<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 October 4, 1997
----------------
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 October 31, 1997 the Registrant had outstanding 13,393,684 common shares.
-1-
<PAGE> 2
PART I
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT (UNAUDITED)
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THIRD QUARTER ENDED NINE MONTHS ENDED
----------------------------- -------------------------------
1997 1996 1997 1996
-------- -------- --------- --------
<S> <C> <C> <C> <C>
Net sales $ 70,492 $78,098 $ 211,775 $219,481
Cost of products sold 62,139 62,276 175,757 173,395
-------- ------- --------- --------
GROSS PROFIT 8,353 15,822 36,018 46,086
Selling, general and
administrative expenses 12,954 11,807 36,247 36,463
-------- ------- --------- --------
OPERATING INCOME (4,601) 4,015 (229) 9,623
Interest 1,046 593 2,686 1,936
-------- ------- --------- --------
INCOME BEFORE INCOME TAXES (5,647) 3,422 (2,915) 7,687
Income Tax Benefit 700 1,400 2,050
-------- ------- --------- --------
NET INCOME $ (5,647) $ 4,122 $ (1,515) $ 9,737
======== ======= ========= ========
EARNINGS PER COMMON SHARE $ (0.42) $ 0.30 $ (0.11) $ 0.71
======== ======= ========= ========
AVERAGE COMMON SHARES 13,378 13,674 13,331 13,688
======== ======= ========= ========
</TABLE>
See Notes to Consolidated Financial Statements (Unaudited)
-2-
<PAGE> 3
CONSOLIDATED BALANCE SHEET (UNAUDITED)
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR END
---------------------------------
1997 1996
---------------------------------
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash $ 382 $ 758
Accounts receivable 43,937 36,626
Inventories
Raw materials and supplies 5,549 3,998
Finished goods and work-in-process 34,564 38,824
--------- ---------
40,113 42,822
Prepaid expenses and other 11,763 10,739
--------- ---------
TOTAL CURRENT ASSETS 96,195 90,945
OTHER ASSETS 10,233 9,703
PROPERTY, PLANT AND EQUIPMENT 119,995 113,937
Less allowances for depreciation and amortization 56,934 53,464
--------- ---------
63,061 60,473
--------- ---------
TOTAL ASSETS $ 169,489 $ 161,121
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 27,853 $ 19,084
Accrued expenses and other liabilities 21,951 24,803
Taxes 3,473 3,643
Current maturities of long-term debt 3,726 4,376
--------- ---------
TOTAL CURRENT LIABILITIES 57,003 51,906
LONG-TERM DEBT 48,126 36,911
POST-RETIREMENT BENEFITS AND OTHER LONG-TERM LIABILITIES 20,575 27,238
SHAREHOLDERS' EQUITY
Common shares 1,340 1,330
Other capital 73,295 72,792
Retained earnings (deficit) (28,820) (27,026)
Pension adjustment (2,030) (2,030)
--------- ---------
43,785 45,066
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 169,489 $ 161,121
========= =========
</TABLE>
See Notes to Consolidated Financial Statements (Unaudited)
-3-
<PAGE> 4
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
-----------------------------
1997 1996
----------- ---------
OPERATING ACTIVITIES
<S> <C> <C>
Net income $ (1,515) $ 9,737
Adjustments to reconcile net income to cash (used) provided by operations:
Depreciation and amortization 6,415 6,256
Deferred income tax benefit (1,450) (2,512)
Net change in working capital accounts:
Accounts receivable (7,311) (11,857)
Inventories 2,709 (1,411)
Prepaid expenses and other (298) 83
Current liabilities 5,468 8,830
Net change in other long-term items (6,758) (1,266)
-------- --------
Cash (used) provided by operating activities (2,740) 7,860
INVESTING ACTIVITIES
Net purchases of property, plant and equipment (8,715) (12,282)
-------- --------
CASH USED BY INVESTING ACTIVITIES (8,715) (12,282)
FINANCING ACTIVITIES
Net change in secured credit agreement 11,183 3,224
Net changes in long-term borrowing and capital lease obligations (618) 151
Exercise of stock options 514 50
-------- --------
CASH PROVIDED BY FINANCING ACTIVITIES 11,079 3,425
DECREASE IN CASH (376) (997)
Cash at beginning of year 758 1,431
-------- --------
CASH AT END OF THE PERIOD $ 382 $ 434
======== ========
</TABLE>
See Notes to Consolidated Financial Statements (Unaudited)
-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 1996
amounts have been reclassified to conform with 1997 classifications.
