1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
April 21, 1997
Date of Report
(Date of earliest event reported)
NASHVILLE COUNTRY CLUB, INC.
(Exact name of registrant as specified in its charter)
Tennessee 0-22582 62-1535897
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
402 Heritage Plantation Way
Hickory Valley, Tennessee
(Address of principal executive offices)
38042
(Zip Code)
(901) 764-2300
(Registrant's telephone number, including area code)
2
Item 7 is hereby amended and restated in its entirety as follows:
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
Filed herewith as a part of this report are the audited financial
statements and related notes of Avalon Entertainment Group, Inc., a
Tennessee corporation ("AEG"), for the years ended December 31, 1995
and 1996, and as of December 31, 1996, and unaudited financial
statements of AEG for the three month periods ended March 31, 1996 and
1997, and as of March 31, 1997.
(b) RESTATED AND PRO FORMA FINANCIAL INFORMATION
Filed herewith as a part of this report, is the pro forma financial
information required by Article 11 of Regulation S-X including:
Unaudited Pro Forma Consolidated Balance Sheet of Registrant
as of March 31, 1997 and related Notes.
Unaudited Pro Forma Consolidated Statement of Operations
of Registrant for the year ended December 31, 1996
and related Notes.
Unaudited Pro Forma Consolidated Statement of Operations
of Registrant for the three months ended March 31, 1997
and related Notes.
(c) Exhibits.
2.1 Merger Agreement, dated April 21, 1997, among Nashville Country
Club, Inc., Avalon Acquisition Corp., Inc., Avalon
Entertainment Group, Inc. and each of Robert E. Geddes, Greg M.
Janese, Thomas Miserendino, Brian F. Murphy and Marc W. Oswald.
(Previously Filed)
3
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of Avalon Entertainment Group, Inc.:
We have audited the accompanying balance sheet of Avalon Entertainment
Group, Inc., a Tennessee corporation, as of December 31, 1996, and the related
statements of operations, stockholders' deficit and cash flows for each of the
two years in the period ended December 31, 1996. These financial statements are
the responsibility of Avalon Entertainment Group's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Avalon Entertainment Group,
Inc. as of December 31, 1996, and the results of its operations and its cash
flows for each of the two years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Los Angeles, California
May 9, 1997
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AVALON ENTERTAINMENT GROUP, INC.
BALANCE SHEETS
ASSETS
DECEMBER 31, MARCH 31,
1996 1997
------------ -----------
(UNAUDITED)
CURRENT ASSETS:
Cash and cash equivalents................................. $ 275,988 $ 193,761
Accounts receivable....................................... 59,537 102,965
Due from joint venture.................................... 13,244 --
Prepaid production expenses............................... 195,343 293,345
--------- ---------
Total current assets.............................. 544,112 590,071
--------- ---------
PROPERTY AND EQUIPMENT, at cost:
Furniture and fixtures.................................... 201,525 204,854
Computer and other equipment.............................. 59,652 67,465
Leasehold improvements.................................... 26,344 26,344
--------- ---------
287,521 298,663
Less -- accumulated depreciation and amortization........... (233,133) (239,564)
--------- ---------
54,388 59,099
--------- ---------
INVESTMENT IN JOINT VENTURE................................. 27,239 (87,219)
--------- ---------
DEPOSITS.................................................... 2,746 2,746
--------- ---------
Total assets...................................... $ 628,485 $ 564,697
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable.......................................... $ 51,253 $ 22,986
Accrued expenses.......................................... 64,095 33,756
Commission payable........................................ 64,080 --
Profit distributions payable.............................. 150,000 26,852
Deferred revenues......................................... 518,500 709,200
--------- ---------
Total current liabilities......................... 847,928 792,794
--------- ---------
COMMITMENTS
STOCKHOLDERS' DEFICIT:
Common stock, no par value; 2,000 shares authorized, 1,333
shares issued and outstanding.......................... 2,000 2,000
Additional paid-in capital................................ 16,560 16,560
Accumulated deficit....................................... (238,003) (246,657)
--------- ---------
Total stockholders' deficit....................... (219,443) (228,097)
--------- ---------
Total liabilities and stockholders' deficit....... $ 628,485 $ 564,697
========= =========
The accompanying notes are an integral part of these balance sheets.
