<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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: SEPTEMBER 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
ACT OF 1934
For the transition period from _________________ to _________________
Commission File Number: 0-24094
LESLIE BUILDING PRODUCTS, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 13-3764357
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
200 Mamaroneck Avenue, White Plains, N.Y. 10601
(Address of principal executive offices)
(Zip Code)
(914) 421-2545
Registrant's Telephone Number including Area Code
(Former name, former address and former fiscal year,
if changed since last year)
Indicate by check marks 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 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 XX No _____
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. 4,822,167 shares of common
stock as of October 25, 1996.
<PAGE>
LESLIE BUILDING PRODUCTS, INC.
INDEX TO FINANCIAL STATEMENTS FILED WITH
QUARTERLY REPORT OF REGISTRANT ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1996
(UNAUDITED)
Page
PART I - FINANCIAL INFORMATION
CONSOLIDATED STATEMENTS OF OPERATIONS 3
CONSOLIDATED BALANCE SHEETS 4
CONSOLIDATED STATEMENTS OF CASH FLOWS 5
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7-8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 9-13
PART II - OTHER INFORMATION
Item 1 14
SIGNATURES 15
<PAGE>
LESLIE BUILDING PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
1996 1995 1996 1995
---- ---- ---- ----
(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
Net sales $ 65,946 $ 60,694 $ 21,226 $ 22,088
Cost of sales (Note 2) 53,250 49,881 16,969 18,029
--------- -------- --------- --------
Gross profit 12,696 10,813 4,257 4,059
--------- -------- --------- --------
Selling, general and administrative expenses 10,172 9,645 3,379 3,531
Restructuring expense 854 385
Revaluation of goodwill (Note 5) 5,092 5,092
--------- -------- --------- --------
10,172 15,591 3,379 9,008
--------- -------- --------- --------
Operating profit (loss) 2,524 (4,778) 878 (4,949)
Interest expense, net 1,273 760 399 299
--------- -------- --------- --------
Net income (loss) $ 1,251 $ (5,538) $ 479 $ (5,248)
========= ======== ========= ========
Net income (loss) per common share $ .26 $ (1.16) $ .10 $ (1.10)
========= ======== ========= ========
Weighted average common shares outstanding 4,812 4,787 4,820 4,787
========= ======== ========= ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
LESLIE BUILDING PRODUCTS, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995 1995
---- ---- ----
(In thousands, except shares and per share amounts)
<S> <C> <C> <C>
ASSETS
Current assets
Cash $ 102 $ 36 $ 15
Accounts receivable, trade, less allowance for
doubtful accounts 9,872 11,581 7,707
Inventories (Note 2) 12,721 12,977 12,242
Prepaid expenses and other current assets 1,555 2,204 1,842
--------- --------- ---------
Total current assets 24,250 26,798 21,806
Fixed assets, net 15,745 15,445 16,383
Other assets 408 580 560
--------- --------- ---------
Total assets $ 40,403 $ 42,823 $ 38,749
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt $ 923 $ 463 $ 551
Accounts payable, trade 6,614 7,572 5,255
Accrued expenses and other current liabilities 4,769 6,062 5,444
Discontinued operations, net (Note 3) 3,658 3,493 3,541
--------- --------- ---------
Total current liabilities 15,964 17,590 14,791
Long-term debt (Note 4) 14,300 12,376 14,749
Other long-term liabilities 973 2,474 1,341
--------- --------- ---------
Total liabilities 31,237 32,440 30,881
--------- --------- ---------
Commitments and Contingencies (Note 3)
Stockholders' equity
Common stock par value $.01 per share: authorized 20,000,000
shares; issued 4,822,167 shares in September 1996, 4,787,393
shares in September 1995 and 4,796,920 shares in December 1995 48 48 48
Paid-in capital 20,291 20,228 20,244
Accumulated deficit (11,173) (9,893) (12,424)
--------- --------- ---------
Total stockholders' equity 9,166 10,383 7,868
--------- --------- ---------
Total liabilities and stockholders' equity $ 40,403 $ 42,823 $ 38,749
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
LESLIE BUILDING PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1996 1995
---- ----
(In thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 1,251 $ (5,538)