NOTE B - ACCOUNTING POLICIES
The Company will adopt statement of Financial Accounting Standards No. 128,
"Earnings per Share" at year end 1997. Adoption of this standard is not expected
to have a material impact on the calculation of earnings per share.
In June 1997 FASB issued SFAS No. 130, "Reporting Comprehensive Income" and SFAS
No. 131, "Disclosures about Segments of an Enterprise and Related Information,"
both of which are effective for fiscal years beginning after December 15, 1997.
SFAS No. 130 establishes standards for reporting and display of comprehensive
income and its components. SFAS No. 131 establishes standards for reporting
information about operating segments and related disclosures about products and
services, geographic areas and major customers. The requirements of both
statements only impact financial statement disclosure. Accordingly, these
statements are not expected to have a material impact on the Company's financial
position or the results of its operations.
-5-
<PAGE> 6
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 4, 1997
AND COMPARABLE PERIODS ENDED SEPTEMBER 28, 1996
CONSOLIDATED STATEMENT OF INCOME
Net sales in the third quarter of 1997 decreased $8 million, or approximately
10%, compared to the third quarter of 1996. The sales decrease resulted from
a continued inability to pass through raw material cost increases from any of
the Company's business units as well as customer service issues related to the
implementation of the Company's new management information system. The largest
volume decrease was in the area of commodity rigid pipe, which accounted for
60% of the sales decrease. Sales of electrical fittings products also suffered
declines due to customer service problems related to the information system
issue and several large diameter sewer pipe projects experienced customer
schedule delays. However, volume increases were achieved in the Company's
telecommunication priority products. Sales for the first nine months decreased
by $8 million compared to the prior-year period resulting from the third
quarter decreases stated above.
Gross profit decreased $7 million in the third quarter of 1997 compared to the
third quarter of 1996. The gross profit decrease resulted from lower sales
levels, elevated distribution and freight costs, and unplanned manufacturing
variances. The Company experienced a significant increase in distribution costs
during the quarter, from the second quarter and compared to the prior-year
quarter, as heavy emphasis was placed on increasing customer order fill rates
and improving delivery timeliness to regain customer confidence. Freight was
negatively impacted by the UPS strike as well as by the Union Pacific rail
logistics problems which continue. The Company also operated its manufacturing
facilities at less than capacity to decrease its working capital investment in
inventory which resulted in volume variances negatively impacting the quarterly
results. Gross profit decreased approximately $10 million for the first nine
months of 1997 compared to the same period in 1996. The year-to-date decrease
resulted from lower sales levels, raw material price increases in the first
half of the year that were absorbed by the Company as well as elevated third
quarter distribution costs and manufacturing variances.
Selling, general and administrative expenses were 18.4% of sales in the third
quarter of 1997 compared to 15.1% in the comparable 1996 period primarily due
to lower sales in the current year's quarter and increased depreciation for the
new information system that did not exist in 1996. Commission expense in 1997
was higher as a percentage of sales due to an increase in the average rate
being paid on higher margin products. For the nine-month period, selling,
general and administrative costs as a percentage of sales were 17% in both
years. However, the increased depreciation expense for the new information
system for year-to-date 1997 was offset by decreases in other administrative
expenses.
Interest expense increased over 75% in the third quarter of 1997 compared to
1996. This increase resulted from increased debt levels supporting higher
working capital investment and the operating loss as well as higher borrowing
rates. Interest expense increased 39% in the first nine months of 1997 compared
to the same period in 1996. Year-to-date interest increases also primarily
relate to increased borrowing levels.
An income tax benefit was not booked in the third quarter due to the Company's
lack of pre-tax profits during the period.
-6-
<PAGE> 7
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
CONSOLIDATED BALANCE SHEET
Accounts Receivable increased approximately $7 million compared to 1996 year-end
levels. This increase is lower than traditionally experienced by the Company
during this period due to the lower sales levels. Days sales outstanding are up
slightly due to slower collection efforts as associates adapt to the new
information system. Inventories at the end of the third quarter decreased $3
million from 1996 year-end levels and $4 million from the second quarter. The
inventory decrease is a direct result of the Company's focused inventory
reduction efforts. Accounts Payable increased $9 million from 1996 year-end
primarily due to more favorable payment terms from the Company's largest raw
material vendors and aggressive cash management efforts. Accrued expenses and
other liabilities decreased $3 million compared to 1996 year end levels mainly
due to the second quarter accounting estimate changes.
Long-term debt has risen $11 million compared to year-end 1996 but has decreased
over $3 million since the end of the second quarter. Working capital decreases
during the third quarter are being used to reduce debt. However, in light of
weaker results from year to date operations, increased borrowing has been used
primarily to purchase capital equipment and the continued funding of the
Company's pension plans.
