U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from to .
Commission File Number 0 - 14835
TRANSNATIONAL INDUSTRIES, INC.
(Exact Name of small business issuer as
specified in its charter)
Delaware 22-2328806
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
Post Office Box 198
U.S. Route 1
Chadds Ford, Pennsylvania 19317
(Address of principal executive offices)
(610) 459-5200
(Issuer's telephone number)
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 (which is the period
the Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES X NO
State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date.
Common stock, $0.20 par value
Outstanding at November 30, 1999: 502,470
Transitional Small Business Disclosure Format (check one):
YES NO X
<PAGE>
TRANSNATIONAL INDUSTRIES, INC.
INDEX PAGE
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed consolidated balance sheets -- October 31, 1999,
and January 31, 1999. 3-4
Condensed consolidated statements of operations -- Three
months ended October 31, 1999 and 1998; nine months ended
October 31, 1999 and 1998. 5
Condensed consolidated statements of cash flows -- Nine
months ended October 31, 1999 and 1998. 6
Notes to condensed consolidated financial statements --
October 31, 1999. 7-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-13
Part II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Transnational Industries, Inc.
Condensed Consolidated Balance Sheets
(Dollars in thousands)
<TABLE>
<CAPTION>
October 31, January 31,
1999 1999
------------ ------------
Assets (Unaudited) (audited)
<S> <C> <C>
Current Assets:
Cash $ 90 $ 455
Accounts receivable 1,943 1,712
Inventories 1,432 1,281
Other current assets 170 85
------------ ------------
Total current assets 3,635 3,533
Machinery and equipment:
Machinery and equipment 2,988 2,784
Less accumulated depreciation 2,342 2,172
------------ ------------
Net machinery and equipment 646 612
Other assets:
Repair and maintenance inventories, less provision
for obsolescence 165 165
Computer software, less amortization 748 501
Excess of cost over net assets of business acquired,
less amortization 1,774 1,825
------------ ------------
Total other assets 2,687 2,491
------------ ------------
Total assets $6,968 $6,636
============ ============
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
Transnational Industries, Inc.
Condensed Consolidated Balance Sheets (continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
October 31, January 31,
1999 1999
------------ ------------
Liabilities and stockholders' equity (Unaudited) (Audited)
<S> <C> <C>
Current liabilities:
Accounts payable $ 900 $ 366
Deferred maintenance revenue 659 686
Accrued expenses 340 338
Billings in excess of cost and estimated earnings 1,130 1,447
Current portion of long-term debt 272 238
------------ -------------
Total current liabilities 3,301 3,075
Long-term debt, less current portion 665 731
Stockholders' equity:
Series B cumulative convertible preferred stock,
$0.01 par value - authorized 100,000 shares;
issued and outstanding 318 shares (liquidating value
$158,205) 73 73
Common stock, $0.20 par value - authorized
1,000,000 shares; issued and outstanding 502,470
shares 100 100
Additional paid-in capital 8,502 8,493
Accumulated deficit (5,673) (5,836)
------------ -------------
Total stockholders equity 3,002 2,830
------------ -------------
Total liabilities and stockholders' equity $6,968 $ 6,636
============ =============
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
Transnational Industries, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
October 31, October 31,
----------------------------- ------------------------------
1999 1998 1999 1998
-------------- -------------- ---------------- -------------
<S> <C> <C> <C> <C>
Revenues $ 2,481 $ 2,064 $ 7,145 $ 5,431
Cost of Sales 1,911 1,461 5,208 3,772
-------------- -------------- ---------------- -------------
Gross Margin 570 603 1,937 1,659
Selling expenses 203 176 599 571
Research and development 117 115 467 352
General and administrative expenses 207 205 636 606
-------------- -------------- ---------------- -------------
527 496 1,702 1,529
-------------- -------------- ---------------- -------------
Operating income 43 107 235 130
Interest expense 21 26 58 96
-------------- -------------- ---------------- -------------
Income before income tax 22 81 177 34
Provision for income taxes 3 6 14 6
-------------- -------------- ---------------- -------------
Net income 19 75 163 28
Preferred dividend requirement 2 2 6 6
-------------- -------------- ---------------- -------------
Net income 19 75 163 28
============== ============== ================ =============
Basic income per common share $ 0.03 $ 0.15 $ 0.31 $ 0.04
============== ============== ================ =============
Diluted income per common share $ 0.03 $ 0.14 $ 0.31 $ 0.04
============== ============== ================ =============
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE>
Transnational Industries, Inc.
