1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) - June 26, 1997
FLORIDA PANTHERS HOLDINGS, INC.
-------------------------------
(Exact Name of Registrant as Specified in Charter)
Florida 0-21435 65-0676005
------- ------- ----------
(State or Other Jurisdiction (Commission (IRS Employer of
of Incorporation) File Number) Identification No.)
100 Northeast Third Avenue, Second Floor, Fort Lauderdale, FL 33301
- ------------------------------------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
(Registrant's Telephone Number, Including Area Code) (954) 768-1900
- ---------------------------------------------------------------------
Not Applicable
- --------------------------------------------------------------------------------
(Former Name or Former Address; if Changed Since Last Report)
Page 1 of ___ pages.
Exhibit Index at Page ___.
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Item 2. Acquisition or Disposition of Assets.
On March 20, 1997, Florida Panthers Holdings, Inc., a Florida corporation
(the "Company") entered into a Contribution and Exchange Agreement, as amended
and restated (the "Contribution and Exchange Agreement"), with Boca Raton Hotel
and Club Limited Partnership, a Florida limited partnership ("Boca
Partnership"), BRMC, L.P., a Delaware limited partnership (the "Boca General
Partner"), and BRMC Corporation, a Delaware corporation and the general partner
of the Boca General Partner ("BRMC"). Boca Partnership was formed in June 1983
for the purpose of purchasing, owning, managing and operating the Boca Raton
Resort and Club, a destination luxury resort and private club encompassing 298
acres of land fronting on both the Atlantic Ocean and Intracoastal Waterway in
Boca Raton, Florida. The transaction contemplated by the Contribution and
Exchange Agreement (the "Contribution and Exchange") was consummated on June 26,
1997.
Upon the terms and subject to the provisions of the Contribution and
Exchange Agreement, all of the assets of Boca Partnership were transferred to
Panthers BRHC Limited, a newly-formed Florida limited partnership ("Panthers
BRHC"), in which the managing general partner and the limited partner are
wholly-owned by the Company. As set forth in the Contribution and Exchange
Agreement, the Company, through the managing general partner, limited partner
and Panthers BRHC, paid the following consideration: (i) a non-managing general
partnership interest in Panthers BRHC; (ii) warrants (the "Warrants") to
purchase 869,810 shares of Panthers Holdings' Class A common stock, par value
$.01 per share (the "Class A Common Stock"); (iii) 189,574 shares of Class A
Common Stock, which were used to compensate certain affiliates of Boca
Partnership, who through their affiliates control the Boca General Partner, for
their involvement in integrating Boca Raton Resort and Club into the Company;
(iv) 82,729 shares of Class A Common Stock, which were used to pay persons to
whom Boca Partnership is obligated to pay fees; (v) Exchange Rights which, when
distributed to the Boca General Partner and the limited partners in accordance
with the partnership agreement of Boca Partnership, will entitle such holders,
without any additional consideration, to sell their partnership interests to an
affiliate of the Company in exchange for approximately 4,242,586 shares of Class
A Common Stock exercisable at any time before January 1, 2001; and (vi) the
assumption of indebtedness and payment of deferred fees and additional interest
charges owed by the Boca Partnership in the amount of approximately $205.9
million, of which approximately $95.9 million was repaid upon consummation of
the Contribution and Exchange. Of the $95.9 million which was repaid, $60.9
million was paid from the Company's working capital and $35.0 million was paid
from the incurrence of additional debt.
The value of the aggregate consideration paid in connection with the
acquisition of Boca Partnership as of the closing date, including the assumption
by the Company of approximately $205.9 million of indebtedness and payment of
deferred fees and additional interest charges owed by the Boca Partnership, was
approximately $317.6 million, based on the closing price per share of Class A
Common Stock of $24 3/4 on the June 26, 1997 closing date.
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Page
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Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
(a) Financial Statements of Business Acquired
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
Reports of Independent Certified Public Accountants........... 4
Balance Sheets as of December 31, 1996 and 1995 .............. 6
Statements of Operations for the years ended
December 31, 1996, 1995 and 1994............................ 7
Statements of Changes in Partners' Deficit for the years
ended December 31, 1996, 1995 and 1994...................... 8
Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994............................ 9
Notes to Financial Statements................................. 10
UNAUDITED FINANCIAL STATEMENTS -
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
Unaudited Balance Sheets as of March 31, 1997 and
December 31, 1996........................................... 17
Unaudited Statements of Operations for the three months ended
March 31, 1997 and 1996..................................... 18
Unaudited Statements of Cash Flows for the three months ended
March 31, 1997 and 1996..................................... 20
Notes to Unaudited Financial Statements....................... 21
(b) Pro Forma Financial Information
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Introduction to Unaudited Pro Forma Financial Information..... 26
Unaudited Pro Forma Consolidated Balance Sheet as of
March 31, 1997.............................................. 28
Unaudited Pro Forma Consolidated Statement of Operations
for the nine months ended March 31, 1997.................... 29
Unaudited Pro Forma Consolidated Statement of Operations
for the year ended June 30, 1996............................ 30
Notes to Unaudited Pro Forma Consolidated Financial
Statements.................................................. 31
2
4
(c) Exhibits.
Exhibit No. Description
----------- -----------
4.1 Contribution and Exchange Agreement dated as of March
20, 1997, as amended and restated (incorporated by
reference to the Company's Registration Statement on
Form S-4 (Regis. No. 333-28951)
23.1 Consent of Price Waterhouse LLP
23.2 Consent of Ernst & Young LLP
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5
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Partners of
Boca Raton Hotel and Club Limited Partnership
In our opinion, the accompanying balance sheet and the related statements
of operations, of changes in partners' deficit and of cash flows present fairly,
in all material respects, the financial position of Boca Raton Hotel and Club
Limited Partnership at December 31, 1996, and the results of its operations and
its cash flows for the year in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the
Partnership's management; our responsibility is to express an opinion on these
financial statements based on our audit. We conducted our audit of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Fort Lauderdale, Florida
January 29, 1997, except as to Note 12, which is
as of March 20, 1997
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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Partners
Boca Raton Hotel and Club Limited Partnership
We have audited the accompanying balance sheet of the Boca Raton Hotel and
Club Limited Partnership (A Limited Partnership) (the Partnership) as of
December 31, 1995, and the related statements of operations, changes in
partners' deficit and cash flows for each of the two years in the period ended
December 31, 1995. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Boca Raton Hotel and
Club Limited Partnership (A Limited Partnership) at December 31, 1995, and the
results of its operations and its cash flows for each of the two years in the
period ended December 31, 1995, in conformity with generally accepted accounting
principles.
Ernst & Young LLP
West Palm Beach, Florida
January 26, 1996
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7
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
BALANCE SHEETS
(IN THOUSANDS)
DECEMBER 31,
-------------------
1996 1995
-------- --------
ASSETS
Current assets:
Cash and cash equivalents................................. $ 1,126 $ 2,887
Restricted cash and short-term investments................ 18,887 13,671
Accounts receivable, net of allowance for doubtful
accounts of $412 and $50, respectively, in 1996 and
1995................................................... 12,203 12,249
Current portion of Premier Club promissory notes for
membership deposits.................................... 3,840 3,161
Other current assets...................................... 727 705
Prepaid insurance......................................... 1,697 2,074
Inventories............................................... 5,725 5,752
-------- --------
Total current assets.............................. 44,205 40,499
Premier Club promissory notes for membership deposits, less
current portion........................................... 8,246 6,964
Property and improvements:
Land...................................................... 26,851 26,851
Buildings and improvements................................ 114,199 103,354
Furnishings and equipment................................. 20,407 19,934
Construction in progress.................................. 6,750 4,199
-------- --------
168,207 154,338
Less accumulated depreciation............................. (52,479) (49,914)
-------- --------
115,728 104,424
Deferred loan costs and other, net.......................... 10,080 6,546
-------- --------
$178,259 $158,433
======== ========
LIABILITIES AND PARTNERS' DEFICIT
Current liabilities:
Accounts payable, trade................................... $ 4,490 $ 7,289
Advance deposits.......................................... 3,027 3,118
Accrued interest payable.................................. 3,296 2,559
Accrued payroll costs and employee benefits............... 3,015 3,108
Due to general partner.................................... 3,725 5,900
Other accounts payable and accrued expenses............... 6,102 5,654
Deferred membership revenue............................... 7,232 6,371
Current portion of mortgage and other loans payable....... 400 2,347
-------- --------
Total current liabilities......................... 31,287 36,346
Mortgage and other loans payable, less current portion...... 174,800 140,889
Accrued settlement costs.................................... 500 950
Premier Club membership deposits and credits, net........... 55,905 49,717
Partners' deficit:
General Partner........................................... (2,492) (2,249)
Class A Limited Partners.................................. (80,067) (65,892)
Class B Limited Partner................................... (1,674) (1,328)
-------- --------
Total Partners' deficit........................... (84,233) (69,469)
-------- --------
$178,259 $158,433
======== ========
The accompanying notes are an integral part of these financial statements.
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BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
1996 1995 1994
--------- --------- ---------
Revenue:
Rooms..................................................... $ 44,856 $ 44,050 $ 41,191
Food and beverage......................................... 34,762 32,764 32,841
Club Membership, Retail and Other......................... 34,109 31,376 29,339
-------- -------- --------
Total revenue..................................... 113,727 108,190.. 103,371
Costs and expenses:
Rooms..................................................... 10,913 10,228 10,038
Food and beverage......................................... 26,363 24,814 25,136
Club Membership, Retail and Other......................... 19,005 17,569 17,103
Selling, general and administrative....................... 17,999 16,679 19,498
Property operations, maintenance and energy costs......... 10,959 11,125 9,604
Other indirect costs........................................ 8,911 8,041 6,799
-------- -------- --------
Total cost of revenues...................................... 94,150 88,456 88,178
Depreciation and amortization............................... 6,215 6,623 7,108
-------- -------- --------
Income from operations...................................... 13,362 13,111 8,085
Interest expense, net....................................... 16,562 14,909 17,382
-------- -------- --------
Loss before extraordinary item.............................. (3,200) (1,798) (9,297)
Extraordinary items:
Net gain on debt restructuring............................ -- 10,328 6,704
Net (loss) on debt restructuring, including debt
prepayment penalty of ($3,515)......................... (8,932) -- --
-------- -------- --------
Net (loss) income........................................... $(12,132) $ 8,530 $ (2,593)
======== ======== ========
The accompanying notes are an integral part of these financial statements.
