-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, J025chePALzAH+0nDNCyRzyNPEruAFfvLrt7cWOPeOcGcfjJY2NXXgtQLxfTGM1U ULnqeVlG7jmxMsXPhXcDMw== 0000783728-99-000002.txt : 19990115 0000783728-99-000002.hdr.sgml : 19990115 ACCESSION NUMBER: 0000783728-99-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981130 FILED AS OF DATE: 19990114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RIDGEWOOD HOTELS INC CENTRAL INDEX KEY: 0000783728 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE DEALERS (FOR THEIR OWN ACCOUNT) [6532] IRS NUMBER: 581656330 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-14019 FILM NUMBER: 99505927 BUSINESS ADDRESS: STREET 1: 2859 PACES FERRY RD STE 700 CITY: ATLANTA STATE: GA ZIP: 30339 BUSINESS PHONE: 4044343670 MAIL ADDRESS: STREET 1: 2859 PACES FERRY ROAD STREET 2: SUITE 700 CITY: ATLANTA STATE: GA ZIP: 30339 FORMER COMPANY: FORMER CONFORMED NAME: RIDGEWOOD PROPERTIES INC DATE OF NAME CHANGE: 19920703 10-Q 1 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, 1998 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 Hotels, Inc. ------------------------------------------------------ (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) (770) 434-3670 ---------------------------------------------------- (Registrant's telephone number, including area code) ---------------------------------------------------- (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 - 1,513,480 shares outstanding at November 30, 1998. PART I. FINANCIAL INFORMATION ------------------------------ ITEM 1. FINANCIAL STATEMENTS ----------------------------- RIDGEWOOD HOTELS, INC. AND SUBSIDIARIES --------------------------------------- CONSOLIDATED BALANCE SHEETS --------------------------- NOVEMBER 30, 1998 AND AUGUST 31, 1998 ------------------------------------- ($000'S omitted, except per share data) ---------------------------------------
(Unaudited) Nov. 30, August 31, ASSETS 1998 1998 ------ ----------- ----------- CURRENT ASSETS: Cash and cash equivalents $ 969 $ 1,255 Other 708 722 ------------ ------------ Total current assets 1,677 1,977 REAL ESTATE INVESTMENTS, NET 4,419 4,423 OTHER ASSETS 847 880 ------------ ------------ $ 6,943 $ 7,280 ============ ============ The accompanying notes are an integral part of these consolidated financial statements.
RIDGEWOOD HOTELS, INC. AND SUBSIDIARIES --------------------------------------- CONSOLIDATED BALANCE SHEETS --------------------------- NOVEMBER 30, 1998 AND AUGUST 31, 1998 ------------------------------------- ($000's omitted, except per share data) ---------------------------------------
(Unaudited) Nov. 30, August 31, LIABILITIES AND SHAREHOLDERS' INVESTMENT 1998 1998 ---------------------------------------- ------------ ------------ CURRENT LIABILITIES: Accounts payable $ 265 $ 260 Accrued salaries, bonuses and other compensation 117 107 Accrued interest and other liabilities 418 405 Current maturities of long-term obligations 65 65 ------------ ------------ Total current liabilities 865 837 LONG-TERM OBLIGATIONS 2,664 2,679 ACCRUED PENSION EXPENSE 838 820 ------------ ------------ Total liabilities 4,367 4,336 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' INVESTMENT: Series A convertible cumulative preferred stock, $1 par value, 1,000,000 shares authorized, 450,000 shares issued and outstanding at November 30, 1998 and August 31, 1998, liquidation preference and callable at $3,600,000. 450 450 Common Stock, $.01 par value, 5,000,000 shares authorized, 1,513,480 shares issued and outstanding at November 30, 1998 and August 31, 1998 15 15 Note receivable from officer for purchase of common stock (75) (75) Paid-in surplus 15,771 15,861 Accumulated deficit since December 30, 1985 (13,585) (13,307) ------------ ------------ Total shareholders' investment 2,576 2,944 ------------ ------------ $ 6,943 $ 7,280 ============ ============ The accompanying notes are an integral part of these consolidated financial statements.
