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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 2001 Commission File Number 0-4539
TRANS-INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-2598139
-------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2637 S. Adams Road, Rochester Hills, MI 48309
---------------------------------------------
(Address) (Zip Code)
Registrant's Telephone Number, including Area Code (248) 852-1990
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 and 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
--- ----
The number of shares outstanding of registrant's Common stock, par value $.10
per share, at March 31, 2001 was 3,139,737.
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TRANS-INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
FORM 10-Q - FOR THE QUARTER ENDED MARCH 31, 2001
INDEX
PART I. Financial Information
Item 1. FINANCIAL STATEMENTS
A. Consolidated Statements of Operations ---
Three months ended March 31, 2001 and 2000.
B. Consolidated Statements of Comprehensive Loss ---
Three months ended March 31, 2001 and 2000.
C. Consolidated Balance Sheets ---
March 31, 2001 and December 31, 2000.
D. Consolidated Statements of Cash Flows ---
Three months ended March 31, 2001 and 2000.
E. Notes to Consolidated Financial Statements.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
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TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
A.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
QUARTER ENDED MARCH 31, 2001 AND 2000
3/31/01 3/31/00
------- -------
1. Gross sales less discounts, returns and allowances $ 10,747,661 $11,529,341
2. Cost of goods sold 7,889,526 8,504,035
------------ -----------
3. Gross Profit 2,858,135 3,025,306
4. Selling, general and administrative exp. 2,583,135 2,842,950
------------ -----------
5. Operating income 275,000 182,356
6. Other (income)/expense
Interest expense 340,724 310,002
Other income (4,168) (8,084)
------------ -----------
Total other expense 336,556 301,918
------------ -----------
7. Loss before income taxes (61,556) (119,562)
8. Income tax expense/(benefit) 3,000 (4,000)
------------ -----------
9. Net loss $ (64,556) $ (115,562)
============ ===========
10. Loss per share (Note 6):
Basic $ (.02) $ (.04)
Diluted $ (.02) $ (.04)
============ ===========
11. Dividends per share $ -- $ --
============ ===========
See Notes to Financial Statements
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TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
B.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited)
QUARTER ENDED MARCH 31, 2001 AND 2000
2001 2000
------------ --------------
Net loss $ (64,556) $ (115,562)
Other comprehensive loss:
Equity adjustment from foreign
currency translation. (41,443) (32,759)
----------- --------------
Comprehensive loss $ (105,999) $ (148,321)
=========== ==============
See Notes to Financial Statements
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TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
C.
CONSOLIDATED BALANCE SHEETS
ASSETS
Current Assets 3/31/01 12/31/00
- -------------- (Unaudited) (Audited)
------------ ------------
Cash $ 14,087 $ 317,754
Accounts receivable 10,508,752 10,925,535
Inventories (Note 2) 12,471,503 13,056,101
Prepaid expenses 692,964 427,183
Deferred income taxes 863,978 856,000
------------ ------------
Total current assets 24,551,284 25,582,573
Property, Plant & Equipment, at Cost
- ------------------------------------
Land 306,881 306,881
Land Improvements 126,660 126,660
Buildings 5,960,237 5,958,794
Machinery & equipment 12,818,694 12,895,829
------------ ------------
19,212,472 19,288,164
Less: accumulated
depreciation (12,265,391) (11,996,151)
------------ ------------
Net plant and equipment 6,947,081 7,292,013
Other Assets
- ------------
Investments in affiliates 68,484 68,484
Patents, licenses & trademarks,
net of accumulated amortization 62,738 76,438
Excess of cost of investment in
stock of subsidiary over equity in
underlying net assets of acquisition 1,447,534 1,487,985
Sundry 26,830 4,013
------------ ------------
Total assets $ 33,103,951 $ 34,511,506
============ ============
LIABILITIES AND STOCKHOLDERS EQUITY
- -----------------------------------
Current Liabilities 3/31/01 12/31/00
- ------------------- (Unaudited) (Audited)
------------ ------------
Notes Payable (Note 5) $ 8,477,019 $ 8,439,750
Current installments
- Long term debt (Note 5) 796,373 813,025
Accounts payable - trade 5,946,753 6,935,197
Accrued liabilities 1,192,246 1,464,214
Income taxes (248,964) (251,964)
------------ ------------
Total current liabilities 16,163,427 17,400,222
Deferred income taxes - Non-current 240,000 240,000
Long term debt
- --------------
Current portion shown above (Note 5) 5,195,175 5,263,236
Other non-current liabilities 303,771 300,471
Stockholders' Equity
- --------------------
Preferred stock of $1.00 par value
per share - authorized 500,000
shared; none issued -- --
Common stock of $.10 par value per
share - authorized 10,000,000 shares;
3,139,737 shares issued and 3,139,737
outstanding at 3/31/01 313,974 313,974
Additional paid-in capital 4,072,081 4,072,081
Retained earnings 6,889,935 6,954,491
Foreign currency translation (74,412) (32,969)
------------ ------------
11,201,578 11,307,577
------------ ------------
Total liabilities and stockholders' equity $ 33,103,951 $ 34,511,506
============ ============
See Notes to Financial Statements.
