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 June 30, 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 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 June 30, 1996
Common Stock, $.01 par value 21,452,642 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.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Material Changes in Financial Position
June 30, 1996 and December 31, 1995
During the six month period ended June 30, 1996, the Corporation continued the
process of purchasing Olympic Mills Corporation and its affiliate Lutania Mills,
Inc. (together "Olympic Mills"). The Olympic Mills purchase (the "Acquisition")
is being accounted for as an acquisition in progress. During the period, the
Corporation and Olympic Mills paid $80,297 of interest on the notes due to the
sellers from internal sources of capital. At June 30, 1996 the Corporation and
Olympic Mills were still indebted to the sellers in the amount of $6,206,080.
On July 29, 1996 one note of $122,054 was paid off. The other notes originally
matured on July 15, 1996; however; they were extended until September 13,
1996.
During the period, Current assets decreased by $168,985 caused by a decrease in
Cash of $93,748, which was used to fund operations and for the Acquisition;
repayment by an affiliate of Note receivable of $50,324 and the sale of
Marketable securities. Current liabilities increased by $120,542; due primarily
to increases in Accounts payable of $90,777 and Accrued expenses of $29,040.
The Corporation still has a sizable negative current ratio, caused primarily by
the debts of Caribbean Outfitter's, Inc.; Caribbean Outfitters, N.V. Aruba;
Caribbean Outfitters, N.V. and Back Bay Outfitters, Inc. (together "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 $1,611,410. This increase was due
to an increase in Acquisition in progress of $1,791,256; caused by the Net
income of Olympic Mills and then additional investment in Olympic Mills by the
Corporation; offset by the decrease in Current assets and Notes receivable
affiliate. Total Liabilities increased by $110,120.
Stockholders' equity increased by $1,501,260. This was caused by the decrease
in Accumulated deficit of $1,401,290 (the Net income) and the sale of 1,187,500
shares of Common Stock in a Private Placement. The Corporation now has an
Accumulated deficit of $8,206,706.
Liabilities and expenses associated with the Retail Subsidiaries accounted for
$2,173,173 of the Corporation's Current liabilities and $2,195,726 of the
Corporation's Total liabilities. Additionally, the acquisition in progress of
Olympic Mills accounted for $10,420,744 of the Corporation's Current assets and
$5,110,526 of the Current liabilities.
Olympic Mills, the Corporation's un-consolidated subsidiary had Current assets
of $20,868,932; Total assets of $33,475,241; Current liabilities of $13,387,642;
Total liabilities of $18,500,363 and Stockholders' equity of $14,974,878.
Olympic Mills is accounted for by the Corporation as an Acquisition in progress
of $9,485,332.
Results of Operations
For three and six month periods ended June 30, 1996 compared to the same
periods of 1995.
For the three months ended June 30, 1996 the Corporation had Net income of
$848,818 ($.04 per share), compared to a Net loss of $229,942 ($.02 per share)
for the same period of 1995. For the six months ended June 30, 1996 the
Corporation had Net income of $1,401,290 ($.07 per share), compared to a net
loss of $470,321 ($.04 per share) for the same period of 1995. The Corporation
had Operating losses of $83,141 and $204,350 for the three and six month periods
ended June 30, 1996; compared to Operating losses of $166,228 and $371,607 for
the same periods of 1995. Revenues increased by $3,905 and $6,430, caused by
increases in Management fees of $3,905 and $8,723 and the ceasing of selling
time share units. Operating expenses decreased by $83,087 and $167,257. This
was caused by the ceasing of selling time share units, decreases in General and
administrative costs of $59,847 and $115,044 and Depreciation of $19,335 and
$39,411. The decreases in General and administrative expenses would have been
approximately $60,500 greater if non recurring charges of $38,000 for 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. During the second
quarter, it was determined that the $38,000 audit fee was charged twice and it
was reversed. Management believes that this decrease in general and
administrative expenses 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 $52,905 of travel expenses, primarily associated with the
management of Olympic Mills.
