United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
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 33-75154
J.B. POINDEXTER & CO., INC.
(Exact name of registrant as specified in its charter)
Delaware 76-0312814
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1100 Louisiana
Suite 5400
Houston, Texas
77002
(Address of principal executive offices)
(Zip code)
(713) 655-9800
(Registrant's telephone number, including area code)
Not Applicable
(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
There were 3,059 shares of Common Stock, $.01 par value, of the registrant
outstanding as of May 14, 1998.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1998 1997
(Unaudited)
<S> <C> <C>
Current assets
Restricted cash .............................................. $ 1,767 $ 3,191
Accounts receivable, net of allowance for doubtful accounts of
$987 and $965, respectively ............................ 32,777 31,270
Inventories, net ............................................. 46,200 36,521
Deferred income taxes ........................................ 2,281 2,277
Prepaid expenses and other ................................... 581 1,005
--------- ---------
Total current assets ................................... 83,606 74,264
Property, plant and equipment, net ................................ 32,147 33,488
Net assets of discontinued operations ............................. 28,050 42,737
Goodwill, net ..................................................... 3,286 3,322
Deferred income tax ............................................... 5,264 5,259
Other assets ...................................................... 6,398 6,340
--------- ---------
Total assets ........................................... $ 158,751 $ 165,410
========= =========
LIABILITIES AND STOCKHOLDER'S DEFICIT
Current liabilities
Short-term debt .............................................. $ 2,297 $ 428
Current portion of long-term debt ............................ 997 1,279
Borrowings under revolving credit facility ................... 37,238 39,763
Accounts payable ............................................. 19,880 9,621
Accrued compensation and benefits ............................ 3,955 3,607
Accrued income taxes ......................................... 331 196
Other accrued liabilities .................................... 11,438 9,797
--------- ---------
Total current liabilities .............................. 76,136 64,691
--------- ---------
Noncurrent liabilities
Long-term debt, less current portion ......................... 101,944 102,191
Employee benefit obligations and other ....................... 3,296 3,269
--------- ---------
Total noncurrent liabilities ........................... 105,240 105,460
--------- ---------
Commitments and contingencies
Stockholder's deficit
Common stock and paid-in capital ............................. 16,486 16,486
Accumulated deficit .......................................... (39,111) (21,227)
--------- ---------
Total stockholder's deficit ............................ (22,625) (4,741)
--------- ---------
Total liabilities and stockholder's deficit ............ $ 158,751 $ 165,410
========= =========
<FN>
The accompanying notes are an integral part of these
consolidated financial statements.
</FN>
</TABLE>
- 2 -
<PAGE>
J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited-in thousands except share and per share amounts)
For the Three Months
Ended March 31,
1998 1997
-------- --------
Net sales ................................. $ 79,632 $ 69,006
Cost of sales ............................. 67,710 55,967
-------- --------
Gross Profit .............................. 11,922 13,039
Selling, general and administrative expense 10,301 9,886
Other (income) expense .................... (28) (2,663)
-------- --------
Operating income .......................... 1,649 5,816
Interest expense .......................... 4,061 3,866
-------- --------
Income (loss) from continuing operations,
before income taxes .............. (2,412) 1,950
Income tax provision ...................... 85 350
-------- --------
Income (loss), from continuing operations . (2,497) 1,600
Loss from discontinued operations, less
applicable taxes ................. (15,429) (3,209)
-------- --------
Net loss .................................. $(17,926) $ (1,609)
======== ========
Basic and diluted loss per share:
Loss from continuing operations ........ $ (816) $ 523
Loss from discontinued operations ......... (5,044) (1,049)
-------- --------
Net loss ............................... $ (5,860) $ (526)
======== ========
Weighted average shares outstanding ....... 3,059 3,059
======== ========
The accompanying notes are an integral part of these
consolidated financial statements.
