-----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, QpCgQALmi18fGP6JR21M0UZmiwAB/oWTWUvymTa2gDXQG40j3Y3auA6GfiJDqZlb wJCLIdoZr6qiCpQjz7pXcg== 0000861502-00-000005.txt : 20000508 0000861502-00-000005.hdr.sgml : 20000508 ACCESSION NUMBER: 0000861502-00-000005 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000325 FILED AS OF DATE: 20000505 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: 620267 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, 2000. [ ] 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) 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. 5,344,233 shares of common stock, no par value, were outstanding as of April 25, 2000. PART I. FINANCIAL INFORMATION. Item 1. Financial Statements. The accompanying condensed consolidated financial statements of The Coeur d Alenes Company (sometimes referred to herein as the Company) should be read in conjunction with the audited consolidated financial statements and related notes included in the Corporations Annual Report on Form 10-KSB for the year ended September 25, 1999. The comparative consolidated balance sheet and related disclosures at September 25, 1999 have been derived from the audited balance sheet and financial statement footnotes. The accompanying condensed consolidated financial statements reflect all adjustments that in the opinion of management are necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. The results of operations for the six month period ended March 25, 2000 are not necessarily indicative of the operating results to be expected for the full year. The preparation of the Companys consolidated financial statements in conformity with generally accepted accounting principles necessarily requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the balance sheet dates and reported amounts of revenue and cost during the reporting periods. Actual results could differ from those estimates. On an ongoing basis, management reviews its estimates based on information that is currently available. Changes in facts and circumstances may result in revised estimates. Condensed Consolidated Financial Statements Consolidated Balance sheets at March 25, 2000 (unaudited) and September 25, 1999 Unaudited consolidated Income Statements Six Months Ended March 25, 2000 and March 25, 1999 Unaudited Consolidated Income Statements Three Months Ended March 25, 2000 and March 25, 1999 Unaudited Consolidated Statement of Cash Flows Six Months Ended March 25, 2000 and March 25, 1999 Condensed Notes to Unaudited Consolidated Financial Statements THE COEUR D ALENES COMPANY CONSOLIDATED BALANCE SHEETS March 25, 2000 and September 25, 1999 March 25, September 25 2000 1999 (Unaudited) (Audited) ASSETS Current Assets: Cash $ 7,428 $ 32,422 Accounts receivable 894,883 1,019,063 Inventory 2,309,825 2,464,247 Other current assets 126,986 86,305 Total current assets 3,339,122 3,602,037 Plant, Property and Equipment 5,174,627 5,059,408 Less accumulated depreciation 1,792,425 1,715,242 Net plant property and equipment 3,382,202 3,344,166 Other assets 44,970 67,777 Total assets $6,766,294 $7,013,980 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Short term bank borrowings $ 91,642 $ 367,553 Accounts payable 799,530 540,154 Accrued expenses 298,009 297,271 Debentures payable to related parties 0 128,000 Current amount on long-term debt 168,810 164,241 Total current liabilities 1,357,991 1,497,219 Long-term debt: Deferred tax liability 162,000 156,000 Long term debt less current maturities 2,180,104 2,266,399 Total long term liabilities 2,342,104 2,422,399 Total liabilities 3,700,095 3,919,618 Stockholders' Equity: Capital Stock 1,186,192 1,186,192 Retained earnings 1,889,687 1,917,230 3,075,879 3,103,422 Less treasury stock at cost 9,680 9,060 Total stockholders' equity 3,066,199 3,094,362 Total liabilities and stockholders equity $6,766,294 $7,013,980 THE COEUR DALENES COMPANY UNAUDITED CONSOLIDATED INCOME STATEMENTS Six months Ended March 25, 2000 and March 25, 1999 2000 1999 Net sales $5,891,024 $6,348,465 Cost of sales 4,330,908 4,820,655 Gross profit on sales 1,560,116 1,527,810 Selling, general and administrative expenses 1,503,967 1,492,247 Operating income 56,149 35,563 Other income (expense) Interest income 15,873 21,864 Interest expense ( 117,128) ( 142,880) Other income 1,387 21,112 Total other expense, net ( 99,868) ( 99,904) Loss before income tax benefit ( 43,719) ( 64,341) Income tax benefit ( 16,176) ( 23,806) Net loss ( 27,543 $( 40,535) Earnings (loss) per share (basic and diluted) $( 0.01) $( 0.01 ) Shares outstanding 5,344,628 5,349,250 THE COEUR D'ALENES COMPANY UNAUDITED CONSOLIDATED INCOME STATEMENTS Three Months Ended March 25, 2000 and March 25, 1999 2000 1999 Net sales $2,991,911 $2,840,819 Cost of sales 2,185,788 2,133,961 Gross profit on sales 806,123 706,858 Selling, general and administrative expenses 728,176 701,644 Operating income (loss) 77,947 5,214 Other income (expense) Interest income 7,513 9,332 Interest expense ( 52,078) ( 66,229) Other income 763 16,202 Total other expense, net ( 43,802) ( 40,695) Income (loss) before