SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________
FORM 10-K
(Mark One)
_X_ Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended December 31, 1994, 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 0-627
________________
DOUGLAS & LOMASON COMPANY
(Exact Name of Registrant as Specified in its Charter)
MICHIGAN 38-0495110
(State or other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
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
Securities Registered Pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
------------------- ---------------------
None None
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, $2.00 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 10, 1995, 4,242,970 shares of Common Stock of the
Registrant were outstanding, and the aggregate market value of the shares
of Common Stock as of such date (based on the closing price in the Nasdaq
National Market) of the Registrant held by nonaffiliates (including certain
officers and non-officer directors) was approximately $60,748,548.
Documents Incorporated by Reference
The following documents are incorporated by reference into this Form 10-K:
Part I: Item 1 - Part of Annual Report of the Registrant for the year
ended December 31, 1994
Part II: Items 5-8 - Part of Annual Report of the Registrant for the
year ended December 31, 1994
Part III: Items 10-12 - Part of definitive Proxy Statement of the
Registrant dated March 31, 1995 filed pursuant to Regulation
14A.
PART I
Item 1. Business
Douglas & Lomason Company (the "Company" or the "Registrant") is a
major supplier of original equipment parts to the North American automotive
industry. Automotive products, which have accounted for approximately 94%
of the Company's total sales during each of the last three years, include
fully trimmed seating, seating components and mechanisms, and decorative
and functional body trim parts. These products are manufactured primarily
for the three major U.S. automotive manufacturers and other original
equipment suppliers.
The Company also manufactures material handling systems and custom
truck bodies and trailers. These products have accounted for approximately
6% of the Company's total sales during each of the last three years.
The Registrant classifies its business into two segments:
automotive products and industrial and commercial products. Exclusive of
automotive products, no segment accounts for 10 percent or more of
consolidated revenues or profits. A summary of certain segment information
appears in note (6) of notes to consolidated financial statements on page
20 of the 1994 Annual Report to Shareholders and is incorporated herein by
reference.
AUTOMOTIVE PRODUCTS
Seating
Seating systems and components account for the principal portion
of the Company's automotive business. The Company is one of the major
independent manufacturers and assemblers of seating systems and components
for the North American automotive industry. Seat assemblies produced by
the Company satisfy the seat requirements of a full range of vehicles. The
Company currently supplies complete seats to customer assembly plants on a
"just-in-time" (JIT) "sequenced parts delivery" (SPD) basis for passenger
cars and vans.
The Company's seat frame business has grown significantly over the
48 years it has been supplying seating systems and components to the North
American automotive industry. The Company believes it is currently one of
the largest independent manufacturers of seat frames in North America. The
seat frames manufactured by the Company are incorporated by it into
complete seats and sold to vehicle assembly plants and are also sold
separately to other seat assemblers. The Company believes that it is
recognized as one of the most vertically integrated independent seat
manufacturers in North America. The Company is capable of producing seat
frames, manual seat mechanisms, foam, covers, suspension systems, and
plastic seat trim at its manufacturing facilities.
The Company believes that opportunities for growth may emerge in
foreign transplant operations in North America and from the expanding trend
toward seat assembly outsourcing in Europe. The Company has established
technical and business relationships with three Japanese partners to
facilitate the exchange of technical information and to establish business
relationships with foreign automakers. In 1988, the Company formed a
50/50 joint venture company with Namba Press Works Co., Ltd. of Japan.
This company, named Bloomington-Normal Seating Company, is located in
Normal, Illinois and manufactures seating systems for Diamond-Star Motors,
a subsidiary of Mitsubishi Motors Corporation. The Company also has a
license agreement with Imasen Electric of Japan for the manufacture of
manual seat adjuster mechanisms.
Body Trim Components
The Company has been supplying decorative body trim components to
the automotive industry since 1902. These products include body side,
wheel opening and structural B-pillar moldings, head and tail lamp bezels,
bumpers, including those back filled with Azdel, and window and door
sealing systems. The Company has the capability of processing large
quantities of metal, plastic and composite material parts through injection
molding, pressing, rolling, laminating and extruding systems and finishing
parts through anodizing and painting.
The Company produces a variety of injection molded and extruded
plastic moldings including bi-laminate body side and deck lid moldings.
