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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
[ X ] SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 29, 1996
OR
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
[ ] SECURITIES EXCHANGE ACT OF 1934
Commission File Number : 0-24354
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DORSEY TRAILERS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 58-2110729
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(State of Incorporation) (IRS Employer
Identification Number)
2727 Paces Ferry Road
One Paces West, Suite 1700
Atlanta, Georgia 30339
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Registrant's telephone number, including area code: (770) 438-9595
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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
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The number of shares of common stock outstanding at July 31, 1996, was
4,997,422.
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DORSEY TRAILERS, INC.
FORM 10-Q
Quarter ended June 29, 1996
Index
Page
Part I. Financial Information ----
Item 1. Condensed Financial Statements 3
Balance Sheet - June 29, 1996 and December 31, 1995
Statement of Operations - For the three months and six months
ended June 29, 1996 and June 24, 1995 4
Statement of Cash Flows - For the six months ended
June 29, 1996 and June 24, 1995 5
Statement of Changes in Stockholders' Equity -
For the six months ended June 29, 1996 6
Notes to Condensed Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-9
Part II. Other Information 9-10
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PART 1 - FINANCIAL INFORMATION
ITEM 1. CONDENSED FINANCIAL STATEMENTS
DORSEY TRAILERS, INC.
BALANCE SHEET
(In thousands except share data)
June 29, December 31,
1996 1995
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(unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 6,415 $ 7,738
Accounts receivable, net 10,022 9,394
Inventories 14,340 16,771
Prepaid expenses and other assets 2,051 663
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Total current assets 32,828 34,566
Property, plant and equipment, net 9,593 9,459
Other assets 5 6
Deferred income taxes 3,418 3,418
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$45,844 $47,449
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt $ 495 $ 1,011
Accounts payable 17,649 15,568
Accrued wages and employee benefits 4,809 5,004
Accrued expenses 3,416 3,669
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Total current liabilities 26,369 25,252
Long-term debt, net of current maturities 9,115 9,304
Accrued pension liability 1,600 1,600
Accrued warranty 1,100 1,100
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38,184 37,256
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Stockholders' equity
Preferred stock, $.01 par value, 500,000 shares
authorized; none issued or outstanding
Common stock, $.01 par value, 30,000,000 shares
authorized; 4,997,422 and 4,988,854
shares issued and outstanding 49 49
Additional paid-in capital 2,193 2,086
Retained earnings 5,589 8,229
Unrecognized pension liability (171) (171)
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Total stockholders' equity 7,660 10,193
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Commitments and contingencies - -
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$45,844 $47,449
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See notes to condensed financial statements.
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DORSEY TRAILERS, INC.
STATEMENT OF OPERATIONS - UNAUDITED
(In thousands except share amounts)
Three months ended Six months ended
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June 29, June 24, June 29, June 24,
1996 1995 1996 1995
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Net sales $38,891 $63,381 $79,919 $123,175
Cost of sales 38,820 58,501 79,546 114,224
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Gross profit 71 4,880 373 8,951
Selling, general and
administrative expenses 2,009 2,028 4,064 3,896
Provision for plant closing 185 24 427 47
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Income (loss) from operations (2,123) 2,828 (4,118) 5,008
Interest expense, net 89 13 174 57
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Income (loss) before income taxes (2,212) 2,815 (4,292) 4,951
Provision (credit) for income taxes (852) 820 (1,652) 820
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Net income (loss) $(1,360) $ 1,995 $(2,640) $ 4,131
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Net income (loss) per share $ (.27) $ 0.40 $ (.53) $ 0.83
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Weighted average number of
common and common share
equivalents used in the net income
(loss) per share calculation 4,952 4,981 4,949 4,983
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See notes to condensed financial statements.
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DORSEY TRAILERS, INC.
