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 March 31, 2011
[ ]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. {X}Yes { }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 March 31, 2011
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
ITEM 1. Condensed Consolidated Financial Statements:
(a) Condensed Consolidated Balance Sheets as of
March 31, 2011 (unaudited) and June 30, 2010
(b) Condensed Consolidated Statements of Operations for the three
months ended March 31, 2011 and 2010 (unaudited) and nine
months ended March 31, 2011 and 2010 (unaudited)
(c) Condensed Consolidated Statements of Cash Flows for the nine
months ended March 31, 2011 and 2010 (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. Not Applicable
ITEM 6. Exhibits
SIGNATURES
PART I - FINANCIAL INFORMATION FORM 10-Q
ITEM 1 - FINANCIAL STATEMENTS
OAKRIDGE HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
March 31,2011 June 30,2010
(Unaudited) (Audited)
ASSETS _________________ ____________
Current assets:
Cash & cash equivalents $493,050 $372,797
Restricted cash 89,737 89,320
Receivables, net 2,878,367 2,236,804
Inventories:
Production, net 7,359,023 6,647,308
Cemetery, mausoleum space and markers 628,360 607,435
Other current assets 76,439 104,942
Deferred income taxes 252,000 312,000
----------- -----------
Total current assets 11,776,976 10,370,606
----------- -----------
Property, plant and equipment:
Property, plant and equipment,
at cost 6,665,940 6,506,136
Less accumulated depreciation 4,507,509 4,312,179
----------- -----------
Property, plant and equipment, net 2,158,431 2,193,957
----------- -----------
Other assets:
Preneed trust investments 2,054,909 2,023,358
Cemetery perpetual care trusts 5,166,404 4,962,756
Deferred income taxes 78,000 78,000
Deferred financing costs, net 55,491 61,299
Other 13,792 11,033
----------- -----------
Total other assets 7,368,596 7,136,446
----------- -----------
Total assets $21,304,003 $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
March 31,2011 June 30,2010
(Unaudited) (Audited)
_____________ _____________
LIABILITIES
Current liabilities:
Lines of credit - bank $1,531,443 $1,331,443
Accounts payable 1,773,491 1,249,716
Due to finance company 1,915,633 1,227,231
Accrued liabilities 975,904 979,818
Deferred revenue 1,663,745 1,886,908
Short-term notes payable - officers 300,000 300,000
Short-term notes payable - others 30,000 80,000
Current maturities of long-term debt 175,625 696,321
----------- -----------
Total current liabilities 8,365,841 7,751,437
----------- -----------
Long-term debt:
Long-term debt, net of current
maturities 3,938,484 3,496,865
Non-controlling interest in pre-need
care trust investments 2,054,909 2,023,358
----------- -----------
Total long-term liabilities 5,993,393 5,520,223
----------- -----------
Total liabilities 14,359,234 13,271,660
----------- -----------
Non-controlling interest in
trust investments 5,166,404 4,962,756
----------- -----------
Stockholders' Equity:
Common stock 143,151 143,151
Additional paid-in-capital 2,028,975 2,028,975
Accumulated deficit (393,761) (705,533)
----------- -----------
Total stockholders' equity 1,778,365 1,466,593
----------- -----------
Total liabilities & stockholder's
equity $21,304,003 $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 March 31, Nine Months Ended March 31,
2011 2010 2011 2010
__________ __________ __________ __________
Revenue, net:
Cemetery $874,952 $802,312 $2,431,028 $2,424,238
Aviation 3,492,900 2,716,039 10,460,328 8,602,543
Interest-Care Funds 19,907 14,903 51,844 66,648
Other (85) 967 1,699 890
---------- ---------- ---------- ----------
Total revenue 4,387,674 3,534,221 12,944,899 11,094,319
---------- ---------- ---------- ----------
Operating expenses:
Cost of cemetery sales 504,094 450,697 1,469,378 1,419,110
Cost of aviation sales 3,216,145 2,542,727 9,428,768 7,834,934
Sales and marketing 87,199 81,238 317,181 312,566
General and administrative 261,271 290,481 876,668 861,584
---------- ---------- ---------- ----------
Total operating expenses 4,068,709 3,365,143 12,091,995 10,428,194
---------- ---------- ---------- ----------
Income from operations 318,965 169,078 852,904 666,125
---------- ---------- ---------- ----------
