##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 For the fiscal year ended June 30, 2005
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
 For the Transition Period from ___ to ___
 Commission File Number 1-14523
 TRIO-TECH INTERNATIONAL
  California
    
    95-2086631(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification Number)14731 Califa StreetVan Nuys, California
    
    91411(Address of principal executive offices)
    
    (Zip Code)
 818-787-7000
  Name of each exchangeTitle of each class
    
    On which registeredCommon Stock, no par value
    
    AMEX
 
 þ o
 o
 o þ
 o þ




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TRIO-TECH INTERNATIONAL
 INDEX
 PagePart IItem 1
    
    Business
    
    
    3Item 2
    
    Properties
    
    
    9Item 3
    
    Legal Proceedings
    
    
    11Item 4
    
    Submission of matters to a vote of security holders
    
    
    11Part IIItem 5
    
    Market for registrants common
equity, related stockholder matters and Issuer Purchases of Equity
Securities
    
    
    12Item 6
    
    Selected financial data
    
    
    14Item 7
    
    Managements discussion and analysis of financial condition and results of operations
    
    
    15Item 7A
    
    Quantitative and qualitative disclosures about market risk
    
    
    36Item 8
    
    Financial statements and supplementary data
    
    
    37Item 9
    
    Changes in and disagreements with accountants on accounting and financial disclosure
    
    
    38Item 9A
    
    Controls and Procedures
    
    
    38Item 9B
    
    Other Information
    
    
    38Part IIIItem 10
    
    Directors and executive officers of the registrant
    
    
    38Item 11
    
    Executive compensation
    
    
    38Item 12
    
    Security ownership of certain
beneficial owners and management and related stockholder matters
    
    
    38Item 13
    
    Certain relationships and related transactions
    
    
    38Item 14
    
    Principal Accountant Fees and Services
    
    
    38Part IVItem 15
    
    Exhibits and Financial Statement Schedules
    
    
    38Signatures
    
    
    
    
    42Exhibits
    
    
    
    
    43Report of Independent Registered Public Accounting Firm
    
    
    47Consolidated Balance Sheets as of June 30, 2005 and 2004
    
    
    48Consolidated Statements of
Operations and Comprehensive Income (Loss) for the Years Ended June
30, 2005, 2004 and 2003
    
    
    49Consolidated Statements of
Shareholders Equity for the Years Ended June 30, 2005, 2004 and 2003
    
    
    50Consolidated Statements of Cash
Flows for the Years Ended June 30, 2005, 2004 and 2003
    
    
    51Notes to
Consolidated Financial Statements
    
    
    52EXHIBIT 10.36EXHIBIT 10.37EXHIBIT 10.38EXHIBIT 10.39EXHIBIT 10.40EXHIBIT 23.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32
  2




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##### Table of Contents



NOTE CONCERNING FORWARD-LOOKING STATEMENTS
   
 ITEM 1  BUSINESS
   General
    3




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##### Table of Contents



Company History
 1958
    
    Incorporated in California.1976
    
    The Company formed Trio-Tech International Pte. Ltd. in Singapore.1984
    
    The Company formed the European Electronic Test Center (EETC), a Cayman Islands domiciled subsidiary,
to operate a test facility in Dublin, Ireland.1985
    
    The Companys Singapore subsidiary entered into a joint-venture agreement, Trio-Tech Malaysia, to
operate a test facility in Penang.1986
    
    Trio-Tech International listed on the NASDAQ Small Cap market under the symbol TRTC.1988
    
    The Company acquired the Rotating Test Equipment Product Line of Genisco Technology Corporation.1990
    
    Trio-Tech International acquired Express Test Corporation in California.Trio-Tech Malaysia opened a new facility in Kuala Lumpur.1992
    
    Trio-Tech Singapore opened Trio-Tech Bangkok, Thailand.Trio-Tech Singapore achieved ISO 9002 certification.1994
    
    Trio-Tech Malaysia started a new components assembly operation in Batang Kali.1995
    
    Trio-Tech Singapore achieved ISO 9001 certification.1997
    
    In November 1997, the Company acquired KTS Incorporated, dba Universal Systems of Campbell, California.1998
    
    In September 1998, the Company listed on AMEX under the symbol TRT.2000
    
    Trio-Tech Singapore achieved QS 9000 certification.Trio-Tech Malaysia closed its facility in Batang Kali.2001
    
    The Company divested the Rotating Test Equipment Product Line.Trio-Tech Malaysia closed its facility in Kuala Lumpur.2003
    
    Trio-Tech Singapore opened a sales office in China known as Trio-Tech (Suzhou) Co. Ltd.Trio-Tech Malaysia scaled down its facility in Penang.2004
    
    The Company moved its Wet Process Station manufacturing from Campbell, California to Singapore.Trio-Tech Test Services Pte. Ltd. was renamed Universal (Far East) Pte. Ltd.Trio-Tech Malaysia acquired a burn-in testing division in Petaling Jaya.2005
    
    Trio-Tech Singapore, Trio-Tech Malaysia and Trio-Tech Bangkok achieved ISO 9001 : 2000 certification.Trio-Tech Singapore, Trio-Tech Malaysia and Trio-Tech Bangkok achieved ISO/TS16949 : 2002 certification.
 4




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##### Table of Contents



Background
   Testing Services
     Manufacturing Products
  Front-End Products
 Wet Process Stations
  5




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##### Table of Contents



Artic Temperature Controlled Wafer Chucks
 ° °
 Back-End Products
 Autoclaves and HAST (Highly Accelerated Stress Test) Equipment
  Burn-in Equipment and Boards
     Component Centrifuges and Leak Detection Equipment
  Distribution Activities
  6




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##### Table of Contents



Product Research and Development
   Marketing, Distribution and Services
   7




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##### Table of Contents



Backlog
  June 30,
    
    
    June 30,2005
    
    
    2004Manufacturing backlog
    
    $
    882
    
    
    $
    3,440Testing service backlog
    
    
    7,402
    
    
    
    4,058Distribution backlog
    
    
    1,099
    
    
    
    852$
    9,383
    
    
    $
    8,350
  Materials and Supply
  Competition
     8




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##### Table of Contents



Patents
    Employees
  
 ITEM 2  PROPERTIES
   Owned (O)Approx.

    
    or Leased (L)Sq. Ft.

    
    ExpirationLocation
    
    Principal Use/Segment
    
    Occupied

    
    Date14731 Califa Street
    
    Headquarters/
    
    
    10,000
    
    
    (L) Jan. 2008Van Nuys, CA 9l411
    
    Testing/ManufacturingAbbey Road
    
    Testing
    
    
    18,400
    
    
    (O) *4Deansgrange Co.Dublin, Ireland1004, Toa Payoh North, Singapore
    
    Testing
    
    
    6,864
    
    
    (L) Sept. 2006HEX 07-01/07,
 9




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##### Table of Contents



Owned (O)Approx.

    
    or Leased (L)Sq. Ft.

    
    ExpirationLocation
    
    Principal Use/Segment
    
    Occupied

    
    DateHEX 03-01/03,
    
    Testing/Manufacturing
    
    
    2,959
    
    
    (L) Sept. 2006HEX 03-16/17,
    
    Testing
    
    
    976
    
    
    (L) Sept. 2006HEX 01-08/15
    
    Testing/Manufacturing
    
    
    6,864
    
    
    (L) Jan. 2006 *1HEX 01-16/17
    
    Testing
    
    
    1,983
    
    
    (L) Jan. 2006 *1HEX 02-08/10,
    
    Testing
    
    
    2,959
    
    
    (L) Aug. 2005*1HEX 02-11/15
    
    Testing
    
    
    3,905
    
    
    (L) Apr. 2008HEX 04-17
    
    Testing
    
    
    1,006
    
    
    (L) May. 2007HEX 04-14/16
    
    Testing
    
    
    2,929
    
    
    (L) May. 2007HEX 03-08/10
    
    Testing
    
    
    2,959
    
    
    (L) May. 2007HEX 01/07-R1/R2
    
    Testing
    
    
    710
    
    
    (L) Sept. 20061008, Toa Payoh North, SingaporeHEX 03-01/06,
    
    Testing
    
    
    7,345
    
    
    (L) Feb. 2006 *1HEX 03-09/17,
    
    Logistics/Universal(FE)
    
    
    6,099
    
    
    (L) Jan. 2006 *1HEX 01-08,
    
    Transformer Room
    
    
    603
    
    
    (L) Jun. 2006 *1HEX 07-17/18,
    
    Testing
    
    
    4,315
    
    
    (L) Nov. 2006HEX 07-01,
    
    Testing
    
    
    3,466
    
    
    (L) Jan. 2007HEX 02-17
    
    Universal (FE)
    
    
    832
    
    
    (L) Jun. 2007HEX 02-15/16
    
    Universal (FE)
    
    
    1,400
    
    
    (L) Jul. 2007HEX 01-09/11
    
    Universal (FE)
    
    
    2,202
    
    
    (L) Jun. 2006 *1HEX 03-07/08
    
    Testing
    
    
    1,765
    
    
    (L) Nov. 2007HEX 01-S3/S4
    
    Power Substation
    
    
    1,627
    
    
    (L) Sept. 2006Plot 1A, Phase 1
    
    Subleased
    
    
    42,013
    
    
    (O) *2Bayan Lepas Free Trade Zone11900 Penang327, Chalongkrung Road,
    
    Testing
    
    
    34,432
    
    
    (O)Lamplathew, Lat Krabang,Bangkok 10520, ThailandLot No. B7, Kawasan MIEL
    
    Vacant
    
    
    24,142
    
    
    (O) *3Batang Kali, Phase II,43300 Batang KaliSelangor Darul Ehsan, MalaysiaLot No. 11A, Jalan SS8/2,
    
    Testing
    
    
    19,334
    
    
    (L) Jul. 2007Sungai Way Free Industrial Zone,47300 Petaling Jaya,Selangor Darul Ehsan, MalaysiaLot No. 4, Kawasan MIEL
    
    Testing
    
    
    14,432
    
    
    (L) Nov. 2007Sungai Way Baru Free IndustrialZone, Phase III,Selangor Darul Ehsan, MalaysiaNo. 5, Xing Han Street, Block B
    
    Testing
    
    
    560
    
    
    (L) Sept. 2007#05-01/02, Room 6
Suzhou Industrial Park
China 215021Suzhou Industrial ParkChina 215021
 
 *1
    
    With respect to the various leases that expire during fiscal 2006, the Company anticipates
that the landlord will offer similar terms on each such lease at renewal and does not believe
that material expenses will be incurred. *2
    
    The premises are subleased to a third party.
 10




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##### Table of Contents



*3
    
    The premises are currently vacant as the tenant has terminated the tenancy agreement in June
2005. The Company plans to lease or sell the property to a third party subsequent to the
fiscal year. No agreement as to sale has been entered into nor has any purchaser for the
premises been specifically named.*4
    
    The Company plans to close the Ireland operation and sell the property. No agreement as to
sale has been entered into nor has any purchaser for the property been specifically named. 
 ITEM 3 LEGAL PROCEEDINGS
    
 ITEM 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  11




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PART II
 
 ITEM 5 MARKET FOR REGISTRANTS COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND                   ISSUER PURCHASES OF EQUITY SECURITIES
  Quarter Ended
    
    High

    
    LowFiscal 2004September 30, 2003
    
    
    3.60
    
    
    
    2.40December 31, 2003
    
    
    4.25
    
    
    
    3.24March 31, 2004
    
    
    4.65
    
    
    
    3.59June 30, 2004
    
    
    5.00
    
    
    
    4.25Fiscal 2005September 30, 2004
    
    
    4.45
    
    
    
    3.45December 31, 2004
    
    
    4.98
    
    
    
    3.25March 31, 2005
    
    
    5.00
    
    
    
    3.53June 30, 2005
    
    
    4.00
    
    
    
    3.50
   12




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##### Table of Contents



EQUITY COMPENSATION PLAN INFORMATIONPlan Category
    
    Number of
    
    
    Weighted-average
    
    
    Number ofsecurities to be
    
    
    exercise price of
    
    
    securitiesissued upon
    
    
    outstanding options
    
    
    remaining availableexercise of
    
    
    
    
    
    for future issuanceoutstanding options
    
    
    
    
    
    
    under equitycompensation plans(excludingsecuritiesreflected in column(a))(a)
    
    
    (b)
    
