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, 1999
[ ]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:
1,388,003
Transitional Small Business Disclosure Format (Check One):
{ )Yes {X}No
OAKRIDGE HOLDINGS, INC.
FORM 10-QSB
For the quarter ended September 30, 1999
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
ITEM 1. Condensed Consolidated Financial Statements:
(a) Condensed Consolidated Balance Sheets as of
September 30, 1999 (unaudited) and June 30, 1999
(b) Condensed Consolidated Statements of Operations
for the three months ended September 30, 1999 and
1998 (unaudited).
(c) Condensed Consolidated Statements of Cash Flows
for the three months ended September 30, 1999 and
1998 (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 INFORMATION FORM 10-QSB
ITEM 1 - FINANCIAL STATEMENTS
OAKRIDGE HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
ASSETS September 30,1999 June 30,1999
_________________ ____________
<S> <C> <C>
Cash & cash equivalents $ 700,880 $ 950,907
Receivables 1,899,189 1,720,747
Inventories:
Production 2,409,116 1,854,221
Cemetery and mausoleum space 638,005 634,887
Markers, urns & flowers 24,248 20,367
Deferred income taxes 102,000 102,000
Other current assets 117,622 36,514
---------- ----------
Total current assets 5,891,060 5,319,643
---------- ----------
Property, plant and equipment, at cost 4,546,430 4,387,570
Allowance for depreciation (1,601,425) (1,539,730)
---------- ----------
2,945,005 2,847,840
---------- ----------
Other assets 50,488 64,537
---------- ----------
$8,886,553 $8,232,020
========== ==========
</TABLE>
PART I - FINANCIAL INFORMATION FORM 10-QSB
ITEM 1 - FINANCIAL STATEMENTS
OAKRIDGE HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
LIABILITIES September 30,1999 June 30,1999
(Unaudited)
_________________ ____________
<S> <C> <C>
Notes payable & current maturities $1,380,761 $1,452,743
Accounts payable 1,221,076 601,186
Accrued customer deposits 34,348 25,248
Accrued compensation 234,179 375,657
Accrued perpetual care fund 250,921 212,781
Accrued deferred revenue 523,736 507,711
Accrued marker and inscription costs 75,407 79,876
Income tax payable 5,717 -
Other current liabilities 147,484 161,490
---------- ----------
Total current liabilities 3,873,629 3,416,692
---------- ----------
Long-term debt 3,095,031 3,044,075
---------- ----------
Total liabilities 6,968,660 6,460,767
---------- ----------
STOCKHOLDERS' EQUITY
Common stock & additional
paid-in-capital 2,156,051 2,156,051
Accumulated deficit (238,158) (384,798)
---------- ----------
1,917,893 1,771,253
---------- ----------
$8,886,553 $8,232,020
========== ==========
</TABLE>
See accompanying notes to the condensed
consolidated financial statements
PART I - FINANCIAL INFORMATION FORM 10-QSB
ITEM 1 - FINANCIAL STATEMENTS
OAKRIDGE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
Three Months Ended September 30,
1999 1998
_______________________________
<S> <C> <C>
Revenue, net:
Cemetery $ 611,774 $ 601,213
Aviation 2,362,781 2,919,178
Interest - Care Funds 59,532 43,377
Other 2,741 3,325
---------- ----------
Total revenue 3,036,828 3,567,093
---------- ----------
Operating expenses:
Cost of aviation sales 2,004,109 2,348,282
Cost of cemetery sales 335,843 321,361
Sales and marketing 163,335 136,170
General and administrative 248,480 173,293
---------- ----------
Total operating expenses 2,751,767 2,979,106
---------- ----------
Income from operations 285,061 587,987
Interest expense 84,421 101,090
---------- ----------
Income from continuing operations
before income taxes 200,640 486,897
Provision for income taxes 54,000 146,069
---------- ----------
Net income $146,640 $340,828
========== ==========
Net income per common share - basic $.106 $ .253
========== ==========
Weighted average number of common
shares outstanding - basic 1,388,003 1,349,670
========== ==========
Net income per common shares - diluted .079 .171
========== ==========
Weighted average number of common