Other Income and expense increased by $913,871 and $1,606,300, caused
primarily by the equity in the income of Olympic Mills of $935,412 and
$1,641,256.
Olympic Mills had Net sales of $10,338,258 and $20,134,510 for the three and
six month periods ended June 30, 1996 compared to $9,105,857 and $15,119,183
for the same periods for 1995. Net earnings of Olympic Mills for the
corresponding periods were $935,412 and $1,641,263 for 1996 and $467,401 and
$401,446 for 1995. Olympic Mills sales were increased partially to increased
purchasing by the U.S. Military. During the quarter, Olympic Mills was awarded
a five year contract to produce briefs for the U.S. Department of Defense. The
contract should result in sales of at least $3,000,000 annually. During the
quarter, the Department of Defense also exercised its option to purchase
tee-shirts during 1997. The minimum purchases under the contract are
$11,000,000. Other sales remained reasonably constant. During the quarter,
Olympic Mills also continued to increase its private label manufacturing
business and began to ship America Project (Registered) tee-shirts to the
U.S. market.
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 Corporation has now ceased all
retail operations. All overhead associated with these operations has been
eliminated. Although these operations are consolidated for accounting
purposes, the Corporation believes it is not directly liable for the debt of
these subsidiaries. The Corporation will continue to try to work out the
debts of these subsidiaries, if this is not successful it will look at other
options such as liquidation. With the exception of these discontinued
operations the Corporation was able to meet its commitments.
In order to repay the Acquisition loans, on July 1, 1996 Olympic Mills
Corporation offered for sale shares of preferred stock in a Private Placement
being underwritten by Rizek Investments of Puerto Rico. The Corporation has
also arranged for a term loan of up to $3,300,000 to be used to repay the
Acquisition loans.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Other than stated below, 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 Retail Operations. In the opinion of management none of these
will effect the corporation.
COACHMAN INCORPORATED
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1996 AND DECEMBER 31, 1995
June 30, December 31,
1996 1995
----------- -----------
ASSETS
CURRENT ASSETS:
Cash and cash equiv. $ 6,098 $ 99,846
Accounts receivable:
Trade 952 922
Related parties 49,312 99,636
Notes receivable from affiliates 35,702 35,702
Marketable equity securities 85,500 108,000
Other current assets 3,352 5,795
----------- -----------
Total current assets $ 180,916 $ 349,901
Property and equipment, net of accumulated
depreciation of $245,199 in 1996 and
$244,626 in 1995 1,679 2,252
Notes receivable:
Officer 131,409 127,609
Affiliates 383,545 402,633
Acquisition in progress 10,420,744 8,629,488
Investments in affiliated entities 81,038 76,038
and other assets
----------- -----------
TOTAL ASSETS $11,199,331 $ 9,587,921
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable: $ $
Trade 913,771 822,994
Related parties 2,547 1,822
Accrued liabilities:
Rent 149,670 138,870
Interest 353,701 301,491
Other 501,889 535,859
Notes payable:
Related parties 4,710,526 4,710,526
Other 125,000 125,000
Current maturities 596,912 596,912
----------- -----------
Total current liabilities 7,354,016 7,233,474
LONG-TERM DEBT 22,553 32,975
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; authorized
200,000 shares; issued and outstanding 73 73
7,250 shares at June 30, 1996
Common stock, $.01 par value; authorized 214,526 202,651
25,000,000 shares, issued and outstanding
21,452,642 shares at June 30, 1996 and
20,265,142 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 (8,206,676) (9,607,966)
Net unrealized gain on marketable sec 23,625 23,625
----------- -----------
Total stockholders' equity 3,822,762 2,321,472
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $11,199,331 $ 9,587,921
