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 March 31, 1996
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 ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of securities
under a plan confirmed by a court. 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.
Class Outstanding at March 31, 1996
Common Stock, $.01 par value 21,452,642 shares
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The following consolidated financial statements, in the opinion of
management, reflect all adjustments 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.
Index to Consolidated Financial Statements
Consolidated Balance Sheets as of December 31, 1995 and March 31, 1996.
Consolidated Statements of Operations Three Months ended March 31, 1996 and
1995.
Consolidated Statements of Stockholders' Equity (Deficit) as of December 31,
1995 and March 31, 1996.
Consolidated Statements of Cash Flows, Three Months ended March 31, 1995 and
1994.
Notes to Consolidated Financial Statements.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Material Changes in Financial Position
During the three month period ended March 31, 1996; the Corporation continued
the process of purchasing Olympic Mills Corporation and its affiliate Lutania
Mills, Inc. (together "Olympic Mills"). The purchase of Olympic Mills (the
"Acquisition") is being accounted for as an acquisition in progress. During the
period the Corporation paid additional capital of $150,000 to Olympic Mills,
which was used to repay one of the notes owed to the sellers as a result of the
Acquisition. In total, Olympic Mills repaid $1,003,460 on the notes due to
the sellers from internal sources of capital and the Corporation's investment.
The Corporation is still indebted to the sellers in the amount of $4,613,826
on a note due July 15, 1996.
During the period current assets decreased by $147,076; caused by a decrease in
cash used to fund operations and for the Acquisition; repayment by an
affiliate of receivable of $53,653 and the sale of marketable securities.
Current liabilities increased by $54,500; due primarily to the increases in
accounts payable of $21,867 and accrued expenses of $21, 622. The
Corporation still has a sizable negative Current ratio, caused primarily by
the debts of the Corporation's retail subsidiaries and the $4,613,826 note
due to the sellers of Olympic Mills. The Corporation is seeking additional
equity or long term debt to refinance the note due to the sellers of Olympic
Mills. The Corporation will continue to try to settle the debts of the
retail subsidiaries or liquidate them. These retail subsidiaries have no
current business and are accounted for as discontinued operations.
During the period total assets increased by $699,042. This increase was due to
an increase in acquisition in progress of $855,844; caused by the net income of
Olympic Mills and the additional investment in Olympic Mills by the Corporation;
offset by the decrease in current assets. Total liabilities increased by
$46,600.
Stockholders' equity increased by $652,442.
During the period the Corporation's subsidiary Caribbean Outfitters, Inc.,
closed its remaining store. It is not the intention of the Corporation to
reenter these retail businesses. With the exception of these discontinued
operations the Corporation was able to meet its commitments.
Olympic Mills, the Corporation's un-consolidated subsidiary had current
assets of $18,346,343; total assets of $31,117,775; current liabilities of
$11,425,527; total liabilities of $17,078,316 and stockholder's equity of
$14,039,459. Olympic Mills is accounted for by the Corporation as an
acquisition in progress of $9,485,332.
Material Changes in Results of Operations
For the three months ended March 31, 1996 the Corporation had net income of
$572,472 ($.03 per share), compared to a net loss of $240,378 ($.03 per share)
for the same period of 1995. The Corporation had an operating loss of $121,209
for 1996, compared to an operating loss of $204,397 for 1995. Revenues
increased by $2,525; caused by an increase in management fees of $4,818 and the
ceasing of selling time share units. Operating expenses decreased by $84,188.
This was caused by the ceasing of selling time share units, a decrease in
general and administrative costs of $55,197 and depreciation of $20,365. The
decrease in general and administrative expenses would have been approximately
$60,500 greater if non recurring charges of $38,000 of fees associated with
past audits and $16,000 of legal fees and $6,600 of accounting fees
associated with the Acquisition had not been charged. Management believes
that this decrease in general and administrative costs is in part due to the
cost saving measures undertaken in our plan of action to mitigate the
explanatory paragraph in the auditors reports for 1994 and 1995. Also
included in general and administrative expenses were $26,358 of travel
expenses, primarily associated with the management of Olympic Mills.
