<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: November 30, 1998
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.)
3513 CONCORD PIKE, SUITE 3527, WILMINGTON, DELAWARE
19803
---------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(302) 478-9170
----------------------------------------------------
(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 January 5, 1999, 4,943,018 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 November 30, 1998 (unaudited)
and February 28, 1998................................................................. 3
Consolidated Statements of Operations for the three month periods ended
November 30, 1998 and November 30, 1997 (unaudited)................................... 4
Consolidated Statements of Operations for the nine month periods ended
November 30, 1998 and November 30, 1997 (unaudited)................................... 5
Consolidated Statement of Stockholders' Equity for the nine months
ended November 30, 1998 (unaudited) ................................................. 6
Consolidated Statements of Cash Flows for the nine month periods
ended November 30, 1998 and November 30, 1997 (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 NOVEMBER 30, FEBRUARY 28,
1998 1998
------------ ------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash .......................................................................... $ 417 $ 47
Trade accounts receivable, less allowance of $416 and $461,respectively ....... 3,376 4,026
Other receivables ............................................................. 227 223
Inventories ................................................................... 4,724 6,167
Other ......................................................................... 144 226
------------ ------------
Total current assets ........................................ 8,888 10,689
------------ ------------
Property and equipment, at cost .................................................... 2,028 1,782
Less accumulated depreciation ................................................. (1,273) (1,098)
------------ ------------
755 684
------------ ------------
Excess of cost over net assets acquired, net ....................................... 2,129 2,275
Other assets ....................................................................... 340 383
------------ ------------
2,469 2,658
------------ ------------
$ 12,112 $ 14,031
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable .............................................................. $ 5,462 $ 6,392
Accrued compensation .......................................................... 453 519
Current maturities of long-term obligations ................................... 322 646
Current maturities of long-term obligations, related parties .................. 88 88
Accrued interest .............................................................. 45 76
Other accrued expenses ........................................................ 192 249
------------ ------------
Total current liabilities ................................... 6,562 7,970
------------ ------------
Long-term obligations:
Long-term debt ................................................................ 4,162 4,058
Long-term debt, related parties ............................................... 132 198
Other long-term obligations ................................................... 181 62
------------ ------------
4,475 4,318
------------ ------------
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 3,212,962 and 3,207,053 shares, respectively ................ 32 32
Additional paid-in capital .................................................... 46,540 46,535
Deficit (Reorganized on August 26, 1989) ...................................... (45,496) (44,823)
Treasury stock, at cost, 207 common shares .................................... (1) (1)
------------ ------------
Total stockholders' equity .................................. 1,075 1,743
------------ ------------
$ 12,112 $ 14,031
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
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<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
NOVEMBER 30, NOVEMBER 30,
1998 1997
------------ ------------
<S> <C> <C>
Sales ........................................................... $ 7,554 $ 7,880
Other income .................................................... 79 51
------------ ------------
7,633 7,931
------------ ------------
Cost of goods sold, including occupancy and
buying expenses .............................................. 6,174 6,449
Operating, selling and administrative expenses .................. 1,414 1,521
Provision for doubtful accounts ................................. 28 74
Amortization of excess of cost over net assets acquired ......... 49 46
Interest expense ................................................ 123 165
------------ ------------
7,788 8,255
------------ ------------
Net loss before income taxes .................................... (155) (324)
Income tax benefit (expense) .................................... 3 (6)
------------ ------------
Net loss ........................................................ $ (152) $ (330)
============ ============
Basic and diluted net loss per share attributable to common
stockholders ............................................... $ (0.05) $ (0.10)
============ ============
Weighted average number of shares outstanding
used in computing per share amount ........................... 3,212,962 3,207,053
