SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15 (d) SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from to
Commission file number 0-10176
DOMINION RESOURCES, INC.
(Exact name of registrant as specified in its
charter)
Delaware
(State or other jurisdiction of
22-2306487
(IRS Employer Identification No.)
incorporation or organization)
355 Madison Avenue, Morristown, NJ 07960
(Address of principal executive offices)
(Zip Code)
(973) 538-4177
Registrant's telephone number, including area
code)
NONE
(Former name, former address, and former fiscal
year, if changed since last report.)
Indicate by check mark whether the
registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) or the
Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period
that the registrant was required to file such
reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes No X
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding
of each of the issuer's classes of common stock,
as of the close of the latest practicable date.
Class
Common Stock, $0.01 par value
Outstanding at June 30, 1996
4,239,404
DOMINION RESOURCES, INC. AND SUBSIDIARIES
FORM 10-QSB
QUARTER ENDED JUNE 30, 1996
FINANCIAL INFORMATION
PART I
Part I
Item 1. Financial Statements
The attached unaudited financial statements of
Dominion Resources, Inc. and its wholly owned
subsidiaries (the "Company") reflect all
adjustments which are, in the opinion of
management, necessary to present a fair
statement of the operating results for the
interim period presented.
Condensed consolidated balance sheets 1-2
Condensed consolidated statements
of operations 3-4
Condensed consolidated statements
of cash flows 5-6
Notes to condensed consolidated
financial statements 7-25
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations.
PART II
OTHER INFORMATION
Part II
Item 4. Submission of Matters to a Vote of
Security Holders
Item 6. Exhibits and Reports on Form 8-K
DOMINION RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<S> <C> <C>
June 30, 1996 September 30,
1995
(Unaudited) (See note below)
Current assets:
Cash and Cash
Equivalents $ 656,939 $ 666,697
Cash held in escrow (Note 3) 400,000 -0-
Investment in mutual fund and
other marketable securities 539,056 -0-
Membership Receivables, Net
(including allowance for
doubtful accounts of $211,502
at June 30, 1996 1,043,109 -0-
Accounts receivable - trade
(net of allowance for
doubtful accounts of $-0-
at June 30, 1996 and $133,070
at September 30, 1995) (Note3) -0- 808,780
Investment in PriCellular
Corporation (Note 5) 2,504,713 -0-
Note Receivable - Resort Club,
Inc. (Note 4) -0- 1,129,062
Accrued interest and other
receivables 235,564 101,985
Inventories (Note 3) -0- 43,535
Deferred expenses of sale
(Note 3) -0- 346,003
Prepaid expenses and
other assets 42,839 10,886
Deferred Membership
Interests Held For Sale 6,222,878 -0-
Total current assets 11,645,098 3,106,948
Property, equipment, furniture,
and fixtures, net
of accumulated depreciation
and amortization of
$76,428 at June 30, 1996
and $1,147,312 at
September 30, 1995
(Note 3) 1,541,456 4,435,417
Other assets:
Membership Receivables,
Net (including allowance
for doubtful accounts
of $708,073 at June
30, 1996 3,540,449 -0-
Mortgages receivables
(Note 6) 1,523,585 -0-
Note Receivable - Great Gorge
(Note 4) 97,135 -0-
Note Receivable -
Food Extrusion, Inc. 1,388,059 -0-
Investment in Food
Extrusion, Inc. 361,941 -0-
Related party receivable
- MAFC participation note
(Note 4) -0- 529,440
Cellular telephone license
costs - net of accumulated
amortization of $-0- at
June 30, 1996 and $154,460
at September 30, 1995
(Note 3) -0- 49,976
Assets Held For Sale
(Note 4) 165,700 -0-
Real Estate and Real
Estate related activities 648,249 142,684
Total other assets 7,725,118 722,100
Total assets $20,911,672 $8,264,465
</TABLE>
Note: The balance sheet at September 30, 1995, has been taken from
audited financial statements at that date and condensed.
See accompanying notes
DOMINION RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<S> <C> <C>
June 30, 1996 September 30,
1995
(Unaudited) (See note below)
Current liabilities:
Long-term debt,
current portion (Note 3) $ -0- $ 2,986,057
Mortgages payable,
current portion 29,789 23,365
Notes payable, current
portion (Note 9) 2,781,460 125,000
Capital Lease 107,099 -0-
Notes payable -
PriCellular (Note 3) -0- 2,000,000
Accounts payable
and accrued liabilities 6,563,616 770,032
Deferred Membership Revenue
(Note 12) 7,538,476 -0-
Total current liabilities 17,020,440 5,904,454
Long-term liabilities:
Mortgages payable, net
of current maturities 301,548 138,089
Total long-term liabilities 301,548 138,089
Stockholders' equity:
Common stock, $0.01 par
value; authorized -
25,000,000 shares; issued
and outstanding - 4,239,404
shares at June 30, 1996 and
5,559,000 at September 30,
1995 (Note 11) 42,394 55,590
Additional paid-in capital 5,058,706 5,058,706
Retained earnings (deficit) (138,098) (2,892,374)
Less: 1,319,596 shares held
in treasury (Note 11) (1,373,318) -0-
Total stockholders' equity 3,589,684 2,221,922
Total liabilities and
stockholders' equity $ 20,911,672 $ 8,264,465
</TABLE>
Note: The balance sheet at September 30, 1995,
has been taken from audited financial statements
at that date and condensed.
See accompanying notes
DOMINION RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
NINE MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
<TABLE>
<S> <C> <C>
1996 1995
Revenues
Membership revenue $ 2,001,911 $ -0-
Membership annual fee revenue 293,765 -0-
Ski rental shop revenue
and other revenue 1,274,023 185,701
Total revenues 3,569,699 185,701
Expenses:
Ski rental shop and
other operations 1,081,686 141,527
Membership operations 4,095,990 -0-
Membership maintenance 4,205,366 -0-
Marketing and selling 2,967,901 5,078
General and administrative
expenses 716,651 94,352
Depreciation and amortization 53,285 16,608
Total expenses 13,120,879 257,565
Income (loss) from operations (9,551,180) (71,864)
Other income (expenses):
Interest income 137,567 84,500
Interest expense (511,960) (62,827)
Amortized discount on
warrants and deferred
financing costs -0- (502,604)
Gain on Sale of PriCellular
Stock and other
marketable securities 2,628,808 -0-
Total other income (expenses) 2,254,415 (480,931)
Income (loss) from continuing
operations before
income taxes (7,296,765) (552,795)
Income taxes (Note 8) -0- -0-
Net Income (loss) from
continuing operations (7,296,765) (552,795)
Discontinued operations (Note 3):
Gain (loss) from operations
of Cellular Telephone
System (less applicable
income tax (benefit)
of $24,294) (36,442) 951,284
Gain on Sale of Cellular
Telephone System (less
applicable income taxes
of $728,294) 10,087,483 -0-
Income from discontinued
operations 10,051,041 951,284
Net income (loss) $ 2,754,276 $ 398,489
Net income (loss) from
continuing operations
per common share $ (1.46) $ (0.11)
Net income (loss) from
discontinued operations
per common share $ 2.01 $ 0.18
Net Income (loss) per
common share $ 0.55 $ 0.08
Weighted average number
of share used in computing
net income per share 4,991,595 5,159,733
</TABLE>
See accompanying notes.
DOMINION RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
<TABLE>
<S> <C> <C>
1996 1995
Revenues:
Membership Revenue $ 2,001,911 $ -0-
Membership annual fee revenue 293,765 -0-
Ski rental shop and
other revenue 215,714 111,158
Total revenues 2,511,390 111,158
Expenses:
Ski rental shop and
other operations 14,455 74,544
Membership operations 4,095,990 -0-
Membership maintenance 4,205,366 -0-
Marketing and selling 2,967,901 -0-
General and administrative
expenses 266,224 98,381
Depreciation and amortization 49,739 5,536
Total expenses 11,599,675 178,461
Income (loss) from
operations (9,088,285) (67,303)
Other income (expenses):
Interest income (313,016) 60,062
Interest expense (267,260) (43,836)
Amortized discount on
warrants and deferred
financing costs -0- (210,938)
Gain on sale of
PriCellular Stock
and other marketable
securities 177,464 -0-
Total other income (expenses) (402,812) (194,712)
Income (loss) from continuing
operations before
income taxes (9,491,097) (262,015)
Income taxes (Note 8) (203,177) -0-
Net Income (loss) from
continuing operations (9,287,920) (262,015)
Discontinued operations (Note 3):
Gain (loss) from
operations of Cellular
Telephone System 7,890 387,046
Gain on Sale of Cellular
Telephone System 2,787,756 -0-
Income from discontinued
operations 2,795,646 387,046
Net income (loss) $ (6,492,274) $ 125,031
Net income (loss) from
continuing operations
per common share $ (2.19) $ (0.05)
Net income (loss) from
discontinued operations
per common share $ 0.66 $ 0.07
Net Income (loss) per
common share $ (1.53) $ 0.02
Weighted average number of
shares used in computing
net income per share 4,239,404 5,559,000
</TABLE>
See accompanying notes.
