For
the quarterly period ended
|
June 28,
2008
|
For
the transition period from
|
to
|
Commission
File Number:
|
0-18914
|
DORMAN
PRODUCTS, INC.
|
(Exact
name of registrant as specified in its
charter)
|
Pennsylvania
|
23-2078856
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
3400 East Walnut Street, Colmar,
Pennsylvania
|
18915
|
(Address
of principal executive offices)
|
(Zip
Code)
|
(215) 997-1800
|
(Registrant's
telephone number, including area
code)
|
Not Applicable
|
(Former
name, former address and former fiscal year, if changed since last
report)
|
Large
accelerated filer ¨
|
Accelerated
filer x
|
Non-accelerated
filer ¨ (Do
not check if a smaller reporting company)
|
Smaller
reporting company ¨
|
Page
|
||||
Part
I — FINANCIAL INFORMATION
|
||||
Item
1.
|
||||
Statements of Operations: | ||||
3
|
||||
4
|
||||
5
|
||||
6
|
||||
7
|
||||
Item
2.
|
11
|
|||
Item
3.
|
||||
Item
4.
|
17
|
|||
Part
II — OTHER INFORMATION
|
||||
Item
1.
|
18
|
|||
Item
1A.
|
18
|
|||
Item
2.
|
18
|
|||
Item
3.
|
18
|
|||
Item
4.
|
18
|
|||
Item
5.
|
19
|
|||
Item
6.
|
19
|
|||
22
|
||||
23
|
For
the Thirteen Weeks Ended
|
||||||||
(in
thousands, except for share data)
|
June
28, 2008
|
June
30, 2007
|
||||||
Net
Sales
|
$ | 90,311 | $ | 85,796 | ||||
Cost
of goods sold
|
60,146 | 56,726 | ||||||
Gross
profit
|
30,165 | 29,070 | ||||||
Selling,
general and administrative expenses
|
21,469 | 19,225 | ||||||
Income
from operations
|
8,696 | 9,845 | ||||||
Interest
expense, net
|
285 | 512 | ||||||
Income
before taxes
|
8,411 | 9,333 | ||||||
Provision
for taxes
|
3,178 | 3,565 | ||||||
Net
Income
|
$ | 5,233 | $ | 5,768 | ||||
Earnings
Per Share:
|
||||||||
Basic
|
$ | 0.30 | $ | 0.33 | ||||
Diluted
|
$ | 0.29 | $ | 0.32 | ||||
Average
Shares Outstanding:
|
||||||||
Basic
|
17,692 | 17,688 | ||||||
Diluted
|
18,041 | 18,129 |
For
the Twenty-six Weeks Ended
|
||||||||
(in
thousands, except for share data)
|
June
28, 2008
|
June
30, 2007
|
||||||
Net
Sales
|
$ | 170,436 | $ | 160,089 | ||||
Cost
of goods sold
|
115,568 | 105,243 | ||||||
Gross
profit
|
54,868 | 54,846 | ||||||
Selling,
general and administrative expenses
|
41,453 | 38,010 | ||||||
Income
from operations
|
13,415 | 16,836 | ||||||
Interest
expense, net
|
553 | 1,039 | ||||||
Income
before taxes
|
12,862 | 15,797 | ||||||
Provision
for taxes
|
4,947 | 5,967 | ||||||
Net
Income
|
$ | 7,915 | $ | 9,830 | ||||
Earnings
Per Share:
|
||||||||
Basic
|
$ | 0.45 | $ | 0.56 | ||||
Diluted
|
$ | 0.44 | $ | 0.54 | ||||
Average
Shares Outstanding:
