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, 2000
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, 2000
Class A Common Stock, par value $.02 per share
Shares Outstanding: 2,333,133
Class B Common Stock, par value $.02 per share
Shares Outstanding: 502,155
<PAGE>
LUCOR, INC.
INDEX
PART I FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Consolidated Balance Sheets
March 31, 2000 (unaudited) and
December 31, 1999 1
Unaudited Consolidated Statements of Loss
Three Months Ended March 31, 2000 and March
31, 1999 2
Unaudited Consolidated Statements of Cash Flows
Three Months Ended March 31, 2000 and
March 31, 1999 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 6
Item 3. Defaults Upon Senior Securities 6
Item 4. Submission of Matters to a Vote of
Security Holders 6
Item 5. Other Information 6
Item 6. Exhibits and Reports on Form 8-K 6
<PAGE>
LUCOR, INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Unaudited Audited
ASSETS 31-March-00 31-December-99
-------------- -----------------
Current assets:
Cash $ 5,142,985 $ 7,097,115
Accounts receivable 1,414,528 1,468,669
Inventory 4,665,684 4,885,220
Prepaid charges 628,322 683,677
Income tax receivable 31,579 --
----------- -----------
Total current assets 11,883,098 14,134,681
----------- -----------
Property, plant & equipment, net
of accumulated depreciation 34,740,450 33,419,225
----------- -----------
Other assets:
Goodwill, net of accumulated
amortization 21,717,672 21,956,315
Franchise and operating rights,
net of accumulated amortization 8,308,390 8,385,966
Leasehold rights, licenses,
application, area development
and organization costs, net
of accumulated amortization 4,225,728 4,285,748
Other assets 142,710 160,093
----------- -----------
Total other assets 34,394,500 34,788,122
----------- -----------
Total assets $81,018,048 $82,342,028
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long term debt $ 3,164,075 $ 3,136,090
Current portion of deferred
revenue 200,000 200,000
Accounts payable 5,359,965 5,428,011
Income tax payable 5,749 43,002
Accrued expenses 5,424,713 5,927,936
Preferred dividend payable -- 35,000
----------- -----------
Total current liabilities 14,154,502 14,770,039
----------- -----------
Long term debt, net of
current portion 59,709,386 60,178,661
Deferred gain 89,342 90,348
Deferred revenue and other long-
term liabilities 1,982,996 2,067,902
Deferred taxes 150,000 150,000
----------- -----------
Total long term liabilities 61,931,724 62,486,911
----------- -----------
Stockholders' equity 4,931,822 5,085,078
----------- ----------
Total liabilities, equity $81,018,048 $82,342,028
=========== ===========
(1)
<PAGE>
LUCOR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF LOSS
(unaudited)
THREE MOS THREE MOS
ENDED ENDED
31-MAR-00 31-MAR-99
----------- -----------
$25,709,510 $14,794,700
Cost of sales 5,855,020 3,262,580
----------- -----------
Gross profit 19,854,490 11,532,120
----------- -----------
Costs and expenses:
Direct 9,821,920 5,392,782
Operating 4,886,826 3,016,874
Depreciation and amortization 932,526 598,730
Selling, general, and
administrative 3,053,109 2,053,243
----------- -----------
18,694,381 11,061,629
----------- -----------
Income from operations 1,160,109 470,491
----------- -----------
Other income 161,590 56,592
Interest expense (1,409,830) (735,024)
----------- -----------
Loss before provision
for income taxes (88,131) (207,941)
Income tax expense 33,500 --
----------- -----------
Net loss (121,631) (207,941)
Preferred dividend ( 35,000) ( 35,000)
----------- -----------
Loss available to
common shareholders ($ 156,631) ($ 242,941)
========== ==========
Weighted average number of
shares outstanding -
basic and diluted 2,834,685 2,823,788
========== ==========
Basic and diluted loss available
to common shareholders per
common share outstanding ($ 0.06) ($ 0.09)
========== ==========
(2)
<PAGE>
LUCOR, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended
(unaudited)
31-Mar-00 31-Mar-99
----------- -----------
Cash flow from operations:
Net loss $ (121,631) $ (207,941)
Adjustments to reconcile net
loss to net cash provided
by operating activities:
Gain on sale of property
and equipment 320 --
Depreciation and amortization
of property and equipment 605,772 367,296
Amortization of intangible assets 326,754 231,434
Stock issued as directors' fees 3,375 --
Changes in assets and liabilities:
Decrease(increase)in accounts
receivable 54,141 (269,093)
Decrease (increase) in inventories 219,536 (219,345)
Decrease (increase) in prepaid
expenses 55,355 (210,981)
Increase in income tax receivable (31,579) (56,020)
Increase (decrease) in accounts
payable and accrued expenses (643,522) 1,498,700
----------- -----------
Net cash provided by operating
