Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ______________ to ______________
______________
For Quarter Ended June 30, 1995 Commission File Number 33-10280C
LAMCOR, INCORPORATED
(Exact name of registrant as specified in its charter)
MINNESOTA 41-1478017
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
P.O. Box 70 Highway 169 North
LeSueur, MN 56058
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (612) 665-6658
Former name, former address and former fiscal year,
if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes _X_ No ___
1,328,542 Common Shares were outstanding as of August 15, 1995
LAMCOR, INCORPORATED
I N D E X
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Page
PART I. FINANCIAL INFORMATION
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Item 1. Financial Statements
Condensed Balance Sheets
June 30, 1995 (Unaudited) and
September 30, 1994 3
Statements of Income
Three months ended June 30, 1995 and 1994 (Unaudited) and
nine months ended June 30, 1995 and 1994 (Unaudited) 4
Condensed Statements of Cash Flows
Nine months ended June 30,
1995 and 1994 (Unaudited) 5
Selected Notes to Condensed Financial
Statements (Unaudited) 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7 - 8
PART II. OTHER INFORMATION 9
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Part I. FINANCIAL INFORMATION
Item I. FINANCIAL STATEMENTS
LAMCOR, INCORPORATED
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CONDENSED BALANCE SHEETS
June 30, September 30,
Assets 1995 1994
(Unaudited)
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Cash (including savings) $ 26,897 $ 6,196
Accounts receivable, less allowance for
uncollectibles of $10,000 at June 30,
1995 and $10,000 at September 30, 1994 1,262,509 793,610
Inventories (Note 2) 1,084,120 1,064,687
Prepaid expenses and other 21,626 14,414
Refundable income taxes 6,500 --
Total current assets 2,401,652 1,878,907
Property, plant and equipment - net 2,053,144 1,353,278
Other assets 10,831 295,362
$ 4,465,627 $ 3,527,547
Liabilities and Stockholders' Equity
Checks issued in excess of bank balance $ -- $ 82,381
Bank lines of credit 170,000 90,000
Current maturities of long-term debt 120,000 101,500
Capital lease obligations, current 24,369 157,030
Accounts payable 784,320 638,983
Other accrued expenses 92,607 86,110
Income taxes payable 98,951 29,436
Total current liabilities 1,290,247 1,185,440
Long-term debt - net of current maturities 872,206 837,761
Capital lease obligations, net of current maturities 457,451 --
Deferred income taxes 125,000 97,000
Stockholders' Equity (Note 3):
Common stock 940,159 940,159
Notes arising from sale of common stock (88,576) (97,500)
Retained earnings 869,140 564,687
1,720,723 1,407,346
$ 4,465,627 $ 3,527,547
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Note: The balance sheet at September 30, 1994 has been taken from the audited
financial statements at that date, and condensed.
See Notes to Condensed Financial Statements.
LAMCOR, INCORPORATED
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STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Nine Months Ended
June 30 June 30
1995 1994 1995 1994
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Net sales $ 1,943,604 $ 1,416,807 $ 5,442,722 $ 3,449,294
Cost of sales 1,402,643 1,043,149 3,956,059 2,476,576
Gross profit 540,961 373,658 1,486,663 972,718
Selling, general and administrative expense 313,817 242,387 922,637 662,522
Income from operations 227,144 131,271 564,026 310,196
Other income (expense):
Interest income 1,632 1,926 5,046 7,155
Interest expense (32,867) (16,274) (98,419) (44,754)
Other - - - 177
(31,235) (14,348) (93,373) (37,422)
Income before income taxes 195,909 116,923 470,653 272,774
Income taxes 65,300 46,000 166,200 104,500
Net income $ 130,609 $ 70,923 $ 304,453 $ 168,274
Weighted average common shares outstanding 1,325,542 1,325,542 1,325,542 1,324,260
Net income per common share $ .10 $ .05 $ .23 $ .13
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See Notes to Condensed Financial Statements.