Other income (expense)
Interest income 5,914 1,282 9,900 21,828
Interest expense (107,440) (102,386) (351,032) (327,673)
---------- ---------- ---------- ----------
Total other expense (101,526) (101,104) (341,132) (305,845)
Income before income taxes 217,439 67,974 511,772 360,280
Income taxes provision 85,000 41,000 200,000 144,000
---------- ---------- ---------- ----------
Net income $132,439 $26,974 $311,772 $216,280
========== ========== ========== ==========
Net income per common share - basic $.093 $.019 $.218 $.151
========== ========== ========== ==========
Weighted average number of
common shares - basic 1,431,503 1,431,503 1,431,503 1,431,503
========== ========== ========== ==========
Net income per common
shares - diluted $.055 $.019 $.140 $.126
========== ========== ========== ==========
Weighted average number of
common shares outstanding -
diluted 2,649,143 1,992,614 2,530,074 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)
Nine Months Ended March 31, 2011 2010
____________ ___________
Cash flows from operating activities:
Net income $311,772 $216,280
Adjustments to reconcile net income to
cash flows from operating activities:
Depreciation and amortization 201,138 185,272
Deferred income taxes 60,000 144,000
Accounts receivable (641,563) (390,432)
Inventories (732,640) (217,340)
Other assets 25,744 (13,216)
Accounts payable and due to
finance company 1,212,177 18,711
Loss (gains) on non-controlling
trust investments 7,802 (4,209)
Deferred revenue (223,163) 327,225
Accrued liabilities (3,914) (9,544)
---------- ----------
Net cash provided in operating activities 217,353 256,747
---------- ----------
Cash flows used in investing activities:
Purchases of property and equipment (159,804) (366,183)
Sales of non-controlling
investments in trusts 6,752,906 123,119
Restricted cash (417) (78,476)
Purchases of non-controlling
investments in trusts (6,760,708) (118,910)
---------- ----------
Net cash flows used in investing
activities (168,023) (440,450)
---------- ----------
Cash flows from financing activities:
Net borrowings on lines of credit 200,000 340,758
Proceeds from short-term notes
payable - officer - 50,000
Payments on short-term notes
payable - others (50,000) -
Proceeds from issuance of
long-term debt 105,000 -
Principal payments on long-term debt (184,077) (177,089)
---------- ----------
Net cash flows from financing activities 70,923 213,669
---------- ----------
Net change in cash and cash equivalents: 120,253 29,966
Cash and cash equivalents:
Beginning of year 372,797 345,153
---------- ----------
End of period $493,050 $375,119
========== ==========
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 nine-month period ended
March 31, 2011 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 the
three and nine months ended March 31, 2011:
Three Months Ended March 31, 2011 2010
-------------------------------------- --------- ----------
Income from continuing operations $132,439 $26,974
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 1,217,640 561,111
Additional income from continuing
operations, assuming conversion
of convertible debentures at the
beginning of the period $14,400 $11,363
Shares used to compute dilutive effect
of stock options and convertible
debentures 2,649,143 1,992,614
Basic earnings per common share
from continuing operations $.093 $.019
Diluted earnings per common share from
continuing operations $.055 $.019
Nine Months Ended March 31, 2011 2010
-------------------------------------- --------- ----------
Income from continuing operations $311,772 $216,280
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 1,098,571 561,111
Additional income from continuing
operations, assuming conversion
of convertible debentures at the
beginning of the period $43,200 $34,088
Shares used to compute dilutive effect
of stock options and convertible
debentures 2,530,074 1,992,614
Basic earnings per common share
from continuing operations $.218 $.151
Diluted earnings per common share from
continuing operations $.140 $.126
3. COMPREHENSIVE INCOME
The Company has no significant components of other comprehensive
income and accordingly, comprehensive income is the same as net
income for all periods.
