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 September 30, 1994
Commission file number 1-10716
TRIMAS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 38-2687639
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
315 East Eisenhower Parkway, Ann Arbor, Michigan 48108
(Address of principal executive offices) (Zip Code)
(313) 747-7025
(Telephone number)
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
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Shares Outstanding at
Class October 31, 1994
Common Stock, $.01 Par Value 36,644,101
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TRIMAS CORPORATION
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Condensed Balance Sheets -
September 30, 1994 and December 31, 1993 1
Consolidated Condensed Statements of
Income for the Three Months and Nine
Months Ended September 30, 1994 and 1993 2
Consolidated Condensed Statements of
Cash Flows for the Nine Months
Ended September 30, 1994 and 1993 3
Notes to Consolidated Condensed
Financial Statements 4
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 5
Part II. Other Information and Signature 9
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
TRIMAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
September 30, December 31,
1994 1993
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 96,200,000 $ 69,770,000
Receivables 70,080,000 58,710,000
Inventories 77,870,000 76,700,000
Prepaid expenses 9,500,000 9,790,000
Total current assets 253,650,000 214,970,000
Property and equipment 166,330,000 162,230,000
Excess of cost over net assets
of acquired companies 149,730,000 152,210,000
Notes receivable 9,090,000 8,160,000
Other assets 24,080,000 26,560,000
Total assets $602,880,000 $564,130,000
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 19,540,000 $ 20,330,000
Accrued liabilities 36,280,000 30,550,000
Current portion of long-term debt 320,000 320,000
Total current liabilities 56,140,000 51,200,000
Deferred income taxes and other 29,250,000 29,190,000
Long-term debt 238,600,000 238,890,000
Total liabilities 323,990,000 319,280,000
Shareholders' equity:
Common stock, $.01 par value, authorized
100 million shares, outstanding 36.6
million shares 370,000 370,000
Paid-in capital 154,080,000 154,190,000
Retained earnings 125,810,000 91,700,000
Cumulative translation adjustments (1,370,000) (1,410,000)
Total shareholders' equity 278,890,000 244,850,000
Total liabilities and
shareholders' equity $602,880,000 $564,130,000
The accompanying notes are an integral part of the
consolidated financial statements.
1
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TRIMAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net sales $414,990,000 $335,230,000 $133,590,000 $109,710,000
Cost of sales (280,830,000) (229,200,000) (90,010,000) (74,690,000)
Selling, general and
administrative expenses (63,460,000) (52,520,000) (20,710,000) (17,790,000)
Operating profit 70,700,000 53,510,000 22,870,000 17,230,000
Interest expense (9,310,000) (6,250,000) (3,380,000) (2,170,000)
Other income (expense),
net 2,710,000 2,350,000 1,300,000 820,000
(6,600,000) (3,900,000) (2,080,000) (1,350,000)
Income before income
taxes 64,100,000 49,610,000 20,790,000 15,880,000
Income taxes 25,960,000 20,090,000 8,420,000 6,430,000
Net income $ 38,140,000 $ 29,520,000 $ 12,370,000 $ 9,450,000
Preferred stock
dividends,
MascoTech, Inc. $ 5,250,000 $ 1,750,000
Earnings available for
common stock $ 38,140,000 $ 24,270,000 $ 12,370,000 $ 7,700,000
Earnings per common
share:
Primary $1.03 $.83 $.33 $.26
Fully diluted $.97 $.79 $.32 $.25
Dividends declared per
common share $.11 $.085 $.04 $.03
Weighted average number
of common and common
equivalent shares
outstanding:
Primary 37,033,000 29,165,000 37,022,000 29,189,000
Fully diluted 42,116,000 37,997,000 42,104,000 40,016,000
</TABLE>
The accompanying notes are an integral part of the
consolidated condensed financial statements.
