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 December 31, 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
Incorporation or Organization) Identification No.)
14320 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 3,736,000 shares of common stock outstanding as of
December 31, 1996.
TRIPLE S PLASTICS, INC.
INDEX
Page No.
Part I. Financial Information
Item 1. Condensed Financial Statements
Condensed Balance Sheets - 3
December 31, 1996 and March 31, 1996
Condensed Statements of Income - Three Months and 4
Nine Months Ended December 31, 1996 and 1995
Condensed Statements of Cash Flows - 5
Nine Months Ended December 31, 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 10
TRIPLE S PLASTICS, INC.
CONDENSED BALANCE SHEETS
(in thousands)
(Unaudited)
December 31 March 31
1996 1996
ASSETS
Current Assets:
Cash and cash equivalents $ 1,673 $ 1,382
Accounts receivable, less allowance of
$280 and $250 for possible losses 9,424 9,637
Inventories (Note 2) 5,502 4,718
Other 377 571
---------- ----------
Total Current Assets 16,976 16,308
Property, Plant and Equipment (Note 3) 34,991 32,998
Less accumulated depreciation and
amortization 10,083 8,070
---------- ----------
Net Property, Plant and Equipment 24,908 24,928
Other:
Cash restricted for capital expenditures
(Note 3) 3,744 3,827
Goodwill, net of accumulated amortization
of $421 and $393 727 755
Miscellaneous 293 332
---------- ----------
Total Other Assets 4,764 4,914
---------- ----------
$ 46,648 $ 46,150
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Note payable to bank __ $ 998
Accounts payable $ 3,845 2,170
Accrued compensation 881 997
Deferred mold revenue 947 866
Other accrued expenses 403 635
Current maturities of long-term debt (Note 3) 1,103 1,081
---------- ----------
Total Current Liabilities 7,179 6,747
Long-Term Debt, less current maturities (Note 3) 7,960 8,747
Deferred Income Taxes 1,675 1,675
---------- ----------
Total Liabilities 16,814 17,169
Shareholders' Equity:
Preferred stock, no par value, 1,000 shares
authorized, none issued -- --
Common stock, no par value, 10,200 shares
authorized, 3,736 and 3,729 shares issued
and outstanding 14,404 14,370
Retained earnings 15,430 14,611
---------- ----------
Total Shareholders' Equity 29,834 28,981
---------- ----------
$ 46,648 $ 46,150
========== ==========
See accompanying notes to financial statements.
TRIPLE S PLASTICS, INC.
CONDENSED STATEMENTS OF INCOME
(Unaudited)
(in thousands)
Three Months Nine Months
Ended Ended
December 31 December 31
1996 1995 1996 1995
Net Sales $ 15,766 $ 14,242 $ 46,998 $ 45,305
Cost of Sales 13,679 12,181 39,779 37,574
-------- --------- --------- ---------
Gross Profit 2,087 2,061 7,219 7,731
Operating Expenses:
Administrative and general 1,274 1,217 4,431 3,748
Selling 438 471 1,265 1,399
-------- --------- --------- ---------
Total Operating Expenses 1,712 1,688 5,696 5,147
-------- --------- --------- ---------
Operating Income 375 373 1,523 2,584
Interest Expense (Income):
Interest expense 136 145 437 351
Interest income (59) (39) (178) (139)
-------- --------- --------- ---------
Total Interest Expense 77 106 259 212
Income Before Income Taxes 298 267 1,264 2,372
Income Taxes 105 106 445 832
-------- --------- --------- ---------
Net Income $ 193 $ 161 $ 819 $ 1,540
======== ========= ========= =========
Earnings per Share of
Common Stock $ .05 $ .04 $ .22 $ .41
======== ========= ========= =========
Weighted Average Number of
Common Shares Outstanding 3,736 3,727 3,733 3,726
======== ========= ========= =========
TRIPLE S PLASTICS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Nine Months Ended
December 31
1996 1995
Operating Activities:
Net Income $ 819 $ 1,540
Adjustments to reconcile net income to
cash provided by (used in) operating
activities:
Depreciation and amortization 2,144 1,873
Changes in assets and liabilities:
Accounts receivable 213 150
Inventories (784) (2,601)
Accounts payable and accruals 2,114 (1,380)
Other (428) (99)
--------- ---------
CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES 4,078 (517)
INVESTING ACTIVITIES:
Capital expenditures (2,141) (5,201)
(Increase) decrease in restricted cash 83 (4,059)
Other __ (78)
--------- ---------
CASH USED IN INVESTING ACTIVITIES (2,058) (9,338)
--------- ---------
FINANCING ACTIVITIES:
Borrowings (payments) on note payable
to bank (998) 1,500
Proceeds from issuance of long-term debt __ 5,000
Proceeds from issuance of common stock, 34 21
net of fees
Principal payments on long-term debt (765) (440)
--------- ---------
CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES (1,729) 6,081
--------- ---------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS $ 291 $ (3,774)
========= =========
TRIPLE S PLASTICS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
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 December 31, 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
($000s)
Inventories are summarized as follows: December 31 March 31
1996 1996
Raw materials and packaging $ 2,607 $ 2,153
Finished goods and work-in-process 2,895 2,565
--------- --------
Total Inventories $ 5,502 $ 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 $48,000 to $80,000 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.
