<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> 6-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-END> NOV-30-1996
<CASH> 702504
<SECURITIES> 897372
<RECEIVABLES> 346406
<ALLOWANCES> 63943
<INVENTORY> 112984
<CURRENT-ASSETS> 2550619
<PP&E> 1569367
<DEPRECIATION> 38514
<TOTAL-ASSETS> 5565489
<CURRENT-LIABILITIES> 415681
<BONDS> 0
0
0
<COMMON> 437428
<OTHER-SE> 4652685
<TOTAL-LIABILITY-AND-EQUITY> 5565489
<SALES> 1483009
<TOTAL-REVENUES> 1483009
<CGS> 1000673
<TOTAL-COSTS> 1000673
<OTHER-EXPENSES> 323408
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 633
<INCOME-PRETAX> 272331
<INCOME-TAX> 100839
<INCOME-CONTINUING> 171492
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 299289
<EPS-PRIMARY> .17
<EPS-DILUTED> .17
</TABLE>
<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 1996
[ ] 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 0-2288
(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)
(Issuer's telephone number) (808) 538-3877
N/A
(Former name, former address and former fiscal year, if changed since
last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months, and (2) has been
subject to such filing requirements for the past 90 days.
Yes XX No
1,803,955 shares of Common Stock
Outstanding at November 30, 1996
<PAGE> 2
HOSOI GARDEN MORTUARY, INC.
_ _ _ _ _ _ _ _ _ _ _ _ _ _
Six-Months Ended November 30, 1996 and 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 to Financial Statements 5 - 8
Item 2. Management's Discussions and Analysis of Financial
Condition 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 November 30, 1996, and the related statements of income and cash flows
for the three-months and six-months ended November 30, 1996 and 1995 were
not audited by us and accordingly, we do not express an opinion on them.
January 10, 1997
Honolulu, Hawaii
1
<PAGE> 4
HOSOI GARDEN MORTUARY, INC.
BALANCE SHEET
_ _ _ _ _ _ _
November 30, 1996
[CAPTION]
A S S E T S
[S] [C]
CURRENT ASSETS
Cash and cash equivalents (Note 1) $ 702,504
Certificate of deposit 200,000
Securities available-for-sale, at market (Note 2) 897,372
Accounts receivable, less allowance for doubtful accounts
of $63,943 346,406
Dividend receivable from Garden Life Plan, Ltd. 200,000
Inventories 112,984
Prepaid expenses and others 54,957
Deferred income taxes (Note 4) 36,396
------------
TOTAL CURRENT ASSETS 2,550,619
------------
INVESTMENTS
Garden Life Plan, Ltd. (Note 3) 1,224,103
Cemetery plots 1,350
Securities held-to-maturity, at cost (Note 2) 89,932
------------
1,315,385
------------
PROPERTY AND EQUIPMENT, at cost, less accumulated
depreciation 1,569,367
------------
OTHER ASSETS 130,118
------------
TOTAL ASSETS $ 5,565,489
============
[CAPTION]
L I A B I L I T I E S
[S] [C]
CURRENT LIABILITIES
Accounts payable $ 302,898
Accrued liabilities 79,678
Note payable 685
Income taxes payable 32,420
------------
TOTAL CURRENT LIABILITIES 415,681
------------
DEFERRED INCOME TAXES (Note 4) 91,795
------------
[CAPTION]
S T O C K H O L D E R S ' E Q U I T Y
[S] [C]
CAPITAL CONTRIBUTED (Note 7)
Common stock, par value $.20 per share; authorized
3,625,000 shares, issued 2,187,140 shares 437,428
Less 159,400 reacquired shares (32,100)
------------
TOTAL CAPITAL CONTRIBUTED 405,328
------------
RETAINED EARNINGS (Note 8) 4,700,393
------------
NET UNREALIZED GAIN ON SECURITIES AVAILABLE-FOR-SALE,
net of deferred taxes (Note 2) 33,574
------------
TREASURY STOCK, 223,785 shares, at cost (Note 7) (81,282)
------------
TOTAL STOCKHOLDERS' EQUITY 5,058,013
------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,565,489
============
[FN]
See the accompanying Notes to Financial Statements
(Unaudited)
2
<PAGE> 5
HOSOI GARDEN MORTUARY, INC.
