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 February 29, 1996
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 0-14019
Ridgewood Properties, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 58-1656330
- ------------------------------- ------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2859 Paces Ferry Road, Suite 700
Atlanta, Georgia
30339
- -------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(404) 434-3670
----------------------------------------------------
(Registrant's telephone number, including area code)
N/A
----------------------------------------------------
(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 _____
Common stock, par value $.01 per share - 1,088,480 shares
outstanding at February 29, 1996.
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
-----------------------------
RIDGEWOOD PROPERTIES, INC. AND SUBSIDIARIES
-------------------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
FEBRUARY 29, 1996 AND AUGUST 31, 1995
-------------------------------------
($000'S omitted, except per share data)
---------------------------------------
<CAPTION>
(Unaudited)
February 29, August 31,
ASSETS 1996 1995
------ ----------- -----------
<S> <C> <C>
Real Estate Investments:
Real Estate Properties
Operating Properties $ 1,412 $ 1,461
Land Held for Sale or
Future Development 9,916 10,104
------------ ------------
11,328 11,565
Mortgage Loans 6 44
------------ ------------
Total real estate investments 11,334 11,609
Allowance for Possible Losses (4,700) (4,700)
------------ ------------
Net real estate investments 6,634 6,909
Investment in Limited Partnership 771 232
Cash and Cash Equivalents 436 1,880
Escrowed Funds 125 140
Other Assets 930 512
------------ ------------
$ 8,896 $ 9,673
============ ============
<FN>
The accompanying notes are an integral part of these consolidated
financial statements.
</FN>
</TABLE>
<TABLE>
RIDGEWOOD PROPERTIES, INC. AND SUBSIDIARIES
-------------------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
FEBRUARY 29, 1996 AND AUGUST 31, 1995
-------------------------------------
($000's omitted, except per share data)
---------------------------------------
<CAPTION>
(Unaudited)
February 29, August 31,
LIABILITIES AND SHAREHOLDERS' INVESTMENT 1996 1995
---------------------------------------- ------------ ------------
<S> <C> <C>
Accounts Payable $ 126 $ 102
Accrued Salaries, Bonuses and
Other Compensation 773 737
Accrued Property Tax Expense 38 146
Accrued Interest and Other Liabilities 280 280
Term Loans 2,884 2,796
------------ ------------
Total Liabilities 4,101 4,061
------------ ------------
Commitments and Contingencies
Shareholders' Investment
Series A Convertible Preferred Stock,
$1 par value, 1,000,000 shares authorized, 450,000
shares issued and outstanding at February 29, 1996
and August 31, 1995, liquidation preference
and callable at $3,600,000. 450 450
Common Stock, $.01 par value, 5,000,000
shares authorized, 1,088,480 shares issued and
outstanding at February 29, 1996 and
August 31, 1995. 11 10
Paid-in Surplus 16,105 16,196
Accumulated Deficit since December 30, 1985 (11,771) (11,044)
------------ ------------
4,795 5,612
------------ ------------
$ 8,896 $ 9,673
============ ============
<FN>
The accompanying notes are an integral part of these consolidated
financial statements.