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BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
(IN THOUSANDS)
CLASS A CLASS B
GENERAL LIMITED LIMITED
PARTNER PARTNERS PARTNER TOTAL
------- -------- ------- --------
Partners' deficit at January 1, 1994.................... $(2,368) $(71,606) $(1,432) $(75,406)
Net loss.............................................. (52) (2,495) (46) (2,593)
------- -------- ------- --------
Partners' deficit at December 31, 1994.................. (2,420) (74,101) (1,478) (77,999)
Net income............................................ 171 8,209 150 8,530
------- -------- ------- --------
Partners' deficit at December 31, 1995.................. (2,249) (65,892) (1,328) (69,469)
Distribution.......................................... -- (2,500) (132) (2,632)
Net loss.............................................. (243) (11,675) (214) (12,132)
------- -------- ------- --------
Partners' deficit at December 31, 1996.................. $(2,492) $(80,067) $(1,674) $(84,233)
======= ======== ======= ========
The accompanying notes are an integral part of these financial statements.
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BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
1996 1995 1994
---------- --------- ---------
Operating activities:
Net income (loss)......................................... $ (12,132) $ 8,530 $ (2,593)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization.......................... 6,935 6,623 7,108
Loss (gain) on debt restructuring...................... 5,417 (10,328) (6,704)
Provision for settlement agreements.................... 300 -- 1,250
Changes in operating assets and liabilities:
Accounts receivable.................................. (1,915) (2,193) (1,955)
Prepaid expenses and other assets.................... 354 1,146 (4,105)
Inventories.......................................... 27 (227) 703
Accounts payable, trade.............................. (2,799) 1,998 1,265
Advance deposits..................................... (91) 32 (210)
Accrued interest payable............................. 737 197 4,682
Accrued payroll costs and employee benefits.......... (93) (385) 898
Other accounts payable and accrued expenses.......... (4,184) 1,669 1,569
Deferred membership revenue.......................... 861 325 535
Premier Club Membership cash and note payments....... 6,049 3,987 5,770
Accrued settlement costs............................. (750) -- --
--------- -------- --------
Net cash provided by (used in) operating
activities........................................ (1,284) 11,374 8,213
--------- -------- --------
Investing activities:
Restricted cash and short-term investments................ (5,216) (10,964) 1,124
Additions to property and improvements.................... (14,829) (4,601) (3,454)
Additions to construction in progress..................... (2,551) -- --
--------- -------- --------
Net cash used in investing activities................ (22,596) (15,565) (2,330)
--------- -------- --------
Financing activities:
Proceeds from increase in mortgage and other loans
payable................................................ 155,000 60,000 48,583
Principal payments of mortgage and other loans payable.... (123,036) (54,313) (48,071)
Principal payment on Banyan mortgage loans................ -- (3,500) (1,000)
Payment of financing costs................................ (7,345) (725) --
Distributions to Limited Partners......................... (2,500) -- --
--------- -------- --------
Net cash (used in) provided by financing
activities........................................ 22,119 1,462 (488)
--------- -------- --------
Net increase (decrease) in cash and cash equivalents........ (1,761) (2,729) 5,395
Cash and cash equivalents at beginning of year.............. 2,887 5,616 221
--------- -------- --------
Cash and cash equivalents at end of year.................... $ 1,126 $ 2,887 $ 5,616
========= ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for interest...................... $ 14,148 $ 14,710 $ 12,633
========= ======== ========
Accrual of distribution payable to Class B Limited
Partners.................................................. $ 132 $ -- $ --
========= ======== ========
Accrual of General Partner Fees............................. $ 2,325 $ -- $ --
========= ======== ========
The accompanying notes are an integral part of these financial statements.
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BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 (IN THOUSANDS OF DOLLARS)
1. ORGANIZATION
The Boca Raton Hotel and Club Limited Partnership (the Partnership) was
formed in June 1983 under the laws of the State of Florida. The purpose of the
Partnership is to purchase, own, manage and operate the Boca Raton Resort and
Club, a 298-acre resort complex containing several hotel facilities with a total
of 963 guest rooms. In addition, the complex includes 31 tennis courts, 2 golf
courses, marina, beach club and other recreational facilities. Included within
the resort is the Boca Golf and Tennis Country Club (a separate facility) (see
Note 6). The Partnership also leases the food and beverage concessions, and has
contracted for golf access at the Deer Creek and Carolina country clubs.
As of January 15, 1993, the original general partner, VMS Realty Investment
Ltd. (VMSRIL), withdrew from the Partnership as general partner and was replaced
by the Boca Raton Management Company, a New York general partnership (BRMC/NY).
BRMC/NY was succeeded as general partner on October 1, 1993 by BRMC, L.P., a
Delaware limited partnership (BRMC) (see Note 3).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting principles and practices used in
the preparation of the financial statements follows:
BASIS OF FINANCIAL STATEMENT PRESENTATION
The Partnership prepares its financial statements in conformity with
generally accepted accounting principles. These principles require management to
(1) make estimates and assumptions that affect the reported amounts of assets
and liabilities, (2) disclose contingent assets and liabilities at the date of
the financial statements and (3) report amounts of revenue and expenses during
the reporting period. Actual results could differ from these estimates.
CASH EQUIVALENTS AND RESTRICTED CASH
The Partnership considers all highly liquid investments with a maturity of
three months or less from the date purchased to be cash equivalents. Restricted
cash consists principally of escrow accounts restricted as to use and maintained
in accordance with the terms of the Partnership's First Mortgage Notes. Short
term investments consist primarily of repurchase agreements.
FAIR VALUES OF FINANCIAL INSTRUMENTS
At December 31, 1996 and 1995, the carrying amounts of cash, cash
equivalents and short-term investments approximate their fair value due to their
short duration to maturity. The carrying amount of the mortgages and other loans
approximate their fair value.
CONCENTRATIONS OF CREDIT RISK AND MARKET RISK
Concentration of credit risk and market risk associated with cash, cash
equivalents, restricted cash and short-term investments are considered low due
to the credit quality of the issuers of the financial instruments held by the
Partnership and due to their short duration to maturity. Accounts receivable are
primarily from major credit card companies and other large corporations. The
Partnership performs ongoing credit evaluations of its significant customers and
generally does not require collateral.
PREMIER CLUB MEMBERSHIP DEPOSITS
The Partnership classifies premier club membership deposits as an operating
activity in the Statement of Cash Flows (see Note 10).
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BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS) -- (CONTINUED)
PROPERTY, IMPROVEMENTS AND DEPRECIATION
Property and improvements are stated at cost and are depreciated on the
straight-line method over the estimated useful lives of the assets as follows:
Buildings and improvements.............................. 15 - 30 years
Furnishings and equipment............................... 3 - 10 years
Provision for value impairments are recorded with respect to such assets
whenever the estimated future cash flows from operations and projected sales
proceeds are less than the net carrying value. The Partnership implemented
Statements on Financial Accounting Standards (FAS) No. 121, Accounting for
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,
effective January 1, 1996. The implementation of FAS No. 121 did not have a
material impact on the financial statements. Costs of major renewals and
improvements which extend useful lives are capitalized. Expenditures for
maintenance and repairs are charged to expense as incurred.
INVENTORIES
Inventories consisting of food, beverage and operating supplies are
determined using the first-in, first-out method and are stated at the lower of
cost or market.
DEFERRED LOAN COSTS
Deferred loan costs, primarily loan origination and related fees, are
capitalized and amortized on the straight-line basis over the terms of the
respective debt, which approximates the effective interest method. Deferred loan
costs are presented net of accumulated amortization. At December 31, 1996 and
1995, accumulated amortization totaled $643 and $1,320, respectively.
DEFERRED MEMBERSHIP REVENUE
Deferred membership revenue is recognized as income ratably over the
membership year commencing October 1.
RECLASSIFICATIONS
Certain items for 1994 and 1995 have been reclassified to conform to the
1996 presentation.
PARTNERSHIP RECORDS
The Partnership's records are maintained on the accrual basis of accounting
as adjusted for federal income tax reporting purposes. The accompanying
financial statements have been prepared from such records after making
adjustments, where applicable, to reflect the Partnership's accounts in
accordance with generally accepted accounting principles (GAAP). The net effect
of these items is summarized as follows:
DECEMBER 31,
------------------------------------------
1996 1995
-------------------- -------------------
GAAP TAX GAAP TAX
BASIS BASIS BASIS BASIS
--------- -------- -------- --------
Total assets................................. $ 178,259 $153,248 $158,433 $133,290
Partners' deficits:
General Partner............................ (2,492) (3,127) (2,249) (2,834)
Class A Limited Partners................... (80,067) (102,207) (65,892) (85,631)
Class B Limited Partner.................... (1,674) (1,964) (1,328) (1,706)
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BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS) -- (CONTINUED)
YEAR ENDED DECEMBER 31,
---------------------------------------------------------
1996 1995 1994
------------------- --------------- -----------------
GAAP TAX GAAP TAX GAAP TAX
BASIS BASIS BASIS BASIS BASIS BASIS
-------- -------- ------ ------ ------- -------
Net income (loss):
General Partner................ $ (243) $ (293) $ 171 $ 182 $ (52) $ (163)
Class A Limited Partners....... (11,675) (14,076) 8,209 8,767 (2,495) (7,835)
Class B Limited Partner........ (214) (258) 150 161 (46) (144)
INCOME TAXES
No provision has been recorded for income taxes or related credits in the
Partnership's financial statements as the results of operations are includable
in the income tax returns of the partners. The differences between financial
statement income or loss and tax income or loss relate primarily to the methods
and lives used to depreciate fixed assets, the treatment of costs of the Premier
Membership Program, the treatment of syndication costs and the treatment of the
1994, 1995 and 1996 debt restructurings.
3. PARTNERSHIP AGREEMENT
Operating profits and losses of the Partnership are allocated pursuant to
the terms of the partnership agreement or in accordance with Internal Revenue
Code Section 704(b). Profits and losses attributable to capital items such as a
sale or refinancing are allocated among the partners in accordance with the
Partnership agreement.
Distributions of cash flows are made, subject to the participation therein
of BRMC, as follows: (a) first, to the Limited Partners in an amount equal to
12% per annum (on a non-cumulative basis) of their aggregate capital
contributions (95% to Class A and 5% to Class B); (b) then, to BRMC, the payment
of a subordinated incentive fee, as defined in the Partnership Agreement; and
(c) then, of the balance, 98% to the Limited Partners (93.1% to Class A and 4.9%
to Class B) and 2% to BRMC.
