FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ____________
Commission file number 1-9593
COACHMAN INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 73-1244422
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
301 N.W. 63rd, Suite 500, Oklahoma City, OK 73116
(Address of principal executive offices) (Zip Code)
(405)-840-4667
Registrant's telephone number, including area code
Not applicable
(Former name, former address and former fiscal year,
changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) for 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 ____ No __X__
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.
Class Outstanding at September 30, 1995
Common Stock, $.01 par value 9,284,142 shares
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The following financial statements, in the opinion of management,
reflect all adjustments (none of which was other than a normal recurring
adjustment) necessary for a fair presentation of results of operations for
such periods. Results for interim periods should not be considered
indicative of results for a full year.
THE FOLLOWING NOTES ARE AN INTEGRAL PART OF THESE
FINANCIAL STATEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THEM.
Note 1: On June 27, 1995 the Corporation entered into an agreement
to acquire Olympic Mills Corporation. The agreement was amended on
August 31, 1995 and October 31, 1995 to extend the closing date to
November 30, 1995. The purchase price is $12,500,000 cash, 6,000,000
shares of common stock and $2,000,000 in subordinated notes. The
Corporation has on deposit as earnest money $250,000, included in Other
Assets. Congress Credit Corporation has agreed to fund a portion of the
purchase price through a $15,000,000 credit facility. The Corporation
will raise the balance through the sale of Common and Preferred Stock.
Note 2: The Corporation holds an option to purchase the Hotel on
the Cay in St. Croix, U.S.V.I. for $2,000,000, $250,000 of which has
been earned through an earn out agreement. The option expires October
31, 1995 and at this time it is the intention of the Corporation to let the
option expire.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Material Changes in Financial Position
September 30, 1995 and December 31, 1994
From December 31, 1994 through September 30, 1995 current Assets
decreased $160,012 due to decrease in cash of $8,231 and inventory of
$99,395 and marketable equity securities of $112,500. Inventories
decreased due to a decrease in activity at the Company's retail stores as
the Company restructured its activities. This decrease in inventories, if
not reversed, will further decrease the business potential of the Company
retail operations. During the quarter the Company also sold $56,250 of
the ILEX stock which it held. Other Assets increased by $220,322 due to
repayment of Notes Receivable of $24,791 as notes were paid as agreed,
Amortization of Deferred Costs of $6,373 and a increase in Other Assets
of $268,301, $250,000 of which is the purchase deposit on Olympic Mills
Corporation funded through the sale of common stock in a Private
Placement.
From December 31, 1994 through September 30, 1995 Total Liabilities
increased by $258,212 due primarily to an increase in Accrued Liabilities
the majority of which relate to Caribbean Outfitters and Back Bay
Outfitters.
On June 27, 1995 the Company executed an agreement to purchase all of
the stock of Olympic Mills Corporation ("Olympic Mills"). The
agreement, which was amended on August 31, 1995 and October 31,
1995, calls for the acquisition to close on November 30, 1995. On July
10, 1995 the Company received a financing proposal from Congress Credit
Corporation to partially finance the acquisition of Olympic Mills. On
October 12, 1995 Congress Credit Corporation committed to fund up to
$15,000,000 in the form of a $13,000,000 revolving line of credit and a
$2,000,000 three year term loan.
In order to complete the acquisition of Olympic Mills Corporation the
Corporation will be required to raise additional equity capital. This is
being accomplished through the private placement of common and
preferred stock. Since December 31, 1994 the Corporation has issued
857,142 shares of Common Stock. The Corporation is offering an
additional 20,000,000 shares of Common Stock at $.40 per share through
a Private Placement.
In order to have sufficient stock authorized to finance the growth of the
Corporation the Board of Directors has proposed raising the authorized
Common Stock of the Corporation from 25,000,000 shares to 50,000,000.
Further, to position the Corporation to list its common stock on a national
exchange the Board of Directors has proposed a reverse split of 1 share for
6 of the Common Stock contingent on simultaneous listing.
