U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 April 30, 1999.
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ........... to ............
Commission File No. 33-85102
SEVEN FIELDS DEVELOPMENT COMPANY
(Name of small business issuer in its charter)
PENNSYLVANIA 25-1561828
(State of Incorporation) (I.R.S. Employer Identification No.)
2200 Garden Drive, Suite 200, Mars, PA 16046-7846
(Address of principal executive office with Zip Code)
Issuer's telephone number (724) 776-5070
Check whether the issuer (1) has filed all reports required to be filed by
Sections 13 or 15(d) of the Exchange Act 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 XX No ___
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
As of May 29, 1999 there were 3,484,392 shares of the issuer's
beneficial interests outstanding
Transitional Small Business Disclosure Format
Yes ____ No XX
<PAGE>
SEVEN FIELDS DEVELOPMENT COMPANY
Form 10-QSB
FOR THE SIX MONTHS ENDED APRIL 30, 1999
PART I - Financial Information
The following financial information is provided in response to Items 1
and 2 of Form 10-QSB.
Item 1 - Financial Statements
<PAGE>
SEVEN FIELDS DEVELOPMENT COMPANY
BALANCE SHEETS
AS OF APRIL 30, 1999 AND OCTOBER 31, 1998
<TABLE>
<CAPTION>
ASSETS
1999 1998
<S> <C> <C>
Cash $ 7,662 $ 106,865
Temporary investments 712,136 308,103
Total Cash & Temporary Investments $ 719,798 $ 414,968
Accounts and notes receivable, net of
allowances of $57,492 108,164 199,482
Mortgage notes receivable 459,918 497,918
Capitalized development costs 4,384,281 5,282,662
Capitalized house construction costs,
net of allowances 3,709,088 3,606,597
Prepaid expenses and deposits 109,581 78,445
Property not currently under
development 3,296,122 3,038,721
Deferred income tax assets 2,061,385 2,096,129
Property, Buildings &
Equipment
Land $ 484,756 $ 484,756
Buildings 1,294,345 1,294,345
Equipment and furnishings 850,169 845,934
Total Property, Buildings and
Equipment $ 2,629,270 $ 2,625,035
Accumulated Depreciation (636,486) (581,633)
Total Property, Buildings and
Equipment, Net Of
Accumulated Depreciation $ 1,992,784 $ 2,043,402
Total Assets $ 16,841,121 $ 17,258,324
</TABLE>
<PAGE>
<TABLE>
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
LIABILITIES
<CAPTION>
1999 1998
<S> <C> <C>
Accounts payable and accrued expenses $ 188,693 $ 580,812
Accrued estimated costs related to
developed lots and houses sold 942,947 1,041,873
Notes payable - credit lines 196,000
Mortgages payable 1,006,064 972,461
Customer deposits and advances 290,384 106,245
General unsecured debt - minority
investors 9,501,710 9,501,710
General unsecured debt -
Seven Fields (Del), Inc. 46,372,015 46,372,015
Total Liabilities $ 58,301,813 $ 58,771,116
<CAPTION>
SHAREHOLDERS' DEFICIENCY
<S> <C> <C>
Shares of beneficial interest, $1 par value
5,000,000 shares authorized,
3,484,392 shares issued and outstanding $ 3,484,392 $ 3,484,392
Shareholders' deficit - excess of
non-discharged debt over assets on
November 7, 1987 (Date of reorganization) (52,235,399) (52,235,399)
Retained earnings, since November 7, 1987
(Date of reorganization) 7,290,315 7,238,215
Total Shareholders' Deficiency $(41,460,692) $(41,512,792)
Total Liabilities and
Shareholders' Deficiency $ 16,841.121 $ 17,258,324
</TABLE>
<PAGE>
<TABLE>
SEVEN FIELDS DEVELOPMENT COMPANY
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED APRIL 30, 1999 AND 1998
<CAPTION>
1999 1998
<S> <C> <C>
Gross Revenue
Rental income $ 22,403 $ 18,613
Fees & other operating income 19,438 13,339
Water revenue 44,696 41,808
Developed lot and house sales 2,720,886 1,584,362
Townhouse unit sales 167,686
$ 2,807,423 $ 1,825,808
Costs & Expenses
Cost of Developed Lots &
Houses Sold $ 2,424,721 $ 1,411,208
Cost of Townhouses Sold $ 69,329
Other Operating Expenses* $ 96,097 $ 123,653
General & Administrative Expenses* $ 237,190 $ 217,224
Depreciation Expense $ 27,319 $ 34,922
Operating Income (Loss) $ 22,096 $ (30,528)
Interest Expense* $ 5,327 $ (9,152)
Interest Income $ 17,762 $ 20,662
Income(Loss)Before Provision
for Income Taxes $ 45,185 $ (19,018)
Provision for Income Taxes $ 18,044
Net Income (Loss) $ 27,141 $ (19,018)
Net Loss Per Share,
Basic and Fully Diluted $ .01 $ (.01)
Weighted Average Number of Shares 3,484,392 3,484,560
<FN>
* See details on following page.