shares outstanding - diluted 2,090,665 2,097,090
========== ==========
</TABLE>
See accompanying notes to the
condensed consolidated financial statements
PART I - FINANCIAL INFORMATION FORM 10-QSB
ITEM 1 - FINANCIAL STATEMENTS
OAKRIDGE HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
Three Months Ended September 30,
1999 1998
_______________________________
<S> <C> <C>
Cash flows from operating activities:
Net income $ 146,640 $ 340,828
Adjustments to reconcile net income to
cash flows from operating activities:
Depreciation & Amortization 62,255 47,458
Change in accounts receivable (178,442) 301,729
Change in inventories (561,894) 449,642
Change in deferred income taxes 37,236
Change in other assets (67,619) (36,061)
Change in accounts payable 619,890 (224,068)
Change in accrued liabilities (90,971) 159,476
---------- ----------
Net cash from operating activities (70,141) 1,076,240
---------- ----------
Cash flows from investing activities:
Purchase of property and equipment (158,860) (277,108)
---------- ----------
Net cash from investing activities (158,860) (277,108)
---------- ----------
Cash flows from financing activities:
Repayment on long-term debt (24,318) ( 26,529)
Repayment of short-term borrowing (970,300)
Proceeds from issuance of common
stock 80,000
Proceeds from short-term borrowing 3,292
---------- ----------
Net cash from financing activities (21,026) (916,829)
---------- ----------
Net increase (decrease) in cash: (250,027) (117,697)
Cash at beginning of period 950,907 823,458
---------- ----------
Cash at end of period $ 700,880 $ 705,761
========== ==========
</TABLE>
See accompanying notes to the condensed
consolidated financial statements
PART I - FINANCIAL INFORMATION FORM 10-QSB
ITEM 1 - FINANCIAL STATEMENTS
OAKRIDGE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying 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,
1999. Operating results for the three month period ended
September 30, 1999 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 accruals. Actual results could differ from those
estimates.
2. EARNINGS PER COMMON SHARE
Earnings per Common Share (EPS) is presented on both a basic and
diluted basis in accordance with the provisions of Statement of
Financial Accounting Standards No. 128, "Earnings per Share."
Basic EPS is computed by dividing net income by the weighted
average number of shares of common stock outstanding during the
period. Diluted EPS reflects the maximum dilution that would
results after giving effect to dilutive stock options and
convertible debentures. The following table presents the
computation of basic and diluted EPS.
Three Months Ended September 30,
1999 1998
---------- ----------
Income from continuing operations $ 146,640 $ 340,828
Average shares of common stock
outstanding used to compute basic
earnings per common share 1,388,003 1,349,670
Additional common shares to be issued
assuming exercise of stock options, and
conversion of convertible debentures 702,662 747,420
Additional income from continuing
operations, assuming conversion of
convertible debentures at the beginning
of the period 18,117 18,117
Shares used to compute dilutive effect
of stock options and convertible
debentures 2,090,665 2,097,090
Basic earnings per common share
from continuing operations $.106 $.253
Diluted earnings per common share
from continuing operations $.079 $.171
3. COMPREHENSIVE INCOME
Comprehensive income was $146,640 and $340,828 for the three
months ended September 30, 1999 and 1998, respectively.
Comprehensive income encompasses net income and "other
comprehensive income," which includes all other non-owner
transactions and events that change shareholders equity.
4. OPERATING SEGMENTS AND RELATED DISCLOSURES
The Company operations are classified into two principal industry
segments: cemeteries and aviation ground support equipment.
The Company evaluates the performance of its segments and
allocates resources to them based primarily on operating income.
