UNITED STATES
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: September 30, 1996
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Commission File No.: 33-11309
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THE IDAHO COMPANY
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(Exact name of registrant as specified in its charter)
IDAHO 82-0410913
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(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
102 S. 17th Street, Suite 201, Boise, Idaho 83702
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(Address of principal executive offices) (Zip Code)
(208) 344-6308
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(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. [X] 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 the latest practicable date.
1,618 shares of no par value common stock
were outstanding at 9-30-96.
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<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
The financial information set forth herein is unaudited and reflects all
adjustments which are, in the opinion of management, necessary to the
presentation of a fair statement of the interim period presented.
(The remainder of this page intentionally left blank.)
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THE IDAHO COMPANY
BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, 1996 December 31, 1995
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ASSETS
<S> <C> <C>
Cash $ 5,233 $ 128,742
Loans receivable 1,259,986 1,010,027
Less allowance for loan losses 70,328 63,636
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Net loans 1,189,658 946,391
Interest and other receivables 20,682 16,582
Prepaid expenses 11,985 9,415
---------- ----------
Total Assets $1,227,558 $1,101,130
========== ==========
LIABILITIES & STOCKHOLDERS' EQUITY
Accrued interest $ 359
Accrued expenses 3,290 $ 2,950
Payroll tax payable 2,320 1,567
Fees collected, unearned 16,886
Note payable 100,421
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123,276 4,517
Excess of net assets acquired over
cost, net of accumulated accretion
of $52,002 at September 30, 1996
and $34,668 at December 31, 1995 63,557 80,891
---------- ----------
Total Liabilities 186,833 85,408
STOCKHOLDERS' EQUITY
Common stock, no par value,
Authorized 500,000 shares; 1,618
shares issued and outstanding 982,825 982,825
Retained earnings 57,900 32,897
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1,040,725 1,015,722
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY $1,227,558 $1,101,130
========== ==========
</TABLE>
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<PAGE>
THE IDAHO COMPANY
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Quarter Year Quarter Year
Ended to Date Ended to Date
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1996 1996 1995 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
REVENUE
Consulting Income $ 410 $ 983 $ $ 1,884
Loan Fees 2,885 15,401 4,958 25,308
Interest Income - Loans 38,948 107,167 30,017 77,952
Interest Income - TCD 91
Interest Income - Other 81 1,356 3,007 12,321
Negative Goodwill & Other Income 6,128 18,734 6,303 18,884
-------- -------- -------- --------
Total Revenue 48,452 143,641 44,285 136,440
EXPENSES
Operating Expenses 36,276 118,639 35,553 106,865
-------- -------- -------- --------
Total Expenses 36,276 118,639 35,553 106,865
NET INCOME $ 12,176 $ 25,002 $ 8,732 $ 29,575
======== ======== ======== ========
AVERAGE NUMBER
SHARES OUTSTANDING 1,618 1,618 1,618 1,618
INCOME/LOSS PER SHARE
OF COMMON STOCK $7.53 $15.45 $5.40 $18.28
</TABLE>
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THE IDAHO COMPANY
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Sept. 30, 1996 Sept. 30, 1995
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<S> <C> <C>
INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 25,002 $ 29,575
Adjustments to reconcile net income
to net cash used in operating activities:
Accretion of excess of net assets
acquired over cost (17,334) (17,334)
Provision for loan losses 6,692 10,168
Changes in operating assets
and liabilities:
Accounts receivable 275
Interest receivable (4,100) (8,557)
Fees collected, unearned 16,886
Prepaid expenses (2,570) 740
Accrued expenses 340 (17,129)
Payroll tax payable 753 297
Interest payable 359
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Total adjustments 1,026 (31,540)
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 26,028 (1,965)
CASH FLOWS FROM INVESTING ACTIVITIES:
Maturities of interest bearing deposits 36,908
Loans receivable disbursed (989,513) (895,320)
Loans receivable collected 739,555 1,018,246
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NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES (249,958) 159,834
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in debt 496,475
Principal payments on debt (396,054) (9,577)
Reverse split, fractional share payments (23,238)
Capital additions 22,938
-------- --------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 100,421 (9,877)
INCREASE (DECREASE) IN CASH (123,509) 147,992
CASH AT BEGINNING OF PERIOD 128,742 145,127
-------- --------
CASH AT END OF PERIOD $ 5,233 $293,119
======== ========
</TABLE>
5
<PAGE>
THE IDAHO COMPANY
NOTES TO FINANCIAL STATEMENTS
Quarter Ended September 30, 1996
BASIS OF PRESENTATION AND COMPANY BACKGROUND
The Idaho Company (the Company), was incorporated under the laws of the State
of Idaho on November 28, 1986, as a for-profit corporation. The Company was
formed to promote economic growth, and to stimulate, develop, and advance the
business prosperity of Idaho and its citizens. The Company achieves this
objective by lending to, investing in, arranging financing for, and consulting
with new, emerging, and expanding businesses.
