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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1995
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: 0-17969
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SIERRA TUCSON COMPANIES, INC.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 86-0589712
------------------------------- -----------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
16500 N. Lago Del Oro Parkway, Tucson, Arizona 85739
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(Address of Principal Executive Offices) (Zip Code)
(520) 624-4000
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(Registrant's Telephone Number, including Area Code)
No Changes
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(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. /X/ YES / / NO
On August 1, 1995, there were 8,546,884 shares of the registrant's Common Stock
outstanding.
Reference is made to the listing beginning on page 12 of all exhibits filed as
a part of this report.
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SIERRA TUCSON COMPANIES, INC.
FORM 10-Q
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION PAGE
----
<S> <C> <C>
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of June 30, 1995 (unaudited)
and December 31, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Unaudited Condensed Consolidated Statements of Operations for the three and
six month periods ended June 30, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . 4
Unaudited Condensed Consolidated Statements of Cash Flows for the six
month periods ended June 30, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . 5
Unaudited Notes to the Condensed Consolidated Financial Statements . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
PART II - OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . 12
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
2
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SIERRA TUCSON COMPANIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
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(Unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash and investments . . . . . . . . . . . . . . . . . . $11,543,609 $11,741,278
Accounts receivable, net . . . . . . . . . . . . . . . . 735,913 1,115,941
Accounts receivable in settlement . . . . . . . . . . . . -- 1,667,055
Deferred income tax benefit . . . . . . . . . . . . . . . 315,000 315,000
Income taxes receivable . . . . . . . . . . . . . . . . -- 4,507,575
Prepaid and other assets . . . . . . . . . . . . . . . . 594,721 563,210
----------- -----------
Total current assets . . . . . . . . . . . . . . . . . 13,189,243 19,910,059
Property and equipment, net . . . . . . . . . . . . . . . 22,086,809 22,075,192
Long-term investments . . . . . . . . . . . . . . . . . . . 15,204,558 8,799,363
Long-term receivables, net . . . . . . . . . . . . . . . . 364,331 185,277
Other assets and deposits . . . . . . . . . . . . . . . 334,795 1,986
----------- -----------
Total assets . . . . . . . . . . . . . . . . . . . . . $51,179,736 $50,971,877
=========== ===========
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable and accrued liabilities . . . . . . . . $ 3,096,617 $ 1,603,689
Deposits . . . . . . . . . . . . . . . . . . . . . . . . 310,806 231,175
----------- -----------
Total current liabilities . . . . . . . . . . . . . . 3,407,423 1,834,864
Long-term debt and financing obligation . . . . . . . . . . 1,097,016 1,181,714
----------- -----------
Total liabilities . . . . . . . . . . . . . . . . . . . 4,504,439 3,016,578
----------- -----------
Commitments and contingent liabilities . . . . . . . . . . -- --
Stockholders' Equity:
Common stock . . . . . . . . . . . . . . . . . . . . . . 85,469 84,969
Additional paid-in capital . . . . . . . . . . . . . . . 43,418,677 43,262,927
Retained earnings . . . . . . . . . . . . . . . . . . . . 3,349,182 5,006,457
Accumulated unrealized investment losses . . . . . . . . (178,031) (399,054)
----------- -----------
Total stockholders' equity . . . . . . . . . . . . . . 46,675,297 47,955,299
----------- -----------
Total liabilities and stockholders' equity . . . . . . $51,179,736 $50,971,877
=========== ===========
</TABLE>
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SIERRA TUCSON COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------- ---------------------------
1995 1994 1995 1994
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<S> <C> <C> <C> <C>
Revenue:
Net revenue - Sierra Tucson, Inc. . . . . . . $ 2,765,443 $2,783,605 $ 5,721,299 $ 5,224,138
Net revenue - Onsite at Sierra Tucson, Inc. . . 329,653 -- 641,782 --
Other revenue . . . . . . . . . . . . . . . . 711,226 366,504 1,377,880 737,619
----------- ---------- ----------- -----------
Total revenue . . . . . . . . . . . . . 3,806,322 3,150,109 7,740,961 5,961,757
----------- ---------- ----------- -----------
Operating expenses:
Salaries and related benefits . . . . . . . . 1,878,356 1,828,090 3,830,695 3,925,663
