Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One) Form 10-Q
[X]QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2010
[ ]TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
ACT
For the transition period from to
Commission file number 0-1937
OAKRIDGE HOLDINGS, INC.
(Exact name of Registrant as specified in its charter)
MINNESOTA 41-0843268
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification Number)
400 W Ontario St., Chicago, Il, 60654
(Address of principal executive offices) (Zip Code)
(Issuer's telephone number) (312) 505-9267
_________________________________________________________________
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the
past 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
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any,
every Interactive Date File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (232.405 of this chapter)
during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files.)
{ }Yes { }No
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). { }Yes {X}No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
1,431,503 shares as of the date of this report
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer,
or a smaller reporting company. See the definitions of "large
accelerated filer," "accelerated filer" and "smaller reporting
company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer { } Accelerated filer { }
Non-accelerated filer { } Smaller reporting company {X}
(Do not check if a smaller reporting company)
OAKRIDGE HOLDINGS, INC.
FORM 10-Q
For the quarter ended December 31, 2010
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
ITEM 1. Condensed Consolidated Financial Statements:
(a) Condensed Consolidated Balance Sheets as of
December 31, 2010 (unaudited) and June 30, 2010 (audited)
(b) Condensed Consolidated Statements of Operations for the three
months ended December 31, 2010 and 2009 (unaudited) and six
months ended December 31, 2010 and 2009 (unaudited)
(c) Condensed Consolidated Statements of Cash Flows for the six
months ended December 31, 2010 and 2009 (unaudited)
(d) Notes to Condensed Consolidated Financial Statements
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
ITEM 4. Controls and Procedures
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
ITEM 1A. Risk Factors
ITEM 2-3. Not Applicable
ITEM 4. [Removed and Reserved]
ITEM 5. Other Information
ITEM 6. Exhibits
SIGNATURES
PART I - FINANCIAL INFORMATION FORM 10-Q
ITEM 1 - FINANCIAL STATEMENTS
OAKRIDGE HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
December 31,2010 June 30,2010
(Unaudited) (Audited)
ASSETS _________________ ____________
Current assets:
Cash & cash equivalents $386,925 $372,797
Restricted cash 89,596 89,320
Receivables 2,284,207 2,236,804
Inventories:
Production 6,463,821 6,647,308
Cemetery, mausoleum space, markers
and related 618,043 607,435
Other current assets 91,934 104,942
Deferred income taxes 195,000 312,000
----------- -----------
Total current assets 10,129,526 10,370,606
----------- -----------
Property, plant and equipment:
Property, plant and equipment,
at cost 6,630,972 6,506,136
Less accumulated depreciation 4,442,694 4,312,179
----------- -----------
Property, plant and equipment, net 2,188,278 2,193,957
----------- -----------
Other assets:
Preneed trust investments 1,977,140 2,023,358
Cemetery perpetual care trusts 5,230,050 4,962,756
Deferred income taxes 78,000 78,000
Deferred financing costs 57,427 61,299
Other 16,378 11,033
----------- -----------
Total other assets 7,358,995 7,136,446
----------- -----------
Total assets $19,676,799 $19,701,009
=========== ===========
See accompanying notes to the condensed
consolidated financial statements
PART I - FINANCIAL INFORMATION FORM 10-Q
ITEM 1 - FINANCIAL STATEMENTS
OAKRIDGE HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
December 31,2010 June 30,2010
(Unaudited) (Audited)
_____________ _____________
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Lines of credit - bank $1,531,443 $1,331,443
Trade accounts payable 1,545,377 1,249,716
Due to finance company 745,831 1,227,231
Accrued liabilities 973,324 979,818
Deferred revenue 1,578,885 1,886,908
Short-term notes payable - officers 300,000 300,000
Short-term notes payable - others 50,000 80,000
Current maturities of long-term debt 192,235 696,321
----------- -----------
Total current liabilities 6,917,095 7,751,437
----------- -----------
Long-term liabilities:
Long-term debt, net of current
maturities 3,908,588 3,496,865
Non-controlling interest in pre-need
care trust investments 1,977,140 2,023,358
----------- -----------
Total long-term liabilities 5,885,728 5,520,223
----------- -----------
Total liabilities 12,802,823 13,271,660
----------- -----------
Non-controlling interest in
trust investments 5,230,050 4,962,756
----------- -----------
Stockholders' Equity:
Common stock 143,151 143,151
Additional paid-in-capital 2,028,975 2,028,975
Accumulated deficit (528,200) (705,533)
----------- -----------
Total stockholders' equity 1,643,926 1,466,593
----------- -----------
Total liabilities & stockholder's
equity $19,676,799 $19,701,009
=========== ===========
See accompanying notes to the condensed
consolidated financial statements
PART I - FINANCIAL INFORMATION FORM 10-Q
