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 November 30, 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 November 30, 1995.
PART I. FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
-----------------------------
RIDGEWOOD PROPERTIES, INC. AND SUBSIDIARIES
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CONSOLIDATED BALANCE SHEETS
---------------------------
NOVEMBER 30, 1995 AND AUGUST 31, 1995
-------------------------------------
($000'S omitted, except per share data)
---------------------------------------
(Unaudited)
November 30, August 31,
ASSETS 1995 1995
------ ----------- -----------
Real Estate Investments:
Real Estate Properties
Operating Properties $ 1,438 $ 1,461
Land Held for Sale or
Future Development 9,891 10,104
------------ ------------
11,329 11,565
Mortgage Loans 7 44
------------ ------------
Total real estate investments 11,336 11,609
Allowance for Possible Losses (4,700) (4,700)
------------ ------------
Net real estate investments 6,636 6,909
Investment in Limited Partnership 232 232
Cash and Cash Equivalents 1,567 1,880
Other Assets 682 652
------------ ------------
$ 9,117 $ 9,673
============ ============
<FN>
The accompanying notes are an integral part of these consolidated
financial statements.
</FN>
RIDGEWOOD PROPERTIES, INC. AND SUBSIDIARIES
-------------------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
NOVEMBER 30, 1995 AND AUGUST 31, 1995
-------------------------------------
($000's omitted, except per share data)
---------------------------------------
(Unaudited)
November 30, August 31,
LIABILITIES AND SHAREHOLDERS' INVESTMENT 1995 1995
---------------------------------------- ------------ ------------
Accounts Payable $ 56 $ 102
Accrued Salaries, Bonuses and
Other Compensation 748 737
Accrued Property Tax Expense 119 146
Accrued Interest and Other Liabilities 233 280
Term Loans 2,790 2,796
------------ ------------
Total Liabilities 3,946 4,061
------------ ------------
Commitments and Contingencies
Shareholders' Investment
Series A Convertible Preferred Stock,
$1 par value, 1,000,000 shares authorized, 450,000
shares issued and outstanding at November 30, 1995
and August 31, 1995, liquidation preference
and callable at $3,600,000. 450 450
Common Stock, $.01 par value, 5,000,000
shares authorized, 963,480 shares issued and
outstanding at November 30, 1995 and
August 31, 1995. 10 10
Paid-in Surplus 16,151 16,196
Accumulated Deficit since December 30, 1985 (11,440) (11,044)
------------ ------------
5,171 5,612
------------ ------------
$ 9,117 $ 9,673
============ ============
<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 MONTHS ENDED NOVEMBER 30, 1995 AND NOVEMBER 30, 1994
------------------------------------------------------------------
($000's omitted, except per share data)
---------------------------------------
For the Three Months Ended
-----------------------------
November 30, November 30,
1995 1994
------------ ------------
REVENUES:
Operating revenues from real estate properties..... $ 520 $ 756
Revenues from hotel management .................... 58 --
Sales of real estate properties ................... 235 --
Income from loans and temporary investments ....... 23 39
Other ............................................. -- 3
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836 798
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COSTS AND EXPENSES:
Expenses of real estate properties ................ 549 738
Expenses of hotel management ...................... 44 --
Expenses of real estate sales ..................... 180 --
Allowance for possible losses ..................... -- 50
Depreciation ...................................... 39 118
Interest expense .................................. 85 116
General, administration and other ................. 295 342
Business development .............................. 40 --
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1,232 1,364
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NET LOSS BEFORE INCOME TAX EXPENSE .................... $ (396) $ (566)
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INCOME TAX EXPENSE .................................... $ -- $ 75
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NET LOSS .............................................. $ (396) $ (641)
============= =============
LOSS PER SHARE ........................................ $ (0.46) $ (0.70)
============= =============
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</FN>
RIDGEWOOD PROPERTIES, INC. AND SUBSIDIARIES
-------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------
FOR THE THREE MONTHS ENDED NOVEMBER 30, 1995 AND NOVEMBER 30, 1994
------------------------------------------------------------------
Decrease in Cash and Cash Equivalents
-------------------------------------
($000's Omitted)
----------------
1995 1994
---------- ----------