    
    (c)Equity compensation plans
approved by security holders:(1) Companys 1988
Stock Option Plan
    
    
    165,000
    
    
    $
    3.44
    
    
    
    135,000(2) Directors Stock
Option Plan
    
    
    137,000
    
    
    $
    3.63
    
    
    
    163,000Equity compensation plans not
approved by security holders:
    
    
    0
    
    
    $
    0.00
    
    
    
    0Total
    
    
    302,000
    
    
    $
    3.53
    
    
    
    298,000
 13




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##### Table of Contents



ITEM 6  SELECTED FINANCIAL DATA
 June 30,
    
    
    June 30,
    
    
    June 30,
    
    
    June 30,
    
    
    June 30,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Consolidated Statements of OperationsNet sales
    
    $
    25,694
    
    
    $
    19,154
    
    
    $
    21,246
    
    
    $
    19,617
    
    
    $
    36,133Income (loss) from operations
    
    
    246
    
    
    
    36
    
    
    
    (287
    )
    
    
    (3,579
    )
    
    
    1,383Net income (loss)
    
    
    221
    
    
    
    220
    
    
    
    (81
    )
    
    
    (3,547
    )
    
    
    1,163Earnings (loss) per share :Basic
    
    
    0.07
    
    
    
    0.07
    
    
    
    (0.03
    )
    
    
    (1.21
    )
    
    
    0.40Diluted
    
    
    0.07
    
    
    
    0.07
    
    
    
    (0.03
    )
    
    
    (1.21
    )
    
    
    0.39Weighted average common
shares outstandingBasic
    
    
    2,968
    
    
    
    2,939
    
    
    
    2,928
    
    
    
    2,928
    
    
    
    2,884Diluted
    
    
    2,992
    
    
    
    3,000
    
    
    
    2,928
    
    
    
    2,928
    
    
    
    3,006Consolidated Balance SheetsCurrent assets
    
    $
    10,645
    
    
    $
    12,313
    
    
    $
    11,493
    
    
    $
    13,405
    
    
    $
    15,501Current liabilities
    
    
    5,836
    
    
    
    5,624
    
    
    
    5,050
    
    
    
    6,918
    
    
    
    8,014Working capital
    
    
    4,809
    
    
    
    6,689
    
    
    
    6,443
    
    
    
    6,487
    
    
    
    7,487Total assets
    
    
    18,345
    
    
    
    18,000
    
    
    
    16,711
    
    
    
    19,075
    
    
    
    24,150Long-term debt and
capital leases
    
    
    744
    
    
    
    793
    
    
    
    836
    
    
    
    986
    
    
    
    1,745Shareholders equity
    
    $
    9,297
    
    
    $
    9,024
    
    
    $
    8,590
    
    
    $
    8,618
    
    
    $
    11,609
 14




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ITEM 7  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PERCENTAGES AND SHARE AMOUNTS)
 The discussions of Trio-Tech Internationals (the Company) business and activities set forth
in this Form 10-K 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, 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-K 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
  (i) Results of operations and business outlook
  Revenue Components
 Year EndedJune 30,

    
    June 30,

    
    June 30,2005

    
    2004
    

    2003Net Sales:Manufacturing
    
    
    41.57
    %
    
    
    37.18
    %
    
    
    22.00
    %Testing
    
    
    46.47
    
    
    
    46.50
    
    
    
    44.74Distribution
    
    
    11.96
    
    
    
    16.32
    
    
    
    33.26Total
    
    
    100.00
    %
    
    
    100.00
    %
    
    
    100.00
    %
    15




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Total purchase price:Cash
    
    $
    823Notes payable
    
    
    395$
    1,218Allocated as follows:Fixed assets-Machinery and equipment
    
    $
    729-Leasehold improvements
    
    
    7736Intangible assets  customer relationship
    
    
    482$
    1,218
      16




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(ii) Financial information
     17




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Critical Accounting Estimates & Policies
   Accounts Receivable and Allowance for Doubtful Accounts
  18




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Inventory Valuation
  Revenue Recognitio n
   Income Tax
     Impairment of Long-Lived Assets
  19




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##### Table of Contents



Results of Operations
 Year Ended June 30, 2005 (2005) Compared to June 30, 2004 (2004)
  2005
    

    2004Net Sales
    
    
    100.0
    %
    
    
    100.0
    %Cost of Sales
    
    
    76.0
    %
    
    
    75.5
    %Gross Margin
    
    
    24.0
    %
    
    
    24.5
    %Operating ExpensesGeneral and administrative
    
    
    18.3
    %
    
    
    19.7
    %Selling
    
    
    4.1
    %
    
    
    4.6
    %Research and development
    
    
    0.4
    %
    
    
    0.6
    %Impairment Loss
    
    
    0.3
    %
    
    
    0.0
    %Loss (Gain) on disposal of PP&E
    
    
    0.0
    %
    
    
    -0.5
    %Total Operating Expenses
    
    
    23.1
    %
    
    
    24.4
    %Income from operations
    
    
    0.9
    %
    
    
    0.1
    %
 Overall Net Sales and Gross Margin
   Manufacturing Segment
  (In Thousands, unaudited)
    
    2005
    
    
    2004Revenue
    
    $
    10,681
    
    
    $
    7,122Gross margin
    
    
    15.6
    %
    
    
    19.3
    %
  20




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##### Table of Contents



Testing Segment
  (In Thousands, unaudited)
    
    2005
    
    
    2004Revenue
    
    $
    11,940
    
    
    $
    8,908Gross margin
    
    
    31.6
    %
    
    
    29.2
    %
   Distribution Segment
  (In Thousands, unaudited)
    
    2005
    
    
    2004Revenue
    
    $
    3,073
    
    
    $
    3,124Gross margin
    
    
    23.8
    %
    
    
    23.2
    %
  21




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##### Table of Contents



Sales by geographical area
  Operating Expenses
  (In Thousands, unaudited)
    
    2005
    
    
    2004General and administrative
    
    $
    4,695
    
    
    $
    3,769Selling
    
    $
    1,059
    
    
    $
    875Research and development
    
    $
    93
    
    
    $
    117Impairment loss
    
    $
    70
    
    
    $
    4Loss (gain) on disposal of PP&E
    
    $
    1
    
    
    $
    (101
    )$
    5,918
    
    
    $
    4,664
   22




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Income (loss) from operations
  (In Thousands, unaudited)
    
    2005
    
    
    2004Manufacturing Segment
    
    $
    (109
    )
    
    $
    (205
    )Testing Segment
    
    $
    470
    
    
    $
    241Distribution Segment
    
    $
    (142
    )
    
    $
    (27
    )Corporate
    
    $
    27
    
    
    $
    27$
    246
    
    
    $
    36
    23




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##### Table of Contents



Interest Expense
  (In Thousands, unaudited)
    
    2005
    
    
    2004Interest expense
    
    $
    (176
    )
    
    $
    (120
    )
  Other Income
  (In Thousands, unaudited)
    
    2005
    
    
    2004Other income
    
    $
    323
    
    
    $
    372
  Income Tax
   24




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##### Table of Contents



Net Income
  Year Ended June 30, 2004 (2004) Compared to Year Ended June 30, 2003 (2003)
  2004

    
    2003Net Sales
    
    
    100.0
    %
    
    
    100.0
    %Cost of Sales
    
    
    75.5
    %
    
    
    76.5
    %Gross Margin
    
    
    24.5
    %
    
    
    23.5
    %Operating ExpensesGeneral and administrative
    
    
    19.7
    %
    
    
    18.8
    %Selling
    
    
    4.6
    %
    
    
    3.3
    %Research and development
    
    
    0.6
    %
    
    
    0.6
    %Impairment Loss
    
    
    0.0
    %
    
    
    1.7
    %(Gain) Loss on disposal of PP&E
    
    
    -0.5
    %
    
    
    0.5
    %Total Operating Expenses
    
    
    24.4
    %
    
    
    24.9
    %Income from operations
    
    
    0.1
    %
    
    
    -1.4
    %
 Overall Net Sales and Gross Margin
  Distribution Segment
  (In Thousands, unaudited)
    
    2004
    
    
    2003Revenue
    
    $
    3,124
    
    
    $
    7,067Gross margin
    
    
    13.5
    %
    
    
    5.3
    %
  25




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##### Table of Contents



Testing Segment
  (In Thousands, unaudited)
    
    2004

    
    2003Revenue
    
    $
    8,908
    
    
    $
    9,505Gross margin
    
    
    29.2
    %
    
    
    38.4
    %
    Manufacturing Segment
  (In Thousands, unaudited)
    
    2004

    
    2003Revenue
    
    $
    7,122
    
    
    $
    4,674Gross margin
    
    
    19.3
    %
    
    
    19.1
    %
   26




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##### Table of Contents



Operating Expenses
  (In Thousands, unaudited)
    
    2004
    
    
    2003General and administrative
    
    $
    3,769
    
    
    $
    3,992Selling
    
    $
    875
    
    
    $
    702Research and development
    
    $
    117
    
    
    $
    121Impairment loss
    
    $
    4
    
    
    $
    358(Gain) loss on disposal of PP&E
    
    $
    (101
    )
    
    $
    115$
    4,664
    
    
    $
    5,288
     27




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##### Table of Contents



Income (loss) from operations
  (In Thousands, unaudited)
    
    2004
    
    
    2003Manufacturing Segment
    
    $
    (205
    )
    
    $
    (802
    )Testing Segment
    
    $
    241
    
    
    $
    803Distribution Segment
    
    $
    (27
    )
    
    $
    (212
    )Corporate
    
    $
    27
    
    
    $
    (76
    )$
    36
    
    
    $
    (287
    )
      Interest Expense
  (In Thousands, unaudited)
    
    2004
    
    
    2003Interest expense
    
    $
    (120
    )
    
    $
    (185
    )
  28




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##### Table of Contents



Other Income
  (In Thousands, unaudited)
    
    2004
    
    
    2003Other income
    
    $
    372
    
    
    $
    347
  Income Tax
     Net (Loss) Income
  Liquidity and Capital Resources
  29




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##### Table of Contents



Entity with Facility
    
    Type of
    
    Interest
    
    Expiry dates
    
    Credit
    
    
    UnusedBanks prime rate(6% as at June 30,2005) plus 1% perTrio-Tech Malaysia
    
    Line of Credit
    
    annum
    
    January 2006
    
    $
    106
    
    
    $
    75Banks prime rate(6% as at June 30,2005) plus 1% perTrio-Tech Bangkok
    
    Line of Credit
    
    annum
    
    October 2005
    
    
    97
    
    
    
    97(See Note 5 of the
    
    (See Note 5 of thefinancial
    
    financialTrio-Tech Singapore
    
    Line of Credit
    
    statements)
    
    statements)
    
    
    9,599
    
    
    
    9,263$
    9,802
    
    
    $
    9,435
   Payments Due by Period (at June 30, 2005)Less than
    
    
    2 - 3
    
    
    AfterTotal
    
    
    1 Year
    
    
    Years
    
    
    3 YearsLines of Credit
    
    $
    336
    
    
    $
    336
    
    
    $
    
    
    
    $
    Notes Payable
    
    
    1,407
    
    
    
    703
    
    
    
    704
    
    
    
    Capital Leases
    
    
    255
    
    
    
    134
    
    
    
    113
    
    
    
    8Operating Leases
    
    
    1,265
    
    
    
    698
    
    
    
    567
    
    
    
    $
    3,263
    
    
    $
    1,871
    
    
    $
    1,384
    
    
    $
    8
 30




---



##### Table of Contents



Fiscal 2005
     Fiscal 2004
    31




---



##### Table of Contents



Corporate Guarantee Arrangement
  Recently Issued Accounting Pronouncements
       32




---



##### Table of Contents



CERTAIN RISKS THAT MAY AFFECT OUR FUTURE RESULTS
  Our operating results are affected by a variety of factors
  
    
    economic and market conditions in the semiconductor industry;
 
    
    market acceptance of our products and services;
 
    
    changes in technology in the semiconductor industry, which could affect demand for our products and services;
 
    
    changes in testing processes;
 
    
    the impact of competition;
 
    
    the lack of long-term purchase or supply agreements with customers and vendors;
 
    
    changes in military or commercial testing specifications, which could affect the market for our products and services;
 
    
    difficulties in profitably integrating acquired businesses, if any, into the Company;
 
    
    the loss of key personnel or the shortage of available skilled employees;
 
    
    international political or economic events;
 
    
    currency fluctuations; and
 
    
    other technological, economic, financial and regulatory factors beyond our control.
  Semiconductor industry cycles affect our business
   Rapid technological changes may make our products obsolete or result in decreased prices or
increased expenses
  33




