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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 COMMISSION FILE NUMBER 1-10716
TRIMAS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C>
DELAWARE 38-2687639
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
315 EAST EISENHOWER PARKWAY 48108
ANN ARBOR, MICHIGAN (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 313-747-7025
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
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NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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<S> <C>
COMMON STOCK, $.01 PAR VALUE NEW YORK STOCK EXCHANGE, INC.
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
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 [ ]
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405
OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K. [X]
THE AGGREGATE MARKET VALUE OF THE REGISTRANT'S COMMON STOCK HELD BY
NON-AFFILIATES OF THE REGISTRANT ON MARCH 21, 1997 (BASED ON THE CLOSING SALE
PRICE OF $23 1/2 OF THE REGISTRANT'S COMMON STOCK AS REPORTED ON THE NEW YORK
STOCK EXCHANGE COMPOSITE TAPE ON SUCH DATE) WAS APPROXIMATELY $490,141,000.
NUMBER OF SHARES OUTSTANDING OF THE REGISTRANT'S COMMON STOCK AT MARCH 21, 1997:
41,332,151 SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE
PORTIONS OF THE REGISTRANT'S DEFINITIVE PROXY STATEMENT TO BE FILED FOR ITS 1997
ANNUAL MEETING OF STOCKHOLDERS ARE INCORPORATED BY REFERENCE INTO PART III OF
THIS REPORT.
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TABLE OF CONTENTS
<TABLE>
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ITEM PAGE
- ---- ----
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PART I
1. Business.................................................... 2
2. Properties.................................................. 7
3. Legal Proceedings........................................... 7
4. Submission of Matters to a Vote of Security Holders......... 8
Supplementary Item. Executive Officers of Registrant........ 8
PART II
5. Market for Registrant's Common Equity and Related
Stockholder Matters......................................... 9
6. Selected Financial Data..................................... 10
7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 11
8. Financial Statements and Supplementary Data................. 16
9. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure.................................... 33
PART III
10. Directors and Executive Officers of the Registrant.......... 33
11. Executive Compensation...................................... 33
12. Security Ownership of Certain Beneficial Owners and
Management.................................................. 33
13. Certain Relationships and Related Transactions.............. 33
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K......................................................... 34
Signatures.................................................. 36
FINANCIAL STATEMENT SCHEDULES
TriMas Corporation and Subsidiaries Financial Statement
Schedule.................................................... F-1
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PART I
ITEM 1. BUSINESS.
TriMas Corporation is a diversified proprietary products company with
leadership positions in commercial, industrial and consumer niche markets.
Except as the context otherwise indicates, the terms "TriMas" and the "Company"
refer to TriMas Corporation and its consolidated subsidiaries. TriMas' operating
businesses manufacture industrial container closures, specialty dispensing and
packaging products, pressurized gas cylinders, specialty industrial gaskets,
towing systems products, specialty fasteners, specialty products for fiberglass
insulation, specialty tapes and precision cutting tools. The Company's
businesses are managed as decentralized autonomous profit centers which
emphasize entrepreneurial management, high value-added products and services,
and strong cash flows. While each of the Company's businesses operates as an
autonomous entity, they are grouped into four categories for financial reporting
purposes: Specialty Fasteners, Towing Systems, Specialty Container Products and
Corporate Companies.
TriMas was incorporated in Delaware in 1986 as Campbell Industries, Inc.
and subsequently acquired a manufacturer of industrial fasteners. In 1988 the
Company adopted its current name and acquired various businesses and cash from
MascoTech, Inc. ("MascoTech") in exchange for the Company's issue of debt and
equity securities. In a related transaction, Masco Corporation ("Masco"),
already a shareholder of the Company, acquired additional shares of the
Company's common stock, $.01 par value per share (the "Company Common Stock")
for cash. The Company became a public company in February 1989 when
approximately 28 percent of the then outstanding Company Common Stock was
distributed by Masco to its stockholders as a special dividend. MascoTech
currently holds approximately 37 percent, and Masco approximately 4 percent, of
the outstanding Company Common Stock.
Since its inception in 1986, the Company has expanded its operations into
diverse industries largely through acquisitions of existing businesses. During
1996 the Company acquired four businesses. The Englass Group Limited, based in
the United Kingdom, designs, assembles and markets a variety of specialty
sprayers, pumps and related products. Heinrich Stolz GmbH is a leading European
manufacturer of a wide variety of specialty closures for industrial packaging
markets. While both Englass and Stolz retain their separate identities and
operations, they have been integrated with the Company's subsidiary, Rieke
Corporation, for administrative purposes, and their results are reported with
Rieke's as part of the Company's Specialty Container Products segment.
Queensland Towbars Pty. Ltd. is Australia's second largest manufacturer of
vehicle hitches and related towing products. Queensland and the Company's Hayman
Reese Pty. Ltd. subsidiary have been combined to form TriMas Corporation Pty.
Ltd. which is reported as part of TriMas' Towing Systems segment. Beaumont Bolt
& Gasket Co. is a domestic manufacturer and distributor of fasteners and
specialty gaskets utilized by industrial processing industries. Beaumont Bolt is
an important adjunct to the Company's subsidiary, Lamons Metal Gasket Co., and
has been combined with Lamons for administrative purposes. The results of both
Lamons and Beaumont Bolt are reported as part of the Specialty Container
Products segment.
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The following table sets forth net sales and operating profit information
for the past three years for each of the Company's industry segments.
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<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
NET SALES:
Specialty Fasteners....................................... $141,510 $141,050 $138,720
Towing Systems............................................ 189,540 175,000 163,130
Specialty Container Products.............................. 189,320 165,670 163,880
Corporate Companies....................................... 79,860 71,770 69,750
-------- -------- --------
Total net sales........................................ $600,230 $553,490 $535,480
======== ======== ========
OPERATING PROFIT (BEFORE GENERAL CORPORATE EXPENSE):
Specialty Fasteners....................................... $ 25,740 $ 27,290 $ 24,280
Towing Systems............................................ 31,480 31,080 25,660
Specialty Container Products.............................. 42,890 39,040 39,060
Corporate Companies....................................... 11,980 8,420 9,850
-------- -------- --------
Total operating profit................................. $112,090 $105,830 $ 98,850
======== ======== ========
</TABLE>
For further financial information related to the Company's business
segments, see Note 11 of the Notes to Consolidated Financial Statements of the
Company.
SPECIALTY FASTENERS
Lake Erie Screw Corporation, Eskay Screw Corporation, Monogram Aerospace
Fasteners, Inc. and Commonwealth Industries form the Company's Specialty
Fasteners segment. Lake Erie and Eskay are manufacturers of both standard and
custom-designed ferrous, nonferrous and special alloy fasteners sold to
commercial and industrial markets. Monogram Fasteners manufactures permanent
blind bolt and temporary fasteners used in aircraft construction and assembly.
Commonwealth provides specialized metallurgical services for fastener products
used in a variety of markets.
Lake Erie specializes in manufacturing both standard and custom-designed
large diameter fasteners, generally in sizes 1/4" to 1 1/4". Lake Erie's design
and engineering capabilities enable it to formulate fastener product programs to
meet demanding metallurgical and performance specifications for a wide variety
of customers. The Company believes that this emphasis on design and engineering,
coupled with an ability to offer just-in-time delivery, has established Lake
Erie's premier reputation in the industry for product quality and service. Lake
Erie products are sold to distributors and manufacturers in the agricultural,
transportation, construction, fabricated metal products, and commercial and
industrial maintenance markets. Lake Erie is a leading manufacturer of private
brand products for the equipment maintenance aftermarket, supplying national and
regional private brand distributor organizations.
Eskay manufactures both ferrous and nonferrous standard and
specialty-designed small diameter fasteners, generally in sizes 3/8" and
smaller. Eskay's strategy is to focus on niche markets which require high
value-added products for critical applications. Eskay's ES-Form(R) and
ES-Form(R)II, Plask(R)I and Plask(R)II, Plask H/L(R), and Tri-Plask(R)
self-threading specialty fasteners, for example, are designed for use in
applications where the absence of drilling chip contamination is critical. A
typical application would be electronic or electrical assemblies installed
within metallic or plastic housings and requiring no chip contamination to
qualify for UL or other certification. Eskay products are marketed directly to
distributors and manufacturers in the electrical and electronic equipment,
appliance, fabricated metal products, furniture, transportation and agricultural
markets.
Monogram Fasteners manufactures highly engineered specialty fasteners for
the domestic and international aerospace industry. Monogram Fasteners is the
leader in the development of blind bolt fastener technology for the aerospace
industry. Its Visu-Lok(R), Visu-Lok(R)II and Radial-Lok(R) blind bolts, which
allow
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sections of aircraft to be joined together when access is provided to only one
side of the airframe, are lighter in weight and provide certain cost
efficiencies over conventional two-sided fastening devices. Monogram Fasteners'
Composi-Lok(R) and Composi-Lok(R)II blind bolts are designed to solve unique
fastening problems associated with the assembly of composite aircraft
structures, and are therefore particularly well suited to take advantage of the
increasing use of composite materials in aircraft construction. Monogram
Fasteners recently completed development work on the OSI-Bolt(R) fastener, the
first one piece aerospace fastener approved to replace traditional two piece
fasteners in certain applications on the primary aircraft structure. The
OSI-Bolt(R) fastener has been approved by an aerospace manufacturer for use on
certain large commercial aircraft, and the first production orders will be
shipped in 1997.
Commonwealth Industries provides commercial heat treating and specialized
metallurgical and finishing services for fastener products used in the
automotive, industrial, agricultural and construction markets.
The Company's fasteners are sold through its own sales personnel and
independent sales representatives. Although the overall market for fasteners and
metallurgical services is highly competitive, these businesses provide products
and services primarily for specialized market niches, and compete principally as
quality- and service-oriented suppliers in their respective markets.
TOWING SYSTEMS
The Towing Systems segment consists of Draw-Tite, Inc., Reese Products,
Inc. and Fulton Performance Products, Inc. Draw-Tite, Reese and Fulton are
leading producers of vehicle hitches, jacks, winches, couplers and related
accessories and collectively give TriMas the leading position in the design and
manufacture of towing systems products for domestic and imported passenger cars,
light trucks and recreational vehicles. The Company believes that product lines
offered by its Towing Systems companies are the most extensive in the industry,
permitting TriMas to provide custom-designed products for virtually every towing
vehicle and need.
Each company conducts extensive testing of its products to assure reliable
and safe performance. Engineering, product design and fatigue testing are
performed utilizing computer aided design and finite element analysis. In
addition, on-road performance research is conducted on hitches with
instrumentation equipped trailers and towing vehicles. Extensive product testing
programs have improved product safety and reliability and reduced manufacturing
costs.
The Company believes that Draw-Tite is the largest North American
manufacturer and distributor of premium towing systems products, including
hitches and towing accessories, such as hitch balls, sway controls, wiring
harnesses and brake controls. Draw-Tite has two manufacturing facilities and
seven regional distribution centers in the United States, as well as a sales and
distribution center in Canada. Draw-Tite sales are principally to independent
installers through its own sales organization. Rapid delivery and customer
service are emphasized, with most Draw-Tite orders shipped within twenty-four
hours of receipt.
Reese manufactures premium towing systems products, including
weight-distributing hitches and towing accessories, which are sold to
independent installers, distributors, recreational vehicle manufacturers and
automotive aftermarket retailers. Sales in the United States are made by both
Reese sales personnel and independent sales representatives and are distributed
from five regional distribution centers. Reese also manufactures and distributes
hitches and towing accessories in Australia and Canada. Queensland Towbars Pty.
Ltd., acquired in 1996, has been combined with the Company's Hayman Reese Pty.
Ltd. subsidiary to form TriMas Corporation Pty. Ltd. which is operated as part
of Reese. The Company believes that Reese is the largest manufacturer of towing
systems products in Australia.
Fulton is a major manufacturer of winches, jacks, couplers and accessories
for marine, recreational vehicle, agricultural and industrial markets. These
products are sold by Fulton marketing personnel to distributors, manufacturers
and aftermarket retailers.
Sales for the Towing Systems segment are stronger during the months of
March through July impacting the Company's net sales and operating profits
primarily in the second quarter.
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SPECIALTY CONTAINER PRODUCTS
The Company's Specialty Container Products segment consists of Rieke
Corporation, Norris Cylinder Company and Lamons Metal Gasket Co. For
administrative purposes, The Englass Group Limited and Heinrich Stolz GmbH, both
acquired in 1996, are operated as part of Rieke, and Beaumont Bolt & Gasket Co.,
also acquired in 1996, is operated as part of Lamons. Rieke, Norris and Lamons
are leading suppliers of products for the containment and dispensing of fluids
and gases for the chemical, agricultural, refining, food, petrochemical, health
care and other industries.
