UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. 1)
Commission File Number 1-10676
Filed by the Registrant [X] Filed by a Party other than the
Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-12
THE COEUR d'ALENES COMPANY
(Name of Registrant as Specified In Its Charter)
________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(I)(1) and 0-11.
1) Title of each class of securities to which Transaction
applies:
_________________________________________________
2) Aggregate number of securities to which Transaction
applies:
_________________________________________________
3) Per unit price or other underlying value of Transaction
computed pursuant to Exchange Act Rule 0-11 (set forth
the amount on which the filing fee is calculated
And state how it was determined):
_________________________________________________________
4) Proposed maximum aggregate value of Transaction:
__________________________________________________
5) Total fee paid:
__________________________________________________
[ ] Fee previously paid with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
1) Amount Previously Paid ______________
2) Form, Schedule or Registration Statement No.:
______________________
3) Filing Party
__________________________________________________
4) Date Filed: ______________________________
THE COEUR d'ALENES COMPANY
3900 E Broadway
Spokane, WA 99202
(509) 924-6363
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
DATE AND TIME: 1:30 P.M., Pacific Standard Time on Monday, May
28, 2002.
PLACE: 3900 E. Broadway, Spokane, WA 99202
MAILING ADDRESS: P O Box 2610 Spokane, WA 99220-2610
Proxies, Solicitation and Voting
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of proxies in the
accompanying form to be used at the Annual Meeting of
Shareholders on May 28, 2002. It was mailed to shareholders on
or about April 26, 2002. Properly executed and dated proxies
received will be voted in accordance with instructions thereon.
If no instructions are given with respect to the matters to be
acted upon, the shares represented by the proxy will be voted for
the proposal to amend the Company's articles of incorporation to
effect a reverse stock split followed by a forward stock split of
the Company's common stock, for the election of the nominees for
Directors designated below, for the approval of the appointment
of BDO Seidman as the independent certified public accountants of
The Coeur d'Alenes Company ("Cd'A" or the "Company") and, as to
any other business that comes before the meeting, in the manner
deemed in the best interests of the Company by the persons named
in the proxy.
Shareholders may vote in person or by proxy. A shareholder
giving a proxy may revoke it at any time before it is exercised
by filing with the Secretary of the Company an instrument of
revocation or a duly executed proxy bearing a later date. A
proxy may also be revoked by attending the Annual Meeting of
Shareholders and voting in person. Attendance at the Annual
Meeting of Shareholders will not in and of itself constitute the
revocation of a proxy.
As of the record date, April 1, 2002, the Company had outstanding
and entitled to vote 5,335,530 shares of Common Stock, each of
which is entitled to one vote on each matter to be voted on at
the meeting. The Articles of Incorporation of the Company state
that shareholders are not entitled to exercise cumulative voting
rights for the election of Directors.
PROPOSAL NO. 1
AMENDMENT OF THE COMPANY'S
ARTICLES OF INCORPORATION
TO EFFECT A REVERSE STOCK SPLIT FOLLOWED BY A FORWARD
STOCK SPLIT OF THE COMPANY'S COMMON STOCK
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE MERITS OR FAIRNESS OF
THE TRANSACTION OR THE ACCURACY OR ADEQUACY OF THE DISCLOSURES IN
THIS PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
SPECIAL FACTORS
As presented in Proposal No. 1, the Board of Directors has
authorized and unanimously recommends that the Shareholders
approve a reverse 1 for 1,000 stock split followed immediately by
a forward 1,000 to 1 stock split of the Company's common stock.
A summary of the terms of the Transaction is as follows:
The purpose of the Transaction is to cash out Shareholders
holding less than one thousand (1,000) shares of common
stock in a record or nominee account at 6:01 p.m. on June
12, 2002 (the "Effective Time"); the Transaction is being
undertaken at this time in order to provide small,
unaffiliated shareholders with an economic means of
liquidating their shares, as well as reducing the Company's
expense of compliance with federal securities laws, (For
additional information, see discussion in the section
entitled "Reasons for Transaction", page 10;
The ratio for the reverse split is one (1) share for every
one thousand (1,000) shares beneficially owned at the
Effective Time; (For additional information, see discussion
in section entitled "Structure of the Transaction on page
10;
Shareholders who are cashed out will receive $0.25 for each
share beneficially owned the moment before the Effective
Time; the Directors believe that the purchase price is
fair, as it is higher than the fair market value determined
by an appraisal received by the Company. (For additional
information, see discussion in section entitled "Affect of
the Transaction on Company Shareholders" at page 13;
The Transaction must be approved by a majority of the shares
of common stock including shares owned by Shareholders who
are affiliated with the Company as officers, Directors or
employees;
If the Transaction is approved, then the Company intends to
file a certification of termination of registration of its
common stock with the Securities and Exchange Commission and
the Company will cease to be a reporting company; Officers,
Directors and holders of 10% or more of the outstanding
shares of common stock also will not be subject to other
provisions of federal securities law. (For additional
information, see section entitled "Effect on Shareholders"
at page 8 and "Affect of the Transaction on Company" page
15;
The Transaction, if approved, will not have any material
effect upon Shareholders beneficially owning one thousand
(1,000) or more shares of the Company's common stock; the
Directors determined on January 28, 2002 that $0.25 per
share was a fair purchase price. (For additional
information, see section entitled "Effect on Shareholders at
page 8.
If the Transaction is approved, small Shareholders
(thereafter referred to as Cashed-Out Shareholders) will
have dissenter appraisal rights under Idaho law; a Cashed-
Out Shareholder, however, must have sent a notice to the
Company prior to the meeting and not voted for the
Transaction. (For additional information, see section
entitled "Dissenter's Appraisal Rights" on page 19.
The purpose of the Transaction is to eliminate the cost
associated with administering a large number of shareholder
accounts with fewer than 1,000 shares. As an alternative, the
Company has offered several programs allowing shareholders to
tender their shares to the Company, but has had limited success
in reducing the total number of accounts with small holdings.
The Company will benefit as a result of a substantial cost
savings and the small shareholders will benefit from the ability
to cash out their holdings without incurring a sales expense.
There will be no material effect on the remaining shareholders,
whether affiliated or unaffiliated. The only detriment to the
Company and remaining shareholders will be the cost associated
with the Transaction. The shareholders have received very little
benefit from the "public market" for the stock, as there has been
very limited activity since 1993. The cashed out shareholders
will not be harmed as the net cash to the shareholder exceeds
what is available in the open market. The small shareholders who
are cashed out will be subject to the capital gains tax rules in
effect at the time of the Transaction. The Company has chosen
this time for this Transaction because in the face of operating
losses, the Company has to find ways to cut the expense load
while still maintaining operations at a level that will allow the
Company to participate in a market recovery.
Mr. Coulson, the Directors and Management of the Company believe
this Transaction is fair to all unaffiliated shareholders of the
Company. The small shareholders currently have no way to
liquidate their investment in the Company without incurring costs
that are disproportionate to the overall value of the stock.