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##### Table of Contents



Our dependence on international sales involves significant risk
  We may incur losses due to foreign currency fluctuations
   We do not rely on patents to protect our products or technology
  Intense competition can adversely affect our operating results
  Loss, reduction or delay of orders from significant customers could adversely affect our financial
condition
  34




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##### Table of Contents



There is a limited market for our testing products and services
  Acquisition and integration of new businesses could disrupt our ongoing business, distract
management and employees, increase our expenses and adversely affect our business
  We do not have contracts with key suppliers
  We are highly dependent on key personnel
  Our management has significant influence over corporate decisions
  We have not paid cash dividends
  35




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##### Table of Contents



Possible dilutive effect of outstanding options
  The market price for our common stock is subject to fluctuation
  
 ITEM 7A  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Interest Rate Risk
  36




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##### Table of Contents



There-
    
    
    
    
    
    
    FairFiscal year ending June 30,
    
    2006
    
    
    2007
    
    
    2008
    
    
    after
    
    
    Total
    
    
    ValueLoans:denominated by Singapore dollars
    
    $
    198
    
    
    $
    66
    
    
    
    
    
    
    
    
    
    
    $
    264
    
    
    $
    264Interest is at the banks prime rate (5.75%
at June 30, 2005) plus 0.5% per annumdenominated by Singapore dollars
    
    $
    62
    
    
    $
    21
    
    
    
    
    
    
    
    
    
    
    $
    83
    
    
    $
    83Interest is at the banks prime rate (2.95% at
June 30, 2005) plus 2.64% per annumdenominated by Singapore dollars
    
    $
    162
    
    
    $
    171
    
    
    $
    15
    
    
    
    
    
    
    $
    348
    
    
    $
    348Interest is at the banks prime rate (4.25% at
June 30, 2005) plus 1% per annumdenominated by Singapore dollars
    
    $
    126
    
    
    $
    134
    
    
    $
    89
    
    
    
    
    
    
    $
    349
    
    
    $
    349Interest is at the banks prime rate (4.25% at
June 30, 2005) plus 1% per annumdenominated by Thailand baht
    
    $
    58
    
    
    $
    58
    
    
    $
    30
    
    
    
    
    
    
    $
    146
    
    
    $
    146Interest is at a fixed rate (4.5% at
June 30, 2005) per annumdenominated Irish pound
    
    $
    32
    
    
    $
    26
    
    
    $
    2
    
    
    
    
    
    
    $
    60
    
    
    $
    60Interest is at the banks prime rate (2.09% at
June 30, 2005) plus 3.5% per annumdenominated Irish pound
    
    $
    17
    
    
    $
    11
    
    
    $
    11
    
    
    
    
    
    
    $
    39
    
    
    $
    39Interest is
at the banks prime rate (2.11% at
June 30, 2005) plus 3% per annumSubtotal
    
    $
    655
    
    
    $
    487
    
    
    
    147
    
    
    
    
    
    
    $
    1,289
    
    
    $
    1,289Line of credit:denominated by Singapore dollars
    
    $
    119
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    119
    
    
    $
    119Interest is
at the banks prime rate (5.75%
at June 30, 2005) plus 0.25% per annumdenominated by Singapore dollars
    
    $
    217
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    217
    
    
    $
    217Interest is
at the banks prime rate (4.25%
at June 30, 2005) plus 1.25% per annum$
    336
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    336
    
    
    $
    336Total
    
    $
    991
    
    
    $
    487
    
    
    $
    147
    
    
    $
    
    
    
    $
    1,625
    
    
    $
    1,625
 Foreign Currency Exchange Rate Risk
  
 ITEM 8  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  37




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##### Table of Contents



ITEM 9  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A  CONTROLS AND PROCEDURES
  
 ITEM 9B  OTHER INFORMATION
  
 PART III
  
 PART IV
 
 ITEM 15  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
   1.
    
    Report of Independent Public Registered Accounting Firm2.
    
    Consolidated Balance Sheets3.
    
    Consolidated Statements of Income and Comprehensive (Loss) Income4.
    
    Consolidated Statements of Shareholders Equity5.
    
    Consolidated Statements of Cash Flows6.
    
    Notes to Consolidated Financial Statements
  Number
    
    Description3.1
    
    Articles of Incorporation, as currently in effect. [Incorporated by reference to Exhibit
3.1 to the Registrants Annual Report on Form 10-K for June 30, 1988.]3.2
    
    Bylaws, as currently in effect. [Incorporated by reference to Exhibit 3.2 to the
Registrants Annual Report on Form 10-K for June 30, 1988.]10.1
    
    Credit Facility Letter dated January 4, 2001, between Trio-Tech International Pte. Ltd. and
Standard Chartered Bank. [Incorporated by reference to Exhibit 10.9 to the
Registrants Annual Report on Form 10-K for June 30, 2001.]10.2
    
    1998 Stock Option Plan. [Incorporated by reference to Exhibit 1 to the Companys proxy
statement filed under regulation 14A on October 27, 1997.] **
 38




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##### Table of Contents



Number
    
    Description10.3
    
    Directors Stock Option Plan. [Incorporated by reference to Exhibit 2 to the Companys proxy
statement filed under regulation 14A on October 27, 1997.] **10.4
    
    Real Estate Lease dated February 1, 1999 between Martinvale Development Company and Universal
Systems. [Incorporated by reference to Exhibit 10.12 to the Registrants Annual Report on Form
10-K for June 30, 1999.]10.5
    
    Real Estate Lease dated February 16, 2001 between JTC Corporation and Trio-Tech International
Pte. Ltd. for Block 1004 Toa Payoh North #07-01/07 and #03-01/03. [Incorporated by reference
to Exhibit 10.13 to the Registrants Annual Report on Form 10-K for June 30, 2001.]10.6
    
    Real Estate Lease dated May 13, 1999 between JTC Corporation and Trio-Tech International Pte.
Ltd. for Block 1004 Toa Payoh North #03-16/17. [Incorporated by reference to Exhibit 10.14
to the Registrants Annual Report on Form 10-K for June 30, 2001.]10.7
    
    Real Estate Lease dated October 13, 1999 between JTC Corporation and Trio-Tech International
Pte. Ltd. for Block 1004 Toa Payoh North #01-08/15. [Incorporated by reference to Exhibit
10.15 to the Registrants Annual Report on Form 10-K for June 30, 2001.]10.8
    
    Real Estate Lease dated December 7, 2000 between JTC Corporation and Trio-Tech International
Pte. Ltd. for Block 1004 Toa Payoh North #01-16/17. [Incorporated by reference to Exhibit
10.16 to the Registrants Annual Report on Form 10-K for June 30, 2001.]10.9
    
    Real Estate Lease dated January 3, 2000 between JTC Corporation and Trio-Tech International
Pte. Ltd. for Block 1008 Toa Payoh North #03-01/06. [Incorporated by reference to Exhibit
10.17 to the Registrants Annual Report on Form 10-K for June 30, 2001.]10.10
    
    Real Estate Lease dated October 13, 1999 between JTC Corporation and Trio-Tech International
Pte. Ltd. for Block 1008 Toa Payoh North #03-09/15 and #03-16/18. [Incorporated by reference
to Exhibit 10.18 to the Registrants Annual Report on Form 10-K for June 30, 2001.]10.11
    
    Real Estate Lease dated May 2, 2000 between JTC Corporation and Trio-Tech International Pte.
Ltd. for Block 1008 Toa Payoh North #01-08. [Incorporated by reference to Exhibit 10.19 to
the Annual Report on Form 10-K for June 30, 2001.]10.12
    
    Real Estate Lease dated September 12, 2000 between JTC Corporation and Trio-Tech
International Pte. Ltd. for Block 1008 Toa Payoh North #07-17/18. [Incorporated by reference
to Exhibit 10.20 to the Registrants Annual Report on Form 10-K for June 30, 2001.]10.13
    
    Real Estate Lease dated October 30, 2000 between JTC Corporation and Trio-Tech International
Pte. Ltd. for Block 1008 Toa Payoh North #07-01. [Incorporated by reference to Exhibit 10.21
to the Registrants Annual Report on Form 10-K for June 30, 2001.]10.14
    
    Real Estate Lease dated February 26, 2002 between JTC Corporation and Trio-Tech
International Pte. Ltd. for Block 1004 Toa Payoh North #02-11/15. [Incorporated by reference
to Exhibit 10.14 to the Registrants Annual Report on Form 10-K for June 30, 2002.]10.15
    
    Real Estate Lease dated June 10, 2002 between JTC Corporation and Trio-Tech International
Pte. Ltd. for Block 1004 Toa Payoh North #02-08/10. [Incorporated by reference to Exhibit
10.15 to the Registrants Annual Report on Form 10-K for June 30, 2002.]10.16
    
    Credit Facility Letter dated November 16, 2001 and June 24, 2002, between Trio-Tech
International Pte. Ltd. and Standard Chartered Bank. [Incorporated by reference to Exhibit
10.16 to the Registrants Annual Report on Form 10-K for June 30, 2002.]10.17
    
    Credit Facility Letter dated July 24, 2002, between Trio-Tech International Pte. Ltd.
and OCBC Bank. [Incorporated by reference to Exhibit 10.17 to the Registrants Annual Report
on Form 10-K for June 30, 2002.]10.18
    
    Credit Facility Letter dated May 21, 2002, between Trio-Tech (M) Sdn Bhd and HSBC Bank
Malaysia Berhad. [Incorporated by reference to Exhibit 10.18 to the Registrants Annual Report
on Form 10-K for June 30, 2002.]
 39




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##### Table of Contents



Number
    
    Description10.19
    
    Credit Facility Letter dated January 22, 2002, between Trio-Tech (KL) Sdn Bhd and Public
Bank Berhad. [Incorporated by reference to Exhibit 10.19 to the Registrants Annual Report on
Form 10-K for June 30, 2002.]10.20
    
    Real Estate Lease dated November 8, 2001 between Elbar Investments, L.P. and Trio-Tech
International for 14731 Califa Street, Van Nuys. [Incorporated by reference to Exhibit 23.1 to
the Registrants Annual Report on Form 10-K for June 30, 2002.]10.21
    
    Amendment to the Directors Stock Option Plan [Incorporated by reference to Exhibit 10.21 to
the Registrants Annual Report on Form 10-K for June 30, 2002.] **10.22
    
    Credit Facility Letter dated January 28, 2003, between Trio-Tech (M) Sdn Bhd and HSBC Bank
Malaysia Berhad [Incorporated by reference to Exhibit 10.22 to the Registrants Annual Report
on Form 10-K for June 30, 2003.]10.23
    
    Credit Facility Letter dated September 20, 2002, between KTS Incorporated and Bank of
America. [Incorporated by reference to Exhibit 10.23 to the Registrants Annual Report on Form
10-K for June 30, 2003.]10.24
    
    Real Estate Lease dated January 12, 2001 between JTC Corporation and Trio-Tech
International Pte. Ltd. for Toa Payoh North #01-S3/S4. [Incorporated by reference to Exhibit
10.24 to the Registrants Annual Report on Form 10-K for June 30, 2003.]10.25
    
    Sales and Purchase Agreement, dated March 29, 2004 between TS Matrix BHD. and Trio Tech
(Malaysia) SDN BHD. [Incorporated by reference to Exhibit 99.1 to the Registrants Form 8-K
filed on July 15, 2004.]10.26
    
    Real Estate Sublease, dated July 1, 2004 between TS Matrix BHD. and Trio Tech (Malaysia)
SDN. BHD. for factory lot no. 11A Kawansan MIEL Sungai Way Baru (FTZ), Phase III Selangor
Darul Ehsan. [Incorporated by reference to Exhibit 10.1 to the Registrants Amended Form 8-K
filed on August 20, 2004.]10.27
    
    Real Estate Lease dated April 28, 2004 between JTC Corporation and Trio-Tech International
Pte. Ltd. for Block 1004 Toa Payoh North #04-14/16 and #04-17. [Incorporated by reference to
Exhibit 10.27 to the Registrants Annual Report on Form 10-K for June 30, 2004.]10.28
    
