1
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, 1999
[ ] 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
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)
7000 CENTRAL PARKWAY, SUITE 850, ATLANTA, GEORGIA 30328
(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: November 4, 1999
Common stock, par value $.01 - 2,029,313 shares outstanding
Transitional Small Business Disclosure Format
(Check one): Yes No X
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BUCKHEAD AMERICA CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Financial Statements
September 30, 1999 and 1998
(Unaudited)
<PAGE>
BUCKHEAD AMERICA CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Balance Sheet
September 30, 1999
(Unaudited)
Assets
Current assets:
Cash and cash equivalents, including
restricted cash of $598,730 $ 3,124,064
Investment securities 2,589,799
Accounts receivable, net 2,130,561
Current portions of notes receivable 455,342
Other current assets 332,412
-------------
Total current assets 8,632,178
Noncurrent portions of notes receivable, net 3,414,511
Property and equipment, at cost, net 36,268,877
Deferred tax assets 2,458,032
Deferred costs, net 2,465,403
Leasehold interests, net 2,590,163
Other assets 1,369,433
-------------
$ 57,198,597
=============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued expenses $ 3,524,525
Current portions of notes payable 1,077,538
-------------
Total current liabilities 4,602,063
Noncurrent portions of notes payable 29,289,613
Other liabilities 386,474
-------------
Total liabilities 34,278,150
-------------
Shareholders' equity:
Series A preferred stock; $100 par value;
200,000 shares authorized; 30,000 shares
issued and outstanding 3,000,000
Common stock; $.01 par value; 5,000,000
shares authorized; 2,094,655 shares issued
and 2,029,313 shares outstanding 20,947
Additional paid-in capital 7,854,921
Retained earnings 12,688,217
Accumulated other comprehensive income(loss) (136,358)
Treasury stock (65,342 shares) (507,280)
-------------
Total shareholders' equity 22,920,447
-------------
$ 57,198,597
=============
See accompanying notes to condensed consolidated financial statements.
<PAGE>
BUCKHEAD AMERICA CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Statements of Income
Nine Months ended September 30, 1999 and 1998
(Unaudited)
1999 1998
------------- -----------
Revenues:
Hotel revenues $ 19,446,646 19,846,707
Investment income 327,020 110,551
Other income, net 5,367,513 1,558,728
------------- -----------
Total revenues 25,141,179 21,515,986
------------- -----------
Expenses:
Hotel operations 15,734,038 15,473,788
Other operating and administrative 2,386,358 2,423,977
Depreciation and amortization 1,217,548 1,325,622
Interest 2,364,490 2,175,301
------------- -----------
Total expenses 21,702,434 21,398,688
------------- -----------
Income before income taxes 3,438,745 117,298
Provision for income tax expense (benefit) 1,385,000 (10,000)
------------- -----------
Net income $ 2,053,745 127,298
============= ===========
Net income(loss) per common share:
Basic $ 0.93 (0.05)
============= ===========
Diluted $ 0.72 (0.05)
============= ===========
See accompanying notes to condensed consolidated financial statements.
<PAGE>
BUCKHEAD AMERICA CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Statements of Income
Three Months ended September 30, 1999 and 1998
(Unaudited)
1999 1998
------------- -----------
Revenues:
Hotel revenues $ 6,901,554 7,799,274
Investment income(loss) 83,037 (44,828)
Other income, net 807,281 860,367
------------- -----------
Total revenues 7,791,872 8,614,813
------------- -----------
Expenses:
Hotel operations 5,490,510 6,080,479
Other operating and administrative 759,053 781,710
Depreciation and amortization 345,290 453,197
Interest 732,379 760,909
------------- -----------
Total expenses 7,327,232 8,076,295
------------- -----------
Income before income taxes 464,640 538,518
Provision for income tax expense 185,000 140,000
------------- -----------
Net income $ 279,640 398,518
============= ===========
Net income per common share:
Basic $ 0.10 0.17
============= ===========
Diluted $ 0.10 0.16
============= ===========
See accompanying notes to condensed consolidated financial statements.
