SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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FORM 10-Q
Quarterly Report under Section 13 or 15(d) of
The Securities Exchange Act of 1934
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For Quarter Ended March 31, 1995 Commission file no. 0-10546
LAWSON PRODUCTS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 36-2229304
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1666 East Touhy Avenue, Des Plaines, Illinois 60018
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(Address of principal executive offices) (Zip Code)
Registrant's telephone no., including area code: (708) 827-9666
Not applicable
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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
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
12,337,314 Shares, $1 par value, as of April 24, 1995.
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<TABLE>
LAWSON PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31,
(Amounts in thousands) 1995 1994
<CAPTION> ------------- -------------
(UNAUDITED)
<S> <C> <C>
ASSETS
- - ------
Current Assets:
Cash and cash equivalents $ 8,069 $ 9,853
Marketable securities 26235 21798
Accounts receivable, less
allowance for doubtful accounts 27903 27319
Inventories (Note B) 28143 26839
Miscellaneous receivables and
prepaid expenses 6131 5625
Deferred income taxes 676 815
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Total Current Assets 97157 92249
Marketable securities 18748 26102
Property, plant and equipment, less
allowances for depreciation and
amortization 36143 35858
Investments in real estate 3033 3084
Deferred income taxes 2502 2461
Other assets 8214 8376
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Total Assets 165797 168130
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</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
- - -----------------------------------
<S> <C> <C>
Current Liabilities:
Accounts payable $ 3,127 $ 3,274
Accrued expenses and other liabilities 13022 14524
Income taxes 3937 2017
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Total Current Liabilities 20086 19815
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Accrued liability under security
bonus plans 10349 10163
Other 6795 6922
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17144 17085
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Stockholders' Equity:
Preferred Stock, $1 par value:
Authorized - 500,000 shares
Issued and outstanding - None
Common Stock, $1 par value:
Authorized - 35,000,000 shares
Issued - (1995 - 17,097,490 shares;
1994 - 17,097,490 shares) 17097 17097
Capital in excess of par value 716 716
Retained earnings 199152 195609
Cost of common stock in treasury
(1995 - 4,746,176 shares;
1994 - 4,493,676 shares) -87298 -80884
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129667 132538
Other -1100 -1308
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Total Stockholders' Equity 128567 131230
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Total Liabilities and Stockholders'
Equity 165797 168130
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<FN>
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
LAWSON PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(UNAUDITED)
(Amounts in thousands, except per share data)
<CAPTION>
For the
Three Months Ended
March 31,
1995 1994
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<S> <C> <C>
Net Sales $ 54,845 $ 49,772
Investment and other income 1026 253
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55871 50025
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Cost of goods sold (Note B) 15421 14252
Selling, general and
administrative expenses 32211 29223
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47632 43475
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Income before income taxes 8239 6550
Provision for income taxes 3214 2482
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Net income 5025 4068
Retained earnings at
beginning of period 195609 181381
Deduct:
Cash dividends declared 1482 1628
--------- ---------
Retained earnings at end
of period 199152 183821
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Net income per share of
common stock 0.40 0.30
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Cash dividends declared per
share of common stock 0.12 0.12
===== =====
Weighted average shares
outstanding 12454 13562
===== =====
<FN>
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
LAWSON PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Amounts in thousands)
<CAPTION>
For the
Three months ended
March 31,
1995 1994
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<S> <C> <C>
Operating activities:
Net income $ 5,025 $ 4,068
Adjustments to reconcile net income to
net cash provided by oper. activities:
Depreciation and amortization 842 854
Changes in oper. assets and liab -2835 469
Other 499 400
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Net Cash Provided by Operating Activities 3531 5791
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Investing activities:
Additions to property, plant and equipment -1120 -1829
Purchases of marketable securities -60404 -60422
Proceeds from sale of mkt securities 63491 59817
Other 644 25
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Net Cash Provided by/
(Used in) Investing Activities 2611 -2409
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Financing activities:
Purchases of treasury stock -6414 ---
Dividends paid -1512 -1628
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Net Cash Used in Financing Activities -7926 -1628
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Increase/(Decrease) in Cash
and Cash Equivalents -1784 1754
Cash and Cash Equivalents
at Beginning of Period 9853 17952
--------- ---------
Cash and Cash Equivalents
at End of Period $ 8,069 $ 19,706
======== ========
<FN>
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
Part I
NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
A) As contemplated by the Securities and Exchange Commission, the
accompanying consolidated financial statements and footnotes have been
condensed and therefore, do not contain all disclosures required by
generally accepted accounting principles. Reference should be made to the
Company's Annual Report to Stockholders for the year ended December 31,
1994. The Condensed Consolidated Balance Sheet as of March 31, 1995 and
the Condensed Consolidated Statements of Income and Retained Earnings for
the three month periods ended March 31, 1995 and 1994 and the Condensed
Consolidated Statements of Cash Flows for the three month periods ended
March 31, 1995 and 1994 are unaudited. In the opinion of the Company, all
adjustments (consisting only of normal recurring accruals) have been made,
which are necessary to present fairly the results of operations for the
interim periods.
