-----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, VbSOenATrtcKuHdYGLTrpzQlBG870hNW3JRpPJwfUIcS18wyw1mRo0XfIFm7lrf7 /4PEHYwmyGh76fnjglt4IA== 0000950144-98-008421.txt : 19980716 0000950144-98-008421.hdr.sgml : 19980716 ACCESSION NUMBER: 0000950144-98-008421 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 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: 98666655 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 June 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 18 2 GOLF HOST RESORTS, INC. (A WHOLLY OWNED SUBSIDIARY OF GOLF HOSTS, INC.) BALANCE SHEETS ASSETS (Substantially all pledged)
JUNE 30, DECEMBER 31, 1997 1996 ------------ ----------- (unaudited) CURRENT ASSETS: Cash $ 2,974,688 $ 488,685 Accounts receivable, net 3,560,495 4,380,108 Notes receivable -- 163,942 Inventories and supplies 2,989,301 5,123,966 Prepaid expenses and other assets 463,335 956,054 Intercompany receivables 4,705,194 724,312 ----------- ----------- 14,693,013 11,837,067 Assets held for sale 6,575,000 -- ----------- ----------- Total current assets 21,268,013 11,837,067 INTANGIBLES, net 34,617,494 -- PROPERTY AND EQUIPMENT, at cost, less accumulated depreciation and amortization 34,851,692 40,038,322 OTHER ASSETS 579,136 238,627 LONG-TERM RECEIVABLES -- 1,021,178 ----------- ----------- $91,316,335 $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
JUNE 30, DECEMBER 31, 1997 1996 ----------- ----------- (unaudited) CURRENT LIABILITIES: Accounts payable $ 1,669,431 2,258,702 Accrued expenses 5,039,693 4,577,981 Deposits and prepaid fees 1,641,238 2,755,297 Notes payable -- 734,429 Maturing long-term obligations -- 2,788,764 ----------- ----------- Total current liabilities 8,350,362 13,115,173 LONG-TERM OBLIGATIONS 75,600,166 17,777,544 DEFERRED INCOME TAXES 16,498,514 4,951,895 LONG-TERM CONTINGENCY -- 2,221,938 ----------- ----------- Total liabilities 100,449,042 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) earnings (157,707) 8,157,197 ----------- ----------- Total shareholders' (deficit) equity (9,132,707) 15,068,644 ----------- ----------- Total liabilities and shareholders' (deficit) equity $91,316,335 $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)
Seven day 84 day Quarter Seven day 174 day Six months period ended period ended ended period ended period ended ended June 30, 1997 June 23, 1997 June 30, 1996 June 30, 1997 June 23, 1997 June 30, 1996 ------------- ------------- ------------- ------------- ------------- ------------ REVENUES: Resort facilities $ 346,283 $ 4,106,527 $ 4,174,702 $ 346,283 $10,775,626 $10,875,123 Food and beverage 275,690 3,485,895 3,746,335 275,690 8,106,385 8,573,951 Golf 236,227 3,745,237 3,665,311 236,227 9,347,282 9,519,704 Other 122,733 1,442,607 1,861,398 122,733 3,340,715 4,186,024 Real estate activities - - - - 180,000 (14,288) ---------- ----------- ----------- ---------- ----------- ----------- 980,933 12,780,266 13,447,746 980,933 31,750,008 33,140,514 ---------- ----------- ----------- ---------- ----------- ----------- COSTS AND OPERATING EXPENSES: Resort facilities 308,252 3,805,167 3,698,205 308,252 9,083,194 8,913,047 Food and beverage 203,215 2,475,719 2,524,660 203,215 5,591,373 5,523,773 Golf 112,614 1,538,916 1,554,343 112,614 3,247,628 3,286,239 Other 347,802 3,707,736 4,250,767 347,802 7,672,813 8,646,370 General and administrative 93,495 1,221,000 832,586 93,495 2,374,385 1,927,001 Real estate activities - 1,989 - - 90,618 477 ---------- ----------- ----------- ---------- ----------- ----------- 1,065,378 12,750,527 12,860,561 1,065,378 28,060,011 28,296,907 ---------- ----------- ----------- ---------- ----------- ----------- OPERATING (LOSS) INCOME (84,445) 29,739 587,185 (84,445) 3,689,997 4,843,607 INTEREST, NET 160,000 480,143 481,523 160,000 945,481 995,720 ---------- ----------- ----------- ---------- ----------- ----------- (LOSS) INCOME BEFORE INCOME TAXES (244,445) (450,404) 105,662 (244,445) 2,744,516 3,847,887 PARENT INCOME TAX CHARGE (BENEFIT) (91,667) (234,400) 20,500 (91,667) 967,800 1,424,400 ---------- ----------- ----------- ---------- ----------- ----------- (LOSS) INCOME BEFORE EXTRAORDINARY ITEMS (152,778) (216,004) 85,162 (152,778) 1,776,716 2,423,487 LOSS ON EARLY EXTINGUISHMENT OF LONG TERM DEBT (NET OF TAXES OF $155,400) - (288,600) - - (288,600) - ---------- ----------- ----------- ---------- ----------- ----------- NET (LOSS) INCOME (152,778) (504,604) 85,162 (152,778) 1,488,116 2,423,487 DIVIDEND REQUIREMENTS ON PREFERRED STOCK 4,929 59,149 64,078 4,929 123,227 128,156 ---------- ----------- ----------- ---------- ----------- ----------- NET CHANGE IN EARNINGS (DEFICIT) $ (157,707) $ (563,753) $ 21,084 $ (157,707) $ 1,364,889 $ 2,295,331 ========== =========== =========== ========== =========== =========== (LOSS) EARNINGS PER COMMON SHARE $ (31.54) $ (112.75) $ 4.22 $ (31.54) $ 272.97 $ 459.07 ========== =========== =========== ========== =========== ===========
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 - - - - - (157,707) (157,707) ----- ------ --------- ---------- ------------ ----------- ----------- Balance, June 30, 1997 5,000 $5,000 4,577,000 $4,577,000 $(13,557,000) $ (157,707) $(9,132,707) ===== ====== ========= ========== ============ =========== ===========
Page 5 6 GOLF HOST RESORTS, INC. (A WHOLLY OWNED SUBSIDIARY OF GOLF HOSTS, INC.) STATEMENTS OF CASH FLOWS
Seven day 174 day Six months period ended period ended ended June 30, June 23, June 30, 1997 1997 1996 ------------ -------------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income $ (152,778) $ 1,488,116 $ 2,423,487 Noncash items included in income: Provision for bad debts -- 89,609 -- Depreciation and amortization 7,480 1,282,510 1,240,200 Decrease in deferred tax (91,667) -- -- Changes in operating working capital 236,965 (2,059,667) (107,551) ------------ ------------ ----------- Cash provided by operations -- 800,568 3,556,136 ------------ ------------ ----------- CASH FLOWS FROM INVESTING ACTIVITIES: (Decreases) increases in other assets -- 62,302 -- Purchases of property and equipment -- (1,517,431) (1,142,757) Net recovery of cost of property and equipment sold or retired -- -- 12,190 Increase in assets held for sale -- -- -- Additions to notes receivable -- -- (17,517) Reduction in notes receivable -- 1,185,120 550,800 ------------ ------------ ----------- Cash (used for) investing -- (270,009) (597,284) ------------ ------------ ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Net change in notes payable -- -- (1,285,673) Increases in long-term obligations -- -- 454,012 Decreases in long-term obligations -- -- (917,198) Net proceeds from merger transactions -- -- -- Increases in long-term intercompany -- -- 871,034 Increases in long-term contingency -- -- 70,476 Additional borrowings -- 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 -- 1,955,444 (807,349) ------------ ------------ ----------- NET (DECREASE) INCREASE IN CASH -- 2,486,003 2,151,503 CASH, BEGINNING OF PERIOD 2,974,688 488,685 312,603 ------------ ------------ ----------- CASH, END OF PERIOD $ 2,974,688 $ 2,974,688 $ 2,464,106 ============ ============ =========== NONCASH FINANCING AND INVESTING ACTIVITIES: Preferred stock dividend liability to Golf Hosts, Inc. satisfied through the intercompany account $ 4,929 $ 123,227 $ 128,156 The Company transferred its investment in GTA to GHI $ 8,975,000 $ -- $ -- OTHER INFORMATION Interest paid in cash $ -- $ 965,117 $ 1,020,860 Income taxes paid in cash $ -- $ 118,090 $ 266,316
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 JUNE 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 position. Certain of the Company's operations are seasonal in nature and, therefore, interim results from operations are not necessarily indicitive of a full year. The financial statements as of and for the period from the merger to June 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 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. (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 loss from operations subsequent to June 23, 1997, related to these assets held for sale and the interest expense on the allocated debt, have been excluded from the current year's consolidated statement of earnings. Tamarron generated a net loss in the current period. The impact of the sale will have a positive impact on earnings and liquidity. Page 7 8 (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 in certain revenue of the Innisbrook property securing the loan above certain predefined levels.
