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, 1996.
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ........... to ...........
Commission File No. 33-85102-01
SEVEN FIELDS DEVELOPMENT (PA), INC.
(Name of small business issuer in its charter)
PENNSYLVANIA 25-1752570
(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 (412) 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 28, 1996 there were 2,905,682 shares of the
issuer's $1.00 par value common stock outstanding.
Transitional Small Business Disclosure Format
Yes ____ No XX
<PAGE>
<TABLE>
SEVEN FIELDS DEVELOPMENT (PA), INC. AND SUBSIDIARIES
Form 10-QSB
FOR THE SIX MONTHS ENDED APRIL 30, 1996 AND 1995
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
SEVEN FIELDS DEVELOPMENT (PA), INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF APRIL 30, 1996 AND OCTOBER 31, 1995
<CAPTION>
ASSETS
1996
1995
<S> <C> <C>
Cash $ 488,475 $
2,887
Temporary investments 356,590
1,205,919
Total Cash & Temporary Investments $ 845,065 $
1,208,806
Certificate of deposit $ 40,397 $
23,885
Cash escrow - horses
184,550
Accounts and notes receivable, net of
allowances of $49,733 and $58,308 149,983
241,601
Mortgage notes receivable 126,985
186,681
Capitalized development costs 3,666,100
2,944,303
Capitalized house construction costs 1,988,918
1,961,255
Prepaid expenses and deposits 199,897
282,492
Property not currently under
development 2,494,944
2,995,685
Tenant security deposits 62,986
79,220
Deferred income tax assets 3,992,000
3,992,000
Property, Buildings &
Equipment
Land $ 420,221 $
452,061
Buildings 4,581,964
5,217,808
Equipment and furnishings 1,372,078
1,397,097
Construction in progress 299,057
317,124
Total Property, Buildings and
Equipment $ 6,673,320 $
7,384,090
Accumulated Depreciation (2,309,023)
(2,447,881)
Total Property, Buildings and
Equipment, Net of Accumulated
Depreciation $ 4,364,297 $
4,936,209
Total Assets $ 17,931,572 $
19,036,687
</TABLE>
<PAGE>
<TABLE>
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
<CAPTION>
1996
1995
<S> <C> <C>
Accounts payable and accrued expenses $ 384,431 $
419,924
Accrued estimated costs related to
developed lots and townhouses sold 344,006
267,973
Mortgage payable 2,024,683
1,645,985
Customer deposits and advances 70,128
61,714
Tenant security deposits 62,986
79,220
Legal settlement payable
175,000
General unsecured subordinated debt 10,067,744
10,406,981
Total Liabilities $ 12,953,978 $
13,056,797
<CAPTION>
SHAREHOLDERS' EQUITY
<S> <C> <C>
Common stock, $1 par value,
10,000,000 shares authorized,
2,905,682 and 2,905,960 shares
issued and outstanding $ 2,905,682 $
2,905,960
Additional Paid In Capital 49,713,982
51,375,083
Shareholders' Deficit - excess of
non-discharged debt over assets
on November 7, 1987 (Date of
reorganization) (52,235,399)
(52,240,537)
Retained earnings, since
November 7, 1987 (Date
of reorganization) 4,593,329
3,939,384
Total Shareholders' Equity $ 4,977,594 $
5,979,890
Total Liabilities and
Shareholders' Equity $ 17,931,572 $
19,036,687
</TABLE>
<PAGE>
<TABLE>
SEVEN FIELDS DEVELOPMENT (PA), INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
DETAILS OF OTHER OPERATING EXPENSES,
GENERAL AND ADMINISTRATIVE EXPENSES, AND INTEREST EXPENSE
FOR THE THREE MONTHS ENDED APRIL 30, 1996 AND 1995
<CAPTION>
1996
1995
<S> <C> <C>
Other Operating Expenses
Payroll, payroll taxes and benefits $ 146,711 $
148,923
Repairs & maintenance 42,683
43,442
Utilities 33,362
25,064
Insurance 34,200
39,600
Property taxes 27,753
54,695
Other operating supplies & services 18,327
31,322
Total Other Operating Expenses $ 303,036 $
343,046
Less Costs Capitalized To
Development and House Construction (148,624)
(130,740)
Net Operating Expenses $ 154,412 $
212,306
General And Administrative Expenses
Payroll, payroll taxes and benefits $ 92,175 $
106,706
Professional fees 49,621
