-----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, J2xT4KVqrE3glpjO/TfsQokYkHLCVP2JIozIeR/B1g3kJpB43IhI1bvyqO+UpgCC IHodp+ys65qOp4UPwrxBYw== 0000897101-95-000489.txt : 19951229 0000897101-95-000489.hdr.sgml : 19951229 ACCESSION NUMBER: 0000897101-95-000489 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951228 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LAMCOR INC CENTRAL INDEX KEY: 0000806549 STANDARD INDUSTRIAL CLASSIFICATION: PAPERBOARD CONTAINERS & BOXES [2650] IRS NUMBER: 411478017 STATE OF INCORPORATION: MN FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 033-10280-C FILM NUMBER: 95604943 BUSINESS ADDRESS: STREET 1: P O BOX 70 HWY 169 NORTH CITY: LESUEUR STATE: MN ZIP: 56058 BUSINESS PHONE: 6126656658 MAIL ADDRESS: STREET 1: P.O. BOX 70 STREET 2: HIGHWAY 169 NORTH CITY: LE SUEUR STATE: MN ZIP: 56058 10-K 1 SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 10-K Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended September 30, 1995 Commission File No. 33-1475C LAMCOR INCORPORATED (Exact name of registrant as specified in its charter) Minnesota 41-1478017 (State or other jurisdiction (IRS Employer Identification No.) of Incorporation or Organization) Highway 169 North, P.O. Box 70, Le Sueur, MN 56058 (Address of principal executive office) (Zip Code) Registrant's telephone number: (612) 332-1997 Securities registered pursuant to Section 12(b) of the Act: 275,000 Shares Of Common Stock Securities registered pursuant to Section 12(g) of the Act: None Common Stock, (no par value) (Title of Class) Indicate by check mark whether the Registrant (1) as filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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___ The aggregate market value of the voting stock held by non-affiliates of the Registrant on September 30, 1995, based on the average bid and asked prices of Common Stock in the over-the-counter market on that date was $2,937,501. 1,341,542 shares of Registrant's Common Stock, no par value were outstanding on September 30, 1995, prior to the effectiveness of the latest practicable date. DOCUMENTS INCORPORATED BY REFERENCE None. CONTENTS Page PART I Item 1. BUSINESS 4 Item 2. PROPERTY 5 Item 3. LEGAL PROCEEDINGS 6 Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 6 PART II Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 6 Item 6. SELECTED FINANCIAL DATA 7 Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 7 Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 8 Item 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 8 PART III Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 9 Item 11. EXECUTIVE COMPENSATION 10 Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 10 Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 11 PART IV Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K 11 PART I Item 1. - BUSINESS General Lamcor Incorporated, formerly Laminations Incorporated was formed in July, 1983 as the successor company to Film Converting Services, Inc. The name was changed in September, 1986 to Lamcor Incorporated. There are two basic processes that take place in the plant of the company. First the roll of plastic film is laminated with another roll of film to give it strength. The other is to apply a heat seal coating to the basic material to act as a sealant, and is called a coated roll. This resulting roll is either used in the next process, or sold to others as is. The laminated rolls are sold to the meat industry, to other food packagers, and as a generic product. The coated rolls are sold to snack food makers, to specialty food manufacturers, and as a generic product. The product sales mix is about 10% laminated rolls, 20% coated rolls, and 70% pouches, and are sold to wide variety of customers. The company has been able in the past to keep the employees employed full time as a result, since it can sell this basic laminated roll to any number of customers. The other process takes the laminated roll of plastic film, folds it over, and makes a pouch. This machine seals the pouch on three sides, cuts it to the desired length, and is able to make the folded over roll wide enough to make two pouches at the same time. These are sold in standard sizes, and some to customers specifications. The pouch that comes from this process is then used for packaging products. The customer takes the pouch, inserts the product, removes the air from the pouch, and seals the fourth side. This removal of air causes the plastic pouch to collapse around the product and the result is the package found in most stores. Some processors do this by machine, but most pack the product in the pouch by hand. The FDA has set standards for this type of plastic film pouch for food products. The company meets these standards. The FDA standards are met by the suppliers of the basic material; the company relies on these written representations and its own testing to ensure that the FDA standards are met. The company has machinery that will enable it to custom make pouches for various customers in different thicknesses and