UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
Commission File Number:
333-264
Exact name of Registrant as specified in its charter:
South Seas Properties Company Limited Partnership
State or other Jurisdiction of incorporation or organization:
Ohio
I.R.S. Employer Identification Number:
59-2541464
Address of Principal Executive Offices:
12800 University Drive, Suite 350
Fort Myers, FL 33907
Registrant's Telephone Number, including Area Code:
(941) 481-5600
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. X YES NO
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of securities
under a plan confirmed by a court. YES NO
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SOUTH SEAS PROPERTIES COMPANY LIMITED PARTNERSHIP
FORM 10-Q
MARCH 31, 1996
INDEX
PAGE NO.
COVER LETTER
PART I
ITEM 1
FINANCIAL INFORMATION
Consolidated Balance Sheets at
March 31, 1996 and 1995 and December 31, 1995 1
Consolidated Statements of Operations
for the Three Months Ended March 31, 1995 and 1996 2
Consolidated Statements of Cash Flows
for the Three Months Ended March 31, 1995 and 1996 3-4
Notes to Consolidated Financial Statements 5
ITEM 2
Management's Discussion and Analysis of Financial Condition
and Results of Operations 6-11
PART II
OTHER INFORMATION 12
SIGNATURES 13
EXHIBITS:
EXHIBIT 10.1 - MANAGEMENT EQUITY INCENTIVE PLAN
EXHIBIT 27 - FINANCIAL DATA SCHEDULE
EXHIBIT 99 - CALCULATION OF WEIGHTED AVERAGE UNITS OUTSTANDING
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SOUTH SEAS PROPERTIES COMPANY LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
(In Thousands)
March 31
Dec. 31
1995 1995 1996
(audited) (unaudited) (unaudited)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $7,340 $10,842 $ 22,681
Restricted cash 5,818 290 3,472
Accounts receivable, trade 6,261 7,676 7,532
Inventories 1,847 1,742 1,964
Prepaid expenses and other 1,975 834 1,898
Total current assets 23,241 21,384 37,547
PROPERTY, PLANT AND EQUIPMENT, net 76,668 60,215 77,194
LOAN COSTS, net 2,450 1,979 5,322
GOODWILL, net 6,805 7,079 6,714
OTHER ASSETS 1,662 1,427 1,897
Total assets $110,826 $92,084 $128,674
LIABILITIES AND PARTNERS' CAPITAL
DEFICIENCY
CURRENT LIABILITIES
Current maturities of notes
and mortgages payable $13,602 $ 8,545 $ 8,675
Current maturities of bonds
payable 12,998 2,425 -
Current obligations under
capital leases 398 327 265
Accounts payable 3,146 3,682 4,633
Accrued expenses 9,540 7,246 7,619
Customer deposits 4,708 3,036 3,750
Deferred revenue 1,073 - 359
Total current liabilities 45,465 25,261 25,301
NOTES AND MORTGAGES PAYABLE, less
current maturities 75,555 55,746 64,232
BONDS PAYABLE, less current
maturities - 12,316 43,500
LONG-TERM OBLIGATIONS UNDER
CAPITAL LEASES, less current
obligations 1,112 1,122 838
OTHER LONG-TERM OBLIGATIONS 1,384 1,384 1,384
COMMITMENTS AND CONTINGENCIES - - -
MINORITY INTERESTS 12 22 17
PARTNERS' CAPITAL DEFICIENCY (12,702) (3,767) (6,598)
Total liabilities and
partners' capital
deficiency $110,826 $92,084 $128,674
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The accompanying notes are an integral part of these financial statements.
