UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

March 2, 2007

Date of Report (Date of earliest event reported)

 

LAWSON PRODUCTS, INC.

(Exact name of registrant as specified in its charter)

 

 

 

 

(847) 827-9666

(Registrant’s telephone number, including area code)

 

N/A

(Former name or former address, if changed since last report.)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

 

 

 

 

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Item 2.02      Results of Operations and Financial Condition.

 

On March 2, 2007, Lawson Products, Inc. issued a press release announcing its operating results for the year and quarter ended December 31, 2006. A copy of the press release is attached as Exhibit 99.1 to this Form 8-K and is incorporated herein by reference.

 

 

(d) Exhibits.

 

 

 

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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 hereunto duly authorized.

 

 

 

 

 

 

 

Contact: Scott F. Stephens

847-827-9666, ext. 2269

 

Lawson Products, Inc. Announces 2006 Fourth Quarter and Annual Results

 

DES PLAINES, IL, March 2, 2007 – Lawson Products, Inc. (NASDAQ: LAWS, the “Company”), an international distributor of services, systems and products to the MRO and OEM marketplaces, today announced financial results for its fourth quarter and year ended December 31, 2006.

For the full year 2006, net sales were $518.2 million, a 15.1 percent increase from $450.2 million in 2005. Operating income was $22.3 million in 2006 compared to $35.4 million in the prior year. Net income decreased 52.8 percent to $12.6 million for 2006 compared with $26.7 million for 2005. Diluted earnings per share were $1.42 in 2006, a 51.7 percent decrease from $2.94 in 2005.

Adjusted operating income for 2006 was $29.9 million, down 14.3 percent from $34.9 million in 2005. Adjusted operating income is a non-GAAP financial measure which is reconciled to reported operating income later in this release. The decline in adjusted operating income in 2006 compared to 2005 was primarily due to higher general and administrative expenses in 2006 associated with the Company’s on-going investments in marketing, technology and supply chain initiatives.

“The Company achieved record sales levels in 2006, a year that included progress on many initiatives that are important for the Company’s long-term growth,” said Robert J. Washlow, Chairman of the Board and CEO. “In 2006, we invested heavily in the future of Lawson, including the integration of Rutland Tool & Supply Co. (“Rutland”), acquired in December 2005, which resulted in the expansion of our product offering by about 80,000 stock keeping units. In addition, we broadened our efforts on several supply chain development initiatives, including the reconfiguration of our Suwannee, Georgia distribution center and the commencement of construction of a 140,000 square foot addition to our Reno, Nevada distribution center. Finally, the Company completed the purchase of almost 500,000 shares of outstanding stock in 2006,” Washlow continued.

Net sales for the fourth quarter 2006 increased 9.2 percent to $126.2 million from $115.6 million in the same quarter of 2005. Operating income was $3.2 million in the fourth quarter of 2006 compared to $6.2 million in the prior year period. Adjusted operating income was $4.9 million in fourth quarter of 2006

 

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compared to $6.8 million in the comparable 2005 period. Fourth quarter 2006 results include a full quarter of the operations of Rutland, which was acquired in December 2005.

Rutland accounted for $13.1 million of net sales and $0.5 million of operating income in the fourth quarter 2006 and $4.1 million of net sales and $0.2 million of operating income in the fourth quarter of 2005. For the full year 2006, Rutland accounted for $54.8 million of net sales and $2.6 million of operating income.

Fourth quarter and full year 2006 net income results include higher effective income tax rates, reflecting the Company’s recording of additional tax expenses due to the removal of tax deductions taken in tax years 2005, 2004, and 2003 for costs incurred related to certain customer loyalty programs discontinued in January 2006. As a result of these adjustments, the Company’s fourth quarter and full year 2006 effective tax rates were 67.8 percent and 46.8 percent, respectively, compared to 48.4 percent and 41.3 percent in the comparable prior year periods.

 

About Lawson Products, Inc.

 

Lawson Products, Inc. is an international leader in selling and distributing services, systems and products to the industrial, commercial and institutional maintenance, repair and operations (MRO) market. The Company also manufacturers, sells and distributes production and specialized component parts to the original equipment marketplace (OEM) including the automotive, appliance, aerospace, construction and transportation industries.

 

This release contains certain forward-looking statements that involve risks and uncertainties. The terms “may,” “should,” “could,” “anticipate,” “believe,” “continues”, “estimate,” “expect,” “intend,” “objective,” “plan,” “potential,” “project” and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Such statements speak only as of the date of the news release and are subject to a variety of risks and uncertainties, many of which are beyond the Company’s control, which could cause actual results to differ materially from the expectations. These risks include, but are not limited to: the impact of governmental investigations, such as the ongoing investigation by U.S. Attorney’s office for the Northern District of Illinois; excess and obsolete inventory; disruptions of the Company’s information systems; risks of rescheduled or cancelled orders; increases in commodity prices; the influence of controlling stockholders; competition and competitive pricing pressures; the effect of general economic conditions and market conditions in the markets and industries the Company serves; the risks of war, terrorism, and similar hostilities; and, all of the factors discussed in the Company’s “Risk Factors” set forth in its Annual Report on Form 10-K for the year ended December 31, 2005. The Company undertakes no obligation to update any such factor or to publicly announce the results of any revisions to any forward-looking statements contained herein whether as a result of new information, future events or otherwise.

 

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