<PAGE>
BUCKHEAD AMERICA CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
Nine Months Ended September 30, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
------------ -------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,053,745 127,298
Adjustments to reconcile net income
to net cash provided (used) by
operating activities:
Depreciation and amortization 1,217,548 1,325,622
Sales (purchases) of trading securities, net (2,469,018) 2,998,950
Gains on property transactions, net (5,471,395) (820,236)
Minority interests in partnership income 2,521,962 201,068
Other, net 999,558 193,447
------------ -------------
Net cash provided (used) by
operating activities (1,147,600) 4,026,149
------------ -------------
Cash flows from investing activities:
Note receivable principal receipts 183,725 598,958
Originations of notes receivable (165,000) (878,721)
Capital expenditures (2,488,400) (4,745,570)
Proceeds from property sales 8,379,512 749,611
Other, net (672,974) (1,328,817)
------------ -------------
Net cash provided (used) by
investing activities 5,236,863 (5,604,539)
------------ -------------
Cash flows from financing activities:
Repayments of notes payable (1,827,961) (620,232)
Additional borrowings 2,495,018 2,184,872
Distributions to minority interests (3,206,894) (164,750)
Preferred stock dividends (94,375) (225,000)
Other, net 64,819 325,742
------------ -------------
Net cash provided (used) by
financing activities (2,569,393) 1,500,632
------------ -------------
Net increase (decrease) in cash and
cash equivalents 1,519,870 (77,758)
Cash and cash equivalents at beginning
of period 1,604,194 3,281,774
------------ -------------
Cash and cash equivalents at end of period $ 3,124,064 3,204,016
============ =============
(Continued)
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
BUCKHEAD AMERICA CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows - Continued
Nine Months Ended September 30, 1999 and 1998
(Unaudited)
Supplemental disclosures of noncash investing and financing activities:
In June 1999, the Company recorded the following partial cash activity relating
to the sale of a 150-room hotel in Orlando, Florida:
Gross sale price $ 13,500,000
Portion allocated to management
and franchise contract termination (1,446,590)
-------------
Net sales price 12,053,410
Basis in property sold (6,474,116)
Costs (327,682)
-------------
Net gain $ 5,251,612
=============
The company owns approximately 59% of the partnership which owned the
hotel.
In August 1999, the Company recorded the following partial cash activity
relating to the acquisition of management contracts on nine hotel properties:
Cash and payables $ 506,040
Common stock issued (65,378 shares) 392,268
-------------
Deferred costs of management contracts $ 898,308
=============
During 1999, the Company recorded the following partial cash activity relating
to the sale of a hotel property and the sales of leasehold interests in four
other hotel properties:
Proceeds:
Cash, net of closing costs $ 709,437
Note payable reduction 525,000
Notes receivable, net 825,000
-------------
2,059,437
Basis in assets sold 1,839,654
-------------
Net gains $ 219,783
=============
(Continued)
<PAGE>
BUCKHEAD AMERICA CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows - Continued
Nine Months Ended September 30, 1999 and 1998
(Unaudited)
In May 1998, the Company recorded the following partial cash activity relating
to an acquired 121-room hotel in Norcross, Georgia:
Costs:
Cash and payables $ 223,101
Debt assumed 3,818,798
-------------
Property and equipment acquired $ 4,041,899
=============
In June 1998, the Company recorded the following partial cash activity relating
to the acquisition of leasehold interests in seven hotels:
Costs:
Cash and payables $ 516,635
Common stock issued 400,000
Notes payable issued 400,000
-------------
$ 1,316,635
=============
Allocated to:
Lessor=s common stock 288,000
Leasehold interests 1,028,635
-------------
$ 1,316,635
=============
In August and September 1998, the Company recorded the following partial cash
activity relating to the refinancing of four owned hotels:
New mortgage notes issued $ 4,885,000
Discharge of old mortgage notes (4,323,476)
Debt issuance costs (187,084)
------------
Net proceeds $ 374,440
============
During 1998, the Company recorded the following partial cash activity relating
to the sales of leasehold interests in five hotel properties:
Proceeds:
Cash, net of closing costs $ 749,611
Notes receivable, net 750,000
------------
1,499,611
Basis in assets sold 679,375
------------
Net gains $ 820,236
============
See accompanying notes to condensed consolidated financial statements.
