<PAGE>
ANNUAL REPORT FOR SMALL BUSINESS ISSUERS SUBJECT
TO THE 1934 ACT REPORTING REQUIREMENTS
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
/X/ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [Fee Required]
For the Fiscal Year ended SEPTEMBER 30, 1998
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Commission file number 0-8463
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PISMO COAST VILLAGE, INC.
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(Name of small business issuer in its charter)
California 95-2990441
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(State or other jurisdiction (IRS Employer ID Number)
of incorporation or organization)
165 South Dolliver Street, Pismo Beach, CA 93449
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(Address of Principal Executive Offices) (Zip Code)
Issuer's telephone number (805)773-5649
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange
on Which Registered.
N/A N/A
Securities registered pursuant to Section 12(g) of the Act:
Common Stock
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(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the 90 days past.
YES XX NO
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Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. XX
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State issuer's revenues for its most recent fiscal year. $2,683,948
State the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the stock was
sold, or the average bid and asked prices of such stock, as of a specified
date within the past 60 days (See definition of affiliate in Rule 12b-2 if
the Exchange Act). $15,930,000
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date. 1,800
Statements in this Annual Report on Form 10-KSB which express the
"Belief", "Anticipation", "Intention" or "Expectation", as well as other
statements which are not historical fact, and statements as to business
opportunities, market conditions, and operating performance insofar as they
may apply prospectively, are forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995 and involve risks and
uncertainties that could cause actual results to differ materially from those
projected.
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FORM 10-KSB PART I
ITEM 1 DESCRIPTION OF BUSINESS
(a) GENERAL DEVELOPMENT OF BUSINESS
Pismo Coast Village, Inc., the "Registrant" or the "Company" was incorporated
under the laws of the State of California on April 2, 1975. The Company's
sole business is owning and operating a recreational vehicle resort
(hereinafter the "Resort") in Pismo Beach, California. The Resort has
continued to enhance its business by upgrading facilities and services to
better serve customers.
(b) BUSINESS OF ISSUER
The Company is engaged in only one business, namely, the ownership and
operation of the Resort. The Company generates revenue from rental of
camping sites, recreational vehicle storage, recreational vehicle repair and
retail sales from a general store and recreational vehicle parts store.
Accordingly, all of the revenues, operating profit (loss) and identifiable
assets of the Company, are attributable to a single industry segment.
Pismo Coast Village, Inc., is a full service 400 space recreational vehicle
resort. Its resort operations include site rentals, RV storage business,
video arcade, Laundromat, and other income sources related to the operation.
The retail operations include a general store, RV parts store, and RV repair
shop. In addition, the Company has a recreation department that provides a
youth program and recreational equipment rentals.
PUBLIC AND SHAREHOLDER USERS
The present policy of the Company is to offer each shareholder the
opportunity for 45 days of free use of sites at the Resort, 25 days may be
used during prime time and 20 days during non-prime time. The free use of
sites by shareholders is managed by designating the days of the year as prime
time and non-prime time. A prime time day is one that is most in demand, for
example Memorial Day weekend and the period from mid-June until Labor Day.
Non-prime time is that time with the least demand. Each shareholder is
furnished annually a calendar that designates the prime and non-prime time
days; it also provides a schedule of when reservations can be made and the
procedure for making reservations. Shareholders' free use of sites average
approximately 20% to 22% annually, refer to Result of Operations MD&A, page 9.
SEASONAL ASPECTS OF BUSINESS
The business of the Company is seasonal and is concentrated during prime days
of the year which are defined as follows: President's Day weekend, Easter
week, Memorial Day weekend, summer vacation months, Labor Day, Thanksgiving
weekend and Christmas vacation.
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WORKING CAPITAL REQUIREMENTS
By accumulating reserves during the prime seasons, the Company is able
generally to meet its working capital needs during off-season. Industry
practice is to accumulate funds during the prime season and use such funds,
as necessary, in the off-season. The Company has arranged, but not used, a
$150,000 line of credit to ensure funds are available, if necessary, in the
off-season.
COMPETITION
The Company is in competition with nine other RV parks located within a
five-mile radius. Since its property is the only property located adjacent
to the beach, it has a competitive edge. The Company is recognized as a
recreational vehicle resort rather than a park because of its upgraded
facilities and amenities which include 23 Channels of Satellite TV, a heated
pool, a miniature golf course and a recreational program. The Resort is
noted for its ability to provide full service which includes RV Storage and
RV Repair and Service. The Resort is consistently given high ratings by
industry travel guides based on resort appearance, facilities offered, and
recreational programs. In Fiscal Year 1998, Pismo Coast Village, Inc., was
awarded the designation of RV Park of the Year, Large Park Category 1997, by
the National Association of RV Parks and Campgrounds (ARVC) which has a
membership of more than 3,300 properties. These factors allow the Resort to
price its site rental fees well above most of its competition based on
perceived value received.
Competition for the tourist market is keen between the cities on the Central
Coast of California. Resort management and staff are involved with the City
of Pismo Beach, Chamber of Commerce, Conference and Visitors Bureau, and
Business Improvement Group and are major sponsors in cooperative events and
advertising. The Resort continues to market off season discounts using its
reservations' database to enhance repeat business. To attract new business
the Company uses mailing lists of recreational vehicle owners and places its
brochure with companies selling or renting recreational vehicles. The
marketing program has been expanded targeting groups and clubs by providing
entertainment and catering services. The Company's marketing plan was funded
by $38,539 for Fiscal Year 1998 which was developed out of operating
revenues. The major source of the Company's business is repeat business,
which has been developed by attention to good customer service.
ENVIRONMENTAL REGULATION
The Company is affected by federal, state and local antipollution laws and
regulations. Due to the nature of its business operations (camping, RV
storage and small retail store sales) the discharge of materials into the
environment is not considered to be of a significant concern and the EPA has
not designated the Company as a potentially responsible party for clean up of
hazardous waste.
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The main property of the Resort is located within the boundaries of those
lands under the review and purview of the Coastal Commission of the State of
California and the City of Pismo Beach. The water and sewer systems are
serviced by the City of Pismo Beach. The Company was subject to state and
federal regulations regarding the Fiscal Year 1996 reconstruction of an
outflow structure that empties into Pismo Creek at the north boundary of the
Resort. Because the Resort is within the wetlands area, the California
Coastal Commission required permits for repair and construction to be
reviewed by the following agencies: City of Pismo Beach, State Lands
Commission, Regional Water Quality Board, State of California, California
Department of Fish and Game, State Department of Parks and Recreation and the
Army Corps of Engineers. The requirement for these permits involved the
diversion of capital from operations, but did not increase cost of debt
financing.
EMPLOYEES
As of September 30, 1998, the Company employed approximately 39 people with
14 of these on a part time basis and 25 on full time basis. Due to the
seasonal nature of the business, additional staff is needed during peak
periods and fewer during the off season. Staffing levels during the fiscal
year ranged from approximately 38 employees to 47 employees. Management
considers its labor relations to be good.
ADDITIONAL INFORMATION
Beginning October 1, 1994, site rental rates at the Resort were increased to
range from $22 - $26 per day during the off season and $32 - $36 per day
during prime time. Rates have remained at this level and were not increased
for Fiscal Year 1997-98, and an increase in rates is not being considered for
Fiscal Year 1998-99. It is anticipated the current rates will continue to
market site usage at its highest value and a rate increase would possibly
affect the Company's ability to capture an optimum market share.
During the May 1998 meeting, the Board elected to increase RV storage and
towing rates, to be effective October 1, 1998. The rates were increased from
$30 per unit and $1 per foot over 28 feet to $33 per unit and $1.25 per foot
over 28 feet. The towing and set-up fees went from $11 to $12.50. The rate
increase was a result of increased operational expenses and new prices remain
within the range of local competition.
On April 20, 1998, the Company opened escrow for a parcel of property to be
developed as an additional RV storage facility. Presently, storage is at
full capacity and it is anticipated, upon permit approval, additional storage
will become available by Summer 1999.
ITEM 2 DESCRIPTION OF PROPERTIES
The Company's principal asset consists of the Resort which is located at 165
South Dolliver Street in Pismo Beach, California. The Resort is built on a
26-acre site and includes 400 campsites with full hookups and nearby restrooms
with showers, and common facilities, such as video arcade, recreation hall,
general store, swimming pool, Laundromat, and three playgrounds.
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In 1980 the Company purchased a 2.2 acre parcel of real property located at
2050 22nd Street, Oceano, California, at a price of $66,564. The property is
being used by the Company as a storage facility for recreational vehicles.
