**UNITEDSTATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

# **FORM 10Q**

 

**QUARTERLYREPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

 

**For the Quarter Ended****June 30, 2003**

 

**Commission File Number 33-98404**

 

**T.J.T.,INC.**

(Exact name of registrant as specified in its charter)

 

** **

| **WASHINGTON**                   |   | **82-0333246**       |
|----------------------------------|--------|----------------------|
| (State  or other jurisdiction of |   | (IRS  Employer       |
| incorporation  or organization)  |   | Identification  No.) |
|                             |   |                 |

** **

**843 NorthWashington, P.O. Box 278, Emmett, Idaho 83617**

(Address of principal executive offices)

 

**(208)365-5321**

(Issuer’s telephone number)

 

Indicate by check mark whether the registrant (1) has filed all reportsrequired to be filed by Section 13 or 15(d) of the Securities Exchange Actduring the preceding 12 months (or for such shorter period that the registrantwas required to file such reports), and (2) has been subject to such filingrequirements the past 90 days.  Yes ý  No o

 

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

 

At June 30, 2003, the registrant had 4,504,939 shares of common stockoutstanding.

 

 

 

 

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**T.J.T.,INC.**

**Form 10-Q**

 

**June 30,2003**

 

**TABLE OFCONTENTS**

 

**PARTI.  FINANCIAL INFORMATION**

 

|                                 |                                                                                         |
|--------------------------------------|----------------------------------------------------------------------------------------------|
| Item 1                               | Financial Statements  (Unaudited)                                                            |   |
|                                 |                                                                                         |   |
|                                 |                                                                                         | Balance Sheets at June 30, 2003 and   September 30, 2002 |   |
|                                 |                                                                                         |   |   |
|                                 |                                                                                         | Statements  of Operation for the Three Months and Nine Months  Ended June 30, 2003 and 2002 |   |
|                                 |                                                                                         |   |   |
|                                 |                                                                                         | Statements  of Cash Flows for the Nine Months   Ended June 30, 2003 and 2002 |   |
|                                 |                                                                                         |   |   |
|                                 |                                                                                         | Notes to  Financial Statements |   |
|                                 |                                                                                         |   |   |
| Item  2.

                      | Management’s  Discussion and Analysis of Financial Condition  and Results of Operations |   |
|                                 |                                                                                         |   |   |
|                                 |                                                                                         |   |   |
| Item  3.                             | Quantitative  and Qualitative Disclosure about Market Risk                                   |   |
|                                 |                                                                                         |   |   |
| Item 4.                              | Controls and  Procedures                                                                     |   |
|                                 |                                                                                         |   |   |
| **PART II.  OTHER INFORMATION** |                                                                                         |
|                                 |                                                                                         |   |   |
| Item 1.                              | Legal Proceedings                                                                            |   |
|                                 |                                                                                         |   |   |
| Item 2.                              | Changes in Securities  and Use of Proceeds                                                   |   |
|                                 |                                                                                         |   |   |
| Item 3.                              | Defaults Upon  Senior Securities                                                             |   |
|                                 |                                                                                         |   |   |
| Item  4.                             | Submission  of Matters to a Vote of Security Holders                                         |   |
|                                 |                                                                                         |   |   |
| Item 5.                              | Other Information                                                                            |   |
|                                 |                                                                                         |   |   |
| Item 6.                              | Exhibits and  Reports on Form 8-K                                                            |   |
|                                 |                                                                                         |   |   |
| Signatures                           |                                                                                         |
|                                 |                                                                                         |   |   |
| Section 302 Certifications           |                                                                                         |
|                                 |                                                                                         |   |   |

 

 

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T.J.T., INC.

