SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ___________
Commission file number: 0-24206
Penn National Gaming, Inc.
(Exact Name of Registrant
as Specified in its Charter)
Pennsylvania 23-2234473
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Penn National Gaming, Inc.
825 Berkshire Blvd.
Wyomissing, PA 19610
(Address of Principal Executive Offices)
610-373-2400
(Registrant's Telephone Number, Including Area Code:)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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 ____
<PAGE>
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15 (d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed be a court. Yes __ No __
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
Title Outstanding as of May 13, 1997
Common Stock par value .01 per share 15,111,290
This Report contains forward-looking statements that inherently involve risks
and uncertainties. The Company's actual results could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, including those discussed in this Quarterly Report and those discussed
in the Company's Annual Report on Form 10-K. References to "Penn National
Gaming" or the "Company" include Penn National Gaming, Inc. and its
subsidiaries.
<PAGE>
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES
INDEX
PART - FINANCIAL INFORMATION Page
Item 1. - Financial Statements
Consolidated Balance Sheets -
March 31, 1997 (unaudited) and December 31, 1996 4 -5
Consolidated Statements of Income -
Three Months Ended March 31, 1997
and 1996 (unaudited) 6 -7
Consolidated Statement of Shareholders' Equity -
Three Months Ended March 31, 1997 (unaudited) 8
Consolidated Statements of Cash Flow -
Three Months Ended March 31, 1997
and 1996 (unaudited) 9 -10
Notes to Consolidated Financial Statements 11 - 12
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 13 - 14
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8 -K 15
<PAGE>
Item 1. Financial Statements
<TABLE>
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share and share data)
<CAPTION>
March 31, December 31,
1997 1996
(Unaudited)
<S> <C> <C>
Assets
Current Assets
Cash $13,536 $ 5,634
Accounts receivable 3,048 4,293
Prepaid expenses and other current assets 2,108 1,552
Deferred income taxes 58 90
------- --------
Total current assets 18,750 11,569
------- --------
Property, plant and equipment, at cost
Land and improvements 17,844 15,728
Buildings and improvements 46,738 30,484
Furniture, fixtures and equipment 11,385 8,937
Transportation equipment 417 366
Leasehold improvements 6,685 6,680
Leased equipment under capitalized lease 824 1,626
Construction in progress 1,310 2,926
------- --------
85,203 66,747
Less accumulated depreciation and amortization 8,673 8,029
------- --------
Net property and equipment 76,530 58,718
------- --------
Other assets
Excess of cost over fair market value of net
assets acquired (net of accumulated amortization of
$974 and $811, respectively) 23,662 21,885
Prepaid acquisition costs - 1,764
Deferred financing costs 1,902 2,416
Miscellaneous 459 371
-------- --------
Total other assets 26,023 26,436
-------- --------
$121,303 $ 96,723
======== ========
</TABLE>
See accompanying notes to consolidated financial statements
4
<PAGE>
<TABLE>
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share and share data)
<CAPTION>
March 31, December 31,
1997 1996
(Unaudited)
<S> <C> <C>
Liabilities and Shareholders' Equity
Current Liabilities
Current maturities of long-term debt and
capital lease obligations $ 3,108 $ 1,563
Accounts payable 5,906 5,066
Purses due horsemen 2,363 1,421
Uncashed pari-mutuel tickets 1,598 1,336
Accrued expenses 1,640 1,880
Customer deposits 559 420
Taxes, other than income taxes 685 392
-------- -------
Total current liabilities 15,859 12,078
-------- -------
Long-term liabilities
Long-term debt and capital lease obligations,
net of current maturities 41,639 45,954
Deferred income taxes 10,836 10,810
Total long-term liabilities 52,475 56,764
-------- -------
Commitments and contingencies
Shareholders' equity
Preferred stock, $.01 par value, 1,000,000 shares
authorized; none issued - -
Common stock, $.01 par value, 20,000,000 shares
authorized; 15,111,290 and 13,355,290 issued and
outstanding 151 134
Additional paid in capital 38,069 14,299
Retained earnings 14,749 13,448
-------- -------
Total shareholders' equity 52,969 27,881
-------- -------
$121,303 $96,723
======== =======
</TABLE>
See accompanying notes to consolidated financial statements
5
<PAGE>
<TABLE>
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
1997 1996
