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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 September 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 October 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.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Income for the three months ended
September 30, 1996 and 1995 and the nine months ended September 30, 3
1996 and 1995
Condensed Consolidated Balance Sheets at September 30, 1996 and
December 31, 1995 4
Condensed Consolidated Statements of Cash Flows for the nine months ended
September 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 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 NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
------------------------ -------------------------
SALES $ 72,501 $ 28,690 $ 200,688 $ 95,330
COST OF SALES 56,082 24,721 153,553 78,627
-------- -------- --------- --------
GROSS MARGIN 16,419 3,969 47,135 16,703
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 9,746 2,014 29,728 5,778
PLANT AND BUSINESS CONSOLIDATION COSTS 549 -- 2,676 --
-------- -------- --------- --------
INCOME FROM OPERATIONS 6,124 1,955 14,731 10,925
EQUITY IN EARNINGS OF GDI -- 1,358 -- 2,495
INTEREST EXPENSE (718) (171) (2,315) (642)
INTEREST INCOME 39 92 48 356
-------- -------- --------- --------
INCOME BEFORE TAXES 5,445 3,234 12,464 13,134
PROVISION FOR INCOME TAXES 2,205 1,310 5,048 5,319
-------- -------- --------- --------
NET INCOME $ 3,240 $ 1,924 $ 7,416 $ 7,815
======== ======== ========= ========
EARNINGS PER COMMON SHARE $ .49 $ .29 $ 1.12 $ 1.18
======== ======== ========= ========
CASH DIVIDENDS PER COMMON SHARE $ .05 -- $ .15 --
======== ======== ========= ========
AVERAGE COMMON SHARES
OUTSTANDING 6,591 6,621 6,598 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 periods.
The EPS effect of the plant and business consolidation costs is $.05 during the
third quarter and $.24 during the first nine months of 1996.
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TRANSPRO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share amounts)
SEPTEMBER 30, DECEMBER 31,
ASSETS 1996 1995
------------- ------------
(Unaudited)
Current assets:
Cash and cash equivalents $ 995 $ --
Accounts receivable (less allowances of $ 3,545 and $3,059) 44,790 35,692
Inventories:
Raw materials 13,467 11,943
Work in process 7,074 8,512
Finished goods 30,609 31,086
--------- ---------
Total inventories 51,150 51,541
--------- ---------
Deferred income tax benefit 6,050 6,338
Other current assets 1,333 1,588
--------- ---------
Total current assets 104,318 95,159
--------- ---------
Property, plant and equipment 85,716 80,554
Less accumulated depreciation 49,439 43,603
--------- ---------
Net property, plant and equipment 36,277 36,951
--------- ---------
Deferred start-up costs 1,707 2,505
Goodwill 2,543 --
Other assets 3,924 5,103
--------- ---------
Total assets $ 148,769 $ 139,718
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 12,797 $ 12,573
Notes payable and current maturities of long-term obligations 5,000 6,450
Accrued insurance 6,480 6,820
Accrued salaries and wages 5,130 5,688
Accrued taxes 2,684 2,667
Accrued plant and business consolidation charges 1,849 --
Accrued expenses 7,980 7,706
--------- ---------
Total current liabilities 41,920 41,904
--------- ---------
Long- term liabilities:
Long-term debt 38,749 34,396
Retirement and postretirement obligations 7,028 7,155
Deferred income taxes 2,795 3,718
Other liabilities 809 1,442
--------- ---------
Total liabilities 91,301 88,615
--------- ---------
Stockholders' equity:
Common stock, $.01 par value: 66 67
Authorized 17,500,000 shares; issued 6,660,584 shares at
September 30, 1996 and 6,686,743 shares at December 31, 1995
Preferred stock, $.01 par value: -- --
Authorized 2,500,000 shares; none issued at September 30, 1996 and
December 31, 1995
Unearned compensation (397) (806)
Paid-in capital 52,075 52,445
Retained earnings 7,356 928
Translation adjustment (212) (111)
Adjustment for minimum pension liability (1,420) (1,420)
--------- ---------
Total stockholders' equity 57,468 51,103
--------- ---------
Total liabilities and stockholders' equity $ 148,769 $ 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)
NINE MONTHS ENDED
SEPTEMBER 30,
1996 1995
------- --------
Cash flows from operating activities:
Net income $ 7,416 $ 7,815
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 5,704 3,214
Joint venture income -- (2,495)
Change in:
Accounts receivable (6,753) 1,467
Inventory 1,617 334
Accounts payable (865) (1,191)
Accrued expenses 1,062 (319)
Joint venture receivable -- 857
Other 67 971
------- --------
Cash provided by operating activities 8,248 10,653
------- --------
Cash flows from investing activities:
GDI redemption -- (23,028)
Capital expenditures (3,984) (1,825)
Sales and retirements of fixed assets 76 8
Acquisition of Rahn Industries, Inc.,
net of cash acquired (5,205) --
------- --------
Cash used in investing activities (9,113) (24,845)
------- --------
Cash flows from financing activities:
Dividends paid (990) --
Payment of short-term debt (5,200) --
Proceeds from borrowings 8,050 37,672
Repayments of long-term debt -- (13,832)
Increase in receivable from The Allen Group Inc. -- (11,395)
------- --------
Cash provided by financing activities 1,860 12,445
------- --------
Increase (decrease) in cash and cash equivalents 995 (1,747)
Cash and cash equivalents:
Beginning of period -- 5,749
------- --------
End of period $ 995 $ 4,002
======= ========
Interest paid $ 2,396 $ 513
Taxes paid (net of refunds) $ 8,418 --
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 GDI Redemption and the
Distribution, 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 Securities and Exchange Commission on
March 27, 1996, including those financial statements and notes thereto included
therein.
