UNITED STATES
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 November 30, 1999
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: 0-19954
JEWETT-CAMERON TRADING COMPANY, LTD.
------------------------------------
(Exact name of registrant as specified in its charter)
BRITISH COLUMBIA NONE
---------------- ----
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
32275 N.W. Hillcrest, North Plains, Oregon 97133
------------------------------------------------
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (503) 647-0110
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 since May 16, 1992 and (2) has been subject to the above filing
requirements for the past 90 days.
Yes X No
----- -----
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 November 30, 1999. Common Stock, no par value 1,075,162
Shares. ---------
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Attached hereto and incorporated herein by reference.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The following information contains certain forward-looking statements that
anticipate future trends or events. These statements are based on certain
assumptions that may prove to be erroneous and are subject to certain risks
including but not limited to the risks of increased competition in the Company's
industry and other risks detailed in the Company's Securities and Exchange
Commission filings. Accordingly, actual results may differ, possibly materially,
from the predictions contained herein.
Gross sales increased $142,897 during the first quarter of Fiscal 2000 as
compared to the first quarter of Fiscal 1999. During the first quarter of Fiscal
2000, the Company also experienced an increase in net income of $10,296.
Results of Operations.
For the first quarter of the current fiscal year, ending November 30,
1999, sales increased 3.6% to $4,149,716 compared to $4,006,879 for the same
quarter of the previous year.
Sales for Jewett-Cameron Lumber were $3,829,398 million for the
quarter, up 9% compared to sales of $3,517,236 million for the first quarter of
last year.
Sales for MSI-PRO (pneumatic tools and industrial clamps) were $273,414
for the first quarter compared to $281,792 for the first quarter of last year,
down 3%.
Sales for Jewett-Cameron South Pacific in the Kingdom of Tonga were
$46,904 for first quarter compared to $207,851 for the first quarter of last
year, down 77%. The Company is currently winding down its operations in the
Kingdom of Tonga.
General and administrative expenses for the Company were $530,200 for
the first quarter down from $550,268 for the first quarter of last year. The
primary reasons for the decrease of $20,068 are decreases of $5,674 in
depreciation and amortization; $2,382 in travel, entertainment and advertising;
$17,740 in wages and employee benefits; $6,610 in office and miscellaneous
related expenses: and, $1,581 in warehouse expense and supplies. Increases;
however, did occur in the categories of consulting ($3,450) and professional
fees ($20,221).
Net income for the quarter was $76,173 which represents a 16% increase
over the first quarter of last year when net income was $65,877. The increase in
net income was due to an increase in sales of $142,837 over the same period last
year coupled with decreases in general and administrative expenses and interest
expense. Interest income also increased slightly from $9,869 to $10,175.
<PAGE>
Earnings per share was $0.07 for the first quarter of Fiscal 1999
compared to $0.06 for the first quarter of fiscal 1998.
Liquidity and Capital Resources
As of November 30, 1999 the Company had working capital of $4,157,504
which represented an increase of $458,119 as compared to the working capital
position of $3,699,385 as of November 30, 1998. The increase in working capital
was due to an increase in cash and cash equivalents of $590,508 and a decrease
in current liabilities of $328,898.
Accounts Receivable and Inventory represented 86% of current assets and
both continue to turn over at acceptable rates.
External sources of liquidity include a bank line from the United
States National Bank of Oregon. The total line of credit available is $6.5
million of which there was no outstanding balance as of November 30, 1998. As of
the end of Fiscal 1999 (August 31st) the Company had an outstanding balance of
$87,883 and at the end of the first quarter of Fiscal 2000, the Company had no
outstanding balance.
Based on the Company's current working capital position, its policy of
retaining earnings, and the line of credit available, the Company has adequate
working capital to meet its needs during the current fiscal year.
Impact of the Year 2000 Issue:
The Company has completed as assessment of the impact of the Year 2000 issue on
its internal systems and equipment, on its products and on the systems of its
significant vendors. Based on this assessment, the company believes that its
internal systems have been updated to address the Year 2000 issue, its products
will properly recognize calendar dates beginning in the Year 2000, and its
significant vendors are appropriately addressing the Year 2000 issue.
Accordingly, the Company believes it is Year 2000 ready and does not expect that
the Year 2000 will have a material impact on the Company's business, results of
operations or financial condition. However, there can be no assurance that the
systems of other companies on which the Company relies will not have an adverse
effect on the Company's systems.