RIDGEWOOD HOTELS, INC. AND SUBSIDIARIES -------------------------------- ------- CONSOLIDATED STATEMENTS OF OPERATIONS ------------------------------- ------ ($000's omitted, except per share data) -------------------------------- ------- Unaudited ---------
For the Three Months Ended -------------------------- Nov. 30, Nov. 30, 1998 1997 -------- -------- REVENUES: Revenues from wholly-owned hotel operations ....... $ 609 $ 701 Revenues from hotel management .................... 306 254 Sales of real estate properties ................... 10 725 Equity in net income of unconsolidated entities ........................................ 47 -- Interest income ................................... 8 13 Other ............................................. -- 3 -------- -------- COSTS AND EXPENSES: Expenses of wholly-owned real estate properties ... 571 578 Costs of real estate sold ......................... 5 274 Depreciation and amortization ..................... 94 47 Interest expense .................................. 85 84 General, administration and other ................. 467 503 Business development .............................. 36 40 -------- -------- 1,258 1,526 -------- -------- NET INCOME (LOSS) ..................................... $ (278) $ 170 ======== ======== BASIC AND DILUTED EARNINGS (LOSS) PER COMMON SHARE .... $ (0.24) $ 0.05 ======== ======== The accompanying notes are an integral part of these consolidated financial statements.
RIDGEWOOD HOTELS, INC. AND SUBSIDIARIES --------------------------------------- CONSOLIDATED STATEMENTS OF CASH FLOWS ------------------------------------- ($000's Omitted) ---------------- Unaudited ---------
For the Three Months Ended -------------------------- Nov. 30, Nov. 30, 1998 1997 ------------- ------------- Cash flows from operating activities: Net income (loss) ............................................. $ (278) $ 170 Adjustments to reconcile net income (loss) to net cash used by operating activities: Depreciation and amortization ............................. 94 47 Gain from sales of real estate property ................... (5) (451) Increase in other assets .................................. (14) (427) Increase (decrease) in accounts payable and accrued liabilities ..................................... 46 (105) ------------- ------------- Total adjustments ......................................... 121 (936) ------------- ------------- Net cash used by operating activities ..................... (157) (766) Cash flows from investing activities: Proceeds from sales of real estate .......................... 9 646 Additions to real estate properties ......................... (33) (56) ------------- ------------- Net cash provided by (used in) investing activities ....... (24) 590 Cash flows from financing activities: Repayments of notes payable ................................. (15) (14) Payment of dividends on preferred stock ..................... (90) (90) ------------- ------------- Net cash used in financing activities ..................... (105) (104) ------------- ------------- Net decrease in cash and cash equivalents ....................... $ (286) $ (280) Cash and cash equivalents at beginning of period ................ 1,255 1,596 ------------- ------------- Cash and cash equivalents at end of period ...................... $ 969 $ 1,316 ============= ============= The accompanying notes are an integral part of these consolidated financial statements.
RIDGEWOOD HOTELS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOVEMBER 30, 1998 AND NOVEMBER 30, 1997 (Unaudited) 1. GENERAL: Ridgewood Hotels, Inc. (the "Company") is primarily engaged in the business of acquiring, developing, operating and managing hotel properties in the Southeast and "Sunbelt" areas. Additionally, the Company owns several land parcels which are held for sale. The Company was incorporated under the laws of the State of Delaware on October 29, 1985. In January 1997, the Company changed its name from Ridgewood Properties, Inc. to Ridgewood Hotels, Inc. Prior to December 31, 1985, the Company operated under the name CMEI, Inc. The Company's common stock is listed in the National Association of Securities Dealers (NASDAQ) over-the-counter bulletin board service. Of the Company's issued and outstanding shares of common stock, 51% of the common stock is owned by the Company's President, N. Russell Walden. All of the Company's issued and outstanding shares of preferred stock are owned by Alarmguard Holdings, Inc. 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 investments in unconsolidated entities 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, 1998. The results of operations for the three months ended November 30, 1998 are not necessarily indicative of the results to be expected for the fiscal year ending August 31, 1999. The Company has net operating loss carryforwards for both book and tax purposes which may be used to offset future taxable income. 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. The Company accounts for its investments in unconsolidated entities under the equity method of accounting after the elimination of all intercompany transactions. Certain prior year amounts have been reclassified to conform with the current presentation. 3. INCOME TAXES: The Company's income tax provision for the three months ended November 30, 1998 and November 30, 1997 is as follows: For the Three Months Ended -------------
Nov. 30, Nov. 30, 1998 1997 -------- -------- Income tax provision -- $80,000 Utilization of net operating loss carryforwards -- 80,000 -------- -------- Net income tax provision -- -- ======== ========
4. SHAREHOLDERS' INVESTMENT: Loss Per Share -- The following table sets forth the computation of basic and diluted loss per share: For the Three Months Ended --------------------------
