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 30, 1998
[ ]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:
1,349,670
Transitional Small Business Disclosure Format (Check One):
{ )Yes {X}No
OAKRIDGE HOLDINGS, INC.
FORM 10-QSB
For the quarter ended September 30, 1998
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
ITEM 1. Condensed Consolidated Financial Statements:
(a) Condensed Consolidated Balance Sheet as of September 30, 1998
(unaudited) and June 30, 1998
(b) Condensed Consolidated Statements of Operations for the three
months ended September 30, 1998 and 1997 (unaudited)
(c) Condensed Consolidated Statements of Cash Flows for the three
months ended September 30, 1998 and 1997 (unaudited)
(d) Notes to Condensed Consolidated Financial Statements
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
ITEM 2. Changes in Securities and Use of Proceeds
ITEM 3-5.Not Applicable
ITEM 6. Exhibits and Reports on Form 8
SIGNATURES
PART I - FINANCIAL INFORMATIONFORM 10-QSB
ITEM 1 - FINANCIAL STATEMENTS
OAKRIDGE HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
<TABLE>
<CAPTION>
ASSETS September 30,1998 June 30,1998
(Unaudited)
_________________ ____________
<S> <C> <C>
Cash & cash equivalents $ 705,761 $ 823,458
Receivables 2,265,663 2,567,392
Inventories:
Production 2,380,829 2,829,142
Cemetery and mausoleum space 659,264 663,791
Markers, urns & flowers 27,586 24,388
Deferred income taxes 207,764 245,000
Other current assets 48,862 10,731
---------- ----------
Total current assets 6,295,729 7,163,902
---------- ----------
Property, plant and equipment, at cost 3,910,016 3,632,908
Allowance for depreciation (1,395,063) (1,347,698)
---------- ----------
2,514,953 2,285,210
---------- ----------
Other assets 58,028 60,191
---------- ----------
$8,868,710 $9,509,303
========== ==========
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES September 30,1998 June 30,1998
(Unaudited)
_________________ ____________
<S> <C> <C>
Notes payable & current maturities $1,381,421 $2,378,250
Accounts payable 726,723 950,791
Accrued customer deposits 653,694 329,914
Accrued compensation 248,525 469,980
Accrued perpetual care fund 216,160 226,858
Accrued deferred revenue 459,691 452,661
Accrued marker and inscription costs 94,343 98,676
Accrued warranty 30,501 138,883
Income tax payable 108,833 -
Other current liabilities 205,645 140,944
---------- ----------
Total current liabilities 4,125,536 5,186,957
---------- ----------
Long-term debt 3,123,833 3,123,833
---------- ----------
Total liabilities 7,249,369 8,310,790
---------- ----------
STOCKHOLDERS' EQUITY
Common stock & additional
paid-in-capital 2,151,468 2,071,468
Accumulated deficit (532,127) (872,955)
---------- ----------
1,619,341 1,198,513
---------- ----------
$8,868,710 $9,509,303
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements
OAKRIDGE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended September 30,
1998 1997
_______________________________
<S> <C> <C>
Revenue, net:
Cemetery $ 601,213 $ 681,454
Aviation 2,919,178 -
Interest - Care Funds 43,377 49,593
Other 3,325 -
---------- ----------
Total revenue 3,567,093 731,047
---------- ----------
Operating expenses:
Cost of aviation sales 2,348,282 -
Cost of cemetery sales 321,361 318,921
Sales and marketing 136,170 73,843
General and administrative 173,293 179,241
---------- ----------
Total operating expenses 2,979,106 572,005
---------- ----------
Income from operations 587,987 159,042
Interest expense 101,090 2,301
---------- ----------
Income from continuing operations
before income taxes 486,897 156,741
Provision for income taxes 146,069 45,000
---------- ----------
Net income 340,828 111,741
========== ==========
Net income per common share - basic $.253 $.085
========== ==========
Weighted average number of common
shares outstanding - basic 1,349,670 1,309,670
========== ==========
Net income per common shares - diluted .171 .084
========== ==========
Weighted average number of common
shares outstanding - diluted 2,097,090 1,337,358
========== ==========
</TABLE>
The accompanying notes are an integral part of the
condensed consolidated financial statements
OAKRIDGE HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended September 30,
1998 1997
_______________________________
<S> <C> <C>
Cash flows from operating activities:
Net income $ 340,828 $ 111,741
Adjustments to reconcile net income to
cash flows from operating activities:
Depreciation & Amortization 47,458 18,117
Change in accounts receivable 301,729 (50,263)
Change in inventories 449,642 7,279
Change in deferred income taxes 37,236 45,000
Change in other assets (36,061) (49,625)
Change in accounts payable (224,068) 31,219
Change in accrued liabilities 159,476 762
---------- ----------
Net cash from operating activities 1,076,240 113,096
---------- ----------
Cash flows from investing activities:
Purchase of property and equipment (277,108) (50,265)
---------- ----------
Net cash from investing activities (277,108) (50,265)
---------- ----------
Cash flows from financing activities:
Repayment on long-term debt (26,529) (2,733)
Repayment of short-term borrowing (970,300) -
Proceeds from issuance of common
stock 80,000 -
---------- ----------
Net cash from financing activities (916,829) (2,733)
---------- ----------
Net increase (decrease) in cash: (117,697) 60,962
Cash at beginning of period 823,458 382,287
---------- ----------