The storage capacity of this lot is approximately 114 units.
In 1981 the Company exercised an option and purchased a 3.5 acre parcel
located at 300 South Dolliver Street, Pismo Beach, California, at a price of
$300,000. The property, which previously had been leased by the Company, is
used primarily as a recreational vehicle storage yard. The storage capacity
of this lot is approximately 223 units.
In 1988 the Company purchased approximately 0.8 acres of property at 180
South Dolliver Street, Pismo Beach, California, across the street from the
main property, consisting of a large building with a storefront and one large
maintenance bay in the rear. Also, on the property is a smaller garage-type
building with three parking stalls. The Company enlarged its recreational
vehicle repair operation, added RV storage for approximately eleven units and
developed the storefront into a RV parts store. The property was purchased
for $345,000, of which $300,000 was financed and paid in full during Fiscal
Year 1997.
On April 20, 1998, the Company opened escrow on a parcel of property to be
developed as an additional RV storage facility. The 5.8 acre property is
located in Oceano adjacent to existing Company RV storage. Upon permit
approval it is expected to be in operation in 1999 and provide storage for
500 units.
There is no deferred maintenance on any of the Resort's facilities. The
Company's facilities are in good condition and adequate to meet the needs of
the stockholder users as well as the public users. The Company continues to
develop sufficient revenue from general public sites sales to support a
continued positive maintenance program and to meet the demands of
shareholders use of free sites.
The Resort, RV Repair Shop and Parts Store and two storage facilities
constitute substantially all the Company's property, and are owned in fee.
Two storage lots and beach access used by the shareholders and general public
visitors are leased by the Company pursuant to the herein below described
leases.
1. TRAILER STORAGE YARDS. In 1986 the Company leased a parcel of land 100
feet wide by 1,600 feet long from the Southern Pacific Railroad Corp. The
property is being used by the Company as a storage facility for recreational
vehicles. Capital improvements in the amount of $40,000 were made to this
property, which provides storage for approximately 183 units. The property
was leased for $950 per month the first year, $1,400 per month for the second
year, with continuing years tied to the "CPI" Index, or Fair Market Value of
the property according to the lease agreement. During Fiscal Year 1998,
lease payments were made in the amount of $35,711, Fiscal Year 1999 lease
payments will be $36,204, and Fiscal Year 2000 lease payments will be $36,204
plus applicable changes in index or valuation.
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In 1991 the Company developed a lease for a five-acre RV storage lot at the
Oceano Airport clear zone as storage for approximately 337 RV's. This lot
was developed to replace a 100-unit storage lot that was closed when the
lease was not renewed. The original lease on the storage lot was for five
years with an additional five-year option which has been executed.
Construction was completed in January 1992 and capital improvements in the
amount of $330,768 were made to this property of which $300,000 was financed
and paid in full during Fiscal 1997.
Lease payments for the first year of control and occupancy area were $1,500
per month, $2,000 for the second year and continuing years are tied to the
"CPI" index. During Fiscal Year 1998, lease payments were made in the amount
of $24,353, Fiscal Year 1999 lease payments will be $26,940 plus applicable
changes in index, and Fiscal Year 2000 lease payments will be $26,940 plus
index changes.
2. AMENDMENT NO. 4 TO CONTRACT, PISMO STATE BEACH LOCATED IN SAN LUIS
OBISPO COUNTY, PISMO COAST VILLAGE, INC., DATED JULY 1976. (Pertaining to
the Boardwalk Concession Contract for construction and maintenance of three
boardwalks to the beach for pedestrians at Pismo State Beach and to provide
for continued access through the sand dunes to the State Beach abutting the
Resort.) This contract is between the Company and the State of California
Department of Parks and has been renewed annually since June 30, 1984. The
contract was originally assigned by the former owner to the Company by an
assignment, dated December 1, 1975. Continued ocean access is granted
annually by payment of a license fee of $400.
The Resort leases out areas to other companies to insure that the best
service and equipment are available for guest use. These areas are leased
from the Company pursuant to the herein below described leases.
1. RECREATIONAL ARCADE AGREEMENT WITH COIN AMUSEMENTS, INC. This agreement
is dated October 1, 1997, and pursuant to this agreement the Company granted
Coin Amusements, Inc., the concession to operate various coin-operated game
units at the Resort. The one year term expired on September 30, 1998. This
agreement has been subsequently renewed for a one year term ending September
30, 1999; continued renewal is expected without significant impact.
2. WEB SERVICE COMPANY, GOLETA, CA. The five-year lease expired on July
22, 1997, and was reissued for a five-year period which will expire on July
22, 2002, and grants to Web Service Company the right to place and service
coin-operated laundry machines at the Resort on a 50-50 basis for all
revenues derived from their use. On April 23, 1998, Web replaced all 18
washers and 18 dryers with new equipment. Continued renewal is expected
without significant impact.
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3. RESTAURANT AGREEMENT, THE LITTLE DECK, PISMO BEACH, CA. In 1993 the
Company reorganized its restaurant operations from a company-managed facility
to a leased restaurant operation. The concessionaire operated the restaurant
facilities as an independent food service operation. A one year lease was
entered into on June 1, 1997, with The Little Deck Restaurant at an annual
rent of $4,800. On April 3, 1998, the agreement with The Little Deck was
terminated and a similar one year lease was entered with Stephen's Strictly
Catering. On October 26, 1998, a mutual agreement was reached to terminate
the existing lease with the current operator. Based on historical
information, local competition, limited visibility, and insufficient parking,
the restaurant does not appear to be cost effective, and with support of the
Board of Directors, management has decided to utilize the restaurant facility
for other activities. These activities may include group meetings, catered
functions, seasonal snack bar, or Company-sponsored special events.
ITEM 3 LEGAL PROCEEDINGS
The Company or its property is not a party to any pending legal proceedings.
ITEM 4 SUBMISSION OF MATTERS TO VOTE OF SHAREHOLDERS
Paragraph inapplicable
PART II
ITEM 5 MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS
(a.) There is no market for the Company's common stock, and there are only
limited or sporadic transactions in its stock. Mr. Kenneth L. McFarlen, a
licensed broker/dealer, handles sales of the Company shares as Central Coast
Investments. The last transaction the Company is aware of occurred on
September 15, 1998, at a price of $9,000 for one share conveyed. This price
was used for computation of aggregate market value of Company stock on page 2
of this Report.
(b.) The approximate number of holders of the Company's common stock on
September 30, 1998 was: 1,521.
(c.) The Company has paid no dividends since it was organized in 1975, and
although there is no legal restriction impairing the right of the Company to
pay dividends, the Company does not intend to pay dividends in the
foreseeable future. The Company selects to invest its available working
capital to enhance the facilities at the Resort.
(d.) Mr. McFarlen, the Company's on-site broker, renewed his agreement which
expired on March 31, 1993, to lease 200 square feet at the Resort, from which
he conducts sales activities in the Company's stock. He has agreed to
continue this lease on a month to month agreement and is current under his
lease agreement. Termination or cancellation may be made by either Lessor or
Lessee by giving the other party ninety (90) days written notice.
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ITEM 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULT OF OPERATIONS
Pismo Coast Village, Inc., operates as a 400 space recreational vehicle
resort. The Corporation includes additional business operations to provide
its users with a full range of services expected of a recreational resort.
These services include a store, video arcade, Laundromat, recreational
vehicle repair, parts shop and an RV storage operation.
The Corporation is authorized to issue 1,800 shares, of one class, all with
equal voting rights and all being without par value. Transfers of shares are
restricted by Company bylaws. One such restriction is that transferees must
acquire shares with intent to hold the same for the purpose of enjoying
camping rights and other benefits to which a stockholder is entitled. Each
share of stock is intended to provide the stockholder with the opportunity
for 45 days of free site use per year. However, if the Corporation is
unable to generate sufficient funds from the public, the Company may be
required to charge shareholders for services.
Management is charged with the task of developing sufficient funds to operate
the Resort through site sales to general public guests by allocating a
minimum of 175 sites to general public use and allocating a maximum of 225
sites for stockholder free use. The other service centers are expected to
generate sufficient revenue to support themselves and/or produce a profit.
Certain information included herein contains statements that may be
considered forward-looking statements within the meaning of Section 21E of
the Securities Exchange Act of 1934, such as statements relating to
anticipated expenses, capital spending and financing sources. Such
forward-looking information involves important risks and uncertainties that
could significantly affect anticipated results in the future and,
accordingly, such results may differ from those expressed in any
forward-looking statements made herein. These risks and uncertainties
include, but are not limited to, those relating to competitive industry
conditions, California tourism and weather conditions, dependence on existing
management, leverage and debt service, the regulation of the recreational
vehicle industry, domestic or global economic conditions and changes in
federal or state tax laws or the administration of such laws.