BALANCE SHEETS

(Dollars in thousands)

 
|                                                                                                       |   | **June 30,**

**2003** |   | **Sept. 30,**

**2002** |   |
|------------------------------------------------------------------------------------------------------------|--------|------------------------|--------|-------------------------|--------|
| Current assets:                                                                                            |   |                   |   |                    |   |
| Cash and cash equivalents                                                                                  |   | $                      | 610    |                    | $      | 767 |   |
| Accounts receivable and notes receivable  (net of allowances for doubtful accounts of $138 and $129)       |   | 1,304                  |   | 1,247                   |   |
| Inventories                                                                                                |   | 2,716                  |   | 2,593                   |   |
| Prepaid expenses and other current assets                                                                  |   | 112                    |   | 99                      |   |
| Total current assets                                                                                       |   | 4,742                  |   | 4,706                   |   |
|                                                                                                       |   |                   |   |                    |   |
| Property, plant and equipment, net of  accumulated depreciation                                            |   | 602                    |   | 699                     |   |
|                                                                                                       |   |                   |   |                    |   |
| Notes receivable                                                                                           |   | 337                    |   | 232                     |   |
| Notes receivable from related parties                                                                      |   | 94                     |   | 156                     |   |
| Real estate held for investment                                                                            |   | 340                    |   | 523                     |   |
| Investment in joint venture                                                                                |   | 391                    |   | —                  |   |
| Other assets                                                                                               |   | 174                    |   | 135                     |   |
| Deferred tax asset                                                                                         |   | 523                    |   | 539                     |   |
| Total assets                                                                                               |   | $                      | 7,203  |                    | $      | 6,990 |   |
|                                                                                                       |   |                   |   |                    |   |
| Current liabilities:                                                                                       |   |                   |   |                    |   |
| Accounts payable                                                                                           |   | $                      | 912    |                    | $      | 655 |   |
| Accrued liabilities                                                                                        |   | 359                    |   | 334                     |   |
| Total current liabilities                                                                                  |   | 1,271                  |   | 989                     |   |
|                                                                                                       |   |                   |   |                    |   |
| Deferred credits and other noncurrent obligations                                                          |   | 86                     |   | 83                      |   |
| Total liabilities                                                                                          |   | 1,357                  |   | 1,072                   |   |
|                                                                                                       |   |                   |   |                    |   |
| Shareholders’ equity:                                                                                 |   |                   |   |                    |   |
| Preferred stock, $.001 par value; 5,000,000 sharesauthorized; 0 shares issued and outstanding              |   | —                 |   | —                  |   |
| Common stock, $.001 par value; 10,000,000shares   authorized;  4,504,939 shares issuedand outstanding |   | 5                      |   | 5                       |   |
| Capital surplus                                                                                            |   | 5,788                  |   | 6,181                   |   |
| Retained earnings                                                                                          |   | 53                     |   | 125                     |   |
| Treasury stock (349,800 shares at cost)                                                                    |   | —                 |   | (393                    | )      |
| Total shareholders’ equity                                                                            |   | 5,846                  |   | 5,918                   |   |
| Total liabilities and shareholders’ equity                                                            |   | $                      | 7,203  |                    | $      | 6,990 |   |

 

Seeaccompanying notes to financial statements.

 

3

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T.J.T., INC.

STATEMENTS OF OPERATION

(Dollars in thousandsexcept per share amounts)