</FN>
</TABLE>
<TABLE>
RIDGEWOOD PROPERTIES, INC. AND SUBSIDIARIES
-------------------------------------------
STATEMENTS OF CONSOLIDATED LOSS
-------------------------------
FOR THE THREE AND SIX MONTHS ENDED FEBRUARY 29, 1996 AND FEBRUARY 28, 1995
--------------------------------------------------------------------------
($000's omitted, except per share data)
---------------------------------------
<CAPTION>
For the Three Months Ended For the Six Months Ended
-------------------------- ------------------------
February 29, February 28, February 29, February 28,
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUES:
Operating revenues from real estate properties..... $ 730 $ 981 $ 1,250 $ 1,737
Revenues from hotel management .................... 173 66 232 67
Sales of real estate properties ................... 184 326 419 326
Income from loans and temporary investments ....... 13 24 36 63
Other ............................................. -- -- -- 3
------------- ------------- ------------- -------------
1,100 1,397 1,937 2,196
------------- ------------- ------------- -------------
COSTS AND EXPENSES:
Expenses of real estate properties ................ 564 795 1,113 1,532
Expenses of hotel management ...................... 216 135 260 135
Expenses of real estate sales ..................... 110 332 290 332
Allowance for possible losses ..................... -- -- -- 50
Depreciation ...................................... 39 117 78 235
Interest expense .................................. 85 105 169 221
General, administration and other ................. 376 309 671 642
Business development .............................. 43 19 83 29
------------- ------------- ------------- -------------
1,433 1,812 2,664 3,176
------------- ------------- ------------- -------------
NET LOSS BEFORE INCOME TAX EXPENSE .................... $ (333) $ (415) $ (727) $ (980)
------------- ------------- ------------- -------------
INCOME TAX EXPENSE .................................... $ -- $ -- $ -- $ 75
------------- ------------- ------------- -------------
NET LOSS .............................................. $ (333) $ (415) $ (727) $ (1,055)
============= ============= ============= =============
LOSS PER SHARE ........................................ $ (0.35) $ (0.47) $ (0.80) $ (1.18)
============= ============= ============= =============
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</FN>
</TABLE>
<TABLE>
RIDGEWOOD PROPERTIES, INC. AND SUBSIDIARIES
-------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------
FOR THE SIX MONTHS ENDED FEBRUARY 29, 1996 AND FEBRUARY 28, 1995
-----------------------------------------------------------------
Decrease in Cash and Cash Equivalents
-------------------------------------
($000's Omitted)
----------------
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net loss ...................................................... $ (727) $ (1,055)
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation and amortization ............................. 82 251
Increase in allowance for possible losses ................. -- 50
Loss (gain) from sales of real estate property ............ (129) 6
Decrease in escrowed funds ................................ 15 --
Increase in other assets .................................. (334) (51)
Decrease in accounts payable and
accrued liabilities ..................................... (48) (244)
---------- ----------
Total adjustments ......................................... (414) 12
---------- ----------
Net cash used by operating activities ..................... (1,141) (1,043)
Cash flows from investing activities:
Principal payments received on mortgage loans ............... 38 1
Proceeds from sales of real estate .......................... 444 308
Additions to real estate properties ......................... (138) (95)
Investment in limited partnership ........................... (539) --
---------- ----------
Net cash received (used) from investing activities ........ (195) 214
Cash flows from financing activities:
Repayments of notes payable ................................. (18) (1,145)
Payment of dividend on preferred stock ...................... (90) (82)
---------- ----------
Net cash used by financing activities ..................... (108) (1,227)
---------- ----------
Net decrease in cash and cash equivalents ....................... $ (1,444) $ (2,056)
Cash and cash equivalents at beginning of period ................ 1,880 2,804
---------- ----------
Cash and cash equivalents at end of period ...................... $ 436 $ 748
========== ==========
The accompanying notes are an integral part of these consolidated financial statements.
Supplemental disclosure of noncash activity in fiscal year 1996:
Issuance of 125,000 shares of common stock
at $.01 par value in conjunction with purchase
of hotel management company .............................. $ 1,250
Assumption of notes payable in conjunction with ==========
purchase of hotel management company ..................... $ 106,000
==========
</TABLE>
RIDGEWOOD PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 29, 1996 AND FEBRUARY 28, 1995
(Unaudited)
1. GENERAL:
Ridgewood Properties, Inc. (the "Company") is
primarily engaged in the business of acquiring, developing,
operating and selling real estate property in the Southeast
and "Sunbelt" areas. Additionally, the Company, through its
investment in a limited partnership, is engaged in acquiring
and managing hotel properties in the Southeast. Currently,
the Company's only operating property is the hotel in
Longwood, Florida. All of the Company's other properties
are land properties held for sale, and no additional
development is currently anticipated for the land. The
Company was incorporated under the laws of the State of
Delaware on October 29, 1985. Prior to December 31, 1985,
the Company operated under the name CMEI, Inc.
The Company's common stock is currently listed
in the broker-dealer "Pink Sheets" and trades in the
over-the-counter market. Of the Company's issued and
outstanding shares of common stock, 37% of the common stock
is owned by the Company's President, N. Russell Walden. All
of the Company's issued and outstanding shares of preferred
stock are owned by Triton Group, Ltd.