Cash at end of period $ 705,761 $ 443,249
========== ==========
</TABLE>
PART I - FINANCIAL INFORMATION FORM 10-QSB
ITEM 1 - FINANCIAL STATEMENTS
OAKRIDGE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
A.BASIS OF PRESENTATION
The condensed consolidated financial statements include the accounts of
Oakridge Holdings, Inc. (the "Company") and its wholly-owned subsidiaries.
All significant intercompany transactions and balances have been eliminated.
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements include all adjustments, consisting only of
normal recurring adjustments, necessary to present such information fairly.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to Securities and Exchange
Commission rules and regulations. These condensed consolidated financial
statements should be read in conjunction with the consolidated financial
statements and related notes included in the Company's Annual Report on Form
10-KSB for the fiscal year ended June 30, 1998. Operating results for the
three month period ended September 30, 1998 may not necessarily be indicative
of the results to be expected for any other interim period or for the full
year.
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 period.
The most significant estimates in the financial statements include but are not
limited to accounts receivable, sales, and accurals. Actual results could
differ from those estimates.
The Company adopted Statement of Financial Accounting Standards No. 131 ("SFAS
131") "Disclosures about Segments of an Enterprise and Related Information
("SFAS 131"), effective June 30, 1998. SFAS 131 does not need to be applied
to interim financial statements in the initial year of its application, but
comparative information for interim periods in the initial year of application
is to be reported in financial statements for interim periods in the second
year of application. SFAS 131 establishes standards for the way that public
business enterprises report selected information about operating segments in
annual financial statements and requires that those enterprises report
selected information about operating segments in interim financial reports
issued to shareholders. SFAS 131 also establishes standards for related
disclosures about products and services, geographic areas and major
customers. The Company will make the necessary disclosures in conjuction with
the filing of their annual 10-KSB for the year ended June 30, 1999.
The Company's Consolidated Statements of Operations for the three month period
ended September 30, 1998, reflect all components of Comprehensive Income as
defined by SFAS No. 130, " Reporting Comprehensive Income." Accordingly, no
separate Consolidated Statement of Comprehensive Income is presented as would
otherwise be required.
B.Reconciliation of Basic and Diluted Shares
<TABLE>
<CAPTION>
Three Months Ended September 30,
1998 1997
---------- ----------
<S> <C> <C>
Income from continuing operations $ 340,828 $ 111,741
Average shares of common stock
outstanding used to compute basic
earnings per common share 1,349,670 1,309,670
Additional common shares to be issued
assuming exercise of stock options, and
conversion of convertible debentures 727,420 27,688
Additional income from continuing
operations, assuming conversion of
convertible debentures at the beginning
of the period $18,117 -
Shares used to compute dilutive effect
of stock options and convertible
debentures 2,077,090 1,337,358
Basic earnings per common share
from continuing operations $.253 $.085
Diluted earnings per common share
from continuing operations $.173 $.084
</TABLE>
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
Management's Discussion and Analysis of Financial Condition and Results of
Operations, as well as other portions of this document, include certain
forward-looking statements about the Company's business and products,
revenues, expenditures and operating and capital requirements. The Private
Securities Litigation Reform Act of 1995 contains certain safe harbors
regarding forward-looking statements. From time to time, information provided
by the Company or statements made by its directors, officers or employees may
contain "forward-looking" information subject to numerous risks and
uncertainties. Any statements made herein that are not statements of
historical fact are forward-looking statements including, but not limited to,
statements concerning the characteristics and growth of the Company's markets
and customers, the Company's objectives and plans for the future operations
and products and the Company's expected liquidity and capital resources. Such
forward-looking statements are based on a number of assumptions and involve a
number of risks and uncertainties, and, accordingly, actual results could
differ materially.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION AND LIQUIDITY
The Company's liquidity needs arise from its acquisition-related activity,
debt service, working capital and capital expenditures. The Company has
historically funded its liquidity needs with proceeds from equity
contributions, bank borrowing, cash flow from operations and the offering of
it's subordinated debentures. The Company for the first three months of
fiscal year 1999 had a decrease in cash of $ 117,697 compared to a cash
increase in the same period in fiscal year 1998 of $60,692. As of September
30, 1998, the Company held cash and cash equivalents of $705,761.