This Transaction provides a method to cash out these
shareholders. As explained on page 11, the Directors declined to
accept the conclusion presented in a going concern valuation
study and report from an independent appraiser that the going
concern value is $0.08 per share. The Directors decided that
$0.25 per share was a fair price. Over the last two years, the
range of high and low bids has been $0.31 to $0.05. Market price
is not a relevant measure of fairness, as there is not an active
trading market. Because of significant losses incurred in fiscal
2001 and continuing in fiscal 2002, Mr. Coulson and management do
not believe the price of a stock trade that occurred two years
ago represents fair value nor is it relevant in determining the
fairness of the price to the unaffiliated shareholders. Over the
last five years, after tax earnings per share have averaged $0.02
and $0.01 over the last three years. At $0.25 per share, the
purchase price represents twelve and one half times average after
tax net income per share based on the last five years and twenty
five times average after tax net income per share based on the
last three years. Book value as of December 31, 2002 was
approximately $2,927,000, or $0.55 per share. The purchase price
represents roughly 50% of current book value. Liquidation value
would likely be half of a going concern value as there would be
considerable expense associated with winding down operations for
closure. Over the last two years, the Company has purchased a
small number of shares through tender offers at purchase prices
ranging from $0.43 to $0.58. There have been no firm offers by
any unaffiliated party regarding mergers or acquisition of stock
or assets during the past two years. Mr. Coulson, Management and
the Directors did not attempt to assign any weight to the various
factors in concluding that the Transaction is fair to
unaffiliated shareholders.
This Transaction will not have a material effect on shareholders
holding 1,000 or more shares of the Company's stock. The Company
will no longer be a registered, reporting Company; without an
active trading market over the last ten years, however, the
registration has not provided a material benefit to the Company
or its shareholders.
No Director dissented or abstained from voting on the
Transaction. The Transaction does not require the approval of a
majority of the unaffiliated shareholders voting as a separate
class.
A majority of the Directors who are not employees of the Company
has not retained an unaffiliated representative to act solely on
behalf of unaffiliated shareholders for purposes of negotiating
the terms of this Transaction; neither the Company nor Mr.
Coulson intend to grant access to Company files to unaffiliated
Shareholders (except to the extent such access exists for all
shareholders under Idaho law), to provide counsel to unaffiliated
Shareholders at Company expense, to obtain appraisal services or
to prepare a report concerning the fairness of the Transaction.
Mr. Coulson and the Company believe that the Transaction is
procedurally fair to unaffiliated small shareholders, because the
Directors understand their fiduciary responsibilities, have
authorized several tender offers to small shareholders
previously, and have tried to establish active trading markets.
Dissenter appraisal rights also are available.
This Transaction was approved by all the Directors who are not
employees of the Company.
There have been no firm offers made by an unaffiliated person
during the last two years to acquire the Company or a significant
part of the Company's assets.
The Company commissioned an independent valuation of the
Company's stock in August, 2001. The resulting report was
prepared by Cronkite and Kissell Business Valuation and Financial
Advisory Services, 1888 Century Park East, Suite 1900, Los
Angeles, CA 90067, who have significant valuation experience
including an emphasis on accounting, finance and legal. The
Company selected this firm because of their experience with the
steel fabrication industry. The report was prepared by David
Kissell, ASA and Helena Nam Reich, ASA. No relationship with
this firm existed before the commission to prepare a valuation
report and no relationship is contemplated for the future. The
report concluded that the shares of common stock that represent a
minority interest have a fair market value of $0.08 per share.
Since the report did not compare the Company to other companies
of similar size, the Board of Directors felt that the discounts
for lack of marketability and lack of control used in the report
were questionable; consequently, the Directors did not accept the
conclusions set forth in the report. The following is a summary
of the report issued by Cronkite & Kissell:
Cronkite and Kissell met with certain members of
the senior management of the Company and
discussed the operations, financial condition,
future prospects and projected operations and
performance of the Company. They conducted a
review of the Company's internally prepared
financial statements for the eleven months ended
August 25, 2000 and 2001 and the audited
financial statements for the five fiscal years
ended September 30, 2000. They reviewed
publicly available financial data for certain
companies that they deemed comparable to the
Company and conducted such other studies,
analyses and inquiries as they deemed
appropriate. Cronkite and Kissell conducted a
market approach and an income approach analysis
along with cash free debt free working capital
and weighted average cost of capital analyses
and applied a discount for lack of control and a
discount for lack of marketability. The Company
imposed no limitations on the appraisal process.
In the opinion of Cronkite and Kissell, as of
August 31, 2001, the fair market value of the
common stock of The Coeur d'Alenes Company on an
aggregate minority interest basis is reasonably
stated in the amount of Four Hundred Forty Four
Thousand Dollars ($444,000) or approximately
$.08 per share based on 5,340,804 common shares
issued and outstanding.
A copy of this report will be provided without charge
to any shareholder upon written request.
Subject Company Information
This Transaction is being conducted by the issuer:
THE COEUR D'ALENES COMPANY
3900 E Broadway
Spokane, WA 99220-2610
(509) 924-6363
Identify and Background of Filing Person
The filing person is the subject company; because he is an
affiliated shareholder Jimmie T. G. Coulson also is deemed to be
a filing person;
Directors:
Jimmie T G Coulson, Director, President/Chief Executive
Officer ("CEO")
P O Box 2610
Spokane, WA 99220-2610
(509) 924-6363
Wendell J Satre, Director
2822 E Snowberry Lane
Spokane, WA 99223
(509) 536-5627
Marilyn Schroeder, Director, Vice President/Chief
Financial Officer ("CFO")
P O Box 2610
Spokane, WA 99220-2610
(509) 924-6363
Robert P Shanewise, Director
921 W Comstock Court
Spokane, WA 99203
(509) 443-1944
Lawrence A Stanley, Director
Empire Bolt and Screw
1501 E Trent
Spokane, WA 99202
(509) 534-0636
Officers: Jimmie T G Coulson, Director, President/CEO
P O Box 2610
Spokane, WA 99220-2610
(509) 924-6363
Lawrence A Coulson, Vice President/GM Stock Steel
P O Box 2610
Spokane, WA 99220-2610
Marilyn Schroeder, Director, Vice President/CFO
P O Box 2610
Spokane, WA 99220-2610
(509) 924-6363
Information concerning the principal occupation and employment
during the last five years is set forth in Proposal No. 2 of this
proxy statement at page 20. None of these individuals has been
convicted in a criminal proceeding nor been a party to a judicial
or administrative proceeding in the last five years. All of
these individuals are United States Citizens.
The Board of Directors has authorized and unanimously recommends
that the Shareholders approve a reverse 1 for 1000 stock split
followed immediately by a forward 1000 for 1 stock split of the
Company's common stock (together, the "Transaction"). As
permitted under Idaho law, Shareholders of the Company whose
shares are converted into less than one share in the reverse
split portion of the Transaction will receive cash payments equal
to the value of their fractional interests determined in the
manner described below. The Transaction will include shares of
common stock held in a nominee account, as well as shares
registered in the name of a Shareholder.
If approved, the Transaction will take place on June 12, 2002.
For the Transaction to be approved, a majority of the
Shareholders entitled to vote at the Meeting, including
Shareholders who are affiliated with the Company, must approve
the amendments to the Company's Articles of Incorporation
attached hereto as Exhibit A; the Company anticipates that the
Shareholders listed in the Security Ownership of Management
section on page 25.will vote in favor of the Transaction.