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SOUTH SEAS PROPERTIES COMPANY LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, except per unit data)
Three Months
Ended March 31
1995 1996
(unaudited) (unaudited)
<S> <C> <C>
Revenues
Rooms $ 19,813 $22,850
Food and beverage 5,014 5,728
Retail 1,776 2,005
Golf 1,076 1,113
Spa and fitness - 770
Other 4,336 5,137
Total revenues 32,015 37,603
Expenses
Rooms 2,851 3,478
Food and beverage 3,450 4,021
Retail 1,194 1,333
Golf 270 285
Spa and fitness - 402
Other 1,478 1,729
Condominium lease and rental expenses 5,435 6,102
Sales and marketing 1,308 1,983
Maintenance and grounds 1,036 1,328
General and administrative - resort properties 4,512 5,175
General and administrative - corporate overhead 774 911
Depreciation and amortization 1,360 1,879
Interest expense 2,150 2,553
Total expenses 25,818 31,179
Income before non-operating items 6,197 6,424
Net gain on disposal/sale of
fixed assets 3 4
Minority interests (24) (22)
Net income $ 6,176 $ 6,406
Net income per unit $1.46 $1.49
Weighted average units outstanding 4,219 4,309
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The accompanying notes are an integral part of these financial statements.
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SOUTH SEAS PROPERTIES COMPANY LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
Page 1 of 2
(In Thousands)
Three Months
Ended March 31
1995 1996
(unaudited) (unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers and others $30,183 $ 34,660
Cash paid to suppliers, employees and affiliates (21,509) (26,047)
Interest paid (2,108) (4,399)
Net cash provided by operating
activities 6,566 4,214
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures/purchase of assets (1,183) (1,905)
Proceeds from sale of assets 3 4
Loans to affiliates, net of repayments 724 -
Change in restricted cash 632 2,346
Net cash provided by investing
activities 176 445
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt 4,884 43,500
Deferred loan costs (88) (2,844)
Principal payments, long-term debt (3,501) (16,250)
Principal payments, under capital
lease obligations (96) (407)
Principal payments, bonds payable - (12,998)
Distributions to partners (354) (302)
Distributions to minority interest (10) (17)
Net cash provided by
financing activities 835 10,682
Net increase in cash 7,577 15,341
Cash and cash equivalents, beginning of period 3,265 7,340
Cash and cash equivalents, end of period $10,842 $22,681
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(continued)
The accompanying notes are an integral part of these financial statements.
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SOUTH SEAS PROPERTIES COMPANY LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
Page 2 of 2
(In Thousands)
Three Months
Ended March 31
1995 1996
(unaudited) (unaudited)
<S> <C> <C>
RECONCILIATION OF NET INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
Net income $ 6,176 $ 6,406
Adjustments to reconcile net income
to net cash provided by operating
activities
Depreciation/amortization expense 1,360 1,879
(Gain)/loss on disposal/sale of fixed assets (3) (4)
Minority interest 24 22
Changes in assets and liabilities
(Increase) decrease in:
Accounts receivable, net (1,372) (1,271)
Inventories (57) (117)
Prepaid expenses and other assets 589 (158)
Increase (decrease) in:
Accounts payable (11) 1,420
Accrued expenses 320 (2,291)
Customer deposits (276) (958)
Deferred revenues (184) (714)
Total adjustments 390 (2,192)
Net cash provided by operating activities $ 6,566 $ 4,214
Supplemental schedule of noncash investing and financing activities:
Capital lease obligations of $174 were incurred during the three months
ended March 31, 1995 when South Seas entered into leases for the upgrade of
equipment.
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The accompanying notes are an integral part of these financial statements.
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SOUTH SEAS PROPERTIES COMPANY LIMITED PARTNERSHIP
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Basis of Presentation
In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments
necessary (consisting of only normal recurring adjustments) to
present fairly South Seas Properties Company Limited Partnership
("South Seas") consolidated financial position as of March 31,
1995 and 1996, and the consolidated results of its operations
and its consolidated cash flows for the three months ended
March 31, 1995 and 1996. The results of operations for the
three month period ended March 31, 1996 are not indicative of
the results to be expected for the full year due to the
seasonality of the business operation. For further information,
refer to the audited consolidated financial statements and notes
thereto, included in South Seas' Prospectus dated March 25,
1996.
