<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2000
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 Company 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
--------------
(Company's Telephone Number,
Including Area Code)
Indicate by check mark whether the Company (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
--- ---
37,822,873
(Number of shares of common stock outstanding as of June 30, 2000)
<PAGE> 2
Part I
Item 1 - Financial Statements
Trinity Industries, Inc.
Consolidated Balance Sheet
(in millions except per share data)
<TABLE>
<CAPTION>
June 30 March 31
Assets 2000 2000
---------- --------
(unaudited)
<S> <C> <C>
Cash and equivalents. . . . . . . . . . . . $ 10.0 $ 16.9
Receivables . . . . . . . . . . . . . . . . 258.3 349.8
Inventories:
Raw materials and supplies. . . . . . . . 296.5 257.0
Work in process . . . . . . . . . . . . . 42.9 37.5
Finished goods . . . . . . . . . . . . . 68.4 66.1
-------- --------
407.8 360.6
Property, plant and equipment, at cost. . . 1,348.4 1,304.9
Less accumulated depreciation . . . . . . . (508.4) (491.7)
-------- --------
840.0 813.2
Other assets. . . . . . . . . . . . . . . . 230.1 198.0
-------- --------
$1,746.2 $1,738.5
======== ========
Liabilities and Stockholders' Equity
Short-term debt . . . . . . . . . . . . . . $ 252.0 $ 170.1
Accounts payable and accrued liabilities. . 315.9 360.9
Long-term debt. . . . . . . . . . . . . . . 61.0 95.4
Deferred income taxes . . . . . . . . . . . 61.2 58.5
Other liabilities . . . . . . . . . . . . . 37.7 38.5
-------- --------
727.8 723.4
-------- --------
Stockholders' equity:
Common stock - par value $1 per share;
authorized 100.0 shares; shares issued
and outstanding at June 30, 2000
- 43.8; at March 31, 2000 - 43.8. . . . 43.8 43.8
Capital in excess of par value. . . . . . 295.2 295.1
Retained earnings . . . . . . . . . . . . 874.6 860.6
Accumulated other comprehensive income. . (20.0) (19.8)
Treasury stock - (shares held at
June 30, 2000 - 6.0; at March 31,
2000 - 5.5), at cost . . . . . . . . . (175.2) (164.6)
-------- --------
1,018.4 1,015.1
-------- --------
$1,746.2 $1,738.5
======== ========
</TABLE>
2
<PAGE> 3
Trinity Industries, Inc.
Consolidated Income Statement
(unaudited)
(in millions except per share data)
<TABLE>
<CAPTION>
Three Months
Ended June 30
2000 1999
-------- --------
<S> <C> <C>
Revenues. . . . . . . . . . . . . . . . . . . . . . . . . $ 533.7 $ 693.4
Operating costs:
Cost of revenues. . . . . . . . . . . . . . . . . . . . 447.0 572.0
Selling, engineering and administrative expenses. . . . 49.2 44.0
-------- --------
496.2 616.0
-------- --------
Operating profit. . . . . . . . . . . . . . . . . . . . . 37.5 77.4
Other (income) expense:
Interest income . . . . . . . . . . . . . . . . . . . . (1.1) (0.2)
Interest expense. . . . . . . . . . . . . . . . . . . . 6.0 5.0
Other, net. . . . . . . . . . . . . . . . . . . . . . . - 0.5
-------- --------
4.9 5.3
-------- --------
Income before income taxes. . . . . . . . . . . . . . . . 32.6 72.1
Provision for income taxes:
Current . . . . . . . . . . . . . . . . . . . . . . . . 10.3 25.5
Deferred. . . . . . . . . . . . . . . . . . . . . . . . 1.4 1.6
-------- --------
11.7 27.1
Net income . . . . . . . . . . . . . . . . . . . . . . . $ 20.9 $ 45.0
======== ========
Net income per common share:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.55 $ 1.11
======== ========
Diluted . . . . . . . . . . . . . . . . . . . . . . . . $ 0.55 $ 1.10
======== ========
Weighted average number of shares outstanding:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . 38.1 40.6
Diluted . . . . . . . . . . . . . . . . . . . . . . . . 38.2 41.0
</TABLE>
3
<PAGE> 4
Trinity Industries, Inc.
