-----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, PHbEDIHnsyk3VuoiwrUjeeXenJSBXs5Fw882TvIvFw/M6wQpyEEzmfHEy+CbLI5N e6qmfRRkZEPQjbiEAaEmUw== 0000950124-99-003398.txt : 19990519 0000950124-99-003398.hdr.sgml : 19990519 ACCESSION NUMBER: 0000950124-99-003398 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRIANON INDUSTRIES CORP CENTRAL INDEX KEY: 0001021907 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 133379803 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-11801-01 FILM NUMBER: 99628905 BUSINESS ADDRESS: STREET 1: 24331 SHERWOOD AVENUE STREET 2: PO BOX 3067 CITY: CENTER LINE STATE: MI ZIP: 48015 BUSINESS PHONE: 8107592200 MAIL ADDRESS: STREET 1: PO BOX 3067 CITY: CENTER LINE STATE: MI ZIP: 48015 FORMER COMPANY: FORMER CONFORMED NAME: MS ACQUISITION DATE OF NAME CHANGE: 19960829 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AETNA INDUSTRIES INC CENTRAL INDEX KEY: 0001022657 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 382007550 STATE OF INCORPORATION: VI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-11801 FILM NUMBER: 99628906 BUSINESS ADDRESS: STREET 1: CITIBANK BLDG VETERANS DR STREET 2: P O BOX 305304 CITY: ST THOMAS STATE: VI ZIP: 00803-5304 BUSINESS PHONE: 8107592200 MAIL ADDRESS: STREET 1: 24331 SHERWOOD AVE STREET 2: P O BOX 3067 CITY: CENTER LINE STATE: MI ZIP: 48015 10-Q 1 QUARTERLY REPORT PERIOD ENDED 3/31/99 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1999. OR __TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to _________________ Commission File No. 333-11801-01 Trianon Industries Corp. Commission File No. 333-11801 (Aetna Industries, Inc.) TRIANON INDUSTRIES CORP. (FORMERLY KNOWN AS MS ACQUISITION CORP.) AETNA INDUSTRIES, INC. (Exact name of registrant as specified in its charter) Delaware 13-337-9803/38-200-7550 - ----------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) (Address of principal executive offices) (Zip Code) 1, rue Thomas Edison, Quartier des Chenes 78056 St. Quentin en Yvelines, France 24331 Sherwood Avenue, P.O. Box 3067, Centerline, Michigan 48015-0067 Registrant's telephone number, including area code (33-1) 39-412000 (810) 759-2200 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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No - - As of May 14, 1999, there were 1,000 shares of Aetna Industries, Inc. common stock outstanding and 3,902,498 shares of Trianon Industries Corp. common stock outstanding. 1 2 INDEX
PART I FINANCIAL INFORMATION PAGE Item 1. FINANCIAL STATEMENTS OF TRIANON INDUSTRIES CORP. Condensed Consolidated Balance Sheets - March 31, 1999 and December 31, 1998 3 Consolidated Statements of Operations and Comprehensive Income - three months ended March 31, 1999 and March 31, 1998 4 Condensed Consolidated Statements of Cash Flows - three months ended March 31, 1999 and March 31, 1998 5 Notes to Consolidated Financial Statements 6 FINANCIAL STATEMENTS OF AETNA INDUSTRIES, INC. Condensed Consolidated Balance Sheets - April 2, 1999 and December 31, 1998 11 Consolidated Statements of Operations and Comprehensive Income (Loss) - three months ended April 2, 1999 and March 29, 1998 12 Condensed Consolidated Statements of Cash Flows - three months ended April 2, 1999 and March 29, 1998 13 Notes to Consolidated Financial Statements 14 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 16 Item 3. Qualitative and Quantitative Disclosure About Market Risk 23 Item 4. Submission of Matters to a Vote of Security Holders. 24 PART II OTHER INFORMATION 30 Description of Exhibits 31 Signatures 32 EXHIBIT INDEX
2 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS TRIANON INDUSTRIES CORP. CONDENSED CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS)
MARCH 31, 1999 DECEMBER 31, 1998 -------------- ----------------- (UNAUDITED) ASSETS CURRENT ASSETS: Cash and marketable securities $18,958 $26,092 Accounts receivable (less allowance for doubtful accounts of $1,721 and $1,921 respectively) 174,126 181,375 Inventories 114,709 115,287 Other current assets 10,316 9,801 -------------- ------------ Total current assets 318,109 332,555 -------------- ------------ Property, plant and equipment, net 193,426 203,271 Deferred costs and other assets 24,720 22,969 Goodwill 64,454 65,367 -------------- ------------ TOTAL ASSETS $600,709 $624,162 ============== ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $188,555 $173,517 Accrued expenses 48,639 82,250 Current portion of long term and short term debt (145,441) 157,004 -------------- ------------ Total current liabilities 377,433 412,771 -------------- ------------ Long-term debt, less current portion 182,125 167,477 Deferred income taxes and other long-term liabilities 18,717 19,370 Redeemable preferred stock 42,302 41,157 Series A - $100 stated value; 293,123 shares authorized; 142,424 shares issued and outstanding Series B - $100 stated value; 270,000 shares authorized; 270,000 shares issued and outstanding Stockholders' Equity (Deficit) Class A, common stock - $.01 par value, 12,000,000 shares authorized, 3,902,498 shares issued and outstanding 39 39 Contributed paid-in capital 40,708 40,708 Retained earnings (accumulated deficit) (54,795) (54,910) Accumulated other comprehensive income (loss) (5,820) (2,450) -------------- ------------ TOTAL LIABILITIES, PREFERRED STOCK AND SHAREHOLDER'S EQUITY (DEFICIT) $600,709 $624,162 ============== ============
See accompanying notes to consolidated financial statements. 3 4 TRIANON INDUSTRIES CORP. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (DOLLARS IN THOUSANDS)
THREE MONTHS ENDED ------------------ MARCH 31, MARCH 31, 1999 1998 ---- ---- (UNAUDITED) Net sales $218,157 $136,873 Cost of sales 191,932 120,735 ------------ ----------- Gross profit 26,225 16,138 Selling, general and administrative expenses and research and development expenses 14,673 9,833 ------------ ----------- Operating income (loss) 11,552 6,305 Interest expense, net 7,268 2,170 ------------ ----------- Income (loss) before income taxes 4,284 4,135 Income tax provision (credit) 2,251 1,185 ------------ ----------- Income (loss) before discontinued operations 2,033 2,950 Losses on discontinued operations, net of tax 772 0 ------------ ----------- Net income (loss) before preferred stock dividends 1,261 2,950 Preferred stock dividends 1,146 0 ------------ ----------- Net income available for common stockholders $115 $2,950 ============ =========== Other comprehensive income (loss): Foreign currency translation adjustment (3,370) 6,165 ------------ ----------- Comprehensive income (loss) $ (3,255) $ 9,115 ============ ===========
See accompanying notes to consolidated financial statements 4 5 TRIANON INDUSTRIES CORP. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLARS IN THOUSANDS)
THREE MONTHS ENDED MARCH 31, MARCH 31, 1999 1998 ---- ---- (UNAUDITED) CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ 1,261 $ 2,950 Adjustments to reconcile net income to net cash used for operating activities: Depreciation and amortization 8,879 5,154 Deferred income taxes 411 Other non cash charges 100 753 Changes in other assets and liabilities (8,565) 3,493 ----------- ------------ Net cash provided by (used for) operating activities 1,675 12,761 ----------- ------------ Cash flows from investing activities Additions to property, plant and equipment (7,485) (5,895) Increase in other assets (2) (5) ----------- ------------ Net cash provided by (used for) investing activities (7,487) (5,900) ----------- ------------ Cash flows from financing activities Net decrease in borrowings under line of credit (1,298) (1,138) Repayment of long term debt (9,825) (3,608) Borrowings of long term debt 11,776 -- ----------- ------------ Net cash provided by (used for) financing activities 653 (4,746) ----------- ------------ Exchange Rate Variation (1,975) (548) Net increase (decrease) in cash (7,134) 1,567 Cash - beginning of year 26,092 11,626 ----------- ------------ Cash - end of period $18,958 $ 13,193 =========== ============
