SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q/A
(X) Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 2000
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: 0-23474
Triple S Plastics, Inc.
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(Exact name of registrant as specified in its charter)
Michigan 38-1895876
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(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
7950 Moorsbridge Road, Suite 200, Portage, Michigan 49024
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(Address of principal executive offices) (Zip Code)
(616) 327-3417
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
Yes __X__ No _____
The registrant had 3,782,153 shares of common stock outstanding
as of September 30, 2000.
Explanatory Note:
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Triple S Plastics, Inc. (the "Company") filed with the Securities
and Exchange Commission, its Form 10-Q for the quarterly period ended
September 30, 2000 on November 13, 2000. Thereafter, the Company
filed a Proxy Statement (the "Proxy Statement") for a special meeting
of the Company's shareholders to vote on a proposed merger. In
preparing the information for the Proxy Statement, limited changes and
updates to the information contained in the Company's Form 10-Q were
required. As a result, the Company has filed this amendment to the
Form 10-Q, which incorporates changes to make the form 10-Q consistent
with the Proxy Statement. These changes include additional disclosure
about the Company's long-term indebtedness and exposure to market risk
as of September 30, 2000 and are found in Items 2 and 3 of this
amendment and Note 7 to the Company's financial statements included in
this amendment.
2
TRIPLE S PLASTICS, INC.
INDEX
Page No.
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PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets - 4
September 30, 2000 and March 31, 2000
Condensed Consolidated Statements of 5
Three Months and Six Months Ended
September 30, 2000 and 1999
Condensed Consolidated Statements of 6
Cash Flows - Six Months Ended
September 30, 2000 and 1999
Notes to Condensed Consolidated Financial 7
Statements
Item 2. Management's Discussion and Analysis of 10
Financial Condition and Results of
Operations
Item 3. Quantitative and Qualitative Disclosures 13
About Market Risk
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 14
3
TRIPLE S PLASTICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, dollars in thousands)
September 30 March 31
2000 2000
------------ --------
ASSETS
Current Assets:
Cash and cash equivalents $ 1,478 $ 1,806
Accounts receivable, less allowance of $300 20,185 13,929
Inventories (Note 4) 7,639 6,344
Deferred income taxes 427 427
Other 1,950 656
-------- --------
TOTAL CURRENT ASSETS 31,679 23,162
PROPERTY, PLANT AND EQUIPMENT 48,044 40,482
Less accumulated depreciation and amortization 18,330 16,726
-------- --------
NET PROPERTY, PLANT AND EQUIPMENT 29,714 23,756
OTHER:
Assets held for sale (Note 2) -- 868
Goodwill, net of accumulated amortization of $999 and $848 (Note 6) 4,891 3,641
Miscellaneous 19 59
-------- --------
TOTAL OTHER ASSETS 4,910 4,568
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$ 66,303 $ 51,486
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable (Note 5) $ 3,367 $ --
Accounts payable 10,153 5,543
Accrued compensation 1,946 1,570
Income taxes payable 1,617 831
Deferred mold revenue 1,763 547
Other accrued expenses (Note 7) 1,002 1,331
Current maturities of long-term debt 1,947 1,312
-------- --------
TOTAL CURRENT LIABILITIES 21,795 11,134
LONG-TERM DEBT, less current maturities 3,758 4,618
DEFERRED INCOME TAXES 1,949 1,949
------- -------
TOTAL LIABILITIES 27,502 17,701
SHAREHOLDERS' EQUITY:
Preferred stock, no par value, 1,000,000 shares authorized,
none issued -- --
Common stock, no par value, 10,200,000 shares authorized,
3,782,153 and 3,759,716 shares issued and outstanding 14,622 14,529
Retained earnings 24,179 19,256
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Total Shareholders' Equity 38,801 33,785
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$ 66,303 $ 51,486
======== ========
See accompanying notes to condensed consolidated financial statements.
