FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
Commission file number 1-924
TRINOVA CORPORATION
(Exact name of registrant as specified in its charter)
Ohio 34-4288310
(State of Incorporation) (I.R.S. Employer
Identification No.)
3000 Strayer, Maumee, OH 43537-0050
(Address of principal executive office)
Registrant's telephone number, including area code: (419) 867-2200
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, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
The number of Common Shares, $5 Par Value, outstanding as of July 26, 1996,
was 28,414,534.
This document, including exhibits, contains 23 pages.
The cover page consists of 1 page.
The Exhibit Index is located on page 18.
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
FOR QUARTER ENDED JUNE 30, 1996
INDEX TO INFORMATION IN REPORT
TRINOVA CORPORATION
Page
Number
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Statement of Financial Position -
June 30, 1996 and December 31, 1995 3
Condensed Statement of Income -
Three Months and Six Months Ended
June 30, 1996 and 1995 4
Condensed Statement of Cash Flows -
Six Months Ended June 30, 1996 and 1995 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 17
EXHIBIT INDEX 18
EXHIBIT 11 - STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS 22
EXHIBIT 27 - FINANCIAL DATA SCHEDULE 23
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<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. - Financial Statements
<TABLE>
STATEMENT OF FINANCIAL POSITION
TRINOVA CORPORATION
(Dollars in thousands, except per share data)
(Unaudited)
<CAPTION>
June 30 December 31
ASSETS 1996 1995
CURRENT ASSETS ---------- -----------
<S> <C> <C>
Cash and cash equivalents $ 18,538 $ 16,186
Receivables 349,145 292,146
Inventories:
In-process and finished products 200,197 215,365
Raw materials and manufacturing supplies 54,715 53,919
---------- ----------
254,912 269,284
Other current assets 42,273 38,789
---------- ----------
TOTAL CURRENT ASSETS 664,868 616,405
Plants and properties 973,196 959,286
Less accumulated depreciation 546,406 533,925
---------- ----------
426,790 425,361
Goodwill and other intangibles 89,866 85,292
Other assets 66,609 97,093
---------- ----------
TOTAL ASSETS $1,248,133 $1,224,151
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 10,158 $ 33,229
Accounts payable 107,216 103,853
Income taxes 45,014 39,054
Other current liabilities 171,406 183,659
Current maturities of long-term debt 75,302 378
---------- ----------
TOTAL CURRENT LIABILITIES 409,096 360,173
Long-term debt 252,304 302,352
Postretirement benefits other than pensions 120,808 120,478
Other liabilities 43,610 40,276
SHAREHOLDERS' EQUITY
Common stock; par value $5 a share
Authorized - 100,000,000 shares
Outstanding - 28,463,434 and 28,825,187 shares,
respectively (after deducting 5,746,462 and
5,384,709 shares, respectively, in treasury) 142,317 144,125
Additional paid-in capital 19,700 17,933
Retained earnings 288,865 254,484
Currency translation adjustments (28,567) (15,670)
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 422,315 400,872
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,248,133 $1,224,151
========== ==========
<FN>
The Notes to Financial Statements are an integral part of this statement.
</FN>
</TABLE>
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<PAGE>
<TABLE>
CONDENSED STATEMENT OF INCOME
TRINOVA CORPORATION
(In thousands, except per share data)
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------------ ------------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales $ 517,924 $ 501,617 $1,030,037 $1,000,252
Cost of products sold 384,015 370,696 769,871 746,889
---------- ---------- ---------- ----------
MANUFACTURING INCOME 133,909 130,921 260,166 253,363
Selling and general administrative
expenses 64,308 64,537 130,909 130,812
Engineering, research and development
expenses 17,857 15,805 37,385 30,831
---------- ---------- ---------- ----------
OPERATING INCOME 51,744 50,579 91,872 91,720
Interest expense (6,842) (4,933) (13,127) (9,906)
Other income(expenses)-net 14,258 (2,466) 10,930 (6,346)
---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES 59,160 43,180 89,675 75,468
Income taxes 26,100 9,900 32,200 19,600
---------- ---------- ---------- ----------
NET INCOME $ 33,060 $ 33,280 $ 57,475 $ 55,868
========== ========== ========== ==========
NET INCOME PER SHARE $ 1.11 $ 1.11 $ 1.94 $ 1.88
========== ========== ========== ==========
Cash dividends per common share $ .20 $ .18 $ .40 $ .36
========== ========== ========== ==========
Average shares outstanding 30,528 30,790 30,629 30,787
========== ========== ========== ==========
<FN>
The Notes to Financial Statements are an integral part of this statement.