24,411
Professional fees related to litigation
and pre-reorganization issues 27,672
33,332
Other general and administrative
expenses 64,495
84,913
Total General and Administrative
Expenses $ 233,963 $
249,362
Less Costs Capitalized To
Development and Construction (9,528)
(13,149)
Net General and Administrative
Expenses $ 224,435 $
236,213
Interest Expense
Total Interest Expense $ 48,788 $
37,609
Less Interest Capitalized to
Development and House
Construction $ (28,191) $
(19,276)
Net Interest Expense $ 20,597 $
18,333
</TABLE>
<PAGE>
<TABLE>
SEVEN FIELDS DEVELOPMENT (PA), INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED APRIL 30, 1996 AND 1995
<CAPTION>
1996
1995
<S> <C> <C>
Gross Revenue
Apartment rentals $ 186,493 $
254,450
Fees & other operating income 17,056
16,438
Water revenue 32,360
29,618
Developed lot and house sales 1,356,310
1,976,176
Townhouse unit sales 647,569
983,454
$ 2,239,788 $
3,260,136
Costs & Expenses
Cost of Developed Lots &
Houses Sold $ 1,159,461 $
1,698,973
Cost of Townhouses Sold $ 343,587 $
466,822
Other Operating Expenses* $ 154,412 $
212,306
General & Administrative Expenses* $ 224,435 $
236,213
Depreciation Expense $ 84,940 $
96,075
Operating Income $ 272,953 $
549,747
Interest Expense* $ (20,597) $
(18,333)
Interest Income $ 13,190 $
39,645
Net Income $ 265,546 $
571,059
Weighted Average Shares Outstanding 2,905,682
2,905,682
Earnings per Share .08
.16
<FN>
* See details on following page.
</TABLE>
<PAGE>
<TABLE>
SEVEN FIELDS DEVELOPMENT (PA), INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
DETAILS OF OTHER OPERATING EXPENSES,
GENERAL AND ADMINISTRATIVE EXPENSES, AND INTEREST EXPENSE
FOR THE SIX MONTHS ENDED APRIL 30, 1996 AND 1995
<CAPTION>
1996
1995
<S> <C> <C>
Other Operating Expenses
Payroll, payroll taxes and benefits $ 321,212 $
294,798
Repairs & maintenance 77,052
93,062
Utilities 53,923
42,895
Insurance 68,400
80,875
Property taxes 65,951
102,650
Other operating supplies & services 37,292
52,640
Total Other Operating Expenses $ 623,830 $
666,920
Less Costs Capitalized To
Development and House Construction (299,734)
(258,736)
Net Operating Expenses $ 324,096 $
408,184
General And Administrative Expenses
Payroll, payroll taxes and benefits $ 206,643 $
217,310
Professional fees 91,002
71,086
Professional fees related to litigation
and pre-reorganization issues 42,279
123,513
Other general and administrative
expenses 127,882
142,888
Total General and Administrative
Expenses $ 467,806 $
554,797
Less Costs Capitalized To
Development and Construction (19,056)
(26,298)
Net General and Administrative
Expenses $ 448,750 $
528,499
Interest Expense
Total Interest Expense $ 100,896 $
77,037
Less Interest Capitalized to
Development and House
Construction $ (53,151) $
(46,644)
Net Interest Expense $ 47,745 $
30,393
</TABLE>
<PAGE>
<TABLE>
SEVEN FIELDS DEVELOPMENT (PA), INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1996 AND 1995
<CAPTION>
1996
1995
<S> <C> <C>
Gross Revenue
Apartment rentals $ 391,845 $
534,239
Fees & other operating income 33,970
34,957
Water revenue 64,390
58,953
Developed lot and house sales 2,453,052
3,492,033
Townhouse unit sales 1,455,044
1,622,396
$ 4,398,301 $
5,742,578
Costs & Expenses
Cost of Developed Lots &
Houses Sold $ 2,059,845 $
2,997,322
Cost of Townhouses Sold $ 716,212 $
766,185
Other Operating Expenses* $ 324,096 $
408,184
General & Administrative Expenses* $ 448,750 $
528,499
Depreciation Expense $ 178,738 $
200,330
Operating Income $ 670,660 $
842,058
Interest Expense* $ (47,745) $
(30,393)
Interest Income $ 31,030 $
86,430
Income Before
Provision for Income Taxes $ 653,945 $
898,095
Provision for Income Taxes $ 0 $
12,000
Net Income $ 653,945 $
886,095
Weighted Average Shares Outstanding 2,905,682
2,905,682
Earnings per Share .19
.25
<FN>
* See details on following page.
