-----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, T0koiRtpMzp13uXGXmdziS6BVg/jFCmtFTYWI1vHBCchxu0/m2q6M0pvhJRD3quT 2uM97emZnbNKtqIT+pjmtQ== 0000861502-98-000029.txt : 19980430 0000861502-98-000029.hdr.sgml : 19980430 ACCESSION NUMBER: 0000861502-98-000029 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980325 FILED AS OF DATE: 19980429 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: 98603827 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 MARCH 25, 1998. 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 incorporation or organization) Identification No.) 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. 5,352,553 shares of common stock, no par value, were outstanding as of April 25, 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 March 25, 1998 and March 25, 1997 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 - March 25, 1998 and September 27, 1997 3 Unaudited Consolidated Income Statements - Six Months Ended March 25, 1998 and March 25, 1997 4 Unaudited Consolidated Income Statements - Three Months Ended March 25, 1998 and March 25, 1997 5 Unaudited Consolidated Statement of Cash Flows - Six Months Ended March 25, 1998 and March 25, 1997 6 Condensed Notes to Unaudited Consolidated Financial Statement 7 THE COEUR D ALENES COMPANY CONSOLIDATED BALANCE SHEET March 25, 1998 and September 27, 1997 March 25, September 27 1998 1997 (Unaudited) (Audited) ASSETS Current Assets: Cash $ 60,070 $ 89,495 Accounts receivable 1,263,056 1,240,996 Inventory 2,762,192 2,342,671 Other current assets 93,874 70,004 Total current assets 4,179,192 3,743,166 Plant, Property and Equipment 4,788,407 4,735,715 Less accumulated depreciation 1,529,441 1,400,291 Net plant property and equipment 3,258,966 3,335,424 Other assets 54,389 73,365 Total assets $7,492,547 $7,151,955 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Short term bank borrowings $ 771,649 $ 833,656 Accounts payable 1,011,901 613,608 Accrued expenses 331,730 307,520 Debentures payable to related parties 128,00 Current amount on long-term debt 103,663 103,663 Total current liabilities 2,346,943 1,858,447 Long-term debt: Deferred tax liability 97,953 65,000 Long term debt less current maturities 2,347,607 2,393,822 Long term debt to related parties 0 128,000 Total long term liabilities 2,445,560 2,586,822 Total liabilities 4,792,503 4,445,269 Stockholders' Equity: Capital Stock 1,186,192 1,186,192 Retained earnings 1,518,792 1,524,294 2,704,984 2,710,486 Less Treasury Stock at cost 4,940 3,800 Total stockholders' equity 2,700,044 2,706,686 Total liabilities and stockholders equity $7,492,547 $7,151,955 THE COEUR DALENES COMPANY UNAUDITED CONSOLIDATED INCOME STATEMENT Six Months Ended March 25, 1998 and March 25, 1997 1998 1997 Net sales $6,569,918 $6,053,954 Cost of sales 4,982,770 4,473,000 Gross profit on sales 1,587,148 1,580,954 Selling, general and administrative expenses 1,472,339 1,590,634 Operating income (loss) 114,809 ( 9,680) Other income (expense) Interest income 16,319 12,788 Interest expense ( 149,882) (156,568) Other income 10,020 47,896 Total other expense ( 123,543) (95,884) Income (loss) before income tax expense ( 8,734) (105,564) Income tax (benefit) ( 3,232) (39,059) Net income (loss) $( 5,502) $( 66.505) Earnings (loss) per share $( 0.00 ) $( 0.01 ) Shares outstanding 5,352,553 5,353,561 THE COEUR D'ALENES COMPANY UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS Three Months Ended March 25, 1998 and March 25, 1997 1998 1997 Net sales $3,341,378 $3,049,824 Cost of sales 2,502,300 2,276,804 Gross profit on sales 839,078 773,020 Selling, general and administrative expenses 733,575 760,052 Operating income 105,503 12,968 Other income (expense) Interest income 8,530 6,133 Interest expense (75,562) ( 79,176) Other income 2,493 18,329 Total other expense (64,539) ( 54,714) Income (loss) before income tax expense 40,964 ( 41,746) Income tax expense 15,157 ( 15,446) Net income (loss) $ 25,807 $ ( 26,300) Earnings (loss) per share $ 0.00 $ (0.00) Shares outstanding 5,352,553 5,353,561 THE COEUR D'ALENES COMPANY UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS Six Months Ended March 25, 1998 and March 25, 1997 1998 1997 Cash flows from operating activities: Net loss $( 5,502) $ (66,505) Adjustments to reconcile net income to cash provided (used) by operating activities: Depreciation 129,150 110,134 Gain on disposal of assets ( 1,000) ( 35,723) Changes in assets and liabilities Accounts and notes receivable ( 22,060) 27,168 Inventories (419,521) 216,512 Prepaid expense and other current assets ( 