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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 1-13173
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FLORIDA PANTHERS HOLDINGS, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 65-0676005
(State or Other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
450 EAST LAS OLAS BOULEVARD, FORT 33301
LAUDERDALE, FLORIDA (Zip Code)
(Address of Principal Executive Offices)
(954) 712-1300
(Registrant's Telephone Number, Including Area Code)
NOT APPLICABLE
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuers' classes
of common stock, as of the latest practicable date.
As of February 13, 1998, there were 34,855,533 shares of Class A Common
Stock, $.01 par value per share, and 255,000 shares of Class B Common Stock,
$.01 par value per share, outstanding.
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FLORIDA PANTHERS HOLDINGS, INC.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
PAGE
----
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets at December 31, 1997 and June
30, 1997............................................... 2
Unaudited Consolidated Statements of Operations -- Three
Months Ended December 31, 1997 and 1996................ 3
Unaudited Consolidated Statements of Operations -- Six
Months Ended December 31, 1997 and 1996................ 4
Unaudited Consolidated Statements of Cash Flows -- Six
Months Ended December 31, 1997 and 1996................ 5
Notes to Unaudited Consolidated Financial Statements...... 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS....................... 8
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS................................... 14
ITEM 2. CHANGES IN SECURITIES............................... 14
ITEM 3. DEFAULTS UPON SENIOR SECURITIES..................... 14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS................................................... 14
ITEM 5. OTHER INFORMATION................................... 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.................... 15
Signatures.................................................. 16
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PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FLORIDA PANTHERS HOLDINGS, INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
DECEMBER 31, JUNE 30,
1997 1997
------------ --------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................... $ 12,867 $ 13,709
Restricted cash............................................. 20,209 30,110
Accounts receivable......................................... 24,793 13,087
Inventory................................................... 6,990 5,763
Current portion of Premier Club notes receivable............ 3,763 3,778
Other current assets........................................ 5,428 4,143
-------- --------
Total current assets.............................. 74,050 70,590
Property and equipment, net................................. 603,451 475,391
Intangible assets, net...................................... 39,344 40,987
Premier Club notes receivable, net of current portion....... 7,686 8,240
Other assets................................................ 10,802 5,184
-------- --------
Total assets...................................... $735,333 $600,392
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses....................... $ 40,284 $ 34,590
Deferred revenue............................................ 28,917 10,015
Other current liabilities................................... 4,583 3,631
-------- --------
Total current liabilities......................... 73,784 48,236
Long-term debt.............................................. 173,856 186,056
Premier Club membership fees................................ 66,426 63,499
Other non-current liabilities............................... 2,701 1,448
Minority interest in consolidated entities.................. 2,994 --
Commitments and contingencies...............................
SHAREHOLDERS' EQUITY:
Preferred Stock, $.01 par value, 5,000,000 shares
authorized, none issued................................... -- --
Class A Common Stock, $.01 par value, 100,000,000 shares
authorized and 34,855,220 and 27,929,570 shares
outstanding at December 31 and June 30, 1997,
respectively.............................................. 349 279
Class B Common Stock, $.01 par value, 10,000,000 shares
authorized and 255,000 shares issued and outstanding at
December 31 and June 30, 1997............................. 3 3
Contributed capital......................................... 429,440 304,095
Accumulated deficit......................................... (14,220) (3,224)
-------- --------
Total shareholders' equity........................ 415,572 301,153
-------- --------
Total liabilities and shareholders' equity........ $735,333 $600,392
======== ========
The accompanying notes are an integral part of these statements.
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FLORIDA PANTHERS HOLDINGS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31
(IN THOUSANDS, EXCEPT PER SHARE DATA)
1997 1996
------- -------
REVENUE:
Leisure and recreation...................................... $58,093 $ --
Entertainment and sports.................................... 18,487 14,216
------- -------
Total revenue..................................... 76,580 14,216
OPERATING EXPENSES:
Cost of leisure and recreation services..................... 25,900 --
Cost of entertainment and sports services................... 18,239 13,462
Selling, general and administrative expenses................ 22,922 2,426
Amortization and depreciation expense....................... 5,068 884
------- -------
Total operating expenses.......................... 72,129 16,772
------- -------
Operating income (loss)..................................... 4,451 (2,556)
Interest and other income................................... 853 151
Interest and other expense.................................. (3,375) (798)
Minority interest........................................... (768) (322)
------- -------
Net income (loss)........................................... $ 1,161 $(3,525)
======= =======
Net income (loss) per share -- basic and diluted............ $ .03 $ (0.37)
======= =======
Shares used in computing net income (loss) per
share -- basic............................................ 35,104 9,560
======= =======
Shares used in computing net income (loss) per
share -- diluted.......................................... 35,602 9,560
======= =======
The accompanying notes are an integral part of these statements.