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
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<PAGE> 5
OAKHURST COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS NINE MONTHS
ENDED ENDED
NOVEMBER 30, NOVEMBER 30,
1998 1997
------------ ------------
<S> <C> <C>
Sales ........................................................... $ 24,510 $ 25,507
Other income .................................................... 236 156
------------ ------------
24,746 25,663
------------ ------------
Cost of goods sold, including occupancy and
buying expenses .............................................. 20,088 20,646
Operating, selling and administrative expenses .................. 4,693 4,764
Provision for doubtful accounts ................................. 92 129
Amortization of excess of cost over net assets acquired ......... 146 145
Interest expense ................................................ 397 512
------------ ------------
25,416 26,196
------------ ------------
Net loss before income taxes .................................... (670) (533)
Income tax expense .............................................. (3) (15)
------------ ------------
Net loss ........................................................ $ (673) $ (548)
============ ============
Basic and diluted net loss per share attributable to common
stockholders ................................................ $ (0.21) $ (0.17)
============ ============
Weighted average number of shares outstanding
used in computing per share amount ........................... 3,211,642 3,199,164
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
-5-
<PAGE> 6
OAKHURST COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
NINE MONTHS ENDED NOVEMBER 30, 1998
(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, 1998 ..... 3,207,053 $ 32 $ 46,535 $ (44,823) 207 $ (1)
Net loss for the period ......... (673)
Stock award ..................... 5,909 * 5
---------- ---------- ---------- ---------- ---------- ----------
Balances, November 30, 1998 ..... 3,212,962 $ 32 $ 46,540 $ (45,496) 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>
NINE MONTHS NINE MONTHS
ENDED ENDED
NOVEMBER 30, NOVEMBER 30,
1998 1997
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss ................................................ $ (673) $ (548)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization ....................... 391 497
Loss on retirement of assets ........................ 4 9
Stock awards ........................................ 5 6
Other changes in operating assets and liabilities:
Accounts receivable ................................. 650 452)
Inventories ......................................... 1,443 649
Accounts payable .................................... (930) (323)
Other ............................................... (57) 119
------------ ------------
Net cash provided by (used in) operating activities of:
Continuing operations ................................... 833 (43)
Discontinued operations ................................. (330) (301)
------------ ------------
Net cash provided by (used in) operating activities ........ 503 (344)
------------ ------------
Cash flows from investing activities:
Additions to property and equipment ..................... (135) (106)
------------ ------------
Net cash used in investing activities ...................... (135) (106)
------------ ------------
Cash flows from financing activities:
Net borrowings under revolving credit agreement ......... 32 1,050
Proceeds from issuance of long-term debt ................ 132 --
Repayment of note payable ............................... -- (105)
Principal payments on long-term obligations ............. (162) (352)
Deferred loan costs ..................................... -- (35)
------------ ------------
Net cash provided by financing activities .................. 2 558
------------ ------------
Net increase (decrease) in cash and cash equivalents ....... 370 108
Cash and cash equivalents at beginning of period ........... 47 39
------------ ------------
Cash and cash equivalents at end of period ................. $ 417 $ 147
============ ============
Supplemental schedule of non-cash investing and financing activities:
Nine months ended November 30, 1998:
Capital lease obligations of $131 were incurred in connection with leases of new equipment.
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
-7-
<PAGE> 8
OAKHURST COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED NOVEMBER 30, 1998
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 Dowling's Fleet
Service Co., Inc. ("Dowling's") and of Oakhurst Management Corporation ("OMC").
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 28,
1998 ("fiscal 1998") as filed in the Company's Annual Report on Form 10-K.
2. RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income". SFAS No. 130 establishes standards for reporting
comprehensive income and its components. SFAS No. 130 also requires that the
cumulative balance of these items of other comprehensive income be reported
separately from retained earnings and additional paid-in capital in the equity
section of a statement of financial position. SFAS No. 130 is effective for
fiscal years beginning after December 15, 1997. The Company adopted SFAS No. 130
in the first quarter ended May 31, 1998 (unaudited) and the adoption did not
have a material impact on the Company's disclosures in its consolidated
financial statements.
