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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended August 31, 1998
[ ] 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)
Registrant's telephone number, including area code (770) 434-3670
--------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
----------------------------
(Title of Class)
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 _____
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. _X__
Aggregate market value of voting stock held by non-affiliates on October
31, 1998 - $777,000; Common shares outstanding on October 31, 1998 -
1,513,480 shares
(1) Portions of the registrant's Annual Report to Shareholders for the
fiscal year ended August 31, 1998 (the "1998 Annual Report to
Shareholders") are incorporated by reference in Part II of this
Report.
(2) Portions of the registrant's definitive Proxy Statement relating to
the 1999 Annual Meeting (the "1999 Proxy Statement") to be filed
with the Commission on or about December 15, 1998, are incorporated
by reference in Part III of this Report.
PART I
Item 1. Business
Ridgewood Hotels, 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 certain entities, is engaged in
acquiring and managing hotel properties in the Southeast, as well as
managing other hotels throughout the country. The Company also owns and
operates a 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. 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 has invested in three hotel entities as follows:
RW Hotel Partners, L.P.
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 Georgia, Inc., a
Georgia corporation ("Ridgewood Georgia") which became the sole general
partner in the Partnership with RW Hotel Investments Associates, L.L.C.
("Investor") as the limited partner. Ridgewood Georgia 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 originally
formed to acquire a hotel property in Louisville, Kentucky, but
subsequently purchased five additional hotels. The Partnership
purchased the hotel in Louisville, Kentucky for approximately
$16,000,000. In December 1995 and January 1996, the Partnership
purchased four hotel properties in Georgia for approximately $15,000,000
and a hotel in South Carolina for $4,000,000, respectively. Three of
the Georgia hotels were sold at a loss in March 1998, and the hotel in
Louisville was transferred to a new entity in June 1998 in conjunction
with refinancing that hotel (see below). The two remaining hotels in
the Partnership are in Thomasville, Georgia and Orangeburg, South
Carolina.
Income and loss are allocated to Ridgewood Georgia and the limited
partner based upon the formula for allocating Distributable Cash as
described below.
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 Georgia until the aggregate amount received
by Ridgewood Georgia equals the aggregate cash contributions made by
Ridgewood Georgia to the Partnership.
- Third, 12% to Ridgewood Georgia 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
Georgia.
Management of the Partnership intends to adopt a plan of
liquidation and will sell the remaining two hotels. Based on
management's estimate, Ridgewood Georgia will not receive cash in excess
of its investment in the Partnership. The Company has recorded a loss
from the partnership totaling $184,000 for the fiscal year ended August
31, 1998.
A Management Agreement exists between the Partnership and the
Company as Manager ("Manager") for the purpose of managing the hotels.
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 total
aggregate acquisition costs.
Total management fees for the years ended August 31, 1998, 1997 and
1996 were approximately $233,000, $301,000 and $275,000, respectively.
On March 17, 1998, the Partnership sold three of its six hotels.
The Company signed a management agreement with the new owner of the
three hotels wherein it will receive 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. In connection with the management
agreement, the Company received management fees totaling approximately
$114,000 for the year ended August 31, 1998.
For the fiscal year ended August 31, 1997 and 1996, the Company
recorded equity in income (loss) of the Partnership totaling $(134,000)
net of provision for possible losses and $209,000, respectively. The
Company has recorded during 1997 a provision for possible losses of
approximately $199,000 as there is no indication that the Company will
be able to recover the equity income in the Partnership given the
provisions of the partnership agreement regarding the distribution of
cash to the partners upon liquidation.
Houston Hotel, LLC
On December 9, 1997, Houston Hotel, LLC ("Houston Hotel") was
organized as a limited liability company under the laws of the State of
elaware. 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.
In connection with the management agreement, the Company received
management fees totaling approximately $83,000 for the year ended August
31, 1998.
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 acquired a 10% interest in Louisville Hotel,
LLC for $362,000. Louisville Hotel, LLC loaned $3,620,000 to RW Louisville
Hotel Associates, which resulted in all cash flow from the Hotel being
distributed to Louisville Hotel, LLC.
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 paid an additional $200,000 to Louisville Hotel, LLC as
a fee to acquire the management contract for the hotel. This amount is
included in other assets. The Company is amortizing the fee $70,000 per
year for the first two years and $20,000 per year for the next three
years.
