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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------
FORM 10-K
(Mark One)
[ X ] Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended December 31, 1995, or
[ ] 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
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DOUGLAS & LOMASON COMPANY
(Exact Name of Registrant as Specified in its Charter)
MICHIGAN 38-0495110
(State or other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
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
Securities Registered Pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
------------------- ---------------------
None None
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, $2.00 par value
(Title of Class)
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 (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
As of March 12, 1996, 4,243,021 shares of Common Stock of the Registrant
were outstanding, and the aggregate market value of the shares of Common Stock
as of such date (based on the closing price in the Nasdaq National Market) of
the Registrant held by nonaffiliates (including certain officers and
non-officer directors) was approximately $45,110,362.
Documents Incorporated by Reference
The following documents are incorporated by reference into this Form
10-K:
Part I: Item 1--Part of Annual Report of the Registrant for the year ended
December 31, 1995.
Part II: Items 5-8--Part of Annual Report of the Registrant for the year ended
December 31, 1995.
Part III: Items 10-12--Part of definitive Proxy Statement of the Registrant
dated March 27, 1996 filed pursuant to
Regulation 14A.
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<PAGE>
PART I
Item 1. Business
Douglas & Lomason Company (the "Company" or the "Registrant") is a
major supplier of original equipment parts to the North American automotive
industry. Automotive products, which have accounted for approximately 94% of
the Company's total sales during each of the last three years, include fully
trimmed seating, seat frame assemblies and mechanisms, soft tops and
accessories and decorative moldings. These products are manufactured primarily
for the three major U.S. automotive manufacturers and other original equipment
suppliers.
The Company also manufactures material handling systems and custom
truck bodies and trailers. These products have accounted for approximately 6%
of the Company's total sales during each of the last three years.
The Registrant classifies its business into two segments: automotive
products and other segments. A summary of certain segment information appears
in note (8) of notes to consolidated financial statements on page 22 of the
1995 Annual Report to Shareholders and is incorporated herein by reference.
AUTOMOTIVE PRODUCTS
Automotive product sales are comprised 85.0% of fully trimmed seating,
seat frame assemblies and mechanisms, 6.0% of soft tops and accessories and
9.0% of decorative moldings.
Seating
The Company is one of the major independent manufacturers and
assemblers of seating systems and components for the North American automotive
industry. Seat assemblies produced by the Company satisfy the seat
requirements of a full range of vehicles. The Company currently supplies
complete seats to customer assembly plants on a "just-in-time" (JIT)
"sequenced parts delivery" (SPD) basis for passenger cars and vans.
The Company's seat frame business has grown significantly over the 49
years it has been supplying seating systems and components to the North
American automotive industry. The Company believes it is currently one of the
largest independent manufacturers of seat frames in North America. The seat
frames manufactured by the Company are incorporated by it into complete seats
and sold to vehicle assembly plants and are also sold separately to other seat
assemblers. The Company believes that it is recognized as one of the most
vertically integrated independent seat manufacturers in North America. The
Company is capable of producing seat frames, manual seat mechanisms, foam,
covers, suspension systems, and plastic seat trim at its manufacturing
facilities.
Seating Joint Ventures
In 1988, the Company formed a 50/50 joint venture company with Namba
Press Works Co., Ltd. of Japan. This company, named Bloomington-Normal Seating
Company, is located in Normal, Illinois and manufactures seating systems.
The Company believes that opportunities for growth are emerging in
foreign transplant operations in North America and from the expanding trend
toward seat assembly outsourcing in Europe and the Far East.
In 1995, the Company entered into a joint venture agreement with
Shanghai Traffic Machinery Factory to manufacture seat frames and metal
stampings in Shanghai, P.R. China. Current production at the joint venture,
Shanghai Lomason Automotive Seating Systems Company Limited, is for the
Shanghai Volkswagen Santana series.
<PAGE>
The Company announced in February 1996 that it entered into a 50/50
joint venture with Keiper Recaro Enterprises, Inc. to form Euro American
Seating. The joint venture has been awarded a contract to supply General
Motors, North American Operations, with complete JIT seating systems. The
joint venture will also pursue supplying JIT seat systems on a global scale.
Soft Tops and Accessories
In June 1995, the Company acquired Bestop, Inc. ("Bestop"), the
leading designer and manufacturer in North America of soft tops and
accessories for small sport utility vehicles. Bestop also designs and
manufactures soft tops and accessories for larger sport utility vehicles.
Bestop sells its products domestically and internationally to original
equipment manufacturer companies and in the aftermarket. Bestop estimates that
it holds more than half of the market share in North America for soft tops of
small sport utility vehicles.
Decorative Moldings
The Company, which has been supplying decorative moldings to the
automotive industry since 1903, has announced its intention to discontinue the
operations of this component of its business in 1996. These products include
body side and wheel opening moldings, head and tail lamp bezels and window and
door sealing systems. The Company does not anticipate a significant loss on
the ultimate disposal of the assets related to this component.
Product Engineering
The Company is continually seeking to improve existing automotive
products and pursuing new automotive products and processes through a 165
person product engineering staff. This staff is customer-focused in that all
new projects must be based on a customer's requirements. This facilitates the
development of products in shorter lead time and matches products more closely
to consumer requirements. Research and development costs incurred by the
Company during the last three years were not considered material.
Sales and Customers
Sales coverage by the Company of the North American automotive
industry is maintained by an experienced direct sales staff consisting of 16
account managers, divided into separate and distinct customer-focused groups.
The sales group is supported by fully developed program management teams
incorporating simultaneous engineering techniques.
The percent of sales to total automotive sales of automotive products
to the three major automotive manufacturers and others during the past three
years is as follows:
<TABLE>
<CAPTION>
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
Chrysler Corporation................. 51% 39% 25%
Ford Motor Company................... 25 40 48
General Motors Corporation........... 15 14 12
All other............................ 9 7 15
</TABLE>
Sales percentages include sales to other Tier One suppliers for
ultimate sale to the above customers.
- 2 -
<PAGE>
OTHER SEGMENTS
Other segments of the Company's business accounted for approximately
6% of total Company sales in each of the three years ended December 31, 1995.
Industrial and Commercial Products
The Company is a major supplier to conveyor manufacturers of pulleys
and rollers. The Company also manufacturers conveyors, bag filling scales and
automatic palletizers. These products are sold to the agriculture, mining and
transportation industries among others.
Custom Truck Bodies and Trailers
The Company serves the food and beverage industry through the design
and manufacture of delivery truck bodies and trailers for soft drinks, beer,
bottled water, bakery products, milk and ice cream, meats, frozen foods and
other products. These units include side-loading aluminum bodies and trailers,
steel, aluminum or reinforced fiberglass refrigerated truck bodies and
trailers. The Company intends to dispose of this business during 1996.
COMPETITION
The Company is one of the three major independent seat suppliers to
the North American automotive industry. The Company's primary independent
competitors are Johnson Controls Inc.'s Automotive Products Group and Lear
Corporation. The Company also competes with Delphi Interior and Lighting
Systems of General Motors Corporation, a captive seating supplier.
GENERAL
Raw materials purchased by the Registrant consisting of carbon steel,
aluminum, stainless steel, plastics, and fabric are generally available from
numerous independent sources. Management believes that the trend in its
material costs is upward.
While the Registrant owns several patents and patent rights, patent
protection is not materially significant to its business.
To the best of the Registrant's knowledge, its permits are in
compliance with all federal, state and local environmental protection
provisions.
The approximate number of associates employed by the Registrant at
December 31, 1995 was 5,900.
The Registrant does not consider its business seasonal except to the
extent that automotive changeovers to new models affect business conditions.
Item 2. Properties
The corporate offices of the Company and the product engineering staff
are located in Farmington Hills, Michigan in three buildings containing
approximately 96,000 square feet. Information as to the Company's 18 principal
facilities in operation as of December 31, 1995 is set forth below:
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<PAGE>
<TABLE>
<CAPTION>
Approximate Year Owned or
Location Square Feet Acquired Leased
-------- ----------- -------- --------
<S> <C> <C> <C>
AUTOMOTIVE
Seating
Columbus, Nebraska................... 273,400 1965 Owned
Milan, Tennessee..................... 202,300 1976 Owned
Red Oak, Iowa........................ 193,500 1967 Owned
Marianna, Arkansas................... 188,200 1960 Owned
Ciudad Acuna, Mexico................. 134,100 1987 Owned
Excelsior Springs, Missouri.......... 87,500 1993 Leased
Troy, Missouri....................... 82,500 1990 Leased
Orangeville, Ontario, Canada.(1)..... 28,300 1992 Leased
Del Rio, Texas.(1)................... 40,000 1987 Leased
Saltillo, Mexico..................... 44,000 1992 Owned
Body Trim Components
Carrollton, Georgia................. 240,700 1955 Owned
48,900 1979 Owned
LaGrange, Georgia................... 85,900 1988 Leased
INDUSTRIAL AND COMMERCIAL
Material Handling Equipment
Humboldt, Iowa....................... 95,600 1968 Owned
Dakota City, Iowa.................... 91,600 1978 Owned
Fairfield, CA.(1).................... 4,900 1993 Leased
Custom Truck Bodies and Trailers
Columbus, Georgia ................... 133,000 1962 Owned
Amory, Mississippi................... 67,000 1982 Owned
Kansas City, Missouri................ 10,400 1983 Leased
<FN>
- ---------------
(1) A distribution facility.
</TABLE>
The Company believes that substantially all of its property and
equipment is in good condition and adequate for its present requirements.
The Registrant currently has excessive production capacity as a result
of discontinued models. The Registrant's current utilization is approximately
70% of capacity.
