-----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, V9Pskv2hLnSe+BpOOvVImN3V6PZIPt4R9v1jDAPkP6ya+t4PC+WG+vc8zmbn21ws xq3bqXMr343bw6B5IK1F7g== 0000898430-01-500529.txt : 20010515 0000898430-01-500529.hdr.sgml : 20010515 ACCESSION NUMBER: 0000898430-01-500529 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010330 FILED AS OF DATE: 20010514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRIO TECH INTERNATIONAL CENTRAL INDEX KEY: 0000732026 STANDARD INDUSTRIAL CLASSIFICATION: SPECIAL INDUSTRY MACHINERY, NEC [3559] 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: 1632223 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 d10q.txt 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 30, 2001 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 4, 2001 is 2,927,136 ================================================================================ TRIO-TECH INTERNATIONAL INDEX TO CONSOLIDATED FINANCIAL INFORMATION, OTHER INFORMATION AND SIGNATURE
Page ---- Part I. Financial Information Item 1. Condensed Consolidated Financial Statements Condensed Consolidated Balance Sheets as of March 30, 2001 and June 30, 2000 (Unaudited)...................... 3 Condensed Consolidated Statements of Income for the Three and Nine Months Ended March 30, 2001 and March 31, 2000 (Unaudited)............................................................................. 4 Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 30, 2001 and March 31, 2000 (Unaudited)................................................................................................ 5 Notes to Condensed Consolidated Financial Statements (Unaudited).............................................. 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations......................... 9 Item 3. Quantitative and Qualitative Disclosures about Market Risk.................................................... 11 Part II. Other Information............................................................................................. 12 Item 1. Legal Proceedings............................................................................................. 12 Item 2. Changes in Securities and Use of Proceeds..................................................................... 12 Item 3. Defaults upon Senior Securities............................................................................... 12 Item 4. Submission of Matters to a Vote of Security Holders........................................................... 12 Item 5. Other Information............................................................................................. 12 Item 6. Exhibits and Reports on Form 8-K.............................................................................. 12 Signatures .............................................................................................................. 13
2 TRIO-TECH INTERNATIONAL AND SUBSIDIARIES ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - -------------------------------------------------
Mar. 30, June 30, 2001 2000 (a) --------------- ----------------- ASSETS CURRENT ASSETS: Cash $ 1,622,000 $ 1,956,000 Cash deposits 6,180,000 5,152,000 Trade accounts receivable, less allowance for doubtful accounts of $228,000 on March 30, 2001 and $221,000 on June 30, 2000 5,307,000 6,103,000 Other receivables 739,000 845,000 Inventories 2,455,000 2,756,000 Prepaid expenses and other current assets 372,000 467,000 ----------- ----------- Total current assets 16,675,000 17,279,000 PROPERTY AND EQUIPMENT, Net 7,481,000 4,497,000 OTHER ASSETS, Net 835,000 936,000 ----------- ----------- TOTAL ASSETS $24,991,000 $22,712,000 =========== =========== CURRENT LIABILITIES: Lines of credit $ 142,000 $ 241,000 Accounts payable 3,235,000 4,128,000 Accrued expenses 3,232,000 3,303,000 Income taxes payable 587,000 242,000 Current portion of long-term debt 1,267,000 435,000 ----------- ----------- Total current liabilities 8,463,000 8,349,000 ----------- ----------- LONG-TERM DEBT Net of current portion 1,873,000 586,000 ----------- ----------- DEFERRED INCOME TAXES 690,000 720,000 ----------- ----------- MINORITY INTEREST 2,590,000 2,609,000 ----------- ----------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Common stock; authorized, 15,000,000 shares; issued and outstanding, 2,927,136 shares (March 30, 2001) and 2,836,618 shares (June 30, 2000) stated at 9,423,000 9,067,000 Retained earnings 2,661,000 1,726,000 Accumulated other comprehensive loss (709,000) (345,000) Total shareholders' equity 11,375,000 10,448,000 ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $24,991,000 $22,712,000 =========== ===========
