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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q

|  |  |                                                                                        
|- |  | ---------------------------------------------------------------------------------------
|þ |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2003

OR

|  |  |                                                                                         
|- |  | ----------------------------------------------------------------------------------------
|o |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-14523

TRIO-TECH INTERNATIONAL

(Exact name of Registrant as specified in its Charter)


|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|California                                                     |  | 95-2086631                             
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification Number)

|                                         |  |           
|---------------------------------------- |  | ----------
|14731 Califa Street
Van Nuys, California |  | 91411     
|(Address of principle executive offices) |  | (Zip Code)

Registrants Telephone Number: 818-787-7000

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 þ  No o

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes o  No þ

Number of shares of common stock outstanding as of May 8, 2003 is 2,927,565



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TABLE OF CONTENTS



|                           |                                                                                               |                                                                                 |  |  |  |  |  | 
|-------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------- |  |  |  |  |  | 
|                           | ITEM 1. FINANCIAL STATEMENTS                                                                 
|                           |                                                                                               | CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE AMOUNTS)     
|                           |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
|                           |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED, IN THOUSANDS)      
|                           |                                                                                               | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)               
|                           | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                           | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|                           | ITEM 4. CONTROLS AND PROCEDURES                                                              
|PART II. OTHER INFORMATION
|                           | Item 1. Legal Proceedings                                                                    
|                           | Item 2. Changes in Securities and Use of Proceeds                                            
|                           | Item 3. Defaults Upon Senior Securities                                                      
|                           | Item 4. Submission of Matters to Vote of Security Holders                                    
|                           | Item 5. Other Information                                                                    
|                           | Item 6. Exhibits and reports on Form 8-K                                                     
|SIGNATURES                
|CERTIFICATIONS            
|EXHIBIT 99.1              
|EXHIBIT 99.2              



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##### Table of Contents



TRIO-TECH INTERNATIONAL
INDEX TO CONSOLIDATED FINANCIAL INFORMATION, OTHER INFORMATION AND SIGNATURE

|               |                       |                                                                                                   |                                                                                       |    |   |    |      |  | 
|-------------- | --------------------- | ------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------- | -- | - | -- | ---- |  | 
|               |                       |                                                                                                   |                                                                                       |    |   |    | Page
|               |                       |                                                                                                   |                                                                                       |    |   |    |     
|Part I.        | Financial Information |                                                                                                   |                                                                                       |    |  
|               | Item 1.               |                                                                                                   | Financial Statements                                                                  |    |   |    |     
|               |                       | Condensed Consolidated Balance Sheets as of Mar. 31, 2003 (Unaudited) and June 30, 2002           |                                                                                       |    | 3 |   
|               |                       | Condensed Consolidated Statements of Operations and Comprehensive (loss) income for the Three and |                                                                                       |    |   |   
|               |                       | Nine Months Ended Mar. 31, 2003 (Unaudited) and Mar. 31, 2002 (Unaudited)                         |                                                                                       |    | 4 |   
|               |                       | Condensed Consolidated Statements of Cash Flows for the Nine Months Ended Mar. 31, 2003           |                                                                                       |    |   |   
|               |                       | (Unaudited) and Mar. 31, 2002 (Unaudited)                                                         |                                                                                       |    | 5 |   
|               |                       | Notes to Condensed
Consolidated Financial Statements (Unaudited)                                  |                                                                                       |    | 6 |   
|               | Item 2.               |                                                                                                   | Managements
Discussion and Analysis of Financial Condition and Results of Operations |    |   | 11 |     
|               | Item 3.               |                                                                                                   | Quantitative and
Qualitative Disclosures about Market Risk                            |    |   | 20 |     
|               | Item 4.               |                                                                                                   | Controls and Procedures                                                               |    |   | 20 |     
|Part
II.       | Other Information     |                                                                                                   |                                                                                       | 21 |  
|               | Item 1.               |                                                                                                   | Legal Proceedings                                                                     |    |   | 21 |     
|               | Item 2.               |                                                                                                   | Changes in Securities and Use of Proceeds                                             |    |   | 21 |     
|               | Item 3.               |                                                                                                   | Defaults upon Senior Securities                                                       |    |   | 21 |     
|               | Item 4.               |                                                                                                   | Submission of Matters to a Vote of Security Holders                                   |    |   | 21 |     
|               | Item 5.               |                                                                                                   | Other Information                                                                     |    |   | 21 |     
|               | Item 6.               |                                                                                                   | Exhibits and Reports on Form 8-K                                                      |    |   | 21 |     
|Signatures     |                       |                                                                                                   |                                                                                       |    |   |    | 21   | 
|Certifications |                       |                                                                                                   |                                                                                       |    |   |    | 22   | 

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TRIO-TECH INTERNATIONAL AND SUBSIDIARIES
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE AMOUNTS)

|                                           |                                                                                                                        |                            |        |             |        |          |        |       |        | 
|------------------------------------------ | ---------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------ | ----------- | ------ | -------- | ------ | ----- | ------ | 
|                                           |                                                                                                                        |                            |        | Mar 31,     |        | June 30,
|                                           |                                                                                                                        |                            |        | 2003        |        | 2002    
|                                           |                                                                                                                        |                            |        |             |        |         
|                                           |                                                                                                                        |                            |        | (UNAUDITED) |        |          |        |      
|ASSETS                                     |                                                                                                                        |                            |        |             |        |          |        |      
|CURRENT ASSETS:                            |                                                                                                                        |                            |        |             |        |          |        |      
|                                           | Cash                                                                                                                   |                            | $      | 1,677       |        |          | $      | 1,128 |       
|                                           | Short term deposits                                                                                                    |                            |        | 4,011       |        |          |        | 5,906 |       
|                                           | Investments in marketable securities                                                                                   |                            |        | 417         |        |          |        | 554   |       
|                                           | Trade accounts receivable, less allowance for doubtful accounts
of $160 and $174 respectively                          |                            |        | 4,653       |        |          |        | 4,148 |       
|                                           | Other receivables                                                                                                      |                            |        | 344         |        |          |        | 527   |       
|                                           | Inventories, less provision for obselete stock of $718
and $716 respectively                                           |                            |        | 811         |        |          |        | 1,014 |       
|                                           | Prepaid expenses and other current assets                                                                              |                            |        | 167         |        |          |        | 128   |       
|                                           |                                                                                                                        |                            |        |             |        |          |        |      
|                                           |                                                                                                                        | Total current assets       |        |             | 12,080 |          |        |       | 13,405 | 
|PROPERTY, PLANT AND EQUIPMENT, Net         |                                                                                                                        |                            | 5,702  |             |        |          | 5,593  |      
|OTHER ASSETS                               |                                                                                                                        |                            | 16     |             |        |          | 77     |      
|                                           |                                                                                                                        |                            |        |             |        |          |        |      
|TOTAL ASSETS                               |                                                                                                                        | $                          | 17,798 |             |        | $        | 19,075 |      
|                                           |                                                                                                                        |                            |        |             |        |          |        |      
|LIABILITIES AND SHAREHOLDERS EQUITY       |                                                                                                                        |                            |        |             |        |          |        |      
|CURRENT LIABILITIES:                       |                                                                                                                        |                            |        |             |        |          |        |      
|                                           | Lines of credit                                                                                                        |                            | $      | 532         |        |          | $      | 1,227 |       
|                                           | Accounts payable                                                                                                       |                            |        | 1,354       |        |          |        | 1,717 |       
|                                           | Accrued expenses                                                                                                       |                            |        | 2,184       |        |          |        | 2,315 |       
|                                           | Income taxes payable                                                                                                   |                            |        | 60          |        |          |        | 106   |       
|                                           | Current portion of notes payable                                                                                       |                            |        | 755         |        |          |        | 785   |       
|                                           | Current portion of capitalized leases                                                                                  |                            |        | 347         |        |          |        | 336   |       
|                                           |                                                                                                                        |                            |        |             |        |          |        |      
|                                           |                                                                                                                        | Total current liabilities  |        |             | 5,232  |          |        |       | 6,486  | 
|                                           |                                                                                                                        |                            |        |             |        |          |        |      
|NOTES PAYABLE, net of current portion      |                                                                                                                        |                            | 584    |             |        |          | 641    |      
|CAPITALIZED LEASES, net of current portion |                                                                                                                        |                            | 403    |             |        |          | 345    |      
|DEFERRED INCOME TAXES                      |                                                                                                                        |                            | 666    |             |        |          | 669    |      
|                                           |                                                                                                                        |                            |        |             |        |          |        |      
|TOTAL LIABILITIES                          |                                                                                                                        |                            | 6,885  |             |        |          | 8,141  |      
|                                           |                                                                                                                        |                            |        |             |        |          |        |      
|COMMITMENTS AND CONTINGENCIES              |                                                                                                                        |                            |        |             |        |          |        |      
|MINORITY INTEREST                          |                                                                                                                        |                            | 2,196  |             |        |          | 2,316  |      
|SHAREHOLDERS EQUITY:                      |                                                                                                                        |                            |        |             |        |          |        |      
|                                           | Common stock; no par value, authorized, 15,000,000 shares; issued
and outstanding 2,927,565 and 2,927,551 respectively |                            |        | 9,423       |        |          |        | 9,423 |       
|                                           | Additional paid-in capital                                                                                             |                            |        | 284         |        |          |        | 270   |       
|                                           | Accumulated deficit                                                                                                    |                            |        | (483        | )      |          |        | (658  | )     
|                                           | Accumulated other comprehensive income-marketable securities                                                           |                            |        | 0           |        |          |        | 24    |       
|                                           | Accumulated other comprehensive loss-foreign currency                                                                  |                            |        | (507        | )      |          |        | (441  | )     
|                                           |                                                                                                                        |                            |        |             |        |          |        |      
|                                           |                                                                                                                        | Total shareholders equity |        |             | 8,717  |          |        |       | 8,618  | 
|                                           |                                                                                                                        |                            |        |             |        |          |        |      
|TOTAL LIABILITIES AND
SHAREHOLDERS EQUITY |                                                                                                                        | $                          | 17,798 |             |        | $        | 19,075 |      
|                                           |                                                                                                                        |                            |        |             |        |          |        |      

See notes to condensed consolidated financial statements.

