UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended: December 31, 1998
---------------
Commission file number: 33-11309
--------
THE IDAHO COMPANY
(Exact name of registrant as specified in its charter)
Idaho 82-0410913
(State or other jurisdiction of (Internal Revenue Service Employer
incorporation or organization) Identification Number)
9512 Fairview Avenue
P. O. Box 6812
Boise, ID 83707
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (208) 375-8099
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Common Stock - without par value
- --------------------------------------------------------------------------------
(Title of Class)
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (s. 229. 405 of this Chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in
Part II of this Form 10-K or any amendment to this Form 10-K. [X]
The aggregate market value of voting stock held by nonaffiliates of the
Registrant at December 31, 1998 was zero.
There currently is no market for the Company's stock.
The number of Registrant's no par value common stock outstanding at
December 31, 1998 was 1,618.
THE IDAHO COMPANY
TABLE OF CONTENTS
Item PART I Page
1. Business 3
2. Properties 3
3. Legal Proceedings 3
4. Submission of Matters to a Vote of Security Holders 3
PART II
5. Market for the Registrant's Common Equity and 4
Related Stockholder Matters
6. Selected Financial Data 4
7. Management's Discussion and Analysis of Financial 5
Condition and Results of Operations
7a. Quantitative and Qualitative Disclosures About Market Risk 7
8. Financial Statements and Supplementary Data 8
9. Changes in and Disagreements with Accountants on 21
Accounting and Financial Disclosure
PART III
10. Directors and Executive Officers of the Registrant 22
11. Executive Compensation 23
12. Security Ownership of Certain Beneficial Owners 23
and Management
13. Certain Relationships and Related Transactions 24
PART IV
14. Exhibits, Financial Statement Schedules and 24
Reports on Form 8-K
PART I
Item 1. Business
The Idaho Company (the Company) was incorporated under the laws of
the State of Idaho on November 28, 1986. The Company is a for-profit
Business and Industrial Development Company organized to promote
economic growth in Idaho. The Company achieves this objective by
lending to, investing in, arranging financing for, and consulting with
new, emerging, and expanding businesses.
On September 30, 1992, the Company was granted an exemption from the
reporting requirements of the Investment Company Act of 1940 subject to
continued compliance with sections 9, 10, 15, 16(a), 17(g), 17(i), 18, 21,
23, 35, 36, 37, and, to the extent necessary to enforce the provisions of the
Act, sections 38 through 53. In addition, the Company was exempted from
certain provisions of rule 17g-1. The exemption allows the Company to
make loans to and investments in Idaho small businesses in excess of forty
percent of the Company's assets without incurring reporting requirements
under the Act.
The Company pursues a program of lending and equity investing, loan
placement, and management consulting to helpsmall businesses attain
greater financial stability.
Direct loans and investments totaling $4,608,015 were entered into during
the year ended December 31, 1998. Lending activity resulted in the
creation or retention of 114 jobs in the State of Idaho. The Company also
arranged for$3,010,406 in financing from other sources mainly for
long-term real estate transactions.
Item 2. Properties
The Company leases office space at 9512 Fairview Avenue, Boise, Idaho
83704.
Item 3. Legal Proceedings
There are no legal proceedings involving the Company.
Item 4. Submission Of Matters To A Vote Of Security Holders
No matters were submitted to a vote of security holders during the quarter
ended December 31, 1998.
PART II
Item 5. Market For The Registrant's Common Equity And Related
Stockholder Matters
There is no established public trading market for the Company's stock.
Shareholders as of December 31, 1998, numbered two.
No shareholder is entitled, as a matter of right, to purchase or subscribe for
any unissued or treasury stock of the Company, and no shareholder is
entitled, as a matter of right, to purchase or subscribe for any bonds, notes,
certificates or indebtedness, debentures, or other obligations convertible
into stock of the Company.
The Company declared a cash dividend to its shareholders based upon its
profitability. This dividend was made without the approval of the Director
of the State Department of Finance, however a policy will be approved
during 1999 for future use.