Other income and expense increased by $692,429, caused primarily by the equity
in income of Olympic Mills of $705,844. Olympic Mills had net sales of
$9,796,252 for the three months ended March 31, 1996 compared to $5,118,093
for the same period of 1995. Net earnings of Olympic Mills for the
corresponding periods were $705,844 and ($222,237), respectively. Olympic
Mills sales were increased partially by increased purchasing by the U.S.
Military. Olympic Mills has both two and five year contracts to supply
underwear to the military. Other sales remained reasonably constant.
During the quarter the Corporation continued its actions to mitigate the
situation which caused the independent auditors to add an explanatory
paragraph discussing conditions that raise doubt about the Corporation's
ability to continue as a going concern. The final retail store was closed,
some of debts of the retail subsidiaries were worked out or repaid and
overhead was decreased further.
In order to repay the Acquisition loans, on March 21, 1996, Olympic Mills
offered for sale shares of Preferred Stock in an offering being underwritten by
R.K. Grace & Company. The offering terminated on May 10, 1996; when the
minimum investment had not been deposited into escrow. The Corporation will
continue to seek funding to repay the Acquisition loans. Management is
confident such funding can be arranged.
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 its retail
operations. In the opinion of management none of these will effect the
corporation.
COACHMAN INCORPORATED
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1996 AND DECEMBER 31, 1995
March 31, December 31,
1996 1995
------------ ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 20,116 $ 99,846
Accounts Receivable:
Trade 922 922
Related parties 45,983 99,636
Notes receivable from affiliates 35,702 35,702
Marketable equity securities 96,750 108,000
Other current assets 3,352 5,795
------------ -----------
Total Current Assets $ 202,825 $ 349,901
Property and equipment, net of accumulated
depreciation of $244,915 in 1996 and
$244,626 in 1995 $ 1,963 $ 2,252
Notes receivable:
Officer 127,609 127,609
Affiliates 393,196 402,633
Acquisition in progress 9,485,332 8,629,488
Investment in affiliated entities
and other assets 76,038 76,038
----------- -----------
TOTAL ASSETS $10,286,963 $ 9,587,921
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable:
Trade $ 844,861 $ 822,994
Related parties 2,133 1,822
Accrued liabilities:
Rent 149,670 138,870
Interest 325,571 301,491
Other 533,301 535,859
Notes payable:
Related parties 4,710,526 4,710,526
Other 125,000 125,000
Current maturities of long-term debt 596,912 596,912
----------- -----------
Total Current Liabilities 1,693,270 1,663,906
LONG TERM DEBT 25,075 32,975
STOCKHOLDERS' EQUITY:
Preferred Stock, $.01 par value; authorized
200,000 shares; issued and outstanding 73 73
7,250 shares at March 31, 1996
Common Stock, $.01 par value; authorized 214,526 202,651
25,000,000 shares, issued and outstanding
21,452,142 shares at March 31, 1996 and
20,165,142 in 1995
Additional paid-in capital 11,791,214 11,411,589
Common stock subscribed, unissued 391,500
Common stock subscriptions receivable 100,000
Accumulated deficit (9,055,524) (9,607,966)
Net unrealized gain on marketable
equity securities 23,625 23,625
----------- -----------
Total Stockholders' Equity 2,973,914 2,321,472
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $10,286,963 $ 9,587,921
=========== ===========
COACHMAN INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
THREE MONTHS ENDED
March 31, March 31,
1996 1995
----------- -----------
Revenues:
Management fees from affiliates 20,404 15,586
Time share commissions -- --
----------- -----------
20,404 15,586
Expenses:
Time share commission expenses -- --
General and administrative 141,324 196,521
Depreciation and amortization 289 20,635
----------- -----------
141,613 223,258
----------- -----------
Loss From Operations (121,209) (205,379)
----------- -----------
Other Income (Expense):
Interest income 12,130 12,305
Interest expense (29,142) (24,118)
Other income 3,734 12,795
Gain on sale of marketable equity
securities 845 --
Equity in income of Olympic Mills Corp. 705,844 --
