U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 1996
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-22132
BUCKHEAD AMERICA CORPORATION
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(Exact name of small business issuer as
specified in its charter)
DELAWARE 58-2023732
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
4243 DUNWOODY CLUB DRIVE, SUITE 200, ATLANTA, GEORGIA 30350
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(Address of principal executive offices)
(770) 393-2662
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(Issuer's telephone number)
N/A
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(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
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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: April 16, 1996
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Common stock, par value $.01 - 1,761,127 shares outstanding
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Transitional Small Business Disclosure Format (Check one):
Yes No X
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1
PART I - FINANCIAL INFORMATION
BUCKHEAD AMERICA CORPORATION
AND SUBSIDIARIES
Consolidated Financial Statements
March 31, 1996 and 1995
(Unaudited)
2
BUCKHEAD AMERICA CORPORATION
AND SUBSIDIARIES
Consolidated Balance Sheet
March 31, 1996
(Unaudited)
Assets
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Current assets:
Cash and cash equivalents, including
restricted cash of $ 2,069,336 $ 2,798,767
Short-term investments 1,735,388
Current portions of notes receivable 822,423
Other current assets 827,287
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Total current assets 6,183,865
Noncurrent portions of notes receivable 702,521
Property and equipment, at cost, net of
accumulated depreciation 22,787,584
Other assets 2,675,278
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Total assets $ 32,349,248
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Liabilities and Shareholders' Equity
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Current liabilities:
Accounts payable and accrued expenses $ 1,873,110
Current portions of notes payable 2,979,075
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Total current liabilities 4,852,185
Noncurrent portions of notes payable 15,623,517
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Total liabilities 20,475,702
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Minority interest in partnership 530,751
Shareholders' equity:
Common stock; par value $.01; 3,000,000
shares authorized; 1,807,977 shares issued
and 1,761,127 shares outstanding 18,080
Additional paid-in capital 6,254,274
Retained earnings 5,398,334
Unrealized gain on investment securities 61,928
Treasury stock (46,850 shares) (389,821)
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Total shareholders' equity 11,342,795
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Total liabilities and shareholders' equity $ 32,349,248
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See accompanying note to consolidated financial statements.
3
BUCKHEAD AMERICA CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Income
Three Months ended March 31, 1996 and 1995
(Unaudited)
1996 1995
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Revenues:
Hotel revenues $ 2,880,764 1,581,139
Interest income:
Notes receivable 88,570 239,358
Investments 121,456 172,221
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Total interest income 210,026 411,579
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Other income 356,461 182,891
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Total revenues 3,447,251 2,175,609
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Expenses:
Hotel operations 1,890,179 857,901
Depreciation and amortization 237,100 118,800
Other operating and administrative 434,853 414,431
Interest 382,014 320,707
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Total operating, administrative,
and interest expenses 2,944,146 1,711,839
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Income before income taxes 503,105 463,770
Provision for income taxes - -
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Net income $ 503,105 463,770
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Net income per common and common
equivalent share $ .28 .27
=== ===
Weighted average number of common
and common equivalent shares used
to calculate net income per share 1,803,212 1,726,642
========== =========
See accompanying note to consolidated financial statements.
4
BUCKHEAD AMERICA CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Three Months Ended March 31, 1996 and 1995
(Unaudited)
1996 1995
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Increase (decrease) in cash and cash equivalents:
Cash flows from operating activities:
Net income $ 503,105 463,770
Adjustments to reconcile net income
to net cash provided (used) by
operating activities:
Depreciation and amortization 237,100 118,800
Other, net (225,742) (314,894)
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Net cash provided (used) by
operating activities 514,463 267,676
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Cash flows from investing activities:
Note receivable principal receipts 1,844,645 98,400
Hotel assets acquired (2,965,000) -
Other, net (316,952) (135,796)
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Net cash provided (used) by
investing activities (1,437,307) (37,396)
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Cash flows from financing activities:
Repayments of notes payable (1,781,050) (324,580)
Additional borrowings 2,330,000 -
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Net cash provided (used) by
financing activities 548,950 (324,580)
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Net increase (decrease) in cash and
cash equivalents (373,894) (94,300)
Cash and cash equivalents at beginning
of period 3,172,661 4,616,866
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Cash and cash equivalents at end of period $ 2,798,767 4,522,566
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See accompanying note to consolidated financial statements.
5
BUCKHEAD AMERICA CORPORATION
AND SUBSIDIARIES
Note to Consolidated Financial Statements
March 31, 1996 and 1995
(Unaudited)
(1) Basis of Presentation
The accompanying unaudited financial statements do not include
all of the information and footnotes required by generally
accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. The results of
operations for interim periods are not necessarily indicative
of the results that may be expected for a full year or any
other interim period. For further information see the
consolidated financial statements included in the Company's
Form 10-KSB for the year ended December 31, 1995.
6
Item 2. Management's Discussion and Analysis.
FINANCIAL CONDITION AND CHANGES IN FINANCIAL CONDITION.
