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, 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 August 5, 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 -
June 30, 1994 and December 31, 1993 1
Consolidated Condensed Statements of
Income for the Three Months and Six
Months Ended June 30, 1994 and 1993 2
Consolidated Condensed Statements of
Cash Flows for the Six Months
Ended June 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
June 30, December 31,
1994 1993
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 72,330,000 $ 69,770,000
Receivables 81,770,000 58,710,000
Inventories 78,400,000 76,700,000
Prepaid expenses 10,150,000 9,790,000
Total current assets 242,650,000 214,970,000
Property and equipment 164,740,000 162,230,000
Excess of cost over net assets
of acquired companies 150,630,000 152,210,000
Notes receivable 8,390,000 8,160,000
Other assets 24,600,000 26,560,000
Total assets $591,010,000 $564,130,000
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 21,650,000 $ 20,330,000
Accrued liabilities 33,080,000 30,550,000
Current portion of
long-term debt 320,000 320,000
Total current
liabilities 55,050,000 51,200,000
Deferred income taxes and other 29,600,000 29,190,000
Long-term debt 238,630,000 238,890,000
Total liabilities 323,280,000 319,280,000
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 114,900,000 91,700,000
Cumulative translation adjustments (1,620,000) (1,410,000)
Total shareholders'
equity 267,730,000 244,850,000
Total liabilities and
shareholders' equity $591,010,000 $564,130,000
The accompanying notes are an integral part of the
consolidated financial statements.
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TRIMAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
Six Months Ended Three Months Ended
June 30, June 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net sales $281,400,000 $225,520,000 $146,940,000 $118,600,000
Cost of sales (190,820,000) (154,510,000) (97,620,000) (80,360,000)
Selling, general and
administrative expenses (42,750,000) (34,730,000) (21,890,000) (17,470,000)
Operating profit 47,830,000 36,280,000 27,430,000 20,770,000
Interest expense (5,930,000) (4,080,000) (3,090,000) (1,790,000)
Other income (expense),
net 1,410,000 1,530,000 780,000 670,000
(4,520,000) (2,550,000) (2,310,000) (1,120,000)
Income before income
taxes 43,310,000 33,730,000 25,120,000 19,650,000
Income taxes 17,540,000 13,660,000 10,180,000 8,000,000
Net income $ 25,770,000 $ 20,070,000 $ 14,940,000 $ 11,650,000
Preferred stock
dividends,
MascoTech, Inc. $ 3,500,000 $ 1,750,000
Earnings available for
common stock $ 25,770,000 $ 16,570,000 $ 14,940,000 $ 9,900,000
Earnings per common
share:
Primary $.70 $.57 $.40 $.34
Fully diluted $.66 $.54 $.38 $.32
Dividends declared per
common share $.07 $.055 $.04 $.03
Weighted average number
of common and common
equivalent shares
outstanding:
Primary 37,038,000 29,152,000 37,038,000 29,171,000
Fully diluted 42,121,000 36,974,000 42,120,000 36,974,000
</TABLE>
The accompanying notes are an integral part of the
consolidated condensed financial statements.
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TRIMAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
June 30,
1994 1993
CASH FROM (USED FOR):
OPERATIONS:
Net income $25,770,000 $20,070,000
Adjustments to reconcile net income
to net cash from operations:
Depreciation and amortization 10,490,000 8,960,000
Deferred income taxes 600,000 500,000
(Increase) decrease in
receivables (23,290,000) (18,310,000)
(Increase) decrease in inventories (1,700,000) 5,020,000
Increase (decrease) in accounts
payable and accrued liabilities 4,670,000 4,020,000
Other, net (490,000) (2,200,000)
Net cash from (used for)
operations 16,050,000 18,060,000
INVESTMENTS:
Capital expenditures (11,030,000) (8,870,000)
Net cash from (used for)
investments (11,030,000) (8,870,000)
FINANCING:
Retirement of long-term debt (260,000) (50,000)
Preferred stock dividends paid to
MascoTech, Inc. (8,750,000)
Common stock dividends paid (2,200,000) (1,440,000)
Net cash from (used for)
financing (2,460,000) (10,240,000)
CASH AND CASH EQUIVALENTS:
Increase (decrease) for the period 2,560,000 (1,050,000)
At beginning of period 69,770,000 64,770,000
At end of period $72,330,000 $63,720,000
The accompanying notes are an integral part of the
consolidated condensed financial statements.
