UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period 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: 0-16319
LUND INTERNATIONAL HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware 41-1568618
(State or other jurisdiction (I.R.S. Employer
of organization) Identification No.)
911 LUND BOULEVARD
ANOKA MINNESOTA 55303
Registrant's telephone number, including area code: (612) 576-4200
- --------------------------------------------------------------------------------
(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 close of the latest practicable date.
At May 3, 1996, 4,397,970 shares of the registrant's common stock, $.10 par
value, were outstanding.
LUND INTERNATIONAL HOLDINGS, INC.
QUARTERLY REPORT ON FORM 10-Q
INDEX
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets (Unaudited) March 31, 1996
and June 30, 1995 1-2
Consolidated Income Statements (Unaudited)
Three and nine months ended March 31, 1996 and 1995 3
Consolidated Statements of Cash Flows (Unaudited)
Nine months ended March 31, 1996 and 1995 4
Notes to Consolidated Financial Statements (Unaudited) 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 6-8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 9
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
LUND INTERNATIONAL HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, June 30,
1996 1995
----------- -----------
ASSETS
Current assets:
Cash and temporary cash investments $ 372,739 $ 269,168
Marketable securities 7,561,116 11,026,034
Restricted cash and marketable securities 544,115 783,793
Accounts receivable, net 9,294,221 9,674,908
Inventories 6,162,777 4,669,550
Deferred income taxes 678,800 678,800
Other current assets 1,001,527 830,448
----------- -----------
Total current assets 25,615,295 27,932,701
----------- -----------
Property and equipment, net 6,700,315 6,630,666
Restricted cash and marketable securities 1,120,149 1,336,564
Note receivable 2,230,089 --
Other assets, net 872,277 806,267
----------- -----------
Total long term assets 10,922,830 8,773,497
----------- -----------
TOTAL ASSETS $36,538,125 $36,706,198
=========== ===========
The accompanying notes are an integral part of
these financial statements.
LUND INTERNATIONAL HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
March 31, June 30,
1996 1995
------------ ------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, trade $ 1,580,576 $ 2,797,718
Accrued expenses and other 873,236 2,563,329
Income taxes payable 245,631 391,126
Long-term debt - current portion 440,000 420,000
------------ ------------
Total current liabilities 3,139,443 6,172,173
------------ ------------
Long-term debt, less current portion 4,590,000 5,030,000
------------ ------------
Stockholders' equity:
Preferred stock, $.01 par value
Authorized 2,000,000 shares;
none issued -- --
Common stock, $.10 par value
Authorized 25,000,000 shares;
issued and outstanding 4,391,970 and
4,387,902 shares at March 31, 1996
and June 30, 1995, respectively 439,197 438,790
Class B common stock, $.01 par value
Authorized 3,000,000 shares;
none issued -- --
Additional paid-in capital 975,875 767,417
Unrealized holding losses on marketable securities (153,532) (150,356)
Unearned deferred compensation (177,002) (242,175)
Retained earnings 27,724,144 24,690,349
------------ ------------
Total stockholders' equity 28,808,682 25,504,025
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 36,538,125 $ 36,706,198
============ ============
</TABLE>
The accompanying notes are an integral part
of these financial statements.
LUND INTERNATIONAL HOLDINGS, INC.
CONSOLIDATED INCOME STATEMENTS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 11,524,922 $ 10,623,974 $ 32,229,221 $ 32,787,848
Cost of goods sold 7,240,505 6,188,184 20,046,988 18,713,545
------------ ------------ ------------ ------------
Gross profit 4,284,417 4,435,790 12,182,233 14,074,303
Operating expenses:
General and administrative 912,165 1,092,968 3,022,428 3,008,976
Selling and marketing 1,295,611 1,173,804 3,882,976 3,345,346
Research and development 311,380 219,927 833,326 685,641
------------ ------------ ------------ ------------
Total operating expenses 2,519,156 2,486,699 7,738,730 7,039,963
------------ ------------ ------------ ------------
Income from operations 1,765,261 1,949,091 4,443,503 7,034,340
Other income (expense):
Interest expense (77,517) (36,101) (247,310) (36,101)
Interest income 191,801 146,342 507,399 429,999
Other (20,077) 24,910 (71,848) (98,898)
------------ ------------ ------------ ------------
Other income, net 94,207 135,151 188,241 295,000
------------ ------------ ------------ ------------
Income before income taxes 1,859,468 2,084,242 4,631,744 7,329,340
Provision for income taxes 641,516 729,486 1,597,949 2,565,120
------------ ------------ ------------ ------------
Net income $ 1,217,952 $ 1,354,756 $ 3,033,795 $ 4,764,220
============ ============ ============ ============
Net income per share $ 0.28 $ 0.31 $ 0.69 $ 1.08
============ ============ ============ ============
Weighted average number
of shares outstanding 4,393,437 4,429,034 4,398,074 4,419,979
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part
of these financial statements.
