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 March 31, 2010
Or
[ ]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 WEST ONTARIO STREET, CHICAGO, ILLINOIS 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
{X}Yes { }No
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (Section 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 or 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 March 31, 2010
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
ITEM 1. Condensed Consolidated Financial Statements:
(a) Condensed Consolidated Balance Sheets as of
March 31, 2010 (unaudited) and June 30, 2009
(b) Condensed Consolidated Statements of Operations
for the three months ended March 31, 2010 and 2009
(unaudited) and nine months ended March 31, 2010
and 2009 (unaudited)
(c) Condensed Consolidated Statements of Cash Flows
for the nine months ended March 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. Unregistered Sales of Equity Securities and Use of Proceeds
ITEM 3. Defaults Upon Senior Securities
ITEM 4. (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
ASSETS
March 31,2010 June 30,2009
(Unaudited)
_________________ ____________
<s> <c> <c>
CURRENT ASSETS:
Cash & cash equivalents $375,119 $345,153
Trade receivables, net 2,685,666 2,295,234
Inventories:
Production 6,526,383 6,315,017
Cemetery, mausoleum space,
markers and misc 636,720 630,746
Other current assets 137,861 119,864
Deferred income taxes 232,000 232,000
----------- -----------
Total current assets 10,593,749 9,938,014
----------- -----------
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment,
at cost 6,708,352 6,342,170
Less accumulated depreciation (4,272,589) (4,093,125)
----------- -----------
Property, plant and equipment, net 2,435,763 2,249,045
----------- -----------
OTHER ASSETS:
Restricted cash 78,476 -
Preneed trust investments 1,950,482 2,059,056
Cemetery perpetual care trusts 5,058,422 4,687,816
Deferred income taxes 121,000 265,000
Deferred financing costs 63,235 69,042
Other 6,650 11,431
----------- -----------
Total other assets 7,278,265 7,092,345
----------- -----------
Total assets $20,307,777 $19,279,404
=========== ===========
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 SHEETS
LIABILITIES
March 31,2010 June 30,2009
(Unaudited)
_____________ _____________
<s> <c> <c>
CURRENT LIABILITIES:
Note payable - bank lines of credit $1,320,598 $979,840
Accounts payable 1,412,688 1,274,591
Due to finance company 1,605,514 1,724,900
Accrued liabilities 865,852 875,396
Deferred revenue 1,943,161 1,615,936
Note payable - officers 300,000 250,000
Note payable - others 80,000 80,000
Debentures - officers 505,000 -
Current maturities of long-term debt 220,929 227,012
----------- -----------
Total current liabilities 8,253,742 7,027,675
----------- -----------
LONG-TERM LIABILITIES:
Long-term debt, net of current
maturities 3,497,225 3,668,231
Debentures - officers - 505,000
Non-Controlling interest in pre-need
care trust investments 1,950,482 2,059,056
----------- -----------
Total long-term liabilities 5,447,707 6,232,287
----------- -----------
TOTAL LIABILITIES 13,701,449 13,259,962
----------- -----------
Non-controlling interest in trust
Investments 5,058,422 4,687,816
----------- -----------
SHAREHOLDERS' EQUITY
Common stock 143,151 143,151
Additional paid-in-capital 2,028,975 2,028,975
Accumulated deficit (624,220) (840,500)
----------- -----------
Total stockholders' equity 1,547,906 1,331,626
----------- -----------
Total liabilites and
stockholder's equity $20,307,777 $19,279,404
=========== ===========
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 March 31, Nine Months Ended March 31,
2010 2009 2010 2009
__________ __________ __________ __________
<s> <c> <c> <c> <c>
Revenue, net:
Cemetery $802,312 531,584 $2,424,238 $1,881,243
Aviation 2,716,039 997,188 8,602,543 5,081,856
Interest-Care Funds 14,903 30,493 66,648 89,378
Other 967 (3,920) 890 (10,285)
---------- ---------- ---------- ----------
Total revenue 3,534,221 1,555,345 11,094,319 7,042,192
---------- ---------- ---------- ----------
Operating expenses:
Cost of cemetery sales 450,697 368,814 1,419,110 1,260,582
Cost of aviation sales 2,542,727 1,003,386 7,834,934 4,792,379
