<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: August 31, 1996
---------------
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.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 25-1655321
- ------------------------ --------------------
(State of Incorporation) (I.R.S. Employer
Identification No.)
1001 SANTERRE DRIVE, GRAND PRAIRIE, TEXAS
75050
-----------------------------------------------
(Address of principal executive offices)
(Zip Code)
(972) 660-4499
----------------------------------------------------
(Registrant's telephone number, including area code)
- -------------------------------------------------------------------------------
(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
--- ---
As of October 1, 1996, 3,201,144 shares of the Registrant's Common
Stock, $0.01 par value per share, were issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
OAKHURST COMPANY, INC. AND SUBSIDIARIES
<TABLE>
<S> <C>
Consolidated Balance Sheets at August 31, 1996 (unaudited)
and February 29, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Operations for the three month periods ended
August 31, 1996 and August 31, 1995 (unaudited) . . . . . . . . . . . . . 4
Consolidated Statements of Operations for the six month periods ended
August 31, 1996 and August 31, 1995 (unaudited) . . . . . . . . . . . . . 5
Consolidated Statement of Stockholders' Equity for the six months
ended August 31, 1996 (unaudited) . . . . . . . . . . . . . . . . . . . . . . . 6
Consolidated Statements of Cash Flows for the six month periods
ended August 31, 1996 and August 31, 1995 (unaudited) . . . . . . . . . . 7
Notes to financial statements (unaudited) . . . . . . . . . . . . . . . . . 8
</TABLE>
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<PAGE> 3
OAKHURST COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands, except share data)
<TABLE>
<CAPTION>
ASSETS August 31, February 29,
1996 1996
-------------- ---------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents....................................................... $ 196 $ 318
Trade accounts receivable, less allowance of $492 and $558, respectively........ 4,929 4,027
Commissions receivable.......................................................... 161 230
Other receivables............................................................... 315 564
Inventories..................................................................... 8,252 8,080
Deferred tax asset.............................................................. 75 145
Other........................................................................... 853 467
------------- -------------
Total current assets.................................................. 14,781 13,831
------------- -------------
Property and equipment, at cost................................................... 3,335 3,216
Less accumulated depreciation................................................... (1,346) (1,109)
------------- -------------
1,989 2,107
------------- -------------
Deferred tax asset, less valuation allowance of $46,800........................... 4,011 3,941
Excess of cost over net assets acquired, net...................................... 5,825 6,035
Other assets...................................................................... 476 203
------------- -------------
10,312 10,179
------------- -------------
$ 27,082 $ 26,117
------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................................................ $ 6,196 $ 5,762
Note payable.................................................................... 105 -
Accrued compensation............................................................ 322 369
Current maturities of long-term obligations..................................... 381 284
Current maturities of long-term obligations, related parties.................... 98 169
Net obligation of discontinued business segment-current portion................. 526 465
Other........................................................................... 393 600
------------- -------------
Total current liabilities............................................. 8,021 7,649
------------- -------------
Long-term obligations:
Net obligation of discontinued business segment................................. 349 678
Long-term debt.................................................................. 7,084 5,179
Long-term debt, related parties................................................. 1,498 1,574
Other long-term obligations..................................................... 127 138
------------- -------------
9,058 7,569
------------- -------------
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 3,201,144 and 3,195,235 shares, respectively.................. 32 32
Additional paid-in capital...................................................... 46,529 46,522
Deficit (Reorganized on August 26, 1989)........................................ (36,557) (35,654)
Treasury stock, at cost, 207 common shares...................................... (1) (1)
------------- -------------
Total stockholders' equity............................................ 10,003 10,899
------------- -------------
$ 27,082 $ 26,117
============= =============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
-3-
<PAGE> 4
OAKHURST COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollar amounts in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
AUGUST 31, AUGUST 31,
1996 1995
---------- ----------
<S> <C> <C>
Sales........................................................ $ 11,454 $ 13,517
Other income................................................. 89 151