June 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 $ 70,600,166 $ - 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) ------------- -------------- 75,600,166 20,566,308 Less-current maturities - (2,788,764) $ 75,600,166 $ 17,777,544 ============= =============
(4) CHANGE IN INNISBROOK PROPERTY MANAGER Concurrently 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 8 9 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 periods prior to and subsequent to the June 23, 1997 merger transaction, described in Note 1 to the financial statements, are combined. For the current quarter, occupied room nights fell 2.1% from the prior year. On a divisional basis, occupied room nights at Innisbrook rose 2.3%, while Tamarron's room nights declined 20.1%. The increase in Innisbrook's occupancy resulted primarily from the social segment. The decline in Tamarron's room nights occurred mostly in the conference segment. Revenues from resort operations increased 2.3% for the quarter. The revenue per occupied room night totaled $332.50, a 4.5% increase over the prior year's $318.15. Innisbrook's revenue per occupied room night increased 3.2% to $348.47, while Tamarron's rose 4.2% to $248.64. The comparable prior year amounts were $337.58 and $238.53, respectively. The improvement in guest spending at both resorts offset the impact of the lower occupancy at Tamarron, yielding a $313,000 increase in resort operations revenue. Consistent with the prior year, there was no real estate revenue generated during the quarter. Costs and operating expenses increased to 100.4% of revenues from 95.6%. As a result, operating income declined $642,000 from the prior year to a loss of $55,000. Resort facilities expense increased disproportionately to the occupancy change as a result of an approximately $190,000 adjustment to related inventories. Other costs and operating expenses decreased 4.6%, or approximately $195,000. General and administrative expense increased $482,000 over the prior year. Included in this increase are an additional $l80,000 in costs relative to the change in control of the Company discussed in the notes to financial statements and the above-mentioned management transition, and an increase of $135,000 in bad debt expense. Interest expense increased $159,000 to $640,000, primarily as a result of additional interest from the new borrowings as a result of the merger transactions described in Note 1 to the financial statements. In addition, repayment of previous indebtedness of the Company resulted in an extraordinary loss on early retirement of debt of approximately $444,000, presented net of a related tax benefit of $155,000 primarily relating to the write-off of unamortized debt discounts and related deferred expenses. For the six months ended June 30, 1997, occupied room nights declined 2.3% from the prior year level. Improved levels of spending per occupied room, up 1.1%, served to somewhat mitigate the decline in occupancy, yielding a slight decline in revenues of 1.2%. As a percentage of revenues, cost and operating expenses rose from 85.4% to 89.0%. The reduction in income before income taxes of $1,348,000 reflects the impact of the above items coupled with the first quarter reduction in occupancy, 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 third and fourth quarters 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 at June 30, 1997 (exclusive of Assets Held for Sale) was $6,343,000, compared with $1,841,000 at June 30, 1996 and a deficit of $1,278,000 at December 31, l996. 