<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
AMENDMENT NO. 2
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the quarterly period ended March 31, 1999.
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 No. 333-11801-01 Trianon Industries Corp.
Commission File No. 333-11801 (Aetna Industries, Inc.)
TRIANON INDUSTRIES CORP.
(FORMERLY KNOWN AS MS ACQUISITION CORP.)
AETNA INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-337-9803/38-200-7550
- -----------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
(Address of principal executive offices) (Zip Code)
1, rue Thomas Edison, Quartier des Chenes
78056 St. Quentin en Yvelines, France
24331 Sherwood Avenue, P.O. Box 3067, Centerline, Michigan 48015-0067
Registrant's telephone number, including area code (33-1) 39-412000
(810) 759-2200
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
- -
As of May 14, 1999, there were 1,000 shares of Aetna Industries, Inc. common
stock outstanding and 3,902,498 shares of Trianon Industries Corp. common stock
outstanding.
1
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TRIANON INDUSTRIES CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, 1999 DECEMBER 31, 1998
-------------- -----------------
(UNAUDITED)
ASSETS
CURRENT ASSETS:
<S> <C> <C>
Cash and marketable securities $18,958 $26,092
Accounts receivable (less allowance for doubtful
accounts of $1,721 and $1,921 respectively) 174,126 181,375
Inventories 114,709 115,287
Other current assets 10,316 9,801
-------------- ------------
Total current assets 318,109 332,555
-------------- ------------
Property, plant and equipment, net 193,426 203,271
Deferred costs and other assets 24,720 22,969
Goodwill 64,454 65,367
-------------- ------------
TOTAL ASSETS $600,709 $624,162
============== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $183,353 $173,517
Accrued expenses 48,639 82,250
Current portion of long term and short term debt 145,441 157,004
-------------- ------------
Total current liabilities 377,433 412,771
-------------- ------------
Long-term debt, less current portion 182,125 167,477
Deferred income taxes and other long-term liabilities 18,717 19,370
Redeemable preferred stock 42,302 41,157
Series A - $100 stated value; 293,123 shares authorized;
142,424 shares issued and outstanding
Series B - $100 stated value; 270,000 shares authorized;
270,000 shares issued and outstanding
Stockholders' Equity (Deficit)
Class A, common stock - $.01 par value, 12,000,000
shares authorized, 3,902,498 shares issued and outstanding 39 39
Contributed paid-in capital 40,708 40,708
Retained earnings (accumulated deficit) (54,795) (54,910)
Accumulated other comprehensive income (loss) (5,820) (2,450)
-------------- ------------
TOTAL LIABILITIES, PREFERRED STOCK AND
SHAREHOLDER'S EQUITY (DEFICIT) $600,709 $624,162
============== ============
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 3
TRIANON INDUSTRIES CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------
MARCH 31, MARCH 31,
1999 1998
---- ----
(UNAUDITED)
<S> <C> <C>
Net sales $218,157 $136,873
Cost of sales 191,932 120,735
------------ -----------
Gross profit 26,225 16,138
Selling, general and administrative expenses and
research and development expenses 14,673 9,833
------------ -----------
Operating income (loss) 11,552 6,305
Interest expense, net 7,268 2,170
------------ -----------
Income (loss) before income taxes 4,284 4,135
Income tax provision (credit) 2,251 1,185
------------ -----------
Income (loss) before discontinued operations 2,033 2,950
Losses on discontinued operations, net of tax 772 0
------------ -----------
Net income (loss) before
preferred stock dividends 1,261 2,950
Preferred stock dividends 1,146 0
------------ -----------
Net income available for common stockholders $115 $2,950
============ ===========
Other comprehensive income (loss):
Foreign currency translation adjustment (3,370) 6,165
------------ -----------
Comprehensive income (loss) $(3,255) $9,115
============ ===========
</TABLE>
See accompanying notes to consolidated financial statements
4
<PAGE> 4
TRIANON INDUSTRIES CORP.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE
MONTHS
ENDED
MARCH 31, MARCH 31,
1999 1998
---- ----
(UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 1,261 $ 2,950
Adjustments to reconcile net income to net cash
provided by (used for) operating activities:
Depreciation and amortization 8,879 5,154
Deferred income taxes -- 411
Other non cash charges 100 753
Changes in other assets and liabilities (8,565) 3,493
----------- ------------
Net cash provided by (used for) operating activities 1,675 12,761
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (7,485) (5,895)
Increase in other assets (2) (5)
----------- ------------
Net cash provided by (used for) investing activities (7,487) (5,900)
----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net decrease in borrowings under line of credit (1,298) (1,138)
Repayment of long term debt (9,825) (3,608)
Borrowings of long term debt 11,776 --
----------- ------------
Net cash provided by (used for) financing activities 653 (4,746)
----------- ------------
Exchange Rate Variation (1,975) (548)
Net increase (decrease) in cash (7,134) 1,567
Cash - beginning of year 26,092 11,626
----------- ------------
Cash - end of period $18,958 $13,193
=========== ============
</TABLE>
See accompanying notes to consolidated financial statements
5
<PAGE> 5
TRIANON INDUSTRIES CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Effective May 12, 1999, MS Acquisition Corp changed its name to Trianon
Industries Corp.
Trianon Industries Corp. ("the Company") is the name of the group formed by
the combination of the activities of SOFEDIT S.A. and Trianon Industries
Corp.
Trianon Industries Corp. ("Trianon Industries"), through Aetna Industries
Inc. ("Aetna"), its wholly-owned subsidiary, is a leading direct supplier
of high quality modules, welded subassemblies and chassis parts used as
original equipment components in the North American automobile industry.
SOFEDIT S.A., ("Sofedit") a direct and indirect wholly-owned subsidiary of
the Company, is a leading direct supplier of welded subassemblies, body in
white parts, clutch, brake and accelerator pedal modules, fuel tanks and
crossmembers and chassis parts used as original equipment components by
manufacturers in the European automobile industry.
Trianon Industries and its direct and indirect wholly-owned United States
subsidiaries (i.e., Aetna Holdings, Inc., a Delaware corporation ("Aetna
Holdings"), Aetna Manufacturing Canada Ltd., a Michigan corporation ("Aetna
Canada"), and Aetna Export Sales Corp., a U.S. Virgin Islands corporation
("Export")) have fully and unconditionally guaranteed the 11 7/8% Senior
Notes due 2006 issued by Aetna in an aggregate principal amount of $85.0
million (the "Senior Notes"). Separate financial statements or other
disclosures relative to Aetna Holdings, Export or Aetna Canada have not
been presented as management has determined that such information is not
material to investors.
On April 14, 1998, Trianon Industries completed a combination with Societe
Financiere de Developpement Industriel et Technologique S.A., a French
societe anonyme (Sofedit) (the Combination). In connection with the
Combination, Sofedit's former stockholders transferred the outstanding
capital stock of Sofedit to Trianon Industries in exchange for: (i)
promissory notes of Trianon Industries in the principal amount of $40.9
million; (ii) dividends in an amount of approximately $1.0 million; (iii)
270,000 shares of Series B Preferred stock ($27.0 million stated value) of
Trianon Industries; (iv) 3.0 million shares of Common Stock of Trianon
Industries, and (v) the assumption of approximately $12.0 million of debt
of such former stockholders. The Combination has been accounted for as a
reverse acquisition because the former owners of Sofedit own approximately
75% of the fully diluted outstanding Common Stock of Trianon Industries as
a result of the Combination. For accounting purposes, Sofedit is considered
to be the acquirer of, and the predecessor to, Trianon Industries.
As a result of the Combination being accounted for as a reverse
acquisition, the financial statements included herein for the three month
period ended March 31,1998 represent the historical information of Sofedit,
as predecessor. The consolidated balance sheet at March 31, 1999 represents
the consolidated financial position of Sofedit and Trianon Industries.
