<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, 1997 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 (248) 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, 1997 was 3,072,000.
<PAGE> 2
TRANS-INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
FORM 10-Q - FOR THE QUARTER ENDED MARCH 31, 1997
INDEX
PART I. Financial Information
Item 1. FINANCIAL STATEMENTS
A. Consolidated Statements of Operations ---
Three months ended March 31, 1997 and 1996.
B. Consolidated Balance Sheets ---
March 31, 1997 and December 31, 1996.
C. Consolidated Statements of Cash Flows ---
Three months ended March 31, 1997 and 1996.
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:
--------------------------
3/31/97 3/31/96
------------ ------------
<S> <C> <C>
1. Gross sales less discounts, returns and allowances $7,989,776 $7,166,092
2. Cost of goods sold 5,038,495 4,523,557
---------- ----------
3. Gross Profit 2,951,281 2,642,535
4. Selling, general and administrative exp. 1,986,580 1,832,532
---------- ----------
5. Operating income/(loss) 964,701 810,003
6. Other (income)/ expense
Interest expense 175,723 217,489
Other income (169,090) (42,150)
---------- ----------
Total other (income)/expense 6,633 175,339
---------- ----------
7. Earnings/(loss) before income taxes 958,068 634,664
8. Income tax expense/(benefit) 337,000 211,000
---------- ----------
9. Net profit/(loss) $ 621,068 $ 423,664
========== ==========
10. Earnings per share $ .20 $ .14
========== ==========
11. Dividends per share -- --
========== ==========
</TABLE>
See Notes to Financial Statements
3
<PAGE> 4
TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
B.
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
Current Assets 3/31/97 12/31/96
(Unaudited) (Audited)
----------- ---------
<S> <C> <C>
Cash $ 169,734 $ 358,764
Accounts receivable 6,866,497 6,195,865
Inventories (Note 2) 6,479,327 6,162,592
Prepaid expenses 318,622 279,385
Deferred income taxes 373,000 373,000
----------- -----------
Total current assets 14,207,180 13,369,606
Property, Plant & Equipment, at Cost
Land 314,503 370,814
Land Improvements 126,660 126,660
Buildings 5,228,276 5,234,892
Machinery & equipment 6,660,448 6,582,016
----------- -----------
12,329,887 12,314,382
Less: accumulated
depreciation (7,873,861) (7,793,413)
----------- -----------
Net plant and equipment 4,456,026 4,520,969
----------- -----------
Other Assets
Investments in affiliates 10,000 10,000
Patents, licenses & trademarks,
net of accumulated amortization 275,773 287,267
Excess of cost of investment in
stock of subsidiary over equity in
underlying net assets of acquisition 211,711 222,854
Sundry 104,471 104,471
----------- -----------
Total assets $19,265,161 $18,515,167
=========== ===========
</TABLE>
LIABILITIES AND STOCKHOLDERS EQUITY
<TABLE>
<CAPTION>
Current Liabilities 3/31/97 12/31/96
(Unaudited) (Audited)
----------- ---------
<S> <C> <C>
Notes Payable (Note 5) $ 3,050,959 $ 2,539,142
Current installments
- Long term debt (Note 5) 202,725 250,243
Accounts payable - trade 2,513,841 2,779,171
Accrued liabilities 1,330,400 1,400,727
Income taxes 332,000 195,000
----------- -----------
Total current liabilities 7,429,925 7,164,283
Deferred income taxes - Non-current 126,000 126,000
Long term debt
Current portion shown above (Note 5) 3,890,461 3,992,566
Other non-current liabilities 313,847 310,547
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;
3,072,000 shares issued and 3,072,000
outstanding at 3/31/97 307,200 307,200
Additional paid-in capital 4,053,985 4,053,985
Retained earnings 3,182,752 2,561,684
Foreign currency translation (39,009) (1,098)
----------- -----------
7,504,928 6,921,771
----------- -----------
Total liabilities and stockholders' equity $19,265,161 $18,515,167
</TABLE> =========== ===========
See notes to Financial Statements.
4
<PAGE> 5
TRANS-INDUSTRIES, INC.