ITEM 1 - FINANCIAL STATEMENTS
OAKRIDGE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended December 31, Six Months Ended December 31,
2010 2009 2010 2009
__________ __________ __________ __________
Revenue, net:
Cemetery $734,528 $784,421 $1,556,076 $1,621,926
Aviation 3,802,964 2,911,604 6,967,428 5,886,504
Interest-Care Funds 13,582 28,644 31,937 51,745
Other 1,320 (627) 1,784 (77)
---------- ---------- ---------- ----------
Total revenue 4,552,394 3,724,042 8,557,225 7,560,098
---------- ---------- ---------- ----------
Operating expenses:
Cost of cemetery sales 498,251 453,815 965,284 968,413
Cost of aviation sales 3,367,999 2,630,886 6,212,623 5,292,207
Sales and marketing 75,021 113,095 229,982 231,328
General and administrative 289,561 237,033 615,397 571,104
---------- ---------- ---------- ----------
Total operating expenses 4,230,832 3,434,829 8,023,286 7,063,052
---------- ---------- ---------- ----------
Operating income 321,562 289,213 533,939 497,046
Other income (expense)
Interest income 2,155 3,289 3,986 20,546
Interest expense (118,972) (110,028) (243,592) (225,286)
---------- ---------- ---------- ----------
Total other expense (116,817) (106,739) (239,606) (204,740)
Income from continuing operations
before income taxes 204,745 182,474 294,333 292,306
Provision for income taxes 81,000 67,000 117,000 103,000
---------- ---------- ---------- ----------
Net income $123,745 $115,474 $177,333 $189,306
========== ========== ========== ==========
Net income per common share - basic $.086 $.081 $.124 $.132
========== ========== ========== ==========
Weighted average number of
common shares outstanding -
basic 1,431,503 1,431,503 1,431,503 1,431,503
========== ========== ========== ==========
Net income per common
shares - diluted $.054 $.064 $.082 $.106
========== ========== ========== ==========
Weighted average number of
common shares outstanding -
diluted 2,527,217 1,992,614 2,514,290 1,992,614
========== ========== ========== ==========
See accompanying notes to the
condensed consolidated financial statements
PART I - FINANCIAL INFORMATION FORM 10-Q
ITEM 1 - FINANCIAL STATEMENTS
OAKRIDGE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended December 31, 2010 2009
____________ ___________
Cash flows from operating activities:
Net income $177,333 $189,306
Adjustments to reconcile net income to
cash flows from operating activities:
Depreciation and amortization 134,388 120,914
Deferred income taxes 117,000 103,000
Accounts receivable (47,403) 197,618
Inventories 172,879 (1,074,881)
Other assets 7,663 (17,379)
Accounts payable and due to
finance company (185,739) 728,090
Gains on non-controlling
trust investments (49,790) (37,476)
Deferred revenue (308,023) (177,216)
Accrued liabilities (6,495) 145,305
---------- ----------
Net cash provided in operating activities 11,813 177,281
---------- ----------
Cash flows used in investing activities:
Purchases of property and equipment (124,836) (2,850)
Purchases of non-controlling
investments in trusts (304,147) (55,288)
Sales of non-controlling
investments in trusts 353,937 92,764
Restricted cash (276) (78,476)
---------- ----------
Net cash used by investing activities (75,322) (43,850)
---------- ----------
Cash flows from (used in) financing
activities:
Proceeds from issuance of debt 50,000 -
Net borrowings (repayments) on lines
of credit 200,000 (9,242)
Proceeds from short-term notes
payable - officers - 50,000
Payments on short-term debt (30,000) -
Principal payments on long-term debt (142,363) (116,687)
---------- ----------
Net cash flows from (used in)
financing activities 77,637 (75,929)
---------- ----------
Net change in cash: 14,128 57,502
Cash:
Beginning of year 372,797 345,153
---------- ----------
End of period $386,925 $402,655
========== ==========
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $243,592 $225,286
========== ==========
See accompanying notes to the condensed
consolidated financial statements
PART I - FINANCIAL INFORMATION FORM 10-Q
ITEM 1 - FINANCIAL STATEMENTS
OAKRIDGE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying Condensed Consolidated Financial Statements include the
accounts of Oakridge Holdings, Inc. (the "Company") and its wholly owned
subsidiaries. All significant intercompany transactions and balances have been
eliminated. In the opinion of management, the accompanying unaudited condensed
consolidated financial statements include all adjustments, consisting only of
normal recurring adjustments, necessary to present such information fairly.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to Securities and Exchange Commission
rules and regulations. These condensed consolidated financial statements should
be read in conjunction with the consolidated financial statements and related
notes included in the Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 2010. Operating results for the six-month period ended
December 31, 2010 may not necessarily be indicative of the results to be
expected for any other interim period or for the full year.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period. The
most significant estimates in the financial statements include but are not
limited to accounts receivable, depreciation and accruals. Actual results
could differ from those estimates.
