6309 Monarch Park Place, Suite 203
Niwot, CO 80503, USA
Phone (303) 443-5060
Toll free (888) 742-5060
Net sales in 2002 were $387.5 million, an increase of 2.1% over the prior year, which included nine months of the Premier acquisition, establishing a new high in sales volume. The increased sales level for the year is principally attributable to increased sales generated by our OEM business segment and our international business segment. In the fourth quarter of 2002, net sales decreased 3.5% to $93.3 million, reflecting the effects of difficult market conditions and a planned reduction in the number of domestic MRO sales agents.
In the fourth quarter of 2002, the Company recorded after-tax charges of $2.5 million. These charges reflected an inventory write-off by our United Kingdom subsidiary to better reflect the product needs of its current customer base, and restructuring costs to reduce manpower, principally at our Mexican subsidiary. Full year and fourth quarter results for 2001 included after-tax charges of $7.2 million and $5.4 million, respectively, primarily for the write-off of an enterprise software system and for a one-time promotional program.
Inventories and cost of goods sold for the first three quarters of the year are determined through the use of estimated gross profit rates. In the fourth quarter of 2002, the difference between actual and estimated gross profit rates is determined. That adjustment increased net income by approximately $2.0 million and $2.1 million in 2002 and 2001, respectively.
Robert J. Washlow, Chairman of the Board and CEO, reported, "Full year sales grew $5.6 million and $2.5 million in the OEM and MRO segments, respectively. Improvement in the gross margin of the MRO segment was able to partially offset the effect of the typically lower gross margin of the growing OEM segment. Results were impacted by market conditions, the elimination of under-performing sales agents, and investments in the business to benefit future periods.
These investments included the expanded national accounts program, the inside sales group, the e-commerce program, and the expanded sales education program. These channels of marketing and selling products and the enhanced education program are being pursued to enable the Company to be more competitive in the marketplace and are anticipated to provide additional revenue in the future.
"We remain focused on growing sales and long-term net income. Lawson Products, Inc. is strong financially and debt-free. We intend to continue to provide our sales organizations with the tools necessary to stimulate profitable growth."