-----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, BWLygNtwk7W6zR5AffyuzxE22jksINxSmaGEJk1O6DGjNvDhNvWx7rGIxveo6Ia5 291/gRTOUKfYbjXZjQSWyA== 0001025894-00-000100.txt : 20000412 0001025894-00-000100.hdr.sgml : 20000412 ACCESSION NUMBER: 0001025894-00-000100 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000229 FILED AS OF DATE: 20000411 FILER: COMPANY DATA: COMPANY CONFORMED NAME: JEWETT CAMERON TRADING CO LTD CENTRAL INDEX KEY: 0000885307 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-LUMBER & OTHER BUILDING MATERIALS DEALERS [5211] STATE OF INCORPORATION: OR FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-19954 FILM NUMBER: 598455 BUSINESS ADDRESS: STREET 1: 32275 NW HILLCREST CITY: NORTH PLAINS STATE: OR ZIP: 97133 BUSINESS PHONE: 5036470110 10-Q 1 QUARTERLY REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) (X)QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended February 29, 2000 OR ( ) 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: 0-19954 JEWETT-CAMERON TRADING COMPANY, LTD. ------------------------------------------------------ (Exact name of registrant as specified in its charter) BRITISH COLUMBIA NONE ---------------- ---- (State or other jurisdiction of (IRS Employer Identification Number) incorporation or organization) 32275 N.W. Hillcrest, North Plains, Oregon 97133 ------------------------------------------------ (Address of Principal Executive Offices) Registrant's telephone number, including area code: (503) 647-0110 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 since May 16, 1992 and (2) has been subject to the above filing requirements for the past 90 days. Yes X No ___ --- APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ___ No ___ APPLICABLE ONLY TO CORPORATE ISSUERS Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of February 29, 2000. Common Stock, no par value 1,075,162 Shares. - --------- PART I - FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS. Attached hereto and incorporated herein by reference. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following information contains certain forward-looking statements that anticipate future trends or events. These statements are based on certain assumptions that may prove to be erroneous and are subject to certain risks including but not limited to the risks of increased competition in the Company's industry and other risks detailed in the Company's Securities and Exchange Commission filings. Accordingly, actual results may differ, possibly materially, from the predictions contained herein. Company operations were down during the second quarter of Fiscal 2000, ended February 29, 2000, as sales decreased over the first quarter of Fiscal 2000. Gross sales decreased $1,241,419 during the second quarter of Fiscal 2000 as compared to the second quarter of Fiscal 1999. During the second quarter of Fiscal 2000, the Company experienced a decrease in net income of $113,991 as compared to the second quarter of Fiscal 1999. Management believes that buying patterns in the area of building materials have shifted and that sales which previously occurred in the Company's second fiscal quarter of operations will now occur in the third and, in some instances, the fourth fiscal quarters. The overall result was net income of $41,587 for the second quarter of Fiscal 2000 and net income for the first six months of Fiscal 2000 of $117,760. RESULTS OF OPERATIONS: THREE MONTHS ENDED FEBRUARY 29, 2000 and 1999: For the second quarter of the current fiscal year, ending February 29, 2000, sales decreased 29.4% to $2,985,720 compared to $4,227,139 for the same quarter of the previous year. Sales for Jewett-Cameron Lumber were $2,728,783 million for the quarter, down 27.4% compared to sales of $3,758,478 million for the second quarter of last year. Sales for MSI-PRO (pneumatic tools and industrial clamps) were $259,469 for the second quarter compared to $257,877 for the second quarter of last year, an increase of $1,592. Sales for Jewett-Cameron South Pacific in the Kingdom of Tonga were zero for the second quarter compared to $2,933 for the second quarter of last year. The Company has almost completed winding down its operations in the Kingdom of Tonga. General and administrative expenses for the Company were $482,942 for the second quarter down from $640,439 for the second quarter of last year. The primary reasons for the decrease of $157,497 are decreases of $10,093 in depreciation and amortization; $16,555 in travel, entertainment and advertising; $69,337 in wages and employee benefits; $17,232 in office and miscellaneous related