See accompanying notes to consolidated financial statements 5 6 TRIANON INDUSTRIES CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS) (UNAUDITED) 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION Effective May 12, 1999, MS Acquisition Corp changed its name to Trianon Industries Corp. Trianon Industries Corp. ("the Company") is the name of the group formed by the combination of the activities of SOFEDIT S.A. and Trianon Industries Corp. Trianon Industries Corp. ("Trianon Industries"), through Aetna Industries Inc. ("Aetna"), its wholly-owned subsidiary, is a leading direct supplier of high quality modules, welded subassemblies and chassis parts used as original equipment components in the North American automobile industry. SOFEDIT S.A., ("Sofedit") a direct and indirect wholly-owned subsidiary of the Company, is a leading direct supplier of welded subassemblies, body in white parts, clutch, brake and accelerator pedal modules, fuel tanks and crossmembers and chassis parts used as original equipment components by manufacturers in the European automobile industry. Trianon Industries and its direct and indirect wholly-owned United States subsidiaries (i.e., Aetna Holdings, Inc., a Delaware corporation ("Aetna Holdings"), Aetna Manufacturing Canada Ltd., a Michigan corporation ("Aetna Canada"), and Aetna Export Sales Corp., a U.S. Virgin Islands corporation ("Export")) have fully and unconditionally guaranteed the 11 7/8% Senior Notes due 2006 issued by Aetna in an aggregate principal amount of $85.0 million (the "Senior Notes"). Separate financial statements or other disclosures relative to Aetna Holdings, Export or Aetna Canada have not been presented as management has determined that such information is not material to investors. On April 14, 1998, Trianon Industries completed a combination with Societe Financiere de Developpement Industriel et Technologique S.A., a French societe anonyme (Sofedit) (the Combination). In connection with the Combination, Sofedit's former stockholders transferred the outstanding capital stock of Sofedit to Trianon Industries in exchange for: (i) promissory notes of Trianon Industries in the principal amount of $40.9 million; (ii) dividends in an amount of approximately $1.0 million; (iii) 270,000 shares of Series B Preferred stock ($27.0 million stated value) of Trianon Industries; (iv) 3.0 million shares of Common Stock of Trianon Industries, and (v) the assumption of approximately $12.0 million of debt of such former stockholders. The Combination has been accounted for as a reverse acquisition because the former owners of Sofedit own approximately 75% of the fully diluted outstanding Common Stock of Trianon Industries as a result of the Combination. For accounting purposes, Sofedit is considered to be the acquirer of, and the predecessor to, Trianon Industries. As a result of the Combination being accounted for as a reverse acquisition, the financial statements included herein for the three month period ended March 31,1998 represent the historical information of Sofedit, as predecessor. The consolidated balance sheet at March 31, 1999 represents the consolidated financial position of Sofedit and Trianon Industries. The accompanying unaudited condensed consolidated financial statements of Trianon Industries have been prepared in accordance with Rule 10-01 of Regulation S-X and do not include all the information and notes required by generally accepted accounting principles for complete financial statements. All adjustments, which include only normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results of the interim periods, have been made. The results of operations for such interim periods are not necessarily indicative of results of operations for a full year. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 1998. The statements of operations and cash flows for the three months ended March 31, 1999 represent the three month financial data of Sofedit plus Trianon Industries. On a pro forma basis, Trianon Industries had net sales of $189.9 million, and pre-tax income of $3.6 million, for the three months ended March 31, 1998. 6 7 TRIANON INDUSTRIES CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS) (UNAUDITED) 2. INVENTORIES Inventories are comprised of the following:
MARCH 31, DECEMBER 31, 1999 1998 ---- ---- Raw materials $ 23,923 $ 27,131 Work-in-process 22,542 31,976 Finished goods 15,980 18,839 Tooling 55,691 40,724 ------------ --------------- Inventories, gross 118,136 118,670 Less valuation allowance (3,427) (3,383) ------------ --------------- Total inventories $114,709 $115,287 ------------ ---------------
Tooling inventory at Sofedit is included in work in process at December 31, 1998 and has been included in tooling at March 31, 1999 3. STOCKHOLDERS' EQUITY (DEFICIT)
ACCUMULATED ADDITIONAL RETAINED OTHER TOTAL CONTRIBUTED PAID IN EARNINGS COMPREHENSIVE STOCKHOLDER'S CAPITAL CAPITAL (DEFICIT) ADJUSTMENT EQUITY (DEFICIT) Balance at December 31, 1998 $39 $40,708 ($54,910) ($2,450) ($16,613) Translation adjustment (3,370) (3,370) Preferred Stock dividends (1,146) (1,146) Net income (loss) 1,261 1,261 ------------- -------------- ------------ ------------------- ----------------- Balance at March 31, 1999 $39 $40,708 $(54,795) ($5,820) $(19,868) ------------- -------------- ------------ ------------------- -----------------
7 8 TRIANON INDUSTRIES CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS) (UNAUDITED) 4. COMBINING FINANCIAL INFORMATION OF TRIANON INDUSTRIES CORP BALANCE SHEET AS OF MARCH 31, 1999
AETNA TRIANON AETNA HOLDINGS INDUSTRIES SOFEDIT ELIMINATIONS TOTAL Total current assets $ 82,720 $ - $ 5,789 $ 254,207 $ (24,607) $ 318,109 Property, plant and equipment, net 70,744 6,552 116,130 193,426 Other long-term assets 32,372 8,247 131,745 21,781 (104,971) 89,174 -------- --------- --------- ---------- ---------- --------- Total assets $185,836 $ 8,247 $ 144,086 $ 392,118 $ (129,578) $ 600,709 ======== ========= ========= ========= ========== ========= Total current liabilities 104,859 (201) 46,114 235,100 (8,439) 377,433 Long-term debt 88,125 17,032 79,922 (12,031) 173,048 Junior subordinated notes 9,077 9,077 Deferred income taxes and other long-term liabilities 5,496 3,478 9,743 18,717 Redeemable preferred stock 42,302 42,302 Class A, common stock - $.01 par value, 12,000,000 shares authorized, 3,902,498 outstanding 39 1,274 (1,274) 39 Additional paid-in capital 14,024 32,151 23,969 (29,436) 40,708 Retained earnings (accumulated deficit) (26,494) (629) 2,970 47,740 (78,382) (54,795) Cumulative translation - adjustment (174) (5,630) (16) (5,820) -------- --------- --------- --------- ---------- --------- Total stockholders equity (deficit) $(12,644) $ (629) $ 35,121 $ 67,079 $ (107,834) $ (19,907) ======== ========= ========= ========== ========== ========= Total liabilities and shareholders equity (deficit) $ 185,836 $ 8,247 $ 144,086 $ 392,118 $ (129,578) $ 600,709 ========= ========= ========= ========= ========== =========
8 9 TRIANON INDUSTRIES CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS) (UNAUDITED) 4. COMBINING FINANCIAL INFORMATION OF TRIANON INDUSTRIES CORP. (CONTINUED) CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31,1999
AETNA TRIANON AETNA HOLDINGS INDUSTRIES SOFEDIT TOTAL Net sales $66,820 $ -- $ -- $151,337 $218,157 Cost of sales 58,704 182 133,046 191,932 ------- ------- -------- -------- -------- Gross profit 8,116 -- (182) 18,291 26,225 Selling, general and administrative expenses 4,560 204 9,499 14,263 Other expenses 411 -- -- (1) 410 ------- ------- -------- -------- -------- Operating income (loss) 3,145 -- (386) 8,793 11,552 Net interest expense 3,815 245 837 2,371 7,268 ------- ------- -------- -------- -------- Income (loss) before income taxes (670) (245) (1,223) 6,422 4,284 Income tax provision (credit) (126) (83) (415) 2,875 2,251 Income (loss) before discontinued operations and preferred stock dividend (544) (162) (808) 3,547 2,033 Discontinued Operations 772 772 Preferred stock dividend -- -- 1,146 -- 1,146 ------- ------- -------- -------- -------- Net income available to common stockholders $ (544) $ (162) $ (1,954) $ 2,775 $ 115 ------- ------- -------- -------- -------- Other comprehensive income (loss): Foreign currency translation adjustment (174) -- -- (3,196) (3,370) ------- ------- -------- -------- -------- Comprehensive income (loss) ($718) ($162) ($1,954) $ (421) $ (3,255) ======= ======= ======== ======== ========
9 10 TRIANON INDUSTRIES CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS) (UNAUDITED) 4. COMBINING FINANCIAL INFORMATION OF TRIANON INDUSTRIES (CONTINUED) CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31,1999