The accompanying financial statements of the
Company present the historical cost basis amount of assets,
liabilities and shareholders' investment of the real estate
business for the periods presented. The consolidated
financial statements include the accounts of the Company,
its wholly-owned subsidiaries and its joint venture
investments after the elimination of all intercompany
amounts.
2. BASIS OF PRESENTATION:
The accompanying consolidated financial
statements have been prepared by the Company, without audit,
pursuant to the rules and regulations of the Securities and
Exchange Commission. In the opinion of management, the
consolidated financial statements reflect all adjustments,
consisting of normal recurring adjustments, which are
necessary to present fairly the financial position, results
of operations and changes in cash flow for the interim
periods covered by this report. Although certain
information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations, management
believes that the disclosures are adequate to make the
information presented not misleading. These financial
statements should be read in conjunction with the audited
consolidated financial statements and notes thereto included
in the Company's annual report for the fiscal year ended
August 31, 1995. The results of operations for the six
months ended February 29, 1996 are not necessarily
indicative of the results to be expected for the fiscal year
ending August 31, 1996.
The Company is currently generating net operating
loss carryforwards for both book and tax purposes which may
be used to offset future taxable income. In September 1993,
the Company adopted SFAS 109. The adoption of SFAS 109 did
not have a material effect on the Company's consolidated
financial position or results of operations.
For the purpose of the Statement of Cash Flows,
cash includes cash equivalents which are highly liquid
investments with maturity of three months or less.
Certain prior year amounts have been reclassified
to conform with the current presentation.
3. ALLOWANCE FOR POSSIBLE LOSSES:
No additional allowance for possible losses was
necessary for the six months ended February 29, 1996. The
allowance for possible losses increased by $50,000 for the
six months ended February 28, 1995. The additional reserve
was to reflect the net realizable value on a residential lot
in Atlanta, Georgia.
4. COMMITMENTS AND CONTINGENCIES:
In August 1991, each executive officer was offered
a Post-Employment Consulting Agreement (the "Consulting
Agreement(s)") whereby the officer agrees that if he or she
is terminated by the Company for other than good cause, the
officer will be available for consulting at a rate equal to
their annual compensation immediately prior to termination.
All officers have chosen to enter into Consulting
Agreements. In addition, three other employees were offered
and have chosen to enter into a one year Consulting
Agreement. The executive, upon termination, agrees to sign
an unconditional release of all claims and liability in
exchange for a one year (four employees) or two year (two
employees) consulting fee arrangement, depending upon the
years of service as an officer or the designation as a
senior executive officer.
On May 2, 1995 a complaint was filed in the Court of
Chancery of the State of Delaware (New Castle County)
entitled William N. Strassburger v. Michael M. Early, Luther
A. Henderson, John C. Stiska, N. Russell Walden, and Triton
Group, Ltd., defendants, and Ridgewood Properties, Inc.,
nominal defendant, C.A. No. 14267 (the "Complaint"). The
plaintiff is an individual shareholder of the Company who
purports to file the Complaint individually,
representatively on behalf of all similarly situated
shareholders, and derivatively on behalf of the Company.
The Complaint challenges the actions of the Company and its
directors in consummating the Company's August 1994
repurchase of its common stock held by Triton Group, Ltd.
and Hesperus Partners Ltd. in five counts, denominated Waste
of Corporate Assets, Breach of Duty of Loyalty to Ridgewood,
Breach of Duty of Good Faith, Intentional Misconduct, and
Breach of Duty of Loyalty and Good Faith to Class.
The Complaint seeks (a) permission of the court to
proceed as a class action with respect to one count; (b)
rescission of the repurchase of Triton's Ridgewood common
stock, together with recovery (to Ridgewood) of the
approximately $8 million in cash and the shares of the
preferred stock received by Triton in the repurchase, or in
the alternative, unspecified restitution or damages to
Ridgewood resulting from the Triton repurchase; (c)
unspecified restitution or damages to Ridgewood resulting
from the Hesperus repurchase; (d) unspecified damages to
Ridgewood resulting from the alleged breaches of the
defendants' duties of loyalty and good faith and their
alleged intentional misconduct; (e) unspecified damages for
any separate injury allegedly suffered by members of the
purported class; and (f) the plaintiff's costs and expenses
of this litigation, including attorneys' fees.
