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 December 31, 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 December 31, 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 ___
1,341,542 Common Shares were outstanding as of February 15, 1995
LAMCOR, INCORPORATED
I N D E X
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets
December 31, 1995 (Unaudited) and
September 30, 1995 3
Statements of Income
Three months ended December 31,
1995 and 1994 (Unaudited) 4
Condensed Statements of Cash Flows
Three months ended December 31,
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
Part I. FINANCIAL INFORMATION
Item I. FINANCIAL STATEMENTS
LAMCOR, INCORPORATED
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, September 30,
Assets 1995 1995
----------- -----------
(Unaudited)
<S> <C> <C>
Cash (including savings) $ 21,066 $ 62,872
Accounts receivable, less allowance for
uncollectibles of $10,000 at December 31,
1995 and $10,000 at September 30, 1995 1,073,824 1,046,302
Inventories (Note 2) 1,372,867 986,438
Prepaid expenses and other 26,217 14,498
Deferred income taxes 13,500 12,615
----------- -----------
Total current assets 2,507,474 2,122,725
Property, plant and equipment - net 1,995,887 2,037,197
Other assets 4,620 4,158
----------- -----------
$ 4,507,981 $ 4,164,080
=========== ===========
Liabilities and Stockholders' Equity
Checks issued in excess of bank balance $ 136,088 $ --
Bank lines of credit 70,000 --
Current maturities of long-term debt 97,000 97,000
Accounts payable 694,511 503,645
Other accrued expenses 87,660 144,569
Income taxes payable 66,818 128,206
Current maturities of capital lease obligation 57,103 57,103
----------- -----------
Total current liabilities 1,209,180 930,523
Long-term debt - net of current maturities 835,249 852,093
Capital lease obligations - net of current maturities 399,136 425,706
Deferred income taxes 160,000 145,900
Stockholders' Equity (Note 3):
Common stock 952,809 952,809
Notes arising from sale of common stock (58,932) (66,433)
Retained earnings 1,010,539 923,482
----------- -----------
1,904,416 1,809,858
----------- -----------
$ 4,507,981 $ 4,164,080
=========== ===========
</TABLE>
Note: The balance sheet at September 30, 1995 has been taken from the audited
financial statements at that date, and condensed.
See Notes to Condensed Financial Statements.
LAMCOR, INCORPORATED
STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
--------------------------
1995 1994
----------- -----------
<S> <C> <C>
Net sales $ 1,770,907 $ 1,714,086
Cost of sales 1,235,615 1,269,432
----------- -----------
Gross profit 535,292 444,654
Selling, general and administrative expense 335,004 310,270
----------- -----------
Income from operations 200,288 134,384
----------- -----------
Other income (expense):
Interest income 2,664 1,591
Interest expense (35,680) (31,398)
----------- -----------
(33,016) (29,807)
----------- -----------
Income before income taxes 167,272 104,577
Income taxes 80,215 47,500
----------- -----------
Net income $ 87,057 $ 57,077
=========== ===========
Earnings per common share:
Primary $ .05 $ .04
=========== ===========
Fully diluted $ .05 $ .04
=========== ===========
Shares used in computing earnings per common equivalent shares:
Primary 1,708,689 1,328,542
=========== ===========
Fully diluted 1,712,133 1,328,542
=========== ===========
</TABLE>
See Notes to Condensed Financial Statements.