AETNA TRIANON AETNA HOLDINGS INDUSTRIES SOFEDIT ELIM TOTAL CASH FLOWS FROM OPERATING ACTIVITIES: Net cash provided by operating activities $ 6,577 $(432) $ - $(4,470) - $ 1,675 CASH FLOWS FROM INVESTING ACTIVITIES Net cash used for investing activities (704) - (5,000) (6,783) 5,000 (7,487) CASH FLOWS FROM FINANCING ACTIVITIES Net cash provided by financing (7,100) 432 5,000 7,321 (5,000) 653 Net effect of exchange rate 70 (2,045) - (1,975) Net increase in cash (1,157) - - (5,977) - (7,134) Cash - beginning of year 1,185 - - 24,907 - 26,092 Cash - end of period $ 28 $ - $ - $18,930 $ - $18,958
5. SEGMENT INFORMATION The Company operates in one line of business, the design and manufacture of highly engineered metal-formed components, complex modules and mechanical assemblies for automotive OEM's in Europe and North America. The Company manages the business under two segments, Europe and North America. The accounting policy of the reportable segments are the same as those described in the summary of significant accounting policies in the Company's annual report on form 10-K. The Company evaluates performance based on earnings before interest, income taxes, net income of equity investees, minority interests and discontinued operations (EBIT).
MARCH 31, 1999 MARCH 31, 1998 DECEMBER 1998 -------------- -------------- ------------- OPERATING NORTH NORTH NORTH SEGMENTS EUROPE AMERICA TOTAL EUROPE AMERICA TOTAL EUROPE AMERICA TOTAL - --------- ------ ------- ----- ------ -------- ----- ------ ------- ----- Revenues 151,337 $ 66,820 $218,157 $136,873 $ - $136,673 $542,037 $168,809 $710,848 EBIT 8,793 2,759 11,552 6,305 - 6,305 19,255 7,569 26,824 Depreciation and amortization 6,087 2,792 8,879 $ 5,154 - $ 5,154 23,405 8,438 31,843 Total assets $392,118 $208,591 $600,709 $355,602 - $355,602 $408,915 $215,249 $624,164
6. COMMON STOCK AND PREFERRED STOCK As of May 12, 1999 the capital structure of authorized shares of common stock and preferred stock as amended in the Certificate of Amendment of Restated Certification of Incorporation of Trianon Industries Corp are as follows: Common Stock Shares: 20,000,000 Preferred Stock Shares: SERIES A - 405,000 SERIES B - 270,000 New Preferred - 2,000,000 Any dividends accruing on shares of Series A preferred Stock may be paid, in lieu of cash dividends, by the issuance of additional shares of Series A Preferred Stock (including fractional shares) having an aggregate Stated Value at the time of such payment equal to the amount of the dividend to be paid. With respect to the Preferred Stock dividends, such dividends shall be payable semi-annually on the 13th day of February and August of each year, commencing on the date of issuance of such shares with respect to the Series A Preferred Stock and April 14, 1999 with respect to the Series B Preferred Stock (each such date hereinafter referred to as "Dividend Period"), except that if such date is not a Business Day, then such dividend shall be payable to the next succeeding Business Day, to the holders of record as they appear on the register of the Corporation for the Shares. 10 11 AETNA INDUSTRIES, INC. (A WHOLLY-OWNED SUBSIDIARY OF TRIANON INDUSTRIES CORP.) CONDENSED CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS)
APRIL 2, DECEMBER 31, 1999 1998 ---- ---- (UNAUDITED) ASSETS CURRENT ASSETS: Cash $28 $1,185 Accounts receivable (less allowance for doubtful accounts of $424 and $411, respectively) 40,953 38,793 Inventories 47,444 47,764 Other current assets 3,310 3,390 --------------- ------------------ Total current assets 91,735 91,132 --------------- ------------------ Property, plant and equipment, net 70,744 71,922 Deferred costs and other assets 5,393 5,717 Goodwill 23,971 24,172 --------------- ------------------ Total Assets $191,843 $192,943 =============== ================== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $50,971 $48,874 Accrued expenses 9,267 10,896 Current portion of long term and short term debt 44,620 56,720 --------------- ------------------ Total current liabilities 104,858 116,490 --------------- ------------------ Long-term debt, less current portion 94,131 88,125 Deferred income taxes 5,498 5,498 Stockholder's equity (deficit) Common stock - $.01 par value; 1,000 shares issued and outstanding - - Contributed capital 14,024 9,024 Accumulated deficit (26,494) (25,950) Accumulated other comprehensive income (174) (244) --------------- ------------------ Total shareholder equity (12,644) (17,170) --------------- ------------------ Total liabilities and shareholder equity (deficit) $191,843 $192,943 =============== ==================
See accompanying notes to consolidated financial statements. 11 12 AETNA INDUSTRIES, INC. (A WHOLLY-OWNED SUBSIDIARY OF TRIANON INDUSTRIES CORP.) CONSOLIDATED STATEMENTS OF OPERATIONS (DOLLARS IN THOUSANDS)
THREE MONTHS ENDED APRIL 2, MARCH 29, 1999 1998 ---- ---- (UNAUDITED) Net Sales $66,820 $53,085 Cost of Sales 58,704 44,974 ------- ------- Gross Profit (loss) 8,116 8,111 Selling, general and administrative expenses 4,971 4,486 ------- ------- Operating income (loss) 3,145 3,625 Interest expense, net 3,815 2,866 ------- ------- Income (loss) before income taxes (670) 759 Income tax provision (credit) (126) 235 ------- ------- Net income (loss) $ (544) $ 524 ======= ======= Other Comprehensive income (loss): Foreign currency translation adjustment (70) -- ------- ------- Comprehensive income (loss) $ (474) $ 524 ======= =======
See accompanying notes to consolidated financial statements. 12 13 AETNA INDUSTRIES, INC. (A WHOLLY-OWNED SUBSIDIARY OF TRIANON INDUSTRIES CORP.) CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLARS IN THOUSANDS)
THREE MONTHS ENDED APRIL 2, MARCH 29, 1999 1998 ---- ---- (UNAUDITED) CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) (544) 524 Adjustments to reconcile net income to net cash used for operating activities: Depreciation and amortization 2,406 1,941 Deferred income taxes - - Changes in other assets and liabilities 4,715 (4,285) -------------- -------------- Net cash used for operating activities 6,577 (1,820) Cash flows from investing activities Increase in other assets (704) (3,214) -------------- -------------- Net cash used for investing activities (704) (3,214) Cash flows from financing activities - - Net (decrease) increase in borrowings under line of credit (12,100) 5,275 Capital Contribution 5,000 -------------- -------------- Net cash provided by financing activities (7,100) 5,275 -------------- -------------- Exchange Rate Variation 70 - Net increase (decrease) in cash (1,157) 241 Cash - beginning of year 1,185 23 -------------- -------------- Cash - end of period $ 28 $ 264 ============== ==============
See accompanying notes to consolidated financial statements. 13 14 AETNA INDUSTRIES, INC. (A WHOLLY-OWNED SUBSIDIARY OF TRIANON INDUSTRIES CORP.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS) (UNAUDITED) 1. BASIS OF PRESENTATION Aetna Industries, Inc. ("Aetna") is a wholly-owned indirect subsidiary of Trianon Industries Corp. ("Trianon Industries") and is a wholly-owned direct subsidiary of Aetna Holdings, Inc. ("Aetna Holdings") and has two wholly-owned subsidiaries Aetna Export Sales Corp. ("Export") and Aetna Manufacturing Canada Ltd ("Aetna Canada"). Trianon Industries is a holding company that was formed for the sole purpose of purchasing Aetna and does not have any significant operations, other than its investments in its subsidiaries assets or liabilities, preferred stock and junior subordinated debentures. Trianon Industries, Holdings, Export and Canada have fully and unconditionally guaranteed the 11 7/8% Senior Notes due 2006 issued by Aetna in an aggregate principal amount of $85,000,000 (the "Senior Notes"). Separate financial statements or other disclosures relative to Aetna Holdings, Export or Aetna Canada have not been presented as management has determined that such information is not material to investors. On April 14, 1998, Aetna's parent, Trianon Industries Corp. (Trianon Industries) completed a combination with Societe Financiere de Developpement Industriel et Technologique S.A., a French societe anonyme (Sofedit) (the Combination). In connection with the Combination, Sofedit's