|
|
|
|
|
|
|
|
|
|
|
|
|
|
Previous: JMB MANHATTAN ASSOCIATES LTD, 10-Q, 2000-05-15 |
Next: PDG ENVIRONMENTAL INC, 10KSB40, 2000-05-15 |
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 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: 2-98277C
THE COLONEL'S INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
|
Michigan |
38-3262264 |
|
|
|
|
5550 Occidental Highway, Tecumseh, Michigan |
49286 |
(517) 423-4800
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.01 Par Value
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 during the preceding 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 ______ |
|
Number of shares of the registrant's Common Stock, $0.01 par value, outstanding as of May 1, 2000: 24,518,326
PART I
FINANCIAL INFORMATION
|
Item 1. |
Financial Statements. |
The financial statements required under Item 1 of Part I are set forth in Appendix A to this Report on Form 10-Q and are herein incorporated by reference.
|
Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations. |
Background
The Company has four subsidiaries: The Colonel's Truck Accessories, Inc. ("CTA"), The Colonel's Rugged Liner, Inc. ("CRL"), Brainerd International Raceway, Inc. ("CBIR"), and The Colonel's, Inc. ("The Colonel's").
The Colonel's Truck Accessories, Inc. CTA manufactures and sells pickup truck bedliners and tail gate covers through a distributor network. In March 1997, CTA began to acquire retail outlet stores to sell its manufactured items and other truck accessories that it purchases from third parties to wholesale sub-distributors and dealerships. These retail outlet stores offer installation services and direct sales to retail customers. CTA markets through these various methods to sell CTA's manufactured bedliners and other truck accessories products. In May 1999 CTA purchased the assets of Trader's LLC, a nationally known catalog retailer, for $461,000 in cash and the assumption of $114,000 in liabilities. Trader's has a 42,000 square foot facility in Whittier, California. As discussed below under "Sale/Consolidation of CTA's Stores," CTA is in the process of selling most of its retail outlets.
The Colonel's Rugged Liner, Inc. CRL was formed in March 1998 in connection with the acquisition by merger of four Pennsylvania corporations: Rugged Liner, Inc., Triad Management Group, Inc., Aerocover, Inc. and Ground Force, Inc. (collectively, the "Rugged Liner Companies"). In this transaction, which was consummated in April 1998, each of the Rugged Liner Companies merged with and into CRL, with CRL being the surviving corporation. CRL, which is located in Uniontown, Pennsylvania, manufactures non-skid bedliners and bed mats, as well as ground lowering kits for sport utility vehicles (SUVs) and three piece sliding tonneau covers for pickup trucks. CRL has a distribution warehouse/service center in Pomona, California and also markets its products through CTA's retail outlet stores. CRL, as successor to the Rugged Liner Companies, concentrates its efforts on export bedliner sales, and domestic ground effects, tonneau cover and bed mat sales. As discussed below under "Consolidation of CRL Bedliner Operations with CTA," the Company is in the process of consolidating CRL's bedliner manufacturing operations with CTA's Owosso, Michigan facility.
The Colonel's Brainerd International Raceway, Inc. CBIR operates a motor sports facility located approximately six miles northwest of Brainerd, Minnesota. Substantially all of CBIR's revenues are obtained from motor sports racing events at the racetrack. CBIR schedules racing and other events held at the racetrack during weekends in May through September of each year. In 1998, CBIR's name was changed from Brainerd International Raceway, Inc. to The Colonel's Brainerd International Raceway, Inc. to better reflect the racetrack's affiliation with the Company and its products.
The Colonel's, Inc.; Major Sale of Assets. The Colonel's was organized in 1982 and began producing and selling plastic bumpers and facias in 1983. By 1996, The Colonel's had grown through
acquisitions and normal expansion to two manufacturing plants, five distribution warehouses and a
On December 17, 1998, the Company sold substantially all of the assets of The Colonel's used in its bumper production operations to AutoLign Manufacturing Group, Inc. The sale consisted of substantially all of The Colonel's inventory, machinery and equipment, accounts receivable and prepaid items. AutoLign also assumed certain liabilities such as accounts payable and purchase commitments. Certain real estate and transportation equipment that was not part of the sale remains with The Colonel's.
Sale/Consolidation of CTA's Stores
During 1999, CTA decided to discontinue its retail store operations and the manufacturing of fiberglass shells, caps and tonneau covers and focus on its core activity of bedliner manufacturing in Owosso, Michigan. The retail store operations provided an excellent means of obtaining a presence in the marketplace and expanding production. However, during 1999, CTA sold a number of stores to existing and new distributors and consolidated stores in close proximity to effect cost reductions. CTA sold certain store operations in the first quarter of 2000 and plans to continue divesting retail operations in the second quarter of 2000. Many of the stores were sold pursuant to agreements that require the buyer to purchase bedliners exclusively from CTA or to make certain minimum purchases from CTA for a five-year period (as long as CTA provides a quality product, on time and at competitive prices).
During June 1999, CTA sold its Pomona, California store and consolidated its Baldwin Park, California store with its new Trader's store. It also consolidated its Roswell, New Mexico; Ruidoso, New Mexico; and Las Cruces, New Mexico stores with its El Paso, Texas store. In July 1999 CTA sold stores in Santa Clara, California and Upland, California. CTA also merged its Los Angeles, California store and the Rugged Liner warehouse in California into its new Trader's location in Whittier, California and merged its Franklin, Tennessee store into its Nashville, Tennessee store. The Wexford, Pennsylvania store was closed in August 1999. CTA sold the inventory and certain assets of its Eastern Off Road stores which are comprised of the Uniontown, Pennsylvania warehouse and stores in Pittsburgh, Pennsylvania, Greensburg, Pennsylvania; Morgantown, West Virginia; Glen Burnie, Maryland; and Norfolk, Virginia in November 1999. CTA also sold certain assets of its Riverside, California facility engaged in the manufacturing of fiberglass shells and tonneau covers in November 1999.
An impairment loss of $836,000 (consisting of $570,000 for property, plant and equipment and inventory and $266,000 for goodwill) was recognized in the fourth quarter of 1999 on retail store assets held for sale which are expected to be sold in 2000. The impairment was recognized in order to record assets held for sale at net realizable value. No additional impairment loss was recorded in the first quarter of 2000.
