1
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 April 30, 1996
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 0-4179
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CAPITAL INVESTMENT OF HAWAII, INC.
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(Exact name of registrant as specified in its charter)
Hawaii 99-0065664
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Suite 1700, PRI Tower, 733 Bishop Street
Honolulu, Hawaii 96813
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (808) 537-3981
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No Change
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Former name, former address and former fiscal year, if changed
since last report.
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. Yes X . No .
----- -----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
There were 1,032,683 shares outstanding of common stock, no par value,
as of April 30, 1996.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CAPITAL INVESTMENT OF HAWAII, INC. & SUBSIDIARIES
Condensed Consolidated Balance Sheets
April 30, 1996 and July 31, 1995
ASSETS
April 30, July 31,
1996 1995
(Unaudited)
----------- -------------
Cash and cash equivalents $2,736,660 1,287,636
Marketable equity securities 42,647 111,046
Receivables:
Trade accounts and notes, less allowance
for doubtful receivables of $33,725
at April 30, 1996 and $31,860 at
July 31, 1995 543,955 1,065,991
Long-term receivables (including current
installments of $4,015 at April 30,
1996 and $360,472 July 31, 1995) 466,934 1,656,314
----------- ----------
Total receivables 1,010,889 2,722,305
----------- ----------
Inventories 64,180 53,113
Developed real estate, less accumulated depre-
ciation of $204,294 at April 30, 1996
and $186,345 at July 31, 1995 1,447,943 1,465,832
Undeveloped land held for sale 134,474 134,474
Other investments:
Real estate 3,691,860
Securities 720,983 808,912
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720,983 4,500,772
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Property and equipment, at cost, less accumulated
depreciation of $1,971,408 at April 30,
1996 and $1,780,476 at July 31, 1995 217,032 300,907
Deferred charges and other assets 128,927 41,668
---------- ----------
$6,503,735 10,617,753
========== ==========
See accompanying notes to consolidated financial statements.
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CAPITAL INVESTMENT OF HAWAII, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
April 30, 1996 and July 31, 1995
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
April 30, July 31,
1996 1995
(Unaudited)
----------- -------------
Indebtedness (current installment maturing
within one-year of $4,605,926 at April 30,
1996 and $5,025,642 at July 31, 1995):
Debentures $2,083,245 2,108,245
Mortgage notes 1,867,130 1,874,247
Other notes, secured 988,633 2,670,016
Other notes, unsecured 422,551 499,605
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Total indebtedness 5,361,559 7,152,113
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Accounts payable, trade 577,400 429,433
Accrued expenses 509,867 607,891
Other payables:
Loans under participation agreement:
Related parties - 1,090,200
Other - 472,420
Other 176,839 740,839
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176,839 2,303,459
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Stockholders' equity (deficiency):
Common stock without par value
Authorized 2,531,765 shares; issued
1,723,765 shares at stated value of
$1 per share. (No shares reserved
for conversion, warrants, options
or other rights) 1,723,765 1,723,765
Additional paid-in capital 469,321 469,321
Retained earnings 1,719,134 1,923,877
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3,912,220 4,116,963
Deduct cost of 691,082 common shares
in treasury (4,057,487) (4,057,487)
Unrealized gain on marketable equity securities 23,337 65,381
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Net stockholders' equity (deficiency) (121,930) 124,857
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$6,503,735 10,617,753
========== ==========
See accompanying notes to consolidated financial statements.