Adjustments to reconcile net income (loss) to cash flows provided by
(used for) operating activities:
Revaluation of goodwill 5,092
Depreciation and amortization 1,535 1,373
Provision for accounts receivable 39 42
(Gain) loss on disposal of fixed assets (4) 7
Changes in assets and liabilities:
Accounts receivable (2,204) (4,020)
Inventories (479) (619)
Prepaid expenses and other assets 309 (183)
Accounts payable, accrued expenses and other current liabilities 424 2,758
Other noncurrent liabilities 51 15
-------- --------
Net cash flows provided by (used for) operating activities 922 (1,073)
-------- --------
Cash flows from investing activities:
Capital expenditures (786) (6,518)
-------- --------
Net cash flows used for investing activities (786) (6,518)
-------- --------
Cash flows from financing activities:
Equipment loan 925 1,750
Mortgage loan 4,193
Borrowings under revolving line of credit 25,455 25,023
Loan repayments under revolving line of credit (26,027) (23,377)
Other (402) (154)
-------- --------
Net cash flows (used for) provided by financing activities (49) 7,435
-------- --------
Net increase (decrease) in cash 87 (156)
Cash at beginning of period 15 192
-------- --------
Cash at end of period $ 102 $ 36
======== ========
Supplemental disclosure of cash flows information:
Cash paid (received) during the period for:
Interest on debt $ 1,163 $ 675
Income taxes $ (270) $ 34
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
LESLIE BUILDING PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Total
Common Paid-in Accumulated Stockholders'
Stock Capital Deficit Equity
----- ------- ------- ------
(In thousands, except shares)
<S> <C> <C> <C> <C>
Balance - December 31, 1995 $ 48 $ 20,244 $ (12,424) $ 7,868
Net income for nine months ended September 30, 1996 1,251 1,251
Employee Stock Purchase Plan - 25,247 shares 47 47
---- --------- --------- --------
Balance - September 30, 1996 $ 48 $ 20,291 $ (11,173) $ 9,166
==== ========= ========= ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
6
<PAGE>
LESLIE BUILDING PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The Consolidated Financial Statements presented herein have been
prepared by the Company in accordance with the accounting policies described in
its December 31, 1995 Annual Report on Form 10-K and should be read in
conjunction with the Notes to Consolidated Financial Statements included
therein.
In the opinion of management, the information furnished in this Form
10-Q reflects all adjustments necessary for a fair statement of the results of
operations as of and for the nine and three month periods ended September 30,
1996 and 1995. All such adjustments are of a normal recurring nature. The
Consolidated Financial Statements have been prepared in accordance with the
instructions to Form 10-Q and therefore do not include some information and
notes necessary to conform with annual reporting requirements. Certain prior
year amounts have been reclassified to conform with the current year
presentation.
The Company adopted Statement of Financial Accounting Standards No.
121,"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of" in the first quarter of 1996. The adoption had no
effect on the financial statements.
2. Inventories
Inventories are valued at the lower of cost (using the last-in,
first-out and first-in, first-out methods) or market. Cost includes material,
labor and overhead (for manufactured products); market is replacement cost or
realizable value after allowance for costs of distribution.
Quarterly inventories valued on the last-in, first-out method are
based on an annual determination of quantities and costs as of the previous
year-end. Therefore, such quarterly inventory valuations are based on
estimates.
3. Discontinued Operations
In fiscal 1990, the Company discontinued the operations of White Metal
Rolling and Stamping Corp. ("White Metal"), the Company's ladder manufacturing
subsidiary, and sold certain assets of White Metal, (machinery, equipment and
supplies and customer lists) to a private company. The buyer did not assume any
liabilities of White Metal, did not acquire the White Metal name and does not
produce White Metal ladders. All manufacturing operations of White Metal ceased
as of January 31, 1991 and substantially all of its remaining assets have since
been liquidated.
