-----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, POvJUn+wqnuWLNhdIev6Twnlmx/QxbnUFgT4h7IsIeLrGfYHSRTe6a1KqQhSLIBl z9sIQpiqKV1GvaBTceDQCQ== 0000861502-96-000005.txt : 19960807 0000861502-96-000005.hdr.sgml : 19960807 ACCESSION NUMBER: 0000861502-96-000005 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960625 FILED AS OF DATE: 19960806 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COEUR D ALENES CO /IA/ CENTRAL INDEX KEY: 0000861502 STANDARD INDUSTRIAL CLASSIFICATION: FABRICATED STRUCTURAL METAL PRODUCTS [3440] IRS NUMBER: 820109390 STATE OF INCORPORATION: ID FISCAL YEAR END: 0925 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 001-10676 FILM NUMBER: 96604653 BUSINESS ADDRESS: STREET 1: PO BOX 2610 CITY: SPOKANE STATE: WA ZIP: 99220-2610 BUSINESS PHONE: 5099246363 MAIL ADDRESS: STREET 2: PO BOX 2610 CITY: SPOKANE STATE: WA ZIP: 992202610 FORMER COMPANY: FORMER CONFORMED NAME: CONJECTURE INC /IA/ DATE OF NAME CHANGE: 19931209 FORMER COMPANY: FORMER CONFORMED NAME: COEUR D ALENES CO /WA/ DATE OF NAME CHANGE: 19931209 10QSB 1 US SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 25, 1996. 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 0-18353 THE COEUR D'ALENES COMPANY (Exact name of registrant as specified in its charter) Idaho 82-0109390 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) PO BOX 2610, Spokane, Washington 99220-2610 (Address of principal executive offices) (Zip Code) (509) 924-6363 (Registrant's telephone number, including area code) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 Applicable only to issuers involved in bankruptcy proceedings during the preceding five years. Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes___No___ Applicable only to corporate issuers State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. 5,353,577 shares of common stock, no par value, were outstanding as of June 30, 1996. PART I. FINANCIAL INFORMATION. Item 1. Financial Statements. The condensed financial statements of The Coeur d'Alenes Company (sometimes referred to herein as the "Company") included herein have been prepared by the Company without audit or review by the Company's accountants pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, all adjustments necessary to a fair statement of the results of operations for the interim periods ended June 25, 1996 and June 25, 1995 have been made. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full fiscal year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These condensed financial statements should be read in conjunction with the financial statements and the notes thereto included in The Coeur d'Alenes Company's latest audited financial statements for the fiscal year ended September 30, 1995. Index of Financial Statements Page Consolidated Balance Sheets - June 25, 1996 and September 30, 1995 3 Unaudited Consolidated Income Statements - Nine Months Ended June 25, 1996 and June 25, 1995 4 Unaudited Consolidated Income Statements - Three Months Ended June 25, 1996 and June 25, 1995 5 Unaudited Consolidated Statement of Cash Flows - Nine Months Ended June 25, 1996 and June 25, 1995 6 Condensed Notes to Unaudited Consolidated Financial Statement 7
THE COEUR D ALENES COMPANY CONSOLIDATED BALANCE SHEET June 25, 1996 and September 30, 1995 June 25, 1996 September 30, 1995 ASSETS (Unaudited) (Audited) Current Assets: Cash $ 177,063 $ 128,085 Accounts receivable 1,074,132 992,363 Inventory 2,396,141 2,376,105 Other current assets 66,955 70,450 Total current assets 3,714,291 3,567,003 Property and Equipment 5,016,793 4,067,865 Less accumulated depreciation 2,211,299 2,193,188 Net property and equipment 2,805,494 1,874,677 Other assets 17,789 49,346 Total assets $6,537,574 $5,491,026 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Short term bank borrowings $ 552,771 $ 772,064 Accounts payable 1,448,168 733,767 Accrued expenses 263,994 430,798 Current amount on long-term debt 74,989 58,346 Total current liabilities 2,339,922 1,994,975 Long-term debt: Deferred tax liability 46,768 46,768 Long term debt less current maturities 1,559,183 1,030,131 Long term debt to related parties 128,000 250,000 Total long term liabilities 1,733,951 1,326,899 Total liabilities 4,073,873 3,321,874 Stockholders' Equity: Capital Stock 1,186,192 1,064,193 Retained earnings 1,281,309 1,108,755 2,467,501 2,172,948 Less Treasury Stock at cost 3,800 3,796 Total stockholders' equity 2,463,701 2,169,152 Total liabilities and stockholder's equity $6,537,574 $5,491,026