Distributions of capital items are made as follows: (a) first, 100% to the
Limited Partners until such time as each Limited Partner has received
distributions sufficient to reduce their aggregate capital contribution to zero;
(b) then, 100% to BRMC until such time as BRMC has received distributions
sufficient to reduce its aggregate capital contributions to zero; (c) then, to
the Class A Limited Partners to the extent not previously paid from Cash Flow an
amount equal to: 10% per annum of their aggregate capital contributions (on a
cumulative basis from January 1, 1984); (d) then, first to the Limited Partners,
90% (85.5% to Class A and 4.5% to Class B) of the next $16,000 and then 10% of
such $16,000 to BRMC; and (3) then, 70% to the Limited Partners (66.5% to Class
A and 3.5% to Class B) and 30% to BRMC.
In 1996, the Partnership made capital distributions totaling $2,500 to the
Class A Limited Partners and accrued $132 for distributions to the Class B
Limited Partners.
The Partnership relies on mortgages and other loans to fund capital
improvements and construction projects. The Partnership expects to meet its cash
requirements through operations and the use of existing cash balances.
As general partner, BRMC is entitled to receive the following forms of
compensation and additional distributions (General Partner Compensation):
1. A supervisory management fee, the lesser of (a) $50 per month and
(b) 90% of the hypothetical supervisory fee formerly payable to an
affiliate of VMSRIL (see Note 8).
2. A debt restructuring fee with existing creditors, .5% of the
principal amount of the Partnership's indebtedness restructured (see Note
8).
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BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS) -- (CONTINUED)
3. A debt or equity capital raising fee, 1.5% of the amount raised. To
the extent any capital raised is applied to repay indebtedness, no debt
restructuring fee referred to in 2 above shall be payable with respect to
the portion of the indebtedness for which a capital raising fee is charged
(see Note 8).
4. A debt reduction fee, 10% of the principal amount of the debt
extinguished. BRMC would receive 20% of its debt reduction fee at the
closing of the debt reduction transaction, with the balance paid from (a)
any excess proceeds from the refinancing of such debt, and (b) any
distributions resulting from any sale or refinancing as a preference to the
Limited Partners' distributions thereunder (see Note 8).
5. A participation in cash distributions, BRMC will receive the
following distributions:
BRMC
CUMULATIVE AMOUNT DISTRIBUTED PERCENTAGE
- ----------------------------- ----------
First $10,000.................................................. 1%
Next $10,000.................................................. 2
Next $10,000.................................................. 3
Next $10,000.................................................. 4
Next $10,000.................................................. 5
Over $50,000.................................................. 10
In the event the Limited Partners are diluted in connection with any
offering of new Partnership equity, the distribution breakpoints (DBP)
in the above table will be adjusted in accordance with the following
formula: DBP divided by that percentage of the Partnership's equity
owned by the existing Limited Partners upon completion of the financing.
Notwithstanding any of the foregoing, BRMC shall receive a total share
of such distributions of not less than $500. Such minimum shall not
apply in the event that the Limited Partners' cumulative distributions
have not exceeded Limited Partners' taxes due thereon.
6. The foregoing elements set forth in preceding subparagraphs 2, 3, 4
and 5 are limited by the provisions of the first mortgage notes (see Note
5).
4. LETTERS OF CREDIT
As of December 31, 1996 and 1995, the Partnership has two letters of credit
which secure two operating leases. The letters of credit are collateralized by
certificates of deposit totaling $500 which mature in August 1997 and are
included in restricted cash and short-term investments.
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BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS) -- (CONTINUED)
5. MORTGAGES AND OTHER LOANS PAYABLE
Various refinancing activities occurred in 1996 and can be summarized as
follows:
(IN THOUSANDS)
TOTAL
OUTSTANDING 1996 OUTSTANDING
BALANCE AT PRINCIPAL 1996 DEBT AT
LOAN DESCRIPTION, INTEREST RATE DECEMBER 31, 1995 PAYMENTS NEW DEBT DECEMBER 31, 1996
- ------------------------------- ----------------- --------- -------- -----------------
Nomura-$75,000..................... $ 71,524 $71,524 $ -0-
Starwood-$50,000................... 51,000 51,000 -0-
Starwood-$500 -- 14 1/2%........... 500 500
RMA -- 7%.......................... 10,000 300 9,700
Senior Facility, LIBOR + 2 1/4%.... 110,000 110,000
Subordinate Facility, 13%.......... 20,000 20,000
Starwood-$35,000, 18.5%............ 10,000 25,000 35,000
Other.............................. 212 212 -0-
-------- -------- -------- --------
$143,236 $123,036 $155,000 $175,200
======== ======== ======== ========
FIRST MORTGAGE NOTES
On August 22, 1996, the Partnership entered into an agreement with a
consortium of financial institutions to borrow $130,000 primarily for the
purpose of refinancing existing first mortgage notes. The agreement consists of
a $110,000 Senior Facility (Senior Notes) and a $20,000 Subordinate Facility
(Subordinate Notes). Both Facilities mature on August 22, 2001 and accrue
interest, based on a 360 day year, payable monthly in arrears. The Senior Notes
accrue interest at the lenders' base rate plus one-quarter percent (Base Rate)
or LIBOR plus two and one-quarter percent (LIBOR Rate). In 1996, the Partnership
selected the LIBOR Rate, averaging approximately 7.814%. The Subordinate Notes
accrue interest at a fixed rate of thirteen percent. Both Facilities are secured
by a first mortgage and lien on all assets held by the Partnership, except in
certain circumstances where other first liens are permitted. The outstanding
balance on the First Mortgage Notes at December 31, 1996 totaled $130,000.
The Partnership is required to make quarterly principal payments of $750 on
the Senior Notes commencing September 30, 1998 and increasing to $1,250 on
September 30, 1999 and to $1,750 on September 30, 2000. The Partnership is
required to make additional principal payments on the Senior Notes and initial
principal payments on the Subordinate Notes based upon certain cash flow
conditions.
In accordance with the agreement, the Partnership deposits cash into
reserve accounts which are accumulated and restricted to support future debt
service, facility expansion, fixed asset replacement and real estate tax
payments. Both Facilities contain significant restrictions with respect to
payments to Partners and other debt holders.
In conjunction with the refinancing, the Partnership recorded a loss on
debt restructuring of $5,417 which represents the write off of debt issue costs.
The Partnership paid a loan prepayment penalty of $3,515 to Nomura.
SECOND MORTGAGE NOTE
On August 22, 1996, the Partnership entered into an agreement with an
institutional lender to borrow $35,000, as evidenced by a promissory note,
primarily for the purpose of the planned expansion of the Resort. The note is
secured by a second mortgage and lien on all assets held by the Partnership,
except in certain circumstances where other liens are permitted. At maturity,
August 21, 2003, or prepayment of the note, the Partnership is required to pay
an amount which will result in an annual internal rate of return to the lender
of
14
16
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS) -- (CONTINUED)
eighteen and one-half percent (18.5%). Interest is payable quarterly in arrears
commencing October 1, 1996 at a rate of eight percent through December 31, 1998
and fourteen and one-half percent thereafter based on a 360 day year. The
Partnership accrues interest at 18.5% per annum. Additional interest and
principal payments are required based on certain cash flow conditions. The
outstanding balance on the Second Mortgage Note totaled $35,000 at December 31,
1996.
The Partnership may not prepay the note prior to its third anniversary
except in connection with a sale of Partnership assets to a third party. If
prepayment occurs before August 23, 2001, the Partnership is required to pay an
amount (Prepayment Amount) which would result in an 18.5% internal rate of
return to the lender through that date. The Prepayment Amount will be reduced by
the return which would result from the lenders' reinvestment of the repaid
principal at the United States Treasury Notes rate plus 250 basis points, if
prepayment results from sale of Partnership assets or from cash flow; or plus
150 basis points, if prepayment results from refinancing the note or sale or
issuance of any ownership interest in the Partnership.
THIRD MORTGAGE NOTE
On August 22, 1996, a note payable, which was previously secured by a first
mortgage, was replaced with a third mortgage and lien on all assets of the
Partnership. The note matures on September 30, 2003 and accrues interest at a
fixed rate of approximately 14.52% through September 30, 1998 and at a variable
rate thereafter payable quarterly in arrears. The outstanding balance on the
Third Mortgage Note at December 31, 1996 totaled $500.
The Partnership is required to make an additional payment (Final
Participation Interest) upon maturity of the loan or sale of the Partnership's
assets equaling the sum of $750, plus 5% of the Partnership's net asset value as
calculated based on certain criteria. In the event of refinancing of the
property, the Partnership is required to make a payment of 5% of the net
proceeds (Interim Participation Interest). Interim Participation Interest paid
will be deducted from the Final Participation Interest amount. In 1996, the
Partnership paid $125 of Interim Participation Interest.
OTHER NOTES PAYABLE
The Partnership's other notes payable represent two unsecured promissory
notes with original amounts of $8,000 and $2,000 dated October 7, 1994 related
to a settlement agreement whereby the Partnership terminated a 20-year
management agreement. Both promissory notes mature on October 7, 2004 and accrue
interest at a rate of 7% payable semi-annually in arrears.
The $8,000 promissory note requires future principal reductions of $320 on
October 7, 1997 and $400 on each October 7 from 1998 to 2003, with a balloon
payment of $5,040 due at maturity. The $2,000 promissory note payable requires
future principal reductions of $80 on October 7, 1997 and $100 on each October
7, from 1998 to 2003, with a balloon payment of $1,260 due at maturity. The
notes include limitations on additional senior debt.
