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, 1997
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 re-
quired 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, 1997
Common Stock, $.01 par value 22,688,333 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 Condition.
June 30, 1997 Compared to December 31, 1996
On December 21, 1995 the Corporation acquired all of the outstanding stock of
OMC and LMI. During most of 1996, the transaction was accounted for as an
acquisition in progress. On October 3, 1996, the sellers of Olympic Mills
and the Corporation agreed to modify the terms of the acquisition agreement.
Under these new terms, the acquisition of Olympic Mills has been deemed to
have been consummated for financial reporting terms.
During the period, Current assets increased by $4,550,966 caused by a decrease
in cash of $1,971; increases in Accounts receivable of $1,480,827;
inventories of $1,340,762 and other assets of $1,731,348. Current liabilities
increased by $$6,517,855; due primarily to increases in Accounts payable of
$3,479,687, Accrued expenses of $591,867, Current maturities of $2,041,326
and Taxes payable of $387,833. These increases funded the increase in
current assets and the net loss. The current ratio was 1.13: 1, less than the
Corporation's goal. The Corporation is seeking additional equity or long
term debt to refinance the Preferred Stock owned by the sellers of Olympic
Mills.
During the period, Total assets increased by $3,887,271 and Total liabilities
increased by $4,477,703. At the end of the period, assets were 1.5 times
liabilities.
Stockholders' equity decreased by $590,459. This was caused by an increase in
accumulated deficit of $729,609 and an increase in paid in capital due to the
sale of shares of Common Stock in a Private Placement. The Corporation now
has an Accumulated deficit of $8,269,380.
During the quarter, the Corporation wrote off Accounts receivable totaling
$152,328.
Results of Operations.
For three and six month periods ended June 30, 1997 compared to the same
periods of 1996.
For the three months ended June 30, 1997, the Corporation had net loss of
$1,851,503 ( $.08 per share ), compared to a net income of $848,818
( $.04 per share ) for the same period of 1996. For the six months ended
June 30, 1997, the Corporation had net loss of $1,985,642 ( $.09 per share ),
compared to a net income of $1,401,290 ( $.07 per share ) for the same
period of 1996. Revenues increased by $759,888 for the three months and
decreased by $1,017,255 for the six months. The decrease in revenues were
primarily in the sales to the U. S. Military. The planned reduction in sales
to the U.S. Military were to be offset by sales to the U.S. market. By the
end of the quarter the Board of Directors determined that the terms under
which the company was selling to some accounts in the U.S. were adversely
affecting its liquidity because of inadequate terms and controls.
Consequently the Board instructed management not to open any new, and suspended
sales to one account, in the U.S. until adequate terms and controls were in
place. This resulted in the reported reduction in U.S. sales.
Operating expenses increased by $3,383,163 and $2,268,759. This was caused by
increases in cost of goods of $2,918,296 and $1,499,938 and increases in
general and administrative costs of $464,867 and $768,821. Cost of goods
increases were due to increased labor cost created by increases in the minimum
wage. Increases in general and administrative cost were due to increased
overhead because of the cost of opening a new plant, while operating the old
facility and the fact that the textile operation in the new plant was running
at less than 30% capacity as a result of the reduction in U.S. sales. During
the period, the Corporation wrote off $152,328 of accounts receivable and
spent $59,815 moving into the LMI facility. It also wrote off inventory of
$300,000 for seconds and irregulars of the military t-shirts.
Projected Results of Operations
THE PROJECTIONS AND ANALYSIS WERE PREPARED BY MANAGEMENT OF THE CORPORATION
AND HAVE NOT BEEN REVIEWED BY INDEPENDENT SOURCES. THERE IS NO ASSURANCE
THAT THE RESULTS CAN OR WILL BE ACHIEVED.
In the Corporation's Form 10-K for the year ended December 31, 1996; the
Corporation made projections as to the business of the Corporation for 1997.
In order to evaluate the accuracy of such projections, the Corporation has
prepared the following analysis.