----------- -----------
693,411 982
----------- -----------
Income (Loss) from continuing operations 572,202 (204,397)
Discontinued operations:
Loss from operation of discontinued
retail activities (19,730) (35,981)
----------- -----------
Loss on discontinued operations (19,730) (35,981)
----------- -----------
Net Income/(Loss) $ 552,472 $ (240,378)
=========== ===========
Average outstanding common shares 21,335,197 7,844,809
Net income/(loss) per average outstanding
common share from continuing operations 0.03 (0.03)
Net income/(loss) per average outstanding
common share from discontinued operations (0.00) (0.00)
Net income/(loss) per average outstanding
common share 0.03 (0.03)
COACHMAN INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
THREE MONTHS ENDED
March 31, March 31,
1996 1995
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 552,472 $ (240,378)
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 289 20,365
Gain on sale of marketable equity
securities 845 --
Equity in income of Olympic Mills (705,844) --
(Increase) Decrease in Accounts receivable 153,653 5,930
(Increase) Decrease in Inventory -- 11,446
(Increase) Decrease in Other current assets 2,443 23,389
Increase (Decrease) in Accounts payable and
Accrued liabilities 54,500 29,362
---------- ----------
Net Cash Provided by (Used in)
Operating Activities 56,668 (149,886)
---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net loan repayments from affiliates 9,437 8,628
Capital expenditures -- (34,648)
Loans to officers -- (1,680)
Sale of marketable equity security 12,065 --
Acquisition in progress (150,000) --
---------- -----------
Net Cash Provided by (Used in)
Investing Activities (128,498) (27,700)
---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock -- 186,900
Principal payments on note payable
and long-term debt (7,900) --
---------- ----------
Net Cash Provided by (Used in)
Financing Activities (7,900) 186,900
---------- ----------
Net Increase (Decrease) in Cash (79,730) 9,314
CASH, beginning of period 99,846 32,777
---------- ----------
CASH, end of period $ 20,116 $ 42,091
========== ==========
<TABLE>
<CAPTION>
COACHMAN INCORPORATED
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1996
Net Unreal-
ized Gains
(Losses) on
Paid-in Noncurrent Common Common
Capital Marketable Stock Stock Total
Preferred Common in Excess Equity Subscribed, Subscriptions Accumulated Stockholders
Stock Stock of Par Securities Unissued Receivable Deficit Equity
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance December 31, 1994
$48 $74,210 $ 7,819,458 $0 ($8,311,646) $ (417,930)
Common Stock Issued
128,441 3,374,656 3,503,097
Preferred Stock Issued
25 217,475 217,500
Common Stock subscribed, unissued 391,500 391,500
Common Stock subscriptions receivable (100,000) (100,000)
Net Unrealized loss on noncurrent
marketable equity securities 23,625 23,625
Net loss for 1995 (1,296,320) (1,296,320)
- --------------------------------------------------------------------------------------------------
Balance December, 31, 1995
$73 $202,651 $11,411,589 $23,625 $391,500 ($100,000) ($9,607,966) $2,321,472
Common Stock Issued
11,875 379,625 (391,500) 100,000 100,000
Net income for the three months
ended March 31, 1996 552,472 552,472
- --------------------------------------------------------------------------------------------------
Balance March 31, 1996
$73 $214,526 $11,791,214 $23,625 $0 $0 ($9,055,494) $2,973,944
=================================================================================================
</TABLE>
COACHMAN INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1996
1) The transaction of the acquisition of Olympic Mills Corporation
has been determined to be an acquisition in progress and has been
accounted for under the equity method of accounting. It is
considered an acquisition in progress because the current
operating control of the Olympic Group remains with the former
owner, and a promissory note issued in connection with the
acquisition in the amount of $1,785,200, which is due July 15,
1996, is secured by the stock of Olympic. Following are the
unaudited first quarter, 1996 balance sheet and statement of
operations for Olympic Mills Corporation, Subsidiary and
Affiliate.
