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 September 30, 1997
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 Identification No.)
Incorporation or Organization)
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 3,739,400 shares of common stock outstanding as of
September 30, 1997.
TRIPLE S PLASTICS, INC.
INDEX
Page No.
Part I. Financial Information
Item 1. Condensed Financial Statements
Condensed Balance Sheets - 3
September 30, 1997 and March 31, 1997
Condensed Statements of Income - Three Months and 4
Six Months Ended September 30, 1997 and 1996
Condensed Statements of Cash Flows - 5
Six Months Ended September 30, 1997 and 1996
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
TRIPLE S PLASTICS, INC.
CONDENSED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
Sept. 30 March 31
1997 1997
-------- --------
ASSETS
Current Assets:
Cash and cash equivalents $ 2,723 $ 2,681
Accounts receivable, less allowance of
$255 for possible losses 10,972 11,147
Inventories (Note 2) 4,327 4,833
Other 198 329
-------- --------
Total Current Assets 18,220 18,990
Property, Plant and Equipment (Note 3) 37,496 35,303
Less accumulated depreciation and amortization 12,099 10,716
-------- --------
Net Property, Plant and Equipment 25,397 24,587
Other:
Cash restricted for capital expenditures (Note 3) 3,842 3,787
Goodwill, net of accumulated amortization of
$450 and $431 698 717
Miscellaneous 178 242
-------- --------
Total Other Assets 4,718 4,746
-------- --------
$ 48,335 $ 48,323
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 4,670 $ 4,540
Accrued compensation 1,035 1,096
Deferred mold revenue 732 622
Other accrued expenses 587 647
Current maturities of long-term debt 1,988 1,949
-------- --------
Total Current Liabilities 9,012 8,854
Long-Term Debt, less current maturities 6,396 7,251
Deferred Income Taxes 1,865 1,865
-------- --------
Total Liabilities 17,273 17,970
Shareholders' Equity:
Preferred stock, no par value, 1,000,000
shares authorized, none issued -- --
Common stock, no par value, 10,200,000
shares authorized, 3,739,400 and 3,736,941
shares issued and outstanding 14,429 14,413
Retained earnings 16,633 15,940
-------- --------
Total Shareholders' Equity 31,062 30,353
-------- --------
$ 48,335 $ 48,323
======== ========
See accompanying notes to financial statements.
TRIPLE S PLASTICS, INC.
CONDENSED STATEMENTS OF INCOME
(Unaudited)
(in thousands, except per share amounts)
Three Months Ended Six Months Ended
September 30 September 30
1997 1996 1997 1996
--------- --------- --------- ---------
Net Sales $ 16,399 $ 16,716 $ 33,516 $ 31,232
Cost of Sales 13,845 13,668 27,860 26,100
--------- --------- --------- ---------
Gross Profit 2,554 3,048 5,656 5,132
Total selling, general &
administrative expenses 2,060 2,101 4,403 3,984
--------- --------- --------- ---------
Operating Income 494 947 1,253 1,148
Interest Expense (Income):
Interest expense 156 170 316 301
Interest income (63) (60) (126) (119)
--------- --------- --------- ---------
Net Interest Expense 93 110 190 182
--------- --------- --------- ---------
Income Before Income Taxes 401 837 1,063 966
Income Taxes 140 295 370 340
--------- --------- --------- ---------
Net Income $ 261 $ 542 $ 693 $ 626
========= ========= ========= =========
Earnings per Share of Common Stock $ .07 $ .15 $ .19 $ .17
========= ========= ========= =========
Weighted Average Number of Common
Shares Outstanding 3,739 3,733 3,739 3,732
========= ========= ========= =========
TRIPLE S PLASTICS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Six Months Ended
September 30
1997 1996
---------- ----------
Operating Activities:
Net income $ 693 $ 626
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and amortization 1,582 1,379
Changes in assets and liabilities:
Accounts receivable 175 (697)
Inventories 506 (333)
Accounts payable and accruals 250 2,813
Other 45 (182)
---------- ----------
CASH PROVIDED BY OPERATING ACTIVITIES 3,251 3,606
INVESTING ACTIVITIES:
Capital expenditures (2,354) (1,543)
Increase in restricted cash (55) (75)
---------- ----------
CASH USED IN INVESTING ACTIVITIES (2,409) (1,618)
FINANCING ACTIVITIES:
Payments on note payable to bank -- (998)
Proceeds from issuance of common
stock, net of fees 16 23
Principal payments on long-term debt (816) (648)
---------- ----------
CASH USED IN FINANCING ACTIVITIES (800) (1,623)
---------- ----------
NET INCREASE IN CASH AND CASH EQUIVALENTS $ 42 $ 365
========== ==========
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 September 30, 1997 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: Sept. 30 March 31
1997 1997
-------- --------
Raw materials and packaging $ 2,064 $ 2,084
Finished goods and work-in-process 2,263 2,749
-------- --------
Total Inventories $ 4,327 $ 4,833
3. Cash Restricted for Capital Expenditures
This amount represents the remaining proceeds from a $5 million Industrial
Revenue Bond and is restricted for investment in machinery and equipment for
the Company's Texas facility.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
($ 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, and telecommunications markets. The Company considers
both the manufacture of molded products and mold sales to be an integral part of
its business. The Company's fiscal year end is March 31.