expenses; $2,953 in insurance; $5,640 in professional fees; $8,362 in telephone; and, $1,236 in repairs and maintenance. An increase; however, did occur in the category of warehouse expenses and supplies of $13,911. Net income for the quarter was $41,587 which represents a 73% decrease over the second quarter of last year when net income was $155,578. The decrease in net income was due to a decrease in sales of $1,241,419 over the same period last year. Even though general and administrative expenses decreased by 25%; interest income increased slightly; and, interest expense decreased, the loss in foreign exchange of ($28,607) coupled with the decrease in sales caused the drop in net income. Earnings per share (fully diluted) was $0.04 for the second quarter of Fiscal 2000 compared to $0.13 for the second quarter of fiscal 1999. SIX MONTHS ENDED FEBRUARY 29, 2000: Sales in the first six months of Fiscal 2000 decreased 11.1% to $7,135,436 compared to $8,026,176 in the same period last year. Sales for Jewett-Cameron Lumber were $6,558,181 million for the six month period, down 9.9% compared to sales of $7,275,714 million for the same period of last year. Sales for MSI-PRO (pneumatic tools and industrial clamps) were $532,883 for the six month period compared to $539,669 for the same period of last year, down 1.2%. Sales for Jewett-Cameron South Pacific in the Kingdom of Tonga were $44,372 for the six month period compared to $210,784 for the same period of last year, down 78.9%. The Company is currently winding down its operations in the Kingdom of Tonga. General and administrative expenses for the Company were $1,023,142 for the six month period down from $1,131,854 for the same period of last year. The primary reasons for the decrease of $108,712 are decreases of $12,188 in depreciation and amortization; $11,661 in travel, entertainment and advertising; $56,822 in wages and employee benefits; $12,119 in office and miscellaneous related expenses; $2,809 in insurance; and, $3,938 in telephone. An increase; however, did occur in the categories of warehouse expenses and supplies of $12,409; repairs and maintenance of $1,430; and, professional fees of $16,986. Net income for the first six months of Fiscal 2000 was $117,760 which represents a 49.3% decrease over the first six months of last year when net income was $232,171. The decrease in net income was due to a decrease in sales of $890,731 over the same period last year. Even though general and administrative expenses decreased by 10%; interest income increased slightly; and, interest expense decreased, the loss in foreign exchange of ($29,292) coupled with the decrease in sales caused the drop in net income. Earnings per share (fully diluted) was $0.11 for the first six months of Fiscal 2000 compared to $0.20 for the same period of fiscal 1999. LIQUIDITY AND CAPITAL RESOURCES As of February 29, 2000 the Company had working capital of $4,096,864 which represented an increase of $319,115 as compared to the working capital position of $3,777,749 as of February 28, 2000. The increase in working capital was due to an increase in cash and cash equivalents of $95,914 and a decrease in accounts payable and current liabilities of $1,059,893. Accounts Receivable and Inventory represented 94% of current assets and both continue to turn over at acceptable rates. External sources of liquidity include a bank line from the United States National Bank of Oregon. The total line of credit available is $6.5 million of which there was an outstanding balance as of February 29, 2000 of $2,207,877. As of the end of Fiscal 2000 (August 31st) the Company had an outstanding balance of $87,883 and at the end of the second quarter of Fiscal 2000, the Company had an outstanding balance of $2,391,339. Based on the Company's current working capital position, its policy of retaining earnings, and the line of credit available, the Company has adequate working capital to meet its needs during the current fiscal year. IMPACT OF THE YEAR 2000 ISSUE: The Year 2000 Issue arises because many computerized systems use two digits rather than four to identify a year. Date-sensitive systems may recognize the year 2000 as 1900 or some other date, resulting in errors when information using year 2000 dates is processed. In addition, similar problems may arise in some systems which use certain dates in 1999 to represent something other than a date. Although the change in date has occurred, it is not possible to conclude that all aspects of the Year 2000 Issue that may affect the company including those related to customers, suppliers, or other third parties, have been fully resolved. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS: The Company does not have any derivative financial instruments as of February 29, 2000. However, the Company is exposed to interest rate risk. The Company's interest income and expense are most sensitive to changes in the general level of U.S. interest rates. In this regard, changes in U.S. interest rates affect the interest earned on the Company's cash equivalents as well as interest paid on debt. The Company has a line of credit whose interest rate is based on various published rates that may fluctuate over time based on economic changes in the environment. The Company is subject to interest rate risk and could be subject to increased interest payments if market interest rates fluctuate. The Company does not expect any change in the interest rates to have a material adverse effect on the Company's results from operations. FOREIGN CURRENCY RISK The Company operates a subsidiary in the Kingdom of Tonga. The Company's business and financial condition is, therefore, sensitive to currency exchange rates or any other restrictions imposed on its currency. Since the Company is currently winding down its operations in the Kingdom of Tonga, management does not expect the foreign currency exchange rates to significantly impact the Company in the future. Part II - OTHER INFORMATION Item 1. Legal Proceedings - None Item 2. Changes in Securities - None Item 3. Default Upon Senior Securities - None Item 4. Submission of Matters to a Vote of Securities Holders: The Company conducted an Annual Meeting on January 14, 2000. The matters voted upon, together with the results of voting, were as follows: 1) The following persons were elected to fill the vacancies on the Board of Directors created by the expiration of the directors' terms, to serve until the year 2001 annual meeting of the shareholders and until their successors shall be duly elected: Director Shares Voted Shares Voted in Favor Against ----------------- ------------ ------------ Donald M. Boone 676,153 0 Jeffrey Lowe 676,153 0 James Schjelderup 676,153 0 Item 5. Other Information - None Item 6.(a) Exhibit 27 - Financial Data Schedule Item 6.(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. Jewett-Cameron Trading Company Ltd. (Registrant) Dated: April 5, 2000 /s/ Donald M. Boone -------------------- ------------------- Donald M. Boone, President/CEO/Director JEWETT-CAMERON TRADING COMPANY LTD. CONSOLIDATED FINANCIAL STATEMENTS (Expressed in U.S. Dollars) (Unaudited - See Notice to Reader) FEBRUARY 29, 2000 [Davidson & Company Letterhead] NOTICE TO READER We have compiled the consolidated balance sheet of Jewett-Cameron Trading Company Ltd. as at February 29, 2000 and the consolidated statements of operations, cash flows and changes in shareholders' equity for the six month period then ended from information provided by management. We have not audited, reviewed or otherwise attempted to verify the accuracy or completeness of such information. Readers are cautioned that these statements may not be appropriate for their purposes. "DAVIDSON & COMPANY" Vancouver, Canada Chartered Accountants March 31, 2000 A Member of SC INTERNATIONAL Suite 1200, Stock Exchange Tower, 609 Granville Street, P.O. Box 10372, Pacific Centre, Vancouver, BC, Canada, V7Y 1G6 Telephone (604) 687-0947 Fax (604) 687-6172 JEWETT-CAMERON TRADING COMPANY LTD. CONSOLIDATED BALANCE SHEETS (Expressed in U.S. dollars) (Unaudited - See Notice to Reader)
February 29, February 28, August 31, 2000 1999 1999 --------------- --------------- --------------- ASSETS Current Cash and cash equivalents $ 95,914 $ - $ 223,949 Accounts receivable 1,502,843 2,427,470 2,492,312 Income tax receivable 211,650 128,003 - Inventory 5,069,136 5,237,111 2,666,835 Prepaid expenses 100,549 111,726 28,543 ------------- ------------- ------------- Total current assets 6,980,092 7,904,310 5,411,639 Capital assets (Note 3) 1,433,575 1,572,743 1,511,067 Trademarks (Note 4) - 179,931 - Deferred income taxes (Note 5) 217,200 203,200 217,200 Deposits 74,345 74,345 74,345 ------------- ------------- ------------- $ 8,705,212 $ 9,934,529 $ 7,214,251 =============== =============== =============== LIABILITIES AND SHAREHOLDERS' EQUITY Current Bank indebtedness (Note 6) $ 2,207,877 $ 2,391,339 $ 87,883 Accounts payable and accrued liabilities 675,329 1,735,222 1,142,289 ------------- ------------- ------------- Total current liabilities 2,883,206 4,126,561 1,230,172 ------------- ------------- ------------- Shareholders' equity Capital stock Authorized 20,000,000 common shares, without par value 10,000,000 preferred shares, without par value Issued 1,075,162 common shares (February 28, 1999 - 1,157,162; August 31, 1999 - 1,157,162) 1,795,157 1,932,097 1,932,097 Additional paid-in capital 582,247 582,247 582,247 Retained earnings 3,614,550 3,428,796 3,789,134 ------------- ------------- ------------- 5,991,954 5,943,140 6,303,478 Less: Treasury stock - 32,800 common shares (February 28, 1999 - 26,500; August 31, 1999 - 61,900) (169,948) (135,172) (319,399) ------------- ------------- ------------- 5,822,006 5,807,968 5,984,079 ------------- ------------- ------------- $ 8,705,212 $ 9,934,529 $ 7,214,251 =============== =============== ===============