Cash flows from operating activities:
Net loss ...................................................... $ (396) $ (641)
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation and amortization ............................. 35 126
Increase in allowance for possible losses ................. -- 50
Gain from sales of real estate property ................... (55) --
Decrease (increase) in other assets ....................... (35) 119
Decrease in accounts payable and
accrued liabilities ..................................... (109) (279)
---------- ----------
Total adjustments ......................................... (164) 16
---------- ----------
Net cash used by operating activities ..................... (560) (625)
Cash flows from investing activities:
Principal payments received on mortgage loans ............... 37 --
Proceeds from sales of real estate .......................... 275 --
Additions to real estate properties ......................... (14) (49)
---------- ----------
Net cash received (used) from investing activities ........ 298 (49)
Cash flows from financing activities:
Repayments of notes payable ................................. (6) (543)
Dividend payment ............................................ (45) (36)
---------- ----------
Net cash used by financing activities ..................... (51) (579)
---------- ----------
Net decrease in cash and cash equivalents ....................... $ (313) $ (1,253)
Cash and cash equivalents at beginning of period ................ 1,880 2,804
---------- ----------
Cash and cash equivalents at end of period ...................... $ 1,567 $ 1,551
========== ==========
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</FN>
RIDGEWOOD PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 1995 AND NOVEMBER 30, 1994
(Unaudited)
1. GENERAL:
Ridgewood Properties, Inc. (the "Company") is primarily
engaged in the business of acquiring, developing, operating and
selling real estate property in the Southeast and "Sunbelt" areas.
Additionally, the Company, through its investment in a limited
partnership, is engaged in acquiring and managing hotel properties in
the Southeast. Currently, the Company's only operating property is
the hotel in Longwood, Florida. All of the Company's other
properties are land properties held for sale, and no additional
development is currently anticipated for the land. The Company was
incorporated under the laws of the State of Delaware on October 29,
1985. Prior to December 31, 1985, the Company operated under the
name CMEI, Inc.
The Company's common stock is currently listed in the
broker-dealer "Pink Sheets" and trades in the over-the-counter
market. In December 1995, the Company purchased a hotel management
company by issuing 125,000 shares of the Company's common stock. Of
the Company's issued and outstanding shares of common stock (before
the issuance of shares related to the purchase described above),
approximately 42% of the common stock is owned by the Company's
President, N. Russell Walden. After issuance of the shares related
to the purchase of the hotel management company, approximately 37% of
the common stock is owned by the Company's President. 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 audited consolidated financial
statements and notes thereto included in the Company's annual report
for the fiscal year ended August 31, 1995. The results of operations
for the three months ended November 30, 1995 are not necessarily
indicative of the results to be expected for the fiscal year ending
August 31, 1996.
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.
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.
3. ALLOWANCE FOR POSSIBLE LOSSES:
No additional allowance for possible losses was necessary
for the three months ended November 30, 1995. 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.
4. COMMITMENTS AND CONTINGENCIES:
In August 1991, each executive officer was offered a
Post-Employment Consulting Agreement (the "Consulting Agreement(s)")
whereby the officer agrees that if he or she is terminated by the
Company for other than good cause, the officer will be available for
consulting at a rate equal to their annual compensation immediately
prior to termination. All officers have chosen to enter into
Consulting Agreements. In addition, one other employee was offered
and has chosen to enter into a one year Consulting Agreement. The
executive, upon termination, agrees to sign an unconditional release
of all claims and liability in exchange for a one year (two
employees) or two year (two employees) consulting fee arrangement,
depending upon the years of service as an officer or the designation
as a senior executive officer.
On May 2, 1995 a complaint was filed in the Court of Chancery
of the State of Delaware (New Castle County) entitled WILLIAM N.
STRASSBURGER V. MICHAEL M. EARLY, LUTHER A. HENDERSON, JOHN C.
