UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2007
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or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________________to ________________________
Commission File Number: 0-18914
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DORMAN PRODUCTS, INC.
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(Exact name of registrant as specified in its charter)
Pennsylvania 23-2078856
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
_3400 East Walnut Street, Colmar, Pennsylvania 18915
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(Address of principal executive offices (Zip Code)
(215)997-1800
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal year,
if changed since last report)
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. |X| Yes |_| No
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one):
Large accelerated filer |_| Accelerated filer |X| Non-accelerated filer |_|
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). |_| Yes |X|No
As of August 2, 2007 the Registrant had 17,688,211 shares of common stock,
$.01 par value, outstanding.
Page 1 of 21
DORMAN PRODUCTS, INC. AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT ON FORM 10-Q
June 30, 2007
Part I -- FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (unaudited)
Statements of Operations:
Thirteen Weeks Ended June 30, 2007 and July 1, 2006...............3
Twenty-six Weeks Ended June 30, 2007 and July 1, 2006..............4
Balance Sheets.......................................................5
Statements of Cash Flows.............................................6
Notes to Consolidated Financial Statements...........................7
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations .....................................11
Item 3. Quantitative and Qualitative Disclosure about Market Risk.......16
Item 4. Controls and Procedures.........................................16
Part II -- OTHER INFORMATION
Item 1. Legal Proceedings...............................................17
Item 1A. Risk Factors....................................................17
Item 2. Unregistered Sales of Equity Securities
and Use of Proceeds.............................................17
Item 3. Defaults Upon Senior Securities.................................17
Item 4. Submission of Matters to a Vote of Security Holders.............17
Item 5. Other Information...............................................18
Item 6. Exhibits........................................................18
Signatures...............................................................20
Exhibit Index............................................................21
Page 2 of 21
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
DORMAN PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
For the Thirteen Weeks Ended
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June 30, July 1,
(in thousands, except for share data) 2007 2006
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Net Sales $ 85,796 $ 74,187
Cost of goods sold 56,726 47,500
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Gross profit 29,070 26,687
Selling, general and administrative expenses 19,225 19,333
Goodwill impairment - 2,897
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Income from operations 9,845 4,457
Interest expense, net 512 631
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Income before taxes 9,333 3,826
Provision for taxes 3,565 2,910
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Net Income $ 5,768 $ 916
================================================================================================================
Earnings Per Share:
Basic $0.33 $0.05
Diluted $0.32 $0.05
================================================================================================================
Average Shares Outstanding:
Basic 17,688 17,730
Diluted 18,129 18,147
See accompanying notes to consolidated financial statements.
Page 3 of 21
DORMAN PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
For the Twenty-six Weeks Ended
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June 30, July 1,
(in thousands, except for share data) 2007 2006
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Net Sales $ 160,089 $ 143,052
Cost of goods sold 105,243 91,676
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Gross profit 54,846 51,376
Selling, general and administrative expenses 38,010 37,992
Goodwill impairment - 2,897
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Income from operations 16,836 10,487
Interest expense, net 1,039 1,221
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Income before taxes 15,797 9,266
Provision for taxes 5,967 4,930
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Net Income $ 9,830 $ 4,336
================================================================================================================
Earnings Per Share:
Basic $0.56 $0.24
Diluted $0.54 $0.24
================================================================================================================
Average Shares Outstanding:
Basic 17,689 17,738
Diluted 18,119 18,153
See accompanying notes to consolidated financial statements.
Page 4 of 21
DORMAN PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except for share data) June 30, December 30,
2007 2006
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Assets (unaudited)
Current Assets:
Cash and cash equivalents $ 5,866 $ 5,080
Accounts receivable, less allowance for doubtful
accounts and customer credits of $27,874 and $27,601 83,102 77,187
Inventories 68,870 67,768
Deferred income taxes 10,525 10,330
Prepaids and other current assets 1,309 1,443
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Total current assets 169,672 161,808
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Property, Plant and Equipment, net 26,905 27,963
Goodwill 27,044 26,958
Other Assets 906 1,029
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Total $224,527 $217,758
================================================================ ==================== ======================
Liabilities and Shareholders' Equity
Current Liabilities:
Current portion of long-term debt $ 15,253 $ 8,651
Accounts payable 15,813 12,822
Accrued compensation 5,676 6,949
Other accrued liabilities 5,347 6,582
---------------------------------------------------------------- -------------------- ----------------------
Total current liabilities 42,089 35,004
Long-Term Liabilities 1,954 -
Long-Term Debt 9,055 20,596
Deferred Income Taxes 7,776 8,315
Commitments and Contingencies
Shareholders' Equity:
Common stock, par value $.01; authorized
25,000,000 shares; issued 17,687,475 and 17,705,499 177 177
Additional paid-in capital 32,630 32,956
Cumulative translation adjustments 3,260 2,954
Retained earnings 127,586 117,756
Total shareholders' equity 163,653 153,843
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Total $224,527 $217,758
================================================================ ==================== ======================
See accompanying notes to consolidated financial statements.
Page 5 of 21
DORMAN PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
For the Twenty-six Weeks Ended
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June 30, July 1,
(in thousands) 2007 2006
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Cash Flows from Operating Activities:
Net income $ 9,830 $ 4,336
Adjustments to reconcile net income to cash provided by
operating activities:
Depreciation and amortization 3,748 3,281
Goodwill impairment - 2,897
Provision for doubtful accounts 126 798
(Benefit) Provision for deferred income tax (55) 117
Provision for non-cash stock compensation 250 244
Changes in assets and liabilities:
Accounts receivable (5,986) 2,673
Inventories (979) 146
Prepaids and other current assets 154 (98)
Other assets 123 (246)
Accounts payable 2,925 (2,756)
Accrued compensation and other liabilities (1,183) (3,680)
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Cash provided by operating activities 8,953 7,712
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Cash Flows from Investing Activities:
Property, plant and equipment additions (2,652) (3,795)
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Cash used in investing activities (2,652) (3,795)
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Cash Flows from Financing Activities:
Repayment of long-term debt obligations (39) -
Net repayment of revolving credit facility (4,900) (1,600)
Proceeds from exercise of stock options 38 15
Other stock related activity 35 -
Purchase and cancellation of common stock (649) (385)
------------------------------------------------------------------------------ ------------------- -----------------------
Cash used in financing activities (5,515) (1,970)
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Net Increase in Cash and Cash Equivalents 786 1,947
Cash and Cash Equivalents, Beginning of Period 5,080 2,944
------------------------------------------------------------------------------ ------------------- -----------------------
Cash and Cash Equivalents, End of Period $ 5,866 $ 4,891
============================================================================== =================== =======================
Supplemental Cash Flow Information
Cash paid for interest expense $ 1,040 $ 1,199
Cash paid for income taxes $ 6,237 $ 4,579
See accompanying notes to consolidated financial statements.