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TRIO-TECH INTERNATIONAL AND SUBSIDIARIES
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

|                                                                          |                                                          |         |        |                   |       |                    |        |          |       |          |       |      |       |   |       |       |       | 
|------------------------------------------------------------------------- | -------------------------------------------------------- | ------- | ------ | ----------------- | ----- | ------------------ | ------ | -------- | ----- | -------- | ----- | ---- | ----- | - | ----- | ----- | ----- | 
|                                                                          |                                                          |         |        | Nine Months Ended |       | Three Months Ended
|                                                                          |                                                          |         |        |                   |       |                   
|                                                                          |                                                          |         |        | Mar. 31,          |       | Mar. 31,           |        | Mar. 31, |       | Mar. 31,
|                                                                          |                                                          |         |        | 2003              |       | 2002               |        | 2003     |       | 2002    
|                                                                          |                                                          |         |        |                   |       |                    |        |          |       |         
|NET SALES                                                                 |                                                          | $       | 16,527 |                   |       | $                  | 14,605 |          |       | $        | 5,561 |      |       | $ | 4,657 |      
|COST OF SALES                                                             |                                                          |         | 12,378 |                   |       |                    | 11,361 |          |       |          | 4,535 |      |       |   | 3,603 |      
|                                                                          |                                                          |         |        |                   |       |                    |        |          |       |          |       |      |       |   |       |      
|GROSS PROFIT                                                              |                                                          |         | 4,149  |                   |       |                    | 3,244  |          |       |          | 1,026 |      |       |   | 1,054 |      
|OPERATING EXPENSES:                                                       |                                                          |         |        |                   |       |                    |        |          |       |          |       |      |       |   |       |      
|                                                                          | General and administrative                               |         |        | 3,192             |       |                    |        | 3,233    |       |          |       | 822  |       |   |       | 991   |      
|                                                                          | Selling                                                  |         |        | 655               |       |                    |        | 887      |       |          |       | 182  |       |   |       | 302   |      
|                                                                          | Research and development                                 |         |        | 89                |       |                    |        | 259      |       |          |       | 34   |       |   |       | 93    |      
|                                                                          | Impairment loss                                          |         |        |                  |       |                    |        | 624      |       |          |       |     |       |   |       | 82    |      
|                                                                          | Loss (gain) on disposal of property, plant and equipment |         |        | 112               |       |                    |        | (36      | )     |          |       |     |       |   |       | (39   | )    
|                                                                          |                                                          |         |        |                   |       |                    |        |          |       |          |       |      |       |   |       |      
|                                                                          |                                                          | Total   |        |                   | 4,048 |                    |        |          | 4,967 |          |       |      | 1,038 |   |       |       | 1,429 | 
|                                                                          |                                                          |         |        |                   |       |                    |        |          |       |          |       |      |       |   |       |      
|INCOME (LOSS) FROM OPERATIONS                                             |                                                          |         | 101    |                   |       |                    | (1,723 | )        |       |          | (12   | )    |       |   | (375  | )    
|OTHER INCOME (EXPENSE)                                                    |                                                          |         |        |                   |       |                    |        |          |       |          |       |      |       |   |       |      
|                                                                          | Interest expense                                         |         |        | (145              | )     |                    |        | (159     | )     |          |       | (48  | )     |   |       | (55   | )    
|                                                                          | Other income                                             |         |        | 241               |       |                    |        | 389      |       |          |       | 76   |       |   |       | 114   |      
|                                                                          |                                                          |         |        |                   |       |                    |        |          |       |          |       |      |       |   |       |      
|                                                                          |                                                          | Total   |        |                   | 96    |                    |        |          | 230   |          |       |      | 28    |   |       |       | 59    | 
|                                                                          |                                                          |         |        |                   |       |                    |        |          |       |          |       |      |       |   |       |      
|INCOME (LOSS) BEFORE INCOME TAXES AND MINORITY INTEREST                   |                                                          |         | 197    |                   |       |                    | (1,493 | )        |       |          | 16    |      |       |   | (316  | )    
|INCOME TAXES                                                              |                                                          |         | 71     |                   |       |                    | 68     |          |       |          | 21    |      |       |   | 0     |      
|                                                                          |                                                          |         |        |                   |       |                    |        |          |       |          |       |      |       |   |       |      
|INCOME (LOSS) BEFORE MINORITY INTEREST                                    |                                                          |         | 126    |                   |       |                    | (1,561 | )        |       |          | (5    | )    |       |   | (316  | )    
|MINORITY INTEREST                                                         |                                                          |         | 49     |                   |       |                    | 57     |          |       |          | 33    |      |       |   | 4     |      
|                                                                          |                                                          |         |        |                   |       |                    |        |          |       |          |       |      |       |   |       |      
|NET INCOME (LOSS) ATTRIBUTABLE TO COMMON
SHARES                           |                                                          |         | 175    |                   |       |                    | (1,504 | )        |       |          | 28    |      |       |   | (312  | )    
|                                                                          |                                                          |         |        |                   |       |                    |        |          |       |          |       |      |       |   |       |      
|OTHER COMPREHENSIVE INCOME (LOSS):                                        |                                                          |         |        |                   |       |                    |        |          |       |          |       |      |       |   |       |      
|                                                                          | Unrealized loss on investment                            |         |        | (24               | )     |                    |        |         |       |          |       |      |       |   |       |      |      
|                                                                          | Foreign currency translation adjustment                  |         |        | (66               | )     |                    |        | 10       |       |          |       | (58  | )     |   |       | 30    |      
|                                                                          |                                                          |         |        |                   |       |                    |        |          |       |          |       |      |       |   |       |      
|COMPREHENSIVE INCOME (LOSS)                                               |                                                          | $       | 85     |                   |       | $                  | (1,494 | )        |       | $        | (30   | )    |       | $ | (282  | )    
|                                                                          |                                                          |         |        |                   |       |                    |        |          |       |          |       |      |       |   |       |      
|EARNINGS (LOSS) PER SHARE:                                                |                                                          |         |        |                   |       |                    |        |          |       |          |       |      |       |   |       |      
|                                                                          | Basic                                                    |         | $      | 0.06              |       |                    | $      | (0.51    | )     |          | $     | 0.01 |       |   | $     | (0.11 | )    
|                                                                          |                                                          |         |        |                   |       |                    |        |          |       |          |       |      |       |   |       |      
|                                                                          | Diluted                                                  |         | $      | 0.06              |       |                    | $      | (0.51    | )     |          | $     | 0.01 |       |   | $     | (0.11 | )    
|                                                                          |                                                          |         |        |                   |       |                    |        |          |       |          |       |      |       |   |       |      
|WEIGHTED AVERAGE NUMBER OF COMMON AND
POTENTIAL COMMON SHARES OUTSTANDING |                                                          |         |        |                   |       |                    |        |          |       |          |       |      |       |   |       |      
|                                                                          |                                                          | Basic   |        |                   | 2,928 |                    |        |          | 2,928 |          |       |      | 2,928 |   |       |       | 2,928 | 
|                                                                          |                                                          | Diluted |        |                   | 2,928 |                    |        |          | 2,928 |          |       |      | 2,928 |   |       |       | 2,928 | 

See notes to condensed consolidated financial statements.

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TRIO-TECH INTERNATIONAL AND SUBSIDIARIES
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED, IN
THOUSANDS)   INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS

|                                                 |                                                                                                    |                                           |                                                     |        |                   |      |          |        |        |        |  
|------------------------------------------------ | -------------------------------------------------------------------------------------------------- | ----------------------------------------- | --------------------------------------------------- | ------ | ----------------- | ---- | -------- | ------ | ------ | ------ | -
|                                                 |                                                                                                    |                                           |                                                     |        | Nine Months Ended
|                                                 |                                                                                                    |                                           |                                                     |        |                  
|                                                 |                                                                                                    |                                           |                                                     |        | Mar. 31,          |      | Mar. 31,
|                                                 |                                                                                                    |                                           |                                                     |        | 2003              |      | 2002    
|                                                 |                                                                                                    |                                           |                                                     |        |                   |      |         
|CASH FLOWS FROM OPERATING ACTIVITIES:            |                                                                                                    |                                           |                                                     |        |                   |      |          |       
|                                                 | Net income (loss)                                                                                  |                                           | $                                                   | 175    |                   |      | $        | (1,504 | )     
|                                                 | Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activities: |                                           |                                                     |        |                   |      |          |        |       
|                                                 | Depreciation and amortization                                                                      |                                           |                                                     | 965    |                   |      |          | 1,283  |       
|                                                 | Bad debt expense                                                                                   |                                           |                                                     |       |                   |      |          | (8     | )     
|                                                 | Inventory provision                                                                                |                                           |                                                     | 2      |                   |      |          | 75     |       
|                                                 | Impairment loss                                                                                    |                                           |                                                     |       |                   |      |          | 624    |       
|                                                 | Stock Compensation                                                                                 |                                           |                                                     | 14     |                   |      |          |       |       
|                                                 | Realized gain on investment in securities                                                          |                                           |                                                     | (24    | )                 |      |          |        |       
|                                                 | (Gain)/loss on disposal of property and equipment                                                  |                                           |                                                     | 112    |                   |      |          | (36    | )     
|                                                 | Deferred income taxes                                                                              |                                           |                                                     |       |                   |      |          | 7      |       
|                                                 | Minority interest                                                                                  |                                           |                                                     | (49    | )                 |      |          | (57    | )     
|                                                 | Changes in operating assets and liabilities:                                                       |                                           |                                                     |        |                   |      |          |        |       
|                                                 |                                                                                                    | Accounts receivable, net                  |                                                     |        | (488              | )    |          |        | 354    |       
|                                                 |                                                                                                    | Other receivables                         |                                                     |        | 183               |      |          |        | (123   | )     
|                                                 |                                                                                                    | Inventories                               |                                                     |        | 200               |      |          |        | (68    | )     
|                                                 |                                                                                                    | Prepaid expenses and other current assets |                                                     |        | (39               | )    |          |        | (67    | )     
|                                                 |                                                                                                    | Accounts payable and accrued expenses     |                                                     |        | (494              | )    |          |        | (2,118 | )     
|                                                 |                                                                                                    | Income taxes payable                      |                                                     |        | (47               | )    |          |        | (57    | )     
|                                                 |                                                                                                    |                                           |                                                     |        |                   |      |          |       
|                                                 |                                                                                                    |                                           | Net cash provided by (used in) operating activities |        |                   | 510  |          |        |        | (1,695 | )
|                                                 |                                                                                                    |                                           |                                                     |        |                   |      |          |       
|CASH FLOWS FROM INVESTING ACTIVITIES:            |                                                                                                    |                                           |                                                     |        |                   |      |          |       
|                                                 | Short term deposits                                                                                |                                           |                                                     | 1,895  |                   |      |          | 1,513  |       
|                                                 | Marketable securities                                                                              |                                           |                                                     | 137    |                   |      |          | (150   | )     
|                                                 | Capital expenditures                                                                               |                                           |                                                     | (1,188 | )                 |      |          | (374   | )     
|                                                 | Other assets                                                                                       |                                           |                                                     | 61     |                   |      |          | (27    | )     
|                                                 | Proceeds from sale of property and equipment                                                       |                                           |                                                     |       |                   |      |          | 47     |       
|                                                 |                                                                                                    |                                           |                                                     |        |                   |      |          |       
|                                                 |                                                                                                    |                                           | Net cash (used in) provided by investing activities |        |                   | 905  |          |        |        | 1,009  |  
|                                                 |                                                                                                    |                                           |                                                     |        |                   |      |          |       
|CASH FLOWS FROM FINANCING ACTIVITIES:            |                                                                                                    |                                           |                                                     |        |                   |      |          |       
|                                                 | Net payments and borrowings on lines of credit                                                     |                                           |                                                     | (698   | )                 |      |          | 836    |       
|                                                 | Principal payments of debt and capitalized leases                                                  |                                           |                                                     | (916   | )                 |      |          | (551   | )     
|                                                 | Dividends paid to minority interest                                                                |                                           |                                                     | (71    | )                 |      |          | (4     | )     
|                                                 | Proceeds from long-term debt                                                                       |                                           |                                                     | 898    |                   |      |          |       |       
|                                                 |                                                                                                    |                                           |                                                     |        |                   |      |          |       
|                                                 |                                                                                                    |                                           | Net cash provided by (used in) financing activities |        |                   | (787 | )        |        |        | 281    |  
|                                                 |                                                                                                    |                                           |                                                     |        |                   |      |          |       
|EFFECT OF EXCHANGE RATE CHANGES ON CASH          |                                                                                                    |                                           | 79                                                  |        |                   |      | 17       |       
|NET INCREASE/(DECREASE) IN CASH                  |                                                                                                    |                                           | 549                                                 |        |                   |      | (388     | )     
|CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR     |                                                                                                    |                                           | 1,128                                               |        |                   |      | 1,149    |       
|                                                 |                                                                                                    |                                           |                                                     |        |                   |      |          |       
|CASH AND CASH EQUIVALENTS, END OF YEAR           |                                                                                                    | $                                         | 1,677                                               |        |                   | $    | 761      |       
|                                                 |                                                                                                    |                                           |                                                     |        |                   |      |          |       
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION |                                                                                                    |                                           |                                                     |        |                   |      |          |       
|                                                 | Cash paid during the year for:                                                                     |                                           |                                                     |        |                   |      |          |        |       
|                                                 |                                                                                                    | Interest                                  |                                                     | $      | 145               |      |          | $      | 159    |       
|                                                 |                                                                                                    | Income taxes                              |                                                     | $      | 102               |      |          | $      | 125    |       

