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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 1997
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 registrant as specified in its charter)
Delaware 75-0225040
( State of Incorporation) (I.R.S. Employer Identification No.)
2525 Stemmons Freeway
Dallas, Texas 75207-2401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (214) 631-4420
Securities Registered Pursuant to Section 12(b) of the Act
Name of each exchange
Title of each class on which registered
Common stock, $1.00 par value New York Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
and (2) has been subject to such filing requirements for the
past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will
not be contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form10-K or any amendment to
this Form 10-K. X
The aggregate market value of voting stock held by nonaffiliates
of the Registrant is $1,246,815,230 as of May 30, 1997.
42,984,303
( Number of Shares of common stock outstanding as of May 30, 1997)
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's 1997 Annual Report to
Stockholders for the fiscal year ended March 31, 1997
are incorporated by reference into Parts I, II, and
IV hereof and portions of the Registrant's definitive
Proxy Statement for the 1997 Annual Meeting of
Stockholders to be held July 16, 1997 are incorporated
by reference into Part III hereof.
PART I
Item 1. Business
General Development of Business. Trinity Industries, Inc. (the
"Registrant" or "Trinity") was originally incorporated under the laws of the
State of Texas in 1933. On March 27, 1987, Trinity became a Delaware
corporation by merger into a wholly-owned subsidiary of the same name.
Narrative Description of Business and Financial Information About
Industry Segments. The Registrant is engaged in the manufacture, marketing,
and leasing of a wide variety of products consisting principally of (1)
"Transportation Products" such as railcars, principally tank cars, hopper
cars, gondola cars, intermodal cars and miscellaneous other freight cars,
barges for inland waterway service, and leasing of Registrant manufactured
railcars and barges to various industries; (2) "Construction Products" such
as highway guardrail and safety products, beams, girders, and columns used in
construction of highway and railway bridges, passenger loading bridges and
conveyor systems for airports and other people and baggage conveyance
requirements, ready-mix concrete production and aggregates including
distribution, and providing raw material to owners, contractors and
sub-contractors for use in the building and foundation industry; (3)
"Industrial Products" such as extremely large, heavy pressure vessels and
other heavy welded products including industrial silencers, desalinators,
evaporators, and gas processing systems, pressure and non-pressure containers
for the storage and transportation of liquefied gases, brewery products and
other liquid and dry products, heat transfer equipment for the chemical,
petroleum and petrochemical industries, weld fittings (tees, elbows,
reducers, caps, flanges, etc.) used in pressure piping systems, and container
heads (the ends of pressure and non-pressure containers) for use internally
and by other manufacturers of containers.
Various financial information concerning the Registrant's industry
segments for each of the last three fiscal years is included in the
Registrant's 1997 Annual Report to Stockholders on page 21 under the heading
"Segment Information", and such section is incorporated herein by reference.
Transportation Products. The Registrant manufactures railroad freight
cars, principally pressure and non-pressure tank cars, hopper cars,
intermodal cars and gondola cars used for transporting a wide variety of
liquids, gases and dry cargo. Tank cars transport products such as liquefied
petroleum gas, liquid fertilizer, sulfur, sulfuric acids and corn syrup.
Covered hopper cars carry cargo such as grain, dry fertilizer, plastic
pellets and cement. Open-top hoppers haul coal, and top-loading gondola cars
transport a variety of heavy bulk commodities such as scrap metals, finished
flat steel products, machinery and lumber. Intermodal cars transport various
products which have been loaded in containers to minimize shipping costs.
The Registrant produces river hopper barges which are used to carry
coal, grain and miscellaneous commodities for various barge transport
companies and tank barges which are used to transport liquid products.
The Registrant has one wholly-owned leasing subsidiary, Trinity
Industries Leasing Company ("TILC"), which was incorporated in 1979. TILC is
engaged in leasing specialized types of railcars, primarily consisting of
tank cars and hopper cars, to industrial companies in the petroleum,
chemical, grain, food processing, fertilizer and other industries which
supply cars to the railroads. At March 31, 1997, TILC had 10,405 railcars
under lease and/or management agreement. During fiscal year 1995, TILC
divested its inventory of river hopper barges previously held for lease. The
barges were operated under an agreement which provided for management of the
barges. The barges were generally used for movement of commodities on the
inland waterway system, primarily the Mississippi and Missouri Rivers.
Substantially all equipment leased by TILC was purchased from the
Registrant at prices comparable to the prices for equipment sold by the
Registrant to third parties. As of March 31, 1997, TILC had equipment on
lease or available for lease purchased from the Registrant at a cost of
$454.1 million. Generally, TILC purchases the equipment to be leased only
after a lessee has committed to lease such equipment.
The volume of equipment purchased and leased by TILC depends upon a
number of factors, including the demand for equipment manufactured by the
Registrant, the cost and availability of funds to finance the purchase of
equipment, the Registrant's decision to solicit orders for the purchase or
lease of equipment and factors which may affect the decision of the
Registrant's customers as to whether to purchase or lease
equipment.
Although the Registrant is not contractually obligated to offer to TILC
equipment proposed to be leased by the Registrant's customers, it is the
Registrant's intention to effect all such leasing transactions through TILC.
Similarly, while TILC is not contractually obligated to purchase from the
Registrant any equipment proposed to be leased, TILC intends to purchase and
lease all equipment which the Registrant's customers desire to lease when the
lease rentals and other terms of the proposed lease are satisfactory to TILC,
subject to the availability and cost of funds to finance the acquisition of
the equipment.
Construction Products. The construction products manufactured by the
Registrant include beams, girders, columns, highway guard rail and highway
safety devices and related barrier products, ready-mix concrete and
aggregates, passenger loading bridges, and baggage handling systems. These
products are used in the bridge, highway construction and building industries
and airports. Some of the sales of beams, girders and columns are to general
contractors and subcontractors on highway construction projects. Generally,
customers for highway guardrail and highway safety devices are highway
departments or subcontractors on highway projects. Passenger loading bridges
and conveyor systems are generally sold to contractors, airports, or airlines
as part of airport terminal equipment. Ready-mix concrete and aggregates are
used in the building and foundation industry, and customers include primarily
owners, contractors and sub- contractors.
Industrial Products. The Registrant is engaged in manufacturing metal
containers consisting of extremely large, heavy pressure vessels and other
heavy welded products, including industrial silencers, desalinators,
evaporators, and gas processing systems for the storage and transportation of
liquefied petroleum ("LP") gas and anhydrous ammonia fertilizer. Pressure LP
gas containers are utilized at industrial plants, utilities, small businesses
and in suburban and rural areas for residential heating and cooking needs.
Fertilizer containers are manufactured for highway and rail transport, bulk
storage, farm storage and the application and distribution of anhydrous
ammonia. The Registrant also makes heat transfer equipment for the chemical,
petroleum and petrochemical industries and a complete line of custom vessels,
standard steam jacketed kettles, mix cookers, and custom-fabricated cooking
vessels for the food, meat, dairy, pharmaceutical, cosmetic and chemical
industries.
The Registrant also manufactures butt weld type fittings, flanges and
pressure and non- pressure container heads that are made from ferrous and
non-ferrous metals and their alloys. The weld fittings include caps, elbows,
return bends, concentric and eccentric reducers, full and reducing outlet
tees, and a full line of pipe flanges, all of which are pressure rated. The
Registrant manufactures and stocks, in standard, extra-heavy and
double-extra-heavy weights and in various diameters, weld caps, tees,
reducers, elbows, return bends, flanges and also manufactures to customer
specifications. The basic raw materials for weld fittings and flanges are
carbon steel, stainless steel, aluminum, chrome-moly and other metal tubing
or seamless pipe and forgings. The Registrant sells its weld fittings and
flanges to distributors and to other manufacturers of weld fittings.
Container heads manufactured by the Registrant are pressed metal
components used in the further manufacture of a finished product. Since the
manufacture of container heads requires a substantial investment in heavy
equipment and dies, many other manufacturers order container heads from the
Registrant. Container heads are manufactured in various shapes and may be
pressure rated or non-pressure. Other pressed shapes are hot- or cold-formed
to customer requirements.
Marketing, Raw Materials, Employees and Competition. As of March 31,
1997, the Registrant operated in the continental United States and Mexico.
The Registrant sells substantially all of its products through its own
salesmen operating from offices in Montgomery, Alabama; Chicago, Illinois;
Elizabethtown and Paducah, Kentucky; Shreveport, Louisiana; Asheville, North
Carolina; Cincinnati and Girard, Ohio; Beaumont, Dallas/Ft. Worth, Houston
and Navasota, Texas; Centerville, Utah; and Mexico. Independent sales
representatives are also used to a limited extent. The Registrant primarily
markets its transportation and industrial products throughout North America.
Except in the case of weld fittings, guardrail, and standard size LP gas
containers, the Registrant's products are ordinarily fabricated to the
customer's specifications pursuant to a purchase order.
The principal materials used by the Registrant are steel plate,
structural steel shapes, steel forgings, and aggregate and cement material
for ready-mix concrete. There are numerous domestic and foreign sources of
such steel and most other materials used by the Registrant.
The Registrant currently has approximately 12,700 employees, of which
approximately 11,600 are production employees and 1,100 are administrative,
sales, supervisory and office employees.
There are numerous companies located throughout the United States and
world-wide that are engaged in the business of manufacturing various
transportation and industrial products of the types manufactured by the
Registrant, and these industries are highly competitive. A number of
well-established companies actively compete with TILC in the business of
owning and leasing railcars, as well as banks, investment partnerships and
other financial and commercial institutions. Companies manufacturing products
which compete with the Registrant's construction products consist of numerous
other structural fabricators and ready-mix concrete and aggregate producers.
Recent Developments. Information concerning the Registrant's business
acquisitions are included in the Registrant's 1997 Annual Report to
Stockholders under the heading "Business Acquisitions and Divestitures,"
(page 22) and such section is incorporated herein by reference.
Information concerning the initial public offering of the Registrant's
wholly-owned subsidiary, Halter Marine Group, Inc. ("Halter"), and subsequent
property distribution of Halter to the stockholders of the Registrant is
included in the Registrant's 1997 Annual Report to Stockholders under the
heading "Business Acquisitions and Divestitures," (page 22) and such section
is incorporated herein by reference.
Other Matters. The Registrant is not materially affected by federal,
state and local provisions which have been enacted or adopted regulating the
discharge of materials into the environment or otherwise relating to the
protection of the environment. The Registrant believes that the Company and
its operations are in compliance in all material respects with environmental
laws. To date, the Registrant has not suffered any material shortages with
respect to obtaining sufficient energy supplies to operate its various plant
facilities or its transportation vehicles. Future limitations on the
availability or consumption of petroleum products (particularly natural gas
for plant operations and diesel fuel for vehicles) could have an adverse
effect upon the Registrant's ability to conduct its business. The likelihood
of such an occurrence or its duration, and its ultimate effect on the
Registrant's operations, cannot be reasonably predicted at this time.
Item 2. Properties.
The Registrant's principal executive offices are located in a ten story
office building containing approximately 107,000 sq. ft. and a connected
adjacent building containing approximately 66,000 sq. ft., each owned by the
Registrant, in Dallas, Texas. The following table sets forth certain facts
with respect to each of the operating plant properties owned and/or leased by
the Registrant at March 31, 1997:
Registrant's Uses of Approx.
Interest in Premises Bldg. Area Expiration Annual
Plant Location Property (1) (Sq Ft.) Date Rentals
Ackerman, MS Fee (c) 92,000 - -
Alliance, NE Fee (a) 44,000 - -
Ashland City, TN Fee (a) 92,000 - -
Asheville, NC Lease (a) 94,000 06/30/99 $198,000
Baton Rouge, LA Fee (a) - - -
Beaumont, TX Fee (a) 280,000 - -
Belpre, OH Fee (b) 42,000 - -
Bessemer, AL Fee (a) 1,201,000 - -
Brusly, LA Fee (a) 148,000 - -
Butler, PA Fee (a) 386,000 - -
Butler, PA Lease (a) 30,000 12/31/02 $ 67,000
Caruthersville, MO Fee (a) 266,000 - -
Caruthersville, MO Lease (a) 40,000 03/01/99 $ 72,000
Cedartown, GA Fee (c) 143,000 - -
Centerville, UT Fee (b) 63,000 - -
Cincinnati, OH Fee (c) 203,000 - -
Dallas, TX
(2 plants) Fee (a) 447,000 - -
Denton, TX Fee (a) 117,000 - -
Douglas, WY Lease (a) 34,000 09/30/04 $ 15,000
Elizabethtown, KY Fee (b) 40,000 - -
Elkhart, IN Fee (c) 108,000 - -
Enid, OK Fee (c) 73,000 - -
Flat Rock, NC Lease (a) 8,000 01/31/98 $ 64,000
Ft. Worth, TX
(6 plants) Fee (a,b) 703,000 - -
Girard, OH
(2 plants) Fee (b) 326,000 - -
Greenville, PA Fee (a) 752,000 - -
Houston, TX
(3 plants) Fee (a,b,c) 599,000 - -
Huehuetoca, MX Fee (a,c) 264,000 - -
Johnstown, PA Fee (a) 148,000 - -
Lima, OH Fee (b) 72,000 - -
Longview, TX
(4 plants) Fee (a) 675,000 - -
Longview, TX Lease (a) 57,000 10/31/00 $ 40,000
Madisonville, LA Fee (a) 137,000 - -
McKees Rocks, PA Fee (a) 462,000 - -
Miles City, MT Fee (a) 72,000 - -
Monclova, MX Fee (a,c) 81,000 - -
Registrant's Uses of Approx.
Interest in Premises Bldg. Area Expiration Annual
Plant Location Property (1) (Sq Ft.) Date Rentals
Montgomery, AL Fee (a,b) 310,000 - -
Mt. Orab, OH Fee (a) 183,000 - -
Nashville, TN Fee (a) 261,000 - -
Navasota, TX Fee (c) 170,000 - -
Oklahoma City, OK Fee (a) 260,000 - -
Orange, TX Fee (a) 735,000 - -
Paducah, KY Fee (a) 49,000 - -
Paris, TN Fee (a) 29,000 - -
Pine Bluff, AR Fee (c) 56,000 - -
Quincy, IL Fee (c) 95,000 - -
Rock Springs, WY Fee (a) 20,000 - -
Rocky Mount, NC Fee (c) 53,000 - -
Saginaw, TX
(2 plants) Fee (a) 333,000 - -
San Antonio, TX Fee (b) 224,000 - -
Sand Springs, OK Fee (c) 184,000 - -
Shreveport, LA Lease (a,c) 691,000 11/30/42 $ 12,000
Sioux City, IA Lease (a) 38,000 05/31/98 $ 48,000
Tulsa, OK Fee (a) 121,000 - -
Vallejo, MX Fee (c) 54,000 - -
Vidor, TX Fee (a) 126,000 - -
Waycross, GA Fee (a) 5,000 - -
West Memphis, AR Fee (c) 77,000 - -
(1) (a) Manufacture of Transportation Products
(b) Manufacture of Construction Products
(c) Manufacture of Industrial Products
All machinery and equipment and the buildings occupied by the Registrant
are maintained in good condition. The Registrant estimates that its plant
facilities were utilized during the fiscal year at an average of
approximately 75 percent of present productive capacity for Transportation
Products, 80 percent for Construction Products, and 85 percent for
Industrial Products.
Item 3. Legal Proceedings.
See page 26 of the Registrant's 1997 Annual Report to Stockholders which
is incorporated herein by reference for a discussion of legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
There were no matters submitted to a vote of security holders during the
fourth quarter of fiscal year 1997.
___________________
PART II
Item 5. Market for the Registrant's Common Stock and Related Stockholder
Matters.
Market for the Registrant's common stock and related stockholder matters
are incorporated herein by reference from the information contained on page 3
under the caption "Corporate Profile" and on page 30 under the caption
"Stockholder Information" of the Registrant's 1997 Annual Report to
Stockholders.
Item 6. Selected Financial Data.
Selected financial data is incorporated herein by reference from the
information contained on page 14 under the caption "Financial Summary" of the
Registrant's 1997 Annual Report to Stockholders.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Management's discussion and analysis of financial condition and results
of operations are incorporated herein by reference from the Registrant's 1997
Annual Report to Stockholders, pages 15 through 16.
Item 8. Financial Statements and Supplementary Data.
Financial statements of the Registrant at March 31, 1997 and 1996 and
for each of the three years in the period ended March 31, 1997 and the
auditor's report thereon, and the Registrant's unaudited quarterly financial
data for the two year period ended March 31, 1997, are incorporated by
reference from the Registrant's 1997 Annual Report to Stockholders, pages 17
through 27.
Item 9. Disagreements on Accounting and Financial Disclosure.
No disclosure required.
