FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JULY 31, 1996
---------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 33-1406
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BUCK HILL FALLS COMPANY
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(Exact name of registrant as specified in its charter)
PENNSYLVANIA 24-0536840
- ------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
CRESCO ROAD, BUCK HILL FALLS, PENNSYLVANIA 18323
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(Address of principal executive offices)(Zip Code)
(717) 595-7511
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(Registrant's telephone number, including area code)
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(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
--------- ----------
As of July 31, 1996, the registrant had 73,537 shares of Common
Stock, no par value, outstanding.<PAGE>
<PAGE>
FORM 10-Q
BUCK HILL FALLS COMPANY
=======================
INDEX
Page
----
Part I: Financial Information
- ------ ---------------------
Item 1. Financial Statements
Condensed Consolidated Balance Sheet -
July 31, 1996 and October 31, 1995 1
Condensed Consolidated Statement of Operations -
Nine Months and Three Months Ended July 31, 1996
and 1995 2
Condensed Consolidated Statement of Cash Flows -
Nine Months Ended July 31, 1996 and 1995 3
Note to Condensed Consolidated
Financial Statements 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 5-9
Part II: Other Information 10-11
- ------- -----------------
Signatures 12
<PAGE>
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BUCK HILL FALLS COMPANY AND SUBSIDIARY
======================================
<TABLE>
CONDENSED CONSOLIDATED BALANCE SHEET
- -------------------------------------------------------------------
JULY 31,
1996 OCTOBER 31,
(UNAUDITED) 1995*
- -------------------------------------------------------------------
<S> <C> <C>
ASSETS
======
CURRENT ASSETS:
Cash . . . . . . . . . . . . . . . . . . $ 74,712 $ 31,460
Accounts receivable, net . . . . . . . . 412,156 245,369
Prepaid expenses and other current
assets. . . . . . . . . . . . . . . . 39,389 30,228
---------- ----------
Total current assets . . . . . . . 526,257 307,057
RESTRICTED CASH . . . . . . . . . . . . . . 77,095 73,799
PROPERTY, PLANT AND EQUIPMENT, Net. . . . . 2,672,083 2,756,391
DEFERRED COSTS, Net . . . . . . . . . . . . 9,068 12,623
---------- ----------
TOTAL . . . . . . . . . . . . . $3,284,503 $3,149,870
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
====================================
CURRENT LIABILITIES:
Note payable, unsecured. . . . . . . . . . $ 11,300 $ 11,300
Current portion of long-term debt. . . . 761,075 847,385
Accounts payable, trade. . . . . . . . . 110,339 37,283
Accrued expenses and other . . . . . . . 511,088 183,355
---------- ----------
Total current liabilities. . . . . 1,393,802 1,079,323
CUSTOMER DEPOSITS . . . . . . . . . . . . . 77,095 73,800
LONG-TERM DEBT. . . . . . . . . . . . . . . 962,871 956,218
6-1/4% SUBORDINATED NOTES . . . . . . . . . 140,000 140,000
---------- ----------
Total liabilities. . . . . . . . . 2,573,768 2,249,341
---------- ----------
STOCKHOLDERS' EQUITY:
Common stock . . . . . . . . . . . . . . 1,251,370 1,251,370
Contributed capital. . . . . . . . . . . 799,227 799,227
Deficit. . . . . . . . . . . . . . . . . (1,339,862) (1,150,068)
---------- ----------
Total stockholders' equity . . . . 710,735 900,529
---------- ----------
TOTAL . . . . . . . . . . . . . $3,284,503 $3,149,870
========= =========
</TABLE>
*Condensed from audited financial statements
The accompanying notes are an integral part of these
condensed consolidated financial statements.
1<PAGE>
<PAGE>
BUCK HILL FALLS COMPANY AND SUBSIDIARY
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<TABLE>
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED THREE MONTHS
ENDED
.....JULY 31........ ......JULY
31......
