SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 28, 1995
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 0-14019
Ridgewood Properties, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 58-1656330
- - ------------------------------- ------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2859 Paces Ferry Road, Suite 700
Atlanta, Georgia
30339
- - -------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(404) 434-3670
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(Registrant's telephone number, including area code)
N/A
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(Former name, former address and former fiscal year,
if changed since last report)
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 _____
Common stock, par value $.01 per share - 963,480 shares
outstanding at February 28, 1995.
PART I. FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
-----------------------------
RIDGEWOOD PROPERTIES, INC. AND SUBSIDIARIES
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CONSOLIDATED BALANCE SHEETS
---------------------------
FEBRUARY 28, 1995 AND AUGUST 31, 1994
-------------------------------------
($000'S omitted, except per share data)
---------------------------------------
(Unaudited)
February 28, August 31,
ASSETS 1995 1994
------ ----------- -----------
Real Estate Investments:
Real Estate Properties (Notes 5 & 6)
Operating Properties $ 4,035 $ 4,196
Land Held for Sale or
Future Development 10,406 10,903
------------ ------------
14,441 15,099
Mortgage Loans 502 503
------------ ------------
Total real estate investments 14,943 15,602
Allowance for Possible Losses (Note 3) (4,701) (4,873)
------------ ------------
Net real estate investments 10,242 10,729
Cash and Cash Equivalents (Note 9) 748 2,804
Other Assets 835 818
------------ ------------
$ 11,825 $ 14,351
============ ============
<FN>
The accompanying notes are an integral part of these consolidated
financial statements.
</FN>
RIDGEWOOD PROPERTIES, INC. AND SUBSIDIARIES
-------------------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
FEBRUARY 28, 1995 AND AUGUST 31, 1994
-------------------------------------
($000's omitted, except per share data)
---------------------------------------
(Unaudited)
February 28, August 31,
LIABILITIES AND SHAREHOLDERS' INVESTMENT 1995 1994
---------------------------------------- ------------ ------------
Accounts Payable $ 147 $ 253
Accrued Salaries, Bonuses and
Other Compensation 703 673
Accrued Property Tax Expense 54 187
Accrued Interest and Other Liabilities 348 383
Term Loans (Note 7) 4,270 5,415
------------ ------------
Total Liabilities 5,522 6,911
------------ ------------
Commitments and Contingencies
Shareholders' Investment (Notes 1 & 4)
Series A Convertible Preferred Stock,
$1 par value, 500,000 shares authorized, 450,000
shares issued and outstanding at February 28, 1995
and August 31, 1994, liquidation preference
and callable at $3,600,000. 450 450
Common Stock, $.01 par value, 3,000,000
shares authorized, 963,480 shares issued and
outstanding at February 28, 1995 and
August 31, 1994. 10 10
Paid-in Surplus (Note 4) 16,286 16,368
Accumulated Deficit since December 30, 1985 (10,443) (9,388)
------------ ------------
6,303 7,440
------------ ------------
$ 11,825 $ 14,351
============ ============
<FN>
The accompanying notes are an integral part of these consolidated
financial statements.