The accompanying notes are an integral part of these consolidated financial statements. JEWETT-CAMERON TRADING COMPANY LTD. CONSOLIDATED STATEMENTS OF OPERATIONS (Expressed in U.S. dollars) (Unaudited - See Notice to Reader)
Three month Three month Six month Six month period ended period ended period ended period ended February 29, February 28, February 29, February 28, 2000 1999 2000 1999 --------------- -------------- --------------- --------------- SALES $ 2,985,720 $ 4,227,139 $ 7,135,436 $ 8,026,167 COST OF SALES (2,364,563) (3,403,566) (5,862,303) (6,599,050) ------------- ------------- ------------- ------------- GROSS PROFIT 621,157 823,573 1,273,133 1,427,117 GENERAL AND ADMINISTRATIVE EXPENSES - Schedule (482,942) (640,439) (1,023,142) (1,131,854) ------------- ------------- ------------- ------------- Income from operations 138,215 183,134 249,991 295,263 ------------- ------------- ------------- ------------- OTHER ITEMS Loss on disposal of capital assets (41,582) - (41,582) - Interest and other income 6,262 4,020 16,437 13,879 Interest expense (17,701) (19,356) (17,794) (31,855) Foreign exchange gain (loss) (28,607) 13,780 (29,292) 13,884 ------------- ------------- ------------- ------------- (81,628) (1,556) (72,231) (4,092) ------------- ------------- ------------- ------------- Income before income taxes 56,587 181,578 177,760 291,171 Income taxes (15,000) (26,000) (60,000) (59,000) ------------- ------------- ------------- ------------- Net income for the period $ 41,587 $ 155,578 $ 117,760 $ 232,171 ============= ============= ============= ============= Basic earnings per share $ 0.04 $ 0.14 $ 0.11 $ 0.20 ============= ============= ============= ============= Diluted earnings per share $ 0.04 $ 0.13 $ 0.11 $ 0.19 ============= ============= ============= =============
The accompanying notes are an integral part of these consolidated financial statements. JEWETT-CAMERON TRADING COMPANY LTD. CONSOLIDATED SCHEDULES OF GENERAL AND ADMINISTRATIVE EXPENSES (Expressed in U.S. dollars) (Unaudited - See Notice to Reader)
Three month Three month Six month Six month period ended period ended period ended period ended February 29, February 28, February 29, February 28, 2000 1999 2000 1999 --------------- -------------- --------------- --------------- Bad debt (recovery) $ (40,000) $ - $ (40,000) $ - Depreciation and amortization 28,942 39,035 59,316 71,504 Insurance 11,965 14,918 24,438 27,247 Office and miscellaneous 56,277 73,509 108,732 120,851 Professional fees 39,580 45,220 77,719 60,733 Repairs and maintenance 8,694 9,930 23,361 21,931 Telephone and utilities 19,270 27,632 40,892 44,830 Travel, entertainment and advertising 38,992 55,547 76,747 88,408 Warehouse expenses and supplies 23,176 9,265 41,714 29,305 Wages and employee benefits 296,046 365,383 610,223 667,045 ------------- ------------- ------------- ------------- $ 482,942 $ 640,439 $ 1,023,142 $ 1,131,854 =============== ============== =============== ===============
The accompanying notes are an integral part of these consolidated financial statements. JEWETT-CAMERON TRADING COMPANY LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS (Expressed in U.S. dollars) (Unaudited - See Notice to Reader)
Six month Six month period ended period ended February 29, February 28, 2000 1999 -------------- --------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 117,760 $ 232,171 Items not involving an outlay of cash: Depreciation and amortization 59,316 71,504 Loss on disposal of capital assets 41,582 - Changes in non-cash working capital items: (Increase) decrease in accounts receivable 989,469 (421,200) Increase in income tax receivable (211,650) (128,003) Increase in inventory (2,402,301) (2,188,308) Increase in prepaid expenses (72,006) (65,973) Increase in bank indebtedness 2,119,994 1,624,018 Increase (decrease) in accounts payable and accrued liabilities (466,960) 998,960 ------------- ------------- Net