    Real Estate Lease dated April 28, 2004 between JTC Corporation and Trio-Tech
International Pte. Ltd. for Block 1004 Toa Payoh North #03-08/10. [Incorporated by reference
to Exhibit 10.28 to the Registrants Annual Report on Form 10-K for June 30, 2004.]10.29
    
    Real Estate Lease dated April 19, 2004 between JTC Corporation and Trio-Tech
International Pte. Ltd. for Block 1008 Toa Payoh North #02-17. [Incorporated by reference to
Exhibit 10.29 to the Registrants Annual Report on Form 10-K for June 30, 2004.]10.30
    
    Real Estate Lease dated May 26, 2004 between JTC Corporation and Trio-Tech International
Pte. Ltd. for Block 1008 Toa Payoh North #02-15/16. [Incorporated by reference to Exhibit
10.30 to the Registrants Annual Report on Form 10-K for June 30, 2004.]10.31
    
    Credit Facility Letter dated July 7, 2003, between Trio-Tech International Pte. Ltd, and
Hong Leong Finance Limited. [Incorporated by reference to Exhibit 10.31 to the Registrants
Annual Report on Form 10-K for June 30, 2004.]10.32
    
    Credit Facility Letter dated October 2, 2003, between Trio-Tech Bangkok and Kasikornbank
Public Company Limited. [Incorporated by reference to Exhibit 10.32 to the Registrants
Annual Report on Form 10-K for June 30, 2004.]10.33
    
    Credit Facility Letter dated October 7, 2003, between Trio-Tech International Pte. Ltd,
and DBS Bank Ltd. [Incorporated by reference to Exhibit 10.33 to the Registrants Annual
Report on Form 10-K for June 30, 2004.]10.34
    
    Credit Facility Letter dated August 11, 2003 between Trio-Tech International Pte. Ltd.
and Standard Chartered Bank. [Incorporated by reference to Exhibit 10.34 to the Registrants
Annual Report on Form 10-K for June 30, 2004.]10.35
    
    Letter of Offer, dated June 3, 2005 between Globetronics Technology BHD. and Trio Tech
International PTE. LTD.. [Incorporated by reference to Exhibit 99.1 to the Registrants Form
8-K filed on June 8, 2005.]10.36
    
    Real Estate Lease, dated December 1, 2003 between Trio Tech (Malaysia) SDN. BHD. and
Amphenol Malaysia Sdn. Bhd. for factory plot no. 1A Phase 1, Bayan Lepas Free Trade Zone,
11900 Pulau Pinang . *
 40




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##### Table of Contents



Number
    
    Description10.37
    
    Real Estate Lease, dated December 6, 2004 between Malaysian Industrial Estates Berhad and
Trio Tech (Malaysia) SDN. BHD. for factory lot no. 4 Kawansan MIEL Sungai Way Baru (FTZ),
Phase III Selangor Darul Ehsan. *10.38
    
    Real Estate Lease, dated September 28, 2004 between Ascendas-Xinsu Development (Suzhou) Co.,
Ltd. and Trio Tech (SIP) Co., Ltd. for Block B #05-01/02 room 6 in Suzhou Industrial Park
China 215021. *10.39
    
    Real Estate Lease, dated November 8, 2004 between JTC Corporation and Trio-Tech
International Pte. Ltd. for Block 1008 Toa Payoh North #03-07/08. *10.40
    
    Real Estate Lease, dated September 10, 2003 between JTC Corporation and Trio-Tech
International Pte. Ltd. for Block 1008 Toa Payoh North #01-09/11. *21.1
    
    Subsidiaries of the Registrant (100% owned by the Registrant except as otherwise stated):Trio-Tech International Pte. Ltd., a Singapore CorporationUniversal (Far East) Pte. Ltd., a Singapore CorporationTrio-Tech Reliability Services, a California CorporationExpress Test Corporation, a California CorporationEuropean Electronic Test Center. Ltd. a Cayman Islands CorporationTrio-Tech Malaysia, a Malaysia Corporation (55% owned by the Registrant)Trio-Tech Kuala Lumpur, a Malaysia Corporation (100% owned by Trio-Tech Malaysia)Trio-Tech Bangkok, a Thailand CorporationTrio-Tech Thailand, a Thailand CorporationPrestal Enterprise Sdn. Bhd., a Malaysia Corporation (76% owned by the Registrant)KTS Incorporated, dba Universal Systems, a California CorporationTrio-Tech (Suzhou) Co. Ltd., a China Corporation23.1
    
    Consent of Independent Registered Public Accounting Firm*31.1
    
    Rule 13a-14(a) Certification of Principal Executive Officer of Registrant*31.2
    
    Rule 13a-14(a) Certification of Principal Financial Officer of Registrant*32
    
    Section 1350 Certification. *
 
 *
    
    Filed electronically herewith.**
    
    Indicates management contracts or compensatory plans or arrangements required to be filed as
an exhibit to this report. 41




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##### Table of Contents



TRIO-TECH INTERNATIONALBy:
    
    /s/ Victor H.M. TingVICTOR H.M. TINGVice President andChief Financial OfficerDate: September 27, 2005
  /s/ A. Charles Wilson
    
    September 27, 2005A. Charles Wilson, DirectorChairman of the Board/s/ S. W. Yong
    
    September 27, 2005S. W. Yong, DirectorPresident, Chief Executive Officer(Principal Executive Officer)/s/ Victor H.M. Ting
    
    September 27, 2005Victor H.M. TingVice President, Chief Financial Officer(Principal Financial Officer)/s/ Jason T. Adelman
    
    September 27, 2005Jason T. Adelman, Director/s/ Richard M. Horowitz
    
    September 27, 2005Richard M. Horowitz, Director
 42




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##### Table of Contents



CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
   
  43




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##### Table of Contents



CERTIFICATIONS
            Date: September 27, 2005/s/S. W. YONGS. W. Yong, Chief ExecutiveOfficer and President (Principal Executive Officer)
 44




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##### Table of Contents



Date: September 27, 2005/s/ VICTOR H.M. TINGVictor H.M. Ting, Chief Financial Officerand Vice President (Principal Financial Officer)
 45




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##### Table of Contents



/s/ S. W. YONGName: S. W. YongTitle: President and Chief Executive OfficerDate: September 27, 2005/s/ VICTOR H. M. TINGName: Victor H.M. TingTitle: Vice President and
Chief Financial OfficerDate: September 27, 2005
  46




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     /s/BDO RafflesSingapore
September 15, 2005
 47




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##### Table of Contents



TRIO-TECH
INTERNATIONAL AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT NUMBER OF SHARES)
 
 June 30,
    
    
    June 30,2005
    
    
    2004ASSETSCURRENT ASSETS:Cash
    
    $
    1,439
    
    
    $
    1,357Short-term deposits
    
    
    3,211
    
    
    
    5,649Trade accounts receivable, less allowance for doubtful
accounts of $147 and $165
    
    
    4,178
    
    
    
    3,695Other receivables
    
    
    142
    
    
    
    105Inventories, less provision for obsolete inventory
of $428 and $445
    
    
    1,584
    
    
    
    1,409Prepaid expenses and other current assets
    
    
    91
    
    
    
    98Total current assets
    
    
    10,645
    
    
    
    12,313PROPERTY, PLANT AND EQUIPMENT, Net
    
    
    7,176
    
    
    
    5,202OTHER INTANGIBLE ASSETS, Net
    
    
    386
    
    
    
    OTHER ASSETS
    
    
    138
    
    
    
    485TOTAL ASSETS
    
    $
    18,345
    
    
    $
    18,000LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Line of credit
    
    $
    336
    
    
    $
    146Accounts payable
    
    
    1,681
    
    
    
    2,316Accrued expenses
    
    
    2,598
    
    
    
    2,166Income taxes payable
    
    
    168
    
    
    
    49Current portion of notes payable
    
    
    655
    
    
    
    506Current portion of capital leases
    
    
    123
    
    
    
    246Current portion of deferred tax liabilities
    
    
    275
    
    
    
    195Total current liabilities
    
    
    5,836
    
    
    
    5,624NOTES PAYABLE, net of current portion
    
    
    634
    
    
    
    583CAPITAL LEASES, net of current portion
    
    
    110
    
    
    
    210DEFERRED TAX LIABILITIES
    
    
    407
    
    
    
    449TOTAL LIABILITIES
    
    
    6,987
    
    
    
    6,866MINORITY INTEREST
    
    
    2,061
    
    
    
    2,110SHAREHOLDERS EQUITY:Common stock; no par value, 15,000,000 shares authorized;
2,976,042 shares issued and outstanding as at Jun. 30, 2005, and
2,964,542 shares issued and outstanding as at Jun. 30, 2004, respectively
    
    
    9,554
    
    
    
    9,527Paid-in capital
    
    
    284
    
    
    
    284Accumulated deficit
    
    
    (298
    )
    
    
    (519
    )Accumulated other comprehensive loss-translation adjustments
    
    
    (243
    )
    
    
    (268
    )Total shareholders equity
    
    
    9,297
    
    
    
    9,024TOTAL LIABILITIES AND
SHAREHOLDERS EQUITY
    
    $
    18,345
    
    
    $
    18,000
  - 48 -




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TRIO-TECH INTERNATIONAL AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(IN THOUSANDS, EXCEPT EARNINGS (LOSS) PER SHARE)
 
 Note
    
    
    Years EndedJun. 30
    
    
    Jun. 30
    
    
    Jun. 302005
    
    
    2004
    
    
    2003NET SALESProduct sales
    
    
    
    
    
    $
    13,754
    
    
    $
    10,246
    
    
    $
    11,741Services
    
    
    
    
    
    
    11,940
    
    
    
    8,908
    
    
    
    9,50525,694
    
    
    
    19,154
    
    
    
    21,246COST OF SALESCost of goods sold
    
    
    
    
    
    
    11,386
    
    
    
    8,145
    
    
    
    10,395Cost of service rendered
    
    
    
    
    
    
    8,144
    
    
    
    6,309
    
    
    
    5,85019,530
    
    
    
    14,454
    
    
    
    16,245GROSS PROFIT
    
    
    
    
    
    
    6,164
    
    
    
    4,700
    
    
    
    5,001OPERATING EXPENSES:General and administrative
    
    
    
    
    
    
    4,695
    
    
    
    3,769
    
    
    
    3,992Selling
    
    
    
    
    
    
    1,059
    
    
    
    875
    
    
    
    702Research and development
    
    
    
    
    
    
    93
    
    
    
    117
    
    
    
    121Impairment loss
    
    
    
    
    
    
    70
    
    
    
    4
    
    
    
    358Loss (gain) on disposal of property, plant and equipment
    
    
    
    
    
    
    1
    
    
    
    (101
    )
    
    
    115Total
    
    
    
    
    
    
    5,918
    
    
    
    4,664
    
    
    
    5,288INCOME (LOSS) FROM OPERATIONS
    
    
    
    
    
    
    246
    
    
    
    36
    
    
    
    (287
    )OTHER INCOME (EXPENSE)Interest expense
    
    
    
    
    
    
    (176
    )
    
    
    (120
    )
    
    
    (185
    )Other income
    
    
    15
    
    
    
    323
    
    
    
    372
    
    
    
    347Total
    
    
    
    
    
    
    147
    
    
    
    252
    
    
    
    162INCOME (LOSS) BEFORE
INCOME TAXES AND MINORITY INTEREST
    
    
    
    
    
    
    393
    
    
    
    288
    
    
    
    (125
    )INCOME TAX EXPENSES
    
    
    9
    
    
    
    170
    
    
    
    13
    
    
    
    94INCOME (LOSS) BEFORE MINORITY INTEREST
    
    
    
    
    
    
    223
    
    
    
    275
    
    
    
    (219
    )MINORITY INTEREST
    
    
    
    
    
    
    (2
    )
    
    
    (55
    )
    
    
    138NET INCOME (LOSS) ATTRIBUTABLE TO
COMMON SHARES
    
    
    
    
    
    
    221
    
    
    
    220
    
    
    
    (81
    )EARNINGS (LOSS) PER SHARE:Basic
    
    
    
    
    
    $
    0.07
    
    
    $
    0.07
    
    
    $
    (0.03
    )Diluted
    
    
    
    
    
    $
    0.07
    
    
    $
    0.07
    
    
    $
    (0.03
    )WEIGHTED AVERAGE NUMBER OF COMMON AND
POTENTIAL COMMON SHARES OUTSTANDINGBasic
    
    
    