Page 6 of 21
DORMAN PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE TWENTY-SIX WEEKS ENDED JUNE 30, 2007 AND JULY 1, 2006 (UNAUDITED)
1. Basis of Presentation
As used herein, unless the context otherwise requires, "Dorman", the
"Company", "we", "us", or "our" refers to Dorman Products, Inc. and its
subsidiaries.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. However, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring adjustments) considered necessary for a fair presentation
have been included. Operating results for the twenty-six week period ended June
30, 2007 are not necessarily indicative of the results that may be expected for
the fiscal year ending December 29, 2007. We may experience significant
fluctuations from quarter to quarter in our results of operations due to the
timing of orders placed by our customers. Generally, the second and third
quarters have the highest level of customer orders, but the introduction of new
products and product lines to customers may cause significant fluctuations from
quarter to quarter. For further information, refer to the consolidated financial
statements and footnotes thereto included in our Annual Report on Form 10-K for
the year ended December 30, 2006.
Certain prior year amounts have been reclassified to conform with the
current year presentation.
2. Sales of Accounts Receivable
We have entered into several customer sponsored programs administered by
unrelated financial institutions that permit us to sell, without recourse,
certain accounts receivable at discounted rates to the financial institutions.
We do not retain any servicing requirements for these accounts receivable.
Transactions under these agreements are accounted for as sales of accounts
receivable following the provisions of Statement of Financial Accounting
Standards (SFAS) No. 140, "Accounting for Transfers and Servicing of Financial
Assets and Extinguishment of Liabilities - A Replacement of FASB Statement 125."
At June 30, 2007 and December 30, 2006, $21.4 million and $18.5 million,
respectively, of accounts receivable were sold and removed from the consolidated
balance sheets. Selling, general and administrative expenses for the twenty-six
weeks ended June 30, 2007 and July 1, 2006 include $0.7 million and $1.0
million, respectively, in financing costs associated with these accounts
receivable sales programs.
3. Inventories
Inventories include the cost of material, freight, direct labor and
overhead utilized in the processing of our products. Inventories were as
follows:
June 30, December 30,
(in thousands) 2007 2006
----------------------- ------------------ -------------------
Bulk product $27,414 $27,555
Finished product 38,742 37,407
Packaging materials 2,714 2,806
----------------------- ------------------ -------------------
Total $68,870 $67,768
======================= ================== ===================
Included in finished product is $1.1 million and $1.0 million in inventory held
on consignment as of June 30, 2007 and December 30, 2006, respectively.
Page 7 of 21
4. Goodwill
Goodwill activity during the twenty-six weeks ended June 30, 2007 related
to the translation of goodwill balances from local currencies to U.S. dollars.
During the second quarter of fiscal year 2006, we assessed the value of
the goodwill recorded at our Swedish subsidiary (Scan-Tech) as a result of a
review of the Scan-Tech business in response to bad debt charge offs at two
large customers and the resulting loss of those customers in the first half of
the year. After completing the required analyses, we concluded that the goodwill
balance existing at the subsidiary was impaired. Accordingly, an impairment
charge of approximately $2.9 million, which represented the entire goodwill
balance at the subsidiary, was recorded in the consolidated statements of
operations. In addition, we recorded a $0.3 million charge to our provision for
income taxes to write off deferred tax assets of the subsidiary which were
deemed unrealizable.
5. Change in Vacation Policy
Effective December 31, 2006, we changed our vacation policy so that
vacation is earned ratably throughout the year rather than at the end of the
preceding year. This change will result in a reduction in our vacation accrual
of approximately $1.6 million in 2007. As a result, vacation expense in cost of
goods sold and selling, general and administrative expenses will be reduced
during each of the fiscal quarters in 2007. Results for the three months and six
months ended June 30, 2007 include vacation expense reductions of $0.1 million
and $0.2 million in cost of goods sold and $0.3 million and $0.6 million in
selling, general and administrative expenses, respectively.
6. Stock-Based Compensation
Effective May 18, 2000 we amended and restated our Incentive Stock
Option Plan (the "Plan"). Under the terms of the Plan, our Board of Directors
may grant incentive stock options or non-qualified stock options or combinations
thereof to purchase up to 2,345,000 shares of common stock to officers,
directors and employees. Grants under the Plan must be made within 10 years of
the plan amendment date and are exercisable at the discretion of the Board of
Directors, but in no event more than 10 years from the date of grant. At June
30, 2007, options to acquire 328,001 shares were available for grant under the
Plan.
Effective January 1, 2006, we adopted SFAS No. 123R "Share-Based
Payment," and related interpretations and began expensing the grant-date fair
value of employee stock options. We adopted SFAS No. 123R using the modified
prospective transition method. Under this transition method, compensation cost
associated with employee stock options recognized includes amortization related
to the remaining unvested portion of stock option awards granted prior to
January 1, 2006, and amortization related to new awards granted after January 1,
2006. In accordance with SFAS No. 123R, cash flows resulting from tax deductions
in excess of compensation cost recognized in the financial statements is
classified as financing cash flows.
Compensation cost is recognized on a straight-line basis over the
vesting period during which employees perform related services. The compensation
cost charged against income for our stock-based compensation program for the six
months ended June 30, 2007 and July 1, 2006 was $250,000 and $244,000 before
taxes, respectively. The compensation cost charged against income in the second
quarter of 2007 and 2006 was $125,000 and $126,000 before taxes, respectively.
