FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended April 30, 1997
Commission File Number 33-17286
Lifschultz Industries, Inc.
(Exact name of small business issuer as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
IRS employer identification no. 87-0448118
Address of principal executive offices
641 West 59th Street, New York, NY 10019
- - ----------------------------------------------------
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)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the preceding
12 months (or for such shorter period that the issuer 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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State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date:
Class Outstanding at April 30, 1997
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Common Stock 55,569,495
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PART I- FINANCIAL INFORMATION
Item 1. Financial Statements
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Lifschultz Industries, Inc.
Consolidated Balance Sheets
30-Apr-97 31-Jul-96
Assets -------------- ------------
- - -------
Current Assets
Cash and cash equivalents $ 950,000 $ 1,424,000
Marketable Securities 270,000 601,000
Trade accounts receivable 1,756,000 1,774,000
Related Party Receivable 33,000 34,000
Inventories 2,143,000 1,488,000
Other current assets 69,000 60,000
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Total current assets 5,221,000 5,381,000
Property held for sale or lease, net 2,515,000 2,973,000
Property & equipment, net 824,000 489,000
Total Assets $ 8,560,000 $ 8,843,000
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Lifschultz Industries, Inc.
Consolidated Balance Sheets (Continued)
(unaudited)
30-Apr-97 31-Jul-96
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Liabilities and shareholders' equity
Current Liabilities:
Note payable to a bank 300,000 182,000
Trade accounts payable 637,000 311,000
Accrued liabilities 499,000 1,623,000
Notes payable - 50,000
Notes payable to shareholders 50,000 120,000
Accounts payable and accrued
liabilities past due 106,000 321,000
Current portion of long-term debt 33,000 -
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Total current liabilities 1,625,000 2,607,000
Long-term debt, less current portion 92,000 0
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 0 shares - 8,000
Series E; issued and
outstanding 21,231 shares (Note 1) - 1,000
Common stock, par value $.001;
authorized 80,000,000 shares; issued and
outstanding, 55,569,495 shares 56,000 44,000
Additional paid-in capital 10,979,000 10,978,000
Common stock subscriptions
receivable from related parties (15,000) (15,000)
Treasury Stock (at cost) (157,000) (157,000)
Retained (deficit) (4,020,000) (4,623,000)
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Total shareholders' equity 6,843,000 6,236,000
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Total liabilities and shareholders'
equity $ 8,560,000 $ 8,843,000
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Lifschultz Industries, Inc.
Consolidated Statements of Earnings
(unaudited) (unaudited)
Three months ended Nine months ended
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30-Apr-97 30-Apr-96 30-Apr-97 30-Apr-96
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Revenues:
Sales $3,228,000 $2,948,000 $8,857,000 $8,279,000
Costs and expenses:
Cost of products sold 1,674,000 1,379,000 4,547,000 4,063,000
Selling, general
and admin. 1,274,000 1,191,000 3,280,000 3,059,000
Research and development 116,000 84,000 308,000 208,000
Interest Expense 10,000 24,000 33,000 39,000
---------- ---------- ---------- ----------
Total costs and expenses 3,074,000 2,678,000 8,168,000 7,369,000
Earnings before income
taxes and extraordinary
item 154,000 270,000 689,000 910,000
Income Taxes (8,000) 45,000 86,000 117,000
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Earnings before
extraordinary item 162,000 225,000 603,000 793,000
Extraordinary Item
Forgiveness of Debt,
net of tax effect - 217,000 - 1,279,000
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Net Earnings 162,000 442,000 603,000 2,072,000
Net earnings per common
and common equivalent share:
Earnings before
extraordinary item 0.003 0.004 0.011 0.013
Extraordinary item 0.000 0.003 0.000 0.021
----- ----- ----- -----
Net Earnings 0.003 0.007 0.011 0.034
Common Shares
Outstanding 59,077,815 57,240,000 59,077,815 57,240,000
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Lifschultz Industries, Inc.
Consolidated Statements of Cash Flows
(unaudited)
As of the Quarter Ended
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30-Apr-97 30-Apr-96
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Operating Activities
Net income $ 603,000 $ 2,072,000
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:
Depreciation and amortization (A) 627,000 408,000
Gain on debt Forgiveness
(extraordinary item) 0 (1,279,000)
Changes in assets and liabilities:
Trade Accounts receivable 18,000 (78,000)
Inventory (655,000) (272,000)
Other assets (8,000) 40,000
Accounts payable 326,000 (115,000)
Accrued liabilities (1,244,000) (213,000)
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Net cash provided (used) by
operating activities (333,000) 563,000
Investing Activities
Purchase of Property and Equipment (A) ($504,000) (84,000)
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Net cash provided (used) by
investing activities (504,000) (84,000)
Financing Activities
Proceeds from notes payable
and long-term obligations 130,000 50,000
Proceeds from Bank Line of Credit 118,000 -
Principal payments of notes
payable and long-term obligations (220,000) (26,000)
Proceeds from sale of equity securities 4,000 40,000
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Net cash provided (used) by
financing activities 32,000 64,000
Net increase (decrease) in cash (805,000) 543,000
Cash, cash equivalents,
Marketable Securities:
Beginning of period 2,025,000 1,139,000
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Lifschultz Industries, Inc.