The table below summarizes information about reported segments
for the three months ended September 30:
Three Months Ended
September 30,1999:
Aviation
Ground
Support
Equipment Cemeteries Corporate
----------- ---------- ---------
Revenues $ 2,362,781 $ 671,306 $ 2,741
Depreciation 41,997 19,508 750
Gross Margin 358,672 335,463 2,741
Selling Expenses 113,511 49,824 -
General & Administrative
Expenses 95,425 96,145 56,160
Interest Expense 39,147 63 45,211
Income (loss) before
Taxes 110,589 189,431 (99,380)
Capital Expenditures 18,021 140,839 -
Segment assets:
Inventory 2,409,116 662,253 -
Property, Plant
& Equipment 2,094,296 846,751 3,958
Other Assets 43,801 - 6,687
Three Months Ended
September 30,1998:
Aviation
Ground
Support
Equipment Cemeteries Corporate
----------- ---------- ---------
Revenues $ 2,919,178 $ 644,590 $ 3,325
Depreciation 28,541 18,074 750
Gross Margin 570,896 323,229 3,325
Selling Expenses 88,329 47,841 -
General & Administrative
Expenses 14,045 94,217 65,031
Interest Expense 56,806 336 43,947
Income (loss) before
Taxes 411,766 180,784 (105,653)
Capital Expenditures 234,472 42,636 -
Segment assets:
Inventory 2,380,829 686,850 -
Property, Plant
& Equipment 1,944,161 564,563 6,230
Other Assets 50,058 23,535 7,970
ITEM 2. MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following is management s discussion and analysis of certain
significant factors which have affected the Company's financial
position and operating results during the periods included in the
accompanying condensed consolidated financial statement.
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.
OAKRIDGE HOLDINGS, INC. AND SUBSIDIARIES
PART I - FINANCIAL STATEMENTS
ITEM 2. MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION AND LIQUIDITY
The Company s liquidity needs arise from its 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 2000 had a decrease in cash of
$ 250,027 compared to a cash decrease in the same period in
fiscal year 1999 of $117,697. As of September 30, 1999, the
Company held cash and cash equivalents of zero.
During the three month period ended September 30, 1999, the
Company recorded net income of $146,640 and generated a decrease
in net cash of $250,027. The Company s net cash used by operating
activities was $70,141 in the first three months of fiscal year
1999 compared to net cash from operating activities of $1,076,240
in the same comparable period in fiscal year 1999. The decrease
in net cash from operating activities was primarily due to
increased inventories and accounts payable due to anticipation of
Y-2K and sales backlog. Cash flows used in investing activities
increased $158,860 due to capital expenditures, and net cash used
in financing activities was $ 21,026 due to the repayment of long
term debt incurred to acquire the building and land of 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 $2,017,431, a increase of $114,480 since
June 30, 1999. The increase was primarily due to net income.
Current assets amounted to $5,891,060 and current liabilities
were $3,873,629, resulting in a current ratio of 1.5 to 1, which
resulted in no change from June 30, 1999. With debt of $6,968,660
and equity of $1,917,893 at September 30, 1999, the debt as a
percentage of total capital was 78.4%, compared with 78.5% at
June 30, 1999.
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
2000 were $158,860 compared with $277,108 the same period in
fiscal year 1999. 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 $200,000 on
capital expenditures during the next three quarters of fiscal
year 2000. The Company will be able to finance these capital
expenditures primarily from cash flow from operations.
The stock price ranged from $3.00 to $7.00 per share during the
first three months of Company s fiscal year 2000. The Company s
book value per share at September 30, 1999 was $1.38 compared
with $1.28 at June 30, 1999. The Company s annualized return
from continuing operations on average equity for the three months
of fiscal year 1999 was 28% compared with 97% for the three
months of fiscal year 1998. The annualized return from
continuing operations on average assets was 6.8% compared with
15% for the three months of fiscal year 1999.
The Company has available through two banks, a $3,200,000
revolving credit facility. As of September 30, 1999 there was
$1,380,003 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, 1999, inflation
did not have a significant effect on the Company s results in the
first three months of fiscal year 2000.
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 1999, the Company began to
implement plans to ensure those systems continue to meet its
internal and external requirements. During fiscal year 2000, 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 2000 COMPARED
WITH FIRST QUARTER OF FISCAL YEAR 1999
First quarter revenues of $3,036,828 was a decrease of $530,265
or 14.9%, when compared to 1999's comparable period. The
decrease of $556,397 was due to the aviation ground support
equipment sales composite, which in the first quarter of fiscal
year 2000 consisted of towable equipment, rather than vehicle
mounted equipment as in the prior first quarter fiscal year 1999.