Note 2. Impact of Recently Issued Accounting Standards
In October 1995, FASB issued SFAS No. 123, "Accounting for Stock
Based Compensation," effective for fiscal years beginning after
December 15, 1995. SFAS No. 123 requires a fair value based
method of accounting for stock-based compensation. South Seas
has not utilized any stock-based compensation plans, however,
South Seas has adopted a Management Equity Incentive Plan
subsequent to December 31, 1995. Management has not yet
determined the impact of adopting SFAS No. 123, since no units
have been granted under the Management Equity Incentive Plan.
Note 3. Change in Debt Structure
On March 28, 1996, South Seas completed the funding of the
financing transaction as offered in the form S-1 Registration
Statement. The total aggregate principal amount raised was
$43,500,000, with interest payable monthly at 10%, and no
principal reduction until maturity on April 15, 2003.
The Notes are redeemable, in whole or in part, at the option of
South Seas at various redemption prices (108.24% to 112.62% of
principal) during or after the year 2000. Subsequent to the
occurrence of certain events, the holders of Notes will be
offered the opportunity to exchange the Notes at an exchange
rate of $12 per unit (subject to adjustment in certain
circumstances). Upon the stated maturity of the Notes, holders
of Notes will be offered the opportunity to exchange the Notes
at an exchange rate of $10.50 per unit (subject to adjustment in
certain circumstances).
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PART I - FINANCIAL INFORMATION
Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with "Selected
Historical Financial Data," "Selected Unaudited Pro Forma Consolidated
Financial Data" and the historical and pro forma and audited
consolidated financial statements for South Seas Properties Company
Limited Partnership ("South Seas") and the notes thereto appearing in
the Prospectus.
GENERAL
South Seas is one of the largest owners and operators of upscale
beachfront and/or destination resorts and hotels in Florida. South Seas
owns six resort and hotel properties, leases, operates and manages one
resort spa, owns a golf and tennis club, and manages two additional
resort properties located on Florida's Southwest coast. South Seas
consolidates the results of operations of its owned properties and
records management fees (including incentive management fees) where
applicable, on the managed properties.
South Seas has implemented a growth strategy which focuses on
improving results at existing properties through increased revenues and
increasing its operating leverage through centralized management. South
Seas' growth strategy also focuses on acquiring and, to a lesser extent,
developing new resorts and hotels in targeted markets with demographic
and business characteristics consistent with its market profile. The
Sanibel Inn was acquired on June 1, 1995 in exchange for 71,374 limited
partnership units ("Units") plus a contingent, deferred cash payment of
up to $700,000. This acquisition was accounted for under the purchase
method for financial reporting purposes, and its results of operations
have been included in the consolidated financial statements of South
Seas for periods subsequent to the date of acquisition. In June 1995,
South Seas entered into a four year lease agreement (the "Safety Harbor
Lease") through a wholly-owned subsidiary, Safety Harbor Management
Company, Ltd. ("Safety Harbor Management Co.") with an unrelated party
pursuant to which it manages the Safety Harbor Resort and Spa ("Safety
Harbor," Safety Harbor and the Sanibel Inn are collectively referred to
herein as the "New Resorts"). The Safety Harbor Lease also provides
Safety Harbor Management Co., with an option, expiring on May 31, 2000,
to purchase Safety Harbor for an aggregate purchase price of between
$17.5 million and $22.5 million, depending on the year the option is
exercised. Management views the Safety Harbor Lease as a turnaround
opportunity at an under-performing resort, as evidenced by its occupancy
rate of approximately 35% in 1994 and 1995. Management believes that
the performance of Safety Harbor can be improved by making certain
renovations at the resort and also utilizing South Seas' marketing
resources and operating skills. The Safety Harbor Lease requires that
South Seas spend a minimum of $1.8 million in capital toward renovation.
South Seas will benefit from improved operating results at Safety Harbor
since the lease payments under the Safety Harbor lease are fixed amounts
and South Seas' right to purchase Safety Harbor under the Safety Harbor
Lease is based on a series of annual fixed option prices.