Sales and marketing 81,238 97,961 312,566 303,717
General and administrative 290,481 214,791 861,584 823,320
---------- ---------- ---------- ----------
Total operating expenses 3,365,143 1,684,952 10,428,194 7,179,998
---------- ---------- ---------- ----------
Income (loss) from operations 169,078 (129,607) 666,125 (137,806)
Other income (expense):
Interest income 1,282 5,850 21,828 24,288
Interest expense (102,386) (86,303) (327,673) (293,591)
---------- ---------- ---------- ----------
Total other expense (101,104) (80,453) (305,845) (269,303)
---------- ---------- ---------- ----------
Income (loss) before income taxes 67,974 (210,060) 360,280 (407,109)
Income tax provision (benefit) 41,000 (84,000) 144,000 (163,000)
---------- ---------- ---------- ----------
Net income (loss) $26,974 $(126,060) $216,280 $(244,109)
========== ========== ========== ==========
Net income (loss) per common
share - basic $.019 $(.088) $.151 $(.171)
========== ========== ========== ==========
Weighted average number of
common shares - basic 1,431,503 1,431,503 1,431,503 1,431,503
========== ========== ========== ==========
Net income (loss) per common
shares - diluted $.019 $(.088) $.126 $(.171)
========== ========== ========== ==========
Weighted average number of
common shares - diluted 1,992,614 Anti-dilutive 1,992,614 Anti-dilutive
========== ========== ========== ==========
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)
Nine Months Ended March 31, 2010 2009
____________ ___________
<s> <c> <c>
Cash flows from operating activities:
Net income (loss) $216,280 $(244,109)
Adjustments to reconcile net income
(loss) to cash flows from operating
activities:
Depreciation and amortization 185,272 233,141
Deferred income taxes 144,000 (79,000)
Change in accounts receivable (390,432) 1,036,132
Change in inventories (217,340) (2,262,221)
Change in other assets (13,216) (40,697)
Change in accounts payable and due to
finance company 18,711 1,156,201
Gains (losses) on non-controlling
trust investments (4,209) 20,585
Change in deferred revenue 327,225 (19,198)
Change in accrued liabilities (9,544) (156,204)
---------- ----------
Net cash from (used in)operating
activities 256,747 (355,370)
---------- ----------
Cash flows from investing activities:
Purchases of property and equipment (366,183) (96,079)
Payments of lease receivable - 460,200
Increase in restricted cash (78,476) -
Sales of non-controlling investments
in trusts 123,119 95,444
Purchases of non-controlling investments
in trusts (118,910) (116,029)
---------- ----------
Net cash flows from (used in) investing
activities: (440,450) 343,536
---------- ----------
Cash flows from financing activities:
Increase (decrease) in note payable
bank - lines of credit 340,758 459,840
Proceeds from note payabel - officers 50,000 -
Principal payments on long-term debt (177,089) (164,993)
---------- ----------
Net cash flows from financing activities: 213,669 294,847
---------- ----------
Net change in cash and cash equivalents: 29,966 283,013
Cash and cash equivalents:
Beginning of year 345,153 278,202
---------- ----------
End of period $375,119 $561,215
========== ==========
Supplemental disclosure of cash flow information:
Cash paid during the year for interest $327,673 $293,591
========== ==========
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, 2009. Operating results for the nine-month period ended March 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. RECENT ACCOUNTING PRONOUNCEMENTS
In October 2009, the FASB issued Accounting Standards Update ("ASU") 2009-13,
"Revenue Recognition (Topic 605) - Multiple - Deliverable Revenue Arrangments a
consensus of the FASB Emerging Issues Task Force". This guidance establishes a
selling price hierarchy for determining the selling price of a deliverable;
eliminates the residual method of allocation and requires arrangement
consideration to be allocated at the inception of the arrangement to all
deliverables using the relative selling price method; and requires a vendor to
determine its best estimate of selling price in a manner consistent with that
used to determine the selling price of the deliverable on a stand-alone basis.