DOMINION RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
<TABLE>
<S> <C> <C>
1996 1995
Cash flows provided by (used in) continuing operating activities:
Net Income (loss) $ (7,296,765) $ (552,795)
Adjustments to reconcile net income to net cash provided by continuing
operating activities:
Depreciation and amortization 53,285 16,608
Amortization of discount
on warrants and deferred
financing cost -0- 502,604
Provision for doubtful accounts -0- 134,000
Changes in assets and liabilities:
Membership receivables (1,576,779) -0-
Trade receivables -0- (213,560)
Accrued interest receivable
and other receivables (23,984) (40,084)
Inventories -0- 25,693
Prepaid expenses and other assets (42,838) (248,750)
Deferred member expenses (1,706,524) -0-
Accounts payable and
accrued expenses 4,628,181 38,501
Deferred membership revenue 3,005,694 -0-
Net cash provided by (used in)
continuing operations (2,959,730) (337,783)
Cash flows provided by discontinued operating activities:
Net Income (loss) (36,442) 951,284
Adjustments to reconcile net (loss) to net cash provided by
discontinued operating activities:
Depreciation and amortization 109,601 350,045
Provision for doubtful accounts -0- (119,000)
Changes in assets and liabilities:
Trade receivables 3,986 (184,900)
Inventories (892) 28,794
Prepaid expenses and other assets 31,216 22,639
Accounts payable and accrued expenses 154,460 36,498
Gain on Sale of Cellular Assets 7,263,902 -0-
Net cash provided by
discontinued operations 7,525,831 1,085,360
Cash flows from investing activities:
Sale of PriCellular Stock 4,992,350 -0-
Convert related party
receivable to equity
investment 1,019,467 (1,417,598)
Note Receivable - Food Extrusion (1,750,000) -0-
Note Receivable - Great Gorge (97,135) -0-
Investment in real estate
and real estate related activities 23,875 -0-
Purchase of amusement ride (1,229,010) -0-
Purchase of Piston Bullies (165,700) -0-
Investment in mutual fund
and other marketable securities (539,057) -0-
Investment in mortgages receivables (1,523,585) -0-
Capital expenditures (120,226) (1,172,884)
Net cash (used in)
investing activities 610,979 (2,590,482)
Cash flows from financing activities:
Proceeds from borrowings 1,165,700 2,000,000
Repayment of borrowings (4,566,022) (486,883)
Purchase of treasury stock (1,386,516) -0-
Proceeds from issuance of
common stock and warrants -0- 203,125
Net cash provided by (used in)
financing activities (4,786,838) 1,716,242
Increase (Decrease) in cash 390,242 (126,663)
Cash balance, beginning of year 666,697 293,393
Cash balance, June 30, 1996 $ 1,056,939 $ 166,730
</TABLE>
See accompanying notes
DOMINION RESOURCES, INC. AND SUBSIDIARIES
SUPPLEMENTARY SCHEDULE
OF NON-CASH OPERATING, INVESTING AND FINANCING ACTIVITIES
NINE MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
<TABLE>
<S> <C> <C>
1996 1995
Investment in PriCellular $ 7,497,063 $ -0-
Retained Earnings (7,497,063) -0-
Resort Club assets accrued 7,523,132 -0-
Resort Club liabilities assumed (7,523,132) -0-
Total Non-Cash Operating,
Investing and Financing Activities $ -0- $ -0-
</TABLE>
See accompanying notes.
DOMINION RESOURCES, INC. AND SUBSIDIARIESNOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)NOTE 1 - BASIS OF PRESENTATION:
The accompanying unaudited condensed consolidated financial statements of the
Company have been prepared in accordance with generally accepted accounting
principles for interim financial reporting. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion
of management, the accompanying condensed consolidated financial statements
contain all adjustments (consisting only of normal recurring accruals)
necessary to present fairly the financial position as of June
30, 1996, the results of operations for the nine months ended June 30,
1996 and 1995, and cash flows for the nine months ended June 30, 1996
and 1995. Operating results for the nine months ended June 30, 1996,
are not necessarily indicative of the results
which may be expected for the year ending September 30, 1996.
These statements should be read in conjunction with Form 10-KSB for
fiscal 1995 which is on file with the Securities and Exchange Commission.
On November 7, 1995, the Company completed the sale of its cellular
telephone system. The cellular telephone system was substantially the
Company's only source of revenues. After November 7, 1995, the Company
had no significant operations. On February 1,
1996, the Company through its wholly owned subsidiary Diamond
Leasing, pursuant to a pledge agreement, acquired 100% of the outstanding
common stock of Resort Club. Accordingly, the Company's condensed
consolidated balance sheet at June 30, 1996 is not comparable to the
condensed consolidated balance sheet at September 30, 1995 and
the Company's condensed consolidated statement of operations and cash
flows for the nine months ended June 30, 1996 are not comparable
to the nine months ended June 30, 1995.
NOTE 2 - RECLASSIFICATION:
Certain fiscal 1996 items have been reclassified to conform
with the fiscal 1995 presentation.
NOTE 3 - DISCONTINUED OPERATIONS - SALE OF CELLULAR ASSETS:
On November 16, 1994, the Company announced that its wholly owned subsidiary,
Dominion Cellular Inc. ("DCI"), had retained an independent broker on an
exclusive basis to attempt to find a potential purchaser for DCI's cellular
system or a possible merger partner with DCI. Management of the Company
determined to seek a purchaser because it believed that DCI's cellular
system had been developed to a point where it represented an attractive
acquisition for potential acquirers in the cellular industry at a
price, based on current market conditions, substantially in excess
of DCI's costs in developing the system.
DOMINION RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
NOTE 3 - DISCONTINUED OPERATIONS - SALE OF CELLULAR ASSETS (Continued):
On May 8, 1995, the Company and DCI executed an Asset Purchase Agreement
(subsequently amended on August 14, 1995 and December 14, 1995) with two
unaffiliated entities, PriCellular Corporation ("PriCellular") and
PriCellular's wholly-owned Northland subsidiary, providing for the sale to
Northland of the System operated by DCI in the Bibb, Alabama RSA
(the "AL-4 RSA"). The System was substantially the Company's only
source of revenues. Immediately after completion of the sale of the
System, the Company had no significant operations.
The sale of the System was contingent upon obtaining the consent of the
Federal Communications Commission ("FCC") to the assignment by DCI of the
licenses to operate the System to Northland (which consent was obtained
on June 9, 1995), and upon obtaining the approval of the sale from
holders of a majority of the outstanding shares of the Company's
Common Stock (which approval was obtained on November 6, 1995).
The Assets sold (subject to certain liabilities related to the System and
being assumed by the Purchaser) included the FCC nonwireline license
for the AL-4 RSA, the cellular sites, towers and related equipment
used by the System, the real property on which the cellular sites
are located, and the bulk of DCI's current assets.
The parties also agreed that effective August 1, 1995, PriCellular would
become the manager of the System pursuant to a management
agreement providing for a management fee to be paid to PriCellular equal
to 7% of the gross revenues of the System during the term of the
management agreement. Through November 7, 1995, the Company accrued
$114,600 in connection with the management agreement.
The original purchase price of the system was $19,900,000 (after a $100,000
reduction for the amount by which certain liabilities assumed by the
purchaser at the closing exceeded DCI's assets) payable as follows:
(a) $6,000,000 in cash, payable at the Closing which occurred
on November 7, 1995, (b) $3,900,000 in cash payable 30 days
following the Closing and (c) $10,000,000 by delivery at the Closing of
PriCellular's five-year 4% Convertible Subordinated Note in the principal
amount of $10,000,000 (also referred herein as the "PriCellular Note").
The PriCellular Note was convertible into shares of PriCellular Class A
Common Stock at $8.51 per share (i) at the option of
the holder and (ii) at the option of PriCellular if the closing price
for PriCellular Class A Common Stock when trading on the American Stock
Exchange (or such other exchange which at such time may be the principal
exchange where such stock is traded) is $10.60
or higher for ten consecutive trading days.
DOMINION RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
NOTE 3 - DISCONTINUED OPERATIONS - SALE OF CELLULAR ASSETS (Continued):
At the closing, the initial $6,000,000 cash portion of the purchase price
was reduced to the extent required to repay DCI's outstanding debt to
Motorola (approximately $2,864,000) incurred to
finance construction of the System, and to repay the 8%,
$2,000,000 loan extended to DCI by PriCellular on April 7, 1995 in
anticipation of the execution of the Asset Purchase Agreement.
At the second closing, the $4,000,000 cash portion of the purchase
price was decreased by $100,000, the amount by which assumed
liabilities exceeded DCI's assets. An aggregate $400,000 of the
$3,900,000 balance of the purchase price was required to be held
in escrow for a one year period following the closing, to ensure the
accuracy of the Company's representations and warranties.