CTA sold its Charlotte, North Carolina and Roseville, California stores in January 2000, and its Nashville, Tennessee and Thousand Oaks, California stores in February 2000. Proceeds from the sale of these stores was $452,000. A loss of $5,000 was recognized on the disposal of these store operations, net of the reserve for impairment.
Revenues for the locations sold through the first quarter of 2000 were approximately $10,615,000 in 1999 and $270,000 for the first quarter of 2000.
The Company does not expect these sales and consolidations to have any adverse impact on the Company's future operations. Instead, management expects cost reductions and greater efficiencies associated with these activities. Proceeds received on sales have been and will be used to meet ongoing Company cash requirements.
Consolidation of CRL Bedliner Operations with CTA
In December 1999, the Company decided to consolidate CRL's Uniontown, Pennsylvania bedliner manufacturing operations with CTA's Owosso, Michigan facility during 2000 in an effort to increase efficiency and reduce costs. As part of the consolidation, the Company recognized an impairment loss of $1,583,000 on long lived assets comprised of tooling, molds, machinery and equipment, and furniture and fixtures at the Uniontown facility which were duplicative of assets in Owosso, Michigan and whose future use would not be substantial. Additionally, goodwill of $840,000 associated with CRL product lines to be discontinued was impaired and written off in 1999. The consolidation effort is anticipated to be completed in the second quarter of 2000, and is expected to reduce manufacturing and distribution costs. No additional impairment was recorded in the first quarter of 2000.
Liquidity and Capital Resources
In prior periods, the Company has funded its working capital and capital expenditure requirements using cash flows from operations and bank borrowing under revolving lines of credit and bank notes. The revolving lines of credit and bank notes were paid in full at the time of the December 1998 sale of the bumper production operations of The Colonel's described above. To meet its current obligations, the Company, as well as its majority shareholders and related entities, are actively pursuing various financing arrangements. Management anticipates that it will be able to obtain sufficient funds to meet the Company's cash requirements for the near future.
The Company's consolidated current assets decreased from $12,259,000 at December 31, 1999 to $9,914,000 at March 31, 2000. This decrease primarily related to a $1,219,000 decrease in inventory and a $720,000 decrease in cash. The Company's consolidated current liabilities decreased from $10,152,000 at December 31, 1999 to $8,762,000 at March 31, 2000. This decrease primarily relates to a $1,759,000 decrease in income taxes payable, and a $220,000 decrease in accounts payable, offset by an increase in accrued expenses of $507,000.
Cash decreased by $720,000 from the year end 1999 to March 31, 2000 primarily due to payments of $1,500,000 toward the Company's 1998 income tax liability, offset by proceeds of approximately $644,000 from sales of net assets held for sale.
Accounts receivable-trade decreased by approximately $119,000 from $1,756,000 as of December 31, 1999 to $1,637,000 at March 31, 2000, due to a reduction in retail accounts receivable resulting from the sale of store operations.
An account receivable from a related party of $420,000 was established in the fourth quarter of 1999. The balance due at March 31, 2000 was $178,000. See Note 4 to the consolidated financial statements included in Appendix A.
Notes receivable - related party at March 31, 2000 are comprised principally of a $5,200,000 note which is secured with a personal guarantee from the majority shareholder and requires monthly principal and interest payments. The January and February 2000 installments were paid after the end of the first quarter. The March installment has not been paid. The majority shareholders and affiliated entities are in the process of seeking funds and have informed the Company that they intend to pay this debt in the near term. An additional demand note of $1,401,000 from an affiliated entity (which bears 8% interest) was outstanding as of March 31, 2000. On April 14, 2000, the note was paid in full.
Inventories decreased by approximately $1,219,000 between March 31, 2000 and December 31, 1999, from $6,044,000 to $4,825,000, primarily as a result of the sale of certain store operations with inventory balances of approximately $590,000 and better inventory management practices. See "Sale/Consolidation of CTA's Stores" and "Consolidation of CRL Bedliners Manufacturing Operations" above, as well as Note 6 to the consolidated financial statements included in Appendix A.
Net assets held for sale decreased by $289,000, from $929,000 at December 31, 1999 to $640,000 at March 31, 2000 due to the sale of certain store operations and idle production presses. See Note 6 to the consolidated financial statements included in Appendix A.
Other assets-current increased $295,000, from $523,000 at December 31, 1999 to $818,000 at March 31, 2000, primarily due to amounts owed to the Company on retail store operations sold in the first quarter of 2000.
Net property, plant and equipment decreased by approximately $339,000 from $18,981,000 at December 31, 1999 to $18,642,000 at March 31, 2000, primarily due to a progress payment of $119,000 toward the construction of townhouses at CBIR, the purchase of molds and tooling for $60,000 and other equipment purchases of $50,000, offset by depreciation for the period of $587,000.
Goodwill decreased by approximately $125,000 from $2,529,000 at December 31, 1999 to $2,404,000 at March 31, 2000 as a result of normal amortization expense using a seven-year life.
Other assets-long term decreased $21,000 from $1,653,000 at December 31, 1999 to $1,632,000 at March 31, 2000.
Liabilities and Equity
Accounts payable decreased by approximately $220,000 from $4,184,000 at December 31, 1999 to $3,964,000 at March 31, 2000, primarily due to a reduction in inventory purchases resulting from the sale of retail store operations.
Accrued expenses increased by $507,000 from $2,033,000 at December 31, 1999 to $2,540,000 at March 31, 2000, primarily due to an additional amount of $539,000 owed pursuant to the exercise of put options by the former shareholders of the Rugged Liner Companies and advance ticket sales of $359,000 at CBIR, offset by a decrease in other accrued expenses of $321,000. See Notes 9 and 14 to the consolidated financial statements included in Appendix A.
Deferred compensation decreased by $20,000, from $173,000 at December 31, 1999 to $153,000 at March 31, 2000, due to normal payments.
Income taxes payable decreased from $2,671,000 at December 31, 1999 to $911,000 at March 31, 2000, primarily due to payments made on the Company's 1998 federal income tax liability. In November 1999 the Company received a notice from the Internal Revenue Service ("IRS") regarding the Company's failure to timely file its 1998 corporate income tax return and timely pay the taxes associated with the return. The IRS assessed penalties of $2,442,000 and interest of approximately $574,000 on a tax liability of approximately $8,488,000. Subsequently, the IRS waived penalties of $2,100,000 but not the interest.
