UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended: March 31, 1997
--------------
Commission File No.: 33-11309
--------
THE IDAHO COMPANY
------------------------------------------------------
(Exact name of registrant as specified in its charter)
IDAHO 82-0410913
- --------------------------------- ------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
102 S. 17th Street, Suite 201, Boise, Idaho 83702
- ----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(208) 344-6308
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. [X] 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 the latest practicable date.
1,618 shares of no par value common stock
were outstanding at 03-31-96.
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
The financial information set forth herein is unaudited and reflects all
adjustments which are, in the opinion of management, necessary to the
presentation of a fair statement of the interim period presented.
(The remainder of this page intentionally left blank.)
THE IDAHO COMPANY
BALANCE SHEETS
March 31, 1997 December 31, 1996
- ------------------------------------------------------------------------------
ASSETS
Cash $ 21,988 $ 15,636
Loans receivable 1,234,385 1,345,817
Less allowance for loan losses 76,179 75,706
---------- ----------
Net loans 1,158,206 1,270,111
Interest and other receivables 36,117 23,904
Prepaid expenses 5,473 8,515
---------- ----------
Total Assets $1,224,775 $1,318,166
========== ==========
LIABILITIES & STOCKHOLDERS' EQUITY
Accrued expenses $ 5,011 $ 3,909
Payroll tax payable 1,746 23,197
Fees collected, unearned 10,887 10,887
Notes Payable 94,821 184,921
---------- ----------
112,465 202,036
Excess of net assets acquired over
cost, net of accumulated accretion
of $40,446 at March 31, 1996 and
$34,668 at December 31, 1995 52,002 57,779
---------- ----------
Total Liabilities 164,467 259,815
STOCKHOLDERS' EQUITY
Common stock, no par value,
Authorized 500,000 shares; 1,618
shares issued and outstanding 982,825 982,825
Retained earnings 77,483 75,526
---------- ----------
1,060,308 1,058,351
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY $1,224,775 $1,318,166
========== ==========
THE IDAHO COMPANY
STATEMENTS OF OPERATIONS
Quarter Ended Quarter Ended
March 31, 1997 March 31, 1996
- --------------------------------------------------------------------------
REVENUE
Consulting Income $ 515 $ 150
Loan Fees 150 6,701
Interest Income - Loans 39,387 34,809
Interest Income - Other 52 664
Negative Goodwill
& Other Income 6,991 6,303
-------- ---------
Total Revenue 47,095 48,627
EXPENSES
Operating Expenses 45,137 43,931
Total Expenses 45,137 43,931
-------- --------
NET INCOME/LOSS $ 1,958 $ 4,696
======== ========
AVERAGE NUMBER SHARES OUTSTANDING 1,618 1,618
INCOME/LOSS PER SHARE
OF COMMON STOCK $1.21 $2.90
THE IDAHO COMPANY
STATEMENTS OF CASH FLOWS
March 31, 1997 March 31, 1996
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 1,958 $ 4,696
Adjustments to reconcile net income
to net cash used in operating activities:
Accretion of excess of net assets
acquired over cost (5,777) (5,778)
Provision for loan losses 473 672
Changes in operating assets
and liabilities:
Accounts receivable
Interest receivable (12,213) (7,217)
Fees collected, unearned 0 8,541
Prepaid expenses 3,041 2,905
Accounts payable 0
Accrued expenses 1,452 6,050
Payroll tax payable (573) 198
Fixed Asset (2,991)
Interest Payable (350)
------- -------
Total adjustments (16,938) 5,371
NET CASH PROVIDED BY
OPERATING ACTIVITIES (14,980) 10,067
CASH FLOWS FROM INVESTING ACTIVITIES:
Maturities of interest bearing deposits
Loans receivable disbursed (68,000) (149,534)
Loans receivable collected 179,432 87,827
-------- --------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES 111,432 (61,707)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds form issuance of debt (191,000)
Principal payments on debt 100,900
Reverse stock split - fractional share payments
Capital additions
-------- --------
NET CASH USED IN
FINANCING ACTIVITIES (90,100)
INCREASE (DECREASE) IN CASH 6,352 (51,640)
CASH AT BEGINNING OF PERIOD 15,636 128,742
-------- --------
CASH AT END OF PERIOD $ 21,988 $ 77,103
======== ========
THE IDAHO COMPANY
NOTES TO FINANCIAL STATEMENTS
Quarter Ended March 31, 1996
BASIS OF PRESENTATION AND COMPANY BACKGROUND
The Idaho Company (the Company), incorporated under the laws of the State of
Idaho on November 28, 1986, is a for-profit corporation. The Company was formed
to promote economic growth, and to stimulate, develop, and advance the business
prosperity of Idaho and its citizens. The Company achieves this objective by
lending to, investing in, arranging financing for, and consulting with new,
emerging, and expanding businesses.
