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, 1995
( ) 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, 1995
Common stock, $2 par value 4,242,970
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<CAPTION>
DOUGLAS & LOMASON COMPANY
Consolidated Condensed Balance Sheets
March 31 December 31
1995 1994
ASSETS
<S> <C> <C>
Current assets:
Notes and accounts receivable $ 91,234,731 $ 99,927,502
Inventories
Raw materials 10,288,837 10,823,892
Work in process and finished goods 9,978,178 8,967,433
20,267,015 19,791,325
Cash and other current assets 5,102,827 10,185,455
116,604,573 129,904,282
Property, plant and equipment, net 66,132,095 66,787,613
Other non-current assets 16,985,249 14,871,532
Total assets $199,721,917 $211,563,427
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Current maturities of long-term debt $ 5,657,969 $ 5,938,130
Accounts payable and accrued expenses 56,765,401 71,787,370
Taxes on income 3,204,815 1,865,401
Total current liabilities 65,628,185 79,590,901
Postretirement benefits other than
pensions 7,779,917 7,533,669
Other liabilities 6,542,359 6,822,429
Long-term debt, less current maturities 32,393,750 31,887,500
Shareholders' equity
Preferred stock
No par value, authorized 500,000
shares, issued - none
Common stock 8,485,940 8,457,440
Par value $2 per share authorized
5,000,000 shares; issued and
outstanding 4,242,970 shares in
1995 and 4,228,720 in 1994
Other capital 28,092,006 27,997,976
Retained earnings 55,004,897 52,048,512
Foreign currency translation adjustment (4,205,137) (2,775,000)
Total shareholders' equity 87,377,706 85,728,928
Total liabilities and
shareholders' equity $199,721,917 $211,563,427
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2
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<CAPTION>
DOUGLAS & LOMASON COMPANY
Consolidated Condensed Statements of Income
Three Months Ended
March 31
------------------------------
1995 1994
<S> <C> <C>
Net sales $155,058,225 $123,465,958
Cost of sales 143,759,735 112,310,166
Gross profit 11,298,490 11,155,792
Selling, general and
administrative expense 6,062,712 5,441,947
Operating income 5,235,778 5,713,845
Other income (expenses):
Interest expense, net (695,788) (616,409)
Interest income and other 215,694 202,599
(480,094) (413,810)
Earnings before provision
for income taxes 4,755,684 5,300,035
Income tax expenses 1,375,000 1,985,000
Net earnings $ 3,380,684 $ 3,315,035
Net earnings per share $ .80 $ .78
Weighted average number of
shares 4,235,103 4,227,745
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3
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<TABLE>
<CAPTION>
DOUGLAS & LOMASON COMPANY
Consolidated Condensed Statements of Cash Flows
Three Months Ended
March 31
---------------------------
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 3,380,684 $ 3,315,035
Depreciation 3,011,223 3,076,632
Changes in operating assets and liabilities:
Decrease (increase) in accounts
receivable 4,782,590 (2,470,160)
Increase in inventories (475,690) (3,317,587)
Decrease (increase) in prepaid expenses
and other assets (2,247,237) 636,946
Increase (decrease) in accounts payable,
and accrued expenses (9,533,285) 5,971,127
Increase (decrease) in other liabilities (33,822) 2,388,186
Net cash provided (used) by operating
activities (1,115,537) 9,600,179
Cash flows from investing activities:
Proceeds from the sale of property,
plant and equipment 61,452 73,499
Acquisition of property, plant and
equipment (3,416,396) (4,110,254)
Net cash used by investing activities (3,354,944) (4,036,755)
Cash flows from financing activities:
Repayment of long-term debt (1,773,911) (1,747,701)
Proceeds from long-term borrowings, net 2,000,000 ---
Repayment of short-term debt --- (1,000,000)
Proceeds from exercised stock
options, net 122,530 6,125
Dividends paid (424,299) (422,797)
Net cash used by financing activities (75,680) (3,164,373)
Effect of translation on cash (669,987) ---
Net increase (decrease) in cash (5,216,148) 2,399,051
Cash at beginning of year 6,532,415 2,745,818
Cash at end of quarter $ 1,316,267 $ 5,144,869
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4
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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, 1995 and 1994, and the results of operations for the three
months then ended, and cash flow for the three months then ended, subject
to year end audit adjustments.
2. On Thursday, May 4, 1995, the Company announced that it had entered into
a definitive merger agreement to acquire all of the outstanding shares of
Bestop, Inc., a publicly traded manufacturer of soft tops for utility
vehicles for approximately $44.0 million in cash. Bestop, Inc. reported
$54.0 million in sales and $3.5 million in net income for the year ended
December 31, 1994. The transaction will be completed by means of a Tender
Offer for all of the outstanding shares of Bestop followed by a merger in
which any shares not acquired in the Tender Offer will be acquired.
5
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
Funds provided from operations and additional borrowings were the principal
sources of cash in the first quarter of 1995. Capital expenditures of $3.4
million and long-term debt repayment of $1.8 million resulted in a negative
cash flow of $5.2 million in the first quarter. At March 31, 1995, the Company
had available $17.0 million from its lines of credit at two banks.
Results of Operations
Net Sales
Net sales for the quarter ended March 31, 1995, were $155.1 million up 26%
over the $123.5 million in the first quarter of 1994. The increase in first
quarter sales over 1994 first quarter sales is attributable to production of
the fully trimmed seats for the Ford Contour and Mercury Mystique models.
Cost of Sales
The cost of sales as a percentage of net sales increased 1.7% in the first
quarter of 1995 compared to the same period of 1994. This decline in gross
margin reflects the continued pressure from customers for price reductions and
the higher raw material prices.
Selling, General and Administrative Expenses
Selling, general and administrative expenses in the first quarter of 1995
increased approximately $620,000 compared to the same period of 1994. Wage
increases and additional staffing in the Sales Department are the principal
components of this increase.
Interest Expense
Interest expense in the first quarter of 1995 of $696,000 increased
approximately $80,000 or 13% from the same period of 1994, principally as a
result of higher debt level in 1995.
Net Earnings
Net earnings of $3.4 million or $.80 per share increased modestly over the
$3.3 million or $.78 per share for the first quarter of 1994.
Financial Condition
The balance sheet remained strong at the end of the first quarter of 1995. The
current ratio was 1.78-to-1, and debt to total capitalization was 27.0 at
March 31, 1995.
6
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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 1995.
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 15, 1995 /s/ James J. Hoey
----------------------------
James J. Hoey
Senior Vice President &
Chief Financial Officer
(Duly Authorized Officer and
Principal Financial Officer)
7
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