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 consumer products, information
technologies (principally computer and business equipment), 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 several hours 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 December 31, 1996
and 1995 and the nine months then ended, certain items from the Company's
Condensed Statements of Income expressed as a percentage of net sales, as well
as the change in those items for the respective periods.
Percentage of Net Sales
Three Months Nine Months
Ended Ended
December 31 December 31 % Change
1996 1995 1996 1995 3rd Qtr 9 Mos.
Net Sales 100.0% 100.0% 100.0% 100.0% 10.7% 3.7%
Cost of Sales 86.8 85.5 84.6 82.9 12.3 5.9
----- ----- ----- ----- ----- -----
Gross Profit 13.2 14.5 15.4 17.1 1.3 (6.6)
Operating Expenses 10.8 11.9 12.2 11.4 1.4 10.7
----- ----- ----- ----- ----- -----
Operating Income 2.4 2.6 3.2 5.7 .5 (41.1)
Interest Expense, net .5 .8 .5 .5 (27.4) 22.2
----- ----- ----- ----- ----- -----
Income Before
Income Taxes 1.9 1.8 2.7 5.2 11.6 (46.7)
Income Taxes .7 .7 1.0 1.8 (.9) (46.5)
----- ----- ----- ----- ----- -----
Net Income 1.2 1.1 1.7 3.4 19.9 (46.8)
===== ===== ===== ===== ===== =====
Net Sales
Net sales for the third quarter ended December 31, 1996 increased 11%
compared to the third quarter of the prior year. The sales increase was led by
sales to customers in the consumer products, telecommunications, automotive and
medical products markets. Sales to customers in the information technologies
market declined due to the expiration of certain significant sales programs in
the prior year, which have not been replaced. The overall increase in sales is
principally related to volume as no significant price increases occurred during
the third quarter of fiscal 1997.
Net sales for the first nine months of fiscal 1997 were up 4% compared to
the same period in the prior year. The sales increase was led by sales to
customers in the consumer products, telecommunications, automotive and medical
products markets. Sales to customers in the consumers products market comprised
the largest percentage of sales for the first nine months of the current year at
30% compared to 25% for the same period in the prior year. Furthermore, while
the information technologies market continues to be a strong market for the
Company, comprising 25% of the first nine month's sales in the current year, it
has declined from 35% of the first nine month's sales last year. The ten largest
customers of the Company for the first nine months of fiscal 1997, including at
least one in each of the primary business markets served, continue to account
for approximately 70% of the Company's net sales.
Cost of Sales
Cost of sales as a percentage of sales increased to 86.8% in the third
quarter of fiscal 1997 compared to 85.5% for the third quarter last year.
This increase in the cost of sales percentage relates principally to an
across-the-board production wage increase for molding plant personnel. This
increase was required to meet wage levels of local competitors and help maintain
the stability of the Company's work force.
For the first nine months of fiscal 1997 the cost of sales percentage is
higher than the previous year's comparable period at 84.6% compared to 82.9% in
the prior year. This increase generally relates to resin cost increases in the
last half of the prior year and increased depreciation and other fixed costs
relating to the Company's expansion in the second half of the previous year.
The Company's costs of raw material highly engineered resins has stabilized
over the first nine months of fiscal 1997 compared to resin costs at the end
of the previous year.
Operating Expenses
Operating expenses were 10.8% of sales in the third quarter of fiscal 1997
compared to 11.9% for the same period last year. For the first nine months of
fiscal 1997, these expenses were 12.2% of sales compared to 11.4% for the
comparable period last year. For the third quarter, the growth in operating
expenses was slowed to 1.4% comapred to the third quarter last year, but for
the first nine months of fiscal 1997, these costs are up 10.7% compared to the
comparable period one year ago. The increase in operating expenses for the first
nine months of the year relates to increased personnel costs and the
administrative costs relating to the Company's Georgetown, Texas facility, which
was added late last year.
While net interest expense was lower in the third quarter of fiscal 1997
than the comparable period one year ago, for the first nine months of fiscal
1997 net interest expense has increased 22%. This increase 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 facility.
Income Taxes
For the first nine months of fiscal 1997, the income tax rate is 35.2%,
which is comparable to the rate for the same period last year of 35.1%.
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 nine months of fiscal 1997, the Company generated $4.1 million
of cash from operations which was used to pay off debt and acquire $2.1 million
of capital equipment. Since the end of the previous fiscal year, the Company's
cash and cash equivalents have risen by $.3 million.
Accounts receivable is actually $.2 million lower at December 31, 1996 than
it was at the end of the prior fiscal year and days sales outstanding in
accounts receivable increased slightly to 58 days compared to 57 days at the end
of the prior year. Inventories have increased 17% at December 31, 1996 compared
to the prior year end, but still only represent 34 days in inventory, which
compares favorably to the figure of 50 days one year ago.
The Company still has $3.7 million available from the $5.0 million
industrial revenue bond issued late last year. In addition, the Company has a
$5.0 million unsecured line of credit agreement with the bank, which has not
been drawn on at December 31, 1996. Management believes that these sources of
cash, along with internally generated cash, will be adequate to fund future
operating and capital requirements.
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: February 13, 1997 _ROBERT D. MONK___________________
Robert D. Monk
Chief Financial Officer
Date: February 13, 1997 _CATHERINE A. TAYLOR______________
Catherine A. Taylor
Corporate Controller (Chief Accounting Officer)