</FN>
RIDGEWOOD PROPERTIES, INC. AND SUBSIDIARIES
-------------------------------------------
STATEMENTS OF CONSOLIDATED LOSS
-------------------------------
FOR THE THREE AND SIX MONTHS ENDED FEBRUARY 28, 1995 AND FEBRUARY 28, 1994
--------------------------------------------------------------------------
($000's omitted, except per share data)
---------------------------------------
For the Three Months Ended For the Six Months Ended
----------------------------- ---------------------------
February 28, February 28, February 28, February 28,
1995 1994 1995 1994
------------ ------------ ----------- -----------
REVENUES:
Operating revenues from real estate properties..... $ 981 $ 1,649 $ 1,737 $ 3,050
Sales of real estate properties ................... 326 637 326 1,228
Revenues from hotel management .................... 66 -- 67 --
Mobile home sales ................................. -- 928 -- 1,859
Income from loans and temporary investments ....... 24 25 63 51
Other ............................................. -- 31 3 36
------------- ------------- ------------ ------------
1,397 3,270 2,196 6,224
------------- ------------- ------------ ------------
COSTS AND EXPENSES:
Expenses of real estate properties ................ 795 1,317 1,532 2,666
Expenses of real estate sales ..................... 332 615 332 1,163
Expenses of hotel management ...................... 135 -- 135 --
Expenses of mobile home sales ..................... -- 1,281 -- 2,567
Depreciation ...................................... 117 331 235 667
Interest expense .................................. 105 216 221 433
Provision for possible losses ..................... -- -- 50 --
General, administration and other ................. 328 397 671 778
------------- ------------- ------------ ------------
1,812 4,157 3,176 8,274
------------- ------------- ------------ ------------
LOSS BEFORE INCOME TAX EXPENSE ........................ $ (415) $ (887) $ (980) $ (2,050)
------------- ------------- ------------ ------------
INCOME TAX EXPENSE .................................... $ -- $ -- $ 75 $ --
------------- ------------- ------------ ------------
NET LOSS .............................................. $ (415) $ (887) $ (1,055) $ (2,050)
============= ============= ============ ============
LOSS PER SHARE (NOTE 4) ............................... $ (0.43) $ (0.23) $ (1.10) $ (0.52)
============= ============= ============ ============
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</FN>
RIDGEWOOD PROPERTIES, INC. AND SUBSIDIARIES
-------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
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FOR THE SIX MONTHS ENDED FEBRUARY 28, 1995 AND FEBRUARY 28, 1994
-----------------------------------------------------------------
Decrease in Cash and Cash Equivalents
-------------------------------------
($000's Omitted)
----------------
1995 1994
---------- ----------
Cash flows from operating activities:
Net loss ...................................................... $ (1,055) $ (2,050)
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation and amortization ............................. 251 747
Increase (decrease) in allowance for possible losses ...... 50 (37)
Loss (gain) from sales of real estate property ............ 6 (27)
Decrease (increase) in mobile home inventory .............. -- (137)
Decrease (increase) in other assets ....................... (51) 73
Increase (decrease) in accounts payable and
accrued liabilities ..................................... (244) 230
---------- ----------
Total adjustments ......................................... 12 849
---------- ----------
Net cash used by operating activities ..................... (1,043) (1,201)
Cash flows from investing activities:
Principal payments received on mortgage loans ............... 1 33
Proceeds from sales of real estate .......................... 308 1,091
Additions to real estate properties ......................... (95) (858)
---------- ----------
Net cash provided by investing activities ................. 214 266
Cash flows from financing activities:
Payment of dividend on preferred stock ...................... (82) --
Proceeds from notes payable ................................. -- 1,626
Repayments of notes payable ................................. (1,145) (2,362)
---------- ----------
Net cash used by financing activities ..................... (1,227) (736)
---------- ----------
Net decrease in cash and cash equivalents ....................... $ (2,056) $ (1,671)
Cash and cash equivalents at beginning of period ................ 2,804 2,142
---------- ----------
Cash and cash equivalents at end of period ...................... $ 748 $ 471
========== ==========
Supplemental disclosure of noncash activity:
Chargeoff of fully reserved loan ............................ $ 227,000
==========
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</FN>
RIDGEWOOD PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 1995 AND FEBRUARY 28, 1994
(Unaudited)
1. GENERAL:
Ridgewood Properties, Inc. (the "Company") has
been engaged in the business of acquiring, developing,
operating and selling real property located primarily in the
Southeast and "Sunbelt" areas. The Company is focusing in
the future on the acquisition, development and management of
hotel properties throughout the country. Accordingly, the
Company formed a hotel management subsidiary in December 1994
and is actively pursuing the acquisition of management
contracts, as well as investor groups for future acquisitions
where the Company can use its expertise on a fee basis for
the benefit of others. The Company will take ownership
interest where feasible and dependent upon adequate sources
of financing. The Company was incorporated in Delaware on
October 29, 1985.
The Company's common stock is currently listed in
the broker-dealer "Pink Sheets" and trades in the
over-the-counter market. Of the Company's issued and
outstanding shares of common stock, approximately 42% of the
common stock is owned by the Company's President, N. Russell
Walden. All of the Company's issued and outstanding shares
of preferred stock are owned by Triton Group, Ltd.
The accompanying financial statements of the
Company present the historical cost basis amount of assets,
liabilities and shareholders' investment of the real estate
business for the periods presented. The consolidated
financial statements include the accounts of the Company, its
wholly-owned subsidiaries and its joint venture investments
after the elimination of all intercompany amounts.