activities 468,521 1,134,050
----------- -----------
Cash flow from investing activities:
Purchase of property and equipment (1,219,746) (171,843)
Net increase in construction
in progress (707,571) (1,225,999)
Acquisition of additional service
centers -- (339,019)
Decrease in deferred gain (1,006) (687)
Decrease (increase) in intangible
assets 66,868 (56,559)
----------- -----------
Net cash used in
investing activities (1,861,455) (1,794,107)
----------- -----------
Cash flows from financing activities:
Repayments of debt and obligations under
capital leases (441,290) (170,358)
Proceeds from borrowings -- 1,946,264
Dividend paid (35,000) (35,000)
Decrease in other long-term
liabilities (84,906) --
----------- -----------
Net cash provided from (used by)
financing activities (561,196) 1,740,906
----------- -----------
Increase (decrease) in cash (1,954,130) 1,080,849
Cash at beginning of period 7,097,115 3,269,859
----------- -----------
Cash at end of period $ 5,142,985 $ 4,350,708
============ =============
(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
Raleigh-Durham, North Carolina, Cincinnati, Ohio (including northern
Kentucky), Pittsburgh, Pennsylvania, Dayton, Ohio, Toledo, Ohio, Lansing,
Michigan, Nashville, Tennessee, Richmond/Tidewater, Virginia and Atlanta,
Georgia areas. These service centers provide rapid lubrication, oil changes
and related services for automobiles, light duty trucks and other vehicles.
As of March 31, 2000 the Company had 216 centers in operation; as of December
31, 1999, 219 centers were in operation; and as of March 31, 1999 142 centers
were in operation.
The financial information as of March 31, 2000 and March 31, 1999
included herein is unaudited. However, such information reflects all
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, 1999 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, 1999.
Due to disappointing revenue and profits, the Company made the decision
in 1998 to close twelve of its Sears service centers. As a result of this
decision, during the fourth quarter of 1998, the Company took a charge of
$1,383,475. The Company closed six of these service centers during the first
quarter of 1999, five additional service centers during the second quarter of
1999, and one service center during February 2000.
The Company made the decision in 1999 to close nine additional service
centers, four of which are located in Sears service centers. As a result of
this decision, during the fourth quarter of 1999, the Company took a charge of
$276,007. The Company closed four of these service centers during the fourth
quarter of 1999 and has closed two service centers during the first quarter of
2000. The remaining three service centers are scheduled to close by December
31, 2000.
Certain statements in this Form 10-Q "Management's Discussion and
Analysis of Financial Condition and Results of Operations" constitute "forward
looking statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. Such forward looking statements involve known and unknown
risks, uncertainties and other factors which may cause the actual results,
performance or achievements of the Company to be materially different from any
future results, performance or achievements expressed or implied by such
forward looking statements. Such factors include, among others, the
following: competition, success of operating initiative, advertising and
promotional efforts, adverse publicity, acceptance of new product offerings,
availability, locations and terms of sites for store development, changes in
business strategy or development plan, availability and terms of capital,
labor and employee benefit costs, changes in government regulation, regional
weather conditions, and other factors specifically referred to in this 10-Q.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FIRST QUARTER ENDED MARCH 31, 2000 AND MARCH 31, 1999
Consolidated net sales for the first three months of 2000 rose 73.8%
when compared to the first three months of 1999. This sales growth reflects
the increase in the number of stores operated by the Company, due to the 1999
acquisition of seventy-three stores in the Nashville, Tennessee, Dayton, Ohio,
Cincinnati, Ohio, Lansing, Michigan and Atlanta Georgia areas and the
acquisition of twenty-four stores in the Raleigh-Durham area. During 1999, the
Company also built an additional five service centers. Same store sales,
comparing the first quarter of 2000 to the same period in 1999, were up 6.2%.
In 2000, the North Carolina and Virginia areas experienced a severe snowstorm
which caused the closure or curtailment of activity at these service centers
for up to a week. The Company estimates that it lost $850,000 in sales due to
the storm.