PART III
Item 10. Directors and Executive Officers of the Registrant.
Information concerning the directors and executive officers of the
Registrant is incorporated herein by reference from the Registrant's
definitive proxy statement for the Annual Meeting of Stockholders on July 16,
1997, page 4, under the caption "Election of Directors".
Executive Officers of the Registrant.*
The following table sets forth the names and ages of all executive
officers of the Registrant, the nature of any family relationship between
them, all positions and offices with the Registrant presently held by them,
the year each person first became an officer and the term of each person's
office:
Officer Term
Name Age Office Since Expires
W. Ray Wallace 74 Chairman & Chief 1958 July 1997
Executive Officer
Timothy R. Wallace 43 Director, President & 1993 July 1997
Chief Operating Officer
John T. Sanford 45 Executive Vice President & 1993 July 1997
Chief Financial Officer
Ralph A. Banks, Jr. 73 Senior Vice President 1962 July 1997
Richard G. Brown 73 Senior Vice President 1979 July 1997
Mark W. Stiles 48 Group Vice President 1993 July 1997
Jack L. Cunningham, Jr. 52 Vice President 1982 July 1997
John M. Lee 36 Vice President 1994 July 1997
R. A. Martin 62 Vice President 1974 July 1997
F. Dean Phelps, Jr. 53 Vice President 1979 July 1997
Joseph F. Piriano 60 Vice President 1992 July 1997
Linda S. Sickels 46 Vice President 1995 July 1997
Neil O. Shoop 53 Treasurer 1985 July 1997
William J. Goodwin 49 Controller 1986 July 1997
J.J. French, Jr. 66 Secretary 1970 July 1997
* This data is furnished as additional information pursuant to instructions to Item 401 to Regulation
S-K and in lieu of inclusion in the Registrant's Proxy Statement.
W. Ray Wallace, Chairman & Chief Executive Officer, is the father of Timothy R. Wallace,
Director, President and Chief Operating Officer.
Mr. Piriano was Director of Purchasing for the Registrant for at least the last five years. Mr.
Lee joined the Registrant in 1994. For at least five years prior thereto, Mr. Lee was a manager for a
national public accounting firm. Ms. Sickels joined the Registrant in 1992. Prior to that, Ms.
Sickels was in government relations for a utility company. During fiscal 1997, Mr. Tim Wallace was
elected President and Chief Operating Officer of the Registrant. Prior to this year, Mr. Tim Wallace
was a Group Vice President of the Registrant. Also during fiscal 1997, Mr. Sanford was elected
Executive Vice President and Chief Financial Officer of the Registrant. Prior to this year, Mr.
Sanford was a Senior Vice President and Group Vice President. All of the other above-mentioned
executive officers, except Mr. French, have been in the full-time employ of the Registrant or its
subsidiaries for more than five years. Although the titles of certain such officers have changed
during the past five years, all have performed essentially the same duties during such period of
time.
Mr. French, an attorney, is President of Joe French & Associates, a Professional Corporation,
since April, 1993. For at least five years prior thereto, Mr. French was employed by Locke Purnell
Rain Harrell, a Professional Corporation.
It is anticipated that all of such officers will be reelected at the Annual Meeting of the Board of
Directors to be held on July 16, 1997.
Item 11. Executive Compensation.
Information on executive compensation is incorporated herein by reference
from the Registrant's definitive proxy statement for the Annual Meeting of
Stockholders on July 16, 1997, beginning on page 8 under the caption
"Executive Compensation and Other Matters".
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Information concerning security ownership of certain beneficial owners
and management is incorporated herein by reference from the Registrant's
definitive proxy statement for the Annual Meeting of Stockholders on July 16,
1997, page 2, under the caption "Voting Securities and Stockholders", and
page 4, under the caption "Election of Directors".
Item 13. Certain Relationships and Related Transactions.
Information concerning certain relationships and related transactions is
incorporated herein by reference from the Registrant's definitive proxy
statement for the Annual Meeting of Stockholders on July 16, 1997, pages 4
through 5, under the caption "Election of
Directors".
______________________
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) 1&2. Financial statements and financial statement schedule.
The financial statements and schedule listed in the accompanying
indices to financial statements and financial statement schedule
are filed as part of this Annual Report Form 10-K.
3. Exhibits.
The exhibits listed on the accompanying index to exhibits are filed
as part of this Annual Report Form 10-K.
(b) Reports on Form 8-K
Form 8-K filed March 14, 1997 that reported the Registrant's
decision to declare a distribution of the fifteen million shares of
common stock of Halter held by the Registrant. This tax-free
property distribution was payable on March 31, 1997 to Trinity
stockholders of record on March 21, 1997.
Trinity Industries, Inc.
Financial Statements and Financial Statement Schedule
for Inclusion in the Annual Report on Form 10-K
Year Ended March 31, 1997
Trinity Industries, Inc.
Index to Financial Statements
and Financial Statement Schedule
(Item 14 (a))
REFERENCE
1997 Annual
Form Report to
10-K Stockholders
(Page) (Page)
Consolidated balance sheet at
March 31, 1997 and 1996 . . . . . . . - 18
For each of the three years in the
period ended March 31, 1997:
Consolidated income statement . . . - 17
Consolidated statement of cash flows. . . . - 19
Consolidated statement of
stockholders' equity. . . . . . . - 20
Notes to consolidated financial
statements . . . . . . . . . . . . . . . - 20
Supplemental information:
Supplementary unaudited quarterly data . . . - 27
Consolidated financial statement schedule
for each of the three years in the
period ended March 31, 1997:
II - Allowance for doubtful accounts . . 12 -
Other financial information:
Weighted average interest rate on
short-term borrowings. . . 12 -
All other schedules have been omitted since the required information
is not present or is not present in amounts sufficient to require submission
of the schedules, or because the information required is included in the
consolidated financial statements, including the notes thereto.
The consolidated financial statements and supplementary information
listed in the above index which are included in the 1997 Annual Report to
Stockholders are hereby incorporated by reference.
SCHEDULE II
Trinity Industries, Inc.
Allowance for Doubtful Accounts
Year Ended March 31, 1997, 1996 and 1995
(in millions)
Additions
Balance at charged to Accounts Balance
beginning costs and charged at end
of year expenses off of year
Year Ended March 31, 1997 $ 1.1 $ 1.4 $ 1.5 $ 1.0
Year Ended March 31, 1996 $ 0.8 $ 0.8 $ 0.5 $ 1.1
Year Ended March 31, 1995 $ 1.0 $ 0.3 $ 0.5 $ 0.8
___________________________
Trinity Industries, Inc.
Other Financial Information
Short-Term Borrowings
The weighted average interest rate on short-term borrowings outstanding as
of March 31, 1997, 1996, and 1995 is 5.60%, 6.04%, and 5.28%, respectively.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Annual Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Trinity Industries, Inc. By /s/ F. Dean Phelps, Jr.
Registrant F. Dean Phelps, Jr.
Vice President
June 25, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons of the Registrant and
in the capacities and on the dates indicated:
Directors: Directors (continued)
/s/ John L. Adams /s/ Diana Natalicio
John L. Adams Diana Natalicio
Director Director
June 25, 1997 June 25, 1997
/s/ David W. Biegler /s/ Timothy R. Wallace
David W. Biegler Timothy R. Wallace
Director Director
June 25, 1997 June 25, 1997
/s/ Barry J. Galt
Barry J. Galt
Director Principal Executive Officer:
June 25, 1997
/s/ W. Ray Wallace
/s/ Clifford J. Grum W. Ray Wallace
Clifford J. Grum Chairman
Director June 25, 1997
June 25, 1997
/s/ Dean P. Guerin Principal Financial Officer:
Dean P. Guerin
Director /s/ John T. Sanford
June 25, 1997 John T. Sanford
Executive Vice President
/s/ Jess T. Hay June 25, 1997
Jess T. Hay
Director
June 25, 1997 Principal Accounting Officer:
/s/ Edmund M. Hoffman /s/ John M. Lee
Edmund M. Hoffman John M. Lee
Director Vice President
June 25, 1997 June 25, 1997
Trinity Industries, Inc.
Index to Exhibits
(Item 14(a))
NO. DESCRIPTION PAGE
(3.1) Certificate of Incorporation of Registrant (incorporated by reference to
Exhibit 3.A to Registration Statement No. 33-10937 filed April 8, 1987). *
(3.2) By-Laws of Registrant, as amended and Form of Amendment to the By-Laws
(incorporated by reference to Exhibit 3.2 to Form 8-K filed May 6, 1997). *
(4.1) Specimen Common Stock Certificate of Registrant (incorporated by reference
to Exhibit 3B to Registration Statement No. 33-10937 filed April 8, 1987). *
(4.2) Rights Agreement, as amended, between the Registrant and the Rights Agent
(incorporated by reference to Exhibit 4.2 to Form 8-K filed May 6, 1997). *
(10.1) Fixed Charges Coverage Agreement dated as of January 15, 1980, between
Registrant and Trinity Industries Leasing Company (incorporated by
reference to Exhibit 10.1 to Registration Statement No. 2-70378 filed
January 29, 1981). *
(10.2) Tax Allocation Agreement dated as of January 22, 1980 between Registrant
and its subsidiaries (including Trinity Industries Leasing Company)
(incorporated by reference to Exhibit 10.2 to Registration Statement
No. 2-70378 filed January 29, 1981). *
(10.3) Form of Executive Severance Agreement entered into between the Registrant
and all executive officers of the Registrant (other than Mr. French)
(incorporated by reference to Exhibit 10.3 to Form 10-K filed June 19, 1989). *
(10.4) Trinity Industries, Inc., Stock Option Plan With Stock Appreciation Rights
(incorporated by reference to Registration Statement No. 2-64813 filed
July 5, 1979, as amended by Post-Effective Amendment No. 1 dated July 1, 1980,
Post-Effective Amendment No.2 dated August 31, 1984, and Post-Effective
Amendment No. 3 dated July 13, 1990). *
(10.5) Directors' Retirement Plan adopted December 11, 1986 ( incorporated by
reference to Exhibit 10.6 to Form 10-K filed June 14, 1990). *
(10.6) 1989 Stock Option Plan with Stock Appreciation Rights (incorporated by
reference to Registration Statement No. 33-35514 filed June 20, 1990) *
(10.7) Supplemental Retirement Benefit Plan for W. Ray Wallace, effective
July 18, 1990 (incorporated by reference to Exhibit 10.8 to Form 10-K
filed June 13, 1991). *
(10.8) 1993 Stock Option and Incentive Plan (incorporated by reference to
Registration Statement No. 33-73026 filed December 15, 1993) *
(10.9) Pension Plan A for Salaried Employees of Trinity Industries, Inc. and
Certain Affiliates dated August 20, 1985, as amended by Amendment
No. 1 dated May 27, 1986, Amendment No. 2 dated December 30, 1986,
Amendment No. 3 dated December 12, 1986, Amendment No. 4 dated
March 31, 1987, Amendment No. 5 dated March 31, 1987, Amendment
No. 6 dated December 4, 1987, Amendment No. 7 dated July 26, 1988,
Amendment No. 8 dated July 28, 1988, Amendment No. 9 dated March
15, 1989, Amendment No. 10 dated March 31, 1989, and Amendment
No. 11 dated July 14, 1989 (incorporated by reference to Exhibit 10.9
to Form 10-K filed June 13, 1991). *
(10.10) Supplemental Profit Sharing Plan for Employees of Trinity Industries Inc.
and Certain Affiliates dated June 30, 1990, as amended by Amendment
No. 1 dated June 13, 1991. Supplemental Profit Sharing Trust for
Employees of Trinity Industries, Inc. and Certain Affiliates dated June 30,
1990, as amended by Amendment No. 1 dated June 13, 1991 (incorporated
by reference to Exhibit 10.10 to Form 10-K filed June 13, 1991). *
(13) Annual Report to Stockholders. With the exception of the information
incorporated by reference into Items 1, 3, 5, 6, 7 and 8 of Form 10-K, the
1997 Annual Report to Stockholders is not deemed as a part of this report.
(21) Listing of subsidiaries of the Registrant. 16
(23) Consent of Independent Auditors. 11
(27) Financial Data Schedule.
(99.1) Annual Report on Form 11-K for employee stock purchase, savings and
similar plans filed pursuant to Rule 15d-21.
Notice: Exhibits 13, 27, and 99.1 have been omitted from the reproduction of
this Form 10-K. A copy of the Exhibits will be furnished upon written
request to Michael E. Conley, Director of Investor Relations, Trinity
Industries, Inc., P.O. Box 568887, Dallas, Texas 75356-8887. The Registrant
may impose a reasonable fee for its expenses in connection with providing the
above-referenced Exhibits.
EXHIBIT 13
Corporate Profile
Trinity Industries, Inc. is a leading manufacturer of a variety
of products with manufacturing and fabrication operations in
three business segments: Transportation Products, Construction
Products and Industrial Products. The Company, headquartered in
Dallas, Texas, has seventy-one facilities containing more than
twelve million square feet of manufacturing space in twenty
states and in Mexico. The Company also operates more than eighty
ready-mix concrete and aggregate locations in Texas and
Louisiana.
The Company has a continuing strategy of growth through internal
expansion and strategic acquisitions within its established
business segments.
Trinity's stockholders of record numbered more than 2,600 at
March 31, 1997. Its common stock is traded on the New York Stock
Exchange under the symbol TRN.
Highlights
(in millions except per share data)
Year Ended March 31
1997 1996 1995
Revenues. . . . . . . . . . . . . . . . $2,234.3 2,241.7 2,064.3
Income from continuing operations . . . $ 113.7 101.3 73.4
Income from discontinued operations . . 23.8 12.5 15.7
Net income. . . . . . . . . . . . . . . $ 137.5 113.8 89.1
Income per common and common equivalent
share from continuing operations . . . $ 2.66 2.42 1.81
Income per common and common equivalent
share from discontinued operations . . $ 0.55 0.30 0.39
Net income per common and common
equivalent share . . . . . . . . . . . $ 3.21 2.72 2.20
Cash dividends per share. . . . . . . . $ 0.68 0.68 0.68
Total assets . . . . . . . . . . . . . $1,356.4 1,426.6 1,400.5
Stockholders' equity. . . . . . . . . . $ 809.5 746.0 641.2
TO OUR STOCKHOLDERS As we enter a new fiscal year, it is important
that we take this opportunity to reflect on the activity of the past year and
to understand its significance in defining Trinity's future. Fiscal 1997 was
both a year of building on our strengths and a year of positioning for the
future. In retrospect, each of our transactions speaks to our philosophy of
doing business and of strengthening Trinity's position in a competitive
marketplace. Fiscal 1997 was the fourth consecutive year of record income
for Trinity. Net income increased 21% to $137.5 million, or $3.21 per share.
This compares with net income of $113.8 million, or $2.72 per share, in
fiscal 1996. In fiscal 1997, Trinity divested its ownership interest in its
former subsidiary, Halter Marine Group, Inc. Trinity's results for fiscal
1997 and all prior periods include Halter's results as a discontinued
operation. Income from continuing operations increased 12% in fiscal 1997
to a record $113.7 million, or $2.66 per share, on revenues of $2.2
billion. This eclipsed the previous record of income from continuing
operations of $101.3 million, or $2.42 per share, on revenues of $2.2 billion
in fiscal 1996.
You will find in this year's annual report that we are simplifying and
consolidating our segment reporting. The new reporting format reduces the
number of reporting categories by combining similar businesses to more
accurately reflect the nature of our current operations.
While we are best known for our transportation products, Trinity continues
to grow as a diversified provider of industrial and construction related
products and services. Our flexibility and low cost management practices
position us very competitively in each of the markets we serve.
Trinity continues to enjoy remarkable success, and our success and growth
is an ongoing process. We evaluate a steady stream of potential
acquisitions, searching for products that complement our existing business
units or for services that enhance our products.
There are several criteria we use to evaluate potential acquisitions. We
look for a compatible business philosophy, good market timing, the potential
for a sizable market niche, and an overlap with our existing and potential
customer base. We are constantly poised to take advantage of opportunities
as they arise, and when it's apparent that our low cost management practices
can add value.
In September 1996, we acquired Transcisco Industries, Inc., a San
Francisco-based railcar services company. It was a unique opportunity which
met our criteria. Transcisco's services fit well within our existing
infrastructure and complement our manufacturing capability. This acquisition
enables us to be more creative in the packaging of our products and services.
We recently acquired the Industrial Products Division of Ladish Co., Inc.,
a major name in the pipefitting, flange and valve industry, and we are
currently engaged in discussions on several other acquisitions that appear to
meet our criteria and enhance our ability to be creative in serving our
customers.
