<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange
Act of 1934
For the Quarterly Period Ended September 30, 1998
Commission File Number 0-7205
HOLIDAY-GULF HOMES, INC.
(Exact name of registrant as specified in its charter)
Minnesota 41-0916277
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4804 Mile Stretch Drive, Holiday, Florida 34690
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (813) 937-3293
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
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of September 30, 1998.
Common Stock, $.01 Par Value - 1,903,853 shares as of September 30, 1998.
<PAGE>
INDEX
HOLIDAY-GULF HOMES, INC. AND SUBSIDIARIES
PAGE
PART 1. - FINANCIAL INFORMATION NUMBER
Item 1. Financial Statements: (Unaudited)
Consolidated Balance Sheets - September 30, 1998 and
December 31, 1997........................................... 3-4
Consolidated Statements of Operations - For the three
months ended September 30, 1998 and 1997 and for the
nine months ended September 30, 1998 and 1997................ 5-6
Consolidated Statements of Shareholders' Equity -
For the year ended December 31, 1997 and the
nine months ended September 30, 1998......................... 7
Consolidated Statements of Cash Flows - For the nine
months ended September 30, 1998 and 1997..................... 8
Notes to Consolidated Financial Statements..................... 9-15
Accountants' Report............................................ 16
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..........................17-18
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings............................................. 19
Item 2 Changes in Securities......................................... 19
Item 3 Defaults upon Senior Securities............................... 19
Item 4. Submission of Matters to a Vote of Security Holders........... 19
Item 5. Other Information............................................. 19
Item 6. Exhibits and Reports on Form 8-K.............................. 20
SIGNATURES 21
<TABLE>
PART 1. FINANCIAL INFORMATION
HOLIDAY-GULF HOMES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
September 30, December 31,
1998 1997
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
WATER, PLANT AND EQUIPMENT
Water Plant & Equipment, at Original Costs $ 311,075 $ 302,023
Less: Accumulated Depreciation (239,995) (234,404)
Less: CIAC, Net of Amortization of $269 in
1998 and $207 in 1997 (1,056) (1,118)
------------ -----------
Net Water Plant & Equipment $ 70,024 $ 66,501
------------ -----------
OTHER PROPERTY AND INVESTMENTS
Non-Utility Property, less Accumulated
Depreciation of $52,246 in 1998 and
$49,700 in 1997 $ 22,818 $ 24,164
------------ -----------
Net Other Property & Investments $ 22,818 $ 24,164
------------ -----------
CURRENT ASSETS
Cash and Certificates of Deposits $ 91,090 $ 129,478
Accounts Receivable 3,001 4,778
Prepaids 1,921 4,089
Other Receivables 3,933 4,549
Deferred Tax Benefit 10,000 10,000
------------ -----------
Total Current Assets $ 109,945 $ 152,894
------------ -----------
OTHER ASSETS
Prepaids $ 297 $ 1,187
Deposits 2,035 2,035
Deferred Tax Benefit 6,800 16,000
------------ -----------
Total Other Assets $ 9,132 $ 19,222
------------ -----------
TOTAL ASSETS $ 211,919 $ 262,781
============ ===========
<FN>
See accompanying notes and accountants' report.
</FN>
</TABLE>
<TABLE>
HOLIDAY-GULF HOMES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
September 30, December 31,
1998 1997
(Unaudited) (Audited)
<S> <C> <C>
SHAREHOLDERS' EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY
Capital Stock, 5,000,000 shares authorized
and 1,903,853 shares issued and
outstanding in 1998 and 1997 $ 19,039 $ 19,039
Paid-In-Capital 105,371 164,396
Retained Earnings (of which $12,404 and $10,102
as of September 30, 1998 and December 31, 1997,
respectively, was appropriated for unclaimed
1997, 1995, 1993, 1990, 1989 and 1988 (dividends) 61,830 59,528
------------ -----------
Total Shareholders' Equity $ 186,240 $ 242,963
------------ -----------
CURRENT LIABILITIES
Accounts Payable $ 24,579 $ 18,232
Deferred Income 1,100 1,586
------------ -----------
Total Current Liabilities $ 25,679 $ 19,818
------------ -----------
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES $ 211,919 $ 262,781
============ ===========
<FN>
See accompanying notes and accountants' report.
