FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarter Ended September 27, 1996 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 As of October 22, 1996, the Registrant had outstanding approximately 1,208,279* Shares of Common Stock. * See PART II. OTHER INFORMATION, ITEM 2 in connection with a one-for- four reverse stock split, whose effective date of record was October 13, 1994. This document contains a total of 8 pages.
<TABLE> <CAPTION> PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS TRIO-TECH INTERNATIONAL CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (In Thousands) Sep. 27 Jun. 28, 1996 1996 -------- -------- <S> <C> <C> ASSETS CURRENT ASSETS Cash $ 743 $ 2,114 Certificates of deposit 4,665 3,114 Accounts receivable - net 4,908 4,783 Notes & other receivables 403 179 Inventories 1,813 1,430 Prepaid expenses 271 140 ------- ------- Total current assets 12,803 1,760 ------- ------- PROPERTY, EQUIPMENT AND CAPITALIZED LEASES, NET 5,033 5,330 ------- ------- OTHER ASSETS 304 326 ------- ------- TOTAL ASSETS $ 18,140 $ 17,416 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Notes payable $ 131 $ 245 Accounts payable 1,822 1,813 Accrued expenses 4,063 4,032 Income taxes payable 1,960 1,598 Current portion of long-term debt and capitalized leases 408 481 ------ ------- Total current liabilities 8,384 8,169 ======= ======== LONG-TERM DEBT AND CAPITALIZED LEASES, Net of current portion 675 688 DEFERRED TAXES 770 771 MINORITY INTEREST 2,874 2,581 SHAREHOLDERS' EQUITY: Common stock; authorized, 2,500,000 shares; issued and outstanding, 1,208,279 shares at September 27, 1996, and 1,205,804 shares at June 28, 1996 stated at 4,884 4,878 Accumulated deficit (1,167) (1,336) Cumulative currency translation 1,720 1,665 ------- -------- Total shareholders' equity 5,437 5,207 ------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 18,140 $ 17,416 ======== ======== <FN> SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. </TABLE>
<TABLE> <CAPTION> TRIO-TECH INTERNATIONAL CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited) (In Thousands, except Earnings per Share Data) THREE MONTHS ENDED ---------------------- SEP. 27, SEP. 29, 1996 1995 ---------- ----------- <S> <C> <C> Revenues $ 5,616 $ 5,733 Cost of revenues 3,322 3,721 ------------- ------------ Gross profit 2,294 2,012 ------------- ------------ Selling, general & administrative expenses 1,416 1,275 ------------- ------------- Income from operations 878 737 ------------- ------------ Other income (expense): Interest expense (35) (41) Other income 126 184 ------------ ------------ Total 91 143 ------------ ------------ Income before income taxes and minority interest 969 880 Income taxes 421 360 ----------- ------------ Income before minority interest 548 520 Minority interest 379 400 ----------- ------------ Net income $ 169 $ 120 =========== ============ Net income per share: Primary $ 0.13 $ 0.09 Fully diluted $ 0.13 $ 0.09 Weighted average number of shares outstanding Primary 1,280 1,274 Fully diluted 1,289 1,304 <FN> SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. </TABLE>
<TABLE> <CAPTION> TRIO-TECH INTERNATIONAL CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (In Thousands) THREE MONTHS ENDED -------------------- SEP. 27, SEP. 29, 1996 1995 ---------- ----------- <S> <C> <C> Net income $ 169 $ 120 Cash flows from operating activities: Adjustments to reconcile net income to Cash provided by operations: Depreciation and amortization 370 388 Loss on disposal of property and equipment 37 Effect of exchange rate changes on Operating assets (29) (54) Changes in assets and liabilities: Accounts receivable, net (125) (946) Notes and other receivables (224) 8 Inventories (383) (68) Prepaid expenses & other current assets (131) (132) Other assets 3 60 Accounts payable and accrued expenses 402 1,200 Deferred taxes (1) (26) -------- ---------- Net cash (used in) provided by operating activities (81) 430 -------- ---------- Cash flows from investing activities: Certificates of deposit (1,551) (497) Capital expenditures, net (17) (200) Minority interest 305 586 ------- ---------- Net cash used in investing activities (1,263) (111) ------- ---------- Cash flows from financing activities: Payments on notes payable and lines of credit (104) (219) Proceeds from long-term debt and capitalized leases 30 19 Principal payments of long-term debt capitalized leases (126) (59) Issuance of common stock 6 ------- ---------- Net cash used in financing activities (194) (259) ------- ---------- Effect of exchange rate changes on cash (2) 31 Net (decrease) increase in cash (1,371) 211 Cash, beginning of the period 2,114 674 ------- ---------- Cash , end of the period $ 743 $ 885 ======= ========== Supplemental disclosure of cash flow information Cash paid during the period for: Interest $ 29 $ 39 Income taxes $ 25 $ 25 <FN> SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. </TABLE>
