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 February 29, 2000
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 February 29, 2000. 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.
Company operations were down during the second quarter of Fiscal 2000, ended
February 29, 2000, as sales decreased over the first quarter of Fiscal 2000.
Gross sales decreased $1,241,419 during the second quarter of Fiscal 2000 as
compared to the second quarter of Fiscal 1999. During the second quarter of
Fiscal 2000, the Company experienced a decrease in net income of $113,991 as
compared to the second quarter of Fiscal 1999. Management believes that buying
patterns in the area of building materials have shifted and that sales which
previously occurred in the Company's second fiscal quarter of operations will
now occur in the third and, in some instances, the fourth fiscal quarters. The
overall result was net income of $41,587 for the second quarter of Fiscal 2000
and net income for the first six months of Fiscal 2000 of $117,760.
RESULTS OF OPERATIONS:
THREE MONTHS ENDED FEBRUARY 29, 2000 and 1999:
For the second quarter of the current fiscal year, ending February 29, 2000,
sales decreased 29.4% to $2,985,720 compared to $4,227,139 for the same quarter
of the previous year.
Sales for Jewett-Cameron Lumber were $2,728,783 million for the quarter, down
27.4% compared to sales of $3,758,478 million for the second quarter of last
year.
Sales for MSI-PRO (pneumatic tools and industrial clamps) were $259,469 for the
second quarter compared to $257,877 for the second quarter of last year, an
increase of $1,592.
Sales for Jewett-Cameron South Pacific in the Kingdom of Tonga were zero for the
second quarter compared to $2,933 for the second quarter of last year. The
Company has almost completed winding down its operations in the Kingdom of
Tonga.
General and administrative expenses for the Company were $482,942 for the second
quarter down from $640,439 for the second quarter of last year. The primary
reasons for the decrease of $157,497 are decreases of $10,093 in depreciation
and amortization; $16,555 in travel, entertainment and advertising; $69,337 in
wages and employee benefits; $17,232 in office and miscellaneous related
expenses; $2,953 in insurance; $5,640 in professional fees; $8,362 in telephone;
and, $1,236 in repairs and maintenance. An increase; however, did occur in the
category of warehouse expenses and supplies of $13,911.
Net income for the quarter was $41,587 which represents a 73% decrease over the
second quarter of last year when net income was $155,578. The decrease in net
income was due to a decrease in sales of $1,241,419 over the same period last
year. Even though general and administrative expenses decreased by 25%; interest
income increased slightly; and, interest expense decreased, the loss in foreign
exchange of ($28,607) coupled with the decrease in sales caused the drop in net
income.
<PAGE>
Earnings per share (fully diluted) was $0.04 for the second quarter of Fiscal
2000 compared to $0.13 for the second quarter of fiscal 1999.
SIX MONTHS ENDED FEBRUARY 29, 2000:
Sales in the first six months of Fiscal 2000 decreased 11.1% to $7,135,436
compared to $8,026,176 in the same period last year.
Sales for Jewett-Cameron Lumber were $6,558,181 million for the six month
period, down 9.9% compared to sales of $7,275,714 million for the same period of
last year.
Sales for MSI-PRO (pneumatic tools and industrial clamps) were $532,883 for the
six month period compared to $539,669 for the same period of last year, down
1.2%.
Sales for Jewett-Cameron South Pacific in the Kingdom of Tonga were $44,372 for
the six month period compared to $210,784 for the same period of last year, down
78.9%. The Company is currently winding down its operations in the Kingdom of
Tonga.
General and administrative expenses for the Company were $1,023,142 for the six
month period down from $1,131,854 for the same period of last year. The primary
reasons for the decrease of $108,712 are decreases of $12,188 in depreciation
and amortization; $11,661 in travel, entertainment and advertising; $56,822 in
wages and employee benefits; $12,119 in office and miscellaneous related
expenses; $2,809 in insurance; and, $3,938 in telephone. An increase; however,
did occur in the categories of warehouse expenses and supplies of $12,409;
repairs and maintenance of $1,430; and, professional fees of $16,986.