(a) Derived from audited consolidated financial statements included in the Form 10K for the fiscal year ended June 30, 2000 See notes to condensed consolidated financial statements. 3 TRIO-TECH INTERNATIONAL AND SUBSIDIARIES ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
Nine Months Ended Three Months Ended ------------------------------ ------------------------------- Mar. 30, Mar. 31, Mar. 30, Mar. 31, 2001 2000 2001 2000 ------------ ------------- ------------- ------------ NET SALES $ 29,070,000 $ 18,269,000 $ 7,877,000 $ 5,925,000 COST OF SALES 21,671,000 13,575,000 6,159,000 4,402,000 ------------ ------------- ------------ ----------- GROSS PROFIT 7,399,000 4,694,000 1,718,000 1,523,000 OPERATING EXPENSES: General and administrative 4,545,000 2,915,000 1,367,000 957,000 Selling 1,584,000 1,304,000 245,000 414,000 Research and development costs 167,000 136,000 62,000 45,000 ------------ ------------- ------------ ----------- Total 6,296,000 4,355,000 1,674,000 1,416,000 ------------ ------------- ------------ ----------- INCOME FROM OPERATIONS 1,103,000 339,000 44,000 107,000 OTHER INCOME (EXPENSES) Interest expense (253,000) (91,000) (67,000) (27,000) Other income 415,000 619,000 103,000 126,000 ------------ ------------- ------------ ----------- Total 162,000 528,000 36,000 99,000 ------------ ------------- ------------ ----------- INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 1,265,000 867,000 80,000 206,000 INCOME TAXES (244,000) (129,000) 35,000 (65,000) ------------ ------------- ------------ ----------- INCOME BEFORE MINORITY INTEREST 1,021,000 738,000 115,000 141,000 MINORITY INTEREST (86,000) (75,000) (2,000) (27,000) ------------ ------------- ------------ ----------- NET INCOME 935,000 663,000 113,000 114,000 OTHER COMPREHENSIVE INCOME (LOSS): Foreign currency translation adjustment (364,000) 82,000 (150,000) 38,000 ------------ ------------- ------------ ----------- COMPREHENSIVE INCOME (LOSS) $ 571,000 $ 745,000 $ (37,000) $ 152,000 ============ ============= ============ ============ EARNINGS PER SHARE: Basic $ 0.32 $ 0.24 $ 0.04 $ 0.04 ============ ============= ============ ============ Diluted $ 0.32 $ 0.23 $ 0.04 $ 0.04 ============ ============= ============ =========== WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON POTENTIAL SHARES OUTSTANDING Basic 2,886,000 2,749,000 2,922,000 2,757,000 Diluted 2,952,000 2,856,000 2,928,000 3,049,000
See notes to condensed consolidated financial statements. 4 TRIO-TECH INTERNATIONAL AND SUBSIDIARIES ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED ----------------- Mar. 30, 2001 Mar. 31, 2000 ---------------- --------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 935,000 $ 663,000 Adjustments to reconcile net income to net cash provided by operations: Depreciation and amortization 1,201,000 1,038,000 Gain on sale of property and equipment (5,000) (535,000) Deferred income taxes (30,000) (148,000) Minority interest (8,000) 8,000 Changes in assets and liabilities: Accounts receivable, net 796,000 (502,000) Other receivables 106,000 (297,000) Inventories 301,000 (857,000) Prepaid expenses and other current assets 95,000 (89,000) Other assets 39,000 (336,000) Income tax payable 345,000 323,000 Accounts payable and accrued expenses (964,000) 919,000 ----------- ---------- Net cash provided by operating activities 2,811,000 187,000 ----------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Cash deposits (1,028,000) (704,000) Capital expenditures (4,449,000) (1,024,000) Proceeds from sale of property and equipment 32,000 1,555,000 ----------- ---------- Net cash used in investing activities (5,445,000) (173,000) ----------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Payments on lines of credit (443,000) (248,000) Borrowings under lines of credit 344,000 35,000 Principal payments of long-term obligations (466,000) (340,000) Proceeds from long-term obligations 2,627,000 Issuance of common stock 356,000 44,000 ----------- ---------- Net cash provided by (used in) financing activities 2,418,000 (509,000) ----------- ---------- EFFECT OF EXCHANGE RATE ON CASH (118,000) 22,000 NET DECREASE IN CASH (334,000) (473,000) CASH, BEGINNING OF PERIOD 1,956,000 1,593,000 ----------- ---------- CASH, END OF PERIOD $ 1,622,000 $1,120,000 =========== ========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the period for: Interest $ 158,000 $ 82,000 =========== ========== Income taxes $ 158,000 $ 103,000 =========== ==========
