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, 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 November 30, 2000. Common Stock, no par value 1,074,162
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 decreased $429,916 during the first quarter of Fiscal 2000 as
compared to the first quarter of Fiscal 1999. In spite of the decrease in gross
sales, during the first quarter of Fiscal 2000, the Company experienced an
increase in net income of $7,790.
Results of Operations.
The Company's operations are classified into three principle industry segments:
(sales of) building materials and (sales of) industrial tools and (sales of)
processed agricultural seeds.
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. Sales of seeds consists of distribution
of processed agricultural seeds in the United States.
For the first quarter of the current fiscal year, ending November 30, 2000,
sales decreased 10.4% to $3,719,800 compared to $4,149,716 for the same quarter
of the previous year.
Sales for Jewett-Cameron Lumber were $3,283,140 million for the quarter, down
14.3% compared to sales of $3,829,398 million for the first quarter of last
year.
Sales for MSI-PRO (pneumatic tools and industrial clamps) were $251,303 for the
first quarter compared to $273,414 for the first quarter of last year, down 8%.
Sales for Jewett-Cameron South Pacific in the Kingdom of Tonga were nil for
first quarter compared to $46,904 for the first quarter of last year. The
Company is currently winding down its operations in the Kingdom of Tonga.
Sales for Jewett Cameron Seed Company were $185,357 for the first quarter. The
first quarter of Fiscal 2001, ended November 30, 2000, was the first quarter of
operations for Jewett Cameron Seed Company.
<PAGE>
General and administrative expenses for the Company were $673,423 for the first
quarter up from $540,200 for the first quarter of last year. The primary reasons
for the increase of $133,233 are increases of $6,680 in bad debt expense; $8,579
in depreciation and amortization; $6,437 in insurance; $83,190 in wages and
employee benefits; and, $30,783 in warehouse expenses and supplies. Decreases
did occur, however, in the categories of consulting ($2,797); professional fees
($26,870); repairs and maintenance ($5,469; and travel, entertainment and
advertisement ($3,094).
Net income for the quarter was $83,963 which represents a 10.2% increase over
the first quarter of last year when net income was $76,173. The increase in net
income was due to a decrease in cost of sales of ($533,514); a decrease in
interest expense of ($9,756); and, a decrease in income taxes of ($20,000).
Earnings per share was $0.08 for the first quarter of Fiscal 2000 compared to
$0.07 for the first quarter of fiscal 1999.
Liquidity and Capital Resources
As of November 30, 2000 the Company had working capital of $3,060,590 which
represented an decrease of $1,104,914 as compared to the working capital
position of $4,165,504 as of November 30, 1999. The decrease in working capital
was due primarily to an increase in current liabilities of $1,103,777. Current
liabilities at November 30, 2000 consisted of $909,298 in bank indebtedness and
$673,096 in accounts payable and accrued liabilities.
Accounts Receivable and Inventory represented 92.7% 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 of $909,298 on November 30, 2000 and no
outstanding balance as of November 30, 1999. As of the end of Fiscal 2000
(August 31st) 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.
<PAGE>
Item 3 - Quantitative and Qualitative Disclosures about Market Risks:
The Company does not have any derivative financial instruments as of November
30, 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 - 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 15, 2001 /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 - Prepared by Management)
NOVEMBER 30, 2000
<PAGE>
<TABLE>
<CAPTION>
JEWETT-CAMERON TRADING COMPANY LTD.
