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 December 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
<TABLE>
OAKRIDGE HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
ASSETS December 31,1996 June 30,1996
________________ ____________
<S> <C> <C>
Cash $288,505 $264,691
---------- ----------
Trade receivable, net of allowance 583,031 513,641
---------- ----------
Inventories:
Cemetery and mausoleum space 691,876 701,490
Markers, urns & flowers 18,998 15,675
---------- ----------
710,874 717,165
---------- ----------
Property and equipment 1,744,328 1,701,490
Less: accumulated depreciation 1,250,492 1,217,310
---------- ----------
493,836 484,180
---------- ----------
Prepaid expenses and other assets 52,389 46,331
---------- ----------
Other assets:
Deferred income taxes 297,429 337,429
---------- ----------
Investments:
Land 250,000 250,000
---------- ----------
$2,676,064 $2,613,437
========== ==========
</TABLE>
PART I - FINANCIAL INFORMATION FORM 10-QSB
ITEM 1 - FINANCIAL STATEMENTS
<TABLE>
OAKRIDGE HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
LIABILITIES December 31,1996 June 30,1996
________________ ____________
<S> <C> <C>
Accounts payable - trade $ 75,814 $70,199
---------- ----------
Accrued liabilities:
Salaries & payroll taxes 50,099 151,182
Perpetual care trust fund 218,197 190,135
Deferred revenue 362,143 314,483
Marker and inscription costs 72,043 76,026
Other 27,437 33,192
---------- ----------
729,919 765,018
---------- ----------
Notes payable 978,054 989,065
---------- ----------
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
December 31, 1996 and June 30, 1996 130,968 130,968
Additional paid-in-capital 1,875,500 1,875,500
Accumulated deficit (1,114,191) (1,217,313)
---------- ----------
892,277 789,155
---------- ----------
$2,676,064 $2,613,437
========== ==========
</TABLE>
PART I - FINANCIAL INFORMATION FORM 10-QSB
ITEM 1 - FINANCIAL STATEMENTS
<TABLE>
OAKRIDGE HOLDINGS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
(UNAUDITED)
Three Months Ended September 30, Six Months Ended December 31,
1996 1995 1996 1995
________________________________ ____________________________
<S> <C> <C> <C> <C>
Revenue, net:
Cemetery $554,142 $565,823 $1,149,272 $1,178,206
Interest - Care Funds 57,238 63,675 116,529 125,152
Other 6,190 8,683 6,190 8,683
---------- ---------- ---------- ----------
Total revenue 617,570 638,181 1,271,991 1,312,041
---------- ---------- ---------- ----------
Operating expenses:
Cemetery 262,475 267,335 562,596 578,897
Selling 55,786 41,829 120,321 90,304
General and administrative 210,449 164,072 407,408 323,053
---------- ---------- ---------- ----------
Total operating expenses 528,710 473,236 1,090,325 992,254
---------- ---------- ---------- ----------
Income from operations 88,860 164,945 181,666 319,787
Interest expense 15,665 35,469 15,665 66,904
---------- ---------- ---------- ----------
Income from continuing operations 73,195 129,476 143,122 252,883
Income taxes 22,518 45,317 40,000 88,509
---------- ---------- ---------- ----------
Net income 50,677 84,159 103,122 164,374
Accumulated deficit:
Beginning of period (1,164,868) (1,311,593) (1,217,313) (1,391,808)
---------- ---------- ---------- ----------
End of period $(1,114,191) $(1,227,434) $(1,114,191) $(1,227,434)
========== ========== ========== ==========
Earnings per share $.0387 $.0702 $.0787 $.1165
========== ========== ========== ==========
Weighted average
shares outstanding 1,309,670 1,198,242 1,309,670 1,410,742
========== ========== ========== ==========
</TABLE>
PART I - FINANCIAL INFORMATION FORM 10-QSB
ITEM 1 - FINANCIAL STATEMENTS
<TABLE>
OAKRIDGE HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
Three Months Ended December 31,
1996 1995
_______________________________
<S> <C> <C>
Cash flows from operating activities:
Net income $103,122 $164,374
Adjustments to reconcile net income to
cash flows from operating activities:
Depreciation & Amortization 33,182 29,070
Change in receivables (69,390) (74,092)
Change in inventories 6,291 7,247
Change in prepaid and other assets 33,942 98,457
Change in accounts payable 5,615 (21,215)
Change in accrued liabilities (35,099) (35,576)
---------- ----------
Net cash from operating activities 77,663 168,265
---------- ----------
Cash flows from investing activities:
Purchase of property and equipment (42,838) (80,120)
Investment in golf course - 50,000
---------- ----------
Net cash from investing activities (42,838) 30,110
---------- ----------
Cash flows from financing activities:
Payments on long-term debt (11,011) (75,776)
---------- ----------
Net cash from financing activities (11,011) (75,776)
---------- ----------
Net increase (decrease) in cash: 23,814 62,369
Cash at beginning of period 264,691 192,691
---------- ----------
Cash at end of period $288,505 $255,060
========== ==========
</TABLE>
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
December 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 I - 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 $104,932. 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 and prepaid expenses increasing $6,058 primarily due to
the timing of insurance payments. Deferred taxes decreased
$40,000 due to net income earned during the six months.
