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TJT INC
10-Q, 2000-08-14
MISCELLANEOUS TRANSPORTATION EQUIPMENT

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

     For the Quarter Ended
June 30, 2000
Commission File Number 33-98404

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T.J.T., INC.
(Exact name of registrant as specified in its charter)

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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    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 during the preceding 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 June 30, 2000, the registrant had 4,854,739 shares of common stock outstanding.

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Page 1

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June 30, 2000

TABLE OF CONTENTS

				PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
		Balance Sheets at June 30, 2000 and September 30, 1999		3
		Statements of Income for the Three Months and Nine Months Ended June 30, 2000 and 1999		4
		Statements of Cash Flows for the Nine Months Ended June 30, 2000 and 1999		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				10
Item 2. Changes in Securities and Use of Proceeds				10
Item 3. Defaults Upon Senior Securities				10
Item 4. Submission of Matters to a Vote of Security Holders				10
Item 5. Other Information				10
Item 6. Exhibits and Reports on Form 8-K				10
Signatures				11

Page 2

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T.J.T., INC.

BALANCE SHEETS

(Dollars in thousands)

					June 30, 2000			Sept. 30, 1999
Current assets:
	Cash and cash equivalents				$	76		$	129
	Accounts receivable and notes receivable (net of allowances for doubtful accounts of $21 and $35)					1,971			1,925
	Inventories					3,652			4,021
	Income taxes receivable					395			100
	Prepaid expenses and other current assets					43			90
		Total current assets				6,137			6,265
Property, plant and equipment, net of accumulated depreciation						1,509			1,862
Notes receivable						575			572
Income taxes receivable						41			—
Real estate held for investment						707			600
Deferred charges and other assets						230			268
Goodwill						1,668			1,771
	Total assets				$	10,867		$	11,338
Current liabilities:
	Line of credit				$	1,573		$	1,159
	Accounts payable					889			657
	Accrued liabilities					378			495
		Total current liabilities				2,840			2,311
Deferred credits and other noncurrent obligations						160			160
Deferred income taxes						—			29
	Total liabilities					3,000			2,500
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					2,074			2,974
	Treasury stock (349,800 and 279,800 shares at cost)					(393	)		(322	)
		Total shareholders' equity				7,867			8,838
			Total liabilities and shareholders' equity		$	10,867		$	11,338

See accompanying notes to financial statements.

Page 3

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T.J.T., INC.

STATEMENTS OF INCOME

(Dollars in thousands except per share amounts)

				Three Months Ended June 30,						Nine Months Ended June 30,
				2000			1999			2000			1999
Sales (net of returns and allowances):
	Axles and tires			$	5,396		$	7,077		$	13,771		$	20,169
	Accessories and siding				2,033			2,276			5,601			6,115
	Investment property				44			5			378			13
		Total sales			7,473			9,358			19,750			26,297
Cost of goods sold					6,243			7,596			16,517			21,626
	Gross profit				1,230			1,762			3,233			4,671
Selling, general and administrative expenses					1,396			1,643			4,563			4,616
	Operating income (loss)				(166	)		119			(1,330	)		55
Interest income					20			25			47			55
Interest expense					(37	)		(25	)		(111	)		(47	)
Other income (expense)					(9	)		—			16			(2	)
	Loss before taxes				(192	)		119			(1,378	)		61
Income taxes (benefit)					(60	)		61			(478	)		75
	Net income (loss)			$	(132	)	$	58		$	(900	)	$	(14	)
Net income (loss) per common share				$	(.03	)	$	.01		$	(.20	)	$	(.00	)
Weighted average shares outstanding					4,504,939			4,728,123			4,521,992			4,802,991

See accompanying notes to financial statements.

Page 4

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T.J.T., INC.

STATEMENTS OF CASH FLOWS

(Dollars in thousands)

					For the nine months ended June 30,
					2000			1999
Cash flows from operating activities:
	Net loss				$	(900	)	$	(14	)
	Adjustments to reconcile net loss to net cash provided by operating activities:
		Depreciation and amortization				616			553
		(Gain) Loss on sale of assets				(28	)		2
		Change in receivables				(45	)		6
		Change in inventories				369			215
		Change in prepaid expenses and other current assets				47			(71	)
		Change in accounts payable				232			(667	)
		Change in other assets and liabilities				(516	)		(22	)
			Net cash provided (used) by operating activities			(225	)		2
Cash flows from investing activities:
	Additions to property, plant and equipment					(92	)		(283	)
	Proceeds from sale of assets					29			—
	Issuance of notes receivable					(10	)		(6	)
	Payments on notes receivable					37			27
	Land purchased for investment					(436	)		(260	)
	Sale of land purchased for investment					301			—
	Direct aquisition costs					—			(4	)
	Cash paid for Ford acquisition					—			(251	)
		Net cash used by investing activities				(171	)		(777	)
Cash flows from financing activities:
	Proceeds from debt					865			1,111
	Payments on debt					(451	)		(346	)
	Treasury stock transactions					(71	)		(119	)
		Net cash provided by financing activities				343			646
Net decrease in cash and cash equivalents						(53	)		(129	)
Beginning cash and cash equivalents						129			204
Ending cash and cash equivalents					$	76		$	75
Supplemental information:
	Interest paid				$	111		$	47
	Income taxes paid					1			87
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					31			98