STATEMENT OF CASH FLOWS - UNAUDITED
(In thousands)
Six months ended
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June 29, June 24,
1996 1995
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Cash flows from operating activities:
Net income (loss) $(2,640) $ 4,131
Adjustments to reconcile net income (loss) to net cash
used in operating activities
Depreciation and amortization 672 572
Issuance of common stock to non-employee directors 30 22
Change in assets and liabilities-
Increase in accounts receivable (628) (6,063)
Decrease (increase) in inventories 2,431 (147)
(Increase) decrease in prepaid expenses and
other current assets (1,388) 9
Increase in accounts payable 2,081 2,777
(Decrease) increase in accrued expenses (448) 521
Decrease in other assets 1 158
Increase in deferred income taxes - (1,206)
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Net cash provided by operating activities 111 774
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Cash flows from investing activities:
Capital expenditures (806) (689)
Redeem certificate of deposit - 250
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Net cash used in investing activities (806) (439)
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Cash flows from financing activities:
Payments on long-term debt (705) (249)
Tax benefit from exercise of stock options 77 -
Payment of accrued distribution to stockholders - (1,160)
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Net cash used in financing activities (628) (1,409)
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Decrease in cash and cash equivalents (1,323) (1,074)
Cash and cash equivalents at beginning of period 7,738 9,297
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Cash and cash equivalents at end of period $ 6,415 $ 8,223
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See notes to condensed financial statements.
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DORSEY TRAILERS, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(in thousands except share data)
Common Stock Additional Unrecognized
------------ Paid-in Retained Pension
Shares Amount Capital Earnings Liability Total
--------- ------ ---------- -------- ------------ -------
Balance, December 31, 1995 4,988,854 $49 $2,086 $8,229 ($171) $10,193
Net loss (2,640) (2,640)
Record unrecognized tax benefit of
stock option compensation 77 0 0 77
Issuance of common stock to non-
employee directors 8,568 0 30 0 0 30
--------- --- ------ ------ ----- ------
Balance, June 29, 1996 (unaudited) 4,997,422 $49 $2,193 $5,589 ($171) $7,660
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See notes to condensed financial statements.
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DORSEY TRAILERS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. GENERAL
The financial statements included herein have been prepared by Dorsey Trailers,
Inc. (the Company) without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations; however, the Company believes that the
disclosures are adequate to make the information presented not misleading. The
condensed financial statements included herein should be read in conjunction
with the financial statements and the notes thereto included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1995.
In the opinion of the Registrant, the accompanying financial statements contain
all material adjustments (consisting only of normal recurring adjustments),
necessary to present fairly the financial position of the Company at June 29,
1996, and December 31, 1995, and its results of operations for the three months
and six months ended June 29, 1996, and June 24, 1995, and its cash flows for
the six months ended June 29, 1996 and June 24, 1995.
NOTE 2. INVENTORIES
Inventories consisted of the following:
June 29, December 31,
1996 1995
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(in thousands)
Raw materials $ 8,661 $10,284
Work-in-process 4,382 4,948
Finished trailers 1,051 1,312
Used trailers 246 227
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$14,340 $16,771
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
NET SALES Net sales for the second quarter ended June 29, 1996 decreased
38.6% to $38.9 million from $63.4 million for the second quarter ended June 24,
1995. The decrease in sales for the quarter ended June 29, 1996, was primarily
attributable to a 35.2% decrease in new trailer units sold, reflecting
significantly lower demand in the trailer industry. Net sales for the six
months ended June 29, 1996, were $79.9 million, a 35.1% decrease from the
$123.2 million in the comparable prior year period. This decrease in sales was
primarily due to a 33.0% decrease in new trailer units sold from the comparable
period in 1995.
