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
May 1, 2007
Date of Report (Date of earliest event reported)
LAWSON PRODUCTS, INC.
(Exact name of registrant as specified in its charter)
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Delaware |
0-10546 |
36-2229304 |
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(State or other jurisdiction |
(Commission File Number) |
(IRS Employer |
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of incorporation) |
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Identification No.) |
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1666 East Touhy Avenue, Des Plaines, Illinois |
60018 |
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(Address of principal executive offices) |
(Zip Code) |
(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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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Item 2.02 |
Results of Operations and Financial Condition. |
On May 1, 2007, Lawson Products, Inc. issued a press release announcing its operating results for the quarter ended March 31, 2007. A copy of the press release is attached as Exhibit 99.1 to this Form 8-K.
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Item 9.01 |
Financial Statements and Exhibits. |
(d) Exhibits.
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99.1 |
Press release issued by Lawson Products, Inc. on May 1, 2007. |
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.
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LAWSON PRODUCTS, INC. |
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(Registrant) |
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Dated: May 3, 2007 |
By: |
/s/ Neil Jenkins |
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Name: Neil Jenkins |
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Title: General Counsel and Secretary |
Contact: Scott F. Stephens
847-827-9666, ext. 2269
Lawson Products, Inc. Announces First Quarter 2007 Results
DES PLAINES, IL, May 1, 2007 – Lawson Products, Inc. (NASDAQ: LAWS, the “Company”), a distributor of services, systems and products to the MRO and OEM marketplaces, today announced financial results for its first quarter ended March 31, 2007. For the first quarter 2007, net sales were $131.1 million, a slight decrease from $131.9 million in 2006, and net income decreased 8% to $4.6 million from $5.0 million in the first quarter of 2006. Diluted earnings per share were $.54 for the quarter, a $.01 or 1.8 percent decrease from the prior year period.
Operating income was $8.0 million in the first quarter of 2007, compared to $8.3 million in the prior year. First quarter 2007 results include costs of $1.4 million associated with the January 2007 retirement of the Company’s former President. The first quarter of 2007 had one less sales day than the prior year quarter, which in conjunction with slightly weaker sales in the Company’s MRO business contributed to overall lower sales in the first quarter. Gross profit margins for the first quarter 2007 of 58.0 percent were slightly lower than the 58.2 percent gross profit margins in the first quarter of 2006, declining slightly primarily due to the mix of sales between the Company’s MRO and OEM segments. Selling, general and administrative expenses were 50.8 percent of net sales for the first quarter 2007, a decrease from 51.9 percent of net sales in the prior year quarter, primarily as a result of lower compensation costs related to the Company’s long-term performance based incentive plans.
The effective tax rate was 42.9 percent in the first quarter of 2007, compared 40.0% in the 2006 period. The increase in the 2007 rate compared to the prior year is primarily due to tax-exempt income from insurance proceeds that was higher in 2006, as well as higher state taxes in 2007. The Company’s state income tax rate fluctuates based on the various jurisdictions in which the Company operates and the levels of profits in those jurisdictions. Share repurchases impacted earnings comparisons for the first
quarter, resulting in 5 percent fewer shares of stock outstanding in the first quarter 2007 as compared to the prior year quarter.
On April 13, 2007, the Company announced that its Board of Directors named Dr. Ronald B. Port as its Non-Executive Chairman, to replace Robert J. Washlow, the Company’s former Chairman and Chief Executive Officer. Thomas Neri, President and Chief Operating Officer, was elected to serve as Chief Executive Officer.
About Lawson Products, Inc.
Lawson Products, Inc. is a 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, 2006. 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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LAWSON PRODUCTS, INC AND SUBSIDIARIES |
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
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(UNAUDITED) |
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For the |
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Three Months Ended |
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March 31, |
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_________________________________________ |
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(Amounts in thousands, except per share data) |
2007 |
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2006 |
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_______________ |
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____________________ |
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Net sales |
$131,126 |
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$131,875 |
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Cost of goods sold |
55,042 |
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55,078 |
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Gross profit |
76,084 |
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76,797 |
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Operating expenses: |
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Selling, general and administrative expenses |
66,645 |
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68,493 |
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Other charges |
1,442 |
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--- |
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Operating income |
7,997 |
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8,304 |
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Investment and other income |
94 |
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559 |
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Interest expense |
(81) |
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--- |
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Income from continuing operations before income taxes And cumulative effect of accounting change |
8,010 |
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8,863 |
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Provision for income taxes |
3,440 |
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3,546 |
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Income from continuing operations before cumulative effect of accounting change |
4,570 |
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5,317 |
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Income from discontinued operations, net of income taxes |
--- |
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32 |
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Income before cumulative effect of accounting change |
4,570 |
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5,349 |
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Cumulative effect of accounting change, net of income taxes |
--- |
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(361) |
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Net income |
$4,570 |
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$4,988 |
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Basic income (loss) per share of common stock: |
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Continuing operations before cumulative effect of accounting change |
$0.54 |
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$0.59 |
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Discontinued operations |
--- |
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0.00 |
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Cumulative effect of accounting change |
--- |
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(0.04) |
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$0.54 |
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$0.56 |
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Diluted income (loss) per share of common stock: |
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Continuing operations before cumulative effect of accounting change |
$0.54 |
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$0.59 |
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Discontinued operations |
--- |
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0.00 |
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Cumulative effect of accounting change |
--- |
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(0.04) |
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$0.54 |
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$0.55 |
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Cash dividends declared per share of common stock |
$0.20 |
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$0.20 |
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Weighted average shares outstanding: |
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Basic |
8,521 |
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8,974 |
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Diluted |
8,524 |
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8,988 |
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LAWSON PRODUCTS, INC. AND SUBSIDIARIES |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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March 31, |
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December 31, | |
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(Amounts in thousands) |
2007 |
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2006 | |
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(UNAUDITED) |
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ASSETS |
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Current Assets: |
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Cash and cash equivalents |
$716 |
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$4,179 | |
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Accounts receivable, less allowance for doubtful accounts |
63,237 |
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60,614 | |
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Inventories |
90,423 |
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90,752 | |
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Other current assets |
9,384 |
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9,022 | |
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Discontinued current assets |
633 |
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630 | |
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Total Current Assets |
164,393 |
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165,197 | |
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Property, plant and equipment, less |
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allowances for depreciation and amortization |
44,335 |
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42,664 | |
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Deferred income taxes |
20,649 |
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20,341 | |
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Goodwill, less accumulated amortization |
27,999 |
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27,999 | |
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Other assets |
23,297 |
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22,679 | |
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Discontinued non-current assets |
3 |
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3 | |
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Total Assets |
$280,676 |
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$278,883 | |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current Liabilities: |
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Accounts payable |
$11,660 |
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$14,350 | |
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Revolving line of credit |
11,000 |
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Accrued expenses and other liabilities |
36,567 |
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47,440 | |
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Income taxes |
2,932 |
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772 | |
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Discontinued current liabilities |
869 |
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865 | |
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Total Current Liabilities |
63,028 |
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63,427 | |
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Accrued liability under security bonus plans |
25,890 |
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25,522 | |
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Other |
19,730 |
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19,617 | |
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45,620 |
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45,139 | |
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Total Stockholders' Equity |
172,028 |
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170,317 | |
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Total Liabilities and Stockholders' Equity |
$280,676 |
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$278,883 | |
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