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 March 31, 1996
Transition report under Section 13 or 15(d) of
the Securities Exchange Act of 1934.
For the transition 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
Incorporation or Organization) Identification Number)
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 March 31, 1996, the Registrant had outstanding
1,470,000 shares of Common Stock, no par value.
Transitional Small Business Disclosure Format (check one)
Yes No X
Page 1 of 12 sequentially numbered pages
TABLE OF CONTENTS
Item 1: Financial Statements:
Consolidated Balance Sheets 3
Consolidated Statements of Operations 5
Consolidated Statements of Cash Flow 6
Notes to Consolidated Financial Statements 8
Item 2: Management's Discussion and Analysis
or Plan of Operation 10
PART II: Other Information
Signatures 12
PART I
FINANCIAL INFORMATION
Item 1. Financial statements
<TABLE>
Nashville Country Club, Inc. and Subsidiaries
Consolidated Balance Sheets
<CAPTION>
March 31,December 31,
1996 1995
(Unaudited)
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 954,758 $ 235,711
Accounts receivable 914,219 -
Inventories 417,511 120,554
Prepaid expenses and other current
assets 165,762 7,190
Total current assets 2,452,250 363,455
Property, plant, and equipment,
at cost
Land 13,501,065 800,000
Buildings and improvements 16,876,072 1,351,439
Furniture, fixtures, restaurant
equipment, and other equipment 2,106,721 508,495
32,483,858 2,659,934
Less accumulated depreciation
and amortization (321,954) (129,202)
32,161,904 2,530,732
Other assets
Intangibles, net 2,261,667 -
Deferred offering costs 444,657 -
Other assets 277,475 138,412
Total assets $37,597,953 $3,032,599
</TABLE>
<TABLE>
Nashville Country Club, Inc. and Subsidiaries
Consolidated Balance Sheets
<CAPTION>
March 31, December 31,
1996 1995
(Unaudited)
<S> <C> <C>
Liabilities and Stockholders' Equity
Current liabilities
Current portion of long-term debt $ 265,000 $ -
Notes payable 300,000 250,000
Due to seller 6,133,698 -
Accounts payable 1,460,079 138,595
Accrued expenses 1,849,057 116,046
Advanced deposits 360,234 -
Due to homeowners 703,330 -
Total current liabilities 11,071,398 504,641
Long-term debt, net of current portion 20,350,756 -
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
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 3,224,747 3,224,747
Common stock subscribed,
417,525 shares 2,087,627 -
Retained earnings (accumulated
deficit) 120,425 (1,439,789)
Total stockholders' equity 5,442,799 1,794,958
Total liabilities and stockholders'
equity $37,597,953 $3,032,599
</TABLE>
<TABLE>
Nashville Country Club, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
1996 1995
<S> <C> <C>
Revenue
Room $5,120,975 $ -
Food and beverage 2,616,213 545,227
Commercial leasing 549,907 -
Other 1,084,766 -
Total revenue 9,371,861 545,227
Departmental expenses
Rooms 2,916,147 -
Food and beverage 1,913,309 451,598
Other 954,311 -
Total departmental expenses 5,783,767 451,598
Departmental profit 3,588,094 93,629
Undistributed operating expenses
Other operating costs 446,518 248,793
Sales and marketing 187,408 -
General and administrative 521,452 96,547
Depreciation 231,085 27,962
1,386,463 373,302
Gross operating profit (loss) 2,201,631 (279,673)
Other income (expenses)
Interest, net (450,491) 10,941
Property taxes (68,588) -
Imputed interest on acquisition (122,338) -
Total other income (expenses) (641,417) 10,941
Net income $1,560,214 $(268,732)
Weighted average shares outstanding 4,287,525 1,470,000
Earnings (loss) per common share .39 (.18)
</TABLE>
<TABLE>
Nashville Country Club, Inc. and Subsidiaries
Consolidated Statements of Cash Flow
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
1996 1995
<S> <C> <C>
Net income (loss) $1,560,214 $(268,732)
Adjustments to reconcile net
income (loss) to net cash
(used) provided by operating
activities
Depreciation and amortization 231,085 27,962
Interest imputed on acquisition 122,338 -
Changes in assets and liabilities
Accounts receivable (762,155) -
Inventory (8,280) (4,418)
Prepaid expenses (41,946) 9,274
Other assets (139,063) (10,244)
Accounts payable and
accrued expenses (53,971) (144,751)
Advanced deposits (859,640) -
Due to homeowners 182,191 -
(1,329,441) (122,177)
Net cash provided (used) by
operating activities 230,773 (390,909)
Cash flows from investing activities
Property and equipment additions (36,482) (14,114)
Cash acquired 1,150,277 -
Acquisition of The Village at
Breckenridge Resort (465,822) -
Net cash provided (used) by
investing activities 647,973 (14,114)
Cash flows from financing activities
Deferred offering costs (30,657) -
Proceeds from notes payable 50,000 -
Net principal payments under
long-term debt obligations (179,042) -
Net cash (used) by
financing activities (159,699) -
Net increase (decrease) in cash and
cash equivalents 719,047 (405,023)
Cash and cash equivalents - beginning
of period 235,711 1,046,709
Cash and cash equivalents - end
of period $ 954,758 $ 641,686
Supplemental disclosure of cash flow information:
Cash paid for interest was $295,026 and $10,941 for
the three months ended March 31, 1996 and 1995,
respectively.