This guidance also expands the required disclosures related to a vendor's
multiple-deliverable revenue arrangements. The guidance is effective
prospectively for revenue arrangements entered into or materially modified in
fiscal years beginning on or after June 15, 2010. Early adoption is permitted.
The Company does not believe the adoption of this standard will have a material
impact on our consolidated results of operations, financial condition, cash
flows, or disclosures.
In January 2010, the FASB issued ASU 2010-06, "Fair Value Measurements and
Disclosures (Topic 820) - Improving Disclosures about Fair Value Measurements."
This update requires additional disclosure within the roll forward of activity
for assets and liabilities measured at fair value on a recurring basis,
including transfers of assets and liabilities between Level 1 and Level 2 of
the fair value hierarchy and the separate presentation of purchase, sales,
issuances and settlements of assets and liabilities within Level 3 of the fair
value hierarchy. In addition, the update requires enhanced disclosures of the
valuation techniques and inputs used in the fair value measurements within
Levels 2 and 3. The new disclosure requirements are effective for interim and
annual periods beginning after December 15, 2009 except for the disclosure of
purchases, sales, issuances and settlements of Level 3 measurements. Those
disclosures are effective for fiscal years beginning after December 15, 2010.
As ASU 2010-06 only requires enhanced disclosures, the Company does not
expect that the adoption of this update will have a material effect on its
financial statements.
3. EARNINGS PER COMMON SHARE
Earnings per Common Share (EPS) are presented on both a basic and diluted basis.
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 the nine and three months ended March 31:
Nine Months Ended March 31, 2010 2009
- --------------------------------- ------------- -------------
Income (Loss) from continuing $216,280 $(244,109)
operations
Average shares of common stock 1,431,503 1,431,503
outstanding used to compute basic
earnings per common share
Additional common shares to be 561,111 Antidilutive
issued assuming exercise of stock
options, and conversion of
convertible debentures
Additional income from continuing 34,088 Antidilutive
operations, assuming conversion of
convertible debentures at the
beginning of the period
Shares used to compute dilutive 1,992,614 1,431,503
effect of stock options and
convertible debentures
Basic earnings (loss) per common $.151 $(.171)
share from continuing operations
Diluted earnings (loss) per common $.126 $(.171)
share from continuing operations
Three Months Ended March 31, 2010 2009
- --------------------------------- ------------- -------------
Income (Loss) from continuing $26,974 $(126,060)
operations
Average shares of common stock 1,431,503 1,431,503
outstanding used to compute basic
earnings per common share
Additional common shares to be 561,111 Antidilutive
issued assuming exercise of stock
options, and conversion of
convertible debentures
Additional income from continuing 11,363 Antidilutive
operations, assuming conversion of
convertible debentures at the
beginning of the period
Shares used to compute dilutive 1,992,614 1,431,503
effect of stock options and
convertible debentures
Basic earnings (loss) per common $.019 $(.088)
share from continuing operations
Diluted earnings (loss) per common $.019 $(.088)
share from continuing operations
4. 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 the 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 March 31, 2010, is as follows:
Recurring Fair Value Measurements using
Level 1 Level II Level III Total Fair Value
-----------------------------------------------------
Assets at fair value:
Cemetery perpetual care
and pre-need trust
investments - 7,008,904 - 7,008,904
-----------------------------------------------------
Total asset at fair value $ - $7,008,904 $ - $7,008,904
=====================================================
Liabilities at fair value:
Non-controlling interest
in pre-need trust
investments $ - $1,950,482 $ - $1,950,482
=====================================================
5. 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.
6. RECLASSIFICATIONS
Certain amounts in the March 31, 2009 statements of operations have been
reclassified to conform with March 31, 2010 presentation. These
reclassifications have no effect on consolidated net loss, consolidated
accumulated deficit or consolidated cash flows as originally reported.
7. OPERATING SEGMENTS AND RELATED DISCLOSURES
The Company's operations are classified into two principal industry segments:
cemeteries and aviation ground support equipment.