At September 30, 1996, White Metal's estimated future product
liability, which is no longer covered by insurance, was approximately $4.2
million which is reflected on the Balance Sheet, net of imputed interest, at
$3.7 million representing (i) the estimated non-discounted cost of existing
product liability claims in excess of insurance coverage, (ii) future estimated
non-discounted claims administration costs and (iii) the actuarially estimated
reserve for potential future unasserted claims, which are anticipated to be
incurred over an extended number of years. Although the Company's subsidiary,
Leslie-Locke, Inc. ("Leslie-Locke")
7
<PAGE>
LESLIE BUILDING PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
was named as a defendant in certain actions commenced in connection with these
claims, Leslie-Locke has not been held responsible, and the Company and
Leslie-Locke disclaim any liability for the obligations of White Metal.
On September 30, 1994, White Metal filed a voluntary petition seeking
liquidation under the provisions of chapter 7 of the United States Bankruptcy
Code. In connection with the chapter 7 filing by White Metal, numerous proofs
of claim have been filed against White Metal. Included is a claim by Sears,
Roebuck & Co., ("Sears") dated April 7, 1995, in the amount of $164 million,
including actual losses of $1,657,000 and estimated future product liability
losses for the next 20 years, based upon indemnification obligations which
Sears alleges White Metal undertook in connection with White Metal's sale of
ladders to Sears. These proofs of claim have been evaluated and no change was
required in the Company's estimated product liability accrual. The Company and
Leslie-Locke have in the past disclaimed, and continue to disclaim, any
liability for the obligations of White Metal.
On May 6, 1996, the Company and Leslie-Locke and Drew Industries
Incorporated ("Drew"), the former parent of Leslie-Locke, and its subsidiary,
Kinro, Inc., were served with a summons and complaint in an adversary
proceeding commenced by the chapter 7 trustee of White Metal. The proceeding is
based upon the trustee's allegations, previously disclosed by the Company, that
Leslie-Locke, as well as Drew and Drew affiliated companies, obtained tax
benefits attributable to the use of White Metal's net operating losses. The
trustee seeks to recover the purported value of the tax savings achieved. In
addition, the trustee alleges that White Metal made certain payments to
Leslie-Locke and Drew which were preferential and are recoverable by White
Metal. The complaint, which appears to allege several duplicate claims, seeks
damages in the aggregate amount of approximately $10.6 million plus attorneys'
fees. Management believes that the trustee's allegations are without merit and
have no basis in fact. The Company and Leslie-Locke deny any liability for any
amount claimed and are vigorously defending against the allegations. However,
an estimate of potential loss, if any, cannot be made at this time. The Company
believes that it has sufficient accruals for the defense of this proceeding and
that there will be no material adverse impact on the Company's financial
condition or results of operations.
4. Long-Term Debt
The Company's credit agreement with Branch Banking and Trust Company,
which is secured by substantially all the assets of the Company, has been
extended to July 1998.
5. Revaluation of Goodwill
In the third quarter of 1995, the Company re-evaluated its accounting
policy regarding goodwill and adopted a new policy for recognition and
measurement of goodwill impairment based upon a fair value approach. Based upon
a valuation of Leslie-Locke, Inc., the Company's sole operating subsidiary, by
an independent business appraiser, it was determined that the goodwill
previously reflected on its financial statements had no value. Accordingly, the
Company wrote off the balance of goodwill of $5,092,000 as of August 31, 1995.
Goodwill amortization had been $170,000 per annum.
8
<PAGE>
LESLIE BUILDING PRODUCTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Leslie Building Products, Inc. ("Leslie Building Products"), including
its wholly-owned subsidiary Leslie-Locke, Inc. ("Leslie-Locke") (together, the
"Company"), is a diversified manufacturer and marketer of a wide variety of
specialty building products for the professional and do-it-yourself home
remodeling and residential construction industry. Its products consist of :
o ornamental iron security products (including doors, window
guards, fencing and railings),
o residential ventilation products,
o metal and fiberglass air distribution products for the HVAC
industry,
o skylights,
o professional aluminum rakes, and
o door louvers and vision lite products for the architectural door
market.
This broad range of products is marketed primarily to leading home
center chains and, to a lesser extent, to building material distributors,
hardware co-ops and mass merchandisers.