Material Changes in Results of Operations
Three Months Ended September 30, 1995 compared to Three Months
Ended September 30,1994.
The Retail Operations were Sales of $78,760; Cost of Goods Sold of
$45,272 or 57%; Operating Expenses of $135,245 and Loss from Retail
Operations of $101,757 compared to a profit of $24,533 in 1994. The
gross margins of 43% are low compared with the Corporations goals.
Overall sales and income were low due to low inventory levels.
Additional financing to bring inventory levels to $500,000 is needed. The
Corporation is evaluating the entire retail operation and its future viability.
During the quarter the Corporation closed its entire retail administrative
office in Florida. All functions were incorporated into the Oklahoma City
office. This will mean an additional savings in operating costs of
approximately $220,000 annually. The Corporation is negotiating to close
one store in Aruba and the store in Tampa, Florida and have its
subsidiaries released from the leases. Major changes in the retail
operations are necessary to make them profitable. The inventory level is
the most critical.
General and Administrative Expenses decreased by $26,241 due to
downsizing of management and administrative personnel. Additional
savings are planned for the balance of the year. The year 1995 proved to
be the most active in terms of hurricanes. Over all, this effected the retail
sales as tourist stayed out of the Caribbean Basin. Hurricane Marilyn
devastated the island of St. Thomas and although the Caribbean Outfitter
store sustained only minor damage, it was closed from early September
until late October and tour travel is off significantly.
Nine Months Ended September 30, 1995 compared to Nine Months Ended
September 30, 1994.
Retail sales decreased by $973,787, cost of goods sold decreased by
$456,329, and operating expenses decreased by $208,668. For the six
months Retail Operations lost $219,457 compared to a profit of $89,330
for the same period of 1994. General and Administrative Expenses
decreased by $179,555 compared to the same period of 1994. The reasons
for the results for nine months are similar to those for three months above.
Through the end of September the Corporation has been pursuing its cost
saving and restructuring needed to continue operations. Retail stores have
been closed and the retail administrative office in Florida has been closed.
In order to fund operations and pursue the acquisition of Olympic Mills,
the Corporation has sold 75,000 shares of ILEX stock and sold its own
stock in two Private Placements. Management continues to evaluate all of
the Corporations operations to look for savings or additional opportunities.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Corporation is not a party to any current, pending or threatened
material legal proceedings. The Corporation's subsidiary Caribbean
Outfitters, Inc. is a party to a number of suits related to the closing of all
Florida Operations and the scaling back of its retail operations. In the
opinion of management none of these will effect the corporation directly.
Item 5. Other Information.
On June 27, 1995 the Company entered into an agreement to acquire
Olympic Mills Corporation ("Olympic Mills"), a privately held vertically
integrated textile and apparel manufacturing company in Puerto Rico. The
purchase price is $12,500,000 cash, 6,000,000 shares of Common Stock
of the Company and $2,000,000 of subordinated debt. Olympic Mills is
Puerto Rico's leading manufacturer of underwear, t-shirts, school uniforms
and polo shirts. Olympic Mills operates two vertical mills and a cut and
sew operation. Olympic Mills had sales in excess of $31,000,000 in 1994
and net income of over $2,000,000. The acquisition agreement calls for
a closing of August 31, 1995 with an extension to September 30, 1995
upon the Company paying an additional $100,000 in earnest money to the
sellers. On August 31, 1995 and October 31, 1995 the Corporation
executed Amendments to the agreement extending the closing date to
November 30, 1995 and deposited an additional $50,000 in earnest money.
Currently the total earnest money deposit totals $250,000.
The Corporation holds an option to purchase the Hotel on the Cay in St.
Croix, U.S.V.I. Due to deterioration in the property, soft tourism market
in St. Croix and damage to the property caused by Hurricane Marilyn the
Corporation will not pursue executing the option if dramatic changes do
not occur.
SIGNATURES
FORM 10-Q
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.
