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 September 30, 1995
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 October 31, 1995
Common Stock, $.01 Par Value 36,644,441
TRIMAS CORPORATION
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Condensed Balance Sheets -
September 30, 1995 and December 31, 1994 1
Consolidated Condensed Statements of
Income for the Three Months and Nine
Months Ended September 30, 1995 and 1994 2
Consolidated Condensed Statements of
Cash Flows for the Nine Months
Ended September 30, 1995 and 1994 3
Notes to Consolidated Condensed
Financial Statements 4
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 5
Part II. Other Information and Signature 9
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
TRIMAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
September 30, December 31,
1995 1994
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 80,870,000 $107,670,000
Receivables 76,500,000 64,190,000
Inventories 82,440,000 79,560,000
Other current assets 3,100,000 3,590,000
Total current assets 242,910,000 255,010,000
Property and equipment 169,490,000 168,380,000
Excess of cost over net assets
of acquired companies 146,010,000 149,160,000
Notes receivable 8,620,000 9,960,000
Other assets 37,520,000 32,630,000
Total assets $604,550,000 $615,140,000
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 22,060,000 $ 21,590,000
Accrued liabilities 34,770,000 34,370,000
Current portion of
long-term debt 210,000 280,000
Total current
liabilities 57,040,000 56,240,000
Deferred income taxes and other 32,510,000 29,700,000
Long-term debt 187,190,000 238,600,000
Total liabilities 276,740,000 324,540,000
Shareholders' equity:
Common stock, $.01 par value,
authorized 100 million shares,
outstanding 36.6 million shares 370,000 370,000
Paid-in capital 154,900,000 155,210,000
Retained earnings 174,400,000 136,310,000
Cumulative translation adjustments (1,860,000) (1,290,000)
Total shareholders'
equity 327,810,000 290,600,000
Total liabilities and
shareholders' equity $604,550,000 $615,140,000
The accompanying notes are an integral part of the
consolidated financial statements.
1
TRIMAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
Nine Months Ended Three Months Ended
September 30, September 30,
1995 1994 1995 1994
Net sales $431,400,000 $414,990,000 $131,880,000 $133,590,000
Cost of sales (290,750,000) (280,830,000) (89,360,000) (90,010,000)
Selling, general and
administrative expenses (63,720,000) (63,460,000) (19,490,000) (20,710,000)
Operating profit 76,930,000 70,700,000 23,030,000 22,870,000
Interest expense (10,800,000) (9,310,000) (3,360,000) (3,380,000)
Other income (expense),
net 5,070,000 2,710,000 1,940,000 1,300,000
(5,730,000) (6,600,000) (1,420,000) (2,080,000)
Income before income
taxes 71,200,000 64,100,000 21,610,000 20,790,000
Income taxes 27,980,000 25,960,000 8,390,000 8,420,000
Net income $ 43,220,000 $ 38,140,000 $ 13,220,000 $ 12,370,000
Earnings per common
share:
Primary $1.17 $1.03 $.36 $.33
Fully diluted $1.09 $.97 $.34 $.32
Dividends declared per
common share $.14 $.11 $.05 $.04
Weighted average number
of common and common
equivalent shares
outstanding:
Primary 36,995,000 37,033,000 36,998,000 37,022,000
Fully diluted 42,078,000 42,116,000 42,080,000 42,104,000
The accompanying notes are an integral part of the
consolidated condensed financial statements.
2
TRIMAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
September 30,
1995 1994
CASH FROM (USED FOR):
OPERATIONS:
Net income $43,220,000 $38,140,000
Adjustments to reconcile net income
to net cash from operations:
Depreciation and amortization 16,280,000 15,810,000
Deferred income taxes 2,100,000 1,100,000
(Increase) decrease in receivables (10,970,000) (12,300,000)
(Increase) decrease in inventories (2,880,000) (1,170,000)
Increase (decrease) in accounts
payable and accrued liabilities 700,000 5,580,000
Other, net (4,230,000) (120,000)
Net cash from (used for)
operations 44,220,000 47,040,000
INVESTMENTS:
Capital expenditures (14,780,000) (16,660,000)
Net cash from (used for)
investments (14,780,000) (16,660,000)
FINANCING:
Retirement of long-term debt (51,480,000) (290,000)
Common stock dividends paid (4,760,000) (3,660,000)
Net cash from (used for)
financing (56,240,000) (3,950,000)
CASH AND CASH EQUIVALENTS:
Increase (decrease) for the period (26,800,000) 26,430,000
At beginning of period 107,670,000 69,770,000
At end of period $80,870,000 $96,200,000
The accompanying notes are an integral part of the
consolidated condensed financial statements.
