<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
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 1-5896
HUDSON GENERAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 13-1947395
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
111 GREAT NECK ROAD, GREAT NECK, NEW YORK 11021
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (516) 487-8610
Not Applicable
(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) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------- -------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, par value $1.00 per share: 1,145,402 shares outstanding at October
31, 1995
Page 1 of 14
<PAGE> 2
PART I - FINANCIAL STATEMENTS
2
<PAGE> 3
HUDSON GENERAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1995 1994
-----------------------------------------
(Unaudited) (Unaudited)
<S> <C> <C>
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . $34,193,000 $31,348,000
----------- -----------
Costs and expenses:
Operating . . . . . . . . . . . . . . . . . . . . . . . . . 27,130,000 25,435,000
Depreciation and amortization . . . . . . . . . . . . . . . 1,642,000 1,537,000
Selling, general & administrative . . . . . . . . . . . . . 3,760,000 3,354,000
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 111,000 193,000
----------- -----------
Total costs and expenses . . . . . . . . . . . . . . . . . 32,643,000 30,519,000
----------- -----------
Earnings before equity in loss of joint
venture and provision for income taxes . . . . . . . . . . . 1,550,000 829,000
Equity in loss of joint venture . . . . . . . . . . . . . . . (683,000) (482,000)
------------ ------------
Earnings before provision for income taxes . . . . . . . . . 867,000 347,000
Provision for income taxes . . . . . . . . . . . . . . . . . 387,000 112,000
----------- -----------
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . $ 480,000 $ 235,000
=========== ===========
Earnings per share, primary . . . . . . . . . . . . . . . . . $ .41 $ .19
=========== ===========
Earnings per share, fully diluted . . . . . . . . . . . . . . $ .37 $ .19
=========== ===========
Cash dividends per common share . . . . . . . . . . . . . . . $ - $ -
=========== ===========
Weighted average common and common equivalent
shares outstanding:
Primary. . . . . . . . . . . . . . . . . . . . . . . . . . . 1,165,000 1,261,000
=========== ===========
Fully diluted. . . . . . . . . . . . . . . . . . . . . . . . 2,054,000 -
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
HUDSON GENERAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30 June 30
1995 1995
------------- -----------
(Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . . $ 9,289,000 $12,613,000
Accounts and notes receivable - net. . . . . . . . . . . . . . . . . . . . 14,929,000 14,457,000
Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,039,000 936,000
Prepaid expenses and other assets. . . . . . . . . . . . . . . . . . . . . 1,541,000 876,000
Deferred income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . 4,602,000 4,602,000
----------- -----------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . 31,400,000 33,484,000
Property, equipment and leasehold rights at cost,
less accumulated depreciation and amortization . . . . . . . . . . . . . . 35,741,000 33,864,000
Investment in Hawaii joint venture - net . . . . . . . . . . . . . . . . . 16,091,000 16,065,000
Long-term receivables - net . . . . . . . . . . . . . . . . . . . . . . . . 2,446,000 2,585,000
Other assets - net . . . . . . . . . . . . . . . . . . . . . . . . . . . . 757,000 770,000
Excess cost over fair value of net assets acquired . . . . . . . . . . . . 800,000 800,000
----------- -----------
$87,235,000 $87,568,000
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $12,351,000 $12,305,000
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,217,000 1,557,000
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . 20,936,000 21,233,000
----------- -----------
Total current liabilities. . . . . . . . . . . . . . . . . . . . . . . . 34,504,000 35,095,000
----------- -----------
Long-term debt, subordinated . . . . . . . . . . . . . . . . . . . . . . . 29,000,000 29,000,000
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,857,000 1,857,000
----------- -----------
Total noncurrent liabilities . . . . . . . . . . . . . . . . . . . . . . 30,857,000 30,857,000
----------- -----------
Stockholders' Equity:
Serial preferred stock (authorized 100,000 shares
of $1 par value) - none outstanding . . . . . . . . . . . . . . . . . . . - -
Common stock (authorized 7,000,000 shares of $1 par
value) - issued and outstanding 1,256,102 and
1,253,802 shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,256,000 1,254,000