Condensed Consolidated Statements
of Cash Flows
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended
October 31,
--------------------
1999 1998
---------- ---------
<S> <C> <C>
Net cash provided (used) by operating activities 220 399
Net cash provided (used) by investing activities (370) (237)
Net cash provided (used) for financing activities (215) (167)
---------- ---------
Increase (decrease) in cash (365) (5)
Cash at beginning of period 455 471
---------- ---------
Cash at end of period $ 90 $ 466
========== =========
</TABLE>
See notes to condensed consolidated financial statements.
6
<PAGE>
Transnational Industries, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
October 31, 1999
Note A -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Regulation
S-B. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments considered necessary
for a fair presentation have been included. All such adjustments are of a normal
recurring nature. Operating results for the three-month and nine-month periods
ended October 31, 1999, are not necessarily indicative of the results to be
expected for the fiscal year. For further information, refer to the consolidated
financial statements and footnotes thereto for the year ended January 31, 1999,
contained in the Registrant's Annual Report on Form 10-KSB for the year ended
January 31, 1999.
Note B - EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per
share (dollars in thousands except per share data):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
October 31, October 31,
--------------------------- --------------------------
1999 1998 1999 1998
-------------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
Numerator (same for basic and dilutive):
Net income $ 19 $ 75 $ 163 $ 28
Preferred dividend requirement 2 2 6 6
-------------- ------------ ------------ -------------
Net income available to common stockholders $ 17 73 $ 157 $ 22
============== ============ ============ =============
Denominator:
Weighted average shares outstanding for basic earnings per
share 502,470 502,470 502,470 501,470
Dilutive effect of employee stock options 11,070 1,951 7,911 8,524
-------------- ------------ ------------ -------------
Weighted average shares outstanding and assumed conversions
for dilutive earnings per share 513,540 504,421 510,381 509,994
============== ============ ============ =============
Basic income per share $ .03 $ .15 $ .31 $ .04
============== ============ ============ =============
Dilutive income per share $ .03 $ .14 $ .31 $ .04
============== ============ ============ =============
</TABLE>
7
<PAGE>
Common shares potentially issuable under the contractual conversion rights of
the Preferred B shares would have an antidilutive effect on earnings per share
and therefore have not been included in the above computations. Weighted average
common shares issuable under the contractual conversion rights of the Preferred
B shares amounted to 1,871 and 1,941 in each of periods ended October 31, 1999
and 1998, respectively.
Note C -- CONTINGENCIES
In 1995, Spitz became involved in a dispute in connection with a public bid for
the supply of planetarium equipment for an expansion project at a public
community college. Spitz's subcontract bid was the lowest submitted and the
general contractor for the project allegedly used Spitz's pricing in submitting
its total contract bid to the college. After the total contract was awarded to
the general contractor, however, the college's architect alleged that Spitz's
equipment did not conform to the bid specifications. The bid for the equipment
which the architect deemed to be in conformance with the specifications was
allegedly approximately $150,000 higher than Spitz's bid. Because the Contractor
has been forced to supply the more expensive equipment, it is attempting to
recover the $150,000 price differential plus alleged related amounts due to
adverse impacts on the project schedule from various parties. At various times,
the Contractor has threatened to assert its claim against Spitz because it has
been unsuccessful in its attempts to recover its alleged damages from the
College or other involved parties. The Company believes the bid specifications,
to the extent that they excluded Spitz's equipment, constituted an improper
sole-source of equipment which violates competitive bidding laws because the
specifications appear to have been copied from a competitor's equipment. The
Company also believes that the Spitz equipment meets all of the valid functional
requirements in the bid specifications. No lawsuit has been filed against Spitz
or the Company and the parties have discussed settling the matter. The
Contractor has not communicated any threats to carry out its assertion against
Spitz since July 1996, but it has indicated to Spitz that proceedings continue
in an effort to recover damages from the other parties involved. The Company
believes that the parties will reach an agreement to resolve the dispute without
litigation involving Spitz. It is too early to estimate a probable outcome and
its effect, if any, on Spitz. Accordingly, no liability for the potential claim
has been recorded at October 31, 1999.
