SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
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 1-6903
TRINITY INDUSTRIES, INC.
(Exact name of Registrant as specified in its charter)
Incorporated Under the Laws 75-0225040
of the State of Delaware (I.R.S. Employer
Identification No.)
2525 Stemmons Freeway
Dallas, Texas 75207-2401
(Address of Principal (Zip Code)
Executive Offices)
214) 631-4420
(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 and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
43,231,588
(Number of shares of common stock outstanding as of September 30, 1997)
Part I
Item 1 - Financial Statements
Trinity Industries, Inc.
Consolidated Balance Sheet
(unaudited)
(in millions except per share data)
September 30 March 31
Assets 1997 1997
Cash and cash equivalents . . . . . . . . . $ 3.4 $ 12.2
Receivables . . . . . . . . . . . . . . . . 292.3 236.9
Inventories:
Raw materials and supplies. . . . . . . . 233.6 216.7
Work in process . . . . . . . . . . . . . 49.0 41.9
Finished goods . . . . . . . . . . . . . 58.1 55.9
340.7 314.5
Property, plant and equipment, at cost. . . 1,195.2 1,136.5
Less accumulated depreciation . . . . . . . (451.0) (424.9)
744.2 711.6
Other assets. . . . . . . . . . . . . . . . 104.2 81.2
$1,484.8 $1,356.4
Liabilities and Stockholders' Equity
Short-term debt . . . . . . . . . . . . . . $ 190.0 $ 64.0
Accounts payable and accrued liabilities. . 262.9 261.2
Long-term debt. . . . . . . . . . . . . . . 162.4 178.6
Deferred income taxes . . . . . . . . . . . 22.2 22.8
Other liabilities . . . . . . . . . . . . . 21.4 20.3
658.9 546.9
Stockholders' equity:
Common stock - par value $1 per
share; authorized 100.0 shares;
shares issued and outstanding at
September 30, 1997 - 43.2 and
March 31, 1997 - 43.0 . . . . . . . . . . 43.2 43.0
Capital in excess of par value. . . . . . 278.2 273.3
Retained earnings . . . . . . . . . . . . 504.5 493.2
825.9 809.5
$1,484.8 $1,356.4
Trinity Industries, Inc.
Consolidated Income Statement
(unaudited)
(in millions except per share data)
Six Months
Ended September 30
1997 1996
Revenues. . . . . . . . . . . . . . . . . . . . . . $1,120.4 $1,125.0
Operating costs:
Cost of revenues. . . . . . . . . . . . . . . . . 917.6 946.8
Selling, engineering and administrative expenses. 72.1 61.2
Retirement plans expense. . . . . . . . . . . . . 9.2 8.7
998.9 1,016.7
Operating profit. . . . . . . . . . . . . . . . . . 121.5 108.3
Other (income) expenses:
Litigation settlement . . . . . . . . . . . . . . 70.0 -
Interest income . . . . . . . . . . . . . . . . . (1.2) (0.5)
Interest expense. . . . . . . . . . . . . . . . . 10.2 12.4
Other, net. . . . . . . . . . . . . . . . . . . . 1.0 (2.1)
80.0 9.8
Income from continuing operations
before income taxes . . . . . . . . . . . . . . . 41.5 98.5
Provision (benefit) for income taxes:
Current . . . . . . . . . . . . . . . . . . . . . 14.5 38.1
Deferred. . . . . . . . . . . . . . . . . . . . . 1.1 (0.6)
15.6 37.5
Income from continuing operations . . . . . . . . . 25.9 61.0
Income from discontinued operations (net of income
taxes of $4.8). . . . . . . . . . . . . . . . . . - 7.2
Net income. . . . . . . . . . . . . . . . . . . . . $ 25.9 $ 68.2
Income per common and common equivalent share
from continuing operations. . . . . . . . . . . . $ 0.59 $ 1.45
Income per common and common equivalent share
from discontinued operations. . . . . . . . . . . - 0.17
Net income per common and common equivalent share . $ 0.59 $ 1.62
Weighted average number of common and common
equivalent shares outstanding. . . . . . . . . . . 43.8 42.2
Trinity Industries, Inc.
