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 June 30, 1999
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 of 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 and 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 August 4, 1999.
7,161,247 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>
Six Months Three Months
Ended June 30 Ended June 30
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net sales . . . . . . . . . . . . . $ 29,963 $ 30,591 $ 15,106 $ 14,610
Cost and expenses:
Cost of products sold . . . . . 19,585 19,756 9,875 9,023
Selling, administration
and engineering expenses . . . 8,601 9,000 4,340 4,417
Litigation settlement and other
non-recurring charges. . . . . 321 3,000 321 3,000
Interest . . . . . . . . . . . . 377 401 190 182
Amortization . . . . . . . . . . 172 172 86 86
Other expense (income), net. . . (57) (84) (24) (27)
28,999 32,245 14,788 16,681
Income (loss) before income taxes . 964 (1,654) 318 (2,071)
Income tax expense (benefit). . . . 285 (682) 74 (828)
Net income (loss) for the period. . $ 679 $ (972) $ 244 $(1,243)
Earnings (loss) per share of common
stock - basic . . . . . . . . . $ 0.09 $ (0.13) $ 0.03 $ (0.17)
Earnings (loss) per share of common
stock - assuming dilution . . . $ 0.09 $ (0.13) $ 0.03 $ (0.17)
Cash dividends declared
per common share. . . . . . . . $ 0.00 $ 0.02 $ 0.00 $ 0.00
See notes to consolidated condensed financial statements
</TABLE>
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<TABLE>
TRION, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands)
<CAPTION>
ASSETS
June 30 December 31
_ 1999* _ _ 1998
<S> <C> <C>
CURRENT ASSETS
Cash . . . . . . . . . . . . . . . . . . . . . $ 1,525 $ 2,158
Trade accounts receivable, less allowance
for doubtful accounts (1999 - $282,000 and
1998 - $317,000) . . . . . . . . . . . . . . 8,896 9,964
Inventories . . . . . . . . . . . . . . . . . 9,676 8,834
Prepaid expenses and other current assets . . 940 694
Refundable income taxes. . . . . . . . . . . . 722 994
Deferred current income taxes . . . . . . . . 163 91
Total current assets . . . . . . . . . . . 21,922 22,735
PROPERTY, PLANT AND EQUIPMENT
Land . . . . . . . . . . . . . . . . . . . . . 78 78
Building . . . . . . . . . . . . . . . . . . . 5,408 5,408
Equipment. . . . . . . . . . . . . . . . . . . 20,094 19,663
Allowance for depreciation . . . . . . . . . . (16,347) (15,549)
9,233 9,600
OTHER ASSETS
Goodwill less accumulated amortization:
($1,346,000 in 1999 and $1,174,000 in 1998) 5,533 5,705
Deferred income taxes . . . . . . . . . . . . 531 546
Other non-current assets . . . . . . . . . . . 562 615
6,626 6,866
$37,781 $39,201
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accruals . . . . . . . . $ 6,226 $ 5,510
Note payable . . . . . . . . . . . . . . . . . - 1,450
Revolving line of credit . . . . . . . . . . . 2,500 2,500
Current portion of long-term debt . . . . . . 2,500 2,500
Total current liabilities . . . . . . . . . 11,226 11,960
LONG-TERM DEBT . . . . . . . . . . . . . . . . . 4,450 5,700
15,676 17,660
SHAREHOLDERS' EQUITY
Common stock, par value $0.50 a share:
Authorized 20,000,000 shares
Issued and outstanding: (7,161,247 in 1999
and 7,149,247 in 1998). . . . . . . . . . 3,581 3,575
Additional paid-in capital . . . . . . . . . . 1,597 1,558
Retained earnings . . . . . . . . . . . . . . 16,878 16,199
Accumulated other comprehensive income . . . . 49 209
22,105 21,541
$37,781 $39,201
See notes to consolidated condensed financial statements
* Unaudited
</TABLE>
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<TABLE>
TRION, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<CAPTION>
Six Months
Ended June 30
1999 1998
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss). . . . . . . . . . . . . . . . . . $ 679 $ (972)
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization . . . . . . . . . 1,213 1,139
Deferred income taxes . . . . . . . . . . . . . (57) 65
Changes in operating assets and liabilities:
Accounts receivable . . . . . . . . . . . . 1,068 2,704
Inventory and other. . . . . . . . . . . . . (1,111) (1,880)
