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UNITED STATES 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
X EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
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 No. 0-3108
TRION, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 25-0922753
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P. O. Box 760, 101 McNeill Road, Sanford, North Carolina 27331-0760
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 919/775-2201
Not applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of May 5, 1995.
6,430,183 shares of Common Stock, par value $.50.
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<TABLE>
Part I
Item 1. Financial Statements
TRION, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share amounts)
<CAPTION>
Three Months Ended March 31
1995 1994
<S> <C> <C>
Net sales. . . . . . . . . . . . . . . $ 8,504 $ 7,918
Other income. . . . . . . . . . . . . 39 28
8,543 7,946
Cost and expenses:
Cost of products sold. . . . . . . . 5,485 5,133
Selling, administrative and engineering 2,348 2,272
Interest . . . . . . . . . . . . . . 48 36
7,881 7,441
Income before income taxes . . . . . . 662 505
Income tax expense . . . . . . . . . . 232 134
Net income for the period. . . . . . . $ 430 $ 371
Net income per common share. . . . . . $ .07 $ .06
Cash dividends declared per common share $ .02 None
<FN>
See notes to consolidated condensed financial statements.
</TABLE>
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<TABLE>
TRION, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands, except per share amounts)
<CAPTION>
ASSETS
March 31 December 31
1995 * 1994
<S> <C> <C>
Current assets:
Cash . . . . . . . . . . . . . . . . . $ 4,726 $ 4,149
Trade accounts receivable, less allowance
for doubtful accounts (1995 and
1994 - $175,000). . . . . . . . . . 7,013 6,914
Inventories. . . . . . . . . . . . . . 5,860 5,590
Prepaid expenses and other current assets 884 1,335
Total current assets. . . . . . . . 18,483 17,988
Property, plant and equipment:
Land . . . . . . . . . . . . . . . . . 78 78
Building . . . . . . . . . . . . . . . 5,058 5,058
Machinery and equipment. . . . . . . . 10,823 10,456
Allowance for depreciation . . . . . . (9,903) (9,801)
6,056 5,791
$24,539 $23,779
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Accounts payable and accruals. . . . . $ 3,364 $ 3,244
Current portion of long-term debt. . . 360 360
Total current liabilities . . . . . 3,724 3,604
Long-term debt . . . . . . . . . . . . . 2,840 2,840
Accrued management restructuring expenses 307 307
Deferred income taxes. . . . . . . . . . 260 232
7,131 6,983
Shareholders' equity:
Common stock, par value $.50 a share:
Authorized 10,000,000 shares
Issued and outstanding: 1995 -
6,424,183 and 1994 - 6,399,183. . . 3,212 3,200
Additional paid-in capital . . . . . . 1,421 1,327
Retained earnings. . . . . . . . . . . 12,504 12,202
Foreign currency translation adjustment -
unrealized. . . . . . . . . . . . . 271 67
17,408 16,796
$24,539 $23,779
<FN>
See notes to consolidated condensed financial statements.
* Unaudited
</FN>
</TABLE>
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<TABLE>
TRION, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<CAPTION>
Three Months Ended March 31
1995 1994
<S> <C> <C>
OPERATING ACTIVITIES
Net income . . . . . . . . . . . . . . $ 430 $ 371
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization . . . 255 303
Deferred income taxes . . . . . . . 52 8
Changes in operating assets and
liabilities:
Accounts receivable . . . . . . . (33) 332
Inventory and prepaid expenses. . (167) 670
Accounts payable and accrued expenses 324 (393)
Gain on disposal of equipment. . . (18)
Foreign currency transaction loss (4) 28
Net cash provided by operating
activities . . . . . . . . . 839 1,319
INVESTING ACTIVITIES
Purchase of property, plant and equipment (511) (132)
Proceeds from disposal of equipment . 21 2
Net cash used by investing activities (490) (130)
FINANCING ACTIVITIES
Exercise of stock options. . . . . . . 106 56
Net cash provided by financing
activities . . . . . . . . . . . 106 56
Effect of foreign exchange rate changes on cash 122 10
Increase in cash . . . . . . . . . . . . 577 1,255
Cash at beginning of period. . . . . . . 4,149 2,139
Cash at end of period. . . . . . . . . . $ 4,726 $ 3,394
<FN>
See notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
TRION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
March 31, 1995
Note A - Basis of presentation
The accompanying unaudited consolidated condensed financial statements have
been prepared in accordance with the instructions to Form 10-Q and therefore do
not include all information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting only of normal recurring accruals)
considered necessary for a fair presentation have been reflected in the
reported financial information. For further information, refer to the
consolidated financial statements and footnotes included in the Registrant's
annual report on Form 10-K for the year ended December 31, 1994.
