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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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, 1995, 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
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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 12, 1996, 4,243,021 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 $45,110,362.
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, 1995.
Part II: Items 5-8--Part of Annual Report of the Registrant for the year ended
December 31, 1995.
Part III: Items 10-12--Part of definitive Proxy Statement of the Registrant
dated March 27, 1996 filed pursuant to
Regulation 14A.
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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, seat frame assemblies and mechanisms, soft tops and
accessories and decorative moldings. 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 other segments. A summary of certain segment information appears
in note (8) of notes to consolidated financial statements on page 22 of the
1995 Annual Report to Shareholders and is incorporated herein by reference.
AUTOMOTIVE PRODUCTS
Automotive product sales are comprised 85.0% of fully trimmed seating,
seat frame assemblies and mechanisms, 6.0% of soft tops and accessories and
9.0% of decorative moldings.
Seating
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 49
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.
Seating Joint Ventures
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.
The Company believes that opportunities for growth are emerging in
foreign transplant operations in North America and from the expanding trend
toward seat assembly outsourcing in Europe and the Far East.
In 1995, the Company entered into a joint venture agreement with
Shanghai Traffic Machinery Factory to manufacture seat frames and metal
stampings in Shanghai, P.R. China. Current production at the joint venture,
Shanghai Lomason Automotive Seating Systems Company Limited, is for the
Shanghai Volkswagen Santana series.
The Company announced in February 1996 that it entered into a 50/50
joint venture with Keiper Recaro Enterprises, Inc. to form Euro American
Seating. The joint venture has been awarded a contract to supply General
Motors, North American Operations, with complete JIT seating systems. The
joint venture will also pursue supplying JIT seat systems on a global scale.
Soft Tops and Accessories
In June 1995, the Company acquired Bestop, Inc. ("Bestop"), the
leading designer and manufacturer in North America of soft tops and
accessories for small sport utility vehicles. Bestop also designs and
manufactures soft tops and accessories for larger sport utility vehicles.
Bestop sells its products domestically and internationally to original
equipment manufacturer companies and in the aftermarket. Bestop estimates that
it holds more than half of the market share in North America for soft tops of
small sport utility vehicles.
Decorative Moldings
The Company, which has been supplying decorative moldings to the
automotive industry since 1903, has announced its intention to discontinue the
operations of this component of its business in 1996. These products include
body side and wheel opening moldings, head and tail lamp bezels and window and
door sealing systems. The Company does not anticipate a significant loss on
the ultimate disposal of the assets related to this component.
Product Engineering
The Company is continually seeking to improve existing automotive
products and pursuing new automotive products and processes through a 165
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. Research and development costs incurred by the
Company during the last three years were not considered material.
Sales and Customers
Sales coverage by the Company of the North American automotive
industry is maintained by an experienced direct sales staff consisting of 16
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 automotive products
to the three major automotive manufacturers and others during the past three
years is as follows:
1993 1994 1995
---- ---- ----
Chrysler Corporation................. 51% 39% 25%
Ford Motor Company................... 25 40 48
General Motors Corporation........... 15 14 12
All other............................ 9 7 15
Sales percentages include sales to other Tier One suppliers for
ultimate sale to the above customers.
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OTHER SEGMENTS
Other segments of the Company's business accounted for approximately
6% of total Company sales in each of the three years ended December 31, 1995.
Industrial and Commercial Products
The Company is a major supplier to conveyor manufacturers of pulleys
and rollers. The Company also manufacturers conveyors, bag filling scales and
automatic palletizers. 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,
steel, aluminum or reinforced fiberglass refrigerated truck bodies and
trailers. The Company intends to dispose of this business during 1996.
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
Corporation. The Company also competes with Delphi Interior and Lighting
Systems of General Motors Corporation, a captive seating supplier.
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 approximate number of associates employed by the Registrant at
December 31, 1995 was 5,900.
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, 1995 is set forth below:
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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....................... 82,500 1990 Leased
Orangeville, Ontario, Canada.(1)..... 28,300 1992 Leased
Del Rio, Texas.(1)................... 40,000 1987 Leased
Saltillo, Mexico..................... 44,000 1992 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....................... 95,600 1968 Owned
Dakota City, Iowa.................... 91,600 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>
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(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.
The Registrant currently has excessive production capacity as a result
of discontinued models. The Registrant's current utilization is approximately
70% of capacity.
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
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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 61
James B. Nicholson Vice Chairman of the
Board 1990 52
James J. Hoey Senior Vice President and 1992
Chief Financial Officer 1985 59
Roger H. Morelli Senior Vice President- 1987 51
Manufacturing
Steven C. Bruck Vice President-Design,
Development and Engineering
Services 1994 39
Ollie V. Cheatham Vice President-Human
Resources 1984 51
A. Warren Vice President-Safety,
Daubenspeck III Environmental and
Loss Control 1988 44
Martin A. DiLoreto Vice President-Procurement
and International Business
Development 1994 60
Scott E. Paradise Vice President-Automotive
Sales 1993 41
Robert D. Strachura Vice President and
Executive Manager-
Manufacturing 1990 53
Dan D. Smith Vice President-Cost Analysis
and Information Technology 1989 47
Gary A. Pniewski Vice President-Seating
and Decorative Trim
Engineering 1994 51
Verne C. Hampton II Secretary 1977 62
Melynn M. Zylka Treasurer 1990 35
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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 captions "Stock Prices and Cash
Dividends" and "Shareholder Information" on pages 27 and 28 of the 1995 Annual
Report of the Registrant is incorporated by reference herein. As of December
31, 1995, there were 726 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 26 and 27 the 1995 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 1995 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 1995 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.