November 30, November 30, 1998 1997 ------------ ------------ Net income (loss) $ (278,000) $ 170,000 Less preferred dividends (90,000) (90,000) ---------- ---------- Net income (loss) available to common shareholders $ (368,000) $ 80,000 Weighted average shares outstanding - basic and diluted 1,513,000 1,538,000 ========== ========== Net income (loss) per share - basic and diluted $ (0.24) $ 0.05 ========= ==========
The effect of the Company's stock options and convertible securities was excluded from the computations for November 30, 1998 and 1997 as it is antidilutive. Accordingly, for the periods presented, diluted net loss per share is the same as basic net loss per share. The $75,000 promissory note due from the Chief Financial Officer was extended and is payable in full on January 31, 1999 and accrues interest at a rate per annum of 8.25%. 5. INVESTMENT IN UNCONSOLIDATED ENTITIES On November 24, 1998, RW Hotel Partners, L.P., a limited partnership of which the Company is the sole general partner, sold one of its remaining two hotels. The only remaining hotel in the partnership is in Thomasville, Georgia. The Company did not receive any cash upon the sale of the hotel and, based upon management's estimate, the Company will not receive cash upon the sale of the remaining hotel. As of November 30, 1998, the carrying value of the Company's investment in the partnership is -0-. The Company is currently receiving the 13% preferred return, management and incentive fees, and also anticipates receiving 20% of distributable cash from its two unconsolidated entities, Houston Hotel, LLC and RW Louisville Hotel Associates, LLC. The Company's investment in unconsolidated entities is included in real estate investments on the balance sheet. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED NOVEMBER 30, 1998 COMPARED TO THE THREE MONTHS ENDED NOVEMBER 30, 1997 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, 1998, there was approximately $233,000 of escrowed funds related to this loan agreement. On December 9, 1997, Houston Hotel, LLC ("Houston Hotel") was organized as a limited liability company under the laws of the State of Delaware. The purpose which Houston Hotel was organized is limited solely to owning and managing the Hampton Inn Galleria in Houston, Texas. The Company contributed approximately $316,000 into Houston Hotel which represents a 10% interest, and the other 90% interest is owned by Houston Hotel, Inc. (the "Managing Member"), a Nevada Corporation. Income or loss allocated to the Company and the Managing Member is based upon the formula for distributing cash. Distributable cash is defined as the cash from operations and capital contributions determined by the Manager to be available for distribution. Cash from operations is defined as the net cash realized from the operations of Houston Hotel after payment of all cash expenditures of Houston Hotel including, but not limited to, operating expenses, fees, payments of principal and interest on indebtedness, capital improvements and replacements, and such reserves and retentions as the Manager reasonably determines to be necessary. Distributions of distributable cash shall be made as follows: - First, 100% to the Manager until it has been distributed an amount equal to its accrued but unpaid 13% preferred return. - Second, 100% to the Company until the Company has been distributed an amount equal to its accrued but unpaid 13% preferred return. - Third, 80% to the Manager and 20% to the Company. A Property Management Agreement exists between Houston Hotel, LLC and the Company as Property Manager ("Property Manager") for the purpose of managing the hotel. The Property Manager shall be entitled to the following property management fees: 1) 1.5% of the gross revenues from the hotel property. 2) 1.5% of the gross revenues from the hotel property as an incentive fee if 85% of the budgeted net operating income is met. RW Louisville Hotel Associates, LLC On May 13, 1998, RW Louisville Hotel Associates LLC ("RW Louisville Hotel Associates") was organized as a limited liability company under the laws of the State of Delaware. The purpose which RW Louisville Hotel Associates was organized is limited solely to owning and managing the Holiday Inn ("the Hotel") in Louisville, Kentucky. The Company's investment in RW Hotel Partners, L.P. of $337,500 (see above) was transferred to RW Louisville Hotel Associates at its historical basis. Simultaneously, the Company invested $362,000 into Louisville Hotel, LLC. The combined equity of $699,500 represents a 10% interest in the Hotel. Louisville Hotel, LLC loaned $3,620,000 to the Hotel. Income or loss allocated to the Company is based upon the formula for distributing cash. Distributable cash is defined as the net cash realized from operations but after payment of management fees, principal and interest, capital improvements and other such retentions as the managing member determines to be necessary. Distributions of distributable cash from Louisville Hotel, LLC shall be made as follows: - First, to the managing member until the managing member has been distributed an amount equal to its accrued but unpaid 13% preferred return. - Second, to the Company until the Company has been distributed an amount equal to its accrued but unpaid 13% preferred return. - Third, 20% to the Company and 80% to the managing member. Cash from a sale or refinancing would be distributed 10% to the Company and 90% to the managing member. A Management Agreement exists between the Owner and the Company as Property Manager ("Property Manager") for the purpose of managing the hotel. The Property Manager shall be entitled to the following property management fees: (1) Base Management Fee equal to 1.5% of gross revenues from the hotel property. (2) Incentive Management Fee equal to 1.5% of gross revenues from the hotel in which the