</FN>
</TABLE>
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<PAGE>
<TABLE>
CONDENSED STATEMENT OF CASH FLOWS
TRINOVA CORPORATION
(In thousands)
(Unaudited)
<CAPTION>
Six Months Ended
June 30
--------------------
1996 1995
---------- ----------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 57,475 $ 55,868
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 34,014 31,231
Gain on sale of affiliates (17,300) --
Changes in certain components of working
capital other than debt (47,755) (45,996)
Dividends received from affiliates 9,896 22
Other (2,512) (5,307)
---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 33,818 35,818
INVESTING ACTIVITIES
Capital expenditures (40,125) (41,870)
Businesses acquired (6,227) --
Sales of business and affiliates 40,216 --
Other (21) (34)
---------- ----------
NET CASH USED BY INVESTING ACTIVITIES (6,157) (41,904)
FINANCING ACTIVITIES
Net increase in short- and long-term debt 122 3,832
Cash dividends (11,468) (10,373)
Purchase of common stock (13,825) --
Stock issuance under stock plans 2,157 449
Other (2,271) --
---------- ----------
NET CASH USED BY FINANCING ACTIVITIES (25,285) (6,092)
Effect of exchange rate changes on cash (24) 1,743
---------- ----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,352 (10,435)
Cash and cash equivalents at beginning of period 16,186 27,928
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 18,538 $ 17,493
========== ==========
<FN>
The Notes to Financial Statements are an integral part of this statement.
</FN>
</TABLE>
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<PAGE>
NOTES TO FINANCIAL STATEMENTS
TRINOVA CORPORATION
Note 1 - Basis of Presentation
The accompanying financial statements for the interim periods are unaudited.
In the opinion of management, all adjustments necessary for a fair statement
of the results for the interim periods included herein have been made.
Operating results for the six months ended June 30, 1996 are not necessarily
indicative of the results that may be expected for the year ended December 31,
1996. It is suggested that these financial statements be read in conjunction
with the audited 1995 financial statements and notes thereto included in
TRINOVA Corporation's most recent annual report.
Note 2 - Gain on Sale of Unconsolidated Affiliates
During the 1996 second quarter, the Company sold its 35% interest in Yokohama
Aeroquip K.K., based in Japan, and its 49% interest in Aeroquip Mexicana S.A.,
based in Mexico. The two transactions resulted in a net combined pretax gain
of $17.3 million ($5 million net, or $.16 per share). The combined pretax
gain included $6.4 million of net gains previously deferred in the currency
translation component of equity.
Note 3 - Business Acquired
Second-quarter 1996 expenditures for business acquisitions amounted to $6.2
million, which included acquisition of a business serving the industrial
aftermarket, net of adjustment to the purchase price of a 1995 acquisition.
Note 4 - Income Taxes
The income tax provision for the 1996 six-month period includes a credit for
settlement of claims for prior years' research and development credits of $4
million, or $.13 per share, that was recorded in the first quarter. The 1996
income tax provision also includes income taxes of $12.3 million resulting
from the gain on sale of unconsolidated affiliates. The effective income tax
rate for the 1996 six-month period exclusive of these items was 33%. The 23%
and 26% effective income tax rates for the 1995 second-quarter and six-month
periods reflect, among other things, the utilization of tax loss carryforwards
outside the U.S. for which deferred tax valuation allowances had previously
been provided.
Note 5 - Accounts Receivable Sold
"Changes in certain components of working capital other than debt" in the 1995
Condensed Statement of Cash Flows includes a $50 million increase in working
capital resulting from termination of the Company's program for the sale of
accounts receivable.
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<PAGE>
NOTES TO FINANCIAL STATEMENTS
TRINOVA CORPORATION
(Continued)
Note 6 - Net Income per Share
Net income per share is computed using the average number of shares
outstanding, including common stock equivalents. The assumed conversion of
the Company's 6% convertible debentures was included in average shares
outstanding for each of the interim periods included herein, increasing the
average number of shares outstanding by 1,904,762 shares. For purposes of
computing net income per share, net income was increased for the after-tax
equivalent of interest expense on the 6% convertible debentures.
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
FINANCIAL REVIEW AND ANALYSIS OF OPERATIONS
Analysis of Operations
Second Quarter 1996 Compared with Second Quarter 1995
The following data provide highlights for the 1996 second quarter compared
with the 1995 second quarter.
Percent
(dollars in thousands, Second Quarter Increase
except per share data) 1996 1995 (Decrease)
CONSOLIDATED
Net sales $ 517,924 $ 501,617 3.3%
Manufacturing income 133,909 130,921 2.3
Manufacturing margin (%) 25.9 26.1
Operating income 51,744 50,579 2.3
Operating margin (%) 10.0 10.1
Net income 33,060 33,280 (0.7)
Net income per share 1.11 1.11 -
INDUSTRIAL
Net sales 292,627 282,853 3.5
Operating income 32,093 38,883 (17.5)
Operating margin (%) 11.0 13.7
Order intake 294,480 270,194 9.0
Order backlog at June 30 201,024 192,726 4.3
AUTOMOTIVE
Net sales 129,876 133,738 (2.9)
Operating income 11,941 9,536 25.2
Operating margin (%) 9.2 7.1
AEROSPACE & DEFENSE
Net sales 95,423 85,026 12.2
Operating income 13,523 8,480 59.5
Operating margin (%) 14.2 10.0
Order intake 108,847 76,138 43.0
Order backlog at June 30 297,880 257,394 15.7
Consolidated sales for the 1996 second quarter increased $16.3 million, or
3.3%, over the 1995 second quarter. Sales for the industrial and aerospace &
defense segments increased 3.5% and 12.2%, respectively, but automotive sales
declined 2.9%. Businesses acquired in the 1995 fourth quarter generated
second-quarter 1996 sales, principally in the industrial segment, of more than
$28 million. Including the results of acquisitions, U.S. sales increased
$17.8 million but non-U.S. sales declined $1.5 million. Changes in currency
exchange rates reduced non-U.S. sales by $7.7 million.