PART III
Item 10. Director 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 27, 1996 filed with the Securities and
Exchange Commission pursuant to Regulation 14A is incorporated by reference
herein for information as to directors of the Registrant.
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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" and "Executive Compensation" on pages 4 through 7 of the definitive
Proxy Statement of the Registrant dated March 27, 1996 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
27, 1996 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.
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 1995
Annual Report to its Shareholders for the year ended December 31, 1995, are
incorporated herein by reference:
Consolidated Balance Sheets at December 31, 1995 and 1994.
Consolidated Statements of Earnings for each of the years in the three
year period ended December 31, 1995.
Consolidated Statements of Shareholders' Equity for each of the years
in the three year period ended December 31, 1995.
Consolidated Statements of Cash Flows for each of the years in the
three year period ended December 31, 1995.
Notes to Consolidated Financial Statements.
The Independent Auditors' Report and Schedule VIII -- Valuation and
Qualifying Accounts for the years ended December 31, 1995, 1994 and 1993 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 Exhibits marked with five asterisks were
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filed as Exhibits to the Form 10-K Report of the Registrant for
the fiscal year ended December 31, 1993, the Exhibit marked
with six asterisks was filed as an Exhibit to the Form 8-K
Report of the Registrant dated June 8, 1995, and the Exhibit
marked with seven asterisks was filed as an Exhibit to the Form
10-Q Report of the Registrant for the quarter ended June 30,
1995, and are incorporated herein by reference, the Exhibit
numbers in brackets being those in such Form 10-K, 10-Q or 8-K
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 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 Manu-
facturers Bank, N.A., as amended. [(4)(b)]
(4)(c)****** Amended and Restated Credit Agreement dated as of
June 8, 1995, between Registrant and the banks
named in Section 2.1 thereof. [2]
(10)(a)* 1982 Incentive Stock Option Plan of the Regis-
trant [10](#)
(10)(b)*** 1990 Stock Option Plan of Registrant [(10)(c)](#)
(10)(c)**** Joint Venture Agreement dated as of July 25, 1986
between Registrant and Namba Press Works Co. Ltd.
[(10)(c)].
(10)(d)******* Directors Stock Plan [1](#)
(13) Portions of 1995 Annual Report of Regis-
trant.
(21) Subsidiaries of the Registrant.
(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.
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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 the 27th day of
March 1996.
DOUGLAS & LOMASON COMPANY
By: /s/ H. A. Lomason II
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H. A. Lomason II
Chairman of the Board
and President
(Principal Executive Officer)
By: /s/ James J. Hoey
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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 27, 1996.
Signature Title
--------- -----
/s/ James E. George Director
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James E. George
/s/ Verne C. Hampton II Director
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Verne C. Hampton II
/s/ H. A. Lomason II Director
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H. A. Lomason II
/s/ Dale A. Johnson Director
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Director
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Charles R. Moon
/s/ James B. Nicholson Director
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/s/ Gary T. Walther Director
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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, 1995 and 1994, 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, 1995 together with the related notes and the report
of KPMG Peat Marwick LLP, independent certified public accountants, all
contained in the Company's 1995 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 1995 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
[Letterhead of KPMG Peat Marwick LLP]
KPMG Peat Marwick LLP
Suite 1200
150 West Jefferson
Detroit, MI 48226-4429
Independent Auditors' Report
The Board of Directors and Shareholders
Douglas & Lomason Company:
Under date of January 29, 1996, we reported on the consolidated balance sheets
of Douglas & Lomason Company and subsidiaries as of December 31, 1995 and
1994, 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, 1995, as contained in the 1995 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 1995.
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. This financial statement
schedule is the responsibility of the Company's management. Our responsibility
is to express an opinion on this financial statement schedule based on our
audits.
In our opinion, such financial statement schedule, 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, 7, and 10 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 29, 1996
Member Firm of
Klynvald Peat Marwick Goerdeler
F-2
Schedule VIII
DOUGLAS & LOMASON COMPANY AND SUBSIDIARIES
Valuation and Qualifying Accounts
Years ended December 31, 1995, 1994, and 1993
(Expressed in thousands of dollars)
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
===== == ===== =====
Balance at Charged to Balance at
December 31, Costs and December 31,
1994 Expenses Deductions 1995
---- -------- ---------- ----
Other accrued plant closing
liabilities 3,681 -- 2,947 734
===== == ===== =====
F-3