-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GYaml4Uhe6ViikhjKWcA7kpBIXmxxU5ryFVFsP/grk68gh3i6YHgXge1LxasIDQd nZZwupyOD2ItLIPQlK+FAg== 0000059198-96-000012.txt : 19960809 0000059198-96-000012.hdr.sgml : 19960809 ACCESSION NUMBER: 0000059198-96-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960808 SROS: CSE SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRINOVA CORP CENTRAL INDEX KEY: 0000059198 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS FABRICATED METAL PRODUCTS [3490] IRS NUMBER: 344288310 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-00924 FILM NUMBER: 96605763 BUSINESS ADDRESS: STREET 1: 3000 STRAYER CITY: MAUMEE STATE: OH ZIP: 43537 BUSINESS PHONE: 4198672200 FORMER COMPANY: FORMER CONFORMED NAME: LIBBEY OWENS FORD CO DATE OF NAME CHANGE: 19860814 FORMER COMPANY: FORMER CONFORMED NAME: LIBBEY OWENS FORD GLASS CO DATE OF NAME CHANGE: 19681004 10-Q 1 FORM 10-Q 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 June 30, 1996 Commission file number 1-924 TRINOVA CORPORATION (Exact name of registrant as specified in its charter) Ohio 34-4288310 (State of Incorporation) (I.R.S. Employer Identification No.) 3000 Strayer, Maumee, OH 43537-0050 (Address of principal executive office) Registrant's telephone number, including area code: (419) 867-2200 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, and (2) has been subject to such filing requirements for the past 90 days. Yes X No The number of Common Shares, $5 Par Value, outstanding as of July 26, 1996, was 28,414,534. This document, including exhibits, contains 23 pages. The cover page consists of 1 page. The Exhibit Index is located on page 18. SECURITIES AND EXCHANGE COMMISSION FORM 10-Q FOR QUARTER ENDED JUNE 30, 1996 INDEX TO INFORMATION IN REPORT TRINOVA CORPORATION Page Number PART I - FINANCIAL INFORMATION Item 1. Financial Statements Statement of Financial Position - June 30, 1996 and December 31, 1995 3 Condensed Statement of Income - Three Months and Six Months Ended June 30, 1996 and 1995 4 Condensed Statement of Cash Flows - Six Months Ended June 30, 1996 and 1995 5 Notes to Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 14 SIGNATURES 17 EXHIBIT INDEX 18 EXHIBIT 11 - STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS 22 EXHIBIT 27 - FINANCIAL DATA SCHEDULE 23 -2- PART I - FINANCIAL INFORMATION Item 1. - Financial Statements STATEMENT OF FINANCIAL POSITION TRINOVA CORPORATION (Dollars in thousands, except per share data) (Unaudited)
June 30 December 31 ASSETS 1996 1995 CURRENT ASSETS ---------- ----------- Cash and cash equivalents $ 18,538 $ 16,186 Receivables 349,145 292,146 Inventories: In-process and finished products 200,197 215,365 Raw materials and manufacturing supplies 54,715 53,919 ---------- ---------- 254,912 269,284 Other current assets 42,273 38,789 ---------- ---------- TOTAL CURRENT ASSETS 664,868 616,405 Plants and properties 973,196 959,286 Less accumulated depreciation 546,406 533,925 ---------- ---------- 426,790 425,361 Goodwill and other intangibles 89,866 85,292 Other assets 66,609 97,093 ---------- ---------- TOTAL ASSETS $1,248,133 $1,224,151 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Notes payable $ 10,158 $ 33,229 Accounts payable 107,216 103,853 Income taxes 45,014 39,054 Other current liabilities 171,406 183,659 Current maturities of long-term debt 75,302 378 ---------- ---------- TOTAL CURRENT LIABILITIES 409,096 360,173 Long-term debt 252,304 302,352 Postretirement benefits other than pensions 120,808 120,478 Other liabilities 43,610 40,276 SHAREHOLDERS' EQUITY Common stock; par value $5 a share Authorized - 100,000,000 shares Outstanding - 28,463,434 and 28,825,187 shares, respectively (after deducting 5,746,462 and 5,384,709 shares, respectively, in treasury) 142,317 144,125 Additional paid-in capital 19,700 17,933 Retained earnings 288,865 254,484 Currency translation adjustments (28,567) (15,670) ---------- ---------- TOTAL SHAREHOLDERS' EQUITY 422,315 400,872 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,248,133 $1,224,151 ========== ========== The Notes to Financial Statements are an integral part of this statement.