Paid in capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,792,000 6,759,000
Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,187,000 16,707,000
Equity adjustments from foreign currency
translation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,351,000) (1,483,000)
Treasury stock, at cost, 114,300
and 96,600 shares . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,010,000) (1,621,000)
----------- -----------
Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . 21,874,000 21,616,000
----------- -----------
$87,235,000 $87,568,000
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
HUDSON GENERAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1995 1994
-----------------------------
(Unaudited) (Unaudited)
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 480,000 $ 235,000
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,642,000 1,537,000
Increase in deferred income tax liabilities. . . . . . . . . . . . . . . . . . . . . . . . 26,000 28,000
Equity in loss of joint venture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 683,000 482,000
Capitalization of interest costs on Hawaii
joint venture advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (401,000) (318,000)
Gain on sale or disposal of equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . (87,000) (108,000)
Change in other current assets and liabilities:
Accounts and notes receivables - net . . . . . . . . . . . . . . . . . . . . . . . . . . (392,000) 608,000
Inventory - net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (96,000) 59,000
Prepaid expenses and other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . (659,000) (110,000)
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,000 (668,000)
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (340,000) (25,000)
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . (403,000) (1,499,000)
Decrease in other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,000 33,000
Decrease in long-term receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139,000 138,000
Other - net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,000 31,000
----------- -----------
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . 641,000 423,000
----------- -----------
Cash flows from investing activities:
Purchases of property, equipment and leasehold rights . . . . . . . . . . . . . . . . . . . (3,452,000) (1,516,000)
Proceeds from sale of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . 159,000 286,000
Advances to Hawaii joint venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (308,000) (250,000)
----------- -----------
Net cash used by investing activities . . . . . . . . . . . . . . . . . . . . . . . . (3,601,000) (1,480,000)
----------- -----------
Cash flows from financing activities:
Proceeds from issuance of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,000 30,000
Purchase of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (389,000) -
----------- -----------
Net cash provided (used) by financing activities . . . . . . . . . . . . . . . . . . . (354,000) 30,000
----------- -----------
Effect of exchange rate changes on cash . . . . . . . . . . . . . . . . . . . . . . . . . . . (10,000) 96,000
----------- -----------
Net decrease in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . (3,324,000) (931,000)
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . . . . . . . . 12,613,000 6,727,000
----------- -----------
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,289,000 $ 5,796,000
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
HUDSON GENERAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying unaudited consolidated financial statements were prepared
in accordance with generally accepted accounting principles and include all
adjustments which, in the opinion of management, are necessary to present
fairly the consolidated financial position of Hudson General Corporation
and Subsidiaries (the Company) as of September 30, 1995 and June 30, 1995,
and the results of operations and cash flows for the three months ended
September 30, 1995 and 1994. In the opinion of management, all necessary
adjustments that were made are of a normal recurring nature.
The accounting policies followed by the Company are stated in Note 1 to the
Company's consolidated financial statements in the 1995 Hudson General
Corporation Annual Report filed under Item 8 to Form 10-K for the Company's
fiscal year ended June 30, 1995.
2. The Company is a partner in a joint venture (the Venture) which was formed
to acquire, develop and sell approximately 4,000 contiguous acres of land
in Hawaii. The Company accounts for its investment in the Venture under
the equity method of accounting.