Refundable income taxes. . . . . . . . . . . 272 (1,064)
Accounts payable and accrued expenses . . . 716 1,323
Foreign currency transaction loss (gain). . . . 1 (29)
Net cash provided by
operating activities . . . . . . . . . . . 2,781 1,286
INVESTING ACTIVITIES
Purchase of property, plant and equipment, net . . . (611) (763)
Net cash used by investing activities . . . (611) (763)
FINANCING ACTIVITIES
Net proceeds from (payments on)
master credit facility . . . . . . . . . . . . - (1,008)
Principal payments on long-term debt and
note payable . . . . . . . . . . . . . . . . . (2,700) (1,250)
Stock issued . . . . . . . . . . . . . . . . . . . . 45 121
Cash dividends paid. . . . . . . . . . . . . . . . . - (286)
Net cash provided (used) by
financing activities . . . . . . . . . . . (2,655) (2,423)
Effect of foreign exchange rate changes on cash . . . . (148) 59
Increase (decrease) in cash . . . . . . . . . . . . . . (633) (1,841)
Cash and cash equivalents at beginning of period . . . 2,158 2,979
Cash and cash equivalents at end of period . . . . . . $ 1,525 $ 1,138
See notes to consolidated condensed financial statements
</TABLE>
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TRION, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
June 30, 1999
Note A - Subsequent Events
On July 12, 1999 the Company and Fedders Corporation ("Fedders") entered into
a definitive agreement providing for Fedders' acquisition of Trion at a price
of $5.50 per share in cash for all outstanding shares of Trion's common stock.
The transaction is subject to the receipt of any necessary government
approvals and other customary conditions. Per the Agreement, a subsidiary of
Fedders commenced a cash tender offer on July 15, 1999, which is conditioned
upon the tender of 80.0% of the shares of Trion common stock outstanding on a
fully diluted basis. Following the purchase of the shares under the tender
offer and satisfaction of certain conditions, the acquisition subsidiary of
Fedders will merge with the Company and each share of Trion common stock not
purchased in the tender offer will be converted into the right to receive
$5.50 in cash or such higher price as may be paid in the tender offer.
Following the merger, it is expected that Trion will continue its business as
a wholly-owned subsidiary of Fedders.
Note B - 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. Operating results for the three-month period
and six-month period ended June 30, 1999 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1999. 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, 1998.
It is a standard and accepted practice used by the Company in the preparation
of the financial statements in conformity with generally accepted accounting
principles that estimates and assumptions are used by management that affect
the amounts reported in the financial statements. Actual results could differ
from those estimates.
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Note C - Earnings per Share of Common Stock
The following tables set forth the computation of basic and diluted earnings
per share:
<TABLE>
<CAPTION>
Three months ended June 30
1999 1998
<S> <C> <C>
Numerator for basic and
diluted earnings per share:
Net income . . . . . . . . . . $ 244,000 $(1,243,000)
Denominator:
Denominator for basic
earnings per share - weighted
average shares: . . . . . . . 7,158,263 7,145,400
Effect of dilutive securities:
Employee stock options . . 38,016 93,863
Denominator for diluted
earnings per share - adjusted
weighted average shares and
assumed conversions . . . . . 7,196,279 7,239,532
Basic earnings per share . . . . . $ 0.03 $ (0.17)
Diluted earnings per share. . . . . $ 0.03 $ (0.17)
</TABLE>
Note D - 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 products 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):
June 30 December 31
1999 1998
Raw materials . . . . . . . . . . . . . $ 4,879 $ 4,454
Work-in-process and finished goods. . . 4,797 4,380
$ 9,676 $ 8,834
Cost of domestic 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.