Cemetery revenue increased $10,561 to $611,774, or 2% over the
prior comparable period revenue of $601,213, primarily due to
increased sales of memorials during the first quarter of fiscal
year 2000.
The cemetery gross profit margin decreased to 45% in first
quarter of fiscal year 2000 or 2% when compared to 47% for the
corresponding period in fiscal year 1999. The increase in cost of
goods sold was due a 18% increase in health insurance premiums
and the fall weed spray being done in the first quarter of fiscal
year 2000.
Gross profit margin for the aviation ground support equipment
business decreased to 15% in first quarter of fiscal year 2000 or
5% when compared to 20% for the corresponding period in fiscal
year 1999. The decrease in gross profit margin was due to
increased labor costs, due to the hiring of two engineers and
inefficiencies in production.
Interest from cemetery care funds increased $16,155 or 37% in
first quarter of fiscal year 2000 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
remained at 8% in fiscal year 1999 and 1998.
Selling expenses for the aviation ground support equipment in
first quarter of fiscal year 2000 in relation to sales increased
.9% in comparison to first quarter of fiscal year 1999. The
increase was due to less sales in first quarter of fiscal year
2000.
General and administrative expenses, which are expenses
associated with supporting the Company s day-to-day management of
its existing businesses and corporate increased $75,187 or 43%.
Cemetery general and administrative expenses in relation to sales
remained constant at 16% for the first quarter of fiscal year
2000 and 1999.
Aviation ground support equipment business general and
administrative expenses in the first quarter of fiscal year 2000
increased $51,866 or 119% in comparison to the first quarter of
fiscal year 2000. The increase is primarily due to hiring of two
office personnel for $17,292, consulting fees of $5,771 for
computer network, web page on internet, and changing the
technical manuals to CD Rom, and prior year had a collection of
bad debts for $61,000 which reduced general and administrative
expenses.
Corporate general and administrative in the first quarter of
fiscal year 2000 was $56,160 or a decrease of $8,891 in
comparison to first quarter of fiscal year 1999 expenses of
$65,801 The decrease is due to reduced professional fees
associated with the prior year acquisition.
Depreciation and amortization expenses increased 31% to $62,255
for the first quarter of fiscal year 2000 or $14,798 in
comparison to the first quarter of fiscal year 1999. The increase
is a result of the aviation ground support equipment assets
purchased the prior year.
Interest expense in the first quarter of fiscal year 2000 was
$84,421 or a decrease of $16,669 or 16% in comparison to the
first quarter of fiscal year 1999 expense of $101,090. The
decrease in interest expense was attributable to lower financing
of vehicles and chassis used for production.
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
Not applicable.
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) Exhibit 27 - Financial Data Schedule
(b) No reports on Form 8 have been filed during the quarter for
which this report is filed.
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 11, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> SEP-30-1999
<CASH> 700,880
<SECURITIES> 0
<RECEIVABLES> 1,932,189
<ALLOWANCES> 33,000
<INVENTORY> 3,071,369
<CURRENT-ASSETS> 5,891,060
<PP&E> 4,546,430
<DEPRECIATION> 1,601,425
<TOTAL-ASSETS> 8,886,553
<CURRENT-LIABILITIES> 3,873,629
<BONDS> 0
0
0
<COMMON> 138,801
<OTHER-SE> 1,779,092
<TOTAL-LIABILITY-AND-EQUITY> 8,886,553
<SALES> 2,974,555
<TOTAL-REVENUES> 3,036,828
<CGS> 2,339,952
<TOTAL-COSTS> 2,751,767
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 84,421
<INCOME-PRETAX> 200,640
<INCOME-TAX> 54,000
<INCOME-CONTINUING> 146,640
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 146,640
<EPS-BASIC> .106
<EPS-DILUTED> .079
</TABLE>
