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 JUNE 30, 1996
--------------------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
EXCHANGE ACT OF 1934
For the transition period from to
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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 lastreport)
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: July 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
June 30, 1996 and 1995
(Unaudited)
2
<PAGE>
BUCKHEAD AMERICA CORPORATION
AND SUBSIDIARIES
Consolidated Condensed Balance Sheet
June 30, 1996
(Unaudited)
Assets
------
Current assets:
Cash and cash equivalents, including
restricted cash of $1,618,449 $ 2,922,213
Short-term investments 1,143,956
Current portions of notes receivable 489,163
Other current assets 837,109
------------
Total current assets 5,392,441
Noncurrent portions of notes receivable 777,168
Property and equipment, at cost, net of
accumulated depreciation 22,683,297
Other assets 2,894,885
Total assets $ 31,747,791
============
Liabilities and Shareholders' Equity
------------------------------------
Current liabilities:
Accounts payable and accrued expenses $ 1,551,848
Current portions of notes payable 2,437,662
------------
Total current liabilities 3,989,510
Noncurrent portions of notes payable 15,562,638
Total liabilities 19,552,148
Minority interest in partnership 572,993
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 5,658,789
Unrealized gain on investment securities 46,928
Treasury stock (46,850 shares) (389,821)
------------
Total shareholders' equity 11,622,650
Total liabilities and shareholders' equity $ 31,747,791
============
See accompanying note to consolidated condensed financial statements.
3
<PAGE>
BUCKHEAD AMERICA CORPORATION
AND SUBSIDIARIES
Consolidated Condensed Statements of Income
Six Months ended June 30, 1996 and 1995
(Unaudited)
1996 1995
---------- ----------
Revenues:
Hotel revenues $5,318,444 3,065,814
Interest income:
Notes receivable 271,210 420,059
Investments 242,633 346,713
---------- ----------
Total interest income 513,843 766,772
---------- ----------
Other income 863,829 707,806
---------- ----------
Total revenues 6,696,116 4,540,392
---------- ----------
Expenses:
Hotel operations 3,787,818 1,974,009
Depreciation and amortization 483,700 280,734
Other operating and administrative 881,329 748,849
Interest 779,709 693,055
---------- ----------
Total operating, administrative,
and interest expenses 5,932,556 3,696,647
---------- ----------
Income before income taxes 763,560 843,745
Provision for income taxes -- --
---------- ----------
Net income $ 763,560 843,745
========== ==========
Net income per common and common
equivalent share $ .42 .49
=== ===
Weighted average number of common and
common equivalent shares used to
calculate net income per share 1,810,855 1,736,941
========= =========
See accompanying note to consolidated condensed financial statements.
4
<PAGE>
BUCKHEAD AMERICA CORPORATION
AND SUBSIDIARIES
Consolidated Condensed Statements of Income
Three Months ended June 30, 1996 and 1995
(Unaudited)
1996 1995
---------- ----------
Revenues:
Hotel revenues $2,437,680 1,484,675
---------- ----------
Interest income:
Notes receivable 182,640 180,701
Investments 121,177 174,492
---------- ----------
Total interest income 303,817 355,193
---------- ----------
Other income 507,368 524,915
---------- ----------
Total revenues 3,248,865 2,364,783
---------- ----------
Expenses:
Hotel operations 1,897,639 1,116,108
Depreciation and amortization 246,600 161,934
Other operating and administrative 446,476 334,418
Interest 397,695 372,348
---------- ----------
Total operating, administrative,
and interest expenses 2,988,410 1,984,808
---------- ----------
Income before income taxes 260,455 379,975
Provision for income taxes -- --
---------- ----------
Net income $ 260,455 379,975
========== ==========
Net income per common and common
equivalent share $ .14 .22
=== ===
Weighted average number of common and
common equivalent shares used to
calculate net income per share 1,818,497 1,747,127
========= =========
See accompanying note to consolidated condensed financial statements.
5
<PAGE>
BUCKHEAD AMERICA CORPORATION
AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows
Six Months Ended June 30, 1996 and 1995
(Unaudited)
1996 1995
----------- -----------
Increase (decrease) in cash and cash equivalents:
Cash flows from operating activities:
Net income $ 763,560 843,745
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 483,700 280,734
Other, net (485,743) 189,457
----------- -----------
Net cash provided by
operating activities 761,517 1,313,936
----------- -----------
Cash flows from investing activities:
Note receivable principal receipts 2,385,647 1,952,290
Hotel assets acquired (2,965,000 --
Other, net (413,670) (382,901)
----------- -----------
Net cash provided (used) by
investing activities (993,023) 1,569,389
----------- -----------
Cash flows from financing activities:
Repayments of notes payable (2,383,342) (2,226,053)
Additional borrowings 2,330,000 --
Other, net 34,400 --
----------- -----------
Net cash used by
financing activities (18,942 (2,226,053)
----------- -----------
Net increase (decrease) in cash and
cash equivalents (250,448) 657,272
Cash and cash equivalents at beginning
of period 3,172,661 4,616,866
----------- -----------
Cash and cash equivalents at end of period $ 2,922,213 5,274,138
=========== ===========
See accompanying note to consolidated condensed financial statements.