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<PAGE>
Analysis of Operations - Continued
Record second-quarter 1996 industrial sales of $292.6 million were $9.8
million, or 3.5%, higher than in the 1995 second quarter, bolstered by the
operations of Vickers Electronic Systems (VES) acquired in late 1995. U.S.
industrial sales increased $16.1 million, or 9%, compared with the 1995 second
quarter, and sales for Asia/Pacific improved modestly. European sales
declined $3.7 million, or 5.3%, including the effects of changes in currency
exchange rates, while sales in Brazil were $3.6 million, or 31.4%, lower than
in the 1995 second quarter. Strong industrial order intake of $294.5 million,
including orders for VES, represented an increase of $24.3 million, or 9%,
over the 1995 second quarter. Order intake for the U.S. and Asia/Pacific
increased over the prior year, while order intake in Europe and Brazil
declined. Order backlog of $201 million was $8.3 million, or 4.3%, higher
than at June 30, 1995.
Automotive sales declined $3.9 million, or 2.9%, from the 1995 second quarter.
However, second-quarter 1996 sales were $5.8 million higher than sales in the
1996 first quarter. U.S. sales in the 1996 second quarter were $7.4 million,
or 12.3%, lower than in the 1995 second quarter, but were nearly equal to the
1996 first-quarter sales. Although new business is being secured, the
conclusion of a number of programs with U.S. car manufacturers in the second
half of 1995 contributed to the 1996 second-quarter sales decline. European
automotive sales increased $3.5 million, or 4.8%, over the 1995 second quarter
despite the unfavorable effects of changes in currency exchange rates. The
increased European volume was driven by higher sales of air conditioning and
power steering components.
Aerospace & defense sales increased $10.4 million, or 12.2%, over the 1995
second quarter. The sales increase reflects continued strength in all areas
of the original equipment and aftermarket business, and included the benefit
of two small acquisitions made in late 1995, as sales were up 12.7% in the
U.S. and 9.6% in Europe. Order intake of $108.8 million was $32.7 million, or
43%, higher than in the 1995 second quarter. Order backlog, likewise,
increased substantially to $297.9 million from $257.4 million at June 30,
1995.
Consolidated manufacturing income increased $3.0 million, or 2.3%, from the
1995 second quarter, but manufacturing margin declined from 26.1% to 25.9%.
Manufacturing income and margin for the industrial segment declined from the
1995 second quarter as the benefit of increased sales volume was negated by
losses in Brazil (a decline in manufacturing income of $3.9 million) and
amortization of premium, including goodwill, associated with the VES
acquisition. Although profitable, VES's manufacturing margin is lower than
margins for the remainder of the segment, primarily due to the premium
amortization. Automotive manufacturing income and margin improved due to the
benefits of consolidation and downsizing of facilities, and improved product
mix resulting from sales increases in certain higher-margin product lines.
Higher sales and continued process improvements contributed to significantly
higher manufacturing income and margin over the 1995 second quarter for the
aerospace & defense segment.
-9-
<PAGE>
Analysis of Operations - Continued
Selling and general administrative and engineering, research and development
expenses were $1.8 million higher in the 1996 second quarter than in the 1995
second quarter, but as a percent of sales were 15.9% in 1996 compared with 16%
in 1995. Selling and general administrative expenses were slightly lower than
in 1995, while engineering, research and development expenses increased $2
million. This increase is due in part to the VES acquisition, but also
represents expanding initiatives for new product and business development.
Interest expense for the 1996 second quarter was $1.9 million higher than in
the 1995 second quarter and was principally due to higher debt levels
resulting from the 1995 acquisitions and the program initiated in 1995 to
repurchase shares of the Company's common stock.
As previously announced, the Company sold its 35% interest in Yokohama
Aeroquip K.K. based in Japan, and its 49% interest in Aeroquip Mexicana S.A.,
based in Mexico. The two transactions resulted in a net combined pretax gain
of $17.3 million, which is reported in Other Income (Expenses) in the
Statement of Income. The combined pretax gain included $6.4 million of net
gains previously deferred in the currency translation component of equity. The
Company expects that the sales of its interests in the two unconsolidated
affiliates will stimulate the Company's growth in the industrial markets in
Mexico and the Asia/Pacific region. The Company can now explore opportunities
in the Japanese market with the full Aeroquip product line and expand its
product line offerings in Mexico and Central America.
Net income for the 1996 second quarter amounted to $33.1 million, or $1.11 per
share (including a gain of $5 million, or $.16 per share, from the sale of
unconsolidated affiliates), compared with net income of $33.3 million, or
$1.11 per share, in the 1995 second quarter. The effective income tax rate
for the 1996 second quarter (exclusive of the tax associated with the gain on
the sale of unconsolidated affiliates) was 33% compared with 23% in the 1995
second quarter. The lower effective income tax rate in 1995 reflects, among
other things, the utilization of tax loss carryforwards outside the U.S. for
which deferred tax valuation allowances had previously been provided.