An important element of our business philosophy is our strong belief that
the primary obligation of corporate management is to maximize return to
investors and create stockholder value. The property distribution of Halter
Marine Group is a good example of this philosophy in action. More than 20
years ago, we began to assemble the people and the facilities that offered us
the physical capability, the designs and the expertise to take advantage of
an increase in the offshore oil and gas exploration market.
As we grew this segment of our business, it became apparent that Halter was
more valuable under public ownership than as an integral part of Trinity.
Therefore, in the interest of stockholder value, we made the decision to give
Halter its separate identity through an initial public offering of
approximately 19% of its stock on September 26, 1996 and to distribute the
remainder to our stockholders in a tax free distribution on March 31, 1997.
The current value of Halter common stock clearly validates our decision.
However, we continue to maintain a thriving inland barge products business
that closely adheres to our basic philosophy of common customers and
repetitive, low cost, quality production. Inland barges were our original
marine products, and we have established a strong leadership position in this
market.
We constantly monitor a number of external factors that drive the growth of
our business segments. Our transportation products businesses are responding
to a strong worldwide demand for grain and coal and to a replacement need
for aging railcar and barge fleets. Owners of railcars continue to show
interest in outsourcing their maintenance, repair and fleet management.
Consolidation in the utilities industry is causing utility companies to form
more partnerships, and we are a strong candidate for transporting their fuel.
Our Construction Products segment is poised to take advantage of likely
increases in government spending on transportation infrastructure. Safety
legislation that becomes effective next year calls for specific guardrail
and safety end-treatment products, of which Trinity is a leading
manufacturer. Our ready-mix concrete and aggregate business is benefiting
from an ever-increasing volume of residential, commercial, industrial and
municipal construction in the market areas we serve.
In Trinity's Industrial Products segment, our containers and metal compo-
nents businesses are responding to a global increase in energy and petrochem-
ical demand. Trinity is a leading manufacturer of LPG storage and
transportation tanks and heavy custom pressure vessels. Our metal components
business produces pipefittings, flanges and container heads. These two
businesses work together to meet these growing demands for energy and its
transportation. We foresee outstanding future growth opportunities in both of
these businesses.
Trinity Industries de Mexico continues to flourish and to provide opportun-
ities for expansion farther south. You can look forward to seeing Trinity
establish a manufacturing presence in South America in the near future.
We have touched on many of the elements of Trinity's success our
flexibility and adaptability, our efficiency and low cost management
practices, and our market expertise. However, without question, our most
valuable resource is our people. To keep our people abreast of rapidly
changing technology, we invest substantially in their training. Our QuEST
Total Quality Management program is an example of our efforts to ensure our
continued reputation as a quality producer. Our greatest challenge for the
future is to develop our people as fast as we develop our opportunities. We
are proud of our employees commitment to continued learning, to excellence
and to Trinity.
We welcomed two additional Board members during the past year John L.
Adams, Chairman of the Board and Chief Executive Officer Metroplex Region of
Texas Commerce Bank NA and Dr. Diana Natalicio, President of the University
of Texas at El Paso. Both bring additional expertise and guidance as Trinity
continues to expand its horizons.
The future looks extremely bright for Trinity. Our company is strong, our
opportunities are many, and our direction is clear. We have a remarkable
team of employees, customers, stockholders and suppliers. We are grateful to
each of you for your contributions to Trinity's success in fiscal 1997 and
for the significant role that you will play in building our company's
future.
W. Ray Wallace
Chairman and Chief Executive Officer
Timothy R. Wallace
President and Chief Operating Officer
During fiscal 1997, Trinity elected Timothy R. Wallace President and Chief
Operating Officer and John T. Sanford Executive Vice President and Chief
Financial Officer. W. Ray Wallace is Chairman and Chief Executive Officer.
These individuals comprise Trinity's Executive Committee.
SELECTED HISTORICAL INFORMATION
[Appearing at this point are performance graphs comparing the five (5)
year trends of Revenues from Continuing Operations, Income from Continuing
Operations, Earnings Per Share from Continuing Operations, Return on Average
Equity from Continuing Operations, Return on Average Assets from Continuing
Operations, and Long Term Debt-to-Total Capital, with the following plot
points expressed in dollars:
Years
(from Continuing Operations) 1993 1994 1995 1996 1997
(in millions)
Revenues 1,235.6 1,509.6 2,064.3 2,241.7 2,234.3
Income 25.4 56.7 73.4 101.3 113.7
Earnings Per Share .72 1.41 1.81 2.42 2.66
Return on Average Equity 5.73% 10.52% 12.12% 14.60% 14.59%
Return on Average Assets 2.46% 4.89% 5.48% 7.17% 8.17%
Long Term Debt-To-Total Capital 37% 33% 28% 22% 18%
TRANSPORTATION PRODUCTS
Trinity's Transportation Products segment consists of our railcar, leasing
and marine products businesses. In fiscal 1997, segment revenues were
comparable to those of the previous year while operating income increased
11%. Our operating income increased as a result of previous investment in
equipment, facilities and employee training.
RAILCAR AND LEASING
Trinity has grown to be one of North America's largest and most profitable
makers of railcars and related parts. We market our wide range of tank and
freight cars to railroads, leasing companies and private shippers.
In fiscal 1997, we realigned Trinity's railcar business into strategic
business units along product lines to better deliver our broad menu of
products and services to our customers. Our extensive manufacturing capacity
is geared toward meeting the demands of any market environment. Optimally
delivering our products and services to our customers requires teamwork, the
centerpiece of our QuEST program. Through QuEST's cross-functional employee
teams, we continue to work to improve our quality, efficiency, safety and
service and build long lasting relationships with our customers.
Trinity's forward-looking perspective illustrates our commitment to growth,
and we are never satisfied with the status quo. We are constantly working to
identify new growth opportunities for our products and services. During the
past several years, we have continued to introduce new products that meet the
unique needs of our customers. We are at the forefront in using aluminum and
light weight composite materials in an increasing number of railcar types.
We are developing and constructing railcars that transport greater volumes
of freight. Last year, we introduced a large capacity, insulated box car
that is constructed from high-strength composite materials. In fiscal
1997, we enhanced this product by adding a refrigeration unit, making it
ideal for transporting potatoes, meats, fruit juices and other food and
beverage items. We developed an aluminum plastic pellet covered hopper.
Its light weight helps maintain product purity while eliminating the need
for costly interior lining. In addition, we recently received an order for
1,200 intermodal platforms, a railcar for which Trinity is well-recognized.
Our acquisition of Transcisco enhances our ability to take advantage of the
ongoing consolidation within the railroad and utilities industries by
expanding our activities in railcar financing, fleet management and railcar
maintenance and repair. Trinity's leasing company continues to serve as an
important marketing tool for our railcar sales activities.
MARINE PRODUCTS
Trinity is one of North America's largest producers of inland and
intercoastal barges. Our hopper and tank barges are the workhorses of the
waterways for many barge operators and private shippers. Trinity-built
barges transport a variety of cargoes, such as grain, coal, scrap iron and
liquid products. In addition, Trinity is one of the world's largest makers
of fiberglass barge covers.
There are several factors driving today's strong demand for barges. Simi-
lar to the railcar industry, the replacement cycle for barges continues in
full swing. Generally, the useful life of a typical barge is approximately
25 years. There are approximately 21,000 barges in our nation's barge fleet
and two-thirds of those are more than 15 years old. Environmental
legislation enacted in recent years calls for the replacement of single hull
liquid tank barges through the phase-in of double-skin types over the next
decade. Grain and coal exports are continuing to create additional demand
for barges.
As a result of these demand factors, Trinity's barge orders on hand are at
historically high levels. To meet this strong appetite for barges, in
fiscal 1997, we added significant production capacity by converting certain
of our existing facilities into state-of-the-art barge yards. We also
continue to upgrade our manufacturing equipment and fixturing at all of our
facilities which will improve our cost structure and productivity as we head
into fiscal 1998.
Progressive growth is the focus of Trinity's Transportation Products seg-
ment. We continue to take advantage of new opportunities to expand our
businesses while increasing our profitability and improving our customer
service.
CONSTRUCTION PRODUCTS
The two largest components of Trinity's Construction Products segment are our
ready-mix concrete and aggregate business and our highway safety products
group. In fiscal 1997, segment revenues increased slightly and operating
income was unchanged compared with the previous year. In fiscal 1997,
continuing growth and efficiency improvements in our highway products
business helped offset the effects of adverse weather conditions in our
ready-mix concrete and aggregate operations.
READY-MIX CONCRETE AND AGGREGATE
In fiscal 1992 when we recognized the natural link with our other construc-
tion products activities, Trinity entered the ready-mix concrete business.
Trinity acquired certain assets of Transit Mix Concrete Company and began to
grow this business. At the time of our entry, the concrete and aggregate
business was in the bottom of its cycle providing us substantial
opportunities for future growth. Since that time, we have completed a number
of acquisitions that met the criteria of our proven expansion strategy.
Today, Trinity is a leader in the markets we serve in Texas and Southwestern
Louisiana.
Since fiscal 1993, ready-mix concrete and aggregate revenues have nearly
quadrupled. Along with our growth, we have assembled a team of people who
possess the technical expertise and experience to maintain our leadership
position in this market. Moreover, our low cost management practices
continue to provide substantial opportunities for efficiency gains.
Our fleet of ready-mix and aggregate trucks has grown to more than 500
units that are ready to deliver our products to our customers at a moments
notice. We thoroughly maintain all of our state-of-the-art equipment to
insure product quality and timely delivery.
The strong levels of commercial, industrial, residential and municipal
construction in our markets and our commitment to efficiency and customer
service continue to provide Trinity with the essential ingredients for growth
and improving profitability in the ready-mix concrete and aggregate
business.
HIGHWAY SAFETY PRODUCTS AND ROLLFORM SHAPES
Trinity continues to refine our process that transforms flat sheet steel
into an assortment of highway safety products, sheet piling and custom rolled
structural shapes. Growth opportunities continue to surface in our highway
guardrail and safety end-treatment business, where Trinity is an industry
leader.
Improving our nation's transportation system continues to be a key focus of
state and federal governments as the system's role in domestic economic
growth becomes even more critical. This year is the renewal year for federal
funding to support infrastructure building and maintenance across a range of
transportation modes.
Trinity will continue to play an important role as a supplier of highway
safety products for this improvement campaign. Working with a diverse group
of inventors and transportation research institutions, Trinity has helped
develop five state-of-the-art energy absorbing safety devices that exceed
existing federal requirements.
The recently established National Highway System ("NHS") is also fueling
exceptional growth opportunities for Trinity. The NHS effectively triples
the mileage of U.S. roadways that must be maintained to interstate highway
standards. Further, in 1998 the Federal Highway Administration will
implement new mandatory safety standards for roadside safety products used on
the NHS. This safety related federal mandate is already creating a strong
demand for Trinity's guardrail end-treatment products. Trinity's
state-of-the-art products are installed in all 50 states. We foresee
tremendous opportunity in helping to make America's highways safer.
Together, Trinity's ready-mix concrete and aggregate business and highway
safety products form the backbone of our Construction Products segment. We
are poised to take advantage of the healthy pace of spending and construction
for highways, homes, hospitals, businesses and other projects. We expect
continuing growth and excellent performance in our Construction Products
segment.
INDUSTRIAL PRODUCTS
Trinity's Industrial Products segment is comprised of our metal components
and containers businesses. In fiscal 1997, revenues increased 7% and
operating income increased 20% over the prior year. These results reflect
the stability in demand for our products.
METAL COMPONENTS GROUP
Trinity continues to be a leader in the manufacturing of certain commodity
and specialty metal components. Trinity's wide range of pipefittings,
flanges and container heads are used extensively in pressure piping and
storage systems worldwide. Trinity products are an integral part of many
process industries, including oil and gas exploration and production,
petrochemical manufacturing, gas transmission, power generation, paper
manufacturing and food processing.
We recently acquired certain assets of the Industrial Products Division of
Ladish Co., Inc. This acquisition strengthens our position as one of the
premier manufacturers in the pipefittings, flange and valve industry.
In fiscal 1997, we continued to upgrade and add manufacturing equipment
which increased our production capacity. In the year ahead, we expect to
increase our investment in new forging, machining and head-making capacity.
Trinity continues to penetrate important distribution channels by building
lasting customer relationships with a strong network of industrial suppliers
and other container manufacturers. Our commitment to product quality is
proven by the number of Trinity manufacturing facilities that receive ISO
9002 (International Organization for Standardization) accreditation in fiscal
1997.
We look forward to exciting growth opportunities in our metal components
business. Expanding world economies and resultant increases in the demand
for energy continue to be key drivers of demand for pipefittings, flanges and
heads. In addition, new uses for industrial gases should create added demand
for our products in a number of process industries.
CONTAINERS
Trinity manufactures a full line of containers, including liquefied
petroleum gas ("LPG") cylinders and permanent storage containers as well as
custom vessels. Trinity's LPG containers are recognized worldwide for their
dependability.
Our commitment to quality improvements, in both product and production
methods, keeps Trinity a leader in the industry.
We foresee substantial growth opportunities for Trinity's containers busi-
ness. A growing U.S. housing industry, new opportunities in the manufactured
housing market, and the increasing migration of families to non-urban and
rural areas not served by natural gas should continue to create demand for
LPG containers.
Competing in the international marketplace, Trinity manufactures custom
vessels for a spectrum of uses, including petrochemical production, oil and
gas recovery, refining and infrastructure building. Trinity's time-proven
approach to each project we undertake keeps us on the leading edge of custom
vessel fabrication. Our recent ISO 9001 accreditation assures our customers
of manufacturing consistency and product quality.
Our Mexico operations provide us with substantial opportunities to expand
our production and penetrate new markets. Their state-of-the-art facilities
and highly experienced workforce offer us significant production flexibility.
With a variety of developing domestic and foreign opportunities available
to us in our metal components and containers businesses, we look forward to
continuing growth and strong performance in our Industrial Products segment.
FINANCIAL SUMMARY
(in millions except for percent and per share data)
Year ended March 31
1997 1996 1995 1994 1993
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,234.3 2,241.7 2,064.3 1,509.6 1,235.6
Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . $ 214.2 194.9 148.9 106.7 70.5
Interest expense, net. . . . . . . . . . . . . . . . . . . . . . . $ 20.9 29.0 28.7 25.8 29.5
Income from continuing operations before income taxes and
cumulative effect of change in accounting for income taxes. . . . $ 181.3 165.8 121.6 82.5 41.8
Provision for income taxes . . . . . . . . . . . . . . . . . . . . $ 67.6 64.5 48.2 33.7 16.4
Effective tax rate . . . . . . . . . . . . . . . . . . . . . . . . % 37.3 38.9 39.6 40.8 39.2
Income from continuing operations before cumulative effect of
change in accounting for income taxes . . . . . . . . . . . . . . $ 113.7 101.3 73.4 48.8 25.4
Cumulative effect as of April 1, 1993 of change in accounting
for income taxes. . . . . . . . . . . . . . . . . . . . . . . . . $ - - - 7.9 -
Income from discontinued operations, net of income taxes . . . . . $ 23.8 12.5 15.7 19.5 19.6
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 137.5 113.8 89.1 76.2 45.0
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,356.4 1,426.6 1,400.5 1,279.1 1,039.1
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . $ 178.6 206.4 242.9 277.9 293.2
Stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . $ 809.5 746.0 641.2 570.5 507.3
Stock data:
Weighted average number of common and common equivalent
shares outstanding. . . . . . . . . . . . . . . . . . . . . . . 42.8 41.9 40.5 40.3 35.4
Income per common and common equivalent share from
continuing operations before cumulative effect of change
in accounting for income taxes. . . . . . . . . . . . . . . . . $ 2.66 2.42 1.81 1.21 0.72
Cumulative effect of change in accounting for income taxes . . . $ - - - 0.20 -
Income per common and common equivalent share from
discontinued operations . . . . . . . . . . . . . . . . . . . . $ 0.55 0.30 0.39 0.48 0.55
Net income per common and common equivalent share. . . . . . . . $ 3.21 2.72 2.20 1.89 1.27
Dividends per share . . . . . . . . . . . . . . . . . . . . . $ 0.68 0.68 0.68 0.64 0.53
Book value per share . . . . . . . . . . . . . . . . . . . . . . . $ 18.83 17.93 15.95 14.37 12.95
On March 31, 1997, the Company made a prorata distribution of the common
stock of Halter Marine Group, Inc. ("Halter") to its stockholders in the
form of a property distribution. The results of operations and balance sheet
of Halter have been reclassified in the financial statements to
discontinued operations as a result of the divestiture.
On August 31, 1993, the Company distributed a three-for-two stock split in
the form of a stock dividend. Accordingly, in the above table and
throughout this report for all prior fiscal years, share and per share
information has been restated to give effect to the stock split.
