T.J.T., Inc. Reports Results for Fiscal Year 2009

EMMETT, Idaho--(BUSINESS WIRE)--T.J.T., Inc. (the Company), (Pink Sheets: AXLE), a major supplier of axles, tires, and set-up supplies to the manufactured housing industry announced a net loss of $1,726,000, or $.38 per diluted share, for fiscal year 2009.

Net sales declined over 40 percent in both the three and twelve month periods ending September 30, 2009 as compared to the same periods a year ago. Sales of axles and tires in the fourth quarter ending September 30, 2009 decreased 45 percent from the same quarter in 2008, while sales of accessories declined 52 percent. Sales in both business segments dropped 44 percent in fiscal 2009 when compared to fiscal 2008.

Gross margin dropped to 4 percent for the fourth quarter of fiscal 2009 compared to 25 percent in the same quarter of 2008. Gross margin for the twelve month period was 15 percent compared to 24 percent in fiscal 2008. The decline in both periods was due to the axle and tire segment. Axle and tire margins declined due to lower sales volumes along with inventory write-downs totaling $331,000. The axle and tire segment write-downs included $261,000 of lower of cost or market adjustments and $70,000 related to a product manufactured with Canadian specifications that has limited marketability in the current market. Management expected to sell a significant amount of inventory to the wholesale market in the final quarter of 2009. However, demand from the wholesale market dropped off dramatically early in the fourth quarter with price decreases occurring later in the quarter. Excluding write-downs, axle and tire gross margins were 7 percent and 13 percent in the three and twelve months ended September 30, 2009, respectively, compared to 21 percent and 20 percent in the same periods a year ago. Accessories gross margin increased from the third quarter to the fourth quarter of 2009 resulting in a year to date gross margin of 33 percent, virtually unchanged as compared to fiscal 2008.

Consolidated selling, general and administrative (SG&A) expense decreased 38 percent in the final quarter of 2009 compared to the same quarter in 2008. SG&A for fiscal 2009 decreased 31 percent, or $1,610,000, compared to the same twelve month period in fiscal 2008. The decrease in both periods was a result of cost cutting measures implemented throughout the Company, including but not limited to reductions in wages, legal expenses, and expenses associated with the joint ventures TJT Realty, L.L.C. and Ladder Lift Systems, L.L.C. The Company closed the TJT Realty L.L.C. office effective July 2008 and Ladder Lift Systems L.L.C. operations were suspended in September 2008. Operations of Ladder Lift Systems, L.L.C. are consolidated within the financial statements for the Company. During 2009, wages, commissions, and bonuses declined $380,000, legal and other professional fees dropped $226,000, and joint venture expenses were reduced by $148,000.

The Company’s net loss in the fourth quarter of 2009 was $858,000 compared to a net loss of $52,000 in the final quarter of 2008. The Company reported a net loss of $1,726,000, or $.38 per diluted share, for the year ending September 30, 2009 compared to a net loss of $674,000, or $.15 per diluted share in 2008. The axle and tire segment experienced a sharp decline in gross margin in 2009, as compared to 2008, resulting from significantly lower sales volumes and inventory write-downs of $331,000. The Company also incurred an impairment loss on investment property held for sale for $136,000 in 2009. The inventory write-downs and the impairment loss total $467,000, or 54 percent of the fourth quarter pretax loss. Further market declines could result in additional inventory write-downs in 2010.

At September 30, 2009, the Company was able to carry back the entire net operating loss for federal tax purposes, and recorded a deferred tax asset related to the remaining state net operating losses. In accordance with current tax regulations, future net operating losses for both federal and state will be carried forward and used to offset future taxable income. Given the market conditions of the manufactured housing industry, the nature and extent of the deferred tax assets, and the Company’s history of losses, management determined a valuation allowance equal to the net deferred tax assets was appropriate, resulting in tax expense of $385,000 in the final quarter of 2009.

The Company’s cash increased $731,000 by the end of fiscal 2009 compared to September 2008 after paying off the line of credit and the loan against the life insurance policy. The net operating loss for 2009 will be carried back resulting in tax refunds of approximately $596,000, which are expected to be received in the second quarter of 2010.

Terrence Sheldon, President and Chief Executive Officer of the Company, noted that, “Throughout 2009, the manufactured housing industry continued its decade-long slide, with no bottom yet seen. Sales in our market area experienced over a 50 percent reduction from 2008 sales. The early outlook for 2010 becomes increasingly concerning given the prevailing economic climate, and our Company’s reliance on the health of manufactured housing. We closed the Arizona facility in August, moving the inventory to the Colorado facility, where we will service the Arizona, Colorado, and surrounding market areas. We continue to curtail expenses wherever possible through expense control, layoffs, and by suspending the Company’s 401 K matching funds. Salary reductions are in effect for all management and salaried personnel. These cost cutting measures have reduced wage and benefit costs by approximately $575,000 in fiscal 2009. We will continue to implement cost-cutting as appropriate, and to closely monitor our liquidity needs by actively managing our inventory levels. As it has become apparent that our primary industry will not soon be experiencing recovery, it is important that we focus on developing other, profitable, uses for our resources. We are constantly researching appropriate opportunities.”

Established in 1977, T.J.T., Inc. is a major provider of recycled axles and tires to the manufactured housing industry. It operates recycling facilities in Idaho, Washington, California, and Colorado, and serves 14 western states. In addition to the recycling business, T.J.T. also sells aftermarket products to manufactured housing, recreational vehicle, and residential markets.