See notes to condensed consolidated financial statements.

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TRIO-TECH INTERNATIONAL AND SUBSIDIARIES
ITEM 1. FINANCIAL STATEMENTS
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE AND SHARE AMOUNTS AND PERCENTAGES)

1.     ORGANIZATION AND BASIS OF PRESENTATION



| |  | Trio-Tech International (the Company or TTI thereafter) was
incorporated in 1958 under the laws of the State of California. TTI
provides third-party semiconductor testing and burn-in services primarily
through its laboratories in Southeast Asia. In addition, TTI operates test
facilities in the United States and Europe. The Company also designs,
develops, manufactures and markets a broad range of equipment and systems
used in the manufacture and testing of semiconductor devices and electronic
components. TTI conducts business in three industry segments: Testing
Services, Manufacturing and Distribution. TTI has subsidiaries in the
U.S., Singapore, Malaysia, Thailand, and Ireland as follows:
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                        |  |           |     |          |  |                     
|--------------------------------------- |  | --------- | --- | -------- |  | --------------------
|                                        |  | Ownership |     | Location
|                                        |  |           |     |         
|Express Test Corporation                |  |           | 100 | %        |  | Van Nuys, California
|Trio-Tech Reliability Services          |  |           | 100 | %        |  | Van Nuys, California
|KTS Incorporated, dba Universal Systems |  |           | 100 | %        |  | San Jose, California
|European Electronic Test Centre. Ltd.   |  |           | 100 | %        |  | Dublin, Ireland     
|Trio-Tech International Pte. Ltd.       |  |           | 100 | %        |  | Singapore           
|Trio-Tech Test Services Pte. Ltd.       |  |           | 100 | %        |  | Singapore           
|Trio-Tech Thailand                      |  |           | 100 | %        |  | Bangkok, Thailand   
|Trio-Tech Bangkok                       |  |           | 100 | %        |  | Bangkok, Thailand   
|Trio-Tech Malaysia                      |  |           | 55  | %        |  | Penang, Malaysia    
|Trio-Tech Kuala Lumpur  100% owned by  |  |           |     |          |  |                     
|Trio-Tech
Malaysia                      |  |           | 55  | %        |  | Selangor, Malaysia  
|Prestal Enterprise Sdn. Bhd.            |  |           | 76  | %        |  | Selangor, Malaysia  



| |  | The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. All significant inter-company accounts and
transactions have been eliminated in consolidation. The unaudited
consolidated financial statements are presented in U.S. dollars.
Accordingly, the accompanying financial statements do not include all the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair statement of the results for the interim
period presented have been included. Operating results for the nine months
ended March 31, 2003 are not necessarily indicative of the results that may
be expected for the fiscal year ending June 30, 2003. The accompanying
consolidated financial statements should be read in conjunction with the
audited financial statements of the Company included in the Companys Form
10-K for the fiscal year ended June 30, 2002.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

2.     INVENTORIES



| |  | The composition of inventories is as follows:
| |  | ---------------------------------------------

|                                       |  |         |      |          |  |   |       |  
|-------------------------------------- |  | ------- | ---- | -------- |  | - | ----- | -
|                                       |  | Mar 31, |      | June 30,
|                                       |  | 2003    |      | 2002    
|                                       |  |         |      |         
|Raw materials                          |  | $       | 988  |          |  | $ | 938   |  
|Work in progress                       |  |         | 223  |          |  |   | 287   |  
|Finished goods                         |  |         | 318  |          |  |   | 505   |  
|Less: provision for obsolete inventory |  |         | (718 | )        |  |   | (716  | )
|                                       |  |         |      |          |  |   |       |  
|                                       |  | $       | 811  |          |  | $ | 1,014 |  
|                                       |  |         |      |          |  |   |       |  

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3.     STOCK OPTIONS



| |  | In September 2002, the Board of Directors amended the Directors Stock
Option Plan to require that the exercise price of options granted
thereunder be equal to 100% of the fair market value of the Companys
Common Stock as of the date of grant.                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | On July 1, 2002, the Board of Directors granted to all directors options
covering 35,000 shares of Common Stock with an exercise price of $2.25 per
share, $0.40 lower than the market price of $2.65 at the grant date. These
options have a five-year contractual life and vested immediately.
Consequently, the Company recognized $14 of stock compensation expense in
the nine months ended March 31, 2002.                                                                                                                                                                                                                                                   
|
| |  | The Company has adopted the intrinsic value method of accounting for
employee stock options as permitted by Statement of Financial Accounting
Standards No. 123, Accounting for Stock-based Compensation (SFAS No. 123)
and discloses the pro forma effect on net loss and loss per share as if the
fair value based method had been applied. For equity instruments, including
stock options, issued to non-employees, the fair value of the equity
instruments or the fair value of the consideration received, whichever is
more readily determinable is used to determine the value of services or
goods received and the corresponding charge to operations.
|
| |  | The following table illustrates the effect on net loss and loss per share
as if the Company had applied the fair value recognition provision of SFAS
No. 123 to stock-based employee compensation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

|                                                                                                       |  |                   |      |                    |  |          |        |          |  |   |      |   |  |   |       |  
|------------------------------------------------------------------------------------------------------ |  | ----------------- | ---- | ------------------ |  | -------- | ------ | -------- |  | - | ---- | - |  | - | ----- | -
|                                                                                                       |  | Nine Months Ended |      | Three Months Ended
|                                                                                                       |  |                   |      |                   
|                                                                                                       |  | Mar. 31,          |      | Mar. 31,           |  | Mar. 31, |        | Mar. 31,
|                                                                                                       |  | 2003              |      | 2002               |  | 2003     |        | 2002    
|                                                                                                       |  |                   |      |                    |  |          |        |         
|Net income (loss): as reported                                                                         |  | $                 | 175  |                    |  | $        | (1,504 | )        |  | $ | 28   |   |  | $ | (312  | )
|Add: total stock based employee compensation
expense determined under fair value method
for
all awards |  |                   | (12  | )                  |  |          | (397   | )        |  |   | (4   | ) |  |   | (12   | )
|                                                                                                       |  |                   |      |                    |  |          |        |          |  |   |      |   |  |   |       |  
|Pro forma net income (loss)                                                                            |  | $                 | 163  |                    |  | $        | (1,901 | )        |  | $ | 24   |   |  | $ | (324  | )
|                                                                                                       |  |                   |      |                    |  |          |        |          |  |   |      |   |  |   |       |  
|Income (loss) per share  basic and diluted:                                                           |  |                   |      |                    |  |          |        |          |  |   |      |   |  |   |       |  
|As reported                                                                                            |  | $                 | 0.06 |                    |  | $        | (0.51  | )        |  | $ | 0.01 |   |  | $ | (0.11 | )
|Pro forma                                                                                              |  | $                 | 0.06 |                    |  | $        | (0.65  | )        |  | $ | 0.01 |   |  | $ | (0.11 | )



| |  | As required by SFAS 123, the Company provides the following disclosure of
estimated values for these awards. The weighted-average grant-date fair
value of options granted during, 2003 and 2002 was estimated to be $2.25
and $3.06, respectively.                                                                                                              
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The fair value of each option grant was estimated on the date of grant
using a Black-Scholes option-pricing model with the following weighted
average assumptions for 2003 and 2002, respectively; risk free interest
rates of 2.93 and 4.88 percent, expected lives of 1 and 2.67 years;
volatility of 45.99 percent and 60.32 percent and no assumed dividends.

4.     EARNINGS PER SHARE



| |  | The Company adopted SFAS No. 128, Earnings per Share(EPS). Basic
Earnings per Share is computed by dividing net income available to common
shareholders (numerator) by the weighted average number of common shares
outstanding (denominator) during the period. Diluted EPS gives effect to
all dilutive potential common shares outstanding during a period. In
computing diluted EPS, the average price for the period is used in
determining the number of shares assumed to be purchased from exercise of
stock options and warrants.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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##### Table of Contents





| |  | Stock options to purchase 469,500 shares at prices ranging from $2.25 to
$6.00 per share were outstanding during the nine months ended March 31,
2003 and were excluded in the computation of diluted EPS because their
effect would have been antidilutive.             
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Stock options and warrants to purchase 578,665 shares at prices ranging
from $3.20 to $8.00 per share were outstanding during the nine months ended
March 31, 2002 and were excluded in the computation of diluted EPS because
their effect would have been antidilutive.
|
| |  | The following table is a reconciliation of the weighted-average shares used
in the computation of basic and diluted EPS for the periods presented
herein:                                                                                                                

|                                                                              |  |                   |       |                    |  |          |        |          |  |   |       |  |  |   |       |  
|----------------------------------------------------------------------------- |  | ----------------- | ----- | ------------------ |  | -------- | ------ | -------- |  | - | ----- |  |  | - | ----- | -
|                                                                              |  | Nine Months Ended |       | Three Months Ended
|                                                                              |  |                   |       |                   
|                                                                              |  | Mar. 31,          |       | Mar. 31,           |  | Mar. 31, |        | Mar. 31,
|                                                                              |  | 2003              |       | 2002               |  | 2003     |        | 2002    
|                                                                              |  |                   |       |                    |  |          |        |         
|Net income (loss) used to compute basic
and diluted earnings (loss) per share |  | $                 | 175   |                    |  | $        | (1,504 | )        |  | $ | 28    |  |  | $ | (312  | )
|                                                                              |  |                   |       |                    |  |          |        |          |  |   |       |  |  |   |       |  
|Weighted average number of common
shares outstanding  basic                  |  |                   | 2,928 |                    |  |          | 2,928  |          |  |   | 2,928 |  |  |   | 2,928 |  
|Dilutive effect of stock options and warrants                                 |  |                   |      |                    |  |          |       |          |  |   |      |  |  |   |      |  
|                                                                              |  |                   |       |                    |  |          |        |          |  |   |       |  |  |   |       |  
|Number of shares used to compute
earning per share  diluted                  |  |                   | 2,928 |                    |  |          | 2,928  |          |  |   | 2,928 |  |  |   | 2,928 |  
|                                                                              |  |                   |       |                    |  |          |        |          |  |   |       |  |  |   |       |  

