TABLE OF CONTENTS
Financial Highlights 1
Corporate Profile 1
Letter to Shareholders 2
Selected Financial Data 4
Management's Discussion and
Analysis of Results of Operations and Financial Condition 5
Audited Financial Statements
Appendix A
Investor Information
Appendix B
FINANCIAL HIGHLIGHTS
Percent
Years Ended June 30, 2000 1999
Change
Total revenue $13,392,862 $12,409,032
7.9%
Net income $273,975 $488,157
(43.9%)
Basic earnings per share .20 .36
(44.4%)
Earnings per share assuming dilution .16 .29
(44.8%)
Working capital $2,104,481 $1,902,951
10.6%
Stockholders' equity $2,046,103 $1,771,253
15.5%
Closing market price per common share $2.00 $3.15
(36.5%)
(Average of bid and ask)
Return on equity 14.35% 32.89%
(56.4%)
Return on assets 1.86% 5.93%
(68.6%)
CORPORATE PROFILE
Oakridge Holdings, Inc. is a Minnesota Corporation organized on
March 6, 1961. Through two wholly owned subsidiaries, Oakridge
Cemetery (Hillside), Inc. and Glen Oak Cemetery Company, the
Company operates two adjacent cemeteries near Hillside,
Illinois, used for the intern of human remains. The cemetery
operations of the Company are discussed on a consolidated basis.
The Company makes no functional distinction between the two
cemeteries, except where noted.
The combined cemeteries have 176.7 total acres of which 12.8 are
used for interior roads and other improvements leaving 163.9 net
acres with 137,000 burial plots, of which 35,283 remain in
inventory. The cemeteries have two mausoleums with 975 niches
and 3,190 crypts of which 149 niches and 342 crypts remain in
inventory. The Company also holds deeds to 188 unsold crypts
located in Forest Home Cemetery in Forest Park, Illinois. Cook
and Dupage Counties in Illinois serve as the principal market
for the Company's services.
The Company estimates that it has an inventory of cemetery and
mausoleum spaces representing a 24 to 32 year supply, based on
the maintenance of current sale levels. This inventory is
considered adequate, and the Company does not currently plan on
adding to it.
On June 29, 1998, the Company, through Stinar HG Inc., a
Minnesota corporation and wholly-owned subsidiary of the
Company, purchased substantially all the assets (including the
right to use the name of the seller) and assumed substantially
all of the liabilities of Stinar Corporation, a Minnesota
corporation ("Seller"). Until the sale of the assets to Stinar
HG, Inc., the Seller had been engaged in the manufacture and
sale of ground support equipment for use by commercial airports
and airlines and by military airbases.
Principal products of Stinar include truck-mounted stairways for
use on aircraft, fuel and water trucks, food service and
catering vehicles, vehicles used in transporting and loading
luggage and cargo, sanitary services vehicles and other custom-
built ground support vehicles used by airports, commercial
airlines and the military. Stinar also provides limited service
and repairs on vehicles it sells.
[Letterhead of Oakridge Holdings, Inc.]
To Our Shareholders,
By most measures, fiscal year 2000 was a year in which your
company made solid progress. Even as we met the challenges of
growing competition, employment shortages, and economic turmoil
in the Far East, we generated a good cash flow, extended our
strategic partnerships in new and innovative ways, aggressively
managed costs and made great strides toward achieving our goal of
becoming a unified customer-driven company. At year end, we were
well positioned to take a new strategic step to further improve
your company in the future.
As the information included in this report demonstrates, we have
come a long way from the difficult years of the early-1990's.
Our turnaround is succeeding. We are committed to becoming the
clear industry leader by providing our customers with services
and products of exceptional quality.
Fiscal year 2000 was not without disappointments; the company
reported net income of $273,975, or $.16 per diluted share, on
revenue of $13,392,862, versus 1999 net income of $488,157 or
$.29 per share, on revenues of $12,409,032. As anticipated,
operating profit from Cemetery operations declined 11% from 1999
due to a decrease in at-need cases caused by road construction.
Stinar operations declined from a small profit in 1999 to a small
loss in fiscal year 2000, due to costs associated with research
and development, start up costs associated with a new line of
equipment, and interest expense. Nevertheless, 2000 was not
without achievements. The Cemetery operations continues to be
strong and will return to normal once road construction is
completed, and Stinar operations has made significant progress
toward quality of equipment and elimination of unprofitable
product lines. Still we do not intend to shrink our way to
success, but to concentrate on the profitable product lines.
We began fiscal year 2001 by establishing some exceptionally
ambitious quality challenges that we fully intend to meet. The
only way we can achieve them is through a fundamentally different
approach to doing business based on quality excellence; through
education and training in the principles of quality management,
through rigorous process discipline, and through performance-
based compensation linked directly to our company-wide goals. We
have set out to accomplish four goals in 2001:
-Our goal is keep voluntary employee turnover to the minimum
in 2001. We estimate that voluntary turnover is costing our
company at least $200,000 each year in terms of recruitment,
training and inefficient operations. Increased retention will
have a significant impact on the quality of our work and our
success at managing expenses.
-Our goal is to survey our customers in 2001 to determine
their level of satisfaction with our services. Once we have
this information we will set benchmarks and measures to set
specific numerical goals for improvements. The bottom line:
Satisfactory will not be acceptable. We intend to become the
benchmark for quality in both the cemetery and Stinar
operations.
-Our passion is to provide every customer with services and
products of uncompromising quality - error free, on time,
every time. We will do that by dedicating ourselves to the
relentless pursuit of excellence in the services and products
we provide.
-Our goal is to improve operating profit in year 2001. This
means we must continue to remove costs while restoring
profitable growth to the top line.
These four goals are interrelated. We must achieve the first
three: increased employee satisfaction, greater customer
satisfaction, and dramatically improved quality, to enable us to
meet the financial goal.
In short, 2001 promises a year full of challenges for your
company, but one in which we have the opportunity to move far
beyond the solid record of accomplishments we have established
during the last eight years. We are convinced that our attention
is focused on the right goals: providing quality serviced for
our customers, an exceptional working environment for our
dedicated employees, and a strong return on our shareholders'
investment.
While fiscal year 2000 was an average year for net income, the
foundation has been built for year 2001. As I have said in the
past, it is extremely important for us to remember, "Success is a
never-ending journey, taken one step at a time, and last year we
took a small step in the right direction. We thank you, the
shareholders, for taking the journey with us, and we look forward
to converting our goals into additional value for you the
shareholder.