8
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Revenues in the third quarter and first nine months of fiscal 2000 were
$2,481,000 and $7,145,000 compared to $2,064,000 and $5,431,000 in the
comparable periods of fiscal 1999. The increase of $417,000 (20%) for the
quarter was due to higher ImmersaVision and dome revenues, which were partially
offset by lower planetarium revenues. The increase of $1,714,000 (32%) for the
nine-month period resulted from higher revenues from all of the Company's
products. ImmersaVision revenues were $534,000 and $1,294,000 in the third
quarter and first nine months of Fiscal 2000, respectively, compared to $13,000
of ImmersaVision revenue in the third quarter and first nine months of Fiscal
1999. The ImmersaVision revenue in Fiscal 2000 was attributable to the two
orders received at the end of Fiscal 1999. Revenue from ImmersaVision is
expected to continue at this level through Fiscal 2000 and into the following
year as work continues on the two current orders as well as other new sales.
Planetarium revenues were $733,000 and $2,286,000 in the third quarter and first
nine months of Fiscal 2000 compared to $1,045,000 and $2,229,000 in the
comparable periods of Fiscal 1999, a decrease of $312,000 (30%) for the quarter
and an increase of $57,000 (3%) for the six-month period. Planetarium revenues
from the sale of systems decreased in Fiscal 2000 while revenue from maintenance
and parts increased. Planetarium revenues attributable to the sale of
maintenance and parts were $333,000 and $961,000 in the third quarter and first
none months of Fiscal 2000 compared to $308,000 and $890,000 in the comparable
periods of Fiscal 1999, an increase of $25,000 (8%) and $71,000 (8%),
respectively. The increase in maintenance and parts revenues was due to higher
sales to customers without preventive maintenance agreements as well as the
timing of performance on preventive maintenance agreements. Dome revenues were
$1,214,000 and $3,565,000 in the third quarter and first nine months of fiscal
2000 compared to $1,006,000 and $3,189,000 in the comparable periods of fiscal
1999, an increase of $208,000 (21%) for the quarter and $376,000 (12%) for the
nine-month period. The higher dome revenues were attributable to higher revenues
from ride simulator and planetarium domes, which were partially offset by lower
revenues from film and military simulator domes.
Revenues are expected to continue at higher than historical levels for the
remainder of Fiscal 2000 as work continues on sales booked through late Fiscal
1999. The backlog of unearned revenue remains healthy by historical comparison
at $8,324,000, with several recent bookings of new sales. Sales prospects remain
strong and the Company still expects significant revenue contributions from
ImmersaVision products in future years as the installed base grows and new
applications of the product are developed. While revenue levels are expected to
continue at historically high levels over the next year, uncertainty in the
timing and delivery of sales may cause revenue levels to continue to fluctuate
in interim periods.
Gross margins decreased to 23.0% and 27.1% in the third quarter and first nine
months of Fiscal 2000 compared to 29.2% and 30.5% in the comparable periods of
Fiscal 1999. The lower margins were mostly attributable to unanticipated cost
incurred on the completion and installation of the Company's second
ImmersaVision sale. The increased costs were attributable to the first time
completion of newly designed components, additional installation effort required
9
<PAGE>
by Company technicians and unanticipated high labor costs at the installation
site. The knowledge gained from this experience is expected to aid efforts in
reducing costs on future ImmersaVision sales. Compounding the effect of the
unanticipated costs, ImmersaVision systems include many purchased components
that command a lower mark-up than the Company's manufactured products. Although
the gross margins on ImmersaVision sales are generally lower, significant
profits result from the revenue volume generated from the sale of the high cost
components. Also, as the Company develops more proprietary technology for
ImmersaVision, it expects more sales of higher margin software and integration
services to the new markets that open up for ImmersaVision. Otherwise, in Fiscal
2000, margin improvements resulted from volume-related efficiencies and
successful efforts on many dome projects.