5.     ACCOUNTS
RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS



| |  | Accounts receivable are customer
obligations due under normal trade terms. We sell our products and
services to manufacturers in the semiconductor industry. We perform
continuing credit evaluations of our customers financial condition
and although we generally do not require collateral, letters of
credit may be required from our customers in certain circumstances.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
|

|          |                                        |   |             |     |          |   |     |     |  
|--------- | -------------------------------------- | - | ----------- | --- | -------- | - | --- | --- | -
|          |                                        |   | Nine months |     |          |   |    
|          |                                        |   | ended       |     |          |   |    
|          |                                        |   | Mar 31,     |     | June 30,
|          |                                        |   | 2003        |     | 2002    
|          |                                        |   |             |     |         
|Beginning |                                        | $ | 174         |     |          | $ | 174 |    
|          | Additions charged to cost and expenses |   |             |    |          |   |     | 66  |  
|          | Recovered                              |   |             | 24  |          |   |     | (25 | )
|          | Actual write-offs                      |   |             | (38 | )        |   |     | (41 | )
|          |                                        |   |             |     |          |   |     |    
|Ending    |                                        | $ | 160         |     |          | $ | 174 |    
|          |                                        |   |             |     |          |   |     |    

6.     WARRANTY

|          |                                        |   |             |    |          |   |     |    |  
|--------- | -------------------------------------- | - | ----------- | -- | -------- | - | --- | -- | -
|          |                                        |   | Nine months |    |          |   |    
|          |                                        |   | ended       |    |          |   |    
|          |                                        |   | Mar 31,     |    | June 30,
|          |                                        |   | 2003        |    | 2002    
|          |                                        |   |             |    |         
|Beginning |                                        | $ | 305         |    |          | $ | 262 |   
|          | Additions charged to cost and expenses |   |             | 1  |          |   |     | 43 |  
|          | Recovered                              |   |             | (5 | )        |   |     | (4 | )
|          | Actual write-offs                      |   |             | 0  |          |   |     | 4  |  
|          |                                        |   |             |    |          |   |     |   
|Ending    |                                        | $ | 301         |    |          | $ | 305 |   
|          |                                        |   |             |    |          |   |     |   

7.     BUSINESS SEGMENTS



| |  | The Company operates principally in three industry segments: the designing
and manufacturing of equipment (that tests the structural integrity of
integrated circuits and other products which measure the rate of turn), the
testing service industry (that performs structural and electronic tests of
semiconductor devices) and the distribution of various products from other
manufacturers in Singapore and Southeast Asia.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | There were no intersegment transactions during the nine months ended March
31, 2003. Geographic Segment presentation is based on a customers
location, not a subsidiarys location.                                                                                                                                                                                                                                              

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Business Segment Information:

|                 |  |              |  |       |       |        |  |           |      |        |  |              |        |         |  |   |     |  |  |   |    |  |  | 
|---------------- |  | ------------ |  | ----- | ----- | ------ |  | --------- | ---- | ------ |  | ------------ | ------ | ------- |  | - | --- |  |  | - | -- |  |  | 
|                 |  | Three Months |  |       |       |        |  | Operating |      |        |  |              |        | Depr.   |  |   |     | 
|                 |  | Ended        |  | Net   |       | Income |  |           |      |        |  | and          |        | Capital
|                 |  | Mar. 31,     |  | Sales |       | (loss) |  | Assets    |      | Amort. |  | Expenditures
|                 |  |              |  |       |       |        |  |           |      |        |  |             
|Manufacturing    |  | FY 2003      |  | $     | 902   |        |  | $         | (264 | )      |  | $            | 2,792  |         |  | $ | 23  |  |  | $ | 1  | 
|                 |  | FY 2002      |  |       | 1,008 |        |  |           | (525 | )      |  |              | 4,672  |         |  |   | 99  |  |  |   | 19 | 
|Testing Services |  | FY 2003      |  |       | 2,327 |        |  |           | 228  |        |  |              | 14,083 |         |  |   | 269 |  |  |   | 65 | 
|                 |  | FY 2002      |  |       | 2,151 |        |  |           | 229  |        |  |              | 15,615 |         |  |   | 293 |  |  |   | 60 | 
|Distribution     |  | FY 2003      |  |       | 2,332 |        |  |           | (6   | )      |  |              | 450    |         |  |   | 27  |  |  |   | 10 | 
|                 |  | FY 2002      |  |       | 1,498 |        |  |           | (39  | )      |  |              | 390    |         |  |   | 20  |  |  |   | 8  | 
|Corporate and    |  | FY 2003      |  |       | 0     |        |  |           | 30   |        |  |              | 473    |         |  |   | 2   |  |  |   | 0  | 
|unallocated      |  | FY 2002      |  |       | 0     |        |  |           | (40  | )      |  |              | 101    |         |  |   | 1   |  |  |   | 0  | 
|Total Company    |  | FY 2003      |  | $     | 5,561 |        |  | $         | (12  | )      |  | $            | 17,798 |         |  | $ | 321 |  |  | $ | 76 | 
|                 |  | FY 2002      |  |       | 4,657 |        |  |           | (375 | )      |  |              | 20,778 |         |  |   | 413 |  |  |   | 87 | 

Business Segment Information:

|                 |  |             |  |       |        |        |  |           |        |        |  |              |        |         |  |   |       |  |  |   |       |  |  | 
|---------------- |  | ----------- |  | ----- | ------ | ------ |  | --------- | ------ | ------ |  | ------------ | ------ | ------- |  | - | ----- |  |  | - | ----- |  |  | 
|                 |  | Nine Months |  |       |        |        |  | Operating |        |        |  |              |        | Depr.   |  |   |       | 
|                 |  | Ended       |  | Net   |        | Income |  |           |        |        |  | and          |        | Capital
|                 |  | Mar. 31,    |  | Sales |        | (loss) |  | Assets    |        | Amort. |  | Expenditures
|                 |  |             |  |       |        |        |  |           |        |        |  |             
|Manufacturing    |  | FY 2003     |  | $     | 4,037  |        |  | $         | (526   | )      |  | $            | 2,792  |         |  | $ | 65    |  |  | $ | 6     | 
|                 |  | FY 2002     |  |       | 3,787  |        |  |           | (2,177 | )      |  |              | 4,672  |         |  |   | 312   |  |  |   | 126   | 
|Testing Services |  | FY 2003     |  |       | 7,238  |        |  |           | 836    |        |  |              | 14,083 |         |  |   | 812   |  |  |   | 1,139 | 
|                 |  | FY 2002     |  |       | 6,654  |        |  |           | 612    |        |  |              | 15,615 |         |  |   | 895   |  |  |   | 226   | 
|Distribution     |  | FY 2003     |  |       | 5,252  |        |  |           | (125   | )      |  |              | 450    |         |  |   | 84    |  |  |   | 43    | 
|                 |  | FY 2002     |  |       | 4,164  |        |  |           | (31    | )      |  |              | 390    |         |  |   | 74    |  |  |   | 9     | 
|Corporate and    |  | FY 2003     |  |       | 0      |        |  |           | (84    | )      |  |              | 473    |         |  |   | 4     |  |  |   | 0     | 
|unallocated      |  | FY 2002     |  |       | 0      |        |  |           | (127   | )      |  |              | 101    |         |  |   | 2     |  |  |   | 13    | 
|Total Company    |  | FY 2003     |  | $     | 16,527 |        |  | $         | 101    |        |  | $            | 17,798 |         |  | $ | 965   |  |  | $ | 1,188 | 
|                 |  | FY 2002     |  |       | 14,605 |        |  |           | (1,723 | )      |  |              | 20,778 |         |  |   | 1,283 |  |  |   | 374   | 

Geographic Area Information:

|                    |  |              |  |        |       |        |  |      |     |           |  |         |       |       |  |        |     |         |  |   |       |   |  | 
|------------------- |  | ------------ |  | ------ | ----- | ------ |  | ---- | --- | --------- |  | ------- | ----- | ----- |  | ------ | --- | ------- |  | - | ----- | - |  | 
|                    |  |              |  |        |       |        |  |      |     |           |  |         |       |       |  |        |     | Elimin- |  |   |       |  
|                    |  | Three Months |  |        |       |        |  |      |     |           |  |         |       |       |  | ations |     |         |  |  
|                    |  | Ended        |  | United |       |        |  |      |     | Southeast |  | and     |       | Total
|                    |  | Mar. 31,     |  | States |       | Europe |  | Asia |     | Other     |  | Company
|                    |  |              |  |        |       |        |  |      |     |           |  |        
|Net sales to        |  | FY 2003      |  | $      | 2,747 |        |  |      | 222 |           |  |         | 2,600 |       |  |        | (8  | )       |  | $ | 5,561 |  
|customers           |  | FY 2002      |  | $      | 2,052 |        |  |      | 260 |           |  |         | 2,347 |       |  |        | (2  | )       |  | $ | 4,657 |  
|Operating           |  | FY 2003      |  | $      | (55   | )      |  |      | (56 | )         |  |         | 69    |       |  |        | 30  |         |  | $ | (12   | )
|Income (loss)       |  | FY 2002      |  | $      | (318  | )      |  |      | (61 | )         |  |         | 44    |       |  |        | (40 | )       |  | $ | (375  | )
|Property, plant     |  | FY 2003      |  | $      | 119   |        |  |      | 441 |           |  |         | 5,182 |       |  |        | (40 | )       |  | $ | 5,702 |  
|and equipment - net |  | FY 2002      |  | $      | 657   |        |  |      | 389 |           |  |         | 5,585 |       |  |        | (40 | )       |  | $ | 6,591 |  

