<PAGE> 1
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 Quarter Ended June 30, 1995 Commission File Number 0-4539
TRANS-INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-2598139
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2637 Adams Road, Rochester Hills, MI 48309
(Address) (Zip Code)
Registrant's Telephone Number, including Area Code (810) 852-1990
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 and Exchange
Act of 1934 during the preceding 12 months and (2) has been subject to such
filing requirements for the past 90 days.YES _X_ NO ___
The number of shares outstanding of registrant's Common stock, par value
$.10 per share, at June 30, 1995 was 2,927,000.
<PAGE> 2
TRANS-INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
FORM 10Q - FOR THE QUARTER ENDED JUNE 30, 1995
INDEX
PART I. Financial Information
Item 1. FINANCIAL STATEMENTS
A. Consolidated Statements of Operations ---
Three months ended June 30, 1995 and 1994.
Six months ended June 30, 1995 and 1994.
B. Consolidated Balance Sheets ---
June 30, 1995 and December 31, 1994.
C. Consolidated Statements of Cash Flows ---
Six months ended June 30, 1995 and 1994.
D. Notes to Consolidated Financial Statements.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
PART II. Other Information
Item 1. Legal Proceedings
Item 6. Exhibits and Reports on Form 8-K
Signatures
-2-
<PAGE> 3
TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
A. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
<TABLE>
<CAPTION>
For 3 Months Ended: For 6 Months Ended:
------------------ ------------------
6/30/95 6/30/94 6/30/95 6/30/94
------- ------- ------- -------
<S> <C> <C> <C> <C>
1. Gross sales less discounts, returns
and allowances $5,932,229 $6,132,079 $11,189,209 $11,928,279
2. Cost of goods sold 4,067,294 4,374,012 7,990,271 8,658,705
--------- --------- --------- ---------
3. Gross profit 1,864,935 1,758,067 3,198,938 3,269,574
4. Selling, general and administrative exp. 1,376,188 1,436,386 2,877,877 2,852,944
--------- --------- --------- ---------
5. Operating income 488,747 321,681 321,061 416,630
6. Other income/expense
Interest expense 238,943 200,170 463,799 382,529
Other income (8,935) (104) (124,924) (2,242)
--------- --------- --------- ---------
Total other income/expense 230,008 200,066 338,875 380,287
--------- --------- --------- ---------
7. Earnings before income taxes 258,739 121,615 (17,814) 36,343
8. Income tax expense 75,000 75,000 (26,000) 47,000
--------- --------- --------- ---------
9. Net Profit $ 183,739 $ 46,615 $ 8,186 ($10,657)
========= ========= ========= =========
10. Earnings per share $ .06 $ .02 $ .00 $ .00
--------- --------- --------- ---------
11. Dividends per share - - - -
--------- --------- --------- ---------
</TABLE>
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<PAGE> 4
TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
B. CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS LIABILITIES AND STOCKHOLDERS' EQUITY
- ------ -------------------------------------
Current Assets 6/30/95 12/31/94 Current Liabilities 6/30/95 12/31/94
(Unaudited) (Audited) (Unaudited) (Audited)
---------- --------- ----------- ----------
<S> <C> <C> <C> <C>
Cash $ 85,291 $ 27,739 Notes payable (Note 5) $ 2,998,551 $ 2,389,367
Accounts receivable
(net) 5,731,207 5,367,133 Current installments
Inventories (Note 2) 5,078,522 4,817,825 - Long term debt (Note 5) 351,140 368,544
Prepaid expenses 316,408 286,243 - Capital leases 6,817 19,803
Deferred income taxes 320,000 320,000 Accounts payable - trade 2,315,569 2,435,110
---------- ---------- Accrued liabilities 734,505 768,514
Total current assets 11,531,428 10,818,940 Income taxes (26,000) -0-
---------- ---------- --------- ---------