Item 3 - Quantitative and Qualitative Disclosures about Market Risks:
The Company does not have any derivative financial instruments as of November
30, 1999. However, the Company is exposed to interest rate risk.
The Company's interest income and expense are most sensitive to changes in the
general level of U.S. interest rates. In this regard, changes in U.S. interest
rates affect the interest earned on the Company's cash equivalents as well as
interest paid on debt.
The Company has a line of credit whose interest rate is based on various
published rates that may fluctuate over time based on economic changes in the
environment. The Company is subject to interest rate risk and could be subject
to increased interest payments if market interest rates fluctuate. The Company
does not expect any change in
<PAGE>
the interest rates to have a material adverse effect on the Company's results
from operations.
Foreign Currency Risk
The Company operates a subsidiary in the Kingdom of Tonga. The Company's
business and financial condition is, therefore, sensitive to currency exchange
rates or any other restrictions imposed on its currency. Since the Company is
currently winding down its operations in the Kingdom of Tonga, management does
not expect the foreign currency exchange rates to significantly impact the
Company in the future.
Part II - OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Default Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Securities Holders - None
Item 5. Other Information - None
Item 6.(a) Exhibit 27 - Financial Data Schedule
Item 6.(b) Reports on Form 8-K - None
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.
Jewett-Cameron Trading Company Ltd.
(Registrant)
Dated: January 12, 2000 /s/ Donald M. Boone
---------------- -------------------
Donald M. Boone, President/CEO/Director
<PAGE>
JEWETT-CAMERON TRADING COMPANY LTD.
CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars)
(Unaudited - See Notice to Reader)
NOVEMBER 30, 1999
<PAGE>
[Davidson & Company Letterhead]
NOTICE TO READER
We have compiled the consolidated balance sheet of Jewett-Cameron Trading
Company Ltd. as at November 30, 1999 and the consolidated statements of
operations, cash flows and changes in stockholders' equity for the three month
period then ended from information provided by management. We have not audited,
reviewed or otherwise attempted to verify the accuracy or completeness of such
information. Readers are cautioned that these statements may not be appropriate
for their purposes.
/s/Davidson & Company
Vancouver, Canada Chartered Accountants
January 7, 2000
<PAGE>
JEWETT-CAMERON TRADING COMPANY LTD.
CONSOLIDATED BALANCE SHEETS
(Expressed in U.S. dollars)
(Unaudited - See Notice to Reader)
NOVEMBER 30, 1999
<TABLE>
===================================================================================================================
November 30, November 30, August 31,
1999 1998 1999
- -------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C> <C>
Current
Cash and cash equivalents $ 619,210 $ 28,702 $ 223,949
Accounts receivable 1,103,961 1,241,736 2,492,312
Inventory 2,890,779 3,200,787 2,666,835
Prepaid expenses 30,171 43,675 28,543
-------------- -------------- --------------
Total current assets 4,644,121 4,514,900 5,411,639
Capital assets (Note 3) 1,493,318 1,593,952 1,511,067
Deferred income taxes (Note 4) 217,200 203,200 217,200
Deposits 74,345 74,345 74,345
Trademarks (Note 5) - 187,177 -
-------------- -------------- --------------
Total assets $ 6,428,984 $ 6,573,574 $ 7,214,251
===================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Bank indebtedness (Note 6) $ - $ - $ 87,883
Accounts payable and accrued liabilities 478,617 815,515 1,142,289
-------------- -------------- --------------
Total current liabilities 478,617 815,515 1,230,172
-------------- -------------- --------------
Stockholders' equity
Capital stock
Authorized
20,000,000 common shares without par value
10,000,000 preferred shares without par value
Issued
1,075,162 common shares (November 30, 1998 - 1,157,162;
August 31, 1999 - 1,157,162) 1,795,157 1,932,097 1,932,097
Additional paid-in capital 582,247 582,247 582,247
Retained earnings 3,572,963 3,262,502 3,789,134
-------------- -------------- --------------
5,950,367 5,776,846 6,303,478
Less: Treasury stock - Nil common shares (November 30,
1998 - 3,300; August 31, 1999 - 61,900) - (18,787) (319,399)
-------------- -------------- --------------
5,950,367 5,758,059 5,984,079
-------------- -------------- --------------
Total liabilities and stockholders' equity $ 6,428,984 $ 6,573,574 $ 7,214,251
===================================================================================================================