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FLORIDA PANTHERS HOLDINGS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31
(IN THOUSANDS, EXCEPT PER SHARE DATA)
1997 1996
-------- -------
REVENUE:
Leisure and recreation...................................... $ 88,380 $ --
Entertainment and sports.................................... 21,149 15,383
-------- -------
Total revenue..................................... 109,529 15,383
OPERATING EXPENSES:
Cost of leisure and recreation services..................... 43,468 --
Cost of entertainment and sports services................... 21,577 15,951
Selling, general and administrative expenses................ 40,364 4,097
Amortization and depreciation expense....................... 8,915 1,795
-------- -------
Total operating expenses.......................... 114,324 21,843
-------- -------
Operating loss.............................................. (4,795) (6,460)
Interest and other income................................... 1,318 151
Interest and other expense.................................. (6,663) (2,201)
Minority interest........................................... (856) (289)
-------- -------
Net loss.................................................... $(10,996) $(8,799)
======== =======
Net loss per share -- basic and diluted..................... $ (0.33) $ (1.19)
======== =======
Shares used in computing net loss per share -- basic and
diluted................................................... 33,552 7,418
======== =======
The accompanying notes are an integral part of these statements.
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FLORIDA PANTHERS HOLDINGS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED DECEMBER 31
(IN THOUSANDS)
1997 1996
--------- --------
OPERATING ACTIVITIES:
Net loss.................................................... $ (10,996) $ (8,799)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Amortization and depreciation expense..................... 8,915 1,795
Deferred compensation..................................... -- (321)
Income applicable to minority interests................... 856 289
Change in operating assets and liabilities (excluding the
effects of business acquisitions):
Accounts receivable....................................... (9,892) (2,902)
Other current assets...................................... 20,243 (1,018)
Accounts payable and accrued expenses..................... (5,346) 2,971
Deferred revenue and other liabilities.................... 22,509 9,598
--------- --------
Net cash provided by operating activities......... 26,289 1,613
INVESTING ACTIVITIES:
Cash acquired in business acquisitions...................... 12,476 --
Cash used in business acquisitions.......................... (83,534) --
Acquisition of additional interest in consolidated
subsidiary................................................ (10,439) --
Capital expenditures........................................ (40,419) (649)
--------- --------
Net cash used in investing activities............. (121,916) (649)
FINANCING ACTIVITIES:
Net proceeds from issuance of common stock.................. 108,760 66,322
Payments under note payable to related party................ -- (20,000)
Payment under long term debt agreement...................... -- (25,000)
Borrowings under revolving credit line...................... 22,800 1,131
Payments on revolving credit line........................... (35,000) --
Purchase of and distributions to minority interests......... (1,642) (74)
Payment of dividends to minority interests.................. (207) (140)
Proceeds from exercise of stock options..................... 74 --
--------- --------
Net cash provided by financing activities......... 94,785 22,239
--------- --------
Increase (decrease) in cash and cash
equivalents...................................... (842) 23,203
Cash and cash equivalents, at beginning of period........... 13,709 465
--------- --------
Cash and cash equivalents, at end of period................. $ 12,867 $ 23,668
========= ========
SUPPLEMENTAL SCHEDULE OF NON-CASH OPERATING AND INVESTING
ACTIVITIES:
Reduction in other assets in connection with acquisition of
additional interest in units of consolidated subsidiary... $ 1,474 $ --
========= ========
The accompanying notes are an integral part of these statements.
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FLORIDA PANTHERS HOLDINGS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited Consolidated Financial Statements of Florida
Panthers Holdings, Inc. and subsidiaries (the "Company") have been prepared in
accordance with generally accepted accounting principles for interim financial
statements and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements.
The financial information furnished herein reflects all adjustments
consisting of normal recurring accruals that, in the opinion of management, are
necessary for a fair presentation of the results for the interim period. The
results of operations for the three and six month periods ended December 31,
1997 are not necessarily indicative of the results to be expected for the entire
year primarily due to seasonal variations. All significant intercompany accounts
have been eliminated.
2. ORGANIZATION
The Company is a holding company with subsidiaries currently operating in
two business segments: (i) leisure and recreation (the "Leisure and Recreation
Business") and (ii) entertainment and sports (the "Entertainment and Sports
Business").