--------------------------
<S> <C> <C>
Revenues
Pari-mutuel revenues
Penn National races $ 4,369 $ 4,482
Import simulcasting 14,797 7,593
Export simulcasting 1,123 850
Admissions, programs and other racing revenues 1,258 869
Concession revenues 1,273 766
------- --------
Total revenues 22,820 14,560
------- --------
Operating expenses
Purses, stakes and trophies 4,202 2,925
Direct salaries, payroll taxes and employee benefits 3,246 1,909
Simulcast expenses 2,836 2,288
Pari-mutuel taxes 1,957 1,267
Other direct meeting expenses 3,378 2,225
Off-track wagering concessions expenses 966 508
Other operating expenses 2,559 1,399
------- --------
Total operating expenses 19,144 12,521
------- --------
Income from operations 3,676 2,039
------- --------
Other income (expenses)
Interest (expense) (900) (12)
Interest income 86 66
------ --------
Total other income (expenses) (814) 54
------- --------
Income before income taxes
and extraordinary item 2,862 2,093
Taxes on income 1,178 854
------- --------
Income before extraordinary item 1,684 1,239
</TABLE>
6
<PAGE>
<TABLE>
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
<S> <C> <C>
Extraordinary item
Loss on early extinguishment
of debt, net of income taxes of $264 383 -
------- --------
Net Income $ 1,301 $ 1,239
------- --------
Earnings Per Share:
Income before extraordinary item $ 0.11 $ 0.09
Extraordinary item ( 0.02) -
------- --------
Earnings Per Share: $ 0.09 $ 0.09
======= ========
Weighted average common shares outstanding 14,912 13,302
====== ======
</TABLE>
See accompanying notes to consolidated financial statements
7
<PAGE>
<TABLE>
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(In thousands, except share data)
(Unaudited)
<CAPTION>
Additional
Common Stock Paid-In Retained
Shares Amounts Capital Earning Total
<S> <C> <C> <C> <C> <C>
Balance, at January 1, 1997 13,355,290 $ 134 $14,299 $13,448 $27,881
Issuance of common stock 1,756,000 17 23,197 - 23,214
Tax benefit related to stock
options exercised - - 573 - 573
Net income for the three months
ended March 31, 1997 - - - 1,301 1,301
---------- ------ ------- ------ -------
Balance at March 31, 1997 15,111,290 $ 151 $38,069 $14,749 $52,969
========== ====== ======= ======= =======
</TABLE>
See accompanying notes to consolidated financial statements
8
<PAGE>
<TABLE>
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands)
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
1997 1996
-----------------------
<S> <C> <C>
Cash flows from operating activities
Net income $ 1,301 $ 1,239
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 841 299
Extraordinary item, loss on early extingushiment
of debt, before income tax benefit 647 -
Deferred income taxes 26 22
Decrease (Increase) in
Accounts receivable 1,245 188
Prepaid expenses and other current assets (556) (552)
Deferred income assets 32 (186)
Miscellaneous other assets (88) -
Increase (decrease) in
Accounts payable 840 1,244
Purses due horsemen 942 (100)
Uncashed pari-mutuel tickets 262 153
Accrued expenses (240) 31
Customers deposits 139 93
Taxes other than income taxes 293 -
Income taxes 740 -
------- -------
Net cash provided by operating activities 5,684 3,171
------- -------
Cash flows from investing activities
Expenditures for property and equipment (2,456) (504)
Acquisition of business,
(Primarily property and equipment) (16,000) -
Increase in prepaid acquisition cost (176) -
------- -------
Net cash (used in) investing activities (18,632) (504)
------- -------
</TABLE>
9
<PAGE>
<TABLE>
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands)
(Unaudited)
<S> <C> <C>
Cash flows from financing activities
Proceeds of sale common stock 23,214 426
Tax benefit related to stock options exercised 573 -
Proceeds of long term debt 16,500 -
Principal payments on long-term debt and
capital lease obligations (19,270) (15)
Increase in unamortized financing cost (167) -
------- -------
Net cash provided by financing activities 20,850 411
------- -------
Net increase in cash 7,902 3,078
Cash, at beginning of period 5,634 7,514
------- -------
Cash, at end of period $13,536 $10,592
======= =======
</TABLE>
See accompanying notes to consolidated financial statements
10
<PAGE>
PENN NATIONAL GAMING , INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Basis of Financial Statement Presentation
The accompanying consolidated financial statements are unaudited and
include the accounts of Penn National Gaming, Inc., (Penn) and its wholly and
majority owned subsidiaries, (collectively the "Company"). All significant
intercompany transactions and balances have been eliminated.
