UNITED STATES
SECURITIES AND EXCHANGE COMMISISSION
Washington, D.C. 20549
FORM 10-KSB
{X}ANNUAL REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the fiscal year ended June 30, 2000
{ }TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 for the transition period from to
_
Commission file number 0-1937
OAKRIDGE HOLDINGS, INC.
(Name of small business issuer as specified in its charter)
Minnesota
(State or other jurisdiction of incorporation or organization)
41-0843268
(I.R.S. Employer Identification No.)
4810 120th Street West, Apple Valley, Minnesota 55124
(Address of principal executive offices)(Zip code)
(612) 686-5495
(Issuer's telephone number, including area code)
Securities registered pursuant to Section 12 (b) of the Exchange
Act: None
Securities registered pursuant to Section 12 (g) of the Exchange
Act:
Common Stock, Par Value $.10 per share
(Title of Class)
Check whether the issuer (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange
Act during the past 12 months (of 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.
Yes {X} No { }
Check if there is no disclosure of delinquent filers in
response to Item 405 of Regulation S-B contained in this form,
and no disclosure will be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any
amendment to the Form 10-KSB. {X}
The issuer's revenues for its fiscal year ended June 30,
2000 were $13,392,862.
The aggregate market value of the voting stock held by non
affiliates on September 18, 2000, was approximately $2,442,885,
based on the average of the bid and asked price of such stock.
The number of shares outstanding of Registrant's only class
of common equity on September 18, 2000, was 1,391,503.
Documents incorporated by reference: None.
Transitional Small Business Disclosure Format. Yes { } No {x}
PART I
CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995: This Form 10-KSB contains certain forward
looking statements. Forward-looking statements do not relate
strictly to historical or current facts, but rather give our
current expectations or forecasts of future events. Forward
looking statements may be identified by their use of words such
as "plans," "expects," "may," "will," "anticipates," "believes"
and other words of similar meaning. Forward-looking statements
may address, among other things, the Company's strategy for
growth, product development, regulatory changes, the outcome of
contingencies (such as legal proceedings) market position,
expenditures and financial results. Forward-looking statements
are based on current expectations of future events. Forward
looking statements involve risks and uncertainties, and actual
results could differ materially from those discussed. Among the
factors that could cause actual results to differ materially from
those projected in any forward-looking statement are as follows:
the effect of business and economic conditions; the impact of
competitive products and continued pressure on prices realized by
the Company for its products; constraints on supplies of raw
materials used in manufacturing certain of the Company's products
or services provided; capacity constraints limiting the
production of certain products; difficulties or delays in the
development, production, testing and marketing of products;
market acceptance issues, including the failure of products to
generate anticipated sales levels; difficulties in manufacturing
process and in realizing related cost savings and other benefits;
the effects of changes in trade, monetary and fiscal policies,
laws and regulations; foreign exchange rates and fluctuations in
those rates; the costs and effects of legal and administrative
proceedings, including environmental proceedings; and the risk
factors reported from time to time in the Company's SEC reports.
The Company undertakes no obligation to update any forward
looking statement as a result of future events or developments.
GENERAL POINTS
In this report:
Oakridge Holdings, Inc. and its subsidiaries, collectively,
are called the "Company" or "Oakridge," unless otherwise
indicated by the context. The Company has two business segments
- cemeteries and aviation ground support equipment.
The term "operating earnings" represents revenues less all
operating expenses. Operating earnings of a business segment do
not include corporate interest expense, corporate income or
expense, or taxes on income.
All references to years are to fiscal years ended June 30
unless otherwise stated.
Item 1. DESCIPTION OF BUSINESS
(a) Business Development
Oakridge Holdings, Inc. ("OHI"), through its wholly owned
subsidiaries described in this Form 10-KSB (with OHI,
collectively referred to herein as the "Company"), is engaged in
the following business segments:
- Cemeteries used for the interment of human remains
- Manufacturing and Marketing of Aviation Ground Support
Equipment
The Company began operations on March 6, 1961, with two
cemeteries in Cook County, Illinois, emphasizing service and
careful attention to customers' preferences and needs. Over the
next 30 years, the Company became involved in more cemeteries,
funeral homes, marketing of monuments, various partnerships in
real estate transactions and construction of single and multiple
family housing projects.
After sustaining substantial losses during the late 1980's,
in fiscal year 1993 a special shareholders meeting was called and
a new board of directors was elected. The new board, led by the
present chairman, began to implement a turnaround strategy.
Among other things, the strategy included a decision to refocus
the Company on its core business segment, the cemeteries. The
Company also took other actions, including the elimination of all
corporate staff and offices of OHI, to reduce overhead expenses.
On June 29, 1998, the Company acquired substantially all of
the assets of Stinar Corporation, a Minnesota corporation,
manufacturer and seller of aviation ground support equipment used
by airports, airlines and military installations.
(b) Business of the Company
Cemeteries Business Segment
Through two wholly owned subsidiaries, Oakridge Cemetery
(Hillside), Inc. and Glen Oak Cemetery, Inc., the Company
operates two adjacent cemeteries near Hillside, Illinois. The
cemetery operations are discussed on a consolidated basis and the
Company makes no functional distinction between the two
cemeteries, except where noted.
Together the cemeteries comprise 176.7 total acres of real
estate, of which 12.8 acres are used for interior roads and other
improvements, and 163.9 acres which contain 137,000burial plots,
975 niches and 3,190 crypts. There are approximately 35,283
burial plots, 149 niches and 342 crypts in inventory at June 30,
2000. The Company estimates that it has an inventory of cemetery
and mausoleum spaces representing between a 24 to 32 year supply,
based on the maintenance of current sales and annual usage
levels. This inventory is considered adequate for the
foreseeable future, and the Company is presently developing a
plan of adding more niches and crypts in the future. 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. In addition to providing interment services, burial
plots and crypts, the Company operates a crematory.