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<TABLE>
Note E - Segment Information
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Revenues from external customers:
Consumer products . . . . . . . . . $ 6,928 $ 5,541 $11,763 $12,212
Engineered products . . . . . . . . $ 3,912 $ 3,549 $ 7,319 $ 7,262
Cleanroom products. . . . . . . . . $ 2,807 $ 3,779 $ 7,921 $ 7,926
European operations . . . . . . . . $ 1,459 $ 1,741 $ 2,960 $ 3,191
Segment profit (loss):
Consumer products . . . . . . . . . $ 718 $ 646 $ 1,033 $ 1,194
Engineered products . . . . . . . . $ 186 $ 126 $ 245 $ 122
Cleanroom products. . . . . . . . . $ 323 $ 446 $ 1,049 $ 843
European operations . . . . . . . . $ (57) $ 143 $ (91) $ 56
Reconciliation of segment profit to
income before income taxes follows:
Total profit for reportable segments $ 1,170 $ 1,361 $ 2,236 $ 2,215
Interest . . . . . . . . . . . . . . (190) (182) (377) (401)
Other income and general corporate
expenses . . . . . . . . . . . . . (341) (250) (574) (468)
Settlement of litigation and other
non-recurring charges. . . . . . . (321) (3,000) (321) (3,000)
Income before income taxes . . . . . $ 318 $(2,071) $ 964 $(1,654)
</TABLE>
Note F - Comprehensive Income
For the three month period ended June 30, 1999 and 1998 total comprehensive
income amounted to $192,000 and a loss of $1,234,000, respectively. During
the first six months of 1999 total comprehensive income amounted to $519,000
and a loss of $942,000 in 1998. The differences between reported net income
or loss and these amounts was due to foreign currency translation adjustments.
Note G - Non-recurring Charges
The three month period ended June 30, 1999 includes $321,000 in non-recurring
charges related to the acquisition of the Company by Fedders (see Note A).
These charges were incurred by the Company for legal, accounting and
investment banking advice. During the three month period ended June 30, 1998
the Company incurred a $3 million charge for the settlement of a lawsuit with
Carico International, Inc.
Note H - Legal Proceedings
During the month of April 1999, the Company participated in an arbitration
proceeding related to a dispute over consulting fees purportedly owed by the
Company to International Business Consultants, Inc. of Atlanta, Georgia
("IBC"). The results of the arbitration ruled that no fees were owed by the
Company to IBC.
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<p>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Recent Developments
On July 12, 1999 the Company and Fedders Corporation ("Fedders") entered into
a definitive agreement providing for Fedders' acquisition of Trion at a price
of $5.50 per share in cash for all outstanding shares of Trion's common stock.
The transaction is subject to the receipt of any necessary government
approvals and other customary conditions. Per the Agreement, a subsidiary of
Fedders commenced a cash tender offer on July 15, 1999, which is conditioned
upon the tender of 80.0% of the shares of Trion common stock outstanding on a
fully diluted basis. Following the purchase of the shares under the tender
offer and satisfaction of certain conditions, the acquisition subsidiary of
Fedders will merge with the Company and each share of Trion common stock not
purchased in the tender offer will be converted into the right to receive
$5.50 in cash or such higher price as may be paid in the tender offer.
Following the merger, it is expected that Trion will continue its business as
a wholly-owned subsidiary of Fedders.
Results of Operations
Consolidated net sales for the quarter ended June 30, 1999 were $15,106,000
compared to $14,610,000 from the same period a year ago, a 3 percent increase.
This increase was primarily due to higher shipments of the Company's Consumer
Products segment, specifically appliance products to a private label direct
marketer OEM and whole-house residential products to a private label OEM. The
increase was partially offset by a decline in sales of the Company's Cleanroom
Products segment which was caused by fluctuations in customer quarterly buying
patterns, but backlog of unshipped orders for these products increased by $1.4
million. In addition, in 1998 the Company shipped two of their high margin
electrostatic oil depositors ("EOD") whereas in 1999 no units were sold during
the second quarter. Both shipment and order levels for the Company's products
can vary from period to period and performance is dependent upon the timing of
major orders placed upon the Company and their related delivery dates. Sales
from European operations decreased approximately 16 percent, the reduction
occurring across all major product lines with the exception of cleanroom
products, and was primarily due to foreign sourced competitors and their
related foreign currency exchange rate advantages.