1996 1995 1996
1995
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES . . . . . . . . . . . . . . . $1,418,638 $1,381,327 $786,465 $747,612
COST OF REVENUES . . . . . . . . . . . 1,290,619 1,135,983 610,957 528,474
---------- ---------- -------- --------
GROSS PROFIT FROM OPERATIONS . . . . . 128,019 245,344 175,508 219,138
GENERAL AND ADMINISTRATIVE EXPENSES. . 251,576 341,434 86,888 80,285
---------- ---------- -------- --------
INCOME (LOSS) FROM OPERATIONS. . . . . (123,557) (96,090) 88,620 138,853
---------- ---------- -------- --------
OTHER INCOME (EXPENSE):
Miscellaneous . . . . . . . . . . . 71,840 113,805 32,474 54,635
Interest expense. . . . . . . . . . (138,079) (134,973) (49,987) (62,035)
Capitalized interest. . . . . . . . - 21,455 - -
--------- --------- ------- -------
Other income (expense), net . . . (66,239) 287 (17,513) (7,400)
---------- --------- -------- --------
NET INCOME (LOSS). . . . . . . . . . . $ (189,796) $ (95,803) $ 71,107 $131,453
========== ========= ======== ========
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING . . . . . . . . . . . . 73,537 73,537 73,537 73,537
NET INCOME (LOSS) PER COMMON SHARE . . $ (2.58) $ (1.30) $ .97 $ 1.79
========== ========== ======== ========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
2<PAGE>
<PAGE>
BUCK HILL FALLS COMPANY AND SUBSIDIARY
======================================
<TABLE>
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
- --------------------------------------------------------------------------
NINE MONTHS ENDED
.......JULY 31.....
1996 1995
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<S> <C> <C>
CASH PROVIDED BY (USED IN):
OPERATING ACTIVITIES:
Net loss . . . . . . . . . . . . . . . . . . . . $(189,795) $(95,803)
Adjustments for noncash charges:
Depreciation and amortization. . . . . . . . . 164,601 142,788
Gain on sale of property and equipment . . . . - (52,389)
Changes in assets and liabilities. . . . . . . . 229,182 (98,565)
--------- --------
Net cash provided by (used in) operating
activities . . . . . . . . . . . . . . . . . 203,988 (103,969)
--------- --------
INVESTING ACTIVITIES:
Purchase of property and equipment . . . . . . . (80,293) (145,988)
Proceeds from sale of property and equipment . . - 42,513
-------- --------
Net cash used in investing activities. . . . . (80,293) (103,475)
--------- --------
FINANCING ACTIVITIES:
Proceeds from issuance of debt . . . . . . . . . 225,012 938,612
Repayment of debt. . . . . . . . . . . . . . . . (305,455) (719,538)
--------- ---------
Net cash (used in) provided by financing
activities . . . . . . . . . . . . . . . . (80,443) 219,074
--------- --------
INCREASE IN CASH . . . . . . . . . . . . . . . . . . 43,252 11,630
CASH, BEGINNING OF PERIOD. . . . . . . . . . . . . . 31,824 20,194
--------- --------
CASH, END OF PERIOD. . . . . . . . . . . . . . . . . $ 75,076 $ 31,824
========= ========
CASH PAID FOR:
Interest . . . . . . . . . . . . . . . . . . . . . $ 138,079 $ 95,766
========= ========
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
3<PAGE>
<PAGE>
BUCK HILL FALLS COMPANY AND SUBSIDIARY
======================================
NOTE TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------
NOTE 1: BASIS OF PRESENTATION
Although the interim condensed consolidated financial statements
of Buck Hill Falls Company and Subsidiary (the "Company") are unaudited,
it is the opinion of the Company's management that all normal recurring
adjustments necessary for a fair statement of the results for the interim
periods presented have been reflected therein. The results of operations
for any interim period are not necessarily indicative of results that may
be expected for the entire year.
