SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C.
FORM 10-Q/A
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarter ended June 30, 1996
( ) 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 15, 1996
Common stock, $2 par value 4,245,127 shares
DOUGLAS & LOMASON COMPANY
Consolidated Condensed Balance Sheets
(in thousands)
June 30 December 31
1996 1995
------- -----------
ASSETS
Current assets:
Cash $ 4,342 $ 4,587
Accounts receivable 96,556 93,486
Inventories
Raw materials 10,165 10,562
Work in process and finished goods 13,060 15,520
-------- --------
23,225 26,082
Prepaid expenses and other
current assets 4,199 7,618
-------- --------
128,322 131,773
Property, plant and equipment, net 74,113 76,164
Intangibles 36,656 38,179
Other non-current assets 28,454 22,773
-------- --------
Total assets $267,545 $268,889
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 4,963 $ 4,775
Accounts payable and accrued expenses 62,929 80,944
--------- --------
Total current liabilities 67,892 85,719
Long-term debt, less current maturities 78,849 69,113
Postretirement benefits other than
pensions 9,059 8,598
Other liabilities and deferred credits 18,993 19,112
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 4,243,021 shares in
1996 and 1995 8,486 8,486
Other capital 28,088 28,088
Retained earnings 61,050 54,543
Foreign currency translation adjustment (4,872) (4,770)
--------- --------
Total shareholders' equity 92,752 86,347
--------- --------
Total liabilities and
shareholders' equity $ 267,545 $268,889
========= ========
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DOUGLAS & LOMASON COMPANY
Consolidated Condensed Statements of Income
(in thousands, except per share data)
Three Months Ended Six Months Ended
June 30 June 30
------------------ ----------------
1996 1995 1996 1995
---- ---- ---- ----
Net sales $ 156,155 $ 130,602 $ 298,986 $ 285,660
Cost of sales 140,928 125,131 272,514 268,890
----------- ----------- ----------- -----------
Gross profit 15,227 5,471 26,472 16,770
Selling, general and
administrative expense 8,153 5,959 15,258 12,022
----------- ----------- ----------- -----------
Operating income (loss) 7,074 (488) 11,214 4,748
Other income (expenses):
Interest expense, net (1,594) (1,054) (3,157) (1,750)
Interest income
and other 529 46 1,594 262
----------- ----------- ----------- -----------
(1,065) (1,008) (1,563) (1,488)
Earnings (loss) before
provision for
income taxes 6,009 (1,496) 9,651 3,260
Income tax expense
(benefit) 1,680 (1,040) 2,295 335
----------- ----------- ----------- -----------
Net earnings (loss) $ 4,329 $ (456) $ 7,356 $ 2,925
=========== =========== =========== ===========
Net earnings (loss)
per share $ 1.02 $ (.11) $ 1.73 $ .69
=========== =========== =========== ===========
Weighted average number
of shares $ 4,243,021 4,243,580 4,243,021 4,239,365
=========== =========== =========== ===========
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DOUGLAS & LOMASON COMPANY
Consolidated Condensed Statements of Cash Flows
(in thousands)
Six Months Ended
June 30
----------------
1996 1995
-------- ------
Cash flows from operating activities:
Net earnings $ 7,356 $ 2,925
Depreciation and amortization 6,686 6,437
Changes in operating assets and liabilities:
(Increase) decrease in accounts
receivable (3,158) 8,940
Decrease in inventories 2,857 2,847
Increase in prepaid expenses
and other assets (739) (7,188)
Decrease in accounts payable,
and accrued expenses (18,575) (8,176)
Increase in other liabilities 1,031 485
-------- -------
Net cash (used) provided by operating
activities (4,542) 6,270
Cash flows from investing activities:
Proceeds from the sale of property,
plant and equipment --- 84
Acquisition of property, plant and
equipment (4,653) (9,356)
Cost of acquisition, net of cash --- (43,488)
------- -------
Net cash used by investing activities (4,653) (52,760)
------- -------
Cash flows from financing activities:
Proceeds from long-term debt 12,000 47,000
Repayment of long-term debt (2,076) (3,221)
Proceeds from exercised stock
options, net --- 129
Dividends paid (849) (849)
-------- -------
Net cash provided by financing
activities 9,075 43,059
------- -------
Effect of translation on cash (125) (719)
Net decrease in cash (245) (4,150)
Cash at beginning of year 4,587 6,532
-------- -------
Cash at end of quarter $ 4,342 $ 2,382
======== =======
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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, 1996 and 1995, 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.
2. On June 8, 1995, Douglas & Lomason Company (the "Company") acquired the
stock of Bestop, Inc. ("Bestop"). Bestop is the leading designer and
manufacturer in North America of soft tops and accessories for small
sport utility vehicles. Bestop sells its product domestically and
internationally to original equipment manufacturer (OEM) companies and in
the aftermarket. The purchase agreement required a purchase price of
approximately $43,952,000. The acquisition will be accounted for in
accordance with the purchase method of accounting.
