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, 2002
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
The Company's operations are classified into two principal reportable segments,
tubing and seat tracks, 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.
Combined net sales increased 2.7% in the second quarter of the fiscal year
ending August 2002 to $2,236,530 from $2,176,820 a year ago. This is a result of
a strong recovery in the motor home market served by the registrant's seat track
business. For the second quarter, sales for this segment increased 58.0% to
$1,126,879 from $713,420 a year ago. The heavy truck market served by our tubing
segment is in the second year of a sharp decline. According to "Automotive News"
February 2002 is the 23rd consecutive month that heavy duty truck sales dropped
from their year earlier levels. For the second quarter ending February 28, 2002,
the registrant's tube sales to this segment declined 24.2% to $1,109,651 from
$1,463,400 a year ago.
For the six months ending February 28, 2002, combined sales declined 3.0% to
$4,566,602 from $4,705,959 in the year ago period as a result of the weak first
quarter of the current fiscal year.
The registrant operated at a $49,246 profit in the second quarter of the 2002
fiscal year ending February 28, 2002 versus a loss of $74,213 in the year ago
period as a result of the increased sales revenue. For the six months ending
February 28, 2002, profit was $98,788 versus a loss of $172,353 in the year ago
period.
Below is summarized segmental data for the second quarters and six months ending
February 28, 2002 and February 28, 2001.
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2ND QTR TUBING SEAT TRACK TOTAL
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2002 2001 2002 2001 2002 2001
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REVENUE 1,109,651 1,463,400 1,126,879 713,420 2,236,530 2,176,820
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PROFIT (138,601) (120,666) 187,847 46,458 49,246 (74,208)
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6 MONTHS TUBING SEAT TRACK TOTAL
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2002 2001 2002 2001 2002 2001
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REVENUE 2,615,503 3,248,458 1,951,099 1,457,501 4,566,602 4,705,959
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PROFIT (198,170) (314,312) 296,958 141,959 98,788 (172,353)
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Selling, general and administrative expenses increased 14.4% in the second
quarter ending February 28, 2002, to $290,323 from $253,783 in the year ago
period as a result of the increased sales activity. For the six months ending
February 28, 2002, these expenses increased 5.4% to $582,368 from $551,032 in
the year ago period.
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LIQUIDITY AND SOURCES OF CAPITAL
The Registrant has a $1,250,000 line of credit with Standard Federal Bank, with
interest payable monthly at the Bank's Prime Rate plus 1%. This line of credit
is evidenced by a note which is secured by a security interest/mortgage in all
of the Registrant's assets. This line of credit is due October 1, 2002. At
February 28, 2002, the outstanding balance was $841,761.42 and the applicable
interest rate was 4.75%.
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, 2002
ASSETS February 28, 2002 August 31, 2001
CASH $ 125,893 $ 62,753
ACCOUNTS RECEIVABLE $ 1,642,032 $ 1,538,348
ACCOUNTS RECEIVABLE -- OTHER $ 6,133 $ 3,598
INVENTORIES $ 1,097,514 $ 1,010,533
REFUNDABLE TAXES $ 0 $ 205,566
PREPAID EXPENSES $ 81,811 $ 44,600
----------- -----------
TOTAL CURRENT ASSETS $ 2,953,376 $ 2,865,398
NET PROPERTY AND EQUIPMENT $ 1,911,129 $ 2,053,985
OTHER ASSETS
DEPOSITS $ 7,050 $ 10,579
INVESTMENT IN JOINT VENTURES $ 110,987 $ 99,291
GOODWILL, NET OF AMORTIZATION $ 5,650 $ 6,652
----------- -----------
TOTAL OTHER ASSETS $ 123,687 $ 116,522
----------- -----------
TOTAL ASSETS $ 4,988,192 $ 5,035,905
=========== ===========