2
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TRIMAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
September 30,
1994 1993
CASH FROM (USED FOR):
OPERATIONS:
Net income $38,140,000 $29,520,000
Adjustments to reconcile net income
to net cash from operations:
Depreciation and amortization 15,810,000 13,560,000
Deferred income taxes 1,100,000 750,000
(Increase) decrease in receivables (12,300,000) (12,440,000)
(Increase) decrease in inventories (1,170,000) 3,000,000
Increase (decrease) in accounts
payable and accrued liabilities 5,580,000 5,210,000
Other, net (120,000) (1,630,000)
Net cash from (used for)
operations 47,040,000 37,970,000
INVESTMENTS:
Capital expenditures (16,660,000) (16,130,000)
Net cash from (used for)
investments (16,660,000) (16,130,000)
FINANCING:
Issuance of convertible subordinated
debt, net 112,050,000
Retirement of long-term debt (290,000) (115,070,000)
Preferred stock dividends paid to
MascoTech, Inc. (10,500,000)
Common stock dividends paid (3,660,000) (2,310,000)
Net cash from (used for)
financing (3,950,000) (15,830,000)
CASH AND CASH EQUIVALENTS:
Increase (decrease) for the period 26,430,000 6,010,000
At beginning of period 69,770,000 64,770,000
At end of period $96,200,000 $70,780,000
The accompanying notes are an integral part of the
consolidated condensed financial statements.
3
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TRIMAS CORPORATION AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
A. Basis of Presentation
The accompanying unaudited consolidated condensed financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to
Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments considered necessary for a fair
presentation have been included, and such adjustments are of a normal
recurring nature.
The year-end condensed balance sheet data was derived from audited
financial statements, but does not include all disclosures required by
generally accepted accounting principles. For further information, refer
to the consolidated financial statements and footnotes thereto included in
the Company's annual report on Form 10-K for the year ended December 31,
1993. Certain amounts in the 1993 financial statements have been
reclassified to conform with the current presentation.
B. Inventories by component are as follows:
September 30, December 31,
1994 1993
Finished goods $41,050,000 $41,950,000
Work in process 12,270,000 12,230,000
Raw material 24,550,000 22,520,000
$77,870,000 $76,700,000
C. Property and equipment reflects accumulated depreciation of $101.3 million
and $92.3 million as of September 30, 1994 and
December 31, 1993, respectively.
4
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Net sales during the third quarter of 1994 equaled $133.6 million,
exceeding last year's third quarter sales by 21.8 percent. Sales during 1994's
first nine months increased 23.8 percent over the comparable period in 1993 to
$415.0 million. Both third quarter and year-to-date sales represent records for
the relevant periods as all four of the Company's reporting segments experienced
increases in sales over the corresponding periods of 1993. Operating results
during 1994 include those of Lamons Metal Gasket Co., acquired in November,
1993.
Net sales of the Towing Systems segment increased 9.8 percent in the third
quarter of 1994, and 15.7 percent in the first nine months of 1994. Sales for
this segment reached $40.8 million for the third quarter of 1994, and $136.2
million for the first nine months of 1994. Factors contributing to these sales
increases include a stronger automotive sales cycle, particularly sales of light
trucks and sport utility vehicles which are more apt to use towing system
products, strong demand for marine OEM and aftermarket products, and continuing
new product introductions. Because of the seasonality of the demand for the
products provided by this segment, its sales are concentrated in the second and
third quarters of each year.
Third quarter 1994 sales by the Specialty Fasteners segment increased 11.0
percent over 1993's level to $34.0 million. For the first nine months of the
year, sales increased 13.9 percent to $105.0 million. Increased sales to heavy-
duty truck, distribution, and other original equipment industrial markets have
favorably impacted the operating results of this segment. As customers in these
markets have continued to consolidate their vendor bases,
5
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preferred suppliers like the TriMas Specialty Fasteners companies have increased
their market shares.
Sales of the Specialty Container Products segment for the third quarter
1994 were $40.9 million, a 57.7 percent increase over the comparable period in
1993. For the first nine months of the year, sales increased 55.2 percent to
$122.3 million. In addition to the impact of the Lamons Metal Gasket
acquisition which is reflected in 1994's results, sales of specialty container
closures and compressed gas cylinders improved as the industrial and commercial
markets requiring these products strengthened along with the general economy.