On July 29, 1994, Drew Industries Incorporated ("Drew") spun off Leslie
Building Products to Drew's shareholders on a one-for-one basis (the
"Spin-off"). Thereafter Leslie Building Products became a stand-alone company
whose common shares are publicly traded.
RESULTS OF OPERATIONS
Restructuring
In December 1994, the Board of Directors of the Company approved a plan
to restructure its manufacturing facilities in order to achieve more efficient
and less costly manufacturing and distribution of its products. The plan, as
revised in 1995, involved (i) expanding the Company's facility in Burgaw, North
Carolina by 165,000 square feet, (ii) closing the Company's facilities in
Chicago, Illinois and Atlanta, Georgia and (iii) transferring operations of the
closed facilities to the new Burgaw factory and the Company's existing facility
in Compton, California. The restructuring was substantially completed by
December 31, 1995. The Company recorded total pretax restructuring charges of
$2,816,000 in 1995 (of which $469,000 was recorded in the nine months ended
September 30, 1995) and $4,433,000 in the fourth quarter of 1994.
Operations
The results of operations for the nine months and three months ended
September 30, 1996 and 1995 should not be regarded as indicative of the results
that may be expected for the entire year, since operations are seasonal in
nature. Operations are historically stronger in the spring and summer months
with 60% of sales occurring during the six month period March to August.
Net sales increased 9% and decreased 4%, respectively, for the nine
months and three months ended September 30, 1996 compared to the same periods
last year. Excluding postal products, which were discontinued during 1995, net
sales increased 13% and decreased 1% for the nine months and three months
9
<PAGE>
LESLIE BUILDING PRODUCTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
ended September 30, 1996, respectively. The changes are primarily volume related
as there were no significant price increases since the second quarter of 1995.
The decline in sales for the quarter is attributable to the cool weather in
several parts of the country which affected ventilation sales, and to the
Olympics, which apparently kept buyers at home.
Gross profit as a percentage of sales improved 1.4% and 1.6%,
respectively for the nine months and three months ended September 30, 1996 over
the same periods last year. The costs of certain raw materials declined in 1996
after increasing last year. The Company's new plant in Burgaw, North Carolina
combined with improvements at the Company's west coast facility are yielding
improved efficiencies and reduced labor and overhead costs. In addition, the
Burgaw facility further enhanced margins by permitting the Company to produce
products in-house that were previously produced by outside vendors. These
combined savings were partially offset by increased freight costs.
Selling, general and administrative expenses as a percentage of sales
are slightly below last year.
Revaluation of Goodwill
In the third quarter of 1995, the Company re-evaluated its accounting
policy regarding goodwill and adopted a new policy for recognition and
measurement of goodwill impairment based upon a fair value approach. Based upon
a valuation of Leslie-Locke, Inc., the Company's sole operating subsidiary, by
an independent business appraiser, it was determined that the goodwill
previously reflected on its financial statements had no value. Accordingly, the
Company wrote off the balance of goodwill of $5,092,000 as of August 31, 1995.
Goodwill amortization had been $170,000 per annum.
Interest Expense, Net
Interest expense, net includes interest on bank debt, as well as
imputed interest on certain long-term obligations of White Metal,
Leslie-Locke's discontinued ladder manufacturing subsidiary. The $513,000 and
$100,000 increases in interest expense for the nine months and quarter,
respectively, ended September 30, 1996 result primarily from debt incurred in
connection with the restructuring, including capital expenditures.
Income Taxes
The Company's income tax provision is recorded pursuant to the
requirements of Financial Accounting Standards No. 109 "Accounting for Income
Taxes" ("Statement 109"). At December 31, 1995, the Company had a net operating
loss carryforward for Federal income tax purposes of approximately $3.9 million
that expires in the year 2010. The Company has net deferred tax assets at
December 31, 1995 in excess of $4 million, however, due to the uncertainty of
future realization no income tax benefit has been recorded. No income tax
provision has been recorded in 1996 due to the Company's net operating loss
carryforward and its expected zero effective tax rate for the year.