=========== ===========
COACHMAN INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1996 AND 1995
AND THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
THREE MONTHS ENDED SIX MONTHS ENDED
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
---------- ---------- ---------- ----------
Revenues:
Management fees $ 21,625 $ 17,720 $ 42,029 $ 33,306
Time-share commissions 0 0 0 2,293
---------- ---------- ---------- ----------
21,625 17,720 42,029 35,599
Expenses:
Time-share commission expenses 0 0 0 6,372
General and administrative 104,477 164,324 245,801 360,845
Depreciation and amortization 289 19,624 578 39,989
---------- ---------- ---------- ----------
104,766 183,948 246,379 407,206
---------- ---------- ---------- ----------
Operating income/(loss) (83,141) (166,228) (204,350 (371,607)
---------- ---------- ---------- -----------
Other income (expense):
Interest income 13,362 12,100 25,492 24,405
Interest expense (26,337) (22,811) (55,479) (46,929)
Other income 2,834 11,406 6,568 24,201
Gain on sale of marketable sec 6,604 17,309 7,449 17,309
Equity in income of Olympic 935,412 0 1,641,256 0
---------- ---------- ---------- ----------
931,875 18,004 1,625,286 18,986
---------- ---------- ---------- ----------
Income/(loss) from continuing
operations 848,734 (148,224) 1,420,936 (352,621)
Discontinued operations:
Income/(loss) from operation of
discontinued retail activities 84 (81,719) (19,646) (117,700)
---------- ---------- ---------- ----------
Income/(loss) on discontinued
operations 84 (81,719) (19,646) (117,700)
---------- ---------- ---------- ----------
Net income/(loss) $ 848,818 $ (229,943) $1,401,290 $ (470,321)
========== ========== ========== ==========
Avg. outstanding common shares 21,393,919 8,062,668 21,393,919 8,062,668
Net income/(loss) per avg.
outstanding common share
from continuing operations 0.04 (0.02) 0.07 (0.04)
Net income/(loss) per avg.
outstanding common share
from discontinued operations 0.00 (0.01) 0.00 0.00
Net income/(loss) per avg.
outstanding common share 0.04 (0.03) 0.07 (0.06)
COACHMAN INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
SIX MONTHS ENDED
June 30, June 30,
1996 1995
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 1,401,290 $ (489,125)
Adjustments to reconcile net income to net cash
provided by (used in) operating activities
Depreciation and amortization 578 5,887
Partnership loss 0 3,258
Gain on sale of marketable security (7,449) 0
Equity income in Olympic Mills (1,641,256) 0
(Increase) decrease in accounts
receivable-trade 150,324 (3,888)
(Increase) decrease in inventory 0 (74,159)
(Increase) decrease in other current 2,443 (24,604)
(Increase) decrease in other assets (5,000) 0
Increase (decrease) in accounts payable
and accrued liabilities 120,542 222,585
----------- -----------
Net cash provided by (used in)
operating activities 21,472 (360,046)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net loan repayments from affiliates 19,088 40,270
Capital expenditures (5) (140,111)
Loans to officers (3,800) 17,307
Sale of security 29,919 0
Acquisition in progress (150,000) 0
----------- -----------
Net cash provided by (used in)
investing activities (104,798) (82,534)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of stock 0 250,000
Proceeds from note payable 0 77,341
Principal payments on note payable
and long-term debt (10,422) 0
----------- -----------
Net cash provided by (used in)
financing activities (10,422) 327,341
----------- -----------
Net increase (decrease) in cash (93,748) (115,239)
CASH, beginning of period 99,846 174,969
----------- -----------
CASH, end of period $ 6,098 $ 59,730
=========== ===========
<TABLE>
COACHMAN INCORPORATED
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1996
<CAPTION>
Net
Paid-in Common Common Unrealized
Capital Stock Stock Loss-Nonc Total
Preferred Common in Excess Subscribed, Subscript Marketable Accumulated Stockholders
Stock Stock of Par Unissued Receivable Securities Deficit Equity