With respect to the sum of $100,000, in the event that the
management contract is terminated by Louisville Hotel, LLC with or
without cause and not pursuant to a third party sale prior to June 5,
2000, Louisville Hotel, LLC will pay to the Company the sum of $4,166.67
times the number of months prior to June 5, 2000 that the management
contract is terminated.
With respect to the second sum of $100,000, in the event that the
management contract is terminated by Louisville Hotel, LLC prior to June
5, 2003, Louisville Hotel, LLC will pay to the Company the sum of
$1,666.67 times the number of months prior to June 5, 2003 that the
management contract is terminated.
In connection with the management agreement, the Company received
management fees totaling approximately $57,000 for the year ended August
31, 1998.
The hotel management business has become very competitive. In
order to obtain management agreements, owners of hotels are frequently
requiring management companies to acquire an ownership in the hotel.
The hotel industry has become very attractive to many investors and, in
turn, it has become very competitive to purchase hotels. This has also
prompted the building of many new hotels in various markets. The
Company believes that it is in a position to remain competitive in this
industry. The Company has the ability to generate equity to contribute
to additional acquisitions as well as to provide the expertise to manage
the acquisitions, operations and ultimate disposition of properties so
acquired for both the Company and for third-party owners. As the
Company acquires additional hotel properties, it will enter into
management agreements to manage those properties.
The Company owns and operates one hotel and owns a number of land
parcels which are held for sale. 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
industry is particularly sensitive: zoning, labor, material and energy
availability, weather conditions and the availability of satisfactory
financing.
The annual average occupancy of the Company's only hotel was
approximately 64% for the fiscal year 1998.
The Company's principal office is located at 2859 Paces Ferry Road,
Suite 700, Atlanta, Georgia 30339 (telephone number: (770) 434-3670).
The Company employed approximately 90 persons (of which 17 were located
at its principal office) at August 31, 1998.
Item 2. Properties
The Company does not own any real property material to conducting
the administrative aspects of its business operations. Its principal
office in Atlanta, Georgia is leased until June 2002 and consists of
approximately 6,200 square feet. As a result of its operations, the
Company is the owner of various other properties, including developed
and undeveloped real estate.
The Company's operating properties are as follows:
Name of Hotel Location # of Rooms Ownership Interest
Ramada Inn Longwood, FL 192 Wholly-Owned (a)
Holiday Inn Orangeburg, SC 160 (b)
Holiday Inn Thomasville, GA 147 (b)
Holiday Inn Louisville, KY 267 (c)
Hampton Inn Houston, TX 176 (d)
(a) The hotel serves as collateral for the Company's
$2,711,000 term loan with a commercial lender.
(b) The Company has a 1% ownership interest in these hotels as
the general partner of RW Hotel Partners, L.P., which owns the
hotels.
(c) The Company has a 10% ownership interest in this hotel as a
member of RW Louisville Hotel Associates, LLC and Louisville
Hotel, LLC, which owns the hotel.
(d) The Company has a 10% ownership interest in this hotel as a
member of Houston Hotel, LLC, which owns the hotel.
The Company also holds six land parcels for sale, two of which
are located in Florida, one in Georgia and one each in Texas, Ohio
and Arizona. For further information on such properties, see the
accompanying consolidated financial statements and Schedule III, Real
Estate and Accumulated Depreciation, contained elsewhere herein.
Item 3. Legal Proceedings
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 Hotels, 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 repurchases 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. On July 5, 1995, the
Company filed a timely answer generally denying the material
allegations of the complaint and asserting several affirmative
defenses. Discovery has been concluded, and on March 19, 1998, the
Court dismissed all class claims, with only the derivative claims
remaining for trial. Trial has been scheduled for February, 1999.
The Company intends to vigorously contest this matter.
The Company serves as a general partner in a limited
partnership. As a general partner, the Company may be liable for
certain deficiencies which arise in meeting the terms of loan
obligations incurred by the limited partnership and for operating
expenses and other liabilities incurred by the partnership in the
ordinary course of business.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders
during the fourth quarter of the Company's fiscal year ended August
31, 1998.