sizes. The advent of microwave cooking has brought new demands to the requirements for plastic packaging of food. Microwave cooking requires that the food be packaged in plastic that will also be used in cooking not just in the storage of the food. The cooking of the food has brought more stringent requirements from the FDA for plastic packaging. The company complies with the FDA requirements, and so far has been able to fully comply. Along with the more stringent requirements has come a vastly expanded market. The convenience of microwave cooking is a market that has barely been tapped at this time. The company feels that the market for microwave cooking will greatly expand in the next few years, and the company wants to be in position to exploit its portion of that market; the plastic packaging of the convenience foods. The pouch that the company makes is in many ways the ideal vehicle to package the microwave foods, and, in fact, the company has several customers that use its pouch at this time in microwave foods, such as entrees and snack foods. About 30% of the production of the products of the company at this time is used for microwave foods. Major Customers Reference is made to Note 9 to the financial statements with regard to customers from which the company derived more than 10% of its sales. Patents and Trademarks The Company has no patents on any of its products, however there is a patent pending on a vacuum seal for its plastic bags. Employees As of September 30, 1995, the Company had 38 full time employees, of which nine are in management and twenty nine are in production. Item 2. - PROPERTY Facilities The Company purchased its manufacturing and office facilities for $340,000 in March, 1991. The Company expanded the plant in 1994, adding an additional 9,500 square feet to bring the size of the plant to 23,000 square feet, at a cost of $210,000. The sales offices were moved from leased space in Edina, Minnesota to expanded space at the plant. The Company added an additional 1,200 square feet at a cost of $100,000 for the new offices. Item 3. - LEGAL PROCEEDINGS None Item 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. PART II Item 5. - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The Company's common stock has been actively traded principally in the Minneapolis over-the-counter market since March 1, 1987. As of September 30, 1995, the following brokerage firms were making a market in the Company's common stock: R.J. Steichen & Co. Corp., Van Clemons Co. The following table sets forth for the periods indicated the range of high and low closing bid quotations per share as reported by the local over-the-counter market. These quotations represent inter-dealer prices, without retail markups, markdowns or commissions and may not necessarily represent actual transactions. Price Per Share High Low Fiscal year 1995 First Quarter (October 1, 1994 through December 31, 1994) $ 3.50 $ 3.00 Second Quarter (January 1, 1995 through March 31, 1995) $ 2.50 $ 1.75 Third Quarter (April 1, 1995 through June 30, 1995) $ 3.37 $ 3.00 Fourth Quarter (July 1, 1995 through September 30, 1995) $ 3.75 $ 3.00 On September 30, 1995 the high closing bid and low asked prices of the Company's common stock were $3.00 and $3.75 per share, respectively. On September 30, 1995 there were 183 holders of record. Item 6. - SELECTED FINANCIAL DATA
Fiscal Years Ended September 30, -------------------------------- 1995 1994 1993 1992 1991 ---------- ---------- ---------- ---------- ---------- Income Statement Data Net Sales $7,158,636 $4,817,411 $3,682,870 $3,190,502 $2,223,107 Income (loss) before extraordinary item $ 358,795 $ 176,918 $ 127,450 $ 192,288 $ 47,622 Net Income (loss) $ 358,795 $ 176,918 $ 127,450 $ 192,288 $ 57,622 Per Share Data Income (loss) before extraordinary item $ .22 $ .12 $ .09 $ .16 $ .04 Net Income (loss) $ .22 $ .12 $ .09 $ .16 $ .05 Cash dividends -- -- -- -- -- As of September 30, ------------------- 1995 1994 1993 1992 1991 ---------- ---------- ---------- ---------- ---------- Balance Sheet Data Total Assets $4,164,080 $3,527,547 $2,374,724 $1,936,955 $1,675,124 Long-term debt, net of current portion $ 852,093 $ 837,761 $ 589,561 $ 316,042 $ 328,581
Item 7. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Profitability was achieved for a sixth consecutive year. Net income was double that of 1994, and was aided, in part, by stability in raw material markets. Management feels that this will be a continuing trend with only moderate increases in fixed costs. Net sales for 1995 were $7,158,636, up from $4,817,411 in 1994, $3,682,870 in 1993. This reflected an increase of 49% in one year and almost double in the last 4 years. Net income was $358,795, compared to $176,918 in 1994, an increase of 103%. Per share income was $.22 per share, as opposed to $.12 in 1994. All income was from operations. Cost of goods sold for 1995 was $5,194,981, compared to $3,542,411 in 1994 and $2,762,358 in 1993. Gross profit was $1,963,655 in 1995 compared to $1,275,000 in 1994 and $920,512 in 1993. Selling and administrative