At December 31, 1996, aggregate future maturities of mortgage and other
loans payable are as follows:
1997........................................................ $ 400
1998........................................................ 2,000
1999........................................................ 4,500
2000........................................................ 6,500
2001........................................................ 119,000
Thereafter.................................................. 42,800
--------
$175,200
========
15
17
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS) -- (CONTINUED)
The following schedule reflects the mortgage and loan payable balances as
of December 31, 1995. Senior and subordinated notes were refinanced during 1996,
as disclosed above:
1995
--------
A senior note secured by the $130,000 first mortgage on
the principal resort property, improvements and all
assets and rights of the Partnership accruing interest
at 8.26%. The Partnership may pay the loan in whole or
in part at any time by paying a prepayment fee based on
a formula. $ 71,524
A subordinated note secured by the $130,000 first mortgage
on the principal resort property, improvements, and all
assets and rights of the Partnership accruing interest
at 14.52%. The balance at December 31, 1995 includes a
fee of $1,000 due upon payoff of the note. The loan has
a term of eight years and no amortization period [see
(b) and (d) below]. 51,000
A subordinated note secured by the $130,000 first mortgage
on the principal resort property, improvements and all
assets and rights of the Partnership accruing interest
at 14.52%. The note contains a provision whereby the
lender upon the sale or refinancing of the Partnership,
or substantially all of its assets, is entitled to an
amount based on a certain formula [see (a) below]. 500
Other loans payable:
A promissory note bearing interest at 14.5% per annum,
payable quarterly commencing April 1, 1996. The note is
collateralized by the notes receivable due from club
members for the Premier Membership Program at December
15, 1995 and additions thereafter (see Note 10). The
loan matures on December 15, 2002, at which time all
principal and any accrued unpaid interest is due. The
principal amount due at maturity of the note includes
an amount, in addition to principal and accrued
interest, sufficient to provide the lender an internal
rate of return of 18.5% per annum. [see (c) below]. 10,000
An unsecured promissory note dated October 7, 1994 with
interest at 7% per annum. The first interest payment is
due October 7, 1995, with subsequent payments of
interest due semiannually commencing April 1, 1996.
Principal payments commence October 7, 1996 in the
amount of $240 increasing to $400 in the year 2003 with
a balloon payment of $5,040 due October 7, 2004. 8,000
An unsecured promissory note dated October 7, 1994 with
interest at 7% per annum. The first interest payment is
due October 7, 1995, with subsequent payments of
interest due semiannually commencing April 1, 1996.
Principal payments commence October 7, 1996 in the
amount of $60 increasing to $100 in the year 2003 with
a balloon payment of $1,260 due October 7, 2004. 2,000
An unsecured promissory note dated October 7, 1994 with
interest at 7% per annum. Annual principal payments of
$100 plus interest commence October 7, 1995. $ 100
A note payable dated March 31, 1991 for $600 to fund the
redevelopment and renovation of a resort restaurant.
Principal and interest payments are made monthly over a
five-year term at an interest rate of prime plus 2.5%
(11.0% at December 31, 1995). 112
--------
143,236
Current portion of mortgage and other loans payable (2,347)
--------
$140,889
========
- ---------------
(a) On October 11, 1994, the Partnership exercised its call option (the "1994
Refinancing") and paid $45,086 to reduce the then outstanding principal
balance of $55,000 on this subordinated note to $500,
16
18
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS) -- (CONTINUED)
resulting in a gain on debt restructuring of $6,704, net of $2,710 in
capitalized costs on the repaid subordinated note which were written off as
a result of the restructuring.
Also on October 11, 1994, the Partnership entered into a $48,500
subordinated note agreement with a new lender. The proceeds of the note
were reduced by a $1,000 commitment fee and used to make the $45,086
payment described above and to pay accrued interest of $216 on the repaid
subordinated note, resulting in net cash proceeds of $2,198.
(b) The Partnership's subordinated note in the original principal amount of
$48,500 was retired on September 29, 1995 (the "1995 Refinancing"). The
total principal and interest owed to the Lender under the note was $50,241.
An additional Payoff Premium of $1,500 was also owed to the Lender under the
note. The Partnership made a cash payment of $1,741 to the Lender for
accrued interest at September 29, 1995 and refinanced $50,000 with the
issuance of a $50,000 subordinated note. As a result of the 1995
Refinancing, approximately $1,696 in deferred loan costs were written off
resulting in a loss on extinguishment of debt of said amount.
In connection with the 1995 Refinancing, the Partnership paid $389 in
closing costs and legal fees. These loan costs were capitalized and are
being amortized on a straight line basis over the term of the loan.
(c) On December 15, 1995, the Partnership entered into a $10,000 promissory
note, the proceeds of which were deposited into an escrow account. The
balance in the escrow account at December 31, 1995 is $9,864 and is included
in restricted cash and short-term investments in the accompanying balance
sheet. The proceeds of the note are to be used for the construction of
certain hotel property.
The Note is prepayable at any time, provided that any prepayments made
prior to December 15, 2000 require a prepayment fee sufficient to provide
the holder an internal rate of return of 16% per annum through December 15,
2000 based upon a yield maintenance formula.
(d) The note calls for $1,000 fee due upon payoff. This fee is being accreted
over the life of the loan. At December 31, 1995, included in deferred loan
costs is approximately $968, which represents the $1,000 fee less
accumulated accretion of $32.
Under the terms of the senior and subordinated mortgage notes described
above, certain amounts are required to be deposited in an escrow account for the
purposes of paying personal and real property taxes. The balance in the personal
and real property taxes account was $853 at December 31, 1995. The terms of
these mortgages also require funds to be escrowed for capital repairs and
replacements to the resort. The balance in the capital repair and replacement
escrow account was $2,148 at December 31, 1995.
The mortgage loan agreements include certain restrictive covenants
including, among other things, the maintenance of a senior debt service ratio,
as defined, of 1.75 to 1 and a subordinate debt service coverage ratio, as
defined, of 1.2 to 1, restrictions on general and limited partner distributions
and limitations on the incurrence of new debt.
6. BANYAN MORTGAGE LOANS
The Banyan mortgage loans consisted of three matured first mortgage loans
collateralized by certain land (the Marina Parcel) and the Boca Golf and Tennis
Country Club. At December 31, 1994, the mortgage loans had principal balances of
$8,100, $10,354 and $2,031 and accrued interest totaled $4,388. During 1994 and
1995, no principal payments were made, other than as described below, and, in
accordance with the terms of the agreements, interest totaling $2,419 was
incurred in 1994.
On December 29, 1994 (the Settlement Date), the Partnership entered into a
settlement agreement which called for the following: (1) a payment of $1,000,
which was made on November 29, 1994, and applied against outstanding principal;
(2) a payment to be made of $3,500, plus interest accrued from the Settlement
Date to the date of payment, to release the Boca Golf and Tennis Country Club
from the mortgage loans; and (3) a foreclosure sale on the Marina Parcel, to be
held subsequent to December 31, 1994.
17
19
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS) -- (CONTINUED)
On January 17, 1995, the Partnership made the $3,500 payment, plus accrued
interest of $18, and on January 26, 1995, a foreclosure sale was held and the
lender obtained ownership of the Marina Parcel.
The settlement is deemed to have occurred at the time the $3,500 payment
was made and the foreclosure sale was held. Accordingly, in 1995, the
Partnership recognized a net gain of $12,024 consisting of $21,373 in
forgiveness of principal and interest offset by a write-off of $9,349
representing the carrying value of the Marina Parcel.
The Partnership agreed to lease the Marina Parcel from the owner for $8 per
month which terminated December 1, 1996 and was subsequently extended to January
1, 1997. On January 2, 1997, the Partnership entered into an agreement with the
owner for the right of partial use of the marina property. The agreement's
initial term expires on September 1, 1997 and is automatically renewable upon
notice, unless terminated by either property owner or the Partnership.
7. SERVICES AGREEMENT
The Partnership has entered into a services agreement with an individual to
provide executive services. Pursuant to the agreement, the individual has agreed
to serve as a director of the corporate general partner of BRMC. The term of the
agreement is ten years commencing on January 1, 1993. As compensation for these
services, the individual receives the following:
1. Basic advisory fee of not less than $150 per year payable in equal
monthly installments.
2. For the first three calendar years, a guaranteed bonus equal to the
greater of $35 or 2.5% of the Partnership's adjusted contract year earnings
in excess of the contract year base level earnings.
3. Complimentary Premier Club membership.
The basic advisory fee of $150 was paid to the individual in 1994, 1995 and
1996. Cumulative bonuses totaling $107 have been accrued and are included in
other accounts payable and accrued expenses at December 31, 1996.
8. OTHER RELATED PARTY TRANSACTIONS
As described in Note 3, BRMC is entitled to receive several forms of
compensation. In respect to Note 3 subparagraph 1, the Partnership paid $600 in
supervisory management fees during 1994, 1995 and 1996. In connection with Note
3 subparagraph 2, 3, 4 and 5, the following sets forth the extent of amounts
owed by the Partnership to BRMC.
Fees incurred in 1993
Capital raising fee(1).................................... $ 1,650
Debt reduction fee(2)..................................... 1,416
---------
Balance due as of December 31, 1993......................... 3,066
Less: Payment made in 1994 in connection with balance due as
of December 31, 1993.................................. (500)
Plus: Fees incurred in 1994
Capital raising fee(3)................................ 728
Debt reduction fee(4)................................. 1,140
Settlement fee(5)..................................... 400
---------
Balance due as of December 31, 1994......................... 4,834
18
20
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS) -- (CONTINUED)
Plus: Fees incurred in 1995
Debt restructuring fee(6)............................. 243
Capital raising fee(7)................................ 173
Debt reduction fee(8)................................. 650
---------
Balance due as of December 31, 1995......................... 5,900
Less: Payment made in 1996 in connection with balance due as
of December 31, 1995.................................. (4,500)
Plus: Capital raising fee incurred in 1996(9)............... 2,325
---------
Balance due as of December 31, 1996......................... $ 3,725
=========
(1) Aggregate new money raised in 1993.......................... 110,000
Capital raising fee (@ 1.5%)................................ 1,650
(2) Original principal replaced................................. 154,908
Less: Replacement financing................................. (140,750)
---------
Debt reduction amount....................................... 14,158
=========
Debt reduction fee (@ 10%).................................. 1,416
(3) Aggregate new money raised in 1994.......................... 48,500
Capital raising fee (@ 1.5%)................................ 728
(4) Original principal replaced................................. 25,200
Less: Loan payments......................................... (4,500)
Value of Marina Parcel per settlement....................... (9,300)
---------
Debt reduction amount....................................... 11,400
=========
Debt reduction fee (@ 10%).................................. 1,140
(5) RMA settlement fee.......................................... 400
(6) Debt restructured in 1995................................... 48,500
Debt restructuring fee (@ 0.5%)............................. 243
(7) Aggregate new money raised in 1995.......................... 11,500
Capital raising fee (@ 1.5%)................................ 173
(8) Original principal replaced................................. 54,500
Less: Replacement financing payoff amount................... (51,000)
Plus: New money included in replacement financing........... 3,000
---------
Debt reduction amount....................................... 6,500
=========
Debt reduction fee (@ 10%).................................. 650
(9) Aggregate new money raised in 1996.......................... 155,000
Capital raising fee (@ 1.5%)................................ $ 2,325
Payment of the balance due BRMC at December 31, 1996 is restricted in
accordance with provisions of the First Mortgage Notes. There is $25 due to the
BRMC from future distribution to Limited Partners for the participation fee on
the $2,500 distribution made during 1996.
