-----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, Ps5qGOdZ/OpX6IUzTBDsJLlOCwKcvnmZdTjKtNsop/lL3WtymQ7/U/ov8HANVdsL 1pCu+6NRwPj6ekYPYXB9uw== 0000950144-98-008418.txt : 19980716 0000950144-98-008418.hdr.sgml : 19980716 ACCESSION NUMBER: 0000950144-98-008418 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19980715 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GOLF HOST RESORTS INC CENTRAL INDEX KEY: 0000042429 STANDARD INDUSTRIAL CLASSIFICATION: HOTELS & MOTELS [7011] IRS NUMBER: 840631130 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 002-64309 FILM NUMBER: 98666619 BUSINESS ADDRESS: STREET 1: P O DRAWER 3131 CITY: DURANGO STATE: CO ZIP: 81302 BUSINESS PHONE: 3032592000 MAIL ADDRESS: STREET 1: P O BOX 1088 CITY: TARPON SPRINGS STATE: FL ZIP: 34688-1088 FORMER COMPANY: FORMER CONFORMED NAME: TAMARRON INC DATE OF NAME CHANGE: 19870405 FORMER COMPANY: FORMER CONFORMED NAME: GOLF HOST WEST INC /D/B/A/ TAMARRON DATE OF NAME CHANGE: 19840330 10-Q/A 1 GOLF HOST RESORTS, INC. FORM 10-Q/A 1 FORM 10-Q/A SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 -------------------- Quarterly Report Pursuant to Section 13 or 15 (d) of The Securities Exchange Act of 1934 -------------------- For Quarter Ended September 30, 1997 Commission File No. 2-64309 GOLF HOST RESORTS, INC. ----------------------- (Exact name of registrant as specified in its charter) Colorado 84-0631130 - -------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Post Office Box 3131, Durango, Colorado 81302-3131 - --------------------------------------------------- (Address of principal executive offices) (Zip Code) (970)-259-2000 - -------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding twelve months, and (2) has been subject to the filing requirements for the past 90 days. - Yes X No --- --- Issuer has no common stock subject to this report. Page 1 of 19 2 GOLF HOST RESORTS, INC. (A WHOLLY OWNED SUBSIDIARY OF GOLF HOSTS, INC.) BALANCE SHEETS ASSETS (Substantially all pledged)
SEPTEMBER 30, DECEMBER 31, 1997 1996 ----------- ----------- (unaudited) CURRENT ASSETS: Cash $ 919,832 $ 488,685 Accounts receivable, net 2,720,444 4,380,108 Notes receivable -- 163,942 Inventories and supplies 2,870,337 5,123,966 Prepaid expenses and other assets 853,338 956,054 Intercompany receivables 4,552,350 724,312 ----------- ----------- 11,916,301 11,837,067 Assets held for sale 6,275,246 -- ----------- ----------- Total current assets 18,191,547 11,837,067 INTANGIBLES, net 34,399,665 -- PROPERTY AND EQUIPMENT, at cost, less accumulated depreciation and amortization 35,956,819 40,038,322 OTHER ASSETS 572,204 238,627 LONG-TERM RECEIVABLES -- 1,021,178 ----------- ----------- $89,120,235 $53,135,194 =========== ===========
The accompanying notes are an integral part of these financial statements Page 2 3 GOLF HOST RESORTS, INC. (A WHOLLY OWNED SUBSIDIARY OF GOLF HOSTS, INC.) BALANCE SHEETS LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
SEPTEMBER 30, DECEMBER 31, 1997 1996 ------------- ----------- (unaudited) CURRENT LIABILITIES: Accounts payable $ 3,389,120 $ 2,258,702 Accrued expenses 4,126,347 4,577,981 Deposits and prepaid fees 1,979,404 2,755,297 Notes payable -- 734,429 Maturing long-term obligations -- 2,788,764 ------------- ----------- Total current liabilities 9,494,871 13,115,173 LONG-TERM OBLIGATIONS 76,673,914 17,777,544 DEFERRED INCOME TAXES 14,929,374 4,951,895 LONG-TERM CONTINGENCY -- 2,221,938 ------------- ----------- Total liabilities 101,098,159 38,066,550 SHAREHOLDERS' (DEFICIT) EQUITY: Common stock, $1 par, 5,000 shares authorized, issued and outstanding 5,000 5,000 5.6% cumulative preferred stock, $1 par, 4,577,000 shares authorized and outstanding 4,577,000 4,577,000 Paid-in capital (13,557,000) 2,329,447 Retained (deficit) equity (3,002,924) 8,157,197 ------------- ----------- Total shareholders' (deficit) equity (11,977,924) 15,068,644 ------------- ----------- Total liabilities and shareholders' (deficit) equity $ 89,120,235 $53,135,194 ============= ===========
The accompanying notes are an integral part of these financial statements. Page 3 4 GOLF HOST RESORTS, INC. STATEMENTS OF INCOME (a wholly owned subsidiary of Golf Hosts, Inc.) (unaudited)
