<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, 2000 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 S. 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, 2000 was 3,139,737.
<PAGE> 2
TRANS-INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
FORM 10-Q - FOR THE QUARTER ENDED MARCH 31, 2000
INDEX
PART I. Financial Information
Item 1. FINANCIAL STATEMENTS
A. Consolidated Statements of Operations ---
Three months ended March 31, 2000 and 1999.
B. Consolidated Statements of Comprehensive Income/(Loss) ---
Three months ended March 31, 2000 and 1999.
C. Consolidated Balance Sheets ---
March 31, 2000 and December 31, 1999.
D. Consolidated Statements of Cash Flows ---
Three months ended March 31, 2000 and 1999.
E. 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:
-------------------
3/31/00 3/31/99
------- -------
<S> <C> <C>
1. Gross sales less discounts, returns and allowances $11,529,341 $8,910,832
2. Cost of goods sold 8,504,035 6,247,649
----------- -----------
3. Gross Profit 3,025,306 2,663,183
4. Selling, general and administrative exp. 2,842,950 2,450,365
----------- -----------
5. Operating income 182,356 212,818
6. Other (income)/ expense
Interest expense 310,002 184,214
Other income (8,084) (51,095)
----------- -----------
Total other (income)/expense 301,918 133,119
----------- -----------
7. Earnings/ (loss) before income taxes (119,562) 79,699
8. Income tax expense/ (benefit) (4,000) 58,000
----------- -----------
9. Net earnings/ (loss) $ (115,562) $ 21,699
=========== ==========
10. Earnings per share (Note 6):
Basic $ (.04) $ .01
Diluted $ (.04) $ .01
=========== ==========
</TABLE>
See Notes to Financial Statements
3
<PAGE> 4
TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
B.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
QUARTER ENDED MARCH 31, 2000 AND 1999
<TABLE>
<CAPTION>
2000 1999
------------ ------------
<S> <C> <C>
Net earnings/ (loss) $ (115,562) $ 21,699
Other comprehensive income (loss)
Equity adjustment from foreign
currency translation (32,759) (30,581)
------------ ------------
Comprehensive income/ (loss) $ (148,321) $ (8,882)
============ ============
</TABLE>
See Notes to Financial Statements
4
<PAGE> 5
TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
C.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
------
Current Assets
- --------------
3/31/00 12/31/99
(Unaudited) (Audited)
----------- ---------
<S> <C> <C>
Cash $ 6,433 $ 163,953
Accounts receivable 11,153,713 10,489,187
Inventories (Note 2) 14,268,991 12,799,521
Prepaid expenses 752,935 382,292
Deferred income taxes 837,978 830,000
----------- ------------
Total current assets 27,020,050 24,664,953
Property, Plant & Equipment, at Cost
Land 306,881 306,881
Land Improvements 126,660 126,660
Buildings 5,950,111 5,905,639
Machinery & equipment 12,261,704 11,754,635
----------- ------------
18,645,356 18,093,815
Less: accumulated
depreciation (11,067,881) (10,775,158)
----------- ------------
Net plant and equipment 7,577,475 7,318,657
----------- ------------
Other Assets
- ------------
Investments in affiliates 51,196 51,196
Patents, licenses & trademarks,
net of accumulated amortization 118,351 132,568
Excess of cost of investment in
stock of subsidiary over equity in
underlying net assets of acquisition 1,613,923 1,654,374
Sundry 32,537 12,079
----------- ------------
Total assets $36,413,532 $ 33,833,827
=========== ============
<CAPTION>
LIABILITIES AND STOCKHOLDERS EQUITY
3/31/00 12/31/99
Current Liabilities (Unaudited) (Audited)
------------------- ----------- ---------
<S> <C> <C>
Notes Payable (Note 5) $10,279,369 $8,504,120
Current installments
- Long term debt (Note 5) 559,825 561,940
Accounts payable - trade 6,295,230 4,367,123
Accrued liabilities 1,470,688 2,028,962
Income taxes (94,077) 207,316
----------- -----------
Total current liabilities 18,511,035 15,669,461
Deferred income taxes - Non-current 269,000 269,000
Long term debt
--------------
Current portion shown above (Note 5) 3,804,986 3,923,634
Other non-current liabilities 346,712 341,612
Stockholders' Equity
--------------------
Preferred stock of $1.00 par value
per share - authorized 500,000
shared; none issued -- --
Common stock of $.10 par value per
share - authorized 10,000,000 shares;
3,139,737 shares issued and 3,139,737
outstanding at 3/31/00 313,974 313,974
Additional paid-in capital 4,072,081 4,072,081
Retained earnings 9,142,187 9,257,749
Foreign currency translation (46,443) (13,684)
---------- -----------
13,481,799 13,630,120
---------- -----------
Total liabilities and stockholders' $36,413,532 $ 33,833,827
equity
=========== ============
</TABLE>
See Notes to Financial Statements.
