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, 1997
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 April 30, 1997
Common Stock, $.01 Par Value 41,345,529
TRIMAS CORPORATION
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Condensed Balance Sheets -
March 31, 1997 and December 31, 1996 1
Consolidated Condensed Statements of
Income for the Three Months
Ended March 31, 1997 and 1996 2
Consolidated Condensed Statements of
Cash Flows for the Three Months
Ended March 31, 1997 and 1996 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 10
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
TRIMAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
March 31, December 31,
1997 1996
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 89,660,000 $105,890,000
Receivables 102,630,000 80,390,000
Inventories 97,070,000 92,210,000
Other current assets 5,340,000 4,130,000
Total current assets 294,700,000 282,620,000
Property and equipment 194,930,000 194,540,000
Excess of cost over net assets
of acquired companies 174,490,000 174,710,000
Other assets 41,670,000 44,800,000
Total assets $705,790,000 $696,670,000
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 36,260,000 $ 33,750,000
Other current liabilities 44,730,000 45,430,000
Total current
liabilities 80,990,000 79,180,000
Deferred income taxes and other 40,880,000 39,920,000
Long-term debt 74,330,000 187,120,000
Total liabilities 196,200,000 306,220,000
Shareholders' equity:
Common stock, $.01 par value,
authorized 100 million shares,
outstanding 41.3 million shares
in 1997; 36.6 million shares
in 1996 410,000 370,000
Paid-in capital 259,660,000 155,690,000
Retained earnings 251,980,000 238,290,000
Cumulative translation adjustments (2,460,000) (3,900,000)
Total shareholders'
equity 509,590,000 390,450,000
Total liabilities and
shareholders' equity $705,790,000 $696,670,000
The accompanying notes are an integral part of the
consolidated financial statements.
1
TRIMAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended
March 31,
1997 1996
Net sales $164,220,000 $147,700,000
Cost of sales (111,680,000) (100,240,000)
Selling, general and administrative
expenses (26,110,000) (22,990,000)
Operating profit 26,430,000 24,470,000
Interest expense (1,800,000) (2,690,000)
Other, net (principally interest income) 1,390,000 1,390,000
(410,000) (1,300,000)
Income before income taxes 26,020,000 23,170,000
Income taxes 9,850,000 9,040,000
Net income $ 16,170,000 $ 14,130,000
Earnings per common share:
Primary $.43 $.38
Fully diluted $.40 $.36
Dividends declared per common share $.06 $.05
Weighted average number of common
and common equivalent shares
outstanding:
Primary 37,651,000 36,966,000
Fully diluted 41,655,000 42,067,000
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)
Three Months Ended
March 31,
1997 1996
CASH FROM (USED FOR):
OPERATIONS:
Net income $16,170,000 $14,130,000
Adjustments to reconcile net income
to net cash from operations:
Depreciation and amortization 6,570,000 5,740,000
Deferred income taxes 750,000 1,100,000
(Increase) decrease in receivables (21,580,000) (24,300,000)
(Increase) decrease in inventories (4,860,000) (6,500,000)
Increase (decrease) in accounts
payable and other current
liabilities 460,000 5,060,000
Other, net (960,000) (360,000)
Net cash from (used for)
operations (3,450,000) (5,130,000)
INVESTMENTS:
Capital expenditures (6,770,000) (6,070,000)
Net cash from (used for)
investments (6,770,000) (6,070,000)
FINANCING:
Long-term debt:
Issuance 16,780,000
Retirement (20,590,000) (200,000)
Common stock dividends paid (2,200,000) (1,830,000)
Net cash from (used for)
financing (6,010,000) (2,030,000)
CASH AND CASH EQUIVALENTS:
Increase (decrease) for the period (16,230,000) (13,230,000)
At beginning of period 105,890,000 92,390,000
At end of period $89,660,000 $79,160,000
SUPPLEMENTAL CASH FLOW INFORMATION:
Noncash financing transaction:
Conversion of convertible subordinated
debentures into common stock $106,000,000
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, 1996.
B. Inventories by component are as follows:
March 31, December 31,
1997 1996
Finished goods $55,080,000 $53,380,000
Work in process 14,330,000 14,340,000
Raw material 27,660,000 24,490,000
$97,070,000 $92,210,000
C. Property and equipment reflects accumulated depreciation of $135.1
million and $131.7 million as of March 31, 1997 and December 31, 1996,
respectively.
D. During the first quarter of 1997 the Company announced that it would
redeem for cash its outstanding issue of $115.0 million of 5%
Convertible Subordinated Debentures Due 2003. On March 21, 1997, $9.0
million of Convertible Subordinated Debentures were redeemed for cash.
The remaining $106.0 million of Convertible Subordinated Debentures were
converted into 4.7 million shares of TriMas Corporation common stock at
the conversion price of $22 5/8 per share.
4
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Consolidated net sales during the first quarter of 1997 were a record
$164.2 million, an increase of 11.2 percent over sales of $147.7 million in last
year's first quarter. All four of the Company's reporting segments recorded
increased sales compared to the prior year's first quarter.
First quarter 1997 sales by the Specialty Container Products segment
increased 31.6 percent to $56.3 million, compared to the prior year's first
quarter results of $42.8 million. Segment sales were affected by the results of
businesses acquired in 1996, increased demand for cylinders from industrial gas
distributors and moderately increased sales of gasket products to industrial
processing industries.