former stockholders transferred the outstanding capital stock of Sofedit to Trianon Industries in exchange for: (i) promissory notes of Trianon Industries in the principal amount of $40.9 million; (ii) dividends in an amount of approximately $1.0 million; (iii) 270,000 shares of Series B Preferred stock ($27.0 million stated value) of Trianon Industries; (iv) 3.0 million shares of Common Stock of Trianon Industries, and (v) the assumption of approximately $12.0 million of debt of such former stockholders. The Combination has been accounted for as a reverse acquisition because the former owners of Sofedit own approximately 75% of the fully diluted outstanding Common Stock of Trianon Industries as a result of the Combination. For accounting purposes, Sofedit is considered to be the acquirer of, and the predecessor to, Trianon Industries. The accompanying unaudited condensed consolidated financial statements of Aetna have been prepared in accordance with Rule 10-01 of Regulation S-X and do not include all the information and notes required by generally accepted accounting principles for complete financial statements. All adjustments, which include only normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results of the interim periods, have been made. The results of operations for such interim periods are not necessarily indicative of results of operations for a full year. The unaudited condensed consolidated financial statements should be read in conjunction with Aetna's consolidated financial statements and notes thereto for the year ended December 31, 1998. 14 15 AETNA INDUSTRIES, INC. (A WHOLLY-OWNED SUBSIDIARY OF TRIANON INDUSTRIES CORP.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS) (UNAUDITED) 2. INVENTORIES Inventories are comprised of the following:
MARCH 31, DECEMBER 31, 1999 1998 ------------ ------------ Raw materials $ 1,048 $ 881 Work-in-process 2,668 2,333 Finished goods 1,441 1,670 Tooling 39,463 40,724 ------------ ------------ Inventories valued at FIFO 44,620 45,608 LIFO Reserve (200) (200) ------------ ------------ 46,420 45,408 Purchased parts and purchased labor 3,024 2,356 ------------ ------------ Total inventories $ 47,444 $ 47,764 ============ ============
3. STOCKHOLDER'S EQUITY (DEFICIT)
CUMULATIVE TOTAL CONTRIBUTED ACCUMULATED TRANSLATION STOCKHOLDER'S CAPITAL DEFICIT ADJUSTMENT EQUITY (DEFICIT) Balance at December 31,1998 $ 9,024 $ (25,950) $ (244) $ (17,170) Translation adjustment - - 70 70 Capital Contribution 5,000 5,000 Net loss (544) - (544) ----------- -------------- ----------- --------------- Balance at March 31, 1999 $ 14,024 $ (26,494) $ (174) $ (12,644) ----------- -------------- ----------- ---------------
15 16 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS TRIANON INDUSTRIES RESULTS OF OPERATIONS On April 14, 1998, Trianon Industries completed a combination with Societe Financiere de Developpement Industriel et Technologique S.A., a French societe anonyme (Sofedit) (the Combination). In connection with the Combination, Sofedit's former stockholders transferred the outstanding capital stock of Sofedit to Trianon Industries in exchange for: (i) promissory notes of Trianon Industries in the principal amount of $40.9 million; (ii) dividends in an amount of approximately $1.0 million; (iii) 270,000 shares of Series B Preferred stock ($27.0 million stated value) of Trianon Industries; (iv) 3.0 million shares of Common Stock of Trianon Industries, and (v) the assumption of approximately $12.0 million of debt of such former stockholders. The Combination has been accounted for as a reverse acquisition because the former owners of Sofedit own approximately 75% of the fully diluted outstanding Common Stock of Trianon Industries as a result of the Combination. For accounting purposes, Sofedit is considered to be the acquirer of, and predecessor of Trianon Industries. As a result of the Combination being accounted for as a reverse acquisition, the statements of operations and cash flows included herein for the three month period ended March 31, 1998 represent the historical information of Sofedit, as predecessor. The consolidated balance sheet at March 31, 1999 and December 31, 1998 represents the consolidated financial position of Sofedit and Trianon Industries. The statements of operations and cash flows for the three months ended March 31, 1999 represent the consolidated three month financial data of Sofedit and Trianon Industries. The following table sets forth, for the periods indicated, Trianon Industries's statement of operations expressed as a percentage of net sales for three months ended March 31, 1999 and proforma statement of operations for the three months ended March 31, 1998. This table and subsequent discussions should be read in conjunction with the condensed consolidated financial statements and related notes thereto of Trianon Industries included elsewhere herein. 16 17 AS A PERCENTAGE OF NET SALES
THREE MONTHS ENDED MARCH 31, MARCH 31, 1999 1998 ---- ---- Net sales 100.0% 100.0% Cost of sales 88.0% 87.3% ------------- ------------- Gross profit 12.0% 12.7% Selling, general and administrative expenses 6.8% 7.6% ------------- ------------- Operating income (loss) 5.2% 5.1% Interest expense, net 3.3% 3.2% ------------- ------------- Income (loss) before income taxes 1.9% 1.9% ------------- ------------- Income tax provision (credit) 1.0% 0.4% Net income 0.0% 1.0% ============= =============
THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998 NET SALES: Net sales were $218.1 million, up 14.8 % from the $189.9 million for the three months ended March 31, 1999. Net sales in North America was 25.9% higher in the first three months in 1999 than 1998. Net sales in Europe were up 10.5% in the first quarter 1999 from 1998, or 6.0% excluding the effects of foreign exchange. The increase in European sales was due to both a general growth in the car market and to the launch of the Renault Clio II, Peugeot 20, and the Mercedes Class S in 1998 which reach full production in 1999. GROSS PROFIT: Gross profit was $26.2 million, or 12.0% of net sales, for the three months ended March 31, 1999 compared to $24.1 million, or 12.7% of net sales, for the same period in 1998. In North America, gross profit was $8.1 million for three months ended 1999 and 1998. In Europe, gross profit reached $18.3 million or 12.1% of net sales, versus $16.1 million or 11.8% of net sales in 1998. The increase in European gross margin is mainly due to reducing launch and project costs and to the first effect of cost saving plan implemented at several production facilities. SELLING, GENERAL AND ADMINISTRATIVE ("SG&A") EXPENSES: SG&A expenses for the three months ended March 31,1999 were $14.7 million, or 6.8 % of net sales, compared to $14.5 million, or 7.6% of net sales, for the same period in 1998. Increased costs were due to increased project team activity and the reinforcement of the current management structure. INTEREST EXPENSE: Interest expense for the three months ended March 31, 1999 was $7.3 million, or 3.3% of net sales, compared to $6.1 million, or 3.2% of net sales in the same period in the prior 17 18 year. The increase in interest expense is due principally to a sharp increase in tooling inventory relating to two major projects in North America. In Europe, interest expense was $2.4 million or 1.6% of sales, versus $2.2 million for the same period in 1998. Excluding the effect of exchange rate fluctuations, interest expense in Europe raised by 4.7%. The increase is mainly due to a $7.3 million increase in medium and short term debt. INCOME TAXES: The income tax for the three months ended March 31, 1999 was $2.3 million with an effective tax rate of 52.5% as compared to a provision of $1.0 million with an effective tax rate of 28.5% for the same period in the prior year. The change in the effective tax rate is mainly due to loss incurred in North America and to reduced research and development tax credit in France. LIQUIDITY AND CAPITAL RESOURCES Trianon Industries's primary sources of liquidity are cash generated from operations and short-term and long-term debt, including the sale of receivables. Trianon Industries's principal use for these funds is to finance working capital needs, debt payments and planned maintenance and expansion