3
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, 1994. Certain amounts in the 1994 financial
statements have been reclassified to conform with the current
presentation.
B. Inventories by component are as follows:
September 30, December 31,
1995 1994
Finished goods $42,720,000 $44,860,000
Work in process 12,530,000 10,440,000
Raw material 27,190,000 24,260,000
$82,440,000 $79,560,000
C. Property and equipment reflects accumulated depreciation of $113.3
million and $103.3 million as of September 30, 1995 and December 31,
1994, respectively.
4
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Consolidated net sales during the third quarter of 1995 equaled $131.9
million. Sales volumes in the quarter continued to reflect the softness, which
began during the second quarter, in the general economy and in certain markets
served by the Company's products. Current quarter sales declined 1.3 percent
compared to last year's third quarter sales of $133.6 million. Sales during the
first three quarters of 1995 were $431.4 million, an increase of 4.0 percent
over the comparable period in 1994, and represent the highest total in Company
history for the first nine months.
Sales by the Towing Systems segment increased modestly during the current
quarter to $41.5 million compared to $40.7 million during last year's third
quarter. Consumers remain cautious on discretionary purchases, including
recreational products, which has caused some segment customers to limit their
purchases. Segment sales for the current year-to-date period of $144.8 million
increased 6.3 percent over last year's comparable period. Because of the
seasonality of the demand for the products provided by this segment, its sales
are concentrated in the first half of each year.
Third quarter 1995 sales by the Specialty Fasteners segment decreased
modestly to $33.3 million compared to $34.0 million during the corresponding
period of a year ago. Demand for aerospace fasteners, which remains stronger
than it was a year ago, was offset by the effects of current softness in demand
for fasteners from appliance manufacturers and from customers for heat treating
services. Segment sales during the first nine months of 1995 increased 4.3
percent to $109.5 million compared to $104.9 million one year ago.
5
Sales by the Specialty Container Products segment equaled $39.2 million
during the current quarter compared to $40.9 million during last year's third
quarter. Lower demand from the subsegments of the construction, chemical and
industrial maintenance markets served by this segment affected performance.
Year-to-date sales increased 1.0 percent to $123.5 million compared to $122.3
million in 1994. Current quarter sales by the Corporate Companies segment were
flat compared to 1994, both equaled $17.9 million. During the first nine months
sales were up 4.0 percent to $53.6 million compared to $51.5 million during
1994's corresponding period.
The Company's consolidated gross margin for the third quarter of 1995 was
32.2 percent compared to 32.6 percent for the third quarter of 1994, reflecting,
in part, the reduced sales volumes in segments where fixed costs are a greater
percentage of total cost. For the first nine months of 1995 and 1994, the gross
margins were 32.6 percent and 32.3 percent, respectively. Maintaining high
gross margins remains an important operating strategy of the Company.
The Company's consolidated operating profit for the current third quarter
was $23.0 million compared to $22.9 million in 1994. The operating margin
achieved during the current quarter increased to 17.5 percent from 17.1 percent
in 1994's third quarter. Successful cost reduction programs continue to have a
positive effect on the operating margin. During the first nine months of 1995
operating profit increased 8.8 percent to $76.9 million and represented an
operating margin of 17.8 percent, compared to operating profit of $70.7 million
or 17.0 percent of net sales in 1994.
During the latter part of the third quarter of 1995 the Company used
excess cash to retire $50 million of long-term revolving credit borrowings. The
effect of this retirement was offset by higher prevailing interest rates
resulting in interest expense during the current quarter equalling that
6
incurred during the 1994 third quarter. Interest expense during the first nine
months of 1995 increased because of higher rates. Higher interest rates and
increased average cash balances resulted in more interest income, the major
component of other income, in both 1995 periods.