The Company believes that Rieke is the largest manufacturer in North
America of steel and plastic industrial container closures and dispensing
products. Rieke's manufacturing and distribution facilities in the United
States, Canada and Mexico, as well as distribution capabilities in Europe and
the Far East, allow Rieke to service most major world markets for its products.
The operations of Englass, a United Kingdom-based supplier of specialty
sprayers, pumps and related products, and Stolz, a leading European manufacturer
of a wide variety of closures for industrial packaging markets, will complement
Rieke's existing international activities. Industrial container closures and
specialty dispensing and packaging products are manufactured using metal forming
and plastic injection molding technologies, supplemented by automated assembly
and material handling systems.
Rieke believes its investment in new product development and manufacturing
programs has enabled it to develop and produce precise quality, high performance
products while maintaining cost-efficient production capabilities. For more than
seventy-five years, Rieke's new product development programs have provided
innovative and attractive proprietary product opportunities, which have been an
integral part of its success. Among these products are the ViseGrip(R) steel
flange and plug closure, the Poly-ViseGrip(R) plastic closure, the all plastic,
environmentally safe, self-venting FlexSpout(R) flexible pouring spout and the
ViseGrip(R) drum closure.
Rieke sells its products through its own sales personnel primarily to
industrial container manufacturers who also utilize Rieke's specialty tooling to
install the closures. A significant portion of Rieke's products are specified by
end-users of industrial containers. Rieke believes it has been successful in
having end-users specify its products because of Rieke's history of new product
development, its product quality and performance characteristics and its
customer service standards.
Norris is one of the world's leading suppliers of a complete line of large
and intermediate size, high-pressure and low-pressure cylinders for the
transportation, storage and dispensing of compressed gases. Norris is one of two
United States manufacturers of large high-pressure seamless compressed gas
cylinders, used principally for shipping, storing and dispensing oxygen,
nitrogen, argon, helium and other gases for industrial and health care markets.
In addition, Norris offers a complete line of low-pressure welded cylinders used
to contain and dispense acetylene gas for the welding and cutting industries.
The Company believes that Norris is the leading product innovator in its
industry. Among Norris' product developments are the Ultrapure(R) seamless
stainless steel cylinder for the semiconductor and pharmaceutical industries,
the Pacesetter(R) cylinder, which was the first asbestos-free acetylene cylinder
available to satisfy increasing concerns about asbestos in the workplace
environment, and the Ultralight(R) high-pressure cylinder designed to hold 30
percent more gas than standard cylinders of similar size, weight and diameter.
In addition, Norris has directed a portion of its research and new product
development efforts to specially-designed cylinders for natural gas powered
vehicles and related refueling facilities.
Norris markets cylinders primarily to major industrial gas producers and
distributors, welding equipment distributors and equipment manufacturers.
Cylinder products are sold by Norris personnel organized in five geographic
sales regions. Sales for export markets and to national accounts are made by
personnel at Norris' corporate office.
Lamons and Beaumont Bolt manufacture and distribute metallic and
nonmetallic industrial gaskets and complementary fasteners for refining,
petrochemical and other industrial applications principally in the United States
and Canada. Gaskets and complementary fasteners are supplied both for original
installations and replacement and maintenance.
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The Company believes that Lamons is the largest gasket supplier to the
United States petroleum refining and petrochemical industries. Sales are made
direct from the factory to major customers, through ten company-owned
distribution facilities in major regional markets, or through a large network of
independent distributors. Lamons has maintained its market leadership position
through superior customer service and delivery and high product quality.
CORPORATE COMPANIES
The Company has six businesses that compose its Corporate Companies
segment. The largest of these companies is Compac Corporation, believed by the
Company to be the leading manufacturer of flame-retardant facings and jacketings
used in conjunction with fiberglass insulation as temperature and vapor
barriers. These products are principally used for commercial and industrial
construction applications, and are sold to most major manufacturers of
fiberglass insulation.
Compac's product line also includes pressure-sensitive specialty tape
products which are marketed to insulation manufacturers as well as to numerous
other customers. Pressure-sensitive products for the insulation industry are
utilized for sealing pipe jacketing, ducts and fiberglass wrappings to increase
the efficiency and cost effectiveness of heating and cooling installations.
Combined with Compac's facing and jacketing products, pressure-sensitive
specialty tapes enable Compac to offer customers the only complete systems
approach to insulation installation. With important product positions in several
specialty tape markets, Compac is pursuing further opportunities to expand its
presence in the industry. Utilizing existing pressure-sensitive adhesive
technologies, Compac continues to develop new product programs to expand its
pressure-sensitive product positions into subsegments of existing markets,
including the medical supply industry.
The other businesses that constitute the Corporate Companies segment
produce a variety of specialty precision tools such as center drills, cutters,
end mills, reamers, master gears, gages and punches and provide specialty metal
finishing services. Principal markets served by these companies include the
automotive, aerospace, appliance, medical and electronics industries, with such
diverse products as miniature surgical cutting tools to high volume industrial
cutting tools and master gages.
GENERAL INFORMATION CONCERNING INDUSTRY SEGMENTS
Except for the Company's Towing Systems segment, no material portion of the
Company's business is seasonal. No material portion of the Company's business
has special working capital requirements. The Company does not consider backlog
orders to be a material factor in its industry segments, and no material portion
of its business is dependent upon any one customer or subject to renegotiation
of profits or termination at the election of the federal government. Compliance
with federal, state and local regulations relating to the discharge of materials
into the environment, or otherwise relating to the protection of the
environment, is not expected to result in material capital expenditures by the
Company or to have a material effect on the Company's earnings or competitive
position. In general, raw materials required by the Company are obtainable from
various sources and in the quantities desired. Further financial information
concerning the Company's operations in its industry segments as of and for each
of the three years in the period ended December 31, 1996 is set forth in Note 11
of the Notes to Consolidated Financial Statements of the Company.
INTERNATIONAL OPERATIONS
The Company's Specialty Container Products segment operates manufacturing
facilities in Canada, England, Germany and Mexico and the Towing Systems segment
operates manufacturing facilities in Australia and Canada. Otherwise, all of the
Company's manufacturing operations are located in the United States. The
Company's export sales for 1996, 1995 and 1994 equaled approximately eight
percent, six percent and five percent, respectively, of the Company's
consolidated net sales for those years. See Notes 11 and 12 of the Notes to
Consolidated Financial Statements of the Company for additional financial
information related to the Company's foreign operations.
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PATENTS AND TRADEMARKS
The Company holds a number of patents, patent applications, licenses,
trademarks and trade names. The Company considers its patents, patent
applications, licenses, trademarks and trade names to be valuable, but does not
believe that there is any reasonable likelihood that the loss of any such rights
would have a material effect on the Company's industry segments or its present
business as a whole.
COMPETITION
The major markets for the Company's products are highly competitive.
Competition is based primarily on performance, quality, service and price, with
the relative importance of such factors varying among products. Although a
number of companies of varying size compete with the Company in its industry
segments, no single competitor is in substantial competition with the Company
with respect to more than a few of its product lines.
EMPLOYEES
The Company currently employs approximately 3,900 people. Satisfactory
relations have generally prevailed between the Company and its employees.
ITEM 2. PROPERTIES.
The following table sets forth the locations of the Company's manufacturing
facilities and identifies the industry segments utilizing facilities in such
locations:
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California....................... Commerce (a)
Illinois......................... Wood Dale (a)
Indiana.......................... Auburn (c), Elkhart (b), Frankfort (a), Goshen (b), Mongo (b)
Louisiana ....................... Baton Rouge (c)
Massachusetts.................... Plymouth (d)
Michigan......................... Canton (b), Detroit (a), Warren (d)
New Jersey....................... Edison (d), Netcong (d)
Ohio............................. Lakewood (a)
Texas............................ Beaumont (c), Houston (c), Longview (c)
Wisconsin........................ Mosinee (b)
Australia........................ Hampton Park, Victoria (b), Wakerley, Queensland (b)
Canada........................... Fort Erie, Ontario (c), Oakville, Ontario (b), Sarnia, Ontario
(c)
England.......................... Leicester (c)
Germany.......................... Neunkirchen (c)
Mexico........................... Mexico City (c)
</TABLE>
Industry segments in the preceding table are identified as follows: (a)
Specialty Fasteners, (b) Towing Systems, (c) Specialty Container Products, and
(d) Corporate Companies.
The Company's largest manufacturing facility, consisting of approximately
430,000 square feet, is located in Lakewood, Ohio. This facility is owned by the
Company and is used to manufacture specialty fasteners. The Company's other
manufacturing facilities range in size from approximately 10,000 to 250,000
square feet. Most of these other facilities are owned by the Company and are not
subject to significant encumbrances. The Company's executive offices are leased
facilities in Ann Arbor, Michigan.
The Company's buildings, machinery and equipment have been generally well
maintained, are in good operating condition, and are adequate for the Company's
current production requirements.
ITEM 3. LEGAL PROCEEDINGS.
The Company is subject to claims and litigation in the ordinary course of
its business, but does not believe any such claim or litigation is material.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
SUPPLEMENTARY ITEM. EXECUTIVE OFFICERS OF THE REGISTRANT (PURSUANT TO
INSTRUCTION 3 TO ITEM 401(B) OF REGULATION S-K).
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NAME POSITION AGE OFFICER SINCE
---- -------- --- -------------
<S> <C> <C> <C>
Richard A. Manoogian............................ Chairman of the Board 60 1989
Brian P. Campbell............................... President 56 1986
William E. Meyers............................... Vice President-Controller 64 1987
Peter C. DeChants............................... Vice President-Treasurer 44 1990
Douglas P. Roosa................................ Vice President-Administration 37 1996
</TABLE>
Each of the officers is elected to a term of one year or less and serves at
the discretion of the Board of Directors. Mr. Manoogian is and has been the
Chairman of the Board and the Chief Executive Officer of each of Masco
Corporation and MascoTech, Inc., affiliates of the Company. Masco Corporation is
a manufacturer of home improvement and building products. MascoTech, Inc.
manufactures products principally for the original equipment and aftermarket
transportation markets. Except for Mr. Roosa, each of the Company's executive
officers has been employed in the capacity shown for more than five years. Prior
to joining the Company as Vice President-Administration in March 1996, Mr. Roosa
was employed by the public accounting firm of Coopers & Lybrand L.L.P. for 14
years.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The New York Stock Exchange ("NYSE") is the principal market on which the
Company Common Stock is traded (under the symbol TMS). The following table
indicates the high and low sale prices for Company Common Stock as reported on
the NYSE Composite Tape and Common Stock dividends declared for the periods
indicated.
<TABLE>
<CAPTION>
MARKET PRICE
------------ DIVIDEND
HIGH LOW DECLARED
---- ---- --------
<S> <C> <C> <C>
1995
First Quarter............................................. $22 3/4 $19 5/8 $.04
Second Quarter............................................ 24 1/4 20 1/4 .05
Third Quarter............................................. 25 1/2 20 .05
Fourth Quarter............................................ 22 1/4 18 3/8 .05
----
Total.................................................. $.19
====
1996
First Quarter............................................. $24 3/8 $16 7/8 $.05
Second Quarter............................................ 25 1/2 20 7/8 .06
Third Quarter............................................. 24 1/4 19 7/8 .06
Fourth Quarter............................................ 25 1/2 22 3/8 .06
----
Total.................................................. $.23
====
</TABLE>
On March 21, 1997 there were approximately 2,500 holders of record of
Company Common Stock.
The Company expects that its practice of paying quarterly dividends on
Company Common Stock will continue, although future dividends will continue to
depend upon the Company's earnings, capital requirements, financial condition
and other factors.
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ITEM 6. SELECTED FINANCIAL DATA.
The following table sets forth summary consolidated financial information
for the years and dates indicated:
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
1996(A) 1995 1994 1993(B) 1992(C)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net sales................................. $600,230 $553,490 $535,480 $443,230 $388,230
Operating profit.......................... $104,290 $ 98,680 $ 91,400 $ 70,020 $ 58,620
Income before extraordinary charge........ $ 61,360 $ 56,020 $ 50,100 $ 38,000 $ 29,780
Earnings available for common stock before
extraordinary charge.................... $ 61,360 $ 56,020 $ 50,100 $ 32,750 $ 22,780
Earnings per common share before
extraordinary charge:
Primary.............................. $1.66 $1.51 $1.35 $1.05 $.87
Fully diluted........................ $1.55 $1.42 $1.28 $1.01 $.87
Dividends declared per common share(D).... $.23 $.19 $.15 $.115 $.05
At December 31:
Working capital......................... $203,440 $197,460 $198,770 $163,770 $131,820
Total assets............................ $696,670 $616,360 $615,140 $564,130 $446,620
Long-term debt.......................... $187,120 $187,200 $238,600 $238,890 $178,490
Shareholders' equity.................... $390,450 $338,670 $290,600 $244,850 $215,440
</TABLE>
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(A) Reflects the acquisition of four businesses in 1996.