<PAGE>
BUCKHEAD AMERICA CORPORATION
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 1999 and 1998
(Unaudited)
(1) Basis of Presentation
The accompanying unaudited condensed consolidated 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, 1998.
(2) Comprehensive Income(Loss)
Total comprehensive income(loss)for the nine months ended September
30, 1999 and 1998 was $2,065,410 and $(36,278), respectively, and for
the three months ended September 30, 1999 and 1998 was $283,529 and
$234,942, respectively.
(3) Sale of Hotel
In June 1999, the Company completed the sale of the Country Hearth Inn
located in Orlando, Florida for $13.5 million. The Company held an
approximate 59% interest in the partnership which owned the hotel in
addition to holding franchise and hotel management contracts relating
to the operation of the property. After retirement of an approximate
$4.4 million first mortgage loan, payment of certain fees, costs,
bonuses, and minority interest shares, the Company=s share of net
proceeds was approximately $5.5 million. The Company has no obligation
to continue to operate the property, but plans to continue to operate
the hotel under an agreement with Orange County, Florida (the
purchaser) until December 2000 at which time the property is to be
demolished to make way for expansion of the Orange County Convention
Center.
The pretax impact of the Orlando hotel sale is reflected in other
income for the nine month period ended September 30, 1999. In
connection with the transaction, other income includes franchise
termination fees of approximately $640,000 and management termination
fees of approximately $605,000. Other income also includes
approximately $3 million which represents the Company=s share of the
pretax gain on sale net of termination fees to others, cost accruals,
and minority interest=s share of the gain.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS.
FINANCIAL CONDITION AND CHANGES IN FINANCIAL CONDITION.
First Nine Months of 1999
In June 1999, the Company completed the sale of the Country Hearth Inn located
in Orlando, Florida for $13.5 million. The Company held an approximate 59%
interest in the partnership which owned the hotel in addition to holding
franchise and hotel management contracts relating to the operation of the
property. After retirement of an approximate $4.4 million first mortgage loan,
payment of certain fees, costs, bonuses, and minority interest shares, the
Company's share of net proceeds was approximately $5.5 million. After
distributions to minority interest partners of approximately $3.2 million, the
Company began soliciting for additional partnership units. During September
1999, the Company purchased an additional 13.4% of the partnership. The Company
has no obligation to continue to operate the property, but plans to continue to
operate the hotel under an agreement with Orange County, Florida (the purchaser)
until December 2000 at which time the property is to be demolished to make way
for expansion of the Orange County Convention Center.
In August 1999, the Company purchased nine hotel management agreements from the
members of Quality Lodging, LLC ("Quality") for an aggregate purchase price of
approximately $900,000, including the issuance of 65,378 unregistered shares of
the Company's common stock. The Company has agreed to purchase additional
contracts from Quality when the related hotel properties are completed and
opened.
The Company sold its leasehold interests in three hotel properties during the
first quarter of 1999 resulting in aggregate gains of approximately $300,000.
These sales represent a continuation of the Company's previously announced
desire to divest itself of older properties. One additional such sale was
completed in September 1999 resulting in a net gain of approximately $205,000.
In July 1999, the Company completed the sale of one of its three 40-room hotel
properties in Texas. The Company is presently marketing the other two
properties. The Company recognized a second quarter charge of $300,000 relating
to the establishment of valuation reserves for these three properties.
During the first half of 1999, the Company drew down $1 million on its bank line
of credit in order to fund working capital needs and construction commitments.
Also, the Company temporarily suspended payment of dividends on its Series A
preferred stock. As has been previously disclosed, the Company's hotel
operations are highly seasonal. Historically, the Company's hotel revenues and
operating profits have been stronger during the second and third quarters as
opposed to the first and fourth quarters. Management expects this trend to
continue and further believes that the Company's present liquidity and existing
commitments are adequate to sustain the current operations of the Company. The
line of credit was fully repaid in July from a portion of the proceeds from the
Orlando hotel sale. The Company also resumed payment of Series A preferred
dividends.
The Company has continued its expansion of the Country Hearth Inn lodging
system. Nine additional properties were opened in the first half of 1999
bringing the total to 46 properties operating in fourteen states. An additional
24 properties are in various stages of development; approximately half of which
are expected to open within the next 12 months.
