UNITED STATES
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 the quarterly period ended March 31, 1997
Commission File Number: 0-25164
LUCOR, INC.
Florida 65-0195259
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
790 Pershing Road, Raleigh, NC 27608
(Address of principal executive offices) (Zip Code)
(919) 828-9511
Registrant's telephone number, including area code
(Former name, former address and former fiscal year, if changed since last
reported)
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 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. [X] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
Date: April 30, 1997 Class A Common Stock, par value $.02 per share
Shares Outstanding: 2,144,733
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
March 31, 1997 and December 31, 1996 1
Consolidated Statements of Income
Three Months Ended March 31, 1997
and March 31, 1996 2
Consolidated Statements of Cash Flows
Three Months Ended March 31, 1997 and
March 31, 1996 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 31-March-97 31-December-96
___________ ______________
Current assets:
Cash $ 1,154,808 $ 2,052,417
Accounts Receivable 499,283 491,154
Inventory 2,106,264 1,832,658
Prepaid charges 303,035 280,688
Income Tax Receivable 795,667 556,364
___________ ___________
Total Current assets 4,859,057 5,213,281
___________ ___________
Property, plant & equipment, net
of accumulated depreciation 23,113,111 22,506,488
___________ ___________
Other assets:
Goodwill, licenses, application,
area development and organization
costs, net of accumulated
amortization 4,462,835 4,543,603
Security deposits and pre-opening
expenses, net of accumulated
amortization 179,017 364,237
__________ ___________
Total other assets 4,641,852 4,907,840
__________ ___________
Total assets $32,614,020 $32,627,609
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long term debt $ 918,955 $ 969,893
Current portion of capital lease 23,337 22,664
Accounts payable 3,448,201 2,803,146
Accrued expenses 1,140,757 1,504,497
Preferred dividend payable 0 35,000
__________ ___________
Total current liabilities 5,531,250 5,335,200
__________ ___________
Long term debt, net of
current portion 15,764,847 15,831,727
Capital lease, net of
current portion 43,017 49,110
Deferred Taxes 423,594 423,594
__________ ___________
Total Long Term Liabilities 16,231,458 16,304,431
__________ ___________
Redeemable preferred stock 2,000,000 2,000,000
__________ ___________
Stockholders' equity 8,851,312 8,987,978
__________ ___________
Total liabilities, equity $32,614,020 $32,627,609
=========== ===========
(1)
<PAGE>
LUCOR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
THREE MOS THREE MOS
ENDED ENDED
31-MAR-97 31-MAR-96
__________ _________
Full service cars 280,409 222,437
========== ==========
Net sales $10,018,378 $ 7,896,603
Cost of sales 2,309,933 1,885,820
__________ ___________
Gross profit 7,708,445 6,010,783
__________ ___________
Costs and expenses:
Direct 3,838,697 2,912,914
Operating 2,099,489 1,719,122
Depreciation 618,387 324,341
Selling, general, and
administrative 1,368,212 1,197,690
__________ ___________
7,924,785 6,154,067
__________ ___________
Loss from operations (216,340) (143,284)
__________ ___________
Other income 9,679 67,762
Interest expense (356,537) (208,666)
__________ ___________
Loss before provision
for income taxes (563,198) (284,188)
Income tax benefit (202,781) (111,878)
__________ __________
Net loss (360,417) (172,310)
Preferred dividend accrued ( 35,000) ( 35,000)
__________ __________
Net loss available to
common shareholders ($ 395,417) ($ 207,310)
========== ==========
Weighted average number of
shares outstanding 2,831,888 1,944,618
========== ==========
Net income per common
share outstanding ($ 0.14) ($ 0.11)
========== ==========
(2)
<PAGE>
LUCOR, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended
31-Mar-97 31-Mar-96
___________ __________
Net cash provided by (used in)
operating activities $ (39,099) $ 1,181,740
___________ ___________
Cash flow from investing activities:
Purchase of property and equipment ( 1,496,669) (1,348,313)
Increase (decrease) in construction
in progress 570,702 (1,711,271)
Sale - Raleigh office building 116,000
Pre-investment in Lansing properties (78,296)
Franchise fees, goodwill, etc. (33,055) ( 103,403)
___________ __________
Net cash provided by (used in)
investing activities ( 959,022) ( 3,125,283)
____________ ____________
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of debt ( 523,238) ( 118,298)
Proceeds from borrowings 400,000 1,288,904
Pennzoil preferred share dividend ( 35,000) ( 35,000)
Proceeds from issuance of common stock 258,750 0
____________ ___________
Cash provided by (used in)
financing activities 100,512 1,135,606
____________ ___________
Increase (decrease) in cash ( 897,609) ( 807,937)
Cash at beginning of period 2,052,417 2,344,484
____________ ___________
Cash at end of period $ 1,154,808 $ 1,536,547
============ ============
(3)
<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 Area
of Dominant Influence (ADI) of Raleigh-Durham, North Carolina, 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 March 31, 1997 the
Company had 96 centers in operation; as of December 31, 1996, 94 centers were
in operation; and as of March 31, 1996 63 centers were in operation.