COACHMAN INCORPORATED
(Registrant)
November 10, 1995 By: /s/ Dennis D. Bradford
Dennis D. Bradford
Chairman of the Board
Chief Financial Officer
COACHMAN INCORPORATED
CONSOLIDATED BALANCE SHEETS
September 30, 1995 AND DECEMBER 31, 1994
September 30, December 31,
1995 1994
---------- ----------
ASSETS
CURRENT ASSETS:
Cash $24,546 $32,777
Accounts Receivable:
Trade 11,314 25,317
Related parties 75,135 2,658
Notes Receivables:
Officer 30,979 27,619
Affiliates 35,702 35,702
Inventory 129,460 228,855
Marketable equity securities 56,250 168,750
Prepaid Expenses 63 1,884
---------- ----------
Total Current Assets $363,449 $523,562
OTHER ASSETS:
Property and equipment, net of accumulated
depreciation of $374,605 in 1995 and
$320,145 in 1994 $291,118 $309,105
Notes receivable:
Officer 94,448 92,767
Affiliates 410,184 436,656
Investment in condominium time-share memberships 60,000 60,000
Investments in affiliated entities 30,638 30,638
Deferred costs, net of accumulated amortization
of $26,308 in 1995 and $19,936 in 1994 16,994 23,367
Deposits 68,517 67,345
Other 302,956 34,655
---------- ----------
Total Other Assets 1,274,855 1,054,533
---------- ----------
TOTAL ASSETS $1,638,304 $1,578,095
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable:
Related party $154,150 $154,150
Other 164,092 139,189
Current maturities of long-term debt 289,785 289,785
Accounts payable:
Trade 687,978 657,127
Related parties 96,671 58,771
Accrued liabilities:
Taxes 13,927 15,112
Interest 259,258 195,128
Other 249,180 147,567
---------- ----------
Total Current Liabilities 1,915,041 1,656,829
LONG-TERM DEBT 339,195 339,196
STOCKHOLDERS' EQUITY:
Preferred Stock, $.01 par value; authorized
200,000 shares; issued and outstanding 48 48
4,750 shares at June 30, 1995
Common Stock, $.01 par value; authorized 92,841 74,210
25,000,000 shares authorized;
9,284,142 shares outstanding 1995
and 7,421,000 shares outstanding in 1994
Stock Warrants; 1,000,000 authorized; 90,000
Additional paid-in capital 8,294,054 7,819,458
Accumulated deficit (9,092,875) (8,311,646)
---------- ----------
Total Stockholders' Equity (615,932) (417,930)
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,638,304 $1,578,095
========== ==========
COACHMAN INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
AND THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
THREE MONTHS ENDED
SIX MONTHS ENDED
Sept 30, Sept 30, Sept 30, Sept 30,
1995 1994 1995 1994
--------- --------- --------- ----------
Revenues:
Retail sales $ 78,760 $ 473,805 $ 503,570 $1,477,357
Management fees from affiliates 19,662 20,760 52,968 54,591
Time share commissions 0 0 2,293 0
--------- --------- ---------- ---------
98,422 494,565 558,831 1,531,948
Expenses:
Cost of retail goods sold 45,272 234,559 271,859 728,188
Retail operating expenses 135,245 214,713 451,168 659,839
Time share commission expenses 0 -- 6,372 --
General and administrative 198,472 224,713 559,317 738,872
Depreciation and amortization 19,020 10,208 59,009 25,682
--------- --------- --------- ---------
398,009 684,193 1,347,725 2,152,581
--------- --------- --------- ---------
Loss From Operations (299,587) (189,628) (788,895) (620,633)
--------- --------- --------- ----------
Other Income (Expense):
Interest income 11,848 12,644 36,253 82,151
Interest expense (22,684) (3,145) (69,613) (74,024)
Other income 7,306 8,377 31,507 --
Other expense -- -- -- (48,371)
Gain on sale of security (7,791) -- 9,518 --
--------- --------- --------- ----------
(11,321) 17,876 7,665 (40,244)
--------- --------- --------- ----------
Income (Loss) Before Income Taxes (310,908) (171,752) (781,229) (660,877)