(B) Reflects the acquisition of one business in 1993.
(C) Net income, earnings available for common stock and earnings per common
share in 1992 were $24.0 million, $17.0 million and $.65, respectively,
after being reduced $5.7 million, $5.7 million and $.22, respectively, for
an extraordinary charge related to the early extinguishment of subordinated
debt.
(D) In the third quarter of 1992 the Company initiated a regular quarterly
dividend on its common stock.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
During 1996 TriMas achieved record net sales and operating earnings for the
ninth consecutive year as it continued its focus on operating and financial
strategies to improve operating performance and shareholder returns. These
strategies include internal and external programs to strengthen the Company's
competitive positions in key markets, including increased levels of
manufacturing efficiency and customer service, new product development and
market share initiatives, and the acquisition of selected companies which can
enhance future growth and profitability.
The discussion which follows should be reviewed in conjunction with the
financial statements and related footnotes to assist in understanding the
Company's results of operations, its financial position, cash flows, capital
structure and other relevant financial information.
ANALYSIS OF 1996 OPERATIONS COMPARED TO 1995 OPERATIONS
Record net sales of $600.2 million in 1996 increased 8.4 percent over 1995
net sales of $553.5 million. TriMas' strategic diversification of products and
markets has balanced its operating risk over a broad range of industries and
markets, moderating the cyclical impact of individual markets. As in 1995, the
results of the Company's strategic diversification, including emphasis on niche
markets, manufacturing efficiencies and market share initiatives, played an
important role in 1996's performance.
The Company's gross margin percentage equaled 32.8 percent in 1996,
consistent with the 32.9 percent achieved in 1995. The results of businesses
acquired during 1996 partially affected the consolidated measure of selling,
general and administrative expenses as a percentage of sales, which increased to
15.4 percent in 1996, compared to 15.1 percent for 1995. It is anticipated that
this category of expenses at the newly acquired entities will provide an
opportunity for improved results as the Company's cost reduction, distribution
efficiency and marketing programs are integrated into these businesses.
Consolidated operating profit, after general corporate expense, equaled
$104.3 million during 1996, compared to $98.7 million in 1995, an increase of
5.7 percent, with operating profit margins of 17.4 percent and 17.8 percent in
1996 and 1995, respectively.
Sales by the Specialty Fasteners segment during 1996 increased modestly to
$141.5 million, compared to $141.1 million in 1995. Increasing aircraft build
rates at aerospace manufacturers resulted in increased segment sales of
aerospace fasteners. This increase was offset by lower demand for fasteners,
from heavy-duty truck and appliance manufacturers, and automotive related
metallurgical services. Operating profit decreased 5.7 percent to $25.7 million
in 1996, compared to $27.3 million in 1995, as increases in costs were not
offset by incremental sales or selling price increases. As a result, segment
operating profit margin decreased to 18.2 percent in 1996, compared to 19.3
percent in 1995. In 1996 the inventory turnover ratio was 4.8 times as compared
to 5.0 times in 1995. Capital expenditures during the year, primarily for Lake
Erie Screw Corporation and TriMas Fasteners, Inc., were $4.5 million, compared
to 1995's $10.8 million.
Record sales of the Towing Systems segment increased 8.3 percent to $189.5
million, compared to $175.0 million in 1995. Record segment operating profit
increased 1.3 percent to $31.5 million, compared to $31.1 million in 1995.
Operating performance of the segment was favorably impacted by the strength of
the specialty automotive retail market, market share initiatives, manufacturing
efficiencies resulting from ongoing capital expenditure programs and the
acquisition of Queensland Towbars Pty. Ltd. Sales and operating profit were
negatively affected by poor weather conditions during both the first and second
quarters of 1996, with only partial recovery in the second half of the year.
Sales by companies which form the Towing Systems segment are stronger during the
spring and summer of the year impacting the Company's net sales and operating
profits primarily in the second quarter. The segment's 1996 operating profit
margin equaled 16.6 percent, compared to 17.8 percent in 1995. The inventory
turnover ratio during the year was 3.4 times as compared to 3.2 times in 1995.
Capital expenditures increased to $7.7 million, compared to $4.8 million in
1995.
Sales of the Specialty Container Products segment increased 14.3 percent to
$189.3 million in 1996, compared to $165.7 million in 1995. Segment operating
profit increased 9.9 percent to $42.9 million,
11
<PAGE> 13
compared to $39.0 million in the prior year. Segment performance in 1996
includes the results of The Englass Group Limited, Heinrich Stolz GmbH and
Beaumont Bolt & Gasket Co. acquired in July, October and December, respectively.
The segment's operating profit margin in 1996 was 22.7 percent, compared to 23.6
percent in 1995. The segment's operating profit margin in 1996 was partially
affected by these acquisitions as the historical operating profit margins of the
acquired businesses, although consistently meeting or exceeding the high
standards of the Company's acquisition criteria, have been lower relative to the
historical margin of this segment. The segment's inventory turnover ratio in
1996, including the effects of the year end inventory balances of acquired
companies, was 6.0 times, as compared to 6.3 times in 1995. Capital expenditures
for the segment, primarily related to new product introductions, and to further
improve manufacturing efficiencies and service capabilities, were $11.8 million,
compared to $5.8 million in 1995.
The Corporate Companies segment experienced record sales during 1996 of
$79.9 million, an increase of 11.3 percent compared to $71.8 million in 1995.
Operating profit increased 42.3 percent to $12.0 million, compared to $8.4
million in 1995. Increased sales and cost reduction initiatives were the primary
reasons for the improved operating profit. Operating profit margin in 1996
equaled 15.0 percent, compared to 11.7 percent in 1995. The inventory turnover
ratio was 5.4 times in both 1996 and 1995. Capital expenditures during the year
increased to $2.7 million, compared to $2.0 million in 1995.
Primary earnings per common share increased 9.9 percent to $1.66 in 1996
based on 37.0 million average common shares and equivalents outstanding,
compared to $1.51 in 1995. Fully diluted earnings per common share in 1996 were
$1.55 based on 42.1 million average common shares and equivalents outstanding,
compared to $1.42 in 1995, an increase of 9.2 percent.
ANALYSIS OF 1995 OPERATIONS COMPARED TO 1994 OPERATIONS
Net sales of $553.5 million in 1995 increased 3.4 percent over 1994 net
sales of $535.5 million. TriMas' strategic diversification of products and
markets has balanced its operating risk over a broad range of industries,
moderating the cyclical impact of individual markets. As in 1994, the results of
the Company's strategic diversification, including emphasis on niche markets,
manufacturing efficiencies and market share initiatives, played an important
role in 1995's performance.
The Company's gross margin percentage increased to 32.9 percent in 1995, up
from 32.5 percent in 1994. The improvement in 1995's gross margin reflects the
incremental profit impact of increased sales as well as the effects of ongoing
cost reduction and manufacturing efficiency initiatives. Selling, general and
administrative expenses increased less than one percent in 1995 compared to
1994, and as a percentage of net sales declined to 15.1 percent, compared to
15.4 percent for 1994.
Consolidated operating profit, after general corporate expense, equaled
$98.7 million during 1995, compared to $91.4 million in 1994, an increase of 8.0
percent, with operating profit margins of 17.8 percent and 17.1 percent in 1995
and 1994, respectively.
A strong year was experienced by the Specialty Fasteners segment in both
sales and operating profit as operating profit increased 12.4 percent to $27.3
million, compared to $24.3 million in 1994, while sales of $141.1 million were
1.7 percent higher than 1994 sales of $138.7 million. Higher levels of demand
for aerospace fasteners and from farm equipment and other off-road vehicle
manufacturers were partially offset by softness in demand from the construction
market and from customers for heat treating services. As a result of higher
sales levels and improved operating efficiencies, the segment operating profit
margin increased to 19.3 percent in 1995, compared to 17.5 percent in 1994. In
1995 the inventory turnover ratio was 5.0 times as compared to 5.5 times in
1994. Capital expenditures during the year, primarily for Lake Erie Screw
Corporation and TriMas Fasteners, Inc., were $10.8 million, compared to 1994's
$9.1 million.
Operating profit of the Towing Systems segment increased 21.1 percent to
$31.1 million, compared to $25.7 million in 1994. Segment sales increased 7.3
percent to $175.0 million, compared to $163.1 million in 1994. Operating
performance of the segment was favorably impacted by market share initiatives
and manufacturing efficiencies resulting from both 1994 and 1995 capital
expenditure programs. The segment's 1995 operating profit margin equaled 17.8
percent, compared to 15.7 percent in 1994. The inventory turnover
12
<PAGE> 14
ratio during the year was 3.2 times as compared to 3.1 times in 1994. Capital
expenditures decreased to $4.8 million, compared to $6.7 million in 1994.
Sales of the Specialty Container Products segment equaled $165.7 million in
1995, a 1.1 percent increase compared to $163.9 million in 1994. Segment
operating profit totaled $39.0 million, compared to $39.1 million in the prior
year. The segment's operating profit margin in 1995 was 23.6 percent, compared
to 23.8 percent in 1994. The segment's inventory turnover ratio was 6.3 times in
both 1995 and 1994. Capital expenditures for the segment, primarily to further
improve manufacturing efficiencies and service capabilities, were $5.8 million,
compared to $5.4 million in 1994.
The Corporate Companies segment recorded sales during 1995 of $71.8
million, an increase of 2.9 percent compared to $69.8 million in 1994. Operating
profit decreased 14.5 percent to $8.4 million, compared to $9.9 million in 1994.
Significant price increases for certain raw materials were the primary cause of
the reduced operating profit. Operating profit margin in 1995 equaled 11.7
percent, compared to 14.1 percent in 1994. In 1995 the inventory turnover ratio
was 5.4 times as compared to 5.6 times in 1994. Capital expenditures during the
year decreased to $2.0 million, compared to $3.0 million in 1994.
Primary earnings per common share increased 11.9 percent to $1.51 in 1995
based on 37.0 million average common shares and equivalents outstanding,
compared to $1.35 in 1994. Fully diluted earnings per common share in 1995 were
$1.42 based on 42.1 million average common shares and equivalents outstanding,
compared to $1.28 in 1994, an increase of 10.9 percent.
LIQUIDITY, WORKING CAPITAL AND CASH FLOWS
One of the Company's financial strategies is to maintain a relatively high
level of liquidity and cash flow, which continued in 1996. Historically, TriMas
Corporation has generated significant cash flows from operating activities to
fund capital expenditures, debt service, dividends and other operating
requirements. Cash flow generation has been enhanced by the Company's continuing
efforts to improve operating efficiencies, cost reductions and the management of
working capital requirements to support increased sales volumes.
One of the Company's strengths is its ability to generate cash from
operations in excess of requirements for capital investments and dividends.
"Free Cash Flow": Free Cash Flow is cash from operations remaining after
the Company has satisfied its capital investment initiatives to enhance
manufacturing efficiencies, expand productive capacity and avail itself of other
competitive opportunities. As one of its financial strategies, the Company
focuses on maximizing Free Cash Flow to achieve management's primary objective
- -- maximizing long-term shareholder value. The consolidated statements of cash
flows are summarized as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Cash flows from (used for):
Operations................................................ $ 91,080 $ 66,250 $ 67,670
Capital expenditures...................................... (26,670) (23,470) (24,310)
-------- -------- --------
"Free Cash Flow"............................................ 64,410 42,780 43,360
Cash flows from (used for):
Acquisitions.............................................. (27,490)
Financing................................................. (23,420) (58,060) (5,460)
-------- -------- --------
Increase (decrease) in cash and cash equivalents............ $ 13,500 $(15,280) $ 37,900
======== ======== ========
</TABLE>
In 1996 the Company again experienced strong operating cash flows as
operating activities provided $91.1 million. Increased cash flow from income,
noncash charges for depreciation and amortization, and working capital changes
resulted in record cash flows from operations. Working capital changes provided
$3.4 million, compared to using $13.1 million in 1995, despite record sales
levels in all four segments during 1996. Capital expenditures to reduce product
costs, improve quality, increase manufacturing efficiencies and
13
<PAGE> 15
expand productive capacity equaled $26.7 million in 1996, $23.5 million in 1995
and $24.3 million in 1994. The Company continues its active corporate
development efforts to complement internal growth through significant
investments for the acquisition of additional companies which meet TriMas'
well-disciplined criteria. In 1996 the Company acquired four businesses for
$27.5 million cash and the assumption of $26.7 million of liabilities.