Robert C. Harvey
Chairman and Chief Executive Officer
<TABLE>
SELECTED FINANCIAL DATA
<S> <C> <C> <C> <C> <C>
<C> <C> <C>
6/30/00 6/30/99 6/30/98 6/30/97 6/30/96
6/30/95 6/30/94 6/30/93
Total assets $14,754,933 $8,232,020 $9,509,303 $2,682,918
$2,613,437 $3,125,595 $2,350,132 $1,515,185
Long-term
Obligations $3,406,838 $3,044,075 $3,123,833 $689,528 $989,065
$1,315,485 $301,103 $441,987
Total revenue $13,392,862 $12,409,032 $2,550,709 $2,344,988
$2,378,109 $2,349,345 $2,103,021 $2,243,461
Income (loss) from
continuing operations
before income taxes and
effect of change in
accounting principle $413,975 $670,157 $181,926 $297,432 $244,495
$295,149 $171,402 ($15,804)
Net income (loss) $273,975 $488,157 $129,926 $214,432 $174,495
$190,512 $678,588 ($15,804)
Basic net income (loss)
per common share $.20 $.36 $.10 $.16 $.13
$.09 $.35 $.17
Basic net income (loss)
per common share
assuming dilution $.16 $.29 $.09 $.16 $.12
$.09 $.35 ($.01)
Cash dividends
declared per share
of common stock $ - $ - $ - $ - $ -
$ - $ - $ -
Return on equity 15% 33% 12% 24% 19%
18% 14% (4%)
Book value per share $1.47 $1.28 $.92 $.77 $.60
$.65 $.58 $.17
Closing stock price $1.97 $3.15 $2.25 $.64 $.98
$.43 $.50 $.09
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
<C> <C> <C>
1993 1994 1995 1996 1997
1998 1999 2000
Market Price $0.09 $0.50 $0.43 $0.98 $0.64
$2.25 $3.15 $2.00
Net Income $15,804 $101,996 $190,512 $174,495 $214,432
$129,926 $488,157 $173,975
Basic Earnings $0.01 $0.35 $0.09 $0.12 $0.16
$0.10 $0.36 $0.20
Diluted Earnings $0.01 $0.35 $0.09 $0.12 $0.16
$0.09 $0.29 $0.16
Total Revenue $2,243,461 $2,321,677 $2,584,565 $2,614,973 $2,585,443
$2,767,214 $12,409,032 $13,392,862
Income $15,804 $263,277 $416,459 $446,940 $384,014
$506,038 $877,085 $770,863
Debt To Equity 2.96% 1.21% 1.96% 2.31% 1.67%
6.93% 3.65% 6.21%
Equity $382,463 $1,061,051 $1,052,710 $789,155 $1,033,587
$1,198,513 $1,771,253 $2,046,103
Book Value $0.17 $0.58 $0.65 $0.6 $0.76
$0.92 $1.28 $1.47
Return On Equity 0.04% 14% 18% 19% 24%
12% 33% 14%
</TABLE>
MANAGEMENT'S DISCUSSION
AND ANALYSIS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
Net Income and Earnings Per Share
Net Income for 2000 was $273,975, a decrease of 44% compared
with $488,157 for 1999. Net Income for the last eight years has
continued to alternate from a high of $488,157 in 1999 to a low
of a loss of $15,804 in 1993. Fiscal year 1994 was an exception
with a net income of $678,588 due to a cumulative effect of a
change in accounting principle.
Basic earnings per share for 2000 was $.20, a decrease of 44%
compared with $.36 per share for 1999. Basic earnings per share
since 1993 have returned an average of $.17, with fiscal year
year 1993, 1994, 1995, 1996, 1997 and 1998 being ($.01), $.35,
$.09, $.12, $.16, and $.10 respectively.
Diluted earnings per share was $.16, a decrease of 45% compared
with $.29 per share in 1999. Diluted earnings per share since
1993 have returned an average of $.16, with fiscal years 1993,
1994, 1995, 1996, 1997 and 1998 being ($.01), $.35, $.09, $.12,
$.16 and $.09 respectively.
Revenue
Revenue for 2000 was $13,392,862, an increase of $983,830 or 8%
compared to revenue of $12,409,032 in 1999. This increase is
attributable to Stinar HG, Inc. ("Stinar").
Cemetery Operations
In fiscal year 2000, cemetery revenue increased $69,414 or 2.5%
over fiscal year 1999. The company did experience a $107,264
increase, or 27.6%, in cemetery space revenue due to a one-time
sale to a non-profit organization. The increase was offset by
decreases in sales foundations (7%), interment fees (6%), vault
sealing fees (42%), mausoleum sales (13%), and cremation fees
(17%). These decreases are attributable to a decrease in at-need
cases of approximately 10%. Trust and interest income increased
$23,241 or 12%, due to timing of receipts.
Stinar Operations
In fiscal year 2000, revenue increased $914,416, or 9.5%, over
fiscal year 1999. The increase is due to the final year of a
three-year contract with the United States Air Force to
manufacture loading stairs. During fiscal year 1999, no funds
were appropriated for this contract; therefore, during fiscal
year 2000 and 2001, the contract will complete the second and
third year of the contract.
The sales allocation in fiscal year 2000 to commercial and
international airlines increased 6% over fiscal year 1999.
Commercial airlines increased to 51% and international airlines
to 26% of total sales allocation. Sales to the United States
government entities decreased to 23%, or 12%, when compared with
35% in 1999.
Holding Company other income increased $50,840, or 88% over
fiscal year 1999. Other income consisted primarily of partial
settlements with prior board members.
Cost Of Sales And Products Sold
Cemetery Operations
Cemetery operations expenses in fiscal year 2000 increased
$75,034 or 5%, but cost of goods sold in relations to sales
increased 1.6% over fiscal year 1999. The increase was due to
higher labor costs, increased medical and dental insurance
benefits for the employees, higher utilities expense and
increased costs of fuel.
Stinar Operations
Stinar operations expenses in fiscal year 2000 increased
$968,537, or 10%, but cost of goods sold in relation to sales
only increased 1.5% over fiscal year 1999. The greatest increase
was due to higher labor costs, medical and dental benefits and
utilities expense.
Holding Operations
Holding company operating expenses in fiscal year 2000 decreased
$35,723 or 15% in comparison to the prior fiscal year 1999. The
primary decrease was due to lower officer's wages and reduction
of shareholders meeting expenses.
Gross Profit
Cemetery Operations
Cemetery operation's gross profit decreased from 50.8% in fiscal
year 1999 to 50.2% or .6% in fiscal year 2000. The decrease was
due to revenue mix, and increased cost of fuel, utilities, and
labor.
Stinar Operations
Stinar operation's gross profit increased from 8.9% in fiscal
year 1999 to 9%, a change of .1% in fiscal year 2000.