The Company is not obligated to pay a dividend or dividend in kind unless the
payment has been approved by the Director of the Department of Finance of the
State of Idaho and is consistent with capital requirements and profitability.
The Company is a licensed Business and Industrial Development Company (BIDCO).
As such, it is regulated by the State of Idaho Department of Finance and
subject to periodic asset quality examinations. On September 30, 1992, the
Company was granted an exemption from registration as an investment company
under the Investment Company Act of 1940, conditioned upon satisfying certain
requirements, which have been met as of September 30, 1996.
On June 15, 1994, William F. Rigby acquired 97.7 percent of the Company's then
outstanding common stock in a tender offer for cash consideration in the amount
of $957,780. In accordance with the tender offer terms and conditions, a
reverse stock split was subsequently concluded during the first quarter of
1995. The remaining 2.3 percent of shares outstanding became fractional shares
as a result of the split and were paid out in the form of cash. The reverse
stock split occurred on February 28, 1995, and resulted in a reduction of
pre-split issued and outstanding shares of 163,453 to 1,618 post-split shares.
Effective with the reverse stock split, the Company amended its articles of
incorporation to eliminate the par value feature of its authorized common stock
in favor of a no par value feature. On February 28, 1995, the Company
re-acquired all fractional common shares created by the reverse stock split for
approximately $23,000.
The Idaho Company continues to explore opportunities to form and/or manage a
Small Business Investment Corporation (SBIC). The Idaho Company may ultimately
consider forming a subsidiary or affiliate for the purpose of becoming licensed
as an SBIC. The Company may also pursue a partnership arrangement.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Unaudited Interim Financial Statements: In the opinion of management, the
accompanying financial statements contain all adjustments necessary to fairly
represent the financial position of The Idaho Company and the results of
operations and cash flows.
6
<PAGE>
This report on Form 10-Q for the quarter ended September 30, 1996, should
be read in conjunction with the Company's report on Form 10-K for the year
ended December 31, 1995, and reports on Form 10-Q for the quarters ended
March 31, 1996 and June 30, 1996.
Loans: The Company makes commercial loans to Idaho small businesses to
stimulate economic activity. Loans are reported at the principal amount
outstanding, net of an allowance for estimated loan losses. Accrual of
interest is discontinued when reasonable doubt exists as to collectibility.
All loans greater than 90 days delinquent are subject to nonaccrual of
interest. Interest accruals are resumed on such loans only when, in the
judgment of management, the loans are fully collectible.
Allowance for Loan Losses: The allowance for loan losses is established
through a provision charged to expense. Loans are charged against the
allowance when management believes that the collectibility of principal is
unlikely. The allowance is an amount which management believes would be
adequate to absorb possible losses on existing loans, based on 1) conditions
existing at the balance sheet date, 2) evaluations of the collectibility of the
loans and 3) prior loan loss experience. The evaluations take into
consideration such factors as changes in the nature and volume of the loan
portfolio, overall portfolio quality, review of specific problem loans, and
current economic conditions that may affect the borrower's ability to repay.
Income Taxes: Effective January 1, 1993, the Company adopted Statement of
Financial Accounting Standards No. 109, Accounting for Income Taxes (Statement
No. 109). Under the asset and liability method of Statement No. 109, deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and operating
loss carryforwards. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in years in which those
temporary differences are expected to be recovered or settled. Under Statement
No. 109, the effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date.