Aviation Ground Support Equipment Segment
On June 29, 1998, the Company (through Stinar HG, Inc., a
Minnesota corporation and wholly-owned subsidiary of the Company
("Stinar")) purchased substantially all of the assets (including
the right to use the Stinar name)(the "Assets") of Stinar
Corporation, a Minnesota corporation ("Seller"). Until the sale
of the assets to Stinar, Seller had been engaged in the
manufacture and sale of aviation ground support equipment for use
by airports, airlines and military bases. The Company now
operates this segment under the name "Stinar".
Principal products of Stinar include the following: truck
mounted stairways and push stairs for loading aircraft; lavatory
trucks and carts, water trucks and carts, and catering trucks for
servicing aircraft; cabin cleaning trucks, maintenance hi-lifts,
and turbo oilers for maintaining aircraft; and other custom-built
aviation ground support equipment used by airports, airlines and
the military. Stinar also provides limited service and repairs
on equipment it sells and equipment purchased from other vendors.
The Company acquired the Assets pursuant to an Asset
Purchase Agreement between Stinar, the Seller and the
shareholders of the Seller. The aggregate purchase price for the
Assets consisted of: (i) $2,000,000 cash paid at closing; (ii) a
promissory note issued by Stinar in the original principal amount
of $200,000, payable June 30, 1999 with interest at 8.25% per
annum, guaranteed by OHI; (iii) a convertible subordinated
debenture of OHI in the original principal amount of $700,000,
OHI has the right to pay the principal before the debenture is
due or the debenture is convertible into shares of OHI's common
stock at a conversion price equal to seventy-five percent (75%)
of the mean between the average closing "bid" and "ask" price of
OHI's common stock on each of the last five (5) full trading days
immediately prior to the date the debenture is converted, with
interest payable at 9% per annum on December 31 of each year it
is outstanding and principal payable in annual installments of
$200,000 commencing June 30, 2001 and on June 30, 2002 and 2003,
with a final payment of principal on June 30, 2004, guaranteed by
OHI; and (iv) aggregate payments under two contracts for deed
pursuant to which Stinar will pay the Seller and two of its
shareholders principal of $1,400,000 over seven years from the
closing date, with equal installments of principal and interest
(at the rate of 8.25%) payable monthly. In addition to the
foregoing payments, Stinar assumed debt of the Seller in the
amount of approximately $2,830,000. The source of the $2,000,000
cash paid by Stinar at the closing was income from the Company's
operations, a $3,000,000 credit facility extended to Stinar by
Associated Bank, and the sale of convertible subordinated
debentures by the Company.
In connection with the Asset acquisition, Stinar entered
into employment agreements with Randy and Gary Stinar,
shareholders and former employees of the Seller. The terms and
conditions of their employment were substantially similar to the
terms and conditions of their employment with Seller. Randy
Stinar terminated his employment with Stinar during 1998 and Gary
Stinar renewed his employment contract through June 30, 2001 and
continues to be employed as Vice-President of International
sales.
Stinar sells its products to airports, airlines, and
government and military customers in the United States, where
domestic sales comprise approximately 52%, government and
military customer's 21% and international 33% of its annual
revenues.
Financial Information About Industry Segments
The following table summarizes the assets, revenues and
operating results attributable to the Company's two industry
segments for the date and periods indicated. Other financial
information about the Company's business segments appears in Item
6, Management's Discussion and, and in Item 7, Financial
Statements.
<TABLE>
For the fiscal years ended June 30, 2000 1999
<S> <C> <C>
Revenues:
(1) Aviation $10,533,253 $9,618,837
(2) Cemetery 2,859,609 2,790,195
Operating profit or loss:
(1) Aviation $(99,731) $140,827
(2) Cemetery 782,657 877,801
Identifiable assets:
(1) Aviation $11,818,097 $5,408,274
(2) Cemetery 3,393,904 3,072,662
</TABLE>
Certain Important Factors-Government
The Company holds all governmental licenses necessary to
carry on its business and all such licenses are current. Neither
of the Company's two business segments is heavily regulated,
although the cemeteries are required to comply with state laws
and regulations applicable to all cemeteries and funeral homes
operating in Illinois. The costs and effects of compliance with
these regulations do not have a material impact on the financial
results of the Company.
Under Illinois law, the Company is required to place a
portion of all sales proceeds of cemetery lots, niches and crypts
in a trust fund for perpetual care of the cemeteries. Pursuant
to these laws, the Company deposits 15% of the revenues from the
sale of grave spaces and 10% of revenues from the sale of crypt
spaces and niches into a perpetual care fund. Earnings from
these funds are recognized in current cemetery revenues and are
intended to defray cemetery maintenance costs. The Company's
perpetual care funds balance as of June 30, 2000 was
approximately $4,238,580
The Company has a "pre-need" trust account representing
revenues received by the Company for the purchase of vaults and
interment services prior to the death of the purchaser. The
market value of the pre-need trust as of June 30, 2000 was
approximately $859,366. The trust is administered by Access
Financial Group, Inc., through a master trust with the Illinois
Cemetery Association.
Stinar is required to comply with competitive bidding and
other requirements in cases where it sells to local, state and
federal governmental customers. The costs and effects of
complying with these requirements do not have a material impact
on the financial results of the Company.
COMPETITION
Success of competition in Oakridge's business segments
includes price, service, location, quality and technological
innovation. Competition is strong in all markets served.