2. BASIS OF PRESENTATION:
The accompanying consolidated financial statements
have been prepared by the Company, without audit, pursuant to
the rules and regulations of the Securities and Exchange
Commission. In the opinion of management, the consolidated
financial statements reflect all adjustments, consisting of
normal recurring adjustments, which are necessary to present
fairly the financial position, results of operations and
changes in cash flow for the interim periods covered by this
report. Although certain information and footnote
disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such
rules and regulations, management believes that the
disclosures are adequate to make the information presented
not misleading. These financial statements should be read in
conjunction with the consolidated financial statements and
notes thereto included in the Company's annual report for the
fiscal year ended August 31, 1994. The results of operations
for the six months ended February 28, 1995 are not
necessarily indicative of the results to be expected for the
fiscal year ending August 31, 1995.
The Company is currently generating net operating
loss carryforwards for both book and tax purposes which may
be used to offset future taxable income. In September 1993,
the Company adopted SFAS 109. The adoption of SFAS 109 did
not have a material effect on the Company's consolidated
financial position or results of operations. The Company has
incurred some income tax expense due to alternative minimum
tax limitations on the amount of net operating losses which
may be used to offset taxable income. However, this
alternative minimum tax may be used to decrease future taxes
payable.
For the purpose of the Statement of Cash Flows,
cash includes cash equivalents which are highly liquid
investments with maturity of three months or less.
Certain prior year amounts have been reclassified
to conform with the current presentation.
3. ALLOWANCE FOR POSSIBLE LOSSES:
Six Months Six Months
Ended Ended
2/28/95 2/28/94
---------- ----------
Allowance for possible
losses at beginning
of year $4,873 $3,625
Provision for possible
losses 50 --
Chargeoff and reversal of
reserves from the sales
of real estate assets (222) (37)
Chargeoff of fully reserved
loan -- (227)
___________ __________
Allowance for possible
losses at 2/28/95 and
2/28/94, respectively $4,701 $3,361
=========== ==========
The allowance for possible losses increased by
$50,000 for the three months ended November 30, 1994. The
additional reserve was to reflect the net realizable value on
a residential lot in Atlanta, Georgia. There were no
adjustments to the allowance for possible losses during the
second quarter of fiscal year 1995.
The allowance for possible losses decreased by
approximately $264,000 for the six months ended February 28,
1994. Approximately $37,000 of the decrease was due to the
sale of land on which reserves had been specifically
allocated. The remaining $227,000 decrease was due to the
write off of a mortgage loan which had a 100% reserve.
4. SHAREHOLDERS' INVESTMENT:
Loss Per Common Share --
Loss per common share is calculated based upon the
weighted average number of shares outstanding of
approximately 963,000 for the three and six months ended
February 28, 1995 and 3,912,000 for the three and six months
ended February 28, 1994.
Preferred Stock --
The Company paid a dividend of $.10 per share to
the preferred shareholder, Triton Group, Ltd., on November
15, 1994 and again on February 28, 1995. The preferred stock
is callable at $8.00 per share and has cumulative annual
dividend rights of $.40 per share, payable on a quarterly
basis.
5. REFINANCING OF THE RAMADA INN:
The Company has applied for a loan from a
commercial lender to refinance the Ramada Inn in Longwood,
Florida. The expected loan proceeds will be $2,970,000. The
loan will be for a term of 15 years with the amortization
period being 25 years, at the rate of the 10 year U. S.
Treasury Notes plus 4% fixed at the closing of the loan or
sooner if the Company chooses. Principal and interest
payments will be approximately $31,000 per month. Proceeds
from the loan will be used to repay the current loan. The
loan commitment is expected to be issued no later than April
14, 1995. The closing is expected to occur on or before May
29, 1995.
6. SALE OF RIDGEWOOD LODGE:
The Company has signed a definitive contract to
sell the RidgeWood Lodge, its weekly rental hotel in Orlando,
Florida. The net proceeds, after commissions, will be
approximately $2.7 million. All contingencies under the
contract have expired, and the closing date has been set for
April 27, 1995. The gain on the sale will be approximately
$200,000.
7. NOTES PAYABLE:
Effective December 31, 1991, the Company's
Revolving Line of Credit expired and the outstanding
principal balance of $15,000,000 converted to a term loan.