In the opinion of management, all adjustments (consisting of normal
recurring accruals) have been made which are necessary to present fairly the
financial position of the Company as of March 31, 1997 and the results of its
operations for the three month periods ended March 31, 1997 and 1996. The
results of operations experienced for the three month period ended March 31,
1997 are not necessarily indicative of the results to be experienced for the
fiscal year ended December 31, 1997.
The statements and related notes have been prepared pursuant to the rules
and regulations of the Securities and Exchange Commission. Accordingly, certain
information and footnote disclosures normally include in financial statements
prepared in accordance with generally accepted accounting principles have been
omitted pursuant to such rules and regulations. The accompanying notes should
therefore be read in conjunction with the Company's December 31, 1996 annual
financial statements.
<TABLE>
2. Wagering Information
<CAPTION>
Three months ended
March 31,
1997 1996
(in thousands)
<S> <C> <C>
Pari-mutuel wagering in Pennsylvania
on Company Races $ 22,490 $21,308
-------- -------
Pari-mutuel wagering on simulcasting
Import simulcasting from other
racetracks 75,436 39,070
Export simulcasting to out of
Pennsylvania wagering facilities 37,431 28,338
-------- -------
112,867 67,408
-------- -------
Total pari-mutuel wagering $135,357 $88,716
======== =======
</TABLE>
11
<PAGE>
PENN NATIONAL GAMING , INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
3. Commitments
At March 31, 1997, the Company was contingently obligated under letters of
credit with face amounts aggregating $1,634,000. The $1,634,000 consisted of
$1,534,000 relating to the horsemen's account balances and $100,000 for
Pennsylvania pari-mutuel taxes.
4. Supplemental Disclosures of Cash Flow Information
Cash paid during the three months ended March 31, 1997 and 1996 for
interest was $1,034,000 and $12,000 respectively.
Cash paid during the three months ended March 31, 1997 and 1996 for income
taxes was $398,000 and $92,000 respectively.
For the three months ended March 31, 1997, the Company reclassified
approximately $1.9 million of prepaid acquisition costs to excess of cost over
fair market value of net assets acquired.
5. Common Stock
In February 1997, the Company completed a secondary public offering of
1,725,000 shares of its common stock. The net proceeds of $23 million were used
to repay $19 million of term loans outstanding under the $75 million credit
facility and to finance a portion of the cost of the refurbishment of the
Charles Town Races facility. In connection with such debt repayment, the Company
incurred an extraordinary loss of $383,000 after taxes, consisting primarily of
the write-off of deferred finance costs.
6. Acquisitions
On January 15, 1997, an 89% - owned Company subsidiary acquired
substantially all of the assets of Charles Town Races for approximately $16
million plus acquisition- related fees and expenses of approximately $1.9
million.
On March 26, 1997, the Company entered into an agreement to purchase
property for its proposed Carbondale, Pennsylvania OTW facility. The agreement
provides for a purchase price of $200,000 and is subject to numerous
contingencies, including approval by the Pennsylvania State Harness Racing
Commission, (On April 1, 1997, the Company submitted its application for such
approval). If approved by the Racing Commission, the Company expects to have the
facility constructed and operational in the fourth quarter of 1997.
12
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operation
Results of Operation
Three months ended March 31, 1997 compared to three months ended March 31, 1996
Total revenues increased by approximately $8.3 million or 56.7% from $14.6
million to $22.8 million for the three months ended March 31, 1997 as compared
to the three months ended March 31, 1996.
$7.0 million of this increase was attributable to the addition of the Pocono
Downs operations, which were acquired in the fourth quarter of 1996. In
addition, revenues at the Penn National facilities, exclusive of the Pocono
Downs operations, increased by $1.3 million. The increase was primarily due to
an increase of $2.2 million in revenue at the Company's new OTW facilities in
Lancaster and Williamsport offset by a decrease of $900,000 at the Company's
thoroughbred track and other OTW facilities. Management believes that the
decrease at its other OTW facilities, exclusive of the Pocono Downs operations,
was primarily due to competition from the opening of a competitor's OTW facility
and of the Company's Lancaster OTW facility.