The summary balance sheets for the Venture are as follows:
<TABLE>
<CAPTION>
September 30 June 30
1995 1995
------------ -----------
(Unaudited)
<S> <C> <C>
Cash and equivalents $ 67,000 $ 89,000
Land and development costs 26,963,000 26,863,000
Mortgages, accounts and notes receivable 6,705,000 7,732,000
Foreclosed real estate - net 2,595,000 2,395,000
Other assets - net 2,453,000 2,461,000
----------- -----------
$38,783,000 $39,540,000
=========== ===========
Notes payable $ 3,009,000 $ 3,402,000
Partner advances and accrued interest payable 45,234,000 44,048,000
Accounts payable and accrued expenses 1,238,000 1,422,000
Partners' deficit (10,698,000) (9,332,000)
----------- -----------
$38,783,000 $39,540,000
=========== ===========
</TABLE>
Summary results of operations for the Venture are as follows:
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1995 1994
------------------------------
(Unaudited) (Unaudited)
------------------------------
<S> <C> <C>
Sales (net of discounts) $ 81,000 $ 96,000
----------- ----------
Selling, general and administrative 582,000 558,000
Interest - net 865,000 502,000
----------- ----------
Total costs 1,447,000 1,060,000
----------- ----------
Loss $(1,366,000) $ (964,000)
=========== ==========
</TABLE>
The Company's 50% share of the Venture's results were losses of $683,000
and $482,000 for the three months ended September 30, 1995 and 1994,
respectively, and have been included in "Equity in loss of joint venture"
in the accompanying consolidated statements of earnings. The Company's
partner in the Venture is Oxford Kohala, Inc. (the Partner), a wholly owned
subsidiary of Oxford First Corporation (Oxford First). Under the Restated
Joint Venture Agreement dated April 29, 1981, as amended (the Agreement),
the partners have agreed to make equal advances to the Venture for all
costs necessary for the orderly development of the land. The Company's
total advances (including accrued interest) at September 30, 1995
(including Additional Advances referred to in the next paragraph) were
$23,318,000.
6
<PAGE> 7
On October 13, 1994, Oxford First filed for reorganization under Chapter 11
of the Bankruptcy Code. Pursuant to an order of the Bankruptcy Court dated
November 28, 1994, Oxford First (through its subsidiary, The Oxford Finance
Companies, Inc.) was permitted to transfer funds to the Partner in an
aggregate amount not to exceed $376,000 with respect to the period October
1, 1994 through March 31, 1995, which amounts were intended to enable the
Partner to make its share of advances required by the Venture. The amount
so authorized by the Bankruptcy Court was not sufficient to allow the
Partner to make its full share of required advances. To date, the Company
has opted to make additional advances (the Additional Advances) to cover
the Partner's funding deficiency. The Company has filed a claim with the
Bankruptcy Court in an amount equal to the Additional Advances. In
addition, Oxford First filed an amended reorganization plan which was
approved by the Bankruptcy Court on September 7, 1995 which permits Oxford
First to transfer funds to the Partner in an aggregate amount not to exceed
$528,000 for the balance of calendar year 1995 and $750,000 in each of the
calendar years 1996 and 1997. The Company, at present, is unable to
determine whether such permitted transfers will be sufficient in order for
the Partner to make its share of future advances to the Venture. Should
the Partner be unable to make its share of future advances to the Venture,
the Company has the option to make further advances on behalf of the
Partner (subject to its rights of reimbursement) necessary up to the limits
set forth in its Revolving Credit Agreement (the Credit Agreement) with a
group of banks (see Note 4). The Partner did not file for reorganization
under Chapter 11 of the Bankruptcy Code. During the three months ended
September 30, 1995, the Company advanced to the Venture $308,000, including
$154,000 of Additional Advances. As of September 30, 1995 the total amount
of Additional Advances was $702,000.
3. Accrued expenses and other liabilities consisted of the following:
<TABLE>
<CAPTION>
September 30 June 30
1995 1995
------------ ------------
(Unaudited)
<S> <C> <C>
Salaries and wages $ 4,054,000 $ 5,353,000
Interest 454,000 956,000
Insurance 6,089,000 6,022,000
Operating expenses payable 3,578,000 3,176,000
Customer advances and deposits 1,981,000 1,739,000
Other 4,780,000 3,987,000
------------ -----------
$20,936,000 $21,233,000
=========== ===========
</TABLE>
4. The Credit Agreement contains various restrictions, among which are
provisions restricting the Company from paying cash dividends or
purchasing, redeeming or retiring its stock unless consolidated tangible
net worth (TNW), as defined, is greater than $16,500,000 both immediately
before and after giving effect to such dividend, purchase, redemption or
retirement. At September 30, 1995, the Company's TNW was $22,425,000.