The Company is not obligated to pay a dividend or dividend in kind unless the
payment has been approved by the Director of the Department of Finance of the
State of Idaho and is consistent with capital requirements and profitability.
The Company is a licensed Business and Industrial Development Company (BIDCO).
As such, it is regulated by the State of Idaho Department of Finance and subject
to periodic asset quality examinations. On September 30, 1992, the Company was
granted an exemption from registration as an investment company under the
Investment Company Act of 1940, conditioned upon satisfying certain
requirements, which have been met as of March 31, 1996.
On June 15, 1994, William F. Rigby acquired 97.7 percent of the Company's then
outstanding common stock in a tender offer for cash consideration in the amount
of $957,780. In accordance with the tender offer terms and conditions, a
reverse stock split was subsequently concluded during the first quarter of
1995. The remaining 2.3 percent of shares outstanding became fractional shares
as a result of the split and were paid out in the form of cash. The reverse
stock split occurred on February 28, 1995, and resulted in a reduction of
pre-split issued and outstanding shares of 163,453 to 1,618 post-split shares.
Effective with the reverse stock split, the Company amended its articles of
incorporation to eliminate the par value feature of its authorized common stock
in favor of a nopar value feature. On February 28, 1995, the Company
re-acquired all fractional common shares created by the reverse stock split for
approximately $23,000.
The Idaho Company underwent Board of Directors and Management changes in the
first quarter of 1997. Diane Rigby was hired during the first quarter as Vice
President. Resigning as Chairman of the Board was Ted Ellis effective February
14,1997, resigning as President & Chief Executive Officer was Eugene D. Heil
effective March 31, 1997 and resigning as Administrative Assistant was Sue Anne
Maben effective March 15, 1997. Upon Mr. Ellis' resignation, William F. Rigby
assumed his position as Chairman of the Board and upon Mr. Heil's resignation,
William F. Rigby assumed his position as President and Chief Executive Officer.
On April 16, 1997, the Annual Stockholders and Quarterly Board of Directors
meetings will be held. At that time, new management will be approved.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Unaudited Interim Financial Statements. In the opinion of management, the
accompanying financial statements contain all adjustments necessary to fairly
represent the financial position of The Idaho Company and the results of
operations and cash flows.
This report on Form 10-Q for the quarter ended March 31, 1997, should be read in
conjunction with the Company's report on Form 10-K for the year ended December
31, 1996, and report on Form 10-Q for the quarter ended March 31, 1996.
Loans. The Company makes commercials loans to Idaho small businesses to
stimulate economic activity through job creation. Loans are reported at the
principal amount outstanding, net of an allowance for estimated loan losses.
Accrual of interest is discontinued when reasonable doubt exists as to
collectibility. All loans greater than 90 days delinquent are subject to
nonaccrual of interest. Interest accruals are resumed on such loans only when
they are brought fully current with respect to principal and interest and when,
in the judgment of management, the loans are fully collectible.
