<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 September 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 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 September 30, 1995 was 2,927,000.
<PAGE> 2
TRANS-INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
FORM 10Q - FOR THE QUARTER ENDED SEPTEMBER 30, 1995
INDEX
PART I. Financial Information
<TABLE>
<CAPTION>
<S> <C>
Item 1. FINANCIAL STATEMENTS
A. Consolidated Statements of Operations ---
Three months ended September 30, 1995 and 1994.
Nine months ended September 30, 1995 and 1994.
B. Consolidated Balance Sheets ---
September 30, 1995 and December 31, 1994.
C. Consolidated Statements of Cash Flows ---
Nine months ended September 30, 1995 and 1994.
D. Notes to Consolidated Financial Statements.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
<CAPTION>
PART II. Other Information
<S> <C>
Item 1. Legal Proceedings
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
</TABLE>
<PAGE> 3
TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
A. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
<TABLE>
<CAPTION>
For 3 Months Ended: For 9 Months Ended:
------------------ ------------------
9/30/95 9/30/94 9/30/95 9/30/94
------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
1. Gross sales less discounts, returns
and allowances $6,549,057 $5,790,432 $17,738,266 $17,718,711
2. Cost of goods sold 4,315,931 4,164,459 12,306,202 12,823,164
---------- ---------- ----------- -----------
3. Gross profit 2,233,126 1,625,973 5,432,064 4,895,547
4. Selling, general and administrative exp. 1,526,453 1,494,793 4,404,330 4,347,737
---------- ---------- ----------- -----------
5. Operating income 706,673 131,180 1,027,734 547,810
6. Other income/expense
Interest expense 238,418 209,372 702,217 591,901
Other income ( 85) 37,265 ( 125,009) 35,023
---------- ---------- ----------- -----------
Total other income/expense 238,333 246,637 577,208 626,924
---------- ---------- ----------- -----------
7. Earnings before income taxes 468,340 ( 115,457) 450,526 ( 79,114)
8. Income tax expense 156,000 ( 30,000) 130,000 17,000
---------- ---------- ---------- -----------
9. Net Profit $ 312,340 ($ 85,457) $ 320,526 ($ 96,114)
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
10. Earnings per share $ .11 ($ .03) $ .11 ($ .03)
---------- ---------- ----------- -----------
11. Dividends per share - - - -
---------- ---------- ----------- -----------
</TABLE>
-3-
<PAGE> 4
TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
B. CONSOLIDATED BALANCE SHEETS
---------------------------
<TABLE>
<CAPTION>
ASSETS LIABILITIES AND STOCKHOLDERS' EQUITY
- ------ ------------------------------------
Current Assets 9/30/95 12/31/94 Current Liabilities 9/30/95 12/31/94
- -------------- (Unaudited) (Audited) ------------------- (Unaudited) (Audited)
----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Cash $ 99,359 $ 27,739 Notes payable (Note 5) $ 4,158,108 $ 2,389,367
Accounts receivable (net) 7,100,596 5,367,133 Current installments
Inventories (Note 2) 5,837,661 4,817,825 - Long term debt (Note 5) 319,023 368,544
Prepaid expenses 432,565 286,243 - Capital leases -0- 19,803
Deferred income taxes 320,000 320,000 Accounts payable - trade 2,817,744 2,435,110
---------- ---------- Accrued liabilities 846,110 768,514
Total current assets 13,790,181 10,818,940 Income taxes 130,000 -0-
---------- ---------- --------- ---------
Total current liabilities 8,270,985 5,981,338
--------- ---------
Property, Plant & Equipment, Deferred Income Taxes - Non-current 373,000 373,000
at Cost
- ----------------------------
Land 382,519 382,519 Long term debt-