    
    
    
    2,968
    
    
    
    2,939
    
    
    
    2,928Diluted
    
    
    
    
    
    
    2,992
    
    
    
    3,000
    
    
    
    2,928COMPREHENSIVE INCOME (LOSS):Net income (loss)
    
    
    
    
    
    
    221
    
    
    
    220
    
    
    
    (81
    )Unrealized loss on investment
    
    
    
    
    
    
    
    
    
    
    (45
    )
    
    
    21Foreign currency translation adjustment
    
    
    
    
    
    
    25
    
    
    
    155
    
    
    
    18COMPREHENSIVE INCOME (LOSS)
    
    
    
    
    
    $
    246
    
    
    $
    330
    
    
    $
    (42
    )
  - 49 -




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##### Table of Contents



TRIO-TECH INTERNATIONAL AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY (IN THOUSANDS)
 
 Accum-ulatedCommon Stock
    
    
    
    
    
    
    Retained
    
    
    OtherNumber
    
    
    
    
    
    
    Additional
    
    
    Earnings/
    
    
    Compre-of
    
    
    
    
    
    
    Paid-in
    
    
    Accumulated
    
    
    hensiveShares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    (Loss)
    
    
    TotalBalance, June 30, 2002
    
    
    2,927
    
    
    $
    9,423
    
    
    $
    270
    
    
    $
    (658
    )
    
    $
    (417
    )
    
    $
    8,618Stock compensation due
to issuance of options
    
    
    
    
    
    
    
    
    
    
    14
    
    
    
    
    
    
    
    
    
    
    
    14Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (81
    )
    
    
    
    
    
    
    (81
    )Unrealized gain in
marketable
securities (net of
tax)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21
    
    
    
    21Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18
    
    
    
    18Balance, June 30, 2003
    
    
    2,927
    
    
    
    9,423
    
    
    
    284
    
    
    
    (739
    )
    
    
    (378
    )
    
    
    8,590Cash received from stock
options exercised
    
    
    37
    
    
    
    104
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    104Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    220
    
    
    
    
    
    
    
    220Unrealized loss
in marketable
securities (net of
tax)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (45
    )
    
    
    (45
    )Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    155
    
    
    
    155Balance, June 30, 2004
    
    
    2,964
    
    
    
    9,527
    
    
    
    284
    
    
    
    (519
    )
    
    
    (268
    )
    
    
    9,024Cash received from stock
options exercised
    
    
    12
    
    
    
    27
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    221
    
    
    
    
    
    
    
    221Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25
    
    
    
    25Balance, June 30, 2005
    
    
    2,976
    
    
    $
    9,554
    
    
    $
    284
    
    
    $
    (298
    )
    
    $
    (243
    )
    
    $
    9,297
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##### Table of Contents



TRIO-TECH INTERNATIONAL AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASHFLOW (IN THOUSANDS)
 
 Years EndedJun. 30,
    
    
    Jun. 30,
    
    
    Jun. 30,2005
    
    
    2004
    
    
    2003CASH FLOWS FROM OPERATING ACTIVITIES:Net income (loss)
    
    $
    221
    
    
    $
    220
    
    
    $
    (81
    )Adjustments to reconcile net income (loss) to
net cash provided by operating activities:Depreciation and amortization
    
    
    1,521
    
    
    
    1,145
    
    
    
    1,271Bad debt (recovery) expense, net
    
    
    (18
    )
    
    
    14
    
    
    
    (17
    )Inventory provision
    
    
    45
    
    
    
    
    
    
    
    48Interest income on short-term deposits
    
    
    (52
    )
    
    
    (63
    )
    
    
    (67
    )Impairment loss
    
    
    70
    
    
    
    4
    
    
    
    358Stock compensation
    
    
    
    
    
    
    
    
    
    
    14(Gain) loss on sale of property and equipment
    
    
    1
    
    
    
    (101
    )
    
    
    115(Gain) loss on disposal of marketable securities
    
    
    
    
    
    
    (115
    )
    
    
    (49
    )Deferred tax provision (benefit)
    
    
    38
    
    
    
    (67
    )
    
    
    42Minority interest
    
    
    2
    
    
    
    55
    
    
    
    (138
    )Changes in operating assets and liabilities (excluding business acquisition):Accounts receivable, net
    
    
    (465
    )
    
    
    (66
    )
    
    
    522Other receivables
    
    
    (37
    )
    
    
    (200
    )
    
    
    (503
    )Other assets
    
    
    (105
    )
    
    
    9
    
    
    
    389Inventories
    
    
    (220
    )
    
    
    (360
    )
    
    
    385Prepaid expenses and other current assets
    
    
    7
    
    
    
    30
    
    
    
    (4
    )Accounts payable and accrued expenses
    
    
    (203
    )
    
    
    1,305
    
    
    
    (856
    )Income taxes payable
    
    
    119
    
    
    
    (7
    )
    
    
    (50
    )Net cash provided by operating activities
    
    
    924
    
    
    
    1,803
    
    
    
    1,379CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from maturing short-term deposits
    
    
    5,489
    
    
    
    3,537
    
    
    
    7,711Investments in short-term deposits
    
    
    (2,999
    )
    
    
    (4,815
    )
    
    
    (5,925
    )Capital expenditures
    
    
    (2,306
    )
    
    
    (950
    )
    
    
    (1,020
    )Purchase of marketable securities
    
    
    
    
    
    
    (4
    )
    
    
    (537
    )Acquisition of business in Malaysia
    
    
    (1,126
    )
    
    
    (92
    )
    
    
    Proceeds from disposal of marketable securities
    
    
    
    
    
    
    555
    
    
    
    665Proceeds from sale of property and equipment
    
    
    1
    
    
    
    241
    
    
    
    Net cash (used in) provided by investing activities
    
    
    (941
    )
    
    
    (1,528
    )
    
    
    894CASH FLOWS FROM FINANCING ACTIVITIES:Net payments and borrowings on lines of credit
    
    
    190
    
    
    
    (155
    )
    
    
    (932
    )Principal payments of debt and capital leases
    
    
    (909
    )
    
    
    (1,359
    )
    
    
    (1,284
    )Proceeds from long-term debt
    
    
    862
    
    
    
    999
    
    
    
    535Dividends paid to minority interest
    
    
    (53
    )
    
    
    (53
    )
    
    
    (70
    )Cash received from stock options exercised
    
    
    27
    
    
    
    104
    
    
    
    Net cash provided by (used in) financing activities
    
    
    117
    
    
    
    (464
    )
    
    
    (1,751
    )EFFECT OF EXCHANGE RATE CHANGES ON CASH
    
    
    (18
    )
    
    
    51
    
    
    
    (34
    )NET INCREASE (DECREASE) IN CASH
    
    
    82
    
    
    
    (138
    )
    
    
    488CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
    
    
    1,357
    
    
    
    1,495
    
    
    
    1,007CASH AND CASH EQUIVALENTS, END OF YEAR
    
    $
    1,439
    
    
    $
    1,357
    
    
    $
    1,495SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATIONCash paid during the year for:Interest
    
    $
    176
    
    
    $
    120
    
    
    $
    182Income taxes
    
    $
    13
    
    
    $
    90
    
    
    $
    105NON-CASH INVESTING AND FINANCING ACTIVITIESProperty, plant and equipment purchase under capital leases
    
    $
    24
    
    
    $
    135
    
    
    $
    363
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##### Table of Contents



TRIO-TECH INTERNATIONAL AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2005, 2004 AND 2003 (IN THOUSANDS, EXCEPT PER SHARE AND NUMBER OF SHARES)
 
 1. ORGANIZATION AND BASIS OF PRESENTATION
  Ownership
    
    
    LocationExpress Test Corporation
    
    
    100
    %
    
    Van Nuys, CaliforniaTrio-Tech Reliability Services
    
    
    100
    %
    
    Van Nuys, CaliforniaKTS Incorporated, dba Universal Systems
    
    
    100
    %
    
    San Jose, CaliforniaEuropean Electronic Test Centre.
    
    
    100
    %
    
    Dublin, IrelandTrio-Tech International Pte. Ltd.
    
    
    100
    %
    
    SingaporeUniversal (Far East) Pte. Ltd.
    
    
    100
    %
    
    SingaporeTrio-Tech Thailand
    
    
    100
    %
    
    Bangkok, ThailandTrio-Tech Bangkok
    
    
    100
    %
    
    Bangkok, ThailandTrio-Tech Malaysia
    
    
    55
    %
    
    Penang and Selangor, MalaysiaTrio-Tech Kuala Lumpur  100%
owned by
Trio-Tech
Malaysia
    
    
    55
    %
    
    Selangor, MalaysiaPrestal Enterprise Sdn. Bhd.
    
    
    76
    %
    
    Selangor, MalaysiaTrio-Tech (Suzhou) Co. Ltd.
    
    
    100
    %
    
    Suzhou, China
 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Principles of Consolidation 
 Use of Estimates 
 Accounting Period 
 Revenue Recognition 
  - 52 -




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##### Table of Contents



Accounts Receivable and Allowance for Doubtful Accounts 
  Warranty Costs 
 Short Term Deposits 
  Investments in Marketable Securities
 Inventories
 Property, Plant and Equipment 
  Other intangible asset 
 - 53 -




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##### Table of Contents



Impairment of Long-Lived Assets 
    Leases 
   Advertising Costs 
 Comprehensive Income (Loss) 
 Foreign Currency Translation and Transactions 
  Income Taxes 
 - 54 -




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##### Table of Contents



Retained earnings 
 Research and Development Costs 
 Stock Based Compensation 
   June 30,
    
    
    June 30,
    
    
    June 30,2005
    
    
    2004
    
    
    2003Net income (loss) : as reported
    
    $
    221
    
    
    $
    220
    
    
    $
    (81
    )Add: stock based employee compensation
included in reported income
    
    
    
    
    
    
    
    
    
    
    14Deduct: total stock based employee
compensation expense determined under
fair value method for all awards
    
    
    (41
    )
    
    
    (42
    )
    
    
    (18
    )Pro forma net income (loss)
    
    $
    180
    
    
    $
    178
    
    
    $
    (85
    )Income (loss) per share  basicAs reported
    
    $
    0.07
    
    
    $
    0.07
    
    
    $
    (0.03
    )Pro forma
    
    $
    0.06
    
    
    $
    0.06
    
    
    $
    (0.03
    )Income (loss) per share  dilutedAs reported
    
    $
    0.07
    
    
    $
    0.07
    
    
    $
    (0.03
    )Pro forma
    
    $
    0.06
    
    
    $
    0.06
    
    
    $
    (0.03
    )
  -55-




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##### Table of Contents



Years EndedJune 30, 2005
    
    June 30, 2004
    
    June 30, 2003Volatility
    
    
    33.5  36.8
    %
    
    
    41.9
    %
    
    
    37.2
    %Risk free interest rate
    
    
    2.89  3.27
    %
    
    
    2.76
    %
    
    
    2.27 - 2.93
    %Expected life (years)
    
    
    3.00
    
    
    
    2.00
    
    
    
    2.00
 Earnings per Share  Earnings per Share
     June 30,
    
    
    June 30,
    
    
    June 30,2005
    
    
    2004
    
    
    2003Net income (loss) used to compute basic
and diluted earnings (loss) per share
    
    $
    221
    
    
    $
    220
    
    
    $
    (81
    )Weighted average number of common
shares outstanding  basic
    
    
    2,968
    
    
    
    2,939
    
    
    
    2,928Dilutive effect of stock options and warrants
    
    
    24
    
    
    
    61
    
    
    
    Number of shares used to compute
earnings per share  diluted
    
    
    2,992
    
    
    
    3,000
    
    
    
    2,928
 Fair Values of Financial Instruments
 Concentration of credit risk .
  -56-




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##### Table of Contents



Years EndedJune 30,
    
    
    June 30,
    
    
    June 30,2005
    
    
    2004
    
    
    2003Beginning
    
    $
    165
    
    
    $
    157
    
    
    $
    174Additions charged to cost and expenses
    
    
    44
    
    
    
    18
    
    
    
    Recovered
    
    
    (62
    )
    
    
    (4
    )
    
    
    (17
    )Actual write-offs
    
    
    
    
    
    
    (6
    )
    
