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 JANUARY 31, 1997
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 33-1406
BUCK HILL FALLS COMPANY
(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
(Address of principal executive offices)(Zip Code)
(717) 595-7511
(Registrant's telephone number, including area code)
(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 January 31, 1997, the registrant had 73,537 shares of Common
Stock and 22,760 shares of Common Stock Class A, no par value, issued and
outstanding.
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<PAGE>
FORM 10-Q
BUCK HILL FALLS COMPANY
INDEX
Page
Part I: Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheet -
January 31, 1997 and October 31, 1996 1
Condensed Consolidated Statement of Operations -
Three Months Ended January 31, 1997 and 1996 2
Condensed Consolidated Statement of Cash Flows -
Three Months Ended January 31, 1997 and 1996 3
Notes to Condensed Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 5-7
Part II: Other Information 8
Signatures 9
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<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BUCK HILL FALLS COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
JANUARY 31,
1997 OCTOBER 31,
(UNAUDITED) 1996*
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash $136,534 $106,703
Accounts receivable, net 312,491 253,278
Prepaid expenses and other current assets 31,258 43,416
Total current assets 480,283 403,397
RESTRICTED CASH 68,520 68,556
PROPERTY, PLANT AND EQUIPMENT, Net 2,651,287 2,692,743
DEFERRED COSTS, Net 4,700 7,883
----------- ------------
TOTAL $3,204,790 $3,172,579
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable, unsecured $11,300 $11,300
Current portion of long-term debt 739,939 829,939
Accounts payable, trade 63,804 47,942
Accrued expenses and other 314,383 91,844
Total current liabilities 1,129,426 981,025
CUSTOMER DEPOSITS 68,520 68,556
LONG-TERM DEBT 930,526 940,004
6-1/4% SUBORDINATED NOTES 140,000 140,000
------- -------
Total liabilities 2,268,472 2,129,585
--------- ---------
STOCKHOLDERS' EQUITY:
Common stock 1,560,543 1,518,964
Contributed capital 799,227 799,227
Deficit (1,423,452) (1,275,197)
----------- ------------
Total stockholders' equity 936,318 1,042,994
--------- ----------
TOTAL $3,204,790 $3,172,579
=========== ==========
</TABLE>
*Condensed from audited financial statements
See notes to condensed consolidated financial statements.
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<PAGE>
BUCK HILL FALLS COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED
JANUARY 31,
1997 1996
REVENUES $323,914 $291,613
COST OF REVENUES 355,154 323,956
-------- ---------
GROSS LOSS FROM OPERATIONS (31,240) (32,343)
GENERAL AND ADMINISTRATIVE EXPENSES 81,461 62,615
--------- ----------
LOSS FROM OPERATIONS (112,701) (94,958)
--------- -----------
OTHER INCOME (EXPENSE):
Miscellaneous 13,949 22,969
Interest expense (49,503) (49,325)
---------- ---------
Other expense, net (35,554) (26,356)
---------- ----------
NET LOSS $(148,255) $(121,314)
========= ==========
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 80,093 73,537
============ ===========
NET LOSS PER COMMON SHARE ($1.85) ($1.65)
============ ============
See notes to condensed consolidated financial statements.
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<PAGE>
BUCK HILL FALLS COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JANUARY 31,
1997 1996
<S> <C> <C>
CASH PROVIDED BY (USED IN):
OPERATIONS:
Net loss ($148,255) ($121,314)
Adjustments for noncash charges:
Depreciation and amortization 55,209 30,385
Changes in assets and liabilities 194,530 83,488
------- ------
Net cash provided by (used in) operations 101,484 (7,441)
------- -------
INVESTING:
Purchase of property and equipment (13,753) (34,648)
-------- --------
FINANCING:
Proceeds from issuance of debt 100,000 121,016
Repayment of debt (199,479) (67,709)
Proceeds from issuance of stock 41,579
-------- --------
Net cash (used in) provided by financing (57,900) 53,307
-------- ------
INCREASE IN CASH 28,831 11,218
CASH, BEGINNING OF PERIOD 106,703 31,460
------- ------
CASH, END OF PERIOD $135,534 $42,678
======== =======
CASH PAID FOR,
Interest $49,503 $49,325
======= =======
</TABLE>
See notes to condensed consolidated financial statements.
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<PAGE>
BUCK HILL FALLS COMPANY AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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, 1996.