|
||||||||
Basic
|
17,695 | 17,689 | ||||||
Diluted
|
18,064 | 18,119 |
(in
thousands, except for share data)
|
June
28,
2008
|
December
29,
2007
|
||||||
Assets
|
||||||||
Current
Assets:
|
||||||||
Cash
and cash equivalents
|
$ | 7,492 | $ | 6,918 | ||||
Accounts
receivable, less allowance for doubtful accounts and customer credits of
$28,176 and $28,705
|
82,079 | 76,897 | ||||||
Inventories
|
87,888 | 80,565 | ||||||
Deferred
income taxes
|
10,306 | 10,111 | ||||||
Prepaids
and other current assets
|
3,103 | 1,921 | ||||||
Total
current assets
|
190,868 | 176,412 | ||||||
Property,
Plant and Equipment, net
|
25,295 | 25,680 | ||||||
Goodwill
|
26,645 | 26,662 | ||||||
Other
Assets
|
1,629 | 1,901 | ||||||
Total
|
$ | 244,437 | $ | 230,655 | ||||
Liabilities
and Shareholders' Equity
|
||||||||
Current
Liabilities:
|
||||||||
Current
portion of long-term debt
|
$ | 8,656 | $ | 8,654 | ||||
Accounts
payable
|
20,902 | 18,752 | ||||||
Accrued
compensation
|
4,007 | 6,520 | ||||||
Other
accrued liabilities
|
3,781 | 4,198 | ||||||
Total
current liabilities
|
37,346 | 38,124 | ||||||
Other
Long-Term Liabilities
|
1,861 | 1,869 | ||||||
Long-Term
Debt
|
14,399 | 8,942 | ||||||
Deferred
Income Taxes
|
8,392 | 7,862 | ||||||
Commitments and
Contingencies
|
||||||||
Shareholders'
Equity:
|
||||||||
Common
stock, par value $.01; authorized 25,000,000 shares; issued and
outstanding 17,681,798 and 17,702,948
|
177 | 177 | ||||||
Additional
paid-in capital
|
32,273 | 32,591 | ||||||
Cumulative
translation adjustments
|
5,125 | 4,141 | ||||||
Retained
earnings
|
144,864 | 136,949 | ||||||
Total
shareholders' equity
|
182,439 | 173,858 | ||||||
Total
|
$ | 244,437 | $ | 230,655 |
For
the Twenty-six Weeks Ended
|
||||||||
(in
thousands)
|
June
28, 2008
|
June
30, 2007
|
||||||
Cash
Flows from Operating Activities:
|
||||||||
Net
income
|
$ | 7,915 | $ | 9,830 | ||||
Adjustments
to reconcile net income to cash provided by operating
activities:
|
||||||||
Depreciation
and amortization
|
3,814 | 3,748 | ||||||
Provision
for doubtful accounts
|
101 | 126 | ||||||
Provision
(benefit) for deferred income tax
|
335 | (55 | ) | |||||
Provision
for non-cash stock compensation
|
113 | 250 | ||||||
Changes
in assets and liabilities:
|
||||||||
Accounts
receivable
|
(4,833 | ) | (5,976 | ) | ||||
Inventories
|
(7,682 | ) | (979 | ) | ||||
Prepaids
and other current assets
|
(184 | ) | 154 | |||||
Other
assets
|
154 | 123 | ||||||
Accounts
payable
|
1,827 | 2,913 | ||||||
Accrued
compensation and other liabilities
|