Net income for the first six months of Fiscal 2000 was $117,760 which represents
a 49.3% decrease over the first six months of last year when net income was
$232,171. The decrease in net income was due to a decrease in sales of $890,731
over the same period last year. Even though general and administrative expenses
decreased by 10%; interest income increased slightly; and, interest expense
decreased, the loss in foreign exchange of ($29,292) coupled with the decrease
in sales caused the drop in net income.
Earnings per share (fully diluted) was $0.11 for the first six months of Fiscal
2000 compared to $0.20 for the same period of fiscal 1999.
LIQUIDITY AND CAPITAL RESOURCES
As of February 29, 2000 the Company had working capital of $4,096,864 which
represented an increase of $319,115 as compared to the working capital position
of $3,777,749 as of February 28, 2000. The increase in working capital was due
to an increase in cash and cash equivalents of $95,914 and a decrease in
accounts payable and current liabilities of $1,059,893.
Accounts Receivable and Inventory represented 94% 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 an outstanding balance as of February 29, 2000 of $2,207,877. As
of the end of Fiscal 2000 (August 31st) the Company had an outstanding balance
of $87,883 and at the end of the second quarter of Fiscal 2000, the Company had
an outstanding balance of $2,391,339.
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.
<PAGE>
IMPACT OF 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 recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
year 2000 dates is processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something other than a
date. Although the change in date has occurred, it is not possible to conclude
that all aspects of the Year 2000 Issue that may affect the company including
those related to customers, suppliers, or other third parties, have been fully
resolved.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISKS:
The Company does not have any derivative financial instruments as of February
29, 2000. 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 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: The Company conducted an Annual Meeting on January
14, 2000. The matters voted upon, together with the results
of voting, were as follows:
1) The following persons were elected to fill the
vacancies on the Board of Directors created by the
expiration of the directors' terms, to serve until the
year 2001 annual meeting of the shareholders and until
their successors shall be duly elected:
Director Shares Voted Shares Voted
in Favor Against
----------------- ------------ ------------
Donald M. Boone 676,153 0
Jeffrey Lowe 676,153 0
James Schjelderup 676,153 0
Item 5. Other Information - None
Item 6.(a) Exhibit 27 - Financial Data Schedule
Item 6.(b) Reports on Form 8-K - 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.
Jewett-Cameron Trading Company Ltd.
(Registrant)
Dated: April 5, 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)
FEBRUARY 29, 2000
<PAGE>
[Davidson & Company Letterhead]
NOTICE TO READER
We have compiled the consolidated balance sheet of Jewett-Cameron Trading
Company Ltd. as at February 29, 2000 and the consolidated statements of
operations, cash flows and changes in shareholders' equity for the six 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.
"DAVIDSON & COMPANY"
Vancouver, Canada Chartered Accountants
March 31, 2000
A Member of SC INTERNATIONAL
Suite 1200, Stock Exchange Tower, 609 Granville Street, P.O. Box 10372,
Pacific Centre, Vancouver, BC, Canada, V7Y 1G6
Telephone (604) 687-0947 Fax (604) 687-6172
<PAGE>
JEWETT-CAMERON TRADING COMPANY LTD.