The accompanying unaudited condensed consolidated financial statements of
Trianon Industries have been prepared in accordance with Rule 10-01 of
Regulation S-X and do not include all the information and notes required by
generally accepted accounting principles for complete financial statements.
All adjustments, which include only normal recurring adjustments that are,
in the opinion of management, necessary for a fair presentation of the
results of the interim periods, have been made. The results of operations
for such interim periods are not necessarily indicative of results of
operations for a full year. The unaudited condensed consolidated financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto for the year ended December 31, 1998.
The statements of operations and cash flows for the three months ended
March 31, 1999 represent the three month financial data of Sofedit plus
Trianon Industries. On a pro forma basis, Trianon Industries had net sales
of $189.9 million, and pre-tax income of $3.6 million, for the three
months ended March 31, 1998.
6
<PAGE> 6
TRIANON INDUSTRIES CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
2. INVENTORIES
Inventories are comprised of the following:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
---- ----
<S> <C> <C>
Raw materials $ 23,923 $ 27,131
Work-in-process 22,542 31,976
Finished goods 15,980 18,839
Tooling 55,691 40,724
------------ ---------------
Inventories, gross 118,136 118,670
Less valuation allowance (3,427) (3,383)
------------ ---------------
Total inventories $114,709 $115,287
------------ ---------------
</TABLE>
Tooling inventory at Sofedit is included in work in process at December 31, 1998
and has been included in tooling at March 31, 1999
3. STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
ACCUMULATED
ADDITIONAL RETAINED OTHER TOTAL
CONTRIBUTED PAID IN EARNINGS COMPREHENSIVE STOCKHOLDER'S
CAPITAL CAPITAL (DEFICIT) INCOME EQUITY (DEFICIT)
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1998 $39 $40,708 ($54,910) ($2,450) ($16,613)
Translation adjustment (3,370) (3,370)
Preferred Stock dividends (1,146) (1,146)
Net income (loss) 1,261 1,261
------------- -------------- ------------ ------------------- -----------------
Balance at March 31, 1999 $39 $40,708 $(54,795) ($5,820) $(19,868)
------------- -------------- ------------ ------------------- -----------------
</TABLE>
7
<PAGE> 7
TRIANON INDUSTRIES CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
4. COMBINING FINANCIAL INFORMATION OF TRIANON INDUSTRIES
CORP BALANCE SHEET AS OF MARCH 31, 1999
<TABLE>
<CAPTION>
AETNA TRIANON
AETNA HOLDINGS INDUSTRIES SOFEDIT ELIMINATIONS TOTAL
<S> <C> <C> <C> <C> <C> <C>
Total current assets $ 82,720 $ - $ 5,789 $ 254,207 $ (24,607) $ 318,109
Property, plant and
equipment, net 70,744 6,552 116,130 193,426
Other long-term assets 32,372 8,247 131,745 21,781 (104,971) 89,174
-------- --------- --------- ---------- ---------- ---------
Total assets $185,836 $ 8,247 $ 144,086 $ 392,118 $ (129,578) $ 600,709
======== ========= ========= ========= ========== =========
Total current liabilities 104,859 (201) 46,114 235,100 (8,439) 377,433
Long-term debt 88,125 17,032 79,922 (12,031) 173,048
Junior subordinated notes 9,077 9,077
Deferred income taxes and
other long-term liabilities 5,496 3,478 9,743 18,717
Redeemable preferred stock 42,302 42,302
Class A, common stock -
$.01 par value,
12,000,000 shares
authorized, 3,902,498
outstanding 39 1,274 (1,274) 39
Additional paid-in capital 14,024 32,151 23,969 (29,436) 40,708
Retained earnings
