FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31,June 30, 1997
Commission File Number: 0-23238
DEFLECTA-SHIELD CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 42-1411117
(State or other jurisdiction (I.R.S. Employer
jurisdiction of incorporation or Identification incorporation No.)
or
organization)
1800 North 9th Street, 50125
Indianola, Iowa 50125
(Address(Zip Code)
Address of principal
executive offices) (Zip Code)
(515) 961-6100
(Registrant's telephone number, including area code)
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]X ] No [ ]
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest
practicable date:
As of May 13,August 14, 1997, 4,800,000 shares of the registrant's
Common Stock were outstanding.
DEFLECTA-SHIELD CORPORATION
FORM 10-Q FOR THE QUARTER ENDED MARCH 31,JUNE 30, 1997
INDEX
Page
----
PART I. Financial Information . . . . . . . . . . . . . 3
Item 1. Financial Statements . . . . . . . . . . . . . 3
Consolidated Balance Sheets as of
March 31,June 30, 1997 and December 31, 1996 . . . . 3
Consolidated Statements of Income for the
Three Months ended March 31,June 30, 1997 and 1996 . . 4
Consolidated Statements of Income for the
Six Months ended June 30, 1997 and 1996 . . . 5
Consolidated Statements of Cash Flows for
the ThreeSix Months ended March 31,June 30, 1997 and 1996 5. 6
Notes to Consolidated Financial Statements 6. . 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7. 9
PART II. Other Information
Item 1. Legal Proceedings 11. . . . . . . . . . . . . . . 14
Item 4. Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . . 14
Item 5. Other Information 11. . . . . . . . . . . . . . . 15
Item 6. Exhibits and Reports on Form 8-K 11. . . . . . . 15
2
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
DEFLECTA-SHIELD CORPORATION
---------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
($ in thousands)
March 31June 30 December 31
1997 1996
---------- -----------
(Unaudited)
ASSETS
------
Current Assets:
Cash and equivalents $ 340915 $ 459
Accounts receivable, less 10,547 10,326
allowance for doubtful accounts
of $783$904 and $703, respectively
10,320 10,326
Inventories 11,10110,876 10,123
Deferred income taxes 1,3541,380 1,328
Prepaid expenses 445598 304
---------- -----------
Total current assets 23,56024,316 22,540
Property and equipment, net 9,3839,723 9,383
Goodwill and intangibles, net 12,00711,896 12,117
Other assets 103108 107
---------- -----------
$45,053$46,043 $44,147
========== ===========
LIABILITIES AND STOCKHOLDERS EQUITY
------------------------------------
Current liabilities:
Current maturities of long-term
debt $ 9 $ 9
Accounts payable 4,3565,111 4,830
Accrued expenses 2,4992,549 2,461
---------- -----------
Total current liabilities 6,8647,669 7,300
Deferred income taxes 284289 280
Long-term debt, less current
maturities 8,4827,380 8,024
---------- -----------
Total liabilities 15,63015,338 15,604
---------- -----------
Stockholders equity:
Common stock 48 48
Additional paid-in capital 18,556 18,556
Retained earnings 10,81912,101 9,939
---------- -----------
29,42330,705 28,543
Commitments and contingencies - -
---------- -----------
$45,053$46,043 $44,147
========== ===========
The accompanying notes are an integral part of these
statements.
3
DEFLECTA-SHIELD CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
($ in thousands, except per share amounts)
(Unaudited)
Three Months Ended March 31,
---------------------------June 30,
1997 1996
--------------- -----------
Net sales $16,893 $18,023$18,425 $18,255
Cost of sales 10,940 12,233
--------------- -----------11,646 11,917
Gross Profit 5,953 5,7906,779 6,338
Operating expenses:
Selling 2,303 2,6472,488 2,648
General and administrative 1,854 1,4911,882 1,794
Amortization 110 146
--------------- -----------111 113
Income from operations 1,686 1,5062,298 1,783
Interest expense 194 308
--------------- -----------125 241
Income before income taxes 1,492 1,1982,173 1,542
Income tax expense 612 476
--------------- -----------891 585
Net income $880 $722
=============== ===========$1,282 $ 957
Net income per share $.18 $.15
=============== ===========$ .27 $ .20
Weighted average common shares outstanding 4,800 4,800
=============== ===========shares outstanding
The accompanying notes are an integral part of these
statements.