</TABLE>
<PAGE>
<TABLE>
SEVEN FIELDS DEVELOPMENT COMPANY
STATEMENTS OF OPERATIONS - CONTINUED
DETAILS OF OTHER OPERATING EXPENSES,
GENERAL AND ADMINISTRATIVE EXPENSES, AND INTEREST EXPENSE
FOR THE THREE MONTHS ENDED APRIL 30, 1999 AND 1998
<CAPTION>
1999 1998
<S> <C> <C>
Other Operating Expenses
Payroll, payroll taxes and benefits $ 158,528 $ 161,679
Repairs & maintenance 39,999 28,749
Utilities 33,662 23,450
Insurance 24,400 23,160
Property taxes 6,040 5,640
Other operating supplies & services 10,467 31,231
Total Other Operating Expenses $ 273,096 $ 273,909
Less Expenses Capitalized To
Development and Construction (176,999) (150,256)
Net Other Operating Expenses $ 96,097 $ 123,653
General And Administrative Expenses
Payroll, payroll taxes and benefits $ 100,768 $ 123,954
Professional fees 44,370 32,396
Other general and administrative
expenses 103,830 78,031
Total General and Administrative
Expenses $ 248,968 $ 234,381
Less Expenses Capitalized To
Development and Construction (11,778) (17,157)
Net General and Administrative
Expenses $ 237,190 $ 217,224
Interest Expense
Total Interest Expense $ 27,243 $ 34,332
Less Interest Capitalized to
Development and House
Construction $ (32,570) $ (25,180)
Net Interest Expense $ (5,327) $ 9,152
</TABLE>
<PAGE>
<TABLE>
SEVEN FIELDS DEVELOPMENT COMPANY
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1999 AND 1998
<CAPTION>
1999 1998
<S> <C> <C>
Gross Revenue
Rental income $ 44,805 $ 146,721
Fees & other operating income 32,388 32,620
Water revenue 92,445 81,427
Developed lot and house sales 4,535,946 4,241,075
Townhouse unit sales 4,135,586
$ 4,705,584 $ 8,637,429
Costs & Expenses
Cost of Developed Lots &
Houses Sold $ 3,918,573 $ 3,733,914
Cost of Townhouses Sold $ 1,912,967
Other Operating Expenses* $ 214,855 $ 339,939
General & Administrative Expenses* $ 464,427 $ 440,080
Depreciation Expense $ 54,853 $ 133,720
Operating Income $ 52,876 $ 2,076,809
Interest Expense* $ (40,776)
Interest Income $ 33,968 $ 31,005
Income Before
Provision for Income Taxes $ 86,844 $ 2,067,038
Provision for Income Taxes $ 34,744 $ 835,500
Net Income $ 52,100 $ 1,231,538
Net Income Per Share,
Basic and Fully Diluted $ .01 $ .35
Weighted Average Number of Shares 3,484,392 3,484,560
<FN>
* See details on following page.