In fiscal 1994, dividends per share were restated to $0.13 in the first
quarter and then increased to $0.17 for the last three quarters.
MANAGEMENT DISCUSSION OF OPERATIONS AND FINANCIAL CONDITION
BASIS OF PRESENTATION
As a result of the distribution to its stockholder of the common stock of
Halter at the close of business on March 31, 1997 (see Business Acquisitions
and Divestitures in Notes to Consolidated Financial Statements), Trinity's
results of operations reflect the reclassification of Halter as a
discontinued operation. With this divestiture, the Company revised its
segment reporting to more accurately reflect the nature of its current
operations. The new reporting format combines similar businesses to reflect
internal organizational and operational focuses. The newly formed segments
are: (i) the Transportation Products segment, (ii) the Industrial Products
segment, and (iii) the Construction Products segment. The following
discussion compares results from continuing operations of Trinity for fiscal
1997, 1996 and 1995. Prior year segment results from continuing operations
are restated to the new segment reporting format.
1997 COMPARED WITH 1996
Record operating profit of $214.2 million was recorded for the fiscal
year ended March 31, 1997, an increase of $19.3 million compared to fiscal
1996. This increase is due primarily to higher operating profit recorded in
the Transportation Products and Industrial Products segments. The
Construction Products segment operating profit remained comparable to the
previous fiscal year. Revenues recorded for fiscal 1997 were $2.2 billion,
a decrease of $7.4 million from fiscal 1996. Results from the Transportation
Products segment reflect continued demand from the ongoing replacement cycle
for those products. The Construction Products segment continues to benefit
from federal and state government's focus on improving the nation's
transportation systems and good levels of construction activities in the
markets served by Trinity. The Industrial Products segment continues to
experience favorable market conditions.
Operating profit increased in the Transportation Products segment on
slightly lower revenues when compared to fiscal 1996 as a result of improving
margins attained from cost reduction programs put in place in prior years.
Transportation Products achieved record operating profit in a highly
competitive environment through increases in productivity and improvements to
production methods. The replacement cycle for railcars and barges continues
to be the main driver for the fiscal 1997 results, and it is anticipated that
replacement demand for these products will continue in the next fiscal year.
Trinity continues to be active in the railcar market with a variety of car
types including coal, grain, plastic pellet, cement, and a variety of tank
railcars. The inland river hopper barge product line has continued to
strengthen and is well positioned to take advantage of the current demand
generated by the strong shipments of commodities as well as the replacement
demand from the aging fleet. The Transportation Products segment has
positioned itself for future growth through investments which expand its
production capacity. Trinity's position as a full service provider of
maintenance services, management services, and leasing alternatives continues
to provide the Company with a steady revenue stream and to provide
opportunities for growth in today's market place.
Revenues in the Construction Products segment increased in the current
fiscal year when compared to the prior fiscal year with stable operating
profit. The increase in revenues signifies the Company's emphasis on
expanding its highway guardrail and safety system products and its ready-mix
concrete and aggregate business. Stable operating profit in the current year
is primarily the result of unusually severe weather in the fourth quarter
which restricted the pouring of ready-mix concrete. The outlook for next
year for the Construction Products segment is positive. Demand for
commercial, residential, and municipal construction and the overall strength
of the economy in the markets served will benefit the ready-mix concrete and
aggregate business. The highway safety systems products will continue to
benefit from the upgrading of America's highways and the new safety
requirements mandated by the federal government.
The Industrial Products segment has benefitted primarily from the
general improvement in the economy. Continuing improvements in the chemical
and petroleum industries and the ongoing regulatory emphasis on protecting
the environment is increasing the market for fittings and flanges as large
industrial customers increase capacity and replace and repair their existing
plants and piping systems. Continued strength in new housing starts and
general business conditions continue to support the LPG container markets.
Selling, engineering and administrative expenses increased to $124.0
million in fiscal 1997 from $105.6 million in fiscal 1996 due primarily to
increased expenses attributable to operations of fiscal 1997 acquisitions in
the Transportation Products segment.
Retirement plans expense increased to $18.5 million in fiscal 1997 from
$12.2 million in fiscal 1996 due primarily to an increased wage base and the
effect of a change in actuarial tables utilized.
Net interest expense of $20.9 million in fiscal 1997 decreased as
compared to $29.0 million in fiscal 1996 due primarily to less short-term
debt during the current fiscal year and to the reduction of equipment trust
certificate debt through scheduled debt payments.
Other, net expense increased to $12.0 million in fiscal 1997 from $0.1
million the previous fiscal year. The increase was due primarily to the
recording of certain charges, principally for valuation of production
facilities determined to be in excess of that required for future business
operations.
The provision for income taxes in fiscal 1997, expressed as a percent of
income from continuing operations before income taxes is a 37.3 percent rate
as compared to a 38.9 percent rate in fiscal 1996.
1996 COMPARED WITH 1995
Record revenues of $2.2 billion were recorded for the fiscal year ended
March 31, 1996, an increase of $177.4 million when compared to fiscal year
ended 1995. The Company experienced increases in demand in all of its three
business segments. Transportation Products, the Company's largest segment,
continued to benefit from the ongoing replacement cycle for its products.
The Construction Products segment continued to be favorably affected by
additional business acquisitions of certain ready-mix concrete operations
(see Business Acquisitions and Divestitures in Notes to Consolidated
Financial Statements) and by continued government focus on the transportation
infrastructure. The Industrial Products segment benefitted from improved
market conditions. Total operating profit increased from $148.9 million in
fiscal 1995 to $194.9 million in fiscal 1996.
Continuing the trend, revenues and operating profit in the
Transportation Products segment increased in fiscal 1996 compared to the
previous fiscal year as a result of continued replacement demand and
expansion of railroad traffic. Trinity continued to be active in the railcar
market with a variety of car types including coal, grain, plastic pellet,
cement, and a variety of tank railcars. The replacement cycle for barges
continued to intensify. Fiscal 1995 results included profit of $6.7 million
from the sale of hopper barges previously held for lease. Strategic
acquisitions (see Business Acquisitions and Divestitures in Notes to
Consolidated Financial Statements) and continued improvements made to
existing capacity positioned this segment for future growth.
In fiscal 1996, the Construction Products segment expanded its highway
guardrail and road barrier products and expanded its ready-mix concrete and
aggregate business. Improvements in operating results were reflective of
increased efficiencies gained from integrating operations from past
acquisitions and funding increases for improvements to the nation's highway
system.
Industry demand for products in the Industrial Products segment rose in
fiscal 1996. General improvement in the economy generated some expansion in
the industries served by this segment.
Selling, engineering and administrative expenses increased to $105.6
million in fiscal 1996 from $92.1 million in fiscal 1995 due principally to
additional expenses from fiscal 1996 business acquisitions and increased
Transportation Products and Industrial Products segment business.
Retirement plans expense increased to $12.2 million in fiscal 1996
from $11.0 million in fiscal 1995. The increase was due primarily to
increases in personnel in fiscal 1996 business acquisitions.
Net interest expense of $29.0 million in fiscal 1996 slightly increased
as compared to $28.7 million in fiscal 1995 primarily due to the increase in
the usage of short-term debt for capital expenditures and to finance business
acquisitions offset by the reduction of equipment trust certificate debt
through scheduled debt payments and disposition of certain assets.
The provision for income taxes in fiscal 1996, expressed as a percent of
income from continuing operations before income taxes was a 38.9 percent rate
as compared to a 39.6 percent rate in fiscal 1995.
LIQUIDITY AND FINANCIAL RESOURCES
During fiscal 1997, internally generated funds and short-term borrowing
were used to support capital expenditures and payments for business
acquisitions. Capital expenditures, excluding assets under lease, for fiscal
1997 were $44.5 million. Capital expenditures projected for fiscal 1998 are
approximately $50.0 million excluding assets for leasing activities. Cash
payments for acquisitions in fiscal 1997, net of cash acquired, totalled $7.9
million. Future operating requirements are expected to be financed
principally with net cash flows from operations. Internally generated funds,
short-term and long-term debt will continue to be used to finance business
acquisitions. Additions to Trinity's assets under lease are anticipated to
be financed through internally generated funds, the issuance of equipment
trust certificates, or similar debt instruments.
The percentages of long-term debt and stockholders' equity to total
capital (long-term debt and stockholders' equity) of $988.1 million were 18.1
percent and 81.9 percent, respectively.
INFLATION
Changes in price levels did not significantly affect the Company's
operations in fiscal 1997, 1996 or 1995.
FORWARD LOOKING STATEMENTS
This report contains "forward looking statements" as defined by the
Private Securities Litigation Reform Act of 1995 and includes statements as
to expectations, beliefs, plans, objectives and future financial performance,
or assumptions underlying or concerning matters herein. These statements
that are not historical facts, are forward looking and involve estimates;
projections; goals; forecasts; legal, regulatory and environmental issues;
market conditions, competition and expectations for new and existing products
in Trinity's Transportation Products, Construction Products and Industrial
Products segments; expectations for market segments and industry growth;
technologies; steel prices; interest rates and capital costs; taxes; effects
of unstable governments and business conditions in emerging economies; and
other assumptions and uncertainties, any of which could cause actual results
or outcomes to differ materially from those expressed in the forward looking
statements. Any forward looking statement speaks only as of the date on
which such statement is made. Trinity undertakes no obligation to update any
forward looking statement or statements to reflect events or circumstances
after the date on which such statement is made.
CONSOLIDATED INCOME STATEMENT
Year Ended March 31
1997 1996 1995
(in millions except per share data)
Revenues. . . . . . . . . . . . . . . . . . . . $2,234.3 $2,241.7 $2,064.3
Operating costs:
Cost of revenues. . . . . . . . . . . . . . . 1,877.6 1,929.0 1,812.3
Selling, engineering and administrative
expenses . . . . . . . . . . . . . . . . . . 124.0 105.6 92.1
Retirement plans expense. . . . . . . . . . . 18.5 12.2 11.0
2,020.1 2,046.8 1,915.4
Operating profit. . . . . . . . . . . . . . . . 214.2 194.9 148.9
Other (income) expenses:
Interest income . . . . . . . . . . . . . . . (0.5) (1.8) (0.8)
Interest expense. . . . . . . . . . . . . . . 21.4 30.8 29.5
Other, net. . . . . . . . . . . . . . . . . . 12.0 0.1 (1.4)
32.9 29.1 27.3
Income from continuing operations before
income taxes . . . . . . . . . . . . . . . . . 181.3 165.8 121.6
Provision (benefit) for income taxes:
Current . . . . . . . . . . . . . . . . . . . 71.2 77.0 77.7
Deferred. . . . . . . . . . . . . . . . . . . (3.6) (12.5) (29.5)
67.6 64.5 48.2
Income from continuing operations . . . . . . . 113.7 101.3 73.4
Discontinued operations:
Income from discontinued operations (net of
income taxes of $10.9, $8.1, and $10.2,
respectively) . . . . . . . . . . . . . . . 14.5 12.5 15.7
Gain from sale of subsidiary stock in an
initial public offering . . . . . . . . . . 9.3 - -
23.8 12.5 15.7
Net income. . . . . . . . . . . . . . . . . . . $ 137.5 $ 113.8 $ 89.1
Income per common and common equivalent share
from continuing operations . . . . . . . . . . $ 2.66 $ 2.42 $ 1.81
Income per common and common equivalent share
from discontinued operations . . . . . . . . . 0.55 0.30 0.39
Net income per common and common
equivalent share . . . . . . . . . . . . . . . $ 3.21 $ 2.72 $ 2.20
Weighted average number of common and common
equivalent shares outstanding . . . . . . . . 42.8 41.9 40.5
See accompanying notes to consolidated financial statements.
CONSOLIDATED BALANCE SHEET
March 31
1997 1996
(in millions except per share data)
Assets
Cash and cash equivalents. . . . . . . . . . . . . . $ 12.2 $ 14.7
Receivables (net of allowance for doubtful accounts
of $1.0 in 1997 and $1.1 in 1996). . . . . . . . . 236.9 285.2
Inventories:
Raw Materials and Supplies . . . . . . . . . . . . 216.7 212.2
Work in process. . . . . . . . . . . . . . . . . . 41.9 78.6
Finished goods . . . . . . . . . . . . . . . . . . 55.9 38.9
314.5 329.7
Property, plant and equipment, at cost:. . . . . . . 1,136.5 1,007.1
Less accumulated depreciation. . . . . . . . . . . . (424.9) (369.6)
711.6 637.5
Net assets of discontinued operations . . . . . . . .. - 109.3
Other assets. . . . . . . . . . . . . . . . . . . . . 81.2 50.2
$1,356.4 $1,426.6
Liabilities and Stockholders' Equity
Short-term debt . . . . . . . . . . . . . . . . . . . $ 64.0 $ 216.0
Accounts payable and accrued liabilities. . . . . . . 261.2 210.0
Long-term debt. . . . . . . . . . . . . . . . . . . . 178.6 206.4
Deferred income taxes . . . . . . . . . . . . . . . . 22.8 33.1
Other liabilities . . . . . . . . . . . . . . . . . . 20.3 15.1
546.9 680.6
Stockholders' equity:
Common stock - par value $1 per share;
authorized - 100.0 shares; shares issued and
outstanding in 1997 - 43.0; in 1996 - 41.6 . . . . 43.0 41.6
Capital in excess of par value. . . . . . . . . . . 273.3 239.6
Retained earnings . . . . . . . . . . . . . . . . . 493.2 464.8
809.5 746.0
$1,356.4 $1,426.6
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
Year Ended March 31
(in millions) 1997 1996 1995
Cash flows from operating activities:
Net income. . . . . . . . . . . . . . . . . . . . . $137.5 $113.8 $ 89.1
Less: Income from discontinued operations . . . . . (23.8) (12.5) (15.7)
Income from continuing operations . . . . . . . . . 113.7 101.3 73.4
Adjustments to reconcile net income to net cash
provided (required) by operating activities:
Depreciation. . . . . . . . . . . . . . . . . . . 87.8 69.2 53.2
Deferred benefit for income taxes . . . . . . . . (3.6) (12.5) (29.5)
(Gain) loss on sale of property, plant
and equipment. . . . . . . . . . . . . . . . . . (4.3) 3.1 (0.7)
Other . . . . . . . . . . . . . . . . . . . . . . (4.5) (6.7) (6.6)
Change in assets and liabilities:
(Increase) decrease in receivables . . . . . . . 64.7 (14.9) (15.4)
(Increase) decrease in inventories . . . . . . . 17.9 (3.6) (39.5)
(Increase) decrease in other assets. . . . . . . (32.0) 7.8 (11.0)
Increase (decrease) in accounts payable and
accrued liabilities . . . . . . . . . . . . . . 51.5 (50.2) 79.3
Increase (decrease) in other liabilities . . . . (12.4) 0.9 (4.8)
Total adjustments. . . . . . . . . . . . . . . 165.1 (6.9) 25.0
Net cash provided by operating activities . . . . 278.8 94.4 98.4
Cash flows from investing activities:
Proceeds from sale of property, plant and equipment 59.2 100.2 83.3
Capital expenditures. . . . . . . . . . . . . . . . (173.5) (127.5) (87.0)
Payment for purchase of acquisitions. . . . . . . . (7.9) (18.5) (58.3)
Cash of acquired subsidiary . . . . . . . . . . . . 2.3 1.2 1.1
Net cash required by investing activities . . . . (119.9) (44.6) (60.9)
Cash flows from financing activities:
Issuance of common stock. . . . . . . . . . . . . . 4.6 2.9 0.9
Net borrowings (repayments) under short-term debt . (152.0) (4.0) 28.0
Proceeds from issuance of long-term debt. . . . . . - 7.0 -
Payments to retire long-term debt . . . . . . . . . (31.6) (43.6) (38.1)
Dividends paid. . . . . . . . . . . . . . . . . . . (28.7) (27.9) (27.2)
Net cash required by financing activities . . . . (207.7) (65.6) (36.4)
Cash flows provided by discontinued operations . . . 46.3 15.7 5.2
Net increase (decrease) in cash and cash equivalents. (2.5) (0.1) 6.3
Cash and cash equivalents at beginning of period. . . 14.7 14.8 8.5
Cash and cash equivalents at end of period. . . . . . $ 12.2 $ 14.7 $ 14.8
Interest paid in fiscal 1997, 1996, and 1995 was $24.5, $36.2, and $33.0,
respectively.
