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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999 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
incorporation or organization) Identification Number)
2637 S. Adams Road, Rochester Hills, MI 48309
(Address of principal executive offices) (Zip Code)
(248) 852-1990
(Registrant's telephone number, including area code)
Securities Registered Pursuant to Section 12(b) of the Act:
NONE
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, Par Value $.10 Per Share
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 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
As of February 29, 2000, 3,139,737 shares of Common Stock were
outstanding and the aggregate market value of the Common Stock held by
non-affiliates of the registrant (based upon the last sale price on the NASDAQ
National Market) was approximately $8,593,440.
DOCUMENTS INCORPORATED BY REFERENCE
Information called for by Part III (Items 10, 11, 12, and 13) is
incorporated by reference from the Registrant's definitive proxy statement in
connection with its Annual Meeting of Shareholders to be held on May 17, 2000,
which Proxy Statement will be filed pursuant to Regulation 14A.
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PART I
Item 1 Business.
Introduction
Trans-Industries, Inc. (the "Company") was incorporated in
Delaware in 1967 to acquire the business of Transign, Inc., a company founded in
1952 to manufacture mechanical bus signs. Initially, the Company produced
mechanical signage for the mass transit market, but its current efforts are
concentrated on electronic systems for the display of information, bus lighting
products, bus glass products and source extraction systems for the environmental
market. These products are sold to virtually all aspects of the transportation
industry and to a broad range of commercial and industrial markets. The Company
has one major customer - Gillig Corporation - which accounted for over 10
percent of consolidated annual sales. Although Gillig Corp. is a highly valued
customer, the Company does not consider itself dependent upon it for continued
ongoing sales. Sales volume is significantly affected by state and municipal
government spending for mass transit, highway systems, and airports. As of
February 29, 2000, the Company's backlog was $18,983,400 compared with
$17,811,600 and approximately $13,232,400 for the same dates in 1999 and 1998,
respectively. Of the current backlog, it is anticipated that 90 percent will be
completed within one year.
Operations
A. Industry Segment.
Trans-Industries is a leading supplier of lighting and information
display systems for mass transit operations. New and growing markets are already
being developed for the electronic information display systems, the liquid
crystal displays, and the Company's dust control product line. The Company is
currently in the process of developing and expanding the market for its newly
acquired glass product line. Based on the nature of the Company's products,
production processes, types of customers, and marketing methods, management
believes the Company operates in predominately one broad industry segment which
is the transportation industry.
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B. Foreign and Domestic Operations and Export Sales.
Through subsidiaries, the Company operates manufacturing,
assembly, sales, and service facilities in the United Kingdom. These operations
sell products purchased from the affiliated domestic companies, as well as
products manufactured in the United Kingdom, to customers in Europe, Australia,
and Asia. Additional foreign sales are made on an export basis from domestic
offices as well as through certain agents abroad. Summarized financial
information about foreign operations and exports is in Note L to the
Consolidated Financial Statements.
C. Research and Quality Control.
The Company's principal research activities are conducted at its
product development center in Rochester Hills, Michigan, where line maintenance
and new product programs are carried out according to perceived market
opportunities. Quality control, rather than being centralized, is a function
performed at each manufacturing plant.
Approximately $1,143,000, $849,000, and $700,000 was spent on
research and development during the years-ended December 31, 1999, 1998, and
1997, respectively.
D. Competition.
In each of the market niches where the Company competes, there are
one or more competitors. Sizes of these concerns range from small to large
integrated enterprises, both domestically and internationally, with no single
company dominating the various markets. The Company owns and has licensed United
States and foreign patents relating to the manufacture of most of its products,
but these are not deemed sufficient to substantially minimize competition from
other parties. It is felt that success in the marketplace is due to the ability
to compete on the basis of price, service, and product performance.
E. Raw Materials.
The principal raw materials used by the Company include steel,
glass, plastics, electronic components, and synthetic materials, all of which
are presently available in adequate supply on the open market.
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F. Employee Relations.
The Company employs approximately 385 people, supplemented by
temporary workers, with a minority of these employees covered by a union
contract that expires August 7, 2001. The Company considers its overall labor
relations with employees to be good.
The Company maintains profit sharing and 401-K plans for all of
its full-time employees who are not part of a bargaining unit.
In 1996, the Company adopted a stock option plan for officers,
directors, and key employees of the Company and its subsidiaries. (See Note H to
the financial statements)
G. Environmental Considerations.
The Company believes it is in compliance with all state and
federal regulations for environmental control and safety, and the related
expenditures are generally not significant.
H. Directors and Officers of the Registrant.
See Part III, Item 10 for certain information regarding officers
and directors.
Item 2. Properties.
Domestic operations are conducted at eight principal facilities.
Four are owned, of which two are located in Waterford, Michigan, one in
Rochester Hills, Michigan and one in Bad Axe, Michigan. Four locations are
leased. One of the leased facilities is located in Rochester Hills, Michigan
under a lease agreement expiring in February 2002. Two leased facilities are in
Wilmington, North Carolina. One facility is leased through January 2001 and the
other is leased through August 2001. The fourth facility is in Irwindale,
California and is leased through August 2004.
International operations are conducted in England at a leased
facility located in Leeds, and an owned facility in Telford. The lease agreement
for the facility in Leeds expires in December 2009.
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The plants, all of which are well maintained and in good operating
condition, contain an aggregate of approximately 340,000 square feet of floor
space. Generally, the plants have been operating on a five day a week basis with
frequent overtime.
Item 3. Legal Proceedings.
The Company was the plaintiff in a patent infringement lawsuit
filed in the Federal District Court for the Eastern District of Michigan,
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. Because
the decision was not unanimous, the Company appealed this decision. In June of
1999, the court again ruled in favor of the defendant. In August of 1999, a
final interest award of $719,153 was paid to the Company, thereby bringing a
conclusion to this suit.
Item 4. Submission of Matters to a Vote for Security Holders.
No matters were submitted during the fourth quarter of the fiscal
year covered by this report to a vote of security holders through solicitations
of proxies or otherwise.
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PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters.
