SECURITIES & EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM-10QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended January 31, 1995 Commission file number 0-9949
---------------- ------
GREAT AMERICAN RECREATION, INC.
-------------------------------
(exact name of registrant as specified in its charter)
New Jersey 22-2381071
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
P.O. Box 848, McAfee, New Jersey 07428
- ---------------------------------------- ----------
(address of principal executive offices) (zip code)
(201) 827-2000
- ----------------------------------------------------
(Registrant's telephone number, including area code)
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 preceding twelve 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 close of the period covered by this report.
Common stock $.01 par, shares outstanding at January 31, 1995, 53,991,338.
THIS REPORT CONTAINS A TOTAL OF 26 PAGES
PAGE 1 OF 26
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GREAT AMERICAN RECREATION, INC. & SUBSIDIARIES
CONDENSED CONSOLIDATION BALANCE SHEET
JANUARY 31, 1995 & APRIL 30, 1994
UNAUDITED
JANUARY 31, 1995 APRIL 30, 1994
(SEE NOTE BELOW)
Current assets: ---------------- --------------
Cash $ 92,625 $ 4,335,361
Other receivables, net 3,390,694 2,201,263
Prepaid and other assets 520,452 525,338
--------- ---------
Current assets 4,003,771 7,061,962
--------- ---------
Noncurrent assets:
Net investment in Princeton New York Parent 11,250,833 10,479,813
Receivable from Princeton New York Parent 23,582,552 19,043,479
Other receivables, net 1,230,858 467,728
Other assets 2,022,950 5,990,971
Investment in and advances to
unconsolidated subsidiary 1,817,383 1,813,726
Property, plant and equipment, net 50,426,327 47,846,856
---------- -----------
Noncurrent assets 90,330,903 85,642,573
---------- ----------
Total assets $ 94,334,674 $ 92,704,535
========== ==========
NOTE: The balance sheet at April 30, 1994, has been taken from the audited
financial statements at that date and condensed.
SEE ACCOMPANYING NOTES
PAGE 2 OF 26
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GREAT AMERICAN RECREATION, INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
JANUARY 31, 1995 & APRIL 30, 1994
UNAUDITED
JANUARY 31, 1995 APRIL 30,1994
(SEE NOTE BELOW)
Current liabilities: ---------------- ---------------
Accounts payable $ 3,051,527 $ 1,610,803
Accrued liabilities 10,776,141 6,831,863
Deferred revenue and other liabilities 3,240,520 1,037,383
Debt 34,457,401 7,183,312
----------- ----------
Current liabilities 51,525,589 16,663,361
----------- ----------
Noncurrent liabilities:
Debt 6,912,768 35,364,065
---------- ----------
Total liabilities 58,438,357 52,027,426
---------- ----------
Commitments and contingencies (Note 7)
Redeemable preferred stock (2,005
aggregate liquidation value 8,350,000) 2,104,867 1,914,730
--------- ---------
Stockholder's equity:
Cumulative, convertible preferred stock:
$1 par value; authorized 5,000,000 shares
issued 654,639 at January 31, 1995
and 880,365 at April 30, 1994 654,639 880,365
Series B convertible preferred stock $1 par
value;issued 12,500 shares at January 31, 1995
and -0- at April 30, 1994 12,500 -0-
Common stock:
$.01 par value; authorized 100,000,000
shares issued 53,991,338 at January 31,
1995 and 40,278,360 at April 30, 1994 539,914 402,784
Paid in capital in excess of par value 41,975,302 36,588,580
Retained earnings since elimination of
deficit of $31,017,247 in April 30, 1992
quasi-reorganization (9,326,831) 954,724
Less common stock in treasury, at cost,
2,378 shares (64,074) (64,074)
---------- ----------
Total stockholders' equity 33,791,450 38,762,379
---------- ----------
Total liabilities and stockholders'
Equity $94,334,674 $92,704,535
========== ==========
NOTE: The balance sheet at April 30, 1994, has been taken from the audited
financial statements at that date and condensed.
SEE ACCOMPANYING NOTES
PAGE 3 OF 26
GREAT AMERICAN RECREATION, INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED JANUARY 31, 1995 & JANUARY 31, 1994
UNAUDITED
NINE MONTHS ENDED
JANUARY 31, JANUARY 31,
1995 1994
Revenue: ------------- ------------
Admission $ 8,746,520 $10,500,837
Food & beverage 2,801,654 3,581,932
Other 4,217,568 4,554,046
---------- ----------
Total revenue 15,765,742 18,636,815
Cost of Operations:
Admission 7,034,127 6,785,803
Food & beverage 2,140,210 2,236,005
Other 2,396,945 2,515,860
---------- ----------
11,571,282 11,537,668
Selling, General & Administrative 3,776,684 3,960,689
Interest 1,192,350 2,139,685
Amortization of financing costs 22,239 75,140
Dividend income from Princeton New York
Parent (1,171,047) (1,060,911)
Depreciation and Amortization 874,051 631,294
---------- ----------
16,265,559 17,283,565
---------- ----------
(499,817) 1,353,250
Writedown of goodwill relating to
investment in boxing interests (Note 5) (5,077,811) -0-
Reserve on dividend and interest income
relating to Princeton Parent (Notes 4 and 11) (1,009,781) -0-
Non cash financing costs (Notes 9 and 10) (625,000) -0-
Litigation claims (Note 7) (3,069,146) -0-
------------ ---------
(10,281,555) 1,353,250
Income taxes -0- -0-
------------ ---------
Net Income (Loss) (10,281,555) 1,353,250
Less: preferred stock dividend
requirements -0- 768,263
------------ ---------
Net income (Loss) applicable to common
stockholders $(10,281,555) $ 584,987
========== =========
Per Common Share:
Net Income (Loss) $ (0.21) $ 0.03
========== =========
Weighted average number of common shares
used in computing earnings per share 48,632,099 20,672,164
SEE ACCOMPANYING NOTES
PAGE 4 OF 26
GREAT AMERICAN RECREATION, INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED JANUARY 31, 1995 & JANUARY 31, 1994
UNAUDITED
THREE MONTHS ENDED
JANUARY 31, JANUARY 31,
