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 June 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 June 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 5
Notes to Consolidated Financial Statements 7
Item 2: Management's Discussion and Analysis or Plan of Operation 9
PART II: Other Information
Signature 12
NASHVILLE COUNTRY CLUB, INC. AND SUBSIDIARIES
Part I
Financial Information
Item 1. Financial statements
Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30, December
31,
1996 1995
(Unaudited
)
<S> <C> <C>
Current assets
Cash and cash equivalents $ 3,158,498 $ 235,711
Accounts receivable 872,496 -
Inventories 452,693 120,554
Prepaid expenses and other current 210,290 7,190
assets
Total current assets 4,693,977 363,455
Property, plant, and equipment, at cost
Land 12,827,521 800,000
Buildings and improvements 15,966,149 1,351,439
Furniture, fixtures, restaurant 2,486,677 508,495
equipment, and other equipment
31,280,347 2,659,934
Less accumulated depreciation and (321,729) (129,202)
amortization
30,958,618 2,530,732
Other assets
Intangibles, net 2,330,657 138,412
Other assets 49,025
Total assets $ 38,032,277 $ 3,032,599
Current liabilities
Current portion of long-term debt $ 265,000 $ -
Notes payable - 250,000
Accounts payable 889,624 138,595
Accrued payroll and related taxes 789,106 -
Advanced deposits 349,340 -
Due to homeowners 92,525 -
Accrued interest 150,052 -
Other accrued expenses 272,589
116,046
Total current liabilities 2,808,236 504,641
Long-term debt, net of current portion 20,288,325 -
Capital lease obligation 733,000 733,000
Stockholders' equity
Preferred stock, no par value; authorized
1,000,000 shares, 334,285 of Series A
convertible preferred stock issued and 10,000
outstanding, $10,029 liquidation 10,000
preference
Common stock, no par value; authorized
20,000,000 shares, 1,470,000 shares
issued and outstanding; 4,590,435 shares 16,623,033
issued and outstanding pro forma 3,224,747
Accumulated deficit (2,430,317) (1,439,789)
Total stockholders' equity 14,202,716 1,794,958
Total liabilities and stockholders' $ 38,032,277 $ 3,032,599
equity
NASHVILLE COUNTRY CLUB, INC. AND SUBSIDIARIES
Consolidated Statements of Operations (Unaudited)
</TABLE>
<TABLE>
<CAPTION>
Pro Forma (See Note
Six Months Ended B)
Six Months Ended
June June
30, 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenue
Room $ 485,701 $ - $ $
6,226,187 4,955,773
Food and beverage 1,380,108 1,132,284 3,377,395
3,793,637
Commercial leasing 207,141 -
957,340 903,110
Other 221,251 -
1,463,324 391,866
Total revenue 2,294,201 1,132,284
12,440,48 9,628,144
8
Departmental expenses
Rooms 465,960 -
3,800,460 3,069,381
Food and beverage 1,336,317 3,181,155
901,279 2,663,603
Other 266,888 -
1,362,130 348,369
Total departmental 2,069,165 901,279
expenses 8,343,745 6,081,353
Departmental profit 225,036 231,005
4,096,743 3,546,791
Undistributed operating
expenses
Sales and marketing 225,751 -
463,171 342,066
General and administrative 535,707 686,304
and other 1,511,893 1,977,955
Depreciation 192,527 55,851
462,592 448,805
953,985 742,155
2,437,656 2,768,826
Gross operating (loss) (728,949) (511,150)
profit 1,659,087 777,965
Other income (expenses)
Interest, net (231,236) 16,532
(830,097) (959,171)
Property taxes (30,343) -
(137,176) (46,664)
Total other income (261,579) 16,532
(expenses) (967,273) (1,005,83
5)
Net (loss) income $ (990,528) $ (494,618) $ $
691,814 (227,870)
Weighted average shares 2,459,660 1,470,000
outstanding 4,590,435 4,590,435
Earnings (loss) per common
share (.40) (.34) .15 (.05)
NASHVILLE COUNTRY CLUB, INC. AND SUBSIDIARIES
Consolidated Statements of Operations (Unaudited)
</TABLE>
<TABLE>
<CAPTION>
Pro Forma (See Note
Three Months Ended B) Three Months
Ended
June June
30, 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenue
Room $ 485,701 $ - $ $
1,105,212 881,430
Food and beverage 874,847 587,057
1,177,424 1,082,060
Commercial leasing 207,141 -
407,433 353,945
Other 211,270 -
378,558 99,922
Total revenue 1,778,959 587,057
3,068,627 2,417,357
Departmental expenses
Rooms 465,960 -
884,313 698,838
Food and beverage 981,915 449,681 917,969
1,267,846
Other 266,888 -
407,819 65,214
Total departmental 1,714,763 449,681
expenses 2,559,978 1,682,021
Departmental profit 64,196 137,376
508,649 735,336
Undistributed operating
expenses
Sales and marketing 225,751 275,763
- 153,422
General and administrative 302,551 340,964
and other 543,923 925,868
Depreciation 163,422 27,889
237,048 224,404
691,724 368,853
1,056,734 1,303,694
Gross operating (loss) (627,528) (231,477)
profit (548,085) (568,358)
Other income (expenses)
Interest, net (233,198) 5,591
(379,606) (473,978)
Property taxes (30,343) -
(68,588) (23,332)
Total other income (263,541) 5,591
(expenses) (448,194) (497,310)
Net (loss) income $ (891,069) $ (225,886) $ $
(996,279) (1,065,66
8)
Weighted average shares 1,964,830 1,470,000
outstanding 4,590,435 4,590,435
Earnings (loss) per common
share (.45) (.15) (.22) (.23)
