-----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, OdRwGiWR/U0vLvrVeDhI/FKHhpomD/XtZ0OLw5vfSu9M7OwDAF9G2OwJ0VnN6uB1 MjrDib2KNL/Gci7qldxrmw== 0000861502-98-000028.txt : 19980210 0000861502-98-000028.hdr.sgml : 19980210 ACCESSION NUMBER: 0000861502-98-000028 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980209 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: SEC FILE NUMBER: 001-10676 FILM NUMBER: 98525123 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 DECEMBER 25, 1997. [ ] 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. 5,353,450 shares of common stock, no par value, were outstanding as of January 31, 1998 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 December 25, 1997 and December 25, 1996 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 27, 1997. Index of Financial Statements Page Consolidated Balance Sheets - December 25, 1997 and September 27, 1997 3 Unaudited Consolidated Income Statements - Three Months Ended December 25, 1997 and December 25, 1996 4 Unaudited Consolidated Statement of Cash Flows - Three Months Ended December 25, 1997 and December 25, 1996 6 Condensed Notes to Unaudited Consolidated Financial Statement 7 THE COEUR D ALENES COMPANY CONSOLIDATED BALANCE SHEET December 25, 1997 and September 28, 1997 December 25, 1997 September 28, 1997 ASSETS (Unaudited) (Audited) Current Assets: Cash $ 7,760 $ 89,495 Accounts receivable 1,160,108 1,240,996 Inventory 2,542,632 2,342,671 Other current assets 100,448 70,004 Total current assets 3,810,948 3,743,166 Property and Equipment 4,761,711 4,735,715 Less accumulated depreciation 1,464,866 1,400,291 Net property and equipment 3,296,845 3,335,424 Other assets 54,389 73,365 Total assets $7,162,182 $7,151,955 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Short term bank borrowings $ 383,652 $ 833,656 Accounts payable 1,163,308 613,608 Accrued expenses 272,539 307,520 Current amount on long-term debt 103,663 103,663 Total current liabilities 1,923,162 1,858,447 Long-term debt: Deferred tax liability 65,000 65,000 Long term debt less current maturities 2,370,973 2,393,822 Long term debt to related parties 128,000 128,000 Total long term liabilities 2,563,973 2,586,822 Total liabilities 4,487,135 4,445,269 Stockholders' Equity: Capital Stock 1,186,192 1,186,192 Retained earnings 1,492,985 1,524,294 2,679,177 2,710,486 Less Treasury Stock at cost 4,130 3,800 Total stockholders' equity 2,675,047 2,706,686 Total liabilities and stockholder's equity $7,162,182 $7,151,955 THE COEUR D ALENES COMPANY UNAUDITED CONSOLIDATED INCOME STATEMENT Three Months Ended December 25, 1997and December 25, 1996 1997 1996 Net sales $3,228,540 $3,004,130 Costs of sales 2,480,470 2,196,196 Gross profit on sales 748,070 807,934 Selling, general and administrative expenses 738,765 830,577 Operating income 9,305 < 22,643> Other income (expense) Interest income 7,788 6,655 Interest expense <74,319> < 77,392> Other income 7,528 29,567 Total other expense <59,003> < 41,170> Loss before income tax expense <49,698> < 63,813> Income tax benefit <18,388> < 23,611> Net loss $ <31,310> $< 40,202> Loss per share $ 0.01 $ 0.01 Shares outstanding 5,353,450 5,353,561 THE COEUR D'ALENES COMPANY UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS Three Months Ended December 25, 1997 and December 25, 1996 1997 1996 Cash flows from operating activities: Net loss $<31,310> $<40,202> Adjustments to reconcile net income to cash provided (used) by operating activities: Depreciation 64,575 55,384 Gain on disposal of assets < 1,000> < 22,122> Changes in assets and liabilities Accounts and notes receivable 80,888 <159,242> Inventories < 199,961> < 7,862> Other current assets < 30,444> < 57,943> Other assets 18,976 6,239 Accounts payable 549,701 38,131 Accrued expenses < 34.981> <185,162> Cash provided (used) by operating activities 416,444 <372,779> Cash flows from investing activities: Proceeds from sale of assets 1,000 47,350 Additions to property and equipment < 25,996> <250,505> Cash flows used by investing activities < 24,996> <203,155> Cash flows from financing activities: Purchase of treasury stock < 330> Net borrowing (payments) borrowings under line of credit <450,004> 342,732 Principal repayment of long-term debt < 22,849> < 14,280> New long term note 271,273 Cash provided by financing activities <473,183> 599,725 Net increase (decrease) in cash < 81,735> 23,791 Cash, beginning of period 89,495 68,645 Cash, end of period $ 7,760 $ 92,436 THE COEUR D ALENES COMPANY CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (1) Summary of Significant Accounting Policies. Significant accounting policies followed for the three months ended December 25, 1997 are the same as those contained in the Summary of Significant Accounting Policies from the Company's audited financial statements as of September 27, 1997 and September 28, 1996. (2) Inventories. Inventories are summarized as follows: December 25, September 27, 1997 1997 Fabrication inventories: Raw materials $ 61,968 $ 74,501 Work-in-progress 92,909 293,181 Inventories at FIFO cost 154,877 367,682 LIFO reserve <50,538> <50,538> Inventories at LIFO cost 104,339 317,144 Distribution inventories at FIFO 2,438,293 2,025,527 Total inventories $2,542,632 $2,342,671 (3) Short-term bank borrowings. The Company has $1,850,000 in bank credit lines which mature on April 1, 1998. Interest is charged at the lender's prime rate plus .325%, 8.82% at December 25, 1997. 