    
    Ending
    
    $
    147
    
    
    $
    165
    
    
    $
    157
 Recently Issued Accounting Pronouncements 
      -57-




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##### Table of Contents



Reclassification 
 3. INVENTORIES
  June 30,
    
    
    June 30,2005
    
    
    2004Raw materials
    
    $
    842
    
    
    $
    652Work in progress
    
    
    608
    
    
    
    700Finished goods
    
    
    562
    
    
    
    502Less: provision for obsolete inventory
    
    
    (428
    )
    
    
    (445
    )$
    1,584
    
    
    $
    1,409
 4. PROPERTY, PLANT AND EQUIPMENT
  Useful
    
    June 30,
    
    
    June 30,Life in years
    
    2005
    
    
    2004Building and improvements
    
    
    3-20
    
    
    $
    816
    
    
    $
    817Leasehold improvements
    
    
    3-27
    
    
    
    2,669
    
    
    
    2,347Machinery and equipment
    
    
    3-7
    
    
    
    7,020
    
    
    
    4,655Furniture and fixtures
    
    
    3-5
    
    
    
    420
    
    
    
    363Equipment under capital leases
    
    
    3-5
    
    
    
    1,322
    
    
    
    1,27912,247
    
    
    
    9,461Less:Accumulated depreciation and
amortization
    
    
    
    
    
    
    4,317
    
    
    
    3,417Accumulated amortization on
equipment under capital leases
    
    
    
    
    
    
    754
    
    
    
    842$
    7,176
    
    
    $
    5,202
  5. LINES OF CREDIT
  -58-




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##### Table of Contents



June 30,
    
    
    June 30,2005
    
    
    2004Revolving line of credit denominated by Singapore dollars payable to a
commercial bank for working capital purposes, to borrow up to $4,225
with an interest rate at the banks prime rate (5.75% at June 30, 2005
and 2004) plus 0.25% per annum. The line of credit is renewable in July
2006 and is collateralized by Trio-Tech International Pte. Ltd.
accounts receivable.
    
    $
    119
    
    
    $
    146Revolving line of credit denominated by Singapore dollars payable to a
commercial bank for working capital purposes, to borrow up to $5,374
with an interest rate at the banks prime rate (4.25% at June 30, 2005)
plus 1.25% per annum. The line of credit is renewable in December 2005
and is collateralized by Trio-Tech International Pte. Ltd. fixed
deposits
    
    
    217
    
    
    
    Lines of credit
    
    $
    336
    
    
    $
    146
 6.
    
    ACCRUED EXPENSESAccrued expenses consist of the following:
 June 30,
    
    
    June 30,2005
    
    
    2004Payroll and related
    
    $
    1,182
    
    
    $
    954Commissions
    
    
    113
    
    
    
    64Customer Deposits
    
    
    26
    
    
    
    39Legal and audit
    
    
    53
    
    
    
    113Sales tax
    
    
    285
    
    
    
    271Utilities
    
    
    188
    
    
    
    201Warranty
    
    
    155
    
    
    
    162Provision for sales volume rebate
    
    
    5
    
    
    
    3Provision for building sinking fund
    
    
    34
    
    
    
    34Accrued purchase of materials and fixed assets
    
    
    256
    
    
    
    133Unearned revenue
    
    
    123
    
    
    
    Other accrued expenses
    
    
    178
    
    
    
    192Total
    
    $
    2,598
    
    
    $
    2,166
 7.
    
    WARRANTY ACCRUAL
 June 30,
    
    
    June 30,2005
    
    
    2004Beginning
    
    $
    162
    
    
    $
    165Additions charged to cost and expenses
    
    
    43
    
    
    
    41Recovered
    
    
    
    
    
    
    Actual write-offs
    
    
    (50
    )
    
    
    (44
    )Ending
    
    $
    155
    
    
    $
    162
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##### Table of Contents



8.
    
    NOTES PAYABLENotes payable consists of the following:
 June 30,
    
    
    June 30,2005
    
    
    2004Note payable denominated by Singapore dollars to a commercial bank for
purchasing certain equipment, matured in February 2005, bearing interest at
banks prime rate (5.75% at June 30, 2004) plus 1.5% per annum, with
monthly payments of principal and interest installments of $17 through
February 2005, collateralized by the relevant equipment, with a fixed
deposit and a corporate guarantee. This note was fully paid in February 2005.
    
    $
    
    
    
    
    145Note payable denominated by Singapore dollars to a commercial bank for
purchasing certain equipment, maturing in October 2006, bearing interest at
the banks prime rate (5.75% at June 30, 2005 and 2004) plus 0.5% per
annum, with monthly payments of principal and interest installments of
$16 through October 2006 with no collateral.
    
    
    264
    
    
    
    455Note payable denominated by Singapore dollars to a commercial bank for
purchasing certain equipment, maturing in October 2006, bearing interest at
the banks prime rate (2.95% at June 30, 2005 and 2004) plus 2.64% per
annum, with monthly payments of principal and interest installments of
$5 through October 2006, with no collateral.
    
    
    83
    
    
    
    140Note payable denominated by Singapore dollars to a commercial bank for
infrastructure investment, maturing in June 2007, bearing interest at the
banks prime rate (4.25% at June 30, 2005) plus 1% per annum, with
monthly payments of principal and interest installments of $15 through
June 2007, with no collateral.
    
    
    348
    
    
    
    Note payable denominated by Singapore dollars to a commercial bank for
infrastructure investment, maturing in February 2008, bearing interest at the
banks prime rate (4.25% at June 30, 2005) plus 1% per annum, with
monthly payments of principal and interest installments of $12 through
February 2008, with no collateral.
    
    
    349
    
    
    
    Note payable denominated by Thailand baht to a commercial bank for
extension of a building, maturing in December 2007, bearing interest at a
fixed rate (4.5% at June 30, 2005 and 2004) per annum, with monthly payments
of principal and interest installments of $6 through December 2007, with no
collateral.
    
    
    146
    
    
    
    207Mortgage note payable denominated in Irish pounds to the Industrial Credit
Corporation for purchasing a building, maturing in July 2007, bearing
interest at the banks prime rate (2.09% at June 30, 2005 and 2004) plus 3.5%
per annum, with monthly payments of principal and interest installments
of $3 through July 2007, collateralized by the relevant building.
    
    
    60
    
    
    
    88Mortgage note payable denominated by Irish pounds to the Industrial Credit
Corporation for purchasing a building, maturing in May 2008, bearing
interest at the banks prime rate (2.11% at June 30, 2005 and 2004) plus 3%
per annum, with monthly payments of principal and interest installments
of $1 through May 2008, collateralized by the relevant building.
    
    
    39
    
    
    
    541,289
    
    
    
    1,089Less current portion
    
    
    (655
    )
    
    
    (506
    )Notes payable
    
    $
    634
    
    
    $
    583
 -60-




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##### Table of Contents



YearEndingJune 30,2006
    
    $
    6552007
    
    
    4872008
    
    
    147Thereafter
    
    
    $
    1,289
 9.
    
    INCOME TAXES
 The Company generates income or loss before income taxes and minority interest in the
U.S., Singapore, Thailand, Malaysia, and Ireland, respectively, and files income tax returns
in these countries. The summarized income or loss before income taxes and minority interest
in the U.S. and foreign countries for the fiscal years ended June 30, 2005, 2004 and 2003 were
as follows:
 June 30,
    
    
    June 30,
    
    
    June 30,2005
    
    
    2004
    
    
    2003U.S.
    
    $
    (118
    )
    
    $
    (87
    )
    
    $
    (231
    )Foreign
    
    
    511
    
    
    
    375
    
    
    
    106$
    393
    
    
    $
    288
    
    
    $
    (125
    )
 On a consolidated basis, the Companys net income tax provision (benefits) was as
follows:
 June 30,
    
    
    June 30,
    
    
    June 30,2005
    
    
    2004
    
    
    2003Current:Federal
    
    $
    
    
    
    $
    
    
    
    $
    State
    
    
    3
    
    
    
    3
    
    
    
    4Foreign
    
    
    129
    
    
    
    77
    
    
    
    48132
    
    
    
    80
    
    
    
    33Deferred:Foreign
    
    
    38
    
    
    
    (67
    )
    
    
    42$
    170
    
    
    $
    13
    
    
    $
    94
 The reconciliation between the U.S. federal statutory tax rate and the effective income tax
rate was as follows:
 June 30,
    
    June 30,
    
    June 30,2005
    
    2004
    
    2003Statutory federal tax rate
    
    
    34
    %
    
    
    34
    %
    
    
    (34
    )%State taxes, net of federal benefit
    
    
    6
    
    
    
    6
    
    
    
    (6
    )Foreign tax rate reduction
    
    
    (9
    )
    
    
    (37
    )
    
    
    28Other
    
    
    3
    
    
    
    
    
    
    
    4Changes in valuation allowance
    
    
    9
    
    
    
    2
    
    
    
    83Effective rate
    
    
    43
    %
    
    
    5
    %
    
    
    75
    %
 At June 30, 2005, the Company had net operating loss carry forwards of approximately $6.0
million for federal income tax purposes (which will expire through fiscal 2024) and $2.1
million for state income tax purposes (which will expire through fiscal 2009). Management
believes that it is more likely than not that these future benefits from these timing
differences would not be realized. Accordingly, a full valuation allowance has been provided
as of June 30, 2005 and 2004.
 -61-




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The components of deferred income tax assets (liabilities) are as follows:
 June 30,
    
    
    June 30,2005
    
    
    2004Deferred tax assets:Net operating loss carry forward
    
    $
    2,470
    
    
    $
    2,465Provision for obsolete inventory
    
    
    144
    
    
    
    141Fixed assets
    
    
    167
    
    
    
    116Allowance for doubtful accounts
    
    
    16
    
    
    
    8Accrued vacation
    
    
    13
    
    
    
    10Accrued expenses
    
    
    6
    
    
    
    40Other
    
    
    1
    
    
    
    1Total deferred tax assets
    
    
    2,817
    
    
    
    2,781Deferred tax liabilities:Depreciation on property, plant and equipment
    
    
    407
    
    
    
    449Other
    
    
    275
    
    
    
    195Total deferred income tax liabilities
    
    
    682
    
    
    
    644Subtotal
    
    
    2,135
    
    
    
    2,137Valuation allowance
    
    
    (2,817
    )
    
    
    (2,781
    )Net deferred tax liability
    
    $
    (682
    )
    
    $
    (644
    )
 The change in valuation allowance was $36, $15 and $104 in fiscal 2005, 2004 and 2003,
respectively.
 10.
    
    COMMITMENTS AND CONTINGENCIES
 The Company leases certain of its facilities and equipment under long-term agreements
expiring at various dates through fiscal 2009. Certain of these leases require the Company to
pay real estate taxes and insurance and provide for escalation of lease costs based on certain
indices. Future minimum payments under capital leases and non-cancelable operating leases as
of June 30, 2005 and future minimum rental income under non-cancelable operating leases are as
follows:
 Capital
    
    
    Operating
    
    
    Minimum
    
    
    Net OperatingYear ending June 30,
    
    Leases
    
    
    leases
    
    
    rental income
    
    
    leases2006
    
    $
    134
    
    
    $
    698
    
    
    $
    (25
    )
    
    $
    6732007
    
    
    74
    
    
    
    447
    
    
    
    
    
    
    
    4472008
    
    
    39
    
    
    
    120
    
    
    
    
    
    
    
    1202009
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    Thereafter
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total future minimum lease payments
    
    
    255
    
    
    $
    1,265
    
    
    $
    (25
    )
    
    $
    1,240Less amount representing interest
    
    
    (22
    )Present value of net minimum lease payments
    
    
    233Less current portion of capital lease obligations
    
    
    (123
    )Long-term obligations under capital leases
    
    $
    110
 The Company entered into three sublease agreements with third parties to rent out the
properties in Ireland and Malaysia. In January 2003, the Company rented out part of the
property in Dublin, Ireland for five years, which expires in December 2007 with monthly rental
income of approximately $9. In February 2003, the Company rented out a property in Batang
Kali, Malaysia for three years, which expires in February 2006 with monthly rental income of
approximately $3. In December 2003, the Company rented out another property in Malaysia for
two years, which expires in December 2005. The monthly rental income is approximately $4.
Total rental income from subleases amounted to $198 in fiscal 2005, $169 in fiscal 2004 and
$89 in fiscal 2003.Total rental expense on all operating leases, both cancelable and non-cancelable, amounted to
$788 in fiscal 2005, $658 in fiscal 2004 and $733 in fiscal 2003.
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The Company is, from time to time, the subject of litigation claims and assessments arising
out of matters occurring in its normal business operations. In the opinion of management,
resolution of these matters will not have a material adverse effect on the Companys financial
statements.
 11.
    
