-----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, Rjd6aDMgzMDMo+hMK1rHsUmM+he1AXGzjk9Yq7kDvhJhbVEX1bKtxmslrzh/Xy3Y GVPAOtKmD19H6P1hOgGz5g== 0000950134-01-505016.txt : 20010813 0000950134-01-505016.hdr.sgml : 20010813 ACCESSION NUMBER: 0000950134-01-505016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20010810 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRINITY INDUSTRIES INC CENTRAL INDEX KEY: 0000099780 STANDARD INDUSTRIAL CLASSIFICATION: RAILROAD EQUIPMENT [3743] IRS NUMBER: 750225040 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06903 FILM NUMBER: 1705119 BUSINESS ADDRESS: STREET 1: 2525 STEMMONS FREEWAY CITY: DALLAS STATE: TX ZIP: 75207-2401 BUSINESS PHONE: 2146314420 FORMER COMPANY: FORMER CONFORMED NAME: TRINITY STEEL CO INC DATE OF NAME CHANGE: 19720407 10-Q 1 d89789e10-q.txt FORM 10-Q FOR QUARTER ENDED JUNE 30, 2001 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------- FORM 10-Q ----------- (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2001 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 number 1-6903 TRINITY INDUSTRIES, INC. (Exact name of Company as specified in its charter) Incorporated Under the Laws 75-0225040 of the State of Delaware ------------------ (I.R.S. Employer Identification No.) 2525 Stemmons Freeway Dallas, Texas 75207-2401 ------------- ------------ (Address of Principal (Zip Code) Executive Offices) (214) 631-4420 ---------------------- (Company's Telephone Number, Including Area Code) Indicate by check mark whether the Company (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 --- --- 36,983,562 (Number of shares of common stock outstanding as of June 30, 2001) 2 Part I Item 1 - Financial Statements Trinity Industries, Inc. Consolidated Balance Sheet (in millions except per share data)
June 30 March 31 Assets 2001 2001 ------------ ------------ (unaudited) Cash and equivalents ........................... $ 11.2 $ 13.5 Receivables .................................... 252.7 245.7 Inventories: Raw materials and supplies ................... 179.8 235.5 Work in process .............................. 39.8 43.5 Finished goods ............................... 96.3 73.5 ------------ ------------ 315.9 352.5 Property, plant and equipment, at cost ......... 1,474.6 1,534.1 Less accumulated depreciation .................. (554.3) (541.7) ------------ ------------ 920.3 992.4 Other assets ................................... 226.2 221.8 ------------ ------------ $ 1,726.3 $ 1,825.9 Liabilities and Stockholders' Equity Short-term debt ................................ $ 421.0 $ 493.8 Accounts payable and accrued liabilities ....... 325.3 364.2 Long-term debt ................................. 42.2 44.0 Deferred income taxes .......................... 20.1 7.1 Other liabilities .............................. 33.9 37.8 ------------ ------------ 842.5 946.9 ------------ ------------ Stockholders' equity: Common stock - shares issued and outstanding at June 30, 2001 - 43.8; at March 31, 2001 - 43.8 ........... 43.8 43.8 Capital in excess of par value ............... 291.8 291.8 Retained earnings ............................ 762.3 759.4 Accumulated other comprehensive loss ......... (21.9) (21.1) Treasury stock -(shares held at June 30, 2001 - 6.8; at March 31, 2001 - 7.0), at cost ....................... (192.2) (194.9) ------------ ------------ 883.8 879.0 ------------ ------------ $ 1,726.3 $ 1,825.9 ============ ============
See accompanying notes to consolidated financial statements. 2 3 Trinity Industries, Inc. Consolidated Income Statement (unaudited) (in millions except per share data)
Three Months Ended June 30 2001 2000 ------------ ------------ Revenues ................................................... $ 467.6 $ 533.7 Operating costs: Cost of revenues ......................................... 402.3 447.0 Selling, engineering and administrative expenses ......... 42.7 49.2 ------------ ------------ 445.0 496.2 Operating profit ........................................... 22.6 37.5 Other (income) expense: Interest income .......................................... (1.7) (1.1) Interest expense ......................................... 7.6 6.0 Other, net ............................................... 1.0 -- ------------ ------------ 6.9 4.9 Income before income taxes ................................. 15.7 32.6 Provision (benefit) for income taxes: Current .................................................. (5.1) 10.3 Deferred ................................................. 11.2 1.4 ------------ ------------ 6.1 11.7 ------------ ------------ Net income ................................................. $ 9.6 $ 20.9 ============ ============ Net income per common share: Basic .................................................... $ 0.26 $ 0.55 ============ ============ Diluted .................................................. $ 0.26 $ 0.55 ============ ============ Weighted average number of shares outstanding: Basic .................................................... 37.0 38.1 Diluted .................................................. 37.1 38.2
See accompanying notes to consolidated financial statements. 3 4 Trinity Industries, Inc. Consolidated Statement of Cash Flows (unaudited) (in millions)
Three Months Ended June 30 2001 2000 ---------- ---------- Operating activities: Net income ................................................ $ 9.6 $ 20.9 Adjustments to reconcile net income to net cash provided (required) by operating activities: Depreciation and amortization ........................... 22.5 22.4 Deferred income taxes ................................... 11.2 1.4 Gain on sale of property, plant and equipment ........... (0.7) (0.6) Other ................................................... 0.7 0.4 Changes in assets and liabilities, net of effects from acquisitions: (Increase) decrease in receivables ..................... (6.6) 91.5 (Increase) decrease in inventories ..................... 36.6 (47.2) Increase in other assets ............................... (0.1) (31.5) Decrease in accounts payable and accrued liabilities ................................... (42.2) (45.0) Decrease in other liabilities .......................... (3.9) (0.8) ---------- ---------- Total adjustments ..................................... 17.5 (9.4) ---------- ---------- Net cash provided by operating activities ............................................ 27.1 11.5 Investing activities: Proceeds from sale of property, plant and equipment ............................................ 91.2 1.3 Capital expenditures ...................................... (37.9) (41.0) Payment for acquisitions, net of cash acquired ............ -- (8.7) ---------- ---------- Net cash provided (required) by investing activities .................................. 53.3 (48.4) Financing activities: Net borrowings (repayments) of short-term debt ............ (72.8) 81.9 Stock repurchases ......................................... -- (10.6) Payments to retire long-term debt ......................... (3.3) (34.4) Dividends paid ............................................ (6.6) (6.9) ---------- ---------- Net cash provided (required) by financing activities .................................. (82.7) 30.0 ---------- ---------- Net decrease in cash and equivalents ....................... (2.3) (6.9) Cash and equivalents at beginning of period ................ 13.5 16.9 ---------- ---------- Cash and equivalents at end of period ...................... $ 11.2 $ 10.0 ========== ==========