4
DEFLECTA-SHIELD CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
($ in thousands, except per share amounts)
(Unaudited)
Six Months Ended June 30,
1997 1996
Net sales $35,318 $36,278
Cost of sales 22,586 24,150
Gross Profit 12,732 12,128
Operating expenses:
Selling 4,791 5,295
General and administrative 3,736 3,285
Amortization 221 259
Income from operations 3,984 3,289
Interest expense 319 549
Income before income taxes 3,665 2,740
Income tax expense 1,503 1,061
Net income $2,162 $1,679
Net income per share $ .45 $ .35
Weighted average common shares
outstanding 4,800 4,800
The accompanying notes are an integral part of these
statements.
5
DEFLECTA-SHIELD CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
(Unaudited)
ThreeSix Months Ended March 31
---------------------------June 30
1997 1996
----------- ----------
Cash flow from operating activities:
Net income $ 880 $ 722$2,162 $1,679
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation 499 4621,038 939
Amortization 110 146221 259
Deferred income taxes (22)(43) -
Add (deduct) changes in assets and
liabilities:
Accounts receivable 6 (1,440)(221) (672)
Inventories (978) 790(753) 779
Prepaid expenses (141) 602(294) 596
Other assets 4 (2)(1) (4)
Accounts payable (474) 577281 909
Accrued expenses 38 (103)
----------- ----------88 (81)
Net cash provided (used)
by operating activities (78) 1,754
----------- ----------2,478 4,404
Cash flow from investing activities:
Purchases of property and equipment (499) (428)
----------- ----------(1,378) (809)
Cash used by investing activities (499) (428)
----------- ----------(1,378) (809)
Cash flow from financing activities:
Net proceeds (repayment) of revolving
line of credit 460 (1,402)(640) (3,316)
Repayment of other debt (2) (104)
----------- ----------(4) (402)
Net cash provided (used)used by financing activities 458 (1,506)
----------- ----------(644) (3,718)
Net decreaseincrease (decrease) in cash (119) (180)456 (123)
Cash at beginning of period 459 533
Cash at end of period $ 340 $ 353
=========== ==========$915 $410
Supplemental disclosures of cash flow
information:
Cash paid during the period for interest $ 164 $ 324$353 $590
Cash paid during the period for income
taxes $ 42 $ 10$1,176 $645
The accompanying notes are an integral part of this
statement.
5these
statements.
6
DEFLECTA-SHIELD CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands except per share amounts)
NOTE 1 - BASIS OF PRESENTATION OF UNAUDITED FINANCIAL
STATEMENTS
The accompanying unaudited consolidated financial
statements of Deflecta-Shield Corporation and its
subsidiaries (collectively, the "Company") have been
prepared in accordance with generally accepted accounting
principles for interim financial information. In the
opinion of management, all adjustments (which were of a
normal recurring nature) considered necessary for a fair
presentation have been included. Operating results for the
three and six months ended March 31,June 30, 1997 are not necessarily
indicative of the results that may be expected for the year
ended December 31, 1997. For further information, refer to
the consolidated financial statements and footnotes thereto
included in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996.
NOTE 2 - INVENTORIES
Inventories at March 31,June 30, 1997 and December 31, 1996
consisted of the following:
March 31,June 30, December 31,
1997 1996
(Unaudited)
Raw materials $ 4,2434,446 $ 4,606
Finished goods and 6,8586,430 5,517
work-in-process ------- -------
$11,101$10,876 $10,123
======= =======
NOTE 3 - EARNINGS PER SHARENEW ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards
Board ("FASB") issued Statement of Financial Accounting
Standards #128 -("SFAS") No. 128, Earnings Per Share, which must
be adopted by the Company for all financial statements
issued after December 15, 1997. The Company has reviewed
the effects of the provisions of the standard and determined
that the net income per share for the three and six months
ended June 30, 1996 would not be affected. If the Company
would have adopted the provisions of the standard during the
firstsecond quarter and six months of 1997, basic earnings per share and diluted earnings per
share would have been equal to the earnings per share of
$.18$.27 and $.45 presented on the face of the Consolidated
Statements of Income. 6 However, diluted earnings per share
would have been $.26 and $.44, respectively.
7
The FASB issued SFAS No. 130, Reporting Comprehensive
Income, which will require the Company to disclose, in
financial statement format, all non-owner changes in equity.