STISKA, N. RUSSELL WALDEN, AND TRITON GROUP, LTD., DEFENDANTS, AND
RIDGEWOOD PROPERTIES, INC., NOMINAL DEFENDANT, C.A. NO. 14267 (the
"Complaint"). The plaintiff is an individual shareholder of the
Company who purports to file the Complaint individually,
representatively on behalf of all similarly situated shareholders,
and derivatively on behalf of the Company. The Complaint challenges
the actions of the Company and its directors in consummating the
Company's August 1994 repurchase of its common stock held by Triton
Group, Ltd. and Hesperus Partners Ltd. in five counts, denominated
Waste of Corporate Assets, Breach of Duty of Loyalty to Ridgewood,
Breach of Duty of Good Faith, Intentional Misconduct, and Breach of
Duty of Loyalty and Good Faith to Class.
The Complaint seeks (a) permission of the court to proceed
as a class action with respect to one count; (b) rescission of the
repurchase of Triton's Ridgewood common stock, together with recovery
(to Ridgewood) of the approximately $8 million in cash and the shares
of the preferred stock received by Triton in the repurchase, or in
the alternative, unspecified restitution or damages to Ridgewood
resulting from the Triton repurchase; (c) unspecified restitution or
damages to Ridgewood resulting from the Hesperus repurchase; (d)
unspecified damages to Ridgewood resulting from the alleged breaches
of the defendants' duties of loyalty and good faith and their alleged
intentional misconduct; (e) unspecified damages for any separate
injury allegedly suffered by members of the purported class; and (f)
the plaintiff's costs and expenses of this litigation, including
attorneys' fees.
The Company has answered the Complaint, denying all
allegations of wrongdoing either on its part or that of its
directors. The Company's management believes the claims made in the
Complaint are without merit, and that the shareholders of Ridgewood
benefited from the challenged transactions. Management intends to
vigorously contest this matter.
As more fully described in Note 7, the Company is required
to fund certain capital contributions to RW Hotel Partners, L.P. as
the partnership acquires hotels.
5. 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 months ended November 30, 1995 and 1994.
Stock Option Plan --
On March 30, 1993, the Company granted options to purchase
378,000 shares of common stock at a price of $1.83 per share to its
key employees and one director under the Ridgewood Properties, Inc.
Stock Option Plan (the "Plan"). The options will vest over a four
year period in 25% increments. All options expire ten years from the
date of grant, unless earlier on account of death, disability,
termination of employment, or for other reasons outlined in the Plan.
As of November 30, 1995, approximately 284,000 options are currently
exercisable.
On January 28, 1994, the Company granted options to
purchase 375,000 and 75,000 shares of common stock at a price of
$1.00 per share to its President and Chief Financial Officer,
respectively, under the Plan. The options are exercisable
immediately and expire on January 31, 1997.
On January 4, 1995, the shareholders of the Company
approved an increase in the number of authorized shares reserved for
the Company's stock option plan from 900,000 to 1,200,000.
6. NOTES PAYABLE:
In November 1989, the Company entered into a $15,000,000
Revolving Line of Credit with a commercial bank. Effective December
31, 1991, the Company's Revolving Line of Credit expired and the
outstanding principal balance of $15,000,000 was converted to a term
loan. In January 1992, the term loan was amended to postpone
principal payments for seven months. Under the amended agreement,
the interest accrued at the rate of one percent (1%) per annum above
the prime rate of the lender. Under the term loan agreement, the
Company was required to make interest payments on the outstanding
principal balance of the note, which payments commenced on February
1, 1992, and monthly thereafter through December 1, 1996. Commencing
on September 1, 1992, and thereafter on the first day of each month
through December 1, 1996, the outstanding principal amount of the
note shall be repaid in equal monthly payments. 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 monthly payment rather than
reducing the remaining principal due at the end of the term loan. On
January 1, 1997, the remaining outstanding principal balance was to
be payable in full. The entire loan was repaid in full in June 1995.
In June 1995, the Company entered into a loan with a
commercial lender to refinance the Ramada Inn in Longwood, Florida.
The loan proceeds are $2,800,000. The loan is for a term of 20 years
with an amortization period of 25 years, at the rate of 10.35%.