Supplemental disclosure of non-cash investing and
financing activities:
During the three months ended March 31, 1996,
Nashville Country Club, Inc. (the "Company") accrued
$414,000 of deferred offering costs.
</TABLE>
<TABLE>
Nashville Country Club, Inc. and Subsidiaries
Consolidated Statements of Cash Flow
(Unaudited)
<CAPTION>
Effective January 1, 1996, the Company acquired the
properties and interests commonly known as The Village at
Breckenridge-A Wyndham Resort (the "Resort"). The net
purchase price was allocated as follows:
<S> <C>
Working capital deficit $(2,230,805)
Property and equipment 29,290,412
Intangibles 2,300,000
Long-term debt (20,794,798)
Net assets acquired 8,564,809
Cash paid (465,822)
Common stock subscribed (2,087,627)
Due to seller (6,133,698)
Interest imputed on acquisition for period
between effective date and closing
$ (122,338)
Additionally, in connection with the acquisition, the
Company accrued $511,545 of closing costs and prepaid property
taxes.
Nashville Country Club, Inc. and Subsidiary
Notes to Consolidated Financial Statements
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements 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 Regulations S-
B. 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 March 31, 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 - PROFORMA OPERATIONS
Effective January 1, 1996, the Company acquired The Village
at Breckenridge Resort (the "Resort"). The acquisition has
been accounted for using the purchase method of
accounting and accordingly, the 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
purchased price was allocated as follows:
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Working capital (deficit) $(2,230,805)
Property and equipment 29,290,412
Intangibles 2,300,000
Long-term debt (20,794,798)
Net assets acquired $ 8,564,804
</TABLE>
Intangibles are being amortized over 15 years.
The operating results of the Resort have been included in
the consolidated statement of operations since the effective
date of the acquisition. The following unaudited proforma
results of operations for the three months ended March 31,
1995 assumed that the acquisition was effective January 1,
1995:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
(Proforma)
<S> <C> <C>
Revenue $ 9,371,861 $ 7,210,787
Net income $ 1,560,214 $ 832,257
Earnings per common share $ .39 $ .19
Proforma weighted average
shares outstanding 4,287,525 4,287,525
</TABLE>
Nashville Country Club, Inc. and Subsidiary
Notes to Consolidated Financial Statements
NOTE C - EARNINGS (LOSS) PER COMMON SHARE
In 1996, the computation of earnings per share was based on
the weighted average number of common shares outstanding plus
common stock equivalents. Common stock equivalents are
determined using the treasury stock method. In addition,
shares subscribed as a result of the acquisition of the
Resort and shares issued in connection with the securities
offering (Note F) are considered as outstanding since
January 1, 1996 as proceeds from the offering satisfied
the amount due to the seller in April of 1996. Accordingly,
imputed interest on the acquisition of the Resort has been
excluded from net income when computing earnings per
share.
For 1995, common stock equivalents were not considered as
their inclusion would be antidilutive
NOTE D - IMPUTED INTEREST ON ACQUISITION
As the effective date of the acquisition was between
the initiation and execution of the transaction, the
Company has reduced the cost of the assets and net
income acquired by imputing interest on the cash
consideration paid to the seller of $6,133,698 using the
Company's current borrowing rate for the period from
January 1, 1996 to April 29, 1996 (date of closing). As a
result, the cost of the assets acquired was reduced by
$161,325 of which $122,338 reduced net income acquired in
the first quarter. The remaining $38,987 will reduce second
quarter earnings and is included in prepaid expenses in the
accompanying consolidated financial statements.