</FN>
</TABLE>
<TABLE>
HOLIDAY-GULF HOMES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
For the three months ended For the nine months ended
September 30, September 30,
RESTATED RESTATED
1998 1997 1998 1997
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
OPERATING REVENUES
Water $ 35,598 $ 34,120 $ 103,802 $ 103,444
Garbage 27,199 26,749 80,195 79,971
Streetlights 8,812 8,661 25,935 25,975
Transfer & Reconnect Fees 495 584 1,515 1,440
----------- ----------- ----------- ---------
Total Operating Revenues $ 72,104 $ 70,114 $ 211,447 $ 210,830
----------- ----------- ----------- ---------
COST OF SALES
Garbage $ 20,920 $ 20,920 $ 55,786 $ 62,760
Electric 1,405 1,399 4,391 4,438
Streetlights 3,610 3,578 10,816 10,837
Other Costs 8,991 7,531 26,433 22,990
----------- ----------- ----------- ---------
Total Cost of Sales $ 34,926 $ 33,428 $ 97,426 $ 101,025
----------- ----------- ----------- ---------
Gross Profit $ 37,178 $ 36,686 $ 114,021 $ 109,805
OPERATING EXPENSES
Depreciation & Amortization $ 1,937 $ 1,914 $ 6,005 $ 5,741
General & Administrative 19,267 19,194 66,080 66,663
----------- ----------- ----------- ---------
Total Operating Expenses $ 21,204 $ 21,108 $ 72,085 $ 72,404
----------- ----------- ----------- ---------
Operating Income $ 15,974 $ 15,578 $ 41,936 $ 37,401
OTHER INCOME
Rental and Late Fees $ 9,863 $ 9,516 $ 28,954 $ 27,940
Interest 549 1,874 3,029 3,066
----------- ----------- ----------- ---------
Total Other Income $ 10,412 $ 11,390 $ 31,983 $ 31,006
----------- ----------- ----------- ---------
OTHER OPERATING EXPENSES
General and Administrative $ 8,437 $ 7,811 $ 26,481 $ 23,365
Depreciation 690 755 2,070 2,263
----------- ----------- ----------- ---------
Total Other Operating Expenses $ 9,127 $ 8,566 $ 28,551 $ 25,628
----------- ----------- ----------- ---------
<FN>
See accompanying notes and accountants' report.
</FN>
HOLIDAY-GULF HOMES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months ended For the nine months ended
September 30, September 30,
RESTATED RESTATED
1998 1997 1998 1997
(Unaudited) (Unaudited)
Other Net Income, on Non-Utility $ 1,285 $ 2,824 $ 3,432 $ 5,378
----------- ----------- ----------- ---------
Net Income Before Provision
For Income Taxes $ 17,259 $ 18,402 $ 45,368 $ 42,779
----------- ----------- ----------- ---------
Provision For Income Taxes $ 3,450 $ 3,750 $ 9,200 $ 8,900
----------- ----------- ----------- ---------
NET INCOME $ 13,809 $ 14,652 $ 36,168 $ 33,879
=========== =========== =========== =========
EARNINGS PER SHARE $ .007 $ .007 $ .018 $ .017
=========== =========== =========== =========
<FN>
See accompanying notes and accountants' report.
</FN>
</TABLE>
<TABLE>
HOLIDAY-GULF HOMES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1997 AND THE NINE MONTHS ENDED
SEPTEMBER 30, 1998
<CAPTION>
APPROPRIATED UNAPPROPRIATED TOTAL
COMMON STOCK PAID IN RETAINED RETAINED SHAREHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS EARNINGS EQUITY
<S> <C> <C> <C> <C> <C> <C>
Restated
December 31, 1996
(Audited) 1,903,853 $ 19,039 $ 214,352 $ 10,102 $ 49,426 $ 292,919
--------- --------- --------- ----------- ----------- -----------
Payment of 1997
Dividends (.05 Per
Share) - - (49,956) - (45,237) (95,193)
Net Income - - - - 45,237 45,237
--------- --------- --------- ----------- ----------- -----------
December 31, 1997
(Audited) 1,903,853 $ 19,039 $ 164,396 $ 10,102 $ 49,426 $ 242,963
--------- --------- --------- ----------- ----------- -----------
Reissuance of Previously
Unclaimed Dividends - - - (350) - (350)
Return of Unclaimed
1997 Dividends - - - 2,652 - 2,652
Payment of 1998
Dividends (.05 Per
Share) - - (59,025) - (36,168) (95,193)
Net Income
(Unaudited) - - - - 36,168 36,168
--------- --------- --------- ----------- ----------- -----------
September 30, 1998
(Unaudited) 1,903,853 $ 19,039 $ 105,371 $ 12,404 $ 49,426 $ 186,240
========= ========= ========= =========== =========== ===========
<FN>
See accompanying notes and accountants' report.