2. EARNINGS PER COMMON SHARE
Earnings per Common Share (EPS) are presented on both a basic and diluted
basis in accordance with the provisions of Accounting Standards Codification
Topic 260 - Earnings per Share. Basic EPS is computed by dividing net income
by the weighted average number of shares of common stock outstanding during
the period. Diluted EPS reflects the maximum dilution that would result after
giving effect to dilutive stock options and convertible debentures.
The following table presents the computation of basic and diluted EPS for six
and three months ended December 31, 2010:
Six Months Ended December 31, 2010 2009
-------------------------------------- --------- ----------
Income from continuing operations $177,333 $189,306
Average shares of common stock
outstanding used to compute basic
earnings per common share 1,431,503 1,431,503
Additional common shares to be issued
assuming exercise of stock options,
and conversion of convertible
debentures 1,082,787 561,111
Additional income from continuing
operations, assuming conversion
of convertible debentures at the
beginning of the period 28,088 22,725
Shares used to compute dilutive effect
of stock options and convertible
debentures 2,514,290 1,992,614
Basic earnings per common share
from continuing operations $.124 $.132
Diluted earnings per common share from
continuing operations $.082 $.106
Three Months Ended December 31, 2010 2009
-------------------------------------- --------- ----------
Income from continuing operations $123,745 $115,474
Average shares of common stock
outstanding used to compute basic
earnings per common share 1,431,503 1,431,503
Additional common shares to be issued
assuming exercise of stock options,
and conversion of convertible
debentures 1,095,714 561,111
Additional income from continuing
operations, assuming conversion
of convertible debentures at the
beginning of the period 12,363 11,363
Shares used to compute dilutive effect
of stock options and convertible
debentures 2,527,217 1,992,614
Basic earnings per common share
from continuing operations $.086 $.081
Diluted earnings per common share from
continuing operations $.054 $.064
3. COMPREHENSIVE INCOME
The Company has no significant components of other comprehensive
income and accordingly, comprehensive income (loss) is the same as net
income (loss) for all periods.
4. OPERATING SEGMENTS AND RELATED DISCLOSURES
The Company's operations are classified into two principal industry
segments: cemeteries and aviation ground supportequipment.
The Company evaluates the performance of its segments and allocates resources
to them based primarily on operating income.
