-----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, WL9zZ9xfMSWYgxsZYmbgyfYpIO2jRGj8WrtRNlu1EXlhiSidfvchfAMxHULvn3kp /09+Lrvvi5CdE1Q4ULwGDA== 0000898430-00-001617.txt : 20000516 0000898430-00-001617.hdr.sgml : 20000516 ACCESSION NUMBER: 0000898430-00-001617 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 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: 0625 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-14523 FILM NUMBER: 633005 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 =============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________________ FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 2000 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 principal 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 2, 2000 is 2,764,957 ================================================================================ TRIO-TECH INTERNATIONAL INDEX TO CONSOLIDATED FINANCIAL INFORMATION, OTHER INFORMATION AND SIGNATURE - ----------------------------------------------------------------------------
Page ---- Part I. Financial Information................................................................................... 3 Item 1. Consolidated Financial Statements....................................................................... 3 Condensed Consolidated Balance Sheets as of March 31, 2000 and June 25, 1999............................ 3 Condensed Consolidated Statements of Income for the Nine Months Ended March 31, 2000 and March 26, 1999.................................................................................................... 4 Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2000 and March 26, 1999.................................................................................................... 5 Notes to Condensed Consolidated Financial Statements.................................................... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................... 8 Item 3. Quantitative and Qualitative Disclosures about Market Risk...... ....................................... 9 Part II. Other Information....................................................................................... 10 Item 1. Legal Proceedings....................................................................................... 10 Item 2. Changes in Securities and Use of Proceeds............................................................... 10 Item 3. Defaults upon Senior Securities......................................................................... 10 Item 4. Submission of Matters to a Vote of Security Holders..................................................... 10 Item 5. Other Information....................................................................................... 10 Item 6. Exhibits and Reports on Form 8-K........................................................................ 10 Signatures ........................................................................................................ 11
2 TRIO-TECH INTERNATIONAL AND SUBSIDIARIES ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS - -------------------------------------------------------------------------------
Mar. 31, June 25, ASSETS 2000 1999 (a) ------------ ------------ CURRENT ASSETS: Cash $ 1,120,000 $ 1,593,000 Cash deposits 5,203,000 4,499,000 Trade accounts receivable, less allowance for doubtful accounts of $262,000 in 2000 and $219,000 in 1999 4,962,000 4,460,000 Other receivables 579,000 282,000 Inventories 2,656,000 1,799,000 Prepaid expenses and other current assets 179,000 90,000 ------------ ------------ Total current assets 14,699,000 12,723,000 PROPERTY AND EQUIPMENT, Net 4,550,000 5,538,000 OTHER ASSETS, Net 986,000 671,000 ------------ ------------ TOTAL ASSETS $ 20,235,000 $ 18,932,000 ============ ============ CURRENT LIABILITIES: Lines of credit $ 151,000 $ 364,000 Accounts payable 3,171,000 1,989,000 Accrued expenses 2,743,000 3,005,000 Income taxes payable 394,000 71,000 Current portion of long-term debt and capitalized leases 385,000 505,000 ------------ ------------ Total current liabilities 6,844,000 5,934,000 ------------ ------------ LONG-TERM DEBT AND CAPITALIZED LEASES, Net of current portion 742,000 962,000 ------------ ------------ DEFERRED INCOME TAXES 434,000 582,000 ------------ ------------ MINORITY INTEREST 2,375,000 2,403,000 ------------ ------------ COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Common stock; authorized, 15,000,000 shares; issued and outstanding, 2,764,957 shares (March 31, 2000) and 2,741,334 shares (June 25, 1999) stated at 8,698,000 8,654,000 Retained earnings 1,355,000 692,000 Accumulated other comprehensive loss (213,000) (295,000) ------------ ------------ Total shareholders' equity 9,840,000 9,051,000 ------------ ------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 20,235,000 $ 18,932,000 ============ ============
(a) Derived from audited consolidated financial statements included in the Form 10K for the fiscal year ended June 25, 1999. See notes to condensed consolidated financial statements. 3 TRIO-TECH INTERNATIONAL AND SUBSIDIARIES ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS) - -------------------------------------------------------------------------------