Principal and interest payments are approximately $26,000 per month
beginning August 1, 1995. In addition, the Company is required to
make a repair escrow payment comprised of 4% of estimated revenues,
as well as real estate tax and insurance escrow payments. The total
amount for these items will be a payment of approximately $20,000 per
month and can be adjusted annually. The escrow funds will be used as
tax, insurance and repair needs arise. As of November 30, 1995,
there was approximately $200,000 of escrowed funds related to this
loan agreement. Also, commitment fees and loan costs of
approximately $159,000 are being amortized over 20 years. The
balance of this loan as of November 30, 1995 was approximately
$2,796,000.
Maturities of long-term debt during the Company's next five
fiscal years are as follows: 1996 - $25,000; 1997 - $28,000; 1998 -
$31,000; 1999 - $35,000; 2000 - $38,000.
7. INVESTMENT IN LIMITED PARTNERSHIP:
On August 16, 1995, RW Hotel Partners, L.P. was organized
as a limited partnership (the "Partnership") under the laws of the
State of Delaware. Concurrently, the Company formed Ridgewood
Hotels, Inc., a Georgia corporation ("Ridgewood Hotels") which became
the sole general partner in the Partnership with RW Hotel
Investments, L.L.C. ("Investor") as the limited partner. Ridgewood
Hotels has a 1% base distribution percentage versus 99% for the
Investor. However, distribution percentages do vary depending on
certain defined preferences and priorities pursuant to the
Partnership Agreement ("Agreement") which are discussed below. The
partnership was formed to acquire a hotel property in Louisville,
Kentucky. The terms of this partnership will serve as a guideline
for other potential acquisitions with the Investor or its affiliates.
The Partnership Agreement was amended and restated on
September 8, 1995. Distributable Cash is defined as the net income
from the property before depreciation plus any net sale proceeds and
net financing proceeds less capital costs. Distributions of
Distributable Cash shall be made as follows:
- First, to the Investor until there has been distributed
to the Investor an amount equal to a 15% cumulative internal rate of
return on the Investor's investment.
- Second, to Ridgewood Hotels until the aggregate amount
received by Ridgewood Hotels equals the aggregate cash contributions
made by Ridgewood Hotels to the Partnership (as of 8/31/95, Ridgewood
Hotels contributed approximately $232,000).
- Third, 12% to Ridgewood Hotels and 88% to the Investor
until there has been distributed to the Investor an amount equal to a
25% cumulative internal rate of return on Investor's investment.
- Fourth, 75% of the residual to the Investor and 25% to
Ridgewood Hotels.
A Management Agreement exists between the Partnership and
the Company as Manager ("Manager") for the purpose of managing a
hotel in Louisville, Kentucky. The Manager shall be entitled to the
following property management fees:
(1) 2.5% of the gross revenues from the hotel property.
(2) 1% of the gross revenues from the hotel property as an
incentive fee if distributable cash equals or exceeds 13.5% of
certain aggregate acquisition costs. No management fees are payable
with respect to the first 12-month period of management of this
hotel.
A Construction Management Agreement exists between the
Partnership and the Manager for the purpose of managing future
improvements to the property.
The Company currently has approximately $232,000 invested
in the Partnership. The Partnership purchased a hotel in Louisville,
Kentucky for approximately $16,000,000. In December 1995, the
Partnership purchased four hotel properties in Georgia for
approximately $15,000,000. The Company's capital contribution to the
Partnership in conjunction with the purchases was approximately
$500,000, and the Company was reimbursed for approximately $73,000 of
due diligence costs related to the hotels. See the Subsequent Events
footnote below. One other hotel is under contract to be purchased by
the partnership for an aggregate cost of approximately $4,000,000,
and would require approximately $40,000 in additional capital
contribution to the Partnership by the Company. The Company also has
approximately $11,000 of due diligence costs incurred for the hotel
under contract that will be reimbursed to the Company upon the
closing of the hotel. These costs are reflected in Other Assets.
The Company may make future capital contributions to the Partnership.
Management expects to fund such capital contributions through
available cash or from loans from the Partnership. Additionally, the
Company may invest in other partnerships to acquire hotels in the
future.