CONSOLIDATED BALANCE SHEETS
(Expressed in U.S. dollars)
(Unaudited - Prepared by Management)
===============================================================================================================
November 30, November 30, August 31,
2000 1999 2000
------------------------------------------------------------------------------------ ------------ -------------
<S> <C> <C> <C>
ASSETS
Current
Cash and cash equivalents $ 238,561 $ 619,210 $ 208,277
Accounts receivable 997,571 1,103,961 2,541,387
Inventory 3,306,863 2,890,779 2,622,575
Prepaid expenses 99,989 30,171 24,247
----------- ----------- -----------
Total current assets 4,642,984 4,644,121 5,396,486
Capital assets (Note 3) 2,890,512 1,493,318 1,343,929
Deferred income taxes (Note 4) 122,200 217,200 122,200
Deposits 74,745 74,345 74,745
----------- ----------- -----------
Total assets $ 7,730,441 $ 6,428,984 $ 6,937,360
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Bank indebtedness (Note 5) $ 909,298 $ - $ -
Accounts payable and accrued liabilities 673,096 478,617 787,128
----------- ----------- -----------
Total current liabilities 1,582,394 478,617 787,128
----------- ----------- -----------
Stockholders' equity
Capital stock
Authorized
20,000,000 common shares without par value
10,000,000 preferred shares without par value
Issued
1,074,162 common shares (November 30, 1999 - 1,075,162;
August 31, 2000 - 1,074,162) 1,795,157 1,795,157 1,795,157
Additional paid-in capital 582,247 582,247 582,247
Retained earnings 4,189,433 3,572,963 4,105,470
----------- ----------- -----------
6,566,837 5,950,367 6,482,874
Less: Treasury stock - 86,500 common shares (November 30,
1999 - Nil; August 31, 2000 - 65,500) (418,790) - (332,642)
----------- ----------- -----------
6,148,047 5,950,367 6,150,232
----------- ----------- -----------
Total liabilities and stockholders' equity $ 7,730,441 $ 6,428,984 $ 6,937,360
=========== =========== ===========
Contingent liabilities and commitments (Note 9)
Subsequent event (Note 13)
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
JEWETT-CAMERON TRADING COMPANY LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in U.S. dollars)
(Unaudited - Prepared by Management)
================================================= =============== ============
Three Month Three Month
Period Ended Period Ended
November 30, November 30,
2000 1999
------------------------------------------------- ------------ -------------
SALES $ 3,719,800 $ 4,149,716
COST OF SALES 2,964,886 3,497,740
----------- -----------
GROSS PROFIT 754,914 651,976
GENERAL AND ADMINISTRATIVE EXPENSES - Schedule 637,423 540,200
Foreign exchange loss 3,376 685
----------- -----------
Income from operations 114,115 111,091
----------- -----------
OTHER ITEMS
Interest and other income 4,697 10,175
Interest expense (9,849) (93)
----------- -----------
(5,152) 10,082
----------- -----------
Income before income taxes 108,963 121,173
Income taxes 25,000 45,000
----------- -----------
Net income for the period $ 83,963 $ 76,173
============ =============
Basic earnings per share $ 0.08 $ 0.07
Diluted earnings per share $ 0.08 $ 0.06
============ =============
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 - Prepared by Management)
=========================================== =============== ================
Three Month Three Month
Period Ended Period Ended
November 30, November 30,
2000 1999
------------------------------------------- --------------- ----------------
Bad debt expense $ 6,680 $ -
Consulting 653 3,450
Depreciation and amortization 38,953 30,374
Insurance 18,910 12,473
Office and miscellaneous 49,760 49,005
Professional fees 11,269 38,139
Repairs and maintenance 9,198 14,667
Telephone and utilities 20,651 21,622
Travel, entertainment and advertising 34,661 37,755
Wages and employee benefits 397,367 314,177
Warehouse expenses and supplies 49,321 18,538
-------------- --------------
$ 637,423 $ 540,200
=============== ================
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<TABLE>
<CAPTION>
JEWETT-CAMERON TRADING COMPANY LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in U.S. dollars)
(Unaudited - Prepared by Management)
=============================================================== =============== ================
Three Month Three Month
Period Ended Period Ended
November 30, November 30,
2000 1999
--------------------------------------------------------------- --------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 83,963 $ 76,173
Items not involving an outlay of cash:
Depreciation and amortization 38,953 30,374
Foreign exchange loss 3,376 685
Changes in non-cash working capital items::
Decrease in accounts receivable 1,540,440 1,387,666
Increase in inventory (684,288) (223,944)
Increase in prepaid expenses (75,742) (1,628)
Increase (decrease) in bank indebtedness 909,298 (87,883)
Decrease in accounts payable and accrued liabilities (114,032) (663,672)
-------------- --------------
Net cash provided by operating activities 1,701,968 517,771
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Treasury shares acquired (86,148) (109,885)
-------------- --------------
Net cash used in financing activities (86,148) (109,885)
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of capital assets (1,585,536) (12,625)
-------------- --------------
Net cash used in investing activities (1,585,536) (12,625)
-------------- --------------
Increase in cash and cash equivalents 30,284 395,261
Cash and cash equivalents, beginning of period 208,277 223,949
-------------- --------------
Cash and cash equivalents, end of period $ 238,561 $ 619,210
=============== ================
</TABLE>
Supplemental disclosures with respect to cash flows (Note 10)
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<TABLE>
<CAPTION>
JEWETT-CAMERON TRADING COMPANY LTD.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Expressed in U.S. Dollars)
