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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter By Period Ended October 31, 1995
Commission File Number 33-17286
Lifschultz Industries, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 87-0448118
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(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
641 West 59th Street, New York, NY 10019
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Address of principal executive offices Zip Code
Registrant's telephone number, including area code: (212) 397-7788
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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
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of October 31, 1994, the most recent date for which figures
are available.
Class Outstanding at October 31, 1995
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Common Stock 36,541,229 Shares
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I N D E X
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PAGE
NUMBER
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheet - October 31, 1995 and
July 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statement of Operations for Three Months
ended October 31, 1995 and October 31, 1994 . . . . . . . . . . . . 5
Consolidated Statements of Cash Flows - Three Months
Ended October 31, 1995 and October 31, 1994 . . . . . . . . . . . . 6
Notes To Consolidated Financial Statements . . . . . . . . . . . . 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operation . . . . . . . . . . . . . . . . . . . . . . . 8
Financial Condition and Liquidity . . . . . . . . . . . . . . . . . 8
PART II. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . 8
Item 1. Legal Proceedings
Item 2. Changes In Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
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2
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LIFSCHULTZ INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(UNAUDITED)
31-OCT-95 31-JUL-95
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<S> <C> <C>
ASSET
Current Assets
Cash and cash equivalents $1,591,000 $1,139,000
Trade accounts receivable 1,393,000 1,669,000
Inventories 1,221,000 1,085,000
Other current assets 127,000 124,000
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Total current assets 4,332,000 4,017,000
Property held for sale or lease, net 3,266,000 3,319,000
Property & equipment, net 502,000 496,000
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Total Assets $8,100,000 $7,832,000
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3
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LIFSCHULTZ INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
<TABLE>
<CAPTION>
(UNAUDITED)
31-OCT-95 31-JUL-95
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<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Note payable to a bank $ 150,000 $ 150,000
Trade accounts payable 822,000 312,000
Accrued liabilities 743,000 994,000
Notes payable to shareholders 50,000 50,000
Accounts payable and accrued liabilities
past due 810,000 2,088,000
Current portion of long-term debt 29,000 32,000
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Total current liabilities 2,604,000 3,626,000
Long-term debt, less current portion 18,000 26,000
Shareholders' equity:
Convertible preferred stock, par value $.01;
authorized 4,900,000 shares
Series A; issued and outstanding 5,200 shares - -
Series B; issued and outstanding 1,004,215 shares 10,000 10,000
Series E; issued and outstanding 509,433
shares (Note 1) 6,000 6,000
Cumulative non-voting preferred stock; par value
$100; authorized 100,000 shares
Series C 10%; issued and outstanding 9,760
shares - -
Series D 8%; issued and outstanding 3,030
shares - -
Common stock, par value $.001; authorized
80,000,000 shares; issued and outstanding,
36,541,229 shares 36,000 36,000
Additional paid-in capital 10,938,000 10,938,000
Common stock subscriptions receivable from related
parties (15,000) (15,000)
Treasury Stock (at cost) (157,000) (157,000)
Retained (deficit) (5,340,000) (6,638,000)
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Total shareholders' equity 5,478,000 4,180,000
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Total liabilities and shareholders' equity $ 8,100,000 $ 7,832,000
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4
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LIFSCHULTZ INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
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<CAPTION>
(unaudited)
Three months ended
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31-Oct-95 31-Oct-94
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<S> <C> <C>
REVENUES:
Sales $ 2,355,000 $ 2,130,000
COSTS AND EXPENSES:
Cost of products sold 1,181,000 1,086,000
Selling, general and admin. 662,000 696,000
Research and development 235,000 44,000
Interest Expense 6,000 46,000
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Total costs and expenses 2,084,000 1,872,000
Income before income taxes and extraordinary
item 271,000 258,000
Income Taxes 35,000 -
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Income before extraordinary item 236,000 258,000
EXTRAORDINARY ITEM -
Forgiveness of Debt, net of tax effect 1,062,000 -
NET INCOME 1,298,000 258,000
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NET INCOME PER COMMON AND COMMON
EQUIVALENT SHARE: 0.004 0.003
Income before extraordinary item 0.018 -
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Extraordinary item 0.022 0.003
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Common Shares Outstanding 59,723,000 33,396,000
</TABLE>
5
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LIFSCHULTZ INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(unaudited)
Three months ended
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31-Oct-95 31-Oct-94
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<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 1,298,000 $ 226,000
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 99,000 180,000
Gain on debt Forgiveness (extraordinary (1,062,000) -
item)
Changes in assets and liabilities: 276,000 (93,000)
Trade Accounts receivable (136,000) (159,000)
Inventories (3,000) (19,000)
Other assets 313,000 15,000
Accounts payable (270,000) (154,000)
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Accrued liabilities 515,000 (4,000)
Net cash provided (used) by operating activities
INVESTING ACTIVITIES
Purchase of Property and Equipment (52,000) (178,000)
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Net cash provided (used) by investing activities (52,000) (178,000)
FINANCING ACTIVITIES
Proceeds from notes payable and long-term
obligations 0 219,000
Proceeds from notes payable to shareholders 0 0
Principal payments of notes payable and long-
term obligations (11,000) (6,000)
Proceeds from sale of equity securities 0 6,000
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Net cash provided (used) by financing activities (11,000) 219,000
Net increase (decrease) in cash 452,000 37,000
Cash and cash equivalents at beginning of period 1,139,000 931,000
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Cash and cash equivalents at end of period $ 1,591,000 $ 968,00
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6
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NOTES TO FINANCIAL STATEMENTS
NOTE 1- ACCOUNTING POLICIES
In February 1992 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 109 "Accounting for Income Taxes,"
which is effective for fiscal years beginning after December 15, 1992.
