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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, 1996
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 1-13894
TRANSPRO, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 34-1807383
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
100 Gando Drive, New Haven, Connecticut 06513
(Address of principal executive offices, including zip code)
(203) 401-6450
(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 number of shares of common stock outstanding as of July 31, 1996 was
6,591,280, $.01 par value.
Exhibit Index is on page 13 of this report.
Page 1 of 14
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INDEX
Page No.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Income for the
three months ended June 30, 1996 and 1995 and the
six months ended June 30, 1996 and 1995 3
Condensed Consolidated Balance Sheets at June 30, 1996
and December 31, 1995 4
Condensed Consolidated Statements of Cash Flows for
the six months ended June 30, 1996 and 1995 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TRANSPRO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(amounts in thousands, except per share amounts)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1996 1995 1996 1995
---------------------- -----------------------
SALES $ 69,849 $ 33,145 $ 128,187 $ 66,640
COST OF SALES 53,036 26,775 97,547 53,906
-------- -------- --------- --------
GROSS MARGIN 16,813 6,370 30,640 12,734
SELLING, GENERAL, AND
ADMINISTRATIVE EXPENSES 10,095 1,854 19,982 3,764
RESTRUCTURING COSTS 1,030 ---- 2,051 ----
-------- -------- --------- --------
INCOME FROM OPERATIONS 5,688 4,516 8,607 8,970
EQUITY IN EARNINGS OF GDI ---- 1,170 ---- 1,137
INTEREST EXPENSE (819) (257) (1,597) (471)
INTEREST INCOME ---- 135 9 264
-------- -------- --------- --------
INCOME BEFORE TAXES 4,869 5,564 7,019 9,900
PROVISION FOR INCOME TAXES 1,983 2,253 2,843 4,009
-------- -------- --------- --------
NET INCOME $ 2,886 $ 3,311 $ 4,176 $ 5,891
======== ======== ========= ========
EARNINGS PER COMMON SHARE $ .43 $ .50 $ .63 $ .89
======= ======== ========= ========
CASH DIVIDENDS PER COMMON SHARE $ .05 ---- $ .10 ----
======== ======== ========= ========
AVERAGE COMMON SHARES
OUTSTANDING 6,588 6,621 6,601 6,621
======== ======== ========= ========
The accompanying notes are an integral part of these statements.
The EPS calculations presented for 1995 are for comparative purposes only as
common shares were not issued until October 1995. The amount of shares issued in
the spin-off were assumed to be outstanding for the 1995 period.
The EPS effect of the restructuring costs is $.10 during the second quarter and
$.19 during the first six months of 1996.
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TRANSPRO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except share and per share amounts)
JUNE 30, DECEMBER 31,
ASSETS 1996 1995
------------ ------------
(unaudited)
Current assets:
Cash and cash equivalents $ 732 $ --
Accounts receivable (less allowances of $3,070 and $3,059) 41,707 35,692
Inventories:
Raw materials 13,912 11,943
Work in process 7,185 8,512
Finished goods 33,995 31,086
--------- ---------
Total inventories 55,092 51,541
--------- ---------
Deferred income tax benefit 6,477 6,338
Other current assets 1,724 1,588
--------- ---------
Total current assets 105,732 95,159
--------- ---------
Property, plant and equipment 83,166 80,554
Less accumulated depreciation 46,857 43,603
--------- ---------
Net property, plant and equipment 36,309 36,951
--------- ---------
Deferred start-up costs 1,968 2,505
Other assets 4,094 5,103
--------- ---------
Total assets $ 148,103 $ 139,718
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current maturities of long-term obligations $ 5,000 $ 6,450
Accrued insurance 7,118 6,820
Accrued salaries and wages 4,541 5,688
Accounts payable 11,455 12,573
Accrued taxes 2,319 2,667
Accrued restructuring charges 1,955 --
Accrued expenses 8,974 7,706
--------- ---------
Total current liabilities 41,362 41,904
--------- ---------
Long-term liabilities:
Long-term debt 41,081 34,396
Retirement and postretirement obligations 7,013 7,155
Deferred income taxes 3,190 3,718
Other liabilities 875 1,442
--------- ---------
Total liabilities 93,521 88,615
--------- ---------
Stockholders' equity:
Common stock, $.01 par value: 66 67
Authorized 17,500,000 shares; issued 6,660,584 shares at
June 30, 1996 and 6,686,743 shares at December 31, 1995
Preferred stock, $.01 par value: -- --
Authorized 2,500,000 shares; none issued at June 30, 1996
Unearned compensation (437) (806)
Paid-in capital 52,089 52,445
Retained earnings 4,445 928
Translation adjustment (161) (111)
Adjustment for minimum pension liability (1,420) (1,420)
--------- ---------
Total stockholders' equity 54,582 51,103
--------- ---------
Total liabilities and stockholders' equity $ 148,103 $ 139,718
========= =========
The accompanying notes are an integral part of these statements.
