10
FORM 10-Q
SECURITIES AND EXCHANGE
COMMISSION WASHINGTOn, D.C. 20549
Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For Quarter Ended December 31, 1996
Commission File Number: 33-6738-D
Eldorado Artesian Springs, Inc.
(Exact name of registrant as specified in its charter as amended)
Colorado 84-0907853
(State or other jurisdiction of incorporation (IRS Employer Identification No.)
or organization)
PO Box 445, Eldorado Springs, Colorado 80025
(Address of principal executive offices) (Zip Code)
(303)499-1316
(Registrant's telephone number, including area code)
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 shares of common stock outstanding at the latest practicable
date, December 31, 1996: 32,344,948 with 56,045 shares in the treasury.
Eldorado Artesian Springs, Inc.
Form 10-Q, December 31, 1996
TABLE OF CONTENTS
Part I - Financial Information Page
Balance Sheet as of March 31, 1996 and
December 31, 1996 3
Statement of Operations for the nine months and 3 months
ended December 31, 1996 and 1995 4
Statement of Cash Flow for the nine months and 3 months
ended December 31, 1996 and December 31, 1995 5
Notes to Financial Statements 6
Management's Discussion and Analysis of Financial
Condition & Results of Operations 7-8
Part II - Other Information 9
Signature Page 10
ELDORADO ARTESIAN SPRINGS, INC.
Balance Sheet
<TABLE> December 31, 1996 March 31, 1996
<CAPTION> <C> <C>
<S> Assets
Current Assets
Cash 115,260 89,289
Accounts Receivable
Trade Net 267,119 234,543
Other 4,888 4,809
Inventories 115,102 96,210
Prepaid Expenses and Other 55,858 16,783
Deferred Income Taxes 18,251 18,251
Total Current Assets 576,478 459,885
Property, Plant & Equipment (net of 1,121,360 1,144,308
depreciation)
Other Assets
Water Rights - net 120,227 123,593
Other - net 51,965 53,977
Total Other Assets 172,192 177,570
Total 1,870,030 1,781,763
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable 56,798 53,598
Accrued Expenses 56,540 73,288
Unearned Income 16,588 23,863
Current Maturities 53,544 54,148
Total Current 183,470 204,897
Long Term Debt 1,162,959 1,202,967
Deferred Income Taxes 30,359 30,359
Total Liabilities 1,376,788 1,438,223
Equity
Common Stock 32,345 32,345
Additional Paid-in Capital 265,225 265,225
Retained Earnings 45,970 45,970
Net Earnings 149,702
Total Equity 493,242 343,540
Total 1,870,030 1,781,763
</TABLE>
ELDORADO ARTESIAN SPRINGS, INC.
Statement of Operations
<TABLE>
<CAPTION>
<S>
3 Months 9 Months
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1996 1995 1996 1995
<C> <C> <C> <C>
Revenue
Water and related 600,308 468,543 1,902,117 1,508,491
Pool 0 378 75,419 78,420
Rentals 11,865 11,515 35,595 31,345
Returns and
Allowances (3,991) 7,304 (13,953) (851)
NET REVENUE 608,182 487,740 1,999,178 1,617,405
Cost of Goods Sold 76,224 66,388 317,802 235,384
Gross Profit 531,958 421,352 1,681,376 1,382,021
Operating Expenses
Salaries and 248,619 190,722 750,877 627,734
Related
Administrative 87,015 60,583 252,797 184,211
and General
Selling and 82,708 71,753 283,279 211,549
Delivery
Depreciation and 57,819 43,973 161,468 131,921
Amortization
TOTAL OTHER EXPENSE 476,161 367,031 1,448,421 1,155,415
Operating Income 55,797 54,321 232,955 226,606
Other Income (expense)
Interest Income 275 651 819 2,313
Interest Expense (27,636) (32,066) (84,072) (96,061)
Net Income (loss) 28,436 22,906 149,702 132,858
Net Income Per Common Share - - - -
Weighted Average
Number of Shares 32,108,903 32,108,903 32,108,903 32,108,903
Outstanding
</TABLE>
ELDORADO ARTESIAN SPRINGS,INC.
Statement of Cash Flows
<TABLE>
<CAPTION>
<S>
3 Months Ended 9 Months Ended Ended Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1996 1995 1996 1995
<C> <C> <C> <C>
Cash Flows From Activities
Net Income 28,436 22,906 149,702 132,858
Adjustments to
Reconcile
Depreciation and 57,819 43,973 161,468 131,921
Amortization
Changes in Assets and
Liabilities
Accounts 36,491 12,333 (32,655) (15,975)
Receivable
Inventory (7,564) (6,927) (18,892) 6,488
Prepaid Expenses (39,075) (1,415) (39,075) 8,387
and Other
Accounts 12,868 (33,342) 3,200 2,905
Payable
Accrued 8,184 (1,106) (16,748) (7,508)
Expenses
Unearned (1,691) (2,249) (7,275) (5,860)
Income
Net Cash From Operating 95,468 34,173 199,725 253,216
Activities
Cash Flows From Investing
Purchase of Property (33,538) (176,106) (135,154) (333,876)
and Equipment
Increase in Note 0 (555) 0 (1,667)
Receivable
Net (33,538) (176,661) (135,154) (335,543)
Cash Investing
Cash Flows From Financing
Activities
Additions to Long-Term Debt 0 186,210 0 300,123
Loan Fees and Other 671 (680) 2,012 (23,370)
Assets
Payments on Long-Term (13,768) (64,177) (40,612) (143,751)
Debt
Net Cash Flows From (13,097) 121,353 (38,600) 133,002
Financing
Net Increase (Decrease) in 48,833 (21,135) 25,971 50,675
Cash
Cash - beginning 66,427 115,930 89,289 44,120
Cash - ending 115,260 94,795 115,260 94,795
</TABLE>
NOTES TO FINANCIAL STATEMENTS
OPINIONS OF MANAGEMENT
A. In the opinion of management, the accompanying financial statements
contain all adjustments (consisting of only normal recurring accruals)
necessary to present fairly the financial position as of December 31, 1996,
the results of operations and cash flow for the period then ended.