5
<PAGE> 6
TRANS-INDUSTRIES, INC.
Consolidated Statements of Cash Flows
D. For the Three Months Ended March 31, 2000 and 1999
<TABLE>
<CAPTION>
Three Months Ended March 31
---------------------------
2000 1999
---- ----
(Unaudited) (Unaudited)
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
- ------------------------------------
Net earnings/ (loss) $ (115,562) $ 21,699
Adjustments to reconcile net earnings/ (loss)
to net cash provided by operations:
Depreciation/Amortization 326,933 267,074
Decrease (increase) in accts. receiv. (664,526) (63,047)
Decrease (increase) in inventory (1,469,470) (726,725)
Decrease (increase) in prepaid exp. (370,643) (146,044)
Increase (decrease) in accts. payable 1,928,107 (203,735)
Increase (decrease) in accr. liab. (558,274) (173,689)
Increase (decrease) in income taxes (301,393) (555,723)
Other -0- (54,880)
------------ ----------
Net Cash Provided (Used) by Operations (1,224,828) (1,635,070)
CASH FLOWS FROM INVESTING ACTIVITIES
- ------------------------------------
Purchase of fixed assets (551,541) (357,453)
Acquisition of Business -0- (1,362,854)
------------ ----------
Net Cash Provided (Used) by Investing (551,541) (1,720,307)
CASH FLOWS FROM FINANCING ACTIVITIES
- ------------------------------------
Net increase (repayment) of long-term
borrowings (123,641) (128,849)
Net proceeds (payment) of credit line 1,775,249 3,386,614
------------ ----------
Net Cash Provided (Used) by Financing 1,651,608 3,257,765
Foreign currency translation (32,759) (30,581)
------------ ----------
Net decrease in cash (157,520) (128,193)
Cash at beginning of year 163,953 193,579
------------ ----------
Cash at end of quarter $ 6,433 $ 65,386
============ ==========
Supplemental Disclosures:
Interest paid $ 283,353 $ 160,537
Income taxes paid $ 300,000 $ 610,000
</TABLE>
See Notes to Financial Statements
6
<PAGE> 7
E. 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, 1999.
2. Inventories
The major components of inventories are:
<TABLE>
<CAPTION>
3/31/00 12/31/99
------- --------
<S> <C> <C>
Raw Materials $6,198,292 $4,993,075
Work in Process 4,597,409 4,592,891
Finished Goods 3,473,290 3,213,555
----------- -----------
$14,268,991 $12,799,521
=========== ===========
</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.
7
<PAGE> 8
E. TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. Long-Term Debt
Long-term debt at March 31, 2000 consisted of the following:
<TABLE>
<S> <C>
Trans-Industries, Inc., $3,840,000 term note, payable in $ 3,027,324
monthly installments of $38,362 which includes interest
at bank's prime lending rate, and a balloon payment of
$1,850,207 in October 2004. The note is secured by
substantially all the assets of Trans-Industries, Inc.
and subsidiaries.
Term note, payable in monthly installments of $896 105,216
including interest at a rate of 6%. The note is due
January 21, 2002.
Term note, payable in monthly installments of $16,667 plus interest at the
bank's prime lending rate less 1/4 point. Note is due July 1, 2004. 866,667
Other 365,604
-----------
4,364,811
Less current installments (559,825)
-----------
Long-term debt $ 3,804,986
===========
</TABLE>
The Trans-Industries, Inc. term loan agreement contains restrictive
provisions relating principally to the maintenance of working capital,
tangible net worth, and ratio of debt to earnings. At March 31, 2000 the
Company was not in compliance and received a waiver from the bank.
The Company also has an unsecured $12,000,000 line of credit of which
$10,279,369 was utilized at March 31, 2000. Interest is charged at the
bank's prime lending rate, less 1/4 point. This line of credit expires on
July 1, 2000.
8
<PAGE> 9
TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. Earnings Per Share
For the quarter ended March 31, 2000, all options outstanding have been
excluded from the computation of diluted earnings per share as the effect
would be anti-dilutive.
The following is a reconciliation of the numerator and denominator of the
basic and diluted earnings per share computations.
