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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, 1996 Commission File Number 0-4539
TRANS-INDUSTRIES, INC.
----------------------
(Exact name of registrant as specified in its charter)
Delaware 13-2598139
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2637 Adams Road, Rochester Hills, MI 48309
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(Address) (Zip Code)
Registrant's Telephone Number, including Area Code (810) 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, 1996 was 3,077,000.
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TRANS-INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
FORM 10-Q - FOR THE QUARTER ENDED MARCH 31, 1996
INDEX
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PART I. Financial Information
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Item 1. FINANCIAL STATEMENTS
A. Consolidated Statements of Operations ---
Three months ended March 31, 1996 and 1995.
B. Consolidated Balance Sheets ---
March 31, 1996 and December 31, 1995.
C. Consolidated Statements of Cash Flows ---
Three months ended March 31, 1996 and 1995.
D. Notes to Consolidated Financial Statements.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
PART II. Other Information
Item 1. LEGAL PROCEEDINGS
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES
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TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
A. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
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For 3 Months Ended:
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3/31/96 3/31/95
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1. Gross sales less discounts, returns and allowances $7,166,092 $5,256,980
2. Cost of goods sold 4,523,557 3,922,977
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3. Gross profit 2,642,535 1,334,003
4. Selling, general and administrative exp. 1,832,532 1,501,689
--------- ---------
5. Operating income/(loss) 810,003 (167,686)
6. Other (income)/expense
Interest expense 217,489 224,856
Other income ( 42,150) ( 115,989)
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Total other (income)/expense 175,339 108,867
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7. Earnings/(loss) before income taxes 634,664 (276,553)
8. Income tax expense/(benefit) 211,000 ( 101,000)
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9. Net Profit/(loss) $ 423,664 ($ 175,553)
========== ==========
10. Earnings per share $ .14 $ (.06)
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11. Dividends per share - -
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TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
B. CONSOLIDATED BALANCE SHEETS
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ASSETS
- ------
Current Assets
- -------------- 3/31/96 12/31/95
(Unaudited) ( Audited )
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Cash $ 162,988 $ 109,123
Accounts receivable 7,291,425 6,846,677
Inventories (Note 2) 5,935,617 5,974,417
Prepaid expenses 296,597 311,866
Deferred income taxes 316,000 316,000
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14,002,627 13,558,083
Total current assets
Property, Plant & Equipment, at
- -------------------------------
Cost
- ----
Land 370,813 382,519
Land improvements 126,660 126,660
Buildings 5,331,922 5,298,437
Machinery & equipment 6,175,998 6,056,769
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Less: accumulated 12,005,393 11,864,385
depreciation (7,884,975) (7,758,344)
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Net plant and equipment 4,120,418 4,106,041
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Other Assets
- ------------
Investments in affiliates 10,000 10,000
Patents, licenses & trademarks,
net of accumulated
amortization 39,764 34,159
Excess of cost of investment in
stock of subsidiary over
equity in underlying net assets
of acquisition 256,282 267,425
Sundry 168,785 172,331
----------- -----------
Total assets $18,597,876 $18,148,039
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LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities 3/31/96 12/31/95
- ------------------- (Unaudited) ( Audited )
---------- -----------
Notes payable (Note 5) $3,598,889 $2,981,788
Current installments
- Long term debt (Note 5) 539,502 680,233
Accounts payable - trade 2,856,157 3,101,956
Accrued liabilities 1,086,425 1,049,010
Income taxes 214,000 423,000
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Total current liabilities 8,294,973 8,235,987
Deferred Income Taxes - Non-current 223,000 223,000
Long term debt -
Current portion shown above (Note 5) 4,234,193 4,271,314
Other non-current liabilities 334,964 331,364
Stockholders' Equity
- --------------------
Preferred stock of $1.00 par value
per share - authorized
shares; none issued -- --
Common stock of $.10 par value per
share - authorized 10,000,000
shares; 3,100,000 shares issued and
3,077,000 outstanding at 3/31/96 310,000 310,000
Treasury Stock ( 2,300) ( 2,300)
Additional paid-in capital 4,081,546 4,081,546
Retained earnings 1,262,590 838,926
Foreign currency translation ( 141,090) ( 141,798)
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5,510,746 5,086,374
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Total liabilities and stockholders' equity $18,597,876 $18,148,039
=========== ===========
See Notes to Financial Statements.