- 3 -
<PAGE>
J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited-In thousands)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
1998 1997
---- ----
<S> <C> <C>
Net loss .......................................................... $(17,926) $ (1,609)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Non-cash provision for loss on sale of discontinued operations 14,385 --
Depreciation and amortization ................................ 2,980 3,148
(Gain) loss on sale of equipment ............................. 41 (2,626)
Deferred federal income tax provision ........................ (13) 1
Other ........................................................ 69 320
Increase (decrease) in operating cash flows resulting from:
Accounts receivable .......................................... (3,455) (6,838)
Inventories .................................................. (9,252) (8,875)
Prepaid expenses and other ................................... (77) 30
Accounts payable ............................................. 10,953 12,102
Accrued income taxes ......................................... 136 (222)
Accrued expenses and other ................................... 2,376 2,988
-------- --------
Net cash provided by (used in) operating activities ........ 217 (1,581)
-------- --------
Cash flows used in investing activities:
Proceeds from disposition of property plant and equipment .... 1,184 2,818
Acquisition of property, plant and equipment ................. (1,724) (1,995)
Other ........................................................ (21) (45)
-------- --------
Net cash provided by (used in) investing activities ....... (561) 778
-------- --------
Cash flows provided by (used in) financing activities:
Net proceeds (payments) of revolving lines of credit and
short-term debt ........................................... (724) 3,009
Payments of long-term debt and capital leases ................ (356) (573)
-------- --------
Net cash provided by (used in) financing activities .......... (1,080) 2,436
-------- --------
(Decrease) increase in restricted cash and cash equivalents ....... (1,424) 1,633
Restricted cash and cash equivalents, beginning of period ......... 3,191 2,607
-------- --------
Restricted cash and cash equivalents, end of period ............... $ 1,767 $ 4,240
======== ========
Supplemental information:
Cash paid for income taxes, net of refunds ................... $ 39 $ 118
======== ========
Cash paid for interest ....................................... $ 1,473 $ 1,208
======== ========
<FN>
The accompanying notes are an integral part of these
consolidated financial statements.
</FN>
</TABLE>
- 4 -
<PAGE>
J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) Organization and Business. J.B. Poindexter & Co., Inc. (JBPCO) and its
subsidiaries (the Subsidiaries, and, together with JBPCO, the Company), operate
manufacturing and wholesale distribution businesses. Subsidiaries consist of
Morgan Trailer Mfg. Co., (Morgan), Truck Accessories Group, Inc., (TAG), Lowy
Group, Inc. (Lowy), EFP Corporation (EFP), and Magnetic Instruments Corp. (MIC
Group).
The consolidated financial statements included herein have been prepared
by the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. In the opinion of management, the
information furnished reflects all adjustments, consisting only of normal
recurring adjustments, which are necessary for a fair presentation of the
results of the interim periods. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations. However, the Company believes that the disclosures are
adequate to make the information presented not misleading. Operating results for
the three-month period ended March 31, 1998 are not necessarily indicative of
the results that may be expected for the year ended December 31, 1998. These
financial statements should be read in conjunction with the audited consolidated
financial statements and notes thereto for the year ended December 31, 1997
filed with the Securities and Exchange Commission on Form 10-K.
(2) Comprehensive Loss. As of January 1, 1998, the Company adopted Statement
130, Reporting Comprehensive Income. Statement 130 establishes new rules for the
reporting and display of comprehensive income and its components; however, the
adoption of this Statement had no impact on the Company's net loss or
shareholder's deficit. Statement 130 requires foreign currency translation
adjustments which, prior to adoption, were reported separately in shareholder's
equity to be included in other comprehensive income. Prior year financial
statements have been reclassified to conform to the requirements of Statement
130. The components of comprehensive loss for the three-month periods ended
March 31, 1998 and 1997 are as follows:
1998 1997
---- ----
Net loss ............................... $(17,926) $ (1,609)
Foreign currency translation adjustments 42 (23)
-------- --------
Comprehensive loss ..................... $(17,884) $ (1,632)
======== ========
The accumulated foreign currency translation adjustment at March 31, 1998
and December 31, 1997 were $144,000 and $186,000, respectively.
