<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended February 29, 2000
[ ] 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) (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) 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
1,669,633 shares of Common Stock
Outstanding at February 29, 2000
<PAGE> 2
HOSOI GARDEN MORTUARY, INC.
_ _ _ _ _ _ _ _ _ _ _ _ _ _
[CAPTION]
CONTENTS
_ _ _ _
[S] [C]
Pages
DISCLAIMER OF OPINION 1
PART I - Financial Information
Item 1. Financial Statements
Balance Sheet 2
Statements of Income and Comprehensive Income 3
Statements of Cash Flows 4
Notes 5 - 13
Item 2. Management's Discussions and Analysis of Financial
Conditions and Results of Operations 14
PART II - Other Information 15
SIGNATURES 16
<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, 2000, and the related statements of income and
comprehensive income for the three-months and nine-months ended February 29,
2000 and February 28, 1999 and cash flows for the nine-months ended February
29, 2000 and February 28, 1999 were not audited by us and accordingly, we do
not express an opinion on them.
April 10, 2000
Endo & Company
Honolulu, Hawaii
1
<PAGE> 4
HOSOI GARDEN MORTUARY, INC.
BALANCE SHEET
_ _ _ _ _ _ _
February 29, 2000
[CAPTION]
A S S E T S
- - - - - -
[S] [C]
CURRENT ASSETS
Cash and cash equivalents (Note 2) $ 724,970
Securities available-for-sale, at market (Note 3) 893,952
Accounts receivable, less allowance for doubtful
accounts of $86,402 319,683
Income taxes receivable 28,127
Inventories 299,544
Prepaid expenses and others 93,089
Deferred income taxes (Note 6) 43,064
------------
TOTAL CURRENT ASSETS 2,402,429
------------
INVESTMENTS
Garden Life Plan, Ltd. (Note 4) 2,795,231
Woolsey-Hosoi Mortuary Services, LLC (Note 5) 4,845
Cemetery plots 1,350
Securities held-to-maturity, at cost (Note 3) 886,935
------------
TOTAL INVESTMENTS 3,688,361
------------
PROPERTY, PLANT AND EQUIPMENT, at cost, less accumulated
depreciation 1,483,742
------------
OTHER ASSETS 106,724
------------
TOTAL ASSETS $ 7,681,256
============
[CAPTION]
L I A B I L I T I E S
---------------------
[S] [C]
CURRENT LIABILITIES
Accounts payable $ 336,717
Accrued liabilities 113,463
------------
TOTAL CURRENT LIABILITIES 450,180
------------
DEFERRED INCOME TAXES (Note 6) 218,507
------------
[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 293,989 reacquired shares (59,018)
-----------
TOTAL CAPITAL CONTRIBUTED 378,410
-----------
RETAINED EARNINGS 6,642,914
ACCUMULATED OTHER COMPREHENSIVE INCOME,
net of deferred taxes (Notes 3 and 9) 72,527
TREASURY STOCK, 223,785 shares, at cost (Note 8) (81,282)
-----------
TOTAL STOCKHOLDERS' EQUITY 7,012,569
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 7,681,256
============
[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, 2000 28, 1999 29, 2000 28, 1999
---------- ---------- ---------- -----------
[S] [C] [C] [C] [C]
NET SALES AND SERVICES $ 749,527 $ 787,854 $ 2,054,046 $ 2,060,738
COST OF SALES AND SERVICES 477,529 548,357 1,433,710 1,503,371
---------- ---------- ----------- -----------
GROSS PROFIT 271,998 239,497 620,336 557,367
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 218,877 197,662 597,262 519,292
---------- ---------- ---------- ----------
OPERATING INCOME 53,121 41,835 23,074 38,075
OTHER INCOME (EXPENSE)
Parking, dividends, interest
and miscellaneous income 48,460 59,445 141,501 131,247
Interest and other expenses (1,170) - (1,438) (1,643)
---------- --------- ---------- ---------
INCOME BEFORE INCOME
TAXES AND EQUITY IN
EARNINGS OF GARDEN
LIFE PLAN, LTD. 100,411 101,280 163,137 167,679
INCOME TAXES (Note 7) 38,313 34,126 56,203 53,436
--------- --------- ---------- ---------
INCOME BEFORE EQUITY
IN EARNINGS OF GARDEN
LIFE PLAN, LTD. 62,098 67,154 106,934 114,243
EQUITY IN EARNINGS OF GARDEN
LIFE PLAN, LTD., net of
deferred income taxes (Note 4) 640,061 521,481 648,725 602,111
--------- --------- --------- ----------
NET INCOME 702,159 588,635 755,659 716,354
OTHER COMPREHENSIVE INCOME-
Net unrealized gains(loss) on
available-for-sale securities,
net of income taxes (7,554) (6,517) (11,901) 6,598
--------- --------- ---------- ---------
COMPREHENSIVE INCOME $ 694,605 $ 582,118 $ 743,758 $ 722,952
=========== ========== ========== =========
AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING (Note 8) 1,669,566 1,722,325 1,671,127 1,730,573
=========== ========== ========== =========
EARNINGS PER COMMON SHARE
