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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM 10-K
/X/ Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended December 26, 1998.
/ / 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 0-6169
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WOLOHAN LUMBER CO.
(Exact name of registrant as specified in its charter)
MICHIGAN 38-1746752
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1740 Midland Road, Saginaw, Michigan 48603
(Address of principal executive offices)
(517) 793-4532
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $1.00 par value
(Title of Class)
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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. _X_
As of March 1, 1999, 5,370,345 shares of Common Stock of the registrant were
outstanding and the aggregate market value of the shares of Common Stock held
by non-affiliates (including certain officers and non-officer directors) of
the registrant was approximately $49,244,000.
Documents Incorporated by Reference
Portions of the Annual Report of the registrant to its shareholders for the
year ended December 26, 1998 are incorporated by reference into Part II.
Portions of the definitive Proxy Statement of the registrant, dated March 26,
1999, filed pursuant to Regulation 14A are incorporated by reference into
Part III.
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PART I
Item 1. Business.
Wolohan Lumber Co. (the "registrant") is engaged in the retail sale of
a full-line of lumber and building materials and related items,
through a chain of 50 building supply stores located in Illinois,
Indiana, Kentucky, Michigan and Ohio.
In June 1998 the registrant acquired Central Michigan Lumber Company
headquartered in Lansing, Michigan which currently operates nine
stores throughout mid-Michigan which sell lumber and building
materials.
The registrant sells to contractor builders and remodelers and to the
"do-it-yourself" market consisting principally of homeowners. These
customer types accounted for approximately 63% and 37%, respectively,
of the registrant's sales for 1998.
The registrant sells more than 30,000 different products which are
purchased from approximately 2,000 suppliers. No supplier accounts for
more than 5% of total purchases. The registrant purchases lumber
products primarily from lumber and plywood mills and more than half of
all other merchandise from original producers or manufacturers.
The business of the registrant is not dependent upon a single customer
or a few customers for any significant portion of sales.
The registrant believes that backlogs are not significant to its
business.
The registrant is engaged in only one line of business - retail sales
of lumber and building materials and related items. The classes of
products include dimension lumber; sheathing plywood; building
materials; building hardware; millwork; plumbing, heating and
electrical; kitchen cabinets and vanities; home decorations; trusses
and components, including storage barns; and other forest products,
such as fencing and treated lumber.
The business of the registrant is highly competitive, and it
encounters competition from both national and regional chains and from
local independent merchants, as well as integrated department stores.
Because of the variety of competition faced by the registrant and the
wide range of products it sells, it is virtually impossible to
determine the registrant's competitive position in the markets it
serves.
The registrant holds no material patents, trademarks, licenses,
franchises or concessions.
The registrant's business, like the retail lumber business, generally
is subject to seasonal influences. The second and third quarters are
generally the periods of highest sales volumes while the first quarter
is usually the period of lowest sales volume.
The registrant had approximately 1,575 full-time employees at December
26, 1998.
To the best of the registrant's knowledge, it is complying with all
federal, state and local environmental protection provisions.
2
Item 2. Properties.
The administrative offices of the registrant are located in a
28,000-square-foot, two-story brick face building situated on three
acres of land owned by the registrant in Saginaw, Michigan.
As of March 1, 1999, the registrant operated 50 building supply stores
in the states of Illinois, Indiana, Kentucky, Michigan and Ohio. The
showroom selling space in the stores averages 24,000 square feet. In
addition, total warehouse and storage space (under roof) ranges in
size from 6,000 square feet to 66,000 square feet (average of 26,000
square feet).
All of the building supply stores are owned in fee by the registrant
with the exception of four leased stores.
The registrant believes that all of its building supply stores and the
display, warehouse and storage facilities and equipment located
thereon are well maintained and adequate for the purpose for which
they are used. A fleet of approximately 320 trucks is owned by the
registrant for the delivery of its retail merchandise.
Item 3. Legal Proceedings.
Various lawsuits arising during the normal course of business are
pending against the Company. In the opinion of management, the
ultimate liability, if any, resulting from these matters will have no
significant effect on the Company's results of operations, liquidity
or financial position.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
3
Executive Officers of the Registrant
The executive officers of the registrant are as follows:
Has Served
In Position
Name Position Since Age
- ------------------ -------------------------------- ------------- ---
James L. Wolohan Chairman of the Board, 1994 47
President and 1986
Chief Executive Officer 1987
David G. Honaman Vice President-Administration, 1995 47
Secretary, and Chief
Financial Officer
Curtis J. LeMaster Vice President- 1997 49
Marketing, Purchasing
and Systems
John A. Sieggreen Vice President- 1997 36
Operations
Edward J. Dean Corporate Controller 1984 48
James R. Krapohl Treasurer and 1978 53
Assistant Secretary
Officers of the registrant are elected each year in April at the Annual
Meeting of the Board of Directors to serve for the ensuing year and until
their successors are elected and qualified.
All of the officers of the registrant named above have held various positions
with the registrant for more than five years, with the exception of Curtis J.