The Common Stock is traded on the Over-the-Counter Market and is
included in the National Association of Securities Dealers Automated Quotation
System under the symbol TRNI. The following table sets forth the range of trade
prices as reported by the National Securities Dealers Association, Inc. for the
preceding two years:
Trade Prices
------------
High Low
---- ---
1999
First Quarter 8.63 6.13
Second Quarter 8.75 6.06
Third Quarter 7.25 5.75
Fourth Quarter 6.50 4.88
1998
First Quarter 14.25 11.00
Second Quarter 16.00 12.50
Third Quarter 14.00 8.25
Fourth Quarter 9.88 7.25
These quotations reflect actual transactions without retail markup, markdown, or
commission.
As of December 31, 1999, there were 235 registered holders of the Common
Stock of the Registrant.
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Item 6. Selected Financial Data.
OPERATIONS 1999 1998 1997 1996 1995
Net Sales $39,544,177 $35,795,386 $35,382,461 $29,919,604 $24,934,101
Cost of Sales 28,167,787 22,296,059 22,824,939 19,007,311 17,109,368
Interest Expense 955,953 565,889 637,401 782,684 909,458
Income Tax Exp. 392,000 2,287,000 1,498,000 851,000 277,000
Net Earnings 225,643 4,071,729 2,711,560 1,722,758 823,733
FINANCIAL CONDITION
Current Assets 24,664,953 20,793,971 16,081,326 13,369,606 13,558,083
Current Liabilities 15,669,461 9,895,773 7,795,272 7,164,283 8,235,987
Working Capital 8,995,492 10,898,198 8,286,054 6,205,323 5,322,096
Current Ratio 1.57 2.10 2.06 1.87 1.65
Net Property, Plant
and Equipment 7,318,657 5,731,698 5,012,911 4,520,969 4,106,041
Long Term Debt 3,923,634 3,175,917 3,561,838 3,992,566 4,271,314
Stockholders' Equity 13,630,120 13,349,629 9,640,246 6,921,771 5,086,374
Total Assets 33,833,827 27,086,459 21,618,928 18,515,167 18,148,039
Tangible Net Worth
and Subordinated Debt(a) 11,779,903 12,788,839 9,220,026 6,663,201 5,076,091
COMMON SHARE DATA
Net Earnings (b)
Basic $ .07 $ 1.30 $ .86 $ .55 $ .27
Diluted $ .07 $ 1.28 $ .85 $ .53 $ .25
Book Value (c) $ 4.34 $ 4.25 $ 3.07 $ 2.21 $ 1.61
Average Shares Outstanding
Basic 3,140,000 3,138,000 3,135,000 3,138,000 3,015,000
Diluted 3,140,000 3,185,000 3,214,000 3,266,000 3,582,000
(a) Tangible net worth equals total assets less intangible assets, less
total liabilities. Subordinated debt in the periods of 1995 and 1996
consisted of one convertible subordinated debenture which was retired
in 1997.
(b) Based on weighted average number of common shares and equivalents
outstanding.
(c) Based on shares outstanding at year end.
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Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Forward-Looking Statements
This discussion highlights significant factors influencing the
financial condition and results of operations of Trans-Industries, Inc. It
should be read in conjunction with the financial statements and related notes.
This discussion includes certain forward-looking statements based on
management's estimate of trends and economic factors in the markets in which the
corporation is active, as well as the corporation's business plans. In light of
recent securities law developments, including the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995, the corporation notes that
such forward-looking statements are subject to risks and uncertainties.
Accordingly, the corporation's actual results may differ from those set forth in
such statements. Significant changes in economic conditions, regulatory or
legislative changes affecting Trans-Industries, Inc., its competitors, or the
markets in which it is active, or changes in other factors may cause future
results to vary from those expected by the corporation.
OPERATIONS
1999 Compared With 1998
Sales for 1999 were $39.5 million compared to $35.8 million for
the previous year. Of this sales increase of $3.7 million, or 10.3 percent, from
1998 sales levels, approximately $2.7 million is attributable to increased sales
of the company's bus lighting equipment. This is primarily a result of increased
bus production in the United States. The additional $1.0 million net increase is
attributable to other domestic operations as sales in Europe were depressed.
Inflationary impact on sales for 1999 and 1998 was minimal.
For the first quarter of 2000, the Company expects sales to be up
from the levels achieved for the same period last year. This expected increase
should be the result of increased sales in all domestic operations.
The Company's pretax income for 1999 amounted to $617,643 compared
to $6,358,729 for the 1998 fiscal year. Pretax income for 1999 includes a gain,
net of legal fees, of $599,294 from an interest judgement relating to the
proceeds of a patent infringement lawsuit award received by the Company in 1998.
Pretax income for 1998 includes, net of legal fees, a gain of $2,419,811 from
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damage awards related to the same patent infringement lawsuit. The decline in
the Company's 1999 pretax income from operations as compared to 1998 was
primarily attributable to three factors:
1. Soft markets overseas resulting in a 42 percent decline in foreign
sales revenue for 1999 which in turn, resulted in a decrease of
pretax income of approximately $1,040,000 in 1999 as compared to 1998;
2. Costs associated with the acquisition and start up of TransGlass, the
transit window glass company acquired in February of 1999;
3. Reorganization efforts, as noted below, at the Company's electronics
operation.
Cost of sales for 1999 was $28,167,787 compared to $22,296,059 for
the prior year. As a percentage of sales, this amounted to 71.2 percent in 1999
compared to 62.3 percent in 1998. This increase of 8.9 percent is primarily
attributable to the Company's electronics operation which produces variable
message displays. The factors that impacted gross margins at the electronics
operations include:
1. The introduction of a new product which provides a completely
integrated transit package;
2. The expansion and re-organization of the manufacturing facility in Bad
Axe Michigan;
3. Competitive pricing pressures incurred on certain product lines to
maintain market share.
The Company believes these issues have been addressed. Coupled
with the realignment of personnel in production and purchasing together with the
implementation of new manufacturing software, improved margins are expected for
the year ended December 31, 2000.