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LAMCOR, INCORPORATED
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
June 30,
1995 1994
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Cash flows from operating activities:
Net income $ 304,453 $ 168,274
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 130,348 88,641
Gain on sale of fixed assets -- (150)
Deferred income taxes 21,500 18,000
Changes in current assets and liabilities:
Accounts receivable (468,899) (290,557)
Inventory (19,433) (508,280)
Prepaid expenses (7,212) (3,807)
Refundable income taxes -- 37,124
Accounts payable 145,337 395,415
Income taxes payable 69,515 61,982
Other liabilities and accrued items 6,497 45,753
Net cash provided by operating activities 182,106 12,395
Cash flows from investing and other activities:
Purchase of equipment (366,604) (223,048)
Proceeds from sale of fixed assets -- 150
Other - deposits 158,115 (16,434)
Net cash used in investing and other activities (208,489) (239,332)
Cash flows from financing activities:
Collections on notes receivable from common stock 8,924 8,750
Proceeds from exercise of stock options -- 6,375
Proceeds from debt borrowings 182,846 323,000
Payments on debt and capital lease obligations (62,305) (133,912)
Payments on checks issued in excess of bank balance (82,381) --
Cash provided by financing activities 47,084 204,213
Net increase (decrease) in cash 20,701 (22,724)
Cash and savings account:
Beginning of period 6,196 89,205
End of period $ 26,897 $ 66,481
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See Notes to Condensed Financial Statements.
LAMCOR, INCORPORATED
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Condensed Financial Statements:
The condensed balance sheet as of June 30, 1995, the statement of
operations for the three-month and nine-month periods ended June
30, 1995 and 1994, and the condensed statement of cash flows for
the nine-month periods then ended have been prepared by the
Company, without audit. In the opinion of management, all
adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, results of
operations and changes in cash flows at June 30, 1995 and for all
periods presented have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted. It
is suggested that these condensed financial statements be read in
conjunction with the financial statements and notes thereto
included in the Company's September 30, 1994 audited financial
statements. The results of operations for the period ended June
30, 1995 is not necessarily indicative of the operating results
for the full year.
Note 2. Inventories:
Inventories consist of the following:
June 30, September 30,
1995 1994
Materials $ 244,771 $ 480,394
Work in process 462,236 355,094
Finished goods 377,113 229,199
Totals $1,084,120 $1,064,687
Note 3. Stockholders' Equity:
During the nine months ended June 30, 1995, stockholders' equity
changed for net income of $304,453 and collections on notes
receivable from common stock of $8,924.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
INTRODUCTION
The Third Quarter of 1995 once again eclipsed all previous sales and earnings
records. While the market remained soft, we were not only able to maintain our
market position but make small gains as well. Year end sales are now expected to
finish 40% to 50% over last year's levels with earnings up 70% to 80%. This
would exceed our already aggressive budgeted numbers by an estimated 20%.
Raw material costs, which have the greatest impact on our margins, have
stabilized and in some instances have been reduced. We anticipate such
stabilization to continue well into fiscal 1996. Sales prices, currently holding
steady, are expected to erode slightly until the busy fall season begins.
Production levels should remain steady with certain amounts of time set aside
for the sampling and prototyping of several new projects. With our industry so
dynamic, it was determined several years ago that a certain percentage of our
production time would be allocated towrd the development of unique products.
This strategy has paid off and has enabled Lamcor to create and manufacture
packaging that rivals even that of our larger competitors.
OPERATIONS
Lamcor sales for the Third Quarter of 1995 were $1,943,604 compared to
$1,416,807 for the same period in 1994. Sales were 9% greater than our Second
Quarter totals which were also a record. Third Quarter revenues represent an
increase of over 37% for the same period last year. Year to date sales total
$5,442,722 compared to $3,449,294 in 1994, an improvement exceeding 57%.
Net income was $130,609 compared to $70,923 for the same period one year ago and
represents an increase of 84%. Income per share grew from $.05/share in 1994 to
$.10/share in 1995. Year to date earnings are $.23/share verus $.13/share for
the three comparable quarters in 1994.
CAPITAL
It is not anticipated that large expenditures will be required for capital
equipment within the next 3-4 quarters. Although market conditions could change
and necessitate some purchases, it is assumed that we will continue to pay down
existing equipment debt unless an opportunity would otherwise dictate. This
always remains a possibility since many of the projects we are working on could
require funds for additional equipment. The timetable for amrket introduction of
these products is never certain but we remain ready to act if necessary.
Several projects revolve around the use of our new 36" PDI recloseable pouch
machine. It has already shown itself to be a valuable addition and we anticipate
more benefits as its presence and capabilities become better known to the
market.