</TABLE>
<PAGE>
<TABLE>
SEVEN FIELDS DEVELOPMENT COMPANY
STATEMENTS OF OPERATIONS - CONTINUED
DETAILS OF OTHER OPERATING EXPENSES,
GENERAL AND ADMINISTRATIVE EXPENSES, AND INTEREST EXPENSE
FOR THE SIX MONTHS ENDED APRIL 30, 1999 AND 1998
<CAPTION>
1999 1998
<S> <C> <C>
Other Operating Expenses
Payroll, payroll taxes and benefits $ 335,207 $ 342,507
Repairs & maintenance 72,647 59,988
Utilities 61,514 49,053
Insurance 48,600 53,520
Property taxes 12,290 63,709
Other operating supplies & services 21,940 64,430
Total Other Operating Expenses $ 552,198 $ 633,207
Less Expenses Capitalized To
Development and Construction (337,343) (293,268)
Net Other Operating Expenses $ 214,855 $ 339,939
General And Administrative Expenses
Payroll, payroll taxes and benefits $ 212,837 $ 218,274
Professional fees 85,439 77,422
Other general and administrative
expenses 189,707 178,698
Total General and Administrative
Expenses $ 487,983 $ 474,394
Less Expenses Capitalized To
Development and Construction (23,556) (34,314)
Net General and Administrative
Expenses $ 464,427 $ 440,08
Interest Expense
Total Interest Expense $ 47,033 $ 93,783
Less Interest Capitalized to
Development and House Construction (47,033) (53,007)
Net Interest Expense $ 0 $ 40,776
</TABLE>
<PAGE>
<TABLE>
SEVEN FIELDS DEVELOPMENT COMPANY
STATEMENT OF RETAINED EARNINGS
FOR THE SIX MONTHS ENDED APRIL 30, 1999
<S> <C>
Retained earnings - beginning $ 7,238,215
Net income for the six month period 52,100
Retained earnings - ending $ 7,290,315
</TABLE>
<PAGE>
<TABLE>
SEVEN FIELDS DEVELOPMENT COMPANY
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED APRIL 30, 1999 AND 1998
<CAPTION>
1999 1998
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 52,100 $ 1,231,538
Provision for deferred income taxes 34,744 835,500
Depreciation 54,853 133,720
Capitalized development costs incurred (288,512) (362,804)
Capitalized house construction
costs incurred (2,969,023) (2,236,034)
Cost of lots & houses sold 3,796,024 3,596,161
Changes in other assets & liabilities:
Other assets 60,182 (90,856)
Other liabilities (306,906) (558,452)
Net Cash Flows Provided By
Operating Activities $ 433,462 $ 2,548,773
Cash Flows From Investing Activities:
Additions to property, buildings and
equipment $ (4,235) $ (77,836)
Payments on notes receivable 38,000
Sale of property, buildings & equipment 1,349,219
Total Cash Flows Provided By
Investing Activities $ 33,765 $ 1,271,383
Cash Flows From Financing Activities:
Repayment of general unsecured debt $ (2,328,505)
Net repayments on credit lines $ (196,000)
Proceeds from borrowings 87,500 280,000
Repayment of notes payable (53,897) (1,494,990)
Total Cash Flows Used In
Financing Activities $ (162,397) $ (3,543,495)
Net Increase in Cash And
Temporary Investments $ 304,830 $ 276,661
Cash & Temporary Investments,
Beginning of Period $ 414,968 $ 421,517
Cash & Temporary Investments,
End of Period $ 719,798 $ 698,178
Interest Expense Included in
Net Income Above $ 40,776
Interest Paid & Included in Capitalized
Development & House Construction Costs $ 47,033 $ 53,007
Total Interest Paid $ 47,033 $ 93,783
</TABLE>
<PAGE>
SEVEN FIELDS DEVELOPMENT COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED APRIL 30, 1999 AND 1998
Basis of Presentation
The financial statements included herein have been prepared by the
Registrant, without audit, for filing with the Securities and Exchange
Commission pursuant to the rules and regulations of said commission. The
financial information presented herein, while not necessarily indicative of
results to be expected for the year, reflects adjustments comprising normal
recurring accruals which in the opinion of the Registrant are necessary for
the fair statement of the results for the periods indicated. This financial
information should be read in conjunction with the financial statements and
notes thereto included in the Registrant's Annual Report for the two years in
the period ended October 31, 1998.
For comparative purposes, certain 1998 amounts have been reclassified to
conform to the presentation adopted in 1999.
<PAGE>
SEVEN FIELDS DEVELOPMENT COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED APRIL 30, 1999 AND 1998
Part I - Item 2 Management Discussion and Analysis
of Financial Condition and Results
of Operations
Financial Condition
The Company's financial condition improved slightly due to generation of net
profit of $ 52,100 in the first six months of 1999. The Company purchased two
additional single family lots for $110,000 in the Nevillewood sub-division,
of which mortgage notes of $55,000 were granted to the seller. Credit lines
for units under construction were paid off in full during the quarter.