</TABLE>
<PAGE>
<TABLE>
SEVEN FIELDS DEVELOPMENT (PA), INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED APRIL 30, 1996 AND 1995
<CAPTION>
1996
1995
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 653,945 $
886,095
Provision for income taxes
12,000
Depreciation 178,738
200,330
Capitalized development costs incurred (662,342)
(259,828)
Capitalized construction
costs incurred (1,524,398)
(1,938,267)
Cost of lots & houses sold 1,938,021
2,809,074
Changes in other assets & liabilities:
Restricted cash 184,550
(2,085)
Mortgage notes receivable 59,696
618,233
Other assets 173,935
159,309
Other liabilities (142,280)
(239,533)
Net Cash Flows From Operating Activities $ 859,865 $
2,245,328
Cash Flows From Investing Activities:
Additions to property, buildings and
equipment $ (36,857) $
(501,213)
Sale of property, buildings & equipment 430,031
510,764
Total Cash Flows From Investing Activities $ 393,174 $
9,551
Cash Flows From Financing Activities:
Repayment of investor debt $ (339,237)
$(1,637,861)
Return of capital to shareholders (1,656,241)
(340,032)
Repayment of mortgages payable (371,302)
(26,152)
Proceeds of new mortgage 750,000
Total Cash Flows From Financing Activities $ (1,616,780)
$(2,004,045)
Net Decrease in Cash And
Temporary Investments $ (363,741) $
250,834
Cash & Temporary Investments,
Beginning of Period $ 1,208,806 $
2,488,891
Cash & Temporary Investments,
End of Period $ 845,065 $
2,739,725
Interest Expense Included in Net Income
From Operating Activities Above $ 47,745 $
30,393
Interest Paid & Included in Capitalized
Development Costs & Houses Under
Construction $ 53,151 $
46,644
Total Interest Paid $ 100,896 $
77,037
Supplemental Schedule of Noncash
Investing and Financing Activities:
Pre-November 7, 1987 shareholder
adjustment $ 5,138
0
</TABLE>
<PAGE>
<TABLE>
SEVEN FIELDS DEVELOPMENT (PA), INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS,
SHAREHOLDERS' DEFICIT, COMMON STOCK, AND
ADDITIONAL PAID IN CAPITAL
FOR THE SIX MONTHS ENDED
APRIL 30, 1996
<CAPTION>
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
<S> <C>
Retained earnings - beginning $
3,939,384
Net income for the six months
ended April 30
653,945
Retained earnings - ending $
4,593,329
<CAPTION>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' DEFICIT
<S> <C>
Shareholders' deficit - excess of
non-discharged debt over assets on
November 7, 1987 (Date of
reorganization) - beginning $
(52,240,537)
Pre-November 7, 1987 shareholder adjustment
5,138
Shareholders' deficit - excess of
non-discharged debt over assets on
November 7, 1987 (Date of
reorganization) - ending $
(52,235,399)
<CAPTION>
CONSOLIDATED STATEMENT OF COMMON STOCK
<S> <C>
Common stock - beginning $
2,905,960
Pre-November 7, 1987 shareholder adjustment
(278)
Common stock - ending $
2,905,682
<CAPTION>
CONSOLIDATED STATEMENT OF ADDITIONAL PAID IN CAPITAL
<S> <C>
Additional paid in capital - beginning $
51,375,083
Pre-November 7, 1987 shareholder adjustment
(4,860)
Return of capital distribution to shareholders
(1,656,241)
Additional paid in capital - ending $
49,713,982
</TABLE>
<PAGE>
SEVEN FIELDS DEVELOPMENT (PA), INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED APRIL 30, 1996 AND 1995
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 financial
statements and notes
thereto included in the Registrant's Annual Report for the two
years ended
October 31, 1995.