(Note 8) $ .42 $ .34 $ .45 $ .41
===== ===== ===== =====
[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, 2000 28, 1999
---------- ----------
[S] [C] [C]
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 755,659 $ 716,354
Adjustments to reconcile net income to net cash
provided by (used in) operations
Depreciation 50,504 49,842
Gain on sale of securities (8,399) (17,296)
Undistributed earnings of Garden Life Plan, Ltd. (705,075) (654,412)
Increase in allowance for doubtful accounts 23,692 -
Cash value of life insurance policies (622) 2,438
Deferred income taxes 47,240 (581)
(Increase) decrease in certain assets
Accounts receivable (21,922) (38,080)
Income taxes receivable (20,053) 71,862
Dividend receivable - 750,000
Inventories (155,570) (40,400)
Prepaid expenses and others (34,224) (65,041)
(Decrease) increase in certain liabilities
Accounts payable 76,746 101,146
Accrued liabilities (18,253) (26,269)
---------- --------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (10,277) 849,563
---------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of securities 905,482 825,674
Purchase of property and equipment (28,154) (43,838)
Increase in securities (960,508) (863,403)
Distribution from investment in LLC 17,500 -
Investment in Woolsey-Hosoi Mortuary Services, LLC - (15,000)
Increase in certificate of deposit - (600,000)
Premium payments on life insurance policies (4,217) 4,863
--------- --------
NET CASH USED IN INVESTING ACTIVITIES (69,897) (691,704)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of reacquired shares (21,994) (122,740)
Cash dividends paid (101,024) (173,488)
---------- ---------
NET CASH USED IN FINANCING ACTIVITIES (123,018) (296,228)
---------- ---------
NET DECREASE (203,192) (138,369)
CASH, beginning of period 928,162 498,871
---------- ---------
CASH, end of period $ 724,970 $ 360,502
============ ==========
[FN]
See the Accompanying Notes to Financial Statements
(Unaudited)
4
<PAGE> 7
HOSOI GARDEN MORTUARY, INC.
NOTES TO FINANCIAL STATEMENTS
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _
February 29, 2000 and February 28, 1999
(1) Basis of presentation
---------------------
Use of estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.
Reclassification - Certain amounts in 1999 have been reclassified to conform
with the 2000 presentation.
(2) Cash and cash equivalents
-------------------------
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
The Company's cash is deposited with four local financial institution. At
February 29, 2000 and February 28, 1999, the Company had deposits in two of
these financial institutions in excess of the deposit insurance of $100,000.
(3) 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]
February 29, 2000
Available-for-Sale
Equity Securities $ 116,685 $ 20,976 $ 25,541 $ 112,120
Mutual Funds 660,339 132,627 11,134 781,832
---------- ---------- ---------- ----------
777,024 153,603 36,675 893,952
[FN]
(Unaudited)
5
<PAGE> 8
HOSOI GARDEN MORTUARY, INC.
NOTES TO FINANCIAL STATEMENTS
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _
February 29, 2000 and February 28, 1999
(3) Investment securities (continued)
---------------------
[CAPTION]
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gain Loss Value
----------- ---------- ---------- ---------
[S] [C] [C] [C] [C]
Held-to-Maturity
U.S. Treasury Notes 886,935 22 4,640 882,317
----------- --------- ---------- ----------
Totals $1,663,959 $ 153,625 $ 41,315 $1,776,269
=========== ========= ========== ==========
February 28, 1999
Available-for-Sale
Equity Securities $ 102,669 $ 31,576 $ 8,125 $ 126,120
Mutual Funds 617,208 93,733 152 710,789
----------- --------- --------- ----------
719,877 125,309 8,277 836,909
Held-to-Maturity
U.S. Treasury Notes 844,872 1,103 1,569 844,406
----------- ---------- --------- ----------
Totals $ 1,564,749 $ 126,412 $ 9,846 $1,681,315
=========== ========== ========= ==========
The maturities for all debt securities held at February 29, 2000 were:
[CAPTION]
Available-for-Sale Held-to-Maturity
------------------- ----------------------
Amortized Market Amortized Market
Cost Value Cost Value
--------- -------- --------- ---------
[S] [C] [C] [C] [C]
Within 1 year $ - $ - $ 777,553 $ 776,970
After 1 year
through 5 years - - 75,501 72,868
After 5 years - - 33,881 32,479
--------- --------- --------- ---------
$ - $ - $ 886,935 $ 882,317
========= ======== ========= =========
[FN]
(Unaudited)
6
<PAGE> 9
HOSOI GARDEN MORTUARY, INC.