The table below summarizes information about reported segments for the three
months and six months ended December 31, 2010 and 2009:
SIX MONTHS ENDED
DECEMBER 31, 2010:
Aviation Cemeteries Corporate Consolidation
Ground
Support
Equipment
Revenues $6,967,428 $1,588,013 $1,784 $8,557,225
Depreciation 54,373 78,000 2,015 134,388
Gross Margin 754,805 622,729 1,784 1,379,318
Selling Expenses 87,193 142,789 - 229,982
General & Administrative
Expenses 135,471 281,093 198,833 615,397
Interest Expense 201,674 349 41,569 243,592
Interest Income 211 3,775 - 3,986
Income (loss) before Taxes 330,678 202,273 (238,618) 294,333
Capital Expenditures 60,627 56,019 8,190 124,836
Segment assets at 12/31/10:
Inventory 6,463,821 618,043 - 7,081,864
Property, Plant &
Equipment 1,387,049 791,154 10,075 2,188,278
SIX MONTHS ENDED
DECEMBER 31, 2009:
Aviation Cemeteries Corporate Consolidation
Ground
Support
Equipment
Revenues $5,886,504 $1,673,671 $(77) $7,560,098
Depreciation 44,672 76,000 242 120,914
Gross Margin 594,297 705,258 (77) 1,299,478
Selling Expenses 92,114 139,214 - 231,328
General & Administrative
Expenses 133,293 308,254 129,557 571,104
Interest Expense 181,167 1,595 42,524 225,286
Interest Income 2 20,544 - 20,546
Income (loss) before Taxes 187,725 276,739 (172,158) 292,306
Capital Expenditures - 2,850 - 2,850
Segment assets:
Inventory 7,391,681 628,963 - 8,020,644
Property, Plant &
Equipment 1,294,617 839,993 243 2,134,853
THREE MONTHS ENDED
DECEMBER 31, 2010:
Aviation Cemeteries Corporate Consolidation
Ground
Support
Equipment
Revenues $3,802,964 $748,110 $1,320 $4,552,394
Depreciation and amortization 28,173 39,000 1,515 68,688
Gross Margin 434,965 249,859 1,320 686,144
Selling Expenses 25,027 49,994 - 75,021
General & Administrative
Expenses 65,866 117,899 105,796 289,561
Interest Expense 99,494 (1,954) 21,432 118,972
Interest Income 48 2,107 - 2,155
Income (loss) before Taxes 244,626 86,027 (125,908) 204,745
Capital Expenditures 50,510 34,664 2,550 87,724
THREE MONTHS ENDED
DECEMBER 31, 2009:
Aviation Cemeteries Corporate Consolidation
Ground
Support
Equipment
Revenues $2,911,604 $813,065 $(627) $3,724,042
Depreciation 24,100 38,000 121 62,221
Gross Margin 280,718 359,250 (627) 639,341
Selling Expenses 46,777 66,318 - 113,095
General & Administrative
Expenses 46,422 183,978 6,633 237,033
Interest Expense 87,370 1,148 21,510 110,028
Interest Income 2 3,287 - 3,289
Income (loss) before Taxes 111,094 100,150 (28,770) 182,474
Capital Expenditures - 2,850 - 2,850
5. FAIR VALUE MEASUREMENTS
The Company defines fair value as the price that would be received to sell an
asset or paid to transfer a liability between market participants at a
measurement date.
General accepted accounting principles describes a fair value hierarchy that
includes three levels or inputs to be used to measure fair value. The three
levels are defined as follows as interpreted for use by the Company.
Level 1 - Inputs into fair value methodology are based on quoted market prices
in active markets.
Level 2 - Inputs into the fair value methodology are based on quoted prices
for similar items, broker/dealer quotes, or models using market interest rates
or yield curves. The inputs are generally seen as observable in active markets
for similar items for the asset or liability, either directly or indirectly,
for substantially the same term of the financial instrument.
Level 3 - Inputs into fair value methodology are unobservable and significant
to the fair value measurement (primarily or alternative type investments, which
include but are not limited to limited partnership interests, hedges, private
equity, real estate, and natural resource funds). Often, these types of
investments are valued based on historical cost and then adjusted by shared
earnings of a partnership or cooperative, which can require some varying degree
of judgment.
Information regarding assets (principally cash and investments) and liabilities
measured at fair value on a recurring basis as of December 31, 2010 and
June 30, 2010 are as follows:
Recurring Fair Value Measurements using
Level I Level II Level III Total Fair Value
----------------------------------------------------
December 31, 2010
Assets at fair value:
Cemetery perpetual care
and pre-need trust
investments $ - $7,207,190 $ - $7,207,190
----------------------------------------------------
Total assets at
fair value $ - $7,207,190 $ - $7,207,190
====================================================
Liabilities at fair value:
Non-controlling interest
in pre-need trust
investments $ - $1,977,140 $ - $1,977,140
====================================================
Recurring Fair Value Measurements using
Level I Level II Level III Total Fair Value
----------------------------------------------------
June 30, 2010
Assets at fair value:
Cemetery perpetual care
and pre-need trust
investments $ - $6,986,114 $ - $6,986,114
----------------------------------------------------
Total assets at
fair value $ - $6,986,114 $ - $6,986,114
====================================================
Liabilities at fair value:
Non-controlling interest
in pre-need trust
investments $ - $2,023,358 $ - $2,023,358
====================================================
6. LONG-TERM DEBT
On July 1, 2010, the Company refinanced existing subordinated convertible
debentures which had a maturity date of July 1, 2010 with new subordinated
convertible debentures. The new debentures mature on July 1, 2012, bear
interest at an annual rate of 9% payable quarterly and are convertible into
the Company's common stock at any time at a rate of $.50 per share.
