1
F O R M 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
--------------------
Quarterly Report Pursuant to Section 13 or 15 (d)
of The Securities Exchange Act of 1934
--------------------
For Quarter Ended June 30, 1997
Commission File No. 2-64309
GOLF HOST RESORTS, INC.
STATE OF COLORADO EMPLOYER IDENTIFICATION NO. 84-0631130
Post Office Drawer 3131, Durango, Colorado 81302
Telephone Number (970) 259-2000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding twelve months, and (2) has been subject to the
filing requirements for the past 90 days. Yes X No
------- ------
Issuer has no common stock subject to this report.
Page 1 of 19
2
GOLF HOST RESORTS, INC.
(A WHOLLY OWNED SUBSIDIARY OF GOLF HOSTS, INC.)
BALANCE SHEETS
ASSETS
(Substantially all pledged - Notes 2 and 3)
JUNE 30, DECEMBER 31,
1997 1996
-------------- -----------
(unaudited)
CURRENT ASSETS:
Cash $ 6,956,559 $ 488,685
Accounts receivable 4,383,882 4,380,108
Notes receivable -- 163,942
Inventories and supplies 4,947,595 5,123,966
Prepaid expenses and other 706,478 956,054
Intercompany receivables 739,665 724,312
----------- -----------
Total current assets 17,734,179 11,837,067
INTANGIBLES 17,424,977 --
PROPERTY AND EQUIPMENT, at cost,
less accumulated depreciation
and amortization 44,020,450 40,038,322
OTHER DEFERRED CHARGES 715,322 238,627
LONG-TERM RECEIVABLES, less
amounts currently due -- 1,021,178
----------- -----------
$79,894,928 $53,135,194
=========== ===========
The accompanying notes are an integral part of these financial statements.
Page 2
3
GOLF HOST RESORTS, INC.
(A WHOLLY OWNED SUBSIDIARY OF GOLF HOSTS, INC.)
BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
JUNE 30, DECEMBER 31,
1997 1996
------------ -----------
(unaudited)
CURRENT LIABILITIES:
Accounts payable $ 2,091,169 2,258,702
Accrued expenses 5,781,085 4,577,981
Deposits and prepaid fees 2,211,479 2,755,297
Notes payable -- 734,429
Maturing long-term obligations -- 2,788,764
----------- ----------
Total current liabilities 10,083,733 13,115,173
----------- ----------
LONG-TERM OBLIGATIONS,
less current maturities 75,775,000 17,777,544
----------- ----------
LONG-TERM INTERCOMPANY 3,302,968 4,951,895
----------- ----------
LONG-TERM CONTINGENCY -- 2,221,938
----------- ----------
SHAREHOLDERS' (DEFICIT) EQUITY:
Common stock, $1 par, 5,000
shares authorized and
outstanding 5,000 5,000
5.6% cumulative preferred
stock, $1 par, 4,577,000
shares authorized and
outstanding 4,577,000 4,577,000
Paid-in capital (13,557,000) 2,329,447
Retained (Deficit) Equity (291,773) 8,157,197
----------- -----------
Total shareholders' (Deficit) Equity (9,266,773) 15,068,644
----------- -----------
$79,894,928 $53,135,194
=========== ===========
The accompanying notes are an integral part of these financial statements.
Page 3
4
GOLF HOST RESORTS, INC.
STATEMENTS OF INCOME
(a wholly owned subsidiary of Golf Hosts, Inc.)