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AVALON ENTERTAINMENT GROUP, INC.
STATEMENTS OF OPERATIONS
YEARS ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
----------------------- -----------------------
1995 1996 1996 1997
---------- ---------- ---------- ----------
(UNAUDITED)
REVENUES..................................... $3,969,531 $5,570,136 $1,039,863 $1,543,515
COST OF REVENUES............................. 2,887,475 4,028,794 737,689 1,221,689
---------- ---------- ---------- ----------
1,082,056 1,541,342 302,174 321,826
GENERAL AND ADMINISTRATIVE EXPENSES.......... 1,259,271 2,009,793 278,577 338,523
---------- ---------- ---------- ----------
(Loss) income from operations.............. (177,215) (468,451) 23,597 (16,697)
---------- ---------- ---------- ----------
OTHER INCOME (EXPENSE):
Interest (expense), income net............... (15,903) 5,656 (76) --
Equity in income of joint venture............ 538,215 449,496 217,353 8,043
Other income, net............................ 5,135 2,819 160 --
---------- ---------- ---------- ----------
Income (loss) before provision for taxes... 350,232 (10,480) 241,034 (8,654)
PROVISION FOR TAXES.......................... 2,852 1,263 1,000 --
---------- ---------- ---------- ----------
NET INCOME (LOSS)............................ $ 347,380 $ (11,743) $ 240,034 $ (8,654)
========== ========== ========== ==========
The accompanying notes are an integral part of these statements.
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AVALON ENTERTAINMENT GROUP, INC.
STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1996
AND THE THREE MONTH PERIOD ENDED MARCH 31, 1997 (UNAUDITED)
COMMON STOCK TOTAL
--------------- ADDITIONAL ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT PAID-IN CAPITAL DEFICIT DEFICIT
------ ------ --------------- ----------- -------------
BALANCES, December 31, 1994.............. 1,333 $2,000 $16,560 $(573,640) $(555,080)
Net income............................. -- -- -- 347,380 347,380
----- ------ ------- --------- ---------
BALANCES, December 31, 1995.............. 1,333 2,000 16,560 (226,260) (207,700)
Net loss............................... -- -- -- (11,743) (11,743)
----- ------ ------- --------- ---------
BALANCES, December 31, 1996.............. 1,333 2,000 16,560 (238,003) (219,443)
Net loss (unaudited)................... -- -- -- (8,654) (8,654)
----- ------ ------- --------- ---------
BALANCES, March 31, 1997 (unaudited)..... 1,333 $2,000 $16,560 $(246,657) $(228,097)
===== ====== ======= ========= =========
The accompanying notes are an integral part of these statements.
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AVALON ENTERTAINMENT GROUP, INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
--------------------- ---------------------
1995 1996 1996 1997
--------- --------- --------- ---------
(UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)............................. $ 347,380 $ (11,743) $ 240,034 $ (8,654)
Adjustments to reconcile net income (loss)
to net cash (used in) provided by
operating activities --
Depreciation and amortization............ 30,692 24,228 7,597 6,431
Loss on disposal of equipment............ -- 3,124 3,124 --
Equity in income of joint venture........ (538,215) (449,496) (217,353) (8,043)
Changes in assets and liabilities --
(Increase) decrease in assets --
Accounts receivable................. 12,642 (22,284) (19,050) (43,428)
Due from joint venture.............. (149,825) (54,387) (41,143) 13,244
Prepaid production expenses and
deposits......................... (109,012) 32,547 (8,283) (98,002)
Increase (decrease) in liabilities --
Accounts payable.................... (271,115) (71,777) (20,156) (28,267)
Accrued expenses.................... (33,354) 196,797 45,020 (217,567)
Deferred revenues................... 158,050 97,500 207,850 190,700
--------- --------- --------- ---------
Net cash (used in) provided by operating
activities................................. (552,757) (255,491) 197,640 (193,586)
--------- --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Distributions from joint venture.............. 560,472 400,000 -- 122,500
Expenditures for property and equipment....... (22,955) (22,491) -- (11,141)
--------- --------- --------- ---------
Net cash provided by investing activities..... 537,517 377,509 -- 111,359
--------- --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES............ -- -- -- --
--------- --------- --------- ---------
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS................................... (15,240) 122,018 197,640 (82,227)
CASH AND CASH EQUIVALENTS, beginning of
period........................................ 169,210 153,970 153,970 275,988
--------- --------- --------- ---------
CASH AND CASH EQUIVALENTS, end of period........ $ 153,970 $ 275,988 $ 351,610 $ 193,761
========= ========= ========= =========
The accompanying notes are an integral part of these statements.