SFAS No. 130 is effective for fiscal years beginning after
December 15, 1997. Adoption of this standard is not
expected to have a material impact on disclosures in the
Company's financial statements, except that the tax benefit
obtained by the Company upon exercise of employee stock
options would be included as an element of comprehensive
income.
The FASB has issued SFAS No. 131, Disclosures About
Segments Of An Enterprise And Related Information, which
established a new accounting principle for reporting
information about operating segments in annual financial
statements and interim financial reports. It also
established standards for related disclosures about products
and services, geographic areas and major customers. SFAS
No. 131 is effective fiscal years beginning after December
15, 1997. The Company is currently evaluating the
applicability of this standard. However, the Company does
not expect a material impact on disclosures in the Company's
financial statements.
8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
($ in thousands except per share amounts)
The following discussion and analysis of the financial
condition and results of operations should be read in
conjunction with the consolidated financial statements
included elsewhere herein and in conjunction with the
Management's Discussion and Analysis of Financial Condition
and Results of Operations contained in the Company's Annual
Report on Form 10-K for the Fiscal Year ended December 31,
1996.
Results of Operations
---------------------
The following tables settable sets forth, for the periods
indicated, certain operating data as a percentage of net
sales and the percentage change in the dollar amounts of
such items compared to the prior period.sales.
Percentage of Net Sales
Three Months Six Months
Ended March 31, -----------------------------Ended June 30,
1997 1996 ---- ----1997 1996
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 64.8 67.963.2 65.3 63.9 66.6
Gross profit 35.2 32.136.8 34.7 36.1 33.4
Selling expenses 13.5 14.5 13.6 14.714.6
General and 10.2 9.9 10.6 9.1
administrative expenses
11.0 8.3
Amortization .6 .8
------ ------.6 .6 .7
Income from operations 10.0 8.312.5 9.7 11.3 9.0
Interest expense 1.2 1.7
------ ------.7 1.3 .9 1.5
Income before income
taxes 8.8 6.611.8 8.4 10.4 7.5
Income tax expense 3.6 2.6
------ ------4.8 3.2 4.3 2.9
Net income 7.0% 5.2% 4.0%
====== ======6.1% 4.6%
Three Months ended March 31,June 30, 1997 Compared to
Three ---------------------------------------------------
Months Ended March 31,June 30, 1996
---------------------------
Net Sales. Net sales were $16,893$18,425 for the three months
ended March 31,June 30, 1997, compared to $18,023$18,255 for the three
months ended March 31,June 30, 1996, a decreasean increase of $1,130,$170, or 6.3%.9%.
While net sales of air deflectors and aluminum products were
down for the quarter, net sales increased in heavy truck
products, increased
by $32 and shock absorbers and suspension systems, increased by $318, net sales ofand other
light truck productsaccessories as a group decreased by $1,480, primarily due to
reduced orders for air deflectors and aluminum products.
In general, the light truck accessory market was soft in
the first quarter of 1997. In addition, our
promotions in
7
late 1996 resulted in reduced ordering in early 1997.
Also, by repositioning some product lines,group. Because the Company
moved away from some mass merchandisers and retail chain
stores that accounted for a fair amount ofchains to
whom sales were made in the firstsecond quarter of 1996.
Gross Profit. Offsetting the shortfall1996, an
increase in net sales grossin air deflectors was not anticipated.
With the introduction of a new aluminum products catalog
late in the second quarter of 1997, the Company expects
9
sales of these products will respond positively in the
coming months.
Gross Profit. Gross profit was $5,953$6,779 for the three
months ended March 31,June 30, 1997, compared to $5,790$6,338 for the
three months
ended March 31,comparable period of 1996, an increase of $163,$441, or 2.8%7.0%.
This favorable trend in gross profit was due to higher net
sales, improvements in manufacturing efficiencies, decreased
costs of some raw material components, and changesfavorable shifts
in product mix. As a percentage of net sales, gross profitmargins
increased to 35.2%36.8% from 34.7% for the same quarter of 1996.
Selling Expenses. Selling expenses were $2,488 for the
three months ended March 31,June 30, 1997, compared to 32.1%$2,648 for the
three months ended March 31, 1996, an
increasecomparable period of 3.1 percentage points.