Selling Expenses
Cemetery Operations
Cemetery selling expenses decreased $15,434, or 7.2%, for the
fiscal year 2000, compared to fiscal year 1999. The decrease was
due to no sales commission earned on the non-profit sale of
cemetery plots by the general manager.
Stinar Operations
Stinar selling expenses decreased $22,160, or 4.8%, for the
fiscal year 2000, compared to fiscal year 1999, primarily due to
less travel and trade show expenses.
General And Administrative Expenses
Cemetery Operations
Cemetery general and administrative expenses increased $23,863,
or 5.2%, for the fiscal year 2000 compared to fiscal year 1999.
The increase is attributable to a new computer system and related
consulting fees and cost of labor.
Stinar Operations
Stinar general and administrative expenses increased $106,327, or
38.7%, for the fiscal year 2000 compared to fiscal year 1999.
The increase was primarily due to one time consulting fees to
train personnel, research and development of a new line of
equipment and contributions to the 401-k plan.
Other Non-Operating Expenses
Stinar Operations
Stinar's other expenses which consist of interest expense
increased $102,497, or 44%. This was due to a higher debt
balance to finance a larger inventory caused by Ford Motor not
delivering 20 trucks per month as requested, but delivering all
200 trucks at one time.
Holding Operations
Holding company interest expense in fiscal year 2000 increased
$7,045, or 4% in comparison to prior fiscal year 1999. The
increase is due to increase in line of credit balance during last
quarter to assist Stinar operation's cash flow.
Taxes On Income
The effective rate on income was approximately 34% in 2000 and
27% in 1999.
Financial Position
Liquidity and Capital Resources
The company relies on cash flow from continuing cemetery and
Stinar operations to meet operating needs, debt and capital
requirements. The cemetery businesses have provided sufficient
cash during the past seven years to provide sufficient cash to
support day-to-day operations, current debt service, capital
expenditures, and provide cash to assist in the acquisition of
Stinar. The company expects that cemetery operations and Stinar
will provide sufficient cash during the next five years to cover
all debt payments and operation needs.
Stinar has secured a $2,800,000 line of credit to fund operations
and capital expenditures. The line of credit is secured by
assets of Stinar and matures October 1, 2001.
Cemetery has secured a line of credit for $400,000 to meet any
uncertainties that could materially affect liquidity. This line
of credit is secured by assets of cemetery and matures October 3,
2001.
There are no expected changes in the number of full time, part
time, or seasonal employees by the cemetery operations. However,
Stinar anticipates hiring an additional 20 full time employees
for production.
The ratio of total debt to total stockholders equity was 6.21 to
1, 3.64 to 1, 6.93 to 1, 1.67 to 1, 2.31 to 1, 1.97 to 1, 1.21 to
1, and 2.96 to 1 at June 30, 2000, 1999, 1998, 1997, 1996, 1995,
1994, and 1993, respectively. The increase in the 2000 ratio was
due the increase in inventory to produce the United States Air
Force contract for the next two years. At June 30, 2000,
$2,513,740 of long-term debt matures within one year, $2,195,003
is bank line of credit, which will be able to be refinanced.
Management believes that, in addition to current financial
resources, adequate capital resources are available to satisfy
the Company's growth rate. Management believes the Company's
cash flow is sufficient to maintain its current operations and
service its debt.
Capital Expenditures
Capital expenditures for the Company in 2000 amounted to
$567,159, compared to $779,457 in 1999. During the past six
years the Company's capital expenditures totaled $1,833,804. The
Company's expenditures in fiscal year 2000 for cemetery
operations were: dump truck, sewers and repaving of cemetery
roads, office equipment and a new boiler in the mausoleum.
Stinar operations capital expenditures were: building
improvements which consisted of garage doors and electrical
work, various machinery and equipment, office equipment, and
software and hardware computer equipment.
The cemetery and Stinar operations have a five-year plan for
capital expenditures in the 1999 to 2003 period of approximately
$2,600,000. The cemetery capital expenditures will be
approximately $600,000 for cemetery road improvements, increased
inventory of niches and crypts in mausoleum and outdoors grounds
equipment and computer software and hardware. Stinar operation's
capital expenditures will be approximately $2,000,000 for
improvements in the present manufacturing plant, computer
software and hardware, office equipment, manufacturing equipment
and another manufacturing facility to meet the anticipated
revenue increase.
Net cash from operating activity in fiscal year 2000 resulted in
the Company's ability to generate sufficient cash flow to finance
its operations, fund capital expenditures, pay current debt
service, and continue to solve its environmental matters.
ENVIRONMENTAL MATTERS
Cemetery Operations
In fiscal year 1995, the Company commissioned an engineering
study of the Cemetery operations for the purpose of determining
the full extent of possible soil contamination related to
suspected leaking underground storage tanks. As a result of this
study, five underground fuel tanks were removed and the adjoining
soil was removed and disposed by an independent contractor.
During 2000 and 1999, the Company did not incur any expenses for
environmental remediation and a total of approximately $228,000
had been spent in prior years in remediating conditions at the
Cemetery operations. In fiscal year 1997 the Company was
notified by the Illinois Environmental Protection Agency
("Illinois EPA") that the environmental work conducted at the
Cemetery Operations may not have been in full compliance with its
guidelines. The Company responded to the Illinois EPA with a
work plan that will require the expenditure of additional costs
approximately $28,500 with the possibility of additional costs.
The Company is awaiting a response on the work plan from the
Illinois EPA. Additional costs beyond the $28,500 accrued at
June 30, 2000 may be incurred; however, management 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 Illinois EPA approval.
Accordingly, the Company has made no provision for
reimbursements. The Company is not aware of any other
environmental issues affecting the Cemetery operations.
Stinar Corporation
The assets purchased by Stinar from the Seller included a 43,271
square foot manufacturing facility located on approximately 7.875
acres of land ("Stinar facility") located in an industrial park
in Eagan, Minnesota, a suburb of St. Paul, Minnesota. Prior to
the acquisition of the Stinar facility, Stinar and the Company
obtained a Phase I environmental assessment of the Stinar
facility. This phase I environmental assessment suggested the
need for additional study of the Stinar facility. In addition,
Phase I assessment suggested that certain structural improvements
be made to the Stinar facility. Accordingly, two additional
Phase II environmental assessments were performed and revealed
the presence of certain contaminants in the soil around and under
the building located on the Stinar facility.
Subsequent to the completion of the Phase II environmental
assessments and completion of the structural improvements to the
building, the Company and Stinar requested and obtained a "no
association" letter from the Minnesota Pollution Control Agency
("MPCA") stating that, provided certain conditions set forth in
the no association letter are met, the Company and Stinar will
not deemed responsible for contamination which occurred at the
Stinar Facility prior to the purchase of the assets Stinar. The
structural improvements recommended by the Company's
environmental consulting firm has been completed and the
contaminated soil has been removed and is awaiting transfer from
the property. Once the contaminated soil has been removed from
the property the Company believes the MPCA will issue the no
association letter.