(accumulated deficit) (26,494) (629) 2,970 47,740 (78,382) (54,795)
Cumulative translation
adjustment (174) (5,630) (16) (5,820)
-------- --------- --------- --------- ---------- ---------
Total stockholders equity
(deficit) $(12,644) $ (629) $ 35,160 $ 67,353 $ (109,108) $ (19,868)
-------- --------- --------- --------- ---------- ---------
Total liabilities and
shareholders equity
(deficit) $ 185,836 $ 8,247 $ 144,086 $ 392,118 $ (129,578) $ 600,709
========= ========= ========= ========= ========== =========
</TABLE>
8
<PAGE> 8
TRIANON INDUSTRIES CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
4. COMBINING FINANCIAL INFORMATION OF TRIANON INDUSTRIES CORP. (CONTINUED)
CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31,1999
<TABLE>
<CAPTION>
AETNA TRIANON
AETNA HOLDINGS INDUSTRIES SOFEDIT TOTAL
<S> <C> <C> <C> <C> <C>
Net sales $66,820 $ -- $ -- $151,337 $218,157
Cost of sales 58,704 182 133,046 191,932
------- ------- -------- -------- --------
Gross profit 8,116 -- (182) 18,291 26,225
Selling, general and administrative
expenses 4,560 204 9,499 14,263
Other expenses 411 -- -- (1) 410
------- ------- -------- -------- --------
Operating income (loss) 3,145 -- (386) 8,793 11,552
Net interest expense 3,815 245 837 2,371 7,268
------- ------- -------- -------- --------
Income (loss) before income taxes (670) (245) (1,223) 6,422 4,284
Income tax provision (credit) (126) (83) (415) 2,875 2,251
------- ------- -------- -------- --------
Income (loss) before discontinued
operations and preferred stock
dividend (544) (162) (808) 3,547 2,033
Discontinued Operations 772 772
Preferred stock dividend -- -- 1,146 -- 1,146
------- ------- -------- -------- --------
Net income available to common
stockholders $ (544) $ (162) $ (1,954) $ 2,775 $ 115
------- ------- -------- -------- --------
Other comprehensive income (loss):
Foreign currency translation
adjustment 70 -- -- (3,440) (3,370)
------- ------- -------- -------- --------
Comprehensive income (loss) ($474) ($162) ($1,954) $ (665) $ (3,255)
======= ======= ======== ======== ========
</TABLE>
9
<PAGE> 9
TRIANON INDUSTRIES CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
4. COMBINING FINANCIAL INFORMATION OF TRIANON INDUSTRIES (CONTINUED)
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31,1999
<TABLE>
<CAPTION>
AETNA TRIANON
AETNA HOLDINGS INDUSTRIES SOFEDIT ELIM TOTAL
<S> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by
operating activities $ 6,577 $(432) $ - $(4,470) - $ 1,675
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash used for investing activities (704) - (5,000) (6,783) 5,000 (7,487)
CASH FLOWS FROM FINANCING ACTIVITIES
Net cash provided by financing (7,100) 432 5,000 7,321 (5,000) 653
Net effect of exchange rate 70 (2,045) - (1,975)
Net increase in cash (1,157) - - (5,977) - (7,134)
Cash - beginning of year 1,185 - - 24,907 - 26,092
Cash - end of period $ 28 $ - $ - $18,930 $ - $18,958
</TABLE>
5. SEGMENT INFORMATION
The Company operates in one line of business, the design and manufacture of
highly engineered metal-formed components, complex modules and mechanical
assemblies for automotive OEM's in Europe and North America.
The Company manages the business under two segments, Europe and North America.
The accounting policy of the reportable segments are the same as those described
in the summary of significant accounting policies in the Company's annual report
on Form 10-K. The Company evaluates performance based on earnings before
interest, income taxes, net income of equity investees, minority interests and
discontinued operations (EBIT).