Item 3. Legal Proceedings
There are no material legal proceedings pending against the Registrant
or its subsidiaries.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
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<PAGE>
Executive Officers of the Registrant
The names and ages of all executive officers of the Registrant are as
follows:
<TABLE>
<CAPTION>
Has Served
in Position
Name Position Since Age
- ---- -------- ------------ ---
<S> <C> <C> <C>
Harry A. Lomason II Chairman of the Board 1992
President 1976
Chief Executive Officer 1982 61
James B. Nicholson Vice Chairman of the
Board 1990 52
James J. Hoey Senior Vice President and 1992
Chief Financial Officer 1985 59
Roger H. Morelli Senior Vice President- 1987 51
Manufacturing
Steven C. Bruck Vice President-Design,
Development and Engineering
Services 1994 39
Ollie V. Cheatham Vice President-Human
Resources 1984 51
A. Warren Vice President-Safety,
Daubenspeck III Environmental and
Loss Control 1988 44
Martin A. DiLoreto Vice President-Procurement
and International Business
Development 1994 60
Scott E. Paradise Vice President-Automotive
Sales 1993 41
Robert D. Strachura Vice President and
Executive Manager-
Manufacturing 1990 53
Dan D. Smith Vice President-Cost Analysis
and Information Technology 1989 47
Gary A. Pniewski Vice President-Seating
and Decorative Trim
Engineering 1994 51
Verne C. Hampton II Secretary 1977 62
Melynn M. Zylka Treasurer 1990 35
</TABLE>
- 5 -
<PAGE>
Officers of the Registrant are elected each year at the Annual Meeting
of the Board of Directors to serve for the ensuing year or until their
successors are elected and qualified.
All of the executive officers of the Registrant named above have held
various executive positions with the Registrant for more than five years
except: Mr. Nicholson who has been President and Chief Executive Officer of
PVS Chemicals, Inc. and a Director of the Company for more than five years;
Mr. Bruck who joined the Company in 1993 after having served as Vice
President, Product Engineering Group at RCO the preceding five years; Mr.
Pniewski who joined the Company in January 1994 after serving in various
positions with Ford Motor Company for more than twenty years, the most recent
of which was Vehicle Seat Systems Engineering Manager in the Plastics and Trim
Products Division; and Mr. Hampton who has been a partner with the law firm of
Dickinson, Wright, Moon, Van Dusen and Freeman for more than five years.
There is no family relationship between any of the foregoing persons.
PART II
Item 5. Market for the Registrant's Common Equity and Related Shareholder
Matters
The information set forth under the captions "Stock Prices and Cash
Dividends" and "Shareholder Information" on pages 27 and 28 of the 1995 Annual
Report of the Registrant is incorporated by reference herein. As of December
31, 1995, there were 726 holders of record of the Registrant's Common Stock.
Item 6. Selected Financial Data
The information set forth under the caption "Selected Financial and
Other Data" on pages 26 and 27 the 1995 Annual Report of the Registrant is
incorporated by reference herein.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The information set forth under the caption "Management's Discussion
and Analysis of Financial Condition and Results of Operations" on pages 12 and
13 of the 1995 Annual Report of the Registrant is incorporated by reference
herein.
Item 8. Financial Statements and Supplementary Data
The information set forth on pages 14 through 25 of the 1995 Annual
Report of the Registrant is incorporated by reference herein.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not Applicable.
PART III
Item 10. Director and Executive Officers of the Registrant
The information set forth under the caption "Information About
Directors and Nominees for Directors" on pages 3 and 4 of the definitive Proxy
Statement of the Registrant dated March 27, 1996 filed with the Securities and
Exchange Commission pursuant to Regulation 14A is incorporated by reference
herein for information as to directors of the Registrant.
- 6 -
<PAGE>
Reference is made to Part I of this Report for information as to executive
officers of the Registrant.
Item 11. Executive Compensation
The information set forth under the captions "Compensation Committee
Report" and "Executive Compensation" on pages 4 through 7 of the definitive
Proxy Statement of the Registrant dated March 27, 1996 filed with the
Securities and Exchange Commission pursuant to Regulation 14A is incorporated
by reference herein.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information set forth under the caption "Security Ownership" on
pages 1 and 2 of the definitive Proxy Statement of the Registrant dated March
27, 1996 filed with the Securities and Exchange Commission pursuant to
Regulation 14A is incorporated by reference herein.
Item 13. Certain Relationships and Related Transactions
Not applicable.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) The following documents are filed as a part of this report:
1. Financial Statements
The following consolidated financial statements of Douglas & Lomason
Company and subsidiaries included in the Douglas & Lomason Company 1995
Annual Report to its Shareholders for the year ended December 31, 1995, are
incorporated herein by reference:
Consolidated Balance Sheets at December 31, 1995 and 1994.
Consolidated Statements of Earnings for each of the years in the three
year period ended December 31, 1995.
Consolidated Statements of Shareholders' Equity for each of the years
in the three year period ended December 31, 1995.
Consolidated Statements of Cash Flows for each of the years in the
three year period ended December 31, 1995.
Notes to Consolidated Financial Statements.
The Independent Auditors' Report and Schedule VIII -- Valuation and
Qualifying Accounts for the years ended December 31, 1995, 1994 and 1993 set
forth under "Index to Consolidated Financial Statements and Schedules."
EXHIBITS
(The Exhibit marked with one asterisk below was filed as an
Exhibit to the Form 10-K Report of the Registrant for the
fiscal year ended December 31, 1983; the Exhibit marked with
two asterisks below was filed as an Exhibit to the Form 10-Q
Report of the Registrant for the quarter ended June 30, 1988;
the Exhibit marked with three asterisks below was filed as an
Exhibit to the Form 10-K Report of the Registrant for the
fiscal year ended December 31, 1989; the Exhibits marked with
four asterisks below were filed as Exhibits to the Form 10-K
Report of the Registrant for the fiscal year ended December 31,
1991; the Exhibits marked with five asterisks were
- 7 -
<PAGE>
filed as Exhibits to the Form 10-K Report of the Registrant for
the fiscal year ended December 31, 1993, the Exhibit marked
with six asterisks was filed as an Exhibit to the Form 8-K
Report of the Registrant dated June 8, 1995, and the Exhibit
marked with seven asterisks was filed as an Exhibit to the Form
10-Q Report of the Registrant for the quarter ended June 30,
1995, and are incorporated herein by reference, the Exhibit
numbers in brackets being those in such Form 10-K, 10-Q or 8-K
Reports).
(3)(a)***** Restated Articles of Incorporation of Registrant.
[(3) (a)]
(3)(b)***** By-Laws of the Registrant. [(3) (b)]
(4)(a)** Term Loan Agreement dated as of May 20, 1988
between Registrant and the Banks named in Section
2.1 thereof [1].
(4)(a)(1)**** Amendments to Term Loan Agreement dated as of May
20, 1988. [(4) (a)(1)]
(4)(b)**** Term Loan Agreement dated as of December 19, 1991
between Registrant and NBD Bank, N.A. and Manu-
facturers Bank, N.A., as amended. [(4)(b)]
(4)(c)****** Amended and Restated Credit Agreement dated as of
June 8, 1995, between Registrant and the banks
named in Section 2.1 thereof. [2]
(10)(a)* 1982 Incentive Stock Option Plan of the Regis-
trant [10](#)
(10)(b)*** 1990 Stock Option Plan of Registrant [(10)(c)](#)
(10)(c)**** Joint Venture Agreement dated as of July 25, 1986
between Registrant and Namba Press Works Co. Ltd.
[(10)(c)].
(10)(d)******* Directors Stock Plan [1](#)
(13) Portions of 1995 Annual Report of Regis-
trant.
(21) Subsidiaries of the Registrant.
(23) Consent of KPMG Peat Marwick LLP.
(27) Financial Data Schedule
(b) Reports on Form 8-K.
The Registrant has not filed any reports on Form
8-K during the last quarter of the period covered
by this report.
(#) This document is a management contract or
compensatory plan.
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<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 on the 27th day of
March 1996.
DOUGLAS & LOMASON COMPANY
By: /s/ H. A. Lomason II
-------------------------
H. A. Lomason II
Chairman of the Board
and President
(Principal Executive Officer)
By: /s/ James J. Hoey
-------------------------
James J. Hoey
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
By: /s/ Melynn M. Zylka
-------------------------
Melynn M. Zylka
Treasurer
(Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on March 27, 1996.
Signature Title
--------- -----
/s/ James E. George Director
- -----------------------
James E. George
/s/ Verne C. Hampton II Director
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Verne C. Hampton II
/s/ H. A. Lomason II Director
- -----------------------
H. A. Lomason II
/s/ Dale A. Johnson Director
- -----------------------
Director
- -----------------------
Charles R. Moon
/s/ James B. Nicholson Director
- -----------------------
/s/ Gary T. Walther Director
- -----------------------
- 9 -
<PAGE>
DOUGLAS & LOMASON COMPANY AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
The consolidated balance sheets of the Company and subsidiaries as of December
31, 1995 and 1994, and the related consolidated statements of earnings,
shareholders' equity, and cash flows for each of the years in the three-year
period ended December 31, 1995 together with the related notes and the report
of KPMG Peat Marwick LLP, independent certified public accountants, all
contained in the Company's 1995 Annual Report to Shareholders, are
incorporated herein by reference.
The following additional financial data should be read in conjunction with the
financial statements in the 1995 Annual Report to Shareholders. All other
schedules are omitted, as the required information is inapplicable or the
information is presented in the consolidated financial statements or related
notes. Financial statements and related schedules of the Registrant have been
omitted because the Registrant is primarily an operating company and the
subsidiaries included in the consolidated financial statements are totally
held.