CURRENT OPERATING PLANS
The Board of Directors continues its previously established policy by
adopting a stringent, conservative budget for Fiscal Year 1999, which
projects a positive cash flow of approximately $421,533 from operations.
While the Company projects a positive cash flow, this cannot be assured for
Fiscal Year 1999. Capital expenditures planned for 1999 include the
continued enhancement of RV sites and services, continuing the enhancement of
the maintenance area, renovating the accounting/reservations building, and
purchasing and developing a new RV storage facility. These investments are
projected to be approximately $920,000, some of which can be deferred, if
necessary. These proposed capital improvements will be funded from cash from
operations, from existing working capital, and from financing obtained by the
Company. Thus, budgeted cash flow for the year is expected to be within the
Company's capabilities based on its present working capital position.
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FINANCIAL CONDITION
The business of the Company is seasonal and is concentrated on prime days of
the year which are defined as follows: President's Day weekend, Easter week,
Memorial Day weekend, summer vacation months, Labor Day, Thanksgiving
weekend, and Christmas vacation. There are no known trends which affect
business or affect revenue.
The Company develops its income from two sources: (a) Resort Operations,
consisting of revenues generated from RV site rentals, from RV storage space
operations, and from lease revenues from restaurant, Laundromat, and arcade
operations by third party lessees; and (b) Retail Operations, consisting of
revenues from general store operations and from RV parts and service
operations.
A major impact on the financial condition of Fiscal Year 1996, was the
Company's reconstruction of the storm water drainage outfall caused by storm
damage suffered March 10, 1995. The $422,719 cost of this project required
the review and modification to the Company's business and operational plans
during the fiscal year ending 1996. This impact included the delay of
proposed capital expenditures, such as deferring site enhancement on the
north side of the Resort, which was completed in Fiscal Year 1997, and
deferring the improvements to the maintenance, accounting, and reservation
facilities to Fiscal Year 1999.
The Company completed its plan to aggressively reduce debt by eliminating, by
early payoff, all outstanding loan balances. The Company continues its
policy to adopt conservative budgets with managed capital outlays.
The Company has arranged a $150,000 line of credit that has not been drawn on
to date. The Company has no other liabilities to creditors other than
current accounts payable arising from its normal day-to-day operations and
advance Resort rental reservation deposits, none of which are in arrears.
LIQUIDITY
The Company's policy is to use its ability to generate operating cash flow to
meet its expected future needs for internal growth. The Company has
continued to maintain sufficient cash so as to not require the use of a short
term line of credit during the off-season period, and the Company expects to
be able to do so (although no assurance of continued cash flow can be given).
Net cash provided by operating activities totaled $529,521 in 1998, compared
to $444,213 in 1997, and $577,120 in 1996. These fluctuations are primarily
a result of early payoff of long term debt, rebuilding the storm water
outfall structure, marketing a reduced discount rate, pricing concepts, and
of deferring selected capital projects.
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The capital projects that were deferred will not detrimentally affect current
business and were moved to future years. Future capital expenditures are
expected to be funded through normal operating cash flows and, if necessary,
supplemented with outside financing.
During Fiscal Year 1998, cash investments of $107,827 included purchase and
installation of a new emergency generator, upgrade of all computers and
software for reservations and accounting, paving, and preliminary design and
permit applications for the RV storage and maintenance yard projects. Some
projects budgeted for 1998 were deferred to future dates due to the impact of
the El Nino weather pattern. In 1997, cash investments of $327,660 included
the enhancement of 123 sites, street lights, a new trailer moving vehicle,
maintenance equipment, computer systems, renovation of square public areas,
and research into permits and plans for a new storage lot. The major capital
expenditures during 1996 consisted of $502,514 to rebuild the storm water
outfall structure due to storm damage, renovation of restaurant kitchen, site
enhancements, playground equipment, computer software, awnings, street
sweeper, maintenance cart, and clubhouse furniture.
The Company has continued to maintain sufficient cash from operations to not
require the addition of long term debt during 1998 or 1997. With the
possibility of requiring additional funds for planned capital improvements
and winter season, the Company established a $150,000 Line of Credit to
insure funds will be available if required. In anticipation of future large
projects, the Board of Directors has instructed management to build
operational cash balances.
Fiscal Year 1998's current ratio (current assets to current liabilities) of
2.28 increased from Fiscal Year 1997's current ratio of 1.88. The increase
in current ratio is the result of a stronger cash position due to reduced
1998 capital expenditures, planned Fiscal Year 1999 capital expenditures, the
elimination of current portion of long term debt, and prepayment of income
taxes at year end.
Working Capital increased to $550,500 at the end of Fiscal Year 1998 compared
with $272,325 at year end Fiscal Year 1997. This increase is a result of
eliminating all long term debt, anticipating planned capital improvements,
development of cash reserves, and deferment of capital projects that have not
detrimentally affected current operations.
CAPITAL RESOURCES AND PLANNED EXPENDITURES
The Company plans capital expenditures of $920,000 in Fiscal Year 1998 to
purchase and develop an additional RV storage facility, renovate the
reservation/accounting building, and complete the improvements to the
maintenance yard. Funding for these projects is expected to be from normal
operating cash flows and supplemented with outside financing. These capital
expenditures are expected to increase the Resort's value to its stockholders
and the general public.
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RESULTS OF OPERATIONS
YEAR TO YEAR COMPARISON
INCOME: Increased over the prior fiscal year ended September 30, 1997, by
$54,815, or 2.1%, and increased from fiscal year ended September 30, 1996, by
$98,894, or 3.8%.
INCOME BY SEGMENT
<TABLE>
<CAPTION>
1998 1997 1996
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<S> <C> <C> <C>
OCCUPANCY
% of Stockholder Site Use 20.5% 20.5% 20.8%
% of Paid Site Rental 41.1% 42.4% 42.1%
% Total Site Occupancy 61.7% 62.9% 63.0%
% of Storage Rental 99.9% 99.7% 94.0%
Average Paid Site $27.86 $27.40 $27.78
RESORT OPERATIONS
Site Rental $1,672,887 $1,695,109 $1,710,716
Storage Operations $386,699 $357,621 $319,280
Support Operations $111,981 $99,629 $94,258
Total $2,171,567 $2,152,360 $2,124,254
RETAIL OPERATIONS
Store $306,558 $290,184 $308,293
RV Repair/Parts store $189,917 $171,341 $137,583
Total $496,475 $461,525 $445,876
INTEREST INCOME $15,904 $15,246 $14,922
TOTAL INCOME $2,683,946 $2,629,131 $2,585,052
</TABLE>
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Occupancy rates on the above table are calculated based on the quantity
occupied as compared to the total sites available for occupancy (i.e., total
occupied to number of total available). Average paid site is based on site
revenue and paid sites. Resort support operations include revenues received
from the arcade, Laundromat, recreational activities, restaurant lease, and
other less significant sources.
1998 COMPARED WITH 1997
Resort operations income increased 0.9% due to an 8.1% increase in RV storage
revenue offsetting a decrease of 1.3% in paid site occupancy. Paid site
occupancy was up 8.3% for the Fourth Quarter of Fiscal 1998, however, the El
Nino weather pattern had a significant impact on paid occupancy during the
previous three quarters.
Rtail operations income increased 7.6% due to a 10.8% increase in RV
Repair/Parts Store revenue and an increase of 5.6% in General Store sales.
These increases are a result of management's continuing program to increase
RV Shop sales, and in the General Store from efforts to stock more
appropriate items, more effectively merchandise, and greater attention to
customer service.
Interest Income increased 4.3% as a result of carrying higher cash balances
through most of the year. Long term debt payoff occurred in the Fourth
Quarter of Fiscal Year 1997 and the Company expects to see reduced interest
income over the next several quarters due to reduced cash balances and
increased capital expenditures.
Operating Expenses increased $38,517, or 2.1%, as a result of payroll,
property taxes, contracted services, and equipment expense. Despite
operating at staffing levels below Fiscal Year 1997, the mandatory increase
in minimum wage affected Company payroll and contracted service expenses.
Maintaining the conservative approach, most expense items were managed well
below plan in response to occupancy, cash flow, and other impacts of the
extreme weather during the first three quarters. The Board of Directors have
directed management to continue maintenance projects as needed to provide a
first class resort for campers using recreational vehicles.