expense for 1995, 1994 and 1993 were $1,244,694, $936,587 and $693,781 respectively. During the course of the year financing was procured to provide capital for building expansion and for new machinery for production. Assets increased from $3,527,547 in 1994 to $4,164,080 in 1995. Long term debt increased from $837,761 in 1994 to $1,277,799, primarily due to building expansion and capital lease obligation. Capital expenditures this year included the delivery of a new P.D.I. pouch machine capable of making large recloseable pouches. Full utilization was only recent, and there are orders employing its capabilities. Ten new offices were completed in the second quarter of 1995. For the past several years the Company has maintained a sales office in Edina, Minnesota, and the lease term ended in 1995. Management determined that the sales operations would be enhanced by a move to the manufacturing headquarters in LeSuer. This put all operations under one roof, at a lower cost, and enhanced communications between sales and production The company funded $15,200 in 1994 and $18,000 in 1995 to the 401(k) plan. Nearly all of the employees contributed to the plan, and management feels that it adds stability to the work force. The company is planning another major expansion to the plant to double its size for manufacturing and warehouse space and to purchase a six color impression printing press in 1996. All printing of the plastic bags has been done by others to this time. The increased volume of sales, and the added space with the new addition to the plant will enable the company to do the printing in its own facility. Management feels that the printing will enable the company to control the timing of the printing, its quality, and enhance profits. Inflation has not had a significant effect on the company, and the company has budgeted 1996 based on moderate economic growth. The only significant variable has been the volatile price of the film purchased as a raw material. Item 8. - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The financial statements are attached following Item 14. Item 9. - DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. PART III Item 10. - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. The executive officers and directors of the Company, with a brief description, are as follows: Name Age Position Leo Lund 64 Chairman of the Board Toby Jensen 43 President David Stewart 55 Director Sue Jones 41 Director Christopher Elliott 38 Director The directors of the company are elected annually by the shareholders for a term of one year or until their successors are elected and qualified. The officers serve at the pleasure of the Board of Directors. LEO LUND, Chairman of the Board and Secretary, age 64. Mr. Lund is an accountant, and was a partner in the firm of Lund & Associates, P.A. from 1955 to 1992, which provided accounting services. Mr. Lund sold his interest in the accounting firm in 1992, and is now semi retired. He serves as a board member of several corporations, which are not registered corporations. Mr. Lund devotes less than 5% of his time to the company. TOBY JENSEN, President, age 43. Mr. Jensen has a degree from the University of Minnesota, and has been in management and sales with 2 flexible packaging companies for the past 17 years. He has been the President of the Company since 1988. DAVID STEWART, Director, age 55. Mr. Stewart is the President of Paragon Enterprises, Inc. a real estate development company. SUE JONES, Director, age 41. Ms Jones was the Vice President and General Manager of Strout Plastics, Inc., for 13 years until 1994. She is now an independent sales representative in the flexible packaging industry. CHRISTOPHER ELLIOTT, Director, age 38. Mr. Elliott is an attorney and has practiced with the firm Christoffel, Elliott and Albrecht since 1989. Item 11. - EXECUTIVE COMPENSATION. The following table sets forth the cash compensation for services rendered in all capacities to the company during the company's fiscal year ended September 30, 1995, as paid by the company to each executive officer whose cash compensation exceeded $60,000 and to all executive officers as a group: Name Capacity Cash Compensation Toby Jensen President $ 93,799 All executive officers as a group $121,499 Item 12. - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. There are presently 1,341,542 shares of the company's common shares outstanding. The following table sets forth the information as to the ownership of each person who, as of the date of this report, owns of record, or is known by the company to own beneficially, more than five percent of the company's common stock, and the officers and directors of the company. Number Of Percent Of Name of Beneficial Owner Shares Shares Leo Lund 145,075 10.8% Tanana, Inc. 122,300 9.1% Kathy Young 103,230 7.6% Christopher Elliott 156,000 11.6% Toby Jensen 45,000 3.3% Sue Jones 5,000 0.3% David Stewart 11,300 0.8% All executive officers and directors as a group (5 individuals) 362,375 27.0% Does not take into account any unexecuted