See accompanying notes to consolidated financial statements 4 5 Trinity Industries, Inc. Consolidated Statement of Stockholders' Equity (unaudited) (in millions except share and per share data)
Common Stock ----------------------- Capital Accumulated Amount in Other Total Shares $1.00 Excess Compre- Treasury Stock Stock- (100,000,000) Par of Par Retained hensive ----------------------- holders' (Authorized) Value Value Earnings Income Shares Amount Equity ----------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Balance at March 31, 2000 43,796,351 $ 43.8 $ 295.1 $ 860.6 $ (19.8) (5,455,743) $ (164.6) $ (1,015.1 Net income ................ -- -- -- 20.9 -- -- -- 20.9 Currency translation Adjustments ............. -- -- -- -- (0.2) -- -- (0.2) ---------- Comprehensive income ...... 20.7 Cash dividends ($0.18 per share) ......... -- -- -- (6.9) -- -- -- (6.9) Stock repurchases ......... -- -- -- -- -- (518,900) (10.6) (10.6) Other ..................... -- -- 0.1 -- -- 1,165 -- 0.1 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Balance at June 30, 2000.... 43,796,351 $ 43.8 $ 295.2 $ 874.6 $ (20.0) (5,973,478) $ (175.2) $ 1,018.4 ========== ========== ========== ========== ========== ========== ========== ========== Balance at March 31, 2001 43,796,351 $ 43.8 $ 291.8 $ 759.4 $ (21.1) (6,953,386) $ (194.9) 879.0 Net income ................ -- -- -- 9.6 -- -- -- 9.6 Currency translation and derivative fair value adjustments ....... -- -- -- -- (0.8) -- -- (0.8) ---------- Comprehensive income ...... 8.8 Cash dividends ($0.18 per share) ........ -- -- -- (6.7) -- -- -- (6.7) Other ..................... -- -- -- -- -- 140,597 2.7 2.7 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Balance at June 30, 2001.... 43,796,351 $ 43.8 $ 291.8 $ 762.3 $ (21.9) (6,812,789) $ (192.2) $ 883.8 ========== ========== ========== ========== ========== ========== ========== ==========
See accompanying notes to consolidated financial statements 5 6 Trinity Industries, Inc. Notes to Consolidated Financial Statements (unaudited) June 30, 2001 General The foregoing consolidated financial statements are unaudited and have been prepared from the books and records of Trinity Industries, Inc. ("Trinity " or the "Company "). In the opinion of management, all adjustments, consisting only of normal and recurring adjustments necessary for a fair presentation of the financial position of the Company as of June 30, 2001, the results of operations for the three month periods ended June 30, 2001 and 2000 and cash flows for the three month periods ended June 30, 2001 and 2000, in conformity with generally accepted accounting principles, have been made. Because of seasonal and other factors, the results of operations for the three month period ended June 30, 2001 may not be indicative of expected results of operations for the year ending March 31, 2002. These interim financial statements and notes are condensed as permitted by the instructions to Form 10-Q, and should be read in conjunction with the audited consolidated financial statements of the Company included in its Form 10-K for the year ended March 31, 2001. Contingencies The Company is involved in various claims and lawsuits incidental to its business. In the opinion of management, these claims and suits in the aggregate will not have a material adverse effect on the Company's consolidated financial statements. Segments of Business Trinity Industries, Inc. is a diversified industrial manufacturer. As of March 31, 2001, the Company modified its segment reporting to align the reportable segments with current internal reporting. The Company combined the Highway Construction Products segment and the Concrete and Aggregate segment into the Construction Products segment, moved its Heads business into the Industrial Products segment from Parts and Services, and moved its Deck Fittings and Marine Parts business into the Inland Barge segment from Parts and Services. Furthermore, the Company changed the definition of operating profit at the segment level to include corporate shared services charges. Information reflecting these changes for fiscal years 2001, 2000 and 1999 was presented in the 2001 Annual Report in order to conform to these changes. Quarterly information for the fiscal years ended March 31, 2001, 2000, and 1999 has been restated to the new reporting format and is included as Exhibit 99.2 in this report to provide additional information to the users of the financial statements. The determination of operating segments is based on the types of products and services provided by the Company and the internal reporting relationships. 6 7 The new reporting format includes the following business segments: (1) the Railcar segment, which manufactures and sells railcars; (2) the Inland Barge segment, which manufactures barges and related products for inland waterway services; (3) the Parts & Services segment, which manufactures and sells various parts to manufacturers of railcars and other industrial products and provides services such as railcar maintenance, fleet management, and leasing; (4) the Construction Products segment, consisting primarily of highway guardrail and safety products, concrete and aggregate, and girders and beams used in the construction of highway and railway bridges; (5) the Industrial Products segment, which manufactures and sells containers, container heads, weld fittings used in pressure piping systems, and pressure and non-pressure containers for the storage and transportation of liquefied gases and other liquid and dry products. Finally, All Other includes transportation services, the Company's captive insurance company, structural towers, and other peripheral businesses. The financial information for the quarter ended June 30, 2001 and 2000 is shown in the tables below. Three months ended June 30, 2001 (unaudited) (in millions)
