<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, 1996 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 September 30, 1996 was 3,072,000.
<PAGE> 2
TRANS-INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
FORM 10-Q - FOR THE QUARTER ENDED SEPTEMBER 30, 1996
INDEX
PART I. Financial Information
Item 1. FINANCIAL STATEMENTS
A. Consolidated Statements of Operations ---
Three months ended September 30, 1996 and 1995.
Nine months ended September 30, 1996 and 1995.
B. Consolidated Balance Sheets ---
September 30, 1996 and December 31, 1995.
C. Consolidated Statements of Cash Flows ---
Nine months ended September 30, 1996 and 1995.
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>
For 3 Months Ended: For 9 Months Ended:
-------------------------- --------------------------
9/30/96 9/30/95 9/30/96 9/30/95
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
1. Gross sales less discounts, returns and allowances $7,217,902 $6,549,057 $21,734,670 $17,738,266
2. Cost of goods sold 4,681,411 4,315,931 13,988,564 12,306,202
---------- ---------- ----------- -----------
3. Gross Profit 2,536,491 2,233,126 7,746,106 5,432,064
4. Selling, general and administrative exp. 1,873,857 1,526,453 5,557,173 4,404,330
---------- ---------- ----------- -----------
5. Operating income/(loss) 662,634 706,673 2,188,933 1,027,734
6. Other (income)/ expense
Interest expense 193,909 238,418 615,661 702,217
Other income (20,045) (85) (81,428) (125,009)
---------- ---------- ----------- -----------
Total other (income)/expense 173,864 238,333 534,233 577,208
---------- ---------- ----------- -----------
7. Earnings/(loss) before income taxes 488,770 468,340 1,654,700 450,526
8. Income tax expense/(benefit) 173,000 156,000 566,000 130,000
---------- ---------- ----------- -----------
9. Net profit/(loss) $315,770 $312,340 $1,088,700 $ 320,526
========== ========== =========== ===========
10. Earnings per share $.10 $.11 $.36 $.11
========== ========== =========== ===========
11. Dividends per share -- -- -- --
========== ========== =========== ===========
</TABLE>
See Notes to Financial Statements
3
<PAGE> 4
TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
B. CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
Current Assets 9/30/96 12/31/95
(Unaudited) ( Audited )
--------- ------------
<S> <C> <C>
Cash $ 154,035 $ 109,123
Accounts receivable 6,474,348 6,846,677
Inventories (Note 2) 5,787,644 5,974,417
Prepaid expenses 141,438 311,866
Deferred income taxes 316,000 316,000
----------- -----------
Total current assets 12,873,465 13,558,083
Property, Plant & Equipment, at Cost
Land 370,813 382,519
Land improvements 126,660 126,660
Buildings 5,231,670 5,298,437
Machinery & equipment 6,287,093 6,056,769
----------- -----------
12,016,236 11,864,385
Less: accumulated
depreciation (7,663,675) (7,758,344)
----------- -----------
Net plant and equipment 4,352,561 4,106,041
----------- -----------
Other Assets
Investments in affiliates 10,000 10,000
Patents, licenses & trademarks,
net of accumulated amortization 36,752 34,159
Excess of cost of investment in
stock of subsidiary over equity in
underlying net assets of acquisition 233,997 267,425
Sundry 135,302 172,331
----------- ----------
Total assets $17,642,077 $18,148,039
=========== ===========
<CAPTION>
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities 9/30/96 12/31/95
(Unaudited) ( Audited )
------------- ------------
<S> <C> <C>
Notes payable (Note 5) $ 3,339,797 $ 2,981,788
Current installments
- Long term debt (Note 5) 196,545 680,233
Accounts payable - trade 1,886,160 3,101,956
Accrued liabilities 1,357,061 1,049,010
Income taxes 8,000 423,000
----------- -----------
Total current liabilities 6,787,563 8,235,987
Deferred Income Taxes - Non-current 223,000 223,000
Long term debt -
Current portion shown above (Note 5) 4,138,176 4,271,314
Other non-current liabilities 325,619 331,364
Stockholders' Equity
Preferred stock of $1.00 par value
per share - authorized 500,000
shares; none issued -- --
Common stock of $.10 par value per share
- authorized 10,000,000 shares;
3,100,000 shares issued and
3,072,000 at 9/30/96 310,000 310,000
Treasury Stock ( 2,800) ( 2,300)
Additional paid-in capital 4,053,986 4,081,546
Retained earnings 1,927,625 838,926
Foreign currency translation ( 121,092) ( 141,798)
--------- ---------
6,167,719 5,086,374
--------- ---------
Total liabilities and
stockholders' equity $17,642,077 $18,148,039
=========== ===========
</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, 1996 and 1995
<TABLE>
<CAPTION>
Nine Months Ended September 30
---------------------------------
1996 1995
---------------- ---------------
( Unaudited) ( Unaudited)
---------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income (loss) $ 1,088,700 $ 320,526
Adjustments to reconcile net income (loss)
to net cash provided by operations:
Depreciation/Amortization 508,555 488,637
Decrease (increase) in accts. receiv. 372,329 ( 1,733,463)
Decrease (increase) in inventory 186,773 ( 1,019,836)
Decrease (increase) in prepaid exp. 170,428 ( 146,322)
Increase (decrease) in accts. payable ( 1,215,796) 382,634
Increase (decrease) in accr. liab. 308,051 77,596
Increase (decrease) in income taxes ( 415,000) 130,000
Disposal of fixed assets 10,228 45,000
(Gain) loss on sale of fixed assets ( 31,630) ( 7,338)
----------- -----------
Net Cash Provided (Used) by Operations 982,638 ( 1,462,566)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets ( 712,810) ( 142,475)
Proceeds from sale of property and equipment 47,000 75,000
----------- -----------
Net Cash Provided (Used) by Investing ( 665,810) ( 67,475)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (repayment) of long-term
borrowings ( 622,571) ( 174,703)
Net proceeds (payment) of credit line 358,009 1,768,741
Purchase of Treasury Stock ( 28,060) -0-
----------- -----------
Net Cash Provided (Used) by Financing ( 292,622) 1,594,038
Foreign currency translation 20,706 7,623
----------- -----------
Net Increase in Cash 44,912 71,620
Cash at beginning of year 109,123 27,739
----------- -----------
Cash at end of quarter $ 154,035 $ 99,359
=========== ===========
Supplemental Disclosures:
Interest paid $ 564,619 $ 612,054
Income taxes (refunded) paid, net $ 981,000 $ -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, 1995.
