SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(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: 0-23474
Triple S Plastics, Inc.
(Exact name of registrant as specified in its charter)
Michigan 38-1895876
(State or other Jurisdiction of (I.R.S.Employer
Incorporatin or Organization) Identification No.)
14320 S. Portage Road, Vicksburg, Michigan 49097-0905
(Address of principal executive offices) (Zip Code)
(616) 649-0545
(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 3,730,467 shares of common stock outstanding as of
June 30, 1996.
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TRIPLE S PLASTICS, INC.
INDEX
Page No.
Part I. Financial Information
Item 1. Condensed Financial Statements
Condensed Balance Sheets - 3
June 30, 1996 and March 31, 1996
Condensed Statements of Income - Three Months 4
Ended June 30, 1996 and 1995
Condensed Statements of Cash Flows - 5
Three Months Ended June 30, 1996 and 1995
Notes to Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 9
2
TRIPLE S PLASTICS, INC.
CONDENSED BALANCE SHEETS
(in thousands)
(Unaudited)
June 30 March 31
1996 1996
ASSETS
Current Assets:
Cash and cash equivalents $ 1,248 $ 1,382
Accounts receivable, less allowance of
$265 and $250 for possible losses 9,540 9,637
Inventories (Note 2) 5,104 4,718
Other 292 571
-------- --------
Total Current Assets 16,184 16,308
Property, Plant and Equipment (Note 3) 33,826 32,998
Less accumulated depreciation and amortization 8,737 8,070
-------- --------
Net Property, Plant and Equipment 25,089 24,928
Other:
Cash restricted for capital expenditures (Note 3) 3,871 3,827
Goodwill, net of accumulated amortization of
$402 and $393 746 755
Miscellaneous 330 332
-------- --------
Total Other Assets 4,947 4,914
-------- --------
$ 46,220 $ 46,150
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Note payable to bank __ $ 998
Accounts payable $ 3,609 2,170
Accrued compensation 979 997
Deferred mold revenue 943 866
Other accrued expenses 310 635
Current maturities of long-term debt (Note 3) 1,081 1,081
--------- --------
Total Current Liabilities 6,922 6,747
Long-Term Debt, less current maturities (Note 3) 8,548 8,747
Deferred Income Taxes 1,675 1,675
--------- --------
Total Liabilities 17,145 17,169
Shareholders' Equity:
Preferred stock, no par value, 1,000 shares
authorized, none issued -- --
Common stock, no par value, 10,200 shares
authorized, 3,730 and 3,729 shares
issued and outstanding 14,380 14,370
Retained earnings 14,695 14,611
--------- --------
Total Shareholders' Equity 29,075 28,981
--------- --------
$ 46,220 $ 46,150
See accompanying notes to financial statements.
3
TRIPLE S PLASTICS, INC.
CONDENSED STATEMENTS OF INCOME
(Unaudited)
(in thousands, except per share amounts)
Three Months Ended
June 30
1996 1995
Net Sales $ 14,516 $ 14,945
Cost of Sales 12,432 11,919
--------- ---------
Gross Profit 2,084 3,026
Operating Expenses:
Administrative and general 1,446 1,137
Selling 437 443
--------- ---------
Total Operating Expenses 1,883 1,580
Operating Income 201 1,446
Interest Expense (Income):
Interest expense 131 101
Interest income (59) (65)
--------- ---------
Total Interest Expense 72 36
Income Before Income Taxes 129 1,410
Income Taxes 45 485
--------- ---------
Net Income $ 84 $ 925
========= =========
Earnings per Share of Common Stock $ .02 $ .25
========= =========
Weighted Average Number of Common Shares Outstanding 3,730 3,725
Outstanding ========= =========
4
TRIPLE S PLASTICS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Three Months Ended
June 30
1996 1995
Operating Activities:
Net Income $ 84 $ 925
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 676 567
Changes in assets and liabilities:
Accounts receivable 97 142
Inventories (386) (1,504)
Accounts payable and accruals 1,439 866
Other (28) (27)
-------- --------
CASH PROVIDED BY OPERATING ACTIVITIES 1,882 969
INVESTING ACTIVITIES:
Capital expenditures (829) (1,298)
Proceeds from sale of equipment __ 8
-------- --------
CASH USED IN INVESTING ACTIVITIES (829) (1,290)
FINANCING ACTIVITIES:
Payments on note payable to bank (998) __
Proceeds from issuance of common stock,
net of fees 10 7
Principal payments on long-term debt (199) (642)
-------- --------
CASH USED IN FINANCING ACTIVITIES (1,187) (635)
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS $ (134) $ (955)
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TRIPLE S PLASTICS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited, in thousands)
1. Presentation of Interim Information
In the opinion of the management of Triple S Plastics, Inc. (the Company),
the accompanying unaudited condensed financial statements include all normal
adjustments considered necessary to present fairly the financial position of
the Company as of June 30, 1996, and the results of its operations for the
periods shown. Interim results are not necessarily indicative of results for a
full year.