9



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Geographic Area Information:

|                    |  |             |  |        |        |        |  |      |       |           |  |         |       |       |  |         |      |        |  |   |        |   |  | 
|------------------- |  | ----------- |  | ------ | ------ | ------ |  | ---- | ----- | --------- |  | ------- | ----- | ----- |  | ------- | ---- | ------ |  | - | ------ | - |  | 
|                    |  |             |  |        |        |        |  |      |       |           |  |         |       |       |  |         |      | Elimi- |  |   |        |  
|                    |  | Nine Months |  |        |        |        |  |      |       |           |  |         |       |       |  | nations |      |        |  |  
|                    |  | Ended       |  | United |        |        |  |      |       | Southeast |  | and     |       | Total
|                    |  | Mar. 31,    |  | States |        | Europe |  | Asia |       | Other     |  | Company
|                    |  |             |  |        |        |        |  |      |       |           |  |        
|Net sales to        |  | FY 2003     |  | $      | 6,705  |        |  |      | 716   |           |  |         | 9,145 |       |  |         | (39  | )      |  | $ | 16,527 |  
|customers           |  | FY 2002     |  | $      | 5,906  |        |  |      | 1,222 |           |  |         | 7,512 |       |  |         | (35  | )      |  | $ | 14,605 |  
|Operating           |  | FY 2003     |  | $      | 32     |        |  |      | (120  | )         |  |         | 275   |       |  |         | (85  | )      |  | $ | 101    |  
|Income (loss)       |  | FY 2002     |  | $      | (1,521 | )      |  |      | (279  | )         |  |         | 204   |       |  |         | (127 | )      |  | $ | (1,723 | )
|Property, plant     |  | FY 2003     |  | $      | 119    |        |  |      | 441   |           |  |         | 5,182 |       |  |         | (40  | )      |  | $ | 5,702  |  
|and equipment - net |  | FY 2002     |  | $      | 657    |        |  |      | 389   |           |  |         | 5,585 |       |  |         | (40  | )      |  | $ | 6,591  |  

8.     RECLASSIFICATION



| |  | Certain prior period line item presentations have been reclassified to conform to current period presentations.
| |  | ---------------------------------------------------------------------------------------------------------------

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##### Table of Contents



TRIO-TECH INTERNATIONAL AND SUBSIDIARIES




|ITEM 2. |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
|------- |  | ------------------------------------------------------------------------------------------------------------------------------

The discussions of Trio-Tech Internationals (the Company) business and
activities set forth in this Form 10-Q and in other past and future reports and
announcements by the Company may contain forward-looking statements within
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, and assumptions
regarding future activities and results of operations of the Company. In light
of the safe harbor provisions of the Private Securities Litigation Reform Act
of 1995, the following factors, among others, could cause actual results to
differ materially from those reflected in any forward-looking statement made by
or on behalf of the Company: market acceptance of Company products and
services; changing business conditions or technologies and volatility in the
semiconductor industry, which could affect demand for the Companys products
and services; the impact of competition; problems with technology; product
development schedules; delivery schedules; changes in military or commercial
testing specifications which could affect the market for the Companys products
and services; difficulties in profitably integrating acquired businesses, if
any, into the Company; risks associated with conducting business
internationally and especially in Southeast Asia, including currency
fluctuations and devaluation, currency restrictions, local laws and
restrictions, SARS virus, and possible social, political and economic
instability; and other economic, financial and regulatory factors beyond the
Companys control. See the discussions elsewhere in this Form 10-Q for more
information. In some cases, you can identify forward-looking statements by the
use of terminology such as may, will, expects, plans, anticipates,
estimates, potential, believes, can impact, continue, or the negative
thereof or other comparable terminology.

We undertake no obligation to update forward-looking statements to reflect
subsequent events, changed circumstances, or the occurrence of unanticipated
events.

Overview

Founded in 1958, Trio-Tech International provides third-party semiconductor
testing and burn-in services primarily through its laboratories in Southeast
Asia. At or from its facilities in California and Southeast Asia, the Company
also designs, manufactures and markets equipment and systems used in the
testing and production of semiconductors and distributes semiconductor
processing and testing equipment manufactured by others.

During the nine months ended March 31, 2003, total assets decreased by $1,277
from $19,075, at June 30, 2002 to $17,798. Most of the decrease was in cash and
short term investments as a result of payments on lines of credit, long-term
debts and capital lease obligations.

The accounts receivable turnover index (defined as quarterly net sales divided
by ending accounts receivable plus bad debt allowance, multiplied by 4) totaled
4.78 at March 31, 2003, compared with 4.83 at the end of our last fiscal year
(June 30, 2002) and 4.56 at March 31, 2002. The Company believes that the
foregoing reflects its consistent emphasis on the collection of account
receivables. The accounts receivable at March 31, 2003 increased by $505, or
12.2% compared to accounts receivable at June 30, 2002 and increased by $567,
or 13.9% compared to the accounts receivable at March 31, 2002. Net sales for
the nine month period ended March 31, 2003 were 13.2%.higher than net sales for
the nine month period ended March 31, 2002 and net sales for the three month
period ended March 31, 2003 were 19.4% higher for the comparable period in the
last fiscal year. Increased new sales were the primary factor in the
improvement in accounts receivable turns.

The inventory turnover ratio (defined
as quarterly factory cost divided by ending inventory, multiplied by
4) was 18.06 at
March 31, 2003, up from 10.86 at June 30, 2002. Inventories at March 31, 2003 declined $203 compared to inventories at
June 30, 2002, reflecting decreases in work in progress in the amount of $64,
finished goods in the amount of $187 and increases in raw materials of $50.
Inventories at March 31, 2003 declined by $1,100 compared to inventories at
March 31, 2002, primarily as a result of write down of inventories in the
amount of $511 for unsalable, excess or obsolete raw materials, work-in-process
and finished goods in the fourth quarter of fiscal year 2002. The future impact
on the future gross margins cannot be readily identified at this time due to
the slow-moving / obsolete nature of this inventory and the price at which
these items could be sold is not known until a buyer can be identified.

In addition, during the nine months
ended March 31, 2003 short-term deposits and investments in marketable securities
decreased by $2,032 from $6,460 at June 30, 2002 to $4,428 as of
March 31, 2003 which was offset by net additions to property, plant and
equipment of $1,188.

Total liabilities at March 31, 2003 was $6,885, reflecting a $1,256 decrease
from June 30, 2002 mainly due to payments on lines of credit and accounts
payable. As of March 31, 2003, total debt (excluding minority interest) was 79%
of total capital, compared with 94.5% at June 30, 2002. The Company believes
its strong cash position provides ready and ample access to funds in the global
capital markets. The Companys available short-term lines of credit have not
materially changed since June 30, 2002.

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The following table sets forth our revenue components for the nine and three
months ended March 31, 2003 and 2002 respectively.

|           |               |  |                   |        |                    |  |         |        |         |  |  |        |   |  |  |        |  
|---------- | ------------- |  | ----------------- | ------ | ------------------ |  | ------- | ------ | ------- |  |  | ------ | - |  |  | ------ | -
|           |               |  | Nine Months Ended |        | Three Months Ended
|           |               |  |                   |        |                   
|           |               |  | Mar 31,           |        | Mar 31,            |  | Mar 31, |        | Mar 31,
|           |               |  | 2003              |        | 2002               |  | 2003    |        | 2002   
|           |               |  |                   |        |                    |  |         |        |        
|Net Sales: |               |  |                   |        |                    |  |         |        |         |  |  |        |   |  |  |       
|           | Testing       |  |                   | 43.80  | %                  |  |         | 45.56  | %       |  |  | 41.85  | % |  |  | 46.21  | %
|           | Manufacturing |  |                   | 24.42  |                    |  |         | 25.93  |         |  |  | 16.21  |   |  |  | 21.63  |  
|           | Distribution  |  |                   | 31.78  |                    |  |         | 28.51  |         |  |  | 41.94  |   |  |  | 32.16  |  
|           |               |  |                   |        |                    |  |         |        |         |  |  |        |   |  |  |        |  
|           | Total         |  |                   | 100.00 | %                  |  |         | 100.00 | %       |  |  | 100.00 | % |  |  | 100.00 | %
|           |               |  |                   |        |                    |  |         |        |         |  |  |        |   |  |  |       

Geographically, we operate in the United States, Singapore, Malaysia, Thailand,
and Ireland. Our customers are mainly concentrated in Southeast Asia and they
are either semiconductor chip manufacturers or testing facilities that purchase
our testing equipment.

Our cost of sales is made up of the cost of materials used, obsolescence costs,
labor, depreciation, utilities (which is our major consumption for testing
services), and overhead relating to manufacturing, testing and distribution.

Our expenses can be classified into three general categories: selling expense,
general and administrative expense, and research and development expense.
Selling expenses include expenses for payroll and payroll taxes for employees
working in the selling department, advertising, insurance, utilities and other
expenses directly related to selling activities. General and administrative
expenses include management payroll, property taxes, rental expense,
depreciation of fixed assets used by the management function, utilities,
employee fringe benefits, office supplies, travel and entertainment,
professional expense, outside services and other expenses related to management
and administration processes. Research and development expense includes
payroll and payroll tax, travel, and any other expenses that are directly
related to the research activities.

Critical Accounting Policies

In response to the SECs Release No. 33-8040, Cautionary Advice Regarding
Disclosure About Critical Accounting Policy, the Company identified the most
critical accounting principles upon which its financial status depends. The
Company determined that those critical accounting principles are related to the
use of estimates, inventory valuation, revenue recognition, income tax and
impairment of intangibles and other long-lived assets. The Company states these
accounting policies in the relevant sections in this managements discussion
and analysis, including the Recently issued Accounting Pronouncements discussed
below.

Use of Estimates

The Companys financial statements have been prepared in accordance with
accounting principles generally accepted in the United States, which require us
to make estimates and judgments that significantly affect the reported amounts
of assets, liabilities, revenues and expenses and related disclosure of
contingent assets and liabilities. The Company regularly evaluates these
estimates, including those related to inventory valuation, revenue
recognition and income taxes. These estimates are based on historical
experience and on assumptions that are believed by management to be reasonable
under the circumstances. The most important estimates included in the interim
financial statements are the allowance for doubtful accounts, provision for
inventory obsolescence, the estimated useful life of long-lived assets, and
valuation allowance for deferred tax assets. Actual results may differ
materially from these estimates, which may impact the carrying values of assets
and liabilities.

Inventory Valuation

We value our inventories at the lower of cost or market. We write down
inventories for unsalable, excess or obsolete raw materials, work-in-process
and finished goods by charging such write-downs to cost of sales. In addition
to write downs based on newly introduced parts, statistical and judgmental
assessments are calculated for the remaining inventory based on salability and
obsolescence.

Revenue Recognition

Revenue from product sales made to
customers is recognized when the risk of loss for the product sold
passes to the customer and any right of return can be quantified,
which is generally when goods are shipped or upon the completion of
services. The Company estimates an allowance for sales returns based
on historical experience with product returns. The Company warrants
its manufactured products against defects in design, materials and
workmanship for one year. A provision for estimated future costs
relating to warranty expense is recorded when products are shipped.

Because acceptance provisions are not
applicable to Testing revenue, which constitutes 43.80% of total
revenue, we recognize Testing revenue when the services are provided.

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Distribution revenue, which constitutes 31.78% of total revenue, is generally
recognized upon delivery and the completion of services such as installation or
training. Product is generally drop-shipped from vendors and subsequently
installed at customer site. In general contracts are written that either
separate installation, training and upgrades (value added) as a separate line
item or hold-back a percentage of the sale until post installation obligations
have been met.

Manufacturing revenue, which constitutes 24.42% of total revenue, is similar to
Distribution in that contracts are written that either separate installation,
training and upgrades (value added) as a separate line item or hold-back a
percentage of the sale until post installation obligations have been met. Our
provisions and obligations are relatively standard over our entire product
line.