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TRIPLE S PLASTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in thousands, except per share amounts)
Three Months Ended Six Months Ended
September 30 September 30
----------------- ----------------
2000 1999 2000 1999
---- ---- ---- ----
Net Sales $ 39,713 $ 23,709 $ 71,851 $ 42,955
Cost of Sales 31,419 19,165 56,946 34,871
-------- ------- -------- --------
Gross Profit 8,294 4,544 14,905 8,084
Selling and marketing expenses 699 1,427 1,389 2,409
General and administrative expenses 3,185 1,494 5,585 3,651
Plant closing costs (Note 7) -- -- -- 1,312
------- -------- -------- --------
Total Operating Expenses 3,884 2,921 6,974 7,372
-------- -------- --------
OPERATING INCOME 4,410 1,623 7,931 712
Interest Expense (Income):
Interest expense 195 131 307 266
Interest income (9) (41) (31) (111)
-------- -------- -------- --------
Net Interest Expense 186 90 276 155
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES 4,224 1,533 7,655 557
Income Tax Expense 1,513 560 2,733 205
-------- -------- -------- --------
NET INCOME $ 2,711 $ 973 $ 4,922 $ 352
======== ======== ======== ========
Basic Earnings per Share of Common Stock $ .72 $ 0.26 $ 1.31 $ 0.09
======== ======== ======== ========
Diluted Earnings per Share of Common Stock $ .59 $ 0.24 $ 1.09 $ 0.09
======== ======== ======== ========
Shares Used in Computing Earnings per
Share:
Basic 3,768 3,753 3,764 3,752
Diluted 4,564 4,057 4,514 3,952
See accompanying notes to condensed consolidated financial statements.
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TRIPLE S PLASTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Six Months Ended
September 30
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2000 1999
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OPERATING ACTIVITIES:
Net income $ 4,922 $ 352
Adjustments to reconcile net income to cash provided
by (used in) operating activities:
Depreciation and amortization 2,293 1,975
Changes in assets and liabilities, net of amounts acquired
from business acquisition:
Accounts receivable (6,171) (1,748)
Inventories (1,285) (1,258)
Accounts payable 4,579 1,590
Other 546 (1,166)
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CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 4,884 (255)
INVESTING ACTIVITIES:
Capital expenditures (6,971) (2,735)
Proceeds from sale of property and equipment 203 --
Business acquisition (Note 6) (1,310) --
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CASH USED IN INVESTING ACTIVITIES (8,078) (2,735)
FINANCING ACTIVITIES:
Proceeds from issuance of common stock 93 20
Net borrowings under note payable 3,367 --
Proceeds from issuance of long-term debt 660 --
Principal payments on long-term debt (1,254) (892)
-------- --------
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 2,866 (872)
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS (328) (3,862)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 1,806 5,594
-------- --------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 1,478 $ 1,732
======== ========
See accompanying notes to condensed consolidated financial statements.
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TRIPLE S PLASTICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, Dollars in thousands)
1. PRESENTATION OF INTERIM INFORMATION
In the opinion of the management of Triple S Plastics, Inc. (the
Company), the accompanying unaudited condensed consolidated financial
statements include all normal adjustments considered necessary to
present fairly the financial position of the Company as of September
30, 2000 and the results of its operations for the periods shown.
Interim results are not necessarily indicative of results for a full
year.
The condensed consolidated financial statements have been prepared in
accordance with the instructions to Form 10-Q and therefore, do not
include all information and footnotes necessary for a fair
presentation of financial position, results of operations and cash
flows in conformity with generally accepted accounting principles.
2. ASSETS HELD FOR SALE
As discussed in Note 7, the Company's Tucson, Arizona facility was
sold in December 1999 and at that time, the Victor Plastics facility
was being held for sale. These facilities were written down to their
estimated fair market value in the first quarter ended June 30, 1999,
and depreciation of the facilities was terminated at the time of
closure. In September 2000, management decided to reactivate the
Victor Plastics facility. The asset has been reclassified from "assets
held for sale" to "property, plant and equipment."
3. BUSINESS
During the six months ended September 30, 2000 and 1999, a
telecommunications customer accounted for 70% and 56% of net sales,
respectively.
4. INVENTORIES
Inventories are summarized as follows: September 30 March 31
2000 2000
------------ --------
Raw materials and packaging $ 4,498 $ 3,658
Finished goods and work-in-process 3,141 2,686
-------- --------
Total Inventories $ 7,639 $ 6,344
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5. NOTE PAYABLE
The Company has a $10,000 unsecured line of credit with a bank, due on
demand, with interest on the unpaid principal balance at a variable
rate based on certain financial ratios. There was $3,367 outstanding
under this agreement at September 30, 2000. There were no borrowings
under the agreement at March 31, 2000.
6. ACQUISITION OF BURCO PRECISION PRODUCTS, INC.
On June 16, 2000, the Company purchased, for cash of $1,310,
assumption of long-term debt of $309 and a note payable of $60, the
outstanding stock of Burco Precision Products, Inc. (Burco), a
precision mold-building business located in Denton, Texas. The
transaction has been accounted for using the purchase method. Burco's
results have been included in the Company's condensed consolidated
financial statements from the date of acquisition. Goodwill amounting
to $1,400 is being amortized on a straight-line basis over 15 years.
