-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, E//C2sVd6vNPw+n728suLT2bH3kWqmFT2+0AWwbDge4yyDfyDkq8R4morZHwr59j Nuk3kWlVU28pjfOgcKHYZg== 0000950150-99-001331.txt : 19991216 0000950150-99-001331.hdr.sgml : 19991216 ACCESSION NUMBER: 0000950150-99-001331 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991031 FILED AS OF DATE: 19991215 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAPITAL INVESTMENT OF HAWAII INC CENTRAL INDEX KEY: 0000017221 STANDARD INDUSTRIAL CLASSIFICATION: BAKERY PRODUCTS [2050] IRS NUMBER: 990065664 STATE OF INCORPORATION: HI FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-04179 FILM NUMBER: 99774525 BUSINESS ADDRESS: STREET 1: POST OFFICE BOX 2668 STREET 2: PRI TOWER CITY: HONOLULU STATE: HI ZIP: 96803 BUSINESS PHONE: 8085373981 MAIL ADDRESS: STREET 1: 733 BISHOP STREET STREET 2: SUITE 1700 CITY: HONOLULU STATE: HI ZIP: 96813 10-Q 1 FORM 10-Q FOR THE PERIOD ENDED 10/31/1999 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 31, 1999 OR [ ] 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 0-4179 CAPITAL INVESTMENT OF HAWAII, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Hawaii 99-0065664 - ------------------------------ ------------------------------------ State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) Suite 1700, Makai Tower, 733 Bishop Street Honolulu, Hawaii 96813 - ------------------------------------------ ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (808) 537-3981 No Change - ------------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. There were 1,032,692 shares outstanding of common stock, no par value, as of October 31, 1999. 2 PART I - FINANCIAL INFORMATION CAPITAL INVESTMENT OF HAWAII, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets October 31, 1999 and July 31, 1999 ASSETS
October 31, July 31, 1999 1999 (Unaudited) ----------- ----------- Cash $ 113,190 360,769 ----------- ----------- Receivables: Trade accounts and notes, less allowance for doubtful receivables of $1,000 at October 31, 1999 and July 31, 1999 60,790 67,421 Accrued interest 89,248 55,417 Other 66,483 66,483 ----------- ----------- Total receivables 216,521 189,321 ----------- ----------- Developed real estate, less accumulated depre- ciation of $280,188 at October 31, 1999 and $274,759 at July 31, 1999 1,378,415 1,383,745 Undeveloped land held for sale 232,006 226,797 Other investments: Real estate 1,208,017 1,246,608 Securities 618,102 681,006 ----------- ----------- 1,826,119 1,927,614 ----------- ----------- Property and equipment, at cost: Leasehold improvements 63,740 63,740 Furniture and equipment 330,538 329,394 ----------- ----------- 394,278 393,134 Less accumulated depreciation and amortization (363,502) (360,944) ----------- ----------- Net property and equipment 30,776 32,190 ----------- ----------- Deferred charges and other assets 26,673 11,627 ----------- ----------- $ 3,823,700 4,132,063 =========== ===========
3 CAPITAL INVESTMENT OF HAWAII, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets, cont'd. October 31, 1999 and July 31, 1999 LIABILITIES AND STOCKHOLDERS' DEFICIENCY
October 31, July 31, 1999 1999 (Unaudited) ----------- ----------- Indebtedness (current installments of $3,970,745 at October 31, 1999 and $3,971,798 at July 31, 1999): Debentures $ 1,897,505 1,897,505 Mortgage notes 1,822,694 1,826,566 Other notes, secured 383,403 515,031 Other notes, unsecured 534,373 530,748 ----------- ----------- Total indebtedness 4,637,975 4,769,850 ----------- ----------- Accounts payable, trade 158,951 105,048 Accrued expenses 601,805 776,932 Other payables: Loans under participation agreement: Related parties 474,101 442,900 Other 420,365 357,973 Other 202,376 193,660 ----------- ----------- 1,096,842 994,533 ----------- ----------- Stockholders' deficiency: Common stock, no par value, stated value $1 per share: Authorized 2,531,765 shares; issued 1,723,774 shares. (No shares reserved for conversion, warrants, options or other rights) 1,723,774 1,723,774 Additional paid-in capital 469,312 469,312 Accumulated deficit (807,472) (649,899) ----------- ----------- 1,385,614 1,543,187 Deduct cost of 691,082 common shares in treasury (4,057,487) (4,057,487) ----------- ----------- Stockholders' deficiency (2,671,873) (2,514,300) ----------- ----------- $ 3,823,700 4,132,063 =========== ===========
See accompanying notes to condensed consolidated financial statements. 4 CAPITAL INVESTMENT OF HAWAII, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations Three months ended October 31, 1999 and 1998 (Unaudited)