7. SUBSEQUENT EVENTS
On February 7, 2011, the Company issued to its CEO/President $75,000 of
unsecured convertible subordinated debentures bearing interest at 9% due
quarterly, convertible into one common share for each $.50 of principal,
maturing on July 1, 2012.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors which have affected the Company's financial position and operating
results during the periods included in the accompanying condensed consolidated
financial statements.
Management's discussion and analysis of financial condition and results of
operations, as well as other portions of this document, include certain
forward-looking statements about the Company's business and products, revenues,
expenditures and operating and capital requirements. From time to time,
information provided by the Company or statements made by its directors,
officers or employees may contain "forward-looking" information subject to
numerous risks and uncertainties. Any statements made herein that are not
statements of historical fact are forward-looking statements including, but not
limited to, statements concerning the characteristics and growth of the
Company's markets and customers, the Company's objectives and plans for its
future operations and products and the Company's expected liquidity and
capital resources. Such forward-looking statements are based on a number of
assumptions and involve a number of risks and uncertainties, and, accordingly,
actual results could differ materially for those discussed. Among the factors
that could cause actual results to differ materially from those projected in
any forward-looking statement are as follows: the effect of business and
economic conditions; conditions in the industries in which the Company
operates, particularly the airline industry; the Company's ability to win
government contracts; the impact of competitive products and continued pressure
on prices realized by the Company for its products; constraints on supplies of
raw material used in manufacturing certain of the Company's products or
services provided; capacity constraints limiting the production of certain
products; changes in anticipated operating results, credit availability, equity
market conditions or the Company's debt levels may further enhance or inhibit
the Company's ability to maintain or raise appropriate levels of cash;
requirements for unseen maintenance, repairs or capital asset acquisitions;
difficulties or delays in the development, production, testing, and marketing
of products; market acceptance issues, including the failure of products to
generate anticipated sales levels; difficulties in manufacturing process and
in realizing related cost savings and other benefits; the effects of changes in
trade, monetary and fiscal policies, laws and regulations; foreign exchange
rates and fluctuations in those rates; the cost and effects of legal and
administrative proceedings, including environmental proceedings; and the risk
factors reported from time to time in the Company's SEC reports. The Company
undertakes no obligation to update any forward-looking statement as a result
of future events or developments.
FINANCIAL CONDITION AND LIQUIDITY
The Company's liquidity needs arise from its debt service, working capital and
capital expenditures. The Company has historically funded its liquidity needs
with proceeds from equity contributions, bank borrowing, short term notes from
officers, cash flow from operations and the offering of its subordinated
debentures. For the first six months of fiscal year 2011, the Company had an
increase in cash of $14,128 compared to a cash increase in the same period in
fiscal year 2010 of $57,502. As of December 31, 2010, the Company had no cash
equivalents.
During the six month period ended December 31, 2010, the Company recorded net
income after taxes of $177,333. The Company's net cash provided from operating
activities was $11,813 in the first six months of fiscal year 2011 compared to
net cash provided from operating activities of $177,281 in the same period in
fiscal year 2010. The decrease provided from operating activities was
primarily due to reduction in accounts payable and deferred revenue. During
the first six months of fiscal 2011, cash used by investing activities was
$75,322 primarily due to purchase of equipment and net cash from by financing
activities was $77,637 primarily due to increased debt to banks. The remaining
increases and decreases in the components of the Company's financial position
reflect normal operating activity.