(Unaudited - Prepared by Management)
=================================== ========================= ========================== =========== ============ ============
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, 1999 1,157,162 $ 1,932,097 61,900 $ 319,399 $ 582,247 $ 3,789,134 $ 5,984,079
Net income for the year - - - - - 608,679 608,679
Shares cancelled (83,000) (136,940) - - - - (136,940)
Treasury shares acquired - - 86,600 442,526 - - (442,526)
Treasury shares cancelled - - (83,000) (429,283) - - 429,283
Premium relating to cancellation
of share capital - - - - - (292,343) (292,343)
----------- ----------- ----------- ----------- ---------- ----------- -----------
Balance, August 31, 2000 1,074,162 $ 1,795,157 65,500 $ 332,642 $ 582,247 $ 4,105,470 $ 6,150,232
============ ============ ============ ============= =========== ============ ============
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
============ ============ ============ ============= =========== ============ ============
Balance August 31, 2000 1,075,162 $ 1,795,157 65,500 $ 332,642 $ 582,247 $ 4,105,470 $ 6,150,232
Net income for the period - - - - - 83,963 83,963
Treasury shares acquired - - 21,000 86,148 - - (86,148)
----------- ----------- ----------- ----------- ---------- ----------- -----------
Balance, November 30, 2000 1,075,162 $ 1,795,157 86,500 $ 418,790 $ 582,247 $ 4,189,433 $ 6,148,047
=================================== ============ ============ ============ ============= =========== ============ ============
</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 - Prepared by Management)
NOVEMBER 30, 2000
1. BUSINESS COMBINATION AND ACQUISITION
The Company was incorporated under the Company Act of British Columbia
on July 8, 1987.
During the three month period ended November 30, 2000, the Company
acquired all of the assets, including land, buildings and equipment of
Agrobiotech Inc. (Hillsborough) for total proceeds of $1,530,762.
The cost of the acquisition was allocated as follows:
Land $ 456,713
Buildings 782,781
Warehouse equipment 285,768
Office equipment 5,500
-------------
$ 1,530,762
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.
Following the acquisition, the Company incorporated Jewett-Cameron Seed
Co. under the laws of Oregon, U.S.A. on October 31, 2000. This
subsidiary operates as a processor and distributor of agricultural seed
products.
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, 2000. The results of operations for the period
ended November 30, 2000 are not necessarily indicative of the results to
be expected for the year ending August 31, 2001.
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 Jewett-Cameron Seed Co., 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 requires 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.
<PAGE>
JEWETT-CAMERON TRADING COMPANY LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. dollars)
(Unaudited - Prepared by Management)
NOVEMBER 30, 2000
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd.....)
Revenue recognition
The Company recognizes revenue from the sales of building supply
products and tools, when the products are shipped and the ultimate
collection is reasonably assured.
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
Foreign exchange
Financial statements of the Company's foreign subsidiaries are
translated 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.
Earnings per share
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per
Share" ("SFAS 128"). Under SFAS 128, basic and diluted earnings per
share are to be presented. Basic earnings per share is computed by
dividing income available to common shareholders by the weighted average
number of common shares outstanding in the period. Diluted earnings per
share takes into consideration common shares outstanding (computed under
basic earnings per share) and potentially dilutive common shares.
<PAGE>
JEWETT-CAMERON TRADING COMPANY LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. dollars)
(Unaudited - Prepared by Management)
NOVEMBER 30, 2000
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd.....)
Earnings per share (cont'd.....)
The earnings per share data for the periods ended November 30, 2000 and
1999 is summarized as follows:
<TABLE>
<CAPTION>
======================================================================== ======================== ===============
Three Month Three Month
Period Ended Period Ended
November 30, November 30,
2000 1999
------------------------------------------------------------------------ ------------ ------------
<S> <C> <C>
Net income for United States reporting purposes $ 83,963 $ 76,173
=========== ===========
Basic earnings per share weighted average number of shares
outstanding 1,003,149 1,147,618
Effect of dilutive securities
Stock options 29,680 35,533
----------- -----------
Diluted earnings per share weighted average number of shares
outstanding 1,032,829 1,183,151
======================================================================== ============ ============
</TABLE>
Employee stock option plan
The Company accounts for its employee stock option plan using the
intrinsic value method.
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".
Accounting for derivative instruments and hedging activities
In September 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133 "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133") which
establishes accounting and reporting standards for derivative
instruments and for hedging activities. SFAS 133 is effective for all
fiscal quarters of fiscal years beginning after June 15, 1999. In June
1999, the FASB issued SFAS 137 to defer the effective date of SFAS 133
to fiscal quarters of fiscal years beginning after June 15, 2000. The
adoption by the Company of SFAS 137 during the current period did not
have any impact on its financial statements.
