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 APRIL 30, 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
(Address of principal executive offices)
18323
(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 April 30, 1997, the registrant had 79,811 shares of Common Stock, no
par value, and 22,760 shares of Common Stock Class A, 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 -
April 30, 1997 and October 31, 1996 1
Condensed Consolidated Statement of Operations -
Six Months and Three Months Ended April 30, 1997
and 1996 2
Condensed Consolidated Statement of Cash Flows -
Six Months Ended April 30, 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>
APRIL 30, 1997 OCTOBER 31
(UNAUDITED) 1996*
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 94,457 $ 106,703
Accounts receivable, net 283,625 253,278
Prepaid expenses and other current assets 8,904 43,416
----------- -----------
Total current assets 386,986 403,397
RESTRICTED CASH 79,966 68,556
PROPERTY, PLANT AND EQUIPMENT, Net 2,613,329 2,692,743
DEFERRED COSTS, Net 4,769 7,883
----------- -----------
TOTAL $ 3,085,050 $ 3,172,579
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable, unsecured $ 11,300 $ 11,300
Current portion of long-term debt 612,596 829,939
Accounts payable, trade 30,215 47,941
Accrued expenses and other 73,170 91,844
Deferred revenue 202,283 --
----------- -----------
Total current liabilities 929,564 981,024
CUSTOMER DEPOSITS 79,966 68,556
LONG-TERM DEBT 923,741 940,005
6-1/4% SUBORDINATED NOTES 140,000 140,000
----------- -----------
Total liabilities 2,073,271 2,129,585
----------- -----------
STOCKHOLDERS' EQUITY:
Common stock 1,697,969 1,518,964
Contributed capital 799,227 799,227
Deficit (1,485,417) (1,275,197)
----------- -----------
Total stockholders' equity 1,011,779 1,042,994
----------- -----------
TOTAL $ 3,085,050 $ 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>
SIX MONTHS ENDED THREE MONTHS ENDED
...........APRIL 30......................APRIL 30...........
1997 1996 1997 1996
<S> <C> <C> <C> <C>
REVENUES $ 665,417 $ 631,603 $ 341,503 $ 339,990
COST OF REVENUES 672,877 679,610 317,723 355,654
--------- --------- --------- ---------
GROSS (LOSS) PROFIT FROM
OPERATIONS (7,460) (48,007) 23,780 (15,664)
GENERAL AND ADMINISTRATIVE
EXPENSES 183,763 164,116 102,302 101,501
--------- --------- --------- ---------
LOSS FROM OPERATIONS (191,223) (212,123) (78,522) (117,165)
--------- --------- --------- ---------
OTHER INCOME (EXPENSE):
Miscellaneous income 63,008 39,367 49,059 16,398
Interest expense (82,004) (88,092) (32,501) (38,767)
--------- --------- --------- ---------
Other income (expense), net (18,996) (48,725) 16,558 (22,369)
--------- --------- --------- ---------
NET LOSS $(210,219) $(260,848) $ (61,964) $(139,534)
========= ========= ========= =========
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 86,674 73,537 86,674 73,537
NET LOSS PER COMMON
SHARE $ (2.43) $ (3.55) $ (0.71) $ (1.90)
========= ========= ========= =========
</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>
SIX MONTHS ENDED
............APRIL 30...........
1997 1996
<S> <C> <C>
CASH PROVIDED BY (USED IN):
OPERATING ACTIVITIES:
Net loss $(210,219) $(260,848)
Adjustments for noncash charges:
Depreciation and amortization 109,360 107,011
Gain on sale of land (53,669) --
Changes in assets and liabilities 173,161 141,333
--------- ---------
Net cash provided by (used in)
operating activities 18,633 (12,504)
--------- ---------
INVESTING ACTIVITIES:
Purchase of property and equipment (30,156) (50,007)
Proceeds from sale of land 53,879 --
--------- ---------
Net cash provided by (used in)
investing activities 23,723 (50,007)
--------- ---------
FINANCING ACTIVITIES:
Proceeds from issuance of debt 175,000 171,014
Repayment of debt (408,607) (75,811)
Proceeds from issuance of stock 179,005 --
--------- ---------
Net cash (used in) provided by
financing activities (54,602) 95,203
--------- ---------
(DECREASE) INCREASE IN CASH (12,246) 32,692
CASH, BEGINNING OF PERIOD 106,703 31,460
--------- ---------
CASH, END OF PERIOD $ 94,457 $ 64,152
========= =========
CASH PAYMENTS FOR:
Interest $ 79,912 $ 92,467
========= =========
</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 AND COMMON STOCK CLASS A
<TABLE>
<CAPTION>
....COMMON STOCK.... STOCK
...COMMON STOCK... ........CLASS A..... STOCK SUBSCRIBED SUBSCRIPTION
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT RECEIVABLE
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, October 31, 1996 73,537 $1,251,370 18,620 $267,594 9,380 $182,700 $(182,700)
Common Stock issued 6,274 125,120 4,140 41,579
Common Stock subscribed (4,140) (75,000) 75,000
------ ---------- ------ -------- ----- -------- ---------
Balance, April 30, 1997 79,811 $1,376,490 22,760 $309,173 5,240 $107,700 $(107,700)
====== ========== ====== ======== ===== ======== =========
</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 SIX MONTHS ENDED
APRIL 30, 1997
COMPARED TO THE SIX MONTHS ENDED
APRIL 30, 1996
Revenues increased $33,814 for the six months ended April 30, 1997, as
compared to the same period in the prior fiscal year. Dues revenues increased
$79,500 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
$13,000 as a result of less snowfall amounts in 1997 and a decrease in golf
revenues of $3,800 due to the golf course being open fewer days in 1997. Golf
membership fees were not recognized in April 1997 resulting in a decrease in
revenues of $25,400.