Land improvements 126,660 126,660
Buildings 5,296,905 5,272,324 Current portion shown above (Note 5) 5,216,384 5,318,208
Machinery & equipment 6,052,018 6,828,160 Other non-current liabilities 328,642 332,197
---------- ----------
11,858,102 12,609,663
Less: accumulated
depreciation (7,630,295) (8,009,178)
---------- ----------
Net plant and equipment 4,227,807 4,600,485 Stockholders'Equity
---------- ---------- -------------------
Other Assets Preferred stock of $1.00 par value
- ------------ per share - authorized 500,000
Investments in affiliates 10,000 10,000 shares: issued none -- --
Patents, licenses & trade- Common stock of $.10 par value per
marks, net of accumulated share - authorized 10,000,000 shares;
amortization 25,908 28,158 2,950,000 shares issued and 2,927,000
outstanding at 9/30/95 295,000 295,000
Excess of cost of investment
in stock of subsidiary over Treasury Stock ( 2,300) ( 2,300)
equity in underlying net Additional paid-in capital 3,796,546 3,796,546
assets of acquisition 278,568 311,996 Retained earnings 335,719 15,193
Foreign currency translation ( 105,633) ( 113,256)
--------- ---------
Sundry 175,879 226,347
4,319,332 3,991,183
--------- -----------
Total assets $18,508,343 $15,995,926 Total liabilities and stockholders' $18,508,343 $15,995,926
=========== =========== equity =========== ===========
</TABLE>
See Notes to Financial Statements
-4-
<PAGE> 5
TRANS-INDUSTRIES, INC.
Consolidated Statements of Cash Flows
C. For the Nine Months Ended September 30, 1995 and 1994
<TABLE>
<CAPTION>
Nine Months Ended September 30
------------------------------
1995 1994
---- ----
(Unaudited) (Unaudited)
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
- ------------------------------------
<S> <C> <C>
Net income/(loss) $ 320,526 ($ 96,114)
Adjustments to reconcile net income (loss)
to net cash provided by operations:
Depreciation 488,637 591,039
Decrease (increase) in accts. receiv. (1,733,463) 990,685
Decrease (increase) in inventory (1,019,836) 249,584
Decrease (increase) in prepaid exp. ( 146,322) 115,201
Increase (decrease) in accts. payable 382,634 ( 726,728)
Increase (decrease) in accr. liab. 77,596 ( 156,711)
Increase (decrease) in income taxes 130,000 ( 53,999)
Disposal of fixed assets 45,000 -0-
(Gain)/loss on sale of fixed assets ( 7,338) 39,403
---------- ----------
Net Cash Provided (Used) by Operations (1,462,566) 952,360
CASH FLOWS FROM INVESTING ACTIVITIES
- ------------------------------------
Purchase of fixed assets ( 142,475) ( 147,597)
Proceeds from sale of fixed assets 75,000 10,000
Purchase of license and patents -0- ( 19,000)
---------- ----------
Net Cash Provided (Used) by Investing ( 67,475) ( 156,597)
CASH FLOWS FROM FINANCING ACTIVITIES
- ------------------------------------
Net increase (repayment) of long-term
borrowings ( 174,703) ( 654,779)
Net proceeds (payment) of credit line 1,768,741 ( 267,581)
---------- ----------
Net Cash Provided (Used) by Financing 1,594,038 ( 922,360)
Foreign currency translation 7,623 65,307
---------- ----------
Net Increase in Cash 71,620 ( 61,290)
Cash at beginning of year 27,739 120,943
---------- ----------
Cash at end of quarter $ 99,359 $ 59,653
========== ==========
Supplemental Disclosures:
Interest paid $ 612,054 $ 572,207
Income taxes (refunded) paid, net -0- 70,000
</TABLE>
-5-
<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>
9/30/95 12/31/94
------- --------
<S> <C> <C>
Raw Materials $3,503,930 $2,843,470
Work in Process 811,737 768,064
Finished Goods 1,521,994 1,206,291
---------- ----------
$5,837,661 $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.