Consolidated Statement of Cash Flows
(unaudited)
(in millions)
<TABLE>
<CAPTION>
Three Months
Ended June 30
2000 1999
-------- --------
<S> <C> <C>
Operating activities:
Net income. . . . . . . . . . . . . . . . . . . . . $ 20.9 $ 45.0
Adjustments to reconcile net income to net cash
provided (required) by operating activities:
Depreciation and amortization . . . . . . . . . . 22.4 19.5
Deferred income taxes . . . . . . . . . . . . . . 1.4 1.6
Gain on sale of property, plant and equipment . . (0.6) (0.8)
Other . . . . . . . . . . . . . . . . . . . . . . 2.4 5.4
Changes in assets and liabilities, net of effects
from acquisitions:
Decrease in receivables. . . . . . . . . . . . . 91.5 38.9
(Increase) decrease in inventories . . . . . . . (47.2) 7.2
Increase in other assets . . . . . . . . . . . . (31.5) (3.4)
Decrease in accounts payable and
accrued liabilities . . . . . . . . . . . . . . (45.0) (15.4)
Decrease in other liabilities. . . . . . . . . . (0.8) (0.2)
------- ------
Total adjustments . . . . . . . . . . . . . . . (7.4) 52.8
------- ------
Net cash provided by operating
activities. . . . . . . . . . . . . . . . . . . 13.5 97.8
Investing activities:
Proceeds from sale of property, plant
and equipment . . . . . . . . . . . . . . . . . . 1.3 9.9
Capital expenditures. . . . . . . . . . . . . . . . (43.0) (39.9)
Payment for acquisitions, net of cash acquired. . . (8.7) (2.4)
------ ------
Net cash required by
investing activities. . . . . . . . . . . . . . (50.4) (32.4)
Financing activities:
Issuance of common stock. . . . . . . . . . . . . . - 0.2
Net borrowings (repayments) of short-term debt. . . 81.9 (19.0)
Stock repurchases . . . . . . . . . . . . . . . . . (10.6) (36.5)
Payments to retire long-term debt . . . . . . . . . (34.4) (6.5)
Dividends paid. . . . . . . . . . . . . . . . . . . (6.9) (7.4)
------ ------
Net cash provided (required) by
financing activities. . . . . . . . . . . . . . 30.0 (69.2)
------ ------
Net decrease in cash and equivalents . . . . . . . . (6.9) (3.8)
Cash and equivalents at beginning of period. . . . . 16.9 13.5
------ ------
Cash and equivalents at end of period. . . . . . . . $ 10.0 $ 9.7
====== ======
</TABLE>
4
<PAGE> 5
Trinity Industries, Inc.