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
Information regarding the market for the Company's common stock,
the Company's dividend policy and the approximate number of holders
of the common stock at October 31, 1998, is included under the
caption "Market for Registrant's Common Equity and Related
Stockholder Matters" on page 1 of the 1998 Annual Report to
Shareholders and is incorporated herein by reference. There were no
sales of unregistered securities of the Company in the fourth quarter
of the Company's fiscal year ended August 31, 1998.
Item 6. Selected Financial Data
A summary of selected financial data for the Company for the
fiscal years 1994 through 1998 is included under the caption entitled
"Selected Financial Data" on page 3 of the 1998 Annual Report to
Shareholders and is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Information regarding the Company's financial condition, changes
in financial condition and results of operations is included under
the caption entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operations" on pages 4 through 8
of the 1998 Annual Report to Shareholders and is incorporated herein
by reference.
Item 8. Financial Statements
Consolidated financial statements and notes thereto for the
Company, which are included on pages 11 through 34 of the 1998 Annual
Report to Shareholders under the following captions listed below, are
incorporated herein by reference.
Consolidated Balance Sheets at August 31, 1998 and 1997.
Consolidated Statements of Operations for the years ended August
31, 1998, 1997 and 1996.
Consolidated Statements of Cash Flows for the years ended August
31, 1998, 1997 and 1996.
Consolidated Statements of Shareholders' Investment for the
years ended August 31, 1998, 1997 and 1996.
Notes to Consolidated Financial Statements.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
Information required by this item with respect to directors and
with respect to Item 405 of Regulation S-K is incorporated by reference
to the Company's 1999 Proxy Statement.
Item 11. Executive Compensation
Information regarding compensation of officers and directors of the
Company is set forth under the caption entitled "Executive Compensation"
in the Company's 1999 Proxy Statement and is incorporated herein by
reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
Information regarding ownership of certain of the Company's
securities is set forth under the caption entitled "Beneficial Ownership
of the Company's Securities" in the Company's 1999 Proxy Statement and
is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
Information regarding certain relationships and related
transactions with the Company is set forth under the caption entitled
"Certain Relationships and Related Transactions" in the Company's 1999
Proxy Statement and is incorporated herein by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K
(a)(1) The following financial statements, together with the
applicable report of independent public accountants, are set forth on
pages 11 through 34 of the 1998 Annual Report to Shareholders and are
incorporated by reference at Item 8 herein:
Report of Independent Accountants.
Consolidated Balance Sheets at August
31, 1998 and 1997.
Consolidated Statements of Operations
for the years ended August 31, 1998,
1997 and 1996.
Consolidated Statements of Cash Flows for the
years ended August 31, 1998, 1997 and 1996.
Consolidated Statements of Shareholders'
Investment for the years ended
August 31, 1998, 1997 and 1996.
Notes to Consolidated Financial Statements.
(a)(2) The following financial statement schedule, together with
the applicable report of independent public accountants, are filed as a
part of this Report:
Page Number(s)
in Form 10-K
Report of Independent Accountants
on Financial Statement Schedule S-1
III - Real Estate and Accumulated
Depreciation - August 31, 1998 S-2 thru S-3
All other schedules are omitted because they are not applicable or
because the required information is given in the financial statements or
notes thereto.
(a)(3) The exhibits filed herewith or incorporated by reference
herein are set forth on the Exhibit Index on pages E-1 through E-9
hereof. Included in those exhibits are the following Executive
Compensation Plans and Arrangements:
10(a) Employment Agreement between N. R. Walden and CMEI,
Inc., dated March 28, 1985 (filed as an Exhibit to
Registrant's Registration Statement on Form 10 filed
November 19, 1985 (Securities Exchange Act File No.
0-14019) and incorporated herein by reference).
10(c) Ridgewood Properties, Inc. Supplemental Retirement and
Death Benefit Plan dated January 1, 1987 (filed as an
Exhibit to Registrant's Form 10-K for the fiscal year
ended August 31, 1988 and incorporated herein by
reference).
10(d) Post-Employment Consulting Agreement between N. R.
Walden and Ridgewood Properties, Inc. dated September 4,
1991 (filed as an Exhibit to Registrant's Form 10-K for
the fiscal year ended August 31, 1991 and incorporated
herein by reference).
