<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 1, 1995
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OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 1-313
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T H E L A M S O N & S E S S I O N S C O.
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(Exact name of Registrant as specified in its charter)
Ohio 34-0349210
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
25701 Science Park Drive
Cleveland, Ohio 44122-9803
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(Address of principal executive offices) (Zip Code)
216/464-3400
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(Registrant's telephone number, including area code)
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(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
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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
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APPLICABLE ONLY TO CORPORATE ISSUERS:
As of April 1, 1995 the Registrant had outstanding 13,278,784 common shares.
<PAGE> 2
PART I
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF EARNINGS (Unaudited)
The Lamson & Sessions Co. and Subsidiaries
(Dollars in thousands, except per share amounts.)
<TABLE>
<CAPTION>
First Quarter Ended
---------------------------------
1995 1994
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<S> <C> <C>
Net sales $ 68,402 $ 63,889
Cost of products sold 56,103 53,622
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GROSS MARGIN 12,299 10,267
Selling, general and
administrative expenses 9,803 9,678
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OPERATING EARNINGS 2,496 589
Interest 1,671 1,549
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EARNINGS (LOSS) FROM CONTINUING OPERATIONS 825 ( 960)
Loss on Discontinued Operations (Note C) ( 9,930)
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NET EARNINGS (LOSS) $ 825 $ (10,890)
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EARNINGS (LOSS) PER COMMON SHARE
--------------------------------
Continuing Operations $ .06 $ (.07)
Discontinued Operations (.75)
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$ .06 $ (.82)
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AVERAGE COMMON SHARES 13,279 13,225
============= ============
</TABLE>
See Notes to Consolidated Financial Statements (Unaudited)
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<PAGE> 3
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Unaudited)
The Lamson & Sessions Co. and Subsidiaries
(Dollars in thousands)
<TABLE>
<CAPTION>
First First
Quarter Quarter
Ended Year End Ended
--------------------------------------------------
1995 1994 1994
--------------------------------------------------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 926 $ 1,885 $ 242
Accounts receivable 38,192 35,448 40,909
Inventories:
Finished goods and work-in-process 47,810 41,157 41,380
Raw materials and supplies 5,450 5,048 3,619
---------- ---------- -----------
53,260 46,205 44,999
Prepaid expenses and other 4,072 3,988 3,450
---------- ---------- -----------
TOTAL CURRENT ASSETS 96,450 87,526 89,600
OTHER ASSETS 1,678 1,899 5,896
NET ASSETS HELD FOR SALE (NOTE C) 3,742 3,742 16,529
PROPERTY, PLANT AND EQUIPMENT 116,562 115,914 114,273
Less allowances for depreciation and amortization 64,175 61,935 56,832
---------- ---------- -----------
52,387 53,979 57,441
---------- ---------- -----------
$ 154,257 $ 147,146 $ 169,466
========== ========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 26,199 $ 17,354 $ 23,787
Accrued expenses and other liabilities 24,558 27,167 20,065
Taxes 3,345 3,009 3,567
Current maturities of long-term debt 4,502 4,502 3,121
---------- ---------- -----------
TOTAL CURRENT LIABILITIES 58,604 52,032 50,540
LONG-TERM DEBT 46,600 46,958 70,203
POSTRETIREMENT BENEFITS AND OTHER LONG-TERM LIABILITIES 35,348 35,276 42,455
SHAREHOLDERS' EQUITY
Common shares 1,328 1,328 1,323
Other Capital 72,679 72,679 72,448
Retained earnings (deficit) (51,903) (52,728) (57,944)
Pension adjustment ( 8,399) ( 8,399) (9,559)
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13,705 12,880 6,268
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$ 154,257 $ 147,146 $ 169,466
========== ========== ===========
</TABLE>
See Notes to Consolidated Financial Statements (Unaudited)
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<PAGE> 4
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
The Lamson & Sessions Co. and Subsidiaries
(Dollars in thousands)
<TABLE>
<CAPTION>
First Quarter Ended
-------------------------
1995 1994
-------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings (loss) from continuing operations $ 825 $ ( 960)
Adjustments to reconcile net earnings (loss) from continuing operations to
cash used by continuing operations:
Depreciation and amortization 2,239 2,028
Net change in working capital accounts:
Accounts Receivable (2,744) (6,180)
Inventories (7,055) (1,651)
Prepaid expenses and other ( 84) 1,127
Other current liabilities 6,572 1,586
Net change in other long-term items 293 793
-------- --------
Cash provided (used) by continuing operations 46 (3,257)
Net earnings (loss) from discontinued operations (9,930)
Change in net assets 1,026
Non-cash expenses 4,800
--------
Cash used by discontinued operations (4,104)
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CASH PROVIDED (USED) BY OPERATING ACTIVITIES 46 (7,361)
INVESTING ACTIVITIES
Proceeds from sale of discontinued operation
Purchases of property, plant and equipment ( 647) (1,781)
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CASH USED BY INVESTING ACTIVITIES ( 647) (1,781)
FINANCING ACTIVITIES
Net change in secured credit agreement 504 8,498
Payments on long-term borrowing and capital lease obligations ( 862) ( 339)
Exercise of stock options 37
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CASH (USED) PROVIDED BY FINANCING ACTIVITIES ( 358) 8,196
DECREASE IN CASH ( 959) ( 946)
Cash at beginning of year 1,885 1,188
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CASH AT END OF THE PERIOD $ 926 $ 242
======== ========
</TABLE>
See Notes to Consolidated Financial Statements (Unaudited).