CONSOLIDATED STATEMENT OF CASH FLOWS
Cashflow from operations resulted in a $3 million use for the first nine months
of 1997 compared to a source of $8 million for the same period in 1996. The
decline in cashflow from operations relates almost exclusively to the decline in
operating profits between the two years.
Cashflow used by investing activities is down nearly $4 million, comparing the
first nine months of 1997 and 1996. The decrease relates to a shift from heavy
investment in the new information system in 1996 to a more moderate spending
level in 1997 which is more focused on manufacturing capacity additions and
productivity improvements.
OUTLOOK AND UPDATE
The Company's efforts are focused on reducing the inefficiencies and extra costs
being incurred to meet customer service expectations. Improvement is anticipated
in customer service performance in the fourth quarter, but the Company's
management believes there will still be some lingering effects from prior
customer service issues which will continue to lower sales and earnings
expectations for the rest of the year.
Recovering the confidence of key customers is a top priority for the remainder
of 1997. When this goal is reached, the Company should realize improved sales
order volume and operating efficiencies. This requires an outward focus toward
customers that was not present earlier in the year as the Company dealt with
internal issues arising from cultural changes associated with the implementation
of the new operating systems.
-7-
<PAGE> 8
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
The Company expects the demand levels in its markets to remain stable, but to
moderate with seasonal trends in construction activity in the fourth quarter.
Shipments relating to Dimango products have resumed as of the end of the third
quarter and the Company is hopeful of regaining its market leadership position
in the first half of 1998.
The Company generated operating cash flow of nearly $5 million in the third
quarter despite having a substantial loss from operations. The Company
anticipates improved operating performance in the fourth quarter, continued
aggressive working capital management and moderated capital spending which
should provide adequate liquidity. Additional financing opportunities continue
to be evaluated consistent with the Company's growth requirements.
The foregoing outlook contains expectations that are forward-looking statements
within the meaning of the private Securities Litigation Reform Act of 1995.
Actual results may differ materially from those expected as a result of a
variety of factors such as (i) the volatility of polyvinylchloride resin
pricing, (ii) changes in the pattern of construction spending in both the new
construction, and repair and rehabilitation markets, (iii) changes in the number
of distribution of housing starts, (iv) fluctuations in the interest rate
affecting housing starts, (v) unpredictable technological innovations that could
make the Company's products comparatively less attractive, (vi) changes in
local, state and federal regulations relating to building codes and the
environment (in each case as they may affect the attractiveness of the Company's
products and manufacturing costs), (vii) the ability of the Company to pass
through raw material cost increases to its customers, (viii) recovering the
confidence of key customers, (ix) resolution of the Union Pacific rail logistics
problems, and (x) a reversal in the country's general pattern of economic
improvement affecting the markets for the Company's products.
-8-
<PAGE> 9
PART II
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit
No. Description
------------ ----------------------------------------
10(bb) Waiver dated September 30, 1997, to the GECC Loan
Agreement filed herewith.
11 Computation of Earnings Per Share
27 Financial Data Schedule
(b) Reports on Form 8-K. There were no reports on Form 8-K filed for
the three months ended October 4, 1997.
-9-
<PAGE> 10
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: November 17, 1997 By /s/ James J. Abel
----------------------------------------
Executive Vice President, Secretary
Treasurer and Chief Financial Officer
-10-
<PAGE> 1
Exhibit No. 10 (bb)
EXECUTION COPY
WAIVER
Dated as of September 30, 1997
THIS WAIVER ("Waiver") is entered into as of
September 30, 1997 by and among THE LAMSON & SESSIONS CO., an Ohio corporation
(the "Borrower"), GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation
("GE Capital"), as the sole "Lender" (as defined in the Loan Agreement referred
to below) and GE Capital as agent for the Lenders (in such capacity, the
"Agent").
PRELIMINARY STATEMENT
A. The Borrower, the Lender and the Agent are parties to that
certain Loan Agreement dated as of February 13, 1992, as amended and restated as
of July 14, 1995 (as the same has been and may be further amended, restated,
supplemented or otherwise modified from time to time, the "Loan Agreement").
Capitalized terms used herein and not otherwise defined shall have the meanings
ascribed to them in the Loan Agreement.