The Company has made regular monthly payments
toward its outstanding tax liability (including $1,250,000,
paid subsequent to the end of the first quarter of 2000), thereby eliminating its 1998 tax liability leaving interest and penalties of approximately $800,000 as of May 15, 2000. Company
management and legal counsel have had ongoing discussions with an IRS agent
regarding the payment of the
Outstanding Loans
With the proceeds of the December 1998 sale of The Colonel's assets described above, the Company paid-off its bank line of credit and notes. At that time, the Company suspended its credit facilities with its lending institution.
CBIR entered into a term loan in August 1999 in the amount of $403,000. This loan is secured by a permanent grandstand addition and requires annual principal payments of $100,675, plus 9% interest, through 2003. CBIR also has a term loan of $250,000 which is secured by property. The loan requires quarterly interest payments at 2% above the prime rate and a single principal payment of $50,000 per year through 2004.
In 1995, The Colonel's leased $2,689,000 of equipment under a six-year equipment lease agreement that includes an option to purchase the equipment for $1.00 upon expiration of the lease term. The payment amounts under the lease represent principal payments, with interest at rates between 7.5 and 8.75 percent. In 1996, The Colonel's leased additional equipment in the amount of $3,744,000, structured in the same manner as noted above.
The Company believes that it will be able to its satisfy ongoing cash requirements for the next 12 months and thereafter with cash flows from operations and the collection of notes receivable outstanding from the majority shareholder and related entities, supplemented by borrowing arrangements that may be necessary from time to time.
Results of Operations
Revenues for the Company were $6,555,000 in the three months ended March 31, 2000, compared to $8,725,000 in the same period of 1999. The $2,170,000 decrease in 2000 was primarily due to the sale of certain retail store operations in 1999 and the first quarter of 2000. CBIR traditionally has little revenue during the first quarter because the racing season doesn't begin until May of each year.
Cost of sales for the first quarters in 2000, and 1999 were 83% and 85% of revenue respectively. The Company realizes better margins on wholesale sales which it is now concentrating on as opposed to retail sales.
Selling, general and administrative expenses were $2,085,000 and $2,280,000 for the first quarters of 2000 and 1999, respectively, or as a percentage of revenues, 32% and 26%. The absolute decrease in total expense is primarily attributable to the sale of retail store operations. See "Sale/Consolidation of CTA's Stores," above. Since a portion of these expenses are fixed in nature, these costs as a percentage of revenues will not decrease proportionately.
Interest expense decreased from $122,000 for the first quarter of 1999 to $91,000 for the first quarter of 2000. This decrease was due to the Company's ability to pay off the vehicle financing during the first quarter of 1999 and the reduction of debt amounts, resulting in lower interest amounts.
Interest income decreased by $106,000 from the first quarter of 1999 to the first quarter of 2000 due to the reduction of excess cash available for short-term investment.
Net rental income decreased by $26,000 from $66,000 to $40,000 for the quarters ending March 31, 1999 and 2000, respectively.
Market Risk Disclosure
On occasion the Company has inventory purchase commitments outside the United States that are subject to foreign market fluctuations. At present, all sales transactions are conducted in United States Dollars. The Company does not believe that it faces significant exposure to foreign currency fluctuations. However, as the Company's sales to foreign countries continue to expand there is a risk that such markets may suddenly change and that the Company may have to accept payment in foreign currencies.
The Company from time to time purchases products from outside the United States. The Company usually pays for its purchases in U.S. Dollars. These purchases are based on the foreign countries' economic conditions and because the Company markets and sells its products throughout the world, it could be affected by a weak economic condition associated with a foreign entity.
Other than the term loans described above, and the other items described in Note 8 to the consolidated financial statements included in Appendix A, the Company currently has no outstanding borrowings. When the Company borrows money in the future, it may be exposed to changes in interest rates. The Company's interest rates are usually based on the prime rate. If this rate changes there could be an adverse effect on the Company's cash flow and profits.
The Company deals in a marketplace that generally has been favorably changing over the past five years. The SUV market has increased in the last five years. More new SUVs and trucks are now sold in the United States than new automobiles. This market change has had a positive impact on the Company. Any change in the buying habits of consumers would have an adverse effect on the Company's marketplace and profit potential. Because the Company invests up front money in tooling to manufacture models, any downward trend would change the product mix analysis and drive costs higher.
The Company's new contract with the NHRA for the national race at the CBIR race facility is critical to the track. The track obtains 60% of its sales and 70% of its profit from this race. The loss of the National race with the NHRA would immediately impact CBIR's income potential.
The Company operates using a very small management group. The sudden loss of one of the key managers could have an immediate impact on the Corporation because of the lack of cross trained personnel.
Effects of Inflation
The Company believes that the relatively moderate inflation rate over the last few years has not had a significant impact on the Company's operations. The Company does not expect inflation to have any near-term material effect on the sales of its products, although there can be no assurance that such an effect will not occur in the future.
New Accounting Standard
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS No. 133") which is effective for fiscal years beginning after June 15, 2000. This statement
standardizes the accounting for derivative instruments, including certain derivative instruments embedded in other contracts, by recognition of these items as assets and liabilities in the statement of financial position and measurement at fair value. The
Company will adopt this statement
Segment Reporting
For a discussion of the Company's business segments, see Note 15 to the consolidated financial statements included in Appendix A.
Year 2000 Readiness Disclosure
The Company did not experience any material disruptions to its operations arising from failure of the Company's computer systems or other equipment to properly handle the year 2000 issue. The Company has spent approximately $270,000 to address the year 2000 issue. These costs were expensed as incurred.
Subsequent Events
In April 2000, the Company received payment on a $1,401,000 note receivable due from an affilated entity. The Company in turn paid $1,000,000 towards its 1998 income tax liability with the proceeds of the note. See above and Notes 3 and 10 to the consolidated financial statements included in Appendix A.
The Company sold inventory and certain assets of its Collinsville, Illinois and South Sacramento, California store operations in April, 2000. Proceeds from the sales were approximately $558,000. Revenues from these operations were approximately $2,805,000 in 1999 and $615,000 for the first quarter of 2000.