<TABLE>
<CAPTION>
MARCH 31, 1999 MARCH 31, 1998 DECEMBER 1998
-------------- -------------- -------------
OPERATING NORTH NORTH NORTH
SEGMENTS EUROPE AMERICA TOTAL EUROPE AMERICA TOTAL EUROPE AMERICA TOTAL
- --------- ------ ------- ----- ------ -------- ----- ------ ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $151,337 $ 66,820 $218,157 $136,873 $ - $136,873 $542,037 $168,809 $710,848
EBIT 8,793 2,759 11,552 6,305 - 6,305 19,255 7,569 26,824
Depreciation
and amortization 6,087 2,792 8,879 5,154 - 5,154 23,405 8,438 31,843
Total assets $392,118 $208,591 $600,709 $355,602 - $355,602 $408,915 $215,247 $624,162
</TABLE>
6. COMMON STOCK AND PREFERRED STOCK
As of May 12, 1999 the capital structure of authorized shares of common stock
and preferred stock as amended in the Certificate of Amendment of Restated
Certification of Incorporation of Trianon Industries Corp are as follows:
Common Stock Shares: 20,000,000
Preferred Stock Shares:
SERIES A - 405,000
SERIES B - 270,000
New Preferred - 2,000,000
Any dividends accruing on shares of Series A preferred Stock may be paid, in
lieu of cash dividends, by the issuance of additional shares of Series A
Preferred Stock (including fractional shares) having an aggregate Stated Value
at the time of such payment equal to the amount of the dividend to be paid.
10
<PAGE> 10
AETNA INDUSTRIES, INC.
(A WHOLLY-OWNED SUBSIDIARY OF
TRIANON INDUSTRIES CORP.)
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
APRIL 2, DECEMBER 31,
1999 1998
---- ----
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $28 $1,185
Accounts receivable (less allowance for doubtful
accounts of $424 and $411, respectively) 40,953 38,793
Inventories 47,444 47,764
Other current assets 3,310 3,390
--------------- ------------------
Total current assets 91,735 91,132
--------------- ------------------
Property, plant and equipment, net 70,744 71,922
Deferred costs and other assets 5,393 5,717
Goodwill 23,971 24,172
--------------- ------------------
Total Assets $191,843 $192,943
=============== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $50,971 $48,874
Accrued expenses 9,267 10,896
Current portion of long term and short term debt 44,620 56,720
--------------- ------------------
Total current liabilities 104,858 116,490
--------------- ------------------
Long-term debt, less current portion 94,131 88,125
Deferred income taxes 5,498 5,498
Stockholder's equity (deficit)
Common stock - $.01 par value; 1,000 shares
issued and outstanding - -
Contributed capital 14,024 9,024
Accumulated deficit (26,494) (25,950)
Accumulated other comprehensive income (174) (244)
--------------- ------------------
Total shareholder equity (12,644) (17,170)
--------------- ------------------
Total liabilities and shareholder equity (deficit) $191,843 $192,943
=============== ==================
</TABLE>
See accompanying notes to consolidated financial statements.
11
<PAGE> 11
AETNA INDUSTRIES, INC.
(A WHOLLY-OWNED SUBSIDIARY OF
TRIANON INDUSTRIES CORP.)
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
APRIL 2, MARCH 29,
1999 1998
---- ----
(UNAUDITED)
<S> <C> <C>
Net Sales $66,820 $53,085
Cost of Sales 58,704 44,974
------- -------
Gross Profit (loss) 8,116 8,111
Selling, general and administrative expenses 4,971 4,486
------- -------
Operating income (loss) 3,145 3,625
Interest expense, net 3,815 2,866
------- -------
Income (loss) before income taxes (670) 759
Income tax provision (credit) (126) 235
------- -------
Net income (loss) $ (544) $ 524
======= =======
Other Comprehensive income (loss):
Foreign currency translation adjustment 70 --
------- -------
Comprehensive income (loss) $ (474) $ 524
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
12
<PAGE> 12
AETNA INDUSTRIES, INC.