 
|                                                       |   | **Three  Months Ended  June 30, 2003** |   | **Nine  Months Ended  June 30, 2003** |   |
|------------------------------------------------------------|--------|----------------------------------------|--------|---------------------------------------|--------|
|                                                       |   | **2003**                               |   | **2002**                              |   | **2003** |   | **2002** |   |
| Sales (net of returns and allowances):                     |   |                                   |   |                                  |   |   |   |   |   |
| Axles and tires                                            |   | $                                      | 3,980  |                                  | $      | 4,182 |   | $ | 11,405 |   | $ | 11,394 |   |
| Accessories and siding                                     |   | 1,147                                  |   | 1,393                                 |   | 3,211 |   | 3,484 |   |
| Total sales                                                |   | 5,127                                  |   | 5,575                                 |   | 14,616 |   | 14,878 |   |
|                                                       |   |                                   |   |                                  |   |   |   |   |   |
| Cost of goods sold                                         |   |                                   |   |                                  |   |   |   |   |   |
| Axles and tires                                            |   | 3,232                                  |   | 3,443                                 |   | 9,412 |   | 9,292 |   |
| Accessories and siding                                     |   | 795                                    |   | 1,002                                 |   | 2,219 |   | 2,474 |   |
| Total cost of goods sold                                   |   | 4,027                                  |   | 4,445                                 |   | 11,631 |   | 11,766 |   |
|                                                       |   |                                   |   |                                  |   |   |   |   |   |
| Gross profit                                               |   | 1,100                                  |   | 1,130                                 |   | 2,985 |   | 3,112 |   |
|                                                       |   |                                   |   |                                  |   |   |   |   |   |
| Selling, general and administrative expenses               |   | 1,019                                  |   | 1,112                                 |   | 3,198 |   | 3,536 |   |
|                                                       |   |                                   |   |                                  |   |   |   |   |   |
| Operating income (loss)                                    |   | 81                                     |   | 18                                    |   | (213 | ) | (424 | ) |
|                                                       |   |                                   |   |                                  |   |   |   |   |   |
| Interest income                                            |   | 12                                     |   | 9                                     |   | 37 |   | 35 |   |
| Investment property income (expense)                       |   | (1                                     | )      | 50                                    |   | 28 |   | 87 |   |
| Income from joint venture                                  |   | 12                                     |   | —                                |   | 12 |   | — |   |
| Rental income                                              |   | 9                                      |   | 5                                     |   | 14 |   | 5 |   |
| Other income                                               |   | 9                                      |   | 19                                    |   | 17 |   | 23 |   |
|                                                       |   |                                   |   |                                  |   |   |   |   |   |
| Income (loss) before taxes                                 |   | 122                                    |   | 101                                   |   | (105 | ) | (274 | ) |
|                                                       |   |                                   |   |                                  |   |   |   |   |   |
| Income taxes (benefit)                                     |   | 50                                     |   | 41                                    |   | (33 | ) | (95 | ) |
|                                                       |   |                                   |   |                                  |   |   |   |   |   |
| Income (loss) before cumulative effectof accounting change |   | 72                                     |   | 60                                    |   | (72 | ) | (179 | ) |
|                                                       |   |                                   |   |                                  |   |   |   |   |   |
| Cumulative effect of accounting change,net of income taxes |   | —                                 |   | —                                |   | — |   | (748 | ) |
|                                                       |   |                                   |   |                                  |   |   |   |   |   |
| Net income (loss)                                          |   | $                                      | 72     |                                  | $      | 60 |   | $ | (72 | ) | $ | (927 | ) |
|                                                       |   |                                   |   |                                  |   |   |   |   |   |
| Net income (loss) per common share                         |   |                                   |   |                                  |   |   |   |   |   |
| Continuing operations                                      |   | $                                      | .02    |                                  | $      | .01 |   | $ | (.02 | ) | $ | (.04 | ) |
| Cumulative effect of accounting change                     |   | —                                 |   | —                                |   | — |   | (0.17 | ) |
| Net income (loss)                                          |   | $                                      | .02    |                                  | $      | .01 |   | $ | (.02 | ) | $ | (.21 | ) |
|                                                       |   |                                   |   |                                  |   |   |   |   |   |
| Weighted average shares outstanding                        |   | 4,504,939                              |   | 4,504,939                             |   | 4,504,939 |   | 4,504,939 |   |

 

Seeaccompanying notes to financial statements.

 

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T.J.T., INC.

STATEMENTS OF CASH FLOWS

(Dollars in thousands)

