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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 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 ___________________
Commission file number: 0-19450
OAKHURST COMPANY, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 25-1655321
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(State of Incorporation) (I.R.S. Employer
Identification No.)
1001 SANTERRE DRIVE, GRAND PRAIRIE, TEXAS
75050
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(Address of principal executive offices)
(Zip Code)
(214) 660-4499
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(Registrant's telephone number, including area code)
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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 No X
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As of October 1, 1995, 3,195,235 shares of the Registrant's Common
Stock, $0.01 par value per share, were issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None
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EXPLANATORY NOTE
This Form 10-Q/A amends Item One of the Company's Form 10-Q for the
quarterly period ended August 31, 1995 that was filed on October 16, 1995. The
statement of cash flows in the original filing for the prior year comparative
twenty-six week period ended August 27, 1994 presented incorrect numbers; this
amendment corrects such prior year period.
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
OAKHURST COMPANY, INC. AND SUBSIDIARIES
<TABLE>
<S> <C>
Balance sheets at August 31, 1995 (unaudited)
and February 28, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Statements of operations for the three months ended August 31, 1995
and the thirteen weeks ended August 27, 1994 (unaudited) . . . . . . . . . . . . 5
Statements of operations for the six months ended August 31, 1995
and the twenty-six weeks ended August 27, 1994 (unaudited) . . . . . . . . . . . 6
Statement of stockholders' equity for the six months
ended August 31, 1995 (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . 7
Statements of cash flows for the six months ended August 31, 1995
and the twenty-six weeks ended August 27, 1994 (unaudited) . . . . . . . . . . . 8
Notes to financial statements (unaudited) . . . . . . . . . . . . . . . . . . . . . 9
</TABLE>
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OAKHURST COMPANY, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
ASSETS August 31, February 28,
1995 1995
------------ ------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents.............................. $ 302 $ 314
Trade accounts receivable, less allowance of $487 and
$282, respectively................................... 5,231 5,760
Commissions receivable................................. 224 226
Other receivables...................................... 209 498
Inventories............................................ 9,423 10,400
Deferred tax asset..................................... - 620
Other.................................................. 500 280
------------ ------------
Total current assets......................... 15,889 18,098
------------ ------------
Property and equipment, at cost.......................... 3,034 2,993
Less accumulated depreciation.......................... (876) (921)
------------ ------------
2,158 2,072
------------ ------------
Deferred tax asset....................................... 6,086 5,466
Excess of cost over net assets acquired, net............. 7,401 7,399
Other assets............................................. 268 266
------------ ------------
13,755 13,131
------------ ------------
$ 31,802 $ 33,301
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of revolving credit agreement....... $ 2,800 $ -
Note payable, related party............................ 287 532
Accounts payable....................................... 6,843 8,066
Accrued compensation................................... 475 757
Income taxes payable................................... - 109
Current maturities of long-term obligations............ 656 617
Current maturities of long-term obligations, related
parties.............................................. 740 800
Net obligation of discontinued business segment-
current portion...................................... 536 505
Other.................................................. 584 468
------------ ------------
Total current liabilities.................... 12,921 11,854
------------ ------------
Long-term obligations:
Net obligation of discontinued business segment........ 681 985
Long-term debt......................................... 1,391 3,237
Long-term debt, related parties........................ 1,960 1,800
Convertible debt, related parties...................... 532 517
Other long-term obligations............................ 111 73
------------ ------------
4,675 6,612
------------ ------------
Commitments and contingencies............................