In 1996 the Company borrowed $27.9 million of long-term debt in connection
with the business acquisitions. A portion of available cash and a portion of the
proceeds from the aforementioned debt issuance were used to retire $43.3 million
of debt, consisting of borrowings under the Company's domestic revolving credit
agreement and debt assumed as part of the 1996 acquisitions. In 1995 the Company
used a portion of its significant cash resources to retire $51.5 million of
long-term debt. The majority of this amount, $50.0 million, was the repayment of
borrowings under the Company's domestic revolving credit agreement which were
originally incurred to finance prior acquisitions. Common stock dividends paid
in 1996, 1995 and 1994 equaled $8.1 million, $6.6 million and $5.1 million,
respectively.
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.
At December 31, 1996 the Company's current ratio was 3.6 to 1 and working
capital totaled $203.4 million, including $105.9 million of cash and cash
equivalents. At December 31, 1995 the current ratio was 4.6 to 1 and working
capital totaled $197.5 million, including $92.4 million of cash and cash
equivalents. The current ratio has been affected by the assets acquired and the
liabilities assumed and incurred in connection with the business acquisitions.
The Company's working capital turnover was 2.9 times in 1996, compared to
2.7 times in 1995. Excluding cash, the working capital turnover was 5.6 times in
1996 as compared to 5.4 times in 1995. The Company's inventory turnover ratio
was 4.5 times in both 1996 and 1995, while the accounts receivable days-sales
year end balance equaled 53 days in 1996, compared to 52 days in 1995.
The Company has a $350.0 million domestic revolving credit facility,
maturing in 2000, with a group of domestic and international banks. The facility
permits the Company to borrow under several different interest rate options. At
December 31, 1996 the Company had available credit of $317.0 million under its
domestic credit agreement. During 1996 the Company entered into revolving credit
facilities in both England and Germany in connection with its business
acquisitions in those countries. The facility in England provides Pound 20.0
million, of which Pound 8.5 million was available at December 31, 1996. The
facility in Germany provides DM 30.0 million, of which DM 16.2 million was
available at December 31, 1996.
Under a Stock Repurchase Agreement which expires in December 1998, Masco
Corporation and MascoTech, Inc. have the right to sell to the Company, at
approximate fair market value, shares of Company common stock following the
occurrence of certain events that would result in an increase in their
respective ownership percentage of the then outstanding shares of Company common
stock. In all cases, the Company has control over the amount of Company common
stock it would ultimately acquire. Neither Masco Corporation nor MascoTech, Inc.
have ever exercised their right to sell Company common stock to the Company. To
the extent these rights have been exercised at any balance sheet date, the
Company would reclassify from permanent capital an amount representative of the
repurchase obligation.
During February 1997 TriMas called for redemption, on March 21, 1997, its
outstanding issue of $115.0 million of 5% Convertible Subordinated Debentures
Due 2003. The Debentures are convertible at the option of the holders through
March 20, 1997 into shares of Company common stock at a conversion price of
$22 5/8 per share. The Company currently plans to use long-term borrowings under
its domestic revolving credit facility to redeem the Debentures. The redemption
price for the Debentures will be 103.33 percent of the principal amount. Any
premium and unamortized debt issuance costs associated with the Debentures
redeemed will be recorded as an extraordinary charge, on an after tax basis, in
the first quarter of 1997.
14
<PAGE> 16
CORPORATE DEVELOPMENT
The Company maintains an active acquisition program, which has made
important contributions to the Company's growth. During 1996 the Company
acquired four businesses for $54.2 million (including the assumption of certain
liabilities), plus contingent payments based upon certain of the businesses
achieving specified levels of future earnings. Businesses acquired include The
Englass Group Limited ("Englass"), Heinrich Stolz GmbH ("Stolz"), Queensland
Towbars Pty. Ltd. ("Queensland") and Beaumont Bolt & Gasket Co. ("Beaumont").
Englass is a United Kingdom-based supplier of specialty dispensing and packaging
products with applications in toiletry, pharmaceutical, veterinary, food and
consumer household markets. Stolz, based in Neunkirchen, Germany, manufactures a
wide variety of closures for industrial packaging markets. Queensland is
Australia's second largest manufacturer of vehicle hitches and towing products.
Beaumont, based in Texas, manufactures and distributes specialty metallic and
nonmetallic gaskets, and complementary bolts and fasteners used in the refinery,
chemical and petrochemical industries.
The Company utilizes well-disciplined criteria in selecting acquisitions,
including the long-term enhancement of its financial strength and shareholder
value.
The initial earnings benefit of acquisitions to the Company is less than
the corresponding increase in sales since earnings are reduced by acquisition
related costs such as interest and added depreciation and amortization.
Generally, the anticipated earnings improvement for the Company comes from
subsequent growth of acquired companies, since future incremental sales are not
burdened with these fixed acquisition costs. Future earnings are also
anticipated to benefit from improved operating efficiencies and cost containment
programs.
15
<PAGE> 17
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
and Shareholders of TriMas Corporation:
We have audited the consolidated financial statements and the financial
statement schedule of TriMas Corporation and subsidiaries listed in Item 14(a)
of this Form 10-K. These financial statements and financial statement schedule
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of TriMas
Corporation and subsidiaries as of December 31, 1996 and 1995, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996 in conformity with generally
accepted accounting principles. In addition, in our opinion, the financial
statement schedule referred to above, when considered in relation to the basic
financial statements taken as a whole, presents fairly, in all material
respects, the information required to be included therein.
COOPERS & LYBRAND L.L.P.
Detroit, Michigan
February 11, 1997
16
<PAGE> 18
TRIMAS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------------------
1996 1995 1994
------------- ------------- -------------
<S> <C> <C> <C>
Net sales....................................... $ 600,230,000 $ 553,490,000 $ 535,480,000
Cost of sales................................... (403,380,000) (371,470,000) (361,520,000)
Selling, general and administrative expenses.... (92,560,000) (83,340,000) (82,560,000)
------------- ------------- -------------
Operating profit.............................. 104,290,000 98,680,000 91,400,000
Interest expense................................ (10,810,000) (13,530,000) (12,930,000)
Other, net (principally interest income)........ 7,110,000 6,690,000 5,030,000
------------- ------------- -------------
Income before income taxes.................... 100,590,000 91,840,000 83,500,000
Income taxes.................................... 39,230,000 35,820,000 33,400,000
------------- ------------- -------------
Net income.................................... $ 61,360,000 $ 56,020,000 $ 50,100,000
============= ============= =============
Earnings per common share:
Primary....................................... $1.66 $1.51 $1.35
============= ============= =============
Fully diluted................................. $1.55 $1.42 $1.28
============= ============= =============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
17
<PAGE> 19
TRIMAS CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $105,890,000 $ 92,390,000
Receivables............................................... 80,390,000 71,200,000
Inventories............................................... 92,210,000 85,490,000
Other current assets...................................... 4,130,000 2,510,000
------------ ------------
Total current assets.............................. 282,620,000 251,590,000
Property and equipment...................................... 194,540,000 173,700,000
Excess of cost over net assets of acquired companies........ 174,710,000 144,860,000
Other assets................................................ 44,800,000 46,210,000
------------ ------------
Total assets.................................... $696,670,000 $616,360,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 33,750,000 $ 24,390,000
Other current liabilities................................. 45,430,000 29,740,000
------------ ------------
Total current liabilities......................... 79,180,000 54,130,000
Deferred income taxes and other............................. 39,920,000 36,360,000
Long-term debt.............................................. 187,120,000 187,200,000
------------ ------------
Total liabilities................................. 306,220,000 277,690,000
------------ ------------
Shareholders' equity:
Common stock, $.01 par value, authorized 100 million
shares, outstanding 36.6 million shares................ 370,000 370,000
Paid-in capital........................................... 155,690,000 155,430,000
Retained earnings......................................... 238,290,000 185,370,000
Cumulative translation adjustments........................ (3,900,000) (2,500,000)
------------ ------------
Total shareholders' equity........................ 390,450,000 338,670,000
------------ ------------
Total liabilities and shareholders' equity...... $696,670,000 $616,360,000
============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
18
<PAGE> 20
TRIMAS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------------
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
CASH FROM (USED FOR):
OPERATIONS:
Net income.................................... $ 61,360,000 $ 56,020,000 $ 50,100,000
Adjustments to reconcile net income to net
cash from operations:
Depreciation and amortization............ 22,930,000 21,480,000 20,580,000
Deferred income taxes.................... 2,100,000 5,560,000 3,210,000
(Increase) decrease in receivables....... (1,460,000) (4,670,000) (7,280,000)
(Increase) decrease in inventories....... (2,430,000) (5,930,000) (2,860,000)
Increase (decrease) in accounts payable
and accrued liabilities................ 7,320,000 (2,500,000) 5,110,000
Other, net............................... 1,260,000 (3,710,000) (1,190,000)
------------ ------------ ------------
Net cash from operations............... 91,080,000 66,250,000 67,670,000
------------ ------------ ------------
INVESTMENTS:
Capital expenditures.......................... (26,670,000) (23,470,000) (24,310,000)
Acquisitions, net of cash acquired............ (27,490,000)
------------ ------------ ------------
Net cash from (used for) investments... (54,160,000) (23,470,000) (24,310,000)
------------ ------------ ------------
FINANCING:
Long-term debt:
Issuance................................. 27,920,000
Retirement............................... (43,280,000) (51,470,000) (330,000)
Common stock dividends paid................... (8,060,000) (6,590,000) (5,130,000)
------------ ------------ ------------
Net cash from (used for) financing..... (23,420,000) (58,060,000) (5,460,000)
------------ ------------ ------------
CASH AND CASH EQUIVALENTS:
Increase (decrease) for the year.............. 13,500,000 (15,280,000) 37,900,000
At beginning of the year...................... 92,390,000 107,670,000 69,770,000
------------ ------------ ------------
At end of the year.......................... $105,890,000 $ 92,390,000 $107,670,000
============ ============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
19
<PAGE> 21
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of TriMas
Corporation and its wholly owned subsidiaries (the "Company"). All significant
intercompany transactions have been eliminated.
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
AFFILIATES
As of December 31, 1996 MascoTech, Inc.'s common stock ownership in the
Company approximated 41.5 percent, and Masco Corporation's common stock
ownership approximated 4.3 percent. The Company has a corporate services
agreement with Masco Corporation. Under the terms of the agreement, the Company
pays a fee to Masco Corporation for various corporate support staff,
administrative services, and research and development services. Such fee equals
.8 percent of the Company's net sales, subject to certain adjustments, and
totaled $3.3 million, $3.1 million and $3.0 million in 1996, 1995 and 1994.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents. At December 31, 1996
the Company had $84.8 million invested in prime commercial paper of several
United States issuers having the highest rating given by one of the two
principal rating agencies.
RECEIVABLES
Receivables are presented net of an allowance for doubtful accounts of $1.9
million and $1.5 million at December 31, 1996 and 1995.
INVENTORIES
Inventories are stated at the lower of cost or net realizable value, with
cost determined principally by use of the first-in, first-out method.
PROPERTY AND EQUIPMENT
Property and equipment additions, including significant betterments, are
recorded at cost. Upon retirement or disposal of property and equipment, the
cost and accumulated depreciation are removed from the accounts and any gain or
loss is included in income. Maintenance and repair costs are charged to expense
as incurred.
DEPRECIATION AND AMORTIZATION
Depreciation is computed principally using the straight-line method over
the estimated useful lives of the assets. Annual depreciation rates are as
follows: buildings and land improvements, 2 1/2 to 5 percent, and machinery and
equipment, 6 2/3 to 33 1/3 percent. The excess of cost over net assets of
acquired companies is being amortized using the straight-line method over the
periods estimated to be benefited, not exceeding
20
<PAGE> 22
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1. ACCOUNTING POLICIES (CONTINUED)
40 years. At December 31, 1996 and 1995, accumulated amortization of the excess
of cost over net assets of acquired companies and other intangible assets was
$36.6 million and $31.3 million. Amortization expense was $5.3 million, $5.0
million and $5.3 million in 1996, 1995 and 1994.
As of each balance sheet date management assesses whether there has been an
impairment in the value of excess of cost over net assets of acquired companies
by comparing anticipated undiscounted future cash flows from the related
operating activities with the carrying value. The factors considered by
management in performing this assessment include current operating results,
trends and prospects, as well as the effects of obsolescence, demand,
competition and other economic factors. Based on this assessment there was no
impairment at December 31, 1996.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying values of financial instruments classified in the balance
sheet as current assets and current liabilities approximate fair values. The
fair value of notes receivable, a portion of which is included in both
receivables and other assets, based on discounted cash flows using current
interest rates, approximates the carrying value of $9.6 million at December 31,
1996.