LeMaster and John Sieggreen. Mr. LeMaster was Vice President of Marketing and
Purchasing with Henry Bacon Building Materials, Inc., before joining the
registrant in 1995 as Vice President-Marketing. Mr. Sieggreen served as
Marketing Director of the registrant until he resigned in February 1994.
Thereafter, he was employed by BMC West until April 1997 when he rejoined the
registrant.
4
PART II
Item 5. Market for the Registrant's Common Equity and Related Shareholder
Matters.
The information set forth under the caption "Common Stock Data" on
page 4 of the 1998 Annual Report of the registrant to its
shareholders, is incorporated herein by reference.
Item 6. Selected Financial Data.
The five year selected financial data set forth under the caption
"Five Year Performance" on page 6 of the 1998 Annual Report of the
registrant to its shareholders, is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The information set forth on pages 7, 8 and 9 of the 1998 Annual
Report of the registrant to its shareholders, is incorporated herein
by reference.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Not Applicable
Item 8. Financial Statements and Supplementary Data.
The report of management, report of independent auditors, and
financial statements included on pages 10 through 20 of the 1998
Annual Report of the registrant to its shareholders, are
incorporated herein by reference.
The information set forth under the caption "Quarterly Summaries" on
page 4 of the 1998 Annual Report of the registrant to its
shareholders, is incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None
5
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Wolohan Lumber Co.
We have audited the balance sheet of Wolohan Lumber Co. as of December 28,
1996, and the related statements of income, shareowners' equity, and cash
flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Wolohan Lumber Co. at
December 28, 1996, and the results of its operations and its cash flows for
the year then ended, in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Detroit, Michigan
February 14, 1997
6
PART III
Item 10. Directors and Executive Officers of the Registrant.
The information set forth under the caption "Information About
Nominees As Directors" on pages 4 and 5 of the definitive Proxy
Statement of the registrant, dated March 26, 1999, filed with the
Securities and Exchange Commission pursuant to Regulation 14A is
incorporated herein by reference for information as to directors of
the registrant.
Reference is made to Part I of this Report for information as to
executive officers of the registrant.
Item 11. Executive Compensation.
The information set forth under the captions "Compensation Committee
Report" on pages 5, 6 and 7 and "Executive Compensation" on pages 7,
8 and 9 of the definitive Proxy Statement of the registrant, dated
March 26, 1999, filed with the Securities and Exchange Commission
pursuant to Regulation 14A is incorporated herein by reference.
Item 12. Security ownership of Certain Beneficial Owners and Management.
The information set forth under the caption "Security Ownership" on
pages 2 and 3 of the definitive Proxy Statement of the registrant,
dated March 26, 1999, filed with the Securities and Exchange
Commission pursuant to Regulation 14A is incorporated herein by
reference.
Item 13. Certain Relationships and Related Transactions.
None.
7
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) (1) and (2) -- The response to this portion of Item 14 is
submitted as a separate section of this report.
(3) Listing of Exhibits -- The exhibit marked by one asterisk
below was filed as an exhibit to Form 10-K of the registrant
for the year ended December 31, 1980; the exhibits marked with
three asterisks below were filed as exhibits to Form 10-Q of
the registrant for the quarter ended June 30, 1987; the exhibit
marked with four asterisks below was filed as an exhibit to
Form 10-K of the registrant for the year ended December 31,
1988; the exhibit marked with five asterisks below was filed as
an exhibit to Form 10-Q of the registrant for the quarter ended
June 30, 1990; the exhibit marked with six asterisks below was
filed as an exhibit to Form 10-Q of the registrant for the
quarter ended June 30, 1991, the exhibit marked with seven
asterisks below was filed as an exhibit to Form 10-K of the
registrant for the year ended December 31, 1991; and the
exhibit marked with eight asterisks below was filed as an
exhibit to Form 10-K of the registrant for the year ended
December 31, 1994 (file number 0-6169), and are incorporated
herein by reference, the exhibit number in parenthesis being
those in such Form 10-K or 10-Q reports.
Exhibit (3)(a) *Articles of Incorporation (1)
Exhibit (3)(b) ***Amendment to Articles of Incorporation(3)(a)
Exhibit (3)(c) *****Amendment to Articles of Incorporation(6)(a)(1)
Exhibit (3)(d) ****By-laws (3) (c)
Exhibit (4)(a) ***Note Agreement dated as of May 1, 1987, between
registrant and Massachusetts Mutual Life Insurance
Company (4)
Exhibit (4)(b) *******Note Agreement dated as of January 15, 1992,
between registrant and Principal Mutual Life
Insurance Company
Exhibit (10)(a) ******1991 Long-Term Incentive Plan of Wolohan
Lumber Co. (6) (a) (1) (X)
Exhibit (10)(b) ********Stock Option Plan for Non-Employee
Directors (10) (b) (X)
(X) A compensatory plan required to be filed as an exhibit.