Consolidated Income Statement
(unaudited)
(in millions except per share data)
Three Months
Ended September 30
1997 1996
Revenues. . . . . . . . . . . . . . . . . . . . . . $ 560.3 $ 548.5
Operating costs:
Cost of revenues. . . . . . . . . . . . . . . . . 458.3 459.8
Selling, engineering and administrative expenses. 34.7 30.6
Retirement plans expense. . . . . . . . . . . . . 4.1 3.7
497.1 494.1
Operating profit. . . . . . . . . . . . . . . . . . 63.2 54.4
Other (income) expenses:
Litigation settlement . . . . . . . . . . . . . . 70.0 -
Interest income . . . . . . . . . . . . . . . . . (0.6) (0.3)
Interest expense. . . . . . . . . . . . . . . . . 5.2 6.0
Other, net. . . . . . . . . . . . . . . . . . . . (0.3) (0.7)
74.3 5.0
Income (loss) from continuing operations
before income taxes . . . . . . . . . . . . . . . (11.1) 49.4
Provision (benefit) for income taxes:
Current . . . . . . . . . . . . . . . . . . . . . (3.8) 17.1
Deferred. . . . . . . . . . . . . . . . . . . . . - 1.8
(3.8) 18.9
Income (loss) from continuing operations. . . . . . (7.3) 30.5
Income from discontinued operations (net of income
taxes of $2.5). . . . . . . . . . . . . . . . . . - 3.9
Net income (loss) . . . . . . . . . . . . . . . . . $ (7.3) $ 34.4
Income (loss) per common and common equivalent share
from continuing operations. . . . . . . . . . . . $ (0.17) $ 0.72
Income per common and common equivalent share
from discontinued operations. . . . . . . . . . . - 0.09
Net income (loss) per common and common equivalent
share . . . . . . . . . . . . . . . . . . . . . . $ (0.17) $ 0.81
Weighted average number of common and common
equivalent shares outstanding. . . . . . . . . . . 43.2 42.4
Trinity Industries, Inc.
Consolidated Statement of Cash Flows
(unaudited)
(in millions)
Six Months
Ended September 30
1997 1996
Cash flows from operating activities:
Net income. . . . . . . . . . . . . . . . . . . . . $ 25.9 $ 68.2
Less: Income from discontinued operations. . . . . - (7.2)
Income from continuing operations. . . . . . . . . 25.9 61.0
Adjustments to reconcile net income to net cash
provided (required) by operating activities:
Depreciation. . . . . . . . . . . . . . . . . . . 40.5 43.4
Deferred provision (benefit) for income taxes . . 1.1 (0.6)
Gain on sale of property, plant and equipment . . (0.7) (1.8)
Other . . . . . . . . . . . . . . . . . . . . . . 1.5 0.8
Change in assets and liabilities:
(Increase) decrease in receivables . . . . . . . (51.8) 70.3
(Increase) decrease in inventories . . . . . . . (2.2) 4.6
Increase in other assets . . . . . . . . . . . . (22.1) (27.1)
Increase (decrease) in accounts payable and
accrued liabilities . . . . . . . . . . . . . . (2.7) 1.3
Increase (decrease) in other liabilities . . . . 1.2 (6.6)
Total adjustments . . . . . . . . . . . . . . . (35.2) 84.3
Net cash provided (required) by operating
activities. . . . . . . . . . . . . . . . . . . (9.3) 145.3
Cash flows from investing activities:
Proceeds from sale of property, plant
and equipment. . . . . . . . . . . . . . . . . . . 15.1 15.9
Capital expenditures. . . . . . . . . . . . . . . . (50.0) (100.8)
Payment for purchase of acquisitions,
net of cash acquired . . . . . . . . . . . . . . . (57.2) -
Cash of acquired subsidiary . . . . . . . . . . . . - 2.3
Net cash required by investing activities . . . . (92.1) (82.6)
Cash flows from financing activities:
Issuance of common stock. . . . . . . . . . . . . . 0.7 1.4
Net borrowings (repayments) under short-term debt . 126.0 (27.0)
Payments to retire long-term debt . . . . . . . . . (19.5) (19.9)
Dividends paid. . . . . . . . . . . . . . . . . . . (14.6) (14.1)
Net cash provided (required) by
financing activities . . . . . . . . . . . . . . 92.6 (59.6)
Cash flows provided by discontinued operations . . . - 0.7
______ ______
Net increase (decrease) in cash and cash equivalents (8.8) 3.8
Cash and cash equivalents at beginning of period . . 12.2 14.7
Cash and cash equivalents at end of period . . . . . $ 3.4 $ 18.5
<TABLE>
Trinity Industries, Inc.