Had the acquisition of Bestop, Inc. occurred as of January 1, 1995,
revenues, net income and earnings per share would have been as follows:
Three Months Ended Six Months Ended
June 30 June 30
------------------ ----------------
(in 000's except for per share data)
1996 1995 1996 1995
---- ---- ---- ----
Revenues $156,155 $143,108 $298,986 $314,025
Net Income $ 4,329 $ (928) $ 7,356 $ 2,310
Earnings Per Share $ 1.02 $ (.22) $ 1.73 $ .54
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Management's Discussion and Analysis of Financial
Conditions and Results of Operations
Liquidity and Capital Resources
At June 30, 1996, the Company had working capital of $60.4 million and
available borrowings of $15.0 million on a $60.0 million revolver credit
agreement with two banks.
Funds from borrowings, $12.0 million, less repayment of long-term debt of $2.1
million provided cash available for capital expenditures of $4.7 million and
cash necessary for operating activities of $4.5 million.
Capital expenditures in 1996 are anticipated to be approximately $15.0
million.
Results of Operations
Net Sales
Net sales for the three months ended June 30, 1996, were $156.2 million, an
increase of 19.6% over sales of $130.6 million in the second quarter of 1995.
Sales for the six month period of 1996 were $299.0 million versus $285.7
million for the same period of 1995, an increase of 4.7%. The acquisition of
Bestop in June 1995 accounted for the majority of the sales increase, but the
Company also benefited from increased production of the Ford Aerostar minivan
and the Ford Contour/Mercury Mystique for which the Company is the lead
supplier of complete seating systems.
Cost of Sales
The cost of sales as a percentage of sales decreased to 90.2% for the three
month period ended June 30, 1996, compared to 95.8% in the same period of
1995. For the six month period ended June 30, 1996, the cost of sales as a
percentage of sales was 91.1% compared to 94.1% in 1995. Several factors
contributed to the improvement in 1996, including cost reductions achieved
through Value Analysis/Value Engineering efforts, increased production volume
at a number of plants, the full quarter impact of Bestop in 1996 and a
dramatic improvement in medical insurance claims.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the three month period ended
June 30, 1996, increased $2.2 million over the same period of 1995 as a result
of the consolidation of the selling, general and administrative expenses of
Bestop, Inc. acquired in June of 1995.
Interest Expense
Interest expense in the second quarter of 1996 of $1.6 million increased $.5
million or 51.2% from the $1.1 million reported for the same period of 1995
principally as a result of the higher debt level in 1996. In June 1995, the
Company borrowed $44.0 million to acquire Bestop, Inc.
Net Earnings (Loss)
Net earnings of $4.3 million or $1.02 per share in the second quarter of 1996
compared with a net loss of $456.0 thousand or $.11 per share in the second
quarter of 1995 improved principally as a result of the lower cost mentioned
previously in the cost of sales. For the six months ended June 30, 1996, the
Company recorded net earnings of $7.4 million or $1.73 per share compared with
net earnings of $2.9 million or $.69 per share in the first six months of
1995.
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Financial Condition
The balance sheet remains strong at June 30, 1996. The current ratio was 1.9
to 1 and the ratio of debt to total capitalization was .45 to 1 at June 30,
1996.
On August 7, 1996, in response to increased trading volume and per share
price, the Company announced that it was engaged in discussions regarding a
possible business combination. No assurance can be given that the discussions
will result in the consumation of any transaction. The Company will not issue
any further press releases or comments concerning the discussions until they
are finalized or terminated.
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PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote for Security Holders
The following information is furnished with respect to the Annual
Meeting of security holders of the Registrant held during April 1996:
(a) A meeting was held on April 26, 1996, and was an Annual
Meeting.
(b) Not applicable.
(c) At such meeting the nominee for election as a director, Verne C.
Hampton II, was elected for the term of office to expire at the
1999 Annual Meeting of Shareholders. The votes cast with respect
to such nominee for director are as follows:
Votes to
Withhold
Authority
to Vote
Votes for for the
Nominee Nominee Nominee
------- ------- -------
Verne C. Hampton II 3,977,353 28,007
The shareholders further approved an amendment to the Registrant's
1990 Stock Option Plan to increase the number of shares of the Registrant's
Common Stock which may be issued thereunder. 3,886,599 affirmative votes,
62,453 negative votes and 15,076 withhold votes were cast with respect to
such proposal.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
20.1. Agreement dated as of May 17, 1996 between Registrant and
Harry A. Lomason II.
20.2. Form of Agreement dated as of May 17, 1996 between
Registrant and the following executive officers of
Registrant: James J. Hoey, Roger H. Morelli, Dan D. Smith
and certain other officers.
(b) Reports on Form 8-K
The Registrant filed no reports on Form 8-K duirng the quarter
for which this report is filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amended report to be signed on its behalf by
the undersigned thereunto duly authorized.
DOUGLAS & LOMASON COMPANY
-------------------------
(Registrant)
Date: August 15, 1996 /s/ James J. Hoey
-------------------------
James J. Hoey
Senior Vice President &
Chief Financial Officer
(Duly Authorized Officer
and Principal Financial
Officer)
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