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, 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. The Company made a tender offer to shareholders with holdings of four shares or less which ended on October 15, 1997. The purchase price for the shares was $10 for each shareholder. The total shares tendered were 111 for a total purchase price of $330. (5) Federal Income Tax Expense As of December 25, 1997 and September 27, 1997, the Company has a deferred long term tax liability of $65,000 resulting primarily from the use of accelerated methods of depreciation of fixed assets and a deferred tax asset of $46,000 resulting from vacation accrual and bad debt allowance. A valuation allowance on the Company's deferred tax assets has been established to the extent the Company believes it is more likely than not that the deferred tax assets will not be realized. 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 three months of the current fiscal year, the Company's working capital has remained relatively constant, moving from approximately $1,884,700 on September 27,1997 to approximately $1,888,000 as of December 25, 1997. The Company converted a construction loan in the amount of $1,950,000 to a permanent real estate loan in December, 1996. The loan was used to pay off the former owner, construct approximately 42,000 sq. ft. of plant facility and remodel and expand the office space to approximately 6,000 sq. ft. The terms of the loan include a 20 year amortization period with a ten year balloon payment. Interest was being adjusted every six months to a rate of 2.75% over LIBOR. As of January 26, 1998, the loan rate was fixed at 8-1/2%. An additional loan fee in the amount of $4,779 was paid to exercise the conversion feature. During the current fiscal year it is likely that the Company will want to invest in crane improvements for the distribution business. The cost is expected to be approximately $20,000. A portion of the cost will likely be financed with an equipment loan. 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 April 1, 1998. 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 last year. Results of Operations Sales of approximately $3,229,000 for the three month period ended December 31, 1997 are approximately 7% higher than approximately $3,004,000 for the same period of time in 1996. Gross margins, however, declined by approximately 7% to $748,000 for the period ended December 31, 1997 from $808,000 for the same period of the prior fiscal year. The steel service center sales represent approximately 82% of the total sales for the first three months of the current fiscal year compared to 76% for the first three months of the prior fiscal year. This represents a 17% increase in the steel service center's sales volume over the first three months of the prior year. Of that 17%, approximately 1/3 is the result of the press brake work moving from the fabrication business to the steel service center business where the fit is better. The remaining 2/3, or 11% is real sales growth. The fabrication business (contributing 18% and 24% of the total sales in the first three months of fiscal 1998 and 1997 respectively) after factoring out the shift of the press brake work experienced a real sales decline of 13%. The fabrication business, with the greater value added component will generally achieve gross margins 10%-20% higher as a percentage of sales than the steel service center business. Consequently, the gross margin dollars for the current year are approximately $60,000 less than the same period of the prior fiscal year due to the different sales mix. Operating expenses, at approximately $739,000 for the three months ended December 25, 1997 were approximately 11% lower than approximately $831,000 for the same period of the prior fiscal year. The decrease was possible because the prior fiscal year's expense was impacted by severe weather conditions and a move to new facilities which was not duplicated in the current year. Interest expense at approximately $74,000 for the three month period ended December 25, 1997 is 4% lower than approximately $77,000 for the three month period ended December 25, 1996. The slight reduction is attributable to a lower over all debt level for the first three months of the current fiscal year. Increases in inventory levels going into the second quarter will have the effect of increasing debt levels again and second quarter will probably more closely resemble the second quarter of the prior fiscal year. Other income at approximately $7,500 for the first three months of the current fiscal year compares to approximately $30,000 for the same period of time in the prior year. The decrease was expected, as last year's income included the gain on the sale of surplus equipment (approximately $22,000) in conjunction with the move of the fabrication business to a new facility. The reduced operating expense for the first quarter of the current year helped to reduce the loss to approximately $31,000 compared to a loss of approximately $40,000 for the same period of time in the prior year. PART II. OTHER INFORMATION. Item 1. Legal Proceedings. None. 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 by 22%. The Company conducted a tender offer on odd lot shares from August 1997 through October 15, 1997. As a result of the offer, the Company purchased 111 shares for a total cost of $330. 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: February 9, 1998 /s/ Marilyn A. Schroeder Marilyn A. Schroeder, Treasurer and Chief Financial Officer (Authorized Officer and Principal Accounting and Financial Officer EX-27 2
5 3-MOS 12-MOS SEP-26-1998 SEP-27-1997 DEC-25-1997 SEP-27-1997 7,760 89,495 0 0 1,216,609 1,294,302 56,501 53,306 2,542,632 2,342,671 3,810,948 3,743,166 4,761,711 4,735,715 1,464,866 1,400,291 7,162,182 7,151,955 1,923,162 1,858,447 1,914,747 1,924,395 0 0 0 0 1,186,192 1,186,192 1,492,985 1,524,294 7,162,182 7,151,955 3,228,540 12,858,765 3,243,856 12,992,262 2,480,470 9,498,045 3,219,235 12,565,646 55,931 356,195 2,400 3,000 74,319 301,306 49,698 180,199 18,388 54,889 9,305 180,199 0 0 0 0 0 0 31,310 125,310 0.01 0.02 0.01 0.02
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