Total operating expenses increased by approximately $6.6 million or 52.9%
from $12.5 million to $19.1 million for the three months ended March 31, 1997 as
compared to the three months ended March 31, 1996. Pocono Downs accounted for
$5.9 million of this increase. Penn National Race Course operations accounted
for $745,000 of the total increase. The increase in operating expenses resulted
from an increase in purses, stakes and trophies, pari-mutuel taxes, and
simulcast expenses resulting from an increase in revenue from import
simulcasting, and the additional operating expenses of the Lancaster and
Williamsport OTW facilities.
Income from operations increased by approximately $1.7 million or 80.3%
from $2.0 million to $3.7 million due to the factors described above. Other
expenses for the 1997 quarter consisted of approximately $900,000 in interest
expense (due to the financing of the Pocono Downs acquisition) compared to
$12,000 in interest expense for the 1996 quarter.
Income tax expense increased from $854,000 to $1,178,000 due to the
increase in income for the period.
The extraordinary item consisted of a loss on the early extinguishment of
debt in the amount of $383,000 net of income taxes. The Company received
approximately $23 million as proceeds from the February 1997 equity offering and
used approximately $19 million to reduce long-term debt. This resulted in a
write- off of $647,000 for fees associated with the retired debt.
13
<PAGE>
Net Income increased by approximately $62,000 or 5.0% from $1,239,000 to
$1,301,000 for the three months ended March 31, 1997 as compared to the three
months ended March 31, 1996, based on the factors described above.
Liquidity and Capital Resources
Historically, the Company's primary sources of liquidity and capital
resources have been cash flow from operations and borrowing from banks. During
the three months ended March 31, 1997, the Company's cash position increased by
approximately $7.9 million from $5.6 million at December 31, 1996 to $13.5
million as a result of increased cash flow from operations, proceeds from the
sale of common stock, and net additional long-term borrowings.
Net cash provided from operating activities totaled approximately $5.7
million for the three months ended March 31, 1997 of which $2.8 million came
from net income and non-cash expenses and $1.3 million came from the repayment
of the Charles Town Races loan receivable in January 1997. The balance of $1.6
million was generated primarily by other changes in working capital .
Cash flows used in investing activities totaled approximately $18.6
million. Acquisition costs and construction in progress totaled $17.3 million
for the Charles Town Race facility that was purchased on January 15, 1997.
Capital expenditures totaled $700,000 for the completion of the Williamsport OTW
facility.
Cash flows from financing activities totaled approximately $23.2 million
from the secondary equity offering in February 1997 and the exercise of options
which resulted in the issuance of 1,756,000 shares of common stock. The Company
also received $16.5 million in proceeds from long-term debt to use as payment
for the Charles Town Acquisition on January 15, 1997. The Company used $19
million of the proceeds from the offering to repay a portion of its bank debt.
The remaining amount of the proceeds approximately $4 million will be used for
the refurbishment of the Charles Town facility.
During the balance of 1997, the Company anticipates capital expenditures
of approximately $4.0 million, exclusive of the cost of refurbishing the Charles
Town Facility ( described below), to construct two additional OTWs, and
approximately $1.0 million for miscellaneous capital expenditures and
improvements. Under the Company Credit Facility, the Company is permitted to
make capital expenditures (not including the refurbishment of the Charles Town
Facility or the cost of gaming machines to be installed there) of $12.0 million
in 1997, $4.0 million in 1998 and $2.0 million in 1999 and in each year
thereafter. The Company anticipates expending approximately $16.0 million on the
refurbishment of the Charles Town Facility (excluding the cost of gaming
machines), of which $1.3 million had already been expended at March 31, 1997.
14
<PAGE>
The Company currently estimates that the net proceeds of the equity
offering, together with the cash generated from operations and borrowings under
its Credit Facility, will be sufficient to finance its current operations, and
planned capital expenditure requirements. There can be no assurance, however,
that the Company will not be required to seek capital, in addition to that
available from the foregoing sources. The Company may, from time to time, seek
additional funding through public or private financing, including equity
financing. There can be no assurance that adequate funding will be available as
needed or, if available, on terms acceptable to the Company. If additional funds
are raised by issuing equity securities, existing shareholders may experience
dilution.
15
<PAGE>
Part II. Other Information
6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.61 General Contractor Agreement dated March 26, 1997, between
PGNI Charles Town Gaming Limited Liability Company and Myers
Building Systems, Inc.