Total current liabilities 6,380,582 5,981,338
--------- ---------
Property, Plant & Equipment, Deferred Income Taxes -
at Cost Non-current 373,000 373,000
- ------------------------------
Land 382,519 382,519 Long term debt-
Land improvements 126,660 126,660
Current portion shown
Buildings 5,274,448 5,272,324 above (Note 5) 5,249,549 5,318,208
Machinery & equipment 6,063,231 6,828,160 Other non-current
---------- ---------- liabilities 322,042 332,197
11,846,858 12,609,663
Less: accumulated
depreciation (7,546,222) (8,009,178)
---------- ----------
Net plant and equipment 4,300,636 4,600,485 Stockholders' Equity
---------- ---------- --------------------
Other Assets Preferred stock of $1.00 par value
- ------------ per share - authorized 500,000
Investments in shares: issued none -- --
affiliates 10,000 10,000
Patents, licenses & trade- Common stock of $.10 par value per
marks, net of accumulated share - authorized 10,000,000
amortization 26,658 28,158 shares; 2,950,000 shares issued
and 2,927,000 outstanding at
6/30/95 295,000 295,000
Excess of cost of
investment in stock of
subsidiary over Treasury Stock (2,300) (2,300)
equity in underlying Additional paid-in capital 3,796,546 3,796,546
net assets of Retained earnings 23,379 15,193
acquisition 289,711 311,996 Foreign currency translation (99,940) (113,256)
----------- -----------
Sundry 179,425 226,347 4,012,685 3,991,183
----------- -----------
Total assets $16,337,858 $15,995,926 Total liabilities and
=========== =========== stockholders' equity $16,337,858 $15,995,926
=========== ===========
</TABLE>
See Notes to Financial Statements
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<PAGE> 5
TRANS-INDUSTRIES, INC.
Consolidated Statements of Cash Flows
C. For the Six Months Ended June 30, 1995 and 1994
<TABLE>
<CAPTION>
Six Months Ended June 30
------------------------
1995 1994
---- ----
(Unaudited) (Unaudited)
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
- ------------------------------------
Net (Loss) $ 8,186 ($10,657)
Adjustments to reconcile net income (loss)
to net cash provided by operations:
Depreciation 389,125 400,510
Decrease (increase) in accts. receiv. (364,074) 469,064
Decrease (increase) in inventory (260,697) 102,491
Decrease (increase) in prepaid exp. (30,165) 104,834
Increase (decrease) in accts. payable (119,541) (482,953)
Increase (decrease) in accr. liab. (34,009) (206,956)
Increase (decrease) in income taxes (26,000) 46,000
Disposal of fixed assets 4,180 -0-
(Gain)/loss on sale of fixed assets (7,338) -0-
------------ ------------
Net Cash Provided (Used) by Operations: (440,333) 422,333
CASH FLOWS FROM INVESTING ACTIVITIES
- ------------------------------------
Purchase of fixed assets (90,411) (120,132)
Proceeds from sale of fixed assets 75,000 -0-
------------ ------------
Net Cash Provided (Used) by Investing: (15,411) (120,132)
CASH FLOWS FROM FINANCING ACTIVITIES
- ------------------------------------
Net increase (repayment) of long-term
borrowings (109,204) (142,655)
Net proceeds (payment) of credit line 609,184 (234,402)
------------ ------------
Net Cash Provided (Used) by Financing: 499,980 (377,057)
Foreign currency translation 13,316 41,623
------------ ------------
Net Increase in Cash: 57,552 (33,233)
Cash at beginning of year 27,739 120,943
------------ ------------
Cash at end of quarter $85,291 $ 87,710
============ ============
Supplemental Disclosures:
Interest paid $ 415,350 $ 369,763
Income taxes (refunded) paid, net -0- -0-
</TABLE>
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<PAGE> 6
D. TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The financial information presented as of any date other than December 31
has been prepared from the Company's books and records without audit.
