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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended March 31, 1994
Commission file number 1-10716
TRIMAS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 38-2687639
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
315 East Eisenhower Parkway, Ann Arbor, Michigan 48108
(Address of principal executive offices) (Zip Code)
(313) 747-7025
(Telephone number)
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 the latest practicable date.
Shares Outstanding at
Class April 29, 1994
Common Stock, $.01 Par Value 36,645,901
TRIMAS CORPORATION
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Condensed Balance Sheets -
March 31, 1994 and December 31, 1993 1
Consolidated Condensed Statements of
Income for the Three Months
Ended March 31, 1994 and 1993 2
Consolidated Condensed Statements of
Cash Flows for the Three Months
Ended March 31, 1994 and 1993 3
Notes to Consolidated Condensed
Financial Statements 4
Item 2. Management's Discussion and Analysis 5
of Financial Condition and Results
of Operations
Part II. Other Information and Signature 9
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
TRIMAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
March 31, December 31,
1994 1993
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 56,480,000 $ 69,770,000
Receivables 85,050,000 58,710,000
Inventories 79,850,000 76,700,000
Prepaid expenses 9,870,000 9,790,000
Total current assets 231,250,000 214,970,000
Property and equipment 164,160,000 162,230,000
Excess of cost over net assets
of acquired companies 151,680,000 152,210,000
Notes receivable 8,180,000 8,160,000
Other assets 25,550,000 26,560,000
Total assets $580,820,000 $564,130,000
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 24,110,000 $ 20,330,000
Accrued liabilities 33,440,000 30,550,000
Current portion of long-term debt 320,000 320,000
Total current liabilities 57,870,000 51,200,000
Deferred income taxes and other 29,560,000 29,190,000
Long-term debt 238,660,000 238,890,000
Total liabilities 326,090,000 319,280,000
Shareholders' equity:
Common stock, $.01 par value, authorized
100 million shares, outstanding 36.6
million shares 370,000 370,000
Paid-in capital 154,090,000 154,190,000
Retained earnings 101,430,000 91,700,000
Cumulative translation adjustments (1,160,000) (1,410,000)
Total shareholders' equity 254,730,000 244,850,000
Total liabilities and
shareholders' equity $580,820,000 $564,130,000
The accompanying notes are an integral part of the
consolidated financial statements.
1
PAGE
TRIMAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended
March 31,
1994 1993
Net sales $134,460,000 $106,920,000
Cost of sales (93,200,000) (74,150,000)
Selling, general and administrative expenses (20,860,000) (17,260,000)
Operating profit 20,400,000 15,510,000
Interest expense (2,840,000) (2,290,000)
Other income (expense), net 630,000 860,000
(2,210,000) (1,430,000)
Income before income taxes 18,190,000 14,080,000
Income taxes 7,360,000 5,660,000
Net income $ 10,830,000 $ 8,420,000
Preferred stock dividends,
MascoTech, Inc. $ 1,750,000
Earnings available for common stock $ 10,830,000 $ 6,670,000
Earnings per common share:
Primary $.29 $.23
Fully diluted $.28 $.23
Dividends declared per common share $.03 $.025
The accompanying notes are an integral part of the
consolidated condensed financial statements.
2
PAGE
TRIMAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31,
1994 1993
CASH FROM (USED FOR):
OPERATIONS:
Net income $10,830,000 $ 8,420,000
Adjustments to reconcile net income
to net cash from operations:
Depreciation and amortization 5,300,000 4,500,000
Deferred income taxes 300,000 100,000
(Increase) decrease in receivables (26,360,000) (18,490,000)
(Increase) decrease in inventories (3,150,000) 490,000
Increase (decrease) in accounts
payable and accrued liabilities 6,670,000 5,460,000
Other, net 920,000 (1,560,000)
Net cash from (used for)
operations (5,490,000) (1,080,000)
INVESTMENTS:
Capital expenditures (6,470,000) (4,550,000)
Net cash from (used for)
investments (6,470,000) (4,550,000)
FINANCING:
Long-term debt:
Issuance
Retirement (230,000) (20,000)
Preferred stock dividends paid to
MascoTech, Inc. (7,000,000)
Common stock dividends paid (1,100,000) (720,000)
Net cash from (used for)
financing (1,330,000) (7,740,000)
CASH AND CASH EQUIVALENTS:
Increase (decrease) for the period (13,290,000) (13,370,000)
At beginning of period 69,770,000 64,770,000
At end of period $56,480,000 $51,400,000
The accompanying notes are an integral part of the
consolidated condensed financial statements.