GROSS PROFIT Gross profit as a percentage of sales totaled .2% for the second
quarter of 1996 compared to 7.7% for the same period in 1995. The gross profit
percentage for the six month period ended June 29, 1996 was .5% versus 7.3% for
the same period in 1995. Lower gross profit in 1996 was due to several
factors, including substantially lower volume and selling prices resulting from
very weak market demand and excess production capacity in the industry, as well
as a one week shutdown during the first quarter of 1996 and the inefficiencies
associated with the reduction in the production rate at the Company's largest
plant in Elba, Alabama. Also contributing to the decrease was significant
start-up losses at the Company's new flatbed facility in Cartersville, Georgia.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and
administrative ("S, G, & A") expenses for the second quarter of 1996 decreased
.9% versus the second quarter of 1995 but increased as a percentage of sales
to 5.2% in the second quarter of 1996 from 3.2% for the corresponding period in
1995. S,G,&A expenses for the six month period ended June 29, 1996 increased
4.3% versus the same period in 1995, and increased as a percentage of sales to
5.1% from 3.2% for the corresponding period in 1995.
PROVISION FOR PLANT CLOSING Costs related to the Company's closed facilities
increased in the second quarter of 1996 over the same period in 1995 and
includes costs related to the closing of the Northumberland, Pennsylvania plant
which occurred during the fourth quarter of 1995.
INTEREST EXPENSE, NET Interest expense, net for the three and six month
periods ended June 29, 1996 totaled $89,000 and $174,000 compared to $13,000
and $57,000 for the same period in 1995. The increase is a result of the note
payable for the November, 1995 purchase of the Cartersville, Georgia facility.
NET INCOME (LOSS) Net loss for the three months and six months ended June 29,
1996 was $1.4 million and $2.6 million which included a credit for income taxes
of $0.9 million and $1.7 million, respectively. Net income for the three and
six months ended June 24, 1995 was $2.0 million and $4.1 million which was
positively impacted by utilization of the deferred tax valuation reserve, which
reduced the income tax expense to $0.9 million for the six month period.
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LIQUIDITY AND CAPITAL RESOURCES
As presented in the Statement of Cash Flows, net cash provided by operating
activities was $111,000 during the first six months of 1996 and $774,000 during
the corresponding period of 1995.
The Company believes that cash provided from operating activities, cash and
cash equivalents, and the borrowing capacity under its revolving line of credit
will be sufficient to meet its working capital and capital expenditure
requirements for 1996.
BACKLOG
The Company's backlog of orders was approximately $44 million at December 31,
1995 and $34 million at June 29, 1996. The backlog includes only those orders
for trailers for which a confirmed customer order has been received. The
Company manufactures trailers only to customer or dealer order and does not
generally maintain an inventory of trailers.
SUBSEQUENT EVENTS
On July 1, 1996, the Company completed the purchase of the majority of assets
of a Dillon, South Carolina-based dump trailer manufacturer, Montone
Manufacturing. The purchase was made with a combination of cash and notes.
Production at this facility began immediately.
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
Not applicable.
ITEM 2. Changes in Securities
Not applicable.
ITEM 3. Defaults upon Senior Securities
Not applicable.
ITEM 4. Submission of Matters to a Vote of Security Holders
A. The Company's annual meeting of stockholders was held on April 22,
1996.
B. Lawrence E. Mock, Jr. and Ernest H. Lorch were elected as
directors. The term of office of Marilyn R. Marks, J. Hoyle
Rymer, and Neil A. Springer continued after the meeting.
C. Stockholders voted on the matters disclosed in the following table:
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Ratification of Independent
Election of Directors* Certified Public Accountants
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Votes Cast:
For 4,724,579 4,734,379
Against 0 14,650
Withheld 6,150 0
Abstentions 22,100 12,800
Broker Non Votes 0 0
*For a term of three years
ITEM 5. Other Information
Not applicable.
ITEM 6. Exhibits and Reports on Form 8-K
10.38 First Amendment to Revolving Credit and Reimbursement Agreement by and
between the Company and NationsBank of Georgia, N.A., dated June 11,
1996.
27 Financial Data Schedule (for SEC use only).
No reports on Form 8-K were filed during the period.
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.
DORSEY TRAILERS, INC.
Date: July 31, 1996 By: /s/ T. Charles Chitwood
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T. Charles Chitwood
Vice President - Finance
(Principal Financial Officer
and Principal Accounting Officer)
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