SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended September 30, 1995
Commission File No. 0-17436
LAS VEGAS DISCOUNT GOLF & TENNIS, INC.
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(Exact Name of Registrant as Specified in its Charter)
Colorado 84-1034868
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(State or Other Jurisdiction of (IRS Employer Identification Number)
Incorporation or Organization)
5325 South Valley View Boulevard, Suite 10
Las Vegas, Nevada 89118
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(Address of Principal Executive Offices)
(702) 798-7777
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(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such report(s), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [ X ] No [ ]
There were 5,319,008 shares of the Registrant's no par value Common Stock
outstanding as of September 30, 1995.
(LVDG93095.10Q)
LAS VEGAS DISCOUNT GOLF & TENNIS, INC. AND SUBSIDIARIES
FORM 10-QSB
INDEX
Part I: Financial Information Page No.
Item 1. Financial Information:
Unaudited Condensed Consolidated Balance Sheets 3
Unaudited Condensed Consolidated Statements of Income 5
Unaudited Condensed Consolidated Statements of
Cash Flows 6
Notes to Unaudited Condensed Consolidated
Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Part II: Other Information
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matters to a Vote of
Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
LAS VEGAS DISCOUNT GOLF & TENNIS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
September 30, December 31,
1995 1994
CURRENT ASSETS:
Cash and cash equivalents $ 626,000 $3,586,000
Accounts receivable from franchises, net 495,000 569,000
Accounts receivable - lease termination 3,260,000 0
Inventories 2,086,000 1,256,000
Prepaid expenses and other 118,000 101,000
Total current assets 6,585,000 5,512,000
FURNITURE, EQUIPMENT AND
LEASEHOLD IMPROVEMENTS, NET 636,000 975,000
OTHER ASSETS 665,000 297,000
$7,886,000 $6,784,000
NOTE: The balance sheet at December 31, 1994 has been taken from the audited
financial statements at that date and condensed.
The accompanying notes are an integral part of these condensed consolidated
financial statements.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, December 31,
1995 1994
CURRENT LIABILITIES:
Accounts payable and accrued expenses $2,263,000 $1,060,000
Deferred franchise fees 150,000 120,000
Total current liabilities 2,413,000 1,180,000
NOTE PAYABLE TO SHAREHOLDER 478,000 618,000
DEFERRED INCOME TAX LIABILITY 743,000 743,000
MINORITY INTEREST 1,269,000 1,319,000
STOCKHOLDERS' EQUITY:
Convertible, preferred stock, Series A,
no par value: authorized-5,000.00
shares; issued and outstanding-
512,799 shares 5,000 5,000
Common stock, no par value: authorized-
15,000,000 shares, issued and
outstanding-5,319,008 shares 3,871,000 3,871,000
Accumulated deficit (893,000) (952,000)
Total stockholders' equity 2,983,000 2,924,000
$7,886,000 $6,784,000
NOTE: The balance sheet at December 31, 1994 has been taken from the audited
financial statements at that date and condensed.
The accompanying notes are an integral part of these condensed consolidated
financial statements.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1995 1994 1995 1994
REVENUES:
Net merchandise sales $2,916,000 $1,865,000 $8,378,000 $4,908,000
Franchise fees 40,000 0 165,000 257,000
Royalties 326,000 350,000 920,000 952,000
Other 92,000 66,000 169,000 224,000
Total revenues 3,374,000 2,281,000 9,632,000 6,341,000
EXPENSES:
Cost of sales 2,180,000 1,452,000 6,698,000 3,859,000
Selling, general and
administrative 1,112,000 721,000 2,925,000 2,169,000
Total expenses 3,292,000 2,173,000 9,623,000 6,028,000
INCOME BEFORE PROVISION FOR
INCOME TAXES, MINORITY INTEREST
AND EXTRAORDINARY ITEM 82,000 108,000 9,000 313,000
PROVISION FOR INCOME TAXES 0 43,000 0 105,000
INCOME BEFORE MINORITY INTEREST
AND EXTRAORDINARY ITEM 82,000 65,000 9,000 208,000
MINORITY INTEREST (1,000) 0 50,000 0
INCOME BEFORE EXTRA ORDINARY
ITEM 81,000 65,000 59,000 208,000
EXTRAORDINARY ITEM-UTILIZATION
OF OPERATING LOSS CARRY-
FORWARD 0 43,000 0 105,000
NET INCOME $ 81,000 $ 108,000 $ 59,000 $ 313,000
INCOME PER COMMON SHARE:
Operating .02 .01 .01 .04
Extraordinary item .00 .01 .00 .02
$ .02 $ .02 $ .01 $ .06
The accompanying notes are an integral part of these condensed consolidated
financial statements.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months