Revenues Operating ----------------------------------------- Profit Outside Intersegment Total (Loss) ---------- --------------- ---------- ---------- Railcar Segment ........................ $ 169.2 $ 0.8 $ 170.0 $ 3.6 Inland Barge Segment ................... 49.6 -- 49.6 2.9 Parts & Services Segment ............... 51.7 19.2 70.9 8.2 Construction Products Segment .......... 135.3 -- 135.3 15.7 Industrial Products Segment ............ 44.0 0.9 44.9 0.4 All Other .............................. 17.8 10.5 28.3 (2.9) Eliminations and Corporate Items ....... -- -- (31.4) (5.3) ---------- ---------- Consolidated Total ..................... $ 467.6 $ 22.6 ========== ==========
Three months ended June 30, 2000 (unaudited) (in millions)
Revenues Operating ----------------------------------------- Profit Outside Intersegment Total (Loss) ---------- --------------- ---------- ---------- Railcar Segment ........................ $ 214.1 $ 1.3 $ 215.4 $ 12.2 Inland Barge Segment ................... 51.6 -- 51.6 6.5 Parts & Services Segment ............... 72.6 14.9 87.5 11.3 Construction Products Segment .......... 125.9 -- 125.9 15.9 Industrial Products Segment ............ 59.1 1.3 60.4 1.7 All Other .............................. 10.4 16.0 26.4 (3.8) Eliminations and Corporate Items ....... -- -- (33.5) (6.3) ---------- ---------- Consolidated Total ..................... $ 533.7 $ 37.5 ========== ==========
7 8 Other Effective April 1, 2001, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 133, as amended, "Accounting for Derivative Instruments and Hedging Activities," which establishes a comprehensive standard for the recognition and measurement of derivatives and hedging activities. Due to the Company's limited use of derivatives, the impact was not material. In the first quarter of fiscal 2002, the Company entered into six interest rate swap agreements with a total notional amount of $175 million in order to mitigate the impact from interest rate fluctuations on outstanding debt obligations. The Company pays an average fixed rate of 4.60% and receives a floating rate based on the three-month LIBO rates. As of June 30, 2001, the fair value of these swaps was a liability on the Company's books of ($0.3) million with the offset to other comprehensive income. Effective April 1, 2001, the Company adopted Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets," (SFAS No. 142) which requires that goodwill not be amortized but instead be tested for impairment annually by reporting unit. The adoption of SFAS No. 142 is not expected to have a material effect on the financial statements, however, the fair values of the respective reporting units have not been finally determined. For the three months ended June 30, 2000, goodwill amortization was $700 thousand($400 thousand after tax or $0.01 per share). If SFAS 142 had not been adopted, goodwill amortization of approximately $900 thousand ($600 thousand after tax or $0.02 per share) would have been recorded for the three months ended June 30,2001. On June 8, 2001 the Company completed a committed revolving bank facility for $460 million. Amounts borrowed under the facility bear interest at LIBOR plus 0.625% or other alternative rates at the Company's option and can be converted to a one-year term loan on June 6, 2002. The agreement requires maintenance of ratios related to interest coverage, leverage, and minimum net worth. The Company is currently in compliance with such requirements. The initial proceeds under this facility were used to retire existing short-term borrowings. 8 9 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Three Months Ended June 30, 2001 Compared to Three Months Ended June 30, 2000 Revenues for the first quarter of fiscal 2002 decreased to $467.6 million from $533.7 million primarily due to reduced car shipments in the Railcar segment. Operating profit also decreased to $22.6 million compared to $37.5 million due to reduced railcar activities. Revenues for the Railcar segment decreased to $169.2 million from $214.1 million while operating profit decreased to $3.6 million from $12.2 million. The decline in revenues and operating profit is a result of the significant weakening in demand for new railcars in North America combined with a higher percentage of railcar deliveries going to Trinity's lease fleet than in the prior year. Railcar segment operating margins declined due to sales price declines and inefficiencies associated with the lower volumes. Revenues for the Inland Barge segment decreased to $49.6 million from $51.6 million. Operating profit decreased to $2.9 million from $6.5 million. The decrease in operating profit is primarily due to competitive price pressures for both hopper barges and tank barges. Revenues decreased by $16.6 million in the Parts & Services segment, from $87.5 million (including intersegment sales of $14.9 million), to $70.9 million (including intersegment sales of $19.2 million), while operating profit decreased to $8.2 million from $11.3 million. This decrease in revenues and operating profit is primarily due to the soft market conditions in the railcar market. Revenues for the Construction Products segment increased to $135.3 million from $125.9 million, a 7.5% increase, while operating profit decreased to $15.7 million from $15.9 million. Operating profit increases in the Concrete & Aggregate portion of this segment were offset by losses in the Bridge business related to flooding in the Houston plant. Industrial Products segment revenues decreased to $44.0 million compared to $59.1 million. Operating profit decreased to $0.4 million from $1.7 million. The reduction of revenues and operating profit is primarily a result of reduced demand from gas distributors in the Mexico LPG market. This situation is presently expected to continue through September 2001. In the three months ended June 30, 2001, selling, engineering and administrative expenses decreased to $42.7 million from $49.2 million in comparison to the same period last year primarily due to staff reductions. Net interest expense increased due to higher debt levels. The Company's effective tax rate increased from 36% to 39% due to the impact of reduced taxable income on available tax credits. 