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1996
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The most significant event affecting the Company's financial condition
during the first quarter of 1996 was the completed acquisition of an
80-room hotel in Atlanta for approximately $3 million. The acquisition
was funded by $600,000 cash, issuance of a $230,000 interest free
short-term note, and a seller provided $2.1 million (9.5%) first
mortgage.
The Company intends to spend approximately $500,000 in renovations and
refurbishments in converting the Atlanta hotel to join the Country
Hearth Inn chain, the Company's principal product.
Other events included the collection of $1.1 million on a first
mortgage note receivable which had been pledged to Trilon Interna-
tional. These funds reduced the Company's net obligation to Trilon to
approximately $1.5 million. Management believes there to be a variety
of sources of funds available for the purpose of satisfying this
obligation which matures December 31, 1996.
The Company also collected in full on a $730,000 short-term note
related to the development, conversion, and sale of a hotel property in
Lake Park, Georgia. The Company recognized a $130,000 profit as a result
of converting this property to a Country Hearth Inn.
The Company reduced its Orlando IRB obligation $400,000 using funds
generated by operations of the Orlando Country Hearth Inn.
1995
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Company operating activities in the first quarter of 1995,
excluding "Old Buckhead" claim settlements, generated positive
cash flow of approximately $400,000. Most of those funds,
approximately $325,000, were used to reduce the Company's debt
obligations.
Estimated allowed amounts of "Old Buckhead" claims and
associated restricted cash balances were reduced by
approximately $130,000 as a result of payments and changes in
estimates. Remaining balances at March 31, 1995 included $1.5
million relating to the previously reported "Glenstone" claim,
which continued in the appeal process and was favorably
resolved in the third quarter of 1995.
Otherwise, the Company's financial condition did not change
significantly from the end of 1994.
7
RESULTS OF OPERATIONS
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First Quarter of 1996 vs. First Quarter of 1995
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Increases in 1996 hotel revenues and operating profits resulted
from the Company's acquisitions of hotels in Orlando, Atlanta,
and Texas. The Company's Miami hotel (a Days Inn) experienced a
slight decline in revenues, but all of the other Company owned
properties generated first quarter performance increases versus
the same period in 1995.
Interest income continues to decline as a result of decreases in
the note receivable portfolio and in funds available for
investment. As previously stated, management intends to shift
financial resources to other assets, such as the hotel
acquisitions previously discussed.
Increases in other income resulted from growth of franchising
revenues and the previously discussed Lake Park, Georgia
transaction. Both of the first quarters in 1996 and 1995 included
approximately $110,000 of income from changes in estimates of
allowed amounts of "Old Buckhead" claims. While no assurances can
be given, management is hopeful of further favorable settlements
in the future.
Depreciation and interest expense increases resulted from the
hotel acquisitions. Interest expense on each individual debt
obligation generally decreases as the principal balances are
reduced. Most of the debt obligations are fixed rate, thus the
Company is not susceptible to a large amount of rate risk.
Other operating and administrative expenses increased 5% from
1995 to 1996. All of this increase is attributable to increased
sales and marketing efforts relating to Country Hearth Inn
franchising. Management intends to continue to focus its efforts
on the growth of the Country Hearth Inn chain.
Excluding the nonrecurring other income from "Old Buckhead"
claims, first quarter profit before depreciation and amortization
increased from $470,000 in 1995, or 27 cents per share, to
$625,000 in 1996, or 35 cents per share. Management does not
presently anticipate any short-term liquidity shortfalls or the
need to raise additional capital.
Differences between financial reporting net income and taxable
net income are declining. The Company may be required to provide
for income taxes in its financial statements prior to the end of
1996. As of December 31, 1995, the Company had unrecognized
deferred tax assets of approximately $4 million. The benefit of
these assets will be realized if and to the extent the Company
sustains continued profitable operations.
8
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit Index
Exhibit Description Page
3(i) Articles of Incorporation *
3(i)(a) Certificate of Amendment of
Certificate of Incorporation **
3(ii) By-Laws - Amended and Restated
as of June 27, 1994 **
27 Financial Data Schedule ***
* Previously filed as an Exhibit to the Registrant's
Registration Statement on Form 10-SB
which became effective on November 22, 1993
and incorporated herein by reference.
** Previously filed as an Exhibit to the Registrant=s
December 31, 1994 Form 10-KSB
and incorporated herein by reference.
*** Filed electronically only
(b) Reports on Form 8-K
On or about February 19, 1996, the Company filed a report on Form 8-K/A which
included the financial statements and pro forma financial information related
to the Company's December 7, 1995 acquisition of three hotels in southeastern
Texas.
9
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Buckhead America Corporation
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(Registrant)
Date: May 10, 1996 /s/Douglas C. Collins
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Douglas C. Collins
President and Chief Executive Officer
Date: May 10, 1996 /s/Robert B. Lee
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Robert B. Lee
Vice President and Chief Financial Officer
10