The purchase agreement between the Seller, its shareholders and
Stinar requires the Seller and its shareholders to indemnify
Stinar for costs or expenses by Stinar related to environmental
conditions at the Stinar facility, up to an amount believed by
the Company and Stinar to exceed the reasonably anticipated
potential liability associated with the Stinar facility. In
addition, the Seller agreed to pay all costs associated with
obtaining the no association letter from the MPCA and the Seller
paid for the environmental consulting, remediating and structural
improvements discussed in the preceding paragraph. The Company
does not anticipate that the operations of Stinar and the
ownership of the Assets will result in any material liability to
the Company or Stinar under existing environmental laws, and
Stinar has not included a material sum in its budget for matters
related to environmental compliance.
Common Stock and Stockholder's Equity
Stockholders' equity was $2,046,103 at June 30, 2000, as compared
with $1,771,253 at June 30, 1999. The increase of $274,850
represents $273,975 of net income and $875 of stock transactions.
The book value of each share of common stock at June 30, 2000 was
$1.47, compared to $1.28 at June 30, 1999.
In 2000, the return on average stockholders' equity was 14% as
compared to 33% in 1999, 12% in 1998, 24% in 1997, 19% in 1996,
18% in 1995, 14% in 1994 and (.4%) in 1993.
The Company has traditionally not paid dividends and does not
anticipate paying dividends in the foreseeable future.
At June 30, 2000 common stockholders' of record numbered 1802,
compared with 2,109 at the end of June 30, 1999.
Inflation
General inflation has not had a significant impact on the Company
over the past eight years due to a strong cash flow from
operations. The Company continues to maximize cash flow through
programs designed for cost containment, productivity
improvements, and capital spending. Management does not expect
inflation to have a significant impact on the results of
operations or financial condition in the foreseeable future.
Outlook
The Company's prospects for the future are positive. The
operations of the operating cemeteries remain strong and the
Company expects vast improvement from Stinar operations in 2001.
Financial Condition
The Company's June 30, 2000 balance sheet continues to improve
after seven consecutive years of net income.
The following key measurements are indicative of the improvements
made in 2000 by the Company:
<TABLE>
<S> <C> <C> <C> <C>
Stockholders'
Cash and cash Stockholders'
Equity to Total
Equivalents Cash flow Equity
Liabilities
1993 $76,161 $66,654 $382,463 1 to
2.96
1994 $391,373 $315,212 $1,061,051 1 to
1.21
1995 $192,691 ($198,682) $1,052,710 1 to
1.97
1996 $264,691 $72,000 $789,155 1 to
2.31
1997 $382,287 $117,596 $1,003,587 1 to
1.67
1998 $823,458 $441,171 $1,198,513 1 to
6.93
1999 $950,907 $127,449 $1,771,253 1 to
3.65
2000 $902,201 ($48,706) $2,046,103 1 to
6.21
</TABLE>
Cash and cash equivalents were $902,201 at year-end 2000, a
decrease of $48,706 from the year-end 1999 balance. Cash flow
from operations continues to generate sufficient funds to meet
working capital for operations and capital improvements.
Forward-Looking Statements
The statements in the Annual Report under the headings Liquidity
and Capital Resources, Capital Expenditures, and Environmental
Matters are forward-looking statements based on current
expectations. These statements are subject to risks and
uncertainties, including slower or faster customer acceptance of
new management of Stinar HG, Inc., difficulties in financing and
expanding capacity, changes in manufacturing efficiencies, and
other risks and uncertainties discussed above. These factors
may cause the Company's actual results to differ materially from
historically earnings and from the financial performance of the
Company presently anticipated.
APPENDIX A
AUDITED FINANCIAL STATEMENTS
OAKRIDGE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2000 AND 1999
TABLE OF CONTENTS
Page
Independent Auditors' Report 1
Consolidated Financial Statements:
Consolidated Balance Sheets 2
Consolidated Statements of Operations 3
Consolidated Statements of Stockholders' Equity 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6
{Letterhead of Independent Auditors}
To the Board of Directors and Stockholders
Oakridge Holdings, Inc. and Subsidiaries
Apple Valley, Minnesota
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying consolidated balance sheets of
Oakridge Holdings, Inc. and Subsidiaries as of June 30, 2000 and
1999, and the related consolidated statements of operations,
stockholders' equity and cash flows for the years then ended.
These consolidated financial statements are the responsibility of
the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the consolidated financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Oakridge Holdings, Inc. and Subsidiaries as of June
30, 2000 and 1999, and the results of their operations and their
cash flows for the years then ended in conformity with generally
accepted accounting principles.