cash provided by operating activities 175,204 123,169 ------------- ------------- CASH FLOWS FROM FINANCING ACTIVITIES Treasury shares acquired (279,833) (151,896) Capital stock issued - 11,043 ------------- ------------- Net cash used in financing activities (279,833) (140,853) ------------- ------------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of capital assets (23,406) (35,245) ------------- ------------- Net cash used in investing activities (23,406) (35,245) ------------- ------------- Change in cash and cash equivalents for the period (128,035) (52,929) Cash and cash equivalents, beginning of period 223,949 52,929 ------------- ------------- Cash and cash equivalents, end of period $ 95,914 $ - ============== =============== Supplemental disclosure with respect to cash flows (Note 10)
The accompanying notes are an integral part of these consolidated financial statements. JEWETT-CAMERON TRADING COMPANY LTD. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Expressed in U.S. Dollars) (Unaudited - See Notice to Reader)
Common Stock Treasury Shares ------------------------- -------------------------- Additional Number Number Paid-In Retained of Shares Amount of Shares Amount Capital Earnings Total - ----------------------------------- ------------ ------------ ------------ ------------- ----------- ------------ ------------ Balance, August 31, 1998 1,176,762 $ 1,960,368 20,600 $ 117,630 $ 582,247 $ 3,291,664 $ 5,716,649 Net income for the year - - - - - 592,509 592,509 Stock options exercised 4,000 11,044 - - - - 11,044 Shares cancelled (23,600) (39,315) - - - - (39,315) Treasury shares acquired - - 64,900 336,123 - - (336,123) Treasury shares cancelled - - (23,600) (134,354) - - 134,354 Premium relating to cancellation of share capital - - - - - (95,039) (95,039) ----------- ----------- ----------- ----------- ---------- ----------- ----------- Balance, August 31, 1999 1,157,162 $ 1,932,097 61,900 $ 319,399 $ 582,247 $ 3,789,134 $ 5,984,079 ============ ============ ============ ============= =========== ============ ============ Balance, August 31, 1998 1,176,762 $ 1,960,368 20,600 $ 117,630 $ 582,247 $ 3,291,664 $ 5,716,649 Net income for the period - - - - - 232,171 232,171 Stock options exercised 4,000 11,044 - - - - 11,044 Shares cancelled (23,600) (39,315) - - - - (39,315) Treasury shares acquired - - 29,500 151,896 - - (151,896) Treasury shares cancelled - - (23,600) (134,354) - - 134,354 Premium relating to cancellation of capital stock - - - - - (95,039) (95,039) ----------- ----------- ----------- ----------- ---------- ----------- ----------- Balance, February 28, 1999 1,157,162 $ 1,932,097 26,500 $ 135,172 $ 582,247 $ 3,428,796 $ 5,807,968 ============ ============ ============ ============= =========== ============ ============ Balance, August 31, 1999 1,157,162 $ 1,932,097 61,900 $ 319,399 $ 582,247 $ 3,789,134 $ 5,984,079 Net income for the period - - - - - 117,760 117,760 Shares cancelled (82,000) (136,940) - - - (136,940) Treasury shares acquired - - 52,900 279,833 - - (279,833) Treasury shares cancelled - - (82,000) (429,284) - - 429,284 - Premium relating to cancellation of capital stock - - - - - (292,344) (292,344) ----------- ----------- ----------- ----------- ---------- ----------- ----------- Balance, February 29, 2000 1,075,162 $ 1,795,157 32,800 $ 169,948 $ 582,247 $ 3,614,550 $ 5,822,006 ============ ============ ============ ============= =========== ============ ============
The accompanying notes are an integral part of these consolidated financial statements. JEWETT-CAMERON TRADING COMPANY LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in U.S. dollars) (Unaudited - See Notice to Reader) FEBRUARY 29, 2000 - -------------------------------------------------------------------------------- 1. NATURE OF OPERATIONS The Company was incorporated under the Company Act of British Columbia on July 8, 1987. The Company and its subsidiaries operate as a wholesaler of lumber and other building products, as a distributor of industrial tools, and as a retailer of building materials. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Generally accepted accounting principles In the opinion of management, the accompanying consolidated financial statements contain all adjustments necessary (consisting only of normal recurring accruals) to present fairly the financial information contained therein. These statements do not include all disclosures required by generally accepted accounting principles and should be read in conjunction with the audited financial statements of the Company for the year ended August 31, 1999. The results of operations for the period ended February 29, 2000 are not necessarily indicative of the results to be expected for the year ending August 31, 2000. Principles of consolidation These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, The Jewett-Cameron Lumber Corporation, MSI-Pro Co., and Material Supply International Inc., all of which are incorporated under the laws of Oregon, U.S.A. and Jewett-Cameron South Pacific Ltd., which is incorporated under the laws of Tonga. Significant inter-company balances and transactions have been eliminated upon consolidation. Estimates The preparation of financial statements in conformity with generally accepted accounting principles required management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Currency These financial statements are expressed in U.S. dollars as the Company's operations are based predominantly in the United States. Cash and cash equivalents Cash and cash equivalents include highly liquid investments with original maturities of three months or less. Inventory Inventory is recorded at the lower of cost and net realizable value based on the average cost method. Capital assets and depreciation Capital assets are recorded at cost and the Company provides for depreciation over the estimated life of each asset on a straight-line basis over the following periods: Office equipment 5-7 years Warehouse equipment 2-10 years Automotive equipment 4 years Buildings 5- 30 years JEWETT-CAMERON TRADING COMPANY LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in U.S. dollars) (Unaudited - See Notice to Reader) FEBRUARY 29, 2000 - -------------------------------------------------------------------------------- 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd.....) Foreign exchange The Company accounts for foreign currency transactions and translation of foreign currency financial statements under Statement of Financial Accounting Standards No. 52, "Foreign Currency Translation" ("SFAS 52"). Transaction amounts denominated in foreign currencies are translated at exchange rates prevailing at transaction dates. Carrying values of monetary assets and liabilities are adjusted at each balance sheet date to reflect the exchange rate at that date. Non monetary assets and liabilities are translated at the exchange rate on the original transaction date. Gains and losses from restatement of foreign currency monetary and non-monetary assets and liabilities are included in income. Revenues and expenses are translated at the rates of exchange prevailing on the dates such items are recognized in earnings. Trademarks The Company accounts for costs of acquiring its trademarks by capitalizing all costs of acquisition. These costs will be amortized to income over periods ranging from five to fifteen years. Comparative figures Certain comparative figures have been reclassified to conform with the presentation adopted for the current period. Financial instruments The Company's financial instruments consist of cash and cash equivalents, accounts receivable, income tax receivable, deposits, bank indebtedness and accounts payable and accrued liabilities. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. The fair value of these financial instruments approximate their carrying values, unless otherwise noted. Earnings per share Basic earnings per share is computed using the weighted average number of shares outstanding during the period. Diluted earnings per share consider the dilutive impact of the conversion of outstanding stock options as if the events occurred during the period. The earnings per share data for the periods ended February 29, 2000 and February 28, 1999 is summarized as follows:
Three Month Three Month Six Month Six Month Period Ended Period Ended Period Ended Period Ended February 29, February 28, February 29, February 28, 2000 1999 2000 1999 --------------- ---------------- ---------------- --------------- Net income $ 41,587 $ 155,578 $ 117,760 $ 232,171 ============== =============== =============== ============== Basic earnings per share weighted average number of shares outstanding 1,055,255 1,166,919 1,055,255 1,166,919 Effect of dilutive securities Stock options 28,880 35,863 28,880 35,863 -------------- --------------- --------------- -------------- Diluted earnings per share weighted average number of shares outstanding 1,084,135 1,202,782 1,084,135 1,202,782 =============== ================ ================ ===============