Selling, general, and administrative expenses increased to
$10,636,155 in 1999 from $9,754,750 in 1998. This increase of $881,405, or 9.0
percent, is due to the addition of the recently acquired subsidiaries,
TransGlass and Lobb, and the addition of more marketing personnel.
Interest expense increased in 1999 to $955,953 from $565,889 in
1998. This increase of $390,064 reflects higher borrowings in 1999.
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1998 Compared With 1997
Sales for 1998 were $35.8 million compared to $35.4 million for
the previous year. Demand for the Company's lighting and environmental products
remained strong during 1998 with revenues from such products increasing
approximately 14%. Overall sales, however, remained essentially unchanged as
this increase was essentially offset by a reduction in the sales level of the
Company's variable message signs.
Several factors contributed to this reduction and management
believes this was a transitional situation with significant growth of variable
message revenues expected in the future due to recently enacted legislation. The
Transportation Equity Act for the 21st Century, which was signed into law in
June of 1998, has spawned a great deal of interest and demand for the Company's
variable message signs, particularly the large overhead highway signs used to
help control traffic patterns and communicate messages to the driving public. To
accommodate the production and sale of these larger signs, the Company addressed
several issues during the year, including software requirements, engineering
design and documentation, reallocation of production space, and establishment of
procedures for the scheduling and achievement of factory sign-offs of the
completed product. Inflationary impact on sales for 1998 and 1997 was minimal.
The Company's pretax income for 1998 amounted to $6,358,729
compared to $4,209,560 for 1997. This increase of $2,149,169, or 51%, was
attributable to proceeds received in settlement of a patent lawsuit which it
filed against a competitor for infringing upon its patented lighting module. The
amount of the judgement, net of legal fees, was approximately $2,420.000.
Cost of sales for 1998 was $22,296,059 compared to $22,824,939 for
the prior year. As a percentage of sales, this amounted to a decrease to 62.3
percent in 1998, from 64.5 percent in 1997. This decrease of 2.2 percent was
primarily the result of higher labor and overhead absorption in work-in-process
and finished goods inventory.
Selling, general, and administrative expenses increased to
$9,754,750 in 1998, from $7,917,545 in 1997. This increase of $1,837,205 was
primarily the result of the following:
- Payroll and related costs were up approximately $215,000 -
to accommodate pay adjustments and the addition of new
personnel;
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- Legal fees were up approximately $780,000 - primarily
related to settlement of the patent infringement lawsuit;
- Professional fees were up approximately $100,000 - primarily
attributable to tax accounting and investor relation fees;
- Advertising and sales promotion expenses were up
approximately $185,000;
- Service costs were up approximately $206,000 - related to
expansion of the Company's field service and customer
support capabilities.
Interest expense decreased in 1998 to $565,889 from $637,401 in
1997 due primarily to more favorable borrowing rates.
LIQUIDITY AND CAPITAL RESOURCES
As of year-end 1999, the Company had $9.0 million of working
capital compared with $10.9 million at year-end 1998 and $8.3 million at
year-end 1997. The decrease in working capital of $1.9 million in 1999 from 1998
resulted primarily from the purchase of TransGlass for approximately $1.6
million. The Company showed a net utilization of cash from operating activities
of $654,000 for the year ended December 31, 1999. Net cash used by operations
was primarily the result of the increase in accounts receivables and inventories
for the year. This was partially offset primarily by depreciation and an
increase in accounts payable. The Company used cash in investing activities of
$4,156,000 for the year ended December 31, 1999. Cash used in investing
activities included $2,553,000 for the purchase of property and equipment and
$1,605,000 for the purchase of TransGlass. The cash generated from financing
activities of $4,725,000 for the current year was used primarily to fund the
purchase of capital equipment and TransGlass. The increase in 1998 of $2.6
million from 1997 includes a damage award, net of legal fees, of $2,419,811
relating to a patent infringement lawsuit brought against a competitor.
Anticipated increases in required working capital are expected to be met
from the cash flow from operations and credit line borrowings. At December 31,
1999, there were no material commitments for capital expenditures for the
ensuing year.
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YEAR 2000 DISCLOSURE
The Company has conducted an evaluation of the actions necessary
to ensure that its business critical computer systems will be able to function
without disruption with respect to the application of dating systems in the year
2000. As a result of this evaluation, in 1999 the Company completed the process
of upgrading, replacing and testing certain of its information and other
computer systems so as to be able to operate without disruption due to year 2000
issues. The Company has not experienced any significant disruption to it's
computer system or to those of it's key customers or suppliers. The cost of its
remedial actions were not material to its results of operations and financial
condition and were expensed as incurred.
DIVIDENDS
Typically, the Company does not pay cash dividends on its common
stock. However, due to the favorable settlement of the patent infringement
lawsuit, a special one-time dividend of $.10 per share was declared and paid in
1998.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
Item 8. Financial Statements.
The following pages contain the Consolidated Balance Sheets as of
December 31, 1999 and 1998 and the related Consolidated Statement of Earnings,
Stockholders' Equity and Cash Flows for each of the years in the three year
period ended December 31, 1999, including the report of the Company's
independent certified public accountants.
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CONSOLIDATED FINANCIAL STATEMENTS AND REPORT
OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
DECEMBER 31, 1999, 1998 AND 1997
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CONTENTS
PAGE
Report of Independent Certified Public Accountants............... 15
FINANCIAL STATEMENTS
Consolidated Balance Sheets.................................. 16
Consolidated Statements of Earnings.......................... 18
Consolidated Statements of Comprehensive Income.............. 19
Consolidated Statement of Stockholders' Equity............... 20
Consolidated Statements of Cash Flows........................ 21
Notes to Consolidated Financial Statements................... 22
SUPPLEMENTAL INFORMATION
Schedule II - Valuation and Qualifying Accounts.......... 32
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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Trans-Industries, Inc.
We have audited the accompanying consolidated balance sheets of
Trans-Industries, Inc. (a Delaware corporation) and Subsidiaries as of December
31, 1999 and 1998 and the related consolidated statements of earnings,
comprehensive income, stockholders' equity and cash flows for each of the three
years in the period ended December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above, present
fairly, in all material respects, the consolidated financial position of
Trans-Industries, Inc. and Subsidiaries as of December 31, 1999 and 1998, and
the consolidated results of their operations and their consolidated cash flows
for each of the three years in the period ended December 31, 1999, in conformity
with generally accepted accounting principles.