The condensed 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. Inventories
Inventories are summarized as follows: June 30 March 31
1996 1996
Raw materials and packaging $ 2,274 $ 2,153
Finished goods and work-in-process 2,830 2,565
-------- --------
Total Inventories $ 5,104 $ 4,718
======== ========
3. Long-Term Debt
During October, 1995, the Company received the proceeds of a $5 million
Georgetown Industrial Development Corporation Industrial Revenue Bond Series
1995 maturing in monthly installments ranging from $48 to $80 through 2002.
Interest is fixed at 6.56% through September, 2000 and thereafter at a rate
equal to 77% of the bank's base lending rate. The bonds are collateralized by
machinery and equipment acquired with the proceeds. The proceeds from the bond
issue, which are restricted for investment in machinery and equipment for the
Texas facility, are classified as non-current restricted cash.
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(in thousands)
Overview
The Company designs and builds molds and manufactures complex, highly
engineered thermoplastic molded components based on customers' specifications
and orders. Its customers are primarily in the information technologies
(principally computer and business equipment), consumer products, automotive,
medical/pharmaceutical, telecommunications and electronics markets. The Company
considers both the manufacture of molded products and mold sales to be an
integral part of its business. Typically the Company manufactures molds in
2 - 16 weeks, after which the Company begins producing injection molded
components. These production runs can range from as short as one day to as
long as several months. The Company's fiscal year end is March 31.
Results of Operations
The following table sets forth, for the three months ended June 30,1996
and 1995, certain items from the Company's Condensed Statements of Income
expressed as a percentage of net sales.
Three months ended
June 30
1996 1995
Net sales 100.0% 100.0%
Cost of sales 85.6 79.8
----- -----
Gross profit 14.4 20.2
Operating expenses 13.0 10.6
----- -----
Operating income 1.4 9.6
Interest expense, net 0.5 0.2
----- -----
Income before income taxes 0.9 9.4
Income taxes 0.3 3.2
----- -----
Net income 0.6% 6.2%
===== =====
Net Sales
Net Sales for the first quarter of fiscal 1997 were 3% lower than the first
quarter of fiscal 1996. Even though sales to a new customer in the
telecommunications market provided 10% sales growth, this could not overcome
a 39% decrease in sales to the information technologies market due to the
expiration of customer programs which had strong sales in the prior year.
Management believes this unfavorable sales comparison in the information
technologies market will continue for the balance of the year, though not to
the same extent as the first quarter. Consumer products market sales decreased
10% in the quarter but this was nearly offset by increased sales in the medical
and automotive markets of 24% and 8%, respectively. The overall change in sales
is related to volume as no significant price increases occurred during the first
quarter of fiscal 1997. The ten largest customers of the Company for the first
quarter of fiscal 1997, including at least one in each of the primary business
markets served, accounted for approximately 70% of the Company's net sales in
that quarter.
7
Cost of Sales
Cost of sales increased 4% in the first quarter of fiscal 1997 compared to
the prior year first quarter and, as a percentage of sales, increased to 85.6%
compared to 79.8% in the prior year quarter. The higher cost of sales
percentage in fiscal 1997 is due to increased labor costs and increased
depreciation and other fixed costs related to the Company's expansion in the
second half of the previous year. Management is focusing on new sales
initiatives which will take advantage of the Company's available capacity to
produce increased sales and contribution toward covering its increased fixed
costs.
Operating Expenses
Operating expenses increased 19% in the first quarter of fiscal 1997 compared
to the first quarter of the prior year. This increase in operating expenses
principally relates to increased personnel costs and administrative costs
relating to the Company's Georgetown, Texas facility which was added late last
year.
The increase in interest expense relates to the interest on the $5 million
industrial revenue bond, which was issued late last year to finance equipment
for the Company's Georgetown, Texas plant.
Income Taxes
The Company's effective income tax rate increased slightly to 34.9% in the
first quarter of fiscal 1997 compared to 34.4% in the prior year first quarter.
Liquidity and Capital Resources
The Company's primary cash requirements are for operating expenses and
capital expenditures. Historically, the Company's prime sources of cash have
been from operations, bank borrowings and industrial revenue bonds.
In the first quarter of fiscal 1997, the Company generated $1.9 million
of cash from operations which was used to pay off debt and acquire $829 of
capital equipment.
Accounts receivable decreased by $97 at June 30, 1996 compared to the prior
fiscal year end, and represented 56 days sales compared to 57 days at the end
of the prior fiscal year, and 63 days one year ago. Inventories increased by
$386 at June 30, 1996 compared to the prior fiscal year end, but still
represents only 34 days in inventory, which compares favorably to the 39 day
figure one year ago.
The Company still has $3.9 million available from the $5.0 million industrial
revenue bond issued late last year. In addition, the Company has a
$2.5 million term loan available from a bank and a $2.0 million unsecured line
of credit agreement with a bank, neither of which has been drawn on at
June 30, 1996. Management believes that these sources of cash, along with
internally generated cash, will be adequate to fund future operating and
capital requirements.
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Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27 - Financial Data Schedule
(b) No reports were filed on Form 8-K during this quarter.
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.
TRIPLE S PLASTICS, INC.
(Registrant)
Date: August 15, 1996 __Robert D. Monk__________________________
Robert D. Monk
Chief Financial Officer
Date: August 15, 1996 __Catherine A. Taylor_____________________
Catherine A. Taylor
Controller (Chief Accounting Officer)
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