1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended November 30, 1999
Commission File Number 0-7795
KNUSAGA CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
62-1004034
(I.R.S.) Employer Identification Number
3578 S. VAN DYKE
ALMONT, MI 48803
(Address of principal executive office and zip code)
Registrant's telephone number (include area code): (810) 798-8567
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 twelve months (or such shorter period that the registrant
was required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
X YES NO
----- -----
Shares of Common Stock Par Value $.01, outstanding: 7,000,000.
-1-
2
RESULTS OF OPERATIONS
Net Sales increased 35.8% in the first quarter of the fiscal year ending August
2000 to $3,343,517 from $2,462,657 a year ago. Tubing sales increased 52.7% to
$2,352,984 from $1,541,310 in the year ago quarter. This is a result of Ford
Medium Truck production in their Mexican plant and Freightliner's production at
their St. Thomas plant returning to normal levels from the depressed levels of a
year ago. In addition the tubing business is now the exclusive tube supplier for
the St. Thomas plant winning business from a competitor. The seat track business
sales increased 7.5% to $990,533 in the first quarter from $921,347 a year ago
as a result of growth in recreational vehicle motor home sales.
Profit declined 73.5% in the first quarter to $10,185 from $38,446 in the year
ago quarter. The tube sector loss increased 149.6% to $126,462 from $50,662 in
the year ago quarter. This was a result of two factors: start up problems on the
new tubing business acquired and start up expenses for the new sequencing
operation in St. Thomas. Seat track profits increased 53.3% to $136,648 from
$89,108 in the year ago quarter as a result of cost savings from re-sourcing
component parts.
Selling and Administrative expenses of $302,724 increased 40.1% from the year
ago quarter expense of $216, 59 due to the 35.8% increase is sales.
LIQUIDITY AND SOURCES OF CAPITAL
The company generated $302,575 of cash from operations during the quarter.
Equipment purchases consumed $89,605. There was a reduction in long term debt of
$36,174 resulting in a net positive cash flow of $176,796 for the quarter.
CONTINGENT MATTERS
There are no contingencies or consequential uncertainties known that will
materially affect the financial information as presented.
-2-
3
KNUSAGA CORPORATION
BALANCE SHEET (UNAUDITED)
NOVEMBER 30, 1999
ASSETS November 30, 1999
CASH $ 672,541
ACCOUNTS RECEIVABLE $1,611,193
ACCOUNTS RECEIVABLE - OTHER $ 170,051
INVENTORIES $ 772,954
PREPAID EXPENSE $ 50,807
----------
TOTAL CURRENT ASSETS $3,277,547
NET PROPERTY, PLANT AND EQUIPMENT $2,580,693
OTHER ASSETS $ 17,209
----------
TOTAL ASSETS $5,875,450
LIABILITIES
ACCOUNTS PAYABLE $1,356,343
NOTES PAYABLE $1,288,315
ACCRUED LIABILITIES $ 295,085
----------
TOTAL CURRENT LIABILITIES $2,939,745
LONG TERM DEBT $1,467,028
----------
TOTAL LIABILITIES $4,406,773
STOCKHOLDERS EQUITY (DEFICIENCY)
Common Stock, par value $.01 per share authorized $ 70,006
7,000,000 shares issued and outstanding.
Preferred stock, par value $.01 per share $ 175,000
authorized 500,000 shares, issued and outstanding
175,000 of Class A $1.00 stated value, 4%
non-cumulative, non-voting.
ADDITIONAL PAID-IN CAPITAL $ 366,365
RETAINED EARNINGS $ 857,305
---------
TOTAL STOCKHOLDERS EQUITY $1,468,677
----------
TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY $5,875,450
-3-
4
KNUSAGA CORPORATION
STATEMENT OF INCOME (UNAUDITED)
THREE MONTHS ENDED
NOVEMBER 30, 1999 AND NOVEMBER 30, 1998
(UNAUDITED)
THREE MONTHS ENDED
NOVEMBER 30, 1999 NOVEMBER 30, 1998
NET SALES $3,343,516 $2,462,657
COST OF GOODS SOLD $2,959,677 $2,136,670
---------- ----------
GROSS PROFIT $ 383,839 $ 325,987
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES $ 302,724 $ 216,059
MISC. INCOME (EXPENSE) ($ 50,421) ($ 44,485)
---------- ----------
INCOME (LOSS) BEFORE TAXES $ 30,694 $ 65,443
PROVISION FOR FEDERAL INCOME TAXES $ 20,508 $ 26,997
---------- ----------
NET INCOME BEFORE EXTRAORDINARY ITEMS $ 10,185 $ 38,446
EXTRAORDINARY ITEMS: $ -0- $ -0-
TAX BENEFIT OF OPERATING
LOSS CARRYFORWARD ---------- ----------
NET INCOME $ 10,185 $ 38,446
PAR SHARE OF COMMON STOCK AND
COMMON STOCK EQUIVALENTS:
AVERAGE OUTSTANDING SHARES 7,000,000 7,000,000
.00 .00
7,000,000 THE FINANCIAL STATEMENTS INCLUDED IN THIS
REPORT REFLECT ALL ADJUSTMENTS, WHICH, IN THE OPINION
OF MANAGEMENT, .00 ARE NECESSARY FOR FAIR PRESENTATION.
-4-
5
KNUSAGA CORPORATION
STATEMENT OF CASH FLOW (UNAUDITED)
THREE MONTHS ENDED
NOVEMBER 30, 1999 AND NOVEMBER 30, 1998
(UNAUDITED)
THREE MONTHS ENDED
NOVEMBER 30, 1999 NOVEMBER 30, 1998
CASH PROVIDED BY (USED FOR) OPERATIONS
NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS, $ 10,185 $ 38,446
EXCHANGE LOSS ( 94)
NON-CASH EXPENSE INCLUDED IN NET INCOME $ 85,270 $ 82,686
DEPRECIATION
(INCREASE) DECREASE IN:
ACCOUNTS RECEIVABLE $427,439 ($475,725)
INVENTORIES ($ 55,888) $ 51,785
PREPAID EXPENSES $ 3,702 ($ 4,472)
OTHER ASSETS $ 7,773 ---
INCREASE (DECREASE) IN:
ACCOUNTS PAYABLE ($ 50,054) $267,179
ACCRUED LIABILITIES ($125,757) $ 12,905
---------- --------
NET CASH PROVIDED BY (USED FOR) $302,575 ($ 27,196)
OPERATING ACTIVITIES
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES
PURCHASES OF EQUIPMENT $ 89,604 $107,470
CASH PROVIDED BY (USED FOR) BEFORE ($134,666)
FINANCING ACTIVITIES
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES
DEBT INCREASE (DECREASE)
SHORT-TERM $ 9,863
LONG-TERM ($36,174) ($94,043)
--------- ---------
NET CASH PROVIDED BY (USED FOR) ($36,174) ($84,180)
FINANCING ACTIVITIES
INCREASE (DECREASE) IN CASH $176,796 ($218,840)
BALANCE AT BEGINNING OF PERIOD $495,744 $364,781
BALANCE AT END OF PERIOD $672,541 $145,935
-5-
6
Exhibit Index
-------------
Exhibit No. Description
- ----------- -----------
27 Financial Data Schedule