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
JEWETT-CAMERON TRADING COMPANY LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in U.S. dollars)
(Unaudited - See Notice to Reader)
NOVEMBER 30, 1999
<TABLE>
===================================================================================================================
Three Month Three Month
Period Ended Period Ended Year Ended
November 30, November 30, August 31,
1999 1998 1999
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SALES $ 4,149,716 $ 4,006,879 $ 29,102,273
COST OF SALES (3,497,740) (3,354,990) (24,755,568)
-------------- -------------- --------------
GROSS PROFIT 651,976 651,889 4,346,705
GENERAL AND ADMINISTRATIVE EXPENSES - Schedule (540,200) (550,268) (2,895,790)
-------------- -------------- --------------
Income from operations 111,776 101,621 1,450,915
-------------- -------------- --------------
OTHER ITEMS
Interest and other income 10,175 9,859 37,026
Interest expense (93) (12,499) (93,701)
Foreign exchange gain (loss) (685) (104) (532)
Loss on disposal of capital assets - - (45,078)
Write-down of inventory - - (58,681)
Write-down of trademarks (Note 5) - - (165,440)
-------------- -------------- --------------
9,397 (2,744) (326,406)
-------------- -------------- --------------
Income before income taxes 121,173 98,877 1,124,509
Income taxes (45,000) (33,000) (532,000)
-------------- -------------- --------------
Net income for the period $ 76,173 $ 65,877 $ 592,509
===================================================================================================================
Basic earnings per share $ 0.07 $ 0.06 $ 0.52
Fully diluted earnings per share $ 0.06 $ 0.05 $ 0.51
===================================================================================================================
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
JEWETT-CAMERON TRADING COMPANY LTD.
CONSOLIDATED SCHEDULES OF GENERAL AND ADMINISTRATIVE EXPENSES
(Expressed in U.S. dollars)
(Unaudited - See Notice to Reader)
NOVEMBER 30, 1999
<TABLE>
===================================================================================================================
Three Month Three Month
Period Ended Period Ended Year Ended
November 30, November 30, August 31,
1999 1998 1999
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Bad debt expense $ - $ - $ 196,923
Consulting 3,450 - -
Depreciation and amortization 30,374 36,128 170,435
Insurance 12,473 12,455 55,398
Office and miscellaneous 49,005 55,625 242,558
Professional fees 38,139 17,928 161,500
Repairs and maintenance 14,667 14,067 36,937
Telephone and utilities 21,622 21,822 90,320
Travel, entertainment and advertising 37,755 40,137 167,929
Wages and employee benefits 314,177 331,917 1,689,362
Warehouse expenses and supplies 18,538 20,189 84,428
-------------- -------------- --------------
$ 540,200 $ 550,268 $ 2,895,790
===================================================================================================================
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
JEWETT-CAMERON TRADING COMPANY LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in U.S. dollars)
(Unaudited - See Notice to Reader)
NOVEMBER 30, 1999
<TABLE>
===================================================================================================================
Three Month Three Month
Period Ended Period Ended Year Ended
November 30, November 30, August 31,
1999 1998 1999
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 76,173 $ 65,877 $ 592,509
Items not involving an outlay of cash:
Depreciation and amortization 30,374 36,128 170,435
Bad debt expense - - 196,923
Deferred income taxes - - (14,000)
Loss on disposal of capital assets - - 45,078
Write-down of inventory - - 58,681
Write-down of trademarks - - 165,440
Cash provided by changes in the following non-cash
working capital items:
(Increase) decrease in accounts receivable 1,388,351 764,534 (682,965)
(Increase) decrease in inventory (223,944) (151,984) 323,287
(Increase) decrease in prepaid expenses (1,628) 2,078 17,210
Increase (decrease) in bank indebtedness (87,883) (767,321) (679,438)
Increase (decrease) in accounts payable and
accrued liabilities (663,672) 79,252 406,026
-------------- -------------- --------------
Net cash provided by operating activities 517,771 28,564 599,186
-------------- -------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Capital stock issued - 11,044 11,044
Treasury shares acquired (109,885) (35,512) (336,123)
-------------- -------------- --------------
Net cash used in financing activities (109,885) (24,468) (325,079)
-------------- -------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of capital assets (12,625) (28,323) (112,411)