<TABLE>
<CAPTION>
EARNINGS SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ------
<S> <C> <C> <C>
Qtr. ended March 31, 1999
Basic earnings per share:
Earnings available to common
stockholders $ 21,699 3,138,339 $ .01
Effect of dilutive securities
Stock options -- 8,090 .00
--------- ---------- ---------
Diluted earnings per share:
Earnings available to stockholders
plus assumed conversions $ 21,699 3,146,429 $ .01
========= ========== =========
</TABLE>
7. Segment Information
Financial information summarized by geographic location is as follows:
<TABLE>
<CAPTION>
3/31/00 3/31/99
--------------------------------------- ----------------------------------------
LONG- LONG-
LIVED LIVED
REVENUES ASSETS REVENUES ASSETS
-------- ------ -------- ------
<S> <C> <C> <C> <C>
United States $9,427,847 $7,465,424 $6,524,400 $6,931,685
United Kingdom 469,379 1,928,058 775,230 943,039
Canada 1,298,052 - 1,021,093 -
Other 334,063 - 590,109 -
Total $11,529,341 $9,393,482 $8,910,832 $7,874,724
</TABLE>
9
<PAGE> 10
TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. Business Acquisition
In February, 1999, Trans-Industries, Inc. acquired 100% of the outstanding
common stock of Plastech Transparencies, Inc., a California based company
specializing in the design and manufacture of glass and window system
technology, in a transaction accounted for as a stock purchase. Plastech
Transparencies, Inc. has served the replacement and conversion market in
portions of the West Coast transit industry since 1991. Plastech has become
part of Trans-Industries' Transmatic Group of Companies, operating as a
wholly owned subsidiary of Transmatic, Inc. and changed its name to
TransGlass, Inc.
10
<PAGE> 11
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, 2000
Sales and Earnings
Sales for the quarter ended March 31, 2000 were $11,529,341 compared to
$8,910,832 for the same period a year ago. This increase of $2,618,509 is
attributed to increased demand for the Company's lighting products, improved
production throughput of the Company's variable message signs, and an increase
in bus window systems and glass compared to the same period a year ago.
During the first quarter of 2000, the Company recorded a net loss of $115,562 on
sales of $11,529,341. For the same period of the prior year, the Company
reported a net profit of $21,699 on sales of $8,910,832 The Company's
electronics and lighting operations, showed improved operating results over the
same period a year ago. However, this improvement was more than offset by higher
losses incurred at TransGlass, Inc. the producer of bus windows systems. It is
anticipated that as TransGlass "grows" into their new facility and cost
structure, coupled with increase labor efficiencies, operating profits will
start to be realized in the third quarter of 2000.
Inventories
Inventory valuation is based upon the lower of cost or market. At March 31,
2000, consolidated inventories were $14,268,991 compared to $11,831,454 a year
ago. This increase of $2,437,537 is to accommodate increased sales compared to a
year ago, and is concentrated in raw materials. It also reflects approximately
$350,000 of finished goods for a customer who was on credit hold at 3/31/2000.
Interest
Interest expense amounted to approximately $310,000 and $184,000 for the first
quarter of 2000 and 1999, respectively. This increase of $126,000 was the result
of higher debt levels in 2000, plus increased interest costs tied to the bank's
prime rate.
Financial Condition
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.
11
<PAGE> 12
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDING
The Company was the plaintiff in a patent infringement lawsuit filed in the
Federal District Court for the Eastern District of Michigan, the Southern
Division. On April 9, 1998, the District Court awarded the Company $3,023,773 in
damages and $1,119,588 in interest. On May 1, 1998, the defendant paid the
damages awarded to the Company and appealed the interest award. On April 29,
1999, the Court of Appeals, consisting of a three judge panel, ruled in favor of
the defendant, thus allowing the interest calculation to be computed using an
interest rate of approximately 1/2 the original calculation. In June of 1999,
the court again ruled in favor of the defendant. In August, 1999 a final
interest award of $719,153 was paid to the Company thereby concluding the suit.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(b) Form 8K dated May 4, 1998; receipt of damage award and Declaration of
Special Dividend.
12
<PAGE> 13
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 11, 1999 /s/ Kai Kosanke
---------------------------
Kai Kosanke, Treasurer
and Chief Financial Officer
Date: May 11, 1999 /s/ Paul Clemo
---------------------------
Paul Clemo
Assistant Treasurer
13
<PAGE> 14
Exhibit Index
-------------
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000099102
<NAME> TRANS INDUSTRIES INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 6,433
<SECURITIES> 0
<RECEIVABLES> 11,153,713
<ALLOWANCES> 0
<INVENTORY> 14,268,991
<CURRENT-ASSETS> 27,020,050
<PP&E> 18,645,356
<DEPRECIATION> 11,067,881
<TOTAL-ASSETS> 36,413,532
<CURRENT-LIABILITIES> 18,511,035
<BONDS> 3,804,986
0
0
<COMMON> 313,974
<OTHER-SE> 13,167,825
<TOTAL-LIABILITY-AND-EQUITY> 36,413,532
<SALES> 11,529,341
<TOTAL-REVENUES> 11,537,425
<CGS> 8,504,035
<TOTAL-COSTS> 2,842,950
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 310,002
<INCOME-PRETAX> (119,562)
<INCOME-TAX> (4,000)
<INCOME-CONTINUING> (115,562)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (115,562)
<EPS-BASIC> (.04)
<EPS-DILUTED> (.04)
</TABLE>
