T.J.T, Inc. Reports Third Quarter Profitability
EMMETT, Idaho--Aug. 14, 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 a slight increase in sales in the third quarter ended June 30, 2002 despite a sluggish manufactured housing market.Sales increased to $5.6 million from $5.5 million in the same quarter a year ago while manufacturing housing shipments in T.J.T.'s market were flat compared to a year ago. Higher costs of goods related to increased use of new tires lowered gross profit to $1.1 million, or 20.3 percent, from $1.2 million, or 21.7 percent in the same 2001 quarter. Selling, general and administrative expenses in the third quarter decreased from the year-ago period, the tenth consecutive quarter of lower expenses. Net income of $67,000, or $0.01 per share, declined from $69,000, or $0.02 per share, a year ago.
"Market conditions remain difficult," said Terrence Sheldon, president and chief executive officer of T.J.T. "Not only is the manufactured housing market flat-to-declining, but we are facing pricing pressure stemming from a more competitive market. Even a slight increase in our sales year-over-year is a significant accomplishment."
During the quarter, a larger majority of new tires, which carry lower sales margins, were utilized by T.J.T. than in the prior year quarter, as a result of a change in federal government rules on manufactured home load limit per tire. "This change reduced gross profit for the quarter by approximately $102,000 or 1.8 percent," Sheldon explained. The new, higher rated tires will cycle through the company's distribution channels and eventually be sold as used tires.
For the nine months ended June 30, 2002, sales of $14.9 million declined from $15.8 million last year. Higher gross profit and lower selling, general and administrative expenses for the nine months combined to lower losses, before the cumulative effect of an accounting change. Losses, before the accounting change, were $179,000, or $0.04 per common share, compared to losses of $395,000, or $0.17 per common share for the 2001 nine months. Losses, including implementation of SFAS 142 "Goodwill and Other Intangible Assets" in the first quarter which resulted in a $748,000 write down of goodwill, net of taxes, totaled $927,000, or $0.21 per share, up from $781,000, or $0.17 per common. 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 Nine Months Ended
June 30, June 30,
-----------------------------------------
2002 2001 2002 2001
-----------------------------------------
Sales (net of returns and
allowances):
Axles and tires $ 4,182 $ 3,980 $ 11,394 $ 11,339
Accessories and siding 1,393 1,526 3,484 4,494
-----------------------------------------
Total sales 5,575 5,506 14,878 15,833
Cost of goods sold
Axles and tires 3,443 3,199 9,292 9,722
Accessories and siding 1,002 1,110 2,474 3,237
-----------------------------------------
Total cost of goods sold 4,445 4,309 11,766 12,959
-----------------------------------------
Gross profit 1,130 1,197 3,112 2,874
Selling, general and
administrative expenses 1,112 1,137 3,536 3,654
-----------------------------------------
Operating income (loss) 18 60 (424) (780)
Interest income 9 16 36 56
Interest expense - 11 1 85
Investment property income
(expense) 55 62 92 210
Other income 19 1 23 11
-----------------------------------------
Income (loss) before
taxes 101 128 (274) (588)
Income taxes (benefit) (34) (59) (95) (193)
-----------------------------------------
Income (loss) before
cumulative effect of
accounting change 67 69 (179) (395)
Cumulative effect of accounting
change, net of
income taxes - - (748) -
Net income (loss) $ 67 $ 69 $ (927) $ (781)
=========================================
Net income (loss) per common
share
Continuing operations $ .01 $ .02 $ (.04) $ (.17)
Cumulative effect of
accounting change - - (0.17) -
-----------------------------------------
Net income (loss) $ .01 $ .02 $ (.21) $ (.17)
-----------------------------------------
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)
June 30, Sept.30,
2002 2001
-----------------
Current assets:
Cash and cash equivalents $ 185 $ 329
Accounts receivable and notes receivable
(net of allowances for doubtful accounts of $91 and
$84) 1,541 1,501
Inventories 2,783 2,679
Prepaid expenses and other current assets 67 80
-----------------
Total current assets 4,576 4,589
Property, plant and equipment, net of
accumulated depreciation 762 952
Notes receivable 182 265
Notes receivable from related parties 159 186
Real estate held for investment 600 562
Deferred charges and other assets 137 145
Deferred tax asset 654 516
Goodwill - 790
-----------------
Total assets $ 7,070 $ 8,005
=================
Current liabilities:
Accounts payable $ 880 $ 759
Accrued liabilities 229 311
-----------------
Total current liabilities 1,109 1,070
Deferred credits and other noncurrent obligations 83 130
-----------------
Total liabilities 1,192 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 85 1,012
Treasury stock (349,800 shares at cost) (393) (393)
-----------------
Total shareholders' equity 5,878 6,805
-----------------
Total liabilities and shareholders' equity $ 7,070 $ 8,005
=================
T.J.T., INC.
STATEMENTS OF CASH FLOWS
(Dollars in thousands)
For the Nine
months ended
June 30,
-----------------
2002 2001
-----------------
Cash flows from operating activities:
Net loss $ (927) $ (395)
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Depreciation and amortization 273 453
Cumulative effect of accounting change 748 -
Gain on sale of assets (79) (215)
Change in receivables (48) 371
Change in inventories (104) 980
Change in prepaid expenses and other current
assets 13 (37)
Change in accounts payable 121 (18)
Change in taxes (96) 102
Change in other assets and liabilities (165) (155)
-----------------
Net cash provided (used) by operating
activities (264) 1,086
-----------------
Cash flows from investing
activities:
Additions to property, plant and equipment (43) (69)
Proceeds from sale of assets 28 15
Issuance of notes receivable (25) 0
Payments on notes receivable 103 67
Land purchased for investment (28) (3)
Sale of land purchased for
investment 85 238
-----------------
Net cash provided (used) by investing
activities 120 248
-----------------
Cash flows from financing
activities:
Net proceeds from credit line - (1346)
-----------------
Net cash provided (used) by financing
activities - (1,346)
-----------------
Net decrease in cash and cash equivalents (144) (12)
Beginning cash and cash equivalents 329 54
-----------------
Ending cash and cash equivalents $ 185 $ 42
=================
Supplemental information:
Interest paid $ 1 $ 85
Income taxes paid, net of refunds - (296)
Noncash transactions:
Prepaid operating lease $ 4 $ -
Reacquisition of investment property by
cancellation of note receivable 40 -
Cumulative effect of change in accounting
principle 748 -
Sale of land by issuance of notes
receivable 20 34