LAMCOR, INCORPORATED
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
----------------------
1995 1994
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 87,057 $ 57,077
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 54,041 37,731
Changes in current assets and liabilities:
Accounts receivable (27,522) (134,566)
Inventory (386,429) 150,430
Prepaid expenses (11,719) (3,623)
Accounts payable 190,866 (91,494)
Other liabilities and accrued items (56,909) (10,188)
Accrued income taxes (61,388) 20,635
Deferred income taxes 13,215 (3,500)
--------- ---------
Net cash provided by (used in) operating activities (198,788) 22,502
Cash flows from investing and other activities:
Purchase of equipment (12,615) (52,360)
Other - deposits (578) (15,970)
--------- ---------
Net cash used in investing and other activities (13,193) (68,330)
Cash flows from financing activities:
Proceeds from debt borrowings 70,000 90,000
Payments on debt (43,414) (25,447)
Collections on notes receivable from common stock 7,501 6,250
Payment of checks issued in excess of bank balance -- (82,381)
Checks issued in excess of bank balance 136,088 63,009
--------- ---------
Cash provided by financing activities 170,175 51,431
--------- ---------
Net increase (decrease) in cash (41,806) 5,603
Cash and savings account:
Beginning of period 62,872 6,196
--------- ---------
End of period $ 21,066 $ 11,799
========= =========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES:
Capital lease obligation for equipment deposit $ 120,793
=========
Equipment deposit used for purchase of equipment $ 126,068
=========
</TABLE>
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 December 31, 1995, the statement of
operations for the three-month periods ended December 31, 1995 and
1994, and the condensed statement of cash flows for the three-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 December
31, 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, 1995 audited financial statements. The results of
operations for the period ended December 31, 1995 is not necessarily
indicative of the operating results for the full year.
Note 2. Inventories:
Inventories consist of the following:
December 31, September 30,
1995 1995
---------- ----------
Materials $ 230,332 $ 246,576
Work in process 627,666 416,504
Finished goods 514,869 323,358
---------- ----------
Totals $1,372,867 $ 986,438
========== ==========
Note 3. Stockholders' Equity:
During the three months ended December 31, 1995, stockholders' equity
changed for net income of $87,057 and collections on notes receivable
from common stock of $7,501.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
INTRODUCTION
The First Quarter was solid and on budget. Despite some general overall softness
in demand, we were able to maintain our market position while at the same time
increasing our margins. Although greater profit margins are generally not a
by-product of lessened demand, our success is, in part, due to our continued
emphasis on value added products coupled with current stablilization in raw
material costs. While the flat economy bears watching, we remain confident that
the "FED" will respond with lower interest rates if and when appropriate.
Customer inventory levels are being more closely monitored and have been found
to be slightly higher than the past two quarters. We, in turn, are accelerating
our efforts in new product development in order to maintain our aggressive
growth levels until such time as market demand increases.
Several new projects in both the food and medical market are nearing completion
and are close to being introduced. Their market potential is at this time
unknown but initial interest is strong. The introduction of our new
Savor-Loc(TM) (patent pending) coffee pouch has been well received and promises
big savings for the industry as a whole. In addition, we are a major sponsor of
the International Coffee Show which will take place in April, 1996.
OPERATIONS
Lamcor sales for the First Quarter of 1996 were $1,770,907 compared to
$1,714,086 for the same period in 1995. While sales were up a modest 3%, it was
nevertheless anticipated and exceeds our First Quarter budget of $1,725,000.
Net income was $87,057 compared to $57,077 for the same period one year ago and
represents an increase of over 52%. Income per share grew from .04/share in 1994
to .05/share in 1995. For purposes of computing earning per share, the number of
common stock equivalents was larger in the First Quarter of 1996 compared to the
First Quarter 1995.
INVENTORY
Inventories have increased and are the result of decreased demand. Steps have
been taken that will result in a better ratio by the second or third quarter.
This is an area we closely monitor since it represents a significant part of our
capital investment. Care must be taken that adequate supplies are on hand
however, since rush orders tend to rise as our customers begin to allow their
inventories to decline. There are many occasions when an order is placed with a
manufacturer because they have the raw materials on hand. We remain cognizant of
this possibility and generally error on the side of having slightly more
inventory rather than less.