Selling Expenses. Selling expenses were $2,303 for
the three months ended March 31, 1997, compared to $2,647
for the three months ended March 31, 1996, a decrease of $344,$160, or 13.0%6.0%. As
a percentage of net sales for the same periods, selling
expenses decreased to 13.6% for the three months ended
March 31, 1997,13.5% from 14.7% for the three months ended
March 31, 1996.14.5%. The reduction in
selling expenses is a function of: (i) the timing of
spending for catalogs and other advertising and promotional
flyersmaterials that was greater in the firstsecond quarter of 1996,
and (ii) a commensurate dropreduction in variable
expenses that track withoutbound freight. The higher and
better balanced inventory levels in the shortfallsecond quarter of
1997 allowed the Company to ship more product on time and at
improved fill rates to customers, thus resulting in net sales such
as co-op advertising, outbound freight and sales
commissions.fewer
less-than-truckload ("LTL") shipments to customers compared
to the same period of 1996.
General and Administrative Expenses. General and
administrative expenses were $1,854$1,882 for the three months
ended March 31,June 30, 1997, compared to $1,491$1,794 for the three months
ended March 31,June 30, 1996, an increase of $363,$88, or 24.3%4.9%. As a
percentage of net sales, general and administrative expenses
increased to 11.0% for the three
months ended March 31, 1997,10.2% compared to 8.3%9.9% for the comparable
period in 1996. The majority of the increase is due to (i)
increased headcount in senior management, (ii) training,
manpower, and development costs for a new information
system, and (iii) costs related to consolidation of
facilities and manufacturing processes.
Interest Expense. Interest expense was $125 for the
three months ended June 30, 1997, compared to $241 for the
three months ended June 30, 1996, a decrease of $116, or
48.1%. Interest rates were more favorable in 1997 and
interest-bearing debt averaged approximately $8,052 for the
three months ended June 30, 1997, compared to approximately
$10,896 for the three months ended June 30, 1996.
Income Tax Expense. The effective income tax rate was
41.0% for the three months ended June 30, 1997, compared to
37.9% for the comparable period of 1996.
Net Income Per Share. As a result of the improvement
in net income to $1,282 for the three months ended June 30,
1997, compared to $957 for the three months ended June 30,
1996, and no change in the weighted average common shares
10
outstanding, net income per share increased to $.27 per
share from $.20 per share, an increase of $.07 per share, or
35%.
Six Months ended June 30, 1997 Compared to
Six Months Ended June 30, 1996
Net Sales. Net sales were $35,318 for the six months
ended June 30, 1997, compared to $36,278 for the six months
ended June 30, 1996, a decrease of $960, or 2.6%. The
overall net sales decline occurred in the first quarter of
1997 which was below the comparable period of 1996 by
$1,130, or 6.3%. In general, the light truck accessory
market was soft in the first six months of 1997. In
addition, the Company's promotions in late 1996 resulted in
reduced ordering in early 1997, and, by repositioning some
product lines, the Company moved away from some customers to
whom sales were made in the comparable six month period of
1996.
Gross Profit. Offsetting the shortfall in net sales,
gross profit was $12,732 for the six months ended June 30,
1997, compared to $12,128 for the comparable period of 1996,
an increase of $604, or 5.0%. As a percentage of net sales,
gross margins increased to 36.1% from 33.4% for the same
period of 1996. The increased gross profit percentage is
due to improvements in manufacturing processes and
efficiencies, decreased costs of some raw material
components, and favorable shifts in product mix.
Selling Expenses. Selling expenses were $4,791 for the
six months ended June 30, 1997, compared to $5,295 for the
comparable period of 1996, a decrease of $504, or 9.5%. As
a percentage of net sales for the same periods, selling
expenses decreased to 13.6% from 14.6%. The reduction in
selling expenses is a function of: (i) the timing of
spending for product advertising that was greater in the
first six months of 1996, and (ii) a reduction in outbound
freight resulting from a combination of decreased sales
volume and better utilization of LTL shipments to customers.
General and Administrative Expenses. General and
administrative expenses were $3,736 for the six months ended
June 30 1997, compared to $3,285 for the six months ended
June 30, 1996, an increase of $451, or 13.7%. As a
percentage of net sales, general and administrative expenses
increased to 10.6% compared to 9.1% for the comparable
period in 1996. The increase is principally the result of
(i) increased headcount in senior management, (ii) increased
product design and development costs, (iii) training,
manpower, and development costs for a new computerinformation
system, and (iv) costs related to consolidation of
facilities and manufacturing processes.
11Interest Expense. Interest expense was $194$319 for the
threesix months ended March 31,June 30, 1997, compared to $308$549 for the threesix
months ended March 31,June 30, 1996, a decrease of $114.$230, or 41.9%.