Edina, Minnesota
September 8, 2000
OAKRIDGE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30,
---------- ----------
2000 1999
---------- ----------
ASSETS
Current assets:
Cash and cash equivalents $902,201 $950,907
Receivables:
Trade, less allowance for doubtful 3,206,367 1,578,822
accounts of $24,000 in 2000 and $33,000
in 1999
Trust income 19,750 9,425
Other 24,200 132,500
Inventories:
Production 6,397,151 1,854,221
Cemetery and mausoleum space available 629,045 634,887
for sale
Markers, urns and flowers 21,259 20,367
Deferred income taxes 146,000 102,000
Other current assets 60,500 36,514
---------- ----------
Total current assets 11,406,473 5,319,643
---------- ----------
Property and equipment 4,793,397 4,387,570
Less accumulated depreciation (1,637,750) (1,539,730)
---------- ----------
3,155,647 2,847,840
---------- ----------
Other assets:
Investment in land 140,000 -
Other 52,813 64,537
---------- ----------
192,813 64,537
---------- ----------
$14,754,933 $8,232,020
========== ==========
June 30,
---------- ----------
2000 1999
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable - bank $2,195,003 $1,346,556
Notes payable other - 30,155
Accounts payable trade 5,158,604 601,186
Deferred revenue 551,210 507,711
Accrued liabilities 1,078,438 855,052
Current maturities of long-term debt 318,737 76,032
---------- ----------
Total current liabilities 9,301,992 3,416,692
---------- ----------
Long-term debt 3,406,838 3,044,075
---------- ----------
Commitments and contingencies - -
---------- ----------
Total liabilities 12,708,830 6,460,767
---------- ----------
Stockholders' equity:
Preferred stock, $.10 par value,
1,000,000 shares authorized; none
issued - -
Common stock, $.10 par value, 5,000,000
shares authorized; 1,391,503 and
1,388,003 shares issued and outstanding
in 2000 and 1999, respectively 139,151 138,801
Additional paid-in capital 2,017,775 2,017,250
Accumulated deficit (110,823) (384,798)
---------- ----------
Total stockholders' equity 2,046,103 1,771,253
---------- ----------
$14,754,933 $8,232,020
========== ==========
OAKRIDGE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended June 30,
---------- ----------
2000 1999
---------- ----------
Net sales $13,392,862 $12,409,032
Cost of good sold 10,913,690 9,802,382
---------- ----------
Gross margin 2,479,172 2,606,650
Selling, general and administrative
expenses 1,708,309 1,729,565
---------- ----------
Income from operations 770,863 877,085
---------- ----------
Other income (expense):
Interest expense (501,361) (392,970)
Interest income 12,915 13,945
Other, net 131,558 172,097
---------- ----------
Total other income (expense) (356,888) (206,928)
---------- ----------
Income before income taxes 413,975 670,157
Income taxes 140,000 182,000
---------- ----------
Net income $273,975 $488,157
========== ==========
Basic net income per share $ .20 $ .36
========== ==========
Diluted net income per share $ .16 $ .29
========== ==========
<TABLE>
OAKRIDGE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED JUNE 30, 2000 AND 1999
Common Stock Additional
--------------------- Paid-In
Accumulated
Shares Amount Capital
Deficit Total
<S> <C> <C> <C>
<C> <C>
BALANCE, June 30, 1998 1,309,670 $130,968 $1,940,500
$(872,955) $1,198,513
Issuance of common stock for cash 40,000 4,000 76,000
- 80,000
Issuance of common stock for services 15,000 1,500 41,000
- 42,500
Retirement of common stock (16,667) (1,667) (46,250)
- (47,917)
Exercise of stock options 40,000 4,000 6,000
- 10,000
Net income - - -
488,157 488,157
--------- -------- ---------- -----
---- ----------
BALANCE, June 30, 1999 1,388,003 138,801 2,017,250
(384,798) 1,771,253
Exercise of stock options 3,500 350 525
- 875
Net income - - -
273,975 273,975
--------- -------- ---------- --
------- ---------
BALANCE, June 30, 2000 1,391,503 $139,151 $2,017,775
$(110,823) $2,046,103
========= ======== ==========
========== =========
</TABLE>
OAKRIDGE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
Years Ended June 30,
---------- ----------
2000 1999
---------- ----------
Cash flows from operating activities:
Net income $273,975 $488,157
Adjustments to reconcile net income to
net cash flows from operating
activities:
Depreciation and amortization 264,995 217,332
Deferred income taxes (44,000) 143,000
Common stock received in settlement - (47,917)
Land received in settlement (103,000) -
Gain on condemnation - (132,500)
Loss on disposal of equipment - 4,500
Compensation expense common stock - 42,500
Receivables (1,529,570) 979,145
Inventories (4,537,980) 1,007,846
Other assets (18,368) (35,134)
Accounts payable trade 4,557,418 (349,605)
Deferred revenue 43,499 55,050
Accrued liabilities 223,386 (550,203)
---------- ----------
Net cash flows from operating activities (869,645) 1,822,171
---------- ----------
Cash flows from investing activities:
Purchases of property and equipment (566,696) (779,457)
Investment in land (37,000) -
---------- ----------
Net cash flows from investing activities (603,696) (779,457)
---------- ----------
Cash flows from financing activities:
(Increase) decrease Change in notes 848,447 (718,444)
payable bank
Principal payments on long-term debt and (124,687) (286,821)
other notes payable
Proceeds from issuance of long-term debt 700,000 -
Proceeds on exercise of stock options 875 10,000
Proceeds from issuance of common stock - 80,000
---------- ----------
Net cash flows from financing activities 1,424,635 (915,265)
---------- ----------
Net change in cash and cash equivalents (48,706) 127,449
Cash and cash equivalents, beginning of
Year 950,907 823,458
---------- ----------
Cash and cash equivalents, end of year $902,201 $950,907
========== ==========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the years for:
Interest $460,574 $328,119
Income taxes $ 87,000 $ 2,000
1. Summary of Significant Accounting Policies
Nature of Business
The Company is a Minnesota corporation organized on March 6,
1961. The Company operates two cemeteries in Illinois. The
cemetery operations routinely grant credit to pre-need customers,
substantially all of whom are in the Chicago area. On June 29,
1998, the Company acquired the net assets of an aviation ground
support equipment business. The business designs, engineers and
manufactures aviation ground support equipment serving businesses
domestically and internationally.
Principles of Consolidation
The consolidated financial statements include the accounts of the
Company and its subsidiaries, each of which is wholly owned. All
material intercompany balances and transactions have been
eliminated in consolidation.
Estimates and Assumptions
The preparation of consolidated 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 consolidated
financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ
from those estimates.
Cash and Cash Equivalents
For purposes of the consolidated statements of cash flows, the
Company considers all highly liquid investments purchased with a
maturity of three months or less to be cash equivalents.
Inventories
Production inventories are stated at the lower of cost or market.
Cost is determined on the first-in, first-out (FIFO) method.
The cemetery and mausoleum space available for sale is stated at
the lower of cost (determined by an allocation of the total
purchase and development costs of each of the properties to the
number of spaces available) or market. Included in cemetery space
available for sale is land held in a land trust in which a wholly-
owned subsidiary of the Company is the sole beneficiary.
Property and Equipment
Property and equipment are carried at cost. Depreciation is
computed using the straight-line method over the estimated useful
lives of the related assets. When assets are retired or otherwise
disposed of, the cost and related accumulated depreciation are
removed from the accounts and any resulting gain or loss is
recognized in income for the period. The cost of maintenance and
repairs is charged to operations as incurred and significant
renewals and betterments are capitalized.
Cemetery and Mausoleum Space Revenue
Under the Cemetery Care Act of the State of Illinois, the Company
is required to transfer a portion of the proceeds of each sale of
cemetery and mausoleum space to perpetual care trust funds. The
reported net revenue has been reduced by the portion of the sales
price that is required to be remitted to the perpetual care
trusts.
Income on the perpetual care trust funds is recorded as cemetery
revenue in the accompanying consolidated financial statements as
earned. Distributions from the perpetual care trusts are used for
care and maintenance of the cemetery. Expenses are recognized as
incurred.
Deferred Revenue
Deferred revenue consists of pre-need contracts that include
charges for services to be performed at a later date. Revenue on
these services is deferred to the period in which the services
are performed.