In June 1997, the FASB issued SFAS No. 131, "Disclosure about Segments
of an Enterprise and Related information". SFAS No. 131 establishes standards
for the way public companies report selected information about operating
segments in both quarterly and annual financial statements to their
shareholders. It also establishes standards for related disclosures about
products and services, geographic areas and major customers. SFAS No. 131 is
effective for fiscal years beginning after December 15, 1997. This statement is
not required to be applied to interim financial statements in the initial year
of its application. The Company has not yet determined the effects, if any, that
SFAS No. 131 will have on the disclosures in its consolidated financial
statements.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 establishes accounting and
reporting standards for derivative instruments,
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<PAGE> 9
including certain derivative instruments embedded in other contracts, and for
hedging activities. It requires that an entity recognize all derivatives as
either assets or liabilities in the statement of financial position and measure
those instruments at fair market value. If certain conditions are met, a
derivative may be specifically designated as a hedge. The accounting for changes
in the fair value of a derivative depends on the intended use of the derivative
and the resulting designation of the hedge exposure. Depending on how the hedge
is used and the designation, the gain or loss due to changes in the fair value
is reported either in earnings or in other comprehensive income.
The Company has not yet determined the effects, if any, that SFAS No.
133 will have on the disclosures in its consolidated financial statements.
3. SUBSEQUENT EVENT
On December 30, 1998 Oakhurst issued approximately 1,730,000 shares of
common stock to KTI, Inc. ("KTI"), for $865,000. In conjunction with the
placement, Oakhurst entered into a secured, subordinated loan agreement pursuant
to which KTI has committed to lend Oakhurst up to $17.0 million ("the KTI Loan
Facility").
Proceeds of the private placement, together with amounts drawn under
the KTI Loan Facility are to be invested in Oakhurst Technology, Inc. ("OTI"), a
newly-formed, wholly-owned subsidiary of Oakhurst. OTI will invest in businesses
in the waste-to-energy and recycling sectors and the development of the crumb
rubber industry.
The first such investment will be made to upgrade and retrofit a 20
megawatt waste-to-energy facility in Ford Heights, Illinois, and provide working
capital for the operation of that facility. As a result, OTI will acquire a 50%
equity interest in the entity that owns the facility, New Heights Recovery &
Power, LLC.
ITEM 2. 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 $155
million of net operating loss carry-forwards) 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 carry-forwards.
Until the formation of its wholly-owned subsidiary, Oakhurst
Technology, Inc. ("OTI") in December 1998, Oakhurst has been involved primarily
in the distribution of products to the automotive after-market. Its largest
business, which is conducted by SCPI under the trade name "Steel City Products",
is the distribution of automotive parts and accessories and of non-food pet
supplies to independent retailers from a facility in McKeesport, Pennsylvania.
Oakhurst's subsidiary, Dowling's Fleet Service Co., Inc. ("Dowling's") is a New
York-headquartered distributor of automotive radiators and related products.
- 9 -
<PAGE> 10
LIQUIDITY AND CAPITAL RESOURCES
In addition to cash derived from the operations of its subsidiaries,
Oakhurst's liquidity and financing requirements have been 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 working capital needs have varied primarily with the
amount of inventory carried, which can change seasonally, the size and
timeliness of payment of receivables from customers, especially at SCPI, which
from time to time grants extended payment terms to its customers for seasonal
inventory build-ups, and the amount of credit extended by suppliers.
At November 30, 1998, Oakhurst's debt primarily consisted of (i) a
credit facility with an institutional lender (the "Credit Facility"), which
includes borrowings of approximately $4.1 million under a revolving credit
facility (the "Revolver"), (ii) debt aggregating $258,000 in connection with
Oakhurst's acquisitions, and (iii) notes payable that were issued in connection
with the settlement of certain contingent liabilities related to SCPI's former
retail division.
Oakhurst and its subsidiaries have available financing under the
Revolver up to a maximum of $7 million, subject to a borrowing base that is
calculated according to defined levels of the subsidiaries' accounts receivable
and inventories. At November 30, 1998, the borrowing base under the Revolver was
$4.5 million. In fiscal 1998, the Revolver was extended to April 1999, and it
provides for subsequent renewal terms of one year each upon payment of a renewal
fee of 0.5% of the entire line, unless earlier terminated as provided for in the
agreement. Management believes that the Revolver will provide adequate funding
for the Company's working capital requirements for at least the next twelve
months, including seasonal fluctuations, assuming no material deterioration in
current sales levels or gross profit margins and assuming the continuation of
normal levels of supplier credit.