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 nine months ended March 31, 2010 and 2009:
NINE MONTHS ENDED
MARCH 31, 2010:
Aviation Cemeteries Corporate Consolidation
Ground
Support
Equipment
---------- ---------- ---------- -----------
Revenues $8,602,543 $2,490,886 $890 $11,094,319
Depreciation and
amortization 70,909 114,000 363 185,272
Gross Margin 767,609 1,071,776 890 1,840,275
Selling Expenses 116,380 196,186 - 312,566
General & Administrative
Expenses 189,960 461,219 210,405 861,584
Interest Expense 264,090 1,146 62,437 327,673
Interest Income 2 21,826 - 21,828
Income (loss) before Taxes 197,181 435,051 (271,952) 360,280
Capital Expenditures 347,775 18,408 - 366,183
Segment Assets:
Inventory 6,526,383 636,720 - 7,163,103
Property, Plant
& Equipment 1,618,091 817,551 121 2,435,763
THREE MONTHS ENDED
MARCH 31, 2010:
Aviation Cemeteries Corporate Consolidation
Ground
Support
Equipment
---------- ---------- ---------- -----------
Revenues $2,716,039 $817,215 $967 $3,534,221
Depreciation 26,237 38,000 121 64,358
Gross Margin 173,312 366,518 967 540,797
Selling Expenses 24,266 56,972 - 81,238
General & Administrative
Expenses 56,667 152,966 80,848 290,481
Interest Expense 82,921 (449) 19,914 102,386
Interest Income - 1,282 - 1,282
Income (loss) before Taxes 9,458 158,311 (99,795) 67,974
Capital Expenditures 347,775 15,558 - 363,333
NINE MONTHS ENDED
MARCH 31, 2009:
Aviation Cemeteries Corporate Consolidation
Ground
Support
Equipment
---------- ---------- ---------- -----------
Revenues $5,081,856 $1,970,621 (10,285) $7,042,192
Depreciation and
amortization 78,708 153,000 1,433 233,141
Gross Margin 289,477 710,039 (10,285) 989,231
Selling Expenses 132,474 171,243 - 303,717
General & Administrative
Expenses 239,460 384,553 199,307 823,320
Interest Expense 250,225 3,878 39,488 293,591
Interest Income 6,855 17,433 - 24,288
Income (loss) before Taxes (325,827) 167,798 (249,080) (407,109)
Capital Expenditures 6,052 90,027 - 96,079
Segment Assets:
Inventory 7,915,472 649,686 - 8,565,158
Property, Plant
& Equipment 1,312,408 920,093 1,052 2,233,553
THREE MONTHS ENDED
MARCH 31, 2009:
Aviation Cemeteries Corporate Consolidation
Ground
Support
Equipment
---------- ---------- ---------- -----------
Revenues $997,188 $562,077 $(3,920) $1,555,345
Depreciation 24,300 51,000 450 75,750
Gross Margin (6,198) 193,263 (3,920) 183,145
Selling Expenses 43,494 54,467 - 97,961
General & Administrative
Expenses 55,958 116,488 42,345 214,791
Interest Expense 72,826 314 13,163 86,303
Interest Income - 5,850 - 5,850
Income (loss) before Taxes (178,476) 27,844 (59,428) (210,060)
Capital Expenditures 71 1,260 - 1,331
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 that may
further enhance or inhibit the Company's ability to maintain or raise
appropriate levels of cash; requirements for unforeseen 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, officers notes
payable, cash flow from operations and the offering of its subordinated
debentures. For the first nine months of fiscal year 2010, the Company had
an increase in cash of $29,966 compared to a cash increase in the same period
in fiscal year 2009 of $283,013. As of March 31, 2010, the Company had no cash
equivalents.