Item 6. Selected Financial Data
Year Year Year
Ended Ended Ended
1998 1997 1996
---------- ---------- ---------
Revenues $ 449,054 $ 178,093 $ 177,811
Net income 56,705 5,384 42,629
Basic and diluted 35.05 3.32 26.35
net income per share
Total assets $2,197,642 $1,387,803 $1,318,166
Cash dividends declared
per common share 15.45 -- --
Year Year
Ended Ended
1995 1994
----------- ----------
Revenues $ 154,123 $ 58,739
Net income 31,070 1,827
Basic and diluted 19.20 1.13
net income per share
Total assets $1,101,130 $1,117,595
Cash dividends declared
per common share -- --
Item 7. Management's Discussion And Analysis Of Financial Condition
And Results Of Operation.
Nearly all of the Company's assets are employed in loans to Idaho
businesses earning market rates of interest. At December 31, 1998, other
than one SBA guaranteed loan in the amount of $168,364 that is in
liquidation, there were no loans 30 or more days past due in the portfolio.
The Company created or retained an estimated 114 jobs in the State
of Idaho during 1998.
The Company abandoned its financial backing of the development of
Littlewood Capital Resources, L.P., a limited partnership, which would
become licensed as a Small Business Investment Corporation (SBIC).
With the abandonment of this SBIC, the Company has begun investing in
equity positions of startup companies throughout Idaho, and currently
holds equity positions in three such companies.
Year Year Year
Ended Ended Ended
1998 1997 1996
---------- ----------- ----------
Interest income 212,148 148,415 156,048
Loan fees 43,600 19,831 16,636
Consulting fee income 1,313 1,341 983
Other income 191,993 8,506 4,144
---------- ------------ ----------
449,054 178,093 177,811
Operating expense 415,461 195,821 158,294
---------- ------------ ----------
415,461 195,821 158,294
Accretion of excess 23,112 23,112 23,112
at net assets ---------- ------------ ----------
acquired over cost
Net income $56,705 5,384 42,629
======== ======== ========
Results Of Operations
The primary sources of revenue for the Company during 1998, 1997, and
1996 were interest earned on loans, loan fees, and premiums received on
the sale of those loans. This year will stand out as the year of growth in
average outstanding loan balances, gross revenues, and net income never
before seen in the history of the Company. Major expense categories in
1998 and 1997 were payroll, interest expense, severance, and rent.
Operations for 1998, 1997, and 1996 resulted in net income of $56,705,
$5,384,and $42,629, respectively. Net income in 1998 was recognized in
part due to a gain in the amount of $104,059, on the sale of property held
in Other Real Estate Owned. During 1998, the Company saw increased
expenses in payroll and interest expense as it grew its loan volume from the
previous year. These two expenses totaled $201,580 as compared to
$92,433 in the previous year.
1998 was a year in experimentation with personnel. Two employees were
hired and subsequently dismissed and thus, higher than normal salary
expense for 1998 without sufficient income to compensate for the expense.
This had a major negative impact on net income for 1998 that will not be
felt again in future years.
Inflation has had little impact upon the operating overhead, lending or
investing activities of the Company during 1998, 1997 and 1996. Interest
rates have remained stable with loan volumes increasing during 1998.
Liquidity And Capital Resources
The Company has substantially all available capital invested in loans.
Liquidity for operations and additional lending is provided through income,
$1,500,000 in unsecured lines of credit and $800,000 in secured line of
credit. The Company has $532,168 in secured and $437,232 in unsecured
borrowings at year end. Principal payments on the Company's loans
receivables are applied to reducing the line. The Company's lines of credit
mature and are renewable one year from the date of contract or mature
within five years of the specific obligation. If additional funds are raised,
the Company will be able to increase net income commensurately, provided
the Company maintains its current overhead structure.
No material commitments for capital equipment existed at year end 1998.
No unusual capital expenditures are anticipated at this time. On December
25, 1998 the Company declared $25,000 in dividends and paid them on
January 13, 1999. Management anticipates that cash will be generated
from operations in amounts sufficient to allow the Company to meet its
obligations as they come due and to further strengthen the financial stability
of the Company. The Company had commitments to fund loans in the
amount of $29,366 at December 31, 1998.
Item 7A - Quantitative and Qualitative Disclosures About Market Risk
The Company participates in commercial loans. This is subject to specific
policies that are focused on preserving principal, maintaining proper
liquidity to meet operating needs, and maximizing yields.