warrants or options. Item 13. - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. See notes 6, 8, 9 & 11 to Financial Statement. PART IV Item 14. - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. (a) Attached are the Financial Statements and Independent Auditor's Report on Examination of Financial Statements for the year ended September 30, 1994, 1993 and 1992. (b) Attached are the following Financial Statement Schedules and Auditors Report on Schedules, Independent Auditors Report on Schedules Schedule V - Property, Plant and Equipment Schedule VI - Accumulated Depreciation, Depletion, and Amortization of Property, Plant and Equipment Schedule IX - Short-term borrowings All other schedules are omitted because they are not required or not applicable or the information is shown in the consolidated financial statements or notes thereto. (c) No report was filed on Form 8-K. (d) There are no exhibits. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated December 22,1995 LAMCOR, INC. by____________________________ Leo W. Lund LAMCOR, INCORPORATED FINANCIAL REPORT SEPTEMBER 30, 1995, 1994 AND 1993 INDEPENDENT AUDITOR'S REPORT Board of Directors and Shareholders Lamcor, Incorporated LeSueur, Minnesota We have audited the accompanying balance sheets of Lamcor, Incorporated as of September 30, 1995 and 1994, and the related statements of income, changes in stockholders' equity and cash flows for each of the three years in the period ended September 30, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Lamcor, Incorporated as of September 30, 1995 and 1994, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 1995, in conformity with generally accepted accounting principles. /s/ HOUSE, NEZERKA & FROELICH, P.A. November 20, 1995
LAMCOR, INCORPORATED BALANCE SHEETS September 30, 1995 and 1994 ASSETS 1995 1994 ----------- ----------- CURRENT ASSETS: Cash and savings account $ 62,872 $ 6,196 Trade accounts receivable, less allowance for doubtful accounts of $10,000 (Notes 4, 5 and 9) 1,046,302 793,610 Inventories (Notes 2, 4 and 5) 986,438 1,064,687 Prepaid expenses and other 14,498 14,414 Deferred tax assets (Note 10) 12,615 -- ----------- ----------- Total current assets 2,122,725 1,878,907 OTHER ASSETS (Note 3) 4,158 295,362 PROPERTY, EQUIPMENT AND IMPROVEMENTS, at cost (Notes 4, 5 and 6): Land 20,000 20,000 Building and improvements 753,862 602,418 Manufacturing equipment 1,981,743 1,313,585 Office equipment and other 128,165 88,133 ----------- ----------- 2,883,770 2,024,136 Less accumulated depreciation 846,573 670,858 ----------- ----------- 2,037,197 1,353,278 ----------- ----------- $ 4,164,080 $ 3,527,547 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Checks issued in excess of bank balance $ -- $ 82,381 Bank lines of credit (Note 4) -- 90,000 Current maturities of long-term debt (Note 5) 97,000 101,500 Current maturities of capital lease obligations (Note 6) 57,103 157,030 Accounts payable 503,645 638,983 Accrued expenses (Note 11) 144,569 86,110 Income taxes payable (Note 10) 128,206 29,436 ----------- ----------- Total current liabilities 930,523 1,185,440 LONG-TERM DEBT, less current maturities (Note 5) 852,093 837,761 CAPITAL LEASE OBLIGATIONS, less current maturities (Note 6) 425,706 -- DEFERRED INCOME TAXES (Note 10) 145,900 97,000 STOCKHOLDERS' EQUITY (Notes 7 and 8): Undesignated shares; authorized 5,000,000 shares; none issued Common stock, no par value; authorized 5,000,000 shares; outstanding shares 1995 1,341,542; 1994 1,328,542 952,809 940,159 Notes receivable arising from the sale of common stock (66,433) (97,500) Retained earnings 923,482 564,687 ----------- ----------- 1,809,858 1,407,346 ----------- ----------- $ 4,164,080 $ 3,527,547 =========== ===========
See Notes to Financial Statements.
LAMCOR, INCORPORATED STATEMENTS OF INCOME Years Ended September 30, 1995, 1994 and 1993 1995 1994 1993 ----------- ----------- ----------- Net sales (Note 9) $ 7,158,636 $ 4,817,411 $ 3,682,870 Cost of goods sold 5,194,981 3,542,411 2,762,358 ----------- ----------- ----------- Gross profit 1,963,655 1,275,000 920,512 Selling, general and administrative expense 1,244,694 936,587 693,781 ----------- ----------- ----------- Operating income 718,961 338,413 226,731 Other income (expense): Interest income 5,181 8,996 8,054 Interest expense (139,247) (66,141) (50,135) Other -- 150 3,500 ----------- ----------- ----------- (134,066) (56,995) (38,581) ----------- ----------- ----------- Income before income taxes 584,895 281,418 188,150 Income taxes (Note 10) 226,100 104,500 60,700 ----------- ----------- ----------- Net income $ 358,795 $ 176,918 $ 127,450 =========== =========== =========== Earning per common share: Primary $ .22 $ .12 $ .09 =========== =========== =========== Fully diluted $ .21 $ .12 $ .09 =========== =========== =========== Shares used in computing earnings per common equivalent shares: Primary 1,615,101 1,448,315 1,363,168 =========== =========== =========== Fully diluted 1,713,000 1,451,483 1,370,214 =========== =========== ===========
See Notes to Financial Statements.