The Company had working capital of $3,212,431 at December 31, 2010, an increase
of $593,261 from June 30, 2010. The increase in working capital was primarily
due to the Company's debentures being refinanced and becoming long term and due
July 1, 2012. As of December 31, 2010, the Company's current assets amounted
to $10,129,526 and current liabilities were $6,917,095, resulting in a current
ratio of 1.46 to 1 at December 31, 2010. Long-term debt was $3,908,588 and
equity was $1,643,926 at December 31, 2010.
Capital expenditures for the first six months of fiscal year 2011 were $124,836
compared with $2,850 for the same period in fiscal year 2010. The increase in
investments was the result of the Company's increase in cash flow and sales
allowing it to make previously deferred investments. The Company anticipates
that it will spend approximately $20,000 on capital expenditures during the
final two quarters of fiscal year 2011 for technical manuals for aviation
ground support operations and $10,000 for repairs on the mausoleums. The
Company plans to finance these capital expenditures primarily through cash
flows provided by operations.
The Company has three lines of credit facilities. As of December 31, 2010,
$1,531,443 of aggregate borrowing capacity of $1,850,000 was outstanding
leaving available credit of $318,557.
As indicated above, the Company believes that its financial position, remaining
debt capacity and ability to issue subordinated debentures should enable it to
meet its current and future capital requirements.
INFLATION
Because of the relatively low levels of inflation experienced during the first
half of this fiscal year, and as of December 31, 2010, inflation did not have a
significant effect on the Company's results in the first six months of fiscal
year 2011.
RESULTS OF OPERATIONS
FIRST SIX MONTHS OF FISCAL YEAR 2011 COMPARED
WITH FIRST SIX MONTHS OF FISCAL YEAR 2010
CEMETERY OPERATIONS
Revenue for the six months ended December 31, 2010 was $1,588,013, a decrease
of $85,658, or 5%, when compared to the six months ended December 31, 2009.
The decrease was primarily due to a decrease in sales of cemetery plots of
$29,606, interment fees of $46,500, and mausoleum space of $51,745, whereby
markers increased $95,123 and grave boxes increased $28,396 in comparison to
the prior year's period. Management believes revenue will continue to decrease
because of the economy and discretionary spending.
Cost of sales for the six months ended December 31, 2010 was $965,284, a
decrease of $3,129, or 1%, compared to the six months ended December 31, 2009.
The limited decrease was primarily due to the fixed costs associated with
direct labor. All other costs remained constant with the prior year's period.
It is management's opinion that costs will continue to increase in the future
due to a new law passed in Illinois to oversee cemeteries.
The resulting cemetery gross profit margin was 39% for the first six months of
fiscal year 2011 versus 42% for the corresponding period in fiscal year 2010,
representing a 3% decrease. The decrease was caused by a decrease in sales
volume, whereas most of the cost of goods sold is fixed except for the markers
and grave liners. Customers are selecting sales packages which sell for less
instead of higher price sections in the cemetery.
Selling expenses for the six months ended December 31, 2010 were $142,789, an
increase of $3,575, or 3%, when compared to the six months ended
December 31, 2009. The increase was due to increased costs of health insurance
and hiring of one full time salesman.
General and administrative expenses for the six months ended December 31, 2010,
were $281,093, a decrease of $27,161, or 9%, when compared to the six months
ended December 31, 2009. The decrease was primarily due to a decrease in
professional fees of $34,305. All other costs remained constant with the prior
year's period.
CORPORATE
Revenue for the six months ended December 31, 2010 was immaterial and the
changes related to the increase in stock investment and cash surrender value.
General and administrative expenses for the six months ended December 31, 2010
were $198,833, an increase of $69,726, or 53%, when compared to the six months
ended December 31, 2009. The increase was primarily due to increase in
professional fees for accountants and attorneys due to changes in increased
federal, and state government regulations and new laws.
Interest expense for the six months ended December 31, 2010 was $41,569, a
decrease of $955, or 2%, when compared to the six months ended
December 31, 2009. The decrease is due to reduction of notes payable of
$30,000.
AVIATION GROUND SUPPORT EQUIPMENT OPERATIONS:
Revenue for the six months ended December 31, 2010 was $6,967,428, an increase
of $1,080,924, or 18%, when compared to the six months ended December 31, 2009.
The increase was primarily due to increased new government contracts and
General Services Administration contract in which Stinar is the subcontractor.