3
PAGE
TRIMAS CORPORATION AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
A. Basis of Presentation
The accompanying unaudited consolidated condensed financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q
and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments considered necessary for a fair presentation
have been included, and such adjustments are of a normal recurring nature.
The year-end condensed balance sheet data was derived from audited
financial statements, but does not include all disclosures required by
generally accepted accounting principles. For further information, refer
to the consolidated financial statements and footnotes thereto included in
the Company's annual report on Form 10-K for the year ended December 31,
1993. Certain amounts in the 1993 financial statements have been
reclassified to conform with the current presentation.
B. Inventories by component are as follows:
March 31, December 31,
1994 1993
Finished goods $43,900,000 $41,950,000
Work in process 12,920,000 12,230,000
Raw material 23,030,000 22,520,000
$79,850,000 $76,700,000
C. Property and equipment reflects accumulated depreciation of $95.4 million
and $92.3 million as of March 31, 1994 and December 31, 1993, respectively.
4
PAGE
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Net sales during the first quarter of 1994 equalled $134.5 million, a new
first quarter record, and represented a 25.8 percent increase over the first
quarter of 1993. First quarter 1994 results include those of Lamons Metal
Gasket Co. acquired in November, 1993.
Net sales of the Towing Systems segment increased 17.7 percent to $41.7
million, compared to $35.4 million in the first quarter of 1993. This increase
was due in part to increasing sales of new products introduced in the last two
years, strengthening of segment sales to mass merchandisers and increased sales
of marine aftermarket products. Sales of this segment, which follow seasonal
patterns reflecting strong market demand in the second and third quarters, were
also aided by a mix of new vehicle sales which continue to trend toward light
trucks and sport utility vehicles.
First quarter 1994 sales for the Specialty Fasteners segment were $35.3
million, a 15.6 percent increase over the same quarter in 1993. Increased sales
to heavy-duty truck, distribution, and other original equipment industrial
markets continue to favorably impact the performance of this segment. During
the first quarter of 1994 the Company's new TriMas Fasteners, Inc. operation in
central Indiana commenced first-stage production.
5
First quarter 1994 sales by the Specialty Container segment grew 67.0
percent over the prior year's first quarter results to $41.2 million. In
addition to the impact of the Lamons Metal Gasket acquisition, sales of
specialty container closures and compressed gas cylinders also improved as the
industrial markets requiring these products continued to strengthen along with
the general economy. The Corporate Companies segment first quarter sales of
$16.3 million equalled last year's first quarter.
The Company's consolidated gross margin percentage for the first quarter
1994 was 30.7 percent compared to 30.6 percent during last year's first
quarter. Because of the seasonal factors relating to the Towing Systems segment
and the volume sensitive nature of the Company's operations, gross margin
recorded in the first quarter is typically less than that which is realized for
the year. Maintaining high gross margins is an important operating strategy of
the Company as it helps maximize earnings growth as a result of sales increases.
Selling, general and administrative expense as a percentage of net sales
decreased in the first quarter to 15.5 percent as compared to 16.1 percent in
the prior year, reflecting the Company's volume sensitivity, ongoing cost
containment efforts and higher overall sales.
The Company's consolidated operating profit for the first quarter 1994
represented a 31.5 percent increase over operating profit for the first quarter
of 1993. Operating profit for the first quarter 1994 equalled $20.4 million, or
15.2 percent of net sales compared to $15.5 million or 14.5
6
percent of net sales for the comparable period in 1993. Each of the four
segments experienced an increase in operating profit over the first quarter of
last year.
Earnings available for common stock of $10.8 million equalled primary
earnings per common share of $.29 on 37.0 million shares, compared to first
quarter 1993 primary earnings per common share of $.23 on 29.1 million shares.
The increase in common shares outstanding was the result of the conversion of
the Company's $100 Convertible Participating Preferred Stock in
December, 1993. Fully diluted earnings per common share were $.28 on 42.1
million shares in the first quarter 1994. Convertible securities did not have a
dilutive effect in the first quarter of 1993.