The Company has answered the Complaint, denying all
allegations of wrongdoing either on its part or that of its
directors. The Company's management believes the claims
made in the Complaint are without merit, and that the
shareholders of Ridgewood benefited from the challenged
transactions. Management intends to vigorously contest this
matter.
As more fully described in Note 7, the Company is
required to fund certain capital contributions to RW Hotel
Partners, L.P. as the partnership acquires hotels.
5. SHAREHOLDERS' INVESTMENT:
Loss Per Common Share --
Loss per common share is calculated based upon
the weighted average number of shares outstanding of
approximately 963,000 for the three and six months ended
February 28, 1995, 1,079,000 for the three months ended
February 29, 1996 and 1,021,000 for the six months ended
February 29, 1996. Dividends paid on preferred stock were
$37,000 and $82,000, respectively, for the three and six
months ended February 28, 1995; and $45,000 and $90,000,
respectively, for the three and six months ended February
29, 1996. These dividends were added to the net loss for
purposes of computing the loss per common share.
Stock Option Plan --
On March 30, 1993, the Company granted options to
purchase 378,000 shares of common stock at a price of $1.83
per share to its key employees and one director under the
Ridgewood Properties, Inc. Stock Option Plan (the "Plan").
The options will vest over a four year period in 25%
increments. All options expire ten years from the date of
grant, unless earlier on account of death, disability,
termination of employment, or for other reasons outlined in
the Plan. As of February 29, 1996, approximately 284,000
options are currently exercisable.
On January 28, 1994, the Company granted options to
purchase 375,000 and 75,000 shares of common stock at a
price of $1.00 per share to its President and Chief
Financial Officer, respectively, under the Plan. The
options are exercisable immediately and expire on January
31, 1997.
On January 4, 1995, the shareholders of the Company
approved an increase in the number of authorized shares
reserved for the Company's stock option plan from 900,000 to
1,200,000.
Issuance of Common Shares --
In December 1995, the Company purchased a hotel
management company in part by issuing 125,000 shares of the
Company's common stock. The total stock outstanding as of
February 29, 1996 is 1,088,480.
6. NOTES PAYABLE:
In November 1989, the Company entered into a
$15,000,000 Revolving Line of Credit with a commercial bank.
Effective December 31, 1991, the Company's Revolving Line of
Credit expired and the outstanding principal balance of
$15,000,000 was converted to a term loan. In January 1992,
the term loan was amended to postpone principal payments for
seven months. Under the amended agreement, the interest
accrued at the rate of one percent (1%) per annum above the
prime rate of the lender. Under the term loan agreement,
the Company was required to make interest payments on the
outstanding principal balance of the note, which payments
commenced on February 1, 1992, and monthly thereafter
through December 1, 1996. Commencing on September 1, 1992,
and thereafter on the first day of each month through
December 1, 1996, the outstanding principal amount of the
note shall be repaid in equal monthly payments. In June
1994, the loan agreement was amended whereby proceeds from
future sales of property securing the term loan will serve
to reduce the remaining monthly amortization thereby
reducing the monthly payment rather than reducing the
remaining principal due at the end of the term loan. On
January 1, 1997, the remaining outstanding principal balance
was to be payable in full. The entire loan was repaid in
full in June 1995.
In June 1995, the Company entered into a loan with
a commercial lender to refinance the Ramada Inn in Longwood,
Florida. The loan proceeds are $2,800,000. The loan is for
a term of 20 years with an amortization period of 25 years,
at the rate of 10.35%. Principal and interest payments are
approximately $26,000 per month beginning August 1, 1995.
In addition, the Company is required to make a repair escrow
payment comprised of 4% of estimated revenues, as well as
real estate tax and insurance escrow payments. The total
amount for these items will be a payment of approximately
$20,000 per month and can be adjusted annually. The escrow
funds will be used as tax, insurance and repair needs arise.
As of February 29, 1996, there was approximately $125,000 of
escrowed funds related to this loan agreement. Also,
commitment fees and loan costs of approximately $159,000 are
being amortized over 20 years. The balance of this loan as
of February 29, 1996 was approximately $2,784,000.