Income Tax

We account for income taxes in accordance with Statement of Financial
Accounting Standards No 109, Accounting for Income Taxes (SFAS No. 109).
SFAS No. 109 requires an entity to recognize deferred tax liabilities and
assets. Deferred tax assets and liabilities are recognized for the future tax
consequence attributable to the difference between the tax bases of assets and
liabilities and their reported amounts in the financial statements. Deferred
tax assets and liabilities are measured using the enacted tax rate expected to
apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
included the enactment date.

Our foreign subsidiaries are subject to income taxes in the regions where they
operate. Because of the different income tax jurisdictions, net loss generated
in the U.S. cannot be utilized to offset the taxable income generated in
foreign countries. Therefore, we may incur certain income tax expenses in any
fiscal year.

For US income tax purposes, no provision has been made for US taxes on
undistributed earnings of overseas subsidiaries, with which the Company intends
to continue to reinvest. It is not practicable to estimate the amount of
additional tax that might be payable on the foreign earnings if they were
remitted as dividends, were lent to the Company, or if the Company should sell
its stock in the subsidiary. However, the Company believes that US foreign tax
credits and net operating losses available would substantially eliminate any
additional tax effects.

Impairment of Long-Lived Assets

Effective July 1, 2002, we adopted the provisions of Statement of Financial
Accounting Standard No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets (SFAS No. 144). SFAS No. 144 requires that long-lived
assets be reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable through
the estimated undiscounted cash flows expected to result from the use and
eventual disposition of the assets. Whenever any such impairment exists, an
impairment loss will be recognized for the amount by which the carrying value
exceeds the fair value.

Comparison of Three Months Ended March 31, 2003 (2003) and March 31, 2002
(2002)

Sales

Net sales increased by $904 or 19.4% from $4,657 in 2002 to $5,561 in 2003,
which we believe indicates improved consumers spending in the technology
market from a year ago.

We anticipate that the fourth quarter sales will be lower than third quarter
sales due to lower bookings as indicated by our quarterly backlog graph.

Quarterly Backlog

Geographically, net sales into and within the United States increased $695 or
33.9% from $2,052 in 2002 to $2,747 in 2003. The increase was mainly
attributable to the increased demand for low margin products. Net sales within
Southeast Asia increased $253 or

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10.8% from $2,347 in 2002 to $2,600 in 2003
mainly due to increased burn-in sales from our Thailand operation. Net sales
for Europe decreased $38 or 14.6% from $260 in 2002 to $222 in 2003. This
decrease was due primarily to a decline in demand for testing services, which
occurred when several large customers moved from Europe to Southeast Asia. We
have managed to recapture some of this business in Southeast Asia due to the
fact that our testing services were already established in regions to where the
customers relocated.

The Manufacturing Segment sales decreased $106 or 10.5% from $1,008 in 2002 to
$902 in 2003 due to conservative capital spending by OEMs for the Artic
Temperature Controlled Chunks and the COBIS-II Burn-in Board Systems. The
Testing Services Segment sales, Company-wide, increased $176 or 8.2% from
$2,151 in 2002 to $2,327 in 2003. Although the downturn in global economic
conditions has created a tough and competitive environment, our Testing Segment
continues to secure contracts in Thailand as well as its newly developed
Burn-in technology in its new facilities in Singapore. There is however, no
assurance that this will continue in the future. The Distribution Segment
increased by $834 or 55.7% from $1,498 in 2002 to $2,332 in 2003. This is
mainly attributed to the increase in sales and distribution of low margin
products.

Cost of Sales

The Companys cost of sales varies depending on the mix of sector and
geographic sales and increased $932 or 25.9% from $3,603 in 2002 to $4,535 in
2003. As a percentage of sales, the cost of sales increased 4.2% from 77.4% in
2002 to 81.6% in 2003. This increase in cost of sales, as a percentage of
sales, was mainly due to an increase in sales of lower margin products. The
selling price of equipment was lowered to remain competitive.

Operating Expenses

Operating expenses decreased by $391 or 27.4% from $1,429 in 2002 to $1,038 in
2003. As a percentage of total revenue, our operating expenses in 2003
decreased from 30.7% in 2002 to 18.7% in 2003, due to an increase in sales
revenue in 2003, the implementation of further cost cutting measures and the
reduction of depreciation due to the impairment of assets recorded in fiscal
year 2002.

General and Administrative

General and Administrative (G&A) expenses decreased by $169 or 17.1% from
$991 in 2002 to $822 in 2003. As a percentage of sales, G&A decreased by 6.5%
from 21.3% in 2002 to 14.8% in 2003. These decreases were due to cost-cutting
measures implemented in late 2002 and further cost-cutting measures in 2003
which consisted of (1) reducing headcount and related expenses such as payroll
and payroll-related costs such as bonuses which has been accomplished through
layoffs and reduction in management, (2) relocating to smaller facilities in
Van Nuys, California, (3) reducing insurance, travel and other miscellaneous
expenses and (4) continued reduced work weeks at certain of our operations.

Selling Expenses

Selling expenses decreased by $120 or 39.7% from $302 in 2002 to $182 in 2003.
As a percentage of sales, selling expenses decreased 3.2% from 6.5% in 2002 to
3.3% in 2003 due to certain components of fixed expenses, such as rent,
depreciation, insurance, etc. included in selling expenses. Of the decrease of
$120 comparing selling expenses in 2003 to that in 2002, a majority of decrease
was attributed to the cost-cutting measures that were implemented in 2002 which
consisted of (1) reducing headcount and the related expenses such as payroll
and payroll-related costs such as bonuses which has been accomplished through
layoffs, reduction in management, shortened work weeks, salary reductions and
periodic closures and (2) reducing insurance, travel and other miscellaneous
expenses.

Research and Development

Research and Development expenses decreased by $59 or 63.4% from $93 in 2002 to
$34 in 2003. This decrease is primarily due to managements decision to limit
research and development on its Automated Wet Benches and Artic Thermal Chucks
due to the profitability of the Manufacturing Segment.

Impairment loss

The Company has not recorded any impairment loss in 2003 based on its
examination of estimated undiscounted future cash flows that are generated by
the subsidiaries in which certain long-lived assets (certain fixed assets) are
used. In 2002, the Company recorded an impairment loss of approximately $82 on
machinery and equipment.

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Loss on Sale of Property, Plant and Equipment

The Company did not have a loss on sale of property, plant and equipment in
2003 The Company reported $39 in income in 2002 due to a gain on disposal of
assets.

Income (Loss) from Operations

For segment reporting purposes, the loss from operations in our Manufacturing
Segment was reduced by $261 or 49.7% from a loss of $525 in 2002 to a loss of
$264 in 2003, due to the cost-cutting measures implemented in late 2002 and
further cost-cutting measures in 2003, which consisted of (1) a reduction in
headcount and related expenses such as payroll and payroll-related costs
(including bonuses) which have been accomplished through layoffs, reduction in
management, shortened work weeks, salary reductions and periodic, temporary
plant closures, (2) relocation to smaller facilities, (3) the reduction of
depreciation due to the impairment loss recorded in fiscal year 2002, and (4) a
reduction in insurance, travel and other miscellaneous expenses.

Income from operations in our Testing Services Segment decreased by $1 or 0.4%
from $229 in 2002 to $228 in 2003, even though net sales increased by 8.1%.
This decrease in operating profit was due to increases in utilities and rent
for new Smart Burn-in (SBI) facilities.

Loss from operations in our Distribution Segment decreased by $33 from a loss
of $39 in 2002 to a loss of $6 in 2003. This resulted from an increase in
sales of products with low margin. Distribution products have a wide variety of
margins from one product to the next, and the margins generally depend on the
overall price of the product being sold. Customers have taken advantage of
certain price reductions we implemented to obtain necessary equipment, which in
turn has reduced the margins for those products. However, the increase in sales
volumes has improved the net loss position for the three months ended March 31,
2003.

Corporate operating loss was reduced from $40 in 2002 to an operating income of
$30 in 2003 due to an increase in the allocation percentage being charged on a
greater sales volume and cost-cutting measures implemented to reduce
payroll-related costs such as bonuses.

Interest Expenses

Interest expense decreased by $7 or 12.7%, from $55 in 2002 to $48 in 2003 and
is primarily due to the net repayment on borrowings. There were lower interest
rates on additional borrowings under the line of credit ($389) and long-term
debt and capitalized leases ($898) which was offset by repayment of line of
credit ($1,087) and long-term debt and capitalized leases ($933).

Other Income

Other income decreased by $38 or 33.3% from $114 in 2002 to $76 in 2003.
Changes in other income from 2002 to 2003 was made up mainly of a (1) decrease
in interest income of $34, (2) decrease in rental income of $2, (3) increase in
exchange gain of $64, (4) decrease in dividends of $1, (5) a decrease in
royalties of $26, and (5) a decrease in sundry income of $39.

Income Tax

Current income tax expense for 2003 was approximately $21, an increase of $21
compared to $0 income tax provided for in 2002. Because of the different
income tax jurisdictions, the taxable income generated in foreign
countries will not be offset the net loss generated in the U.S.
Therefore, we generally incur certain income tax expenses in any
fiscal year.

Because the net loss incurred in the U.S did not offset the taxable income in
Singapore and Malaysia, we still incurred a total income tax expense of $21 for
2003 including changes in deferred income tax assets and liabilities, compared
to $0 income tax expense for 2002.

Net Income (Loss)

As a result of all of the factors analyzed above, the net income attributable
to common shares for the quarter ended March 31, 2003 was approximately $28,
which represented an increase of $340 from a net loss of approximately $312
attributed to common shares for the quarter ended March 31, 2002, a 109%
change. Basic income per share for the quarter ended March 31, 2003 increased
to earnings of $0.01 per share, from a basic loss per share of $0.11 in 2002,
which represents a change of $0.12 from net loss to net income, a 109% change.
Diluted income per share for third quarter 2003 was $0.01 per share, an
increase of $0.12 per share from diluted losses per share of $0.11 for third
quarter 2002.

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Comparison of Nine Months Ended March 31, 2003 (2003) and March 31, 2002 (2002)

Sales

Net sales increased by $1,922 or 13.2% from $14,605 in 2002 to $16,527 in 2003,
due to a slight recovery in the semiconductor industry.

Geographically, net sales into the United States increased by $799 or 13.5%
from $5,906 in 2002 to $6,705 in 2003. The increase was mainly attributed to
increased demand for wet process benches and low margin products. Net sales
within Southeast Asia increased $1,633 or 21.7% from $7,512 in 2002 to $9,145
in 2003 due mainly to higher burn-in services and higher distribution volume.
Net sales for Europe decreased by $506 or 41.4% from $1,222 in 2002 to $716 in
2003. This decrease was primarily due to a decline in demand for testing
services, which occurred when several large customers moved from Europe to
Southeast Asia. We managed to recapture some of this business in Southeast Asia
due to the fact that our testing services were already established in regions
to where the customers relocated.