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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:
June 30, December 31,
1994 1993
Finished goods $39,230,000 $41,950,000
Work in process 13,130,000 12,230,000
Raw material 26,040,000 22,520,000
$78,400,000 $76,700,000
C. Property and equipment reflects accumulated depreciation of $97.3 million
and $92.3 million as of June 30, 1994 and December 31, 1993, respectively.
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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 second quarter of 1994 equalled $146.9 million,
exceeding last year's second quarter sales by 23.9 percent, and established a
new quarterly sales record for the Company. First half 1994 sales increased
24.8 percent over the comparable period in 1993 to $281.4 million, again
representing a record for the relevant period. Operating results during 1994
include those of Lamons Metal Gasket Co., acquired in November, 1993.
All four of the Company's business segments experienced an increase in sales
during the second quarter of 1994 over the comparable period last year. Net
sales of the Towing Systems segment increased 19.1 percent over 1993's second
quarter to $53.8 million. Sales for the six month period were $95.5 million, an
18.5 percent increase over the $80.6 million achieved in the comparable period
in 1993. These increases were the result of several factors, including the
strength of the automotive industry, primarily the continuing trend in new
vehicle sales toward light trucks and sport utility vehicles which are more apt
to use towing systems products, ongoing new product introductions and strong
demand for marine aftermarket products. The seasonality of the end-markets
served by this segment cause its sales to be concentrated in the second and
third quarters of each year.
Second quarter 1994 sales by the Specialty Fasteners segment were $35.7
million, a 15.0 percent increase over the comparable period in 1993. Strong
demand from the heavy-duty truck, distribution, and other original equipment
industrial markets continue to favorably impact the performance of this
segment. For the first six months of 1994, sales by the Specialty Fasteners
segment increased 15.3 percent over the first six months of 1993 to $71.0
million.
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Specialty Container Products segment sales for the second quarter of
1994 were $40.2 million, a 42.6 percent increase over the second quarter of
1993, reflecting the inclusion of the results of Lamons Metal Gasket Co. in
1994. For the first six months sales increased 54.0 percent to $81.4 million.
In addition to the effect of the Lamons Metal Gasket acquisition, year-to-date
sales of specialty container closures, dispensing equipment and compressed gas
cylinders improved as the strength of the general economy continued to impact
the markets served by these products.
Second quarter sales by the Corporate Companies segment increased 21.2
percent to $17.3 million over 1993's revenues of $14.3 million. For the first
six months of 1994, sales exceeded 1993 results by 9.9 percent equalling $33.6
million. The segment continues to benefit from record demand for specialty
industrial tape products, and strong demand for vapor barrier products used in
many construction applications.
The Company's consolidated gross margin for the second quarter of 1994 was
33.6 percent compared to 32.2 percent for the second quarter of 1993. For the
first six months of 1994 and 1993 gross margin was 32.2 percent and 31.5
percent, respectively. Because of the seasonal factors relating to the Towing
Systems segment and the volume sensitive nature of the Company's operations,
gross margin recorded in the second quarter is typically higher than that which
is realized during the first quarter. 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 of $27.4 million during the
second quarter of 1994 represents a 32.1 percent increase over the second
quarter of 1993. The operating margin increased to 18.7 percent from 17.5
percent achieved in the second quarter of 1993. Operating profit for the first
six months of 1994 was $47.8 million and represented an operating margin
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of 17.0 percent compared to 1993's first six months operating profit of
$36.3 million or 16.1 percent of net sales. The operating profits of all of the
Company's reporting segments increased during the second quarter and the first
six months of 1994 compared to comparable periods in 1993. This improvement in
profit is primarily the result of the successful cost reduction efforts employed
by the operating units, as well as the previously mentioned sales increases and
related volume sensitivity.
