SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
Quarterly Report Under Section 13 or 15(d)
of the Securities exchange Act of 1934
For Quarter Ending March 31, 1997
Commission File Number #33-38119-C
THE KENSINGTON COMPANY, INC.
(Exact name of registrant as specified in its charter)
Minnesota 41-1610632
(State or other (IRS Employer
jurisdiction of Identification No.)
incorporation)
Suite 1150 Interchange Tower, 600 S. Hy. 169, Minneapolis,
Minnesota 55426
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (612) 546-2075
Indicate by Check mark whether the registration (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 of such shorter period that the
registrant was required to file such reports), and 92) has been subject to
such filing requirements for the past 90 days.
Yes * No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Weighted Number of Shares outstanding are 3,021,450 of common stock no
par value.
Part I. Financial Information
Quarter Ended March 31, 1997
GENERAL
The following financial information is submitted in response to the
requirements of Form 10-QSB and does not purport to be financial statements
prepared in accordance with generally accepted accounting principles. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted, although the Company believes the disclosures that are
made are adequate to make the information presented not misleading. Further,
in the opinion of the management, the interim financial statements reflect
fairly the financial position and results of operations for the period
indicated.
The results of operations for the quarter ended as stated above are not
necessarily indicative of results to be expected for the entire fiscal year
ending December 31st.
Item 1. Financial Statements
The balance sheet of The Kensington Company, Inc. (the "Company") as of the
Quarter stated above, and the related statement of income and changes in
financial position and note thereto are incorporated herein by reference to
the Company's quarterly report.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
For the quarter being reported on, the company had revenues of $863k as
compared to $654k for the same period in 1996. Operating profits for the
period were $292k as compared to $246k for 1996. Operations of the fixure
manufacturing subsidiary remained very strong during the quarter. The backlog
of orders continues to be strong indicating the second quarter should be
consistent with the first quarter. As was stated at the end of 1996, the
company has written off virtually all its oil & gas operations. Overall the
company reported a net income of $10k for the quarter. This was accomplished
by reducing S,G and A expenses in all entities.
Liquidity and Capital Resources
For the quarter, the Company had a net income from operations of $64k.
Management of the Company is of the opinion that the Company will continue to
show an operating profit through the foreseeable future. However the company
faces a serious cash flow problem with a significant portion of its long term
debt coming due. Management is currently negotiating with the debtors to roll
over their debt and also is in discussions with Mortgage bankers to provide
alternative financing.
During the period stated the Registrant did not sell to directors, management
and others, any common stock.
Inflation
The rate of inflation has had a great impact on the Company's results of
operations and is expected to have a continued impact on continuing operations
due to the increase in wood product costs and the fact that we have to bid
most of our projects and we can not pass all of the cost increases to our
customers.
Part II. Other Information
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K and the October 18, 1995
S-8 filing
as described in Item 2 herein.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
THE KENSINGTON COMPANY, INC.
Mark Haggerty
Mark Haggerty
Chief Executive Officer
Jeff Etten
Jeff Etten, C.F.O.
Dated: February 17, 1998
Minneapolis, Minnesota
<PAGE>
<PAGE>
THE KENSINGTON COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE QUARTER ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
Revenues:
Product sales $863,257 $651,581
Distributions from oil
and gas partnerships 0 3,067
Oil and gas sales 0 0
Total revenues 863,257 654,648
Cost of sales:
Cost of products sold 570925 408837
Oil and gas costs 0 200
Total cost of sales 570925 409037
Gross profit 292332 245611
Operating expenses 228519 180267
Income (loss) from operations 63813 65344
Other income (expense):
Interest expense (54019) (45799)
Litigation settlement 0 0
Minority Interest in Earnings of
Consolidated Oil & Gas Ptsp 0 32446
Miscellaneous income 0 0
Total other income (expense) (54019) (46121)
Income (loss) before income taxes
and extraordinary item 9794 19223
Provision for income taxes (benefit) 0 0
Income before extraordinary item 9794 19223
Extinguishment of debt, net of
income taxes of $0 0 0
Net income (loss) 9794 19223
Accumulated deficit, beginning (3978135) (2898821)
Accumulated deficit, ending (3968341) (2879598)
Earnings Per Share 0.0032414900130732 0.0062349178753989
WEIGHTED NUMBER OF SHARES OUTSTANDING 3021450 2945894
<PAGE>
THE KENSINGTON COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE QUARTER ENDED MARCH 31, 1997 & 1996
(UNAUDITED)
1997 1996
Cash flows from operating activities:
Net income (loss) $9794 $19223
Adjustments to reconcile net income (loss)
to cash flows from operating activities:
Depreciation, depletion and amortization 13792 10829
Extinguishment of debt 0
Changes in operating assets and liabilities:
Accounts receivable (86889) (88150)
Inventories 33385 5499
Other current assets (26514) (25527)
Other assets 0 0
Accounts payable 1256 50351
Other current liabilities 103448 28735
Cash flows from operating activities 48272 (31808)
Cash flows from investing activities:
Distributions from Unconsolidated
Gas & Oil Partnerships 0 1491
Decrease in notes receivable - related parties 0 1000
Purchase of property and equipment 5304 (1371)
Sale of Stock 0
Cash flows from investing activities 5304 1120
Cash flows from financing activities:
Increase (decrease) in notes
payable - related parties (4126) 1860
Proceeds short, long-term debt 0 18990
Payments on long-term debt (9708) (11968)
Payments on obligations under
capital leases (21677) (3005)
Cash flows from financing activities (35511) 5877
Increase (decrease) in cash 7457 (24811)
Cash, beginning 16186 34232
Cash, ending 23643 9421
<PAGE>
THE KENSINGTON COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET
MARCH 31, 1997 AND 1996
(UNAUDITED)
1997 1996
ASSETS
Current assets:
Cash $23,643 $9,421
Accounts receivable 309,274 290,368
Inventories 159,841 130,613
Other current assets 33,052 38,603
Total current assets 525,810 469,005
Other assets:
Investment in oil and
gas properties, net 87,854 1,206,278
Investment in oil and gas partnerships 44,832 47,981
Investment in Ives 0 0
Investment in KEC partnerships 0 0
Property and equipment, net 312,752 351,791
Notes receivable - related parties 26,511 32,125
Total other assets 471,949 1,638,175
$997,759 $2,107,180
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable - $112,541 $50,098
Note payable - related parties 278,556 345,956
Current portion of long-term debt 510,527 87,793
Current portion of obligations
under capital leases 23,340 23,543
Accounts payable 308,257 273,167
Accrued payroll & related taxes 100,185 97,094
Accrued interest 32,747 29,397
Accrued Expenses 77,946 54,897
Intercompany 0 0
Total current liabilities 1,444,099 961,945
Long-term debt, net of current portion 30,110 606,146
Obligations under capital leases, net
of current portion 10,000 55,017
Minority interest in consolidated Subsidiaries 11,239 13,332
Total liabilities 1,595,448 1,636,440
STOCKHOLDERS' EQUITY
Common stock 3,661,273 3,647,670
Additional paid-in capital 0 0
Accumulated deficit (5,212,124) (2,879,598)
Stock subscriptions receivable 953,162 (297,332)
Total stockholders' equity (597,689) 470,740
$997,759 $2,107,180
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