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TRANSPRO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(amounts in thousands)
SIX MONTHS ENDED
JUNE 30,
1996 1995
-------- --------
Cash flows from operating activities:
Net income $ 4,176 $ 5,891
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 3,319 1,551
Amortization of deferred start-up costs 537 545
Joint venture income -- (1,137)
Change in:
Accounts receivable (6,015) (929)
Inventory (3,551) 597
Accounts payable (1,118) (172)
Accrued expenses 2,027 78
Other (504) 173
------- -------
Cash provided by (used in) operating activities (1,129) 6,597
------- -------
Cash flows from investing activities:
Capital expenditures (2,680) (1,214)
Sales and retirements of fixed assets 3 --
------- -------
Cash used in investing activities (2,677) (1,214)
------- -------
Cash flows from financing activities:
Dividends paid (661) --
Payment of short-term debt (3,950) --
Proceeds from borrowings 9,149 7
Increase in receivable from The Allen Group Inc. -- (5,247)
------- -------
Cash provided by (used in) financing activities 4,538 (5,240)
------- -------
Increase in cash and cash equivalents 732 143
Cash and cash equivalents:
Beginning of period -- 5,749
------- -------
End of period $ 732 $ 5,892
======= =======
Interest paid $ 1,529 $ 357
Taxes paid (net of refunds) $ 3,932 --
The accompanying notes are an integral part of these statements.
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TRANSPRO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - THE COMPANY
On September 29, 1995, TransPro, Inc. (the "Company") completed a
series of transactions pursuant to which the Company's sole stockholder, The
Allen Group Inc. ("Allen"), contributed (the "Contribution") to the Company
substantially all of the assets and liabilities of Allen's original equipment
radiator and fabricated metal products business (the "Automotive and Truck
Products Business"), as well as Allen's 50% ownership interest in GO/DAN
Industries ("GDI"), a 50/50 joint venture partnership between affiliates of
Allen and Handy & Harman. Immediately thereafter, Allen caused GDI to redeem the
outstanding ownership interest in GDI not already owned by Allen (the "GDI
Redemption"), thereby making GDI an indirect wholly owned partnership of the
Company. GDI produces replacement radiators and other heat transfer products for
the automotive and truck aftermarkets. The GDI Redemption was accounted for
under the purchase method of accounting.
In addition, Allen effected the distribution (the "Distribution"), on a
pro rata basis, of 100% of the outstanding shares of the Company's common stock
to the holders of record of Allen's common stock as of the close of business on
September 29, 1995 (the "Record Date"). The Distribution was made on the basis
of one share of the Company's common stock for every four shares of Allen's
common stock outstanding on the Record Date, which resulted in the distribution
of an aggregate of 6,621,349 shares of TransPro common stock.
In connection with the foregoing transactions, the Company also entered
into a Revolving Credit and Term Loan Agreement with The First National Bank of
Boston, as agent, and certain lenders named therein (the "Credit Agreement").
(See Note 3 for additional information.)
As a result of the Contribution, the Distribution, and the GDI
Redemption, TransPro now owns the Automotive and Truck Products Business and
100% of GDI, and is an independent publicly-traded company.
Operating results up to the date of the Distribution as presented
herein include all costs directly associated with the Automotive and Truck
Products Business operations, including all facilities and data processing
costs, and an allocation of Allen's compensation, insurance, interest and
pension plans. Results of operations do not include residual costs for certain
general corporate management and public reporting functions since there is no
reasonable basis for such an allocation. As such, these statements may not
necessarily reflect the combined income (loss) that would have resulted if the
Company had operated as an independent stand-alone company. As part of the
Distribution Agreement, TransPro entered into agreements with Allen relating to
interim administrative services, certain employee matters and other
miscellaneous matters. Any agreements entered into following the distribution
are on an arm's length basis.
NOTE 2 - INTERIM FINANCIAL STATEMENTS
The condensed consolidated financial information should be read in
conjunction with the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995 filed with the
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Securities and Exchange Commission on March 27, 1996, including those
financial statements and notes thereto included therein.
