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, 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
---- ----
Shares of Common Stock Par Value $.01, outstanding: 7,000,000.
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RESULTS OF OPERATIONS
Net sales decreased 7.8% in the first quarter of the fiscal year ending August
2002 to $2,330,072 from $2,529,139 a year ago. This is a result of continued
decline in the heavy truck market which was partially offset by improvement in
the recreational vehicle market. There did not appear to be any decline in the
registrant's market share in either of these markets
The registrant operated at a $45,137 profit in the first quarter of the 2002
fiscal year versus a loss of $136,678 in the first quarter a year ago. This is a
result of expense reductions versus the year ago quarter. Cost of sales dropped
from 87.3% in the first quarter of fiscal 2001 to 82.5% in the first quarter of
fiscal 2002. Selling, general and administrative expenses decreased 31.5% to
$289,810 in the first quarter of fiscal 2002 versus $423,338 in the year ago
quarter.
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. The tubing business services the heavy
truck market and the seat track business services the recreational vehicle
market. Below is summarized segmental data for the three months ended November
30, 2001 and 2000.
- ------------------------ --------------------------------- ----------------------------------- -----------------------------------
TUBING SEAT TRACK TOTAL
- ------------------------ --------------------------------- ----------------------------------- -----------------------------------
Fiscal 2002 Fiscal 2001 Fiscal 2002 Fiscal 2001 Fiscal 2002 Fiscal 2001
- ------------------------ --------------- ----------------- ----------------- ----------------- ----------------- -----------------
External Revenue 1,505,852 1,785,058 824,220 744,081 2,330,072 2,529,139
- ------------------------ --------------- ----------------- ----------------- ----------------- ----------------- -----------------
Intersegment Revenue 0 0 0 0 0 0
- ------------------------ --------------- ----------------- ----------------- ----------------- ----------------- -----------------
Profit (loss) (63,974) (173,464) 109,111 36,786 45,137 (136,678)
- ------------------------ --------------- ----------------- ----------------- ----------------- ----------------- -----------------
LIQUIDITY AND SOURCES OF CAPITAL
Operations during the quarter produced $156,333 of cash, equipment purchases
consumed $7,061 and there was a reduction in bank debt of $157,694 resulting in
negative cash flow of $10,302 for the quarter. The maturity date of registrant's
line of credit has been extended until March 1, 2002.
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)
NOVEMBER 30, 2001
ASSETS November 30, 2001
CASH $ 52,451
ACCOUNTS RECEIVABLE $ 1,411,529
ACCOUNTS RECEIVABLE -- OTHER $ 5,920
INVENTORIES $ 1,037,477
REFUNDABLE TAXES $ 164,848
PREPAID EXPENSES $ 47,584
-----------
TOTAL CURRENT ASSETS $ 2,719,809
NET PROPERTY, PLANT AND EQUIPMENT $ 1,980,271
OTHER ASSETS
DEPOSITS $ 7,050
INVESTMENT IN JOINT VENTURES $ 115,293
GOODWILL, NET OF AMORTIZATION $ 6,151
-----------
TOTAL OTHER ASSETS $ 128,494
-----------
TOTAL ASSETS $ 4,828,574
===========
LIABILITIES
ACCOUNTS PAYABLE $ 523,337
NOTES PAYABLE $ 1,555,408
ACCRUED LIABILITIES $ 960,773
-----------