These moldings can be finished in a variety of ways such as with a high
gloss, in body colors including metallics, or with encapsulated colorful
graphics.
Product Engineering
The Company pursues new products and processes through a 180
person product engineering staff. This staff is customer-focused in that
all new projects must be based on a customer's requirements. This
facilitates the development of products in shorter lead time and matches
products more closely to consumer requirements.
Sales and Customers
Sales coverage by the Company of the North American automotive
industry is maintained by an experienced direct sales staff consisting of
24 account managers, divided into separate and distinct customer-focused
groups. The sales group is supported by fully developed program management
teams incorporating simultaneous engineering techniques.
The percent of sales to total automotive sales of seating systems
and body trim components to the three major automotive manufacturers during
the past three years is as follows:
1992 1993 1994
Chrysler Corporation........................ 50% 51% 39%
Ford Motor Company.......................... 25 25 40
General Motors Corporation.................. 18 15 14
Sales percentages include sales to other seat assemblers for
ultimate sale to the above customers.
INDUSTRIAL AND COMMERCIAL PRODUCTS
This segment of the Company's business accounted for approximately
6% of total Company sales in each of the three years ended December 31,
1994.
-2-
Industrial and commercial products include:
Material Handling Equipment. The Company designs and manufactures
material handling equipment such as conveyors, bagging and packaging
machines, pulleys and rollers. The Company also produces related equipment
such as elevators, bag flatteners, automatic palletizers and bag placers.
These products are sold to the agriculture, mining and transportation
industries among others.
Custom Truck Bodies and Trailers. The Company serves the food and
beverage industry through the design and manufacture of delivery truck
bodies and trailers for soft drinks, beer, bottled water, bakery products,
milk and ice cream, meats, frozen foods and other products. These units
include side-loading aluminum bodies and trailers, and steel, aluminum or
reinforced fiberglass refrigerated truck bodies and trailers.
Competition
The Company is one of the three major independent seat suppliers
to the North American automotive industry. The Company's primary
independent competitors are Johnson Controls Inc.'s Automotive Products
Group and Lear Seating Inc. The Company also competes with captive seating
suppliers, namely: Delphi Interior and Lighting Systems of General Motors
Corporation and the Plastic Trim Products Division of Ford Motor Company.
The Company's body trim business competes with a significant
number of major competitors. There are 10 to 12 with a full range of
material, process and product capabilities similar to the Company's and
several competitors with specialized niche products.
GENERAL
Raw materials purchased by the Registrant consisting of carbon
steel, aluminum, stainless steel, plastics, and fabric are generally
available from numerous independent sources. Management believes that the
trend in its material costs is upward.
While the Registrant owns several patents and patent rights,
patent protection is not materially significant to its business.
To the best of the Registrant's knowledge, its permits are in
compliance with all federal, state and local environmental protection
provisions.
The number of persons employed by the Registrant at December 31,
1994 was 6,039.
The Registrant does not consider its business seasonal except to
the extent that automotive changeovers to new models affect business
conditions.
Item 2. Properties
The corporate offices of the Company and the product engineering
staff are located in Farmington Hills, Michigan in three buildings
containing approximately 96,000 square feet. Information as to the
Company's 18 principal facilities in operation as of December 31, 1994 is
set forth below:
-3-
Approximate Year Owned or
Location Square Feet Acquired Leased
AUTOMOTIVE
Seating
Columbus, Nebraska............................ 273,400 1965 Owned
Milan, Tennessee.............................. 202,300 1976 Owned
Red Oak, Iowa................................. 193,500 1967 Owned
Marianna, Arkansas............................ 188,200 1960 Owned
Ciudad Acuna, Mexico.......................... 134,100 1987 Owned
Excelsior Springs, Missouri................... 87,500 1993 Leased
Troy, Missouri.(1)............................ 82,500 1990 Leased
Orangeville, Ontario, Canada.(1).............. 28,300 1992 Leased
Del Rio, Texas.(1)............................ 25,000 1987 Leased
Saltillo, Mexico.............................. 44,000 1993 Owned
Body Trim Components
Carrollton, Georgia........................... 240,700 1955 Owned
48,900 1979 Owned
LaGrange, Georgia............................. 85,900 1988 Leased
INDUSTRIAL AND COMMERCIAL
Material Handling Equipment
Humboldt, Iowa................................ 96,300 1968 Owned
Dakota City, Iowa............................. 50,500 1978 Owned
Fairfield, CA.(1)............................. 4,900 1993 Leased
Custom Truck Bodies and Trailers
Columbus, Georgia............................. 133,000 1962 Owned
Amory, Mississippi............................ 67,000 1982 Owned
Kansas City, Missouri......................... 10,400 1983 Leased
<FN>
----------------
(1) A distribution facility.