1995 1994
Revenue: ----------- -----------
Admission $ 1,648,728 $ 2,943,005
Food & beverage 511,082 939,545
Other 1,615,442 2,139,560
--------- ---------
Total revenue 3,775,252 6,022,110
Cost of Operations:
Admission 2,322,575 2,000,920
Food & beverage 633,702 565,420
Other 507,590 1,070,243
3,463,867 3,636,583
Selling, General & Administrative 1,308,820 1,165,222
Interest 477,474 815,865
Amortization of financing costs 7,413 -0-
Dividend income from Princeton New York
Parent (400,027) (362,404)
Depreciation and Amortization 305,725 234,436
--------- ---------
5,163,272 5,489,702
--------- ---------
(1,388,020) 532,408
Writedown of goodwill relating to
investment in boxing interests (Note 5) (5,077,811) -0-
Reserve on dividend and interest income
relating to Princeton Parent (Notes 4
and 11) (1,009,781) -0-
Non cash financing costs (Notes 9 and 10) (625,000) -0-
Litigation claims (Note 7) (3,069,146) -0-
------------ ---------
(11,169,758) 532,408
Income taxes -0- -0-
------------ ---------
Net Income (Loss) (11,169,758) 532,408
Less: preferred stock dividend
requirements -0- 308,263
------------ ---------
Net income (Loss) applicable to common
stockholders $(11,169,758) $ 224,145
========== ==========
Per Common Share:
Net Income (Loss) $ (0.21) $ 0.01
========== ==========
Weighted average number of common shares
used in computing earnings per share 53,275,136 26,439,580
SEE ACCOMPANYING NOTES
PAGE 5 OF 26
GREAT AMERICAN RECREATION, INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
NINE MONTHS ENDED JANUARY 31, 1995 & JANUARY 31, 1994
UNAUDITED
NINE MONTHS ENDED
JANUARY 31, JANUARY 31,
1995 1994
Cash flows from operating activities: ------------- -------------
Income (Loss) from operations $(10,281,555) $ 1,353,250
Adjustments to reconcile net loss to net
cash (used in) provided by continuing
operations:
Depreciation and amortization 874,051 631,294
Amortization of financing costs 647,239 75,140
Reserve on advances and investment in
unconsolidated subsidiary 421,215 309,133
Dividend income paid-in-kind (1,171,047) (1,060,911)
Interest expense paid-in-kind -0- 309,096
Reserve on dividend and interest income
relating to Princeton Parent 1,009,781 -0-
Writedown of Good Will 5,077,811 -0-
Change in assets and liabilities:
Prepaid and other assets and deferred
charges (1,312,267) (503,579)
Other receivables (1,952,806) (359,584)
Advances to unconsolidated subsidiary (424,872) (314,192)
Receivable from Princeton New York Parent (5,148,827) (6,612,980)
Accounts payable & accrued liabilities 5,478,902 824,010
Deferred revenue and other liabilities 2,203,137 672,199
---------- -----------
Net cash used in operations (4,579,238) (4,677,124)
---------- -----------
Cash flows from investing activities:
Utilization of escrow held for debt
payments -0- 1,520,000
Utilization of escrow held for interest
payments -0- 463,500
Additions to properties (3,218,398) (2,784,185)
----------- ----------
Net cash used in investing activities (3,218,398) (800,685)
----------- ----------
Cash flows from financing activities:
Additional borrowings 4,522,624 531,028
Repayment of borrowings (64,345) (2,204,128)
Costs in connection with exchange offering (291,318) -0-
Issuance of common stock -0- 8,688,287
Dividends on 10% preferred stock (612,061) (768,263)
--------- ----------
Net cash provided by financing activities 3,554,900 6,426,924
--------- ----------
Net increase (decrease) in cash (4,242,736) 949,115
Cash balance at beginning of period 4,335,361 49,849
--------- ---------
Cash balance at end of period $ 92,625 $ 998,964
========== ==========
SEE ACCOMPANYING NOTES
PAGE 6 OF 26
GREAT AMERICAN RECREATION, INC. & SUBSIDIARIES
SUPPLEMENTARY SCHEDULE OF NON-CASH OPERATING,
INVESTING AND FINANCING ACTIVITIES
NINE MONTHS ENDED JANUARY 31, 1995 & JANUARY 31, 1994
UNAUDITED
NINE MONTHS ENDED
JANUARY 31, JANUARY 31,
1995 1994
----------- ------------
Accounts Payable $ 93,900 $ 475,000
Common stock and Paid-in-Capital issued for
services (93,900) (475,000)
Common stock and Paid-in-Capital issued in
connection with exchange offering (5,612,029) -0-
Subordinated debentures (Note 9) 5,612,029 -0-
Common stock in Paid-in-Capital (23,457) -0-
Subordinated debentures converted to common
stock 23,457 -0-
Preferred stock and Paid-in-Capital issued in
connection with financing costs of demand
loans (625,000) -0-
Financing costs 625,000 -0-
Common stock and Paid-in-Capital issued in
connection with settlement of lawsuit (50,000) -0-
Other assets - stock held in escrow 50,000 -0-
---------- ----------
Net non-cash operating, investing and
financing activities $ -0- $ -0-
========== ===========
SEE ACCOMPANYING NOTES
PAGE 7 OF 26
GREAT AMERICAN RECREATION, INC. & SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED JANUARY 31, 1995 & JANUARY 31, 1994
(UNAUDITED)
NOTE 1 - Basis of Presentation
- ------------------------------
The condensed consolidated balance sheet as of January 31, 1995, the
condensed consolidated statement of operations for the nine months ended
January 31, 1995 and 1994, and the condensed consolidated statement of
cash flows for the periods then ended are unaudited and reflect all normal
and recurring adjustments which are, in the opinion of management,
necessary for a fair presentation of such data. Results of operations for
the nine months ended January 31, 1995 and 1994 are not necessarily
indicative of the results which may be expected for any other interim period
or for the year taken as a whole. These statements should be read in
conjunction with Form 10-KSB for fiscal 1994, which is on file with the
Securities and Exchange Commission.
NOTE 2 - Reclassification
- -------------------------
Certain fiscal 1995 items have been reclassified to conform with the
fiscal 1994 presentation.