JEWETT-CAMERON TRADING COMPANY LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in U.S. dollars) (Unaudited - See Notice to Reader) FEBRUARY 29, 2000 - -------------------------------------------------------------------------------- 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd.....) Post retirement benefits Post retirement benefits are accounted for on an accrual basis. Any difference between net periodic post retirement benefit cost charged against income and the amount actually funded is recorded as an accrued or prepaid cost. This policy is consistent with Financial Accounting Standards No. 106, "Employers Accounting for Post Retirement Benefits Other than Pensions". 3. CAPITAL ASSETS February 29, February 28, August 31, 2000 1999 1999 ------------- ------------- ------------- Office equipment $ 181,703 $ 179,389 $ 210,652 Warehouse equipment 210,551 214,182 213,751 Automotive equipment 43,871 59,009 46,159 Building 1,378,802 1,463,266 1,410,058 Land 372,562 344,892 365,522 ------------- ------------- ------------- 2,187,489 2,260,738 2,246,142 Accumulated depreciation (753,914) (687,995) (735,075) ------------- ------------- ------------- Net book value $ 1,433,575 $ 1,572,743 $ 1,511,067 ============= ============= ============= 4. TRADEMARKS February 29, February 28, August 31, 2000 1999 1999 ------------- ------------- ------------- Trademarks $ 283,914 $ 283,914 $ 283,914 Accumulated amortization (118,474) (103,983) (118,474) Write-down of trademarks (165,440) - (165,440) ------------- ------------- ------------- Net book value $ - $ 179,931 $ - =============== =============== =============== 5. DEFERRED INCOME TAXES Deferred income taxes of $217,200 (February 28, 1999 - $203,200; August 31, 1999 - $217,200) relate principally to timing differences between the accounting and tax treatment of income, expenses, reserves and depreciation. JEWETT-CAMERON TRADING COMPANY LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in U.S. dollars) (Unaudited - See Notice to Reader) FEBRUARY 29, 2000 - -------------------------------------------------------------------------------- 6. BANK INDEBTEDNESS February 29, February 28, August 31, 2000 1999 1999 --------------- --------------- --------------- Demand loan $ 2,207,877 $ 2,391,339 $ 87,883 =============== =============== =============== The bank indebtedness is secured by an assignment of accounts receivable and inventory. Interest is calculated at either prime or the libor rate plus 225 basis points. 7. STOCK OPTIONS At February 29, 2000, the Company had the following stock options outstanding enabling the holders to purchase common shares of the Company: Number of Shares Price Expiry Date ---------- --------- ----------------- 12,000 Cdn $ 8.25 December 31, 2000 70,000 Cdn $ 4.25 August 6, 2006 ========== ========= ================= 8. EMPLOYEE STOCK OWNERSHIP PLAN The Company sponsored an employee stock ownership plan ("ESOP") that covers all U.S. employees who are employed by the Company on August 31 of each year and who have at least one thousand hours with the Company in the twelve months preceding that date. The ESOP grants to participants in the plan certain ownership rights in, but not possession of, the common stock of the Company held by the Trustee of the plan. Shares of common stock are allocated annually to participants in the ESOP pursuant to a prescribed formula. The value of the shares released by the Trustee under the plan's provisions for allocation was recognized as an expense of $Nil, $Nil and $90,170 for the periods ended February 29, 2000, February 28, 1999 and August 31, 1999, respectively. February 29, February 28, August 31, 2000 1999 1999 --------------- --------------- --------------- Allocated shares 107,000 90,000 107,000 Total ESOP shares 107,000 90,000 107,000 =============== =============== =============== JEWETT-CAMERON TRADING COMPANY LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in U.S. dollars) (Unaudited - See Notice to Reader) FEBRUARY 29, 2000 - -------------------------------------------------------------------------------- 9. CONTINGENT LIABILITIES AND COMMITMENTS At February 29, 2000, February 28, 1999 and August 31, 1999, the Company had an un-utilized line-of-credit of approximately $4,300,000, $1,300,000 and $6,400,000, respectively. 10. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS
February 29, February 28, August 31, 2000 1999 1999 --------------- --------------- --------------- Cash paid during the period for: Interest $ 16,437 $ 31,855 $ 93,701 Income taxes 441,157 257,667 433,157 =============== =============== ===============
