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, 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 3,740,516 shares of common stock outstanding as of
December 31, 1997.
TRIPLE S PLASTICS, INC.
INDEX
Page No.
Part I. Financial Information
Item 1. Condensed Financial Statements
Condensed Balance Sheets - 3
December 31, 1997 and March 31, 1997
Condensed Statements of Income - Three Months and 4
Nine Months Ended December 31, 1997 and 1996
Condensed Statements of Cash Flows - 5
Nine Months Ended December 31, 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)
December 31 March 31
1997 1997
ASSETS
Current Assets:
Cash and cash equivalents $ 2,279 $ 2,681
Accounts receivable, less allowance of
$255 for possible losses 11,031 11,147
Inventories (Note 2) 4,193 4,833
Other 291 329
--------- ---------
Total Current Assets 17,794 18,990
Property, Plant and Equipment (Note 3) 38,094 35,303
Less accumulated depreciation and amortization 12,898 10,716
--------- ---------
Net Property, Plant and Equipment 25,196 24,587
Other:
Cash restricted for capital
expenditures (Note 3) 3,757 3,787
Goodwill, net of accumulated amortization
of $460 and $431 688 717
Miscellaneous 151 242
--------- ---------
Total Other Assets 4,596 4,746
--------- ---------
$ 47,586 $ 48,323
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 3,463 $ 4,540
Accrued compensation 581 1,096
Deferred mold revenue 1,718 622
Other accrued expenses 493 647
Current maturities of long-term debt 1,993 1,949
--------- ---------
Total Current Liabilities 8,248 8,854
Long-Term Debt, less current maturities 6,177 7,251
Deferred Income Taxes 1,865 1,865
--------- ---------
Total Liabilities 16,290 17,970
Shareholders' Equity:
Preferred stock, no par value, 1,000 shares
authorized, none issued -- --
Common stock, no par value, 10,200 shares
authorized, 3,740,516 and 3,736,941
shares issued and outstanding 14,436 14,413
Retained earnings 16,860 15,940
--------- ---------
Total Shareholders' Equity 31,296 30,353
--------- ---------
$ 47,586 $ 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 Nine Months Ended
December 31 December 31
1997 1996 1997 1996
-------------------- -------------------
Net Sales $ 15,000 $ 15,766 $ 48,516 $ 46,998
Cost of Sales 12,436 13,679 40,296 39,779
--------- --------- --------- ---------
Gross Profit 2,564 2,087 8,220 7,219
Total Selling, General &
Administrative Expenses 2,134 1,712 6,537 5,696
--------- --------- --------- ---------
Operating Income 430 375 1,683 1,523
Interest Expense (Income):
Interest expense 153 136 469 437
Interest income (75) (59) (201) (178)
--------- --------- --------- ---------
Net Interest Expense 78 77 268 259
Income Before Income Taxes 352 298 1,415 1,264
Income Taxes 125 105 495 445
--------- --------- --------- ---------
Net Income $ 227 $ 193 $ 920 $ 819
========= ========= ========= =========
Basic and Diluted Earnings
per Share $ .06 $ .05 $ .25 $ .22
========= ========= ========= =========
Weighted Average Number of
Common Shares Outstanding 3,741 3,736 3,739 3,733
========= ========= ========= =========
TRIPLE S PLASTICS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Nine Months Ended
December 31
1997 1996
------------ ------------
Operating Activities:
Net Income $ 920 $ 819
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and amortization 2,411 2,144
Changes in assets and liabilities:
Accounts receivable 116 213
Inventories 640 (784)
Accounts payable and accruals (612) 2,114
Other 64 (428)
--------- ---------
CASH PROVIDED BY OPERATING ACTIVITIES 3,539 4,078
INVESTING ACTIVITIES:
Capital expenditures (2,964) (2,141)
Decrease in restricted cash 30 83
--------- ---------
CASH USED IN INVESTING ACTIVITIES (2,934) (2,058)
--------- ---------
FINANCING ACTIVITIES:
Borrowings (payments) on note payable to bank -- (998)
Proceeds from issuance of common stock,
net of fees 23 34
Principal payments on long-term debt (1,030) (765)
--------- ---------
CASH USED IN FINANCING ACTIVITIES (1,007) (1,729)
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS $ (402) $ 291
========= =========
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, 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: December 31 March 31
1997 1997
----------- ----------
Raw materials and packaging $ 2,207 $ 2,084
Finished goods and work-in-process 1,986 2,749
----------- ----------
Total Inventories $ 4,193 $ 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
(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 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 ended December 31, 1997
and 1996 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.