First quarter sales by the Towing Systems segment increased modestly to
$49.7 million, compared to $49.2 million in the first quarter of 1996. Sales
increases attributable to Queensland Towbars Pty. Ltd., acquired in 1996, as
well as continuing penetration of the specialty automotive retail market and
ongoing new product introductions were partially offset by lower sales to
domestic independent hitch installers as well as the effects of unseasonal
weather conditions in the Pacific Northwest. Unusually cold temperatures during
both first quarters negatively affected segment sales performance.
First quarter 1997 sales by the Specialty Fasteners segment increased to
$38.0 million, compared to $36.0 million during the same quarter in 1996.
5
Stronger demand for large diameter industrial fasteners and continued strength
in the aerospace markets the Company serves resulted in the improved sales
performance.
The Corporate Companies segment first quarter sales equaled $20.2 million,
compared to last year's first quarter sales of $19.7 million, primarily
reflecting increased sales of insulation related products used in commercial and
industrial construction and maintenance markets, and also modest improvement in
markets for precision tools.
The Company's consolidated gross margin percentage for the first quarter
1997 was 32.0 percent, compared to 32.1 percent during last year's first
quarter. The results of businesses acquired during the second half of 1996
affected the consolidated measure of selling, general and administrative
expenses as a percentage of net sales, which increased to 15.9 percent during
the 1997 first quarter, compared to 15.6 percent for the first quarter of 1996.
It is anticipated that this category of expenses at the recently acquired
entities will provide an opportunity for improved results as the Company's cost
reduction, distribution efficiency and marketing programs are integrated into
these businesses. The Company's consolidated operating profit for the first
quarter 1997 was $26.4 million, or 16.1 percent of net sales, compared to $24.5
million, or 16.6 percent of net sales in 1996.
Interest expense decreased in the 1997 first quarter primarily because of
the conversion during the period of $106.0 million of the Company's issue of
$115.0 million of 5% Convertible Subordinated Debentures Due 2003 into 4.7
million shares of Company common stock.
6
Net income of $16.2 million resulted in primary earnings per common share
of $.43 based on 37.7 million shares outstanding, compared to first quarter 1996
primary earnings per common share of $.38, based on 37.0 million shares
outstanding. Fully diluted earnings per common share were $.40 based on 41.7
million shares outstanding, compared to $.36 in the first quarter of 1996, based
on 42.1 million shares outstanding.
Liquidity, Working Capital and Cash Flows
The Company's financial strategies include maintaining a relatively high
level of liquidity. Historically, TriMas Corporation on an annual basis has
generated sufficient cash flows from operating activities to fund capital
expenditures, debt service and dividends while maintaining its strategic level
of liquidity. At March 31, 1997, the current ratio was 3.6 to 1 and working
capital equaled $213.7 million, including $89.7 million of cash and cash
equivalents. The Company had available credit of $330.0 million under its
domestic and foreign revolving credit facilities at March 31, 1997.
Cash and cash equivalents decreased $16.2 million and $13.2 million during
the first quarters of 1997 and 1996, respectively. The Company's operating
activities used $3.5 million during the first quarter 1997, compared to $5.1
million during the same quarter of 1996. Due primarily to the seasonality of
the Company's Towing Systems segment, first quarter sales are stronger than the
preceding year's fourth quarter, thereby causing substantial increases in
receivables and, to a lesser extent, inventories during any first
7
quarter. Cash flow resulting from these increased receivables and inventories
has historically been realized later in the year. Total changes in working
capital items were approximately the same in each of the first quarters.
Capital expenditures equaled $6.8 million in the first quarter of 1997 and $6.1
million in the first quarter of 1996. The 1997 expenditures include $5.4
million invested in the Specialty Fasteners and Specialty Container Products
segments.
During the first quarter of 1997 the Company announced that it would
redeem for cash its outstanding issue of $115.0 million of 5% Convertible
Subordinated Debentures Due 2003. On March 21, 1997, after $106.0 million of
the Debentures had been converted into Company common stock, the remaining
$9.0 million of Debentures were redeemed for cash. Long-term debt issuances
and retirements during the first quarter of 1997 also include the consolidation
of borrowings, originally incurred or acquired in connection with acquisitions
made in 1996, under certain of the Company's revolving credit facilities.
Dividends paid on common stock totaled $2.2 million for the first quarter of
1997, compared to $1.8 million for the first quarter of 1996.
The Company believes its cash flows from operations, along with its unused
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
Under a Stock Repurchase Agreement which expires in December 1998, Masco
Corporation and MascoTech, Inc. have the right to sell to the Company, at
approximate fair market value, shares of Company common stock following the
occurrence of certain events that would result in an increase in their
respective ownership percentage of the then outstanding shares of Company common
stock. In all cases, the Company has control over the amount of Company common
stock it would ultimately acquire. Neither Masco Corporation nor MascoTech,
Inc. have ever exercised their right to sell Company common stock to the
Company. To the extent these rights have been exercised at any balance sheet
date, the Company would reclassify from permanent capital an amount
representative of the repurchase obligation.
In February 1997 the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, Earnings per Share. The Company will
adopt the provisions of this Statement during the fourth quarter of 1997 and it
is not expected to have a material effect on the Company's financial statements.
9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
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 March 31, 1997.
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: May 12, 1997 By: /s/William E. Meyers
William E. Meyers
Vice President - Controller
(Chief accounting officer
and authorized signatory)
10
Exhibit Index
Exhibit
Number Description of Document
11 Computation of Earnings Per Common Share
12 Computation of Ratios of Earnings to Fixed Charges
27 Financial Data Schedule