Capital expenditures during the first nine months of 1999 aggregated
approximately $2.5 million and mostly related to two new Company owned Country
Hearth Inns in Eddyville, Kentucky and Washington Courthouse, Ohio.
Approximately $1.5 million of such expenditures was funded by construction loan
commitments and the remainder was funded by working capital and the Company's
line of credit.
The Company also has continued expansion of its hotel management business.
During the first quarter of 1999, the Company entered into four additional hotel
management contracts with third party owners and the Company began management of
the nine Quality hotel properties mentioned above during the third quarter.
Management presently intends to use the remaining proceeds from the Orlando
hotel sale to fund working capital needs and to continue to invest in the growth
of the Country Hearth Inn lodging system and the expansion of its hotel
management business. Also, the Company's board of directors authorized the
repurchase of up to 100,000 shares of the Company's outstanding common stock.
Through November 12, 1999, 6,000 shares have been repurchased in the open
market.
First Nine Months of 1998
The Company began 1998 with 33 hotel properties owned or leased, 36 properties
managed, and 29 Country Hearth Inn franchise properties open and operating.
Seven additional Country Hearth Inn properties were opened during the first nine
months of 1998.
Construction of an additional Company owned Country Hearth Inn in Nicholasville,
Kentucky was underway and the Company acquired rights to a site in Eddyville,
Kentucky which began construction in the second quarter of 1998. Loan
commitments were in place which funded the major portion of the construction
costs for both of these projects. The Nicholasville property opened in September
1998 and the Eddyville property opened in March 1999.
Renovation and conversion of two Ohio properties to Country Hearth Inns was
begun in the first quarter using funds from the Company's December 1997
debenture sale. Both conversions were completed during 1998.
Capital expenditures in the first nine months of 1998 amounted to approximately
$4.7 million. Construction and other loan commitments provided approximately
$2.2 million of these funds. The remainder was provided by a portion of the
proceeds from the Company's December 1997 sale of convertible debentures.
In May 1998, the Company acquired a 121-room hotel in Norcross, Georgia for
approximately $4 million, most of which was financed by the assumption of a $3.8
million first mortgage loan.
In June 1998, the Company entered into lease agreements for the operation and
management of seven hotels owned by Host Funding, Inc.("Host"). The leased
properties are operated as "Sleep Inns" and "Super 8" hotels; are located in
Florida, Illinois, Missouri, Kentucky, and Mississippi; and aggregate 450 rooms.
In August 1998, the Company refinanced three 40-room hotel properties. The new
mortgage notes bear interest at 8.25% and are amortized over twenty years;
replacing floating rate notes which had relatively shorter maturities. In
September 1998, the Company refinanced its Daytona hotel property. The new
mortgage note bears interest at 8.5% and is amortized over twenty years;
replacing a note which was to be due in April 1999. The four new notes totaled
$4,885,000 and after satisfaction of the old notes and issuance costs, the
Company netted proceeds of approximately $375,000 in addition to locking in
long-term fixed rate financing on these four properties.
In 1998, the Company began a program of divesting its older less profitable
hotel properties. During the first nine months of 1998, five leasehold interests
in hotel properties were sold for an aggregate gain of approximately $820,000.
RESULTS OF OPERATIONS
Periods ended September 30, 1999 and 1998
The pretax impact of the Orlando hotel sale is reflected in other income for the
nine month period ended September 30, 1999. In connection with the transaction,
other income includes franchise termination fees of approximately $640,000 and
management termination fees of approximately $605,000. Other income also
includes approximately $3 million which represents the Company's share of the
pretax gain on sale net of termination fees to others, cost accruals, and
minority interest's share of the gain. Other income in the 1999 nine month
period also includes the $300,000 valuation charge relating to the Texas hotel
properties. Other income in all periods presented also includes the gains
relating to the sales of leasehold interests in hotel properties described
above.