Quarter Ended September 30, 99 Day 174 Day Nine Months ------------------------------ Period Ended Period Ended Ended 1997 1996 September 30, 1997 June 23, 1997 September 30, 1996 ------------ ----------- ------------------ -------------- ------------------ REVENUES: Resort facilities $ 1,738,987 $ 3,978,191 $ 2,085,270 $10,775,626 $14,853,314 Food and beverage 1,421,176 2,923,444 1,696,866 8,106,385 11,497,395 Golf 1,877,970 2,801,712 2,114,198 9,347,282 12,321,416 Other 667,050 1,303,403 789,783 3,340,715 4,960,517 Real estate activities - 671,105 - 180,000 656,817 ----------- ----------- ----------- ----------- ----------- 5,705,183 11,677,855 6,686,117 31,750,008 44,289,459 ----------- ----------- ----------- ----------- ----------- COSTS AND OPERATING EXPENSES: Resort facilities 1,949,972 3,570,192 2,258,224 9,083,194 12,625,972 Food and beverage 1,307,088 2,265,814 1,510,303 5,591,373 7,789,587 Golf 1,221,933 1,320,423 1,334,547 3,247,628 4,606,662 Other 2,866,716 3,940,124 3,214,518 7,672,813 11,914,851 General and administrative 828,991 902,864 922,486 2,374,385 2,829,865 Real estate activities - 279,750 - 90,618 280,227 ----------- ----------- ----------- ----------- ----------- 8,174,700 12,279,167 9,240,078 28,060,011 40,047,164 ----------- ----------- ----------- ----------- ----------- OPERATING (LOSS) INCOME (2,469,517) (601,312) (2,553,961) 3,689,997 4,242,295 INTEREST, NET 2,055,237 494,740 2,215,237 945,481 1,490,460 ----------- ----------- ----------- ----------- ----------- (LOSS) INCOME BEFORE INCOME TAXES (4,524,754) (1,096,052) (4,769,198) 2,744,516 2,751,835 PARENT INCOME TAX CHARGE (BENEFIT) (1,743,614) (412,400) (1,835,281) 967,800 1,012,000 ----------- ----------- ----------- ----------- ----------- (LOSS) INCOME BEFORE EXTRAORDINARY ITEMS (2,781,140) (683,652) (2,933,917) 1,776,716 1,739,835 LOSS ON EARLY EXTINGUISHMENT OF LONG TERM DEBT (NET OF TAXES OF $155,400) - - - (288,600) - ----------- ----------- ----------- ----------- ----------- NET (LOSS) INCOME (2,781,140) (683,652) (2,933,917) 1,488,116 1,739,835 DIVIDEND REQUIREMENTS ON PREFERRED STOCK 64,078 64,078 69,007 123,227 192,234 ----------- ----------- ----------- ----------- ----------- NET CHANGE IN (DEFICIT) EARNINGS $(2,845,218) $ (747,730) $(3,002,924) $ 1,364,889 $ 1,547,601 =========== =========== =========== =========== =========== (LOSS) EARNINGS PER COMMON SHARE $ (569.04) $ (149.55) $ (600.58) $ 272.97 $ 309.52 =========== =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements. Page 4 5 GOLF HOST RESORTS, INC. STATEMENTS OF SHAREHOLDERS' EQUITY (a wholly owned subsidiary of Golf Hosts, Inc.) (unaudited)
$1 Par Value 5.6% Cumulative Common Stock Preferred Stock Retained Total ----------------- --------------------- Paid-In (Deficit) Shareholders' Shares Amount Shares Amount Capital Earnings (Deficit) Equity ------ ------- --------- ---------- ------------ ----------- ---------------- Balance, December 31, 1995 5,000 $5,000 4,577,000 $4,577,000 $ 2,329,447 $ 7,042,986 $13,954,433 ----- ------ --------- ---------- ------------ ----------- ------------ Net income available to common shareholders - - - - - 1,114,211 1,114,211 ----- ------ --------- ---------- ------------ ----------- ------------ Balance, December 31, 1996 5,000 5,000 4,577,000 4,577,000 2,329,447 8,157,197 15,068,644 Notes receivable distribution (Note 1) - - - - - (3,941,666) (3,941,666) Net income available to common shareholders - - - - - 1,364,889 1,364,889 ----- ------ --------- ---------- ------------ ----------- ------------ Balance, June 23, 1997 5,000 $5,000 4,577,000 $4,577,000 $ 2,329,447 $ 5,580,420 $12,491,867 ===== ====== ========= ========== ============ =========== ============ Balance, June 24, 1997 5,000 $5,000 4,577,000 $4,577,000 $ (4,582,000) - $ - Distribution to shareholder - - - - (8,975,000) - (8,975,000) Net income (loss) available to common shareholder - - - - - (3,002,924) (3,002,924) ----- ------ --------- ---------- ------------ ----------- ------------ Balance, September 30, 1997 5,000 $5,000 4,577,000 $4,577,000 $(13,557,000) $(3,002,924) $(11,977,924) ===== ====== ========= ========== ============ =========== ============
Page 5 6 GOLF HOST RESORTS, INC. (A WHOLLY OWNED SUBSIDIARY OF GOLF HOSTS, INC.) STATEMENTS OF CASH FLOWS