Results of Operations
The following table sets forth, for the three months and six months ended
September 30, 1997 and 1996, certain items from the Company's Condensed
Statements of Income expressed as a percentage of net sales, as well as the
percentage change in those items.
Three months Ended Six Months Ended
September 30 September 30 % Change
------------------- ------------------- --------------
1997 1996 1997 1996 2nd Qtr 6 mos.
-------- -------- -------- -------- ------- ------
Net sales 100.0% 100.0% 100.0% 100.0% (1.9)% 7.3%
Cost of sales 84.4 81.8 83.1 83.6 1.3 6.7
-------- -------- -------- -------- ------- ------
Gross profit 15.6 18.2 16.9 16.4 (16.2) 10.2
Operating expenses 12.6 12.5 13.2 12.7 (2.0) 10.5
-------- -------- -------- -------- ------- ------
Operating income 3.0 5.7 3.7 3.7 (47.8) 9.1
Interest expense, net 0.6 0.7 0.5 0.6 (15.5) 4.4
-------- -------- -------- -------- ------- ------
Income before income
taxes 2.4 5.0 3.2 3.1 (52.1) 10.0
Income taxes 0.8 1.8 1.1 1.1 (52.5) 8.8
-------- -------- -------- -------- ------- ------
Net income 1.6% 3.2% 2.1% 2.0% (51.8)% 10.7%
======== ======== ======== ======== ======= ======
Net Sales
Net sales for the second quarter ended September 30, 1997 decreased 2%
compared to the second quarter of the prior year. The decrease is principally
due to several of the Company's customers slowing purchases to reduce their
inventories. This sales reduction, along with the mix of product sales resulted
in the reduction in net income. In the second quarter, sales to customers in the
telecommunications and medical markets actually increased, but were more than
offset by decreases in sales to customers in the information technologies and
automotive markets.
Net sales for the first half of fiscal 1998 increased 7% to $33,516 from
$31,232 for the same period last year. For the first half of the year, sales to
customers in the consumer products market comprised the largest percentage of
salesat 35%, with sales to customers in the information technologies,
automotive, medical and telecommunications markets representing approximately
15% of sales each. The overall increase in sales is principally related to
volume as no significant price increases occurred during the first half of
fiscal 1998. The Company's twenty largest customers, including at least one in
each of the primary business markets served, accounted for approximately 80% of
the Company's net sales for the first six months of fiscal 1998 and 1997.
Cost of Sales
As a percentage of sales, cost of sales in the second quarter increased to
84.4% compared to 81.8% in the prior year second quarter. The higher cost of
sales percentage in fiscal 1998 principally resulted from the lower sales level
in addition to an increased material cost of sales ratio due to product mix
when compared to the prior year second quarter. For the first six months of
fiscal 1998, the cost of sales percentage decreased slightly to 83.1% compared
to 83.6% for the comparable period last year.
Selling, General and Administrative Expenses
Selling, general and administrative expenses in the second quarter of
fiscal 1998 were comparable with the same period last year. For the first six
months of fiscal 1998, these expenses increased slightly to 13.1% of sales
compared to 12.8% for the comparable period last year. This increase in
operating expenses principally relates to increased compensation, depreciation
and professional services.
Income Taxes
For the first six months of fiscal 1998, the Company's effective income tax
rate was 34.8% which is comparable to the rate for the same period last year of
35.2%.
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 six months of fiscal 1998, the Company generated $3.3 million
of cash from operations which was used to acquire $2.4 million of capital
equipment and pay debt requirements.
Accounts receivable decreased by $175 at September 30, 1997 compared to the
prior fiscal year end, and represented 62 days sales compared to 54 days at the
end of the prior fiscal year, and 54 days one year ago. This increase is due to
several customers stretching out payments to the Company and is believed to be
a temporary situation. Inventories decreased by $506 at September 30, 1997
compared to the prior fiscal year end, and represented 29 days in inventory
compared to 31 days at the end of the prior fiscal year, and 29 days one year
ago.
The Company still has $3.8 million available from the $5.0 million
industrial revenue bond issued in October of 1995 to finance the expansion of
the Georgetown, Texas plant. In addition, the Company has a $5.0 million
unsecured line of credit agreement with a bank which has not been drawn on at
September 30, 1997. 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 4 - Submission of Matters to a Vote of Security Holders
(a) The Company's annual meeting of shareholders was held on July 23, 1997.
(b) The directors elected at the meeting were:
Shares
---------------------------------------
For Against Withheld
---------------------------------------
Robert D. Bedilion 3,472,049 -- 41,636
Daniel B. Canavan 3,429,607 -- 84,078
Albert C. Schauer 3,387,295 -- 126,390
Other directors whose terms of office continued after the meeting are as
follows:
Victor V. Valentine, Jr., David L. Stewart, and James F. Hettinger.
(c) Other matters voted upon at the meeting and the results of those votes
were as follows:
Shares
----------------------------------------------
Broker
For Against Withheld Non-Votes
----------------------------------------------
Amendment to Outside
Director Option Plan 3,369,079 100,420 44,186 --
The foregoing matters are described in detail in the Company's proxy statement
dated June 13, 1997 for the 1997 Annual Meeting of Shareholders.
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: November 13, 1997 _ROBERT D. MONK___________________________
Robert D. Monk
Chief Financial Officer
Date: November 13, 1997 _CATHERINE A. TAYLOR_______________________
Catherine A. Taylor
Corporate Controller
(Chief Accounting Officer)