-10-
<PAGE>
Analysis of Operations - Continued
Six Months 1996 Compared with Six Months 1995
The following data provide highlights for the 1996 first six months compared
with the 1995 first six months.
Six Months Ended Percent
(dollars in thousands, June 30 Increase
except per share data) 1996 1995 (Decrease)
CONSOLIDATED
Net sales $1,030,037 $1,000,252 3.0%
Manufacturing income 260,166 253,363 2.7
Manufacturing margin (%) 25.3 25.3
Operating income 91,872 91,720 0.2
Operating margin (%) 8.9 9.2
Net income 57,475 55,868 2.9
Net income per share 1.94 1.88 3.2
INDUSTRIAL
Net sales 584,531 559,108 4.5
Operating income 56,672 69,091 (18.0)
Operating margin (%) 9.7 12.4
Order intake 592,606 570,980 3.8
AUTOMOTIVE
Net sales 253,965 273,919 (7.3)
Operating income 20,726 19,717 5.1
Operating margin (%) 8.2 7.2
AEROSPACE & DEFENSE
Net sales 191,542 167,223 14.5
Operating income 25,771 15,641 64.8
Operating margin (%) 13.5 9.4
Order intake 224,622 156,089 43.9
Sales exceeding $1 billion for the first six months of 1996 were a record for
the Company and were $29.8 million, or 3%, greater than in the comparable 1995
period. Sales for the industrial and aerospace & defense segments increased
4.5% and 14.5%, respectively, but automotive sales declined 7.3%. Businesses
acquired in the 1995 fourth quarter generated sales for the first six months
of 1996 of more than $54 million, principally in the industrial segment.
Including the results of acquisitions, U.S. sales increased $34.5 million, or
5.5%, but non-U.S. sales declined $4.7 million. Changes in currency exchange
rates reduced non-U.S. sales by nearly $12 million.
Industrial sales for the first six months of 1996 amounting to $584.5 million
were also a record and were $25.4 million, or 4.5%, greater than in the
comparable 1995 period. U.S. industrial sales increased $34.2 million, or
9.6%, and Asia/Pacific sales improved modestly. European sales declined $1.7
million, or 1.2%, after changes in currency exchange rates. Sales in Brazil
were $8.3 million, or 36.1%, lower than in the comparable 1995 six-month
period.
-11-
<PAGE>
Analysis of Operations - Continued
Automotive sales declined $20 million, or 7.3%, from the first six months of
1995. U.S. automotive sales were $21.6 million, or 17%, lower than in the
comparable 1995 period. The conclusion of a number of significant programs
with U.S. car manufacturers in the second half of 1995 contributed to the
decline in 1996 U.S. volume. European automotive sales increased $1.6
million, after the adverse effects of changes in currency exchange rates
amounting to more than $7 million.
Aerospace & defense sales increased significantly over the first six months of
1995, up $24.3 million, or 14.5%. The Company's aggressive aerospace &
defense growth initiatives evidence sustained momentum as the favorable first-
quarter performance was replicated in the second quarter.
Consolidated manufacturing income increased $6.8 million, or 2.7%, over the
first six months of 1995, while manufacturing margin remained unchanged at
25.3%. Factors similar to those described for the second quarter influenced
the six-month performance. Manufacturing income and margin for the industrial
segment declined from the prior year due to the performance of the Brazilian
operations and lower profit margin for the acquired VES operations.
Automotive manufacturing income was flat with the prior year, but
manufacturing margin improved due principally to the benefits recognized in
the 1996 second quarter from consolidation and downsizing of facilities and
improved sales mix. Higher sales volume and continued process improvements
for aerospace & defense contributed to a 25% increase in manufacturing income
and a 2.8 percentage-point increase in manufacturing margin.
Selling and general administrative and engineering, research and development
expenses were $6.7 million higher in the 1996 six-month period compared with
the 1995 first six months and as a percent of sales were approximately the
same as in 1995. The increase is principally due to the VES acquisition but
also represents expanding initiatives for new product and business
development.
Interest expense for the 1996 six-month period was $3.2 million greater than
in the comparable 1995 period and was attributable to the higher average debt
levels in 1996. Other Income (Expenses) for the 1996 six-month period
includes a gain of $17.3 million resulting from the sales of unconsolidated
affiliates.
Net income for the first six months of 1996 amounted to $57.5 million, or
$1.94 per share (including a gain of $5 million, or $.16 per share, from the
sale of unconsolidated affiliates), compared with net income of $55.9 million,
or $1.88 per share, for the first six months of 1995. The income tax
provision for the 1996 six-month period includes a credit for settlement of
claims for prior years' research and development credits of $4 million, or
$.13 per share, that was recorded in the first quarter. The 1996 income tax
provision also includes income taxes of $12.3 million resulting from the gain
on sale of unconsolidated affiliates. The effective income tax rate for the
1996 six-month period exclusive of these items was 33%. The 26% effective
income tax rate for the 1995 six-month period reflects, among other things,
the utilization of tax loss carryforwards outside the U.S. for which deferred
tax valuation allowances had previously been provided.