10
<PAGE>
LESLIE BUILDING PRODUCTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Other
The Company has adopted Statement of Financial Accounting Standards
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of" in the first quarter of 1996. The adoption had no
effect on the financial statements.
Pursuant to a Shared Services Agreement in connection with the
Spin-off, Drew and Leslie Building Products share certain administrative
functions and employee services, such as management overview and planning, tax
preparation, financial reporting, coordination of independent audit,
stockholder relations, and regulatory matters. Drew will be reimbursed by
Leslie Building Products for the fair market value of such services. This
Agreement expires on December 31, 1997 and may be extended. The Company was
charged management fees by Drew of $398,000 and $452,000 for the nine months
ended September 30, 1996 and 1995, respectively.
LIQUIDITY AND CAPITAL RESOURCES
The Company has a seasonally adjusted $12 million revolving line of
credit with Branch Banking and Trust Company ("BBT"), consisting of cash
advances of a maximum of $10.5 million and letters of credit of $1.5 million,
with interest payable at 0.375% over the prime rate. The interest rate was
amended to 0.625% over the prime rate on February 20, 1996. The line of credit,
of which $3.9 million is available at the close of business on September 30,
1996, is adequate for the Company's anticipated needs. The loan agreement
expires in July 1998.
In connection with the facilities restructuring plan approved by the
Board of Directors in December 1994, on January 6, 1995 the Company entered
into a new $7.2 million Construction and Equipment Loan Facility with BBT to
provide construction and permanent financing for a 165,000 square foot, 17
acre, addition to the Company's manufacturing, warehouse and distribution
facility in Burgaw, North Carolina, and for acquisition of manufacturing
equipment. The new building mortgage loan of $4.2 million bears interest at the
LIBO rate plus 2.825%. Payments under the mortgage loan commenced in September
1995 based on a fifteen year amortization schedule with a balloon payment after
five years. The $3 million equipment loan is payable over four years commencing
July 1, 1996. Interest on $690,000 of the equipment loan is at 4% per annum and
the remainder bears interest at the LIBO rate plus 2.825%.
Pursuant to its bank agreements the Company is prohibited from
declaring or paying dividends without the prior written consent of the lender.
Leslie-Locke is also required to maintain certain financial covenants typical
to secured borrowing arrangements.
11
<PAGE>
LESLIE BUILDING PRODUCTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
The Statements of Cash Flows reflect the following (in thousands):
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
1996 1995
---- ----
<S> <C> <C>
Net cash flows provided by (used for) operating activities $ 922 $ (1,073)
Net cash flows used for investing activities $ (786) $ (6,518)
Net cash flows (used for) provided by financing activities $ (49) $ 7,435
</TABLE>
Net cash provided by operating activities was $.9 million in the 1996
period compared to cash used of $1.1 million in the 1995 period. The seasonal
increase in accounts receivable was $2.2 million compared to $4.0 million for
the 1995 period. The reduction in the seasonal increase of receivables is
attributable to lower sales in the third quarter as well as faster collections.
Inventories increased $.5 million compared to $.6 million in the prior year's
period. The combined increases in accounts receivable and inventories were
partially offset by increased payables of $.4 million and $2.8 million in the
1996 and 1995 periods, respectively.
Net cash flows used for investing activities represent capital
expenditures which aggregated $.8 million for the nine months ended September
30, 1996 compared to $6.5 million for the nine months ended September 30, 1995,
which related to the new plant in Burgaw, North Carolina. Such expenditures
were funded by the $4.2 million mortgage and $3 million equipment loan from
BBT.
At September 30, 1996, White Metal's estimated future product
liability was approximately $4.2 million which is reflected in discontinued
operations, net on the Consolidated Balance Sheet, net of imputed interest, at
$3.7 million. Although Leslie-Locke was named as a defendant in certain product
liability actions, Leslie-Locke has not been held responsible, and the Company
and Leslie-Locke disclaim any liability for the obligations of White Metal.
