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, 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 July 31, 1997, the registrant had 79,811 shares of Common Stock, no
par value and 23,320 shares of Class A Common Stock, no par value, issued and
outstanding.
<PAGE>
FORM 10-Q
BUCK HILL FALLS COMPANY
INDEX
Page
Part I: Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheet -
July 31, 1997 and October 31, 1996 1
Condensed Consolidated Statement of Operations -
Nine Months and Three Months Ended July 31, 1997
and 1996 2
Condensed Consolidated Statement of Cash Flows -
Nine Months Ended July 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 5-8
Part II: Other Information 9
Signatures 10
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BUCK HILL FALLS COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
JULY 31,
1997 OCTOBER 31,
(UNAUDITED) 1996*
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 182,804 $ 106,703
Accounts receivable, net 486,039 253,278
Prepaid expenses and other
current assets 21,176 43,416
----------- -----------
Total current assets 690,019 403,397
RESTRICTED CASH 76,146 68,556
PROPERTY, PLANT AND EQUIPMENT, Net 2,618,117 2,692,743
DEFERRED COSTS, Net 4,328 7,883
----------- -----------
TOTAL $ 3,388,610 $ 3,172,579
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable, unsecured $ -- $ 11,300
Current portion of long-term debt 366,309 829,939
Accounts payable, trade 58,977 47,941
Deferred revenue 466,632 --
Accrued expenses and other 125,173 91,844
----------- -----------
Total current liabilities 1,017,091 981,024
CUSTOMER DEPOSITS 76,146 68,556
LONG-TERM DEBT 922,280 940,005
6-1/4% SUBORDINATED NOTES 140,000 140,000
----------- -----------
Total liabilities 2,155,517 2,129,585
----------- -----------
STOCKHOLDERS' EQUITY:
Common stock 1,709,170 1,518,964
Contributed capital 799,227 799,227
Deficit (1,275,304) (1,275,197)
----------- -----------
Total stockholders' equity 1,233,093 1,042,994
----------- -----------
TOTAL $ 3,388,610 $ 3,172,579
=========== ===========
</TABLE>
* Condensed from audited financial statements
The accompanying notes are an integral part of these condensed
consolidated financial statements.
-1-
<PAGE>
BUCK HILL FALLS COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
............JULY 31............ .............JULY 31.............
1997 1996 1997 1996
<S> <C> <C> <C> <C>
REVENUES $ 1,479,933 $ 1,418,638 $ 814,516 $ 786,465
COST OF REVENUES 1,249,260 1,290,619 576,383 610,957
----------- ----------- ----------- -----------
GROSS PROFIT FROM
OPERATIONS 230,673 128,019 238,133 175,508
GENERAL AND ADMINISTRATIVE
EXPENSES 217,936 251,576 34,173 86,888
----------- ----------- ----------- -----------
INCOME (LOSS) FROM
OPERATIONS 12,737 (123,557) 203,960 88,620
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE):
Miscellaneous income 106,602 71,840 43,594 32,474
Interest expense (119,446) (138,079) (37,442) (49,987)
----------- ----------- ----------- -----------
Other income (expense), net (12,844) (66,239) 6,152 (17,513)
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ (107) $ (189,796) $ 210,112 $ 71,107
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 98,931 73,537 98,931 73,537
=========== =========== =========== ===========
NET INCOME (LOSS) PER
COMMON SHARE $ -- $ (2.58) 2.12 .97
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
-2-
<PAGE>
BUCK HILL FALLS COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
............JULY 31............
1997 1996
<S> <C> <C>
CASH PROVIDED BY OPERATING
ACTIVITIES:
Net loss $ (107) $(189,795)
Adjustments for noncash charges:
Depreciation and amortization 167,858 164,601
Gain on sale of property and equipment (53,669) --
Changes in assets and liabilities 304,031 229,182
--------- ---------
Net cash provided by operating
activities 418,113 203,988
--------- ---------
INVESTING ACTIVITIES:
Purchase of property and equipment (93,443) (80,293)
Proceeds from sale of property and equipment 53,880 --
--------- ---------
Net cash used in investing activities (39,563) (80,293)
--------- ---------
FINANCING ACTIVITIES:
Proceeds from issuance of debt 205,042 225,012
Repayment of debt (697,697) (305,455)
Proceeds from issuance of stock 190,206 --
--------- ---------
Net cash used in financing activities (302,449) (80,443)
--------- ---------
INCREASE IN CASH 76,101 43,252
CASH, BEGINNING OF PERIOD 106,703 31,824
--------- ---------
CASH, END OF PERIOD $ 182,804 $ 75,076
========= =========
CASH PAID FOR,
Interest $ 119,446 $ 138,079
========= =========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
-3-
<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>
...COMMON STOCK... STOCK
CLASS A ...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 4,700 52,779
Common Stock Subscribed (4,700) (86,200) 86,200
------- --------- ------- -------- ---------
Balance, July 31, 1997 23,320 $320,373 4,680 $ 96,500 $ (96,500)
======= ========= ======= ======== =========
</TABLE>
-4-
<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 NINE MONTHS ENDED
JULY 31, 1997
COMPARED TO THE NINE MONTHS ENDED
JULY 31, 1996
Revenues increased $61,295 for the nine months ended July 31, 1997, as
compared to the same period in the prior year. The Company had an increase of
$109,570 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 snowplowing
revenues of approximately $13,000 as a result of less snowfall in 1997 and a
decrease in golf revenues of approximately $35,000. The decrease in golf
revenues for the third quarter is due mainly to the change in deferral period
from April through September to May through October to reflect usage.
