SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange
Act of 1934 for the Quarterly period ended January 31, 1996.
[ ] 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: 0-16787
INTERNATIONAL YOGURT COMPANY
(Exact name of registrant as specified in its charter)
Oregon 91-0989395
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
5858 N.E. 87th Avenue
Portland, Oregon 97220
(Address of Principal (Zip Code)
Executive Office)
(503) 256-3754
(Registrant's telephone number, including area code.)
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.
YES X NO
The number of shares outstanding of the registrant's common stock, as of the
latest practicable date is:
Class: Common stock outstanding at
April 30, 1996: 2,188,043 shares
<PAGE>
INTERNATIONAL YOGURT COMPANY
CONTENTS
Page
PART I FINANCIAL INFORMATION:
Item 1. Financial Statements 3 - 7
Balance Sheet as of April 30, 1996, 3
(unaudited) and October 31, 1995
Statements of Operations for the 4
Three Months ended April 30, 1996 and 1995
Six Months ended April 30, 1996 and 1995
(all unaudited)
Statements of Cash Flows for the 5
Six Months ended April 30, 1996
and 1995 (all unaudited)
Notes to Financial Statements 6 - 7
Item 2. Management's Discussion and Analysis of 8 - 9
Financial Condition and Results of
Operations
PART II OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults upon Senior Securities 10
Item 4. Submission of Matters to a Vote of 10
Security Holders
Item 5. Other Information 10
SIGNATURES 11
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
INTERNATIONAL YOGURT COMPANY
BALANCE SHEETS
April 30, October 31,
1996 1995
ASSETS (unaudited)
Current assets
Cash and cash equivalents $ 206,239 $ 318,535
Accounts receivable, net 819,481 873,191
Inventories 1,483,199 1,554,625
Equipment held for resale, net 26,783 28,220
Other current assets 114,807 102,012
Total current assets 2,650,509 2,876,583
Fixed assets, net 1,795,716 1,839,860
Deferred tax asset 125,000 125,000
Intangible and other long-term assets,net 196,561 195,273
$4,767,786 $5,036,716
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Note payable to bank $1,142,644 $1,089,920
Current portion of long-term debt 69,058 68,879
Current obligations under capital lease 31,421 30,715
Accounts payable 635,022 813,309
Other accrued liabilities 89,157 75,952
Total current liabilities 1,967,302 2,078,775
Long-term debt payable to related parties
and others, less current portion 104,855 144,385
Long term obligations under
capital lease 118,623 134,113
Total liabilities 2,190,780 2,357,273
Commitments _ _
Shareholders' equity
Common stock, nor par value,
30,000,000 shares authorized;
2,188,043 and 2,192,043 shares
issued and outstanding 4,589,279 4,597,498
Accumulated deficit (2,012,273) (1,918,055)
Net shareholders' equity 2,577,006 2,679,443
$4,767,786 $5,036,716
The accompanying notes are an integral part of the financial statements.
<PAGE>
INTERNATIONAL YOGURT COMPANY
STATEMENTS OF OPERATIONS
(unaudited)
Three months ended Six months ended
April 30, April 30,
1996 1995 1996 1995
Yogurt sales $1,831,745 $1,712,740 $3,255,367 3,225,475
Cost of yogurt sales
Manufacturing 911,128 865,525 1,665,805 1,694,179
Transportation and
warehousing 293,093 275,613 545,242 569,060
Gross profit 627,524 571,602 1,044,320 962,236
Selling and marketing
expenses 262,405 266,161 516,191 483,633
General and administrative
expenses 224,473 229,397 449,457 444,237
Unusual expenses 114,527 - 114,527 -
Income (loss) from
Operations 26,119 76,044 (35,855) 34,366
Other income (expenses)
Interest income 2,489 2,005 5,787 4,383
Interest expense (33,222) (31,834) (64,150) (67,648)
Other, net (30,733) (29,829) (58,363) (63,265)
Income (loss) before taxes (4,614) 46,215 (94,218) (28,899)
Provision for income taxes - - - -
Net income (loss) $ (4,614) $ 46,215 $ (94,218) $(28,899)
Net income(loss)per share $ - $ .02 $ (.04) $ (.01)
Weighted average number of
shares outstanding 2,188,043 2,112,663 2,189,709 2,112,663
The accompanying notes are an integral part of the financial statements.