The compensation cost recognized is classified as selling, general and
administrative expense in the consolidated income statement. No cost was
capitalized during fiscal 2007 and 2006. We included a forfeiture assumption of
3.5% in 2007 and 2.5% in 2006 in the calculation of expense.
The fair value of options granted in 2006 was estimated using the
Black-Scholes option valuation model that used the assumptions noted in the
table below. There were no stock options granted during 2007. Expected
volatility and expected dividend yield are based on the actual historical
experience of our stock. The expected life represents the period of time that
options granted are expected to be outstanding and was calculated using the
simplified method prescribed by the Securities and Exchange Commission Staff
Accounting Bulletin No. 107. The risk-free rate is based on the U.S. Treasury
security with terms equal to the expected time of exercise as of the grant date.
Page 8 of 21
2006
Expected dividend yield 0%
Expected stock price volatility 45%
Risk-free interest rate 4.5%
Expected life of options 6.5 years
The weighted-average grant-date fair value of options granted during
the first six months of 2006 was $4.85 per option.
Transactions under the Plan were as follows:
Weighted Weighted Aggregate
Shares Average Price Average Intrinsic
Remaining Term Value
(In years)
------------------------------------------- --------------- ------------------ --------------------- ---------------------
Balance at December 30, 2006 981,950 $ 4.96
Granted - -
Exercised (55,200) 0.67
Canceled (10,000) 10.10
Balance at June 30, 2007 916,750 $ 5.16 5.4 $7,937,000
------------------------------------------- --------------- ------------------ --------------------- ---------------------
Options exercisable at June 30, 2007 661,384 $ 3.47 4.7 $6,848,000
-----------------------------------------------------------------------------------------------------------------------------
The total intrinsic value of stock options exercised during 2007 was
$598,000.
As of June 30, 2007, there was approximately $0.9 million of
unrecognized compensation cost related to non-vested stock options, which is
expected to be recognized over a weighted-average period of approximately 2.4
years.
Cash received from option exercises during 2007 was $38,000. The total
tax benefit generated from options granted prior to January 1, 2006, which were
exercised during 2007, was $193,000 and was credited to additional paid in
capital.
7. Earnings Per Share
The following table sets forth the computation of basic earnings per
share and diluted earnings per share:
Thirteen Weeks Ended Twenty-six Weeks Ended
----------------------------------------------------------------
June 30, July 1, June 30, July 1,
(in thousands, except per share data) 2007 2006 2007 2006
------------------------------------------------------ ---------------- -------------- --------------- --------------
Numerator:
Net income .............................................$.5,768 $ 916 $ 9,830 $ 4,336
Denominator:
Weighted average shares outstanding
17,688 17,730 17,689 17,738
us use
used in basic earnings per share calculation
Effect of dilutive stock options... ................. 441 417 430 415
---------------- -------------- --------------- --------------
Adjusted weighted average shares outstanding
diluted earnings per share........................ 18,129 18,147 18,119 18,153
================ ============== =============== ==============
Basic earnings per share.............................. $ 0.33 $ 0.05 $ 0.56 $0.24
================ ============== ===============================
Diluted earnings per share........................... $ 0.32 $ 0.05 $ 0.54 $0.24
================ ============== =============== ==============
Options to purchase 163,500 and 193,500 shares were outstanding at June
30, 2007 and July 1, 2006, respectively, but were not included in the
computation of diluted earnings per common share, as their effect would have
been antidilutive.
9 of 21
8. Related-Party Transactions
We have entered into a noncancelable operating lease for our primary
operating facility from a partnership in which Richard N. Berman, our Chief
Executive Officer, and Steven L. Berman, our Executive Vice President, are
partners. Total rental payments to the partnership under the lease arrangement
were $1.3 million in 2006.
9. Income Taxes
We adopted the provisions of Financial Accounting Standards Board
Interpretation No.48, "Accounting for Uncertainty in Income Taxes an
interpretation of FASB Statement No. 109"("FIN 48" ) effective December 31,
2006. As a result of the implementation of FIN 48, we recognized no material
adjustment in the liability for unrecognized income tax benefits. At the
adoption date of December 31, 2006, we had $1.2 million of net unrecognized tax
benefits, which would affect our effective tax rate if recognized. At June 30,
2007, we have $1.2 million of net unrecognized tax benefits.
We recognize interest and penalties related to uncertain tax positions
in income tax expense. As of June 30, 2007, we have approximately $161,000 of
accrued interest related to uncertain tax positions.
The last year examined by the IRS was 2004, and all years up through
and including that year are closed by examination. The tax years 2003-2006
remain open to examination by the remaining major taxing jurisdictions in the
United States to which we are subject. The tax years 2002-2006 remain open to
examination in Sweden for our Swedish subsidiary.
10. New Accounting Pronouncements
In September 2006, the Financial Accounting Standards Board (FASB)
issued SFAS No. 157, "Fair Value Measurements." SFAS No. 157 defines fair
value, establishes a framework for measuring fair value and expands disclosures
about fair value measurements. This statement applies under other accounting
pronouncements that require or permit fair value measurements. Accordingly,
SFAS No. 157 does not require any new fair value measurements. The provisions of
SFAS No. 157 are to be applied prospectively and are effective for financial
statements issued for fiscal years beginning after November 15, 2007.
We are currently evaluating what effect, if any, adoption of SFAS No. 157
will have on our consolidated results of operations and financial position.
In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option
for Financial Assets and Financial Liabilities." SFAS No. 159 permits companies
to choose to measure many financial instruments and certain other items at fair
value. The objective is to improve financial reporting by providing companies
with the opportunity to mitigate volatility in reported earnings caused by
measuring related assets and liabilities differently without having to apply
complex hedge accounting provisions. SFAS No. 159 is effective for fiscal years
beginning after November 15, 2007. Companies are not allowed to adopt SFAS No.