CEMETERY OPERATIONS. The Cemetery Operations compete with
other cemeteries in Cook and DuPage Counties in Illinois.
Competitive factors in the cemetery business are primarily
predicated on location, convenience, service, and heritage.
Decisions made by customers are only minimally influenced by
pricing. There are virtually no new entrants in the markets
served by the Company as the cost of acquiring sufficient
undeveloped land and establishing a market presence necessary to
commence operations is prohibitive.
STINAR CORPORATION. The aviation ground support equipment
business is extremely fragmented and diverse. The Company
estimates that there are approximately twenty-five companies
operating in the United States in the business of manufacturing
equipment similar to those manufactured by Stinar. The purchasers
of the types of equipment manufactured by Stinar tend to be
longstanding, repeat customers of the same manufactures, with
quality, reliability, pricing, warranties, after market service
and delivery being the key factors cited by customers in
selecting an aviation ground support equipment supplier.
Accordingly, while the market for Stinar equipment is
competitive, Stinar's reputation for quality and reliable
equipment and the industry's familiarity with Stinar puts it on
equal footing with most of its competitors.
Based on air transportation industry statistics obtained
from GSE Today, a trade publication, the Company estimates the
annual worldwide sales for the types of equipment manufactured by
Stinar is approximately $1,700,000,000, and no single competitor
of Stinar accounts for in excess of 10% of the share of the
domestic market. Competition internationally in the market for
Stinar's equipment is equally diffuse, and the international
market is served primarily by manufactures located in the United
States and Europe.
MARKETING
CEMETERY OPERATIONS. Sales are made to customers utilizing
the facilities primarily on an at-need basis, that is, on the
occurrence of a death in the family when the products and
services and interment space are sold to the relatives of the
deceased. The cemeteries do not actively market their products.
Rather the customers typically learn of the cemeteries from
satisfied customers who recommend the cemeteries based on
superior location and services rendered.
STINAR CORPORATION. The chief method of marketing Stinar's
equipment is through one-on-one customer contact made by sales
representatives employed by Stinar and manufacturer's
representatives under contract with Stinar. Stinar's customers
report that Stinar has a reputation in the commercial aviation
industry for manufacturing high quality, reliable equipment.
Stinar intends to capitalize on this reputation in the domestic
airline industry by making frequent sales calls on customers and
potential customers and by reducing the amount of time needed to
complete customer orders. Stinar has also engaged manufacturers'
representatives to assist it in increasing sales to overseas
markets.
Neither of Oakridge's business segments generally extends
long-term credit to customers. However, the Company's aviation
ground support equipment segment may in the future periodically
facilitate leasing arrangements through unaffiliated companies
for the financing of aviation ground support equipment to airline
customers. In certain instances, the Company has provided, and
can be expected to continue to provide limited recourse to such
unaffiliated companies in the event of customer default, although
the Company believes that the potential liability from the
recourse is immaterial to the Company as a whole. The Company
believes this credit policy, as well as its working capital
requirements, do not materially differ from those of its
competitors.
Stinar's sales to customers outside the United States
represented approximately 33% percent of consolidated net sales
in 2000. Products are manufactured and marketed through the
Company's sales department and sales representatives around the
world. For additional information, see discussions of individual
business segments included below; under Item 6, Management's
Discussion and Analysis; and Item 7, Note 16 of the Notes to
Consolidated Financial Statements.
OTHER BUSINESS INFLUENCES
CEMETERY OPERATIONS. The Cemetery Operations do not
experience seasonal fluctuations, nor are they dependent upon any
identifiable group of customers, the loss of which would have a
material adverse effect on its business, and discussion of
backlog is not material to any understanding of Company's
business.
STINAR CORPORATION. While there is no reliable historical
information for Stinar to identify specific trends (except for
two years of operations), the Company believes that its reliance
on customers in the U.S. commercial aviation business exposes
Stinar to the cyclical nature of the airline industry. In the
event of a downturn or recession in the airline business, world
commercial air carriers would be more likely to curtail purchases
of capital equipment of the kind manufactured by Stinar. In
addition, government budget decisions and world politics will
affect sales to military purchasers both domestically and
internationally.
The diversity of Stinar's customer base and equipment lines
mitigates these risks, as does the growing importance of
marketing both domestically and internationally, providing Stinar
with an additional customer base not subject to economic
conditions or politics unless it is global.
The Company operates globally in the aviation ground support
equipment segment and is subject to certain risks, including
foreign currency fluctuations and government actions.
The Company does not believe that the present overall rate
of inflation will have a significant impact on the business
segments in which it operates. However, a worldwide general
sales decline in aviation ground support equipment on a global
basis (caused by recessions, airline employees or truck
manufacturers' strikes and increases in fuel costs) has had a
negative effect on operating results, and this trend is expected
to continue.
While future economic events cannot be predicted, the
Company believes its current operations and future expansion
plans will not significantly change its risk profile.
EMPLOYEES
As of June 30, 2000, the Company had 137 full time and 11
part time or seasonal employees. Of these, the Company employed
117 full-time employees in the aviation segment and 20 full-time
and 11 part-time or seasonal employees in the cemeteries segment.
The cemetery segment employees are represented by local #1,
of the Services Employees International Union, AFL-CIO, whose
contract expires February 28, 2005.
A union does not represent the Aviation segment employees
and the Company considers its labor relations to be excellent.
COMPLIANCE WITH ENVIRONMENTAL LAWS
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, the Company did not incur any expenses for
environmental remediating and a total of approximately $228,000
has been spend 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
of 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
for 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 (the "Stinar
Facility") located 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, the 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 be deemed responsible for contamination which occurred at the
Stinar Facility prior to the purchase of the Assets of Stinar.