EFFECT ON SHAREHOLDERS:
If approved at the meeting, the Transaction will effect
unaffiliated Shareholders holding less than 1,000 shares of
common stock in a record account or in a nominee account at the
close of business on June 12, 2002. Unaffiliated Shareholders
holding common stock in street name through a nominee (such as a
bank or broker) will be effected in the same manner as
Shareholders whose shares are registered in their name. Such
shares will be cashed out by the Company at a price of $0.25 for
each share beneficially owned by an unaffiliated Shareholder
prior to the effective time of the reverse split; the Directors
have determined that $0.25 represents a fair value for the
cashed-out shares. (See, Structure of the Transaction below.)
No commission or other fee will be charged to the Shareholders on
this cash-out. The purchase price will be paid when the
certificates for such shares are delivered to the Company. Such
shares will have no continuing interest in the Company after the
Transaction whether or not such shares are delivered to the
Company.
The Directors believe that the Transaction will provide a
significant benefit to the unaffiliated Shareholders, as it
provides a method for the unaffiliated Shareholders owning less
than 1,000 shares to receive cash for their shares without
incurring high brokerage costs. Because affiliated Shareholders
own or control 64.95% of the outstanding shares of the Company's
common stock, it is difficult for unaffiliated, small
Shareholders to participate in or have an effect upon management
of the Company. See also, Background and Purpose of the
Transaction, page 12.
After the Transaction is completed, the unaffiliated Shareholders
will not have an equity interest in the Company. Management does
not have any basis upon which to speculate concerning the future
fair market value of its shares of common stock. The general
downturn in the economy and the closure of the aluminum smelters
in the northwest in 2000 and 2001, among other things caused the
Company to incur a net loss for the fiscal year ended September
29, 2001 of $132,171. Management has been following an
aggressive cost cutting program since mid-2000; costs reduced and
steps taken, include: merging the wholly owned subsidiary back
into the parent company to reduce overhead, cutting staff by 30%,
reducing inventories to lower carrying costs, postponing
equipment purchases and putting idled equipment up for sale .
Eliminating the projected cost of $43,500 related to small
shareholders and SEC registration is another cost reduction
approach. The affiliated Shareholders and Directors understand
the risks facing the Company in the future. The Directors do not
believe that the small unaffiliated Shareholders should be
subject to the Company's future uncertainties. The Directors do
not believe that there is any detriment to the Shareholders in
this Transaction.
If the Transaction is completed, affiliated Shareholders will own
65.73% of the outstanding shares of common stock. See Affects of
the Transaction on Company Shareholders, page 13 for effect of
the Transaction on the affiliated Shareholders, increased
interest in the net book value and net earnings/loss of the
Company.
The Transaction will have no net effect on Shareholders holding
1,000 or more shares of the Company's common stock whether held
of record or in a nominee account with a bank or broker.
Continuing Shareholders will no longer receive whatever benefits
result from the reporting system, including the continued filing
of the annual report on Form 10-KSB and quarterly filings on Form
10-QSB. If the Transaction is approved, then the Company intends
to withdraw its registration of the common stock with the
Securities and Exchange Commission and cease to be a reporting
company. If the Company's registration with the SEC pursuant to
Section 12(g) of the Securities Exchange Act of 1934 (the "SEA")
is withdrawn, then officers, Directors and shareholders owning
more than 5% of the outstanding shares of the Company's common
stock will not be required to file reports presently required by
Sections 13 and 16 of the SEA. The Company will also not be
required to file proxy material with the SEA pursuant to Section
14 of the SEA.
REASONS FOR THE TRANSACTION:
The Company, acting through its Directors, including all
Directors who are not employees of the Company, and Mr. Coulson
recommend approval of the Transaction for the following reasons,
which are described in more detail under "Background and Purpose
of the Transaction" below:
As a result of the Company's merger with Conjecture, Inc. in
1993, the Company has a large number of Shareholders holding
a small number of shares. As of March 1, 2002, 599 of the
721 Shareholders of record of the Company held less than
1,000 shares. These shares constituted only 63,287 (1.18%)
of the total 5,335,530 shares outstanding at the time. Of
these 599 shareholders, 382 own 40 or fewer shares resulting
in a value of $10.00 or less. Continuing to maintain
accounts for these Shareholders and mailing them notices and
financial information costs the Company a substantial amount
each year. The Transaction will reduce the number of
Shareholders with small accounts and result in significant
cost savings for the Company.
In most cases, it is prohibitively expensive for
Shareholders with fewer than a round lot of 1,000 shares to
sell their shares in the limited public market that exists
for the stock. The Transaction provides such Shareholders
with the opportunity to receive cash for their shares
without incurring brokerage fees. If these Shareholders,
however, do not want to cash out their shares, they can
purchase additional shares on the open market to increase
their record account to at least 1,000 shares or, if
applicable, consolidate or transfer record or nominee
accounts held in different names into a single record or
nominee account with 1,000 or more shares. Shareholders
with less than 1,000 shares in a nominee account can
instruct their agent to purchase additional shares; for some
Shareholders, the nominee account could be closed with the
shares consolidated with shares held of record. Such
Shareholders need to complete any purchase or consolidation
prior to the effective time on June 12, 2002.
The Directors and officers of the Company are undertaking
the Transaction at this time because in the face of a
depressed economy and a significant decline in the demand
for the Company's products, the expense associated with
administering these small shareholder accounts is too great
of a burden on cash flow. The Company estimates that the
annual savings from this Transaction will be approximately
$43,500.
STRUCTURE OF THE TRANSACTION
The Transaction includes both a reverse stock split and a forward
stock split of the Company's common stock. If this Transaction is
approved and occurs, the reverse split will occur at 6:00 P.M.
Pacific time on June 12, 2002 (the "Effective Time"). All
Shareholders on June 12, 2002 will receive 1 share of the
Company's common stock for every 1,000 shares of the Company's
common stock held in their record or nominee accounts at that
time. Any Shareholder who has the beneficial interest in fewer
than 1,000 shares of the Company's common stock at the Effective
Time (referred to hereafter as a "Cashed-Out Shareholder"), will
receive a cash payment instead of fractional shares. This cash
payment will be $0.25 per share as determined by the Board of
Directors at regularly scheduled meetings of the Board held on
November 29, 2001 and January 28, 2002. The Directors considered
an independent valuation report prepared by Cronkite and Kissell
that established the value at $.08 per share as of August 31,
2001. The Directors, however, did not accept the conclusions and
recommendations of that report; consequently, it has not been
provided to the Shareholders as part of this proxy statement. As
noted above, a copy will be provided without charge upon written
request. The Directors decided that $0.25 was a more appropriate
value. The minutes of the meeting for this discussion state in
part as follows:
The Board concluded that the Company should
attempt to eliminate the small shareholders
in order to reduce the number of
shareholders to less than 300. The Company
thus would not be required to be a reporting
entity with the Securities and Exchange
Commission. Elimination of the filing
requirements will reduce expenses
significantly. An independent valuation
report by Cronkite and Kissell on the
Company's stock was available for Board use.
This report concluded that the shares of
common stock that represent a minority
interest have a fair market value of $0.08
per share. There was discussion on the lack
of relevance of this report. Since the
report did not compare the Company to other
companies of similar size, the Board felt
that the discounts for lack of marketability
and lack of control used in the report were
questionable; consequently, the Directors did
not accept the conclusions set forth in the
report. A value of twenty-five cents a share,
roughly half of current book value, was
considered and determined by the Directors to
be a fair price.