The Company believes that substantially all of its property and
equipment is in good condition and adequate for its present requirements.
Item 3. Legal Proceedings
There are no material legal proceedings pending against the
Registrant or its subsidiaries.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
-4-
Executive Officers of the Registrant
The names and ages of all executive officers of the
Registrant are as follows:
Has Served
in Position
Name Position Since Age
Harry A. Lomason II Chairman of the Board 1992
President 1976
Chief Executive Officer 1982 60
James B. Nicholson Vice Chairman of the
Board 1990 51
James J. Hoey Senior Vice President and 1992
Chief Financial Officer 1985 58
Roger H. Morelli Senior Vice President-
Manufacturing 1987 50
Steven C. Bruck Vice President-Design,
Development and Engineering
Services 1984 38
Ollie V. Cheatham Vice President-Human
Resources 1984 50
A. Warren Vice President-Safety,
Daubenspeck III Environmental and
Loss Control 1988 43
Martin A. DiLoreto Vice President-Marketing
and Business Planning 1994 59
Scott E. Paradise Vice President-Automotive
Sales 1993 40
Joe Kamil Vice President-Business
Development and Advanced
Engineering 1991 41
Robert D. Stachura Vice President and
Executive Manager-
Manufacturing 1990 52
H. James Kouris Vice President-Purchasing 1976 64
Dan D. Smith Vice President-Cost Analysis
and Information Technology 1989 46
Gary A. Pniewski Vice President-Seating
and Decorative Trim
Engineering 1994 50
Verne C. Hampton II Secretary 1977 61
Melynn M. Zylka Treasurer 1990 34
-5-
Officers of the Registrant are elected each year at the Annual
Meeting of the Board of Directors to serve for the ensuing year or until
their successors are elected and qualified.
All of the executive officers of the Registrant named above
have held various executive positions with the Registrant for more than
five years except: Mr. Nicholson who has been President and Chief
Executive Officer of PVS Chemicals, Inc. and a Director of the Company for
more than five years; Mr. Bruck who joined the Company in 1993 after having
served as Vice President, Product Engineering Group at RCO the preceding
five years; Mr. Pniewski who joined the Company in January 1994 after
serving in various positions with Ford Motor Company for more than twenty
years, the most recent of which was Vehicle Seat Systems Engineering
Manager in the Plastics and Trim Products Division; and Mr. Hampton who has
been a partner with the law firm of Dickinson, Wright, Moon, Van Dusen and
Freeman for more than five years.
There is no family relationship between any of the foregoing
persons.
PART II
Item 5. Market for the Registrant's Common Equity and Related
Shareholder Matters
The information set forth under the caption "Shareholder
Information" on page 26 the 1994 Annual Report of the Registrant is
incorporated by reference herein. As of December 31, 1994, there were 757
holders of record of the Registrant's Common Stock.
Item 6. Selected Financial Data
The information set forth under the caption "Selected Financial
and Other Data" on pages 24 and 25 the 1994 Annual Report of the Registrant
is incorporated by reference herein.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The information set forth under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
on pages 12 and 13 of the 1994 Annual Report of the Registrant is
incorporated by reference herein.