159 on a retrospective basis unless they choose early adoption. We are currently
evaluating what effect, if any, the adoption of SFAS No. 159 will have on our
results of operations and financial position
Page 10 of 21
DORMAN PRODUCTS, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Cautionary Statement Regarding Forward Looking Statements
Certain statements in this document constitute "forward-looking
statements" within the meaning of the Federal Private Securities Litigation
Reform Act of 1995. While forward-looking statements sometimes are presented
with numerical specificity, they are based on various assumptions made by
management regarding future circumstances over many of which the Company has
little or no control. Forward-looking statements may be identified by words
including "anticipate," "believe," "estimate," "expect," and similar
expressions. The Company cautions readers that forward-looking statements,
including, without limitation, those relating to future business prospects,
revenues, working capital, liquidity, and income, are subject to certain risks
and uncertainties that would cause actual results to differ materially from
those indicated in the forward-looking statements. Factors that could cause
actual results to differ from forward-looking statements include but are not
limited to competition in the automotive aftermarket industry, concentration of
the Company's sales and accounts receivable among a small number of customers,
the impact of consolidation in the automotive aftermarket industry, foreign
currency fluctuations, dependence on senior management and other risks and
factors identified from time to time in the reports the Company files with the
Securities and Exchange Commission. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated, estimated or
projected. For additional information concerning factors that could cause actual
results to differ materially from the information contained in this report,
reference is made to the information in Part I, "Item 1A, Risk Factors" in the
Company's Annual Report on Form 10-K for the fiscal year ended December 30,
2006.
Overview
We are a leading supplier of Original Equipment (OE) Dealer "Exclusive"
automotive replacement parts, automotive hardware, brake products, and household
hardware to the automotive aftermarket and mass merchandise markets. Dorman
automotive parts and hardware are marketed under the OE Solutions(TM), HELP!(R),
AutoGrade(TM), First Stop(TM), Conduct-Tite(R), Pik-A-Nut(R), and Scan-Tech(TM)
brand names. We design, package and market over 77,000 different automotive
replacement parts (including brake parts), fasteners and service line products
manufactured to our specifications. Our products are sold under one of the seven
Dorman brand names listed above. Our products are sold primarily in the United
States through automotive aftermarket retailers (such as AutoZone, Advance and
O'Reilly), national, regional and local warehouse distributors (such as Carquest
and NAPA) and specialty markets including parts manufacturers for resale under
their own private labels and salvage yards. Through our Scan-Tech and Hermoff
subsidiaries, we are increasing our international distribution of automotive
replacement parts, with sales into Canada, Europe, the Middle East and the Far
East.
The automotive aftermarket in which we compete has been growing in
size; however, the market continues to consolidate. As a result, our customers
regularly seek more favorable pricing, product returns and extended payment
terms when negotiating with us. While we do our best to avoid such concessions,
in some cases pricing concessions have been made, customer payment terms have
been extended and returns of product have exceeded historical levels. The
product returns and more favorable pricing primarily affect our profit levels
while terms extensions generally reduce operating cash flow and require
additional capital to finance the business. We expect both of these trends to
continue for the foreseeable future. Gross profit margins have declined over the
past two years as a result of this pricing pressure. Another contributing factor
in our gross profit margin decline is a shift in mix to higher-priced, but lower
gross margin products. Both of these trends are expected to continue for the
foreseeable future. We have increased our focus on efficiency improvements and
product cost reduction initiatives to offset the impact of price pressures.
In addition, we are relying on new product development as a way to
offset some of these customer demands and as our primary vehicle for growth. As
such, new product development is a critical success factor for us. We have
invested heavily in resources necessary for us to increase our new product
development efforts and to strengthen our relationships with our
Page 11 of 21
customers. These investments are primarily in the form of increased product
development resources and awareness programs, customer service improvements
and increased customer credits and allowances. This has enabled us
to provide an expanding array of new product offerings and grow our revenues.
We may experience significant fluctuations from quarter to quarter in
our results of operations due to the timing of orders placed by our customers.
Generally, the second and third quarters have the highest level of customer
orders, but the introduction of new products and product lines to customers may
cause significant fluctuations from quarter to quarter.
We operate on a fifty-two, fifty-three week period ending on the last
Saturday of the calendar year.
Change in Vacation Policy
Effective December 31, 2006, we changed our vacation policy so that
vacation is earned ratably throughout the year rather than at the end of the
preceding year. This change will result in a reduction in our vacation accrual
of approximately $1.6 million in 2007. As a result, vacation expense in cost of
goods sold and selling, general and administrative expenses will be reduced
during each of the fiscal quarters in 2007. Results for the three months and six
months ended June 30, 2007 include vacation expense reductions of $0.1 million
and $0.2 million in cost of goods sold and $0.3 million and $0.6 million in
selling, general and administrative expenses, respectively.
Write Off of Goodwill and Deferred Tax Asset Related to Swedish Subsidiary
During the thirteen weeks ended July 1, 2006, we assessed the
value of the goodwill recorded at our Swedish subsidiary (Scan-Tech) as a result
of a review of the Scan-Tech business in response to bad debt charge offs at two
large customers and the resulting loss of those customers in the first half of
the year. After completing the required analyses, we concluded that the goodwill
balance existing at the subsidiary was impaired. Accordingly, an impairment
charge of approximately $2.9 million, which represented the entire goodwill
balance at the subsidiary, was recorded in the consolidated statements of
operations. In addition, we recorded a $0.3 million charge to our provision for
income taxes to write off deferred tax assets of the subsidiary which were
deemed unrealizable.