</FN>
</TABLE>
<TABLE>
HOLIDAY-GULF HOMES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
For the nine months ended
September 30,
RESTATED
1998 1997
(Unaudited)
<S> <C> <C>
Cash flows from operating activities
Net Income $ 36,168 $ 33,879
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and Amortization 8,075 8,003
Change in assets and liabilities
(Increase) decrease in
Receivables 2,393 (517)
Prepaid Assets 3,059 3,011
Deferred Tax Benefit 9,200 11,421
Increase (decrease) in
Accounts Payable 6,346 4,057
Accrued Expenses & Deferred Income (486) 127
---------- ----------
Net cash provided by operating activities $ 64,755 $ 59,981
---------- ----------
Cash flows from investing activities
Improvements to Utility Company Equipment $ (10,252) $ (10,013)
---------- ----------
Net cash used in investing activities $ (10,252) $ (10,013)
---------- ----------
Cash flows from financing activities
Payment of Dividends $ (95,193) $ (95,193)
Reissuance of Previously Unclaimed Dividends (350) -
Return of Unclaimed Dividends 2,652 -
---------- ----------
Net cash provided by (used) in financing activities $ (92,891) $ (95,193)
---------- ----------
Net increase (decrease) in cash $ (38,388) $ (45,225)
Cash at beginning of period 129,478 168,031
---------- ----------
Cash at end of period $ 91,090 $ 122,806
========== ==========
Supplementary Disclosures of Cash Flow Information
Interest Paid $ -0- $ -0-
Income Tax Paid $ -0- $ -0-
<FN>
See accompanying notes and accountant's report.
</FN>
</TABLE>
<PAGE>
HOLIDAY-GULF HOMES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(1) - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Organization--
The Company consists of two utility companies and a land development
company. These companies are located in Pasco County, Florida. The utility
companies generate revenues by selling water, garbage and streetlight
services. These companies bill customers on a monthly basis for these
services. The utility companies contract with outside parties to provide
the garbage services. The rates charged by the utility companies are set by
the Florida Public Service Commission.
The land development company owns an office building/warehouse rental
operation. There are no plans in the future to develop anything.
Principles of Consolidation--
The accompanying consolidated financial statements include the accounts
of the Company and its wholly owned subsidiaries. All significant
intercompany balances and transactions have been eliminated in consolidation.
Basis of Presentation--
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the three and
nine month period ended September 30, 1998 are not necessarily indicative of
the results that may be expected for the year ended December 31, 1998. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's annual report on Form 10-K for the
year ended December 31, 1997.
Recognition of Income from Utility Operations--
The majority of the Company's revenues are generated by two utility
companies. These companies recognize revenues on a monthly basis. The use
is based on actual meter readings by an outside independent contractor. The
independent contractor also provides services for other utility companies in
the area. The independent contractors fees are based on a set amount per
customer plus any additional repairs. Since the meter reading is not done on
the last day of the month, there is some unbilled revenue not recorded.
<PAGE>
HOLIDAY-GULF HOMES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(1) - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
Depreciation--
Depreciation included in the accompanying financial statements has been
provided by the straight-line method at rates calculated to amortize the cost
of the assets over their estimated useful lives as follows:
YEARS
Utility Plant and Equipment 5 - 40
Building and Improvements 5 - 30
Maintenance and repairs of property and equipment are charged to expense
as incurred, whereas renewals and betterments are capitalized. When
properties are replaced, retired, or otherwise disposed of, the cost and
related accumulated depreciation are removed from the accounts. Any gain or
loss is credited or charged to operations in the year of disposal.
Amortization--
The Contribution in Aide of Construction (CIAC) costs are being
amortized over a period of sixteen years using the straight-line method.
CIAC represents $1,325 received in 1995 from a utility customer to help
pay for the cost of the new asset.
Cash and Cash Equivalents--
For the purpose of the statement of cash flows, cash includes cash on
hand, cash in checking and money market accounts, and Certificates of
Deposit.The Company considers all certificates of deposit with a maturity of
one year or less as a current cash or cash equivalent.
Accounts Receivable--
The accounts receivable represent amounts due from customers for monthly
streetlight, garbage and water service. Based on managements review of
accounts receivable, no allowance for doubtful accounts is considered
necessary.
Concentration of Credit Risk--
Management does not believe a credit risk for accounts receivable exists
because the amounts are due from a large number of customers for very small
amounts, and past performance has shown the accounts receivable will be
collected.