Income Taxes -- -- -- --
--------- --------- --------- ---------
Net Income (Loss) $(310,908) $(171,752) $(781,229) $(660,877)
Net Income (Loss) Per Common Share:
Primary (0.04) (0.02) (0.09) (0.09)
Fully Diluted (0.03) (0.02) (0.08) (0.09)
Weighted Average Shares Outstanding:
Primary 8,382,944 7,421,000 8,382,944 7,421,000
Fully Diluted 9,871,694 7,421,000 9,871,694 7,421,000
COACHMAN INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
NINE MONTHS ENDED
Sept 30, Sept 30,
1995 1994
--------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(781,229) $(660,877)
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 59,009 25,682
Partnership loss 3,259
(Increase) Decrease in Accounts 14,003 (3,342)
receivable-trade
(Increase) Decrease in Inventory 99,395 34,914
(Increase) Decrease in Prepaids and Other (267,652) (295,179)
Increase (Decrease) in Accounts payable and
Accrued liabilities 233,309 179,653
--------- ---------
Net Cash Provided by (Used in)
Operating Activities (643,165) (715,890)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net loan repayments from affiliates (46,005) 54,325
Capital expenditures (34,649) (123,733)
Loans to officers (5,041) 16,457
Sale of Security 112,500
--------- ---------
Net Cash Provided by (Used in)
Investing Activities 26,805 (52,951)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 583,227 535,000
Proceeds from note payable 50,000 77,100
Principal payments on note payable
and long-term debt (25,098) 0
--------- ---------
Net Cash Provided by (Used in)
Financing Activities 608,129 612,100
--------- ---------
Net Increase (Decrease) in Cash (8,231) (156,741)
CASH, beginning of period 32,777 174,969
--------- ---------
CASH, end of period $24,546 $18,228
========= =========
<TABLE>
COACHMAN INCORPORATED
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
<CAPTION>
Net Unreal-
ized Gains
(Losses) on
Paid-in Noncurrent
Capital Marketable Total
Preferred Common in Excess Equity Accumulated Stockholders
Stock Stock of Par Securities Deficit Equity
--------- -------- ---------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance December 31, 1993 $0 $ 58,125 $6,921,143 $60,938 $(5,788,954) $1,251,252
Common Stock Issued 16,085 443,323 459,408
Preferred Stock Issued 48 474,992 475,040
Net Unrealized loss on noncurrent
marketable equity securities (60,938) (60,938)
Partial Reduction-Deferred Loan Costs (20,000) (20,000)
Net loss for 1994 (2,522,692) (2,522,692)
--------- -------- ---------- -------- ----------- ------------
Balance December, 31, 1994 $48 $ 74,210 $7,819,458 $0 $(8,311,646) (417,930)
Common Stock Issued 18,631 474,596 493,227
Stock Warrants Issued 9,000 81,000 90,000
Net loss for the nine months
ended Sept 30, 1995 (781,229) (781,229)
--------- -------- ---------- -------- ----------- ------------
Balance Sept 30, 1995 $48 $101,841 $8,375,054 $0 $(9,092,875) $(615,932)
========= ======== ========== ======== =========== ============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 24,546
<SECURITIES> 56,250
<RECEIVABLES> 153,130
<ALLOWANCES> 0
<INVENTORY> 129,460
<CURRENT-ASSETS> 363,449
<PP&E> 665,723
<DEPRECIATION> 374,605
<TOTAL-ASSETS> 1,638,304
<CURRENT-LIABILITIES> 1,915,041
<BONDS> 0
<COMMON> 92,841
0
48
<OTHER-SE> (708,821)
<TOTAL-LIABILITY-AND-EQUITY> 1,638,304
<SALES> 503,570
<TOTAL-REVENUES> 604,602
<CGS> 271,859
<TOTAL-COSTS> 271,859
<OTHER-EXPENSES> 1,075,866
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 69,613
<INCOME-PRETAX> (781,229)
<INCOME-TAX> 0
<INCOME-CONTINUING> (781,229)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (781,229)
<EPS-PRIMARY> (.09)
<EPS-DILUTED> (.08)
</TABLE>