23,870) ( 34,043) Other assets 18,976 ( 12,761) Accounts payable 398,293 (269,697) Accrued expenses 24,210 (197,317) Other liabilities 32,953 _____ Cash provided (used) by operating activities 131,629 (262,232) Cash flows from investing activities: Proceeds from sale of assets 1,000 98,860 Additions to property and equipment ( 52,692) (267,580) Cash used by investing activities ( 51,692) (168,720) Cash flows from financing activities: Net borrowing (repayment) under line of credit ( 62,007) 181,841 Principal repayment of long-term debt ( 46,215) ( 19,993) New long term note 0 262,000 Treasury shares repurchased ( 1,140) 0 Cash provided (used) by financing activities ( 109,362) 423,848 Net decrease in cash ( 29,425) ( 7,104) Cash, beginning of period 89,495 68,645 Cash, end of period $ 60,070 $ 61,541 THE COEUR D ALENES COMPANY CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (1) Summary of Significant Accounting Policies. Significant accounting policies followed for the six months ended March 25, 1998 are the same as those contained in the Summary of Significant Accounting Policies from the Company's audited financial statements as of September 28, 1996 and September 30, 1995. (2) Inventories. Inventories are summarized as follows: March 25, September 28, 1997 1996 Raw materials on LIFO $ 194,912 $ 147,528 Work-in-process 282,580 550,462 Inventories at FIFO cost 477,492 697,990 LIFO reserve (56,711) (56,711) Inventories at LIFO cost 420,781 641,279 Other FIFO inventories 2,151,361 2,147,375 Total inventories 2,572,142 2,788,654 (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 lenders prime rate plus .325%, 8.57% at March 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. 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 As of March 25, 1997 and September 28, 1996, the Company has a deferred long term tax liability of $63,007 and $44,403 resulting primarily from the use of accelerated methods of depreciation of fixed assets and a deferred tax asset of $70,450 and $70,450 resulting from vacation accrual and bad debt allowance. No valuation allowance is recorded since the Company believes it is more likely than not that it will realize the deferred tax asset. 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 six months of the current fiscal year, the Companys working capital increased from approximately $1,637,000 at the end of the prior fiscal year to approximately $1,716,000 as of March 25, 1997. The 5% improvement is due primarily to the proceeds from the sale of surplus equipment being applied to current liabilities. During the month of November 1996, the Company converted a construction loan to a permanent loan with a 20 year amortization and a ten year balloon payment. The interest rate is adjustable semi-annually at LIBOR Index plus 2.75%. At March 25, 1997 the rate was 8.375%. The first adjustment will be May 11, 1997. The Company has placed an order for a new 1/2x12 Cincinnati Shear which should arrive before the end of the fiscal year. The cost will be approximately $185,000. It is also likely that the Company will purchase a document imaging system to replace the current manual filing system. The cost is estimated to be approximately $30,000. A bank has committed funds up to $250,000 to help finance these acquisitions with the interest rate at 1/2% over prime. 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 following year on substantially the same terms and conditions as this year. Results of Operations. Six Months Ended March 25, 1997 Sales of approximately $6,054,000 for the six month period ended March 25, 1997 are 3% higher than approximately $5,895,000 for the same six month period of the prior fiscal year. Gross margins, however, declined by 1% from approximately $1,594,000 for the first half of last year to approximately $1,581,000 during the same six month period of the current fiscal year. The steel service center business accounts for approximately 80% of the total Company sales and for the six month period ended March 25, 1997, posted a 13% sales growth over the six month period ended March 25, 1996. Gross margins for the steel service center at 22.4% for the first half of the current fiscal year compare to 22.9% for the same period of time in the prior fiscal year. The fabrication and processing business accounts for the remaining 20% of the total net sales and experienced a 20% decline in sales volume for the six month period ended March 25, 1997 over the same six month period of the prior fiscal year. The gross margins at 36% of sales improved by a full percentage