Note B - Net Income per Share of Common Stock
Net income per share of common stock is computed by dividing net income by the
average number of shares of common stock outstanding during the periods. The
average number of common shares outstanding was 6,412,147 in 1995 and 6,352,830
in 1994. Outstanding stock options are not considered in computing earnings
per share as the effect would not be material.
Note C - Inventories
The Registrant does not maintain an integrated dollar perpetual inventory
system. During the interim periods, inventories are charged with actual costs
incurred and relieved at product standard costs. Such standards are updated at
least annually. Based upon the components of inventory at the preceding
physical inventory date and charges to and relief of inventories during the
interim period, the components of inventory are estimated as follows (in
thousands):
March 31 December 31
1995 1994
Raw materials $ 2,305 $ 2,147
Work-in-process and finished goods 3,555 3,443
$ 5,860 $ 5,590
Cost of domestic raw materials inventory is determined by the last-in, first-
out method. No provision has been made during the interim period to reflect
changes in last-in, first-out values since the preceding December 31.
Management believes that such provision, if any, would not be significant.
PAGE
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Material Changes In Results of Operations
Net sales for the quarter ended March 31, 1995 were $8,504,000 as compared to
$7,918,000 during the same period a year ago, a 7% increase in 1995 over 1994.
This improvement was due to increased shipments of consumer products in the
North American operation primarily attributable to a promotional program offered
by a major retail customer. Net income increased to $430,000 during the first
quarter of 1995, representing a 16% improvement over the first quarter of 1994
and reflecting the increase in net sales.
The Company's backlog of unshipped customer orders increased to $5,088,000 at
March 31, 1995, well above last year's $2,298,000 and 1994 year end backlog of
$4,023,000.
Cost of products sold as a percentage of sales was 64.5% in the first quarter
of 1995 as compared to 64.8% in the same period a year ago. Accordingly, gross
margin increased to $3,019,000 in the 1995 period, an increase of $234,000 over
the first quarter of 1994.
Selling, administrative and engineering expenses increased by $76,000 during
the first three months of 1995 to $2,348,000 as compared to $2,272,000 in 1994.
As a percentage of sales, selling, administrative and engineering expenses
during the first quarter were 27.6% and 28.7% in 1995 and 1994, respectively.
This improvement as a percentage of sales was due primarily to measures to
control spending and the results of the consolidation of the Company's European
Operations.
A slight rise in interest expense, $48,000 in 1995 as compared to $36,000 in
1994, was due solely to a corresponding rise in interest rates during the
comparative periods.
Taxes in terms of dollars were $232,000 and as a percent of income before
income taxes were 35.0% in the first quarter of 1995, both increasing over the
same period in 1994. The primary reason for these increases was foreign
currency exchange gains recorded in our European Operations during the 1994
period which were not subject to tax due to loss carry forwards.
The resulting earnings per share improved to $0.07 in the first three months of
1995, as compared to $0.06 per share in the prior year.
Material Changes in Financial Condition
The financial condition of the Company remains strong with the current ratio at
5.0:1 and working capital increasing by 3% to $14,759,000 from 1994 year end.
Long-term debt is now only 16% of equity and total shareholders' equity has
risen to $17,408,000. The Company believes working capital and available lines
of credit will be adequate to meet normal operating and capital requirements
for the foreseeable future.