On a year to date basis, the Company's sales in 1999 were $29,963,000 as
compared to $30,591,000 in 1998. This 2 percent decline was primarily due to
lower shipments of the Company's appliance products.
The Company's backlog of unshipped customer orders was $4,410,000 at June 30,
1999, as compared to $5,632,000 reported at the same time during 1998. The
primary reason for the decline were changes in order patterns by major
appliance product customers which caused a $2.1 million decline in the
Company's backlog, which was partially offset by a $1.4 million increase in
unshipped customer orders for Cleanroom Products.
The level of profits during the second quarter of 1999 increased in the
Consumer Products and Engineered Products segments due to the higher sales
volumes and decreased in the Cleanroom Products and European Operations
segments due to lower sales volumes as compared to the same period in 1998.
Product mix also contributed to the overall decline in total profit for
reportable segments due to higher appliance product content and lower
shipments in EOD products. Year to date, the profitability of various
segments was consistent with the second quarter.
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<p>
On a consolidated basis, cost of goods sold ratio to sales during the second
quarter remained constant with the first quarter of 1999, although the ratio
did deteriorate from prior year due to the aforementioned product mix changes.
Consolidated gross profit for the second quarter ended June 30, 1999 was
$5,231,000 as compared to $5,587,000 in the 1998 period, the decline due to
the previously discussed product mix and slight reduction in overall sales
volume. Consolidated gross profit for the first six months ended June 30,
1999 was $10,378,000 as compared to $10,835,000 in the 1998 period, the
difference being primarily attributable to the lower sales volume and product
mix changes discussed above.
Consolidated selling, administration and engineering expenses declined $77,000
and $399,000 during the second quarter and first six months of 1999,
respectively, as compared to the level of spending during the same periods
last year. As a percentage of net sales consolidated selling, administration
and engineering expenses were 28.7 percent for both the quarter and year to
date periods in 1999 as compared to 30.2 percent and 29.4 percent,
respectively, in 1998. The reasons for the improvements are primarily related
to operational improvements and measures taken to control spending such as the
consolidation of the Company's humidifier operation from the Lancaster,
Pennsylvania location into its Sanford, North Carolina facility.
For discussion concerning the non-recurring charges recorded during the second
quarter ended June 30, 1999, see comments in "Recent Developments" above. The
$3,000,000 recorded in the quarter ended June 30, 1998 was related to the
settlement of a lawsuit with Carico International, Inc.
Interest expense for the second quarter of 1999 was $190,000 as compared to
$182,000 for the same period in 1998, the increase primarily related to higher
interest rates. Interest expense for the first six months of 1999 and 1998
was $377,000 and $401,000, respectively, due to lower borrowings offset
somewhat by higher rates.
Income taxes for the second quarter and first six months of 1999 were $74,000
and $285,000, respectively, as compared to an income tax benefit for the
second quarter and the first six months of $828,000 and $682,000,
respectively, in 1998.
The Company reported net income during the second quarter of 1999 of $244,000,
or $0.03 per share (basic and fully diluted), as compared to a net loss of
$1,243,000, or $0.17 per share, in 1998. Year to date, the Company reported
net income for the six month period ended June 30, 1999 of $679,000, or $0.09
per share (basic and fully diluted) and a net loss for the six month period
ended June 30, 1998 of $972,000, or $0.13 per share. This performance is
primarily due to the changes in sales volumes, product mix and litigation
settlement and other non-recurring charges recorded in the respective periods.
Liquidity and Sources of Capital
The financial condition of the Company is strong with a current ratio of 2.0:1,
which is slightly improved from the 1998 year-end level. Working capital
is holding steady at $10,696,000. Long-term debt has declined to 20.1 percent
of shareholders' equity and total shareholders' equity is $22,105,000.