This release contains certain forward-looking statements, which are based on management’s current expectations including, but not limited to, general economic conditions, changes in interest rates, deposit flows, real estate values, competition, and changes in legislation or regulations, and other economic, competitive, governmental, regulatory, and technological factors affecting the company’s operations, pricing, products, and services. Any forward looking statement speaks only as of the date on which the statement is made, and the Company undertakes no obligation to update any forward looking statement.

Copies of this report and additional financial information can be found at www.pinksheets.com, or you may contact:

Larry B. Prescott

Senior Vice President and Chief Financial Officer

T.J.T., Inc.

208-365-5321

T.J.T., INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
At September 30,		2009		2008
Current assets:
Cash and cash equivalents	$	889	$	158
Accounts receivable (net of allowances and
discounts of $49 and $41)		662		1,177
Current portion of notes receivable		20		10
Inventories		3,380		5,775
Prepaid expenses and other current assets		42		14
Income tax receivable		596		325
Deferred tax asset		-		86
Total current assets		5,589		7,545
Property, plant and equipment, net of
accumulated depreciation		403		739
Notes receivable, net of current portion		122		21
Real estate held for sale		577		899
Real estate held for investment		289		-
Other assets		402		379
Deferred tax asset		-		72
Total assets	$	7,382	$	9,655
Current liabilities:
Accounts payable	$	261	$	731
Accrued liabilities		358		497
Total current liabilities		619		1,228
Deferred income and other noncurrent obligations		74		16
Total liabilities		693		1,244
Non-controlling interest		2		9
Shareholders' equity:
Preferred stock, $.001 par value; 5,000,000
shares authorized; 0 shares issued and
outstanding		-		-
Common stock, $.001 par value; 10,000,000
shares authorized; 4,532,862 shares outstanding		5		5
Capital surplus		5,856		5,845
Retained earnings		826		2,552
Total shareholders' equity		6,687		8,402
Total liabilities and shareholders' equity	$	7,382	$	9,655

T.J.T., INC.
CONSOLIDATED STATEMENTS OF OPERATION
(Dollars in thousands except per share amounts)
(Unaudited)
	Three Months Ended						Year Ended
	September 30,						September 30,
		2009			2008			2009			2008
Sales (net of returns and allowances):
Axles and tires	$	1,819		$	3,283		$	6,532		$	11,709
Accessories and siding		672			1,390			2,523			4,502
Total sales		2,491			4,673			9,055			16,211
Cost of goods sold
Axles and tires		1,946			2,586			5,983			9,325
Accessories and siding		435			924			1,692			3,005
Total cost of goods sold		2,381			3,510			7,675			12,330
Gross profit		110			1,163			1,380			3,881
Selling, general and administrative expenses		796			1,294			3,502			5,112
Operating loss		(686	)		(131	)		(2,122	)		(1,231	)
Interest income		-			2			2			30
Investment property income (expense)		(90	)		-			(90	)		15
Rental income		6			5			17			10
Other income		4			1			25			12
Loss before non-controlling interest and taxes		(766	)		(123	)		(2,168	)		(1,164	)
Non-controlling interest		2			46			7			82
Loss before taxes		(764	)		(77	)		(2,161	)		(1,082	)
Income tax expense (benefit)		94			(25	)		(435	)		(408	)
Net loss	$	(858	)	$	(52	)	$	(1,726	)	$	(674	)
Net loss per common share
Basic	$	(.19	)	$	(.01	)	$	(.38	)	$	(.15	)
Diluted	$	(.19	)	$	(.01	)	$	(.38	)	$	(.15	)
Weighted average shares outstanding
Basic		4,532,862			4,532,862			4,532,862			4,532,862
Diluted		4,533,455			4,548,174			4,537,336			4,575,455

T.J.T., INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
For the year ended September 30,		2009			2008			2007
Cash flows from operating activities:
Net income	$	(1,726	)	$	(674	)	$	515
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization		174			221			224
Loss on impairment of property held for sale		136			-			-
Gain on sale of assets		(25	)		(12	)		(6	)
Loss on sale of property held for investment		28			-			(157	)
Gain on sale of property held for sale		(74	)		-			-
Equity earnings in joint venture		-			-			(47	)
Stock-based compensation		11			13			25
Non-controlling interest		(7	)		5			4
Change in accounts receivables		515			(187	)		91
Change in inventories		2,395			(829	)		(827	)
Change in prepaid expenses and other current assets		(28	)		16			(19	)
Change in accounts payable		(470	)		129			(7	)
Change in taxes		(113	)		(481	)		26
Change in other assets and liabilities		(162	)		80			(759	)
Net cash provided (used) by operating activities		654			(1,719	)		(937	)
Cash flows from investing activities:
Purchases of property, plant and equipment		(43	)		(131	)		(150	)
Repayments received on notes receivable		11			172			60
Issuance of notes receivable		(11	)		(22	)		(2	)
Proceeds from sale of assets		17			51			10
Distributions from joint venture		-			-			397
Land purchased for investment		(1	)		(27	)		(292	)
Proceeds from sale of land held for investment		104			-			174
Net cash provided by investing activities		77			43			197
Cash flows from financing activities:
Proceeds from line of credit		70			294			-
Proceeds from loan against life insurance policy		200			-			-
Repayment of debt		(270	)		(294	)		-
Net cash provided by financing activities		-			-			-
Net change in cash and cash equivalents		731			(1,676	)		(740	)
Cash and cash equivalents at October 1		158			1,834			2,574
Cash and cash equivalents at September 30	$	889		$	158		$	1,834
Supplemental information:
Cash paid for interest	$	10		$	3		$	-
Income taxes paid		-			-			285
Noncash transactions:
Sale of investment property by issuance of note receivable	$	111		$	-		$	-
Sale of fixed assets by issuance of note receivable		-			10			5
Value of stock received into treasury as payment to exercise options		-			-			14