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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 28, 2001
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
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Shares of Common Stock Par Value $.01, outstanding: 7,000,000.
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RESULTS OF OPERATIONS
Net sales decreased 36.5% in the second quarter of the fiscal year ending August
2001 to $2,176,815 from $3,429,444 a year ago. This is a result of a sharp
decline in both of the markets served by the registrant, heavy trucks and
recreational vehicles. There did not appear to be any decline in the
registrant's market share in either of these markets
The registrant operated at a $74,208 loss in the second quarter of the 2001
fiscal year versus a profit of $30,681 in the second quarter a year ago. This
was a result of the decrease in sales volume.
Selling, general, and administrative expenses decreased 21.0% to $253,783 in the
second quarter of fiscal 2001 versus $321,309 in the year ago quarter, in
response to the reduction in sales.
The Company's operations are classified into two principal reportable segments
that provide different products or services. Separate management of each segment
is required because each business unit is subject to different marketing,
production and technology strategies. Below is summarized segmental data for the
six months ended February 28, 2001 and February 29, 2000.
- ------------------------ --------------------------------- ----------------------------------- -----------------------------------
TUBING SEAT TRACK TOTAL
- ------------------------ --------------------------------- ----------------------------------- -----------------------------------
2001 2000 2001 2000 2001 2000
- ------------------------ --------------- ----------------- ----------------- ----------------- ----------------- -----------------
External Revenue 3,205,161 4,611,209 1,500,798 2,161,753 4,705,959 6,772,961
- ------------------------ --------------- ----------------- ----------------- ----------------- ----------------- -----------------
Intersegment Revenue 0 0 0 0 0 0
- ------------------------ --------------- ----------------- ----------------- ----------------- ----------------- -----------------
Profit (loss) (115,918) (251,907) 73,259 292,773 (42,659) 40,866
- ------------------------ --------------- ----------------- ----------------- ----------------- ----------------- -----------------
LIQUIDITY AND SOURCES OF CAPITAL
$407,253 of shareholder debt plus $517,927 of accrued interest was converted to
paid in capital during the first quarter of fiscal 2001. There was no net effect
on cash but equity increased by $925,180. Operations during the six months of
the current fiscal year consumed $55,515 of cash, equipment purchases consumed
$23,332, and there was a reduction in bank debt of $235,888, resulting in a
negative cash flow of $256,220 for the period.
CONTINGENT MATTERS
There are no contingencies or consequential uncertainties known that will
materially affect the financial information as presented.
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KNUSAGA CORPORATION
BALANCE SHEET (UNAUDITED)
FEBRUARY 28, 2001
ASSETS February 28, 2001
CASH $ 192,317
ACCOUNTS RECEIVABLE $ 1,476,753
ACCOUNTS RECEIVABLE - OTHER $ 31,943
INVESTMENT IN JOINT VENTURE $ (2,634)
INVENTORIES $ 1,316,321
PREPAID EXPENSE $ 114,589
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TOTAL CURRENT ASSETS $ 3,129,289
NET PROPERTY, PLANT AND EQUIPMENT $ 2,327,312
OTHER ASSETS $ 14,704
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TOTAL ASSETS $ 5,471,305
LIABILITIES
ACCOUNTS PAYABLE $ 996,671
NOTES PAYABLE $ 1,647,613
ACCRUED LIABILITIES $ 272,776
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TOTAL CURRENT LIABILITIES $ 2,917,060
LONG TERM DEBT $ 293,526
TOTAL LIABILITIES
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 $ 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 $ 1,291,545
RETAINED EARNINGS $ 831,510
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NOTE RECEIVABLE SHAREHOLDER (107,343)
TOTAL STOCKHOLDERS EQUITY $ 2,260,719
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TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY $ 5,471,305
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KNUSAGA CORPORATION
STATEMENT OF INCOME (UNAUDITED)
THREE MONTHS ENDED
FEBRUARY 28, 2001 AND FEBRUARY 29, 2000
(UNAUDITED) (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
FEBRUARY 28, FEBRUARY 29, FEBRUARY 28, FEBRUARY 29,
2001 2000 2001 2000
NET SALES $ 2,176,820 $ 3,429,444 $ 4,705,959 $ 6,772,961
COST OF GOODS SOLD $ 1,985,869 $ 2,984,028 $ 4,194,646 $ 5,943,705
----------- ----------- ----------- -----------
GROSS PROFIT $ 190,951 $ 445,417 $ 511,313 $ 829,256
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES $ 253,783 $ 321,309 $ 551,632 $ 624,033
MISC. INCOME (EXPENSE) ($ 32,429) ($ 56,487) ($ 174,687) ($ 106,908)
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INCOME (LOSS) BEFORE TAXES ($ 95,261) $ 67,621 ($ 215,012) $ 98,315
PROVISION FOR FEDERAL INCOME TAXES ($ 21,053) $ 36,940 ($ 42,659) $ 57,449
----------- ----------- ----------- -----------
NET INCOME BEFORE EXTRAORDINARY ITEMS ($ 74,208) $ 30,681 ($ 172,353) $ 40,866
EXTRAORDINARY ITEMS: $-0- $-0- $-0- $-0-
TAX BENEFIT OF
OPERATING LOSS
CARRYFORWARD
----------- ----------- ----------- -----------
NET INCOME ($ 74,208) $ 30,681 ($ 172,353) $ 40,866
PAR SHARE OF COMMON STOCK
AND COMMON STOCK
EQUIVALENTS:
AVERAGE OUTSTANDING SHARES 7,000,000 7,000,000 7,000,000 7,000,000
.01 .00 (.02) (.01)
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, 2001 AND FEBRUARY 29, 2000
(UNAUDITED)
SIX MONTHS ENDED
FEBRUARY 28, FEBRUARY 29,
2001 2000
CASH PROVIDED BY (USED FOR) OPERATIONS
NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS, ($172,353) $ 40,865
NON-CASH EXPENSE INCLUDED IN NET INCOME
DEPRECIATION $189,055 $163,532
(INCREASE) DECREASE IN:
ACCOUNTS RECEIVABLE $141,215 $165,590
INVENTORIES ($ 64,751) ($230,831)
PREPAID EXPENSES ($ 61,783) $ 1,262
OTHER ASSETS $ 12,421 ($ 22,950)
INCREASE (DECREASE) IN:
ACCOUNTS PAYABLE ($174,441) $423,145
ACCRUED LIABILITIES ($739,216) ($142,811)
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DEFERRED TAXES ($ 22,500)
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NET CASH PROVIDED BY (USED FOR) ($ 55,515) $397,804
OPERATING ACTIVITIES
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES
PURCHASES OF EQUIPMENT $ 23,332 ($161,792)
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES
DEBT INCREASE (DECREASE) ($259,220) ($ 29,777)
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NET CASH PROVIDED BY (USED FOR)
FINANCING ACTIVITIES ($235,888) ($ 29,776)
INCREASE (DECREASE) IN CASH ($256,220) $206,235
BALANCE AT BEGINNING OF PERIOD $448,855 $495,744
BALANCE AT END OF PERIOD $192,317 $701,979
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Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
KNUSAGA CORPORATION
By: /s/ Jerry Luptak
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Vice President
Dated: May 16, 2001
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Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant and
in the capacities and on the date indicated:
By: /s/ James G. Musser Date: May 16, 2001
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Director/President
(Principal Executive Officer and
Controller)
By: /s/ Jerry D. Luptak Date: May 16, 2001
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Director
Vice President, Finance and
General Counsel
(Principal Financial Officer)
By: /s/ Harold Beznos Date: May 16, 2001
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Director Secretary-Treasurer