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The 1995 three month and nine month condensed 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. Certain items reported in prior condensed consolidated
financial statements have been reclassified to conform with the presentation of
the current condensed consolidated financial statements. 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
September 30, 1996, borrowings were $20.0 million under the Term Loan and
approximately $11.3 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. Outstanding letters of credit totaled
approximately $18.4 million at September 30, 1996.
NOTE 4 - ACQUISITIONS
In August 1996, the Company acquired substantially all of the assets of
and assumed certain specified liabilities of Rahn Industries, Inc. ("Rahn") of
Los Angeles, California. Rahn is a manufacturer of replacement automotive air
conditioner condensers and evaporators for the Aftermarket and tube and fin heat
exchangers for industrial applications. Rahn reported sales of $12.3 million for
the twelve months ended December 31, 1995. 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. The initial purchase price was financed by borrowing under the
Credit Agreement.
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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 includes comparisons of the third quarter and first nine
months of 1996 with the third quarter and first nine months of 1995 when the
Company was owned by Allen and operated as the Automotive and Truck Products
Business of Allen. In addition, during the 1995 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 SEPTEMBER 30, 1996 VERSUS QUARTER ENDED SEPTEMBER 30, 1995
Net sales for the third quarter of 1996 were $72.5 million versus $28.7
million for the third quarter of 1995, an increase of $43.8 million. GDI was not
included in 1995 sales results and contributed $40.8 million of the additional
sales in 1996 including $1.8 million of automotive air conditioning condenser
sales resulting from the Rahn acquisition. Sales of OEM contract manufacturing
products increased $3.2 million or 16% as a result of higher shipments of Crew
Cabs to Ford Motor Company as well as growth in van interior conversions. Sales
of other OEM products declined slightly reflecting primarily lower sales of heat
transfer products to domestic heavy duty truck manufacturers consistent with
continued weakness in that market. Higher sales of charge air coolers were
offset by a decline in sales of off-highway heat transfer products.
Gross margins of 22.6% for the third quarter were up from the 13.8%
achieved in the third quarter of 1995. The increase was primarily the result of
the inclusion of GDI's Aftermarket sales which generally yield higher gross
margins than OEM sales in order to support GDI's national Aftermarket
distribution system. Higher margins in the OEM contract manufacturing business
were partially offset by lower margins in the OEM heat transfer business.
Selling, general and administrative expenses totaled $9.7 million in
the third quarter 1996 versus $2.0 million in the third quarter 1995. The
majority of the increase is due to the inclusion of GDI on a fully consolidated
basis in the third quarter of 1996. GDI's nationwide distribution system and
related marketing expenses produce substantially higher selling expenses than
those incurred in the OEM business.
The Company recorded approximately $.5 million in plant and business
consolidation costs in the third quarter of 1996. The total cost of the plant
and business consolidation actions is anticipated to be approximately $5.5
million on a pre-tax basis. The majority of these costs are expected to be
incurred during 1996 and in the first part of 1997. 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 $.6 million to $.7 million in the third
quarter 1996 versus $.1 million in the third quarter of 1995 due to the
approximately $25.0 million in additional debt incurred for the GDI Redemption.