The carrying amount of borrowings from banks approximates fair value as the
floating rates applicable to this debt generally reflect changes in overall
market interest rates. The fair value of the Company's Convertible Subordinated
Debentures, based on quoted market prices, was $124.8 million at December 31,
1996 and $112.7 million at December 31, 1995, as compared to the carrying value
on such dates of $115.0 million.
FOREIGN CURRENCY TRANSLATION
Net assets of the Company's operations outside of the United States are
translated into U.S. dollars using current exchange rates with the effects of
translation adjustments deferred and included as a separate component of
shareholders' equity. Revenues and expenses are translated at the average rates
of exchange during the period.
EARNINGS PER COMMON SHARE
Primary earnings per common share in 1996, 1995 and 1994 were calculated on
the basis of 37.0 million weighted average common and common equivalent shares
outstanding. Fully diluted earnings per common share in 1996, 1995 and 1994 were
calculated on the basis of 42.1 million weighted average common and common
equivalent shares outstanding.
21
<PAGE> 23
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2. ACQUISITIONS
In June 1996 the Company acquired Queensland Towbars Pty. Ltd.
("Queensland"), in July it acquired The Englass Group Limited ("Englass"), and
in the fourth quarter it acquired Heinrich Stolz GmbH ("Stolz") and Beaumont
Bolt & Gasket Co. ("Beaumont"), all for an aggregate $54.2 million of cash and
assumed liabilities. The acquisitions were accounted for as purchases. The
aggregate excess of cost over net assets acquired of $28.8 million is being
amortized on a straight-line basis over 40 years. The results of operations of
the acquired businesses have been included in the consolidated financial
statements from the respective acquisition dates. Additional purchase price
amounts, contingent upon the achievement of specified levels of future
profitability by certain of the businesses, may be payable in 1997. These
payments, if required, will be recorded as additional excess of cost over net
assets of acquired companies.
Englass is a United Kingdom-based supplier of specialty dispensing and
packaging products with applications in toiletry, pharmaceutical, veterinary,
food and consumer household markets. Stolz, based in Neunkirchen, Germany,
manufactures a wide variety of closures for industrial packaging markets.
Queensland is Australia's second largest manufacturer of vehicle hitches and
towing products. Beaumont, based in Texas, manufactures and distributes
specialty metallic and nonmetallic gaskets, and complementary bolts and
fasteners used in the refinery, chemical and petrochemical industries.
On a pro forma, unaudited basis, as if the 1996 acquisitions had all
occurred as of January 1, 1995, net sales, net income, primary earnings per
common share and fully diluted earnings per common share for 1996 would have
been $631.5 million, $63.1 million, $1.71 and $1.59, and net sales, net income,
primary earnings per common share and fully diluted earnings per common share
for 1995 would have been $592.6 million, $57.6 million, $1.56 and $1.46.
NOTE 3. SUPPLEMENTAL CASH FLOWS INFORMATION
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Interest paid............................................... $10,610 $13,560 $12,110
======= ======= =======
Income taxes paid........................................... $33,180 $30,690 $30,440
======= ======= =======
Significant noncash transactions:
Common stock dividends declared, payable in subsequent
year................................................... $ 2,200 $ 1,830 $ 1,460
======= ======= =======
Assumption of liabilities as partial consideration for the
assets of companies acquired........................... $26,720
=======
Increase in obligation, including accrued interest, to
former owner, MascoTech, Inc., of business acquired,
recorded as additional
excess of cost over net assets of acquired companies... $ 5,850
=======
</TABLE>
22
<PAGE> 24
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 4. INVENTORIES
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31,
------------------
1996 1995
------- -------
<S> <C> <C>
Finished goods.............................................. $53,380 $47,490
Work in process............................................. 14,340 14,200
Raw material................................................ 24,490 23,800
------- -------
$92,210 $85,490
======= =======
</TABLE>
NOTE 5. PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
Cost:
Land and land improvements................................ $ 14,010 $ 13,380
Buildings................................................. 71,260 65,560
Machinery and equipment................................... 240,960 211,540
-------- --------
326,230 290,480
Less accumulated depreciation............................... 131,690 116,780
-------- --------
$194,540 $173,700
======== ========
</TABLE>
Depreciation expense was $17.7 million, $16.4 million and $15.2 million in
1996, 1995 and 1994.
NOTE 6. OTHER CURRENT LIABILITIES
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31,
---------------------
1996 1995
------- -------
<S> <C> <C>
Employee wages and benefits................................. $18,570 $16,010
Amount due former owner, MascoTech, Inc., of business
acquired.................................................. 5,850
Current income taxes........................................ 3,810 1,080
Interest.................................................... 2,710 2,820
Dividends................................................... 2,200 1,830
Property taxes.............................................. 1,930 1,890
Other....................................................... 10,360 6,110
------- -------
$45,430 $29,740
======= =======
</TABLE>
23
<PAGE> 25
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7. LONG-TERM DEBT
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31,
-----------------------
1996 1995
-------- --------
<S> <C> <C>
Borrowings from banks....................................... $ 68,030 $ 72,000
5% Convertible Subordinated Debentures Due 2003............. 115,000 115,000
Other....................................................... 4,260 410
-------- --------
187,290 187,410
Less current maturities..................................... 170 210
-------- --------
$187,120 $187,200
======== ========
</TABLE>
At December 31, 1996 borrowings from banks are owing under the Company's
domestic $350.0 million revolving credit facility ($33.0 million), its Pound
20.0 million revolving credit facility in England ($19.3 million), its DM 30.0
million revolving credit facility in Germany ($9.0 million) and other borrowing
arrangements in Germany ($6.7 million). At December 31, 1995 borrowings from
banks were owing under the domestic facility. The domestic facility permits the
Company to borrow under several different interest rate options, while the
foreign facilities base interest rates on the London Interbank Offered Rate
(LIBOR). At December 31, 1996 the blended interest rate on bank borrowings
equaled 5.9 percent. The facilities contain certain restrictive covenants, the
most restrictive of which, at December 31, 1996, required $270.1 million of
shareholders' equity. The Company had available credit of $341.8 million under
its revolving credit facilities at December 31, 1996.
During February 1997 TriMas called for redemption, on March 21, 1997, its
outstanding issue of $115.0 million of 5% Convertible Subordinated Debentures
Due 2003. The Debentures are convertible at the option of the holders through
March 20, 1997 into shares of Company common stock at a conversion price of
$22 5/8 per share. The Company currently plans to use long-term borrowings under
its domestic revolving credit facility to redeem the Debentures. The redemption
price for the Debentures will be 103.33 percent of the principal amount. Any
premium and unamortized debt issuance costs associated with the Debentures
redeemed will be recorded as an extraordinary charge, on an after tax basis, in
the first quarter of 1997.
24
<PAGE> 26
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 8. SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
(IN THOUSANDS)
CUMULATIVE
COMMON PAID-IN RETAINED TRANSLATION
STOCK CAPITAL EARNINGS ADJUSTMENTS TOTAL
------ -------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1994................... $370 $154,190 $ 91,700 $(1,410) $244,850
Net income............................... 50,100 50,100
Common stock dividends................... (5,490) (5,490)
Other.................................... 1,020 120 1,140
---- -------- -------- ------- --------
Balance, December 31, 1994................. 370 155,210 136,310 (1,290) 290,600
Net income............................... 56,020 56,020
Common stock dividends................... (6,960) (6,960)
Other.................................... 220 (1,210) (990)
---- -------- -------- ------- --------
Balance, December 31, 1995................. 370 155,430 185,370 (2,500) 338,670
Net income............................... 61,360 61,360
Common stock dividends................... (8,440) (8,440)
Other.................................... 260 (1,400) (1,140)
---- -------- -------- ------- --------
Balance, December 31, 1996................. $370 $155,690 $238,290 $(3,900) $390,450
==== ======== ======== ======= ========
</TABLE>
On the basis of amounts paid (declared), cash dividends per common share
were $.22 ($.23) in 1996, $.18 ($.19) in 1995 and $.14 ($.15) in 1994.
Under a Stock Repurchase Agreement which expires in December 1998, Masco
Corporation and MascoTech, Inc. have the right to sell to the Company, at
approximate fair market value, shares of Company common stock following the
occurrence of certain events that would result in an increase in their
respective ownership percentage of the then outstanding shares of Company common
stock. Such events include repurchases of Company common stock initiated by
TriMas or any of its subsidiaries, and reacquisitions of Company common stock
through forfeitures of shares previously awarded by the Company pursuant to its
employee stock incentive plans. In each case, TriMas has control over the amount
of Company common stock it would ultimately acquire, including shares subject to
repurchase under the Stock Repurchase Agreement. The aforementioned rights
expire 30 days from the date notice of an event is given by TriMas and neither
Masco Corporation nor MascoTech, Inc. have ever exercised their right to sell
Company common stock to the Company. To the extent these rights have been
exercised at any balance sheet date, the Company would reclassify from permanent
capital an amount representative of the repurchase obligation.
25
<PAGE> 27
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9. STOCK OPTIONS AND AWARDS
The Company's stock incentive plans include the TriMas Corporation 1995
Long Term Stock Incentive Plan, the 1988 Restricted Stock Incentive Plan and the
1988 Stock Option Plan. Company common stock available for grant under these
plans includes the 2,000,000 shares initially established under the 1995 plan,
plus additional shares resulting from certain reacquisitions of shares by the
Company.
The Company granted long-term incentive awards of Company common stock,
net, for 159,071 shares in 1996, 290,588 shares in 1995 and 88,118 shares in
1994, to key employees of the Company. The weighted average fair value per
share, on date of grant, of long-term incentive awards granted in 1996 and 1995
was $19.66 and $23.21. Compensation expense recorded in 1996, 1995 and 1994
related to long-term incentive awards was $2.2 million, $1.6 million and $1.2
million. The unamortized costs of incentive awards, aggregating $14.0 million at
December 31, 1996, are being amortized over the ten year vesting periods.
Fixed stock options are granted to key employees of the Company and have a
maximum term of ten years. The exercise price of each fixed option equals the
market price of the Company's common stock on the date of grant. The options
generally vest in installments beginning in the second year and extending
through the eighth year after grant. For the three years ended December 31, 1996
stock option information is as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Options outstanding, January 1.............................. 576,064 594,200 604,000
Options granted:
At option prices per share of $18.38-$25.50............... 16,154 4,864
Weighted average option price per share................... $22.12 $23.35
Options exercised:
At option price per share of $8.88........................ 53,661 23,000 9,800
Options outstanding, December 31:
At option prices per share of $7.50-$8.88................. 517,539 571,200 594,200
Weighted average option price per share................ $8.45 $8.49 $8.50
Weighted average remaining term........................ 3.5 years 4.6 years 5.6 years
At option prices per share of $18.38-$25.50............... 21,018 4,864
Weighted average option price per share................ $22.40 $23.35
Weighted average remaining term........................ 4.3 years 5.3 years
Exercisable, December 31.................................... 312,552 260,464 218,000
Weighted average option price per share................... $8.94
</TABLE>
The Company applies Accounting Principles Board Opinion No. 25, Accounting
for Stock Issued to Employees, in accounting for stock based compensation.
Accordingly, no compensation expense has been charged against income for fixed
stock option grants. Had compensation expense been determined based on the fair
value at the 1996 and 1995 grant dates, consistent with the methodology of
Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation, the pro forma effects on the Company's net income and earnings per
share would not have been material.
At December 31, 1996 and 1995, a combined total of 2,011,642 and 2,055,803
shares of Company common stock were available for the granting of options and
incentive awards under the aforementioned plans.
26
<PAGE> 28
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 10. RETIREMENT PLANS
The Company has noncontributory retirement benefit plans, both defined
benefit plans and profit-sharing and other defined contribution plans, for most
of its employees.
The annual expense for all plans was:
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Defined contribution plans.................................. $2,480 $3,470 $3,320
Defined benefit plans....................................... 2,660 1,690 890
------ ------ ------
$5,140 $5,160 $4,210
====== ====== ======
</TABLE>
Contributions to profit-sharing and other defined contribution plans are
generally determined as a percentage of the covered employee's annual salary.
Defined benefit plans provide retirement benefits for salaried employees
based primarily on years of service and average earnings for the five highest
consecutive years of compensation. Defined benefit plans covering hourly
employees generally provide benefits of stated amounts for each year of service.
These plans are funded based on an actuarial evaluation and review of the
assets, liabilities and requirements of each plan. Plan assets are held by a
trustee and invested principally in cash equivalents and marketable equity and
fixed income instruments.