 
| ** **                                                                     |   | **For the  nine months ended  June 30,** |   |
|--------------------------------------------------------------------------------|--------|------------------------------------------|--------|
|                                                                           |   | **2003**                                 |   | **2002** |   |
| Cash flows from operating activities:                                          |   |                                     |   |   |   |
| Net loss                                                                       |   | $                                        | (72    | ) | $ | (927 | ) |
| Adjustments to reconcile net income to net cashused by   operating activities: |   |                                     |   |   |   |
| Depreciation and amortization                                                  |   | 174                                      |   | 273 |   |
| Cumulative effect of accounting change                                         |   | —                                   |   | 748 |   |
| Gain on sale of assets                                                         |   | (41                                      | )      | (79 | ) |
| Equity earnings in joint venture                                               |   | (12                                      | )      | — |   |
| Change in receivables                                                          |   | (40                                      | )      | (48 | ) |
| Change in inventories                                                          |   | (382                                     | )      | (104 | ) |
| Change in prepaid expenses and other current assets                            |   | (13                                      | )      | 13 |   |
| Change in accounts payable                                                     |   | 257                                      |   | 121 |   |
| Change in taxes                                                                |   | 16                                       |   | (96 | ) |
| Change in other assets and liabilities                                         |   | (26                                      | )      | (165 | ) |
| Net cash used by operating activities                                          |   | (139                                     | )      | (264 | ) |
|                                                                           |   |                                     |   |   |   |
| Cash flows from investing activities:                                          |   |                                     |   |   |   |
| Additions to property, plant and equipment                                     |   | (74                                      | )      | (43 | ) |
| Proceeds from sale of assets                                                   |   | 17                                       |   | 28 |   |
| Issuance of notes receivable                                                   |   | —                                   |   | (25 | ) |
| Payments on notes receivable                                                   |   | 60                                       |   | 103 |   |
| Investment in joint venture                                                    |   | (120                                     | )      | — |   |
| Land purchased for investment                                                  |   | —                                   |   | (28 | ) |
| Sale of land purchased for investment                                          |   | 99                                       |   | 85 |   |
| Net cash provided (used) by investing activities                               |   | (18                                      | )      | 120 |   |
|                                                                           |   |                                     |   |   |   |
| Net decrease in cash and cash equivalents                                      |   | (157                                     | )      | (144 | ) |
| Beginning cash and cash equivalents                                            |   | 767                                      |   | 329 |   |
|                                                                           |   |                                     |   |   |   |
| Ending cash and cash equivalents                                               |   | $                                        | 610    |   | $ | 185 |   |
|                                                                           |   |                                     |   |   |   |
| Supplemental information:                                                      |   |                                     |   |   |   |
| Interest paid                                                                  |   | $                                        | 1      |   | $ | 1 |   |
| Income taxes paid, net of refunds                                              |   | —                                   |   | — |   |
| Noncash transactions:                                                          |   |                                     |   |   |   |
| Prepaid operating lease                                                        |   | $                                        | — |   | $ | 4 |   |
| Reacquisition of investment property bycancellation of note receivable         |   | —                                   |   | 40 |   |
| Cumulative effect of change in accounting principle                            |   | —                                   |   | 748 |   |
| Note receivable issued for sale of land purchasedfor investment                |   | 120                                      |   | 20 |   |
| Inventory invested in joint venture                                            |   | 259                                      |   | — |   |

 

Seeaccompanying notes to financial statements.

 

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T.J.T., INC.

NOTES TO FINANCIALSTATEMENTS (unaudited)

 

NOTE A — BASIS OF PRESENTATION

 

*UnauditedFinancial Statements*

 

Inthe opinion of management, the accompanying unaudited financial statementscontain all adjustments (consisting solely of normal recurring adjustments)necessary to present fairly the financial position of T.J.T., Inc. (theCompany) and the results of operations and cash flows.  Certain reclassifications of prior quarteramounts were made to conform with current quarter presentation, none of whichaffect previously recorded net income.

 

*StockOptions*

 

The Company has a stock option plan which allows officers, directorsand key employees of the company to receive non-qualified and incentive stockoptions. The Company awarded 50,000 stock options to directors during thequarter ended December 31, 2002 with an exercise price of $.28.  During the quarter ended March 31, 2003, theCompany awarded 10,000 stock options with an exercise price of $.45 and 5,000with an exercise price of $.46 to directors. An additional 5,000 options weregranted to directors during the quarter ended June 30, 2003 with an exerciseprice of $.62.  These options willbecome vested at a rate of 20 percent each year for a period of five years fromthe grant date.  As of June 30, 2003,320,000 shares of stock were available for future option grants.

