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, 1997
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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 09-30-97.
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.)
THE IDAHO COMPANY
BALANCE SHEETS
September 30,1997 December 31, 1996
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ASSETS
Cash $ 191,465 $ 15,636
Loans receivable 978,912 1,345,817
Less allowance for loan losses 77,578 75,706
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Net loans 901,334 1,270,111
Interest and other receivables 22,299 23,904
Prepaid expenses 10,991 8,515
Property Plant & Equipment 2,478
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Total Assets $1,128,567 $1,318,166
========== ==========
LIABILITIES & STOCKHOLDERS' EQUITY
Accrued expenses $ 8,792 $ 3,909
Payroll tax payable 3,181 2,319
Fees collected, unearned 3,352 10,887
Notes Payable 0 184,921
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15,325 202,036
Excess of net assets acquired over
cost, net of accumulated accretion
of $40,446 at March 31, 1996 and
$34,668 at December 31, 1995 40,447 57,779
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Total Liabilities 55,772 259,815
STOCKHOLDERS' EQUITY
Common stock, no par value,
Authorized 500,000 shares; 1,618
shares issued and outstanding 982,825 982,825
Retained earnings 89,970 75,526
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1,072,794 1,058,351
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY 1,128,567 $1,318,166
========== ==========
THE IDAHO COMPANY
STATEMENTS OF OPERATIONS
Quarter Year Quarter Year
Ended to Date Ended to Date
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1997 1997 1996 1996
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REVENUE
Consulting Income $ $ 922 $ 410 $ 983
Loan Fees 1,477 10,762 2,885 15,401
Interest Income - Loans 35,465 114,846 38,948 107,167
Interest Income - Other 2,789 3,184 81 1,356
Negative Goodwill
& Other Income 5,775 19,604 6,128 18,734
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Total Revenue 45,508 149,318 48,452 143,641
EXPENSES
Operating Expenses 48,574 134,873 36,276 118,639
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Total Expenses 48,574 134,873 36,276 118,639
NET INCOME/LOSS $ (3,068) $ 4,444 $ 12,176 $ 25,002
========= ========= ======== ========
AVERAGE NUMBER SHARES
OUTSTANDING 1,618 1,618 1,618 1,618
INCOME/LOSS PER SHARE
OF COMMON STOCK $ (1.90) $ 8.93 $ 7.53 $ 15.45
THE IDAHO COMPANY
STATEMENTS OF CASH FLOWS
Sept. 30, 1997 Sept. 30, 1996
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INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 14,444 $ 25,002
. Adjustments to reconcile net income
to net cash used in operating activities:
Accretion of excess of net assets
acquired over cost (17,332) (17,334)
Provision for loan losses 1,872 6,692
Changes in operating assets
and liabilities:
Interest receivable 1,606 (4,100)
Fees collected, unearned (7,535) 16,886
Prepaid expenses (2,477) (2,570)
Accounts payable
Accrued expenses 5,234 340
Payroll tax payable 862 753
Fixed Asset (2,478)
Interest Payable (350) 359
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Total adjustments (20,598) 1,026
NET CASH PROVIDED BY
OPERATING ACTIVITIES (6,154) 26,028
CASH FLOWS FROM INVESTING ACTIVITIES:
Maturities of interest bearing deposits
Loans receivable disbursed (288,391) (989,513)
Loans receivable collected 655,298 739,555
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NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES 366,907 (249,958)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt 496,475
Principal payments on debt (184,921) (396,054)
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NET CASH USED IN
FINANCING ACTIVITIES (184,921) 100,421
INCREASE (DECREASE) IN CASH 175,829 (123,509)
CASH AT BEGINNING OF PERIOD 15,636 128,742
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CASH AT END OF PERIOD $ 191,465 $ 5,233
========= ========
THE IDAHO COMPANY
NOTES TO FINANCIAL STATEMENTS
Quarter Ended September 30, 1997
BASIS OF PRESENTATION AND COMPANY BACKGROUND
The Idaho Company (the "Company"), incorporated under the laws of the State of
Idaho on November 28, 1986, is 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, 1997.
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.
On August 4, 1997, an office in Idaho Falls, Idaho was established. Mr. Robert
W. Barnes was hired as Vice President, Credit, to manage the office. Mr. Barnes
has 20 years credit experience including commercial, agriculture and government
guaranteed loans. Mr. Barnes will work exclusively on credit requests
throughout Idaho; specifically, SBA 7a, 504's, Farmer Mac and commercial loans.
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.
This report on Form 10-Q for the quarter ended September 30, 1997, should be
read in conjunction with the Company's report on Form 10-K for the year ended
December 31, 1996, and report on Form 10-Q for the quarter ended September 30,
1996.
Loans. The Company makes commercials loans to Idaho small businesses to
stimulate economic activity through job creation. 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
they are brought fully current with respect to principal and interest and 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 2) 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. The Company accounts for income taxes using the asset and
liability method, under which 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. 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 accreted 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 has a revolving note with a maturity of June
20, 1998. This note was not drawn against during the third quarter, 1997.
Cash. With the exception of a nominal operating account, all cash earns
interest at current market rates.
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, 1997, resulted in
net income of -$3,068, compared to net income of $12,176 for the quarter ended
September 30, 1996. Net income for the nine months ended September 30, 1997,
equaled $14,444 compared to net income of $25,002 for the nine months ended
September 30, 1996. Year-to-date results for 1997 are in line with
management's projections. These projections include a severance package for a
former employee, the opening of a new office, hiring additional staff, and
offerings of new loan products.
Revenues for the quarter ended September 30, 1997, were primarily derived from
interest on loans receivable, loan fees and late 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, 1996, were interest on loans
receivable and loan fees.
Shareholders' equity on September 30, 1997, was $1,072,794 compared to
shareholders equity of $1,058,351 on September 30, 1996.
Inflation has had no significant impact upon the operating overhead, lending or
investing activities of the company. Management anticipates that interest
rates may slightly increase throughout 1997.
LIQUIDITY AND CAPITAL RESOURCES. As of September 30, 1997, the Company
held $191,465 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 $300,000 at a rate of Prime plus 1.5 percent. Zero was drawn
against at quarter end. At September 30, 1997, current portions of loans
receivable totaled $308,348. 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, 1997, the largest asset items consisted of cash and loans
receivable, net of reserve, totaling $1,070,799 out of $1,128,567 total assets.
At September 30, 1996, the largest asset items consisted of cash and loans
receivable, net, totaling $1,194,891 out of $1,227,558 total assets.
Part II - OTHER INFORMATION
Item 1. Legal Proceedings. None.
Item 2. Changes in Securities. None.
Item 3. Defaults Upon Senior Securities. None.
Item 4. Submission of Matters to a Vote of Security Holders. None.
Item 5. Other Information. None.
Item 6. Exhibits and Reports on Form 8-K. 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
Diane Rigby
Vice President
Date: October 22, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE IDAHO
COMPANY'S BALANCE SHEET AT SEPTEMBER 30, 1997, AND STATEMENT OF INCOME FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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