-----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, AUil4Zfz4jMy1aIIBQvC3ruVe/oNK5BTC4+nZFb6bydoiYPPc24KeR4ym0yGBW6u Bnfjf9Wn8sVv15DppJ1ibA== 0000861502-98-000036.txt : 19980806 0000861502-98-000036.hdr.sgml : 19980806 ACCESSION NUMBER: 0000861502-98-000036 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980610 FILED AS OF DATE: 19980805 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: 10-Q SEC ACT: SEC FILE NUMBER: 001-10676 FILM NUMBER: 98677521 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 10-Q 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, 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 Identification No.) 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. 5,352,553 shares of common stock, no par value, were outstanding as of June 30, 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 June 25, 1998 and June 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 - June 25, 1998 and September 27, 1997 3 Unaudited Consolidated Income Statements - Six Months Ended June 25, 1998 and June 25, 1997 4 Unaudited Consolidated Income Statements - Three Months Ended June 25, 1998 and June 25, 1997 5 Unaudited Consolidated Statement of Cash Flows - Six Months Ended June 25, 1998 and June 25, 1997 6 Condensed Notes to Unaudited Consolidated Financial Statement 7 THE COEUR D'ALENES COMPANY CONSOLIDATED BALANCE SHEET June 25, 1998 and September 27, 1997 June 25, September 27 1998 1997 (Unaudited) (Audited) ASSETS Current Assets: Cash $ 32,657 $ 89,495 Accounts receivable 1,478,666 1,240,996 Inventory 3,125,215 2,342,671 Other current assets 65,511 70,004 Total current assets 4,702,049 3,743,166 Plant, Property and Equipment 4,822,634 4,735,715 Less accumulated depreciation 1,540,632 1,400,291 Net plant property and equipment 3,282,002 3,335,424 Other assets 54,389 73,365 Total assets $8,038,440 $7,151,955 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Short term bank borrowings $ 947,972 $ 833,656 Accounts payable 1,269,822 613,608 Accrued expenses 336,493 307,520 Debentures payable to related parties 128,000 Current amount on long-term debt 103,663 103,663 Total current liabilities 2,785,950 1,858,447 Long-term debt: Deferred tax liability 65,000 65,000 Long term debt less current maturities 2,390,409 2,393,822 Long term debt to related parties 0 128,000 Total long term liabilities 2,455,409 2,586,822 Total liabilities 5,241,359 4,445,269 Stockholders' Equity: Capital Stock 1,186,192 1,186,192 Retained earnings 1,615,829 1,524,294 2,802,021 2,710,486 Less Treasury Stock at cost 4,940 3,800 Total stockholders' equity 2,797,081 2,706,686 Total liabilities and stockholders' equity $8,038,440 $7,151,955 THE COEUR DALENES COMPANY UNAUDITED CONSOLIDATED INCOME STATEMENT Nine Months Ended June 25, 1998 and June 25, 1997 1998 1997 Net sales $10,488,212 $9,293,019 Cost of sales 7,927,801 6,904,820 Gross profit on sales 2,560,411 2,388,199 Selling, general and administrative expenses 2,246,617 2,287,321 Operating income 313,794 100,878 Other income (expense) Interest income 25,091 20,433 Interest expense ( 230,404) (237,846) Other income 36,810 85,487 Total other expense ( 168,503) (131,926) Income (loss) before income tax expense 145,291 ( 31,048) Income tax expense (benefit) 53,757 ( 11,488) Net income (loss) $ 91,534 $ ( 19,560) Earnings (loss) per share $ 0.02 $ ( 0.00 ) Shares outstanding 5,352,553 5,353,561 THE COEUR D'ALENES COMPANY UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS Three Months Ended June 25, 1998 and June 25, 1997 1998 1997 Net sales $3,918,292 $3,239,065 Cost of sales 2,945,030 2,431,820 Gross profit on sales 973,262 807,245 Selling, general and administrative expenses 774,278 698,687 Operating income 198,984 108,558 Other income (expense) Interest income 8,772 7,625 Interest expense (80,522) ( 79,278) Other income 26,789 37,611 Total other expense (44,961) ( 34,042) Income (loss) before income tax expense 154,023 74,516 Income tax expense 56,988 27,571 Net income $ 97,034 $ 46,945 Earnings per share $ 0.02 $ 0.01 Shares outstanding 5,352,553 5,353,561 THE COEUR D'ALENES COMPANY UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS Nine Months Ended June 25, 1998 and June 25, 1997 1998 1997 Cash flows from operating activities: Net income (loss) 91,534 (19,560) Adjustments to reconcile net income to cash provided (used) by operating activities: Depreciation 194,909 164,884 Gain on disposal of assets ( 1,000) ( 35,723) Changes in assets and liabilities Accounts and notes receivable ( 237,670) 56,196 Inventories ( 782,544) 218,060 Prepaid expense and other current assets 4,493 ( 30,141) Other assets 18,976 ( 8,761) Accounts payable 656,214 (214,787) Accrued expenses 28,973 (217,912) Cash used by operating activities ( 26,115) ( 87,744) Cash flows from investing activities: Proceeds from sale of assets 1,000 98,860 Additions to property and equipment ( 141,487) (292,624) Cash used by investing activities ( 140,487) (193,764) Cash flows from financing activities: Purchase of Treasury shares ( 1,140) (0) Net borrowing (repayment) under line of credit 114,316 5,248 Principal repayment of long-term debt ( 70,412) ( 42,404) New long term note 67,000 262,000 Cash provided by financing activities 109,764 224,844 Net increase (decrease) in cash ( 56,838) ( 56,664) Cash, beginning of period 89,495 68,645 Cash, end of period $ 32,657 $ 11,981 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 June 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 27, 1997 and September 28, 1996. (2) Inventories. Inventories are summarized as follows: June 25, September 27, 1998 1997 Fabrication inventories: Raw materials $ 44,515 $ 74,501 Work-in-progress 217,759 293,181 Inventories, at FIFO cost 262,274 367,682 LIFO reserve ( 50,538) ( 50,538) Inventories, at LIFO cost 211,736 317,144 Distribution inventories, at FIFO 2,913,479 2,025,527 Total inventories 3,125,215 2,342,671 (3) Short-term bank borrowings. The Company has $1,850,000 in bank credit lines which mature on May 1, 1999. Interest is charged at the lenders prime rate plus .25%, 8.75% at June 25, 1998. 