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TRANS-INDUSTRIES, INC.
Consolidated Statements of Cash Flows
C. For the Three Months Ended March 31, 1996 and 1995
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Three Months Ended March 31
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1996 1995
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( Unaudited) ( Unaudited)
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CASH FLOWS FROM OPERATING ACTIVITIES
- ------------------------------------
Net income (loss) $ 423,664 ($175,553)
Adjustments to reconcile net income (loss)
to net cash provided by operations:
Depreciation/Amortization 168,327 218,668
Decrease (increase) in accts. receiv. ( 444,748) ( 405,066)
Decrease (increase) in inventory 38,800 ( 19,871)
Decrease (increase) in prepaid exp. 15,269 ( 41,261)
Increase (decrease) in accts. payable ( 245,799) 54,824
Increase (decrease) in accr. liab. 37,415 132,436
Increase (decrease) in income taxes ( 209,000) ( 101,000)
Disposal of fixed assets -0- 4,180
(Gain) loss on sale of fixed assets ( 30,730) ( 11,317)
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Net Cash Provided (Used) by Operations ( 246,802) ( 343,960)
CASH FLOWS FROM INVESTING ACTIVITIES
- ------------------------------------
Purchase of fixed assets ( 189,890) ( 37,115)
Proceeds from sale of property and equipment 47,000 75,000
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Net Cash Provided (Used) by Investing ( 142,890) 37,885
CASH FLOWS FROM FINANCING ACTIVITIES
- ------------------------------------
Net increase (repayment) of long-term
borrowings ( 174,252) ( 75,277)
Net proceeds (payment) of credit line 617,101 388,666
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Net Cash Provided (Used) by Financing 442,849 313,389
Foreign currency translation 708 14,899
--------- ---------
Net Increase in Cash 53,865 22,213
Cash at beginning of year 109,123 27,739
--------- ---------
Cash at end of quarter $ 162,988 $ 49,952
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Supplemental Disclosures:
Interest paid $ 191,658 $ 172,397
Income taxes (refunded) paid, net 420,000 -0-
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D. TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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1. Basis of Presentation
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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, 1995.
2. Inventories
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The major components of inventories are:
3/31/96 12/31/95
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Raw Materials $3,493,716 $3,860,239
Work in Process 737,762 513,525
Finished Goods 1,704,139 1,600,653
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$5,935,617 $5,974,417
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3. Principles of Consolidation
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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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D. TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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5. Long-Term Debt
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Long-term debt at March 31, 1996 consisted of the following:
Trans-Industries, Inc., $3,840,000 term note, payable in $3,720,989
monthly installments of $39,249 which includes interest at
1-1/4% over the bank's prime lending rate, and a balloon
payment of $3,228,259 in October 1999. The note is secured
by substantially all the assets of Trans-Industries, Inc.
and subsidiaries.
Transmatic Europe Ltd., mortgage note, payable in monthly 196,031
installments of $890 plus interest at 9.99%. The mortgage is
secured by certain property and is due August 9, 2003.
Term note payable in monthly installments of $41,667, including 333,332
interest at 1-1/4% above bank's prime lending rate. This
note is due November 1, 1996.
Trans-Industries, Inc., $300,000 convertible subordinated 257,142
debentures, payable in annual installments of $42,858 plus
interest at 10%. Interest is payable quarterly commencing
March 15, 1992. The debentures are due December 30, 2001.