In December 1998, the Loan Agreement was amended to permit Oakhurst to
enter into a secured, subordinated loan agreement pursuant to which KTI, Inc.
("KTI") has committed to lend up to $17.0 million ("the KTI Loan Facility"), in
conjunction with the issuance by Oakhurst of approximately 1,730,000 shares of
common stock to KTI for $865,000.
Proceeds of the private placement, together with amounts drawn under
the KTI Loan Facility are to be invested in OTI, a newly-formed, wholly-owned
subsidiary of Oakhurst. OTI will invest in businesses in the waste-to-energy and
recycling sectors and the development of the crumb rubber industry.
The first such investment will be made to upgrade and retrofit a 20
megawatt waste-to-energy facility in Ford Heights, Illinois, and provide working
capital for the operation of such facility. As a result, OTI will acquire a 50%
equity interest in the entity that owns the facility, New Heights Recovery &
Power, LLC ("New Heights").
The New Heights facility was built in 1996 at a cost of about $110
million for the purpose of combusting waste rubber to produce electricity. Due
to amendments to the Illinois Retail Rate Act, which repealed certain rate
incentives to the facility, it was closed during start-up testing and the owner
sought protection under federal bankruptcy laws. Pursuant to a Reorganization
Plan that was confirmed by the bankruptcy court on December 15, 1998, the New
Heights bondholders agreed to convert their $80 million in bonds and other
claims into equity, and to grant 50% of such equity interest in New Heights to
KTI or its affiliate, in return for a commitment to invest in and manage the
project. KTI has designated OTI as its affiliate for these purposes and KTI
Operations, a wholly-owned subsidiary of KTI, will manage the facility.
The upgrading and retrofitting of the New Heights facility will include
the use of KTI-patented cryogenic crumb rubber processing technology. Oakhurst
expects that over time, subject to the receipt of
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<PAGE> 11
the necessary permits, the New Heights facility will be developed as an
environmental campus, for the processing and recycling of paper and other
non-hazardous wastes in addition to waste rubber.
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 2 - "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.
MATERIAL CHANGES IN FINANCIAL CONDITION
At November 30, 1998, there had been no material changes in the
Company's financial condition from February 28, 1998, as discussed in Item 7 of
the Company's Annual Report on Form 10-K for fiscal 1998.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
THREE MONTHS ENDED NOVEMBER 30, 1998 COMPARED WITH THREE MONTHS ENDED NOVEMBER
30, 1997
Consolidated sales in the third quarter of the current year decreased
by $327,000, or by 4.1% when compared with the prior year. Sales by SCPI
decreased by approximately $101,000, and sales by Dowling's decreased by
approximately $226,000. The decrease at SCPI was due primarily to lower sales to
existing customers, resulting from competitive pressures faced by many smaller
customers, and because some customers have changed buying practices to obtain
products directly from the manufacturer. The sales decrease at Dowling's was due
to continued mild weather resulting in fewer radiator and condenser failures,
and by increased competition facing certain warehouses in the third quarter of
the current year.
Gross profits were $1.4 million, or 18.3% of sales, in the third
quarter of the current year, a decrease of $51,000 compared with the prior year
period. Decreases in gross profits due to the lower sales volume at both SCPI
and Dowling's, together with higher buying and occupancy costs of $31,000 were
largely offset by higher margins achieved by Dowling's.
Operating, selling and administrative expenses in the third quarter of
the current year decreased by $174,000 compared with the prior year period. Much
of the decrease was due to reductions in operating and administrative expenses,
which reflected the lower sales levels at Dowling's. Corporate overhead expenses
were below prior year levels by $75,000, due largely to personnel and salary
reductions, lower insurance costs, lower renewal fees associated with the
Company's line of credit, and a reduction in other expenses.