(b) Reports on Form 8-K
The Company filed the following Current Reports on Form 8-K during
the first quarter of 1997:
On January 21, 1997, the Company filed a Current Report on Form 8-K
which reflected the completion, on January 15, 1997, of the purchase
of the Charles Town Race Track.
On February 6, 1997, the Company filed an amendment to its Current
Report on Form 8-K dated December 12, 1996 to include required
financial statements with respect to Pocono Downs.
On March 25, 1997, the Company filed an amendment to its Current
Report on Form 8-K dated January 21, 1997 to include required
financial statements with respect to Charles Town Race Track.
16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PENN NATIONAL GAMING, INC.
By:/s/ Robert S. Ippolito
Date May 15, 1997 Robert S. Ippolito
Chief Financial Officer
Secretary/Treasurer
17
<PAGE>
EXHIBIT INDEX
Exhibit Nos. Description of Exhibits Page No.
10.61 General Contractor Agreement dated March 26, 1997, between 19 -26
PGNI Charles Town Gaming Limited Liability Company
and Myers Building Systems, Inc.
18
Exhibit #10.61 THE AMERICAN INSTITUTE OF ARCHITECTS
- ------------------------------------------------------------------------------
AIA Document A101
Standard Form of Agreement Between Owner
and Contractor
where the basis of payment is a
STIPULATED SUM
1987 EDITION
THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES,. CONSULTATION WITH AN ATTORNEY
IS ENCOURAGED WITH RESPECT TO ITS COMPLETION OR MODIFICATION.
The 1987 Edition of AIA Document A201, General Conditions of the Contract for
Construction, is adopted in this document by reference. Do not use with other
general conditions unless this document is modified. This document has been
approved and endorsed by The Associated General Contractors of America.
- ------------------------------------------------------------------------------
AGREEMENT
made as of the 26th day of March in the year of Nineteen Hundred and Ninety
Seven
BETWEEN the Owner:
(Name and address)
PNGI Charles Town Gaming LLC
P.O. Box 551
Charles Town, West Virginia 25414
and the Construction Manager:
(Name and address)
Myers Building Systems, Inc.
14627 National Pike
Clear Spring, MD 21722
The Project is:
(Name, address and brief description)
Horse Barns for the Charles Town Race Track
Flowering Springs Road
Charles Town, West Virginia 25414
The Architect is:
(Name and address)
Architectural Concepts
Suite 200 Stonebank Professional Center
967 East Swedesford Road
Exton, PA 19341
The Owner and Contractor agree as set forth below.
19
<PAGE>
ARTICLE 1
THE CONTRACT DOCUMENT
The Contract Documents consist of this Agreement, Conditions of the Contract
(General, Supplementary and other Conditions), Drawings, Specifications, Addenda
issued prior to execution of this Agreement, other documents listed in this
Agreement and Modifications issued after execution of this Agreement: these form
the Contract, and are as fully a part of the Contract as if attached to this
Agreement or repeated herein. The Contract represents the entire and integrated
agreement between the parties hereto and supersedes prior negotiations,
representations or agreements, either written or oral. An enumeration of the
Contract Documents, other than Modifications, appears in Article 9.
ARTICLE 2
THE WORK OF THIS CONTRACT
The Contractor shall execute the entire Work described in the Contract
Documents, except to the extent specifically indicated in the Contract Documents
to be the responsibility of others, or as follows:
Permits
Performance Bond
Sales Tax (Owner shall pay for the building materials directly to qualify for
tax exemption)
Demolition of the existing buildings and footings
Site preparation
Rock removal if encountered
ARTICLE 3
DATE OF COMMENCEMENT AND SUBSTANTIAL COMPLETION
3.1 The date of commencement is the date from which the Contract Time of
Paragraph 3.2 is measured, and shall be the date of this Agreement, as first
written above, unless a different date is stated below or provision is made for
the date to be fixed in a notice to proceed issued by the Owner.
(Insert the date of commencement, if it differs from the date of this
Agreement or, if applicable, state that the date will be fixed in a notice to
proceed.)
Date will be fixed in a notice to proceed
Unless the date of commencement is established by a notice to proceed issued by
the Owner, the Contractor shall notify the Owner in writing not less than five
days before commencing the Work to permit the timely filing of mortgages,
mechanic's liens and other security interest.
