SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) Quarterly Report Under Section 13 or 15 (d)
of the Securities and Exchange Act of 1934
For Quarter Ended September 30, 1996
Commission File Number 0-25164
LUCOR, INC.
Florida 65-0195259
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
902 Clint Moore Road, Suite 100, Boca Raton, Florida 33487
(Address of principal executive offices) (Zip Code)
(407) 997-5601
Registrant's telephone number, including area code
(Former name, former address and former fiscal year,
if changed since last reported)
Indicate by checkmark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities and Exchange Act
of 1934 during the preceding twelve 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 ninety days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
Date: November 13, 1996 Class A Common Stock, par value $.02 per share
Shares Outstanding: 2,098,973
Class B Common Stock, par value $.02 per share
Shares Outstanding: 702,155
<PAGE>
LUCOR, INC.
INDEX
PART I FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Consolidated Balance Sheets
September 30, 1996 and December 31, 1995 1
Consolidated Statements of Income
Three Months Ended September 30, 1996
and September 30, 1995 and Nine Months Ended
September 30, 1996 and September 30, 1995 2
Consolidated Statements of Cash Flows
Nine Months Ended September 30, 1996 and
September 30, 1995 3
Notes to Consolidated Financial
Statements 4
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operation 4
PART II - Other Information
Item 1. Legal Proceedings 5
Item 2. Changes in Securities 5
Item 3. Defaults Upon Senior Securities 5
Item 4. Submission of Matters to a Vote of
Security Holders 5
Item 5. Other Information 5
Item 6. Exhibits and Reports on Form 8-K 5
<PAGE>
LUCOR, INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS 30-September-96 31-December-95
(Unaudited) (Audited)
__________ ___________
Current assets:
Cash and cash equivalents $2,623,089 $ 2,344,484
Accounts receivable 698,655 462,510
Inventory 1,896,407 1,126,302
Prepaid and other current assets 493,872 210,103
Income tax receivable 326,437 0
__________ ___________
Total current assets 6,038,460 4,143,399
__________ ___________
Property, plant & equipment, net
of accumulated depreciation 22,486,710 14,246,603
__________ ___________
Other assets:
Goodwill, licenses, application,
area development and organization
costs, net of accumulated
amortization 4,525,075 3,087,759
Other assets 85,261 200,285
__________ ___________
Total other assets 4,610,336 3,288,044
__________ ___________
Total assets $33,135,506 $21,678,046
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion, long term debt $ 804,780 $ 328,121
Accounts payable 3,537,261 2,243,287
Accrued expenses 1,308,560 659,928
Preferred dividend payable 0 35,000
___________ ___________
Total current liabilities 5,650,602 3,266,336
___________ ___________
Long term debt, net of
current portion 16,063,761 12,068,721
Deferred taxes 130,237 130,237
__________ ___________
Total long term liabilities 16,070,937 12,198,958
__________ ___________
Redeemable preferred stock 2,000,000 2,000,000
__________ ___________
Stockholders' equity 9,290,906 4,212,752
__________ ___________
Total liabilities, equity $33,135,506 $21,678,046
=========== ===========
<PAGE>
<TABLE>
LUCOR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
THREE MOS THREE MOS NINE MOS NINE MOS
ENDED ENDED ENDED ENDED
30-SEP-96 30-SEP-95 30-SEP-96 30-SEP-95
__________ _________ __________ ___________
<S> <C> <C> <C> <C>
Full service cars 274,236 223,861 752,127 560,650
========== ========== ========== ==========
Net sales $10,054,582 $7,882,445 $27,365,035 $19,885,467
Cost of sales 2,352,430 1,873,311 6,469,390 4,787,828
__________ _________ __________ __________
Gross profit 7,702,152 6,009,134 20,895,645 15,097,639
__________ _________ __________ __________
Costs and expenses:
Direct 3,622,898 2,838,520 10,069,171 6,882,829
Operating 2,057,736 1,707,404 5,755,386 4,426,603
Depreciation 431,630 209,006 1,185,829 478,960
Selling, general, and
administrative 1,549,031 784,721 3,969,545 2,190,661
__________ _________ __________ __________
7,661,295 5,539,651 20,979,931 13,979,053
__________ _________ __________ __________
Income from operations 40,857 469,483 ( 84,286) 1,118,586
__________ _________ ___________ __________
Other income 26,638 23,890 124,367 51,587
Interest expense (287,522) (195,499) ( 708,475) ( 315,079)
__________ _________ ___________ __________
Income before provision
