-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, REoR1U0jxBs8OJH+FiBqoyfeju6nL5y8CRAsWy9Thx/2IIH53qti1U4/NgRkRFSi j/zzB7Tr0PkSXbeICa/WUg== 0000950148-96-000714.txt : 19960509 0000950148-96-000714.hdr.sgml : 19960509 ACCESSION NUMBER: 0000950148-96-000714 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960508 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: SCOPE INDUSTRIES CENTRAL INDEX KEY: 0000087864 STANDARD INDUSTRIAL CLASSIFICATION: GRAIN MILL PRODUCTS [2040] IRS NUMBER: 951240976 STATE OF INCORPORATION: CA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03552 FILM NUMBER: 96557612 BUSINESS ADDRESS: STREET 1: 233 WILSHIRE BLVD STE 310 CITY: SANTA MONICA STATE: CA ZIP: 90401 BUSINESS PHONE: 3104581574 MAIL ADDRESS: STREET 1: 233 WILSHIRE BLVD STE 310 CITY: SANTA MONICA STATE: CA ZIP: 90401 10-Q 1 FORM 10-Q FOR THE QUARTER ENDED 3/31/96 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended Commission File March 31, 1996 Number 1-3552 -------------- ------------- SCOPE INDUSTRIES (Exact name of Registrant as specified in its charter) California 95-1240976 - ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 233 Wilshire Blvd., Ste.310, Santa Monica, CA 90401 - --------------------------------------------- ---------- (Address of principal executive office) (ZIP Code) Registrant's telephone number, including area code (310) 458-1574 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceeding 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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at April 18, 1996 - -------------------------- ----------------------------- Common Stock, no par value 1,212,565 2 SCOPE INDUSTRIES AND SUBSIDIARIES INDEX
PAGE Part I. Financial Information: Consolidated Balance Sheets - March 31, 1996 and June 30, 1995 3 Consolidated Statements of Income - Three Months Ended March 31, 1996 and 1995 4 Consolidated Statements of Income - Nine Months Ended March 31, 1996 and 1995 5 Consolidated Statements of Cash Flows - Nine Months Ended March 31, 1996 and 1995 6 Notes to Consolidated Financial Statements 7 Management's Discussion and Analysis of Results of Operations and Financial Condition 8 Part II. Other Information: Item 2. Increases and Decreases in Outstanding Securities and Indebtedness 9 Item 6. Exhibits and Reports on Form 8-K 9 Signatures 9
-2- 3 PART I. FINANCIAL INFORMATION SCOPE INDUSTRIES AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
MARCH 31 JUNE 30 1996 1995 ----------- ---------- (UNAUDITED) (AUDITED) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 2,044,126 $ 242,794 Treasury bills (par value $5,035,000 at March 31, 1996 and $2,290,000 at June 30, 1995) 4,993,162 2,258,883 Accounts and notes receivable, less allowance for doubtful accounts of $118,857 at March 31, 1996 and $298,834 at June 30, 1995 2,060,199 2,256,766 Inventories 478,057 423,177 Prepaid expenses and other current assets 888,033 1,109,106 ----------- ----------- TOTAL CURRENT ASSETS 10,463,577 6,290,726 ----------- ----------- NOTES RECEIVABLE 3,662,258 3,474,398 ----------- ----------- PROPERTY AND EQUIPMENT, AT COST: Machinery and equipment 21,630,955 21,162,104 Land, buildings and improvements 9,626,935 10,272,459 ----------- ----------- 31,257,890 31,434,563 Less accumulated depreciation and amortization 20,471,738 20,210,689 ----------- ----------- 10,786,152 11,223,874 ----------- ----------- OTHER ASSETS: Deferred charges and other assets 140,096 423,266 Investments 27,721,162 21,656,014 ----------- ----------- 27,861,258 22,079,280 ----------- ----------- $52,773,245 $43,068,278 =========== =========== LIABILITIES AND SHAREOWNERS' EQUITY CURRENT LIABILITIES: Bank overdraft $ 98,767 $ 61,746 Accounts payable 1,184,100 899,372 Other accrued liabilities 1,344,855 1,196,004 Accrued payroll and related employee benefits 1,013,554 414,707 Income taxes payable 955,385 192,836 ----------- ----------- TOTAL CURRENT LIABILITIES 4,596,661 2,764,665 ----------- ----------- DEFERRED INCOME TAXES 1,940,000 ----------- SHAREOWNERS' EQUITY: Common stock, no par value, 5,000,000 shares authorized; shares issued and outstanding March 31, 1996 1,231,365 June 30, 1995 1,244,865 3,921,287 3,921,287 Retained earnings 29,786,001 27,874,671 Net unrealized gain on investments 12,529,296 8,507,655 ----------- ----------- 46,236,584 40,303,613 ----------- ----------- $52,773,245 $43,068,278 =========== ===========