- 5 -
<PAGE>
(3) Inventories. Consolidated net inventories consist of the following (in
thousands):
March 31, December 31,
1998 1997
---------- -----------
FIFO Basis Inventory:
Raw Materials .................. $17,533 $11,450
Work in Process ................ 15,479 13,143
Finished Goods ................. 1,791 980
------- -------
34,803 25,573
------- -------
LIFO Basis Inventory:
Raw Materials .................. 2,318 2,160
Work in Progress ............... 1,739 1,658
Finished Goods ................. 7,340 7,130
------- -------
11,397 10,948
------- -------
Total Inventory ........................ $46,200 $36,521
======= =======
If the first-in, first-out method had been used for all inventories,
inventories would have approximated inventory valued on a last-in, first-out
method at March 31, 1998 and at December 31, 1997.
(4) Discontinued Operations. Effective April 2, 1998 the Company signed a letter
of intent to sell principally all the assets less certain liabilities of TAG.
The final transaction, which is subject to a number of conditions, is expected
to close late in the second quarter of 1998. In anticipation of this
transaction, TAG's results of operations are reported as discontinued operations
in the Consolidated Financial Statements for all periods presented. In addition,
the net assets and liabilities, which will be disposed of relating to TAG, have
been segregated on the consolidated balance sheets from their historical
classifications to separately identify them as net assets of discontinued
operations. Condensed financial information relating to Net Assets of
Discontinued Operations is as follows (dollars in thousands):
March 31, December 31,
1998 1997
--------- ---------
Net assets of discontinued operations:
Current assets ................................. $21,266 $19,716
Property, net .................................. 12,329 12,841
Intangible assets .............................. 19,744 20,130
------- -------
Total Assets ................................... 53,339 52,687
------- -------
Less current liabilities ....................... 10,904 9,950
Less provision for estimated loss on disposal .. 14,385 --
------- -------
Net Assets ..................................... $28,050 $42,737
======= =======
- 6 -
<PAGE>
Revenues of the TAG division were $31,521,000 and $32,992,000 for the
three months ended March 31, 1998 and 1997, respectively. The losses from
discontinued operations were as follows for the three months ended March 31 (in
thousands):
1998 1997
---- ----
Loss from operations of TAG, less
applicable income taxes of $34
and $-0-, respectively ...................... $ 1,044 $ 3,209
Loss on disposal of TAG, including
provision of $641 for estimated
operating losses through disposal date,
less applicable income taxes of $-0- ........ 14,385 --
------- -------
$15,429 $ 3,209
======= =======
Losses from operations of TAG include interest expense of $874,000 and
$376,000 related to the borrowings of TAG under the Revolving Loan Agreement for
the three months ended March 31, 1998 and 1997 respectively. The borrowings are
anticipated to be re-paid using the proceeds from the sale of TAG. The Company
has not recorded tax benefits for the TAG losses due to the accumulation of net
operating losses that may not be realizable.
(5) Gain on Sale of Facility. Lowy sold a warehouse and office facility near
Minneapolis, Minnesota during the three months ended March 31, 1997 and realized
a $2.6 million gain on the transaction which is included in other income and
expense on the accompanying statement of operations.
(6) Revolving Credit Agreement. Effective May 13, 1998 the Company's principal
revolving credit lenders agreed to increase the maximum borrowings available to
the Company's subsidiaries, under the Revolving Loan Agreement, from $50.0
million to $55.0 million. At May 13, 1998 the maximum available borrowing was
$55.0 million, unused available borrowing capacity under the Revolving Loan
Agreement was approximately $11.7 million.
(7) Income Taxes. The income tax expense of $85,000 in 1998 and $350,000 in
1997 represent state and foreign income taxes payable. The provision for income
taxes differs from amounts computed based on the federal statutory rates
principally due to an increase in the deferred tax valuation allowance relating
to net operating losses that may not be realizable.
(8) Contingencies.
Claims and Lawsuits. The Company is involved in certain claims and
lawsuits arising in the normal course of business. In the opinion of management,
the ultimate resolution of these matters will not have a material adverse effect
on the financial position or results of operations of the Company.
