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: June 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 06-30-97.
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
June 30, 1997 December 31, 1996
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ASSETS
Cash $ 166,924 $ 15,636
Loans receivable 1,011,383 1,345,817
Less allowance for loan losses 76,734 75,706
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Net loans 934,649 1,270,111
Interest and other receivables 28,437 23,904
Prepaid expenses 2,381 8,515
Property Plant & Equipment 2,734
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Total Assets $1,135,125 $1,318,166
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LIABILITIES & STOCKHOLDERS' EQUITY
Accrued expenses $ 6,170 $ 3,909
Payroll tax payable 2,518 2,319
Fees collected, unearned 4,352 10,887
Notes Payable 0 184,921
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13,040 202,036
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 46,224 57,779
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Total Liabilities 59,264 259,815
STOCKHOLDERS' EQUITY
Common stock, no par value,
Authorized 500,000 shares; 1,618
shares issued and outstanding 982,825 982,825
Retained earnings 93,036 75,526
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1,075,861 1,058,351
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY 1,135,125 $1,318,166
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THE IDAHO COMPANY
STATEMENTS OF OPERATIONS
Quarter Year Quarter Year
Ended to Date Ended to Date
June 30, June 30, June 30, June 30,
1997 1997 1996 1996
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REVENUE
Consulting Income $ 407 $ 922 $ 423 $ 572
Loan Fees 9,135 9,285 5,815 12,516
Interest Income - Loans 39,480 79,381 33,410 68,219
Interest Income - Other 343 395 610 1,275
Negative Goodwill
& Other Income 7,349 13,827 6,303 12,606
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Total Revenue 56,714 103,810 46,561 95,188
EXPENSES
Operating Expenses 41,162 86,300 38,432 82,363
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Total Expenses 41,162 86,300 38,432 82,363
NET INCOME/LOSS $ 15,552 $ 17,510 $ 8,129 $ 12,825
======== ======== ======== ========
AVERAGE NUMBER SHARES
OUTSTANDING 1,618 1,618 1,618 1,618
INCOME/LOSS PER SHARE
OF COMMON STOCK $ 9.61 $ 10.82 $ 5.02 $ 7.93
THE IDAHO COMPANY
STATEMENTS OF CASH FLOWS
June 30, 1997 June 30, 1996
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INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 17,510 $ 12,825
. Adjustments to reconcile net income
to net cash used in operating activities:
Accretion of excess of net assets
acquired over cost (11,556) (11,556)
Provision for loan losses 1,028 4,467
Changes in operating assets
and liabilities:
Interest receivable (4,532) 2,902
Fees collected, unearned (6,535) 12,449
Prepaid expenses 6,134 5,884
Accounts payable
Accrued expenses 2,612 1,000
Payroll tax payable 199 754
Fixed Asset (2,735)
Interest Payable (350) 54
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Total adjustments (15,735) 15,954
NET CASH PROVIDED BY
OPERATING ACTIVITIES 1,775 28,779
CASH FLOWS FROM INVESTING ACTIVITIES:
Maturities of interest bearing deposits
Loans receivable disbursed (162,007) (710,069)
Loans receivable collected 496,443 514,101
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NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES 334,434 (195,968)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt 182,500
Principal payments on debt (184,921) (115,054)
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NET CASH USED IN
FINANCING ACTIVITIES (184,921) 67,446
INCREASE (DECREASE) IN CASH 151,288 (99,743)
CASH AT BEGINNING OF PERIOD 15,636 128,742
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CASH AT END OF PERIOD $166,924 $ 28,999
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THE IDAHO COMPANY
NOTES TO FINANCIAL STATEMENTS
Quarter Ended June 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 June 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 April 16, 1997, the Annual Stockholders and Quarterly Board of Directors
meetings were held. Mr. William F. Rigby was elected Chairman of the Board,
President & Chief Executive Officer. Ms. Diane Rigby was elected Vice President
and Mr. John P. Rigby was elected as Secretary/Treasurer. The Board of
Directors include the previously mentioned and Mr. Fred T. Thompson, Jr., Mr.
Charles M. Rice, Mr. A. Wayne Mittleider, Mr. Grant Caldwell and Mr. Dan G.
Simkins.
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 June 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 June 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 was obligated under a note payable at March 31,
1996 which was paid in full during the following quarter.
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 June 30, 1997, resulted in net
income of $15,552, compared to net income of $8,129 for the quarter ended June
30, 1996. Net income for the six months ended June 30, 1997, equaled $17,510
compared to net income of $12,825 for the six months ended June 30, 1996.
Year-to-date results for 1997 are in line with management's projections.
Revenues for the quarter ended June 30, 1997, 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 June 30, 1996, were interest on loans receivable
and loan fees.
Shareholders' equity on June 30, 1997, was $1,075,861 compared to shareholders
equity of $1,028,548 on June 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 June 30, 1997, the Company held
$166,924 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 June 30, 1997, current portions of loans receivable
totalled $343,519. 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 June 30, 1997, the largest asset items consisted of cash and loans
receivable, net of reserve, totaling $1,101,573 out of $1,135,125 total assets.
At June 30, 1996, the largest asset items consisted of cash and loans
receivable, net, totaling $1,166,892 out of $1,184,102 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. On April 16,
1997, the Company held its ninth annual meeting of shareholders. One hundred
percent of all shares outstanding were voted at the meeting. The following
individuals were elected or re-elected to serve as officers of the corporation:
William F. Rigby, Chairman, President & CEO
Diane Rigby, Vice President
John P. Rigby, Secretary/Treasurer
The following individuals were elected or re-elected to serve a three-year term
expiring at the 2000 annual meeting of shareholders:
William F. Rigby Fred T. Thompson, Jr.
Additionally, KPMG Peat Marwick was approved as independent auditors for the
year ending December 31, 1997.
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: July 22, 1997
<TABLE> <S> <C>
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE IDAHO
COMPANY'S BALANCE SHEET AT JUNE 30, 1997, AND STATEMENT OF INCOME FOR THE SIX
MONTHS ENDED JUNE 30, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
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