10(e) Post-Employment Consulting Agreement between Karen S.
Hughes and Ridgewood Properties, Inc. dated September 4,
1991 (filed as an Exhibit to Registrant's Form 10-K for
the fiscal year ended August 31, 1991 and incorporated
herein by reference).
10(f) Post-Employment Consulting Agreement between Byron T.
Cooper and Ridgewood Properties, Inc. dated September 4,
1991 (filed as an Exhibit to Registrant's Form 10-K for
the fiscal year ended August 31, 1991 and incorporated
herein by reference).
10(g) Post-Employment Consulting Agreement between M. M.
McCullough and Ridgewood Properties, Inc. dated
September 4, 1991 (filed as an Exhibit to Registrant's
Form 10-K for the fiscal year ended August 31, 1991 and
incorporated herein by reference).
10(h) Ridgewood Properties, Inc. Stock Option Plan dated March
30, 1993 and as amended September 14, 1993 (filed as an
Exhibit to Registrant's Form 10-Q for the quarter ended
February 28, 1994, and incorporated herein by
reference).
10(i) Stock Option Agreement between Byron T. Cooper and
Ridgewood Properties, Inc. dated April 1, 1993 and as
approved on January 12, 1994 (filed as an Exhibit to
Registrant's Form 10-Q for the quarter ended February
28, 1994, and incorporated herein by reference).
10(j) Stock Option Agreement between Luther A. Henderson and
Ridgewood Properties, Inc. dated April 1, 1993 and as
approved on January 12, 1994 (filed as an Exhibit to
Registrant's Form 10-Q for the quarter ended February
28, 1994, and incorporated herein by reference).
10(k) Stock Option Agreement between Karen S. Hughes and
Ridgewood Properties, Inc. dated April 1, 1993 and as
approved on January 12, 1994 (filed as an Exhibit to
Registrant's Form 10-Q for the quarter ended February
28, 1994, and incorporated herein by reference).
10(l) Stock Option Agreement between M. M. McCullough and
Ridgewood Properties, Inc. dated April 1, 1993 and as
approved on January 12, 1994 (filed as an Exhibit to
Registrant's Form 10-Q for the quarter ended February
28, 1994, and incorporated herein by reference).
10(m) Stock Option Agreement between N. R. Walden and
Ridgewood Properties, Inc. dated April 1, 1993 and as
approved on January 12, 1994 (filed as an Exhibit to
Registrant's Form 10-Q for the quarter ended February
28, 1994, and incorporated herein by reference).
10(n) Stock Option Agreement between Gregory T. Weigle and
Ridgewood Properties, Inc. dated April 1, 1993 and as
approved on January 12, 1994 (filed as an Exhibit to
Registrant's Form 10-Q for the quarter ended February
28, 1994, and incorporated herein by reference).
10(o) Stock Option Agreement between Karen S. Hughes and
Ridgewood Properties, Inc. dated January 31, 1994 (filed
as an Exhibit to Registrant's Form 10-Q for the quarter
ended February 28, 1994, and incorporated herein by
reference).
10(p) Stock Option Agreement between N. R. Walden and
Ridgewood Properties, Inc. dated January 31, 1994 (filed
as an Exhibit to Registrant's Form 10-Q for the quarter
ended February 28, 1994, and incorporated herein by
reference).
10(q) Ridgewood Properties, Inc. 1993 Stock Option Plan, as
amended on October 26, 1994 (filed as an Exhibit to
Registrant's Registration Statement on Form S-8 filed
November 8, 1994 (No. 33-86084) and incorporated herein
by reference).
10(ff) Amendment No. 1 to Post-Employment Consulting Agreement
between Ridgewood Hotels, Inc. and N. Russell Walden dated
August 13, 1998.
10(gg) Amendment No. 1 to Post-Employment Consulting Agreement
between Ridgewood Hotels, Inc. and Byron T. Cooper dated
August 18, 1998.
10(hh) Amendment No. 1 to Post-Employment Consulting Agreement
between Ridgewood Hotels, Inc. and Karen S. Hughes dated
August 13, 1998.