In 1994, the Partnership received $500 from an affiliate of VMSRIL for
reimbursement of a percentage of shared executives' salaries and benefits and
$60 for office space rental.
9. PROFIT SHARING PLAN
On January 1, 1987, the Partnership established the Boca Raton Hotel and
Beach Club Employees Savings and Thrift Plan and Trust (the "BEST Plan").
Substantially all employees are eligible to participate
19
21
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS) -- (CONTINUED)
in the BEST Plan. The BEST Plan allows participants to contribute up to 16% of
their total compensation. The Partnership is required to contribute 50% of the
first 6% of the employee's earnings. The Partnership's contributions to the BEST
Plan were $360, $362, and $387 for the years ended December 31, 1994, 1995, and
1996, respectively.
10. PREMIER CLUB MEMBERSHIP DEPOSITS AND CREDITS
During 1991, the Partnership introduced the Premier Club at the resort
complex. The program requires an initial membership deposit and annual dues
based on the number and type of facilities the member uses.
Under the terms of the Premier Club, commencing in January 1991,
applications for membership required a deposit of $15 ($12 for members under a
prior program). The required deposit was increased to $18 as of May 1, 1992, $22
as of May 1, 1993, $25 as of May 1, 1994 and $28 as of May 1, 1995 and $30 as of
May 1, 1996. As of December 31, 1996, the Partnership has recorded membership
deposits of $59,287, of which $47,201 has been either received or credited. As
of December 31, 1996, $1,912 of membership notes bear interest at 7% per annum
and the remaining balance of $10,174 is non-interest bearing. The membership
notes will be collected by 2003 as follows:
1997........................................................ $ 3,840
1998........................................................ 3,327
1999........................................................ 2,723
2000........................................................ 1,565
2001........................................................ 565
Thereafter.................................................. 66
-------
$12,086
=======
Premier Club deposits are net of a deposit credit of $3,584 and $3,462 at
December 31, 1995 and 1996, respectively, granted to members of a prior
membership program. The deposit credit is amortized on the interest method over
30 years. If any member paying over time suspends payments, amounts paid to date
will be forfeited and recognized as income. Fully paid deposits are refundable
upon the death of a member or a member's spouse and upon the expiration of the
30-year membership term (subject to renewal). The deposit is refundable upon a
member's resignation from the Premier Club, but only out of the proceeds of the
membership deposit of the fifth new member to join the Premier Club following
refund of all previously resigned members' deposits.
11. COMMITMENTS, CONTINGENCIES AND OTHER MATTERS
On August 5, 1993, the Partnership entered into agreements to lease food
and beverage operations at the Deer Creek and Carolina country club facilities.
The Partnership is entitled to food and beverage revenues from the operation of
the facilities and is obligated to pay all employee costs, certain maintenance
costs and 50% of the following: real and personal property taxes, insurance
premiums and common area maintenance costs, and certain other items, in
accordance with the terms of the agreements. For the years ended December 31,
1994, 1995 and 1996, rental and other expenses include net losses from these
leases operations of $365, $261 and $431, respectively, which are net of food
and beverage revenues totaling $5,164, $5,241 and $5,018, respectively. Included
in the net losses from these operations are rent expense under the related
leases of $305, $397 and $321, respectively.
20
22
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS) -- (CONTINUED)
Minimum future obligations under operating leases, in effect at December
31, 1996, for certain equipment and the Deer Creek and Carolina food and
beverage operations are as follows:
1997........................................................ $1,620
1998........................................................ 1,522
1999........................................................ 1,386
2000........................................................ 343
2001........................................................ 327
Thereafter.................................................. 321
------
$5,519
======
Rent expense under operating leases, excluding rent expense under the Deer
Creek and Carolina country club leases, totaled $566, $1,290 and $1,493 for the
years ended December 31, 1994, 1995 and 1996, respectively.
In conjunction with the closing of the First and Second Mortgage Notes,
bonuses totaling $1,000 were paid to certain employees of the Partnership.
State of Florida Department of Revenue performed audits of the
Partnership's Sales and Use and Intangible taxes for the periods March 31, 1991
to December 31, 1995 and January 1, 1991 to January 1, 1995, respectively. The
Partnership was assessed an additional $248 of taxes and $106 of interest. The
Partnership disputes the assessments and believes it will be successful in
defending its position. Accordingly, no additional liability has been accrued.
The Partnership and KSL Recreation Corporation (KSL) entered into a
settlement agreement and general release on April 24, 1996. In accordance with
the settlement agreement, the Partnership agreed to pay KSL an amount totaling
$1,250, in exchange for mutual releases and discharges from all actions and
obligations from their respective suits. In accordance with the agreement, the
Partnership paid $750 and agreed to pay $500 on or before June 30, 1998. At
December 31, 1995, $950 was included in accrued settlement cost in the
accompanying balance sheet.
The Partnership is subject to various actions arising out of the operations
of its business. Management is vigorously defending these actions and believes
that all actions are adequately covered by insurance.
In November 1995, the Partnership began Phase I of a planned $40,000
expansion of the Resort. At December 31, 1996, the Partnership incurred $15,148
of costs related to the expansion; $8,396 was completed in 1996 and includes
building of a parking garage and tennis courts. The balance of the expansion
plan encompasses construction of a new conference center, completion of a
fitness center and certain other minor improvements to the Resort facilities.
Construction of the new conference center commenced in September 1996. As of
December 31, 1996 and in connection with the Project, the Partnership had
contractual commitments for capital expenditures of $28,406 of which $1,507 is
included in other accounts payable and accrued expenses in the accompanying
balance sheet.
12. SUBSEQUENT EVENTS
On March 20, 1997, BRMC, BRMC's corporate general partner, and the
Partnership entered into a Contribution and Exchange Agreement with Florida
Panthers Holdings, Inc. (Panthers) and Panthers BRHC Limited to convey
substantially all of the assets and liabilities of the Partnership in exchange
for cash and ownership interests (as defined in the agreement) in Florida
Panthers Holdings, Inc. This exchange of interests, which is subject to approval
of the limited partners of the Partnership and the shareholders of Panthers, has
an agreed-upon value of approximately $325,000 and is to close within five days
of registering Panthers BRHC Limited shares and Panthers shares and warrants
under the Securities Act of 1933 and under applicable state securities law.
21
23
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
BALANCE SHEETS
(IN THOUSANDS)
MARCH 31, DECEMBER 31,
--------- ------------
1997 1996
--------- ------------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents................................. $ 1,736 $ 1,126
Restricted cash and short-term investments................ 28,005 18,887
Accounts receivable, net of allowance for doubtful
accounts of $397 and $412, respectively, at March 31,
1997 and December 31, 1996............................. 11,689 12,203
Current portion of Premier Club promissory notes for
membership deposits.................................... 3,892 3,840
Other current assets...................................... 970 727
Prepaid insurance......................................... 1,489 1,697
Inventories............................................... 5,773 5,725
-------- --------
Total current assets.............................. 53,554 44,205
Premier Club promissory notes for membership deposits, less
current portion........................................... 8,131 8,246
Property and improvements:
Land...................................................... 26,851 26,851
Buildings and improvements................................ 114,199 114,199
Furnishings and equipment................................. 20,407 20,407
Construction in progress.................................. 9,335 6,750
-------- --------
170,792 168,207
Less accumulated depreciation............................. (54,003) (52,479)
-------- --------
116,789 115,728
Deferred loan costs and other, net.......................... 9,620 10,080
-------- --------
$188,094 $178,259
======== ========
LIABILITIES AND PARTNERS' DEFICIT
Current liabilities:
Accounts payable, trade................................... $ 5,791 $ 4,490
Advance deposits.......................................... 2,511 3,027
Accrued interest payable.................................. 4,466 3,296
Accrued payroll costs and employee benefits............... 2,674 3,015
Due to general partner.................................... 3,725 3,725
Other accounts payable and accrued expenses............... 6,746 6,102
Deferred membership revenue............................... 4,936 7,232
Current portion of mortgage and other loans payable....... 400 400
-------- --------
Total current liabilities......................... 31,249 31,287
Mortgage and other loans payable, less current portion...... 174,800 174,800
Accrued settlement costs.................................... 500 500
Premier Club membership deposits and credits, net........... 58,011 55,905
Partners' deficit:
General Partner........................................... (2,337) (2,492)
Class A Limited Partners.................................. (72,593) (80,067)
Class B Limited Partner................................... (1,536) (1,674)
-------- --------
Total Partners' deficit........................... (76,466) (84,233)
-------- --------
$188,094 $178,259
======== ========
The accompanying notes are an integral part of these financial statements.
22
24
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(IN THOUSANDS)
THREE MONTHS ENDED
MARCH 31,
-------------------
1997 1996
-------- --------
(UNAUDITED)
STATEMENT OF OPERATIONS DATA:
Revenue:
Rooms..................................................... $18,523 $17,593
Food and beverage......................................... 10,443 10,582
Club Membership, Retail and Other......................... 10,664 9,454
------- -------
Total revenues.................................... 39,630 37,629
Cost of Revenue:
Rooms..................................................... 3,194 3,126
Food and beverage......................................... 7,545 7,356
Club Membership, Retail and Other......................... 5,772 5,142
Selling, general and administrative....................... 4,334 4,270
Property maintenance and energy costs..................... 2,444 2,555
Other indirect costs...................................... 2,007 2,369
------- -------
Total cost of revenue............................. 25,296 24,818
Depreciation and amortization............................... 1,559 1,391
Operating income............................................ 12,775 11,420
Interest expense, net....................................... 5,008 3,903
Profit before extraordinary items........................... 7,767 7,517
------- -------
Net income.................................................. $ 7,767 $ 7,517
======= =======
The accompanying notes are an integral part of these financial statements.
