<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
MARCH 31, 2000
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)
- --------------------------------------------------------------------------------
The registrant's common stock and warrants are registered on the Nasdaq
SmallCap Market
- --------------------------------------------------------------------------------
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 March 31, 2000, the registrant had 4,854,739 shares of common stock
outstanding.
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T.J.T., INC.
FORM 10-Q
MARCH 31, 2000
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE
<S><C> <C>
Item 1. Financial Statements (Unaudited)
Balance Sheets at March 31, 2000 and
September 30, 1999 3
Statements of Income for the Three Months and Six Months
Ended March 31, 2000 and 1999 4
Statements of Cash Flows for the Six Months
Ended March 31, 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 9
Item 2. Changes in Securities 9
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 10
</TABLE>
Page 2
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T.J.T., INC.
BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
March 31, Sept. 30,
2000 1999
---------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 59 $ 129
Accounts receivable and notes receivable
(net of allowances for doubtful accounts of $27 and $35) 1,566 1,925
Inventories 4,250 4,021
Income taxes receivable 428 100
Prepaid expenses and other current assets 90 90
--------- ---------
Total current assets 6,393 6,265
Property, plant and equipment, net of
accumulated depreciation 1,630 1,862
Notes receivable 572 572
Real estate held for investment 698 600
Deferred charges and other assets 222 268
Goodwill 1,702 1,771
--------- ---------
Total assets $ 11,217 $ 11,338
========= =========
Current liabilities:
Line of credit $ 2,024 $ 1,159
Accounts payable 542 657
Accrued liabilities 462 495
--------- ---------
Total current liabilities 3,028 2,311
Deferred credits and other noncurrent obligations 161 160
Deferred income taxes 29 29
--------- ---------
Total liabilities 3,218 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 2,206 2,974
Treasury stock (349,800 and 279,800 shares at cost) (393) (322)
--------- ---------
Total shareholders' equity 7,999 8,838
--------- ---------
Total liabilities and shareholders' equity $ 11,217 $ 11,338
========= =========
</TABLE>
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)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
----------------------------- ------------------------------
2000 1999 2000 1999
------------ ------------- ------------- -------------
<S> <C> <C> <C> <C>
Sales (net of returns and allowances):
Axles and tires $ 3,988 $ 6,894 $ 8,375 $ 13,092
Accessories and siding 1,646 1,738 3,568 3,839
Investment property 188 4 334 8
------------ ------------- ------------- -------------
Total sales 5,822 8,636 12,277 16,939
Cost of goods sold 4,969 7,186 10,274 14,030
------------ ------------- ------------- -------------
Gross profit 853 1,450 2,003 2,909
Selling, general and administrative expenses 1,552 1,612 3,167 2,973
------------ ------------- ------------- -------------
Operating loss (699) (162) (1,164) (64)
Interest income 7 15 27 30
Interest expense (40) (18) (74) (22)
Other income (expense) 25 (2) 25 (2)
------------ ------------- ------------- -------------
Loss before taxes (707) (167) (1,186) (58)
Income taxes (benefit) (250) (46) (418) 14
------------ ------------- ------------- -------------
Net loss $ (457) $ (121) $ (768) $ (72)
============ ============= ============= =============
Net loss per common share $ (.10) $ (.03) $ (.17) $ (.01)
Weighted average shares outstanding 4,504,939 4,836,943 4,528,396 4,840,425
============ ============= ============= =============
</TABLE>
See accompanying notes to financial statements.
Page 4
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T.J.T., INC.
STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
For the six months ended
March 31,
------------------------------
2000 1999
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (768) $ (72)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 415 354
(Gain) Loss on sale of assets (3) 2
Change in receivables 364 (129)
Change in inventories (229) (24)
Change in prepaid expenses and other current assets - (91)
Change in accounts payable (115) (475)
Change in other assets and liabilities (358) (81)
------------- -------------
Net cash provided (used) by operating activities (694) (516)
------------- -------------
Cash flows from investing activities:
Additions to property, plant and equipment (68) (219)
Proceeds from sale of assets 3 -
Issuance of notes receivable (41) (6)
Payments on notes receivable 36 17
Land purchased for investment (434) (262)
Sale of land purchased for investment 334 -
Direct aquisition costs - (4)
Cash paid for Ford acquisition - (231)
------------- -------------
Net cash used by investing activities (170) (705)
------------- -------------
Cash flows from financing activities:
Proceeds from debt 865 1,111
Treasury stock transactions (71) (20)
------------- -------------
Net cash provided by financing activities 794 1,091
------------- -------------
Net decrease in cash and cash equivalents (70) (130)
Beginning cash and cash equivalents 129 204
------------- -------------
Ending cash and cash equivalents $ 59 $ 74
============= =============
Supplemental information:
Interest paid $ 74 $ 22
Income taxes paid 1 49
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
</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) Mar. 31, Sept. 30,
2000 1999
----------- -----------
<S> <C> <C>
Raw materials $ 1,135 $ 1,271
Finished goods 3,115 2,750
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Total $ 4,250 $ 4,021
=========== ===========
</TABLE>
NOTE C - PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
Mar. 31, Sept. 30,
(Dollars in thousands) 2000 1999
---------- -----------
<S> <C> <C>
Land and building $ 386 $ 389
Leasehold improvements 380 400
Furniture and equipment 1,219 1,184
Vehicles and trailers 1,414 1,445
---------- ---------
3,399 3,418
Less accumulated depreciation 1,769 1,556
---------- ---------
Net property, plant and equipment $ 1,630 $ 1,862
========== =========
</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 March 31, 2000 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 has awarded 270,000 incentive stock options to directors and
officers during the quarter ended March 31, 2000. These options will become 100%
vested over a period of five years from grant date at a weighted average strike
price of $0.75. There were 254,000 stock options available for grant at March
31, 2000.
