U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission file number 0-22132
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BUCKHEAD AMERICA CORPORATION
- --------------------------------------------------------------------------------
(Exact name of small business issuer as
specified in its charter)
DELAWARE 58-2023732
- ------------------------------------ ------------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization
4243 DUNWOODY CLUB DRIVE, SUITE 200, ATLANTA, GEORGIA 30350
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(770) 393-2662
- --------------------------------------------------------------------------------
(Issuer's telephone number)
N/A
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: October 31, 1996
------------------
Common stock, par value $.01 - 1,771,127 shares outstanding
-----------------------------------------------------------
Transitional Small Business Disclosure Format (Check one):
Yes No X
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1
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
BUCKHEAD AMERICA CORPORATION
AND SUBSIDIARIES
Consolidated Condensed Financial Statements
September 30, 1996 and 1995
(Unaudited)
2
<PAGE>
BUCKHEAD AMERICA CORPORATION
AND SUBSIDIARIES
Consolidated Condensed Balance Sheet
September 30, 1996
(Unaudited)
Assets
------
Current assets:
Cash and cash equivalents, including
restricted cash of $1,547,983 $ 2,418,924
Short-term investments 670,800
Current portions of notes receivable 451,676
Other current assets 958,308
------------
Total current assets 4,499,708
Noncurrent portions of notes receivable 680,643
Property and equipment, at cost, net of
accumulated depreciation 24,371,880
Other assets 3,060,059
------------
Total assets $ 32,612,290
============
Liabilities and Shareholders' Equity
------------------------------------
Current liabilities:
Accounts payable and accrued expenses $ 1,268,178
Current portions of notes payable 2,228,104
------------
Total current liabilities 3,496,282
Noncurrent portions of notes payable 16,577,383
------------
Total liabilities 20,073,665
------------
Minority interest in partnership 603,994
Shareholders' equity:
Common stock; par value $.01; 3,000,000
shares authorized; 1,817,977 shares issued
and 1,771,127 shares outstanding 18,180
Additional paid-in capital 6,288,574
Retained earnings 5,985,770
Unrealized gain on investment securities 31,928
Treasury stock (46,850 shares) (389,821)
------------
Total shareholders' equity 11,934,631
------------
Total liabilities and shareholders' equity $ 32,612,290
============
See accompanying note to consolidated condensed financial statements.
3
<PAGE>
BUCKHEAD AMERICA CORPORATION
AND SUBSIDIARIES
Consolidated Condensed Statements of Income
Nine Months ended September 30, 1996 and 1995
(Unaudited)
1996 1995
----------- -----------
Revenues:
Hotel revenues $ 7,762,931 4,897,782
----------- -----------
Interest income:
Notes receivable 401,250 623,111
Investments 320,944 498,270
----------- -----------
Total interest income 722,194 1,121,381
----------- -----------
Other income 1,682,657 2,287,265
----------- -----------
Total revenues 10,167,782 8,306,428
----------- -----------
Expenses:
Hotel operations 5,593,179 3,405,115
Depreciation and amortization 722,300 476,334
Other operating and administrative 1,617,808 1,174,884
Interest 1,143,954 989,531
----------- -----------
Total operating, administrative,
and interest expenses 9,077,241 6,045,864
----------- -----------
Income before income taxes 1,090,541 2,260,564
Provision for income taxes -- --
----------- -----------
Net income $ 1,090,541 2,260,564
=========== ===========
Net income per common and common
equivalent share $ .60 1.29
=========== ===========
Weighted average number of common and
common equivalent shares used to
calculate net income per share 1,813,431 1,743,082
=========== ===========
See accompanying note to consolidated condensed financial statements.