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AVALON ENTERTAINMENT GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
(INCLUDING INFORMATION AS OF MARCH 31, 1997, AND FOR THE
THREE MONTH PERIODS ENDED MARCH 31, 1996 AND MARCH 31, 1997, WHICH IS UNAUDITED)
1. NATURE OF BUSINESS
Avalon Entertainment Group, Inc. ("AEG"), a Tennessee corporation,
specializes in corporate entertainment events, event marketing programs and
artist management. AEG was incorporated on April 7, 1989 and has operations in
Nashville and San Diego. AEG is also a 50% partner in a joint venture,
Warner/Avalon, that coordinates live sponsored music entertainment marketing
programs.
2. SIGNIFICANT ACCOUNTING POLICIES
Revenue recognition
Customer deposits and AEG expenditures related to future corporate shows
are recorded as deferred revenues and prepaid assets, respectively, and
recognized as revenue and expense in the month the show takes place.
Property and equipment
Property and equipment are recorded at cost and are depreciated or
amortized using the double-declining balance method, except for leasehold
improvements which are amortized using the straight-line method, over the
following estimated useful lives:
Furniture and fixtures................................... 7 years
Computer and other equipment............................. 5 years
Leasehold improvements................................... The lesser of 15 years or the
remaining term of the lease.
AEG follows the policy of capitalizing expenditures that materially
increase asset lives and charges ordinary maintenance and repairs to operations
as incurred.
Income taxes
AEG has elected to be an S corporation under provisions of the Internal
Revenue Code. As long as AEG continues to qualify for S corporation tax
treatment, no federal income taxes are payable. Accordingly, there is no
provision for federal income taxes reflected in the accompanying financial
statements. Tennessee, which has not conformed to the federal provisions
recognizing S corporations, imposes an excise tax of 6 percent of taxable
income.
Deferred state income taxes are provided for the tax effect of temporary
differences in the recognition of income and expenses for financial reporting
and tax purposes.
Because of the acquisition of AEG (Note 7), AEG's S corporation election
was automatically terminated subsequent to year end.
Statements of cash flows
AEG has a cash management program that invests excess cash in money market
funds. Cash balances not required to meet daily checks clearing the banks are
temporarily invested. For purposes of the statements of cash flows, AEG
considers all highly liquid investments with original maturities of less than
three months to be cash equivalents.
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AVALON ENTERTAINMENT GROUP, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
AEG prepares its statements of cash flows using the indirect method as
defined under Statement of Financial Accounting Standards No. 95. Supplemental
cash flow disclosures are as follows:
DECEMBER 31,
---------------- MARCH 31,
1995 1996 1997
------- ------ -----------
(UNAUDITED)
Cash paid during the period for:
Income taxes......................................... $ -- $6,054 $ --
======= ====== ======
Interest............................................. $15,903 $ 810 $ --
======= ====== ======
Payments to stockholders
AEG has made payments to its stockholders, who are all employees of AEG,
based in part on the profitability of AEG and availability of cash. These
payments can cause significant variations in AEG's results of operations as they
are included in general and administrative expenses in the period paid. These
payments totalled $410,000 and $902,000 for the years ended December 31, 1995
and 1996, respectively, and $50,000 and $62,500 for the three month periods
ended March 31, 1996 and 1997, respectively.