-3- CONDENSED STATEMENT OF INCOME TRINOVA CORPORATION (In thousands, except per share data) (Unaudited)
Three Months Ended Six Months Ended June 30 June 30 ------------------------ ------------------------ 1996 1995 1996 1995 ---------- ---------- ---------- ---------- Net sales $ 517,924 $ 501,617 $1,030,037 $1,000,252 Cost of products sold 384,015 370,696 769,871 746,889 ---------- ---------- ---------- ---------- MANUFACTURING INCOME 133,909 130,921 260,166 253,363 Selling and general administrative expenses 64,308 64,537 130,909 130,812 Engineering, research and development expenses 17,857 15,805 37,385 30,831 ---------- ---------- ---------- ---------- OPERATING INCOME 51,744 50,579 91,872 91,720 Interest expense (6,842) (4,933) (13,127) (9,906) Other income(expenses)-net 14,258 (2,466) 10,930 (6,346) ---------- ---------- ---------- ---------- INCOME BEFORE INCOME TAXES 59,160 43,180 89,675 75,468 Income taxes 26,100 9,900 32,200 19,600 ---------- ---------- ---------- ---------- NET INCOME $ 33,060 $ 33,280 $ 57,475 $ 55,868 ========== ========== ========== ========== NET INCOME PER SHARE $ 1.11 $ 1.11 $ 1.94 $ 1.88 ========== ========== ========== ========== Cash dividends per common share $ .20 $ .18 $ .40 $ .36 ========== ========== ========== ========== Average shares outstanding 30,528 30,790 30,629 30,787 ========== ========== ========== ========== The Notes to Financial Statements are an integral part of this statement.
-4- CONDENSED STATEMENT OF CASH FLOWS TRINOVA CORPORATION (In thousands) (Unaudited)
Six Months Ended June 30 -------------------- 1996 1995 ---------- ---------- OPERATING ACTIVITIES Net income $ 57,475 $ 55,868 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 34,014 31,231 Gain on sale of affiliates (17,300) -- Changes in certain components of working capital other than debt (47,755) (45,996) Dividends received from affiliates 9,896 22 Other (2,512) (5,307) ---------- ---------- NET CASH PROVIDED BY OPERATING ACTIVITIES 33,818 35,818 INVESTING ACTIVITIES Capital expenditures (40,125) (41,870) Businesses acquired (6,227) -- Sales of business and affiliates 40,216 -- Other (21) (34) ---------- ---------- NET CASH USED BY INVESTING ACTIVITIES (6,157) (41,904) FINANCING ACTIVITIES Net increase in short- and long-term debt 122 3,832 Cash dividends (11,468) (10,373) Purchase of common stock (13,825) -- Stock issuance under stock plans 2,157 449 Other (2,271) -- ---------- ---------- NET CASH USED BY FINANCING ACTIVITIES (25,285) (6,092) Effect of exchange rate changes on cash (24) 1,743 ---------- ---------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,352 (10,435) Cash and cash equivalents at beginning of period 16,186 27,928 ---------- ---------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 18,538 $ 17,493 ========== ========== The Notes to Financial Statements are an integral part of this statement.
-5- NOTES TO FINANCIAL STATEMENTS TRINOVA CORPORATION Note 1 - Basis of Presentation The accompanying financial statements for the interim periods are unaudited. In the opinion of management, all adjustments necessary for a fair statement of the results for the interim periods included herein have been made. Operating results for the six months ended June 30, 1996 are not necessarily indicative of the results that may be expected for the year ended December 31, 1996. It is suggested that these financial statements be read in conjunction with the audited 1995 financial statements and notes thereto included in TRINOVA Corporation's most recent annual report. Note 2 - Gain on Sale of Unconsolidated Affiliates During the 1996 second quarter, the Company sold its 35% interest in Yokohama Aeroquip K.K., based in Japan, and its 49% interest in Aeroquip Mexicana S.A., based in Mexico. The two transactions resulted in a net combined pretax gain of $17.3 million ($5 million net, or $.16 per share). The combined pretax gain included $6.4 million of net gains previously deferred in the currency translation component of equity. Note 3 - Business Acquired Second-quarter 1996 expenditures for business acquisitions amounted to $6.2 million, which included acquisition of a business serving the industrial aftermarket, net of adjustment to the purchase price of a 1995 acquisition. Note 4 - Income Taxes The income tax provision for the 1996 six-month period includes a credit for settlement of claims for prior years' research and development credits of $4 million, or $.13 per share, that was recorded in the first quarter. The 1996 income tax provision also includes income taxes of $12.3 million resulting from the gain on sale of unconsolidated affiliates. The effective income tax rate for the 1996 six-month period exclusive of these items was 33%. The 23% and 26% effective income tax rates for the 1995 second-quarter and six-month periods reflect, among other things, the utilization of tax loss carryforwards outside the U.S. for which deferred tax valuation allowances had previously been provided. Note 5 - Accounts Receivable Sold "Changes in certain components of working capital other than debt" in the 1995 Condensed Statement of Cash Flows includes a $50 million increase in working capital resulting from termination of the Company's program for the sale of accounts receivable. -6- NOTES TO FINANCIAL