Forward-Looking Statements
With the exception of historical matters, the matters discussed in this report, particularly descriptions of the Company's plans with respect to the business of CTA, contain forward-looking statements that are based on management's beliefs, assumptions, current expectations, estimates and projections about the industries in which the Company operates, the economy, and about the Company itself. Words such as "anticipates," "believes," "estimates," "expects," "intends," "is likely," "plans," "predicts," "projects," variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions ("Future Factors") that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed or forecasted in such forward-looking statements. Furthermore, the Company undertakes no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events or otherwise.
Future Factors include, but are not limited to, uncertainties relating to changes in demand for the Company's products or trucks and SUVs; the cost and availability of inventories, raw materials and equipment to the Company; the degree of competition by the Company's competitors; changes in government and regulatory policies; changes in economic conditions; and the ability of the Company to sell certain of its retail store operations on favorable terms. These matters are representative of the Future Factors that could cause a difference between an ultimate actual outcome and a forward-looking statement.
|
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk. |
See the discussion under "Market Risk Disclosure" in Item 2 above.
PART II
OTHER INFORMATION
|
Item 1. |
Legal Proceedings. |
For a discussion of certain pending legal proceedings involving the former shareholders of the Rugged Liner Companies, see Note 14 to the consolidated financial statements included in Appendix A.
|
Item 6. |
Exhibits and Reports on Form 8-K. |
(a) Exhibits. The following exhibits are filed as part of this report.
|
Exhibit |
|
|
|
|
|
2.1 |
Agreement and Plan of Merger between The Colonel's, Inc. and Brainerd Merger Corporation and joined in by Brainerd International, Inc. Incorporated by reference from Exhibit A to the Proxy Statement of Brainerd International, Inc. for the Annual Meeting of Shareholders of Brainerd International, Inc. held on November 21, 1995. |
|
|
|
|
2.2 |
Agreement and Plan of Reorganization among Brainerd International, Inc. and The Colonel's Holdings, Inc. Incorporated by reference from Exhibit D to the Proxy Statement of Brainerd International, Inc. for the Annual Meeting of Shareholders of Brainerd International, Inc. held on November 21, 1995. |
|
|
|
|
2.3 |
Amended and Restated Asset Purchase Agreement by and between Colonel's Acquisition Corp. (later renamed AutoLign Manufacturing Group, Inc.), The Colonel's International, Inc., The Colonel's, Inc. and Donald J. Williamson dated November 23, 1998. Incorporated by reference to Appendix A to the Company's Definitive Proxy Statement filed with the Securities and Exchange Commission on December 7, 1998. |
|
|
|
|
2.4 |
First Amendment to Amended and Restated Asset Purchase Agreement by and between AutoLign Manufacturing Group, Inc. (formerly known as Colonel's Acquisition Corp.), The Colonel's International, The Colonel's, Inc. and Donald J. Williamson dated December 17, 1998. Incorporated by reference to Exhibit 2(b) to the Company's Report on Form 8-K filed with the Securities and Exchange Commission on December 30, 1998. |
|
|
|
|
2.5 |
Agreement and Plan of Merger by and among The Colonel's International, Inc., The Colonel's Rugged Liner, Inc., Rugged Liner, Inc., Triad Management Group, Inc., Aerocover, Inc., Ground Force, Inc., and certain shareholders of the foregoing, dated March 13, 1998. Incorporated by reference to Exhibit 2(a) to the Registrant's Current Report on Form 8-K dated May 8, 1998. |
|
|
|
|
2.6 |
First Amendment to Agreement and Plan of Merger, by and among The Colonel's International, Inc., The Colonel's Rugged Liner, Inc., Rugged Liner, Inc., Triad Management Group, Inc., Aerocover, Inc., Ground Force, Inc., and certain shareholders of the foregoing, dated April 23, 1998. Incorporated by reference to Exhibit 2(b) to the Registrant's Current Report on Form 8-K dated May 8, 1998. |
|
Exhibit |
|
|
|
|
|
3.1 |
Articles of Incorporation of the Company, as amended. Incorporated by reference from Exhibit 3.1 to the Company's Report on Form 10-Q for the period ended March 31, 1997. |
|
|
|
|
3.2 |
Bylaws of the Company, as amended. Incorporated by reference from Exhibit 3.2 to the Company's Report on Form 10-Q for the period ended March 31, 1997. |
|
|
|
|
27 |
Financial Data Schedule. |
(b) Reports on Form 8-K. The Registrant did not file any reports on Form 8-K during the quarter ended March 31, 2000.
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 COLONEL'S INTERNATIONAL, INC. Gregory T. Strzynski Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer of the Registrant) |
APPENDIX A
THE COLONEL'S INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
|
|
March 31, |
|
December 31, |
|
|
ASSETS |
||||
|
|
|
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
|
Cash |
$ |
349,236 |
$ |
1,069,338 |
|
Accounts receivable: |
|
|
||
|
Related party (Note 4) |
|
177,969 |
|
419,784 |
|
Notes receivable - related party (Note 3) |
|
1,466,915 |
|
1,517,698 |
|
Inventories (Note 5) |
|
4,824,739 |
|
6,044,379 |
|
Net assets held for sale (Note 6) |
|
639,620 |
|
929,025 |
|
Other |
|
818,179 |
|
522,843 |
|
|
|
|
|
|
|
Total current assets |
|
9,913,622 |
|
12,259,422 |
|
|
|
|
|
|
|
PROPERTY, PLANT, AND EQUIPMENT - Net |
|
18,642,014 |