LUND INTERNATIONAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,033,795 $ 4,764,220
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 654,131 383,245
Gain on disposal of property and equipment (10,758) (24,591)
Provision for doubtful accounts 170,657 27,374
Provision for (reduction in) inventory reserves 88,895 (73,569)
Increase in cash surrender value of life insurance (131,490) (140,792)
Changes in operating assets and liabilities:
Accounts receivable 210,030 (1,722,978)
Inventories (1,582,122) (1,232,460)
Other current assets and other assets (144,364) (306,894)
Accounts payable, trade (1,217,142) 1,343,277
Accrued expenses and other (780,213) (578,580)
Income taxes payable (145,495) (762,200)
----------- -----------
Net cash provided by operating activities 145,924 1,676,052
----------- -----------
Cash flows from investing activities:
Purchases of property and equipment (635,906) (5,450,912)
Proceeds from sales of property and equipment 26,822 34,850
Purchases of marketable securities (5,182,454) (4,233,871)
Proceeds from sales and redemption of marketable securities 8,644,196 2,336,254
Change in restricted cash and marketable securities 456,093 (1,905,678)
Increase in note receivable (2,230,089) --
----------- -----------
Net cash provided by (used in) investing activities 1,078,662 (9,219,357)
----------- -----------
Cash flows from financing activities:
Cost of bond issuance, net -- (151,682)
Proceeds from bond offering -- 5,450,000
Checks issued in excess of cash balances (909,880) --
Payment on long-term debt (420,000) --
Proceeds from issuance of common stock 208,865 464,163
----------- -----------
Net cash (used in) provided by financing activities (1,121,015) 5,762,481
----------- -----------
Net increase (decrease) in cash and
and temporary cash investments 103,571 (1,780,824)
Cash and temporary cash investments:
Beginning of period 269,168 3,051,861
----------- -----------
End of period $ 372,739 $ 1,271,037
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the period for income taxes $ 1,721,000 $ 3,327,319
=========== ===========
Cash paid during the period for interest $ 333,843 $ 36,101
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
LUND INTERNATIONAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
A - Principles of Consolidation.
The accompanying consolidated financial statements include the accounts of Lund
International Holdings, Inc. and its wholly-owned subsidiaries, Lund Industries,
Incorporated and Lund International FSC, Inc. The consolidated balance sheet as
of March 31, 1996, and the related consolidated income statements for the
three-and nine-month periods ended March 31, 1996 and 1995 and consolidated
statements of cash flows for the nine-month periods ended March 31, 1996 and
1995 are unaudited. In the opinion of management, all adjustments necessary for
a fair presentation of such financial statements have been included. Such
adjustments consisted only of normal recurring items.
The financial statements and notes are presented as permitted by Form 10-Q, and
do not contain certain information included in the Company's annual financial
statements and notes.
B - Inventories.
Inventories consisted of the following:
March 31, June 30,
1996 1995
----------- -----------
Raw Materials $ 2,879,954 $ 2,195,717
Finished goods and work in process 3,282,823 2,473,833
----------- -----------
Total $ 6,162,777 $ 4,669,550
=========== ===========
C - Earnings per Share.
Earnings per share is computed based on the weighted average number of common
and common equivalent shares outstanding during the period. Dilutive stock
options and warrants are considered common stock equivalents for the purposes of
this computation.
D - Note Receivable.
