SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ____ to ____
Commission File Number 000-02290
EFFICIENCY LODGE, INC.
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Georgia 58-0898219
- ---------------------------- --------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
5342 Old Floyd Road, P.O. Box 635, Mableton, Georgia 30059
----------------------------------------------------------
(Address of principal executive offices)
(770) 819-0039
------------------------------------------------
(Issuer's telephone number, including area code)
Check whether the issuer (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 / /
Shares outstanding of each of the issuer's classes of common equity at
August 14, 1997: 1,026,880 shares of Common Stock, $0.10 par value share.
Transitional Small Business Disclosure Format (check one)
Yes / / No /x/
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - Financial Statements
Efficiency Lodge, Inc.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
ASSETS
June 30, 1997 December 31, 1996
------------- ---------------
(Unaudited)
<S> <C> <C>
Property and equipment, net $10,442,480 $ 8,844,764
Cash 368,716 159,944
Other assets 1,352,884 1,532,390
----------- -----------
$12,164,080 $10,537,098
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgage notes payable $11,491,813 $10,038,389
Other liabilities 638,581 503,251
----------- -----------
Total liabilities 12,130,394 10,541,640
Stockholders' equity
Common stock 102,688 102,688
Additional paid-in capital 52,674 52,674
Accumulated deficit (121,676) (159,904)
----------- ----------
Total stockholders' equity 33,686 (4,542)
----------- ----------
$12,164,080 $10,537,098
=========== ===========
/TABLE
<PAGE>
Efficiency Lodge, Inc.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited)
Six months ended June 30, 1997
<TABLE>
<CAPTION>
Additional
Common paid-in Accumulated
stock capital deficit Total
-------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Balance at January 1, 1997 $102,688 $ 52,674 $ (159,904) $(4,542)
Net income for the six months -- -- 38,228 38,228
-------- --------- ---------- -------
Balance at June 30, 1997 $102,688 $ 52,674 $ (121,676) $33,686
======== ========= ========== =======
</TABLE>
<PAGE>
Efficiency Lodge, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Quarters Ending June 30, 1997 and 1996
For the Six Months Ended June 30, 1997 and 1996
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues $1,141,640 $1,028,649 $2,000,303 $2,002,577
Operating expenses 662,449 595,396 1,345,536 1,146,961
---------- ---------- ---------- ----------
Operating income 479,191 433,253 654,767 855,616
Other (income) expense, net 336,361 235,334 606,378 499,313
---------- ---------- ---------- ----------
Earning (loss) before income
taxes 142,830 197,919 48,389 356,303
Provision for income taxes 45,161 -- 10,161 --
---------- ---------- ---------- ----------
Net earnings (loss) $ 97,669 $ 197,919 $ 38,228 $ 356,303
========== ========== ========== ==========
Net earnings (loss) per common
share $ .09 $ 219.91 $ .04 $ 395.89
========== ========== ========== ==========
Weighted average number of
common shares outstanding 1,026,880 900 1,026,880 900
========== ========== ========== ==========
Historical earnings before income
taxes $ 197,919 $ 356,303
Pro forma income tax expense 81,000 140,000
---------- ----------
Pro forma net earnings $ 116,919 $ 216.303
========== ==========
Pro forma earnings per share $ 129.91 $ 240.34
========== ==========
/TABLE
<PAGE>
Efficiency Lodge, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Six months ended June 30,
1997 1996
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 38,228 $ 356,303
Adjustments to reconcile net earnings (loss) to
to net cash provided by operating activities:
Depreciation and amortization 198,509 209,464
Changes in assets and liabilities:
Other assets (76,065) (53,107)
Other liabilities 135,388 192,646
Loss on sale of asset 46,953 --
---------- ----------
Net cash provided by operating activities 343,013 705,306
Cash flows from investing activities:
Capital expenditures (1,653,405) (29,922)
Increase in due from stockholders -- (50,500)
Increase in advance to affiliate (18,648) (209,982)
Proceeds from sale of building 84,448 --
---------- ----------
Net cash used for investing activities (1,587,605) (290,404)
Cash flows from financing activities:
Principal payments on long-term debt (208,613) (159,604)
Due to stockholders -- (30,000)
Cash distributions to stockholders -- (10,000)
Proceeds from issuance of debt 1,700,000 --
Payoff of note on building sold (37,963) --
---------- ----------
Net cash provided (used) be financing activities 1,453,424 (199,604)
---------- ----------
Increase (decrease) in cash and cash equivalents 208,832 215,298
Cash and cash equivalents, beginning of period 159,944 84,064
---------- ----------
Cash and cash equivalents, end of period $ 368,776 $ 299,362
========== ==========
Cash paid during the period for interest $ 596,569 $ 532,623
========== ==========
</TABLE>
During the three month period ended March 31, 1997, advances to an affiliate
totaling $265,095 were forgiven in connection with the purchase of a facility
from the affiliate.
During the three month period ending June 30, 1997, a building was sold which
had a cost of $132,626 and accumulated depreciation of $1,225.
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
----------------------------------
Fixed assets increased from December 31, 1996, because of the acquiring
and equipping of DeKalb Lodge which opened on March 1, 1997. Likewise,
the increase of mortgage debt was the result of the assumption of
mortgage debt associated with DeKalb Lodge.
