SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C.
FORM 10-Q
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarter ended June 30, 1994
( ) 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 0-627
Douglas & Lomason Company
(exact name of registrant as specified in its charter)
Michigan 38-0495110
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
24600 Hallwood Court, Farmington Hills, Michigan 48335-1671
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code: (810) 478-7800
Former name, former address and former fiscal year, if changed since last
year: Same
Indicate by checkmark 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 and (2) has been subject to such filing
requirements for the past 90 days.
YES _X_ NO ___
CLASS OUTSTANDING AT AUGUST 12, 1994
Common stock, $2 par value 4,227,970 shares
DOUGLAS & LOMASON COMPANY
Consolidated Condensed Balance Sheets
June 30 December 31
1994 1993
ASSETS
Current assets:
Notes and accounts receivable $ 76,929,905 $ 70,458,109
Inventories
Raw materials 11,740,419 7,796,730
Work in process and finished goods 9,341,389 6,638,703
21,081,808 14,435,433
Cash and other current assets 7,353,334 9,330,661
105,365,047 94,224,203
Property, plant and equipment, net 69,830,440 69,109,773
Other non-current assets 9,767,525 10,949,345
Total assets $184,963,012 $174,283,321
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt $ --- $ 7,000,000
Current maturities of long-term debt 5,882,387 5,829,315
Accounts payable and accrued expenses 54,660,573 44,390,029
Taxes on income 1,156,853 800,149
Total current liabilities 61,699,813 58,019,493
Long-term debt, less current maturities 23,170,843 21,825,630
Postretirement benefits other than
pensions 7,009,116 6,521,094
Other liabilities 10,421,987 10,242,484
Shareholders' equity
Preferred stock
No par value, authorized 500,000
shares, issued - none
Common stock
Par value $2 per share authorized
10,000,000 shares; issued and
outstanding 4,227,970 shares in
1994 and 4,223,395 in 1993 8,455,940 8,454,440
Other capital 27,991,101 27,986,476
Retained earnings 46,214,212 41,233,704
Total shareholders' equity 82,661,253 77,674,620
Total liabilities and
shareholders' equity $184,963,012 $174,283,321
DOUGLAS & LOMASON COMPANY
Consolidated Condensed Statements of Income
Three Months Ended Six Months Ended
June 30 June 30
1994 1993 1994 1993
Net sales $123,253,404 $103,858,609 $246,719,362 $219,261,650
Cost of sales 113,582,619 95,563,385 225,892,785 198,554,234
Gross profit 9,670,785 8,295,224 20,826,577 20,707,416
Selling, general and
administrative expense 5,434,963 4,824,495 10,876,910 9,883,464
Operating income 4,235,822 3,470,729 9,949,667 10,823,952
Other income (expenses):
Interest expense, net (591,478) (651,214) (1,207,887) (1,361,678)
Interest income
and other 256,725 35,316 459,324 184,796
(334,753) (615,898) (748,563) (1,176,882)
Earnings before provision
for income taxes 3,901,069 2,854,831 9,201,104 9,647,070
Income tax expenses 1,390,000 1,005,000 3,375,000 3,435,000
Earnings before cumulative
effect of change in
accounting 2,511,069 1,849,831 5,826,104 6,212,070
Cumulative effect of change
in accounting for post-
retirement benefits,
net of income taxes --- --- --- 3,756,930
Net earnings $ 2,511,069 $ 1,849,831 $ 5,826,104 $ 2,455,140
Earnings per share before
cumulative effect of
change in accounting $ .60 $ .44 $ 1.38 $ 1.48
Cumulative per share
effect of change in
accounting --- --- --- .90
Net earnings per share $ .60 $ .44 $ 1.38 $ .58
Weighted average number
of shares 4,227,970 4,207,281 4,227,858 4,201,557
DOUGLAS & LOMASON COMPANY
Consolidated Condensed Statements of Cash Flows
Six Months Ended
June 30
1994 1993
Cash flows from operating activities:
Net earnings $ 5,826,104 $ 2,455,140
Depreciation 6,274,800 5,652,714
Postretirement benefits other than
pensions --- 5,963,381
Changes in operating assets and liabilities:
Increase in accounts receivable (6,471,796) (4,352,968)
Increase in inventories (6,646,375) (2,988,084)
Decrease in prepaid expenses and other assets 1,294,844 310,749
Increase in accounts payable,
and accrued expenses 10,270,544 4,698,610
Increase (decrease) in other liabilities 1,077,299 (1,720,773)
Net cash provided by operating activities 11,625,420 10,018,769
Cash flows from investing activities:
Proceeds from the sale of property,
plant and equipment 187,240 15,526
Acquisition of property, plant and
equipment (7,182,707) (10,942,778)
Net cash used by investing activities (6,995,467) (10,927,252)
Cash flows from financing activities:
Proceeds from long-term debt 4,500,000 ---
Repayment of long-term debt (3,154,787) (2,701,715)
Repayment of short-term debt (7,000,000) ---
Proceeds from exercised stock
options, net 6,125 586,475
Dividends paid (845,594) (841,666)
Net cash used by financing activities (6,494,256) (2,956,906)
Net decrease in cash (1,864,303) (3,865,389)
Cash at beginning of year 2,745,818 8,238,779
Cash at end of quarter $ 881,515 $ 4,373,390
DOUGLAS & LOMASON COMPANY
Notes to Consolidated Condensed Financial Statements
1. In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting only of
normal recurring accruals) necessary to present fairly the financial
position as of June 30, 1994 and 1993, and the results of operations
for the six months then ended, and changes in financial position for
the six months then ended, subject to year end audit adjustments.