At the next regularly scheduled Directors meeting held January
28, 2002, the Directors reviewed again their prior conclusion
that $0.25 was the fair market value for the shares. In addition
to the facts examined at the November 29, 2001 meeting, the
Directors noted that, based on the average earnings for the last
five years, the price earnings ratio at that value would be 12.5
to 1. Given no change in business conditions or marketability of
the stock, coupled with the belief that 12.5 x earnings is a fair
price, the Board once again concluded that $0.25 was the fair
market value per share. As required by Idaho law, the Directors
also considered the beneficial effect upon the Company's
customers, vendors, and suppliers of the cost reductions
resulting from the Transaction.
Immediately following the Effective Time for the reverse split,
all Shareholders who are not Cashed-Out Shareholders will receive
1,000 shares of the Company's common stock for every 1 share of
stock they received as a result of the reverse stock split. If a
Shareholder holds 1,000 or more shares in a record or nominee
account prior to the Transaction, any fractional share in those
accounts will not be cashed out after the reverse split and the
total number of shares held in those accounts will not change as
a result of the Transaction.
In general, the Transaction can be illustrated by the following
examples:
Hypothetical Scenario
A is a Shareholder who holds 999 shares of Company stock
in one account as of 6 P.M. on June 12, 2002. Assume the
trading value of A's share is $0.25 per share.
Result
Instead of receiving a fractional share (.999 of a share) of
Company stock after the reverse split, A's 999 shares will be
converted into the right to receive cash. For these 999 shares, A
will receive $249.75, assuming the hypothetical trading value of
$0.25 per share.
Note: If A wants to continue an investment in the Company, A can
buy at least 1 share of stock and hold it in A's record account.
A would have to act far enough in advance of June 12, 2002 so
that the purchase is complete by the close of business on that
date.
Hypothetical Scenario
B has 1 record account and 1 nominee account. As of June 12,
2002, B holds 500 shares of Company stock in one account and 700
shares of stock in the nominee account. B has the beneficial
interest in the shares in both accounts.
Result
B will receive cash payments equal to $0.25 per share for shares
of Company stock in each of the two accounts. B would receive
two checks totaling $300.00 (500 shares x. .25 = $125.00 + 700
shares x .25 = $175.00 $125.00 + $175.00 = $300.00
Note: If B wants to continue an investment in the Company, B can
consolidate/transfer the two accounts prior to June 12, 2002. In
that case, B's holdings will not be cashed out in connection with
the Transaction because B will hold at least 1,000 shares in one
account. B would have to act far enough in advance so that the
consolidation is complete by the close of business on June 12,
2002.
Hypothetical Scenario
C holds 1,001 shares of Company stock in a record account as of
June 12, 2002.
Result
After the Transaction, C will continue to hold all 1,001 shares
of Company stock.; the Transaction will not effect his ownership.
Hypothetical Scenario
D holds 999 shares of Company stock in a nominee account as of
June 12, 2002.
Result
Same result as A above.
BACKGROUND AND PURPOSE OF THE TRANSACTION
The Company has a large number of small shareholders resulting
from the merger with Conjecture, Inc. in 1993. Since that time,
the Company has been able to reduce its total number of
Shareholders by offering several programs that have allowed the
Shareholders to tender their shares to the Company. The Company,
however, still has a large number of Shareholders with less than
1,000 shares.
As of March 1, 2002, 599 Shareholders owned fewer than 1,000
shares of stock. At that time, these Shareholders represented
approximately 83% of the total number of Shareholders of record,
but with ownership less than 2% of the total number of
outstanding shares of the Company's stock. The Transaction will
provide the Cashed-Out Shareholders with a cost-effective way to
cash out their investments, as the Cashed-Out Shareholders will
not have any Transaction costs in connection with the
Transaction. In most other cases, small shareholders would likely
incur brokerage fees disproportionately high relative to the
market value of the shares if they wanted to sell their stock. In
addition, some small shareholders might even have difficulty
finding a broker willing to handle such a small Transaction. The
Transaction, however, eliminates these problems for most small
shareholders. The Company does not believe that there is any
alternative means available at this time to accomplish this
objective for small shareholders.
Moreover, the Company will benefit from substantial cost savings
as a result of the Transaction. The cost of administering each
Shareholder's account is the same regardless of the number of
shares held in each account. Therefore, the Company's cost to
maintain hundreds of small accounts is disproportionately high
when compared to the total number of shares involved.
Because of these disproportionate costs, the Directors believe
that it is in the best interests of the Company and its
shareholders as a whole to eliminate the administrative burden
and costs associated with small shareholders with fewer than
1,000 shares of Company stock.
The Company in the future may pursue alternative methods of
reducing its shareholder base whether or not the Transaction is
approved, including odd-lot tender offers and programs to
facilitate sales by shareholders of odd-lot holdings. There can
be no assurance, however, that the Company will decide to engage
in any such Transactions.
AFFECT OF THE TRANSACTION ON COMPANY SHAREHOLDERS
Shareholders With Fewer Than 1,000 Shares:
If the Company completes the Transaction, Cashed-Out
Shareholders:
Will not receive a fractional share of the Company stock as
a result of the reverse split.
Instead of receiving a fractional share of Company stock,
will receive cash equal to $0.25 for each share owned
beneficially prior to the Effective Time of the Transaction.
After the reverse split, will have no further interest in
the Company with respect to cashed-out shares. These shares
will no longer be entitled to the right to vote as a
shareholder or share in the Company's assets, earnings and
profits.
Will not have to pay any service charges or brokerage fees
in connection with the Transaction.
As soon as practicable after June 12, 2002, will receive
cash for the common stock held immediately prior to the
reverse split in accordance with the procedure described
below.
All amounts owed to Shareholders will be subject to
applicable federal income tax and state abandoned property
laws.
No interest will be paid on cash payments owed as a result
of the Transaction.
If you hold certificated shares:
A Cashed-Out Shareholder with a stock certificate
representing cashed-out shares will receive a transmittal
letter from the Company as soon as practicable after June
12, 2002. The letter of transmittal will contain
instructions on how to surrender stock certificate(s) to the
Company for cash payment. Cash payments will not be made
until the outstanding certificate(s) are surrendered to the
Company together with a completed and executed copy of the
letter of transmittal. Please do not send certificates
until you receive a letter of transmittal.
If you hold shares in a nominee account:
The Company intends for the Transaction to treat
Shareholders holding common stock in street name through a
nominee (such as a bank or broker) in the same manner as
Shareholders whose shares are registered in their names.
Nominees will be instructed to effect the Transaction for
their beneficial holders. Nominees, however, may have
different procedures and Shareholders holding common stock
in street name should contact their nominees.
NOTE:
Shareholders who would be cashed out as part of the Transaction
but want to continue to hold Company stock after the Transaction
may do so by completing any of the following actions by June 12,
2002:
(1) Purchase a sufficient number of shares of Company stock on
the open market and have them registered or deposited so
that they hold at least 1,000 shares in their account
immediately prior to the Effective Time for the reverse
split; or
(2) If applicable, consolidate accounts so that they hold at
least 1,000 shares of Company stock in one record account
immediately prior to the Effective Time.