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<TABLE>
SEGMENT DATA
(Unaudited)
(In thousands)
<CAPTION>
Three Months Ended March 31
1995 1994 *
<S> <C> <C>
Net sales to unaffiliated customers:
North American Operations:
Engineered Products. . . . . . . . . . $2,053 $2,284
Consumer Products. . . . . . . . . . . 4,962 4,115
European Operations. . . . . . . . . . . 1,489 1,519
8,504 7,918
Income (loss) from operations:
North American Operations:
Engineered Products. . . . . . . . . . 314 356
Consumer Products. . . . . . . . . . . 868 511
European Operations. . . . . . . . . . . (48) (24)
1,134 843
General Corporate:
Other income . . . . . . . . . . . . . . 39 128
Interest (U.S.). . . . . . . . . . . . . (48) (36)
Other expense. . . . . . . . . . . . . . (463) (430)
(472) (338)
Income before income taxes . . . . . . . . $ 662 $ 505
<FN>
* Certain amounts in 1994 have been reclassified to conform to 1995
classifications.
</TABLE>
There was a $231,000 decline in the shipments of North American engineered
products during the first quarter of 1995 as compared to the same quarter a year
ago, primarily due to a reduction in specialized product sales of the electronic
oiler and marine product lines. However, backlog for this segment has grown
by over 70% during the same period. Income from operations in the engineered
products segment declined slightly during the first quarter of 1995 reflecting
the lower sales volume. Expectations are that the performance of engineered
products will improve in the near term.
Consumer products sales in North America increased by $847,000 during the first
three months of 1995 as compared to the same period last year primarily due
to the aforementioned promotional program offered by a major retail customer.
Income from operations increased accordingly.
Sales in the European Operations segment were relatively flat comparing like
periods even though the German subsidiary was closed at 1994 year end. The
segment loss from operations in 1995 was primarily due to charges related to a
significant engineering project for prospective customers in the UK. The
European consolidation continues to generate operating savings as expected.
PAGE
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PART II
Item 4. Submission of Matters to a Vote of Security Holders
(a) The annual meeting of shareholders of the Registrant was held on
April 18, 1995.
(b) Directors elected at the meeting were Hugh E. Carr, Joseph W. Deering
and Seddon Goode, Jr. Other continuing directors are Edwin V.
Clarke, Jr., James E. Heins, Grant R. Meyers, Steven L. Schneider and
Samuel J. Wornom III.
(c) The following substantive matters were voted upon at the meeting:
the election of three directors for a term of three years; proposal
to increase the authorized common stock; proposal for Trion, Inc.
1995 Stock Incentive Plan; and proposal for Trion, Inc. 1995 Non-
Employee Director Stock Plan. The results of the voting are as
follows:
All nominees for directors as listed in the proxy statement were
elected with the following vote:
Nominees For Withheld
Hugh E. Carr 5,664,378 50,733
Joseph W. Deering 5,643,588 71,523
Seddon Goode, Jr. 5,138,923 576,188
There were no abstentions or broker non-votes in the election of
directors.
The Amendment of the Articles of Incorporation to increase the number
of authorized shares of common stock from 10,000,000 to 20,000,000
was approved with the following vote:
For Against Abstain
5,479,572 189,220 37,627
There were 8,692 broker non-votes with respect to increasing the
number of authorized shares.
The proposal for the Stock Incentive Plan was approved with the
following vote:
For Against Abstain
5,144,383 482,591 79,445
There were 8,692 broker non-votes with respect to the Stock Incentive
Plan.
<PAGE>
The proposal for the Non-Employee Director Stock Plan was approved
with the following vote:
For Against Abstain
5,150,598 462,189 93,632
There were 8,692 broker non-votes with respect to the Non-Employee
Director Stock Plan.
Item 6(a). Exhibits
The following exhibits are filed herewith:
3.1 Amendment to Articles of Incorporation
3.2 Articles of Incorporation (Composite Version)
Item 6(b). Report on Form 8-K
There were no reports on Form 8-K filed by the Registrant during the period
covered by this report.