(b) No reports on Form 8-K were filed during the fourth
quarter of the Company's fiscal year ended August 31, 1998.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, Chief
Executive Officer
Dated: November 24, 1998
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on
the date indicated:
/s/ N. R. Walden
N. Russell Walden, President,
Chief Executive Officer and
Director
/s/ Karen S. Hughes
Karen S. Hughes,
Vice President, Chief
Accounting and Financial
Officer and Secretary
/s/ Michael M. Earley
Michael M. Earley, Director
/s/ Luther A. Henderson
Luther A. Henderson, Director
Dated: November 24, 1998
Report of Independent Accountants on
Financial Statement Schedule
October 23, 1998
To the Board of Directors
of Ridgewood Hotels, Inc.
Our audits of the consolidated financial statements referred to in
our report dated October 23, 1998 appearing in the 1998 Annual
Report to Shareholders of Ridgewood Hotels, Inc. (which report and
consolidated financial statements are incorporated by reference in
this Annual Report on Form 10-K) also included an audit of the
Financial Statement Schedules listed in Item 14(a) of this Form
10-K. In our opinion, these Financial Statement Schedules present
fairly, in all material respects, the information set forth
therein when read in conjunction with the related consolidated
financial statements.
PRICEWATERHOUSECOOPERS LLP
Atlanta, Georgia
RIDGEWOOD HOTELS, INC. AND SUBSIDIARIES SCHEDULE III
----------------------------------------- Page 1 of 2
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
-------------------------------------------------------
AUGUST 31, 1998
---------------
(000'S Omitted)
Cost Capitalized Gross Amount at Which
Initial Cost Subsequent to Carried at August 31, 1998
to Company Acquisition (A)(B)(D)
------------------ ------------------ ----------------------------------
Building Building Accumu-
and Carry- and lated Date of
Encum- Improve- Improve- ing Improve- Deprecia- Construc- Date
Description brances Land ments ments Costs Land ments Total tion (C) tion Acquired
- ----------- -------- ---- -------- -------- ------ ---- -------- ----- -------- -----------------
LAND
- ----
Georgia -- 58 -- -- -- 58 -- 58 -- -- 12/75
Texas -- 5,338 -- 2 -- 3,776 2 3,778 -- -- 12/85
--
Florida -- 475 -- -- -- 402 -- 402 -- -- 3/85
Florida -- 41 -- -- -- 41 -- 41 -- -- 6/78
Arizona -- 978 -- 110 -- 978 110 1,088 -- -- 3/85
Ohio -- 1,006 -- 175 -- 367 74 441 -- -- 12/77
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Total Non-
operating
properties -- 7,896 -- 287 -- 5,622 186 5,808 --
--------- --------- --------- --------- --------- --------- --------- --------- ---------
HOTEL
- --------------
Florida 2,742 439 1,921 1,120 -- 439 2,488 2,927 1,679 1973 9/74
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total
operating
properties 2,742 439 1,921 1,120 -- 439 2,488 2,927 1,679
-------- -------- -------- -------- -------- -------- -------- -------- --------
GRAND TOTAL $ 2,742 $ 8,335 $ 1,921 $ 1,407 $ -- $ 6,061 $ 2,674 $ 8,735 $ 1,679
========= ========= ========= ========= ========= ========= ========= ========= =========
SCHEDULE III
Page 2 of 2
(A) Except as discussed in Note 2 to the "Notes to Consolidated
Financial Statements," real estate owned is carried at the lower
of cost or fair value less costs to sell. At August 31, 1998,
the amount of the allowance for possible losses was approximately
$3,447,000, which related to land held for sale.
(B) Reconciliation of real estate properties:
For the Year Ended
(000's omitted)
8/31/98 8/31/97 8/31/96
------- ------- -------
Balance, beginning of year $ 9,553 $12,612 $12,934
Additions during the period:
Acquisitions -- -- --
Capitalized costs 88 78 49
Deductions during the period:
Real estate sold or assets
retired (on which financing
was provided by the Company
in certain cases) 906 3,137 371
------- ------- -------
Balance, end of year $ 8,735 $ 9,553 $12,612
======= ======= =======
(C) Operating properties and any related improvements are being
depreciated by the "straight line" method over the estimated
useful lives of such assets, which are generally 30 years for
buildings and 5 years for furniture and fixtures.