7. PLANT CLOSING COSTS
On June 18, 1999, the Company announced that it was closing its
Tucson, Arizona facility and transferring the machinery and equipment
to its new facility in Fort Worth, Texas and other locations in
Michigan. A charge for closing costs was recorded in the first quarter
ended June 30, 1999 and reflected the cost of closing the Tucson
facility and disposition of the Victor Plastics facility. The loss on
closing included the writedown of property, plant and equipment to
market value, as well as closedown expenses. The pre-tax effect of
this charge is shown in the Condensed Consolidated Statements of
Income as plant closing costs. The Tucson facility was sold in
December 1999 and no additional provision for closing costs was
necessary. In September 2000, management decided to reactivate the
Victor Plastics facility as discussed in Note 2.
8. OTHER MATTERS
On July 14, 2000, the Company and Eimo Oyj of Finland announced that
it had entered into a formal merger agreement pursuant to which a
subsidiary of Eimo Oyj will merge into the Company, and the Company
will become a wholly-owned subsidiary of Eimo Oyj. The transaction is
subject to approval by the stockholders of the Company and Eimo. The
merger is intended to be tax free to the shareholders of the Company
and is intended to be accounted for as a pooling-of-interests under
Finnish generally accepted accounting principles.
9. COMMITMENTS
On August 30, 2000 the Company announced the formation of a new
business in Manaus, Brazil. The business, known as Triple S
Cosmosplast da Amazonia, Ltda., is being formed in collaboration with
Cosmosplast Industria e Comercio de Plasticos Ltda., a Brazilian
plastics company serving the electronics and other selected consumer
goods industries. The Company owns a 70% interest in the new venture
and Cosmosplast Industria owns the remaining 30%. In conjunction with
8
this venture, the Company issued long-term debt consisting of a note
payable for $660 with monthly payments ranging from $12 to $43 plus
interest at 6% through August 2002.
10. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Non-cash investing and financing activities in conjunction with the
acquisition of Burco were as follows:
Equipment additions $ 274
Long-term debt 369
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands)
Certain matters discussed in this Form 10-Q constitute forward-looking
statements which are necessarily subject to certain risks and
uncertainties, and they may change in a material way based upon
various market, industry and other important factors, many of which
are beyond the control of the Company. From time to time, the Company
identifies factors in its Form 10-K filed with the Securities and
Exchange commission and its other interim reports that may influence
future results, and the Company recommends that investors consult
those reports. The Company cautions investors that actual results may
differ materially from the forward-looking statements contained in
these reports.
OVERVIEW
The Company designs and builds molds and manufactures complex, highly
engineered thermoplastic molded components based on customers'speci-
fications and orders. Its customers are primarily in the telecom-
munications, consumer products, automotive, medical/pharmaceutical,
and information technologies markets. The Company considers both
the manufacture of molded products and mold sales to be an integral
part of its business. The Company's fiscal year end is March 31.
RESULTS OF OPERATIONS
On June 18, 1999, the Company announced that it was closing its
Tucson, Arizona facility and transferring the machinery and equipment
to its new facility in Fort Worth, Texas and other locations in
Michigan. The facility was sold in December 1999. The impact of these
actions are discussed in Note 7 to the Condensed Consolidated
Financial Statements.
The following table sets forth, for the three months and six months
ended September 30, 2000 and 1999, certain items from the Company's
Condensed Consolidated Statements of Income expressed as a percentage
of net sales.
10
Three months ended Six months ended
September 30 September 30
----------------- ------------------
2000 1999 2000 1999
------ ------ ------ ------
Net Sales 100.0% 100.0% 100.0% 100.0%
Cost of Sales 79.1 80.8 79.3 81.2
----- ----- ----- -----
Gross Profit 20.9 19.2 20.7 18.8
Selling & Marketing Expenses 1.8 6.0 1.9 5.6
General & Administrative Expenses 8.0 6.3 7.8 8.5
Plant Closing Costs -- -- -- 3.0
----- ----- ----- -----
Operating Expenses 9.8 12.3 9.7 17.1
Operating Income 11.1 6.9 11.0 1.7
Interest Expense, net 0.5 0.4 0.3 0.4
----- ----- ----- -----
Income Before Income Taxes 10.6 6.5 10.7 1.3
Income Tax Expense 3.8 2.4 3.8 0.5
----- ----- ----- -----
Net Income 6.8% 4.1% 6.9% 0.8%
===== ===== ===== =====
NET SALES
Net sales for the second quarter and six months ended September 30,
2000 increased 67.5% and 67.3%, respectively, compared to their
respective prior year periods. The sales increase reflected
exceptionally strong shipments to the telecommunications market which
comprised 76.1% of net sales for the second quarter of this year and
73.9% for the six months ended September 30, 2000. Sales to customers
in all the other markets the Company serves reflected decreases as a
percentage of net sales. Management anticipates the Company's reliance
on the telecommunications market will continue into the foreseeable
future.