The financial information as of March 31, 1997 and March 31, 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,
1996 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, 1996.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Three months ended March 31, 1997 compared with March 31, 1996
The Company increased its number of service centers in operation from 63
to 96. Accordingly, consolidated net sales for the first three months rose
27%. During the first three months of 1997, 280,409 full service sales were
performed versus 222,437 for the same period of 1996. Cars serviced per day
per service center averaged 33 cars versus 39 cars during 1996. Management
believes that a majority of 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. Of the 96 stores open as
of March 31, 1997, 27 stores (28%) have been opened less than one year. Net
revenue per car serviced remained fairly constant increasing from $35.50 to
$35.73 from the previous quarter one year ago.
Cost of sales decreased as a percent of sales from 23.9% to 23.1% for
the first three months ended March 31, 1997 versus March 31, 1996. The Company
has been able to obtain lower prices for some of its major inventory items
through quantity purchasing and other negotiations which is reflected in the
lower cost of sales. Management believes that the new lower prices will
continue to lower cost of sales for the entire year when compared to 1996.
Direct costs rose slightly as a percent of sales reflecting, in part, the
fixed store management costs associated with running a store operation which,
as a percent of sales, is higher during the initial periods of the stores
operation. Operating costs increased less rapidly than sales during the
period. Depreciation and amortization charges increased for the period
reflecting the Company's increased capital investment for store improvements
and new store development. The amortization costs were higher than the prior
year due to the amortization of cost associated with the opening of new
stores. These costs are amortized over a six month period.
Selling, general and administrative expenses increased 14% over the
comparable three month period of 1996, but decreased as a percent of sales or
car serviced basis. Over 90% of this increase relates to increased marketing
expenditures by the Company. The Company has increased its marketing in
conjunction with opening new stores. Other income decreased from the prior
year. Other income in 1996 included a gain of $47,942 from the sale of the
Company's former office in Raleigh, North Carolina.
Interest expense increased, reflecting the higher level of borrowing to
support the Company's capital expenditure program. Provision for income taxes
was negative reflecting the negative taxable income. A charge for dividend
payments due on the Company's redeemable preferred stock was made for each
quarter.
Funds provided by financing activities included the placement of debt of
$400,000 plus the issuance of Class A common stock to two of the Company's
Directors at market price for $258,750.
Liquidity and capital resources:
Working capital, current assets less current liabilities, has decreased
by $550,274 since the end of 1996. The decrease in working capital was
expected as funds were used to build new store sites plus the increased
requirements for inventory and equipment for these sites. The funding for
these purchases has come from the issuance of additional stock, an increase in
outstanding debt, less cash used in operations.
The Company has nearly completed its current expansion program and it is
expected that current funds on hand plus the income tax refund are expected to
provide the immediate capital requirements of the expansion. Management
believes that additional funds may be required to sustain its operations
through the end of its expansion period and the time frame required for the
new stores to reach their anticipated volumes. Management is currently
discussing its requirements with its lenders to procure such financing. There
can be no assurance that such financing will be available. If the Company is
unable to satisfy such cash requirements, the Company could be required to
adopt one or more alternatives, such as reducing or delaying capital
expenditures, restructuring indebtedness, or selling assets.
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
(5)
<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 14th day of May 1997.
LUCOR, INC.
/s/ Stephen P. Conway
________________________
Stephen P. Conway
Chairman, Chief Executive Officer,
and Director
/s/ Kendall A. Carr
________________________
Kendall A. Carr
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SEC FORM-Q
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,154,808
<SECURITIES> 0
<RECEIVABLES> 533,528
<ALLOWANCES> 34,245
<INVENTORY> 2,106,264
<CURRENT-ASSETS> 4,859,057
<PP&E> 26,646,919
<DEPRECIATION> 3,533,808
<TOTAL-ASSETS> 32,614,020
<CURRENT-LIABILITIES> 5,531,250
<BONDS> 0
0
2,000,000
<COMMON> 56,928
<OTHER-SE> 8,794,384
<TOTAL-LIABILITY-AND-EQUITY> 32,614,020
<SALES> 10,018,378
<TOTAL-REVENUES> 10,018,378
<CGS> 2,309,933
<TOTAL-COSTS> 7,915,106
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 356,537
<INCOME-PRETAX> (563,198)
<INCOME-TAX> (202,781)
<INCOME-CONTINUING> (360,417)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (360,417)
<EPS-PRIMARY> (0.140)
<EPS-DILUTED> (0.140)
</TABLE>
