FORM 10-QSB
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
(Mark One)
Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934.
For the quarterly period ended September 30, 1996
Transition report under Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the transition period from ____________ to ______________
Commission file number 0-22582
NASHVILLE COUNTRY CLUB, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Tennessee
62-1535897
(State or Other Jurisdiction of
I.R.S. Employer Identification Number
Incorporation or Organization)
402 Heritage Plantation Way, Hickory Valley, Tennessee 38042
(Address of Principal Executive Offices)
(901) 764-2300
(Issuer's Telephone Number, Including Area Code)
Not applicable
(Former Name, Former Address and Former Fiscal Year, if
Changed Since Last Report)
Check whether the Registrant: (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
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
As of September 30, 1996, the Registrant had outstanding 4,590,435
shares of Common Stock, no par value per share.
Transitional Small Business Disclosure Format (check one)
Yes No X
NASHVILLE COUNTRY CLUB, INC. AND SUBSIDIARIES
Table of Contents
PART I: Financial Information
Item 1: Financial Statements:
Consolidated Balance Sheets 3
Consolidated Statements of Operations 4
Consolidated Statements of Cash Flow 6
Notes to Consolidated Financial Statements 7
Item 2: Management's Discussion and Analysis or Plan of Operation 9
PART II: Other Information
Signature 13
NASHVILLE COUNTRY CLUB, INC. AND SUBSIDIARIES
Part I
Financial Information
Item 1. Financial statements
Consolidated Balance Sheets
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
(Unaudited)
<S> <C> <C>
Current assets
Cash and cash equivalents $1,822,640 $ 235,711
Accounts receivable 640,196 -
Inventories 491,149 120,554
Prepaid expenses and other current
assets 231,552 7,190
Total current assets 3,185,537 363,455
Property, plant, and equipment, at cost
Land 12,824,247 800,000
Buildings and improvements 16,222,054 1,351,439
Furniture, fixtures, restaurant
equipment, and other equipment 2,636,677 508,495
31,682,978 2,659,934
Less accumulated depreciation and
amortization (490,095) (129,202)
31,192,883 2,530,732
Other assets
Intangibles, net 2,236,000 138,412
Other assets 79,025 -
Total assets $ 36,693,445 $3,032,599
Current liabilities
Current portion of long-term debt $ 280,000 $ -
Notes payable - 250,000
Accounts payable 909,814 138,595
Advanced deposits 397,214 -
Due to homeowners 138,357 -
Accrued interest 150,890 -
Other accrued expenses 604,766 116,046
Total current liabilities 2,481,041 504,641
Long-term debt, net of current portion 20,067,047 -
Capital lease obligation 733,000 733,000
23,281,088 1,237,641
Stockholders' equity
Preferred stock, no par value;
authorized 1,000,000 shares, 334,285
of Series A convertible preferred
stock issued and outstanding, $10,029
liquidation preference 10,000 10,000
Common stock, no par value; authorized
20,000,000 shares, 1,470,000 shares
issued and outstanding; 4,590,435
shares issued and outstanding 16,623,033 3,224,747
Accumulated deficit (3,220,676) (1,439,789)
Total stockholders' equity 13,412,357 1,794,958
Total liabilities and stockholders'
equity $36,693,445 $ 3,032,599
</TABLE>
NASHVILLE COUNTRY CLUB, INC. AND SUBSIDIARIES
Consolidated Statements of Operations (Unaudited)
<TABLE>
<CAPTION>
Pro Forma
(See Note B)
Three Months
Three Months Ended Ended
September 30, September 30,
1996 1995 1995
<S> <C> <C> <C>
Revenue
Room $1,692,424 $ - $1,474,148
Food and beverage 1,446,610 517,620 1,288,869
Commercial leasing 297,523 - 277,347
Other 686,899 - 162,841
Total revenue 4,123,456 517,620 3,203,205
Departmental expenses
Rooms 1,269,902 - 995,291
Food and beverage 1,306,771 491,551 1,164,011
Other 709,421 - 207,740
Total departmental expenses 3,286,094 491,551 2,367,042
Departmental profit 837,362 26,069 836,163
Undistributed operating expenses
Sales and marketing 295,719 48,957 211,068
General and administrative
and other 533,347 100,313 574,941
Depreciation 237,164 27,890 224,401
1,066,230 177,160 1,010,410
Gross operating loss (228,868) (151,091) (174,247)
Other income (expenses)
Interest, net (466,828) 2,962 (473,978)
Property taxes (94,663) (3,373) (84,571)
Total other income (expenses) (561,491) (411) (558,549)
Net (loss) income $(790,359)$(151,502) $(732,796)
Weighted average shares
outstanding 4,590,435 1,470,000 4,590,435