<PAGE>
HOLIDAY-GULF HOMES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(1) - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
Deferred Income--
Deferred income represents monies prepaid by customers which have not
been earned.
Allocation of Dividends--
To the extent dividends were paid in excess of current years earnings
and profits, they have been allocated against paid in capital.
Income Taxes--
The Company and its subsidiaries file consolidated Federal and State
Income Tax Returns.
Deferred income taxes are provided on temporary differences between book
and tax income, arising primarily from the use of different methods of
depreciation, valuing inventory and providing an allowance for doubtful
accounts and notes receivable for financial statement purposes. Deferred
income tax benefits are recognized for operating losses, if available, to
offset future federal income taxes. An allowance is provided if it is more
likely than not that the Company will not realize the benefits of a deferred
tax asset.
Earnings Per Share--
Earnings per share of Common Stock is computed based upon weighted
average number of shares outstanding for the period (1,903,853 shares in 1997
and for the first nine months of 1998).
(2) - LONG-TERM DEBT:
There was no debt as of September 30, 1998 or December 31, 1997.
(3) - STOCK OPTION PLAN:
The Company has adopted a qualified stock option plan whereby options
may be granted to key employees to purchase a maximum 50,000 shares of the
Company's common stock at not less than 10% of the fair market value of the
shares at date of grant. The options are exercisable in installments of not
more than 20% of the shares covered thereby during any one-year period,
subject to the right of cumulation. The options expire five years from the
date of grant. No options have been granted under this plan.
<PAGE>
HOLIDAY-GULF HOMES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(4) - PROPERTY AND EQUIPMENT:
The property and equipment accounts consisted of the following at
September 30, 1998 and December 31, 1997:
September 30, December 31,
1998 1997
Land, Buildings, Office Equipment
and Furniture $ 75,064 $ 73,864
Water, Plant and Equipment 311,075 307,307
CIAC, Net of Amortization (1,056) (1,077)
------------ -----------
Total Property and Equipment $ 385,083 $ 380,094
Less: Accumulated Depreciation (292,241) (289,593)
------------ -----------
Net Property and Equipment $ 92,842 $ 90,501
============ ===========
(5) - RELATED PARTY TRANSACTIONS:
There were no related party transactions during the nine months ended
September 30, 1998 and 1997.
(6) - LEASE AND LEASE COMMITMENTS:
The Company is leasing office space in Knollwood Plaza under a three-
year lease expiring in October, 1999. The lease is $450 per month. The rent
paid as of September 30, 1998 and 1997 was $4,050, respectively.
The following is a schedule of future minimum lease payments:
December 31, 1998 $ 1,350
December 31, 1999 4,500
--------
Total $ 5,850
========
The Company owns an office/warehouse rental facility consisting of three
tenants. Two have month to month leases. The other lease is a five-year lease
which was renewed in June, 1995.
<PAGE>
HOLIDAY-GULF HOMES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(6) - LEASES AND LEASE COMMITMENTS: (CONTINUED)
The minimum payments under this lease are as follows:
1998 $ 8,679
1999 34,716
2000 17,358
2001 -0-
2002 and thereafter -0-
--------
Total Due $ 60,753
========
The rental real estate held for lease is located in New Port Richey
Florida. The companies investment in this rental property is as follows at
September 30, 1998:
Warehouse and Office Building $ 29,323
Improvements 42,215
--------
$ 71,538
Less: Accumulated Depreciation (50,553)
--------
$ 20,985
========
(7) - INCOME TAXES:
Deferred income taxes (benefits) are provided for certain income and
expenses which are recognized in different periods for tax and financial
reporting purposes. Sources of temporary differences and the resulting tax
assets and liabilities are as follows:
September 30, December 31,
1998 1997
Net Operating Loss Carryforwards $ 198,540 $ 243,831
--------- ----------
Applicable Tax Rate
(15% Federal, 5.5% State) $ 38,700 $ 49,700
Valuation Allowance (21,900) (23,700)
--------- ----------
Amount Per Balance Sheet $ 16,800 $ 26,000
========= ==========
<PAGE>
HOLIDAY-GULF HOMES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(7) - INCOME TAXES: (CONTINUED)
The provision (benefit) for income taxes consist of the following:
September 30, December 31,
1998 1997
Current $ -0- $ -0-
Deferred $ 9,200 $ 11,900
Income Tax Expense Consisted of the following:
September 30, December 31,
1998 1997
Provision for income taxes:
Federal Income Tax $ 6,800 $ 9,000
State Income Tax 2,400 2,900
---------- ---------
$ 9,200 $ 11,900
========== =========
The reconciliation of income tax computed at the U.S. federal statutory
tax rates (34%) to income tax expense for the nine months ended September 30,
1998 and the year ended December 31, 1997 is:
September 30, 1998 December 31, 1997
AMOUNT PERCENT AMOUNT PERCENT
Tax at U.S.