During the nine-month period ended March 31, 2010, the Company recorded a net
income after tax of $216,280. The Company's net cash from operating activities
was $256,747 in the first nine months of fiscal year 2010 compared to net cash
used in operating activities of $355,370 in the same period in fiscal year
2009. The increase in net cash from operating activities was primarily due to
net income. During the first nine months of fiscal 2010, cash used by
investing activities was $440,450 primarily due to the aviation segment
capitalizing technical data packages and manuals for new equipment being
manufactured and the cemetery segment purchasing computer software and
hardware, and building heaters. Net cash provided by financing activities for
the nine months ended March 31, 2010 was $213,669 primarily due to additional
borrowings on the bank lines of credit. The remaining increases and decreases
in the components of the Company's financial position reflect normal operating
activity.
The Company had working capital of $2,340,007 at March 31, 2010, a decrease of
$570,332 from June 30, 2009. The decrease in working capital was primarily
due to an increase in deferred income and, officers notes payable and
debentures becoming short-term and some cash becoming restricted. As of
March 31, 2010, current assets amounted to $10,593,479 and current liabilities
were $8,253,742, resulting in a current ratio of 1.28 to 1 at March 31, 2010.
Long-term debt was $5,447,707 and stockholders' equity was $1,547,906 at
March 31, 2010.
Capital expenditures for the first nine months of fiscal year 2010 were
$366,183 compared with $96,079 for the same period in fiscal year 2009. These
investments reflect the Company's continuing program to achieve business
growth, improve its properties, and improve productivity. The cemetery
operations' primary expenditure was for software for the computer system. The
aviation ground support operations primarily expenditures were for technical
data package and manuals for new equipment being manufactured. The Company
anticipates that it will spend approximately $80,000 on capital expenditures
during the final quarter of fiscal year 2010 for additional technical data
packages and manuals for aviation ground support operations. The Company plans
to finance these capital expenditures primarily through cash flows provided by
operations.
The Company has a bank line of credit for up to the lesser of (1) $1,000,000
or (2) 75% of the Company's accounts receivable acceptable to the lender. The
line of credit contains certain financial covenants that require the Company's
Aviation Ground Equipment to maintain a debt-to-worth ratio of at least
4.5-to-1 and cash flow-to-current maturity of at least 1.2-to-1. These
covenants are measured annually. The line of credit matures on
October 31, 2010. As of March 31, 2010 there was $970,598 outstanding under
this facility.
In addition, the Company has an additional bank line of credit through the
working capital guarantee program of Export-Import Bank of the United States
for up to the lesser of (1) $350,000 or (2) 80% of the Company's foreign
accounts receivable acceptable to the lender and 75% of inventory in process
for foreign sales. The line of credit contains certain financial covenants
that require the Company's Aviation Ground Equipment subsidiary to maintain a
debt service coverage ratio in excess of 1.2 to 1 annually and a debt to
tangible net worth ratio not in excess of 4.5 to 1 at all times.
At March 31, 2010, the Company was in compliance with the debt to tangible net
worth ratio with a calculated ratio of 4.43 to 1. The line of credit matures
on April 26, 2011. As of March 31, 2010 there was $350,000 outstanding under
this facility. In April 2010, the maximum borrowings under this facility was
expanded to the lesser of (1) $750,000 or (2) 80% of the Company's foreign
accounts receivable acceptable to the lender and 75% of inventory in process
for foreign sales.
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
nine months of this fiscal year, and as of March 31, 2010, inflation did not
have a significant effect on the Company's results in the first nine months of
fiscal year 2010.
RESULTS OF OPERATIONS
FIRST NINE MONTHS OF FISCAL YEAR 2010
COMPARED WITH FIRST NINE MONTHS OF FISCAL YEAR 2009
Cemetery Operations:
Revenue for the nine months ended March 31, 2010 was $2,490,886, an increase
of $520,265, or 26%, when compared to the nine months ended March 31, 2009.
The increase was primarily due to a increases in the following revenue
accounts as follows: increase in marker sales of $108,273, mausoleum space of
$34,090, vault sealing fees of $13,345, land sales of $91,566, overtime
charges for Saturday burials of $32,101, grave liners of $75,562, interment
fees of $108,372, foundations of $74,339, inscriptions of $11,017. These
increases were partially offset by decreases in care fund interest of $22,730
and flower shop revenue sales of $7,443. The Company's management believes the
increases are attributable in part to the legal problems that another local
cemetery is experiencing with state of Illinois and the new rules and
regulations passed by the state of Illinois.