The accompanying notes are an integral part of these statements. -3- 4 SCOPE INDUSTRIES AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED MARCH 31 -------- 1996 1995 ------------ ------------ REVENUES: Sales $ 5,913,408 $ 4,525,933 Vocational school revenues 1,136,612 1,010,546 ----------- ----------- 7,050,020 5,536,479 ----------- ----------- OPERATING COSTS AND EXPENSES: Cost of sales 3,383,687 3,229,555 Vocational school expenses 847,414 853,975 Depreciation and amortization 544,520 551,479 General and administrative 1,042,498 875,755 ----------- ----------- 5,818,119 5,510,764 ----------- ----------- 1,231,901 25,715 OTHER INCOME: Investment and other income 322,062 289,106 ----------- ----------- Income before taxes 1,553,963 314,821 Provision for income taxes 610,000 30,000 ----------- ----------- NET INCOME $ 943,963 $ 284,821 =========== =========== NET INCOME PER SHARE $ 0.76 $ 0.23 =========== =========== Weighted average number of shares outstanding 1,236,173 1,253,651
The accompanying notes are an integral part of these statements. -4- 5 SCOPE INDUSTRIES AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
NINE MONTHS ENDED MARCH 31 -------- 1996 1995 ------------ ------------ REVENUES: Sales $17,925,227 $14,118,910 Vocational school revenues 3,522,714 2,971,978 ----------- ----------- 21,447,941 17,090,888 ----------- ----------- OPERATING COSTS AND EXPENSES: Cost of sales 10,558,300 9,531,722 Vocational school expenses 2,578,782 2,664,958 Depreciation and amortization 1,605,345 1,683,534 General and administrative 3,426,056 2,967,448 ----------- ----------- 18,168,483 16,847,662 ----------- ----------- 3,279,458 243,226 OTHER INCOME: Investment and other income 1,226,895 642,343 ----------- ----------- Income before taxes 4,506,353 885,569 Provision for income taxes 1,590,000 60,000 ----------- ----------- NET INCOME $ 2,916,353 $ 825,569 =========== =========== NET INCOME PER SHARE $ 2.36 $ 0.66 =========== =========== CASH DIVIDENDS PAID PER COMMON SHARE $ 0.50 $ 0.35 Weighted average number of shares outstanding 1,237,805 1,257,372
The accompanying notes are an integral part of these statements. -5- 6 SCOPE INDUSTRIES AND SUBSDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED MARCH 31 -------- 1996 1995 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 2,916,353 $ 825,569 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization 1,605,345 1,683,534 (Gains) losses on investments (89,052) (12,232) (Gains) losses on sale of equipment (47,470) (53,330) Deferred income taxes (295,000) (75,000) Changes in operating assets and liabilities: Accounts and notes receivable 238,707 501,662 Inventories (54,880) (1,243) Prepaid expenses and other current assets 221,073 (324,492) Accounts payable and accrued liabilities 1,032,426 (64,529) Income taxes payable 762,549 83,282 ----------- ----------- Net cash flows from operating activities 6,290,051 2,563,221 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of U.S. Treasury bills (8,104,279) (2,992,392) Maturities or dispositions of U.S. Treasury bills 5,370,000 4,295,159 Purchase of property and equipment (1,499,150) (1,781,742) Disposition of property and equipment 412,897 967,464 Purchase of long-term notes receivable (230,000) Purchase of non-current investments (1,805,371) (2,639,729) Disposition of non-current investments 2,350,916 1,065,782 Other (15,730) ----------- ----------- Net cash flows used in investing activities (3,520,717) (1,085,458) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Dividends to shareowners (616,783) (439,088) Repurchase of common stock (388,240) (210,668) Change in bank overdraft 37,021 (201,912) ----------- ----------- Net cash used in financing activities (968,002) (851,668) ----------- ----------- Net change in cash and cash equivalents 1,801,332 626,095 Cash and cash equivalents at beginning of period 242,794 30,397 ------------ ------------ Cash and cash equivalents at end of period $ 2,044,126 $ 656,492 ============ ============
The accompanying notes are an integral part of these statements. -6- 7 SCOPE INDUSTRIES AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) MARCH 31, 1996 1. In the opinion of the Registrant, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly Scope Industries' financial position as of March 31, 1996 and June 30, 1995, and the results of its operations for the three and nine months ended March 31, 1996 and 1995. The accounting policies followed by the Registrant are set forth in Note 1 of its financial statements in the 1995 Scope Industries Annual Report which is incorporated by reference on Form 10-K. 2. Quarterly results of operations are not necessarily indicative of the results to be expected for the full year. 3. Inventories consisted of the following:
March 31 June 30 1996 1995 ---- ---- Finished products $ 192,610 $ 116,711 Raw materials 85,286 125,642 Operating supplies 200,161 180,824 ---------- ---------- $ 478,057 $ 423,177 ========== ==========
4. In the nine month period ended March 31, 1996, net unrealized holding gains on investments increased by $4,021,641 and were $12,529,296 (net of deferred income taxes of $2,500,000) at March 31, 1996.