Stockholders' equity:
Preferred stock, par value $0.01; authorized 1,000,000
shares, none issued.................................. - -
Common stock, par value $0.01 per share; authorized
14,000,000 shares; issued 3,195,235 and 3,189,326
shares, respectively................................ 32 32
Additional paid-in capital............................. 46,515 46,480
Deficit (Reorganized on August 26, 1989)............... (32,340) (31,676)
Treasury stock, at cost, 207 common shares............. (1) (1)
------------ ------------
Total stockholders' equity................... 14,206 14,835
------------ ------------
$ 31,802 $ 33,301
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
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OAKHURST COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollar amounts in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Thirteen Weeks
Ended Ended
August 31, August 27,
1995 1994
------------ --------------
<S> <C> <C>
Sales......................................... $ 13,517 $ 9,891
Other income.................................. 151 217
------------ ------------
13,668 10,108
------------ ------------
Cost of goods sold, including occupancy and
buying expenses............................. 10,690 7,424
Operating, selling and administrative
expenses.................................... 2,945 1,991
Provision for doubtful accounts............... 205 -
Amortization of excess of costs over net asset
acquired.................................... 125 35
Interest expense.............................. 182 54
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14,147 9,504
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Income (loss) from continuing operations
before income taxes......................... (479) 604
Income taxes (benefit)........................ (30) 201
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Income (loss) from continuing operations...... (449) 403
Income from discontinued operations (net of
$34 income tax expense)..................... - 66
------------ ------------
Net income (loss) ............................ $ (449) $ 469
============ ============
Per share amounts:
Income (loss) from continuing operations.... $ (0.14) $ 0.13
Income from discontinued operations......... - 0.02
------------ ------------
Net income (loss) .......................... $ (0.14) $ 0.15
============ ============
Weighted average number of common shares
outstanding used in computing per share
amounts..................................... 3,195,235 3,034,650
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
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OAKHURST COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollar amounts in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Twenty-six Weeks
Ended Ended
August 31, August 27,
1995 1994
------------ ----------------
<S> <C> <C>
Sales.............................................. $ 26,542 $ 19,760
Other income....................................... 197 228
------------ ------------
26,739 19,988
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Cost of goods sold, including occupancy and
buying expenses.................................. 20,828 14,876
Operating, selling and administrative expenses..... 5,660 3,883
Provision for doubtful accounts.................... 267 -
Amortization of excess of costs over net assets
acquired......................................... 262 50
Interest expense................................... 377 85
------------ ------------
27,394 18,894
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Income (loss) from continuing operations
before income taxes.............................. (655) 1,094
Income taxes....................................... 9 397
------------ ------------
Income (loss) from continuing operations........... (664) 697
Income from discontinued operations (net of
$34 income tax expense).......................... - 66
------------ ------------
Net income (loss).................................. $ (664) $ 763
============ ============
Per share amounts:
Income (loss) from continuing operations......... $ (0.21) $ 0.24
Income from discontinued operations.............. - 0.02
------------ ------------
Net income (loss)................................ $ (0.21) $ 0.26
============ ============
Weighted average number of common shares
outstanding used in computing per share amounts.. 3,192,832 2,949,777
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
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OAKHURST COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
SIX MONTHS ENDED AUGUST 31, 1995
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Additional Retained Treasury Stock
-------------------- Paid-in Earnings -----------------
shares par value Capital (Deficit) shares cost
--------- --------- ---------- --------- ------ ----
<S> <C> <C> <C> <C> <C> <C>
Balances, February 28, 1995.......... 3,189,326 $32 $46,480 ($31,676) 207 ($1)
Net loss for the period.............. (664)
Employee stock awards................ 5,909 * 19
Other................................ 16
