UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One) Form 10-QSB
[X]QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 31, 1996
[ ]TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
ACT
For the transition period from to .
Commission file number 0-1937
OAKRIDGE HOLDINGS, INC.
(Exact name of Registrant as specified in its charter)
MINNESOTA 41-0843268
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification Number)
4810 120TH STREET WEST, APPLE VALLEY, MINNESOTA 55124
(Address of principal executive offices) (Zip Code)
(Issuer's telephone number) (612) 686-5495
_________________________________________________________________
(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 (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. {X}Yes { }No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
1,309,670
Transitional Small Business Disclosure Format (Check One):
{ )Yes {X}No
PART I - FINANCIAL INFORMATION FORM 10-QSB
ITEM 1 - FINANCIAL STATEMENTS
OAKRIDGE HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
ASSETS September 30,1996 June 30,1996
_________________ ____________
Cash $304,640 $264,691
---------- ----------
Trade receivable, net of allowance 551,428 513,641
---------- ----------
Inventories:
Cemetery and mausoleum space 695,880 701,490
Markers, urns & flowers 21,755 15,675
---------- ----------
717,635 717,165
---------- ----------
Property and equipment 1,727,002 1,701,490
Less: accumulated depreciation 1,233,901 1,217,310
---------- ----------
493,101 484,180
---------- ----------
Prepaid expenses and other assets 41,635 46,331
---------- ----------
Other assets:
Deferred income taxes 319,946 337,429
---------- ----------
Investments:
Land 250,000 250,000
---------- ----------
$2,678,385 $2,613,437
========== ==========
PART I - FINANCIAL INFORMATION FORM 10-QSB
ITEM 1 - FINANCIAL STATEMENTS
OAKRIDGE HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
LIABILITIES September 30,1996 June 30,1996
_________________ ____________
Accounts payable - trade $106,603 $70,199
---------- ----------
Accrued liabilities:
Salaries & payroll taxes 91,207 151,182
Perpetual care trust fund 200,584 190,135
Deferred revenue 338,099 314,483
Marker and inscription costs 80,777 76,026
Other 35,005 33,192
---------- ----------
745,672 765,018
---------- ----------
Notes payable 984,510 989,065
---------- ----------
STOCKHOLDERS' EQUITY
Preferred stock, par value $.10 per
share; authorized 1,000,000 shares,
none issued and outstanding - -
Common stock, par value $.10 per share;
authorized 5,000,000 shares, issued
and outstanding 1,309,670 at
September 30, 1996 and June 30, 1996 130,968 130,968
Additional paid-in-capital 1,875,500 1,875,500
Accumulated deficit (1,164,868) (1,217,313)
---------- ----------
841,600 789,155
---------- ----------
$2,678,385 $2,613,437
========== ==========
PART I - FINANCIAL INFORMATION FORM 10-QSB
ITEM 1 - FINANCIAL STATEMENTS
OAKRIDGE HOLDINGS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
(UNAUDITED)
Three Months Ended September 30,
1996 1995
_______________________________
Revenue, net:
Cemetery $595,130 $612,383
Interest - Care Funds 59,291 61,477
---------- ----------
Total revenue 654,421 673,860
---------- ----------
Operating expenses:
Cemetery 300,121 311,562
Selling 64,535 48,475
General and administrative 196,959 158,981
---------- ----------
Total operating expenses 561,615 519,018
---------- ----------
Income from operations 92,806 154,842
Interest expense 22,879 31,435
---------- ----------
Income from continuing operations 69,927 123,407
Income taxes 17,482 43,192
---------- ----------
Net income 52,445 80,215
Accumulated deficit:
Beginning of period (1,217,313) (1,391,808)
---------- ----------
End of period $(1,164,868) $(1,311,593)
========== ==========
Earnings per share $.040 $.049
========== ==========
Weighted average shares outstanding 1,309,670 1,623,242
========== ==========
PART I - FINANCIAL INFORMATION FORM 10-QSB
ITEM 1 - FINANCIAL STATEMENTS
OAKRIDGE HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
Three Months Ended September 30,
1996 1995
_______________________________
Cash flows from operating activities:
Net income $52,445 $80,215
Adjustments to reconcile net income to
cash flows from operating activities:
Depreciation & Amortization 20,438 12,095
Change in receivables (37,787) (22,650)
Change in inventories (470) 259
Change in prepaid and other assets 849 17,205
Change in deferred income taxes 17,483 43,192
Change in accounts payable 36,404 19,214
Change in accrued liabilities (19,346) (25,338)
---------- ----------
Net cash from operating activities 70,016 124,192
---------- ----------
Cash flows from investing activities:
Purchase of property and equipment (25,512) (54,713)
---------- ----------
Net cash from investing activities (25,512) (54,713)
---------- ----------
Cash flows from financing activities:
Payments on long-term debt (4,555) (42,852)
---------- ----------
Net cash from financing activities (4,555) (42,852)
---------- ----------
Net increase (decrease) in cash: 39,949 26,627
Cash at beginning of period 264,691 192,691
---------- ----------
Cash at end of period $304,640 $219,318
========== ==========
PART I - FINANCIAL INFORMATION FORM 10-QSB
ITEM 1 - FINANCIAL STATEMENTS
OAKRIDGE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
A. The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with
instructions to Form 10-QSB and, accordingly, do not include
all information and footnotes required by generally accepted
accounting principles for complete financial statements. In
the opinion of management all adjustments, consisting only
of normal recurring accruals, considered necessary for a
fair presentation have been included.
B. These statements should be read in conjunction with the
financial statements and footnotes included in the
Registrant's Annual Report on Form 10-KSB for the year ended
June 30, 1996, previously filed with the Commission.
C. The results of operations for the three months ended
September 30, 1996, are not necessarily indicative of
operating results to be expected for the full year.
D. Income tax provisions for interim periods are based on the
current best estimate of the effective federal and state
income tax rates spread evenly throughout the year.
E. Earnings per common share are based on the weighted average
number of common shares outstanding during each period.
PART 1 - FINANCIAL INFORMATION FORM 10-QSB
ITEM 2 - MANAGEMENT'S DISCUSSION AND
ANALYSIS OR PLAN OF OPERATION
OAKRIDGE HOLDINGS, INC.
FINANCIAL & LIQUIDITY AND CAPITAL RESOURCES
Since June 30, 1996 "operating working capital" (defined as
receivables and prepaids less accounts payable and accrued
liabilities) increased $16,033. The increase was primarily due to
higher receivables and decrease in accrued liabilities. The
company showed the largest increase in receivables due to its
increase in pre-need sales. The decrease in accrued liabilities
is primarily due to timing of accrued salaries and payroll taxes.
Inventory remained constant with June 30, 1996, with other
assets decreasing $17,483 primarily due to the amortization of
loan fees and reduction of deferred taxes due to net income
earned during the three months. Investments remained constant
during the three month period.
Accounts payable increased $36,404 from June 30, 1996
primarily due to legal fees and related litigation expenses.
Accrued liabilities decreased $19,346 from June 30, 1996
primarily due to timing of accrued salaries and payroll taxes.
Notes payable decreased $4,555 from June 30, 1996 due to
payments on the debt.
Stockholders' equity increased $52,445 from June 30, 1996
primarily due to net income.
The Registrant's present working capital has continued to
improve and is sufficient to meet current operating needs.
The Registrant's capital expenditures for equipment was
$25,512 for the three months ended September 30, 1996. Consistent
with its ongoing goal to increase net sales and operating
efficiencies, the Registrant is investing substantial amounts to
increase its sales and operating efficiencies. The Registrant's
planned capital expenditures will require an additional $125,000
during the fiscal year 1997. The Registrant will be able to
finance these capital expenditures primarily from cash flow from
operations.