In January 1992, the term loan was amended to postpone
principal payments for seven months. Under the amended
agreement, interest accrues at the rate of one percent (1%)
per annum above the prime rate (currently 8.50%) of the
lender. Under the term loan agreement, the Company is
required to make interest payments on the outstanding
principal balance of the note monthly through December 31,
1996. On the first day of each month through December 1,
1996, the outstanding principal amount of the note was to be
repaid in equal monthly payments of $250,000. In June 1994,
the loan agreement was amended whereby proceeds from future
sales of property securing the term loan will serve to reduce
the remaining monthly amortization, thereby reducing the
$250,000 monthly payment rather than reducing the remaining
principal due at the end of the term. On January 1, 1997,
the remaining outstanding principal balance shall be payable
in full. The loan is secured by certain real estate assets
of the Company with a gross book value of approximately
$10,000,000. At February 28, 1995, the monthly principal
payment is $171,000. The balance of this term loan as of
February 28, 1995 was approximately $4,270,000. In March
1995, the Company obtained a waiver of principal payments
under the loan until the occurrence of the closing of the
loan on the Ramada Inn and the sale of the RidgeWood Lodge or
May 30, whichever occurs first. (See Notes 5 and 6). The
proceeds from the sale and refinancing will exceed the
principal balance outstanding by approximately $1.4 million.
The excess cash will be used to fund operating losses until
new sources of income are established.
Before considering the effects of the sale of the
RidgeWood Lodge and the refinancing of the Ramada Inn,
maturities of long-term debt for the remainder of fiscal year
1995 are approximately $1,710,000; fiscal year 1996
maturities are $2,052,000; and fiscal year 1997 maturities
are $508,000.
8. HOTEL MANAGEMENT SUBSIDIARY:
In December 1994, the Company formed a hotel
management company which is a wholly-owned subsidiary of the
Company. In conjunction with the formation of this
subsidiary, the Company acquired options to purchase the
assets and the contracts of another hotel management company.
At the end of the option period (December 31, 1995), the
Company will have the option to purchase the contracts based
on earnings of the subsidiary for the calendar year 1995.
The seller has the right to sell or to withdraw when this
offer is received. The payment would be made through the
issuance of the Company's stock. The hotel management
expenses currently exceed revenues. Under the terms of the
option agreement, any losses generated will be repaid at the
end of December 1995. Because it is not certain that the
Company will recover this deficit, it has shown the losses in
the operations of the Company in the accompanying financial
statements. Management does not expect this transaction to
have a material impact on the financial condition or results
of operations of the Company.
9. SUBSEQUENT EVENT:
In March 1995 the Company borrowed approximately
$381,000 against the cash values on key-person life insurance
contracts which the Company purchased concurrently with the
implementation of the Supplemental Retirement and Death
Benefit Plan. The net proceeds to the Company were
approximately $358,000 due to prepayment of interest on the
loan.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THREE AND SIX MONTHS ENDED FEBRUARY 28, 1995
COMPARED TO THREE AND SIX MONTHS ENDED FEBRUARY 28, 1994
LIQUIDITY AND CAPITAL RESOURCES --
Effective December 31, 1991, the Company's
Revolving Line of Credit expired and the outstanding
principal balance of $15,000,000 converted to a term loan.
In January 1992, the term loan was amended to postpone
principal payments for seven months. Under the amended
agreement, interest accrues at the rate of one percent (1%)
per annum above the prime rate (currently 8.50%) of the
lender. Under the term loan agreement, the Company is
required to make interest payments on the outstanding
principal balance of the note monthly through December 31,
1996. On the first day of each month through December 1,
1996, the outstanding principal amount of the note was to be
repaid in equal monthly payments of $250,000. In June 1994,
the loan agreement was modified whereby proceeds from future
sales of property securing the term loan will serve to reduce
the remaining monthly amortization, thereby reducing the
$250,000 monthly payment rather than reducing the remaining
principal due at the end of the term. The monthly principal
payment is currently $171,000. On January 1, 1997, the
remaining outstanding principal balance shall be payable in
full. The loan is secured by certain real estate assets of
the Company with a gross book value of approximately
$10,000,000. The balance of this term loan as of February
28, 1995 was approximately $4,270,000.
Occupancy of the Company's operating properties as
of February 28, 1995 and 1994, were as follows:
February 28,
1995 1994
---- ----
Hotel in Longwood, FL (monthly avg.) . . 85% 83%
Hotel in Orlando, FL (monthly avg.) . . 92% 70%
Since the Company is not currently generating sufficient
operating cash to cover overhead and debt service, the
Company must continue to sell real estate, seek alternative
financing or otherwise recapitalize the Company. In February
1995 the Company signed a contract to sell the weekly rental
hotel property in Orlando, Florida for $2.9 million in cash.