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 which would be incurred if TransPro
was financed independently.
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The Company's effective tax rate of 40.5% for the third quarter of 1996
and the third quarter of 1995 is comprised of the U.S. federal income tax rate
plus the estimated aggregate effective rate for state and local income taxes.
NINE MONTHS ENDED SEPTEMBER 30, 1996 VERSUS NINE MONTHS ENDED SEPTEMBER 30, 1995
Net sales for the first nine months of 1996 were $200.7 million versus
$95.3 million for the comparable period in 1995, an increase of $105.4 million.
Sales for 1995 did not include GDI, which contributed $104.1 million of the
additional sales in 1996 including $1.8 million of sales of automotive air
conditioning condensers resulting from the Rahn acquisition. OEM contract
manufacturing product sales increased $3.1 million principally due to higher
shipments of Crew Cabs to Ford Motor Company. OEM heat transfer products sales
declined $1.8 million reflecting the continued softness in the domestic heavy
duty truck market. The increase in sales of charge air coolers were
essentially offset by lower sales of off-highway heat transfer products.
Gross margins in the first nine months of 1996 were 23.5% versus 17.5%
for the comparable period in 1995. The increase was primarily the result of the
inclusion of GDI's Aftermarket sales which yield higher gross margins than OEM
sales in order to support GDI's national Aftermarket distribution system. This
increase was partially offset by lower margins in the OEM heat transfer business
as reduced production in response to the continued softness in the heavy duty
truck and off-highway equipment markets led to lower overhead absorption. Gross
margins in the OEM contract manufacturing business were essentially unchanged
year to year.
Selling, general and administrative expenses for the first nine months
of 1996 were $29.7 million versus $5.8 million for the comparable period in
1995. The majority of the increase was due to the inclusion of GDI which has
higher selling and distribution expenses than the OEM business due to GDI's
nationwide distribution system. Selling, general and administrative expenses in
1996 also included costs associated with the Company's operation as an
independent, publicly traded corporation.
Plant and business consolidation costs of approximately $2.7 million
were recognized in the first nine months of 1996. The costs result from the
previously announced actions 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 heat transfer
plant and move all such manufacturing to Mexico. The charge primarily reflects
severance and other personnel termination costs associated with these
consolidations. The total cost of these actions is 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 and in the first part of 1997. 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 of $2.3 million for the first nine months of 1996
rose $2.0 million versus $.3 million net interest expense in the comparable
period in 1995. The increase was due to the previously discussed GDI Redemption
which required approximately $25 million in additional borrowings under the
Credit Agreement.
The Company's effective tax rate was 40.5% and was consistent with
prior years.
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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.
Immediately prior to the Distribution, 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 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 Handy & Harman's ownership interest in GDI
(including approximately $2 million of GDI indebtedness to Handy & Harman), and
approximately $13 million of borrowings under the Revolver to refinance other
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 nine months of 1996, TransPro generated positive cash
flow of $8.2 million from operating activities. Net income plus depreciation and
amortization equaled $13.1 million and was partially offset by a $6.8 million
increase in accounts receivable, excluding the increase in the level of accounts
receivable attributable to the Rahn acquisition. The increase reflects higher
customer balances normally experienced at the end of the busy third quarter
selling season compared to year end balances. Excluding the increase in the
level of inventory as a result of the Rahn acquisition, inventory declined from
December 31, 1995 and contributed $1.6 million to positive operating cash flow.
Capital spending during the first nine months of 1996 totaled $4.0
million. In addition, $5.2 million was used for the Rahn acquisition.
The Company paid a cash dividend of $.3 million or $.05 per common
share on October 9, 1996 to holders of record at the close of business on
September 25, 1996. During the first nine months of 1996, the Company paid cash
dividends totaling $1.0 million or $.15 per common share.
During the first three quarters of 1996, borrowings under the Credit
Agreement increased by approximately $2.9 million.
