SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(X) Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 1998
OR
( ) Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from __________ to __________
Commission file number: 0-23474
Triple S Plastics, Inc.
(Exact name of registrant as specified in its charter)
Michigan 38-1895876
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
14320 Portage Road, Vicksburg, Michigan 49097-0905
(Address of principal executive offices) (Zip Code)
(616) 649-0545
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes___X___ No ______
The registrant had 3,742,993 shares of common stock outstanding as of
June 30, 1998.
<PAGE>
TRIPLE S PLASTICS, INC.
INDEX
Page No.
Part I. Financial Information
Item 1. Condensed Financial Statements
Condensed Balance Sheets - 3
June 30, 1998 and March 31, 1998
Condensed Statements of Income - Three Months 4
Ended June 30, 1998 and 1997
Condensed Statements of Cash Flows - 5
Three Months Ended June 30, 1998 and 1997
Notes to Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
Item 3. Quantitative and Qualitative Disclosures
About Market Risk (not applicable)
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 9
<PAGE>
TRIPLE S PLASTICS, INC.
CONDENSED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
June 30 March 31
1998 1998
ASSETS
Current Assets:
Cash and cash equivalents $ 4,048 $ 3,783
Accounts receivable, less allowance of $350
for possible losses 10,732 13,275
Inventories (Note 2) 4,003 3,634
Deferred income taxes 360 360
Other 243 202
---------- ----------
Total Current Assets 19,386 21,254
Property, Plant and Equipment (Note 3) 39,933 38,508
Less accumulated depreciation and amortization 14,328 13,483
---------- ----------
Net Property, Plant and Equipment 25,605 25,025
Other:
Cash restricted for capital expenditures (Note 3) 2,931 2,932
Goodwill, net of accumulated amortization of
$497 and $469 4,009 679
Miscellaneous 131 140
---------- ----------
Total Other Assets 7,071 3,751
---------- ----------
$ 52,062 $ 50,030
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 4,554 $ 5,182
Accrued compensation 985 1,167
Deferred mold revenue 601 503
Other accrued expenses 858 888
Current maturities of long-term debt 1,365 1,346
---------- ----------
Total Current Liabilities 8,363 9,086
Long-Term Debt, less current maturities 8,993 6,603
Deferred Income Taxes 2,360 2,360
---------- ----------
Total Liabilities 19,716 18,049
Shareholders' Equity:
Preferred stock, no par value, 1,000,000
shares authorized, none issued -- --
Common stock, no par value, 10,200,000
shares authorized, 3,742,993 and
3,741,951 shares issued and outstanding 14,449 14,444
Retained earnings 17,897 17,537
---------- ----------
Total Shareholders' Equity 32,346 31,981
---------- ----------
$ 52,062 $ 50,030
========== ==========
See accompanying notes to financial statements.
<PAGE>
TRIPLE S PLASTICS, INC.
CONDENSED STATEMENTS OF INCOME
(Unaudited)
(in thousands, except per share amounts)
Three Months Ended
June 30
--------------------------
1998 1997
------------ ------------
Net Sales $ 15,641 $ 17,117
Cost of Sales 12,713 14,015
------------ ------------
Gross Profit 2,928 3,102
Total Selling, General & Administrative Expenses 2,301 2,343
------------ ------------
Operating Income 627 759
Interest Expense (Income):
Interest expense 149 160
Interest income (77) (63)
------------ ------------
Net Interest Expense 72 97
------------ ------------
Income Before Income Taxes 555 662
Income Taxes 195 230
------------ ------------
Net Income $ 360 $ 432
============ ============
Basic and Diluted Earnings per Share $ .10 $ .12
============ ============
Shares Used in Computing Earnings per Share:
Basic 3,743 3,738
Diluted 3,759 3,748
<PAGE>
TRIPLE S PLASTICS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Three Months Ended
June 30
--------------------------
1998 1997
------------ ------------
Operating Activities:
Net income $ 360 $ 432
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 901 776
Changes in assets and liabilities:
Accounts receivable 2,543 420
Inventories (308) (136)
Accounts payable and accruals (804) (246)
Other -- 39
------------ ------------
CASH PROVIDED BY OPERATING ACTIVITIES 2,692 1,285
INVESTING ACTIVITIES:
Capital expenditures (1,203) (1,219)
Change in restricted cash 1 (8)
Business acquisition, net (Note 4) (909) --
------------ ------------
CASH USED IN INVESTING ACTIVITIES (2,111) (1,227)
FINANCING ACTIVITIES:
Proceeds from issuance of common stock,
net of fees 5 8
Principal payments on long-term debt (321) (300)
------------ ------------
CASH USED IN FINANCING ACTIVITIES (316) (292)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS $ 265 $ (234)
============ ============
<PAGE>
TRIPLE S PLASTICS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. Presentation of Interim Information
In the opinion of the management of Triple S Plastics, Inc. (the
Company), the accompanying unaudited condensed financial statements include
all normal adjustments considered necessary to present fairly the financial
position of the Company as of June 30, 1998 and the results of its operations
for the periods shown. Interim results are not necessarily indicative of
results for a full year.
The condensed financial statements have been prepared in accordance with
the instructions to Form 10-Q and therefore, do not include all information
and footnotes necessary for a fair presentation of financial position, results
of operations and cash flows in conformity with generally accepted accounting
principles.