NOTES TO FINANCIAL STATEMENTS
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _
February 29, 2000 and February 28, 1999
(3) Investment securities (continued)
---------------------
The Company sold securities available-for-sale and held-to-maturity for
$905,482 and $825,674 in 2000 and 1999, respectively. The net realized gain
of $8,399 in 2000 and $17,296 in 1999 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.
The net unrealized holding gains on investment securities available-for-sale
as of February 29, 2000 is reported as a separate component of Stockholders'
Equity as follows:
[S] [C]
Unrealized holding gains, net of losses $ 116,928
Deferred income tax on net unrealized holding gains (44,401)
---------
$ 72,527
=========
(4) 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. Garden Life Plan, Ltd., (GLP), a Hawaii
corporation is engaged in the sale of pre-need funeral plans which are
serviced solely by the Company.
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 $1,508,657 and $2,136,577 for the
years ended May 31, 1999 and 1998, respectively. Trust assets are not included
in the financial statements of Hosoi Garden Mortuary, Inc. nor GLP.
[FN]
(Unaudited)
7
<PAGE> 10
HOSOI GARDEN MORTUARY, INC.
NOTES TO FINANCIAL STATEMENTS
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _
February 29, 2000 and February 28, 1999
(4) Garden Life Plan, Ltd. (continued)
----------------------
Audited financial statements of this subsidiary as of May 31, 1999 and 1998
reflected the following summarized financial position and results of
operations:
[CAPTION]
1998(As
1999 Restated)
----------- -----------
[S] [C] [C]
Total assets $ 6,129,660 $ 6,981,992
Total liabilities 1,179,107 2,959,262
----------- -----------
Total stockholders' equity $ 4,950,553 $ 4,022,730
=========== ===========
Total revenues $ 439,573 $ 617,214
=========== ===========
Operating loss$ (131,566) $ (84,329)
=========== ===========
Other income - trust fund income $ 1,508,657 $ 2,136,577
=========== ===========
Net income $ 880,869 $ 1,283,447
=========== ===========
Equity in earnings of Garden Life Plan, Ltd. represents the Company's share of
the earnings of GLP for its three-months and nine-months ended February 29,
2000 and February 28,1998, respectively.
(5) Related party transactions
--------------------------
On July 7, 1998, the Company in partnership with Woolsey Funeral & Cemetery
Services, Inc. formed Woolsey-Hosoi Mortuary Services, LLC (Woolsey-Hosoi), a
limited liability company, to provide funeral services to market sectors not
previously serviced by the Company. The Company's initial capital
contribution in Woolsey-Hosoi is $15,000.
[FN]
(Unaudited)
8
<PAGE> 11
HOSOI GARDEN MORTUARY, INC.
NOTES TO FINANCIAL STATEMENTS
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _
February 29, 2000 and February 28, 1999
(5) Related party transactions (continued)
--------------------------
The Company provides Woolsey-Hosoi with embalming services, assistance with
funeral arrangements, use of its facilities and related charges. The revenues
from services provided to Woolsey-Hosoi is reflected in net sales and services
which amounted to $12,728 and $10,440 for the period ended February 29, 2000
and February 28, 1999, respectively.
(6) Deferred income taxes
---------------------
Deferred taxes are recognized for differences between the basis of assets and
liabilities for financial statements and income tax purposes. The deferred
assets and liabilities represent the future tax consequences of those
differences, which will be either taxable or deductible when the assets and
liabilities are recovered or settled. The deferred tax liability results from
the recognition of unrealized gains, net of losses, on securities for
financial statements purposes and recognition of gains or losses when
securities are sold for income tax purposes, the inclusion of deferred
earnings on an annuity policy for financial statements and the recognition of
the earnings when received for tax purposes and 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 February 29, 1999 the Company's
retained earnings included approximately $2,795,231 of undistributed earnings
of GLP.
The deferred tax asset results 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 purpose, the accrual
of the retroactive rent for financial statements purposes and the recognition
of the rent expense when paid for income tax purposes and the accrual of
vacation and sick leave when earned for the financial statements and the
recognition for income tax purposes when paid.