|
18,980,980 |
|
(Notes 7 and 8) |
|
|
|
|
|
|
|
|
|
|
|
OTHER ASSETS: |
|
|
|
|
|
Notes receivable - related party (Note 3) |
|
4,971,028 |
|
5,001,685 |
|
Goodwill (Net of accumulated amortization and |
|
2,403,864 |
|
2,528,981 |
|
Other |
|
1,631,982 |
|
1,653,435 |
|
|
|
|
|
|
|
Total other assets |
|
9,006,874 |
|
9,184,101 |
|
|
|
|
|
|
|
TOTAL ASSETS |
$ |
37,562,510 |
$ |
40,424,503 |
|
|
March 31, |
|
December 31, |
|
|
|
|
|
|
|
|
LIABILITIES & SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
|
|
Current portion of long-term obligations (Note 8) |
$ |
1,293,913 |
$ |
1,204,528 |
|
Accounts payable |
|
3,964,335 |
|
4,184,161 |
|
Accrued expenses (Note 9) |
|
2,540,200 |
|
2,033,077 |
|
Current portion of deferred compensation |
|
52,000 |
|
59,279 |
|
Income taxes payable (Note 10) |
|
911,453 |
|
2,670,673 |
|
|
|
|
|
|
|
Total current liabilities |
|
8,761,901 |
|
10,151,718 |
|
|
|
|
|
|
|
LONG-TERM OBLIGATIONS, NET OF |
|
|
|
|
|
CURRENT PORTION (Note 8) |
|
2,819,455 |
|
3,073,601 |
|
|
|
|
|
|
|
LONG-TERM PORTION OF DEFERRED |
|
|
|
|
|
COMPENSATION |
|
101,400 |
|
114,400 |
|
|
|
|
|
|
|
SHAREHOLDERS' EQUITY (Notes 9 and 14): |
|
|
|
|
|
Common stock: 35,000,000 shares authorized |
|
|
|
|
|
Additional paid-in-capital |
|
7,369,879 |
|
7,908,336 |
|
Retained earnings |
|
18,264,702 |
|
18,931,265 |
|
|
|
|
|
|
|
Total shareholders' equity |
|
25,879,754 |
|
27,084,784 |
|
|
|
|
|
|
|
TOTAL LIABILITIES & SHAREHOLDERS' |
|
|
|
|
|
EQUITY |
$ |
37,562,510 |
$ |
40,424,503 |
|
|
|
|
|
|
THE COLONEL'S INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
Three Months Ending |
|||||||||
|
2000 |
|
|
1999 (As restated) (Note 17) |
||||||
|
SALES |
$ |
6,554,884 |
|
$ |
8,724,834 |
|
|||
|
|
|
|
|
|
|
|
|||
|
COST OF SALES |
|
5,408,221 |
|
|
7,424,198 |
|
|||
|
|
|
|
|
|
|
|
|||
|
GROSS PROFIT |
|
1,146,663 |
|
|
1,300,636 |
|
|||
|
|
|
|
|
|
|
|
|||
|
SELLING, GENERAL AND |
|
2,084,601 |
|
|
2,279,550 |
|
|||
|
|
|
|
|
|
|
|
|||
|
LOSS FROM OPERATIONS |
|
(937,938 |
) |
|
(978,914 |
) |
|||
|
|
|
|
|
|
|
|
|||
|
OTHER INCOME (EXPENSE): |
|
|
|
|
|
|
|||
|
Interest expense |
|
(91,194 |
) |
|
(121,639 |
) |
|||
|
Interest income |
|
36,218 |
|
|
142,611 |
|
|||
|
Net rental income |
|
39,573 |
|
65,609 |
|
||||
|
Other |
|
27,562 |
|
|
15,694 |
|
|||
|
|
|
|
|
|
|
|
|||
|
Other income (expense), net |
|
12,159 |
|
|
102,275 |
|
|||
|
|
|
|
|
|
|
|
|||
|
LOSS BEFORE INCOME TAX BENEFIT |
|
(925,779 |
) |
|
(876,639 |
) |
|||
|
|
|
|
|
|
|
|
|||
|
INCOME TAX BENEFIT |
|
(259,218 |
) |
|
333,123 |
||||
|
|
|
|
|
|
|
|
|||
|
NET LOSS |
$ |
(666,561 |
) |
$ |
(543,516 |
) |
|||
|
|
|
|
|
|
|
|
|||
|
BASIC AND DILUTED |
|
|
|
|
|
|
|||
|
LOSS PER SHARE (Note 11) |
$ |
(0.03 |
) |
$ |
(0.02 |
) |
|||
THE COLONEL'S INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
Three Months Ending |
|||||
|
|
2000 |
1999 (As restated) (Note 17) |
||||
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
Net loss |
$ |
(666,561 |
) |
$ |
(543,516 |
) |
|
Adjustments to reconcile net loss to net cash |
|
|
|
|
|
|
|
provided by operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
711,898 |
|
|
983,509 |
|
|
Deferred tax provision |
|
-- |
|
|
(126,000 |
) |
|
Gain on sale of property and equipment |
|
(18,527 |
) |
|
-- |
|
|
Changes in assets and liabilities that (used) provided cash: |
|
|
|
|
|
|
|
Accounts receivable |
|
361,206 |
|
(72,503 |
) |
|
|
Inventories |
|
783,558 |
|
|
(262,690 |
) |
|
Other |
|
(310,162 |
) |
|
42,289 |
|
|
Accounts payable |
|
(219,828 |
) |
|
(1,934,972 |
) |
|
Accrued expenses |
|
(31,345 |
) |
|
422,181 |
|
|
Income taxes payable |
|
(1,759,219 |
) |
|
(551,030 |
) |
|
|
|
|
|
|
|
|
|
Net cash used in operating activities |
|
(1,148,980 |
) |
|
(2,042,732 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
Capital expenditures |
|
(254,354 |
) |
|
(2,252,993 |
) |
|
Proceeds from sale of property and equipment |
|
122,900 |
|
|
-- |
|
|
Net change in deposits |
|
-- |
|
|
145,588 |
|
|
Additions to notes receivable-related party |
|
-- |
|
|
(5,200,000 |
) |
|
Payments received on notes receivable-related party |
|
81,441 |
|
|
25,000 |
|
|
Proceeds from sale of businesses, net of cash sold |
|
452,082 |
|
|
-- |
|
|
Proceeds from sale of assets held for sale |
|
191,570 |
|
|
-- |
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities |
|
593,639 |
|
|
(7,282,405 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
Principal payments on long-term debt |
|
(11,752 |
) |
|
(206,262 |
) |
|
Principal payments on obligations under capital leases |
|
(153,009 |
) |
|
(121,678 |
) |
|
Common stock redeemed (Notes 9 and 14) |
|
-- |
|
|
(931,089 |
) |
|
|
|
|
|
|
|
|
|
Net cash (used in) financing activities |
|
(164,761 |
) |
|
(1,259,029 |
) |
|
|
|
|
|
|
|
|
|
NET (DECREASE) IN CASH |
|
(720,102 |
) |
|
(10,584,166 |
) |
|
|
|
|
|
|
|
|
|
CASH, BEGINNING OF PERIOD |
|
1,069,338 |
|
|
18,303,097 |
|
|
|
|
|
|
|
|
|
|
CASH, END OF PERIOD |
$ |
349,236 |
|
$ |
7,718,931 |
|
Continued
THE COLONEL'S INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
Three Months Ending |
|
||||
|
|
2000 |
|
1999 (As restated) (Note 17) |
|
||
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW |
|
|
|
|
|
|
|
Cash paid during the period for interest |
$ |
65,522 |
|
$ |
121,639 |
|
|
|
|
|
|
|
|
|
|
Cash paid during the period for taxes |
$ |
1,500,000 |
|
$ |
91,907 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL SCHEDULE OF NONCASH |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in accrued expenses for future share redemption |
$ |
538,468 |
|
$ |
-- |
|
(concluded)
THE COLONEL'S INTERNATIONAL, INC.