We have also audited Schedule II for each of the three years in the period ended
December 31, 1999. In our opinion, this schedule presents fairly, in all
material respects, the information required to be set forth therein.
Grant Thornton LLP
Detroit, Michigan
February 14, 2000
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TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
- ----------------------------------------------------------------------------------------------------------------------
ASSETS 1999 1998
---------- ----------
CURRENT ASSETS
Cash $ 163,953 $ 193,579
Accounts receivable, less allowance for doubtful
accounts of $363,000 in 1999 and $225,000
in 1998 10,489,187 8,658,444
Inventories 12,799,521 10,896,529
Deferred income taxes 830,000 461,000
Prepaid expenses and other current assets 382,292 584,419
------------ ------------
Total Current Assets 24,664,953 20,793,971
PROPERTY, PLANT AND EQUIPMENT - AT COST
Land 306,881 306,881
Land improvements 126,660 126,660
Buildings 5,303,484 5,130,411
Machinery and equipment 12,356,790 9,563,794
------------ ------------
18,093,815 15,127,746
Less accumulated depreciation and amortization 10,775,158 9,396,048
------------ ------------
Net property, plant and equipment 7,318,657 5,731,698
Goodwill, less accumulated amortization of
$1,355,527 in 1999 and $1,210,875 in 1998 1,654,374 351,721
Other assets 195,843 209,069
------------ ------------
$33,833,827 $27,086,459
============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
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TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
- ----------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY 1999 1998
---------- ----------
CURRENT LIABILITIES
Note payable to bank $ 8,600,016 $ 4,645,144
Current maturities of long-term debt 466,044 222,726
Accounts payable 4,367,123 2,792,705
Income taxes payable 207,316 614,000
Accrued liabilities 2,028,962 1,621,198
------------ ------------
Total Current Liabilities 15,669,461 9,895,773
Long-term debt, excluding current maturities 3,923,634 3,175,917
Deferred income taxes 269,000 325,000
Other liabilities 341,612 340,140
COMMITMENTS AND CONTINGENCIES (NOTE K) - -
STOCKHOLDERS' EQUITY
Preferred stock of $1 par value per share, authorized
500,000 shares; none issued - -
Common stock of $0.10 par value per share, authorized
10,000,000 shares; 3,139,737 issued and outstanding 313,974 313,974
Additional paid-in capital 4,072,081 4,072,081
Retained earnings 9,257,749 9,032,106
Accumulated other comprehensive loss (13,684) (68,532)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 13,630,120 13,349,629
------------ ------------
$ 33,833,827 $ 27,086,459
============ ============
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TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
- ----------------------------------------------------------------------------------------------------------------------
1999 1998 1997
---------- ---------- ----------
Net sales $39,544,177 $35,795,386 $35,382,461
Cost of goods sold 28,167,787 22,296,059 22,824,939
----------- ----------- -----------
Gross profit 11,376,390 13,499,327 12,557,522
Selling, general and administrative expenses 10,636,155 9,754,750 7,917,545
----------- ----------- -----------
Operating earnings 740,235 3,744,577 4,639,977
Other expense (income), net
Interest expense 955,953 565,889 637,401
Patent litigation award - (3,023,773) -
Other (833,361) (156,268) (206,984)
----------- ----------- -----------
122,592 (2,614,152) 430,417
----------- ----------- -----------
Earnings before income taxes 617,643 6,358,729 4,209,560
Income tax expense 392,000 2,287,000 1,498,000
----------- ----------- -----------
Net earnings $ 225,643 $ 4,071,729 $ 2,711,560
=========== =========== ===========
Earnings per share:
Basic $ .07 $ 1.30 $ .86
=========== =========== ===========
Diluted $ .07 $ 1.28 $ .85
=========== =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
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TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
- ----------------------------------------------------------------------------------------------------------------------
1999 1998 1997
---------- --------- ---------
Net earnings $ 225,643 $4,071,729 $2,711,560
Other comprehensive income (loss)
Equity adjustment from foreign
currency translation 54,848 (66,098) (1,336)
---------- ---------- ----------
Comprehensive income $ 280,491 $4,005,631 $2,710,224
========== ========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
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TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
- --------------------------------------------------------------------------------
ACCUMULATED
ADDITIONAL OTHER
COMMON PAID-IN RETAINED COMPREHENSIVE
STOCK CAPITAL EARNINGS INCOME (LOSS) TOTAL
-------- ---------- ----------- --------- -------------
Balance at January 1, 1997 $313,495 $4,047,690 $ 2,561,684 $ (1,098) $ 6,921,771
Issuance of 1,200 shares of common stock 120 8,131 -- -- 8,251
Net earnings -- -- 2,711,560 -- 2,711,560
Other comprehensive loss -- -- -- (1,336) (1,336)
-------- ---------- ----------- -------- ------------
Balance at December 31, 1997 313,615 4,055,821 5,273,244 (2,434) 9,640,246
Issuance of 3,589 shares of common stock 359 16,260 -- -- 16,619
Dividends paid -- -- (312,867) -- (312,867)
Net earnings -- -- 4,071,729 -- 4,071,729
Other comprehensive loss -- -- -- (66,098) (66,098)
-------- ---------- ----------- -------- ------------
Balance at December 31, 1998 313,974 4,072,081 9,032,106 (68,532) 13,349,629
Net earnings -- -- 225,643 -- 225,643
Other comprehensive income -- -- -- 54,848 54,848
-------- ---------- ----------- -------- ------------
Balance at December 31, 1999 $313,974 $4,072,081 $ 9,257,749 $(13,684) $ 13,630,120
======== ========== =========== ======== ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
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TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
- --------------------------------------------------------------------------------
1999 1998 1997
----------- ----------- -----------
OPERATING ACTIVITIES
Net earnings $ 225,643 $ 4,071,729 $ 2,711,560
Adjustments to reconcile net earnings to net
cash (used in) provided by operations:
Depreciation of property, plant and equipment 1,155,076 910,080 710,868
Bad debt expense 204,557 172,287 213,625
Amortization of goodwill 144,652 52,129 44,571
Loss (gain) on sale of property and equipment 2,519 (47,716) (141,200)
Deferred income tax expense (benefit) (425,000) 44,000 -
Changes in operating assets and liabilities:
Increase in accounts receivable (1,954,868) (277,347) (2,451,228)
Increase in inventories (1,744,832) (3,941,100) (649,914)
