-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BbKrCutF76DB/7qem5NKI4S36Ne16L5B/XmcVo57uvmiuKRCnYsY8hs3Bg/Tn9G9 eWmrmJVp+ZtTd2poccyfGQ== 0000898430-98-001807.txt : 19980512 0000898430-98-001807.hdr.sgml : 19980512 ACCESSION NUMBER: 0000898430-98-001807 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980327 FILED AS OF DATE: 19980511 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRIO TECH INTERNATIONAL CENTRAL INDEX KEY: 0000732026 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-TESTING LABORATORIES [8734] IRS NUMBER: 952086631 STATE OF INCORPORATION: CA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-13914 FILM NUMBER: 98614870 BUSINESS ADDRESS: STREET 1: 355 PARKSIDE DR CITY: SAN FERNANDO STATE: CA ZIP: 91340 BUSINESS PHONE: 8183659200 MAIL ADDRESS: STREET 1: 355 PARKSIDE DRIVE CITY: SAN FERNANDO STATE: CA ZIP: 91340 10-Q 1 FORM 10-Q DATED MARCH 27, 1998 =============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------------------ FORM 10-Q [X] REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended March 27, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 0-13914 TRIO-TECH INTERNATIONAL (Exact name of Registrant as specified in its Charter) CALIFORNIA 95-2086631 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 355 PARKSIDE DRIVE SAN FERNANDO, CALIFORNIA 91340 (Address of principle executive offices) (Zip Code) Registrant's Telephone Number: 818-365-9200 Indicate by check mark whether the registrant (1) has filed all reports required to be filed with the Commission by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No[_] Number of shares of common stock outstanding as of May 1, 1998 is 2,744,396 =============================================================================== TRIO-TECH INTERNATIONAL INDEX TO CONSOLIDATED FINANCIAL INFORMATION, OTHER INFORMATION AND SIGNATURE
Page ---- Part I. FINANCIAL INFORMATION................................................................................. Item 1. Consolidated Financial Statements.................................................................... Condensed Consolidated Balance Sheets as of March 27, 1998 and June 27, 1997......................... 3 Condensed Consolidated Statements of Income for the Three and Nine Months Ended March 27, 1998 and March 28,1997.................................................................................. 4 Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 27, 1998 and March 28, 1997..................................................................................... 5 Notes to Condensed Consolidated Financial Statements................................................. 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................ 7 PART II. OTHER INFORMATION..................................................................................... 8 Item 1. Legal Proceedings.................................................................................... 8 Changes in Securities................................................................................ 8 Defaults upon Senior Securities...................................................................... 8 Submission of Matters to Vote of Security Holders.................................................... 8 Other Information.................................................................................... 8 Exhibits and Reports on Form 8-K..................................................................... 8 SIGNATURE ..................................................................................................... 8 EXHIBIT 11.1 STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS................................................ 9
2 TRIO-TECH INTERNATIONAL CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (IN THOUSANDS)
MAR. 27, JUN. 27, 1998 1997 (a) ----------- ---------- ASSETS CURRENT ASSETS Cash $ 1,857 $ 868 Cash deposits 6,163 7,104 Accounts receivable - net 3,804 3,646 Notes and other receivables 425 161 Inventories 1,881 1,784 Prepaid expenses and other current assets 269 280 ----------- ----------- Total current assets 14,399 13,843 ----------- ----------- PROPERTY, EQUIPMENT AND CAPITALIZED LEASES, net 4,842 4,421 OTHER ASSETS 593 264 ----------- ----------- TOTAL ASSETS $ 19,834 $ 18,528 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Notes payable $ 790 $ 150 Accounts payable 1,896 1,121 Accrued expenses 3,674 3,605 Income taxes payable 1,007 1,965 Current portion of long-term debt 177 198 ----------- ----------- Total current liabilities 7,544 7,039 ----------- ----------- LONG-TERM DEBT, NET OF CURRENT PORTION 495 723 DEFERRED TAXES 658 776 MINORITY INTEREST 2,239 3,527 ----------- ----------- TOTAL LIABILITIES 10,936 12,065 ----------- ----------- SHAREHOLDERS' EQUITY: Common stock; authorized, 15,000,000 shares; issued and outstanding, 2,744,396 shares at March 27, 1998, and 1,936,596 shares at June 27, 1997 8,727 5,075 Retained earnings (accumulated deficit) 264 (334) Cumulative currency translation (93) 1,722 ----------- ---------- Total shareholders' equity 8,898 6,463 ----------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 19,834 $ 18,528 =========== ==========
(a) DERIVED FROM AUDITED CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN THE FORM 10K FOR THE FISCAL YEAR ENDED JUNE 27, 1997. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. 3 TRIO-TECH INTERNATIONAL CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (IN THOUSANDS, EXCEPT EARNINGS PER SHARE DATA)
NINE MONTHS ENDED THREE MONTHS ENDED --------------------- ---------------------- MAR. 27, MAR. 28, MAR. 27, MAR. 28, 1998 1997 1998 1997 --------- --------- ---------- --------- NET SALES $15,464 $16,066 $5,558 $5,031 COST OF SALES 10,114 9,782 3,647 2,968 ------- ------- ------ ------ GROSS PROFIT 5,350 6,284 1,911 2,063 ------- ------- ------ ------ OPERATING EXPENSES Selling, general and administrative expenses 4,649 4,305 1,749 1,527 ------- ------- ------ ------ INCOME FROM OPERATIONS 701 1,979 162 536 ------- ------- ------ ------ OTHER INCOME (EXPENSE) Interest expense (89) (92) (31) (30) Other income 276 492 97 177 ------- ------- ------ ------ Total 187 400 66 147 ------- ------- ------ ------ INCOME BEFORE INCOME TAXES AND 888 2,379 228 683 MINORITY INTEREST INCOME TAXES 406 900 149 228 ------- ------- ------ ------ INCOME BEFORE MINORITY INTEREST 482 1,479 79 455 MINORITY INTEREST 116 (810) 127 (157) ------- ------- ------ ------ NET INCOME $ 598 $ 669 $ 206 $ 298 ======= ======= ====== ====== EARNINGS PER SHARE: Basic $0.25 $0.34 $0.07 $0.15 Diluted $0.25 $0.34 $0.08 $0.15 WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING Basic 2,391 1,940 2,753 1,964 Diluted 2,386 1,951 2,742 1,981
See notes to condensed consolidated financial statements. 4 TRIO-TECH INTERNATIONAL CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS)
NINE MONTHS ENDED --------------------------------------- MAR.27, MAR. 28, 1998 1997 ------------------ ------------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 598 $ 669 Adjustments to reconcile net income to cash provided by operations: Depreciation and amortization 803 1,030 Loss on disposal of property and equipment 54 Changes in assets and liabilities: Accounts receivable, net (158) 547 Notes and other receivables (264) 2 Inventories (97) (595) Prepaid expenses and other current assets 11 (138) Other assets (375) 10 Other current liabilities (114) (490) Deferred taxes (118) (11) ------- ------- Total adjustment (312) 409 ------- ------- Net cash (used in) provided by operating activities 286 1,078 ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Maturity (purchase) of cash deposits 941 (2,406) Capital expenditures, net (2,161) (513) Minority interest (248) 651 Effect of exchange rate (1,872) 406 ------- ------- Net cash used in investing activities (3,340) (1,862) ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Payments on notes payable and lines of credit (227) Borrowings under notes payable 656 104 Repayment of long-term obligations (265) (343) Issuance of common stock 3,652 185 ------- ------- Net cash provided by (used in) financing activities 4,043 (281) ------- ------- NET INCREASE (DECREASE) IN CASH 989 (1,065) CASH, BEGINNING OF THE PERIOD 868 2,114 ------- ------- CASH, END OF THE PERIOD $ 1,857 $ 1,049 ======= ======= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest $ 85 $ 93 Income taxes $ 865 $ 667