23
25
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
FOR THE THREE
MONTHS ENDED
MARCH 31,
-----------------
1997 1996
------- -------
(UNAUDITED)
Operating activities:
Net income................................................ $ 7,767 $ 7,517
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization.......................... 1,938 1,444
Changes in operating assets and liabilities:
Accounts receivable.................................. 514 (2,064)
Prepaid expenses and other assets.................... (35) (622)
Inventories.......................................... (48) (82)
Accounts payable, trade.............................. 1,301 (1,265)
Advance deposits..................................... (517) (275)
Accrued interest payable............................. 1,170 540
Accrued payroll costs and employee benefits.......... (341) 87
Other accounts payable and accrued expenses.......... 644 1,106
Deferred membership revenue.......................... (2,296) (1,705)
Premier Club Membership cash and note payments....... 2,216 1,206
------- -------
Net cash provided by operating activities............ 12,313 5,887
------- -------
Investing activities:
Restricted cash and short-term investments................ (9,118) 2,002
Additions to construction in progress..................... (2,585) (2,183)
------- -------
Net cash used in investing activities................ (11,703) (181)
------- -------
Financing activities:
Principal payments of mortgage and other loans payable.... -- (482)
------- -------
Net cash used in financing activities................ -- (482)
------- -------
Net increase in cash and cash equivalents................... 610 5,224
Cash and cash equivalents at beginning of period............ 1,126 2,886
------- -------
Cash and cash equivalents at end of period.................. $ 1,736 $ 8,110
======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for interest...................... $ 3,447 $ 3,307
======= =======
The accompanying notes are an integral part of these financial statements.
24
26
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
NOTES TO UNAUDITED FINANCIAL STATEMENTS
1. INTERIM FINANCIAL STATEMENTS
The accompanying unaudited financial statements of Boca Raton Hotel and
Club Limited Partnership (the "Partnership") as of March 31, 1997 and for the
three months ended March 31, 1997 and 1996 have been prepared by the Company
without audit pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information related to the Company's organization,
significant accounting policies and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. These unaudited financial statements
reflect, in the opinion of management, all adjustments (which include only
normal recurring adjustments) necessary to fairly state the financial position
and the results of operations for the periods presented and the disclosures
herein are adequate to make the information presented not misleading. Operating
results for the interim periods presented are not indicative of the results that
can be expected for a full year.
2. COMMITMENTS AND CONTINGENCIES
On March 20, 1997, BRMC, corporate general partner of BRMC, L.P., and the
Partnership entered into a Contribution and Exchange Agreement with Florida
Panthers Holdings, Inc. (Panthers) and Panthers BRHC Limited to convey
substantially all of the assets and liabilities of the Partnership in exchange
for cash and ownership interests (as defined in the agreement) in Florida
Panthers Holdings, Inc. This exchange of interests, which is subject to approval
of the limited partners of the Partnership and the shareholders of Panthers, had
an agreed-upon value of approximately $325,000 and is to close within five days
of registering Panthers BRHC Limited shares and Panthers shares and warrants
under the Securities Act of 1933 and under applicable state securities law.
3. SUBSEQUENT EVENT
On April 3, 1997, the Partnership sold approximately 7 acres of land that
formed part of the Resort Golf Course for $6,675,000. The proceeds from this
sale will be used to completely reconstruct the Golf Course and provide
additional working capital. The estimated cost of the project is approximately
$6,000,000. Construction began on April 21, 1997 and is anticipated to be ready
for play December 15, 1997.
25
27
FLORIDA PANTHERS HOLDINGS, INC.
INTRODUCTION TO
UNAUDITED PRO FORMA FINANCIAL INFORMATION
GENERAL
The following Unaudited Pro Forma Consolidated Balance Sheet as of March
31, 1997 and the Unaudited Pro Forma Statements of Operations for the year ended
June 30, 1996 and nine months ended March 31, 1997 reflect adjustments to
Florida Panthers Holdings, Inc. (the "Company"), Hyatt Regency Pier 66 Hotel
("2301 Ltd."), Radisson Bahia Mar Resort and Yachting Center ("Rahn Ltd."),
Incredible Ice and Boca Raton Resort & Club historical financial position and
results of operations to give effect to the transactions discussed below as if
such transactions had been consummated at March 31, 1997, or at the beginning of
the period presented.
SEASONALITY
The Company operates in two separate business segments, both of which are
seasonal. Hockey related revenues and team operating expenses are recognized
during the regular season which extends from early October through mid-April. In
addition, approximately 45% to 50% of the resort net operating revenues are
earned during the period from January through April.
THE PRIOR OFFERINGS
The Unaudited Pro Forma Statements of Operations reflect the Company's
Prior Offerings, which were effective November 13, 1996 and the application of
the net proceeds therefrom, as if these offerings had occurred at the beginning
of the periods presented.
PRIVATE PLACEMENT TRANSACTION
On January 30, 1997, the Company issued and sold 2,460,000 shares of
unregistered, but otherwise unrestricted, Class A Common Stock in a Private
Placement at a price of $27.75 per share. The Private Placement resulted in net
proceeds to the Company of $65.6 million after deducting placement agency fees
and other expenses. The application of the net proceeds of the Private Placement
has been reflected in the Unaudited Pro Forma Consolidated Statements of
Operations as if it had occurred at the beginning of the periods presented.
2301 LTD. AND RAHN LTD.
Pursuant to the Pier 66 Exchange Agreement, on March 4, 1997 all of the
ownership interests, comprised of capital stock and partnership interests, of
each of the entities which own, directly or indirectly, all of the general and
limited partnership interests in 2301 Ltd. were exchanged for 4,450,000 shares
of the Company's Class A Common Stock. Pursuant to the Bahia Mar Exchange
Agreement, on March 4, 1997 all of the ownership interests, comprised of capital
stock and partnership interests, of each of the entities which own, directly or
indirectly, all of the general and limited partnership interests in Rahn Ltd.
were exchanged for 3,950,000 shares of the Company's Class A Common Stock. After
the consummation of the transactions contemplated by the Exchange Agreements,
the Company owns all of the ownership interests of each of the entities which
own, directly or indirectly, all of the general and limited partnership
interests in 2301 Ltd. and Rahn Ltd.
INCREDIBLE ICE
On January 31, 1997, the Company acquired substantially all of the
business, assets and operations of Iceland (Coral Springs) Corp. and Iceland
Holdings, Inc. ("Incredible Ice"), including the business, assets and operations
of a twin pad ice rink facility. In addition, the Company acquired from an
architectural firm and such architectural firm's principal certain architectural
plans and designs relating to the ice rink facility.
26
28
The consideration paid by the Company in connection with these acquisitions
consisted of the assumption by the Company of a maximum of approximately
$8,100,000 in construction-related obligations, of which approximately
$6,700,000 was repaid upon consummation of the referenced acquisition,
$1,000,000 in cash and 212,766 shares of unregistered, but otherwise
unrestricted, Class A Common Stock with a market value, if registered and
tradeable, of $4,000,000. These acquisitions will be accounted for as a purchase
business combination.
BOCA RATON HOTEL AND CLUB
On March 20, 1997, the Company entered into a definitive agreement (the
"Contribution and Exchange Agreement") with Boca Raton Hotel and Club Limited
Partnership, a Florida limited partnership ("Boca Partnership"), BRMC, L.P., a
Delaware limited partnership and the general partner of the Boca Partnership
(the "General Partner"), and BRMC Corporation, a Delaware corporation and
general partner of the General Partner ("BRMC"). Upon the terms and subject to
the provisions of the Contribution and Exchange Agreement, all of the assets of
Boca Partnership were transferred to Panthers BRHC Limited, a newly-formed
Florida limited partnership ("Panthers BRHC"), in which the managing general
partner and the limited partner are wholly-owned by the Company. As set forth in
the Contribution and Exchange Agreement, the Company, through the managing
general partner, limited partner and Panthers BRHC, paid the following
consideration: (i) a non-managing general partnership interest in Panthers BRHC;
(ii) warrants (the "Warrants") to purchase 869,810 shares of Panthers Holdings'
Class A common stock, par value $.01 per share (the "Class A Common Stock");
(iii) 189,574 shares of Class A Common Stock, which were used to compensate
certain affiliates of Boca Partnership, who through their affiliates control the
Boca General Partner, for their involvement in integrating Boca Raton Resort and
Club into the Company; (iv) 82,729 shares of Class A Common Stock, which were
used to pay persons to whom Boca Partnership is obligated to pay fees; (v)
Exchange Rights which, when distributed to the Boca General Partner and the
limited partners in accordance with the partnership agreement of Boca
Partnership, will entitle such holders, without any additional consideration, to
sell their partnership interests to an affiliate of the Company in exchange for
approximately 4,242,586 shares of Class A Common Stock exercisable at any time
before January 1, 2001; and (vi) the assumption of indebtedness and payment of
deferred fees and additional interest charges owed by the Boca Partnership in
the amount of approximately $205.9 million, of which approximately $95.9 million
was repaid upon consummation of the Contribution and Exchange. Of the $95.9
million which was repaid, $60.9 million was paid from the Company's working
capital and $35.0 million was paid from the incurrence of additional debt.
27
29
FLORIDA PANTHERS HOLDINGS, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 1997
(IN THOUSANDS)
BUSINESS TO BE ACQUIRED PRO FORMA AS
------------------------------ ADJUSTED FOR THE
FLORIDA PANTHERS BOCA RATON HOTEL ACQUISITION BUSINESS TO BE
HOLDINGS, INC. & CLUB ADJUSTMENTS ACQUIRED
---------------- ---------------- ----------- ----------------
Current Assets:
Cash and equivalents.............. $ 75,129 $ 1,736 $ 35,000(c) $ 16,012
(95,853)(c)
Accounts receivable............... 10,445 15,581 26,026
Prepaid expenses and other........ 1,831 36,237 38,068
-------- -------- -------- --------
Total current assets...... 87,405 53,554 (60,853) 80,106
Property and equipment, net......... 129,152 116,789 228,201(a) 474,142
Franchise cost, net................. 22,033 22,033
Player contract acquisition costs,
net............................... 4,438 4,438
Investment in Miami Arena
contract.......................... 8,609 8,609
Other intangible assets, net........ 6,118 6,118
Other assets........................ 4,316 17,751 (9,620)(b) 12,447
-------- -------- -------- --------
Total assets.............. $262,071 $188,094 $157,728 $607,893
======== ======== ======== ========
Current Liabilities:
Deferred revenue.................. $ 6,541 $ 4,936 $ 11,477
Accounts payable and accrued
expenses....................... 9,298 19,677 $ 11,800(b) 40,775
Current portion of long-term
debt........................... 15,235 400 15,635
Other current liabilities......... 3,611 6,236 (3,725)(c) 6,122
-------- -------- -------- --------
Total current
liabilities............. 34,685 31,249 8,075 74,009
Long-term debt...................... 25,951 174,800 20,332(b) 170,508
35,000(c)
(85,575)(c)
Other non-current liabilities....... 1,560 58,511 60,071
Shareholders' Equity
Class A Common Stock........... 234 45(d) 279
Class B Common Stock........... 3 3
Contributed capital............ 200,124 (76,466) 179,851(d) 303,509
Accumulated deficit............ (486) (486)
-------- -------- -------- --------
Total shareholders'
equity.................. 199,875 (76,466) 179,896 303,305
-------- -------- -------- --------
Total liabilities and
shareholders' equity.... $262,071 $188,094 $157,728 $607,893
======== ======== ======== ========
The accompanying notes to unaudited pro forma consolidated
financial statements are an integral part of these statements.