Selling expenses increased $27,000 (15%) and $28,000 (5%) in the third quarter
and first nine months of Fiscal 2000 compared to the comparable periods of
Fiscal 1999 due to greater sales and marketing efforts through the reassignment
of personnel and a sales staff addition. The increase resulting from the new
sales and marketing activities was partially offset by the reduction of the
Fiscal 1999 high use of engineering resources for selling efforts. Research and
development expenses increased $2,000 (2%) and $115,000 (33%) in the third
quarter and first nine months of Fiscal 2000 compared to the comparable periods
of Fiscal 1999. The increase in research and development expenses is due to
product development efforts to meet delivery obligations for existing
ImmersaVision customers as well as continuing research and development of
proprietary programming tools for software content development for
ImmersaVision, improvements to ImmersaVision subsystems, and improvements to
optical planetarium products. Research and development efforts in the third
quarter of Fiscal 2000 were reduced due to the use of engineering personnel on
the ImmersaVision installation. General and administrative expenses increased
$2,000 (1%) and $30,000 (5%) in the third quarter and the first nine months of
Fiscal 2000 compared to the comparable periods of Fiscal 1999. General and
administrative expenses increased due primarily to the use of professional
services for information system improvements and strategic planning. The effect
of the increase was less obvious due to a $25,000 charge for questionable
accounts receivable in fiscal 1999.
Net interest expense amounted to $21,000 and $58,000 in the third quarter and
first nine months of Fiscal 2000 compared to $26,000 and $96,000 in the
comparable periods of Fiscal 1999. The decrease in interest expense was
attributable mainly to lower use of the bank line of credit. The $21,000 and
$58,000 reported in the first quarter and first nine months of Fiscal 2000
consisted of $12,000 and $40,000 paid on bank debt agreements plus $10,000 and
$21,000 paid on capital lease obligations, offset by $1,000 and $3,000 of
interest income earned on cash invested. The $26,000 and $96,000 reported in the
first quarter and first nine months of fiscal 1999 consisted of $19,000 and
$73,000 paid on bank debt agreements plus $7,000 and $23,000 paid on capital
lease obligations. The Company continues to pay no federal income taxes as
federal taxable income is offset by the utilization of net operating loss
carryforwards. The provision for income taxes consists of state income taxes on
net income reported through the nine-month periods.
As a result of the above, the Company reported net income of $19,000 and
$163,000 in the third quarter and first nine months of Fiscal 2000 compared to
$75,000 and $28,000 in comparable periods of Fiscal 1999.
Liquidity and Capital Resources
Net cash provided by operating activities was $220,000 in the first nine months
of Fiscal 2000 compared to $399,000 provided in the first nine months of Fiscal
10
<PAGE>
1999. The $220,000 provided by operations in the first nine months of fiscal
1999 consisted of $525,000 provided from earnings offset by $305,000 used by
changes in operating assets and liabilities. The $399,000 provided by operations
in the first nine months of fiscal 1999 consisted of $334,000 provided from
earnings plus $65,000 provided from changes in operating assets and liabilities.
The $220,000 provided by operations in the first nine months of Fiscal 2000 was
offset by $215,000 of scheduled principal payments on debt obligations and
$370,000 invested in capital assets. The $399,000 provided by operations in the
first nine months of fiscal 1999 was offset by $167,000 of scheduled principal
payments on debt obligations and $237,000 invested in capital assets. The net
result was a $365,000 decrease in cash balances during the first nine months of
Fiscal 2000 compared to a $5,000 decrease during the first nine months of Fiscal
1999.
The $370,000 invested in capital assets in the first nine months of Fiscal 2000
consisted of $253,000 in computer software and $117,000 of various machinery and
equipment additions. Also in the first nine months of Fiscal 2000 the
installation of a new computer infrastructure began for the purpose of improving
the Company's information systems. Initial hardware installation was completed
in August 1999 at a cost of $87,000. The Company is financing this cost along
with new computer software to be installed in Fiscal 2000 through a capital
lease. Under a master lease agreement, the $87,000 in hardware costs plus
$96,000 in software costs were financed in the third quarter of Fiscal 2000. An
additional $132,000 of hardware and software costs were financed under the
master lease agreement in November 1999. The master lease agreement allows for
the financing of up to $118,000 in additional hardware and software costs
through early 2000. The $237,000 invested in capital assets in the first nine
months of Fiscal 1999 consisted of $168,000 of computer software and $69,000 of
various machinery and equipment additions. In addition, $32,000 of computer
hardware for the development of ImmersaVision software was financed through
capital leases in the first nine months of fiscal 1999.