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
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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 costs associated with the Company's recent plant and
business consolidation 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 three months and nine months ended September 30, 1995 reflect the
estimated 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 the Company's common stock to Allen stockholders, and (iii) the
additional 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 on Form 10-K.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(amounts in thousands, except per share amounts)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
ACTUAL PRO FORMA ACTUAL PRO FORMA
1996 1995 1996 1995
--------------------- -----------------------
Original equipment sales $31,725 $28,690 $ 96,588 $ 95,330
Aftermarket sales 40,776 38,989 104,100 95,682
------- ------- -------- --------
Net sales 72,501 67,679 200,688 191,012
Cost of sales 56,082 52,905 153,553 145,481
------- ------- -------- --------
Gross margin 16,419 14,774 47,135 45,531
Selling, general, and
administrative expenses 9,746 11,331 29,728 31,062
Plant and business consolidation
costs 549 -- 2,676 --
------- ------- -------- --------
Income from operations 6,124 3,443 14,731 14,469
Net interest expense 679 638 2,267 2,204
------- ------- -------- --------
Income before taxes 5,445 2,805 12,464 12,265
Provision for income taxes 2,205 1,125 5,048 4,959
------- ------- ======== ========
Net income $ 3,240 $ 1,680 $ 7,416 $ 7,306
======= ======= ======== ========
Earnings per common share $ .49 $ .25 $ 1.12 $ 1.10
======= ======= ======== ========
Average common shares
outstanding 6,591 6,621 6,598 6,621
======= ======= ======== ========
The EPS effect of the plant and business consolidation costs is $.05 during the
third quarter and $.24 during the first nine months of 1996.
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The pro forma condensed consolidated statement of income for the three
month and nine month periods ended September 30, 1995 and the following
discussion are presented for informational purposes only and may not necessarily
be indicative of the future performance of the company.
QUARTER ENDED SEPTEMBER 30, 1996 VERSUS QUARTER ENDED SEPTEMBER 30, 1995
Net sales for the third quarter of 1996 were $72.5 million versus $67.7
million for the same period last year. Sales of OEM contract manufacturing
products increased during the quarter as a result of higher shipments of Crew
Cabs to Ford Motor Company and growth in van interior conversions. Sales of
other OEM products declined reflecting primarily lower sales of heat transfer
products to domestic heavy duty truck manufacturers consistent with their
continued lower production rates. Higher sales of charge air coolers were
offset by lower sales off-highway heat transfer products. Sales of heat
transfer products in the Aftermarket increased $1.8 million in the third
quarter, primarily as a result of sales to the automotive Aftermarket of air
conditioning condensers arising from the Rahn Industries acquisition.
In the third quarter of 1996, gross margins increased to 22.6% from the
21.8% achieved in the third quarter of 1995. Higher margins in the Aftermarket
and OEM contract manufacturing businesses were partially offset by lower margins
in the OEM heat transfer business.
Selling, general and administrative ("SG&A") expenses totaled $9.7
million in the third quarter of 1996 versus $11.3 million in the third quarter
of 1995. Part of the improvement quarter-to-quarter reflects unusually high SG&A
costs in the third quarter of 1995 immediately preceding the spin-off of the
Company from Allen.
As previously discussed, the Company recorded pre-tax plant and
business consolidation costs of approximately $.5 million in the third quarter
of 1996.
The Company's effective tax rate of 40.5% for the third quarter of 1996
and 40.1% for the third quarter of 1995 is comprised of the U.S. federal income
tax rate plus the estimated aggregate effective rate for state and local income
taxes.
NINE MONTHS ENDED SEPTEMBER 30, 1996 VERSUS NINE MONTHS ENDED SEPTEMBER 30, 1995
Net sales for the first nine months of 1996 were $200.7 million versus
$191.0 million for the comparable period in 1995. Sales of Aftermarket heat
transfer products increased $8.4 million or 9% including $1.8 million of sales
of replacement air conditioner condensers arising from the Rahn acquisition.
Gross margins in the first nine months of 1996 of 23.5% were
essentially unchanged compared with gross margins of 23.8% in the same period in
1995.
Selling, general and administrative expenses for the first nine months
of 1996 were $29.7 million versus $31.1 million for the first nine months of
1995 reflecting higher than usual SG&A costs in the third quarter of 1995
immediately preceding the spin-off of the Company from Allen.
As previously discussed, the Company recognized pre-tax plant and
business consolidation costs of approximately $2.7 million during the first nine
months of 1996.
The Company's effective tax rate of 40.5% for the first nine months of
1996 and 40.4% for the first nine months of 1995 is comprised of the U.S.
federal income tax rate plus the estimated aggregate effective rate for state
and local income taxes.
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PART II. OTHER INFORMATION
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
September 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: November 12, 1996 By: /s/ Henry P. McHale
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Henry P. McHale
President, Chief Executive Officer and Director
Date: November 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: November 12, 1996 By: /s/ Timothy E. Coyne
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Timothy E. Coyne
Vice President and Controller
(Principal Accounting Officer)
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