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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended JUNE 30, 1995
Commission File NO. 0-3858
INTERNATIONAL LEISURE HOSTS, LTD.
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(Exact name of Registrant as specified in its charter)
Wyoming 86-0224163
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
2525 E. Camelback, Phoenix, AZ 85016
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(Address of principal executive (Zip Code)
office)
Issuer's telephone number, including area code (602) 955-6100
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the 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
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State the number of shares outstanding of each of the issuer's classes of common
stock as of the close of the latest practicable date. There were 698,262 shares
of $.01 par value common stock outstanding as of August 10, 1995.
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PART I - FINANCIAL INFORMATION
ITEM 1. SUMMARIZED FINANCIAL INFORMATION
INTERNATIONAL LEISURE HOSTS, LTD.
CONSOLIDATED BALANCE SHEETS
JUNE MARCH
30, 1995 31, 1995
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ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 334,406 $ 573,279
Marketable investment securities 300,000
Accounts receivable 35,121 10,855
Merchandise inventories 225,260 114,515
Prepaid income taxes 46,647 15,147
Prepaid expenses and other 18,986 6,338
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Total current assets 660,420 1,020,134
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CASH SEGREGATED FOR CONSTRUCTION OF REPLACEMENT
PROPERTY 116,758
PROPERTY AND EQUIPMENT:
Buildings, equipment and improvements 6,199,165 2,807,179
Construction in process 2,646 2,841,521
Less accumulated depreciation and amortization (2,386,663) (2,357,201)
----------- -----------
Property and equipment - net 3,815,148 3,291,499
DEPOSITS 2,478 2,478
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$ 4,478,046 $ 4,430,869
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LIABILITIES & SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 429,763 $ 476,423
Accrued liabilities 50,625 63,005
Advance deposits 271,269 106,520
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Total current liablilites 751,657 645,948
DEFERRED INCOME TAXES 180,852 180,852
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Total liabilities 932,509 826,800
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COMMITMENTS AND CONTINGENCIES (Note 3)
SHAREHOLDERS' EQUITY:
Preferred stock, $5 par value - authorized 100,000 shares; issued, none
Common stock, $.01 par value -
authorized 2,000,000 shares; issued, 718,373 shares 7,184 7,184
Additional paid-in capital 656,426 656,426
Retained earnings 2,941,155 2,999,687
Common stock in treasury - at cost, 19,875 shares (59,228) (59,228)
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Total shareholders' equity 3,545,537 3,604,069
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$ 4,478,046 $ 4,430,869
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See notes to the consolidated financial statements.
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INTERNATIONAL LEISURE HOSTS, LTD.
CONSOLIDATED STATEMENTS OF INCOME
For three months ended
June 30,
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1995 1994
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REVENUES:
Sales of merchandise $ 319,214 $ 346,961
Room, cabin & trailer space rentals 273,249 271,291
Interest 7,634 21,655
Other income 4,855 1,400
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Total revenues 604,952 641,307
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COSTS & EXPENSES:
Cost of merchandise 173,245 197,616
Operating 385,518 298,410
General and administrative 106,759 107,659
Depreciation and amortization 29,462 19,305
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Total costs and expenses 694,984 622,990
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INCOME BEFORE INCOME TAXES (90,032) 18,317
INCOME TAX PROVISION (BENEFIT) (31,500) 4,500
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NET INCOME (L0SS) ($ 58,532) $ 13,817
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NET INCOME (LOSS) PER COMMON SHARE (Note 1) ($ 0.08) $ 0.02
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See notes to consolidated financial statements.
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INTERNATIONAL LEISURE HOSTS, LTD.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED JUNE 30, 1995
Common Stock Additional
--------------------- Paid-in Retained Treasury
Shares Amount Capital Earnings Stock
------- ------- ---------- ---------- ---------
Balance, March 31, 1995 718,373 $7,184 $656,426 $2,999,687 ($59,228)
Net loss (58,532)
------- ------ -------- ---------- --------
Balance, June 30, 1995 718,373 $7,184 $656,426 $2,941,155 ($59,228)
======= ====== ======== ========== ========
See notes to the consolidated financial statements.