(2,979 | ) | (1,213 | ) | ||||
Cash
(used in) provided by operating activities
|
(1,419 | ) | 8,921 | |||||
Cash
Flows from Investing Activities:
|
||||||||
Property,
plant and equipment additions
|
(3,603 | ) | (2,652 | ) | ||||
Proceeds
from sale of assets of a business
|
134 | - | ||||||
Cash
used in investing activities
|
(3,469 | ) | (2,652 | ) | ||||
Cash
Flows from Financing Activities:
|
||||||||
Repayment
of long-term debt
|
(41 | ) | (39 | ) | ||||
Net
proceeds from (repayment of) revolving credit facility
|
5,500 | (4,900 | ) | |||||
Proceeds
from exercise of stock options
|
22 | 38 | ||||||
Other
stock related activity
|
(1 | ) | 35 | |||||
Purchase
and cancellation of common stock
|
(452 | ) | (649 | ) | ||||
Cash
provided by (used in) financing activities
|
5,028 | (5,515 | ) | |||||
Effect
of exchange rate changes on cash and cash equivalents
|
434 | 32 | ||||||
Net
Increase in Cash and Cash Equivalents
|
574 | 786 | ||||||
Cash
and Cash Equivalents, Beginning of Period
|
6,918 | 5,080 | ||||||
Cash
and Cash Equivalents, End of Period
|
$ | 7,492 | $ | 5,866 | ||||
Supplemental
Cash Flow Information
|
||||||||
Cash
paid for interest expense
|
$ | 634 | $ | 1,040 | ||||
Cash
paid for income taxes
|
$ | 4,938 | $ | 6,237 |
(in
thousands)
|
June
28,
2008
|
December
29,
2007
|
||||||
Bulk
product
|
$ | 35,603 | $ | 34,493 | ||||
Finished
product
|
49,204 | 43,212 | ||||||
Packaging
materials
|
3,081 | 2,860 | ||||||
Total
|
$ | 87,888 | $ | 80,565 |
Balance,
December 29, 2007
|
$ | 26,662 | ||
Currency
translation
|
(17 | ) | ||
Balance,
June 28, 2008
|
$ | 26,645 |
Shares
|
Weighted
Average Price
|
Weighted
Average Remaining Term (In years)
|
Aggregate Intrinsic
Value
|
|||||||||||||
Balance
at December 29, 2007
|
903,150 | $ | 5.80 | |||||||||||||
Exercised
|
(31,450 | ) | 1.17 | |||||||||||||
Canceled
|
(50,000 | ) | 11.10 | |||||||||||||
Balance
at June 28, 2008
|
821,700 | $ | 5.66 | 4.8 | $ | 3,255,000 | ||||||||||
Options
exercisable at June 28, 2008
|
661,666 | $ | 4.33 | 4.1 | $ | 3,199,000 |
Thirteen
Weeks Ended
|
Twenty-six
Weeks Ended
|
|||||||||||||||
(in
thousands, except per share data)
|
June
28,
2008
|
June
30,
2007
|
June
28,
2008
|
June
30,
2007
|
||||||||||||
Numerator:
|
||||||||||||||||
Net
income
|
$ | 5,233 | $ | 5,768 | $ | 7,915 | $ | 9,830 | ||||||||
Denominator:
|
||||||||||||||||
Weighted
average shares outstanding us use used in basic earnings
per share calculation
|
17,692 | 17,688 | 17,695 | 17,689 | ||||||||||||
Effect
of dilutive stock options.