For comparative purposes certain 1995 amounts have been
reclassified to
conform to the presentation adopted in 1996.
Principles of Consolidation
The consolidated financial statements include the accounts of
Seven Fields
Development (PA), Inc. and its wholly-owned subsidiaries, Seven
Fields
Development Company (a Pennsylvania Business Trust), Seven Fields
Development
(Del), Inc., and Seven Fields Management, Inc. The companies were
formed
pursuant to a plan of reorganization approved by the shareholders
of Seven
Fields Development Corporation at the annual shareholders meeting
on March
31, 1995.
All significant intercompany transactions have been eliminated
from the
consolidated financial statements.
Minority Interest Adjustment and Earnings Per Share
The balance sheet of Seven Fields Development(PA), Inc. does not
reflect the
minority interest of those shareholders of Seven Fields Development
Corporation who did not accept the exchange offer with Seven Fields
Development(PA), Inc., but instead received trust shares. Under
generally
accepted accounting principles, it is not appropriate to reflect a
negative
(i.e., a debit balance) minority interest in a balance sheet.
Similarly,
there is no minority interest provision reflected in the statement
of
operations because of such capital deficiency. Although earnings
accrue to
the benefit of the minority shareholders of the Trust, no such
minority
interest can be reflected in the statement of operations as long
as the Trust
continues to have a capital deficiency, and as a result a negative
minority
interest.
<PAGE>
Notes to Financial Statements for the Six
Months
Ended April 30, 1996 and 1995 (Con't)
Minority Interest Adjustment and Earnings Per Share (Con't)
Earnings per share have been calculated to give effect to the
earnings which
accrue to the benefit of the minority shareholders although under
generally
accepted accounting principles such minority interests may not be
reflected
in the balance sheet or statement of operations so long as the
capital
deficiency exists in the Trust.
The computation of earnings per share for the three months ended
April 30,
1996 and 1995 is as follows:
[CAPTION]
1996 1995
[S] [C] [C]
Net Income $ 265,546 $
571,059
Less Net Income Accruing to
Minority Interest in Seven
Fields Development Company 44,114
94,868
Net Income Applicable to Seven Fields
(PA), Inc. Shareholders $ 221,432 $
476,191
Weighted Average Shares Outstanding 2,905,682
2,905,682
Earnings Per Share .08
.16
The computation of earnings per share for the six months ended
April 30, 1996
and 1995 is as follows:
[CAPTION]
1996 1995
[S] [C] [C]
Net Income $ 653,945 $
886,095
Less Net Income Accruing to
Minority Interest in Seven
Fields Development Company 108,637
147,204
Net Income Applicable to Seven Fields
(PA), Inc. Shareholders $ 545,308 $
738,891
Weighted Average Shares Outstanding 2,905,682
2,905,682
Earnings Per Share .19
.25
Weighted average number of shares are adjusted to reflect
retroactive changes
related to settlements with shareholders relating to the
Corporation's
reorganization on November 7, 1987.
<PAGE>
Part I - Item 2 Management Discussion and Analysis of
Financial
Condition and Results of Operations
Financial Condition
The Company's financial condition improved due to generation of
net profit of
$653,945 in the first six months of 1996. The Company granted a
$1.0 million
mortgage to Integra Bank on its property in the Northridge Manor
subdivision
in order to secure a $1.0 million dollar line of credit. The line
of credit
shall be used to fund home construction in such subdivision;
however, to date
no amounts have been borrowed under this line. The Company also
granted a
mortgage to PNC Bank on the office building to secure a term loan
in the
amount of $750,000. One mortgage note receivable was sold,
generating
approximately $58,000 of additional cash. The proceeds of the PNC
loan, sale
of the mortgage and other cash generated through operations and
sales served
to fund the partial repayment of investor debt in the amount of
$339,237 and
return of capital to shareholders in the amount of $1,656,241.