Disposal of capital assets - - 9,324
-------------- -------------- --------------
Net cash used in investing activities (12,625) (28,323) (103,087)
-------------- -------------- --------------
Increase (decrease) in cash and cash equivalents 395,261 (24,227) 171,020
Cash and cash equivalents, beginning of period 223,949 52,929 52,929
-------------- -------------- --------------
Cash and cash equivalents, end of period $ 619,210 $ 28,702 $ 223,949
===================================================================================================================
</TABLE>
Supplemental disclosures with respect to statements of cash flows (Note 9)
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
JEWETT-CAMERON TRADING COMPANY LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Expressed in U.S. Dollars)
(Unaudited - See Notice to Reader)
NOVEMBER 30, 1999
<TABLE>
==============================================================================================================================
Common Stock Treasury Shares
-------------- ---------------
Additional
Number Number Paid-In Retained
of Shares Amount of Shares Amount Capital Earnings Total
- ----------------------------------- ------------ ------------ ------------ ------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, August 31, 1998 1,176,762 $ 1,960,368 20,600 $ 117,630 $ 582,247 $ 3,291,664 $ 5,716,649
Net income for the year - - - - - 592,509 592,509
Stock options exercised 4,000 11,044 - - - - 11,044
Shares cancelled (23,600) (39,315) - - - - (39,315)
Treasury shares acquired - - 64,900 336,123 - - (336,123)
Treasury shares cancelled - - (23,600) (134,354) - - 134,354
Premium relating to cancellation
of share capital - - - - - (95,039) (95,039)
----------- ----------- ----------- ----------- ---------- ----------- -----------
Balance, August 31, 1999 1,157,162 $ 1,932,097 61,900 $ 319,399 $ 582,247 $ 3,789,134 $ 5,984,079
============ ============ ============ ============= =========== ============ ============
Balance, August 31, 1998 1,176,762 $ 1,960,368 20,600 $ 117,630 $ 582,247 $ 3,291,664 $ 5,716,649
Net income for the period - - - - - 65,877 65,877
Stock options exercised 4,000 11,044 - - - - 11,044
Shares cancelled (23,600) (39,315) - - - - (39,315)
Treasury shares acquired - - 6,300 35,511 - - (35,511)
Treasury shares cancelled - - (23,600) (134,354) - - 134,354
Premium relating to cancellation
of share capital - - - - - (95,039) (95,039)
----------- ----------- ----------- ----------- ---------- ----------- -----------
Balance, November 30, 1998 1,157,162 $ 1,932,097 3,300 $ 18,787 $ 582,247 $ 3,262,502 $ 5,758,059
============ ============ ============ ============= =========== ============ ============
Balance, August 31, 1999 1,157,162 $ 1,932,097 61,900 $ 319,399 $ 582,247 $ 3,789,134 $ 5,984,079
Net income for the period - - - - - 76,173 76,173
Shares cancelled (82,000) (136,940) - - - - (136,940)
Treasury shares acquired - - 20,100 109,885 - - (109,885)
Treasury shares cancelled - - (82,000) (429,284) - - 429,284
Premium relating to cancellation
of share capital - - - - - (292,344) (292,344)
----------- ----------- ----------- ----------- ---------- ----------- ------------
Balance, November 30, 1999 1,075,162 $ 1,795,157 - $ - $ 582,247 $ 3,572,963 $ 5,950,367
=================================== ============ ============ ============ ============= =========== ============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
JEWETT-CAMERON TRADING COMPANY LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. dollars)
(Unaudited - See Notice to Reader)
NOVEMBER 30, 1999
================================================================================
1. BUSINESS COMBINATION
The Company was incorporated under the Company Act of British Columbia
on July 8, 1987.
The Company and its subsidiaries operate as a distributor of lumber and
other building products, as a distributor of industrial tools, and as a
retailer of building materials.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Generally accepted accounting principles
These consolidated financial statements have been prepared in accordance
with generally accepted accounting principles of Canada, which are not
materially different from generally accepted accounting principles
utilized in the United States.
Principles of consolidation
These consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries, The Jewett-Cameron Lumber
Corporation, MSI-Pro Co., and Material Supply International Inc., all of
which are incorporated under the laws of Oregon, U.S.A. and
Jewett-Cameron South Pacific Ltd., which is incorporated under the laws
of Tonga.