These statements should be read in conjunction with the
consolidated financial statements and related notes included in the
Company's annual report on Form 10-K for the year ended October 31, 1995.
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4<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------
GENERAL
- -------
The Company's business, insofar as it relates to the provision of
recreational facilities, is largely seasonal in nature. As a result, the
Company's revenues and cost of revenues typically increase significantly
in its third and fourth fiscal quarters.
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED
JULY 31, 1996
COMPARED TO THE NINE MONTHS ENDED
JULY 31,1995
- ------------------------------------------------
Revenues increased approximately $37,000 for the nine months ended
July 31, 1996, as compared to the same period in the prior year. The
Company had an increase of $62,000 in its water operations revenues
primarily as a result of a rate increase, an increase of $19,000 in snow
plowing revenues as a result of heavy snowfall amounts in 1996 and an
increase in golf membership fees of $18,200 due to an increase in resident
yearly rate of $100 and non-resident yearly rate of $125. Locker rentals
increased $3,000 due to increase in charge from $25 to $40. Green fees
also increased $3,000 due to rate increase. Sports camp revenue increased
$3,000 due to increased participation. Revenue from cottage inspections
and the tennis pro shop both increased $1,000. These increases were
offset by a decrease in water and sewer revenue from Buck Hill Inn of
$45,000 and a decrease in golf cart rentals of $15,976. The Company also
reduced annual dues billed to the 290 residents at Buck Hill Falls from
$2,400 to $2,300 in 1996, resulting in a decrease of $21,750 for the nine
months ended July 31, 1996.
Cost of revenues increased 14% as compared to the same period in
the previous fiscal year, primarily due to the increase in depreciation
expense of $50,520 related to capital improvements to the water system
which was put into operation in February 1995 and to the reallocation of
approximately $30,000 in administrative salaries to the related community
service operations to which the employees are currently performing
services. In addition, snow plowing costs increased $15,000 and road and
path maintenance increased $15,250 as a result of severe weather
conditions during 1996.
General and administrative costs decreased 26% in the first nine
months of 1996 as compared to the same period in 1995. This decrease
relates to the reallocation of administrative salaries discussed above.
Bad debt decreased $45,000 as a result of the Company no longer billing
5<PAGE>
<PAGE>
the Buck Hill Inn for water and sewer services. During 1995, legal and
accounting fees were incurred primarily for an evaluation of a purchase
offer from the Lot and Cottages Owner's Association. Such costs were not
incurred during 1996, resulting in a decrease in legal and accounting fees
of $32,615.
Other income decreased 37% during 1996. During 1995, there was a
gain on sale of land of $15,013 and sale of timber of $23,470 and a bad
debt recovery of $4,800, which were not present in 1996.
Interest expense, net increased 22% as a result of borrowings
related to the water filtration system which was placed in service in
February 1995. Interest increased $34,788 for the nine months ending
July 31, 1994.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED
JULY 31, 1996
COMPARED TO THE THREE MONTHS ENDED
JULY 31,1995
- -------------------------------------------------
Revenues increased 5% primarily as a result of increases in golf
membership fees, of approximately $18,200, and water operations revenues
due to rate increases described above. Cost of revenues increased 15% as a
result of the increase in depreciation expense for the water filtration
improvements of $16,840, increase in materials and supplies for the water
operations of approximately $11,000, increase in repairs and maintenance
for the golf operations of approximately $10,000, and an increase in
community services. Security increased $5,000 and road and path repairs
increased $10,285.
General and administrative expenses increased 8% primarily due to
an increase in telephone and printing expenses of $5,000 due to increased
correspondence with shareholders.
Other income decreased 40% primarily due to the sale of timber of
approximately $23,000 which took place in 1995.
Interest expense decreased 19% during this period as compared to
the same period in 1995 due to less borrowings during this period.