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TRANS-INDUSTRIES, INC.
Consolidated Statements of Cash Flows
D. For the Three Months Ended March 31, 2001 and 2000
--------------------------------------------------
Three Months Ended March 31
---------------------------
2001 2000
---- ----
(Unaudited) (Unaudited)
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (64,556) $ (115,562)
Adjustments to reconcile net loss
to net cash provided by operations:
Depreciation/Amortization 364,213 326,933
Decrease (increase) in accts. receiv. 416,783 (664,526)
Decrease (increase) in inventory 584,598 (1,469,470)
Decrease (increase) in prepaid exp. (273,759) (370,643)
Increase (decrease) in accts. payable (988,444) 1,928,107
Increase (decrease) in accr. liab. (271,968) (558,274)
Increase (decrease) in income taxes 3,000 (301,393)
Loss on sale of Property and Equipment 1,017 -0-
Other (22,918) -0-
----------- -----------
Net Cash Used by Operations (252,034) (1,224,828)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (97,246) (551,541)
Proceeds from sale of Property & Equip. 131,200 -0-
----------- -----------
Net Cash Provided (Used) by Investing 33,954 (551,541)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (repayment) of long-term
borrowings (81,413) (123,641)
Net proceeds (payment) of credit line 37,269 1,775,249
----------- -----------
Net Cash Provided (Used) by Financing (44,144) 1,651,608
Foreign currency translation (41,443) (32,759)
----------- -----------
Net decrease in cash (303,667) (157,520)
Cash at beginning of year 317,754 163,953
----------- -----------
Cash at end of quarter $ 14,087 $ 6,433
=========== ===========
Supplemental Disclosures:
Interest paid $ 342,982 $ 283,353
Income taxes paid $ -0- $ 300,000
See Notes to Financial Statements
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E. TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The financial information presented as of any date other than December 31
has been prepared from the Company's books and records without audit.
Financial information as of December 31 has been derived from the audited
financial statements of the Company. In the opinion of management, all
adjustments consisting of normal recurring adjustments, necessary for a
fair presentation of the financial information for the periods indicated,
have been included. For further information regarding the Company's
accounting policies, refer to the consolidated financial statements and
related notes included in the Company's annual report on form 10-K for the
year ended December 31, 2000.
2. Inventories
The major components of inventories are:
3/31/01 12/31/00
------- --------
Raw Materials $ 6,336,998 $ 6,984,323
Work in Process 3,653,591 3,262,522
Finished Goods 2,480,914 2,809,256
----------- -----------
$12,471,503 $13,056,101
=========== ===========
3. Principles of Consolidation
There have been no significant changes in the principles of consolidation
since our most recent audited financial statements.
4. Significant Accounting Policies
There have been no significant changes in the accounting policies since our
most recent audited financial statements.
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E. TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. Long-Term Debt
Long-term debt at March 31, 2001 consisted of the following:
Trans-Industries, Inc., $3,840,000 term note, payable in $2,826,790
monthly installments of $40,725 which includes interest at
bank's prime lending rate, and a balloon payment of $1,927,007
in October 2004. The note is secured by substantially all the
assets of the Company.
Term note, payable in monthly installments of $896 100,659
including interest at a rate of 6%. The note is due January 21,
2002.