CONSOLIDATED BALANCE SHEETS
(Expressed in U.S. dollars)
(Unaudited - See Notice to Reader)
<TABLE>
<CAPTION>
February 29, February 28, August 31,
2000 1999 1999
--------------- --------------- ---------------
<S> <C> <C> <C>
ASSETS
Current
Cash and cash equivalents $ 95,914 $ - $ 223,949
Accounts receivable 1,502,843 2,427,470 2,492,312
Income tax receivable 211,650 128,003 -
Inventory 5,069,136 5,237,111 2,666,835
Prepaid expenses 100,549 111,726 28,543
------------- ------------- -------------
Total current assets 6,980,092 7,904,310 5,411,639
Capital assets (Note 3) 1,433,575 1,572,743 1,511,067
Trademarks (Note 4) - 179,931 -
Deferred income taxes (Note 5) 217,200 203,200 217,200
Deposits 74,345 74,345 74,345
------------- ------------- -------------
$ 8,705,212 $ 9,934,529 $ 7,214,251
=============== =============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Bank indebtedness (Note 6) $ 2,207,877 $ 2,391,339 $ 87,883
Accounts payable and accrued liabilities 675,329 1,735,222 1,142,289
------------- ------------- -------------
Total current liabilities 2,883,206 4,126,561 1,230,172
------------- ------------- -------------
Shareholders' 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 (February 28, 1999 - 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 3,614,550 3,428,796 3,789,134
------------- ------------- -------------
5,991,954 5,943,140 6,303,478
Less: Treasury stock - 32,800 common shares (February 28, 1999 -
26,500; August 31, 1999 - 61,900) (169,948) (135,172) (319,399)
------------- ------------- -------------
5,822,006 5,807,968 5,984,079
------------- ------------- -------------
$ 8,705,212 $ 9,934,529 $ 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)
<TABLE>
<CAPTION>
Three month Three month Six month Six month
period ended period ended period ended period ended
February 29, February 28, February 29, February 28,
2000 1999 2000 1999
--------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
SALES $ 2,985,720 $ 4,227,139 $ 7,135,436 $ 8,026,167
COST OF SALES (2,364,563) (3,403,566) (5,862,303) (6,599,050)
------------- ------------- ------------- -------------
GROSS PROFIT 621,157 823,573 1,273,133 1,427,117
GENERAL AND ADMINISTRATIVE
EXPENSES - Schedule (482,942) (640,439) (1,023,142) (1,131,854)
------------- ------------- ------------- -------------
Income from operations 138,215 183,134 249,991 295,263
------------- ------------- ------------- -------------
OTHER ITEMS
Loss on disposal of capital assets (41,582) - (41,582) -
Interest and other income 6,262 4,020 16,437 13,879
Interest expense (17,701) (19,356) (17,794) (31,855)
Foreign exchange gain (loss) (28,607) 13,780 (29,292) 13,884
------------- ------------- ------------- -------------
(81,628) (1,556) (72,231) (4,092)
------------- ------------- ------------- -------------
Income before income taxes 56,587 181,578 177,760 291,171
Income taxes (15,000) (26,000) (60,000) (59,000)
------------- ------------- ------------- -------------
Net income for the period $ 41,587 $ 155,578 $ 117,760 $ 232,171
============= ============= ============= =============
Basic earnings per share $ 0.04 $ 0.14 $ 0.11 $ 0.20
============= ============= ============= =============
Diluted earnings per share $ 0.04 $ 0.13 $ 0.11 $ 0.19
============= ============= ============= =============
</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)
<TABLE>
<CAPTION>
Three month Three month Six month Six month
period ended period ended period ended period ended
February 29, February 28, February 29, February 28,
2000 1999 2000 1999
--------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
Bad debt (recovery) $ (40,000) $ - $ (40,000) $ -
Depreciation and amortization 28,942 39,035 59,316 71,504
Insurance 11,965 14,918 24,438 27,247
Office and miscellaneous 56,277 73,509 108,732 120,851
Professional fees 39,580 45,220 77,719 60,733
Repairs and maintenance 8,694 9,930 23,361 21,931
Telephone and utilities 19,270 27,632 40,892 44,830
Travel, entertainment and advertising 38,992 55,547 76,747 88,408
Warehouse expenses and supplies 23,176 9,265 41,714 29,305
Wages and employee benefits 296,046 365,383 610,223 667,045
------------- ------------- ------------- -------------
$ 482,942 $ 640,439 $ 1,023,142 $ 1,131,854
=============== ============== =============== ===============
</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)
<TABLE>
<CAPTION>
Six month Six month
period ended period ended
February 29, February 28,
2000 1999
-------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 117,760 $ 232,171
Items not involving an outlay of cash:
Depreciation and amortization 59,316 71,504
Loss on disposal of capital assets 41,582 -
Changes in non-cash working capital items:
(Increase) decrease in accounts receivable 989,469 (421,200)