Net income for the nine months and three months ended September 30, 1995
was $43.2 million and $13.2 million respectively, compared to $38.1 million and
$12.4 million in last year's comparable periods. Primary earnings per common
share increased 13.6 percent to $1.17 for the first nine months of 1995 compared
to 1994's primary earnings per common share of $1.03. Fully diluted earnings
per common share increased 12.4 percent to $1.09 versus $.97 last year. Primary
and fully diluted earnings per common share for the third quarter of 1995 were
$.36 and $.34, compared to $.33 and $.32 last year.
Liquidity, Working Capital and Cash Flows
The Company's financial strategies include maintaining a relatively high
level of liquidity. Historically, TriMas Corporation has generated sufficient
cash flows from operating activities to fund capital expenditures, debt service
and dividends, while maintaining its strategic level of liquidity. During the
latter part of the third quarter of 1995 the Company used excess cash to retire
$50 million of long-term revolving credit borrowings. At September 30, 1995 the
current ratio was 4.3 to 1 and working capital equaled $185.9 million, including
$80.9 million of cash and cash equivalents. The Company had available credit of
$278.0 million under its revolving credit facility at September 30, 1995.
Cash flows from operations provided $44.2 million and $47.0 million
during the first nine months of 1995 and 1994, respectively. These operating
7
cash flows were net of increases in receivables of $11.0 million in 1995 and
$12.3 million in 1994. These increases in receivables during the first nine
months of each year were due mainly to the seasonality of the Towing Systems
segment, and increased sales volumes. Historically, the cash flow provided by
the seasonal increase in receivables is realized later in the year. Increases
in accounts payable and accrued liabilities provided $.7 million and $5.6
million in the first nine months of 1995 and 1994, respectively. Capital
expenditures during the first nine months equaled $14.8 million in 1995 and
$16.7 million in 1994. The retirement of the revolving credit borrowings and an
increase in the common dividend rate are reflected in the increase in cash used
for financing activities during the first nine months of 1995.
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
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
27 Financial Data Schedule
(b) Reports on Form 8-K:
None were filed during the quarter ended
September 30, 1995.
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: November 9, 1995 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
27 Financial Data Schedule
Exhibit 11
TRIMAS CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
(In Thousands, Except Per Share Amounts)
Nine Months Ended Three Months Ended
September 30, September 30,
1995 1994 1995 1994
Primary:
Net income $43,220 $38,140 $13,220 $12,370
Weighted average common
shares outstanding 36,644 36,644 36,644 36,644
Dilution of stock options 351 389 354 378
Weighted average common
and common equivalent
shares outstanding
after assumed exercise
of options 36,995 37,033 36,998 37,022
Primary earnings per
common share $1.17 $1.03 $.36 $.33
Fully diluted:
Net income $43,220 $38,140 $13,220 $12,370
Add after tax convertible
debenture related
expenses 2,760 2,760 920 920
Net income as adjusted $45,980 $40,900 $14,140 $13,290
Weighted average common
shares outstanding 36,644 36,644 36,644 36,644
Dilution of stock options 351 389 353 377
Addition from assumed
conversion of convertible
debentures 5,083 5,083 5,083 5,083
Weighted average common
and common equivalent
shares outstanding on
a fully diluted basis 42,078 42,116 42,080 42,104
Fully diluted earnings
per common share $1.09 $.97 $.34 $.32
Exhibit 12
TRIMAS CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(Dollar Amounts in Thousands)
Nine Months Ended Three Months Ended
September 30, September 30,
1995 1994 1995 1994
Earnings:
Income before income taxes $71,200 $64,100 $21,610 $20,790
Fixed charges 11,570 10,030 3,620 3,620
Earnings before fixed
charges $82,770 $74,130 $25,230 $24,410
Fixed Charges:
Interest $10,950 $ 9,490 $3,410 $3,440
Portion of rental expense 680 660 230 220
Fixed charges $11,630 $10,150 $3,640 $3,660
Ratios of earnings to fixed charges 7.1 7.3 6.9 6.7
5
9-MOS
DEC-31-1995
SEP-30-1995
80,870,000
0
78,060,000
1,560,000
82,440,000
242,910,000
282,830,000
113,340,000
604,550,000
57,040,000
187,190,000
370,000
0
0
327,440,000
604,550,000
431,400,000
431,400,000
290,750,000
290,750,000
0
0
10,800,000
71,200,000
27,980,000
43,220,000
0
0
0
43,220,000
1.17
1.09