|
349 | 441 | 369 | 430 | ||||||||||||
Adjusted
weighted average shares outstanding diluted earnings per
share
|
18,041 | 18,129 | 18,064 | 18,119 | ||||||||||||
Basic
earnings per share
|
$ | 0.30 | $ | 0.33 | $ | 0.45 | $ | 0.56 | ||||||||
Diluted
earnings per share
|
$ | 0.29 | $ | 0.32 | $ | 0.44 | $ | 0.54 |
Percentage
of Net Sales
|
||||||||||||||||
For
the Thirteen Weeks Ended
|
For
the Twenty-six Weeks Ended
|
|||||||||||||||
June
28,
2008
|
June
30,
2007
|
June
28,
2008
|
June
30,
2007
|
|||||||||||||
Net
Sales
|
100.0%
|
100.0%
|
100%
|
100%
|
||||||||||||
Cost
of goods sold
|
|
66.6
|
66.1
|
67.8
|
65.7
|
|||||||||||
Gross
profit
|
33.4
|
33.9
|
32.2
|
34.3
|
||||||||||||
Selling,
general and administrative expenses
|
23.8
|
22.4
|
24.3
|
23.8
|
||||||||||||
Income
from operations
|
9.6
|
11.5
|
7.9
|
10.5
|
||||||||||||
Interest
expense, net
|
0.3
|
0.6
|
0.4
|
0.6
|
||||||||||||
Income
before taxes
|
9.3
|
10.9
|
7.5
|
9.9
|
||||||||||||
Provision
for taxes
|
3.5
|
4.2
|
2.9
|
3.8
|
||||||||||||
Net
Income
|
5.8%
|
6.7%
|
4.6%
|
6.1%
|
For
|
Withhold
Authority
|
|
Richard
N. Berman
|
16,428,257
|
15,753
|
Steven
L. Berman
|
15,686,687
|
757,323
|
George
L. Bernstein
|
16,374,207
|
69,803
|
John
F. Creamer, Jr.
|
16,426,257
|
17,753
|
Paul
R. Lederer
|
16,376,207
|
67,803
|
Edgar
W. Levin
|
16,374,207
|
69,803
|
Exhibit
Number
|
Title
|
|
3.1
(1)
|
Amended
and Restated Articles of Incorporation of the Company dated May 23,
2007.
|
|
3.2
(2)
|
Bylaws
of the Company.
|
|
4.1
|
Amended
and Restated Shareholder's Agreement dated July 1, 2006
|
|
10.1
(2)
|
Lease,
dated December 1, 1990, between the Company and the Berman Real Estate
Partnership, for premises located at 3400 East Walnut Street, Colmar,
Pennsylvania.
|
|
10.1.1
(4)
|
Amendment
to Lease, dated September 10, 1993, between the Company and the Berman
Real Estate Partnership, for premises located at 3400 East Walnut Street,
Colmar, Pennsylvania, amending 10.1.
|
|
10.1.2
(5)
|
Assignment
of Lease, dated February 24, 1997, between the Company, the Berman Real
Estate Partnership and BREP 1, for the premises located at 3400 East
Walnut Street, Colmar, Pennsylvania, assigning 10.1.
|
|
10.1.3
(8)
|
Amendment
to Lease, dated April 1, 2002, between the Company and the BREP I, for
premises located at 3400 East Walnut Street, Colmar, Pennsylvania,
amending 10.1.
|
|
10.1.4
(11)
|
Amendment
to Lease, dated December 12, 2007, between the Company and BREP I, for
premises located at 3400 East Walnut Street, Colmar, Pennsylvania,
amending 10.1.
|
|
10.2 (12)
|
Lease,
dated January 31, 2006, between the Company and First Industrial, L.P. for
premises located at 3150 Barry Drive, Portland,
Tennessee.
|
10.2.1
(13)
|
Amendment
to Lease, dated January 28, 2008, between the Company and First
Industrial, L.P. for premises located at 3150 Barry Drive, Portland,
Tennessee.
|
|
10.3
(9)
|
Third
Amended and Restated Credit Agreement dated as of July 24, 2006, between
the Company and Wachovia Bank, N.A.
|
|
10.3.1
(14)
|
Amendment
to Amended and Restated Credit Agreement, dated December 24, 2007, between
the Company and Wachovia Bank, N.A.
|
|
10.4 (10)
|
Commercial
Loan Agreement, dated September 27, 2006, between the Company and the
Tennessee Valley Authority.
|
|
10.5
(6)†
|
Dorman
Products, Inc. Amended and Restated Incentive Stock
Plan.
|
|
10.6
(3)†
|
Dorman
Products, Inc. 401(k) Retirement Plan and Trust.
|
|
10.6.1
(7)†
|
Amendment
No. 1 to the Dorman Products, Inc. 401(k) Retirement Plan and
Trust.
|
|
10.7
(3)†
|
Dorman
Products, Inc. Employee Stock Purchase Plan.
|
|
10.8
(15)
|
Employment
Agreement, dated April 1, 2008, between the Company and Richard N.
Berman.
|
|
10.9
(16)
|
Employment
Agreement, dated April 1, 2008, between the Company and Steven L.