THE COEUR D ALENES COMPANY UNAUDITED CONSOLIDATED INCOME STATEMENT Nine Months Ended June 25, 1996 and June 25, 1995 1996 1995 Net sales $9,344,985 $8,778,081 Costs of sales 6,834,153 6,352,815 Gross profit on sales 2,510,832 2,425,266 Selling, general and administrative expenses 2,169,520 2,046,569 Operating incpme 341,312 378,697 Other income (expense) Interest income 17,267 40,525 Interest expense (150,935) (166,592) Other income 66,251 86,616 Total other expense (67,417) (39,451) Income before income tax expense 273,895 339,246 Income tax expense 101,341 132,306 Net income $ 172,554 $206,940 Earnings per share $0.03 $0.05 Shares outstanding 5,353,577 4,377,577
THE COEUR D'ALENES COMPANY UNAUDITED CONSOLIDATED INCOME STATEMENT Three Months Ended June 25, 1996 and June 25, 1995 1996 1995 Net sales $3,449,797 $2,895,626 Costs of sales 2,532,614 2,099,728 Gross profit on sales 917,183 795,898 Selling, general and administrative expenses 677,182 654,002 Operating income 240,001 141,896 Other income (expense) Interest income 5,119 17,288 Interest expense (59,173) (57,892) Other income 36,070 38,841 Total other expense (17,984) (1,763) Income before income tax expense 222,017 140,133 Income tax expense 82,146 54,652 Net income $139,871 $85,481 Earnings per share $ 0.03 $ 0.02 Shares outstanding 5,353,577 4,377,577
THE COEUR D'ALENES COMPANY UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS Nine Months Ended June 25, 1996 and June 25, 1995 1996 1995 Cash flows from operating activities: Net income $ 172,554 $206,940 Adjustments to reconcile net income to cash provided (used) by operating activities: Depreciation 112,575 90,800 Gain on disposal of assets (3,057) (15,675) Changes in assets and liabilities Accounts and notes receivable ( 81,769) 198,465 Inventories ( 20,037) (382,086) Prepaid expense 3,495 ( 11,576) Other Assets 31,557 2,073 Accounts payable 714,401 354,042 Accrued expenses (166,804) ( 82,632) Cash provided by operating activities 762,915 360,351 Cash flows from investing activities: Proceeds from sale of assets 8,000 20,000 Additions to property and equipment (1,048,338) (184,760) Cash flows used by investing activities (1,040,338) (164,760) Cash flows from financing activities: Contribution of shares to treasury (4) 0 Net repayment under line of credit (219,293) (276,854) Principal repayment of long-term debt ( 64,159) (226,372) New long term note 146,900 200,000 Advance on construction loan 1,308,871 0 Pay off real estate loan (H. Stack) ( 845,914) 0 Cash provided (used) by financing activities 326,401 (303,226) Net increase (decrease) in cash 48,978 (107,635) Cash, beginning of period 128,085 110,638 Cash, end of period $ 177,063 $ 3,003
THE COEUR D'ALENES COMPANY CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (1) Summary of Significant Accounting Policies. Significant accounting policies followed for the nine months ended June 25, 1996 are the same as those contained in the Summary of Significant Accounting Policies from the Company's audited financial statements as of September 30, 1995 and September 24, 1994. (2) Inventories. Inventories are summarized as follows: June 25, September 30, 1996 1995 Raw materials on LIFO $ 50,789 $ 94,873 Work-in-process 335,512 312,619 Inventories at FIFO cost 386,301 407,492 LIFO reserve (66,028) (66,028) Inventories at LIFO cost 320,273 341,464 Other FIFO inventories 2,075,869 2,034,641 Total inventories 2,396,142 2,376,105
(3) Short-term bank borrowings. The Company has $1,850,000 in bank credit lines which mature on March 1, 1997. Interest is charged at the lender's prime rate plus .325%, 8.57% at June 25, 1996. Outstanding borrowings are collateralized by accounts receivable and inventories. The credit line agreement contains covenants under which the Company may not pay dividends in excess of 10% of annual net (after tax) profit, purchase property and equipment in excess of $1.4 million in fiscal year end 1996 or enter into mergers, acquisitions or any major sales of assets or corporate reorganizations without prior consent of the bank. The Company is also required to maintain certain financial ratios concerning working capital and debt to equity, as well as a minimum net worth of $2,000,000. (4) Capital Stock On October 31, 1995, the holders of $122,000 worth of convertible debentures converted into 976,000 shares of capital stock at a conversion price of $.125 per share. The conversion increased capital stock outstanding from 4,377,577 shares to 5,353,577 shares. (5) Federal Income Tax Expense Effective September 26, 1993, the Company adopted SFAS No. 109, "Accounting for Income Taxes," which requires an asset and liability approach to financial accounting and reporting for income taxes. The cumulative effect of adopting SFAS No. 109 on years prior to September 26, 1993 was $48,227. There was no significant effect on net income from applying SFAS No. 109 during the year ended September 24, 1994. There were no extraordinary items to be reported for any of the above accounting periods. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Liquidity and Capital Resources During the first nine months of the current fiscal year, the Company's working capital has declined from approximately $1,572,000 on September 30,1995 to approximately $1,375,000 as of June 25, 1996. The 13% decline is due primarily to financing the down payment on a new building which will be occupied by the fabrication and processing business. The lease on the premises at the Spokane Industrial Park expired in May 1996. The fabrication business is continuing to occupy the premises on a month to month lease until the new facility at 3900 E. Broadway is complete. The Company has a commitment from a bank to provide a construction and subsequent real estate loan for up to $1,688,000. As of June 25, 1996, advances outstanding on the construction loan amounted to approximately $1,309,000. Of this amount outstanding, $878,000 was used to pay off an existing loan secured by a lien on the property. The commitment should be adequate to complete construction of the plant structure. Alternatives are still being explored for additional office space. It is likely that the existing office space for Stock Steel can be remodeled and expanded to provide the necessary accommodation for approximately $215,000. As soon as the engineering is complete the contractor will apply for a building permit. The plan is to begin construction immediately thereafter. It will be necessary to acquire more efficient office furniture in order to make the additional space accommodate the required personnel. The estimated cost of the furniture is $70,000. The Company is dependent on an operating line of credit, secured by accounts receivable and inventory to meet its daily financial obligations. A $1.85 million operating line is currently in place through March 1, 1997. The Company expects to be able to renew the operating line of credit for the next year on substantially the same terms and conditions as this year. Results of Operations Nine Months Ended June 25, 1996 Sales of approximately $9,345,000 for the nine month period ended June 25, 1996 are 6% higher than approximately $8,778,000 for the same period of time in the prior fiscal year. The increase in sales volume is due primarily to strong demand in both the steel service center and the fabrication and processing markets. Gross margins for the first three quarters of the current year, at approximately $2,510,000 exceeded gross margins for the same period of time in the prior year by 3-1/2%. As a percentage of sales, gross margins for the current year at 26.9% are down slightly from 27.6% the prior year to date. The decline was primarily due to inventory costs below replacement costs early in the year. Increased volume offset the temporary effect of declining mill replacement pricing. The steel service center business represents approximately 74% of the current year to date sales and 67% of the current year to date gross margins. The fabrication and processing business accounts for the remaining 26% of sales and 33% of gross margins. The markets for both businesses continue to exhibit signs of strong demand in the immediate future. A 5% increase in operating expense during the first nine months of the current fiscal year over the same period of the prior year is accounted for primarily by increased wages and associated benefits and taxes. The increases are attributable in part to the inefficiencies inherent in working around a construction project. The structure is about 99% complete and the major pieces of equipment have been moved. The move should be complete by the middle to the end of August. While a lot of the spaciousness of the old facility will be gone, the new facility has a much more efficient layout and the space will be much better utilized. Interest expense, at approximately $151,000 for the first three quarters of the current fiscal year is 9% below the $166,600 for the same period for the prior fiscal year. The decrease is primarily due to lower interest rates and the conversion of $122,000 worth of debentures into capital stock. The interest rate on the debentures was 9.25%. Other income includes payments received on a sublease arrangement at the Spokane Industrial Park location. The $6,000 monthly rental fee was reduced to $3,000 monthly in April 1996 as the equipment in the building was removed for use at the new facility. Rebates