Use of estimates in preparation of financial statements
The preparation of financial statements in conformity with generally
accepted accounting principles require management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Unaudited quarterly information
Information with respect to the three month periods ended March 31, 1996
and 1997, and as of March 31, 1997, included in these financial statements and
notes thereto, is unaudited; however, in the opinion of AEG's management, all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of the financial position and results of operations of AEG for
such period have been included.
3. INVESTMENT IN JOINT VENTURE
AEG has a 50% interest in a joint venture with Warner Custom Music Corp., a
California corporation. The joint venture, Warner/Avalon, was formally organized
as a Delaware general partnership on November 21, 1995, and commenced limited
operations in 1994. Warner/Avalon develops and coordinates live, sponsored music
entertainment marketing tours and programs and related projects. AEG accounts
for the investment using the equity method of accounting.
Warner/Avalon generates revenues primarily from third party corporate
sponsorships. Warner/Avalon recognizes revenue by amortizing the contract
sponsorship funds over the life of the related tour. Tours may range from a
single day event to several months.
During 1995, the two largest customers accounted for 62% and 36% of gross
revenues of Warner/Avalon. During 1996, the same two customers accounted for 80%
and 15% of gross revenues of Warner/Avalon.
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AVALON ENTERTAINMENT GROUP, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Summary balance sheet data and statement of operations data of
Warner/Avalon are as follows:
DECEMBER 31, MARCH 31,
1996 1997
------------ -----------
(UNAUDITED)
Current assets............................................. $1,385,106 $2,193,719
Non-current assets......................................... 107,750 263,799
Current liabilities........................................ 1,438,377 2,631,953
Partners' capital (deficit)................................ 54,479 (174,435)
Income for the year
-- 1995.................................................. 1,076,430
-- 1996.................................................. 898,993
Income for the three months ended March 31, 1997........... 16,086
4. RELATED PARTY TRANSACTIONS
AEG is affiliated, through common ownership, with several companies. The
following represents a summary of activity with these affiliates.
AEG paid New Avalon, Inc. ("Avalon Attractions"), an affiliate involved in
the entertainment and music industries, $60,000 and $93,000 in 1995 and 1996,
respectively, for financial and accounting services. In addition, AEG paid
Avalon Attractions $104,000 in 1996 for assistance with business development.
Accounts payable to Avalon Attractions for payroll paid on behalf of AEG were
approximately $21,000 and $32,000 in 1995 and 1996, respectively. In 1995, AEG
paid Avalon Attractions $15,908 for interest on a loan with principal amount of
$253,390 beginning in October 1994. All principal and interest were paid off in
June 1995.
AEG paid consulting fees of $20,000 and $60,000 in 1995 and 1996,
respectively, to the Vice-President of Operations of Irvine Meadows
Amphitheater, an outdoor amphitheater in which an affiliated entity has an
ownership interest. Accounts receivable for a loan to an employee of Warner
Custom Music Corp. was $10,000 as of December 31, 1996.
5. COMMITMENTS
AEG leases facilities and certain equipment under lease agreements through
1998. Rent expense under operating leases was approximately $55,000 and $29,000
for the years ended December 31, 1995 and 1996, respectively. The minimum lease
commitments as of December 31, 1996 are as follows:
1997....................................................... $55,000
1998....................................................... 9,000
-------
$64,000
=======
6. SIGNIFICANT CONCENTRATIONS
During 1995, AEG's four largest customers each accounted for approximately
12 percent of revenues. During 1996, AEG's two largest customers accounted for
approximately 15 and 10 percent of revenues. (Note 3).
7. SUBSEQUENT EVENTS
On April 21, 1997, AEG entered into an Agreement and Plan of Merger whereby
it was acquired by Avalon Acquisition Corp., Inc., a Tennessee corporation and
wholly owned subsidiary of Nashville Country Club, Inc. ("NCCI"), a Tennessee
corporation, for $7,200,000. NCCI is a public company and a developer, owner and
operator of restaurants, hotels and other entertainment-related business assets.