The Leisure and Recreation Business presently consists of the Company's
ownership of the Boca Raton Resort and Club ("Boca Resort"), the Hyatt Regency
Pier 66 Hotel and Marina ("Pier 66"), the Radisson Bahia Mar Beach Resort and
Yachting Center ("Bahia Mar") and the Rolling Hills Golf Club ("Rolling Hills").
The Company also maintains an ownership interest in the Registry Hotel at
Pelican Bay ("Registry Resort"). Boca Resort, Pier 66, Bahia Mar, Registry
Resort and Rolling Hills are collectively referred to as (the "Resort
Facilities").
The Entertainment and Sports Business consists of the Florida Panthers
Hockey Club (the "Panthers"), the operations of two ice skating rinks, the arena
operating and development companies associated with the new Broward County Arena
and an interest in the operations of the Miami Arena.
3. SALE OF COMMON STOCK
On August 11, 1997, the Company received $108.8 million in net proceeds
from the underwritten public offering of 6,000,000 shares of Class A Common
Stock. A portion of the proceeds was used to acquire Registry Resort. See Note
4.
4. BUSINESS COMBINATIONS
On August 13, 1997, the Company acquired its initial 68% ownership interest
(325 of the 474 units) in Registry Resort for 918,174 shares of Class A Common
Stock, warrants to purchase 325,000 shares of Class A Common Stock and $75.5
million in cash. As of December 31, 1997, the Company had paid an additional
$11.9 million to close on 57 units, increasing its ownership interest to
approximately 81%. The Company currently has outstanding offers to acquire the
remaining units of Registry Resort.
On November 26, 1997, the Company acquired certain assets associated with
Rolling Hills in exchange for $8.0 million in cash. The assets acquired consist
of a 27 hole golf course located in Davie, Florida, a 27,000
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FLORIDA PANTHERS HOLDINGS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
square-foot club house, a restaurant, a grill, a pro shop, practice greens, a
driving range, a parking lot and approximately 79 acres of land adjacent to
Rolling Hills.
The initial acquisition of a 68% interest in Registry Resort and the
acquisition of Rolling Hills have been accounted for under the purchase method
of accounting. The preliminary purchase price allocation in thousands is set
forth below.
REGISTRY ROLLING HILLS TOTAL
-------- ------------- --------
Cash acquired in connection with business acquisition....... $ 12,476 $ -- $ 12,476
Other current assets........................................ 7,347 150 7,497
Property and equipment...................................... 86,499 7,876 94,375
Other non-current assets.................................... 2,319 -- 2,319
Current liabilities including accrued transaction related
costs..................................................... (12,300) -- (12,300)
Minority interest........................................... (4,046) -- (4,046)
Class A Common Stock issued or reserved for issuance........ (16,787) -- (16,787)
-------- ------ --------
Cash used in business acquisition........................... $ 75,508 $8,026 $ 83,534
======== ====== ========
The purchase price allocation for the subsequent acquisition of units in
Registry Resort in thousands is set forth below.
Property and equipment...................................... $11,913
Reduction in other assets (mortgage notes receivable)
resulting from acquisition of additional interest in units
of consolidated subsidiary................................ (1,474)
-------
Cash used to acquire additional interest in consolidated
entity.................................................... $10,439
=======
The Company's consolidated results of operations on an unaudited pro forma
basis, assuming that the Registry Resort and Rolling Hills acquisitions and sale
of 6,000,000 shares of Class A Common Stock occurred at the beginning of the
periods presented, are set forth below in thousands. See also Note 3.
SIX MONTHS ENDED
DECEMBER 31,
------------------
1997 1996
-------- -------
Revenue..................................................... $ 92,418 $17,673
Operating loss.............................................. (6,205) (6,898)
Net loss.................................................... (11,997) (8,008)
Pro forma basic and diluted loss per common share........... $ (.34) $ (.56)
Number of share used to compute loss per share -- basic and
diluted................................................... 35,104 14,336
5. RECENT DEVELOPMENTS
On December 19, 1997, the Company entered into a definitive agreement to
acquire the Arizona Biltmore Hotel, in partnership with its current owners, for
$225.8 million in cash and shares of Class A Common Stock, along with the
assumption of $63.5 million in debt. The consummation of the transaction is
subject to customary conditions and will be accounted for under the purchase
method of accounting.
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ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
Consolidated Financial Statements and related Notes thereto included in the
Company's Annual Report on Form 10-K.