The structural improvements recommended by the Company's
environmental consulting firm have 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
relate to environmental compliance.
REAL ESTATE DEVELOPMENT
APPLE VALLEY, CALIFORNIA RAW LAND
On May 22, 2000, the Company acquired 4.5 acres of raw land
in Apple Valley, California in exchange for the full and final
settlement of the judgment against the former chairman of the
board. The appraised value of the land was $140,000, with the
Company contributing $37,527.
ITEM 2: DESCRIPTION OF PROPERTIES.
The Company's principal executive offices are located at 4810
120th Street West, Apple Valley, Minnesota and are leased month
to month. Total rental space is approximately 300 square feet,
condition is excellent, and cost is $100 per month. There are no
plans for renovation or improvement to the rental space. The
property is adequately insured.
The cemetery segment's principal properties are located at
Roosevelt Road and Oakridge Ave, Hillside, Illinois. The two
business segments comprise 176.7 acres of real estate, of which
12.8 acres are used for interior roads and other improvements,
and 163.9 acres for burial plots. The business segments have two
mausoleums, an office building, and three maintenance buildings.
The Oakridge Cemetery (Hillside), Inc. mausoleum is in fair to
excellent shape and the mausoleum for Glen Oak Cemetery is poor
and will require approximately $350,000 of repairs. All other
buildings are in fair shape and will require minimum repairs in
the future. The cemetery segments are subject to a mortgage in
the principal amount of $560,370. See Financial Statements,
beginning on page F-1 for payment details.
Stinar operates out of a single 43,271 square foot
manufacturing facility in Eagan, Minnesota located on 7.875 acres
of land. The land consists of two contiguous parcels of real
estate. This facility was purchased by Stinar in connection with
the purchase of Assets. The purchase of the Stinar facility was
financed by the Seller pursuant to contracts for deed payable in
monthly installments of $9,766 for seven years from the date of
purchase, with a balloon payment of principal of $1,207,000 due
on June 29, 2005. The condition of the manufacturing facility
and office spaces are fair and will require improvements in the
future at an estimated cost of $250,000.
ITEM 3: LEGAL PROCEEDINGS
The Company is from time to time involved in litigation
incidental to the conduct of its businesses. There is no
material pending, or threatened legal, governmental,
administrative or other proceeding to which the Company is a
party or of which any of its property is the subject.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The shareholders approved the 1999 Stock Incentive Awards
Plan (the "1999 Plan") on February 22, 1999, at the annual
meeting of shareholders. The purpose of the 1999 Plan is to
attract and retain persons of ability to perform services for the
Company and to provide an equity incentive to such individuals
who contribute to the overall success of the Company. The Company
has reserved a maximum of 175,000 shares of common stock for
issuance under the 1999 plan. The Company, in fiscal year 2000,
issued 7,000 stock options to key employees.
PART II
ITEM 5: MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS
MATTERS
(a) Market Information.
Trading in the Company's common stock is in the over the
counter market, primarily through listings in the National
Quotation Bureau "pink sheets", although the market in the stock
is still not well established. The table below sets forth the
range of bid and asked prices for the two most recent fiscal
years. Prices used in the table were reported to the Company by
National Quotation Bureau, Inc. These quotations represent inter
dealer prices, without retail markup or commission, and may not
necessarily represent actual transactions.
FISCAL YEAR
2000 1999
First Quarter $2.31 - 7.00 $1.59 - 3.50
Second Quarter 1.75 - 4.75 1.75 - 4.50
Third Quarter .75 - 2.25 2.63 - 4.00
Fourth Quarter .88 - 1.97 2.06 - 4.25
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. The
common stock was issued in reliance on an exemption provided in
Section 4 (2) of the Securities Act of 1933.
In fiscal 1999, the Company issued a total of 15,000 shares
of unregistered stock value at $2.50 to $3.00 per share to one
officer and two employees for employment signing bonuses.
(b) Holders.
As of September 18, 2000, the number of holders of record of
the Company's common stock was 1802.
(c) Dividends.
The Company has never paid dividends on it common stock and
does not anticipate paying dividends on its common stock in the
foreseeable future due to bank borrowings covenants.
ITEM 6: MANAGEMENT'S DISCUSSION AND ANALYSIS
Fiscal 2000
Liquidity and Capital Resources
The Company relies on cash flow form its two business
segments to meet operating needs, debt and funding capital
requirements. Cemetery operations have provided sufficient cash
during the past six years to support day-to-day operations,
current debt service, capital expenditures, and cash to assist in
the acquisition of the assets of Stinar. The Company expects
that the cemetery operations and Stinar will provide sufficient
cash during the next five years to cover all debt requirements
and operational needs.
Stinar has a $2,300,000 line of credit to fund operations
and capital expenditures. The line of credit will expire on
November 2, 2000 and per discussions with the bank it is expected
to be extended to November 2, 2001 and increased to $4,000,000.
The cemetery has a line of credit for $225,000 to meet any
uncertainties that could materially affect liquidity. This line
of credit is secured by the assets of the cemetery and matures
November 1, 2000. The Company believes that the present line of
credit will be extended for another year to November 1, 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, and a controller and senior buyer in
fiscal year 2001.
The Cemetery operation and Stinar had a five-year plan for
capital expenditures in 1998 for $2,600,000. The Company is on
target at the end of fiscal year 2000.