(unaudited)
Seven day 84 day Quarter
period ended period ended ended
June 30, 1997 June 23, 1997 June 30, 1996
-------------- ------------- ---------------
REVENUES:
Hotel $ 346,283 $ 4,106,527 $ 4,206,938
Food and beverage 275,690 3,485,895 3,780,692
Golf 236,227 3,745,237 3,665,311
Other 122,733 1,442,607 1,525,156
Real estate activities - - -
-------------- ------------- -------------
980,933 12,780,266 13,178,097
-------------- ------------- -------------
COSTS AND OPERATING EXPENSES:
Hotel 308,252 3,805,167 3,731,774
Food and beverage 203,215 2,475,719 2,647,222
Golf 112,614 1,538,916 1,563,782
Other 347,802 3,707,736 3,730,415
General and administrative 135,894 1,221,000 917,721
Real estate activities - 1,989 -
-------------- ------------ ------------
1,107,777 12,750,527 12,590,914
-------------- ------------ ------------
OPERATING INCOME ( LOSS) 126,844 29,739 587,183
INTEREST, NET 160,000 480,143 481,523
-------------- ------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES (286,844) (450,404) 105,660
PARENT INCOME TAX CHARGE (CREDIT) - (234,400) 20,500
-------------- ------------- ------------
INCOME (LOSS) BEFORE EXTRAORDINARY
ITEMS (286,844) (216,004) 85,160
LOSS ON EARLY EXTINGUISHMENT OF
LONG TERM DEBT (NET OF TAXES OF $155,400) - (288,600) -
-------------- ------------ ------------
INCOME (LOSS) BEFORE DIVIDEND
REQUIREMENTS ON PREFERRED STOCK (286,844) (504,604) 85,160
DIVIDEND REQUIREMENTS ON
PREFERRED STOCK 4,929 59,149 64,078
-------------- ------------ -------------
NET INCOME (LOSS) AVAILABLE
TO COMMON SHAREHOLDERS $ (291,773) $ (563,753) $ 21,082
============== ============ ============
EARNINGS (LOSS) PER COMMON SHARE $ (58.35) $ (112.75) $ 4.22
============== ============ ============
Seven day 174 day Six months
period ended period ended ended
June 30, 1997 June 23, 1997 June 30, 1996
-------------- ------------- ---------------
REVENUES:
Hotel $ 346,283 $ 10,775,626 $ 11,008,990
Food and beverage 275,690 8,106,385 8,636,926
Golf 236,227 9,347,282 9,519,704
Other 122,733 3,340,715 3,439,862
Real estate activities - 180,000 (14,288)
-------------- ------------ -----------
980,933 31,750,008 32,591,194
-------------- ------------ -----------
COSTS AND OPERATING EXPENSES:
Hotel 308,252 9,083,194 8,957,236
Food and beverage 203,215 5,591,373 5,766,862
Golf 112,614 3,247,628 3,305,784
Other 347,802 7,672,813 7,624,748
General and administrative 135,894 2,374,385 2,092,482
Real estate activities - 90,618 477
-------------- ------------ ------------
1,107,777 28,060,011 27,747,589
-------------- ------------ ------------
OPERATING INCOME ( LOSS) (126,844) 3,689,997 4,843,605
INTEREST, NET 160,000 945,481 995,720
-------------- ------------ -----------
INCOME (LOSS) BEFORE INCOME TAXES (286,844) 2,744,516 3,847,885
PARENT INCOME TAX CHARGE (CREDIT) - 967,800 1,424,400
-------------- ------------ ------------
INCOME (LOSS) BEFORE EXTRAORDINARY
ITEMS (286,844) 1,776,716 2,423,485
LOSS ON EARLY EXTINGUISHMENT OF
LONG TERM DEBT (NET OF TAXES OF $155,400) - (288,600) -
-------------- ------------ ------------
INCOME (LOSS) BEFORE DIVIDEND
REQUIREMENTS ON PREFERRED STOCK (286,844) 1,488,116 2,423,485
DIVIDEND REQUIREMENTS ON
PREFERRED STOCK 4,929 123,227 128,156
-------------- ---------- ------------
NET INCOME (LOSS) AVAILABLE
TO COMMON SHAREHOLDERS $ (291,773) $ 1,364,889 $ 2,295,329
============== ============ ============
EARNINGS (LOSS) PER COMMON SHARE $ (58.35) $ 272.98 $ 459.07
============== ============ ============
The accompanying notes are an integral part of these financial statements.
Page 4
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GOLF HOST RESORTS, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
(a wholly owned subsidiary of Golf Hosts, Inc.)
(unaudited)
$1 Par Value 5.6% Cumulative
Common Stock Preferred Stock Paid-In
---------------------------- ---------------------------------
Shares Amount Shares Amount Capital
------------- ------------- --------------- --------------- ----------------
Balance, December 31, 1995 5,000 $5,000 4,577,000 $4,577,000 $2,329,447
------------ ------------- --------------- --------------- ----------------
Net income available to
common shareholders - - - - -
------------ ------------- --------------- --------------- ----------------
Balance, December 31, 1996 5,000 5,000 4,577,000 4,577,000 2,329,447
Notes receivable
distribution (Note 1) - - - - -
Net income available to
common shareholders - - - - -
------------ ------------- --------------- --------------- ----------------
Balance, June 23, 1997 5,000 $ 5,000 4,577,000 $4,577,000 $ 2,329,447
============ ============= =============== =============== ================
Balance, June 24, 1997 5,000 $ 5,000 4,577,000 $4,577,000 $ (4,582,000)
Distribution to shareholder - - - - (8,975,000)
Net income (loss) available
to common shareholder - - - - -
------------ ------------- --------------- --------------- ----------------
Balance, June 30, 1997 5,000 $ 5,000 4,577,000 $4,577,000 $(13,557,000)
============ ============= =============== =============== ================
Retained Total
(Deficit) Shareholders'
Earnings (Deficit) Equity
---------------- -----------------
Balance, December 31, 1995 $7,042,986 $13,954,433
---------------- -----------------
Net income available to
common shareholders 1,114,211 1,114,211
---------------- -----------------
Balance, December 31, 1996 8,157,197 15,068,644
Notes receivable
distribution (Note 1) (3,941,666) (3,941,666)
Net income available to
common shareholders 1,364,889 1,364,889
---------------- -----------------
Balance, June 23, 1997 $ 5,580,420 $ 12,491,867
================ =================
Balance, June 24, 1997 - $ -
Distribution to shareholder - (8,975,000)
Net income (loss) available
to common shareholder (291,773) (291,773)
---------------- ------------------
Balance, June 30, 1997 $ (291,773) $ (9,266,773)
================ =================
Page 5
6
GOLF HOST RESORTS, INC.