OLYMPIC MILLS CORPOR ATION, SUBSIDIARY AND AFFILIATE
COMBINED BALANCE SHEETS
MARCH 31, 1996 AND DECEMBER 31, 1995
Unaudited
1996 1995
----------- -----------
Assets
Current assets:
Cash $ 500 $ 500
Accounts receivable:
Trade 6,796,724 5,087,883
Other 1,891,143 1,161,811
----------- -----------
8,687,867 6,249,694
Inventories 9,458,768 9,759,353
Prepaid expenses 182,114 198,512
Prepaid income taxes 17,094 17,094
----------- -----------
Total current assets 18,346,343 16,225,153
Equipment and improvements 4,568,522 4,599,815
Intangibles:
Leasehold rights 40,275 55,378
Tradenames 1,511,892 1,548,930
Goodwill 5,411,810 5,504,706
Debt issue costs 458,333 255,900
Other assets 48,815 48,815
Deferred tax assets, net 731,785 731,785
----------- -----------
$31,117,775 $28,970,482
=========== ===========
Liabilities and Stockholder's Equity
Current liabilities:
Notes payable 7,191,460 8,545,880
Accounts payable 2,938,018 2,656,991
Accrued expenses 1,194,851 1,017,798
Income payable 101,198 101,198
----------- -----------
Total current liabilities 11,425,527 12,321,867
Long-term notes payable 5,652,789 3,465,000
----------- -----------
17,078,316 15,786,867
Stockholder's equity:
Common stock, $10 par value.
Authorized, issued and outstanding
100 shares 1,000 1,000
Additional paid-in capital 9,652,384 9,502,384
Retained earnings 4,386,075 3,680,231
----------- -----------
Total stockholder's equity 14,039,459 13,183,615
----------- -----------
$31,117,775 $28,970,482
=========== ===========
OLYMPIC MILLS CORPORATION, SUBSIDIARY AND AFFILIATE
COMBINED STATEMENTS OF OPERATIONS
THREE MONTH PERIOD ENDED MARCH 31, 1996 AND 1995
Unaudited
1996 1995
----------- -----------
Net sales
Trade $ 9,796,252 $ 5,118,093
----------- -----------
Total net sales 9,796,252 5,118,093
Cost of goods sold 7,918,885 3,994,730
----------- -----------
Gross profit 1,877,367 1,123,363
Selling, general and administrative expenses 1,015,646 1,168,183
----------- -----------
Operating income 861,721 (44,820)
Other income/(expense):
Interest expense net (155,877) (283,078)
Other -- 5,841
----------- -----------
Other income/(expense), net (155,877) (277,237)
----------- -----------
Earnings before income taxes 705,844 (322,057)
Income tax benefits -- 100,000
----------- -----------
Net earnings $ 705,844 $ (222,057)
=========== ============
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1995
<CASH> 20116
<SECURITIES> 96750
<RECEIVABLES> 603412
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3352
<PP&E> 246878
<DEPRECIATION> 244915
<TOTAL-ASSETS> 10286963
<CURRENT-LIABILITIES> 1693270
<BONDS> 0
0
73
<COMMON> 214526
<OTHER-SE> 2759315
<TOTAL-LIABILITY-AND-EQUITY> 10286963
<SALES> 0
<TOTAL-REVENUES> 253259
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 141613
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29142
<INCOME-PRETAX> 572202
<INCOME-TAX> 0
<INCOME-CONTINUING> 572202
<DISCONTINUED> (19730)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 552472
<EPS-PRIMARY> .03
<EPS-DILUTED> .02
</TABLE>