General and administrative . . . . . . . . . . 1,930,539 1,775,685 3,906,533 3,457,675
Business expansion costs . . . . . . . . . . . 828,326 -- 828,326 --
Interest expense . . . . . . . . . . . . . . . 22,105 3,995 49,841 7,798
Depreciation and amortization . . . . . . . . 395,496 369,438 782,841 718,457
----------- ---------- ----------- -----------
Total operating expenses . . . . . . . . 5,054,822 3,977,208 9,398,236 8,109,593
----------- ---------- ----------- -----------
Loss before income tax benefit . . . . . . . . . (1,248,500) (827,099) (1,657,275) (2,147,836)
Income tax benefit . . . . . . . . . . . . . . . -- 195,254 -- 712,558
----------- ---------- ----------- -----------
Net loss . . . . . . . . . . . . . . . . . . . . $(1,248,500) $ (631,845) $(1,657,275) $(1,435,278)
=========== ========== =========== ===========
Weighted average shares of common
stock outstanding . . . . . . . . . . . . . . 8,546,884 8,496,884 8,543,551 8,496,884
=========== ========== =========== ===========
Net loss per share of common stock . . . . . . . $ (.15) $ (.07) $ (.19) $ (.17)
=========== ========== =========== ===========
</TABLE>
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SIERRA TUCSON COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-------------------------------
1995 1994
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<S> <C> <C>
Cash flows from operating activities:
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . $ (1,657,275) $(1,435,278)
Adjustments to reconcile net loss to cash provided
by (used in) operating activities:
Depreciation and amortization . . . . . . . . . . . . . . 782,841 718,457
Provision for bad debts . . . . . . . . . . . . . . . . . 122,392 420,679
Changes in operating assets and liabilities net of effects
from acquisitions:
Decrease (increase) in assets:
Accounts receivable and long-term receivables . . . . . . 1,745,636 1,196,779
Prepaid and other assets . . . . . . . . . . . . . . . . 2,570 6,344
Increase (decrease) in liabilities:
Accounts payable and accrued liabilities . . . . . . . . 1,471,626 (439,446)
Reserve for litigation charges . . . . . . . . . . . . . -- (5,673,268)
Income taxes receivable . . . . . . . . . . . . . . . . . 4,507,575 (591,655)
------------ -----------
Net cash provided by (used in) operating activities . . . . . 6,975,365 (5,797,388)
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Investing activities:
Purchases of property and equipment, net . . . . . . . . . (763,959) (498,619)
Business acquisitions, net of cash acquired . . . . . . . . (129,687) --
Purchase of long-term investments . . . . . . . . . . . . . (12,237,563) (2,923,459)
Sale of long-term investments . . . . . . . . . . . . . . . 6,053,391 4,343,969
------------ -----------
Net cash provided by (used in) investing activities . . . . . (7,077,818) 921,891
------------ -----------
Financing activities:
Reduction of long-term debt . . . . . . . . . . . . . . . . (95,216) (3,934)
------------ -----------
Net cash used in financing activities . . . . . . . . . . . . (95,216) (3,934)
------------ -----------
Net decrease in cash and short-term investments . . . . . . . (197,669) (4,879,431)
Cash and short-term investments at beginning of period . . . 11,741,278 13,990,245
------------ -----------
Cash and short-term investments at end of period . . . . . . $ 11,543,609 $ 9,110,814
============ ===========
</TABLE>
5
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SIERRA TUCSON COMPANIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The interim unaudited condensed consolidated financial statements presented
herein should be read in conjunction with the Consolidated Financial Statements
and Notes thereto incorporated in Sierra Tucson Companies, Inc.'s Annual Report
on Form 10-K for the year ended December 31, 1994. The interim unaudited
condensed consolidated financial statements as of June 30, 1995 and for the
three and six month periods ended June 30, 1995 and 1994 have been prepared in
accordance with generally accepted accounting principles for interim financial
information and in accordance with the instructions to Form 10-Q and Article 10
of Regulation S-X. Accordingly, they do not include all of the information and
notes required by generally accepted accounting principles for complete
financial statements, but reflect, in the opinion of management, all
adjustments (consisting of normal recurring adjustments) considered necessary
to fairly present the results for such periods. Operating results for the
three and six-month periods ended June 30, 1995 are not necessarily indicative
of the results that may be expected for the year ended December 31, 1995.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
General
Sierra Tucson Companies, Inc. (the "Company") conducts its operations through
separate operating divisions and wholly owned subsidiaries. A subsidiary,
Sierra Tucson, Inc. ("STI"), operates an inpatient program business
specializing in treating substance abuse and a broad range of mental health
disorders, including eating disorders. Onsite at Sierra Tucson, Inc.