LIABILITIES
ACCOUNTS PAYABLE $ 552,477 $ 715,712
NOTES PAYABLE $ 1,405,500 $ 1,667,884
ACCRUED LIABILITIES $ 1,207,212 $ 863,172
----------- -----------
TOTAL CURRENT LIABILITIES $ 3,165,189 $ 3,246,768
LONG TERM DEBT $ 633,898 $ 698,819
DEFERRED TAXES $ 36,500 $ 36,500
----------- -----------
TOTAL LIABILITIES $ 3,835,587 $ 3,982,087
STOCKHOLDERS EQUITY
STOCK $ 70,000 $ 70,000
PREFERRED STOCK $ 175,000 $ 175,000
ADDITIONAL PAID IN CAPITAL $ 366,365 $ 366,365
RETAINED EARNINGS $ 648,583 $ 549,796
NOTE RECEIVABLE SHAREHOLDER ($ 107,343) ($ 107,343)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY $ 1,152,605 $ 1,053,818
----------- -----------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 4,988,192 $ 5,035,905
=========== ===========
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KNUSAGA CORPORATION
STATEMENT OF INCOME (UNAUDITED)
FOR THREE AND SIX MONTH PERIOD ENDED
FEBRUARY 28, 2002 AND FEBRUARY 28, 2001
(UNAUDITED) (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
FEBRUARY 28, FEBRUARY 28, FEBRUARY 28, FEBRUARY 28,
2002 2001 2002 2001
NET SALES $ 2,236,530 $ 2,176,820 $ 4,566,602 $ 4,705,959
COST OF GOODS SOLD $ 1,809,613 $ 1,985,869 $ 3,724,727 $ 4,194,646
----------- ----------- ----------- -----------
GROSS PROFIT $ 426,917 $ 190,951 $ 841,875 $ 511,313
SELLING, GENERAL AND ADMINISTRATIVE $ 290,323 $ 253,783 $ 582,368 $ 551,032
EXPENSES
MISC. INCOME (EXPENSE) ($ 23,692) ($ 32,429) ($ 60,246) ($ 174,687)
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE TAXES $ 112,902 ($ 95,261) $ 199,261 ($ 215,012)
PROVISION FOR FEDERAL INCOME TAXES $ 63,656 ($ 21,053) $ 100,473 ($ 42,659)
----------- ----------- ----------- -----------
NET INCOME BEFORE EXTRAORDINARY ITEMS $ 49,246 ($ 74,208) $ 98,788 ($ 172,353)
EXTRAORDINARY ITEMS: $-0- $-0- $ 0 $ 0
----------- ----------- ----------- -----------
NET INCOME $ 49,246 ($ 74,208) $ 98,788 ($ 172,353)
PAR SHARE OF COMMON
STOCK AND COMMON
STOCK EQUIVALENTS:
AVERAGE OUTSTANDING 7,000,000 7,000,000 7,000,000 7,000,000
SHARES .007 -0.011 0.013 -0.025
THE FINANCIAL STATEMENTS INCLUDED IN THIS REPORT REFLECT ALL ADJUSTMENTS, WHICH,
IN THE OPINION OF REGISTRANT'S 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 AND SIX MONTHS PERIOD ENDED
FEBRUARY 28, 2002 AND FEBRUARY 28, 2001
(UNAUDITED) (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
FEBRUARY FEBRUARY FEBRUARY FEBRUARY
28, 2002 28, 2001 28, 2002 28, 2001
NET INCOME $ 49,246 ($ 74,208) $ 98,788 ($172,353)
DEPRECIATION & AMORTIZATION $ 87,487 $ 92,580 $ 145,566 $ 182,019
(INCREASE) DECREASE IN:
ACCOUNTS RECEIVABLE ($230,716) $ 128,312 ($106,219) $ 107,920
INVENTORIES ($ 60,037) ($ 5,400) ($ 86,981) ($ 64,571)
REFUNDABLE TAXES $ 205,566
PREPAID EXPENSES ($ 26,696) ($ 57,422) ($ 37,211) ($ 50,162)
OTHER ASSETS $ 501 $ 501 $ 3,529 $ 1,002
INCREASE (DECREASE) IN:
ACCOUNTS PAYABLE ($ 2,404) ($323,437) ($163,235) ($210,318)
ACCRUED LIABILITIES $ 451,436 ($ 15,174) $ 344,040 ($ 65,398)
---------
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES $ 268,817 (254,248) $ 403,843 ($271,861)
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INVESTMENT ACTIVITIES
PURCHASES OF EQUIPMENT ($ 8,768) $ 20,203 ($ 1,708) ($ 23,083)
INVESTMENT IN JOINT VENTURES ($ 5,459) $ 33,593 $ 11,696 $ 33,593
---------
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES ($ 14,227) $ 53,796 ($ 13,404) $ 10,510
---------
FINANCING ACTIVITIES ($181,148) $ 96,691 ($327,299) $ 3,849
---------
PAYMENT OF NOTES
CASH USED FOR FINANCING ACTIVITIES ($181,148) $ 96,691 ($327,299) $ 3,849
---------
NET INCREASE (DECREASE) $ 73,442 ($103,761) $ 63,140 ($256,596)
BEGINNING CASH $ 52,451 $ 296,078 $ 62,753 $ 448,913
---------
ENDING CASH $ 125,893 $ 192,317 $ 125,893 $ 192,317
=========
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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
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President, Duly Authorized Officer and
Principal Accounting Officer
Dated: April 12, 2002
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