For the three month period ended June 30, 1997, the Corporation's projected
operating data compared to actual was as follows:
Projected Actual Variance
Sales $12,352,032 $11,098,146 ( $1,253,146 )
Cost of goods 9,623,452 10,671,738 1,048,286
Selling, general
and administrative 1,935,132 2,167,150 232,018
----------- ----------- -----------
Gross profit 793,448 ( 1,740,742 ) ( 2,534,190 )
Other income ( expense ) (28,910) (101,926) (73,016)
----------- ----------- -----------
Net income $764,538 ( $1,842,668 ) ( $2,607,206 )
During the period, the Corporation's sales fell short of projections by
$1,253,146, caused primarily by reductions in sales to the U.S. military not
being offset by increases in sales in the U.S. market. Cost of goods
exceeded projections by $1,048,286. This combination caused Gross profit
and Net income to fall short of projections by $2,534,190 and $2,607,206
respectively.
During the period, the Corporation begun a complete review of the operations
and management of Olympic Mills. These were prompted by the variance from
plan of the results of operations for the period and other factors described
above.
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.
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)
January 8, 1998 By: /s/ Dennis D. Bradford
Dennis D. Bradford
Chairman of the Board
Chief Financial Officer
COACHMAN INCORPORATED
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1997 AND DECEMBER 31, 1996
June 30, December 31,
1997 1996
----------- -----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,570 $ 5,541
Accounts Receivable:
Trade, Net of Allowance 5,979,496 4,676,459
Related parties 29,784 8,764
Other, Principally Govt Incentives 1,092,995 1,092,995
Notes receivable from affiliates 199,484 42,714
Inventories 13,586,870 12,246,108
Investment in equity securities 40,000 40,000
Other current assets 1,888,977 157,629
----------- -----------
Total Current Assets 22,821,176 18,270,210
Property & Equipment, Net 7,848,571 6,606,225
Intangibles 1,495,711 3,249,786
Notes receivable:
Officer 95,876 135,266
Affiliates 378,882 356,570
Investment in affiliated entities 60,315 76,038
Deferred Tax asset 1,653,000 1,653,000
Debt issue costs, Net 439,374 565,709
Other assets 56,015 48,845
----------- -----------
Total Other Assets 12,027,744 12,691,439
----------- -----------
TOTAL ASSETS $34,848,920 $30,961,649
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable:
Trade $ 6,969,301 $ 3,489,614
Related parties 20,876 3,734
Accrued liabilities 1,630,391 1,038,524
Current maturities 11,006,268 8,964,942
Income Tax Payable 537,203 149,370
----------- -----------
Total Current Liabilities 20,164,039 13,646,184
Deferred Tax Liability 412,642 800,475
Long Term Debt 2,589,788 2,482,080
Minority Interest in subsidiary 1,760,000
----------- -----------
23,166,469 18,688,739
STOCKHOLDERS' EQUITY:
Preferred Stock - $.01 Par Value;
200,000 authorized; 12,971 shares 130 130
outstanding in 1997 & 1996
Common Stock - $.01 Par Value; 228,459 226,708
25,000,000 shares authorized;
22,688,333 shares outstanding in 1997
and 22,670,833 shares outstanding in 1996
Additional paid-in capital 20,088,243 19,950,844
Accumulated deficit (8,269,380) (7,539,771)
Net unrealized gain on marketable sec (5,000) (5,000)
Payments towards redemption of (360,001) (360,001)
Class AA Preferred Stock
----------- -----------
Total Stockholders' Equity 11,682,451 12,272,910
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'EQUITY $34,848,920 $30,961,649
=========== ===========
COACHMAN INCORPORATED
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1997 AND 1996
THREE MONTHS ENDED SIX MONTHS ENDED
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
----------- ----------- ----------- -----------
Revenues:
Trade Sales $11,076,794 $10,338,258 $19,077,165 $20,134,510
Other 21,352 -- 40,090 --
----------- ----------- ----------- -----------
11,098,146 10,338,258 19,117,255 20,134,510
Costs & Expenses
Cost of Goods Sold 10,671,737 7,753,441 17,172,263 15,672,325