Corporate Companies segment sales were $17.9 million during the 1994 third
quarter, an 11.9 percent increase over 1993's third quarter. Sales for the
first nine months of 1994 increased 10.6 percent to $51.5 million. Strong
demand for cutting tools, specialty industrial tape products and vapor barrier
products used in construction applications contributed to the improved
performance of this segment.
The Company's consolidated gross margin for the third quarter of 1994 was
32.6 percent compared to 31.9 percent for the third quarter of 1993. For the
first nine months of 1994 and 1993, the gross margins were 32.3 percent and 31.6
percent, respectively. The volume sensitive nature of the Company's operations
results in improved gross margins as sales increase. Maintaining high gross
margins is an important operating strategy of the Company as it helps maximize
earnings growth as a result of sales increases.
The Company's consolidated operating profit for the third quarter of 1994
was $22.9 million, a 32.7 percent increase over the similar period of 1993. The
operating margins for the three months ended September 30, 1994 and 1993 were
17.1 percent and 15.7 percent, respectively. For the first nine
6
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months of 1994, operating profit increased 32.1 percent to $70.7 million and
represented an operating margin of 17.0 percent, compared to operating profit of
$53.5 million or 16.0 percent of net sales in 1993. All four of the Company's
segments reported an increase in operating profit for the third quarter and the
first nine months of 1994. This improvement in profit is primarily the result
of successful cost reduction programs employed by the operating units, as well
as the previously discussed increased sales volumes including the effect of the
Lamons acquisition.
Interest expense increased in both the third quarter and first nine months
of 1994 compared to last year principally because of the borrowings associated
with the Lamons acquisition and higher prevailing interest rates. Higher
interest rates and increased average cash balances resulted in more interest
income, the major component of other income, in both 1994 periods.
Earnings available for common stock for the nine months and three months
ended September 30, 1994 were $38.1 million and $12.4 million respectively,
compared to $24.3 million and $7.7 million respectively, after provisions for
preferred stock dividends, in last year's comparable periods. Primary earnings
per common share equalled $1.03 on 37.0 million shares for the first nine months
of 1994 compared to 1993's primary earnings per common share of $.83 on 29.2
million shares. The increase in common shares outstanding was the result of the
conversion of the Company's $100 Convertible Participating Preferred Stock in
December, 1993. Fully diluted earnings per common share were $.97 on 42.1
million shares versus $.79 on 38.0 million shares for the nine months ended
September 30, 1994 and 1993, respectively. The increase in fully diluted shares
was the result of the issuance of 5% Convertible Subordinated Debentures in
August, 1993. Primary and fully diluted earnings per common share for the third
quarter of 1994 were $.33 and $.32, compared to $.26 and $.25 in 1993's third
quarter.
7
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Liquidity, Working Capital and Cash Flows
The Company's financial strategies include maintaining a relatively high
level of liquidity. Historically, TriMas Corporation has generated sufficient
cash flows from operating activities to fund capital expenditures, debt service
and dividends, while maintaining its strategic level of liquidity. At September
30, 1994 the current ratio was 4.5 to 1 and working capital equalled $197.5
million, including $96.2 million of cash and cash equivalents. At December 31,
1993 the current ratio was 4.2 to 1 and working capital equalled $163.8
million. At September 30, 1994, the Company had available credit of $228.0
million under its revolving credit facility.
Cash flows from operations provided $47.0 million and $38.0 million during
the first nine months of 1994 and 1993, respectively. These operating cash
flows were net of increases in receivables of $12.3 million in 1994 and $12.4
million in 1993. This increase in receivables during the first nine months of
each year is due mainly to the seasonality of the Towing Systems segment, and
increased sales volumes. Capital expenditures equalled $16.7 million and $16.1
million in 1994 and 1993, respectively. The conversion of the Company's
Preferred Stock in December, 1993 and an increase in the dividend rate resulted
in common stock dividends paid in 1994 of $3.7 million versus $2.3 million in
1993. No preferred stock dividends have been paid in 1994 compared to $10.5
million paid in the first nine months of 1993.