8
Exhibit (13) Annual Report of registrant to its shareholders for
the year ended December 26, 1998
Exhibit (21) Subsidiaries of the registrant
Exhibit (23) Consent of Independent Auditors
Exhibit (23.1) Consent of Independent Auditors
(b) Reports on Form 8-K filed in the fourth quarter of 1998.
None
(c) Exhibits -- The response to this portion of item 14 is submitted as
a separate section of this report.
(d) Financial Statement Schedules -- The response to this portion of
Item 14 is submitted as a separate section of this report.
9
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 on March 24,
1999.
WOLOHAN LUMBER CO.
By /s/ James L. Wolohan
--------------------------------
James L. Wolohan
Chairman of the Board,
President and Chief
Executive Officer
(Principal Executive Officer)
By /s/ David G. Honaman
--------------------------------
David G. Honaman
Vice President - Administration,
Chief Financial
Officer and Secretary
(Principal Financial Officer)
By /s/ Edward J. Dean
--------------------------------
Edward J. Dean
Corporate Controller
(Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on March 24, 1999.
Signature Title Signature Title
- --------- ----- --------- -----
Director Director
/s/ Hugo E. Braun, Jr. /s/ Lee A. Shobe
- ---------------------- --------------------
Hugo E. Braun, Jr. Lee A. Shobe
Director Director
/s Leo B. Corwin /s/ Charles R. Weeks
- ---------------------- --------------------
Leo B. Corwin Charles R. Weeks
Director Director
/s/ F. R. Lehman /s/ James L. Wolohan
- ---------------------- --------------------
F.R. Lehman James L. Wolohan
10
ANNUAL REPORT ON FORM 10-K
Item 14 (a) (1) and (2), (c) and (d)
Lists of Financial Statements and Financial Statement Schedules
Certain Exhibits
Financial Statement Schedules
Year-Ended December 26, 1998
WOLOHAN LUMBER CO.
SAGINAW, MICHIGAN
11
FORM 10-K -- Item 14 (a) (1) and (2)
WOLOHAN LUMBER CO.
List of Financial Statements and Financial Statement Schedules
The following financial statements, included in the 1998 Annual Report of the
registrant to its shareholders for the year ended December 26, 1998, are
incorporated by reference in Item 8:
Balance sheets -- December 26, 1998 and December 27, 1997.
Statements of income -- Years ended December 26, 1998,
December 27, 1997 and December 28, 1996.
Statements of shareowners' equity -- Years ended
December 26, 1998, December 27, 1997 and
December 28, 1996.
Statements of cash flows -- Years ended December 26, 1998,
December 27, 1997 and December 28, 1996.
Notes to financial statements -- December 26, 1998.
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under
the related instructions or are inapplicable, and therefore have been
omitted.
12
EXHIBIT INDEX
The exhibit marked by one asterisk below was filed as an exhibit to Form 10-K
of the registrant for the year ended December 31, 1980; the exhibits marked
with three asterisks below were filed as exhibits to Form 10-Q of the
registrant for the quarter ended June 30, 1987; the exhibit marked with four
asterisks below was filed as an exhibit to Form 10-K of the registrant for
the year ended December 31, 1988; the exhibit marked with five asterisks
below was filed as an exhibit to Form 10-Q of the registrant for the quarter
ended June 30, 1990; the exhibit marked with six asterisks below was filed as
an exhibit to Form 10-Q of the registrant for the quarter ended June 30,
1991, the exhibit marked with seven asterisks below was filed as an exhibit
to Form 10-K of the registrant for the year ended December 31, 1991; and the
exhibit marked with eight asterisks below was filed as an exhibit to Form
10-K of the registrant for the year ended December 31, 1994 (file number
0-6169), and are incorporated herein by reference, the exhibit number in
parenthesis being those in such Form 10-K or 10-Q reports.
Page Number
Sequential
Exhibit Numbering
Number System
- ------- -----------
Exhibit (3) (a) *Articles of Incorporation (1)
Exhibit (3) (b) ***Amendment to Articles of
Incorporation(3)(a)
Exhibit (3) (c) *****Amendment to Articles of
Incorporation(6)(a)(1)
Exhibit (3) (d) ****By-laws (3) (c)
Exhibit (4) (a) ***Note Agreement dated as of May 1, 1987,
between registrant and Massachusetts Mutual Life
Insurance Company(4)
Exhibit (4) (b) *******Note Agreement dated as of January 15,
1992 between registrant and Principal Mutual
Life Insurance Company
Exhibit (10)(a) ******1991 Long-Term Incentive Plan of Wolohan
Lumber Co.(6)(a)(1)
Exhibit (10)(b) ********Stock Option Plan for Non-Employee
Directors
Exhibit (13) Annual Report of registrant to its 14-37
shareholders for the year ended December 26, 1998
Exhibit (21) Subsidiaries of the registrant 38
Exhibit (23) Consent of Independent Auditors 39
Exhibit (23.1) Consent of Independent Auditors 40
13