Furthermore, any such payments are limited to an annual amount not to
exceed the lesser of (i) $1,200,000 or (ii) 50% of consolidated net income,
as defined, for the most recently ended fiscal year. In addition, the
Company may, until March 31, 1996, expend up to an additional $3,000,000 to
repurchase shares of its common stock so long as no proceeds from
borrowings under the Credit Agreement are utilized for such purpose. During
fiscal 1995, the Board of Directors approved the repurchase of up to
150,000 shares of the Company's common stock from time to time in either
open market or privately negotiated transactions. As of September 30,
1995, the Company had repurchased 114,300 shares of its common stock in the
open market for an aggregate purchase price of $2,010,000 pursuant to this
authorization.
Pursuant to the Credit Agreement, the Company may advance up to $2,000,000
to the Venture in any fiscal year or up to $4,000,000 during the term of
the Credit Agreement, net of any distributions received from the Venture by
the Company during such periods. Since the inception of the Credit
Agreement the Company has increased its net advances to the Venture by
$3,114,000.
7
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Results of Operations
Revenues for the three months ended September 30, 1995 increased $2.8
million, or 9.1%, compared with the corresponding period of the prior year. The
increase reflects higher: (i) ground handling service revenues of $2.6 million
due primarily to expanded services to new and existing customers, and (ii)
domestic aircraft fueling revenues of $1.7 million resulting primarily from
expanded intoplane fueling services and retail sales of fuel at existing
locations. Partially offsetting the revenue increases were lower aircraft
fueling and hangar rental revenues in Canada of $1.7 million as a result of the
cessation of operations of the Company's Canadian fixed base operations (FBO's)
on October 31, 1994.
Costs and expenses for the three months ended September 30, 1995 increased
$2.1 million, or 7.0%, compared with the corresponding period of the previous
year. Operating costs for the three months ended September 30, 1995 increased
$1.7 million, or 6.7%, compared with the corresponding period of the previous
year. The increase was attributable to higher: (i) labor and related costs
associated with expanded ground handling operations and domestic aircraft
fueling services, and (ii) fuel costs associated with higher volumes of retail
fuel sales in the U.S. Partially offsetting the increases were lower costs as a
result of the cessation of operations of the Company's Canadian FBO's.
Depreciation and amortization expenses and interest expense for the three
months ended September 30, 1995 were comparable with those in the same period of
the previous year.
Selling, general and administrative expenses for the three months ended
September 30, 1995 increased $.4 million, or 12.1%, compared with the
corresponding period of the previous year. The increase primarily reflects the
recording of a provision relating to stock appreciation rights as a result of an
increase in the market price of the Company's common stock.
Earnings before equity in loss of joint venture and provision for income
taxes for the three months ended September 30, 1995, increased $.7 million
compared with the corresponding period of the previous year due primarily to
improved results from Canadian ground handling and domestic aircraft fueling
operations. Partially offsetting the increases were higher selling, general and
administrative expenses as described above and the loss of a ground handling
contract at a domestic airport location as a result of a merger of two airlines.
Results of the Company's aircraft ground handling operations fluctuate
depending upon the flight activity and schedules of customers and the ability of
the Company to deploy equipment and manpower in the most efficient manner to
service such customers.
8
<PAGE> 9
The Company's snow removal and aircraft de-icing services are seasonal in
nature. The results of these operations are normally reflected in the second
and third quarters of the fiscal year, and fluctuate depending upon the severity
of the winter season.
The Company's 50% share of losses from its real estate joint venture in
Hawaii (the Venture) for the three months ended September 30, 1995 increased $.2
million compared with the corresponding period of the previous year. The
increased loss is due primarily to higher interest - net as interest expense
increased due mainly to higher balances of partner advances payable. In
addition, the Venture's interest income decreased as a result of the reduction
in mortgage receivables. As is usual for companies with land development
operations, the contribution to future results from such operations will
fluctuate depending upon land sales closed in each reported period.