B. The Borrower has requested that GE Capital, as the Agent
and the sole Lender, waive the Borrower's compliance with the EBITDA to interest
expense ratio covenant set forth in Section 7.3(d) of the Loan Agreement and the
minimum EBITDA covenant set forth in Section 7.3(f) of the Loan Agreement for
the fiscal quarter ending nearest September 30, 1997, and GE Capital, as such
Agent and sole Lender, has agreed to waive such compliance subject to the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises set forth
above, and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Borrower, the Lender and the Agent hereby
agree as follows:
SECTION 1. WAIVER. The Borrower has failed to comply with
SECTION 7.3(d) of the Loan Agreement by reason of the Borrower's failure to meet
the Consolidated EBITDA to Consolidated Interest Expense Ratio covenant set
forth therein and with SECTION 7.3(f) of the Loan Agreement by reason of the
<PAGE> 2
Exhibit No. 10 (bb)
Borrower's failure to meet the minimum Consolidated EBITDA covenant set forth
therein for the fiscal quarter ending nearest September 30, 1997. Effective as
of the date first above written, subject to the satisfaction of the conditions
precedent set forth in SECTION 2 below, GE Capital, as the Agent and the sole
Lender, hereby waives the Borrower's compliance with such covenants for such
period.
SECTION 2. CONDITIONS PRECEDENT. This Waiver shall become
effective and be deemed effective as of the date first above written upon the
Agent's having received the following:
(a) four (4) copies of this Waiver duly executed by the
Borrower, the Lender and the Agent;
(b) Reaffirmation of Guaranty and Security Agreement in
substantially the form of EXHIBIT A attached hereto, duly executed by
Carlon Chimes Co.; and
(c) Reaffirmation of Guaranty and Security Agreement in
substantially the form of EXHIBIT B attached hereto, duly executed by
Dimango Products Corporation.
SECTION 3. COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE
BORROWER.
3.1 Except to the extent that any representation or warranty
expressly is made only with respect to an earlier date, upon the effectiveness
of this Waiver, the Borrower hereby reaffirms all covenants, representations and
warranties made by it in the Loan Agreement to the extent the same are not
modified hereby and agrees that all such covenants, representations and
warranties shall be deemed to have been re-made as of the effective date of this
Waiver.
3.2 The Borrower hereby represents and warrants that this
Waiver constitutes the legal, valid and binding obligation of the Borrower
enforceable against the Borrower in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally and general principles of equity which may limit the availability of
equitable remedies.
SECTION 4. EFFECT ON THE LOAN AGREEMENT.
4.1 Except as specifically amended hereby, the Loan Agreement
and other documents, instruments and agreements
-- 2 --
<PAGE> 3
Exhibit No. 10 (bb)
executed and/or delivered in connection therewith shall remain in full force
and effect and are hereby ratified and confirmed.
4.2 The execution, delivery and effectiveness of this Waiver
shall not operate as a waiver of any right, power or remedy of any Lender or the
Agent under the Loan Agreement or any of the other Loan Documents, nor
constitute a waiver of any provision contained therein, except as specifically
set forth herein.
SECTION 5. GOVERNING LAW. THIS WAIVER SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE
CONFLICTS OF LAW PROVISIONS) AND DECISIONS OF THE STATE OF ILLINOIS.
SECTION 6. EXECUTION IN COUNTERPARTS. This Waiver may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute but
one and the same instrument.
SECTION 7. HEADINGS. Section headings in this Waiver are
included herein for convenience or reference only and shall not constitute a
part of this Waiver for any other purpose.
IN WITNESS WHEREOF, the parties hereto have caused this Waiver
to be executed by their respective officers thereto duly authorized as of the
date first written above.
THE LAMSON & SESSIONS CO.
By:/s/ James J. Abel
-------------------------------------------
Executive Vice President and
Chief Financial Officer
GENERAL ELECTRIC CAPITAL CORPORATION, as
the Agent and as the sole Lender
By:/s/ Trevor J. Clark
-------------------------------------------
Duly Authorized Signatory
-- 3 --
<PAGE> 4
Exhibit No. 10 (bb)
EXHIBIT A
to
Waiver
Form of Reaffirmation of Guaranty and
Security Agreement of Carlon Chimes Co.
---------------------------------------
(Attached.)
<PAGE> 5
Exhibit No. 10 (bb)
REAFFIRMATION OF GUARANTY AND SECURITY AGREEMENT
The undersigned hereby (i) acknowledges receipt of that
certain Waiver of even date herewith (the "Waiver") to the Loan Agreement dated
as of February 13, 1992, as amended and restated as of July 14, 1995 (as such
Loan Agreement has been may be amended, restated, supplemented or otherwise
modified from time to time, the "Loan Agreement") among THE LAMSON & SESSIONS
CO. (the "Borrower"), GENERAL ELECTRIC CAPITAL CORPORATION ("GE Capital"), as a
"Lender" (as defined in the Loan Agreement) and GE Capital, as agent for the
Lenders (in such capacity, the "Agent"), (ii) reaffirms all of its obligations
under that certain Guaranty and Security Agreement dated as of February 13, 1992
("Guaranty and Security Agreement"), made by the undersigned in favor of the
Lenders, and (iii) acknowledges and agrees that such Guaranty and Security
Agreement remains in full force and effect notwithstanding the Waiver, and that
such Guaranty and Security Agreement is hereby ratified and confirmed.