The Company's operations may be subject to a variety of market risks, the
most material of which is the risk of changing interest rates. Most
generally, interest rate risk is the volatility in financial performance
attributable to changes in market interest rates, which may result in either
fluctuation of net interest income or changes to the economic value of the
equity of the Company.
After a review of its commercial loans as of December 31, 1998, the
Company has determined that its current exposure to interest rate risk
would not result in a significant impact to the financial statements taken as
a whole.
Item 8. Financial Statements And Supplementary Data
Independent Auditors' Report
The Board of Directors
The Idaho Company:
We have audited the accompanying balance sheets of The Idaho Company
(the Company) as of December 31, 1998 and 1997, and the related
statements of income, stockholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Company as of December
31, 1998 and 1997, and the results of its operations and its cash flows for
each of the years in the three-year period ended December 31, 1998, in
conformity with generally accepted accounting principles.
KPMG LLP
Salt Lake City, Utah
March 12, 1999
THE IDAHO COMPANY
Balance Sheets
December 31, 1998 and 1997
Assets 1998 1997
---------- ----------
Cash $ 6,206 64,898
Loans receivable (notes 3 and 9) 2,087,908 1,343,585
Less allowance for loan losses (note 4) 87,500 81,464
---------- ----------
Net loans 2,000,408 1,262,121
Accounts receivable 15,450 --
Interest receivable 20,428 21,088
Prepaid expense 14,811 10,609
Other investments 114,365 26,865
Office equipment and vehicles, net (note 6) 25,974 2,222
--------- ----------
$2,197,642 1,387,803
========== ========
Liabilities and Stockholders' Equity
Accounts payable $ 33,612 --
Accrued expenses 8,440 10,780
Payroll tax payable 4,194 5,391
Dividends payable 25,000 --
Amounts due sharehol 50,000 --
Deferred fees -- 3,352
Notes payable (note 969,400 269,877
---------- ----------
1,090,646 289,400
Excess of net assets acquired over cost,
net of accumulated accretion of $104,003
in 1998 and $80,891 in 1997 11,556 34,668
---------- ----------
Total liabilities 1,102,202 324,068
Stockholder's equity:
Common stock, no par value. Authorized 500,000
shares; 1,618 shares issued and outstanding 982,825 982,825
Retained earnings 112,615 80,910
---------- ----------
Total stockholders' equity 1,095,440 1,063,735
Commitments and contingencies (notes 5 and 10) ---------- ----------
$2,197,642 1,387,803
THE IDAHO COMPANY
Statements of Income
Years Ended December 31, 1998, 1997, and 1996
1998 1997 1996
---------- ---------- ----------
Revenues:
Interest income $ 212,418 148,415 156,048
Loan Fees 43,600 19,831 16,636
Consulting fees 1,313 1,341 983
Other income (note 9) 191,993 8,506 4,144
---------- ---------- ----------
449,054 178,093 177,811
Expenses:
Operating expense 210,088 102,533 79,664
Payroll 141,028 86,609 72,378
Interest expense 60,552 5,824 6,252
Depreciation 3,793 855 --
---------- ---------- ----------
415,461 195,821 158,294
Other - accretion of excess of net
assets acquired over cost 23,112 23,112 23,112
---------- ---------- ----------
Net income $ 56,705 5,384 46,629
======= ======= =======
Basic and diluted net
income per share $ 35.05 3.32 26.35
========= ======= =======
Average number of shares
outstanding 1,618 1,618 1,618
========= ======= =======
See accompanying notes to financial statements.
THE IDAHO COMPANY
Statements of Stockholders' Equity
Years ended December 31, 1998, 1997, and 1996
Common Stock-
stock Retained holders'
shares Amount earnings equity
--------- ---------- ----------- ------------
Balances at December 31, 1995 1,618 $ 982,825 32,897 1,015,722
Net income -- -- 42,629 42,629
--------- ----------- ----------- ------------
Balances at December 31, 1996 1,618 982,825 75,526 1,058,351
Net income -- -- 5,384 5,384
--------- ----------- ------------ -----------
Balances at December 31, 1997 1,618 982,825 80,910 1,063,735
Net income -- -- 56,705 56,705
Dividend -- -- (25,000) (25,000)
--------- ----------- ----------- ------------
Balances at December 31, 1998 1,618 $ 982,825 112,615 1,095,440
====== ======= ====== ========
See accompanying notes to financial statements.