Earnings (loss) per common share (.17) (.10) (.16)
</TABLE>
NASHVILLE COUNTRY CLUB, INC. AND SUBSIDIARIES
Consolidated Statements of Operations (Unaudited)
<TABLE>
<CAPTION>
Pro Forma (See Note B)
Nine Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenue
Room $ 2,178,125 $ - $ 7,918,611 $ 6,429,921
Food and beverage 2,826,718 1,649,905 5,240,247 4,666,264
Commercial leasing 483,436 - 1,191,183 1,180,457
Other 929,378 19,494 2,213,903 574,201
Total revenue 6,417,657 1,669,399 16,563,944 12,850,843
Departmental expenses
Rooms 1,735,862 - 5,070,362 4,064,672
Food and beverage 2,643,088 1,729,766 4,487,918 4,164,550
Other 928,692 - 2,023,934 746,109
Total departmental 5,307,642 1,729,766 11,582,214 8,975,331
expenses
Departmental profit (loss) 1,110,015 (60,367) 4,981,730 3,875,512
Undistributed operating
expenses
Sales and marketing 521,470 143,537 758,890 647,724
General and administrative 1,069,054 348,361 2,045,240 1,924,630
and other
Depreciation 429,691 83,741 699,756 673,202
2,020,215 575,639 3,503,886 3,245,556
Gross operating (loss) (910,200) (636,006) 1,477,844 629,956
profit
Other income (expenses)
Interest, net (698,064) - (1,296,925) (1,452,643)
Property taxes (172,623) (10,114) (279,456) (137,976)
Total other income (870,687) (10,114) (1,576,381) (1,590,619)
(expenses)
Net (loss) income $ (1,780,887) $(646,120) $ (98,537) $ (960,663)
Weighted average shares 3,206,767 1,470,000 4,590,435 4,590,435
outstanding
Earnings (loss) per common
share (.56) (.44) (.02) (.21)
</TABLE>
NASHVILLE COUNTRY CLUB, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flow (Unaudited)
Nine Months Ended September 30, 1996
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1996 1995
<S> <C> <C>
Net loss $(1,780,887) $ (646,120)
Adjustments to reconcile net loss to net
cash used by operating activities
Depreciation and amortization 424,893 83,741
Changes in assets and liabilities
Accounts receivable 232,200 -
Inventory (38,454) (897)
Prepaid expenses (21,262) 10,145
Accounts payable and accrued
expenses 179,597 (222,666)
776,974 (129,677)
Net cash used by operating
activities (1,003,913) (775,797)
Cash flows from investing activities
Acquisition of the Resort, net of cash
acquired (7,834,936) -
Increase in other assets (25,000) (8,142)
Expenditures for property, plant and
equipment (393,605) (51,083)
Net cash used by investing
activities (8,253,541) (59,225)
Cash flows from financing activities
Proceeds from sale of units 11,300,661 -
Payments on debt (456,278) -
Net cash provided by financing
activities 10,844,383 -
Net increase (decrease) in cash and cash
equivalents 1,586,929 (835,022)
Cash and cash equivalents - beginning of
period 235,711 1,046,709
Cash and cash equivalents - end of period $ 1,822,640 $ 211,687
</TABLE>
NASHVILLE COUNTRY CLUB, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of
Nashville Country Club, Inc. (the "Company") have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and
Item 310(b) of Regulation S-B under the Securities Exchange Act of
1934. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating
results for the three months ended September 30, 1996 are not
necessarily indicative of the results that may be expected for the
fiscal year ending December 31, 1996. For further information, refer
to the consolidated financial statements and footnotes thereto
included in the Company's Form 10-KSB for the year ended December 31,
1995.
NOTE B - PRO FORMA OPERATIONS
On April 29, 1996, the Company acquired the assets and interests
comprising The Village at Breckenridge - A Wyndham Resort (the
"Resort"). The acquisition is accounted for using the purchase
method of accounting and, accordingly, the net purchase price has
been allocated to the assets purchased and the liabilities assumed
based on the fair values on the date of acquisition. The net
purchase price was allocated as follows:
<TABLE>
<CAPTION>
<S> <C>
Working capital (deficit) $ (1,190,365)
Property and equipment 28,070,925
Intangibles 2,300,000
Long-term debt (20,615,756)
Net assets acquired $ 8,564,804
</TABLE>
Intangibles are being amortized over 15 years. The unaudited pro
forma results of operations at September 30, 1996 and 1995 included
in the accompanying consolidated financial statements include the
results of operations of the Resort assuming that the acquisition was
effective January 1, 1995. A portion of the purchase price was
satisfied with proceeds from the public offering (Note E).