Comparative figures
Certain comparative figures have been reclassified to conform with the
presentation adopted for the current period.
<PAGE>
JEWETT-CAMERON TRADING COMPANY LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. dollars)
(Unaudited - Prepared by Management)
NOVEMBER 30, 2000
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd.....)
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 other than those disclosed in
Note 12, Concentrations of Credit Risk. The fair value of these
financial instruments approximate their carrying values, unless
otherwise noted.
3. CAPITAL ASSETS
============================== =========== =========== ===========
November 30, November 30, August 31,
2000 1999 2000
------------------------------ ----------- ----------- -----------
Office equipment $ 190,922 $ 214,193 $ 185,422
Warehouse equipment 549,104 219,476 221,568
Automotive equipment - 46,159 -
Building 2,308,720 1,413,700 1,288,340
Land 607,713 370,412 375,593
----------- ----------- -----------
3,656,459 2,263,940 2,070,923
Accumulated depreciation (765,947) (770,622) (726,994)
----------- ----------- -----------
Net book value $ 2,890,512 $ 1,493,318 $ 1,343,929
============================== =========== =========== ===========
In the event that facts and circumstances indicate that the carrying
amount of an asset may not be recoverable and an estimate of future
undiscounted cash flows is less than the carrying amount of the asset,
an impairment loss will be recognized. Management's estimates of
revenues, operating expenses, and operating capital are subject to
certain risks and uncertainties which may affect the recoverability of
the Company's investments. Although management has made its best
estimate of these factors based on current conditions, it is possible
that changes could occur which could adversely affect management's
estimate of the net cash flow expected to be generated from its
operations.
4. DEFERRED INCOME TAXES
Deferred income taxes of $122,200 (November 30, 1999 - $217,200; August
31, 2000 - $122,200) 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 - Prepared by Management)
NOVEMBER 30, 2000
5. BANK INDEBTEDNESS
===================== ================ =============== ================
November 30, November 30, August 31,
2000 1999 2000
--------------------- ---------------- --------------- ----------------
Demand loan $ 909,298 $ - $ -
===================== ================ =============== ================
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 point.
6. STOCK OPTIONS
Stock options to purchase securities from the Company can be granted to
directors and employees of the Company on terms and conditions
acceptable to the regulatory authorities of Canada, notably the Toronto
Stock Exchange ("TSE"), the Ontario Securities Commission and the
British Columbia Securities Commission.
Under the stock option program, stock options for up to 10% of the
number of issued and outstanding common shares may be granted from time
to time, provided that stock options in favour of any one individual may
not exceed 5% of the issued and outstanding common shares. No stock
option granted under the stock option program is transferable by the
optionee other than by will or the laws of descent and distribution, and
each stock option is exercisable during the lifetime of the optionee
only by such optionee.
The exercise price of all stock options, granted under the stock option
program, must be at least equal to the fair market value (subject to
regulated discounts) of such common shares on the date of grant.
At November 30, 2000, 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$ 8.25 December 31, 2000
70,000 Cdn$ 4.25 August 6, 2006
============ ============== ==================
7. 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.
<PAGE>
JEWETT-CAMERON TRADING COMPANY LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. dollars)
(Unaudited - Prepared by Management)
NOVEMBER 30, 2000
8. STOCK BASED COMPENSATION EXPENSE
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation", encourages but does not require companies to
record compensation cost for stock-based employee compensation plans at
fair value. The Company has chosen to account for stock-based
compensation using Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees". Accordingly, compensation
cost for stock options is measured as the excess, if any, of quoted
market price of the Company's stock at the date of grant over the option
price. No stock based compensation has resulted from the use of this
prior standard.
No new stock options were granted during the fiscal period ended
November 30, 2000.