activities. The Company's liquidity is affected by both the cyclical nature of its business and its level of net sales. The Company believes that operating cash flow and its line of bank credit will be sufficient to cover its short-term and long-term capital expenditures and debt payment obligations. Nevertheless, Trianon Industries's ability to meet these liquidity demands will depend upon future operating performance, which will be affected by prevailing economic conditions and financial, business and other factors, certain of which are beyond Trianon Industries's control. FINANCIAL CONDITION At March 31, 1999, Trianon Industries had available cash, cash equivalents and marketable securities totaling $19.0 million, compared to $26.1 million at December 31, 1998. At March 31, 1999, Trianon Industries had current assets of $318.1 million, compared to $377.4 million in current liabilities, giving it negative working capital of $59.3 million, compared to $80.2 million at December 31, 1998. At March 31, 1999, Trianon Industries had $16.5 million available under its Amended and Restated Credit Agreement among Aetna, Trianon Industries, Aetna Holdings, Aetna Export Sales Co., Aetna Canada and NBD Bank (the "Senior Revolving Credit Facility"). Restricted cash of $10.7 million at March 31, 1999 represents cash held by Sofedit in a mutual fund until June 1999 to warranty an additional line of credit for Aetna Industries. On March 31, 1999, short-term debt consisted of $13.0 million of bank overdraft, $56.7 million of line of credit, $30.9 million bank borrowing, promissory notes of $40.9 million. Long-term debt consisted of Senior notes of $85.0 million, long-term bank loans of $60.5 million, leasing contracts of $27.5 million and junior debt of $9.1 million. CASH FLOWS Net cash provided by operating activities was $1.6 million compared to $10.9 million in the same period of the prior year. The principal reason for the decrease in cash provided by operating activities is attributable to lower net income, tooling inventory increases, partially offset by increased depreciation and amortization. Net cash used for investing activities was $7.5 million and $9.0 million for the three months ended March 31, 1999 and 1998, respectively. The change was due principally to decreased capital expenditures in North America. Capital expenditures in Europe reached $6.8 million for the three months ended March 31, 1999, compared to $5.9 million for the same period in 1998. 18 19 Net cash provided by financing was $0.7 million compared to cash provided of $0.5 million for the three months ended March 31, 1999 and 1998 respectively. This change was principally due to an increase in medium term loans in Europe in 1999. EUROPEAN MONETARY UNION Since substantial portions of Trianon Industries's activities are carried out in Europe, Trianon Industries is actively preparing for the introduction of a single European currency. After January 1, 1999, Trianon Industries will be required, upon the request of any party with which it transacts to use the euro as a currency of payment in its European commercial activities in certain financial transactions and in dealings with administrative bodies. On the basis of currently available information, Trianon Industries does not expect that expenses to be incurred in connection with the introduction of the euro as a currency of payment for Trianon Industries will have a material adverse effect on the results of operations or financial position of Trianon Industries. YEAR 2000 Trianon Industries has conducted a review of its computer systems to identity those areas that may not be Year 2000 compliant and is developing a plan to resolve the issue. Trianon Industries believes that by modifying existing software and obtaining new releases of licensed software, the Year 2000 transition can be carried out without significant operational expenses or significant investments in computer systems improvements. On the basis of currently available information, Trianon Industries does not expect that expenses be incurred in connection with the continuing identification of systems which are not Year 2000 compliant and with their replacement or upgrade will have a material adverse impact on the results of operations or financial position of Trianon Industries. There can be, however, no assurances of the absence of any disruptions in Trianon Industries's own systems or those of its customers and suppliers. Trianon Industries considers that sufficient resources have been dedicated to address these issues in a timely manner. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS In June, 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133 ("SFAS 133"), "Accounting for Derivative Instruments and Hedging Activities". SFAS 133 addresses the accounting for derivative instruments. This statement is not expected to have a material effect on Trianon Industries's financial position or results of operations. In April 1998, the Accounting Standards Executive Committee issued Statement of Position 98-5 ("SOP") 98-5), "Reporting on the Costs of Start-up Activities. This statement prescribes accounting treatment for start-up activities and is effective for fiscal years beginning after December 15, 1998. The adoption of this statement did not have a material effect on Trianon Industries's financial position or result of operations. 19 20 FUTURE OPERATING RESULTS With the exception of historical matters, the matters discussed in this Quarterly Report on Form 10-Q are forward-looking statements that involve risks and uncertainties, including, but not limited to, factors related to the highly competitive nature of the automotive supplier industry and its sensitivity to changes in general economic conditions, the results of financing efforts and other factors discussed in Aetna's or Trianon Industries's filings with the Securities and Exchange Commission. Such factors could cause Trianon Industries's actual results during the remainder of 1999 and beyond to differ materially from those expressed in any forward-looking statement made by or on behalf of Aetna or Trianon Industries. There can be no assurance that additional sources of financing will not be required during the next twelve months as a result of unanticipated cash demands or opportunities for expansion or acquisition, changes in growth strategy or adverse operating results. There can be no assurance that any additional funds required, whether within the next twelve months or thereafter, will be available to Aetna or Trianon Industries on satisfactory terms. AETNA RESULTS OF OPERATIONS The following table sets forth, for the periods indicated, Aetna's statement of operations expressed as a percentage of net sales. This table and subsequent discussions should be read in conjunction with the condensed consolidated financial statements and related notes thereto of Aetna included elsewhere herein. 20 21 AS A PERCENTAGE OF NET SALES THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998
THREE MONTHS ENDED MARCH 31, MARCH 31, 1999 1998 ---- ---- Net sales 100.0% 100.0% Cost of sales 87.9% 84.7% ------------- ------------- Gross profit 12.1% 15.3% Selling, general and administrative expenses 7.4% 8.5% ------------- ------------- Operating income (loss) 4.7% 6.8% Interest expense, net 5.7% 5.4% ------------- ------------- Income (loss) before income taxes (1.0%) 1.4% ------------- ------------- Income tax provision (credit) (0.2%) 0.4% Net loss (0.8%) 1.0% ============= =============