Increase in income tax receivable (211,650) (128,003)
Increase in inventory (2,402,301) (2,188,308)
Increase in prepaid expenses (72,006) (65,973)
Increase in bank indebtedness 2,119,994 1,624,018
Increase (decrease) in accounts payable and accrued liabilities (466,960) 998,960
------------- -------------
Net cash provided by operating activities 175,204 123,169
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Treasury shares acquired (279,833) (151,896)
Capital stock issued - 11,043
------------- -------------
Net cash used in financing activities (279,833) (140,853)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of capital assets (23,406) (35,245)
------------- -------------
Net cash used in investing activities (23,406) (35,245)
------------- -------------
Change in cash and cash equivalents for the period (128,035) (52,929)
Cash and cash equivalents, beginning of period 223,949 52,929
------------- -------------
Cash and cash equivalents, end of period $ 95,914 $ -
============== ===============
Supplemental disclosure with respect to cash flows (Note 10)
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
JEWETT-CAMERON TRADING COMPANY LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Expressed in U.S. Dollars)
(Unaudited - See Notice to Reader)
<TABLE>
<CAPTION>
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 - - - - - 232,171 232,171
Stock options exercised 4,000 11,044 - - - - 11,044
Shares cancelled (23,600) (39,315) - - - - (39,315)
Treasury shares acquired - - 29,500 151,896 - - (151,896)
Treasury shares cancelled - - (23,600) (134,354) - - 134,354
Premium relating to cancellation
of capital stock - - - - - (95,039) (95,039)
----------- ----------- ----------- ----------- ---------- ----------- -----------
Balance, February 28, 1999 1,157,162 $ 1,932,097 26,500 $ 135,172 $ 582,247 $ 3,428,796 $ 5,807,968
============ ============ ============ ============= =========== ============ ============
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 - - - - - 117,760 117,760
Shares cancelled (82,000) (136,940) - - - (136,940)
Treasury shares acquired - - 52,900 279,833 - - (279,833)
Treasury shares cancelled - - (82,000) (429,284) - - 429,284
-
Premium relating to cancellation
of capital stock - - - - - (292,344) (292,344)
----------- ----------- ----------- ----------- ---------- ----------- -----------
Balance, February 29, 2000 1,075,162 $ 1,795,157 32,800 $ 169,948 $ 582,247 $ 3,614,550 $ 5,822,006
============ ============ ============ ============= =========== ============ ============
</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)
FEBRUARY 29, 2000
- --------------------------------------------------------------------------------
1. NATURE OF OPERATIONS
The Company was incorporated under the Company Act of British Columbia
on July 8, 1987.
The Company and its subsidiaries operate as a wholesaler 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
In the opinion of management, the accompanying consolidated financial
statements contain all adjustments necessary (consisting only of normal
recurring accruals) to present fairly the financial information
contained therein. These statements do not include all disclosures
required by generally accepted accounting principles and should be read
in conjunction with the audited financial statements of the Company for
the year ended August 31, 1999. The results of operations for the period
ended February 29, 2000 are not necessarily indicative of the results to
be expected for the year ending August 31, 2000.
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)
FEBRUARY 29, 2000
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd.....)
Foreign exchange
The Company accounts for foreign currency transactions and translation of
foreign currency financial statements under Statement of Financial
Accounting Standards No. 52, "Foreign Currency Translation" ("SFAS 52").
Transaction amounts denominated in foreign currencies are translated at
exchange rates prevailing at transaction dates. Carrying values of
monetary assets and liabilities are adjusted at each balance sheet date
to reflect the exchange rate at that date. Non monetary assets and
liabilities are translated at the exchange rate on the original
transaction date. Gains and losses from restatement of foreign currency
monetary and non-monetary assets and liabilities are included in income.
Revenues and expenses are translated at the rates of exchange prevailing
on the dates such items are recognized 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, income tax receivable, deposits, bank
indebtedness and 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
Basic earnings per share is computed using the weighted average number
of shares outstanding during the period.