Net periodic pension cost of defined benefit plans includes the following
components:
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Service cost................................................ $ 2,670 $ 2,000 $ 2,490
Interest cost............................................... 3,980 3,570 3,310
Actual (return)/loss on assets.............................. (4,010) (5,360) 1,820
Net amortization and deferral............................... 20 1,480 (6,730)
------- ------- -------
$ 2,660 $ 1,690 $ 890
======= ======= =======
</TABLE>
Weighted average rate assumptions used were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----- ----- -----
<S> <C> <C> <C>
Discount rate............................................... 7.5% 7.3% 8.5%
Rate of increase in compensation levels..................... 5.1% 5.1% 5.1%
Expected long-term rate of return on plan assets............ 10.6% 10.7% 12.5%
</TABLE>
27
<PAGE> 29
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 10. RETIREMENT PLANS (CONTINUED)
The following table sets forth the funded status of the defined benefit
plans:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31,
--------------------------------------------------------
1996 1995
-------------------------- --------------------------
PLANS PLANS PLANS PLANS
WHERE WHERE WHERE WHERE
ASSETS ACCUMULATED ASSETS ACCUMULATED
EXCEED BENEFITS EXCEED BENEFITS
ACCUMULATED EXCEED ACCUMULATED EXCEED
BENEFITS ASSETS BENEFITS ASSETS
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Actuarial present value of:
Vested benefit obligation.................... $30,850 $12,060 $30,680 $11,530
======= ======= ======= =======
Accumulated benefit obligation............... $31,220 $14,190 $31,000 $12,960
======= ======= ======= =======
Projected benefit obligation................. $41,030 $15,270 $39,900 $13,980
Plan assets at fair value...................... 35,660 9,200 33,640 7,790
------- ------- ------- -------
Projected benefit obligation (in excess of) or
less than plan assets........................ (5,370) (6,070) (6,260) (6,190)
Unrecognized net (asset) or obligation......... (980) 390 (1,160) 420
Unrecognized prior service cost................ 400 1,680 440 1,670
Unrecognized net (gain) or loss................ 5,630 3,240 7,910 3,230
Requirement to recognize minimum liability..... (4,220) (4,300)
------- ------- ------- -------
Prepaid pension cost or (pension
liability).............................. $ (320) $(4,980) $ 930 $(5,170)
======= ======= ======= =======
</TABLE>
The Company provides postretirement health care and life insurance benefits
for certain eligible retired employees under unfunded plans. Some of the plans
have cost-sharing provisions. Net periodic postretirement benefit costs during
1996, 1995 and 1994 were $1.0 million, $.8 million and $.8 million.
The aggregate accumulated postretirement benefit obligation of these
unfunded plans was $7.1 million at both December 31, 1996 and 1995. The discount
rates used in determining the accumulated postretirement benefit obligations and
the net periodic postretirement benefit costs were 7.5 percent, 7.3 percent and
8.5 percent in 1996, 1995 and 1994. The assumed health care cost trend rate in
1996 was 12.0 percent, decreasing to an ultimate rate in the years subsequent to
2001 of seven percent. A one percent increase in the assumed health care cost
trend rates would have increased the net periodic postretirement benefit cost by
$.1 million during 1996 and would have increased the accumulated postretirement
benefit obligation at December 31, 1996 by $.9 million. The Company is
amortizing the unrecognized transition accumulated postretirement benefit
obligation and subsequent plan net gains and losses in accordance with Statement
of Financial Accounting Standards No. 106. The accrued postretirement benefit
obligation was $3.5 million and $3.1 million at December 31, 1996 and 1995.
28
<PAGE> 30
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 11. BUSINESS SEGMENT AND GEOGRAPHIC AREA INFORMATION
The Company's operations in its business segments consist principally of
the manufacture and sale of the following:
Specialty Fasteners: Cold formed fasteners and related metallurgical
processing.
Towing Systems: Vehicle hitches, jacks, winches, couplers and related
towing accessories.
Specialty Container Products: Industrial container closures, pressurized
gas cylinders and metallic and nonmetallic gaskets.
Corporate Companies: Specialty drills, cutters and specialized metal
finishing services, and flame-retardant facings and jacketings and
pressure-sensitive tapes.
29
<PAGE> 31
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 11. BUSINESS SEGMENT AND GEOGRAPHIC AREA INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
NET SALES
Specialty Fasteners.................................. $141,510 $141,050 $138,720
Towing Systems....................................... 189,540 175,000 163,130
Specialty Container Products......................... 189,320 165,670 163,880
Corporate Companies.................................. 79,860 71,770 69,750
-------- -------- --------
Total net sales................................... $600,230 $553,490 $535,480
======== ======== ========
OPERATING PROFIT
Specialty Fasteners.................................. $ 25,740 $ 27,290 $ 24,280
Towing Systems....................................... 31,480 31,080 25,660
Specialty Container Products......................... 42,890 39,040 39,060
Corporate Companies.................................. 11,980 8,420 9,850
-------- -------- --------
Total operating profit............................ 112,090 105,830 98,850
Other income (expense), net............................ (3,700) (6,840) (7,900)
General corporate expense.............................. (7,800) (7,150) (7,450)
-------- -------- --------
Income before income taxes........................ $100,590 $ 91,840 $ 83,500
======== ======== ========
IDENTIFIABLE ASSETS AT DECEMBER 31
Specialty Fasteners.................................. $143,060 $146,200 $137,190
Towing Systems....................................... 158,840 151,160 148,890
Specialty Container Products......................... 231,610 149,790 150,360
Corporate Companies.................................. 57,220 56,230 55,210
Corporate (A)........................................ 105,940 112,980 123,490
-------- -------- --------
Total assets...................................... $696,670 $616,360 $615,140
======== ======== ========
CAPITAL EXPENDITURES
Specialty Fasteners.................................. $ 4,500 $ 10,840 $ 9,140
Towing Systems....................................... 9,160 4,790 6,720
Specialty Container Products......................... 23,170 5,780 5,420
Corporate Companies.................................. 2,690 2,030 3,000
Corporate............................................ 10 30 30
-------- -------- --------
Total capital expenditures........................ $ 39,530(B) $ 23,470 $ 24,310
======== ======== ========
DEPRECIATION AND AMORTIZATION
Specialty Fasteners.................................. $ 7,510 $ 7,230 $ 6,970
Towing Systems....................................... 6,070 5,610 5,390
Specialty Container Products......................... 6,690 6,140 5,790
Corporate Companies.................................. 2,590 2,430 2,360
Corporate............................................ 70 70 70
-------- -------- --------
Total depreciation and amortization............... $ 22,930 $ 21,480 $ 20,580
======== ======== ========
</TABLE>
- -------------------------
(A) Corporate assets consist primarily of cash and cash equivalents.
(B) Including $12.9 million from businesses acquired.
Sales of the Company's foreign operations equaled $46.0 million, $33.7
million and $35.2 million in 1996, 1995 and 1994. Identifiable assets of foreign
operations totaled $82.9 million, $32.4 million and $26.5 million at December
31, 1996, 1995 and 1994. Export sales equaled less than ten percent of total
sales for each of the three years presented.
30
<PAGE> 32
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 12. INCOME TAXES
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31,
------------------------------------
1996 1995 1994
-------- ------- -------
<S> <C> <C> <C>
Income before income taxes:
Domestic................................................. $ 92,990 $86,900 $79,040
Foreign.................................................. 7,600 4,940 4,460
-------- ------- -------
$100,590 $91,840 $83,500
======== ======= =======
Provision for income taxes:
Federal.................................................. $ 29,700 $23,810 $24,240
State and local.......................................... 4,690 4,460 4,100
Foreign.................................................. 2,740 1,990 1,850
Deferred, principally federal............................ 2,100 5,560 3,210
-------- ------- -------
$ 39,230 $35,820 $33,400
======== ======= =======
</TABLE>
The following is a reconciliation of the U.S. federal statutory tax rate to
the effective tax rate:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
1996 1995 1994
----- ----- -----
<S> <C> <C> <C>
U.S. federal statutory tax rate............................. 35.0% 35.0% 35.0%
State and local taxes, net of federal tax benefit........... 3.0 3.1 3.2
Foreign taxes in excess of U.S. federal tax rate............ .1 .3 .3
Nondeductible amortization of excess of cost over net assets
of acquired companies..................................... .6 .7 .8
Other, net.................................................. .3 (.1) .7
----- ----- -----
Effective tax rate..................................... 39.0% 39.0% 40.0%
===== ===== =====
</TABLE>
Items that gave rise to deferred taxes:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31,
------------------------------------------------------------------
1996 1995
------------------------------ ------------------------------
DEFERRED TAX DEFERRED TAX DEFERRED TAX DEFERRED TAX
ASSETS LIABILITIES ASSETS LIABILITIES
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Property and equipment...................... $23,940 $22,240
Intangible assets........................... 4,960 3,840
Accrued employee benefits................... $2,950 $1,200
Inventory................................... 620 1,080
Other....................................... 1,420 4,480 910 3,400
------ ------- ------ -------
$4,990 $33,380 $3,190 $29,480
====== ======= ====== =======
</TABLE>
31
<PAGE> 33
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONCLUDED)
NOTE 13. INTERIM FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
FIRST QUARTER SECOND QUARTER
-------------------- --------------------
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales........................................... $147,700 $147,600 $160,200 $151,920
Gross profit........................................ $ 47,460 $ 47,600 $ 53,460 $ 50,530
Net income.......................................... $ 14,130 $ 13,440 $ 17,820 $ 16,560
Primary earnings per common share................... $.38 $.36 $.48 $.45
Fully diluted earnings per common share............. $.36 $.34 $.45 $.42
Weighted average common and common equivalent shares
outstanding:
Primary........................................ 36,966 36,996 36,983 37,001
Fully diluted.................................. 42,067 42,090 42,065 42,088
</TABLE>
<TABLE>
<CAPTION>
THIRD QUARTER FOURTH QUARTER
-------------------- --------------------
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales........................................... $149,620 $131,880 $142,710 $122,090
Gross profit........................................ $ 47,790 $ 42,520 $ 48,140 $ 41,370
Net income.......................................... $ 14,440 $ 13,220 $ 14,970 $ 12,800
Primary earnings per common share................... $.39 $.36 $.40 $.35
Fully diluted earnings per common share............. $.37 $.34 $.38 $.33
Weighted average common and common equivalent shares
outstanding:
Primary........................................ 36,977 36,998 36,978 36,978
Fully diluted.................................. 42,072 42,080 42,063 42,061
</TABLE>
Earnings per common share in the fourth quarter of 1996 and 1995 were
improved by $.06 and $.07, net, resulting from year end adjustments to estimates
recorded earlier in each year. Amounts adjusted include rebates from raw
material suppliers, required year end insurance reserves and incentive
compensation accruals whose final determinations require actual results for the
year. Quarterly earnings per common share amounts for both 1996 and 1995 do not
total to the full year amounts due to rounding.
QUARTERLY COMMON STOCK PRICE AND DIVIDEND INFORMATION:
<TABLE>
<CAPTION>
MARKET PRICE
--------------- DIVIDENDS
HIGH LOW DECLARED
----- ----- ---------
<S> <C> <C> <C>
1996
- -----
4th Quarter.................................... $25 1/2 $22 3/8 $.06
3rd Quarter.................................... 24 1/4 19 7/8 .06
2nd Quarter.................................... 25 1/2 20 7/8 .06
1st Quarter.................................... 24 3/8 16 7/8 .05
1995
- -----
4th Quarter.................................... $22 1/4 $18 3/8 $.05
3rd Quarter.................................... 25 1/2 20 .05
2nd Quarter.................................... 24 1/4 20 1/4 .05
1st Quarter.................................... 22 3/4 19 5/8 .04
</TABLE>
32
<PAGE> 34
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information regarding executive officers required by this Item is set forth
as a Supplementary Item at the end of Part I hereof (pursuant to Instruction 3
to Item 401(b) of Regulation S-K). Other information required by this Item will
be contained in the Company's definitive Proxy Statement for its 1997 Annual
Meeting of Stockholders, to be filed on or before April 30, 1997, and such
information is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
Information required by this Item will be contained in the Company's
definitive Proxy Statement for its 1997 Annual Meeting of Stockholders, to be
filed on or before April 30, 1997, and such information is incorporated herein
by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information required by this Item will be contained in the Company's
definitive Proxy Statement for its 1997 Annual Meeting of Stockholders, to be
filed on or before April 30, 1997, and such information is incorporated herein
by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information required by this Item will be contained in the Company's
definitive Proxy Statement for its 1997 Annual Meeting of Stockholders, to be
filed on or before April 30, 1997, and such information is incorporated herein
by reference.