Index
Page
Independent Auditors' Report F-2
Schedule VIII - Valuation and Qualifying Accounts F-3
F-1
<PAGE>
[Letterhead of KPMG Peat Marwick LLP]
KPMG Peat Marwick LLP
Suite 1200
150 West Jefferson
Detroit, MI 48226-4429
Independent Auditors' Report
The Board of Directors and Shareholders
Douglas & Lomason Company:
Under date of January 29, 1996, we reported on the consolidated balance sheets
of Douglas & Lomason Company and subsidiaries as of December 31, 1995 and
1994, and the related consolidated statements of earnings, shareholders'
equity, and cash flows for each of the years in the three-year period ended
December 31, 1995, as contained in the 1995 annual report to shareholders.
These consolidated financial statements and our report thereon are
incorporated by reference in the annual report on Form 10-K for the year 1995.
In connection with our audits of the aforementioned consolidated financial
statements, we also have audited the related consolidated financial statement
schedules as listed in the accompanying index. This financial statement
schedule is the responsibility of the Company's management. Our responsibility
is to express an opinion on this financial statement schedule based on our
audits.
In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, present
fairly, in all material respects, the information set forth therein.
As discussed in notes 1, 7, and 10 to the consolidated financial statements,
the Company changed its method of accounting for income taxes and
postretirement benefits other than pensions in 1993.
/s/ KPMG PEAT MARWICK LLP
Detroit, Michigan
January 29, 1996
Member Firm of
Klynvald Peat Marwick Goerdeler
F-2
<PAGE>
Schedule VIII
<TABLE>
<CAPTION>
DOUGLAS & LOMASON COMPANY AND SUBSIDIARIES
Valuation and Qualifying Accounts
Years ended December 31, 1995, 1994, and 1993
(Expressed in thousands of dollars)
<S> <C> <C> <C> <C>
Balance at Charged to Balance at
December 31, Costs and December 31,
1992 Expenses Deductions 1993
---- -------- ---------- ----
Other accrued plant closing
liabilities -- 9,078 -- 9,078
== ===== == =====
Balance at Charged to Balance at
December 31, Costs and December 31,
1993 Expenses Deductions 1994
---- -------- ---------- ----
Other accrued plant closing
liabilities 9,078 -- 5,397 3,681
===== == ===== =====
Balance at Charged to Balance at
December 31, Costs and December 31,
1994 Expenses Deductions 1995
---- -------- ---------- ----
Other accrued plant closing
liabilities 3,681 -- 2,947 734
===== == ===== =====
</TABLE>
F-3
Exhibit 13
MANAGEMENT'S DISCUSSION & ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1995, the Company had working capital of $46.1 million and
available borrowings of $27.0 million on a $60.0 million revolver credit
agreement with two banks. The current ratio was 1.5 to 1.0. The principal
increases in total assets and liabilities at December 31, 1995, as compared to
December 31, 1994, are due to the acquisition and consolidation of Bestop,
Inc. acquired in June, 1995.
During 1995, the Company formed a joint venture in China with Shanghai Traffic
Machinery Factory for the purpose of furthering global opportunities. An
initial capital contribution by the Company of approximately $5.0 million was
required by the joint venture agreement. This joint venture will provide seat
frames and stampings for the Shanghai Volkswagen Santana series. Consistent
with the Company's desire for a strong global presence, other overseas
investments and relationships are being examined to supplement the Company's
core business.
Earnings from operations of $4.2 million, dividends of $4.4 million and
proceeds from borrowings of $42.0 million were the principal sources of cash
in 1995. The acquisition of Bestop, Inc. in June, 1995 for $43.5 million,
capital expenditures of $18.4 million and debt repayments of $7.7 million were
the primary uses of cash.
No other significant borrowings are anticipated on a short-term or long-term
basis beyond the capacity of the Company's present revolver loan. Capital
expenditures in 1996 are anticipated to be approximately $15.0 million.
Refer to Note 11 for complete information on plant closings.
RESULTS OF OPERATIONS - 1995 VERSUS 1994
Net Sales
Net sales of $561.2 million in 1995 were the second highest in the Company's
history but decreased slightly from the $566.8 million of net sales reported
for 1994. Fourth quarter 1995 net sales of $144.3 million decreased 21.0% from
$182.4 million of net sales in the fourth quarter of 1994. During the third
quarter of 1995, the Company announced the decision to phase out, over time,
the business associated with anodized aluminum decorative moldings and
extruded bilaminate and plastic moldings. The phase-out is expected to be
completed in 1996. This product line contributed approximately $50.0 million
in sales in 1995 compared to $74.0 million in 1994. A significant portion of
the 1995 sales were eliminated as a result of car models that were
discontinued.
The Company's Mexican operations experienced significant increases in sales
volumes in 1995. The acquisition of Bestop, Inc. contributed $32.2 million to
net sales. These increases were offset by sales price reductions and lower
than expected volumes of fully trimmed seats for the Ford Contour, Mercury
Mystique and Ford Aerostar and lower production of the Caprice and Roadmaster.
Cost of Sales
Cost of sales as a percentage of net sales increased slightly in both the
fourth quarter and the year of 1995 compared to 1994. The trend of raw
material price increases and reduced selling prices to the Company's
customers, as a result of long term agreements prevalent in the automotive
industry, resulted in an adverse effect on the relationship of cost of sales
to sales. Opportunities for cost reduction through engineering changes will
improve this trend. The Company has consistently reflected the equity in
earnings of affiliated companies within cost of sales. The effect of this
inclusion reduced the cost of sales by approximately .8% in 1995 and .3%
in 1994.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for 1995 increased $3.8 million
from the $21.9 million reported in 1994. The consolidation of selling, general
and administrative expenses of Bestop, Inc. for 1995 of $3.9 million accounted
for the entire increase.
Interest Expense
Interest expense in 1995 increased $2.4 million or 89.7% from 1994.
Significantly higher debt level in 1995, primarily related to the Bestop, Inc.
acquisition, is the principal reason for the increase in interest expense.
12
Net Earnings
Net earnings in 1995 of $4.2 million decreased $8.3 million or 66.4% from the
$12.5 million recorded in 1994. This decrease is primarily the result of
losses sustained on the anodized aluminum decorative moldings and extruded
bilaminate and plastic moldings business of $4.8 million in 1995 compared to
net earnings of $4.0 million in 1994. Operating losses in both the second and
third quarters of 1995 as a result of lower sales and rising costs of raw
materials combined with selling price reductions in long term agreements were
major contributors to this unfavorable 1995 results. Equity in earnings of
affiliates was a significant contributor to the Company's consolidated net
earnings for the year ended December 31, 1995.
RESULTS OF OPERATIONS - 1994 VERSUS 1993
Net Sales
Net sales of $566.8 million in 1994 were the highest in the Company's history
and increased 33.4% compared to the 1993 net sales of $424.8 million. Fourth
quarter 1994 net sales of $182.4 million increased 62.0% compared to $112.6
million in the fourth quarter of 1993. Fourth quarter 1994 sales were also the
highest in the Company's history. The sales increase was due principally to
the commencement of full production of fully trimmed seats for the recently
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.
Industry sales of automobiles, vans and light trucks continued to have a
strong consumer demand, particularly in the final months of 1994.
Cost of Sales
Cost of sales as a percentage of net sales declined slightly in 1994 to 92.4%
compared to 92.7% in 1993. This slightly favorable trend was attributable to
the significantly higher sales volume during the last six months of 1994.
Higher raw material prices, particularly in metals, chemicals and plastics,
and pressure for customer price concessions resulted in a trend toward reduced
margins.
During the fourth quarter of 1993, the Company decided to close certain
plants, and in connection therewith established a plant closing accrual of
$10.0 million for associate benefit costs, environmental costs, facilities
maintenance and other, $4.0 million of which remained at December 31, 1994.
The significant decrease was due to lower than expected associate severance
payments, including benefits and facilities maintenance. The accrual reduction
included $1.2 million of associate severance and benefits and $650,000 of
facilities maintenance costs taken into income during the third and fourth
quarters, 1994, respectively. Furthermore, in compliance with current
guidelines, site restoration and other environmental exit costs of $2.5
million were reclassified from the provision for plant closing accrual to
other accrued liabilities during the fourth quarter of 1994.
Selling, General and Administrative Expenses
Selling, general and administrative expenses in 1994 increased approximately
$2.2 million from 1993 but decreased significantly to 3.9% of sales compared
to 4.6% of sales in 1993. Incentive compensation, additional staffing, travel
and professional services expense were the principal components of the
increase.
Interest Expense
Interest expense in 1994 decreased $86,000 or 3.2% from 1993. This decrease
was attributable to the lower debt level in the first and second quarters of
1994.
Net Earnings (Loss)
Net earnings in 1994 of $12.5 million or $2.95 per share compared with the net
loss of $7.2 million or $1.70 per share a year earlier. Results for 1993
included a $9.6 million after tax provision for closing certain plants and a
$3.8 million after tax provision to reflect a change in the method of
accounting for postretirement benefits other than pensions. Net earnings from
operations in 1993 exclusive of the two items mentioned above were $6.2
million or $1.47 per share. The improvement in 1994 was attributable to the
significant 33.4% sales increase which included higher production of
automobiles and light trucks nationwide, combined with cost reductions and
improvements in productivity in several areas.