NOTE 3 - Quasi-Reorganization
- -----------------------------
On April 30, 1992, the board of directors of the Company and its subsidiaries
approved a corporate readjustment of their accounts, effected in the form of
a quasi-reorganization, which resulted in the adjustment of assets and
liabilities to estimated fair values and elimination of the accumulated
deficit, effective April 30, 1992. The Company had implemented the
quasi-reorganization at that time since it had completed its reorganizations
with respect to real estate development activities, raised substantial new
capital and completed the necessary restructuring which will permit the
concentration of efforts on recreational activities.
The net amount of such revaluation adjustments together with the accumulated
deficit as of the date thereof, was transferred to paid-in capital in
accordance with the accounting principles applicable to quasi-reorganizations.
The adjustments include writedowns of certain deferred costs and other
intangibles not considered to have future value, revaluations of land,
depreciable assets, receivables and adjustments to deferred gains,
deferred revenue and debt.
The quasi-reorganization resulted in a significant write-up of non-depreciable
assets with a significant write-down of depreciable assets based upon an
independent appraisal. The result was a substantial improvement in reported
net income in the absence of any improvement in operating performance.
The effect of the quasi-reorganization in future financial statements is to
reduce depreciation and amortization expense by approximately $4,072,000
per year. These reductions and changes have had a material effect on the
comparability of current financial statements as compared with those for
years ending through April 30, 1992.
PAGE 8 OF 26
GREAT AMERICAN RECREATION, INC. & SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED JANUARY 31, 1995 & JANUARY 31, 1994 (UNAUDITED)
NOTE 4 - Investment in Princeton-New York Parent, Inc.
- ------------------------------------------------------
On June 15, 1989, the Company entered into an Agreement and Plan of Merger
whereby the Company's real estate and spa operations were combined under
the control of a corporation, Princeton-New York Parent, Inc., ("Princeton"),
which is partially owned by three directors of the Company. Under the
original terms of the transaction, the Company received 30% of the stock of
the affiliated corporation and received 5% of the gross revenues realized
from the sale of residential units developed and sold on the land presently
owned by the combined entities. In addition, the affiliated corporation
assumed certain indebtedness of the former real estate subsidiary of the
Company and had agreed to reimburse the Company's net operating costs of
the former subsidiaries from the date of the plan to divest to the closing
of the transaction, which totaled approximately $6,400,000, and, furthermore,
had agreed to pay to the Company an additional $2,100,000. The Company
received an $8.5 million note for the cost of reimbursement and the purchase
price of the subsidiaries which was payable over a maximum of ten years, with
interest at prime plus 2 1/2%, payable quarterly. This transaction was
completed at the end of the second quarter of fiscal 1990, with a resulting
gross pre-tax gain to the Company of approximately $3,178,000. Through April
30, 1992, the affiliated corporation prepaid approximately $7,145,000 of the
note.
On April 30, 1992, the board of directors of the Company and Princeton
authorized the conversion of the Company's 30% equity interest in Princeton,
along with its receivables and its entitlement to 5% of residential unit
sales revenue of Princeton into a preferred stock investment. The conversion
to preferred stock was made to improve Princeton's financial condition and
recognize the long-term nature of the Company's investment in Princeton.
The investment in preferred stock is accounted for under the cost method
commencing April 30, 1992. Under this method of accounting, the Company will
include dividends paid by Princeton on the preferred stock in income when
received. The Company will no longer include a share of Princeton's income
or losses in its income statement. In the year ended April 30, 1992, the
Company included a charge against income of $2,361,000 as its share of
Princeton's net loss.
The preferred stock has a liquidation value of $16,401,082 at January 31, 1995,
and a dividend rate of 10%. Dividends are cumulative and can be paid-in-kind
with additional preferred stock or, at the option of Princeton, in cash.
On August 12, 1994, Princeton-New York Investors, Inc. and certain affiliated
entities commenced a proceeding under Chapter XI of the United States
Bankruptcy Code. The Company is unable to state at this time the impact,
if any, of such proceeding on the Company or Princeton. There can be no
assurance that the effects of such bankruptcy proceeding may not have an
adverse impact on Princeton which could impair the Company's investment in
Princeton. As a result of the proceeding, however, the Company has
determined to reserve all interest income the Company records on its
receivables with Princeton and all dividend income the Company records on its
preferred stock investment in Princeton commencing the third quarter of 1995
until such time that the impact of the proceeding can be quantified.
PAGE 9 OF 26
GREAT AMERICAN RECREATION, INC. & SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED JANUARY 31, 1995 & JANUARY 31, 1994
(UNAUDITED)
NOTE 5 - Boxing Interests
- -------------------------
On December 5, 1994, the Company entered into an agreement with a
non-affiliated person to purchase his remaining boxing interest of 7 l/2
percent in Charles Murray and Raymond Mercer and 2 l/2 percent of his
interest in Alfred Cole and the assignment of notes executed by Charles
Murray in favor of the seller of the interest in the principal amount of
$50,000 and the assignment of a note executed by Raymond Mercer in favor
of the seller of the interest in the principal amount of $150,000 in
consideration of a $200,000 promissory note with monthly principal payments
commencing January 1, 1995 through April 1, 2003. Interest on the note is
payable at prime and payable solely from the Company's proceeds received
from its interest in the purse amounts of the fighters.
On December 8 and 16, 1994 the Company entered into agreements with
non-affiliated Company's whereby the Company assigned 22 l/2 percent of its
interest in the Company's purse revenues of Raymond Mercer and Charles
Murray in consideration for the non-affiliated corporations providing all
training expense obligations associated with the fighters.
The Company's wholly owned subsidiary Great American Boxing has under
management, four contenders in the welterweight, middleweight, cruiserweight,
and heavyweight boxing divisions. The performance of this subsidiary has
not lived up to its expectations and a complete revaluation of whether the
Company should remain in this business has been undertaken. Based on the
sale of boxing interests in the third quarter of 1995 and expected future
income generated from the Company's remaining interests, the Company has
determined that its entire investment has been impaired and accordingly has
written off its goodwill related to the investment for an aggregate of
$5,077,811. In the meantime, strict cost controls have been implemented over
expenditures for the boxers, themselves, as well as the training facility.