Item 8. Financial Statements and Supplementary Data
The information set forth on pages 14 through 25 of the 1994
Annual Report of the Registrant is incorporated by reference herein.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not Applicable
-6-
PART III
Item 10. Directors and Executive Officers of the Registrant
The information set forth under the caption "Information About
Directors and Nominees for Directors" on pages 3 and 4 of the definitive
Proxy Statement of the Registrant dated March 31, 1995 filed with the
Securities and Exchange Commission pursuant to Regulation 14A is
incorporated by reference herein 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 caption "Executive
Compensation" on pages 7, 8 and 9 of the definitive Proxy Statement of the
Registrant dated March 31, 1995 filed with the Securities and Exchange
Commission pursuant to Regulation 14A is incorporated by reference herein.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information set forth under the caption "Security Ownership"
on pages 1 and 2 of the definitive Proxy Statement of the Registrant dated
March 31, 1995 filed with the Securities and Exchange Commission pursuant
to Regulation 14A is incorporated by reference herein.
Item 13. Certain Relationships and Related Transactions
Not applicable
-7-
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K
(a) The following documents are filed as a part of this
report:
1. Financial Statements
The following consolidated financial statements
of Douglas & Lomason Company and subsidiaries
included in the Douglas & Lomason Company 1994
Annual Report to its Shareholders for the year
ended December 31, 1994, are incorporated herein
by reference:
Consolidated Balance Sheets at December 31, 1994
and 1993.
Consolidated Statements of Earnings for each of
the years in the three year period ended
December 31, 1994.
Consolidated Statements of Shareholders' Equity
for each of the years in the three year period
ended December 31, 1994.
Consolidated Statements of Cash Flows for each of
the years in the three year period ended
December 31, 1994.
Notes to Consolidated Financial Statements.
The consolidated financial information for the
years ended December 31, 1994, 1993, and 1992 set
forth under "Index to Consolidated Financial
Statements and Schedules."
EXHIBITS
(The Exhibit marked with one asterisk below was
filed as an Exhibit to the Form 10-K Report of
the Registrant for the fiscal year ended
December 31, 1983; the Exhibit marked with two
asterisks below was filed as an Exhibit to the
Form 10-Q Report of the Registrant for the
quarter ended June 30, 1988; the Exhibit marked
with three asterisks below was filed as an
Exhibit to the Form 10-K Report of the
Registrant for the fiscal year ended December 31,
1989; the Exhibits marked with four asterisks
below were filed as Exhibits to the Form 10-K
Report of the Registrant for the fiscal year
ended December 31, 1991; the Exhibit marked
with five asterisks below was filed as an
Exhibit to the Form 10-K Report of the Registrant
for the fiscal year ended December 31, 1992, the
Exhibits marked with six asterisks were filed as
-8-
Exhibits to the Form 10-K Report of the Registrant
for the fiscal year ended December 31, 1993, and the
Exhibit marked with seven asterisks below was filed
as an Exhibit to the Form 10-Q Report of the Registrant
for the quarter ended June 30, 1994, and are
incorporated herein by reference, the Exhibit
numbers in brackets being those in such Form 10-K
or 10-Q Reports).
(3)(a)****** Restated Articles of
Incorporation of Registrant.[(3)(a)]
(3)(b)****** By-Laws of the Registrant. [(3)(b)]
(4)(a)** Term Loan Agreement dated as of
May 20, 1988 between Registrant
and the Banks named in Section
2.1 thereof [1].
(4)(a)(1)**** Amendments to Term Loan Agreement
Agreement dated as of May 20,
1988. [(4)(a)(1)]
(4)(b)**** Term Loan Agreement dated as of
December 19, 1991 between
Registrant and NBD Bank, N.A.
and Manufacturers Bank, N.A.,
as amended. [(4)(b)]
(4)(c)******* Amended and Restated Credit Agreement
dated as of June 24, 1994, between
Registrant and the banks named in
Section 2.1 thereof. [4]
(10)(a)* 1982 Incentive Stock Option Plan
of the Registrant [10](#)
(10)(b)*** 1990 Stock Option Plan of the
Registrant [(10)(b)](#)
(10)(c)**** Joint Venture Agreement dated
as of July 25, 1986 between
Registrant and Namba Press
Works Co., Ltd. [(10)(c)]
(13) Portions of 1994 Annual Report
of Registrant.
(21)***** Subsidiaries of the Registrant.
[(22)]
(23) Consent of KPMG Peat Marwick LLP.
(27) Financial Data Schedule
(b) Reports on Form 8-K.
The Registrant has not filed
any reports on Form 8-K during
the last quarter of the period
covered by this report.