Cost of sales for the nine months ended March 31, 2010 was $1,419,110, an
increase of $158,528, or 12%, compared to the nine months ended March 31, 2009.
During the nine months ended March 31, 2010, costs associated with sales of
markers increased $20,624, foundations increased $47,719, grave liners
increased $31,781 compared to the same period in fiscal year 2009. In addition,
health insurance costs continued to increase $36,045, dirt hauling increased
$48,180 and most other costs experienced immaterial increase. The Company's
primary increase in cost of goods sold was due to the increase in revenue of
26%.
The resulting cemetery gross profit margin was 43% for the first nine months
of fiscal year 2010 versus 36% for the corresponding period in fiscal year
2009, representing a 7% increase. The increase was primarily caused by an
increase in sales volume.
Selling expenses for the nine months ended March 31, 2010 were $196,186, an
increase of $24,943, or 15%, when compared to the nine months ended
March 31, 2009. The increase was primarily due to higher commissions on sales
of markers and foundations.
General and administrative expenses for the nine months ended March 31, 2010,
were $461,219, an increase of $76,666, or 20%, compared to the nine months
ended March 31, 2009. The increase was primarily due to increases in
professional fees of $35,048 (largely associated with review by the U. S.
Securities and Exchange Commission of the Company's past filings), health
insurance of $14,946, and office salaries and related payroll taxes of $29,288.
Corporate Operations:
Revenue for the nine months ended March 31, 2010 was immaterial.
General and administrative expenses for the nine months ended March 31, 2010
was $210,405, an increase of $11,098, or 6%, when compared to the nine months
ended March 31, 2009. The increase was primarily due to costs associated with
the preparation of a valuation, study of the Aviation Ground Support operation.
Interest expense for the nine months ended March 31, 2010 was 62,437, a
increase of $22,949, or 58%, when compared to the nine months ended
March 31, 2010. The increase is primarily due to the additional advances from
officers.
Aviation Ground Support Operations:
Revenue for the nine months ended March 31, 2010 was $8,602,543, an increase
of $3,520,687, or 69%, when compared to the nine months ended March 31, 2009.
The increase was primarily due to increased domestic and governmental sales.
Cost of sales as a percentage of sales for the nine months ended
March 31, 2010 was 91%, a decrease of 3%, when compared to the nine months
ended March 31, 2009. The decrease was primarily due to increased revenue for
the period.
The resulting gross profit margin was 9% for the first nine months of fiscal
year 2010 versus 6% for the corresponding period in fiscal year 2009,
representing a $478,132 increase.
Selling expenses for the nine months ended March 31, 2010 were $116,380, a
decrease of $16,094, or 12%, when compared to the nine months ended
March 31, 2009. The decrease was primarily due to decreases in travel of
$11,030, and medical health insurance of $5,704.
General and administrative expenses for the nine months ended March 31, 2010
were $189,960, a decrease of $49,500, or 21%, when compared to nine months
ended March 31, 2009. The decrease was primarily due decreased officer and
office wages and related payroll taxes of $47,473.
Other expenses, which consist of interest expense and interest income, for the
nine months ended March 31, 2010, were a combined expense of $264,088, an
increase of $20,718, or 9%, when compared to the nine months ended
March 31, 2009. The increase was primarily due to greater debt to finance
inventory and work in process.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2010
COMPARED WITH THREE MONTHS ENDED MARCH 31, 2009
Cemetery Operations:
Revenue for the three months ended March 31, 2010 was $817,215, an increase of
$255,138, or 45%, when compared to the three months ended March 31, 2009. The
increase was primarily due to increases in the following revenue accounts:
increases in cemetery space sales of $38,161, markers of $61,889, foundations
of $23,468, grave liners of $50,420, and interment fees of $70,930. The
Company's management believes the increase in total revenue is attributable in
part, to the legal problems that another local cemetery is experiencing.