(A WHOLLY OWNED SUBSIDIARY OF GOLF HOSTS, INC.)
STATEMENTS OF CASH FLOWS
Seven day 174 day Six months
period ended period ended ended
June 30, 1997 June 23, 1997 June 30, 1996
------------- ------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) before dividend requirements
on preferred stock $ (286,844) $ 1,488,116 $ 2,423,485
Noncash items included in income:
Depreciation and amortization 49,889 1,240,111 1,240,200
----------- ------------- -----------
Cash provided by income (236,955) 2,728,227 3,663,685
Changes in operating working capital 241,884 417,429 15,699
----------- ------------- -----------
Cash provided by operations 4,929 3,145,656 3,679,384
----------- ------------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increases in other deferred charges - 62,302 (248,622)
Purchases of property and equipment - (1,517,432) (1,142,757)
Net recovery of cost of property and
equipment sold or retired - (56,063) 12,190
Additions to notes receivable - (378,788) (17,517)
Reduction in notes receivable - 413,278 556,053
----------- ------------- -----------
Cash (used for) investing - (1,476,703) (840,653)
----------- ------------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in notes payable - (734,429) (1,285,673)
Increases in long-term obligations - - 467,378
Decreases in long-term obligations - (436,002) (1,023,564)
Net proceeds from merger transactions - 5,965,529 -
Increases in long-term intercompany (4,929) (123,227) 1,084,155
Increases in long-term contingency - 127,050 70,476
Decreases in long-term contingency - - -
----------- ------------ -----------
Cash provided (used) for financing (4,929) 4,798,921 (687,228)
----------- ------------ -----------
NET INCREASE IN CASH - 6,467,874 2,151,503
CASH, BEGINNING OF PERIOD 6,956,559 488,685 312,603
----------- ------------ -----------
CASH, END OF PERIOD $ 6,956,559 $ 6,956,559 $ 2,464,106
=========== ============ ===========
NONCASH FINANCING AND INVESTING ACTIVITIES:
Preferred stock dividend liability to
Golf Hosts, Inc. satisfied through the
intercompany account $ 4,929 $ 123,227 $ 128,156
The Company transferred undeveloped land
to inventory $ - $ 69,628 $ -
Distributions to shareholders $(8,975,000) $ (3,941,666) $ -
The accompanying notes are an integral part of these financial statements.
Page 6
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GOLF HOST RESORTS, INC.
(A WHOLLY OWNED SUBSIDIARY OF GOLF HOSTS, INC.)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
(1) ORGANIZATION, BUSINESS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
On June 23, 1997, TM Golf Hosts, Inc. ("TMGHI") acquired all of the
outstanding stock of Golf Hosts, Inc. ("GHI"), previously an 80% owner
of Golf Host Resorts, Inc. (the "Company"), and the 20% of the Company's
stock not held by GHI. Concurrently, TMGHI and GHI merged with the legal
survivor being GHI, which now owns 100% of the Company. Total
consideration for the acquisition of the outstanding stock of GHI and
the Company was approximately $63 million, including assumption of
certain liabilities. The transaction was financed with new borrowing and
all previous indebtedness of the Company was repaid, resulting in an
extraordinary loss on early retirement of debt primarily relating to the
write-off of unamortized debt discounts and related deferred expenses.
Under the terms of the agreement, certain long term receivables were
transferred to the selling shareholders immediately prior to the
transaction. In addition, certain marketable securities and investments
with ascribed values aggregating $8,975,000 were distributed from the
Company to its parent, GHI, subsequent to the transaction.
The interim financial statements are unaudited and were prepared from
the books and records of the Company. In the opinion of management, they
include all adjustments necessary for a fair presentation of the
Company's operations and financial positon. Certain of the Company's
operations are seasonal in nature and, therefore, interim results from
operations are not necessarily indicitive of a full year.