The Company entered into an agreement to provide working capital funds and to
market products for Innovative Accessories, Inc. dba Luxxus Trux Covers
("Innovative Accessories") during the second quarter of fiscal year 1996. In
connection with the arrangement, the Company has provided working capital
funding of $2,230,089. As of March 31, 1996, Innovative Accessories had not
complied with certain provisions of said agreement.
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations
RESULTS OF OPERATIONS FOR THREE AND NINE MONTHS ENDED
MARCH 31, 1996
AS COMPARED TO THREE AND NINE MONTHS ENDED
MARCH 31, 1995
Introduction
Over the last four fiscal years ended June 30, 1995, Lund has experienced
significant sales growth due to the popularity of its product lines, the
strength of its marketing programs and the growth in unit sales of light duty
trucks. During fiscal 1995, Lund responded to this increased demand by adding
additional capacity with a new facility which was completed in March 1995. This
facility has allowed Lund to meet current customer demand, reduce backlog and
improve order fill rates. As a result of improved servicing levels during the
fourth quarter of fiscal 1995, Lund's customers decreased inventory stock levels
to improve inventory turns. Additionally, with the increased capacity, the
Company entered fiscal 1996 without the historical backlog that resulted from
production and shipping constraints in the previous facility. These fundamental
improvements, in addition to the generally soft retail market, contributed to
the decrease in net sales and income for the first nine-month period of fiscal
1996 compared to fiscal 1995. During the latter part of second quarter and
throughout the third quarter of fiscal 1996, sales were also impacted by delays
in the design, production and shipment of new product applications for the 1997
Ford F series pickup and Lund's new Solar(TM) and Lunar(TM) visors. The Company
anticipates these product development issues will be corrected during the fourth
quarter of fiscal 1996.
Results of Operations
Net sales for the three-month period ended March 31, 1996 increased 8.5% to
$11,524,922 from $10,623,974 for same period ended March 31, 1995. Although
sales of the Solar and Lunar visor lines did not meet expectations, they did
contribute to the increase in sales for the third quarter of fiscal 1996 over
fiscal 1995. Net sales for the nine-month period ended March 31, 1996 decreased
1.7% to $32,229,221 from $32,787,848 for the same period ended March 31, 1995.
The net sales decrease for the nine-month period was primarily due to Lund's
customers reducing their inventory levels, an overall sluggishness in retail
sales and delays in new product offerings and shipments.
For the three-month period ended March 31, 1996, gross profit decreased 3.4% to
$4,284,417 from $4,435,790 for the same period ended March 31, 1995. For the
nine-month period ended March 31, 1996, gross profit decreased 13.4% to
$12,182,233 from $14,074,303 for the same period ended March 31, 1995. For the
three-month period ended March 31, 1996, gross profit margin was 37.2% compared
to 41.8% for the comparable period ended March 31, 1995. For the nine-month
period ended March 31, 1996, gross profit margin was 37.8% compared to 42.9% for
the comparable period ended March 31, 1995. The decrease in gross profit margins
for both periods primarily resulted from (i) higher raw material and packaging
expenses, (ii) a shift in sales mix which continued to favor plastic products
and lower gross margin fiberglass products, (iii) higher labor and manufacturing
operating costs as a percent of sales due to lower production and sales levels,
and (iv) higher warranty expenses on the acrylic hood protectors.
For the three-month period ended March 31, 1996, general and administrative
expenses decreased 16.5% to $912,165 from $1,092,968 for the same period ended
March 31, 1995. For the nine-month period ended March 31, 1996, general and
administrative expenses increased less than 1% to $3,022,428 from $3,008,976
for the same period ended March 31, 1995. The decreased expenses for the
three-month period ended March 31, 1996 resulted from $155,000 of relocation
expenses and higher bonus expenses for the same period in 1995, which was
partially offset by higher salary, legal patent, and consulting fees. For the
nine month periods, the expenses in dollars were virtually the same although
higher bad debt expenses were a significant component of general and
administrative expenses in fiscal 1996 while higher bonus and relocation
expenses were a significant factor in fiscal 1995. As a percent of net sales,
general and administrative expenses were 7.9% and 10.3% for the three-month
periods ended March 31, 1996 and 1995, respectively. As a percent of net sales,
general and administrative expenses were 9.4% and 9.2% for the nine-month
periods ended March 31, 1996 and 1995, respectively.
