SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarter ended March 31, 1994
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission file number 0-627
Douglas & Lomason Company
(exact name of registrant as specified in its charter)
Michigan 38-0495110
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
24600 Hallwood Court, Farmington Hills, Michigan 48335-1671
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (810) 478-7800
Former name, former address and former fiscal year, if changed since last
year: Same
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
CLASS OUTSTANDING AT MAY 12, 1994
Common stock, $2 par value 4,227,970
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DOUGLAS & LOMASON COMPANY
Consolidated Condensed Balance Sheets
March 31 December 31
1994 1993
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ASSETS
Current assets:
Notes and accounts receivable $ 72,928,269 $ 70,458,109
Inventories
Raw materials 9,229,209 7,796,730
Work in process and finished goods 8,523,811 6,638,703
17,753,020 14,435,433
Cash and other current assets 11,649,157 9,330,661
102,330,446 94,224,203
Property, plant and equipment, net 70,069,896 69,109,773
Other non-current assets 10,392,954 10,949,345
Total assets $182,793,296 $174,283,321
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short term debt $ 6,000,000 $ 7,000,000
Current maturities of long-term debt 5,829,315 5,829,315
Accounts payable and accrued expenses 50,361,156 44,390,029
Taxes on income 2,736,736 800,149
Total current liabilities 64,927,207 58,019,493
Postretirement benefits other than
pensions 6,765,105 6,521,094
Other liabilities 10,450,072 10,242,484
Long-term debt, less current maturities 20,077,929 21,825,630
Shareholders' equity
Preferred stock
No par value, authorized 500,000
shares, issued - none
Common stock
Par value $2 per share authorized
10,000,000 shares; issued and
outstanding 4,227,970 shares in
1994 and 4,197,570 in 1993 8,455,940 8,454,440
Other capital 27,991,101 27,986,476
Retained earnings 44,125,942 41,233,704
Total shareholders' equity 80,572,983 77,674,620
Total liabilities and
shareholders' equity $182,793,296 $174,283,321
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DOUGLAS & LOMASON COMPANY
Consolidated Condensed Statements of Income
Three Months Ended
March 31
1994 1993
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Net sales $123,465,958 $115,403,041
Cost of sales 112,310,166 102,990,849
Gross profit 11,155,792 12,412,192
Selling, general and administrative expense 5,441,947 5,058,969
Operating income 5,713,845 7,353,223
Other income (expenses):
Interest expense (616,409) (710,464)
Interest income and other 202,599 149,480
(413,810) (560,984)
Earnings before provision for income taxes 5,300,035 6,792,239
Income tax expenses 1,985,000 2,430,000
Earnings before cumulative effect
of change in accounting 3,315,035 4,362,239
Cumulative effect of change in accounting
for postretirement benefits, net of
income taxes --- 3,756,930
Net earnings $ 3,315,035 $ 605,309
Earnings per share before cumulative
effect of change in accounting $ .78 $ 1.04
Cumulative per share effect of
change in accounting --- .90
Net earnings per share $ .78 $ .14
Weighted average number of shares 4,227,745 4,195,770
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DOUGLAS & LOMASON COMPANY
Consolidated Condensed Statements of Cash Flows
Three Months Ended
March 31
1994 1993
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Cash flows from operating activities:
Net earnings $ 3,315,035 $ 605,309
Depreciation 3,076,632 2,724,651
Postretirement benefits other than pensions --- 5,963,381
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable (2,470,160) (20,804,779)
Decrease (increase) in inventories (3,317,587) (2,782,780)
Decrease (increase) in other assets 636,946 (165,511)
Increase (decrease) in accounts payable,
and accrued expenses 5,971,127 11,862,061
Increase (decrease) in other liabilities 2,388,186 (99,322)
Net cash provided (used) by operating
activities 9,600,179 (2,696,990)
Cash flows from investing activities:
Proceeds from the sale of property,
plant and equipment 73,499 11,065
Acquisition of property, plant and
equipment (4,110,254) (4,206,677)
Net cash used by investing activities (4,036,755) (4,195,612)
Cash flows from financing activities:
Repayment of long-term debt (1,747,701) (1,347,701)
Proceeds from short-term borrowings, net --- 2,000,000
Repayment of short-term debt (1,000,000) ---
Proceeds from exercised stock
options, net 6,125 45,938
Dividends paid (422,797) (419,607)
Net cash used by financing activities (3,164,373) 278,630
Net increase (decrease) in cash 2,399,051 (6,613,972)
Cash at beginning of year 2,745,818 8,238,779
Cash at end of quarter $ 5,144,869 $ 1,624,807
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DOUGLAS & LOMASON COMPANY
Notes to Consolidated Condensed Financial Statements
1. In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting only of
normal recurring accruals) necessary to present fairly the financial
position as of March 31, 1994 and 1993, and the results of operations
for the three months then ended, and changes in financial position for
the three months then ended, subject to year end audit adjustments.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
Funds provided from operations of $9.6 million were the principal source of
cash in the first quarter of 1994. Capital expenditures of $4.1 million
and financing activities, principally debt repayment, of $3.2 million
resulted in a positive cash flow of $2.4 million. At March 31, 1994, the
Company had available borrowings of $14.0 million from its lines of credit
at two banks in addition to cash of $5.1 million.
Results of Operations
Net Sales
Net sales for the quarter ended March 31, 1994, were $123.5 million an
increase of 7.0 % over the $115.4 million in the first quarter of 1993.
Industry sales of automobiles, vans and light trucks were up significantly
in the first quarter of 1994.
Cost of Sales
The cost of sales as a percentage of net sales increased 1.8% in the first
quarter of 1994 compared to the same period of 1993. This decline in gross
margin reflects continued pressure from customers for price reductions and
concessions and higher raw material prices.
Selling, General and Administrative Expenses
Selling, general and administrative expenses in the first quarter of 1994
only increased $383,000 on the higher sales level but remained at the
percentage of sales as the first quarter 1993. Additional staffing in the
Chantland Division contributed to this increase.
Depreciation Expense
Depreciation expense in the first quarter of 1994 of $3.1 million increased
by $.4 million or 13% from the same period of 1993. This increase was a
result of the capital expenditures of $20.5 million in 1993.
Interest Expense
Interest expense in the first quarter of 1994 decreased 13% or $94,000 from
the same period of 1993, principally as a result of the lower debt level in
1994.
Net Earnings
Net earnings of $3.3 million or $.78 per share decreased $1.1 million or
24% from the $4.4 million or $1.04 per share in 1993 before the cumulative
effect of the change in accounting in 1993, which amounted to $3.8 million
or $.90 per share.
Financial Condition
The balance sheet remained strong at the end of the first quarter of 1994.
The current ratio stood at 1.58-to-1, and long-term debt at the end of the
first quarter of 1994 declined 17.3% to $20.1 million from $24.3 million at
the end of the first quarter last year. Inventories declined 17.4% from
$21.5 million to $17.8 million.
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PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
There were no reports on Form 8-K filed by the Registrant during
the first quarter of 1994.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DOUGLAS & LOMASON COMPANY
-------------------------
(Registrant)
Date: May 12, 1994 /s/ James J. Hoey
---------------------------
James J. Hoey
Senior Vice President &
Chief Financial Officer
(Duly Authorized Officer and
Principal Financial Officer)