for income taxes ( 220,027) 297,874 ( 668,394) 855,094
Provision for income taxes ( 88,367) 115,530 ( 241,836) 332,802
__________ ________ __________ __________
Net income ( 131,660) 182,344 ( 426,558) 522,292
Preferred dividend accrued ( 28,287) 0 ( 98,287) 0
__________ _________ ___________ _________
Net income available to
common shareholders ($ 159,947) $ 182,344 ($ 524,845) $ 522,292
========== ========= =========== =========
Weighted average number of
shares outstanding 2,800,888 1,945,411 2,430,676 1,945,411
========== ========= =========== =========
Net income per common
share outstanding ($ 0.057) $ 0.094 ($ 0.216) $ 0.268
========== ========= =========== =========
</TABLE>
<PAGE>
LUCOR, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months ended
(Unaudited)
30-Sep-96 30-Sep-95
___________ __________
Net cash provided by (used in)
operating activities $ 1,176,170 ($ 90,066)
___________ ___________
Cash flow from investing activities:
Purchase of property and equipment (8,999,899) (8,705,887)
Increase in construction
in progress 0 (2,680,505)
Acquisition of additional service
centers (1,798,191) 0
Franchise fees, goodwill, etc. (75,888) ( 616,070)
___________ ___________
Net cash provided by (used in)
investing activities (10,873,978) (12,002,462)
____________ ____________
Cash flows from financing activities:
Repayments of debt ( 220,931) (1,641,821)
Proceeds from borrowings 4,692,630 11,311,616
Proceeds from issuance of
redeemable preferred stock 0 2,000,000
Pennzoil preferred share dividend ( 98,287) 0
Proceeds from issuance of common stock 5,603,001 0
Other 0 (20,095)
____________ ___________
Cash provided by (used in)
financing activities 9,976,413 11,649,700
____________ ___________
Increase (decrease) in cash 278,605 ( 442,828)
Cash and cash equivalents at
beginning of period 2,344,484 2,012,915
____________ ___________
Cash and cash equivalents at
end of period $ 2,623,089 $ 1,570,087
============ ============
<PAGE>
LUCOR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company
Lucor, Inc. and its subsidiaries have license agreements with Jiffy Lube
International, Inc. ("JLI") to operate Jiffy Lube service centers in the
Raleigh-Durham Area of Dominant Influence (ADI), and the ADI's of Cincinnati,
Ohio (including northern Kentucky) Pittsburgh, Pennsylvania, Dayton, Ohio,
Toledo, Ohio, Lansing, Michigan, and Nashville, Tennessee. These service
centers provide rapid lubrication, oil changes and related services for
automobiles, light duty trucks and other vehicles. As of September 30, 1996
the Company had 84 centers in operation; as of December 31, 1995, 60 centers
were in operation; and as of September 30, 1995 had 57 centers in operation.
The financial information as of September 30, 1995 and September 30, 1996
included herein is unaudited. However, such information reflects all
adjustments, consisting of only normal recurring adjustments, which are, in
the opinion of Management, necessary for a fair presentation of the results
for the interim periods. Financial statement information as of December 31,
1995 has been extracted from audited financial statements. All of the above
financial information should be read in conjunction with the Company's annual
audited financial statements (and notes thereto) included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1995.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Nine months ended September 30, 1996 compared with September 30, 1995.
The Company increased its number of stores in operation from 57 stores to
84 stores. Accordingly, consolidated net sales for the first nine months rose
38%. During the first nine months of 1996, 752,127 full service sales were
performed versus 560,650 in the same period of 1995. Cars serviced per day
per service center averaged 40 cars versus 47 cars during 1995. The decrease
in the number of cars per day is due to the impact of the new stores opened
this year, which traditionally have lower car counts in the early stages of
operation. Net revenue per car serviced increased from $36.22 to $36.58 from
the previous quarter. Management attributes the increase in net revenue per
car to the additional services provided to our customers. The Company has
added a complete automatic transmission fluid replacement service and tire
rotation service at all of its locations this year. These services, when
purchased in conjunction with a full service oil change, increase the net
revenue per car.