The Company's provision for income taxes for the three months ended
September 30, 1995, increased $.3 million compared with the corresponding period
of the previous year. The increase primarily reflects higher tax provisions due
mainly to increased pre-tax earnings.
The state of the North American aviation industry has resulted in increased
competitive pressures on the pricing of aviation services and in the exploration
of alliances between major commercial airline carriers. While these factors may
have an adverse effect on the Company, several airlines have begun to outsource
services to independent aviation service companies. This trend, as well as the
Open Skies Agreement between the United States and Canada, which provides
increased access for airlines to fly between these bordering countries, has
provided additional opportunities for the Company. The Company is unable, at
this time, to evaluate the full impact of these factors.
9
<PAGE> 10
Liquidity and Capital Expenditures and Commitments
The Company's recurring sources of liquidity are funds provided from
operations and bank lines of credit. The Company has a Revolving Credit
Agreement (the Credit Agreement) with a group of banks which provides for a
revolving credit facility. Pursuant to the Credit Agreement, the Company may
borrow funds (including outstanding letters of credit) up to a limit of $18.3
million (the Limit) until March 31, 1997. At such time, and at the end of each
subsequent quarter, the Limit will be reduced by one-sixteenth of the Limit that
was in effect on December 31, 1996 until December 31, 2000, at which time the
Credit Agreement terminates. As of September 30, 1995, there were no direct
borrowings and $3.7 million of letters of credit were outstanding under the
Credit Agreement.
During the three months ended September 30, 1995 and 1994, net cash
provided by operating activities was $.6 and $.4 million, respectively. Net
cash used by advances to the Hawaii joint venture was $.3 million for both the
three months ended September 30, 1995 and 1994. Capital expenditures, net of
proceeds from the sale of property and equipment, were $3.3 and $1.2 million for
the three months ended September 30, 1995 and 1994, respectively. At September
30, 1995 cash and cash equivalents were $9.3 million compared with $12.6 million
at June 30, 1995. At September 30, 1995 the Company had commitments to fund
approximately $4.1 million for operating equipment, the majority of which is
expected to be expended during the second quarter of fiscal 1996. Capital
expenditures are primarily for equipment and facilities used in the Company's
operations. The Company is unable to determine the extent of additional future
capital expenditures since, as a service company, its capital expenditure
requirements fluctuate depending upon facility requirements and equipment
purchases associated with the Company's ability to successfully obtain
additional contracts.
During fiscal 1995, the Board of Directors approved the repurchase of up to
150,000 shares of the Company's common stock from time to time in either open
market or privately negotiated transactions. As of September 30, 1995, the
Company had repurchased 114,300 shares of its common stock in the open market
for an aggregate purchase price of approximately $2.0 million pursuant to this
authorization.
At September 30, 1995, the Venture had commitments aggregating $2.9 million
for project expenditures. Included in this amount is $1.7 million for the
construction of water well equipment and a reservoir by June 30, 1996. It is
expected that funds for most of the Venture's other commitments will be expended
subsequent to fiscal 1996. On October 31, 1995, the Venture was obligated to
repurchase $.8 million of mortgage receivables that were previously sold to a
bank. In addition, the Venture is obligated to repurchase on January 28 and
September 27, 1996 the unpaid balance of certain mortgage receivables that were
previously sold to another bank. As of October 31, 1995, the unpaid balance in
10
<PAGE> 11
respect of such mortgage receivables was $1.0 and $.6 million, respectively. The
Venture is engaged in discussions with financial institutions to extend or
refinance such obligations. At September 30, 1995, the Venture had $67,000 of
cash available for its requirements.