28
30
FLORIDA PANTHERS HOLDINGS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED MARCH 31, 1997
(IN THOUSANDS)
BUSINESSES ACQUIRED(V)
-----------------------------------
FLORIDA
PANTHERS PRO FORMA
HOLDINGS, INC. OFFERING AS ACQUISITION
ACTUAL ADJUSTMENTS ADJUSTED 2301 LTD. RAHN LTD. ADJUSTMENTS
-------------- ----------- ------------ --------- --------- -----------
Revenue:
Ticket sales......................... $18,944 $18,944
Television and radio................. 5,745 5,745
Advertising and promotion............ 3,580 3,580
Arena operations..................... 2,138 2,138
Rooms................................ 2,535 2,535 $ 8,846 $ 5,031
Yachting and marina services......... 701 701 2,242 2,865
Food, beverage and banquets.......... 1,209 1,209 5,800 1,867
Retail and other..................... 507 507 1,623 1,815
Other, primarily concessions......... 1,778 1,778
------- ------ ------- ------- ------- -------
Total revenue................... 37,137 37,137 18,511 11,578
Cost of revenue:
Team operations...................... 27,482 27,482
Ticketing and arena operations....... 2,865 2,865
Rooms................................ 408 408 1,925 1,071
Yachting and marina services......... 169 169 656 612
Food, beverage and banquets.......... 843 843 4,371 1,436
Retail and other..................... 219 219 727 796
Selling, general and
administrative..................... 7,243 7,243 5,513 3,658 $ 301(j)
------- ------ ------- ------- ------- -------
Total cost of revenue........... 39,229 39,229 13,192 7,573 301
Amortization and depreciation......... (3,586) (3,586) (1,155) (1,348) (977)(i)
------- ------ ------- ------- ------- -------
Operating income (loss)............... (5,678) (5,678) 4,164 2,657 (1,278)
Interest and other, net............... (1,844) $2,069(g) 225 (1,487) (816)
------- ------ ------- ------- ------- -------
Net income (loss)..................... $(7,522) $2,069 $(5,453) $ 2,677 $ 1,841 $(1,278)
======= ====== ======= ======= ======= =======
Net income (loss) per share........... $ (0.72)(f) $ (0.43)(h)
Pro Forma weighted average shares
outstanding.......................... 10,498(f) 12,811(h)
BUSINESSES ACQUIRED(V) BUSINESS TO BE ACQUIRED(E)
------------------------------------------------- ------------------------------
PRO FORMA AS
ADJUSTED FOR THE
INCREDIBLE ACQUISITION BUSINESSES BOCA RATON HOTEL ACQUISITION
ICE ADJUSTMENTS ACQUIRED & CLUB ADJUSTMENTS
---------- ----------- ----------------- ---------------- -----------
Revenue:
Ticket sales......................... $18,944
Television and radio................. 5,745
Advertising and promotion............ 3,580
Arena operations..................... 2,138
Rooms................................ 16,412 $35,579
Yachting and marina services......... 5,808
Food, beverage and banquets.......... 8,876 26,053
Retail and other..................... 3,945 27,680
Other, primarily concessions......... $ 356 2,134
------- --- ----- ----- -------
Total revenue................... 356 67,582 89,312
Cost of revenue:
Team operations...................... 27,482
Ticketing and arena operations....... 2,865
Rooms................................ 3,404 8,199
Yachting and marina services......... 1,437
Food, beverage and banquets.......... 6,650 20,410
Retail and other..................... 1,742 14,694
Selling, general and
administrative..................... 1,175(k) $ 4(j) 17,894 25,917 $ (817)(j)(n)
------- --- ----- ----- -------
Total cost of revenue........... 1,175 4 61,474 69,220 (817)
Amortization and depreciation......... (36) (89)(l) (7,191) (4,667) (1,768)(i)
------- --- ----- ----- -------
Operating income (loss)............... (855) (93) (1,083) 15,425 (951)
Interest and other, net............... (2,078) (13,250) 4,550 (o)
------- --- ----- ----- -------
Net income (loss)..................... $ (855) $ (93) $(3,161) $ 2,175 $ 3,599
======= === ===== ===== =======
Net income (loss) per share........... $ (0.15)(m)
Pro Forma weighted average shares
outstanding.......................... 20,550(m)
PRO FORMA AS
ADJUSTED FOR THE
BUSINESS TO BE
ACQUIRED
----------------
Revenue:
Ticket sales......................... $ 18,944
Television and radio................. 5,745
Advertising and promotion............ 3,580
Arena operations..................... 2,138
Rooms................................ 51,991
Yachting and marina services......... 5,808
Food, beverage and banquets.......... 34,929
Retail and other..................... 31,625
Other, primarily concessions......... 2,134
------
Total revenue................... 156,894
Cost of revenue:
Team operations...................... 27,482
Ticketing and arena operations....... 2,865
Rooms................................ 11,603
Yachting and marina services......... 1,437
Food, beverage and banquets.......... 27,060
Retail and other..................... 16,436
Selling, general and
administrative..................... 42,994
------
Total cost of revenue........... 129,877
Amortization and depreciation......... (13,626)
------
Operating income (loss)............... 13,391
Interest and other, net............... (10,778)
------
Net income (loss)..................... $ 2,613
======
Net income (loss) per share........... $ 0.10(p)
Pro Forma weighted average shares
outstanding.......................... 27,312(p)
The accompanying notes to unaudited pro forma consolidated financial statements
are an integral part of these statements.
29
31
FLORIDA PANTHERS HOLDINGS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1996
BUSINESSES ACQUIRED(V)
----------------------
FLORIDA
PANTHERS
HOLDINGS, INC. OFFERING PRO FORMA
ACTUAL ADJUSTMENTS AS ADJUSTED 2301 LTD. RAHN LTD.
-------------- ----------- ----------- --------- ----------
Revenue:
Ticket Sales..................................... $ 23,226 $ 23,226
Television and radio............................. 5,141 5,141
Advertising and promotion........................ 2,192 2,192
Arena operations................................. 1,082 1,082
Rooms............................................ $12,036 $ 6,251
Yachting and marina services..................... 3,481 3,813
Food, beverage and banquets...................... 8,309 2,379
Retail and other................................. 2,513 2,365
Other, primarily concessions..................... 2,446 2,446
-------- ------ -------- ------- -------
Total revenue............................... 34,087 34,087 26,339 14,808
Cost of revenue:
Team operations.................................. 32,639 32,639
Ticketing and arena operations................... 3,319 3,319
Rooms............................................ 2,698 1,402
Yachting and marina services..................... 1,175 733
Food, beverage and banquets...................... 6,340 1,870
Retail and other................................. 1,078 1,088
Selling, general and administrative.............. 8,371 8,371 7,957 5,068
-------- ------ -------- ------- -------
Total cost of revenue....................... 44,329 44,329 19,248 10,161
Amortization and depreciation.................... (9,815) (9,815) (1,608) (1,935)
-------- ------ -------- ------- -------
Operating income (loss)........................... (20,057) (20,057) 5,483 2,712
Interest and other, net........................... (5,082) $5,030(g) (52) (2,299) (1,340)
-------- ------ -------- ------- -------
Net income (loss)................................. $(25,139) $5,030 $(20,109) $ 3,184 $ 1,372
======== ====== ======== ======= =======
Net loss per share................................ $ (4.76)(q) $ (1.99)(r)
Pro Forma weighted average shares outstanding..... 5,276(q) 10,114(r)
BUSINESSES ACQUIRED(V)
----------------------------------------------------------
PRO FORMA
AS ADJUSTED FOR
THE
ACQUISITION INCREDIBLE ACQUISITION BUSINESSES
ADJUSTMENTS ICE(U) ADJUSTMENTS ACQUIRED
----------- ---------- ----------- ---------------
Revenue:
Ticket Sales..................................... $ 23,226
Television and radio............................. 5,141
Advertising and promotion........................ 2,192
Arena operations................................. 1,082
Rooms............................................ 18,287
Yachting and marina services..................... 7,294
Food, beverage and banquets...................... 10,688
Retail and other................................. 4,878
Other, primarily concessions..................... 2,446
------- -- --- --------
Total revenue............................... 75,234
Cost of revenue:
Team operations.................................. 32,639
Ticketing and arena operations................... 3,319
Rooms............................................ 4,100
Yachting and marina services..................... 1,908
Food, beverage and banquets...................... 8,210
Retail and other................................. 2,166
Selling, general and administrative.............. $ 411(j) 21,807
------- -- --- --------
Total cost of revenue....................... 411 74,149
Amortization and depreciation.................... (1,458)(i) $(152)(l) (14,968)
------- -- --- --------
Operating income (loss)........................... (1,869) (152) (13,883)
Interest and other, net........................... (3,691)
------- -- --- --------
Net income (loss)................................. $(1,869) $ $(152) $(17,574)
======= == === ========
Net loss per share................................ $ (0.94)(s)
Pro Forma weighted average shares outstanding..... 18,727(s)
BUSINESS TO BE ACQUIRED(E)
--------------------------
PRO FORMA AS
ADJUSTED FOR
THE
BOCA RATON ACQUISITION BUSINESS TO BE
HOTEL & CLUB ADJUSTMENTS ACQUIRED
------------ ----------- --------------
Revenue:
Ticket Sales..................................... $ 23,226
Television and radio............................. 5,141
Advertising and promotion........................ 2,192
Arena operations................................. 1,082
Rooms............................................ $ 47,044 65,331
Yachting and marina services..................... 7,294
Food, beverage and banquets...................... 33,465 44,153
Retail and other................................. 30,799 35,677
Other, primarily concessions..................... 2,446
-------- ------- --------
Total revenue............................... 111,308 186,542
Cost of revenue:
Team operations.................................. 32,639
Ticketing and arena operations................... 3,319
Rooms............................................ 10,895 14,995
Yachting and marina services..................... 1,908
Food, beverage and banquets...................... 25,597 33,807
Retail and other................................. 16,771 18,937
Selling, general and administrative.............. 38,223 $(1,169)(n)(j) 58,861
-------- ------- --------
Total cost of revenue....................... 91,486 (1,169) 164,466
Amortization and depreciation.................... (6,420) (1,719)(i) (23,107)
-------- ------- --------
Operating income (loss)........................... 13,402 (550) (1,031)
Interest and other, net........................... (15,697) 4,097 (15,291)
-------- ------- --------
Net income (loss)................................. $ (2,295) $ 3,547 $(16,322)
======== ======= ========
Net loss per share................................ $ (0.65)(t)
Pro Forma weighted average shares outstanding..... 25,237(t)
The accompanying notes to unaudited pro forma consolidated financial statements
are an integral part of these statements.