Income Taxes
Income taxes are provided for the tax effects of transactions
reported in the consolidated financial statements and consist of
taxes currently due plus deferred income taxes. Deferred income
taxes relate to differences between the financial and tax bases
of certain assets and liabilities. The significant temporary
differences relate to fixed assets, valuation allowances,
inventories and certain accruals. Deferred income tax assets and
liabilities represent the future tax return consequences of those
differences, which will either be taxable or deductible when the
assets and liabilities are recovered or settled.
Environmental Costs
Environmental expenditures that pertain to current operations or
relate to future revenue are expensed or capitalized consistent
with the Company's capitalization policy. Expenditures that
result from the remediation of an existing condition caused by
past operations that do not contribute to current or future
revenue are expensed. Liabilities are recognized for remedial
activities when the clean-up is probable and the cost can be
reasonably estimated.
Concentrations of Credit Risk
The Company's cash deposits from time to time exceed federally
insured limits. The Company has not experienced any losses on its
cash deposits in the past.
Financial instruments which potentially subject the Company to a
concentration of credit risk consist principally of accounts
receivable. The Company generally does not require collateral
for its trade accounts receivable. At June 30, 2000, two
customers accounted for approximately 25.4% of the accounts
receivable balance.
Income Per Share
The Company has adopted the provisions of Statement of Financial
Accounting Standards No. 128, "Earnings Per Share" (SFAS No.
128). SFAS No. 128 establishes accounting standards for
computing and presenting earnings per share. Basic earnings per
common share are computed by dividing net income by the weighted
average number of shares of common stock outstanding during the
period. No dilution for potentially dilutive securities is
included. Diluted earnings per share are computed under the
treasury stock method and are calculated to compute the dilutive
effect of outstanding options, warrants and other securities.
The adoption had no effect on previously reported income per
share.
Recently Issued Accounting Pronouncements
In June 1999, the Financial Accounting Standards Board amended
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities." SFAS No. 133 establishes accounting and reporting
standards for derivative instruments, including certain
derivative instruments embedded in other contracts (collectively
referred to as derivatives) and for hedging activities. SFAS No.
133, as amended by SFAS No. 137, is effective for all fiscal
quarters of fiscal years beginning after June 15, 2000. The
Company does not expect SFAS Nos. 133 and 137 to materially
affect its financial position or results of operations.
2. Inventories
Production inventories consisted of the following:
2000 1999
---------- ----------
Finished goods $946,038 $170,173
Work-in-progress 2,156,847 945,782
Raw materials and trucks in stock 3,294,266 738,266
---------- ----------
$6,397,151 $1,854,221
========== ==========
Inventories of cemetery and mausoleum space available for sale
consisted of the following:
2000 1999
---------- ----------
Cemetery space $503,794 $521,783
Mausoleum space 125,251 113,104
---------- ----------
$629,045 $634,887
========== ==========
3. Property and Equipment
Property and equipment consisted of the following:
2000 1999
---------- ----------
Land $450,000 $450,000
Land improvements 675,125 417,344
Building and improvements 1,826,730 1,798,692
Vehicles 332,023 291,836
Equipment 1,509,519 1,429,698
---------- ----------
$4,793,397 $4,387,570
========== ==========
Depreciation charged to operations was $258,889 in 2000 and
$212,327 in 1999.
4. Accrued Liabilities
Accrued liabilities consisted of the following:
2000 1999
---------- ----------
Salaries and payroll taxes $314,723 $375,657
Perpetual care trust funds 172,337 212,781
Customer deposits 83,605 25,248
Marker and inscription costs 81,304 79,876
Interest 105,638 64,851
Income taxes 136,000 39,000
Environmental costs 28,500 28,500
Other 156,331 29,139
---------- ----------
$1,078,438 $855,052
========== ==========
5. Notes Payable Bank
The Company has a $225,000 line-of-credit of which $19,997 was
unused and available at June 30, 2000. Interest is payable
monthly at the prime rate (9.5% at June 30, 2000). The note is
secured by the assets of a wholly-owned subsidiary and matures
November 1, 2000.
The Company has two lines-of-credit totaling $2,300,000, of which
$1,990,000 was outstanding at June 30, 2000. At June 30, 2000,
$10,000 was unused and available and $300,000 was unused and
available for the issuance of letters of credit. Advances on the
$2,000,000 line-of-credit are based on 80% of eligible accounts
receivable, plus 75% of the eligible truck, work-in-process and
finished goods inventory, plus 50% of the eligible raw materials
inventory. Interest is payable monthly at the bank's reference
rate plus .75% (10.25% at June 30, 2000.). The note matures
November 2, 2000, and is secured by the assets of the Company's
wholly-owned subsidiary, Stinar HG, Inc., and by assignment of
life insurance policies.
6. Finance Company
A finance company finances a subsidiary's truck purchases, which
are used in the production of aviation ground support
equipment. At June 30, 2000, approximately $2,970,000 of truck
inventory is financed with interest at 8.5%. The financing is
secured by truck inventory.
7. Long-Term Debt
Long-term debt consisted of the following:
2000 1999
---------- ----------
Mortgage note payable bank,
payable in monthly installments of
$9,350 Including interest at 8.625%,
maturing January 2002, secured by
real estate and the assets of the
Company. $560,371 $616,445
Note payable - bank, payable in
monthly installments of $8,917
including interest at the bank's
reference rate plus .75% (10.25%
at June 30, 2000). The note is
secured by all the assets of
Stinar HG, Inc., and matures
November 2004. 676,520 -
Contracts for deed, payable in
monthly installments of $8,264 and
$1,503 including interest at
8.25%, maturing with balloon
payments in June 2005, secured
by certain property. 1,268,684 1,280,673
Other notes payable, payable in
monthly installments including
interest at 8.75%, maturing
through November 1999, secured by
equipment. - 2,989
---------- ----------
Long-term debt before debentures 2,505,575 1,900,107
Convertible subordinated debentures
9% interest, due annually each
December 31, convertible into one
common share at a conversion price
equal to 75% of the mean between
the average closing "bid" and "ask"
price on each of the five trading
days prior to the conversion date,
issued to owners of the business
acquired, payable in annual
installments of $200,000 commencing
June 2001, 2002 and 2003, with the
final $100,000 payment due in June
2004, unsecured, redeemable by the
Company with ten days written notice. $700,000 $700,000
Convertible subordinated debentures
9% interest, due annually each
December 31, convertible into one
common share for each $2.00 of the
principal amount, maturing in July
2006, unsecured, $270,000 of the
debentures were issued to an officer
and employee of the Company. 520,000 520,000
---------- ----------
3,725,575 3,120,107
Less current maturities (318,737) (76,032)
---------- ----------
$3,406,838 $3,044,075
========== ==========
Subsequent maturities as of June 30, 2000, are as follows:
Years Ending June 30:
2001 $318,737
2002 751,748
2003 263,735
2004 170,250
2005 1,701,105
Thereafter 520,000
----------
$3,725,575
==========
8. Environmental Costs
In 1995, the Company commissioned an engineering study of its
property for the purpose of determining the full extent of
possible soil contamination. Five underground fuel tanks were
found to require removal and the adjoining soil to undergo
remediation. Environmental costs expensed to operations were $0in
2000 and 1999, and approximately $228,000 in years prior to those
presented.