At October, 1999 the balance on the revolving credit note was $125,000 compared
to $150,000 at January 31, 1999. This resulted in unused borrowing capacity of
$675,000 at October 31, 1999 compared to $650,000 at January 31, 1999. Remaining
cash balances of $90,000 at October 31, 1999 compared to $455,000 at January 31,
1999 provided additional liquidity. The next source of liquidity, trade accounts
receivable, increased to $1,943,000 at October 31, 1999 compared to $1,712,000
at January 31, 1999. The demand on liquidity by contracts in progress decreased
as billings exceeded revenue recorded by $452,000 at October 31, 1999 compared
to $763,000 at January 31, 1999. Contracts in progress at October 31, 1999 will
use the other sources of liquidity as performance catches up to the billings
through the completion of each project. The payment terms on new contracts
remain uncertain and will also affect liquidity.
Total debt at July 31, 1999 was $937,000, a decrease of $32,000 from the
$969,000 at January 31, 1999. The decrease resulted from $190,000 of scheduled
principal payments on debt and lease obligations and $25,000 in net payments on
revolving credit debt, offset by a new lease obligation for $183,000.
The existing debt agreements combined with current assets and cash flow from
operations, assuming reasonably consistent revenue levels, should provide the
Company with adequate liquidity for the foreseeable future.
11
<PAGE>
Year 2000 Impact
The Year 2000 Issue is the result of computer programs being unable to
distinguish between the year 1900 and 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, or engage in
similar normal business activities.
The Company has used a combination of mini computer applications, microcomputer
applications and manual procedures to account for and manage its business
processes. The very unique nature of the Company's business, its small size, and
the variety of activities it is involved in, along with past financial
constraints, have perpetuated the use of the current systems. The mini computer
applications are not Year 2000 compliant. Vendors and consultants have proposed
year 2000 corrections to the mini computer applications; however, the Company
believes that such changes could be costly and uncertain. Improvements in the
Company's financial condition, the availability of more affordable technology
solutions and anticipated increases in business volume now justify major
improvement to the Company's information systems. Therefore, the Company has
concluded that it would be better served by an alternative solution. As part of
this wider objective to improve its information systems, the Company has
evaluated its overall data processing resources and has made substantial changes
in the fiscal year ending January 31, 2000. In this process, the Company has
selected new products that are Year 2000 compliant. The Company has completed an
analysis of its business processes and requirements, which were matched to the
capabilities of available enterprise software products. A list of enterprise
software products best suited for the Company's business was compiled and a
determination was made on the basic computer infrastructure required to run the
list of software products. Installation of the new computer infrastructure was
completed in August 1999 at an initial cost of $82,000. An enterprise software
system was selected after an evaluation of several products, which required
additional computer hardware installed in September 1999 at a cost of
approximately $40,000. Cost of the enterprise software, installation and
implementation is estimated at $300,000. The cost is being capitalized and
funded through operating cash flow and leasing of computer hardware and
software. Implementation of the enterprise software is in process and is
scheduled for completion over the next nine months. The first phase of the
implementation, which replaced critical financial applications, was completed on
December 1, 1999. In addition, modifications have been made to certain date
sensitive applications of the current minicomputer system in order to ensure
that other critical business processes continue through the completion of the
implementation of the new enterprise software in year 2000.
The Company is not integrated with and does not rely heavily on vendors',
clients' and other third parties' data processing systems. The bulk of the
Company's revenue is generated from new public or commercial projects.
Maintenance and parts revenue comes from repeat customers, mainly museums and
schools. As such, revenue is generally not dependent upon repeat sales to
commercial customers' inventory management systems or enterprise resource
planning systems the way many businesses may be. The Company uses a network of
vendors to obtain its parts and supplies. Many parts and supplies are
commodities available from numerous sources. The effect of critical vendors'
ability to continue to supply the Company though Year 2000 has not been
determined. However, the Company believes that the lack of integration with
vendors systems and numerous available sources will reduce the risk from
vendors' Year 2000 potential problems.
The Company's products rely on a number of widely used third party software
products, which claim to be Year 2000 compliant or do not perform date-oriented
12
<PAGE>
tasks. Evaluation and testing of the Year 2000 impact on software used in the
Company's products has been conducted in conjunction with other research and
development efforts over the past year and no significant problems have been
detected.
As a contingency plan, in the event that all of the necessary changes are not
completed, the portions of the operations that rely on date sensitive data can
be accommodated by manual procedures and date adjustments to selective existing
software applications. The Company believes this contingency plan could be
accomplished without a material interruption to the Company's business.