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UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
The following unaudited pro forma consolidated financial data (the "Pro
Forma Financial Data") of Nashville Country Club, Inc. (the "Company") has been
prepared utilizing the historical financial statements and related notes
thereto of each of the Company and Avalon Entertainment Group, Inc. ("AEG") and
the unaudited financial statements of the Breckenridge Resort for the period
from January 1, 1996 to April 29, 1996. The Pro Forma Financial Data gives pro
forma effect to the consummation of the acquisition of Avalon Entertainment
Group, Inc. (the "AEG Acquisition") as if it had occurred on March 31, 1997 for
balance sheet purposes and as of January 1, 1996 and January 1, 1997 for
purposes of the pro forma statements of operations and to the consummation of
the Breckenridge Resort Acquisition as though such transaction had occurred as
of January 1, 1996. As a result of the AEG Acquisition, the Company has
reconfigured its financial reporting segments into Entertainment and Resort to
separate the operations of its two primary business divisions.
The Breckenridge Resort Acquisition has been accounted for, and the AEG
Acquisition is being accounted for, under the purchase method of accounting and
the Pro Forma Financial Data has been prepared on such basis of accounting
utilizing estimates and assumptions as set forth below and in the notes
thereto. The Pro Forma Financial Data is presented for informational purposes
and is not necessarily indicative of the future financial position or results
of operations of the combined businesses that would have resulted had the
Breckenridge Resort Acquisition and the AEG Acquisition been consummated on the
dates or as of the periods described above. The purchase price allocations
reflected in the Pro Forma Financial Data have been based on preliminary
estimates of the respective fair value of assets and liabilities, which may
differ from the actual allocations, and are subject to revision.
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NASHVILLE COUNTRY CLUB, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET DATA
AS OF MARCH 31, 1997
(IN THOUSANDS)
HISTORICAL
---------------- ACQUISITION PRO FORMA
COMPANY AEG ADJUSTMENTS CONSOLIDATED
------- ------ ------------ ------------
ASSETS
Cash and cash equivalents............... $ 2,620 $ 194 $ (700) (a) $ 2,114
Accounts receivable..................... 1,235 103 1,338
Inventories............................. 431 -- 431
Prepaid expenses and other
current assets........................ 135 293 428
------- ------ -------
Total current assets.......... 4,421 590 4,311
Property and equipment, net............. 33,870 59 33,929
Intangible and other assets............. 357 (84) 7,728 (a) 8,001
------- ------ -------
Total assets.................. $38,648 $ 565 $46,241
======= ====== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term debt and current portion
of long-term debt..................... $ 2,683 $ -- 2,480 (a) $ 5,163
Accounts payable and accrued
liabilities........................... 3,681 793 4,474
------- ------ -------
Total current liabilities..... 6,364 793 9,637
Long-term debt:
Capital lease obligation, net of
current portion..................... 733 -- 733
Long-term debt, net of
current portion..................... 17,559 -- 17,559
------- ------ -------
Total liabilities............. 24,656 793 27,929
------- ------ -------
Stockholders' equity:
Preferred stock....................... 10 10
Common Stock.......................... 16,770 19 (19)(a)
4,320 (a) 21,090
Accumulated (deficit) earnings.......... (2,788) (247) 247 (a)
(2,788)
------- ------ -------
Total stockholders equity..... 13,992 (228) 18,312
------- ------ -------
Total liabilities and
stockholders' equity........ $38,648 $ 565 $46,241
======= ====== =======
See notes to unaudited pro forma consolidated financial data.