Also at the closing, PriCellular elected to force conversion of its
five-year, 4%, $10,000,000 Convertible Subordinated Note to DCI into
1,175,088 shares of its Class A Common Stock. The high and low sales prices
for PriCellular Class A Common Stock, as traded on the American
Stock Exchange on November 7, 1995, were $13.125 and
$12.75, respectively. As a result, the Company recorded the 1,175,088
converted shares at a value of $7,497,061 an amount which reflected a 50%
discount of the closing sales price of PriCellular Class A Common
Stock on November 7, 1995 of $12.75. The Company recorded a 50% discount
because of the trading restrictions placed on the stock.
In connection with the second closing, the Company entered into a second
amendment to the Asset Purchase Agreement dated December 14, 1995 whereby
the Company and PriCellular resolved certain disputes with respect to the
adjusted purchase price of the cellular telephone system. As amended,
the Company received $3,500,000 at the second closing, with the $400,000
balance being held in escrow. As part of the second amendment, the
Company retained ownership of certain accounts receivable deemed to
be uncollectible as of August 1, 1995 in the aggregate principal amount of
approximately $124,000. In addition, the Company reserved the right to
the proceeds of any insurance claim arising from a loss that took place
in the month of August 1995.
DOMINION RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
NOTE 3 - DISCONTINUED OPERATIONS - SALE OF CELLULAR ASSETS (Continued):
Use of Proceeds from the System Sale
In addition to receipt of the PriCellular Class A Common Stock, the Company
received an aggregate of approximately $9,900,000 (less closing costs
and associated expenses) in cash payments from PriCellular at the initial
closing and at the Second Payment Date (of which $400,000 is being held in
escrow for a one year period as previously described). The cash payments
and the proceeds from the sale or distribution of PriCellular Stock through
June 30, 1996 were applied substantially as follows:
<TABLE>
<S> <C>
a) Repayment of Motorola debt and accrued
interest incurred to finance construction
of the System. $ 2,864,226
b) Closing costs 747,955
c) Escrow account deposit 400,000
d) Advances to Resort Club 6,225,442
e) Investment in mutual fund and
other marketable securities 381,723
f) Investment in RTC mortgages 1,600,000
g) Prepaid lease 950,000
h) Investment in Food Extrusion 1,750,000
i) Purchase of the Company's Common
Stock from former President 1,664,450
j) Purchase of the Company's Common
Stock from unrelated parties 562,343
k) Investments in real estate and real
estate related activities 505,565
l) Investment in Space Shot and Piston Bullies 1,394,710
Total: $ 19,046,414
</TABLE>
DOMINION RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
NOTE 3 - DISCONTINUED OPERATIONS - SALE OF CELLULAR ASSETS (Continued):
Proceeds from the System Sale Payable to Former PresidentIn
lieu of a severance payment and in appreciation for her services in
developing the System, the Board of Directors had agreed in principle with
Ms. Evers-Tierney that in the event of consummation of the sale of the
System, the Company would repurchase all of the shares of the Company's
Common Stock owned by Ms. Evers-Tierney, her son and her husband,
at a price equal to the "book value" of such shares computed as of the
first business day after the Closing. The determination of "book value"
would be made by the Company's auditors, computed on an accrual basis
giving effect to the sale and the expenses and taxes incurred in
connection with the sale, but without deducting any
severance payment obligations to Ms. Evers-Tierney (which were waived)
or the stock repurchase obligation to Ms. Evers-Tierney and her family.
As a result, pro rata payment was made to Ms. Evers-Tierney and her family.
Ms. Evers-Tierney and her family had the right to obtain part of such
payments in PriCellular notes. As of June 30, 1996, the Company purchased
an aggregate of 943,411 shares of the Company's Common Stock from Ms.
Tierney and her family at an aggregate purchase price equal to
approximately $500,000 in cash and 182,500 shares of PriCellular
Common Stock of which 50% was allocated to the purchase of
Tierney stock and 50% as a cost in connection with the sale of System.
With the exception of the above described payments to the Company's
former president and members of her family, no portion of the sale
proceeds were distributed directly to the Company's shareholders.
NOTE 4 - RELATED PARTY TRANSACTIONS
During the period of October 1, 1994 through June 30, 1996, the
Company engaged in various transactions with certain of its officers,
directors, principal stockholders and
certain of their affiliated entities. Specifically, the Company
has entered into transactions with Resort Club, Great American
Recreation Inc. ("Great American"), Madison Avenue Financial
Corporation ("MAFC"), Stonehill Recreation Corporation
("Stonehill Recreation"), and Great Mountain Development Corporation
("GMD") of which the Company's Directors and Officers are either
principal shareholders and/or Officers and Directors.
In this regard, William McManus, a Director of the Company
and its President, was an Officer of GMD, and the President of MAFC.
Mr. Bellantoni, the Secretary, Treasurer and Director of the Company
was Vice President and Chief Financial Officer of Great American and
is currently a Director of Great American; Gene Mulvihill, the Chairman
of the Board and Chief Executive Officer of the Company
was a principal shareholder and former Officer of GMD and former Chairman
of the Board and Chief Executive Officer of Great American
and his daughter was a Director, and the President and
DOMINION RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
NOTE 4 - RELATED PARTY TRANSACTIONS (Continued):
Chief Operating Officer of such corporation. Mr. Gene Mulvihill's son,
Andrew Mulvihill is an Executive Officer of Resort club
and a former officer of GMD.
An entity beneficially owned by Gene Mulvihill is also owed $147,960 by
Resort Club, currently due and owing and has been granted a security
interest in Resort Club membership promissory notes to secure
repayment of indebtedness. However, such
security interest is subordinate to all security interests in such notes.
On March 29, 1996, but effective as of June 1, 1993, Resort Club entered
into amended and restated agreements with Vernon Valley, Great Gorge
and Great Valley Real Estate Corp., all subsidiaries of Great American
whereby in consideration for an aggregate payment of 10%
of the gross sales price of each Resort Club membership, these entities
will provide amenities and access to certain properties for the benefit
of Resort Club members. The amenities provided by Great American
include admission passes to the Vernon Valley and Great Gorge ski facilities,
admission passes to the Action Park and admission passes to the
Mountain Top Recreation Center, all for a period of 35 years.
As of June 30, 1996, Resort Club has accrued an aggregate of $178,000
due to Great American for the amenities and access to certain property.
Also on March 29, 1996, Resort Club entered into an amended and
restated agreement with Stonehill Recreation, the entity which owns
and operates the Spa and Country Club at Great Gorge on
terms similar to those that were entered into with Great American,
except that the consideration payable to Stonehill Recreation from
Resort Club represents $25,000 for each condominium controlled
by Resort Club. As of June 30, 1996, Resort Club has accrued an
aggregate of $650,000 due to Stonehill Recreation for amenities which
is due and payable. Andrew J. Mulvihill, an Executive Officer of
Resort Club is the beneficial owner of 33% of Stonehill Recreation
and Christopher Mulvihill, the son of Gene Mulvihill is the
beneficial owner of 33% of Stonehill Recreation.
On November 10, 1995, the Company entered into an assumption agreement
with Mr. Gene Mulvihill, whereby the Company assumed indebtedness of
$750,000 for a loan previously advanced to Mr. Mulvihill by his
two partners in St. Marks Associates, the Company's current landlord,
on or about May 19, 1995. The Company assumed the said
indebtedness in exchange for an equal amount of Resort Club receivables.
Resort Club receivables were incorporated into the second loan
agreement with Resort Club described above. The loan was paid
in full on February 15, 1996 together with interest at 15%.
DOMINION RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
NOTE 4 - RELATED PARTY TRANSACTIONS (Continued):
On March 31, 1996 the Company entered into an agreement to purchase nine
condominiums from Mr. Gene Mulvihill which are used in connection with
Resort Club for an aggregate purchase price of $878,500. Of the
condominiums purchased, eight are located in the Great
Gorge Resort and one is located in the Resort of Palmas Del Mar,
Puerto Rico. As of June 30, 1996, the Company has a remaining balance
due on the purchase of $503,500 which is evidenced by a note payable
bearing interest at 10.25%.
Subsequent to the sale of the System, the Company transferred its
executive offices to 355 Madison Avenue, Morristown, New Jersey.
In connection with this move, the Company entered into a
lease agreement with St. Marks Associates, a real estate
partnership owned 50% by Mr. Gene Mulvihill. The lease provides
for a lease term of 5 years commencing December 1, 1995 with a base
rent of $1,558 per month and a monthly payment of approximately
$519 for the Company's proportionate share of impositions and
operating expenses. The lease provides for rental adjustments for
changes in the Consumer Price Index.