THE IDAHO COMPANY
Statements of Cash Flows
Years ended December 31, 1998, 1997, and 1996
1998 1997 1996
--------- --------- ---------
Cash flows from operating activities:
Net income 56,705 5,384 42,629
Adjustments to reconcile net income to net
cash provided by (used in) opearating activities:
Depreciation expense 3,793 855 --
Accretion of excess of net assets
acquired over cost (23,112) (23,111) (23,112)
Provision for loan losses 18,536 5,758 12,070
Gain on sale of other real-estate
owned (104,059) -- --
Changes in operating assets and liabilities:
Accounts receivable (15,450) -- --
Interest receivable 660 2,816 (7,322)
Prepaid expense (4,202) (2,094) 900
Accounts payable 33,612 -- --
Accured expenses (2,340) 6,871 959
Payroll tax payable (1,197) 3,072 752
Amounts due shareholder 50,000 -- --
Deferred fees (3,352) (7,535) 10,887
--------- --------- ---------
Net cash provided by (used in)
operating activities 9,594 7,984 37,763
--------- --------- ---------
Cash flows from investing activitie:
Loans receivable disbursed (4,608,015) (1,161,579) (1,344,114)
Loans receivable collected 3,764,038 1,163,811 1,008,324
Capital expenditures (27,545) (3,077) --
Purchase of other real estate owned (171,789) -- --
Proceeds from sale of other real
estate owed 375,502 -- --
Purchase of other investments (100,000) (26,865) --
----------- --------- ---------
Net cash used in
investing activities (767,809) (27,710) (335,790)
--------- --------- ---------
Cash flows from financing activities:
Net proceeds under notes payable under line
credit agreements 699,523 84,956 184,921
1998 1997 1996
--------- --------- ---------
Net increase (decrease) in cash (58,692) 49,262 (113,106)
Cash at beginning of year 64,898 15,636 128,742
--------- ---------- ---------
Cash at end of year 6,206 64,898 15,636
===== ====== ======
Supplemental Disclosure of Cash Flow Information
Cash paid during year for interest 60,552 5,824 6,252
Supplemental Schedule of Non-Cash Activities
Transfer of loans receivable to
other real estate owed 99,654 -- --
Write off of other investments 12,500 -- --
(1) Description of Company
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 these objectives by lending to, investing in,
arranging financing for, and consulting with new, emerging, and expanding
businesses.
The dividend policy must be approved by the Director of the Department
of Finance of the State of Idaho. TheCompany is not obligated to pay a
dividend or dividend in kind.
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 is 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
December 31, 1998.
(2) Summary of Significant Accounting Policies
(a) Loans
The Company makes commercial loans to Idaho small businesses to
stimulate economic activity through job creation. 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.
The Company considers a loan to be impaired when the accrual of interest
has been discontinued. The amount of the impairment is measured based
on the present value of expected future cash flows discounted at the notes
effective interest rate. Impairment losses are included in the allowance
for loan losses through a provision for loan losses.
The Company originates loans to customers under a program that generally
provides for SBA guarantees of 75 percent to 90 percent of each loan.
Historically, the Company has sold the guaranteed portion of each loan to a
third-party and has retained the unguaranteed portion in its own portfolio.
The Company allocates basis of the loans sold and the retained portions
based upon their relative fair market value. The Company may be required to
refund a portion of the sales premium received, if the borrower defaults or
the loan prepays within 90 days of the settlement date. At December 31, 1998,
the Company had received premiums of $11,594, subject to such recourse.
(b) Allowance for Loan Losses
The allowance for loan losses is established through a provision for loan
losses charged to expense. Loans and other investments are charged against
the allowance for loan losses when management believes that the
collectibility of the principal is unlikely. The allowance is an amount
that management believes will be adequate to absorb possible losses on
existing loans and other investments that may become uncollectible, based
on conditions existing at the balance sheet date using evaluations of the
collectibility of loans and other investments and 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 pay.