Nine Months Ended Three Months Ended -------------------------------------- ------------------------------------- Mar. 31, Mar. 26, Mar. 31, Mar. 26, 2000 1999 2000 1999 ----------------- -------------- ---------------- ---------------- NET SALES $ 18,269,000 $ 15,120,000 $ 5,925,000 $ 4,950,000 COST OF SALES 13,575,000 10,700,000 4,402,000 3,576,000 -------------- -------------- ------------- ------------- GROSS PROFIT 4,694,000 4,420,000 1,523,000 1,374,000 OPERATING EXPENSES: General and administrative 2,915,000 2,765,000 957,000 971,000 Selling 1,304,000 1,247,000 414,000 275,000 Research and development costs 136,000 247,000 45,000 90,000 -------------- -------------- ------------- ------------- Total 4,355,000 4,259,000 1,416,000 1,336,000 -------------- -------------- ------------- ------------- INCOME FROM OPERATIONS 338,000 161,000 107,000 38,000 OTHER INCOME (EXPENSES) Interest expense (91,000) (138,000) (27,000) (40,000) Other income 619,000 418,000 126,000 104,000 -------------- -------------- ------------- ------------- Total 528,000 280,000 99,000 64,000 -------------- -------------- ------------- ------------- INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 867,000 441,000 206,000 102,000 INCOME TAXES 129,000 267,000 65,000 83,000 -------------- -------------- ------------- ------------- INCOME BEFORE MINORITY INTEREST 738,000 174,000 141,000 19,000 MINORITY INTEREST 75,000 26,000 27,000 0 -------------- -------------- ------------- ------------- NET INCOME 663,000 148,000 114,000 19,000 OTHER COMPREHENSIVE INCOME (LOSS): Foreign currency translation adjustment 82,000 28,000 38,000 (59,000) -------------- -------------- ------------- ------------- COMPREHENSIVE INCOME (LOSS) $ 745,000 $ 176,000 $ 152,000 $ (40,000) ============== ============== ============= ============= EARNINGS PER SHARE: Basic $ 0.24 $ 0.05 $ 0.04 $ 0.01 ============== ============== ============= ============= Diluted $ 0.23 $ 0.05 $ 0.04 $ 0.01 ============== ============== ============= ============= WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON POTENTIAL SHARES OUTSTANDING Basic 2,749,000 2,746,000 2,757,000 2,741,000 Diluted 2,856,000 2,758,000 3,049,000 2,752,000
See notes to condensed consolidated financial statements. 4 TRIO-TECH INTERNATIONAL AND SUBSIDIARIES ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENTS OF CASH FLOWS - -------------------------------------------------------------------------------
Nine Months Ended ------------------------------------------ Mar. 31, Mar. 26, 2000 1999 ----------------- ----------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 663,000 $ 148,000 Adjustments to reconcile net income to net cash (used in) provided by operations: Depreciation and amortization 1,038,000 851,000 (Gain)/loss on sale of property and equipment (535,000) 109,000 Deferred income taxes (148,000) (10,000) Minority interest 8,000 (61,00) Changes in assets and liabilities: Accounts receivable (502,000) 415,000 Other receivables (297,000) 26,000 Inventories (857,000) (4,000) Prepaid and other current assets (89,000) (238,000) Other assets (336,000) (82,000) Accounts payable, accrued expenses and income taxes 1,242,000 (1,151,000) -------------- ------------- Net cash (used in) provided by operating activities 187,000 3,000 -------------- ------------- CASH FLOWS FROM INVESTING ACTIVITIES: Certificates of deposit (704,000) 814,000 Capital expenditures (1,024,000) (1,302,000) Proceeds from sale of property and equipment 1,555,000 0 -------------- ------------- Net cash (used in) provided by investing activities (173,000) (488,000) -------------- ------------- CASH FLOWS FROM FINANCING ACTIVITIES: Payments on lines of credit (248,000) (430,000) Borrowings under lines of credit 35,000 0 Principal payments of long-term obligations and capitalized leases (340,000) (197,000) Proceeds from long-term obligations 143,000 Issuance of common stock 44,000 Repurchase of common stock (43,000) -------------- ------------- Net cash provided by (used in) financing activities (509,000) (527,000) -------------- ------------- EFFECT OF EXCHANGE RATE ON CASH 22,000 76,000 NET INCREASE/(DECREASE) IN CASH (473,000) (936,000) CASH, BEGINNING OF PERIOD 1,593,000 3,234,000 -------------- ------------- CASH, END OF PERIOD $ 1,120,000 $ 2,298,000 -------------- ------------- SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the period for: Interest $ 82,000 $ 68,000 Income taxes $ 103,000 $ 554,000
See notes to condensed consolidated financial statements 5 TRIO-TECH INTERNATIONAL AND SUBSIDIARIES ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NOTE 1. Basis of Presentation The interim condensed consolidated financial statements as of March 31, 2000 and as of March 26, 1999, respectively, and for the nine-months ended March 31, 2000 and as of March 26, 1999, 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 condensed 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 25, 1999. The consolidated results of operations for the three-month periods ending March 31, 2000 and March 26, 1999, are not necessarily indicative of the results expected for a full year. NOTE 2. Inventories The composition of inventories is as follows (in thousands):
Mar. 31, June 25, 2000 1999 --------- --------- Raw materials $1,165 $ 839 Work in process 1,036 383 Finished goods 455 577 -------- -------- $2,656 $1,799 ======== ========
NOTE 3. 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. 31, 2000 Mar. 26, 1999 ------------- ------------- Net Income (Loss): (in thousands) As Reported $ 114 $ 19 Pro forma ($ 615) ($ 297) Earnings (Loss) per Share: As Reported $ 0.04 $ 0.01 Pro forma ($ 0.22) ($ 0.11)