Consolidated Statement of Stockholders' Equity
(unaudited)
(in millions except share and per share data)
<TABLE>
<CAPTION>
Common Stock
-------------------- Capital Accumulated
Amount in Other Total
Shares $1.00 Excess Compre- Treasury Stock Stock-
(100,000,000) Par of Par Retained hensive -------------- holders'
(Authorized) Value Value Earnings Income Shares Amount Equity
------------ ----- ------- -------- ----------- ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at March 31, 1999 . . . 43,705,636 $43.7 $292.6 $722.9 $(20.6) (2,363,932) $ (79.5) $959.1
Net income . . . . . . . . . . - - - 45.0 - - - 45.0
Currency translation
Adjustments. . . . . . . . . - - - - 0.8 - - 0.8
-------
Comprehensive income . . . . . 45.8
Cash dividends
($0.18 per share). . . . . . . - - - (6.7) - - - (6.7)
Stock repurchases. . . . . . . - - - - - (1,257,372) (36.5) (36.5)
Other. . . . . . . . . . . . . 11,419 - 0.5 - - 0.5
---------- ----- ------ ------ ------- ---------- ------- ------
Balance June 30, 1999 43,717,055 $43.7 $293.1 $761.2 $ (19.8) (3,621,304) $(116.0) $962.2
========== ===== ====== ====== ======= ========== ======= ======
Balance at March 31, 2000 . . . 43,796,351 $43.8 $295.1 $860.6 $ (19.8) (5,455,743) $(164.6) $1,015.1
Net income . . . . . . . . . . - - - 20.9 - - - 20.9
Currency translation
Adjustments. . . . . . . . . - - - - (0.2) - - (0.2)
-------
Comprehensive income 20.7
Cash dividends
($0.18 per share) . . . . . . - - - (6.9) - - - (6.9)
Stock repurchases. . . . . . . - - - - - (518,900) (10.6)
(10.6)
Other. . . . . . . . . . . . . - - 0.1 - - 1,165 - 0.1
---------- ----- ------ ------ ---------- --------- ------- --------
Balance June 30, 2000 . . . . . 43,796,351 $43.8 $295.2 $874.6 $ (20.0) (5,973,478) $(175.2) $1,018.4
========== ===== ====== ====== ========== ========== ======= ========
</TABLE>
5
<PAGE> 6
Trinity Industries, Inc.
Notes to Consolidated Financial Statements
(unaudited)
June 30, 2000
General
The foregoing consolidated financial statements are unaudited and have been
prepared from the books and records of Trinity Industries, Inc. ("Trinity " or
the "Company "). In the opinion of management, all adjustments, consisting only
of normal and recurring adjustments necessary for a fair presentation of the
financial position of the Company as of June 30, 2000, the results of operations
for the three month periods ended June 30, 2000 and 1999 and cash flows for the
three month periods ended June 30, 2000 and 1999, in conformity with generally
accepted accounting principles, have been made. Because of seasonal and other
factors, the results of operations for the three month period ended June 30,
2000 may not be indicative of expected results of operations for the year ending
March 31, 2001. These interim financial statements and notes are condensed as
permitted by the instructions to Form 10-Q, and should be read in conjunction
with the audited consolidated financial statements of the Company included in
its Form 10-K for the year ended March 31, 2000.
Stock Repurchases
In the first quarter of fiscal 2001, the Company purchased 518,900 shares of the
Company's outstanding common stock at a cost of $10.6 million. The Company has
determined that it may purchase additional shares from time to time in the open
market and in negotiated transactions. Purchase of additional shares will be
based on market conditions and other relevant factors.
Contingencies
The Company is involved in various 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 Company's consolidated financial
statements.
Segments of Business
The Company's operations consist of the following business segments: (1) the
Railcar Group, which manufactures and sells railcars; (2) the Inland Barge
Group, which manufactures barges and related products for inland waterway
services; (3) the Parts & Services Group, which manufactures and sells various
parts to manufacturers of railcars and other industrial products and provides
services such as railcar maintenance, fleet management, and leasing; (4) the
Highway Construction Products Group, which is primarily engaged in the
manufacture of highway guardrail and safety products and
6
<PAGE> 7
girders, beams, and columns used in the construction of highway and railway
bridges; (5) the Concrete & Aggregate Group, composed of ready-mix concrete and
aggregate; and (6) the Industrial Group, which manufactures and sells
containers, weld fittings (tee, elbows, reducers, caps, and flanges) used in
pressure piping systems, and pressure and non-pressure containers for the
storage and transportation of liquefied gases and other liquid and dry products.
Finally, All Other includes transportation services, the Company's captive
insurance company, and other peripheral businesses.