(c) Office Equipment and Vehicles
Office equipment and vehicles are stated at cost. Depreciation on equipment
and vehicles is calculated on the straight-line method over the following
estimated useful lives:
Office equipment 3 years
Vehicles 5 years
(d) Income Taxes
The Company accounts for income taxes using the asset and liability
method, under which deferred tax assets and deferred tax 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 deferred tax 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 deferred tax liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
(e) Excess of Net Assets Acquired Over Cost
The excess of net assets acquired over cost is accreted on a straight-line
basis over a five year life.
(f) Net Earnings Per Share
On December 31, 1997, the Company adopted the provisions SFAS No.
128, Earnings Per Share. SFAS 128 requires the presentation of both
basic and diluted earnings per share (EPS). Basic EPS is the amount of
net income or loss divided by the weighted average number of shares of
common stock outstanding. Diluted EPS is the amount of income or loss
for the period divided by the weighted average number of shares plus all
potentially dilutive common shares. The earnings were the same for both
the basic and diluted EPS calculations. The basic and diluted weighted average
number of shares used for calculating EPS for the years ending December
31, 1998 and 1997, was 1,618.
(g) Other Investments
The Company has two noninterest bearing convertible debt instruments
issued by software companies located in Idaho Falls, Idaho, one valued at
$25,000 and second valued at $12,500. The Company also has a $75,000
nonvoting preferred stock interest in a mid-market brokerage firm located in
Boise, Idaho and a $1,865 investment in Farmer Mac stock.
(h) Use of Estimates
The financial statements have been prepared in conformity with generally
accepted accounting principles. In preparing the financial statements,
management is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities as of the date of the balance sheet
and revenues and expenses for the period. Actual results could
differ from those estimates.
(i) Reclassifications
Certain amounts reported in 1997 have been reclassified to conform with
the 1998 presentation.
(3) Loans Receivable
The Company's loan portfolio is diversified among a variety of industry
classifications as follows:
December 31,
--------------------
1998 1997
-------- -----------
Retail $39,978 316,568
Manufacturing 760,786 17,998
Agriculture 21,717 368,433
Food processing - 37,200
Distribution - 5,600
Construction - 425,244
Transportation 13,495 39,638
Finance 375,263 21,272
Medical 5,995 62,533
Hospitality 25,448 19,010
Natural resources - 3,379
Trade 749,951 26,710
Development 95,275 -
-------- ----------
$2,087,908 1,343,585
========= ========
Loans within the portfolio have maturities ranging from one to ten years as
of December 31, 1998 and 1997. At December 31, 1998, the Company had
loan receivables balances totaling $1,097,273 with two customers. As of
December 31, 1998 and 1997, loans designated to nonaccrual status were
$168,364 and $97,167, respectively.
(4) Allowance for Loan Loss
Allowance for loan loss activity is summarized as follows:
Years ended December 31,
------------------------------
1998 1997 1996
------- ------- ---------
Balances, beginning of period $ 81,464 75,706 63,636
Provision for loan losses 18,536 5,758 12,070
Write-offs (12,500) - -
------- ------- --------
Balances, end of period $ 87,500 81,464 75,706
(5) Notes Payable
Notes payable consist of the following at December 31:
1998 1997
-------- --------
Note payable under a revolving line of credit to a financial institution, due
July 1999. The interest rate is either the LIBOR rate for fixed periods of 30,
60, or 90 days as selected by the Company plus applicable margin based on
the Company's debt/worth ratio or the financial institution's prime rate
(8.125 percent at December 31, 1998). The note is secured by qualified
accounts receivable and chattel paper. The Company may borrow up to $750,000.
The agreement is subject to certain minimum financial covenants.
200,000 -
Note payable under a revolving line-of-credit to a financial institution, due
July 1999. The interest rate is the financial institution's prime rate
(7.75 percent at December 31, 1998). The note is unsecured. The Company may
borrow up to $500,000. The agreement is subject to certain minimum financial
covenants.
437,232 -
Note payable under wholesale lease line to a financial institution due
February 2004 with monthly payments varying based on the underlying
lease agreements. The interest rate is the financial institution's internal
transfer rate plus 2.2 percent (8 percent at December 31, 1998). The note is
secured by equipment and chattel paper. The Company may borrow up to $750,000.