Consolidated Statements of Cash Flows (continued)
(unaudited)
As of the Quarter Ended
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30-Apr-97 30-Apr-96
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End of period $ 1,220,000 $ 1,682,000
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(A) Net of Disposals
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Notes to Financial Statements
(unaudited)
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 April 30, 1997 and 1996
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.
Item 2. Discussion and Analysis of Financial
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Condition and Results of Operations
-----------------------------------
Results of Operations:
- - ---------------------
Total revenues for the nine months ended April 30, 1997 were $8,857,000
versus $8,279,000 for the same period last year, a 7% increase. Total revenues
for the three months ended April 30, 1997 were $3,228,000 versus $2,948,000
for the same period last year, a 9% increase.
Hart Scientific revenues for the current nine month period were
$8,503,000 versus $7,858,000 for the same period last year, an 8% increase.
Hart Scientific revenues for the current three month period were $3,106,000
versus $2,783,000 for the same period last year, a 12% increase.
General & Administrative costs for the current nine month period were
$2,299,000 versus $2,236,000 for the same period last year. These costs
included Lifschultz Fast Freight depreciation of the New York leasehold
($364,000 in the current nine month period).
Marketing and sales expenses for the current three month period were
$316,000 and $980,000 for the current nine month period. For the current nine
months ended April 30, 1997 marketing and sales expenses are 12% of Hart
revenues, versus 11% for the same period last year.
Consolidated net income before extraordinary items for the nine months
ended April 30, 1997 was $603,000 versus $793,000 for the same period last
year, a 24% decrease. Consolidated net income for the nine months ended April
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30, 1996 included an extraordinary gain of $1,279,000 for forgiveness of debt.
Net income for the current nine month period at Hart Scientific was $584,000
versus $1,146,000 for the same period last fiscal year, a 49% decrease.
Consolidated net income for the current three month period was $162,000
compared to $225,000 during the same three month period last year, a 28%
decrease. Consolidated net income including extraordinary items for the prior
year's three months ended April 30, 1996 was $442,000 which included an
extraordinary gain of $217,000 for forgiveness of debt. Net income for the
current three month period at Hart Scientific was $215,000 versus $364,000 for
the same period last fiscal year, a 41% decrease.
The decrease in net income for the current period is due to a change in
product sales mix, competitive pricing pressures which reduced margins and
reduction of higher margin export sales due to the strength of the U.S.
dollar.
Financial Condition and Liquidity
- - ---------------------------------
The company's current ratio at April 30, 1997 is 3.21 versus 2.37 at July 31,
1996. The current ratio has improved from .49 on July 31, 1993 to 3.21 on
April 30, 1997.
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. Management expects that
internal operating cash flow from Hart Scientific and from certain subleases
held by Lifschultz Fast Freight will be sufficient to meet the cash needs of
the Company. Hart Scientific has approximately $425,000 in unused lines of
credit available.
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PART II - OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.0 Financial Data Schedule
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 11 June 1997 By:/s/ Dennis R. Hunter
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President and Chief
Financial Officer
Exhibit Index
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Exhibit No. Description
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27 Financial Data Schedule
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-END> APR-30-1997
<CASH> $950,000
<SECURITIES> $270,000
<RECEIVABLES> $1,789,000
<ALLOWANCES> 0
<INVENTORY> $2,143,000
<CURRENT-ASSETS> $5,221,000
<PP&E> $824,000
<DEPRECIATION> 0
<TOTAL-ASSETS> $8,560,000
<CURRENT-LIABILITIES> $1,625,000
<BONDS> 0
0
0
<COMMON> $56,000
<OTHER-SE> $6,787,000
<TOTAL-LIABILITY-AND-EQUITY> $8,560,000
<SALES> $3,228,000
<TOTAL-REVENUES> $3,228,000
<CGS> $1,674,000
<TOTAL-COSTS> $1,400,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> $10,000
<INCOME-PRETAX> $154,000
<INCOME-TAX> $(8,000)
<INCOME-CONTINUING> $162,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> $162,000
<EPS-PRIMARY> .003
<EPS-DILUTED> .003
</TABLE>