Furthermore, the Company was notified by the Illinois
Environmental Protection Agency (IEPA) that the clean-up plan may
not be in full compliance with IEPA 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,
2000, may be incurred; however, management 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.
9. Income Taxes
The provision for income taxes consisted of the following:
2000 1999
---------- ----------
Current:
Federal $168,000 $ 22,000
State 16,000 17,000
---------- ----------
184,000 39,000
---------- ----------
Deferred:
Federal (40,000) 39,000
State (4,000) 4,000
---------- ----------
(44,000) 43,000
---------- ----------
$140,000 $182,000
========== ==========
Principal reasons for variations between the statutory federal
tax rate and the effective tax rate were as follows:
2000 1999
---------- ----------
Statutory U.S. federal tax rate 34% 34%
State taxes, net of federal benefit 2 2
Utilization of deferred income tax
assets at rates different than
originally capitalized - (5)
Other (2) (4)
---------- ----------
34% 27%
========== ==========
The net deferred income tax assets in the accompanying
consolidated balance sheets included the following components as
of June 30, 2000 and 1999:
2000 1999
---------- ----------
Deferred income tax assets $146,000 $117,000
Deferred income tax liabilities - (15,000)
Valuation allowance - -
---------- ----------
Net deferred income tax assets $146,000 $102,000
========== ==========
10. Other Related Party Transactions
During the years ended June 30, 2000 and 1999, amounts paid for
compliance services to entities related to the chief executive
officer were $16,187 and $13,715, respectively.
The Company leases office space from an officer of the Company on
a month-to-month basis at $100 per month.
11. Benefit Plans
Certain subsidiaries of the Company participate in a multi
employer union administered defined benefit pension plan that
covers the cemetery employees. Pension expense under this plan
was $21,088 in 2000, and $20,290 in 1999.
The Company has a 401(k) profit sharing plan that covers all
eligible non-union employees. Participants can elect to
contribute pre-tax compensation, and effective January 1, 2000,
the Company matches 50% of the first 6% of compensation
contributed to the Plan. Expense for the 401(k) Plan was $45,848
in 2000 and $-0- in 1999.
12. Stock Options
On May 18, 1990, the Board of Directors approved a Nonqualified
Stock Option Plan for outside directors. Under the Plan, each
outside director received options to purchase 3,500 shares of the
Company's common stock at an exercise price per share equal to
the market price at the grant date. These stock options are
exercisable for a period of ten years from the grant date for
active board members or for a period of twelve months from the
date of termination for former board members. The Company
reserved 21,000 shares of common stock for issuance under the
Plan, of which 14,000 shares are available for issuance.
On September 1, 1998, the Board of Directors approved a Stock
Incentive Awards Plan to attract and retain individuals to
contribute to the achievement of the Company's economic
objectives. Under the Plan, individuals are eligible based on
the judgment of a committee of Board members (committee). At the
discretion of the committee, eligible recipients may be granted
options to purchase shares of the Company's common stock at an
exercise price per share equal to the market price at the grant
date. The stock options are exercisable at such times and in
such installments as determined by the committee, limited to a
maximum of ten years from the date of the grant. The Plan has
authorized the issuance of 175,000 shares of common stock under
the Plan, of which there were grants for 7,000 shares issued in
2000, and 168,000 shares available for future grants at June 30,
2000.
Shares subject to option are summarized as follows:
1990 Employee Weighted
Stock Stock Average
Option Options Exercise
Plan Price
------- ------- --------
BALANCE,
June 30, 1998 3,500 80,000 $.31
Options exercised - (40,000) $.25
------ ------
BALANCE,
June 30, 1999 3,500 40,000 $.37
Options granted - 7,000 $2.09
Options exercised (3,500) - $.25
------ ------
BALANCE,
June 30, 2000 - 47,000 $.63
====== ======
Options exercisable
at:
June 30, 1999 3,500 $.37
40,000
June 30, 2000 - 47,000 $.63
Information regarding options outstanding at June 30, 2000, is as
follows:
Type of Option Number of Exercise Weighted Weighted
Options Price Average Average
Range Exercise Remaining
Price Contractual
Life
-------------- --------- -------- -------- -----------
Employee Stock 47,000 $.38 - $.63 1.5 Years
Options $2.30
The Company applies Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," and related
interpretations in accounting for its options. Had compensation
cost been recognized based on the provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation," the Company's net
income would have been as follows:
2000 1999
---------- ----------
Net Income
As reported $273,975 $488,157
Pro forma $268,345 $488,157
The weighted average fair value of options granted was $1.22 in
2000. There were no options granted in 1999. The fair value of
each option is estimated on the date of grant using the Black-
Scholes option pricing model. The weighted average assumptions
used for grants in 2000 were as follows:
2000
----------
Risk free interest rate 6.0%
Expected life of options 5 Years
Expected volatility 61.98%
Expected dividend yield -
13. Trust Funds
Two of the Company's wholly-owned subsidiaries are beneficiaries
of perpetual care trust funds established under the Cemetery Care
Act of the State of Illinois. Earnings on these perpetual care
trust funds are to be used for the care, preservation and
ornamentation of the Company's cemetery and mausoleum properties.
Earnings on these perpetual care trust funds totaled $203,382
in 2000, and $184,646 in 1999.
Perpetual care trust fund assets totaled approximately $4,239,000
at June 30, 2000.
The wholly-owned subsidiaries also have a "pre-need" trust
account representing revenues received for the purchase of vaults
and interment services prior to the death of the decedent. The
market value of the pre-need trust as of June 30, 2000 was
approximately $859,000.