332,168 -
Note payable under revolving line of credit to a financial institution due
June 99. The interest rate is the Wall Street Journal prime rate plus 1.5
percent (10 percent at December 31, 1997). The note is unsecured. The
Company may borrow up to $300,000.
- 269,877
--------- -----------
$969,400 269,877
The aggregate principal maturities of the notes payable subsequent to
December 31, 1998 are as follows:
1999 $817,517
2000 112,568
2001 39,315
-------
$969,400
At December 31, 1998, the Company was in violation of certain financial
debt covenants on notes payable under revolving line of credit agreement
with a financial institution in the amounts of $200,000 and $437,237,
respectively. Covenants in violation included the debt service coverage ratio,
nonperforming loan percentage, and nonperforming loan to capital percentage.
The Company received a waiver from the financial institution for fiscal year
ending December 31, 1998 only. The Company is attempting to negotiate
modification to the covenants with the financial institution in order to be in
compliance.
(6) Office Equipment and Vehicles
The components of office equipment and vehicles at December 31, are as
follows:
1998 1997
-------- --------
Office equipment $ 20,717 19,734
Vehicles 26,562 -
--------- ---------
47,279 19,734
Less accumulated depreciation (21,305) (17,512)
----------- ----------
$ 25,974 2,222
====== ======
(7) Income Taxes
No provision has been made in the financial statements for income taxes
because of utilization of net operating losses and related decrease in
valuation allowance.
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets are presented below:
December 31,
------------------
1998 1997
------ ------
Deferred tax assets:
Allowance for loan losses $36,750 34,215
Net operating loss carryforward 111,916 171,232
------- -------
Total deferred tax assets 148,666 205,447
Less valuation allowance (148,666) (205,447)
------- -------
Net deferred tax asset $ - -
The net change in the total valuation allowance for the years ended
December 31, 1998 and 1997, was a decrease of $56,781 and an
increase of $11,591, respectively.
For income tax return purposes, the Company has available, net operating
loss carryforwards of $270,538 which expire between 2002 and 2012.
(8) Disclosures About the Fair Values of Financial Instruments
The carrying value for short-term financial instruments that mature or
reprice frequently at market rates, approximates fair value. Such financial
instruments include: cash, accounts and interest receivable, notes payable
under revolving lines of credit, accounts payable, and accrued liabilities,
payroll taxes payable, dividends payable, amounts due stockholder, and
deferred fees. The difference between the fair market value and the carrying
value for loans receivable and other investments is not considered significant.
(9) Related Party Transactions
During the fourth quarter of 1998, the Company sold other real estate
owned to a nonaffiliated company owned by an officer and majority stockholder
of the Company for $375,502. Included in other income is $104,059 relating to
the gain on the sale of other real estate owned. The transaction was settled in
cash.
The Company participates out originated loans to a financial institution in
which a stockholder of the Company an ownership interest. Total participated
loans for the years ending December 31, 1998 and 1997, were $700,000 and
$-0-, respectively.
(10) Commitments and Contingencies
The Company had funds committed for loans and unfunded lines of credit
as of December 31, 1998 of $29,366.
Certain facilities are leased under various short-term operating leases.
Rental expense was $16,989, $10,085, and $7,875 for the years ended
December 31, 1998, 1997, and 1996, respectively.
(11) Year 2000
The Company has developed a plan to deal with Year 2000 compliance
issues. The Company's operations require only two personal computers, one of
which will need to be replaced by Year 2000. The Company will be contacting
its building lessor to insure all non-IT systems for internal environment
controls will be unaffected by the Year 2000 changeover. Steps are being
taken to evaluate all third parties with whom the Company does business,
in order to determine any effects of the Year 2000 problem on those
relationships. Status of plan development will affect the amount of risk
involved. It is expected that risk will be minimal. The Plan provides
for the conversion efforts to be completed by the end of fiscal year 1999.
Costs surrounding Year 2000 readiness are considered by the Company as
insignificant, amounting to the cost of replacing one personal computer.