The financial statements as of and for the period from the merger to
June 30, 1997 reflect the allocation of the purchase price based upon
the fair value of the assets acquired and the liabilities assumed in
connection with the merger and are, therefore, not comparable to the
financial statements of the Company presented herein as of or for
periods prior to the merger, which are based upon its previous
historical cost. A portion of the purchase price was allocated to
certain intangible assets including those relating to the golf course
operations and the operations of the resort pursuant to the rental pool
arrangement with the condominium owners. These intangibles will
generally be amortized on a straight line basis over a period from 5-10
years based on the related expected period of benefit or contract term
of the underlying rental pool arrangement.
(2) LONG-TERM OBLIGATIONS
As a part of the transaction referred to in Note 1, all previously
existing long-term obligations were replaced by a mortgage note with
Golf Trust of America, L.P. The participating mortgage is for a term of
thirty years and is secured by certain real and personal property of the
Company and guaranteed by GHI. The loan allows for certain additional
borrowings for capital improvements. The loan has an initial base pay
rate increasing annually. The loan also includes participation in
certain revenue of the Innisbrook property securing the loan above
certain predefined levels.
Page 7
8
Long-term obligations consist of the following:
June 30, December 31,
1997 1996
------------- -------------
Participating mortgage note at varying,
increasing pay rates maturing in 2027 $ 70,775,000 $ -
Mortgage note at 6.34%, maturing
in 2002 5,000,000 -
Mortgage notes at varying rates, ranging
from 8.3% to 9%, maturing from
1998 to 2007 - 15,487,194
Equipment revolving credit line
at prime, maturing serially
from 1997 to 2001 - 3,891,728
A $2,000,000 revolving credit line at 9%
maturing in 2007 - 1,368,000
Other - 286,386
Unamortized debt discount and expense - (467,000)
------------ -------------
20,566,308
Less-current maturities - (2,788,764)
------------ -------------
$ 75,775,000 $ 17,777,544
============ =============
(3) ACCRUED EXPENSES
Accrued expenses consist of the following:
June 30, December 31,
1997 1996
-------------- --------------
Rental pool lease operations $ 2,238,783 $ 2,134,459
Salaries 2,042,857 1,456,267
Taxes, other than income taxes 766,724 242,820
Other 732,721 744,435
--------------- -------------
$ 5,781,085 $ 4,577,981
=============== =============
(4) INCOME TAX ALLOCATION AND SHARING POLICY
Effective concurrently with the merger, the Company and GHI elected to
be subsequently treated as S-Corporations for federal and state tax
purposes. As a result, the Company will generally no longer be subject
to federal and state income taxes and the tax effects of its activities
will accrue to the shareholders of GHI. The Company will be responsible
for entity level corporate taxes on certain built-in gains (where the
fair market value of the related assets at the effective date the
election was made exceeds the carryover tax basis) on property if sold
within a ten year period. Estimated deferred tax liabilities relating to
these potential entity level taxes, based on management's current plans,
have been reflected in these financial statements.
Page 8
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(5) SUPPLEMENTAL CASH FLOW DATA
The (increases) decreases in working capital other than cash are as
follows:
Seven day 174 day Six months
period ended period ended ended
June 30, 1997 June 23, 1997 June 30, 1996
------------- ------------- -------------
Accounts receivable $ (619) $ (3,155) $ 261,026
Inventories and supplies 49,751 253,620 (379,746)
Prepaid expenses and other 40,929 208,647 458,621
Intercompany (62,582) (319,029) 23,237
Accounts payable (27,475) (140,060) 220,972
Accrued expenses 331,063 872,041 (88,486)
Deposits and prepaid fees (89,183) (454,635) (479,925)
------------- ------------- -------------
$241,884 $ 417,429 $ 15,699
============= ============= =============
(6) CHANGE IN INNISBROOK PROPERTY MANAGER
Concurrently with the merger, the Company entered into an agreement to
terminate the existing Innisbrook hotel operation management agreement
effective July 15, 1997 for a $600,000 termination fee. A new hotel property
manager was engaged effective on that date. Such termination fee was included
in determining the cost of the acquisition.
Page 9
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GOLF HOST RESORTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
For purposes of discussing comparative results from operations for 1996 and
1997, the results for periods prior to and subsequent to the June 23, 1997
merger transaction, described in Note 1 to the financial statements, are
combined.
For the current quarter, occupied room nights fell 2.1% from the prior year. On
a divisional basis, occupied room nights at Innisbrook rose 2.3%, while
Tamarron's room nights declined 20.1%. The increase in Innisbrook's occupancy
resulted primarily from the social segment. The decline in Tamarron's room
nights occurred mostly in the conference segment.