The preceding calculation uses the Black Scholes option-pricing model with the assumptions listed below:
Quarter Ended Mar. 31, 2000 Mar. 26, 1999 ------------- -------------- Volatility 52.47% 41.90% Expected Life (years) 1.81 3.24 Discount rate 6.32% 5.61%
6 Note 4. Earnings per Share The Company adopted Statement of Financial Accounting Standards No. 128 ("SFAS"), "Earnings per Share". SFAS 128 replaces the presentation of primary and fully diluted (EPS) with a presentation of basic EPS based upon the weighted- average number of common shares and also requires dual presentation of basic and diluted EPS for companies with "complex capital structures". EPS for the current and prior period has been presented in conformity with the provisions of SFAS 128. The following table is a reconciliation of the weighted-average shares used in the computation of basic and diluted EPS for the periods presented herein:
Mar. 31, Mar. 26, 2000 1999 ----------------- ----------------- Net income used to compute basic and diluted earnings per share $ 114,000 $ 19,000 ----------------- ----------------- Weighted average number of common shares outstanding - basic 2,757,000 2,741,000 Dilutive effect of stock options and warrants 280,000 11,000 Number of shares used to compute ----------------- ----------------- diluted earnings per share 3,037,000 2,752,000 ================= =================
7 TRIO-TECH INTERNATIONAL AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - -------------------------------------------------------------------------------- Economic Conditions in Southeast Asia The Company's operations, balance sheet and cash flows have been affected by past economic instabilities in portions of Southeast Asia, which accounted for approximately 58% of the Company's net sales for the nine months ending March 31, 2000 and 71% for the year ended June 1999. A 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's Southeast Asian consolidated results of operations have been profitable, extended economic instability could adversely affect the Company's financial condition, results of operations or cash flows. On September 1, 1998, the government of Malaysia announced its limitation in the movement of cash balances in Malaysian. Forward-Looking Statements The discussions of the Company's business and activities set forth in this report and in other past and future reports and announcements by the Company may contain forward-looking statements and assumptions regarding future activities and results of operations of the Company. In light of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, the Company hereby identifies the following factors which could cause actual results to differ materially from those reflected in any forward-looking statement made by or on behalf of the Company: market acceptance of Company products and services; changing business conditions or technologies in the semiconductor industry, which could affect demand for the Company's products and services; the impact of competition; problems with technology; product development schedules; delivery schedules; changes in military or commercial testing specifications which could affect the market for the Company's products and services; difficulties in profitability integrating acquired businesses, if any, into the Company; risks associated with conducting business internationally and especially in Southeast Asia, including currency fluctuations and devaluations, currency restrictions, local laws and restrictions and possible social, political and economic instability; general and economic conditions; and other economic, financial and regulatory factors beyond the Company's control. Year 2000 Compliance Issue The Company completed its Year 2000 compliance program in the quarter ended December 31, 1999, including its compliance program for 55% owned Trio-Tech Malaysia. The total costs and expenditures with respect to the Company's Year 2000 compliance program were not material to the Company's financial position or its results of operations. As of the date of this report, the Company has not experienced any material Year 2000 problems internally or from any outside sources. Quarter Ended March 31, 2000 ("2000") Compared to Quarter Ended March 26, 1999 - ------------------------------------------------------------------------------- ("1999") - ------- Net sales increased by $975,000 or 19.7% from $4,950,000 in 1999, to $5,925,000 in 2000, as a result of the upturn in the semiconductor industry. Net sales for the Far East operations decreased $53,000 or 1.5% from $3,543,000 in 1999 to $3,490,000 in 2000 due mainly to lower distribution sales. Cost of sales increased $826,000 or 23.1% from $3,576,000 in 1999 to $4,402,000 in 2000. As a percentage of sales, it increased 2.0% from 72.2% in 1999 to 74.3% in 2000. This increase is primarily due to a lower optimization of the testing facilities as testing operations are semi-variable in nature. Operating expenses increased by $80,000 or 6.0% from $1,336,000 in 1999 to $1,416,000 in 2000 partially as a result of re-classifying expenses from International Accounting Standards to Generally Accepted Accounting Policies and for increased commissions and wages from the increase in sales. Research and development expenses decreased by $45,000 to $45,000 in 2000 from $90,000 in 1999 due to the maturity in the development of a range of Artic Temperature Controlled Chucks. Interest expense decreased in 1999 by $13,000 or 32.5%, from $40,000 in 1999 to $27,000 in 2000, due to decreases in lines of credit. Other income increased by $22,000 or 21.6% from $104,000 in 1999 to $126,000 in 2000 primarily due to interest income on certificates of deposit. 