Significant inter-company balances and transactions have been eliminated
upon consolidation.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles required management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Currency
These financial statements are expressed in U.S. dollars as the
Company's operations are based predominantly in the United States.
Cash and cash equivalents
Cash and cash equivalents include highly liquid investments with
original maturities of three months or less.
Inventory
Inventory is recorded at the lower of cost and net realizable value
based on the average cost method.
Capital assets and depreciation
Capital assets are recorded at cost and the Company provides for
depreciation over the estimated life of each asset on a straight-line
basis over the following periods:
Office equipment 5-7 years
Warehouse equipment 2-10 years
Automotive equipment 4 years
Buildings 5- 30 years
<PAGE>
JEWETT-CAMERON TRADING COMPANY LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. dollars)
(Unaudited - See Notice to Reader)
NOVEMBER 30, 1999
================================================================================
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd.....)
Foreign exchange
Financial statements of the Company's foreign subsidiaries are
translated using the temporal method whereby all monetary assets and
liabilities are translated at the rate of exchange at the balance sheet
date. Non-monetary assets and liabilities are translated at exchange
rates prevailing at the transaction date. Income and expenses are
translated at rates which approximate those in effect on transaction
dates. Gains and losses arising from restatement of foreign currency
monetary assets and liabilities at each period end are included in
earnings.
Trademarks
The Company accounts for costs of acquiring its trademarks by
capitalizing all costs of acquisition. These costs will be amortized to
income over periods ranging from five to fifteen years.
Comparative figures
Certain comparative figures have been reclassified to conform with the
presentation adopted for the current period.
Financial instruments
The Company's financial instruments consist of cash and cash
equivalents, accounts receivable, deposits, accounts payable and accrued
liabilities. Unless otherwise noted, it is management's opinion that the
Company is not exposed to significant interest, currency or credit risks
arising from these financial instruments. The fair value of these
financial instruments approximate their carrying values, unless
otherwise noted.
Earnings per share
Earnings per share is computed using the weighted average number of
shares outstanding during the period, after considering outstanding
stock options and warrants.
Fully diluted earnings per share consider the dilutive impact of the
conversion of outstanding stock options as if the events occurred during
the period.
The earnings per share data for the periods ended November 30, 1999 and
1998 and August 31, 1999 is summarized as follows:
<TABLE>
======================================================================================================
November 30, November 30, August 31,
1999 1998 1999
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income for United States reporting purposes $ 76,173 $ 19,663 $ 592,509
=============== =============== ===============
Basic earnings per share weighted average number
of shares outstanding 1,147,618 1,176,762 1,131,627
Effect of dilutive securities
Stock options 35,533 34,785 34,948
--------------- --------------- ---------------
Fully diluted earnings per share weighted average
number of shares outstanding 1,183,151 1,211,547 1,166,575
======================================================================================================
</TABLE>
<PAGE>
JEWETT-CAMERON TRADING COMPANY LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. dollars)
(Unaudited - See Notice to Reader)
NOVEMBER 30, 1999
================================================================================
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd.....)
Post retirement benefits
Post retirement benefits are accounted for on an accrual basis. Any
difference between net periodic post retirement benefit cost charged
against income and the amount actually funded is recorded as an accrued
or prepaid cost. This policy is consistent with Financial Accounting
Standards No. 106, "Employers Accounting for Post Retirement Benefits
Other than Pensions".
3. CAPITAL ASSETS
<TABLE>
======================================================================================================
November 30, November 30, August 31,
1999 1998 1999
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Office equipment $ 214,193 $ 174,922 $ 210,652
Warehouse equipment 219,476 210,491 213,751
Automotive equipment 46,159 59,009 46,159
Building 1,413,700 1,460,993 1,410,058
Land 370,412 347,127 365,522
--------------- --------------- ---------------
2,263,940 2,252,542 2,246,142
Accumulated depreciation (770,622) (658,590) (735,075)
--------------- --------------- ---------------
Net book value $ 1,493,318 $ 1,593,952 $ 1,511,067
======================================================================================================
</TABLE>
4. DEFERRED INCOME TAXES
Deferred income taxes of $217,200 (November 30, 1998 - $203,200; August
31, 1999 - $217,200) relate principally to timing differences between
the accounting and tax treatment of income, expenses, reserves and
depreciation.