point over the 35% representative of the same period of the prior year. The sales volume decrease attributable to a major budget reduction in the operations of a major customer was too great to be offset by an improvement in the gross margin percent. A comparison of net sales for the first six months of the prior fiscal year shows the steel service center business contributing 74% of total sales and the fabrication and processing business accounting for the remaining 26%. Operating expenses at approximately $1,591,000 for the six month period ended March 25, 1997 were 7% higher than approximately $1,492,000 for the six month period ended March 25, 1996. Severe weather conditions, equipment repairs necessary as a result of moving seasoned equipment, higher wage rates and a settlement bonus paid to shop employees all contributed to the increased expense load. Interest expense, at approximately $157,000 for the six month period ended March 25, 1997 is 71% higher than approximately $65,000 for the six month period ended March 25, 1996. The increase is the result of replacing a leased facility formerly occupied by the fabrication and processing business with a newly constructed facility paid for with a 25% down payment by the Company and 75% borrowed funds. Long term debt increased from approximately $1,362,000 as of March 1996 to approximately $2,457,000 as of March 1997. With the burden of the increased expense load, the first six months of the current fiscal year resulted in an after tax net loss of $66,505, compared to a net profit of $32,683 for the first six months of the prior fiscal year. Three Months Ended March 25, 1996 Sales of approximately $3,050,000 for the three month period ended March 25, 1996 were approximately 5% below the $3,201,000 for the same period of the prior fiscal year. The steel service center business, which contributed 84% of the total sales for the three month period ended March 25, 1997, increased revenues by 9% over the three month period ended March 25, 1996. The fabrication and processing business, accounting for only 16% of second quarter sales in the current fiscal year, experienced a sales decline of 42% during the second quarter of the current year compared to the second quarter of the prior fiscal year. The decline is the result of capital budget cuts by a major customer. Gross margins for the three month period ended March 25, 1997, at 25.3% of sales dropped by over two percentage points from 27.6% for the same period of the prior fiscal year. The decrease is due to the sales blend between service center and fabrication being more heavily weighted towards service center sales which command a lower gross margin than fabrication sales. The combination of lower sales volume and lower gross margin percent resulted in gross margin dollars for the second quarter of the current fiscal year approximately $109,000 lower than the same period of the prior fiscal year. Operating expenses at approximately $760,000 for the three month period ended March 25, 1997 are 5% higher than the same three month period of the prior fiscal year. The increase is due primarily to increased occupancy costs, more repairs to equipment and higher labor costs. Interest expense for the second quarter roughly doubled over the same time period for the prior year. The increase is the result of the debt incurred to construct a new facility for the fabrication and processing business. Lower sales volume, lower gross margins as a percent of sales and higher expense resulted in a net loss for the three months ended March 25, 1997 in the amount of $26,300. The comparative net income for the same three month period of the prior year was $76,328. 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 1996, $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 29, 1997 /s/ Marilyn A. Schroeder Marilyn A. Schroeder, Treasurer and Chief Financial Officer (Authorized Officer and Principal Accounting and Financial Officer) EX-27 2
5 6-MOS 12-MOS SEP-26-1998 SEP-27-1997 MAR-25-1998 SEP-27-1997 60,070 89,495 0 0 1,313,594 1,294,302 50,538 53,306 2,762,192 2,342,671 4,179,192 3,743,166 4,788,407 4,735,715 1,529,441 1,400,291 7,492,547 7,151,955 2,346,943 1,858,447 1,905,024 1,924,395 0 0 0 0 1,186,192 1,186,192 1,518,792 1,524,294 7,492,547 7,151,955 6,569,918 12,858,765 6,596,257 12,992,262 4,982,770 9,498,045 645,509 12,565,646 146,650 356,195 7,400 3,000 149,882 301,306 ( 8,734) 180,199 ( 3,232) 54,889 114,809 180,199 0 0 0 0 0 0 ( 5,502) 125,310 0.00 0.02 0.00 0.02
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