income tax expense 34,145 ( 35,481) Income tax expense (benefit) 12,634 ( 13,128) Net income (loss) $ 21,511 $ ( 22,353) Earnings (loss) per share basic and diluted) $ 0.00 $ ( 0.00 ) Shares outstanding 5,344,628 5,349,250 THE COEUR D'ALENES COMPANY UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS Six Months Ended March 25, 2000 and March 25, 1999 2000 1999 Cash flows from operating activities: Net loss $( 27,543) $( 40,535) Adjustments to reconcile net loss to cash provided by operating activities: Depreciation 116,370 128,451 Gain on disposal of assets 0 ( 250) Provision for doubtful accounts 3,000 9,500 Changes in assets and liabilities: Accounts and notes receivable 129,266 405,581 Inventories 154,422 294,605 Prepaid expense and other current assets ( 40,681) ( 18,582) Other assets 20,721 20,742 Accounts payable 259,376 389,387 Accrued expenses 738 ( 184,805) Cash provided by operating activities 615,669 1,004,094 Cash flows from investing activities: Proceeds from sale of assets 0 250 Additions to property and equipment ( 154,406) ( 151,642) Cash used in investing Activities ( 154,406) ( 151,392) Cash flows from financing activities: Net repayment under line of credit ( 275,911) ( 831,457) Principal repayment of long-term debt ( 81,726) ( 42,188) Principal repayment of debentures ( 128,000) 0 Treasury shares repurchased ( 620) ( 1,000) Cash used by financing activities ( 486,257) ( 874,645) Net decrease in cash ( 24,994) ( 21,943) Cash, beginning of period 32,422 39,486 Cash, end of period $ 7,428 $ 17,543 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, 2000 are the same as those contained in the Summary of Significant Accounting Policies from the Company's audited financial statements as of September 25, 1999 and September 26, 1998. (2) Inventories. Inventories are summarized as follows: March 25, September 25, 2000 1999 (Unaudited) Fabrication inventories: Raw materials $ 29,231 $ 27,372 Work-in-progress 429,187 401,899 Inventories, at FIFO cost 458,418 429,271 LIFO reserve ( 15,018) ( 15,018) Inventories, at LIFO cost 443,400 414,253 Distribution inventories, at FIFO 1,866,425 2,049,994 Total inventories 2,309,825 2,464,247 (3) Short-term bank borrowings. The Company has $1,850,000 in bank credit lines which matured on May 1, 2000. Interest is charged at the lenders prime rate plus .25% ( 9-1/4% as of March 25, 2000). 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 $2,400,000. As of April 26, 2000 the Company has a $1,900,000 credit line with a different bank which will mature on February 16, 2001. The old operating line will be paid off with funds advanced from the new line of credit. Outstanding borrowings will be collateralized by accounts receivable and inventories. Interest will be charged at the lenders prime rate (9% as of March 25, 2000). Covenants include a minimum net worth of $2,200,000, a minimum of $1,500,000 in working capital, a current ratio of at least 1.5 to 1 and a debt to equity ratio below 2.3 to 1. 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 reorganization without prior consent of bank. (4) Capital Stock. The Company conducted a tender offer that expired during the current fiscal year. The offers resulted in 1,186 shares being repurchased as treasury stock with a total cost to the Company of $620. 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 by the shareholder. (5) Federal Income Tax Expense As of March 25, 2000 and September 25, 1999, the Company has a deferred long term tax liability of $162,000 (unaudited) and $156,000 respectively resulting primarily from the use of accelerated methods of depreciation of fixed assets and a deferred tax asset of $71,000 (unaudited) and $65,000 respectively resulting from vacation accrual and bad debt allowance. A valuation allowance on the Companys 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. Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations THE FOLLOWING DISCUSSION OF THE FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS OF THE COMPANY SHOULD BE READ IN CONJUNCTION WITH THE COMPANYS FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED ELSEWHERE IN THIS REPORT. This report contains forward-looking statements regarding, among other items, anticipated trends in the Companys business. These forward-looking statements are based largely on the Companys expectations and are subject to a number of risks, uncertainties, certain of which are beyond the Companys control. Actual results could differ materially from these forward-looking statements as a result of the factors described elsewhere herein. In light of these risks and uncertainties, there can be no assurance that the forward-looking information contained in this report will in fact transpire or prove to be accurate. LIQUIDITY AND CAPITAL RESOURCES The Company anticipates that it will continue operating the steel distribution business much as it has for the past year during the twelve month period beginning March 26, 2000. In October 1999, the Company signed a two year lease on a small warehouse facility in Wenatchee, WA. The Company conducts