Net proceeds will be approximately $2.7 million. In April
1995, the Company expects to receive a commitment to
refinance its other hotel property in Orlando, Florida. The
approximate loan amount is expected to be $2.9 million. Both
of these are expected to close by May 30, 1995. The current
lender has agreed to forego principal payments until the
Company consummates the refinancing transaction and the
closing of the sale of the RidgeWood Lodge or until May 30,
1995, whichever occurs first. At closing of both
transactions, the Company will repay the existing loan to the
extent there remains a loan balance. The excess cash from
these two transactions will be approximately $1.4 million.
The excess cash will be used to fund operating losses until
new sources of income can be generated. The Company also
intends to aggressively pursue the acquisition of hotel
management contracts which would provide additional cash
flow. Such acquisitions would be accomplished by either
acquiring the contracts of other hotel management companies
and/or through the Company's own marketing efforts to earn
new contracts.
RESULTS OF OPERATIONS --
During the three month period ended February 28,
1995, the Company had losses from real estate sales of
approximately $6,000. There were no real estate sales during
the first quarter of fiscal year 1995. During the three and
six months ended February 28, 1994, the gains from real
estate sales were $22,000 and $65,000, respectively. Gains
or losses on sales are dependent upon the specific assets
sold in a particular period and the terms of each sale.
Operating revenues from real estate properties
decreased $668,000, or 40%, and $1,313,000, or 43%,
respectively, for the three and six months ended February 28,
1995 compared to the three and six months ended February 28,
1994. The decrease was a result of the sale of the Company's
apartments in Dallas, Texas, and mobile home parks in Florida
during the fourth quarter of fiscal year 1994. Revenues
attributable to the two remaining hotel properties increased
by $100,000 and $196,000, respectively, for the three and six
months ended February 28, 1995. The sale of the RidgeWood
Lodge is expected to have a positive effect on the
operations of the Company. The net loss was approximately
$161,000, and $103,000 for the six months ended February 28,
1994 and February 28, 1995, respectively.
During the three and six months ended February 28,
1995, there were no losses from mobile home sales compared to
losses of $353,000 and $708,000 for the same periods of
fiscal year 1994.
Operating expenses during the three and six months
ended February 28, 1995 decreased $522,000, or 40%, and
$1,134,000, or 43%, compared to the three and six months
ended February 28, 1994. The decrease is due primarily to
the sale of the Company's mobile home parks in Florida and
apartments in Texas. Expenses at the Company's two hotel
properties in Florida remained relatively stable during the
three and six months ended February 28, 1995 compared to
February 28, 1994.
Interest expense decreased approximately $111,000
and $212,000 during the three and six months ended February
28, 1995, respectively, compared to the three and six months
ended February 28, 1994 due to the decrease in outstanding
debt. There was no capitalized interest during the three or
six months ended February 28, 1995 or February 28, 1994.
The Company formed a hotel management subsidiary in
December 1994. Losses for the three and six months ended
February 28, 1995 were $68,000. The loss was generated by
expenses attributable to the hotel management operations
exceeding management fee revenue. This loss is attributable
to the assets of another company which the Company has an
option to purchase pursuant to the terms of the agreement.
The agreement also requires Cornerstone Management and
Development, Inc. (Maryland) to repay the Company if losses
occur, but because of the uncertainty of collecting this
amount, the Company has included this loss in its results of
operations. The Company is currently funding its deficit
because it anticipates that the loss will reverse and that
the management activities will generate a profit for the
fiscal year.
General, administration and other expenses
decreased $69,000, or 17%, and $107,000, or 14%, for the
three and six months ended February 28, 1995 compared to the
three and six months ended February 28, 1994 as a result of
reduced overhead expenses due to a smaller business entity.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
A. Exhibits:
27 Financial Data Schedule
B. Reports on Form 8-K:
No reports on Form 8-K were filed during the
three months ended February 28, 1995.
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.
RIDGEWOOD PROPERTIES, INC.
By: /s/ N. R. Walden__________
N. Russell Walden
President
By: /s/ Karen S. Hughes_______
Karen S. Hughes
Vice President,
Chief Accounting Officer
Date: April 11, 1995