("Onsite"), the Arizona subsidiary formed to succeed Onsite Training and
Consulting, Inc., a Minnesota corporation acquired in January 1995, offers
short-term therapeutic workshops. Each line of business offers safe, expertly
staffed treatment experiences; integrates philosophies and methodologies from
psychological, family systems and self-help approaches into comprehensive and
effective treatment experiences while emphasizing a nonjudgmental, non-blaming
approach to the healing process which encourages patients and clients to
recognize and break through their denial in an atmosphere conducive to
long-term recovery.
As announced in April 1995, the Company is expanding its business to include a
new division called Miraval(TM). Miraval will be a luxury wellness facility
which educates guests on "life-balancing" techniques. The Miraval experience
will provide a leisure and educational vacation alternative in a resort-like
setting. Personal guides will assist guests in choosing and designing their
own personally-tailored programs of stress management, self discovery and
recreational activities. Miraval is expected to commence operations during the
fourth quarter of 1995.
The following discussion and analysis relates to factors which have affected
the consolidated financial condition and results of operations of the Company
for the three and six month periods ended June 30, 1995 and 1994. Reference
should also be made to the Company's unaudited condensed consolidated financial
statements and related notes included elsewhere in this document.
7
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Results of Operations
Three Month Period Ended June 30, 1995 Compared to the Three Month Period Ended
June 30, 1994
The significant changes in results of operations and cash flow for the
three-month period ended June 30, 1995 compared to the same period in 1994 are
discussed below. Total operating expenses, the loss before income tax benefit,
the net loss and the net loss per share of common stock exclude approximately
$828,000 in 1995 business expansion costs for purposes of this presentation.
<TABLE>
<CAPTION>
Three Months Ended
June 30,
-------------------------------------
1995 1994 Change
---------- ---------- ------
<S> <C> <C> <C>
FINANCIAL RESULTS:
Total revenue . . . . . . . . . . . . . . . . . . . . . $3,806,322 $3,150,109 20.8%
Total operating expense . . . . . . . . . . . . . . . . 4,226,496 3,977,208 6.3
Loss before income tax benefit . . . . . . . . . . . . (420,174) (827,099) 49.2
Net loss . . . . . . . . . . . . . . . . . . . . . . . (420,174) (631,845) 33.5
Loss per share of common stock . . . . . . . . . . . . (.05) (.07) 28.6
Net cash provided by (used in) operating activities . . 5,683,499 (233,540) --
OPERATING DATA:
Patient days - Sierra Tucson, Inc. . . . . . . . . . . 4,307 4,427 2.7
Average daily census - Sierra Tucson, Inc. . . . . . . 47 49 4.1
Participant days - Onsite at Sierra Tucson, Inc. . . . 1,843 -- --
Average daily census - Onsite at Sierra Tucson, Inc. . 20 -- --
Combined patient and participant days . . . . . . . . . 6,150 4,427 38.9
Combined average daily census . . . . . . . . . . . . . 68 49 38.8
</TABLE>
The net loss decreased approximately $212,000 and net cash provided by
operating activities increased approximately $5.9 million for the three-month
period ended June 30, 1995 compared to the same period in 1994. The
improvement in the net loss is primarily related to increased earnings on the
Company's long-term investments and an adjustment to the Company's provision
for bad debts to more accurately reflect the Company's experience. The
increase in net cash provided by operating activities is primarily attributable
to the Company receiving an income tax refund of approximately $5.9 million in
April 1995.