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 February 29, 2000 and
February 28, 1999 is summarized as follows:
<TABLE>
<CAPTION>
Three Month Three Month Six Month Six Month
Period Ended Period Ended Period Ended Period Ended
February 29, February 28, February 29, February 28,
2000 1999 2000 1999
--------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Net income $ 41,587 $ 155,578 $ 117,760 $ 232,171
============== =============== =============== ==============
Basic earnings per share weighted
average number of shares outstanding 1,055,255 1,166,919 1,055,255 1,166,919
Effect of dilutive securities
Stock options 28,880 35,863 28,880 35,863
-------------- --------------- --------------- --------------
Diluted earnings per share weighted
average number of shares outstanding 1,084,135 1,202,782 1,084,135 1,202,782
=============== ================ ================ ===============
</TABLE>
<PAGE>
JEWETT-CAMERON TRADING COMPANY LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. dollars)
(Unaudited - See Notice to Reader)
FEBRUARY 29, 2000
- --------------------------------------------------------------------------------
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
February 29, February 28, August 31,
2000 1999 1999
------------- ------------- -------------
Office equipment $ 181,703 $ 179,389 $ 210,652
Warehouse equipment 210,551 214,182 213,751
Automotive equipment 43,871 59,009 46,159
Building 1,378,802 1,463,266 1,410,058
Land 372,562 344,892 365,522
------------- ------------- -------------
2,187,489 2,260,738 2,246,142
Accumulated depreciation (753,914) (687,995) (735,075)
------------- ------------- -------------
Net book value $ 1,433,575 $ 1,572,743 $ 1,511,067
============= ============= =============
4. TRADEMARKS
February 29, February 28, August 31,
2000 1999 1999
------------- ------------- -------------
Trademarks $ 283,914 $ 283,914 $ 283,914
Accumulated amortization (118,474) (103,983) (118,474)
Write-down of trademarks (165,440) - (165,440)
------------- ------------- -------------
Net book value $ - $ 179,931 $ -
=============== =============== ===============
5. DEFERRED INCOME TAXES
Deferred income taxes of $217,200 (February 28, 1999 - $203,200; August
31, 1999 - $217,200) relate principally to timing differences between
the accounting and tax treatment of income, expenses, reserves and
depreciation.
<PAGE>
JEWETT-CAMERON TRADING COMPANY LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. dollars)
(Unaudited - See Notice to Reader)
FEBRUARY 29, 2000
- --------------------------------------------------------------------------------
6. BANK INDEBTEDNESS
February 29, February 28, August 31,
2000 1999 1999
--------------- --------------- ---------------
Demand loan $ 2,207,877 $ 2,391,339 $ 87,883
=============== =============== ===============
The bank indebtedness is secured by an assignment of accounts receivable
and inventory. Interest is calculated at either prime or the libor rate
plus 225 basis points.
7. STOCK OPTIONS
At February 29, 2000, the Company had the following stock options
outstanding enabling the holders to purchase common shares of the
Company:
Number
of Shares Price Expiry Date
---------- --------- -----------------
12,000 Cdn $ 8.25 December 31, 2000
70,000 Cdn $ 4.25 August 6, 2006
========== ========= =================
8. EMPLOYEE STOCK OWNERSHIP PLAN
The Company sponsored 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 ESOP grants to
participants in the plan certain ownership rights in, but not possession
of, the common stock of the Company held by the Trustee of the plan.
Shares of common stock are allocated annually to participants in the
ESOP pursuant to a prescribed formula. The value of the shares released
by the Trustee under the plan's provisions for allocation was recognized
as an expense of $Nil, $Nil and $90,170 for the periods ended February
29, 2000, February 28, 1999 and August 31, 1999, respectively.
February 29, February 28, August 31,
2000 1999 1999
--------------- --------------- ---------------
Allocated shares 107,000 90,000 107,000
Total ESOP shares 107,000 90,000 107,000
=============== =============== ===============
<PAGE>
JEWETT-CAMERON TRADING COMPANY LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. dollars)
(Unaudited - See Notice to Reader)
FEBRUARY 29, 2000
- --------------------------------------------------------------------------------
9. CONTINGENT LIABILITIES AND COMMITMENTS
At February 29, 2000, February 28, 1999 and August 31, 1999, the Company
had an un-utilized line-of-credit of approximately $4,300,000,
$1,300,000 and $6,400,000, respectively.
10. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS
<TABLE>
<CAPTION>
February 29, February 28, August 31,
2000 1999 1999
--------------- --------------- ---------------
<S> <C> <C> <C>
Cash paid during the period for:
Interest $ 16,437 $ 31,855 $ 93,701
Income taxes 441,157 257,667 433,157
=============== =============== ===============
</TABLE>
Significant non-cash transactions for the six month period ended
February 29, 2000 are as follows:
The Company cancelled 82,000 treasury shares repurchased at a price
of $429,284 which had an original cost $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 transactions for the six month period ended
February 28, 1999 are as follows:
The Company cancelled 23,600 treasury shares, repurchased at a price
of $134,354, which had an original cost of $39,315. The difference
of $95,039 between the original cost and purchase price was applied
against retained earnings as a premium relating to the cancellation
of share capital.