RESULTS OF OPERATIONS
The Company currently operates through two business segments (i) the
Leisure and Recreation Business and (ii) the Entertainment and Sports Business.
The Leisure and Recreation Business presently consists of the Company's
ownership of Boca Resort, Pier 66, Bahia Mar and Rolling Hills and an ownership
interest in Registry Resort. The Entertainment and Sports Business consists of
the Panthers and the Company's ice skating rink operations and arena development
and management activities.
The Company has historically experienced, and expects to continue to
experience, seasonal fluctuations in its gross revenue and net earnings. Peak
season at the Resort Facilities extends from January through April, while
regular season for the Panthers commences in October and ends in April.
Accordingly, the operating results for the three and six month periods ended
December 31, 1997 are not necessarily indicative of the results to be expected
for the entire year.
BUSINESS SEGMENT INFORMATION
The following table sets forth business segment operating data, with costs
and expenses expressed as a percent of the related business segment revenue for
the period indicated in thousands:
THREE MONTHS ENDED DECEMBER 31, SIX MONTHS ENDED DECEMBER 31,
--------------------------------- ------------------------------
1997 % 1996 % 1997 % 1996 %
-------- ---- -------- ---- -------- --- ------- ---
REVENUE:
Leisure and recreation.................. $58,093 76% $ -- -- $ 88,380 81% $ -- --
Entertainment and sports................ 18,487 24% 14,216 100% 21,149 19% 15,383 100%
------- ------- -------- -------
Total revenue.................. 76,580 100% 14,216 100% 109,529 100% 15,383 100%
OPERATING EXPENSES:
Cost of Services
Leisure and recreation................ 25,900 45% -- -- 43,468 49% -- --
Entertainment and sports.............. 18,239 99% 13,462 95% 21,577 102% 15,951 104%
Selling, General and Administrative
Expenses
Leisure and recreation................ 17,351 30% -- -- 31,083 35% -- --
Entertainment and sports.............. 2,781 15% 2,272 16% 4,874 23% 3,943 26%
Corporate............................. 2,790 -- 154 -- 4,407 -- 154 --
Amortization and Depreciation
Leisure and recreation................ 4,026 7% -- -- 6,893 8% -- --
Entertainment and sports.............. 1,042 6% 884 6% 2,022 10% 1,795 11%
------- ------- -------- -------
Total operating expenses....... 72,129 94% 16,772 118% 114,324 104% 21,843 142%
------- ------- -------- -------
Operating income -- leisure and
recreation............................ $10,816 $ -- $ 6,936 $ --
======= ======= ======== =======
Operating loss -- entertainment and
sports................................ $(3,575) $(2,402) $ (7,324) $(6,306)
======= ======= ======== =======
Corporate general and administrative.... $(2,790) $ (154) $ (4,407) $ (154)
======= ======= ======== =======
Total operating income
(loss)....................... $ 4,451 $(2,556) $ (4,795) $(6,460)
======= ======= ======== =======
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Consolidated Results of Operations
Net operating income (loss) for the three months ended December 31, 1997
and 1996 amounted to $4.5 million and $(2.6) million, respectively. The
Company's net operating loss for the six months ended December 31, 1997 and 1996
amounted to $4.8 million and $6.5 million, respectively. Strong results from the
Resort Facilities during the 1997 periods were offset by higher corporate
general and administrative expenses and higher losses from the Entertainment and
Sports Business. Additional information relating to the operating results for
each business segment is set forth below.
LEISURE AND RECREATION
Since each of the Resort Facilities was acquired subsequent to December 31,
1996 and was accounted for under the purchase method of accounting, a discussion
of comparative operating results for the Leisure and Recreation Business would
not be meaningful and therefore has been excluded. Accordingly, the discussion
to follow is dedicated to the 1997 period only.
Revenue
Leisure and Recreation Business revenue totaled $58.1 million and $88.4
million, respectively, for the three and six month periods ended December 31,
1997 of which approximately 60% was derived from non-room sources such as food
and beverage sales, yachting and marina revenue, retail and other resort
amenities. Management expects leisure and recreation revenue for the ensuing
three month period ending March 31, 1998 to be higher than the recently
concluded quarterly period as the Resort Facilities move into their peak season.
Operating Expenses
Cost of leisure and recreation services totaled $25.9 million and $43.5
million, respectively, for the three and six month periods ended December 31,
1997 and consisted primarily of direct costs incurred in connection with
servicing the Resort Facilities' rooms, marinas, food and beverage operations,
retail establishments and other facility amenities.
