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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
DECEMBER 31, 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 [ ]
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At December 31, 1999, the registrant had 4,854,739 shares of common stock
outstanding.
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T.J.T., INC.
FORM 10-Q
DECEMBER 31, 1999
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE
<S> <C>
Item 1. Financial Statements (Unaudited)
Balance Sheets at December 31, 1999 and
September 30, 1999 3
Statements of Income for the Three Months
Ended December 31, 1999 and 1998 4
Statements of Cash Flows for the Three Months
Ended December 31, 1999 and 1998 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 8
Item 2. Changes in Securities and Use of Proceeds 9
Item 3. Defaults Upon Senior Securities 9
Item 4. Submission of Matter to a Vote of Security Holder 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 9
Signatures 9
</TABLE>
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T.J.T., INC.
BALANCE SHEETS (unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
Dec. 31 Sept. 30
1999 1999
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<S> <C> <C>
Current assets:
Cash and cash equivalents $ 132 $ 129
Accounts receivable and notes receivable
(net of allowance for doubtful accounts of $30 and $35) 1,318 1,925
Income taxes receivable 268 100
Inventories 4,686 4,021
Prepaid expenses and other current assets 68 90
------------ ------------
Total current assets 6,472 6,265
Property, plant and equipment, net of
accumulated depreciation 1,766 1,862
Notes receivable 576 572
Real estate held for investment 901 600
Deferred charges and other assets 247 268
Goodwill 1,736 1,771
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Total assets $ 11,698 $ 11,338
============ ============
Current liabilities:
Line of credit $ 2,188 $ 1,159
Accounts payable 506 657
Accrued liabilities 361 495
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Total current liabilities 3,055 2,311
Deferred credits and other noncurrent obligations 158 160
Deferred income taxes 29 29
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Total liabilities 3,242 2,500
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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 2,663 2,974
Treasury stock (351,200 and 279,800 shares at cost) (393) (322)
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Total shareholders' equity 8,456 8,838
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Total liabilities and shareholders' equity $ 11,698 $ 11,338
============ ============
</TABLE>
See accompanying notes to financial statements.
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T.J.T., INC.
STATEMENTS OF INCOME (unaudited)
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
For the three months ended December 31, 1999 1998
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<S> <C> <C>
Sales (net of returns and allowances):
Axles and tires $ 4,387 $ 6,198
Accessories and siding 1,922 2,101
Investment property income 146 -
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Total sales 6,455 8,299
Cost of goods sold 5,305 6,844
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Gross profit 1,150 1,455
Selling, general and administrative expenses 1,615 1,361
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Operating income (loss) (465) 94
Interest income 20 15
Interest expense (34) (4)
Income on investment property (non operating) - 4
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Income before taxes (loss) (479) 109
Income taxes (benefit) (168) 60
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Net income (loss) $ (311) $ 49
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Net income (loss) per common share $ (.07) $ .01
Weighted average shares outstanding 4,551,655 4,843,832
============= ===============
</TABLE>
See accompanying notes to financial statements.
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T.J.T., INC.
STATEMENTS OF CASH FLOWS (unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
For the three months ended December 31, 1999 1998
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<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (311) $ 49
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 208 168
(Gain) loss on sale of assets (1) -
Change in receivables 607 301
Change in inventory (665) (206)
Change in prepaid expenses and other current assets 22 (139)
Change in accounts payable (151) (334)
Change in other assets and liabilities (305) 53
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Net cash used by operating activities (596) (108)
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Cash flows from investing activities:
Additions to property, plant and equipment (53) (157)
Issuance of notes receivable - (2)
Payments on notes receivable 37 6
Land purchased for investment (431) (180)
Sale of land 88 -
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Net cash used by investing activities (359) (333)
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Cash flows from financing activities:
Net borrowing on line of credit 1,029 237
Treasury stock transactions (71) -
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Net cash provided by financing activities 958 237
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Net increase (decrease) in cash and cash equivalents 3 (204)
Cash and cash equivalents at October 1 129 204
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Cash and cash equivalents at December 31 $ 132 $ -
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Supplemental information:
Interest paid $ 34 $ 4
Income taxes paid - -
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 land by issuance of notes receivable 41 -
</TABLE>
See accompanying notes to financial statements.
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T.J.T., INC.