6<PAGE>
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
At July 31, 1996, the Company had a working capital deficiency of
$867,545. Included in current liabilities is the entire $731,120
outstanding on the Company's $1,000,000 line of credit with a bank
(described in the following paragraph), which is payable on demand. An
additional $29,955 in scheduled principal payments on long-term debt are
due within the next twelve months.
On July 24, 1992, the Company entered into a loan agreement with a
bank relating to a secured revolving line of credit in the amount of
$1,000,000 (the "Revolving Credit Facility"). Amounts borrowed under the
Revolving Credit Facility bear interest at the prime rate (8.25% at July
31, 1996) plus 1-1/2%. Pursuant to the loan agreement, approximately
2,600 acres of land and land improvements located in Barrett Township,
Monroe County, Pennsylvania, are pledged as collateral, along with dues,
assessments and fee revenues. The Revolving Credit Facility is available
through May 31, 1997, contingent upon the Company maintaining a
satisfactory financial position and subject to annual review of the
Company's financial statements by the bank. The loan agreement with the
bank provides that if, in the opinion of the authorized lending officers
of the bank, the Company's credit worthiness materially declines, the
credit line will cease to be available for future draws, and any existing
balance will be required to be fully amortized over a reasonable term.
The Company has been required to make certain improvements to its
water system. In May of 1995, the Company entered into a $900,000 loan
agreement with a bank to refinance the existing debt and to complete the
improvements. Principal is payable in monthly installments of $8,985 over
a 20-year amortization period. Interest is payable at the bank's base
rate (8.25% at July 31, 1996) plus 1-1/2%. The loan matures in May 2015
and is secured by a first mortgage on approximately 2,200 acres of land
and land improvements located in Barrett Township, Monroe County,
Pennsylvania and a collateral assignment of all revenue and assessments of
the Company's water operations.
The Company expects to meet its current liabilities (other than
payment of the entire $731,120 under the Revolving Credit Facility, which,
although not currently due, is classified as a current liability because
of the Revolving Credit Facility's demand terms) through increased
collections as a result of the seasonal increase in revenues which
typically occurs during the Company's third and fourth quarters through
the provision of recreational services. The Company does not anticipate
that the bank will demand payment under the Revolving Credit Facility.
7<PAGE>
<PAGE>
Cash increased $43,252 for the nine months ended July 31, 1996.
Cash provided by borrowings of $195,000 under the Company's revolving line
of credit and $30,797 in additional long-term debt was used to make
scheduled principal payments of $305,455 on long-term debt and capital
expenditures of approximately $80,000. Such capital expenditures included
improvements to roads and paving of $16,832, purchase of a new automobile
for $17,816 and purchase of furniture and equipment for the golf club of
$45,700. Additional cash flow was generated in this period due to the
Company billing its Lot and Cottages Owner's Association dues on a
semiannual basis rather than a quarterly basis and receipt of membership
fees for various amenities. This resulted in an increase in accrued
expenses and other liabilities.
At July 31, 1996, the Company had drawn $731,120 on its $1,000,000
line of credit, leaving $268,880 available.
The Company incurred a net loss of $189,741 for the nine months
ended July 31, 1996 and at July 31, 1996, the Company has a cumulative
deficit of $1,339,862 and a working capital deficiency of $867,545.
Although the Company's line of credit is available through May 31, 1997,
the ability to borrow under the line is contingent upon certain factors.
As a result, continuation of the Company in its present form is dependent
upon the successful maintenance of its debt terms, its ability to obtain
additional financing if needed and the eventual achievement of sustained
profitable operations.
Management believes that revisions in the Company's operating
requirements, including rate increases for amenities and the effect of the
water rate increase implemented in August 1995, provide the opportunity
for the Company to continue as a going concern. However, there is no
assurance that management's actions will be successful or, if they are not
successful, that the Company would be able to continue as a going concern.