1999 1998 ----------- ---------- Revenues: Income from investments $ 166,070 195,416 Other 5,585 5,187 ----------- ---------- 171,655 200,603 ----------- ---------- Cost and expenses: Direct operating expenses and general and administrative expenses 246,859 374,917 Interest 120,666 151,370 ----------- ---------- 367,525 526,287 ----------- ---------- Loss from continuing operations (195,870) (325,684) Earnings from discontinued operations 38,297 45,653 ----------- ---------- Net loss (157,573) (280,031) Retained earnings (accumulated deficit) at beginning of period (649,899) 436,668 ----------- ---------- Retained earnings at end of period $ (807,472) 156,637 =========== ========== Loss per common share: Loss from continuing operations (.19) (.31) Gain from discontinued operations .04 .04 ----------- ---------- Net loss per common share $ (.15) (.27) =========== ========== Dividends per common share NONE NONE ----------- ---------- Weighted average number of common shares outstanding during the period 1,032,692 1,032,692 =========== ==========
See accompanying notes to condensed consolidated financial statements. 5 CAPITAL INVESTMENT OF HAWAII, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows Three months ended October 31, 1999 and 1998 (Unaudited)
1999 1998 ---------- ---------- Net cash used in operating activities $(289,780) (745,988) ---------- ---------- Cash flows from investing activities: Capital expenditures (1,144) (1,483) Proceeds from sales of securities 81,627 28,714 ---------- ---------- Net cash provided by investing activities 80,483 27,231 ---------- ---------- Cash flows from financing activities: Proceeds from long-term debt 9,936 9,568 Principal payments on indebtedness (141,811) (250,049) Proceeds received under loan participa- tion agreements 115,873 521,874 Payments made under loan participation agreements (22,280) (258,450) ---------- ---------- Net cash provided by (used in) financing activities (38,282) 22,943 ---------- ---------- Net decrease in cash (247,579) (695,814) Cash at beginning of period 360,769 752,493 ---------- ---------- Cash at end of period $ 113,190 56,679 ========== ==========
See accompanying notes to condensed consolidated financial statements. 6 CAPITAL INVESTMENT OF HAWAII, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Information (Unaudited) (1) Basis of Presentation The accompanying unaudited consolidated financial information have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The accompanying unaudited consolidated financial statements should be read in conjunction with the report on SEC Form 10-K for the fiscal year ended July 31, 1999 and the consolidated financial statements and the notes thereto in the Company's Quarterly Report on SEC Form 10-Q for the quarter ended October 31, 1998. In the opinion of the Company's management, the accompanying unaudited financial information contains all material adjustments required by generally accepted accounting principles to present fairly the Company's financial position as of October 31, 1999 and July 31, 1999, the results of its operations for the three months ended October 31, 1999 and 1998, and its cash flows for the three months ended October 31, 1999 and 1998. All such adjustments are of a normal recurring nature, unless otherwise disclosed in this Form 10-Q or other referenced material. Results of operations for interim periods are not necessarily indicative of results for the full year. 7 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The Company and its subsidiaries are engaged principally in the business of acquiring, developing, leasing and dealing in real estate, investing in securities which are subject to various factors which cause fluctuations between periods. Accordingly, the results of operations for the three months ended October 31, 1999 are not necessarily indicative of results to be expected for the year and are not necessarily comparable to the results of operations for the three months ended October 31, 1998. ADC Lending Activities As of October 31, 1999, the Company had approximately $1,208,000 in real estate investments. Those investments consist primarily of three acquisition, development and construction (ADC) loans to developers in Nevada and Utah. The Company has engaged in making ADC loans for more than nine years. As Nevada, particularly Las Vegas has seen strong economic growth, the Company will continue to focus on ADC lending activities for the remainder of fiscal 2000. Capital requirements to finance such activities will continue to be satisfied from institutional borrowings and participating loans to small groups of investors. Direct Operating and General and Administrative Expenses The decrease of direct operating and general and administrative expenses for the three months ended October 31, 1999 as compared to the same period in 1998 of $128,058 