The Company believes its cash flows from operations, along with its
borrowing capacity and access to financial markets, are adequate to fund its
strategies for future growth, including working capital, expenditures for
manufacturing expansion and efficiencies, market share initiatives, and
corporate development activities.
8
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
11 Computation of Earnings Per Common Share
12 Computation of Ratios of Earnings to Fixed Charges
27 Financial Data Schedule
(b) Reports on Form 8-K:
None were filed during the quarter ended
September 30, 1994.
SIGNATURE
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.
TRIMAS CORPORATION
Date: November 9, 1994 By: /s/William E. Meyers
William E. Meyers
Vice President - Controller
(Chief accounting officer
and authorized signatory)
9
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Exhibit Index
Exhibit
Number Description of Document
11 Computation of Earnings Per Common Share
12 Computation of Ratios of Earnings to Fixed Charges
27 Financial Data Schedule
Exhibit 11
TRIMAS CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
(In Thousands, Except Per Share Amounts)
Nine Months Ended Three Months Ended
September 30, September 30,
1994 1993 1994 1993
Primary:
Net income $38,140 $29,520 $12,370 $ 9,450
Preferred stock
dividend requirement (5,250) (1,750)
Earnings available
for common stock $38,140 $24,270 $12,370 $ 7,700
Weighted average common
shares outstanding 36,644 28,867 36,644 28,867
Dilution of stock options 389 298 378 322
Weighted average common
and common equivalent
shares outstanding
after assumed exercise
of options 37,033 29,165 37,022 29,189
Primary earnings per
common share $1.03 $.83 $.33 $.26
Fully diluted:
Net income $38,140 $29,520 $12,370 $ 9,450
Add after tax convertible
debenture related
expenses 2,760 920
Net income as adjusted $40,900 $29,520 $13,290 $ 9,450
Weighted average common
shares outstanding 36,644 28,867 36,644 28,867
Dilution of stock options 389 326 377 326
Addition from assumed
conversion of
convertible preferred
stock 7,778 7,778
Addition from assumed
conversion of convertible
debentures 5,083 1,026 5,083 3,045
Weighted average common
and common equivalent
shares outstanding on
a fully diluted basis 42,116 37,997 42,104 40,016
Fully diluted earnings
per common share $.97 $.79 $.32 $.25
<PAGE>
Exhibit 12
TRIMAS CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(Dollar Amounts in Thousands)
Nine Months Ended Three Months Ended
September 30, September 30,
1994 1993 1994 1993
Earnings:
Income before income taxes $64,100 $49,610 $20,790 $15,880
Fixed charges 10,030 6,840 3,620 2,350
Earnings before fixed
charges $74,130 $56,450 $24,410 $18,230
Fixed Charges:
Interest $ 9,490 $6,430 $3,440 $2,230
Portion of rental expense 660 510 220 150
Fixed charges $10,150 $6,940 $3,660 $2,380
Ratios of earnings to fixed charges 7.3 8.1 6.7 7.7
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM TRIMAS
CORPORATION'S 3RD QUARTER 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> QTR-3
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 96,200,000
<SECURITIES> 0
<RECEIVABLES> 72,140,000
<ALLOWANCES> 2,060,000
<INVENTORY> 77,870,000
<CURRENT-ASSETS> 253,650,000
<PP&E> 267,650,000
<DEPRECIATION> 101,320,000
<TOTAL-ASSETS> 602,880,000
<CURRENT-LIABILITIES> 56,140,000
<BONDS> 238,600,000
<COMMON> 370,000
0
0
<OTHER-SE> 278,520,000
<TOTAL-LIABILITY-AND-EQUITY> 602,880,000
<SALES> 414,990,000
<TOTAL-REVENUES> 414,990,000
<CGS> 280,830,000
<TOTAL-COSTS> 280,830,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,310,000
<INCOME-PRETAX> 64,100,000
<INCOME-TAX> 25,960,000
<INCOME-CONTINUING> 38,140,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 38,140,000
<EPS-PRIMARY> 1.03
<EPS-DILUTED> .97
</TABLE>
