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 June 30, 1996
Commission file number 1-10716
TRIMAS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 38-2687639
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
315 East Eisenhower Parkway, Ann Arbor, Michigan 48108
(Address of principal executive offices) (Zip Code)
(313) 747-7025
(Telephone number)
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 No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Shares Outstanding at
Class July 31, 1996
Common Stock, $.01 Par Value 36,670,013
TRIMAS CORPORATION
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Condensed Balance Sheets -
June 30, 1996 and December 31, 1995 1
Consolidated Condensed Statements of
Income for the Three Months and Six
Months Ended June 30, 1996 and 1995 2
Consolidated Condensed Statements of
Cash Flows for the Six Months
Ended June 30, 1996 and 1995 3
Notes to Consolidated Condensed
Financial Statements 4
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 5
Part II. Other Information and Signature 9
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
TRIMAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
June 30, December 31,
1996 1995
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $108,570,000 $ 92,390,000
Receivables 92,110,000 71,200,000
Inventories 86,410,000 85,490,000
Other current assets 2,350,000 2,510,000
Total current assets 289,440,000 251,590,000
Property and equipment 176,020,000 173,700,000
Excess of cost over net assets
of acquired companies 142,730,000 144,860,000
Other assets 44,960,000 46,210,000
Total assets $653,150,000 $616,360,000
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 27,800,000 $ 24,390,000
Other current liabilities 33,590,000 29,740,000
Total current liabilities 61,390,000 54,130,000
Deferred income taxes and other 37,950,000 36,360,000
Long-term debt 187,040,000 187,200,000
Total liabilities 286,380,000 277,690,000
Shareholders' equity:
Common stock, $.01 par value, authorized
100 million shares, outstanding 36.6
million shares 370,000 370,000
Paid-in capital 154,920,000 155,430,000
Retained earnings 213,310,000 185,370,000
Cumulative translation adjustments (1,830,000) (2,500,000)
Total shareholders' equity 366,770,000 338,670,000
Total liabilities and
shareholders' equity $653,150,000 $616,360,000
The accompanying notes are an integral part of the
consolidated financial statements.
1
TRIMAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
Six Months Ended Three Months Ended
June 30, June 30,
1996 1995 1996 1995
Net sales $307,900,000 $299,520,000 $160,200,000 $151,920,000
Cost of sales (206,980,000) (201,390,000) (106,740,000) (101,390,000)
Selling, general and
administrative expenses (45,860,000) (44,230,000) (22,870,000) (21,100,000)
Operating profit 55,060,000 53,900,000 30,590,000 29,430,000
Interest expense (5,520,000) (7,440,000) (2,830,000) (3,700,000)
Other, net (principally
interest income) 2,840,000 3,130,000 1,450,000 1,650,000
(2,680,000) (4,310,000) (1,380,000) (2,050,000)
Income before income
taxes 52,380,000 49,590,000 29,210,000 27,380,000
Income taxes 20,430,000 19,590,000 11,390,000 10,820,000
Net income $ 31,950,000 $ 30,000,000 $ 17,820,000 $ 16,560,000
Earnings per common
share:
Primary $.86 $.81 $.48 $.45
Fully diluted $.80 $.76 $.45 $.42
Dividends declared per
common share $.11 $.09 $.06 $.05
Weighted average number
of common and common
equivalent shares
outstanding:
Primary 36,968,000 36,994,000 36,983,000 37,001,000
Fully diluted 42,065,000 42,088,000 42,065,000 42,088,000
The accompanying notes are an integral part of the
consolidated condensed financial statements.
2
TRIMAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
June 30,
1996 1995
CASH FROM (USED FOR):
OPERATIONS:
Net income $ 31,950,000 $ 30,000,000
Adjustments to reconcile net income
to net cash from operations:
Depreciation and amortization 11,510,000 10,850,000
Deferred income taxes 2,200,000 1,400,000
(Increase) decrease in receivables (20,010,000) (20,370,000)
(Increase) decrease in inventories (920,000) (2,950,000)
Increase (decrease) in accounts
payable and other current
liabilities 6,590,000 4,090,000
Other, net (140,000) (3,110,000)
Net cash from (used for)
operations 31,180,000 19,910,000
INVESTMENTS:
Capital expenditures (11,140,000) (9,930,000)
Net cash from (used for)
investments (11,140,000) (9,930,000)
FINANCING:
Retirement of long-term debt (200,000) (270,000)
Common stock dividends paid (3,660,000) (2,930,000)
Net cash from (used for)
financing (3,860,000) (3,200,000)
CASH AND CASH EQUIVALENTS:
Increase (decrease) for the period 16,180,000 6,780,000
At beginning of period 92,390,000 107,670,000
At end of period $108,570,000 $114,450,000
The accompanying notes are an integral part of the
consolidated condensed financial statements.