Reconciliation of accumulated depreciation:
For the Year Ended
(000's omitted)
8/31/98 8/31/97 8/31/96
------- ------- -------
Balance, beginning of year $1,567 $1,460 $1,369
Additions during the period 139 128 121
Depreciation associated with
assets sold or retired (27) (21) (30)
------ ------ ------
Balance, end of year $1,679 $1,567 $1,460
====== ====== ======
(D) The aggregate cost for federal income tax purposes is approximately
$8,938,000 at August 31, 1998.
EXHIBIT INDEX
Report on Form 10-K for the fiscal year ended August 31, 1998
Page Number
Exhibit in Manually
Number Description Signed Original
3(a) Certificate of Incorporation of
Registrant.*
3(b) By-Laws of Registrant.*
3(c) Certificate of Amendment to the
Certificate of Incorporation (filed
as an Exhibit to Registrant's Form
10-K for the fiscal year ended August
31, 1987 and incorporated herein by
reference).
3(d) Certificate of Amendment to the
Certificate of Incorporation of the
Registrant (filed as an Exhibit to
Registrant's Form 10-K for the
fiscal year ended August 31, 1989 and
incorporated herein by reference).
3(e) Certificate of Amendment of the
Certificate of Incorporation of
Ridgewood Properties, Inc. dated May
23, 1991 (filed as an Exhibit
to Registrant's Form 10-K for the
fiscal year ended August 31, 1991 and
incorporated herein by reference).
3(f) Certificate of Amendment of the
Certificate of Incorporation of
Ridgewood Properties, Inc.
dated March 30, 1993 (filed as
Exhibit 3 to Registrant's Form 10-Q
for the fiscal quarter ended February
28, 1993 and incorporated herein by
reference).
3(g) Certificate of Amendment of the
Certificate of Incorporation of
Ridgewood Properties, Inc. dated
January 26, 1994 (filed as Exhibit 3
to Registrant's Form 10-Q for the
fiscal quarter ended February 28,
1994 and incorporated herein by
reference).
3(h) Certificate of Amendment to
Certificate of Incorporation by
Ridgewood Hotels, Inc. (filed as an
Exhibit to Registrant's Form 8-K on
February 5, 1997, and incorporated
herein by reference).
4(a) Stock Purchase Agreement between
Ridgewood Properties, Inc. and Triton
Group Ltd., dated as of August 15,
1994 (filed as an Exhibit to
Registrant's Form 8-K on August 15,
1994, and incorporated herein by
reference).
4(b) August 15, 1994 Press Release issued
by Ridgewood Properties, Inc. (filed
as an Exhibit to Registrant's Form
8-K on August 15, 1994, and
incorporated herein by reference).
4(c) Certificate of Designation,
Preferences and Rights of Series A
Convertible Preferred Stock of the
Registrant (filed as an Exhibit to
Registrant's Registration Statement
on Form S-8 filed on November 8, 1994
(No. 33-866084) and incorporated
herein by reference).
4(d) Notice of Exercise by N. Rusell
Walden dated January 31, 1997 (filed
as an Exhibit to Registrant's Form
8-K on February 5, 1997, and
incorporated herein by reference).
4(e) Notice of Exercise by Karen S. Hughes
dated January 31, 1997 (filed as an
Exhibit to Registrant's Form 8-K on
February 5, 1997, and incorporated
herein by reference).
4(f) Share Security Agreement between N.
Russell Walden and Ridgewood
Properties, Inc. dated January 31,
1997 (filed as an Exhibit to
Registrant's Form 8-K on February 5,
1997, and incorporated herein by
reference).
4(g) Share Security Agreement between
Karen S. Hughes and Ridgewood
Properties, Inc. dated January 31,
1997 (filed as an Exhibit to
Registrant's Form 8-K on February 5,
1997, and incorporated herein by
reference).
10(a) Employment Agreement between N. R.
Walden and CMEI, Inc., dated March
28, 1985.*
10(b) Bill of Sale and Assumption of
Liabilities between CMEI, Inc. and
Ridgewood Properties, Inc. dated
December 9, 1985.*
10(c) Ridgewood Properties, Inc.
Supplemental Retirement and Death
Benefit Plan dated January 1, 1987
(filed as an Exhibit to Registrant's
Form 10-K for the fiscal year ended
August 31, 1988 and incorporated
herein by reference).