---------- ----------
11,543 13,668
---------- ----------
Cost of goods sold, including occupancy and
buying expenses............................................ 8,877 10,690
Operating, selling and administrative expenses............... 2,741 2,945
Provision for doubtful accounts.............................. 21 205
Amortization of excess of cost over net assets acquired...... 111 125
Interest expense............................................. 218 182
---------- ----------
11,968 14,147
---------- ----------
Net loss before income taxes................................. (425) (479)
Income tax (expense) benefit................................. (7) 30
---------- ----------
Net loss..................................................... $ (432) $ (449)
========== ==========
Net loss per share........................................... $ (0.13) $ (0.14)
========== ==========
Weighted average number of shares outstanding
used in computing per share amount......................... 3,201,144 3,195,235
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
-4-
<PAGE> 5
OAKHURST COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollar amounts in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
AUGUST 31, AUGUST 31,
1996 1995
---------- ----------
<S> <C> <C>
Sales............................................ $ 22,346 $ 26,542
Other income..................................... 134 197
---------- ----------
22,480 26,739
---------- ----------
Cost of goods sold, including occupancy and
buying expenses................................ 17,357 20,828
Operating, selling and administrative expenses... 5,315 5,660
Provision for doubtful accounts.................. 51 267
Amortization of excess of cost over net
assets acquired................................ 223 262
Interest expense................................. 422 377
---------- ----------
23,368 27,394
---------- ----------
Net loss before income taxes..................... (888) (655)
Income tax expense............................... (15) (9)
---------- ----------
Net loss......................................... $ (903) $ (664)
========== ==========
Net loss per share............................... $ (0.28) $ (0.21)
========== ==========
Weighted average number of shares outstanding
used in computing per share amount............. 3,199,164 3,192,832
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
-5-
<PAGE> 6
OAKHURST COMPANY, INC. AND SUBSIDIARIES
STATEMENT OF STOCKHOLDERS' EQUITY
SIX MONTHS ENDED AUGUST 31, 1996
(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 29, 1996.......... 3,195,235 $ 32 $ 46,522 ($35,654) 207 ($1)
Net loss for the period.............. (903)
Stock award.......................... 5,909 * 7
--------- ----- ---------- ----------- ------- -------
Balances, August 31, 1996............ 3,201,144 $ 32 $ 46,529 ($36,557) 207 ($1)
--------- ----- ---------- ----------- ------- -------
</TABLE>
*Rounds to less than one thousand
The accompanying notes are an integral part of these consolidated financial
statements.
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<PAGE> 7
OAKHURST COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
AUGUST 31, AUGUST 31,
1996 1995
----------------- ----------------
<S> <C> <C>
Cash flows from operating activities:
Net loss......................................................... $ (903) $ (664)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization.................................. 609 444
Loss on retirement of assets................................... 5 10
Stock awards................................................... 7 19
Other changes in operating assets and liabilities:
Accounts receivable............................................ (852) 529
Inventories.................................................... (9) 977
Accounts payable............................................... 399 (1,223)
Other.......................................................... (168) (175)
----------- ----------
Net cash used in operating activities of:
Continuing operations............................................ (912) (83)
Discontinued operations.......................................... (268) (273)
----------- ----------
Net cash used in operating activities.............................. (1,180) (356)
----------- ----------
Cash flows from investing activities:
Additions to property and equipment.............................. (100) (216)
Acquisition of a subsidiary, net of cash acquired................ (79) -
Net change in the excess of cost over net assets acquired........ - (151)
Other............................................................ (25) -
----------- ----------
Net cash used in investing activities.............................. (204) (367)
----------- ----------
Cash flows from financing activities:
Net borrowings under revolving credit agreement.................. 2,038 1,275
Proceeds from issuance of long-term debt......................... 1,500 -
Repayment of note payable........................................ - (258)
Principal payments on long-term obligations...................... (2,052) (306)
Deferred loan costs.............................................. (224) -
----------- ----------
Net cash provided by financing activities.......................... 1,262 711
----------- ----------
Net decrease in cash and cash equivalents.......................... (122) (12)
Cash and cash equivalents at beginning of period................... 318 314
----------- ----------
Cash and cash equivalents at end of period......................... $ 196 $ 302
=========== ==========
</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.