B) Inventories (consisting of finished goods) at March 31, 1995 and cost of
goods sold for the three month periods ended March 31, 1995 and 1994 were
determined through the use of estimated gross profit rates.
The following exhibits are attached to Part I:
1. Letter from independent accountants furnished
pursuant to Rule 10.01 (d) of regulation S-X.
2. Letter from independent accountants furnished
pursuant to Item 601, #15 of regulation S-K.
Part I
Independent Accountant's Review Report
Board of Directors
Lawson Products, Inc.
We have reviewed the accompanying condensed consolidated balance sheet of
Lawson Products, Inc. and subsidiaries as of March 31, 1995 and the
related condensed consolidated statements of income and retained earnings
and cash flows for the three month periods ended March 31, 1995 and 1994.
These financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical
procedures to financial data, and making inquiries of persons responsible
for financial and accounting matters. It is substantially less in scope
than an audit in accordance with generally accepted auditing standards,
which will be performed for the full year with the objective of expressing
an opinion regarding the financial statements taken as a whole. Accordingly,
we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying condensed consolidated financial
statements referred to above for them to be in conformity with generally
accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Lawson Products, Inc. as of
December 31, 1994, and the related consolidated statements of income and
retained earnings and cash flows for the year then ended, not presented
herein, and in our report dated February 23, 1995, we expressed an
unqualified opinion on those consolidated financial statements.
In our opinion, the information set forth in the accompanying condensed
consolidated balance sheet as of December 31, 1994, is fairly stated, in
all material respects, in relation to the consolidated balance sheet from
which it has been derived.
ERNST & YOUNG LLP
April 21, 1995
Part I
April 21, 1995
Board of Directors
Lawson Products, Inc.
We are aware of the incorporation by reference in the Registration
Statement (Form S-8 No. 33-17912 dated November 4, 1987) of Lawson
Products, Inc. of our report dated April 21, 1995 relating to the
unaudited condensed consolidated interim financial statements of Lawson
Products, Inc. which are included in its Form 10-Q for the quarter ended
March 31, 1995.
Pursuant to Rule 436(c) of the Securities Act of 1933 our report is not
part of the registration statement prepared or certified by accountants
within the meaning of Section 7 or 11 of the Securities Act of 1933.
ERNST & YOUNG LLP
Part I
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
Cash flows provided by operations for the three months ended March 31, 1995
decreased to $3,531,000 from $5,791,000 in the comparable period of the
prior year. This decline was due primarily to an increase in operating
assets and a decrease in operating liabilities. In addition to satisfying
operating requirements, current investments and cash flows from operations
are expected to finance the Company's future growth, cash dividends and
capital expenditures. Additions to property, plant and equipment were
$1,120,000 and $1,829,000, respectively, for the three months ended
March 31, 1995 and 1994. Capital expenditures during 1995 and 1994
include the construction of a Lawson outbound facility in Addison,
Illinois, which was substantially completed by the end of 1994, at a cost
of approximately of $5,600,000. This facility opened during the first
quarter of 1995.
At December 31, 1994, the Company was authorized to purchase up to
1,000,000 shares of its common stock. During the first three months of
1995, the Company expended $6,414,000 to acquire 252,500 shares.
Net sales for the three month period ended March 31, 1995, advanced 10.2%
to $54,845,000 relative to the similar period of 1994. The gains are
principally the result of increases in both the average order size and
number of orders processed.
Net income increased 23.5% to $5,025,000 ($.40 per share) for the three
months ended March 31, 1995 from $4,068,000 ($.30 per share) for the
comparable period of 1994. This increase is attributable to the gain in
net sales noted above, a slight improvement in gross margins, net life
insurance proceeds, and cost containment efforts, which more than offset a
higher effective income tax rate. The income per share increase was
positively impacted by the Company's share repurchase program.
Part II
OTHER INFORMATION
Items 1, 2, 3, 4, and 5 are inapplicable and have been omitted
from this report.
Item 6. Exhibits and Reports on Form 8-K.
(a) Not applicable.
(b) The registrant was not required to file Form 8-K
for the most recently completed quarter.
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.
LAWSON PRODUCTS, INC.
(Registrant)
Dated April 24, 1995 /s/ Bernard Kalish
Bernard Kalish
Chairman of the Board
Dated April 24, 1995 /s/ Joseph L. Pawlick
Joseph L. Pawlick
Vice President and Controller
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 8069
<SECURITIES> 44983
<RECEIVABLES> 27903
<ALLOWANCES> 0
<INVENTORY> 28143
<CURRENT-ASSETS> 97157
<PP&E> 36143
<DEPRECIATION> 0
<TOTAL-ASSETS> 165797
<CURRENT-LIABILITIES> 20086
<BONDS> 0
<COMMON> 17097
0
0
<OTHER-SE> 111470
<TOTAL-LIABILITY-AND-EQUITY> 165797
<SALES> 54845
<TOTAL-REVENUES> 55871
<CGS> 15421
<TOTAL-COSTS> 47632
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 253
<INTEREST-EXPENSE> 10
<INCOME-PRETAX> 8239
<INCOME-TAX> 3214
<INCOME-CONTINUING> 5025
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5025
<EPS-PRIMARY> 0.4
<EPS-DILUTED> 0.4
</TABLE>