TRIO-TECH INTERNATIONAL NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. Basis of Presentation The interim financial statements as of September 27, 1996, and for the three- months ended September 27, 1996, are unaudited. In the opinion of management, the unaudited financial statements include all adjustments necessary, consisting of normal recurring accruals, for a fair presentation of such information. Certain reclassifications of prior year amounts have been made to conform to the current year financial statement presentation. The consolidated results of operations for the three-month periods ending September 27, 1996 and September 29, 1995, are not necessarily indicative of the results expected for a full year. <TABLE> NOTE 2. Inventories The composition of inventories is as follows (in thousands): <CAPTION> Sept. 27, June 28, 1996 1996 ---------- ----------- <S> <C> <C> Raw materials $ 790 $ 640 Work in process 383 294 Finished goods 640 496 ---------- ----------- $ 1,813 $ 1,430 ========== =========== </TABLE> <TABLE> NOTE 3. Other Assets The composition of other assets is as follows (in thousands): <CAPTION> Sept. 27, June 28, 1996 1996 --------- --------- <S> <C> <C> Cost in excess of net assets acquired, net of accumulated amortization $ 209 $ 228 Other assets 95 98 --------- -------- $ 304 $ 326 ========= ======== </TABLE> NOTE 4. Common Stock In October, 1994 the Board of Directors approved a one-for-four reverse stock split. Common stock and stock options have been retroactively adjusted for the split.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 1. Liquidity and Capital Resources The Company's working capital improved $ 828,000 during the first quarter. This is due to increases in inventories and receivables. The Company's subsidiary, TTI Pte, has a secured credit agreement with Standard Chartered Bank which provides for a total line of credit of $ 655,000. Borrowings under these lines amounted to $16,000 as of September 27, 1996. The interest rate on borrowings is at the bank's prime rate (6.5% at September 27, 1996) plus 2%. Borrowings under this agreement are collateralized by substantially all of TTI Pte's assets. The Company's subsidiary, TTBk, has a secured line of credit with a bank which provides for a total line of credit of $78,000. There were no borrowings under the line as of September 27, 1996. The Company's subsidiary, WGP, has a short-term loan of $210,000 from a bank. Interest is at 1.31% above the bank reference rate (13.29% at September 27, 1996). The Company's subsidiary, EETC, has a credit agreement with a bank which provides a term loan of $376,000. Interest is at the bank's prime rate (6.25% at September 27,1996) plus 3%. The Company has a revolving line of credit of $125,000 from a bank bearing interest at 1.5% above the bank's reference rate (8.25% at September 27, 1996). Borrowings under the line amounted to $115,000 as of September 27, 1996. 2. Material Changes in Financial Position There were no material changes in the financial position of the Company during the three-month period ending September 27, 1996. 3. Material Changes in Results of Operations (a) Comparison of the three-month period ending September 27, 1996 and September 29, 1995. The Company recorded $ 169,000 of profit during the first quarter ($ 120,000 for the three months ended September 29, 1995). Sales have decreased by 2% in the three-month period ending September 27, 1996 as compared to the corresponding period in the previous year. Gross margins have improved by 6% to 41% for the period ended September 27, 1996, as compared to 35% for the corresponding period in the previous year. Selling, general and administrative expenses have increased $141,000 or 11% as a result of increases in manufacturing costs and have increased as a percentage to sales to 25% for the three months ended September 27, 1996, as compared to 22% for the three months ended September 29, 1995. Interest expenses have declined as a result of a reduction in borrowings against a line of credit. Other income decreased $ 58,000 due to a decrease in realized and unrealized gains. Minority interest has decreased mainly due to the performance from the Malaysia operations.
PART II. OTHER INFORMATION Item 2. Changes in securities. A reverse stock split (the "Reverse Split" ) of the common stock was confirmed with a date of record for determining the Stockholders entitled to participate in the Reverse Split of October 13, 1994. The Reverse Split was a one-for-four reverse stock split whereby each outstanding share of existing common stock was automatically converted into one-fourth of a share of common stock. Fractional interests resulting from the Reverse Split were rounded up to the nearest whole share, with half-shares being rounded up to the next whole number. For example, a person holding 101 shares prior to the Reverse Split would now hold 25 shares, the remaining 1/4 share having been canceled and disregarded; persons holding 102 or 103 shares received 26 full shares after the Reverse Split. As of January 31, 1994 3,724,000 shares had been delivered to the Transfer Agent for the new stock certificates. The Company approximates the number of currently outstanding shares to be 1,208,279. SIGNATURES Pursuant to the requirements of the Securities and 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 Registrant By A. Charles Wilson Chairman Dated: November 6, 1996