During fiscal 1992, the County of Hawaii passed an ordinance pursuant to
which the Venture, after subdivision approvals are obtained, would be able to
develop Phase IV of the project into 1,490 units. Pursuant to such ordinance,
the Venture is required to expend (in addition to the commitments noted above)
approximately $2.3 million for improvements and in lieu payments. Shortly after
passage of the ordinance, a lawsuit against the County of Hawaii was filed by
two local residents of Hawaii (Plaintiffs) seeking to invalidate such ordinance
on various grounds including that the ordinance was adopted without following
State of Hawaii procedure relating to the preparation of an Environmental Impact
Statement. During fiscal 1993, the Judge in this action granted Plaintiffs'
motion for partial summary judgment without indicating any effect on Phase IV
zoning. The County and the Venture have appealed this ruling. The appeal was
heard before the Hawaii Supreme Court in March 1994, and the Court has taken the
matter under advisement. The Venture cannot, at this time, determine the impact
of the Court's ruling on the timing of development of Phase IV or the
expenditures related thereto.
The Joint Venture Agreement provides that the Company and its partner in
the Venture, Oxford Kohala, Inc. (the Partner), are obligated to make equal
advances of any of the Venture's required fundings. It is anticipated that the
Venture's commitments, including any repurchase of mortgage receivables
previously sold to two banks, will be funded by cash flow from its operations
and advances from the Company and the Partner. It is expected that any advances
which the Company may be required to make to the Venture will be provided from
the Company's cash flow and lines of credit. Pursuant to the Credit Agreement
the Company may advance up to $2.0 million to the Venture in any fiscal year or
up to $4.0 million during the term of the Credit Agreement, net of any
distributions received from the Venture by the Company during such periods.
Since the inception of the Credit Agreement the Company has increased its net
advances to the Venture by $3.1 million. Distributions, if any, received by the
Company with respect to the Venture, net of advances made by the Company during
the applicable period, in excess of $4.0 million in any four consecutive
quarters, or in excess of $2.0 million in any fiscal year, reduce the Limit. At
present, it is anticipated that the advances required to meet the obligations of
the Venture will not exceed the limits set forth in the Credit Agreement or that
the Credit Agreement will be amended to allow for any excess.
11
<PAGE> 12
The Partner is a subsidiary of Oxford First Corporation (Oxford First). On
October 13, 1994, Oxford First filed for reorganization under Chapter 11 of the
Bankruptcy Code. Pursuant to an order of the Bankruptcy Court dated November
28, 1994, Oxford First (through its subsidiary, The Oxford Finance Companies,
Inc.) was permitted to transfer funds to the Partner in an aggregate amount not
to exceed $376,000 with respect to the period October 1, 1994 through March 31,
1995, which amounts were intended to enable the Partner to make its share of
advances required by the Venture. The amount so authorized by the Bankruptcy
Court was not sufficient to allow the Partner to make its full share of required
advances. To date, the Company has opted to make additional advances (the
Additional Advances) to cover the Partner's funding deficiency. The Company has
filed a claim with the Bankruptcy Court in an amount equal to the Additional
Advances. In addition, Oxford First filed an amended reorganization plan which
was approved by the Bankruptcy Court on September 7, 1995 which permits Oxford
First to transfer funds to the Partner in an aggregate amount not to exceed
$528,000 for the balance of calendar year 1995 and $750,000 in each of the
calendar years 1996 and 1997. The Company, at present, is unable to determine
whether such permitted transfers will be sufficient in order for the Partner to
make its share of future advances to the Venture. Should the Partner be unable
to make its share of future advances to the Venture, the Company has the option
to make further advances on behalf of the Partner (subject to its right of
reimbursement) necessary up to the limits set forth in the Credit Agreement. The
Partner did not file for reorganization under Chapter 11 of the Bankruptcy Code.
During the three months ended September 30, 1995, the Company advanced $.3
million to the Venture including $154,000 of Additional Advances. As of
September 30, 1995 the total amount of Additional Advances was $.7 million.
The extent to which advances by the Company to the Venture will be required
in the future, as well as the timing of the return to the Company of the
advances made by it, will depend upon the amount of sales generated by the
Venture, the terms upon which parcels are sold, expenses incurred in the
planning and development of future phases of the project and the ability of the
Partner to fund its obligations under the Joint Venture Agreement. The
general economic climate has negatively impacted the sale of the Venture's land
parcels.
