<PAGE>
UNITED STATES
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 the Quarter Ended
JUNE 30, 1999
Commission File Number 33-98404
T.J.T., INC.
(Exact name of small business issuer as specified in its charter)
WASHINGTON 82-0333246
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
843 NORTH WASHINGTON, P.O. BOX 278, EMMETT, IDAHO 83617
(Address of principal executive offices)
(208) 365-5321
(Issuer's telephone number)
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The registrant's common stock and warrants are registered on the
Nasdaq SmallCap Market
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Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements the past 90 days. Yes [X] No [ ]
- --------------------------------------------------------------------------------
At June 30, 1999, the registrant had 4,854,739 shares of common stock
outstanding.
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T.J.T., INC.
FORM 10-Q
JUNE 30, 1999
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE
<S> <C> <C> <C>
Item 1. Financial Statements
Balance Sheets at June 30, 1999 and
September 30, 1998 3
Statements of Income for the Three Months and Nine Months
Ended June 30, 1999 and 1998 4
Statements of Cash Flows for the Nine Months
Ended June 30, 1999 and 1998 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 2. Changes in Securities and Use of Proceeds 9
Item 3. Defaults Upon Securities 9
Item 4. Submission of Matter to a Vote of Security Holder 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 10
</TABLE>
Page 2
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T.J.T., INC.
BALANCE SHEETS (unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
JUNE 30, SEPT. 30,
1999 1998
-------- --------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 75 $ 204
Accounts receivable and notes receivable
(net of allowances for doubtful accounts
of $82 and $38 2,177 2,111
Inventories 3,712 3,774
Income taxes receivable 9 --
Prepaid expenses and other current assets 118 517
-------- --------
Total current assets 6,091 6,606
Property, plant and equipment, net of
accumulated depreciation 1,933 1,944
Notes receivable 595 348
Real estate held for investment 610 390
Deferred charges and other assets 284 326
Goodwill 1,807 1,440
-------- --------
Total assets $ 11,320 $ 11,054
Current liabilities:
Line of credit $ 765 $ --
Accounts payable 636 1,117
Accrued liabilities 910 809
Income taxes payable -- 3
-------- --------
Total current liabilities 2,311 1,929
Deferred credits and other noncurrent obligations 153 136
Deferred income taxes 60 60
-------- --------
Total liabilities 2,524 2,125
-------- --------
Shareholders' equity:
Common stock, $.001 par value; 10,000,000
shares authorized; 4,854,739 shares issued
and outstanding 5 5
Common stock warrants 113 113
Capital surplus 6,068 6,068
Retained earnings 3,167 3,181
Treasury stock (132,807 and 10,907 shares at cost) (163) (44)
Stock subscriptions receivable (394) (394)
-------- --------
Total shareholders' equity 8,796 8,929
-------- --------
Total liabilities and shareholders' equity $ 11,320 $ 11,054
======== ========
</TABLE>
See accompanying notes to financial statements.
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T.J.T., INC.
STATEMENTS OF INCOME
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
------------------------- --------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales (net of returns and allowances):
Axles and tires $ 7,077 $ 7,508 $ 20,169 $ 18,869
Accessories and siding 2,276 1,688 6,115 5,669
Investment Property Income 5 2 13 7
----------- ----------- ----------- -----------
Total sales 9,358 9,198 26,297 24,545
Cost of goods sold 7,596 7,675 21,626 20,045
----------- ----------- ----------- -----------
Gross profit 1,762 1,523 4,671 4,500
Selling, general and administrative expenses 1,643 1,318 4,616 3,880
----------- ----------- ----------- -----------
Operating income 119 205 55 620
Interest income -- 13 8 50
Other income (expense) -- -- (2) --
----------- ----------- ----------- -----------
Income before taxes 119 218 61 670
Income taxes 61 96 75 295
Net income (loss) $ 58 $ 122 $ (14) $ 375
=========== =========== =========== ===========
Net income (loss) per common share $ .01 $ .03 $ (.00) $ .08
Weighted average shares outstanding 4,728,123 4,843,832 4,802,991 4,844,704
=========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
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T.J.T., INC.
STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
JUNE 30,
------------------
1999 1998
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (14) $ 375
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 553 435
Loss on sale of assets 2 --
Change in receivables 6 (542)
Change in inventories 215 (87)
Change in prepaid expenses and other current assets (71) (10)
Change in accounts payable (667) 74
Change in other assets and liabilities (22) 42
------- -------
Net cash provided (used) by operating activities 2 287
------- -------
Cash flows from investing activities:
Additions to property, plant and equipment (283) (627)
Issuance of notes receivable (6) (36)
Payments on notes receivable 27 44
Land purchased for investment (260) (119)
Direct aquisition costs (4) --
Cash paid for Hanger acquisition -- (320)
Cash paid for Ford acquisition, including advances (251) --
------- -------
Net cash used by investing activities (777) (1,058)
------- -------
Cash flows from financing activities:
Proceeds from debt 1,111 (50)
Payments on debt (346)
Payments on stock subscription receivable -- 17
Treasury stock transactions (119) (5)
------- -------
Net cash provided by financing activities 646 (38)
------- -------
Net decrease in cash and cash equivalents (129) (809)
Beginning cash and cash equivalents 204 835
------- -------
Ending cash and cash equivalents $ 75 $ 26
======= =======
Supplemental information:
Interest paid $ 47 $ 9
Income taxes paid 87 405
Noncash transactions:
Acquisition of plant property and equipment by capital lease $ 22 $ --
Re-acquisition of investment property by cancellation
of notes receivable 38 --
Sale of Bend, Oregon facility by note receivable 196
Sale of land by issuance of notes receivable 98
</TABLE>
See accompanying notes to financial statements.
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T.J.T., INC.
NOTES TO FINANCIAL STATEMENTS
NOTE A - UNAUDITED INTERIM FINANCIAL STATEMENTS
In the opinion of management, the accompanying unaudited financial statements
contain all adjustments (consisting solely of normal recurring adjustments)
necessary to present fairly the financial position of T.J.T., Inc. (the company)
and the results of operations and cash flows. Certain reclassifications of prior
quarter amounts were made in order to conform with the current quarter
presentation, none of which affect previously reported net income.
NOTE B - INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out and average
cost methods) or market.
<TABLE>
<CAPTION>
(Dollars in thousands) JUNE 30, SEPT. 30,
1999 1998
------- -------
<S> <C> <C>
Raw materials $ 991 $ 1,490
Finished goods 2,721 2,284
------- -------
Total $ 3,712 $ 3,774
======= =======
</TABLE>
NOTE C - PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
(Dollars in thousands) JUNE 30, SEPT. 30,
1999 1998
------- ------
<S> <C> <C>
Land and building $ 389 $ 389
Leasehold improvements 365 362
Furniture and equipment 1,305 1,092
Vehicles and trailers 1,350 1,220
------- -------
3,409 3,063
Less accumulated depreciation 1,476 1,119
------- -------
Net property, plant and equipment $ 1,933 $ 1,944
======= =======
</TABLE>
NOTE D - SHAREHOLDERS EQUITY
Authorized stock of the company consists of 10,000,000 shares of $.001 par value
common stock and 5,000,000 shares of $.001 par value preferred stock. No shares
of preferred stock have been issued. The company also has 4,500,644 outstanding
warrants to purchase common stock. Each warrant entitles the holder to purchase
one share of common stock at $4.00 per share. The warrants were exercisable
beginning December 21, 1996 and expire December 21, 2000. The warrants are
redeemable by the company with 30 days written notice at the rate of $.10 per
warrant after December 21, 1996 and only if the average stock closing bid price
equals or exceeds $7.50 per share for 10 consecutive trading days. The company
does not have the ability to call the warrants as of June 30, 1999 because it
has not met the closing bid requirements.
The company has a stock option plan which allows officers, directors and key
employees of the company to receive non-qualified and incentive stock options.
The company awarded 100,000 non-qualified stock
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options to certain officers and directors on October 1, 1994 with an exercise
price of $4.00 per share. These options became 100% vested and exercisable on
September 30, 1996 and expire September 30, 1999. All non-qualified stock
options were outstanding at June 30, 1999 and 1998. The Company also awarded
68,000 incentive stock options to newly appointed directors and officers in the
quarter ended June 30, 1999. These options will become 100% vested over a period
of five years at a weighted average strike price of $1.028. There were 17,000
stock optons available for grant at June 30, 1999 and 85,000 in 1998.
As of June 30, 1999 the company had purchased 121,900 shares pursuant to a
740,000 share buy back program authorized by the Board of Directors.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
All period references are to the three month or nine month periods ended June
30, 1999 and 1998, unless otherwise indicated. Quarterly financial results may
not be indicative of the financial results for any future period. The following
discussion may contain forward-looking statements within the meaning of the
federal securities laws which involve risks and uncertainties. When used in this
discussion, the words "anticipate," "believe," "estimate," "expect" and similar
expressions as they relate to the Company or its management are intended to
identify such forward-looking statements. The Company's actual results,
performance or achievements could differ materially from the results expressed
in, or implied by, these forward-looking statements. Factors that could cause or
contribute to such differences include, among others, the following: general
economic and business conditions; competition; success of operating initiatives;
development and operating costs; the existence or absence of adverse publicity;
availability, locations and terms of sites for facility development; changes in
business strategy or development plans; quality of management; availability,
terms and deployment of capital; business abilities and judgment of personnel;
availability of qualified personnel; labor and employee benefit costs; and
construction costs.