Statutory Rates $ 15,425 34.00 $ 19,427 34.00
Surtax exemption (8,599) (18.95) (10,829) (18.95)
State income tax-
net of federal
tax benefits 1,584 3.49 2,900 5.08
Permanent differences
and other 790 1.74 402 .70
-------- ------ -------- ------
$ 9,200 20.28 $ 11,900 20.83
======== ====== ======== ======
<PAGE>
HOLIDAY-GULF HOMES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(7) - INCOME TAXES: (CONTINUED)
Operating Loss Carryforwards--
The Company has loss carryforwards at December 31, 1997 totaling
$243,831 that may be offset against future taxable income. If not used, the
carryforward will expire as follows:
Year Year
Originated Expired
1983 1998 $ 44,522
1984 1999 171,592
1991 2006 27,717
-----------
Total December 31, 1997 $ 243,831
Less Year To Date 1998 Taxable Net Income 45,291
-----------
Remaining Loss $ 198,540
===========
(8) - PRIOR PERIOD ADJUSTMENT FOR CHANGE IN ACCOUNTING FOR INCOME TAXES:
September 30,
1997
Net Income as Previously Reported $ 42,779
Adjustment for Deferred Tax Benefit (8,900)
-----------
Net Income Adjusted $ 33,879
===========
Earnings Per Share Amounts:
As Previously Reported .023
Effect of Retroactive Change (.006)
-----------
As Adjusted .017
===========
(9) - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS:
The carrying value of cash and cash equivalents approximate fair values.
<PAGE>
<REVIEW-REPORT>
ACCOUNTANTS' REPORT
To the Board of Directors
Holiday-Gulf Homes, Inc. and Subsidiaries
Holiday, Florida
We have reviewed the accompanying consolidated condensed balance sheets
of Holiday-Gulf Homes, Inc. (a Minnesota corporation) and subsidiaries as of
September 30, 1998 and the related consolidated condensed statements of
operations for the three-month and nine-month periods ended September 30, 1998
and 1997, and the consolidated condensed statements of shareholders' equity
for the period ended September 30, 1998 and the consolidated condensed
statement of cash flows for the nine-month periods ended September 30, 1998
and 1997. These consolidated condensed financial statements are the
responsibility of the management of Holiday Gulf Homes, Inc..
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the consolidated
condensed financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying September 30, 1998 consolidated condensed
financial statements in order for them to be in conformity with generally
accepted accounting principles.
The financial statements for the year ended December 31, 1997, were
audited by us, and we expressed an unqualified opinion on them in our report
dated January 9, 1998, but we have not performed any auditing procedures since
that date.
ARNOLD, MCMULLEN AND CO., P.A.
Ocala, Florida
October 11, 1998
</REVIEW-REPORT>
<PAGE>
HOLIDAY-GULF HOMES, INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations:
RESULTS OF OPERATIONS:
Utility operating revenues increased 2.83% in the third quarter of 1998
to $72,104 up $1,990 over the third quarter of 1997. For the first nine
months utility operating revenues of $211,447 were $617 or .29% higher than
the same period in 1997. The increase in revenues for the third quarter and
year to date, are due primarily to a increase in water, garbage and
streetlight usage.
The gross profit percentage for the third quarter of 1998 compared to
the same period of the prior year is due to the stability in the number of
customers. However, the year to date gross profit percentage increased by
1.84% to 53.92% compared to 52.08% for the three quarters ended September 30,
1997. This increase was a result of Management's renegotiation of the
Company's garbage collection contract.
General and administrative expenses have remained stable, due to
management controlling costs, as a percentage of utility revenues. General and
administrative expenses as a percentage of utility revenues were approximately
26.72% and 31.25% for the three and nine month periods ended September 30,
1998 as compared to 27.38% and 31.62% for the comparable periods of 1997.
Income from other operations decreased 8.58% in the third quarter of
1998 to $10,412, down $978 over the third quarter of 1997. For the first nine
months income from other operations of $31,983 was $11,390, or 3.15% higher
than the same period in 1997. The increase in revenues is due primarily to
an increase in rental income.