10(d) Post-Employment Consulting Agreement
between N. R. Walden and Ridgewood
Properties, Inc. dated September 4,
1991 (filed as an Exhibit to
Registrant's Form 10-K for the fiscal
year ended August 31, 1991 and
incorporated herein by reference).
10(e) Post-Employment Consulting Agreement
between Karen S. Hughes and Ridgewood
Properties, Inc. dated September 4,
1991 (filed as an Exhibit to
Registrant's Form 10-K for the fiscal
year ended August 31, 1991 and
incorporated herein by reference).
10(f) Post-Employment Consulting Agreement
between Byron T. Cooper and Ridgewood
Properties, Inc. dated September 4,
1991 (filed as an Exhibit to
Registrant's Form 10-K for the fiscal
year ended August 31, 1991 and
incorporated herein by reference).
10(g) Post-Employment Consulting Agreement
between M. M. McCullough and
Ridgewood Properties, Inc. dated
September 4, 1991 (filed as an
Exhibit to Registrant's Form 10-K for
the fiscal year ended August 31, 1991
and incorporated herein by
reference).
10(h) Ridgewood Properties, Inc. Stock
Option Plan dated March 30, 1993 and
as amended September 14, 1993 (filed
as an Exhibit to Registrant's Form
10-Q for the quarter ended February
28, 1994, and incorporated herein by
reference).
10(i) Stock Option Agreement between Byron
T. Cooper and Ridgewood Properties,
Inc. dated April 1, 1993 and as
approved on January 12, 1994 (filed
as an Exhibit to Registrant's Form
10-Q for the quarter ended February
28, 1994, and incorporated herein by
reference).
10(j) Stock Option Agreement between Luther
A. Henderson and Ridgewood
Properties, Inc. dated April 1, 1993
and as approved on January 12, 1994
(filed as an Exhibit to Registrant's
Form 10-Q for the quarter ended
February 28, 1994, and incorporated
herein by reference).
10(k) Stock Option Agreement between Karen
S. Hughes and Ridgewood Properties,
Inc. dated April 1, 1993 and as
approved on January 12, 1994 (filed
as an Exhibit to Registrant's Form
10-Q for the quarter ended February
28, 1994, and incorporated herein by
reference).
10(l) Stock Option Agreement between M. M.
McCullough and Ridgewood Properties,
Inc. dated April 1, 1993 and as
approved on January 12, 1994 (filed
as an Exhibit to Registrant's Form
10-Q for the quarter ended February
28, 1994, and incorporated herein by
reference).
10(m) Stock Option Agreement between N. R.
Walden and Ridgewood Properties, Inc.
dated April 1, 1993 and as approved
on January 12, 1994 (filed as an
Exhibit to Registrant's Form 10-Q for
the quarter ended February 28, 1994,
and incorporated herein by
reference).
10(n) Stock Option Agreement between
Gregory T. Weigle and Ridgewood
Properties, Inc. dated April 1, 1993
and as approved on January 12, 1994
(filed as an Exhibit to Registrant's
Form 10-Q for the quarter ended
February 28, 1994, and incorporated
herein by reference).
10(o) Stock Option Agreement between Karen
S. Hughes and Ridgewood Properties,
Inc. dated January 31, 1994 (filed as
an Exhibit to Registrant's Form 10-Q
for the quarter ended February 28,
1994, and incorporated herein by
reference).
10(p) Stock Option Agreement between N. R.
Walden and Ridgewood Properties, Inc.
dated January 31, 1994 (filed as an
Exhibit to Registrant's Form 10-Q for
the quarter ended February 28, 1994,
and incorporated herein by
reference).
10(q) Ridgewood Properties, Inc. 1993 Stock
Option Plan, as amended on October
26, 1994 (filed as an Exhibit to
Registrant's Registration Statement
on Form S-8 filed on November 8, 1994
(No. 33-86084) and incorporated
herein by reference).
10(r) Amended and Restated Basic Agreement
between RW Hotel Investment Partners,
L.P. and Ridgewood Hotels, Inc. dated
August 14, 1995 (filed as an Exhibit
to Registrant's Form 10-K for the
fiscal year ended August 31, 1995,
and incorporated herein by
reference).