13
[GRAPHIC: This page also has two bar charts on the left side of the page; one
showing a five-year range of Total Assets, the other showing a five-year range
of Long-Term Debt. The values are as follows:]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C>
TOTAL ASSETS (In millions) $ 139 $ 156 $ 174 $ 212 $ 269
LONG-TERM DEBT (In millions) $ 46 $ 26 $ 22 $ 32 $ 69
</TABLE>
Douglas & Lomason Company and Subsidiaries
Consolidated Balance Sheets
December 31, 1995 and 1994
(In thousands)
<TABLE>
<CAPTION>
Assets 1995 1994
---- ----
<S> <C> <C>
Current assets:
Cash $ 4,587 $ 6,532
Accounts receivable (note 8) 93,486 99,928
Inventories (note 3) 26,082 19,344
Income taxes recoverable 3,442 --
Deferred tax assets (note 7) 2,635 2,843
Prepaid expenses and other current assets 1,541 810
-------- --------
Total current assets 131,773 129,457
Property, plant and equipment at cost
less accumulated depreciation (note 4) 76,164 66,788
Goodwill and other intangibles (note 2) 38,179 2,695
Other assets 22,773 12,624
-------- --------
$268,889 $211,564
======== ========
Liabilities and Shareholders' Equity
Current liabilities:
Current installments of long-term debt (note 6) $ 4,775 $ 5,938
Accounts payable 60,954 54,429
Accrued payroll 4,747 3,729
Income taxes payable -- 1,865
Accrued plant closing expenses (note 11) 367 3,783
Other accrued expenses (note 9) 14,876 9,847
-------- --------
Total current liabilities 85,719 79,591
Long-term debt, excluding current installments (note 6) 69,113 31,888
Postretirement benefits, other than pensions (note 10) 8,598 7,534
Deferred income taxes (note 7) 14,387 651
Other liabilities (note 12) 4,725 6,171
Shareholders' equity (note 13):
Preferred stock, no par value.
Authorized 500,000 shares;
no shares issued -- --
Common stock, $2 par value.
Authorized 10,000,000 shares;
issued 4,243,021 in 1995 (4,228,720 in 1994) 8,486 8,457
Other capital 28,088 27,998
Retained earnings 54,543 52,049
Foreign currency translation adjustment (4,770) (2,775)
-------- --------
Total shareholders' equity 86,347 85,729
-------- --------
$268,889 $211,564
======== ========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
14
[GRAPHIC: This page also has a bar chart on the right side of the page, showing
a five-year range of Interest Expense. The values are as follows:]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C>
INTEREST EXPENSE (In millions) $5.4 $ 3.5 $ 2.7 $ 2.6 $ 5.0
</TABLE>
<TABLE>
<CAPTION>
Douglas & Lomason Company and Subsidiaries
Consolidated Statements of Earnings
Years ended December 31, 1995, 1994 and 1993
(In thousands, except per share data)
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Net sales $ 561,187 $ 566,819 $ 424,843
Cost of sales 527,589 523,577 393,935
--------- --------- ---------
Gross profit 33,598 43,242 30,908
Selling, general and administrative expenses 25,674 21,890 19,671
Provision for plant closings (note 11) -- -- 15,000
--------- --------- ---------
Operating income (loss) 7,924 21,352 (3,763)
--------- --------- ---------
Other income (expenses):
Interest expense (4,971) (2,620) (2,706)
Interest income and other, net 1,283 962 451
--------- --------- ---------
(3,688) (1,658) (2,255)
--------- --------- ---------
Earnings (loss) before income taxes
and cumulative effect of change
in accounting principle 4,236 19,694 (6,018)
Income tax expense (benefit) (note 7) 45 7,208 (2,607)
--------- --------- ---------
Earnings (loss) before cumulative
effect of change in accounting
principle 4,191 12,486 (3,411)
Cumulative effect at January 1, 1993
of change in accounting for
postretirement benefits other
than pensions, net of income tax
benefit (note 10) -- -- (3,757)
--------- --------- ---------
Net earnings (loss) $ 4,191 $ 12,486 $ (7,168)
========= ========= =========
Earnings (loss) per share before
cumulative effect of change
in accounting principle $ .99 $ 2.95 $ (.80)
Cumulative per share effect of
change in accounting for post-
retirement benefits other than
pensions, net of income tax
benefit -- -- (.90)
--------- --------- ---------
Net earnings (loss) per share $ .99 $ 2.95 $ (1.70)
========= ========= =========
Dividends per share $ .40 $ .40 $ .40
========= ========= =========
Weighted average number of common and common
equivalent shares outstanding 4,241,216 4,228,120 4,214,372
========= ========= =========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
15
[GRAPHIC: This page also has a bar chart on the left side of the page
showing a five-year range of Shareholders' Equity. The values are as follows:]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C>
SHAREHOLDERS' EQUITY (In millions) $54.2 $85.9 $77.7 $85.7 $86.3
</TABLE>
<TABLE>
<CAPTION>
Douglas & Lomason Company and Subsidiaries
Consolidated Statements of Shareholders' Equity
Years ended December 31, 1995, 1994 and 1993
(In thousands)
Foreign
Currency
Common Other Retained Translation Shareholders'
Stock Capital Earnings Adjustment Equity
------ ------- -------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Balance at
December 31, 1992 $8,389 $27,383 $50,109 $ -- $85,881
Net loss -- -- 7,168) -- (7,168)
Dividends, $.40
per share -- -- (1,687) -- (1,687)
Foreign currency
translation
adjustment -- -- -- (20) (20)
Issuance of 32,275
shares under
employee stock
option plan 65 603 -- -- 668
------ ------- ------- ------- -------
Balance at
December 31, 1993 8,454 27,986 41,254 (20) 77,674
Net earnings -- -- 12,486 -- 12,486
Dividends, $.40
per share -- -- (1,691) -- (1,691)
Foreign currency
translation
adjustment -- -- -- (2,755) (2,755)
Issuance of 1,500
shares under
employee stock
option plan 3 12 -- -- 15
------ ------- ------- ------- -------
Balance at
December 31, 1994 8,457 27,998 52,049 (2,775) 85,729
Net earnings -- -- 4,191 -- 4,191
Dividends, $.40
per share -- -- (1,697) -- (1,697)
Foreign currency
translation
adjustment -- -- -- (1,995) (1,995)
Issuance of 15,000
shares under
employee stock
option plan 30 99 -- -- 129
Canceled shares (1) (9) -- -- (10)
------ ------- ------- ------- -------
Balance at
December 31, 1995 $8,486 $28,088 $54,543 $(4,770) $86,347
====== ======= ======= ======= ========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
16
[GRAPHIC: This page also shows a bar chart on the right side of
the page, showing a five-year range of Capital Additions.
The values are as follows:]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C>
CAPITAL ADDITIONS (In millions) $ 6.1 $16.7 $20.5 $14.6 $18.4
</TABLE>
<TABLE>
<CAPTION>
Douglas & Lomason Company and Subsidiaries
Consolidated Statements of Cash Flows
Years ended December 31, 1995, 1994 and 1993
(In thousands)
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 4,191 $ 12,486 $ (7,168)
Adjustments to reconcile net earnings (loss)
to net cash provided by operating
activities:
Provision for plant closings -- -- 15,000
Cumulative effect of change in accounting for
postretirement benefits other than pensions,
net of tax benefit -- -- 3,757
Depreciation and amortization 14,148 13,212 12,002
Net gain on sale of property, plant
and equipment (12) (107) (68)
Provision for deferred income taxes 2,406 2,358 (6,386)
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable 8,085 (29,469) (14,860)
Decrease (increase) in inventories 3,191 (5,356) 4,278
Decrease (increase) in prepaid expenses and
other assets 6,023 (3,689) (4,216)
Increase (decrease) in accounts payable (13,161) 23,328 11,252
Increase (decrease) in other current
liabilities 1,653 6,417 (822)
Decrease in plant closing accrual (3,416) (3,904) --
Increase (decrease)in other liabilities (382) 555 1,151
-------- -------- --------
Net cash provided by operating activities 22,726 15,831 13,920
-------- -------- --------
Cash flows from investing activities:
Proceeds from the sale of property, plant and
equipment 1,835 1,541 417
Capital expenditures (18,444) (14,629) (20,460)
Acquisition of assets, net of liabilities
assumed (43,488) -- --
Dividends received 4,410 -- --
-------- -------- --------
Net cash used in investing activities (55,687) (13,088) (20,043)
-------- -------- --------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 42,000 16,000 --
Principal payments on long-term debt (6,235) (5,829) (5,331)
Proceeds from (payments on) short-term
borrowings (1,453) (7,000) 7,000
Proceeds from exercised stock options, net 119 15 668
Dividends paid (1,697) (1,691) (1,687)
-------- -------- --------
Net cash provided by
financing activities 32,734 1,495 650
-------- -------- --------
Effect of translation adjustment on cash (1,718) (451) (20)
-------- -------- --------
Net increase (decrease) in cash (1,945) 3,787 (5,493)
Cash at beginning of year 6,532 2,746 8,239
-------- -------- --------
Cash at end of year $ 4,587 $ 6,533 $ 2,746
======== ======== ========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 4,375 $ 2,547 $ 2,716
======== ======== ========
Income taxes $ 415 $ 3,550 $ 5,079
======== ======== ========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
17
Douglas & Lomason Company and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 1995, 1994 and 1993
(1)
Summary of Significant
Accounting Policies
Principles of Consolidation
The consolidated financial statements include the financial statements of
Douglas & Lomason Company and its wholly owned subsidiaries. All significant
intercompany balances and transactions have been eliminated in consolidation.
The Company's investments in affiliates are accounted for on the equity
method.