Allowance for Loan Losses. The allowance for loan losses is established
through a provision charged to expense. Loans are charged against the allowance
when management believes that the collectibility of principal is unlikely. The
allowance is an amount which management believes would be adequate to absorb
possible losses on existing loans, based on 1) conditions existing at the
balance sheet date, 2) evaluations of the collectibility of the loans and
2) prior loan loss experience. The evaluations take into consideration such
factors as changes in the nature and volume of the loan portfolio, overall
portfolio quality, review of specific problem loans, and current economic
conditions that may affect the borrower's ability to repay.
Income Taxes. The Company accounts for income taxes using the asset and
liability method, under which deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases and operating loss carryforwards. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply
to taxable income in years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of
a change in tax rates is recognized in income in the period that includes the
enactment date.
Excess of Net Assets Acquired over Cost. The excess of net assets acquired
over purchase price is accreted on a straight-line basis over a five year life.
Income Per Share. Income per share is computed by dividing the net income
by the average number of shares outstanding during the period. See "Basis of
Presentation" for a description of the reverse stock split occurring on
February 28, 1995.
Interest Bearing Deposits. Interest bearing deposits are comprised of
certificates of deposit and other deposits.
Notes Payable. The Company was obligated under a note payable at March 31,
1996 which was paid in full during the following quarter.
Cash. With the exception of a nominal operating account, all cash earns
interest at current market rates.
Reclassifications. Certain amounts presented in 1995 have been reclassified
to be consistent with this presentation.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS. The quarter ended March 31, 1997 resulted in net
income of $1,958, compared to net income of $4,696 for the quarter ended March
31, 1996. The first quarter of 1996 included fee income of $6,700 versus $150
for the first quarter of 1997. Compensation for this decrease in fee income was
an increase in Interest Income for Loans from $34,808.96 (1996) to $39,387.32
(1997). Interest Expense also increased from the first quarter of 1996 of
$11.27 to first quarter 1997 total of $3,173. Year-to-date results for 1996
are in line with management's projections.
Revenues for the first quarter of 1997 were primarily derived from interest on
loans receivable. Non-cash revenues were also realized from the amortization of
negative goodwill (see "Basis of Presentation" under Notes to Financial
Statements). The primary sources of revenue for the quarter ended March 31,
1996, were interest on loans receivable and loan fees.
Shareholders' equity on March 31, 1997, was $1,060,308 compared to shareholders
equity of $1,020,419 on March 31, 1996.
Inflation has had no significant impact upon the operating overhead, lending or
investing activities of the company. Management anticipates that interest rates
may slightly increase throughout 1997.
LIQUIDITY AND CAPITAL RESOURCES. As of March 31, 1997, the Company held
$21,988 in cash accounts (including interest bearing accounts) to fund loans and
operating expenses. The Company has available a line of credit in the amount of
$300,100 at a rate of Prime plus 1.5 percent, $94,821 was drawn against at
quarter end. At March 31, 1997, current portions of loans receivable totalled
$546,631. No extraordinary capital expenditures were anticipated at quarter
end. Management believes that existing cash, the line of credit, and cash
generated from operations will be sufficient to allow the Company to meet its
obligations as they come due.
At March 31, 1997, the largest asset items consisted of cash and loans
receivable, net of reserve, totalling $1,180,195 out of $1,224,775 total
assets. At March 31, 1996, the largest asset items consisted of cash and loans
receivable, net, totalling $1,084,529 out of $1,114,836 total assets.
Part II - OTHER INFORMATION
Item 1. Legal Proceedings. None.
Item 2. Changes in Securities. None.
Item 3. Defaults Upon Senior Securities. None.
Item 4. Submission of Matters to a Vote of Security Holders. None.
Item 5. Other Information. None.
Item 6. Exhibits and Reports on Form 8-K. 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.
FOR THE IDAHO COMPANY
Diane Rigby
Vice President
Date: April 25, 1997