14. Earnings Per Share of Common Stock Disclosures
The following tables reconcile the income and shares of the basic
and diluted earnings per share computations:
2000 Income Shares Per-Share
---- ---------- ----------- -----------
(Numerator) (Denominator) (Amount)
---------- ----------- -----------
Basic EPS:
Income available to
common shareholders $273,975 1,388,291 $.20
Effect of Dilutive
Securities:
Employee Stock Options - 32,453
Convertible Debentures 74,468 729,602
1999 Stock Option Plan - -
---------- ----------- -----------
Diluted EPS:
Income available to
common shareholders
plus assumed
conversions $346,443 2,150,346 $.16
========== =========== ===========
1999 Income Shares Per-Share
---- ---------- ----------- -----------
(Numerator) (Denominator) (Amount)
---------- ----------- -----------
Basic EPS:
Income available to
common shareholders $488,157 1,344,250 $.36
Effect of Dilutive
Securities:
Employee Stock Options - 34,146
Convertible Debentures 76,900 567,154
1999 Stock Option Plan - 3,159
---------- ----------- -----------
Diluted EPS:
Income available to
common shareholders
plus assumed
conversions $565,057 1,948,709 $.29
========== =========== ===========
15. Segment Information
The Company's operations are classified into two principal
industry segments: cemeteries and aviation ground support
equipment. The accounting policies of the segments are the same
as those described in the summary of significant account
policies. The Company evaluates performance based on profit or
loss from operations before income taxes. Revenues derived by
geographic location is deemed impractical, and therefore not
disclosed. Financial information by industry segment as of and
for the years ended June 30, 2000 and 1999, is summarized as
follows:
Cemeteries Aviation Total
Ground
Support
Equipment
---------- ----------- -----------
2000
----
Net sales - external $2,859,609 $10,533,253 $13,392,862
Depreciation and
Amortization 99,283 165,712 264,995
Interest expense 152 333,705 333,857
Segment operating profit 782,657 (99,731) 682,926
Segment assets 3,393,904 11,818,097 15,212,001
Expenditures for segment
fixed assets 351,656 215,040 566,696
1999
----
Net sales - external $2,790,195 $9,618,837 $12,409,032
Depreciation and
amortization 91,021 126,311 217,332
Interest expense 1,302 231,208 232,510
Segment operating profit 877,801 140,827 1,018,628
Segment assets 3,072,662 5,408,274 8,480,936
Expenditures for segment
fixed assets 267,634 511,823 779,457
Reconciliation of segment profit to consolidated income before
income taxes is as follows:
2000 1999
---------- ----------
Total profit for reportable
segments $682,926 1,018,628
Unallocated amounts:
Interest expense (167,504) (160,460)
Other corporate expenses (209,877) (245,601)
Other corporate income 108,430 57,590
---------- ----------
Income before income taxes $413,975 $670,157
========== ==========
Reconciliation of segment assets to consolidated assets is as
follows:
2000 1999
---------- ----------
Total segment assets $15,212,001 $8,480,936
Other assets 192,189 196,227
Elimination of receivable from
holding company (649,257) (445,143)
---------- ----------
Total assets $14,754,933 $8,232,020
========== ==========
The results of operations of the airline ground equipment
business are reflected in the Company's operations beginning July
1, 1998 (see Note 2).
Segment profit represents segment revenues less directly related
operating expenditures of the Company's segments. Management
believes this is the most meaningful measurement of each
segment's results as it excludes consideration of corporate
expenses which are common to both business segments.
Other corporate expenses consist principally of senior
management's compensation, and general and administrative
expenses. These costs generally would not be subject to
significant reduction upon the discontinuance or disposal of one
of the segments.
Approximately 32.9% of aviation ground support equipment net
sales were to foreign entities in 2000.
16. Fair Values of Financial Instruments
The estimated fair values of the Company's financial instruments
at June 30, 2000, and the methods and assumptions used to
estimate such fair values, were as follows:
Cash and cash equivalents - the fair value approximates the
carrying amount because of the short maturity of those financial
instruments.
Long-term debt and other notes payable - the fair value
approximates the carrying amount, as the interest rates on the
debt approximate current interest rates.
17. Research and Development
Research and development expense charged to operations were
$73,036 in 2000 and $0 in 1999.
18. Other Income
Included in 2000 other income is a litigation settlement with a
former officer of the Company for $103,000.
Included in 1999 other income is a settlement with the Illinois
Department of Transportation regarding condemnation of property
for $132,500.
19. Reclassifications
Certain reclassifications were made to the 1999 consolidated
financial statements to conform to the 2000 presentation which
had no effect on net income.
APPENDIX B
INVESTOR INFORMATION
INVESTOR INFORMATION
Officers and Directors
Robert C. Harvey
Chairman of the Board
Chief Executive Officer
Robert B. Gregor
Secretary and Director
Hugh H. McDaniel
Director
Independent Auditors
Stirtz Bernards Boyden Surdel & Larter, P.A.
Minneapolis, Minnesota
Legal Counsel
Oppenheimer Wolff & Donnelly
Minneapolis, Minnesota
Transfer Agent and Register
Correspondence regarding stock holdings and changes of
address should be directed to the transfer agent at the
following departments:
For general inquiries, changes of address and consolidation
of shareholder accounts:
Chemical Mellon Shareholder Services, L.L.C.
Recordkeeping Services
PO Box 590
Ridgefield Park, NJ 07660
For transfer of certificates:
Chemical Mellon Shareholder Services, L.L.C.
Stock Transfer Department
PO Box 469
Washington Bridge Station
New York, NY 10033
For replacement of lost stock certificates:
Chemical Mellon Shareholder Services, L.L.C.
Estoppel Department
PO Box 467
Washington Bridge Station
New York, NY 10033
Common Stock
Ticker Symbol: OKRG
Common stock of Oakridge Holdings, Inc. is listed and traded on
the over-the-counter market, primarily through listings in the
National Quotation Bureau "pink sheets". Quotations reflect
inter-dealer prices, without retail mark-up, mark-down or
commission, and may not reflect actual transactions.
As of June 30, 2000 there were approximately 1,802 shareholders
of record of the Company's common stock.
Stock Prices
Years Ended June 30, 2000 1999
High Low High
Low
First quarter 7.00 2.31 3.50
1.59
Second quarter 4.75 1.75 4.50
1.75
Third quarter 2.25 .75 4.00
2.63
Fourth quarter 1.97 .88 4.25
2.06
Dividend Policy
The Company has never paid dividends on its common stock and
does not anticipate a change in this policy in the foreseeable
future.
Form 10-K
Copies of Oakridge Holdings, Inc. annual report to the
Securities and Exchange Commission on Form 10-K may be obtained
by contacting:
Robert C. Harvey
4810 120th Street West
St. Paul, Minnesota 55124-8628
(952) 686-5495 Phone
(952) 686-5427 Fax
Financial Information
Security analysts, investment managers and shareholders seeking
additional information about the Company should direct inquiries
to the Corporate office.
Annual Meeting of Shareholders
All shareholders and other interested parties are invited to
attend the Company's annual meeting. It is scheduled for January
29, 2001 at 11:00 a.m. at Oppenheimer Wolff & Donnelly, Plaza
VII, 45 South Seventh Street, Suite 3400, Minneapolis,
Minnesota.