6
<PAGE>
BUCKHEAD AMERICA CORPORATION
AND SUBSIDIARIES
Note to Consolidated Condensed Financial Statements
June 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 second quarter of 1996, the Company invested approximately $250,000
in a joint venture to build a Country Hearth Inn in Mason, Ohio. In a separate
transaction, the Company made a $170,000 loan to a partnership which, in turn,
executed a license agreement for a Country Hearth Inn in Canton Township,
Michigan. The loan proceeds will be used for hotel renovations and the Company
also has an option to acquire up to a 50% equity interest in the partnership.
Also during the second quarter, the Company collected $250,000 on a note
receivable pledged to Trilon International, Inc. ("Trilon"). Those proceeds
along with other collections reduced the net obligation to Trilon to
approximately $1 million. The Company intends to pay off the remaining
obligation, which is due December 31, 1996, using existing available liquid
funds or from the sale or refinancing of one of the pledged hotel properties.
One of the last remaining "Old Buckhead" claims was resolved in April 1996. The
settlement released approximately $300,000 of restricted funds to the Company.
1995
- ----
Property and equipment increased $6.5 million subject to first mortgage debt of
$4.4 million as a result of the Company's acquisition in May of a majority
ownership interest in a 150 room hotel in Orlando, Florida (the "Orlando
Hotel"). The property also collateralizes a $1 million note payable to the
Company which eliminates in consolidation. Additionally, the Company acquired
cash and other working capital of approximately $750,000 in the transaction.
Also in May 1995, the Company collected a $1.7 million note receivable.
Approximately $900,000 of such was used to pay off a related wrapped mortgage
and the remaining proceeds were used to pay down the Company's note payable to
Trilon.
Estimated allowed amounts of "Old Buckhead" claims and associated restricted
cash balances were reduced by approximately $440,000 during the first six months
of 1995 as a result of payments and changes in estimates.
8
<PAGE>
RESULTS OF OPERATIONS
- ---------------------
Periods ended June 30, 1996 and 1995
- ------------------------------------
Hotel revenues amounted to $2,437,680 and $5,318,444 for the three month and six
month periods ended June 30, 1996, respectively, as opposed to $1,484,675 and
$3,065,814 during the same periods in 1995. Hotel operating profits for the 1996
three and six month periods amounted to $540,041 and $1,530,626, respectively,
versus $368,567 and $1,091,805 in 1995. Such increases are attributable to the
acquisitions of hotels in Orlando (May 1995), Texas (December 1995), and Atlanta
(March 1996). The Company's two Days Inn properties (in Miami and Daytona)
experienced declines in revenues and operating profits during the three and six
month 1996 periods. The Company's Country Hearth Inn properties all experienced
increased performances vs. 1995.
Interest income continues to decline as a result of decreases in the note
receivable portfolio and in funds available for investment. As previously
stated, management intends to shift financial resources to other assets, such as
the hotel acquisitions previously discussed.
Other income in the second quarter of 1996 decreased slightly from the same
period in 1995. This resulted from a decrease in nonoperating income offset
largely by an increase in franchise revenues.
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 $112,000 from the second
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 4. Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Shareholders on May 24, 1996. The purpose
of the meeting was to consider and vote upon the following matters:
1. To elect a Board of Directors consisting of four persons to
serve until the next Annual Meeting of Shareholders.
2. To transact such other business as may have properly come
before the meeting.
Each of the Company's incumbent directors (Douglas C. Collins, Robert M.
Miller, William K. Stern, and Leon M. Wagner) were nominated for re-
election. Each of the nominees was elected as follows:
Votes For Votes Withheld
--------- --------------
Douglas C. Collins 1,460,720 2,728
Robert M. Miller 1,380,578 82,870
William K. Stern 1,445,524 17,924
Leon M. Wagner 1,460,786 2,662
No other matters came before the meeting.
10
<PAGE>
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.
11
<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: August 13, 1996 /s/Douglas C. Collins
----------------------- ------------------------------------------
Douglas C. Collins
President and Chief Executive Officer
Date: August 13, 1996 /s/Robert B. Lee
----------------------- ------------------------------------------
Robert B. Lee
Vice President and Chief Financial Officer
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF BUCKHEAD AMERICA CORPORATION FOR THE SIX MONTHS ENDED
JUNE 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
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<S> <C>
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<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,922
<SECURITIES> 1,144
<RECEIVABLES> 3,646
<ALLOWANCES> 2,380
<INVENTORY> 0
<CURRENT-ASSETS> 5,392
<PP&E> 24,632
<DEPRECIATION> 1,949
<TOTAL-ASSETS> 31,748
<CURRENT-LIABILITIES> 3,990
<BONDS> 15,563
<COMMON> 18
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0
<OTHER-SE> 11,605
<TOTAL-LIABILITY-AND-EQUITY> 31,748
<SALES> 5,318
<TOTAL-REVENUES> 6,696
<CGS> 3,788
<TOTAL-COSTS> 4,272
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