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Common Capital
Common Stock in
Shares $1.00 Excess Total
(100,000,000 Par of Par Retained Stockholders'
(in millions except share Authorized) Value Value Earnings Equity
and per share data)
Balance at March 31, 1994 . . . . . 39,711,698 $39.7 $213.4 $317.4 $570.5
Other . . . . . . . . . . . . . . 508,996 0.5 8.3 - 8.8
Net income. . . . . . . . . . . . - - - 89.1 89.1
Cash dividends ($0.68 per share). - - - (27.2) (27.2)
Balance at March 31, 1995 . . . . . 40,220,694 40.2 221.7 379.3 641.2
Other . . . . . . . . . . . . . . 1,375,343 1.4 17.9 - 19.3
Net income. . . . . . . . . . . . - - - 113.8 113.8
Cash dividends ($0.68 per share). - - - (28.3) (28.3)
Balance at March 31, 1996 . . . . . 41,596,037 41.6 239.6 464.8 746.0
Distribution of Halter Marine
Group, Inc. . . . . . . . . . . - - - (80.2) (80.2)
Other . . . . . . . . . . . . . . 1,450,328 1.4 33.7 - 35.1
Net income. . . . . . . . . . . . - - - 137.5 137.5
Cash dividends ($0.68 per share). - - - (28.9) (28.9)
Balance at March 31, 1997 . . . . . 43,046,365 $43.0 $273.3 $493.2 $809.5
The Company has authorized and unissued 1,500,000 shares of no par value
voting preferred stock.
See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Summary of Significant Accounting Policies
The financial statements of Trinity Industries, Inc. and its
consolidated subsidiaries ("Trinity" or the "Company") include the accounts
of all significant majority-owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated. Certain amounts for periods
ended prior to March 31, 1997 have been reclassified to conform to the
current year presentation, including restatements to reflect the divestiture
of Trinity's former subsidiary, Halter Marine Group, Inc. ("Halter").
For purposes of the Consolidated Statement of Cash Flows, the Company
considers all highly liquid debt instruments purchased with a maturity of
three months or less to be cash equivalents. Financial instruments which
potentially subject the Company to concentrations of credit risk are
primarily cash investments and receivables. The Company places its cash
investments in investment grade, short-term debt instruments and limits the
amount of credit exposure to any one commercial issuer. Concentrations of
credit risk with respect to receivables are limited due to the large number
of customers in the Company's customer base, and their dispersion across
different industries and geographic areas. The Company maintains an
allowance for losses based upon the expected collectibility of all
receivables.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
The Company enters into lease contracts with third parties with terms
generally ranging between one and fifteen years, wherein certain equipment
manufactured by Trinity is leased for a specified type of service over the
term of the contract. The Company accounts for leases principally by the
operating method.
Inventories and investments are valued at the lower of cost or market.
Inventory cost is determined principally on the specific identification
method. Market replacement cost or net realizable value.
Depreciation and amortization are generally computed by the straight-
line method on the estimated useful lives of the assets. The costs
of ordinary maintenance and repair are charged to expense while renewals and
major replacements are capitalized.
Net income per common an common equivalent share is based on the
weighted average shares outstanding plus the assumed exercise of dilutive
stock options (less the number of treasury shares assumed to be purchased
from the proceeds using the average market price of Trinity's common stock).
In fiscal 1997, the Company adopted Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed of," which did not have a material
impact on the assets of continuing operations.
In fiscal 1997, the Company adopted Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation," and has elected
to continue to apply the accounting provisions of APB Opinion 25, "Accounting
for Stock Issued to Employees." See Stock Plans in Notes to Consolidated
Financial Statements.
In February 1997, Statement of Financial Accounting Standards No. 128,
"Earnings Per Share," was issued. Adoption is required by the Company
beginning with the interim financial statements issued for the third quarter
of fiscal 1998. The pro forma effect of applying this statement to fiscal
1997 earnings is an increase in net income per common and common equivalent
share of $0.02.
Segment Information
With the divestiture of Halter, Trinity revised its segment reporting to
more accurately reflect the nature of its current operations. The new
reporting format combines similar businesses to reflect current internal
organizational and operational focuses. Prior year segment results are
restated to the new segment reporting format.
Trinity manufactures, sells and leases a wide variety of products
principally in three business segments: (1) the Transportation Products
segment which consists primarily of railcars, principally tank cars and
freight cars, barges for inland waterway service, and railcar and barge
leasing to various industries; (2) the Construction Products segment which
consists primarily of highway guardrail and safety products, beams, girders,
and columns used in construction of highway and railway bridges, passenger
loading bridges and conveyor systems, and ready- mix concrete and aggregates;
(3) the Industrial Products segment which consists primarily of pressure and
non-pressure containers for the storage and transportation of liquefied
gases, other liquid, and dry products, weld fittings (tees, elbows, reducers,
caps, flanges, etc.) used in pressure piping systems and container heads (the
ends of pressure and non-pressure containers) for use internally and by other
manufacturers of containers.
Financial information for these segments is summarized in the following
table. The Company operates principally in the continental United States.
Intersegmental sales are shown at market prices.
Corporate operating profit elimination consists principally of the
administrative overhead of the Company.
Corporate assets consist primarily of cash and cash equivalents, other
assets, notes receivable, land held for investment, and certain property,
plant and equipment.
The Transportation Products segment includes revenues from one customer
which accounted for 10.8 percent, 14.9 percent, and 14.1 percent of
consolidated revenues in fiscal 1997, 1996, and 1995, respectively.
In the Segments of Business table below, the caption 'Additions (net) to
property, plant and equipment' does not include Business Acquisitions.
Segments of Business
Eliminations
Transpor Construc- & Cor- Consol-
tation tion Industrial porate idated
(in millions) Products Products Products Items Total
Year ended March 31, 1997
Total revenues:
Trade. . . . . . . . . . . . . $1,501.5 395.2 327.6 10.0 2,234.3
Intersegment . . . . . . . . . 129.3 - 4.8 (134.1) -
Total . . . . . . . . . . . . $1,630.8 395.2 332.4 (124.1) 2,234.3
Operating profit (loss). . . . . $ 175.2 43.4 42.5 (46.9) 214.2
Identifiable assets . . . . . . $ 846.0 210.8 164.9 134.7 1,356.4
Depreciation . . . . . . . . . . $ 49.5 22.8 7.8 7.7 87.8
Additions (net) to property,
plant and equipment . . . . . . $ 100.5 15.1 7.1 (0.1) 122.6
Year ended March 31, 1996
Total revenues:
Trade. . . . . . . . . . . . . $1,555.2 380.6 305.4 0.5 2,241.7
Intersegment . . . . . . . . . 86.9 - 6.5 (93.4) -
Total . . . . . . . . . . . . $1,642.1 380.6 311.9 (92.9) 2,241.7
Operating profit (loss). . . . . $ 157.9 43.4 35.4 (41.8) 194.9
Identifiable assets . . . . . . $ 832.5 218.4 151.6 224.1 1,426.6
Depreciation . . . . . . . . . . $ 33.7 19.3 8.9 7.3 69.2
Additions (net) to property,
plant and equipment . . . . . . $ 6.8 9.2 4.1 8.7 28.8
Year ended March 31, 1995
Total revenues:
Trade. . . . . . . . . . . . . $1,433.3 355.5 275.2 0.3 2,064.3
Intersegment . . . . . . . . . 29.4 - 3.9 (33.3) -
Total . . . . . . . . . . . . $1,462.7 355.5 279.1 (33.0) 2,064.3
Operating profit (loss). . . . . $ 133.8 35.6 24.6 (45.1) 148.9
Identifiable assets . . . . . . $ 821.0 228.7 136.9 213.9 1,400.5
Depreciation . . . . . . . . . . $ 24.9 14.6 7.2 6.5 53.2
Additions (net) to property,
plant and equipment . . . . . . $ (7.9) 12.9 6.9 11.3 23.2
Business Acquisitions and Divestitures
Business Acquisitions
The Company, through wholly-owned subsidiaries, made certain business
acquisitions for continuing operations during fiscal 1997, 1996 and 1995. All
have been accounted for by the purchase method. The operations of these
companies have been included in the consolidated financial statements from
the effective dates of the acquisitions.
In fiscal 1997, the businesses acquired for continuing operations
included: (i) 100 percent of the capital stock of Transcisco Industries, Inc.
in exchange for 1,162,612 shares of Trinity common stock. Transcisco is a
diversified railcar services company engaged in railcar maintenance and
repair, specialty railcar leasing and management services, and Russian rail
transportation services through its 20 percent ownership of SFAT, Russia's
largest private rail transportation services company, and (ii) certain assets
of John Guidry Ready Mix Company, Inc., The Cement and Supply Company, and
Pitcock Bros. Ready Mix Concrete, Inc. for cash. These assets will be used
in the ready-mix concrete business. The aggregate purchase price of these
acquisitions was approximately $68.6 million. Contribution of these
acquisitions to revenues and operating profit during fiscal 1997 is not
material.
In fiscal 1996, the businesses acquired for continuing operations
included: (i) 100 percent of the capital stock of the holding company which
owns Grupo TATSA S. A. de C. V. in exchange for 1,199,000 shares of Trinity
common stock. Grupo TATSA, now known as Trinity Industries de Mexico,
headquartered in Mexico City, Mexico, manufactures and distributes a wide
variety of fabricated steel products including containers (primarily for the
storage or transportation of liquefied petroleum products), railcars and
railcar parts, and heads which are used within the Company as well as sold to
other manufacturers from its manufacturing facilities in Mexico City,
Monclova, and Huehuetoca, Mexico; (ii) certain assets of McDonald's
Ready-Mix, Brazos Point, Inc., and Dunn & Gerhart Everready Concrete, Inc.
for cash. These assets are utilized in the ready-mix concrete and aggregate
business; (iii) certain assets of Hall-Buck Marine, Inc. for cash.
Hall-Buck's assets are utilized in the maintenance and repair of marine
products; and (iv) certain assets of The Casteel Group, Inc. for cash.
Casteel's assets are utilized in the fabrication of construction products.
The aggregate purchase price of these acquisitions was approximately $52.6
million.
In fiscal 1995, the businesses and properties acquired for continuing
operations included: (i) 100 percent of the common stock of Concrete Pipe
Products Company, Inc. and Midland Concrete, Incorporated for 149,001 shares
and 35,033 shares of Trinity common stock, respectively, certain assets of
Gemini Industries, Inc., Ratliff Ready-Mix, Inc., and Diamond Ready-Mix for
cash, and certain properties acquired for mineral extraction. These companies
and assets are utilized in the ready-mix concrete and aggregates business;
(ii) certain assets of Port Allen Marine Services, Inc., the Syntechnics
Division of The Alpha Corporation of Tennessee, and New NABRICO Corporation
for cash. These businesses produce and repair barges and manufacture other
marine products; (iii) certain assets of Flo- Bend, Inc. for cash. These
assets are utilized in the manufacture of metal components; and (iv) certain
assets of the Ready-Mix Concrete Operations and Aggregate Operations of
LaFarge Corporation for cash. These operations are utilized in the ready-mix
concrete and aggregates business. The aggregate purchase price of these
acquisitions was approximately $80.9 million.
Divestiture
Halter Marine Group, Inc., previously a wholly-owned subsidiary of the
Company, completed its initial public offering (the "Offering") of 3,450,000
shares of common stock, par value $.01 per share on October 29, 1996. The
3,450,000 shares of common stock sold to the public represented approximately
19.0 percent of the total outstanding common stock of Halter. The Company
retained ownership of the remaining 15,000,000 shares. The Offering price
was $11 per share of Halter common stock resulting in net proceeds to Halter
of approximately $33.8 million after deducting underwriting discounts and
commissions and Halter's Offering expenses. Trinity recorded a net gain of
approximately $9.3 million from the sale of Halter common stock in the
Offering.
At the close of business on March 31, 1997, the Company completed the
divestiture of Halter with the distribution of its remaining 15 million
shares of Halter common stock to its stockholders in the form of a tax-free
property distribution. Each of the Company's stockholders of record at March
21, 1997 received 0.348 of a share of Halter common stock for each share of
Trinity common stock held.
Prior year's financial statements have been reclassified to reflect the
divestiture of the Halter business. The income from discontinued operations
reflected in the table below is inclusive of minority interest held by
stockholders outside of the Company. Summary operating results of
discontinued operations are as follows (in millions):
Year Ended March 31
1997 1996 1995
Revenues . . . . . . . . . . . . . . . $406.8 $254.3 $250.6
Income from discontinued operations
before income taxes . . . . . . . . . $ 27.0 $ 20.6 $ 25.9
Provision for income taxes . . . . . . 10.9 8.1 10.2
Income from discontinued operations. . $ 16.1 $ 12.5 $ 15.7
Due to the divestiture of Halter, the Halter assets at March 31, 1997 are
not included in the Company's March 31, 1997 Consolidated Balance Sheet.
At March 31, 1997, Trinity guaranteed contract performance obligations
of Halter in the aggregate amount of approximately $66.1 million, and
Halter has outstanding contract bid and performance bonds and similar
obligations issued by third parties with Trinity as the obligor with an
aggregate face amount of approximately $94.6 million.
Stock Plans
The Company has a Stock Option and Incentive Plan (the "Plan") which
provides for grants of incentive or non-qualified stock options, restricted
stock awards, performance awards and stock appreciation rights ("SARs").
Grants may be made to directors, officers, and employees in managerial or
other key positions in the Company. Incentive options may be granted over
a period not to exceed ten years at a price not less than fair market value
on the date of grant. The maximum number of shares of common stock which
may be issued under the Plan shall not exceed 1,500,000 unless adjusted
for changes in capitalization of the Company. The Plan provides that, to
the extent awards granted pursuant to this Plan or any prior stock option
plan are forfeited, expire or are canceled, they may again be granted
pursuant to the provisions of this Plan. The Plan provides that if shares
already owned by the optionee are surrendered as full or partial payment
of the exercise price of an option, a new option (the "Reload Option") may
be granted equal to the number of shares surrendered. The exercise price
of the Reload Option is the fair market value on the effective date of the
surrender of the shares.
Restricted stock awards issued under the Plan may not be disposed of
by the recipient until all restrictions specified in the award expire.
Under the Plan, 20,000 shares of restricted stock were granted during 1997
at a grant-date fair value of $25.13 per share.
The following table summarizes stock option activity:
Stock Options
Weighted Weighted
Incentive Average Non-Incentive Average
Shares Exercise Price Shares Exercise Price
Outstanding at March 31, 1994 . . . . . . . . . . . . . . . . 373,321 $18.57 1,602,686 $23.94
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,100 $32.78 68,887 $36.45
Cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . (4,080) $18.78 (6,000) $24.78
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . (31,731) $18.01 (80,539) $24.70
Outstanding at March 31, 1995 . . . . . . . . . . . . . . . . 343,610 $18.88 1,585,034 $24.44
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . 79,500 $32.59 41,273 $37.64
Cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . (10,212) $19.99 (11,090) $21.99
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . (56,025) $17.77 (245,629) $23.61
Outstanding at March 31, 1996 . . . . . . . . . . . . . . . . 356,873 $22.07 1,369,588 $25.01
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . 305,505 $32.05 174,951 $32.62
Cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . (3,625) $22.43 (3,000) $26.67
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . (105,047) $18.39 (132,523) $23.35
Outstanding at March 31, 1997 . . . . . . . . . . . . . . . . 553,706 $28.28 1,409,016 $26.11
At March 31, 1997, there were 893,548 shares (1,146,660 at March 31, 1996)
reserved for future options.
The following table summarizes information about stock options outstanding at March 31, 1997:
Options Outstanding Options Exercisable
Weighted Weighted Weighted
Average Average Average
Remaining Life Shares Exercise Price Shares Exercise Price
Incentive options . . . . . 4 Years 164,591 $19.06 164,591 $19.06
10 Years 389,115 $32.17 18,350 $32.57
Non-Incentive options . . . 3 Years 467,495 $19.29 467,495 $19.29
7 Years 941,521 $29.49 298,253 $31.43
1,962,722 948,689
Pursuant to a merger agreement between Transcisco Industries, Inc.
("Transcisco") and a wholly-owned subsidiary of the Company, stock options
outstanding to purchase Transcisco stock were converted to options to acquire
shares of Trinity stock. Transcisco options were converted into incentive
options to acquire 58,208 shares and non-incentive options to acquire 92,092
shares of Trinity stock at prices ranging from $1.17 to $29.51 per share.
For the fiscal year ended March 31, 1997, 117,518 options were exercised and
10,053 options were canceled. As of March 31, 1997, 22,729 options were
outstanding and 16,633 options were exercisable.
The exercise price for outstanding options under the Plan ranged from
$16.58 to $39.25 at March 31, 1997. In connection with the Halter property
distribution, stock options outstanding at the close of business on March 31,
1997 were adjusted to preserve the economic value of such options. Incentive
and non-incentive options shown outstanding in the table above were adjusted
to 694,192 and 1,767,899 options, respectively at prices ranging from $13.22
to $31.28. Incentive and non-incentive options pursuant to the Transcisco
converted options were adjusted to 7,700 and 20,817, respectively at prices
ranging from $2.11 to $22.46 per share.