See accompanying notes to financial statements.

Page 5

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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.

NOTE C—PROPERTY, PLANT AND EQUIPMENT

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 June 30, 2000 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 did not award any stock

Page 6

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options to directors and officers during the quarter ended June 30, 2000. There were options for 254,000 shares of stock available for grant at June 30, 2000.

    As of June 30, 2000, the company had purchased 338,893 shares pursuant to a 740,000 share buy back program authorized by the Board of Directors.

NOTE E—SEGMENT DISCLOSURE

    The Company operates in three business segments: Axles and Tire Reconditioning, Housing Accessories, and Investment Real Property. These segments have been determined by evaluating the Company's internal reporting structure and nature of products offered.

    Axles and Tire Reconditioning: The Company provides reconditioned axles and tires to manufactured housing factories.

    Housing Accessories: The Company provides skirting, siding, and other aftermarket accessories to manufactured housing dealers and contractors.

    Investment Real Property: The Company invests in and, on a limited basis, develops real estate for sale.

		Axle & Tire Reconditioning		Housing Accessories		Investment Real Property		Total
Three months ended June 30, 2000
Operating revenue		5,396		2,033		44		7,473
Operating income (loss)		(106	)	(73	)	13		(166	)
Depreciation		163		37		1		201
Three months ended June 30, 1999
Operating revenue		7,077		2,276		5		9,358
Operating income (loss)		131		2		(14	)	(119	)
Depreciation		166		32		1		199
Nine months ended June 30, 2000
Operating revenue		13,771		5,601		378		19,750
Operating income (loss)		(771	)	(657	)	98		(1,330	)
Depreciation		500		114		2		616
Nine months ended June 30, 1999
Operating revenue		20,169		6,115		13		26,297
Operating income (loss)		156		(70	)	(31	)	55
Depreciation		464		87		2		553

    The Company does not assign interest income, interest expense, other expenses or income taxes to operating segments. Identifiable assets and related capital expenditures are assigned to operating locations rather than operating segments, with depreciation allocated to the segments based upon usage.

Page 7

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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, 2000 and 1999, 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:

    Sales were $7.5 million for the three months ended June 30, 2000 compared to $9.4 million in the same quarter a year ago. Gross profit was $1,230,000 compared to $1,762,000 for the same quarter in 1999. Gross margin for the quarter was 16.5 percent compared to 18.8 percent for the same period a year ago.

    Sales of manufactured housing have continued to be slow throughout the company's 11 state market area. Sales for fiscal year 2000 are expected to be well under 1999 averages.

    Selling and general administrative expenses decreased $247,000 during the quarter compared to the same quarter a year ago.

    Overall payroll cost was decreased another 4% during the quarter ending June 30, 2000, as compared to the preceding quarter. For the nine months ending June 30, 2000 payroll cost has decreased 9% as compared to the nine months ending June 30, 1999.

    The company has increased its market share of the axle and tire business. During May 2000, the company began supplying the last two manufacturing plants covered by the service agreement with Oakwood/Schultz Homes to supply six manufacturing plants and purchase used axles and tires from 67 company-owned stores.

Page 8

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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 $3,000,000 maximum bank line of credit secured by designated percentages of eligible accounts receivable and inventories. The credit line bears interest at the Federal Funds rate plus 3.25 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 June 30, 2000 because it has not met the closing bid requirements.

Page 9

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

    Nothing to report

Item 2. Changes in Securities

    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 company was delisted from the Nasdaq SmallCap Market on June 22, 2000 and is currently trading on the OTCBB.

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, 2000.

Page 10

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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      , 2000		By:		/s/ LARRY B. PRESCOTT    Larry B. Prescott Senior Vice President and Chief Financial Officer

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Liquidity and Capital Resources

PART II. OTHER INFORMATION

Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
6. Exhibits and Reports on Form 8-K

SIGNATURES

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