The accompanying notes are an integral part of these consolidated financial
statements.
-7-
<PAGE> 8
OAKHURST COMPANY, INC. AND SUBSIDIARIES
SIX MONTHS ENDED AUGUST 31, 1996
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. INTERIM FINANCIAL STATEMENTS
Oakhurst Company, Inc. ("Oakhurst" or the "Company") 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 owns all of the outstanding capital stock of H&H
Distributors, Inc., d/b/a Harry Survis Auto Centers, ("H&H"), of Dowling's
Fleet Service Co., Inc. ("Dowling's") and of Puma Products, Inc. ("Puma"). In
March 1995, Oakhurst formed Oakhurst Management Corporation ("OMC"), a
wholly-owned subsidiary, to coordinate the provision of certain corporate
administrative, legal, and accounting services to the Company and its
subsidiaries. In March 1996, Dowling's acquired the outstanding capital stock
of G&O Sales Company ("G&O") (see Note 2). The accompanying consolidated
financial statements include the accounts of these subsidiaries, and 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
29, 1996 ("fiscal 1996") as filed in the Company's Annual Report on Form 10-K.
2. DOWLING'S ACQUISITION OF A SUBSIDIARY
On March 28, 1996, Dowling's acquired all of the outstanding capital
stock of G&O, a radiator distributor based in Philadelphia, Pennsylvania. The
purchase price of approximately $210,000 consisted of $105,000 in cash, with
the balance in the form of a note payable to the seller. The note bears
interest at 7%, and is due on the first anniversary of the acquisition date,
together with interest thereon. The seller continues with G&O under a four
year employment agreement.
In connection with the acquisition, Dowling's entered into a
non-competition agreement with the seller that provides for payments of
$315,000 over a three year period, and for payments of 7.5% of the defined
profits of G&O for the next four years. The non-compete agreement has been
discounted using an imputed interest rate of 9.75%, and the related asset is
being amortized over the life of the agreement, which is ten years.
The acquisition did not have an impact on Oakhurst's earnings per
share, and accordingly, pro forma information has not been presented.
- 8 -
<PAGE> 9
In connection with the acquisition, assets were acquired and
liabilities were assumed as follows (in thousands):
Fair value of assets acquired . $279
Liabilities assumed . . . . . . 67
----
Net assets acquired . . . . $212
====
3. RECENTLY ISSUED ACCOUNTING STANDARD
In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation". This statement is effective beginning in the
Company's current fiscal year. The new standard defines a fair value method of
accounting for stock options and similar equity instruments. Pursuant to the
new standard, companies are encouraged, but not required, to adopt the fair
value method of accounting for employee stock-based transactions. Companies
are also permitted to continue to account for such transactions under
Accounting Principles Board Opinion ("APBO") No. 25, "Accounting for Stock
Issued to Employees", but would be required to disclose in a note to the
financial statements pro forma net income and earnings per share as if the
company had applied the new method of accounting.
In the first quarter, the Company elected not to adopt the fair value
method of accounting for employee stock-based transactions and will continue
to account for such transactions under the provisions of APBO No. 25.
- 9 -
<PAGE> 10
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
Oakhurst Company, Inc. ("Oakhurst" or "the Company"), a holding
company, was formed as part of a merger transaction in July 1991, in which
Steel City Products, Inc. ("SCPI") became a special, limited purpose,
majority-owned subsidiary of Oakhurst. Management believes that the corporate
structure resulting from the merger transaction will facilitate capital
formation by Oakhurst while permitting Oakhurst and its subsidiaries to file
consolidated tax returns so that both may utilize the tax benefits (including
approximately $149 million of net operating loss carryforwards) attributable
principally to SCPI. Through Oakhurst's ownership of SCPI, primarily in the
form of preferred stock, Oakhurst retains the value of SCPI, and receives
substantially all of the benefit of SCPI's operations through dividends on such
preferred stock. Oakhurst's ownership of SCPI facilitates the preservation and
utilization of SCPI's net operating loss carryforwards.