The following table sets forth the operating data of the company as a percentage
of net sales for the periods listed below:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
-------------------------- ---------------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1999 1998 1999 1998
----------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
Axle and tire reconditioning 75.6 % 81.6 % 76.7 % 76.9 %
Manufactured housing accessories and siding 24.3 18.4 23.3 23.1
Investment property income .1 0.0 0.0 0.0
Gross margin 18.8 16.6 17.8 18.3
Selling expense 14.2 8.2 12.8 9.1
Administrative expense 3.3 6.1 4.8 6.7
Interest income 0.0 0.1 0.0 0.2
Other income (expense) 0.0 0.0 0.0 0.0
</TABLE>
Sales rose to $9.4 million for the three months ended June 30, 1999 compared to
$9.2 million in 1998 third quarter. Gross profit increased to $1.8 million in
the quarter ending June 30, 1999 compared to $1.5 million for the same quarter
in 1998. Gross margin for quarter ended June 30, 1999 increased 2.2% from the
same quarter last year due to the change of sale mix. Increasing sales of higher
margin dealer accessories business and decreasing sales of lower margin axles
and tires contributed to the margin improvement.
Higher costs of procurement of used axles and tires continue to negatively
impact gross margins of this segment of the business.
Selling and general administration expenses for quarter ended June 30, 1999
increased $325,000. $141,880 was a result of the acquisition of Ford's Tires and
Axles which occurred January 5, 1999.
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LIQUIDITY AND CAPITAL RESOURCES
Historically, the company's principal sources of liquidity have been retained
earnings from operations as well as borrowings under a revolving line of credit
with a bank. The company has a $2,000,000 maximum bank line of credit secured by
designated percentages of eligible accounts receivable and inventories.
Authorized stock of the company consists of 10,000,000 shares of $.001 par value
common stock and 5,000,000 shares of $.001 par value preferred stock. No shares
of preferred stock have been issued. The company also has 4,500,644 outstanding
warrants to purchase common stock. Each warrant entitles the holder to purchase
one share of common stock at $4.00 per share. The warrants were exercisable
beginning December 21, 1996 and expire December 21, 2000. The warrants are
redeemable by the company with 30 days written notice at the rate of $.10 per
warrant after December 21, 1996 and only if the average stock closing bid price
equals or exceeds $7.50 per share for 10 consecutive trading days. The company
does not have the ability to the call the warrants as of June 30, 1999 because
it has not met the closing bid requirements.
YEAR 2000 SYSTEM ISSUE
The company is reviewing its financial and operating systems with respect to the
Year 2000 issue. The company has obtained assurance from the vendors of its
major purchased software systems that the products are Year 2000 compliant. The
company has contracted the services of its outside auditors to obtain further
asssurance that internal systems and equipment are compliant. Based on the
results of the first review, the company does not anticipate any material
disruption in its operations related to the Year 2000 issue.
The company is also seeking assurance from its financial service provider, major
vendors and customers that the Year 2000 issue has been addressed. In the event
that the financial service provider or any of the major vendors or customers do
not achieve Year 2000 compliance, the company's business or operations could be
adversely affected.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Nothing to report
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Nothing to report
ITEM 3. DEFAULTS UPON SECURITIES
Nothing to report
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Nothing to report
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ITEM 5. OTHER INFORMATION
The Board of Directors authorized a stock buy back plan of 500,000 shares in May
of 1999. This plan was in addition to 240,000 additional shares authorized in
November of 1998. The shares authorized for buy back account for approximately
15% of the company's outstanding stock.
6. EXHIBITS AND REPORTS ON FORM 8-K
(a) No exhibits required to be filed.
(b) No reports on Form 8-K were filed during the quarter ended June 30, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
T.J.T., INC.
Registrant
Date: August 11, 1999 By: /s/ Larry B. Prescott
-------------------------------------
Larry B. Prescott, Senior Vice President and
Chief Financial Officer
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BALANCE
SHEET INCOME STATEMENT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001002577
<NAME> T.J.T. INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 75
<SECURITIES> 0
<RECEIVABLES> 2,259
<ALLOWANCES> 82
<INVENTORY> 3,712
<CURRENT-ASSETS> 6,091
<PP&E> 3,490
<DEPRECIATION> 1,476
<TOTAL-ASSETS> 11,320
<CURRENT-LIABILITIES> 2,311
<BONDS> 0
0
0
<COMMON> 5
<OTHER-SE> 8,791
<TOTAL-LIABILITY-AND-EQUITY> 11,320
<SALES> 26,297
<TOTAL-REVENUES> 26,305
<CGS> 21,626
<TOTAL-COSTS> 4,616
<OTHER-EXPENSES> 2
<LOSS-PROVISION> 44
<INTEREST-EXPENSE> 47
<INCOME-PRETAX> 61
<INCOME-TAX> 75
<INCOME-CONTINUING> (14)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-BASIC> (.00)
<EPS-DILUTED> (.00)
</TABLE>