Revenues from resort operations increased 4.4% for the quarter. The revenue per
occupied room night totaled $332.50, a 6.6% increase over the prior year's
$311.80. Innisbrook's revenue per occupied room night increased 5.6% to
$348.47, while Tamarron's rose 4.9% to $248.64. The comparable prior year
amounts were $330.05 and $236.97, respectively. The improvement in guest
spending at both resorts offset the impact of the lower occupancy at Tamarron,
yielding a $583,000 increase in resort operations revenue. Consistent with the
prior year, there was no real estate revenue generated during the quarter.
Costs and operating expenses increased to 100.7% of revenues from 95.5%. As a
result, operating income declined $684,000 from the prior year to a loss of
$97,000. Hotel expense increased disproportionately to the occupancy change as
a result of an approximately $190,000 adjustment to related inventories. Other
costs and operating expenses rose 8.7%, or approximately $325,000. Included in
this increase was approximately $134,000 related to the ensuing property
management transition at Innisbrook. General and administrative expense
increased $439,000 over the prior year. Included in this increase are an
additional $l80,000 in costs relative to the change in control of the Company
discussed in the notes to financial statements and the above-mentioned
management transition, and an increase of $135,000 in bad debt expense.
Interest expense increased $159,000 to $640,000, primarily as a result of
additional interest from the new borrowings as a result of the merger
transactions described in Note 1 to the financial statements. In addition,
repayment of previous indebtedness of the Company resulted in an extraordinary
loss on early retirement of debt of approximately $444,000, presented net of a
related tax benefit of $155,000 primarily relating to the write-off of
unamortized debt discounts and related deferred expenses.
For the six months ended June 30, 1997, occupied room nights declined 2.3% from
the prior year level. Improved levels of spending per occupied room, up 2.2%,
served to somewhat mitigate the decline in occupancy, yielding a slight decline
in revenues of .2%. As a percentage of revenues, cost and operating expenses
rose from 85.1% to 89.3%. The reduction in income before income taxes of
$1,674,000 reflects the impact of the above items coupled with the first
quarter reduction in occupancy, related lost economies of scale relative to
operating income margin and the impact of the minimum wage hike.
FINANCIAL CONDITION AND LIQUIDITY
As more fully discussed in Note 1 to the financial statements, on June 23, 1997
all the stock of the Company and its parent GHI was acquired by previously
unrelated parties in a transaction financed by new debt obligations of the
Company. These transactions have generally resulted in improved financial
liquidity as a result of additional cash and borrowing facilities.
The Company's working capital position at June 30, 1997 was $3,845,000,
compared with $1,841,000 at June 30, 1996 and a deficit of $1,278,000 at
December 31, l996. The Company typically experiences seasonal fluctuations in
its net working capital position without impairing its ability to pay trade
creditors in a timely manner and satisfy its financial obligations in an
orderly fashion.
As a result of the change in control previously discussed, the Company's former
lenders were replaced with a single lender on June 23, 1997. Reference is made
in the notes to financial statements regarding the new lender.
While the Company has a substantial retained deficit, based on existing cash
levels, expected operating levels for the balance of the year and the existence
of credit facilities with its parent, the Company assesses its liquidity as
satisfactory.
Page 10
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Registrant is not currently involved in lawsuits other than ordinary
routine litigation incidental to its business.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Pursuant to an agreement with the SEC staff, included in this 10-Q
filing are unaudited financial statements of the Innisbrook Rental
Pool Lease Operation and the Tamarron Rental Pool Lease Operation
for the quarter and six months ended June 30, 1997
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 - Financial Data Schedule (for SEC use only).
(b) Reports on Form 8-K
Form 8-K, reporting changes in control of registrant and
change in registrant's certifying accountant, was filed with
the SEC on July 8, 1997.
Page 11
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GOLF HOST RESORTS, INC.
Date: August 20, 1997 By:/s/ Merrick Kleeman
--------------------- --------------------------
Merrick Kleeman
President
Date: August 20, 1997 By:/s/ R. L. Akin
--------------------- --------------------------
Richard L. Akin
Vice President
and Treasurer
Page 12
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RENTAL POOL LEASE OPERATIONS
The following unaudited financial statements of the Innisbrook Rental Pool
Lease Operation and the Tamarron Rental Pool Lease Operation (the Rental Pools)
are for the quarter and six months ended June 30, 1997.
The operations of the Rental Pools are tied closely to that of Golf Host
Resorts, Inc. (the Company), and provide for distribution of a percentage of
the Company's room revenues, as defined in the Rental Pool Master Lease
Agreements, to participating condominium owners (Participants).
The operations of the Rental Pools are more fully discussed in Form 10-K, for
the fiscal year ended December 31, 1996 (File No. 2-64309).