The Manufacturing Segment sales increased $250 or 6.6% from $3,787 in 2002 to
$4,037 in 2003 despite conservative capital spending by OEMs for the Artic
Temperature Controlled Chunks, wet process benches and the COBIS-II Burn-in
Board Systems. The Testing Services Segment sales, Company-wide, increased by
$584 or 8.8% from $6,654 in 2002 to $7,238 in 2003. Although the downturn in
global economic conditions has created a tough and competitive environment, our
Testing Segment continues to secure contracts in Thailand as well as for its
newly developed Burn-in technology in its new facilities in Singapore. There is
however, no assurance that this will continue in the future. The Distribution
Segment increased $1,088 or 26.1% from $4,164 in 2002 to $5,252 in 2003. This
is mainly attributed to increase in low margin products.

Cost of Sales

The Companys cost of sales varies depending on the mix of sector and
geographic sales and increased by $1,017 or 9% from $11,361 in 2002 to $12,378
in 2003. As a percentage of sales, it decreased 2.9% from 77.8% in 2002 to
74.9% in 2003. The decrease in cost of sales, as a percentage of sales, was
mainly due to an increase in sales and a reduction in depreciation due to the
impairment of assets recorded in fiscal year 2002. In addition, cost-cutting
measures were implemented in late 2002 and during 2003 by reducing headcount
and related expenses such as payroll and payroll-related costs.

Operating Expenses

Operating expenses decreased by $919 or 18.5% from $4,967 in 2002 to $4,048 in
2003. As a percentage of total revenue, our operating expenses decreased from
34% in 2002 to 24.5% in 2003, due mainly to the increase in our total revenue
in 2003 and cost cutting measures implemented in late 2002..

General and Administrative

General and Administrative (G&A) expenses decreased by $41 or 1.3% from
$3,233 in 2002 to $3,192 in 2003. As a percentage of sales, G&A decreased by
2.8% from 22.1% in 2002 to 19.3% in 2003 due to cost-cutting measures which
consisted of (1) reducing headcount and related expenses such as payroll and
payroll-related costs such as bonuses which has been accomplished through
layoffs, reduction in management, and periodical closures in fiscal year ended
June 30, 2002, (2) ) relocating to smaller facilities in Van Nuys, California,
(3) reducing insurance, travel and other miscellaneous expenses and (4) reduced
work weeks at certain of our operations.

Selling Expenses

Selling expenses decreased by $232 or 26.2% from $887 in 2002 to $655 in 2003.
As a percentage of sales, selling expenses decreased 2.1% from 6.1% in 2002 to
4.0% in 2003 due to certain components (with the nature of fixed expenses, such
as rent, depreciation, insurance, etc.) included in selling expenses. Of the
decrease of $232 comparing selling expenses in 2003 to that in 2002, a majority
of decrease was attributed to the cost-cutting measures that were implemented
during 2002 and 2003 which consisted of (1) reducing headcount and related
expenses such as payroll and payroll-related costs such as bonuses which has
been accomplished through layoffs, reduction in management, shortened work
weeks, salary reductions and periodic closures and (2) reducing insurance,
travel and other miscellaneous expenses.

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Research and Development

Research and Development expenses decreased by $170 or 65.6% from $259 in 2002
to $89 in 2003. This decrease is primarily due to managements decision to
limit research and development on its Automated Wet Benches and Artic Thermal
Chucks due to the profitability of the Manufacturing Segment.

Impairment loss

The Company has not recorded any impairment loss for 2003 based on its
examination of estimated undiscounted future cash flows that are generated by
the subsidiaries in which certain long-lived assets (goodwill and certain fixed
assets) were used. In 2002, the Company recorded an impairment loss of
approximately $624, consisting of (1) $393 in goodwill, related to the
Companys acquisition of manufacturing product lines in the United States; (2)
$80 in intangibles, used in its manufacturing segment (within the United
States); and (3) $151 of fixed assets, consisting of machinery and equipment,
furniture and fixtures, leasehold improvements, and demonstration.

Loss on Sale of Property, Plant and Equipment

The sale of property, plant and equipment decreased by $148 from a gain of $36
in 2002 to a loss of $112 in 2003 due to a loss on disposal of assets, mainly
in Singapore, in the first quarter of 2003.

Income (Loss) from Operations

For segment reporting purposes, the loss from operations in our Manufacturing
Segment was reduced by $1,651 or 75.8% from $2,177 in 2002 to $526 in 2003, due
to the increase in sales and further cost-cutting measures which consisted of
(1) reducing headcount and related expenses such as payroll and payroll-related
costs such as bonuses which has been accomplished through layoffs, reduction in
management and shortened work weeks, (2) relocation to smaller facilities (3)
impairment of assets recorded in fiscal year 2002, which also resulted in a
reduction of depreciation, and (4) reducing insurance, travel and other
miscellaneous expenses.

Income from operations in our Testing Services Segment increased by $224 or
36.6% from $612 in 2002 to $836 in 2003 due to the increase in sales and rapid
implementation in Southeast Asia of cost saving measures in late 2002.

Loss from operations in our Distribution Segment increased by $94 from $31 in
2002 to $125 in 2003. This resulted from an increase in product sales with low
margins. Distribution products have a wide variety of margins from one product
to the next, and the margins generally depend on the overall price of the
product being sold. Customers have taken advantage of price reductions to
obtain necessary equipment, which in turn has reduced the margins and sales
volume have not been sufficient in the nine months ended March 31, 2003 to
offset in full the price reduction.

Corporate operating loss was decreased from $127 in 2002 to $84 in 2003 due to
an increase in the allocation percentage being charged on a greater sales
volume and cost-cutting measures implemented to reduce payroll-related costs
such as bonuses.

Interest Expenses

Interest expense decreased by $14 or 8.8% from $159 in 2002 to $145 in 2003 and
is primarily due to the net repayment on borrowings. There were lower interest
rates on additional borrowings under the line of credit ($389) and long-term
debt and capitalized leases ($898) which was offset by repayment of line of
credit ($1,087) and long-term debt and capitalized leases ($933).

Other Income

Other Income decreased by $148 or 38% from $389 in 2002 to $241 in 2003. .
Changes in other income from 2002 to 2003 was made up mainly of a (1) decrease
in interest income of $86, (2) decrease in rental income of $16, (3) increase
in exchange gain of $24, (4) increase in dividends of $2, (5) a decrease in
royalties of $6, and (5) a decrease in sundry income of $66.

Income Tax

Current income tax expense for 2003 was approximately $71, an increase of $3,
or 4.4% compared to the current income tax expense of $68 for 2002.
Because of the different income tax jurisdictions, the taxable income
generated in foreign countries will not offset the net loss generated in
the U.S. Therefore, we generally incur certain income tax expenses in
any fiscal year.

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Net Income (Loss)

As a result of all of the factors analyzed above, the net income attributable
to common shares for the nine months ended March 31, 2003 was approximately
$175, which represented an increase of $1,679 from a net loss of approximately
$1,504 attributed to common shares for the nine months ended March 31, 2002, a
111.6% change. Consequently, basic income per share for the nine months ended
March 31, 2003 increased to earnings of $0.06 per share, from a basic loss per
share of $0.51 in 2002, which represented a change of $0.57 from net loss to
net income, a 111.6% change. Diluted income per share for 2003 was $0.06 per
share, an increase of $0.57 per share from diluted loss per share of $0.51 for
2002.

Liquidity and Capital Resources

We had working capital (defined as current assets minus current liabilities) of
approximately $6,848 for the nine-month period ended March 31, 2003, which
represented a decrease of approximately $71 compared with working capital of
$6,919 as of June 30, 2002, a 1% decrease. Historically, the Company had
positive working capital for the eight fiscal years prior to the fiscal year
ended June 30, 2002. We believe that the Company has the ability to maintain
positive working capital in the near future.

The Companys credit rating provides ready and ample access to funds in global
capital markets. At March 31, 2003, the Company had available short-term lines
of credit totaling $7,435 of which $6,903 was unused.

|                        |  |                |  |          |      |        |  |        |       |   |       |   |       |   |       | 
|----------------------- |  | -------------- |  | -------- | ---- | ------ |  | ------ | ----- | - | ----- | - | ----- | - | ----- | 
|Entity with Facility    |  | Type of        |  | Interest |      | Credit |  | Unused
|                        |  |                |  |          |      |        |  |       
|Trio-Tech Malaysia      |  | Line of Credit |  |          | 7.40 | %      |  | $      | 38    |   |       | $ | 38    |  
|Trio-Tech Bangkok       |  | Line of Credit |  |          | 7.75 | %      |  |        | 47    |   |       |   | 47    |  
|Trio-Tech Singapore     |  | Line of Credit |  |          | 7.00 | %      |  |        | 2,538 |   |       |   | 2,318 |  
|Trio-Tech Singapore     |  | Line of Credit |  |          | 6.38 | %      |  |        | 4,512 |   |       |   | 4,500 |  
|Trio-Tech International |  | Line of Credit |  |          | 5.75 | %      |  |        | 300   |   |       |   |      |  
|                        |  |                |  |          |      |        |  |        |       |   |       |   |       |   |       | 
|                        |  |                |  |          |      |        |  |        |       | $ | 7,435 |   |       | $ | 6,903 | 
|                        |  |                |  |          |      |        |  |        |       |   |       |   |       |   |       | 

Even though the Company had suffered a net loss in the fiscal year ended June
30, 2002, management of the Company believes that the Company has the economic
wherewithal to satisfy its cash needs for the next twelve months plus one day
as a going concern business. Managements belief is based, in part, on the
following: (1) we have a fixed cash deposit of approximately $4 million (of
which approximately $2.6 million is available immediately); (2) we had backlog
of $2,822 as of March 31, 2003; (3) our accounts receivable turnover ratio is
approximately 4.78 times per year (76 days of sales in accounts receivable) in
2003; (4) our financing facilities available as of March 31, 2003 were
approximately $6.9 million upon which we are able to draw at any time; and (5)
our efforts during the fiscal year ended June 30, 2002 and during the nine
months ended March 31, 2003, to cut costs and expenses, have been effective.
These cost cutting measures consisted of (1) reducing headcount and related
expenses such as payroll and payroll-related costs such as bonuses which has
been accomplished through layoffs, reduction in management, shortened work
weeks, salary reductions and periodical closures (2) reducing plant capacity by
moving to smaller facilities and (3) reducing insurance, travel and other
miscellaneous expenses. We anticipate that the costs and expenses in fiscal
year 2003 will be lower than those during fiscal year 2002 and, accordingly,
cash disbursement needs should be lower also. However, we cannot provide any
assurance that costs and expenses in fiscal year 2003 or thereafter will not be
higher than those in fiscal year 2002.

Net cash provided by operating activities during the nine months ended March
31, 2003 was $497 compared to net cash used of $1,673 in operating activities
during the quarter ended March 31, 2002. The change of approximately $2,170 or
129.7% reflects our efforts in cost reduction and our response to the economic
downturn. The $497 of net cash provided by operating activities during the nine
months ended March 31, 2003 was primarily attributable to net income of $175
and a decrease of $183 in other receivables. The cash flow from our
inventory was $200 compared $68 used during the nine months ended March 31,
2002 reflecting the fact that our inventory turnover is increasing. We had a
$112 loss on the sale of property plant and equipment from the disposal of
obsolete equipment. The cash used in our accounts receivable in 2003 was $488
compared to $354 provided during the nine months ended March 31, 2002, a
change of 237.9%, reflecting the fact that our total revenue in 2003 increased
and accounts receivable turnover times decreased. Cash used in our accounts
payable and accrued expenses during the nine months ended March 31, 2003 was
$494 compared to $2,118 used during the nine months ended March 31, 2002, a
change of 76.7%, indicating the reduction in the volume of purchases.