[FN]
(Unaudited)
9
<PAGE> 12
HOSOI GARDEN MORTUARY, INC.
NOTES TO FINANCIAL STATEMENTS
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _
February 29, 2000 and February 28, 1999
(7) Income taxes
------------
The provision for income taxes consists of the following:
[CAPTION]
2000 1999
---------- ---------
[S] [C] [C]
Federal:
Current $ 56,594 $ 48,916
Deferred (7,666) (3,023)
---------- ---------
Total federal 48,928 45,893
---------- ---------
State:
Current 8,719 8,113
Deferred (1,444) (570)
---------- ---------
Total state 7,275 7,543
---------- ---------
Total income taxes $ 56,203 $ 53,436
========== =========
(8) Earnings per share
------------------
Earnings per common share has been computed on the basis of a weighted average
of shares outstanding of 1,671,127 for 2000 and 1,730,573 for 1999.
(9) Comprehensive income
--------------------
In the year ended May 31, 1999, the Company adopted Statement of Financial
Accounting Standards No. 130, Reporting Comprehensive Income, which requires
that unrealized gains and losses on available-for-sale securities be included
in other comprehensive income.
[FN]
(Unaudited)
10
<PAGE> 13
HOSOI GARDEN MORTUARY, INC.
NOTES TO FINANCIAL STATEMENTS
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _
February 29, 2000 and February 28, 1999
(10) Reacquired shares
-----------------
Capital contributed is reduced for shares of the Company 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, Retained Earnings is charged for the cost in excess of par value.
The 223,785 shares reflected as Treasury Stock as of November 30, 1999
reflects the shares acquired before July 1, 1987.
(11) Prior period adjustment
-----------------------
Subsequent to the issuance of the Company's 1999 financial statements, it was
determined that the amount of income taxes provided in the financial
statements was understated. As a result additional income taxes of $20,943
has been charged to retained earnings in the current year.
(12) Year 2000 Issue
---------------
The Year 2000 Issue arises because most computer software programs allocate
only two digits to the data field for year on the assumption that the first
two digits will be 19. Such programs, absent reprogramming, will thus
interpret the year 2000 as the year 1900 and 2001 as 1901 and so on. The Year
2000 Issue affects both computer hardware (i.e. the embedded logic of
computer chips) and computer software and could impact both the ability to
enter data into computer programs and the ability of such programs to process
data correctly. The Company's operations, like those of many business entities,
including infrastructure providers, vendors and others whose performance can
affect the operations of the Company, may be impacted by the Year 2000 Issue
with microprocessors and programs. Unless such microprocessors or programs are
modified or replaced, they may not function properly after December 31, 1999,
causing system failure or miscalculations.
[FN]
(Unaudited)
11
<PAGE> 14
HOSOI GARDEN MORTUARY, INC.
NOTES TO FINANCIAL STATEMENTS
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _
February 29, 2000 and February 28, 1999
(12) Year 2000 Issue (continued)
---------------
Based on recent assessments, the Company has determined that it will be
required to modify or replace significant portions of its software and
hardware so that these systems will properly utilize dates beyond December 31,
1999. The Company presently believes that with modifications or replacement
of existing software and certain hardware, the Year 2000 Issue can be
mitigated. However, if such modifications and replacements are not made, or
are not completed timely, the Year 2000 Issue could have a material impact on
the operations of the Company.
The Company has identified the system in the matrix below as mission-critical
which may be affected by the Year 2000 Issue. This system was subject to the
following four stages of work: awareness, assessment, remediation and
validation/testing.
The following matrix summarizes the Company's Year 2000 remediation work for
its mission-critical system. The remediation is either complete, in progress
or yet to be addressed.
[CAPTION]
System Description Awareness Assessment Remediation Validation/
Testing
- ---------------------- --------- ---------- ----------- ------------
[S] [C] [C] [C] [C]
General Office Desktop Complete Complete Complete Complete
Systems (Windows based
spreadsheet and word
processing)
The Company has solicited information from vendors and others, whose Year 2000
compliance could affect the Company, regarding the status of assessment,
testing and remediation of their computer applications. The Company, is
continuing its efforts to determine the status of Year 2000 compliance of
entities whose systems could impact the operations of the Company. In
general, those who have responded to the Company have indicated that they too
are working on the Year 2000 Issue. There can be no guarantee, however, that
all such persons or others who have not been identified or solicited or who
has
[FN]
(Unaudited)
12
<PAGE> 15
HOSOI GARDEN MORTUARY, INC.