Term note, payable in monthly installments of $50,965 beginning in May
2001. Interest is payable monthly at the bank's prime lending rate plus
.5%. The note is due November 2005 and is secured by substantially all
the assets of the Company. 2,752,150
Other 311,949
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5,991,548
Less current installments (796,373)
----------
Long-term debt $5,195,175
==========
The Company also has an unsecured $13,000,000 line of credit of which
$8,477,019 was utilized at March 31, 2001. Interest is charged at the
bank's prime lending rate, plus 1/2 point. This line of credit expires on
July 1, 2001 and is expected to be renewed prior to that date.
The line of credit agreement requires the company to maintain certain
financial ratios. The agreement also restricts the payment of dividends,
repurchase of common stock, and acquisition of property and equipment. At
March 31, 2001, the Company was not in compliance with the financial ratio
covenants and obtained a waiver for such non compliance from its lender.
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TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. Loss Per Share
For the quarters ended March 31, 2000, and 2001 all options outstanding
have been excluded from the computation of diluted loss per share as the
effect would be anti-dilutive.
7. Segment Information
The Company operates in one market segment, the transportation industry,
with products directed towards customers in the mass transit, highway,
airline and rental car segments. Financial information summarized by
geographic area is as follows:
3/31/01 3/31/00
------------------------ -------------------------
LONG- LONG-
LIVED LIVED
REVENUES ASSETS REVENUES ASSETS
-------- ------ -------- ------
United States $ 8,703,673 $6,638,871 $ 9,427,847 $7,465,424
United Kingdom 444,787 1,913,796 469,379 1,928,058
Canada 1,437,141 -0- 1,298,052 -0-
Other 162,060 -0- 334,063 -0-
----------- ---------- ----------- ----------
Total $10,747,661 $8,552,667 $11,529,341 $9,393,482
=========== ========== =========== ==========
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TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
For Three Months Ended March 31, 2001
Forward-Looking Statements
This discussion highlights significant factors influencing the financial
condition and results of operations of Trans-Industries, Inc. It should be read
in conjunction with the financial statements and related notes. This discussion
includes certain forward-looking statements based on management's estimate of
trends and economic factors in the markets in which the corporation is active,
as well as the corporation's business plans. In light of recent securities law
developments, including the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, the corporation notes that such forward-looking
statements are subject to risks and uncertainties. Accordingly, the
corporation's actual results may differ from those set forth in such statements.
Significant changes in economic conditions, regulatory or legislative changes
affecting Trans-Industries, Inc., its competitors, or the markets in which it is
active, or changes in other factors may cause future results to vary from those
expected by the corporation.
Sales and Earnings
Sales for the quarter ended March 31, 2001 were $10,747,661 compared to
$11,529,341 for the same period a year ago. This decrease of $781,680 is
attributed to a decrease in shipments of the Company's overhead highway signs as
well as fewer shipments of its bus window systems for the first quarter of 2001
as compared to the same period a year ago.
During the first quarter of 2001, the Company recorded a net loss of $64,556 or
$.02 per share on sales of $10,747,661. For the same period of the prior year,
the Company reported a net loss of $115,562 or $.04 per share on sales of
$11,529,341. The reduction in loss of $51,006 during the first quarter of 2001
on less sales in the amount of $781,680 was primarily attributed to cost
reductions put in place, including a reduction of the direct labor force.
Inventories
Inventory valuation is based upon the lower of cost or market. At March 31,
2001, consolidated inventories were $12,471,503 compared to $14,268,991 a year
ago. This decrease of $1,797,488 is a result of the Company's effort to bring
its inventory levels more in line with its sales volumes.
Interest
Interest expense amounted to approximately $341,000 and $310,000 for the first
quarter of 2001 and 2000, respectively. This increase of $31,000 was the result
of slightly higher debt levels in 2001, plus increased interest costs.
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TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
For Three Months Ended March 31, 2001
Financial Condition
Current financial resources coupled with anticipated funds from operations and
those freed up through the consolidation of the Companies operations in England,
are expected to meet funding requirements for the remainder of the year, based
upon present needs.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of l934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRANS-INDUSTRIES, INC.
Date: May 9, 2001 /s/ Kai Kosanke
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Kai Kosanke, Treasurer
and Chief Financial Officer
Date: May 9, 2001 /s/ Paul Clemo
----------------------------- --------------------------------
Paul Clemo
Assistant Treasurer
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