See notes to condensed consolidated financial statements. 5 TRIO-TECH INTERNATIONAL AND SUBSIDIARIES ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1. Basis of Presentation The interim condensed consolidated financial statements as of March 30, 2001 and as of March 31, 2000, respectively, and for the nine-months ended March 30, 2001 and as of March 31, 2000, respectively, are unaudited. In management's opinion, the unaudited consolidated financial statements reflect all adjustments necessary, consisting of normal recurring accruals, for a fair statement of the results for the interim periods presented. 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 30, 2000. The consolidated results of operations for the three-month periods ending March 30, 2001 and March 31, 2000, 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. 30, Jun. 30, 2001 2000 ------ ------ Raw materials $1,565 $1,251 Work in process 522 1,160 Finished goods 368 345 ------ ------ $2,455 $2,756 ====== ======
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 three Stock Option Plans. 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. 30, 2001 Mar. 31, 2000 -------------- ------------- Net Income (Loss): (in thousands) As Reported $ 113 $ 114 Pro forma $ 37 ($ 615) Earnings (Loss) per Share: As Reported $0.04 $ 0.04 Pro forma $0.01 ($0.22)
The preceding calculation uses the Black Scholes option-pricing model with the assumptions listed below:
Quarter Ended Mar. 30, 2001 Mar. 31, 2000 -------------- ------------- Volatility 53.38% 52.47% Expected Life (years) 2.75 1.81 Discount rate 4.62% 6.32%
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:
Nine Months Ended Three Months Ended -------------------------- ------------------------- Mar. 30, Mar. 31, Mar. 30, Mar. 31, 2001 2000 2001 2000 ------------ ----------- ----------- ----------- Net income used to compute basic and diluted earnings per share $ 935,000 $ 663,000 $ 113,000 $ 114,000 ------------ ----------- ----------- ----------- Weighted average number of common shares outstanding - basic 2,886,000 2,749,000 2,922,000 2,757,000 Dilutive effect of stock options and warrants 66,000 107,000 6,000 292,000 ------------ ----------- ----------- ----------- Number of shares used to compute diluted earnings per share 2,952,000 2,856,000 2,928,000 3,049,000 ============ =========== =========== ===========
The following options and warrants were outstanding during and as of the quarter ended March 30, 2001 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 and therefore were anti-dilutive:
Type Shares Price Expiration ------- ------ ----- ----------------- Options 27,000 $3.67 December 12, 2001 Warrants 30,000 $4.69 January 22, 2002 Warrants 22,500 $5.00 January 22, 2002 Warrants 36,870 $8.00 May 9, 2002 Options 45,000 $5.00 September 30, 2002 Warrants 15,000 $5.00 September 30, 2002 Warrants 15,000 $5.00 September 30, 2002 Warrants 69,920 $5.00 November 4, 2002 Warrants 34,960 $5.00 November 4, 2002 Options 75,000 $5.00 November 14, 2002 Warrants 9,915 $8.00 November 5, 2002 Options 5,000 $5.00 December 9, 2002 Options 45,000 $3.69 July 9, 2003 Options 14,500 $5.31 July 9, 2003 Options 70,500 $6.00 March 27, 2005 Options 42,000 $5.38 July 10, 2005 Options 40,000 $5.63 September 18, 2005
NOTE 5. Long-term debt Long-Term debt consists of the following:
March 30, 2001 --------------- Machinery loans, due in various installments through 2003 bearing interest at 6.5%, collateralized by equipment $ 1,434,000
7 Leasehold improvement loans, due in various installments through 2005 bearing interest at bank's prime (6.25% at March 30, 2001) plus 1.25% 644,000 Mortgage loan, due in monthly installments through 2002, bearing interest at 7.6%, collateralized by land and building 189,000 Other long-term debt, due in monthly installments through 2005 bearing interest at rates ranging from 3.5% to 9.0% collateralized by leased assets 873,000 ------------- 3,140,000 Less current portion (1,267,000) ------------- $ 1,873,000 ============= NOTE 6. Business Segments The Company operates principally in three industry segments, the designing and manufacturing of equipment (that tests the structural integrity of integrated circuits and other products which measure the rate of turn), the testing service industry (that performs structural and electronic tests of semiconductor devices) and the distribution of various products from other manufacturers in Singapore and Southeast Asia. All intersegment sales are sales from the manufacturing segment to the testing and distribution segment.