The Cemetery operations' capital expenditures will be
approximately $900,000 under the five-year plan. The funds will
be expended for road improvements, increased inventory of niches
and crypts in the mausoleum and outdoors, computer software and
hardware equipment, and grounds keeping equipment. The Cemetery
capital expenditures for fiscal year 2000 were $351,656, or the
first two years of the five-year plan totaled $619,290.
Expenditures for fiscal year 2000 were for the following: $40,187
for a dump truck, $257,781 for sewers and repaving of cemetery
roads, $28,282 for office equipment and computer software, $3,640
for new steam pipes for the boiler room in the mausoleum and
$21,766 for various equipment.
Stinar capital expenditures will be approximately $1,700,000
under the five-year plan. The funds will be expended for
improvement and repair of the manufacturing plant, office and
manufacturing equipment, upgrade of the administrative offices,
and computer software and hardware. Stinar's capital
expenditures for fiscal year 2000 or the second year of the plan
were $215,040, and the first two years of the five-year plan
totaled $726,863. These funds in fiscal year 2000 were spent on
the following: $28,037 for building improvements which consisted
of garage doors and electrical work, $158,629 for various
machinery and equipment, $5,239 for office equipment, and $23,135
for software and hardware computer equipment.
RESULTS OF OPERATIONS
CEMETERY OPERATIONS
In fiscal year 2000, cemetery revenues increased $69,414 or
2.5% over fiscal year 1999. The cemetery did experience a
$107,624 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 of foundations (7%), grave boxes
(2%), 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%.
Operating expenses in fiscal year 2000 increased $75,034 or
5%, but cost of goods sold in relation 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.
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 costs of fuel, utilities and labor.
Selling expenses decreased $15,434, or 7.2%, for the fiscal
year 2000, compared to fiscal year 1999. The decrease was due to
no payment of sales commission on the non-profit sale of cemetery
space by the general manager.
General and Administrative expenses increased $23,863, or
5.2%, for the fiscal year 2000 compared to fiscal year 1999. The
increase is attributed to changing of computer software and
related consulting fees of $6,000, and increased costs of labor
of $31,981. The increased costs were reduced by a decrease in
professional fees of $7,000, a decrease in telephone expense of
$3,000, a decrease in entertainment expenses of $2,000, and a
reduction of miscellaneous items of $2,000.
STINAR
In fiscal year 2000, Stinar 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 this contract will complete the second and
third year of the contract.
Operating expenses in fiscal year 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 (caused by overtime due to lack of a trained
workforce and increase in wages to retain and hire qualified
personnel), increased medical and dental costs of 40%, and a
utilities increase of 25%.
Gross profit increased from 8.9% in fiscal year 1999 to 9%,
or .1% in fiscal year 2000.
Selling expenses decreased $22,160, or 4.8%, for the fiscal
year 2000, compared to fiscal year 1999, due to lower travel and
show expenses.
General and administrative expenses increased $106,327, or
38.7%, for the fiscal year 2000 compared to fiscal year 1999.
The increases was primarily due to the following; $17,000
consulting fees to train personnel, $73,036 for research and
development of a new line of equipment, and $41,020 in
contributions to the new 401-k plan.
Interest expense increased $102,497, or 44%. This was due
to a higher debt balance to finance a larger truck inventory
caused by Ford Motor not delivering 20 trucks per month, but
shipping all 200 trucks at one time.
HOLDING OPERATIONS:
In fiscal year 2000, other income increased $50,840, or 88%,
over fiscal year 1999. Other income consisted of primarily of
partial settlements with prior board members.
General and administrative expenses in fiscal year 2000
decreased $35,723 or 15% in comparison to the prior fiscal year
1999. The decrease is due to a decrease of $27,550 in officer's
salaries, and a reduction of shareholders meeting expenses of
$7,659.
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's cash flow.
Fiscal 1999
Liquidity and Capital Resources
The Company relies on cash flow from its two business
segments to meet operating needs, debt and funding capital
requirements. Cemetery operations have provided sufficient cash
during the past five years to support day-to-day operations,
current debt service, capital expenditures, and cash to assist in
the acquisition of the assets 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 $3,000,000 line of credit to fund
operations and capital expenditures
The cemetery has secured a line of credit for $225,000 to
meet any uncertainties that could materially affect liquidity.
This line of credit is secured by assets of the cemetery.
There are no expected changes in the number of full time,
part time or seasonal employees by the Cemetery operation.
However, Stinar anticipates hiring an additional 15 full time
employees for production, and a chief financial officer in fiscal
year 2000.
The cemetery operation and Stinar had a five-year plan for
capital expenditures in 1998 for $2,600,000. The Company
believes this plan is appropriate and the Company is on target at
the end of fiscal year 2000.
The cemetery operations' capital expenditures will be
approximately $900,000 under the five-year plan. The funds will
be expended for road improvements, increased inventory of niches
and crypts in mausoleum and outdoors, grounds keeping equipment,
and a new computer software and hardware system. The Cemetery
capital expenditures for fiscal year 1999 or the first year of
the five-year plan were $267,634. These funds were spent on the
following: $64,290 for software programs and hardware (compliance
with the year 2000), $26,826 for tools and implements for the
grounds, $129,251 on sewers and repaving of cemetery roads,
$43,056 to replace three ground vehicles being retired, and
$4,211 for new cemetery signs and flags.