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<p>
Implications of the Year 2000 Issue
Many existing information technology ("IT") products and systems and non-IT
products and systems containing embedded processor technology were originally
programmed to represent any date by using six digits (e.g., 12/31/99), as
opposed to eight digits (e.g., 12/31/1999). Accordingly, such products and
systems may experience miscalculations, malfunctions or disruptions when
attempting to process information containing dates that fall after December
31, 1999 or other dates, such as September 9, 1999 (9/9/99), a date
traditionally used by some computer programmers as a default. These potential
problems are collectively referred to as the "Year 2000" problem. The
following comments summarize the Company's approach and status with respect to
Year 2000 issues. The Company's plan to resolve the Year 2000 problem
involves four phases: assessment, remediation, testing and implementation.
The Company uses numerous software applications and computer programs
throughout the various functions within its organization that may require
modification in order to address the Year 2000 issues. The significant systems
identified include: the primary computer system (IBM AS400), which maintains
the Company's sales, accounting and inventory records and transactions in
Sanford, North Carolina, its primary manufacturing and headquarters location;
the networked personal computer systems, which maintain engineering design
software, electronic mail, and various support subsystems including sales,
accounting and inventory transactions at the other Company locations;
individual personal computers utilizing standard, off-the-shelf software; and
embedded non-IT microprocessors contained in production machinery, office
equipment and other such devices.
Over 90% of the software and computer programs used by the Company are
standard off-the-shelf applications, all of which have been or the Company
anticipates will be deemed by the Company's software providers to be Year 2000
compliant by the provider. The remaining custom software applications and code
are currently undergoing a comprehensive review and correction process which
will prepare them for compliance by September 1999. The Company is assessing
and evaluating its non-IT systems, but does not believe it will have a
material adverse effect on the Company's business, financial condition or
results of operations. The Company expects to remediate and test its non-IT
systems by early third quarter 1999.
The Company is currently in the process of assessing and evaluating its
materially significant customers and suppliers of goods and services, to
determine the ability of those entities to achieve Year 2000 compliance. As
part of the process, the Company has distributed Year 2000 compliance
questionnaires to its materially significant customers and suppliers and will
evaluate their responses. The Company will continue to assess and evaluate
the potential impact of Year 2000 issues on these entities and expects to
complete this process by September 1999. Following is a summary of the status
of this project as of the date of this filing:
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<p>
Trion Year 2000 Status
IT Systems Operating Equip. Products 3rd Party
Resolution Phase:
Assessment 100% 70% N/A 75%
Remediation 76% 70% N/A N/A
Implementation 75% 70% N/A N/A
Testing 64% 70% N/A N/A
Completion Date Sept. 99 Aug. 99 N/A Aug. 99
Category Definitions
IT Systems - All software/hardware.
Operating Equipment - Equipment or machines with embedded chips.
Products - Not applicable (N/A) Y2K issue.
Third Party - Vendor/customer compliance verification.
The Company has employed third party providers in its efforts to address the
Year 2000 issue in conjunction with the Company's own information technology
staff. Excluding the costs for the Company's own information technology
personnel, the total cost of compliance is expected to be approximately
$288,000 (of which $119,000 will be a capital expenditure) with $152,000
having been expended through July 31, 1999. All costs (except capital) have
been and will be expensed as incurred and will be funded out of normal
operating cash flows.
Excluding any possible catastrophic events such as the loss of utilities or
banking, financial or communications services, the potential risks known to
the Company at this time are primarily limited to delays, disruptions or
losses resulting from information bottlenecks and the lack of computer
processing power. In order to mitigate the risk to the greatest extent
possible, the Company would be prepared to track mission-critical information
manually. Such information includes recording customer orders, purchasing
needed materials from suppliers, issuing payments for purchases/payroll, and
creating customer invoices/ collections. The Company believes its current
workforce and the employment pool available in the area is sufficiently
skilled to accommodate such a demand. Although the Company has few sole-
source components, in the case of vendors or suppliers that are found to be
non compliant, the Company will either ensure stocking levels of related
inventory items are increased or identify and certify alternative suppliers
prior to January 2000. The Company will continue to evaluate its contingency
planning activities as more information becomes available. At this time, the
total cost of the risks to the Company is not anticipated to have a material
adverse effect on the business, financial condition or results of operations
on the Company.