-6-
<PAGE> 7
D. TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. Long-Term Debt
Long-term debt at September 30, 1995 consisted of the following:
<TABLE>
<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. $3,769,484
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. 205,764
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. 129,168
Term note, payable in monthly installments of
$896 including interest at a rate of 6%. The
note is due January 21, 2002. 122,642
Other 8,349
----------
$5,535,407
Less current installments ( 319,023)
----------
Long-term debt $5,216,384
==========
</TABLE>
-7-
<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 September 30, 1995 the
Company was in compliance with all provisions.
The Company also has a secured $5,500,000 line of credit of
which $4,158,108 was utilized at September 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
domestic subsidiaries.
-8-
<PAGE> 9
TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
For Nine Months Ended September 30, 1995
Sales and Earnings
Sales for the quarter ended September 30, 1995 were $6,549,057
compared to $5,790,432 for the same period a year ago. This increase of
$758,625 is primarily attributable to an increase in sales of the Company's
multifunction bus lighting module, which is the result of the Company obtaining
a larger market share.
During the third quarter of 1995, the Company realized a net profit
of $312,340 on sales of $6,549,057. For the same period of the prior year, the
Company reported net losses of $85,457 on sales of $5,790,432. This increase
in profit is due to higher sales volume being achieved and an improved product
mix of sales. This improved mix is primarily the result of dropping the molded
composite line and increasing sales of products with higher margins.
Profit/(loss) per share for the third quarter was $.11 and ($.03) for 1995 and
1994, respectively. Profit/(loss) 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
September 30, 1995, consolidated inventories were $5,837,661 compared to
$4,655,529 a year ago. The increase of $1,182,132 results from higher raw
material levels in anticipation of improving sales and higher finished goods
being held temporarily pending release of certain customers from "credit hold."
Interest
Interest expense amounted to approximately $238,000 and $209,000 for
the third quarter of 1995 and 1994 respectively. This increase of $29,000 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 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. On May 2, 1995, the Company was notified that the
U.S. Circuit Court of Appeals changed the District Courts ruling that the
defendant literally infringed the patent instead of infringment by equivalents.
Further the court of appeals rewarded the case back to the Federal District
Court for first determination of damages. Briefs covering this matter will be
filed with the Federal District Court on December 7th with 15 days allowed
thereafter for filing of cross briefs.
Item 5. OTHER INFORMATION
On October 26, 1995 the Company repurchased $700,000.00 of a 10%
convertible debenture which was issued October 30, 1991. In addition the
Company's deferred profit sharing plan also purchased $300,000.00 of the
convertible debenture and immediately exercised its right to convert the debt
into 150,000 shares of non registered company common stock. The Company
financed the purchase with short term bank borrowings with a floating interest
rate of 1 1/4% over prime.
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: 11/13/95 /s/Kai Kosanke
-------------------- --------------------------------
Kai Kosanke, Treasurer
and Chief Financial Officer
Date: 11/13/95 /s/Paul Clemo
-------------------- --------------------------------
Paul Clemo
Assistant Treasurer
-11-
<PAGE> 12
EXHIBIT INDEX
Exhibit
No. Description Page
- ------- ----------- ----
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 99,359
<SECURITIES> 0
<RECEIVABLES> 7,100,596
<ALLOWANCES> 0
<INVENTORY> 5,837,661
<CURRENT-ASSETS> 13,790,181
<PP&E> 11,858,102
<DEPRECIATION> 7,630,295
<TOTAL-ASSETS> 18,508,343
<CURRENT-LIABILITIES> 8,270,985
<BONDS> 5,545,026
<COMMON> 295,000
0
0
<OTHER-SE> 4,024,332
<TOTAL-LIABILITY-AND-EQUITY> 18,508,343
<SALES> 17,738,266
<TOTAL-REVENUES> 17,863,275
<CGS> 12,306,202
<TOTAL-COSTS> 4,404,330
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 702,217
<INCOME-PRETAX> 450,526
<INCOME-TAX> 130,000
<INCOME-CONTINUING> 320,526
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 320,526
<EPS-PRIMARY> .11
<EPS-DILUTED> .11
</TABLE>