3
TRIMAS CORPORATION AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
A. Basis of Presentation
The accompanying unaudited consolidated condensed 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. Accordingly, 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 considered necessary for a fair presentation
have been included, and such adjustments are of a normal recurring nature.
The year-end condensed balance sheet data was derived from audited
financial statements, but does not include all disclosures required by
generally accepted accounting principles. 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 year ended December 31,
1995. Certain amounts in the 1995 financial statements have been
reclassified to conform with the current presentation.
B. Inventories by component are as follows:
June 30, December 31,
1996 1995
Finished goods $46,980,000 $47,490,000
Work in process 13,990,000 14,200,000
Raw material 25,440,000 23,800,000
$86,410,000 $85,490,000
C. Property and equipment reflects accumulated depreciation of $125.1 million
and $116.8 million as of June 30, 1996 and December 31, 1995, respectively.
4
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Consolidated net sales during the second quarter of 1996 equaled $160.2
million, an increase of 5.5 percent over the comparable 1995 period and the
highest quarterly total in Company history. Record sales during the first half
of 1996 equaled $307.9 million, compared to $299.5 million in 1995. The
Company's Towing Systems, Specialty Container Products and Corporate Companies
segments all recorded increased sales during the six months and quarter ended
June 30, 1996.
Second quarter sales by the Towing Systems segment increased to $56.4
million, compared to $55.1 million in the second quarter of 1995. Increased
sales to both independent hitch installers and to the specialty automotive
retail market were partially offset by lower sales to the marine aftermarket.
Ongoing new product introductions also aided second quarter sales performance.
Unfavorable weather conditions which began during the first quarter continued
into the second quarter and negatively affected segment sales performance.
First half segment sales equaled $105.6 million, which compares to $103.3
million in 1995.
Second quarter 1996 sales for the Specialty Fasteners segment were $37.1
million, which equaled sales recorded in the comparable period of 1995. Sales
during the first half of 1996 of $73.1 million decreased $3.0 million compared
to 1995 because first quarter sales were below last year's level. First half
sales were negatively impacted by reduced sales to the heavy-duty truck and
appliance markets, and decreased demand for automotive related metallurgical
services. Increasing build rates at aerospace manufacturers has lead to an
increase in segment sales of aerospace fasteners.
5
Sales for the Specialty Container Products segment for the second quarter
and first six months ended June 30, 1996 increased 12.9 percent and 6.5 percent
respectively. Second quarter sales equaled $47.0 million bringing the six month
total to $89.8 million. Export sales of specialty compressed gas cylinders to
the medical industry in the Far East contributed to the second quarter
increase. Increasing demand for specialty gasket products used by industrial
processing industries also added to this segment's sales performance. The
Corporate Companies segment sales increased 10.3 percent for the first six
months of 1996 to $39.4 million. Sales of specialty insulation products
increased as the commercial construction market continued to improve.
The Company's consolidated gross margin for the first six months of both
1996 and 1995 equaled 32.8 percent. During the second quarters of 1996 and 1995
gross margin equaled 33.4 percent and 33.3 percent respectively. Because of the
seasonal factors relating to the Towing Systems segment, gross margin recorded
in the second quarter is typically higher than that which is realized during the
first quarter.
The Company's consolidated operating profit for the first six months of
1996 increased to $55.1 million and represented an operating margin of 17.9
percent compared to 1995's first six months operating profit of $53.9 million or
18.0 percent of net sales. Operating profit for the second quarter 1996 of
$30.6 million represented an operating margin of 19.1 percent.