9 10 Liquidity & Capital Resources Net cash provided by operating activities increased to $27.1 million during the first three months of fiscal 2002 compared to $11.5 million in the first three months of fiscal 2001. Capital expenditures during the first three months of fiscal 2002 were approximately $37.9 million of which approximately $24.8 million was for additions to the railcar lease fleet. This compares to $41.0 million of capital expenditures in the first three months of fiscal 2001 of which $22.7 million was for additions to the railcar lease fleet. Proceeds from the sale of property, plant and equipment (primarily lease fleet sales) were $91.2 million in the first three months of fiscal 2002 compared to $1.3 million in fiscal 2001. Effective April 1, 2001, the Company adopted Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets," (SFAS No. 142) which requires that goodwill not be amortized but instead be tested for impairment annually by reporting unit. The adoption of SFAS No. 142 is not expected to have a material effect on the financial statements, however, the fair values of the respective reporting units have not been finally determined. For the three months ended June 30, 2000, goodwill amortization was $700 thousand ($400 thousand after tax or $0.01 per share). If SFAS 142 had not been adopted, goodwill amortization of approximately $900 thousand ($600 thousand after tax or $0.02 per share) would have been recorded for the three months ended June 30,2001 On June 8, 2001 the Company completed a committed revolving bank facility for $460 million. Amounts borrowed under the facility bear interest at LIBOR plus 0.625% or other alternative rates at the Company's option and can be converted to a one-year term loan on June 6, 2002. The agreement requires maintenance of ratios related to interest coverage, leverage, and minimum net worth. The Company is currently in compliance with such requirements. The initial proceeds under this facility were used to retire existing short-term borrowings. The Company presently has no intention to repurchase any additional shares. The Company believes cash provided from operations and cash available under uncommitted bank lines of credit will be sufficient to meet its operating and capital expenditure requirements for the remainder of the fiscal year. The Company believes acquisitions could be financed through its uncommitted facility and additional borrowing with the consent of lenders. 10 11 ------------------ Any statements contained herein that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and involve risks and uncertainties. These forward-looking statements include expectations, beliefs, plans, objectives, future financial performance, estimates, projections, goals and forecasts. Potential factors which could cause the Company's actual results of operations to differ materially from those in the forward-looking statements include market conditions and demand for the Company's products; competition; technologies; steel prices; interest rates and capital costs; taxes; unstable governments and business conditions in emerging economies; and legal, regulatory and environmental issues. Any forward-looking statement speaks only as of the date on which such statement is made. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made. Part II Item 4 - Submission of Matters to a Vote of Security Holders At the Annual Meeting of Stockholders held July 31, 2001, stockholders elected nine incumbent directors for a one-year term (Proposal 1), approved an Amendment to the 1998 Stock Option and Incentive Plan (Proposal 2), and approved ratification of Ernst & Young LLP as independent auditors for fiscal year 2002 (Proposal 3). The vote tabulation follows for each proposal: Proposal 1 - Election of Directors
NOMINEE For Withheld David W. Biegler 32,233,655 1,374,258 Ronald J. Gafford 32,237,300 1,370,613 Barry J. Galt 32,242,823 1,365,090 Clifford J. Grum 32,231,853 1,376,060 Dean P. Guerin 32,225,364 1,382,549 Jess T. Hay 31,633,906 1,974,007 Diana S. Natalicio 32,245,931 1,361,982 Timothy R. Wallace 32,030,915 1,576,998 W. Ray Wallace 32,222,254 1,385,659
Proposal 2 - Amendment to Stock Option and Incentive Plan For Against Abstentions Broker Non-Votes 24,830,514 8,531,949 245,450 N/A Proposal 3 - Independent Auditors For Against Abstentions Broker Non-Votes 33,403,814 155,777 48,322 N/A 11 12 Item 5 - Other Information Restated Quarterly Segment Information for the fiscal years ended March 31, 2001, 2000, and 1999 and Supplemental Management's Discussion and Analysis of Operating Results for the two years ended March 31, 2001 and 2000 are filed as Exhibit 99.2 in this report on Form 10-Q. Item 6 - Exhibits and Reports on Form 8-K (a) Exhibits Exhibit Number Description 10.12.2 Amendment No. 2 to 1998 Stock Option and Incentive Plan 99.2 Restated Quarterly Segment Information and related Supplemental Management's Discussion and Analysis of Operating Results. (b) Form 8-K was filed on June 1, 2001 that reported the Company's operating results for Fiscal 2001 and additional unusual charges recorded in the fourth quarter. - -------------------------------------------------------------------------------- Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Trinity Industries, Inc. By: /s/ Jim S. Ivy -------------------------------- Jim S. Ivy Vice President and Chief Financial Officer August 10, 2001 12 13 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION ------- ----------- 10.12.2 Amendment No. 2 to 1998 Stock Option and Incentive Plan 99.2 Restated Quarterly Segment Information and related Supplemental Management's Discussion and Analysis of Operating Results.