Cost of sales for the three months ended March 31, 2010 was $450,697, an
increase of $81,883, or 22%, when compared to the three months ended
March 31, 2009. The increase was primarily due to increased sales, and driven
by increases in markers expenses of $22,394, grave liners of $9,286, health
insurance of $30,423, and ground workers salaries and related payroll taxes of
$27,132.
The resulting cemetery gross profit margin was 45% for the three months ended
March 31, 2010 versus 34% for the corresponding period in fiscal year 2009,
representing an 11% increase. The increase was primarily due to increased
sales.
Selling expenses for the three months ended March 31, 2010 were $56,972, a
increase of $2,505, or 5%, when compared to the three-month period ended
March 31, 2009. The increase was primarily due to increased health insurance
costs ($2,541).
General and administrative expenses for the three months ended March 31, 2010
were $152,966, an increase of $36,478, or 31%, when compared to the three
months ended March 31, 2009. The increase was primarily due to higher office
salaries and related payroll costs of $26,888, and all other costs increasing
immaterially.
Corporate Operations:
Revenue for the three months ended March 31, 2010 was immaterial.
General and administrative expenses for the three months ended March 31, 2010
were $80,848, an increase of $38,503, or 91%, when compared to the three months
ended March 31, 2009. The increase was primarily due to increase in
professional fees of $19,753 associated with replying to a Securities and
Exchange comment letter, and the costs associated with the preparation of a
valuation of the Aviation Ground Support Operation of $12,375.
Interest expense for the three months ended March 31, 2010 was $19,914, an
increase of $6,751, or 51%, when compared to the three months ended
March 31, 2009. The increase primarily relates to additional advances from
officers and other short term notes.
Aviation Ground Support Operations:
Revenues for the three months ended March 31, 2010 were $2,716,039, an increase
of $1,718,851, or 172%, when compared to the three months ended
March 31, 2009. The increase in revenue was primarily due to higher equipment
sales for domestic, and governmental.
Cost of sales for the nine months ended March 31, 2010, was $2,542,727, an
increase of $1,539,341, or 153%, when compared to the three months ended
March 31, 2009. The increase was primarily due to increased sales and related
costs to manufacture goods for those sales.
The resulting gross profit margin was 7% for the three months ended
March 31, 2010 versus a negative percentage for the corresponding period in
fiscal year 2009. The increase was due to higher sales and less fixed costs.
Selling expenses for the three months ended March 31, 2010 were $24,266, a
decrease of $19,228, or 44%, when compared to the three months ended
March 31, 2009. The decrease was primarily due to decreased international
commissions paid to agents in foreign countries.
General and administrative expenses for the three months ended March 31, 2010
were $56,667, a decrease of $709 or 1%, when compared to the three months
ended March 31, 2009. The decrease is immaterial
Interest expense for the three months ended March 31, 2010 was $82,921, an
increase of $10,095, or 13%, when compared to the three months ended
March 31, 2009. The increase was attributable to increased interest rates.
OFF BALANCE SHEET ARRANGEMENTS
The Company has no off-balance sheet arrangements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
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 has
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 (a) recorded, processed,
summarized and reported within the time periods specified in SEC rules and
forms and (b) accumulated and communicated to the Chief Executive Officer and
Chief Financial Officer to allow timely decisions regarding disclosure.
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 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. (RESERVED)
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS
The following exhibits are filed as part of this Quarterly Report
on Form 10-Q for the quarterly period ending March 31, 2010:
3(i) Amended and Restated Articles of Incorporation, as
amended (1)
3(ii) Amended and Superseding By-Laws of the Company, as
amended (1)
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 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 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: May 14, 2010
INDEX TO EXHIBITS
EXHIBIT DESCRIPTION PAGE
3(i) Amended and Restated Articles of (incorporated
Incorporation of the Company by reference)
3(ii) Amended and Superseding By-Laws (incorporated
of the Company, as amended by reference)
31 Rule 13a-14(a)/15d-14(a) (filed
Certifications electronically)
32 Section 1350 Certifications (filed
electronically)