Earnings before interest, taxes, depreciation and amortization ("EBITDA") for
the nine months ended September 30, 1999 and 1998 amounted to $7,020,783 and
$3,618,221, respectively. EBITDA for the three months ended September 30, 1999
and 1998 amounted to $1,542,309 and $1,752,624, respectively. Excluding the
impact of the property transactions described in the preceding paragraph, EBITDA
for the 1999 three and nine month periods amounted to $1,389,174 and $2,758,040,
respectively, versus $1,167,510 and $2,755,656, respectively for the same
periods in 1998. During the first half of 1999, a decline in revenue and
operating profit occurred in the Company's older leasehold properties which are
held for sale. Also, the Company's Orlando hotel experienced a second quarter
operating profit decline of approximately $125,000 attributable to a decline in
convention center business. The first half of 1999 EBITDA was also negatively
impacted by new property openings which take time to ramp up to normal profit
levels.
Excluding the impact of the property transactions, 1999 third quarter EBITDA
increased by $221,664 versus the same period in 1998. This is primarily
attributable to increases in franchise and management fee revenues resulting
from the increases in the number of franchised and managed hotel properties.
Hotel revenues and operating profits for the three months ended September 30,
1999 amounted to $6,901,554 and $1,411,044, respectively, versus $7,799,274 and
$1,718,795 in 1998. These reductions result from the sale of the older, less
profitable hotel properties. The properties sold were generally profitable in
the third quarter and marginally profitable or unprofitable during the remaining
nine months of each year.
The properties presently owned or leased by the Company are subject to a
significant amount of seasonal fluctuation. Most of the properties are
profitable during the third quarter and will generally not be profitable during
the fourth quarter. On an annual basis, all properties are expected to satisfy
their debt, rent, and other cash obligations in addition to providing the
Company with management and/or franchise fees.
Franchising profits increased over $600,000 due to the Orlando termination fees.
Franchising profits for the remainder of 1999 and beyond are expected to further
increase as a result of additional franchise property openings and a reduction
in payroll relating to the resignation of an executive officer.
Interest income increased during the three and nine month 1999 periods due to
increases in the notes receivable portfolio resulting from the 1998 and 1999
leasehold interest sales. Other operating and administrative expenses in 1999
are comparable to 1998 amounts and in line with management expectations.
Changes in depreciation and interest expense are directly related to changes in
property and equipment and related mortgages resulting from new construction,
other acquisitions, and disposals.
The Company files income tax returns and recognizes income tax expense (benefit)
on an annual calendar basis. The provisions for income tax expense (benefit)
recognized in the quarterly condensed financial statements represents
management's estimates of the impact on the annual income tax expense (benefit)
which results from such quarter's operations.
YEAR 2000 ISSUES
The following information is being provided as a Year 2000 Readiness Disclosure
Statement, as is subject to the provisions of the Year 2000 Information and
Readiness Disclosure Act.
The Year 2000 compliance issue concerns the inability of computerized
information systems to accurately calculate, store or use a date after 1999.
This could result in a system failure or miscalculations causing disruptions of
operations. The Year 2000 issue affects virtually all companies and all
organizations. The Company recognizes the importance of ensuring that its
business operations are not disrupted as a result of Year 2000 related computer
system and software issues.
The Company has conducted an assessment of its computer and data
telecommunications information systems ("IT Systems"), as well those computer
systems that do not relate to information technology, including, without
limitation, electronic locks, telephone systems, elevators, VCR's and other
guest service related systems ("Non-IT Systems"), to identify needed Year 2000
remediation. The Company currently anticipates that its Year 2000 assessment,
remediation, and testing efforts will be completed prior to December 31, 1999.
The Company's home office, and management company IT Systems have been evaluated
and tested and are considered to be Year 2000 compliant. All hotel front office
systems have been evaluated. Seven such systems were found not to be Year 2000
compliant and will need to be upgraded or replaced at an estimated total cost of
$40,000.
The Company has communicated with its significant vendors and service providers
regarding the extent to which these entities have addressed Year 2000 compliance
issues. The most critical IT System, credit card processing, has been tested and
found to be Year 2000 compliant. Other vendor and service provided systems such
as electronic lock systems and guest related telephone and television systems
have been tested and found to be Year 2000 compliant. All other less critical
systems are currently being evaluated. Management estimates that this overall
process is approximately 90% complete and expenditures to remediate any problems
encountered will not be significant.