 

The Company accounts for its stock options under Accounting PrinciplesBoard (APB) Opinion No. 25 using the intrinsic value method.  In accordance with Financial AccountingStandards (SFAS) No. 148, *Accounting**for Stock-Based Compensation —Transition and Disclosure*, pro-forma net income, stock-basedcompensation expense, and earnings per share using the fair value method arestated as follows:

 
|                                                                                            |   | **Three  Months Ended** |       | **Nine  Months Ended** |       |
|-------------------------------------------------------------------------------------------------|--------|-------------------------|------------|------------------------|------------|
| **(Dollars in thousands)**                                                                      |   | **June 30,  2003**      |       | **June 30,  2002**     |       | **June 30,  2003** |   | **June 30,  2002** |   |
|                                                                                            |   |                    | ** ** |                   | ** ** |   | ** ** |   | ** ** |
| Net income (loss), as reported                                                                  |   | $                       | 72         |                   | $          | 60 |   | $ | (72 | ) | $ | (927 | ) |
| Deduct:  stock-based  compensationexpense determined under fair value   method, net of tax |   | —                  |       | —                 |       | (9 | ) | (6 | ) |
|                                                                                            |   |                    |       |                   |       |   |   |   |   |
| Pro forma net income  (loss)                                                               |   | $                       | 72         |                   | $          | 60 |   | $ | (81 | ) | $ | (933 | ) |
|                                                                                            |   |                    |       |                   |       |   |   |   |   |
| Earnings per share:                                                                             |   |                    |       |                   |       |   |   |   |   |
| Basic — as reported                                                                        |   | $                       | .02        |                   | $          | .01 |   | $ | (.02 | ) | $ | (.21 | ) |
| Basic — pro forma                                                                          |   | $                       | .02        |                   | $          | .01 |   | $ | (.02 | ) | $ | (.21 | ) |

 

 

6

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NOTE B - INVENTORIES

 

Inventoriesare stated at the lower of cost (first-in, first-out and average cost methods)or market.

 
| **(Dollars  in thousands)** |   | **June 30,  2003** |   | **Sept. 30,  2002** |   |
|-----------------------------|--------|--------------------|--------|---------------------|--------|
| Raw materials               |   | $                  | 1,316  |                | $      | 1,363 |   |
| Finished goods              |   | 1,400              |   | 1,230               |   |
| Total                       |   | $                  | 2,716  |                | $      | 2,593 |   |

 

NOTE C — PROPERTY, PLANT AND EQUIPMENT

 
| **(Dollars  in thousands)**       |   | **June 30,  2003** |   | **Sept. 30,  2002** |   |
|-----------------------------------|--------|--------------------|--------|---------------------|--------|
| Land and building                 |   | $                  | 386    |                | $      | 386 |   |
| Leasehold improvements            |   | 389                |   | 386                 |   |
| Furniture and equipment           |   | 1,152              |   | 1,102               |   |
| Vehicles and trailers             |   | 1,072              |   | 1,142               |   |
|                              |   | 2,999              |   | 3,016               |   |
| Less accumulated depreciation     |   | 2,397              |   | 2,317               |   |
| Net property, plant and equipment |   | $                  | 602    |                | $      | 699 |   |

 

NOTE D - SHAREHOLDERS’ EQUITY

 

Authorizedstock of the Company consists of 10,000,000 shares of $.001 par value commonstock and 5,000,000 shares of $.001 par value preferred stock.  No shares of preferred stock have been issued.

 

NOTE E — SEGMENT DISCLOSURE

 

The Company operates in two business segments: Axles and TireReconditioning and Housing Accessories. These segments have been determined byevaluating the Company’s internal reporting structure and nature of productsoffered.

 

Axles and Tire Reconditioning: The Company provides reconditioned axlesand tires to manufactured housing factories.

 

Housing Accessories: The Company provides skirting, siding, and otheraftermarket accessories to manufactured housing dealers and contractors.