NOTE 6 - Related Party Transactions
- -----------------------------------
Certain directors of the Company are also principals in Princeton. Princeton
was billed for services rendered by the Company, and these amounts were
mutually agreed upon by the management of both companies. Upon the sale of
the Company's real estate businesses to this company (see Note 4), the Company
has continued to provide certain support services including payroll, marketing
and staffing essentially on a cost basis. In the first nine months of fiscal
1995 and 1994, approximately $2,722,000 and $2,468,000 of costs associated
with these activities have been billed with an off-setting reduction to the
appropriate Company expense.
NOTE 7 - Commitments and Contingencies
- --------------------------------------
Insurance coverage has been limited by the Company because the premiums are
prohibitively expensive, however, the Company has provided for uninsured
liability claims. The Company makes provisions, as deemed necessary, for
claims not covered by insurance, the amount of which is considered by
management to be adequate.
PAGE 10 OF 26
GREAT AMERICAN RECREATION, INC. & SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED JANUARY 31, 1995 & JANUARY 31, 1994
(UNAUDITED)
NOTE 7 - Commitments and Contingencies (continued)
- --------------------------------------------------
In lawsuits instituted by four plaintiffs who were on the Company's premises
without permission and were injured in a toboggan accident during non-business
hours in March 1988, a jury returned verdicts against the Company in the
aggregate amount of $1,300,000. On February 8, 1995 the Appellate Division in
a unanimous decision affirmed the Trial Court's decision. On March 10, 1995,
the Company filed a Petition with the New Jersey Supreme Court requesting
Certification of the Appellate Division's decision. Based on the issues on
appeal, it is management's opinion that the matter should be reversed on
appeal. However, due to the uncertainty associated with the request for
Certification and the outcome of the appeal, and the Appellate Division's
unanimous decision on February 8, 1995, the Company has accrued an additional
liability in the sum of $1,515,334 liability in the third quarter of 1995
relating to this case.
Although management has consulted with counsel, the foregoing is not based on a
legal opinion and there can be no assurance that management's opinion will be
correct. Any final judgment the Company is required to pay will be paid out
of its available funds. However, the Company has collateralized the judgment
with certain real estate. Management is unable to specify a specific dollar
range for the loss but believes it will not exceed $350,000, however, due to
the Appellate Division's unanimous decision on February 8, 1995 an aggregate
of 1,865,334 has been accrued for this case. There can be no assurance,
however, that the Company will not be required to pay the entire amount of the
judgment.
On January 28, 1994, Parkway Power Corporation and certain of its affiliated
entities and Robert Morgenroth commenced a lawsuit in the Law Division,
Superior Court, Sussex County, New Jersey, against the Company, Great Mountain
Development Corporation Princeton New York Investors, Inc. and a director of
the Company, seeking the delivery of certain condominium units and to recover
the sum of $1.2 million alleging, among other things, that the defendants have
breached a settlement agreement resolving certain litigation previously
instituted by the plaintiffs. The Company filed an answer and other responsive
pleadings and believes it has meritorious defenses to the claims asserted in
the litigation. The Company's belief is based on the facts that the Company
fully performed under the terms of the settlement agreement and that it was
the responsibility of Princeton New York Investors, Inc. to deliver the
condominium units to plaintiffs and plaintiffs failed to enforce its rights
against Princeton New York Investors, Inc.. The Company's belief is supported
by discussions with its counsel in the matter and the Company has not obtained
an opinion of counsel to support its belief.
On or about December 9, 1994, Plaintiff's in two lawsuits renewed their Motions
for Summary Judgment against the Company on the issue of damages in the matter
of:
PAGE 11 OF 26
GREAT AMERICAN RECREATION, INC. & SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED JANUARY 31, 1995 & JANUARY 31, 1994
(UNAUDITED)
NOTE 7 - Commitments and Contingencies (continued)
- --------------------------------------------------
Sidney Waters, John B. Early and Emily Del Conte, t/a Waters Realty, a New
Jersey Partnership vs. Stony Point Recreation Corporation, a New Jersey
Corporation, and Great American Recreation, Inc., A New Jersey Corporation,
j/s/a/, Superior Court of New Jersey, Law Division, Camden County, Docket No.:
L-076167-85; and
EDWA Realty, A New Jersey Partnership v. Stony Point Recreation of New Jersey,
Inc., Stony Point Recreation Corporation, A New York Corporation, and Great
American Recreation, Inc. a New Jersey Corporation, j/s/a, Superior Court of
New Jersey, Law Division, Camden County, Docket No.:L-075410-85.
Previously, the Court entered Judgment as to liability against all Defendant's,
including the Company. On March 17, 1995, the Court entered Judgment against
the Company in the matter of Sidney Waters, John B. Early and Emily Del Conte,
t/a Waters Realty, a New Jersey Partnership vs. Stony Point Recreation
Corporation, a New Jersey Corporation, et al, Docket No.: L-076167-85; in the
sum of $963,364 and EDWA Realty, A New Jersey Partnership v. Stony Point
Recreation of New Jersey, Inc., et al, Docket No.:L-075410-85 in the sum of
$590,448. Based on the Court's decision on March 17, 1995, an aggregate of
$1,553,812 has been accrued in the third quarter of 1995 relating to this
case. The Company is reviewing this Judgment and continues to contest this
matter and intends to file an appeal.
NOTE 8 - Income Taxes
- ---------------------
In connection with the quasi-reorganization effected on April 30, 1992
(see Note 3), the Company has adopted Financial Accounting Standards
Board Statement No. 109, Accounting for Income Taxes, effective on that
date. The effect of the adoption had no material effect on the financial
statements.
NOTE 9 - Debt
- -------------
In June 1994, the Company entered into an agreement with a corporation to
receive up to a $1,000,000 loan to finance receivables with respect to
various contracts entered into with regard to its joint venture with
Princeton. As of January 31, 1995, the Company received the full amount
of the loan. The loan is due in June, 1997 and bears interest at 15%.
