<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
balance sheet and the statement of income filed as part of the quarterly
report on Form 10-QSB and is qualified in its entirety by reference to
such quarterly report on Form 10-QSB.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-END> FEB-29-1996
<CASH> 732,324
<SECURITIES> 788,973
<RECEIVABLES> 396,070
<ALLOWANCES> 45,250
<INVENTORY> 105,016
<CURRENT-ASSETS> 2,202,015
<PP&E> 1,602,166
<DEPRECIATION> 54,387
<TOTAL-ASSETS> 5,280,395
<CURRENT-LIABILITIES> 369,411
<BONDS> 0
<COMMON> 437,428
0
0
<OTHER-SE> 4,411,521
<TOTAL-LIABILITY-AND-EQUITY> 5,280,395
<SALES> 2,018,313
<TOTAL-REVENUES> 2,018,313
<CGS> 1,409,409
<TOTAL-COSTS> 1,409,409
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 271,308
<INCOME-TAX> 100,981
<INCOME-CONTINUING> 368,228
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 368,228
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
</TABLE>
<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended February 29, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _____________ to____________
_____________________________
Commission file number 0-2288
_____________________________
(Unaudited)
HOSOI GARDEN MORTUARY, INC.
(Exact name of small business issuer as specified in its charter)
State of Hawaii No. 99-0088064
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
30 North Kukui Street
(Corner of Nuuanu Avenue and Kukui Street)
Honolulu, Hawaii 96817
(Address of principal executive offices) (Zip Code)
(808) 538-3877
(Registrant's telephone number, including area code)
N/A
(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, and (2) has been subject to such
filing requirements for the past 90 days.
Yes XX No
1,822,785 shares of Common Stock
Outstanding at February 29, 1996
<PAGE> 2
HOSOI GARDEN MORTUARY, INC.
_ _ _ _ _ _ _ _ _ _ _ _ _ _
Nine-Months Ended February 29, 1996
and February 28, 1995
CONTENTS
_ _ _ _
[CAPTION]
Pages
[S] [C]
DISCLAIMER OF OPINION 1
PART I - Financial Information
Item 1. Financial Statements
Balance Sheet 2
Statements of Income 3
Statements of Cash Flows 4
Notes 5 - 8
Item 2. Management's Discussions and Analysis of Financial
Conditions and Results of Operations 9
PART II - Other Information 10
SIGNATURES 11
<PAGE> 3
DISCLAIMER OF OPINION
_ _ _ _ _ _ _ _ _ _ _
To the Board of Directors
Hosoi Garden Mortuary, Inc.
The accompanying balance sheet of
HOSOI GARDEN MORTUARY, INC.
as of February 29, 1996, and the related statements of income and cash flows
for the three-months and nine-months ended February 29, 1996 and February
28, 1995 were not audited by us and accordingly, we do not express an
opinion on them.
March 26, 1996
Honolulu, Hawaii
1
<PAGE> 4
HOSOI GARDEN MORTUARY, INC.
BALANCE SHEET
_ _ _ _ _ _ _
February 29, 1996
[CAPTION]
A S S E T S
[S] [C]
CURRENT ASSETS
Cash and cash equivalents (Note 1) $ 532,324
Certificate of deposit 200,000
Securities available-for-sale, at market (Note 2) 788,973
Accounts receivable, less allowance for losses of $45,250 396,070
Inventories 105,016
Prepaid expenses and others 126,172
Income tax receivable 7,825
Deferred income taxes (Note 4) 45,635
-----------
TOTAL CURRENT ASSETS 2,202,015
-----------
INVESTMENTS
Garden Life Plan, Ltd. (Note 3) 1,262,688
Cemetery plots 1,350
Securities held-to-maturity, at cost (Note 2) 105,749
------------
1,369,787
------------
PROPERTY, PLANT AND EQUIPMENT, at cost, less accumulated
depreciation 1,602,166
------------
OTHER ASSETS 106,427
------------
TOTAL ASSETS $ 5,280,395
============
[CAPTION]
L I A B I L I T I E S
[S] [C]
CURRENT LIABILITIES
Accounts payable $ 286,219
Accrued liabilities 81,055
Note payable 686
Income tax payable 1,451
------------
TOTAL CURRENT LIABILITIES 369,411
------------
DEFERRED INCOME TAXES (Note 4) 62,035
------------
[CAPTION]
S T O C K H O L D E R S' E Q U I T Y
[S] [C]
CAPITAL CONTRIBUTED
Common stock, par value $.20 per share; authorized
3,625,000 shares, issued 2,187,140 shares 437,428
Less 140,570 reacquired shares 28,334
-----------
TOTAL CAPITAL CONTRIBUTED 409,094
RETAINED EARNINGS 4,466,511
----------
NET UNREALIZED GAIN ON SECURITIES AVAILABLE-FOR-SALE
(Note 2) 54,626
-----------
TREASURY STOCK, 223,785 shares, at cost (Note 7) (81,282)
-----------
TOTAL STOCKHOLDERS' EQUITY 4,848,949
------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,280,395
============
[FN]
See the Accompanying Notes to Financial Statements
(Unaudited)
2
<PAGE> 5
HOSOI GARDEN MORTUARY, INC.