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<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 1994
amounts have been reclassified to conform with 1995 classifications.
NOTE B - LITIGATION
In the first quarter of 1995, the Company settled the complaint seeking
reimbursement for certain costs related to environmental remediation of
property sold by the Company. The resolution of this matter did not have a
material effect on the Company's consolidated financial position.
NOTE C - DISCONTINUED OPERATIONS
During the first quarter of 1994, the Company entered into a definitive
agreement to sell substantially all of the assets and certain liabilities
(including prospective pension and postretirement benefit obligations) of its
Midland Steel Products Division for $16,430,000, resulting in a loss of
$8,900,000 ($.67 per share) after related costs and expenses. Included in the
loss on disposal is a curtailment loss of $1,140,000 related to net pension
costs and a settlement gain of $650,000 related to postretirement benefits
other than pensions. The Company believes adequate provision has been made for
all contractual obligations, environmental costs, and other obligations
retained in the sale of the division. Included in the prior year's loss from
operations is interest of $1,836,000 allocated on the basis of the Company's
incremental borrowing rate applied on the net proceeds from the sale. The
assets held for sale at the end of 1994 are comprised of land and building
pending final resolution of certain contractual conditions.
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<PAGE> 6
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
REVENUES
A continuing emphasis toward non-rigid pipe products contributed to a 7%
increase in the first quarter 1995 revenues. Increased shipments coupled with
7% higher average selling prices for non-rigid pipe products provided a
majority of the increased revenues in the core businesses. A 16% reduction in
total rigid pipe shipments compared to 1994 combined with 22% higher average
selling prices produced revenues approximately equal to the 1994 period. A
stronger than expected 37% increase in 1995 revenues in the aerospace fastener
unit also contributed to the first quarter improvement, although this is the
Company's smallest operating unit.
MARGINS
With the improved product mix in the core businesses and strong control over
manufacturing expenses, a 12% gain in gross profit margins to 18% was attained
in 1995. The higher production levels and improved pricing in the aerospace
fastener unit provided an improvement of 139% in gross profit margin compared
to the same period a year ago.
EXPENSES
Selling, general and administrative expenses remained at 14% of net sales in
both 1995 and 1994 after giving effect to the non- recurring earthquake
expenses reflected in the year ago period. Increased promotional expenses and
nominal salary increases were the primary reasons for the higher level of
expenses. Reduced borrowing levels in the current period were offset with
higher interest rates causing the overall increase in 1995 interest expense.
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
The company generated positive cash flow from operations with a profitable
first quarter of 1995 compared to a prior period loss. Improved operating
earnings and working capital management have combined to increase availability
under the existing credit line which enhances the Company's liquidity position.
Lower capital expenditures and lower revolver borrowings aided in further debt
reduction from year-end levels. Continued profitable operations and reduced
inventory levels should provide the necessary cash flow from operations to fund
capital expenditures and debt reduction through the balance of the year.
OUTLOOK
Although overall construction spending is projecting lower growth than the
prior year, we believe the core businesses serve markets where the greatest
opportunity for growth occurs. The aerospace fastener unit's improved
operating results have heightened the expressions of interest in this business
which may facilitate the possible sale of the unit in this year.
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<PAGE> 7
PART II
ITEM 1 - LEGAL PROCEEDINGS
The action filed against the Company on January 14, 1992, as previously
disclosed in the Company's Annual Report on Form 10-K for the year ended
December 31, 1994, was settled on March 15, 1995 with no material effect on the
Company's financial position.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
(27) - Financial Data Schedule
(b) Reports on Form 8-K. There were no reports on Form 8-K
filed for the three months ended April 1, 1995.
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<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.
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(Registrant)
DATE: May 12, 1995 By /s/ James J. Abel
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James J. Abel
Executive Vice President, Secretary,
Treasurer and Chief Financial Officer
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<NAME> THE LAMSON & SESSIONS CO.
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