 

 

7

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|                             |   | **Axle &  Tire  Reconditioning** |   | **Housing  Accessories** |   | **Total** |   |
|----------------------------------|--------|--------------------------------------|--------|--------------------------|--------|-----------|--------|
| Three months ended June 30, 2003 |   |                                 |   |                     |   |      |   |
|                             |   |                                 |   |                     |   |      |   |
| Operating revenue                |   | 3,980                                |   | 1,147                    |   | 5,127     |   |
| Operating income (loss)          |   | 72                                   |   | 9                        |   | 81        |   |
| Depreciation                     |   | 39                                   |   | 15                       |   | 54        |   |
|                             |   |                                 |   |                     |   |      |   |
| Three months ended June 30, 2002 |   |                                 |   |                     |   |      |   |
|                             |   |                                 |   |                     |   |      |   |
| Operating revenue                |   | 4,182                                |   | 1,393                    |   | 5,575     |   |
| Operating income (loss)          |   | 44                                   |   | (26                      | )      | 18        |   |
| Depreciation                     |   | 48                                   |   | 16                       |   | 64        |   |
|                             |   |                                 |   |                     |   |      |   |
| Nine months ended June 30, 2003  |   |                                 |   |                     |   |      |   |
|                             |   |                                 |   |                     |   |      |   |
| Operating revenue                |   | 11,405                               |   | 3,211                    |   | 14,616    |   |
| Operating income (loss)          |   | (127                                 | )      | (86                      | )      | (213      | )      |
| Depreciation                     |   | 139                                  |   | 35                       |   | 174       |   |
|                             |   |                                 |   |                     |   |      |   |
| Nine months ended June 30, 2002  |   |                                 |   |                     |   |      |   |
|                             |   |                                 |   |                     |   |      |   |
| Operating revenue                |   | 11,394                               |   | 3,484                    |   | 14,878    |   |
| Operating income (loss)          |   | (131                                 | )      | (293                     | )      | (424      | )      |
| Depreciation                     |   | 210                                  |   | 63                       |   | 273       |   |

 

The Company does not assign interest income, interest expense, otherexpenses or income taxes to operating segments. Identifiable assets and relatedcapital expenditures are assigned to operating locations rather than operatingsegments, with depreciation allocated to the segments based upon usage.

 

NOTE F - CREDIT AGREEMENTS

 

On April 9, 2003, the Company renewed a $350,000 revolving creditfacility that matures on March 31, 2004 and is secured by receivables andinventory.  The interest rate on thecredit line is the prime rate plus 1 percent. As of June 30, 2003, the Company has not borrowed on the line and is incompliance with the covenants.

 

NOTE G -  JOINT VENTURE

 

On June 9, 2003, the Company entered into a joint venture with WestStates Recycling, Inc. to form NewCo Tire & Axle L.L.C. (NewCo) to engagein the manufactured housing axle and tire recycling business in Arizona, NewMexico, and Texas.    The Company has a50% ownership interest in the joint venture and will receive 40% interest infuture net profits.  Concurrent with theformation of the joint venture, the Company leases trucks and equipment toNewCo.  The Company accounts for itsinvestment in NewCo using the equity method.

 

**Item 2.    Management’s Discussion and Analysis ofFinancial Condition and Results of**

**                Operations**

 

All period references are to the three or nine month periods ended June30, 2003 and 2002, unless otherwise indicated. Quarterly financial results may not be indicative of the financialresults for any future period.  ThisForm 10-Q contains certain forward-looking statements which are based onmanagement’s current expectations.  Theforward-looking statements are subject to certain risks and uncertainties.  The words “believe,” “expect,” “anticipate,”“intend,” “estimate,” “will,” “should,” “could,” and other expressions thatindicate future events and trends identify 

 

 

8

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forward-looking statements.  TheCompany has identified risk factors which could cause actual results to differsubstantially from the forward looking statements.  These risk factors include, but are not limited to, generaleconomic conditions, changes in interest rates, availability of financing, realestate values, competitive pressure on both the purchasing of used axles andtires from manufactured housing dealers and the selling of refurbished axlesand tires to manufactured housing factories, adverse weather conditions, theeconomic viability of our customers and vendors, changes in legislation orregulations, availability of qualified employees, and the outcome of currentlegal proceedings.

 

T.J.T., Inc. has two business lines: axle andtire reconditioning, and accessories and siding distribution.

 

Axles and tires are purchased frommanufactured homes dealers and reconditioned in four locations in the westernUnited States.  After axles arereconditioned and certified and tires are inspected and graded, they are soldprimarily to manufactured housing factories.

 

Axle and tire reconditioning is performed atthe Company’s locations in Emmett, Idaho; Centralia, Washington; Woodland,California; and Platteville, Colorado. The Company maintains a manufacturingfacility in Eugene, Oregon which manufactures metal hanger parts for attachingaxles to manufactured homes and frame components used on manufactured homechassis.