a business similar to the retail steel business in Spokane on a much smaller scale. The operation has been open since November 1999. Required inventories are expected to continue to be less than $50,000 as sales are supported out of the Spokane location. The Company has the option to cancel the lease after the first year with a $2,000 penalty. The replacement cost of inventories has been slowing increasing following approximately eighteen months of declining steel prices. More capital will be required to finance the larger dollar volumes of inventory. The economic climate will likely prevent sales growth in the distribution business. The demand for fabricated metal products in our particular niche of the market appears to remain fairly strong and should allow for continued sales growth in the fabrication business. During the next twelve months the Company plans to continue to replace outdated equipment and add capacity. In order to facilitate this plan, a bank loan has been approved in the amount of $300,000. These funds can be used to finance up to 75% of the purchase price and should be adequate to cover the immediate needs. During the first six months of the current fiscal year cash flows from operating activities were used to finance the business. Cash decreased by approximately $25,000. The Companys cash flows provided by operating activities were approximately $616,000 compared to approximately $1,004,000 for the first six months of the prior year. Cash flows from operations for the six months ended March 25, 2000 were primarily impacted by a net loss of $28,000, adjusted by depreciation of $116,000, a decrease in accounts receivable and inventories of $129,000 and $154,000 respectively and an increase in accounts payable of $259,000. Cash flows provided by operations for the first six months of the prior fiscal year primarily consisted of a net loss of $41,000 adjusted by depreciation of $128,000, a decrease in accounts receivable and inventories of $406,000 and $295,000 respectively, an increase in accounts payable of $389,000 and a decrease in accrued expenses of $185,000. Cash flows used by investing activities of $154,000 during the current fiscal year and $152,000 during the first six months of the prior fiscal year were attributable to the purchase of new equipment. Cash flows used by financing activities during the current year of $486,000 were primarily used to pay down the operating line of credit in the amount of $276,000, pay off the holder of $128,000 of debentures and make the required current payments of $82,000 on installment debt. During the first six months of the prior fiscal year the cash flows used by financing activities were primarily to pay down the operating line of credit in the amount of $831,000. During the first six months of the current fiscal year, the Companys working capital decreased by 6% from approximately $2,105,000 at the end of the prior fiscal year to approximately $1,981,000 as of March 25, 2000. The Company is dependent on an operating line of credit to meet its daily financial obligations. The operating line of $1,900,000 which is currently in place through February 16, 2001 is considered by management to be adequate. Results of Operations Six Months Ended March 25, 2000 Compared to Six Months Ended March 25, 1999 Sales of approximately $5,891,000 for the six-month period ended March 25, 2000 are 7% lower than approximately $6,348,000 for the same period of the prior fiscal year. Gross profits, however, increased 2% from approximately $1,528,000 during the first six months of the prior fiscal year to approximately $1,560,000 for the first six months of the current fiscal year. The increase in gross margins was principally due to a 14% increase in the fabrication business gross profits. The steel service center sales of approximately $5,000,000 represent 85% of the total Companys sales for the first six months of the current fiscal year. Likewise, steel service center sales of approximately $5,522,000 for the same period of time during the prior fiscal year represent 87% of the total Companys sales. This is a decline of 10% in steel service center sales for the first six months of the current fiscal year compared to the same period of the prior fiscal year. The decline is primarily the result of lower than expected demand. The fabrication business, contributing 15% and 13% of the total sales for the first six months of fiscal 2000 and fiscal 1999 respectively experienced an 8% increase in sales volume from approximately $821,000 for the prior fiscal year to approximately $891,000 for the current year. Demand for fabricated metal products in our niche market have improved during the past six to nine months and should remain strong throughout the remainder of the fiscal year. Operating expenses at approximately $1,504,000 for the six month period ended March 25, 2000 are roughly $12,000 higher than approximately $1,492,000 for the same period of the prior fiscal year. The slight increase is the result of increasing labor and training costs. Interest expense at approximately $117,000 