Notes to Consolidated Financial Statements (Unaudited)
|
Note 1 |
BASIS OF PRESENTATION |
|
|
|
|
|
The financial information included herein is unaudited; however such information reflects all adjustments (consisting solely of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the results of operations, financial position and cash flows for the periods presented. |
|
|
|
|
|
The results of operations for the three months ended March 31, 2000 are not necessarily indicative of the results expected for the full year. |
|
|
|
|
|
Reclassifications - Certain 1999 amounts have been reclassified to conform to the 2000 presentation. |
|
|
|
|
|
|
|
Note 2 |
WRITE DOWN OF IMPAIRED ASSETS |
|
|
|
|
|
During the fourth quarter of 1999, the Company wrote down approximately $3,481,000 of impaired long-lived assets. The write down included $570,000 of property, plant and equipment, and inventory at retail store locations which are held for sale (Note 6), goodwill of $266,000 associated with retail store assets held for sale, $222,000 of low usage bedliner molds and tooling used in the Company's Owosso, Michigan operation and $1,583,000 in tooling, molds, machinery and equipment, and furniture and fixtures at the Company's Uniontown, Pennsylvania bedliner manufacturing facility. The Company is currently in the process of consolidating its Pennsylvania manufacturing operations into its Michigan facility in an effort to reduce costs and improve productivity. Accordingly, the sustained use of these assets is unlikely. Based on the Company's expectation of future undiscounted net cash flow, these assets have been written down to their net realizable value. |
|
|
|
|
|
As a result of management's decision to discontinue certain product lines at CRL's Pennsylvania facility, the goodwill associated with the purchase of the Pennsylvania facility was partially impaired in 1999. The $840,000 goodwill impairment was determined in a pro rata manner based on the revenue streams associated with the products to be discontinued compared to the revenue streams associated with products which will continue to be produced. |
|
|
|
|
|
|
|
Note 3 |
NOTES RECEIVABLE - RELATED PARTY |
|
|
|
|
|
During the first quarter of 1999, a note receivable from South Saginaw LLC, a company owned by Donald J. Williamson, the Company's Chief Executive Officer and majority shareholder, of $5,200,000 was established. The note requires monthly payments of $43,496, including interest at 8.0%, through February 2005, at which time the unpaid balance is due. The note is secured by a mortgage and personal guarantee. The January and February 2000 installments were paid after the end of the first quarter. The March installment has not been paid. The majority shareholder and affiliated entities are in the process of seeking funds and have informed the Company they intend to pay this debt in the near term. |
|
|
On November 13, 1998 a demand note for $1,401,000 from Williamson Buick, Inc., a company affiliated through common ownership was established. The note was due and payable by November 13, 1999 and bears interest at 8%. On April 12, 2000 the due date was extended to May 15, 2000 by the Company's Board of Directors. On April 14, 2000 the note was paid in full. |
|
|
|
|
|
|
|
Note 4 |
ACCOUNTS RECEIVABLE - RELATED PARTY |
|
|
|
|
|
During the fourth quarter of 1999 and the first quarter of 2000, the Company paid certain expenses on behalf of affiliated entities. The amount outstanding at March 31, 2000 was approximately $178,000. |
|
|
|
|
|
|
|
Note 5 |
INVENTORIES |
|
|
Inventories are summarized as follows: |
|
March 31, |
|
December 31, |
|
|
|
|
2000 |
|
1999 |
|
|
|
|
|
(unaudited) |
|
(audited) |
|
|
|
|
|
|
|
|
|
|
|
|
Finished products |
$ |
4,220,436 |
$ |
5,283,860 |
|
|
|
Raw materials |
|
604,303 |
|
760,519 |
|
|
|
|
|
|
|
|
|
|
|
Total inventories |
$ |
4,824,739 |
$ |
6,044,379 |
|
|
Note 6 |
NET ASSETS HELD FOR SALE |
|
|
|
|
|
In the fourth quarter of 1999, the Company decided to discontinue its retail store operations and the manufacturing of fiberglass shells, caps and tonneau covers. During 1999, the Company sold certain store operations to existing and new distributors and consolidated store operations in close proximity to effect cost reductions. The Company intends to continue selling retail store operations in 2000. |
|
|
|
|
|
Proceeds from the sale of store operations in the first quarter of 2000 totaled approximately $452,000, primarily for the sale of inventory because most stores were operated on leased property. A loss of $5,000 net of a reserve for impairment was incurred in the disposition of stores in the first quarter of 2000. An impairment loss of $836,000 was recorded to adjust the carrying value of retail store assets held for sale to estimated net realizable value at December 31, 1999. The sale of store operations is expected to be completed in the second quarter of 2000. The net book value of retail store assets held for sale at March 31, 2000 was approximately $488,000. |
|
|
|
|
|
Revenues for the locations sold in the first quarter of 2000 was approximately $3,775,000 in 1999 and $270,000 for the first quarter of 2000. |
|
|
|
|
|
Also included in net assets held for sale are production presses with a carrying value of $151,500 at March 31, 2000. During the first quarter of 2000, the Company disposed of certain production presses with a combined carrying value of $277,000, recognizing a loss of $86,500, which is included in selling, general and administrative expense. |
|
Note 7 |
PROPERTY, PLANT AND EQUIPMENT |
|
|
|
|
|
Property, plant and equipment is summarized by major classification as follows: |
|
|
|
March 31, |
|
|
December 31, |
|
|
|
|
|
2000 |
|
|
1999 |
|
|
|
|
|
(unaudited) |
|
|
(audited) |
|
|
|
|
Land and improvements |
$ |
4,979,387 |
|
$ |
4,979,387 |
|
|
Track |
1,821,553 |
1,821,553 |
|||||
|
|
Buildings |
|
4,214,921 |
|
|
4,214,921 |
|
|