As discussed in Note 1 to the Golf Host Resorts, Inc. financial statement, on
June 23, 1997, TM Golf Hosts, Inc. ("TMGHI") acquired all of the outstanding
stock of Golf Hosts, Inc. ("GHI") and the 20% of the Company's stock not held
by GHI. Concurrently, TMGHI and GHI merged with the legal survivor being GHI.
Concurrently with the merger, the Company entered into an agreement to
terminate the existing management agreement, effective July 15, 1997, with the
current hotel operations manager for Innisbrook for a $600,000 termination fee.
A new hotel property manager was engaged effective on that date. Neither the
change in ownership nor the change in hotel managers at Innisbrook is expected
to have an adverse affect on the participants in the Rental Pools.
Page 13
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INNISBROOK RENTAL POOL LEASE OPERATION
BALANCE SHEETS
JUNE 30, 1997 AND 1996
DISTRIBUTION FUND
1997 1996
------------- ------------
ASSETS
RECEIVABLE FROM GOLF HOST RESORTS, INC.
FOR DISTRIBUTION - FULLY SECURED $1,982,583 $1,808,415
INTEREST RECEIVABLE FROM MAINTENANCE
ESCROW FUND 29,522 16,784
---------- ----------
$2,012,105 $1,825,199
LIABILITIES AND PARTICIPANTS' FUND BALANCES
DUE TO PARTICIPANTS FOR DISTRIBUTION $1,464,014 $1,469,054
DUE TO MAINTENANCE ESCROW FUND 318,529 310,851
RESERVE FOR ESTIMATED LIFE-SAFETY
REIMBURSEMENT 229,562 45,294
PARTICIPANTS' FUND BALANCES - -
---------- ----------
$2,012,105 $1,825,199
MAINTENANCE ESCROW FUND
ASSETS
CASH AND CASH EQUIVALENTS $2,134,454 $1,345,193
INVENTORIES - 251
RECEIVABLE FROM DISTRIBUTION FUND 318,529 310,851
INTEREST RECEIVABLE 29,135 13,260
---------- ----------
$2,482,118 $1,669,555
========== ==========
LIABILITIES AND PARTICIPANTS' FUND BALANCES
ACCOUNTS PAYABLE $ 378 $ 268
INTEREST PAYABLE TO DISTRIBUTION FUND 29,522 16,784
CARPET CARE RESERVE 34,293 45,420
PARTICIPANTS' FUND BALANCES 2,417,925 1,607,083
---------- ----------
$2,482,118 $1,669,555
These statements were prepared from the books and records of the Rental Pool
without audit and, in the opinion of management, include all adjustments which
are necessary for a fair presentation.
Page 14
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INNISBROOK RENTAL POOL LEASE OPERATION
STATEMENTS OF OPERATIONS
FOR THE QUARTERS AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
DISTRIBUTION FUND
Current Quarter Year-to-Date
------------------------------- -------------------------------
1997 1996 1997 1996
------------ ------------ ------------- ------------
GROSS REVENUES $ 3,761,563 $ 3,453,553 $ 9,643,218 $ 9,619,612
------------ ------------ ------------ ------------
REDUCTIONS:
Agents' commissions 54,459 84,723 157,076 203,270
Audit fees 3,000 3,000 6,100 6,100
------------ ------------ ------------ ------------
57,459 87,723 163,176 209,370
------------ ------------ ------------ ------------
ADJUSTED GROSS REVENUES 3,704,104 3,365,830 9,480,042 9,410,242
MANAGEMENT FEE (1,740,929) (1,581,940) (4,455,619) (4,422,814)
------------ ------------ ------------ ------------
GROSS INCOME DISTRIBUTION 1,963,175 1,783,890 5,024,423 4,987,428
ADJUSTMENTS TO GROSS INCOME
DISTRIBUTION:
Corporate complimentary
occupany fees 4,574 2,135 8,494 5,141
Occupancy fees (424,702) (414,465) (920,252) (953,956)
Advisory Committee expenses (25,601) (23,838) (54,313) (46,078)
Life-safety reimbursement (47,596) (39,559) (229,562) (45,294)
------------ ------------- ------------ ------------
NET INCOME DISTRIBUTION 1,469,850 1,308,163 3,828,790 3,947,241
ADJUSTMENTS TO NET INCOME
DISTRIBUTION:
Occupancy fees 424,702 414,465 920,252 953,956
Hospitality suite fees 2,059 2,852 5,081 7,181
Greens fees 20,890 19,546 56,680 57,053
Additional participation credit 17,485 18,095 35,320 36,385
------------ -------------- ------------ ------------
AMOUNT AVAILABLE FOR DISTRIBUTION
TO PARTICIPANTS $ 1,934,986 $ 1,763,121 $ 4,846,123 $ 5,001,816
============ ============== ============ ============
Average daily distribution $ 23.59 $ 21.13 $ 31.06 $ 31.43
Average room rate $ 108.20 $ 101.63 $ 127.50 $ 122.76
Occupied room nights 34,766 33,980 75,633 78,358
Available room nights 80,026 83,444 156,048 159,136
Occupancy percentage 42.4% 40.7% 48.5% 49.2%
Average number of available units 901 917 862 874
These statements were prepared from the books and records of the
Rental Pool without audit and, in the opinion of management, include
all adjustments which are necessary for a fair presentation.