Term note, payable in monthly installments of $3,229, 106,565
including interest at 1.25% above the bank's prime
lending rate. The note is due January 1, 1999.
Term note, payable in monthly installments of $896 including 120,948
interest at a rate of 6%. The note is due January 21, 2002.
Other 38,688
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4,773,695
Less current installments ( 539,502)
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Long-term debt $4,234,193
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TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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5. Long-Term Debt (continued)
--------------------------
The Trans-Industries, Inc. term loan agreement contains restrictive
provisions relating principally to the maintenance of working capital, net
worth, ratio of debt to net worth, payment of dividends, and acquisition of
fixed assets. At March 31, 1996 the Company was in compliance with all
provisions.
The Company also has a secured $5,500,000 line of credit of which $3,598,889
was utilized at March 31, 1996. Interest is charged at 1 1/4% over the
bank's prime lending rate. This line of credit expires on June 1, 1996.
The line is secured by substantially all of the assets of Trans-Industries,
Inc. and its domestic subsidiaries.
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TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
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CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
For Three Months Ended March 31, 1996
-------------------------------------
Sales and Earnings
- ------------------
Sales for the quarter ended March 31, 1996 were $7,166,092 compared to
$5,256,980 for the same period a year ago. This increase of $1,909,112 is
primarily attributable to an increase in sales of the Company's multifunction
bus lighting module, which is the result of increased production of transit
buses. The Company also posted higher sales of its variable message signs
during the first quarter of 1996 compared to the same period a year ago.
During the first quarter of 1996, the Company realized a net profit of
$423,664 on sales of $7,166,092. For the same period of the prior year, the
Company reported net losses of $175,553 on sales of $5,256,980. This increase
in profit is due to higher sales volume being achieved. Profit/(loss) per
share for the first quarter was $.14 and ($.06) for 1996 and 1995,
respectively. Profit/(loss) per share was computed on the adjusted weighted
average number of shares outstanding during the quarter for 1996 and 1995,
which were 2,989,500 and 2,927,000, respectively.
Inventories
- -----------
Inventory valuation is based upon the lower of cost or market. At March
31, 1996, consolidated inventories were $5,935,617 compared to $4,837,696 a
year ago. The increase of $1,097,921 results from higher raw material and
finished goods levels to accommodate increased sales levels.
Interest
- --------
Interest expense amounted to approximately $217,000 and $225,000 for the
first quarter of 1996 and 1995 respectively. This decrease of $8,000 was the
result of slightly lower interest rates in 1996.
Financial Conditions
- --------------------
Current financial resources coupled with anticipated funds from operations
are expected to meet funding requirements for the remainder of the year, based
upon present needs.
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PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDING
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The Company is the plaintiff in a patent infringement lawsuit. During
November of 1993, an advisory jury recommended a decision in favor of the
Company. In April of 1995, the judge concurred with the advisory jury and
ordered that the defendant be enjoined from any further manufacture, use, or
sale of the accused patented device. It was also ordered that the defendant
pay approximately $3 million in damages. During 1994, the defendant appealed
the case based on the lower courts interpretation of the law. On May 2, 1995,
the Company was notified that the U.S. Circuit Court of Appeals changed the
District Courts ruling that the defendant literally infringed the patent
instead of infringement by equivalents. Further the court of appeals remanded
the case back to the Federal District Court for further determination of
damages. A final outcome is expected to be reached in 1996. Because this
decision can be further appealed by the defendant, the ultimate award to the
Company will be recorded in the financial statements when realized.
Additionally, any award received by the Company will be net of certain
contingent legal fees related to the lawsuit.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(b) Form 8K dated April 19, 1995, and Form 8K/A dated May 23, 1995; change
in registrants certifying accountant.
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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: ______________________ _____________________________
Kai Kosanke, Treasurer and
Chief Financial Officer
Date: ______________________ _____________________________
Paul Clemo Assistant
Treasurer
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Exhibit Index
Exhibit Number Description
11 Financial Data Schedule