Cash Equivalents
For the purposes of the statements of cash flows, the Company considers all
liquid debt instruments with original maturities of three months or less to be
cash equivalents.
Financial Instruments
Financial instruments consist primarily of cash, accounts receivable, accounts
payable, accrued expenses and bank debt. At December 31, 1995, the Company
believes the fair value of these financial instruments approximates the
carrying amount.
Inventories
Inventories are stated at the lower of cost or market (net realizable value).
The last-in, first-out (LIFO) method was used for determining the cost of
approximately 62% of total inventories at December 31, 1995, 99% at December
31, 1994, and 99% at December 31, 1993. The cost for the remaining portion of
the inventories was determined using the first-in, first-out (FIFO) method.
Tooling and Pre-production Design and Engineering Costs
Tooling in process represents unique manufacturing equipment costs incurred,
which are partially reimbursed by customers, and the balance amortized over
the years the tools benefit. Pre-production design and engineering costs
incurred at the request of the customer, when significant, are capitalized and
amortized over the years the costs benefit. Tooling and pre-production design
and engineering costs that benefit future periods, less accumulated
amortization, are included in other assets.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Plant and equipment under
capital leases are stated at the present value of future minimum lease
payments. Depreciation is computed using both straight line and accelerated
methods over the estimated useful lives of the assets: 10 to 20 years for land
improvements, 10 to 40 years for buildings and 2 to 12 years for machinery and
equipment. Plant and equipment held under capital leases and leasehold
improvements are amortized straight line over the shorter of the lease term or
estimated useful life of the asset. The cost and accumulated depreciation of a
fully depreciated asset remain in the accounts. When a sale or abandonment
occurs, the cost and related accumulated depreciation are removed from the
accounts and the resulting gain or loss is reflected in earnings. Repairs and
maintenance are charged to earnings as incurred; renewals and betterments are
capitalized.
Goodwill and Other Intangibles
Goodwill arising from business acquisitions is amortized using the straight
line method over 25 years. Other intangibles, including patents, customer
lists, engineer drawings, trained workforce and trade name, are amortized over
their estimated lives ranging from 6 to 40 years. The Company reviews the
carrying value of goodwill for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. Based
on management's assessment of the future undiscounted operating cash flows of
the acquired businesses, the carrying value of goodwill and other intangibles
at December 31, 1995, has not been impaired. As of December 31, 1995, goodwill
was $11.2 million, net of accumulated amortization of $262,000. Intangibles
were $27.0 million and $2.7 million at December 31, 1995 and 1994,
respectively, net of accumulated amortization of $1.6 million and $263,000,
respectively.
(1)
Summary of Significant Accounting Policies (Cont.)
Income Taxes
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes." Under Statement
No. 109, income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
The adoption of Statement 109 did not have a material effect on the 1993
consolidated financial statements.
Pensions and Postretirement Benefits Other Than Pensions
Annual costs of the Company's pension and postretirement benefits other than
pensions are determined actuarially in accordance with Statement of Financial
Accounting Standards No. 87, "Employers' Accounting for Pensions," and No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions."
Translation of Foreign Currencies
Assets and liabilities of foreign subsidiaries are generally translated at
current exchange rates, and related
18
translation adjustments are reported as a component of shareholders'
equity. Also included are the effects of exchange rate changes on
intercompany transactions of a long-term nature. Income statement accounts
are translated at the average rates during the period.
Net Earnings Per Share
Net earnings per share is computed using the weighted average number of shares
of common stock and common stock equivalents outstanding during the year.
Commitments and Contingencies
Liabilities are recorded for loss contingencies, including environmental
remediation costs, arising from claims, assessments, and other sources when
the amount of the assessment and/or remediation cost is probable and can be
reasonably estimated.
Use of Estimates
Management of the Company has made a number of estimates and assumptions
related to the reporting of assets and liabilities and the disclosure of
contingent liabilities to prepare these financial statements in conformity
with generally accepted accounting principles. Actual results could differ
from those estimates.
Stock-Based Employee Compensation Arrangements
During 1995, the Financial Accounting Standards Board issued Statement No.
123, "Accounting for Stock-Based Compensation." Effective for fiscal years
beginning after December 15, 1995, Statement No. 123 encourages companies to
include the fair value of any stock awards issued as compensation expense
within the income statement. Companies who choose to remain with Accounting
Principles Board Opinion No. 25, using the intrinsic value method to account
for stock awards, must disclose pro forma net income and earnings per share as
if the fair value of the award had been included as compensation expense. The
Company anticipates remaining with the intrinsic value method.
Long-Lived Assets
On March 31, 1995, the Financial Accounting Standards Board issued Statement
No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed of." This Statement provides guidance for
recognition and measurement of impairment of long-lived assets, certain
identifiable intangibles and goodwill related both to assets to be held and
used and assets to be disposed of. The Company will adopt this Statement in
the first quarter of 1996 and anticipates the effect will be immaterial.
Reclassification
Certain amounts related to prior years have been reclassified to conform with
the 1995 presentation.
(2)
Acquisition of Bestop, Inc.
On June 8, 1995, the Company acquired the stock of Bestop, Inc. ("Bestop"),
the leading designer and manufacturer in North America of soft tops and
accessories for small sport utility vehicles, for $43.5 million in cash. The
acquisition was funded from additional long-term borrowings.
The acquisition was accounted for using the purchase method of accounting and
the results of operations of Bestop from the date of acquisition have been
included in the consolidated financial statements. The purchase price has been
allocated to the net assets acquired based on their estimated fair values with
the balance of the purchase price, $37.0 million, included in goodwill and
other intangibles. Goodwill is being amortized over 25 years and other
intangibles are being amortized over lives ranging from 6 to 40 years.
The following unaudited pro forma information presents a summary of
consolidated results of operations of the Company and Bestop as if the
acquisition had occurred at the beginning of 1994, with pro forma adjustments
to give effect to amortization of goodwill, interest expense on acquisition
debt and certain other adjustments together with related income tax effects.
<TABLE>
<CAPTION>
Years ended December 31,
------------------------
1995 1994
---- ----
(In thousands, except per share data)
<S> <C> <C>
Net sales $589,553 $620,837
Net earnings $ 4,352 $ 12,059
Net earnings per share $ 1.03 $ 2.85
</TABLE>
(3)
Inventories
Inventories consist of the following:
<TABLE>
<CAPTION>
1995 1994
---- ----
(In thousands)
<S> <C> <C>
Raw materials $14,459 $14,512
Work in process 7,338 6,834
Tooling in process 4,203 1,617
Finished goods 9,587 5,839
------- -------
Inventories at FIFO basis 35,587 28,802
Less adjustment of certain
inventories to a LIFO basis 9,505 9,458
------- -------
$26,082 $19,344
======= =======
</TABLE>
19
(4)
Property, Plant and Equipment
Property, plant and equipment consist of the following:
<TABLE>
<CAPTION>
1995 1994
---- ----
(In thousands)
<S> <C> <C>
Land and land improvements $ 3,392 $ 3,070
Buildings and building improvements 29,067 28,194
Machinery and equipment 144,385 118,885
Construction in process 854 602
-------- --------
177,698 150,751
Less accumulated depreciation 101,534 83,963
-------- --------
$ 76,164 $ 66,788
======== ========
</TABLE>
Amounts included above, which have been capitalized under capital lease
obligations are as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Machinery and equipment $ -- $6,182
Less accumulated depreciation -- 3,938
----- ------
$ -- 2,244
====== ======
</TABLE>
(5)
Other Assets
Other assets include investments in affiliated companies of 50% of the common
stock of Bloomington Normal Seating Company (BNSC) and 50% of the common stock
of Shanghai Lomason Automotive Seating Systems Company Limited (Shanghai).
BNSC manufactures seating systems while Shanghai supplies seat frames and
metal stampings. Each company has a single customer for which it produces its
products. At December 31, 1995, aggregate current assets of these companies
approximated $26.5 million, aggregate current liabilities approximated $20.7
million and aggregate noncurrent assets approximated $14.1 million. Affiliated
companies generated total net after tax earnings of $8.6 million in 1995.
Prior to 1995, the Company's investment in and equity in earnings of
affiliated companies was not significant.
(6)
Indebtedness
Long-term debt is summarized as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
(In thousands)
<S> <C> <C>
6.50% effective interest rate
revolving credit agreement $33,000 $16,000
9.95% term note, principal and interest
quarterly through May 31, 1998 4,688 6,563
7.95% term note, principal and interest
quarterly through October 31, 1999 10,000 12,500
7.80% term note, quarterly interest
only through July 1999, 25,000 --
principal and interest quarterly
through July 2003
Capital leases -- 1,163
Other 1,200 1,600
------- -------
Total long-term debt 73,888 37,826
Less current installments 4,775 5,938
------- -------
Long-term debt, excluding current
installments $69,113 $31,888
======= =======
</TABLE>
In 1994, the Company entered into an unsecured revolving credit agreement
aggregating $35.0 million with two banks. On June 8, 1995, this agreement was
amended to increase the aggregate funds available to $60.0 million. Interest
only payments are due at various dates at interest rates based on various
factors which are at or below the banks' prime rate. This credit agreement
expires on June 24, 1998, but may be extended by the Company for one
additional year.
All the above long-term debt is unsecured.
During 1993, the Company acquired intangible assets in exchange for a $2.0
million obligation, payable in five equal annual installments through 1998. At
December 31, 1995, the unpaid portion of this obligation was $1.2 million.
The bank notes contain restrictive covenants regarding consolidated working
capital and funded debt to capitalization. The Company was in compliance with
all such covenants at December 31, 1995.