10(s) Amended and Restated Limited
Partnership Agreement of RW Hotel
Partners, L.P. dated September 8,
1995 (filed as an Exhibit to
Registrant's Form 10-K for the fiscal
year ended August 31, 1995, and
incorporated herein by reference).
10(t) Management Agreement (Holiday Inn
Hurstbourne) between RW Hotel
Partners, L.P. and Ridgewood
Properties, Inc. dated August 16,
1995 (filed as an Exhibit to
Registrant's Form 10-K for the fiscal
year ended August 31, 1995, and
incorporated herein by reference).
10(u) Mortgage, Assignment of Leases and
Rents and Security Agreement Between
Bloomfield Acceptance Company, L.L.C.
and Ridgewood Orlando, Inc. dated
June 30, 1995 (filed as an Exhibit to
Registrant's Form 10-K for the fiscal
year ended August 31, 1995, and
incorporated herein by reference).
10(v) Security Agreement between Ridgewood
Orlando, Inc. and Bloomfield
Acceptance Company, L.L.C. dated June
30, 1995 (filed as an Exhibit to
Registrant's Form 10-K for the fiscal
year ended August 31, 1995, and
incorporated herein by reference).
10(w) Mortgage Note between Bloomfield
Acceptance Company and Ridgewood
Orlando, Inc. dated June 30, 1995
(filed as an Exhibit to Registrant's
Form 10-K for the fiscal year ended
August 31, 1995, and incorporated
herein by reference).
10(x) 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
(filed as an Exhibit to Registrant's
Form 10-Q for the quarter ended
November 30, 1995, and incorporated
herein by reference).
10(y) Shareholders' Agreement by and between
Samuel King and Ridgewood Properties,
Inc. dated December 1995 (filed as an
Exhibit to Registrant's Form 10-K for
the fiscal year ended August 31, 1996,
and incorporated herein by reference).
10(z) Warrants to Purchase Shares of Common
Stock of Ridgewood Properties, Inc.
issued to Hugh Jones on December 16,
1996 (filed as an Exhibit to
Registrant's Form 10-Q for the quarter
ended November 30, 1996, and
incorporated herein by reference).
10(aa) Promissory Note between N. Russell
Walden and Ridgewood Properties, Inc.
dated January 31, 1997 (filed as an
Exhibit to Registrant's Form 8-K on
February 5, 1997 and incorporated
herein by reference).
10(bb) Promissory Note between Karen S.
Hughes and Ridgewood Properties, Inc.
dated January 31, 1997 (filed as an
Exhibit to Registrant's Form 8-K on
February 5, 1997 and incorporated
herein by reference).
10(cc) Operating Agreement between Houston
Hotel, LLC and Ridgewood Hotels, Inc.
effective December 9, 1997 (filed as
an Exhibit to Registrant's Form 10-Q
for the quarter ended May 31, 1998).
10(dd) Operating Agreement between RW
Hurstbourne Hotel, Inc. and RW
Louisville Hotel Investors, LLC
effective May 13, 1998 (filed as an
Exhibit to Registrant's Form 10-Q for
the quarter ended May 31, 1998).
10(ee) Operating Agreement between Ridgewood
Hotels, Inc. and Louisville Hotel,
L.P. effective June 5, 1998 (filed as
an Exhibit to Registrant's Form 10-Q
for the quarter ended May 31, 1998).
10(ff) Amendment No. 1 to Post-Employment
Consulting Agreement between Ridgewood
Hotels, Inc. and N. Russell Walden
dated August 13, 1998.
10(gg) Amendment No. 1 to Post-Employment
Consulting Agreement between Ridgewood
Hotels, Inc. and Byron T. Cooper dated
August 18, 1998.
10(hh) Amendment No. 1 to Post-Employment
Consulting Agreement between Ridgewood
Hotels, Inc. and Karen S. Hughes dated
August 13, 1998.
13 1998 Annual Report to Shareholders.
22 Subsidiaries of Registrant.
27 Financial Data Schedule.
[FN]
_______________
* Previously filed as an Exhibit to Registrant's
Registration Statement on Form 10 filed on November 19,
1985 (Securities Exchange Act File No. 0-14019), and
incorporated herein by reference.