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SEASONALITY
Properties owned or operated by South Seas (collectively "the
Properties") are affected by normally recurring seasonal patterns. Room
rates and occupancy are generally higher during the months of January,
February, March and April than during the remainder of the year. As
much as 45-50% of South Seas' revenues is earned in the first four
months of each year. Accordingly, South Seas' operations are seasonal
in nature, with lower revenue and net income in the second, third and
fourth calendar quarters.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1996 COMPARED
TO THE THREE MONTHS ENDED MARCH 31, 1995
Revenues. Revenues consist principally of room rentals, food and
beverage sales, retail sales, spa and fitness revenues, and golf course
operations. Other revenue includes marina operations, long distance
telephone charges, fees for the use of recreation facilities,
commissions from realty sales, interest income and other miscellaneous
items. Revenues for the three months ended March 31, 1996 increased by
$5.6 million, or 17.4% over the prior period.
Room revenues increased by $3.0 million, or 15.3% over the prior
period. Approximately $2.5 million, or 81.7% of the increase represents
room revenues attributable to the New Resorts. Room revenues at resorts
owned throughout both periods ("Comparable Resorts") increased by
approximately $555,000 or 2.8%. The increase in room revenues at
Comparable Resorts resulted from an increase in the average daily rate
("ADR"), partially offset by a slight decrease in the percentage of
occupancy. ADR at Comparable Resorts was $257.35 for 1996, compared to
$251.73 in 1995, an increase of $5.62, or 2.2%. Occupancy percentage at
Comparable Resorts decreased to 82.0% for the first three months of 1996
from 83.0% for the same period in 1995. The increase in ADR reflects
South Seas' efforts to maximize revenue per available room ("REVPAR")
during peak demand periods. During the first three months of 1996,
REVPAR for Comparable Resorts increased $2.03 or 1.0% over the same
period in 1995. The New Resorts had an occupancy percentage of 57.8%,
ADR of $177.84 and REVPAR of $102.77 during the three months ended March
31, 1996, however relative occupancy levels, REVPAR, and ADR at the New
Resorts is in large part a result of Safety Harbor. Management of South
Seas believes operating results at Safety Harbor will improve over time
as its operational skills and marketing resources are fully utilized.
Food and beverage revenues for the three months ended March 31, 1996
increased by $714,000, or 14.2% over the same period in 1995. The
increase was due primarily to the additional food and beverage
operations at Safety Harbor, $628,000 or 88% of the total increase.
Food and beverage revenues at the Comparable Resorts increased by
$86,000 or 1.7% over the prior period.
Retail revenues for the three months ended March 31, 1996 increased by
$229,000, or 12.9% over the same period in 1995. Approximately $86,000,
or 37.6% of the increase was due primarily to retail operations at the
New Resorts. Retail revenues for Comparable Resorts for the three month
period in 1996 increased by $143,000, or 8.1% compared to the prior
period. The newly renovated Dunes Golf & Tennis Club's pro shop
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produced approximately $26,000 of the growth over the prior period.
Other revenues for the three months ended March 31, 1996 increased by
$801,000, or 18.5% over the prior period. Approximately $294,000 or
36.7% of the increase was attributable to the New Resorts.
Approximately $255,000 of the remaining increase is due to increased
membership and initiation fees at the newly renovated Dunes Golf &
Tennis Club, and approximately $209,000 is attributable to increased
commission income from secondary market condominium realty sales.
Expenses. Total expenses for the three months ended March 31, 1996
increased by $5.4 million, or 20.8% over the prior period. As a
percentage of revenues, expenses increased from 80.6% to 82.9%. This
percentage increase is due primarily to Safety Harbor as discussed
previously, management of South Seas believes Safety Harbor will
experience improved operating efficiencies over time as its operational
skills and marketing resources become fully utilized. The dollar
increase resulted principally from expenses associated with the New
Resorts of $3.9 million or 79.2% of the total increase. The increase in
expenses as a percentage of revenues resulted primarily in the expense
categories of sales and marketing due to specific marketing initiatives,
maintenance and grounds, based on planned maintenance projects performed
during the first quarter of 1996 and due to acquisition of new
properties increases in depreciation, amortization and interest.