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CAPITAL INVESTMENT OF HAWAII, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
Three Months ended April 30, 1996 and 1995
and
Nine months ended April 30, 1996 and 1995
(Unaudited)
Three Months Nine Months
April 30, April 30,
--------- ---------
1996 1995 1996 1995
---- ---- ---- ----
Revenues:
Net product sales $1,453,702 1,144,035 $4,208,450 3,756,610
Income from investments 715,625 553,624 1,555,358 1,391,472
Commissions and fees 187,681 179,522 523,319 485,271
Miscellaneous 10,272 2,604 78,368 23,554
---------- --------- ---------- ---------
2,367,280 1,879,785 6,365,495 5,656,907
---------- --------- ---------- ---------
Cost and expenses:
Cost of product sales 939,195 737,245 2,622,657 2,403,911
Other direct operating expenses
and general and administrative
expenses 991,399 1,004,086 3,363,945 3,201,018
Interest 262,437 156,411 583,636 754,682
---------- --------- ---------- ---------
2,193,031 1,897,742 6,570,238 6,359,611
---------- --------- ---------- ---------
Net income (loss) $ 174,249 (17,957) $ (204,743) (702,704)
========== ========= ========== =========
Net income (loss) per common
share $ .17 (.02) $ (.20) (.68)
========== ========= ========== =========
Dividends per common share NONE NONE NONE NONE
========== ========= ========== =========
Weighted average number of common
shares outstanding during the
period 1,032,683 1,032,683 1,032,683 1,032,683
========== ========= ========== =========
See accompanying notes to consolidated financial statements.
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CAPITAL INVESTMENT OF HAWAII, INC. AND SUBSIDIARIES
Consolidated Statements of Retained Earnings
Nine months ended April 30, 1996 and 1995
(Unaudited)
1996 1995
---- ----
Retained earnings at July 31 $1,923,877 2,731,803
Net loss (204,743) (702,704)
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Retained earnings at April 30 $1,719,134 2,029,099
========== =========
See accompanying notes to consolidated financial statements.
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CAPITAL INVESTMENT OF HAWAII, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
Nine months ended April 30, 1996 and 1995
(Unaudited)
1996 1995
---- ----
Net cash provided by (used in) operating activities $ 4,578,102 (402,379)
----------- ---------
Cash flows from investing activities:
Purchase of securities and other investments - (25,600)
Proceeds from sales of securities and other
investments 308,953 196,053
Capital expenditures (84,857) (41,934)
----------- ---------
Net cash provided by investing
activities 224,096 128,519
----------- ---------
Cash flows from financing activities:
Proceeds from long-term borrowings 94,891 270,890
Principal payments on indebtedness (1,885,445) (918,160)
Payments on covenants not-to-compete - (30,000)
Proceeds under loan participation agreements - 700,000
Payments under loan participation agreements (1,562,620) (451,500)
----------- ---------
Net cash used in financing activities (3,353,174) (428,770)
----------- ---------
Increase (decrease) in cash and cash
equivalents 1,449,024 (702,630)
Cash and cash equivalents at beginning of period 1,287,636 1,146,248
----------- ---------
Cash and cash equivalents at end of period $ 2,736,660 443,618
=========== =========
See accompanying notes to consolidated financial statements.
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CAPITAL INVESTMENT OF HAWAII, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
(1) Basis of presentation
The accompanying unaudited consolidated financial information have
been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions
to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. The
accompanying unaudited consolidated financial statements should be
read in conjunction with the report on SEC Form 10- K for the fiscal
year ended July 31, 1995 and the consolidated financial statements and
the notes thereto in the Company's Quarterly Report on SEC Form 10-Q
for the quarter ended October 31, 1995 and January 31, 1996.
In the opinion of the Company's management, the accompanying unaudited
financial information contains all material adjustments required by
generally accepted accounting principles to present fairly the
Company's financial position as of April 30, 1996 and July 31, 1995,
the results of its operations for the three months and nine months
ended April 30, 1996 and 1995, and its cash flows for the nine months
ended April 30, 1996 and 1995. All such adjustments are of a normal
recurring nature, unless otherwise disclosed in this Form 10-Q or
other referenced material. Results of operations for interim periods
are not necessarily indicative of results for the full year.