Cost of sales as a percentage of sales for the six months ended
December 31, 2010 was 89%, or a decrease of 1%, when compared to the six months
ended December 31, 2009. The decrease in costs of sales as percentage of sales
was primarily due to efficiencies from building the same equipment for the past
six months to allow for efficiencies in direct labor, and increase in sales
prices.
The resulting gross profit margin was 11% for the first six months of fiscal
year 2011 versus 10% for the corresponding period in fiscal year 2010,
representing a $160,508 increase. This increase was primarily due to the
Company being more efficient.
Selling expenses for the six months ended December 31, 2010 were $87,193, a
decrease of $4,921, or 5%, when compared to the six months ended
December 31, 2009. The decrease was primarily due not attending the aviation
ground support European trade show.
General and administrative expenses for the six months ended December 31, 2010,
were $135,471, an increase of $2,178, or 2%, when compared to six months ended
December 31, 2009. The increase was primarily due to allocation of the
President/CEO's salary.
Other expenses, which consist of interest expense and interest income, for the
six months ended December 31, 2010, were a combined expense of $201,463, an
increase of $20,298, or 11%, when compared to the six months ended
December 31, 2009. The increase was due to greater amount of debt.
RESULTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 2010
COMPARED WITH THREE MONTHS ENDED DECEMBER 31, 2009
CEMETERY OPERATIONS:
Revenue for the three months ended December 31, 2010 was $748,110, a decrease
of $64,955, or 8%, when compared to the three months ended December 31, 2009.
The decrease was primarily due to a decrease in all revenue accounts,
specifically, cemetery space ($27,683), overtime ($12,625), vault sealing fees
($6,700), and mausoleum space ($20,400). The Company's management believes the
decrease in revenue is due to the weak economy and customers selecting cemetery
packages at a lower sales price than in the past.
Cost of sales for the three months ended December 31, 2010 was $498,251, an
increase of $44,436, or 10%, when compared to the three months ended
December 31, 2009. The increase was primarily due to increased salaries and
dirt hauling fees.
The resulting cemetery gross profit margin was 33% for the three months ended
December 31, 2009 versus 44% for the corresponding period in the prior fiscal
year, representing an 11% decrease. The decrease was due to a lower volume of
sales whereas most costs are fixed except for the grave liners, markers and
foundations.
Selling expenses for the three months ended December 31, 2010 were $49,994, a
decrease of $16,324, or 25%, when compared to the three-month period ended
December 31, 2009. The decrease was primarily due to lower sales commissions
and related payroll taxes.
General and administrative expenses for the three months ended
December 31, 2010 were $117,899, a decrease of $66,079, or 36%, when compared
to the three months ended December 31, 2009. The decrease was primarily due to
the timing of professional fees expensed in first quarter instead of the
second quarter with all other expenses remaining constant in comparison to the
prior year's period.
CORPORATE:
Revenue for the three months ended December 31, 2010 was immaterial.
General and administrative expenses for the three months ended
December 31, 2010 were $105,796, an increase of $99,163 when compared to the
three months ended December 31, 2009. The increase was primarily due to
increased professional fees from attorneys and accountants due to new
regulations and laws from federal and state governments and timing of the work
itself.
Interest expense for the three months ended December 31, 2010 was $21,432, a
decrease of $78 or 1%, when compared to the three months ended
December 31, 2009. The decrease is immaterial.
AVIATION GROUND SUPPORT OPERATIONS:
Revenues for the three months ended December 31, 2010 were $3,802,964, an
increase of $891,360, or 31%, when compared to the three months ended
December 31, 2009. The increase in revenue was primarily due to increased
government sales.
Cost of sales for the three months ended December 31, 2010, were $3,367,999,
an increase of $737,113, or 28%, when compared to the three months ended
December 31, 2009. The increase was primarily related to the increase in
sales and related costs associated with manufacturing the equipment.
The resulting gross profit margin was 11% for the three months ended
December 31, 2010, compared to gross profit margin of 10% for the
corresponding period in fiscal year 2009. The increase of 1% is due to the
volume of sales and new contracts associated with the period, plus new
supervisors in the plant improving our effeciencies.
Selling expenses for the three months ended December 31, 2010 were $25,027, a
decrease of $21,750, or 46%, when compared to the three months ended
December 31, 2009. The decrease is due to no inside sales commissions.