Increase (decrease) in accounts payable 1,513,933 223,695 (360,017)
Increase in other 224,458 264,456 285,457
----------- ----------- -----------
Net cash (used in) provided by operating activities (653,862) 1,472,213 363,722
INVESTING ACTIVITIES
Purchases of property and equipment (2,552,686) (1,253,912) (1,333,793)
Proceeds from sale of property and equipment 1,500 56,389 272,083
Acquisition of businesses, net of cash acquired (1,604,704) (286,200) -
----------- ----------- -----------
Net cash used in investing activities (4,155,890) (1,483,723) (1,061,710)
FINANCING ACTIVITIES
Borrowings from long-term debt 1,185,424 - -
Repayments of long-term debt (415,018) (601,189) (487,582)
Net proceeds from line of credit 3,954,872 1,036,327 964,120
Proceeds from sale of common stock - 16,619 8,251
Dividends paid - (312,867) -
----------- ----------- -----------
Net cash provided by financing activities 4,725,278 138,890 484,789
Effect of foreign currency exchange rate changes 54,848 (66,098) (13,268)
----------- ----------- -----------
Net (decrease) increase in cash (29,626) 61,282 (226,467)
Cash at beginning of year 193,579 132,297 358,764
----------- ----------- -----------
Cash at end of year $ 163,953 $ 193,579 $ 132,297
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES
Interest paid $ 913,358 $ 556,648 $ 641,609
=========== =========== ===========
Income taxes paid $ 350,000 $ 1,602,000 $ 1,605,000
=========== =========== ===========
Fair value of assets acquired, including goodwill $ 1,895,283 $ 872,632
Liabilities assumed (290,579) (586,432)
----------- -----------
Net cash paid $ 1,604,704 $ 286,200
=========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
21
22
TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
- --------------------------------------------------------------------------------
NOTE A - NATURE OF OPERATIONS
The Company is a multinational manufacturer of lighting and information display
systems. The principal markets for its products are the United States, the
United Kingdom and Canada. Sales volume is significantly affected by state and
municipal government spending for mass transit, highway systems and airports.
NOTE B - SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the parent company
and its wholly owned subsidiaries (the Company). All significant intercompany
balances and transactions have been eliminated in consolidation.
INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or market (net
realizable value).
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost. Depreciation is provided using
straight line and accelerated methods over the estimated useful lives of the
assets which range from 10-40 years for buildings and 3-10 years for machinery
and equipment.
GOODWILL
Goodwill is the excess of the cost over the fair value of net assets acquired
and is amortized over a 10 to 30 year period using the straight-line method. On
an ongoing basis, management reviews the valuation and amortization of goodwill.
As part of the review, the Company estimates the value of and the estimated
undiscounted future net income expected to be generated by the related
subsidiary to determine that no impairment has occurred.
FOREIGN CURRENCY TRANSLATION
Assets and liabilities of foreign subsidiaries are translated principally at
year-end exchange rates. Income and expense accounts are converted using the
average exchange rate prevailing throughout the period. The gains and losses
resulting from the translation of these accounts are reported as a separate
component of stockholders' equity.
RESEARCH AND DEVELOPMENT
Research and development costs are expensed as incurred. Research and
development costs approximated $1,140,000, $849,000 and $700,000 for the years
ended December 31, 1999, 1998 and 1997, respectively.
22
23
TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1999, 1998 AND 1997
- --------------------------------------------------------------------------------
NOTE B - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases, and the effects of operating loss and tax credit carryforwards. Deferred
tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes enactment date.
USE OF ESTIMATES
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments consist of the line of credit facility and
long-term debt. The carrying value approximates the estimated fair value based
upon rates and terms available for loans and notes with similar characteristics.
NOTE C - EARNINGS PER SHARE
For the year ended December 31, 1999, all options outstanding have been excluded
from the computation of diluted earnings per share as the effect would be
antidulitive. The weighted average shares outstanding for 1999 were 3,139,737.
The following is a reconciliation of the numerator and denominator of the basic
and diluted earnings per share computations for the years ended December 31,
1998 and 1997.
EARNINGS SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------
Year ended December 31, 1998
Basic earnings per share
Earnings available to common
stockholders $ 4,071,729 3,138,112 $ 1.30
Effect of dilutive securities
Stock options - 46,614 (.02)
Convertible debt
----------- ------------ ---------
Diluted earnings per share
Earnings available to stockholders
plus assumed conversions $ 4,071,729 3,184,726 $ 1.28
=========== ============ =========
23
24
TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1999, 1998 AND 1997
- --------------------------------------------------------------------------------
NOTE C - EARNINGS PER SHARE (CONTINUED)
EARNINGS SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------
Year ended December 31, 1997
Basic earnings per share
Earnings available to common
stockholders $ 2,711,560 3,135,248 $ .86
Effect of dilutive securities
Stock options - 15,885 -
Convertible debt 8,250 62,500 (.01)
----------- ------------- ---------
Diluted earnings per share
Earnings available to stockholders
plus assumed conversions $ 2,719,810 3,213,633 $ .85
=========== ============= =========
NOTE D - INVENTORIES
The major components of inventories at December 31 are:
1999 1998
------------ ------------
Raw materials and purchased parts $ 4,993,075 $ 4,078,689
Work in process 4,592,891 4,346,320
Finished goods 3,213,555 2,471,520
------------ ------------
$ 12,799,521 $ 10,896,529
============ ============
NOTE E - NOTE PAYABLE AND LONG-TERM DEBT
The Company has an unsecured line of credit facility with a bank. The facility
allows the Company to borrow up to $12,000,000. The facility bears interest at
the bank's prime lending rate minus 0.25% or the Eurodollar rate plus 2.25%
(effective rate of 8.25% at December 31, 1999). Interest is payable monthly on
prime rate based advances and no less frequently than quarterly on Eurodollar
based rate advances.