Excess of Net Assets Acquired over Cost: The excess of net assets acquired
over purchase price is amortized on a straight-line basis over a five year life.
Income Per Share: Income per share is computed by dividing the net income
by the average number of shares outstanding during the period. See "Basis of
Presentation" for a description of the reverse stock split occurring on
February 28, 1995.
Interest Bearing Deposits: Interest bearing deposits are comprised of
certificates of deposit and other deposits.
Notes Payable: The Company currently borrows against a line
of credit on an as needed basis. See "Liquidity and Capital Resources".
Cash: With the exception of a nominal operating account, all cash earns
interest at current market rates.
7
<PAGE>
Reclassifications: Certain amounts presented in 1995 have been
reclassified to be consistent with this presentation.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS. The quarter ended September 30, 1996 resulted in
net income of $12,176, compared to net income of $8,732 for the quarter ended
September 30, 1995. Net income for the nine months ended September 30, 1996
equaled $25,002, compared to net income of $29,575 for the nine months ended
September 30, 1995. Income for the nine month period ending September 30, 1995
included fees from the sale of an SBA-guaranteed loan, which substantially
increased profitability in 1995. Year-to-date results for 1996 are in line
with management's projections.
Revenues for the quarter ended September 30, 1996 were primarily derived from
interest on loans receivable and loan fees. Non-cash revenues were also
realized from the amortization of negative goodwill (see "Basis of
Presentation" under Notes to Financial Statements). The primary sources
of revenue for the quarter ended September 30, 1995, were interest on loans
receivable and other interest income.
Shareholders' equity on September 30, 1996, was $1,040,725 compared to
shareholders equity of $1,014,226 on September 30, 1995.
Inflation has had no significant impact upon the operating overhead, lending or
investing activities of the company. Management anticipates that interest rates
will remain relatively constant through the remainder of 1996.
LIQUIDITY AND CAPITAL RESOURCES. As of September 30, 1996, the Company held
$5,233 in cash accounts (including interest bearing accounts) to fund loans and
operating expenses. The Company has available a line of credit in the amount
of $250,000 at a rate of Prime plus 1.5 percent, of which $100,421 was drawn at
quarter end. At September 30, 1996, current portions of loans receivable
totalled $585,506. No extraordinary capital expenditures were anticipated at
quarter end. Management believes that existing cash, the line of credit, and
cash generated from operations will be sufficient to allow the Company to meet
its obligations as they come due.
At September 30, 1996, the largest asset items were notes and interest
receivable, net of reserve, totalling $1,210,340 out of $1,227,558 total
assets. At September 30, 1995, the largest asset items consisted of cash
and loans receivable, net, totalling $1,071,569 out of $1,103,127 total
assets.
8
<PAGE>
Part II - OTHER INFORMATION
Item 1. Legal Proceedings: None.
Item 2. Changes in Securities: None.
Item 3. Defaults Upon Senior Securities: Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders: None.
Item 5. Other Information. None.
Item 6. Exhibits and Reports on Form 8-K. 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.
FOR THE IDAHO COMPANY
--------------------------------------
/s/Eugene D. Heil
President and Chief Accounting Officer
Date: November 1, 1996
9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
accompanying financial statements and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 5233
<SECURITIES> 0
<RECEIVABLES> 1210340
<ALLOWANCES> 70328
<INVENTORY> 0
<CURRENT-ASSETS> 448589
<PP&E> 16658
<DEPRECIATION> 16658
<TOTAL-ASSETS> 1227558
<CURRENT-LIABILITIES> 123276
<BONDS> 0
0
0
<COMMON> 982825
<OTHER-SE> 57900
<TOTAL-LIABILITY-AND-EQUITY> 1227558
<SALES> 0
<TOTAL-REVENUES> 143641
<CGS> 0
<TOTAL-COSTS> 107884
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 6692
<INTEREST-EXPENSE> 4064
<INCOME-PRETAX> 25002
<INCOME-TAX> 0
<INCOME-CONTINUING> 25002
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 25002
<EPS-PRIMARY> 15.45
<EPS-DILUTED> 15.45
</TABLE>