In October 1995, Statement of Financial Accounting Standards ("SFAS")
No. 123, "Accounting for Stock-Based Compensation," was issued. The Company
has elected the option to apply the accounting provisions of APB Opinion 25,
"Accounting for Stock Issued to Employees." Accordingly, no compensation
cost has been recorded for the stock options granted. The effect of computing
compensation cost in accordance with SFAS No. 123 is not material to the
Company's net income or net income per share. SFAS No. 123 does not apply to
grants prior to fiscal year 1996.
The weighted-average fair value of options granted during 1997 and 1996
was $9.26 and $10.39, respectively. The fair value of each option grant is
estimated on the date of the grant using the Black-Scholes option-pricing
model with the following weighted-average assumptions:
1997 1996
Expected option life in years. . . . . . . . . . . 6.8 6.8
Interest rate. . . . . . . . . . . . . . . . . . . 6.45% 6.42%
Volatility factor. . . . . . . . . . . . . . . . . 0.209 0.224
Dividend yield . . . . . . . . . . . . . . . . . . 2.11% 2.00%
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting
restrictions and are fully transferable. Because the Company's employee
stock options have characteristics significantly different from those of
traded options and because changes in the subjective input assumptions can
materially affect the fair value estimate, the existing models, in
management's opinion, do not provide a reliable measure of the fair value of
its employee stock options.
Long-term Debt
March 31
1997 1996
(in millions)
4.95-9.25 percent industrial development revenue bonds
payable in varying amounts through 2005 . . . . . . . . $ 1.7 $ 2.0
6.0-10.0 percent promissory notes, generally payable
annually through 2001 . . . . . . . . . . . . . . . . . 33.5 35.6
6.96-11.55 percent equipment trust certificates to
institutional investors generally payable in semi-
annual installments of varying amounts through 2003 . . 133.8 158.1
11.3 percent notes payable monthly through 2003. . . . . 9.6 10.7
$178.6 $206.4
The fair value of non-traded, fixed rate outstanding debt, estimated
using discounted cash flow analysis, approximates its carrying value. The
Company is required to maintain certain financial ratios, as defined.
Principal payments due during the next five years are: 1998 - $28.2; 1999 -
$27.9; 2000 - $25.9; 2001 - $51.3; and 2002 - $24.0.
The trustees of the equipment trusts have been assigned title to railcars
with a cost of $303.8 at March 31, 1997 for the life of the respective
equipment trusts. Leases relating to such railcars financed by equipment
trust certificates have been assigned as collateral.
Future minimum rental revenues on leases in each fiscal year are
approximately $59.1 in 1998, $49.4 in 1999, $41.7 in 2000, $34.3 in 2001, and
$29.7 in 2002, and $120.1 thereafter.
Property, Plant and Equipment
March 31
1997 1996
(in millions)
Land . . . . . . . . . . . . . . . . . . . . . . . . $ 34.5 $ 34.7
Buildings and improvements . . . . . . . . . . . . . 208.6 185.4
Machinery. . . . . . . . . . . . . . . . . . . . . . 458.4 416.4
Equipment on lease (predominately long-term) . . . . 413.7 353.7
Construction in progress . . . . . . . . . . . . . . 21.3 16.9
$1,136.5 $1,007.1
Income Taxes
(in millions)
The provision for federal income taxes is determined on a
consolidated return basis. The significant components of the
provision (benefit) for income taxes from continuing operations
follows:
Year Ended March 31
1997 1996 1995
Current
Federal. . . $63.2 $70.0 $70.4
State. . . . 8.0 7.0 7.3
71.2 77.0 77.7
Deferred. . . . . (3.6) (12.5) (29.5)
Total . . . . . . $67.6 $64.5 $48.2
Deferred income tax is provided in the financial statements
for differences between financial and taxable income. The
components of deferred tax liabilities and assets follow:
March 31
1997 1996
Deferred tax liabilities:
Excess of tax depreciation over
financial statement depreciation......... $ 74.1 $ 75.7
Total deferred tax liabilities........ 74.1 75.7
Deferred tax assets:
Pensions and other benefits.............. 35.4 39.8
Accounts receivable, inventory, and other
asset valuation accounts................. 3.6 1.7
Other..................................... 12.3 1.1
Total deferred tax assets................ 51.3 42.6
Net deferred tax liabilities.............. $ 22.8 $ 33.1
The provision for income taxes from continuing operations results in
effective tax rates different than the statutory rates. The reconciliation
between the effective and statutory rates follows:
Year Ended March 31
1997 1996 1995
Statutory rate.............. 35.0% 35.0% 35.0%
State taxes................. 2.3 3.2 4.0
Other....................... - 0.7 0.6
Effective tax rate.......... 37.3% 38.9% 39.6%
In fiscal 1997, 1996, and 1995 income taxes of $85.9, $118.1, and $55.9,
respectively, were paid net of refunds received which includes amounts
associated with Halter.
Employee Benefit Plans
(in millions)
Pension plans are in effect which provide income and death benefits for
eligible employees. The Company's policy is to fund retirement costs accrued
to the extent such amounts are deductible for income tax purposes. Plan
assets include cash, short-term debt securities, and other investments.
Benefits are based on years of credited service and compensation.
Net periodic pension expense for fiscal 1997, 1996, and 1995 included
the following components:
Year Ended March 31
1997 1996 1995
Service cost-benefits earned during the period $ 13.7 $ 8.0 $ 7.1
Interest cost on projected benefit obligation. 9.5 7.4 6.6
Actual return on assets. . . . . . . . . . . . (13.0) (16.9) (6.2)
Net amortization and deferral. . . . . . . . . 3.7 10.1 0.3
Accrual of profit sharing contribution . . . . 4.6 3.6 3.2
Net periodic pension expense . . . . . . . . . $ 18.5 $ 12.2 $ 11.0
Assumptions used for valuation of the projected
benefit obligation were:
Year Ended March 31
1997 1996 1995
Discount rates . . . . . . . . . . . . . . . . 7.75% 7.75% 8.25%
Rates of increase in compensation levels . . . 4.75% 4.75% 5.25%
Expected long-term rate of return on assets. . 9.00% 9.00% 9.00%
Amounts recognized in the Company's Consolidated
Balance Sheet follow: March 31
1997 1996
Actuarial present value of benefit obligation:
Vested benefit obligation. . . . . . . . . . $ 82.1 $ 69.9
Accumulated benefit obligation . . . . . . . $ 95.6 $ 83.6
Projected benefit obligation . . . . . . . . . $124.5 $112.4
Plan assets at fair value. . . . . . . . . . . 114.3 92.6
Projected benefit obligation
in excess of plan assets. . . . . . . . . . . (10.2) (19.8)
Unrecognized net asset at April 1, 1985. . . . (1.5) (1.6)
Unrecognized net asset at January 1, 1986. . . (0.7) (0.7)
Unrecognized net loss at March 31. . . . . . . 17.0 22.3
Accrued pension expense. . . . . . . . . . . . $ 4.6 $ 0.2
The Company has a contributory profit sharing plan for employees of the
Company and certain affiliates. Under the plan, eligible employees are
allowed to make voluntary pre-tax contributions. The Company's contribution
to this plan, as defined, is based on consolidated earnings and dividends.
Contingencies
In November 1996, a jury sitting in the United States District Court for
the Southern District of New York returned a verdict against the Company and
CIGNA, formally Aetna Insurance Company, in a retrial of an action brought
against the Company by Morse/Diesel, Inc. for damages allegedly caused in the
construction of the Marriott Marquis Hotel in Times Square, New York City,
New York. A verdict was rendered in favor of Morse/Diesel in the amount of
thirty-one million dollars plus interest from July, 1984. A verdict was
rendered in favor of the Company on its counterclaim of six million dollars
plus interest from December, 1984. The Company has been advised that it has
substantial arguments against the validity of the verdict, and it will pursue
all available avenues in the post-trial and appellate review processes.
In May 1997, the United States Court of Appeals for the Federal Circuit
rendered and remanded for trial in the District Court an appeal from an order
of the United States District Court for the Western District of Pennsylvania
entered on September 13, 1996 concerning a patent in the matter Johnstown
America Corporation and JAC Patent Corporation, Plaintiffs- Appellants versus
Trinity Industries, Inc. Defendant-Appellee. Trinity has been advised that it
has legal and factual defenses, and Trinity will vigorously contest Johnstown
America's claim for actual damages.
While the ultimate liability in these matters is difficult to assess, it
is management's belief that the final outcome is not likely to have a
material adverse affect on the Company's consolidated financial position.
However, there can be no assurance that the outcome of such litigation would
not be material to the results of a particular reporting period.
The Company is involved in various other 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 affect on the Company's
consolidated financial statements.
Stockholder's Rights Plan
The Company has adopted a Stockholder's Rights Plan. Effective April
27, 1989, the Company paid a dividend distribution of one purchase right for
each outstanding share of the Company's $1.00 par value common stock. Each
right entitles the stockholder to purchase from the Company one one-hundredth
of a share of Series A Junior Participating Preferred Stock at an exercise
price of one hundred and seventy-five dollars. As amended, the rights are
not exercisable or detachable from the common stock until ten business days
after a person acquires beneficial ownership of ten percent or more of the
Company's common stock or if a person or group commences a tender or exchange
offer upon consummation of which that person or group would beneficially own
ten percent or more of the common stock.
If any person becomes a beneficial owner of ten percent or more of the
Company's common stock other than pursuant to an offer, as defined, for all
shares determined by certain directors to be fair to the stockholders and
otherwise in the best interests of both the Company and its stockholders
(other than by reason of share purchases by the Company), each right not
owned by that person or related parties enables its holder to purchase, at
the right's then current exercise price, shares of the Company's common stock
having a calculated value of twice the right's exercise price.
The rights, which are subject to adjustment, may be redeemed by the
Company at a price of one cent per right at any time prior to their
expiration on April 27, 1999 or the point at which they become exercisable.
Report of Independent Auditors
The Board of Directors and Stockholders
Trinity Industries, Inc.
We have audited the accompanying consolidated balance sheets
of Trinity Industries, Inc. as of March 31, 1997 and 1996, and
the related consolidated statements of income, cash flows and
stockholders' equity for each of the three years in the period
ended March 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally
accepted auditing standards. These standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Trinity Industries, Inc. at March 31, 1997
and 1996, and the consolidated results of its operations and its
cash flows for each of the three years in the period ended March
31, 1997, in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Dallas, Texas
May 6, 1997
SUPPLEMENTAL INFORMATION
Supplementary Unaudited Quarterly Data
First Second Third Fourth
(in millions except for per share data) Quarter Quarter Quarter Quarter Year
Year ended March 31, 1997:
Revenues . . . . . . . . . . . . . . $ 576.5 548.5 580.4 528.9 2,234.3
Operating profit . . . . . . . . . . $ 53.9 54.4 54.3 51.6 214.2
Income from continuing operations. . $ 30.5 30.5 22.1 30.6 113.7
Income from discontinued operations. 3.3 3.9 12.8 3.8 23.8
Net income . . . . . . . . . . . . . $ 33.8 34.4 34.9 34.4 137.5
Income per common and common
equivalent share from continuing
operations. . . . . . . . . . . . . $ 0.72 0.72 0.51 0.71 2.66
Income per common and common
equivalent share from discontinued
operations. . . . . . . . . . . . . 0.08 0.09 0.29 0.08 0.55
Net income per common and
common equivalent share . . . . . $ 0.80 0.81 0.80 0.79 3.21
Year ended March 31, 1996:
Revenues . . . . . . . . . . . . . . $ 532.7 574.6 545.7 588.7 2,241.7
Operating profit . . . . . . . . . . $ 46.9 49.8 46.8 51.4 194.9
Income from continuing operations. . $ 23.8 25.5 24.4 27.6 101.3
Income from discontinued operations. 3.7 2.4 3.7 2.7 12.5
Net income . . . . . . . . . . . . . $ 27.5 27.9 28.1 30.3 113.8
Income per common and common
equivalent share from continuing
operations. . . . . . . . . . . . . $ 0.57 0.61 0.58 0.66 2.42
Income per common and common
equivalent share from discontinued
operations. . . . . . . . . . . . . 0.09 0.05 0.09 0.06 0.30
Net income per common and
common equivalent share . . . . . $ 0.66 0.66 0.67 0.72 2.72
TRINITY'S BOARD OF DIRECTORS
(Pictures of Trinity's Board of Directors)
EXECUTIVE OPERATING
OFFICERS OFFICERS
W. Ray Wallace Manuel Castro, Sr.
Chairman and President
Chief Executive Officer Trinity Industries de Mexico
Timothy R. Wallace Don A. Graham
President and President
Chief Operating Officer Highway Safety Products/
Rollform Products Division
John T. Sanford
Executive Vice President and Harry W. Hinkle
Chief Financial Officer President
Specialty Products Group
Ralph A. Banks, Jr.
Senior Vice President
Jeffrey J. Marsh
Richard G. Brown President
Senior Vice President Railcar - Tank Car Division
Mark W. Stiles John R. McDearman
Group Vice President President
LPG Containers Division
Jack L. Cunningham, Jr.
Vice President John R. Nussrallah
President
John M. Lee Railcar Division
Vice President
Douglas H. Schneider
R. A. Martin President
Vice President Marine Products Division
F. Dean Phelps, Jr. Mark W. Stiles
Vice President President
Transit Mix Concrete
Joseph F. Piriano President
Vice President Trinity Materials
Linda S. Sickels Patrick A. Turner
Vice President President
Trinity Industries
Neil O. Shoop Transportation, Inc.
Treasurer
William J. Goodwin Robert K. Van Noord
Controller President
Metal Components Group
J. J. French, Jr.
Secretary
(employed by outside law firm)
STOCKHOLDER INFORMATION
EXECUTIVE OFFICES ANNUAL MEETING
2525 Stemmons Freeway The Annual Meeting of
Dallas, Texas 75207-2401 Stockholders will be held on
P.O. Box 568887 July 16, 1997 at 9:30 a.m.
Dallas, Texas 75356-8887 at the offices of the Company,
Tel: (214) 631-4420 2525 Stemmons Freeway,
Dallas, Texas 75207-2401.
AUDITORS FORM 10-K
Ernst & Young LLP A copy of the Company's
10-K, filed with the Securities
and Exchange Commission,
TRANSFER AGENT shall be furnished without
AND REGISTRAR charge upon written request to
The Bank of New York Michael E. Conley,
New York, New York Director of Investor Relations,
Trinity Industries, Inc.
P.O. Box 568887,
Dallas, Texas 75356-8887
STOCK CLOSING PRICE RANGE
1997 1996 1995 1994 1993
First quarter ..$ 36 - 40 1/4- 39 3/4- 35 1/2- 22 1/2-
33 1/8 32 33 7/8 29 5/8 18
Second quarter..$ 33 7/8- 36 1/8- 35 1/4- 38 1/4- 22-
31 1/8 30 7/8 31 32 1/2 19 7/8
Third quarter...$ 37 1/2- 32 1/2- 35 3/8- 43 7/8- 26 1/2-
32 1/2 28 1/4 30 1/2 34 3/4 20 5/8
Fourth quarter..$ 36 7/8- 35 3/4- 37 3/8- 47 3/8- 29 7/8-
30 3/8 31 1/8 31 3/4 37 1/2 25 1/8
DIVIDENDS
If declared by the Board of Directors, dividends are payable on January 31,
April 30, July 31, and October 31.
EXHIBIT 21
Trinity Industries, Inc.
Listing of Subsidiaries of the Registrant
The Registrant has no parent.
At March 31, 1997, the operating subsidiaries of the Registrant were:
Percentage of
Organized voting securities
under the owned by the
Name of subsidiary laws of Registrant
Beaird Industries, Inc. Delaware 100%
Helmsdale Limited Isle of Man 100%
Platzer Shipyard, Inc. Delaware 100%
Standard Forged Products, Inc. Delaware 100%
Stearns Airport Equipment Co., Inc. Delaware 100%
Syntechnics, Inc. Delaware 100%
Syro, Inc. Ohio 100%
Transit Mix Concrete & Materials
Company Delaware 100%
Transit Mix Concrete & Materials
Company of Louisiana Louisiana 100%
Trinity Casteel, Inc. Delaware 100%
Trinity Fitting & Flange Group, Inc. Delaware 100%
Trinity Industries Leasing Company Delaware 100%
Trinity Industries Transportation, Inc. Texas 100%
Trinity Marine Baton Rouge, Inc. Delaware 100%
Trinity Marine Caruthersville, Inc. Delaware 100%
Trinity Marine Nashville, Inc. Delaware 100%
Trinity Marine Orange, Inc. Delaware 100%
Trinity Marine Port Allen, Inc. Delaware 100%
Trinity Marine Products, Inc. Delaware 100%
Trinity Materials, Inc. Delaware 100%
Trinity Mobile Railcar Repair, Inc. Delaware 100%
Trinity Rail, Inc. Delaware 100%
EXHIBIT (23)
Consent of Independent Auditors
We consent to the incorporation by reference in this Annual Report (Form
10-K) of Trinity Industries, Inc. of our report dated May 6, 1997, included
in the 1997 Annual Report to Stockholders of Trinity Industries, Inc.