8. SUBSEQUENT EVENTS:
In December 1995, the Company purchased a hotel management
company by issuing 125,000 shares of the Company's common stock. The
purpose of this wholly-owned subsidiary is to acquire hotel
management contracts and/or interests in hotels around the country.
The subsidiary is currently operating at breakeven. In conjunction
with the Company's purchase of the hotel management company, two
executive officers of the management company were offered a Post-
Employment Consulting Agreement (the "Consulting Agreement(s)")
whereby the officer agrees that if he is terminated by the Company
for other than good cause, the officer will be available for
consulting at a rate equal to his annual compensation immediately
prior to termination. Both officers have chosen to enter into
Consulting Agreements. The executive, upon termination, agrees to
sign an unconditional release of all claims and liability in exchange
for a one year consulting fee arrangement, depending upon the years
of service as an officer or the designation as a senior executive
officer.
In December 1995, RW Hotel Partners, L.P. (of which one of
the Company's subsidiaries is the general partner -- see Note 7)
acquired four additional hotel properties in Georgia for
approximately $15,000,000. The purchases required approximately
$500,000 in capital contribution to the Partnership by the Company.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THREE MONTHS ENDED NOVEMBER 30, 1994
COMPARED TO THREE MONTHS ENDED NOVEMBER 30, 1993
LIQUIDITY AND CAPITAL RESOURCES --
In June 1995, the Company entered into a loan with a
commercial lender to refinance the Ramada Inn in Longwood, Florida.
The loan proceeds are $2,800,000. The loan is for a term of 20 years
with an amortization period of 25 years, at the rate of 10.35%.
Principal and interest payments are approximately $26,000 per month
beginning August 1, 1995. In addition, the Company is required to
make a repair escrow payment comprised of 4% of estimated revenues,
as well as real estate tax and insurance escrow payments. The total
amount for these items will be a payment of approximately $20,000 per
month and can be adjusted annually. The escrow funds will be used as
tax, insurance and repair needs arise. As of November 30, 1995,
there was approximately $200,000 of escrowed funds related to this
loan agreement.
During the first three months of fiscal year 1996, the Company sold land
in Ohio and Georgia for net proceeds of approximately $204,000 and $10,000,
respectively. Also, in September 1995, the Company was refunded its entire
investment of $61,000 in its joint venture for the purpose of developing a
subdivision lot in Atlanta, Georgia.
On August 16, 1995, RW Hotel Partners, L.P. was organized
as a limited partnership (the "Partnership") under the laws of the
State of Delaware. Concurrently, the Company formed Ridgewood
Hotels, Inc., a Georgia corporation ("Ridgewood Hotels") which became
the sole general partner in the Partnership with RW Hotel
Investments, L.L.C. ("Investor") as the limited partner. Ridgewood
Hotels has a 1% base distribution percentage versus 99% for the
Investor. However, distribution percentages do vary depending on
certain defined preferences and priorities pursuant to the
Partnership Agreement ("Agreement") which are discussed below. The
partnership was formed to acquire a hotel property in Louisville,
Kentucky. The terms of this partnership will serve as a guideline
for other potential acquisitions with the Investor or its affiliates.
The Partnership Agreement was amended and restated on
September 8, 1995. Distributable Cash is defined as the net income
from the property before depreciation plus any net sale proceeds and
net financing proceeds less capital costs. Distributions of
Distributable Cash shall be made as follows:
- First, to the Investor until there has been distributed
to the Investor an amount equal to a 15% cumulative internal rate of
return on the Investor's investment.
- Second, to Ridgewood Hotels until the aggregate amount
received by Ridgewood Hotels equals the aggregate cash contributions
made by Ridgewood Hotels to the Partnership (as of 8/31/95, Ridgewood
Hotels contributed approximately $232,000).
- Third, 12% to Ridgewood Hotels and 88% to the Investor
until there ha been distributed to the Investor an amount equal to a
25% cumulative internal rate of return on Investor's investment.
- Fourth, 75% of the residual to the Investor and 25% to
Ridgewood Hotels.