B. In the opinion of management, the results of operations for the nine
months ended December 31, 1996 are not necessarily indicative of the
results to be expected for the full year.
C. Summary of the Company's significant accounting policies are
incorporated by reference to the Company's March 31, 1996 Annual Report
filed under cover of Form 10-K.
D. The financial statements presented were prepared on a proforma
consolidated basis. This gives effect to the combination of Eldorado
Artesian Springs, Inc. and Lexington Funding, Inc. as if it had occurred
April 1, 1986. This business combination was accounted for as a reverse
acquisition using the purchase method in a manner similar to a pooling of
interests. The management of Eldorado Artesian Springs, Inc. has retained
control of the combined entity.
E. Income per common share is computed by dividing the net income by the
weighted average number of shares of common stock outstanding during the
period.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
Revenues for the three months ended December 31, 1996 increased 24.7% to
$608,182, versus $487,740 for the same three month period in 1995. For the
nine months ended December 31, 1996 revenues increased 28.1% to $1,999,178
versus $1,617,405 for the same period in 1995.
Revenues for the water products and related items increased 28.1% for the three
months and 26.1% for the nine months ended December 31, 1996. Consensus of
industry growth rate nationwide is approximately 9%. For the nine month
period sales of wholesale products (gallon and PET containers) increased by
78.4% compared to the same nine months in 1995. Furthermore, these
products increased as a percentage of total company revenue from 9.6% in
1995 to 14.1% in 1996. Management expects the contribution as a percent of
company revenues to increase significantly in the years ahead as a direct
result of more aggressive marketing and superior growth of the category.
As a result of the improving scale of economies the cost of goods on the
wholesale products has declined by 28% from 1995 to 1996. Also affecting
cost of goods positively has been a drop in PET resin prices resulting from
significantly boosted capacities of production by the major manufacturers.
Operating expenses for the nine months end December 31, 1996 increased 25.3%
compared to the same nine month period in 1995. This is slightly less than
but in the line with the increase in revenues during the same period.
Trade accounts receivable totaled $267,119 as of December 31, 1996 compared to
$234,543 on March 1, 1996. This represents 39.5 days sales in receivables
down from the last reporting period ended September 30, 1996. This drop is
due to a charge off of bad debts totaling $11,734.30, or 0.58% of sales
year to date. Management expects additional bad debt charges of
approximately $10,000 for the year ending March 31, 1997, or an approximate
representation of 0.8% of sales.
For the nine months ended December 31, 1996 the company has invested $135,154 in
capital equipment and other capital expenditures. The company does plan on
additional acquisitions for the fiscal year totaling approximately
$140,000. Restrictive covenants on the company's loan agreement with its
principal lender (Bank One, NA) limit the amount of capital expenditures to
$150,000 per year with exceptions allowed by written approval. Such
approval has been obtained to allow for the planned fourth quarter capital
acquisitions.
Net income for the three months increased 24.1% to $28,436 versus the same
quarter one year ago, and by 12.7% to $149,702 for the nine months ended
December 31, 1996 compared to 1995. Net income before taxes for the year
ended March 31, 1996 was $96,481, much lower than the reported third
quarter results.
PART II - OTHER INFORMATION
Item 1 - Legal proceedings
No legal proceedings have been filed on behalf of or against the
Company, nor have any claims been made.
Item 2 - Change in Securities
None
Item 3 - Defaults Upon Senior Obligations
There have been no defaults on any securities. The Company has
no obligations with regard to dividends and no preferred stock
outstanding.
Item 4 - Submission of Matters to a Vote of the Security Holders
None
Item 5 - Other Information
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.
ELDORADO ARTESIAN SPRINGS, INC.
By: /s/ Douglas Larson
Douglas A. Larson, President
By: /s/ Kevin M. Sipple
Kevin M. Sipple, Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> MAR-31-1996 MAR-31-1996
<PERIOD-END> DEC-31-1996 DEC-31-1996
<CASH> 115,260 115,260
<SECURITIES> 0 0
<RECEIVABLES> 272,007 272,007
<ALLOWANCES> 0 0
<INVENTORY> 115,102 115,102
<CURRENT-ASSETS> 576,478 576,478
<PP&E> 2,488,548 2,488,548
<DEPRECIATION> 1,367,188 1,367,188
<TOTAL-ASSETS> 1,870,030 1,870,030
<CURRENT-LIABILITIES> 183,470 183,470
<BONDS> 0 0
0 0
0 0
<COMMON> 32,345 32,345
<OTHER-SE> 311,195 311,195
<TOTAL-LIABILITY-AND-EQUITY> 1,870,030 1,870,030
<SALES> 600,308 1,902,117
<TOTAL-REVENUES> 608,182 1,999,178
<CGS> 76,224 317,802
<TOTAL-COSTS> 494,566 1,594,235
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 27,636 84,072
<INCOME-PRETAX> 28,436 160,222
<INCOME-TAX> 0 10,520
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 28,436 149,702
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