Depreciation Expense increased 5.3% due to the purchase of the emergency
generator, upgrade of accounting and reservation computer systems, road
repair, and various smaller operating items.
Interest Expense decreased from $18,099 in 1997 to $200 in 1998 due to
accelerated prepayments of principal and debt payoff in the Fourth Quarter of
Fiscal Year 1997.
Loss on Disposal of Fixed Assets for 1998 of $12,483 represents the
reclassification of certain assets determined no longer to have a useful life
and were disposed of.
Income before provision for taxes on income of $177,738 is reflective of the
Company's current pricing policies and continuing efforts to maximize resort
services and value. This income exceeded management's plan of operations for
Fiscal Year 1998.
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Net income increased by $24,918, or 29.7%, primarily due to an increase in
income and a significantly smaller reduction of loss on disposal of fixed
assets. This is the ninth consecutive year of positive net income for the
Company.
1997 COMPARED WITH 1996
Resort operations income increased 1.3% due to a 0.5% increase in paid site
occupancy and a 6.1% increase in storage rental occupancy. Average paid site
rental decreased 1.2% as primarily a result of decreasing the fiscal year's
prime nights by 1.3%. Prime nights are charged a higher nightly rate and are
not discounted.
Retail operations income increased 3.5% from a 24.5% increase in RV Repair /
Parts Store revenue and a decrease of 5.9% in General Store sales. These
large fluctuations were a result of managements' continuing program to
increase RV Shop sales and the General Store's deficiency of supervisory
management that was resolved prior to year end.
Interest Income increased 2.2% as a result of carrying higher cash balances
through most of the year. Long term debt payoff occurred in the Fourth
Quarter and the Company expects to see reduced interest income over the next
several quarters due to reduced cash balances and increased capital
expenditures.
Operating Expenses increased $98,678, or 5.7%, as a result of increasing
maintenance staff, landscaping contract services, and associated projects to
improve the Resort's appearance and efficiency. The Board of Directors
directed management to continue maintenance projects as needed to provide a
first class resort for campers using recreational vehicles.
Depreciation Expense increased 10.4% due to the mid-fiscal 1996 year
completion of the water outfall structure and the mid-fiscal 1997 year
completion of site renovation project.
Interest Expense decreased by 35.8% due to accelerated prepayments of
principal and debt payoff.
Loss on Disposal of Fixed Assets for 1997 of $92,191 represents the
reclassification of certain assets determined no longer to have a useful life
and were disposed of.
Income before provision for taxes on income of $103,820 is reflective of the
Company's pricing policies and continuing efforts to maximize resort services
and value. This income is within management's plan of operations.
Net income decreased by $98,756, or 54.1%, primarily as a result of the loss
on disposal of fixed assets and the increase in operating expenses.
14 of 37
<PAGE>
INFLATION has not had a significant impact on our profit position. Company
has increased rates which have more than compensated for the rate of
inflation.
FUTURE OPERATING RESULTS could be unfavorably impacted to the extent that
changing prices result in lower discretionary income for customers and/or
increased transportation costs to the Resort. In addition, increasing prices
affect operations and liquidity by raising the replacement cost of property
and equipment.
YEAR 2000 COMPLIANCE within the Company's computerized systems, and the
readiness of associated vendors has required ongoing assessment. The Company
has retained the services of a consultant to identify any and all hardware
and software systems which may need to be upgraded or replaced. All of the
Company's integral systems, such as reservations and accounting, have been
upgraded within the past year. The Company presently believes that by
modifying existing software, the Company's computer systems will not
experience material operational problems as a result of the year 2000 issue.
However, if such modifications are not made, or are not timely completed, the
year 2000 issue could have a material adverse impact on the operations of the
Company. The most significant disruption would impact customer billings and
collections and resort reservations.
Vendors and institutions such as banks, service providers, and the stock
transfer company are providing statements regarding their level of readiness
or compliance. Some Company functions could be disrupted if these businesses
do not become year 2000 compliant within the required time frame.
The Company anticipates completing the year 2000 project by March 1, 1999,
with an estimated cost of less than $25,000. The Company does not presently
have a formal contingency plan, because it believes the necessary
modifications will be completed in the required time frame. However, should
it become evident that the year 2000 modifications will not be completed on a
timely basis, the Company will explore alternatives to achieve compliance.
The costs of the project and the date on which the Company believes it will
complete the year 2000 modifications are based on management's best estimates
which were derived utilizing numerous assumptions of future events. However,
there can be no assurance that these estimates and timetable will be
achieved, and actual results could differ materially from those anticipated.
ITEM 7 FINANCIAL STATEMENTS
15 of 37
<PAGE>
[LETTERHEAD OF GLENN, BURDETTE, PHILLIPS & BRYSON]
INDEPENDENT AUDITORS' REPORT
Board of Directors
Pismo Coast Village, Inc.
Pismo Beach, California 93449
We have audited the accompanying balance sheets of Pismo Coast Village, Inc.
as of September 30, 1998 and 1997, and the related statements of operations
and retained earnings (deficit) and cash flows for each of the three years
then ended September 30, 1998. 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 audits 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 Pismo Coast Village, Inc. as
of September 30, 1998 and 1997, and the results of its operations and its
cash flows for each of the three years then ended September 30, 1998, in
conformity with generally accepted accounting principles.
/s/ GLENN, BURDETTE, PHILLIPS & BRYSON
Glenn, Burdette, Phillips & Bryson
Certified Public Accountants
A Professional Corporation
October 23, 1998
16 of 37
<PAGE>
PISMO COAST VILLAGE, INC.
BALANCE SHEETS
SEPTEMBER 30, 1998 AND 1997
<TABLE>
<CAPTION>
1997 1998
---- ----
<S> <C> <C>
ASSETS
------
CURRENT ASSETS
Cash and cash equivalents $ 831,756 $ 410,062
Accounts receivable 10,495 8,467
Inventory 66,723 69,597
Current deferred taxes 22,000 19,000
Prepaid income taxes 24,551
Prepaid expenses 48,186 48,900
---------- ----------
Total current assets 979,160 580,577
PISMO COAST VILLAGE RECREATIONAL
VEHICLE RESORT AND RELATED ASSETS -
Net of accumulated depreciation 5,337,587 5,569,029
OTHER ASSETS 68,624 6,619
---------- ----------
Total Assets $6,385,371 $6,156,225
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 123,415 $ 86,479
Accrued salaries and vacation 45,540 37,394
Rental deposits 214,705 184,379
Income tax payable 45,000
---------- ----------
Total current liabilities 428,660 308,252
LONG-TERM LIABILITIES
Long-term deferred taxes 74,000 74,000
---------- ----------
Total liabilities 502,660 382,252
---------- ----------
STOCKHOLDERS' EQUITY
Common stock - no par value, issued
and outstanding 1,800 shares 5,647,708 5,647,708
Retained earnings 235,003 126,265
Total stockholders' equity 5,882,711 5,773,973
---------- ----------
Total Liabilities and Stockholders'
Equity $6,385,371 $6,156,225
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
17 of 37
<PAGE>
PISMO COAST VILLAGE, INC.