It is expected that the sources of the Company's liquidity, as noted above,
will provide sufficient funding to allow the Company to meet its liquidity
requirements.
12
<PAGE> 13
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
11 Computations of Earnings Per Share Information, Primary and
Fully Diluted - Net Earnings.
b) Reports on Form 8-K - None
13
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HUDSON GENERAL CORPORATION
---------------------------
(Registrant)
Date: November 10, 1995
/s/ JAY B. LANGNER
---------------------------
Jay B. Langner
President
/s/ MICHAEL RUBIN
---------------------------
Michael Rubin
Chief Financial Officer
14
<PAGE> 15
HUDSON GENERAL CORPORATION & SUBSIDIARIES
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Exhibit Page No.
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
11 Computations of Earnings Per Share Information,
Primary and Fully Diluted - Net Earnings 16-18
27 Financial Data Schedule 19-20
</TABLE>
15
<PAGE> 1
EXHIBIT 11
Computations of Earnings Per Share Information,
Primary and Fully Diluted - Net Earnings.
16
<PAGE> 2
HUDSON GENERAL CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE INFORMATION
PRIMARY - NET EARNINGS
<TABLE>
<CAPTION>
Three Months Ended
September 30
---------------------
1995 1994
---------------------
(in thousands, except
per share amounts)
<S> <C> <C>
Net earnings for computing earnings
per share - primary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 480 $ 235
======= =======
Weighted average number of
common and common equivalent
shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,165 1,261
======= =======
Net earnings per common and
common equivalent share-primary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ .41 $ .19
======= =======
</TABLE>
17
<PAGE> 3
HUDSON GENERAL CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE INFORMATION
FULLY DILUTED - NET EARNINGS
<TABLE>
<CAPTION>
Three Months Ended
September 30
---------------------
1995 1994
---------------------
(in thousands, except
per share amounts)
<S> <C> <C>
Net earnings for computing
earnings per share - primary . . . . . . . . . . . . . . . . . . $ 480 $ 235
Reduction of interest expense less applicable income
taxes assuming conversion of 7% convertible
subordinated debentures due 2011 . . . . . . . . . . . . . . . 286 *
------ ------
Net earnings for computing earnings
per share-fully diluted . . . . . . . . . . . . . . . . . . . . $ 766 $ 235
====== ======
Weighted average number of common and common
equivalent shares outstanding . . . . . . . . . . . . . . . . 1,165 1,261
Addition from assumed conversion as of the beginning
of each period of the 7% convertible subordinated
debentures outstanding at the end of each period . . . . . . . 889 *
------ ------
Weighted average number of common and common
equivalent shares outstanding on a fully diluted
basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,054 1,261
====== ======
Net earnings per common and
common equivalent share - fully diluted . . . . . . . . . . . . $ .37 $ .19
====== ======
</TABLE>
*Assumed conversion is antidilutive, and accordingly, the debentures are
excluded from the computation.
18
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 9,289,000
<SECURITIES> 0
<RECEIVABLES> 14,929,000
<ALLOWANCES> 0
<INVENTORY> 1,039,000
<CURRENT-ASSETS> 31,400,000
<PP&E> 35,741,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 87,235,000
<CURRENT-LIABILITIES> 34,504,000
<BONDS> 29,000,000
<COMMON> 1,256,000
0
0
<OTHER-SE> 20,618,000
<TOTAL-LIABILITY-AND-EQUITY> 87,235,000
<SALES> 34,193,000
<TOTAL-REVENUES> 34,193,000
<CGS> 27,130,000
<TOTAL-COSTS> 28,772,000
<OTHER-EXPENSES> 3,760,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 111,000
<INCOME-PRETAX> 867,000
<INCOME-TAX> 387,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 480,000
<EPS-PRIMARY> .41
<EPS-DILUTED> .37
</TABLE>