33
<PAGE> 35
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(A) LISTING OF DOCUMENTS.
(1) Financial Statements. The Company's Consolidated Financial Statements
included in Item 8 hereof, as required at December 31, 1996 and 1995,
and for the years ended December 31, 1996, 1995 and 1994, consist of
the following:
Consolidated Statements of Income
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
(2) Financial Statement Schedules.
Financial Statement Schedules of the Company appended hereto, as
required for the years ended December 31, 1996, 1995 and 1994, consist
of the following:
II. Valuation and Qualifying Accounts
(3) Exhibits.
<TABLE>
<S> <C>
3.a Restated Certificate of Incorporation of TriMas
Corporation.(4)
3.b Bylaws of TriMas Corporation, as amended.(2)
4 Credit Agreement dated as of February 1, 1993 among TriMas
Corporation, certain banks party thereto and NationsBank of
North Carolina, N.A. (now known as NationsBank, N.A.
(Carolinas)), as Agent(1), and First Amendment dated as of
June 30, 1995.(6)
Note: Other instruments, notes or extracts from agreements
defining the rights of holders of long-term debt of TriMas
Corporation or its subsidiaries have not been filed since
(i) in each case the total amount of long-term debt
permitted thereunder does not exceed 10 percent of TriMas
Corporation's consolidated assets, and (ii) such
instruments, notes and extracts will be furnished by TriMas
Corporation to the Securities and Exchange Commission upon
request.
10.a Assumption and Indemnification Agreement, dated as of
December 27, 1988 between Masco Industries, Inc. (now known
as MascoTech, Inc.) and TriMas Corporation.(1)
10.b Corporate Services Agreement, dated as of December 27, 1988
between Masco Corporation and TriMas Corporation.(1)
10.c Corporate Opportunities Agreement, dated as of December 27,
1988 among Masco Corporation, Masco Industries, Inc. (now
known as MascoTech, Inc.) and TriMas Corporation.(1)
10.d Stock Repurchase Agreement, dated as of December 27, 1988
among Masco Corporation, Masco Industries, Inc. (now known
as MascoTech, Inc.) and TriMas Corporation.(1)
10.e Registration Agreement, dated as of December 27, 1988 among
TriMas Corporation, Masco Corporation, Masco Industries,
Inc. (now known as MascoTech, Inc.)(1), Amendment dated as
of April 21, 1992 (filed herewith), Amendment to
Registration Agreement dated as of January 5, 1993(1),
Amendment to Registration Agreement dated as of May 26,
1994(5) and Amendment to Registration Agreement dated as of
May 15, 1996 (filed herewith).
Note: Exhibits 10.f through 10.q constitute the management
contracts and executive compensatory plans or arrangements
in which certain of the executive officers and directors of
the Company participate.
10.f TriMas Corporation 1995 Long Term Stock Incentive Plan
(Restated December 5, 1995).(7)
10.g TriMas Corporation 1988 Stock Option Plan (Restated December
5, 1995).(7)
10.h TriMas Corporation 1988 Restricted Stock Incentive Plan
(Restated December 5, 1995).(7)
10.i MascoTech, Inc. 1984 Restricted Stock Incentive Plan
(Restated December 6, 1995).(7)
</TABLE>
34
<PAGE> 36
10.j MascoTech, Inc. 1984 Stock Option Plan (Restated December 6,
1995).(7)
10.k Masco Corporation 1988 Restricted Stock Incentive Plan
(Restated December 6, 1995).(7)
10.1 Masco Corporation 1988 Stock Option Plan (Restated December
6, 1995).(7)
10.m Masco Corporation 1984 Stock Option Plan (Restated December
6, 1995).(7)
10.n Masco Corporation 1991 Long Term Stock Incentive Plan
(Restated December 6, 1995).(7)
10.o MascoTech, Inc. 1991 Long Term Stock Incentive Plan
(Restated December 6, 1995).(7)
10.p TriMas Corporation Supplemental Executive Retirement and
Disability Plan.(5)
10.q TriMas Corporation Benefits Restoration Plan.(5)
10.r Purchase Agreement dated as of January 26, 1990 between
Masco Corporation and TriMas Corporation.(4)
10.s Purchase Agreement dated as of November 23, 1993 between
MascoTech, Inc. and TriMas Corporation.(3)
11 Computation of Earnings per Common Share.
12 Computation of Ratios of Earnings to Fixed Charges.
21 List of Subsidiaries.
23 Consent of Coopers & Lybrand L.L.P. relating to TriMas
Corporation's Financial Statements and Financial Statement
Schedule.
27 Financial Data Schedule.
- -------------------------
(1) Incorporated by reference to the Exhibits filed with TriMas Corporation's
Annual Report on Form 10-K for the year ended December 31, 1992.
(2) Incorporated by reference to the Exhibits filed with TriMas Corporation's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1993.
(3) Incorporated by reference to the Exhibits filed with TriMas Corporation's
Current Report on Form 8-K dated November 23, 1993.
(4) Incorporated by reference to the Exhibits filed with TriMas Corporation's
Annual Report on Form 10-K for the year ended December 31, 1993.
(5) Incorporated by reference to the Exhibits filed with TriMas Corporation's
Annual Report on Form 10-K for the year ended December 31, 1994.
(6) Incorporated by reference to the Exhibits filed with TriMas Corporation's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1995.
(7) Incorporated by reference to the Exhibits filed with TriMas Corporation's
Annual Report on Form 10-K for the year ended December 31, 1995.
THE COMPANY WILL FURNISH TO ANY OF ITS SHAREHOLDERS A COPY OF ANY OF THE
ABOVE EXHIBITS UPON THE WRITTEN REQUEST OF SUCH SHAREHOLDER AND THE PAYMENT TO
THE COMPANY OF THE REASONABLE EXPENSES INCURRED BY THE COMPANY IN FURNISHING
SUCH COPY OR COPIES.
(B) REPORTS ON FORM 8-K.
None.
35
<PAGE> 37
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
By /s/ BRIAN P. CAMPBELL
------------------------------------
Brian P. Campbell
President
March 24, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
<TABLE>
<S> <S> <C>
PRINCIPAL EXECUTIVE OFFICER:
/s/ RICHARD A. MANOOGIAN Chairman of the Board
- -----------------------------------------------------
Richard A. Manoogian
PRINCIPAL FINANCIAL OFFICER:
/s/ WILLIAM E. MEYERS Vice President -- Controller
- -----------------------------------------------------
William E. Meyers
PRINCIPAL ACCOUNTING OFFICER:
/s/ WILLIAM E. MEYERS Vice President -- Controller
- -----------------------------------------------------
William E. Meyers
March 24, 1997
/s/ BRIAN P. CAMPBELL President and Director
- -----------------------------------------------------
Brian P. Campbell
/s/ HERBERT S. AMSTER Director
- -----------------------------------------------------
Herbert S. Amster
/s/ EUGENE A. GARGARO, JR. Director
- -----------------------------------------------------
Eugene A. Gargaro, Jr.
/s/ JOHN A. MORGAN Director
- -----------------------------------------------------
John A. Morgan
/s/ HELMUT F. STERN Director
- -----------------------------------------------------
Helmut F. Stern
</TABLE>
36
<PAGE> 38
TRIMAS CORPORATION
FINANCIAL STATEMENT SCHEDULE
PURSUANT TO ITEM 14(A)(2) OF FORM 10-K
ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
Schedule, as required, for the years ended December 31, 1996, 1995 and
1994:
<TABLE>
<CAPTION>
PAGES
-----
<C> <S> <C>
II. Valuation and Qualifying Accounts........................... F-2
</TABLE>
F-1
<PAGE> 39
TRIMAS CORPORATION
SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- -------- -------------------------- -------- --------
ADDITIONS
--------------------------
CHARGED CHARGED
BALANCE AT (CREDITED) (CREDITED) BALANCE
BEGINNING TO COST TO OTHER AT END
DESCRIPTION OF PERIOD AND EXPENSES ACCOUNTS DEDUCTIONS OF PERIOD
----------- ---------- ------------ ---------- ---------- ---------
(A) (B)
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts,
deducted from accounts receivable
in the balance sheet:
1996............................... $1,530,000 $360,000 $600,000 $640,000 $1,850,000
========== ======== ======== ======== ==========
1995............................... $2,040,000 $270,000 $ -- $780,000 $1,530,000
========== ======== ======== ======== ==========
1994............................... $1,800,000 $620,000 $ -- $380,000 $2,040,000
========== ======== ======== ======== ==========
</TABLE>
Notes:
(A) Allowance of companies acquired, and other adjustments, net.
(B) Doubtful accounts charged off, less recoveries.
F-2
<PAGE> 40
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NO.
------- ----------- ----
<S> <C> <C>
3.a Restated Certificate of Incorporation of TriMas
Corporation.(4)
3.b Bylaws of TriMas Corporation, as amended.(2)
4 Credit Agreement dated as of February 1, 1993 among TriMas
Corporation, certain banks party thereto and NationsBank of
North Carolina, N.A. (now known as NationsBank, N.A.
(Carolinas)), as Agent(1), and First Amendment dated as of
June 30, 1995.(6)
NOTE: Other instruments, notes or extracts from agreements
defining the rights of holders of long-term debt of TriMas
Corporation or its subsidiaries have not been filed since
(i) in each case the total amount of long-term debt
permitted thereunder does not exceed 10 percent of TriMas
Corporation's consolidated assets, and (ii) such
instruments, notes and extracts will be furnished by TriMas
Corporation to the Securities and Exchange Commission upon
request.
10.a Assumption and Indemnification Agreement, dated as of
December 27, 1988 between Masco Industries, Inc. (now known
as MascoTech, Inc.) and TriMas Corporation.(1)
10.b Corporate Services Agreement, dated as of December 27, 1988
between Masco Corporation and TriMas Corporation.(1)
10.c Corporate Opportunities Agreement, dated as of December 27,
1988 among Masco Corporation, Masco Industries, Inc. (now
known as MascoTech, Inc.) and TriMas Corporation.(1)
10.d Stock Repurchase Agreement, dated as of December 27, 1988
among Masco Corporation, Masco Industries, Inc. (now known
as MascoTech, Inc.) and TriMas Corporation.(1)
10.e Registration Agreement, dated as of December 27, 1988, among
TriMas Corporation, Masco Corporation and Masco Industries,
Inc. (now known as MascoTech, Inc.)(1), Amendment dated as
of April 21, 1992 (filed herewith), Amendment to
Registration Agreement dated as of January 5, 1993(1),
Amendment to Registration Agreement dated as of May 26,
1994(5) and Amendment to Registration Agreement dated as of
May 15, 1996 (filed herewith).
NOTE: Exhibits 10.f through 10.q constitute the management
contracts and executive compensatory plans or arrangements
in which certain of the executive officers and directors of
the Company participate.
10.f TriMas Corporation 1995 Long Term Stock Incentive Plan
(Restated December 5, 1995).(7)
10.g TriMas Corporation 1988 Stock Option Plan (Restated December
5, 1995).(7)
10.h TriMas Corporation 1988 Restricted Stock Incentive Plan
(Restated December 5, 1995).(7)
10.i MascoTech, Inc. 1984 Restricted Stock Incentive Plan
(Restated December 6, 1995).(7)
10.j MascoTech, Inc. 1984 Stock Option Plan (Restated December 6,
1995).(7)
10.k Masco Corporation 1988 Restricted Stock Incentive Plan
(Restated December 6, 1995).(7)
10.1 Masco Corporation 1988 Stock Option Plan (Restated December
6, 1995).(7)
10.m Masco Corporation 1984 Stock Option Plan (Restated December
6, 1995).(7)
</TABLE>
<PAGE> 41
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NO.
------- ----------- ----
<S> <C> <C>
10.n Masco Corporation 1991 Long Term Stock Incentive Plan
(Restated December 6, 1995).(7)
10.o MascoTech, Inc. 1991 Long Term Stock Incentive Plan
(Restated December 6, 1995).(7)
10.p TriMas Corporation Supplemental Executive Retirement and
Disability Plan.(5)
10.q TriMas Corporation Benefits Restoration Plan.(5)
10.r Purchase Agreement dated as of January 26, 1990 between
Masco Corporation and TriMas Corporation.(4)
10.s Purchase Agreement dated as of November 23, 1993 between
MascoTech, Inc. and TriMas Corporation.(3)
11 Computation of Earnings per Common Share.
12 Computation of Ratios of Earnings to Fixed Charges.
21 List of Subsidiaries.
23 Consent of Coopers & Lybrand L.L.P. relating to TriMas
Corporation's Financial Statements and Financial Statement
Schedule.