(A WHOLLY-OWNED SUBSIDIARY OF
TRIANON INDUSTRIES CORP.)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
APRIL 2, MARCH 29,
1999 1998
---- ----
(UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (544) $ 524
Adjustments to reconcile net income to net cash
provided by (used for) operating activities:
Depreciation and amortization 2,406 1,941
Changes in other assets and liabilities 4,715 (4,285)
-------------- --------------
Net cash provided by (used for) operating activities 6,577 (1,820)
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in other assets (704) (3,214)
-------------- --------------
Net cash used for investing activities (704) (3,214)
CASH FLOWS FROM FINANCING ACTIVITIES
Net (decrease) increase in borrowings under line
of credit (12,100) 5,275
Capital Contribution 5,000 --
-------------- --------------
Net cash provided by (used for) financing activities (7,100) 5,275
-------------- --------------
Exchange Rate Variation 70 --
Net increase (decrease) in cash (1,157) 241
Cash - beginning of year 1,185 23
-------------- --------------
Cash - end of period $ 28 $ 264
============== ==============
</TABLE>
See accompanying notes to consolidated financial statements.
13
<PAGE> 13
AETNA INDUSTRIES, INC.
(A WHOLLY-OWNED SUBSIDIARY OF
TRIANON INDUSTRIES CORP.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
1. BASIS OF PRESENTATION
Aetna Industries, Inc. ("Aetna") is a wholly-owned indirect subsidiary of
Trianon Industries Corp. ("Trianon Industries") and is a wholly-owned
direct subsidiary of Aetna Holdings, Inc. ("Aetna Holdings") and has two
wholly-owned subsidiaries Aetna Export Sales Corp. ("Export") and Aetna
Manufacturing Canada Ltd ("Aetna Canada"). Trianon Industries is a holding
company that was formed for the sole purpose of purchasing Aetna and does
not have any significant operations, other than its investments in its
subsidiaries assets or liabilities, preferred stock and junior
subordinated debentures.
Trianon Industries, Holdings, Export and Canada have fully and
unconditionally guaranteed the 11 7/8% Senior Notes due 2006 issued by
Aetna in an aggregate principal amount of $85,000,000 (the "Senior Notes").
Separate financial statements or other disclosures relative to Aetna
Holdings, Export or Aetna Canada have not been presented as management has
determined that such information is not material to investors.
On April 14, 1998, Aetna's parent, Trianon Industries Corp. (Trianon
Industries) completed a combination with Societe Financiere de
Developpement Industriel et Technologique S.A., a French societe anonyme
(Sofedit) (the Combination). In connection with the Combination, Sofedit's
former stockholders transferred the outstanding capital stock of Sofedit to
Trianon Industries in exchange for: (i) promissory notes of Trianon
Industries in the principal amount of $40.9 million; (ii) dividends in an
amount of approximately $1.0 million; (iii) 270,000 shares of Series B
Preferred stock ($27.0 million stated value) of Trianon Industries; (iv)
3.0 million shares of Common Stock of Trianon Industries, and (v) the
assumption of approximately $12.0 million of debt of such former
stockholders. The Combination has been accounted for as a reverse
acquisition because the former owners of Sofedit own approximately 75% of
the fully diluted outstanding Common Stock of Trianon Industries as a
result of the Combination. For accounting purposes, Sofedit is considered
to be the acquirer of, and the predecessor to, Trianon Industries.
The accompanying unaudited condensed consolidated financial statements of
Aetna have been prepared in accordance with Rule 10-01 of Regulation S-X
and do not include all the information and notes required by generally
accepted accounting principles for complete financial statements. All
adjustments, which include only normal recurring adjustments that are, in
the opinion of management, necessary for a fair presentation of the results
of the interim periods, have been made. The results of operations for such
interim periods are not necessarily indicative of results of operations for
a full year. The unaudited condensed consolidated financial statements
should be read in conjunction with Aetna's consolidated financial
statements and notes thereto for the year ended December 31, 1998.
14
<PAGE> 14
AETNA INDUSTRIES, INC.