Results of Operations
The following table sets forth, for the periods indicated, the
percentage of net sales represented by certain items in our Consolidated
Statements of Operations:
Percentage of Net Sales
-----------------------------------------------------------------------------
For the Thirteen Weeks Ended For the Twenty six Weeks Ended
-------------------------------------- --------------------------------------
June 30, July 1, June 30, July 1,
2007 2006 2007 2006
-------------------------------------- ------------------- ------------------ ------------------- -----------------
Net Sales 100.0% 100.0% 100.0% 100.0%
Cost of goods sold 66.1 64.0 65.7 64.1
-------------------------------------- ------------------- ------------------ ------------------- -----------------
Gross profit 33.9 36.0 34.3 35.9
Selling, general and administrative 22.4 26.1 23.8 26.6
expenses
Goodwill impairment - 3.9 - 2.0
-------------------------------------- ------------------- ------------------ ------------------- -----------------
Income from operations 11.5 6.0 10.5 7.3
Interest expense, net 0.6 0.8 0.6 0.8
-------------------------------------- ------------------- ------------------ ------------------- -----------------
Income before taxes 10.9 5.2 9.9 6.5
Provision for taxes 4.2 4.0 3.8 3.5
-------------------------------------- ------------------- ------------------ ------------------- -----------------
Net Income 6.7% 1.2% 6.1% 3.0%
====================================== =================== ================== =================== =================
Page 12 of 21
Thirteen Weeks Ended June 30, 2007 Compared to Thirteen Weeks Ended July 1, 2006
Sales increased 16% to $85.8 million for the second quarter ended June
30, 2007 from $74.2 million in the same period last year. Revenues increased as
a result of higher new product sales and two large product line updates that
shipped during the quarter. Approximately 1% of the 2007 net sales increase was
due to the favorable effect of foreign currency exchange.
Cost of goods sold, as a percentage of sales, increased to 66.1% for
the thirteen weeks ended June 30, 2007 from 64.0% in the same period last year.
The increase is the result of higher customer allowances and initiatives
designed to maintain and increase market share for us and our customers. We
partially offset the impact of these initiatives through material cost savings
from suppliers and lower required provisions for excess and obsolete inventory.
Selling, general and administrative expenses for the thirteen weeks
ended June 30, 2007 decreased 1% to $19.2 million from $19.3 million in the same
period last year despite the 16% sales increase. We were able to offset
inflationary cost increases and variable spending increases related to sales
growth with cost reductions and a $0.3 million reduction in vacation expense due
to the vacation policy change mentioned above. Also, results for the three
months ended July 1, 2006 include a $0.6 million charge for the write-off of
accounts receivable after the loss of two large customers of our Swedish
subsidiary.
As noted above, we recorded a $2.9 million charge in the second quarter
of 2006 to write off the goodwill of its Swedish subsidiary.
Interest expense, net, decreased to $0.5 million in the thirteen weeks
ended June 30, 2007 from $0.6 million in the same period last year due to lower
overall borrowing levels.
Our effective tax rate decreased to 38.2% in the thirteen weeks ended
June 30, 2007 from 76.1% in the same period last year. The decrease is the
result of the $2.9 million goodwill impairment charge in 2006 which was not tax
deductible and therefore had no income tax benefit associated with it. In
addition, the Company's provision for income taxes for the thirteen weeks ended
July 1, 2006, included a $0.3 million charge to write off deferred tax assets.
Twenty-six Weeks Ended June 30, 2007 Compared to Twenty-six Weeks Ended July 1,
2006
Sales increased 12% to $160.1 million for the second quarter ended June
30, 2007 from $143.1 million in the same period last year. Revenues increased
primarily as a result of higher new product sales. Growth in our non-automotive
products and further penetration of existing automotive product lines also
contributed to the sales increase. Approximately 1% of our 2007 net sales
increase was due to the favorable effect of foreign currency exchange.
Cost of goods sold, as a percentage of sales, increased to 65.7% for
the twenty-six weeks ended June 30, 2007 from 64.1% in the same period last
year. The increase is the result of higher customer allowances and initiatives
designed to maintain and increase market share for us and our customers. We
partially offset the impact of these initiatives through material cost savings
from suppliers.
Selling, general and administrative expenses for the twenty-six weeks
ended June 30, 2007, were even with the prior year at $38.0 million despite the
12% sales increase. We were able to offset inflationary cost increases and
variable spending increases related to sales growth with cost reductions and a
$0.6 million reduction in vacation expense due to the vacation policy change
mentioned above. Also, results for the six months ended July 1, 2006 include a
$0.8 million charge for the write-off of accounts receivable after the loss of
two large customers of our Swedish subsidiary.
As noted above, we recorded a $2.9 million charge in the second quarter
of 2006 to write off the goodwill of its Swedish subsidiary.
Interest expense, net, decreased to $1.0 million in the twenty-six
weeks ended June 30, 2007 from $1.2 million in the same period last year due to
lower overall borrowing levels.
Our effective tax rate decreased to 37.8% in the twenty-six weeks ended
June 30, 2007 from 53.2% in the same period last year. The decrease is the
result of the $2.9 million goodwill impairment charge in 2006 which was not tax
deductible and therefore had no income tax benefit associated with it. In
addition, the Company's provision for income taxes for the twenty- six weeks
ended July 1, 2006, included a $0.3 million charge to write off deferred tax
assets. We adopted the provisions of Financial Accounting Standards Board
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes, an
Interpretation of FASB Statement No. 109" effective December 31, 2006. As a
result of the implementation, we recognized no material adjustment in the
liability for unrecognized income tax benefits.
Page 13 of 21
Liquidity and Capital Resources
Historically, we have financed our growth through a combination of cash
flow from operations, accounts receivable sales programs provided by certain
customers and through the issuance of senior indebtedness through our bank
credit facility and senior note agreements. At June 30, 2007, working capital
was $127.6 million, total long-term debt (including the current portion and
revolving credit borrowings) was $24.3 million and shareholders' equity was
$163.7 million. Cash and cash equivalents as June 30, 2007 totaled $5.9 million.
Over the past several years we have extended payment terms to certain
customers as a result of customer requests and market demands. These extended
terms have resulted in increased accounts receivable levels and significant uses
of cash flow. We participate in accounts receivable sales programs with several
customers which allow us to sell our accounts receivable on a non-recourse basis
to financial institutions to offset the negative cash flow impact of these
payment terms extensions. As of June 30, 2007 and December 30, 2006, we had sold
$21.4 million and $18.5 million in accounts receivable under these programs and
had removed them from our balance sheets. We expect continued pressure to extend
our payment terms for the foreseeable future. Further extensions of customer
payment terms will result in additional uses of cash flow or increased costs
associated with the sale of accounts receivable.