On December 1, 1995, Diamond Leasing entered into a lease agreement with
Vernon Valley. The lease term commenced on December 15, 1995 and expired
on March 15, 1996. Pursuant to the lease, Diamond Leasing leased the
Vernon Valley/Great Gorge Ski Area Rental Shops and all fixtures located
thereon as well as the ski rental equipment. In consideration for this
lease, Diamond Leasing agreed to: 1) pay a base rent of $950,000;
2) pay additional rent of $75,000 which represents an unallocated
payment for services provided by Vernon Valley, including but not
limited to security, maintenance of the leased premises, and general
administrative services; and 3) pay a percentage of gross
revenue equal to 50% of gross revenues in excess of $1,000,000.
The Lease provided for a cap limitation equal to a 28% rate of return
to Diamond Leasing. Proceeds received in excess of a 28% rate of return
were required to be remitted to Vernon Valley. The Lease also provided
Diamond Leasing with the absolute right of renewal for an additional
three consecutive December 15 - March 15 lease terms. Through June 30, 1996,
Diamond Leasing received net proceeds of approximately $984,000
(excluding the $75,000 additional rent which was paid directly to Vernon
Valley from ski rental receipts) on this transaction and owes no
further obligation to Vernon Valley, and consequently had a net
gain on the transaction.
DOMINION RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
NOTE 4 - RELATED PARTY TRANSACTIONS (Continued):
Diamond Leasing entered into a capital lease for two Piston Bullies with
Bombardier Capital, Inc. ("Bombardier") commencing January 1, 1996 for a
term of 18 months ending September 1, 1997. Piston Bullies are snow
grooming machines used for grooming ski trails. The lease provides for
11 payments with aggregate rental payments of approximately $165,700 and
has a $10,901 purchase option at the end of the lease term.
Concurrent with entering into the lease agreement with Bombardier, Diamond
Leasing entered into a sublease agreement with Vernon Valley on similar
terms with Diamond Leasing's lease agreement with Bombardier except that
the rental payment had been adjusted to reflect a rate of return to the
Company of 28%. In connection with the lease agreement, Bombardier
filed financing statements to protect its security interest.
In addition, the Company pledged 10,000 shares of its PriCellular
Class A Common Stock with Bombardier as additional collateral.
As of June 30, 1996, the outstanding balance due Bombardier was $107,099.
On January 15, 1996, Vernon Valley failed to make the required payments
pursuant to the Piston Bully Lease Agreement causing a default. As a
consequence of the default, Diamond Leasing accelerated the amount due
under the Lease Agreement. Presently, Diamond Leasing has a claim against
Vernon Valley for all sums due under the Lease Agreement, including any and
all costs and expenses, including reasonable attorney fees, incurred by
Diamond Leasing to collect the claim.
On January 26, 1996, Diamond Leasing entered into a loan agreement and
advanced $269,500 to Great American in connection with a loss suffered
by Great American resulting from a flood that occurred on January 12, 1996.
As collateral for the $269,500 loan, Great American assigned to Diamond
Leasing its interest in the insurance proceeds to the extent of $269,500
together with interest at 9% per annum. As further consideration, Diamond
Leasing and Vernon Valley amended the ski rental shop lease
to provide that prior to any "additional rent" being paid to Vernon Valley
pursuant to the lease agreement funds will be paid to Diamond Leasing until
the principal amount of the loan is fully paid with accrued interest.
As of June 30, 1996, Diamond Leasing received payments of $172,366 on
this loan pursuant to the assignment and "additional
rent" described above with a remaining balance of $97,134 outstanding
as of June 30, 1996.
DOMINION RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
NOTE 4 - RELATED PARTY TRANSACTIONS (Continued):
On March 19, 1996, Diamond Leasing agreed to purchase 92 condominium lots
from GMD, at a price of $1,820,000 payable as follows: (i) $270,500 on
or before April 1, 1996, (ii) the assumption of any and all filed liens
affecting the Property; and (iii) the balance from the net cash flow
realized from the development of the Property. Each of
the parties agreed to seek Bankruptcy Court approval for this transaction.
The closing occurred on April 1, 1996 with Diamond Leasing acquiring
good and marketable title to the property insurable at regular rates
and with customary adjustments made at the closing. Finally,
Diamond Leasing offered GMD the Option to participate in the development
of the Property.
On or about July 24, 1992, Great American and one of its subsidiaries were
indebted to the Company for prior loans, in the aggregate amount of
approximately $680,000. At such date, the Company agreed to reduce
the amount of the indebtedness to $600,000 in return for a $600,000
secured position in a junior participation hereinafter described
held by MAFC. MAFC held a second junior participation in a loan
agreement between Great American and First Fidelity Bank, N.A.
("First Fidelity"). MAFC's second junior participation was limited
to receiving a pro rata share of the interest paid by Great
American to First Fidelity under a secured promissory note (the "Term
Note") until First Fidelity and a prior participant had received full
payment on the indebtedness totaling approximately $11,750,000 owed to
them. The Term Note was secured by a lien on Great American's assets.
On July 24, 1992, the total principal indebtedness owed on the
Term Note was $14,450,000 with approximately $1,400,000 of such amount
owed to MAFC.
Interest on the Term Note was payable monthly at an annual rate
equal to 2-1/2% above First Fidelity's prime rate. By virtue of
its agreement to reduce the indebtedness owed to it to $600,000 for
a participation in MAFC's position, the Company became entitled to
6/14ths of each monthly interest payment received by MAFC subsequent
to July 24 1992. The Company had filed a financing statement and
held a secured position in the payments made to MAFC under the Term Note.
In October 1995, Noramco (NJ) Inc. ("Noramco") and Skival, Inc. entered
into an agreement with MAFC whereby MAFC agreed to accept 88.24% or
$1,235,360 of the $1,400,000 second junior participation in the Great
American indebtedness. Thereafter, MAFC agreed to accept approximately
50% of the amount due and owing in cash and the balance in the form
of a note from Noramco in consideration of MAFC receiving a
secured position in Skival, Inc.'s option agreement with Praedium.
Accordingly, the Company adjusted its carrying value of the MAFC
investment to $529,440 as of June 30, 1995. The Company accepted
a discount on its participation in consideration for
being immediately repaid the $529,440 in cash payment made by Noramco. The
proceeds were utilized as a down payment on nine condominiums purchased
from GMD for an aggregate purchase price of $805,000, an amount which
approximates fair market value. The balance of $285,560 was paid at
closing of title on April 1, 1996.
DOMINION RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
NOTE 4 - RELATED PARTY TRANSACTIONS (Continued):
On April 5, 1996, the Company, through a wholly owned subsidiary, Star
II Leasing Corporation, agreed to purchase an attraction known as the
Space Shot from S & S Sports Power, Inc. for the sum of $1,250,000.
Concurrently, Diamond agreed to lease the Space Shot to Vernon Valley
at an annual rental equal to $300,000 for a term of four (4) years subject,
however, to Vernon Valley achieving a certain level of revenues,
failing which no payment will be made to the Company, but will accrue
and be due and payable to the Company in the subsequent years of the
said Lease Agreement. An entity controlled by the immediate family
of Mr. Mulvihill, an officer and director of the Company, is a 50%
owner of S&S Sports Power, Inc. In connection with the acquisition
of this ride, this entity has agreed to forfeit all allocated profits
and direct same to the Company. No payments were made in fiscal
1996 pursuant to lease agreement.
On February 14, 1996, an involuntary bankruptcy petition was filed
against Great American by three creditors in the United States
Bankruptcy Court, Newark, New Jersey. On April 2, 1996, Great
American and its subsidiaries Vernon Valley Recreation Associates,
Inc., Great Valley Real Estate Corp., Great Gorge, Great Heritage,
Inc., Tav Inc., Stonehill Management Corp., Stonehill Maintenance Corp.,
Stonehill Sewer, Inc., Stonehill Water, Inc., Vernon Valley Sewer, Inc.,
and GMD filed voluntary petitions with the United States Bankruptcy
Court for the District of New Jersey seeking reorganization under
Chapter 11 of the United States Bankruptcy Code. There can be no
assurance that Great American will be successful in its efforts to be
reorganized under Chapter 11 of the United States Bankruptcy Code and
that it may not be forced to liquidate its assets and distribute
the proceeds to its creditors.
NOTE 5 - INVESTMENT IN PRICELLULAR CORPORATION:
At the November 7, 1995 closing of the System, PriCellular elected to
force conversion of its five-year, 4%, $10,000,000 Convertible
Subordinated Note to DCI into 1,175,088 shares of its Class A
Common Stock. The high and low sales prices for PriCellular
Class A Common Stock, as traded on the American Stock Exchange
on November 7, 1995, were $13.125 and $12.75, respectively. As a
result, the Company recorded the 1,175,088 converted shares at a
value of $7,497,063 an amount which reflects a 50% discount of the
closing sales price of PriCellular Class A Common Stock on November
7, 1995 of $12.75. The Company recorded a 50% discount because
of the trading restrictions placed on the stock.