2. Inventories
($000s)
Inventories are summarized as follows:
June 30 March 31
1998 1998
----------- -----------
Raw materials and packaging $ 2,020 $ 2,039
Finished goods and work-in-process 2,003 1,595
----------- -----------
Total Inventories $ 4,023 $ 3,634
=========== ===========
3. Cash Restricted for Capital Expenditures
This amount represents the remaining proceeds from a $5 million
Industrial Revenue Bond and is available for investment in machinery and
equipment for the Company's Texas facility through October 1, 1998.
4. Acquisition of Dynacept Company, Inc.
On June 1, 1998, Triple S Plastics, Inc. purchased, for cash and
long-term debt, the assets of Dynacept Company, Inc. (Dynacept). Dynacept
is a preeminent rapid prototyping and model making organization that produces
concept models, engineering prototypes, and pre-production samples. The
transaction has been accounted for using the purchase method.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(in thousands)
Overview
The Company designs and builds molds and manufactures complex,
highly engineered thermoplastic molded components based on customers'
specifications and orders. Its customers are primarily in the consumer
products, telecommunications, medical/pharmaceutical, information technologies,
and automotive markets. The Company considers both the manufacture of molded
products and mold sales to be an integral part of its business. The Company's
fiscal year end is March 31.
Results of Operations
The following table sets forth, for the three months ended June 30, 1998
and 1997, certain items from the Company's Condensed Statements of Income
expressed as a percentage of net sales, as well as the percentage change in
those items.
Three months ended
June 30
--------------------------
1998 1997 % Change
Net Sales 100.0% 100.0% (8.6)
Cost of Sales 81.3 81.9 (9.3)
------ ------
Gross Profit 18.7 18.1 (5.6)
Selling, General & Admin. Expenses 14.7 13.7 (1.8)
------ ------
Operating Income 4.0 4.4 (17.4)
Interest Expense, net 0.5 0.6 (25.8)
------ ------
Income Before Income Taxes 3.5 3.8 (16.2)
Income Taxes 1.2 1.3 (15.2)
------ ------
Net Income 2.3% 2.5% (16.7)
====== ======
Net Sales
Net sales for the first quarter ended June 30, 1998 decreased 8.6% compared
to the first quarter of the prior year. The decrease in sales for the first
quarter, compared to the same period a year ago, is due to certain customers
relocating programs for production in Mexico or the Far East, as well as the
conclusion of several customer programs which have not been replaced with new
programs. Sales to customers in the consumer products, medical, information
technologies and automotive markets decreased, but sales to customers in the
telecommunications market nearly doubled compared to sales in the first quarter
last year.
Cost of Sales
Cost of sales decreased 9.3% in the first quarter of fiscal 1999 compared
to the prior year first quarter. Cost of sales decreased by a larger pencentage
than the sales decrease as a result of management's focus on reducing operating
costs, particularly labor and material costs. As a percentage of sales, cost of
sales remained relatively flat compared to the prior year first quarter.
Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased 2% in the first
quarter of fiscal 1999 compared to the first quarter of the prior year. This
decrease was principally due to decreased compensation and taxes other than
income taxes.
Income Taxes
The Company's effective income tax rate of 35.1% in the first quarter of
fiscal 1999 is comparable to the rate for the same period last year.
Liquidity and Capital Resources
The Company's primary cash requirements are for operating expenses and
capital expenditures. Historically, the Company's prime sources of cash have
been from operations, bank borrowings and industrial revenue bonds.
In the first quarter of fiscal 1999, the Company generated $2.7 million
of cash from operations which was used to acquire $1.2 million of capital
equipment, to acquire the assets of Dynacept Company, and to pay debt.
Accounts receivable decreased by $2,543 at June 30, 1998 compared to the
prior fiscal year end, and improved to 59 days sales outstanding compared to
61 days at the end of the prior fiscal year. Inventories increased by $369 at
June 30, 1998 compared to the prior fiscal year end, but still represents only
33 days in inventory.
The Company still has $2.9 million available from the $5.0 million
industrial revenue bond issued in October of 1995 to finance the expansion of
the Georgetown, Texas plant. In addition, the Company has a $5.0 million
unsecured line of credit agreement with a bank which has not been drawn on at
June 30, 1998. Management believes that these sources of cash, along with
internally generated cash, will be adequate to fund future operating and
capital requirements.
Other Matters
The Company's program to address the Year 2000 date recognition problem
continued to make progress toward its goal to ensure the millennium event does
not have a material adverse effect on its business operations. Projects to
ensure this compliance are currently underway and are anticipated to be
completed by the end of 1999. Based on information currently available from the
work performed, management does not expect that amounts to be expensed for
Year 2000 activities will have a material impact on the Company's results of
operations or financial position
<PAGE>
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27 - Financial Data Schedule
(b) No reports were filed on Form 8-K during this quarter.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TRIPLE S PLASTICS, INC.
(Registrant)
Date: August 14, 1998 _ROBERT D. MONK________________________
Robert D. Monk
Chief Financial Officer
Date: August 14, 1998 _CATHERINE A. TAYLOR___________________
Catherine A. Taylor
Corporate controller (Chief Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from SEC Form
10-Q and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000918642
<NAME> TRIPLE S PLASTICS, INC.
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