-----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, Lt9fd+0Ewqke1a1AJav9BdGILQPv+m/bCQY4VfKOpyIn0p8R1wcVFJfANNt/mTL9 /W62kex3Eso7afcUL5REDg== 0000861502-99-000006.txt : 19990203 0000861502-99-000006.hdr.sgml : 19990203 ACCESSION NUMBER: 0000861502-99-000006 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981225 FILED AS OF DATE: 19990202 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: 99519118 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, 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. 5,348,735 shares of common stock, no par value, were outstanding as of January 31, 1999 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, 1998 and December 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 26, 1998. Index of Financial Statements Page Consolidated Balance Sheets - December 25, 1998 and September 26, 1998 3 Unaudited Consolidated Income Statements - Three Months Ended December 25, 1998 and December 25, 1997 4 Unaudited Consolidated Statement of Cash Flows - Three Months Ended December 25, 1998 and December 25, 1997 6 Condensed Notes to Unaudited Consolidated Financial Statement 7 THE COEUR D ALENES COMPANY CONSOLIDATED BALANCE SHEET December 25, 1998 and September 26, 1998 December 25, 1998 September 26, 1998 ASSETS (Unaudited) (Audited) Current Assets: Cash $ 2,925 $ 39,486 Accounts receivable 1,580,990 1,417,269 Inventory 2,207,159 2,553,384 Other current assets 81,382 56,000 Total current assets 3,872,456 4,066,139 Property and Equipment 4,959,890 4,896,087 Less accumulated Depreciation 1,604,120 1,539,044 Net property and equipment 3,355,770 3,357,043 Other assets 51,269 72,010 Total assets $ 7,279,495 $ 7,495,192 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Short term bank borrowings $ 304,238 $ 842,826 Accounts payable 1,102,138 585,811 Accrued expenses 258,381 400,509 Current amount on long-term debt 134,714 134,714 Debentures payable to related parties 128,000 0 Total current liabilities 1,927,471 1,963,860 Long-term debt: Deferred tax liability 120,000 120,000 Long term debt less current maturities 2,296,040 2,328,170 Long term debt to related parties 0 128,000 Total long term liabilities 2,416,040 2,576,170 Total liabilities 4,343,511 4,540,030 Stockholders' Equity: Capital Stock 1,186,192 1,186,192 Retained earnings 1,757,142 1,775,320 2,943,334 2,961,512 Less Treasury Stock at cost 7,350 6,350 Total stockholders' equity 2,935,984 2,955,162 Total liabilities and stockholders equity $ 7,279,495 $ 7,495,192 THE COEUR D ALENES COMPANY UNAUDITED CONSOLIDATED INCOME STATEMENT Three Months Ended December 25, 1998 and December 25, 1997 1998 1997 Net sales $ 3,507,646 $ 3,228,540 Costs of sales 2,686,694 2,480,470 Gross profit on sales 820,953 748,070 Selling, general and administrative expenses 790,600 738,765 Operating income 30,353 9,305 Other income (expense) Interest income 12,532 7,788 Interest expense <76,651> <74,319> Other income 4,910 7,528 Total other expense <59,209> <59,003> Loss before income tax expense <28,856> <49,698> Income tax benefit <10,677> <18,388> Net loss $ <18,179> $ <31,310> Loss per share $ < 0.00> $ < 0.01> Shares outstanding 5,348,735 5,353,450 THE COEUR D'ALENES COMPANY UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS Three Months Ended December 25, 1998 and December 25, 1997 1998 1997 Cash flows from operating activities: Net loss $ <18,179> $ < 31,310> Adjustments to reconcile net income to cash provided (used) by operating activities: Depreciation 65,283 64,575 Gain on disposal of assets < 0 > < 1,000> Changes in assets and liabilities Accounts and notes receivable < 163,720> < 80,888> Inventories < 346,225> < 199,961> Other current assets < 25,382> < 30,444> Other assets 20,741 18,976 Accounts payable 516,327 549,701 Accrued expenses < 142,128> < 34,981> Cash provided by operating activities 599,167 416,444 Cash flows from investing activities: Proceeds from sale of assets 1,000 1,000 Additions to property and equipment < 64,010> < 25,996> Cash flows used by investing activities < 64,010> < 24,996> Cash flows from financing activities: Purchase of treasury stock < 1,000> < 330> Net borrowing (payments) borrowings under line of credit < 538,588> < 450,004> Principal repayment of long-term debt < 32,130> < 22,849> Cash used by financing activities < 571,718> < 473,183> Net decrease in cash < 36,561> < 81,735> Cash, beginning of period 39,486 89,495 Cash, end of period $ 2,925 $ 7,760 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, 1998 are the same as those contained in the Summary of Significant Accounting Policies from the Company's audited financial statements as of September 26, 1998 and September 27, 1997. (2) Inventories. Inventories are summarized as follows: December 25, September 26, 1998 1998 Fabrication inventories: Raw materials $ 12,638 $ 31,826 Work-in-progress 37,745 67,293 Inventories at FIFO cost 50,383 99,119 LIFO reserve <19,861> <19,861> Inventories at LIFO cost 30,522 79,258 Distribution inventories at FIFO 2,176,637 2,474,126 Total inventories $2,207,159 $2,553,384 (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 December 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. At December 25, 1998 the Company was in compliance with all of its bank covenants. (4) Capital Stock. The Company made a tender offer to shareholders with holdings of forty-nine or fewer shares beginning in January 1998 and which after two extensions, expired on December 15, 1998. The purchase price for the shares was $10 for each shareholder with 24 or fewer shares and $20 for each shareholder with more than 24 but less than 50 shares. The total shares tendered was 4,715 shares for a total purchase price of $3,220. (5) Federal Income Tax Expense As of December 25, 1998 and September 26, 1998, the Company has a deferred long term tax liability of $120,000 resulting primarily from the use of accelerated methods of depreciation of fixed assets and a deferred tax asset of $56,000 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 declined from approximately $2,102,000 on September 26,1998 to $1,945,000 as of December 25, 1998. The decline is primarily the result of debentures payable to related parties in the amount of $128,000 moving from long-term to short term liabilities. The debentures are due on October 31, 1999. See Part II Item 2. 