--------- --- ------- -------- --- ---
Balances, August 31, 1995............ 3,195,235 $32 $46,515 ($32,340) 207 ($1)
========= === ======= ======== === ===
</TABLE>
* Rounds to less than $1,000
The accompanying notes are an integral part of these
consolidated financial statements
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OAKHURST COMPANY, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Twenty-six Weeks
Ended Ended
August 31, August 27,
1995 1994
---------- ----------------
<S> <C> <C>
Cash flows from operating activities:
Income (loss) from continuing operations.............. $ (664) $ 697
Adjustments to reconcile income (loss) from continuing
operations to net cash (used in) provided by
operating activities:
Depreciation and amortization.................... 444 138
Deferred tax expense............................. - 362
Loss on retirement of asset...................... 10 -
Employee stock award............................. 19 -
Other changes in operating assets and liabilities:
Accounts receivable.............................. 529 (144)
Inventories...................................... 977 160
Accounts payable................................. (1,223) 188
Other............................................ (175) 277
--------- ---------
Net cash (used in) provided by operating activities of:
Continuing operations................................. (83) 1,678
Discontinued operations............................... (273) (285)
--------- ---------
Net cash (used in) provided by operating activities..... (356) 1,393
--------- ---------
Cash flows from investing activities:
Additions to property and equipment................... (216) (294)
Acquisition of subsidiary, net of cash acquired....... - (3,990)
Net change in the excess of cost over net assets
acquired............................................ (151) -
--------- ---------
Net cash used in investing activities................... (367) (4,284)
--------- ---------
Cash flows from financing activities:
Exercise of warrants................................... - 64
Proceeds from issuance of long-term debt............... - 2,560
Net borrowings under revolving credit agreement........ 1,275 350
Repayment of note payable.............................. (258) (165)
Repayment of distribution payable...................... - (500)
Principal payments on long-term obligations............ (306) (75)
Deferred financing costs............................... - (58)
--------- ---------
Net cash provided by financing activities..... 711 2,176
--------- ---------
Net decrease in cash and cash equivalents.... (12) (715)
Cash and cash equivalents at beginning of period........ 314 1,071
--------- ---------
Cash and cash equivalents at end of period.............. $ 302 $ 356
========= =========
</TABLE>
Supplemental schedule of non-cash investing and financing activities:
Six months ended August 31, 1995:
Capital lease obligations of $62 were incurred when the Company entered
into three leases for new computer and warehouse equipment.
Additional long-term debt of $100 was issued with a reduction of $13 to a
current note payable upon finalization of an acquisition in the prior
year.
Twenty six weeks ended August 27, 1994:
Convertible debt of $500, and a note and earn-out payable totaling $1.5
million were issued in connection with the acquisition of a subsidiary.
The accompanying notes are an integral part of these
consolidated financial statements.
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OAKHURST COMPANY, INC. AND SUBSIDIARIES
SIX MONTHS ENDED AUGUST 31, 1995
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. INTERIM FINANCIAL STATEMENTS
Oakhurst Company, Inc. ("Oakhurst" or "the Company") (formerly
Oakhurst Capital, Inc.) was formed as a result of a merger transaction (the
"merger") in fiscal 1992 between Steel City Products, Inc. ("SCPI") and an
Oakhurst subsidiary. The merger resulted in a restructuring of SCPI such that
it became a majority-owned subsidiary of Oakhurst. In accordance with the
merger, Oakhurst owns 10% of the outstanding common stock of SCPI and all of
SCPI's Series A Preferred Stock. The merger was structured such that the
aggregate fair market value of SCPI's common stock and Series A Preferred Stock
owned by Oakhurst would be approximately 90% of the aggregate fair market value
of SCPI. Accordingly, Oakhurst controls approximately 90% of the voting power
of SCPI. The accompanying financial statements reflect this control and
include the accounts of SCPI.
Oakhurst acquired all of the outstanding capital stock of H&H
Distributors d/b/a Harry Survis, ("H&H") in January 1994; accordingly, the
accompanying financial statements include the accounts of H&H.
Oakhurst acquired all of the outstanding capital stock of Dowling's
Fleet Service Co., Inc. ("Dowling's") and of Puma Products, Inc. ("Puma") in
August 1994 and October 1994, respectively; accordingly, the accompanying
consolidated financial statements include the accounts of these subsidiaries
for the respective periods of ownership.
All significant intercompany accounts and transactions have been
eliminated in consolidation.