-12-
<PAGE>
Liquidity, Working Capital and Capital Investment
Cash provided by operating activities in the first six months of 1996 amounted
to $33.8 million. Working capital requirements included $62.3 million to
finance a higher level of receivables. This increase reflects, in part, the
result of higher sales in 1996 and, since receivables were not included in the
purchase of VES, recognizes the increase in receivable balances to normal
operating levels for VES. Inventory reductions during the first six months of
1996 provided cash of $12.7 million, and dividends received from affiliates,
principally Aeroquip Yokohama K.K., amounted to $9.9 million. Changes in
components of working capital other than debt in the 1995 first-quarter
operating activities included a $50 million increase in working capital
resulting from the termination of the Company's program for the sale of
accounts receivable.
During the 1996 second quarter, the Company received $40.2 million from the
sales of interests in two unconsolidated affiliates operating as joint
ventures in Japan and Mexico and an injection-molding plastics products
facility in Bassett, Virginia. Also in the 1996 second quarter, expenditures
for business acquisitions amounting to $6.2 million included the acquisition
of a business serving the industrial aftermarket, net of adjustment to the
purchase price of a 1995 acquisition.
Dividend payments in 1996 were $.20 per share in each of the first two
quarters compared with $.18 in 1995. Total dividends paid in the first six
months of 1996 were $11.5 million compared with $10.4 million in the same 1995
period. During the first six months of 1996, the Company purchased 439,600
shares of common stock at a cost of $13.8 million. The Company expects to
make further purchases during 1996, but is not committed to purchase a
specific number of shares.
In 1996, the Company filed a shelf registration statement with the Securities
and Exchange Commission for an additional $175 million (total registrations of
$250 million before debt issuance) in debt securities. In the 1996 second
quarter, the Company issued $100 million of 30-year debentures with a coupon
rate of 7.875% under this authorization. The proceeds were used to retire
debt with shorter maturities, including $75 million that was classified as
long-term. At June 30, 1996, additional debt securities in amounts up to $150
million can be issued under the existing registrations. The debt-to-
capitalization ratio (debt divided by debt plus equity) at June 30, 1996 was
reduced to 44.4% compared with 45.6% at December 31, 1995. The Company also
maintains a revolving credit agreement with a consortium of U.S. and non-U.S.
banks expiring in 2000 under which the Company may borrow up to $175 million.
The agreement is intended to support the Company's commercial paper borrowings
and, to the extent not so utilized, provide domestic borrowing capacity. The
remaining borrowing capacity under this agreement at June 30, 1996, was $173.4
million. In addition to this agreement, the Company has uncommitted
arrangements with various banks to provide short-term financing as necessary.
The Company expects that cash flow from operating activities and available
credit lines will be sufficient to meet normal operating requirements over the
near term.
-13-
<PAGE>
TRINOVA CORPORATION
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibit is filed hereunder as part of Part I:
Exhibit (11) Statement re: Computation of Per Share Earnings
The following exhibit is filed as part of Part II:
Exhibit (27) Financial Data Schedule
The following exhibits are filed as part of Part II and are incorporated
by reference hereunder:
Exhibit (4)-1 First Supplemental Indenture, dated as of May 4,
1992, between TRINOVA Corporation and NBD Bank, with
respect to the issuance of $75,000,000 aggregate
principal amount of TRINOVA Corporation 7.95% Notes
Due 1997, filed as Exhibit (4)-1 to Form SE filed on
May 6, 1992
Exhibit (4)-2 7.95% Notes Due 1997, issued pursuant to the
Indenture, dated as of January 28, 1988, between
TRINOVA Corporation and NBD Bank (formerly National
Bank of Detroit), as supplemented by the First
Supplemental Indenture, dated as of May 4, 1992,
between TRINOVA Corporation and NBD Bank, filed as
Exhibit (4)-2 to Form SE filed on May 6, 1992
Exhibit (4)-3 Officers' Certificate of TRINOVA Corporation, dated
May 4, 1992, pursuant to Section 2.01 of the
Indenture, dated as of January 28, 1988, between
TRINOVA Corporation and NBD Bank (formerly National
Bank of Detroit), as supplemented by the First
Supplemental Indenture, dated as of May 4, 1992,
between TRINOVA Corporation and NBD Bank, filed as
Exhibit (4)-3 to Form SE filed on May 6, 1992
Exhibit (4)-4 Rights Agreement, dated January 26, 1989, between
TRINOVA Corporation and First Chicago Trust Company
of New York filed as Exhibit (2) to Form 8-A filed on