3.2 The Contractor shall achieve Substantial Completion of the entire Work
not later than
(Insert the calendar date or number of calender days after the date of
commencement. Also insert any requirements for earlier Substantial Completion of
certain portions of the Work, if not stated elsewhere in the Contract
Documents.)
October 1, 1997 providing building demolition and site preparation does not
hold up construction
, subject to adjustments of this Contract Time as provided in the Contract
Documents. (Insert provisions, if any, for liquidated damages relating to
failure to complete on time.)
20
<PAGE>
ARTICLE 4
Contract Sum
4.1 The Owner shall pay the Contractor in current funds for the Contractor's
performance of the Contract the Contract Sum of One Million Seven Hundred Twenty
Thousand Dollars ($1,720,000.00 ), subject to additions and deductions as
provided in the Contract Documents.
4.2 The Contract Sum is based upon the following alternates, if any, which are
described in the Contract Documents and are hereby accepted by the Owner:
(State the number or other identification of accepted alternates. If decisions
on other alternates are to be made by the Owner subsequent to the execution of
this Agreement, attach a schedule of such other alternates showing the amount
for each and the date until which that amount is valid.)
Lester S-88 3068 personal doors with passage hardware will be installed in lieu
of hinged wall vents at owners request. Due to the special color Owner agrees to
purchase additional wall and roof panels to use complete coils of steel at .83
per sq. Ft.
4.3 Unit price, if any, are as follows:
21
<PAGE>
ARTICLE 5
PROGRESS PAYMENTS
5.1 Based upon Applications for Payment submitted to the Owner by the Contractor
the Owner shall make progress payments on account of the Contract Sum to the
Contractor as provided below and elsewhere in the Contract Documents.
5.2 The period covered by each Application for Payment shall be one calendar
month ending on the last day of the month, or as follows:
5.3 Provided an Application for Payment is received by the Owner not later than
the 25th day of a month, the Owner shall make payments to the Contractor not
later than the 25th day of the following month. If an Application for Payment is
received by the Owner after the application dated fixed above, payment shall be
made by the Owner not later than 30 days after the Owner receives the
Application for Payment.
5.4 Each Application for Payment shall be based upon the Schedule of Values
submitted by the Contractor in accordance with the Contract Documents. The
Schedule of Values shall allocate the entire Contract Sum among the various
portions of the Work and be prepared in such form and support by such data to
substantiate its accuracy as the Architect may require. The Schedule, unless
objected to by the Architect, shall be used as a basis for reviewing the
Contractor's Applications form Payment.
5.5 Applications for Payment shall indicated the percentage of completion of
each portion of the Work as of the end of the period covered by the Application
for Payment.
5.6 Subject to the provisions of the Contract Documents, the amount of each
progress payment shall be computed as follows:
5.6.1 Take that portion of the
Contract Sum properly allocable to completed Work as determined by multiplying
the percentage completion of each portion of the Work by the share of the total
Contract Sum allocated to that portion of the Work in the Schedule of Values
less retainage of Ten (10 %). Pending finial determination of cost to the Owner
of changes in the Work, amounts not in dispute may be included as provided in
Subparagraph 7.3.7 of the General Contract even though the Contract Sum has not
yet been adjusted by Change Order.
5.6.2 Add that portion of the Contract Sum
properly allocable to materials and equipment delivered and suitably stored at
the site for subsequent incorporation in the completed construction (or, if
approved in advance by the Owner, suitably stored off the site at a location
agreed upon in writing), less retainage of Ten Percent ( 10 %);
5.6.3 Subtract
the aggregate of previous payment made by the Owner: and
5.6.4 Subtract amounts,
if any, for which the Architect has withheld or nullified a Certificate for
Payment as provided in paragraph 9.5 of the General Conditions.
5.7 The progress payment amount determined in accordance with Paragraph 5.6
shall be further modified under the following circumstances:
5.7.1 Add, upon
Substantial Completion of the Work, a sum sufficient to increase the total
payments to Ninety five Percent ( 95 % ) of the Contract Sum, less such amounts
as the Architect shall determine for incomplete Work and unsettled claims; and
5.7.2 Add, if final completion of Work is thereafter materially delayed through
no fault of the Contractor, any additional amounts payable in accordance with
Subparagraph 9.10.3 of the General Conditions.