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 9 10 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 six months ended June 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 10 11 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 /s/ Merrick Kleeman ------------------------ -------------------------- Merrick Kleeman President Date: June 29, 1998 By /s/ Richard L. Akin ------------------------ -------------------------- Richard L. Akin Vice President and Treasurer Page 11 12 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 six months ended June 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 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 12 13 INNISBROOK RENTAL POOL LEASE OPERATION BALANCE SHEETS JUNE 30, 1997 AND 1996 DISTRIBUTION FUND
1997 1996 ----------- ---------- ASSETS RECEIVABLE FROM GOLF HOST RESORTS, INC. FOR DISTRIBUTION - FULLY SECURED $1,982,583 $1,808,415 INTEREST RECEIVABLE FROM MAINTENANCE ESCROW FUND 29,522 16,784 ---------- ---------- $2,012.105 $1,825,199 ========== ========== LIABILITIES AND PARTICIPANTS' FUND BALANCES DUE TO PARTICIPANTS FOR DISTRIBUTION $1,464,014 $1,469,054 DUE TO MAINTENANCE ESCROW FUND 318,529 310,851 RESERVE FOR ESTIMATED LIFE-SAFETY REIMBURSEMENT 229,562 45,294 PARTICIPANTS' FUND BALANCES -- -- ---------- ---------- $2,012,105 $1,825,199 ========== ========== MAINTENANCE ESCROW FUND ASSETS CASH AND CASH EQUIVALENTS $2,134,454 $1,345,193 INVENTORIES -- 251 RECEIVABLE FROM DISTRIBUTION FUND 318,529 310,851 INTEREST RECEIVABLE 29,135 13,260 ---------- ---------- $2,482,118 $1,669,555 ========== ========== LIABILITIES AND PARTICIPANTS' FUND BALANCES ACCOUNTS PAYABLE $ 378 $ 268 INTEREST PAYABLE TO DISTRIBUTION FUND 29,522 16,784 CARPET CARE RESERVE 34,293 45,420 PARTICIPANTS' FUND BALANCES 2,417,925 1,607,083 ---------- ---------- $2,482,118 $1,669,555 ========== ==========
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 13 14 INNISBROOK RENTAL POOL LEASE OPERATION STATEMENTS OF OPERATIONS FOR THE QUARTERS AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996 DISTRIBUTION FUND
Current Quarter Year-to-Date ------------------------------ ------------------------------ 1997 1996 1997 1996 ----------- ----------- ----------- ----------- GROSS REVENUES $ 3,761,563 $ 3,453,553 $ 9,643,218 $ 9,619,612 ----------- ----------- ----------- ----------- REDUCTIONS: Agents' commissions 54,459 84,723 157,076 203,270 Audit fees 3,000 3,000 6,100 6,100 ----------- ----------- ----------- ----------- 57,459 87,723 163,176 209,370 ----------- ----------- ----------- ----------- ADJUSTED GROSS REVENUES 3,704,104 3,365,830 9,480,042 9,410,242 MANAGEMENT FEE (1,740,929) (1,581,940) (4,455,619) (4,422,814) ----------- ----------- ----------- ----------- GROSS INCOME DISTRIBUTION 1,963,175 1,783,890 5,024,423 4,987,428 ADJUSTMENTS TO GROSS INCOME DISTRIBUTION: Corporate complimentary occupany fees 4,574 2,135 8,494 5,141 Occupancy fees (424,702) (414,465) (920,252) (953,956) Advisory Committee expenses (25,601) (23,838) (54,313) (46,078) Life-safety reimbursement (47,596) (39,559) (229,562) (45,294) ----------- ----------- ----------- ----------- NET INCOME DISTRIBUTION 1,469,850 1,308,163 3,828,790 3,947,241 ADJUSTMENTS TO NET INCOME DISTRIBUTION: Occupancy fees 424,702 414,465 920,252 953,956 Hospitality suite fees 2,059 2,852 5,081 7,181 Greens fees 20,890 19,546 56,680 57,053 Additional participation credit 17,485 18,095 35,320 36,385 ----------- ----------- ----------- ----------- AMOUNT AVAILABLE FOR DISTRIBUTION TO PARTICIPANTS $ 1,934,986 $ 1,763,121 $ 4,846,123 $ 5,001,816 =========== =========== =========== =========== Average daily distribution $ 23.59 $ 21.13 $ 31.06 $ 31.43 Average room rate $ 108.20 $ 101.63 $ 127.50 $ 122.76 Occupied room nights 34,766 33,980 75,633 78,358 Available room nights 80,026 83,444 156,048 159,136 Occupancy percentage 42.4% 40.7% 48.5% 49.2% Average number of available units 901 917 862 874