Concentration of Credit Risk. Together, two of Morgan's customers
accounted for approximately 53% and 52% of Morgan's net sales during the three
months ended March 31, 1998 and 1997, respectively, and 32% and 28% of
consolidated net sales, respectively.
- 7 -
<PAGE>
Environmental Matters. Morgan has been named as a potentially
responsible party ("PRP") with respect to its generation of hazardous materials
alleged to have been handled or disposed of at two Federal Superfund sites in
Pennsylvania and one in Kansas. Although a precise estimate of liability cannot
currently be made with respect to these sites, based upon information known to
Morgan, the Company currently believes that it's proportionate share, if any, of
the ultimate costs related to any necessary investigation and remedial work at
those sites will not have a material adverse effect on the Company.
(9) Segments Disclosure. In June 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standard No. 131 - "Disclosure About
Segments of an Enterprise and Related Information" ("SFAS 131"). Although SFAS
131 is effective beginning the first quarter of 1998, the Company has elected
not to report segment information in interim financial statements in the first
year of application consistent with the provisions of the statement.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The Company operates in industries that are dependent on various factors
reflecting general economic conditions, including corporate profitability,
consumer spending patterns, sales of truck chassis and new pickup trucks, new
and remodeling construction activity and levels of oil and gas exploration
activity.
On April 2,1998 the Company signed a letter of intent to sell the assets
and operations of TAG. Accordingly, the results of operations of TAG have been
classified as discontinued operations in the consolidated statement of
operations.
Effective July 1, 1997 the operations of Gem Top which manufactures and
distributes light truck caps, primarily to commercial customers, were
transferred from TAG to Morgan. The following historical financial results and
comparisons for Morgan and TAG have not been restated to reflect the transfer of
Gem Top. The operating results of Gem Top were not material to the operating
results of Morgan or TAG. Inter-company sales between Gem Top and TAG have been
eliminated.
Results of Operations
First Quarter 1998 Compared to First Quarter 1997
Net sales of continuing operations increased 16% to $80.0 million for
the three months ended March 31, 1998 compared to $69.0 million during 1997.
Sales at Morgan increased 29% or $11.0 million accounting for the majority of
the change. The Company recorded sales increases at MIC Group of 3% or $0.2
million and at EFP of 5% or $0.4 million. Sales at Lowy declined 4% or $0.6
million.
Cost of sales increased 22% to $68.1 million for the three months ended
March 31, 1998 compared to $56.0 million during 1997. Gross profit decreased 9%
to $11.9 million (15% of net sales) for the first three months of 1998 compared
to $13.0 million (19% of net sales) for 1997.
- 8 -
<PAGE>
Selling, general and administrative expense increased 4% to $10.3
million (13% of net sales) for the three months ended March 31, 1998 compared to
$9.9 million (14% of net sales) during 1997.
Operating income from continuing operations decreased 72% to $1.6
million (2% of net sales) for the three months ended March 31, 1998 compared to
operating income of $5.8 million (8% of net sales) in 1997. Operating income for
the three months ended March 31, 1997 included a $2.7 million gain on the sale
of certain real property by the Lowy Group.
Interest expense increased 5% to $4.1 million during the three months
ended March 31, 1998 compared to $3.9 million during 1997. Average total
borrowings increased $8.1 million or 6% during the 1998 period compared to the
same period in 1997.
The Company's income (loss) on continuing operations before income taxes
and discontinued operations decreased $4.4 million to a loss of $2.4 million for
the three months ended March 31, 1998 compared to a profit of $2.0 million
during the same period in 1997. The decrease was due primarily to a gain on sale
of property at Lowy of $2.7 million during 1997, and a decline in operating
results at Morgan during 1998.
The provision for income tax of $0.1 million for the first three months
of 1998 consisted of state income taxes in jurisdictions where no benefits will
be received for losses at certain divisions. Valuation allowances have been
provided against the tax benefits of operating losses that may not be
realizable.
Morgan
First Quarter 1998 Compared to First Quarter 1997
Net sales, including Gem Top third party sales, increased 28% to $48.0
million for the first three months of 1998 compared to sales of $37.4 million
for the first three months of 1997 as demand for Morgan's van bodies increased.