Selling, general and administrative expenses ("S,G&A") for the Leisure and
Recreation Business totaled $17.4 million and $31.1 million, respectively, for
the three and six month periods ended December 31, 1997 and consisted primarily
of various fixed, indirect costs, including utility and property costs, real
estate taxes, insurance, management and franchise agreement fees and
administrative salaries.
Amortization and depreciation expense associated with the Resort Facilities
totaled $4.0 million and $6.9 million, respectively, for the three and six month
periods ended December 31, 1997 and relates to the property and equipment
acquired in connection with business combinations.
ENTERTAINMENT AND SPORTS
Revenue
Entertainment and Sports Business revenue was $18.5 million and $14.2
million for the three months ended December 31, 1997 and 1996, respectively, and
$21.1 million and $15.4 million for the six months ended December 31, 1997 and
1996, respectively. The primary component of the Entertainment and Sports
Business is the Panthers. Revenue and direct expenses associated with the team
are recorded over the regular hockey season. Therefore, the majority of revenue
is reported during the three-month periods ended December 31 and March 31.
Should the Panthers participate in the National Hockey League playoffs,
additional revenue and expenses will be recorded during the three-month period
ended June 30. The increase in revenue during the 1997 periods was the result of
higher Panther ticket sales due to an increased number of home games played,
along with the inclusion of revenue from the Company's ice rink operations. The
prior year did not reflect the ice rink operations since they were acquired
subsequent to December 31, 1996.
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Operating Expenses
The Company's total entertainment and sports operating expenses increased
$5.4 million, to $22.0 million for the three months ended December 31, 1997,
compared to $16.6 million for the same period of the prior year. Total
entertainment and sports operating expenses were $28.5 million and $21.7 million
for the six months ended December 31, 1997 and 1996, respectively. The increase
was primarily the result of higher variable costs from team, ticketing and
arena-operations due to more home games during the 1997 periods.
CORPORATE GENERAL AND ADMINISTRATIVE EXPENSES
Corporate general and administrative expenses totaled $2.8 million and
$154,000 for the three months ended December 31, 1997 and 1996, respectively,
and $4.4 million and $154,000 for the six months ended December 31, 1997 and
1996, respectively. The increase was substantially the result of additional
legal, accounting and other corporate general and administrative expenses, which
commenced in November 1996 when the Company became publicly held. These expenses
are associated with the Company's (i) increase in total revenue and assets, (ii)
diversification into the resort hospitality business and (iii) compliance with
reporting and other requirements of being publicly held.
Interest and Other Income
Interest and other income totaled $853,000 and $151,000 for the three
months ended December 31, 1997 and 1996, respectively, and $1.3 million and
$151,000 for the six months ended December 31, 1997 and 1996, respectively. The
increase in interest income was the result of maintaining a higher average cash
balance during the 1997 periods primarily due to the Company's acquisition of
the Resort Facilities.
Interest Expense and Minority Interest
Interest expense totaled $3.4 million and $798,000 for the three months
ended December 31, 1997 and 1996, respectively, and $6.7 million and $2.2
million for the six months ended December 31, 1997 and 1996, respectively. The
increase in interest expense during the 1997 periods was attributable to
additional debt assumed in connection with the acquisitions of the Company's
Resort Facilities. In the comparable periods of the prior year, the outstanding
indebtedness related to the purchase of the Panthers, along with borrowing
needed to fund hockey operations. Such indebtedness was repaid with a portion of
the proceeds from the Company's initial public offering in November 1996. The
increase in the average indebtedness during the 1997 periods was partially
offset by a lower effective interest rate.
Minority interest associated with Registry Resort (applicable for the 1997
period only) and the Miami Arena totaled $768,000 and $322,000 during the three
months ended December 31, 1997 and 1996, respectively. Minority interest totaled
$856,000 and $289,000 during the six months ended December 31, 1997 and 1996,
respectively.
EBITDA
Earnings before interest expense, income taxes, depreciation and
amortization ("EBITDA") is a widely accepted financial indicator used by certain
investors and analysts to compare companies on the basis of operating
performance. It is not, however, a standard measure under generally accepted
accounting principles. EBITDA totaled $9.6 million for the three months ended
December 31, 1997 compared to an EBITDA loss of $1.8 million for the three
months ended December 31, 1996.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents decreased $842,000, from $13.7 million at June
30, 1997 to $12.9 million at December 31, 1997. The major components of the
change are discussed below.