See notes to condensed consolidated financial statements. 5 TRIO-TECH INTERNATIONAL NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. BASIS OF PRESENTATION The interim consolidated financial statements as of March 27, 1998 and as of March 28, 1997, respectively, and for the nine-months ended March 27, 1998 and as of March 28, 1997, respectively, are unaudited. In management's opinion, unaudited consolidated financial statements include all adjustments necessary, consisting of normal recurring accruals, for a fair presentation of such information. Certain reclassifications of prior year amounts have been made to conform to the current year financial statement presentation. The interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report for fiscal year ended June 27, 1997. The consolidated results of operations for the nine-month periods ending March 27, 1998 and March 28, 1997, are not necessarily indicative of the results expected for a full year. Earnings per Share - Earnings per share is based upon the weighted average number of shares outstanding and common stock equivalents (consisting of stock options), excluding those common stock equivalents which would be anti-dilutive. NOTE 2. INVENTORIES The composition of inventories is as follows (in thousands): MAR. 27, JUNE 27, 1998 1997 ------- ------- Raw materials $ 617 $ 551 Work in process 612 526 Finished goods 652 707 -------- -------- $ 1,881 $ 1,784 ======== ======== NOTE 3. SHAREHOLDERS' EQUITY On September 30, 1997, the Board of Directors approved a three-for-two stock split. The date of distribution of the stock split was October 7, 1997. The earnings per share amounts show, for all periods presented, the effect of the stock split. NOTE 4. STOCK OPTIONS The Company applies Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations in accounting for its Stock Option Plan. Accordingly, no compensation expense has been recognized. Had compensation cost for the Company's Plan been determined based upon the fair value at the grant date for awards under this Plan consistent with the methodology prescribed under Statement of Financial Accounting Standards No. 123, Accounting for Stock Based Compensation, the Company's net income and earnings per share would have been reduced to the pro forma amounts indicated below: QUARTER ENDED MAR. 27, 1998 MAR, 28, 1997 ------------- ------------- Net Income (Loss) (in thousands): As Reported $ 206 $ 298 Pro forma ($ 71) $ 156 Earnings (Loss) per Share: As Reported $ 0.07 $0.15 Pro forma ($ 0.03) $0.08 Using the Black Scholes option-pricing model with the assumptions listed below. QUARTER ENDED MAR 27, 1998 MAR 28, 1997 ------------- ------------ Volatility 49.45% 47.72% Expected Life (years) 3.83 2.02 Discount rate 5.61% 6.76% 6 TRIO-TECH INTERNATIONAL MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 1. ECONOMIC CONDITIONS IN SOUTHEAST ASIA The Company's operations, balance sheet and cash flows have been affected by recent economic instability in portions of Southeast Asia, which accounted for approximately 83% of the Company's net sales in the fiscal years ended June 1997 and 1996. A recent currency devaluation in Thailand and continuing currency weaknesses in Thailand, Malaysia and Singapore have required downward accounting adjustments in the U.S. dollar value of net assets located in those countries. Unsettled economic conditions in those countries and elsewhere have had some effect on orders by semiconductor companies for Trio-Tech's testing services. Although the Company has continued to manage its operations profitably, extended economic instability could adversely affect the Company's financial condition, results of operations or cash flows. 2. LIQUIDITY AND CAPITAL RESOURCES The Company's working capital increased by $51,000 to $6,855,000 as of March 27, 1998 as compared to June 27, 1997 due to proceeds of $3,351,000 from a private placement of common stock and warrants, offset by capital expenditures of $1,648,000 and an unrealized currency translation loss of $1,815,000, due to a currency devaluation in Southeast Asia relative to the U.S. Dollar. The Company's subsidiary, TTI Pte, increased the total line of credit from $655,000 to $3,125,000. Borrowings under these lines amounted to $634,000 as of March 27, 1998. The interest rate on borrowings is at the bank's prime rate (8.25% at March 27, 1998) plus 1.25%. Borrowings under this agreement are collateralized by substantially all of TTI Pte's assets. The Company's subsidiary, TTM, has obtained a line of credit from a bank which provides for borrowings of $76,000. There were no borrowings under the line as of March 27, 1998. The Company's subsidiary, TTBk, has a secured line of credit with a bank which provides for a total line of credit of $78,000. There were no borrowings under the line as of March 27, 1998. The Company's subsidiary, EETC, has a credit agreement with a bank which provides a term loan of $400,000. Borrowings under these lines amounted to $315,000 as of March 27, 1998. Interest is at the bank's prime rate (5.84% at March 27, 1998) plus 3.5%. The Company has a revolving line of credit of $150,000 from a bank bearing interest at 1.8% above the bank's reference rate (10.0% at March 27, 1998). Borrowings under the line amounted to $150,000 as of March 27, 1998. 