Following is a summary of the status of the plan during 2000, 1999 and
1998:
<TABLE>
<CAPTION>
====================================================== ========== ===========
Weighted
Average
Number Exercise
of Shares Price
------------------------------------------------------ ---------- -----------
<S> <C> <C>
Outstanding at August 31, 1999 82,000 Cdn$ 4.84
Granted - Cdn$ 8.25
Forfeited -
Exercised -
--------
Outstanding at November 30, 1999 and August 31, 2000 82,000 Cdn$ 4.84
Granted -
Forfeited -
Exercised -
--------
Outstanding at November 30, 2000 82,000 Cdn$ 4.84
====================================================== ======== ===========
</TABLE>
Following is a summary of the status of options outstanding at November
30, 2000:
=====================================================================
Outstanding Options Exercisable Options
------------------------------- -------------------
Weighted
Average Weighted Weighted
Remaining Average Average
Contractual Exercise Exercise
Exercise Price Number Life Price Number Price
----------------- ------- ------------ ---------- ------- -----------
Cdn$8.25 12,000 0.08 Cdn$ 8.25 12,000 Cdn$ 8.25
Cdn$4.25 70,000 5.68 Cdn$ 4.25 70,000 Cdn$ 4.25
================= ======= ============ ========== ======= ===========
<PAGE>
JEWETT-CAMERON TRADING COMPANY LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. dollars)
(Unaudited - Prepared by Management)
NOVEMBER 30, 2000
9. CONTINGENT LIABILITIES AND COMMITMENTS
a) The Company established an Employee Stock Ownership Plan, whereby the
employees may earn up to 90,000 shares of the Company using a formula
based on years of service. The establishment of the plan resulted in
the Company forming a trust, which acquired from the Company 90,000
shares at a deemed price of Cdn$5.00 per share. As at November 30,
2000 and 1999 and August 31, 2000, 90,000 of these shares were earned
by the employees under this plan but remain in the trust (Note 7).
b) At November 30, 2000, the Company had an un-utilized line-of-credit
of approximately $4,500,000.
10. SUPPLEMENTAL DISCLOSURES WITH RESPECT TO STATEMENTS OF CASH FLOWS
================================== =============== ================
November 30, November 30,
2000 1999
---------------------------------- --------------- ----------------
Cash paid during the period for:
Interest $ 9,849 $ 93
Income taxes - 109,000
================================== =============== ================
Significant non-cash transaction for the three month period ended
November 30, 2000:
There were no significant non-cash transactions for the three month
period ended November 30, 2000.
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.
11. SEGMENTED INFORMATION
The Company's operations are classified into three principle industry
segments: (sales of) building materials and (sales of) industrial tools
and (sales of) processed agricultural seeds.
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. Sales of
seeds consists of distribution of processed agricultural seeds 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 - Prepared by Management)
NOVEMBER 30, 2000
11. SEGMENTED INFORMATION (cont'd.....)
Following is a summary of segmented information for the three month
periods ended November 30, 2000 and 1999:
================================== ================ ================
November 30, November 30,
2000 1999
---------------------------------- ---------------- ----------------
Sales to unaffiliated customers:
Building Materials:
United States $ 3,283,140 $ 3,829,398
South Pacific - 46,904
Industrial tools 251,303 273,414
Seeds 185,357 -
-------------- --------------
$ 3,719,800 $ 4,149,716
============== ==============
Income from operations:
Building Materials:
United States $ 88,684 $ 116,961
South Pacific (10,125) (35,198)
Industrial tools 24,627 41,619
Seeds 29,346 -
General corporate (18,417) (12,291)
-------------- --------------
$ 114,115 $ 111,091
============== ==============
Identifiable assets:
Building Materials:
United States $ 6,939,423 $ 5,764,017
South Pacific 237,783 421,517
Industrial tools 105,489 131,672
Seeds 331,384 -
General corporate 116,362 111,778
-------------- --------------
$ 7,730,441 $ 6,428,984
============== ==============
Depreciation and amortization:
Building Materials:
United States $ 30,617 $ 28,869
South Pacific - 1,230
Industrial tools 244 275
Seeds 8,092 -
-------------- --------------
$ 38,953 $ 30,374
============== ==============
Capital expenditures:
Building Materials:
United States $ 54,774 $ 12,625
South Pacific - -
Seeds 1,530,762 -
-------------- --------------
$ 1,585,536 $ 12,625
============== ==============
<PAGE>
JEWETT-CAMERON TRADING COMPANY LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. dollars)
(Unaudited - Prepared by Management)
NOVEMBER 30, 2000
12. CONCENTRATIONS OF CREDIT RISK
Financial instruments which potentially subject the Company to
concentrations of credit risk consist primarily of cash and trade
receivables. As of August 31, 2000 and 1999, substantially all of the
Company's cash, including amounts representing outstanding cheques, are
deposited with U.S. Bank and U.S. Bancorp Securities. During the normal
course of business, the Company extends credit to customers conducting
business in the home improvement industry.
13. SUBSEQUENT EVENT
Subsequent to November 30, 2000, stock options to acquire 12,000 common
shares at CDN$8.25 per share, expired unexercised.