(A WHOLLY-OWNED SUBSIDIARY OF
TRIANON INDUSTRIES CORP.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
2. INVENTORIES
Inventories are comprised of the following:
<TABLE>
<CAPTION>
APRIL 2, DECEMBER 31,
1999 1998
------------ ------------
<S> <C> <C>
Raw materials $ 1,048 $ 881
Work-in-process 2,668 2,333
Finished goods 1,441 1,670
Tooling 39,463 40,724
------------ ------------
Inventories valued at FIFO 44,620 45,608
LIFO Reserve (200) (200)
------------ ------------
44,420 45,408
Purchased parts and purchased labor 3,024 2,356
------------ ------------
Total inventories $ 47,444 $ 47,764
============ ============
</TABLE>
3. STOCKHOLDER'S EQUITY (DEFICIT)
<TABLE>
<CAPTION>
TOTAL
CONTRIBUTED ACCUMULATED ACCUMLATED STOCKHOLDER'S
CAPITAL DEFICIT OTHER EQUITY
COMPHREHENSIVE (DEFICIT)
INCOME
<S> <C> <C> <C> <C>
Balance at December 31,1998 $ 9,024 $ (25,950) $ (244) $ (17,170)
Translation adjustment - - 70 70
Capital Contribution 5,000 5,000
Net loss (544) - (544)
----------- -------------- ----------- ---------------
Balance at April 2, 1999 $ 14,024 $ (26,494) $ (174) $ (12,644)
----------- -------------- ----------- ---------------
</TABLE>
15
<PAGE> 15
ITEM 3. DISCLOSURE OF QUANTITATIVE AND QUALITATIVE INFORMATION ABOUT MARKET
RISKS
The financial condition and results of operations of the Company's operating
entities are reported in various foreign currencies (principally Euro and
British pounds sterling) and then translated into U.S. dollars at the applicable
exchange rate for inclusion in the Company's financial statements. As a result,
an appreciation of the dollar against these foreign currencies will have a
negative impact on the reported sales and operating profit of the Company.
Conversely, depreciation of the dollar against these foreign currencies will
have a positive impact. In addition, the Company incurs currency transaction
risk whenever it or one of its subsidiaries enters into either a purchase or
sale transaction using a different currency than the relevant entity's
functional currency. However, the nature of the Company's business results in
the Company generally matching revenues and expenses of the same currency.
Therefore, the Company does not currently use financial instruments to limit its
exposure to foreign transaction exposure risk. The Company does not currently
use financial instruments to limit its exposure to interest rate variations. The
portion of the company's outstanding debt obligations tied to variable interest
rates totals $125.9 million as of December 31, 1998.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Pursuant to a Consent in Lieu of Special Meeting of the
Stockholders of Trianon which was distributed to its stockholders on December
17, 1998, the Board of Directors proposed an amendment to Trianon's Restated
Certificate of Incorporation to (i) change the name of the corporation from MS
Acquisition Corp. to Trianon Industries Corp., (ii) increase the number of
authorized shares of Trianon's Series A Preferred Stock from 293,123 shares to
405,000 shares and (iii) provide Trianon's Board of Directors the election to
pay dividends accruing on shares of Series A Preferred Stock, in lieu of cash
dividends, in additional shares of Series A Preffered Stock. The amendment is
attached to this Quarterly Report on Form 10-Q as exhibit 3(i).
The proposal was adopted by the votes indicated (which
constituted the affirmative vote of more than one-half of the shares voting for
each class and series of stock).
<TABLE>
<CAPTION>
Common Stock Preferred Stock
------------------------------------- ------------------------
Series A-1 Series A-2 Series A-3 Series A Series B
---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
For the Proposal: 1,391,193 1,235,507 885,213 112,760.18 235,169
Against the Proposal: 0 0 0 0 0
Abstaining: 282,525 90,775 17,285 2,207.20 34,831
</TABLE>
23
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on their behalf by the
undersigned thereunto duly authorized.
The signatory hereby acknowledges and adopts the typed form of his name in the
electronic filing of this document with the Securities and Exchange Commission.
Aetna Industries, Inc.
Date: May 20, 1999 By: s/ Harold A. Brown
-------------------
Harold A. Brown
Secretary, Vice President, Finance
and Chief Financial Officer
Trianon Industries Corp.
Date: May 20, 1999
By: s/ Harold A. Brown
-------------------
Harold A. Brown
Secretary, Vice President North America
31
