<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
F O R M 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 2, 1994
-------------
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 1-313
-------
T H E L A M S O N & S E S S I O N S C O.
- - ------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Ohio 34-0349210
- - -------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
25701 Science Park Drive
Cleveland, Ohio 44122-9803
- - -------------------------------- ---------------------------------
(Address of principal executive offices) (Zip Code)
216/464-3400
----------------------------------------------------
(Registrant's telephone number, including area code)
- - ------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report.)
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
----- -----
APPLICABLE ONLY TO ISSUERS INVOLVED
IN BANKRUPTCY PROCEEDINGS DURING
THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes No
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of April 30, 1994 the Registrant had outstanding 13,227,884 common shares.
L1168 (05/13/94) - 1 -
<PAGE> 2
PART I
ITEM 1 - FINANCIAL STATEMENTS
<TABLE>
CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED)
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
<CAPTION>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS.)
FIRST QUARTER ENDED
------------------------------------------
1994 1993
- - -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
NET SALES $ 63,889 $ 57,692
COST OF PRODUCTS SOLD 53,622 48,750
------------------- ----------------
GROSS MARGIN 10,267 8,942
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 9,158 8,953
EARTHQUAKE EXPENSES 520
------------------- ----------------
OPERATING EARNINGS (LOSS) 589 (11)
INTEREST 1,549 1,459
------------------- ----------------
EARNINGS (LOSS) FROM CONTINUING OPERATIONS (960) (1,470)
LOSS ON DISCONTINUED OPERATIONS (NOTE C) (9,930) (1,075)
------------------- ----------------
NET EARNINGS (LOSS) $ (10,890) $ (2,545)
=================== ===============
EARNINGS (LOSS) PER COMMON SHARE
--------------------------------
CONTINUING OPERATIONS $ (0.07) $ (0.11)
DISCONTINUED OPERATIONS (0.75) (0.08)
------------------- ----------------
$ (0.82) $ (0.19)
=================== ===============
AVERAGE COMMON SHARES 13,225 13,205
=================== ===============
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
</TABLE>
L1168 (05/13/94) - 2 -
<PAGE> 3
<TABLE>
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
<CAPTION>
(DOLLARS IN THOUSANDS)
FIRST FIRST
QUARTER QUARTER
ENDED YEAR END ENDED
--------------------------------------------------------
1994 1993 1993
--------------------------------------------------------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 242 $ 1,188 $ 354
Accounts receivable 40,909 34,729 36,307
Inventories:
Finished goods and work-in-process 41,380 39,317 46,314
Raw materials and supplies 3,619 4,031 3,866
--------------- ------------- --------------
44,999 43,348 50,180
Prepaid expenses and other 4,545 4,822 4,332
--------------- ------------- --------------
TOTAL CURRENT ASSETS 90,695 84,087 91,173
OTHER ASSETS 7,871 11,086 13,039
NET ASSETS HELD FOR SALE (NOTE C) 16,529 17,555 16,774
PROPERTY, PLANT AND EQUIPMENT 114,273 113,126 109,091
Less allowances for depreciation and amortization 56,832 55,285 49,696
--------------- ------------- --------------
57,441 57,841 59,395
--------------- ------------- --------------
$ 172,536 $ 170,569 $ 180,381
=============== ============= ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 23,787 $ 19,408 $ 16,434
Accrued expenses and other liabilities 20,982 22,828 20,947
Taxes 3,567 3,064 3,971
Current maturities of long-term debt 3,121 2,435 6,721
--------------- ------------- --------------
TOTAL CURRENT LIABILITIES 51,457 47,735 48,073
LONG-TERM DEBT 70,203 62,730 66,332
POSTRETIREMENT BENEFITS AND OTHER LONG-TERM LIABILITIES 44,608 44,278 42,077
SHAREHOLDERS' EQUITY
Common shares 1,323 1,322 1,320
Other Capital 72,448 72,412 72,344
Retained earnings (deficit) (57,944) (47,054) (43,808)
Pension adjustment (9,559) (10,854) (5,957)
--------------- ------------- --------------
6,268 15,826 23,899
--------------- ------------- --------------
$ 172,536 $ 170,569 $ 180,381
=============== ============= ==============
See Notes to Consolidated Financial Statements (Unaudited)
</TABLE>
L1168 (05/13/94) - 3 -
<PAGE> 4
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
The Lamson & Sessions Co. and Subsidiaries
<CAPTION>
(Dollars in thousands)
FIRST QUARTER ENDED
------------------------------
1994 1993
------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings (loss) from continuing operations $ (960) $ (1,470)
Adjustments to reconcile net earnings (loss) from continuing operations to
cash used by continuing operations:
Depreciation and amortization 2,028 2,063
Net change in working capital accounts:
Accounts Receivable (6,180) (5,876)
Inventories (1,651) (188)
Prepaid expenses and other 277 825
Other current liabilities 3,036 (2,513)
Net change in other long-term items 193 588
----------- -----------
Cash used by continuing operations (3,257) (6,571)
Net earnings (loss) from discontinued operations (9,930) (1,075)
Adjustments to reconcile net earnings (loss) from discontinued operations to
cash used by discontinued operations:
Net change in assets held for sale 1,026 (425)
Net change in other long-term items 4,800
----------- -----------
Cash used by discontinued operations (4,104) (1,500)
----------- -----------
CASH USED BY OPERATING ACTIVITIES (7,361) (8,071)
INVESTING ACTIVITIES
Purchases of property, plant and equipment (1,781) (735)
----------- -----------
CASH USED BY INVESTING ACTIVITIES (1,781) (735)
FINANCING ACTIVITIES
Net change in secured credit agreement 8,498 8,778
Payments on long-term borrowing and capital lease obligations (339) (775)
Exercise of stock options 37
----------- -----------
CASH PROVIDED BY FINANCING ACTIVITIES 8,196 8,003
DECREASE IN CASH (946) (803)
Cash at beginning of year 1,188 1,157
----------- -----------
CASH AT END OF THE PERIOD $ 242 $ 354
=========== ===========
<FN>
See Notes to Consolidated Financial Statements (Unaudited).