Earnings available for common stock for the six months and three months
ended June 30, 1994 were $25.8 million and $14.9 million respectively, compared
to $16.6 million and $9.9 million respectively, after provisions for preferred
stock dividends, in last year's comparable periods. Primary earnings per common
share equalled $.70 on 37.0 million shares for the first six months of 1994
compared to 1993's primary earnings per common share of $.57 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 $.66 on 42.1
million shares versus $.54 on 37.0 million shares for the six months ended June
30, 1994 and 1993. The increase in fully diluted shares was the result of the
issuance of Convertible Subordinated Debentures in August, 1993. Primary and
fully diluted earnings per common share for the second quarters of 1994 and 1993
were $.40 and $.38, and $.34 and $.32, respectively.
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
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service and dividends, while maintaining its strategic level of
liquidity. At June 30, 1994 the current ratio was 4.4 to 1 and working capital
equalled $187.6 million, including $72.3 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 June 30, 1994, the Company had available credit of $228.0
million under its revolving credit facility.
Cash flows from operations provided $16.1 million and $18.1 million during
the first six months of 1994 and 1993, respectively. These operating cash flows
were net of increases in accounts receivable of $23.3 million in 1994 and $18.3
million in 1993 due mainly to the seasonality of the Towing Systems segment as
well as increased sales by all of the Company's business segments.
Historically, the cash flow provided by the seasonal increase in receivables is
realized later in the year. Capital expenditures equalled $11.0 million in 1994
and $8.9 million in 1993. The conversion of the Company's Preferred Stock into
common shares in December, 1993 and an increase in the common stock dividend
rate resulted in an increase in common stock dividends paid to $2.2 million in
1994 versus $1.4 million in 1993. No preferred stock dividends were paid in the
first six months of 1994, as compared to $8.8 million during 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.
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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
(b) Reports on Form 8-K:
None were filed during the quarter ended June 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: August 10, 1994 By: /s/William E. Meyers
William E. Meyers
Vice President - Controller
(Chief accounting officer
and authorized signatory)
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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.
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Exhibit 11
TRIMAS CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
(In Thousands, Except Per Share Amounts)
Six Months Ended Three Months Ended
June 30, June 30,
1994 1993 1994 1993
Primary:
Net income $25,770 $20,070 $14,940 $11,650
Preferred stock
dividend requirement (3,500) (1,750)
Earnings available
for common stock $25,770 $16,570 $14,940 $ 9,900
Weighted average common
shares outstanding 36,644 28,867 36,644 28,867
Dilution of stock options 394 285 394 304
Weighted average common
and common equivalent
shares outstanding
after assumed exercise
of options 37,038 29,152 37,038 29,171
Primary earnings per
common share $.70 $.57 $.40 $.34
Fully diluted:
Net income $25,770 $20,070 $14,940 $11,650
Add after tax
convertible
debenture related
expenses 1,840 920
Net income as adjusted $27,610 $20,070 $15,860 $11,650
Weighted average common
shares outstanding 36,644 28,867 36,644 28,867
Dilution of stock options 394 329 393 329
Addition from assumed
conversion of
convertible preferred
stock 7,778 7,778
Addition from assumed
conversion of
convertible debentures 5,083 5,083
Weighted average common
and common equivalent
shares outstanding on
a fully diluted basis 42,121 36,974 42,120 36,974
Fully diluted earnings
per common share $.66 $.54 $.38 $.32
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Exhibit 12
TRIMAS CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(Dollar Amounts in Thousands)
Six Months Ended Three Months Ended
June 30, June 30,
1994 1993 1994 1993
Earnings:
Income before income taxes $43,310 $33,730 $25,120 $19,650
Fixed charges 6,420 4,490 3,330 2,010
Earnings before fixed
charges $49,730 $38,220 $28,450 $21,660
Fixed Charges:
Interest $6,050 $4,200 $3,150 $1,850
Portion of rental expense 440 360 220 200
Fixed charges $6,490 $4,560 $3,370 $2,050
Ratios of earnings to fixed charges 7.7 8.4 8.4 10.6
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