STATEMENTS TRINOVA CORPORATION (Continued) Note 6 - Net Income per Share Net income per share is computed using the average number of shares outstanding, including common stock equivalents. The assumed conversion of the Company's 6% convertible debentures was included in average shares outstanding for each of the interim periods included herein, increasing the average number of shares outstanding by 1,904,762 shares. For purposes of computing net income per share, net income was increased for the after-tax equivalent of interest expense on the 6% convertible debentures. -7- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations FINANCIAL REVIEW AND ANALYSIS OF OPERATIONS Analysis of Operations Second Quarter 1996 Compared with Second Quarter 1995 The following data provide highlights for the 1996 second quarter compared with the 1995 second quarter. Percent (dollars in thousands, Second Quarter Increase except per share data) 1996 1995 (Decrease) CONSOLIDATED Net sales $ 517,924 $ 501,617 3.3% Manufacturing income 133,909 130,921 2.3 Manufacturing margin (%) 25.9 26.1 Operating income 51,744 50,579 2.3 Operating margin (%) 10.0 10.1 Net income 33,060 33,280 (0.7) Net income per share 1.11 1.11 - INDUSTRIAL Net sales 292,627 282,853 3.5 Operating income 32,093 38,883 (17.5) Operating margin (%) 11.0 13.7 Order intake 294,480 270,194 9.0 Order backlog at June 30 201,024 192,726 4.3 AUTOMOTIVE Net sales 129,876 133,738 (2.9) Operating income 11,941 9,536 25.2 Operating margin (%) 9.2 7.1 AEROSPACE & DEFENSE Net sales 95,423 85,026 12.2 Operating income 13,523 8,480 59.5 Operating margin (%) 14.2 10.0 Order intake 108,847 76,138 43.0 Order backlog at June 30 297,880 257,394 15.7 Consolidated sales for the 1996 second quarter increased $16.3 million, or 3.3%, over the 1995 second quarter. Sales for the industrial and aerospace & defense segments increased 3.5% and 12.2%, respectively, but automotive sales declined 2.9%. Businesses acquired in the 1995 fourth quarter generated second-quarter 1996 sales, principally in the industrial segment, of more than $28 million. Including the results of acquisitions, U.S. sales increased $17.8 million but non-U.S. sales declined $1.5 million. Changes in currency exchange rates reduced non-U.S. sales by $7.7 million. -8- Analysis of Operations - Continued Record second-quarter 1996 industrial sales of $292.6 million were $9.8 million, or 3.5%, higher than in the 1995 second quarter, bolstered by the operations of Vickers Electronic Systems (VES) acquired in late 1995. U.S. industrial sales increased $16.1 million, or 9%, compared with the 1995 second quarter, and sales for Asia/Pacific improved modestly. European sales declined $3.7 million, or 5.3%, including the effects of changes in currency exchange rates, while sales in Brazil were $3.6 million, or 31.4%, lower than in the 1995 second quarter. Strong industrial order intake of $294.5 million, including orders for VES, represented an increase of $24.3 million, or 9%, over the 1995 second quarter. Order intake for the U.S. and Asia/Pacific increased over the prior year, while order intake in Europe and Brazil declined. Order backlog of $201 million was $8.3 million, or 4.3%, higher than at June 30, 1995. Automotive sales declined $3.9 million, or 2.9%, from the 1995 second quarter. However, second-quarter 1996 sales were $5.8 million higher than sales in the 1996 first quarter. U.S. sales in the 1996 second quarter were $7.4 million, or 12.3%, lower than in the 1995 second quarter, but were nearly equal to the 1996 first-quarter sales. Although new business is being secured, the conclusion of a number of programs with U.S. car manufacturers in the second half of 1995 contributed to the 1996 second-quarter sales decline. European automotive sales increased $3.5 million, or 4.8%, over the 1995 second quarter despite the unfavorable effects of changes in currency exchange rates. The increased European volume was driven by higher sales of air conditioning and power steering components. Aerospace & defense sales increased $10.4 million, or 12.2%, over the 1995 second quarter. The sales increase reflects continued strength in all areas of the original equipment and aftermarket business, and included the benefit of two small acquisitions made in late 1995, as sales were up 12.7% in the U.S. and 9.6% in Europe. Order intake of $108.8 million was $32.7 million, or 43%, higher than in the 1995 second quarter. Order backlog, likewise, increased substantially to $297.9 million from $257.4 million at June 30, 1995. Consolidated manufacturing income increased $3.0 million, or 2.3%, from the 1995 second quarter, but manufacturing margin declined from 26.1% to 25.9%. Manufacturing income and margin for the industrial segment declined from the 1995 second quarter as the benefit of increased sales volume was negated by losses in Brazil (a decline in manufacturing income of $3.9 million) and amortization of premium, including goodwill, associated with the VES acquisition. Although profitable, VES's manufacturing margin is lower than margins for the remainder of the segment, primarily due to the premium amortization. Automotive manufacturing income and margin improved due to the benefits of consolidation and downsizing of facilities, and improved product mix