actual net operating income exceeds 85% of the budgeted goal for the year. (3) Super Incentive Management fee equal to: (a) .25% of gross revenues from the hotel in which the net operating income exceeds 106% of the budgeted goal for the year; (b) an additional .25% of gross revenues in which the net operating income exceeds 112% of the budgeted goal; and (c) an additional .50% of gross revenues in which the net operating income exceeds 120% of the budgeted goal. The Company has a management agreement with the owner of three hotels wherein it receives a management fee equal to 3% of revenues plus 15% of the net operating income plus 5% of any profit realized upon the sale of the hotels. Since the Company is not currently generating sufficient operating cash to cover overhead and debt service, the Company must continue to sell its real estate assets, seek alternative financing or otherwise recapitalize the Company. There is currently approximately $450,000 of available cash. This available cash will be used to fund operating losses until new sources of income can be generated. The Company also intends to aggressively pursue the acquisition of hotels and hotel management contracts through entities similar to those described above which would provide additional cash flow. As hotel properties are acquired, the Company plans to enter into management agreements to manage those properties. However, given increased competition in the hotel acquisition market, acquisitions of economically viable properties are more difficult to identify and purchase. The Company owns one hotel, has 10% ownership interest in two other hotels and has a 1% ownership interest in another. The Company also currently has eight other hotels which it manages but has no ownership interest. Under the terms of franchise agreements, the Company is required to comply with standards established by franchisors, including property renovations and upgrades. The success of the Company's operations continues to be dependent upon such unpredictable factors as the general and local economic conditions to which the real estate and hotel industry is particularly sensitive: labor, environmental issues, weather conditions, consumer spending or general business conditions and the availability of satisfactory financing. RESULTS OF OPERATIONS -- Operating revenues decreased approximately $92,000, or 13% for the three months ended November 30, 1998 compared to the three months ended November 30, 1997 due to decreased occupancy at the Company's hotel in Longwood, Florida. Several new hotels opened near the hotel in Longwood, temporarily creating a very competitive market. Revenues from hotel management increased approximately $52,000, or 20%, for the three months ended November 30, 1998 compared to the three months ended November 30, 1997 due to overall increased revenues at the hotels managed by the Company. Equity in net income of unconsolidated entities was $47,000 during the three months ended November 30, 1998 compared to none during the three months ended November 30, 1997. The Company had not invested in the two entities during the three months ended November 30, 1997 which are now generating the equity during fiscal year 1999. During the three months ended November 30, 1998, the Company had gains from real estate sales of approximately $5,000. The Company had gains from real estate sales of approximately $451,000 for the three months ended November 30, 1997. Gains or losses on sales are dependent upon the specific assets sold in a particular period and the terms of each sale. Depreciation and amortization increased by $47,000, or 100%, during the three months ended November 30, 1998 compared to the three months ended November 30, 1997 due to the amortization of certain management agreements and participation fees. General, administration and other expenses decreased approximately $36,000, or 7%, for the three months ended November 30, 1998 compared to the three months ended November 30, 1997 as a result of overall slightly decreased overhead. YEAR 2000 -- The Company has established policies and procedures to coordinate changes to computer systems and applications necessary to achieve a Year 2000 date conversion with no effect on customers or disruption to business operations. These actions are necessary to ensure that the systems and applications will recognize and process the Year 2000 and beyond. Major areas of potential business impact have been identified and conversion efforts have been completed or are underway. The Company's primary operating and financial systems are already Year 2000 compliant. The Company also is communicating with suppliers, vendors, financial institutions and others with which it does business to coordinate Year 2000 conversion. The total cost of compliance and its effect on the Company's future results of operations is being determined as part of the conversion planning, but is not expected to be material. PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K: A. Exhibits: 27 Financial Data Schedule B. Reports on Form 8-K: No exhibits or reports on Form 8-K were filed during the three months ended November 30, 1998. 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 HOTELS, 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 13, 1998 EX-27 2
5 The Schedule contains summary financial information extracted from the Consolidated Balance Sheets, Consolidated Statements of Operations and Consolidated Statement of Cash Flow and is qualified in its entirety by reference to such financial statements. 3-MOS AUG-31-1999 NOV-30-1998 969,000 0 193,000 3,447,000 19,000 0 3,126,000 1,776,000 6,943,000 865,000 0 0 450,000 15,000 2,186,000 6,943,000 10,000 980,000 5,000 670,000 503,000 0 85,000 (278,000) 0 (278,000) 0 0 0 (278,000) (0.24) (0.24)
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