for the six-month period ended March 25, 2000 is 18% lower than approximately $143,000 for the same period of the prior year. The decrease was possible as a result of lower inventories and accounts receivable supporting a lower sales volume. Other income of approximately $1,000 compares to approximately $21,000 for the first six months of the prior fiscal year. During the prior fiscal year there was a one time industrial insurance dividend paid by the State of Washington based on higher than usual investment returns on the state reserves. This will likely not be repeated during the current fiscal year. Lower sales volume was offset by higher gross margins resulting in a smaller net loss for the first six months of the current fiscal year compared to the first six months of the prior fiscal year. After tax net loss of approximately $28,000 for the six month period ended March 25, 2000 is 32% lower than the after tax net loss of approximately $41,000 for the same period of time during the prior fiscal year. Three months ended March 25, 2000 and March 25, 1999 Sales of approximately $2,992,000 for the second quarter of the current fiscal year are 5% higher than approximately $2,841,000 for the second quarter of the prior fiscal year. The steel service center business, which contributed 86% and 94% of the total sales for the three month period ended March 25, 2000 and 1999 respectively, experienced a 3% decline in sales volume over the second quarter of the prior fiscal year. The decline from approximately $2,666,000 for the second quarter of last year to approximately $2,576,000 for the same period of time this year was largely the result of competitive price pressures. Tons of metal sold during the second quarter of the current year were approximately the same as last year. The fabrication business, with a 147% increase in sales volume represents 14% of the second quarter combined sales for the current fiscal year and only 6% for the prior year. Approximately $416,000 sales for the quarter ended March 25, 2000 compare to approximately $169,000 for the same quarter of the prior fiscal year. The stronger demand is expected to continue for the remainder of this year. Gross margins for the three-month period ended March 25, 2000, at 26.9% of sales compares to 24.9% of sales for the same period of the prior fiscal year. The resulting gross margin dollars for the second quarter of the current fiscal year at approximately $806,000 exceed the same period of the prior year by approximately $100,000. The improvement in gross margins is attributable to the higher volume of fabrication sales and the slowly improving price of metal. Operating expenses at approximately $728,000 for the three-month period ended March 25, 2000 are 4% higher than approximately $702,000 for the same period of the prior fiscal year. The increase is primarily the result of higher labor and training costs. In the tight labor market of the Pacific Northwest, the costs are likely to continue to increase slightly during the remainder of the year. Interest expense for the quarter ending March 25, 2000 at approximately $52,000 is 21% lower than the same quarter of the prior fiscal year. The decrease is attributable to lower inventories and accounts receivable resulting in a lesser dependence on our operating line of credit. This decrease will likely be temporary as the price of metal is recovering making the replacement costs of inventory higher. If sales improve during the second half of the year accounts receivable will also be higher. Improved sales volume and gross margins contributed to an after tax net income of approximately $22,000 for the second quarter of the current year compared to a net loss of approximately the same amount for the quarter of the prior year. PART II. OTHER INFORMATION Item 1. Legal Proceedings. None. Item 2. Changes in Securities At September 25, 1999, the Company owed $128,000 to related parties pursuant to the terms of a convertible debenture agreement. The debentures were redeemed in accordance with the agreement on October 31, 1999. The Company is continuing to conduct a tender offer under an extension which will expire on June 30, 2000. During the current fiscal year the Company has repurchased 1,186 shares for treasury at a total cost of $620. The purpose of the tender offer is to buy out odd lot shareholders of stock with diminimus value. 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: May 4, 2000 /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-30-2000 SEP-25-1999 MAR-25-2000 SEP-25-1999 7,428 32,422 0 0 965,949 1,086,229 71,066 67,166 2,309,825 2,464,247 3,339,122 3,602,037 5,174,627 5,059,408 1,792,425 1,715,242 6,766,294 7,013,980 1,357,991 1,407,219 2,348,914 2,586,640 0 0 0 0 1,186,192 1,186,192 1,880,007 1,908,170 6,766,294 7,013,980 5,891,024 12,247,713 5,908,284 12,334,238 4,330,908 8,957,654 5,818,699 11,944,322 100,952 308,226 3,000 12,000 117,128 248,006 (43,719) 202,130 (16,176) 60,220 (43,719) 202,130 0 0 0 0 0 0 (27,543) 141,910 (0.01) 0.03 (0.00) 0.02
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