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Cash Provided By Operating Activities
Cash provided by operating activities totaled $26.3 million and $1.6
million for the six months ended December 31, 1997 and 1996, respectively. The
increase for the recently concluded six-month period was the result of receiving
cash flows from the Resort Facilities. Each of the properties was acquired
subsequent to December 31, 1996, and accordingly, the related cash flows are not
included in the Company's prior year financial statements. Cash flows from the
Resort Facilities were partially offset by increased costs for corporate general
and administrative expense and slightly less cash flow from the Entertainment
and Sports Business.
Cash Used in Investing Activities
Cash used in investing activities amounted to $121.9 million and $649,000
for the six months ended December 31, 1997 and 1996, respectively. During the
six months ended December 31, 1997, the Company (i) acquired its initial 68%
ownership interest in Registry Resort for $75.5 million in cash and the issuance
of 918,174 shares of Class A Common Stock and warrants to purchase 325,000
shares of Class A Common Stock, (ii) closed on an additional 57 units of the
remaining 149 units of Registry Resort at a cost of $11.9 million (of which
$10.4 million was paid in cash) and (iii) acquired Rolling Hills for $8.0
million (see Note 4 to the Consolidated Financial Statements). The Company
currently has outstanding offers to acquire the remaining units of Registry
Resort.
Capital expenditures increased by $39.8 million during the six months ended
December 31, 1997, primarily associated with the Boca Resort expansion program
that was recently completed. The expansion included an 18 court tennis club
(which adds to the existing 12 courts located in a separate complex), a new
Bates designed championship golf course and a new 140,000 square foot conference
center.
Under covenants to a senior note payable secured by Boca Resort, the
Company is required to deposit excess operating cash into reserve accounts which
are accumulated and restricted to support future debt service, facility
expansion, furniture, fixture and equipment replacement and real estate tax
payments. Additionally, the Company's loan and management agreements for Bahia
Mar and Pier 66 also require the maintenance of customary capital expenditure
reserve funds for the replacement of assets; each such resort having completed a
renovation program within the last four years. These reserve funds are
classified as restricted cash on the Consolidated Balance Sheets.
Cash Provided By Financing Activities
Cash provided by financing activities amounted to $94.8 million and $22.2
million for the six months ended December 31, 1997 and 1996, respectively.
During the six months ended December 31, 1997, the Company received $108.8
million of net proceeds from the sale of shares of Class A Common Stock, which
was partially offset by the net repayment of $12.2 million on the Company's
revolving credit facility. During the six months ended December 31, 1996, the
Company completed its initial public offering and concurrent offering for an
aggregate of 7,300,000 shares of Class A Common Stock, which resulted in net
proceeds of $66.3 million, before the retirement of $45.0 million of debt.
Capital Resources
The Company believes that it has, or can obtain, sufficient financial
resources to support ongoing operations, finance the growth of its businesses
and take advantage of acquisition opportunities.
The Company's capital resources are provided from both internal and
external sources. The primary capital resources from internal operations include
revenue from (i) room rentals, food and beverage sales and other recreational
amenity use at the Resort Facilities, (ii) club memberships at Boca Resort and
(iii) ticket, broadcasting, sponsorship and other revenue derived from ownership
of the Panthers.
The primary external source of liquidity has been the issuance of equity
securities. Borrowing under lines-of-credit and term loans have also provided
capital to the Company. Since its initial public offering in November 1996, the
Company has raised $240.6 million from the issuance of its Class A Common Stock.
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During the ten-month period preceding December 31, 1997, the Company assumed
$151.1 million of secured, term indebtedness in connection with its business
acquisitions. In addition to these term loans as of December 31, 1997, the
Company has $12.2 million in availability under a $35.0 million revolving credit
facility, which is secured by assets of the Panthers. The Company is also
negotiating with another financial institution for senior and subordinated debt
facilities with borrowing capacity up to an estimated $500 million.
FINANCIAL CONDITION
Significant changes in balance sheet data from June 30, 1997 to December
31, 1997 are discussed below.
Restricted Cash
Restricted cash decreased from $30.1 million at June 30, 1997 to $20.2
million at December 31, 1997. The decrease was primarily the result of expending
previously restricted cash for the Boca Resort expansion program.
Accounts Receivable
Accounts receivable increased from $13.1 million at June 30, 1997 to $24.8
million at December 31, 1997. The increase was partially the result of assuming
trade receivables in connection with the acquisition of Registry Resort, which
totaled $2.5 million at December 31, 1997. In addition, Resort Facilities'
account receivables increased $7.9 million due to higher occupancy rates from
corporate guests. The remaining increase substantially relates to the hockey
team operations where it is customary for receivables to be higher during the
regular playing season, which extends from October to April.