4. 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, 2011 and 2010:
NINE MONTHS ENDED
MARCH 31, 2011:
Aviation Cemeteries Corporate Consolidation
Ground
Support
Equipment
Revenues $10,460,328 $2,482,872 $1,699 $12,944,899
Depreciation and amortization 80,608 117,000 3,530 201,138
Gross Margin 1,031,560 1,0136,494 1,699 2,046,753
Selling Expenses 113,055 204,126 - 317,181
General & Administrative
Expenses 194,382 433,889 248,397 876,668
Interest Expense 289,207 793 61,032 351,032
Interest Income 352 9,548 - 9,900
Income (loss) before Taxes 435,268 384,234 (307,730) 511,772
Capital Expenditures 91,395 60,176 8,233 159,804
Segment assets:
Inventory 7,359,023 628,360 - 7,987,383
Property, Plant &
Equipment, net 1,393,517 756,312 8,602 2,158,431
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, net 1,618,091 817,551 121 2,435,763
THREE MONTHS ENDED
MARCH 31, 2011:
Aviation Cemeteries Corporate Consolidation
Ground
Support
Equipment
Revenues $3,492,900 $894,859 $(85) $4,387,674
Depreciation and amortization 26,235 39,000 1,515 66,750
Gross Margin 276,755 390,765 (85) 667,435
Selling Expenses 25,862 61,337 - 87,199
General & Administrative
Expenses 58,911 152,796 49,564 261,271
Interest Expense 87,533 444 19,463 107,440
Interest Income 141 5,773 - 5,914
Income (loss) before Taxes 104,590 181,961 (69,112) 217,439
Capital Expenditures 30,768 4,158 43 34,969
THREE MONTHS ENDED
MARCH 31, 2010:
Aviation Cemeteries Corporate Consolidation
Ground
Support
Equipment
Revenues $2,716,039 $817,215 $967 $3,534,221
Depreciation and amortization 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
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 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 and liabilities measured at fair value on a
recurring basis as of March 31, 2011 and June 30, 2010 are as follows:
Recurring Fair Value Measurements using
Level I Level II Level III Total Fair Value
----------------------------------------------------
March 31, 2011
Assets at fair value:
Cemetery perpetual care
and pre-need trust
investments $ - $7,221,313 $ - $7,221,313
====================================================
Liabilities at fair value:
Non-controlling interest
in pre-need trust
investments $ - $2,054,909 $ - $2,054,909
====================================================
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
====================================================
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.
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.
As of March 31, 2011, there was $640,000 of the aforementioned 9%
subordinated convertible debentures outstanding.
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, officers' notes
payable, cash flow from operations and the offering of its subordinated
debentures. For the first nine months of fiscal year 2011, the Company had an
increase in cash of $120,253 compared to a cash increase in the same period in
fiscal year 2010 of $29,966. As of March 31, 2011, the Company had no cash
equivalents.
During the nine-month period ended March 31, 2011, the Company recorded a net
gain after tax of $311,772. The Company's net cash from operating activities
was $217,353 in the first nine months of fiscal year 2011 compared to net cash
from operating activities of $256,747 in the same period in fiscal year 2010.
The decrease in net cash from operating activities was primarily due to
increase in accounts receivable and inventory. During the first nine months of
fiscal 2011, cash used by investing activities was $168,023 primarily due to
capital expenditures relating to aviation segment, technical data manuals for
new equipment being sold, cemetery segment computer software and hardware and
a pump for the heating system in the mausoleum. Net cash provided by financing
activities was $70,923 primarily due to borrowings on the line of credit with
the bank and proceeds from the issuance of debentures. The remaining increases
and decreases in the components of the Company's financial position reflect
normal operating activity.
The Company had working capital of $3,411,135 at March 31, 2011, an increase
of $791,966 from June 30, 2010. The increase in working capital was primarily
due to an increase in accounts receivable and inventories. Current assets
amounted to $11,776,976 and current liabilities were $8,365,841, resulting in
a current ratio of 1.41 to 1 at March 31, 2011. Long-term debt was $3,938,484
and equity was $1,778,365 at March 31, 2011.