January 27, 1989, as amended by the First Amendment
to Rights Agreement, filed as Exhibit (5) to Form 8
filed on July 1, 1992
Exhibit (4)-5 Form of Share Certificate for Common Shares, $5 par
value, of TRINOVA Corporation, filed as Exhibit (4)-2
to Form SE filed on July 1, 1992
Exhibit (4)-6 Fiscal Agency Agreement, dated as of October 26,
1987, between TRINOVA Corporation, as Issuer, and
Bankers Trust Company, as Fiscal Agent, with respect
to $100,000,000 aggregate principal amount of TRINOVA
-14-
<PAGE>
Item 6. Exhibits and Reports on Form 8-K - Continued
Exhibit (4)-6 Corporation 6% Convertible Subordinated Debentures
(Continued) Due 2002, filed as Exhibit (4)-1 to Form SE filed on
March 18, 1993
Exhibit (4)-7 Indenture, dated as of January 28, 1988, between
TRINOVA Corporation and NBD Bank (formerly National
Bank of Detroit), with respect to the issuance of
$50,000,000 aggregate principal amount of TRINOVA
Corporation 9.55% Senior Sinking Fund Debentures Due
2018, and the issuance of $75,000,000 aggregate
principal amount of TRINOVA Corporation 7.95% Notes
Due 1997, filed as Exhibit (4)-2 to Form SE filed on
March 18, 1993
Exhibit (4)-8 Form of 7.875% Debentures due June 1, 2026, filed as
Exhibit (4)-1 to Form 8-K filed on June 3, 1996
Exhibit (4)-9 Indenture, dated as of May 1, 1996, between TRINOVA
Corporation and NBD Bank, Trustee, with respect to
the issuance of $100,000,000 aggregate principal
amount of 7.875% Debentures due June 1, 2026, filed
as Exhibit (4)-2 to Form 8-K filed on June 3, 1996
Exhibit (10)-1 TRINOVA Corporation 1982 Stock Option Plan, filed as
Exhibit (10)-1 to Form SE filed on March 18, 1993
Exhibit (10)-2 TRINOVA Corporation 1984 Incentive Compensation Plan,
filed as Exhibit (10)-2 to Form SE filed on March 18,
1993
Exhibit (10)-3 TRINOVA Corporation 1987 Stock Option Plan, filed as
Exhibit (10)-3 to Form SE filed on March 18, 1993
Exhibit (10)-4 Change in Control Agreement for Officers, filed as
Exhibit (10)-4 to Form SE filed on March 18, 1993
(the Agreements executed by the Company and various
executive officers of the Company are identical in
all respects to the form of Agreement filed as an
Exhibit to Form SE except as to differences in the
identity of the officers and the dates of execution,
and as to other variations directly necessitated by
said differences)
Exhibit (10)-5 Change in Control Agreement for Non-officers, filed
as Exhibit (10)-5 to Form SE filed on March 18, 1993
(the Agreements executed by the Company and various
non-officer employees of the Company are identical in
all respects to the form of Agreement filed as an
Exhibit to Form SE except as to differences in the
identity of the employees and the dates of execution,
and as to other variations directly necessitated by
said differences)
-15-
<PAGE>
Item 6. Exhibits and Reports on Form 8-K - Continued
Exhibit (10)-6 TRINOVA Corporation 1994 Stock Incentive Plan, filed
as Appendix A to the proxy statement for the annual
meeting held on April 21, 1994
Exhibit (10)-7 TRINOVA Corporation 1989 Non-Employee Directors'
Equity Plan, filed as Exhibit (10)-12 to Form 10-K
filed on March 18, 1994
Exhibit (10)-8 TRINOVA Corporation Plan for Optional Deferment of
Directors' Fees (amended and restated effective
April 1, 1995) filed as Exhibit (10)-8 to Form 10-K
filed on March 20, 1995
Exhibit (10)-9 TRINOVA Corporation Directors' Retirement Plan
(amended and restated effective January 1, 1990),
filed as Exhibit (10)-9 to Form 10-K filed on March
20, 1995
Exhibit (10)-10 TRINOVA Corporation Voluntary Deferred Compensation
Plan (effective April 1, 1995), filed as Exhibit
(10)-11 to Form 10-K filed on March 20, 1995
Exhibit (10)-11 TRINOVA Corporation Supplemental Benefit Plan
(amended and restated effective January 1, 1995),
filed as Exhibit (10)-10 to Form 10-Q filed on
August 10, 1995
Exhibit (99(i))-1 TRINOVA Corporation Directors' Charitable Award
Program, filed as Exhibit (99(i))-2 to Form 10-K
filed on March 18, 1994
Exhibit (99(i))-2 Credit Agreement, dated as of August 31, 1994, among
TRINOVA Corporation (borrower) and The Bank of Tokyo
Trust Company; Chemical Bank; Citibank, N.A;
Dresdner Bank AG, New York and Grand Cayman
branches; The First National Bank of Chicago; Morgan
Guaranty Trust Company of New York; NBD Bank; and
Union Bank of Switzerland, Chicago branches (banks)
and Citibank, N.A. (administrative agent), filed as
Exhibit (99(i))-2 to Form 10-Q filed on November 3,
1994
(b) A report on Form 8-K was filed on June 3, 1996, to report that the
Company, in connection with a shelf registration on Form S-3 of debt
securities in the principal amount of $175,000,000, entered into an
underwriting agreement as of May 29, 1996, with Morgan Stanley & Co.
and J. P. Morgan Securities Inc. to sell 7.875% notes due June 1,
2026, in the amount of $100,000,000. Notes in the amount of
$100,000,000 were issued June 3, 1996.