99 day 174 day Nine months period ended period ended ended September 30, 1997 June 23, 1997 September 30, 1996 ------------------ ----------------- ------------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income $ (2,933,917) $ 1,488,116 $ 1,739,835 Noncash items included in income: Provision for bad debts -- 89,609 -- Depreciation and amortization 852,993 1,282,510 1,870,300 Decrease in deferred tax (1,660,807) -- -- Changes in operating working capital 2,039,253 (2,059,667) (1,303,889) ----------------- ----------------- ----------------- Cash provided by operations (1,702,478) 800,568 2,306,246 ----------------- ----------------- ----------------- CASH FLOWS FROM INVESTING ACTIVITIES: Decreases (increases) in other assets 6,932 62,302 -- Purchases of property and equipment (1,732,812) (1,517,431) (1,642,429) Decrease in assets held for sale 299,754 -- -- Net recovery of cost of property and equipment sold or retired -- -- 66,776 Additions to notes receivable -- -- (7,782) Reduction in notes receivable -- 1,185,120 592,096 ----------------- ----------------- ----------------- Cash provided by (used for) investing (1,426,126) (270,009) (991,339) ----------------- ----------------- ----------------- CASH FLOWS FROM FINANCING ACTIVITIES: Net change in notes payable -- -- (672,582) Increases in long-term obligations -- -- 480,105 Decreases in long-term obligations -- -- (1,411,429) Increases in long-term intercompany -- -- 849,508 Increases in long-term contingency -- -- 108,157 Additional borrowings 1,073,748 1,514,587 -- Proceeds from sale of company -- 63,524,946 -- Repayment of existing debt -- (25,037,262) -- Proceeds to selling shareholders -- (38,046,827) -- ----------------- ----------------- ----------------- Cash provided (used for) financing 1,073,748 1,955,444 (646,241) ----------------- ----------------- ----------------- NET (DECREASE) INCREASE IN CASH (2,054,856) 2,486,003 668,666 CASH, BEGINNING OF PERIOD 2,974,688 488,685 312,603 ----------------- ----------------- ----------------- CASH, END OF PERIOD $ 919,832 $ 2,974,688 $ 981,269 ================= ================= ================= NONCASH FINANCING AND INVESTING ACTIVITIES: Preferred stock dividend liability to Golf Hosts, Inc. satisfied through the intercompany account $ 69,007 $ 123,227 $ 192,236 The Company transferred its investment in GTA to GHI $ 8,975,000 $ -- $ -- OTHER INFORMATION Interest paid in cash $ 1,118,595 $ 965,117 $ 1,503,969 Income taxes paid in cash $ -- $ 118,090 $ 192,001
The accompanying notes are an integral part of these financial statements. Page 6 7 GOLF HOST RESORTS, INC. (A WHOLLY OWNED SUBSIDIARY OF GOLF HOSTS, INC.) NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1997 (1) ORGANIZATION, BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES On June 23, 1997, TM Golf Hosts, Inc. ("TMGHI") acquired all of the outstanding stock of Golf Hosts, Inc. ("GHI"), previously an 80% owner of Golf Host Resorts, Inc. (the "Company"), and the 20% of the Company's stock not held by GHI. Concurrently, TMGHI and GHI merged with the legal survivor being GHI, which now owns 100% of the Company. Total consideration for the acquisition of the outstanding stock of GHI and the Company was approximately $66 million, including assumption of certain liabilities. The transaction was financed with new borrowing and all previous indebtedness of the Company was repaid, resulting in an extraordinary loss on early retirement of debt primarily relating to the write-off of unamortized debt discounts and related deferred expenses. Under the terms of the agreement, certain long term receivables were transferred to the selling shareholders immediately prior to the transaction. In addition, certain marketable securities and investments with ascribed values aggregating $8,975,000 were distributed from the Company to its parent, GHI, subsequent to the transaction. The interim financial statements are unaudited and were prepared from the books and records of the Company. In the opinion of management, they include all adjustments necessary for a fair presentation of the Company's operations and financial positon. Certain of the Company's operations are seasonal in nature and, therefore, interim results from operations are not necessarily indicative of a full year. The financial statements as of and for the period from the merger to September 30, 1997 reflect the allocation of the purchase price based upon the fair value of the assets acquired and the liabilities assumed in connection with the merger and are, therefore, not comparable to the financial statements of the Company presented herein as of or for periods prior to the merger, which are based upon its previous historical cost. A portion of the purchase price was allocated to certain intangible assets including those relating to the golf course operations and the operations of the resort