The aggregate maturities of long-term debt are $4.8 million in 1996, $4.8
million in 1997, $36.8 million in 1998, $4.6 million in 1999 and $22.9 million
thereafter.
20
(7)
Income Taxes
Earnings (loss) before income taxes and cumulative effect of change in
accounting, as shown in the consolidated statements of earnings, consist of
the following:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
(In thousands)
<S> <C> <C> <C>
Domestic $2,624 $19,487 $(4,345)
Foreign 1,612 207 (1,673)
------ ------- -------
$4,236 $19,694 $(6,018)
====== ======= =======
</TABLE>
Components of income tax expense (benefit) are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
(In thousands)
<S> <C> <C> <C>
Current:
Federal $(4,635) $ 4,619 $ 3,438
State 442 231 343
Foreign 443 -- (2)
------- ------- -------
(3,750) 4,850 3,779
------- ------- -------
Deferred:
Federal 3,852 2,100 (4,969)
State 379 234 (580)
Foreign (436) 24 (837)
------- ------- -------
3,795 2,358 (6,386)
------- ------- -------
$ 45 $ 7,208 $(2,607)
======= ======= =======
</TABLE>
A reconciliation of the "expected" income tax expense (benefit) based on the
federal corporate income tax rate of 35% (34% in 1993) to the actual income
tax expense (benefit) is as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
(In thousands)
<S> <C> <C> <C>
Expected income tax expense
(benefit) $ 1,483 $6,893 $(2,046)
State income tax expense
(benefit), net of
federal income tax benefit 534 302 (156)
Foreign taxes 384 -- --
Research and development
tax credits -- (200) (332)
Foreign tax rate differential (250) -- (268)
Dividend received deduction (1,235) -- --
Change in valuation allowance (690) -- --
Other items, net (181) 213 195
------- ------ -------
Actual income tax expense
(benefit) $ 45 $7,208 $(2,607)
======= ====== ========
</TABLE>
(7)
Income Taxes (Cont.)
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December
31, 1995 and 1994, are as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
(In thousands)
<S> <C> <C>
Deferred tax assets:
Plant and equipment, due to difference
in depreciation $ 1,281 $ 801
Accrued postretirement benefits deductible
for tax purposes when paid 4,383 3,688
Other expenses deductible for
tax purposes when paid 3,346 2,203
Accrued plant closing costs 1,407 3,700
Foreign net operating loss carryforward 756 4,580
-------- -------
Gross deferred assets 11,173 14,972
Less valuation allowance 773 1,463
-------- -------
Net deferred tax assets 10,400 13,509
-------- -------
Deferred tax liabilities:
Plant and equipment, due to difference
in depreciation 10,651 7,644
Intangible assets resulting from
acquisition of subsidiary 10,119 --
Other items, net 1,382 3,673
-------- -------
Gross deferred tax liabilities 22,152 11,317
-------- -------
Net deferred tax (liabilities) assets $(11,752) $ 2,192
======== =======
</TABLE>
The valuation allowance for deferred tax assets as of January 1, 1995 and 1994
was $773,000 and $1,463,000, respectively. The net change in the total
valuation allowance for the year ended December 31, 1995 was a decrease of
$690,000, which resulted from the use of foreign net operating loss
carryforwards. In assessing the realizability of deferred tax assets,
management considers whether it is more likely than not that some portion or
all of the deferred tax assets will not be realized. The ultimate realization
of deferred tax assets is dependent upon the generation of future taxable
income during the periods in which those temporary differences become
deductible. Management considers the scheduled reversal of deferred tax
liabilities, projected future taxable income, and tax planning strategies in
making this assessment. Based upon the level of historical taxable income and
projections for future taxable income over the periods which the deferred tax
assets are deductible, management believes it is more likely than not the
Company will realize the benefits of these deductible differences, net of the
existing valuation allowances at Decembr 31, 1995.
21
(8)
Industry Segment
The Company's operations are within the following industry segments:
automotive products and other segments, which include material handling
equipment and specialized truck bodies and trailers. A summary of certain
segment information and a reconciliation to the related consolidated financial
statement amounts follow:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
(In thousands)
<S> <C> <C> <C>
Sales to customers
Automotive products $521,569 $530,866 $397,356
All other segments 39,618 35,953 27,487
-------- -------- --------
$561,187 $566,819 $424,843
======== ======== ========
Operating profit (loss)
Automotive products $ 9,122 $ 23,454 $ (1,601)
All other segments 2,016 2,548 1,457
-------- -------- --------
11,138 26,002 (144)
Corporate expenses (3,214) (4,650) (3,619)
-------- -------- --------
Total operating profit
(loss) $ 7,924 $ 21,352 $ (3,763)
======== ======== ========
Identifiable assets
Automotive products $238,380 $183,358 $149,773
All other segments 15,376 14,617 12,033
-------- -------- --------
253,756 197,975 161,806
Corporate assets 15,133 13,589 12,478
-------- -------- --------
Total assets $268,889 $211,564 $174,284
======== ======== ========
</TABLE>
Automotive product sales are comprised 85% of fully trimmed seating, seat
frame assemblies and mechanisms, 6% of soft tops and accessories for the small
sport utility vehicle and 9% of decorative moldings and energy management
systems. During the year, the Company announced its intention to allow the
decorative molding operations to discontinue in 1996. Management does not
anticipate a significant loss on the ultimate disposal of the related assets.
This product line represented $50.4 million, $73.7 million and $62.9 million
of sales and ($4.8) million, $4.0 million and $4.0 million of pre-tax earnings
(loss) for the years ended December 31, 1995, 1994 and 1993, respectively.
Sales and accounts receivable are classified by ultimate customer and may have
been sold through other Tier One suppliers.
Automotive product sales and trade accounts receivable consist of the
following components:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Automotive product sales
Chrysler 25% 39% 51%
Ford Motor 48 40 25
General Motors 12 14 15
All other 15 7 9
--- --- ---
Total automotive sales 100% 100% 100%
=== === ===
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Automotive trade accounts
receivable
Chrysler 35% 34%
Ford Motor 43 43
General Motors 8 12
All other 14 11
--- ---
Total automotive trade
accounts receivable 100% 100%
=== ===
</TABLE>
Depreciation expense and capital expenditures of the automotive products
segment were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
(In thousands)
<S> <C> <C> <C>
Depreciation expense $11,815 $11,294 $10,700
Capital expenditures $15,273 $12,934 $18,200
</TABLE>
Identifiable assets are those assets used in, or resulting from, the operation
of a segment. Corporate assets, principally cash, administrative offices and
other assets, are not classified as identifiable assets.
(9)
Pension Benefits
The Company's domestic associates are eligible to participate in employee
401(k) savings plans, some of which provide for matching. The Company's
matching expense for the plans in 1995 was $768,000.
The Company also has defined contribution pension plans covering the majority
of its salaried and hourly domestic associates. The benefits are based on
either years of service and the associate's compensation during the last five
years of employment, or a fixed-dollar rate for each year of credited service
up to a maximum of forty years. The Company's policy is to fund pension costs
accrued.
22
The following table sets forth the funded status of the plans and amounts
recognized in the Company's consolidated balance sheets at December 31, 1995
and 1994:
<TABLE>
<CAPTION>
1995 1994
---- ----
(In thousands)
<S> <C> <C>
Actuarial present value of benefit
obligations:
Vested benefit obligations $37,202 $29,623
======= =======
Accumulated benefit obligations $38,157 $30,325
======= =======
Projected benefit obligations $44,565 $35,268
Plan assets at fair market value 49,754 39,100
------- -------
Plan assets in excess of projected
benefit obligations 5,189 3,832
Unamortized transition assets (2,294) (2,629)
Unamortized prior service cost 1,940 2,073
Unrecognized net gain (7,747) (5,848)
------- -------
Accrued pension cost included
in the consolidated balance sheets $ 2,912 $ 2,572
======= =======
</TABLE>
Assets in the plans consist mainly of investments in common stocks, private
sector bonds and federal government obligations.
The components of net pension costs for the years ended December 31, 1995,
1994 and 1993 were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
(In thousands)
<S> <C> <C> <C>
Service cost $ 1,930 $ 2,376 $ 2,033
Interest cost 2,823 2,663 2,469
Actual (gain) loss on assets (11,080) 2,081 300
Net amortization
and deferral 7,645 (5,716) (4,384)
-------- ------- -------
Net pension cost $ 1,318 $ 1,404 $ 418
======== ======= =======
</TABLE>
Assumptions used in accounting for the pension plans as of December 31 were as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Discount rate 7.25% 8.25% 7.25%
Rate of increase in future
compensation levels 4.00% 4.00% 4.00%
Expected long-term rate of
return on assets 9.00% 8.00% 8.00%
</TABLE>
(10)
Other Postretirement Benefits
In addition to providing pension benefits, the Company sponsors two
postretirement benefit plans for substantially all salaried associates and
their dependents. One plan provides medical benefits and the other plan
provides life insurance benefits. The postretirement medical plan is
contributory until the retiree turns age 65, or if the retiree is at least age
62 and retired with 15 or more years of service. The accounting for this plan
is consistent with the Company's expressed intent to modify its future
contribution policy such that the Company's contributions are capped at three
times the 1993 cost levels. The life insurance plan provides death benefits
that vary based on salary level at retirement.
The Company adopted Statement of Financial Accounting Standards No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pension," as of
January 1, 1993. The effect of adopting Statement 106 for the year ended
December 31, 1993 was a decrease on net earnings of approximately $4.0 million
which included an increase in the pre-tax net periodic postretirement benefit
cost of approximately $559,000.