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. 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 additional processing equipment for the distribution business. The cost is expected to be approximately $170,000. A portion of the cost will likely be financed with an equipment loan. The bank has approved a loan in the amount of $150,000 with interest only payments until May 1, 1999. The loan agreement contains provisions for conversion to a five year repayment term at that date. The interest rate is 1/2% over the banks prime rate. 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 May 1, 1999. 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 $3,508,000 for the three month period ended December 21, 1998 are approximately 9% higher than approximately $3,229,000 for the same period of time in 1997. Gross margins increased by 10% to approximately $821,000 for the period ended December 25, 1998 from approximately $748,000 for the same period of the prior fiscal year. With an 8% increase in net revenues, the steel service center sales at approximately $2,855,000 represent 81% of the total sales for the first three months of the current fiscal year. This compares to sales of approximately $2,649,000 or 82% of total sales for the first three months of the prior fiscal year. The fabrication business contributed 19% of the total first quarter sales for the current fiscal year and 18% for the same period of the prior year. Gross margins as a percent of sales are approximately 23% for the period ending December 25, 1998 as well as the period ending December 25, 1997. Operating expenses, at approximately $791,000 for the quarter ended December 25, 1998 are 7% higher than approximately $739,000 for the same period of the prior fiscal year. The increase is attributable to the higher sales volume. As a percent of sales, operating expenses for the first quarter of both fiscal years are 23%. Interest expense at approximately $77,000 for the three month period ended December 25, 1998 is 4% higher than approximately $74,000 for the three Month period ended December 25, 1997. The slight increase is due to the purchase of crane upgrades and a new crane during the latter part of the prior fiscal year. The crane and upgrades were financed utilizing borrowed funds for 80% of the purchase price. The total cost was approximately $100,000. Declining inventory replacement costs will cause interest expense to decline during the second quarter of the current fiscal year. Other income at approximately $4,900 for first quarter of the current fiscal year is slightly lower than approximately $7,500 for the same period of the prior fiscal year. During the first quarter of the prior year a piece of office equipment was sold at a gain of approximately $1,000 which accounted for most of the difference. Higher sales volume during the first quarter of the current fiscal year helped reduce the net loss compared to the first quarter of the prior year. At approximately $18,000 the net loss for the period ended December 25, 1998 is 58% of the net loss for the same period of the prior fiscal year. PART II. OTHER INFORMATION. Item 1. Legal Proceedings. None. Item 2. Changes in Securities. At December 25, 1998 and September 26, 1998, the Company owed $128,000 to related parties pursuant to the terms of a convertible debenture agreement. The debentures require semi-annual interest payments and are secured by the Companys land and building. In October 1998, the agreement was amended from an interest rate of 9.25% to 8.75% and from a due date of October 31, 1998 to October 31, 1999. Accordingly, the related party debt has been classified as a current liability at December 25, 1998 and a noncurrent liability at September 26, 1998. The debentures are convertible into shares of the Companys common stock at a per share rate of $.28 through maturity. The Company, at its option, may call any or all outstanding debentures for redemption. The Company conducted a tender offer on odd lot shares from January 1998 through December 15, 1998. As a result of the offer, the Company purchased 4,715 shares for a total cost of $3,220. 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 Dated: February 9, 1999 (Registrant) /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-25-1999 SEP-26-1998 DEC-25-1998 SEP-26-1998 2,925 39,486 0 0 1,643,392 1,474,117 62,402 56,848 2,207,159 2,553,384 3,872,456 4,066,139 4,959,890 4,896,087 1,604,120 1,539,044 7,279,495 7,495,192 1,927,471 1,963,860 1,873,252 1,884,068 0 0 0 0 1,186,192 1,186,192 1,749,792 1,768,970 7,279,495 7,495,192 3,507,646 14,368,061 3,525,088 14,430,428 2,686,694 10,721,254 3,477,294 13,877,585 65,974 412,302 5,500 12,400 76,651 301,817 (28,856) 361,511 (10,677) 110,485 30,353 361,511 0 0 0 0 0 0 (18,179) 251,026 0.00 0.05 0.00 0.04
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