resulting from sales increases in certain higher-margin product lines. Higher sales and continued process improvements contributed to significantly higher manufacturing income and margin over the 1995 second quarter for the aerospace & defense segment. -9- Analysis of Operations - Continued Selling and general administrative and engineering, research and development expenses were $1.8 million higher in the 1996 second quarter than in the 1995 second quarter, but as a percent of sales were 15.9% in 1996 compared with 16% in 1995. Selling and general administrative expenses were slightly lower than in 1995, while engineering, research and development expenses increased $2 million. This increase is due in part to the VES acquisition, but also represents expanding initiatives for new product and business development. Interest expense for the 1996 second quarter was $1.9 million higher than in the 1995 second quarter and was principally due to higher debt levels resulting from the 1995 acquisitions and the program initiated in 1995 to repurchase shares of the Company's common stock. As previously announced, the Company sold its 35% interest in Yokohama Aeroquip K.K. based in Japan, and its 49% interest in Aeroquip Mexicana S.A., based in Mexico. The two transactions resulted in a net combined pretax gain of $17.3 million, which is reported in Other Income (Expenses) in the Statement of Income. The combined pretax gain included $6.4 million of net gains previously deferred in the currency translation component of equity. The Company expects that the sales of its interests in the two unconsolidated affiliates will stimulate the Company's growth in the industrial markets in Mexico and the Asia/Pacific region. The Company can now explore opportunities in the Japanese market with the full Aeroquip product line and expand its product line offerings in Mexico and Central America. Net income for the 1996 second quarter amounted to $33.1 million, or $1.11 per share (including a gain of $5 million, or $.16 per share, from the sale of unconsolidated affiliates), compared with net income of $33.3 million, or $1.11 per share, in the 1995 second quarter. The effective income tax rate for the 1996 second quarter (exclusive of the tax associated with the gain on the sale of unconsolidated affiliates) was 33% compared with 23% in the 1995 second quarter. The lower effective income tax rate in 1995 reflects, among other things, the utilization of tax loss carryforwards outside the U.S. for which deferred tax valuation allowances had previously been provided. -10- Analysis of Operations - Continued Six Months 1996 Compared with Six Months 1995 The following data provide highlights for the 1996 first six months compared with the 1995 first six months. Six Months Ended Percent (dollars in thousands, June 30 Increase except per share data) 1996 1995 (Decrease) CONSOLIDATED Net sales $1,030,037 $1,000,252 3.0% Manufacturing income 260,166 253,363 2.7 Manufacturing margin (%) 25.3 25.3 Operating income 91,872 91,720 0.2 Operating margin (%) 8.9 9.2 Net income 57,475 55,868 2.9 Net income per share 1.94 1.88 3.2 INDUSTRIAL Net sales 584,531 559,108 4.5 Operating income 56,672 69,091 (18.0) Operating margin (%) 9.7 12.4 Order intake 592,606 570,980 3.8 AUTOMOTIVE Net sales 253,965 273,919 (7.3) Operating income 20,726 19,717 5.1 Operating margin (%) 8.2 7.2 AEROSPACE & DEFENSE Net sales 191,542 167,223 14.5 Operating income 25,771 15,641 64.8 Operating margin (%) 13.5 9.4 Order intake 224,622 156,089 43.9 Sales exceeding $1 billion for the first six months of 1996 were a record for the Company and were $29.8 million, or 3%, greater than in the comparable 1995 period. Sales for the industrial and aerospace & defense segments increased 4.5% and 14.5%, respectively, but automotive sales declined 7.3%. Businesses acquired in the 1995 fourth quarter generated sales for the first six months of 1996 of more than $54 million, principally in the industrial segment. Including the results of acquisitions, U.S. sales increased $34.5 million, or 5.5%, but non-U.S. sales declined $4.7 million. Changes in currency exchange rates reduced non-U.S. sales by nearly $12 million. Industrial sales for the first six months of 1996 amounting to $584.5 million were also a record and were $25.4 million, or 4.5%, greater than in the comparable 1995 period. U.S. industrial sales increased $34.2 million, or 9.6%, and Asia/Pacific sales improved modestly. European sales declined $1.7 million, or 1.2%, after changes in currency exchange rates. Sales in Brazil were $8.3 million, or 36.1%, lower than in the comparable 1995 six-month period. -11- Analysis of Operations - Continued Automotive sales declined $20 million, or 7.3%, from the first six months of 1995. U.S. automotive sales were $21.6 million, or 17%, lower than in the comparable 1995 period. The conclusion of a number of significant programs with U.S. car manufacturers in the second half of 1995 contributed to the decline in 1996 U.S. volume. European automotive sales increased $1.6 million, after the adverse effects of changes in currency exchange rates amounting to more than $7 million. Aerospace & defense sales increased significantly over the first six months of 1995, up $24.3 million, or 14.5%. The Company's aggressive aerospace & defense growth initiatives evidence sustained momentum as the favorable first- quarter performance was replicated in the second quarter. Consolidated manufacturing income increased $6.8 million, or 2.7%, over the first six months of 1995, while manufacturing margin remained unchanged at 25.3%. Factors similar to those described for the second quarter influenced the six-month performance. Manufacturing income and margin for the industrial segment declined from the prior year due to the performance of the Brazilian operations and lower profit margin for the acquired VES operations. Automotive manufacturing income was flat with the prior year, but manufacturing margin improved due principally to the benefits recognized in the 1996 second quarter from consolidation and downsizing of facilities and improved sales mix. Higher sales volume and continued process improvements for aerospace & defense contributed to a 25% increase in manufacturing income and a 2.8 percentage-point increase in manufacturing margin. Selling and general administrative and engineering, research and development expenses were $6.7 million higher in the 1996 six-month period compared with the 1995 first six months and as a percent of sales were approximately the same as in 1995. The increase is principally due to the VES acquisition but also represents expanding initiatives for new product and business development. Interest expense for the 1996 six-month period was $3.2 million greater than in the comparable 1995 period and was attributable to the higher average debt levels in 1996. Other Income (Expenses) for the 1996 six-month period includes a gain of $17.3 million resulting from the sales of unconsolidated affiliates. Net income for the first six months of 1996 amounted to $57.5 million, or $1.94 per share (including a gain of $5 million, or $.16 per share, from the sale of unconsolidated affiliates), compared with net income of $55.9 million, or $1.88 per share, for the first six months of 1995. The income tax provision for the 1996 six-month period includes a credit for settlement of claims for prior years' research and development credits of $4 million, or $.13 per share, that was recorded in the first quarter. The 1996 income tax provision also includes income taxes of $12.3 million resulting from the gain on sale of unconsolidated affiliates. The effective income tax rate for the 1996 six-month period exclusive of these items was 33%. The 26% effective income tax rate for the 1995 six-month period reflects, among other things, the utilization of tax loss carryforwards outside the U.S. for which deferred tax valuation allowances had previously been provided. -12- Liquidity, Working Capital and Capital Investment Cash provided by operating activities in the first six months of 1996 amounted to $33.8 million. Working capital requirements included $62.3 million to finance a higher level of receivables. This increase reflects, in part, the result of higher sales in 1996 and, since receivables were not included in the purchase of VES, recognizes the increase in receivable balances to normal operating levels for VES. Inventory reductions during the first six months of 1996 provided cash of $12.7 million, and dividends received from affiliates, principally Aeroquip Yokohama K.K., amounted to $9.9 million. Changes in components of working capital other than debt in the 1995 first-quarter operating activities included a $50 million increase in working capital resulting from the termination of the Company's program for the sale of accounts receivable. During the 1996 second quarter, the Company received $40.2 million from the sales of interests in two unconsolidated affiliates operating as joint ventures in Japan and Mexico and an injection-molding plastics products facility in Bassett, Virginia. Also in the 1996 second quarter, expenditures for business acquisitions amounting to $6.2 million included the acquisition of a business serving the industrial aftermarket, net of adjustment to the purchase price of a 1995 acquisition. Dividend payments in 1996 were $.20 per share in each of the first two quarters compared with $.18 in 1995. Total dividends paid in the first six months of 1996 were $11.5 million compared with $10.4 million in the same 1995 period. During the first six months of 1996, the Company purchased 439,600 shares of common stock at a cost of $13.8 million. The Company expects to make further purchases during 1996, but is not committed to purchase a specific number of shares. In 1996, the Company filed a shelf registration statement with the Securities and Exchange Commission for an additional $175 million (total registrations of $250 million before debt issuance) in debt securities. In the 1996 second quarter, the Company issued $100 million of 30-year debentures with a coupon rate of 7.875% under this authorization. The proceeds were used to retire debt with shorter maturities, including $75 million that was classified as long-term. At June 30, 1996, additional debt securities in amounts up to $150 million can be issued under the existing registrations. The debt-to- capitalization ratio (debt divided by debt plus equity) at June 30, 1996 was reduced to 44.4% compared with 45.6% at December 31, 1995. The Company also maintains a revolving