STATEMENTS OF INCOME
_ _ _ _ _ _ _ _ _ _
[CAPTION]
Three-Months Ended Six-Months Ended
November 30, November 30,
---------------------- ----------------------
1996 1995 1996 1995
---------- ---------- ----------- -----------
[S] [C] [C] [C] [C]
NET SALES AND SERVICES $ 694,629 $ 632,019 $ 1,483,009 $ 1,320,987
COST OF SALES AND
SERVICES 510,195 432,872 1,000,673 874,840
---------- ---------- ----------- -----------
GROSS PROFIT 184,434 199,147 482,336 446,147
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 195,120 168,400 323,408 310,322
---------- ---------- ----------- -----------
OPERATING INCOME
(LOSS) (10,686) 30,747 158,928 135,825
OTHER INCOME (EXPENSE)
Parking, dividends,
interest and
miscellaneous income 26,295 39,562 114,036 78,153
Interest 64 196 (633) -
--------- --------- --------- ----------
INCOME BEFORE INCOME
TAXES AND EQUITY IN
EARNINGS OF GARDEN
LIFE PLAN, LTD. 15,673 70,505 272,331 213,978
INCOME TAXES (Note 5) 5,933 20,561 100,839 80,793
---------- --------- --------- ----------
INCOME BEFORE EQUITY
IN EARNINGS OF GARDEN
LIFE PLAN, LTD. 9,740 49,944 171,492 133,185
EQUITY IN EARNINGS OF
GARDEN LIFE PLAN, LTD.,
net of deferred income
taxes (Note 3) 67,566 76,790 127,797 149,448
---------- --------- ---------- ---------
NET INCOME $ 77,306 $ 126,734 $ 299,289 $ 282,633
=========== ========== ========== ===========
AVERAGE NUMBER OF
COMMON SHARES
OUTSTANDING (Note 6) 1,804,355 1,834,310 1,809,455 1,835,894
=========== ========== ========== ===========
EARNINGS PER COMMON
SHARE (Note 6) $.04 $.07 $.17 $.15
==== ==== ==== ====
[FN]
See the accompanying Notes to Financial Statements
(Unaudited)
3
<PAGE> 6
HOSOI GARDEN MORTUARY, INC.
STATEMENTS OF CASH FLOWS
_ _ _ _ _ _ _ _ _ _ _ _ _
Six-Months Ended November 30, 1996 and 1995
[CAPTION]
1996 1995
---------- ----------
[S] [C] [C]
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 299,289 $ 282,633
Adjustments to reconcile net income to net
cash provided by operations
Depreciation 38,514 35,130
Gain on sale of securitie (44,798) (13,969)
Undistributed earnings of affiliate (120,742) (162,429)
Cash value of life insurance policies (1,455) -
Deferred income taxes (7,055) 12,982
(Increase) decrease in certain assets
Accounts receivable (20,657) (42,236)
Income tax receivable - 29,147
Inventories (769) (6,355)
Prepaid expenses and others 6,562 (4,818)
(Decrease) increase in certain liabilities
Accounts payable 64,551 10,970
Income taxes payable (6,975) 1,196
Accrued liabilities (71,433) (52,213)
--------- ---------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 135,032 90,038
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (20,927) (102,894)
Increase in securities available-for-sale (505,877) (181,732)
Proceeds from sale of equity securities 446,376 186,730
Increase in certificate of deposit - (200,000)
Premiums payments on life insurance policies (703) (1,628)
---------- ---------
NET CASH USED IN INVESTING ACTIVITIES (81,131) (299,524)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of reacquired shares (62,375) (17,850)
---------- ----------
NET CASH USED IN FINANCING ACTIVITIES (62,375) (17,850)
---------- ----------
NET DECREASE (8,474) (227,336)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 710,978 938,707
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 702,504 $ 711,371
============ ==========
[FN]
See the accompanying Notes to Financial Statements
(Unaudited)
4
<PAGE> 7
HOSOI GARDEN MORTUARY, INC.