Any costs related to Year 2000 readiness are being expensed as incurred.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
KPMG LLP, serve as accountants for the year ended December 31, 1998
and have served as independent accountants since June 23, 1994. There have
been no disagreements with the Company's accountants on accounting and
financial disclosures.
(The remainder of this page intentionally left blank)
Item 10. Directors And Executive Officers Of The Registrant
It is expected that the number of directors serving on the board will
continue to be fewer than the total number permitted.
Principal Occupation During Director Term
Name the Past Five Years Since Expires Age
Grant R. Caldwell Retired CPA and Managing 1994 1999 74
Partner, KMG Main Hurdman
Director, Zions Bancorporation
A. Wayne Mittleider Vice President, 1994 1999 51
Affordable Housing
Past Executive Director,
Idaho Housing Agency
John P. Rigby Data Analyst, 1994 1999 42
Past Database Analyst,
Past Data Analyst,
Past Database Administrator, Idaho Power Company
Secretary/Treasurer, The Idaho Company
Jeff Jones Executive Vice President, 1998 2001 49
Past Vice President Branch Manager,
Bank of Eastern Idaho
Past Vice President Relationship Manager,
Wells Fargo Bank
William F. Rigby Chairman and CEO, 1994 2000 68
The Idaho Company
Chairman, CEO, and President,
Bank of Eastern Idaho, Bank of Idaho Holding Co.
Fred T. Thompson, Jr. Director, 1994 2000 67
Bank of Eastern Idaho
Director, Bank of Idaho Holding Co
Diane Rigby President, The Idaho 1994 2001 33
Company, Director,
Bank of Eastern Idaho
Director, Bank of Idaho Holding Co.
Past Manager, Analytical Support,
Zions Bancorporation
Past Asst. Controller, Asst. Vice President, Bank of Eastern Idaho
(d) Family Relationships
William F. Rigby is the father to John P. Rigby and Diane Rigby.
Item 11. Executive Compensation.
None.
Item 12. Security Ownership Of Certain Beneficial Owners And
Management.
The following directors hold all shares issued and outstanding as of
December 31, 1998.
Shares of Percent of
Common Stock Outstanding
Name of Beneficial Owner Owned
William F. Rigby 1,078 67%
PO Box 1487
Idaho Falls, ID 83403
Fred T. Thompson, Jr. 540 33%
2390 Stroke Drive
Lake Havasu City, AZ 98607
Aggregate Shares: 1,618 100%
Item 13. Certain Relationships And Related Transactions.
During the fourth quarter of 1998, the Company sold other real estate
owned to a nonaffiliated company owned by an officer and majority
stockholder of the Company for $375,502. Included in other income
is $104,059 relating to the gain on the sale of other real estate owned.
The transaction was settled in cash.
PART IV
Item 14. Exhibits, Financial Statement Schedules, And Reports On Form
8-K
(a) The following documents are part of this report and appear on the
pages indicated:
(1) Financial Statements;
Independent Auditors' Report ...7
Balance sheets - December 31, 1998 and 1997 ...8
Statements of Income -
Years ended December 31, 1998, 1997, 1996 ...9
Statements of Stockholders' Equity -
Years ended December 31, 1998, 1997, 1996 ...10
Statements of Cash Flows -
Years ended December 31, 1998, 1997, 1996 ...11
Notes to Financial Statements ...12
(2) Financial Statement Schedules:
Schedules are omitted because the information is either not required, not
applicable, or is included in the accompanying financial statements.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter ended
December 31, 1998.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
executed on its behalf by the undersigned, thereunto duly authorized.
The Idaho Company
----------------------------
Diane Rigby
President
Supplemental information to be furnished with reports filed pursuant to
Section 15(d) of the Act by registrants which have not registered securities
pursuant to Section 12 of the Act: None
Pursuant to the requirements of the Securities Exchange Act if 1934, this
report has been signed by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.
By (Signature and Title) Date:
Grant R. Caldwell, Director
Wayne Mittleider, Director
Diane Rigby, President and Director
John Rigby, Secretary/Treasurer and Director
William F. Rigby, Chairman of Board and
Director
Fred T. Thompson, Jr., Director
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from The idaho
Company's Balance Sheet at December 31, 1998, and Statement of Income for the
twelve months ended December 31, 1998, and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
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<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
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