Stinar's capital expenditures will be approximately
$1,700,000 under the five-year plan. The funds will be expended
for improvements and repairs of the manufacturing plant, office
and manufacturing equipment, upgrade administrative offices,
computer software and hardware, and vehicles. Stinar capital
expenditures for the first year of the five-year plan were
$511,823. The funds were spent on the following: $18,961 for a
snow plow truck and work on the semi-truck, $43,563 for computer
stations, software and network equipment, $48,860 for shop
equipment with the majority of the costs going for a steel saw,
$23,763 for office equipment and furniture, and $375,676 for
building improvements. The building improvements breakdown are:
$67,900 for light fixtures, $106,096 for make up air units and
infrared heaters, $78,932 for grinding and paint booths
upgrades, and $122,748 for electrical equipment and upgrading.
Most funds expended for the building brought the building up to
code regulations and safety standards with all federal and state
agencies.
RESULTS OF OPERATIONS
CEMETERY OPERATIONS
In fiscal year 1999, cemetery revenue increased $22,981, or
.8%, over fiscal year 1998. The Company did experience a
$105,000 increase, or 4.1%, in funeral service revenues due to an
increase in at-need cases handled of approximately 9% over fiscal
year 1998. The increase was offset by a decrease of $61,000, or
2.4%, in sales of monuments and memorials, primarily attributable
to one very large memorial sale in fiscal year 1998, and a
$18,216 decrease in trust and interest income from 1998. The
decrease is due to a decrease in investment returns on taxable
bond funds.
Operating expenses in fiscal year 1999 increased $65,615, or
5%, but cost of goods sold in relation to sales increased 1.9%
over fiscal year 1998. The increase was due to higher labor
cost, increased medical and dental insurance benefits for the
employees, and ground repairs caused by vandalism and storms.
Gross profit decreased from 52.7% in fiscal year 1998 to
50.8% in fiscal year 1999. The decrease was due to revenue mix
and increased costs of labor and related benefits, and repairs.
Selling expenses decreased $23,427, or 9.9%, for the fiscal
year 1999, compared to fiscal year 1998, due to the elimination
of the sales manager position and decreased commissions
attributable to the large memorial sale discussed above.
General and Administrative expenses increased $35,778, or
8.5%, for the fiscal year 1999 compared to fiscal year 1998. The
increase is due to legal fees associated with land condemnation
settlement.
STINAR OPERATIONS
In this segment of the Company's business, there is no
reliable historical financial information regarding operations to
identify specific trends.
Manufacturing sales in fiscal year 1999 were $9,618,837: the
sales makeup was 35% to United States Government entities, 20% to
international airlines, and 45% to commercial airlines.
Cost of sales in relation to sales was 88%, with raw
materials being 49%, labor and benefits being 27%, and remaining
12% being utilities, shop supplies, freight, insurance and
miscellaneous expenses.
Selling expenses in relation to sales was 5% or $459,834,
with sales salaries, sales representatives commissions and
related benefits 78%, advertising in trade magazines 11%, show
expense 4%, travel and miscellaneous 7%.
General and administrative expense in fiscal year 1999 was
$352,768 or 4% in relation to sales. Salaries and benefits 35%,
real estate taxes 16%, professional fees 15%, network consulting
fees 3% and various other expenses 31%.
Other expenses, which consist of interest expense, were
$231,208. This was due to mortgage payment on land and building,
sellers note, and bank debt.
HOLDING OPERATIONS:
Other income of $57,589 in fiscal year 1999 consisted
primarily of partial settlements with prior board members.
Operating expenses in fiscal year 1999 decreased
approximately $50,000 or 17% in comparison to the prior fiscal
year 1998. The decreases are due to decrease in officer's wages
of $17,500, professional fees of $24,000, and lower operating
costs of approximately $9,000.
Interest expense in fiscal year 1999 increased $89,746 in
comparison to prior fiscal year 1998. The increase is due to the
debentures sold to assist in the acquisition of Stinar.
ITEM 7: FINANCIAL STATEMENTS.
The financial statements of the Company for the fiscal years
ending June 30, 2000 and 1999, located at Item 13, F-1, are
incorporated herein.
ITEM 8: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE. None
PART III
ITEM 9: DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16 (a) OF THE EXCHANGE ACT.
Directors hold office for a one-year term or until there
successors are duly elected and qualify. Each director of the
Company has served continuously since the year indicated below.
The age as of September 18, 2000 and principal occupation or
employment of all directors and executives are set forth below.
Robert C. Harvey, (49), has been a Director, Chairman of the
Board, CEO/CFO of Stinar Corporation, President of the Cemeteries
and sole director of the two business segments.
Robert B. Gregor, (48), Secretary and Director since 1993,
Vice-President of Marketing and Sales at Stinar Corporation since
1999 and Officer of the two cemeteries since 1993. From 1993 to
1998, Mr. Gregor was the Senior Account Executive of E.F Johnson
Co.
Hugh H. McDaniel, (60), Director since 1992. Mr. McDaniel
has been a residential real estate broker since 1973.
Marie Leshyn, (48), CFO/General Manager of Cemetery
operations since 1993.
ITEM 10: EXECUTIVE COMPENSATION
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation Long Term Compensation
Awards Payouts
-------------------------------------------------------------- -------------------------
Name and Other Annual
Principal Position Year Salary Bonus Compensation
--------------------- --------------------------------------- -------------------------
<S> <C> <C> <C> <C>
Robert C. Harvey(1) 2000 $112,500 $10,000 $4,248
Chairman of the Board 1999 $90,000 $50,000
and
Chief Executive Officer
Robert B. Gregor 2000 $91,350 $420
Secretary and 1999 $45,000 $13,750
Vice-president
Marie Leshyn 2000 $84,140 $42,377 $9,200
CEO of Cemetery 1999 $79,310 $38,819 $9,200
(1) Mr. Harvey was employed by the Company as Chairman of the
Board and Chief Executive Officer in November 1992.