The following table presents the funded status of these obligations reconciled
with amounts recognized in the Company's consolidated balance sheets at
December 31, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
---- ----
(In thousands)
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $ 4,934 $3,680
Fully eligible active salaried associates 546 231
Other active associates 5,790 4,456
------- ------
11,270 8,367
Plan assets at fair value, primarily insurance
contracts 491 807
------- ------
Accumulated postretirement benefit obligation in
excess of plan assets 10,779 7,560
Unrecognized net loss (2,181) (26)
------- ------
Accrued postretirement benefit cost included
in the consolidated balance sheets $ 8,598 $7,534
======= ======
</TABLE>
23
Net periodic postretirement benefit cost for 1995, 1994 and 1993 includes
the following components:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
(In thousands)
<S> <C> <C> <C>
Service cost $ 409 $ 456 $341
Interest cost 693 598 572
Actual return on assets (41) (60) (59)
Net amortization and deferral 3 19 --
------ ------ ----
Net periodic postretirement benefit cost $1,064 $1,013 $854
====== ====== ====
</TABLE>
(10)
Other Postretirement Benefits (Cont.)
For measurement purposes, the annual percent rate of increase in the per
capita cost of health care benefits (i.e. health care cost trend rate) for
1995 was assumed to vary by age category and by type of health care service.
For benefits provided to participants under age 65, the 1995 trend was assumed
to be 14.0% for prescriptions drugs and 13.2% for all other costs. These rates
were assumed to decrease gradually to approximately 6.0% over the next 15
years and remain at that level thereafter. The health care cost trend rate
assumption has a significant effect on the amounts reported. For example,
increasing the assumed health care cost trend rates by one percentage point in
each year would increase the accumulated postretirement benefit obligation as
of December 31, 1995 by 1.0% and the aggregate of the service and interest
cost components of net periodic postretirement benefit cost for the year ended
December 31, 1995 by .7%.
The unrecognized net loss is being amortized over the average remaining
service period of active plan participants (21 years).
Assumptions used in accounting for other postretirement benefits as of
December 31 were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Discount rate 7.25% 8.25% 7.25%
Rate of increase in future
compensation levels 4.00% 4.00% 4.00%
Expected long-term rate of
return on assets 9.00% 8.00% 8.00%
</TABLE>
(11)
Provision for Plant Closings
During the fourth quarter of 1993, the Company recorded a charge of $15.0
million in connection with management's decision to close certain automotive
plants. This resulted in an after tax charge of $9.6 million or $2.28 per
share. $5.0 million of this charge was immediately utilized for the
devaluation of building and equipment. At December 31, the components of the
accrual consist of the following:
<TABLE>
<CAPTION>
1995 1994
---- ----
(In thousands)
<S> <C> <C>
Associates severance and benefit costs $161 $1,000
Facility maintenance costs and other 573 3,000
---- ------
$734 $4,000
==== ======
</TABLE>
During 1994, $850,000 was charged to facility maintenance costs and other, and
$800,000 for the payment of associate severance and benefit costs. These
severance payments represented the majority of the 12% expected workforce
reduction. In addition, $1.2 million of associate severance and benefits costs
and $650,000 of facilities, maintenance and other costs were taken into income
during the third and fourth quarters of 1994, respectively. Furthermore, in
compliance with current guidance, site restoration and other environmental
exit cost of $2.5 million were reclassified from the provision for plant
closing accrual to other accrued liabilities during the fourth quarter of
1994.
During 1995, the Company completed its workforce reduction, resulting in a
charge of $839,000 against the associate severance and benefits costs accrual.
The $161,000 balance represents management's estimate of remaining workers'
compensation and medical claims. Facility maintenance costs and other charges
to the accrual approximated $2.1 million. In addition, $300,000 resulted in a
reduction of expense in the first quarter associated with plant closings. The
cash payments for remaining costs are expected to be made over the next two
years.
Selected financial information for these automotive facilities for the years
ended December 31, were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
(In thousands)
<S> <C> <C> <C>
Sales $ -- $34,799 $ 71,754
Pre-tax earnings (loss) $ -- $ 359 $(15,597)
</TABLE>
(12)
Environmental Matters
The Company is involved in proceedings related to environmental matters under
the Comprehensive Environmental Response Compensation and Liability Act
(Superfund) and similar state laws at approximately three sites. The Company
is one of several potentially responsible parties in one case. As of December
31, 1995 and 1994, the Company has recorded an accrual of $1.7 million and
$3.5 million, respectively, for estimates of future clean-up costs in
connection with its internal site assessment and compliance program.
Estimates of future liability are based on an evaluation of currently
available facts regarding each individual site and consider factors including
existing
24
technology, presently enacted laws and regulations, and prior Company
experience in remediation of contaminated sites. Changes in environmental
regulations and discovery of additional information concerning these sites and
other sites could result in future expenses that are greater than the accrued
liability. Management believes that these matters will not have a material
adverse effect upon its future financial position or results of operations.
(13)
Stock Option Plans
Under the Company's 1990 Stock Option Plan, 225,000 shares of the Company's
common stock have been reserved for grants to officers and key employees at
prices which are not less than the fair market value on the date of the grant.
Stock options outstanding of 6,375 at December 31, 1995, under the 1982
Incentive Stock Option Plan are exercisable at an option price of $17.50 per
share. This Plan expired in February, 1992 and, accordingly, no additional
options are available for grant. Stock options outstanding of 73,000 at
December 31, 1995, under the 1990 Plan are exercisable at a weighted option
price of $18.63 per share. Options granted, but not exercised, expire within
five years from the date of the grant. Transactions for the years ended
December 31, 1995, 1994 and 1993, were as follows:
<TABLE>
<CAPTION>
Number of Shares
----------------------------
1995 1994 1993
----- ---- ----
<S> <C> <C> <C>
Outstanding at beginning of year 100,375 66,175 100,075
Granted -- 38,000 --
Exercised (15,000) (1,500) (32,275)
Canceled (6,000) (2,300) (1,625)
------- ------- -------
Outstanding at end of year 79,375 100,375 66,175
======= ======= =======
Available for grant at end of year 47,350 42,850 78,550
======= ======= =======
</TABLE>
Independent Auditors' Report
To the Shareholders and Board of Directors of Douglas & Lomason Company:
We have audited the accompanying consolidated balance sheets of Douglas &
Lomason Company and subsidiaries as of December 31, 1995 and 1994, and the
related consolidated statements of earnings, shareholders' equity and cash
flows for each of the years in the three-year period ended December 31, 1995.
These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Douglas &
Lomason Company and subsidiaries at December 31, 1995 and 1994, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1995, in conformity with generally
accepted accounting principles.
As discussed in note 1 to the consolidated financial statements, the Company
changed its method of accounting for income taxes in 1993 to adopt the
provisions of the Financial Accounting Standards Board's Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes." As
discussed in note 10 to the consolidated financial statements, the Company also
adopted the provisions of the Financial Accounting Standards Board's Statement
of Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions" in 1993.