On September 30, 1994, White Metal filed a voluntary petition seeking
liquidation under chapter 7 of the United States Bankruptcy Code. In connection
with the chapter 7 filing by White Metal, numerous proofs of claim have been
filed against White Metal. Included is a claim by Sears, Roebuck & Co.,
("Sears") dated April 7, 1995, in the amount of $164 million, including actual
losses of $1,657,000 and estimated future product liability losses for the next
20 years, based upon indemnification obligations which Sears alleges White
Metal undertook in connection with White Metal's sale of ladders to Sears.
These proofs of claim have been evaluated and no change was required in the
Company's estimated product liability accrual. The Company and Leslie- Locke
have in the past disclaimed, and continue to disclaim, any liability for the
obligations of White Metal.
On May 6, 1996, the Company and Leslie-Locke and Drew Industries
Incorporated ("Drew"), the former parent of Leslie-Locke, and Drew's
subsidiary, Kinro, Inc., were served with a summons and complaint in an
adversary proceeding commenced by the chapter 7 trustee of White Metal. The
proceeding is based upon the trustee's allegations, previously disclosed by the
Company, that Leslie-Locke, as well as Drew and Drew affiliated companies,
obtained tax benefits attributable to the use of White Metal's net operating
losses. The trustee seeks to recover the purported value of the tax savings
achieved. In addition, the trustee alleges that White Metal made certain
payments to Leslie-Locke and Drew which were preferential and are recoverable
by White
12
<PAGE>
LESLIE BUILDING PRODUCTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Metal. The complaint, which appears to allege several duplicate claims, seeks
damages in the aggregate amount of approximately $10.6 million plus attorneys'
fees. Management believes that the trustee's allegations are without merit and
have no basis in fact. The Company and Leslie-Locke deny any liability for any
amount claimed and are vigorously defending against the allegations. However, an
estimate of potential loss, if any, cannot be made at this time. The Company
believes that it has sufficient accruals for the defense of this proceeding and
that there will be no material adverse impact on the Company's financial
condition or results of operations.
INFLATION
The prices of raw materials, consisting primarily of steel, aluminum,
paint, electric motors and packaging materials are influenced by demand and
other factors specific to these commodities rather than being directly affected
by inflationary pressures.
13
<PAGE>
LESLIE BUILDING PRODUCTS, INC.
Part II - Other Information
Item 1 - Legal Proceedings
On May 6, 1996, the Company was served with a Summons and Complaint in
an adversary proceeding entitled In re White Metal Rolling and Stamping Corp.,
Debtor, Alan Nisselson, Chapter 7 Trustee of White Metal Rolling and Stamping
Corp., Plaintiff vs. Drew Industries , Inc., Leslie-Locke, Inc., Leslie
Building Products, Inc. and Kinro, Inc. pending in the United States Bankruptcy
Court, Southern District of New York (Adversary Proceeding No. 96/961 8544A).
See Note 3 of Notes to Consolidated Financial Statements for a description of
this proceeding.
14
<PAGE>
LESLIE BUILDING PRODUCTS, INC.
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.
LESLIE BUILDING PRODUCTS, INC.
Registrant
By /s/ Fredric M. Zinn
Fredric M. Zinn
Principal Financial Officer
November 11, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> $ 102
<SECURITIES> $ 0
<RECEIVABLES> $ 10,242
<ALLOWANCES> $ 370
<INVENTORY> $ 12,721
<CURRENT-ASSETS> $ 24,250
<PP&E> $ 22,279
<DEPRECIATION> $ 6,534
<TOTAL-ASSETS> $ 40,403
<CURRENT-LIABILITIES> $ 15,964
<BONDS> 0
0
0
<COMMON> $ 48
<OTHER-SE> $ 9,118
<TOTAL-LIABILITY-AND-EQUITY> $ 40,403
<SALES> $ 65,946
<TOTAL-REVENUES> $ 65,946
<CGS> $ 53,250
<TOTAL-COSTS> $ 63,422
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> $ 1,273
<INCOME-PRETAX> $ 1,251
<INCOME-TAX> $ 0
<INCOME-CONTINUING> $ 1,251
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> $ 1,251
<EPS-PRIMARY> $ .26
<EPS-DILUTED> $ .26
</TABLE>