Long-term debt at December 31 consisted of the following:
1999 1998
---------- ----------
Term note, payable in monthly installments of $38,362, including interest at the
bank's prime lending rate (effective rate of 8.5% at December 31, 1999) with a
balloon payment of $1,850,207 on October 1, 2004. The note is secured by
substantially all the assets of the Company. $3,076,080 $3,288,100
Term note payable in monthly installments of $16,667, including interest at the
bank's prime lending rate minus .25% (effective rate of 8.25% at December 31,
1999). The note is due July 1, 2004. The note is secured by substantially all
the assets of the Company. 916,667 -
Other term notes payable 396,931 110,543
---------- ----------
4,389,678 3,398,643
Less current maturities 466,044 222,726
---------- ----------
$3,923,634 $3,175,917
========== ==========
24
25
TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1999, 1998 AND 1997
- --------------------------------------------------------------------------------
NOTE E - NOTE PAYABLE AND LONG-TERM DEBT (CONTINUED)
The aggregate maturities of long-term debt by year are as follows:
2000 $ 466,044
2001 531,207
2002 588,393
2003 493,816
2004 2,208,494
Thereafter 101,724
-----------
$ 4,389,678
===========
The term note and line of credit agreements, require the Company to maintain
certain financial ratios. The agreements also restrict the payment of dividends,
repurchase of common stock, and acquisition of property and equipment.
NOTE F - LEASES
The Company leases facilities and equipment under operating leases with
unexpired terms ranging from one to five years. Rent expense for all operating
leases approximated $561,000, $419,000, and $321,000 for 1999, 1998 and 1997,
respectively. Future minimum rentals required under noncancelable lease
agreements are as follows:
2000 $ 373,000
2001 313,000
2002 294,000
2003 294,000
2004 196,000
-----------
$ 1,470,000
===========
NOTE G - INCOME TAXES
The components of earnings before income taxes were as follows:
1999 1998 1997
----------- ----------- -----------
Domestic $ 1,435,405 $ 6,134,499 $ 4,405,544
Foreign (817,762) 224,230 (195,984)
----------- ----------- -----------
$ 617,643 $ 6,358,729 $ 4,209,560
=========== =========== ===========
Income taxes have been charged to operations as follows:
1999 1998 1997
---------- ----------- -----------
Current $ 817,000 $ 2,243,000 $ 1,498,000
Deferred (425,000) 44,000 -
---------- ----------- -----------
Total income tax expense $ 392,000 $ 2,287,000 $ 1,498,000
========== =========== ===========
25
26
TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1999, 1998 AND 1997
- --------------------------------------------------------------------------------
NOTE G - INCOME TAXES (CONTINUED)
A reconciliation of actual income tax expense to the expected amounts computed
by applying the effective U.S. federal income tax rate of 34 percent to earnings
or losses before income taxes is as follows:
1999 1998 1997
-------- ---------- ----------
Expected income tax expense $210,000 $2,162,000 $1,431,000
Goodwill amortization not deductible
for income tax purposes 49,000 18,000 15,000
Loss of foreign subsidiaries without
tax effect 145,000 113,000 67,000
Other items, net (12,000) (6,000) (15,000)
-------- ---------- ----------
Actual income tax expense $392,000 $2,287,000 $1,498,000
======== ========== ==========
The tax effects of temporary differences that give rise to significant deferred
tax assets and liabilities at December 31, 1999 and 1998 are as follows:
DEFERRED DEFERRED
TAX TAX
YEAR ENDED DECEMBER 31, 1999 ASSETS LIABILITIES
- ------------------------------------- ----------- -----------
Property, plant and equipment, principally depreciation $ - $ 385,000
Inventory valuation 605,000 -
Accrued expenses, deductible when paid 341,000 -
Foreign tax loss carryforwards 736,000 -
----------- -----------
1,682,000 385,000
Less valuation allowance on deferred tax assets (736,000) -
----------- -----------
$ 946,000 $ 385,000
=========== ===========
DEFERRED DEFERRED
TAX TAX
YEAR ENDED DECEMBER 31, 1998 ASSETS LIABILITIES
- ------------------------------------- ----------- -----------
Property, plant and equipment, principally depreciation $ - $ 421,000
Inventory valuation 253,000 -
Accrued expenses, deductible when paid 304,000 -
Foreign tax loss carryforwards 619,000 -
----------- -----------
1,176,000 421,000
Less valuation allowance on deferred tax assets (619,000) -
----------- -----------
$ 557,000 $ 421,000
=========== ===========
26
27
TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1999, 1998 AND 1997
- --------------------------------------------------------------------------------
NOTE G - INCOME TAXES (CONTINUED)
The Company has a foreign tax net operating loss carryforward of approximately
$2,231,000 at December 31, 1999. A valuation allowance of $736,000 has been
recognized to reduce the deferred tax assets principally due to the uncertainty
of realizing the benefit of the tax loss carryforward. The valuation allowanced
increased by $117,000 in 1999.
NOTE H - EMPLOYEE BENEFIT PLANS
The Company has a Voluntary Employee Benefit Trust (the Trust) designed to
provide for the payment or reimbursement of all or a portion of certain medical
and dental expenses to eligible participants. Eligible participants include
active full-time employees of the Company and their dependents. Eligible
terminated and retired employees may continue to participate in the Trust, on a
contributory basis, for up to 18 months subsequent to the date of termination or
retirement. The provision for Company contributions to the Trust approximated
$467,000, $455,000 and $380,000 for the years ended December 31, 1999, 1998 and
1997, respectively.
The Company has a deferred compensation plan for all employees who are not part
of a bargaining unit. Company contributions are voluntary and are established as
a percentage of each participant's base salary. Company contributions to the
deferred compensation plan were approximately $290,000, $270,000 and $260,000
for 1999, 1998 and 1997, respectively.
In 1996, shareholders approved the adoption of the 1996 Stock Option Plan (the
Plan) for the officers, directors, and key employees of the Company.