NOTE E - 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's net operating loss carryforwards will offset the
net income for the quarter.
The deferred tax asset of approximately $50,000 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 F - SUBSEQUENT EVENT
On April 29, 1996, the Company completed a public offering
of 1,200,000 units at $10 per unit, each unit consisting of
two shares of common stock and one redeemable common stock
purchase warrant, each redeemable common stock purchase
warrant entitling the holder to purchase one share of common
stock at a price of $6.25 until April 2001. Net proceeds
from the offering were approximately $10,300,000, a portion
of which was used to pay the amount due to seller and pay
expenses of the acquisition.
Item 2. Management's Discussion and Analysis or Plan of
Operation
Total net sales for the three months ended March 31, 1996
were approximately $9,372,000 compared to $545,000 for the same
three month period in the prior year. The overall increase is
due to the acquisition of The Village at Breckenridge (the
"Resort") which was effective January 1, 1996. Had the
acquisition taken place as of January 1, 1995, revenues for
the three months ended March 31, 1996 increased 30% from
$7,211,000 for the three months ended March 31, 1995. 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 the
travel agency which is a part of the Resort and income from
special events packages.
Changes in expenses as if the acquisition was
effective January 1, 1995 are as follows:
Room expenses as a percentage of room revenues
decreased from 58% at March 31, 1995 to 57% at March 31,
1996. These expenses include the fees paid to the owners
of the living units for revenues produced from the
rental of such units. Food and beverage expenses as a
percentage of food and beverage revenues decreased
from 76% at March 31, 1995 to 73% at March 31, 1996.
This decrease is primarily due to improved operating
efficiencies. Other expenses increased primarily due to
an increase in special events packages.
Other expenses remainded relatively stable on a quarter
to quarter basis.
Net income, on a proforma basis, for the first quarter
of 1996 increased 87% from $832,000 to $1,560,000
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.
Liquidity and Capital Resources
As of March 31, 1996, the Company has cash and cash
equivalents of approximately $955,000 and a working
capital deficit of approximately $8,619,000. Subsequent to
March 31, 1996, the Company completed a public offering of
securities whereby the Company received proceeds of
approximately $10,300,000. In connection with the acquisition of the
Resort, the Company paid the seller approximately $6,134,000 which has been
accrued at March 31, 1996. Additionally, the Company paid
approximately $887,000 of closing costs in connection with
the acquisition which have also been accrued at March 31,
1996. The cash and cash equivalents on hand at March 31,
1996 and the remaining proceeds from the offering of
approximately $3,279,000 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 and elsewhere may
contain certain 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 with respect to, among other things,
decisions, all of which are difficult or impossible to predict
accurately and many of which are beyond the control of the
Company, in particular the assumptions assume continued
strong operating results, future economic, competitive and
market conditions and future business decisions, all of which
are difficult or impossible to predict accurately and many
of which are beyond the control of the Company. 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 included in
this Form 10-QSB and elsewhere will prove to be accurate. In
light of the significant uncertainties inherent in the
forward-looking
statement included herein, 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 filed during the quarterly period
ended March 31, 1996:
On February 13, 1996 the Registrant filed
a Form 8-K regarding a press release
dated December 4, 1995 with respect to the
acquisition of The Village at Breckenridge
Resort.
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 15th day of May 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>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 954,758
<SECURITIES> 0
<RECEIVABLES> 914,219
<ALLOWANCES> 0
<INVENTORY> 417,511
<CURRENT-ASSETS> 2,452,250
<PP&E> 32,483,858
<DEPRECIATION> 321,954
<TOTAL-ASSETS> 37,597,953
<CURRENT-LIABILITIES> 11,071,398
<BONDS> 21,083,756
0
10,000
<COMMON> 3,224,747
<OTHER-SE> 2,208,052
<TOTAL-LIABILITY-AND-EQUITY> 37,597,953
<SALES> 2,616,213
<TOTAL-REVENUES> 9,371,861
<CGS> 1,913,309
<TOTAL-COSTS> 5,783,767
<OTHER-EXPENSES> 1,577,389
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 450,491
<INCOME-PRETAX> 1,560,214
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,560,214
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,560,214
<EPS-PRIMARY> .39
<EPS-DILUTED> .39
</TABLE>