STATEMENTS OF INCOME
_ _ _ _ _ _ _ _ _ _
[CAPTION]
Three-Months Ended Nine-Months Ended
------------------- ---------------------
February February February February
29, 1996 28, 1995 29, 1996 28, 1995
-------- -------- ---------- -----------
[S] [C] [C] [C] [C]
NET SALES AND SERVICES $ 697,326 $ 613,193 $ 2,018,313 $ 1,881,623
COST OF SALES AND SERVICES 534,569 486,222 1,409,409 1,393,531
---------- ---------- ----------- -----------
GROSS PROFIT 162,757 126,971 608,904 488,092
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 138,733 158,830 449,055 418,804
---------- ---------- ----------- ----------
OPERATING INCOME (LOSS) 24,024 (31,859) 159,849 69,288
OTHER INCOME (EXPENSE)
Parking, dividends, interest
and miscellaneous income 33,306 37,161 111,459 98,124
Interest - (265) - (910)
---------- --------- ---------- ----------
INCOME BEFORE INCOME
TAXES AND EQUITY IN
EARNINGS OF GARDEN
LIFE PLAN, LTD. 57,330 5,037 271,308 166,502
INCOME TAXES (BENEFIT)
(Note 5) 20,188 (2,993) 100,981 57,427
---------- -------- --------- ---------
INCOME BEFORE EQUITY
IN EARNINGS OF GARDEN
LIFE PLAN, LTD. 37,142 8,030 170,327 109,075
EQUITY IN EARNINGS OF GARDEN
LIFE PLAN, LTD.
(net of deferred income
taxes) (Note 3) 48,453 71,200 197,901 225,686
---------- ---------- ---------- ----------
NET INCOME $ 85,595 $ 79,230 $ 368,228 $ 334,761
========== ========== ========== ==========
AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING
(Note 6) 1,823,185 1,842,325 1,831,652 1,848,715
========== ========== ========== ==========
EARNINGS PER COMMON SHARE
(Note 6) $ .05 $ .04 $ .20 $ .18
===== ===== ===== =====
[FN]
See the Accompanying Notes to Financial Statements
(Unaudited)
3
<PAGE> 6
HOSOI GARDEN MORTUARY, INC.
STATEMENTS OF CASH FLOWS
_ _ _ _ _ _ _ _ _ _ _ _
[CAPTION]
Nine-Months Ended
--------------------------
February February
29, 1996 28,1995
--------- --------
[S] [C] [C]
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 368,228 $ 334,761
Adjustments to reconcile net income to net
cash provided by operations
Depreciation 54,387 57,774
Loss (gain) on sale of securities (12,591) 4,842
Undistributed earnings of affiliate, net (215,092) (245,290)
Deferred income taxes 17,191 3,628
(Increase) decrease in certain assets
Accounts receivable (88,521) (32,259)
Dividend receivable - 200,000
Income tax receivable 46,421 (63,061)
Inventories 6,291 10,562
Prepaid expenses and others (57,329) (68,746)
Other assets - (27)
Cash value of life insurance policies - (1,644)
(Decrease) increase in certain liabilities
Accounts payable (14,172) 61,496
Income taxes payable 1,451 (122,308)
Accrued liabilities (50,339) (68,543)
---------- ----------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 55,925 71,185
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of equity securities 193,945 234,769
Purchase of property and equipment (102,049) (6,500)
Increase in securities available-for-sale (206,393) (246,931)
Purchase of certificate of deposit (200,000) -
Premium payments on life insurance policies (2,442) (2,887)
---------- ----------
NET CASH USED IN INVESTING ACTIVITIES (316,939) (21,549)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of reacquired shares (62,950) (56,435)
Cash dividends paid (82,419) (95,475)
---------- ----------
NET CASH USED IN FINANCING ACTIVITIES (145,369) (151,910)
---------- ----------
NET DECREASE (406,383) (102,274)
CASH AT BEGINNING OF YEAR 938,707 606,114
---------- ----------
CASH AT END OF YEAR $ 532,324 $ 503,840
========== ==========
[FN]
See the Accompanying Notes to Financial Statements
(Unaudited)
4
<PAGE> 7
HOSOI GARDEN MORTUARY, INC.