Forward-Looking Information
The foregoing discussion contains forward-looking statements about the
Company's financial condition and results of operations, which are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those reflected in the forward-looking statements. Readers
are cautioned not to place undue reliance on these forward-looking statements,
which reflect management's judgment only as of the date hereof. The Company
undertakes no obligation to publicly revise these forward-looking statements
to reflect events and circumstances that arise after the date hereof. Factors
that may cause the Company's actual results to differ materially from those
anticipated in forward-looking statements include the following: generally
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<p>
adverse economic and industry conditions, including a decline in demand for
IAQ products or significant changes in preferences in or use of such products;
changes in the competitive environment, including increased competition in the
Company's primary markets and consolidation in the air quality industry;
economic or political changes in the countries in which the Company operates
or adverse trade regulations; and non-availability of resources for the
Company, or its suppliers and customers, to complete their respective Year
2000 compliance effectively.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
PART II
Item 1. Legal Proceedings.
During the month of April 1999, the Company participated in an arbitration
proceeding related to a dispute over consulting fees purportedly owed by the
Company to International Business Consultants, Inc. of Atlanta, Georgia
("IBC"). The results of the arbitration ruled that no fees were owed by the
Company to IBC.
Item 5. Other Information.
The Company's press release dated July 13, 1999 reporting the execution of a
definitive agreement with Fedders Corporation on July 12, 1999 is attached
hereto as Exhibit 99 and incorporated herein by reference.
Item 6(a). Exhibits
The following exhibits are filed herewith:
2 Agreement and Plan of Merger dated July 12, 1999 by and among
Fedders Corporation, TI Acquisition Corp., and Trion, Inc.
(incorporated herein by reference to Exhibit 2 to Schedule 14D-9
filed on July 15, 1999, file number 0-3108).
27 Financial Data Schedule
99 Press Release dated July 13, 1999
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: August 9, 1999 /s/ Steven L. Schneider
Steven L. Schneider
President and
Chief Executive Officer
Date: August 9, 1999 /s/ Calvin J. Monsma
Calvin J. Monsma
Vice President and
Chief Financial Officer
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 1,525,000
<SECURITIES> 0
<RECEIVABLES> 8,896,000
<ALLOWANCES> 282,000
<INVENTORY> 9,676,000
<CURRENT-ASSETS> 21,922,000
<PP&E> 25,580,000
<DEPRECIATION> 16,347,000
<TOTAL-ASSETS> 37,781,000
<CURRENT-LIABILITIES> 11,226,000
<BONDS> 3,200,000
0
0
<COMMON> 3,581,000
<OTHER-SE> 18,524,000
<TOTAL-LIABILITY-AND-EQUITY> 37,781,000
<SALES> 29,963,000
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Exhibit 99
For more information contact:
C. J. Monsma (919/775-2201)
FOR IMMEDIATE RELEASE
FEDDERS TO ACQUIRE TRION, INC.
Liberty Corner, NJ and Sanford, NC - July 13, 1999 - Fedders Corporation
(NYSE: FJA & FJC), a global air conditioning company, and Trion, Inc. (NASDAQ:
TRON), a world leader in the indoor air quality industry, jointly announced
today that they entered into a definitive agreement providing for Fedders'
acquisition of Trion at a price of $5.50 per share in cash for all outstanding
shares of Trion's common stock. The Agreement has been approved by the Boards
of Directors of both Trion and Fedders. Under the Agreement, a newly-formed
wholly-owned subsidiary of Fedders will commence a cash tender offer to
purchase all of the outstanding shares of Trion for $5.50 per share. Trion
has approximately 7.2 million shares of common stock outstanding.