Total revenue increased approximately $660,000 to approximately $3.8 million
for the three-month period ended June 30, 1995 compared to the same period in
1994. The changes in total revenue were primarily attributable to the net
revenue related to Onsite and higher investment income resulting from the
combination of higher investment yields, an increase in the average investment
balance of approximately $5.9 million (related to the cash received from an
income tax refund) and the recognition of a gain resulting from the sale of
certain of the Company's long-term investments.
Excluding approximately $828,000 in 1995 business expansion costs, total
operating expense increased approximately $250,000 to approximately $4.2
million for the three-month period ended June 30, 1995 compared to the same
period in 1994. The significant components of this increase are discussed in
the following two paragraphs.
Although salaries and related benefits increased approximately $50,000 due to
additional staffing required as a result of the Onsite acquisition, they have
declined as a percentage of total revenues primarily as a result of staffing
changes made to correspond to STI's current census levels. Salaries and
related benefits were approximately 49% of total revenue for the three-month
period ended June 30, 1995 compared to 58% for the comparable period of 1994.
General and administrative expenses increased approximately $155,000 for the
three-month period ended June 30, 1995 compared to the same period in 1994
primarily due to an increase in contract labor, a portion of which is
attributable to Onsite; an increase in professional fees; an increase in
advertising costs
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resulting from intensified marketing efforts for STI and an increase in
operating supplies, a majority of which are attributable to Onsite. These
increases were somewhat offset by a decrease in the provision for bad debts to
more accurately reflect the Company's experience and a decrease in consulting
costs. Although there was an overall increase in these costs, general and
administrative expenses have continued to decline as a percentage of total
revenues as a result of the Company's cost control programs. General and
Administrative expenses as a percentage of total revenues were approximately
51% for the three-month period ended June 30, 1995 compared to 56% for the
comparable period of 1994.
The Company incurred approximately $828,000 in business expansion costs during
the three-month period ended June 30, 1995. These costs are related to the
Company expanding its business to include its new Miraval division. Miraval
will be a luxury wellness facility which educates guests on "life-balancing"
techniques. The Miraval experience will provide a leisure and educational
vacation alternative in a resort-like setting. Personal guides will assist
guests in choosing and designing their own personally- tailored programs of
stress management, self discovery and recreational activities. Approximately
$432,000 of these expenditures are related to pilot program research and
development activities. Specific areas of expenditures under the pilot program
include labor related costs, operating supplies, travel and entertainment,
repairs and maintenance, utilities and legal expenditures. Subsequent to the
completion of the pilot program research and development activities, the
Company made additional expenditures of approximately $396,000 for the
continued development and promotion of Miraval. Specific areas of expenditures
include advertising, labor related costs and miscellaneous expenditures.
Additional expenditures will be incurred during the third and fourth quarters
of 1995 but at a significantly higher rate than that which occurred during the
first half of 1995.
Six Month Period Ended June 30, 1995 Compared to the Six Month Period Ended
June 30, 1994
The significant changes in results of operations and cash flows for the
six-month period ended June 30, 1995 compared to the same period of 1994 are
discussed below. Total operating expenses, the loss before income tax benefit,
the net loss and the net loss per share of common stock exclude approximately
$828,000 in 1995 business expansion costs for purposes of this presentation.
<TABLE>
<CAPTION>
Six Months Ended
June 30,
------------------------------------
1995 1994 Change
---------- ---------- ------
<S> <C> <C> <C>
FINANCIAL RESULTS:
Total revenue . . . . . . . . . . . . . . . . . . . . . $7,740,961 $5,961,757 29.8%
Total operating expense . . . . . . . . . . . . . . . . 8,569,910 8,109,593 5.7
Loss before income tax benefit . . . . . . . . . . . . (828,949) (2,147,836) 61.4
Net loss . . . . . . . . . . . . . . . . . . . . . . . (828,949) (1,435,278) 42.2
Loss per share of common stock . . . . . . . . . . . . (.10) (.17) 41.2
Net cash provided by (used in) operating activities . . 6,975,365 (5,797,388) --
OPERATING DATA:
Patient days - Sierra Tucson, Inc. . . . . . . . . . . 8,916 8,429 5.8
Average daily census - Sierra Tucson, Inc. . . . . . . 49 47 4.3
Participant days - Onsite at Sierra Tucson, Inc. . . . 3,725 -- --
Average daily census - Onsite at Sierra Tucson, Inc. . 21 -- --
Combined patient and participant days . . . . . . . . . 12,641 8,429 50.0
Combined average daily census . . . . . . . . . . . . . 70 47 48.9
</TABLE>
The net loss decreased approximately $606,000 and net cash provided by
operating activities increased approximately $12.8 million for the six-month
period ended June 30, 1995 compared to the same period in 1994. The
improvement in the net loss is primarily related to a higher census level at
STI and increased
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earnings on the Company's long-term investments. The increase in net cash
provided by operating activities is primarily attributable to the Company
receiving an income tax refund of approximately $5.9 million in April 1995 and
the payment of a legal settlement of approximately $5.5 million in the first
half of 1994.