 

On June 9, 2003, the Company entered into a joint venture with WestStates Recycling, Inc. to form NewCo Tire & Axle L.L.C. (NewCo) to engagein the manufactured housing axle and tire recycling business in Arizona, NewMexico, and Texas.   As a result, theCompany closed the Phoenix, Arizona location on June 30, 2003.  The Company has a 50% ownership interest inthe joint venture and will receive 40% interest in future net profits.  Concurrent with the formation of the jointventure, the Company leases trucks and equipment to NewCo.

 

The Company sells accessories to manufactured home dealersand set-up contractors from its locations in Washington, California, andIdaho.  As of August 1, 2003, accessorycustomers previously serviced by our Salem, Oregon location will be servicedfrom the Eugene, Oregon and Centralia, Washington locations.  The major product lines are vinyl skirting,piers, and related products through the Company’s distribution channels whichcomprise approximately 650 dealers.  TheCompany also sells vinyl siding to the site-built construction industry out ofits Emmett, Idaho location.

 

**Results ofOperations**

 

The following table sets forth the operating data of the Company as apercentage of net sales for the periods listed below:

 
|                                        |   | **Three  Months Ended** |   | **Nine  Months Ended** |   |
|---------------------------------------------|--------|-------------------------|--------|------------------------|--------|
|                                        |   | **June 30,  2003**      |   | **June 30,  2002**     |   | **June 30,  2003** |   | **June 30,  2002** |   |
| Axle and tire reconditioning                |   | 77.6                    | %      | 75.0                   | %      | 78.0 | % | 76.6 | % |
| Manufactured housing accessories and siding |   | 22.4                    |   | 25.0                   |   | 22.0 |   | 23.4 |   |
| Gross margin                                |   | 21.5                    |   | 20.3                   |   | 20.4 |   | 20.9 |   |
| Selling expense                             |   | 13.7                    |   | 14.2                   |   | 15.2 |   | 15.9 |   |
| Administrative expense                      |   | 6.2                     |   | 5.7                    |   | 6.7 |   | 7.8 |   |

 

 

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The manufactured housing industry continuesto be negatively impacted by more restrictive financing standards, high levelsof repossessions and excess retail housing inventories.  Manufactured housing shipments decreased 19percent in the Company’s market area during the quarter ended June 30, 2003compared to the same quarter in 2002 according to statistics from the NationalConference of States on Building Codes and Standards.   During the quarter ending June 30, 2003, the Company increasedmarket share experiencing only an 8 percent decline in sales to $5,127,000compared to $5,575,000 for the quarter ending June 30, 2002.

 

The Company’s gross margin was 21.5 percentfor the quarter ending June 30, 2003 compared to 20.3 percent in the samequarter in 2002.  The increase is due toa wider spread between purchase cost and selling price of axles and tires inthe current quarter compared to the same quarter in 2002.  During the quarter ending June 30, 2002,gross margin was negatively impacted by regulatory requirements implemented inJanuary of 2002 resulting in increased new tire sales, which typically generatelower margins than used tire sales.

 

Selling and general administrative expensesdecreased $93,000 during the quarter compared to the same quarter in fiscalyear 2002.  The decrease was a result ofoverall cost-cutting measures taken company wide.

 

Sales for nine months ended June 30, 2003decreased by $262,000 or 1.8 percent as compared to the nine months ended June30, 2002 primarily as a result of the industry market conditions.  During the quarter ending December 31, 2002sales were higher than sales in the comparable quarter in fiscal year 2002 dueto the elimination of direct competition from a group of former employees andshareholders known as the Bradley Group, pursuant to an injunction that wasgranted in favor of the Company in January 2002 prohibiting all members of theBradley Group from competing against the Company’s axle and tire business.

 

Gross margin decreased slightly, .5 percentfor the nine months from the same period a year ago.  Higher insurance and fuel costs were partially offset by higherselling prices in the second and third quarter this year.