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
YEARS ENDED SEPTEMBER 30, 1998, 1997, AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
INCOME
Resort operations $2,171,569 $2,152,360 $2,124,254
Retail operations 496,475 461,525 445,876
Interest income 15,904 15,246 14,922
---------- ---------- ----------
Total income 2,683,948 2,629,131 2,585,052
---------- ---------- ----------
COSTS AND EXPENSES
Operating expenses 1,877,051 1,838,534 1,739,856
Cost of good sold 289,690 264,928 255,060
Depreciation 326,786 310,233 281,062
Amortization 1,326 1,325
Interest expense 200 18,099 28,173
Loss on disposal of fixed assets 12,483 92,191
---------- ---------- ----------
Total costs and expenses 2,506,210 2,525,311 2,305,476
---------- ---------- ----------
INCOME BEFORE PROVISION FOR
TAXES ON INCOME 177,738 103,820 279,576
Provision for taxes on income 69,000 20,000 97,000
---------- ---------- ----------
NET INCOME 108,738 83,820 182,576
RETAINED EARNINGS (DEFICIT)
Beginning of Year 126,265 42,445 (140,131)
---------- ---------- ----------
END OF YEAR $ 235,003 $ 126,265 $ 42,445
---------- ---------- ----------
---------- ---------- ----------
EARNINGS PER SHARE $ 60.41 $ 46.57 $ 101.43
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
18 of 37
<PAGE>
PISMO COAST VILLAGE, INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 1998, 1997, AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 108,738 $ 83,820 $ 182,576
--------- --------- ---------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 326,786 310,233 281,062
Amortization 1,326 1,325
Deferred income tax (3,000) 14,000 40,293
Loss on disposal of fixed assets 12,483 92,191
(Increase) decrease in accounts receivable (2,028) (2,345) 4,837
(Increase) decrease in inventory 2,874 (10,505) 6,734
Increase (decrease) in prepaid income taxes 24,551 (24,551)
Decrease in prepaid expenses 714 11,964 13,216
(Increase) decrease in other assets (62,005) 5,034 (4,724)
Increase (decrease) in accounts payable and
accrued liabilities 36,936 19,356 (2,828)
Increase (decrease) in accrued salaries and
vacation payable 8,146 2,279 (2,541)
Increase (decrease) in rental deposits 30,326 (13,589) 18,668
Increase (decrease) in income taxes payable 45,000 (45,000) 38,502
--------- --------- ---------
Total adjustments 420,783 360,393 394,544
--------- --------- ---------
Net cash provided by operating activities 529,521 444,213 577,120
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (107,827) (327,660) (502,514)
--------- --------- ---------
Net cash used in investing activities (107,827) (327,660) (502,514)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Retirement of debt (223,727) (86,436)
--------- ---------
Net cash used in financing activities (223,727) (86,436)
--------- ---------
Net increase (decrease) in cash and cash equivalents 421,694 (107,174) (11,830)
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 410,062 517,236 529,066
--------- --------- ---------
CASH AND CASH EQUIVALENTS - END OF YEAR $ 831,756 $ 410,062 $ 517,236
--------- --------- ---------
--------- --------- ---------
SCHEDULE OF PAYMENTS OF INTEREST AND TAXES
Payments for interest $ 200 $ 18,099 $ 28,173
Payments for income tax $ 17,300 $ 75,611 $ 18,318
</TABLE>
The accompanying notes are an integral part of these financial statements.
19 of 37
<PAGE>
PISMO COAST VILLAGE, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1998, 1997 AND 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
Pismo Coast Village, Inc. (Company) is a recreational vehicle camping resort.
Its business is seasonal in nature with the fourth quarter, the summer, being
its busiest and most profitable.
INVENTORY
Inventory has been valued at the lower of cost or market on a first-in,
first-out basis.
DEPRECIATION AND AMORTIZATION
Depreciation of property and equipment is computed using an accelerated method
based on the cost of the assets, less allowance for salvage value, where
appropriate. Depreciation rates are based upon the following estimated useful
lives:
Building and park improvements 5 to 40 years
Furniture, fixtures, equipment and
leasehold improvements 5 to 31.5 years
Transportation equipment 5 to 10 years
EARNINGS PER SHARE
The earnings per share are based on the 1,800 shares issued and outstanding.
RECLASSIFICATION OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
Reclassification of certain accounts reported in previously issued financial
statements have been made to enhance comparability with current financial
statements.
CASH AND CASH EQUIVALENTS
For purposes of the statements of cash flows, the Company considers all highly
liquid investments including certificates of deposit with a maturity of three
months or less when purchased, to be cash equivalents.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect certain reported amounts and disclosures. Accordingly, actual
results could differ from those estimates.
20 of 37
<PAGE>
PISMO COAST VILLAGE, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1998, 1997 AND 1996
PAGE 2
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
REVENUE AND COST RECOGNITION
The Company's revenue is recognized on the accrual basis as earned based on the
date of stay. Expenditures are recorded on the accrual basis whereby expenses
are recorded when incurred, rather than when paid.
NOTE 2 - PISMO COAST VILLAGE RECREATIONAL VEHICLE RESORT AND RELATED ASSETS
At September 30, 1998 and 1997, property and equipment, which are recorded at
cost, included the following:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Land $2,680,850 $2,680,850
Building and park improvements 5,578,110 5,564,088
Furniture, fixtures, equipment
and leasehold improvements 1,220,944 1,214,381
Transportation equipment 200,400 200,450
Construction in progress 32,559 15,890
---------- ----------
9,712,863 9,675,659
Less accumulated depreciation 4,375,276 4,106,630
---------- ----------
$5,337,587 $5,569,029
---------- ----------
---------- ----------
</TABLE>
NOTE 3 - LINE OF CREDIT
The Company has a revolving line of credit for $150,000. The interest rate
is variable at two percent over prime, with an initial rate of 10.50 percent
expiring March 31, 1999. The purpose of the loan is to augment operating
cash needs in off-season months. There were no outstanding amounts as of
September 30, 1998 or 1997.
NOTE 4 - COMMON STOCK
Each share of stock is intended to provide the shareholder with a maximum
free use of the park for 45 days per year. If the Company is unable to
generate sufficient funds from the public, the Company may be required to
charge shareholders for services.
A shareholder is entitled to a pro rata share of any dividends as well as a
pro rata share of the assets of the Company in the event of its liquidation
or sale. The shares are personal property and do not constitute an interest
in real property. The ownership of a share does not entitle the owner to any
interest in any particular site or camping spot.
21 of 37
<PAGE>
PISMO COAST VILLAGE, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1998, 1997 AND 1996
PAGE 3
NOTE 5 - INCOME TAXES
The provision for income taxes consists of the following components:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Current:
Federal $ 56,000 $ $ 62,000
State 16,000 9,000 25,000
-------- -------- --------
72,000 9,000 87,000
-------- -------- --------
Deferred:
Federal (3,000) 11,000 38,000
State 2,000
-------- -------- --------
(3,000) 11,000 40,000
Tax benefit of net operating loss
carryforward:
Federal (30,000)
-------- -------- --------
$ 69,000 $ 20,000 $ 97,000
-------- -------- --------
-------- -------- --------
</TABLE>
The deferred tax assets (liabilities) are comprised of the following:
<TABLE>
<CAPTION>
1998 1997
---- ----
Current Long-Term Current Long-Term
------- --------- ------- ---------
<S> <C> <C> <C> <C>
Deferred tax assets:
Federal $19,000 $ $16,000 $
State 3,000 3,000
Deferred tax liabilities:
Federal (53,000) (53,000)
State (21,000) (21,000)
------- -------- ------- --------
$22,000 $(74,000) $19,000 $(74,000)
------- -------- ------- --------
------- -------- ------- --------
</TABLE>
22 of 37
<PAGE>
PISMO COAST VILLAGE, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1998, 1997 AND 1996
PAGE 4
NOTE 5 - INCOME TAXES (CONTINUED)
The above deferred tax assets (liabilities) consist of the following temporary
differences:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Depreciation $(74,000) $(74,000)
-------- --------
Total gross deferred tax liabilities (74,000) (74,000)
-------- --------
Vacation accrual 12,000 10,000
Miscellaneous 10,000 9,000
-------- --------
Total gross deferred tax assets 22,000 19,000
-------- --------
$(52,000) $(55,000)
-------- --------
-------- --------
</TABLE>
The effective income tax rate varies from the statutory federal income tax
rate as follows:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Statutory federal income tax rate 34.0% 34.0% 34.0%
Increase (decreases):
State income taxes, net of federal benefit 5.8 5.8 6.3
Effect of graduated tax rates (4.0) (10.4) (5.1)
Miscellaneous .7 (.4) (.6)
---- ----- ----
Effective Income Tax Rate 36.5% 29.0% 34.6%
---- ----- ----
---- ----- ----
</TABLE>
23 of 37
<PAGE>
PISMO COAST VILLAGE, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1998, 1997 AND 1996
PAGE 5
NOTE 6 - OPERATING EXPENSES
Operating expenses for the years ended September 30, 1998, 1997 and 1996,
consisted of the following:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Direct labor $ 531,599 $ 496,308 $ 450,450
Administrative salaries 198,175 214,275 225,569
Contract labor 236 273 816
Insurance 146,357 146,028 148,302
Payroll tax expense 66,666 66,295 64,977
Employee travel and training 13,099 25,194 15,778
Property taxes 48,280 32,194 39,673
Taxes and licenses 4,722 4,713 4,367
Corporation expense 52,719 53,386 46,257
Advertising and promotion 37,341 45,447 50,583
Telephone 25,686 27,821 26,228
Security 81,832 63,983 62,295
Office supplies and expense 35,971 43,199 38,943
Custodial supplies 8,097 6,590 8,889
Recreational supplies 12,448 4,056 4,211
Professional services 28,383 25,580 24,413
Retail operating supplies 3,593 4,647 3,102
Repairs and maintenance 84,150 86,036 63,487
Contract services 103,859 103,957 91,654
Equipment lease 3,514 2,551 1,850
Utilities 230,883 246,989 228,750
Auto and truck expense 44,277 30,008 28,756
Rent - storage lots 63,048 61,020 59,769
Bad debts 1,279 18 1,277
Service charges 34,843 33,617 36,969
Uniforms 8,314 7,814 5,904
Miscellaneous 7,680 6,535 6,587
---------- ---------- ----------
Total Operating Expenses $1,877,051 $1,838,534 $1,739,856
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
24 of 37
<PAGE>
PISMO COAST VILLAGE, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1998, 1997 AND 1996
PAGE 6
NOTE 7 - OPERATING LEASES
The Company leases two pieces of property to use as storage lots. One is
leased under a cancelable month-to-month lease. The other was entered into
effective January 1, 1997, for five years with an option to extend the lease
for an additional five years. Monthly lease payments are currently $2,245
and are increased annually based on the Consumer Price Index. Future minimum
lease payments under the second lease and an obligation to lease equipment
are as follows:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
<S> <C>
1999 $ 29,244
2000 29,052
2001 26,940
2002 20,205
--------
Total $105,441
--------
--------
</TABLE>
Rent expense under these agreements was $29,076, $27,712 and $25,740 for the
years ended September 30, 1998, 1997 and 1996, respectively.