EX-10.12.2 3 d89789ex10-12_2.txt AMEND. NO. 2 TO 1998 STOCK OPTION/INCENTIVE PLAN 1 EXHIBIT 10.12.2 AMENDMENT NO. 2 TO 1998 STOCK OPTION AND INCENTIVE PLAN The Trinity Industries, Inc. 1998 Stock Option and Incentive Plan (the "1998 Plan") is hereby amended as follows: 1. The first two sentences of Section 4 of the Plan shall be deleted in their entirety and replaced with the following: 4. "Shares Subject to Plan. The maximum number of Shares that may be issued pursuant to Awards under this Plan shall not exceed 3,800,000 unless such maximum shall be increased or decreased by reason of changes in capitalization of the Company as hereinafter provided. Notwithstanding the foregoing, no more than 1,000,000 Shares available for Awards shall be issued in the aggregate as Restricted Stock or in satisfaction of Performance Awards or Other Awards, subject to adjustment as provided in Section 20 hereof." 2. Except as expressly set forth in this Amendment to the 1998 Plan, the 1998 Plan is hereby ratified and confirmed without modification. 3. The effective date of this Amendment to the 1998 Plan shall be July 31, 2001. IN WITNESS WHEREOF, the Company has caused this Amendment to be executed by a duly authorized officer of the Company as of July 31, 2001. TRINITY INDUSTRIES, INC. By: -------------------------------- EX-99.2 4 d89789ex99-2.txt RESTATED QUARTERLY SEGMENT INFORMATION 1 EXHIBIT 99(2) Trinity Industries, Inc. Basis of Presentation As of March 31, 2001, the Company (or "Trinity") modified its segment reporting to align the reportable segments with current internal reporting. The Company combined the Highway Construction Products segment and the Concrete and Aggregate segment into the Construction Products segment, moved its Heads business into the Industrial Products segment from Parts and Services, and moved its Deck Fittings and Marine Parts business into the Inland Barge segment from Parts and Services. Furthermore, the Company changed the definition of operating profit at the segment level to include corporate shared services charges. Trinity's Form 10-K for the year ended March 31, 2001, filed June 18, 2001, presented segment information in the changed format for years ended March 31, 2001, 2000, and 1999. Presented in this exhibit is segment information, in the new reporting format, for each of the four quarters of fiscal years 2001, 2000, and 1999. Supplemental Management's Discussion and Analysis of Operating Results for the fiscal 2001 and fiscal 2000 quarters for which Form 10-Q had previously been filed are included for additional analysis. The new reporting format includes the following business segments: (1) the Railcar segment, which manufactures and sells railcars; (2) the Inland Barge segment, consisting of barges and related products for inland waterway services; (3) the Parts and Services segment, which manufactures and sells various parts to manufacturers of railcars and other industrial products and provides services such as railcar maintenance, fleet management, and leasing; (4) the Construction Products segment, consisting primarily of highway guardrail and safety products, concrete and aggregate, and girders and beams used in the construction of highway and railway bridges; and (5) the Industrial Products segment, which manufactures and sells containers, container heads, weld fittings used in pressure piping systems, and pressure and non-pressure containers for the storage and transportation of liquefied gases and other liquid and dry products. Finally, All Other includes transportation services, the Company's captive insurance company, structural towers, and other peripheral businesses. 2 TRINITY INDUSTRIES, INC. Restated Quarterly Segment Information Year Ended March 31, 2001 (in millions) REVENUES:
Quarter Quarter Quarter Quarter Year Ended Ended Ended Ended Ended June 30, 2000 Sept. 30, 2000 Dec. 31, 2000 March 31, 2001 March 31, 2001 -------------- -------------- -------------- -------------- -------------- Railcar Segment Outside $ 214.1 $ 238.7 $ 133.3 $ 152.8 $ 738.9 Intersegment 1.3 1.0 1.2 (0.2) 3.3 -------------- -------------- -------------- -------------- -------------- Total $ 215.4 $ 239.7 $ 134.5 $ 152.6 $ 742.2 Inland Barge Segment Outside $ 51.6 $ 51.7 $ 41.1 $ 58.5 $ 202.9 Intersegment -- -- -- -- -- -------------- -------------- -------------- -------------- -------------- Total $ 51.6 $ 51.7 $ 41.1 $ 58.5 $ 202.9 Parts & Services Segment Outside $ 72.6 $ 62.6 $ 56.8 $ 56.5 $ 248.5 Intersegment 14.9 13.8 10.6 28.9 68.2 -------------- -------------- -------------- -------------- -------------- Total $ 87.5 $ 76.4 $ 67.4 $ 85.4 $ 316.7 Construction Products Segment Outside $ 125.9 $ 127.0 $ 94.4 $ 93.7 $ 441.0 Intersegment -- -- -- 1.4 1.4 -------------- -------------- -------------- -------------- -------------- Total $ 125.9 $ 127.0 $ 94.4 $ 95.1 $ 442.4 Industrial Products Segment Outside $ 59.1 $ 57.6 $ 57.3 $ 46.5 $ 220.5 Intersegment 1.3 1.8 1.5 5.2 9.8 -------------- -------------- -------------- -------------- -------------- Total $ 60.4 $ 59.4 $ 58.8 $ 51.7 $ 230.3 All Other Outside $ 10.4 $ 13.1 $ 18.3 $ 10.7 $ 52.5 Intersegment 16.0 11.9 8.6 24.2 60.7 -------------- -------------- -------------- -------------- -------------- Total $ 26.4 $ 25.0 $ 26.9 $ 34.9 $ 113.2 Eliminations & Corporate Items $ (33.5) $ (28.5) $ (21.9) $ (59.5) $ (143.4) -------------- -------------- -------------- -------------- -------------- Consolidated Total $ 533.7 $ 550.7 $ 401.2 $ 418.7 $ 1,904.3 ============== ============== ============== ============== ==============
3 TRINITY INDUSTRIES, INC. Restated Quarterly Segment Information Year Ended March 31, 2001 (in millions) OPERATING PROFIT:
Quarter Quarter Quarter Quarter Year Ended Ended Ended Ended Ended June 30, 2000 Sept. 30, 2000 Dec. 31, 2000 March 31, 2001 March 31, 2001 ----------- -------------------- -------------------- ---------------------- -------------------- Before After Before After Before After Before After Charges Charges Charges Charges Charges Charges Charges Charges --------- --------- --------- --------- --------- ----------- ---------- --------- Railcar Segment $ 12.2 $ 15.0 $ (6.1) $ 3.6 $ 3.6 $ 5.5 $ (41.4) $ 36.3 $ (31.7) Inland Barge Segment 6.5 5.6 1.9 2.2 1.5 1.8 1.8 16.1 11.7 Parts & Services Segment 11.3 2.2 (4.0) 5.1 (13.9) 3.5 (4.8) 22.1 (11.4) Construction Products Segment 15.9 16.2 16.2 4.0 4.0 2.4 2.4 38.5 38.5 Industrial Products Segment 1.7 2.2 (4.3) 3.1 (4.9) (0.7) (0.7) 6.3 (8.2) All Other (3.8) (2.0) (2.0) (4.2) (5.4) (4.5) (4.5) (14.5) (15.7) Eliminations & Corporate Items (6.3) (5.2) (16.6) (8.1) (15.4) (10.4) (11.0) (30.0) (49.3) ---------- --------- --------- --------- --------- --------- ----------- ---------- --------- Consolidated Total $ 37.5 $ 34.0 $ (14.9) $ 5.7 $ (30.5) $ (2.4) $ (58.2) $ 74.8 $ (66.1) ========== ========= ========= ========= ========= ========= =========== ========== =========
4 TRINITY INDUSTRIES, INC. Restated Quarterly Segment Information Year Ended March 31, 2000 (in millions) REVENUES:
Quarter Quarter Quarter Quarter Year Ended Ended Ended Ended Ended June 30, 1999 Sept. 30, 1999 Dec. 31, 1999 March 31, 2000 March 31, 2000 --------------- --------------- --------------- --------------- --------------- Railcar Segment Outside $ 382.7 $ 378.8 $ 402.9 $ 350.9 $ 1,515.3 Intersegment 2.1 1.8 1.2 0.8 5.9 --------------- --------------- --------------- --------------- --------------- Total $ 384.8 $ 380.6 $ 404.1 $ 351.7 $ 1,521.2 Inland Barge Segment Outside $ 51.7 $ 55.3 $ 48.8 $ 54.3 $ 210.1 Intersegment -- -- -- -- -- --------------- --------------- --------------- --------------- --------------- Total $ 51.7 $ 55.3 $ 48.8 $ 54.3 $ 210.1 Parts & Services Segment Outside $ 71.4 $ 65.7 $ 65.5 $ 60.5 $ 263.1 Intersegment 33.1 28.9 27.1 21.6 110.7 --------------- --------------- --------------- --------------- --------------- Total $ 104.5 $ 94.6 $ 92.6 $ 82.1 $ 373.8 Construction Products Segment Outside $ 113.3 $ 121.8 $ 105.5 $ 105.0 $ 445.6 Intersegment -- -- -- -- -- --------------- --------------- --------------- --------------- --------------- Total $ 113.3 $ 121.8 $ 105.5 $ 105.0 $ 445.6 Industrial Products Segment Outside $ 61.8 $ 64.0 $ 63.8 $ 65.8 $ 255.4 Intersegment 1.8 2.4 2.2 1.8 8.2 --------------- --------------- --------------- --------------- --------------- Total $ 63.6 $ 66.4 $ 66.0 $ 67.6 $ 263.6 All Other Outside $ 12.5 $ 14.4 $ 14.3 $ 9.9 $ 51.1 Intersegment 14.9 16.2 15.9 14.9 61.9 --------------- --------------- --------------- --------------- --------------- Total $ 27.4 $ 30.6 $ 30.2 $ 24.8 $ 113.0 Eliminations & Corporate Items $ (51.9) $ (49.3) $ (46.4) $ (39.1) $ (186.7) --------------- --------------- --------------- --------------- --------------- Consolidated Total $ 693.4 $ 700.0 $ 700.8 $ 646.4 $ 2,740.6 =============== =============== =============== =============== =============== OPERATING PROFIT: Railcar Segment $ 37.7 $ 38.9 $ 38.8 $ 37.8 $ 153.2 Inland Barge Segment 5.6 7.4 6.1 6.6 25.7 Parts & Services Segment 21.9 17.0 14.5 10.0 63.4 Construction Products Segment 15.8 18.1 12.5 9.8 56.2 Industrial Products Segment 3.2 3.5 3.5 2.2 12.4 All Other 0.5 1.4 0.6 (0.6) 1.9 Eliminations & Corporate Items (7.3) (9.4) (7.2) (9.9) (33.8) --------------- --------------- --------------- --------------- --------------- Consolidated Total $ 77.4 $ 76.9 $ 68.8 $ 55.9 $ 279.0 =============== =============== =============== =============== ===============
5 TRINITY INDUSTRIES, INC. Restated Quarterly Segment Information Year Ended March 31, 1999 (in millions) REVENUES:
Quarter Quarter Quarter Quarter Year Ended Ended Ended Ended Ended June 30, 1998 Sept. 30, 1998 Dec. 31, 1998 March 31, 1999 March 31, 1999 --------------- --------------- --------------- --------------- --------------- Railcar Segment Outside $ 369.8 $ 409.1 $ 426.9 $ 488.2 $ 1,694.0 Intersegment 1.2 2.1 1.5 2.1 6.9 --------------- --------------- --------------- --------------- --------------- Total $ 371.0 $ 411.2 $ 428.4 $ 490.3 $ 1,700.9 Inland Barge Segment Outside $ 64.7 $ 45.9 $ 43.4 $ 47.6 $ 201.6 Intersegment -- -- -- -- -- --------------- --------------- --------------- --------------- --------------- Total $ 64.7 $ 45.9 $ 43.4 $ 47.6 $ 201.6 Parts & Services Segment Outside $ 65.5 $ 62.6 $ 79.5 $ 76.9 $ 284.5 Intersegment 34.1 32.6 38.3 39.6 144.6 --------------- --------------- --------------- --------------- --------------- Total $ 99.6 $ 95.2 $ 117.8 $ 116.5 $ 429.1 Construction Products Segment Outside $ 102.6 $ 109.6 $ 95.2 $ 93.5 $ 400.9 Intersegment 0.1 -- -- (0.1) -- --------------- --------------- --------------- --------------- --------------- Total $ 102.7 $ 109.6 $ 95.2 $ 93.4 $ 400.9 Industrial Products Segment Outside $ 85.8 $ 73.6 $ 64.4 $ 58.4 $ 282.2 Intersegment 1.7 2.3 2.3 2.0 8.3 --------------- --------------- --------------- --------------- --------------- Total $ 87.5 $ 75.9 $ 66.7 $ 60.4 $ 290.5 All Other Outside $ 23.1 $ 16.6 $ 13.5 $ 10.5 $ 63.7 Intersegment 15.1 16.2 16.8 16.8 64.9 --------------- --------------- --------------- --------------- --------------- Total $ 38.2 $ 32.8 $ 30.3 $ 27.3 $ 128.6 Eliminations & Corporate Items $ (52.2) $ (53.2) $ (58.9) $ (60.4) $ (224.7) --------------- --------------- --------------- --------------- --------------- Consolidated Total $ 711.5 $ 717.4 $ 722.9 $ 775.1 $ 2,926.9 =============== =============== =============== =============== =============== OPERATING PROFIT: Railcar Segment $ 32.9 $ 40.3 $ 44.5 $ 49.2 $ 166.9 Inland Barge Segment 4.8 2.1 1.8 2.8 11.5 Parts & Services Segment 19.7 18.0 19.4 20.0 77.1 Construction Products Segment 15.3 16.8 9.9 8.2 50.2 Industrial Products Segment 7.4 6.1 2.5 (2.2) 13.8 All Other 2.9 3.2 2.2 1.6 9.9 Eliminations & Corporate Items (8.9) (11.8) (10.6) (13.2) (44.5) --------------- --------------- --------------- --------------- --------------- Consolidated Total $ 74.1 $ 74.7 $ 69.7 $ 66.4 $ 284.9 =============== =============== =============== =============== ===============
6 Trinity Industries, Inc. Supplemental Management's Discussion and Analysis of Operating Results Three Months Ended December 31, 2000 Compared to Three Months Ended December 31, 1999 Revenues for the third quarter of fiscal 2001 were $401.2 million compared to $700.8 million for the third quarter of fiscal 2000 primarily due to reduced railcar shipments and related declines in railcar parts and services sales. Operating profit, excluding the 3rd quarter charges, was $5.7 million compared to $68.8 million. Railcar segment operating profit was $3.6 million compared to $38.8 million for the same period last year. Results declined due to the current downturn in the North American railcar industry. Operating profit margins were impacted by the lower volumes, changeover of the production lines to different car types, and start up costs associated with new products. Comparison to the prior year for Railcar segment revenues and operating profit is affected by the level of railcars delivered to customers of Trinity's leasing company. Approximately 42% of railcar deliveries for the current quarter were to the Company's leasing fleet. Sales to Trinity's leasing company are eliminated in consolidation and profits are deferred and amortized over the life of the asset. For the current quarter, sales to the leasing company were $95.7 million while profit was $6.0 million. This compares with sales and profit on cars sold to the lease fleet of $9.3 million and $1.0 million, respectively, for the same quarter a year ago. In the Inland Barge segment, operating profit, excluding the 3rd quarter charges, was $2.2 million compared to $6.1 million for the same period last year. The declines are predominately the result of reduced sales prices, primarily on hopper barges, due to very competitive markets. In the Parts & Services segment, operating profit, excluding the 3rd quarter charges, was $5.1 million compared to $14.5 million for the same period last year. This decrease in operating profit is primarily due to the downturn in the railcar market and is also impacted by start-up costs related to a non-railcar parts business. Current quarter revenues and operating profit margins in the Construction Products segment were negatively affected by periods of harsh winter weather that temporarily delayed shipments and competitive pricing in certain concrete and aggregate markets. Additionally, operating profit margins were also impacted by an increased proportion of revenues coming from bridge sales which have lower margins. In the Industrial Products segment, operating profit, excluding the 3rd quarter charges, was $3.1 million compared to $3.5 million for the same period last year. Reduced revenues and operating profit in the Industrial segment is primarily a result of competitive pricing pressure and the impact of exiting the flange and valve business. 