Property and Equipment
Property and equipment increased $128.1 million from June 30, 1997 to
December 31, 1997. Approximately $98.4 million of the increase related to
acquisitions of units in Registry Resort, which has brought the Company's
interest to approximately 81% at December 31, 1997. Additionally, $7.9 million
was attributable to the acquisition of Rolling Hills. The remaining increase
represents capital development at Boca Resort, offset by depreciation expense.
Other Assets
Other assets increased $5.6 million from June 30, 1997 to December 31,
1997, partially due to new hockey player signing bonuses, which will be
amortized over the life of the relevant player contracts. In addition, the
Company acquired mortgage notes receivable in connection with the acquisition of
Registry Resort.
Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses increased from $34.6 million at June
30, 1997 to $40.3 million at December 31, 1997. The increase was substantially
attributable to the accrual of acquisition related expenses associated with
Registry Resort.
Deferred Revenue
Deferred revenue increased from $10.0 million at June 30, 1997 to $28.9
million at December 31, 1997. The increase was primarily the result of two
factors. Approximately $10.0 million of the increase related to receipts for
annual club membership dues of Boca Resort. Such amounts are recognized as
revenue ratably over the membership year, which commenced on October 1. An
additional $4.1 million was generated from Panthers' ticket sales for the
current hockey season. Deferred ticket revenue is recognized over the current
season, which extends from October through April.
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Long-Term Debt
Long-term debt decreased from $186.1 million at June 30, 1997 to $173.9
million at December 31, 1997. The decrease was the result of the repayment of
$35.0 million under the Company's revolving credit facility, offset by
subsequent borrowings of $22.8 million.
Minority Interest
The Company has a minority interest in Registry Resort and certain arena
operations.
Shareholders' Equity
Shareholders' equity increased from $301.2 million at June 30, 1997 to
$415.6 million at December 31, 1997. The increase was attributable to the sale
of 6,000,000 shares of Class A Common Stock, together with the issuance of
918,174 shares of Class A Common Stock and warrants to purchase 325,000 shares
of Class A Common Stock in connection with the acquisition of an ownership
interest in Registry Resort. In addition, the Company received proceeds from the
exercise of employee stock options. These sources of increases to shareholders'
equity were partially offset by the net loss for the six months ended December
31, 1997.
FORWARD LOOKING STATEMENTS
Certain statements and information included herein may constitute
forward-looking statements within the meaning of the Federal Private Securities
Litigation Reform Act of 1995. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, among others, the ability
to develop and implement operational and financial systems to manage rapidly
growing operations; competition in the Company's principal businesses; the
ability to integrate and successfully operate acquired businesses and the risks
associated with such businesses; the ability to obtain financing on terms
acceptable to the Company to finance its growth strategy; the Company's limited
history of operations in the Leisure and Recreation Business; dependence on key
personnel and the ability to properly assess and capitalize on future business
opportunities.
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PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There has been no material change in the status of legal proceedings as
described under Item 3., Part I to the Company's Annual Report on Form 10-K for
the year ended June 30, 1997, except as set forth below.
The suit alleging that the Company violated the Americans with Disabilities
Act in connection with the development of the Broward County Arena was dismissed
without prejudice in October 1997.
On October 9, 1997, Bernard Kalishman filed a purported shareholder
derivative and class action lawsuit on behalf of the Company, as nominal
defendant, against Messrs. Huizenga, Berrard, Johnson, Rochon, Hudson, Egan and
Evans, current directors of the Company and William Torrey, a former director of
the Company, in the Seventeenth Judicial Circuit in and for Broward County,
Florida. The suit alleges, among other things, that each of the defendants,
other than Mr. Egan, breached contractual and fiduciary obligations owed to the
Company and its stockholders by engaging in self-dealing transactions in
connection with the Company's purchase of Pier 66 and Bahia Mar. The suit seeks
to impose a constructive trust on alleged excessive compensation paid to the
prior owners of Pier 66 and Bahia Mar or to have damages assessed against the
defendants. The Company believes that this suit is without merit and intends to
defend vigorously against this suit.
ITEM 2. CHANGES IN SECURITIES
On November 17, 1997, the Company's stockholders approved the change of the
Company's state of incorporation from Florida to Delaware. Upon the
effectiveness of the reincorporation, the rights of the Company's stockholders
and the Company's corporate affairs became governed by and subject to the
Delaware General Corporation Law (the "Delaware Act"), rather than the Florida
Business Corporation Act (the "Florida Act"). In this regard, the Company's
affairs became governed by and subject to the certificate of incorporation and
bylaws of the Company, as a Delaware corporation. For a discussion of the
material differences in the rights of stockholders before and after the
reincorporation, reference is made to the Company's Proxy Statement on Schedule
14A dated October 9, 1997, relevant portions of which are incorporated herein.