NOTE 8 - COMMITMENTS
On April 20, 1998, the Company entered into an agreement to purchase a
six-acre parcel for $495,000 to store recreational vehicles. Purchase of the
property is contingent upon approval from the San Luis Obispo County Board of
Supervisors. Escrow is scheduled to close in January of 1999. At September
30, 1998, the Company has deposited $58,000 into an escrow account toward the
purchase price. These amounts are shown in noncurrent other assets.
25 of 37
<PAGE>
ITEM 8 CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Inapplicable.
PART III
ITEM 9 DIRECTORS, EXECUTIVE OFFICERS, AND CONTROL PERSONS; COMPLIANCE WITH
SECTION 16(a) OF THE EXCHANGE ACT
(a) The Company's Directors were chosen at the Shareholder's Annual Meeting
on January 17, 1998. The Directors serve for one year, or until their
successors are elected. The names, ages, background and other information
concerning the Directors, including other offices held by the Directors with
the Company, are set forth below.
(b) The following is a list of the Company's Directors and Executive
Officers setting forth their functions and experience. There is no familial
relationship between the Directors nor between the Directors and the
Officers. There is no understanding or agreement under which the Directors
hold office.
HOWARD ALLARD, DIRECTOR
Howard Allard, age 73, resides at 5161 Diablo Drive, Sacramento, California
95842. He has a Master's degree in education administration from California
State University, Sacramento. He was an elementary school principal in the
Rio Linda Union School District for 29 years prior to retirement in 1985. He
has been a partner since 1978 in Allard Enterprises which maintains rental
properties, and he has also been a partner since 1982 in Allard Limousine.
Mr. Allard has served on the Board for 18 years, including three years as
President, two years as Secretary, and one year as Vice President -
Administration.
EMILY BARTON, DIRECTOR
Emily Barton is 66 years old. She resides at 4008 Glenbrook Avenue,
Bakersfield, California 93306. She holds an inactive B-1 California
Contractors License and a supplemental Swimming Pool License C-53. She was
active in the building business for many years. She is still active in the
remodeling and rehabilitation of her properties. She has been in the rental
business for 31 years and is currently active in the rental business. Her
specialty is buying foreclosures. She holds an inactive life and disability
insurance license and is associated with Cross Town Insurance Co. She is
past president of B'nai B'rith Women Bakersfield Chapter #69. Under her
leadership, B'nai B'rith Women received many community service awards. She
has served on the Board for six years.
26 of 37
<PAGE>
DONALD BIANCHI, DIRECTOR
Donald Bianchi is 75 years old. He resides at 3605 Belle Terrace,
Bakersfield, California 93309. He retired from the U.S. Air Force as a
Lieutenant Colonel in 1983 and served as president of The Retired Officers
Association in 1994. He was a traffic officer, pilot and accident follow-up
officer for the California Highway Patrol for 31 years until his retirement
in 1978. He served as vice president of the Kern Kiwanis and is an active
member of the Masonic Lodge, serving as a director in the Kern Shrine Club.
He is now a licensed state investigator in private practice and monitor for
California traffic schools. He has served on the Board for 23 years.
KURT BRITTAIN, DIRECTOR
Kurt Brittain is 68 years old and resides at 15890 La Porte Court, Morgan
Hill, California 95037. After his Marine Corps service, he was employed for
more than 33 years by Orange County, California, before his retirement in
1986. His background includes public works, flood control and manager of the
county's harbors, beaches and parks system. He was in charge of three
harbors, seven beaches and more than 26 parks, three of which were camping
parks. He has completed extension courses in business administration,
management, recreation and real estate. He has served on the Board for nine
years; including one year as Vice President - Administration, one year as
Vice President - Secretary, and five years as Executive Vice President.
ALBERT BROWN, DIRECTOR
Albert Brown is 75 years old. He resides at 22718 Lone Eagle Road, Apple
Valley, California 92308. He was employed at Hughes Aircraft for 20 years,
from 1945 to 1965, TRW Systems for 3 1/2 years, from 1965 to 1968, and Rohr
Industry, Inc., for 11 1/2 years, from 1968 until retirement in 1979. He
worked his way up from being an assembler to a senior industrial engineer,
reporting directly to the manager of industrial engineering. He has
completed extensive continued education in the field of industrial
engineering at U.S.C. He is an instructor with the A.A.R.P. 55-Alive Senior
Driving Course. He has served on the Board of Directors for 13 years,
including two years as Vice President -Administration.
HARRY BUCHAKLIAN, DIRECTOR AND EXECUTIVE VICE PRESIDENT
Harry Buchaklian is 66 years old. He resides at 1361 E. Ticonderoga Drive,
Fresno California 93720. He has a B.A. degree from C.S.U.F. in industrial
arts, and a secondary level teaching credential in laboratory electronics and
small engine repair. His career has included employment as an assistant
manager with Western Auto Stores, electronics instructor at Fresno Technical
College and technical supervisor for Sears Roebuck. He retired from Sears
Roebuck in 1994. He has served on the Board for 14 accumulative years,
including most recently from September 1995 to present, and is currently
serving as Executive Vice President.
27 of 37
<PAGE>
FRANK DRAKE, DIRECTOR AND VICE PRESIDENT - ADMINISTRATION
Frank Drake is 57 years old. He resides at 9511 Birch Creek Court,
Bakersfield, California 93312. Mr. Drake has an A.A. degree from Bakersfield
College, and holds an administration of justice lifetime vocational teaching
credential from U.C.L.A. Mr. Drake retired after 20 years with the Kern
County Sheriffs Department where he was commander of detective,
administration and jail facilities. Following his retirement from the
Sheriff's Department in 1988, he was employed as a safety consultant with
State Compensation Insurance Fund assisting clients in complying with OSHA
and other safety standards. He retired from this position in December 1995.
Mr. Drake has served on the Board for three years, and is currently serving
as Vice President - Administration.
NORMAN GOULD, DIRECTOR
Norman Gould is 79 years old. He resides at 10597 Road 30, Madera,
California 93637. He has a B.A. in education and an M.A. in administration.
His occupation prior to retirement in 1986 was as the superintendent of
schools for Madera County. He was a member of the board of directors of
Kingsview, Inc., from 1968 to 1980 and held the positions of vice chairman
and chairman of the board. He is currently on the board of directors of
Valley Teen Ranch, Inc. Mr. Gould also serves as the president of the board
of directors for Camp Sugar Pine, Inc., a nonprofit corporation. He has
served on the Board for 20 accumulative years, including most recently from
March 1993 to present, serving nine years as President, one year as Treasurer
and two years as Secretary.
EDWARD HINDS, JR., DIRECTOR AND VICE PRESIDENT - SECRETARY
Edward (Dee) Hinds, Jr., age 71, resides at 3416 West Magill Avenue, Fresno,
California 93711. Prior to his retirement in 1988, he was employed for more
than 38 years by Bank of America serving as a branch officer, vice president,
manager and regional credit administrator. He has served on the Board for 18
years, and is currently serving a sixth year as Vice President - Secretary.
TERRIS HUGHES, DIRECTOR
Terris (Terry) Hughes, is 49 years old and resides at 2426 Sunset, Wasco,
California 93280. Mr. Hughes holds an A.A. degree from Bakersfield Junior
College in police science. He was employed by Cal Resources LLC for 23
years, from 1973 to 1997, holding the position of senior training technician
for the last 10 years of that time. Mr. Hughes is currently employed as a
safety management advisor for Aera Energy LLC, an oil industry company formed
in 1997 between the Shell Oil and Mobil Oil Corporations. His duties are to
serve as a behavior base safety advisor and provide safety training to Aera
Energy LLC employees. Mr. Hughes has served on the Board for three years.