The 1995 three month and six month consolidated statements of income
reflect the earnings of Allen's Automotive and Truck Products Business and its
50% equity interest in GDI. The redemption of the remaining 50% of GDI not owned
by Allen was not concluded until September 29, 1995 and, therefore, GDI was
reported under the equity method of accounting through that date. The 1995
reported earnings results do not include the other 50% of GDI's income, the
incremental costs for TransPro to perform the necessary functions of a public
company and the incremental cost of borrowings to accomplish the redemption of
the other 50% of GDI.
The accompanying unaudited condensed 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
Article 10 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 in the
accompanying unaudited financial statements. All such adjustments are of a
normal recurring nature. The year end condensed consolidated balance sheet data
was derived from audited financial statements, but does not include all
disclosures required by generally accepted accounting principles.
NOTE 3 - FINANCING
In September 1995, the Company entered into the Credit Agreement with a
group of five banking institutions. The Credit Agreement provides for unsecured
borrowings or the issuance of letters of credit in an aggregate amount not to
exceed $75 million. The Credit Agreement expires in October, 2000, and is
comprised of a $50 million revolving credit facility (the "Revolver") and a $25
million term loan facility (the "Term Loan"). The Term Loan is payable in 20
equal quarterly installments over five years commencing December 31, 1995. The
Revolver and Term Loan will each bear interest at variable rates based on either
(i) a Eurodollar loan rate, plus an applicable margin based upon the ratio of
the Company's total funded debt to earnings before interest, taxes, depreciation
and amortization, or (ii) the prime lending rate, at the Company's option. At
June 30, 1996, borrowings were $21.3 million under the Term Loan and
approximately $12.4 million under the Revolver. The Company entered into a two
year interest rate swap agreement to fix the interest rate on $25 million of
borrowings through December 29, 1997.
NOTE 4 - ACQUISITIONS (SUBSEQUENT EVENTS)
In August 1996, the Company acquired the assets of Rahn Industries,
Inc. of Los Angeles, California. Rahn Industries is a manufacturer of
replacement automotive air conditioner condensers and evaporators for the
aftermarket as well as tube and fin heat exchangers for industrial applications.
Rahn Industries' 1995 sales were $12.3 million. The transaction was structured
with an initial purchase price of $5.2 million paid in cash at closing, with an
opportunity for an additional payout based upon the future earnings performance
of the business.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OPERATING RESULTS
This Management's Discussion and Analysis of Financial Condition and
Results of Operations covers the second quarter and first six months of 1995
when the Company was owned by Allen and operated as the Automotive and Truck
Products Business of Allen. In addition, during these periods the Company's 50%
ownership interest in GDI was accounted for under the equity method. Under this
method, the Company's share of net earnings (losses) of GDI was included as a
separate item in the consolidated statements of income of the Company. As a
result of the GDI Redemption, the financial results of GDI were reported on a
fully consolidated basis with those of the Company effective October 1, 1995.
QUARTER ENDED JUNE 30, 1996 VERSUS QUARTER ENDED JUNE 30, 1995
Net sales for the second quarter of 1996 were $69.8 million versus
$33.1 million for the second quarter of 1995. GDI, which was not included in
1995 results, contributed $36.1 million or 98% of the additional sales. Sales of
Crew Cabs to Ford Motor Company increased, but were partly offset by lower Dual
Rear Wheel assembly sales. Sales of heavy duty heat transfer products were down
slightly from last year.
Gross margins of 24.1% for the second quarter were up from the 19.2%
achieved in the second quarter of 1995. The increase was primarily the result of
the inclusion of GDI's aftermarket sales which yielded higher gross margins than
OEM sales. This was offset by higher metal costs (primarily copper) in both the
aftermarket and OEM heat transfer businesses and by increased manufacturing
costs in the OEM heat transfer business as a result of the relocation of
certain manufacturing operations, the start up of aluminum operations and
inefficiencies associated with lower volume.
Selling, general and administrative expenses totaled $10.1 million in
the second quarter 1996 versus $1.9 million in the second quarter 1995. The
majority of the increase is due to the inclusion of GDI. GDI, with its
nationwide distribution system and additional marketing and distribution
expenses which are not incurred in the OEM market, incurs higher selling
expenses. Also included in 1996 were additional costs associated with the
corporate office and being a publicly traded company.