    TRANSACTIONS IN SHAREHOLDERS EQUITY
 Fiscal 2005On July 1, 2004, the Board of Directors granted options under the 1998 Plan, covering 5,500
shares of Common Stock to 1 employee and 30,000 shares of Common Stock to 4 directors under
the Directors Plan, all with an exercise price of $4.40 per share (equal to the market price
at the grant date). The options granted to directors vested in full on the grant date. The
option granted to the employee has a five-year contractual life and vested 25% on the grant
date and will vest as to an additional 25% on each anniversary date. According to APB No. 25,
no stock compensation was recognized for these options to acquire 35,500 shares of Common
Stock. On the measurement date, there was no intrinsic value on these options. Therefore, no
stock compensation expense was recognized for this transaction during fiscal 2005.On December 6, 2004, the Board of Directors granted options under the 1998 Plan, covering
4,500 shares of Common Stock to one employee with an exercise price of $4.50 per share (equal
to the market price at the grant date). The option granted to the employee has a five-year
contractual life and vested 25% on the grant date and will vest as to an additional 25% on
each anniversary date. According to APB No. 25, no stock compensation was recognized for this
option. On the measurement date, there was no intrinsic value on these options. Therefore, no
stock compensation expense was recognized for this transaction during fiscal 2005.Option holders under the Directors Plan exercised options covering 10,000 shares of the
Companys Common Stock with an exercise price of $2.25 per share. Consequently, the Company
issued 10,000 shares of Common Stock in exchange for aggregate proceeds of $22.Option holders under the 1998 Plan exercised options covering 1,000 shares of the Companys
Common Stock with an exercise price of $3.40 per share and options covering 500 shares at an
exercise price of $2.66 per share. Consequently, the Company issued 1,500 shares of Common
Stock in exchange for aggregate proceeds of $5.Fiscal 2004On July 14, 2003, the Board of Directors granted options under the 1998 Plan, covering 61,000
shares of Common Stock to 30 employees and 35,000 shares of Common Stock to 4 directors under
the Directors Plan, all with an exercise price of $2.66 per share (equal to the market price
at the grant date). The options granted to directors vested in full on the grant date. The
options granted to the employees have a five-year contractual life and vested 25% on the grant
date and will vest as to an additional 25% on each anniversary date. According to APB No. 25,
no stock compensation was recognized for these 96,000 options. On the measurement date, there
was no intrinsic value on these options. Therefore, no stock compensation expense was
recognized for this transaction during fiscal 2004.Option holders under the Directors Plan exercised options covering 5,000 shares of the
Companys Common Stock with an exercise price of $2.72 per share. Consequently, the Company
issued 5,000 shares of Common Stock in exchange for aggregate proceeds of $14.Option holders under the Directors Plan exercised options covering 25,000 shares of the
Companys Common Stock with an exercise price of $2.82 per share. Consequently, the Company
issued 25,000 shares of Common Stock in exchange for aggregate proceeds of $70.Option holders under the 1998 Plan exercised options covering 2,000 shares of the Companys
Common Stock with an exercise price of $3.20 per share and options covering 5,000 shares at
exercise price of $2.66 per share. Consequently, the Company issued 7,000 shares of Common
Stock in exchange for aggregate proceeds of $20.Fiscal 2003On July 16, 2002, the Board of Directors granted options under the Directors Plan covering
35,000 shares of Common Stock to 5 directors with an exercise price lower than the market
price at the grant date. These options granted have a five-year contractual life and vested
immediately. The Company recognized the stock compensation expense of $14 according to APB No.
25 on June 30, 2003.No options were exercised in fiscal 2003.On December 8, 1997, the Companys shareholders approved the Companys 1998 Stock Option Plan
(the 1998 Plan) under which employees, officers, directors and consultants receive options
to purchase the Companys common stock at a
 -63-




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##### Table of Contents



price that is not less than 100 percent of the fair market value at the date of grant.
Options under the 1998 Plan have a five-year contractual life and vest at the rate of 25% at
the grant date and 25% at each anniversary after the granting date. There are 300,000 shares
authorized for grant under the 1998 Plan, and options to acquire 165,000 shares were
outstanding as of June 30, 2005.On December 8, 1997, the Companys shareholders approved the Directors Stock Option Plan (the
Directors Plan under which duly elected non-employee Directors and the President (if he or
she is a director of the Company) of the Company (currently four individuals) receive options
to purchase the Companys common stock at a price equal to 85% of the fair market value of the
underlying shares on the date of grant. Subsequent to July 1, 2003, the Board approved and
granted options to purchase the Companys common stock at a price equal to 100% of the fair
market value of the underlying shares on the date of grant. Each option granted under the
Plan shall have a five-year contractual life and be exercisable immediately commencing as of
the date of grant. There are 300,000 shares authorized for grant under the Directors Plan and
options to acquire 137,000 shares were outstanding as of June 30, 2005.The following tables summarize the stock option and warrant activities for the three years
ended June 30, 2003, 2004 and 2005:
 Number
    
    WeightedNumber
    
    Weighted
    
    of
    
    Averageof
    
    Average
    
    Options
    
    ExerciseOutstanding Options
    
    Options
    
    Price
    
    Exercisable
    
    PriceBeginning outstanding options at June 30, 2002
    
    
    474,500
    
    
    $
    4.27Granted
    
    
    35,000
    
    
    
    2.25Exercised
    
    
    Canceled
    
    
    (160,000
    )
    
    
    4.49Total outstanding options at June 30, 2003
    
    
    349,500
    
    
    
    3.96
    
    
    
    296,000
    
    
    $
    4.05Granted
    
    
    96,000
    
    
    
    2.74Exercised
    
    
    (37,000
    )
    
    
    2.81Canceled
    
    
    (63,000
    )
    
    
    3.99Total outstanding options at June 30, 2004
    
    
    345,500
    
    
    $
    3.68
    
    
    
    278,875
    
    
    $
    3.85Granted
    
    
    40,000
    
    
    
    4.41Exercised
    
    
    (11,500
    )
    
    
    3.67Canceled
    
    
    (72,000
    )
    
    
    4.94Total outstanding options at June 30, 2005
    
    
    302,000
    
    
    $
    3.53
    
    
    
    267,250
    
    
    $
    3.57
 Year Ended June 30, 2005Options Outstanding
    
    
    Options ExercisableWeighted AverageWeightedGrant
    
    Number
    
    Remaining
    
    Average
    
    
    NumberPrice Range
    
    Outstanding
    
    Contractual Life
    
    Exercise Price
    
    
    Exercisable
    
    Exercise Price$2.50  $3.69
    
    
    205,000
    
    
    1.68
    
    2.84
    
    
    
    180,250
    
    
    2.87$3.70  $4.69
    
    
    45,000
    
    
    4.05
    
    4.39
    
    
    
    35,000
    
    
    4.39$4.70  $5.69
    
    
    52,000
    
    
    0.09
    
    5.47
    
    
    
    52,000
    
    
    5.47302,000
    
    
    2.24
    
    3.53
    
    
    
    267,250
    
    
    3.57
 12.
    
    CONCENTRATION OF CUSTOMERSThe Company had three major customers that accounted for the following accounts
receivable and sales during the fiscal years ended:
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Years ended June 30,
    
    2005
    
    2004
    
    2003Sales Customer A
    
    
    11
    %
    
    
    15
    %
    
    
    17
    % Customer B
    
    
    35
    %
    
    
    37
    %
    
    
    33
    % Customer C
    
    
    26
    %
    
    
    
    
    
    
    Accounts Receivable Customer A
    
    
    9
    %
    
    
    15
    %
    
    
    10
    % Customer B
    
    
    36
    %
    
    
    32
    %
    
    
    28
    % Customer C
    
    
    23
    %
    
    
    
    
    
    
    
 13.
    
    UNUSED FINANCING FACILITIESThe Company has various credit facilities available to it. The following table summarizes
the credit facilities available to the Company and the unutilized portion of the facilities at
June 30, 2005:
 Entity with Facility
    
    
    Type of

    
    Interest
    
    Expiry dates

    
    Credit
    
    
    UnusedTrio-Tech Malaysia
    
    Line of Credit
    
    Banks prime rate
(6% as at June 30,
2005) plus 1% per
annum
    
    January 2006
    
    $
    106
    
    
    $
    75Trio-Tech Bangkok
    
    Line of Credit
    
    Banks prime rate
(6% as at June 30,
2005) plus 1% per
annum
    
    October 2005
    
    
    97
    
    
    
    97Trio-Tech Singapore
    
    Line of Credit
    
    (See Note 5)
    
    (See Note 5)
    
    
    9,599
    
    
    
    9,263$
    9,802
    
    
    $
    9,435
 14.
    
    ACQUISITION OF A BUSINESSOn July 1, 2004, the Company acquired certain assets from TS Matrix Bhd. (Seller) utilized
by the burn-in testing division of Seller for an aggregate cash purchase price of
approximately $1,218. Seller is one of our competitors. The Company paid approximately $92
by making a deposit in fiscal 2004 and $1,126 in cash in fiscal 2005, of which approximately
$395 was financed through a bank guaranteed note which would mature on December 31, 2004.
Our objectives in acquiring the burn-in testing division were to service a large electronic
device manufacturer with whom we had been pursuing a business relationship for some time and
to increase our market share in testing services. Upon completion of the acquisition, the
customer signed a five-year agreement with the Company to provide testing services. The
value of obtaining this customer relationship intangible was included in other intangible
assets in the amount of $482. Results of the operations for the burn-in testing business
were included in the Companys income statement effective July 1, 2004.In accordance with the Statement of Financial Accounting Standard (SFAS) No. 141, Business
Combinations, the Company allocated the purchase price to the tangible assets and intangible
assets acquired based on their estimated fair values. The fair value assigned to intangible
assets acquired was based on estimates and assumptions determined by the management. Other
intangibles with finite lives are amortized on a straight-line basis over their respective
useful lives. The total purchase price was allocated as follows (in thousands):
 Total purchase price:Cash
    
    $
    823Notes payable
    
    
    395$
    1,218
 -65-




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Allocated as follows:Fixed assets Machinery and equipment
    
    $
    729 Leasehold improvements
    
    
    7736Intangible assets  customer relationship
    
    
    482$
    1,218
 The excess purchase price over the fair value of tangible assets acquired was attributable to
the customer relationship obtained from the aforementioned business acquisition and recorded
as other intangible assets. No goodwill is recognized in this context. The customer
relationship intangible will be amortized over its economic life based on the contract term
as stated in the sales agreement with the customer on a straight-line method over five years.The value of customer relationship was originally presented as $493 in our Form 8-K. After
further identification conducted after July 1, 2004, the Company found that a value of
approximately $11 from an equipment was included in this $493. Consequently, a
reclassification was made to present the proper value of $482 for the customer relationship,
which was started to be amortized over five years from July 1, 2004.Pro Forma Financial InformationThe unaudited financial information in the table below summarizes the combined results of the
operations of the Company and the new burn-in testing division in Malaysia for the year ended
June 30, 2004 as if the acquisition had occurred on July 1, 2003. The results from operations
for the year ended June 30, 2005 included the business acquisition that was completed at the
beginning of the first quarter of fiscal 2005.The pro forma financial information is presented for informational purposes only and is not
necessarily indicative of the results of operations that would have been achieved had the
acquisition taken place at the beginning of the year ended June 30, 2004. The unaudited pro
forma combined statement of operations for the year ended June 30, 2004 combines the
historical results for the Company for year ended June 30, 2004 and the historical results
for the new burn-in testing division for the period preceding the acquisition on July 1,
2004. The following amounts are in thousands.
 UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 2004
 HistoricalHistoricalHistorical
    
    
    information ofinformation of
    
    
    the acquired
    
    
    Proformathe Company
    
    
    business
    
    
    Adjustments
    
    
    ProformaNet sales
    
    $
    19,154
    
    
    $
    1,816
    
    
    $
    
    
    
    $
    20,970Net income
    
    $
    220
    
    
    $
    169
    
    
    $
    (96
    )(a)
    
    $
    293Basic earnings per share
    
    $
    0.07
    
    
    
    
    
    
    
    
    
    
    $
    0.10Diluted earnings per share
    
    $
    0.07
    
    
    
    
    
    
    
    
    
    
    $
    0.10Basic weighted average
common shares outstanding
    
    
    2,939
    
    
    
    
    
    
    
    
    
    
    
    2,939Diluted weighted average
common shares outstanding
    
    
    3,000
    
    
    
    
    
    
    
    
    
    
    
    3,000
 
 (a)
    
    Net earnings were adjusted for pro forma purposes to recognize the effect of the
amortization of the other intangible assets over its economic life of five years on a
straight-line method, assuming that the acquisition took place from July 1, 2003. -66-




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15.
    