The Company has not communicated with its hotel guests regarding Year 2000
compliance issues, since none of its guests is considered to be individually
significant and the Company receives no electronic data from its guests other
than credit card information which is discussed above.
Based on the Company's assessments and available information, the Company
believes that its cost to ensure Year 2000 compliance will not exceed $100,000.
As of October 31, 1999 the Company had incurred approximately $32,000 related to
Year 2000 assessment, remediation and testing. The Company believes that the
Year 2000 issue will not pose significant operational problems for the Company.
However, if all Year 2000 issues are not properly identified, or assessment,
remediation and testing are not completed timely, there can be no assurance that
the Year 2000 issue will not materially adversely impact the Company's results
of operations or adversely affect the Company's relationships with guests,
vendors or others. Additionally, there can be no assurance that the Year 2000
issues of other entities, including, but not limited to, the Company's third
party vendors and service providers and its guests, will not have a material
adverse impact on the Company's systems or results of operations. The Company
has not engaged an independent expert solely to assist in its Year 2000 efforts.
However, when installing new software, the Company requires year 2000 compliance
assurances from its vendors.
The Company has not yet determined the operational costs and problems that would
be reasonably likely to result from the failure by the Company and certain third
parties to complete efforts necessary to achieve Year 2000 compliance on a
timely basis. The Company has not developed a contingency plan for dealing with
the most reasonably likely worst case scenario, and such scenario has not yet
been clearly identified. The Company currently plans to complete such analysis
and contingency planning prior to December 31, 1999.
Readers are cautioned that forward-looking statements regarding Year 2000 issues
should be read in conjunction with the cautionary statement in the RISK FACTORS
section which follows.
RISK FACTORS
This Form 10-QSB contains forward looking statements that involve risks and
uncertainties. Statements contained in this Form 10-QSB that are not historical
facts are forward looking statements that are subject to the safe harbor created
by the Private Securities Litigation Reform Act of 1995. The Company's actual
results may differ significantly from the results indicated by such forward
looking statements. The Company is subject to a number of risks, including the
general risks of investing in real estate, the illiquidity of real estate,
environmental risks, possible uninsured or underinsured losses, fluctuations in
property taxes, hotel operating risks, the impact of competition, the difficulty
of managing growth, seasonality, the risks inherent in operating a hotel
franchise business, and the risks involved in hotel renovation and construction.
For a discussion of these and other risk factors, see the "RISK FACTOR" section
contained in the Company's Registration Statement on Form S-3 (File No.
333-37691).
<PAGE>
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
During 1999, the Company temporarily suspended payments of Series A preferred
stock dividends due to liquidity requirements created by the seasonal aspects of
the Company=s hotel operations. Such preferred dividends are cumulative and
would be required to be paid prior to any distributions to common shareholders.
As of September 30, 1999, a total of $130,625 of Series A preferred dividends
were in arrears.
On August 23, 1999, the Registrant issued 65,378 unregistered shares of its $.01
par value common stock to the members (Aaccredited investors@) of Quality
Lodging, LLC. Such shares were issued as partial consideration for the
Registrant=s purchase and assignment of hotel management agreements relating to
nine hotel properties. The consideration received by the Registrant was
estimated to have a fair market value equal to the fair market value of the
shares issued.
The exemption from registration was pursuant to Section 4(2) of the Securities
Act of 1933, as amended.
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBIT INDEX
Exhibit Description
3(i) Articles of Incorporation.(Incorporated by reference to Exhibit 3(i)
to the Registrant's Registration Statement on Form 10-SB (No.0-22132)
which became effective on November 22, 1993.)
3(i)(a) Certificate of Amendment of Certificate of Incorporation.
(Incorporated by reference to Exhibit 3(i)(a) to the Registrant's
Annual Report on Form 10-KSB for the fiscal year ended December 31,
1994.)
3(i)(b) Certificate of Amendment of Certificate of Incorporation.
(Incorporated by reference to Appendix "A" to the Registrant's
Definitive Proxy Statement filed with the Securities and Exchange
Commission on June 9, 1997.)
3(i)(c) Certificate of Amendment of Certificate of Incorporation.
(Incorporated by reference to Appendix "A" to the Registrant's
Definitive Proxy Statement filed with the Securities and Exchange
Commission on May 5, 1998.)