11. 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
segments' 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)
FEBRUARY 29, 2000
- --------------------------------------------------------------------------------
11. SEGMENTED INFORMATION (cont'd.....)
Following is a summary of segmented information for the six month
periods ended February 29, 2000 and February 28, 1999 and the year
ended August 31, 1999:
<TABLE>
<CAPTION>
February 29, February 28, August 31,
2000 1999 1999
---------------- --------------- ----------------
<S> <C> <C> <C>
Sales to unaffiliated customers:
Building Materials:
United States $ 6,558,181 $ 7,275,714 $ 27,707,986
South Pacific 44,372 210,784 316,757
Industrial tools 532,883 539,669 1,077,530
-------------- -------------- --------------
$ 7,135,436 $ 8,026,167 $ 29,102,273
================ =============== ================
Income from operations:
Building Materials:
United States $ 267,437 $ 367,425 $ 1,583,793
South Pacific (44,044) (62,717) (138,126)
Industrial tools 80,338 61,341 116,902
General corporate (53,740) (70,786) (111,654)
-------------- -------------- --------------
$ 249,991 $ 295,263 $ 1,450,915
================ =============== ================
Identifiable assets:
Building Materials:
United States $ 8,119,130 $ 8,966,092 $ 6,521,677
South Pacific 334,884 710,922 464,719
Industrial tools 146,479 146,017 117,549
General corporate 104,719 111,498 110,306
-------------- -------------- --------------
$ 8,705,212 $ 9,934,529 $ 7,214,251
================ =============== ================
Depreciation and amortization:
Building Materials:
United States $ 57,657 $ 65,147 $ 152,591
South Pacific 1,110 5,359 16,250
Industrial tools 549 998 1,594
-------------- -------------- --------------
$ 59,316 $ 71,504 $ 170,435
================ =============== ================
Capital expenditures:
Building Materials:
United States $ 23,406 $ 32,972 $ 112,411
South Pacific - 2,273 -
-------------- -------------- -------------
$ 23,406 $ 35,245 $ 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)
FEBRUARY 29, 2000
- --------------------------------------------------------------------------------
12. UNCERTAINTY DUE TO THE YEAR 2000
The Year 2000 Issue arises because many computerized systems use two
digits rather than four to identify a year. Date-sensitive systems may
recognize the year 2000 as 1900 or some other date, resulting in errors
when information using year 2000 dates is processed. In addition,
similar problems may arise in some systems which use certain dates in
1999 to represent something other than a date. Although the change in
date has occurred, it is not possible to conclude that all aspects of
the Year 2000 Issue that may affect the entity, including those related
to customers, suppliers, or other third parties, have been fully
resolved.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-2000
<PERIOD-END> FEB-29-2000
<CASH> 95,914
<SECURITIES> 0
<RECEIVABLES> 1,502,843
<ALLOWANCES> 0
<INVENTORY> 5,069,136
<CURRENT-ASSETS> 6,980,092
<PP&E> 1,433,575
<DEPRECIATION> 59,316
<TOTAL-ASSETS> 8,705,212
<CURRENT-LIABILITIES> 2,883,206
<BONDS> 0
0
0
<COMMON> 1,795,157
<OTHER-SE> 4,196,797
<TOTAL-LIABILITY-AND-EQUITY> 8,705,212
<SALES> 7,135,436
<TOTAL-REVENUES> 7,135,436
<CGS> 5,862,303
<TOTAL-COSTS> 6,885,445
<OTHER-EXPENSES> 72,231
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,794
<INCOME-PRETAX> 177,760
<INCOME-TAX> 60,000
<INCOME-CONTINUING> 221,804
<DISCONTINUED> (44,044)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 117,760
<EPS-BASIC> 0.11
<EPS-DILUTED> 0.11
</TABLE>
