EACO Corporation (OTCBB:EACO) today reported the results for the first quarter ended November 30, 2011.

Net sales, net income and earnings per share were as follows for the three month periods ended November 30 (dollars in thousands, except per share information):

   
Three Months Ended
November 30,
2011   2010Change
(unaudited)
 
 
Net sales/revenue $ 26,461 $ 25,656 3.1 %
 
Net income $ 625 $ 600 4.2 %
 
Basic and diluted earnings per common share $ 0.12 $ 0.12 0 %
 

There were 272 sales employees as of November 30, 2011, an increase of 10.1% from the 247 sales employees on November 30, 2010. The Company's sales force is divided into Sales Focus Teams (SFT). The Company had 82 SFT's as of November 30, 2011, an increase of 22% from 67 SFT's on November 30, 2010.

 
EACO Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except share information)

   
November 30, 2011 August 31, 2011
(unaudited)
ASSETS
 
Current Assets:
Cash and cash equivalents $ 1,352 $ 1,368
Trade accounts receivable, net 12,342 12,348
Inventory, net 12,695 11,389
Marketable securities, trading 1,171 892
Prepaid expenses and other current assets 234 320
Deferred tax asset, current 1,055 1,062  
Total current assets 28,849 27,379
 
Non-current assets:
Restricted cash 636 632
Real estate properties held for leasing, net 10,007 10,085
Equipment and leasehold improvements, net 1,017 972
Deferred tax asset 2,478 2,623
Other assets, principally deferred charges, net of accumulated amortization 1,165   1,187  
Total assets $ 44,152 $ 42,878  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
Current Liabilities:
Trade accounts payable $ 9,100 $ 8,541
Accrued expenses and other current liabilities 1,510 2,325
Liabilities of discontinued operations - short-term 147 147
Current portion of long-term debt 784 778  
Total current liabilities 11,541 11,791
 
Non-current Liabilities:
Liabilities of discontinued operations - long-term 2,681 2,708
Deposit liability 147 147
Long-term debt 16,328 15,626  
Total liabilities 30,697 30,272
 
Shareholders' equity:
Convertible preferred stock of $0.01 par value; authorized 10,000,000

shares; 36,000 shares outstanding at November 30, 2011 and August 31, 2011 (liquidation value $900)

1 1
Common stock of $0.01 par value; authorized 8,000,000 shares;

4,861,590 shares outstanding at November 30, 2011 and August 31, 2011

49 49
Additional paid-in capital 12,378 12,378
Accumulated other comprehensive income 778 554
Retained earnings (accumulated deficit) 249 (376 )
Total shareholders' equity 13,455 12,606  
Total liabilities and shareholders' equity $ 44,152 $ 42,878  
 

EACO Corporation and Subsidiaries

Condensed Consolidated Statements of Operations

(in thousands, except per share information)

   
Three Months Ended
November 30,
2011   2010
(unaudited)
 
Distribution sales $ 26,150 $ 25,344
Cost of goods sold   18,878       18,477  
Gross margin   7,272       6,867  
 
Rental revenue 311 312
Cost of rental operations   193       235  
Gross margin from rental operations   118       77  
 
Operating expenses:
Selling, general and administrative expenses   6,530       6,120  
Income from operations 860 824
 
Other non-operating income (expense):
Realized gain on sale of trading securities - 6
Unrealized gain on trading securities 193 209
Interest and other income 4 -
Interest expense   (185 )     (195 )
Net income from continuing operations before income taxes 872 844
Provision for income taxes   (247 )     (244 )
Net income 625 600
Undeclared cumulative preferred stock dividend   (19 )     (19 )
 
Net income attributable to common shareholders $ 606     $ 581  
 
Basic and diluted net income per share:
Net income $ 0.12     $ 0.12  
 
Basic and diluted weighted average common shares outstanding   4,861,590       4,861,590  
 

EACO Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

 
Three Months Ended
November 30,
2011   2010
Operating activities:
Net income $ 625 $ 600
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization 188 204
Bad debt expense - 52
Change in inventory reserve (15 ) 35
Net gain on investments (193 ) (215 )
(Increase) decrease in:
Trade accounts receivable 6 (566 )
Inventory (1,291 ) (712 )
Prepaid expenses and other assets 108 (447 )
Deferred tax asset 152 31
Increase (decrease) in:
Trade accounts payable 298 (34 )
Accrued expenses and other current liabilities (815 ) (499 )
Liabilities of discontinued operations   (27 )   (56 )
Net cash used in operating activities   (964 )   (1,607 )
 
Investing activities:
Purchase of property and equipment (155 ) (23 )
Purchase of marketable securities, trading (86 ) 70
Change in restricted cash   (4 )   234  
Net cash (used in) provided by investing activities   (245 )   281  
 
Financing activities:
Net (payments) borrowings on revolving credit facility (700 ) 603
Borrowings of long-term debt 1,600 -
Payments on long-term debt (192 ) (58 )
Bank overdraft   261     -  
Net cash provided by financing activities   969     545  
Effect of foreign currency exchange rate changes on cash and cash equivalents   224     254  
Net decrease in cash and cash equivalents (16 ) (527 )
 
Cash and cash equivalents - beginning of period   1,368     1,260  
Cash and cash equivalents - end of period $ 1,352   $ 733  
 
Supplemental disclosures of cash flow information:
Cash paid for interest $ 186   $ 76  
 
Cash paid for taxes $ 415   $ 96  

EACO Corporation
Marta Araujo, 714-876-2490