In December 1995 and in conjunction with the
acquisition of a hotel management company, the Company
assumed three promissory notes dated September 22, 1994 and
payable to three different Georgia corporations. The total
combined outstanding principal was approximately $106,000.
All three notes are for a term of five years at a rate of
6.83%. Combined principal and interest payments are
approximately $2,667 per month through October 1, 1999. The
combined balance of these loans at February 29, 1996 was
approximately $100,000.
Maturities of long-term debt during the Company's
next five fiscal years are as follows: 1997 - $55,000; 1998
- - $59,000; 1999 - $65,000; 2000 - $43,000; 2001 - $42,000.
7. INVESTMENT IN LIMITED PARTNERSHIP:
On August 16, 1995, RW Hotel Partners, L.P. was
organized as a limited partnership (the "Partnership") under
the laws of the State of Delaware. Concurrently, the
Company formed Ridgewood Hotels, Inc., a Georgia corporation
("Ridgewood Hotels") which became the sole general partner
in the Partnership with RW Hotel Investments, L.L.C.
("Investor") as the limited partner. Ridgewood Hotels has a
1% base distribution percentage versus 99% for the Investor.
However, distribution percentages do vary depending on
certain defined preferences and priorities pursuant to the
Partnership Agreement ("Agreement") which are discussed
below. The partnership was originally formed to acquire a
hotel property in Louisville, Kentucky. The terms of this
partnership will serve as a guideline for other potential
acquisitions with the Investor or its affiliates.
The Partnership Agreement was amended and restated
on September 8, 1995. Distributable Cash is defined as the
net income from the property before depreciation plus any
net sale proceeds and net financing proceeds less capital
costs. Distributions of Distributable Cash shall be made as
follows:
- First, to the Investor until there has been
distributed to the Investor an amount equal to a 15%
cumulative internal rate of return on the Investor's
investment.
- Second, to Ridgewood Hotels until the aggregate
amount received by Ridgewood Hotels equals the aggregate
cash contributions made by Ridgewood Hotels to the
Partnership (as of 2/29/96, Ridgewood Hotels contributed
approximately $771,000).
- Third, 12% to Ridgewood Hotels and 88% to the
Investor until there has been distributed to the Investor an
amount equal to a 25% cumulative internal rate of return on
Investor's investment.
- Fourth, 75% of the residual to the Investor and
25% to Ridgewood Hotels.
A Management Agreement exists between the
Partnership and the Company as Manager ("Manager") for the
purpose of managing hotels in Kentucky, Georgia and South
Carolina. The Manager shall be entitled to the following
property management fees:
(1) 2.5% of the gross revenues from the hotel
property.
(2) 1% of the gross revenues from the hotel
property as an incentive fee if distributable cash equals or
exceeds 13.5% of certain aggregate acquisition costs. No
management fees are payable with respect to the first
12-month period of management of the hotel in Kentucky.
A Construction Management Agreement exists between
the Partnership and the Manager for the purpose of managing
future improvements to the properties.
The Company currently has approximately $771,000
invested in the Partnership. The Partnership purchased a
hotel in Louisville, Kentucky for approximately $16,000,000.
In December 1995 and January 1996, the Partnership purchased
four hotel properties in Georgia for approximately
$15,000,000 and a hotel in South Carolina for $4,000,000,
respectively. The Company may make future capital
contributions to the Partnership. Management expects to
fund such capital contributions through available cash or
from loans from the Partnership. Additionally, the Company
may invest in other partnerships to acquire hotels in the
future.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED FEBRUARY 29, 1996
COMPARED TO THREE AND SIX MONTHS ENDED FEBRUARY 28, 1995
LIQUIDITY AND CAPITAL RESOURCES --
In June 1995, the Company entered into a loan with
a commercial lender to refinance the Ramada Inn in Longwood,
Florida. The loan proceeds are $2,800,000. The loan is for
a term of 20 years with an amortization period of 25 years,
at the rate of 10.35%. Principal and interest payments are
approximately $26,000 per month beginning August 1, 1995.
In addition, the Company is required to make a repair escrow
payment comprised of 4% of estimated revenues, as well as
real estate tax and insurance escrow payments. The total
amount for these items will be a payment of approximately
$20,000 per month and can be adjusted annually. The escrow
funds will be used as tax, insurance and repair needs arise.