Significant non-cash transactions for the six month period ended February 29, 2000 are as follows: The Company cancelled 82,000 treasury shares repurchased at a price of $429,284 which had an original cost $136,940. The difference between the original cost and purchase price of $292,344 was applied against retained earnings as a premium relating to the cancellation of share capital. Significant non-cash transactions for the six month period ended February 28, 1999 are as follows: The Company cancelled 23,600 treasury shares, repurchased at a price of $134,354, which had an original cost of $39,315. The difference of $95,039 between the original cost and purchase price was applied against retained earnings as a premium relating to the cancellation of share capital. 11. SEGMENTED INFORMATION The Company's operations are classified into two principle industry segments: (sales of) building materials and (sales of) industrial tools. Sales of building materials consists of wholesale sales of lumber and building materials in the United States and retail sales of building materials in Tonga. Sales of industrial tools consists of distribution of pneumatic air tools and industrial clamps in the United States. In computing income from operations by industry segment, unallocable general and administrative expenses have been excluded from each segments' pre-tax operating earnings before interest expense and have been included in general corporate and other operations. JEWETT-CAMERON TRADING COMPANY LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in U.S. dollars) (Unaudited - See Notice to Reader) FEBRUARY 29, 2000 - -------------------------------------------------------------------------------- 11. SEGMENTED INFORMATION (cont'd.....) Following is a summary of segmented information for the six month periods ended February 29, 2000 and February 28, 1999 and the year ended August 31, 1999:
February 29, February 28, August 31, 2000 1999 1999 ---------------- --------------- ---------------- Sales to unaffiliated customers: Building Materials: United States $ 6,558,181 $ 7,275,714 $ 27,707,986 South Pacific 44,372 210,784 316,757 Industrial tools 532,883 539,669 1,077,530 -------------- -------------- -------------- $ 7,135,436 $ 8,026,167 $ 29,102,273 ================ =============== ================ Income from operations: Building Materials: United States $ 267,437 $ 367,425 $ 1,583,793 South Pacific (44,044) (62,717) (138,126) Industrial tools 80,338 61,341 116,902 General corporate (53,740) (70,786) (111,654) -------------- -------------- -------------- $ 249,991 $ 295,263 $ 1,450,915 ================ =============== ================ Identifiable assets: Building Materials: United States $ 8,119,130 $ 8,966,092 $ 6,521,677 South Pacific 334,884 710,922 464,719 Industrial tools 146,479 146,017 117,549 General corporate 104,719 111,498 110,306 -------------- -------------- -------------- $ 8,705,212 $ 9,934,529 $ 7,214,251 ================ =============== ================ Depreciation and amortization: Building Materials: United States $ 57,657 $ 65,147 $ 152,591 South Pacific 1,110 5,359 16,250 Industrial tools 549 998 1,594 -------------- -------------- -------------- $ 59,316 $ 71,504 $ 170,435 ================ =============== ================ Capital expenditures: Building Materials: United States $ 23,406 $ 32,972 $ 112,411 South Pacific - 2,273 - -------------- -------------- ------------- $ 23,406 $ 35,245 $ 112,411 ================ =============== ================
JEWETT-CAMERON TRADING COMPANY LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in U.S. dollars) (Unaudited - See Notice to Reader) FEBRUARY 29, 2000 - -------------------------------------------------------------------------------- 12. UNCERTAINTY DUE TO THE YEAR 2000 The Year 2000 Issue arises because many computerized systems use two digits rather than four to identify a year. Date-sensitive systems may recognize the year 2000 as 1900 or some other date, resulting in errors when information using year 2000 dates is processed. In addition, similar problems may arise in some systems which use certain dates in 1999 to represent something other than a date. Although the change in date has occurred, it is not possible to conclude that all aspects of the Year 2000 Issue that may affect the entity, including those related to customers, suppliers, or other third parties, have been fully resolved. EX-27 2
5 6-MOS AUG-31-2000 FEB-29-2000 95,914 0 1,502,843 0 5,069,136 6,980,092 1,433,575 59,316 8,705,212 2,883,206 0 0 0 1,795,157 4,196,797 8,705,212 7,135,436 7,135,436 5,862,303 6,885,445 72,231 0 17,794 177,760 60,000 221,804 (44,044) 0 0 117,760 0.11 0.11
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