Consolidated Statement of Stockholders' Equity
(unaudited)
(in millions except share and per share data)
<CAPTION>
Common Capital
Common Stock in Total
Shares $1.00 Excess Stock-
(100,000,000) Par of Par Retained holders'
(Authorized) Value Value Earnings Equity
<S> <C> <C> <C> <C> <C>
Balance at March 31, 1996 . . . . 41,596,037 $41.6 $239.6 $464.8 $746.0
Other. . . . . . . . . . . . . . 1,386,220 1.4 42.2 - 43.6
Net income . . . . . . . . . . . - - - 68.2 68.2
Cash dividends
($0.34 per share) . . . . . . - - - (14.4) (14.4)
Balance September 30, 1996. . . . 42,982,257 $43.0 $281.8 $518.6 $843.4
Balance at March 31, 1997 . . . . 43,046,365 $43.0 $273.3 $493.2 $809.5
Other. . . . . . . . . . . . . . 185,223 0.2 4.9 - 5.1
Net income . . . . . . . . . . . - - - 25.9 25.9
Cash dividends
($0.34 per share) . . . . . . - - - (14.6) (14.6)
Balance September 30, 1997. . . . 43,231,588 $43.2 $278.2 $504.5 $825.9
</TABLE>
The foregoing consolidated financial statements are unaudited and have been
prepared from the books and records of the Registrant. In the opinion of
the Registrant, all adjustments, consisting only of normal and recurring
adjustments necessary to a fair presentation of the financial position of
the Registrant as of September 30, 1997 and March 31, 1997, the results of
operations for the six and three month periods ended September 30, 1997
and 1996 and cash flows for the six month periods ended September 30, 1997
and 1996, in conformity with generally accepted accounting principles,
have been made.
Trinity Industries, Inc.
Notes to Consolidated Financial Statements
September 30, 1997
Acquisitions and Divestitures
At the close of business on March 31, 1997, the Registrant completed
the divestiture of Halter Marine Group, Inc. ("Halter"), previously
a wholly-owned subsidiary of the Registrant, with the distribution
of its 15 million shares of Halter common stock to its stockholders
in the form of a tax-free property distribution. Prior year's
financial statements have been reclassified to reflect the divestiture
of the Halter business as a discontinued operation.
On August 12, 1997, a wholly-owned subsidiary of the Registrant,
merged with and into Differential Holdings, Inc., a holding company
for Difco, Inc. ("Difco"). Difco manufactures and sells special
purpose rail cars and mine hauling equipment.
On August 22, 1997, an Asset Purchase Agreement was entered into and
by a wholly-owned subsidiary of the Registrant and Buffalo Specialty
Products, Inc. ("Buffalo"). Buffalo manufactures and sells cold
roll formed steel highway safety and industrial products and timber
highway safety products.
Contingencies
In September 1997, the Registrant settled a thirteen year old lawsuit
brought against a former subsidiary of the Company by Morse/Diesel Inc.
Pursuant to such settlement, the Registrant paid $70 million. The
Company has not participated in the business associated with this
matter since 1989.
The Registrant is involved in various other claims and lawsuits
incidental to its business. In the opinion of management, these
claims and suits in the aggregate will not have a material adverse
affect on the Registrant's consolidated financial statements.
New Accounting Standard
In February 1997, Statement of Financial Accounting Standards
No. 128, "Earnings Per Share," was issued. Adoption is required
by the Registrant beginning with the interim financial statements
issued for the third quarter of fiscal 1998. The pro forma effect
of applying this statement to the six and three month periods
ended September 30, 1997 is not material.
Item 2 - Management's Discussion and Analysis of Consolidated Financial
Condition and Statement of Operations
The increase in 'Receivables' at September 30, 1997 compared to
March 31, 1997 is due primarily to increased business in the
Construction Products and Industrial Products segment from
improved seasonal revenues.
The increase in 'Property, plant and equipment' at September 30,
1997 compared to March 31, 1997 is due primarily to acquisitions
finalized in the second quarter.
Short-term debt increased due primarily to the litigation
settlement in the second fiscal quarter and the acquisition of
assets of Ladish Co., Inc. in the first fiscal quarter.
Statement of Operations
Six Months Ended September 30, 1997 vs.
Six Months Ended September 30, 1996
Operating profit from continuing operations in the current six
month period increased $13.2 million, or 12.2%, compared to the
same period last year on a slight decrease in revenues due to
improved operating profit margins across all segments.
Operating profit for the Transportation Products segment increased
by $6.2 million or 7.2% in the current six month period on a 7.7%
decrease in revenues when compared to the prior year period as a
result of improving margins attained from cost reduction programs
put in place in prior periods. Revenues decreased primarily due
to a reduction in railcar deliveries. The replacement cycle for
railcars and barges coupled with strong traffic on the nation's
rails and rivers continues to drive this segment. The number of
orders on hand in this segment are at record levels and it is
anticipated that a healthy order pattern and replacement demand
will continue throughout the fiscal year.