Nine Months Ended Three Months Ended ------------------------------- ------------------------------ Mar. 30, Mar. 31, Mar. 30, Mar. 31, 2001 2000 2001 2000 ------------- ------------- ------------ ------------ Revenues: Manufacturing $ 13,372,000 $ 8,951,000 $ 3,660,000 $ 2,922,000 Testing 9,302,000 6,029,000 2,540,000 1,949,000 Distribution 6,105,000 3,654,000 1,616,000 1,204,000 ------------- ------------- ------------ ------------ Total Revenues from reportable segments 28,779,000 18,634,000 7,816,000 6,075,000 Intersegment revenue adjustment 291,000 (365,000) 61,000 (150,000) ------------- ------------- ------------ ------------ Total consolidated revenues $ 29,070,000 $ 18,269,000 $ 7,877,000 $ 5,925,000 ============= ============= ============ ============ Operating profit (loss): Manufacturing $ 373,000 $ 26,000 $ (97,000) $ 22,000 Testing 474,000 307,000 130,000 99,000 Distribution 104,000 (201,000) 27,000 (66,000) ------------- ------------- ------------ ------------ Total operating profit 951,000 132,000 60,000 55,000 ------------- ------------- ------------ ------------ Corporate income (loss) 152,000 207,000 (16,000) 52,000 ------------- ------------- ------------ ------------ Total operating profit $ 1,103,000 $ 339,000 $ 44,000 $ 107,000 ============= ============= ============ ============
8 TRIO-TECH INTERNATIONAL AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - -------------------------------------------------------------------------------- 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. Quarter Ended March 30, 2001 ("2001") Compared to Quarter Ended March 31, 2000 - ------------------------------------------------------------------------------ ("2000") - -------- Net sales increased by $1,952,000 or 32.9% from $5,925,000 in 2000 to $7,877,000 in 2001. Net sales in the United States continue to improve due to the growth in sales of new products. Net sales for the Southeast Asia operations increased by $1,286,000 or 36.8% from $3,490,000 in 2000 to $4,776,000 in 2001 due mainly to increased capacities in Singapore allowing for additional testing services. Cost of sales increased by $1,757,000 or 39.9% from $4,402,000 in 2000 to $6,159,000 in 2001. As a percentage of sales, it increased 3.9% from 74.3% in 2000 to 78.2% in 2001. The cost as a percentage of sales increased mainly in the manufacturing sector due to the higher costs associated with the introduction of the Artic Thermal Chuck product line. General and administrative expenses increased by $410,000 or 42.8% from $957,000 in 2000 to $1,367,000 in 2001 due to additions in personnel, wage increases, profit sharing and bonuses, and additional office overhead required due to increased sales volume. Research and development increased by $17,000 or 37.8% from $45,000 in 2000 to $62,000 in 2001 due to further development in the Artic Thermal Chuck. Interest expense increased in 2001 by $40,000 or 148.1%, from $27,000 in 2000 to $67,000 in 2001, primarily due to the increase in financing activities for the support of the capacity expansion of testing operations in Singapore. Other income decreased by $23,000 or 18.3% from $126,000 in 2000 to $103,000 in 2001. The higher income in 2000 was primarily due to the gain on disposal of property in Singapore in same quarter last year. As a result of the level of capital expenditures in Singapore, tax credits are available in the quarter ended March 30, 2001, which will offset Singapore tax previously provided. Accordingly, a tax benefit of $35,000 is reflected in the quarter ended March 30, 2001. The tax provision for the quarter ended March 31, 2000 consisted of normal statutory taxes, as the level of capital expenditure did not give rise to similar tax credits. Nine Months Ended March 30, 2001 ("2001") Compared to the Nine Months Ended - --------------------------------------------------------------------------- March 31, 2000 ("2000") - ----------------------- Net sales increased by $10,801,000 or 59.6% from $18,269,000 in 2000 to $29,070,000 in 2001. Net sales in the United States continue to improve due to the growth in sales of new products. Net sales for the Southeast Asia operations increased by $8,736,000 or 82.6% from $10,581,000 in 2000 to $19,317,000 in 2001 due mainly to increased capacities in Singapore facilities allowing for additional testing services. Cost of sales increased by $8,096,000 or 59.6% from $13,575,000 in 2000 to $21,671,000 in 2001. As a percentage of sales, it increased .2% from 74.3% in 2000 to 74.5% in 2001. 