On January 30, 1996, DCI entered into an agreement with PriCellular
whereby DCI agreed to sell to PriCellular 600,000 shares of its
PriCellular Class A Common Stock for $10.50 per share. The closing
of this transaction occurred on February 9, 1996. At the closing,
DCI entered into an agreement pursuant to which the demand registration
rights of the holders of the Company's PriCellular registerable
securities were waived.
DOMINION RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
NOTE 6 - MORTGAGES RECEIVABLES:
On December 13, 1995, the Company entered into a purchase agreement with the
Resolution Trust Corporation for the purchase of 28 mortgages in New Jersey
and one mortgage in Florida. The purchase price of $1,600,000 represents
approximately 51% of the principal amount of indebtedness on single
family residential properties. As of June 30, 1996, all of the above
mortgages were non-performing. It is the intention of the Company to
restructure these loans or to commence foreclosure proceedings in order
to realize a return on this investment.
NOTE 7 - EXTRUSION NOTE:
On March 21, 1996, the Company loaned $1.75 million to Food Extrusion,
Inc., a non-affiliated nutriceutical corporation engaged in a revolutionary
stabilization process which converts rice bran (one of the world's largest
wasted food resources) into a highly nutritious food with cholesterol-
lowering properties. On July 30, 1996, the Company restructured the
Extrusion Note. The Extrusion Note, as restructured, bears interest at
5% per annum, with principal and interest due on November 21, 1999 and
is secured by a first lien on certain food processing assets and
related contract rights. As additional consideration, the Company
received 578,000 shares of Common Stock which represents less than
3.5% of the issued and outstanding shares of common stock of Food
Extrusion, Inc. At the issuance, the 5% stated interest rate on the
Extrusion Note was considered a below market interest rate. Accordingly,
a valuation discount of $361,941 was applied to the Extrusion Note
to be amortized over the life of its term so that the
effective yield of the Notes would be 12%. The difference between
the face value of the Extrusion Notes and its discounted value is
referred to as an original issue discount. The value of the original
issue discount has been assigned to the 578,000 shares of Food
Extrusion, Inc. common stock.
NOTE 8 - INCOME TAXES:
As of June 30, 1996, the Company had available for federal income
tax purposes approximately $1,690,000 of net operating loss carryforwards,
which would have expired in fiscal 1997 to 2007 and investment tax credit
carryforwards of approximately $8,000 which would have expired in
fiscal 1996 to 2000.
DOMINION RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
NOTE 8 - INCOME TAXES (Continued):
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes". This
statement adopts a balance sheet approach to accounting for income taxes
and requires, among other things, that deferred assets and liabilities
be adjusted to reflect the rate at which the applicable timing items
will reverse based on current enacted law. The effect of adopting this
statement in 1993 was not significant to the Company. The principal
effect of adopting this statement for the nine months ended June 30,
1996, is that utilization of net operating loss carryforwards is
reflected as a reduction of the tax provision rather than
an extraordinary item. As a result of the gain on the sale of the
Company's System, the Company utilized the tax benefit from prior period
net operating loss carryforwards resulting in the following:
Provision of Income Taxes $ 1,380,000
Tax benefit from loss carryforward utilization (676,000)
Net Tax Provision $ 704,000
NOTE 9 - DEBT:
On November 27, 1995, the Company borrowed $1 million from Donaldson,
Lufkin & Jenrette ("DLJ"). The terms of the loan require that the Company
pay a rate of interest equal to the broker's rate as established by DLJ
from time to time. The loan is due and payable on demand and is
collateralized with 300,000 shares of the Company's PriCellular Class
A Common Stock.
NOTE 10 - COMMITMENTS AND CONTINGENCIES:
In lieu of a severance payment and in appreciation for her services in
developing the System, the Board of Directors had agreed in principle
with Ms. Evers-Tierney that in the event of consummation of the sale of
the System, the Company would repurchase all of the shares of the
Company's Common Stock owned by Ms. Evers-Tierney, her son
and her husband, at a price equal to the "book value" of such shares
computed as of the first business day after the Closing. The
determination of "book value" would be made by the Company's auditors,
computed on an accrual basis giving effect to the sale and
the expenses and taxes incurred in connection with the sale, but
without deducting any severance payment obligations to Ms. Evers-Tierney
(which were waived) or the stock repurchase obligation to Ms.
Evers-Tierney and her family. As a result, pro rata payment was made
to Ms. Evers-Tierney and her family. Ms. Evers-Tierney and her
family had the right to obtain part of such payments in PriCellular
notes. As of June 30, 1996, the Company purchased an aggregate of
943,411 shares of the Company's Common Stock from Ms. Evers-Tierney
and her family at a purchase price equal to approximately $500,000
in cash and
DOMINION RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
NOTE 10 - COMMITMENTS AND CONTINGENCIES (Continued):
182,500 shares of PriCellular Common Stock of which 50% was allocated to
the purchase of Treasury stock and 50% as a cost in connection with
the sale of the System.
With the exception of the above described payments to the Company's
former president and members of her family, no portion of the
sale proceeds were distributed directly to the Company's shareholders.
Subsequent to the sale of the System, the Company transferred its
executive offices to 355 Madison Avenue, Morristown, New Jersey. In
connection with this move, the Company entered into a lease agreement
with St. Marks Associates, a real estate partnership owned 50% by
Mr. Gene Mulvihill. The lease provides for a lease term of 5
years commencing December 1, 1995 with a base rent of $1,558 per month
and a monthly payment of approximately $519 for the Company's
proportionate share of impositions and operating expenses. The lease
provides for rental adjustments for changes in the Consumer Price Index.
As of June 30, 1996, based on the number of membership points sold, the
Company is required to purchase a minimum inventory of 29 condominium units.
Currently, the Company owns 6 condominium units free and clear, and has
purchased 11 condominium units which are subject to mortgages in the
principal amount of $663,019. In addition, the Company has entered into
contracts to purchase the remaining 12 required condominium units
for a purchase price of approximately $815,500.
On March 29, 1996, but effective as of June 1, 1993, Resort Club entered
into amended and restated agreements with Vernon Valley Recreation
Association, Inc. ("Vernon Valley"), Great Gorge and Great Valley
Real Estate Corp., all subsidiaries of Great American Recreation, Inc.
("Great American"), whereby in consideration for an aggregate payment
of 10% of the gross sales price of each Resort Club membership,
these entities will provide amenities and access to certain properties
for the benefit of Resort Club members. The amenities provided by
Great American include admission passes to the Vernon Valley and Great
Gorge ski facilities, admission passes to the Action Park and admission
passes to the Mountain Top Recreation Center, all for the period of 35
years. As of June 30, 1996, Resort Club has accrued an aggregate of
approximately $178,000 due to Great American for the amenities and
access to certain property. Also on March 29, 1996, Resort Club entered
into an amended and restated agreement with Stonehill Recreation
Corporation, ("Stonehill Recreation"), the entity which owns and
operates the Spa and Country Club at Great Gorge on terms similar to
those that were entered into with Great American , except that the
consideration payable to Stonehill Recreation
DOMINION RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
NOTE 10 - COMMITMENTS AND CONTINGENCIES (Continued):
from Resort Club represents $25,000 for each condominium controlled by
Resort Club. As of June 30, 1996, Resort Club has accrued an aggregate
of $650,000 due to Stonehill Recreation for amenities which is due
and payable.
In connection with the purchase of a Resort Club membership, a member
is obligated to pay annual membership dues. Annual membership dues
have been established to cover each club member's pro rata share of
the estimated annual maintenance and operating expenses, including
reserves, for all of the units, facilities, and amenities with the
present Resort Club program. Each Resort Club member's pro rata
share of the annual expenses is based on the ratio of Resort Club
member's total contract points to the total contract points in
Resort Club program. The initial annual membership dues may be
increased by Resort Club as of each fiscal year by a percentage not
to exceed the percentage increase, if any, in the Consumer Price Index
("CPI"). The annual membership dues may be increased by an amount
greater than the CPI if the increase is put to a vote of all Resort
Club members and approved by a majority of the points voted.
As of June 30, 1996, management has determined that based on the
average per point assessment as of June 30, 1996, a deficit of $1.41
per point exists. As a result, a $304,244 per year deficit exists
which is the obligation of Resort Club. Management has calculated
the net present value of this obligation to be approximately $3,818,000.
Diamond Leasing entered into a capital lease for two Piston Bullies
with Bombardier commencing January 1, 1996 for a term of 18 months ending
September 1, 1997. Piston Bullies are snow grooming machines used
for grooming ski trails. The lease provides for 11 payments with
aggregate rental payments of approximately $165,700 and has a
$10,901 purchase option at the end of the lease term. Concurrent
with entering into the lease agreement with Bombardier, Diamond
Leasing entered into a sublease agreement with Vernon Valley on
similar terms with Diamond Leasing's lease agreement with Bombardier
except that the rental payment had been adjusted to reflect a rate
of return to the Company of 28%. In connection with the lease agreement,
Bombardier filed financing statements to protect its security interest.