Management's Discussion and Analysis of Financial
Conditions and Results of Operations
Liquidity and Capital Resources
Funds provided from operations of $11.6 million were the principal source of
cash in the first six months of 1994. Capital expenditures of $7.0 million
and financing activities of $6.5 million, principally debt repayment net of
borrowings and dividends resulted in a negative cash flow of $1.9 million.
In June, 1994, the Company entered into an amended and restated unsecured
revolving credit agreement with two banks which matures in June, 1997.
Borrowings outstanding under this facility totaled $4.5 million at June 30,
1994. The amended agreement increased the credit facility from $20.0 million
to $35.0 million.
Results of Operations
Net Sales
Net sales for the quarter ended June 30, 1994, were $123.3 million, up 18.7%
from $103.9 million in the same period of 1993. For the six months ended June
30, 1994, sales of $246.7 million, up 12.5% from the $219.3 million for the
same period of 1993. Industry sales of automobiles, vans and light trucks
continued to have a strong consumer demand during the entire first six months
of 1994.
Cost of Sales
Cost of sales as a percentage of net sales increased only slightly in the
second quarter of 1994 compared to the same period of 1993. For the first six
month period of 1994, the cost of sales increased 1.0% as a percentage of net
sales. These unfavorable trends in 1994 are a direct result of customer
demands for price concessions, increased material costs from suppliers and
start-up costs of new operations.
Selling, General and Administrative Expenses
Selling, general and administrative expenses in 1994 increased $1.0 million or
10.1% as compared to the same period of 1993. Incentive compensation,
additional staffing and maintenance in Information Services and travel
expenses are the principal components of this increase.
Depreciation Expense
Depreciation expense for the quarter ended June 30, 1994, was $3.2 million up
9.2% from $2.9 million in the second quarter of 1993. Depreciation expense in
the first six months of 1994 of $6.3 million increased $.6 million or 11.0%
from the $5.7 million in the same period of 1993. These increases were the
result of capital expenditures of $20.5 million in 1993.
Interest Expense
Interest expense for the quarter ended June 30, 1994, was $591,000 down 9.2%
from the same period of 1993. Interest expense in the first six months of
1994 decreased $154,000 or 11.3% from the same period of 1993, principally as
a result of the lower debt level in 1994.
Net Earnings
Net earnings of $2.5 million or $.60 per share in the second quarter of 1994
increased 35.7% from the $1.8 million or $.44 per share in the comparable
period of 1993. Net earnings of $5.8 million or $1.38 per share in the first
six months of 1994 compare to $2.5 million or $.58 per share in the same
period of 1993. Results of the first half of 1993 included $3.8 million or
$.90 per share related to a change in accounting for postretirement benefits.
Net earnings improvement is principally attributable to higher sales level.
Financial Condition
The balance sheet at June 30, 1994, remains strong. The current ratio stood
at 1.7 to 1 and funded debt to capitalization ratio was a very strong .23 to
1.
PART II - OTHER INFORMATION
Item 4. Exhibits and Reports on Form 8-K
(a) Exhibits
4. Amended and Restated Credit Agreement dated as of June
24, 1994 between Douglas & Lomason Company and two
banks.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed by the Registrant during the
second quarter of 1994.
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.
DOUGLAS & LOMASON COMPANY
-------------------------
(Registrant)
Date: August 12, 1994 /s/ James J. Hoey
-------------------------
James J. Hoey
Senior Vice President &
Chief Financial Officer
(Duly Authorized Officer
and Principal Financial
Officer)