Interest bearingrates were more favorable in 1997 and
interest-bearing debt averaged approximately $8,262$7,872 for the
threesix months ended March 31,June 30, 1997, compared to approximately
$13,115$11,713 for the threesix months ended March 31,June 30, 1996.
Income Tax Expense. The effective income tax rate was
41.0% for the threesix months ended March 31,June 30, 1997, compared to
39.7%38.7% for the comparable period of 1996.
Net Income Per Share. As a result of the
improvementThe increase in net income to
$880$2,162 for the threesix months ended March 31,June 30, 1997, compared to $722from $1,679
for the threesix months ended March 31,June 30, 1996, and no changeresulted in the
weighted average common shares outstanding, net incomea
commensurate increase in earnings per share increased to $.18$.45 per
share from $.15$.35 per share, an increase of $.03$.10 per share.
8share, or
29%.
Seasonality and Quarterly Data
------------------------------
Although the Company deviated from the pattern at one
time, it has historically generated the majority of its net
sales and income from operations in the second and third
quarters of each year. The Company expects the historical
pattern to continue in 1997 and future years. This seasonal
pattern combined with effects of new product introductions
and the timing of customer orders can cause the Company'sCompany s
results of operations to vary from quarter to quarter.
Liquidity and Capital Resources
-------------------------------
The Company'sCompany s liquidity requirements arise primarily
from working capital and capital expenditure requirements.
The Company maintains a $21 million revolving credit
facility which expires on July 21, 1999. The Company
believes that funds generated from operations and funds
available under the revolving credit facility will be
adequate to meet its working capital, debt service and
capital expenditure requirements through the next twelve
months.
As of March 31,June 30, 1997, the Company had cash balances of
$340$915 and working capital of $16,696.$16,647. The current ratio at
March 31,June 30, 1997 was 3.4:3.2:1 compared to 3.1:1 at December 31,
1996. Cash flows usedprovided by operating activities were
$78$2,478 for the threesix months ended March 31,June 30, 1997 compared to
cash flows provided by operating activities of $1,754$4,404 for
the threesix months ended March 31,June 30, 1996. Cash used byThe primary use of cash
from operating activities of $78 for the threesix months ended March 31,June 30,
1997 was primarily for payment of trade payables and to buildthe increase in finished goods inventory levels.inventory.
Accounts receivable of $10,320 remained virtually
unchanged$10,547 increased by 2.1% at
March 31,June 30, 1997 while days sales outstanding increaseddecreased to 55.051.5
from 52.152.8 at December 31, 1996. Inventories of $11,101$10,876 at
March 31,12
June 30, 1997 increased by $978,$753 or 9.7%7.4%, from $10,123 at
December 31, 1996. This represents an increase in days
sales in inventory to 91.387.0 days from 77.5 days. The
finished goods inventory was increased in order to balance
the inventory mix and to allow the Company to respond to
customer'scustomer s orders without significant delays in the second
and third quarters of 1997. Inventory levels were $11,101
at quarter end March 31, 1997.
Capital expenditures of $499 in$1,378 for the threesix months ended
March 31,June 30, 1997 were primarily for new product molds and tooling
and new manufacturing and data processing equipment. The Company
anticipates that capital expenditures in the remainder of
1997 will be approximately $2,000 absent further
consolidation of manufacturing and distribution facilities
discussed below.
As of March 31,June 30, 1997, the outstanding principal balance
of the Company'sCompany s debt was $8,491, an increase$7,389, a decrease of $458$644 from
the outstanding balance at December 31, 1996.
The Company is currently in the process of implementing
a reorganization of several of its manufacturing facilities
and processes. The Company is developing a strategic plan
designed to minimize short-term disruptions, inefficiencies
and costs resulting from the contemplated reorganization,
which is expected to include consolidation of portions of
the Company's
9 Company s manufacturing and distribution facilities.
There has not been a final determination of which locations
into which various activities would be consolidated, but it
is currently anticipated that there will be consolidation
into a new facility located in the same metropolitan area as
one of the Company'sCompany s existing facilities. The Company
anticipates that costs and expenses associated with any
relocation and consolidation would ultimately be
substantially offset by cost savings generated thereby.
However, it is currently anticipated that the reorganization
will negatively impact earnings in the short term.