In August 1996 the Company filed with the Securities and Exchange
Commission a Registration Statement for an offering of up to 75,000 shares
of Class A Common Stock to those persons who own Common Stock in the
Company and are an owner or co-owner of a cottage and/or lot in the Buck
Hill Falls Community ("Qualified Owners"). The offering price is $20 per
share if paid for in five annual installments or $17.50 per share if paid
in full by October 31, 1996. Upon completion of the offering of Class A
Stock to Qualified Owners, the Company plans to offer to stockholders who
are not Qualified Owners the opportunity to purchase at $20 per share a
number of additional shares of Common Stock to enable each such person who
so desires to maintain his or her percentage interest in the Company. The
shares of Class A Stock are identical to the shares of the Company's
8<PAGE>
<PAGE>
Common Stock except that the Class A Stock may, with certain exceptions,
only be held by or transferred to a Qualified Owner. There is no
underwriter and no assurance as to the success of the offering. The
Registration Statement became effective on September 11, 1996 and no sales
could be consummated prior to that time.
9<PAGE>
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
1. The Annual Meeting of the shareholders of the Company was
held on July 7, 1996 at the Tennis Club of the Company. At
the meeting the following persons were elected as directors
of the Company, each receiving the number of votes indicated
after his name :
Anthony C. Bowe 36,886
Richard C. Unger, Jr. 42,682
James T. Sygenda 34,570
The following nominees were not elected: Patricia Rauch
(29,808 votes)and Dale Sack (20,985 votes).
The following additional persons continued as directors of
the Company after the meeting:
Edwin A. Gee
Clifford Press
David B. Ottaway
Grace M. Godshalk
Frank J. Dracos, M.D.
George J. Byron
2. At the July 7, 1996 Annual Meeting, the shareholders also
voted upon an amendment to the Company's Articles of
Incorporation authorizing the issuance of up to 100,000
shares of a new Class A Common Stock.
Approval of this amendment required the affirmative vote of a
majority of the votes cast by all shareholders entitled to
vote at this meeting. The amendment was approved by the
following vote:
10<PAGE>
<PAGE>
For 31,766
Against 11,375
Abstain/no vote 11,836
Item 5. Other Information
At its organizational meeting on July 7, 1996, the Board of
Directors elected David B. Ottaway as Chairman of the Board and
President of the Company and Anthony C. Bowe as Vice President,
Treasurer and Chief Financial Officer.
Item 6. Exhibits and Reports on Form 8-K
None
11<PAGE>
<PAGE>
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.
BUCK HILL FALLS COMPANY
----------------------------------------
(Registrant)
Date: Sept. 13, 1996 By: /s/ David B. Ottaway
--------------- ------------------------------------
David B. Ottaway, President
Date: Sept. 13, 1996 By: /s/ Anthony C. Bowe
--------------- ------------------------------------
Anthony C. Bowe
Vice President, Treasurer and
Chief Financial Officer
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BUCK HILL
FALLS COMPANY'S QUARTERLY FORM 10-Q FOR THE QUARTER ENDED JULY 31, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> MAY-01-1996
<PERIOD-END> JUL-31-1996
<CASH> 74,712
<SECURITIES> 0
<RECEIVABLES> 412,156
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 526,257
<PP&E> 4,829,863
<DEPRECIATION> 2,157,780
<TOTAL-ASSETS> 3,284,503
<CURRENT-LIABILITIES> 1,393,802
<BONDS> 102,872
0
0
<COMMON> 1,251,370
<OTHER-SE> (540,635)
<TOTAL-LIABILITY-AND-EQUITY> 3,284,503
<SALES> 1,418,068
<TOTAL-REVENUES> 1,418,068
<CGS> 1,290,567
<TOTAL-COSTS> 1,135,983
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 138,079
<INCOME-PRETAX> (189,795)
<INCOME-TAX> 0
<INCOME-CONTINUING> (189,795)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (189,795)
<EPS-PRIMARY> (2.58)
<EPS-DILUTED> (2.58)
</TABLE>