NET SALES: Net sales for the first quarter of 1999 were $66.8 million, or 25.9% higher than first quarter 1998 sales of $53.1 million. Production sales of $58.8 million in the first quarter of 1999 were up $6.3 million from $52.5 million in the first quarter of 1998, due to Daimler Chrysler Jeep Grand Cherokee and the Cami Grand Vitara. Tooling and prototype sales were up $ 7.7 million for the same period. GROSS PROFIT: Gross profit was 8.1 million, or 12.1% of net sales, for the first quarter of 1999 compared to $ 8.1 million, or 15.3 % of net sales, for the same period in 1998. The decrease in gross profit was primarily the result of higher tooling sales with little or no associated margin and the loss of higher margin products such as Daimler Chrysler's mini-van. SELLING, GENERAL AND ADMINISTRATIVE ("SG&A") EXPENSES: SG&A expenses for the first quarter of 1999 were $5.0 million, or 7.4% of net sales, compared to $ 4.5 million, or 8.5% of net sales, for the same period in 1998. As a percent of net sales, the decrease was a result of launch expense that is no longer being incurred. INTEREST EXPENSE: Interest expense for the first quarter of 1999 was $3.8 million, or 5.7% of net sales, compared to $2.9 million or 5.4% of net sales for the same period in 1998. Interest expense was impacted by higher levels of short-term debt used to finance the launch of the Saturn and WJ programs, and other working platform capital requirements. INCOME TAXES: The income tax credit in the first quarter of 1999 was $0.1 million as compared to income tax of $ 0.2 million for the same period in 1998. 21 22 LIQUIDITY AND CAPITAL RESOURCES Aetna's principal capital requirements are to fund working capital needs, to meet required debt payments and to complete planned maintenance and expansion expenditures. At March 31, 1999 there was $16.5 million available under the Senior Revolving Credit Facility. Management currently anticipates that its operating cash flow, together with available borrowings under the Senior Revolving Credit Facility, will be sufficient to meet working capital requirements, capital expenditure requirements, and interest requirements on debt obligations. The terms of the indenture pursuant to which the Senior Notes were issued contains certain restrictive covenants which include restrictions on the ability of Aetna, Aetna Canada and Export from paying dividends or making certain other payments to Aetna Holdings or Trianon Industries. CASH FLOWS Net cash flows provided by (used for) operations for the three months ended March 31, 1999 aggregated $6.6 million. This compares to net cash used for operations of $ 1.8 million for the same period in 1998. The increase is due primarily to decrease in tooling inventory and increased depreciation and amortization expenses. Net cash flows provided by (used for) investing activities aggregated $0.7 million for the three months ended March 31, 1999 as compared to $3.2 million for the same period in 1998 and consists principally of capital expenditures. The major capital projects during 1999 have been the purchase of robots for the Saturn Innovate launch, equipment to support Aetna's development lab for 3 dimensional remote welding, and the purchase and installation of robots to support increased volume requirements for the GM rear suspension assembley. Net cash flows provided by (used for) financing aggregated $7.1 million for the three months ended March 31, 1999 as compared to $5.3 million for the same period in the prior year and in both cases represented increases in the Senior Revolving Credit Facility. Item 4. Submission of Matters to a Vote of Security Holders Pursuant to a Consent in Lieu of Special Meeting of the Stockholders of Trianon which was distributed to its stockholders on December 17, 1998, the Board of Directors proposed an amendment to Tiranon's Restated Certificate of Incorporation to (i) change the name of the corporation from MS Acquisition Corp. to Trianon Industries Corp., (ii) increase the number of authorized shares of Trianon's Series A Preferred Stock from 293,123 shares to 405,000 shares and (iii) provide Trianon's Board of Directors the election to pay dividends accruing on shares of Series A Preferred Stock, in lieu of cash dividends, in additional shares of Series A Preffered Stock. The amendment is attached to this Quarterly Report on Form 10-Q as exhibit 3(i). The proposal was adopted by the votes indicated (which constituted the affirmative vote of more than one-half of the shares voting for each class and series of stock).
Common Stock Preferred Stock ------------------------------------- ------------------------ Series A-1 Series A-2 Series A-3 Series A Series B ---------- ---------- ---------- -------- -------- For the Proposal: 1,391,193 1,235,507 885,213 112,760.18 235,169 Against the Proposal: 0 0 0 0 0 Abstaining: 282,525 90,775 17,285 2,207.20 34,831
22 23 ITEM 5. DISCLOSURE OF QUANTITATIVE AND QUALITATIVE INFORMATION ABOUT MARKET RISKS The financial condition and results of operations of the Company's operating entities are reported in various foreign currencies (principally Euro and British pounds sterling) and then translated into U.S. dollars at the applicable exchange rate for inclusion in the Company's financial statements. As a result, an appreciation of the dollar against these foreign currencies will have a negative impact on the reported sales and operating profit of the Company. Conversely, depreciation of the dollar against these foreign currencies will have a positive impact. In addition, the Company incurs currency transaction risk whenever it or one of its subsidiaries enters into either a purchase or sale transaction using a different currency than the relevant entity's functional currency. However, the nature of the Company's business results in the Company generally matching revenues and expenses of the same currency. Therefore, the Company does not currently use financial instruments to limit its exposure to foreign transaction exposure risk. The Company does not currently use financial instruments to limit its exposure to interest rate variations. The portion of the company's outstanding debt obligations tied to variable interest rates totals $125.9 million as of December 31, 1998. 23 24 PART II. OTHER INFORMATION ITEM 1. NOT APPLICABLE ITEM 2. NOT APPLICABLE ITEM 3. NOT APPLICABLE ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ITEM 5. NOT APPLICABLE ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 24 25 EXHIBIT NO. DESCRIPTION OF EXHIBITS 3.1(i) Amendment to Trianon Industries Corp. Restated Certificate of Incorporation filed with the Delaware Secretary of State on May 12, 1999. 4.1 Fifth Amendment to Credit Agreement dated as of February 12, 1999, by and among Aetna Industries, Inc., the Guarantors party thereto, the lenders, NBD Bank as the agent. 27.1 Financial Data Schedule for Aetna Industries, Inc. (EDGAR Filing Only) 27.2 Financial Data Schedule for Trianon Industries Corp. (EDGAR Filing Only) (b) Reports on Form 8-K None 30 26 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized. The signatory hereby acknowledges and adopts the typed form of his name in the electronic filing of this document with the Securities and Exchange Commission. Aetna Industries, Inc. Date: May 14, 1999 By: s/ Harold A. Brown ------------------- Harold A. Brown Secretary, Vice President, Finance and Chief Financial Officer Trianon Industries Corp. Date: May 14, 1999 By: s/ Harold A. Brown ------------------- Harold A. Brown Secretary, Vice President North America 31 27 EXHIBIT INDEX Exhibit No. Description of Exhibits - ----------- ----------------------- 3.1(i) Amendment to Trianon Industries Corp. Restated Certificate of Incorporation filed with the Delaware Secretary of State on May 12, 1999. 4.1 Fifth Amendment to Credit Agreement dated as of February 12, 1999, by and among Aetna Industries, Inc., the Guarantors party thereto, the lenders, NBD Bank as the agent. 27.1 Financial Data Schedule for Aetna Industries, Inc. 27.2 Financial Data Schedule for Trianon Industries Corp. 32 EX-3.(I) 2 AMENDMENT TO RELATED CERT. 1 EXHIBIT 3(I) MS ACQUSITION CORP. AMENDMENTS TO RESTATED CERTIFICATE OF INCORPORATION 1. Article FIRST of the Restated Certificate of Incorporation is amended to read in its entirety as follows: "The name of the corporation is Trianon Industries Corp. (hereinafter the "Corporation")." 2. The first sentence of Article FOURTH of the Restated Certificate of Incorporation is amended to read in its entirety as follows: "The total number of shares of capital stock which the Corporation shall have authority to issue is 22,675,000 shares, consisting of 20,000,000 shares of Common Stock, par value $.01 per share (the "Common Stock"); and 2,675,000 shares of Preferred Stock, par value $.01 per share (the "Preferred Stock")." 