In addition, the Company pledged 10,000 shares of its PriCellular Class
A Common Stock with Bombardier as additional collateral. As of June
30, 1996, the outstanding balance due Bombardier was $107,099.
On January 15, 1996, Vernon Valley failed to make the required payments
pursuant to the Piston Bully Lease Agreement causing a default. As a
consequence of the default, Diamond Leasing accelerated the amount due
under the Lease Agreement. Presently, Diamond Leasing has a claim
against Vernon Valley for all sums due under the Lease
Agreement, including any and all costs
DOMINION RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
NOTE 10 - COMMITMENTS AND CONTINGENCIES (Continued):
and expenses, including reasonable attorney fees, incurred by Diamond
Leasing to collect the claim.
On January 26, 1996, Diamond Leasing entered into a loan agreement and
advanced $269,500 to Great American in connection with a loss suffered
by Great American resulting from a flood that occurred on January 12, 1996.
As collateral for the $269,500 loan, Great American assigned to Diamond
Leasing its interest in the insurance proceeds to the extent of $269,500
together with interest at 9% per annum. As further consideration,
Diamond Leasing and Vernon Valley amended the ski rental shop lease
to provide that prior to any "additional rent" being paid to Vernon
Valley pursuant to the lease agreement funds will be paid to Diamond
Leasing until the principal amount of the loan is fully paid with
accrued interest. As of June 30, 1996, Diamond Leasing received payments
of $172,366 on this loan pursuant to the assignment and "additional
rent" described above with a remaining balance of $97,134 outstanding
as of June 30, 1996.
On March 19, 1996, Diamond Leasing agreed to purchase 92 condominium
lots from the real estate development corporation, GMD at a price of
$1,820,000 payable as follows: (i) $270,500 on or before April 1, 1996,
(ii) the assumption of any and all filed liens affecting the property;
and (iii) the balance from the net cash flow realized from the
development of the property. Each of the parties agreed to seek
Bankruptcy Court approval for this transaction. The closing occurred
on April 1, 1996 with Diamond Leasing acquiring good and marketable
title to the property insurable at regular rates and with customary
adjustments made at the closing. Finally, Diamond Leasing offered
GMD the Option to participate in the development of the property.
A director and officer of the Company is a principal shareholder
and officer of GMD; in addition, a director and officer of the
Company is an officer of GMD.
On April 5, 1996, the Company, through a wholly owned subsidiary, Star II
Leasing Corporation, agreed to purchase an attraction known as the Space
Shot from S & S Sports Power, Inc. for the sum of $1,250,000.
Concurrently, Diamond agreed to lease the Space Shot to Vernon Valley
at an annual rental equal to $300,000 for a term of four (4) years subject,
however, to Vernon Valley achieving a certain level of revenues,
failing which no payment will be made to the Company, but will accrue
and be due and payable to the Company in the subsequent years of the
said Lease Agreement. An entity controlled by the immediate family of
Mr. Mulvihill, an officer and director of the Company, is 50% owner of
S & S Sports Power, Inc. In connection with the acquisition
of this ride, this entity has agreed to forfeit all allocated profits
and direct same to the Company. No payments were made in fiscal
1996 pursuant to this lease agreement.
DOMINION RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
NOTE 10 - COMMITMENTS AND CONTINGENCIES (Continued):
On February 14, 1996, an involuntary bankruptcy petition was filed against
Great American by three creditors in the United States Bankruptcy Court,
Newark, New Jersey. On April 2, 1996, Great American and its wholly
owned subsidiaries, Vernon Valley, Great Valley, Great Gorge, Great
Heritage, Inc., TAV, Inc., Stonehill Management Corp., Stonehill
Maintenance Corp., Stonehill Water, Inc., Stonehill Sewer, Inc.,
Vernon Valley Sewer, Inc. and GMD filed voluntary petitions with the
United States Bankruptcy Court for the District of New Jersey seeking
reorganization under Chapter 11 of the United States Bankruptcy Code.
There can be no assurance that Great American will be successful in
its efforts to be reorganized under Chapter 11 of the United States
Bankruptcy Code and that it may not be forced to liquidate its assets
and distribute the proceeds to its creditors.
NOTE 11 - COMMON STOCK:
In November, 1995, the Company's Board of Directors authorized the
purchase of up to 2,000,000 shares of its' Common Stock by the
Company with established limits. The shares acquired will be held
as treasury shares. Through June 30, 1996, the Company
has repurchased (excluding the 943,411 shares repurchased from Ms.
Evers-Tierney described below) 376,185 shares of its Common Stock at
an average price of approximately $1.46 per share.
In lieu of a severance payment and in appreciation for her services in
developing the System, the Board of Directors has agreed in principle
with Ms. Evers-Tierney that in the event of consummation of the proposed
sale of the System, the Company would repurchase all of the shares of
the Company's Common Stock owned by Ms. Evers-Tierney, her son and her
husband, at a price equal to the "book value" of such shares
computed as of the first business day after the Closing. The determination
of the "book value" would be made by the Company's auditors, computed on
an accrual basis giving effect to the sale and the expenses and taxes
incurred in connection with the sale, but without deducting any
severance payment obligations to Ms. Evers-Tierney (which were
waived) or the stock repurchase obligation to Ms. Evers-Tierney
and her family. As a result, pro rata payment was made to Ms.
Evers-Tierney and her family. Ms. Evers-Tierney and her family had
the right to obtain part of such payments in PriCellular notes. As
of June 30, 1996, the Company purchased an aggregate of 943,411 shares of
the Company's Common Stock from Ms. Evers-Tierney and her family at a
purchase price equal to approximately $500,000 in cash and 182,500
shares of PriCellular Common Stock of which 50% was allocated to the
purchase of Treasury stock and 50% as a cost in connection with the
sale of the System. With the exception of the above described
payments to the Company's former president and members of her family, no
portion of the sale proceeds were distributed directly to the Company's
shareholders.
DOMINION RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
NOTE 12 - BUSINESS ACQUISITION:
On February 1, 1996, the Company, through its wholly owned subsidiary,
Diamond Leasing, pursuant to a pledge agreement, acquired 100% of the
outstanding common stock of Resort Club. The acquisition has been
accounted for as a purchase, and, accordingly, the net assets and
results of operations are included in the Consolidated Financial
Statements, for financial reporting purposes, beginning in February, 1996.
Resort Club is engaged in the business of offering membership interests
in the Great Gorge Resort to the general public. The membership entitles
the member to the use of certain amenities such as skiing, admission to
a participation theme park known as "Action Park", a health club and
other forms of outdoor recreation on certain leased lands.
The accommodations are provided in the form of condominiums.
In connection with the $2,000,000 loan extended by PriCellular to DCI on
April 7, 1995 in anticipation of the execution of the Asset Purchase
Agreement (See Note 3), an aggregate $1,417,598 of the loan proceeds
were applied by the Company through its wholly owned subsidiary Diamond
Leasing to the extension of a loan to Resort Club. The Resort Club
loan was repayable on April 20, 1996, together with interest thereon at
an annual rate of 18% and payable quarterly (said loan was extended for
a period of one year to April 20, 1997).
On October 16, 1995, the Company entered into a second loan agreement
with Resort Club whereby the Company through its wholly owned subsidiary,
Diamond Leasing, provided an additional loan facility of $2,300,000
on terms substantially similar to the previous loan agreement with
Resort Club. The loan was due and payable on October 16, 1996
(said loan was extended for a period of one year to October 16, 1997).
On February 1, 1996, Diamond Leasing entered into a third loan agreement
with Resort Club, whereby it provided an additional loan facility of
$4,000,000 on terms substantially similar to the previous loan
agreements with Resort Club. The loan is due and payable on February
1, 1997.
As additional consideration in connection with the above financing,
Diamond Leasing acquired certain interests in Resort Club, subject
to the satisfaction of certain conditions. In this regard, on February 1,
1996, the Company, through its wholly owned subsidiary, Diamond Leasing,
pursuant to a pledge agreement, acquired 100% of the outstanding
common stock of Resort Club. As of June 30, 1996, the Company's
primary business operations are in connection with the sale of
membership interests through Resort Club. Diamond Leasing acquired
all of the common stock of Resort Club from Whitehorse Enterprises,
Inc., a non-affiliated entity.
DOMINION RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
NOTE 13 - SUBSEQUENT EVENTS:
During the fourth quarter of fiscal 1996, the Company, through Diamond
Leasing, advanced $882,090 to Summit Bank ("Summit") and Lakeview
Savings Bank ("Lakeview") in connection with a limited forbearance
agreement entered into between Summit, Lakeview, Eugene Mulvihill
and Robert and Stanley Holuba.