As of February 29, 1996, there was approximately $125,000 of
escrowed funds related to this loan agreement.
During the first six months of fiscal year 1996,
the Company sold land in Ohio and Georgia for net proceeds
of approximately $316,000 and $67,000, respectively. Also,
in September 1995, the Company was refunded its entire
investment of $61,000 in its joint venture for the purpose
of developing a subdivision lot in Atlanta, Georgia.
On August 16, 1995, RW Hotel Partners, L.P. was
organized as a limited partnership (the "Partnership") under
the laws of the State of Delaware. Concurrently, the
Company formed Ridgewood Hotels, Inc., a Georgia corporation
("Ridgewood Hotels") which became the sole general partner
in the Partnership with RW Hotel Investments, L.L.C.
("Investor") as the limited partner. Ridgewood Hotels has a
1% base distribution percentage versus 99% for the Investor.
However, distribution percentages do vary depending on
certain defined preferences and priorities pursuant to the
Partnership Agreement ("Agreement") which are discussed
below. The partnership was originally formed to acquire a
hotel property in Louisville, Kentucky. The terms of this
partnership will serve as a guideline for other potential
acquisitions with the Investor or its affiliates.
The Partnership Agreement was amended and restated
on September 8, 1995. Distributable Cash is defined as the
net income from the property before depreciation plus any
net sale proceeds and net financing proceeds less capital
costs. Distributions of Distributable Cash shall be made as
follows:
- First, to the Investor until there has been
distributed to the Investor an amount equal to a 15%
cumulative internal rate of return on the Investor's
investment.
- Second, to Ridgewood Hotels until the aggregate
amount received by Ridgewood Hotels equals the aggregate
cash contributions made by Ridgewood Hotels to the
Partnership (as of 2/29/96, Ridgewood Hotels contributed
approximately $771,000).
- Third, 12% to Ridgewood Hotels and 88% to the
Investor until there ha been distributed to the Investor an
amount equal to a 25% cumulative internal rate of return on
Investor's investment.
- Fourth, 75% of the residual to the Investor and
25% to Ridgewood Hotels.
A Management Agreement exists between the
Partnership and the Company as Manager ("Manager") for the
purpose of managing hotels in Kentucky, Georgia and South
Carolina. The Manager shall be entitled to the following
property management fees:
(1) 2.5% of the gross revenues from the hotel
property.
(2) 1% of the gross revenues from the hotel
property as an incentive fee if distributable cash equals or
exceeds 13.5% of certain aggregate acquisition costs. No
management fees are payable with respect to the first
12-month period of management of the hotel in Kentucky.
A Construction Management Agreement exists between
the Partnership and the Manager for the purpose of managing
future improvements to the properties.
The Company currently has approximately $771,000
invested in the Partnership. The Partnership purchased a
hotel in Louisville, Kentucky for approximately $16,000,000.
In December 1995 and January 1996, the Partnership purchased
four hotel properties in Georgia for approximately
$15,000,000 and a hotel in South Carolina for $4,000,000,
respectively. The Company may make future capital
contributions to the Partnership. Management expects to
fund such capital contributions through available cash or
from loans from the Partnership. Additionally, the Company
may invest in other partnerships to acquire hotels in the
future.
Since the Company is not currently generating
sufficient operating cash to cover overhead and debt
service, the Company must continue to sell real estate, seek
alternative financing or otherwise recapitalize the Company.
The Company also intends to aggressively pursue the
acquisition of hotels and hotel management contracts which
would provide additional cash flow.
RESULTS OF OPERATIONS --
The Company had gains from real estate sales of
approximately $74,000 and $129,000 for the three and six
months ended February 29, 1996. During the three and six
months ended February 28, 1995, the Company had losses from
real estate sales of approximately $6,000. Gains or losses
on sales are dependent upon the specific assets sold in a
particular period and the terms of each sale.