7 Three Months Ended September 30, 2000 Compared to Three Months Ended September 30, 1999 Revenues for the second quarter of fiscal 2001 were $550.7 million compared to $700.0 million for the second quarter of fiscal 2000 primarily due to reduced railcar shipments and related declines in railcar parts and services sales. Operating profit, excluding the 2nd quarter charges, was $34.0 million compared to $76.9 million. Railcar segment operating profit, excluding the 2nd quarter charges, was $15.0 million compared to $38.9 million for the same period last year. Revenues and operating profit declined due to the current downturn in the railcar industry which resulted in reduced shipments of new cars by 37% over the same period last year and reduced sales prices. Operating profit margins were further impacted by changeover of production lines to different car types and start up costs associated with new products. Included in revenues for the second quarter were sales of railcars from the Company's lease fleet of approximately $47.5 million, which resulted in operating profits of approximately $8.5 million. In the third quarter, the Company expects about one-third of its railcar production to go to customers of its leasing company which will impact operating profits due to deferral of profits on railcars sold into the lease fleet. In the Inland Barge segment, operating profit, excluding the 2nd quarter charges, was $5.6 million compared to $7.4 million for the same period last year. The declines are predominately the result of reduced sales prices, primarily on hopper barges, due to very competitive markets. In the Parts & Service segment, operating profit, excluding the 2nd quarter charges, was $2.2 million compared to $17.0 million for the same period last year. This decrease in revenues and operating profit is primarily due to the softness in the railcar market and start-up costs related to non-railcar parts. Revenues for the Construction Products segment increased due to a strong construction market for highway products. Operating profit declined due to competitive pricing in certain concrete and aggregate markets, the impact of an increased proportion of revenues coming from bridge sales which have lower margins, and fewer work days which increased unabsorbed manufacturing burden costs. In the Industrial Products segment, operating profit, excluding the 2nd quarter charges, was $2.2 million compared to $3.5 million for the same period last year. Reduced revenues and operating profit in the Industrial Products segment is primarily a result of competitive pricing pressure and the impact of exiting the flange and valve business. 8 Three Months Ended June 30, 2000 Compared to Three Months Ended June 30, 1999 Revenues for the first quarter of fiscal 2001 decreased to $533.7 million from $693.4 million primarily due to reduced car shipments in the Railcar segment, which was partially offset by increased revenues in the Construction Products segment. Operating profit decreased to $37.5 million compared to $77.4 million. Revenues for the Railcar segment decreased to $214.1 million from $382.7 million while operating profit decreased to $12.2 million from $37.7 million. The decline in revenues and operating profit is a result of the significant weakening in demand for new railcars in North America. This creates a very competitive market. Railcar segment operating margins declined due to average sales price declines and inefficiencies associated with changeover of production lines to different car types and start up of new products. Revenues for the Inland Barge segment were $51.6 million for the current quarter and $51.7 million for the prior year quarter. Operating profit increased to $6.5 million from $5.6 million, a 16.1% increase. Increased operating profit is due mainly to cost reductions and operating efficiencies. Revenues decreased by $17.0 million in the Parts & Services segment, from $104.5 (including intersegment sales of $33.1 million), to $87.5 million (including intersegment sales of $14.9 million), while operating profit decreased to $11.3 million from $21.9 million. This decrease in revenues and operating profit is primarily due to the softness in the railcar market. Revenues for the Construction Products segment increased to $125.9 million from $113.3 million, while operating profit increased slightly to $15.9 million. Revenues increased due to a strong highway products market, particularly the demand for guardrail. Increased operating profit for highway products was offset by decreased operating profit from concrete and aggregates. Decreased concrete and aggregate results were primarily attributable to an unusually rainy season over the past three months in principal Texas markets and competitive pricing in certain markets. Industrial segment revenues decreased slightly to $59.1 million compared to $61.8 million, while operating profit decreased to $1.7 million from $3.2 million. The reduction of revenues and operating profit is primarily a result of competitive pressure in pricing. 