There was a reduction in the provision for doubtful accounts of $46,000
for the current year, due to an increase last year resulting from the bankruptcy
of one of SCPI's customers.
Interest expense decreased by $42,000 when compared to the prior year,
due primarily to SCPI's repayment of a term loan in December 1997.
- 11 -
<PAGE> 12
NINE MONTHS ENDED NOVEMBER 30, 1998 COMPARED WITH NINE MONTHS ENDED NOVEMBER 30,
1997
Consolidated sales in the current year period decreased by $997,000, or
by 3.9% when compared with the prior year period. Sales by SCPI decreased by
$147,000, and sales by Dowling's decreased by approximately $852,000.
Sales by SCPI to existing automotive customers decreased by
approximately $927,000, primarily as a result of competitive pressures
encountered by certain of SCPI's customers, and because some customers have
changed their buying practices to obtain certain product lines direct from the
manufacturer. The prior year first quarter also included sales of approximately
$117,000 relating to the "Wing-tech" division that was sold in that quarter.
Partially offsetting these decreases were sales by SCPI to new automotive
customers of approximately $431,000, and increases of $466,000 in sales of
non-food pet supplies. The increase in sales of non-food pet supplies resulted
from expanded sales by SCPI to existing pet supply customers, together with
sales of $375,000 to new pet supply customers recently added.
The decrease in sales by Dowling's was principally caused by
comparatively mild summer and autumn temperatures in Dowling's markets that
resulted in fewer radiator and condenser failures in the current year, combined
with the effect of lower average selling prices for radiators.
Gross profits were $4.4 million, or 18.0% of sales, in the current year
period compared with $4.9 million, or 19.1% of sales, in the prior year period.
The decrease in gross profits of $440,000 resulted from the lower levels of
sales, a reduction in gross margin at SCPI, and increased buying and occupancy
expenses of $128,000. The decrease in SCPI's gross margin, resulting in lower
gross profits of $198,000, was largely attributable to several sales promotions
during the second quarter. The higher buying and occupancy expenses resulted
from increases in certain costs at Dowling's, and from increased costs related
to SCPI operating from rented facilities in the current year, while in the prior
year SCPI's operations were conducted from an owned warehouse that was sold in
December 1997.
Operating, selling and administrative expenses decreased by $131,000
when compared to the prior year, due primarily to lower operating expenses at
Dowling's due to the lower sales volume, and to a reduction in corporate
overheads.
There was a reduction in the provision for doubtful accounts of $49,000
for the current year, due to an increase last year resulting from the bankruptcy
of one of SCPI's customers.
.
Interest expense decreased by $115,000 when compared to the prior year,
due primarily to SCPI's repayment of a term loan in December 1997.
- 12 -
<PAGE> 13
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material legal proceedings outstanding against the
Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
quarter for which this report is filed.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27. Financial Data Schedule
------------
(b) No reports on Form 8-K were filed during the quarter for which
this report is filed.
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<PAGE> 14
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: January 8, 1999 By: /s/ Robert M. Davies
----------------------------------
Robert M. Davies
Chief Executive Officer
Date: January 8, 1999 By: /s/ Maarten D. Hemsley
-----------------------------------
Maarten D. Hemsley
Chief Financial Officer
- 14 -
<PAGE> 15
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-28-1999
<PERIOD-START> MAR-01-1998
<PERIOD-END> NOV-30-1998
<CASH> 417
<SECURITIES> 0
<RECEIVABLES> 3,792
<ALLOWANCES> 416
<INVENTORY> 4,724
<CURRENT-ASSETS> 8,888
<PP&E> 2,028
<DEPRECIATION> 1,273
<TOTAL-ASSETS> 12,112
<CURRENT-LIABILITIES> 6,562
<BONDS> 4,475
0
0
<COMMON> 32
<OTHER-SE> 1,043
<TOTAL-LIABILITY-AND-EQUITY> 12,112
<SALES> 24,510
<TOTAL-REVENUES> 24,746
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</TABLE>