8 Liquidity and Capital Resources Net cash generated by operating activities during the nine months ended March 31, 2000 was $187,000 compared to $3,000 generated by operating activities during the nine months ended March 26, 1999. The cash flow from operating activities for the nine months ended March 31, 2000 was comprised of an increase in accounts payable and accrued expenses of $1,242,000, $663,000 from net income, $1,038,000 of non-cash depreciation and amortization, and a $8,000 increase in Minority interest. These amounts were partially offset by the expenses on the sale of property and equipment of $535,000, an increase in accounts receivable of $799,000, an increase in inventories of $857,000, an increase in prepaid expenses and other current assets of $89,000, an increase in other assets of $336,000 and a decrease in deferred income tax of $148,000. Net cash used by investing activities during the nine months ended March 31, 2000 was $173,000 compared to $488,000 used by investing activities during the nine months ended March 26, 1999. Net cash used in investing activities was increased by the proceeds from the sale of property and equipment in the amount of $1,555,000 and was offset by investments in capital expenditures of $1,024,000, and certificates of deposits of $704,000. Net cash used in financing activities during the nine months ended March 31, 2000 was $509,000 compared to $527,000 used in financing activities during the nine months ended March 26, 1999. This includes $588,000 of payments on lines of credit, long-term obligations and capitalized leases and was partially offset by cash inflow of $35,000 from additional borrowing under lines of credit and the proceeds of $44,000 from the exercise of options to purchase common stock granted under the Employee Stock Option Plan. The Company's subsidiary, TTI Pte, has a secured credit agreement with a bank that provides for a total line of credit of $2,623,000. The agreement contains certain debt covenants relating to net worth. There were $1,461,000 borrowings under the line at the end of March 31, 2000.The interest rate on borrowings is at the bank's prime rate (6.25% at March 26, 2000) plus 1.25. This line of credit does not have an expiration date. The Company's subsidiary, TTM, has a secured credit agreement with a bank that provides for a total line of credit of $79,000. At March 31, 2000, there were $42,000 outstanding. The line of credit bears interest at the bank's reference rate (8.25% at March 31, 2000) plus 2.5%. This line of credit expires May 2000. The Company's subsidiary, TTBk, has a line of credit that provides for borrowings of approximately $51,000. Interest on the line is at the bank's reference rate (8.5% at March 31, 2000) plus 1.0%. Borrowings against this line as of March 31, 2000 amounted to $1,000. This line of credit does not have an expiration date. The Company's subsidiary, TT Ireland, has a credit agreement with a bank, which provides a term loan of $400,000. Borrowings under these lines amounted to $227,000 as of March 31, 2000. Interest is at the bank's rate of 7.0% at March 31, 2000. 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 (8.25% at March 31, 2000). Borrowings under the line amounted to $150,000 as of March 31, 2000. This line of credit expires May 2000. Approximately $3,400,000 of cash deposits relate to the Company's 55% owned Malaysian subsidiary. Under existing Malaysian currency regulations, this amount is not currently available to finance ordinary operations of the Company outside of Malaysia. Material Changes in Financial Position There have not been any material changes in the financial position since the end of the last Fiscal Year. Material Changes in Results of Operations There have not been any material changes in the results of operations since the end of the last Fiscal Year. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK - -------------------------------------------------------------------------------- Because the Company comes within the definition of "a small business issuer" the Quantitative and Qualitative Disclosures about Market Risk is not applicable. 9 TRIO-TECH INTERNATIONAL PART II. OTHER INFORMATION - -------------------------------------------------------------------------------- Item 1. Legal Proceedings Not applicable Item 2. Changes in Securities and Use of Proceeds 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 second quarter of fiscal 2000: None 10 SIGNATURES - -------------------------------------------------------------------------------- Pursuant to the requirements of the Securities 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/ Victor H.M. Ting ----------------------- VICTOR H.M. TING Vice President and Chief Financial Officer Dated: May 12, 2000 By: /s/ A. Charles Wilson ------------------------ A. Charles Wilson Chairman of the Board of Directors Dated: May 12, 2000 11 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS JUN-30-2000 JAN-01-2000 MAR-31-2000 1,120 5,203 5,803 262 2,656 14,699 9,610 5,060 20,235 6,844 0 0 0 8,698 1,142 20,235 5,925 5,925 4,402 4,402 1,317 0 27 179 65 114 0 0 0 14 0.04 0.04
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