The restructuring charge of approximately $1.0 million in the second
quarter resulted from the actions initiated to relocate an aftermarket heat
transfer manufacturing facility from Peru, Illinois to Mexico for cost reasons.
The charge primarily reflects severance and other termination related costs. The
one time costs of these actions and the restructuring actions initiated in the
first quarter are anticipated to be approximately $5.5 million on a pre-tax
basis. The majority of these costs is expected to be incurred in 1996. See
"Forward-Looking Statements -- Cautionary Factors" for a discussion of certain
factors to consider in connection with the foregoing forward-looking statements.
Net interest expense rose to $.8 million in 1996 versus $.1 million in
1995 due to the GDI Redemption, which resulted in approximately $25.0 million in
additional debt. Interest costs in 1995 were comprised of both interest on
outstanding industrial revenue bonds and an allocation of interest costs from
Allen, which are not necessarily indicative of the interest costs incurred if
TransPro was financed independently.
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The Company's effective tax rate of 40.7% for the second quarter of
1996 and 40.5% for the second quarter of 1995 is comprised of the U.S. federal
income tax rate plus estimated state and local income taxes.
SIX MONTHS ENDED JUNE 30, 1996 VERSUS SIX MONTHS ENDED JUNE 30, 1995
Net sales for the first six months of 1996 were $128.2 million versus
$66.6 million for the comparable period in 1995. GDI, which was not included in
1995 results, contributed $63.3 million of sales. OEM sales were down 3% from
last year. Sales of OEM heat transfer products were lower as a result of a
market softening in class 8 truck sales.
Gross margins in the first half of 1996 were 23.9% versus 19.1% for the
comparable period in 1995. The increase was primarily the result of the
inclusion of GDI's aftermarket sales which yielded higher gross margins than OEM
sales. Margins continue to be negatively impacted by lower OEM heat transfer
sales and higher metal costs year-over-year.
Selling, general and administrative expenses for the first six months
were $20.0 million versus $3.8 million for the comparable period in 1995.
The majority of the increase was due to the inclusion of GDI, which as a result
of the markets it services, has higher selling and distribution expenses not
incurred in the OEM market channel. Also included in 1996 were additional costs
associated with the corporate office and being a publicly-traded company.
The restructuring charges of approximately $2.1 million were recognized
in the first six months of 1996. The charges result from the actions previously
announced to consolidate the OEM and aftermarket heat transfer organizations; to
increase competitiveness and profitability, close the New Haven, Connecticut OEM
heat transfer plant and move all such manufacturing to Jackson, Mississippi, and
close the Peru, Illinois aftermarket heater plant and move all such
manufacturing to Mexico. The charge primarily reflects severance and other
personnel termination costs associated with these consolidations. The one-time
costs of these actions are anticipated to be approximately $5.5 million on a
pre-tax basis. The majority of the $5.5 million charge is expected to be
incurred during 1996. See "Forward-Looking Statements -- Cautionary Factors"
for a discussion of certain factors to consider in connection with the
foregoing forward-looking statements.
Net interest expense for the first six months of 1996 rose to $1.6
million versus $.2 million in 1995. The increase was due to the previously
discussed GDI Redemption which resulted in approximately $25 million in
additional debt.
The Company's effective tax rate of 40.5% was consistent with prior
years.
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
Prior to the GDI Redemption the financial position of the Company and
its cash flow and financial needs were intertwined with those of Allen. With the
exception of certain industrial revenue bonds, the Company's cash flow and
financial requirements were funded to or from Allen through intercompany
transactions on a daily basis.
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Immediately prior to the Distribution, the Company entered into a
Credit Agreement with a group of five banking institutions. The Credit Agreement
provides for unsecured borrowings or the issuance of letters of credit in an
aggregate amount not to exceed $75 million. The Credit Agreement is comprised of
a $50 million Revolver and a $25 million Term Loan. The Term Loan is payable in
20 equal quarterly installments over five years commencing December 31, 1995.
The Revolver and Term Loan each bear interest at variable rates based on either
(i) a Eurodollar loan rate, plus an applicable margin based upon the ratio of
the Company's total funded debt to earnings before interest, taxes, depreciation
and amortization, or (ii) the prime lending rate, at the Company's option. The
Company incurred approximately $25 million of borrowings under the Term Loan in
connection with the redemption of H&H's ownership interest in GDI (including
approximately $2 million of borrowings of GDI), and approximately $13 million of
borrowings under the Revolver to refinance existing indebtedness of GDI. The
Company believes that the Credit Agreement, along with cash flow from
operations, will be adequate to meet its anticipated capital expenditure and
working capital requirements for the foreseeable future.