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NASHVILLE COUNTRY CLUB, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1997
(a) This entry reflects the AEG Acquisition and the related elimination of AEG's
historical stockholders' deficit. The AEG Acquisition will result in the net
liabilities of AEG being revalued to reflect the purchase price of the
transaction. The purchase price of AEG will be calculated as the sum of (i)
the fair value of the Company's Common Stock that was issued to the former
owners of AEG, (ii) the fair value of notes payable issued by the Company to
the former owners of AEG, (iii) the cash payment made to the former owners
of AEG, (iv) AEG's net liabilities as of March 31, 1997 and (v) transaction
costs. Under the purchase accounting method, the acquisition cost is
allocated to the assets and liabilities acquired based on their relative
fair values. The Company has not yet completed any appraisals or other
valuation studies, nor has it made a final determination of the useful lives
of the assets acquired. Based on the foregoing, the Company has established
a purchase price for AEG of approximately $7,728,000. For purposes of the
pro forma consolidated financial data, the entire purchase price amount has
been allocated to goodwill. Amortization expense in the pro forma
consolidated financial data has been calculated assuming an amortization
period of 20 years. The Company believes that the final allocation of the
purchase price (and related amortization period) will not differ materially
from the pro forma amounts included herein. The Company expects the final
allocation to be completed no later than March 31, 1998.
The following table summarizes the components of the purchase price:
Fair value of Common Stock issued........................... $4,320,000
Fair value of notes payable issued.......................... 2,480,000
Cash payments............................................... 400,000
Transaction costs........................................... 300,000
AEG's net liabilities at March 31, 1997..................... 228,000
----------
Purchase price.............................................. $7,728,000
==========
The Merger Agreement relating to the AEG Acquisition (the "Merger
Agreement") provides for an adjustment to the purchase price based on AEG's
net income before taxes for the year ending December 31, 1997 (the "1997
Pre-Tax Net Income"). In the event that AEG's 1997 Pre-Tax Net Income
equals or exceeds $1.2 million, the purchase price is not adjusted. In the
event that AEG's 1997 Pre-Tax Net Income is less than $1.2 million, the
purchase price is adjusted downward in an amount equal to six times the
difference between the 1997 Pre-Tax Net Income and $1.2 million. The former
owners of AEG may satisfy the adjusted purchase price, if any, by
delivering to the Company either cash or shares of Common Stock valued
based on the average closing prices of the Common Stock for the 30 trading
days ending 5 days prior to the calculation of the 1997 Pre-Tax Net Income.
Management does not anticipate that the purchase price will be adjusted
materially.
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NASHVILLE COUNTRY CLUB, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS DATA
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
BRECKENRIDGE
HISTORICAL RESORT
---------------- ACQUISITION ACQUISITION PRO FORMA
COMPANY AEG ADJUSTMENTS ADJUSTMENTS CONSOLIDATED
------- ------ ------------ ----------- ------------
Revenues:
Entertainment......................... $ -- $5,570 $ 5,570
Resort................................ 10,809 -- $9,915(a) 20,724
------- ------ -------
Total revenues................ 10,809 5,570 26,294
------- ------ -------
Operating expenses:
Entertainment......................... -- 6,013 (304)(c) 5,709
Resort................................ 11,823 -- 7,368(a) 19,191
Depreciation and amortization......... 599 25 225(a) 386(b) 1,235
Corporate expenses.................... 347 -- 347
------- ------ -------
Total operating expenses...... 12,769 6,038 26,482
------- ------ -------
Loss from operations.................... (1,960) (468) (188)
Interest (expense) income, net.......... (1,167) 5 (595)(a) (248)(e) (2,005)
Other income, net....................... -- 452 452
------- ------ -------
Loss before taxes....................... (3,127) (11) (1,741)
Provision for taxes..................... -- 1 (1)(d) --
------- ------ -------
Net loss ............................... $(3,127) $ (12) $(1,741)
======= ====== =======
Net loss per share...................... $ (.87) $ (.32)
======= =======
Weighted average shares outstanding..... 3,576 5,400
======= =======
- --------------------
See notes to unaudited pro forma consolidated financial data.