credit agreement with a consortium of U.S. and non-U.S. banks expiring in 2000 under which the Company may borrow up to $175 million. The agreement is intended to support the Company's commercial paper borrowings and, to the extent not so utilized, provide domestic borrowing capacity. The remaining borrowing capacity under this agreement at June 30, 1996, was $173.4 million. In addition to this agreement, the Company has uncommitted arrangements with various banks to provide short-term financing as necessary. The Company expects that cash flow from operating activities and available credit lines will be sufficient to meet normal operating requirements over the near term. -13- TRINOVA CORPORATION Item 6. Exhibits and Reports on Form 8-K (a) The following exhibit is filed hereunder as part of Part I: Exhibit (11) Statement re: Computation of Per Share Earnings The following exhibit is filed as part of Part II: Exhibit (27) Financial Data Schedule The following exhibits are filed as part of Part II and are incorporated by reference hereunder: Exhibit (4)-1 First Supplemental Indenture, dated as of May 4, 1992, between TRINOVA Corporation and NBD Bank, with respect to the issuance of $75,000,000 aggregate principal amount of TRINOVA Corporation 7.95% Notes Due 1997, filed as Exhibit (4)-1 to Form SE filed on May 6, 1992 Exhibit (4)-2 7.95% Notes Due 1997, issued pursuant to the Indenture, dated as of January 28, 1988, between TRINOVA Corporation and NBD Bank (formerly National Bank of Detroit), as supplemented by the First Supplemental Indenture, dated as of May 4, 1992, between TRINOVA Corporation and NBD Bank, filed as Exhibit (4)-2 to Form SE filed on May 6, 1992 Exhibit (4)-3 Officers' Certificate of TRINOVA Corporation, dated May 4, 1992, pursuant to Section 2.01 of the Indenture, dated as of January 28, 1988, between TRINOVA Corporation and NBD Bank (formerly National Bank of Detroit), as supplemented by the First Supplemental Indenture, dated as of May 4, 1992, between TRINOVA Corporation and NBD Bank, filed as Exhibit (4)-3 to Form SE filed on May 6, 1992 Exhibit (4)-4 Rights Agreement, dated January 26, 1989, between TRINOVA Corporation and First Chicago Trust Company of New York filed as Exhibit (2) to Form 8-A filed on January 27, 1989, as amended by the First Amendment to Rights Agreement, filed as Exhibit (5) to Form 8 filed on July 1, 1992 Exhibit (4)-5 Form of Share Certificate for Common Shares, $5 par value, of TRINOVA Corporation, filed as Exhibit (4)-2 to Form SE filed on July 1, 1992 Exhibit (4)-6 Fiscal Agency Agreement, dated as of October 26, 1987, between TRINOVA Corporation, as Issuer, and Bankers Trust Company, as Fiscal Agent, with respect to $100,000,000 aggregate principal amount of TRINOVA -14- Item 6. Exhibits and Reports on Form 8-K - Continued Exhibit (4)-6 Corporation 6% Convertible Subordinated Debentures (Continued) Due 2002, filed as Exhibit (4)-1 to Form SE filed on March 18, 1993 Exhibit (4)-7 Indenture, dated as of January 28, 1988, between TRINOVA Corporation and NBD Bank (formerly National Bank of Detroit), with respect to the issuance of $50,000,000 aggregate principal amount of TRINOVA Corporation 9.55% Senior Sinking Fund Debentures Due 2018, and the issuance of $75,000,000 aggregate principal amount of TRINOVA Corporation 7.95% Notes Due 1997, filed as Exhibit (4)-2 to Form SE filed on March 18, 1993 Exhibit (4)-8 Form of 7.875% Debentures due June 1, 2026, filed as Exhibit (4)-1 to Form 8-K filed on June 3, 1996 Exhibit (4)-9 Indenture, dated as of May 1, 1996, between TRINOVA Corporation and NBD Bank, Trustee, with respect to the issuance of $100,000,000 aggregate principal amount of 7.875% Debentures due June 1, 2026, filed as Exhibit (4)-2 to Form 8-K filed on June 3, 1996 Exhibit (10)-1 TRINOVA Corporation 1982 Stock Option Plan, filed as Exhibit (10)-1 to Form SE filed on March 18, 1993 Exhibit (10)-2 TRINOVA Corporation 1984 Incentive Compensation Plan, filed as Exhibit (10)-2 to Form SE filed on March 18, 1993 Exhibit (10)-3 TRINOVA Corporation 1987 Stock Option Plan, filed as Exhibit (10)-3 to Form SE filed on March 18, 1993 Exhibit (10)-4 Change in Control Agreement for Officers, filed as Exhibit (10)-4 to Form SE filed on March 18, 1993 (the Agreements executed by the Company and various executive officers of the Company are identical in all respects to the form of Agreement filed as an Exhibit to Form SE except as to differences in the identity of the officers and the dates of execution, and as to other variations directly necessitated by said differences) Exhibit (10)-5 Change in Control Agreement for Non-officers, filed as Exhibit (10)-5 to Form SE filed on March 18, 1993 (the Agreements executed by the Company and various non-officer employees of the Company are identical in all respects to the form of Agreement filed as an Exhibit to Form SE except as to differences in the identity of the employees and the dates of execution, and as to other variations directly necessitated by said differences) -15- Item 6. Exhibits and Reports on Form 8-K - Continued Exhibit (10)-6 TRINOVA Corporation 1994 Stock Incentive Plan, filed as Appendix A to the proxy statement for the annual meeting held on April 21, 1994 Exhibit (10)-7 TRINOVA Corporation 1989 Non-Employee Directors' Equity