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<PAGE>
LARRY KELLER, DIRECTOR
Larry Keller, age 45, resides at 3807 Mesa Grande, Bakersfield California
93304. Mr. Keller founded and operated Nooner Food Service from 1979 until
1992, providing on-site food service of up to 13,000 meals per day at fire
camps for the U. S. Forest Service throughout 11 western states. He also
served as president, vice president and secretary/treasurer of the Western
Forest Fire Catering Association. Since 1992 Mr. Keller has been
self-employed at Presidio Business Center, a commercial real estate
management company he owns and manages. Mr. Keller has served on the Board
for three years.
RONALD NUNLIST, DIRECTOR
Ronald Nunlist, age 60, resides at 1105 Minter Avenue, Shafter, California
93263. Mr. Nunlist has been employed in the oil business for many years.
From 1995 to June 1997 he was employed as an operations foreman by Cal
Resources LLC, an oil industry company owned by Shell Oil Corporation. Since
June 1997, Mr. Nunlist has been employed by Aera Energy LLC, an oil industry
company formed between the Shell Oil and Mobil Oil Corporations, as a
logistics specialist. He has served on the Board for 13 years, including
five years as President.
JERALD PETTIBONE, DIRECTOR AND PRESIDENT
Jerry Pettibone, age 72, resides at 4179 Court Drive, Santa Cruz, California
95062. He sold and retired from his company, Pettibone Signs, in Santa Cruz
in October 1988. He started the company which operated statewide in 1960.
Active in trade associations, he served on the board of directors of the
National Electric Sign Association, and on the board of directors of the
World Sign Association, serving as national president in 1985-1986. He
served on the board of directors of the California Electric Sign Association
for 22 years and was elected a director emeritus. Also active in Rotary
Club, he is a charter member and past president of the Capitola/Aptos Club.
He served as district governor of Rotary District 5170 in 1983-1984. He has
served on the Board for six years, including three years as Chief Financial
Officer, and is currently serving a second year as President.
RICHARD PROSCHOLD, DIRECTOR
Richard Proschold, age 69, resides at 5717 Maywood Drive, Foresthill,
California 95631. Mr. Proschold worked his entire career in and for the
printing and communications industry. In 1969, he became President/CEO of
Graphic Arts Credit Union in Sacramento, California, which served the
families of the industry with their financial needs. At the time he took the
helm, the credit union had 400 members. In 1989, he completed a merger of
Graphic Arts Credit Union and its 5,000 active members into S.A.F.E. Federal
Credit Union, also in Sacramento, to benefit the membership with more
expanded services. Mr. Proschold remained with S.A.F.E. until 1992 when he
retired, and has since enjoyed traveling. Mr. Proschold has served on the
Board for two years.
29 of 37
<PAGE>
THOMAS ROURKE, DIRECTOR
Thomas Rourke is 61 years old. He resides at 899 Stagi Lane, Los Altos,
California 94024. Mr. Rourke graduated from the University of Massachusetts
in 1965 with a B.B.A. degree. He was vice president of operations at Lynch
Communications, Inc., in Reno, Nevada from 1980-1982, and president of Lynch
Circuits, Inc., in Sunnyvale, California from 1982-1987. He is currently
president and chairman of the board of Startech Electronics, Inc., a company
that produces electronic products, in Mountain View, California, a position
he has held since 1988. Mr. Rourke has served on the board for three years.
HENRY VALENTIA, DIRECTOR
Henry Valentia is 73 years old. He resides at 2007 Cardinal Way, Fairfield,
California 94533. He retired from the U.S. Air Force as a Lieutenant
Colonel in 1969. He has a degree in industrial management and an A.A. in
business administration. Mr. Valentia also retired from Chevron Corporation
as a safety engineer in 1984. From June 1979 to June 1984 he served on the
board of directors at Travis Air Force Base Credit Union on its finance
committee. Mr. Valentia has also served four years as treasurer on the board
of directors for Lawrence Welk Desert Oasis, Palm Springs, California. He
has served on the Board for 12 years, including two years as Vice President -
Administration.
JACK WILLIAMS, DIRECTOR, VICE PRESIDENT - FINANCE, AND CHIEF FINANCIAL OFFICER
Jack Williams is 48 years old. He resides at 7801 Revelstoke Way,
Bakersfield, California 93309. Mr. Williams graduated from San Diego State
University in 1974 with a B.S. in accounting. Following that, he has been
employed in the field of accounting in a variety of industries, including
agriculture, construction, heavy equipment sales, and manufacturing. Mr.
Williams established his own C.P.A. practice in 1983. He is currently
employed as a Financial Analyst by Texaco Oil Corporation in the Bakersfield
area. He has served on the Board of Directors for four years, and is
currently serving a second year as Chief Financial Officer and Vice President
- - Finance.
CHARLES ZAHKA, DIRECTOR
Charles Zahka, age 72, resides at 6300 Alonzo Avenue, Encino, California
91316. He retired as vice president of the Broadway Department Stores in 1990
after 20 years. He presently serves as a private management consultant. Mr.
Zahka is president of the Stroke Association of Southern California and vice
chairman of the Better Business Bureau of the Southland. He has served on
the Board for ten years, including one year as Secretary and one year as
President.
30 of 37
<PAGE>
OTHER OFFICERS AND KEY EMPLOYEES:
JAY JAMISON, ASSISTANT CORPORATE SECRETARY AND GENERAL MANAGER
Jay Jamison, 45 years old, has been employed by the Company since June 1997
as General Manager and serves as Assistant Corporate Secretary. He resides
at 17105 Oak Road, Atascadero, California 93422. He has a B.S. degree in
agricultural management from Cal Poly San Luis Obispo, graduating in 1976.
Mr. Jamison was raised on his family's guest ranch, Rancho Oso, in Santa
Barbara County, which included a recreational vehicle park, resident summer
camp, equestrian facilities and numerous resort amenities. He worked on the
ranch throughout his childhood and after college. The family business was
sold in 1983 at which time Mr. Jamison was hired by Thousand Trails, Inc., a
private membership resort as a Resort Operations Manager. His last ten years
at Thousand Trails were spent managing a 200-acre, 518 site, full-service
resort located near Hollister, California. He also managed resorts in Acton
and Idyllwild in Southern California. Prior to his employment with the
Company, Mr. Jamison managed Sugarloaf Marina and Resort on Lake Shasta in
Northern California from 1995 to 1997. He is active in the Resort and
Commercial Recreation Association and is also a member of the American
Quarter Horse Association. Mr. Jamison was appointed to and has served as a
commissioner on the Pismo Beach Conference and Visitors Bureau since February
1998.
ROGER C. LYON, JR., ASSISTANT CORPORATE SECRETARY AND GENERAL COUNSEL
Roger C. Lyon, Jr., is a practicing attorney in the State of California and
owns his law firm, Lyon and Carmel, Attorneys-at-Law. His business address
is 1104 Palm Street, Post Office Box 922, San Luis Obispo, California 93406.
Mr. Lyon has acted as outside general counsel to the Corporation since 1984.
FURTHER INFORMATION CONCERNING EXECUTIVE OFFICERS AND DIRECTORS
To the knowledge of the Company, none of the officers or directors have been
personally involved in any bankruptcy or insolvency proceedings. To the
knowledge of the Company, none of the directors or officers have been
convicted in any criminal proceedings (excluding traffic violations and other
minor offenses) or are the subject of a criminal proceeding which is
presently pending, nor have such persons been the subject of any order,
judgment, or decree of any court of competent jurisdiction, permanently or
temporarily enjoining them from acting as an investment advisor, underwriter,
broker or dealer in securities, or as an affiliated person, director or
insurance company, or from engaging in or continuing in any conduct or
practice in connection with any such activity or in connection with the
purchase or sale of any security, nor were any of such persons the subject of
a federal or state authority barring or suspending, for more than 60 days,
the right of such person to be engaged in any such activity, which order has
not been reversed or suspended.
31 of 37
<PAGE>
ITEM 10 EXECUTIVE COMPENSATION
No Officer or Director was paid more than $100,000 during the past fiscal
year.