Berman.
|
|
31.1
|
Certification
of Chief Executive Officer as required by Section 302 of the
Sarbanes-Oxley Act of 2002 (filed with this report).
|
|
31.2
|
Certification
of Chief Financial Officer as required by Section 906 of the
Sarbanes-Oxley Act of 2002 (filed with this report).
|
|
32.
|
Certification
of Chief Executive and Chief Financial Officer as required by Section 906
of the Sarbanes-Oxley Act of 2002 (filed with this
report).
|
Dorman
Products, Inc.
|
|
Date August 1, 2008
|
\s\ Richard
Berman
|
Richard
Berman
|
|
Chairman
and Chief Executive Officer
|
|
(Principal
executive officer)
|
|
Date August 1, 2008
|
\s\ Mathias
Barton
|
|
Mathias
Barton
|
Chief
Financial Officer and
|
|
Principal
Accounting Officer
|
|
(Principal
financial officer)
|
3.1
|
Amended
and Restated Articles of Incorporation of the Company dated May 23,
2007.
|
|
3.2
|
Bylaws
of the Company.
|
|
4.1
|
Amended
and Restated Shareholders' dated July 1, 2006.
|
|
10.1
|
Lease,
dated December 1, 1990, between the Company and the Berman Real Estate
Partnership, for premises located at 3400 East Walnut Street, Colmar,
Pennsylvania.
|
|
10.1.1
|
Amendment
to Lease, dated September 10, 1993, between the Company and the Berman
Real Estate Partnership, for premises located at 3400 East Walnut Street,
Colmar, Pennsylvania, amending 10.1.
|
|
10.1.2
|
Assignment
of Lease, dated February 24, 1997, between the Company, the Berman Real
Estate Partnership and BREP 1, for the premises located at 3400 East
Walnut Street, Colmar, Pennsylvania, assigning 10.1.
|
|
10.1.3
|
Amendment
to Lease, dated April 1, 2002, between the Company and the BREP I, for
premises located at 3400 East Walnut Street, Colmar, Pennsylvania,
amending 10.1.
|
|
10.1.4
|
Amendment
to Lease, dated December 12, 2007, between the Company and BREP I, for
premises located at 3400 East Walnut Street, Colmar, Pennsylvania,
amending 10.1.
|
|
10.2
|
Lease,
dated January 31, 2006, between the Company and First Industrial, L.P. for
premises located at 3150 Barry Drive, Portland,
Tennessee.
|
|
10.2.1
|
Amendment
to Lease, dated January 28, 2008, between the Company and First
Industrial, L.P. for premises located at 3150 Barry Drive, Portland,
Tennessee.
|
|
10.3
|
Third
Amended and Restated Credit Agreement dated as of July 24, 2006, between
the Company and Wachovia Bank, N.A.
|
|
10.3.1
|
Amendment
to Amended and Restated Credit Agreement, dated December 24, 2007, between
the Company and Wachovia Bank, N.A.
|
|
10.4
|
Commercial
Loan Agreement, dated September 27, 2006, between the Company and the
Tennessee Valley Authority.
|
|
10.5
|
Dorman
Products, Inc. Amended and Restated Incentive Stock
Plan.
|
|
10.6
|
Dorman
Products, Inc. 401(k) Retirement Plan and Trust.
|
|
10.6.1
|
Amendment
No. 1 to the Dorman Products, Inc. 401(k) Retirement Plan and
Trust.
|
|
10.7
|
Dorman
Products, Inc. Employee Stock Purchase Plan.
|
|
10.8
|
Employment
Agreement, dated April 1, 2008, between the Company and Richard N.
Berman.
|
|
10.9
|
Employment
Agreement, dated April 1, 2008, between the Company and Steven L.
Berman.
|
|
Certification
of Chief Executive Officer as required by Section 302 of the
Sarbanes-Oxley Act of 2002 (filed with this report).
|
||
Certification
of Chief Financial Officer as required by Section 906 of the
Sarbanes-Oxley Act of 2002 (filed with this report).
|
||
Certification
of Chief Executive and Chief Financial Officer as required by Section 906
of the Sarbanes-Oxley Act of 2002.
|