NOTES TO FINANCIAL STATEMENTS
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _
November 30, 1996 and 1995
(1) Cash and cash equivalents
-------------------------
For purposes of the Statement of Cash Flows, cash equivalents include
certificate of deposit, money market accounts and highly liquid debt
instruments with maturities of three months or less at the date of
acquisition. For debt instruments, carrying value is a reasonable
estimate of fair value.
The Company's cash are deposited with four local financial institution. At
November 30, 1996, the Company had deposits in two financial institutions
in excess of the deposit insurance of $100,000.
(2) Investment securities
---------------------
The Company held investments in the following types of securities:
[CAPTION]
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gain Loss Value
--------- ---------- ---------- ------
[S] [C] [C] [C] [C]
November 30, 1996
Available for sale
Equity securities $ 80,998 $ 27,058 $ 1,542 $ 106,514
Mutual Funds 752,584 38,274 - 790,858
--------- --------- --------- ---------
833,582 65,332 1,542 897,372
Held to Maturity
U. S. Treasury Notes 89,932 454 3,429 86,957
--------- --------- --------- ---------
Totals $ 923,514 $ 65,786 $ 4,971 $ 984,329
========= ========= ========= =========
November 30, 1995
Available for sale
Equity securities $ 68,254 $ 11,124 $ 3,777 $ 75,601
Mutual Funds 650,024 12,694 - 662,718
--------- --------- -------- ---------
718,278 23,818 3,777 738,319
Held to Maturity
U. S. Treasury Notes 105,749 - 5,492 100,257
--------- --------- --------- ---------
Totals $ 824,027 $ 23,818 $ 9,269 $ 838,576
========== ========= ======== =========
[FN]
(Unaudited)
5
<PAGE> 8
HOSOI GARDEN MORTUARY, INC.
NOTES TO FINANCIAL STATEMENTS
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _
November 30, 1996 and 1995
(2) Investment securities (continued)
---------------------
The maturities for all debt securities held at November 30, 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 $ - $ - $ 10,242 $ 10,035
After 1 year
through 5 years - - 79,690 76,922
After 5 years - - - -
--------- ------- --------- --------
$ - $ - $ 89,932 $ 86,957
========= ======= ========= ========
The Company sold securities available-for-sale for $446,376 and $186,730
in 1996 and 1995, respectively. The gross realized gains of $47,437 in 1996
and $13,969 in 1995, are reflected in earnings. Gross realized losses of
$2,639 in 1996 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.
----------------------
Investment 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 sales 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 GLP as its compensation. The balance is deposited with Hawaiian
Trust Company, Limited to be held in trust. GLP is entitled to all earnings
from funds held in trust which amounted to $705,222 and $601,851 for the
years ended May 31, 1996 and 1995, respectively. Trust assets are not
included in the financial statements of Hosoi Garden Mortuary, Inc. nor GLP.
[FN]
(Unaudited)
6
<PAGE> 9
HOSOI GARDEN MORTUARY, INC.
NOTES TO FINANCIAL STATEMENTS
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _
November 30, 1996 and 1995
(3) Garden Life Plan, Ltd. (continued)
----------------------
Audited financial statements of this subsidiary as of May 31, 1996 and
1995 reflected the following summarized financial position and results of
operations:
[CAPTION]
1996 1995
----------- -----------
[S] [C] [C]
Total assets $ 2,991,958 $ 2,529,777
Total liabilities 385,243 434,592
----------- -----------
Total stockholders' equity $ 2,606,715 $ 2,095,185
=========== ===========
Total revenues $ 958,576 $ 1,176,848
=========== ===========
Operating income (loss) $ (136,244) $ 170,728
=========== ===========
Net income $ 511,339 $ 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
six-months ended November 30, 1996.