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INTERNATIONAL LEISURE HOSTS, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended June 30,
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1995 1994
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OPERATING ACTIVITIES:
Net Income (loss) ($ 58,532) $ 13,817
Adjustment to reconcile net income (loss) to cash
provided by (used in) operating activities:
Depreciation and amortization 29,462 19,305
Changes in assets and liabilities:
Accounts receivable (24,266) 23,618
Merchandise inventories (110,745) (77,536)
Prepaid income tax (31,500) 0
Prepaid expenses and other (12,648) (30,922)
Accounts payable (46,660) 176,958
Accrued liabilities (12,380) 158,159
Advance deposits 164,732
Income tax payable (34,660)
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Net cash provided by (used in)
operating activities (102,537) 248,739
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INVESTING ACTIVITIES:
Purchases of property and equipment (553,094) (253,939)
Sale of marketable investment securities 300,000 365,375
Cash segregated for construction of
replacement property 116,758 55,644
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Net cash (used in) provided by
investment activities (136,336) 167,080
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NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS (238,873) 415,819
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 573,279 95,505
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CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 334,406 $ 511,324
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See notes to consolidated financial statements.
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INTERNATIONAL LEISURE HOSTS, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three Month Periods Ending June 30, 1995 and 1994
The accompanying unaudited condensed and consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB.
Accordingly, they do not include all of the information and notes required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments and reclassifications considered
necessary for a fair and comparable presentation have been included and are of a
normal recurring nature. Operating results for the three months ended June 30,
1995 are not necessarily indicative of the results that may be expected for the
year ending March 31, 1996. The enclosed financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's Annual Report on Form 10-KSB for the year ended March
31, 1995.
1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation - The consolidated financial statements include the
accounts of International Leisure Hosts, Ltd., and Lewis & Clark Lodge, its
wholly-owned subsidiary (collectively, the "Company"). All intercompany
transactions and accounts have been eliminated in consolidation.
Marketable investment securities are carried at cost, which approximates fair
value. The fair values are estimated based on quoted market prices. Marketable
securities are managed as part of the Company's cash management program. The
Financial Accounting Standards Board issued Statement of Financial Accounting
Standards ("SFAS") No. 115, Accounting for Certain Investments in Debt and
Equity Securities, which the Company adopted in fiscal year 1995. SFAS No. 115
requires the classification of securities of acquisition into one of three
categories: available for sale, held to maturity or trading. The Company has
classified its securities as available for sale.
Merchandise inventories are stated at the lower of aggregate cost (first-in,
first-out basis) or market.
Property and equipment are stated at cost. Depreciation is computed primarily by
the straight-line method over the estimated useful lives of such assets.
Amortization, by the straight-line method, of improvements to leased property is
based on the shorter of the term of the applicable lease or the estimated useful
lives of such assets.
Income taxes were provided for under provisions of the Statement of Financial
Accounting Standards ("SFAS") No. 109.
Net income per common share is computed by dividing net income by the weighted
average number of common shares outstanding. The weighted average number of
common shares outstanding was 698,498 for the quarter ended June 30, 1995 and
698,498 shares for the quarter ended June 30, 1994.
Business Segments - The Company considers its operations to be in one business
segment, the ownership and operation of Flagg Ranch, a full-service resort motel
and trailer park located in the John D. Rockefeller Jr. Memorial Parkway,
approximately four
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miles north of Grand Teton National Park and two miles south of the southern
entrance to Yellowstone National Park.
Statements of Cash Flows - For purposes of the consolidated statements of cash
flows, cash and cash equivalents represent cash in banks, money market funds,
and certificates of deposit with initial maturities of three months or less.
2. MARKETABLE INVESTMENT SECURITIES
Marketable investment securities consist of the following:
June 30, 1995 March 31, 1995
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Available for sale:
Variable rate muni bonds $ 0 $ 0 $ 300,000 $ 300,000
Fixed rate municipal bonds 0 0 0 0
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Total $ 0 $ 0 $ 300,000 $ 300,000
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3. COMMITMENTS AND CONTINGENCIES
The Company receives its operating authorization from the National Park Service
("NPS"). The NPS Contract (the "Contract") which became effective on January 1,
1990, will expire on December 31, 2009. Under the terms of the Contract, prior
to December 31, 1999, the Company is required to move its existing 54-unit
riverside motel from its current location to the high ground above the river, to
provide for new employee housing and make certain other improvements. The cost
of making these improvements is estimated to be between $1,700,000 and
$2,000,000.
The fee expense under the Contract is calculated at 2% of gross receipts (as
defined), subject to review and possible adjustment every five years. The first
review period was scheduled for December 31, 1994; however, as of August 10,
1995, the NPS has not completed its review. Any changes to the fee will be
retroactive to January 1, 1995. For the quarters ended June 30, 1995 and 1994,
this fee amounted to $11,610 and $11,900 respectively.
4. TRANSACTIONS WITH AFFILIATED COMPANIES AND RELATED PARTIES
Included in general and administrative expenses for the quarters ended June 30,
1995 and 1994, are management fees and administrative expenses of approximately
$89,000 and $76,000, respectively, paid to affiliated companies owned by Anthony
J. Nicoli and/or family members.
5. BANK CREDIT FACILITY
During fiscal 1995, the Company established a credit facility with a bank. The
credit facility provides for maximum borrowings of $500,000. The draw period
under the facility runs until September 30, 1996, and as of June 30, 1995, there
were no outstanding borrowings. Interest is payable monthly on the outstanding
principal balance at a rate equal to prime plus .50% (9.25% at August 10, 1995).