Investments remained constant during the six month period.
Accounts payable increased $5,615 from June 30, 1996
primarily due to legal fees and related litigation expenses.
Accrued liabilities decreased $35,099 from June 30, 1996
primarily due to timing of accrued salaries and payroll taxes.
Notes payable decreased $11,011 from June 30, 1996 due to
payments on the debt.
Stockholders' equity increased $103,122 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
$42,838 for the six months ended December 31, 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 $50,000
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 $23,814 during the first
six months of fiscal year 1997. Cash provided from operations was
$77,663 which provided for the purchase of equipment of $48,838
and payments of debt of $11,011.
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 110% at December 31, 1996, was a decrease of 15% in
comparison with June 30, 1996.
During the second quarter of fiscal year 1997, the operating
cemeteries revenue decreased 3% from the prior fiscal year 1996,
cost of sales remained relatively constant at 47% of sales,
selling expenses increased 3% in relation to sales, with general
and administrative expenses increasing 9%, with interest expense
decreasing $19,804. Cash flow from operations exceeded cash flow
used by operations by $23,814 for the six months ended December
31, 1996.
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 December 31, 1996.
The Registrant has 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.
RESULTS OF OPERATIONS:
SIX MONTHS ENDED DECEMBER 31, 1996:
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 49% of sales.
INTEREST - CARE FUNDS - Income decreased 7% 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 33% in comparison
to prior period, primarily due to the hiring of full time sales
manager.
GENERAL & ADMINISTRATION EXPENSES - General and administration
expenses increased 26% in comparison to prior period. The
increase was primarily due to increased legal fees associated
with litigation.
THREE MONTHS ENDED DECEMBER 31, 1996:
CEMETERY - Cemetery revenue decreased 10% in comparison to prior
period, primarily due to decreased cremation cases. Operating
expenses for the second quarter have remained stable and constant
at 47% of cemetery revenue.
INTEREST - CARE FUND - Income decreased 11% due to the timing of
payments from perpetual care funds.
SELLING EXPENSES - Selling expenses increased 2.7% in comparison
to prior year, primarily due to the hiring of full time sales
manager.
GENERAL AND ADMINISTRATION EXPENSES - General and administration
expenses increased $84,355 or 26% in comparison to prior period.
The increased 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 defendant funeral
home to have Mrs. Shafer's remains cremated by the Company. The
complaint alleges that two urns containing ashes were labeled
Sylvia 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.
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: February 12, 1997
<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> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 288,505
<SECURITIES> 0
<RECEIVABLES> 605,031
<ALLOWANCES> 22,000
<INVENTORY> 710,874
<CURRENT-ASSETS> 1,634,799
<PP&E> 1,744,328
<DEPRECIATION> 1,250,492
<TOTAL-ASSETS> 2,676,064
<CURRENT-LIABILITIES> 805,733
<BONDS> 0
0
0
<COMMON> 130,968
<OTHER-SE> 1,875,500
<TOTAL-LIABILITY-AND-EQUITY> 2,676,064
<SALES> 1,149,272
<TOTAL-REVENUES> 1,271,991
<CGS> 562,596
<TOTAL-COSTS> 562,596
<OTHER-EXPENSES> 527,729
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 38,544
<INCOME-PRETAX> 143,122
<INCOME-TAX> 40,000
<INCOME-CONTINUING> 103,122
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 103,122
<EPS-PRIMARY> .079
<EPS-DILUTED> .076
</TABLE>