CAPITAL EXPANSION
At the time of this report, Lamcor is preparing to issue a stock offering which
is being made available to all shareholders. This offering will allow our
current shareholders the right to purchase one share for every four held. Any
shares not purchased initially will be made available to shareholders without
limitation. A full prospectus with all details is expected to be mailed in
mid-February.
The capital raised from this issue will be used to create an in-house printing
facility. To accomplish this task, a 25,000 square foot building addition will
be constructed which will house a six or eight color central impression printing
press. We are taking this step for several reasons: currently over 40% of our
products are printed; the cost associated with current "toll" printing will cash
flow the new operation comfortably; we will have much greater control over
quality as well as control over the enormous scrap generally experi enced with
outside printers; the savings in freight shuttling materials back and forth will
save over $20,000 annually; and currently there are many potential customers who
are reluctant to engage in business with us since we currently do not control
all steps of production. It is our hope that ground breaking can take place as
early as April 1996. Bids for the building have been taken, reviewed, and have
been found within expectations. We look forward with great anticipation to this
expansion and are confident that the results will more than justify our
investment.
SALES AND MARKETING
The Sales and Marketing department continues to focus on value added products.
They enjoy a close relationship with production personnel who, with them,
develop products which are linked with market demand. While time is spent on
totally unique products, care is taken that their development will result in a
usable and salable product. As a small company, we generally do not have the
luxury of creating products that have little chance of finding a home in the
marketplace. As mentioned previously, several projects are being coordinated
with some already in testing. More information will be forthcoming as we near
product introduction.
In an internal move, Tim LaBonte, our Marketing Manager, was promoted to the
newly created position of Vice President of Sales and Marketing. Tim's expertise
is in the custom products area and he will play an instrumental role in our
expansion plans. In addition, he will begin expanding our Manufacturer's
Representative Network, increasing by three times the current number.
We continue to be represented at numerous trade shows across the country. More
than eight shows will be attended during the upcoming year. Product coverage
includes gourmet coffee, fancy foods, cheese, seafood and other specialty areas.
Attendance at these shows increases awareness of our company and its products.
CONCLUSION
While accepting the fact that the market has been less than robust, we will
continue to follow our aggressive plan. Bottom line results continue to be our
overriding goal and we feel we can achieve these through a combination of
aggressive marketing and new product development. The expansion of our customer
base is a main priority and will be aided by the addition of a printing press.
In-house incentives are being offered to our production staff with the full
realization that profits can be increased from within as well as from outside
our organization. Gratifying results are being registered in scrap reduction
while at the same time production rates have increased. This can be attributed
to a production team that understands the need and importance of internal
control and what part it plays in our success.
We once again promise only our best efforts. As in the past, we will continue to
move forward doing whatever is necessary to reach our goals. The support of you,
our shareholders, is greatly appreciated and we hope to provide many more years
of continued success. To this end, we remain firmly dedicated.
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
(b) No reports on Form 8-K were filed during the three months
ended December 31, 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: February 15, 1996 LAMCOR, INCORPORATED
Leo W. Lund
Chairman of the Board and Director
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 21,066
<SECURITIES> 0
<RECEIVABLES> 1,083,824
<ALLOWANCES> 10,000
<INVENTORY> 1,372,867
<CURRENT-ASSETS> 2,507,474
<PP&E> 2,896,385
<DEPRECIATION> 900,498
<TOTAL-ASSETS> 4,507,981
<CURRENT-LIABILITIES> 1,209,180
<BONDS> 1,234,385
952,809
0
<COMMON> 0
<OTHER-SE> (58,932)
<TOTAL-LIABILITY-AND-EQUITY> 4,507,981
<SALES> 1,770,907
<TOTAL-REVENUES> 1,770,907
<CGS> 1,235,615
<TOTAL-COSTS> 1,235,615
<OTHER-EXPENSES> (2,664)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 35,680
<INCOME-PRETAX> 167,272
<INCOME-TAX> 80,215
<INCOME-CONTINUING> 87,057
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 87,057
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
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