NOTE C - EARNINGS (LOSS) PER COMMON SHARE
The computation of earnings per share was based on the weighted
average number of common shares outstanding. Common stock
equivalents were not considered as their inclusion would be
antidilutive. Pro forma earnings per share includes the shares
issued to the sellers in connection with the acquisition of the
Resort and shares issued to the public in connection with the
securities offering (Note E) to finance a portion of the cash
purchase price for the Resort which are considered outstanding as of
January 1, 1995.
NASHVILLE COUNTRY CLUB, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE D - INCOME TAXES
The Company calculates and records the amounts of income taxes
payable or refundable currently or in future years for temporary
differences between the financial statement basis and income tax
basis based on the current enacted tax laws. No provision for income
taxes has been provided in the accompanying consolidated financial
statements as the Company has net operating loss carryforwards to
offset future net income. The deferred tax asset of approximately
$1,200,000 for the remaining net operating losses would be fully
impaired as a result of the uncertainty as to their ultimate
utilization. Therefore, the accompanying consolidated financial
statements would not differ.
NOTE E -SECURITIES OFFERING
On April 29, 1996, the Company completed a public offering of
1,200,000 units at $10 per unit. Each unit consisted of two shares
of common stock and one redeemable common stock purchase warrant.
Each redeemable common stock purchase warrant entitles the holder to
purchase one share of common stock at a price of $6.25 until April
23, 2001. Net proceeds from the offering were approximately
$10,800,000, a portion of which was used to pay the cash purchase
price for the Resort (Note B) and expenses of the acquisition and the
offering.
In May 1996, the underwriter exercised its overallotment option and
acquired an additional 154,365 units. Net proceeds from the
exercising of the overallotment were approximately $1,300,000.
Item 2. Management's Discussion and Analysis or Plan of Operation
General
The Company's historical financial statements include the operations
of a restaurant in Nashville, Tennessee and the Resort. The results
for the three-month and nine-month periods ended September 30, 1996
and 1995 are not readily comparable. The actual results for the
three-month and nine-month periods ended September 30, 1995 include
only operations of the Nashville restaurant. The actual results for
the three-month period ended September 30, 1996 include the Nashville
restaurant and the Resort. The actual results for the nine-month
period ended September 30, 1996 include the operations of the
Nashville restaurant for the entire nine-month period and the Resort
from the date of acquisition (April 29, 1996).
Nashville Restaurant Operations
Total net sales for the nine months ended September 30, 1996 were
approximately $1,577,000 compared to $1,649,000 for the same nine
month period in the prior year. The overall decrease is due to poor
winter weather conditions in Nashville and a loss of summer sales due
to a drop in tourism corresponding to the Atlanta Olympic games.
Food and beverage cost of goods sold decreased, as a percent of
revenue, to 31% in 1996 from 33% for the same nine month period in
1995. Other departmental expenses decreased approximately $160,000
in 1996 over the same nine month period in 1995 due to improved
operating efficiencies and a greater emphasis on controlling labor
and other costs at the Nashville restaurant.
Departmental profit for the Nashville restaurant improved from a loss
of (60,000) for the first nine months of 1995 to a profit of $71,000
for the same period for 1996 due to improved operating efficiencies.
Pro Forma Operations
On a pro forma basis, assuming the acquisition of the Resort, as of
January 1, 1995, revenues for the nine months ended September 30,
1996 increased 29% from $12,851,000 for the nine months ended
September 30, 1995 to $16,564,000 for the nine months ended September
30, 1996. The increase is primarily due to an increase in room and
other revenues. The increase in room revenues is due in part to the
acquisition of additional living units under management contracts and
overall increased occupancy and increased average rates for rooms.
The increase in other revenues was primarily due to improved
operations of A Travel Company, a full service travel agency owned
and operated by the Resort and revenue from special events packages.
Room revenues and food and beverage revenues were negatively inpacted
in the third quarter by a last minute cancellation of a major
government group. This resulted in an irreplaceable loss of 663 room
nights, equating to approximately $100,000 in revenues.
Changes in expenses as if the acquisition was effective January 1,
1995 are as follows:
Food and beverage expenses as a percentage of food and beverage
revenues decreased from 89% at September 30, 1995 to 86% at
September 30, 1996. This decrease is primarily due to improved
operating efficiencies and inventory controls and increased
banquet sales which have a higher profit margin. Other
departmental expenses increased primarily due to an increase in
special events packages and to the increase cost of sales
associated with the increase in travel agency operations.