Accordingly, the Company has implemented Statement 109 in the accompanying
financial statements, without effect on reported income.
NOTE 2- EARNINGS PER SHARE
Earnings per common and common equivalent shares for October 31, 1995 and 1994
is based on the weighted average number of common shares actually outstanding
during the period plus the shares that would be outstanding assuming conversion
of convertible preferred stock and exercise of stock options and warrants, all
of which are common stock equivalents.
7
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Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
Total revenues in the quarter ended October 31, 1995 increased
10.5% versus the same period last fiscal year to $2,355,000 for the current
quarter versus $2,130,000 for the same period last year.
Hart Scientific's gross margins were 48% for the current period
versus 49% for the same period last year.
G & A costs included $386,000 for Hart Scientific versus
$331,000 for the same period last year, $173,000 for Lifschultz Fast Freight
versus $132,000 for the same period last year, and $20,000 for Lifschultz
Industries versus $15,000 for the same period last year.
Hart Scientific had $259,000 of marketing costs versus $147,000
for the same period last year. Hart continues to be very aggressive in its
efforts to market new products and expand distribution of existing products.
The consolidated net income for this quarter of $1,298,000
compares to a net income for the same period last year of $226,000. The
consolidated net income includes an extraordinary gain of $1,062,000 for
forgiveness of debt (Lifschultz Fast Freight negotiated a reduction of a
$1,262,000 debt down to $200,000).
FINANCIAL CONDITION AND LIQUIDITY
The Company's current ratio at October 31, 1995 is 1.66 versus
1.11 at July 31, 1995.
Significant progress continues to be made in reducing costs and
debt at Lifschultz Fast Freight. The debt ratios of the company have been
improved significantly in the last year as debt has been reduced and operating
profits have been healthy. Management hopes to continue this trend. The Company
will need additional capital to support the growth of Hart Scientific and the
activities (primarily debt reduction) of Lifschultz Fast Freight. Management is
working to obtain these funds by revenue generation from Lifschultz Fast Freight
property holdings, internal operating cash flow, exchange of Fast Freight debt
for Company equity and re-negotiation of Fast Freight debt. The reduction of
debt at Fast Freight by over $1 million this quarter (with the resulting
extraordinary gain) is an example of these efforts.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS. Not Applicable
8
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ITEM 2. CHANGES IN SECURITIES. Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES. Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No items were presented for a vote of security holders
during the quarter ended October 31, 1995.
ITEM 5. OTHER INFORMATION. Not Applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) The following Exhibit is attached hereto:
Exhibit
NO. TITLE OF DOCUMENT
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27 Financial Data Schedule
(b) Current Reports on Form 8-K.
None
9
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LIFSCHULTZ INDUSTRIES, INC.
Date 12 December 1995 By /s/ DENNIS R. HUNTER
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Dennis R. Hunter
President, Director and Chief Financial Officer
Date 12 December 1995 By /s/ TIM O. PONT
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Tim O. Pont
Controller
10
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EXHIBIT INDEX
EXHIBIT
NO. TITLE OF DOCUMENT
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27 Financial Data Schedule
11
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENTS OF OPERATION.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-01-1995
<PERIOD-END> OCT-31-1995
<CASH> 1,591,000
<SECURITIES> 0
<RECEIVABLES> 1,393,000
<ALLOWANCES> 0<F1>
<INVENTORY> 1,221,000
<CURRENT-ASSETS> 8,100,000
<PP&E> 3,768,000
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 8,100,000
<CURRENT-LIABILITIES> 2,604,000
<BONDS> 0
<COMMON> 36,000
0
16,000
<OTHER-SE> 5,426,000
<TOTAL-LIABILITY-AND-EQUITY> 8,100,000
<SALES> 0<F3>
<TOTAL-REVENUES> 2,355,000
<CGS> 0<F4>
<TOTAL-COSTS> 1,181,000
<OTHER-EXPENSES> 903,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 271,000
<INCOME-TAX> 35,000
<INCOME-CONTINUING> 236,000
<DISCONTINUED> 0
<EXTRAORDINARY> 1,062,000
<CHANGES> 0
<NET-INCOME> 1,298,000
<EPS-PRIMARY> 0.004
<EPS-DILUTED> 0.004
<FN>
<F1>Amount is not separately provided in interim financial statements.
<F2>Amount is included in figure for property, plant and equipment.
<F3>Amount is not separately provided in interim financial statements.
<F4>Amount is not separately provided in interim financial statements.
</FN>
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