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.
TRION, INC.
(Registrant)
Date May 5, 1995 /s/ Steven L. Schneider
Steven L. Schneider
President and Chief Executive
Officer
Date May 5, 1995 /s/ Calvin J. Monsma
Calvin J. Monsma
Vice President and
Chief Financial Officer
EXHIBIT 3.1
TRION, INC.
AMENDMENT TO ARTICLES OF INCORPORATION
(EFFECTIVE APRIL 20, 1995)
Article 5 of the Articles of Incorporation was amended and
restated in its entirety as follows:
"The Corporation shall have the authority to issue 20,000,000
shares of Common Stock of the par value of $0.50 per share."
<PAGE>
EXHIBIT 3.2
TRION, INC.
ARTICLES OF INCORPORATION
(COMPOSITE VERSION)
1. The name of the corporation is Trion, Inc.
2. The location and post office address of its registered office in
the Commonwealth of Pennsylvania is 1500 Oliver Building, Pittsburgh,
Allegheny County, Pennsylvania 15222.
3. The purpose or purposes of the corporation are: The corporation
shall have unlimited power to engage in and to do any lawful act concerning
any or all lawful business for which corporations may be incorporated under
the Pennsylvania Business Corporation Law, as amended, under which said law
the corporation is incorporated, including without limitation the power to
engage in manufacturing of every kind and character whatsoever.
4. The term of its existence is perpetual.
5. The corporation shall have the authority to issue 20,000,000
shares of Common Stock of the par value of $0.50 per share.
6. If any person, firm, corporation or other entity (hereinafter
called an "Entity") or any person, firm, corporation or other entity
controlling an Entity, controlled by an Entity or under common control with an
Entity, or any group of which an Entity or any of the foregoing persons,
firms, corporation, or other entities are members, or any other group
controlling an Entity, controlled by an Entity, or under common control with
an Entity (all of the foregoing persons, firms, corporations and other
entities including an Entity being hereinafter collectively referred to as the
"Group"), owns of record, or owns beneficially, directly or indirectly, any
shares of any class of equity security of the corporation, then any merger or
consolidation of the corporation with an Entity, or any sale, lease or
exchange of all or substantially all the assets of the corporation or an
entity to the other may not be effected without the consent of the holders of
at least a majority of the voting securities of the corporation entitled to
vote thereon and not owned by the Group as aforesaid, given in person or by
proxy at a meeting called for that purpose. For the purposes of this Article
6 the term "Group" includes persons, firms, corporations and other entities
acting in concert, whether or not as a formal group shall be deemed to be a
Group; and the term "equity security" means any stock or similar security
convertible, with or without consideration, into such a security, or carrying
any warrant to subscribe to or purchase such a security, or any such warrant
or right. The foregoing provisions of this Article 6 are in addition to any
other provisions of these Articles or of the laws of the Commonwealth of
Pennsylvania and may not be amended or repealed without the consent of the
holders of at least eighty percent (80%) of the voting securities of the
corporation entitled to vote thereon given in person or by proxy at a meeting
called for that purpose.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 4,726,000
<SECURITIES> 0
<RECEIVABLES> 7,188,000
<ALLOWANCES> 175,000
<INVENTORY> 5,860,000
<CURRENT-ASSETS> 18,483,000
<PP&E> 15,959,000
<DEPRECIATION> 9,903,000
<TOTAL-ASSETS> 24,539,000
<CURRENT-LIABILITIES> 3,724,000
<BONDS> 3,200,000
<COMMON> 3,212,000
0
0
<OTHER-SE> 14,196,000
<TOTAL-LIABILITY-AND-EQUITY> 24,539,000
<SALES> 8,504,000
<TOTAL-REVENUES> 8,504,000
<CGS> 5,485,000
<TOTAL-COSTS> 7,833,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 19,000
<INTEREST-EXPENSE> 48,000
<INCOME-PRETAX> 662,000
<INCOME-TAX> 232,000
<INCOME-CONTINUING> 430,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 430,000
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
