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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 February 29, 2000
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.
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RESULTS OF OPERATIONS
Net sales increased 26.9% in the second quarter of the fiscal year ending
February 2000 to $3,429,444 from $2,703,112 a year ago. Tubing sales increased
25.3% to $2,213,302 from $1,674,727 in the year ago quarter. This is a result of
increased market volume in the heavy truck industry and the addition of the
sequencing operation in St. Thomas, Ontario. Seat track sales increased 13.9% to
$1,171,220 in the second quarter from $1,028,385 in the year ago quarter as a
result of increased class A motor home sales, our principal market.
Profit declined 78.5% in the second quarter to $30,681 form $$142,443 in the
year ago quarter. The tube sector incurred a loss of $142,931 compared to a
profit of $17,459 in the year ago quarter. This was a result of losses in the
sequencing and startup costs of new tubing business. Seat track profits
increased 24.9% to $156,125 from $124,984 in the year ago quarter as a result of
increased volume and continuing material cost reductions.
Selling and Administrative expenses increased 23.9% in the second quarter to
$321,309 from $259,257 a year ago as a result of the increased sales activity.
LIQUIDITY AND SOURCES OF CAPITAL
The company generated $397,805 from operations through the second quarter of
fiscal 2000. Equipment purchases consumed $161,793. There was a reduction in
long term debt of $39,840 partially offset by an increase in short term debt of
10,063, resulting in a net positive cash flow of $206,235.
CONTINGENT MATTERS
A law suit has been filed against the company relating to a sub contractor's
death while working on company property. The company believes it is adequately
insured in this matter.
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KNUSAGA CORPORATION
BALANCE SHEET (UNAUDITED)
FEBRUARY 29, 2000
ASSETS February 29, 2000
CASH $ 701,773
ACCOUNTS RECEIVABLE $ 1,873,042
NOTES RECEIVABLE $ 201,777
INVENTORIES $ 947,897
PREPAID EXPENSE $ 53,247
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TOTAL CURRENT ASSETS $ 3,777,736
NET PROPERTY, PLANT AND EQUIPMENT $ 2,574,118
OTHER ASSETS $ 16,708
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TOTAL ASSETS $ 6,368,563
LIABILITIES
ACCOUNTS PAYABLE $ 1,829,544
NOTES PAYABLE $ 1,298,378
ACCRUED LIABILITIES $ 278,033
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TOTAL CURRENT LIABILITIES $ 3,405,955
LONG TERM DEBT $ 1,463,363
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TOTAL LIABILITIES $ 1,463,363
STOCKHOLDERS EQUITY (DEFICIENCY)
Common Stock, par value $.01 per share authorized $ 70,007
7,000,000 shares issued and outstanding.
Preferred stock, par value $.01 per share authorized $ 175,000
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 $ 887,874
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TOTAL STOCKHOLDERS EQUITY $ 1,499,246
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TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY $ 6,368,563
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KNUSAGA CORPORATION
STATEMENT OF INCOME (UNAUDITED)
THREE MONTHS ENDED
FEBRUARY 28, 1999 AND FEBRUARY 29, 2000
(UNAUDITED) (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
FEB. 29, 2000 FEB 28, 1999 FEB. 29, 2000 FEB. 28, 1999
NET SALES $3,429,444 $2,703,112 $6,772,961 $5,165,769
COST OF GOODS SOLD $2,984,028 $2,185,344 $5,943,705 $4,322,014
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GROSS PROFIT $ 445,417 $ 517,769 $ 829,256 $ 843,756
SELLING, GENERAL AND $ 321,309 $ 624,033 $ 475,316
ADMINISTRATIVE EXPENSES $ 259,257
MISC. INCOME (EXPENSE) $ 56,487 $ 19,930 $ 106,908 $ 64,415
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INCOME (LOSS) BEFORE TAXES $ 67,621 $ 238,581 $ 98,315 $ 304,025
PROVISION FOR FEDERAL INCOME $ 36,940 $ 96,138 $ 57,449 $ 123,135
TAXES ---------- ---------- ----------
NET INCOME BEFORE $ 30,681 $ 142,443 $ 40,866 $ 180,889
EXTRAORDINARY ITEMS
EXTRAORDINARY ITEMS:
WRITE OFF R S HUGHES IND.
TAX BENEFIT OF OPERATING
LOSS CARRYFORWARD ---------- ---------- ---------- ----------
NET INCOME $ 30,681 $142,443 $ 40,866 $ 180,889
PAR SHARE OF COMMON STOCK AND
COMMON STOCK EQUIVALENTS:
NET INCOME (LOSS) FROM
OPERATIONS PER SHARE 0.00 0.02 0.01 0.03
CASH DIVIDENDS NONE NONE NONE NONE
AVERAGE OUTSTANDING SHARES 7,000,000 7,000,000 7,000,000 7,000,000
THE FINANCIAL STATEMENTS INCLUDED IN THIS REPORT REFLECT ALL ADJUSTMENTS, WHICH,
IN THE OPINION OF MANAGEMENT, ARE NECESSARY FOR FAIR PRESENTATION.
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KNUSAGA CORPORATION
STATEMENT OF CASH FLOW (UNAUDITED)
SIX MONTHS ENDED
FEBRUARY 28, 1999 AND FEBRUARY 28, 2000
(UNAUDITED)
SIX MONTHS ENDED
February 29, 2000 February 28, 1999
CASH PROVIDED BY (USED FOR) OPERATIONS
NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS, NON-CASH $ 40,865 $180,889
EXPENSE INCLUDED IN NET INCOME
DEPRECIATION $163,532 $111,852
(INCREASE) DECREASE IN:
ACCOUNTS RECEIVABLE $165,590 ($851,276)
INVENTORIES ($230,831) $ 54,069
PREPAID EXPENSES $ 1,262 $195,138
OTHER ASSETS ($ 22,950) ($ 7,277)
INCREASE (DECREASE) IN:
ACCOUNTS PAYABLE $423,145 $ 21,156
ACCRUED LIABILITIES ($142,811) $119,405
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NET CASH PROVIDED BY (USED FOR) $397,804 ($176,041)
OPERATING ACTIVITIES
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES
PURCHASES OF EQUIPMENT ($161,792) ($ 97,171)
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NET CASH PROVIDED BY (USED FOR) $236,012 ($273,212)
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INVESTING ACTIVITIES
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES
DEBT INCREASE (DECREASE)
SHORT-TERM $ 10,062 $124,145
LONG-TERM ($39,839) ($ 76,637)
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NET CASH PROVIDED BY (USED FOR) ($29,776) $ 47,507
FINANCING ACTIVITIES
INCREASE (DECREASE) IN CASH $206,235 ($225,704)
BALANCE AT BEGINNING OF PERIOD $495,744 $364,780
BALANCE AT END OF PERIOD $701,979 $139,075
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Exhibit Index
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Exhibit No. Description
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27 Financial Data Schedule