Plan, filed as Exhibit (10)-12 to Form 10-K filed on March 18, 1994 Exhibit (10)-8 TRINOVA Corporation Plan for Optional Deferment of Directors' Fees (amended and restated effective April 1, 1995) filed as Exhibit (10)-8 to Form 10-K filed on March 20, 1995 Exhibit (10)-9 TRINOVA Corporation Directors' Retirement Plan (amended and restated effective January 1, 1990), filed as Exhibit (10)-9 to Form 10-K filed on March 20, 1995 Exhibit (10)-10 TRINOVA Corporation Voluntary Deferred Compensation Plan (effective April 1, 1995), filed as Exhibit (10)-11 to Form 10-K filed on March 20, 1995 Exhibit (10)-11 TRINOVA Corporation Supplemental Benefit Plan (amended and restated effective January 1, 1995), filed as Exhibit (10)-10 to Form 10-Q filed on August 10, 1995 Exhibit (99(i))-1 TRINOVA Corporation Directors' Charitable Award Program, filed as Exhibit (99(i))-2 to Form 10-K filed on March 18, 1994 Exhibit (99(i))-2 Credit Agreement, dated as of August 31, 1994, among TRINOVA Corporation (borrower) and The Bank of Tokyo Trust Company; Chemical Bank; Citibank, N.A; Dresdner Bank AG, New York and Grand Cayman branches; The First National Bank of Chicago; Morgan Guaranty Trust Company of New York; NBD Bank; and Union Bank of Switzerland, Chicago branches (banks) and Citibank, N.A. (administrative agent), filed as Exhibit (99(i))-2 to Form 10-Q filed on November 3, 1994 (b) A report on Form 8-K was filed on June 3, 1996, to report that the Company, in connection with a shelf registration on Form S-3 of debt securities in the principal amount of $175,000,000, entered into an underwriting agreement as of May 29, 1996, with Morgan Stanley & Co. and J. P. Morgan Securities Inc. to sell 7.875% notes due June 1, 2026, in the amount of $100,000,000. Notes in the amount of $100,000,000 were issued June 3, 1996. -16- 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. TRINOVA CORPORATION By /S/ DARRYL F. ALLEN ----------------------------------------- August 8, 1996 Darryl F. Allen Chairman, President and Chief Executive Officer (Principal Executive Officer) By /S/ DAVID M. RISLEY August 8, 1996 ----------------------------------------- David M. Risley Vice President - Finance and Chief Financial Officer (Principal Financial Officer) -17- EX-99 2 EXHIBIT INDEX EXHIBIT INDEX Exhibit No. Page No. (4)-1 First Supplemental Indenture, dated as of May 4, Incorporated 1992, between TRINOVA Corporation and NBD Bank, by Reference with respect to the issuance of $75,000,000 aggregate principal amount of TRINOVA Corporation 7.95% Notes Due 1997, filed as Exhibit (4)-1 to Form SE filed on May 6, 1992 (4)-2 7.95% Notes Due 1997, issued pursuant to the Incorporated Indenture, dated as of January 28, 1988, between by Reference TRINOVA Corporation and NBD Bank (formerly National Bank of Detroit), as supplemented by the First Supplemental Indenture, dated as of May 4, 1992, between TRINOVA Corporation and NBD Bank, filed as Exhibit (4)-2 to Form SE filed on May 6, 1992 (4)-3 Officers' Certificate of TRINOVA Corporation, Incorporated dated May 4, 1992, pursuant to Section 2.01 of by Reference the Indenture, dated as of January 28, 1988, between TRINOVA Corporation and NBD Bank (formerly National Bank of Detroit), as supplemented by the First Supplemental Indenture, dated as of May 4, 1992, between TRINOVA Corporation and NBD Bank, filed as Exhibit (4)-3 to Form SE filed on May 6, 1992 (4)-4 Rights Agreement, dated January 26, 1989, Incorporated between TRINOVA Corporation and First Chicago by Reference Trust Company of New York filed as Exhibit (2) to Form 8-A filed on January 27, 1989, as amended by the First Amendment to Rights Agreement filed as Exhibit (5) to Form 8 filed on July 1, 1992 (4)-5 Form of Share Certificate for Common Shares, $5 Incorporated par value, of TRINOVA Corporation, filed as by Reference Exhibit (4)-2 to Form SE filed on July 1, 1992 (4)-6 Fiscal Agency Agreement, dated as of October 26, Incorporated 1987, between TRINOVA Corporation, as Issuer, by Reference and Bankers Trust Company, as Fiscal Agent, with respect to $100,000,000 aggregate principal amount of TRINOVA Corporation 6% Convertible Subordinated Debentures Due 2002, filed as Exhibit (4)-1 to Form SE filed on March 18, 1993 -18- EXHIBIT INDEX - Continued Exhibit No. Page No. (4)-7 Indenture, dated as of January 28, 1988, between Incorporated TRINOVA Corporation and NBD Bank (formerly by Reference National Bank of Detroit), with respect to the issuance of $50,000,000 aggregate principal amount of TRINOVA Corporation 9.55% Senior Sinking Fund Debentures Due 2018, and the issuance of $75,000,000 aggregate principal amount of TRINOVA Corporation 7.95% Notes Due 1997, filed as Exhibit (4)-2 to Form SE filed on March 18, 1993 (4)-8 Form of 7.875% Debentures due June 1, 2026, Incorporated filed as Exhibit (4)-1 to Form 8-K filed on by Reference June 3, 1996 (4)-9 Indenture, dated as of May 1, 1996, between Incorporated TRINOVA Corporation and NBD Bank, Trustee, with by Reference respect to the issuance of $100,000,000 aggregate principal amount of 7.875% Debentures due June 1, 2026, filed as Exhibit (4)-2 to Form 8-K filed on June 3, 1996 (10)-1 TRINOVA Corporation 1982 Stock Option Plan, Incorporated filed as Exhibit (10)-1 to Form SE filed on by Reference March 18, 1993 (10)-2 