The Plan is administered by an Option Committee (Committee) appointed by the
Board of Directors. The Committee has the authority, subject to Board of
Directors resolutions and the provisions of the Plan, to determine the persons
to whom awards will be granted, the number, type and terms of the awards,
including vesting and to interpret the Plan.
The Plan permits the granting of incentive stock options, non-qualified stock
options and stock appreciation rights (SAR). The total number of shares of
common stock with respect to which awards may be granted under the Plan is
200,000 shares. The option price of each option and the base for calculation of
appreciation of each SAR will be no less than the fair market value at the date
of grant. The term of each option will be fixed and may not exceed ten years
from the date of grant. The Committee may make options exercisable in
installments and may accelerate exercisability.
The Financial Accounting Standards Board issued Statement No. 123, "Accounting
for Stock Based Compensation" ("SFAS No. 123") for transactions entered into
during 1996 and thereafter. The Statement established a fair value method of
accounting for employee stock options and similar equity instruments, and
encourages all companies to adopt that method of accounting for all of their
employee stock compensation plans. However, the Statement allows companies to
continue measuring compensation cost for such plans using accounting guidance in
place prior to SFAS No. 123. Companies that elect to remain with the former
method of accounting must make pro forma disclosures of net income and earnings
per share as if the fair value method provided for in SFAS No. 123 had been
adopted.
27
28
TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1999, 1998 AND 1997
- --------------------------------------------------------------------------------
NOTE H - EMPLOYEE BENEFIT PLANS (CONTINUED)
The Company has not adopted the fair value accounting provisions of SFAS No.
123. Accordingly, SFAS No. 123 has no impact on the Company's consolidated
financial position or results of operations.
The Company accounts for the Plan under APB Opinion No. 25, "Accounting for
Stock Issued to Employees." No compensation costs have been recognized for the
Plan. Had compensation costs for the Plan been determined based on the fair
value of the options at the grant dates consistent with the method of SFAS No.
123, the Company's net earnings and earnings per share would have been reduced
to the pro forma amounts indicated below:
1999 1998 1997
--------- --------- ----------
Net earnings
As reported $225,660 $4,071,729 $2,711,560
Pro forma $ 82,018 $3,887,160 $2,521,929
Basic earnings per share
As reported $ .07 $ 1.30 $ .86
Pro forma $ .03 $ 1.24 $ .80
Diluted earnings per share
As reported $ .07 $ 1.28 $ .85
Pro forma $ .03 $ 1.22 $ .78
The fair value of each option grant is estimated on the date of grant using the
Black-Scholes options-pricing model with the following weighted average
assumptions for the options and SAR's granted in 1999 and 1998, respectively:
risk-free interest rates of 5.70% and 5.63%; expected volatility of 46.71% and
56.15%; expected lives of 10 years for options and four years for SAR's for all
years; and no dividend yield for all years.
A summary of the status of the Plan as of December 31, 1999, 1998, and 1997 and
changes during the years then ended is as follows:
1999 1998 1997
-------------------------- ---------------------------- ---------------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
STOCK EXERCISE STOCK EXERCISE STOCK EXERCISE
OPTIONS SAR'S PRICE OPTIONS SAR'S PRICE OPTIONS SAR'S PRICE
------- ------ -------- -------- ------ -------- ------- ------ --------
Outstanding at
Beginning of
year 124,200 75,000 $ 7.141 130,000 78,000 $ 6.875 136,000 81,600 $ 6.875
Granted 10,000 3,000 7.840 5,000 3,000 13.500 - -
Exercised - - - 2,400 2,400 6.875 1,200 - 6.875
Forfeited - - - 8,400 3,600 6.875 4,800 3,600 6.875
------- ------ -------- -------- ------ -------- ------- ------ --------
Outstanding at
end of year 134,200 78,000 $ 7.18 124,200 75,000 $ 7.141 130,000 78,000 $ 6.875
======= ====== ======== ======== ====== ======== ======= ====== ========
28
29
TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1999, 1998 AND 1997
- --------------------------------------------------------------------------------
NOTE H - EMPLOYEE BENEFIT PLANS (CONTINUED)
1999 1998 1997
---------------- ----------------- --------------------
STOCK STOCK STOCK
OPTIONS SAR'S OPTIONS SAR'S OPTIONS SAR'S
------- ------- -------- ------- -------- -------
Exercisable at
Year end 72,520 73,000 47,680 48,000 26,000 26,000
Weighted
Average fair
value of grants
during the year $ 5.27 $ 3.22 $ 8.563 $ 8.563 - -
The options are for a ten year duration with twenty percent vesting in each of
the first five years. The SAR's are for a four year duration with one-third
vesting in each of the first three years. Holders of SAR's will upon exercise,
receive in cash or other property at the sole discretion of the option
committee, the difference between the base price and the market price of the
Company's stock on the date of exercise. Since the SAR's were issued in tandem
with stock options, upon exercise of a SAR the holder must surrender an
equivalent number of stock options.
NOTE I - BUSINESS ACQUISITIONS
On September 1, 1998, the Company acquired all the issued and outstanding common
and preferred stock of The Lobb Company (Lobb), in exchange for $286,200. The
Lobb Company was owned by certain officers and directors of the Company and is
in the residential humidifier business. Goodwill of $217,000 was recorded in
connection with this acquisition, which has been accounted for under the
purchase method of accounting and accordingly the accompanying consolidated
financial statements include Lobb's results from the date of acquisition. Lobb's
operating results for 1998 and 1997 were not significant, accordingly no pro
forma information is presented.
On February 8, 1999, the Company acquired all the outstanding common stock of
Plastech Transparencies, Inc. (Plastech), in exchange for $1,609,741. Plastech
changed names to TransGlass, Inc. and is an early stage manufacturer of custom
designed windows for the transportation industry. Goodwill of $1,447,000 was
recorded in connection with this acquisition, which has been accounted for under
the purchase method of accounting and accordingly the accompanying consolidated
financial statements include TransGlass's results from the date of acquisition.
TransGlass's operating results prior to the acquisition for 1999 and 1998 were
not significant, accordingly, no pro forma information is presented.