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 $2,200,000. (4) Capital Stock. The Company conducted two tender offers which expired during the current fiscal year. The offers resulted in 1,008 shares being repurchased as treasury stock with a total cost to the Company of $1,140. The purpose of the tender offers was to buy out odd lot holders of stock with diminimus value which cost the Company more to service than the value of the stock held. A third tender offer is currently open for holders of 49 or fewer shares. The offer will expire on August 31, 1998 unless extended by the Company. The total cost to repurchase the stock is expected to be less than $4,000. (5) Federal Income Tax Expense As of June 25, 1998 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 nine months of the current fiscal year, the Company's working capital has increased slightly from approximately $1,885,000 at the end of the prior fiscal year to approximately $1,916,000 as of June 25, 1998. The 2% improvement is the result of operating profits retained in the Company to help finance accounts receivable and inventory growth. The Company has debentures in the amount of $128,000 that will mature on October 31, 1998. These debentures are convertible to common stock at the rate of $0.20 per share, however, any that have not converted by October 31 will be repaid. The operating line is adequate to retire this debt and currently has an interest rate _% lower than the rate carried by the debentures. On January 26, 1998 the Company converted the real estate loan from a variable rate loan to an 8-1/2% fixed rate loan for the 228 months that remained on the term of the loan. The Company is dependent on an operating line of credit, secured by accounts receivable and inventories, to meet its daily financial obligations. A $1.85 million operating line is currently in place through May 1, 1999. Results of Operations: Nine Months Ended June 25, 1998 Sales of approximately $10,488,000 for the nine-month period ended June 25, 1998 are 13% higher than approximately $9,293,000 for the same nine-month period of the prior fiscal year. The steel service center sales represent approximately 85% of the total sales for the first nine months of the current year compared to 82% for the first nine months of the prior fiscal year. This represents a 17% increase in the steel service center's sales volume over the first nine months of last year. Of the 17%, approximately one-third is the result of the press brake work being performed by the steel service business during the current year whereas historically it has been done by the fabrication business. The change was made because the customer base and the type of required processing more closely fit with the distribution business than the fabrication business. The remaining two thirds, or 12%, is real sales growth. After factoring out the shift of the press brake business, the fabrication business (contributing 15% and 18% of the total sales in the first nine months of 1998 and 1997 respectively) experienced a sales increase of 10%. The increase in fabrication sales volume was achieved despite a sales decline during the first two quarters of the current fiscal year. Gross margins for the first nine months of the current year exceed the gross margins for the same period of time during the prior year by approximately $172,000, but as a percentage of net sales the current year's results were 1.3 percentage points lower. The percentage point decline is primarily the result of the fabrication business that was unable to attract the higher margin work that was available during the prior fiscal year. As a result, the fabrication gross margins declined by 8 percentage points. The increased sales volume, however, helped to make up some of the shortfall. Operating expenses at approximately $2,247,000 for the nine month period ended June 25, 2998 were 2% lower than approximately $2,287,000 for the nine-month period ended June 25, 1997. The decline was possible, as the current year was not plagued by the severe weather conditions and equipment repairs that were reflected in the results of operation during the 1996/97 fiscal year. The expense load for the current year does include the cost of moving the distribution business' plate inventory to be closer to the processing equipment through which much of it passes. The move eliminated a costly transfer problem to get the material from one building to the equipment location in another building. The change will make the operation more efficient going forward. Interest expense at approximately $230,000 for the nine-month period ended June 25, 1998 is 3% lower than approximately $238,000 for the same nine-month period of the prior fiscal year. Slightly lower interest rates in the current fiscal year resulted in lower interest expense despite a higher level of borrowing. Other income at approximately $37,000 is 58% lower than approximately $85,000 for the same period of the prior fiscal year. The decline is primarily the result of the prior year figures being reflective of gain on the sale of a lot of surplus equipment which was disposed of at an auction just after the fabrication business moved out of the Spokane Industrial Park during the summer and fall of 1996. Higher sales and gross margins for the first nine months of the current fiscal year compared to the first nine months of the prior fiscal year along with a reduced expense load resulted in an after tax net income of $91,534 compared to a net loss of $19,560. Three months ended June 25, 1998 Sales of approximately $3,918,000 for the three-month period ended June 25, 1998 were approximately 21% higher than the same three-month period of the prior fiscal year. The increase was primarily the result of some large fabrication work during the current third quarter, which was not available the prior year. The sales volume for the fabrication business during its current year third quarter was 117% higher than the third quarter of the prior fiscal year. During the three months of the current year's third quarter the steel service center business represented 81% of the total sales and the fabrication business accounted for the remaining 19%. This compares to 87% and 13% respectively for the same period of the prior fiscal year. The steel service center business also posted a sales volume increase for the three months ended June 25, 1998 over the three-month period ended June 25, 1997. Gross margins for the three-month period ended June 25, 1997, at 24.8% of sales were 21% higher than the gross margins for the third quarter of the prior fiscal year which were also at 24.8% of sales. The increase is the direct result of the sales volume increase. Operating expenses, at approximately $774,000 for the three-month period ended June 25, 1998 are 11% higher than approximately $699,000 for the same period of the prior fiscal year. The increase was related to the sales volume increase and is reflected in labor costs, supplies, repairs and delivery as well as other volume sensitive variable expenses. As a percent of sales, the operating expense for third quarter of the current year is 19.8% compared to 21.6% for the period ended June 25, 1997. Interest expense for the third quarter of the current year exceeds that of the third quarter of the prior year by only 2%. The slight increase is the result of a combination of higher debt levels and lower interest rates. New long-term debt was incurred during the fourth quarter of the fiscal year ended in September 1997 in the amount of $195,000 and during the third quarter of the current fiscal year in the amount of $67,000. The proceeds from these two loans were used to purchase new equipment. Higher sales volume and gross margins for the third quarter of the current fiscal year resulted in an increase in net income of approximately 107% over the third quarter of the prior fiscal year. The earnings per share were $0.02 compared to $0.01 for 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 two tender offers, one from August 1997 through October 15, 1997 and another from January 15, 1998 through June 15, 1998. These tender offers were made to holders of odd lot shares of 24 or fewer shares. As a result of the offers the Company purchased 1008 shares at a total cost of $1,140. Another tender offer is currently open for all holders of 49 or fewer shares. The offer will expire on August 31, 1998 unless extended by the Company. At this time it is the Company's intention to extend the offer. The total cost to repurchase the stock is expected to be less than $4,000. 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, 1998 /s/ Marilyn A. Schroeder Marilyn A. Schroeder, Vice-President Treasurer and Chief Financial Officer (Authorized Officer and Principal Accounting and Financial Officer) EX-5 2 [ARTICLE] 5 [PERIOD-TYPE] 9-MOS 12-MOS [FISCAL-YEAR-END] SEP-26-1998 SEP-27-1997 [PERIOD-END] JUN-25-1998 SEP-27-1998 [CASH] 32,657 89,495 [SECURITIES] 0 0 [RECEIVABLES] 1,545,721 1,294,302 [ALLOWANCES] 67,055 53,306 [INVENTORY] 3,125,215 2,342,671 [CURRENT-ASSETS] 4,702,049 3,743,166 [PP&E] 4,822,634 4,735,715 [DEPRECIATION] 1,540,632 1,400,291 [TOTAL-ASSETS] 8,038,440 7,151,955 [CURRENT-LIABILITIES] 2,785,950 1,858,447 [BONDS] 1,894,657 1,924,395 [PREFERRED-MANDATORY] 0 0 [PREFERRED] 0 0 [COMMON] 1,186,192 1,186,192 [OTHER-SE] 1,615,829 1,524,294 [TOTAL-LIABILITY-AND-EQUITY] 8,038,440 7,151,955 [SALES] 10,488,212 12,858,765 [TOTAL-REVENUES] 10,550,113 12,992,262 [CGS] 7,927,801 9,498,045 [TOTAL-COSTS] 10,228,175 12,565,646 [OTHER-EXPENSES] 284,161 356,195 [LOSS-PROVISION] 12,400 3,000 [INTEREST-EXPENSE] 230,404 301,306 [INCOME-PRETAX] 145,291 180,199 [INCOME-TAX] 53,757 54,889 [INCOME-CONTINUING] 145,291 180,199 [DISCONTINUED] 0 0 [EXTRAORDINARY] 0 0 [CHANGES] 0 0 [NET-INCOME] 91,534 125,310 [EPS-PRIMARY] 0.00 0.02 [EPS-DILUTED] 0.00 0.02
-----END PRIVACY-ENHANCED MESSAGE-----