Page 15
16
INNISBROOK RENTAL POOL OPERATION
STATEMENTS OF CHANGES IN PARTICIPANTS' FUND BALANCES
FOR THE QUARTERS AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
DISTRIBUTION FUND
Current Quarter Year-to-Date
-------------------------- ----------------------
1997 1996 1997 1996
--------- ---------- --------- ----------
BALANCE, beginning of period $ -- $ -- $ -- $ --
ADDITIONS:
Amounts available for distribution
before life-safety reimbursement 1,800,617 1,802,680 4,893,720 5,047,110
Interest received or receivable from
Maintenance Escrow Fund 29,522 16,784 51,584 41,131
REDUCTIONS:
Amount withheld for Maintenance Escrow Fund (318,529) (310,851) (690,194) (715,472)
Amounts held in reserve for estimated
life-safety reimbursement (47,596) (39,559) (229,562) (45,294)
Amounts accrued or paid to participants (1,464,014) (1,469,054) (4,025,548) (4,327,475)
----------- ----------- ----------- -----------
BALANCE, end of period $ -- $ -- $ -- $ --
=========== =========== =========== ===========
MAINTENANCE ESCROW FUND
BALANCE, beginning of period $ 2,329,421 $ 1,496,895 $ 1,734,415 1,141,259
ADDITIONS:
Amounts withheld from occupancy fees 318,529 310,851 690,194 715,472
Interest earned 29,522 16,784 51,584 41,131
Charges to participants to establish
or restore escrow balances 377,022 279,991 830,345 519,465
REDUCTIONS:
Maintenance charges (564,468) (449,856) (776,068) (716,345)
Carpet care reserve deposit (8,497) (8,293) (22,994) (19,085)
Interest accrued or paid to
Distribution Fund (29,522) (16,784) (51,584) (41,131)
Refunds to participants as prescribed
by Master Lease Agreement (34,082) (22,505) (37,967) (33,683)
----------- ----------- ----------- -----------
BALANCE, end of period $ 2,417,925 $ 1,607,083 2,417,925 $ 1,607,083
=========== =========== =========== ===========
These statements were prepared from the books and records
of the Rental Pool without audit and, in the opinion of
management, include all adjustments which are necessary for
a fair presentation.
Page 16
17
TAMARRON RENTAL POOL LEASE OPERATION
BALANCE SHEETS
JUNE 30, 1997 AND 1996
DISTRIBUTION FUND
1997 1996
------------- -------------
ASSETS
CASH $ 1,000 $ 1,000
RECEIVABLE FROM GOLF HOST RESORTS, INC.
FOR DISTRIBUTION 256,200 317,655
INTEREST RECEIVABLE FROM MAINTENANCE
ESCROW FUND 132 1,147
------------- -------------
$ 257,332 $ 319,802
============= =============
LIABILITIES AND PARTICIPANTS' FUND BALANCES
DUE TO PARTICIPANTS FOR DISTRIBUTION $ 190,016 $ 264,791
DUE TO MAINTENANCE ESCROW FUND 67,316 55,011
PARTICIPANTS' FUND BALANCES - -
------------- ------------
$ 257,332 $ 319,802
============= ============
MAINTENANCE ESCROW FUND
ASSETS
CASH AND CASH EQUIVALENTS $ 13,301 149,252
DUE FROM DISTRIBUTION FUND 67,316 55,011
INTEREST RECEIVABLE - 934
INVENTORY:
Linen 114,241 114,237
Materials and supplies 17,224 8,285
DEPOSITS - 16,000
------------- ----------
$ 212,082 $ 343,719
============= ==========
LIABILITIES AND PARTICIPANTS' FUND BALANCES
ACCOUNTS PAYABLE $ 5,113 $ 6,493
INTEREST PAYABLE TO DISTRIBUTION FUND 132 1,147
PARTICIPANTS' FUND BALANCES 206,837 336,079
------------- ----------
$ 212,082 $ 343,719
============= ==========
These statements were prepared from the books and records of the Rental Pool
without audit and, in the opinion of management, include all adjustments which
are necessary for a fair presentation.