General and administrative expenses from other operations have
increased as a percentage of income from other operations due to office
complex warehouse expenses for repairs and maintenance and electric. General
and administrative expenses from other operations as a percentage of income
from other operations were approximately 81.03% and 82.80% for the three and
nine month periods ended September 30, 1998 as compared to 68.58% and 75.36%
for the comparable periods of 1997.
Net income decreased 5.75% in the third quarter of 1998 to $13,809
down $843, over the third quarter of 1997. For the first nine months, net
income of $36,168 was $2,289 or 6.76% higher than the same period in 1997. The
decrease in net income in the third quarter was due primarily to the increase
in general and administrative expenses of the non-utility operations. The
increase in net income for the nine months is primarily attributable to the
increase in gross profit resulting from the renegotiated garbage contract
described above.
<PAGE>
HOLIDAY-GULF HOMES, INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations: (Continued)
LIQUIDITY AND SOURCES OF CAPITAL:
The Company does not anticipate any material capital expenditures in
the near future for the utility companies, therefore, there should not be any
liquidity problem.
<PAGE>
PART II. OTHER INFORMATION
HOLIDAY-GULF HOMES, INC. AND SUBSIDIARIES
Item 1. Legal Proceedings.
There were no reportable events for the quarter ended September 30,
1998 nor have there been any material developments during the quarter.
Item 2. Changes in Securities.
The rights of the holders of registered securities have not been
materially modified, limited or qualified by the issuance or modification of
any class of securities.
There are no working capital restrictions or other limitations
upon payment of dividends.
Item 3. Defaults upon Senior Securities.
There have been no defaults in the payment of principal, interest
or any other material liabilities.
Item 4. Submission of Matters to a Vote of Security Holders.
(a) Annual Meeting of stockholders was held on June 27, 1998.
(b) Elected directors and executive officers were:
Linda Emerick - President and Director
Thomas L. Burkett - Vice President and Director
Ronnie L. Mohr - Secretary and Director
Eileen Falla - Treasurer
(c) Other matters voted upon and the number of affirmative votes and
negative votes cast with respect to each such matter.
None
Item 5. Other Information.
The Company declared and distributed a dividend of $.05 per share
in January, 1997. The declared dividend required the use of $95,193 cash.
The Company declared a dividend of $.05 per share in June, 1998.
The dividend was distributed in July, 1998 and required the use of $95,193
cash.
<PAGE>
PART II. OTHER INFORMATION, CONTINUED
HOLIDAY-GULF HOMES, INC. AND SUBSIDIARIES
Item 6. Exhibits and Reports on Form 8-K.
DESCRIPTION
(a) Exhibits Ex-27
(b) Report on Form 8-K None
<PAGE>
SIGNATURES
HOLIDAY-GULF HOMES, INC. AND SUBSIDIARIES
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.
HOLIDAY-GULF HOMES, INC.
(Registrant)
DATE: November 10, 1998 ___________________________________
LINDA EMERICK, PRESIDENT -
PRINCIPAL FINANCIAL OFFICER
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<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 70,024
<OTHER-PROPERTY-AND-INVEST> 22,818
<TOTAL-CURRENT-ASSETS> 99,945
<TOTAL-DEFERRED-CHARGES> 16,800
<OTHER-ASSETS> 2,332
<TOTAL-ASSETS> 211,919
<COMMON> 19,039
<CAPITAL-SURPLUS-PAID-IN> 105,371
<RETAINED-EARNINGS> 61,830
<TOTAL-COMMON-STOCKHOLDERS-EQ> 186,240
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<LONG-TERM-DEBT-NET> 0
<SHORT-TERM-NOTES> 0
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<OTHER-ITEMS-CAPITAL-AND-LIAB> 25,679
<TOT-CAPITALIZATION-AND-LIAB> 211,919
<GROSS-OPERATING-REVENUE> 211,447
<INCOME-TAX-EXPENSE> 9,200
<OTHER-OPERATING-EXPENSES> 72,085
<TOTAL-OPERATING-EXPENSES> 169,511
<OPERATING-INCOME-LOSS> 41,936
<OTHER-INCOME-NET> 3,432
<INCOME-BEFORE-INTEREST-EXPEN> 36,168
<TOTAL-INTEREST-EXPENSE> 0
<NET-INCOME> 36,168
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<EARNINGS-AVAILABLE-FOR-COMM> 36,168
<COMMON-STOCK-DIVIDENDS> 95,193
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