Amount At Which Carried On The Balance Sheet March 31, 1996 -------------- Held To Maturity Securities (Cost $650,425; Market $632,975) $ 650,425 Available For Sale Securities (Cost $12,041,441 ; Market $27,070,737) 27,070,737 ----------- $27,721,162 ===========
-7- 8 SCOPE INDUSTRIES AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS For the third quarter ended March 31, 1996, net income was $943,963 or $0.76 per share compared to $284,821 or $0.23 per share for the same quarter last year. Total revenues for the third quarter were 27% greater than the revenues for the same quarter last year. Both the Waste Material Recycling segment and the Vocational School Group business experienced increased sales and revenues. Waste Material Recycling sales increased 32% from last year's comparable quarter. Higher selling prices for animal feed products are driving the revenue growth. Vocational School Group revenues were 12% above the year earlier quarter as a result of increased student enrollments. Operating costs for the Waste Material Recycling segment increased compared to the same quarter of last year but the increase was at a lesser rate than the revenue gain. Vocational School Group operating costs were contained at the same level as expenses for the prior year's comparable quarter. General and Administrative expenses increased 19%. Legal expenses and profit sharing provisions were higher in the current quarter than in the comparable quarter last year. During this year's third quarter, both business segments operated profitably. During the third quarter of last fiscal year, the Waste Material Recycling segment operated profitably and the Vocational School Group business operated at a loss. For the nine months ended March 31, 1996, net income was $2,916,353 or $2.36 per share. Last year net income was $825,569 or $0.66 per share for the comparable nine months. Revenues for the nine months ended March 31, 1996 were 25% greater than for the comparable nine months last year. The Waste Material Recycling segment and the Vocational School Group both operated profitably for the current nine month period. During the comparable period last year, the Waste Material Recycling segment operated profitably and the Vocational School Group business operated at a loss. FINANCIAL POSITION Working Capital was $5,866,916 at March 31, 1996. It was $3,526,061 at June 30, 1995. The working capital ratio was 2.3 at March 31, 1996 and at June 30, 1995. Investments are accounted for under Statement of Financial Accounting Standards No. 115 (SFAS 115) "Accounting For Certain Investments in Debt and Equity Securities". At March 31, 1996, investments include $15,029,296 in unrealized gains based on fair values that exceed adjusted costs for certain securities. Shareowners' equity under the provisions of SFAS 115 reflects $12,529,296 net unrealized gain on investments after a provision for deferred income taxes. TAXES The provision for income taxes for the quarter ended March 31, 1996 is $610,000 and represents an effective rate of 39.3% for federal and state income taxes. For the third quarter of last fiscal year, the income tax provision was $30,000 and the effective tax rate was 9.5%. For the nine months ended March 31, 1996 and 1995, the effective income tax rates were 35.3% and 6.8% respectively. Most available tax loss carryforwards were utilized and exhausted in the prior fiscal year. The current fiscal year income, with minor exceptions, is subject to income taxes without adjustments for loss carryforwards. -8- 9 SCOPE INDUSTRIES AND SUBSIDIARIES PART II. OTHER INFORMATION Item 2. Increases and Decreases in Outstanding Securities and Indebtedness. Increases and decreases in outstanding equity securities in the nine months ending March 31, 1996 were as follows:
Common Stock No Par Value ------------ Shares outstanding June 30, 1995 1,244,865 Shares purchased and retired during the nine months (13,500) --------- Shares outstanding March 31, 1996 1,231,365 =========
A corporate resolution requires the retirement of all reacquisitions of common stock. During the nine months ended March 31, 1996, the Registrant purchased and retired 13,500 shares of common stock at a cost of $388,240. Item 6. Exhibits and Reports on Form 8-K. (A) Exhibits - None (B) No Form 8-K was filed for the quarter ended March 31, 1996. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized and accepting responsibility as the signatory. SCOPE INDUSTRIES (Registrant) DATE: May 8, 1996 /s/ John J. Crowley _______________________________________ John J. Crowley, Vice President and Chief Financial Officer -9- EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AT MARCH 31, 1996 AND THE CONSOLIDATED STATEMENT OF INCOME FOR THE QUARTER ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS JUN-30-1996 JAN-01-1996 MAR-31-1996 2,044,126 27,721,162 2,060,199 118,857 478,057 10,463,577 31,257,890 20,471,738 52,773,245 4,596,661 0 0 0 3,921,287 42,315,297 52,773,245 5,913,408 7,050,020 3,383,687 5,818,119 0 0 0 1,553,963 610,000 943,963 0 0 0 943,963 0.76 0.76
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