Cost of revenues decreased $6,733 as compared to the same period in
the previous fiscal year, due primarily to a decrease in snowplowing expense of
$10,600 and a decrease in road and path repairs of approximately $4,000 due to
better weather conditions during 1997. The decrease was offset by an increase in
security costs of $3,000, an increase in depreciation expense of $2,350 and
increases in water maintenance costs of $1,000. There was also an increase in
lawn bowling supplies and maintenance costs of approximately $1,500 due to
preparations for the national competition to be held at Buck Hill Falls.
General and administrative costs increased $19,647 due primarily to an
increase in professional fees of $11,200 and travel and lodging of $2,800
related to the search for a new general manager. Other increases in general and
administrative costs are due to higher salaries for administrative personnel of
$3,600 and an increase in office supplies and postage of approximately $2,000.
-5-
<PAGE>
Miscellaneous income increased $23,655 during 1997 due primarily to
the sale of land for $53,700. This increase was offset by a decrease in interest
income of approximately $20,100 due to a reduction in the finance charge rate
and management's improved efforts to collect accounts receivable on a timely
basis. Miscellaneous income also decreased $9,850 in 1997 due to an insurance
settlement being received during 1996.
Interest expense decreased $6,088 due primarily to management `s
efforts to reduce outstanding debt.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED
APRIL 30, 1997
COMPARED TO THE THREE MONTHS ENDED
APRIL 30, 1996
Revenues increased by $1,513 during the three months ended April 30,
1997. As stated above the increase in dues resulted in increased revenues of
$39,750 which was offset by the decrease in snowplowing revenues and the
decrease in golf membership revenues recognized during 1997.
Cost of revenues decreased $37,900 due primarily to the change in
interim allocation of depreciation expense. During 1996, less depreciation was
recognized during the first quarter and more in later quarters. Beginning in
1997, depreciation is recognized on a pro rata basis throughout the year.
Miscellaneous income increased approximately 200% primarily due to the
sale of land as stated above.
Interest expense decreased 16% due primarily to a reduction in
outstanding debt.
LIQUIDITY AND CAPITAL RESOURCES
At April 30, 1997, the Company had a working capital deficiency of
$542,578. Included in current liabilities is the entire $577,640 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 $34,956 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"). Amounts borrowed under the Revolving Credit
Facility bear interest at the prime rate (8% at April 30, 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 was available through May 31, 1997 and was
subsequently extended until May 31, 1998, and is 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 April
30, 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
revenues and assessments of the Company's water operations.
The Company expects to meet its current liabilities (other than
payment of the entire $577,640 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 decreased $12,246 for the six months ended April 30, 1997. Cash
provided by borrowings of $175,000 under the Company's revolving line of credit,
net proceeds from the issuance of Common Stock Class A and common stock of
$179,005, proceeds from the sale of land of $53,879 and operating activities of
$18,633 was used for repayment of $388,680 on the Company's revolving line of
credit, to make scheduled principal payments of $19,927 on long-term debt and
capital expenditures of $30,156. Such capital expenditures included carpeting
for $4,831, computer equipment for $3,000, pulse meters for $3,708 and the
purchase of equipment for $18,517.
At April 31, 1997, the Company had drawn $577,640 on its $1,000,000
line of credit, leaving $422,360 available.
-7-
<PAGE>
The Company incurred a loss of $210,219 for the six months ended April
30, 1997 and at April 30, 1997, the Company has a cumulative deficit of
$1,485,417 and a working capital deficiency of $542,578. Although the Company's
line of credit is available through May 28, 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 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.
-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
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
None
-9-
<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: June 12, 1997 By:/s/ David B. Ottaway
David B. Ottaway
Chairman and President
Date: June 13, 1997 By:/s/ Anthony C. Bowe
Anthony C. Bowe, Vice-President,
Treasurer and Chief Financial Officer
(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 APRIL 30, 1997 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> APR-30-1997
<CASH> 94,457
<SECURITIES> 0
<RECEIVABLES> 343,748
<ALLOWANCES> 60,123
<INVENTORY> 0
<CURRENT-ASSETS> 386,986
<PP&E> 4,936,645
<DEPRECIATION> 2,323,316
<TOTAL-ASSETS> 3,085,050
<CURRENT-LIABILITIES> 929,564
<BONDS> 1,063,740
0
0
<COMMON> 1,697,969
<OTHER-SE> (686,190)
<TOTAL-LIABILITY-AND-EQUITY> 3,085,050
<SALES> 665,417
<TOTAL-REVENUES> 665,417
<CGS> 672,877
<TOTAL-COSTS> 672,877
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 82,004
<INCOME-PRETAX> (210,220)
<INCOME-TAX> 0
<INCOME-CONTINUING> (210,220)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (210,220)
<EPS-PRIMARY> (2.43)
<EPS-DILUTED> (2.43)
</TABLE>