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NASHVILLE COUNTRY CLUB, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(a) The Breckenridge Resort was acquired on April 29, 1996 and, accordingly, the
results of operations of the Breckenridge Resort for the period from January
1, 1996 to April 29, 1996 are not included in the historical consolidated
financial statements of the Company for the year ended December 31, 1996.
This adjustment is presented to show the impact of including the revenues
and expenses of the Breckenridge Resort as if the Breckenridge Resort
Acquisition had occurred on January 1, 1996.
(b) The AEG Acquisition results in recording goodwill of approximately
$7,728,000. The Company expects to amortize this amount over a period of 20
years. This results in annual amortization of approximately $386,000.
(c) In 1996, AEG paid salaries and made ownership distributions based primarily
on the profitability of AEG and the availability of cash to fund such
payments. These payments were charged to entertainment expenses. Under the
terms of the Merger Agreement, these individuals have been provided with
employment/consulting agreements which specifically define salaries,
consulting fees and bonuses. The adjustment results from the net change in
expense as if the employment/consulting agreements had been in effect in
1996.
(d) As a result of the expected utilization of net operating loss carryforwards,
the tax provisions have been removed as a pro forma adjustment.
(e) The Company anticipates repaying the AEG Promissory Notes with proceeds
from debt financing which the Company is seeking to obtain. This adjustment
reflects pro forma interest expense assuming the AEG Promissory Notes were
outstanding as of January 1, 1996 and a 10% interest rate, the contractual
interest rate of the AEG Promissory Notes.
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NASHVILLE COUNTRY CLUB, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS DATA
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
HISTORICAL
---------------- ACQUISITION PRO FORMA
COMPANY AEG ADJUSTMENTS CONSOLIDATED
------- ------ ----------- ------------
Revenues:
Entertainment............... $ -- $1,544 $ 1,544
Resort...................... 10,102 -- 10,102
------- ------ -------
Total revenues...... 10,102 1,544 11,646
------- ------ -------
Operating expenses:
Entertainment............... -- 1,555 88(b) 1,643
Resort...................... 7,523 -- 7,523
Depreciation and
amortization............. 256 6 97(a) 359
Corporate expense........... 133 -- 133
------- ------ -------
Total operating
expenses.......... 7,912 1,561 9,658
------- ------ -------
Income (loss) from
operations.................. 2,190 (17) 1,988
Interest expense, net......... (411) -- (62)(c) (473)
Other income, net............. -- 8 8
------- ------ -------
Income (loss) before taxes.... 1,779 (9) 1,523
Provision for taxes........... -- -- --
------- ------ -------
Net income (loss)............. $ 1,779 $ (9) $ 1,523
======= ====== =======
Net income per share.......... .36 $ .28
======= =======
Weighted average shares
outstanding................. 4,925 5,400
======= =======
- ---------------
See notes to unaudited pro forma consolidated financial data.
16
17
NASHVILLE COUNTRY CLUB, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(a) The AEG Acquisition results in recording goodwill of approximately
$7,728,000. The Company expects to amortize this amount over a period of 20
years. This results in quarterly amortization of approximately $97,000.
(b) For the three months ended March 31, 1997, AEG paid salaries and made
ownership distributions based primarily on the profitability of AEG and the
availability of cash to fund such payments. These payments were charged to
entertainment expenses. Under the terms of the Merger Agreement, these
individuals have been provided with employment/consulting agreements which
specifically define salaries, consulting fees and bonuses. The adjustment
results from the net change in expense as if the employment/consulting
agreements had been in effect in the first quarter of 1997.
(c) The Company anticipates repaying the AEG Promissory Notes with proceeds
debt financing the Company is seeking to obtain. This adjustment reflects
pro forma interest expense assuming the AEG Promissory Notes were
outstanding as of January 1, 1997 and a 10% interest rate, the contractual
interest rate of the AEG Promissory Notes.
SIGNATURE
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 hereunto duly authorized.
NASHVILLE COUNTRY CLUB, INC.
Date: July 3, 1997 By: /s/ Thomas J. Weaver III
--------------------------
Thomas J. Weaver III
Chief Executive Officer
and President