TRINOVA Corporation 1984 Incentive Compensation Incorporated Plan, filed as Exhibit (10)-2 to Form SE filed by Reference on March 18, 1993 (10)-3 TRINOVA Corporation 1987 Stock Option Plan, Incorporated filed as Exhibit (10)-3 to Form SE filed on by Reference March 18, 1993 (10)-4 Change in Control Agreement for Officers, Incorporated filed as Exhibit (10)-4 to Form SE filed on by Reference March 18, 1993 (the Agreements executed by the Company and various executive officers of the Company are identical in all respects to the form of Agreement filed as an Exhibit to Form SE except as to differences in the identity of the officers and the dates of execution, and as to other variations directly necessitated by said differences) -19- EXHIBIT INDEX - Continued Exhibit No. Page No. (10)-5 Change in Control Agreement for Non-officers, Incorporated filed as Exhibit (10)-5 to Form SE filed on by Reference March 18, 1993 (the Agreements executed by the Company and various non-officer employees of the Company are identical in all respects to the form of Agreement filed as an Exhibit to Form SE except as to differences in the identity of the employees and the dates of execution, and as to other variations directly necessitated by said differences) (10)-6 TRINOVA Corporation 1994 Stock Incentive Plan, Incorporated filed as Appendix A to the proxy statement for by Reference the annual meeting held on April 21, 1994 (10)-7 TRINOVA Corporation 1989 Non-Employee Directors' Incorporated Equity Plan, filed as Exhibit (10)-12 to by Reference Form 10-K filed on March 18, 1994 (10)-8 TRINOVA Corporation Plan for Optional Deferment Incorporated of Directors' Fees (amended and restated by Reference effective April 1, 1995) filed as Exhibit (10)-8 to Form 10-K filed on March 20, 1995 (10)-9 TRINOVA Corporation Directors' Retirement Plan Incorporated (amended and restated effective January 1, 1990) by Reference filed as Exhibit (10)-9 to Form 10-K filed on March 20, 1995 (10)-10 TRINOVA Corporation Voluntary Deferred Compensation Incorporated Plan (effective April 1, 1995), filed as Exhibit by Reference (10)-11 to Form 10-K filed on March 20, 1995 (10)-11 TRINOVA Corporation Supplemental Benefit Plan Incorporated (amended and restated effective January 1, 1995), by Reference filed as Exhibit (10)-10 to Form 10-Q filed on August 10, 1995 (11) Statement re: Computation of Per Share Earnings 22 (27) Financial Data Schedule 23 (99(i))-1 TRINOVA Corporation Directors' Charitable Award Incorporated Program, filed as Exhibit (99(i))-2 to by Reference Form 10-K filed on March 18, 1994 -20- EXHIBIT INDEX - Continued (99(i))-2 Credit Agreement, dated as of August 31, 1994, Incorporated among TRINOVA Corporation (borrower) and The Bank by Reference of Tokyo Trust Company; Chemical Bank; Citibank, N.A.; Dresdner Bank AG, New York and Grand Cayman branches; The First National Bank of Chicago; Morgan Guaranty Trust Company of New York; NBD Bank; and Union Bank of Switzerland, Chicago branches (banks) and Citibank, N.A. (administrative agent), filed as Exhibit (99(i))-2 to Form 10-Q filed on November 3, 1994 -21- EX-11 3 EXHIBIT 11 EXHIBIT 11 STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS TRINOVA CORPORATION (In thousands, except per share data)
Three Months Ended Six Months Ended June 30 June 30 ------------------ ------------------- 1996 1995 1996 1995 ---- ---- ---- ---- AVERAGE SHARES OF COMMON STOCK AND COMMON STOCK EQUIVALENTS OUTSTANDING (NOTE A) Average shares outstanding 28,551 28,815 28,652 28,812 Assumed conversion of the 6% convertible debentures 1,905 1,905 1,905 1,905 Net effect of dilutive stock options based upon treasury stock method using average market price 72 70 72 70 --------- ---------- ---------- ---------- Average shares of common stock and common stock equivalents outstanding 30,528 30,790 30,629 30,787 ========== ========== ========== ========== INCOME ATTRIBUTABLE TO COMMON STOCK (NOTE A) Net income $ 33,060 $ 33,280 $ 57,475 $ 55,868 After-tax equivalent of interest expense on the 6% convertible debentures 930 930 1,860 1,860 ---------- ---------- ---------- ---------- Income attributable to common stock $ 33,990 $ 34,210 $ 59,335 $ 57,728 ========== ========== ========== ========== Net Income per Share $ 1.11 $ 1.11 $ 1.94 $ 1.88 ========== ========== ========== ========== Note A - Net income per share is computed using the average number of common shares outstanding, including common stock equivalents. The assumed conversion of the Company's 6% convertible debentures was included in average shares outstanding, increasing the average number of shares outstanding by 1,904,762 shares. For purposes of computing net income per share, net income was increased for the after-tax equivalent of interest expense on the 6% convertible debentures.
-22- EX-27 4 ARTICLE 5 FINANCIAL DATA SCHEDULE FOR FORM 10-Q
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE STATEMENT OF FINANCIAL POSITION AND THE CONDENSED STATEMENT OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1996 JUN-30-1996 18,538 0 363,444 14,299 254,912 664,868 973,196 546,406 1,248,133 409,096 252,304 142,317 0 0 279,998 1,248,133 1,030,037 1,030,037 769,871 769,871 0 0 13,127 89,675 32,200 57,475 0 0 0 57,475 1.94 1.94
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