pursuant to the rental pool arrangement with the condominium owners. These intangibles are being amortized on a straight line basis over a 20 year period based on the contract term of the Innisbrook management agreement. Page 7 8 (2) ASSETS HELD FOR SALE The Company intends to sell certain resort assets (the Tamarron Hilton Resort and a portion of the non-operating assets at Innisbrook) within one year from the date of acquisition. The Tamarron related net assets related to these operations have been recorded at their estimated proceeds, as adjusted for estimated cash flows from operations and estimated interest expense during the holding period on the incremental debt incurred to finance the purchase as required by EITF 87-11. The net income from operations subsequent to June 23, 1997, related to these assets held for sale of approximately $291,000 and the interest expense on the allocated debt of approximately $238,000 has been excluded from the current year's consolidated statement of earnings. The impact of the sale will have a positive impact on earnings and liquidity. (3) NOTE PAYABLE AND LONG-TERM OBLIGATIONS As a part of the transaction referred to in Note 1, the previously existing note payable and all long-term obligations were replaced by a mortgage note with Golf Trust of America, L.P. The participating mortgage is for a term of thirty years and is secured by certain real and personal property of the Company and guaranteed by GHI. The loan allows for certain additional borrowings for capital improvements. The loan has an initial base pay rate increasing annually. The loan also includes participation above certain predefined levels in certain revenue of the Innisbrook property securing the loans.
September 30, December 31, 1997 1996 -------------- -------------- Note payable under $6,000,000 line of credit $ - $ 734,429 ============== ============== Long-term obligations: Participating mortgage note at varying, increasing pay rates maturing in 2027 $ 71,673,914 $ -- Mortgage note at 6.34%, maturing in 2002 5,000,000 -- Mortgage notes at varying rates, ranging from 8.3% to 9%, maturing from from 1998 to 2007 -- 15,487,194 Equipment revolving credit line at prime, maturing serially from 1997 to 2001 -- 3,891,728 A $2,000,000 revolving credit line at 9% maturing in 2007 -- 1,368,000 Other -- 286,386 Unamortized debt discount and expense -- (467,000) -------------- -------------- 76,673,914 20,566,308 Less-current maturities -- (2,788,764) -------------- -------------- $ 76,673,914 $ 17,777,544 ============== ==============
Page 8 9 (4) CHANGE IN INNISBROOK PROPERTY MANAGER Concurrent with the merger, the Company entered into an agreement to terminate the existing Innisbrook management agreement effective July 15, 1997 for a $600,000 termination fee. A new property manager, Westin Hotel Company (Westin), was engaged effective on that date. Such termination fee was included in determining the cost of the acquisition. Page 9 10 GOLF HOST RESORTS, INC. (A WHOLLY OWNED SUBSIDIARY OF GOLF HOSTS, INC.) MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS For purposes of discussing comparative results from operations for 1996 and 1997, the results for the periods prior to and subsequent to the June 23, 1997 merger transaction, described in Note 1 to the financial statements, are combined. In addition, the discussion includes the operations of Tamarron which are included in Assets Held for Sale as discussed in Note 2. For the current quarter, room nights occupied fell 21.1% from the same prior year quarter. Occupied room nights on a divisional basis declined 24.6% at Innisbrook while Tamarron experienced a 15.4% decline. The decline in occupancy occurred mostly conference business at both resorts. Revenues from resort operations decreased 11.8% for the quarter. Revenue per occupied room night of $284.69 reflected an 11.7% increase over the prior year amount of $254.83. Revenue per occupied room night at Innisbrook increased 13.5% to $284.64 while Tamarron's spending rose 8.9% to $287.65. The prior year amounts were $249.12 and $264.12, respectively. The guest spending improvement was unable to offset the lower occupancy impact, yielding a $1,300,000 decrease in resort operations revenue. There was no real estate revenue generated during the quarter, while $671,000 was produced in the prior year quarter. Resort operations costs and operating expenses increased to 120.2% of revenues from the prior year 