Total revenue increased approximately $1,780,000 to approximately $7.7 million
for the six-month period ended June 30, 1995 compared to the same period in
1994. The changes in total revenue were primarily attributable to the net
revenue related to Onsite; an increase in investment income resulting from the
combination of higher investment yields, an increase in the average investment
balance of approximately $4.0 million and the recognition of a gain resulting
from the sale of certain of the Company's long-term investments; an increase in
miscellaneous income related to a negotiated settlement of disputed receivables
for the reimbursement of collection costs; and an increase in patient revenue
resulting from a higher census level at STI.
Excluding approximately $828,000 in 1995 business expansion costs, total
operating expenses increased approximately $460,000 to approximately $8.6
million for the six-month period ended June 30, 1995 compared to the same
period in 1994. The significant components of this increase are discussed in
the following two paragraphs.
Salaries and related benefits decreased approximately $95,000 for the six-month
period ended June 30, 1995 compared to the same period in 1994. This decrease
is primarily due to staffing changes made to correspond STI's current census
levels and was somewhat offset by the additional staffing required as a result
of the Onsite acquisition. Salaries and related benefits were approximately
49% of total revenue for the six-month period ended June 30, 1995 compared to
66% for the comparable period of 1994.
General and administrative expenses increased approximately $450,000 for the
six-month period ended June 30, 1995 compared to the same period in 1994
primarily due to an increase in contract labor, a portion of which is
attributable to Onsite; an increase in professional fees; an increase in
advertising costs resulting from intensified marketing efforts for STI and an
increase in operating supplies, a majority of which are attributable to Onsite.
These increases were somewhat offset by a decrease in the provision for bad
debts to more accurately reflect the Company's experience and a decrease in
consulting costs. Although there was an overall increase in these costs,
general and administrative expenses have continued to decline as a percentage
of total revenues as a result of the Company's cost control programs. General
and Administrative expenses as a percentage of total revenues were
approximately 50% for the three-month period ended June 30, 1995 compared to
58% for the comparable period of 1994.
The Company incurred approximately $828,000 in business expansion costs during
the six-month period ended June 30, 1995. See page 8 of this document for a
detailed discussion of these costs.
Liquidity & Capital Resources
The Company's sources of liquidity and capital resources historically have been
net cash provided by operating activities, funds available from the liquidation
of short and long-term investments and proceeds from offerings of equity
securities. In the past, these sources have been sufficient to meet the needs
and finance the growth of the Company's business. Net cash provided by
operating activities has been primarily affected by census levels and net
revenue per patient day. The Company's growth will be dependent upon success
in increasing census levels and net revenue per patient day as well as its
ability in attracting customers for Miraval.
Management continues to concentrate on managing existing cash reserves and the
Company's overall liquidity position. At June 30, 1995, the Company had a
working capital ratio of 3.9:1 and working capital of $9.8 million and the
Company's total cash and investments (including short and long-term
investments) were approximately $26.7 million. This represents an increase of
approximately $6.2 million, or 30% when compared to total cash and investments
at December 31, 1994. This increase is primarily attributable to
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the receipt of a tax refund of approximately $5.9 million in the second quarter
of 1995. At June 30, 1995, the Company had a strong liquidity position with
cash and investments which comprised 52% of the Company's total assets.