5. TRADEMARKS
<TABLE>
======================================================================================================
November 30, November 30, August 31,
1999 1998 1999
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Trademarks $ - $ 283,914 $ 283,914
Accumulated amortization - (96,737) (118,474)
Write-down of trademarks - - (165,440)
--------------- --------------- ---------------
$ - $ 187,177 $ -
======================================================================================================
</TABLE>
<PAGE>
JEWETT-CAMERON TRADING COMPANY LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. dollars)
(Unaudited - See Notice to Reader)
NOVEMBER 30, 1999
================================================================================
6. BANK INDEBTEDNESS
<TABLE>
======================================================================================================
November 30, November 30, August 31,
1999 1998 1999
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Demand loan $ - $ - $ 87,883
======================================================================================================
</TABLE>
7. STOCK OPTIONS
At November 30, 1999, employee incentive stock options were outstanding
enabling the holders to acquire the following number of shares:
========================================================================
Number Exercise
of Shares Price Expiry Date
-----------------------------------------------------------------------
12,000 Cdn$ 4.25 December 31, 2000
70,000 Cdn$ 4.25 August 6, 2006
========================================================================
8. EMPLOYEE STOCK OWNERSHIP PLAN
The Company sponsors an employee stock ownership plan ("ESOP") that
covers all U.S. employees who are employed by the Company on August 31
of each year and who have at least one thousand hours with the Company
in the twelve months preceding that date. The Company makes annual
contributions to the ESOP, at least equal to the ESOP's debt service.
The ESOP shares were initially pledged as collateral for its debt. As
the debt is repaid, shares are released from collateral and allocated to
active employees, based on the proportion of debt service paid in the
year. Debt of the ESOP is recorded as debt of the Company and the shares
pledged as collateral are reported as unearned ESOP shares in the
balance sheet. As shares are released from collateral, the Company
reports compensation expense equal to the current market value of the
shares, and the shares become outstanding for earnings per share
computations. ESOP compensation expense was $Nil for the periods ended
November 30, 1999 and 1998 and $Nil for the year ended August 31, 1999.
The ESOP shares as of November 30, 1999, 1998 and August 31, 1999 were
as follows:
<TABLE>
======================================================================================================
November 30, November 30, August 31,
1999 1998 1999
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Allocated shares 90,000 90,000 90,000
Unreleased shares - - -
---------------- ------------- ---- ---------
Total ESOP shares 90,000 90,000 90,000
======================================================================================================
Fair market value of unreleased shares $ - $ - $ -
======================================================================================================
</TABLE>
<PAGE>
JEWETT-CAMERON TRADING COMPANY LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. dollars)
(Unaudited - See Notice to Reader)
NOVEMBER 30, 1999
================================================================================
9. SUPPLEMENTAL DISCLOSURES WITH RESPECT TO STATEMENTS OF CASH FLOWS
<TABLE>
======================================================================================================
November 30, November 30, August 31,
1999 1998 1999
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash paid during the period for:
Interest $ 93 $ 12,499 $ 93,701
Income taxes 109,000 14,336 433,157
======================================================================================================
</TABLE>
Significant non-cash transaction for the three month period ended
November 30, 1999:
The Company cancelled 82,000 treasury shares repurchased at a price
of $429,284 which had an original cost of $136,940. The difference
between the original cost and purchase price of $292,344 was
applied against retained earnings as a premium relating to the
cancellation of share capital.
Significant non-cash transaction for the three month period ended
November 30, 1998:
The Company cancelled 23,600 treasury shares repurchased at a price
of $134,354 which had an original cost of $39,315. The difference
between the original cost and purchase price of $95,039 was applied
against retained earnings as a premium relating to the cancellation
of share capital.
Significant non-cash transaction for the year ended August 31, 1999:
The Company cancelled 23,600 treasury shares repurchased at a price
of $134,354 which had an original cost of $39,315. The difference
between the original cost and purchase price of $95,039 was applied
against retained earnings as a premium relating to the cancellation
of share capital.
10. SEGMENTED INFORMATION
The Company's operations are classified into two principle industry
segments: (sales of) building materials and (sales of) industrial
tools.