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 14 15 INNISBROOK RENTAL POOL OPERATION STATEMENTS OF CHANGES IN PARTICIPANTS' FUND BALANCES FOR THE QUARTERS AND SIX MONTHS ENDED JUNE 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 1,800,617 1,802,680 4,893,720 5,047,110 Interest received or receivable from Maintenance Escrow Fund 29,522 16,784 51,584 41,131 REDUCTIONS: Amount withheld for Maintenance Escrow Fund (318,529) (310,851) (690,194) (715,472) Amounts held in reserve for estimated life-safety reimbursement (47,596) (39,559) (229,562) (45,294) Amounts accrued or paid to participants (1,464,014) (1,469,054) (4,025,548) (4,327,475) ----------- ----------- ----------- ----------- BALANCE, end of period $ -- $ -- $ -- $ -- =========== =========== =========== =========== MAINTENANCE ESCROW FUND BALANCE, beginning of period $ 2,329,421 $ 1,496,895 $ 1,734,415 1,141,259 ADDITIONS: Amounts withheld from occupancy fees 318,529 310,851 690,194 715,472 Interest earned 29,522 16,784 51,584 41,131 Charges to participants to establish or restore escrow balances 377,022 279,991 830,345 519,465 REDUCTIONS: Maintenance charges (564,468) (449,856) (776,068) (716,345) Carpet care reserve deposit (8,497) (8,293) (22,994) (19,085) Interest accrued or paid to Distribution Fund (29,522) (16,784) (51,584) (41,131) Refunds to participants as prescribed by Master Lease Agreement (34,082) (22,505) (37,967) (33,683) ----------- ----------- ----------- ----------- BALANCE, end of period $ 2,417,925 $ 1,607,083 $ 2,417,925 $ 1,607,083 =========== =========== =========== ===========
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 TAMARRON RENTAL POOL LEASE OPERATION BALANCE SHEETS JUNE 30, 1997 AND 1996 DISTRIBUTION FUND
1997 1996 ---------- ---------- ASSETS CASH $ 1,000 $ 1,000 RECEIVABLE FROM GOLF HOST RESORTS, INC FOR DISTRIBUTION 256,200 317,655 INTEREST RECEIVABLE FROM MAINTENANCE ESCROW FUND 132 1,147 ---------- ---------- $ 257,332 $ 319,802 ========== ========== LIABILITIES AND PARTICIPANTS' FUND BALANCES DUE TO PARTICIPANTS FOR DISTRIBUTION $ 190,016 $ 264,791 DUE TO MAINTENANCE ESCROW FUND 67,316 55,011 PARTICIPANTS' FUND BALANCES -- -- ---------- ---------- $ 257,332 $ 319,802 ========== ========== MAINTENANCE ESCROW FUND ASSETS CASH AND CASH EQUIVALENTS $ 13,301 $ 149,252 DUE FROM DISTRIBUTION FUND 67,316 55,011 INTEREST RECEIVABLE -- 934 INVENTORY: Linen 114,241 114,237 Materials and supplies 17,224 8,285 DEPOSITS -- 16,000 ---------- ---------- $ 212,082 $ 343,719 ========== ========== LIABILITIES AND PARTICIPANTS' FUND BALANCES ACCOUNTS PAYABLE $ 5,113 $ 6,493 INTEREST PAYABLE TO DISTRIBUTION FUND 132 1,147 PARTICIPANTS' FUND BALANCES 206,837 336,079 ---------- ---------- $ 212,082 $ 343,719 ========== ==========
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 STATEMENTS OF OPERATIONS FOR THE QUARTERS AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996 DISTRIBUTION FUND