Shipments increased 15% during the 1998 period compared to 1997 including a 26%
increase in retail product shipments. Backlog at March 31, 1998 was $68.1
million compared to $55.2 million at December 31, 1997 and $51.1 million at
March 31, 1997.
Cost of sales increased 36% to $44.2 million for the first three months
of 1998 compared to $32.4 million for the same period in 1997. Gross profit
decreased 17% to $4.2 million (9% of net sales) during 1998 compared to $5.0
million (13% of net sales) during 1997, primarily due to increased raw material
and labor costs.
Selling, general and administrative expense increased 20% to $4.2
million (9% of net sales) for the first three months of 1998 compared to $3.5
million (9% of net sales) for the same period of 1997, due primarily to
increased selling expenses.
Morgan's operating income decreased $1.6 million to a loss of $0.1
million during the first three months of 1998 compared to a profit of $1.5
million for the same period of 1997 due to the decrease in gross margins. Lowy
- 9 -
<PAGE>
First Quarter 1998 Compared to First Quarter 1997
Net sales decreased 4% to $15.9 million for the first three months of
1998 compared to $16.5 million for the first three months of 1997. Third party
sales from the carpet manufacturing business decreased 11% to $6.5 million and
sales from the floor covering distribution business increased 1% to $9.4 million
Cost of sales decreased 1% to $12.0 million for the first three months
of 1998 compared to $12.1 million for the same period in 1997. Gross profit
decreased 13% to $3.9 million (25% of net sales) for the first three months of
1998 compared to $4.4 million (27% of net sales) for the 1997 period.
Selling, general and administrative expense decreased 4% to $3.7 million
(23% of net sales) for the first three months of 1998 compared to $3.9 million
(24% of net sales) for the first three months of 1997.
Lowy Distribution sold a warehouse facility during the first quarter of
1997 period realizing a gain of $2.6 million which was included in Other Income
and Expense for the three months ended March 31, 1997.
Lowy Group's operating income decreased $3.0 million to $0.2 million for
the first three months of 1998 compared to $3.2 million for the first three
months of 1997. $2.7 million of the decrease was due to the gain realized on the
sale of certain properties during 1997.
EFP
First Quarter 1998 Compared to First Quarter 1997
Net sales increased 5% to $8.1 million for the first three months of
1998 compared to $7.7 million for the comparable period of 1997, primarily due
to increased sales of packaging products.
Cost of sales was essentially flat at $6.3 million during both the 1998
period and during 1997. Gross profit increased to $1.9 million (23% of net
sales) for the first three months of 1998 compared to $1.5 million (19% of net
sales) for the first three months of 1997. The increase in gross profit as a
percentage of sales was due to a change in product mix and increased absorption
of overhead resulting from higher sales volume.
Selling, general and administrative expenses were $1.0 million (12% of
net sales) for the first three months of 1998 equal to the same period in 1997
(13% of net sales).
EFP's operating income increased to $0.9 million for the first three
months of 1998 compared to $0.5 million for the first three months of 1997,
primarily due to the improved absorption of overhead expenses.
- 10 -
<PAGE>
MIC Group
First Quarter 1998 Compared to First Quarter 1997
Net sales increased 3% to $7.6 million for the first three months of
1998 compared to $7.4 million during the comparable period in 1997 as result of
an increased demand for the Company's services in the production of components
used in the exploration and production of oil and gas.
Cost of sales increased 7% to $5.6 million for the first three months of
1998 compared to $5.2 million for the first three months of 1997. Gross profit
decreased to $2.0 million (26% of net sales) for the first three months of 1998
compared to $2.1 million (29% of net sales) for the first three months of 1997.
The decrease in gross profit as a percent of sales was due primarily to
increased material and labor costs.
Selling, general and administrative expenses of $0.8 million (11% of net
sales) for the first three months of 1998 is comparable to expenses for the same
period in 1997.
Operating income decreased 14% to $1.1 million for the first three
months of 1998 compared to $1.3 million for the first three months of 1997.