3. The fifth sentence of Article FOURTH of the Restated Certificate of Incorporation is amended to read in its entirety as follows: "The Preferred Stock will consist of: (a) 405,000 shares of a class of Preferred Stock constituting Series A Preferred Stock, par value $.01 per share (the "Series A Preferred Stock"); (b) 270,000 shares of a class of Preferred Stock constituting Series B Preferred Stock, par value $.01 per share (the "Series B Preferred Stock"); and (c) 2,000,000 shares of a class of Preferred Stock constituting New Preferred Stock, par value $.01 per share, in one or more series, the terms of which may be set forth by resolution of the Board of Directors, as provided by Section 1(b) of Part III of Article FOURTH (the "New Preferred Stock")." 4. The second sentence of Section 1(a) of Part III of ARTICLE FOURTH of the Restated Certificate of Incorporation is amended to read in its entirety as follows: "The Corporation is authorized to issue a class of Preferred Stock designated as "Series A Preferred Stock" consisting of 405,000 shares and a class of Preferred Stock designated as "Series B Preferred Stock" consisting of 270,000 shares." 2 5. The following sentence is added to Section 1(d) of Part III of ARTICLE FOURTH of the Restated Certificate of Incorporation as the fourth sentence thereof: "Notwithstanding the foregoing, the Corporation may pay dividends on the Series A Preferred, in lieu of cash dividends thereon, by the issuance of additional shares of Series A Preferred Stock pursuant to Section 2 of this Part III." 6. Section 2 of Part III of ARTICLE FOURTH of the Restated Certificate of Incorporation is amended to read in its entirety as follows: "Dividends. (a) When, as and if declared by the Board of Directors, to the extent funds are legally available therefor, dividends will be payable on each Share, in cash, as provided herein. Dividends on the Shares will be payable at a rate per annum equal to eleven percent (11%) of the Stated Value thereof (the "Dividend Rate"). Such dividends shall be payable semi-annually on the 13th day of February and August of each year, commencing on February 13, 1997 with respect to the Series A Preferred Stock and on the first 13th day of February or August to occur subsequent to the Series B Accrual Date with respect to the Series B Preferred Stock (each such date hereinafter referred to as a "Dividend Payment Date" and each such dividend period hereinafter referred to as a "Dividend Period"), except that if such date is not a Business Day, then such dividend shall be payable on the next succeeding Business Day, to the holders of record as they appear on the register of the Corporation for the Shares. (b) In the sole discretion of the Board of Directors, any dividends accruing on shares of Series A Preferred Stock may be paid, in lieu of cash dividends, by the issuance of additional shares of Series A Preferred Stock (including fractional shares) having an aggregate Stated Value at the time of such payment equal to the amount of the dividend to be paid (a "PIK Dividend Payment"); provided that if the Corporation pays less than the total amount of dividends then accrued on the Series A Preferred Stock in the form of additional shares of Series A Preferred Stock, such payment in shares shall be made pro rata to the holders of Series A Preferred Stock based upon the aggregate accrued but unpaid dividends on the shares of Series A Preferred Stock held by such holder." 7. The first sentence of Section 3(b) of Part III of ARTICLE FOURTH of the Restated Certificate of Incorporation is amended to read in its entirety as follows: "To the extent not paid on any Dividend Payment Date, all dividends which have accrued on any Shares then outstanding during the period from and including the preceding Dividend Payment Date (or from and including the Date of Issuance or 2 3 the Series B Accrual Date, as the case may be, for such Shares in the case of the initial Dividend Payment Date for such Shares) to (but excluding) such Dividend Payment Date shall be added on such Dividend Payment Date to the Preferred Liquidation Value of such Shares (so that, without limitation, dividends shall thereafter accrue in respect of the amount of such accrued but unpaid dividends) and shall remain a part thereof until (but only until) such dividends are paid including payment pursuant to a PIK Dividend Payment." 8. Section 3(c) of Part III of ARTICLE FOURTH of the Restated Certificate of Incorporation is amended to read in its entirety as follows: "Priority for Shares. For so long as any Shares shall be outstanding, no dividend or distribution, whether in cash, stock or other property, shall be paid, declared and set apart for payment or made on any date on or in respect to the Common Stock, or any other class or series of stock of the Corporation ranking junior to the Shares (together with the Common Stock, a "Junior Stock") as to dividends or distributions of assets upon liquidation, dissolution or winding-up, and no payment on account of the redemption, purchase or other acquisition or retirement for value by the Corporation of shares of Common Stock or any other Junior Stock shall be made on any date unless, in each case, the full amount of unpaid dividends accrued on all outstanding Shares shall have been paid or contemporaneously are declared and paid and all Shares issued as a PIK Dividend Payment are redeemed by the Corporation pursuant to Section 4 of Part III; provided, however, that the foregoing provisions of this sentence shall not prohibit (i) a dividend payable solely in shares of Common Stock or any other Junior Stock, (ii) the acquisition of any shares of any Common Stock or any other Junior Stock upon conversion or exchange thereof into or for any shares of any other class of Common Stock or other Junior Stock or (iii) the acquisition of any shares of Common Stock pursuant to the Stockholders Agreement." 9. The second sentence of Section 4(a) of Part III of ARTICLE FOURTH of the Restated Certificate of Incorporation is amended to read in its entirety as follows: "On any Business Day, the Corporation, at its option, may redeem at the Redemption Price therefor all of the issued and outstanding Shares issued as a PIK Dividend Payment and on any Business Day prior to February 13, 2007, the Corporation, at its option, may redeem at the Redemption Price therefor all of the issued and outstanding Shares." 3 EX-4.1 3 5TH AMENDMENT TO CREDIT AGREEMENT 1 Exhibit 4.1 FIFTH AMENDMENT TO CREDIT AGREEMENT THIS FIFTH AMENDMENT TO CREDIT AGREEMENT, dated as of February 12, 1999 (this "Amendment"), is among AETNA INDUSTRIES, INC., a Delaware corporation (the "Company"), the guarantors set forth on the signature pages hereof (collectively, the "Guarantors"), the Lenders set forth on the signature pages hereof (collectively, the "Lenders") and NBD BANK, a Michigan banking corporation, as agent for the Lenders (in such capacity, the "Agent"). RECITALS A. The Company, the Guarantors, the Agent and the Lenders are parties to an Amended and Restated Credit Agreement dated as of April 10, 1998 (as now and hereafter amended, the "Credit Agreement"). B. The Company and the Guarantors desire to amend the Credit Agreement, and the Agent and the Lenders are willing to do so in accordance with the terms hereof. TERMS In consideration of the premises and of the mutual agreements herein contained, the parties agree as follows: ARTICLE I. AMENDMENTS. Upon fulfillment of the conditions set forth in Article III hereof, the Credit Agreement shall be amended as follows: 1.1 Each reference in (a) the definition of Borrowing Base in Section 1.1 and (b) Section 2.11 to "February 15, 1999" shall be deleted and "15 days prior to the expiration or termination of the SOFEDIT Letter of Credit" shall be substituted in each place thereof. 1.2 Section 5.2(b) is restated as follows: (b) Fixed Charge Coverage Ratio. Permit or suffer the Fixed Charge Coverage Ratio to be less than: (i) 1.00:1.00 from and including the Effective Date through and including July 30, 1998; (ii) 0.75:1.00 from and including July 31, 1998 through and including August 30, 1998; (iii) 0.55:1.00 from and including August 31, 1998 through and including December 30, 1998; (iv) 0.60:1.00 from and including December 31, 1998 through and including May 30, 1999; (v) 0.75:1.00 from and including May 31, 1999 through and including June 29, 1999; (vi) 1.10:1.00 from and including June 30, 1999 through and including September 29, 1999; (vii) 1.30:1.00 from and including September 30, 1999 through and including December 30, 1999; and (viii) 1.60:1.00 at any time thereafter. 