Shareholders with 1,000 or More Shares:
Shareholders with 1,000 or more shares of common stock as of 6:00
P.M. on June 12, 2002 will first have their shares converted to
one thousandth of the number of shares held immediately prior to
the reverse split. One minute after the reverse split, at 6:01
P.M., such shares will be reconverted in the forward stock split
into 1,000 times the number of shares held after the reverse
split, which is the same number of shares held before the reverse
split. As a result, the Transaction will not effect the number of
shares held by the shareholder who holds 1,000 or more shares
immediately prior to the Effective Time.
If this Transaction had occurred as of December 25, 2001, the
shareholders with 1,000 or more shares would have benefited from
an increase in book value of approximately $0.02 per share. The
Company projects that the operating loss for second quarter will
bring the book value down to $.53 per share. If the cost of this
Transaction, including the payment to cashed out shareholders, is
approximately $30,000, the book value per share after the
Transaction will also be $.53 per share. Affiliated
shareholders, who currently control 64.95% of the outstanding
common stock, will control 65.73% of the outstanding common stock
after the Transaction. If this Transaction had taken place at
the beginning of fiscal 2000, the loss per share in fiscal 2001
would have been $0.025 instead of $0.024. The earnings per share
would have been $0.029 compared to actual earnings per share of
$0.028. The affiliated shareholders share of the net loss for
2001 would have increased from $85,845 to $86,876. Likewise, the
affiliated shareholders share of the net income from fiscal 2000
would have increased from $100,377 to $101,583. The change is
less than one percent. Mr. Coulson's stock ownership would
increase from 50.56% to 51.15%. His share of the operating loss
for fiscal 2001 would have increased by $779 and his share of the
operating profit for fiscal 2000 would have increased by $912.
Beneficial Owners of Company Stock:
The Transaction will effect shareholders holding Company stock in
street name through a nominee (such as a bank or broker).
Nominees may have different procedures and shareholders holding
Company stock in street name should contact their nominees to
determine how they are effected by this Transaction.
Determination of Cash-Out Price
As explained in the section above entitled Structure of the
Transaction, the cash-out price of the stock will be $0.25 per
share. Under Idaho law, the Company either may arrange for the
sale of these fractional shares or pay cash for their fair value.
If the Transaction is completed, the Directors will elect to pay
cash for the fair value.
AFFECT OF THE TRANSACTION ON COMPANY
The Transaction will effect the registration of the Company's
common stock with the Securities and Exchange Commission (the
"SEC") under the Securities Exchange Act of 1934, as amended.
Following the successful completion of the Transaction, the
Company will file a certification of termination of registration
pursuant to Rule 12g-4, as promulgated by the SEC under the
Securities Exchange Act of 1934. The Company will cease to be a
reporting company. The Company's listing of common stock on the
NASDAQ Bulletin Board will be discontinued. The Company will not
be required to file annual or quarterly reports with the SEC for
any reporting period ending after the date that the certification
is filed. Information contained in annual or quarterly reports
will not be available on the internet.
The Company's Articles of Incorporation currently authorize the
issuance of 10 million shares of common stock having no par
value. The Amendment to the Articles of Incorporation will reduce
the authorized shares to 1,000 shares as of the Effective Time,
with the number of authorized shares returned to 10,000,000
shares moments thereafter. (See, Exhibit A) The total number of
outstanding shares of Company common stock will be reduced by the
number of shares held by Cashed-Out Shareholders immediately
prior to the Effective Time. Based on the Company's best
estimates, if the Transaction had taken place as of January 1,
2002, the number of outstanding shares of common stock would have
been reduced by approximately 63,287 assuming only shareholders
of record are effected by the Transaction and that no
Shareholders took steps to retain their shares. The number of
holders of record of Company common stock then would have been
reduced from approximately 721 to 122 or by approximately 599
shareholders. Consequently, the Company expects to be able to
withdraw its registration with the SEC, even if shareholders with
less than 1,000 shares in a nominee account are not included in
the Transaction.
The Company has no current plans to issue additional shares of
common stock. Unless legally required to do so, the Directors
will not seek further shareholder action before issuing stock.
The Articles of Incorporation do not provide shareholders with
any preemptive right to acquire shares.
The total number of fractional shares that will be purchased and
the total cash to be paid by the Company are unknown. If the
Transaction, however, had been completed as of January 1, 2002,
the cash payment that would have been issued to those Cashed-Out
Shareholders who are Shareholders of record would have been
$15,822 based on 63,287 shares held by 599 record shareholders.
The actual amounts will depend on the number of Cashed-Out
Shareholders on June 12, 2002, which may vary from the number
identified on January 1, 2002. The Company also cannot determine
at this time the number of Shareholders beneficially owning less
than 1,000 shares whose shares are held in a nominee account.
Any such Shareholders subject to the cash-out would be added to
the totals in this paragraph. All funds required to complete the
Transaction will be provided by the general operations of the
Company. The Company estimates that the expenses of the
Transaction, excluding estimated postage expense for the proxy
statement for this proposal and the printing cost of the Annual
Report, will not exceed $15,000.00. The Company will not borrow
funds specifically for the Transaction.
The Company's shares of common stock will continue to have no par
value.
STOCK CERTIFICATES
The Transaction will not effect any certificates representing
shares of common stock held by owners of 1,000 or more shares
immediately prior to the reverse split. Old certificates held by
any of these Shareholders will continue to evidence ownership of
the same number of shares as is set forth on the face of the
certificate.
As described above, any Cashed-Out Shareholder with share
certificates will receive a letter of transmittal after the
Transaction is completed. These Shareholders must complete and
sign the letter of transmittal and return it with their stock
certificate(s) to the Company before they can receive cash
payment for their shares.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Certain federal income tax consequences to the Company and
shareholders resulting from the Transaction are summarized below.
This summary is based on existing US Federal income tax law,
which may change, even retroactively. This summary does not
discuss all aspects of federal income taxation that may be
important to shareholders in light of their individual
circumstances. Many shareholders (such as financial
institutions, insurance companies, broker-dealers, tax exempt
organizations and foreign persons) may be subject to special tax
rules. In addition, this summary does not discuss any state,
local, foreign or other tax considerations. This summary assumes
that shareholders have held and will hold their shares as capital
assets for investment purposes under the Internal Revenue Code of
1986, as amended. Shareholders should consult their tax advisors
as to the particular federal, state, local, foreign, and other
tax consequences, in light of their specific circumstances.
The federal income tax consequences to shareholders also will
depend upon whether they are continuing or Cashed-Out
Shareholders, as discussed below.
Federal Income Tax Consequences to Shareholders Who Are Not
Cashed Out by the Transaction:
Any shareholder who (1) continues to hold Company stock
immediately after the Transaction, and (2) receives no cash as a
result of the Transaction, will not recognize any gain or loss in
the Transaction and will have the same adjusted tax basis and
holding period in his Company stock as he had in such stock
immediately prior to the Transaction.
Federal Income Tax Consequences to Cashed-Out Shareholders:
A Cashed-Out shareholder who receives cash in exchange for a
fractional share as a result of the Transaction, will recognize
capital gain or loss. The amount of capital gain or loss
recognized will be the difference between the cash received for
cashed-out stock and the Shareholder's aggregate adjusted tax
basis in such stock.