General and administrative expenses for the three months ended
December 31, 2010 were $65,866, an increase of $19,444, or 42%, when compared
to the three months ended December 31, 2009. The difference is primarily
higher bank charges, consulting fees, and one more full time office employee.
Interest expense for the three months ended December 31, 2010 was $99,494, an
increase of $12,124, or 14%, when compared to the three months ended
December 31, 2009. The increase is primarily due to higher interest rates
being charged on debt.
OFF BALANCE SHEET ARRANGEMENTS
The Company has no off-balance sheet arrangements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCOURSES ABOUT MARKET RISK
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES
An evaluation was carried out under the supervision and with the participation
of the Company's management, including the Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures (as defined in Rule 13a-15(e)
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as
of the end of the period covered by this quarterly report. Based on that
evaluation, the Chief Executive Officer and Chief Financial Officer have
concluded that the Company's disclosure controls and procedures are effective
to ensure that information required to be disclosed by the Company in reports
that it files or submits under the Exchange Act is (i) recorded, processed,
summarized and reported within the time periods specified in SEC rules and
forms and (ii) accumulated and communicated to the Company's management,
including its Chief Executive Officer and Chief Financial Officer, as
appropriate to allow timely decisions regarding required disclosures.
No change in the Company's internal control over financial reporting was
identified in connection with the evaluation required by Rule 13a-15(d) of the
Exchange Act that occurred during the period covered by this quarterly report
and that has materially affected, or is reasonably likely to materially affect,
the Company's internal control over financial reporting.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is from time to time involved in ordinary course
litigation incidental to the conduct of its businesses. The
Company believes that none of its pending litigation will have a
material adverse effect on the Company's businesses, financial
condition or results of operations.
ITEM 1A. RISK FACTORS
Not applicable.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. [Removed and Reserved]
ITEM 5. OTHER INFORMATION
The owners of 794,850 shares of common stock, or 55% of shares outstanding,
were represented at the annual meeting of shareholders on December 17, 2010 at
Faegre & Benson LLP, 2200 Wells Fargo Center, 90 South Seventh Street,
Minneapolis, Minnesota.
Elected as directors of the Company, each receiving the number of votes for,
votes against and abstentions and broker non-votes indicated below, was:
BROKER NON-VOTES/
FOR WITHHELD ABSTENTIONS NAME
671,727 1,855 356,042 Robert C. Harvey
671,742 1,840 356,042 Robert B. Gregor
665,742 7,740 356,042 Hugh McDaniel
665,842 7,740 356,042 Pamela Whitney
671,342 2,240 356,042 Robert Lindman
In addition, the shareholders ratified the appointment of Moquist Throvilson
Kaufmann Kennedy & Pieper LLC as the independent auditors of the Company for
fiscal year 2011. The vote was 1,012,764 in favor; 1,520 against; and 340
abstaining.
ITEM 6. EXHIBITS
The following exhibits are filed as part of this Quarterly Report
on Form 10-Q for the quarterly period ended September 30, 2010:
1.1 Form of 9.00% Convertible Subordinated Debenture
due July 1, 2012 (1)
3(i) Amended and Restated Articles of Incorporation,
as amended (2)
3(ii) Amended and Superseding By-Laws of the Company,
as amended (2)
31 Rule 13a-14(a)/15d-14(a) Certifications
32 Section 1350 Certifications.
(1) Incorporated by reference to the like numbered Exhibit to the
Company's Current Report on Form 8-K filed with the Commission
on November 22, 2010.
(2) Incorporated by reference to the like numbered Exhibit to the
Company's Annual Report on Form 10-KSB for the fiscal year
ended June 30, 1996.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
Oakridge Holdings, Inc.
/s/ Robert C. Harvey
Robert C. Harvey
Chief Executive Officer
Principal Accounting Officer
and Chief Financial Officer
Date: February 11, 2011
INDEX TO EXHIBITS
DESCRIPTION METHOD OF FILING
1.1 Form of 9.00% Convertible (incorporated by
Subordinated Debenture reference)
due July 1, 2012
3(i) Amended and Restated Articles of (incorporated by
Incorporation of the Company reference)
3(ii)Amended and Superseding By-Laws (incorporated by
of the Company, as amended reference)
31 Rule 13a-14(a)/15d-14(a) (filed electronically)
Certifications
32 Section 1350 Certifications (filed electronically