<PAGE>
INTERNATIONAL YOGURT COMPANY
STATEMENTS OF CASH FLOWS
(Unaudited)
For the six months ended April 30, 1996 and 1995
1996 1995
Cash flows from operating activities:
Net (loss) $ (94,218) $ (28,899)
Adjustments to reconcile net
(loss) to net cash provided by
operating activities:
Depreciation 121,376 116,132
Changes in current assets and liabilities, net (56,350) 46,073
Net cash provided by (used for) operating activities (29,192) 133,306
Cash flows from investing activities:
Additions to plant and equipment (73,474) (86,563)
Net cash used for investing activities (73,474) (86,563)
Cash flows from financing activities:
Net increase (decrease) in line of credit 52,724 (144,296)
Principal payments on long term debt
and capital leases (54,135) (32,900)
Payments for treasury stock purchases (8,219) -
Net cash used for financing activities (9,630) (177,196)
Net decrease in cash (112,296) (130,453)
Cash and equivalents, beginning of period 318,535 336,894
Cash and equivalents, end of period $ 206,239 $ 206,441
The accompanying notes are an integral part of the financial statement.
INTERNATIONAL YOGURT COMPANY
NOTES TO FINANCIAL STATEMENTS
Note A - Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Rule 10-01 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments, which consist of
normal recurring accruals, considered necessary for a fair presentation have
been included. Operating results for the quarter and six months ended April 30,
1996 are not necessarily indicative of the results that may be expected for the
year ending October 31, 1996. For further information, refer to the financial
statements, and footnotes thereto, included in the Corporation's annual report
on Form 10-K for the year ended October 31, 1995.
Certain expenses have been reclassified to conform to the current year's
presentation.
Note B - Inventories
Inventories consist of April 30, October 31,
1996 1995
Finished Goods $1,080,248 $1,169,073
Raw Materials 136,106 149,823
Packaging Materials & Supplies 266,845 235,729
$1,483,199 $1,554,625
Note C - Dividends
None.
Note D - Unusual Expenses
During the second quarter of 1996, the Company made a provision for certain
unusual expenses. The provision was primarily for a reserve against receivables
recognized in prior years for recovery of certain marketing costs, and a
reserve for disputed packaging and freight costs related to prior years. The
provision has been reported separately as an other expense inorder to avoid
distorting normal operating results. The provision reduced net earnings by
$114,527, or $.05 per share for both the quarter and the six months ended April
30, 1996.
<PAGE>
Note E - Earnings per share
Earnings per share are based on the weighted average number of shares of common
stock outstanding during the period presented.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations.
The Company's revenues from yogurt sales increased 6.9% to $1,831,745 for the
second quarter. Revenues for the six month period ending April 30, 1996
increased 1% to $3,255,367. The increased revenues during the second quarter of
1996 were primarily the result of increased copacking and private label
business, as well as increased international sales. Early in the fiscal year,
revenues were adversely impacted by the unusually severe weather conditions
experienced throughout most of the United States resulting in a temporary
decrease in demand for frozen yogurt products.
The company's gross profit margin on yogurt sales increased to 34.3% during the
second quarter compared to 33.4% in 1995. The gross margin for the six months
ended April 30, 1996 was 32.1% compared to 29.8% for the same period in 1995.
The improvements have continued primarily as a result of an increase in sales
activity, the contributions from co-packing, production efficiencies, and
inventory control.
General and administrative expenses were approximately the same in 1996
compared to 1995. The Company's general and administrative expenses are
predominately fixed in nature and do not vary in direct relation to sales
levels.
Selling and marketing expenses in the second quarter remained approximately
the same as the same period in 1995. Due to the increase in revenues such
expenses decreased from 15.5% to 14.3% of revenues. For the six months ended
April 30, 1996, these expenses increased slightly from 15% to 15.9% of
revenues. This reflects the Company's expanded marketing and sales activity. As
a result, for example, the Company has recently been approved by the SYSCO
Corporation of Houston, Texas to begin producing single serve four ounce cups
of non-fat frozen yogurt, and non-dairy sorbet products under SYSCO's "Cool N'
Classy"tm label. These products in five flavors will be available through SYSCO
nationwide. The arrangement does not commit SYSCO to specific quantities, but
International Yogurt Company expects to begin making shipments to SYSCO within
the current quarter.