-16-
<PAGE>
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.
TRINOVA CORPORATION
By /S/ DARRYL F. ALLEN
-----------------------------------------
August 8, 1996 Darryl F. Allen
Chairman, President and
Chief Executive Officer
(Principal Executive Officer)
By /S/ DAVID M. RISLEY
August 8, 1996 -----------------------------------------
David M. Risley
Vice President - Finance and
Chief Financial Officer
(Principal Financial Officer)
-17-
EXHIBIT INDEX
Exhibit No. Page No.
(4)-1 First Supplemental Indenture, dated as of May 4, Incorporated
1992, between TRINOVA Corporation and NBD Bank, by Reference
with respect to the issuance of $75,000,000
aggregate principal amount of TRINOVA Corporation
7.95% Notes Due 1997, filed as Exhibit (4)-1 to
Form SE filed on May 6, 1992
(4)-2 7.95% Notes Due 1997, issued pursuant to the Incorporated
Indenture, dated as of January 28, 1988, between by Reference
TRINOVA Corporation and NBD Bank (formerly
National Bank of Detroit), as supplemented by
the First Supplemental Indenture, dated as of
May 4, 1992, between TRINOVA Corporation and NBD
Bank, filed as Exhibit (4)-2 to Form SE filed on
May 6, 1992
(4)-3 Officers' Certificate of TRINOVA Corporation, Incorporated
dated May 4, 1992, pursuant to Section 2.01 of by Reference
the Indenture, dated as of January 28, 1988,
between TRINOVA Corporation and NBD Bank
(formerly National Bank of Detroit), as
supplemented by the First Supplemental
Indenture, dated as of May 4, 1992, between
TRINOVA Corporation and NBD Bank, filed as
Exhibit (4)-3 to Form SE filed on May 6, 1992
(4)-4 Rights Agreement, dated January 26, 1989, Incorporated
between TRINOVA Corporation and First Chicago by Reference
Trust Company of New York filed as Exhibit (2)
to Form 8-A filed on January 27, 1989, as
amended by the First Amendment to Rights
Agreement filed as Exhibit (5) to Form 8 filed
on July 1, 1992
(4)-5 Form of Share Certificate for Common Shares, $5 Incorporated
par value, of TRINOVA Corporation, filed as by Reference
Exhibit (4)-2 to Form SE filed on July 1, 1992
(4)-6 Fiscal Agency Agreement, dated as of October 26, Incorporated
1987, between TRINOVA Corporation, as Issuer, by Reference
and Bankers Trust Company, as Fiscal Agent, with
respect to $100,000,000 aggregate principal
amount of TRINOVA Corporation 6% Convertible
Subordinated Debentures Due 2002, filed as
Exhibit (4)-1 to Form SE filed on March 18, 1993
-18-
<PAGE>
EXHIBIT INDEX - Continued
Exhibit No. Page No.
(4)-7 Indenture, dated as of January 28, 1988, between Incorporated
TRINOVA Corporation and NBD Bank (formerly by Reference
National Bank of Detroit), with respect to the
issuance of $50,000,000 aggregate principal
amount of TRINOVA Corporation 9.55% Senior
Sinking Fund Debentures Due 2018, and the
issuance of $75,000,000 aggregate principal
amount of TRINOVA Corporation 7.95% Notes Due
1997, filed as Exhibit (4)-2 to Form SE filed
on March 18, 1993
(4)-8 Form of 7.875% Debentures due June 1, 2026, Incorporated
filed as Exhibit (4)-1 to Form 8-K filed on by Reference
June 3, 1996
(4)-9 Indenture, dated as of May 1, 1996, between Incorporated
TRINOVA Corporation and NBD Bank, Trustee, with by Reference
respect to the issuance of $100,000,000 aggregate
principal amount of 7.875% Debentures due June 1,
2026, filed as Exhibit (4)-2 to Form 8-K filed on
June 3, 1996
(10)-1 TRINOVA Corporation 1982 Stock Option Plan, Incorporated
filed as Exhibit (10)-1 to Form SE filed on by Reference
March 18, 1993
(10)-2 TRINOVA Corporation 1984 Incentive Compensation Incorporated
Plan, filed as Exhibit (10)-2 to Form SE filed by Reference
on March 18, 1993
(10)-3 TRINOVA Corporation 1987 Stock Option Plan, Incorporated
filed as Exhibit (10)-3 to Form SE filed on by Reference
March 18, 1993
(10)-4 Change in Control Agreement for Officers, Incorporated
filed as Exhibit (10)-4 to Form SE filed on by Reference
March 18, 1993 (the Agreements executed by the
Company and various executive officers of the
Company are identical in all respects to the
form of Agreement filed as an Exhibit to Form SE
except as to differences in the identity of the
officers and the dates of execution, and as to
other variations directly necessitated by said
differences)
-19-
<PAGE>
EXHIBIT INDEX - Continued
Exhibit No. Page No.