Oakhurst, through SCPI and three wholly-owned subsidiaries, is
primarily a distributor of products to the automotive after-market. Its
largest business, which is conducted by SCPI under the trade name "Steel City
Products", is mainly the distribution of automotive parts and accessories to
independent retailers from a facility in Pittsburgh, Pennsylvania. Dowling's
Fleet Service Co., Inc. ("Dowling's") is a New York-headquartered distributor
of automotive radiators and related products. Puma Products, Inc. ("Puma") is
a Texas-based distributor of after-market products to the light truck and van
conversion industry. H&H Distributors, Inc., d/b/a Harry Survis Auto Centers
("H&H") is a Pittsburgh-based company that distributes and installs automotive
accessories, including stereos, alarms and cellular phones.
On March 28, 1996, Dowling's acquired all of the outstanding capital
stock of G&O Sales Company, Inc. ("G&O"), also a distributor of radiators that
is based in Philadelphia, Pennsylvania, with the intent of expanding into the
greater Philadelphia market. The purchase price of approximately $210,000
consisted of $105,000 in cash, with the balance in the form of a note payable
to the seller. The note bears interest at 7%, and is due on the first
anniversary of the acquisition date, together with interest thereon. In
connection with the acquisition, Dowling's entered into a non-competition
agreement with the seller that provides for payments of $315,000 over a three
year period, and for payments of 7.5% of certain defined profits of G&O for the
next four years. The non-compete agreement has been discounted using an
imputed discount rate of 9.75%, and the related asset is being amortized over
the life of the agreement, which is ten years. The G&O acquisition did not
have a material impact on Oakhurst's financial position.
During the three months ended August 31, 1996, SCPI also began
distributing pet supply products to certain of its customers.
From time to time the information provided by the Company or
statements made by its employees may contain so-called "forward looking"
information that involves risks and uncertainties. In particular, statements
contained in this Item 7 - "Management's Discussion and Analysis of Financial
Condition and Results of Operations," which are not historical facts
(including, but not limited to statements concerning anticipated sales, profit
levels, customers and cash flows) are forward looking statements. The
Company's actual future results may differ significantly from those stated in
any forward looking statements. Factors that may cause such differences
include, but are not limited to the factors discussed above as well as the
accuracy of the Company's internal estimates of revenue and operating expense
levels. Each of these factors and others are discussed from time to time in
the Company's Securities and Exchange Commission filings.
- 10 -
<PAGE> 11
MATERIAL CHANGES IN FINANCIAL CONDITION
In addition to cash derived from the operations of its four
subsidiaries, Oakhurst's liquidity and financing requirements are determined
principally by the working capital needed to support each subsidiary's level of
business, together with the need for capital expenditures and the cash required
to repay debt. Each subsidiary's level of working capital needs varies
primarily with the amount of inventory carried, which can change seasonally,
the size and timeliness of payment of receivables from customers, especially at
the SCPI subsidiary which from time to time grants extended payment terms for
seasonal inventory build-ups, and the amount of credit extended by suppliers.
At August 31, 1996, Oakhurst's debt primarily consisted of (i) a
credit facility with an institutional lender (the "Credit Facility"), which
included a SCPI term loan with a balance of approximately $1.4 million, and
borrowings of approximately $5.8 million under a revolving credit facility (the
"Revolver"), (ii) debt in connection with the acquisitions of Puma, Dowling's
and G&O, and (iii) notes payable with outstanding principal balances
aggregating approximately $820,000 that were issued in connection with the
settlement of certain contingent liabilities related to SCPI's former retail
division.
Oakhurst and its subsidiaries obtained the two year Credit Facility on
March 28, 1996. The initial aggregate amount borrowed under the Revolver was
approximately $4.2 million, which was used primarily to repay existing
revolving debt. In connection with the new financing, Oakhurst and its
subsidiaries incurred loan costs and fees of approximately $250,000.
Oakhurst and its subsidiaries have available financing under the
Revolver up to a maximum of $8 million, subject to defined levels of the
subsidiaries' accounts receivable and inventories. Management believes that
the Revolver will provide adequate funding for the Company's foreseeable
working capital requirements, including seasonal fluctuations.
