<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 June 30, 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 June 30, 2000 was 3,139,737.
<PAGE> 2
TRANS-INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
FORM 10-Q - FOR THE QUARTER ENDED JUNE 30, 2000
INDEX
PART I. Financial Information
Item 1. FINANCIAL STATEMENTS
A. Consolidated Statements of Earnings ---
Three months ended June 30, 2000 and 1999.
Six months ended June 30, 2000 and 1999.
B. Consolidated Statements of Comprehensive Income / (Loss)
Six months ended June 30, 2000 and 1999.
C. Consolidated Balance Sheets ---
June 30, 2000 and December 31, 1999.
D. Consolidated Statements of Cash Flows ---
Six months ended June 30, 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
CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
A.
<TABLE>
<CAPTION>
For 3 Months Ended: For 6 Months Ended:
---------------------------- ----------------------------
6/30/00 6/30/99 6/30/00 6/30/99
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
1. Gross sales less discounts, returns and allowances $ 12,748,067 $ 9,517,217 $ 24,277,408 $ 18,428,049
2. Cost of goods sold 9,310,468 6,732,713 17,814,503 12,980,362
------------ ------------ ------------ ------------
3. Gross Profit 3,437,599 2,784,504 6,462,905 5,447,687
4. Selling, general and administrative exp. 2,795,982 2,520,054 5,638,932 4,970,419
------------ ------------ ------------ ------------
5. Operating income/(loss) 641,617 264,450 823,973 477,268
6. Other (income)/expense
Interest expense 349,675 231,434 659,677 415,648
Other income (8,145) (14,051) (16,229) (65,146)
------------ ------------ ------------ ------------
Total other (income)/expense 341,530 217,383 643,448 350,502
------------ ------------ ------------ ------------
7. Earnings before income taxes 300,087 47,067 180,525 126,766
8. Income tax expense 144,000 35,000 140,000 93,000
------------ ------------ ------------ ------------
9. Net profit $ 156,087 $ 12,067 $ 40,525 $ 33,766
============ ============ ============ ============
10. Earnings per share: (note 6)
Basic $ .05 $ .00 $ .01 $ .01
Diluted $ .05 $ .00 $ .01 $ .01
============ ============ ============ ============
11. Dividends per share $ .00 $ .00 $ .00 $ .00
============ ============ ============ ============
</TABLE>
See Notes to Financial Statements
3
<PAGE> 4
TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
B.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME / (LOSS)
SIX MONTHS ENDED JUNE 30, 2000 AND 1999
<TABLE>
<CAPTION>
2000 1999
------------ ------------
<S> <C> <C>
Net earnings $ 40,525 $ 33,766
Other comprehensive income (loss)
Equity adjustment from foreign
currency translation (95,237) 13,707
------------- ------------
Comprehensive income / (Loss) $ (54,712) $ 47,473
============= ============
</TABLE>
See Notes to Financial Statements
4
<PAGE> 5
TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
C.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
Current Assets 6/30/00 12/31/99
(Unaudited) (Audited)
------------ ------------
<S> <C> <C>
Cash $ 1,513 $ 163,953
Accounts receivable 13,108,557 10,489,187
Inventories (Note 2) 13,950,505 12,799,521
Prepaid expenses 676,775 382,292
Deferred income taxes 837,978 830,000
------------ ------------
Total current assets 28,575,328 24,664,953
Property, Plant & Equipment, at Cost
Land 306,881 306,881
Land Improvements 126,660 126,660
Buildings 5,953,968 5,905,639
Machinery & equipment 12,578,288 11,754,635
------------ ------------
18,965,797 18,093,815
Less: accumulated
depreciation (11,370,352) (10,775,158)
------------ ------------
Net plant and equipment 7,595,445 7,318,657
------------ ------------
Other Assets
Investments in affiliates 51,196 51,196
Patents, licenses & trademarks,
net of accumulated amortization 104,134 132,568
Excess of cost of investment in
stock of subsidiary over equity in
underlying net assets of acquisition 1,573,472 1,654,374
Sundry 32,912 12,079
------------ ------------
Total assets $ 37,932,487 $ 33,833,827
============ ============
<CAPTION>
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities 6/30/00 12/31/99
(Unaudited) (Audited)
------------ ------------
<S> <C> <C>
Notes Payable (Note 5) $ 10,632,143 $ 8,504,120
Current installments
- Long term debt (Note 5) 1,575,891 561,940
Accounts payable - trade 5,899,674 4,367,123
Accrued liabilities 1,872,687 2,028,962
Income taxes 54,392 207,316
------------ ------------
Total current liabilities 20,034,787 15,669,461
Deferred income taxes - Non-current 269,000 269,000
Long term debt
Current portion shown above (Note 5) 3,701,480 3,923,634
Other non-current liabilities 351,812 341,612
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 6/30/00 313,974 313,974
Additional paid-in capital 4,072,081 4,072,081
Retained earnings 9,298,274 9,257,749
Foreign currency translation (108,921) (13,684)
------------ ------------
13,575,408 13,630,120
------------ ------------
Total liabilities and stockholders' equity $ 37,932,487 $ 33,833,827
============ ============
</TABLE>
See Notes to Financial Statements.
5
<PAGE> 6
TRANS-INDUSTRIES, INC.