The overall increase in sales is principally related to volume as no
significant price increases occurred during the first six months of
fiscal 2001.
COST OF SALES
Cost of sales as a percentage of net sales decreased to 79.1% in the
second quarter of fiscal 2001 compared to 80.8% for the second quarter
last year. For the first six months of fiscal 2001 cost of sales as a
percentage of net sales decreased to 79.3% compared to 81.2% for the
six months of the prior year. The lower cost of sales percentage in
fiscal 2001 is primarily attributed to higher overhead absorption as a
result of increased sales. The lower cost of sales percentage is also
attributed to molded part manufacturing cost reductions, primarily in
labor cost, as a result of manufacturing efficiency improvement
initiatives at the Company.
11
SELLING AND MARKETING EXPENSES
Selling and marketing expenses as a percentage of net sales decreased
to 1.8% in the second quarter of fiscal 2001 compared to 6.0% for the
second quarter of the prior year. For the first six months of
fiscal 2001, selling and marketing expenses as a percentage of net
sales decreased to 1.9% compared to 5.6% for the six months of the
prior year. The decrease principally relates to decreased commissions
as a result of contract re-negotiation.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses as a percentage of net sales
increased to 8.0% compared to 6.3% for the second quarter last year.
This increase was principally due to organization costs related to the
merger with Eimo Oyj of $564. For the first six months of fiscal 2001
general and administrative expenses as a percentage of sales decreased
to 7.8% compared to 8.5% for the six months of the prior year. This
decrease is principally attributed to higher overhead absorption as a
result of increased sales.
INCOME TAXES
The Company's effective tax rate for the second quarter of fiscal 2001
was 35.8% compared to the prior year rate of 36.5% and was 35.7% for
the first six months of fiscal 2001 compared to 36.8% for the first
six months of the prior year.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary cash requirements are for operating expenses and
capital expenditures. Historically, the Company's main sources of cash
have been from operations, bank borrowings and industrial revenue
bonds. The Company has adequate liquidity and expects this to continue
into the foreseeable future.
Cash provided from operations of $4,884 for the first six months of
fiscal year 2001 consisted primarily of earnings and an increase in
accounts payable, offset by increases in accounts receivable and
inventories.
As a result of the higher sales level, accounts receivable increased
by $6,171 at September 30, 2000 compared to the prior fiscal year end,
and represented 40 days sales outstanding which is 5 days lower than
the end of the prior fiscal year. Inventories increased by $1,285 at
September 30, 2000 compared to the prior fiscal year end, and
represented 24 days in inventory compared to 34 days at the end of the
prior fiscal year. The increase is primarily due to increased
inventory requirements related to the higher sales at the Texas
facilities.
The Company has a $10,000 unsecured line of credit agreement with a
bank of which $6,633 is available at September 30, 2000. The Company
utilized $3,367 of its line of credit and issued a note payable for
$660 for business acquisitions and facility expansions during the six
12
months ended September 30, 2000. The Company anticipates investing,
over the next two to three years, $5,000 in capital acquisitions
related to the Manaus, Brazil operation. Management believes that this
source of cash, along with internally generated cash, will be adequate
to fund future operating and capital requirements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
As a result of its variable rate line of credit, the Company is
exposed to the risk of rising interest rates. The $10,000 line of
credit had an interest rate ranging from 8.5% to 9.0% for the six
months ended September 30, 2000. In addition, for periods subsequent
to September 30, 2000, the Company's Georgetown Industrial Development
Corporation Revenue Bond provides for interest at a variable rate of
77% of the issuing bank's prime rate.
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) (i) Exhibit 4 - By-laws of Triple S Plastics, Inc.,
as amended
(ii) Exhibit 27 - Financial Data Schedule
(b) The Company filed a Current Report on Form 8-K with the
Securities and Exchange Commission on July 19, 2000, under
Item 2, relating to the merger agreement, dated July 13, 2000,
entered into by the Company and Eimo Oyj, and the transactions
contemplated thereby.
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SIGNATURE
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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.
(Registrant)
TRIPLE S PLASTICS, INC.
Date: February 9, 2001 /s/ A. Christian Schauer
-----------------------------------
A. Christian Schauer
Chief Executive Officer and
Chief Financial Officer
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