During the three month period ended September 30, 1998, the Company recorded
net income of $340,828 and generated a decrease in net cash of $117,697. The
Company's net cash provided by operating activities was $1,076,240 in the
first three months of fiscal year 1999 compared to $113,096 in the same period
in fiscal year 1998. Excluding cash transactions relating to the acquisition
of aviation ground support business, operating cash flows of $113,000 for the
first three months of 1999 approximated the first three months of 1998. Cash
flows used in investing activities increased $226,843 due to capital
expenditures and net cash used in financing activities increased $ 914,096 due
to the repayment of short term debt incurred to acquire the aviation ground
support equipment business. The remaining increases and decreases in the
components of the Company's financial position reflect normal operating
activity.
The Company continues to maintain a good financial position, with net working
capital of $2,170,193, a increase of $193,248 since June 30, 1998. The
increase was primarily due to repayment of bank borrowing and short term debt.
Current assets amounted to $6,295,729 and current liabilities were $4,125,536,
resulting in a current ratio of 1.5 to 1, compared with 1.4 to 1 at June 30,
1998. With debt of $7,249,369 and equity of $1,619,341 at September 30, 1998,
the debt as a percentage of total capital was 82.7%, compared with 87.4% at
June 30, 1998.
The Company's present working capital has continued to improve and is
sufficient to meet current operating needs.
Capital expenditures for the first three months of fiscal year 1999 were
$277,108 compared with $50,265 the same period in fiscal year 1998. These
investments reflect the Company's continuing program to achieve business
growth and to improve productivity and product quality in the aviation ground
support equipment business and new roads for the cemetery business. The
Company anticipates that it will spend approximately $300,000 on capital
expenditures during the next three quarters of fiscal year 1999. The Company
will be able to finance these capital expenditures primarily from cash flow
from operations.
The stock price ranged from $2.00 to $2.88 per share during the first three
months of Company's fiscal year 1999. The Company's book value per share at
September 30, 1998 was $1.20 compared with $.92 at June 30, 1998. The
Company's annualized return from continuing operations on average equity for
the three months of fiscal year 1999 was 97% compared with 42% for the three
months of fiscal year 1998. The annualized return from continuing operations
on average assets was 15% compared with 16% for the three months of fiscal
year 1998.
The Company has available through two banks, a $3,225,000 revolving credit
facility. As of September 30, 1998 there was $1,250,000 in aggregate
borrowing outstanding under these facilities.
As indicated by the above, the Company's financial position and debt capacity
should enable it to meet its current and future requirements. As additional
resources are needed, the Company should be able to obtain funds readily and
at competitive costs.
INFLATION
Because of the relatively low levels of inflation experienced this past fiscal
year, and as of September 30, 1998, inflation did not have a significant
effect on the Company's results in the first three months of fiscal year 1999.
YEAR 2000
The Company utilizes management information systems and software technology
that may be affected by Year 2000 issues throughout its businesses. During
fiscal year 1998, the Company began to implement plans to ensure those systems
continue to meet its internal and external requirements. During fiscal year
1999, the Company will continue to complete the modifications and testing of
it's information systems to ensure it is Year 2000 compliant. The Company has
developed questionnaires and contacted key suppliers and customers regarding
their Year 2000 compliance to determine any impact on its operations. In
general, the suppliers and customers have developed or are in the process of
developing plans to address Year 2000 issues. The Company will continue to
monitor and evaluate the progress of its suppliers and customers on this
critical matter.