Liquidity, Working Capital and Cash Flows
The Company's financial strategies include maintaining a relatively high
level of liquidity. Historically, TriMas Corporation on an annual basis has
generated sufficient cash flows from operating activities to fund capital
expenditures, debt service and dividends, while maintaining its strategic level
of liquidity. At March 31, 1994 the current ratio was 4.0 to 1 and working
capital equalled $173.4 million, including $56.5 million of cash and cash
equivalents. At December 31, 1993 the current ratio was 4.2 to 1 and working
capital equalled $163.8 million. At March 31, 1994, the Company had available
credit of $228.0 million under its revolving credit facility.
7
Cash and cash equivalents decreased $13.3 million and $13.4 million during
the first quarter of 1994 and 1993, respectively. As a result of the
seasonality of the Towing Systems segment, the Company's operating activities
used $5.5 million during the first quarter 1994 and $1.1 million during the same
quarter of 1993. An increase in first quarter sales compared to the preceding
fourth quarter contributed to an increase in receivables of $26.4 million in the
first quarter 1994 and $18.5 million in the first quarter of 1993. The cash
flow resulting from these increased receivables is historically realized later
in the year. Inventory levels increased $3.2 million during 1994's first
quarter as Towing Systems segment businesses increased production in
anticipation of 1994's peak selling season, during the second and third
quarters. Capital expenditures equalled $6.5 million in the first quarter of
1994 and $4.6 million in the first quarter of 1993. Common stock dividends paid
totalled $1.1 million for the first quarter of 1994 compared to $.7 million for
the first quarter of 1993. Due to the conversion of the Company's Preferred
Stock, no preferred dividends were paid during the 1994 first quarter, as
compared to $7.0 million paid in 1993's first quarter.
The Company believes its cash flows from operations, along with its
borrowing capacity and access to financial markets, are adequate to fund its
strategies for future growth, including working capital, expenditures for
manufacturing expansion and efficiencies, market share initiatives, and
corporate development activities.
8
PAGE
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
11 Computation of Earnings Per Common Share
12 Computation of Ratios of Earnings to Fixed Charges
(b) Reports on Form 8-K:
None were filed during the quarter ended March 31, 1994.
SIGNATURE
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.
TRIMAS CORPORATION
Date: May 13, 1994 By: /s/William E. Meyers
William E. Meyers
Vice President - Controller
(Chief accounting officer
and authorized signatory)
9
EXHIBIT INDEX
Exhibit
Number Description of Document
11 Computation of Earnings Per Common Share
12 Computation of Ratios of Earnings to Fixed Charges
PAGE
Exhibit 11
TRIMAS CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
(In Thousands, Except Per Share Amounts)
Three Months Ended
March 31,
1994 1993
Primary:
Net income $10,830 $8,420
Preferred stock dividend
requirement (1,750)
Earnings available for common
stock $10,830 $6,670
Weighted average common shares
outstanding 36,644 28,867
Dilution of stock options 396 264
Weighted average common and
common equivalent shares
outstanding after assumed
exercise of options 37,040 29,131
Primary earnings per common share $.29 $.23
Fully diluted:
Net income $10,830 $8,420
Add after tax convertible
debenture related expenses 920
Net income as adjusted $11,750 $8,420
Weighted average common shares
outstanding 36,644 28,867
Dilution of stock options 396 281
Addition from assumed conversion
of convertible preferred stock 7,778
Addition from assumed conversion
of convertible debentures 5,083
Weighted average common and
common equivalent shares
outstanding on a fully diluted
basis 42,123 36,926
Fully diluted earnings per common
share $.28 $.23(A)
(A) Assumed conversion of potentially dilutive securities has no effect on the
primary earnings per share calculation.
Exhibit 12
TRIMAS CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(Dollar Amounts in Thousands)
Three Months Ended
March 31,
1994 1993
Earnings:
Income before income taxes $18,190 $14,080
Fixed charges 3,090 2,480
Earnings before fixed charges $21,280 $16,560
Fixed Charges:
Interest $2,900 $2,350
Portion of rental expense 220 160
Fixed charges $3,120 $2,510
Ratios of earnings to fixed charges 6.8 6.6