Consolidated Statements of Cash Flows
C. For the Three Months Ended March 31, 1997 and 1996
<TABLE>
<CAPTION>
Three Months Ended March 31
----------------------------
1997 1996
----------- -----------
(Unaudited) (Unaudited)
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 621,068 $ 423,664
Adjustments to reconcile net income (loss)
to net cash provided by operations:
Depreciation/Amortization 199,573 168,327
Decrease (increase) in accts. receiv. (670,632) (444,748)
Decrease (increase) in inventory (316,735) 38,800
Decrease (increase) in prepaid exp. (43,237) 15,269
Increase (decrease) in accts. payable (265,330) (245,799)
Increase (decrease) in accr. liab. (70,327) 37,415
Increase (decrease) in income taxes 137,000 (209,000)
(Gain) loss on sale of fixed assets (148,689) (30,730)
--------- ---------
Net Cash Provided (Used) by Operations (557,309) (246,802)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (164,304) (189,890)
Proceeds from sale of property and equipment 205,000 47,000
--------- ---------
Net Cash Provided (Used) by Investing 40,696 (142,890)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (repayment) of long-term
borrowings (146,323) (174,252)
Net proceeds (payment) of credit line 511,817 617,101
--------- ---------
Net Cash Provided (Used) by Financing 365,494 442,849
Foreign currency translation (37,911) 708
--------- ---------
Net Increase in Cash (189,030) 53,865
Cash at beginning of year 358,764 109,123
--------- ---------
Cash at end of quarter $ 169,734 $ 162,988
========= =========
Supplemental Disclosures:
Interest paid $ 165,312 $ 191,658
Income taxes (refunded) paid, net $ 200,000 $ 420,000
</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, 1996.
2. Inventories
The major components of inventories are:
<TABLE>
<CAPTION>
3/31/97 12/31/96
---------- ----------
<S> <C> <C>
Raw Materials $3,629,512 $3,213,861
Work in Process 1,007,920 976,993
Finished Goods 1,841,895 1,971,738
---------- ----------
$6,479,327 $6,162,592
========== ==========
</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, 1997 consisted of the following:
<TABLE>
<S> <C>
Trans-Industries, Inc., $3,840,000 term note, payable in $3,580,333
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 181,208
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 214,284
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 $896 117,361
including interest at a rate of 6%. The note is due
January 21, 2002.
----------
4,093,186
Less current installments (202,725)
----------
Long-term debt $3,890,461
==========
</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, 1997 the Company was in
compliance with all provisions.
The Company also has a secured $6,500,000 line of credit of which
$3,050,959 was utilized at March 31, 1997. 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. Management
expects to renew this credit line in the second quarter of 1997.
6. Stock Changes
In December of 1996, 28,000 shares that were held as Treasury Stock were
retired.
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, 1997
Sales and Earnings
Sales for the quarter ended March 31, 1997 were $7,989,776 compared to
$7,166,092 for the same period a year ago. This increase of $823,684 is
primarily attributable to an increase in sales of the Company's electronic
destination signs.
During the first quarter of 1997, the Company realized a net profit of
$621,068 on sales of $7,989,776. For the same period of the prior year, the
Company reported net profit of $423,664 on sales of $7,166,092. This increase
in net profit of $197,404 can be attributed to increased volume and the sale of
approximately seven acres of excess land located in Waterford, Michigan. Net
income realized on the land sale approximated $99,000 and has been reported as
"other income." Net profit per share for the first quarter was $.20 and $.14
for 1997 and 1996, respectively. Net profit per share was computed on the
adjusted weighted average number of shares outstanding during the quarter for
1997 and 1996, which were 3,073,250 and 3,074,500, respectively.
Inventories
Inventory valuation is based upon the lower of cost or market. At March
31, 1997, consolidated inventories were $6,479,327 compared to $5,935,617 a
year ago. This increase of $543,710 is to accommodate the growth in sales
volume.
Interest
Interest expense amounted to approximately $176,000 and $217,000 for the
first quarter of 1997 and 1996, respectively. This decrease of $41,000 was the
result of average debt levels being less during the first quarter of 1997
compared to 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 1997. 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: May 8, 1997 /s/ Kai Kosanke
------------------------ ---------------------------
Kai Kosanke, Treasurer
and Chief Financial Officer
Date: May 8, 1997 /s/ Paul Clemo
------------------------ ---------------------------
Paul Clemo
Assistant Treasurer
11
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000099102
<NAME> TRANS-INDUSTRIES, INC
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 169,734
<SECURITIES> 0
<RECEIVABLES> 6,866,497
<ALLOWANCES> 0
<INVENTORY> 6,479,327
<CURRENT-ASSETS> 14,207,180
<PP&E> 12,329,887
<DEPRECIATION> 7,873,861
<TOTAL-ASSETS> 19,265,161
<CURRENT-LIABILITIES> 7,429,925
<BONDS> 3,890,461
0
0
<COMMON> 307,200
<OTHER-SE> 7,197,728
<TOTAL-LIABILITY-AND-EQUITY> 19,265,161
<SALES> 7,989,776
<TOTAL-REVENUES> 8,158,866
<CGS> 5,038,495
<TOTAL-COSTS> 1,986,580
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 175,723
<INCOME-PRETAX> 958,068
<INCOME-TAX> 337,000
<INCOME-CONTINUING> 621,068
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 621,068
<EPS-PRIMARY> .20
<EPS-DILUTED> 0
</TABLE>