Page 17
18
TAMARRON RENTAL POOL LEASE OPERATION
STATEMENTS OF OPERATIONS
FOR THE QUARTERS AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
DISTRIBUTION FUND
Current Quarter Year-to-Date
---------------------------------- ---------------------------------
1997 1996 1997 1996
-------------- -------------- -------------- -------------
GROSS REVENUES $ 579,286 $ 721,149 $ 1,280,976 $ 1,255,511
-------------- -------------- -------------- -------------
DEDUCTIONS:
Agents' commissions 12,418 15,781 70,465 52,360
Sales and marketing expenses 46,345 61,297 102,480 106,718
Audit fees 2,600 2,601 5,200 5,202
-------------- -------------- -------------- -------------
61,363 79,679 178,145 164,280
-------------- -------------- -------------- -------------
ADJUSTED GROSS REVENUES 517,923 641,470 1,102,831 1,091,231
MANAGEMENT FEE (258,961) (320,735) (551,415) (545,616)
-------------- -------------- -------------- -------------
GROSS INCOME DISTRIBUTION 258,962 320,735 551,416 545,615
ADJUSTMENTS TO GROSS INCOME
DISTRIBUTION:
Corporate complimentary
occupancy fees 864 903 1,486 1,598
Occupancy fees (66,586) (67,475) (161,703) (124,158)
Designated items (33,021) (20,273) (53,932) (33,659)
Advisory Committee expenses (3,626) (3,983) (7,719) (5,763)
-------------- -------------- -------------- -------------
POOLED INCOME 156,593 229,907 329,548 383,633
ADJUSTMENTS TO POOLED INCOME:
Hospitality suite fees - - - 53
Occupancy fees 66,586 67,475 161,703 124,158
-------------- -------------- -------------- -------------
NET INCOME DISTRIBUTION $ 223,179 $ 297,382 $ 491,251 $ 507,844
============== ============== ============== =============
Average daily distribution $ 8.34 $ 11.38 $ 9.37 $ 9.83
Average room rate $ 87.49 $ 86.98 $ 79.17 $ 80.53
Room nights 6,621 8,288 16,180 15,587
Occupancy percentage 24.7% 31.7% 30.9% 30.l%
Average number of available units 294 288 290 284
Number of units in Rental Pool at
end of period 298 298 - -
These statements were prepared from the books and records of the
Rental Pool without audit and, in the opinion of management, include
all adjustments which are necessary for a fair presentation.
Page 18
19
TAMARRON RENTAL POOL LEASE OPERATION
STATEMENTS OF CHANGES IN PARTICIPANTS' FUND BALANCES
FOR THE QUARTERS AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
DISTRIBUTION FUND
Current Quarter Year-to-Date
--------------------------------- ---------------------------------
1997 1996 1997 1996
------------- ------------- ------------- --------------
BALANCE, beginning of period $ - $ - $ - $ -
ADDITIONS:
Amounts available for distribution 223,179 297,382 491,251 507,844
Interest received or receivable from
Maintenance Escrow Fund 132 1,147 385 2,327
REDUCTIONS:
Amounts withheld for Maintenance Escrow Fund (33,295) (33,738) (80,855) (62,080)
Amounts accrued or paid to participants (190,016) (264,791) (410,781) (448,091)
------------- ------------- ------------ ------------
BALANCE, end of period $ - $ - $ - $ -
============= ============= ============ ============
MAINTENANCE ESCROW FUND
BALANCE, beginning of period $ 210,371 $ 254,070 $ 197,548 $ 328,336
ADDITIONS:
Amounts withheld from occupancy fees 33,295 33,738 80,855 62,080
Interest earned 132 1,147 385 2,327
Reimbursement of designated items 33,021 20,273 53,932 33,659
Charges to participants to establish
or restore escrow balances 4,209 125,948 16,295 142,632
REDUCTIONS:
Maintenance and inventory charges (32,756) (51,905) (52,228) (88,622)
Refurbishing charges (2,237) (17,804) (24,668) (93,549)
Interest accrued or paid to
Distribution Fund (132) (1,147) (385) (2,327)
Designated items (33,021) (20,273) (53,932) (33,660)
Refunds to participants as prescribed
by Master Lease Agreement (6,045) (7,968) (10,965) (14,797)
-------------- ------------- ------------ ------------
BALANCE, end of period $ 206,837 $ 336,079 $ 206,837 $ 336,079
============= ============= ============ ============
These statements were prepared from the books and records of
the Rental Pool without audit and, in the opinion of
management, include all adjustments which are necessary for a
fair presentation.
Page 19