NOTES TO FINANCIAL STATEMENTS
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _
February 29, 1996 and February 28, 1995
(1) Cash
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.
(2) Investment securities
At February 29, 1996, the Company held investments in the following types
of securities:
[CAPTION]
Available- Held-to-
for-Sale Maturity
---------- --------
[S] [C] [C]
Amortized Costs:
Equity Securities $ 69,315 $ -
U.S. Treasury Notes - 105,749
Mutual Funds 665,032 -
----------- ----------
$ 734,347 $ 105,749
=========== ==========
Market Value:
Equity Securities $ 80,737 $ -
U.S. Treasury Notes - 99,655
Mutual Funds 708,236 -
----------- ----------
$ 788,973 $ 99,655
=========== ==========
Unrealized Gains:
Equity Securities $ 14,500 $ -
U.S. Treasury Notes - -
Mutual Funds 43,204 -
----------- ---------
$ 57,704 $ -
=========== ---------
Unrealized Loss:
Equity Securities $ 3,078 $ -
U.S. Treasury Notes - 6,094
Mutual Funds - -
----------- ---------
$ 3,078 $ 6,094
=========== =========
[FN]
(Unaudited)
5
<PAGE> 8
HOSOI GARDEN MORTUARY, INC.
NOTES TO FINANCIAL STATEMENTS
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _
February 29, 1996 and February 28, 1995
(2) Investment securities (continued)
The maturities for all debt securities held at February 29, 1996 were:
[CAPTION]
Available-for-Sale Held-to-Maturity
------------------- ---------------------
Amortized Market Amortized Market
Cost Value Cost Value
--------- ------ --------- ------
[S] [C] [C] [C] [C]
Within 1 year $ - $ - $ - $ -
After 1 year
through 5 years - - 105,749 99,655
After 5 years - - - -
--------- ------- ---------- ---------
$ - $ - $ 105,749 $ 99,655
========= ======= ========== =========
During the quarter ended February 29, 1996, the Company sold securities
available-for-sale for $193,945. The gross realized gains of $12,591 is
reflected in earnings. The cost of the securities sold was based on the
cost of all the shares of each such security held at the time of sale.
(3) Garden Life Plan, Ltd.
Investments in Garden Life Plan, Ltd. represent the Company's 50% share, in
the underlying equity, accounted for under the equity method of accounting
for investments in common stock of Garden Life Plan, Ltd., (GLP), a Hawaii
corporation engaged in the sale of pre-need funeral plans which are serviced
solely by Hosoi Garden Mortuary, Inc.
All payments received from the sale of pre-need funeral plans up to an amount
equal to 30% of the total price plus any sales tax or other charges are
retained by Garden Life Plan, Ltd. as its compensation. The balance is
deposited with Hawaiian Trust Company, Limited to be held in trust. Garden
Life Plan, Ltd. is entitled to all earnings from funds held in trust which
amounted to $601,851 for the year ended May 31, 1995 and $470,991 for the
eleven months ended May 31, 1994. Trust assets are not included in the
financial statements of Hosoi Garden Mortuary, Inc. nor Garden Life Plan, Ltd.
[FN]
(Unaudited)
6
<PAGE> 9
HOSOI GARDEN MORTUARY, INC.
NOTES TO FINANCIAL STATEMENTS
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _
February 29, 1996 and February 28, 1995
(3) Garden Life Plan, Ltd. (continued)
Audited financial statements of this subsidiary as of May 31, 1995 showed the
following summarized financial position and results of operations:
[S] [C]
Total assets $ 2,529,777
Total liabilities 434,592
------------
Total stockholder's equity $ 2,095,185
============
Net revenue $ 1,176,848
============
Operating income $ 170,728
============
Net income $ 584,579
============
Equity in earnings of Garden Life Plan, Ltd. represents the Company's share
of the earnings of Garden Life Plan, Ltd. for its three-months and nine-months
ended February 29, 1996 and February 28, 1995.