On June 3, 1994, the Company commenced an exchange offer offering to certain
debenture holders pursuant to which the debenture holders have the right to
exchange each $100 in principal amount of old debentures held by such holders
for the following securities: For each $100 principal amount of the Company's
10% PIK Subordinated Debentures due May 31, 2006, an exchanging holder received
$30.00 in principal amount Zero Coupon Debentures due May 31, 2006 and 130
shares of the Company's Common Stock, and for each $100 principal amount of
the Company's 10% Subordinated Debentures due January 7, 1996 and for each $100
principal amount of the Company's 13% Convertible
PAGE 12 OF 26
GREAT AMERICAN RECREATION, INC. & SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED JANUARY 31, 1995 & JANUARY 31, 1994
(UNAUDITED)
NOTE 9 - Debt (continued)
- -------------------------
Subordinated Debentures due December 31, 1996 an exchanging holder received
$100 in principal amount of Zero Coupon Debentures and 130 Shares of Common
Stock. As of January 31, 1995, $6,404,500 principal amount of the 10% PIK
Subordinated Debentures had been tendered, $1,269,700 principal amount of
the 10% Subordinated Debentures had been tendered and $469,500 principal
amount of the 13% Convertible Subordinated Debentures had been tendered.
All debentures tendered were accepted. The exchange offer expired on
September 8, 1994.
During the fiscal quarter ended January 31, 1995, the Company sold for an
aggregate consideration of $600,000, $600,000 principal amount of promissory
notes due February 15, 1995 together with 2,000,000 common stock purchase
warrants expiring February 15, 1997 exercisable at $.30 per share. The
Company also sold for an aggregate consideration of $1,875,000, $1,875,000
principal amount of its promissory notes due on demand together with 12,500
shares of Series B Convertible Preferred Stock convertible into 12,500,000
shares of the Company's Common Stock. The proceeds received were used for
working capital purposes. In connection with the issuance of the Series B
Convertible Preferred stock, the Company recorded non-cash financing costs
of $625,000.
As of January 31, 1995, the sum of approximately $14,900,000 was owing by
the Company to its principal lending bank and the Company had guaranteed
obligations of others to the bank of approximately $2,506,000. Interest
on the indebtedness to the bank is due monthly at prime plus 2.5% on the
unpaid balance of the term loan and the line of credit. As most recently
amended, $13,150,000 of indebtedness was due on December 30, 1994. Repayment
of a $1,750,000 line of credit owing to the bank was due on July 1, 1996.
The Company is in arrears in the payments of interest due on the indebtedness
for each of January 1, February 1, and March 1. By letters dated January 31,
1995, the bank advised the Company that it is seeking proposals from the
Company for restructuring the loan which would, among other things, bring
outstanding interest payments current and provide for full payment of the
remaining principal balances of the loan within a short period of time and
further advised the Company that events of Default exist under the Company's
loan agreement and the principal is immediately due and payable. The Company
is in the process of formulating a response to the bank and, in the view of
management, should be able to resolve this matter. There can be no assurance
however that the Company will be successful in entering into an agreement with
the bank to restructure the loan. However, the Company has amended the terms
of its indebtedness to the bank on several occasions commencing in 1990 to
obtain relief or extend the due dates of payments of principal then due to the
bank.
In addition, an aggregate of $4,327,521 indebtedness owing to two other lending
institutions was due and payable on March 1, 1994. The Company is engaged in
negotiations and has reached agreements in principle to extend the due dates
of this indebtedness, which will reduce the principal amount due during the
twelve months ending January 31, 1996 to approximately $100,000.
PAGE 13 OF 26
GREAT AMERICAN RECREATION, INC. & SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED JANUARY 31, 1995 & JANUARY 31, 1994
(UNAUDITED)
NOTE 9 - Debt (continued)
- -------------------------
The failure of the Company to repay this indebtedness when due could cause a
default under the terms of the loan documents relating to the Company's other
outstanding indebtedness which, if not cured or waived, could result in all
of the Company's bank indebtedness becoming due and payable.
As of January 31, 1995, the Company is in arrears in paying $275,000 of
principal and $342,194 of interest due on the subordinated debentures on
various dates between December 1, 1994 through January 31, 1995.
NOTE 10 - Common Stock
- ----------------------
As of January 31, 1995, 10,586,810 shares were issued in connection with the
Company's exchange offer, which commenced on June 3, 1994 and expired on
September 8, 1994 (See Note 9).
In the second quarter of fiscal 1995 an aggregate of 300,000 shares of the
Company's $0.01 par value common stock was issued in consideration for
services rendered.
During the fiscal quarter ended January 31, 1995, the Company sold for an
aggregate consideration of $600,000, $600,000 principal amount of promissory
notes due February 15, 1995 together with 2,000,000 common stock purchase
warrants expiring February 15, 1997 exercisable at $.30 per share. The
Company also sold for an aggregate consideration of $1,875,000, $1,875,000
principal amount of its promissory notes due on demand together with 12,500
shares of Series B Convertible Preferred Stock convertible into 12,500,000
shares of the Company's Common Stock. The proceeds received were used for
working capital purposes. In connection with the issuance of the Series B
Convertible Preferred Stock, the Company recorded non-cash financing costs
of $625,000.
NOTE 11 - Possible Liabilities and Losses Arising out of Sale of Hotel
Property to Princeton-New York Investors, Inc.
- ----------------------------------------------
In order to finance the development of the hotel and for other purposes,
Princeton, through its former subsidiary, Princeton-New York Investors, Inc.,
("Princeton Investors") entered into an agreement in 1990 with a non-
affiliated investor to sell to the investor shares of Preferred Stock of
Princeton Investors. On April 5, 1991, Princeton entered into an agreement
with Valley Properties, Inc., a non-affiliated investor believed by the Company
to be an affiliate of Valley Development, L.P., for Valley Properties, Inc. to
acquire all of the outstanding Common Stock of Princeton Investors. Effective
April 5, 1991, Valley Properties, Inc., assumed control over the operations and
assets of Princeton Investors which included the 624 room hotel. Princeton
retained operations comprising real estate development activities and the
operation of a health club and spa. The transaction, which under the terms of
the agreement, was to be completed on April 30, 1991, provides for a purchase
price payable to Princeton of $1,500,000, all of which has been received. As
additional consideration, Valley Properties,
PAGE 14 OF 26
GREAT AMERICAN RECREATION, INC. & SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED JANUARY 31, 1995 & JANUARY 31, 1994
(UNAUDITED)
NOTE 11 - Possible Liabilities and Losses Arising out of Sale of Hotel
Property to Princeton-New York, Investors, Inc. - (continued)
- -------------------------------------------------------------
Inc. agreed to make or arrange for a loan of $500,000 to Princeton or the
Company, to transfer to Princeton 25% of the 674 building unit lots,
substantially all of which are the subject of contracts to sell where
substantially all of the purchase price has been received, on a 198 acre
parcel surrounding the golf courses on Princeton Investors' property, and to
grant an option to purchase the remaining condominium units, subject to the
terms of the April 5, 1991 agreement. The loan was made to the Company on
April 30, 1991 and was due and payable in five weekly installments commencing
July 15, 1991. The Company contends that the loan was repaid out of offsetting
obligations owing to the Company, a position disputed by Valley Properties,
Inc. which claims the loan is in default. The purchase agreement relating to
the sale of the stock of Princeton Investors is among Princeton, Valley
Properties, Inc., the Company and certain subsidiaries of Princeton and
includes representations and warranties by Princeton as to the information
provided. In the event of a breach of such representations and warranties,
Princeton and the Company have agreed to indemnify Valley Properties, Inc.