NASHVILLE COUNTRY CLUB, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flow (Unaudited)
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended
June
30,
1996 1995
<S> <C> <C>
Net loss $ $
(990,528 (494,618
) )
Adjustments to reconcile net loss to net
cash used by operating activities
Depreciation and amortization
192,527 68,673
Changes in assets and liabilities
Accounts receivable
16,649 -
Inventory
(106,741 (4,317)
)
Prepaid expenses
(203,100 12,374
)
Other assets
89,387 (17,070)
Accounts payable and accrued
expenses (915,479 (214,853
) )
(926,757 (155,193
) )
Net cash used by operating
activities (1,917,2 (649,811
85) )
Cash flows from investing activities
Acquisition of the Resort, net of cash
acquired (6,148,1 (34,703)
58)
Net cash used by investing
activities (6,148,1 (34,703)
58)
Cash flows from financing activities
Proceeds from sale of units
11,300,6 -
61
Payments on debt
(312,431 -
)
Net cash provided by financing
activities 10,988,2 -
30
Net decrease in cash and cash equivalents
2,922,78 (684,514
7 )
Cash and cash equivalents - beginning of
period 235,711 1,046,70
9
Cash and cash equivalents - end of period $ $
3,158,49 362,195
8
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 June 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>
<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 June 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
$935,000 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
$10,300,000, 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 151,455 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
Nashville Restaurant Operations
Total net sales for the six months ended June 30, 1996 were
approximately $1,085,000 compared to $1,132,000 for the same six
month period in the prior year. The overall decrease is due to poor
winter weather conditions in Nashville. Food and beverage expenses
decreased, as a percent of revenue, to 31% in 1996 from 34% for the
same period in 1995. The decrease in expenses and overall increase
in departmental profit was due primarily 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 six months ended June 30, 1996
increased 29% from $9,628,000 for the six months ended June 30, 1995
to $12,440,000 for the six months ended June 30, 1996. The increase
of 30% was 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 income from special events packages.
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 increased from 79% at June 30, 1995 to 84% at June 30,
1996. This increase is primarily due to integrating food and
beverage operations of the Resort into the combined entity
including training. Other expenses increased primarily due to an
increase in special events packages.
Other expenses remained relatively stable on a quarter to quarter
basis.
Net income, on a proforma basis, for the first six months of 1996
increased to $692,000 from a $(228,000) loss for the first six
months of 1995 due to increased Resort 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. The second quarter is historically the least
profitable. The third quarter should improve due to increased
revenues during the summer months.
Item 2. Management's Discussion and Analysis or Plan of Operation
Liquidity and Capital Resources
As of June 30, 1996, the Company had cash and cash equivalents and
marketable securities of approximately $3,158,000 and working capital
of approximately $1,886,000. On April 29, 1996, the Company
completed a public offering resulting in the Company receiving
proceeds of approximately $11,600,000. 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 June 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 June 30, 1996:
For 8-K and Form 8-K/A filed May 17, 1996 and May 30, 1996,
respectively, with respect to changes in registrant's certifying
accountant.
Form 8-K filed May 18, 1996 with respect to the acquisition of the
Village at Breckenridge Resort (the Resort) including financial
statements of the Resort and Proforma Incorporated by reference from
the Registrant's registration statement on Form SB-2 (Registration
No. 33-97890).
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 6-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-END> JUN-30-1996 JUN-30-1996
<CASH> 3,158,498 3,158,498
<SECURITIES> 0 0
<RECEIVABLES> 872,496 872,496
<ALLOWANCES> 0 0
<INVENTORY> 452,693 452,693
<CURRENT-ASSETS> 4,693,977 4,693,977
<PP&E> 31,280,347 31,280,347
<DEPRECIATION> 321,729 321,729
<TOTAL-ASSETS> 30,958,618 30,958,618
<CURRENT-LIABILITIES> 2,808,236 2,808,236
<BONDS> 0 0
0 0
10,000 10,000
<COMMON> 16,623,033 16,623,033
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 38,032,277 38,032,277
<SALES> 0 0
<TOTAL-REVENUES> 1,778,959 2,294,201
<CGS> 0 0
<TOTAL-COSTS> 2,436,830 3,053,493
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 233,198 231,236
<INCOME-PRETAX> (891,069) (990,528)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (891,069) (990,528)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (891,069) (990,528)
<EPS-PRIMARY> (.45) (.40)
<EPS-DILUTED> 0 0
</TABLE>