Cash and cash equivalents increased $39,949 during the first
three months of fiscal year 1997. Cash provided from operations
was $70,016, which provided for the purchase of equipment of
$25,512 and payments of debt of $4,555.
The remaining increases and decreases in the components of the
Company's financial position reflect normal operating activity.
The Registrant's ratio of indebtedness for borrowed funds to
equity of 117% at September 30, 1996, was a decrease of 9% in
comparison with June 30, 1996.
During the first quarter of fiscal year 1997, the operating
cemeteries revenue decreased 2% from the prior fiscal year 1996,
cost of sales remained relatively constant at 51% of sales,
selling expenses increased 3% in relation to sales, with general
and administrative expenses increasing 8%, with interest expense
decreasing $8,556. Cash flow from operations exceeded cash flow
used by operations by $39,949 in the first quarter of fiscal year
1997.
ENVIRONMENTAL LIABILITIES
Subsequent to June 30, 1994, the Registrant commissioned an
engineering study of its operating cemeteries for the purpose of
determining the full extent of possible soil contamination. Five
underground tanks were found to require removal and the adjoining
soil to undergo remediation. The engineering estimate for this
project was $195,000. A total of approximately $293,258 has been
expensed by the Registrant as of September 30, 1996.
The Registrant has been notified by the Illinois Environmental
Protection Agency that the clean-up plan may not be in full
compliance with EPA guidelines. The Company has responded to the
IEPA with a work plan that calls for additional costs of
approximately $28,500 with the possibility of additional costs.
The Company is awaiting a response on the work plan from the
IEPA. Additional costs beyond the $28,500 accrued at June 30,
1996 may be incurred, however, the Registrant cannot reasonably
estimate those costs. In addition, the Company may not file for
reimbursement from the Leaking Underground Storage Tank Fund
until the work plan has IEPA approval. Accordingly, the Company
has made no provision for reimbursements.
PART I - FINANCIAL INFORMATION FORM 10-QSB
ITEM 2 - MANAGEMENTS DISCUSSION AND
ANALYSIS OR PLAN OF OPERATIONS
RESULTS OF OPERATIONS:
CEMETERY - Cemetery sales decreased 2% over the prior years as a
result of a slight decrease in burials and cremations over the
prior period. The cost of sales remained constant 51% of sales.
INTEREST - CARE FUNDS - Income decreased 3% due to lower rate of
return of trust assets.
OTHER INCOME - Other Income is immaterial and comparable to the
prior period.
SELLING EXPENSES - Selling expenses increased 34% in comparison
to prior period, primarily due to the hiring of full time sales
manager.
GENERAL & ADMINISTRATION EXPENSES - General and administration
expenses increased 24% in comparison to prior period. The
increase was primarily due to increased legal fees associated
with litigation.
PART II - OTHER INFORMATION FORM 10-QSB
ITEM 1 - LEGAL PROCEEDINGS
OAKRIDGE HOLDINGS, INC.
ITEM 1- LEGAL PROCEEDINGS:
In April 1993, a claim was filed against the company by John
P. Shafer, Sr. and John P. Shafer, Jr. in the Circuit Court of
Cook County Illinois. The Complaint alleges that after the death
of Mrs. Sylvia Shafer, wife of one of the plaintiffs and the
mother of the other, the son arranged with the defendants
funeral home to have Mrs. Shafer's remains cremated by the
Company. The complaint alleges that two urns containing ashes
labeled Slyvia Shafer were returned by the Company causing
mental anguish. The complaint alleges that the Company breached a
contract, was negligent in its procedures, and made false
representations. The plaintiffs request that the court award
damages in a "substantial amount".
Defense of this claim was submitted to the Registrant's
insurer, Employers Mutual Companies and was being handled by
Garrestson & Santora, Ltd. until January 1996, when the company
retained its legal counsel Oppenheimer, Wolff & Donnelly.