against loss in accordance with the provisions of the agreement and several
claims have been asserted against Princeton and the Company pursuant to such
indemnification provision. The Company is unable at present to determine
what, if any, liability it will have as a result of such claims.
On August 12, 1994, Princeton New York Investors and certain affiliated
entities commenced a proceeding under Chapter XI of the United States
Bankruptcy Code. The Company is unable to state at this time the impact,
if any, of such proceeding on the Company or Princeton. There can be no
assurance that the effects of such bankruptcy proceeding may not have an
adverse impact on Princeton which could impair the Company's investment
in Princeton. As a result of the proceeding, however, the Company has
determined to reserve all interest income the Company records on its
receivables with Princeton and all dividend income the Company records
on its preferred stock investment in Princeton commencing the third quarter of
1995 until such time that the impact of the proceeding can be quantified.
NOTE 12 - Subsequent Events
- ---------------------------
The Company is currently in arrears on approximately $832,152 of dividend
payments on its 10% Cumulative Preferred Stock.
The Company is currently in arrears in paying $275,000 of principal and
$635,268 of interest due on the subordinated debentures on various dates
between December 1, 1994 through January 31, 1995.
PAGE 15 OF 26
GREAT AMERICAN RECREATION, INC. & SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED JANUARY 31, 1995 & JANUARY 31, 1994
(UNAUDITED)
NOTE 12 - Subsequent Events (continued)
- ---------------------------------------
The Company and Princeton have entered into a joint venture agreement
relating to the joint development of certain recreational and other assets
pursuant to which each of the companies will be responsible for making
available to the joint venture on a non-exclusive basis land, development
expertise, administration, marketing and amenities to the joint venture. The
joint venture is intended to relate primarily to the joint marketing on a
non-exclusive basis of the recreational facilities owned by the parties in
Vernon, New Jersey. Net revenues will be equally shared by the Company and
Princeton. The agreement contemplates that it will be superseded by a
definitive joint venture agreement superseding the existing agreement and the
parties have agreed to promptly enter into such an agreement. Earnings
allocated to Princeton pursuant to the agreement will be assigned and paid
over to the Company in repayment of Princeton's indebtedness to the Company.
Each of the Company and Princeton will continue to own, operate and market
the properties and operations owned individually by them separate from the
joint venture arrangement.
PAGE 16 OF 26
GREAT AMERICAN RECREATION, INC. & SUBSIDIARIES
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
A. LIQUIDITY & CAPITAL RESOURCES
- ---------------------------------
The Company had a net loss to common stockholders of $10,281,555 for the first
three quarters of fiscal 1995, primarily as a result of a significant decrease
in winter attendance in addition to certain non-recurring losses. The
Company had net income to common stockholders of approximately $513,000
and $215,000 during the fiscal years ended April 30, 1994 and 1993,
respectively. The Company incurred net losses of $7,805,000 and $5,094,000 in
the fiscal years ended April 30, 1992 and April 30, 1991, respectively. These
prior losses have weakened the Company's financial condition and have caused
the Company to experience a severe shortage of operating capital rendering it
difficult to meet its obligations on a timely basis. Additional debt
financing incurred during these periods has required third party guarantees
provided by certain of the Company's directors.
During the fiscal quarter ended January 31, 1995, the Company sold for an
aggregate consideration of $600,000, $600,000 principal amount of promissory
notes due February 15, 1995 together with 2,000,000 common stock purchase
warrants expiring February 15, 1997 exercisable at $.30 per share. The Company
also sold for an aggregate consideration of $1,875,000, $1,875,000 principal
amount of its promissory notes due on demand together with 12,500 shares of
Series B Convertible Preferred Stock convertible into 12,500,000 shares of the
Company's Common Stock. The proceeds received were used for working capital
purposes.
On June 3, 1994, the Company commenced an exchange offer offering to certain
debentureholders pursuant to which the debentureholders have the right to
exchange each $100 in principal amount of old debentures held by such holders
for the following securities: For each $100 principal amount of the Company's
10% PIK Subordinated Debentures due May 31, 2006, an exchanging holder
received $30.00 in principal amount Zero Coupon Debentures due May 31, 2006
and 130 shares of the Company's Common Stock, and for each $100 principal
amount of the Company's 10% Subordinated Debentures due January 7, 1996 and
for each $100 principal amount of the Company's 13% Convertible Subordinated
Debentures due December 31, 1996 an exchanging holder received $100 in
principal amount of Zero Coupon Debentures and 130 Shares of Common Stock. As
of January 31, 1995, $6,404,500 principal amount of the 10% PIK Subordinated
Debentures had been tendered, $1,269,700 principal amount of the 10%
Subordinated Debentures had been tendered and $469,500 principal amount of the
13% Convertible Subordinated Debentures had been tendered. All debentures
tendered were accepted. The exchange offer expired on September 8, 1994.
As of January 31, 1995, the sum of approximately $14,900,000 was owing by the
Company to its principal lending bank and the Company had guaranteed
obligations of others to the bank of approximately $2,506,000. Interest on
the indebtedness to the bank is due monthly at prime plus 2.5% on the unpaid
balance of the term loan and the line of credit. As most recently amended,
$13,150,000 of indebtedness was due on December 30, 1994. Repayment of a
$1,750,000 line of credit owing to the bank was due on July 1, 1996. The
Company is in arrears in the payments of interest due on the indebtedness
for each of January 1, February 1, and March 1.