|
Leasehold improvements |
|
85,512 |
|
|
85,512 |
|
|
|
Bleachers & fencing |
|
1,501,294 |
|
|
1,501,294 |
|
|
|
Equipment (including equipment under capital lease) |
|
8,309,740 |
|
|
8,278,818 |
|
|
|
Transportation equipment |
|
2,986,463 |
|
|
3,678,535 |
|
|
|
Furniture & fixtures |
|
605,095 |
|
|
593,387 |
|
|
|
Tooling |
|
3,571,908 |
|
|
3,533,033 |
|
|
|
Construction in progress |
|
264,329 |
|
|
145,062 |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
28,340,202 |
|
|
28,831,502 |
|
|
|
Less accumulated depreciation |
|
(9,698,188 |
) |
|
(9,850,522 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net property, plant and equipment |
$ |
18,642,014 |
|
$ |
18,980,980 |
|
|
|
The Company signed a purchase commitment of $450,000 to construct a six-unit townhouse at CBIR. To date, the Company has made progress payments of $264,329. |
|
|
|
|
|
|
|
Note 8 |
LONG TERM OBLIGATIONS |
|
|
|
|
|
Long-term obligations consist of the following: |
|
|
|
March 31, |
|
December 31, |
|
|
|
|
2000 |
|
1999 |
|
|
|
|
(unaudited) |
|
(audited) |
|
|
|
|
|
|
|
|
|
|
Term loan, annual installments of $100,678 plus interest at |
|
|
|
|
|
|
9% through May 2003. Secured by related assets |
$ 402,700 |
|
$ 402,700 |
|
|
|
Mortgage payable to a bank, interest at the bank's prime |
|
|
|
|
|
|
rate plus 2% (effective rate of 11.00% at March 31, 2000), |
|
|
|
|
|
|
annual principal payments of $50,000 plus interest due quarterly, |
|
|
|
|
|
|
through September 2004. Secured by underlying property |
250,000 |
|
250,000 |
|
|
|
Capital lease obligations through December 2002; |
|
|
|
|
|
|
monthly installments include interest at rates between |
|
|
|
|
|
|
7.5% and 8.75%, collateralized by the related machinery |
|
|
|
|
|
|
and equipment |
3,440,703 |
|
3,593,712 |
|
|
|
Other |
19,965 |
|
31,717 |
|
|
|
Total |
4,113,368 |
|
4,278,129 |
|
|
|
|
|
|
|
|
|
|
Less current portion |
(1,293,913 |
) |
(1,204,528 |
) |
|
|
|
|
|
|
|
|
|
Long-term |
$ 2,819,455 |
|
$ 3,073,601 |
|
|
Note 9 |
ACCRUED EXPENSES |
|
|
Accrued expenses consist of the following: |
|
March 31, |
|
December 31, |
|
|
|
2000 |
|
1999 |
|
|
|
|
(unaudited) |
|
(audited) |
|
|
|
Accrued settlements |
$ |
55,000 |
$ |
150,000 |
|
|
Accrued interest and penalties (Note 10) |
|
879,924 |
|
854,252 |
|
|
Accrued liability, common stock redeemed (Note 14) |
|
931,089 |
|
392,621 |
|
|
Advance ticket sales |
|
359,317 |
|
-- |
|
|
Other |
|
314,870 |
|
636,204 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
$ |
2,540,200 |
$ |
2,033,077 |
|
Note 10 |
INCOME TAXES |
|
|
|
|
|
In November 1999 the Company received a notice from the Internal Revenue Service ("IRS") regarding the Company's failure to timely file its 1998 corporate income tax return and timely pay the taxes associated with the return. The IRS assessed penalties of $2,442,000 and interest of approximately $574,000 on a tax liability of approximately $8,488,000. Subsequently, the IRS waived penalties of $2,100,000 but not the interest. |
|
|
|
|
|
The Company has made regular monthly payments toward its outstanding tax liability (including $1,250,000 paid subsequent to the end of the first quarter of 2000), thereby eliminating its 1998 tax liability, leaving penalties and interest of approximately $800,000 as of May 15, 2000. Company management and legal counsel have had ongoing discussions with an IRS agent regarding the payment of the delinquent taxes and interest. To date the agent has taken no action, due to the Company's commitment to pay the remaining balance. |
|
|
|
|
|
The principal difference between tax provided for at the federal statutory rate and the effective rate is due to non-deductible expenses. |
|
|
|
|
|
|
|
Note 11 |
LOSS PER SHARE |
|
|
|
|
|
In accordance with SFAS 128, basic loss per share for March 31, 2000 and 1999 are calculated as net loss divided by the weighted average number of common shares outstanding. Diluted loss per share was calculated as net loss divided by the weighted average number of common shares outstanding increased by the number of additional common shares that would have been outstanding if the dilutive shares had been issued. Due to the small number of additional potentially dilutive shares, there was no material effect on loss per share; therefore basic and diluted loss per share are the same. |
|
|
|
|
|
|
|
Note 12 |
LITIGATION |
|
|
|
|
|
No material developments in the litigation discussed in the Company's Report on Form 10-K for the year ended December 31, 1999 occurred during the first quarter of 2000. See also Note 14. |
|
|
|
|
|
|
|
Note 13 |
ENVIRONMENTAL |
|
|
|
|
|
No material developments in the environmental matters discussed in the Company's Report on Form 10-K for the year ended December 31, 1999 occurred during the first quarter of 2000. |
|
Note 14 |
COMMON STOCK REDEEMED |
|
|
|
|
|
Pursuant to the Merger Agreement between the Company, the Rugged Liner Companies and the shareholders of the Rugged Liner Companies, on January 3, 2000, the former shareholders of the Rugged Liner Companies exercised 25% of their put options to require the Company to redeem shares of the Company's Common Stock that such shareholders received in the merger. This exercise was with respect to a total of 113,506 shares, for a total redemption price of $931,089. This amount has not been paid to date. Additionally, the Merger Agreement provides that if the "Average Anniversary Trading Price" of the Company's Common Stock received by the shareholders of the Rugged Liner Companies does not equal or exceed the average trading price of $8.20 per share, the Company shall pay the Rugged Liner shareholders the difference between these two amounts multiplied by the number of shares remaining. The Company recorded an additional liability of $392,621 and charged equity related to the April 24, 1999 anniversary date. This amount offsets the amount owed on the put options exercised on January 3, 2000. The former shareholders of the Rugged Liner Companies filed a summons in a Court of Common Pleas in Pennsylvania relating to these matters. Additionally, one of the former shareholders had the right to require the Company to obtain a letter of credit to secure payment of the Company's future obligations under the Merger Agreement. By letter dated March 3, 2000, counsel for the former shareholder demanded that the Company obtain such a letter of credit to secure approximately $2,793,000 in current and future obligations under the Merger Agreement. To date, the Company has not obtained such a letter of credit. |