Liquidity and Capital Resources
Operating activities during the three months ended March 31, 1998
generated cash of $0.2 million compared to using cash of $1.6 million during the
same period in 1997. Increases in inventory were offset by increases in accounts
payable. Inventory at Morgan increased $7.9 million during the three months
ended March 31, 1998, in response to a 23% or $12.9 million increase in backlog
at March 31, 1998 compared to December 31, 1997.
The ability to borrow under the Revolving Credit Agreement depends on
the amount of eligible collateral which in turn depends on certain advance rates
applied to the value of accounts receivables and inventory. At March 31, 1998,
the Company had total borrowing availability of $50.0 million, of which $7.0
million was used to secure letters of credit and finance trade transactions.
Additionally, $35.4 million had been borrowed to fund operations resulting in
unused availability of $7.6 million. Effective May 13, 1998 the Company's
revolving credit lenders agreed to increase the amount of total available
borrowings from $50.0 million to $55.0 million. At May 13, 1998 the Company had
unused available borrowing capacity of $11.7 million under the terms of the
Revolving Credit Agreement.
Capital expenditures for the period of $1.7 million related primarily to
the maintenance of existing capacity.
The Company is pursuing the sale of TAG and has accordingly treated the
operations of TAG as discontinued. The anticipated proceeds from the sale of TAG
will be used to pay down revolver borrowings by approximately $15.0 million and
long-term debt by approximately $2.5 million. The amount in excess of the TAG
borrowings will increase the unused available borrowing capacity of
- 11 -
<PAGE>
the continuing operations. The results of operations of TAG are not anticipated
to significantly affect liquidity prior to their disposal.
The Company believes that it has adequate resources to meet its working
capital and capital expenditure requirements consistent with past trends and
practices. Management believes that its cash balances and the borrowing
availability under the Revolving Loan Agreement will satisfy the Company's cash
requirements for the foreseeable future given its anticipated additional capital
expenditure, working capital requirements and its known obligations. The Company
is in compliance with the terms of the Revolving Loan Agreement.
Discontinued Operations - Truck Accessories Group (TAG)
Effective April 2,1998 the Company signed a letter of intent to sell the
assets less certain liabilities of TAG. Accordingly, the results of operations
have been classified as discontinued operations in the consolidated statement of
operations. Management has provided $14.4 million for an estimated loss on
disposal of TAG including a provision for anticipated losses though the disposal
date, net of applicable taxes. The final transaction, which is subject to a
number of conditions, is expected to close late in the second quarter of 1998.
First Quarter 1998 Compared to First Quarter 1997
Net sales decreased 4% to $31.5 million for the three months ended March
31, 1998 compared to $33.0 million for the same period in 1997. TAG
Manufacturing's net third party sales decreased 11% to $18.5 million for the
three months ended March 31, 1998 compared to $20.8 million during 1997. Net
third party sales by Leer Manufacturing declined $1.8 million or 16% which was
partially offset by a $0.2 million or 6% increase at Raider and a $0.4 million
or 8% increase at Century.
Net third party sales at TAG Distribution increased 7% to $13.0 million
for the three months ended March 31, 1998 from $12.2 million for the first three
months in 1997. At Leer Retail, sales decreased 9% to $7.5 million for the first
three months compared to $8.3 million in the same period of 1997. Same store
sales increased approximately 2% or $0.1 million. Leer Retail closed six stores
between July 1996 and December 1997, which reduced sales approximately $0.9
million during the three months ended March 31, 1998, compared to 1997.
Wholesale sales increased 41% or $1.6 million due to the October 31, 1997
acquisition of Midwest Truck After Market Inc., a wholesale distributor of light
truck accessories based in Tulsa Oklahoma.
Gross profit during the first three months of 1998 increased $0.5
million or 6% to $8.6 million compared to $8.1 million during the 1997 period.