As of March 31, 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. Prior to fiscal 1999, investment real property
was a passive non-operating segment with no employees and little activity rather
than an operating segment.
<TABLE>
<CAPTION>
Axle & Tire Housing Investment
Reconditioning Accessories Real Property Total
---------------- ------------- --------------- -------
Three months ended March 31, 2000
<S> <C> <C> <C> <C>
Operating revenue 3,988 1,646 188 5,822
Operating income (loss) (332) (328) (39) (699)
Depreciation 170 38 - 208
Three months ended March 31, 1999
Operating revenue 6,894 1,738 4 8,636
Operating income (loss) (60) (85) (17) (162)
Depreciation 129 17 - 146
Six months ended March 31, 2000
Operating revenue 8,375 3,568 334 12,277
Operating income (loss) (665) (584) 85 (1,164)
Depreciation 337 77 1 415
Six months ended March 31, 1999
Operating revenue 13,092 3,839 8 16,939
Operating income (loss) 25 (72) (17) (64)
Depreciation 298 55 1 354
</TABLE>
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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.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
All period references are to the three month or six month periods ended March
31, 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:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
--------------------------- --------------------------
Mar. 31, Mar. 31, Mar.31, Mar. 31,
2000 1999 2000 1999
---------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Axle and tire reconditioning 68.5% 80.0 % 68.2% 77.3 %
Manufactured housing accessories and siding 28.3 20.0 29.1 22.7
Investment property income 3.2 0.0 2.7 0.0
Gross margin 14.6 16.8 16.3 17.2
Selling expense 17.9 13.4 17.5 12.0
Administrative expense 8.7 5.2 8.2 5.6
Interest expense 0.1 0.0 0.1 0.0
Interest income 0.0 0.0 0.0 0.0
Other income (expense) 0.0 0.0 0.0 0.0
</TABLE>
Sales were $5.8 million for the three months ended March 31, 2000 compared to
$8.6 million in the same quarter a year ago. Gross profit was $853,000 compared
to $1,450,000 for the same quarter in 1999. Gross margin for the quarter was
14.6 percent compared to 16.8 percent for the same period a year ago. The
margin, excluding real estate sales, declined to 15.4 percent as compared to
16.8 percent in the same 1999 period.
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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, but higher than experienced in the current quarter.
The cost of axles and tires have decreased this quarter versus the previous
quarter ending December 31, 1999, which are expected to positively impact
margins in the near term.
Selling and general administrative expenses decreased $60,000 during the quarter
compared to the same quarter a year ago.
Overall payroll cost was decreased another 6% during the quarter ending March
31, 2000, as compared to the preceding December 31, 1999 quarter-end.
The company has increased its market share of the axle and tire business. During
February 2000, the company signed a service agreement with Oakwood/Schultz Homes
to supply six manufacturing plants and purchase used axles and tires from 67
company-owned stores.
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 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 March 31, 2000 because
it has not met the closing bid requirements.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Nothing to report
ITEM 2. CHANGES IN SECURITIES
Nothing to report
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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 has been notified by Nasdaq of possible delisting of its common
shares traded on the Nasdaq SmallCap Market. The company has requested a
hearing. The determination from the hearing is unknown at this time.
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 March 31, 2000.
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: May 9, 2000 By: /s/Larry B. Prescott
-------------------------------------
Larry B. Prescott, Senior Vice President
and Chief Financial Officer
Page 10
<TABLE> <S> <C>
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BALANCE
SHEETS, STATEMENTS OF INCOME, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-START> OCT-01-1999
<PERIOD-END> MAR-31-2000
<CASH> 59
<SECURITIES> 0
<RECEIVABLES> 1,593
<ALLOWANCES> 27
<INVENTORY> 4,250
<CURRENT-ASSETS> 6,393
<PP&E> 3,399
<DEPRECIATION> 1,769
<TOTAL-ASSETS> 11,217
<CURRENT-LIABILITIES> 3,028
<BONDS> 0
0
0
<COMMON> 5
<OTHER-SE> 7,994
<TOTAL-LIABILITY-AND-EQUITY> 11,217
<SALES> 12,277
<TOTAL-REVENUES> 12,277
<CGS> 10,274
<TOTAL-COSTS> 13,441
<OTHER-EXPENSES> (52)
<LOSS-PROVISION> (8)
<INTEREST-EXPENSE> 74
<INCOME-PRETAX> (1,186)
<INCOME-TAX> (418)
<INCOME-CONTINUING> (768)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (768)
<EPS-BASIC> (.17)
<EPS-DILUTED> (.17)
</TABLE>