LAMCOR, INCORPORATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY Years Ended September 30, 1995, 1994 and 1993 Notes Receivable Common Stock From Sale of Retained Shares Amount Common Stock Earnings Total ------ ------ ------------ -------- ----- Balance, September 30, 1992 1,285,542 $ 894,034 $ (79,750) $ 260,319 $ 1,074,603 Stock issued for notes receivable/options 30,000 37,500 (36,250) - 1,250 Proceeds from notes receivable - - 8,500 - 8,500 Net income - - - 127,450 127,450 ----------- ---------- ---------- ---------- ----------- Balance, September 30, 1993 1,315,542 931,534 (107,500) 387,769 1,211,803 Stock issued for options 13,000 8,625 - - 8,625 Proceeds from notes receivable - - 10,000 - 10,000 Net income - - - 176,918 176,918 ----------- ---------- ---------- ---------- ----------- Balance, September 30, 1994 1,328,542 940,159 (97,500) 564,687 1,407,346 Stock issued for options/compensation 3,000 5,150 - - 5,150 Interest on note receivable - - (7,683) - (7,683) Proceeds from notes receivable - - 46,250 - 46,250 Stock issued for notes receivable/options 10,000 7,500 (7,500) - - Net income - - - 358,795 358,795 ----------- ---------- ---------- ---------- ----------- Balance, September 30, 1995 1,341,542 $ 952,809 $ (66,433) $ 923,482 $ 1,809,858 =========== ========== ========== ========== ===========
See Notes to Financial Statements.
LAMCOR, INCORPORATED STATEMENTS OF CASH FLOWS Years Ended September 30, 1995, 1994 and 1993 1995 1994 1993 -------------- -------------- -------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 358,795 $ 176,918 $ 127,450 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 176,179 125,120 103,556 Deferred income taxes 36,285 42,000 22,000 Stock exchanged for compensation 2,150 - - Changes in assets and liabilities: Trade accounts receivable (252,692) (181,959) (166,652) Inventories 78,249 (628,786) 63,084 Prepaid expenses and other (7,767) (1,317) (4,967) Refundable income taxes - 37,124 (37,124) Accounts payable (135,338) 269,482 51,388 Accrued expenses 58,459 22,275 3,638 Income taxes payable 98,770 29,436 (75,000) -------------- -------------- -------------- Net cash provided by (used in) operating activities 413,090 (109,707) 87,373 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (214,923) (294,491) (431,814) Other deposits (1,777) (134,493) (3,309) -------------- -------------- -------------- Net cash used in investing activities (216,700) (428,984) (435,123) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from short-term borrowings 1,000,000 545,000 85,000 Principal payments on short-term borrowings (1,090,000) (455,000) (85,000) Principal payments on long-term debt and capital lease (136,583) (85,766) (99,478) Proceeds from long-term debt 120,000 350,442 398,020 Collections on note receivable from common stock 46,250 10,000 8,500 Proceeds from exercise of stock options 3,000 8,625 1,250 Checks issued in excess of bank balance - 82,381 - Payments on checks issued in excess of bank balance (82,381) - - -------------- -------------- -------------- Net cash provided by (used in) financing activities (139,714) 455,682 308,292 -------------- -------------- -------------- Net increase (decrease) in cash and savings account 56,676 (83,009) (39,458) Cash and savings account: Beginning 6,196 89,205 128,663 -------------- -------------- -------------- Ending $ 62,872 $ 6,196 $ 89,205 ============== ============== ============== SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: Capital lease obligation for equipment/deposit $ 353,040 $ 157,030 $ - ============== ============== ============== Equipment deposit used for purchase of equipment $ 291,673 $ - $ 60,000 ============== ============== ============== Stock issued for notes receivable $ 7,500 $ - $ 36,250 ============== ============== ============== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid for interest $ 140,019 $ 61,346 $ 50,540 ============== ============== ============== Cash paid for income taxes $ 91,045 $ 15,621 $ 150,824 ============== ============== ============== Cash refunded for income taxes $ - $ 19,681 $ - ============== ============== ==============
See Notes to Financial Statements. LAMCOR, INCORPORATED NOTES TO FINANCIAL STATEMENTS Years Ended September 30, 1995, 1994 and 1993 Note 1. Nature of Business and Significant Accounting Policies: Nature of business: The Company is engaged in the business of laminating plastic and manufacturing of plastic pouches used in the food and medical industries with sales throughout the United States. A summary of the Company's significant accounting policies follows: Inventories: Inventories are stated at the lower of cost (using standard costs for work in progress and finished goods) or market, computed on a basis which approximates the first-in, first-out (FIFO) method. Property, equipment and improvements: Property, equipment and improvements are stated at cost. For financial reporting purposes, depreciation is computed using the straight-line method over the following estimated useful lives: Years Building and improvements 3-40 Manufacturing equipment 5-15 Office equipment and other 3-5 Depreciation on property, equipment and improvements