Our audits also included the financial statement schedule of Trinity
Industries, Inc. listed in Item 14(a). This schedule is the responsibility
of the Company's management. Our responsibility is to express an opinion
based on our audits. In our opinion, the financial statement schedule
referred to above, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
We also consent to the incorporation by reference in Post-Effective
Amendment No. 3 to the Registration Statement (Form S-8, No. 2-64813),
Post-Effective Amendment No. 1 to the Registration Statement (Form S-8, No.
33-10937), Post-Effective Amendment No. 1 to the Registration Statement (Form
S-3, No. 33-12526), Amendment No. 1 to the Registration Statement (Form S-3,
No. 33-57338), Registration Statement (Form S-8, No. 33-35514), Registration
Statement (Form S-8, No. 33-73026), Post-Effective Amendment No. 1 to the
Registration Statement (Form S-4, No. 33-51709), Post-Effective Amendment No.
1 to the Registration Statement (Form S-4, No. 333-08321) of Trinity
Industries, Inc. and in the related Prospectuses of our reports dated May 6,
1997 and June 25, 1997, with respect to the consolidated financial statements
and schedule of Trinity Industries, Inc. included or incorporated by
reference in this Annual Report (Form 10-K) for the year ended March 31, 1997.
ERNST & YOUNG LLP
Dallas, Texas
June 25, 1997
EXHIBIT 99.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 1997
Commission File Number 1-6903
PROFIT SHARING PLAN FOR EMPLOYEES OF TRINITY INDUSTRIES, INC.
AND CERTAIN AFFILIATES
(Full Title of the plan)
TRINITY INDUSTRIES, INC.
(Name of issuer of the securities held pursuant to the plan)
Delaware 75-0225040
(State of Incorporation) (I.R.S. Employer Identification No.)
2525 Stemmons Freeway Dallas, Texas 75207-2401
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (214) 631-4420
Profit Sharing Plan for Employees of Trinity Industries, Inc.
and Certain Affiliates
Index to Annual Report on Form 11-K
(a) Financial Statements
Description Page
Report of Independent Auditors . . . . . . . . 4
Statements of Financial Condition, With Fund
Information as of March 31, 1997 and 1996. . . 5 - 6
Statements of Income and Changes in Plan Equity,
With Fund Information for the Years Ended
March 31, 1997, 1996 and 1995. . . . . . . . . 7 - 9
Notes to Financial Statements. . . . . . . . . 10
(b) Exhibits
Number Title Page
23 Consent of independent auditors 21
Line-27(a) Schedule of Assets Held for
Investment Purposes 22
Line-27(d) Schedule of Reportable
Transactions 23-24
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the trustees have duly caused this Annual Report to be
signed by the undersigned thereunto duly authorized.
Profit Sharing Plan for Employees of Trinity Industries, Inc.
and Certain Affiliates
/S/ F. Dean Phelps
F. Dean Phelps
Vice President
June 25, 1997
Report of Independent Auditors
The Board of Directors
Trinity Industries, Inc.
We have audited the accompanying statements of financial
condition, with fund information of the Profit Sharing Plan for
Employees of Trinity Industries, Inc. and Certain Affiliates (the
"Plan") as of March 31, 1997 and 1996, and the related statements
of income and changes in Plan equity, with fund information for
each of the three years in the period ended March 31, 1997.
These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial condition
of the Plan at March 31, 1997 and 1996, and the income and
changes in Plan equity for each of the three years in the period
ended March 31, 1997, in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion
on the basic financial statements taken as a whole. The
accompanying supplemental schedules of assets held for investment
purposes as of March 31, 1997 and reportable transactions for the
year then ended, are presented for purposes of complying with the
Department of Labor's Rules and Regulations
for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974, and are not a required part of the basic
financial statements. The fund information in the statements of
financial condition and the statements of income and changes in
Plan equity is presented for purposes of additional analysis
rather than to present the financial condition and income and
changes in plan equity of each fund. The supplemental schedules
and fund information have been subjected to the auditing
procedures applied in our audits of the basic financial
statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a
whole.
ERNST & YOUNG LLP
Dallas, Texas
June 13, 1997
Profit Sharing Plan for Employees
of Trinity Industries, Inc. and Certain Affiliates
Statement of Financial Condition, With Fund Information
March 31, 1997
Putnam Mutual Funds
Guaranteed U. S. Govt.
Stock Investment Growth & Income Participant
Assets Account Account Income Trust Voyager Loans Total
Cash and short-term
investments . . . . . . . . . $ 8,651 $ 462,966 $ 3,315 $ 5,149 $ 3,309 $ 63,433 $ 546,823
Notes receivable
from participants . . . . . . - - - - - 959,157 959,157
Investment in Trinity
common stock, at fair value . 11,707,801 - - - - - 11,707,801
Investment in guaranteed
investment contracts, at
contract value . . . . . . . - 34,629,904 - - - - 34,629,904
Investment in Putnam mutual
funds, at fair value . . . . - - 12,973,297 5,449,145 12,509,249 - 30,931,691
Interest receivable . . . . . . 465 209,350 90 30 347 641 210,923
Contribution receivable
from Trinity . . . . . . . . 676,128 1,779,673 758,561 271,819 906,172 - 4,392,353
Contribution receivable
from employees. . . . . . . . 98,032 185,647 106,769 29,855 129,569 - 549,872
Plan Equity . . . . . . . . . . $12,491,077 $37,267,540 $13,842,032 $ 5,755,998 $13,548,646 $1,023,231 $83,928,524
See accompanying notes to financial statements.
Profit Sharing Plan for Employees
of Trinity Industries, Inc. and Certain Affiliates
Statement of Financial Condition, With Fund Information
March 31, 1996
Putnam Mutual Funds
Guaranteed U. S. Govt.
Stock Investment Growth & Income Participant
Assets Account Account Income Trust Voyager Loans Total
Cash and short-term
investments . . . . . . . . . $ 41,742 $ 259,915 $ 146,926 $ 62,283 $ 180,536 $ 56,300 $ 747,702
Notes receivable
from participants . . . . . . - - - - - 863,724 863,724
Investment in Trinity
common stock, at fair value . 13,156,629 - - - - - 13,156,629
Investment in guaranteed
investment contracts, at
contract value . . . . . . . - 38,995,425 - - - - 38,995,425
Investment in Putnam mutual
funds, at fair value . . . . - - 7,820,477 4,672,605 7,076,364 - 19,569,446
Interest receivable . . . . . . 390 170,475 179 85 185 400 171,714
Contribution receivable
from Trinity . . . . . . . . 695,789 1,862,773 550,244 284,627 609,861 - 4,003,294
Contribution receivable
from employees. . . . . . . . 229,860 504,942 176,516 85,831 199,050 - 1,196,199
Plan Equity . . . . . . . . . . $14,124,410 $41,793,530 $8,694,342 $5,105,431 $8,065,996 $ 920,424 $ 78,704,133
See accompanying notes to financial statements.
Profit Sharing Plan for Employees
of Trinity Industries, Inc. and Certain Affiliates
Statement of Income and Changes in Plan Equity, With Fund Information
Year Ended March 31, 1997
Putnam Mutual Funds
Guaranteed U.S. Govt.
Stock Investment Growth & Income Participant
Account Account Income Trust Voyager Loans Total
Net investment income:
Interest . . . . . . . . . . . . $ 4,733 $ 2,618,472 $ 2,184 $ 335,753 $ 3,032 $ 7,358 $ 2,971,532
Dividends. . . . . . . . . . . . 277,519 - 961,995 - 642,747 - 1,882,261
282,252 2,618,472 964,179 335,753 645,779 7,358 4,853,793
Net realized gain(loss)
on investments . . . . . . . . . 26,352 - 36,728 (29,828) 21,920 - 55,172
Unrealized appreciation (depreciation)
of investments . . . . . . . . . (2,325,333) - 676,370 (32,663) (928,839) 1,483 (2,608,982)
Contributions:
Employee contribution. . . . . . 2,758,108 5,065,279 2,387,157 953,693 2,751,676 332,111 14,248,024
Employer contribution. . . . . . 676,128 1,779,673 758,561 271,819 906,172 - 4,392,353
3,434,236 6,844,952 3,145,718 1,225,512 3,657,848 332,111 18,640,377
Withdrawals, distributions
and transfers. . . . . . . . . . (1,494,617) (6,515,500) 1,544,735 (190,070) 3,469,873 (238,145) (3,423,724)
Halter Marine Group, Inc.
divestiture. . . . . . . . . . . (1,556,223) (7,473,914) (1,220,040) (658,137) (1,383,931) - (12,292,245)
Net increase (decrease) in Plan
equity . . . . (1,633,333) (4,525,990) 5,147,690 650,567 5,482,650 102,807 5,224,391
Plan equity:
Beginning of year . . . . . . . 14,124,410 41,793,530 8,694,342 5,105,431 8,065,996 920,424 78,704,133
End of year . . . . . . . . . .$12,491,077 $37,267,540 $13,842,032 $5,755,998 $13,548,646 $ 1,023,231 $ 83,928,524
See accompanying notes to financial statements.
Profit Sharing Plan for Employees
of Trinity Industries, Inc. and Certain Affiliates
Statement of Income and Changes in Plan Equity, With Fund Information
Year Ended March 31, 1996
Putnam Mutual Funds
Guaranteed U.S. Govt.
Stock Investment Growth & Income Participant
Account Account Income Trust Voyager Loans Total
Net investment income:
Interest . . . . . . . . . . . . $ 5,982 $ 2,405,823 $ 2,869 $ 293,918 $ 2,195 $ 5,447 $ 2,716,234
Dividends. . . . . . . . . . . . 227,852 - 443,358 - 329,350 - 1,000,560
233,834 2,405,823 446,227 293,918 331,545 5,447 3,716,794
Net realized gain(loss)
on investments . . . . . . . . . - - 32,305 ( 7,249) 19,660 - 44,716
Unrealized appreciation (depreciation)
of investments . . . . . . . . . (788,303) - 1,204,205 84,158 1,331,542 (44) 1,831,558
Contributions:
Employee contribution. . . . . . 2,772,131 6,118,003 1,996,984 1,087,979 2,027,629 289,602 14,292,328
Employer contribution. . . . . . 695,789 1,862,773 570,775 284,627 589,330 - 4,003,294
3,467,920 7,980,776 2,567,759 1,372,606 2,616,959 289,602 18,295,622
Withdrawals, distributions
and transfers. . . . . . . . . . (820,254) (2,627,389) (490,579) (416,335) (314,666) (187,665) (4,856,888)
Net increase in Plan equity . . . . 2,093,197 7,759,210 3,759,917 1,327,098 3,985,040 107,340 19,031,802
Plan equity:
Beginning of year . . . . . . . 12,031,213 34,034,320 4,934,425 3,778,333 4,080,956 813,084 59,672,331
End of year . . . . . . . . . .$14,124,410 $41,793,530 $8,694,342 $5,105,431 $8,065,996 $ 920,424 $78,704,133
See accompanying notes to financial statements.
Profit Sharing Plan for Employees
of Trinity Industries, Inc. and Certain Affiliates
Statement of Income and Changes in Plan Equity, With Fund Information
Year Ended March 31, 1995
Putnam Mutual Funds
Guaranteed U.S. Govt.
Stock Investment Growth & Income Participant
Account Account Income Trust Voyager Loans Total
Net investment income:
Interest . . . . . . . . . . . . $ 5,210 $ 2,201,037 $ 871 $ 224,450 $ 1,276 $ 2,707 $ 2,435,551
Dividends. . . . . . . . . . . . 181,964 - 233,501 - 124,601 - 540,066
Other . . . . . . . . . . . . - - - - - 426,863 426,863
187,174 2,201,037 234,372 224,450 125,877 429,570 3,402,480
Net realized gain(loss)
on investments . . . . . . . . . - - 4,904 (16,011) 9,891 - (1,216)
Unrealized appreciation (depreciation)
of investments . . . . . . . . . (245,895) - 248,330 (50,592) 303,866 (81) 255,628
Contributions:
Employee contribution. . . . . . 1,827,576 4,499,784 1,270,743 930,977 1,145,353 (17,444) 9,656,989
Employer contribution. . . . . . 633,665 1,720,912 428,277 257,537 359,336 - 3,399,727
2,461,241 6,220,696 1,699,020 1,188,514 1,504,689 (17,444) 13,056,716
Withdrawals, distributions
and transfers. . . . . . . . . . (218,585) (2,225,366) (369,160) (477,085) (131,969) (240,072) (3,662,237)
Net increase in Plan equity . . . . 2,183,935 6,196,367 1,817,466 869,276 1,812,354 171,973 13,051,371
Plan equity:
Beginning of year . . . . . . . 9,847,278 27,837,953 3,116,959 2,909,057 2,268,602 641,111 46,620,960
End of year . . . . . . . . . . $12,031,213 $34,034,320 $4,934,425 $3,778,333 $4,080,956 $ 813,084 $59,672,331
See accompanying notes to financial statements.
Profit Sharing Plan for Employees
of Trinity Industries, Inc. and Certain Affiliates
Notes to Financial Statements
March 31, 1997
1. Description of the Plan
General - The Profit Sharing Plan for Employees of Trinity
Industries, Inc. and Certain Affiliates (the "Plan") was adopted by
the Board of Directors of Trinity Industries, Inc. (the "Board") on
December 11, 1986 and became effective January 1, 1987, for
eligible employees of Trinity Industries, Inc. and Certain
Affiliates (the "Employer"). The Plan was amended and restated
effective April 1, 1994. The Plan is a defined contribution plan
designed to comply with the provisions of Title I of the Employee
Retirement Income Security Act of 1974 ("ERISA"). The following is
a brief description of the Plan. Participants should refer to the
Plan document for complete information regarding the Plan. The
Plan's fiscal year end is March 31.
Participation - Each employee is eligible to contribute to the
Plan on the first day of the calendar quarter on or immediately
following his employment date with the Company and must meet the
following requirements:
Must be classified as a full-time, part-time, or
temporary employee of Trinity Industries, Inc.; and
Must be in a unit of employees who are designated as
eligible to participate in the Plan; and
Must not be included in a unit of employees covered by a
collective bargaining agreement unless benefits under this
Plan were included in an agreement as a result of good
faith bargaining.
Eligible employees automatically become participants and must
indicate on the form or forms provided by the Plan Committee ("Committee")
whether or not they want to make contributions to the Plan. If they elect
to contribute, they will authorize the Employer to make payroll
deductions for contributions to the Plan.
Contributions - For fiscal year 1997 and 1996, each Plan
participant agrees to contribute not less than two percent nor more
than fourteen percent, or not less than two percent nor more than
ten percent, respectively, of their compensation in one percent
increments as designated by the participant. A participant's
salary reduction may not exceed $9,500, $9,500, and $9,240 per
calendar year ended 1997, 1996,and 1995, respectively. A salary
reduction and contribution agreement must be entered into by each
employee as the employee begins participation in the Plan and may
be amended by such employee twice each year.
Employer matching contributions shall be made if Company
earnings are at least $0.33 per share of common stock and
sufficient to pay dividends to stockholders ($0.68, $0.68 and $0.68
per share for the years ended March 31, 1997, 1996, and 1995,
respectively). If the Employer matching contribution is made, then
each participant with at least five years of service, shall receive
an amount equal to 50 percent of that portion of such participant's
employee contribution which does not exceed six percent of such
participant's total compensation for the year. If the Employer
matching contribution is made, then each participant with at least
one but less than five years of service shall receive an amount
equal to 25 percent of that portion of such participant's employee
contribution which does not exceed six percent of such
participant's total compensation for the year.
Employer contributions are net of forfeitures, as defined.
Employer contributions for a given plan year shall be deposited in
the Profit Sharing Trust for Employees of Trinity Industries, Inc.
and Certain Affiliates (the "Trust Fund") as defined below, no
later than the date on which the Employer files its Federal income
tax return for such year.
The Employer and Texas Commerce Bank - Dallas (the "Trustee"),
have entered into a Trust Agreement under which the latter acts as
Trustee under the Plan.