109.0%, resulting in an operating income decline of $995,000 from the prior year loss of $992,000. Other costs and expenses declined 1.2%, or approximately $47,000, while related revenue declined $359,000. General and administrative expense increased $149,000 over the prior year. Interest expense increased $1,560,000 to $2,055,000 as a result of additional interest from the new borrowings related to the merger transactions described in Note 1 to the financial statements. For the nine months ended September 30, 1997, occupied room nights declined 8.2% from the prior year. The 5.4% improvement in guest spending per occupied room somewhat mitigated the decline in occupancy, yielding a decline in revenues of 3.2%. As a percentage of revenues, costs and operating expenses rose from 91.1% to 96.5%. Income before income taxes declined $3,975,000, reflecting the impact of the above items, related lost economies of scale relative to operating income margin and the impact of the minimum wage hike. FINANCIAL CONDITION AND LIQUIDITY As more fully discussed in Note 1 to the financial statements, on June 23, 1997 all the stock of the Company and its parent Golf Hosts, Inc. was acquired by previously unrelated parties in a transaction financed by new debt obligations of the Company. These transactions resulted in the termination of the Company's accounts receivable line of credit, which will negatively impact the Company's ability to meet its cash needs during the latter part of the year. Due to the seasonal nature of the Company's business, the Company expects cash flow deficits from operations during the fourth quarter of 1997. The Company has evaluated the cash needs with respect to these deficits and scheduled capital expenditures and has reason to believe that cash flow generated from operations during the first half of the year coupled with available capital expenditure financing will not be sufficient to meet the expected cash needs during the second half of 1997. Management recognizes that the Company must generate additional cash resources to ensure the continuation of operations. To achieve this, the Company may obtain up to $2,500,000 from a Westin annual minimum cash flow guarantee and may also enter into an unsecured capital expenditure sharing agreement with Westin whereby Westin will fund 50% of capital expenditures incurred subsequent to the June 23, 1997 merger transaction in excess of $6,000,000, plus capital reserve requirements as defined. In addition, the Company is negotiating with its primary lender to release Innisbrook's accounts receivable from its collateral and the Company will then negotiate an accounts receivable line of credit with a major financial institution. The Company anticipates these efforts will yield adequate cash flow for the remainder of 1997. The Company's working capital position (exclusive of Assets Held for Sale) at September 30, 1997 was $2,421,000 as compared with $445,000 at September 30, 1996 and a deficit of $1,278,000 at December 31, 1996. The Company typically experiences seasonal fluctuations in its net working capital position without impairing its ability to pay trade creditors in a timely manner and satisfy its financial obligations in an orderly fashion. As a result of the change in control previously discussed, the Company's former lenders were replaced with a single lender on June 23, 1997. Reference is made in the notes to financial statements regarding the new lender. While the Company has a substantial retained deficit, based on existing cash levels, expected operating levels for the balance of the year and the existence of credit facilities with its parent, the Company assesses its liquidity as satisfactory. Page 10 11 PART II - OTHER INFORMATION Item 1. Legal Proceedings Registrant is not currently involved in material legal proceedings other than ordinary routine litigation incidental to its business. Item 2. Changes in Securities Not applicable. Item 3. Defaults Upon Senior Securities Not applicable. Item 4. Submission of Matters to a Vote of Security Holders Not applicable. Item 5. Other Information Pursuant to an agreement with the SEC staff, included in this 10-Q/A filing are unaudited financial statements of the Innisbrook Rental Pool Lease Operation and the Tamarron Rental Pool Lease Operation for the quarter and nine months ended September 30, 1997. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 27 Financial Data Schedule (for SEC use only) (b) Reports on Form 8-K Form 8-K, reporting changes in control of registrant and change in registrant's certifying accountant, was filed with the SEC on July 8, 1997. Page 11 12 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. GOLF HOST RESORTS, INC. Date: July 10, 1998 By: /a/ Merrick Kleeman ------------------------- --------------------------------- Merrick Kleeman President Date: June 29, 1998 By: /s/ Richard L. Akin ------------------------- --------------------------------- Richard L. Akin Vice President and Treasurer Page 12 13 RENTAL POOL LEASE OPERATIONS The following unaudited financial statements of the Innisbrook Rental Pool Lease Operation and the Tamarron Rental Pool Lease Operation (the Rental Pools) are for the quarter and nine months ended September 30, 1997. The operations of the Rental Pools are tied closely to that of Golf Host Resorts, Inc. (the Company), and provide for distribution of a percentage of the Company's room revenues, as defined in the Rental Pool Master Lease Agreements, to participating condominium owners (Participants). The operations of the Rental Pools are more fully discussed in Form 10-K, for the fiscal year ended December 31, 1996 (File No. 2-64309). As discussed in Note 1 to the Golf Host Resorts, Inc. financial statement, on June 23, 1997, TM Golf Hosts, Inc. ("TMGHI") acquired all of the outstanding stock of Golf Hosts, Inc. ("GHI") and the 20% of the Company's stock not held by GHI. Concurrently, TMGHI and GHI merged with the legal survivor being GHI. Concurrently with the merger, the Company entered into an agreement to terminate the existing management agreement, effective July 15, 1997, with the current operations manager for Innisbrook for a $600,000 termination fee. A new property manager was engaged effective on that date. Neither the change in ownership nor the change in managers at Innisbrook is expected to have an adverse affect on the participants in the Rental Pools. Page 13 14 INNISBROOK RENTAL POOL LEASE OPERATION BALANCE SHEETS SEPTEMBER 30, 1997 AND 1996 DISTRIBUTION FUND
1997 1996 -------------- -------------- ASSETS RECEIVABLE FROM GOLF HOST RESORTS, INC FOR DISTRIBUTION - FULLY SECURED $ 1,140,133 $ 1,160,240 INTEREST RECEIVABLE FROM MAINTENANCE ESCROW FUND 30,326 19,021 -------------- -------------- $ 1,170,459 $ 1,179,261 ============== ============== LIABILITIES AND PARTICIPANTS' FUND BALANCES DUE TO PARTICIPANTS FOR DISTRIBUTION $ 778,608 $ 808,871 DUE TO MAINTENANCE ESCROW FUND 191,096 245,640 RESERVE FOR ESTIMATED LIFE-SAFETY REIMBURSEMENT 200,755 124,750 PARTICIPANTS' FUND BALANCES -- -- -------------- -------------- $ 1,170,459 $ 1,179,261 ============== ============== MAINTENANCE ESCROW FUND ASSETS CASH AND CASH EQUIVALENTS $ 1,888,704 $ 1,467,308 INVENTORIES -- 251 RECEIVABLE FROM DISTRIBUTION FUND 191,096 245,640 INTEREST RECEIVABLE 33,383 20,216 -------------- -------------- $ 2,113,183 $ 1,733,415 ============== ============== LIABILITIES AND PARTICIPANTS' FUND BALANCES ACCOUNTS PAYABLE $ 40,453 $ 34,792 INTEREST PAYABLE TO DISTRIBUTION FUND 30,326 19,021 CARPET CARE RESERVE 31,651 38,720 PARTICIPANTS' FUND BALANCES 2,010,753 1,640,882 -------------- -------------- $ 2,113,183 $ 1,733,415 ============== ==============
These balance sheets were prepared from the books and records of the Rental Pool without audit and, in the opinion of management, include all adjustments which are necessary for a fair presentation. Page 14 15 INNISBROOK RENTAL POOL LEASE OPERATION STATEMENTS OF OPERATIONS FOR THE QUARTERS AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 DISTRIBUTION FUND
Current Quarter Year-to-Date -------------------------- ---------------------------- 1997 1996 1997 1996 ---------- ---------- ----------- ----------- GROSS REVENUES $1,734,022 $2,090,975 $11,377,240 $11,710,587 ---------- ---------- ----------- ----------- REDUCTIONS: Agents' commissions 31,266 4,685 188,342 207,955 Audit fees 3,000 3,000 9,100 9,100 ---------- ---------- ----------- ----------- 34,266 7,685 197,442 217,055 ---------- ---------- ----------- ----------- ADJUSTED GROSS REVENUES 1,699,756 2,083,290 11,179,798 11,493,532 MANAGEMENT FEE (798,885) (979,146) (5,254,504) (5,401,960) ---------- ---------- ----------- ----------- GROSS INCOME DISTRIBUTION 900,871 1,104,144 5,925,294 6,091,572 ADJUSTMENTS TO GROSS INCOME DISTRIBUTION: Corporate complimentary occupany fees 5,202 1,451 13,696 6,592 Occupancy fees (254,792) (327,518) (1,175,044) (1,281,474) Advisory