Gross profit was 27% of net sales during the 1998 period compared to 25% during
the 1997 period. TAG Distribution gross profit increased 7% to $4.2 million on
increased sales as gross profit as a percentage of sales stayed flat at 32%
during 1998 and 1997. TAG Manufacturing's gross profit increased 5% or $0.5
million on lower sales as gross profit as a percentage of sales increased to 21%
as compared to 17% in the same quarter in 1997. The increase of gross profit as
a percentage of sales at TAG Manufacturing the three months of 1998 compared to
1997 was primarily due to the effectiveness of cost controls at Leer
- 12 -
<PAGE>
Manufacturing, a price increase at 20th Century Fiberglass, and reductions in
material costs and warranty charges at Raider.
Selling, general and administrative expense decreased 21% to $8.6
million (or 27% of net sales) for the first three months of 1998 compared to
$10.9 million (or 33% of net sales) for the first three months of 1997. The
decrease was due primarily to lower general and administrative expenses as a
result of the closure of TAG Distribution's headquarters, lower sales expenses
at TAG Distribution as a result of the closure of stores, and lower general and
administrative costs at TAG Manufacturing as a result of lower employment as
well as a reduction of warranty and other reserves in the amount of $0.9
million.
TAG's operating loss decreased to approximately zero for the first three
months of 1998 compared to a loss of $2.8 million for the first three months of
1997. The decreased operating loss was due primarily to the cost containment
measures taken by management during 1997, which are continuing.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Forward-looking statements in this report, including without limitation,
statements relating to the Company's plans, strategies, objectives,
expectations, intentions and adequacy of resources, are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Investors are cautioned that such forward-looking statements involve risks and
uncertainties including without limitation the following: (1) the Company's
plans, strategies, objectives, expectations and intentions are subject to change
at any time at the discretion of the Company; (2) any sale of a business unit is
subject to many factors including terms considered satisfactory to the
management of the Company; and (3) other risks and uncertainties indicated from
time to time in the Company's filings with the Securities and Exchange
Commission.
PART II. OTHER INFORMATION
Item 5. Other Information
Management changes. Effective April 13, 1998 the Company appointed Peter
K. Hunt president of Morgan. Prior to assuming his responsibilities at Morgan,
Mr. Hunt was the senior vice President and General Manager of the Industrial
Products Group of Greenfield Industries, Inc.
On April 20, 1998, the Company appointed James Levine as President of
the Diversified Manufacturing Group of the Company. Mr. Levine's
responsibilities will include EFP, MIC Group and Lowy Group. Mr. Levine was
previously the General Manager of the Precision Abrasives Group of the Norton
Company.
- 13 -
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits. The following exhibits are filed herewith:
None
b. Reports on Form 8-K. The Company filed the following reports on
Form 8-K during the quarter for which this Form 10-Q is filed:
None
- 14 -
<PAGE>
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.
J.B. POINDEXTER & CO., INC.
(Registrant)
Date: May 15, 1998 By: S. Magee
-----------------------------------------------
S. Magee, Chief Financial Officer and Treasurer
By: R.S. Whatley
-----------------------------------------------
R. S. Whatley, Chief Accounting Officer
- 15 -
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE 1997 3RD
QUARTER 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,767
<SECURITIES> 0
<RECEIVABLES> 33,764
<ALLOWANCES> 987
<INVENTORY> 46,200
<CURRENT-ASSETS> 83,606
<PP&E> 32,147
<DEPRECIATION> 0
<TOTAL-ASSETS> 158,751
<CURRENT-LIABILITIES> 76,136
<BONDS> 105,240
0
0
<COMMON> 16,486
<OTHER-SE> (39,111)
<TOTAL-LIABILITY-AND-EQUITY> 158,751
<SALES> 79,632
<TOTAL-REVENUES> 79,632
<CGS> 67,710
<TOTAL-COSTS> 67,610
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,061
<INCOME-PRETAX> (2,412)
<INCOME-TAX> 85
<INCOME-CONTINUING> (2,497)
<DISCONTINUED> (15,429)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (17,926)
<EPS-PRIMARY> (5.860)
<EPS-DILUTED> (5.860)
<FN>
OTHER EXPENSES ARE INCLUDED IN SELLING, GENERAL AND ADMINISTRATIVE ON
THE FINANCIAL STATEMENTS.
</FN>
</TABLE>
