<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 March 31, 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 March 31, 1995 was 2,927,000.
<PAGE> 2
TRANS-INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
FORM 10Q - FOR THE QUARTER ENDED MARCH 31, 1995
INDEX
PART I. Financial Information
Item 1. FINANCIAL STATEMENTS
A. Consolidated Statements of Operations ---
Three months ended March 31, 1995 and 1994.
B. Consolidated Balance Sheets ---
March 31, 1995 and December 31, 1994.
C. Consolidated Statements of Cash Flows ---
Three months ended March 31, 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:
------------------
3/31/95 3/31/94
------- -------
<S> <C> <C> <C>
1. Gross sales less discounts, returns
and allowances $5,256,980 $5,796,200
2. Cost of goods sold 3,922,977 4,284,693
---------- ----------
3. Gross Profit 1,334,003 1,511,507
4. Selling, general and administrative Exp. 1,501,689 1,416,558
---------- ----------
5. Operating Income ( 167,686) 94,949
6. Other income/expense
Interest expense 224,856 182,359
Other income ( 115,989) ( 2,138)
---------- ----------
Total other income/expense 108,867 180,221
---------- ----------
7. Loss before income taxes ( 276,553) ( 85,272)
8. Income tax expense ( 101,000) ( 28,000)
---------- ----------
9. Net loss ($ 175,553) ($ 57,272)
---------- ----------
---------- ----------
10. Loss per share ($ .06) ($ .02)
---------- ----------
11. Dividends per share - -
---------- ----------
</TABLE>
-3-
<PAGE> 4
TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
B. CONSOLIDATED BALANCE SHEETS
---------------------------
ASSETS LIABILITIES AND STOCKHOLDERS' EQUITY
- ------ ------------------------------------
Current Assets 3/31/95 12/31/94 Current Liabilities 3/31/95 12/31/94
- -------------- (Unaudited) (Audited) ------------------- (Unaudited) (Audited)
----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Cash $ 49,952 $ 27,739 Notes payable (Note 5) $ 2,778,033 $ 2,389,367
Accounts receivable (net) 5,772,199 5,367,133 Current installments
Inventories (Note 2) 4,837,696 4,817,825 - Long term debt (Note 5) 365,730 368,544
Prepaid Expenses 327,504 286,243 - Capital Leases 13,416 19,803
Deferred Income Taxes 320,000 320,000 Accounts payable - trade 2,489,934 2,435,110
------- ------- Accrued liabilities 900,950 768,514
Total current assets 11,307,351 10,818,940 Income Taxes ( 101,000) -0-
---------- ---------- ----------- -----------
Total current liabilities 6,447,063 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 5,268,800 5,272,324 Current portion shown above (Note 5) 5,267,887 5,318,208
Machinery & equipment 6,121,190 6,828,160 Other non-current liabilities 316,442 332,197
---------- ----------
11,899,169 12,609,663
Less: accumulated
depreciation (7,492,832) (8,009,178)
---------- ----------
Net plant and equipment 4,406,337 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 27,408 28,158 2,950,000 shares issued and 2,927,000
outstanding at 3/31/95 295,000 295,000
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 300,853 311,996 Retained earnings ( 160,360) 15,193
Foreign currency translation ( 98,357) ( 113,256)
----------- -----------
Sundry 182,972 226,347 3,830,529 3,991,183
----------- -----------
Total assets $16,234,921 $15,995,926 Total liabilities and stockholders' $16,234,921 $15,995,926
=========== =========== equity =========== ===========
</TABLE>
See Notes to Financial Statements
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<PAGE> 5
TRANS-INDUSTRIES, INC.