Cost of goods sold decreased slightly as a percent of sales from 24.1%
to 23.6% for the first nine months ended September 30, 1995 versus September
30, 1996. The decrease in the cost of goods sold was offset by an increase in
the direct costs. Management believes that the increase in the direct costs
is due to an increase in the number of labor intensive services performed on
vehicles. This would result in a decrease in cost of goods sold and increase
in direct costs. Direct costs also include store management costs as well as
other costs that are fixed in nature. Lower volume per store would,
therefore, raise the direct cost percentage of sales. Operating costs
increased less rapidly than sales during the period. Depreciation charges
increased for the period reflecting the Company's increased capital investment
for store improvements and new store development.
Selling, general and administrative expenses increased 81% or $1,780,000
over the comparable nine month period of 1995. Marketing costs, which
represent 47% of the increase, have increased on a per store basis from
$11,000 per store in 1995 to $17,000 per store in 1996. The Company has
increased its marketing efforts to increase the consumer awareness of the new
stores that have opened during this period. In addition, part of the increase
is due to an increase in the number of management personnel hired by the
Company to handle its expansion. Other income increased primarily due to a
$47,942 gain on the sale of the Company's former office and added interest
income from invested cash.
Interest expense increased reflecting the higher level of borrowing to
support the Company's capital expenditure program. The provision for income
taxes was negative reflecting the negative taxable income. The Company has
sufficient taxable income in prior periods to allow it to carry back the
taxable loss to prior periods and receive a refund. A charge of $98,287 was
made for the nine months to provide for a dividend on the Company's redeemable
preferred stock.
Common stock shareholder equity increased by $5,603,001 reflecting the
issuance of unregistered Class A Common Stock as follows:
1. As part of the acquisition of the assets of Quick Lube, Inc., 39,000
shares were issued at a value of $250,000.
2. A private placement of 55,000 shares to Jerry B. Conway and D. Fredrico
Fazio (directors of the Company) resulted in an increase of $343,750 in common
stock shareholder equity.
3. In May, 1996, the Company issued 759,477 shares to Pennzoil Products
Company, Inc. for cash totaling $5,000,000.
4. The remaining small difference is due to the repurchase of a small number
of shares and the exercise of existing options.
Liquidity and capital resources:
Working capital has decreased by $612,266 since the end of 1995. The
decrease in working capital was expected as funds were used to build new store
sites plus the increased requirements for equipment for these sites. The
Company's existing credit facility with Citicorp Leasing, Inc. calls for the
funding of building development at 95% of the cost. The Company, therefore,
has used its working capital to fund the remaining 5% for buildings and for
100% of the equipment required for the stores. Working capital in the amount
of $298,191 was also used in the acquisition of the Lansing, Michigan ADI.
The funding for these purchases has come from the issuance of additional stock
and cash generated by operations.
The current funds on hand are expected to provide the capital required to
sustain our current development schedule. The Company has an agreement with a
real estate development company to finance many of the new store sites that
are in the current development schedule. Such financing will be at 100% of
the building cost with the Company providing funds for equipment and store
working capital.
PART II - Other Information
Item 1. Legal Proceedings: None
Item 2. Changes in Securities: None
Item 3. Defaults Upon Senior Securities: None
Item 4. Submission of Matters to a Vote of
Security Holders: None
Item 5. Other Information: None
Item 6. Exhibits and Reports on Form 8-K: None
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant
and in the capacities indicated on the 13th day of November 1996.
LUCOR, INC.
________________________
Stephen P. Conway
Chairman, Chief Executive Officer,
and Director
________________________
Kendall A. Carr
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from SEC
Form 10-Q and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 2,623,089
<SECURITIES> 0
<RECEIVABLES> 701,047
<ALLOWANCES> 2,392
<INVENTORY> 1,896,407
<CURRENT-ASSETS> 6,038,460
<PP&E> 25,359,972
<DEPRECIATION> 2,873,262
<TOTAL-ASSETS> 33,135,506
<CURRENT-LIABILITIES> 5,650,602
<BONDS> 0
0
2,000,000
<COMMON> 52,540
<OTHER-SE> 9,238,366
<TOTAL-LIABILITY-AND-EQUITY> 33,135,506
<SALES> 27,365,035
<TOTAL-REVENUES> 27,365,035
<CGS> 6,469,391
<TOTAL-COSTS> 22,293,948
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 708,475
<INCOME-PRETAX> (668,393)
<INCOME-TAX> (241,836)
<INCOME-CONTINUING> (426,558)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (426,558)
<EPS-PRIMARY> (0.216)
<EPS-DILUTED> (0.216)
</TABLE>