Investment in Garden Life Plan, Ltd. as of November 30, 1996 is accounted for
as follows:
[S] [C]
Stockholders' equity at November 30, 1996 per
Garden Life Plan, Ltd.'s balance sheet $ 2,848,198
Less: dividends declared in November 1996 (400,000)
-----------
2,448,198
Equity Ownership 50%
-----------
1,224,099
Rounding 4
-----------
Total investment in Garden Life Plan, Ltd. $ 1,224,103
===========
(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 investment 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 November 30, 1996, the Company's retained earnings included approximately
$1,223,603 of undistributed earnings of Garden Life Plan, Ltd.
[FN]
(Unaudited)
7<PAGE>
<PAGE> 10
HOSOI GARDEN MORTUARY, INC.
NOTES TO FINANCIAL STATEMENTS
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _
November 30, 1996 and 1995
(5) Income taxes
------------
The provision for income taxes consists of the following:
[CAPTION]
1996 1995
--------- ---------
[S] [C] [C]
Current:
Federal $ 87,031 $ 68,475
State 13,808 12,318
--------- --------
Total Current 100,839 80,793
--------- --------
Deferred:
Federal (5,624) 10,048
State (1,431) 2,933
-------- --------
Total State (7,055) 12,981
-------- --------
Total Federal and State $ 93,784 $ 93,774
========= ========
(6) Earnings per share
------------------
Earnings per common share has been computed on the basis of a weighted
average shares outstanding of 1,809,455 for 1996 and 1,835,894 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. Purchase of reacquired
shares have exceeded the balance of additional paid-in capital and therefore,
charges are made to Retained Earnings for the cost in excess of par value.
The 223,785 shares reflected as Treasury Stock as of November 30, 1996 and
1995 reflects the shares acquired before July 1, 1987.
(8) Prior period adjustment
-----------------------
The Internal Revenue Service has completed its examination of the Company's
1994 federal income tax return which resulted in an assessment for additional
income taxes and interest of $27,514 which has been charged to Retained
Earnings in the current year.
[FN]
(Unaudited)
8
<PAGE> 11
HOSOI GARDEN MORTUARY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
November 30, 1996 and 1995
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
November 30, 1996.
The working capital and working capital ratio at November 30, 1996 is as
follows:
[S] [C]
Working capital $2,134,938
Working capital ratio 6.1:1
Changes in results of operations
--------------------------------
Cost of Sales and Services - Cost of sales and services as a percent of net
sales increased to 67.5% from 66.2% for the six-months ended November 30,
1996 over 1995. The increase is due principally to an increase in direct
labor cost which was partially offset by a decrease in rent and real
property taxes.
Selling, General and Administrative Expenses - Selling, general and
administrative expenses as a percent of net sales decreased to 21.8% from
23.5% for the six-months ended November 30, 1996 over 1995. The decrease is
mainly due to a decrease in charitable contributions, salaries and wages,
other professional fees which was partially offset by an increase in legal
fees.
Income Taxes - The effective income tax rate has remained relatively stable
at 37.0% for 1996 and 37.8% for 1995.
Other income (expense) - Other income as a percent of net sales increased to
7.7% from 5.9% for the six-months ended November 30, 1996 over 1995. The
increase in other income is due to an increase in gains from the sale of
marketable securities and a non-recurring reimbursement from a former
employee, for expenses previously advanced, which were partially offset by
a decrease in interest income.
9
<PAGE> 12
HOSOI GARDEN MORTUARY, INC.
PART II - OTHER INFORMATION
_ _ _ _ _ _ _ _ _ _ _ _ _ _
November 30, 1996 and 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
six-months ended November 30, 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 there unto 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.
----------------------------------
(Registrant)
Date 01/14/97 CLIFFORD HOSOI
--------------------------------
Clifford Hosoi, President
Date 01/14/97 ELAINE NAKAMURA
--------------------------------
Elaine Nakamura
Corporate Secretary and Bookkeeper
<PAGE> 14
EXHIBIT INDEX
-------------
EXHIBIT
NO. DESCRIPTION
-------- -----------
27 Financial Date Schedule, which is sumbitted electronically
to the Securities and Exchange Commission for information only
and not filed.