Date: September 30, 1997
CARLON CHIMES CO.
By: /s/ James J. Abel
--------------------------------
Title: Executive Vice President
and Chief Financial Officer
<PAGE> 6
Exhibit No. 10(bb)
EXHIBIT B
to
Waiver
Form of Reaffirmation of Guaranty and
Security Agreement of Dimango Products Corporation
--------------------------------------------------
(Attached.)
<PAGE> 7
Exhibit No. 10 (bb)
REAFFIRMATION OF GUARANTY AND SECURITY AGREEMENT
The undersigned hereby (i) acknowledges receipt of that
certain Waiver of even date herewith (the "Waiver") to the Loan Agreement dated
as of February 13, 1992, as amended and restated as of July 14, 1995 (as such
Loan Agreement has been and may be amended, restated, supplemented or otherwise
modified from time to time, the "Loan Agreement") among THE LAMSON & SESSIONS
CO. (the "Borrower"), GENERAL ELECTRIC CAPITAL CORPORATION ("GE Capital"), as a
"Lender" (as defined in the Loan Agreement) and GE Capital, as agent for the
Lenders (in such capacity, the "Agent"), (ii) reaffirms all of its obligations
under that certain Guaranty and Security Agreement dated as of October 25, 1996
("Guaranty and Security Agreement"), made by the undersigned in favor of the
Lenders, and (iii) acknowledges and agrees that such Guaranty and Security
Agreement remains in full force and effect notwithstanding the Waiver, and that
such Guaranty and Security Agreement is hereby ratified and confirmed.
Date: September 30, 1997
DIMANGO PRODUCTS CORPORATION
By: /s/ James J. Abel
-----------------------------
Title: Executive Vice President
and Chief Financial officer
<PAGE> 1
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
EXHIBIT (11) - COMPUTATION OF EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
THIRD QUARTER ENDED NINE MONTHS ENDED
------------------------------ ------------------------------
PRIMARY 1997 1996 1997 1996
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Average common shares outstanding 13,377,517 13,301,084 13,331,317 13,296,084
Average common share equivalents:
Stock options and warrants - based
on treasury stock method using
average market price 372,493 391,868
------------ ----------- ------------ -----------
TOTALS 13,377,517 13,673,577 13,331,317 13,687,952
FULLY DILUTED
Average common shares outstanding 13,377,517 13,301,084 13,331,317 13,296,084
Average common share equivalents:
Stock options and warrants - based
on treasury stock method 372,493 409,354
----------- ----------- ------------ -----------
TOTALS 13,377,517 13,673,577 13,331,317 13,705,438
NET EARNINGS $ (5,647,000) $ 4,122,000 $ (1,515,000) $ 9,737,000
============ =========== ============ ===========
Earnings per common share and common share equivalents:
Primary Net Earnings Per Share $ (0.42) $ 0.30 $ (0.11) $ 0.71
============ =========== ============ ===========
Fully Diluted Net Earnings Per Share $ (0.42) $ 0.30 $ (0.11) $ 0.71
============ =========== ============ ===========
</TABLE>
See Notes to Consolidated Financial Statements (Unaudited)
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000057497
<NAME> THE LAMSON & SESSIONS CO.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-START> JUL-06-1997
<PERIOD-END> OCT-04-1997
<CASH> 382
<SECURITIES> 0
<RECEIVABLES> 43,937
<ALLOWANCES> 0
<INVENTORY> 40,113
<CURRENT-ASSETS> 96,195
<PP&E> 119,995
<DEPRECIATION> 56,934
<TOTAL-ASSETS> 169,489
<CURRENT-LIABILITIES> 57,003
<BONDS> 48,126
0
0
<COMMON> 1,340
<OTHER-SE> 42,445
<TOTAL-LIABILITY-AND-EQUITY> 169,489
<SALES> 70,492
<TOTAL-REVENUES> 70,492
<CGS> 62,139
<TOTAL-COSTS> 62,139
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,046
<INCOME-PRETAX> (5,647)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,647)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,647)
<EPS-PRIMARY> (.42)
<EPS-DILUTED> (.42)
</TABLE>