Cost of revenues decreased $41,359 as compared to the same period in the
previous fiscal year. Insurance costs decreased $12,700 and repair costs
decreased $12,500 due to management's efforts to control costs by renegotiating
contracts and competitive bidding. Snow plowing costs decreased $10,600 and road
and path maintenance decreased $13,300 as a result of better weather conditions
during 1997. Also decreasing during 1997, were telephone expense by $2,700 and
gasoline expense by $1,900. These decreases were offset by increases to security
expense of $4,000 and trash removal expense of $8,600.
General and administrative costs decreased $33,640 in the first nine months
of 1997 as compared to the same period in 1996. This decrease is primarily a
result of a decrease in professional fees of approximately $16,700. Supplies,
postage, telephone and data processing fees decreased approximately $10,900 due
to efforts by management to control costs. Payroll taxes decreased $5,200 and
automobile expense decreased approximately $700 for the nine months ended July
1997.
-5-
<PAGE>
Other income increased $51,007. During 1997, there was a gain on sale of
land of $53,700 and an increase in miscellaneous income of approximately
$10,500. Increases were offset by a decrease in interest income of $13,200 due
primarily to management's improved efforts to collect payments on a timely
basis.
Interest expense decreased $18,633 due to a reduction in debt.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED
JULY 31, 1997
COMPARED TO THE THREE MONTHS ENDED
JULY 31, 1996
Revenues increased 3% during the three months ended July 31,1997. As
explained above, the increase in dues resulted in increased revenue of $39,750
which was offset by the decrease in golf revenues during 1997.
Cost of revenues decreased 6% due primarily to management's efforts to
control costs as explained above.
General and administrative expenses decreased 60% for the three months
ended July 31,1997 primarily due to a reduction in professional fees.
Other income increased 34% for the three months ended July 31, 1997 due
primarily to the Fairway Grille.
Interest expense decreased $12,545 as compared to the same period in 1996.
This was due to a decrease in the overall debt of the Company.
LIQUIDITY AND CAPITAL RESOURCES
At July 31,1997, the Company had a working capital deficiency of $327,072.
Included in current liabilities is the entire $314,940 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 $34,955 in scheduled
principal payments on long -term debt are due within the next twelve months.
-6-
<PAGE>
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"). The loan agreement which was due to expire in May
1997 was renewed on May 7, 1997. Amounts borrowed under the Revolving Credit
Facility bear interest at the prime rate (8.25% at July 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 24, 1998, 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 was 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 (8.25% at July 31, 1997) 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
revenues and assessments of the Company's water operations.
The Company expects to meet its current liabilities (other than payment of
the entire $314,940 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 $76,101 for the nine months ended July 31,1997. Cash
provided by borrowings of $175,000 under the Company's revolving line of credit,
$30,042 in additional long- term debt, net proceeds from the issuance of Common
Stock Class A of $190,206, proceeds from the sale of land of $53,880 and
operating activities of $418,113 were used to make scheduled principal payments
of $697,696 on long-term debt and capital expenditures of $93,443. Such capital
expenditures included a fairway mower for $34,842, electrical service
replacement for $10,200, carpeting for $6,970, computer equipment for $4,490,
appliances for $8,000, pulse meters for $3,707, and purchase of equipment for
$25,234.
At July 31, 1997, the Company had drawn $314,940 on its $1,000,000 line of
credit, leaving $685,060 available.
-7-
<PAGE>
The Company incurred a net loss of $107 for the nine months ended July
31,1997 and at July 31,1997, the Company has a cumulative deficit of $1,275,304
and a working capital deficiency of $327,072. Although the Company's line of
credit is available through May 31, 1998, 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, 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.
-8-
<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 20, 1997. At the meeting the following persons
were elected as directors of the Company, each receiving the
number of votes indicated next to his or her name::
David C. Toomey, Esq. 20,073
Grace Godshalk 17,535
Clifford Press 19,475
The following additional persons continued as directors of
the Company after the meeting:
Anthony C. Bowe
James T. Sygenda
David B. Ottaway
Richard C. Unger, Jr.
Frank J. Dracos, M.D.
George J. Byron
Item 5. Other Information
At its organizational meeting on July 26, 1996, the Board of Directors
reelected David B. Ottaway as Chairman of the Board of the Company and
Anthony C. Bowe as Vice-President and Chief Financial Officer. Richard
C. Unger Jr. was elected President and David C. Toomey was elected
secretary.
Item 6. Exhibits and Reports on Form 8-K
None
-9-
<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: September 4, 1997 By: /s/ David B. Ottaway
David B. Ottaway, Chairman
Date: September 4, 1997 By: /s/ Anthony C. Bowe
Anthony C. Bowe
Vice President (Principal Financial
and Accounting Officer)
-10-
<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, 1997 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> JUL-31-1997
<CASH> 182,804
<SECURITIES> 0
<RECEIVABLES> 538,119
<ALLOWANCES> 52,080
<INVENTORY> 0
<CURRENT-ASSETS> 690,019
<PP&E> 4,999,932
<DEPRECIATION> 2,381,815
<TOTAL-ASSETS> 3,388,610
<CURRENT-LIABILITIES> 1,393,802
<BONDS> 1,097,236
0
0
<COMMON> 1,709,170
<OTHER-SE> (476,077)
<TOTAL-LIABILITY-AND-EQUITY> 3,388,610
<SALES> 1,479,933
<TOTAL-REVENUES> 1,479,933
<CGS> 1,249,260
<TOTAL-COSTS> 1,249,260
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 119,446
<INCOME-PRETAX> (107)
<INCOME-TAX> 0
<INCOME-CONTINUING> (107)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (107)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