Committee expenses (25,230) (20,447) (79,543) (66,525) Life-safety reimbursement 28,807 (79,456) (200,755) (124,750) ---------- ---------- ----------- ----------- NET INCOME DISTRIBUTION 654,858 678,174 4,483,648 4,625,415 ADJUSTMENTS TO NET INCOME DISTRIBUTION: Occupancy fees 254,792 327,518 1,175,044 1,281,474 Hospitality suite fees 2,217 2,672 7,298 9,853 Greens fees 10,276 9,186 66,956 66,239 Additional participation credits 17,235 17,940 52,555 54,325 ---------- ---------- ----------- ----------- AMOUNT AVAILABLE FOR DISTRIBUTION TO PARTICIPANTS $ 939,378 $1,035,490 $ 5,785,501 $ 6,037,306 ========== ========== =========== =========== Average daily distribution $ 10.94 $ 11.83 $ 23.91 $ 24.47 Average room rate $ 85.91 $ 78.14 $ 118.74 $ 111.40 Occupied room nights 20,185 26,761 95,818 105,119 Available room nights 85,904 87,543 241,952 246,679 Occupancy percentage 23.5% 30.6% 39.6% 42.6% Average number of available units 934 952 886 900
These statements were prepared from the books and records of the Rental Pool without audit and, in the opinion of management, include all adjustments which are necessary for a fair presentation. Page 15 16 INNISBROOK RENTAL POOL OPERATION STATEMENTS OF CHANGES IN PARTICIPANTS' FUND BALANCES FOR THE QUARTERS AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 DISTRIBUTION FUND
Current Quarter Year-to-Date -------------------------- ------------------------- 1997 1996 1997 1996 ---------- ---------- --------- --------- BALANCE, beginning of period $ - $ - $ - $ - ADDITIONS: Amounts available for distribution before life-safety reimbursement 910,571 1,114,946 5,986,256 6,162,056 Interest received or receivable from Maintenance Escrow Fund 30,326 19,021 81,910 60,152 REDUCTIONS: Amount withheld for Maintenance Escrow Fund (191,096) (245,640) (881,290) (961,112) Amounts held in reserve for estimated life-safety reimbursement 28,807 (79,456) (200,755) (124,750) Amounts accrued or paid to participants (778,608) (808,871) (4,986,121) (5,136,346) ---------- ---------- ---------- ---------- BALANCE, end of period $ - $ - $ - $ - ========== ========== ========== ========== MAINTENANCE ESCROW FUND BALANCE, beginning of period $2,417,925 $1,607,083 $1,734,415 $1,141,259 ADDITIONS: Amounts withheld from occupancy fees 191,096 245,640 881,290 961,112 Interest earned 30,326 19,021 81,910 60,152 Charges to participants to establish or restore escrow balances 164,492 319,098 994,837 838,563 REDUCTIONS: Maintenance charges (722,489) (493,740) (1,498,557) (1,210,085) Carpet care reserve deposit (5,098) (6,553) (28,092) (25,638) Interest accrued or paid to Distribution Fund (30,326) (19,021) (81,910) (60,152) Refunds to participants as prescribed by Master Lease Agreement (35,173) (30,646) (73,140) (64,329) ---------- ---------- ---------- ---------- BALANCE, end of period $2,010,753 $1,640,882 $2,010,753 $1,640,882 ========== ========== ========== ==========
These statements were prepared from the books and records of the Rental Pool without audit and, in the opinion of management, include all adjustments which are necessary for a fair presentation. Page 16 17 TAMARRON RENTAL POOL LEASE OPERATION BALANCE SHEETS SEPTEMBER 30, 1997 AND 1996 DISTRIBUTION FUND
1997 1996 -------------- -------------- ASSETS CASH $ 1,000 $ 1,000 RECEIVABLE FROM GOLF HOST RESORTS, INC FOR DISTRIBUTION 771,434 837,169 INTEREST RECEIVABLE FROM MAINTENANCE ESCROW FUND 203 481 -------------- -------------- $ 772,637 $ 838,650 ============== ============== LIABILITIES AND PARTICIPANTS' FUND BALANCES DUE TO PARTICIPANTS FOR DISTRIBUTION $ 666,146 $ 751,101 DUE TO MAINTENANCE ESCROW FUND 106,491 87,549 PARTICIPANTS' FUND BALANCES -- -- -------------- -------------- $ 772,637 $ 838,650 ============== ============== MAINTENANCE ESCROW FUND ASSETS CASH AND CASH EQUIVALENTS 21,598 75,509 DUE FROM DISTRIBUTION FUND 106,491 87,549 INTEREST RECEIVABLE -- -- INVENTORY: Linen 89,480 98,871 Materials and supplies 13,643 7,229 DEPOSITS -- 86,077 -------------- -------------- $ 231,212 $ 355,235 ============== ============== LIABILITIES AND PARTICIPANTS' FUND BALANCES ACCOUNTS PAYABLE $ 4,150 $ 5,033 INTEREST PAYABLE TO DISTRIBUTION FUND 203 481 PARTICIPANTS' FUND BALANCES 226,859 349,721 -------------- -------------- $ 231,212 $ 355,235 ============== ==============