was $175,715, $124,805 and $103,556 for the years ended September 30, 1995, 1994 and 1993, respectively. For income tax reporting purposes, other lives and methods are used; deferred income taxes are provided for these differences. Income taxes: Effective October 1, 1993, the Company began accounting for income taxes in accordance with SFAS No. 109, "Accounting for Income Taxes" (see Note 10). Deferred tax assets and liabilities are recognized for the future consequences attributable to temporary differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Earnings per share: Earnings per share has been determined by dividing net income by the weighted average common shares outstanding during each period plus the effect of common shares contingently issuable, primarily from stock options as computed using the modified treasury stock method. Estimates and assumptions: 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 revenues and expenses during the reporting period. Actual results could differ from those estimates. Note 2. Inventories: The components of inventory are as follows: 1995 1994 -------- -------- Raw materials $246,576 $ 480,394 Work in progress 416,504 355,094 Finished goods 323,358 229,199 -------- -------- $986,438 $1,064,687 ======== ======== Note 3. Other Assets: 1995 1994 -------- -------- Building lease deposit $ -- $ 844 Equipment deposits 277 291,673 Refinancing costs, less accumulated amortization 1995 $928; 1994 $464 2,381 2,845 Land deposit 1,500 -- -------- -------- $ 4,158 $295,362 ======== ======== Note 4. Bank Line of Credit: The Company has two revolving lines of credit with a bank in the maximum amount of $300,000 and $90,000 which expire September 26, 1998 and October 10, 1995, respectively. Interest is payable at 1.5% over the bank's reference rate which was 8.75% at September 30, 1995. The notes are payable on demand and are collateralized by receivables, inventory and equipment. Note 5. Long-Term Debt:
1995 1994 -------------- -------------- Mortgage payable - bank, due in monthly installments of $3,285 including interest at 1.75% over the bank's reference rate which was 8.75% at September 30, 1995, balance due December 6, 2000, collateralized by building and land $ 384,772 $ 392,360 Notes payable, due in monthly installments including interest from either 8.5% to 9.6% or 1% to 1.75% over the bank's reference rate which was 8.75% at September 30, 1995, balances are due from October 5, 1995 to September 15, 2001, collateralized by accounts receivable, inventory and equipment 564,321 546,901 -------------- -------------- 949,093 939,261 Less current maturities 97,000 101,500 -------------- -------------- $ 852,093 $ 837,761 ============== ==============
Maturities for the next five years on long-term debt outstanding at September 30, 1995 are as follows: Year Ending September 30 1996 $ 97,000 1997 94,883 1998 102,389 1999 103,781 2000 169,057 After 381,983 -------- $949,093 Note 6. Leases: On August 11, 1994, the Company entered into a capital lease agreement with a financing company to acquire $489,920 of equipment. The financing company advanced the manufacturer $157,030 for which the Company was directly obligated as of September 30, 1994. Payments totaling $332,890 were made by the financing company during the 1995 year. The lease began on May 1, 1995 and calls for 84 monthly payments of $8,147 including interest at 10.33%. On January 17, 1995, the Company entered into a capital lease agreement to purchase a truck for $18,884. The lease requires 48 monthly payments of $400 including interest at 9.75%. The Company also entered into a capital lease agreement to purchase a computer for $4,304 which began on April 30, 1995 and requires 36 monthly payments of $130. The following is a schedule by year of the future minimum lease payments due under capital leases together with the present value of the net minimum lease payments: Year Ended September 30: 1996 $104,125 1997 104,125 1998 103,345 1999 99,360 2000 97,763 After 2000 154,791 -------- Total minimum lease payments 663,509 Less amount representing interest 180,700 -------- Present value of minimum lease payments 482,809 Less current obligation under capital lease 57,103 -------- Non-current obligation under capital lease $425,706 ======== Cost and accumulated amortization of leased assets are as follows: 1995 1994 -------------- ---------- Cost $ 513,108 $ - Accumulated amortization 23,290 - -------------- ---------- $ 489,818 $ - ============== ========== Amortization of assets under capital leases is included in depreciation expense and was $23,290 for the year ended September 30, 1995. The Company rented space for a Minneapolis sales office under an operating lease which commenced June 1, 1990 and expired May 31, 1995. Rent expense under all operating leases was $16,488, $14,810 and $12,962 for the years ended September 30, 1995, 1994 and 1993, respectively. Note 7. Stock Options: The Company has reserved shares of common stock for issuance to key employees and stockholders under incentive stock option and purchase plans. Options are exercisable on a graduated scale and/or expire based on the individual terms of the option agreements. The options are exercisable at prices ranging from $ .50 to $2.00 per share. Other pertinent information related to the plan is as follows:
September 30 -------------------------------------------------------- 1995 1994 1993 -------------- -------------- -------------- Under option, beginning of year 598,000 576,000 455,000 Granted 5,000 45,000 156,000 Terminated and cancelled - (10,000) (5,000) Exercised (13,000) (13,000) (30,000) -------------- -------------- -------------- Under option, end of year 590,000 598,000 576,000 ============== ============== ============== Options exercisible, end of year 505,000 484,000 496,000 ============== ============== ==============
The options exercised during the years ended September 30, 1995, 1994 and 1993 were at an average price of $.81, $.66 and $1.25 per share, respectively. Note 8. Notes Receivable Arising From the Sale of Common Stock:
1995 1994 -------------- --------- Notes receivable from exercise of options for the Company's common stock - Due December 1, 1994, including interest at 2% over prime $ - $ 5,000 Due April 1, 1996, including interest at 6% 58,933 51,250 Due August 2, 1996, including interest at 6% 7,500 - Due in quarterly installments of $1,250 through April 1995, balance due July 1, 1995 - 41,250 -------------- -------------- $ 66,433 $ 97,500 ============== ==============
Issued shares are being held by the Company as collateral for the above notes pending payment of the amounts due. Note 9. Major Customers: The Company derived more than 10% of its net sales from the following unaffiliated customers and had receivable balances from those customers in the amounts of:
Year Ended September 30 ----------------------- 1995 1994 1993 --------------------------- -------------------------- -------------------------- Customer Sales Receivable Sales Receivable Sales Receivable -------- ----------- ----------- ---------- ---------- ---------- ----------- A $ * $ * $ 528,983 $ 68,804 $ 475,858 $ 75,660 B 942,035 87,299 * * * *
* The net sales to customers A and B were less than 10% of the total net sales for the period indicated. Note 10. Income Taxes: Effective October 1, 1993, the Company adopted SFAS No. 109, "Accounting for Income Taxes." The adoption of Statement 109 changes the Company's method of accounting for income taxes from the deferred method to a liability method. Under the deferred method, the Company recorded the tax effects of timing differences between financial reporting and taxable income. As explained in Note 1, the liability method requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the reported amounts of assets and liabilities and their tax bases. The cumulative effect relating to the adoption of Statement No. 109 was not significant. The income tax components are as follows:
Year Ended September 30 ----------------------- 1995 1994 1993 -------------- -------------- -------------- Currently payable: Federal $ 165,815 $ 51,700 $ 31,000 State 24,000 10,800 7,700 -------------- -------------- -------------- 189,815 62,500 38,700 Deferred income taxes 36,285 42,000 22,000 -------------- -------------- -------------- $ 226,100 $ 104,500 $ 60,700 ============== ============== ==============
Net deferred tax liabilities consist of the following:
1995 1994 -------------- ------------- Deferred tax liabilities: Depreciation $ 145,900 $ 97,000 Deferred tax assets: Allowance for doubtful accounts 3,400 - Vacation accrual 4,018 - Inventory capitalization 5,197 - -------------- ---------- 12,615 - -------------- ---------- $ 133,285 $ 97,000 ============== ==============
Differences between income tax expense and the amount computed by applying the statutory federal income tax rates to earnings before income taxes are as follows:
1995 1994 1993 -------- --------- -------- Statutory rate applied to income at 34% $198,900 $ 95,700 $ 64,000 Incremental tax brackets -- 13,000 (7,300) State taxes, net of federal tax benefit 18,100 10,500 7,000 Other 9,100 (14,700) (3,000) -------- --------- -------- $226,100 $ 104,500 $ 60,700 ======== ========= ========
Note 11. Other Accrued Expenses: Other accrued expenses consist of the following:
1995 1994 -------------- -------------- Accrued wages and related expenses $ 42,820 $ 29,037 Accrued commissions 46,189 27,166 Accrued profit sharing 18,000 - Payable to chairman 29,680 22,240 Other 7,880 7,667 -------------- -------------- $ 144,569 $ 86,110 ============== ==============
Note 12. Profit Sharing Plan: During the year ended September 30, 1993, the Company implemented a profit sharing plan under Section 401(k) of the Internal Revenue Code for all eligible employees. The Plan provides that Company contributions are at the discretion of the Board of Directors. In addition, participants may elect to enter into salary reduction agreements with the Company for a portion of their compensation. Company contributions for the years ended September 30, 1995, 1994 and 1993 were $18,000, $15,300 and $0, respectively. INDEPENDENT AUDITOR'S REPORT ON SCHEDULES Board of Directors and Shareholders Lamcor, Incorporated LeSueur, Minnesota Our audits of the financial statements of Lamcor, Incorporated included schedules V, VI and IX contained herein, for the years ended September 30, 1995, 1994 and 1993. In our opinion, such schedules present fairly the information required to be set forth therein in conformity with generally accepted accounting principles. HOUSE, NEZERKA & FROELICH, P.A. Bloomington, Minnesota November 20, 1995