Maximum Tax Rates Applicable to Capital Gain:
Net capital gain (defined generally as total capital gains in
excess of capital losses for the year) recognized upon the sale
of capital assets that have been held for more than 12 months
generally will be subject to tax at a rate not to exceed 20%. Net
capital gain recognized from the sale of capital assets that have
been held for 12 months or less will continue to be subject to
tax at ordinary income tax rates. Capital gain recognized by a
corporate taxpayer will be subject to tax at the ordinary income
tax rates applicable to corporations.
ADDITIONAL INFORMATION
The Company's Annual Report for the fiscal year ended September
29, 2001, has been included with the proxy statement. The
Company currently has fifty-five (55) employees on a full time
equivalent basis. The section entitled "Business of the Issuer",
together with the consolidated financial statements for the
fiscal years ended September 29, 2001 and September 30, 2000,
provide additional information concerning the Company's business,
including products currently distributed, the methods of
distribution, principal markets and effective environmental laws
and regulations. The information set forth in the Annual Report
is important for every Shareholder to review. The Annual Report
also contains a description of real property owned and leased by
the Company together with a description of the plant and
facilities of the Company. The Sections of the Annual Report
entitled "Business of Issuer" and "Description of Property" on
pages 2 and 5 of the Annual Report are incorporated herein by
reference. The consolidated financial statements on pages F-1
through F-18 also are incorporated by reference
As of April 1, 2002, the Company had 5,335,530 shares of common
stock issued and outstanding. There is currently no established
public trading market for the Company's common stock.. The range
of high bid and low bid quotations for the Company's common
stock, by quarters, as reported on the over-the-counter market
for the period beginning October 1, 1999 through September 29,
2001, is set forth in dollars per share below:
2001 2000
High - Low High - Low
July 1 - September 30 $.12 - $.05 $.12 - $.12
April 1 - June 30 $.10 - $.10 $.25 - $.12
January 1 - March 31 $.12 - $.10 $.31 - $.12
October 1 - December 31 $.12 - $.12 $.12 - $.12
The source of the above quotations is the Spokane over-the-
counter listing, and the above quotations reflect inter-dealer
prices, without retail mark-up, markdown or commission and may
not necessarily represent actual Transactions. In addition, the
lack of an established public trading market for the Company's
common stock should be kept in mind in reviewing the above
quotations. The prices shown are reflective of Transactions for a
limited number of shares.
The Company has not declared or paid any dividend on the shares
of common stock in the last two (2) fiscal years. There also have
not been any changes in or disagreements with the Company's
independent public accountants concerning accounting or financial
disclosures.
The only purchase Transaction during the last two years involving
the Company's common stock and Jimmie Coulson was a single
Transaction on December 21, 2001. The Transaction was an
unsolicited offer to sell to Company employees the shares of
common stock held by Eliot Investments Limited Partners. This
Partnership offered to sell the shares quoted at the market
price, which at that time was $0.05. The total shares involved
were 4,205. Of those 4,205, Jimmie Coulson acquired 189 shares
which he subsequently gifted to his grandchildren.
DISSENTERS' APPRAISAL RIGHTS
In accordance with Section 30-1302 of the Idaho Code, Cashed-Out
Shareholders have the right to dissent from the Transaction and
to receive payment in cash for the "fair value" of those shares
voted against the Transaction. Since this brief summary is not a
complete statement, a Shareholder intending to dissent from the
Transaction should refer to Section 30-1-1301 et seq. of the
Idaho Code attached to this Proxy Statement as Appendix A.
A Shareholder who wishes to assert dissenters' rights must (a)
send a written notice to the Company at P. O. Box 2610, Spokane,
WA 99210-2610, Attention: Jimmie T. G. Coulson, President,
prior to the time the vote is taken, that the Shareholder intends
to demand payment for his shares if the Transaction is completed;
and (b) not vote his shares in favor of the proposed action. If
the Transaction is authorized by the Shareholders at the Annual
Meeting, then the Company will deliver a written Dissenters'
Notice to all Shareholders who submitted their notice of intent
and did not vote in favor of the Transaction. The Company's
notice will be sent within ten (10) days of the Meeting date and
will contain the information set forth in Section 30-1-1322 (see,
Appendix A-4). The Shareholder then must submit a demand for
payment in the form required by Section 30-1-1323 (see, Appendix
A-5) and the Company thereafter will forward payment to the
dissenter of the amount that the Company estimates to be the fair
value of the dissenter's shares, plus accrued interest. The
Company does not have any reason to believe that the fair value
as determined for dissenters' shares will be any different than
the fair value set by the Directors for the Transaction;
consequently, the amount sent to dissenting shareholders is
anticipated to be an amount equal to $0.25 per share for each
share held by the dissenting shareholder prior to the Effective
Time. If the dissenter decides not to accept the payment
received from the Company, then the dissenter may notify the
Company in writing of its own estimate of the fair value of the
shares and demand payment of the estimated amount. Such demand
from the dissenter must be made within thirty (30) days after the
Company has made or offered payment for his shares. If the
dissenter does not accept the Company's payment and the Company
does not agree with the dissenter's estimate of the fair value,
then the Company will commence a proceeding in the Idaho District
Court for the County of Kootenai. The Court may appoint
appraisers and shall assess the costs of the proceeding,
including reasonable compensation and expenses of appraisers
appointed by the Court, against the Company unless the Court
determines that the dissenters acted arbitrarily, vexatiously, or
not in good faith.
RESERVATION OF RIGHTS
The Board of Directors reserves the right to abandon the
Transaction without further action by the Shareholders at any
time before the filing of the amendments with the Secretary of
State, even if the Transaction has been authorized by the
Shareholders at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR PROPOSAL NO.
1 TO AMEND THE ARTICLES OF INCORPORATION TO EFFECT A
REVERSE/FORWARD STOCK SPLIT.
PROPOSAL NO. 2
ELECTION OF DIRECTORS
The Board of Directors of the Company will be comprised of five
members. The names, ages, business experience during the past
five years and positions of the nominees for Directors are set
forth below. All Directors serve until the next annual meeting
of the Company's shareholders and until their successors are
elected and qualified or until their earlier resignation, removal
or death. Officers are appointed annually by the Board of
Directors at the organizational meeting of the Directors
following the annual meeting of shareholders. There are no
arrangements or understandings between any nominee and any other
nominee pursuant to which the nominee is listed below.
NOMINEES FOR DIRECTORS
NAME AGE POSITION TERM SERVED
Jimmie T.G. Coulson 68 Director, Jan. 1976
5920 S Phalon Lane President, Jan. 1982
Spokane WA 99223 CEO Jan. 1982
Marilyn A. Schroeder 50 Director, Dec. 1991
N. 15406 Lloyd Lane Treasurer, Jan. 1982
Mead WA 99021 CFO Jan. 1982
Vice-President May 1998
Wendell J. Satre 83 Director Mar. 1989
2822 E Snowberry Lane
Spokane WA 99223
Robert P. Shanewise, M.D. 80 Director Mar. 1989
921 West Comstock Ct.
Spokane WA 99203
Lawrence A. Stanley 73 Director Feb. 1997
311 West 32nd Avenue
Spokane WA 99203
Mr. Coulson has been a Director of Cd'A since January 1976 and
President and Chief Executive Officer of Cd'A since January 1982.
Mr. Coulson also is a Director of Inland Northwest Bank, a
Washington state-chartered commercial bank. He is a member of
the Metals Service Center Institute Planning and Policy committee
and a past Director of Spokane Area Economic Development.