Operating revenues from real estate properties
decreased approximately $251,000, or 26%, and $487,000, or
28%, respectively, for the three and six months ended
February 29, 1996, compared to the three and six months
ended February 28, 1995. The decrease was primarily a
result of the sale of the Company's weekly rental hotel in
Orlando, Florida during fiscal year 1995. For the six
months ended February 29, 1996, approximately $58,000 of the
decrease was also attributed to the Company's hotel in
Longwood, Florida.
Revenues from hotel management increased
approximately $107,000, or 162%, and $165,000, or 246%,
respectively, for the three and six months ended February
29, 1996 compared to the three and six months ended February
28, 1995 due to the acquisition of hotels and a hotel
management company. In turn, expenses of hotel management
increased approximately $81,000, or 60%, and $125,000, or
93%, respectively, for the three and six months ended
February 29, 1996 compared to the three and six months ended
February 28, 1995.
Expenses of real estate properties during the three
and six months ended February 29, 1996 decreased $231,000,
or 29%, and $419,000, or 27%, respectively, compared to the
three and six months ended February 28, 1995 due primarily
to the sale of the Company's weekly rental hotel in Florida.
Expenses decreased by approximately $54,000 at the Company's
remaining hotel in Florida for the six months ended February
29, 1996 compared to the six months ended February 28, 1995.
No provision for possible losses was necessary for
the six months ended February 29, 1996. The provision of
$50,000 for possible losses in fiscal year 1995 pertains to
a land parcel in Atlanta, Georgia which has been sold.
Interest expense decreased approximately $20,000
and $52,000, respectively, for the three and six months
ended February 29, 1996 compared to the three and six months
ended February 28, 1995 due to the decrease in outstanding
debt. There was no capitalized interest during the three or
six months ended February 29, 1996 or February 28, 1995.
General, administration and other expenses
increased approximately $67,000, or 22%, and $29,000, or 5%,
respectively, for the three and six months ended February
29, 1996 compared to the three and six months ended February
28, 1995 as a result of slightly increased overhead due to
an expanding business entity.
Due to the Company's aggressive movement into the
business of acquiring, developing, operating and selling
hotel properties throughout the country, the Company
increased business development costs approximately $24,000,
or 126%, and $54,000, or 186%, respectively, for the three
and six months ended February 29, 1996 compared to the three
and six months ended February 28, 1995.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of shareholders of the Company
was held on January 16, 1996. At the annual meeting, four
directors were elected by the holders of the Company's
common stock, par value $0.01 per share. The votes were as
follows:
Director For Against Abstain
Michael M. Earley 507,390 0 0
Luther A. Henderson 507,390 0 0
John C. Stiska 507,390 0 0
N. Russell Walden 507,390 0 0
ITEM 5. OTHER INFORMATION
On January 26, 1996, John C. Stiska, director,
submitted his letter of resignation effective February 1,
1996.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
A. Exhibits:
27 Financial Data Schedule
B. Reports on Form 8-K:
No exhibits or reports on Form 8-K were filed
during the three months ended February 29, 1996.
<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.
RIDGEWOOD PROPERTIES, INC.
By: /s/ N. R. Walden__________
N. Russell Walden
President
By: /s/ Karen S. Hughes_______
Karen S. Hughes
Vice President,
Chief Accounting Officer
Date: April 12, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial information extracted from
the Consolidated Balance Sheets, Statements of Consolidated Loss and
Consolidated Statement of Cash Flows and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> FEB-29-1996
<CASH> 436,000
<SECURITIES> 0
<RECEIVABLES> 112,000
<ALLOWANCES> (4,700,000)
<INVENTORY> 17,000
<CURRENT-ASSETS> 0
<PP&E> 2,812,000
<DEPRECIATION> 1,400,000
<TOTAL-ASSETS> 8,896,000
<CURRENT-LIABILITIES> 0
<BONDS> 2,884,000
0
450,000
<COMMON> 11,000
<OTHER-SE> 4,334,000
<TOTAL-LIABILITY-AND-EQUITY> 8,896,000
<SALES> 419,000
<TOTAL-REVENUES> 1,937,000
<CGS> 290,000
<TOTAL-COSTS> 1,741,000
<OTHER-EXPENSES> 754,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 169,000
<INCOME-PRETAX> (727,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (727,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (727,000)
<EPS-PRIMARY> (0.80)
<EPS-DILUTED> (0.80)
</TABLE>