9 Three Months Ended December 31, 1999 Compared to Three Months Ended December 31, 1998 Revenues for the third quarter of fiscal 2000 decreased to $700.8 million from $722.9 million due to reduced car shipments in the Railcar segment, along with a decline in revenues in the Parts & Services segment. These decreases were mostly offset by improved results in the Inland Barge, Construction Products, and Industrial Products segments. Operating profit decreased slightly to $68.8 million compared to $69.7 million. Increased operating profits in the Inland Barge, Construction Products, and Industrial Products segments, were offset by a decrease in the Railcar and Parts & Services segments. Revenues for the Railcar segment decreased to $402.9 million from $426.9 million while operating profit decreased to $38.8 million from $44.5 million. Lower revenues and operating profit are a result of softened demand in this segment. Revenues for the Inland Barge segment increased to $48.8 million from $43.4 million. Operating profit increased to $6.1 million from $1.8 million. The improvement in operating profit is due mainly to a change in product mix, increased operating efficiency, and lower material costs. Total revenues for the Parts & Services segment were $92.6 million (including intersegment revenues of $27.1) compared to $117.8 million (including intersegment revenues of $38.3), while operating profit decreased to $14.5 million from $19.4 million. This decrease in revenues and operating profit is primarily due to the softness in the railcar market. Revenues for the Construction Products segment increased to $105.5 million from $95.2 million, while operating profit increased to $12.5 million from $9.9 million due to increased government spending on transportation improvements. Industrial Products segment revenues increased to $63.8 million from $64.4 million while operating profit increased to $3.5 million from $2.5 million. The increase in revenues and operating profit is primarily due to increased LPG tank demand and improvement in the fittings and flange business. Three Months Ended September 30, 1999 Compared to Three Months Ended September 30, 1998 Revenues for the second quarter of fiscal 2000 remained flat, decreasing 2.4% to $700 million from $717.4 million due to reduced car shipments in the Railcar segment, along with a decline in revenues in the Industrial Products segment caused mainly by continued price competition in the fittings & flange business. These decreases were mostly offset by strong results in the Inland Barge and Construction Products segments. Operating profit increased slightly to $76.9 million compared 10 to $74.7 million. Increased operating profits in the Inland Barge and Construction Products segments were partially offset by a decrease in the Industrial Products segment and All Other. Revenues for the Railcar segment decreased 7.4% to $378.8 million from $409.1 million while operating profit decreased 3.5% to $38.9 million from $40.3 million. Lower revenues and operating profit are a result of softened demand in this segment. Margin improvement reflects continued progress on improving operating efficiencies. Revenues for the Inland Barge segment increased 20.5% to $55.3 million from $45.9 million. Operating profit increased 252.4% to $7.4 million from $2.1 million. The improvement in operating profit is due mainly to a change in product mix, increased operating efficiency, and lower material costs. Outside revenues for the Parts & Services segment were $65.7 million compared to $62.6 million, while operating profit decreased 5.6% to $17.0 million from $18.0 million. This decrease in revenues and operating profit is due to the sale of three railcar repair plants, mostly offset by the acquisition of McConway & Torley. Revenues for the Construction Products segment increased 11.1% to $121.8 million from $109.6 million, while operating profit increased 7.7% to $18.1 million from $16.8 million due to increasing government spending on transportation improvements. Industrial Products segment revenues decreased 13.0% to $64.0 million from $73.6 million while operating profit decreased 42.6% to $3.5 million from $6.1 million. The decrease in revenues and operating profit is primarily due to industry conditions in the fittings & flange business and decrease sales of container heads due to the "Asian Crisis". This decrease is partially offset by improved results in LPG operations. Three Months Ended June 30, 1999 Compared to Three Months Ended June 30, 1998 Revenues for the first quarter of fiscal 2000 decreased 2.5% to $693.4 million from $711.5 million due to a decline in revenues in the Industrial Products segment caused mainly by the divestiture of Beaird Industries in June 1998, and a decline in the Inland Barge segment. Operating profits increased 4.5% to $77.4 million compared to $74.1 million. Increased operating profits in the Railcar segment were partially offset by a decline in the Industrial Products segment. Revenues for the Railcar segment increased 3.5% to $382.7 million from $369.8 million while operating profit increased 14.6% to $37.7 million from $32.9 million. Margin improvement reflects the continued progress on improving operating efficiencies. The ongoing replacement cycle for railcars and continued expansion in both Latin America and Europe provide long-term potential for growth and performance from this segment. The Inland Barge segment recorded declines in barge revenues of 20.1% to $51.7 million while operating profit increased 16.7% to $5.6 million. The reduction in revenues is a result of lower volume. The increase in operating profit is due 11 mainly to product mix and cost reductions achieved during the last year. In the barge industry, the fleet replacement cycle and fleet age are important factors and, with nearly one third of the nation's barges more than 20 years old, the long-term outlook for barges continues to be positive. Overall operating results in the Parts & Services segment remained steady as out-side revenues increased slightly from $65.5 million to $71.4 million and operating profit increased slightly from $19.7 million to $21.9 million. Increases in revenues from the acquisition of McConway & Torley, a railcar parts manufacturer, are offset by the sale of certain railcar repair facilities. Revenues for the Construction Products segment decreased 10.4% to $113.3 million from $102.6 million while operating profit increased 3.3% to $15.8 million from $15.3 million. The Company believes that the government's long-term spending commitment and the passage of new highway legislation will lead to increased spending for transportation infrastructure improvements. The Industrial Products segment revenues declined 28.0% to $61.8 million from $85.8 million while operating profit declined 56.8% to $3.2 million from $7.4 million. The decline in revenue is primarily due to the sale of Beaird Industries, Inc. in the quarter ended June 30, 1998. The decline in profit was attributable to the Beaird sale, increased price competition in the fittings and flange business as a result of the "Asian Crisis", and the downturn in the energy sector which has curtailed spending and major maintenance in the petrochemical industry. -----END PRIVACY-ENHANCED MESSAGE-----