The Year 2000 is not expected to have a material impact on the Company's
current information systems as a result of the steps already completed to make
the Company's systems Year 2000 compliant. Based on the nature of the
Company's business, the Company anticipates it is not likely to experience
material business interruption due to the impact of Year 2000 compliance on
its customers and vendors. As a result, the Company does not anticipate that
incremental expenditures to address Year 2000 compliance will be material to
the Company's liquidity, financial position or results of operations.
RESULTS OF OPERATIONS
FIRST QUARTER OF FISCAL YEAR 1999 COMPARED
WITH FIRST QUARTER OF FISCAL YEAR 1998
First quarter revenues of $3,567,093 were 488% above 1998's comparable
period. The increase was due to the inclusion of aviation ground support
equipment business acquired on the last day of fiscal year 1998. Cemetery
revenue decreased $80,241 or 12% over the prior comparable period primarily
due to an extraordinary sale of a marker for $50,200 in fiscal year 1998 and a
slight decrease in markers and foundations due to difficulties in hiring
qualified sales personnel.
Cost of products and services sold increased 6% for the cemetery business
primarily to the mix of sales products, 4% increase in grounds payroll wages,
32% increase in repairs and maintenance caused by weather, repairs on the
mausoleum and increase in operating supplies. Cost of sales averaged 51% for
the past years, but increased to 53% for the first quarter of fiscal year
1999. Cemetery cost of sales for the aviation ground support equipment
business was 80%.
Interest from care funds decreased $6,216 or 13% due to timing of interest
payments and recognition of trust income.
Other Income is immaterial.
Selling expenses for the cemetery business in relation to sales decreased from
11% in fiscal year 1998 to 8% in fiscal year 1998. Decrease was due to the
elimination of sales manager position the prior year. Selling expenses for
the aviation ground support equipment business in relation to sales was 3% for
the first fiscal quarter of 1999.
General and administrative expenses, which are expenses associated with
supporting the Company's day-to-day management of its existing businesses and
the holding company, decreased $5,984 or 3% in comparison to prior period.
The decrease is due to timing of services of professional fees, reduced travel
expenses, and collection of a past due accounts receivable previously written
off for $61,000.
Depreciation and amortization expenses increased 262% to $47,457 for the three
month period ended September 30, 1998 from $18,117 for the three month period
ended September 30, 1997, as a result of the increase in aviation ground
support equipment assets and associated depreciation.
Interest expense increased $98,789 for the three month period ended September
30, 1998 in comparison to the three month period ended September 30, 1997.
The increase in interest expense was attributable to increased borrowing
associated with the Company's acquisition during fiscal year 1998.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is from time to time involved in ordinary litigation incidental to
the conduct of its businesses. The Company believes that none of its pending
litigation will have a material adverse effect on the Company's businesses,
financial condition or results of operations.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
In July 1998 the Company sold 40,000 shares of unregistered common stock to a
director of the Company at a purchase price of $2.00 per share resulting in
net proceeds to the Company of $80,000 per share. The common stock was in
reliance on an exemption provided by Section 4(2) of the Securities Act of
1933.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a)No exhibits are included herein
(b)Reports on Form 8-K. The Company filed a report on form 8-K on July 10,
1998, with respect to the acquisition of aviation ground support equipment
business.
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 16, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> SEP-30-1998
<CASH> 705,761
<SECURITIES> 0
<RECEIVABLES> 2,576,663
<ALLOWANCES> 311,000
<INVENTORY> 3,067,679
<CURRENT-ASSETS> 6,295,729
<PP&E> 3,910,016
<DEPRECIATION> 1,395,063
<TOTAL-ASSETS> 8,868,710
<CURRENT-LIABILITIES> 4,125,536
<BONDS> 0
0
0
<COMMON> 134,968
<OTHER-SE> 2,016,500
<TOTAL-LIABILITY-AND-EQUITY> 8,868,710
<SALES> 3,567,093
<TOTAL-REVENUES> 3,567,093
<CGS> 2,669,643
<TOTAL-COSTS> 2,979,106
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 101,090
<INCOME-PRETAX> 486,897
<INCOME-TAX> 146,069
<INCOME-CONTINUING> 340,828
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 340,828
<EPS-PRIMARY> .253
<EPS-DILUTED> .171
</TABLE>