In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments necessary to present fairly the
financial position, results of operations and cash flows for the interim
periods presented. All adjustments made are of a normal, recurring nature.
While the Company believes that the disclosures presented herein are
adequate to make the information not misleading, it is suggested that these
unaudited consolidated financial statements be read in conjunction with the
audited consolidated financial statements for the fiscal year ended February
28, 1995 ("fiscal 1995") as filed in the Company's Annual Report on Form 10-K.
2. LONG-TERM DEBT AND LINE OF CREDIT
In August 1994, Oakhurst entered into a two year revolving credit
agreement (the "Credit Agreement") that carried a floating interest rate of
prime plus 1% and provided for maximum borrowings of $3 million. Borrowings
may be limited by the borrowing base, as defined in the Credit Agreement, which
is calculated according to the level of Oakhurst's subsidiaries' accounts
receivable.
In August 1994, SCPI obtained a term loan in the amount of $2,560,000
(the "Term Loan"), in connection with Oakhurst's acquisition of Dowling's. The
Term Loan is secured by a mortgage on SCPI's real estate, is guaranteed by
Oakhurst and its subsidiaries, supported by a pledge of the capital stock of
Oakhurst's subsidiaries. The Term Loan is repayable over 48 months through
August 1998 and bears interest at a fixed rate of 9.25%.
The Term Loan and the Credit Agreement are cross-collateralized, and
contain various financial covenants. Following Oakhurst's acquisition of Puma
in the latter part of fiscal 1995, SCPI and Oakhurst negotiated amendments to
the Credit Agreement with the Bank; such amendments were finalized subsequent
to August 31, 1995 and provide for an increase in the line to $4 million, the
elimination of most of the financial covenants,
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and an increase in the interest rate from prime plus 1% to prime plus 1.5%.
The amended Credit Agreement will be secured by the accounts receivable,
inventory and capital stock of Oakhurst's subsidiaries.
3. ARBITRATION
On July 26, 1995 the Company initiated an arbitration proceeding with
the American Arbitration Association in connection with the August 1994
acquisition by the Company of Dowling's. The Company is seeking rescission of
the acquisition, or in the alternative, damages and indemnification in excess
of $1.6 million. The proceeding is based, among other things, on the Company's
belief that the seller breached certain provisions of the purchase and sale
agreement covering the acquisition by furnishing to the Company financial
information that was materially inaccurate. If the Company is successful in
obtaining a rescission of the purchase, the Company would receive back the
portion of the purchase price paid and other consideration given at the
closing, and would be relieved of the obligation to pay the balance of the
purchase price (approximately $1 million) over the three-year period following
the closing. In the event of a rescission of the acquisition, the Company
believes that in the near term it might earn less as a result of the repayment
of the debt that was incurred to make the acquisition and the investment of any
cash re-paid that is in excess of that debt than it might otherwise have
earned from the continued ownership of the Dowling's business.
Pending resolution of the arbitration, Oakhurst has exercised its
right of set-off, as defined in the Dowling's purchase agreement, against a
principal payment due of $350,000 on a related-party note payable issued in
connection with the Dowling's acquisition.
4. SUBSEQUENT EVENTS
During the second quarter of the current fiscal year, management
curtailed the level of credit allowed to Jamesway Corporation ("Jamesway"), one
of SCPI's largest customers, after becoming aware that Jamesway was
experiencing new financial difficulties. Although Jamesway had emerged from
bankruptcy as recently as January 1995, on October 6, 1995 it announced that it
is again considering filing for bankruptcy protection. Pending a further
announcement by Jamesway, SCPI suspended shipments to this customer in October
1995, and Oakhurst's consolidated second quarter results included a provision
of $150,000 in relation to the balances due from Jamesway.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
OAKHURST COMPANY, INC.
Date: December 15, 1995 By: /s/ Maarten D. Hemsley
---------------------------------
Maarten D. Hemsley
Chief Executive Officer
Chief Financial Officer
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