Capital expenditures for the first nine months of fiscal year 2011 were
$159,804 compared with $366,183 for the same period in fiscal year 2010. 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 and hardware for the computer
system because of a hard-drive crash. The aviation ground support operations'
primary expenditure was for technical data manuals for new equipment being
sold. The Company anticipates that it will spend approximately $50,000 on
capital expenditures during the final quarter of fiscal year 2011 for
technical data manuals for new aviation ground support equipment to be sold
and repairs to the front entrance of the cemetery office. 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 March 31, 2011,
$1,531,443 of aggregate borrowing capacity of $1,850,000 was outstanding
leaving available credit of $318,557.
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 the first nine
months of this fiscal year, and as of March 31,2011, inflation did not have a
significant effect on the Company's results in the first nine months of the
year.
RESULTS OF OPERATIONS
FIRST NINE MONTHS OF FISCAL YEAR 2011
COMPARED WITH FIRST NINE MONTHS OF FISCAL YEAR 2010
CEMETERY OPERATIONS
Revenue for the nine months ended March 31, 2011 was $2,482,872, a decrease of
$8,014, or .3%, when compared to the nine months ended March 31, 2010. The
decrease was primarily due to a decrease in marker and foundations revenue.
Most all other revenue accounts increased or remained stable.
Cost of sales for the nine months ended March 31, 2011 was $1,469,378, an
increase of $50,268, or 4%, compared to the nine months ended March 31, 2010.
During the nine months ended March 31, 2011, the primarily increase was in
health insurance of $21,905 and grave liners of $38,366 which was due to the
increase in interment fees and sales of related grave liners.
The resulting cemetery gross profit margin was 40.8% for the first nine months
of fiscal year 2011 versus 43.0% for the corresponding period in fiscal year
2010, representing a 2.2% decrease as a percent of sales. The decrease was
caused by a decrease in markers and foundation sales, which have higher gross
profit margins.
Selling expenses for the nine months ended March 31, 2011 were $204,126, an
increase of $7,940, or 4%, when compared to the nine months ended
March 31, 2010. The increase was due to higher commissions on pre-need sales.
General and administrative expenses for the nine months ended March 31, 2011,
were $433,889, a decrease of $27,330, or 6%, compared to the nine months ended
March 31, 2010. The decrease was primarily due to decreases in professional
fees of $35,389 and management salaries of $25,977, whereas health insurance
increased $11,929, temporary labor increased $17,960 to adhere to the new
cemetery laws and computer consulting increased $6,942.
HOLDING OPERATIONS
Revenue for the nine months ended March 31, 2011 was immaterial.
General and administrative expenses for the nine months ended March 31, 2011
was $248,397, an increase of $37,992, or 18%, when compared to the nine months
ended March 31, 2010. The increase was primarily due to an increase in legal
fees of $18,735, transfer agent expense of $6,904, and officers salary and
vacation expense of $10,730.
Interest expense for the nine months ended March 31, 2011 was $61,032, a
decrease of $1,405, or 2%, when compared to the nine months ended
March 31, 2010. The decrease is due to paying down the Company's short-term
note.
AVIATION GROUND SUPPORT EQUIPMENT OPERATIONS:
Revenue for the nine months ended March 31, 2011 was $10,460,328, an increase
of $1,857,785, or 22%, when compared to the nine months ended March 31, 2010.
The increase was primarily due to increased governmental sales.
Cost of sales as a percentage of sales for the nine months ended
March 31, 2011 was 90%, a decrease of 1%, when compared to the nine months
ended March 31, 2010. The decrease was primarily due to less purchasing of
chassis for production, which have a higher cost to sales ratio.
The resulting gross profit margin was 10% for the first nine months of fiscal
year 2011 versus 9% for the corresponding period in fiscal year 2010,
representing a $263,951 increase.