 

Selling and general administrative expensefor the nine months ending June 30, 2003 decreased $338,000 as compared to thesame period a year ago.  Legal expensesof $186,000 incurred in fiscal year 2002 related to the Bradley Group litigationcontributed to the decrease.  TheCompany expects to continue to see positive results from cost-cutting effortsin the next quarter.

 

**Liquidityand Capital Resources**

 

During the quarter ending June 30, 2003, the Company renewed a line ofcredit from Idaho Banking Company for $350,000.  As of the quarter ended June 30, 2003, the Company has notborrowed on the line and is in compliance with the covenants.  The Company expects that cash flow fromoperations, along with the line of credit, will be a sufficient source ofliquidity to fund operations. The Company continues to maintain a strong cashposition and manages and maintains tight controls of receivables.

 

 

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Authorized stock of the company consists of 10,000,000 shares of $.001par value common stock and 5,000,000 shares of $.001 par value preferredstock.  No shares of preferred stockhave been issued.

 

**Item 3. Quantitative and Qualitative Disclosures about Market Risk**

 

The Company is not required to provide this information pursuant toItem 305(e) of Regulation S-K.

 

**Item 4. Controls and Procedures**

 

The Company maintains disclosure controls andprocedures that are designed to ensure that information required to bedisclosed in the Company’s Securities Exchange Act reports is recorded,processed, summarized and reported within the time periods specified in theSEC’s rules and forms, and that such information is accumulated andcommunicated to the Company’s management, including its Chief Executive Officerand Chief Financial Officer, as appropriate, to allow timely decisionsregarding required disclosure. Management recognized that any controls and procedures, no matter howwell designed and operated, can provide only reasonable assurance of achievingthe desired control objectives, as ours are designed to do, and managementnecessarily was required to apply its judgement in evaluating the cost-benefitrelationship of possible controls and procedures.

 

During the 90-day period prior to the date ofthis report, an evaluation was performed under the supervision and with theparticipation of our Company’s management, including the Chief ExecutiveOfficer and the Chief Financial Officer, of the effectiveness of the design andoperation of our disclosure controls and procedures.  The Chief Exectuve Officer and the Chief Financial Officerconcluded that, based upon the evaluation of management, the Company’sdisclosure controls and procedures were effective.  Subsequent to the date of this evaluation, there have been nosignificant changes in the Company’s internal controls or in other factors thatcould significantly affect these controls, and no corrective actions have beenneeded or taken with regard to significant deficiencies or material weaknessesin such controls.

 

**PARTII.  OTHER INFORMATION**

 

### **Item 1.  Legal Proceedings**

 

Nothing to report.

 

### **Item 2. Changes inSecurities**

 

Nothing to report

 

### **Item 3. DefaultsUpon Senior Securities**

 

Nothing to report

 

 

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### **Item 4. Submissionof Matters to a Vote of Security Holders**

 

Nothingto report

 

**Item 5.  OtherInformation**

 

Nothing to report

 

**Item 6. Exhibits and Reports on Form 8-K**

 
| (a)    |   | Exhibit 31.1 Certification  Pursuant to 18 U.S.C Section 1350.             |
|--------|--------|----------------------------------------------------------------------------|
|   |   | Exhibit 31.2 Certification  Pursuant to 18 U.S.C. Section 1350.            |
|   |   | Exhibit 32.1 Certification  Pursuant to 18 U.S.C. Section 1350.            |
| (b)    |   | No reports on Form 8-K  were filed during the quarter ended June 30, 2003. |

 

 

 

## **SIGNATURES**

 

Pursuantto the requirements of the Securities Exchange Act of 1934, the registrant hascaused this report to be signed on its behalf by the undersigned hereunto dulyauthorized.

 
|   |             | T.J.T.,  INC.                                                          |                  |
|--------|------------------|------------------------------------------------------------------------|-----------------------|
|   |             | Registrant                                                             |                  |
|   |             |                                                                   |                  |   |
| Date:  | August  14, 2003 | By:                                                                    | /s/Larry  B. Prescott |   |
|   |             | Larry B. Prescott, Senior Vice  President and

Chief Financial Officer |
|   |             |                                                                   |                  |   |
|        |                  |                                                                        |                       |  |  |  |

 

 

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