Interest expense decreased in the six and three month periods ended
June 30, 1996 primarily because of the $51.5 million reduction of long-term debt
in the third quarter of 1995, and because of lower prevailing interest rates.
Consequently, lower levels of cash and cash equivalents and lower interest rates
during 1996 resulted in lower interest income during the current periods.
6
Net income for the six months and three months ended June 30, 1996 was
$32.0 million and $17.8 million respectively, compared to $30.0 million and
$16.6 million in last year's comparable periods. Primary earnings per common
share increased 6.2 percent to $.86 for the first six months of 1996 compared
to 1995's primary earnings per common share of $.81, both based on 37.0 million
shares outstanding. Fully diluted earnings per common share increased 5.3
percent to $.80 versus $.76 last year, both based on 42.1 million shares
outstanding. Primary and fully diluted earnings per common share for the second
quarter of 1996 were $.48 and $.45, compared to $.45 and $.42 last year.
Liquidity, Working Capital and Cash Flows
The Company's financial strategies include maintaining a relatively high
level of liquidity. Historically, TriMas Corporation has generated sufficient
cash flows from operating activities to fund capital expenditures, debt service
and dividends, while maintaining its strategic level of liquidity. At June 30,
1996 the current ratio was 4.7 to 1 and working capital equaled $228.1 million,
including $108.6 million of cash and cash equivalents. The Company had
available credit of $278.0 million under its revolving credit facility at June
30, 1996.
Cash flows from operations provided $31.2 million and $19.9 million during
the first six months of 1996 and 1995 respectively. These operating cash flows
were net of increases in accounts receivable of $20.0 million in 1996 and $20.4
million in 1995 due mainly to the seasonality of the Towing Systems segment, as
well as the increased sales levels. Historically, the cash flow provided by the
seasonal increase in receivables is realized later in the year. A corresponding
increase in accounts payable and accrued liabilities provided cash flow of $6.6
million and $4.1 million in the first
7
six months of 1996 and 1995 respectively. Capital expenditures during the first
six months equaled $11.1 million in 1996 and $9.9 million in 1995. Common stock
dividends totaled $3.7 million in 1996 versus $2.9 million in 1995.
In late June, the Company acquired Queensland Towbar Pty. Ltd., Australia's
second largest manufacturer of vehicle hitches and towing products. During
July, the Company acquired The Englass Group Limited, a United Kingdom-based
supplier of specialty dispensing and packaging products. Annualized combined
sales of Queensland Towbar and Englass are in excess of $20.0 million.
The Company believes its cash flows from operations, along with its
borrowing capacity and access to financial markets, are adequate to fund its
strategies for future growth, including working capital, expenditures for
manufacturing expansion and efficiencies, market share initiatives, and
corporate development activities.
8
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders was held on May 15, 1996 at which
the two nominees for the Company's Board of Directors, identified in
the Company's proxy statement dated April 11, 1996, were re-elected
and the selection of Coopers & Lybrand L.L.P. to audit the Company's
financial statements for the year 1996 was ratified. Following is a
tabulation of shares voted:
Election of Directors
Richard A. Manoogian Herbert S. Amster
For 34,202,762 34,204,655
Withheld 47,037 45,144
Ratification of selection of Coopers & Lybrand L.L.P.
For 34,215,645
Against 9,998
Abstentions 24,156
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
4 Credit Agreement dated July 23, 1996 among TriMas
Corporation Limited, TriMas Corporation, Certain Banks and
NationsBank, N.A. (London Branch) as Agent
11 Computation of Earnings Per Common Share
12 Computation of Ratios of Earnings to Fixed Charges
27 Financial Data Schedule
(b) Reports on Form 8-K:
None were filed during the quarter ended June 30, 1996.
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.
TRIMAS CORPORATION
Date: August 14, 1996 By: /s/William E. Meyers
William E. Meyers
Vice President - Controller
(Chief accounting officer
and authorized signatory)
9
Exhibit Index
Exhibit
Number Description of Document
4 Credit Agreement dated July 23, 1996 among TriMas Corporation Limited,
TriMas Corporation, Certain Banks and NationsBank, N.A. (London
Branch) as Agent
11 Computation of Earnings Per Common Share
12 Computation of Ratios of Earnings to Fixed Charges
27 Financial Data Schedule