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Net cash provided by investing activities during the nine months ended March
31, 2003 was $905, reflecting a decrease of $105 or 10.4%, compared to $1,009
provided by investing activities during the nine months ended March 31, 2002.
The net cash provided by investing activities was due mainly to the decrease of
$1,895 in short-term deposits, compared to the decrease in short-term deposits
of $1,513 during the nine months ended March 31, 2002, reflecting a change of
$382 or 25.2%, offset by our capital expenditures during the nine months ended
March 31, 2003 of $1,188 which related to the investment in the Southeast Asia
testing segment. Compared to the capital expenditure of $374 during the nine
months ended March 31, 2002, we increased our investment in capital items by
$814 as a result of expenditures needed to maintain technology required to keep
the current customer base in the ever changing test market. We decreased our
net investment in marketable securities by $137 during the nine months ended
March 31, 2003 compared to an increase of $150 during the nine months ended
March 31, 2002.

Net cash used in financing activities during the nine months ended March 31,
2003 was $804, reflecting an increase in cash used of $1,085 or 386.1%,
compared to $281 provided by financing activities during the nine months ended
March 31, 2002. The cash used in financing activities included $2,020 of
payments on lines of credit, long-term debts and capital lease obligations
which were offset by a cash inflow of (1) $1,287 from additional borrowing
under lines of credit and long term debt, and (2) $71 in dividends paid to
minority interest.

Approximately $796 of cash deposits are held in the Companys 55% owned
Malaysian subsidiary. $260 of this cash is denominated in the currency of
Malaysia. Out of the $260, $176 is currently available for movement, as
authorized by the Central Bank of Malaysia. There are additional amounts
available as dividends (after making deductions for income tax) pursuant to
Malaysian regulations in force from July 1, 2000.

Recently Issued Accounting Pronouncements

Effective July 1, 2002, we adopted Statement of Financial Accounting Standards
(SFAS), No. 141, Business Combinations, and SFAS No. 142, Goodwill and
Other Intangible Assets. SFAS No. 141 replaces Accounting Principles Board
Opinion No. 16 (APB No. 16), Business Combination, and eliminates
pooling-of-interests accounting prospectively. It also provides guidance on
purchase accounting related to the recognition of intangible assets and
accounting for negative goodwill. SFAS No. 142 changes the accounting for
goodwill from an amortization method to an impairment-only approach. The
adoption of SFAS No. 141 and No. 142 did not have significant impact on our
financial statements. During the year ended June 30, 2002, the Company wrote
off all of the outstanding balance of approximately $393 of goodwill. During
the nine months ended March 31, 2003 and 2002, goodwill amortization totaled
approximately $0.

Effective July 1, 2002 we adopted SFAS No. 143, Accounting for Asset
Retirement Obligations,. SFAS No. 143 requires that any legal obligation
related to the retirement of long-lived assets be quantified and recorded as a
liability with the associated asset retirement cost capitalized on the balance
sheet in the period it is incurred when a reasonable estimate of the fair value
of the liability can be made. The adoption of SFAS No 143 did not have
significant impact on our consolidated financial statements.

Effective July 1, 2002 we adopted SFAS No. 145, Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections SFAS No. 145. SFAS No 145 eliminates the current requirement that
gains and losses on debt extinguishment must be classified as extraordinary
items in the income statement. Instead, such gains and losses will be
classified as extraordinary items only if they are deemed to be unusual and
infrequent, in accordance with the current GAAP criteria for extraordinary
classification. In addition, SFAS No. 145 eliminates an inconsistency in lease
accounting by requiring that modifications of capital leases that result in
reclassification as operating leases be accounted for consistent with
sale-leaseback accounting rules. The statement also contains other
nonsubstantive corrections to authoritative accounting literature. The
adoption of SFAS No 145 did not have significant impact on our consolidated
financial statements.

In June 2002, Financial Accounting Standard Board (FASB) issued SFAS No. 146,
Accounting for Costs Associated with Exit or Disposal Activities, which
addresses accounting for restructuring and similar costs. SFAS No. 146
supersedes previous accounting guidance, principally Emerging Issues Task Force
(EITF) Issue No. 94-3. SFAS No. 146 requires that the liability for costs
associated with an exit or disposal activity be recognized when the liability
is incurred. Under EITF No. 94-3, a liability for an exit cost was recognized
at the date of a companys commitment to an exit plan. SFAS No. 146 also
establishes that the liability should initially be measured and recorded at
fair value. Accordingly, SFAS No. 146 may affect the timing of recognizing
future restructuring costs as well as the amount recognized. The provisions of
SFAS No. 146 are to be applied prospectively to exit or disposal activities initiated after December 31,
2002. The adoption of this standard did not have any immediate effect on our
consolidated financial statements.

In November 2002, the (FASB) issued Interpretation No. 45 (FIN No. 45),
Guarantors Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others,which disclosures are effective
for financial statements issued after December 15, 2002. The Company adopted
the disclosure requirements of FIN No. 45 as of

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December 31, 2002. The adoption
of the measurement requirements of FIN No. 45 did not have a material impact on
the Companys financial position or results of operations.

In December 2002, FASB issued SFAS No. 148, Accounting for Stock-Based
CompensationTransition and Disclosurean amendment of FAS 123. This statement
amends Statement of Financial Accounting Standards No. 123, Accounting for
Stock-Based Compensation, to provide alternative methods of transition for a
voluntary change to the fair value based method of accounting for stock-based
employee compensation and amends the disclosure requirements to SFAS No. 123 to
require prominent disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee compensation and the
effect of the method used on reported results. The transition and annual
disclosure provisions of SFAS No. 148 are effective for interim periods
beginning after December 15, 2002. The Company adopted the disclosure
requirements of SFAS 148 on January 1, 2003 and they had no impact on the
consolidated financial statements.




ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk. We do not use derivative financial instruments in our
investment portfolio. Our investment portfolio is generally comprised of cash
deposits. Our policy is to place these investments in instruments that meet
high credit quality standards. These securities are subject to interest rate
risk, and could decline below actual invested amount in value if interest rates
fluctuate and thus subject us to market risk due to those fluctuations. Due to
the short duration and conservative nature of our investment portfolio, we do
not expect any material loss with respect to our investment portfolio.

The interest on loans, capitalized leases and on our lines of credit range from
5.50% to 7.75% per annum. As of March 31, 2003, the outstanding principal
balance on these loans was approximately $2,621. These interest rates are
subject to change and we cannot predict increases or decreases in rates, if
any.

Foreign Currency Exchange Rate Risk. Although the majority of our sales, cost
of manufacturing and marketing are transacted in U.S. dollars, significant
portions of our revenues are denominated in Singapore, Malaysian and other
currencies. Consequently, a portion of our costs, revenues and operating
margins may be affected by fluctuations in exchange rates, primarily between
the U.S. Dollar and such foreign currencies. We are also affected by
fluctuations in exchange rates if there is a mismatch between our foreign
currency denominated assets and liabilities. Foreign currency adjustments
resulted in a decrease of $66 and an increase of $10 to shareholders equity
for nine months ended March 31, 2003 and 2002, respectively.

We try to reduce our risk of foreign currency fluctuations by purchasing
certain equipment and supplies in U.S. Dollars and seeking payment, when
possible, in U.S. Dollars. However, we may not be successful in our attempts
to mitigate our exposure to exchange rate fluctuations. Those fluctuations
could have a material adverse effect on the Companys financial results.




ITEM 4. CONTROLS AND PROCEDURES

Within the 90-day period prior to the filling of this report, an evaluation was
carried out by the Companys Chief Executive Officer and Chief Financial
Officer as to the effectiveness of the Companys disclosure controls and
procedures (as defined in Rule 13a-14(c) under the Securities Exchange Act of
1934). Based upon that evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that these disclosures controls and procedures were
adequate and effective to ensure that material information relating to the
Company and its consolidated subsidiaries would be made known to them by others
within these entities. No significant changes were made in the Companys
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation, nor were any corrective
actions taken with regard to significant deficiencies and material weaknesses.

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TRIO-TECH INTERNATIONAL
PART II. OTHER INFORMATION




Item 1.   Legal Proceedings



| |  |  | Not applicable
| |  |  | --------------




Item 2.   Changes in Securities and Use of Proceeds



| |  |  | Not applicable
| |  |  | --------------




Item 3.   Defaults Upon Senior Securities



| |  |  | Not applicable
| |  |  | --------------




Item 4.   Submission of Matters to Vote of Security Holders



| |  |  | Not applicable
| |  |  | --------------




Item 5.   Other Information



| |  |  | Not applicable
| |  |  | --------------




Item 6.   Exhibits and reports on Form 8-K



| |  |  | (a)   Exhibits
| |  |  | --------------
|

| |  |  | 99.1     Certification Pursuant to 18 U.S.C. Section 1350, As Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act Of 2002  Chief
Executive Officer
| |  |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|

| |  |  | 99.2     Certification Pursuant to 18 U.S.C. Section 1350, As Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act Of 2002  Chief
Financial Officer
| |  |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|

| |  |  | (b)   Reports on Form 8-K
| |  |  | -------------------------
|

| |  |  | The Registrant filed the following reports on Form 8-K with the Securities
and Exchange Commission during the third quarter of fiscal 2003:
| |  |  | -------------------------------------------------------------------------------------------------------------------------------------------
|

| |  |  | None
| |  |  | ----




SIGNATURES

Pursuant to the requirements of the Securities 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                                                                                                                                           
| |  |                                                                                                                                                                    |                      | 
| |  | By:                                                                                                                                                                | /s/ Victor H.M. Ting
| |  |                                                                                                                                                                    |                     
| |  | VICTOR H.M. TING
     Vice President and
     Chief Financial Officer
     (Duly authorized officer and
     Principal Financial Officer)
     Dated: May 16, 2003

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CERTIFICATIONS

I, S. W. Yong, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Trio-Tech
International;

2.     Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this interim
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)     designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared.

b)     evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and

c)     presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5.     The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):

a)     all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants
auditors any material weaknesses in internal control; and

b)     any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal control; and

6.     The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

May 16, 2003

/s/ S. W. YONG
S.W. Yong
President and Chief Executive Officer
(Principal Executive Officer)

I, Victor H.M. Ting, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Trio-Tech
International;

2.     Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this interim
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)     designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared.

b)     evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and

c)     presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5.     The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):

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##### Table of Contents



a)     all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants
auditors any material weaknesses in internal control; and

b)     any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal control; and

6.     The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

May 16, 2003

/s/VICTOR H.M. TING
Victor H.M. Ting
Vice President and Chief Financial Officer
(Principal Financial Officer)

23