At August 31, 1996, there had been no other material changes in the
Company's financial condition from February 29, 1996, as discussed in Item 7 of
the Company's Annual Report on Form 10-K for fiscal 1996.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
In the current year, management expects SCPI's sales to be lower than
in fiscal 1996. As part of a strategic evaluation of the business, SCPI has
reduced expenses so as to mitigate negative cash flow from operations while new
customers and product lines are sought. In the first half of the current year,
SCPI's cash flow from continuing operations was positive, despite the lower
sales levels, but not in amounts sufficient to satisfy all of SCPI's scheduled
principal payments. There can be no assurance that SCPI can obtain enough new
customers or sufficient levels of new business to return sales and profits to
historical levels. The sales recovery at Dowling's is also expected to
continue, and should partially offset the negative impact of lower sales by
SCPI.
THREE MONTHS ENDED AUGUST 31, 1996 COMPARED WITH THREE MONTHS ENDED AUGUST
31, 1995
Consolidated sales for the current year second quarter decreased by
approximately $2.1 million, or by 15.3% when compared with the prior year.
The decrease was primarily caused by the loss of two of SCPI's largest
customers during the prior year. One customer was lost in October 1995 due to
its bankruptcy, while the other changed its source of supply in January 1996.
The decrease in sales in the current year second quarter attributable to these
two customers aggregated $2.6 million. Sales of car alarms, stereo
- 11 -
<PAGE> 12
accessories and cruise control equipment decreased by $135,000 due to the lower
retail demand, and cellular phone commissions also decreased by $93,000 because
of fewer activations due to increased competition in this market. Sales of
light truck and van aftermarket accessories decreased by $195,000, due
primarily to the loss by Puma of two large converter customers in the prior
year.
Certain increases in sales partially offset the decreases described
above. Sales of radiators and related products by Dowling's increased over the
second quarter of the prior year by $475,000, representing an increase of
approximately 13.5%, which is attributed to an improved competitive situation
this year in Dowling's markets, an increase in market share, and the addition
of the G&O facility in Philadelphia. The addition of new customers by SCPI and
of new product lines by SCPI and H&H together accounted for $350,000 in new
sales, and sales to SCPI's existing customers increased by approximately
$120,000.
Gross profits were $2.6 million, or 22.5% of sales, in the current
year second quarter compared with $2.8 million, or 20.9% of sales, in the prior
year period. Lower levels of sales by most of the subsidiaries contributed to
lower profits of approximately $565,000, but this was partially offset by
improved gross margins earned by most of the subsidiaries, most particularly
H&H and Dowling's, and by an increase in sales attributable to Dowling's. The
increased gross margin performance by the two subsidiaries was due to lower
costs on certain product lines, and to the improved competitive situation in
certain of Dowling's markets.
Operating, selling and administrative expenses decreased by $204,000
when compared to the prior year, which primarily reflected management's efforts
to reduce SCPI's expenses and work force in reaction to lower levels of sales.
There was a decrease of $184,000 in the provision for doubtful
accounts in the current year second quarter compared with the same period in
the prior year, when SCPI recorded a provision for the expected bankruptcy of a
large customer.
SIX MONTHS ENDED AUGUST 31, 1996 COMPARED WITH SIX MONTHS ENDED AUGUST 31, 1995
Consolidated sales for the current year decreased by approximately
$4.2 million, or by 15.8% when compared with the prior year. The decrease was
primarily caused by the loss of two of SCPI's largest customers during the
prior year, as previously discussed. These two customers accounted for a
decrease in sales in the current year of approximately $6.1 million. Sales of
car alarms, stereo accessories and cruise control equipment decreased by
approximately $225,000 due to the lower retail demand, and cellular phone
commissions also decreased by $305,000 because of a lower average commission
rate this year combined with fewer activations due to increased competition in
this market. Sales of light truck and van aftermarket accessories decreased by
$395,000, due primarily to the loss by Puma of two large converter customers in
the prior year.