Financial information as of December 31 has been derived from the audited
financial statements of the Company. In the opinion of management, all
adjustments consisting of normal recurring adjustments, necessary for a
fair presentation of the financial information for the periods indicated,
have been included. For further information regarding the Company's
accounting policies, refer to the consolidated financial statements and
related notes included in the Company's annual report on form 10-K for the
year ended December 31, 1994.
2. Inventories
The major components of inventories are:
<TABLE>
<CAPTION>
6/30/95 12/31/94
------- --------
<S> <C> <C>
Raw Materials $2,940,981 $2,843,470
Work in Process 738,293 768,064
Finished Goods 1,399,248 1,206,291
---------- ----------
$5,078,522 $4,817,825
========== ==========
</TABLE>
3. Principles of Consolidation
There have been no significant changes in the principles of consolidation
since our most recent audited financial statements.
4. Significant Accounting Policies
There have been no significant changes in the accounting policies since our
most recent audited financial statements.
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<PAGE> 7
D. TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. Long-Term Debt
<TABLE>
<CAPTION>
Long-term debt at June 30, 1995 consisted of the following:
<S> <C>
Trans-Industries, Inc., $3,840,000 term
note, payable in monthly installments of
$39,249 which includes interest at 1 1/4
percent over the bank's prime lending rate,
and a balloon payment of $3,228,259 in
October 1999. The note is secured by
substantially all the assets of
Trans-Industries, Inc. and subsidiaries. $3,789,613
Transmatic Europe Ltd., $232,360 mortgage,
payable in monthly installments of $890 plus
interest at 9.99%. The mortgage is secured by
certain property and is due August 9, 2003. 209,469
Trans-Industries, Inc., $1,000,000 convertible
subordinated debentures, payable in annual
installments of $142,857 plus interest at 10%.
Interest is payable semiannually commencing
April 30, 1992. The debentures are due
October 30, 2001. 1,000,000
Trans-Industries, Inc., $300,000 convertible
subordinated debentures, payable in annual
installments of $42,858 plus interest at 10%.
Interest is payable quarterly commencing
March 15, 1992. The debentures are due
December 30, 2001. 300,000
Term note, payable in monthly installments of
$3,229, including interest at 1.25% above the
bank's prime lending rate. The note is due
January 1, 1999. 138,855
Term note, payable in monthly installments of
$896 including interest at a rate of 6%. The
note is due January 21, 2002. 123,440
Other 39,312
----------
$5,600,689
Less current installments (351,140)
----------
Long-term debt $5,249,549
==========
</TABLE>
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<PAGE> 8
TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. Long-Term Debt (continued)
The Trans-Industries, Inc. term loan agreement contains restrictive
provisions relating principally to the maintenance of working capital, net
worth, ratio of debt to net worth, payment of dividends, and acquisition
of fixed assets. At June 30, 1995 the Company was in compliance with all
provisions.
The Company also has a secured $5,500,000 line of credit of which
$2,998,551 was utilized at June 30, 1995. Interest is charged at 1 1/4
percent over the bank's prime lending rate. This line of credit expires
on April 1, 1996. The line is secured by substantially all of the assets
of Trans-Industries, Inc. and its subsidiaries.
-8-
<PAGE> 9
TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
For Six Months Ended June 30, 1995
Sales and Earnings
Sales for the quarter ended June 30, 1995 were $5,932,229 compared to
$6,132,079 for the same period a year ago. This decrease of $199,850 is
primarily due to the Company's discontinuation of the molded composite product
line. Molded composite sales for the second quarter of 1994 approximated
$600,000. However, the Company posted increased foreign sales in the second
quarter of 1995, compared to the same period in 1994, of approximately
$400,000.
During the second quarter of 1995, the Company realized a net profit of
$183,739 on sales of $5,932,229. For the same period of the prior year, the
Company reported net profit of $46,675 on sales of $6,132,079. This increase in
profit, despite lower sales volume, is due to an improved product mix of sales.