5.8 Reduction or limitation of retainage, if any, shall be as follows:
(If it is intended, prior to Substantial Completion of the entire Work, to
reduce or limit the retain age resulting from the percentages inserted in
Subparagraphs 5.6.1 and 5.6.2 above, and this is not explained elsewhere in the
Contract Documents, insert here provisions for such reduction or limitation.)
22
<PAGE>
ARTICLE 6
FINAL PAYMENT
Final Payment, constituting the entire unpaid balance of the Contract Sum, shall
be made by the Owner to the Contractor when (1) the Contract has been fully
performed by the Contractor except for the Contractor's responsibility to
correct nonconforming Work as provided in Subparagraph 12.2.2 of the General
Conditions and to satisfy other requirements, if any, which necessarily survive
final payment; and (2) a final Certificate for Payment has been issued by the
Architect; such final payments shall be made by the Owner not more than 30 days
after the issuance of the Architect's final Certificate for Payment, or as
follows:
ARTICLE 7
MISCELLANEOUS PROVISIONS
7.1 Where reference is made in this Agreement to a provision of the General
Conditions or another Contract Documents, the reference refers to that provision
as amended or supplemented by other provisions of the Contract Documents.
7.2 Payments due and unpaid under the Contract shall bear interest from the date
payment is due at the rate stated below, or in the absence thereof, at the legal
rate prevailing from the time at the place where the Project is located.
(Insert rate if interest agreed upon, if any)
(Usury laws and requirements under the Federal Truth in Lending Act, similar
state and local consumer credit laws and other regulations at the Owner's and
Contractor's principal places of business, the location of the Project and
elsewhere may effect the validity of this provision. Legal advise should be
obtained with respect to deletions or modifications, and also regarding
requirements such as written disclosures or waivers.)
7.3 Other provisions:
ARTICLE 8
TERMINATION OR SUSPENSION
8.1 The contract may be terminated by the Owner or the Contractor as provided
in Article 14 of the General Conditions.
8.2 The Work may be suspended by the Owner as provided in Article 14 of the
General Conditions.
23
<PAGE>
ARTICLE 9
ENUMERATION OF CONTRACT DOCUMENTS
9.1 The Contract Documents, except for Modifications issued after execution of
this Agreement, are enumerated as follows:
9.1.1 The Agreement is this executed
Standard form of Agreement Between Owner and Contractor, AIA Document A101, 1987
Edition.
9.1.2 The General Conditions are the General Conditions of the Contract
of Construction, AIA Document A201, 1987 Edition.
9.1.3 The Supplementary and
other Conditions of the Contract are those contained in the Project Manual dated
Not applicable and are as follows:
Document Title Pages
Attachment A Scope of work Dated February 18, 1997 4
9.1.4 The Specifications are those contained in the Project Manual dated as in
Subparagraph 9.1.3, and are as follows: (Either list the Specifications here or
refer to an exhibit attached to this Agreement.)
Section Title Pages
Attachment A Scope of work dated February 18, 1997 4
24
<PAGE>
9.1.5 The Drawings are as follows, and are dated unless a different date is
shown below: (Either list the Drawings or refer to an exhibit attached to this
Agreement.)
Number Title Date
Drawings Numbered 1 through 13 Job-Number RCTRK February 20, 1997
9.1.6 The Addenda, if any, are as follows:
Number Date Pages
Portions of Addenda relating to bidding requirements are not part of the
Contract Documents unless the bidding requirements are also numerated in this
Article 9.
25
<PAGE>
9.1.7 Other documents, if any, forming part of the Contract Documents are
as follows;
(List here any additional documents which are intended to form part of the
Contract Documents. The General Conditions provide that bidding requirements
such as advertisement or invitation to bid, Instructions to Bidders, sample
forms and the Contractor's bid are not part of the Contract Documents unless
enumerated in this Agreement. They should be listed here only if intended to be
part of the Contract Documents.)
This Agreement is entered into as of the day and year first written above and is
executed in at least three original copies of which one is to be delivered to
the Contractor, one to the Architect for use in the administration of the
Contract, and the remainder to the Owner.
OWNER CONTRACTOR
/S/ Jay Fortney /S/ Leroy Myers Jr.
(Signature) (Signature)
Jay Fortney Leroy Myers Jr. Pres/Owner
(Printed Name and Title) (Printed Name and Title)
26
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