The addition of new customers by SCPI and of new product lines by it
and by H&H together accounted for $1.5 million in new sales, partially
offsetting the sales decreases. Sales of radiators and related products by
Dowling's increased over the prior year by $1.6 million, representing an
increase of almost 28%, which is attributed to an improved competitive
situation this year in Dowling's markets, combined with favorable weather in
the first quarter, an increase in market share, and the addition of the
Philadelphia facility.
Gross profits were approximately $5 million, or 22.3% of sales, in the
current year compared with $5.7 million, or 21.5% of sales, in the prior year
period. Lower levels of sales by most of the subsidiaries
- 12 -
<PAGE> 13
contributed to lower profits of approximately $1.3 million, but this was
partially offset by improved gross margins earned by most of the subsidiaries,
most particularly H&H and Dowling's, and by an increase in sales attributable
to Dowling's. The increased gross margin performance by these two subsidiaries
was principally due to lower costs on certain product lines, and to the improved
competitive situation in certain of Dowling's markets.
Operating, selling and administrative expenses decreased by $345,000
when compared to the prior year, which primarily reflected management's efforts
to reduce expenses and its work force in reaction to lower levels of sales.
There was a decrease of $216,000 in the provision for doubtful
accounts compared with the prior year, when the Company recorded provisions for
the bankruptcies of several customers, including one of SCPI's largest
customers.
- 13 -
<PAGE> 14
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material legal proceedings against the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On July 18, 1996, the Company held its Annual Meeting of Stockholders.
The following matters were submitted to a vote of security holders:
The election of one Class I director to serve for a term of three
years and until his successor is elected and qualified. The results
of the voting were as follows:
<TABLE>
<CAPTION>
Nominee Votes For Votes Withheld
---------------- ---------- --------------
<S> <C> <C>
Robert M. Davies 2,219,199 19,224
</TABLE>
To consider the approval of an amendment to the Company's 1994 Omnibus
Stock Plan to increase the shares issuable thereunder from 350,000
shares to 500,000 shares.
<TABLE>
<CAPTION>
For Against Abstain No Vote
--------- --------- ------- -------
<S> <C> <C> <C>
2,056,141 65,407 18,559 -0-
</TABLE>
To authorize the Company-designated proxy holders to vote on such
other matters as might come before the meeting including, but not
limited to the adjournment of the meeting to solicit additional votes
to achieve a quorum or to obtain an affirmative vote on a proposal.
The results of the voting were as follows:
<TABLE>
<CAPTION>
For Against Abstain No Vote
--------- --------- ------- -------
<S> <C> <C> <C>
2,196,069 22,383 19,971 -0-
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27. Financial Data Schedule (EDGAR transmission only)
(b) No reports on Form 8-K were filed during the quarter for which
this report is filed.
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<PAGE> 15
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: October 14, 1996 By: /s/ Mark Auerbach
---------------------------
Mr. Mark Auerbach
Chief Executive Officer
Chief Financial Officer
- 15 -
<PAGE> 16
EXHIBIT INDEX
-------------
Exhibit
Number Description
- ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-START> MAR-01-1996
<PERIOD-END> AUG-31-1996
<CASH> 196
<SECURITIES> 0
<RECEIVABLES> 5,421
<ALLOWANCES> 492
<INVENTORY> 8,252
<CURRENT-ASSETS> 14,781
<PP&E> 3,335
<DEPRECIATION> 1,346
<TOTAL-ASSETS> 27,082
<CURRENT-LIABILITIES> 8,021
<BONDS> 9,058
0
0
<COMMON> 32
<OTHER-SE> 9,971
<TOTAL-LIABILITY-AND-EQUITY> 27,082
<SALES> 22,346
<TOTAL-REVENUES> 22,480
<CGS> 17,357
<TOTAL-COSTS> 17,357
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 51
<INTEREST-EXPENSE> 422
<INCOME-PRETAX> (888)
<INCOME-TAX> 15
<INCOME-CONTINUING> (903)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (903)
<EPS-PRIMARY> (0.28)
<EPS-DILUTED> (0.28)
</TABLE>