Sales of building materials consists of wholesale sales of lumber and
building materials in the United States and retail sales of building
materials in Tonga. Sales of industrial tools consists of distribution
of pneumatic air tools and industrial clamps in the United States.
In computing income from operations by industry segment, unallocable
general and administrative expenses have been excluded from each
segment's pre-tax operating earnings before interest expense and have
been included in general corporate and other operations.
<PAGE>
JEWETT-CAMERON TRADING COMPANY LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. dollars)
(Unaudited - See Notice to Reader)
NOVEMBER 30, 1999
================================================================================
10. SEGMENTED INFORMATION (cont'd.....)
Following is a summary of segmented information for the three month
periods ended November 30, 1999 and 1998 and the year ended August 31,
1999:
<TABLE>
======================================================================================================
November 30, November 30, August 31,
1999 1998 1999
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales to unaffiliated customers:
Building Materials:
United States $ 3,829,398 $ 3,517,236 $ 27,707,986
South Pacific 46,904 207,851 316,757
Industrial tools 273,414 281,792 1,077,530
-------------- -------------- --------------
$ 4,149,716 $ 4,006,879 $ 29,102,273
============== ============== ==============
Income from operations:
Building Materials:
United States $ 116,961 $ 104,437 $ 1,583,793
South Pacific (35,198) (10,938) (138,126)
Industrial tools 42,304 32,347 116,902
General corporate (12,291) (24,225) (111,654)
-------------- -------------- --------------
$ 111,776 $ 101,621 $ 1,450,915
=============== ============== ==============
Identifiable assets:
Building Materials:
United States $ 5,764,017 $ 5,400,404 $ 6,521,677
South Pacific 421,517 934,907 464,719
Industrial tools 131,672 130,666 117,549
General corporate 111,778 107,597 110,306
-------------- -------------- --------------
$ 6,428,984 $ 6,573,574 $ 7,214,251
============== ============== ==============
Depreciation and amortization:
Building Materials:
United States $ 28,869 $ 31,899 $ 152,591
South Pacific 1,230 3,659 16,250
Industrial tools 275 570 1,594
-------------- -------------- --------------
$ 30,374 $ 36,128 $ 170,435
============== ============== ===============
Capital expenditures:
Building Materials:
United States $ 12,625 $ 28,323 $ 112,411
South Pacific - - -
-------------- -------------- --------------
$ 12,625 $ 28,323 $ 112,411
=====================================================================================================
</TABLE>
<PAGE>
JEWETT-CAMERON TRADING COMPANY LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. dollars)
(Unaudited - See Notice to Reader)
NOVEMBER 30, 1999
================================================================================
11. UNCERTAINTY DUE TO THE YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use two
digits rather than four to identify a year. Date-sensitive systems may
incorrectly recognize the year 2000 as some other date, resulting in
errors. The effects of the Year 2000 Issue may be experienced before,
on, or after January 1, 2000 and, if not addressed, the impact on
operations and financial reporting may range from minor errors to
significant systems failure which could affect an entity's ability to
conduct normal business operations. It is not possible to be certain
that all aspects of the Year 2000 Issue affecting the Company, including
those related to the efforts of customers, suppliers, or other third
parties, will be fully resolved.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial
information extracted from the financial
statements of Jewett-Cameron Trading Company Ltd.
which are included in its quarterly report, Form
10-Q for the quarter ended November 30, 1999 and
is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-2000
<PERIOD-END> NOV-30-1999
<CASH> 619,210
<SECURITIES> 0
<RECEIVABLES> 1,103,961
<ALLOWANCES> 0
<INVENTORY> 2,890,779
<CURRENT-ASSETS> 4,644,121
<PP&E> 1,493,318
<DEPRECIATION> 30,374
<TOTAL-ASSETS> 6,428,984
<CURRENT-LIABILITIES> 478,617
<BONDS> 0
0
0
<COMMON> 1,795,157
<OTHER-SE> 4,155,210
<TOTAL-LIABILITY-AND-EQUITY> 6,428,984
<SALES> 4,149,716
<TOTAL-REVENUES> 4,149,716
<CGS> (3,497,740)
<TOTAL-COSTS> (4,037,940)
<OTHER-EXPENSES> 778
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 93
<INCOME-PRETAX> 121,173
<INCOME-TAX> 45,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 76,173
<EPS-BASIC> 0.07
<EPS-DILUTED> 0.06
</TABLE>