27 Financial Data Schedule.
</TABLE>
- -------------------------
(1) Incorporated by reference to the Exhibits filed with TriMas Corporation's
Annual Report on Form 10-K for the year ended December 31, 1992.
(2) Incorporated by reference to the Exhibits filed with TriMas Corporation's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1993.
(3) Incorporated by reference to the Exhibits filed with TriMas Corporation's
Current Report on Form 8-K dated November 23, 1993.
(4) Incorporated by reference to the Exhibits filed with TriMas Corporation's
Annual Report on Form 10-K for the year ended December 31, 1993.
(5) Incorporated by reference to the Exhibits filed with TriMas Corporation's
Annual Report on Form 10-K for the year ended December 31, 1994.
(6) Incorporated by reference to the Exhibits filed with TriMas Corporation's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1995.
(7) Incorporated by reference to the Exhibits filed with TriMas Corporation's
Annual Report on Form 10-K for the year ended December 31, 1995.
<PAGE> 1
EXHIBIT 10.e
[MASCO CORPORATION LETTERHEAD]
April 21, 1992
Mr. Brian P. Campbell, President
TriMas Corporation
315 E. Eisenhower Parkway
Suite 300
Ann Arbor, Michigan 48108
Dear Brian:
This will confirm our understanding to modify the Registration
Agreement dated December 27, 1988 among TriMas Corporation, Masco Corporation
and Masco Industries (the "Registration Agreement"). The Registration
Agreement currently limits Masco Corporation and Masco Industries from
requesting more than one registration within a period of twelve months. At the
request of your underwriters, each of Masco Corporation and Masco Industries
agrees that it will not, for a period of 120 days after the effective date of
TriMas' definitive prospectus relating to its proposed offering of Common
Stock, provided that such effective date is prior to May 15, 1992, (i) offer
for sale, sell, contract to sell or otherwise dispose of any shares of TriMas
Common Stock, or (ii) exercise any Common Stock registration rights granted to
each of them in the Registration Agreement (including but not limited to
requesting registration of shares owned by others).
In return for the foregoing, and whether or not TriMas' current
registration statement is declared effective, TriMas agrees that the
Registration Agreement is hereby modified so that if Masco Corporation or Masco
Industries requests registration of shares of TriMas Common Stock heretofore
sold to the respective executives of Masco Corporation and Masco Industries
pursuant to the Executive Agreements (as defined below), and such registration
is filed during 1992, they may also request that TriMas file not earlier than
January 1, 1993 a second registration statement covering additional such
shares of TriMas Common Stock heretofore sold pursuant to the Executive
Agreements, even if such second registration is within twelve months of the
effective date of the initial filing during 1992 (so long as such request
otherwise complies with the terms of the Registration Agreement and is made
not less than 90 days from the date of the initial such request). It is
understood that if a registration request is made in 1992 and the registration
statement is for any reason not filed during 1992, Masco Corporation or Masco
Industries shall be entitled, prior to filing, to increase the number of shares
covered by such request. All other provisions contained in the Registration
Agreement
<PAGE> 2
Masco Corporation
Mr. Brian P. Campbell
April 21, 1992
Page 2
including but not limited to those limiting registration requests are
unaffected hereby.
In connection with the foregoing, we advise you as follows:
1. All executives who have purchased TriMas stock from Masco
Corporation or Masco Industries have done so pursuant to the agreements which
shall be provided to you prior to any request for registration (the "Executive
Agreements").
2. None of the executives who have purchased TriMas stock pursuant to
the Executive Agreements have notified Masco Corporation or Masco Industries
that they wish to sell any of their TriMas stock in the immediate future.
3. The Executive Agreements currently contain restrictions on sales of
stock by the executive which do not permit the executives to sell in a
registered offering more than 50% of such executive's TriMas stock subject to
the Executive Agreements during 1992, and 75% of such stock by the end of
1993. Masco Corporation and Masco Industries will not amend, waive or modify
the Executive Agreements to permit any sales in a registered offering in excess
of these restrictions.
Please confirm TriMas' agreement with the modifications set forth above
which will become effective upon signature as provided below.
Sincerely,
MASCO CORPORATION MASCO INDUSTRIES, INC.
By: /s/ Richard A. Manoogian By: /s/ Richard A. Manoogian
----------------------------- -----------------------------
Richard A. Manoogian Richard A. Manoogian
TriMas Corporation and the Oversight Committee of its Board of Directors concur
with the foregoing.
TRIMAS CORPORATION OVERSIGHT COMMITTEE
By: /s/ Brian P. Campbell By: /s/ Herbert S. Amster
----------------------------- -----------------------------
Brian P. Campbell Herbert S. Amster
President
By: /s/ Helmut F. Stern
-----------------------------
Helmut F. Stern
<PAGE> 3
AMENDMENT TO REGISTRATION AGREEMENT
This is an Amendment dated as of May 15, 1996 to a Registration
Agreement dated as of December 27, 1988 and amended as of April 21, 1992,
January 5, 1993 and May 26, 1994 (the "Registration Agreement") among TriMas
Corporation, a Delaware corporation ("TriMas"), Masco Corporation, a Delaware
corporation ("Masco"), and MascoTech, Inc. (formerly Masco Industries, Inc.), a
Delaware corporation ("Industries").
WHEREAS, TriMas, Masco, and Industries wish to amend the Registration
Agreement to alter the arrangements for registration of the Executive Shares
owned by Richard A. Manoogian.
NOW, THEREFORE, the parties hereto agree as follows:
A. The second sentence of Paragraph 1(b) of the Registration
Agreement is hereby amended by deleting the year "1996" and by substituting
therefor the year "1997".
B. Except as provided herein, the Registration Agreement shall
remain in full force and effect and not otherwise be modified or affected by
the provisions hereof. This Amendment to Registration Agreement may be
executed in multiple counterparts.
IN WITNESS WHEREOF, the undersigned have executed this Amendment to
Registration Agreement as of the date first set forth above.
MASCO CORPORATION MASCOTECH, INC.
By /s/ Richard A. Manoogian By /s/ Richard A. Manoogian
------------------------ ------------------------
Richard A. Manoogian Richard A. Manoogian
Chairman Chairman
TRIMAS CORPORATION TRIMAS OVERSIGHT COMMITTEE
By /s/ Brian P. Campbell By /s/ Herbert S. Amster
----------------------- -----------------------
Brian P. Campbell Herbert S. Amster
President
By /s/ Helmut F. Stern
-----------------------
Helmut F. Stern
<PAGE> 4
ACKNOWLEDGMENT
I acknowledge that the Letter Agreements with each of Masco
Corporation and MascoTech, Inc. dated as of June 29, 1989 are amended to
conform with the Registration Agreement, as amended, and that the Letter
Agreements shall otherwise continue in full force and effect.
/s/ Richard A. Manoogian
-------------------------
Richard A. Manoogian
<PAGE> 1
EXHIBIT 11
TRIMAS CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE
(In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
For the years ended
------------------------------------
1996 1995 1994
----- ----- -----
Primary:
<S> <C> <C> <C>
Net income $61,360 $56,020 $50,100
======= ======= =======
Weighted average common
shares outstanding 36,644 36,644 36,644
Dilution of stock options 325 347 382
------- ------- -------
Weighted average common
and common equivalent
shares outstanding
after assumed exercise
of options 36,969 36,991 37,026
======= ====== ======
Primary earnings per
common share $1.66 $1.51 $1.35
===== ===== =====
Fully diluted:
Net income $61,360 $56,020 $50,100
Add after tax convertible
debenture related
expenses 3,680 3,680 3,680
------- ------- --------
Net income as adjusted $65,040 $59,700 $53,780
======= ======= =======
Weighted average common
shares outstanding 36,644 36,644 36,644
Dilution of stock options 336 347 382
Addition from assumed
conversion of convertible
debentures 5,083 5,083 5,083
------- ------- --------
Weighted average common
and common equivalent
shares outstanding on
a fully diluted basis 42,063 42,074 42,109
======= ======= ========
Fully diluted earnings
per common share $1.55 $1.42 $1.28
===== ===== =====
</TABLE>
<PAGE> 1
EXHIBIT 12
TRIMAS CORPORATION
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(Dollar Amounts in Thousands)
For the years ended December 31,
---------------------------------------
1996 1995 1994
-------- -------- --------
Earnings:
Income before income taxes $100,590 $ 91,840 $ 83,500
Fixed charges 11,850 14,570 13,900
-------- -------- --------
Earnings before fixed charges $112,440 $106,410 $ 97,400
======== ======== ========
Fixed charges:
Interest $ 11,180 $ 13,870 $ 13,170
Portion of rental expense 910 900 870
-------- -------- --------
Fixed charges $ 12,090 $ 14,770 $ 14,040
======== ======== ========
Ratio of earnings to fixed charges 9.3 7.2 6.9
<PAGE> 1
EXHIBIT 21
TRIMAS CORPORATION
(a Delaware Corporation)
Subsidiaries as of March 15, 1997
Jurisdiction of
Incorporation
Name or Organization
---- ---------------
Beaumont Bolt & Gasket, Inc. Texas
Industrial Bolt & Gasket, Inc. Louisiana
Louisiana Bolt and Gasket, Inc. Louisiana
Compac Corporation Delaware
Netcong Investments, Inc. New Jersey
Di-Rite Company Ohio
Draw-Tite, Inc. Delaware
Mongo Electronics, Inc. Delaware
Draw-Tite (Canada) Ltd. Ontario
Eskay Screw Corporation Delaware
Fulton Performance Products, Inc. Delaware
Spar Marine Manufacturing Ltd. British
Columbia
Heinrich Stolz GmbH & Co. KG Germany
Stolz USA, Inc. Texas
Hitch 'N Post, Inc. Delaware
Kee Services, Inc. Michigan
Keo Cutters, inc. Delaware
Lake Erie Screw Corporation Ohio
Lamons Metal Gasket Co. Delaware
Canadian Gasket & Supply Inc. Canada
Louisiana Hose & Rubber Co. Louisiana
Monogram Aerospace Fasteners, Inc. Delaware
Norris Cylinder Company Delaware
Punchcraft Company Michigan
Reese Products, Inc. Indiana
TriMas Corporation Pty. Ltd. Australia
Reese Products of Canada Ltd. Ontario
Reska Spline Products, Inc. Michigan
Richards Micro-Tool, Inc. Delaware
Rieke Corporation Indiana
Rieke Canada Limited Canada
Rieke of Mexico, Inc. Delaware
Rieke de Mexico, S.A. de C.V. Mexico
Rieke Leasing Co., Incorporated Delaware
TriMas Corporation Nevada
TriMas Corporation Limited United Kingdom
Englass Group Limited United Kingdom
Top Emballage France
TriMas Export, Inc. Barbados
TriMas Fasteners, Inc. Delaware
TriMas Services Corp. Delaware
Directly owned subsidiaries appear at the left hand margin, first tier and
second tier subsidiaries are indicated by single and double indentation,
respectively, and are listed under the names of their respective parent
companies. unless otherwise indicated, all subsidiaries are wholly-owned.
Certain of these companies may also use trade names or other assumed names in
the conduct of their business.
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the prospectuses
included in the registration statements of TriMas Corporation and subsidiaries
on Form S-8 (Registration Nos. 33-31030 and 33-59243) and on Form S-3
(Registration Nos. 33-53889 and 33-59014) of our report dated February 11,
1997, on our audits of the consolidated financial statements and financial
statement schedule of TriMas Corporation and subsidiaries as of December 31,
1996 and 1995, and for each of the three years in period ended December 31,
1996, which report is included in this Annual Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
Detroit, Michigan
March 20, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM TRIMAS
CORPORATION'S FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 105,890,000
<SECURITIES> 0
<RECEIVABLES> 82,240,000
<ALLOWANCES> 1,850,000
<INVENTORY> 92,210,000
<CURRENT-ASSETS> 282,620,000
<PP&E> 326,230,000
<DEPRECIATION> 131,690,000
<TOTAL-ASSETS> 696,670,000
<CURRENT-LIABILITIES> 79,180,000
<BONDS> 187,120,000
<COMMON> 370,000
0
0
<OTHER-SE> 390,080,000
<TOTAL-LIABILITY-AND-EQUITY> 696,670,000
<SALES> 600,230,000
<TOTAL-REVENUES> 600,230,000
<CGS> 403,380,000
<TOTAL-COSTS> 403,380,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,810,000
<INCOME-PRETAX> 100,590,000
<INCOME-TAX> 39,230,000
<INCOME-CONTINUING> 61,360,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 61,360,000
<EPS-PRIMARY> 1.66
<EPS-DILUTED> 1.55
</TABLE>