Inventory at the end of the second quarter of 1999 consists of eleven single
family homes, in various stages of construction, including eight homes under
agreement of sale and three homes available for sale. Also in inventory are
thirty-two multi-family homes, in various stages of construction, including
two model homes, sixteen homes under agreement of sale and fourteen homes
available for sale.
Results of Operations for the Six Month Periods
In 1999, rental income decreased from the prior year's period by nearly
$102,000 due to the sale of townhouse units in January/February 1998. Since
71 of these townhouse units were sold in the first quarter of 1998 and the
remainder of three units were sold in February 1998, gross revenue from
townhouse unit sales was $4,135,586 in 1998. Developed lot and house sales
increased from 1998 to 1999 by nearly $295,000 due to sales of sixteen lots,
seven houses, eleven multi-family units, and one commercial parcel in 1999,
compared with eleven lots, six houses, sixteen multi-family units, and two
commercial parcels a year earlier. As a result of the above variations, total
gross revenue in the period decreased by over $3.9 million from the prior
year's period.
Cost of developed lots and houses sold increased by almost $185,000 from 1998
to 1999 and cost of townhouses sold was over $1.9 million in 1998; both such
variations are due primarily to corresponding proportionate changes in sales
volumes.
From 1998 to 1999 other operating expenses decreased by over $125,000
due to decreased costs related to the townhouses and greater capitalization
of costs related to home construction in 1999. Depreciation expense also
decreased by almost $79,000 due primarily to the 1998 sale of the townhouses.
Gross interest expense decreased from 1998 to 1999 by almost $47,000 due to
pay offs of the townhouse mortgage and credit lines. All interest expense in
1999 was capitalized to development and house construction.
Due to the variations previously indicated, the Company's income, before
provision for income taxes, decreased from 1998 to 1999 by nearly $2.0
million.
<PAGE>
SEVEN FIELDS DEVELOPMENT COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED APRIL 30, 1999 AND 1998
Management Discussion and Analysis
of Financial Condition and Results
of Operations
Results of Operations for Six Month Periods (Con't)
The Company recognized a provision for income tax in 1999 of $34,744 and in
1998, $835,500; such amounts serve to reduce deferred income tax assets and
it is anticipated that no income tax will be paid this year. Upon adopting
Financial Accounting Standard #109 ("FAS 109")in 1994 the Company recognized
a $4 million dollar deferred tax asset, and, annually, values the
realizability of such asset based on the Company's ability to generate
sufficient revenue in future years. Based on the assets the Company currently
owns and its development plans, it is estimated that the deferred tax assets
will be utilized upon development and sale of the Company's remaining
property, and the Company has begun, effective November 1, 1996, recognizing
tax expense at a combined federal and state rate of 40%.
<PAGE>
SEVEN FIELDS DEVELOPMENT COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED APRIL 30, 1999 AND 1998
Part II - Item 1 Legal Proceedings
None
<PAGE>
OTHER INFORMATION
Item 6. Exhibits and Other Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the
quarter ended April 30, 1999.
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.
Seven Fields Development Company
Date: By:PAUL VOYTIK, PRESIDENT
Date: By:LYNN HOFFMAN-KYLE, CHIEF FINANCIAL OFFICER
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-START> NOV-01-1998
<PERIOD-END> APR-31-1999
<CASH> 719,798
<SECURITIES> 0
<RECEIVABLES> 625,574
<ALLOWANCES> (57,492)
<INVENTORY> 11,389,491
<CURRENT-ASSETS> 0
<PP&E> 2,629,270
<DEPRECIATION> (636,486)
<TOTAL-ASSETS> 16,841,121
<CURRENT-LIABILITIES> 0
<BONDS> 56,879,789
0
0
<COMMON> 3,484,392
<OTHER-SE> (44,945,084)
<TOTAL-LIABILITY-AND-EQUITY> 16,841,121
<SALES> 4,628,391
<TOTAL-REVENUES> 4,705,584
<CGS> 3,918,573
<TOTAL-COSTS> 4,652,708
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 86,844
<INCOME-TAX> 34,744
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 52,100
<EPS-BASIC> .01
<EPS-DILUTED> 0
</TABLE>