Ended September 30,
1995 1994
CASH FLOWS FROM OPERATING ACTIVATES:
Net income $ 59,000 $ 313,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Minority interest (50,000) 0
Depreciation and amortization 35,000 68,000
Changes in assets and liabilities:
(Increase) decrease in accounts receivable 74,000 (88,000)
Increase in accounts receivable-lease
termination (2,484,000) 0
(Increase) decrease in inventory (830,000) 328,000
Increase in prepaid expenses and other (17,000) (441,000)
Increase in other assets (617,000) 0
Increase in accounts payable 1,206,000 114,000
Increase in deferred franchise fees 30,000 25,000
Net cash provided (used) by operating activities (2,594,000) 319,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (250,000) (9,000)
(Increase) decrease in other assets 24,000 (30,000)
Net cash flows used by investing activities (226,000) (39,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment on debt (140,000) (223,000)
Increases in long-term debt 0 520,000
Net borrowings from line of credit 0 (502,000)
Net cash used by financing activities (140,000) (205,000)
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (2,960,000) 75,000
CASH AND CASH EQUIVALENTS-
Beginning of period 3,586,000 245,000
CASH AND CASH EQUIVALENTS -
End of period $ 626,000 $ 320,000
The accompanying notes are an integral part of these condensed consolidated
financial statements.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. CONDENSED FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by the Company
without audit. In the opinion of management, all adjustments (which include
only normal recurring adjustments) necessary to present fairly the financial
position, results of operations and cash flows at September 30, 1995 and for
all periods presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
condensed consolidated financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's December 31,
1994 audited financial statements. The results of operations for the periods
ended September 30, 1995 and 1994 are not necessarily indicative of the
operating results for the full year.
NOTE 2. STATEMENT OF CASH FLOWS
For the purposes of the statement of cash flows, the Company considers all
highly liquid debt investments purchased with a maturity of nine months or
less to be cash equivalents.
Supplemental disclosures of cash flow information:
Cash paid during the nine months ended:
September 30,
1995 1994
Interest $ 0 $ 48,000
Income taxes $ 1,000 $ 0
Non cash investing and financing activities: None
NOTE 3. RELATED PARTY TRANSACTIONS
Las Vegas Retail - related party purchases inventory at cost from the Company.
Such purchases amounted to $294,000 and $514,000 for the nine months ended
September 30, 1995 and 1994, respectively.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
RESULTS OF OEPRATIONS.
SEASONALITY
Las Vegas Discount Golf & Tennis, Inc.'s (the "Company") business is
seasonal. The Company typically experiences sales peaks in the Spring and
pre-Christmas seasons. Accordingly, the results of interim periods may not be
indicative of results for the full year.
RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1995, COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1994
During the nine months ended September 30, 1995, the Company had net income of
$59,000 as compared to net income of $313,000 for the same period in 1994.
Total revenues for the first nine months of 1995 increased by approximately
52% as compared to the same period in 1994. The increase in revenues was
primarily attributable to a 71% increase in retail sales of Company owned
stores. Royalty revenue decreased slightly (3%) in 1995 as compared to the
same period in 1994. Since franchise fees are recognized when the applicable
franchised store is opened, the decrease in franchise fees reflects a decrease
in the number of stores opened during the first nine months of 1995 as
compared to the first nine months of 1994. There were four franchise stores
under development at October 31, 1995.
Although royalties decreased from $952,000 in the nine months ended September
30, 1994 to $920,000 in the nine months ended September 30, 1995, the
Company's same store sales actually increased approximately twelve percent
(12%) during the same period.
Cost of Sales as percentage of merchandise sales increased from 79% in 1994 to
80% in 1995, reflecting consistency in company profit margins.