The complaint against the Company was dismissed with prejudice
as to the Company on May 10, 1994. Thereafter, the remaining
defendants, the funeral home and the individual defendant,
shortly thereafter filed a third party complaint alleging that
the Company breached its contract to cremate the remains of Mrs.
Shafer and return the ashes to the funeral home, and a first
amended complaint was filed against the Company for negligence in
its procedures and making false representations. In September
1996, the court ordered the Shafer's first amended complaint
dismissed with prejudice. The funeral home also seeks an
indemnity from the Company if it is held liable to the Shafers,
regarding performance under a contract and has not been finally
adjudicated. The Company insurer has agreed to defend and
indemnify the Company for any loss that may result from the
claim.
On October 23, 1996 a confidential settlement agreement was
reached between all parties. The confidential settlement
agreement will have no material effect on the second quarter
financial statements or the cash flow of the Registrant.
On September 6, 1995, the Registrant and the chairman of the
Registrant was served with a complaint in a lawsuit commenced by
American National Financial Services, an Arizona corporation
whose officer is Lee Brukman, a former chairman of the board of
the Registrant asking for over $500,000 in damages. The complaint
alleges a breach of an essential and material term of an
agreement and that a Guaranty of Collection of the Lawrence G.
Malanfant note, the former president of the Registrant, also at
issue is void. In addition, the complaint alleges interference
with contractual relations. Registrant has filed a motion to
dismiss because of not receiving the plaintiff's disclosure
statement as required by Arizona Rules of Civil Procedure
26.1(b). The Registrant and chairman believe that these
allegations are baseless, and they are vigorously defending
themselves against the claim. Accordingly, the Registrant has
made no provisions for this claim.
On April 1, 1996, Dedrick Jones a seasonal cemetery worker
with one of the Registrant's cemeteries, filed a racial
discrimination charge with the Equal Employment Opportunity
Commission. The charge alleges that Mr. Jones was denied full-
time employment, which instead was offered to a Caucasian
individual. The Commission notified the Registrant of the filing
of the charge and offered the Company an opportunity to file a
response. The Company filed a response denying all allegations.
On June 17, 1996, a fact finding conference was held at the
Illinois Department of Human Health. On July 11, 1996, Mr. Jones
asked that the Equal Employment Opportunity Commission and the
Illinois Department of Human Health dismiss the charges and issue
"right to sue" letters as a prerequisite to his filing suit in
court. Those letters were issued on July 11, 1996. Mr. Jones has
90 days from the receipt of those letters to file suit. Mr. Jones
is seeking back pay and promotion. While the dollar amount of
claimed damages is not known, it would probably be immaterial.
The Registrant believes it has good defense to any action that
may be filed and the likelihood of a substantial or material
award is remote. The Company intends to vigorously defend any
suit filed. Accordingly, the Registrant has made no provisions
for this suit.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
Oakridge Holdings, Inc.
/s/ Robert C. Harvey
Robert C. Harvey
Chief Executive Officer
Date: November 8, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from SEC Form
10-QSB and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> SEP-30-1996
<CASH> 304,640
<SECURITIES> 0
<RECEIVABLES> 573,428
<ALLOWANCES> 22,000
<INVENTORY> 717,635
<CURRENT-ASSETS> 1,615,338
<PP&E> 1,727,002
<DEPRECIATION> 1,233,901
<TOTAL-ASSETS> 2,678,385
<CURRENT-LIABILITIES> 864,907
<BONDS> 0
0
0
<COMMON> 130,968
<OTHER-SE> 710,632
<TOTAL-LIABILITY-AND-EQUITY> 2,678,385
<SALES> 595,130
<TOTAL-REVENUES> 654,421
<CGS> 300,121
<TOTAL-COSTS> 300,121
<OTHER-EXPENSES> 261,494
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22,879
<INCOME-PRETAX> 69,927
<INCOME-TAX> 17,482
<INCOME-CONTINUING> 69,927
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 52,445
<EPS-PRIMARY> .040
<EPS-DILUTED> .039
</TABLE>