Selling, G&A Expenses 2,175,786 1,710,919 3,636,994 2,868,173
----------- ----------- ----------- -----------
12,847,523 9,464,360 20,809,257 18,540,498
Other Income (Expense):
Interest income 5,730 13,362 17,504 25,492
Interest expense (392,119) (382,214) (712,735) (737,631)
Other income 227,617 337,168 404,745 511,968
Gain on sale of assets 56,646 6,604 56,646 7,449
----------- ----------- ----------- -----------
(102,126) (25,080) (233,840) (192,722)
----------- ----------- ----------- -----------
Income (Loss) before taxes(1,851,503) 848,818 (1,925,842) 1,401,290
Income Taxes 59,800
----------- ----------- ----------- -----------
Net Income/(Loss) $(1,851,503) $ 848,818 $(1,985,642) $ 1,401,290
=========== =========== =========== ===========
Avg outst common shares 22,688,333 21,335,197 22,688,333 21,393,919
Net income/(loss) per average
outstanding common share (0.08) 0.04 (0.09) 0.07
COACHMAN INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
SIX MONTHS ENDED
June 30, June 30,
1997 1996
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(1,985,642) $ (239,966)
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization/non-cash 1,711,823 578
Gain on sale of marketable equity securities (7,449)
(Increase) Decrease in Accounts receivable (1,303,037) 150,324
(Increase) Decrease in Inventory (1,324,762) 2,443
(Increase) Decrease in Other current assets (1,722,795) (5,000)
Increase (Decrease) in Accounts payable and
Accrued liabilities 4,088,696 120,542
----------- -----------
Net Cash Provided by (Used in)
Operating Activities (551,717) 21,472
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net loan repayments from affiliates 160,712 19,088
Capital expenditures -- (5)
Loans to officers -- (3,800)
Sale of marketable equity security -- 29,919
Acquisition in Progress -- (150,000)
----------- -----------
Net Cash Provided by (Used in)
Investing Activities 160,712 (104,798)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of Stock -- --
Proceeds from Note Pay & Long-Term Debt 389,034 --
Principal repayments on note payable
and long-term debt -- (10,422)
----------- -----------
Net Cash Provided by (Used in)
Financing Activities 389,034 (10,422)
----------- -----------
Net Increase (Decrease) in Cash (1,971) (93,748)
CASH, beginning of period 5,541 99,846
----------- -----------
CASH, end of period 3,570 6,098
=========== ===========
<TABLE>
COACHMAN INCORPORATED
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1997
Payments Net
Paid-in Common Toward Unrealized
Capital Stock Redemption of Loss-Nonc Total
Preferred Common in Excess & Warrants Class AA Marketable Accumulated Stockholders
Stock Stock of Par Capital Preferred Stock Securities Deficit Equity
- --------- -------- ----------- ---------- --------------- ---------- ----------- ------------
<C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996
$130 $226,708 $18,514,965 $1,435,879 $(360,001) $(5,000) $(7,539,771) $12,272,910
Common Stock Issued
1,751 137,399 139,150
Net income for the six months
ended June 30, 1997 (729,609) (729,609)
- --------- -------- ----------- ---------- -------------- ---------- ------------- -----------
Balance, June 30, 1997
$130 $228,459 $18,652,364 $1,435,879 $(360,001) (5,000) ($8,269,380) $11,682,451
========= ======== =========== ========== ============== ========== ============= ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 3,570
<SECURITIES> 40,000
<RECEIVABLES> 7,776,517
<ALLOWANCES> 0
<INVENTORY> 13,586,870
<CURRENT-ASSETS> 22,821,176
<PP&E> 7,848,571
<DEPRECIATION> 0
<TOTAL-ASSETS> 34,848,920
<CURRENT-LIABILITIES> 20,164,039
<BONDS> 0
0
130
<COMMON> 228,459
<OTHER-SE> 11,453,862
<TOTAL-LIABILITY-AND-EQUITY> 34,848,920
<SALES> 11,076,794
<TOTAL-REVENUES> 11,388,139
<CGS> 10,671,737
<TOTAL-COSTS> 12,847,523
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 392119
<INCOME-PRETAX> (1,851,503)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,851,503)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,851,503)
<EPS-PRIMARY> (.08)
<EPS-DILUTED> (.08)
</TABLE>