--------- -------- ----------- ----------- ---------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance
Dec. 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
Pref. 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 gain on
marketable sec 23,625 23,625
Net income/loss for 1995 (1,296,320) (1,296,320)
--------- -------- ----------- ----------- ---------- ---------- ----------- -----------
73 202,651 11,411,589 391,500 (100,000) 23,625 (9,607,966) 2,321,472
Common stock issued 11,875 379,625 (391,500) 100,000 100,000
Net income\(loss) for the
six months ended June 30, 1996 1,401,290 1,401,290
--------- -------- ----------- ----------- ---------- ---------- ----------- -----------
Balance
June 30, 1996
$ 73 $214,526 $11,791,214 $ 0 $ 0 $ 23,625 $(8,206,676) $ 3,822,762
========= ======== =========== =========== ========== ========== =========== ===========
</TABLE>
OLYMPIC MILLS CORPORATION, SUBSIDIARY AND AFFILIATE
COMBINED BALANCE SHEETS
JUNE 30, 1996 AND DECEMBER 31, 1995
Unaudited
June 30, Dec. 31,
1996 1995
---------- ----------
Assets
Current assets:
Cash $ 500 $ 500
Accounts receivable:
Trade 7,988,989 5,087,883
Other 1,935,805 1,161,811
----------- -----------
9,925,294 6,250,194
Inventories 10,850,211 9,759,353
Prepaid expenses 93,427 198,512
Prepaid income taxes 0 17,094
----------- -----------
Total current assets 20,868,932 16,225,153
Equipment and improvements 4,544,624 4,599,815
Intangibles:
Leasehold rights 25,172 55,378
Trade names 1,474,854 1,548,930
Goodwill 5,318,914 5,504,706
Debt issue costs 462,145 255,900
Other assets 48,815 48,815
Deferred tax assets, net 731,785 731,785
----------- -----------
$33,475,241 $28,970,482
=========== ===========
Liabilities and stockholder's equity
Current liabilities:
Notes payable 9,128,041 8,545,880
Accounts payable 2,762,333 2,656,991
Accrued expenses 1,396,070 1,017,798
Income payable 101,198 101,198
----------- -----------
Total current liabilities 13,387,642 12,321,867
Long-term notes payable 5,112,721 3,465,000
----------- -----------
18,500,363 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 5,321,494 3,680,231
----------- -----------
$33,475,241 $28,970,482
=========== ===========
OLYMPIC MILLS CORPORATION, SUBSIDIARY AND AFFILIATE
COMBINED STATEMENTS OF OPERATIONS
THREE MONTH PERIOD ENDED JUNE 30, 1996 AND 1995 AND
SIX MONTH PERIOD ENDED JUNE 30, 1996 AND 1995
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
Unaudited Unaudited
----------- ----------- ----------- -----------
Net sales $10,338,258 $ 9,105,857 $20,134,510 $15,119,183
Cost of goods sold (7,753,441) (7,200,571) (15,672,325) (11,960,354)
----------- ----------- ----------- -----------
Gross profit 2,584,817 1,905,286 4,462,185 3,158,829
Selling & admin. exp. (1,606,153) (1,345,817) (2,621,794) (2,488,062)
----------- ----------- ----------- -----------
Operating income 978,664 559,469 1,840,391 670,767
Interest expenses (355,877) (186,717) (682,152) (364,900)
Other income 312,625 94,649 483,024 95,579
----------- ----------- ----------- -----------
Income before
Income taxes 935,412 467,401 1,641,263 401,446
Income tax benefits -- -- -- --
----------- ----------- ----------- -----------
Net earnings 935,412 467,401 1,641,263 401,446
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)
August 8, 1996 By: /s/ Dennis D. Bradford
Dennis D. Bradford
Chairman of the Board
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 6,098
<SECURITIES> 85,500
<RECEIVABLES> 600,920
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 180,886
<PP&E> 246,878
<DEPRECIATION> 245,199
<TOTAL-ASSETS> 11,199,331
<CURRENT-LIABILITIES> 7,354,016
<BONDS> 0
0
73
<COMMON> 214,526
<OTHER-SE> 11,791,214
<TOTAL-LIABILITY-AND-EQUITY> 11,199,331
<SALES> 0
<TOTAL-REVENUES> 1,722,794
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 246,379
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 55,479
<INCOME-PRETAX> 1,420,936
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,420,936
<DISCONTINUED> (19,646)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,401,290
<EPS-PRIMARY> 0.07
<EPS-DILUTED> 0.06
</TABLE>