(#) This document is a management contract or compensatory
plan.
-9-
SIGNATURES
Pursuant to the requirements of the 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
the 29th day of March, 1995.
DOUGLAS & LOMASON COMPANY
By: /s/ H. A. Lomason II
----------------------------
H. A. Lomason II
Chairman of the Board,
President and Chief Executive
Officer
(Principal Executive Officer)
By: /s/ James J. Hoey
----------------------------
James J. Hoey
Senior Vice President
and Chief Financial Officer
(Principal Financial Officer)
By: /s/ Melynn M. Zylka
----------------------------
Melynn M. Zylka
Treasurer
(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 29th, 1995.
Signature Title
/s/ James E. George Director
--------------------------
James E. George
/s/ Verne C. Hampton II Director
--------------------------
Verne C. Hampton II
/s/ H. A. Lomason II Director
--------------------------
H. A. Lomason II
/s/ Dale A. Johnson Director
--------------------------
Dale A. Johnson
/s/ Charles R. Moon Director
--------------------------
Charles R. Moon
/s/ James B. Nicholson Director
--------------------------
James B. Nicholson
/s/ Gary T. Walther Director
--------------------------
Gary T. Walther
-10-
DOUGLAS & LOMASON COMPANY AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
The consolidated balance sheets of the Company and subsidiaries as of
December 31, 1994 and 1993, and the related consolidated statements of
earnings, shareholders' equity, and cash flows for each of the years in the
three-year period ended December 31, 1994 together with the related notes
and the report of KPMG Peat Marwick LLP, independent certified public
accountants, all contained in the Company's 1994 annual report to
shareholders, are incorporated herein by reference.
The following additional financial data should be read in conjunction with
the financial statements in the 1994 annual report to shareholders. All
other schedules are omitted, as the required information is inapplicable or
the information is presented in the consolidated financial statements or
related notes. Financial statements and related schedules of the
Registrant have been omitted because the Registrant is primarily an
operating company and the subsidiaries included in the consolidated
financial statements are totally held.
Index
Page
----
Independent Auditors' Report F-2
Schedule VIII - Valuation and Qualifying Accounts F-3
F-1
Independent Auditors' Report
The Board of Directors and Shareholders
Douglas & Lomason Company:
Under date of January 31, 1995, we reported on the consolidated balance
sheets of Douglas & Lomason Company and subsidiaries as of December 31,
1994 and 1993, and the related consolidated statements of earnings,
shareholders' equity, and cash flows for each of the years in the
three-year period ended December 31, 1994, as contained in the 1994 annual
report to Shareholders. These consolidated financial statements and our
report thereon are incorporated by reference in the annual report on Form
10-K for the year 1994. In connection with our audits of the
aforementioned consolidated financial statements, we also have audited the
related consolidated financial statement schedules as listed in the
accompanying index. These financial statement schedules are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statement schedules based on our
audits.
In our opinion, such financial statement schedules, when considered in
relation to the basic consolidated financial statements taken as a whole,
present fairly, in all material respects, the information set forth
therein.
As discussed in notes 1 and 8 to the consolidated financial statements, the
Company changed its method of accounting for income taxes and
postretirement benefits other than pensions in 1993.
/s/ KPMG Peat Marwick LLP
Detroit, Michigan
January 31, 1995
F-2
Schedule VIII
DOUGLAS & LOMASON COMPANY AND SUBSIDIARIES
Valuation and Qualifying Accounts
Years ended December 31, 1994, 1993, and 1992
(Expressed in thousands of dollars)
Balance at Charged to Balance at
December 31, Costs and December 31,
1991 Expenses Deductions 1992
------------ ---------- ---------- ------------
None -- -- -- --
===== ===== ===== =====
Balance at Charged to Balance at
December 31, Costs and December 31,
1992 Expenses Deductions 1993
------------ ---------- ---------- ------------
Other accrued plant
closing liabilities -- 9,078 -- 9,078
===== ===== ===== =====
Balance at Charged to Balance at
December 31, Costs and December 31,
1993 Expenses Deductions 1994
------------ ---------- ---------- ------------
Other accrued plant
closing liabilities 9,078 -- 5,397 3,681
===== ===== ===== =====
F-3