These balance sheets were prepared from the books and records of the Rental Pool without audit and, in the opinion of management, include all adjustments which are necessary for a fair presentation. Page 17 18 TAMARRON RENTAL POOL LEASE OPERATION STATEMENTS OF OPERATIONS FOR THE QUARTERS AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 DISTRIBUTION FUND
Current Quarter Year-to-Date -------------------------- -------------------------- 1997 1996 1997 1996 ---------- ---------- ---------- ---------- GROSS REVENUES $1,711,566 $1,887,216 $2,992,542 $3,142,727 ---------- ---------- ---------- ---------- REDUCTIONS: Sales and marketing expenses 136,925 160,413 239,405 267,131 Agents' commissions 27,916 50,520 98,381 102,880 Audit fees 2,595 2,601 7,795 7,803 ---------- ---------- ---------- ---------- 167,436 213,534 345,581 377,814 ---------- ---------- ---------- ---------- ADJUSTED GROSS REVENUES 1,544,130 1,673,682 2,646,961 2,764,913 MANAGEMENT FEE (772,065) (836,841) (1,323,480) (1,382,457) ---------- ---------- ---------- ---------- GROSS INCOME DISTRIBUTION 772,065 836,841 1,323,481 1,382,456 ADJUSTMENTS TO GROSS INCOME DISTRIBUTION: Corporate complimentary occupancy fees 1,466 1,989 2,952 3,587 Occupancy fees (140,935) (131,790) (302,638) (255,948) Designated items (35,022) (20,653) (88,954) (54,312) Advisory Committee expenses (2,097) (1,661) (9,816) (7,424) ---------- ---------- ---------- ---------- POOLED INCOME 595,477 684,726 925,025 1,068,359 ADJUSTMENTS TO POOLED INCOME: Hospitality suite fees - - - 53 Occupancy fees 140,935 131,790 302,638 255,948 ---------- ---------- ---------- ---------- NET INCOME DISTRIBUTION $ 736,412 $ 816,516 $1,227,663 $1,324,360 ========== ========== ========== ========== Average daily distribution $ 29.36 $ 32.01 $ 15.84 $ 17.17 Average room rate $ 123.03 $ 114.85 $ 99.45 $ 98.15 Room nights 13,912 16,432 30,092 32,019 Occupancy percentage 55.5% 64.4% 38.8% 41.5% Average number of available units 273 277 284 282 Number of units in Rental Pool at end of period 293 302 - -
These statements were prepared from the books and records of the Rental Pool without audit and, in the opinion of management, include all adjustments which are necessary for a fair presentation. Page 18 19 TAMARRON RENTAL POOL LEASE OPERATION STATEMENTS OF CHANGES IN PARTICIPANTS' FUND BALANCES FOR THE QUARTERS AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 DISTRIBUTION FUND
Current Quarter Year-to-Date ------------------------- ------------------------ 1997 1996 1997 1996 ---------- ---------- ---------- ---------- BALANCE, beginning of period $ - $ - $ - $ - ADDITIONS: Amounts available for distribution 736,412 816,516 1,227,663 1,324,360 Interest received or receivable from Maintenance Escrow Fund 204 480 589 2,807 REDUCTIONS: Amounts withheld for Maintenance Escrow Fund (70,470) (65,895) (151,325) (127,975) Amounts accrued or paid to participants (666,146) (751,101) (1,076,927) (1,199,192) ---------- ---------- ---------- ---------- BALANCE, end of period $ - $ - $ - $ - ========== ========== ========== ========== MAINTENANCE ESCROW FUND BALANCE, beginning of period $ 206,837 $ 336,079 $ 197,548 $ 328,336 ADDITIONS: Amounts withheld from occupancy fees 70,470 65,895 151,325 127,975 Interest earned 204 480 589 2,807 Reimbursement of designated items 35,022 20,653 88,954 54,312 Charges to participants to establish or restore escrow balances 7,564 85,132 23,859 227,764 REDUCTIONS: Maintenance and inventory charges (40,840) (30,995) (93,068) (119,617) Refurbishing charges (14,206) (98,167) (38,875) (191,716) Interest accrued or paid to Distribution Fund (204) (480) (589) (2,807) Designated items (35,022) (20,653) (88,953) (54,313) Refunds to participants as prescribed by Master Lease Agreement (2,966) (8,223) (13,931) (23,020) ---------- ---------- ---------- ---------- BALANCE, end of period $ 226,859 $ 349,721 $ 226,859 $ 349,721 ========== ========== ========== ==========
These statements were repared from the books and records of the Rental Pool without audit and, in the opinion of management, include all adjustments which are necessary for a fair presentation. Page 19 EX-27 2 FINANCIAL DATA SCHEDULE
5 1 U.S. DOLLARS 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 1 919,832 0 2,731,479 (11,035) 2,870,337 18,191,547 57,779,200 (21,822,381) 89,120,235 9,494,871 76,673,914 0 4,577,000 5,000 (16,559,924) 89,120,235 11,532,206 38,436,125 3,434,178 37,300,089 0 78,100 3,160,718 (2,024,682) (867,481) (1,157,201) 0 (288,600) 0 (1,638,035) (327.61) (327.61)
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