Mr. Satre has been a Director of Cd'A since March 1989. He is a
retired chairman and CEO of Washington Water Power (currently
operating as Avista Corp). He also is a Director and chairman of
Output Technology Corporation, a manufacturer of high speed
printers, president and chairman of the Board of Directors of
Consolidated Electronics, Inc. and a Director of Key Tronic
Corporation where he served as acting president from August 1991
to March 1992.
Ms. Schroeder has been Treasurer and Chief Financial Officer of
Cd'A since January 1982 and has been a Director of Cd'A since
December 1991 and a Vice President of Cd'A since 1998. She also
is a member of the Board of Directors of Associated Industries of
the Inland Northwest and a member of the Metals Service Center
Institute Management Information Committee.
Dr. Shanewise has been a Director of Cd'A since March 1989. Dr.
Shanewise has been an orthopedic surgeon for Orthopedic
Associates, Inc., from 1955 to present. He also was a Director
of Conjecture from 1979 to February 1993 and President of
Conjecture from 1987 to the merger date of February 2, 1993. Dr.
Shanewise is the owner of Moran Vista Assisted Living Facility.
Lawrence A. Stanley is the founder of Empire Bolt and Screw and
has been the CEO since its incorporation in 1974. He also served
as President from 1974 through 1995. He is the immediate past
Chairman of the Board of Avista Corporation, and a current
Director of Output Technology Corporation, a manufacturer of high
speed printers for industry. He is past Chairman of the
Association of Washington Businesses and the Spokane Area Chamber
of Commerce.
The Directors recommend a vote in favor of the nomination of
these Directors.
COMPENSATION OF EXECUTIVE OFFICERS
Executive Officers of the Company
The following information is provided about the Company's present
executive officers.
NAME AGE POSITION & TERM SERVED
3/28/02
Jimmie T.G. Coulson 68 Director since January 1976
President and CEO since
January 1982
Marilyn A. Schroeder 50 Director since December 1991
Treasurer and CFO since Jan.
1982.
Vice-President since May 1998
Lawrence A. Coulson 43 General Manager of Stock Steel
since Oct. 1986
Vice President of Stock Steel
Since January 1990
Joel E. Simpson 44 Vice President since August
1995
General Manager Cd'A Ind Fab
Nov. 1993 - September 2001
Vice President - Special
Accounts Manager
Since October 2001
COMPENSATION
Name & Other Annual
Principal Compensation
Position Yr Salary* Bonus Total
Jimmie Coulson 01 $122,950* 0 0 $120,735
President, CEO 00 $120,735* 0 0 $120,735
99 $112,262* 0 0 $112,262
Based upon salaries paid or accrued during fiscal years ended
September 29, 2001, September 30,2000 and September 25, 1999.
There are no employees other than the CEO who receive
compensation in excess of $100,000 annually. Includes
contribution to employee profit-sharing and 401(k) plan ("the
plan") of $3,398 in 2001, $3,364 in 2000 and $1,785 in 1999. The
plan is qualified under Section 401 and 501 of the Internal
Revenue Code of 1986. All employees are eligible to participate
after one year of service if they are 21 years of age or older
and meet the minimum hours worked requirement. The plan is
funded by discretionary contributions determined by the Cd'A
Board of Directors and as of July 1, 1998, by a 50% match to
employee contributed funds to a maximum of 6% of salary. The
profit-sharing contributions are allocated to participants based
on the participant's salary as a percentage of total salaries of
all participants. Vesting occurs on an incremental basis between
the third and seventh year of service. No distributions were
made to any executive officer during the last three fiscal years
except as required to refund any excess deferrals. During the
last three years the Company made no profit sharing
contributions.
OTHER TRANSACTIONS
Compensation of Directors
Directors who are not officers of the Company are paid $400 for
each regular meeting attended, $200 for each special meeting
attended and $200 for all committee meetings not held in
conjunction with a full Board Meeting.
Committees of the Board of Directors
The following is a list of standing committees and members of
each:
NO. MEETINGS FYE
COMMITTEE MEMBERS SEPT 2001
EXECUTIVE * Jimmie Coulson 0
Wendell J. Satre 0
Robert P. Shanewise 0
Lawrence A. Stanley
0
AUDIT * Lawrence A. Stanley 1
Robert P. Shanewise 1
Wendell J. Satre 1
COMPENSATION * Robert P. Shanewise 1
Lawrence A. Stanley 1
Wendell J. Satre 1
NOMINATING * Wendell J. Satre 1
Lawrence A. Stanley 1
Jimmie T. G. Coulson 1
Robert P. Shanewise 1
* Committee Chairperson
The duties of the Committee are as follows:
Executive Committee. The Executive Committee shall have the full
authority of the Board of Directors to take action upon such
matters as may be referred to the Committee by the Board of
Directors.
Audit Committee. The Audit Committee meets with the independent
public accountants at least annually to review financial data and
address issues relevant to the operation of the Company.
Compensation Committee. The Compensation Committee receives and
considers recommendations from the chief executive officer for
salaries and other forms of compensation for the executive
officers and makes recommendations to the Board of Directors on
these matters.
Nominating Committee. The responsibilities of the Nominating
Committee include recommending persons to act as Directors,
preparing for and recommending replacements for any vacancies in
Director positions during the year, and initial review of policy
issues regarding the size and composition of the Board of
Directors.
There were four regularly scheduled Board meetings during the
fiscal year ended September 30, 2001 All Directors were in
attendance at all regular meetings, including Committee meetings.
All committee meetings were attended by the full committee.
Audit Committee Report
The Audit Committee of the Board of Directors is composed of
three Directors who are independent Directors as defined by the
applicable rule of the NASD listing standards. The Board of
Directors has not adopted a written charter for the Audit
Committee.
The responsibilities of the Audit Committee include recommending
to the Board of Directors an accounting firm to be engaged as the
Company's independent accountants. Management is responsible for
the Company's financial statements and the financial reporting
process, including the system of internal controls. The
independent accountants are responsible for expressing an opinion
on the conformity of those audited financial statements with
accounting principles generally accepted in the United States.
The Audit Committee's responsibility is to oversee these
processes and the activities of the Company's internal audit
department.
In this context, the Audit Committee has met and held discussions
with management and the independent accountants. Management
represented to the Audit Committee that the Company's
consolidated financial statements were prepared in accordance
with generally accepted accounting principles, and the Audit
Committee has reviewed and discussed the consolidated financial
statements with management and the independent accountants. The
Audit Committee discussed with the independent accountants
matters required to be discussed by Statement On Auditing
Standards No. 61, "Communication with Audit Committees".
The Company's independent accountants also provided to the Audit
Committee the written disclosures and the letter required by
Independent Standards Board Standard No. 1, "Independence
Discussions with Audit Committees". The Audit Committee also
considered the compatibilities of non-audit services with the
accountants' independence.
In fulfilling its oversight responsibilities, the Audit Committee
has reviewed and discussed with management and the independent
accountants the Company's audited financial statements contained
in the Company's Annual Report on Form 10-KSB for the year ended
September 29, 2001. The Audit Committee recommended that the
Board of Directors include the audited consolidated financial
statements in the Company's Annual Report on Form 10-KSB for the
year ended September 29, 2001, as filed with the Securities and
Exchange Commission.