3. MATERIAL CHANGES IN FINANCIAL POSITION Total shareholders' equity was $8,898,000 at March 27, 1998 as compared to $6,463,000 at June 27, 1997, an increase of 38.0%, resulting from an increase of $3,652,000 in common stock, primarily due to a private placement for $3,351,000, offset by an unrealized currency translation loss of $1,815,000 due to a currency devaluation in Southeast Asia relative to the U.S. Dollar. 4. MATERIAL CHANGES IN RESULTS OF OPERATIONS Total net sales increased by 10.5% for the quarter ended March 27, 1998, as compared to the corresponding quarter in the prior year, and decreased by 3.7% for the nine-month period compared to the corresponding period in the prior year. This decline is attributable to a reduction in revenues in Southeast Asia, primarily in Malaysia, brought about by the economic factors discussed in Note 1 above. Although the Company received orders for testing of new types of semiconductors, and expected such testing to begin in late 1997, this work has been rescheduled to the Summer of 1998 because of production delays encountered by the manufacturers of these devices. Gross margin has declined 6.6% for the quarter ended March 27, 1998, as compared to the corresponding quarter in the prior year, and decreased 4.5% for the nine- month period compared to the corresponding period in the prior year. This decline is primarily due to a shift in relative sales from high margin test services to lower margin equipment sales. 7 TRIO-TECH INTERNATIONAL PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Not applicable ITEM 2. CHANGES IN SECURITIES Not applicable ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not applicable ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS Not applicable ITEM 5. OTHER INFORMATION Not applicable ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (A) EXHIBITS Exhibit 27 Financial Data Schedule (B) REPORTS ON FORM 8-K The Registrant filed the following reports on Form 8-K with the Securities and Exchange Commission during the third quarter of fiscal 1998: None SIGNATURE Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TRIO-TECH INTERNATIONAL By: /s/ A. Charles Wilson --------------------------- A. Charles Wilson Chairman of the Board of Directors Dated: May 11, 1998 8 EX-11.1 2 STATEMENT REGARDING COMPUTATION OF PER SHARE TRIO-TECH INTERNATIONAL EXHIBIT 11.1 STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS (UNAUDITED) (IN THOUSANDS, EXCEPT EARNINGS PER SHARE DATA)
NINE MONTHS ENDED THREE MONTHS ENDED ----------------- ------------------ MAR.27, MAR. 28, MAR. 27, MAR. 28, 1998 1997 1998 1997 ------- -------- -------- -------- Net income $ 598 $ 669 $ 206 $ 298 ------ ------ ------ ------ Basic earnings per share: Weighted average number of common shares outstanding 2,391 1,940 2,753 1,964 ------ ------ ------ ------ Basic earnings per share $ 0.25 $ 0.34 $ 0.07 $ 0.15 ====== ====== ====== ====== Diluted earnings per share: Weighted average number of common shares outstanding 2,303 1,841 2,695 1,888 Dilutive effect of stock options and warrants after application of treasury stock method 83 110 47 93 ------ ------ ------ ------ Number of shares used to compute diluted earnings per share 2,386 1,951 2,742 1,981 ------ ------ ------ ------ Diluted earnings per share $ 0.25 $ 0.34 $ 0.08 $ 0.15 ====== ====== ====== ======
The following options and warrants were outstanding during the quarter ended March 27, 1998 but were not included in the computation of diluted earnings per share because the exercise price was greater than the average market price of the common shares: TYPE SHARES PRICE EXPIRATION ------------ ----------- -------- ---------------------- Warrants 22,500 $5.67 January 22, 2002 Warrants 30,000 $5.34 January 22, 2002 Options 45,000 $7.70 September 30, 2002 Options 50,000 $6.67 November 1, 2002 Warrants 349,600 $7.00 November 3, 2002 Options 5,000 $7.70 December 7, 2002 9 EX-27 3 FINANCIAL DATA SCHEDULE
5 0000732026 TRIO-TECH INTERNATIONAL 1,000 3-MOS JUN-26-1998 DEC-28-1997 MAR-27-1998 1,857 6,163 3,804 0 1,881 14,399 15,296 10,454 19,834 7,544 0 0 0 8,727 171 19,834 5,558 5,558 3,647 3,647 1,525 0 31 355 149 206 0 0 0 206 0.07 0.08
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