We have a $30.0 million revolving credit facility that expires in June
2008. Borrowings under the facility are on an unsecured basis with interest at
rates ranging from LIBOR plus 65 basis points to LIBOR plus 150 basis points
based upon the achievement of certain benchmarks related to the ratio of funded
debt to EBITDA. The interest rate at June 30, 2007 was LIBOR plus 85 basis
points (6.17%). Borrowings under the facility were $6.6 million as of June 30,
2007. We have approximately $21.6 million available under the facility at June
30, 2007. The loan agreement also contains covenants, the most restrictive of
which pertain to net worth and the ratio of debt to EBITDA. We were in
compliance with all financial covenants contained in the Notes and Revolving
Credit Facility at June 30, 2007.
At June 30, 2007, long-term debt includes $17.2 million in Senior Notes
that were originally issued in August 1998, in a private placement on an
unsecured basis ("Notes"). The Notes bear a 6.81% fixed interest rate, payable
quarterly. Annual principal payments of $8.6 million are due in August 2007 and
August 2008. The Notes require, among other things, that we maintain certain
financial covenants relating to debt to capital ratios and minimum net worth.
We have also borrowed $0.6 million under a commercial loan granted in
connection with the opening of a new distribution facility. The principal
balance is paid monthly in equal installments through September 2013. The
outstanding balance bears interest at an annual rate of 4% payable monthly. The
loan is secured by a letter of credit issued under our revolving credit
facility.
Our business activities do not include the use of unconsolidated
special purpose entities, and there are no significant business transactions
that have not been reflected in the accompanying financial statements.
We reported a net source of cash flow from our operating activities of
$9.0 million in the twenty-six weeks ended June 30, 2007. Net income,
depreciation and a $2.9 million increase in accounts payable were the primary
sources of operating cash flow. Accounts payable increased due to an increase in
purchase obligations outstanding to support increased inventory levels due to
sales growth. The primary uses of cash flow were inventory and accounts
receivable, which increased $1.0 million and $6.0 million, respectively to
support the 12% sales growth in 2007.
Investing activities used $2.7 million of cash in the twenty-six weeks
ended June 30, 2007 as a result of additions to property, plant and equipment.
Capital spending in 2007 consisted of tooling associated with new products,
upgrades to information systems, purchases of equipment designed to improve
operational efficiencies and scheduled equipment replacements.
Financing activities used $5.5 million in the twenty-six weeks ended
June 30, 2007. The primary use of cash flow was $4.9 million in revolving credit
facility repayments.
Based on our current operating plan, we believe that our available
sources of capital under our Revolving Credit Agreement, accounts receivable
sales programs and cash generated from operations will be sufficient to meet our
ongoing cash needs for the next twelve months.
Foreign Currency Fluctuations
In 2006, approximately 67% of our products were purchased from a
variety of foreign countries. The products generally are purchased through
purchase orders with the purchase price specified in U.S. dollars. Accordingly,
we do not have exposure to fluctuations in the relationship between the dollar
and various foreign currencies between the time of execution of the purchase
order and payment for the product. However, weakness in the dollar has resulted
in some materials
Page 14 of 21
price increases and pressure from several foreign suppliers to increase prices
further. To the extent that the dollar decreases in value to foreign currencies
in the future or the present weakness in the dollar continues for a sustained
period of time, the price of the product in dollars for new purchase orders may
increase further.
The largest portion of our overseas purchases come from China. The
value of the Chinese Yuan has increased relative to the U.S. Dollar since July
2005 when it was allowed to fluctuate against a basket of currencies. Most
experts believe that the value of the Yuan will increase further relative to the
U.S. Dollar over the next few years. Such a move would most likely result in an
increase in the cost of products that are purchased from China. Impact of
Inflation
We have experienced increases in the cost of materials and
transportation costs as a result of raw materials shortages and commodity price
increases. These increases did not have a material impact on us. We believe that
further cost increases could potentially be mitigated by passing along price
increases to customers or through the use of alternative suppliers or resourcing
purchases to other countries, however there can be no assurance that we will be
successful in such efforts.
Related-Party Transactions
We have a noncancelable operating lease for our primary operating
facility from a partnership in which Richard N. Berman, our Chief Executive
Officer, and Steven L. Berman, our Executive Vice President, are partners. Total
rental payments in 2006 to the partnership under the lease arrangement were $1.3
million.
Critical Accounting Policies
Our discussion and analysis of our financial condition and results of
operations are based upon the consolidated financial statements, which have been
prepared in accordance with U.S. generally accepted accounting principles. The
preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets and liabilities, the
disclosure of contingent liabilities and the reported amounts of revenues and
expenses. We regularly evaluate our estimates and judgments, including those
related to revenue recognition, bad debts, customer credits, inventories,
goodwill and income taxes. Estimates and judgments are based upon historical
experience and on various other assumptions believed to be accurate and
reasonable under the circumstances. Actual results may differ materially from
these estimates under different assumptions or conditions. We believe the
following critical accounting policies affect our more significant estimates and
judgments used in the preparation of our consolidated financial statements:
Allowance for Doubtful Accounts. The preparation of our financial
statements requires us to make estimates of the collectability of our accounts
receivable. We specifically analyze accounts receivable and historical bad
debts, customer creditworthiness, current economic trends and changes in
customer payment patterns when evaluating the adequacy of the allowance for
doubtful accounts. A significant percentage of our accounts receivable have
been, and will continue to be, concentrated among a relatively small number of
automotive retailers and warehouse distributors in the United States. Our five
largest customers accounted for 73% and 77% of net accounts receivable as of
December 30, 2006 and December 31, 2005, respectively. A bankruptcy or financial
loss associated with a major customer could have a material adverse effect on
our sales and operating results.
Revenue Recognition and Allowance for Customer Credits. Revenue is
recognized from product sales when goods are shipped, title and risk of loss
have been transferred to the customer and collection is reasonably assured. We
record estimates for cash discounts, product returns and warranties, discounts
and promotional rebates in the period of the sale ("Customer Credits"). The
provision for Customer Credits is recorded as a reduction from gross sales and
reserves for Customer Credits are shown as a reduction of accounts receivable.