|
|
|
|
|
|
|
Note 15 |
SEGMENTS OF BUSINESS |
|
|
|
|
|
The Company's reportable segments are strategic business units that offer different products and services. The business units have been divided into two reportable segments: the manufacturing and sale of bedliners and other truck accessories ("Truck Accessories"), and operation of a multi-purpose motor sports facility in Brainerd, Minnesota ("Raceway"). |
|
|
|
|
|
Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and assessing performance. The Company's chief operating decision-maker is its Chief Executive Officer. |
|
|
|
|
|
The Company evaluates performance based on stand-alone product segment operating income. Intersegment sales and transfers, interest income and expenses are not significant. |
|
|
|
|
|
Financial information segregated by reportable product segment is as follows: |
|
|
|
|
|
Three Months Ending |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2000 |
|
|
1999 |
|
|
|
Sales: |
|
|
|
|
|
|
|
|
|
|
Truck Accessories |
$ |
6,516,332 |
|
$ |
8,706,909 |
|
|
|
|
Raceway |
|
38,552 |
|
|
17,925 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
$ |
6,554,884 |
|
$ |
8,724,834 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from Operations: |
|
|
|
|
|
|
|
|
|
|
Truck Accessories |
$ |
(511,649 |
) |
$ |
(346,570 |
) |
|
|
|
Raceway |
|
(426,289 |
) |
|
(632,344 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
$ |
(937,938 |
) |
$ |
(978,914) |
|
|
|
Note 16 |
SUBSEQUENT EVENTS |
|
|
|
| In April, 2000 the Comapny received payment on a $1,401,000 note receivable due from an affiliated entity. The Company in turn paid $1,000,000 towards its 1998 income tax liability with the proceeds of the note. See also Notes 3 and 10. | |
|
|
The Company sold inventory and certain assets of its Collinsville, Illinois and South Sacramento, California store operations in April, 2000. Proceeds from the sales were approximately $558,000. Revenues from these operations were approximately $2,805,000 in 1999 and $615,000 for the first quarter of 2000. |
| Note 17 | RESTATEMENT |
| Subsequent to the filing of the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1999, management determined that it had failed to recognize an income tax benefit associated with the operating loss incurred. The effects of the restatement are as follows: |
|
Three Months Ending March 31, 1999 (unaudited) |
|||||
|
As Previously Reported |
As Restated |
||||
| Income tax benefit |
$ -- |
$ 333,123 |
|||
| Net loss |
$ (876,639 |
) |
$(543,516 |
) | |
| Basic and diluted loss per share |
$ (0.04 |
) |
$ (0.02 |
) | |
EXHIBIT INDEX
|
Exhibit |
|
|
|
|
|
2.1 |
Agreement and Plan of Merger between The Colonel's, Inc. and Brainerd Merger Corporation and joined in by Brainerd International, Inc. Incorporated by reference from Exhibit A to the Proxy Statement of Brainerd International, Inc. for the Annual Meeting of Shareholders of Brainerd International, Inc. held on November 21, 1995. |
|
|
|
|
2.2 |
Agreement and Plan of Reorganization among Brainerd International, Inc. and The Colonel's Holdings, Inc. Incorporated by reference from Exhibit D to the Proxy Statement of Brainerd International, Inc. for the Annual Meeting of Shareholders of Brainerd International, Inc. held on November 21, 1995. |
|
|
|
|
2.3 |
Amended and Restated Asset Purchase Agreement by and between Colonel's Acquisition Corp. (later renamed AutoLign Manufacturing Group, Inc.), The Colonel's International, Inc., The Colonel's, Inc. and Donald J. Williamson dated November 23, 1998. Incorporated by reference to Appendix A to the Company's Definitive Proxy Statement filed with the Securities and Exchange Commission on December 7, 1998. |
|
|
|
|
2.4 |
First Amendment to Amended and Restated Asset Purchase Agreement by and between AutoLign Manufacturing Group, Inc. (formerly known as Colonel's Acquisition Corp.), The Colonel's International, The Colonel's, Inc. and Donald J. Williamson dated December 17, 1998. Incorporated by reference to Exhibit 2(b) to the Company's Report on Form 8-K filed with the Securities and Exchange Commission on December 30, 1998. |
|
|
|
|
2.5 |
Agreement and Plan of Merger by and among The Colonel's International, Inc., The Colonel's Rugged Liner, Inc., Rugged Liner, Inc., Triad Management Group, Inc., Aerocover, Inc., Ground Force, Inc., and certain shareholders of the foregoing, dated March 13, 1998. Incorporated by reference to Exhibit 2(a) to the Registrant's Current Report on Form 8-K dated May 8, 1998. |
|
|
|
|
2.6 |
First Amendment to Agreement and Plan of Merger, by and among The Colonel's International, Inc., The Colonel's Rugged Liner, Inc., Rugged Liner, Inc., Triad Management Group, Inc., Aerocover, Inc., Ground Force, Inc., and certain shareholders of the foregoing, dated April 23, 1998. Incorporated by reference to Exhibit 2(b) to the Registrant's Current Report on Form 8-K dated May 8, 1998. |
|
|
|
|
3.1 |
Articles of Incorporation of the Company, as amended. Incorporated by reference from Exhibit 3.1 to the Company's Report on Form 10-Q for the period ended March 31, 1997. |
|
|
|
|
3.2 |
Bylaws of the Company, as amended. Incorporated by reference from Exhibit 3.2 to the Company's Report on Form 10-Q for the period ended March 31, 1997. |
|
|
|
|
27 |
Financial Data Schedule. |
|
|