PAGE 17 OF 26
GREAT AMERICAN RECREATION, INC. & SUBSIDIARIES
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
A. LIQUIDITY & CAPITAL RESOURCES (continued)
- ---------------------------------------------
By letters dated January 31, 1995, the bank advised the Company that it is
seeking proposals from the Company for restructuring the loan which would,
among other things, bring outstanding interest payments current and provide
for full payment of the remaining principal balances of the loan within a
short period of time and further advised the Company that events of Default
exist under the Company's loan agreement and the principal is immediately due
and payable. The Company is in the process of formulating a response to the
bank and, in the view of management, should be able to resolve this matter.
There can be no assurance however that the Company will be successful in
entering into an agreement with the bank to restructure the loan. However,
the Company has amended the terms of its indebtedness to the bank on several
occasions commencing in 1990 to obtain relief or extend the due dates of
payments of principal then due to the bank.
In addition, an aggregate of $4,327,521 indebtedness owing to two other
lending institutions was due and payable on March 1, 1994. The Company is
engaged in negotiations and has reached agreements in principle to extend the
due dates of this indebtedness, which will reduce the principal amount due
during the twelve months ending January 31, 1996 to approximately $100,000.
The failure of the Company to repay this indebtedness when due could cause a
default under the terms of the loan documents relating to the Company's other
outstanding indebtedness which, if not cured or waived, could result in all
of the Company's bank indebtedness becoming due and payable.
As of January 31, 1995, the Company is in arrears in paying $275,000 of
principal and $342,194 of interest due on the subordinated debentures on
various dates between December 1, 1994 through January 31, 1995.
After reflecting both new borrowings and repayments of indebtedness, and
the exchange offering which commenced on June 3, 1994 and expired on September
8, 1994, the Company's total outstanding debt decreased by $1,177,208 during
the nine months ended January 31, 1995. Principal payments of indebtedness
from continuing operations presently due during the next twelve months
aggregate approximately $34,457,000. This balance is intended to be repaid
out of funds generated from operations of the Company's Action Park and ski
area, the collection of certain mortgages and accounts receivable, the
collection of interest and dividends from its investments, funding from the
exercise of presently outstanding common stock warrants and the extension or
refinancing of existing indebtedness.
The August 12, 1994 bankruptcy of Princeton Investors (Note 11) may have an
adverse effect on certain directors of the Company for the reason that
Princeton Investors, pursuant to the April 5, 1991 sale agreement, agreed to
assume certain debt obligations of the directors. As a result of this risk
and uncertainty, these directors may not have the resources available to
advance the Company during off-season for liquidity shortages as they have
from time to time in the past.
PAGE 18 OF 26
GREAT AMERICAN RECREATION, INC. & SUBSIDIARIES
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
A. LIQUIDITY & CAPITAL RESOURCES (continued)
- ---------------------------------------------
Under the terms of current loan agreements, among other restrictions, the
Company is restricted from paying cash dividends on its common stock or
reacquiring its capital stock in excess of certain limitations.
In addition, under the provisions of certain publicly held debentures,
Vernon Valley, a wholly owned subsidiary of the Company, is restricted from
making loans and advances and paying dividends to the Company. The aggregate
amount of consolidated net assets that is restricted as of January 31, 1995
is approximately $5,845,761.
In addition, in recent years, the Company has been investing material amounts
in its Action Park and its ski area. Adding to these periodic liquidity
shortages, it is the nature of the Company's business that it must make
significant capital investments in property and equipment and will realize
revenue from these investments seasonally over a number of years. During the
nine month period ended January 31, 1995, the Company expended approximately
$3,218,398 of which $2,087,158 related to the Company's campground project
with the remainder primarily for recreational facilities.
B. RESULTS OF OPERATIONS
- -------------------------
Revenue from operations for the first nine months and third quarter of fiscal
1995 decreased $2,871,073 (15.41%) and $2,246,858 (37.31%), respectively, from
the comparable fiscal 1994 periods. The net loss to common stockholders for
the first nine months of fiscal 1995 was $10,281,555 ($.21 per share) as
compared to net income available to common stockholders of $584,987 ($.03 per
share) in the comparable prior year period. The third quarter of fiscal 1995
had a net loss to common stockholders of $11,169,758 ($.21 per share) as
compared to net income available to common stockholders of $224,145
($.01 per share) in the third quarter of fiscal 1994. Revenue decreased from
the comparable prior year nine months and third quarter primarily as a result
of decreased attendance due to unfavorable weather conditions.
Costs of operations for the first nine months of fiscal 1995 year increased
$33,614 (.29%) and decreased $172,716 (4.75%) for the third quarter of fiscal
1995. The decrease in the third quarter was directly attributed to the
decrease in winter attendance.
Selling, general and administrative expenses for the first nine months of
fiscal 1995 year decreased $184,005 (4.65%) and increased $143,598 (12.32%),
in the third quarter of fiscal 1995. The decrease in the first nine months
of fiscal 1995 is attributed to decreased real estate taxes and professional
fees.
PAGE 19 OF 26
GREAT AMERICAN RECREATION, INC. & SUBSIDIARIES
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
B. RESULTS OF OPERATIONS (continued)
- -------------------------------------
The Company's interest expense from continuing operations for the first nine
months of fiscal 1995 decreased $947,335 (44.27%) and $338,391 (41.48%),
respectively. This decrease is primarily attributed to the Company's
exchange offering which commenced on June 3, 1994 and resulted in a net
decrease of debt in the amount of $5,612,029, as well as additional
interest charged to Princeton on the Company's outstanding indebtedness with
Princeton which increased from $17,076,936 at January 31, 1994 to $23,582,552
at January 31, 1995.
The Company recorded amortization of financing costs in the first nine months
of fiscal 1995 of $22,239 as compared to $75,140 recorded in the first nine
months of fiscal 1994.