9 General and administrative expenses increased by $1,630,000 or 55.9% from $2,915,000 in 2000 to $4,545,000 in 2001 due to additions in personnel, wage increases, profit sharing and bonuses, and additional office overhead required due to increased sales volume. As a percentage of sales, it decreased .4% from 16% in 2000 to 15.6% in 2001. Selling expenses increased by $280,000 or 21.5% from $1,304,000 in 2000 to $1,584,000 in 2001 due to the higher volume of sales. As a percentage of sales, it decreased 1.7% from 7.1% in 2000 to 5.4% in 2001. Research and development increased by $31,000 or 22.8% from $136,000 in 2000 to $167,000 in 2001 due to further development in the Artic Thermal Chuck. Interest expense increased by $162,000 or 178%, from $91,000 in 2000 to $253,000 in 2001, primarily due to the increase in financing activities for the support of the capacity expansion of testing operations in Singapore. Other income decreased by $204,000 or 33% from $619,000 in 2000 to $415,000 in 2001. The higher income in 2000 was primarily due to the gain on disposal of property in Singapore. Liquidity and Capital Resources - ------------------------------- Net cash generated by operating activities during the nine months ended March 30, 2001 was $2,811,000 compared to $187,000 generated by operating activities during the nine months ended March 31, 2000. The cash flow from operating activities for the nine months ended March 30, 2001 was comprised of $935,000 from net income, a decrease in accounts receivable, inventories and other receivables of $796,000, $301,000 and $106,000 respectively, a decrease in prepaid expenses and other current assets of $95,000, $1,201,000 of depreciation and amortization, a decrease in other assets of $39,000 and an increase in income taxes payable of $345,000. These amounts were partially offset by negative cash flow comprised of a $964,000 decrease in accounts payable and accrued expenses, $8,000 in minority interest, $30,000 deferred income tax and $5,000 gain on the sale of property and equipment. Net cash used by investing activities during the nine months ended March 30, 2001 was $5,445,000 compared to $173,000 used by investing activities in the nine months ended March 31, 2000. The net cash used by investing activities in 2001 was comprised of an increase in capital expenditures of $4,449,000 and an increase in cash deposits of $1,028,000, offset by proceeds from the sale of property and equipment of $32,000. Net cash provided by financing activities in the nine months ended March 30, 2001 was $2,418,000 compared to $509,000 used by financing activities in the nine months ended March 31, 2000. The cash outflow from financing activities include $909,000 of payments on lines of credit, long term obligations and capitalized leases, which was offset by a cash inflow of $2,971,000 from additional borrowing under lines of credit, long term obligations and capitalized leases, and the issuance of common stock in the Company of $356,000. The Company's subsidiary, TTI Pte, has a secured credit agreement with a bank that provides for a line of credit of $2,493,000. Borrowings under the line were $1,710,000 at the end of March 30, 2001 and were comprised of letters of credit; trust receipts, shipping and banker's guarantees. Interest rate is at the bank's prime rate (6.25% at March 30, 2001) plus 1.25%. The borrowings are collateralized by a cash deposit of $1,214,000, and a corporate guarantee of $1,385,000. The agreement contains certain debt covenants including maintaining a minimum net worth. This line of credit has no expiration date. The Company was in compliance with all debt covenants at March 30, 2001. The credit agreement above includes a term loan for financing the construction of a power substation for $716,000. Borrowings under the loan amounted to $644,000 at March 30, 2001. Interest rate is at the bank's prime rate (6.25% at March 30, 