1.3 Section 5.2(c) is restated as follows: (c) Senior Secured Funded Debt Ratio. Permit or suffer the Senior Secured Funded Debt Ratio of the Company and Subsidiaries to exceed at any time: (i) 3.00:1.00 from and including the Effective Date through and including July 30, 1998; (ii) 4.50:1.00 from 25 2 and including July 31, 1998 through and including August 30, 1998; (iii) 5.25:1.00 from and including August 31, 1998 through and including September 29, 1998; (iv) 9.00:1.00 from and including September 30, 1998 through and including October 30, 1998; (v) 8.50:1.00 from and including October 31, 1998 through and including December 30, 1998; (vi) 9.00:1.00 from and including December 31, 1998 through and including February 27, 1999; (vii) 7.50:1.00 from and including February 28, 1999 through and including June 29, 1999; (viii) 5.00:1.00 from and including June 30, 1999 through and including July 30, 1999; (ix) 3.50 :1.00 from and including July 31, 1999 through and including August 30, 1999; (x) 2.00:1.00 at any time thereafter. ARTICLE II. REPRESENTATIONS. The Company and each Guarantor represent and warrant to the Agent and the Lenders that: 2.1 The execution, delivery and performance of this Amendment is within its powers, has been duly authorized and is not in contravention of any statute, law or regulation known to it or of any terms of its Articles of Incorporation or By-laws, or of any material agreement or undertaking to which it is a party or by which it is bound. 2.2 This Amendment is the legal, valid and binding obligation of the Company and each Guarantor enforceable against each in accordance with the terms hereof. 2.3 After giving effect to the amendments contained herein, the representations and warranties contained in Article IV of the Credit Agreement are true on and as of the date hereof with the same force and effect as if made on and as of the date hereof. 2.4 After giving effect to the amendments contained herein, no Event of Default or Default exists or has occurred and is continuing on the date hereof. Without limiting the foregoing, no event of default or event or condition which may become an event of default under the Senior Note Documents has occurred or will be caused by this Amendment or any of the transactions contemplated hereby. ARTICLE III. CONDITIONS OF EFFECTIVENESS. This Amendment shall not become effective until each of the following conditions is satisfied: 3.1 The Company, the Guarantors and the Required Lenders shall have signed this Amendment. 3.2 The Company and the Guarantors shall have delivered such resolutions, officer's certificates and legal opinions as the Agent may reasonably request. 3.3 The Company shall have delivered to the Agent such other documents and satisfied such other conditions, if any, as reasonably requested by the Agent. ARTICLE IV. MISCELLANEOUS. 4.1 The Company has informed the Lenders and the Agent that Events of Default have occurred due to a breach of Sections 5.2(b) and 5.2(c) (the "Existing Defaults"), and 26 3 the Company has requested that the Lenders and the Agent waive the Existing Defaults subject to this Amendment becoming effective pursuant to Article III hereof and the terms and conditions set forth herein. Pursuant to such request, the Lenders and the Agent hereby waive the Existing Defaults for the period prior to the effectiveness of this Amendment. The Company acknowledges and agrees that the waiver contained herein is a limited waiver, limited to the specific one time waiver described above. Such limited waiver (a) shall not modify or waive any other term, covenant or agreement of the Loan Documents, and (b) shall not be deemed to have prejudiced any present or future right or rights which the Agent or the Lenders now have or may have under the Loan documents. Without limiting the foregoing, it is acknowledged and agreed that any breach of Sections 5.2(b) or (c) is not waived at any time after the date hereof. 4.2 References in the Credit Agreement or in any other Loan Document to the Credit Agreement shall be deemed to be references to the Credit Agreement as amended hereby and as further amended from time to time. 4.3 The Company agrees to pay and to save the Agent harmless for the payment of all reasonable documented costs and expenses arising in connection with this Amendment, including the reasonable documented fees of counsel to the Agent in connection with preparing this Amendment and the related documents. 4.4 The Company and each Guarantor acknowledge and agree that, to the best of their knowledge, the Agent and the Lenders have fully performed all of their obligations under all documents executed in connection with the Credit Agreement. The Company and each Guarantor represent and warrant that they are not aware of any claims or causes of action against the Agent or any Lender. 4.5 Except as expressly amended hereby, the Company and each Guarantor agree that the Credit Agreement, the Notes, the Security Documents and all other documents and agreements executed by the Company in connection with the Credit Agreement in favor of the Agent or any Lender are ratified and confirmed, as amended hereby, and shall remain in full force and effect in accordance with their terms and that they are not aware of any set off, counterclaim or defense with respect to any of the foregoing. Terms used but not defined herein shall have the respective meanings ascribed thereto in the Credit Agreement. This Amendment may be signed upon any number of counterparts with the same effect as if the signatures thereto and hereto were upon the same instrument, and telecopied signatures shall be effective as originals. 27 4 IN WITNESS WHEREOF, the parties signing this Amendment have caused this Amendment to be executed and delivered as of the day and year first above written. AETNA INDUSTRIES, INC. By:/s/ Harold A. Brown -------------------------------------------- Harold A. Brown Its: Secretary, Vice President/Finance and Chief Financial Officer Guarantor AETNA HOLDINGS, INC. By: :/s/ Harold A. Brown -------------------------------------------- Harold A. Brown Its: Secretary, Vice President/Finance and Chief Financial Officer Guarantor AETNA EXPORT SALES CORP. By: :/s/ Harold A. Brown -------------------------------------------- Harold A. Brown Its: Treasurer and Secretary Guarantor TRIANON INDUSTRIES CORP. By: :/s/ Harold A. Brown -------------------------------------------- Harold A. Brown Its: Secretary and Vice President North America Guarantor AETNA MANUFACTURING CANADA LTD. By: :/s/ Harold A. Brown -------------------------------------------- Harold A. Brown Its: Treasurer and Secretary 28 5 NBD BANK, as a Lender and as Agent By: /s/ Thomas A. Gamm ------------------- Its:Vice President -------------- PNC BANK, NATIONAL ASSOCIATION. By: /s/ Terry H. Bell ------------------ Its:Assistant Vice President ------------------------ NATIONAL BANK OF CANADA By: /s/ Angus White ---------------- Its:Vice President ---------------------------------- And By: /s/ Anne K. Kedred ------------------- Its:Vice President -------------- MICHIGAN NATIONAL BANK By: /s/ Eric L. Johnson -------------------- Its:Relationship Manager -------------------- 29 EX-27.1 4 FINANCIAL DATA SCHEDULE - AETNA WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED STATEMENTS OF OPERATIONS AND THE CONSOLIDATED BALANCE SHEETS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0001022657 AETNA INDUSTRIES 3-MOS APR-02-1999 JAN-01-1999 APR-02-1999 28 0 34,464 424 7,981 85,729 121,395 50,652 185,837 104,858 88,125 0 0 0 (12,644) 185,837 66,820 66,820 58,703 58,703 4,972 0 3,815 (670) (126) (544) 0 0 0 (544) 0 0
EX-27.2 5 FINANCIAL DATA SCHEDULE - TRIANON INDUSTRIES
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED STATEMENTS OF OPERATIONS AND THE CONSOLIDATED BALANCE SHEETS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0001021907 TRIANON INDUSTRIES CORP. 3-MOS MAR-31-1999 JAN-01-1999 MAR-31-1999 18,958 0 174,125 423 114,710 318,109 372,419 178,992 600,709 377,433 88,125 0 42,302 39 (19,907) 600,709 218,157 218,157 191,932 191,932 14,673 0 7,268 11,552 2,251 2,033 (772) 0 0 1,261 0 0
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