SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C.
FORM 10-Q
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarter ended September 30, 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 checkmark 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 NOVEMBER 14, 1994
Common stock, $2 par value 4,228,720
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<TABLE>
<CAPTION>
DOUGLAS & LOMASON COMPANY
Consolidated Balance Sheets
September 30 December 31
1994 1993
ASSETS
<S> <C> <C>
Current assets:
Notes and accounts receivable $102,703,475 $ 70,458,109
Inventories
Raw materials 14,538,903 7,796,730
Work in process and finished goods 10,665,344 6,638,703
25,204,247 14,435,433
Cash and other current assets 7,417,249 9,330,661
135,324,971 94,224,203
Property, plant and equipment, net 70,967,702 69,109,773
Other non-current assets 11,318,698 10,949,345
Total assets $217,611,371 $174,283,321
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Short-term loans $ --- $ 7,000,000
Current maturities of long-term debt 5,938,130 5,829,315
Accounts payable and accrued expenses 76,219,261 44,390,029
Taxes on income 1,322,782 800,149
Total current liabilities 83,480,173 58,019,493
Long-term debt, less current maturities 34,254,615 21,825,630
Postretirement benefits other than pensions 7,253,127 6,521,094
Other liabilities 10,142,871 10,242,484
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
4,228,720 shares in 1994 and 4,227,220
shares in 1993 8,457,440 8,454,440
Other capital 27,997,976 27,986,476
Retained earnings 46,025,169 41,233,704
Total shareholders' equity 82,480,585 77,674,620
Total liabilities and
shareholders' equity $217,611,371 $174,283,321
</TABLE>
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<TABLE>
<CAPTION>
DOUGLAS & LOMASON COMPANY
Consolidated Condensed Statements of Income
Three Months Ended Nine Months Ended
September 30 September 30
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net sales $137,679,747 $ 92,994,847 $384,399,109 $312,256,497
Cost of sales 132,025,549 90,627,440 357,918,334 289,181,674
Gross profit 5,654,198 2,367,407 26,480,775 23,074,823
Selling, general and
administrative expense 4,855,197 4,795,257 15,732,107 14,678,721
Operating income (loss) 799,001 (2,427,850) 10,748,668 8,396,102
Other income (expenses):
Interest expense, net (669,656) (646,549) (1,877,543) (2,008,227)
Interest income
and other 319,407 35,910 778,731 220,706
(350,249) (610,639) (1,098,812) (1,787,521)
Earnings (loss) before
provisions for
income taxes 448,752 (3,038,489) 9,649,856 6,608,581
Income tax expenses
(benefit) 215,000 (1,275,000) 3,590,000 2,160,000
Earnings (loss) before
cumulative effect of
change in accounting 233,752 (1,763,489) 6,059,856 4,448,581
Cumulative effect of
change in accounting
for postretirement
benefits, net of
income taxes --- --- --- 3,756,930
Net earnings (loss) $ 233,752 $ (1,763,489) $ 6,059,856 $ 691,651
Earnings (loss) per
share before
cumulative effect
of change in
accounting $ .05 $ (.42) $ 1.43 $ 1.06
Cumulative per share
effect of change in
accounting --- --- --- .90
Net earnings (loss)
per share $ .05 $ (.42) $ 1.43 $ .16
Weighted average number
of shares 4,228,035 4,226,737 4,227,918 4,210,043
</TABLE>
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<TABLE>
<CAPTION>
DOUGLAS & LOMASON COMPANY
Consolidated Condensed Statements of Cash Flows
Nine Months Ended
September 30
1994 1993
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 6,059,856 $ 691,651
Depreciation 9,764,036 8,668,459
Postretirement benefits other than pensions --- 5,963,381
Changes in operating assets and liabilities:
Increase in accounts receivable (32,245,366) (11,979,321)
Increase in inventories (10,768,814) (4,446,331)
Increase in prepaid expenses
and other assets (499,177) (6,098,732)
Increase in accounts payable,
and accrued expenses 31,938,047 17,443,848
Increase (decrease) in other liabilities 1,155,053 (1,661,360)
Net cash provided by operating activities 5,403,635 8,581,595
Cash flows from investing activities:
Proceeds from the sale of property,
plant and equipment 211,100 (230,106)
Acquisitions of property, plant and
equipment (11,833,065) (15,559,230)
Net cash used by investing activities (11,621,965) (15,789,336)
Cash flows from financing activities:
Proceeds from long-term debt 17,000,000 1,600,000
Repayment of long-term debt (4,571,015) (4,062,199)
Proceeds from (repayment of) short-term debt (7,000,000) 8,000,000
Proceeds from exercised stock options, net 14,500 654,013
Dividends paid (1,268,391) (1,264,388)
Net cash provided by financing activities 4,175,094 4,927,426
Net decrease in cash (2,043,236) (2,280,315)
Cash at beginning of year 2,745,818 8,238,779
Cash at end of quarter $ 702,582 $ 5,958,464
</TABLE>
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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 September 30, 1994 and 1993, and the results of operations for the
nine months then ended, and changes in financial position for the nine
months then ended, subject to year end audit adjustments.