NOTE 2: CHANGES IN COMPONENTS OF COMMON STOCK CLASS A
<TABLE>
<CAPTION>
STOCK
COMMON STOCK STOCK SUBSCRIBED SUBSCRIPTION
SHARES AMOUNT SHARES AMOUNT RECEIVABLE
<S> <C> <C> <C> <C> <C>
Balance, October 31, 1996 18,620 $267,594 9,380 $182,700 $(182,700)
Common Stock Issued 4,140 41,579
Common Stock Subscribed (4,140) (75,000) 75,000
------ -------- ----- -------- ---------
Balance, January 31, 1997 22,760 $309,173 5,240 $107,700 $(107,700)
====== ======== ===== ======== =========
</TABLE>
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<PAGE>
FORM 10-Q
BUCK HILL FALLS COMPANY AND SUBSIDIARY
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 THREE MONTHS ENDED
JANUARY 31, 1997
COMPARED TO THE THREE MONTHS ENDED
JANUARY 31, 1996
Revenues increased $32,301 for the three months ended January 31,
1997, as compared to the same period in the prior fiscal year. The Company had
an increase of $39,700 in its dues revenues as a result of an increase in dues
from $2,300 to $2,800 in fiscal 1997. The increase was offset by a decrease in
snow plowing revenues of approximately $1,800 as a result of less snowfall
amounts in 1997, a decrease in golf revenues of $1,600 due to implementation of
seasonal cart rental fees and a decrease in sewer revenues of approximately
$4,000 due to some untimely billings in 1996.
Cost of revenues increased $31,198 as compared to the same period in
the previous fiscal year, primarily due to an increase in depreciation expense
of approximately $26,000 due to 1996 property and equipment additions and an
adjustment to the allocation of interim depreciation expense. In addition, there
were increases in water maintenance costs of $5,700, water testing fees of $500,
insurance of $500 and gasoline expenses of $700. These increases were offset by
a decrease in snowplowing expense of $2,500.
General and administrative costs increased $18,846 due primarily to an
increase in professional fees of $8,400 and travel and lodging of $1,700
relating to the search for a new general manager. Other increases in general and
administrative costs are due to higher salaries for administrative personnel of
$2,700, increases in telephone expense of $1,350, real estate taxes of $1,000,
office supplies of $1,500, bank charges of $750 and miscellaneous expense of
$1,300 (primarily for Christmas gift certificates).
Other income decreased $9,020 during 1997 due primarily to decreased
finance charges.
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<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
At January 31,1997, the Company had a working capital deficiency of
$649,143. Included in current liabilities is the entire $701,320 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 $38,619 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% at January 31,1997) 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 in its
water system. In May 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% at January
31,1997) plus 1-1/2%. The loan matures in May 2015 and is secured by a first
mortgage on approximately 2,600 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 $701,320 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.
Cash increased $29,831 for the three months ended January 31,1997.
Cash provided by borrowings of $100,000 under the Company's revolving line of
credit, net proceeds from the issuance of Common Stock Class A of $41,579 and
operating activities of $101,484 was used for repayment of $190,000 on the
Company's revolving line of credit, to make scheduled principal payments of
$9,479 on long-term debt and capital expenditures of $13,753. Such capital
expenditures included carpeting for $4,638 and the purchase of equipment for
$9,115.
At January 31, 1997, the Company had drawn $701,320 on its $1,000,000
line of credit, leaving $298,680 available.
The Company incurred a loss of $148,255 for the three months ended
January 31, 1997 and at January 31, 1997, the Company has a cumulative deficit
of $1,423,452 and a working capital deficiency
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<PAGE>
of $649,143. 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 an increase in dues from $2,300 to $2,800 provides 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.
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<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
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
None
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<PAGE>
SIGNATURE
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: March 4, 1997 By: /s/ David B. Ottaway
David B. Ottaway
Chairman and President
Date: March 4, 1997 By: /s/ Anthony C. Bowe
Anthony C. Bowe, Vice-President,
Treasurer and Chief Financial Officer
(Principal Financial and Accounting
Officer)
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<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 JANUARY 31, 1997 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> JAN-31-1997
<CASH> 136,534
<SECURITIES> 0
<RECEIVABLES> 412,936
<ALLOWANCES> 100,445
<INVENTORY> 0
<CURRENT-ASSETS> 480,283
<PP&E> 4,920,451
<DEPRECIATION> 2,269,164
<TOTAL-ASSETS> 3,204,790
<CURRENT-LIABILITIES> 1,129,426
<BONDS> 0
0
0
<COMMON> 1,560,543
<OTHER-SE> (624,225)
<TOTAL-LIABILITY-AND-EQUITY> 3,204,790
<SALES> 323,914
<TOTAL-REVENUES> 323,914
<CGS> 355,154
<TOTAL-COSTS> 355,154
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 49,503
<INCOME-PRETAX> (148,255)
<INCOME-TAX> 0
<INCOME-CONTINUING> (148,255)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (148,255)
<EPS-PRIMARY> (1.85)
<EPS-DILUTED> (1.85)
</TABLE>