/s/ KPMG Peat Marwick LLP
Detroit, Michigan
January 29, 1996
25
<PAGE>
<TABLE>
<CAPTION>
Selected Financial and Other Data
(In thousands, except per share and other data)
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
For the Year
Net sales $ 561,187 $ 566,819 $ 424,843 $ 391,178 $ 375,618
Cost of sales 527,589 523,577 393,935 358,191 342,202
Gross profit 33,598 43,242 30,908 32,987 33,416
Capital additions 18,444 14,629 20,460 16,744 6,098
Depreciation expense 13,346 13,212 12,002 10,432 10,611
Interest expense 4,971 2,620 2,706 3,530 5,416
Income tax expense
(benefit) 45 7,208 (2,607) 3,823 4,650
Earnings (loss) before
cumulative effect for
change in accounting
principle 4,191 12,486 (3,411) 8,770 7,235
Net earnings (loss) 4,191 12,486 (7,168) 8,770 7,235
--------- --------- --------- --------- ---------
At Year End
Total assets $ 268,889 $ 211,564 $ 174,283 $ 156,351 $ 139,192
Working capital 46,054 50,313 36,205 50,633 45,723
Property, plant and
equipment less
accumulated
depreciation 76,164 66,788 69,110 66,022 60,070
Long-term debt 69,113 31,888 21,826 25,655 46,486
Shareholders' equity 86,347 85,729 77,674 85,881 54,204
--------- --------- --------- --------- ---------
Per Share Data
Book value $ 20.35 $ 20.27 $ 18.37 $ 20.47 $ 17.21
Net earnings (loss) per
share .99 2.95 (1.70) 2.25 2.29
Dividends .40 .40 .40 .30 .14
--------- --------- --------- --------- ---------
Other Data
Number of associates 5,912 6,039 5,697 5,817 5,562
Number of shareholders 726 757 806 846 858
Weighted average number
of common and common
equivalent shares
outstanding 4,241,216 4,228,120 4,214,372 3,890,115 3,154,365
--------- --------- --------- --------- ---------
<FN>
Per share data and outstanding shares for 1991 and prior have been
retroactively adjusted to reflect the 1992 3-for-2 stock split distributed
April 2, 1992.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Selected Financial And Other Data
(In thousands, except per share and other data)
1990 1989 1988 1987 1986
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
For the Year
Net sales $ 418,118 $ 424,926 $ 325,498 $ 296,723 $ 286,536
Cost of sales 385,302 406,470 313,943 270,824 267,600
Gross profit 32,816 18,456 11,555 25,899 18,936
Capital additions 8,749 16,708 26,805 13,113 11,939
Depreciation expense 11,666 11,169 7,636 5,374 4,825
Interest expense 8,028 8,322 3,787 2,255 2,459
Income tax expense
(benefit) 3,102 (2,296) (3,692) 4,838 2,669
Earnings (loss) before
cumulative effect for
change in accounting
principle 4,964 (3,372) (4,629) 6,239 3,193
Net earnings (loss) 4,964 (3,372) (3,969) 6,239 3,193
--------- --------- --------- --------- ---------
At Year End
Total assets $ 148,820 $ 169,975 $ 161,916 $ 118,480 $ 99,631
Working capital 52,689 31,123 33,025 38,103 34,730
Property, plant and
equipment less
accumulated
depreciation 64,726 67,886 62,525 43,361 35,631
Long-term debt 67,627 56,253 48,911 29,499 28,679
Shareholders' equity 47,382 41,408 45,096 51,838 42,441
--------- --------- --------- --------- ---------
Per Share Data
Book value $ 15.05 $ 13.68 $ 15.09 $ 16.71 $ 14.69
Net earnings (loss) per
share 1.57 (1.12) (1.31) 2.05 1.11
Dividends .07 .25 .33 .33 .33
--------- --------- --------- --------- ---------
Other Data
Number of associates 5,424 6,285 6,076 3,994 3,612
Number of shareholders 887 903 891 842 702
Weighted average number
of common and common
equivalent shares
outstanding 3,159,311 3,018,002 3,033,798 3,046,578 2,880,246
--------- --------- --------- --------- ---------
<FN>
Per share data and outstanding shares for 1991 and prior have been
retroactively adjusted to reflect the 1992 3-for-2 stock split distributed
April 2, 1992.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Selected Financial And Other Data
(In thousands, except per share and other data)
1985
----
<S> <C>
For the Year
Net sales $ 266,626
Cost of sales 243,669
Gross profit 22,957
Capital additions 11,127
Depreciation expense 3,725
Interest expense 2,385
Income tax expense
(benefit) 4,846
Earnings (loss) before
cumulative effect
of change in accounting
principle 6,651
Net earnings (loss) 6,651
---------
At Year End
Total assets $ 92,331
Working capital 38,845
Property, plant and
equipment less
accumulated
depreciation 28,524
Long-term debt 24,450
Shareholders' equity 39,882
---------
Per Share Data
Book value $ 13.97
Net earnings (loss) per
share 2.33
Dividends .27
---------
Other Data
Number of associates 3,581
Number of shareholders 630
Weighted average number
of common and common
equivalent shares
outstanding 2,849,163
---------
<FN>
Per share data and outstanding shares for 1991 and prior have been
retroactively adjusted to reflect the 1992 3-for-2 stock split distributed
April 2, 1992.
</TABLE>
26/27 (2-page spread)
<PAGE>
<TABLE>
<CAPTION>
Quarterly Financial Summary
(In thousands, except per share data; unaudited)
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
------- ------- ------- ------- -----
<S> <C> <C> <C> <C> <C>
1995
Net sales $155,058 $130,602 $131,264 $144,263 $561,187
Gross profit 11,298 5,471 6,759 10,070 33,598
Earnings (loss) before
income taxes 4,756 (1,496) (1,665) 2,641 4,236
Net earnings (loss) 3,381 (456) (800) 2,066 4,191
Net earnings (loss)
per share .80 (.11) (.19) .49 .99
</TABLE>
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
------- ------- ------- ------- -----
<S> <C> <C> <C> <C> <C>
1994
Net sales $123,466 $123,253 $137,680 $182,420 $566,819
Gross profit 11,156 9,671 5,654 16,761 43,242
Earnings before
income taxes 5,300 3,901 449 10,044 19,694
Net earnings 3,315 2,511 234 6,426 12,486
Net earnings
per share .78 .60 .05 1.52 2.95
</TABLE>
<TABLE>
<CAPTION>
Stock Prices and Cash Dividends
1995 1994
- ------------------------------- -------------------------------
Market Price Market Price
Quarter High Low Dividend Quarter High Low Dividend
- ------- ---- --- -------- ------- ---- --- --------
<S> <C> <C> <C> <C> <C> <C> <C>
First 19 15-1/2 $.10 First 20-1/2 15 $.10
Second 18 14 .10 Second 19-1/2 17-3/4 .10
Third 15-3/4 11-1/2 .10 Third 20-1/2 14-3/4 .10
Fourth 12-3/4 8-3/4 .10 Fourth 18 14-1/2 .10
---- ----
$.40 $.40
==== ====
</TABLE>
27
<PAGE>
SHAREHOLDER INFORMATION
Stock Market Information at December 31, 1995
Symbol: DOUG
Market: The Nasdaq Stock Market
National Market System
Shares outstanding: 4,243,021
16% owned by officers and directors
49% owned by institutions
Shareholders: 726 shareholders
Market Makers: First of Michigan Corporation
Herzog, Heine, Geduld, Inc.
Mayer & Schweitzer, Inc.
Neuberger & Berman
Sherwood Securities Corp.
Annual Meeting
The Annual Meeting of Shareholders will be held on Friday, April, 26, 1996, at
11:00 a.m. EDT at The Hotel Baronette in Novi, MI. All shareholders are
cordially invited to attend.
Dividends
The Company has paid a cash dividend each year since 1957. Subject to approval
of the Board of Directors, dividends are customarily paid on the Company's
common stock on or about March 31, June 30, September 30 and December 31.
Form 10-K and Other Financial Publications
The form 10-K for the year ended December 31, 1995, as well as other financial
publications of the Company, may be obtained without charge. Requests should
be directed to Patricia L. Shelton, Assistant Secretary, at the corporate
offices.
Information may also be obtained via facsimile by dialing 1-800-PRO-INFO and
entering the Company stock symbol DOUG or company code 190.
Investor Relations Contact
Shareholders and prospective investors may contact the Company with questions
or requests for additional information. Inquiries should be directed to
James J. Hoey, Senior Vice President and Chief Financial Officer, at the
corporate offices.
Shareholder Assistance
Inquiries related to shareholder records, change of name, address, or
ownership of stock, and lost or stolen stock certificates should be directed
to the Transfer Agent and Registrar:
State Street Bank and Trust Company
P.O. Box 8200
Boston, MA 02266-8200
(800) 257-1770
Elimination of Duplicate Material
If you receive duplicate mailings of quarterly and annual reports at one
address, you may have multiple shareholder accounts. You can consolidate your
multiple accounts into a single, more convenient account by contacting the
Transfer Agent shown above. In addition, if more than one member of your
household is receiving shareholder materials, you can eliminate the duplicate
mailings by contacting the Transfer Agent.
Independent Auditors
KPMG Peat Marwick LLP, Detroit, MI
Legal Counsel
Dickinson, Wright, Moon, Van Dusen & Freeman,
Detroit, MI
Smith, Currie & Hancock, Atlanta, GA
Trademarks
This report makes reference to the Jeep(R) Wrangler. Jeep(R) is a registered
trademark of Chrysler Corporation.
28
<PAGE>
APPENDIX
GRAPHIC AND IMAGE MATERIAL IN THIS DOCUMENT
(as required pursuant to Rule 304(a) of Regulation S-T)
The following is a narrative description of the graphic or image material
which appears in Exhibit 13 to the Registrant's Annual Report on Form 10-K.
Exhibit 13 contains pages extracted from the Registrant's 1995 Annual Report to
Shareholders which are incorporated by reference into the Form 10-K.
Page No.
In 1995
Annual
Report Description
- ------- -----------
14 Two bar charts; one showing a five-year range of Total Assets, and
the other showing a five-year range of Long-Term Debt. Fully
described in position in body of document.
15 Bar chart showing a five-year range of Interest Expense. Fully
described in position in body of document.
16 Bar chart showing a five-year range of Shareholders' Equity.
Fully described in position in body of document.
17 Bar chart showing a five-year range of Capital Additions. Fully
described in position in body of document.
Exhibit 21
<TABLE>
<CAPTION>
SUBSIDIARIES OF THE REGISTRANT
DOUGLAS & LOMASON COMPANY
Year Jurisdiction of Percent
Name Acquired Incorporation Owned
- ---- -------- --------------- -------
<S> <C> <C> <C>
Muscogee Warehouse and State of
Forwarding Company 1964 Georgia, USA 100
Douglas y Lomason de Ciudad Acuna,
Mexico S.A. de C.V. 1987 Mexico 100
Douglas y Lomason de Saltillo,
Coahuila S.A. de C.V. 1992 Mexico 100
Bestop, Inc. 1995 State of
Delaware, USA 100
</TABLE>
Exhibit 23
[Letterhead of KPMG Peat Marwick LLP]
KPMG Peat Marwick LLP
Suite 1200
150 West Jefferson
Detroit, MI 48226-4429
The Board of Directors and Shareholders
Douglas & Lomason Company:
We consent to incorporation by reference in the Registration Statement (No.
33-36359) on the Form S-8 of Douglas & Lomason Company of our report dated
January 29, 1996, relating to the consolidated balance sheets of Douglas &
Lomason Company and subsidiaries as of December 31, 1995 and 1994, and the
related consolidated statements of earnings, shareholders' equity, and cash
flows for each of the years in the three-year period ended December 31, 1995,
and the related schedule, which report appears in the December 31, 1995,
annual report on Form 10-K of Douglas & Lomason Company. Our report refers to
the changes in accounting for income taxes and postretirement benefits other
than pensions in 1993.
/s/ KPMG PEAT MARWICK LLP
Detroit, Michigan
March 27, 1996
Member Firm of
Klynvald Peat Marwick Goerdeler
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