Amounts billed to customers for shipping and handling are included in net sales.
Costs associated with shipping and handling are included in cost of goods sold.
Actual Customer Credits have not differed materially from estimated amounts for
each period presented.
Excess and Obsolete Inventory Reserves. We must make estimates of
potential future excess and obsolete inventory costs. We provide reserves for
discontinued and excess inventory based upon historical demand, forecasted
usage, estimated customer requirements and product line updates. We maintain
contact with our customer base in order to understand buying patterns, customer
preferences and the life cycle of our products. Changes in customer requirements
are factored into the reserves as needed.
Page 15 of 21
Goodwill. We follow the provisions of SFAS No. 142, "Goodwill
and Other Intangible Assets". We employ a discounted cash flow analysis
and a market comparable approach in conducting our impairment tests. Cash flows
were discounted at 12% and an earnings multiple of 5.6 to 5.85 times EBITDA was
used when conducting these tests in 2006. As a result of the 2006 impairment
test, we wrote-off all of the goodwill of our Swedish subsidiary (Scan-Tech) in
our fiscal second quarter of 2006.
Income Taxes. We follow the liability method of accounting for deferred
income taxes. Under this method, income tax expense is recognized for the amount
of taxes payable or refundable for the current year and for the change in the
deferred tax liabilities and assets for the future tax consequences of events
that have been recognized in an entity's financial statements or tax returns. We
must make assumptions, judgments and estimates to determine our current
provision for income taxes and also our deferred tax assets and liabilities and
any valuation allowance to be recorded against a deferred tax asset. Our
judgments, assumptions and estimates relative to the current provision for
income taxes takes into account current tax laws, our interpretation of current
tax laws and possible outcomes of current and future audits conducted by tax
authorities. Changes in tax laws or our interpretation of tax laws and the
resolution of current and future tax audits could significantly impact the
amounts provided for income taxes in our consolidated financial statements. Our
assumptions, judgments and estimates relative to the value of a deferred tax
asset takes into account predictions of the amount and category of future
taxable income. Actual operating results and the underlying amount and category
of income in future years could render our current assumptions, judgments and
estimates of recoverable net deferred taxes inaccurate. Any of the assumptions,
judgments and estimates mentioned above could cause our actual income tax
obligations to differ from our estimates.
Recent Accounting Pronouncements
In September 2006, the Financial Accounting Standards Board (FASB)
issued SFAS No. 157, "Fair Value Measurements." SFAS No. 157 defines fair
value, establishes a framework for measuring fair value and expands disclosures
about fair value measurements. This statement applies under other accounting
pronouncements that require or permit fair value measurements. Accordingly,
SFAS No. 157 does not require any new fair value measurements. The provisions of
SFAS No. 157 are to be applied prospectively and are effective for financial
statements issued for fiscal years beginning after November 15, 2007. We are
currently evaluating what effect, if any, adoption of SFAS No. 157 will have
on the Company's consolidated results of operations and financial position.
In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option
for Financial Assets and Financial Liabilities." SFAS No. 159 permits companies
to choose to measure many financial instruments and certain other items at fair
value. The objective is to improve financial reporting by providing companies
with the opportunity to mitigate volatility in reported earnings caused by
measuring related assets and liabilities differently without having to apply
complex hedge accounting provisions. SFAS No. 159 is effective for fiscal years
beginning after November 15, 2007. Companies are not allowed to adopt SFAS No.
159 on a retrospective basis unless they choose early adoption. We are currently
evaluating what effect, if any, the adoption of SFAS No. 159 will have on our
results of operations and financial position.
Item 3. Quantitative and Qualitative Disclosure about Market Risk
Our market risk is the potential loss arising from adverse changes in
interest rates. With the exception of our revolving credit facility, long-term
debt obligations are at fixed interest rates and denominated in U.S. dollars. We
manage our interest rate risk by monitoring trends in interest rates as a basis
for determining whether to enter into fixed rate or variable rate agreements.
Under the terms of our revolving credit facility and customer-sponsored programs
to sell accounts receivable, a change in either the lender's base rate or LIBOR
would affect the rate at which we could borrow funds thereunder. We believe that
the effect of any such change would be minimal.
Item 4. Controls and Procedures
Quarterly Evaluation of Our Disclosure Controls and Internal Controls
We evaluated the effectiveness of the design and operation of our
"disclosure controls and procedures" as defined in Rule 13a-15(e) of the
Securities Exchange Act of 1934, as amended ("the Act"), as of the end of the
period covered by this Form 10-Q ("Disclosure Controls"). This evaluation
("Disclosure Controls Evaluation") was done under the supervision and with the
participation of management, including the Chief Executive Officer ("CEO") and
Chief Financial Officer ("CFO").
Page 16 of 21
Our management, with the participation of the CEO and CFO, also
conducted an evaluation of our internal control over financial reporting, as
defined in Rule 13a-15(f) of the Act, to determine whether any changes occurred
during the period ended March 31, 2007 that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting ("Internal Controls Evaluation").
Limitations on the Effectiveness of Controls
Control systems, no matter how well conceived and operated, are
designed to provide a reasonable, but not an absolute, level of assurance that
the objectives of the control system are met. Further, the design of a control
system must reflect the fact that there are resource constraints, and the
benefits of controls must be considered relative to their costs. Because of the
inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if
any, within the Company have been detected. Because of the inherent limitations
in a cost-effective control system, misstatements due to error or fraud may
occur and not be detected. We conduct periodic evaluation of our internal
controls to enhance, where necessary, our procedures and controls.
Conclusions
Based upon the Disclosure Controls Evaluation, the CEO and CFO have
concluded that the Disclosure Controls are effective in reaching a reasonable
level of assurance that (i) information that we are required to disclose in the
reports that we file or submit under the Act is recorded, processed, summarized
and reported within the time periods specified in the Securities and Exchange
Commission's rules and forms and (ii) information that we are required to
disclose in the reports that we file or submit under the Act is accumulated and
communicated to our management, including our principal executive and principal
financial officers, or persons performing similar functions, as appropriate to
allow timely decisions regarding required disclosure.