30
32
FLORIDA PANTHERS HOLDINGS, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS
(a) Represents the step-up in cost basis of property and equipment acquired.
The excess of purchase price over historical cost is allocated based upon
the relative market values as follows (in 000's):
HISTORICAL STEP-UP AS ADJUSTED
---------- -------- -----------
Land........................................... $ 26,851 $ 78,795 $105,646
Building, net.................................. 63,157 149,406 212,563
Furniture and equipment, net................... 17,446 -- 17,446
Construction-in-progress....................... 9,335 -- 9,335
-------- -------- --------
Total fixed assets........................... $116,789 $228,201 $344,990
======== ======== ========
The relative market values of property and equipment were determined by the
Company's management in consultation with representatives of the current
property owners. Factors considered in the allocation include trends in the
hospitality industry and local real estate market. Although such allocation
is preliminary, management believes that no material adjustments will be
required once the Company's due diligence process has been completed.
(b) Represents adjustments to outstanding debt and related costs, including
yield maintenance adjustment of $20,332,000 resulting from the early
retirement of debt in connection with the change of control, reduction of
deferred loan costs of $9,620,000 and accrual of acquisition closing costs
of $11,800,000. The yield maintenance adjustment has been determined in
accordance with Boca Partnership's debt agreements.
(c) Represents the use of Private Placement proceeds to repay approximately
$30,243,000 of outstanding debt, approximately $20,332,000 of yield
maintenance fees (see note (b) above) and $10,278,000 of deferred fees
(including $3,725,000 of deferred fees due the General Partner accrued at
March 31, 1997) and additional interest charges owed by the Boca
Partnership. Approximately $35,000,000 of additional debt will be repaid
with funds provided by additional borrowings in accordance with the terms
of the Contribution and Exchange.
(d) Represents the issuance of 4,514,889 shares of Class A Common Stock in
exchange for the property and equipment detailed in note (a) less the fair
value of long-term debt, per the Contribution and Exchange Agreement. The
fair market value of the net assets received ($103,430,000 or $22.91 per
share) is based on the average share price for 5 days before and 5 days
after execution of the Contribution and Exchange Agreement reduced by a
discount which was based upon the nature of the securities received
(convertible limited partnership units) and the size of the block of shares
to be ultimately issued. The adjustment amount is a combination of the
partners' deficit and the fair value noted.
(e) Boca Raton Resort and Club has a fiscal year which ends on December 31.
Reflected hereon are the results of operations for Boca Raton Resort and
Club for the nine month period ended March 31, 1997 and the twelve month
period ended June 30, 1996.
(f) Net loss per share and weighted average shares outstanding are determined
based on the 5,275,678 shares issued in connection with the Reorganization
as if they had been outstanding for the entire period presented and (i)
7,300,000 shares issued in connection with the Prior Offerings (ii)
8,400,000 shares issued in the acquisitions of Pier 66 and Bahia Mar
(4,450,000 shares for Pier 66 and 3,950,000 shares for Bahia Mar) (iii)
212,766 shares issued in the acquisition of Incredible Ice and (iv)
2,460,000 shares issued in the Private Placement, all for the period for
which they were actually outstanding.
(g) Represents the elimination of interest expense related to the term loan and
the related party debt for the period prior to the Prior Offerings. The
loans had an interest rate of LIBOR plus .75% per annum. In November 1996
these loans were repaid with the proceeds of the Prior Offerings.
(h) Net loss per share and weighted average shares outstanding are determined
based on the (i) 5,275,678 shares issued in connection with the
Reorganization as if they had been outstanding for the entire period
presented, (ii) 4,838,710 shares (of the 7,300,000 shares issued in the
Prior Offerings) issued to repay
31
33
the Company's outstanding indebtedness as if they had been outstanding for
the period prior to the Prior Offerings and (i) 7,300,000 shares issued in
connection with the Prior Offerings (ii) 8,400,000 shares issued in the
acquisitions of Pier 66 and Bahia Mar (4,450,000 shares for Pier 66 and
3,950,000 shares for Bahia Mar) (iii) 212,766 shares issued in the
acquisition of Incredible Ice and (iv) 2,460,000 shares issued in the
Private Placement, all for the period for which they were actually
outstanding.
(i) Represents the additional depreciation expense associated with the
stepped-up basis of the property and equipment of the acquired companies.
(j) Represents a management fee equal to 1% of revenue payable to Huizenga
Holdings.
(k) These Selling, general and administrative costs include approximately
$691,000 of legal and advisory costs incurred by the previous owners
related to unconsummated private placement and business sale transactions.
(l) Represents the amortization of the excess of purchase price over the
historical cost basis of assets of Incredible Ice ($6,092,000) over an
estimated useful life of 40 years.
(m) Net loss per share and weighted average shares outstanding are determined
based on the (i) 5,275,678 shares issued in connection with the
Reorganization as if they had been outstanding for the entire period
presented, (ii) 4,838,710 shares (of the 7,300,000 shares issued in the
Prior Offerings) issued to repay the Company's outstanding indebtedness as
if they had been outstanding for the period prior to the Prior Offerings,
(iii) 7,300,000 shares issued in connection with the Prior Offerings for
the period for which they were actually outstanding, (iv) 8,400,000 shares
in connection with the Exchange Agreements (4,450,000 shares for
2301 Ltd. and 3,950,000 shares for Rahn Ltd.) as if they had been
outstanding for the entire period presented, (v) 212,766 shares issued in
the acquisition of Incredible Ice as if they had been outstanding for the
entire period presented and (vi) 2,460,000 shares issued in the Private
Placement for the period for which they were actually outstanding.
(n) Represents the net difference in contracted expenses incurred prior to the
acquisition versus those to be incurred subsequent to the acquisition. Such
costs include payments under employment contracts and management
agreements.
(o) Represents the reduction of interest expense associated with approximately
$145,000,000 of adjusted debt balances related to the acquisition of the
Boca Raton Hotel and Club as discussed in note (c).
(p) Net income per share and weighted average shares outstanding are determined
based on the (i) 5,275,678 shares issued in connection with the
Reorganization as if they had been outstanding for the entire period
presented, (ii) 4,838,710 shares (of the 7,300,000 shares issued in the
Prior Offerings) issued to repay the Company's outstanding indebtedness as
if they had been outstanding for the period prior to the Prior Offerings,
(iii) 7,300,000 shares issued in connection with the Prior Offerings for
the period for which they were actually outstanding, (iv) 8,400,000 shares
issued in connection with the Exchange Agreements (4,450,000 shares for
2301 Ltd. and 3,950,000 shares for Rahn Ltd.) as if they had been
outstanding for the entire period presented, (v) 212,766 shares issued in
the acquisition of Incredible Ice, as if they had been outstanding for the
entire period presented, (vi) 2,460,000 shares issued in the Private
Placement for the period for which they were actually outstanding (vii)
4,514,889 shares issued in connection with the acquisition of Boca Raton
Hotel and Club as if they had been outstanding for the entire period
presented and (viii) 1,994,124 shares (of the 2,460,000 issued in the
Private Placement) used to repay $54.3 million of outstanding indebtedness
as if they had been outstanding for the entire period presented.
(q) Net loss per share and weighted average shares outstanding are determined
based on the 5,275,678 shares issued in connection with the Reorganization
as if they had been outstanding for the entire period presented.
(r) Net loss per share and weighted average shares outstanding are determined
based on the (i) 5,275,678 shares issued in connection with the
Reorganization and (ii) 4,838,710 shares (of the 7,300,000 shares issued in
the Prior Offerings) issued to repay the Company's outstanding indebtedness
as if they had been outstanding for the entire period presented.
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(s) Net loss per share and weighted average shares outstanding are determined
based on the (i) 5,275,678 shares issued in connection with the
Reorganization, (ii) 4,838,710 shares (of the 7,300,000 shares offered in
the Prior Offerings) issued to repay the Company's outstanding
indebtedness, (iii) 8,400,000 shares issued in connection with the Exchange
Agreements (4,450,000 shares for 2301 Ltd. and 3,950,000 shares for Rahn
Ltd.) and (iv) 212,766 shares issued in the acquisition of Incredible Ice,
all as if they had been outstanding for the entire period presented.
(t) Net loss per share and weighted average shares outstanding are determined
based on the (i) 5,275,678 shares issued in connection with the
Reorganization, (ii) 4,838,710 shares (of the 7,300,000 shares offered in
the Prior Offerings) issued to repay the Company's outstanding
indebtedness, (iii) 8,400,000 shares issued in connection with the Exchange
Agreements (4,450,000 shares for 2301 Ltd. and 3,950,000 shares for Rahn
Ltd.) (iv) 212,766 shares issued in the acquisition of Incredible Ice, (v)
4,514,889 shares issued in connection with the acquisition of Boca Raton
Hotel and Club and (vi) 1,994,124 shares (of the 2,460,000 issued in the
Private Placement) used to repay $54.3 million of outstanding indebtedness,
all as if they had been outstanding for the entire period presented.
(u) Incredible Ice commenced its operations during November, 1996. Accordingly,
there are no results of operations included hereon for the period ended
June 30, 1996.
(v) 2301 Ltd., Rahn Ltd. and Incredible Ice have fiscal years which end on
December 31. Reflected hereon are the results of operations of 2301 Ltd.,
Rahn Ltd. and Incredible Ice for the twelve month period ended June 30,
1996 and the period from July 1, 1996 to the date of acquisition by the
Company.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FLORIDA PANTHERS HOLDINGS, INC.
June 27, 1997
By: /s/ William M. Pierce
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William M. Pierce
Senior Vice President and Chief
Financial Officer
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