T.J.T., Inc. Reports Slightly Higher Sales, Narrows Losses in Second Quarter
EMMETT, Idaho--May 15, 2002--T.J.T., Inc. (OTCBB:AXLE:OB), a recycler of axles and tires and wholesale distributor of O.E.M. parts and aftermarket material to the manufactured housing industry, reported 2 percent higher sales in the second quarter ended March 31, 2002 after nine consecutive quarters of sales decline.Sales increased to $4.9 million from $4.8 million in the same quarter a year ago, as manufactured housing shipments in T.J.T.'s market area rose slightly. Gross profit of $947,000 improved 21 percent quarter-over-quarter, pushing gross margin to 19.3 percent -- 3 percent higher than 16.3 percent in the same 2001 period. Selling, general and administrative expenses fell below the year-ago levels, reflecting ongoing cost controls. The loss of $ (0.03) per share from continuing operations in the second quarter narrowed the loss from $(0.05) per share reported in the comparable 2001 quarter on the same number of weighted shares outstanding.
"We are making steady progress in moving toward our operational and financial goals," said Terrence Sheldon, President and Chief Executive Officer of T.J.T. "Although manufactured housing shipments were up 3 percent in January and February in the company's market area, the industry continues to be negatively affected by reduced consumer demand and tighter credit requirements."
Sheldon pointed out that in the second quarter, T.J.T. incurred $61,000 in legal expenses related to favorable settlement of a lawsuit against The Bradley Group. The Bradley Group, from which T.J.T. acquired Bradley Enterprises, Inc. in 1996, began competing in the tire and axle business in June 2001 despite covenants not to do so. A permanent injunction prohibits The Bradley Group from competing against T.J.T.'s tire and axle and aftermarket sales business until January 1, 2004.
"Gross profit would have been even higher in the quarter had there not been a change effective January 1 in federal government rules on manufactured home load limit per tire," Sheldon said. "As a result of that change, T.J.T. purchased and resold new tires which carry lower sales margins, reducing gross profit by approximately $73,000, or 1.5 percent in gross margins, in the quarter." The company expects margins to improve in the last half of the fiscal year, as the new, higher rated tires cycle through the company's distribution channels and are sold as used tires.
For the six months ended March 31, 2002, sales of $9.3 million were down from $10.3 million last year. An 18 percent increase in gross profit and lower selling, general and administrative expenses lowered losses, before the cumulative effect of an accounting change, to $239,000 from $464,000 in the same 2001 period. The loss for the six months of $987,000 reflects implementation of SFAS 142 "Goodwill and Other Intangible Assets" in the first quarter which resulted in a $748,000 writedown of goodwill, net of taxes. The loss per common share from continuing operations fell to $(0.05) from $(0.10) a year ago. The accounting change increased that loss by $(0.17) per share to $(0.22) per share for the year-to-date. The goodwill is now off the balance sheet from the one-time accounting change.
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.
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.
T.J.T., INC.
STATEMENTS OF OPERATION
(Dollars in thousands except per share amounts)
Three Months Ended Six Months Ended
March 31, March 31,
-----------------------------------------------
2002 2001 2002 2001
-----------------------------------------------
Sales (net of returns and
allowances):
Axles and tires $3,898 $3,479 $7,212 $7,359
Accessories and siding 1,010 1,332 2,091 2,968
-----------------------------------------------
Total sales 4,908 4,811 9,303 10,327
Cost of goods sold
Axles and tires 3,227 3,088 5,849 6,523
Accessories and siding 734 938 1,472 2,127
-----------------------------------------------
Total cost of goods
sold 3,961 4,026 7,321 8,650
-----------------------------------------------
Gross profit 947 785 1,982 1,677
Selling, general and
administrative expenses 1,210 1,240 2,424 2,517
-----------------------------------------------
Operating income (loss) (263) (455) (442) (840)
Interest income 15 19 27 40
Interest expense - 35 1 74
Investment property income
(expense) 25 101 37 148
Other income (1) 4 4 10
-----------------------------------------------
Income (loss) before
taxes (224) (366) (375) (716)
Income taxes (benefit) (78) (125) (136) (252)
-----------------------------------------------
Income (loss) before
cumulative effect of
accounting change (146) (241) (239) (464)
Cumulative effect of
accounting change,
net of income taxes - - (748) -
-----------------------------------------------
Net income (loss) $(146) $(241) $(987) $(464)
===============================================
Net income (loss) per
common share
Continuing operations $(.03) $(.05) $(.05) $(.10)
Cumulative effect of
accounting change - - (0.17) -
-----------------------------------------------
Net income (loss) $(.03) $(.05) $(.22) $(.10)
===============================================
Weighted average
shares outstanding 4,504,939 4,504,939 4,504,939 4,504,939
===============================================
T.J.T., INC.
BALANCE SHEETS
(Dollars in thousands)
March 31, Sept. 30,
2002 2001
--------------------------
Current assets:
Cash and cash equivalents $25 $329
Accounts receivable and notes receivable
(net of allowances for doubtful accounts
of $91 and $84) 1,413 1,501
Inventories 3,080 2,679
Prepaid expenses and other current assets 108 80
--------------------------
Total current assets 4,626 4,589
Property, plant and equipment, net of
accumulated depreciation 807 952
Notes receivable 204 265
Notes receivable from related parties 171 186
Real estate held for investment 610 562
Deferred charges and other assets 104 145
Deferred tax asset 695 516
Goodwill - 790
--------------------------
Total assets $7,217 $8,005
==========================
Current liabilities:
Accounts payable 1,058 759
Accrued liabilities 237 311
--------------------------
Total current liabilities 1,295 1,070
Deferred credits and other noncurrent
obligations 104 130
--------------------------
Total liabilities 1,399 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 25 1,012
Treasury stock (349,800 shares at cost) (393) (393)
--------------------------
Total shareholders' equity 5,818 6,805
--------------------------
Total liabilities and shareholders' equity $7,217 $8,005
==========================
T.J.T., INC.
STATEMENTS OF CASH FLOWS
(Dollars in thousands)
For the six months ended
--------------------------
March 31,
--------------------------
2002 2001
--------------------------
Cash flows from operating activities:
Net loss $(987) $(464)
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 210 310
Cumulative effect of accounting change 748 -
Gain on sale of assets (30) (158)
Change in receivables 81 439
Change in inventories (401) 344
Change in prepaid expenses and other
current assets (28) 10
Change in accounts payable 299 85
Change in taxes (137) 35
Change in other assets and liabilities (99) (78)
--------------------------
Net cash provided (used) by operating
activities (344) 523
--------------------------
Cash flows from investing activities:
Additions to property, plant and equipment (29) (69)
Proceeds from sale of assets 8 15
Issuance of notes receivable (5) -
Payments on notes receivable 48 5
Land purchased for investment (25) (3)
Sale of land purchased for investment 43 176
--------------------------
Net cash provided (used) by investing
activities 40 124
--------------------------
Cash flows from financing activities:
Net proceeds from credit line - (658)
--------------------------
Net cash provided (used) by financing
activities - (658)
--------------------------
Net decrease in cash and cash equivalents (304) (11)
Beginning cash and cash equivalents 329 54
--------------------------
Ending cash and cash equivalents $25 $43
==========================
Supplemental information:
Interest paid $1 $74
Income taxes paid, net of refunds - (288)
Noncash transactions:
Prepaid operating lease $4 $ -
Reacquisition of investment property by
cancellation of note receivable 40 21
Cumulative effect of change in accounting
principle 748 -