    OTHER INCOMEOther income consists of the following:
 June 30,
    
    
    June 30,
    
    
    June 30,2005
    
    
    2004
    
    
    2003Interest income
    
    $
    58
    
    
    $
    78
    
    
    $
    83Rental income
    
    
    198
    
    
    
    169
    
    
    
    89Royalty income
    
    
    
    
    
    
    
    
    
    
    20Dividend income
    
    
    9
    
    
    
    11
    
    
    
    25Exchange (loss) gain
    
    
    10
    
    
    
    (12
    )
    
    
    9Sales of other products
    
    
    18
    
    
    
    6
    
    
    
    52Gain (loss) on disposal on marketable securities
    
    
    
    
    
    
    115
    
    
    
    49Other miscellaneous income
    
    
    30
    
    
    
    5
    
    
    
    20Total
    
    $
    323
    
    
    $
    372
    
    
    $
    347
 16.
    
    BUSINESS SEGMENTSThe Company operates principally in three industry segments, the testing service industry
(that performs structural and electronic tests of semiconductor devices), the designing and
manufacturing of equipment (that tests the structural integrity of integrated circuits and
other products), and the distribution of various products from other manufacturers in
Singapore and Southeast Asia. The following net sales were based on customer location rather
than subsidiary location.The allocation of the cost of equipment, the current year investment in new equipment and
depreciation expense have been made on the basis of the primary purpose for which the
equipment was acquired.All inter-segment sales are sales from the manufacturing segment to the testing and
distribution segment. Total inter-segment sales were $294 in fiscal 2005, $151 in fiscal 2004,
and $41 in fiscal 2003. Corporate assets mainly consist of cash and prepaid expenses.
Corporate expenses mainly consist of salaries, insurance, professional expenses and directors
fees.
 Business Segment Information:
 Year

    
    
    
    
    
    Operating

    
    
    
    
    
    Depr.Ended
    
    Net
    
    Income
    
    Total

    
    and

    
    CapitalJun. 30

    
    Sales
    
    (loss)
    
    Assets
    
    Amort.
    
    ExpendituresManufacturing
    
    FY 2005
    
    $
    10,681
    
    
    $
    (109
    )
    
    $
    1,907
    
    
    $
    67
    
    
    $
    83FY 2004
    
    $
    7,122
    
    
    $
    (205
    )
    
    $
    2,423
    
    
    $
    99
    
    
    $
    165FY 2003
    
    $
    4,674
    
    
    $
    (802
    )
    
    $
    2,494
    
    
    $
    88
    
    
    $
    5Testing Services
    
    FY 2005
    
    $
    11,940
    
    
    $
    470
    
    
    $
    14,417
    
    
    $
    1,310
    
    
    $
    3,132FY 2004
    
    $
    8,908
    
    
    $
    241
    
    
    $
    14,893
    
    
    $
    910
    
    
    $
    693FY 2003
    
    $
    9,505
    
    
    $
    803
    
    
    $
    13,431
    
    
    $
    1,068
    
    
    $
    1,333Distribution
    
    FY 2005
    
    $
    3,073
    
    
    $
    (142
    )
    
    $
    1,843
    
    
    $
    143
    
    
    $
    241FY 2004
    
    $
    3,124
    
    
    $
    (27
    )
    
    $
    588
    
    
    $
    129
    
    
    $
    227FY 2003
    
    $
    7,067
    
    
    $
    (212
    )
    
    $
    415
    
    
    $
    109
    
    
    $
    45Corporate
and Unallocated
    
    FY 2005
    
    $
    
    
    
    $
    27
    
    
    $
    178
    
    
    $
    1
    
    
    $
    FY 2004
    
    $
    
    
    
    $
    27
    
    
    $
    96
    
    
    $
    7
    
    
    $
    FY 2003
    
    $
    
    
    
    $
    (76
    )
    
    $
    371
    
    
    $
    6
    
    
    $
    Total Company
    
    FY 2005
    
    $
    25,694
    
    
    $
    246
    
    
    $
    18,345
    
    
    $
    1,521
    
    
    $
    3,456FY 2004
    
    $
    19,154
    
    
    $
    36
    
    
    $
    18,000
    
    
    $
    1,145
    
    
    $
    1,085FY 2003
    
    $
    21,246
    
    
    $
    (287
    )
    
    $
    16,711
    
    
    $
    1,271
    
    
    $
    1,383
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##### Table of Contents



Geographic Area Information:
 Elimin-Year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    ationsEnded
    
    United
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    and
    
    TotalJun. 30,
    
    States
    
    
    Europe
    
    Singapore
    
    Thailand
    
    Malaysia
    
    Other
    
    CompanyNet sales to
    
    FY 2005
    
    $
    2,209
    
    
    
    2,684
    
    
    
    12,620
    
    
    
    2,135
    
    
    
    6,340
    
    
    
    (294
    )
    
    
    25,694customers
    
    FY 2004
    
    $
    4,706
    
    
    
    1,255
    
    
    
    9,944
    
    
    
    2,534
    
    
    
    866
    
    
    
    (151
    )
    
    
    19,154FY 2003
    
    $
    9,038
    
    
    
    943
    
    
    
    8,682
    
    
    
    1,992
    
    
    
    632
    
    
    
    (41
    )
    
    
    21,246Operating
    
    FY 2005
    
    $
    (192
    )
    
    
    (38
    )
    
    
    268
    
    
    
    46
    
    
    
    135
    
    
    
    27
    
    
    
    246Income (loss)
    
    FY 2004
    
    $
    (216
    )
    
    
    (23
    )
    
    
    184
    
    
    
    48
    
    
    
    16
    
    
    
    27
    
    
    
    36FY 2003
    
    $
    (167
    )
    
    
    (140
    )
    
    
    73
    
    
    
    17
    
    
    
    6
    
    
    
    (76
    )
    
    
    (287
    )Long-lived
    
    FY 2005
    
    $
    17
    
    
    
    305
    
    
    
    3,518
    
    
    
    882
    
    
    
    2,880
    
    
    
    (40
    )
    
    
    7,562Assets
    
    FY 2004
    
    $
    8
    
    
    
    380
    
    
    
    3,557
    
    
    
    886
    
    
    
    411
    
    
    
    (40
    )
    
    
    5,202FY 2003
    
    $
    104
    
    
    
    446
    
    
    
    3,514
    
    
    
    844
    
    
    
    342
    
    
    
    (40
    )
    
    
    5,210
 17.
    
    QUARTERLY FINANCIAL DATA (UNAUDITED)The Companys summarized quarterly financial data are as follows:
 Year ended June 30, 2004
    
    Sep. 30,
    
    
    Dec. 31,
    
    
    Mar. 31,
    
    
    Jun. 30,Revenues
    
    $
    3,850
    
    
    $
    5,056
    
    
    $
    5,042
    
    
    $
    5,206Expenses
    
    
    4,046
    
    
    
    4,816
    
    
    
    4,869
    (a)
    
    
    5,135
    (b)(Loss) income before income taxes and minority interest
    
    
    (196
    )
    
    
    240
    
    
    
    173
    
    
    
    71Income taxes
    
    
    15
    
    
    
    18
    
    
    
    7
    
    
    
    (27
    )(Loss) income before minority interest
    
    
    (211
    )
    
    
    222
    
    
    
    166
    
    
    
    98Minority interest
    
    
    (54
    )
    
    
    (4
    )
    
    
    2
    
    
    
    1Net (loss) income
    
    $
    (265
    )
    
    $
    218
    
    
    $
    168
    
    
    $
    99Net (loss) income per share:Basic
    
    $
    (0.09
    )
    
    $
    0.07
    
    
    $
    0.06
    
    
    $
    0.03Fully diluted
    
    $
    (0.09
    )
    
    $
    0.07
    
    
    $
    0.06
    
    
    $
    0.03
 Year ended June 30, 2005
    
    Sep. 30,
    
    
    Dec. 31,
    
    
    Mar. 31,
    
    
    Jun. 30,Revenues
    
    $
    7,851
    
    
    $
    5,682
    
    
    $
    6,117
    
    
    $
    6,044Expenses
    
    
    7,490
    
    
    
    5,876
    
    
    
    6,117
    
    
    
    5,818
    (e)Income (loss) before income taxes and minority interest
    
    
    361
    
    
    
    (194
    )
    
    
    
    
    
    
    226Income taxes
    
    
    111
    
    
    
    (60
    )(c)
    
    
    (26
    )(d)
    
    
    145Income (loss) before minority interest
    
    
    250
    
    
    
    (134
    )
    
    
    26
    
    
    
    81Minority interest
    
    
    (13
    )
    
    
    34
    
    
    
    (4
    )
    
    
    (19
    )Net income (loss)
    
    $
    237
    
    
    $
    (100
    )
    
    $
    22
    
    
    $
    62Net income (loss) per share:Basic
    
    $
    0.08
    
    
    $
    (0.03
    )
    
    $
    0.01
    
    
    $
    0.01Fully diluted
    
    $
    0.08
    
    
    $
    (0.03
    )
    
    $
    0.01
    
    
    $
    0.01
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##### Table of Contents



(a)
    
    This includes a gain on disposal of equipment of $62 derived from Ireland operation.(b)
    
    The expenses include a gain on disposal of boards of $39 derived from the Thailand operation.(c)
    
    This includes a tax refund of $68 in the Singapore operations after the assessment of the
past years taxes were finalized.(d)
    
    This includes a tax refundable of $46 in the Malaysia operation after the assessment of the
past years taxes were finalized.(e)
    
    The expenses include write off of machinery and equipment, furniture and fittings, and
leasehold improvement of $70 from the Singapore testing operation. 18.
    
    SUBSEQUENT EVENTSTrio Tech International Pte. LTD., a Singapore company and a wholly-owned subsidiary of
Registrant (the Company), executed a Letter of Offer on June 3, 2005 to Globetronics
Technology BHD., a Malaysian company (Seller), to acquire Sellers China subsidiary dealing
with the testing of semiconductor components. The Company has agreed that, subject to the
satisfaction of certain conditions (including without limitation satisfactory results from
the Buyers due diligence examination and the execution of a definitive Sales and Purchase
Agreement), it or one of its subsidiaries and/or nominees of which the Company owns 100% of
the outstanding equity interests (Buyer), would acquire 100% of the issued share capital of
Globetronics (Shanghai) Inc., a wholly-owned China subsidiary of Seller, for an aggregate
cash purchase price of $153. The purchase price shall include all assets of Globetronics
(Shanghai) Inc., excluding the accounts receivables and other receivables. These assets are
expected to be utilized in the acquired burn-in testing division of Buyer to service the
existing customers of the Seller. The Seller shall be responsible for settling all current
and long term liabilities incurred prior to the closing of the transaction. The source of
the funds for this acquisition will be from general working capital of Buyer.The Board of Directors approved Managements recommendation at a meeting held on May 2, 2005
to close the Companys Ireland operation, which operates the testing facility in Dublin
because the Ireland operation generated cash flow only from renting out the property located
in Dublin and had not generated cash flow from testing services for the past three years.
The customers and employees of the Ireland operation were informed of the closure subsequent
to the end of fiscal 2005. In August 2005, the Company established a restructuring plan and
estimated that the reasonable costs for completing the closure of the operation in Dublin
would be approximately $450. Of this total, $350 would be related to one-time
severance-related expenses, and the remaining approximately $100 would be related to
facilities-related expenses.The Company plans to sell the property in Ireland at a later date but has not yet entered
into any agreements with respect thereto. The Company is unable to provide better estimate
regarding the planned sales transaction and any additional costs and charges, all of which
could have varied widely depending on the terms of any specific purchase and sale agreements.
 -69-