T.J.T., Inc. Lowers Losses From Continuing Operations in First Fiscal Quarter
EMMETT, Idaho--Feb. 14, 2002--T.J.T., Inc. (OTCBB:AXLE), a recycler of axles and tires and wholesale distributor of O.E.M. parts and aftermarket material to the manufactured housing industry, lowered losses in the first quarter of fiscal 2002 from the prior year same period before the effect of an accounting change.Sales in the quarter ended December 31, 2001 were $4.4 million, a 20 percent decline from $5.5 million a year ago as the manufactured housing market remained sluggish. A higher gross profit margin of 24 percent, compared to 16 percent in the 2001 quarter, and lower selling, general and administrative expenses resulted in a loss significantly lower than last year, before the effect of the accounting change. During the quarter, the company incurred $105,000 in legal fees related to a lawsuit settled in January 2002 which was offset by cost cutting efforts in the past year.
The loss was $93,000, or $0.02 per share, before the accounting change, compared to $223,000 loss, or $0.05 per share a year ago. The implementation of SFAS 142 "Goodwill and Other Intangible Assets" resulted in a $748,000 writedown of goodwill, net of taxes, or $0.17 per share, which increased the loss for the quarter to $841,000, or $0.19 per share. Terrance Sheldon, president and chief executive of T.J.T. noted that the goodwill is now off the balance sheet from the one-time accounting change.
"Although results are somewhat clouded by the accounting change, we are pleased with our financial performance improvement from continuing operations despite the weak market," said Sheldon, "In the company's market area, manufactured housing production for the quarter ended December 31, 2001 was down by approximately 17 percent."
Sheldon also reported that T.J.T. received a favorable court ruling in its lawsuit against The Bradley Group. In July 2001, the company asked the Federal District Court for the State of Idaho for monetary damages and injunctive relief based breach of covenants by members of the Bradley Group not to compete. T.J.T. acquired Bradley Enterprises, Inc. in 1996 from the Bradley Group, which, despite covenants granted to T.J.T. not to compete, began competing in the tire and axle business in June 2001. On January 10, 2002, the court granted T.J.T. a preliminary injunction prohibiting all members of the Bradley Group from competing against T.J.T., resulting in a stipulated permanent injunction against the Bradley Group from competing against T.J.T.'s tire and axle and aftermarket sales business which The Bradley Group has agreed will be replaced by a permanent injunction lasting until January 1, 2004.
Established in 1977, T.J.T. is a wholesale distributor of O.E.M. parts and aftermarket materials to the manufactured housing industry and the largest recycler and supplier of manufactured home axles and tires in the western United States. The company operates recycling facilities in Idaho, Washington, California, Colorado and Arizona and serves customers in 11 Western states.
T.J.T., INC.
STATEMENTS OF OPERATION (unaudited)
(Dollars in thousands except per share amounts)
For the three months ended December 31, 2001 2000
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Sales (net of returns and allowances):
Axles and tires $ 3,314 $ 3,880
Accessories and siding 1,081 1,636
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Total sales 4,395 5,516
Cost of goods sold:
Axles and tires 2,622 3,443
Accessories and siding 738 1,181
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Total cost of goods sold 3,360 4,624
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Gross profit 1,035 892
Selling, general and administrative
expenses 1,214 1,277
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Operating income (loss) (179) (385)
Interest income 12 21
Interest expense (1) (39)
Other income 5 6
Investment property income 12 47
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Income (loss) before taxes (151) (350)
Income taxes (benefit) (58) (127)
------------- ------------
Income (loss) before cumulative
effect of accounting change (93) (223)
Cumulative effect of accounting change,
net of income taxes (748) --
------------- ------------
Net income (loss) $ (841) $ (223)
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Net income (loss) per common share
Continuing operations $ (.02) $ (.05)
Cumulative effect of accounting
change $ (.17) $ --
------------- ------------
Net income (loss) $ (.19) $ (.05)
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Weighted average shares outstanding 4,504,939 4,503,539
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T.J.T., INC.
BALANCE SHEETS (unaudited)
(Dollars in thousands)
Dec. 31 Sept. 30
2001 2001
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Current assets:
Cash and cash equivalents $ 450 $ 329
Accounts receivable and notes receivable
(net of allowance for doubtful accounts
of $91 and $84) 901 1,501
Inventories 2,969 2,679
Prepaid expenses and other current
assets 53 80
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Total current assets 4,373 4,589
Property, plant and equipment, net of
accumulated depreciation 871 952
Notes receivable 195 265
Notes receivable from related parties 179 186
Real estate held for investment 626 562
Deferred charges and other assets 124 145
Deferred tax asset 616 516
Goodwill -- 790
------------- -------------
Total assets $ 6,984 $ 8,005
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Current liabilities:
Accounts payable $ 719 $ 759
Accrued liabilities 196 311
------------- -------------
Total current liabilities 915 1,070
Deferred income and other noncurrent
obligations 105 130
------------- -------------
Total liabilities 1,020 1,200
Shareholders' equity:
Common stock, $.001 par value; 10,000,000
shares authorized; 4,854,739
shares issued and outstanding 5 5
Capital surplus 6,181 6,181
Retained earnings 171 1,012
Treasury stock (349,800 shares at cost) (393) (393)
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Total shareholders' equity 5,964 6,805
------------- -------------
Total liabilities and shareholders'
equity $ 6,984 $ 8,005
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T.J.T., INC.
STATEMENTS OF CASH FLOWS (unaudited)
(Dollars in thousands)
For the three months ended December 31, 2001 2000
-------- --------
Cash flows from operating activities:
Net income (loss) $ (841) $ (223)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 117 160
Cumulative effect of accounting change 748 --
(Gain) loss on sale of assets (5) (52)
Change in receivables 600 916
Change in inventory (290) (426)
Change in prepaid expenses and other current
assets 27 (22)
Change in accounts payable (40) (83)
Change in taxes (58) (128)
Change in other assets and liabilities (139) (70)
-------- --------
Net cash provided by operating activities 119 72
-------- --------
Cash flows from investing activities:
Additions to property, plant and equipment (15) (3)
Issuance of notes receivable (5) --
Payments on notes receivable 42 2
Proceeds from sale of assets 5 8
Land purchased for investment (25) --
Sale of land -- 59
-------- --------
Net cash provided by investing activities 2 66
-------- --------
Cash flows from financing activities:
Net proceeds from credit line -- (155)
-------- --------
Net cash used by financing activities -- (155)
-------- --------
Net increase (decrease) in cash and cash
equivalents 121 (17)
Cash and cash equivalents at October 1 329 54
-------- --------
Cash and cash equivalents at December 31 $ 450 $ 37
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Supplemental information:
Interest paid $ 1 $ 39
Income taxes paid, net of refunds -- --
Noncash transactions:
Reaquisition of investment property by
cancellation of note receivable $ 40 $ --
Cumulative effect of change in accounting
principle 748 --
This release contains certain forward-looking statements, which are based on management's current expectations including, but not limited to, general economic conditions, changes in interest rates, deposit flows, real estate values and competition, changes in accounting principles, policies or guidelines, changes in legislation or regulations, and other economic, competitive, governmental, regulatory and technological factors affecting the company's operations, pricing, products and services.