The tender offer will commence as soon as practicable, but not later than July
19, 1999, and is expected to close in August 1999. The tender offer is
conditioned upon the tender of 80.0% of the shares of Trion common stock
outstanding on a fully diluted basis, certain regulatory filings and other
customary conditions. The Agreement also provides for the merger of a wholly-
owned subsidiary of Fedders into Trion following the tender offer. Following
the merger, Trion will continue its business as a wholly-owned subsidiary of
Fedders.
Each of Trion's directors, who collectively own 10.1% of Trion's outstanding
common stock, has entered into a definitive agreement with Fedders pursuant to
which each director has agreed, among other things, to tender his shares
pursuant to the cash tender offer and to grant to Fedders an option to
purchase such shares at a purchase price of $5.50 per share, exercisable upon
the occurrence of certain events.
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Page 2
July 13, 1999
Trion, Inc.
In addition, Trion and Fedders have entered into a stock option agreement
pursuant to which Trion has granted to Fedders an irrevocable option to
purchase up to 19.9% of Trion's outstanding common stock at a purchase price
of $5.50 per share, exercisable upon the occurrence of certain events.
Trion manufactures and sells a broad line of high-performance products that
improve indoor air quality in cleanrooms, industrial/commercial and
residential environments. Their extensive line of products includes
electronic air cleaners, HEPA and ULPA filters, humidifiers and dust
collectors. Trion's sales were $57.2 million in 1998.
The indoor air quality industry is estimated to exceed $3.0 billion.
Consistent, long-term industry growth is expected. As governments tighten
regulations regarding levels of emissions released into the workplace and
environment, and as air pollution continues to be a significant health issue,
the global demand for indoor air quality products is expected to increase.
Commenting on the acquisition, Fedders Chief Executive Officer, Sal Giordano,
Jr., said: "Fedders' acquisition of Trion is strategically important to the
growth of both companies. Trion's line of indoor air quality products is
complementary to Fedders' existing product line of air conditioners and
dehumidifiers. Many of the products, including air cleaners and humidifiers,
are counter-seasonal to air conditioner and dehumidifier sales. Trion's
presence in England will strengthen Fedders' position in Europe, while
Fedders' presence in Asia, where it has its international headquarters in
Singapore and a manufacturing facility in Ningbo, China, will enable Trion to
grow there." Steven L. Schneider, President and Chief Executive Officer of
Trion, said: "The Trion team is looking forward to becoming an important part
of Fedders. We expect Fedders' extensive experience with Big Box retailers to
help grow our household air cleaner business and we anticipate deriving
significant benefits from their global sourcing capabilities for all of our
products."
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Page 3
July 13, 1999
Trion, Inc.
TM Capital Corp. served as financial advisor to Fedders Corporation in
connection with this transaction and Harris Williams & Co. served as financial
advisor to Trion, Inc.
This new release includes forward-looking statements that are covered under
the "Safe-Harbor" clause of the Private Securities Litigation Reform Act of
1995. Such statements are based upon current expectations and assumptions.
Actual results may differ materially from those currently anticipated as a
result of known and unknown risks and uncertainties including, but not limited
to, weather and economic, political, market and industry conditions. Such
factors are described in Fedders' and Trion's SEC filings, including their
most recently filed annual reports on Form 10-K. In particular, statements in
this news release pertaining to Fedders' acquisition of Trion, growth of the
indoor air quality industry, Fedders' position in Europe strengthening as a
result of Trion's presence in England, Trion's growing in Asia as a result of
Fedders' presence in Asia, growing Trion's air cleaner business and Trion
deriving significant benefits from Fedders' global sourcing capabilities
constitute forward-looking statements. The companies disclaim any obligation
to update any forward-looking statements to incorporate developments after
this news release.
Trion, a leader in indoor air quality (IAQ) since 1947, specializes in
products that focus on health and safety with specific emphasis on the
environment in industry and the home. Trion is a publicly traded company and
is listed as TRON on the NASDAQ exchange.
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