During the first six months of 1996, TransPro had a cash outflow from
operating activities of $1.1 million. Seasonal increases in inventory and
accounts receivable relating to GDI were the primary causes.
The significant cash flow change between the first six months of 1996
and 1995 is primarily due to the inclusion of the respective GDI assets and
liabilities in the June 30, 1996 condensed consolidated balance sheet. Prior to
September 30, 1995, GDI was reported under the equity method of accounting and
the Company's share of GDI's assets was reported as an investment on the June
30, 1995 condensed consolidated balance sheet.
The Company paid a cash dividend of $.05 per common share on July 2,
1996 to holders of record at the close of business on June 4, 1996.
FORWARD-LOOKING STATEMENTS - CAUTIONARY FACTORS
Statements included in Management's Discussion and Analysis of
Financial Condition and Results of Operations which are not historical in
nature are forward-looking statements. Such forward-looking statements are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements regarding the Company's future
business prospects, revenues, orders, sales and liquidity are subject to
certain risks, uncertainties and other factors that could cause actual results
to differ materially from those projected or suggested in the forward-looking
statements, including but not limited to: business conditions and growth in the
general economy and automotive and truck business, the impact of competitive
products and pricing, changes in customer and product mix, failure to obtain
new customers, retain existing customers or change in the financial stability
of customers, change in the cost of raw materials, components or finished
products, and change in interest rates. In particular, statements regarding the
Company's recent restructuring actions are subject to: changes in moving costs,
severance costs or other logistical costs, delays in terminating production at
certain plants and moving machinery and equipment to new locations and greater
than anticipated manufacturing inefficiencies during the transition period.
PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated statements of
income for the quarter and six months ended June 30, 1995 reflect the effects on
the historical results of the Automotive and Truck Products Business of (i) the
GDI Redemption and the incurrence of approximately $25 million of indebtedness
in connection therewith, (ii) the distribution of the shares of Company stock to
Allen stockholders, and (iii) the addition of expenses to be incurred by the
Company when operating as an independent, publicly traded business. The
following 1995 statement of income has been prepared as if the transactions
described above occurred on January 1, 1995. These 1995 pro forma condensed
consolidated statements of income are unaudited and are not necessarily
indicative of the results of operations of the Automotive and Truck Products
Business had the transactions reflected therein actually been consummated on the
date assumed and are not necessarily indicative of the results of operations
that would have been obtained had the Company operated as an independent company
or of the Company's future performance as an independent entity. This
information should be read in conjunction with the historical condensed
consolidated financial statements and the notes thereto included elsewhere in
this report. This presentation is consistent with the pro forma financial
information in the Company's 1995 Annual Report.
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(amounts in thousands, except per share amounts)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
ACTUAL PRO FORMA ACTUAL PRO FORMA
1996 1995 1996 1995
-------- -------- -------- --------
Original equipment sales $ 33,762 $ 33,145 $ 64,863 $ 66,640
Aftermarket sales 36,087 31,151 63,324 56,693
-------- -------- -------- --------
Net sales 69,849 64,296 128,187 123,333
Cost of sales 53,036 47,510 97,547 92,576
-------- -------- -------- --------
Gross margin 16,813 16,786 30,640 30,757
Selling, general, and
administrative expenses 10,095 10,091 19,982 19,731
Restructuring costs 1,030 -- 2,051 --
-------- -------- -------- --------
Income from operations 5,688 6,695 8,607 11,026
Net interest expense 819 846 1,588 1,566
-------- -------- -------- --------
Income before taxes 4,869 5,849 7,019 9,460
Provision for income taxes 1,983 2,371 2,843 3,834
-------- -------- -------- --------
Net income $ 2,886 $ 3,478 $ 4,176 $ 5,626
======== ======== ======== ========
Earnings per common share $ .43 $ .53 $ .63 $ .85
======== ======== ======== ========
Average common shares
outstanding 6,588 6,621 6,601 6,621
======== ======== ======== ========
The EPS effect of the restructuring costs is $.10 during the second quarter and
$.19 during the first six months of 1996.
The pro forma condensed consolidated statement of income for the three
month and six month periods ended June 30, 1995 and the following discussion are
presented for informational purposes only and may not necessarily be indicative
of future performance of the company.