REMUNERATION OF DIRECTORS
The directors received no cash remuneration for their service. However, the
directors are entitled to mileage reimbursement for travel to and from
meetings upon request. In addition, they are entitled to use of the Resort
for attending meetings and are provided with food and refreshments in
connection with Board Meetings. The aggregate value of the foregoing during
the fiscal year ended September 30, 1998, was estimated at $19,698.40.
OPTIONS, WARRANTS OR RIGHTS
The Company has no outstanding options, warrants or rights to purchase any of
its securities.
INDEBTEDNESS OF MANAGEMENT
No member of management was indebted to the Company during its last fiscal
year.
ITEM 11 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS MANAGEMENT
(a) No person owns beneficially of record more than 5% of the Company's
securities.
SECURITY OWNERSHIP OF MANAGEMENT
(b) The following sets forth the securities beneficially owned, directly, by
all directors and officers as a group as of September 30, 1998:
<TABLE>
<CAPTION>
AMOUNT OF PERCENT
BOARD MEMBER TITLE OF CLASS OWNERSHIP OF CLASS
<S> <C> <C> <C>
Howard Allard Common Stock 1 Share 0.056%
5161 Diablo Ave
Sacramento CA 95842
Emily Barton Common Stock 2 Shares 0.111%
4008 Glenbrook Ave
Bakersfield CA 93306
</TABLE>
32 of 37
<PAGE>
<TABLE>
<CAPTION>
AMOUNT OF PERCENT
BOARD MEMBER TITLE OF CLASS OWNERSHIP OF CLASS
<S> <C> <C> <C>
Donald Bianchi Common Stock 2 Shares 0.111%
3605 Belle Terrace
Bakersfield CA 93309
Kurt Brittain Common Stock 2 Shares 0.111%
15890 La Porte Ct
Morgan Hill CA 95037
Albert Brown Common Stock 2 Shares 0.111%
22718 Lone Eagle Rd
Apple Valley CA 92308
Harry Buchaklian Common Stock 1 Share 0.056%
1361 E Ticonderoga Dr
Fresno, CA 93720
Frank Drake Common Stock 1 Share 0.056%
9511 Birch Creek Ct
Bakersfield CA 93312
Norman Gould Common Stock 1 Share 0.056%
10597 Road 30
Madera CA 93637
Edward Hinds, Jr. Common Stock 1 Share 0.056%
3416 W Magill Ave
Fresno CA 93711
Terris Hughes Common Stock 1 Share 0.056%
2426 Sunset
Wasco CA 93280
Larry Keller Common Stock 2 Shares 0.111%
3807 Mesa Grande
Bakersfield CA 93304
Ronald Nunlist Common Stock 4 Shares 0.222%
1105 Minter Ave
Shafter CA 93263
Jerald Pettibone Common Stock 1 Share 0.056%
4179 Court Dr
Santa Cruz CA 95062
</TABLE>
33 of 37
<PAGE>
<TABLE>
<CAPTION>
AMOUNT OF PERCENT
BOARD MEMBER TITLE OF CLASS OWNERSHIP OF CLASS
<S> <C> <C> <C>
Richard Proschold Common Stock 1 Share 0.056%
5717 Maywood Dr
Foresthill CA 95631-9636
Thomas Rourke Common Stock 2 Shares 0.111%
899 Stagi Ln
Los Altos CA 94024
Henry Valentia Common Stock 3 Shares 0.167%
2007 Cardinal Way
Fairfield CA 94533
Jack Williams Common Stock 1 Share 0.056%
7801 Revelstoke Way
Bakersfield CA 93309
Charles Zahka Common Stock 2 Shares 0.111%
6300 Alonzo Way
Encino CA 91316
All Officers and
Directors as a Group Common Stock 30 Shares 1.666%
</TABLE>
All such shares are owned beneficially and of record, there are no additional
shares known to the Company for which the listed beneficial owner has the
right to acquire beneficial ownership as specified in Rule 13D-3(d)(1) of the
Exchange Act.
CHANGES IN CONTROL
Not applicable
ITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There have been no transactions during the past two years, or proposed
transactions, to which the Company was or is to be a party, in which any of
the officers, directors, nominees, named shareholders, or family members of
any such persons, had or is to have a direct or indirect material interest,
other than transactions where competitive bids determine the rates or charges
involved, or where the amount involved does not exceed $60,000, or where the
interest of the party arises solely from the ownership of securities of the
Company and the party received no extra or special benefit that was not
shared by all shareholders.
34 of 37
<PAGE>
PART IV
ITEM 13 EXHIBITS AND REPORTS ON FORM 8-K
(a.) Documents Filed as Part of the Report:
Independent Auditor's Report
Balance Sheets as of September 30, 1998 and 1997
Statements of Operations and Retained Earnings (Deficit) for the years
ended September 30, 1998, 1997 and 1996
Statements of Cash Flows for the years ended September 30, 1998, 1997 and
1996
Notes to Financial Statements
(b.) Reports on Form 8-K: None have been filed during the last quarter of the
period covered by this report.
35 of 37
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
PISMO COAST VILLAGE, INC.
By: /s/ Jerald Pettibone Date: November 14, 1998
Jerald Pettibone, President
and Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Company and in the capacities and on the dates indicated.
By: /s/ Linda Davidson Date: November 14, 1998
------------------------------------ -----------------
Linda Davidson, Controller
and Principal Accounting Officer
By: /s/ Jerald Pettibone Date: November 14, 1998
------------------------------------ -----------------
Jerald Pettibone, President
and Chairman of the Board
By: /s/ Harry Buchaklian Date: November 14, 1998
------------------------------------ -----------------
Harry Buchaklian, Executive Vice
President and Director
By: /s/ Edward Hinds, Jr. Date: November 14, 1998
------------------------------------ -----------------
Edward Hinds, Jr., Vice President -
Secretary and Director
By: /s/ Jack Williams Date: November 14, 1998
------------------------------------ -----------------
Jack Williams, Chief Financial Officer,
Vice President - Finance and Director
By: /s/ Frank Drake Date: November 14, 1997
------------------------------------ -----------------
Frank Drake, Vice President -
Administration and Director
By: /s/ Howard Allard Date: November 14, 1998
------------------------------------ -----------------
Howard Allard, Director
By: /s/ Emily Barton Date: November 14, 1998
------------------------------------ -----------------
Emily Barton, Director
36 of 37
<PAGE>
By: /s/ Donald Bianchi Date: November 14, 1998
------------------------------------ -----------------
Donald J. Bianchi, Director
By: /s/ Kurt Brittain Date: November 14, 1998
------------------------------------ -----------------
Kurt Brittain, Director
By: /s/ Albert Brown Date: November 14, 1998
------------------------------------ -----------------
Albert Brown, Director
By: /s/ Norman Gould Date: November 14, 1998
------------------------------------ -----------------
Norman Gould, Director
By: /s/ Terris Hughes Date: November 14, 1998
------------------------------------ -----------------
Terris Hughes, Director
By: /s/ Larry Keller Date: November 14, 1998
------------------------------------ -----------------
Larry Keller, Director
By: /s/ Ronald Nunlist Date: November 14, 1998
------------------------------------ -----------------
Ronald Nunlist, Director
By: /s/ Richard Proschold Date: November 14, 1998
------------------------------------ -----------------
Richard Proschold, Director
By: /s/ Thomas Rourke Date: November 14, 1998
------------------------------------ -----------------
Thomas Rourke, Director
By: /s/ Henry Valentia Date: November 14, 1998
------------------------------------ -----------------
Henry Valentia, Director
By: /s/ Charles Zahka Date: November 14, 1998
------------------------------------ -----------------
Charles Zahka, Director
37 of 37
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEP-30-1998
<CASH> 831,756
<SECURITIES> 0
<RECEIVABLES> 10,495
<ALLOWANCES> 0
<INVENTORY> 66,723
<CURRENT-ASSETS> 979,160
<PP&E> 9,712,863
<DEPRECIATION> 4,375,276
<TOTAL-ASSETS> 6,385,371
<CURRENT-LIABILITIES> 428,660
<BONDS> 0
0
0
<COMMON> 5,647,708
<OTHER-SE> 235,003
<TOTAL-LIABILITY-AND-EQUITY> 6,385,371
<SALES> 496,475
<TOTAL-REVENUES> 2,683,948
<CGS> 289,690
<TOTAL-COSTS> 2,506,210
<OTHER-EXPENSES> 12,483<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 200
<INCOME-PRETAX> 177,738
<INCOME-TAX> 69,000
<INCOME-CONTINUING> 108,738
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 108,738
<EPS-PRIMARY> 60.41
<EPS-DILUTED> 0
<FN>
<F1> Loss on disposal of fixed assets.
</FN>
</TABLE>