Commencing October 30, 1996, the principal shall be repaid in 36 equal monthly
principal payments with a maturity date of September 30, 1999. The credit
facility is collateralized by all accounts, an assignment of the Contract and
all improvements the Company has made to the Flagg Ranch property.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company's net loss for the first quarter ended June 30, 1995, was $59,000
($.08 per share). This compares to net income of $14,000 ($.02 per share) for
the quarter ended June 30, 1994. The $73,000 decline in income was due primarily
to increased costs associated with opening and operating the new facilities at
Flagg Ranch. The grand opening for these facilities was held on June 17, 1995,
therefore the full impact of these new facilities will take effect in the
upcoming quarter. Changes to the Company's revenues and expenses for the
quarters ended June 30, 1995 and June 30, 1994 are summarized below. All
references to years represent quarters ending June 30 of stated year.
Flagg Ranch, the principal business of the Company, is operated as a seasonal
resort. The two seasons coincide with the opening and closing dates of
Yellowstone and Grand Teton National Parks. The summer season runs from
approximately May 15 through October 15 and the winter season runs from late
December through mid-March. Therefore, the first quarter consists of only
forty-five days of operations.
Revenues
Total revenues for 1995 decreased by $36,000 or 6% from 1994. The gasoline
station was removed from its prime location next to the main highway and has
been replaced by a new gasoline station located approximately 1,000 feet from
the main highway. As a result, gasoline sales are down $40,000 compared to 1994.
Interest income declined $14,000 in 1995 due to expenditure of cash funds for
the redevelopment of Flagg Ranch. Offsetting these decreases were increases in
float trip revenues of $11,000 and horse rentals of $9,000.
Expenses
Operating expenses increased $87,000 or 29% over 1994. This consisted primarily
of a $45,000 increase in labor and a $32,000 increase in supplies and utilities.
The growth in labor costs had three main components: (1) additional employees
and hours spent related to opening the new facilities; (2) greater ongoing labor
demands due to the expanded and improved facilities, and (3) increase in Snake
River float trips and a new horse rental operation. The increase in supplies and
utilities related to the opening of the new Flagg Ranch facilities and the grand
opening ceremony. The cost of merchandise sold for 1995 was based upon
historical ratios, as adjusted.
Liquidity and Capital Resources
During the past year the Company incurred costs of $2,900,000 to construct the
new Flagg Ranch lodge building, 50 new cabin units and other public facilities.
As a result, the working capital decreased from $1,342,000 at June 30, 1994 to a
negative $91,000 at June 30, 1995. The Company plans to incur additional costs
of $200,000 to $250,000 in the remaining three quarters of fiscal 1996 to
complete certain other improvements required under the NPS Contract. The Company
also intends to begin construction of an additional 42 cabin units during fiscal
year 1996 which would be completed in fiscal 1997. The total cost of these
additional units is estimated between $1,200,000 and $1,300,000.
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The estimated total costs to be incurred for the entire construction planned for
the remainder of fiscal year 1996 through fiscal 2000 is between $2,800,000 and
$3,300,000. The Company intends to fund these improvements through existing cash
funds and cash generated from operations, plus a $500,000 bank credit facility
which can be drawn on through September 30, 1996. Cash generated from operations
was $1,001,000, $576,000 and $658,000 in fiscal years 1995, 1994 and 1993,
respectively. Cash used in operations for the quarter ended June 30, 1995 was
$103,000. Cash generated from operations for the quarter ended June 30, 1994 was
$249,000. The construction funds will have to be obtained from outside sources
to the extent they exceed cash generated from operations and the $500,000 bank
credit facility.
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PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
None
ITEM 2. Changes in Securities
None
ITEM 3. Defaults upon Senior Securities
None
ITEM 4. Submission of Matters to a Vote of Securities Holders
None
ITEM 5. Other Materially Important events
None
ITEM 6. Exhibits and Reports on Form 8-K
Exhibit 27 -- Financial Data Schedule
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In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed by the undersigned, thereunto duly authorized.
INTERNATIONAL LEISURE HOSTS, LTD
(REGISTRANT)
DATE: August 14, 1995 BY: /s/
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John L. Bradley
President
DATE: August 14, 1995 BY: /s/
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Mark G. Sauder
Chief Financial Officer
DATE: August 14, 1995 BY: /s/
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Robert A. Williams
Chief Accountant