3(ii)By-Laws - Amended and Restated as of June 27, 1994. (Incorporated by
reference to Exhibit 3(ii) to the Registrant's Annual Report on Form
10-KSB for the fiscal year ended December 31, 1994.)
4(i) Certificate of Designation, Preferences and Rights of Series A
Preferred Stock of the Registrant. (Incorporated by reference to
Exhibit 3(i)(c) to the Registrant's Quarterly Report on Form 10-QSB
for the quarter ended September 30, 1997.)
11 Statement re: Computation of per share earnings
27 Financial Data Schedule
(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.
<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 12, 1999 /s/Douglas C. Collins
--------------------------------------
Douglas C. Collins
President and Chief Executive Officer
Date: November 12, 1999 /s/Robert B. Lee
--------------------------------------
Robert B. Lee
Senior Vice President and
Chief Financial Officer
EXHIBIT 11
Statement re: Computation of Per Share Earnings
<TABLE>
<CAPTION>
Nine Months Nine Months Three Months Three Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
1999 1998 1999 1998
----------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
Basic Net Income (Loss) per Common Share:
Numerator:
Net income (loss) for the period $ 2,053,745 127,298 279,640 398,518
Series A preferred stock dividends (225,000) (225,000) (75,000) (75,000)
----------------- -------------- ------------- -------------
Net income (loss) attributable to
common shares $ 1,828,745 (97,702) 204,640 323,518
================= ============== ============= =============
Denominator:
Actual common shares outstanding:
Beginning of period 1,943,935 1,897,780 1,969,935 1,951,427
End of period 2,029,313 1,943,935 2,029,313 1,943,935
Weighted average for the period
(Based on the actual days which
the incremental shares, if any,
were outstanding) 1,967,715 1,920,703 1,993,091 1,950,043
================= ============== ============= =============
Basic net income (loss) per common share $ 0.93 (0.05) 0.10 0.17
================= ============== ============= =============
Diluted Net Income (Loss) per Common Share:
Numerator:
Net income (loss) attributable to
common shares $ 1,828,745 (97,702) 204,640 323,518
Impact of assumed conversions:
Series A preferred stock dividends 225,000 - - -
Convertible debenture interest, net of tax 186,000 - - -
----------------- -------------- ------------- -------------
$ 2,239,745 (97,702) 204,640 323,518
================= ============== ============= =============
Denominator:
Weighted average common shares outstanding 1,967,715 1,920,703 1,993,091 1,950,043
Impact of assumed conversions:
Common share equivalents resulting
from Ain-the-money@ stock options 29,677 34,630 35,816 45,274
Series A preferred stock 574,351 - - -
Convertible debentures 555,555 - - -
----------------- -------------- ------------- -------------
3,127,298 1,955,333 2,028,907 1,995,317
================= ============== ============= =============
Diluted net income (loss) per common share $ 0.72 (0.05) 0.10 0.16
================= ============== ============= =============
</TABLE>
Note:The assumed conversions of the Series A preferred stock and the
convertible debentures were excluded from the 1998 computations of
diluted net income (loss) per common share and the three months ended
September 30, 1999 computation of diluted net income (loss) per common
share because the effect would be antidilutive for such periods.
<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, 1999 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-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 3,124
<SECURITIES> 2,590
<RECEIVABLES> 4,264
<ALLOWANCES> 376
<INVENTORY> 40
<CURRENT-ASSETS> 8,632
<PP&E> 39,671
<DEPRECIATION> 3,482
<TOTAL-ASSETS> 57,199
<CURRENT-LIABILITIES> 4,602
<BONDS> 30,367
0
3,000
<COMMON> 21
<OTHER-SE> 19,899
<TOTAL-LIABILITY-AND-EQUITY> 57,199
<SALES> 19,447
<TOTAL-REVENUES> 25,141
<CGS> 15,734
<TOTAL-COSTS> 16,952
<OTHER-EXPENSES> 2,386
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,364
<INCOME-PRETAX> 3,439
<INCOME-TAX> 1,385
<INCOME-CONTINUING> 2,054
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,054
<EPS-BASIC> 0.93
<EPS-DILUTED> 0.72
</TABLE>