For the three-month period ended March 31, 1996, selling and marketing expenses
increased 10.4% to $1,295,611 from $1,173,804 for the same period ended March
31, 1995. For the nine-month period ended March 31, 1996, selling and marketing
expenses increased 16.1% to $3,882,976 from $3,345,346 for the same period ended
March 31, 1995. The increase for both the three and nine-month periods primarily
resulted from increased customer co-operative advertising, printing, sales
displays and promotional expenses. As a percent of net sales, selling and
marketing expenses increased to 11.2% and 12.0%, from 11.0% and 10.2% for the
three-month and nine-month periods ended March 31, 1996 and 1995, respectively.
For the three-month period ended March 31, 1996, research and development
expenses increased 41.6% to $311,380 from $219,927 for the same period ended
March 31, 1995. For the nine-month period ended March 31, 1996, research and
development expenses increased 21.5% to $833,326 from $685,641 for the
comparable period in fiscal 1995. As a percent of net sales, research and
development expenses increased to 2.7% from 2.1% for the three-month period
ended March 31, 1996 compared to the same period ended March 31, 1995. As a
percent of net sales, research and development expenses were 2.6% and 2.1% for
the nine-month periods ended March 31, 1996 and 1995, respectively. These
increases primarily resulted from higher facility, operating lease expenses,
tooling costs and salaries allocated to research and development. The percentage
increases were also impacted by the lower than anticipated sales.
Liquidity and Capital Resources
The Company has generally funded its operations to date from operating cash
flow. The Company had working capital of $22,475,852 including cash and
marketable securities of $8,477,970 as of March 31, 1996 compared to $21,760,528
including cash and marketable securities of $12,078,995 as of June 30, 1995. The
reduction of $3,601,025 in cash and marketable securities was principally due to
(i) an increase of $2,230,089 in note receivable from Innovative Accessories,
Inc., (ii) a $1,217,142 decrease in accounts payable resulting from lowering
outside purchasing levels and by fully utilizing cash discounts and (iii) a
$1,493,227 increase in inventories as the Company has built inventories to
maintain customer servicing levels with increased sales anticipated in the
Company's fourth fiscal quarter.
The Company believes that its existing cash and internally generated funds will
be sufficient to meet the Company's working capital and capital expenditure
requirements for the foreseeable future. If the Company makes significant future
acquisitions, however, it may be required to raise funds through bank financing
or the issuance of debt or equity securities.
PART II. OTHER INFORMATION
Item 5. - None
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports on Form 8-K
Form 8-K filed April 15, 1996 with respect to a change in the
Company's Certifying Accountant.
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.
LUND INTERNATIONAL HOLDINGS, INC.
(Registrant)
By /s/ William J. McMahon
William J. McMahon
President and Chief Executive Officer
(Principal Executive Officer)
By /s/ Jay M. Allsup
Jay M. Allsup
Chief Financial Officer
(Principal Financial and Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> MAR-31-1996
<CASH> 685,078
<SECURITIES> 7,792,892
<RECEIVABLES> 10,141,052
<ALLOWANCES> 846,831
<INVENTORY> 6,162,777
<CURRENT-ASSETS> 25,615,295
<PP&E> 6,700,315
<DEPRECIATION> 2,117,961
<TOTAL-ASSETS> 36,538,125
<CURRENT-LIABILITIES> 3,139,443
<BONDS> 4,590,000
0
0
<COMMON> 439,197
<OTHER-SE> 28,369,665
<TOTAL-LIABILITY-AND-EQUITY> 36,538,125
<SALES> 32,229,221
<TOTAL-REVENUES> 32,229,221
<CGS> 20,046,988
<TOTAL-COSTS> 27,785,718
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 170,657
<INTEREST-EXPENSE> 246,812
<INCOME-PRETAX> 4,631,744
<INCOME-TAX> 1,597,949
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,033,795
<EPS-PRIMARY> 0.69
<EPS-DILUTED> 0.69
</TABLE>