QUARTER ENDED JUNE 30, 1996 VERSUS QUARTER ENDED JUNE 30, 1995
Net sales for the second quarter of 1996 were $69.8 million versus
$64.3 million for the same period last year. Sales of heat transfer products in
the aftermarket increased in the second quarter, gaining almost 16% compared to
the same quarter of 1995. Total OEM sales increased by 2% during the quarter,
compared to the same quarter of 1995. OEM Contract Manufacturing Sales increased
during the quarter as a result of growth in sales of metal fabricated products
and sales to Ford of Crew Cabs. These advances in the OEM Contract Manufacturing
business were partially offset by a decline in sales of heat transfer products
to OEMs, as particularly the Class 8 truck manufacturers continue to be impacted
by lower production rates, reflecting softness in sales to their customers.
Gross margins of 24.1% decreased from the 26.1% achieved in the second
quarter of 1995. Increased competitive pricing pressures in the aftermarket
together with increased metal costs (primarily copper) year-over-year in both
the OEM and aftermarket heat transfer businesses negatively impacted margins.
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As previously discussed, the Company recognized a pre-tax restructuring
charge of approximately $1.0 million in 1996.
The Company's effective tax rate of 40.7% for the second quarter of
1996 and 40.5% for the second quarter of 1995 is comprised of the U.S. federal
income tax rate plus estimated state and local income taxes.
SIX MONTHS ENDED JUNE 30, 1996 VERSUS SIX MONTHS ENDED JUNE 30, 1995
Net sales for the first six months of 1996 were $128.2 million versus
$123.3 million for the comparable period in 1995. Increased sales of aftermarket
heat transfer products account for the majority of the sales increase. This was
offset slightly by a decrease in OEM heat transfer sales.
Gross margins in the first six months of 1996 were 23.9% versus 24.9%
for the comparable period in 1995. Increased metal costs year-over-year, lower
OEM heavy duty heat transfer volume and continued pricing pressures from
customers negatively impacted margins.
Selling, general and administrative expenses for the first six months
of 1996 were $20.0 million versus $19.7 million in 1995. The increase is
primarily due to the fact that actual costs associated with a corporate office
and operating as a public company were higher than the pro forma estimate used
for 1995.
As previously discussed, the Company recognized a pre-tax restructuring
charge of approximately $2.1 million in 1996.
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PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Annual Meeting of Stockholders of the Company held on April 25,
1996, two proposals were voted upon by the Company's stockholders. A brief
description of each proposal voted upon at the Annual Meeting and the number of
votes cast for, against and withheld, as well as the number of abstentions to
each proposal are set forth below. There were no broker non-votes with regard to
these proposals.
A vote was taken at the Annual Meeting for the election of seven
Directors of the Company to hold office until the next annual Meeting of
Stockholders of the Company and until their respective successors shall have
been duly elected. The aggregate number of shares of Common Stock voted in
person or by proxy for each nominee were as follows:
NOMINEE FOR WITHHELD
Barry R. Banducci 5,698,617 324,188
Henry P. McHale 5,694,012 328,793
William J. Abraham, Jr. 5,700,117 322,688
Philip Wm. Colburn 5,714,250 308,555
Paul R. Lederer 5,709,637 313,168
Sharon M. Oster 5,713,605 309,200
F. Alan Smith 5,707,852 314,953
A vote was taken at the Annual Meeting on the proposal to ratify the
appointment of Coopers & Lybrand L.L.P. as auditors for the Company for the
fiscal year ending December 31, 1996. The aggregate numbers of shares of Common
Stock in person or by proxy which: (a) voted for, (b) voted against or (c)
abstained from the vote on such proposal were as follows:
FOR AGAINST ABSTAIN
5,951,930 7,005 63,870
The foregoing proposals are described more fully in the Company's
definitive proxy statement dated March 25, 1996, filed with the Securities and
Exchange Commission pursuant to Section 14 (a) of the Securities Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
(27) Financial Data Schedule
b) There were no reports on Form 8-K filed during the quarter ended June 30,
1996.
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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.
TRANSPRO, INC.
(Registrant)
Date: August 12, 1996 By: /s/ Henry P. McHale
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Henry P. McHale
President, Chief Executive Officer
and Director
Date: August 12, 1996 By: /s/ John C. Martin, III
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John C. Martin, III
Vice President, Treasurer, Secretary,
and Chief Financial Officer
(Principal Financial Officer)
Date: August 12, 1996 By: /s/ Andrew J. Mazzarella
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Andrew J. Mazzarella
Vice President and Controller
(Principal Accounting Officer)
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