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, 1996
( ) 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 15, 1996
Common stock, $2 par value 4,243,021
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<TABLE>
<CAPTION>
DOUGLAS & LOMASON COMPANY
Consolidated Condensed Balance Sheets
(in thousands)
March 31 December 31
1996 1995
-------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 518 $ 4,587
Accounts receivable 104,149 93,486
Inventories
Raw materials 11,970 10,562
Work in process and finished goods 17,114 15,520
-------- --------
29,084 26,082
Prepaid expenses and other
current assets 5,399 7,618
-------- --------
139,150 131,773
Property, plant and equipment, net 75,558 76,164
Intangibles 37,301 38,179
Other non-current assets 23,027 22,773
-------- --------
Total assets $275,036 $268,889
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 4,963 $ 4,775
Accounts payable and accrued expenses 74,470 80,944
------- -------
Total current liabilities 79,433 85,719
Long-term debt, less current maturities 78,986 69,113
Postretirement benefits other than
pensions 8,906 8,598
Other liabilities and deferred credits 18,722 19,112
Shareholders' equity
Preferred stock
No par value, authorized 500,000
shares, issued - none
Common stock
Par value $2 per share authorized
10,000,000 shares; issued and
outstanding 4,243,021 shares in
1996 and 1995 8,486 8,486
Other capital 28,088 28,088
Retained earnings 57,145 54,543
Foreign currency translation adjustment (4,730) (4,770)
------- -------
Total shareholders' equity 88,989 86,347
------- -------
Total liabilities and
shareholders' equity $275,036 $268,889
======= =======
</TABLE>
2
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<TABLE>
<CAPTION>
DOUGLAS & LOMASON COMPANY
Consolidated Condensed Statements of Income
(in thousands, except per share data)
Three Months Ended
March 31
------------------------
1996 1995
---------- ----------
<S> <C> <C>
Net sales $ 142,831 $ 155,058
Cost of sales 131,586 143,760
---------- ----------
Gross profit 11,245 11,298
Selling, general and
administrative expense 7,105 6,062
---------- ----------
Operating income 4,140 5,236
Other income (expenses):
Interest expense, net (1,564) (696)
Interest income and other 1,066 216
---------- ----------
(498) (480)
Earnings before provision
for income taxes 3,642 4,756
Income tax expenses 615 1,375
---------- ----------
Net earnings $ 3,027 $ 3,381
========== ==========
Net earnings per share $ .71 $ .80
========== ==========
Weighted average number of
shares 4,243,021 4,235,103
========== ==========
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
DOUGLAS & LOMASON COMPANY
Consolidated Condensed Statements of Cash Flows
(in thousands)
Three Months Ended
March 31
----------------------
1996 1995
--------- -------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 3,027 $ 3,381
Depreciation 3,139 3,011
Postretirement benefits other than pensions
Changes in operating assets and liabilities:
Decrease (increase) in accounts
receivable (11,007) 4,783
Increase in inventories (3,002) (476)
Decrease (increase) in prepaid expenses
and other assets 2,843 (2,247)
Decrease in accounts payable,
and accrued expenses (6,022) (9,533)
Decrease in other liabilities (82) (34)
-------- -------
Net cash provided (used) by operating
activities (11,104) (1,115)
-------- -------
Cash flows from investing activities:
Proceeds from the sale of property,
plant and equipment -- 61
Acquisition of property, plant and
equipment (2,585) (3,416)
-------- -------
Net cash used by investing activities (2,585) (3,355)
-------- -------
Cash flows from financing activities:
Proceeds from long-term borrowings, net 11,555 2,000
Repayment of long-term debt (1,494) (1,774)
Proceeds from exercised stock options, net --- 122
Dividends paid (425) (424)
-------- -------
Net cash provided (used)
by financing activities 9,636 (76)
-------- -------
Effect of translation on cash (16) (670)
-------- -------
Decrease in cash (4,069) (5,216)
Cash at beginning of year 4,587 6,532
-------- -------
Cash at end of quarter $ 518 $ 1,316
======== =======
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4
<PAGE>
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, 1996 and 1995, 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 June 8, 1995, the Company acquired the stock of Bestop, Inc.
("Bestop"). Bestop is the leading designer and manufacturer in North
America of soft tops and accessories for small sport utility vehicles.
Bestop sells its products domestically and internationally to original
equipment manufacturing (OEM) companies and in the aftermarket. The
purchase agreement required a purchase price of approximately $43,952,000.
The acquisition has been accounted for in accordance with the purchase
method of accounting.
Had the acquisition of Bestop, Inc. occurred as of January 1, 1995,
revenues, net income and earnings per share would have been as follows:
Three Months Ended
March 31
------------------
(in 000's except for per share data)
1996 1995
---- ----
Revenues $142,831 $170,917
Net Earnings $ 3,027 $ 3,238
Net Earnings Per Share $ .71 $ .76
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
At March 31, 1996, the Company had working capital of $59.7 million and
available borrowings of $16.0 million on a $60.0 million revolver credit
agreement with two banks. The increase of $10.7 million at March 31, 1996 in
accounts receivable compared to December of 1995 is attributable to the
significantly higher sales in March of 1996.
Funds from borrowings, $10.0 million, and cash of $4.0 million provided the
necessary cash for operations of $11.1 and capital expenditures of $2.6
million during the first quarter of 1996.
Capital expenditures in 1996 are anticipated to be approximately $15.0
million.
Results of Operations
Net Sales
Net sales for the three months ended March 31, 1996 of $142.8 million
decreased $12.2 million from net sales of $155.0 million for the three months
ended March 31, 1995. This decrease is primarily attributable to the well
publicized labor dispute at General Motors and Ford's two week shutdown in
January 1996 of its Contour and Mystique car lines.
Cost of Sales
The cost of sales as a percentage of sales decreased to 92.1% for the three
month period ended March 31, 1996, compared to 92.7% in the same period of
1995. This improvement in gross margin was generated principally by continuing
value analysis and value engineering efforts to reduce costs by implementing
new processes and techniques.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the three month period ended
March 31, 1996, increased to $7.1 million, an increase of $1.0 million from
the 1995 first quarter expenses of $6.1 million. The consolidation of selling,
general and administrative expenses of Bestop, Inc. for the 1996 first quarter
was $1.8 million, which accounts for the entire increase.
Interest Expense
Interest expense in the first quarter of 1996 of $1.6 million increased $.9
million from the same quarter of 1995. Higher debt levels in 1996 of
approximately $46.0 million, primarily related to the Bestop acquisition is
the principal explanation for the increase in interest expense.
Net Earnings
Net earnings of $3.0 million ($.71 per share) were down $.4 million compared
to the $3.4 million earnings ($.80 per share) in the first quarter of 1995.
This decrease is attributable to the lower sales levels in the first three
months of 1996.
Financial Condition
The balance sheet remains strong at the end of the first quarter of 1996. The
current ratio was 1.8 to 1 and the ratio of debt to total capitalization was
.46 to 1.0 at March 31, 1996.
6
<PAGE>
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 1996.
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, 1996 /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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<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> $ 518
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0
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<CGS> 131586
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<OTHER-EXPENSES> 7105
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