Selling, general and administrative expenses increased by $756,000 (35%) in
1995 as compared to 1994, primarily as a result of higher salaries and
administrative expenses related to franchise sales and increases in
advertising, depreciation, shareholder relations, travel and insurance. In
addition, approximately $456,000 of the increase was attributable to the
expenses of operating stores in Encino and Westwood, California as Company
owned stores during the third quarter of 1995.
In September 1994, Saint Andrews Golf Corporation ("SAGC") entered into a
ground lease for an approximately 33 acre parcel of land located in Las Vegas,
Nevada for the development of the All-American SportPark. The lease
contained a provision allowing the landlord to terminate the lease on 30 days'
notice prior to completion of construction under certain circumstances,
including a sale by the landlord of the property covered by the lease. During
June 1995, SAGC was notified that the landlord was selling the property and
therefore the lease would be terminated. The lease contains a provision
requiring reimbursement for certain specified expenses up to $3,500,000 and
SAGC has submitted a claim to the landlord for reimbursement. Management
anticipates approximately $3,000,000 will be reimbursed. Payment on the claim
was due on August 20, 1995. It is possible that SAGC may not be fully
compensated for its investment in the SportPark. However, negotiations are
underway and the reimbursement is believed to be collectible.
Based on the above, the Company's Balance Sheet includes a line item under
Current Assets for "Accounts Receivable-Lease Termination" in the amount of
$3,260,000 which includes the $3,000,000 expenditure for which reimbursement
is expected and a $260,000 refundable deposit.
RESULTS OF OPERATIONS
QUARTER ENDED SEPTEMBER 30, 1995, COMPARED TO QUARTER ENDED SEPTEMBER 30, 1994
During the quarter ended September 30, 1995, the Company had a net income of
$81,000 as compared to a net income of $108,000 for the same period in 1994.
Total revenues for the quarter ended September 30, 1995 increased by
$1,093,000 (48%) as compared to the same period in 1994. The increase in
revenues was primarily attributable to a $1,051,000 increase in merchandise
sales coupled with a $42,000 net increase in all other revenue categories.
Since franchise fees are recognized when the applicable franchise store is
opened, the increase in franchise fees reflects an increase in the number of
stores opened in the quarter ended September 30, 1995, as compared to the
quarter ended September 30, 1994.
Royalties declined $24,000 or 7% in the third quarter to $326,000, reflecting
eight fewer franchise stores in operation this year compared to 1994. Stores
in operation reported an average increase in sales of 12% during the period,
which partially offset the impact on royalties from fewer stores.
Cost of Sales as a percentage of merchandise sales decreased from 78% in 1994
to 75% in 1995 as a result of a shift in product mix to items with higher
average profit margins.
Selling, general and administrative expenses increased by $391,000 (54%) in
1995 as compared to 1994, primarily attributable to the expenses of operating
the two new company owned stores in Encino and Westwood, California. In
addition, there were small increases in salaries and administrative expenses
related to franchise sales and increases in advertising, depreciation,
shareholder relations, travel and insurance.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1995, the Company had working capital of approximately
4,172,000 compared to $4,332,000 at December 31, 1994. The most significant
use of working capital during 1995 has been for expenditures related to the
All-American SportPark; however, due to the termination of the lease, these
funds should be reimbursed to the SAGC. Any material delay in receiving these
funds would adversely affect SAGC's ability to commence construction of its
first All-American SportPark.
Working capital requirements are the greatest in the first and fourth quarters
as the Company increase inventories to meet demands for the Spring and pre-
Christmas seasons. Since certain Company Brands inventory items have a longer
ordering cycle and will require the Company to stock increasing levels of such
items as the demand of franchisees increases, the Company believes it will
need greater working capital to finance inventory requirements.
Other uses of working capital have included leasehold improvements and other
capital expenditures of $250,000 in 1995, as compared to $9,000 in 1994.
The Company does not expect to have any significant capital expenditures until
such time as a new site is secured for the development of the SportPark.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Not applicable.
Item 2. Changes in Securities.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
Not applicable.
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.
(REGISTRANT) LAS VEGAS DISCOUNT GOLF & TENNIS, INC.
BY (SIGNATURE) /s/ Voss Boreta
(NAME AND TITLE) Voss Boreta, President and Chief
Financial Officer
(DATE) November 16, 1995
EXHIBIT INDEX
EXHIBIT METHOD OF FILING
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27. Financial Data Schedule Filed herewith electronically