Construction Products revenues and operating profit for the current
six month period were higher by 12.5% and 24.4%, respectively, due
to increased governmental, residential, and commercial construction
that utilizes the Company's highway guardrail and safety systems
products and its ready-mix concrete and aggregate businesses.
The federal government continues to emphasize roadside safety and
the upgrade of America's highway system to higher standards to
reflect changes in vehicle mix. In addition the overall economic
outlook across industries has led to strong activity levels in
construction markets served by the Registrant. These factors
should continue to provide a favorable market demand for the
Company's Construction Products.
The Industrial Products segment's revenues and operating profit
increased by $26.8 and $2.8 million, respectively, in the current
six month period as compared to the prior year. This segment
continues to benefit from a global increase in energy and
petrochemical demand as well as the level of housing starts in
markets served by the Company's LPG business.
Three Months Ended September 30, 1997 vs.
Three Months Ended September 30, 1996
Operating profit from continuing operations in the current quarter
increased $8.8 million, or 16.2%, compared to the same period last
year on a slight increase of revenues due to improved operating
profit margins across all segments.
Operating profit for the Transportation Products segment increased
$2.7 million or 6.3% in the current three month period when compared
to the prior year quarter. It is anticipated that the replacement
cycle for railcars and barges will continue to drive this segment
throughout the fiscal year.
Construction Products revenues and operating profit for the current
quarter increased by $21.2 and $4.4 million, respectively, due to
the same factors stated above. The overall demand for the Company's
Construction Products continues to look favorable.
The Industrial Products segment's revenues and operating
profit were higher in the current quarter by $20.8 and
$1.5 million, respectively, when compared to the prior year
quarter. This segment continues to benefit from a global
increase in energy and petrochemical demand as well as the
level of housing starts in markets served by the Company's
LPG business. The Industrial Products segment has also benefited
from the addition of assets of Ladish Co., Inc. in the first fiscal
quarter.
Net income for the six and three month periods decreased by $42.3
and $41.7 million, respectively, due to the litigation settlement
recorded in the second quarter of fiscal 1997.
Any statements contained herein that are not historical facts are
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, and involve risks and
uncertainties. These forward-looking statements include expectations,
beliefs, plans, objectives, future financial performance, estimates,
projections, goals and forecasts. Potential factors which could
cause the Company's actual results of operations to differ materially
from those in the forward-looking statements include market conditions
and demand for the Company's products; competition; technologies;
steel prices; interest rates and capital costs; taxes; unstable
governments and business conditions in emerging economies; and legal,
regulatory and environmental issues. Any forward-looking statement
speaks only as of the date on which such statement is made. The
Company undertakes no obligation to update any forward-looking
statement to reflect events or circumstances after the date on
which such statement is made.
Part II
Item 5 - Other Information
On November 11, 1997, the Registrant announced that it had
indefinitely suspended negotiations to acquire the stock of
American Railcar Industries, Inc. (ARI) and certain assets
of ACF Industries, Inc. The Registrant had announced on
August 28, 1997 an agreement in principal to acquire ARI and
certain ACF assets.
Item 6 - Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit
Number Description
27 Financial Data Schedule
(b) No Form 8-K was filed during the quarter.
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.
Trinity Industries, Inc.
By: \S\ John M. Lee
John M. Lee
Vice President
November 14, 1997
Index to Exhibits
No. Description Page
27 Financial Data Schedule *
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> SEP-30-1997
<CASH> 3,400
<SECURITIES> 0
<RECEIVABLES> 292,300
<ALLOWANCES> 0
<INVENTORY> 340,700
<CURRENT-ASSETS> 0
<PP&E> 1,195,200
<DEPRECIATION> (451,000)
<TOTAL-ASSETS> 1,484,800
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 43,200
0
0
<OTHER-SE> 782,700
<TOTAL-LIABILITY-AND-EQUITY> 1,484,800
<SALES> 0
<TOTAL-REVENUES> 1,120,400
<CGS> 0
<TOTAL-COSTS> 917,600
<OTHER-EXPENSES> 81,300
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,200
<INCOME-PRETAX> 41,500
<INCOME-TAX> 15,600
<INCOME-CONTINUING> 25,900
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 25,900
<EPS-PRIMARY> .59
<EPS-DILUTED> 0
</TABLE>