Consolidated Statements of Cash Flows
C. For the Three Months Ended March 31, 1995 and 1994
Three Months Ended March 31
---------------------------
1995 1994
---- ----
(Unaudited) (Unaudited)
----------- -----------
<TABLE>
<CAPTION>
CASH FLOWS FROM OPERATING ACTIVITIES
- ------------------------------------
<S> <C> <C>
Net (Loss) ($ 175,553) ($ 57,272)
Adjustments to reconcile net income (loss)
to net cash provided by operations:
Depreciation 218,668 197,310
Decrease (increase) in accts. receiv. ( 405,066) 1,181,713
Decrease (increase) in inventory ( 19,871) ( 121,013)
Decrease (increase) in prepaid exp. ( 41,261) 150,371
Increase (decrease) in accts. payable 54,824 ( 275,634)
Increase (decrease) in accr. liab. 132,436 ( 74,469)
Increase (decrease) in income taxes ( 101,000) ( 29,000)
Disposal of fixed assets 4,180 -0-
(Gain)/loss on sale of fixed assets ( 11,317) -0-
---------- ----------
Net Cash Provided (Used) by Operations: ( 343,960) 972,006
CASH FLOWS FROM INVESTING ACTIVITIES
- ------------------------------------
Purchase of fixed assets ( 37,115) -0-
Proceeds from sale of fixed assets 75,000 -0-
---------- ----------
Net Cash Provided (Used) by Investing: 37,885 -0-
CASH FLOWS FROM FINANCING ACTIVITIES
- ------------------------------------
Net increase (repayment) of long-term
borrowings ( 75,277) ( 99,791)
Net proceeds (payment) of credit line 388,666 ( 874,359)
---------- ----------
Net Cash Provided (Used) by Financing: 313,389 ( 974,150)
Foreign currency translation 14,899 7,866
---------- ----------
Net Increase in Cash: 22,213 5,722
Cash at beginning of year 27,739 120,943
---------- ----------
Cash at end of quarter $ 49,952 $ 126,665
---------- ----------
---------- ----------
Supplemental Disclosures:
Interest paid $ 172,397 $ 147,943
Income taxes (refunded) paid, net -0- -0-
</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>
3/31/95 12/31/94
------- --------
<S> <C> <C>
Raw Materials $2,834,407 $2,843,470
Work in Process 737,509 768,064
Finished Goods 1,265,780 1,206,291
---------- ----------
$4,837,696 $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 March 31, 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. $3,807,776
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. 213,176
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. 148,542
Term note, payable in monthly installments of
$896 including interest at a rate of 6%. The
note is due January 21, 2002. 124,226
Other 39,897
----------
$5,633,617
Less current installments ( 365,730)
----------
Long-term debt $5,267,887
==========
</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 March 31, 1995 the Company was in compliance with
all provisions.
The Company also has a secured $ 5,500,000 line of credit of which
$2,778,033 was utilized at March 31, 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 Three Months Ended March 31, 1995
Sales and Earnings
Sales for the quarter ended March 31, 1995 were $5,256,980 compared to
$5,796,200 for the same period a year ago. This decrease of $539,220 is due in
part to the Company's discontinuation of the Molded Composite product line, and
in part to lagging sales of the Company's Dustcontrol equipment. Additionally,
foreign sales for the first quarter of 1995 were down from the first quarter a
year ago. Quoting activity has been heavy in recent months for the Dustcontrol
products and in our foreign markets. It is expected that sales will reflect
the increased activity beginning in the second quarter of 1995.
During the first quarter of 1995, the Company realized a net loss of
$175,553 on sales of $5,256,980. For the same period of the prior year, the
Company reported net loss of $57,272 on sales of $5,796,200. This increase in
losses, was directly attributable to the fall off in sales volume. It is
anticipated by management that market conditions will improve during the second
quarter of 1995 and likewise, improved sale volumes will result. Loss per
share for the first quarter was ($.06) and ($.02) for 1995 and 1994,
respectively. 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 March
31, 1995, consolidated inventories were $4,837,696 compared to $5,026,126 a
year ago. The decrease of $188,430 is a result of the Companies overall
efforts to reduce inventory levels and the associated carrying costs.
Interest
Interest expense amounted to approximately $225,000 and $182,000 for
the first quarter of 1995 and 1994 respectively. This increase of $43,000 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
(a) Exhibits
Exhibit
Number Description
------- -----------
27 Financial Data Schedule
(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: 5/10/95 /s/ Kai Kosanke
------------------ -------------------------------
Kai Kosanke, Treasurer
and Chief Financial Officer
Date: 5/10/95 /s/ Paul Clemo
------------------ -------------------------------
Paul Clemo
Assistant Treasurer
-11-
<PAGE> 12
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description Page
- ------- ----------- ----
<S> <C> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000099102
<NAME> TRANS-INDUSTRIES, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<EXCHANGE-RATE> 1
<CASH> 49,952
<SECURITIES> 0
<RECEIVABLES> 5,772,199
<ALLOWANCES> 0
<INVENTORY> 4,837,696
<CURRENT-ASSETS> 11,307,351
<PP&E> 11,899,169
<DEPRECIATION> 7,492,832
<TOTAL-ASSETS> 16,234,921
<CURRENT-LIABILITIES> 6,447,063
<BONDS> 5,584,329
<COMMON> 295,000
0
0
<OTHER-SE> 3,535,529
<TOTAL-LIABILITY-AND-EQUITY> 16,234,921
<SALES> 5,256,980
<TOTAL-REVENUES> 5,372,969
<CGS> 3,922,977
<TOTAL-COSTS> 1,501,686
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 224,856
<INCOME-PRETAX> (276,553)
<INCOME-TAX> (101,000)
<INCOME-CONTINUING> (175,553)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (175,553)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> (.06)
</TABLE>