NOTE J - SIGNIFICANT CUSTOMERS
The Company has one major customer which accounted for ten percent or more of
consolidated net sales in 1999 and 1998. Sales to this customer amounted to
$4,362,000 and $3,658,000, respectively. The Company had two major customers in
1997. Sales to these customers amounted to $8,538,000.
29
30
TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1999, 1998 AND 1997
- --------------------------------------------------------------------------------
NOTE K - PATENT LITIGATION
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 January 3,
1999, the defendant's appeal was denied, and interest was paid to close the
matter.
NOTE L - GEOGRAPHIC INFORMATION
Financial information summarized by geographic location is as follows:
1999 1998 1997
------------------------ -------------------------- --------------------------
LONG- LONG- LONG-
LIVED LIVED LIVED
REVENUES ASSETS REVENUES ASSETS REVENUES ASSETS
----------- ---------- ----------- ---------- ----------- ----------
United States $32,336,319 $7,382,489 $26,208,932 $5,552,400 $27,527,627 $4,903,047
United Kingdom 1,609,910 1,786,385 3,425,315 740,088 2,169,005 634,555
Canada 4,452,153 - 4,101,794 - 3,900,835 -
Other 1,145,795 - 2,059,345 - 1,784,994 -
----------- ---------- ----------- ---------- ----------- ----------
Total $39,544,177 $9,168,874 $35,795,386 $6,292,488 $35,382,461 $5,537,602
=========== ========== =========== ========== =========== ==========
30
31
SUPPLEMENTAL INFORMATION
31
32
TRANS-INDUSTRIES, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
DECEMBER 31, 1999, 1998, AND 1997
- --------------------------------------------------------------------------------
ALLOWANCE
FOR DOUBTFUL ALLOWANCE
ACCOUNTS BAD WRITE-OFF OF FOR DOUBTFUL
BEGINNING DEBT UNCOLLECTIBLE ACCOUNTS
OF PERIOD EXPENSE ACCOUNTS END OF PERIOD
------------ --------- ------------- -------------
Year ended December 31, 1997 $ 109,000 $ 214,000 $ 110,000 $ 213,000
Year ended December 31, 1998 $ 213,000 $ 172,000 $ 160,000 $ 225,000
Year ended December 31, 1999 $ 225,000 $ 205,000 $ 67,000 $ 363,000
32
33
PART III
Item 10. Directors and Executive Officers of the Registrant.
Name of Director (a)
or Officer (b) Age Office Held and/or Principal Occupation Term Expires
-------------- --- --------------------------------------- ------------
Dale S. Coenen (a) 71 Chairman of the Board and President May 2000
and (b) since 1972.
Duncan Miller (a) 75 Director since 1967, Investment May 2000
Counselor.
Matthew M. Wirgau (a) 48 Director since 1992. May 2000
Robert J. Ruben (b) 76 Secretary since 1967. May 2000
Kai R. Kosanke (b) 49 Vice-President, Controller & Treasurer May 2000
Since January, 1987
Paul Clemo (b) 39 Assistant Secretary since May 1991. May 2000
Assistant Treasurer since May 1991.
O.K. Dealey, Jr. (a) 59 President - Transmatic, Inc. May 2000
and (b) Director since 1998.
Jessie D. Swinea, Jr. (a) 64 President - Vultron, Inc. May 2000
and (b) Director since 1998.
The Company's directors and executive committee's fees for 1999
were as follows: Dale S. Coenen $25,000.00; Duncan Miller, $25,000.00; Matthew
M. Wirgau, $25,000.00; O.K. Dealey, Jr., $25,000.00; and Jessie D.
Swinea, Jr., $25,000.00
Item 11. Executive Compensation.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Item 13. Certain Relationships and Related Transactions
The information called for by Part III (Items 11, 12, and 13, and
additional information regarding Item 10), is incorporated by reference from the
Registrant's definitive proxy statement in connection with its Annual Meeting of
Shareholders to be held on May 17, 2000, which Proxy Statement will be filed
pursuant to Regulation 14A.
33
34
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1, 2. Consolidated Financial Statements for Trans-Industries, Inc.
and Subsidiaries for years ended December 31, 1999, 1998, and 1997
are filed under Part II, Item 8.
3. Exhibits:
Exhibit 3 (a) Restated Certificate of Incorporation incorporated
herein by reference to Form 8 filed May 17, 1982.
Exhibit 3 (b) Bylaws incorporated herein by reference to
Registration Statement No. 2-30317.
Exhibit 13 (b) Form 10-Q for quarter ended September 30, 1999,
filed with the Securities and Exchange Commission on
November 12, 1999 incorporated herein by reference.
Exhibit 21 List of Subsidiaries (see page 36).
(b) No reports on Form 8-K for the three months ended December 31,
1999 were required to be filed.
34
35
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this Annual
Report to be signed on its behalf by the undersigned, thereunto duly authorized.
TRANS-INDUSTRIES, INC.
Date: 3/23/00 /s/ Dale S. Coenen
------------------- -------------------------------
Dale S. Coenen
Chairman of the Board of Directors
and Chief Executive Office
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons, which include
the President, the Chief Financial Officer, the Assistant Treasurer, and a
majority of the Board of Directors on behalf of the Registrant and in the
capacities and on the dates indicated:
/s/ Dale S. Coenen President 3/23/00
- ---------------------------- ---------------------
(Dale S. Coenen)
/s/ Kai Kosanke Vice-President 3/23/00
- ---------------------------- ---------------------
(Kai Kosanke) and Chief Financial Officer
/s/ Paul Clemo Assistant Treasurer 3/23/00
- ---------------------------- ---------------------
(Paul Clemo)
/s/ Jessie D. Swinea, Jr. Director 3/23/00
- ---------------------------- ---------------------
(Jessie D. Swinea, Jr.)
/s/ O.K. Dealey, Jr. Director 3/23/00
- ---------------------------- ---------------------
(O.K. Dealey, Jr.)
35
36
Exhibit Index
-------------
Exhibit No. Description
- ----------- -----------
21 List of Subsidiaries
27 Financial Data Schedule