Three Months Ended Nine Months Ended
December 31 December 31 % Change
1997 1996 1997 1996 3rd Qtr. 9 Mos.
------------------ ----------------- ---------------
Net Sales 100.0% 100.0% 100.0% 100.0% (4.9) 3.2
Cost of Sales 82.9 86.8 83.1 84.6 (9.1) 1.3
------ ------ ------ ------
Gross Profit 17.1 13.2 16.9 15.4 22.9 13.9
S,G&A Expenses 14.2 10.8 13.5 12.2 24.6 14.8
------ ------ ------ ------
Operating Income 2.9 2.4 3.4 3.2 14.7 10.5
Interest Expense, net .6 .5 .5 .5 1.3 3.5
------ ------ ------ ------
Income Before Income
Taxes 2.3 1.9 2.9 2.7 18.1 11.9
Income Taxes .8 .7 1.0 1.0 19.0 11.2
------ ------ ------ ------
Net Income 1.5 1.2 1.9 1.7 17.6 12.3
====== ====== ====== ======
Net Sales
Net sales for the third quarter ended December 31, 1997 decreased 5%
compared to the third quarter of the prior year. In the third quarter, sales
to customers in the telecommunications, medical and consumer products markets
increased, but were more than offset by decreases in sales to the information
technologies and automotive markets.
Net sales for the first nine months of fiscal 1998 were up 3% compared to
the same period last year. For the first nine months of the year, sales to
customers in the consumer products market comprised the largest percentage of
sales at 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 nine months
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 nine months of fiscal 1998 and 1997.
Cost of Sales
Cost of sales as a percentage of sales decreased to 82.9% in the third
quarter of fiscal 1998 compared to 86.8% for the third quarter last year. The
lower cost of sales percentage in fiscal 1998 is principally attributed to mold
manufacturing cost reductions and molded part manufacturing cost reductions as a
result of manufacturing efficiency improvement initiatives at the Company. These
initiatives contributed to reduced labor as a percentage of sales. For the first
nine months of fiscal 1998, the cost of sales percentage decreased to 83.1%
compared to 84.6% for the comparable period last year.
Selling, General and Administrative Expenses
Selling, general and administrative expenses represented 14.2% of sales in
the third quarter of fiscal 1998 compared to 10.8% for the same period last
year. For the first nine months of fiscal 1998, these expenses were 13.5% of
sales compared to 12.2% for the comparable period last year. The increase in
selling, general and administrative expenses principally relates to increased
compensation, professional fees and taxes other than income taxes.
Income Taxes
For the first nine months of fiscal 1998, the Company's effective income
tax rate was 35.0%, which is comparable to the rate for the same period last
year of 35.2%.
Liquidity and Capital Resources
The Company's principal cash requirements are for operating expenses and
capital expenditures. Historically, the Company's primary sources of cash have
been from operations, bank borrowings and industrial revenue bonds.
In the first nine months of fiscal 1998, the Company generated $3.5 million
of cash from operations which was used to acquire $3.0 million of capital
equipment and pay debt requirements.
Accounts receivable decreased by $116 at December 31, 1997 compared to the
prior fiscal year end, and represented 65 days sales compared to 54 days at the
end of the prior fiscal year, and 58 days one year ago. The increase in days
sales outstanding is generally due to the timing of collections on several large
tooling programs. The Company is concentrating more resources in this area to
speed up collections. Inventories decreased by $640 at December 31, 1997
compared to the prior fiscal year end, and represented only 32 days in
inventory, which is comparable to the 31 days at the end of the prior fiscal
year, and 34 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
December 31, 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 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 12, 1998 _ROBERT D. MONK__________________________
Robert D. Monk
Chief Financial Officer
Date: February 12, 1998 _CATHERINE A. TAYLOR______________________
Catherine A. Taylor
Corporate Controller
(Chief Accounting Officer)