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources
Funds provided from operations of $5.4 million and net proceeds from net
borrowings of $5.4 million were the principal sources of cash in the first
nine months of 1994. Capital expenditures of $11.6 million and dividends of
$1.2 million resulted in a negative cash flow of $2.0 million in the first
nine months of 1994. In June 1994, the Company entered into an Amended and
Restated Unsecured Revolving Credit Agreement with two banks which matures in
June 1997. Borrowings under this facility totaled $17.0 million at September
30, 1994. The amended agreement increased the credit facility from $20.0
million to $35.0 million.
Results of Operations
Net Sales
Net sales for the quarter ended September 30, 1994, were $137.7 million, the
highest third quarter in the Company's history and an increase of 48.1% from
the sales of $93.0 million in the third quarter of 1993. The increase was due
principally to the commencement of full production of fully trimmed seats for
the newly introduced Ford Contour and Mercury Mystique models at the Company's
new Excelsior Springs, Missouri plant and the increased production of fully
trimmed seats for the Ford Aerostar Minivan at the Troy, Missouri plant. For
the nine months ended September 30, 1994, sales were $384.4 million, up 23.1%
from the $312.3 million in the same period of 1993. Industry sales of
automobiles, vans and light trucks continued to have a strong consumer demand
during the entire first nine months of 1994.
Cost of Sales
Cost of sales as a percentage of net sales decreased 1.5% in the third quarter
of 1994 compared to the same period of 1993. This third quarter decrease in
1994 is attributable to the significantly higher sales volume and the plant
closing adjustment recorded in December 1993 compared to the same period of
1993. For the nine month period of 1994, the cost of sales increased .5% as a
percentage of sales over the same period of 1993. This increase and reduction
of gross margin is a result of continuing pressure for customer price
concessions combined with higher material prices, particularly in metals,
chemicals and plastics.
Selling, General and Administrative Expenses
Selling, general and administrative expenses in the third quarter of 1994
increased only $60,000 over the same period of 1993, but decreased to 3.5% of
sales compared to 5.2% of sales in the third quarter of 1993. For the nine
month period, these expenses increased $1.1 million or 7.2% as compared to the
same period of 1993. Incentive compensation, additional staffing and travel
expenses are the principal components of this increase.
Depreciation Expense
Depreciation expense for the quarter ended September 30, 1994, was $3.5
million, up 16% from the $3.0 million in the third quarter of 1993.
Depreciation expense for the first nine months of 1994 of $9.8 million
increased $1.1 million or 12.6% from the $8.7 million in the same period of
1993. These increases were the result of capital expenditures of $20.5
million in 1993 and $11.6 million for the first nine months of 1994.
Interest Expense
Interest expense for the quarter ended September 30, 1994, was $670,000
compared to $647,000 in the third quarter of 1993. Interest expense for the
first nine months of 1994 of $1.9 million decreased $131,000 or 6.5% from the
same period of 1993, principally as a result of the lower debt level in the
earlier part of 1994.
Net Earnings (Loss)
Net earnings of $233,800 or $.05 per share in the third quarter of 1994
compare favorably with the net loss of $1.8 million or $.42 per share in the
same period of 1993. Net earnings for the 1994 third quarter included a loss
from operations of $378,000 due primarily to normal plant shutdowns by the
major vehicle manufacturers for vacations and model changeovers. Offsetting
the operating loss was a positive adjustment of $1.2 million (pre tax) to the
provision for plant closings recorded in December, 1993, reflecting lower than
expected expenses incurred in closing two of the plants the Company previously
announced it would close during 1994. Net earnings of $6.1 million or $1.43
per share in the first nine months of 1994 compare favorably to $691,700 or
$.16 per share in the first nine months of 1993. Results of the first nine
months of 1993 included $3.8 million or $.90 per share related to a change in
accounting for postretirement benefits. Net earnings improvement is
principally attributable to the higher sales.
Financial Condition
The balance sheet at September 30, 1994, remains strong. The current ratio
stood at 1.6 to 1.0 and funded debt to capitalization ratio was a very strong
.29 to 1.0.
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PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
None.
(b) Reports on Form 8-K.
The Registrant filed no reports on Form 8-K during the quarter for
which this report is filed.
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: November 14, 1994 /s/ James J. Hoey
-------------------------
Senior Vice President &
Chief Financial Officer
(Duly Authorized Officer
and Principal Financial
Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 703
<SECURITIES> 0
<RECEIVABLES> 102,703
<ALLOWANCES> 0
<INVENTORY> 25,204
<CURRENT-ASSETS> 135,325
<PP&E> 153,951
<DEPRECIATION> 82,983
<TOTAL-ASSETS> 217,611
<CURRENT-LIABILITIES> 83,480
<BONDS> 40,193
<COMMON> 8,457
0
0
<OTHER-SE> 74,023
<TOTAL-LIABILITY-AND-EQUITY> 217,611
<SALES> 384,399
<TOTAL-REVENUES> 384,399
<CGS> 357,918
<TOTAL-COSTS> 357,918
<OTHER-EXPENSES> 15,732
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,878
<INCOME-PRETAX> 9,650
<INCOME-TAX> 3,590
<INCOME-CONTINUING> 6,060
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,060
<EPS-PRIMARY> 1.43
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