</TABLE>
L1168 (05/13/94) - 4 -
<PAGE> 5
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements do not include all of the
information and notes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation of the results of operations have been included. Certain 1993
amounts have been reclassified to conform with 1994 classifications.
NOTE B - LITIGATION
In 1992, the present owner of property sold by the Company in 1978, filed a
complaint against the Company seeking reimbursement for certain costs related
to environmental remediation of the site. All but one of the claims have been
dismissed. Management believes that the final resolution of this matter will
not have a material adverse effect on the Company's consolidated financial
position.
NOTE C - DISCONTINUED OPERATIONS
The Company has entered into a definitive agreement to sell its Midland Steel
Products Division (MSP) subject to certain governmental and other consents and
approvals and determination of final sale price. Closing of the sale is
anticipated in the second quarter of 1994. The Company is selling
substantially all of the assets and certain liabilities of MSP for
approximately $18,000,000 resulting in an estimated loss of $8,900,000 after
related costs and expenses. Included in costs and expenses are contractual
obligations related to employee benefits and environmental costs for which the
company believes adequate reserves have been provided. The discontinued
operation had sales of $13,587,000 and $9,276,000 and losses of $1,030,000 and
$1,075,000 in the first quarters 1994 and 1993, respectively. Included in each
first quarter loss is interest of $459,000 allocated on the basis of the
Company's incremental borrowing rate applied on the anticipated net proceeds
from the sale.
L1168 (05/13/94)
- 5 -
<PAGE> 6
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
REVENUES
The 10.7% increase in revenues from continuing operations resulted from
increased shipments and higher average selling prices. Higher average selling
prices and an approximate 2% increase in rigid conduit sales coupled with an
approximate 7% increase in value added product sales contributed to the
increased revenues in the units serving the industrial and construction
markets. The earthquake at the aerospace fastener unit facility resulted in
disrupted shipping schedules and contributed to its approximate 9% sales
decline.
MARGINS
Gross profit margins increased 3.9% to 16.1% in the first quarter of 1994 over
1993 mainly from increased production levels and cost containment programs
despite adverse weather conditions hampering certain manufacturing facilities
serving the industrial and construction markets. The earthquake contributed to
the lower production levels and depressed average gross margins in the
aerospace fastener unit.
EXPENSES
Selling, general and administrative expenses in 1994 decreased 7.7% to 14.3%
compared to the prior period with increased commissions being partially offset
with reduced promotional expenses. Higher borrowing levels in the current
period caused interest expense to increase in 1994. Since there is no income
against which net operating losses can be carried back, the Company did not
record any current tax benefit for the period. The Company does have net
operating loss carryforwards which should reduce future income tax expense.
CASH FLOW LIQUIDITY AND CAPITAL RESOURCES
Increased working capital requirements and the operating loss caused the
Company to borrow additional funds under its secured credit agreement.
Improved cash flow from continuing operations along with proceeds from the sale
of the discontinued operation should provide adequate cash flow to fund
operating working capital and capital expenditure requirements while
significantly reducing debt by year end.
OUTLOOK
Continuing strength in commercial construction spending and the robust
residential construction market will positively influence the four business
units serving these markets and should provide profitable operations. The
aerospace fastener unit was adversely affected by the first quarter earthquake
and the continued softness in the aerospace market which will make it difficult
to improve results in this unit. Cost reduction programs and improved
manufacturing efficiencies will aid in stabilizing the operating results for
the balance of the year.
L1168 (05/13/94)
- 6 -
<PAGE> 7
PART II
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
None
(b) Reports on Form 8-K - There were no reports on Form 8-K
filed for the three months ended April 2, 1994.
L1168 (05/13/94)
- 7 -
<PAGE> 8
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.
THE LAMSON & SESSIONS CO.
-------------------------
(Registrant)
DATE: May 16, 1994 By /s/ James J. Abel
------------------- -----------------------------------
James J. Abel
Executive Vice President, Treasurer
and Chief Financial Officer
L1168 (05/13/94)
- 8 -