Investment in Garden Life Plan, Ltd. as of February 29, 1996 is accounted for
as follows:
[S] [C]
Stockholders' equity as February 29, 1996 per
Garden Life Plan, Ltd.'s balance sheet $ 2,525,369
Equity Ownership 50%
------------
1,262,685
Rounding 3
------------
Total investment in Garden Life Plan, Ltd. $ 1,262,688
============
(4) Deferred income taxes
Deferred income taxes are provided for timing differences resulting from
inclusion of income and expense items in financial statements in years other
than recognized for income tax purposes. Timing differences result from the
use of the reserve method in accounting for uncollectible accounts
receivable in the financial statements and the use of the direct write-off
method for income tax purposes and from the use of the equity method of
accounting for the investments in subsidiary as explained under Garden Life
Plan, Ltd. above. Under the equity method, the Company's share of earnings
of the subsidiary is reported for tax purposes only when distributions of
earnings are received as dividends.
At February 29, 1996 the Company's retained earnings included approximately
$1,262,188 of undistributed earnings of Garden Life Plan, Ltd.
[FN]
(Unaudited)
7
<PAGE> 10
HOSOI GARDEN MORTUARY, INC.
NOTES TO FINANCIAL STATEMENTS
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _
February 29, 1996 and February 28, 1995
(5) Income taxes
The provision for income taxes consists of the following:
[CAPTION]
February February
29, 1996 28, 1995
--------- --------
[S] [C] [C]
Federal:
Current $ 85,749 $ 48,272
Deferred 13,306 15,174
---------- ---------
Total Federal 99,055 63,446
---------- ---------
State:
Current 15,232 9,155
Deferred 3,885 4,430
---------- --------
Total State 19,117 13,585
---------- --------
Total income taxes $ 118,172 $ 77,031
========== ========
(6) Earnings per share
Earnings per common share has been computed on the basis of a weighted average
of shares outstanding of 1,831,652 for 1996 and 1,848,715 for 1995.
(7) Reacquired shares
Capital contributed has been reduced for shares reacquired after June 30, 1987.
Payments for shares in excess of the par value of each share acquired has been
charged to additional paid-in capital.
The 223,785 shares reflected as Treasury Stock as of February 29, 1996 reflects
shares acquired before July 1, 1987.
[FN]
(Unaudited)
8
<PAGE> 11
HOSOI GARDEN MORTUARY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Changes in financial condition
There have been no material adverse changes in financial condition from the end
of the preceding fiscal year to the end of the current quarter ended February
29, 1996.
The working capital and working capital ratios at February 29, 1996 is as
follows:
[S] [C]
Working capital $ 1,832,604
Working capital ratio 6.0:1
Changes in results of operations
Cost of Sales and Services - Cost of sales and services as a percent of net
sales decreased to 69.8% from 74.1% for the nine-months ended February 29, 1996
over February 28, 1995, and to 76.7% from 79.3% for the three-months ended
February 29, 1996 over February 28, 1995. The decrease resulted from an
increases in revenues and a decrease in repairs and maintenance.
Selling, General and Administrative Expenses - Selling, general and
administrative expenses as a percent of net sales was unchanged at 22.3% for
the nine-months ended February 29, 1996 and February 28, 1995. For the
three-months period ended February 29, 1996, selling, general and
administrative expenses decreased to 19.9% from 25.9% for the three-months
ended February 29, 1995. The decrease of 6.0% was a result of a decrease of
2.3% in professional fees, a 3.0% in administrative salaries and an aggregate
decrease of .7% in other administrative expenses.
Income Taxes - The effective income tax rate is 37.2% for 1996 and 34.5% for
1995.
Other Income - Other income as a percent of net sales increased from 5.2% to
5.5% for the nine-month ended February 29, 1996 over February 28, 1995. The
increase in other income is due to an increase in interest income and gain
from sale of securities available-for-sale which were partially offset by a
decrease in parking revenues.
[FN]
9
<PAGE> 12
HOSOI GARDEN MORTUARY, INC.
PART II - OTHER INFORMATION
_ _ _ _ _ _ _ _ _ _ _ _ _ _
February 29, 1996 and February 28, 1995
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K - There were no reports on Form 8-K filed for the
nine-months ended February 29, 1996.
10
<PAGE> 13
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.
The information furnished reflects all adjustments which are, in the opinion of
management, necessary to a fair statement of the results for the interim
periods.
HOSOI GARDEN MORTUARY, INC.
-------------------------------
(Small business issuer)
Date 04/15/96 CLIFFORD HOSOI
--------------------------------
Clifford Hosoi, President
Date 04/15/96 ELAINE NAKAMURA
--------------------------------
Elaine Nakamura,
Corporate Secretary & Bookkeeper
<PAGE> 14
EXHIBIT INDEX
- - - - - - -
EXHIBIT
NO. DESCRIPTION
- - - - - - - - - - -
27 Financial Data Schedule, which is submitted electronically to the
Securities and Exchange Commission for information only and not
filed.