The Audit Committee discussed with the Company's independent
accountants the overall scope and plans for their audit. The
Audit Committee meets with the internal and independent
accountants, with and without management present, to discuss the
results of their examinations, their evaluations of the Company's
internal controls and the overall quality of the Company's
financial reporting.
This report is submitted by the Audit Committee. Its members
are:
Lawrence A. Stanley, Chairman
Wendell J. Satre
Robert P. Shanewise
Filing Requirements
With respect to the Company's most recent fiscal year, the
records of the Company indicate that the Directors and executive
officers have filed all required Forms 3, 4 and 5 on a timely
basis.
SECURITY OWNERSHIP AND CERTAIN
BENEFICIAL OWNERSHIP OF MANAGEMENT
The following table sets forth the beneficial ownership of
Cd'A Common Stock as of December 2, 2001 by each person known by
Cd'A to be a beneficial owner of 5% or more of Cd'A Common Stock.
As of such date, a total of 5,335,530 shares of Cd'A Common
Stock were outstanding. This disclosure is made pursuant to
certain rules and regulations promulgated by the Securities and
Exchange Commission and in certain instances the number of shares
shown as being beneficially owned may not be deemed to be
beneficially owned for other purposes.
Title of Name and Address Amount and Percent of
Class Of Beneficial Owner Nature of Class
Beneficial
Ownership
Common Stock Jimmie & Arlene Coulson
5920 S Phalon Lane
Spokane WA 99223 2,697,141 50.56
Common Stock Lawrence A. Coulson*
South 5711 Corkery Road
Spokane WA 99223 393,427 7.37
* Lawrence Coulson is the son of Jimmie Coulson
(b) SECURITY OWNERSHIP OF MANAGEMENT.
The following table sets forth the beneficial ownership of
Cd'A Common Stock as of December 2, 2001 by each Director and
executive officer of Cd'A, named individually, and all Directors
and executive officers of Cd'A as a group, without naming them.
This disclosure is made pursuant to certain rules and regulations
promulgated by the Securities and Exchange Commission and in
certain instances the number of shares shown as being
beneficially owned may not be deemed to be beneficially owned for
other purposes.
Title of Name and Address of Amount and
Class Beneficial Owner Nature of Percent of
Beneficial Class
Ownership
Common Stock Jimmie & Arlene Coulson
5920 S Phalon Lane
Spokane WA 99223 2,697,141** 50.56
Common Stock Lawrence A. Coulson
5711 S. Corkery Road
Spokane WA 99223 393,427** 7.37
Common Stock Marilyn A. Schroeder
N. 15406 Lloyd Lane
Mead WA 99021 249,791 4.68
Common Stock Wendell J. Satre
2822 E Snowberry Lane
Spokane WA 99223 389 0*
Common Stock Joel E. Simpson
E. 1306 Sara Lane
Spokane WA 99223 27,244 0*
Common Stock Robert Shanewise, M.D.
921 W. Comstock Court
Spokane WA 99203 96,809 1.81
Common Stock Lawrence A. Stanley
311 West 32nd
Spokane WA 99203 389 0*
Common Stock All Directors & executive
officers as a group
(7 persons) 3,465,190 64.95
* Indicates less than 1% of outstanding shares of class.
** Includes 1/3 ownership (11,904 shares) of CINV , a family
partnership with 35,714 shares
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
During October, 1993, the Company sold $250,000 convertible
debentures in a private placement. The debentures were due on
October 31, 1998 but the initial term was extended for one year
through October 30, 1999. The interest rate was 8-3/4% for the
period of the extension. The debentures were secured by a second
lien on the real estate. Reference is made to the form 10-KSB
for the fiscal year ended September 29, 2001, Item 2, which is
incorporated by reference herein.
PROPOSAL NO. 3
SELECTION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
BDO Seidman has examined the financial statements of the Company
starting with the fiscal year ended September 30, 1989 through
fiscal year ended September 29, 2001. The Directors recommend
that their appointment for fiscal 2002, (the period ending
September 28, 2002) be approved by the shareholders. If a
majority of the shares present at the meeting fails to approve
the appointment of BDO Seidman as independent certified public
accounts, the Board of Directors will consider the selection of
another accounting firm. The principal accountant for the
current year and the most recently completed year will not be
present at the annual meeting of shareholders. A representative
of BDO Seidman is not expected to be present at the annual
meeting of shareholders. Therefore BDO Seidman will not have the
opportunity to make a statement or respond to questions.
Audit Fees:
The aggregate fees billed by BDO Seidman, LLP for professional
services for the audit of the Company's annual consolidated
financial statements for fiscal 2001 and the review of the
consolidated financial statements included in the Company's
Annual Report on Form 10-KSB for fiscal 2001 were $26,229. Fees
billed by BDO Seidman, LLP for professional services related to
reviews of the financial statements included in the quarterly
Form 10-QSB during the 2001 fiscal year were $7,398.
Financial Information Systems Design and Implementation Fees:
There were no fees billed by BDO Seidman, LLP to the Company for
financial information systems design and implementation for
fiscal 2001.
All other fees:
The aggregate fees billed to the Company for all other services
rendered by BDO Seidman, LLP for fiscal 2001 were $1,525.
The Audit Committee feels that the services rendered by BDO
Seidman are compatible with maintaining the principal
accountant's independence.
SHAREHOLDERS' PROPOSALS FOR 2003 ANNUAL MEETING
Proposals of shareholders intended to be presented at the 2003
Annual Meeting of Shareholders should be submitted by certified
mail, return receipt requested and must be received by the
Company at its headquarters in Spokane, Washington on or before
December 1, 2002 to be eligible for inclusion in the Company's
proxy statements and form of proxy card relating to that meeting.
Shareholder proposals should be submitted to the Secretary of The
Coeur d'Alenes Company, PO Box 2610, Spokane, WA 99220-2610. Any
such proposal should comply with the Securities and Exchange
Commission rules governing shareholder proposals submitted for
inclusion in proxy materials.
FORM 10-KSB FOR THE YEAR ENDED SEPTEMBER 29, 2001
A copy of the Annual Report on Form 10-KSB for the year ended
September 29, 2001 which was filed with the Securities & Exchange
Commission has been included with this proxy statement. Because
of the expense associated with producing and mailing, the
Exhibits have been omitted. Reference is made to the Form 10-
KSB, Part IV, Item 13 (List of Exhibits) which is incorporated
herein by reference. A copy of the exhibits as filed with the
Securities and Exchange Commission, will be sent to shareholders
upon request and upon payment of a reasonable charge. Requests
should be made to:
The Coeur d'Alenes Company
Attn: Arlene Coulson
PO Box 2610
Spokane WA 99220-2610
Reference is made to the Form 10-KSB for the fiscal year ended
September 2001, Item 2 (Description of Property) Item 10 and Item
13 (List of Exhibits) which is incorporated herein by reference.
OTHER MATTERS TO COME BEFORE THE MEETING
No other matters are intended to be brought before the meeting by
the Company nor does the Company know of any matters to be
brought before the meeting by others. If, however, any other
matters properly come before the meeting, the persons named in
the proxy will vote the shares represented thereby in accordance
with their judgment on any such matters.
By order of the Board of Directors
Arlene Coulson, Secretary
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