Approximately
$326,000 in additional principal payments was paid to PNC Bank to
release
collateral from townhouse units in preparation for their sale.
Inventory at the end of the second quarter of 1996 consisted of
seventeen
single family homes in various stages of construction including
two model
homes, four homes under agreement of sale, and eleven homes
available for
sale. Also included in inventory are five multi-family homes, all
of which
are available for sale. Fourteen townhouse units are under
construction, of
which two are models, five are under agreement of sale and seven
are
available for sale.
Results of Operations for Six Month Periods
In 1996, gross revenue from apartment rentals decreased from the
prior year's
period by $142,394 due to the sale of such units. Since 20 of
these townhouse
units were sold in 1996 and 23 were sold in 1995, gross revenue
from
townhouse unit sales decreased in 1996 by $167,352. Developed lot
and house
sales decreased from 1995 to 1996 by $1,038,981 due to sales of
ten lots,
five houses and seven multi-family units in 1996, compared with
five lots,
nine houses, and twelve multi-family units a year earlier.
Management
believes that severe winter weather conditions in the area caused
the lower
sales volumes. As a result of the above and other minor
variations, total
gross revenue in the six month period decreased by $1,344,277 from
the prior
year's period.
Costs of developed lots and houses sold decreased by $937,477 from
1995 and
cost of townhouses sold decreased by $49,973 from 1995; both such
variations
are due to corresponding proportionate changes in sales volumes.
<PAGE>
Part I - Item 2(Con't) Management Discussion and Analysis of
Financial
Condition and Results of Operations
Results of Operations for Six Month Periods (Con't)
Other operating expenses decreased by $84,088 when compared with
1995 due
primarily to greater capitalization of costs to home construction
and
decrease of expense because of townhouse sales. General and
administrative
expenses also decreased by $79,749. Most of such decrease is a
result of
final settlement of all litigation with a predecessor principal
early in the
first quarter of 1996.
Interest expense increased in 1996 over 1995 by $17,352 due
primarily to the
new mortgages granted in the first quarter, while interest income
also
decreased by $55,400 because of mortgage notes receivable that
existed in the
prior year's period and because of lower average cash balances in
1996.
<PAGE>
Part II - Item 1 Legal Proceedings
All previously reported litigation between the Company and Thomas
Reilly,
Barbara Reilly, East Pointe Construction Company and TWBJT Realty
Corporation
("the predecessors") has been settled. The Company received clear
title to
the Moon Township property. The Company and the predecessors have
agreed to
be bound by the Court's determination as to title to the 45 acres
located in
Adams Township. The horse escrow account was dissolved with
$175,000
distributed to the predecessors and the remainder released to the
Company.
The litigation pending in Butler County, Pennsylvania, initiated
by the
predecessors against the Company's Board of Directors, was
dismissed with
prejudice. All other outstanding disputes between the
predecessors, including
counterclaims filed by the predecessors against the Company, were
terminated.
<PAGE>
Part II - 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, 1996.
<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.
Seven Fields Development (PA), Inc.
Date:_________________ By:_______________________________________
George K. Wright, Vice-President
Date:_________________ By:_______________________________________
Roman Polnyj, Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> APR-30-1996
<CASH> 845,065
<SECURITIES> 0
<RECEIVABLES> 149,983
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 6,673,320
<DEPRECIATION> (2,309,023)
<TOTAL-ASSETS> 17,931,572
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 2,905,628
0
0
<OTHER-SE> 2,071,912
<TOTAL-LIABILITY-AND-EQUITY> 17,931,572
<SALES> 0
<TOTAL-REVENUES> 4,398,301
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 47,745
<INCOME-PRETAX> 653,945
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 653,945
<EPS-PRIMARY> .19
<EPS-DILUTED> 0
</TABLE>