2001) plus 1.25%. The power substation collateralizes the loan. The loan will expire in March 2005. The Company's subsidiary, TTI Pte, has an additional machinery term loan of $1,434,000 as of March 30, 2001. Interest rate is at 6.5%. The equipment collateralizes the loan. The loan will expire in June 2003. The Company's subsidiary, TTM, has a secured credit agreement with a bank that provides for a total line of credit of $40,000. At March 30, 2001, there were no borrowings outstanding. The line of credit bears interest at the bank's reference rate (6.8% at March 30, 2001) plus 2.5%. This line of credit has no expiration date. The Company's subsidiary, TTKL, has a secured credit agreement with a bank that provides for a total line of credit of $132,000. At March 30, 2001, there were no borrowings outstanding. The line of credit bears interest at the bank's reference rate (6.8% at March 30, 2001) plus 2.5%. This line of credit has no expiration date. 10 The Company's subsidiary, TTBK, has a line of credit that provides for borrowings of approximately $44,000. Interest on the line is at the bank's reference rate (8.5% at March 30, 2001) plus 1%. At March 30, 2001, there were no borrowings outstanding. This line of credit does not have an expiration date. The Company's subsidiary, TT-Ireland, has two credit agreements that provide for mortgage loans totaling $363,000. Borrowings under the mortgage loans amounted to $120,000 and $69,000 as of March 30, 2001. Interest is at the bank's prime rate (4.88% at March 30, 2001) plus 3.52% on the first loan and 3.0% on the second loan. The loans will expire in July 2007 and January 2008 respectively. The Company's subsidiary, TT-Ireland, has an additional machinery term loan of $144,000 as of March 30, 2001. Interest rate is at 7.5%. The equipment collateralizes the loan. The loan will expire in October 2005. The Company's subsidiary, Universal Systems, has a secured agreement with a bank that provides for a line of credit of $200,000. There were no borrowings against this line at March 30, 2001. The line of credit bears interest at the bank's reference rate (8% at March 30, 2001) plus 1.75%. Assets of Universal Systems collateralize the line of credit. This line expires in December 2001. The Company's subsidiary, Universal Systems, has an additional machinery term loan of $156,000 as of March 30, 2001. Interest rate is at 8.05%. The equipment collateralizes the loan. The loan will expire in June 2004. The Company's division, TT-Systems, has a secured agreement with a bank that provides for a line of credit of $400,000. Borrowings against this line were $142,000 at March 30, 2001. The line of credit bears interest at the bank's reference rate (8% at March 30, 2001) plus 1.75%. Assets of TT-Systems collateralize the line of credit. This line expires in December 2001. The Company's division, TT-Systems, has additional machinery term loans aggregating $96,000 as of March 30, 2001. Interest rate is at 12.5%. The equipment collateralizes the loan. The loans will expire between fiscal year 2002 and fiscal year 2004. The Company's cash deposits are partially restricted as to their use in operations. Approximately $3 million of cash deposits relate to the Company's Malaysian subsidiary where restrictions currently exist on the movement of currency. Approximately $1.2 million of cash deposits is restricted as collateral under line of credit agreements in Singapore. Material Changes in Financial Position - -------------------------------------- None Material Changes in Results of Operations - ----------------------------------------- Capacities have been increased in Southeast Asia, resulting in a 82.6% increase in net sales for Southeast Asia during the nine months ended March 30, 2001, as compared to the corresponding months in the prior 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. 11 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 None (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 2001: None 12 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 11, 2001 By: /s/ A. Charles Wilson ---------------------- A. Charles Wilson Chairman of the Board of Directors Dated: May 11, 2001 13 -----END PRIVACY-ENHANCED MESSAGE-----