Consolidated Statements of Cash Flows
D. For the Six Months Ended June 30, 2000 and 1999
<TABLE>
<CAPTION>
Six Months Ended June 30
2000 1999
---- ----
(Unaudited) (Unaudited)
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 40,525 $ 33,766
Adjustments to reconcile net income
to net cash provided by operations:
Depreciation/Amortization 704,729 648,880
Decrease (increase) in accts. receiv. (2,619,370) (231,708)
Decrease (increase) in inventory (1,150,984) (887,486)
Decrease (increase) in prepaid exp. (315,515) (9,608)
Increase (decrease) in accts. payable 1,532,551 769,653
Increase (decrease) in accr. liab. (156,275) (398,788)
Increase (decrease) in income taxes (152,924) (812,470)
Other -0- (153,173)
----------- -----------
Net Cash Provided (Used) by Operations (2,117,263) (1,040,934)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (879,960) (1,346,983)
Acquisition of Business -0- (1,362,854)
----------- -----------
Net Cash Provided (Used) by Investing (879,960) (2,709,837)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (repayment) of long-term
borrowings 801,997 1,113,156
Net proceeds (payment) of credit line 2,128,023 2,729,275
----------- -----------
Net Cash Provided (Used) by Financing 2,930,020 3,842,431
Foreign Currency Translation (95,237) 13,707
----------- -----------
Net Increase (Decrease) In Cash (162,440) 105,367
Cash at beginning of year 163,953 193,579
----------- -----------
Cash at end of quarter $ 1,513 $ 298,946
=========== ===========
Supplemental Disclosures:
Interest paid $ 613,064 $ 384,919
Income taxes paid $ 300,000 $ 900,578
</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>
6/30/00 12/31/99
------------ -----------
<S> <C> <C>
Raw Materials $ 6,103,039 $ 4,993,075
Work in Process 4,552,507 4,592,891
Finished Goods 3,294,959 3,213,555
------------ -----------
$13,950,505 $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
<TABLE>
<S> <C>
Long-term debt at June 30, 2000 consisted of the following:
Trans-Industries, Inc., $3,840,000 term note, payable in $2,981,693
monthly installments of $39,036 which includes interest at
bank's prime lending rate, and a balloon payment of $1,723,141
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 $896 104,102
including interest at a rate of 6%. The note is due January 21,
2002.
Term note, payable in monthly installments of $16,667 816,667
plus interest at bank's prime lending rate less 1/4 point.
The note is due July 1, 2004.
Term note, due on demand, interest at banks prime 1,000,000
lending rate less 1/4 point.
Other 374,909
----------
5,277,371
Less current installments (1,575,891)
----------
Long-term debt $3,701,480
==========
</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 June 30, 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
$10,632,143 was utilized at June 30, 2000. Interest is charged at the
bank's prime lending rate, less 1/4 point. This line of credit expires on
July 1, 2001.
8
<PAGE> 9
TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. Earnings Per Share
For the quarter ended June 30, 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 June 30, 1999
Basic earnings per share:
Earnings available to common
stockholders $ 12,067 3,139,500 $ .00
Effect of dilutive securities
Stock options -- 6,586 .00
-------- ---------- ---------
Diluted earnings per share:
Earnings available to stockholders
plus assumed conversions $ 12,067 3,146,086 $ .00
======== ========== =========
</TABLE>
9
<PAGE> 10
TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. Segment Information
The Company operates in one market segment, the transportation industry.
Financial information summarized by geographic is as follows:
<TABLE>
<CAPTION>
6/30/00 6/30/99
----------------------------------------- -----------------------------------------
LONG- LONG-
LIVED LIVED
REVENUES ASSETS REVENUES ASSETS
-------- ------ -------- ------
<S> <C> <C> <C> <C>
United States $19,852,279 $7,423,225 $13,492,788 $7,023,013
United Kingdom 988,374 1,933,934 1,603,215 1,557,750
Canada 2,733,316 - 2,111,671 -
Other 703,439 - 1,220,375 -
Total $24,277,408 $9,357,159 $18,428,049 $8,580,763
</TABLE>
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 purchase. Plastech
Transparencies, Inc. has served the replacement and conversion market in
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 has 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 Six Months Ended June 30, 2000
Sales and Earnings
Sales for the quarter ended June 30, 2000, were $12,748,067 compared to
$9,517,217, for the same period a year ago. This increase of $3,230,850 reflects
improved shipments of the Company's variable message signs and lighting products
as well as an increase in sales of bus window systems which alone accounted for
over 34% of the total increase in sales over the same period a year ago.
During the second quarter of 2000, the Company had a net profit of $156,087. For
the same period of the prior year, the Company had a net profit of $12,067 on
sales of $9,517,217. This increase of $144,020, although dampened by heavy
software development expenses associated with the intelligent bus pilot program
and continuing losses at our bus window operation, was attributable to overall
increased sales volume.
Inventories
Inventory valuation is based upon the lower of cost or market. At June 30, 2000,
consolidated inventories were $13,950,505 compared to $11,992,215 a year ago.
This increase of $1,958,290 is to accommodate increased sales compared to a year
ago, and is concentrated in raw materials.
Interest
Interest expense amounted to approximately $350,000 and $231,000 for the second
quarter of 2000 and 1999, respectively. This increase of $119,000 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. In anticipation of future funding requirements associated with
forecasted data guide production contracts, exploratory bank conversations have
been held regarding additional credit availability to support anticipated
production of the data guide information system.
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: August 9, 2000 /s/ Kai Kosanke
-------------- --------------------------------
Kai Kosanke, Treasurer
and Chief Financial Officer
Date: August 9, 2000 /s/ Paul Clemo
-------------- --------------------------------
Paul Clemo
Assistant Treasurer
13
<PAGE> 14
Exhibit Index
-------------
Exhibit No. Description
----------- -----------
27 Financial Data Schedule