The financial information for the quarter ended June 30, 2000 and 1999 is shown
in the tables below.
Three months ended June 30, 2000 (unaudited)
(in millions)
<TABLE>
<CAPTION>
Revenues Operating
------------------------------- Profit
Outside Intersegment Total (Loss)
------- ------------ ------ ---------
<S> <C> <C> <C> <C>
Railcar Group . . . . . . . . . . . . . . $214.1 $1.3 $215.4 $ 13.7
Inland Barge Group. . . . . . . . . . . . 50.5 - 50.5 6.8
Parts & Services Group. . . . . . . . . . 82.5 17.2 99.7 13.4
Highway Construction Products Group . . . 61.4 - 61.4 11.7
Concrete & Aggregate Group. . . . . . . . 64.5 - 64.5 5.2
Industrial Group. . . . . . . . . . . . . 50.3 0.1 50.4 2.2
All Other . . . . . . . . . . . . . . . . 10.4 16.0 26.4 (1.6)
Eliminations and Corporate Items. . . . . - - (34.6) (13.9)
------- ------
Consolidated Total. . . . . . . . . . . . $ 533.7 $ 37.5
======= ======
</TABLE>
Three months ended June 30, 1999 (unaudited)
(in millions)
<TABLE>
<CAPTION>
Revenues Operating
------------------------------- Profit
Outside Intersegment Total (Loss)
------- ------------ ------ ---------
<S> <C> <C> <C> <C>
Railcar Group . . . . . . . . . . . . . . $382.7 $2.1 $384.8 $ 41.5
Inland Barge Group. . . . . . . . . . . . 50.8 - 50.8 6.1
Parts & Services Group. . . . . . . . . . 82.3 35.7 118.0 23.9
Highway Construction Products Group . . . 48.3 - 48.3 9.3
Concrete & Aggregate Group. . . . . . . . 65.0 - 65.0 7.7
Industrial Group. . . . . . . . . . . . . 51.8 0.2 52.0 3.9
All Other . . . . . . . . . . . . . . . . 12.5 14.9 27.4 0.7
Eliminations and Corporate Items. . . . . - - (52.9) (15.7)
------ ------
Consolidated Total . . . . . . . . . . . $693.4 $ 77.4
====== ======
</TABLE>
7
<PAGE> 8
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Three Months Ended June 30, 2000 Compared to
Three Months Ended June 30, 1999
Revenues for the first quarter of fiscal 2001 decreased to $533.7 million from
$693.4 million primarily due to reduced car shipments in the Railcar Group,
which was partially offset by increased revenues in the Highway Construction
Products Group. Operating profit decreased to $37.5 million compared to $77.4
million.
Revenues for the Railcar Group decreased to $214.1 million from $382.7 million
while operating profit decreased to $13.7 million from $41.5 million. The
decline in revenues and operating profit is a result of the significant
weakening in demand for new railcars in North America. This creates a very
competitive market. Railcar Group operating margins declined due to average
sales price declines and inefficiencies associated with changeover of production
lines to different car types and start up of new products.
Revenues for the Inland Barge Group decreased slightly to $50.5 million from
$50.8 million. Operating profit increased to $6.8 million from $6.1 million, a
11.5% increase. Increased operating profit is due mainly to cost reductions and
operating efficiencies.
Revenues decreased by $18.3 million in the Parts & Services Group, from $118.0
(including intersegment sales of $35.7 million), to $99.7 million (including
intersegment sales of $17.2 million), while operating profit decreased to $13.4
million from $23.9 million. This decrease in revenues and operating profit is
primarily due to the softness in the railcar market and decreased sales of
container heads.
Revenues for the Highway Construction Products Group increased to $61.4 million
from $48.3 million, a 27.1% increase, while operating profit increased to $11.7
million from $9.3 million, a 25.8% increase. Revenues increased due to a strong
construction market, particularly the demand for guardrail.