Prior to the acquisition of the Resort by the Company, two special
events outdoor concerts were contracted to be held in the third
quarter. These first year events were negatively impacted by
adverse weather and, together, had expenses that were $92,000
greater than corresponding special events revenue.
Sales and marketing expenses increased approximately $111,000 for
the nine months ended September 30, 1996 over the same period in
1995. The increase is primarily due a greater sales effort at the
Resort which is focused on increasing the advanced reservation
pace for 1997.
Interest expense decreased approximately $156,000 for 1996 over
the same nine month period in 1995 as the Resort continues to
reduce its debt levels.
Other expenses remained relatively stable on a quarter to quarter
basis.
Net loss, on a proforma basis, decreased form a net loss of
$(961,000) for the first nine months of 1995 to a net loss of
$(99,000) for the first nine months of 1996. The improvement is
due primarily to increased revenues and improved operating
efficiencies.
The Resort's results of operations are affected by seasonality in its
business, primarily to the extent that revenues and operating profits
may be lower in the spring, summer and fall months than in the winter
months. Historically, the first quarter of the year is the most
profitable with other quarters' earnings significantly less or in a
loss position.
Liquidity and Capital Resources
As of September 30, 1996, the Company had cash and cash equivalents
and marketable securities of approximately $1,823,000 and working
capital of approximately $704,000. On April 29, 1996, the Company
completed a public offering resulting in the Company receiving
proceeds of approximately $12,100,000. The Company paid
approximately $6,467,000 of such net proceeds in satisfaction of the
cash purchase price for the Resort and approximately $887,000 in
closing costs associated with the acquisition and the offering. The
cash and cash equivalents on hand at September 30, 1996 are
anticipated to be sufficient to conduct operations and satisfy
current debt financing obligations for at least the next eighteen
months.
Certain oral and written statements of management of the Company
included in this Form 10-QSB/A and elsewhere may contain forward-
looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934, which are intended to be covered by the safe harbors created
thereby. These statements include the plans and objectives of
management for future operations. The forwardlooking statements
included herein and elsewhere are based on current expectations that
involve numerous risks and uncertainties. Assumptions relating to
the foregoing involve judgments which are difficult or impossible to
predict accurately and many of which are beyond the control of the
Company. In particular the assumptions assume favorable weather
conditions in Breckenridge, Colorado, continued popularity of winter
sports, including skiing, the continued ability of Resort management
to maintain and increase revenues from the Resort's operations,
continued popularity of country music and the country lifestyle
associated with country music and favorable, economic, competitive
and market conditions for the Company's business operations.
Although the Company believes that the assumptions underlying the
forward-looking statements are reasonable, any of the assumptions
could be inaccurate and, therefore, there can be no assurance that
the forward-looking statements will prove to be accurate. In light
of the significant uncertainties inherent in the forward-looking
statement, the inclusion of such information should not be regarded
as a representation by the Company or any other person that the
objectives and plans of the Company will be achieved.
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits
Exhibit 27 Financial Data Schedule
(B) Form 8-K's filed during the quarterly period
ended September 30, 1996:
There were no 8-Ks filed in the third quarter of 1996.
SIGNATURES
In accordance with the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized in the city of Hickory Valley, Tennessee, on the 14th day
of August 1996.
NASHVILLE COUNTRY CLUB, INC.
By: /s/ Thomas Jackson Weaver III
Thomas Jackson Weaver III Chairman of the
Board, Chief
Executive Officer and President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-END> SEP-30-1996 SEP-30-1996
<CASH> 1,822,640 1,822,640
<SECURITIES> 0 0
<RECEIVABLES> 640,196 640,196
<ALLOWANCES> 0 0
<INVENTORY> 491,149 491,149
<CURRENT-ASSETS> 3,185,537 3,185,537
<PP&E> 31,682,978 31,682,978
<DEPRECIATION> 490,095 490,095
<TOTAL-ASSETS> 36,693,445 36,693,445
<CURRENT-LIABILITIES> 2,481,041 2,481,041
<BONDS> 0 0
0 0
10,000 10,000
<COMMON> 16,623,033 16,623,033
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 36,693,445 36,693,445
<SALES> 4,123,456 6,417,657
<TOTAL-REVENUES> 4,123,456 6,417,657
<CGS> 3,286,094 5,307,642
<TOTAL-COSTS> 4,446,987 7,500,480
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 466,828 698,064
<INCOME-PRETAX> (790,359) (1,780,887)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (790,359) (1,780,887)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (790,359) (1,780,887)
<EPS-PRIMARY> (.17) (.56)
<EPS-DILUTED> (.17) (.56)
</TABLE>