(10)-5 Change in Control Agreement for Non-officers, Incorporated
filed as Exhibit (10)-5 to Form SE filed on by Reference
March 18, 1993 (the Agreements executed by the
Company and various non-officer employees of
the Company are identical in all respects to
the form of Agreement filed as an Exhibit to
Form SE except as to differences in the identity
of the employees and the dates of execution, and
as to other variations directly necessitated by
said differences)
(10)-6 TRINOVA Corporation 1994 Stock Incentive Plan, Incorporated
filed as Appendix A to the proxy statement for by Reference
the annual meeting held on April 21, 1994
(10)-7 TRINOVA Corporation 1989 Non-Employee Directors' Incorporated
Equity Plan, filed as Exhibit (10)-12 to by Reference
Form 10-K filed on March 18, 1994
(10)-8 TRINOVA Corporation Plan for Optional Deferment Incorporated
of Directors' Fees (amended and restated by Reference
effective April 1, 1995) filed as Exhibit (10)-8
to Form 10-K filed on March 20, 1995
(10)-9 TRINOVA Corporation Directors' Retirement Plan Incorporated
(amended and restated effective January 1, 1990) by Reference
filed as Exhibit (10)-9 to Form 10-K filed on
March 20, 1995
(10)-10 TRINOVA Corporation Voluntary Deferred Compensation Incorporated
Plan (effective April 1, 1995), filed as Exhibit by Reference
(10)-11 to Form 10-K filed on March 20, 1995
(10)-11 TRINOVA Corporation Supplemental Benefit Plan Incorporated
(amended and restated effective January 1, 1995), by Reference
filed as Exhibit (10)-10 to Form 10-Q filed on
August 10, 1995
(11) Statement re: Computation of Per Share Earnings 22
(27) Financial Data Schedule 23
(99(i))-1 TRINOVA Corporation Directors' Charitable Award Incorporated
Program, filed as Exhibit (99(i))-2 to by Reference
Form 10-K filed on March 18, 1994
-20-
<PAGE>
EXHIBIT INDEX - Continued
(99(i))-2 Credit Agreement, dated as of August 31, 1994, Incorporated
among TRINOVA Corporation (borrower) and The Bank by Reference
of Tokyo Trust Company; Chemical Bank; Citibank,
N.A.; Dresdner Bank AG, New York and Grand Cayman
branches; The First National Bank of Chicago;
Morgan Guaranty Trust Company of New York; NBD
Bank; and Union Bank of Switzerland, Chicago
branches (banks) and Citibank, N.A. (administrative
agent), filed as Exhibit (99(i))-2 to Form 10-Q
filed on November 3, 1994
-21-
EXHIBIT 11
<TABLE>
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
TRINOVA CORPORATION
(In thousands, except per share data)
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------ -------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
AVERAGE SHARES OF COMMON STOCK
AND COMMON STOCK EQUIVALENTS
OUTSTANDING (NOTE A)
Average shares outstanding 28,551 28,815 28,652 28,812
Assumed conversion of the 6%
convertible debentures 1,905 1,905 1,905 1,905
Net effect of dilutive stock
options based upon treasury stock
method using average market price 72 70 72 70
--------- ---------- ---------- ----------
Average shares of common stock
and common stock equivalents
outstanding 30,528 30,790 30,629 30,787
========== ========== ========== ==========
INCOME ATTRIBUTABLE TO COMMON STOCK (NOTE A)
Net income $ 33,060 $ 33,280 $ 57,475 $ 55,868
After-tax equivalent of interest
expense on the 6% convertible
debentures 930 930 1,860 1,860
---------- ---------- ---------- ----------
Income attributable to common stock $ 33,990 $ 34,210 $ 59,335 $ 57,728
========== ========== ========== ==========
Net Income per Share $ 1.11 $ 1.11 $ 1.94 $ 1.88
========== ========== ========== ==========
<FN>
Note A - Net income per share is computed using the average number of common
shares outstanding, including common stock equivalents. The assumed
conversion of the Company's 6% convertible debentures was included in average
shares outstanding, increasing the average number of shares outstanding by
1,904,762 shares. For purposes of computing net income per share, net income
was increased for the after-tax equivalent of interest expense on the 6%
convertible debentures.
</FN>
</TABLE>
-22-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENT OF FINANCIAL POSITION AND THE CONDENSED STATEMENT OF OPERATIONS AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 18,538
<SECURITIES> 0
<RECEIVABLES> 363,444
<ALLOWANCES> 14,299
<INVENTORY> 254,912
<CURRENT-ASSETS> 664,868
<PP&E> 973,196
<DEPRECIATION> 546,406
<TOTAL-ASSETS> 1,248,133
<CURRENT-LIABILITIES> 409,096
<BONDS> 252,304
<COMMON> 142,317
0
0
<OTHER-SE> 279,998
<TOTAL-LIABILITY-AND-EQUITY> 1,248,133
<SALES> 1,030,037
<TOTAL-REVENUES> 1,030,037
<CGS> 769,871
<TOTAL-COSTS> 769,871
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,127
<INCOME-PRETAX> 89,675
<INCOME-TAX> 32,200
<INCOME-CONTINUING> 57,475
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 57,475
<EPS-PRIMARY> 1.94
<EPS-DILUTED> 1.94
</TABLE>