4
<PAGE>
BUCKHEAD AMERICA CORPORATION
AND SUBSIDIARIES
Consolidated Condensed Statements of Income
Three Months ended September 30, 1996 and 1995
(Unaudited)
1996 1995
---------- ----------
Revenues:
Hotel revenues $2,444,487 1,831,968
---------- ----------
Interest income:
Notes receivable 130,040 203,052
Investments 78,311 151,557
---------- ----------
Total interest income 208,351 354,609
---------- ----------
Other income 818,828 1,579,459
---------- ----------
Total revenues 3,471,666 3,766,036
---------- ----------
Expenses:
Hotel operations 1,805,361 1,431,106
Depreciation and amortization 238,600 195,600
Other operating and administrative 736,479 426,035
Interest 364,245 296,476
---------- ----------
Total operating, administrative,
and interest expenses 3,144,685 2,349,217
---------- ----------
Income before income taxes 326,981 1,416,819
Provision for income taxes -- --
---------- ----------
Net income $ 326,981 1,416,819
========== ==========
Net income per common and common
equivalent share $ .18 .80
========== ==========
Weighted average number of common and
common equivalent shares used to
calculate net income per share 1,818,582 1,755,480
========== ==========
See accompanying note to consolidated condensed financial statements.
5
<PAGE>
BUCKHEAD AMERICA CORPORATION
AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows
Nine Months Ended September 30, 1996 and 1995
(Unaudited)
1996 1995
----------- -----------
Increase (decrease) in cash and cash equivalents:
Cash flows from operating activities:
Net income $ 1,090,541 2,260,564
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 722,300 476,334
Other, net (907,673) (1,308,588)
----------- -----------
Net cash provided by
operating activities 905,168 1,428,310
----------- -----------
Cash flows from investing activities:
Note receivable principal receipts 2,519,659 2,092,135
Hotel assets acquired (4,419,778) --
Other, net (545,031) (857,192)
----------- -----------
Net cash provided (used) by
investing activities (2,445,150) 1,234,943
----------- -----------
Cash flows from financing activities:
Repayments of notes payable (2,698,155) (2,498,174)
Additional borrowings 3,450,000 --
Other, net 34,400 --
----------- -----------
Net cash provided (used) by
financing activities 786,245 (2,498,174)
----------- -----------
Net increase (decrease) in cash and
cash equivalents (753,737) 165,079
Cash and cash equivalents at beginning
of period 3,172,661 4,616,866
----------- -----------
Cash and cash equivalents at end of period $ 2,418,924 4,781,945
=========== ===========
See accompanying note to consolidated condensed financial statements.
6
<PAGE>
BUCKHEAD AMERICA CORPORATION
AND SUBSIDIARIES
Note to Consolidated Condensed Financial Statements
September 30, 1996 and 1995
(Unaudited)
(1) Basis of Presentation
---------------------
The accompanying unaudited financial statements 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. The results of operations for interim periods
are not necessarily indicative of the results that may be expected
for a full year or any other interim period. For further
information, see the consolidated financial statements included in
the Company's Form 10-KSB for the year ended December 31, 1995.
7
<PAGE>
Item 2. Management's Discussion and Analysis.
FINANCIAL CONDITION AND CHANGES IN FINANCIAL CONDITION.
- -------------------------------------------------------
1996
- ----
During the third quarter of 1996, the Company acquired a 96 room hotel in
Dalton, Georgia for approximately $1.5 million. The purchase was financed by a
$1,050,000 (9.15%) first mortgage loan from a local bank and a $70,000 (10%)
short term note from the seller. The remainder was paid in cash. A $700,000
renovation is in process and the Company expects to open the hotel as a Country
Hearth Inn before year end. The Company has commitments in place which will fund
the majority of the renovation costs.
Renovations at the Company's Atlanta hotel began shortly after the completion of
the Olympic Games. The $900,000 renovation is expected to be completed prior to
year end when the hotel will open as a Country Hearth Inn. The Company plans to
finance a substantial portion of the renovation costs.
The Company's joint venture project in Mason, Ohio broke ground in September.
The grand opening of this new 93 room hotel is scheduled for the 1997 Memorial
Day Weekend.
The Company received a $4.6 million loan commitment to refinance its Orlando
Country Hearth Inn. Proceeds from the refinancing will allow the Company to pay
off the remaining balance of its obligation to Trilon International, Inc., which
was to be due on December 31, 1996.
The Company executed five new Country Hearth Inn license agreements during the
third quarter bringing the year to date total to twelve new agreements.
1995
- ----
The most significant event occurring in the third quarter of 1995 was the
settlement of the "Glenstone" litigation. As a result of the settlement, the
Company's claim reserves were decreased by $1.5 million. The Company was also
able to recognize a nonrecurring gain of $1.2 million from the settlement.
During the first nine months of 1995, the Company acquired and converted its
Orlando Country Hearth Inn. Additionally, note receipts of $2.1 million were
collected, most of which were used to reduce notes payable.