Current Quarter Year-to-Date ----------------------- --------------------------- 1997 1996 1997 1996 --------- --------- ----------- ----------- GROSS REVENUES $ 579,286 $ 721,149 $ 1,280,976 $ 1,255,511 --------- --------- ----------- ----------- DEDUCTIONS: Agents' commissions 12,418 15,781 70,465 52,360 Sales and marketing expenses 46,345 61,297 102,480 106,718 Audit fees 2,600 2,601 5,200 5,202 --------- --------- ----------- ----------- 61,363 79,679 178,145 164,280 --------- --------- ----------- ----------- ADJUSTED GROSS REVENUES 517,923 641,470 1,102,831 1,091,231 MANAGEMENT FEE (258,961) (320,735) (551,415) (545,616) --------- --------- ----------- ----------- GROSS INCOME DISTRIBUTION 258,962 320,735 551,416 545,615 ADJUSTMENTS TO GROSS INCOME DISTRIBUTION: Corporate complimentary occupancy fees 864 903 1,486 1,598 Occupancy fees (66,586) (67,475) (161,703) (124,158) Designated items (33,021) (20,273) (53,932) (33,659) Advisory Committee expenses (3,626) (3,983) (7,719) (5,763) --------- --------- ----------- ----------- POOLED INCOME 156,593 229,907 329,548 383,633 ADJUSTMENTS TO POOLED INCOME: Hospitality suite fees -- -- -- 53 Occupancy fees 66,586 67,475 161,703 124,158 --------- --------- ----------- ----------- NET INCOME DISTRIBUTION $ 223,179 $ 297,382 $ 491,251 $ 507,844 ========= ========= =========== =========== Average daily distribution $ 8.34 $ 11.38 $ 9.37 $ 9.83 Average room rate $ 87.49 $ 86.98 $ 79.17 $ 80.53 Room nights 6,621 8,288 16,180 15,587 Occupancy percentage 24.7% 31.7% 30.9% 30.l% Average number of available units 294 288 290 284 Number of units in Rental Pool at end of period 298 298 -- --
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 17 18 TAMARRON RENTAL POOL LEASE OPERATION STATEMENTS OF CHANGES IN PARTICIPANTS' FUND BALANCES FOR THE QUARTERS AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996 DISTRIBUTION FUND
Current Quarter Year-to-Date --------------------------- -------------------------- 1997 1996 1997 1996 ---------- ---------- ----------- --------- BALANCE, beginning of period $ -- $ -- $ -- $ -- ADDITIONS: Amounts available for distribution 223,179 297,382 491,251 507,844 Interest received or receivable from Maintenance Escrow Fund 132 1,147 385 2,327 REDUCTIONS: Amounts withheld for Maintenance Escrow Fund (33,295) (33,738) (80,855) (62,080) Amounts accrued or paid to participants (190,016) (264,791) (410,781) (448,091) --------- --------- --------- --------- BALANCE, end of period $ -- $ -- $ -- $ -- ========= ========= ========= ========= MAINTENANCE ESCROW FUND BALANCE, beginning of period $ 210,371 $ 254,070 $ 197,548 $ 328,336 ADDITIONS: Amounts withheld from occupancy fees 33,295 33,738 80,855 62,080 Interest earned 132 1,147 385 2,327 Reimbursement of designated items 33,021 20,273 53,932 33,659 Charges to participants to establish or restore escrow balances 4,209 125,948 16,295 142,632 REDUCTIONS: Maintenance and inventory charges (32,756) (51,905) (52,228) (88,622) Refurbishing charges (2,237) (17,804) (24,668) (93,549) Interest accrued or paid to Distribution Fund (132) (1,147) (385) (2,327) Designated items (33,021) (20,273) (53,932) (33,660) Refunds to participants as prescribed by Master Lease Agreement (6,045) (7,968) (10,965) (14,797) --------- --------- --------- --------- BALANCE, end of period $ 206,837 $ 336,079 $ 206,837 $ 336,079 ========= ========= ========= =========
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 EX-27.1 2 FINANCIAL DATA SCHEDULE
5 1 U.S. DOLLARS 6-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 1 2,974,688 0 4,484,822 (100,940) 2,989,301 21,268,013 71,331,156 (27,310,706) 91,316,335 8,350,362 75,600,166 0 4,577,000 5,000 (13,714,707) 91,316,335 10,910,270 32,730,941 3,305,874 28,060,011 0 89,609 1,105,481 2,500,071 876,133 1,623,938 0 (288,600) 0 1,207,182 241.43 241.43
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