Cost of sales as a percent of sales increased 0.7% from 22.1% to 22.8%
for the first three months ended March 31, 1999 versus March 31, 2000. The
increase in the cost of sales was primarily the result of three price
increases in the price of oil over the past six months.
Direct costs increased as a percent of sales from 36.5% for the first
quarter of 1999 to 38.2% for the first quarter of 2000. Other direct expenses
accounted for a majority of this increase, representing an increase of 1.8% of
sales. This increase is the result of increases in repairs and maintenance
cost. Direct labor expense increased by 0.5%.
Operating costs decreased as a percent of sales from 20.4% for the first
quarter of 1999 to 19.0% for the first quarter of 2000. Actual cost increased
by $1,869,952 for the three months ended March 31, 2000 over the same period
in 1999. This decrease is the result of lower rental and management fees as a
percentage of sales for acquired operations and increased revenue per store
for other operations.
Depreciation and amortization charges increased $333,796 for the first
quarter of 2000 in comparison to the first quarter of 1999. Depreciation and
amortization expense increased due to the acquisitions of service centers as
noted above.
Selling, general and administrative expenses increased 48.7% or $999,866
over the comparable three-month period of 1999. As a percentage of net sales,
SG&A expenses decreased from 13.9% to 11.9% comparing the first quarter of
1999 to the first quarter of 2000. Administrative staffing increased from the
previous year due to increased regional and corporate requirements associated
with supporting the additional service centers acquired or built during 1999.
Marketing costs increased by $548,338 when comparing the first three months of
1999 with the first three months of 2000.
Other income increased from $56,592 to $161,590 for the first three
months. Other income increased due to interest earned on larger amounts of
cash invested and higher commissions on vending sales due to the larger number
of stores.
Interest expense increased by $674,806 for the three-month period ended
March 31, 2000 compared to the three months ended March 31, 1999. The
increase reflects additional borrowing required by the Company associated with
the additional service centers acquired or built during 1999. A charge for
dividend payments due on the Company's preferred stock was made for each
period.
An income tax charge of $33,500 was made for the first quarter of the
year reflecting state income taxes estimated to be payable. The Company has a
federal net operating loss carryforward and, therefore, has not made a federal
income tax charge for the year.
<PAGE>
Liquidity and capital resources:
Since the end of 1999, working capital (current assets less current
liabilities) decreased by $1,636,046. A majority of the capital decrease has
resulted from the use of funds in capital improvements made to stores acquired
in 1999 and to build new service centers. Cash flow from operations amounted
to $468,521. The positive cash flow resulted from the loss after income tax
adding back the non-cash items of depreciation and amortization, plus a
decrease in accounts receivable and inventories and offset by a decrease in
accounts payable.
PART II - Other Information
Item 1. Legal Proceedings: The Company is involved in lawsuits and claims
arising in the normal course of business. Although the outcome of these
lawsuits and claims are uncertain, management believes that these lawsuits and
claims are adequately covered by insurance or they will not (singly or in the
aggregate) have a material adverse affect on the Company's business, financial
condition, or operations. Those lawsuits and claims against the Company which
have not been resolved and which can be estimated and are probable to occur,
have been accounted for in the Company's financial statements.
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: The Company filed a report on Form
8-K on January 3, 2000 reporting the acquisition of 27 service centers from
Quick 10 Corporation. An amendment to the Form 8-K was filed on March 3,
2000.
<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 15th day of May 2000.
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
<PAGE>
<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> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 5,142,985
<SECURITIES> 0
<RECEIVABLES> 1,461,699
<ALLOWANCES> 47,171
<INVENTORY> 4,665,684
<CURRENT-ASSETS> 11,883,098
<PP&E> 42,420,302
<DEPRECIATION> 7,679,852
<TOTAL-ASSETS> 81,018,048
<CURRENT-LIABILITIES> 14,154,502
<BONDS> 0
0
0
<COMMON> 56,705
<OTHER-SE> 4,875,117
<TOTAL-LIABILITY-AND-EQUITY> 81,018,048
<SALES> 25,709,510
<TOTAL-REVENUES> 25,709,510
<CGS> 5,855,020
<TOTAL-COSTS> 18,694,381
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,409,830
<INCOME-PRETAX> (88,131)
<INCOME-TAX> 33,500
<INCOME-CONTINUING> (121,631)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (121,631)
<EPS-BASIC> (.06)
<EPS-DILUTED> (.06)
</TABLE>