LAMCOR, INCORPORATED SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT COL. A COL. B COL. C COL. D COL. E COL. F Balance at Other Balance Beginning Additions Changes - at End Classifications of Period at Cost Retirements Add (Deduct) of Period Year ended September 30, 1995 Land $ 20,000 $ - $ - $ - $ 20,000 Building and improvements 602,418 151,444 - - 753,862 Manufacturing equipment 1,313,585 668,158 - - 1,981,743 Office equipment and other 88,133 40,032 - - 128,165 ----------- ---------- ---------- ---------- ----------- $ 2,024,136 $ 859,634 $ - $ - $ 2,883,770 =========== ========== ========== ========== =========== Year ended September 30, 1994 Land $ 20,000 $ - $ - $ - $ 20,000 Building and improvements 390,638 211,780 - - 602,418 Manufacturing equipment 1,246,594 66,991 - - 1,313,585 Office equipment 72,969 15,720 556 - 88,133 ----------- ---------- ---------- ---------- ----------- $ 1,730,201 $ 294,491 $ 556 $ - $ 2,024,136 =========== ========== ========== ========== =========== Year ended September 30, 1993 Land $ 20,000 $ - $ - $ - $ 20,000 Building and improvements 363,135 27,503 - - 390,638 Manufacturing equipment 824,467 422,127 - - 1,246,594 Office equipment 30,785 42,184 - - 72,969 ----------- ---------- ---------- ---------- ----------- $ 1,238,387 $ 491,814 $ - $ - $ 1,730,201 =========== ========== ========== ========== ===========
Depreciation and amortization of building, equipment and improvements are provided on the straight-line method over the following estimated useful lives of the assets: Years Building and improvements 3-40 Manufacturing equipment 5-15 Office equipment and other 3-5 LAMCOR, INCORPORATED SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
COL. A COL. B COL. C COL. D COL. E COL. F Additions Balance at Charged to Other Balance Beginning Costs and Changes - at End Description of Period Expense Retirement Add (Deduct) of Period Year ended September 30, 1995 Land $ - $ - $ - $ - $ - Building and improvements 60,036 21,960 - - 81,996 Manufacturing equipment 574,165 136,013 - - 710,178 Office equipment and other 36,657 17,742 - - 54,399 ----------- ---------- ---------- ---------- ----------- $ 670,858 $ 175,715 $ - $ - $ 846,573 =========== ========== ========== ========== =========== Year ended September 30, 1994 Land $ - $ - $ - $ - $ - Building and improvements 40,522 19,514 - - 60,036 Manufacturing equipment 480,938 93,227 - - 574,165 Office equipment 25,149 12,064 556 - 36,657 ----------- ---------- ---------- ---------- ----------- $ 546,609 $ 124,805 $ 556 $ - $ 670,858 =========== ========== ========== ========== =========== Year ended September 30, 1993 Land $ - $ - $ - $ - $ - Building and improvements 27,306 13,216 - - 40,522 Manufacturing equipment 397,532 83,406 - - 480,938 Office equipment 18,215 6,934 - - 25,149 ----------- ---------- ---------- ---------- ----------- $ 443,053 $ 103,556 $ - $ - $ 546,609 =========== ========== ========== ========== ===========
LAMCOR, INCORPORATED SCHEDULE IX - SHORT-TERM BORROWINGS
COL. A COL. B COL. C COL. D COL. E COL. F Maximum Average Weighted Weighted Amount Amount Average Balance Average Outstanding Outstanding Interest Rate Period and Category of at End Interest During During the During the Short-Term Borrowings of Period Rate the Period Period (5) Period (6) - --------------------- ----------- ---------- ---------- ---------- ----------- Year ended September 30, 1995 Bank line of credit (1) $ - 10.5% $ 300,000 $ 130,534 10.3% Bank line of credit (2) - - - - - Year ended September 30, 1994 Bank line of credit (1) $ 90,000 9.25% $ 185,000 $ 47,530 5.5% Year ended September 30, 1993 Bank line of credit (3) $ - 7.0% $ 35,000 $ 7,000 7.0% Bank line of credit (4) - - - - -
(1) Note payable to bank under a revolving line of credit borrowing arrangement which expires September 26, 1998. Collateralized by receivables, inventory and equipment. (2) Note payable to bank under a revolving line of credit borrowing arrangement which expires October 10, 1995. Collateralized by receivables, inventory and equipment. (3) Note payable to bank under a revolving line of credit borrowing arrangement which expires November 3, 1994. Collateralized by receivables, inventory and equipment. (4) Note payable to bank dated September 28, 1993 under a revolving line of credit borrowing arrangement which expires December 28, 1998. Collateralized by receivables, inventory and equipment. (5) Total of daily outstanding principal balances divided by days in the year. (6) Actual interest divided by the average amount outstanding. EX-27 2
5 YEAR SEP-30-1995 SEP-30-1995 62,872 0 1,056,302 10,000 986,438 2,122,725 2,883,770 846,573 4,164,080 930,523 1,277,799 0 0 952,809 (66,433) 4,164,080 7,158,636 7,158,636 5,194,981 5,194,981 (5,181) 0 139,247 584,895 226,100 358,795 0 0 0 358,795 .22 .21
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