In April 1995, the Company announced plans for an initial $5.5 million capital
expenditure commitment for the establishment of Miraval. In June 1995 this
commitment for capital expenditures was increased to $10.0 million. While the
Company anticipates additional significant pre-opening costs in connection with
the commencement of operations which will be funded entirely from the Company's
existing cash reserves, it is expected that available cash and investments will
be sufficient to meet the Company's existing normal operating requirements as
well as research and development into other new business opportunities over the
near term.
STI and its patients continue to experience significant pressure from third
party payors and managed care organizations to restrict access to and payment
for treatment services offered. The Company expects this trend to continue
throughout 1995. The results of the three and six-month periods ended June 30,
1995 do however, reflect a positive trend to attract and retain a higher
percentage of cash paying customers. For the six-month period ended June 30,
1995 approximately 65% of patient revenue was derived from individual patient
payments, while only 35% of patient revenue was derived from insurance
companies and other third party payors.
Business Outlook
The operating results for the three-month period ended June 30, 1995 reflect a
relatively stable patient census level compared to the same period in 1994,
while the operating results for the six-month period ended June 30, 1995
reflect an increase of 6% in patient census level when compared to the same
period in 1994. Management's continued efforts to maintain expense controls is
reflected in the operating results for both periods. Revenue growth and expense
controls, including significant improvements in operational efficiencies, have
resulted in limiting the Company's net loss (excluding business expansion
costs) for the quarter and six months ended June 30, 1995.
In May 1995, construction activities related to Miraval commenced. As a
result, certain of the Company's underutilized facilities are being renovated
and expanded to accommodate the lodging requirements and the programs and
activities offered by Miraval. Because of the nature of the construction
activities that are currently underway, certain existing assets and components
of existing assets will be retired. Consequently, the Company will take a
charge in the third quarter of 1995 when these retirements take place. The
Company is currently analyzing these transactions and is unable to accurately
estimate the amount of the charge until further work is completed on the
Miraval property.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is involved in various litigation and administrative proceedings
arising in the normal course of business. In the opinion of management, any
liabilities that may result from these claims will not, individually or in the
aggregate, have a material adverse effect on the Company's financial position
or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's annual meeting of Stockholders was held on May 26, 1995 when
William T. O'Donnell, Jr., and John H. Schmitz were re-elected for three-year
terms as directors. Joseph R. Cruse, Ronald E. Robison and Neil E. Jenkins
continued their terms as directors. In addition to the re-election of
directors, the Company's shareholders also approved an amendment to the 1992
Stock Option Plan with 4,987,924 shareholders voting for the amendment,
1,299,355 shareholders voting against the amendment, 44,514
shareholder abstentions and 1,451,733 broker non-votes. The Company's
shareholders also selected Ernst & Young, LLP as the Company's independent
auditors for the fiscal year ended December 31, 1995.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
NONE
(b) Reports on Form 8-K
12
<PAGE> 13
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.
SIERRA TUCSON COMPANIES, INC.
Registrant
DATE: August 11, 1995 BY: /s/ JOHN H. SCHMITZ
-------------------------------------
John H. Schmitz,
President and Chief Executive Officer
DATE: August 11, 1995 BY: /s/ JULIE S. McBRIDE
-------------------------------------
Julie S. McBride
Director of Accounting
(Principal Accounting Officer)
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1995 AND THE
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE AND
SIX-MONTH PERIODS ENDED JUNE 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 725,838
<SECURITIES> 10,817,771
<RECEIVABLES> 1,270,088
<ALLOWANCES> (534,175)
<INVENTORY> 148,018
<CURRENT-ASSETS> 13,189,243
<PP&E> 29,714,069
<DEPRECIATION> (7,627,260)
<TOTAL-ASSETS> 51,179,736
<CURRENT-LIABILITIES> 3,407,423
<BONDS> 1,097,016
<COMMON> 85,469
0
0
<OTHER-SE> 46,589,828
<TOTAL-LIABILITY-AND-EQUITY> 51,179,736
<SALES> 6,363,081
<TOTAL-REVENUES> 7,740,961
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 9,226,003
<LOSS-PROVISION> 122,392
<INTEREST-EXPENSE> 49,841
<INCOME-PRETAX> (1,657,275)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,657,275)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,657,275)
<EPS-PRIMARY> (.19)
<EPS-DILUTED> (.19)
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