During the second quarter of 1996, the Company made a provision for certain
unusual expenses. The provision was primarily for a reserve against receivables
recognized in prior years for recovery of certain marketing costs, and a
reserve for disputed packaging and freight costs related to prior years. The
provision has been reported separately as an other expense inorder to avoid
distorting normal operating results. The provision reduced net earnings by
$114,527, or $.05 per share for both the quarter and the six months ended April
30, 1996.
Income from operations increased during the second quarter and for the six
months ended April 30, 1996, due to the provision for unusal expenses described
above. Were it not for these unusual expenses that did not relate to the
current periods, the income from operations in the second quarter of 1996 would
have increased $64,602 and reflected an improvement from 4.4% to 7.7% of
revenues. The six months would also have been up $44,306 and reflected an
improvement from 1.1% to 2.4% of revenues. Management believes that these
trends are meaningful. It should be noted that operating results have
historically been more positive in the last half of the fiscal year due to the
seasonal nature of the Company's business. Manegement expects that this trend
of increased sales and corresponding profits will be repeated in the second
half of the fiscal year
Liquidity and Capital Resources.
The company has financed its operations and expansion from bank loans, capital
leases, capital investment by its founders, private and public securities
offerings and internally generated funds. As of April 30, 1996, the Company's
total borrowings under its bank line of credit were $1,142,644 at an interest
rate of 1% over the basic commercial lending rate. On October 31, 1995, total
borrowings were $1,089,920. Borrowings under this line are payable upon demand
and limited to 65 percent of eligible accounts receivable and 30 percent of
eligible inventory up to an aggregate maximum of $1,500,000.
Accounts receivable at April 30, 1996 were $819,481, a 6% decrease over
accounts receivable of $873,191 on October 31, 1995. The decrease is primarily
attributable to a $60,000 reserve for loss against receivables recognized in
prior years for recovery of certain marketing costs. Such reserve is part of
the provision for unusual expenses described above.
The Company believes its existing assets, bank lines, and revenues from
operations will be sufficient to fund the Company's operations for at least the
next twelve months. The bank line of credit which is due on June 1, 1996 has
been extended for 60 days to allow the Company to update its business plan. The
Company expects its bank line to be renewed or replaced. In the event that the
Company's bank lines were not renewed or replaced, the Company would need to
curtail operations substantially, seek additional capital, or both. <PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not involved in any material pending legal proceedings,
other than nonmaterial legal proceedings occurring in the ordinary course
of business.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to Vote of Security Holders
At the Annual Meeting of Shareholders which was held on March 28, 1996, the
shareholders elected John Hanna, Dave Hanna, James Hanna, Bill Rush, and
Carl Behnke as directors. Each of the five nominees received not less than
1,849,293 votes, or 98% of the shares in person or by proxy and voting. The
terms for each director is one year, or until their successor shall have
been elected and qualified.
Item 5. Other Information
None
<PAGE>
SIGNATURES
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.
Registrant:
INTERNATIONAL YOGURT COMPANY
Date: _________________________ By______________________________
John N. Hanna, Chairman of the
Board, and Chief Executive Officer
Date: _________________________ By______________________________
Roger Olson, Principal Accounting
Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> APR-30-1996
<CASH> 206,239
<SECURITIES> 0
<RECEIVABLES> 819,481
<ALLOWANCES> 0
<INVENTORY> 1,483,199
<CURRENT-ASSETS> 2,650,509
<PP&E> 1,795,716
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,767,786
<CURRENT-LIABILITIES> 1,967,302
<BONDS> 0
0
0
<COMMON> 4,589,279
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 4,767,786
<SALES> 3,255,367
<TOTAL-REVENUES> 3,255,367
<CGS> 1,665,805
<TOTAL-COSTS> 3,291,222
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 58,363
<INCOME-PRETAX> (94,218)
<INCOME-TAX> 0
<INCOME-CONTINUING> (94,218)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (94,218)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> 0
</TABLE>
