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 March 29, 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 April 22, 1996, the Registrant had outstanding approximately 1,205,249 Shares of Common Stock. 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) Mar. 29, Jun. 30, 1996 1995 <S> <C> <C> ASSETS Current assets: Cash $ 1,049 $ 674 Certificates of deposit 3,227 553 Accounts receivable - net 3,667 4,140 Notes & other receivables 170 186 Inventories 1,641 1,192 Prepaid expenses 136 103 Total current assets 9,890 6,848 Property, equipment and capitalized leases - net 5,110 5,265 Other assets - net 460 533 TOTAL ASSETS $ 15,460 $ 12,646 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Notes payable $ 44 $ 219 Accounts payable 1,508 1,643 Accrued expenses 2,868 2,246 Income taxes payable 1,387 592 Current portion of long-term debt and capitalized leases 571 459 Total current liabilities 6,378 5,159 Long-term debt and capitalized leases 691 597 Deferred taxes 864 870 Minority interest 2,688 1,601 Shareholders' equity: Common stock; authorized, 2,500,000 shares; issued and outstanding, 1,205,249 shares at March 29, 1996 and 1,181,002 shares at June 30, 1995 stated at 4,878 4,822 Accumulated deficit (1,621) (2,142) Cumulative currency translation 1,582 1,739 Total shareholders' equity 4,839 4,419 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 15,460 $ 12,646 </TABLE> SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
<TABLE> <CAPTION> TRIO-TECH INTERNATIONAL (Condensed Consolidated Statements of Income) (unaudited) (In Thousands, except Earnings per Share Data) NINE MONTHS ENDED THREE MONTHS ENDED MAR. 29, MAR. 31, MAR. 29, MAR. 31, 1996 1995 1996 1995 <S> <C> <C> <C> <C> Revenues $ 16,269 $ 14,010 $ 4,947 $ 4,118 Cost of revenues 9,869 9,412 2,785 2,611 Gross profit 6,400 4,598 2,162 1,507 Selling, general & administrative expenses 4,148 3,791 1,387 1,229 Income from operations 2,252 807 775 278 Other income (expense): Interest expense (113) (139) (37) (49) Other income (expense) 306 439 (143) 142 Total 193 300 (180) 93 Income before income taxes and 2,445 1,107 595 371 minority interest Income taxes 947 384 204 53 Income before minority interest 1,498 723 391 318 Minority interest 977 307 188 125 Net income $ 521 $ 416 $ 203 $ 193 Earnings per share: Primary $ 0.41 $ 0.35 $ 0.16 $ 0.16 Fully diluted $ 0.41 $ 0.35 $ 0.16 $ 0.15 Weighted average number of shares outstanding Primary 1,267 1,195 1,269 1,239 Fully diluted 1,277 1,201 1,269 1,253 </TABLE> SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
<TABLE> <CAPTION> TRIO-TECH INTERNATIONAL CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (In Thousands) NINE MONTHS ENDED MAR. 29, MAR. 31, 1996 1995 <S> <C> <C> Net income $ 521 $ 416 Cash flows from operating activities: Adjustments to reconcile net income to Cash provided by operations: Depreciation and amortization 583 911 Effect of exchange rate changes on Operating assets (196) (253) Changes in assets and liabilities: Accounts receivable, net 473 (248) Notes and other receivables 16 17 Inventories (449) (80) Prepaid expenses & other current assets (33) 18 Other assets 20 (10) Accounts payable and accrued expenses 1,282 191 Deferred taxes (6) 49 Net cash provided by operating activities 2,211 1,011 Cash flows from investing activities: Certificates of deposit (2,674) (371) Capital expenditures, net (603) (941) Minority interest 1,114 284 Net cash used in investing activities (2,163) (1,028) Cash flows from financing activities: Payments on notes payable and lines of credit (215) (114) Proceeds from long-term debt and capitalized leases 340 18 Principal payments of long-term debt capitalized leases (94) (455) Issuance of common stock 56 6 Net cash used in financing activities 87 (545) Effect of exchange rate on cash 240 333 Net increase (decrease) in cash 375 (229) Cash, beginning of the period 674 521 Cash , end of the period $ 1,049 $ 292 Supplemental disclosure of cash flow information Cash paid during the period for: Interest paid $ 112 $ 131 Taxes paid $ 112 $ 40 </TABLE> SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
TRIO-TECH INTERNATIONAL NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. Basis of Presentation The interim financial statements as of March 29, 1996 and for the nine-month periods ended March 29, 1996 and March 31, 1995 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. The consolidated results of operations for the nine-month periods ended March 29, 1996 and March 31, 1995 are not necessarily indicative of the results that would be expected for a full year. NOTE 2. Inventories The composition of inventories is as follows (in thousands): Mar. 29, Jun. 30, 1996 1995 Raw Materials $ 773 $ 559 Work in Process 282 403 Finished Goods 586 230 Total $ 1,641 $ 1,192 NOTE 3. Other Assets The composition of other assets is as follows (in thousands): Mar. 29, Jun. 30, 1996 1995 Goodwill (net of amortization) $ 246 $ 301 Other Assets 214 232 Total $ 460 $ 533
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 1. Liquidity and Capital Resources The Company's working capital increased from $1,689,000 at June 30, 1995 to $3,512,000 at March 29, 1996 an improvement of $1,823,000 for the nine-month period ended March 29, 1996. This is attributable to an improvement in sales and profitability. The Company's subsidiary, TTI Pte, has a secured credit agreement with a bank which provides for a total line of credit of $ 655,000. The Company's subsidiary, TTM, has a secured credit agreement with a bank which provides for a total line of credit of $234,000. There were no borrowings under these lines as of March 29,1996. On December 21, 1995, the Company extended its credit agreement with ICC Bank plc. The additional term loan of 100,000 Irish Pounds was advanced for a period of 12 years. Interest is at the bank's prime rate (5.618% at March 29, 1996) plus 3%. On February 9, 1996, the Company obtained a revolving line of credit of $125,000 from First Interstate Bank bearing interest at 1.5% above the banks reference rate (8.25% at March 29, 1996). Borrowings under the line amounted to $66,000 as of March 29, 1996. 2. Material Changes in Financial Position There were no material changes in the financial position of the Company as of March 29, 1996. 3. Material Changes in Results of Operations (a) Comparison of the nine-month periods ended March 29, 1996 and March 31, 1995. Sales have increased 16% in the nine-month period ended March 29, 1996 as compared to the corresponding period in the previous year. Gross margin has improved 6%, from 33% for the nine-month period ended March 31, 1995, to 39% for the nine-month period ended March 29,1996. This improvement is mainly attributable to higher gross margins realized from test lab work performed in Singapore and Malaysia. Selling, general and administrative expenses have increased $ 357,000 or 9% as a result of increased sales activity and have decreased as a percentage of sales to 25% for the nine months ended March 29,1996 as compared to 27% for the corresponding period in the previous year. Interest expense has declined as a result of reduced borrowings. Other income decreased $ 133,000 due to currency exchange losses. Minority interest has increased $670,000 due to the improved performance from the Malaysia operations. PART II. OTHER INFORMATION Not applicable
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: May 9, 1996