from prior years' participation in an industrial insurance retrospective rating plan for the current year were approximately 50% of the prior year. Both of these third quarter events brought year to date non operating other income down by 24% for the first nine months of the current year compared to the same period of time for the prior year. An overall 17% decline in net income for the first nine months of the current year compared to the same period of the prior year is the result of inefficiencies created by the construction project. To some extent these costs were anticipated, however there were unforeseen costs associated with delays caused by design changes. Both the steel service center business and the fabrication and processing business have been profitable during the first nine months of the current fiscal year. Three Months Ended June 25, 1996 Sales of approximately $3,450,000 for the three month period ended June 25, 1996 were 19% higher than approximately $2,896,000 gross sales for the same period in the prior fiscal year. The fabrication and processing business achieved a 48% increase in gross sales at the same time the steel service center business increased revenues by 12%. The fabrication and processing business accounted for 25% of the current year third quarter sales, while the steel service center business accounted for the other 75%. Potential for fourth quarter sales is good, however, the equipment relocation for the fabrication and processing equipment will cause significant downtime for production. Sales will necessarily decline during the period of the move, which will take approximately 8-10 weeks to accomplish. Gross margins at 26.6% of sales for the most recent quarter compare to 27.5% for the quarter ending June 25, 1995. Sales growth resulted in an overall increase of 15% in total gross margins. Operating expenses, at approximately $677,000 for the three months ended June 25, 1996 compare to approximately $654,000 for the same period of time in the prior fiscal year. This 4% increase is primarily the result of the 19% increase in sales volume. Net income before taxes of approximately $222,000 represents a 59% increase for the three month period ended June 25, 1996 compared to the three month period ended June 25, 1995. Strong sales volume and continuing attention to cost control helped to reduce the shortfall between last year's net income year to date and the current year's net income. Item 2. Changes in Securities. The Company had sold $250,000 of convertible debentures, collateralized by land and building, held by related parties, with annual interest at 9.25% and due October 31, 1998. The instruments are convertible to no-par common stock after October 31, 1994 at $0.125 per share with 20% per year incremental conversion price increases over the life of the debentures. The Company, at its option, may call any or all outstanding debentures for redemption after January 2, 1994. During October 1995, $122,000 of the debentures were converted at $0.125 per share for which 976,000 shares were issued. $128,000 remains as long-term debt. This conversion increased the number of outstanding shares from 4,377,577 to 5,353,577. Item 3. Defaults Upon Senior Securities. None. Item 4. Submission of Matters to a Vote of Security Holders. None. Item 5. Other Information. None. Item 6. Exhibits and Reports on Form 8-K (249.308). (a) Exhibits. None. (b) Reports on Form 8-K. None. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. THE COEUR D'ALENES COMPANY (Registrant) Dated: April 25, 1996 /s/ Marilyn A. Schroeder ------------------------ Marilyn A. Schroeder, Treasurer and Chief Financial Officer (Authorized Officer and Principal Accounting and Financial Officer) SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. THE COEUR D'ALENES COMPANY (Registrant) Dated: April 25, 1996 _________________________________ Marilyn A. Schroeder, Treasurer and Chief Financial Officer (Authorized Officer and Principal Accounting and Financial Officer) EX-27 2 ART. 5 FDS FOR 3RD QUARTER 10-QSB
5 9-MOS 6-MOS SEP-28-1996 SEP-30-1995 JUN-25-1996 MAR-25-1996 177,063 128,085 0 0 1,164,354 1,108,132 90,222 84,213 2,396,142 2,376,105 3,714,291 3,567,003 5,016,793 4,067,865 2,211,299 2,193,188 6,537,574 5,491,026 2,339,922 1,994,975 1,337,688 851,796 0 0 0 0 1,186,192 1,064,193 1,277,509 1,104,959 6,537,574 5,491,026 9,344,985 12,115,865 9,428,503 12,240,378 6,834,153 8,734,461 9,003,673 11,667,501 252,276 316,289 6,000 2,000 150,935 184,095 273,895 388,782 101,341 132,194 273,895 388,782 0 0 0 0 0 0 172,554 256,588 $.03 $.06 $.03 $.04
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