A Management Agreement exists between the Partnership and
the Company as Manager ("Manager") for the purpose of managing a
hotel in Louisville, Kentucky. The Manager shall be entitled to the
following property management fees:
(1) 2.5% of the gross revenues from the hotel property.
(2) 1% of the gross revenues from the hotel property as an
incentive fee if distributable cash equals or exceeds 13.5% of
certain aggregate acquisition costs. No management fees are payable
with respect to the first 12-month period of management of this
hotel.
A Construction Management Agreement exists between the
Partnership and the Manager for the purpose of managing future
improvements to the property.
The Company currently has approximately $232,000 invested
in the Partnership. The Partnership purchased a hotel in Louisville,
Kentucky for approximately $16,000,000. In December 1995, the
Partnership purchased four hotel properties in Georgia for
approximately $15,000,000. The Company's capital contribution to the
Partnership in conjunction with the purchases was approximately
$500,000, and the Company was reimbursed for approximately $73,000 of
due diligence costs related to the hotels. One other hotel is under
contract to be purchased by the partnership for an aggregate cost of
approximately $4,000,000, and would require approximately $40,000 in
additional capital contribution to the Partnership by the Company.
The Company also has approximately $11,000 of due diligence costs
incurred for the hotel under contract that will be reimbursed to the
Company upon the closing of the hotel. The Company may make future
capital contributions to the Partnership. Management expects to fund
such capital contributions through available cash or from loans from
the Partnership. Additionally, the Company may invest in other
partnerships to acquire hotels in the future.
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. The Company also intends to aggressively
pursue the acquisition of hotels and hotel management contracts which
would provide additional cash flow.
RESULTS OF OPERATIONS --
The Company had gains from real estate sales of $55,000 for
the three months ended November 30, 1995. During the three months
ended November 30, 1994, the Company did not sell any real estate.
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
approximately $236,000, or 31%, for the three months ended November
30, 1995, compared to the three months ended November 30, 1994. The
decrease was primarily a result of the sale of the Company's weekly
rental hotel in Orlando, Florida during fiscal year 1995.
Approximately $74,000 of the decrease was also attributed to the
Company's hotel in Longwood, Florida.
Revenues from hotel management increased approximately
$58,000 for the three months ended November 30, 1995 compared to the
three months ended November 30, 1994 due to the acquisition of a
hotel management company. In turn, expenses of hotel management
increased approximately $44,000 for the three months ended November
30, 1995 compared to the three months ended November 30, 1994.
Operating expenses during the three months ended November
30, 1995 decreased $189,000, or 26%, compared to the three months
ended November 30, 1994 due primarily to the sale of the Company's
weekly rental hotel in Florida. Expenses decreased by approximately
$17,000 at the Company's remaining hotel in Florida for the three months
ended November 30, 1995 compared to the three months ended November 30, 1994.
No provision for possible losses was necessary for the
three months ended November 30, 1995. The provision of $50,000 for
possible losses in fiscal year 1995 pertains to a land parcel in
Atlanta, Georgia which has been sold.
Interest expense decreased approximately $31,000 for the
three months ended November 30, 1995 compared to the three months
ended November 30, 1994 due to the decrease in outstanding debt.
Interest expense during the first three months of fiscal year 1996
and 1995 reflects no capitalized interest.
General, administration and other expenses decreased
approximately $47,000, or 14%, for the three months ended November 30,
1995 compared to the three months ended November 30, 1994 as a result
of reduced overhead due to a smaller business entity.
Due to the Company's aggressive movement into the business
of acquiring, developing, operating and selling hotel properties
throughout the country, the Company incurred business development
costs of $40,000 during the first three months of fiscal year 1996.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
A. Exhibits:
10 Agreement and Plan of Merger Between and Among
Ridgewood Properties, Inc., Ridgewood Acquisition
Corp., Wesley Hotel Group, Inc., Wayne
McAteer and Samuel King dated December 7,
1995
27 Financial Data Schedule
B. Reports on Form 8-K:
No reports on Form 8-K were filed during the
the three months ended November 30, 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: January 12, 1996