This improved mix is primarily a result of dropping the molded composite line
and increasing sales of products with higher margins. Profit per share for the
second quarter was $.06 and $.02 for 1995 and 1994, respectively. Profit per
share was computed on the adjusted weighted average number of shares
outstanding during the quarter for 1995 and 1994, which were 2,927,000 and
2,927,000, respectively.
Inventories
Inventory valuation is based upon the lower of cost or market. At June
30, 1995, consolidated inventories were $5,078,522 compared to $4,802,622 a
year ago. The increase of $275,900 is a result of the Companies preparation to
accomodate sales forecasts which are above last years sales.
Interest
Interest expense amounted to approximately $239,000 and $200,000 for the
second quarter of 1995 and 1994 respectively. This increase of $39,000 was the
result of slightly higher interest rates in 1995.
Financial Conditions
Current financial resources coupled with anticipated funds from operations
are expected to meet funding requirements for the remainder of the year, based
upon present needs.
-9-
<PAGE> 10
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDING
The Company was one of several defendants in a lawsuit, directed toward a
former investment counseling firm not associated with the Company, for which
the plaintiffs were seeking $3 million in compensatory losses and $6.5 million
in punitive damages. During 1992, the Company received a summary judgement
dismissing it as a defendant in the case. A trial was subsequently held, and
the remaining defendants received a favorable verdict. The plaintiffs then
appealed all of the dismissals and the verdict. In April of 1995, the Court of
Appeals dismissed the plaintiff's appeal, thereby concluding the lawsuit.
The Company is the plaintiff in a patent infringement lawsuit. During
November of 1993, an advisory jury recommended a decision in favor of the
Company. In April of 1994, the judge concurred with the advisory jury and
ordered that the defendant be enjoined from any further manufacture, use, or
sale of the accused patented device. It was also ordered that the defendant
pay approximately $3 million in damages. On May 9, 1994, the defendant filed
to appeal this decision. The Company subsequently filed a counter appeal
seeking recovery of additional damages. On May 2, 1995, the Company was
notified that the U.S. Circuit Court of Appeals reversed the District Courts
ruling that the defendant committed "no literal infringement" of a patent on a
lighting fixture for buses. The court further ruled that the defendants
fixture was covered by the patent, and sent the case back to the Federal
District court for "further findings of fact" and re-evaluation of damages.
This matter is expected to be resolved in the next 3-5 months.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(b) Form 8K dated April 19, 1994, and Form 8K/A dated May 23, 1994; change
in registrants certifying accountant.
-10-
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of l934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRANS-INDUSTRIES, INC.
Date: 8/3/95 Kai Kosanke
---------------------------
Kai Kosanke, Treasurer
and Chief Financial Officer
Date: 8/3/95 Paul Clemo
---------------------------
Paul Clemo
Assistant Treasurer
-11-
<PAGE> 12
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<EXCHANGE-RATE> 1
<CASH> 85,291
<SECURITIES> 0
<RECEIVABLES> 5,731,207
<ALLOWANCES> 0
<INVENTORY> 5,078,522
<CURRENT-ASSETS> 11,531,428
<PP&E> 11,846,858
<DEPRECIATION> 7,546,222
<TOTAL-ASSETS> 16,337,858
<CURRENT-LIABILITIES> 6,380,582
<BONDS> 5,571,591
<COMMON> 295,000
0
0
<OTHER-SE> 3,717,685
<TOTAL-LIABILITY-AND-EQUITY> 16,337,858
<SALES> 11,189,209
<TOTAL-REVENUES> 11,314,133
<CGS> 7,990,271
<TOTAL-COSTS> 2,877,877
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 463,799
<INCOME-PRETAX> (17,814)
<INCOME-TAX> (26,000)
<INCOME-CONTINUING> 8,186
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,186
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