NOTES TO FINANCIAL STATEMENTS
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _
February 29, 2000 and February 28, 1999
(12) Year 2000 Issue (continued)
---------------
responded, as the case may be, but on whose operations the Company directly or
indirectly depends, will be in compliance in a timely manner. Any failure by
some or all of these persons to be in compliance could adversely affect the
operations of the Company.
The Company will utilize both internal and external resources to reprogram,
replace, test and implement software and equipment for Year 2000
modifications.
The Company has spent approximately $3,500 to replace general office desktop
systems. At the present time, the Company believes that the amount of money
needed to complete the Year 2000 remediation will not be material and is
estimated not to exceed $25,000.
The Company does not have any substantial contingency plans because it
believes that its remediation efforts will be successful. The Company has,
however, identified specific procedures required to keep its operations
functioning in the event of delays or machine failures.
Because of the unprecedented nature of the Year 2000 Issue, its effects and
the success of remediation efforts will not be fully determinable until the
Year 2000 and thereafter. There is no assurance that the Company will be Year
2000 ready, that the Company's remediation efforts will be successful in whole
or in part, or that parties with whom the Company does business will be Year
2000 compliant.
If the steps taken by the Company and its third parties are not successful,
the Company could experience operational difficulties. In addition, the
preceding information, including the nature, timing, extent and costs of the
Company's remediation efforts are subject to change, and such changes could be
material.
[FN]
(Unaudited)
13
<PAGE> 16
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, 2000.
The working capital and working capital ratios at February 29, 2000 is as
follows:
[S] [C]
Working capital $ 1,952,249
Working capital ratio 5.3:1
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 73.0% for the nine-months ended February 29,
2000 over February 28, 1999. The decrease is due principally to a decrease in
rent and real property taxes.
Selling, General and Administrative Expenses - Selling, general and
administrative expenses as a percent of net sales increased to 29.1% for the
nine-months ended February 29, 2000 from 25.2% for February 28, 1999. The
increase is due increases in education expense, salaries and wages and
professional services.
Income Taxes - The effective income tax rate increased to 34.4% in 2000 from
31.9% in 1999.
Other Income (Expense) - Other income as a percent of net sales increased to
7.9% from 6.4% for the nine-month ended February 29, 2000 over February 28,
1999. The increase in other income resulted primarily from a increase in
interest income and non-recurring revenues from data processing for Garden
Life Plan, Ltd.
[FN]
14
<PAGE> 17
HOSOI GARDEN MORTUARY, INC.
PART II - OTHER INFORMATION
_ _ _ _ _ _ _ _ _ _ _ _ _ _
February 29, 2000 and February 28, 1999
Item 4. Submission of Matters to a Vote of Security Holders
- -----------------------------------------------------------
At the Annual Meeting of Stockholders of the Company held on January 23,
2000, the Stockholders re-elected and elected the following individuals as
members of the Board of Directors:
[S] [C]
Re-elected: Robert Kuwahara and Julie Shimonishi.
Elected: Glenn Suetsugu
The Stockholders elected Endo & Company as the auditors for 2000.
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, 2000.
[FN]
15
<PAGE> 18
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.
(Registrant)
Date April 17, 2000 Clifford Hosoi
--------------------------
Clifford Hosoi, President
Date April 17, 2000 Keith M. Numazu
--------------------------
Keith M. Numazu, Treasurer
[FN]
16
<PAGE> 19
EXHIBIT INDEX
-------------
EXHIBIT
NO. DESCRIPTION
- ------- -----------
27 Financial Data Sehedule, which is submitted electronically
to the Securities and Exhange Commission for information
only and not filed.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
balance sheet and the statements of income and comprehensive 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-31-2000
<PERIOD-END> FEB-29-2000
<CASH> 724970
<SECURITIES> 893952
<RECEIVABLES> 319683
<ALLOWANCES> 86402
<INVENTORY> 299544
<CURRENT-ASSETS> 2402429
<PP&E> 1483742
<DEPRECIATION> 50504
<TOTAL-ASSETS> 7681256
<CURRENT-LIABILITIES> 450180
<BONDS> 0
0
0
<COMMON> 378410
<OTHER-SE> 6634159
<TOTAL-LIABILITY-AND-EQUITY> 7681256
<SALES> 2054046
<TOTAL-REVENUES> 2054046
<CGS> 1433710
<TOTAL-COSTS> 1433710
<OTHER-EXPENSES> 597262
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 268
<INCOME-PRETAX> 163137
<INCOME-TAX> 56203
<INCOME-CONTINUING> 106934
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 755659
<EPS-BASIC> .44
<EPS-DILUTED> .44
</TABLE>