TOTAL CURRENT LIABILITIES $ 3,039,518
LONG TERM DEBT $ 653,601
DEFERRED TAXES $ 36,500
-----------
TOTAL LIABILITIES $ 3,729,619
SHAREHOLDER'S EQUITY
STOCK $ 70,007
PREFERRED STOCK $ 175,000
ADDITIONAL PAID IN CAPITAL $ 366,365
RETAINED EARNINGS $ 594,933
NOTE RECEIVABLE SHAREHOLDER ($ 107,343)
-----------
TOTAL SHAREHOLDERS' EQUITY $ 1,098,955
-----------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 4,828,574
===========
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KNUSAGA CORPORATION
STATEMENT OF INCOME (UNAUDITED)
THREE MONTHS ENDED
NOVEMBER 30, 2001 AND NOVEMBER 30, 2000
(UNAUDITED)
THREE MONTHS ENDED
NOVEMBER 30, 2001 NOVEMBER 30, 2000
NET SALES $2,330,072 $2,529,139
COST OF GOODS SOLD $1,921,752 $2,208,777
---------- ----------
GROSS PROFIT $ 408,320 $ 320,361
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES $ 289,810 $ 423,338
MISC. INCOME (EXPENSE) ($ 36,555) ($ 55,307)
---------- ----------
INCOME (LOSS) BEFORE TAXES $ 81,955 ($ 158,284)
PROVISION FOR FEDERAL INCOME TAXES $ 36,818 ($ 21,606)
---------- ----------
NET INCOME BEFORE EXTRAORDINARY ITEMS $ 45,137 ($ 136,678)
EXTRAORDINARY ITEMS: $-0- $ -0-
TAX BENEFIT OF OPERATING
LOSS CARRYFORWARD
---------- ----------
NET INCOME $ 45,137 ($ 136,678)
PAR SHARE OF COMMON STOCK AND
COMMON STOCK EQUIVALENTS:
AVERAGE OUTSTANDING SHARES 7,000,000 7,000,000
.01 .00
THE FINANCIAL STATEMENTS INCLUDED IN THIS REPORT REFLECT ALL ADJUSTMENTS, WHICH,
IN THE OPINION OF MANAGEMENT, ARE NECESSARY FOR FAIR PRESENTATION. The financial
statements should be read in conjunction with the footnotes which are a part of
registrant's audited financial statements contained in registrant's most
recently filed Annual Report on Form 10KSB.
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KNUSAGA CORPORATION
STATEMENT OF CASH FLOW (UNAUDITED)
THREE MONTHS ENDED
NOVEMBER 30, 2001 AND NOVEMBER 30, 2000
(UNAUDITED)
THREE MONTHS ENDED
NOVEMBER 30, 2001 NOVEMBER 30, 2000
CASH PROVIDED BY (USED FOR) OPERATIONS
NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS, $ 45,137 ($136,678)
EXCHANGE LOSS
NON-CASH EXPENSE INCLUDED IN NET INCOME $ 67,154 $ 89,440
DEPRECIATION
(INCREASE) DECREASE IN:
ACCOUNTS RECEIVABLE $124,497 ($ 23,981)
INVENTORIES ($ 26,944) ($ 59,171)
REFUNDABLE TAXES $ 40,718 $ 0
PREPAID EXPENSES ($ 2,984) $ 7,260
OTHER ASSETS $ 3,529 $ 501
INCREASE (DECREASE) IN:
ACCOUNTS PAYABLE ($192,375) $113,119
ACCRUED LIABILITIES $ 97,601 ($ 46,005)
-------- --------
NET CASH PROVIDED BY (USED FOR) $156,333 ($ 55,515)
--------
OPERATING ACTIVITIES
INVESTING ACTIVITIES
PURCHASES OF EQUIPMENT $ 7,061 ($ 5,650)
INVESTMENT IN JOINT VENTURES ($ 16,002)
---------
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES ($ 8,941)
---------
FINANCING ACTIVITIES
PAYMENT OF NOTES ($157,694)
---------
CASH USED FOR FINANCING ACTIVITIES ($157,694)
---------
NET INCREASE (DECREASE) ($ 10,302)
SHORT-TERM 14,122
LONG-TERM ($105,792)
--------
NET CASH PROVIDED BY (USED FOR)
FINANCING ACTIVITIES ($ 91,670)
INCREASE (DECREASE) IN CASH ($152,835)
BALANCE AT BEGINNING OF PERIOD $ 62,753 $448,913
BALANCE AT END OF PERIOD $ 52,451 $296,078
========
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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: James Musser
----------------------------------
President
(Duly Authorized and Principal
Accounting Officer)
Dated: January 31, 2002
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