In the third quarter of fiscal 1995, the Company recorded certain non-recurring
losses as a result of events that occurred during and subsequent to the third
quarter of 1995 which included a writedown of goodwill relating to the
Company's investment in boxing of $5,077,811 (see Note 5), a reserve on
dividend and interest income relating to Princeton of $1,009,781 (see Notes
4 and 11), non-cash financing costs of $625,000 (see Notes 9 and 10) and
litigation claims of $3,069,146 (see Note 7).
Dividend income from Princeton for the first nine months and third quarter of
fiscal 1995 increased $110,136 (10.38%) and $37,623 (10.38%) from the
comparable fiscal 1994 periods.
Depreciation and amortization expense from continuing operations for the first
nine months and third quarter of fiscal 1995 increased $242,757 (38.45%) and
$71,289 (30.41%), respectively, due as a result of additional investments in
fixed assets.
Certain directors of the Company are also principals in Princeton. Princeton
was billed for services rendered by the Company and these amounts were
mutually agreed upon by the management of both companies. Upon the sale of
the Company's real estate businesses to this company, (see Note 4), the
Company has continued to provide certain support services including payroll,
marketing and staffing essentially on a cost basis. In the first nine months
of fiscal 1995 and 1994, approximately $2,722,000 and $2,468,000 of costs
associated with these activities have been billed with an off-setting
reduction to the appropriate Company expense.
No income taxes or benefits were provided in the third quarter of fiscal 1995
and 1994 due to the Company's net operating loss carry forward from prior years.
PAGE 20 OF 26
PART II OTHER INFORMATION
ITEM 6. EXHIBITS & REPORTS ON FORM 8-K
A. EXHIBITS:
Exhibit 11(a) and 11(b) Great American Recreation, Inc. & Subsidiaries -
Computation of Primary and Fully Diluted Earnings per share for the nine
month period ended January 31, 1995 and January 31, 1994.
B. REPORTS ON FORM 8-K:
No current reports on Form 8-K were filed during the fiscal quarter
ended January 31, 1995.
PAGE 21 OF 26
EXHIBIT 11(a)
GREAT AMERICAN RECREATION, INC. & SUBSIDIARIES
COMPUTATION OF EARNINGS (LOSS) PER SHARE
UNAUDITED
NINE MONTHS ENDED
JANUARY 31, JANUARY 31,
1995 1994
----------- -----------
PRIMARY:
Average shares outstanding disregarding
exercise of options, warrants and
conversion of debentures 48,632,099 20,672,164
Assumed conversion of stock options and
warrants based on the Treasury stock
method using average market price -0- -0-
---------- ----------
48,632,099 20,672,164
========== ==========
Net income for primary earnings per share
computation $(10,281,555) $ 584,987
========== ==========
Earnings per common share:
Net income $ (0.21) $ 0.03
========== ==========
Retained earnings and current net income were inadequate to cover preferred
stock dividend requirements for the nine months ended January 31, 1995.
Accordingly, dividends were recorded as liquidating dividends.
PAGE 22 OF 26
EXHIBIT 11(a)
GREAT AMERICAN RECREATION, INC. & SUBSIDIARIES
COMPUTATION OF EARNINGS (LOSS) PER SHARE
UNAUDITED
THREE MONTHS ENDED
JANUARY 31, JANUARY 31,
1995 1994
PRIMARY: ----------- -----------
Average shares outstanding disregarding
exercise of options, warrants and
conversion of debentures 53,275,136 26,439,580
Assumed conversion of stock options and
warrants based on the Treasury stock
method using average market price -0- -0-
----------- ----------
53,275,136 26,439,580
=========== ==========
Net income for primary earnings per
share computation $(11,169,758) $ 224,145
=========== ==========
Earnings per common share:
Net income $ (0.21) $ 0.01
=========== ==========
Retained earnings and current net income were inadequate to cover preferred
stock dividend requirements for the three months ended January 31, 1995.
Accordingly, dividends were recorded as liquidating dividends.
PAGE 23 OF 26
EXHIBIT 11(b)
GREAT AMERICAN RECREATION, INC. & SUBSIDIARIES
COMPUTATION OF EARNINGS (LOSS) PER SHARE
UNAUDITED
NINE MONTHS ENDED
JANUARY 31, JANUARY 31,
1995 1994
----------- -----------
FULLY DILUTED:
Average shares outstanding disregarding
exercise of options, warrants and
conversion of debentures 48,632,099 20,672,164
Assumed conversion of stock options and
warrants based on the Treasury stock
method using average market price 664,254 1,617,633
---------- ----------
49,296,353 22,289,797
========== ==========
Net income for fully diluted earnings per
share computation $ (10,281,555) $ 584,987
=========== ==========
Earnings per common share:
Net income $ (0.21) $ 0.03
=========== ==========
Retained earnings and current net income were inadequate to cover preferred
stock dividend requirements for the nine months ended January 31, 1995.
Accordingly, dividends were recorded as liquidating dividends.
PAGE 24 OF 26
EXHIBIT 11(b)
GREAT AMERICAN RECREATION, INC. & SUBSIDIARIES
COMPUTATION OF EARNINGS (LOSS) PER SHARE
UNAUDITED
THREE MONTHS ENDED
JANUARY 31, JANUARY 31,
1995 1994
----------- -----------
FULLY DILUTED:
Average shares outstanding disregarding
exercise of options, warrants and
conversion of debentures 53,275,136 26,439,580
Assumed conversion of stock options and
warrants based on the Treasury stock
method using average market price -0- 1,645,300
---------- ----------
53,275,136 28,084,880
========== ==========
Net income for fully diluted earnings per
share computation $(11,169,758) $ 224,145
=========== ==========
Earnings per common share:
Net income $ (0.21) $ 0.01
=========== ==========
Retained earnings and current net income were inadequate to cover preferred
stock dividend requirements for the three months ended January 31, 1995.
Accordingly, dividends were recorded as liquidating dividends.
PAGE 25 OF 26
SIGNATURES
Pursuant to the requirements 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.
GREAT AMERICAN RECREATION, INC.
Joseph R. Bellantoni
Vice President of Finance
March 22, 1995
PAGE 26 OF 26
SIGNATURES
Pursuant to the requirements 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.
GREAT AMERICAN RECREATION, INC.
/s/ Joseph R. Bellantoni
Joseph R. Bellantoni
Vice President of Finance
March 22, 1995
PAGE 26 OF 26
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