is primarily due to the reduction of the corporate office space and administrative personnel. The Company will continue its efforts to reduce general and administrative expenses in order to meet its obligations and improve operating results. DISCONTINUED PROPERTY MANAGEMENT DIVISION In October 1999, the Company entered into an agreement to sell certain assets of its property management division. The sale transaction has been finalized in December 1999 and the Company will receive approximately $480,000 in cash in second quarter of fiscal 2000. The Company has recorded earnings from discontinued operations of $38,297 and $45, 653 for the three months ended October 31, 1999 and 1998, respectively which represent the net operating income of the property management division. The Company expects a decline of approximately $160,000 in net cash flows from the absence of the property management division in fiscal 2000. 8 LIQUIDITY AND CAPITAL RESOURCES At October 31, 1999, the Company held cash of $113,190. The decrease in cash of $247,579 for the three months ended October 31, 1999 is primarily due to cash used in operating activities. Included in cash used in operating activities for the three months ended October 31, 1999 was approximately $134,500 of advances for the construction of residential developments in Nevada and Utah. The Company's net loss $157,573 is also included in cash used in operating activities. The Company met its operating cash requirements for the three months ended October 31, 1999 by using cash on hand at July 31, 1999 and proceeds from loan participation agreements. Cash inflows and outflows from ADC loans in Hearthstone Homes, Inc., Hearthstone Homebuilders, Inc. and Martin Development, Inc. will continue throughout fiscal year 2000. The Company has several notes payable to individuals, a corporation and a financial institution. Approximately $1,900,000 of these notes are payable on or before July 1, 2001. The Company has had long standing good relationships with these individuals and companies and has been successful in the past in obtaining extensions on these notes as they become due. Management will continue to work with these lenders in order to achieve future extensions beyond fiscal 2000. The Company is contemplating a plan for going private (the Plan). The Plan is to restructure the share ownership of the Company to reduce the number of shareholders below 300, thus allowing the Company to terminate its reporting obligations under the Securities Exchange Act of 1934 (the Act). This will allow the Company to eliminate the substantial time and expense of compliance with the Act. Cash requirements for the remainder of fiscal 2000 are expected to be satisfied by the cash proceeds from the sale of the Company's property management division, institutional borrowings, loan participation agreements and net collections on ADC loans. The Company anticipates that it will sell certain of its security and real estate holdings to meet cash requirements, if deemed necessary. Currently, the Company has certain condominium apartments in Makaha, Hawaii being actively listed for sale. YEAR 2000 The Company has conducted a comprehensive review of its computer systems to identify the systems that could be affected by the Year 2000 issue and has developed an implementation plan to resolve the issue. The Year 2000 problem is the result of computer programs being written using two digits rather than four to define the applicable year. Any of the Company's programs that have time-sensitive software may recognize a date using "00" as the year 1900 rather then the year 2000. This could result in a major system failure or miscalculations. 9 The Company presently believes that the Year 2000 problem will not pose significant operational problems for the Company's computer systems. 10 PART II - OTHER INFORMATION Items 1,2,3,4,5,6. None 11 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CAPITAL INVESTMENT OF HAWAII, INC. Dated: December 13, 1999 /s/ STUART T.K. HO ----------------------------------- Chairman of the Board and President Dated: December 13, 1999 /s/ DONALD M. WONG ----------------------------------- Senior Vice President and Treasurer EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED CONSOLIDATED BALANCE SHEET AT OCTOBER 31, 1999 AND THE CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED OCTOBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. 3-MOS JUL-31-2000 AUG-01-1999 OCT-31-1999 113,190 0 217,521 1,000 0 0 394,278 363,502 3,823,7000 0 4,637,975 0 0 1,723,774 (4,395,647) 3,823,700 0 171,655 0 367,525 0 0 120,666 (195,870) 0 (195,870) 38,297 0 0 (157,573) (.15) (.15)
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