In addition to the specific anticipated costs described above, the Company will
incur additional costs as salaried personnel utilize their time to work on Year
2000 matters. The Company does not anticipate that the use of internal personnel
will have a material adverse effect upon the Company's operations or earnings;
however, the Company is not yet able to quantify such costs and, because the
Company has not reserved any amounts therefore, any amounts so expended will
reduce the Company's earnings. In addition, in the event that the economy as a
whole is materially and adversely effected by widespread interruptions, or by
failures of key infrastructure providers (such as banks and utilities), it is
likely that the Company's financial condition and results of operations would be
materially adversely effected.
Forward-Looking Information
The statements in this Quarterly Report on Form 10-QSB that are not statements
of historical fact constitute "forward-looking statements." Said forward-looking
statements involve risks and uncertainties which may cause the actual results,
performance or achievements of the Company to be materially different from any
future results, performances or achievements, expressly predicted or implied by
such forward-looking statements. These forward-looking statements are identified
by their use of forms of such terms and phrases as "expects," "intends,"
"goals," "estimates," "projects," "plans," "anticipates," "should," "future,"
"believes," and "scheduled."
The important factors which may cause actual results to differ from the
forward-looking statements contained herein include, but are not limited to, the
following: general economic and business conditions; competition; success of
operating initiatives; operating costs; advertising and promotional efforts; the
existence or absence of adverse publicity; changes in business strategy or
development plans; the ability to retain key management; availability, terms and
deployment of capital; business abilities and judgment of personnel;
availability of qualified personnel; labor and employee benefit costs;
availability and costs of raw materials and supplies; and changes in, or failure
to comply with, government regulations. Although the Company believes that the
assumptions underlying the forward-looking statements contained herein are
reasonable, any of the assumptions could be inaccurate, and therefore, there can
be no assurance that the forward-looking statements included in this filing will
prove to be accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such information
should not be regarded as a representation by the Company or any other person
that the objectives and expectations of the Company will be achieved.
13
<PAGE>
II. OTHER INFORMATION
4. Submission of Matters to a Vote of Security Holders
On August 19, 1999, the Company held its annual meeting of stockholders. At such
meeting, the Company's five nominees for director, Michael S. Gostomski, Charles
H. Holmes, Jr., Charles F. Huber, Calvin A. Thompson and William D. Witter were
elected to the Company's Board of Directors by the vote specified below:
Number of Votes
Nominee For Against/Withheld Abstentions
Michael S. Gostomski 425,910 88 0
Charles H. Holmes, Jr. 425,910 88 0
Charles F. Huber 425,910 88 0
Calvin A. Thompson 425,910 88 0
William D. Witter 425,910 88 0
Also at such annual meeting, the company's stockholders approved an amendment to
the Company's 1995 Stock Option and Performance Incentive Plan to increase the
number of shares of Common Stock available for awards under the Option Plan from
50,000 shares to 150,000 shares. The vote on such amendment was 325,008 shares
in favor, 798 shares against, 35 shares abstaining and 100,157 broker non-votes.
6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
No. Description of Document
27 Financial Data Schedules
(b) The Registrant did not file any reports on Form 8-K during the three months
ended October 31, 1999.
14
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
TRANSNATIONAL INDUSTRIES, INC.
/s/ Paul L. Dailey, Jr.
-------------------------
Date: December 15, 1999 Paul L. Dailey, Jr.
Secretary-Treasurer
Signing on Behalf of Registrant
and as Chief Financial Officer
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
condensed consolidated balance sheet of Transnational Industries, Inc. as of
October 31, 1999 and the related condensed consolidated statement of operations
and statement of cash flows for the nine months then ended and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-31-2000
<PERIOD-END> OCT-31-1999
<CASH> 90
<SECURITIES> 0
<RECEIVABLES> 1943
<ALLOWANCES> 0
<INVENTORY> 1432
<CURRENT-ASSETS> 3635
<PP&E> 2988
<DEPRECIATION> 2342
<TOTAL-ASSETS> 6968
<CURRENT-LIABILITIES> 3301
<BONDS> 0
0
73
<COMMON> 100
<OTHER-SE> 2829
<TOTAL-LIABILITY-AND-EQUITY> 6968
<SALES> 7145
<TOTAL-REVENUES> 7145
<CGS> 5208
<TOTAL-COSTS> 5208
<OTHER-EXPENSES> 467
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 58
<INCOME-PRETAX> 177
<INCOME-TAX> 14
<INCOME-CONTINUING> 163
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 163
<EPS-BASIC> 0.31
<EPS-DILUTED> 0.31
</TABLE>