There were no changes in internal controls over financial reporting as
defined in Rule 13a-15(f) of the Act that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
PART II: OTHER INFORMATION
Item 1. Legal Proceedings
We are a party to or otherwise involved in legal proceedings that arise
in the ordinary course of business, such as various claims and legal actions
involving contracts, competitive practices, trademark rights, product liability
claims and other matters arising out of the conduct of our business. In the
opinion of management, none of the actions, individually or in the aggregate,
would likely have a material financial impact on us.
Item 1A. Risk Factors
In addition to the other information set forth in this report, you
should carefully consider the factors discussed in Part I, "Item A, Risk
Factors" in our Annual Report on Form 10-K for the year ended December 30, 2006,
which could materially affect our business, financial condition or future
results. The risks described in our Annual Report on Form 10-K are not the only
risks we face. Additional risks and uncertainties not currently known to us or
that we currently deem to be immaterial also may materially adversely affect our
business, financial condition and/or operating results.
Item 2. Unregistered Sales of Equity Securities and
Use of Proceeds Not Applicable
Item 3. Defaults Upon Senior Securities Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders (the "Annual Meeting") of the
Company was held on May 23, 2007 to elect six directors.
At the Annual Meeting the following six persons were elected to serve
as Directors of the Company, each to serve for a term of one year to expire at
the next annual meeting of shareholders and until his successor has been
selected and qualified:
Page 17 of 21
Number of Votes
For Withhold Authority
Richard N. Berman 16,835,129 13,665
Steven L. Berman 16,096,440 752,304
George L. Bernstein 16,807,829 40,965
John F. Creamer, Jr. 16,832,231 16,563
Paul R. Lederer 16,831,231 17,563
Edgar W. Levin 16,806,831 41,963
Item 5. Other Information
On May 23, 2007, the Board of Directors of the Company approved an
amendment to the Company's Articles of Incorporation to allow for the issuance
of uncertified shares. By permitting the issuance of uncertificated shares, the
Company becomes eligible to participate in the Direct Registration System
currently administered by the Depositary Trust Company.
Through the use of uncertificated shares on the Direct Registration
System, investors may electronically transfer securities to broker-dealers in
order to effect transactions without the risks and delays associated with
transferring physical certificates. Shares represented by issued and outstanding
certificates will continue to be represented thereby until the certificate is
surrendered to the Company.
Item 6. Exhibits
Item 601
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.
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 (9) Third Amended and Restated Credit Agreement dated as of July
24, 2006, between the Company and Wachovia Bank, N.A.
10.1.5 (10) Commercial Loan Agreement, dated September 27, 2006, between
the Company and the Tennessee Valley Authority.
10.3 (6)+ Dorman Products, Inc. Amended and Restated Incentive Stock
Plan
10.4 (3)+ Dorman Products, Inc. 401(k) Retirement Plan and Trust.
10.4.1 (7)+ Amendment No. 1 to the Dorman Products, Inc. 401(k) Retirement
Plan and Trust.
Page 18 of 21
10.5 (3)+ Dorman Products, Inc. Employee Stock Purchase Plan.
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.
+ Management Contracts and Compensatory Plans, Contracts or Arrangements.
(1) Incorporated by reference to the Company's Current Report on Form 8-K filed
on May 24, 2007.
(2) Incorporated by reference to the Exhibits filed with the Company's
Registration Statement on Form S-1 and Amendments No. 1, No. 2, and No. 3
thereto (Registration 33-37264).
(3) Incorporated by reference to the Exhibits files with the Company's Annual
Report on Form 10-K for the fiscal year ended December 26, 1992.
(4) Incorporated by reference to the Exhibits filed with the Company's
Registration Statement on Form S-1 and Amendment No. 1 thereto (Registration
No. 33-68740)
(5) Incorporated by reference to the Exhibits filed with the Company's Annual
Report on Form 10-K for the fiscal year ended December 28, 1996.
(6) Incorporated by reference to the Exhibits filed with the Company's Proxy
Statement for the fiscal year ended December 27, 1997.
(7) Incorporated by reference to the Exhibits filed with the Company's
Quarterly Report on Form 10-Q for the quarter ended June 25, 1994.
(8) Incorporate by reference to the Exhibits filed with the Company's Quarterly
Report on Form 10-Q for the quarte ended June 29, 2002.
(9) Incorporated by reference to the Exhibit filed with the Company's
Current Report on Form 8-K dated May 24, 2005.
(10) Incorporated by reference to the Exhibit filed with the Company's Current
Report on Form 8-K dated September 28, 2006
Page 19 of 21
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
Dorman Products, Inc.
Date: August 3, 2007 /s/ Richard Berman
______________________________
Richard Berman
President and Chief Executive Officer
(Principal executive officer)
Date: August 3, 2007 /s/ Mathias Barton
______________________________
Mathias Barton
Chief Financial Officer
(Principal accounting officer)
Page 20 of 21
EXHIBIT INDEX
3.1 Amended and Restated Articles of Incorporation of the Company dated
May 23, 2007.
3.2 Bylaws of the Company
10.1 Lease, dated December 1, 1990, between the Company and the Berman Real
Estate Partnership, for premiseslocated 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 I, 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 Third Amended and Restated Credit Agreement dated as of July 24, 2006,
between the Company and Wachovia Bank, N.A.
10.1.5 Commercial Loan Agreement, dated September 27, 2006, between the Company
and the Tennessee Valley Authority.
10.3 Dorman Products, Inc. Amended and Restated Incentive Stock Plan.
10.4 Dorman Products, Inc. 401(k) Retirement Plan and Trust.
10.4.1 Amendment No. 1 to the Dorman Products, Inc. 401(k) Retirement Plan
and Trust.
10.5 Dorman Products, Inc. Employee Stock Purchase Plan.
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 Sarbane Oxley Act of 2002.
Page 21 of 21