On March 1, 1994, loans made by Summit and Lakeview to Vernon Valley
had matured and were immediately due and payable. Vernon Valley
failed to fully pay the loan obligations which constituted a material
default under the Vernon Valley loan documents, and together with the
filing of bankruptcy by Vernon Valley, also constituted a material event
of default under the Vernon Valley loan documents.
As part of the original loan transactions, Mr. Mulvihill and Mr. Stanley
and Robert Holuba (the "guarantors") guaranteed the Summit and Lakeview
loans. The outstanding loan balance, including principal, interest, and
other costs, at September 30, 1996 was approximately $4,607,184. The
payment made by the Company to Summit and Lakeview was made in connection
with a limited forbearance agreement for which the banks agreed to
forebear from exercising their respective rights and remedies under the
Vernon Valley loan documents.
Simultaneously with Diamond Leasing's advance of $882,090, the guarantors
assigned their rights of subrogation to Diamond Leasing. Under the
rights of subrogation, Diamond Leasing has a security interest in the
collateral, the Great Gorge South Summit Lodge and ski facility. Management
believes that the value of the collateral is in excess of the Summit and
Lakeview liens.
In December 1996, the Company entered into a First Amendment to the Limited
Forbearance Agreement dated September 20, 1996 (See Note 3). The terms of
the amended agreement required the Company to make a lump sum payment to
Summit for $253,729 and six monthly payments to Lakeview for $79,150.13
and a lump sum payment of $174,900.78 on July 1, 1997.
On August 5, 1996, DCI consummated the sale of an additional 450,000 shares
of Class A Common Stock of Pricellular in an underwritten public offering
pursuant to a Registration Statement on Form S-3 (File No. 333-03737)
declared effective by the Securities and Exchange Commission on July 30,
1996. Of the 450,000 shares sold, 75,000 shares were sold on behalf
of the Company's former President. As of September 30, 1996, an
additional 107,500 shares were issued to Ms. Evers-Tierney pursuant to her
agreement (see Note 3). The shares were sold at a price of $10.00 per share
less a $.55 per share underwriting discount for a net price of $9.45 per
share or $4,252,500 in the aggregate to an underwriting group
comprised of Merrill Lynch,
DOMINION RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
NOTE 13 - SUBSEQUENT EVENTS (Continued):
Pierce, Fenner & Smith Incorporated, Paine Webber Incorporated, Nat
West Securities Limited and Wasserstein Perella Securities, Inc.
On November 18, 1996, the Company borrowed $1,000,000 from Donaldson,
Lufkin & Jenrette ("DLJ"). The terms of the loan require that the Company
pay a rate of interest equal to 12%. The loan is due and payable on
demand and is collateralized with 196,700 shares of the
Company's PriCellular Class A common stock.
DOMINION RESOURCES, INC. AND SUBSIDIARIES
ITEM 2
Management's Discussion and Analysis of
Financial Condition and Results of Operations
The following information should be read in conjunction with the accompanying
unaudited financial statements and the notes thereto included in Item I of
this quarterly report, and the financial statements and the notes thereto
and management's discussion and analysis of financial condition and
results of operations contained in the Company's Annual Report on
Form 10-KSB for the year ended September 30, 1995.
On November 7, 1995, the Company completed the sale of its System.
The System was substantially the Company's only source of revenues.
After November 7, 1995, the Company had no significant operations. On
February 1, 1996, the Company through its wholly owned subsidiary
Diamond Leasing, pursuant to a pledge agreement, acquired 100% of
the outstanding common stock of Resort Club. Accordingly, the Company's
condensed consolidated balance sheet at June 30, 1996 is not comparable
to the condensed consolidated balance sheet as of September 30 1995,
and the Company's condensed consolidated statement of operations and
cash flows for the nine months ended June 30, 1996 are not comparable
to the nine months ended June 30, 1995.
A. Liquidity and Capital Resources
During the first nine months of fiscal 1996, the Company had a net
loss from continuing operations of approximately $7,297,000. Included
in the net loss from continuing operations is depreciation of
approximately $53,000. After reflecting the net change in
assets and liabilities, net cash used by operations was approximately
$2,960,000. In addition, income from discontinued operations provided
net cash of approximately $7,526,000 primarily as a result of the sale
of the Company's cellular telephone system. Investing activities
provided net cash of approximately $611,000 and primarily includes
investments in mortgages of approximately $1,524,000, purchase of an
amusement ride for approximately $1,229,000, investment in a mutual
fund and other marketable securities of approximately $539,000 and a
loan to Food Extrusion, Inc. of $1,750,000 offset by the sale of
PriCellular Stock which generated cash proceeds of approximately
$5.0 million. Financing activities used net cash of approximately
$4,787,000 which resulted from the repayment of borrowings of
approximately $4,566,000, purchase of treasury stock of approximately
$1,387,000 offset by the proceeds of additional loans of approximately
$1,165,700. Accordingly, during the first nine months of fiscal 1996, the
Company's cash increased by approximately $390,000.
DOMINION RESOURCES, INC. AND SUBSIDIARIES
ITEM 2
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Sale of Cellular Assets
On November 16, 1994, the Company announced that its wholly owned
subsidiary, Dominion Cellular Inc. ("DCI"), had retained an independent
broker on an exclusive basis to attempt to find a potential purchaser for
DCI's cellular system or a possible merger partner with DCI. Management
of the Company determined to seek a purchaser because it believed that
DCI's cellular system had been developed to a point where it
represented an attractive acquisition for potential acquirers in the
cellular industry at a price, based on current market conditions,
substantially in excess of DCI's costs in developing the system.
On May 8, 1995, the Company and DCI executed an Asset Purchase Agreement
(subsequently amended on August 14, 1995 and December 14, 1995) with two
unaffiliated entities, PriCellular Corporation ("PriCellular") and
PriCellular's wholly-owned Northland subsidiary, providing for the sale to
Northland of the System operated by DCI in the Bibb, Alabama RSA (the
"AL-4 RSA"). The System was substantially the Company's only source
of revenues. Immediately after completion of the sale of the
System, the Company had no significant operations.
The sale of the System was contingent upon obtaining the consent of
the Federal Communications Commission ("FCC") to the assignment by
DCI of the licenses to operate the System to Northland (which consent
was obtained on June 9, 1995), and upon obtaining the approval of the
sale from holders of a majority of the outstanding shares of the
Company's Common Stock (which approval was obtained on November 6,
1995).
The Assets sold (subject to certain liabilities related to the System and
being assumed by the Purchaser) included the FCC nonwireline
license for the AL-4 RSA, the cellular sites, towers and related
equipment used by the System, the real property on which the cellular
sites are located, and the bulk of DCI's current assets.
The parties also agreed that effective August 1, 1995, PriCellular
would become the manager of the System pursuant to a management
agreement providing for a management fee to be paid to PriCellular
equal to 7% of the gross revenues of the System during the term of
the management agreement. Through November 7, 1995, the
Company accrued $114,600 in connection with the management agreement.
The original purchase price of the system was $19,900,000 (after a $100,000
reduction for the amount by which certain liabilities assumed by the
purchaser at the closing exceeded DCI's assets) payable as follows:
(a) $6,000,000 in cash, payable at the Closing which occurred on
DOMINION RESOURCES, INC. AND SUBSIDIARIES
ITEM 2
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Sale of Cellular Assets (Continued):
November 7, 1995, (b) $3,900,000 in cash payable 30 days following the
Closing and (c) $10,000,000 by delivery at the Closing of PriCellular's
five-year 4% Convertible Subordinated Note in the principal amount of
$10,000,000 (also referred herein as the "PriCellular Note").
The PriCellular Note was convertible into shares of PriCellular
Class A Common Stock at $8.51 per share (i) at the option of the holder
and (ii) at the option of PriCellular if the closing price for
PriCellular Class A Common Stock when trading on the American
Stock Exchange (or such other exchange which at such time
may be the principal exchange where such stock is traded) is
$10.60 or higher for ten consecutive trading days.
At the closing, the initial $6,000,000 cash portion of the purchase price
was reduced to the extent required to repay DCI's outstanding debt to
Motorola (approximately $2,864,000) incurred to finance construction of
the System, and to repay the 8%, $2,000,000 loan extended to DCI by
PriCellular on April 7, 1995 in anticipation of the execution of the
Asset Purchase Agreement. At the second closing, the $4,000,000 cash
portion of the purchase price was decreased by $100,000, the amount by
which assumed liabilities exceeded DCI's assets. An aggregate
$400,000 of the $3,900,000 balance of the purchase price was required to
be held in escrow for a one year period following the
closing, to ensure the accuracy of the Company's representations
and warranties.
Also at the closing, PriCellular elected to force conversion of its
five-year, 4%, $10,000,000 Convertible Subordinated Note to DCI into
1,175,088 shares of its Class A Common Stock. The high and low sales prices
for PriCellular Class A Common Stock, as traded on the American Stock
Exchange on November 7, 1995, were $13.125 and $12.75, respectively.