INVENTORY
Inventories remained steady and have, in fact, become a lesser percentage of
total sales. The addition of a new pouch machine has helped increase turnover of
raw stock as well as a continued program of monitoring. A new racking system has
been added to reduce material damage and to expedite handling. A second
warehouse person has been hired to speed both incoming and outgoing processes.
SALES AND MARKETING
The sales department continues to do an exemplary job. Activity, which had
slowed a bit, is now picking up and we look forward to increased momentum as we
enter fiscal 1996. The budget for next year will again be an aggressive one but
certainly attainable for a staff that has demonstrated an ability to exceed even
the loftiest goals.
Our new sales representative has already made several sales and at this point is
beyond where we felt he should be. His expertise and aggressiveness will serve
us well in the years ahead and his industry reputation is of great value.
Plans call for the addition of another sales representative as soon as our
newest salesman has established himself. This could occur as early as the Third
Quarter of next year or at such time as we feel our newest member's training
period is complete.
Lamcor is pleased to announce an agreement with a Fortune 500 company which will
yield approximately $400,000 per year in sales. Not only is the sales amount
important but the fact that it is with a large company enhances our reputation
within the marketplace. These types of customers serve as entres with other
larger concerns which in the past may have been reluctant to buy from a smaller
company such as ours.
Our presence at industry trade shows continues to grow. We will have attended
six exhibitions by year's end and anticipate a slightly greater presence next
year. Although these trade shows are costly they have the advantage of reaching
large numbers of potential customers in a short period of time. Leads are
qualified and follow-up calls are made to those with greatest potential.
BUILDING EXPANSION
Lamcor recently exercised an option on six acres of land adjacent to our
existing facility. The agreement is a two year option and monies are applicable
to the purchase price. Future plans call for the addition of 20-25,000 square
feet of warehouse and manufacturing space in calendar year 1996. This would
increase our facility size to 45-50,000 square feet and would enable us to
service sales of $20MM per year. We took this action because our last expansion
utilized all our existing land and we feared the danger of being landlocked if
this particular parcel was sold to another party.
CONCLUSION
While we continue to strive for improvement we are pleased with our results so
far. Sales and earnings are up dramatically and now equal or exceed our
industry's average. Our focus continues to be on product improvement while at
the same time reducing scrap levels in all areas. Increased supervision is being
provided in certain departments which we feel will more than pay for itself.
Steps are also being taken to improve customer service and informational flow.
Our future appears to be a bright one. While we all share in the concerns of the
slower U.S. economy we will do what is necessary to expand our market position.
All employees at Lamcor realize that "ok" is not good enough and that to
experience continued success we must provide a product that is better than our
competitor's and at a reasonable cost. As shareholders, we hope you are pleased
with our results and confident that the steps we are taking are ones that
justify your faith in us. We thank you for your participation in this process
and promise you our best efforts.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is aware of no legal proceeding which is pending or
threatened to which the Company is a party or of which its property is
subject.
Item 6. Exhibits and Reports on Form 8-K
Financial data schedule EX-27
(b) No reports on Form 8-K were filed during the nine months ended
June 30, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
Date: August 15, 1995 LAMCOR, INCORPORATED
Leo W. Lund
Chairman of the Board and Director
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THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS OF LAMCOR, INCORPORATED FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1995
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
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<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> JUN-30-1995
<CASH> 26,897
<SECURITIES> 0
<RECEIVABLES> 1,272,509
<ALLOWANCES> 10,000
<INVENTORY> 1,084,120
<CURRENT-ASSETS> 2,401,652
<PP&E> 2,053,144
<DEPRECIATION> 800,858
<TOTAL-ASSETS> 4,465,627
<CURRENT-LIABILITIES> 1,290,247
<BONDS> 0
<COMMON> 940,159
0
0
<OTHER-SE> 780,564
<TOTAL-LIABILITY-AND-EQUITY> 4,465,627
<SALES> 5,442,722
<TOTAL-REVENUES> 5,442,722
<CGS> 3,956,059
<TOTAL-COSTS> 4,878,696
<OTHER-EXPENSES> 93,373
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 98,419
<INCOME-PRETAX> 470,653
<INCOME-TAX> 166,200
<INCOME-CONTINUING> 304,453
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 304,453
<EPS-PRIMARY> .23
<EPS-DILUTED> .23
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