(2) Other Real Estate Investments
On February 7, 1996, the Company received approximately $2,460,000
representing payments due from MVL, Inc., QCL, Inc. and LSR, Inc. for
acquisition, development and construction loans advanced and accrued
interest thereon. Additionally, in February, 1996, the Company
repaid principal due under loan participation agreements for LSR, Inc.
of approximately $1,058,000.
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company and its subsidiaries are engaged principally in the
business of acquiring, developing, leasing and dealing in real estate,
product sales, including bakery goods and investing in securities,
which activities are subject to various factors which cause
fluctuations between periods. Accordingly, the results of operations
for the three and nine months ended April 30, 1996 are not necessarily
indicative of results to be expected for the year and are not
necessarily comparable to the results of operations for the three and
nine months ended April 30, 1995.
Net Product Sales
The increase in net product sales of $309,667 and $451,840,
respectively for the three and nine months ended April 30, 1996 as
compared to the same periods in 1995 is due to the increase in sales
of Latipac Fine Foods, Incorporated, which operates under the name
Bakery Europa. This increase is attributed primarily to the increase
in tourism in the State of Hawaii for 1996 which affects the airline
and hotel industries which Bakery Europa supplies.
Cost of Product Sales
The increase in cost of product sales of $201,950 and $218,746,
respectively for the three and nine months ended April 30, 1996 as
compared to the same periods in 1995 is due to the increase in product
sales for Bakery Europa.
As a percentage of net sales, the cost of bakery sales decreased to
62% for the nine months ended April 30, 1996 as compared to 64% for
the same periods in 1995.
Interest Expense
The decrease in interest expense of $171,046 for the nine months ended
April 30, 1996 as compared to the same periods in 1995 is due to a
decrease in borrowings related to the financing of real estate
investments.
LIQUIDITY AND CAPITAL RESOURCES
At April 30, 1996, the Company held cash and cash equivalents of
$2,736,660. The increase in cash and cash equivalents of $1,449,024
for the nine months ended April 30, 1996 is primarily due to cash
provided by operating activities.
Included in cash provided by operating activities for the nine months
ended April 30, 1996 was payments of approximately $1,701,000
classified as other real estate investments in the consolidated
balance sheet. The payments represent advances for the construction
of residential developments in Las Vegas, Nevada. Payments received
on the advances for the same period amounted to approximately
$5,275,000. Additionally, payments received on long-term receivables
for the nine months ended April 30, 1996 of approximately $1,189,000
are included in cash provided by operating activities. The Company's
net loss of $204,743 for the nine months ended April 30, 1996 is also
included in cash provided by operating activities.
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Cash flows from financing activities for the nine months ended April
30, 1996 includes principal payments on indebtedness which amounted to
$1,885,445. Payments on loan participation agreements in the
Company's loan to LSR, Inc. amounted to $1,562,620 for the nine months
ended April 30, 1996.
The Company, during the nine months ended April 30, 1996, was able to
meet operating cash requirements with cash on hand at July 31, 1995
and payments received on acquisition, construction and development
loans in Las Vegas, Nevada. Cash requirements for the remaining
quarters of fiscal 1996 will be satisfied by cash on hand, operations
and institutional borrowings.
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PART II - OTHER INFORMATION
Items 1,2,3,5,6. None
Item 4. The following actions were taken at the annual stockholders
meeting held on January 31, 1996:
a. Directors were re-elected for the year as follows:
Stuart T.K. Ho
Dean T.W. Ho
Donald M. Wong
Stanley W. Hong
Pedro Ada
C.B. Sung
b. KPMG Peat Marwick was re-elected independent
auditors for the year ending July 31, 1996 by a
vote of 570,858 shares in the affirmative and none
in the negative.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CAPITAL INVESTMENT OF HAWAII, INC.
Dated: June 5, 1996 /s/ STUART T.K. HO
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Stuart T.K. Ho, Chairman of the Board
and President
Dated: June 5, 1995 /s/ DONALD M. WONG
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Donald M. Wong, Senior Vice President
and Treasurer