Selling expenses for the nine months ended March 31, 2011 were $113,055, a
decrease of $3,325, or 3%, when compared to the nine months ended
March 31, 2010. The decrease was primarily due to a decrease in outside sales
commissions to international agents.
General and administrative expenses for the nine months ended March 31, 2011
were $194,382, a increase of $4,422, or 2%, when compared to nine months ended
March 31, 2010. The increase was primarily due to increased bank charges.
Other expenses, which consist of interest expense and interest income, for the
nine months ended March 31, 2011, were a combined expense of $288,855, an
increase of $24,767, or 9%, when compared to the nine months ended
March 31, 2010. The increase was primarily due to greater debt to finance
inventory and work in process.
RESULTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 2011
COMPARED WITH THREE MONTHS ENDED DECEMBER 31, 2010
CEMETERY OPERATIONS:
Revenue for the three months ended March 31, 2011 was $894,859, an increase of
$77,644, or 10%, when compared to the three months ended March 31, 2010. The
increase was primarily due to an increase in two revenue accounts,
specifically, grave liners ($91,021) and interment fees ($130,210), with all
other discretionary accounts decreasing.
Cost of sales for the three months ended March 31, 2011 was $504,094, an
increase of $53,397, or 12%, when compared to the three months ended
March 31, 2010. The increase was primarily due to increased sales, where the
largest increases were in grave liners ($45,256) and health insurance
($9,128), with all other costs being immaterial.
The resulting cemetery gross profit margin was 44% for the three months ended
March 31, 2011 versus 45% for the corresponding period in fiscal year 2010.
Selling expenses for the three months ended March 31, 2011 were $61,337, an
increase of $4,365, or 8%, when compared to the three-month period ended
March 31, 2010. The increase was primarily due to increased health insurance
costs ($1,747) and sales commissions ($3,963).
General and administrative expenses for the three months ended March 31, 2011
were $152,796, a decrease of $170, when compared to the three months ended
March 31, 2010.
HOLDING OPERATIONS:
Revenue for the three months ended March 31, 2011 was immaterial.
General and administrative expenses for the three months ended March 31, 2011
were $49,564, a decrease of $31,284, or 39%, when compared to the three months
ended March 31, 2010. The decrease was primarily due to decrease in
professional fees of $36,620 associated with addressing a Securities and
Exchange Commission comment letter during the three months ended
March 31, 2010.
Interest expense for the three months ended March 31, 2011 was $19,463, a
decrease of $ 451, or 2%, when compared to the three months ended
March 31, 2010. The decrease is due to paying down a short term note.
AVIATION GROUND SUPPORT OPERATIONS:
Revenues for the three months ended March 31, 2011 were $3,492,900, an
increase of $776,861, or 29%, when compared to the three months ended
March 31, 2010. The increase in revenue was primarily due to higher equipment
sales to the government.
Cost of sales for the three months ended March 31, 2011, was $3,216,145, an
increase of $673,418, or 26%, when compared to the three months ended
March 31, 2010. The increase was primarily due to increased sales and related
costs to manufacture goods for those sales.
The resulting gross profit margin was 8% for the three months ended
March 31, 2011 versus 6% for the corresponding period in fiscal year 2010.
The increase was due to higher sales and less overhead costs.
Selling expenses for the three months ended March 31, 2011 were $25,862, an
increase of $1,596, or 7%, when compared to the three months ended
March 31, 2010. The increase was primarily due increased salaries.
General and administrative expenses for the three months ended March 31, 2011
were $58,911, an increase of $2,244 or 4%, when compared to the three months
ended March 31, 2010. The increase was primarily due to an increase in bad
debts.
Interest expense for the three months ended March 31, 2011 was $87,533, an
increase of $ 4,612, or 6%, when compared to the three months ended
March 31, 2010. The increase was attributable to an increased debenture
balance and increased borrowings under our lines of credit.
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, 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
Not applicable.
ITEM 6. EXHIBITS
The following exhibits are filed as part of this Quarterly Report
on Form 10-Q for the quarterly period ended March 31, 2011:
1.1 Form 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 February 7, 2011.
(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 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 16, 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