8
<PAGE>
RESULTS OF OPERATIONS
- ---------------------
Periods ended September 30, 1996 and 1995
- -----------------------------------------
Hotel revenues amounted to $2,444,487 and $7,762,931 for the three month and
nine month periods ended September 30, 1996, respectively, as opposed to
$1,831,968 and $4,897,782 during the same periods in 1995. Hotel operating
profits for the 1996 three and nine month periods amounted to $639,126 and
$2,169,752, respectively, versus $400,862 and $1,492,667 in 1995. Such increases
are attributable to the acquisitions of hotels in Orlando (May 1995), Texas
(December 1995), Atlanta (March 1996), and Dalton (August 1996). The Company's
two Days Inn properties (in Miami and Daytona) experienced declines in revenues
and operating profits during the three and nine month 1996 periods. The
Company's Country Hearth Inn properties experienced increased performances in
1996.
Interest income continues to decline as a result of decreases in the note
receivable portfolio and in funds available for investment. As disclosed in
previous filings with the Commission, management intends to shift financial
resources to other assets, such as the hotel acquisitions previously discussed.
Other income in the third quarter of 1995 included the $1.2 million Glenstone
gain. During the third quarter of 1996, the Company sold an option to purchase
its equity certificates in Days Inn Mortgage Trust. The Company received
$250,000 for the option sale and, if the option is exercised by the holder, will
receive an additional $100,000. The Company's cost basis in the certificates was
zero.
Franchise fees included in other income in the third quarter of 1996 increased
57% to $191,156 versus the same period in 1995. Such amount excludes the fees
from Company owned hotels which are eliminated in consolidation.
Depreciation and interest expense increases resulted from the hotel
acquisitions. Interest expense on each individual debt obligation generally
decreases as the principal balances are reduced. Most of the debt obligations
are fixed rate, thus the Company is not susceptible to a large amount of rate
risk.
Other operating and administrative expenses increased $310,474 from the third
quarter of 1995 to the same period in 1996. All of this increase is attributable
to increased sales and marketing efforts relating to Country Hearth Inn
franchising. Management intends to continue to focus its efforts on the growth
of the Country Hearth Inn chain.
9
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Index to Exhibits
-----------------
Exhibit Description Page
------- ----------- ----
3(i) Articles of Incorporation *
3(i)(a) Certificate of Amendment of
Certificate of Incorporation **
3(ii) By-Laws - Amended and Restated
as of June 27, 1994 **
27 Financial Data Schedule ***
* Previously filed as the same Exhibit number to the
Registrant's Registration Statement on Form 10-SB which
became effective on November 22, 1993 and incorporated
herein by reference.
** Previously filed as the same Exhibit number to the
Registrant's December 31, 1994 Form 10-KSB and incorporated
herein by reference.
*** Filed electronically only
(b) Reports on Form 8-K
The Company has not filed any reports on Form 8-K during the quarter for which
this report is filed.
10
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Buckhead America Corporation
----------------------------
(Registrant)
Date: November 13, 1996 /s/Douglas C. Collins
------------------------- ------------------------------------------
Douglas C. Collins
President and Chief Executive Officer
Date: November 13, 1996 /s/Robert B. Lee
------------------------- ------------------------------------------
Robert B. Lee
Vice President and Chief Financial Officer
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF BUCKHEAD AMERICA CORPORATION FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 2,419
<SECURITIES> 671
<RECEIVABLES> 3,381
<ALLOWANCES> 2,249
<INVENTORY> 0
<CURRENT-ASSETS> 4,500
<PP&E> 26,532
<DEPRECIATION> 2,160
<TOTAL-ASSETS> 32,612
<CURRENT-LIABILITIES> 3,496
<BONDS> 16,577
0
0
<COMMON> 18
<OTHER-SE> 11,917
<TOTAL-LIABILITY-AND-EQUITY> 32,612
<SALES> 7,763
<TOTAL-REVENUES> 10,168
<CGS> 5,593
<TOTAL-COSTS> 6,315
<OTHER-EXPENSES> 1,618
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,144
<INCOME-PRETAX> 1,091
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,091
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,091
<EPS-PRIMARY> .60
<EPS-DILUTED> .60
</TABLE>