2. Inventories
The major components of inventories are:
<TABLE>
<CAPTION>
9/30/96 12/31/95
---------- ----------
<S> <C> <C>
Raw Materials $3,396,402 $3,860,239
Work in Process 801,219 513,525
Finished Goods 1,590,023 1,600,653
---------- ----------
$5,787,644 $5,974,417
========== ==========
</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, 1996 consisted of the following:
Trans-Industries, Inc., $3,840,000 term note, payable in $3,654,720
monthly installments of $40,496 which
includes interest at 1% over the bank's prime
lending rate, and a balloon payment of
$3,179,777 in October 1999. The note is
secured by substantially all the assets of
Trans-Industries, Inc. and subsidiaries.
Transmatic Europe Ltd., mortgage note, payable in monthly 188,619
installments of $890 plus interest at 9.99%.
The mortgage is secured by certain property
and is due August 9, 2003.
Trans-Industries, Inc., $300,000 convertible subordinated 257,142
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.
Term note, payable in monthly installments of $3,229, 87,191
including interest at 1.25% above the bank's
prime lending rate. The note is due January
1, 1999.
Term note, payable in monthly installments of $896 117,383
including interest at a rate of 6%.
The note is due January 21, 2002.
Other 29,666
-----------
4,334,721
Less current installments (196,545)
-----------
Long-term debt $4,138,176
===========
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, 1996 the Company was in
compliance with all provisions.
The Company also has a secured $6,500,000 line of credit of which
$3,339,797 was utilized at September 30, 1996. Interest is charged at
3/4% over the bank's prime lending rate. This line of credit expires on
July 1, 1997. The line is secured by substantially all of the assets of
Trans-Industries, Inc. and its domestic subsidiaries.
6. Stock Changes
In July of 1996, 5000 shares of stock were repurchased and are currently
being held as Treasury Stock.
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, 1996
Sales and Earnings
Sales for the quarter ended September 30, 1996 were $7,217,902 compared to
$6,549,057 for the same period a year ago. This increase of $668,845 is
primarily attributable to an increase in sales of the Company's electronic
destination signs for use on intercity transit buses.
During the third quarter of 1996, the Company realized a net profit of
$315,770 on sales of $7,217,902. For the same period of the prior year, the
Company reported net profit of $312,340 on sales of $6,549,057. This slight
increase of $3,430.00 on a higher sales volume was depressed due to a final
write down of a receivable in the third quarter of 1996 which amounted to
$113,000.00 pre tax. Profit/(loss) per share for the third quarter was $.10
and $.11 for 1996 and 1995, respectively. Profit/(loss) per share was computed
on the adjusted weighted average number of shares outstanding during the
quarter for 1996 and 1995, which were 3,064,500 and 2,927,000, respectively.
Inventories
Inventory valuation is based upon the lower of cost or market.
Comparatively, inventory levels remained relatively constant. At September 30,
1996, consolidated inventories were $5,787,644 compared to $5,837,661 a year
ago.
Interest
Interest expense amounted to approximately $194,000 and $238,000 for the
third quarter of 1996 and 1995 respectively. This decrease of $44,000 was the
result of slightly lower interest rates in 1996.
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. During 1994, the defendant appealed
the case based on the lower courts interpretation of the law. 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 infringement by equivalents. Further the court of appeals remanded
the case back to the Federal District Court for further determination of
damages. A final outcome is expected to be reached in 1996. Because this
decision can be further appealed by the defendant, the ultimate award to the
Company will be recorded in the financial statements when realized.
Additionally, any award received by the Company will be net of certain
contingent legal fees related to the lawsuit.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(b) Form 8K dated April 19, 1995, and Form 8K/A dated May 23, 1995; 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: 11/5/96 /s/ Kai Kosanke
---------------- -----------------------------
Kai Kosanke, Treasurer
and Chief Financial Officer
Date: 11/5/96 /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-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 154,035
<SECURITIES> 0
<RECEIVABLES> 6,474,348
<ALLOWANCES> 0
<INVENTORY> 5,787,644
<CURRENT-ASSETS> 12,873,465
<PP&E> 12,016,236
<DEPRECIATION> 7,663,675
<TOTAL-ASSETS> 17,642,077
<CURRENT-LIABILITIES> 6,787,563
<BONDS> 4,138,176
0
0
<COMMON> 310,000
<OTHER-SE> 5,857,719
<TOTAL-LIABILITY-AND-EQUITY> 17,642,077
<SALES> 21,734,670
<TOTAL-REVENUES> 21,816,098
<CGS> 13,988,564
<TOTAL-COSTS> 5,557,173
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 615,661
<INCOME-PRETAX> 1,654,700
<INCOME-TAX> 566,000
<INCOME-CONTINUING> 1,088,700
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,088,700
<EPS-PRIMARY> .36
<EPS-DILUTED> .00
</TABLE>