In connection with the reincorporation, the Company's authorized capital
was expanded to include 5,000,000 shares of preferred stock, par value $.01 per
share (the "Preferred Stock"). The Company's Board of Directors is now
authorized, without further shareholder action, to divide any or all shares of
the Preferred Stock into series and fix and determine the designations,
preferences and relative rights and qualifications, limitations or restrictions
thereon of any series so established, including voting powers, dividend rights,
liquidation preferences, redemption rights and conversion privileges. The
issuance of shares of the Preferred Stock with voting rights or conversion
rights may adversely affect the voting power of the then issued and outstanding
shares of the Company's Class A Common Stock, par value $.01 per share,
including the loss of voting control to others. As of the date of this Quarterly
Report on Form 10-Q, there are no plans, agreements or understandings for the
authorization or issuance of any shares of the Preferred Stock.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Annual Meeting of Shareholders held on November 17, 1997, the
shareholders voted to elect the directors named in the proxy materials dated
October 9, 1997, to amend the Company's 1996 Stock Option
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Plan increasing number of shares which are available for issuance under the plan
and to change the Company's state of incorporation from Florida to Delaware. The
results of the voting were as follows:
WITHHELD/ BROKER
FOR AGAINST ABSTAIN NON-VOTE TOTAL(1)
------------- --------- --------- --------- -------------
Elect each as directors of
the Company:
Steven R. Berrard....... 2,525,324,358 -- 16,673 -- 2,525,341,031
Dennis J. Callaghan..... 2,525,324,358 -- 16,673 -- 2,525,341,031
Michael S. Egan......... 2,525,323,647 -- 17,384 -- 2,525,341,031
Richard H. Evans........ 2,525,323,958 -- 17,073 -- 2,525,341,031
Chris Evert............. 2,525,318,831 -- 22,200 -- 2,525,341,031
Harris W. Hudson........ 2,525,321,105 -- 19,926 -- 2,525,341,031
H. Wayne Huizenga....... 2,525,319,678 -- 21,353 -- 2,525,341,031
George D. Johnson,
Jr.................... 2,525,324,208 -- 16,823 -- 2,525,341,031
Henry Latimer........... 2,525,323,164 -- 17,867 -- 2,525,341,031
Richard C. Rochon....... 2,525,324,378 -- 16,653 -- 2,525,341,031
Amend 1996 Stock Option
Plan....................... 2,520,395,597 1,075,149 30,045 3,840,240 2,525,341,031
Reincorporate in Delaware.... 2,519,801,510 1,685,193 14,088 3,840,240 2,525,341,031
- ---------------
(1) Each share of Class A Common Stock is entitled to one vote and each share of
Class B Common Stock is entitled to 10,000 votes on each matter.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
NUMBER DESCRIPTION
- ------ -----------
11 -- Computation of Earnings Per Share
27 -- Financial Data Schedule (for SEC use only)
99 -- The Company's Definitive Proxy Statement on Schedule 14A
dated October 9, 1997 (limited to pages 16-24 of the Proxy
Statement, which are incorporated by reference in response
to Item 2 of Part II above)
(b) Reports on Form 8-K
The Company filed the following Current Reports on Form 8-K during the
three months ended December 31, 1997: Amended Current Report on Form 8-K/A filed
on October 27, 1997, which related to the Company's acquisition of Registry
Resort and reported certain financial statement and pro forma information
related thereto, Current Report on Form 8-K filed on November 17, 1997, which
related to the Company's reincorporation in the state of Delaware, Current
Report on Form 8-K filed on December 16, 1997, which related to the Company's
acquisition of Rolling Hills and Current Report on Form 8-K filed on December
19, 1997, which related to the Company's agreement to acquire the Arizona
Biltmore and reported certain factual information related thereto.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
FLORIDA PANTHERS HOLDINGS, INC.
By: /s/ WILLIAM M. PIERCE
-----------------------------------
William M. Pierce
Senior Vice President and Chief
Financial Officer
(Principal Financial Officer)
By: /s/ STEVEN M. DAURIA
-----------------------------------
Steven M. Dauria
Vice President and Corporate
Controller
(Principal Accounting Officer)
Date: February 13, 1998
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