NOTES TO FINANCIAL STATEMENTS (unaudited)
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 to conform with current quarter presentation, none of
which affect previously recorded 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) Dec. 31, Sept. 30,
1999 1999
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<S> <C> <C>
Raw materials $1,007 $1,271
Finished goods 3,679 2,750
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Total $4,686 $4,021
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</TABLE>
NOTE C - PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
Dec. 31, Sept. 30,
(Dollars in thousands) 1999 1999
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<S> <C> <C>
Land and building $ 386 $ 389
Leasehold improvements 380 400
Furniture and equipment 1,202 1,184
Vehicles and trailers 1,450 1,445
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3,418 3,418
Less accumulated depreciation 1,652 1,556
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Net property, plant and equipment $1,766 $1,862
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</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 are 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 December 31, 1999
because it has not met the closing bid requirements.
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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 also awarded 68,000 incentive stock options to directors and
officers in 1999. These options will become 100% vested over a period of five
years at a weighted average strike price of $1.028. There were 32,000 stock
options available for grant at December 31, 1999 and 85,000 in 1998.
As of December 31, 1999, the company had purchased 340,293 shares pursuant to a
740,000 share buy back program authorized by the Board of Directors.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
All period references are to the three month period ended December 31, 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
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December 31, December 31,
1999 1998
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<S> <C> <C>
Axle and tire reconditioning 68.0% 74.7%
Manufactured housing accessories and siding 29.8 25.3
Investment property income 2.2 0.0
Gross margin 17.8 17.5
Selling expense 17.3 10.5
Administrative expense 7.7 5.9
Interest expense 0.5 0.0
Interest income 0.3 0.2
Other income (expense) 0.0 0.0
</TABLE>
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Sales were $6.4 million for the three months ended December 31, 1999 compared
to $8.3 million in the same quarter a year ago. Gross profit was $1.1 million
compared to $1.5 million for the same quarter in 1998. Gross margin for the
quarter was 17.8 percent compared to 17.5 percent for the same period a year
ago. The margin, excluding real estate sales, declined to 15.9 percent as
compared to 17.5 percent in the same 1998 period.
Sales were negatively impacted by reduced start rates of manufactured housing.
Start rates are expected to remain low in the near term until excess inventories
of homes on retail lots have been sold.
Selling and general administrative expenses for the quarter ended December 31,
1999 increased $254,000 over the same quarter in 1998. Approximately $150,000 of
the increase was attributed to the purchase of Ford's Tires & Axles in January
1999 and $71,000 was related to system conversion and Y2K preparation. Payroll
costs were reduced by approximately 10 percent during the quarter ending
December 31, 1999 as compared to the preceding quarter ending September 30,
1999.
The company's California and Arizona locations continued to experience
competitive pressures which negatively impacted margin. Of the $479,000 pre-tax
loss, California and Arizona accounted for approximately $125,000 and $205,000
of that loss, respectively.
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 $3,000,000 maximum bank line of credit secured by
designated percentages of eligible accounts receivable and inventories. The
company secured an increase of $1,000,000 during the quarter ending December 31,
1999. The credit line bears interest at the Federal Funds rate plus 2.60
percent.
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 December 31, 1999
because it has not met the closing bid requirements.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Nothing to report
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ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Nothing to report
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Nothing to report
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Nothing to report
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 December 31,
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: February 14, 2000 By: /s/ Larry B. Prescott
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Larry B. Prescott, Senior Vice President and
Chief Financial Officer
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<TABLE> <S> <C>
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<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>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-START> OCT-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 132
<SECURITIES> 0
<RECEIVABLES> 1,348
<ALLOWANCES> 30
<INVENTORY> 4,686
<CURRENT-ASSETS> 6,472
<PP&E> 3,418
<DEPRECIATION> 1,652
<TOTAL-ASSETS> 11,698
<CURRENT-LIABILITIES> 3,055
<BONDS> 0
0
0
<COMMON> 5
<OTHER-SE> 8,451
<TOTAL-LIABILITY-AND-EQUITY> 11,698
<SALES> 6,455
<TOTAL-REVENUES> 6,455
<CGS> 5,305
<TOTAL-COSTS> 6,920
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 5
<INTEREST-EXPENSE> 14
<INCOME-PRETAX> (479)
<INCOME-TAX> (168)
<INCOME-CONTINUING> (465)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (311)
<EPS-BASIC> (.07)
<EPS-DILUTED> (.07)
</TABLE>