Revenue for the second quarter was $1,141,640 compared to $1,028,649 for
the same period in 1996. The opening of DeKalb Lodge contributed
$217,695 in revenue for the second quarter. Revenue on a store-to-store
basis, excluding DeKalb, decreased $604,820, as compared to the same
quarter last year. This decrease, on a store-to-store basis, amounted to
a 10% decrease compared to the same quarter in 1996. The first quarter
decrease on a store-to-store basis was 17.86%. The decrease of revenue
on a store-to-store basis is attributed to a wet winter and cool spring
which affected construction workers at primarily three lodges where
construction crews generally stay. The completion of the Olympics and
fewer construction crews also contributed to the loss of revenue at these
lodges. During the second quarter, revenue on a store-to-store basis
improved even through revenue at two lodges lagged improvements of the
other facilities.
DeKalb Lodge opened on March 1, 1997, and has been over 90% occupied
since two weeks after its opening. A new lodge is under construction in
Columbus, Georgia. A fall opening is anticipated.
Total general and administrative expenses for the quarter was $974,925
compared to $869,467 for the same quarter last year. Increases of $38,406
for interest, $6,332 for maintenance supplies, and $17,209 for repairs,
made up $61,947 of the difference. The increased interest is
attributable to the additional mortgage debt of DeKalb Lodge. The
maintenance and repair expenses were the result of normal maintenance and
repair.
Net income before taxes for the quarter was $142,830 which included a
loss on the sale of an office building acquired in the SAC merger of
$46,953. Without this one time charge, the net income before taxes would
be $189,783. Net income before taxes for the same quarter in 1996, was
$197,919 which before taxes for the same quarter in 1996, was $197,919
which included a one time gain from the sale of certain investment
securities in the amount of $30,047. As adjusted for this one time sale,
net income before taxes in 1996, was $167,872.
<PAGE>
Efficiency Lodge, Inc.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 1997
NOTE A - BASIS OF PREPARATION
The accompanying unaudited interim consolidated financial statements of
Efficiency Lodge, Inc. (The "Company") have been prepared in accordance
with generally accepted accounting principles for interim financial
statements and with the rules and regulations of the Securities and
Exchange Commission. 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.
The results of operations for the quarter ended June 30, 1997 are not
necessarily indicative of the results that may be expected for the full
year. The interim consolidated financial statements should be read in
conjunction with the Company's 1996 consolidated financial statements
and related notes.
NOTE B - NEW ACCOUNTING PRONOUNCEMENT
The FASB has issued Statement of Financial Accounting Standards No.
128, Earnings Per Share, which is effective for financial statements
issued after December 15, 1997. Early adoption of the new standard is
not permitted. The new standard eliminates primarily and fully diluted
earnings per share and requires presentation of basic and diluted
earnings per share together with disclosures of how the per share
amounts were computed. The adoption of this new standard is not
expected to have a material impact on the disclosure of earnings per
share in the financial statements.
NOTE C - PRO FORMA RESULTS OF OPERATIONS
On December 31, 1996, the Company merged with Southern Acceptance
Corporation, Inc. (SAC). The merger was recorded under the purchase
method of accounting with ELI being considered the acquiring company.
SAC's results of operations have been included in the Company's
statement of operations from the date of acquisition. Accordingly, the
accompanying historical results of operations for the three months
ended March 30, 1996 and six months ended June 30, 1996 do not include
SAC's results of operations.
The following pro forma results of operations for the six months ended
June 30, 1996 are unaudited and were prepared under the assumption that
the merger with SAC occurred on January 1, 1996 and that the Company
was a taxable entity. These pro forma amounts are not necessarily
indicative of what the actual results of operations might have been if
merger had occurred at the beginning of fiscal year 1996.
Revenue $2,002,577
Net earnings $ 204,722
Earnings per share $ .20<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following Exhibits are filed as of part of this
report:
Exhibit
Number Description
-------- -----------------------
27 Financial Data Schedule - (for SEC use only)
(b) The Company filed a Current Report on Form 8-K on June 12, 1997.
<PAGE>
SIGNATURE
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.
EFFICIENCY LODGE, INC.
DATE: August 14, 1997 By: /s/ W. Ray Barnes
W. Ray Barnes
President and Chief Executive
Officer
DATE: August 14, 1997 By: /s/ Roy E. Barnes
Roy E. Barnes
Secretary/Treasurer
(Principal Financial and Accounting
Officer)<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000092066
<NAME> EFFICIENCY LODGE, INC.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 368,716
<SECURITIES> 0
<RECEIVABLES> 955,224
<ALLOWANCES> 0
<INVENTORY> 50,406
<CURRENT-ASSETS> 0
<PP&E> 13,071,209
<DEPRECIATION> 2,628,080
<TOTAL-ASSETS> 12,164,080
<CURRENT-LIABILITIES> 0
<BONDS> 11,491,813
0
0
<COMMON> 102,688
<OTHER-SE> (69,002)
<TOTAL-LIABILITY-AND-EQUITY> 12,164,080
<SALES> 0
<TOTAL-REVENUES> 2,000,303
<CGS> 0
<TOTAL-COSTS> 1,345,536
<OTHER-EXPENSES> 9,809
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 596,569
<INCOME-PRETAX> 48,389
<INCOME-TAX> 10,161
<INCOME-CONTINUING> 38,228
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 38,228
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