Revenues for the Concrete & Aggregate Group were $64.5 million compared to $65.0
million, while operating profit decreased to $5.2 million from $7.7 million.
Decreased operating profit was primarily attributable to an unusually rainy
season over the past three months in principal Texas markets and competitive
pricing in certain markets. The revenue declines due to bad weather were mostly
offset by increased revenues generated by acquisitions made during fiscal year
2000.
Industrial Group revenues decreased slightly to $50.3 million compared to $51.8
million, while operating profit decreased to $2.2 million from $3.9
8
<PAGE> 9
million. The reduction of revenues and operating profit is primarily a result of
competitive pressure in pricing.
In the quarter ended June 30, 2000, selling, engineering and administrative
expenses includes approximately $2 million related to the Company's e-commerce
initiatives.
Liquidity & Capital Resources
Net cash provided by operating activities decreased to $13.5 million during the
first three months of fiscal 2001 compared to $97.8 million in the first three
months of fiscal 2000. Capital expenditures during the first three months of
fiscal 2001 were approximately $43.0 million of which approximately $24.7
million was for additions to the railcar lease fleet. This compares to $39.9
million of capital expenditures in the first three months of fiscal 2000 of
which $15.6 million was for additions to the railcar lease fleet. Expenditures
for business acquisitions were $8.7 million. Proceeds from the sale of property,
plant and equipment were $1.3 million in the first three months of fiscal 2001
compared to $9.9 million in fiscal 2000.
In the first three months of fiscal 2001, the Company repurchased common stock
for $10.6 million. The Company believes cash provided from operations and cash
available under uncommitted bank lines of credit will be sufficient to meet its
requirements for the remainder of the fiscal year.
------------------
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.
9
<PAGE> 10
Part II
Item 4 - Submission of Matters to a Vote of Security Holders
At the Annual Meeting of Stockholders held July 19, 2000, stockholders
elected ten incumbent directors for a one-year term (Proposal 1), approved the
Company's Short Term Management Incentive Plan (Proposal 2), approved
ratification of Ernst & Young LLP as independent auditors for fiscal year 2001
(Proposal 3), and voted against a proposal requesting the Board of Directors to
arrange for the prompt sale of the Company to the highest bidder (Proposal 4).
The vote tabulation follows for each proposal:
Proposal 1 - Election of Directors
<TABLE>
<CAPTION>
NOMINEE For Withheld
<S> <C> <C>
David W. Biegler 34,059,275 1,171,821
Ronald J. Gafford 34,061,005 1,170,091
Barry J. Galt 33,697,791 1,533,305
Clifford J. Grum 34,054,899 1,176,197
Dean P. Guerin 33,668,860 1,562,236
Jess T. Hay 33,688,082 1,543,014
Edmund M. Hoffman 33,664,143 1,566,953
Diana S. Natalicio 33,696,719 1,534,377
Timothy R. Wallace 34,039,186 1,191,910
W. Ray Wallace 33,484,656 1,746,440
</TABLE>
<TABLE>
<CAPTION>
Proposal 2 - Management Incentive Plan
For Against Abstentions Broker Non-Votes
<S> <C> <C> <C>
32,326,268 2,700,709 204,119 N/A
</TABLE>
<TABLE>
<CAPTION>
Proposal 3 - Independent Auditors
For Against Abstentions Broker Non-Votes
<S> <C> <C> <C>
34,259,516 160,546 811,034 N/A
</TABLE>
<TABLE>
<CAPTION>
Proposal 4 - Stockholder Proposal
For Against Abstentions Broker Non-Votes
<S> <C> <C> <C>
5,104,073 24,499,212 435,301 5,192,510
</TABLE>
10
<PAGE> 11
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 Company has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
Trinity Industries, Inc.
By: \s\ Jim S. Ivy
----------------------
Jim S. Ivy
Vice President and
Chief Financial Officer
August 7, 2000
<PAGE> 12
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