</TABLE>
OPTION GRANTS AND EXERCISES
The following table summarizes options granted to Named Executive Officer during
2000 and 1999.
<TABLE>
Option Grants in Last Fiscal Year
Individual Grants
<CAPTION>
Numbers of Securities % of Total Options Exercise or
Underlying options(1) Granted to Employees Base Price Expiration
Name Granted in Fiscal Year ($/SH) Date
---------------- --------------------- -------------------- ----------- ----------
<C> <C> <C> <C> <C>
Robert C Harvey
2000
1999
1998 40,000(2) 100.0% $0.38 06/30/2001
Robert B. Gregor
2000 5,000 71.4% $2.00 01/01/2005
Marie Leshyn
2000 2,000 28.6% $2.30 07/01/2004
(1) All the options granted to Mr. Harvey was granted pursuant to his
employment contract.
Options are exercisable so long as Mr. Harvey remains in the employ of the
Company.
(2) These options were granted on June 30, 1998 and are fully vested.
</TABLE>
EMPLOYMENT AGREEMENT
During fiscal year 1999, the Company entered into employment
agreements with certain individuals that expire in 2001 through
2004. The agreements provide for annual stock options to be
granted on the respective anniversary dates for a total of 7,000
shares in 2000 and 2001, and 2,000 shares in 2002, 2003, and
2004. The options are exercisable upon issuance at fair market
value at date of grant.
COMPENSATION OF DIRECTORS
Directors who are not salaried employees of the Company are
paid $500 as an annual director's fee plus a fee of $200 per
meeting attended. Directors are also reimbursed for travel and
lodging expenses as appropriate. There was one board of
directors' meeting by telephone and one director received $700
for this meeting.
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, and 14,000 shares are available for issuance.
ITEM 11: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table contains information as of June 30,
2000, concerning the beneficial ownership of the Company's common
shares by Mr. Robert C. Harvey, each director, by all directors
and officers as a group, and by each person known to the Company
to "beneficially own" more than 5% of its common shares.
<TABLE>
Name of Individual
or Persons in Group Number of Shares(a) % of Class
----------------------- ------------------ ----------
<S> <C> <C>
Robert C. Harvey 411,329(b) 24.9%
4810 120th Street West
Apple Valley, MN 55124
Robert B. Gregor 197,689(c) 12.0%
844 Oriole Lane
Chaska, MN 55337
Hugh McDaniel 5,100 .3%
4090 Mission Blvd.
San Diego, CA 92109
All officers and Directors 614,118 37.2%
as a Group (3 persons)
Jerry R. Kenline and 225,000(d) 13.6%
Linda L Kenline
5535 Waterford Circle
Shorewood, MN 55331
(a) Unless otherwise noted, all shares shown are held by persons
possessing sole voting and investment power with respect to such
shares.
(b) Includes 50,307 held by Mr. Harvey's wife and children to
which Mr. Harvey may be deemed to share voting and investment
power, but as to which he disclaims beneficial ownership. In
addition, 150,000 of the 411,329 share total listed in the table
are shares that could be acquired upon exercise of an option and
the conversion of a convertible subordinated debentures. In
addition, 10,000 shares are held jointly by Mr. Harvey and his
wife.
(c) Includes 8,125 shares held by Mr. Gregor's wife and children
to which Mr. Gregor may be deemed to share voting and investment
power, but as to which he disclaims beneficial ownership. In
addition, 112,564 shares are held jointly by Mr. Gregor and his
wife. Also, 30,000 of the 197,689 shares total listed in the
table are shares that could be acquired upon exercise of an
option and the conversion of the convertible subordinated
debenture.
(d) 75,000 of the 225,000 shares total listed in the table are
shares that could be acquired upon the conversion of the
convertible subordinated debenture.
</TABLE>
ITEM 12: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
During the years ended June 30, 2000 and 1999, amounts paid
for compliance services to entities elated to the chief executive
officer were $16,187 and $13,715 respectively. In the fiscal
year 1999, a director was repaid $30,000 advanced by him during
1998 and 40,000 shares of common stock were sold out of treasury
for $80,000. In fiscal year 1999 the Vice-President of
Manufacturing of Stinar was terminated. To settle his
termination, he demanded that his debenture be repurchased for
$100,000 plus interest. Mr. Harvey and Mr. Gregor each purchased
$50,000 of the debenture and paid the interest due on the
debenture.
Item 13: EXHIBITIS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K
FINANCIAL STATEMENTS
(a) The following documents are filed or incorporated by
reference as part of this Form 10-KSB.
1. The following consolidated financial statements of Oakridge
Holdings, Inc. and Subsidiaries, together with the Independent
Auditors Report are filed in this report at Item 13, F-1.
Independent Auditor's Report
Consolidated Balance Sheets as of June 30, 2000 and 1999
Consolidated Statements of Operations for Years Ended June 30,
2000 and 1999
Consolidated Statements of Stockholders' Equity for the Years
Ended June 30, 2000 and 1999
Consolidated Statements of Cash Flows for the Years Ended June
30, 2000 and 1999
Notes to Consolidated Financial Statements
EXHIBIT SCHEDULE:
2. The schedule of exhibits required to be furnished by Item
601 of Regulations S-B is as follows:
3(i) Amended and Restated Articles of Incorporation as amended
(1)
3(ii) Amended and Superseding By-Laws as amended (1)
10(a) Outside Directors Non-Qualified Stock Option Plan (1)
10(b) Robert C. Harvey Employment Agreement (1)
10(c) Loan Documents for line of credit (2)
10(d) Subordinated Debenture Agreement (1)
10(e) Loan documents for Mortgage Note Payable (2)
10(f) Marie Leshyn Employment Agreement (3)
10(g) Robert Gregor Employment Agreement (3)
21 Subsidiaries of Registrant. (3)
22 1999 Stock Incentive Award Plan (3)
27 Financial Data Schedule
(1) Filed as exhibit to Form 10-KSB for fiscal year ended June
30, 1997
(2) Filed as exhibit to Form 10-KSB for fiscal year ended June
30, 1998
(3) Filed as exhibit to Form 10-KSB for fiscal year ended June
30, 1999
(b) No reports of Form 8-K were filed during the first quarter
of the period covered by this report.