Furthermore, the timing relationship between the incurrence
of charges with respect to the reorganization and the
generation of anticipated savings may cause the Company'sCompany s
results of operations to vary from quarter to quarter.
During the second quarter of 1997, the Company
announced that it has launched a $1,500 expansion of its
aluminum products plant in Howe, Indiana which will expand
the plant from 78,500 square feet to 95,100 square feet.
When completed in early 1998, the Howe facility will house
all aluminum manufacturing and distribution.
Forward Looking Information
---------------------------
Information included in this Report on Form 10-Q
relating to sales and earnings expectations constitutes
forward-looking statements that involve a number of risks
13
and uncertainties. From time to time, information provided
by the Company or statements made by its employees may
contain other forward-looking statements. Factors that
could cause actual results to differ materially from the
forward-looking statements include but are not limited to:
general economic conditions, including their impact on the
sale of new light trucks; sales of new heavy trucks, which
are cyclical; competitive factors, including pricing
pressures; changes in product and sales mix; the timely
development and introduction of competitive new products by
the Company and market acceptance of those products;
inventory risks due to changes in market demand or the
Company'sCompany s business strategies; difficulties which may be
encountered in the consolidation of the Company'sCompany s
manufacturing and distribution facilities; changes in
effective tax rates; and the fact that a substantial portion
of the Company'sCompany s sales are generated from orders received
during the quarter, making prediction of quarterly revenues
and earnings difficult. The words "believe," "expect,"
"anticipate," "project," and similar expressions identify
forward looking statements. Readers are cautioned not to
place undue reliance on these forward looking statements,
which speak only as of the date made. The Company
undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new
information, future events or otherwise.
10 PART II. OTHER INFORMATION
Item 1. Legal Proceedings
TheNone
Item 4. Submission of Matters to a Vote of Security Holders
On May 22, 1997, the Company has been namedheld its annual meeting of
stockholders. At the meeting, William V. Glastris, Jr.,
Ronald D. Katz, Mark C. Mamolen, Douglas T. Mergenthaler,
Charles S. Meyer, and Russell E. Stubbings were elected to
serve as a defendant in Olney
vs. Ioimo, et al., a negligence/products liability
lawsuit pending indirectors of the Superior Court of King County,
Washington. The complaint arises from a two vehicle
accident which occurred on April 23, 1994 and alleges
that the plaintiff's vehicle rolled overCompany for 1997 and the
plaintiff's son, a minor, was ejected from that
vehicle. The complaint alleges that a
Trailmaster lift kit was installed on the vehicle driven
by the plaintiff and that the lift kit was not reasonably
safeappointment of Price Waterhouse LLP as it was designed and marketed and that adequate
warnings and instructions were not provided by
Trailmaster. The defense of these claims has been
tendered to the Company's insurer. This case is in an
early stage, the fact investigation has just been
commenced and the ultimate outcome cannot yet be
determined.
During the quarter ended March 31, 1997, the claims
against the predecessor of the Company's Trailmaster
subsidiary in Sexton v. Ford Motor Company, et al., were
dismissed with no payments made byindependent
accountants for the Company was approved.
14
The following table provides the number of votes cast
for, against or withheld, as well as the number of
abstentions and broker non-votes as to each matter submitted
to a vote of stockholders at the claims against the Company's Trailmaster subsidiary in
Haag v. Trailmaster Products, Inc. were dismissed with a
paymentmeeting.
Matter
Broker
Election of $3,500.Directors: For Withheld Non-Votes
William V. Glastris, Jr. 4,348,341 4,950 0
Ronald D. Katz 4,348,341 4,950 0
Mark C. Mamolen 4,348,341 4,950 0
Douglas T. Mergenthaler 4,348,341 4,950 0
Charles S. Meyer 4,348,341 4,950 0
Russell E. Stubbings 4,348,341 4,950 0
Broker
For Against Abstention Non-Votes
Approval of 4,348,541 4,100 650 0
Independent Accountants
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27. Financial Data Schedule.
(b) Reports on Form 8-K
No reports on Form 8-K were filed forduring the quarter
ended March 31, 1997
11June 30, 1997.
15
SIGNATURE
---------
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.
Date: May 13,August 14, 1997
DEFLECTA-SHIELD CORPORATION
By: /s/Ronald C. Fox
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Ronald C. Fox,
Chief Financial Officer(DulyOfficer
(Duly authorized officer
and Principal Financial
and Accounting Officer)
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