In its capacity as Trustee, Texas Commerce Bank - Dallas
invests the employee contributions and Employer contributions in
the following investment options (hereafter collectively referred
to as the "Trust Fund"):
(a) Trinity Stock Investment Account ("Stock Account") holds
shares of Employer common stock purchased on behalf of the
participants. Idle cash is invested in interest-bearing
accounts until such time as it can be utilized to purchase
Employer common stock.
(b) Guaranteed Investment Contract Account (the "Guaranteed
Investment Account") invests in guaranteed investment
contracts issued by various insurance companies selected
annually by the Committee. At March 31, 1997, the guaranteed
investment contracts had guaranteed annual rates of return of
7.33% (GAC 8672), 6.08% (GAC 20254), 8.31% (GAC 7614) and
5.15% (GAC 7219).
At March 31, 1996, the guaranteed investment contracts had
guaranteed annual rates of return of 9.06% (GAC 5027), 6.24%
(GAC 627-05387), 6.08% (GAC 20254), 8.31% (GAC 7614) and
5.15% (GAC 7219).
Participant's accounts invested in the Guaranteed Investment
Account earn interest at a rate blended from all of the
contracts included in the Guaranteed Investment Account. The
account is credited with earnings on the underlying
investments and charged for plan withdrawals and
administrative expenses charged by the insurance companies.
Transfers of participants accounts to and from the Guaranteed
Investment Account are not permitted. However, during fiscal
year 1997, participants were offered a one-time option to
transfer monies out of the Guaranteed Investment Account and
into other fund options.
(c) Putnam Mutual Funds Investment Accounts (the "Putnam
Mutual Funds") invests in three mutual funds selected by the
Committee. At March 31, 1997 and 1996, the funds are U.S.
Government Income Trust, Growth and Income, and Voyager.
Participants may elect the extent to which assets are invested
in the options described above in increments of 10 percent or 25
percent.
Benefits - Distribution of a participant's account balance is
payable upon retirement at or after age 65, total disability,
death, or termination of employment. Distribution is equal to the
salary reduction contribution and related earnings plus the vested
portion of the Employer contribution and related earnings.
Withdrawal of up to 100 percent of the employee contribution
can be made only to meet "immediate and heavy financial needs"
(medical care, college tuition, the purchase of a principal
residence, or to prevent the foreclosure on a principal residence)
as long as the funds are not available for such needs from other
sources. No withdrawal can be made against the earnings on the
employee contributions or against the Employer contribution and
related earnings. These restrictions no longer apply when the
participant reaches age 59 1/2.
Loans for "immediate and heavy financial needs" may be made
for a minimum of $1,000 up to a maximum of $50,000, not to exceed
50 percent of the Employee contribution and related earnings and
not to exceed 50 percent of the vested portion of the Employer
contribution and related earnings. Loans are subject to rules and
regulations established by the Committee, as defined in
the Plan.
Vesting - The Employer contribution and related earnings
(losses) vest to participants, depending upon the number of years
of vesting service, as defined, completed by such participant as
follows:
Years of Service Percentage Vested
Less than 1 0
1 but less than 2 20
2 but less than 3 40
3 but less than 4 60
4 but less than 5 80
5 or more 100
Participants are 100 percent vested in their Employer
contribution and allocated portion of related earnings (losses)
upon their attainment of age 65 and are always 100 percent vested
in their employee contribution and related earnings (losses) on
such contribution.
Administration of the Plan - The Plan is administered by the
Committee, consisting of at least three persons who are appointed
by the Board. The members of the Committee serve at the pleasure
of the Board, and any committee member who is an employee of the
Employer shall not receive compensation for his services.
A separate account is maintained for each participant. The
Plan provides that account balances for participants are adjusted
periodically as follows:
(a) Employee contributions are generally allocated on a
quarterly basis;
(b) Participant's share of the Employer contribution shall be
allocated to the participant's account as of a date no later
than the last day of the Plan year;
(c) Earnings and appreciation or depreciation of investment
assets of the Trust Fund for each calendar quarter shall be
allocated to the accounts of participants, former
participants and beneficiaries who had unpaid balances in
their accounts on the last day of such calendar quarter in
proportion to the balances in such accounts at the beginning
of the calendar quarter.
Upon request, distributions shall be made no earlier than the
later of the last day of the calendar quarter in which entitlement
occurs or the date on which the Committee determines the final
balances. Distributions from the Stock Account shall be made in
cash unless otherwise designated by the participant.
Income tax status - The Plan has received a determination
letter from the Internal Revenue Service dated April 30, 1997
stating that the Plan is a qualified plan under Section 401(a) of
the Internal Revenue Code of 1986 (the "Code") and that the Trust
is exempt from federal income tax under Section 501(a) of the Code.
The Committee believes the Plan is being operated in compliance
with applicable requirements of the code. The Committee is not
aware of any course of action or series of events that have
occurred that might adversely affect the Plan's qualified status.
Employee contributions and Employer contributions are not
included in the participant's federal taxable income in the year
such contributions are made. A participant shall not be subject to
federal income taxes with respect to participation in the Plan
until the amounts are withdrawn or distributed.
Amendment or termination of the Plan - The Employer may amend
the Plan at any time. However, no amendment, unless made to secure
approval of the Internal Revenue Service or other governmental
agency, may operate retroactively to reduce or divest the then
vested interest in the Plan of any participant, former participant
or beneficiary, or to reduce or divest any benefit payable under
the Plan unless all participants, former participants and
beneficiaries then having vested interests or benefit payments
affected thereby consent to such amendment.
The Employer may terminate the Plan at any time. Upon complete
or partial termination, the accounts of all participants affected
thereby shall become 100 percent vested, and the Committee shall
direct the Trustee to distribute the assets in the Trust Fund,
after receipt of any required approval by the Internal Revenue
Service and payment of any expenses properly chargeable thereto, to
participants, former participants, and beneficiaries in proportion
to their respective account balances.
2. Significant Accounting Policies & Events
Investments and investment income - Investments in the common
stock of the Employer and the Putnam Mutual Funds are valued at the
last reported sales price on the last business day of the Plan year
as reported on a national securities exchange. The investments in
guaranteed investment contracts are valued at contract value which
approximates fair value. The Plan is in compliance with AICPA
Statement of Position 94-4, "Reporting of investment contracts held
by health and welfare benefit plans and defined contribution
pension plans," with fair value approximating contract value for
the guaranteed investment contracts.
Security transactions are recorded on a trade date basis. The
statement of income and changes in Plan equity include net
unrealized appreciation or depreciation in fair value on
investments. The Plan's financial statements are prepared on an
accrual basis.
Realized gains and losses - Realized gains and losses have been
calculated using historical cost (first in, first out).
Use of estimates in the preparation of financial statements - The
preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the amounts in the financial statements
and accompanying notes. Actual results could differ from those
estimates.
Divestiture - At the close of business on March 31, 1997,
Trinity Industries, Inc. completed the divestiture, which commenced
on September 26, 1996, of Halter Marine Group, Inc. ("Halter") by
distributing the remaining shares of Halter stock to its stockholders
in the form of a tax-free distribution. The financial statements for
the year ended 1997 reflect the transfer of participants' assets, who
were employed by Halter, out of the Plan.
3. Investments
Investments are as follows:
March 31, 1997 March 31, 1996
Cost Fair value Cost Fair value
Trinity Industries,
Inc. common
stock $11,220,350 $11,707,801* $10,343,845 $13,156,629*
Guaranteed investment
contracts
GAC 20254 15,230,674 15,230,674* 9,330,804 9,330,804*
GAC 8672 1,000,000 1,000,000 - -
GAC 7219 4,324,900 4,324,900* 8,226,153 8,226,153*
GAC 5027 - - 4,776,358 4,776,358*
GAC 627-05387 - - 3,667,622 3,667,622
GAC 7614 14,074,330 14,074,330* 12,994,488 12,994,488*
34,629,904 34,629,904 38,995,425 38,995,425
Putnam mutual funds
U.S. Govt.
Income Trust 5,632,314 5,449,145* 4,823,110 4,672,605*
Growth & Income 10,910,509 12,973,297* 6,434,059 7,820,477*
Voyager 11,709,070 12,509,249* 5,347,346 7,076,364*
28,251,893 30,931,691 16,604,515 19,569,446
Participant loans 957,674 959,157 864,088 863,724
$75,059,821 $78,228,553 $66,807,873 $72,585,224
The Trinity Common Stock at March 31, 1997 includes the right to
receive .348 shares of Halter Common Stock for each share of Trinity
Common Stock in the form of a tax-free distribution referred to in Note 2.
* Investment represents 5 percent or more of the fair value of total
assets.
4. Reconciliation of Financial Statements to the Form 5500
The following is a reconciliation of Plan equity per the financial
statements to the Form 5500:
March 31
1997 1996
Plan equity per the financial statements $83,928,524 $78,704,133
Amounts allocated to withdrawing participants (2,030,571) (1,545,308)
Plan equity per the Form 5500 $81,897,953 $77,158,825
The following is a reconciliation of withdrawals, distributions and
transfers per the financial statements to the Form 5500:
Year Ended March 31
1997
Withdrawals, distributions and transfers
per the financial statements $ 3,423,724
Halter Marine Group, Inc.
divestiture 12,292,245
Amounts allocated to withdrawing participants at
end of year 2,030,571
Amounts allocated to withdrawing participants at
beginning of year (1,545,308)
Withdrawals, distributions and transfers
per the Form 5500 $16,201,232
Amounts allocated to withdrawing participants are recorded on the Form
5500 for withdrawals that have been processed and approved for payment
prior to March 31 but not yet paid as of that date.
5. Unrealized Appreciation (Depreciation) of Investments
Unrealized appreciation (depreciation) of investments in Trinity common
stock, Putnam mutual funds, and Participant loans for the years ended
March 31, 1997, 1996, and 1995 were determined as follows:
Net
Investments Investments increase
at fair value at cost (decrease)
March 31, 1997
Trinity common stock
March 31, 1997 $11,707,801 $11,220,350 $ 487,451
March 31, 1996 13,156,629 10,343,846 2,812,783
(1,448,828) 876,504 (2,325,332)
Putnam mutual funds
March 31, 1997 30,931,691 28,251,893 2,679,798
March 31, 1996 19,569,446 16,604,515 2,964,931
11,362,245 11,647,378 (285,133)
Participant loans
March 31, 1997 959,157 957,674 1,483
March 31, 1996 863,724 863,724 -
95,433 93,950 1,483
Unrealized depreciation
of investments $(2,608,982)
March 31, 1996
Trinity common stock
March 31, 1996 $13,156,629 $10,343,846 $2,812,783
March 31, 1995 11,192,467 7,591,381 3,601,086
1,964,162 2,752,465 (788,303)
Putnam mutual funds
March 31, 1996 19,569,446 16,604,515 2,964,931
March 31, 1995 11,245,201 10,900,175 345,026
8,324,245 5,704,340 2,619,905
Participant loans
March 31, 1996 863,724 864,088 (364)
March 31, 1995 768,096 768,416 (320)
95,628 95,672 (44)
Unrealized appreciation
of investments $1,831,558
March 31, 1995
Trinity common stock
March 31, 1995 $11,192,467 $ 7,591,381 $3,601,086
March 31, 1994 9,280,170 5,433,189 3,846,981
1,912,297 2,158,192 (245,895)
Putnam mutual funds
March 31, 1995 11,245,201 10,900,175 345,026
March 31, 1994 7,191,495 7,348,073 (156,578)
4,053,706 3,552,102 501,604
Participant loans
March 31, 1995 768,096 768,416 (320)
March 31, 1994 567,334 567,573 (239)
200,762 200,843 (81)
Unrealized appreciation
of investments $ 255,628
6. Expenses
The expenses incurred by the Trustee in the performance of its duties,
including the Trustee's compensation and the services of the recordkeeper,
shall be paid by the Plan unless paid by the Employer. The Employer paid
$187,993, $300,751, and $268,624, for recordkeeping and trustee fees on
behalf of the Plan for the fiscal years ended March 31, 1997, 1996, and
1995, respectively.
Index to Exhibits
Number Description Page
23 Consent of Independent Auditors 21
Line-27(a) Schedule of Assets Held for
Investment Purposes 22
Line-27(d) Schedule of Reportable
Transactions 23-24
Exhibit 23
Consent of Independent Auditors
We consent to the incorporation by reference in Post Effective
Amendment No. 1 to the Registration Statement (Form S-8, File No. 33-
10937) pertaining to the Profit Sharing Plan for Employees of Trinity
Industries, Inc. and Certain Affiliates and in the related Prospectus of
our report dated June 13, 1997, with respect to the financial statements
and supplemental schedules of the Profit Sharing Plan for Employees of
Trinity Industries, Inc. and Certain Affiliates included in this Annual
Report (Form 11-K) for the year ended March 31, 1997.
ERNST & YOUNG LLP
Dallas, Texas
June 25, 1997
Profit Sharing Plan for Employees
of Trinity Industries, Inc. And Certain Affiliates
Line 27(a) - Assets Held for Investment Purposes
March 31, 1997
Units,
shares,
or face Current
Identity amount Cost value
Texas Commerce Bank
Short Term Money Market* $ 546,823 $ 546,823
Trinity Industries, Inc.
common stock* 385,442 11,220,350 11,707,801
Guaranteed Investment Contracts
John Hancock Mutual Life
GAC 8672 7.33% 1,000,000 1,000,000
GAC 7219 5.15% 4,324,900 4,324,900
GAC 7614 8.31% 14,074,330 14,074,330
Metropolitan Life Ins Co.
GAC 20254 6.08% 15,230,674 15,230,674
34,629,904 34,629,904
Putnam mutual funds
U. S. Govt.
Income Trust 432,129 5,632,314 5,449,145
Growth & Income 705,454 10,910,509 12,973,297
Voyager 817,598 11,709,070 12,509,249
28,251,893 30,931,691
Participant loans* - 959,157
$74,648,970 $78,775,376
* Party-in-interest
Profit Sharing Plan for Employees
of Trinity Industries, Inc. and Certain Affiliates
Line 27(d) - Reportable Transactions
Year Ended March 31, 1997
(Pursuant to ERISA 2520.103-6(d)(2))
(a) (b) (c) (d) (g) (h) (i)
Value of
Identity of Purchase Selling Cost of asset on Net gain
Party Involved Asset Price Price Asset trans. date or (loss)
Category (i)-Individual transactions in excess of 5% of Plan equity
Allstate Life
Insurance Co. GAC 5027 - 5,061,462 5,061,462 5,061,462 -
John Hancock
Mutual Life GAC 7219 - 4,253,419 4,253,419 4,253,419 -
Texas Commerce
Bank Short-term 7,520,452 - 7,520,452 7,520,452 -
Money Mkt. - 7,402,138 7,402,138 7,402,138 -
- 3,973,914 3,973,914 3,973,914 -
Fidelity 695 9,387,605 - 9,387,605 9,387,605 -
- 9,387,605 9,387,605 9,387,605 -
Category (iii)-Series of securities transactions
in excess of 5% of Plan equity
Allstate Life
Insurance Co. GAC 5027 285,104 - 285,104 285,104 -
- 5,061,462 5,061,462 5,061,462 -
John Hancock
Mutual Life GAC 7219 352,166 - 352,166 352,166 -
- 4,253,419 4,253,419 4,253,419 -
Metropolitan Life
Insurance Co. GAC 20254 5,899,870 - 5,899,870 5,899,870 -
Provident Life &
Accident Ins. GAC 627- 190,386 - 190,386 190,386 -
05387 - 3,858,008 3,858,008 3,858,008 -
Putnam Investments,
Inc. Growth &
Income 4,618,631 - 4,618,631 4,618,631 -
- 178,909 142,181 178,909 36,728
Voyager 6,479,886 - 6,479,886 6,479,886 -
- 140,082 118,162 140,082 21,920
Profit Sharing Plan for Employees
of Trinity Industries, Inc. and Certain Affiliates
Line 27(d) - Reportable Transactions
Year Ended March 31, 1997
(Pursuant to ERISA 2520.103-6(d)(2))
(a) (b) (c) (d) (g) (h) (i)
Value of
Identity of Purchase Selling Cost of asset on Net gain
Party Involved Asset Price Price Asset trans. date or (loss)
Category (iii)-Continued
Trinity Industries,
Inc.* Common
Stock 2,607,603 - 2,607,603 2,607,603 -
- 1,757,452 1,731,100 1,757,452 26,352
Fidelity 695 15,762,674 - 15,762,674 15,762,674 -
- 15,762,674 15,762,674 15,762,674 -
Texas Commerce
Bank Short-term 36,906,280 - 36,906,280 36,906,280 -
Money Mkt. - 37,107,159 37,107,159 37,107,159 -
There were no category (ii) or (iv) reportable transactions.
Columns (e) and (f) are not applicable.
* Party-in-interest