F-1
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
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
<TABLE>
OAKRIDGE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
June 30,
---------- ----------
2000 1999
---------- ----------
ASSETS
<S> <C> <C>
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
========== ==========
<CAPTION>
June 30,
---------- ----------
2000 1999
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
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
========== ==========
</TABLE>
<TABLE>
OAKRIDGE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
Years Ended June 30,
---------- ----------
2000 1999
---------- ----------
<S> <C> <C>
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>
<TABLE>
OAKRIDGE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED JUNE 30, 2000 AND 1999
<CAPTION>
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>
<TABLE>
OAKRIDGE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<CAPTION>
Years Ended June 30,
---------- ----------
2000 1999
---------- ----------
<S> <C> <C>
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
</TABLE>
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:
<TABLE>
<CAPTION>
2000 1999
---------- ----------
<S> <C> <C>
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
========== ==========
</TABLE>
Inventories of cemetery and mausoleum space available for sale
consisted of the following:
<TABLE>
<CAPTION>
2000 1999
---------- ----------
<S> <C> <C>
Cemetery space $503,794 $521,783
Mausoleum space 125,251 113,104
---------- ----------
$629,045 $634,887
========== ==========
</TABLE>
3. Property and Equipment
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
2000 1999
---------- ----------
<S> <C> <C>
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
========== ==========
</TABLE>
Depreciation charged to operations was $258,889 in 2000 and
$212,327 in 1999.
4. Accrued Liabilities
Accrued liabilities consisted of the following:
<TABLE>
<CAPTION>
2000 1999
---------- ----------
<S> <C> <C>
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
========== ==========
</TABLE>
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:
<TABLE>
<CAPTION>
2000 1999
---------- ----------
<S> <C> <C>
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
========== ==========
</TABLE>
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:
<TABLE>
<CAPTION>
2000 1999
---------- ----------
<S> <C> <C>
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
========== ==========
</TABLE>
Principal reasons for variations between the statutory federal
tax rate and the effective tax rate were as follows:
<TABLE>
<CAPTION>
2000 1999
---------- ----------
<S> <C> <C>
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%
========== ==========
</TABLE>
The net deferred income tax assets in the accompanying
consolidated balance sheets included the following components as
of June 30, 2000 and 1999:
<TABLE>
<CAPTION>
2000 1999
---------- ----------
<S> <C> <C>
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
========== ==========
</TABLE>
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:
<TABLE>
<CAPTION>
1990 Employee Weighted
Stock Stock Average
Option Options Exercise
Plan Price
------- ------- --------
<S> <C> <C> <C>
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
====== ======
</TABLE>
Options exercisable
at:
June 30, 1999 3,500 40,000 $.37
June 30, 2000 - 47,000 $.63
<TABLE>
Information regarding options outstanding at June 30, 2000, is as
follows:
<CAPTION>
Type of Option Number of Exercise Weighted Weighted
Options Price Average Average
Range Exercise Remaining
Price Contractual
Life
-------------- --------- -------- -------- -----------
<S> <C> <C> <C> <C>
Employee Stock 47,000 $.38 - $.63 1.5 Years
Options $2.30
</TABLE>
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:
<TABLE>
<CAPTION>
2000 1999
---------- ----------
<S> <C> <C>
Net Income:
As reported $273,975 $488,157
Pro forma $268,345 $488,157
</TABLE>
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:
<TABLE>
2000 Income Shares Per-Share
---- ---------- ----------- -----------
(Numerator) (Denominator) (Amount)
---------- ----------- -----------
<S> <C> <C> <C>
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
========== =========== ===========
</TABLE>
<TABLE>
1999 Income Shares Per-Share
---- ---------- ----------- -----------
(Numerator) (Denominator) (Amount)
---------- ----------- -----------
<S> <C> <C> <C>
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
========== =========== ===========
</TABLE>
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:
<TABLE>
<CAPTION>
Cemeteries Aviation Total
Ground
Support
Equipment
---------- ----------- -----------
<S> <C> <C> <C>
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
</TABLE>
Reconciliation of segment profit to consolidated income before
income taxes is as follows:
<TABLE>
<CAPTION>
2000 1999
---------- ----------
<S> <C> <C>
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
========== ==========
</TABLE>
Reconciliation of segment assets to consolidated assets is as
follows:
<TABLE>
<CAPTION>
2000 1999
---------- ----------
<S> <C> <C>
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
========== ==========
</TABLE>
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.
Signatures
In accordance with Section 13 or 15 (d) of the Exchange Act, the
Company has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
OAKRIDGE HOLDINGS, INC.
/S/ Robert C. Harvey
Chairman Of the Board Of Directors
Dated: September 27, 2000
In accordance with the Exchange Act, this report has also been
signed below by the following persons on behalf of the Company
and in the capacities and on the dates indicated.
/S/ Robert C. Harvey
Chief Executive Officer
Chief Financial Officer
Dated: September 27, 2000
/S/ Robert B. Gregor
Secretary
Director
Dated: September 27, 2000