As a result, the Company recorded the 1,175,088 converted shares
at a value of $7,497,061 an amount which reflected a 50% discount
of the closing sales price of PriCellular Class A Common Stock on
November 7, 1995 of $12.75. The Company recorded a 50% discount
because of the trading restrictions placed on the stock.
In connection with the second closing, the Company entered into a
second amendment to the Asset Purchase Agreement dated December 14,
1995 whereby the Company and PriCellular resolved certain disputes with
respect to the adjusted purchase price of the cellular telephone system.
As amended, the Company received $3,500,000 at the second closing,
with the $400,000 balance being held in escrow. As part of the second
amendment, the Company retained ownership of certain accounts receivable
deemed to be uncollectible as of August 1, 1995 in the aggregate
principal amount of approximately $124,000. In addition, the Company
reserved the
DOMINION RESOURCES, INC. AND SUBSIDIARIES
ITEM 2
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Sale of Cellular Assets (Continued):
right to the proceeds of any insurance claim arising from a loss that
took place in the month of August 1995.
Use of Proceeds from the System Sale
In addition to receipt of the PriCellular Class A Common Stock, the
Company received an aggregate of approximately $9,900,000 (less
closing costs and associated expenses) in cash payments from
PriCellular at the initial closing and at the Second Payment Date
(of which $400,000 is being held in escrow for a one year period as
previously described). The cash payments and the proceeds from the
sale or distribution of PriCellular Stock through June 30, 1996 were
applied substantially as follows:
<TABLE>
<S> <C>
a) Repayment of Motorola debt and accrued interest
incurred to finance construction of the System. $ 2,864,226
b) Closing costs 747,955
c) Escrow account deposit 400,000
d) Advances to Resort Club 6,225,442
e) Investment in mutual fund and other
marketable securities 381,723
f) Investment in RTC mortgages 1,600,000
g) Prepaid lease 950,000
h) Investment in Food Extrusion 1,750,000
i) Purchase of the Company's Common Stock
from former President 1,664,450
j) Purchase of the Company's Common Stock
from unrelated parties 562,343
k) Investments in real estate and real estate
related activities 505,565
l) Investment in Space Shot and Piston Bullies 1,394,710
Total: $ 19,046,414
</TABLE>
DOMINION RESOURCES, INC. AND SUBSIDIARIES
ITEM 2
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Proceeds from the System Sale Payable to Former President
In lieu of a severance payment and in appreciation for her services in
developing the System, the Board of Directors had agreed in principle with
Ms. Evers-Tierney that in the event of consummation of the sale of the
System, the Company would repurchase all of the shares of the Company's
Common Stock owned by Ms. Evers-Tierney, her son and her husband, at
a price equal to the "book value" of such shares computed as of the
first business day after the Closing. The determination of "book value"
would be made by the Company's auditors, computed on an accrual basis
giving effect to the sale and the expenses and taxes incurred in
connection with the sale, but without deducting any severance payment
obligations to Ms. Evers-Tierney (which were waived) or the stock
repurchase obligation to Ms. Evers-Tierney and her family. As a
result, pro rata payment was made to Ms. Evers-Tierney and her family.
Ms. Evers-Tierney and her family had the right to obtain part of such
payments in PriCellular notes. As of June 30, 1996, the Company
purchased an aggregate of 943,411 shares of the Company's
Common Stock from Ms. Tierney and her family at an aggregate purchase
price equal to approximately $500,000 in cash and 182,500 shares of
PriCellular Common Stock of which 50% was allocated to the purchase
of Tierney stock and 50% as a cost in connection with the sale of System.
With the exception of the above described payments to the Company's
former president and members of her family, no portion of the sale
proceeds were distributed directly to the Company's shareholders.
Future Business Plans
On February 1, 1996, the Company, through its wholly owned subsidiary,
Diamond Leasing, pursuant to an option agreement purchased 100% of
the outstanding common stock of Resort Club. Resort Club is engaged in
the business of offering membership interests in the Great Gorge Resort
to the general public. As of June 30, 1996, the Company's primary
business operations are in connection with the sale of membership
interests through Resort Club.
In addition, management presently intends to apply the bulk of the
Company's resources in some or all of the following real estate development
activities: residential, commercial and resort development. Some of
such activities may be conducted with entities affiliated with
management such as Great American and affiliated companies. The
Company's involvement may be as a sole principal, a partner, a joint
venturer or in some other form.
As of June 30, 1996, the Company had engaged in various transactions
with certain of its officers, directors, principal stockholders and
certain of their affiliated entities (see Note 4). In addition, as
of June 30, 1996, the Company had made investments in Food
Extrusion, Inc.
DOMINION RESOURCES, INC. AND SUBSIDIARIES
ITEM 2
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Future Business Plans (Continued):
(see Note 7) and purchased mortgages from the Resolution Trust
Company (see Note 6).
The Company may also seek to pursue real estate development activities
on its "Silver Shield" Mill property in Colorado. Despite the foregoing,
management reserves the right to apply the Company's resources in other
businesses as opportunities present themselves.
B. Results of Operations
Nine months ended June 30, 1996 compared with nine months ended
June 30, 1995.
The net loss from continuing operations applicable to common shareholders
for the first nine months of fiscal 1996 was $7,296,765 ($1.46 per share)
as compared to a net loss from continuing operations applicable to common
shareholders of $552,795 ($0.11 per share) in the comparable prior
year period.
The net loss from continuing operations for the first nine months
of 1996 was primarily a result of the write-off of certain deferred
membership expenses of Resort Club in the aggregate amount of
$5,634,317. In accordance with FASB No. 67, the Company reduced
the carrying amount of deferred membership expenses to net realizable value.
In addition, during fiscal 1996, the Company recorded a provision of
$3,818,371 which represents the net present value of the estimated
annual maintenance and operating expenses, including reserves, for
all the units, facilities and amenities with the present Resort Club
program in excess of the annual membership dues collected by Resort Club.
During the first nine months of fiscal 1996, the Company recorded membership
revenue of approximately $2,002,000 and corresponding membership expenses
of approximately $1,787,630, excluding the write-off of over budgeted
expenses described above. Membership expense primarily includes
Operating Expenses of approximately $160,300, Marketing and Selling
Expenses of approximately $761,300 and Product Costs of approximately
$1,076,100. In addition, the Company had other income of approximately
$1,274,000 primarily from ski rental operations offset by approximately
$1,082,000 in expenses which primarily consisted of $1,025,000 in rent
expense to Vernon Valley Recreation Association, Inc. (See Note 4 of
the Notes to the Condensed Consolidated Financial Statements).
DOMINION RESOURCES, INC. AND SUBSIDIARIES
ITEM 2
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Nine months ended June 30, 1996 compared with nine months ended
June 30, 1995 (Continued):
Also, the Company recorded a gain on sale of marketable securities of
$2,628,808, primarily resulting from the sale of its Pricellular stock
received as part of the proceeds from the sale of the cellular
telephone system.
Net income from discontinues operations applicable to common
shareholders for the twelve months of fiscal 1996 was $10,051,041
($2.01 per share) as compared to net income from discontinued
operations applicable to common shareholders of $951,284 ($0.18 per
share) in the comparable prior year period. The net income from
discontinued operations was primarily a result of the sale of the
Company'' cellular phone system. (See Item 1 and Note 3 to the
Notes to the Condensed Consolidated Financial Statements).
DOMINION RESOURCES, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION
Part II
Item 4. Submission of Matters to a Vote of Security Holders
During the quarter ended June 30, 1996:
None.
Item 6. Exhibits and Reports on Form 8-K
During the quarter ended June 30, 1996:
None.
DOMINION RESOURCES, INC. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Commission Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
DOMINION RESOURCES, INC.
Dated: By: /s/ Gene Mulvihill
Gene Mulvihill
Chief Executive Officer
Dated: By: /s/ Joseph R. Bellantoni
Joseph R. Bellantoni
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE JUNE 30, 1996
10QSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> JUN-30-1996
<CASH> 656,939
<SECURITIES> 539,056
<RECEIVABLES> 1,254,611
<ALLOWANCES> 211,502
<INVENTORY> 0
<CURRENT-ASSETS> 11,645,098
<PP&E> 1,617,884
<DEPRECIATION> 76,428
<TOTAL-ASSETS> 20,911,672
<CURRENT-LIABILITIES> 17,020,440
<BONDS> 0
0
0
<COMMON> 42,394
<OTHER-SE> 5,058,706
<TOTAL-LIABILITY-AND-EQUITY> 20,911,672
<SALES> 3,569,699
<TOTAL-REVENUES> 3,569,699
<CGS> 0
<TOTAL-COSTS> 13,120,879
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 511,960
<INCOME-PRETAX> (7,296,765)
<INCOME-TAX> 0
<INCOME-CONTINUING> (7,296,765)
<DISCONTINUED> 10,051,041
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,754,276
<EPS-PRIMARY> 0.55
<EPS-DILUTED> 0.55
</TABLE>