Sales and marketing costs for the three months ended March 31, 1996
increased $675,000 or 51.6% over the prior period, of which $369,000 or
54.5% of the total increase was associated with operations of the New
Resorts. The $306,000 or 23.4% increase experienced at the Comparable
Resorts reflects South Seas focus on media expense within the first
quarter to support the slower season which typically begins in May. As
a percentage of total revenues, sales and marketing increased from 4.1%
in the three months ended March 31, 1995 to 5.3% for the three months
ended March 31, 1996.
For the three months ended March 31, 1996, maintenance and grounds
expense increased by $292,000 or 28.2% over the prior period, of which
$180,000 or 61.6% of the total increase was attributable to the New
Resorts. Increase at the Comparable Resorts for the same period was
$112,000 or 10.8% and is consistent with budgeted maintenance costs for
1996. As a percentage of total revenues, maintenance and grounds
expense increased from 3.2% to 3.5%.
Room expense for the three months ended March 31, 1996 increased by
$627,000 or 22.0% over the prior period. Room expense at Comparable
Resorts increased $140,000 or 4.9% for the same periods. Approximately
$487,000 or 77.7% of the total increase reflects the additional expenses
associated with the New Resorts. As a percentage of room revenues, room
expense increased from 14.4% to 15.2%. The increase in room expense as
a percentage of room revenues resulted primarily from the lower
occupancy percentage at Safety Harbor and the 1% costs decrease in
occupancy percentage at the Comparable Resorts.
General and administrative expense for the three months ended
March 31, 1996 increased by $800,000, or 15.1% over the prior period.
<PAGE>
However, these costs as a percentage of revenues decreased from 16.5% to
16.2%. Approximately $774,000 or 96.7% of the increase was attributable
to general and administrative expenses associated with the operations of
the New Resorts.
Depreciation and amortization expense for the three months ended March
31, 1996 increased by $519,000 or 38.2% over the prior period. As a
percentage of revenues, depreciation and amortization expense increased
from 4.2% to 5.0%. The increase, both in dollars and as a percentage of
revenues, resulted from the impact of New Resorts acquired in June 1995
($200,000 or 38.5% of the total), and one time non-cash write-offs of
approximately $150,000 in loan costs associated with the early
retirement of existing loans, with the proceeds from the public debt
offering.
Interest expense for the three months ended March 31, 1996 increased
by $403,000 or 18.7% over the prior period. The increase was primarily
attributable to the indebtedness that was incurred in early 1995 to
acquire the Marco Radisson and provide funds for renovations at several
of the resort properties. Of the total increase, $303,000, or 75.2%
related to New Resorts.
Net Income. As a result of the foregoing factors, net income for the
three months ended March 31, 1996 increased by $230,000 or 3.7% compared
to the prior period.
LIQUIDITY AND CAPITAL RESOURCES
South Seas has historically financed its operations and capital
expenditures with cash generated from operations, bank borrowings,
borrowings from private investors, corporate bonds and short-term credit
facilities.
On March 28, 1996, South Seas completed the public offering of
$43,500,000 of its 10% subordinated notes as offered in the Form S-1
Registration Statement ("Notes Offering"). The total aggregate
principal amount raised was $43,500,000, including the full $3.5 million
over allotment, with interest payable monthly at 10%, and with no
principal reduction until maturity on April 15, 2003.
The Notes are redeemable, in whole or in part, at the option of South
Seas at various redemption prices (108.24% to 112.62% of principal)
during or after the year 2000. Subsequent to the occurrence of certain
events, the holders of Notes will be offered the opportunity to convert
the Notes at an exchange rate of $12 per unit (subject to adjustment in
certain circumstances). Upon the stated maturity of the Notes, holders
of Notes will be offered the opportunity to convert the Notes at an
exchange rate of $10.50 per unit (subject to adjustment in certain
circumstances).
South Seas believes that cash generated by operations, together with
the proceeds from the Notes Offering will be adequate to meet its
working capital, debt service and capital expenditure requirements
through 1996. South Seas' outstanding indebtedness, together with the
Notes, places certain debt service obligations on the partnership.
Subsequent to 1996 South Seas believes that it may be necessary to
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obtain additional debt or equity financing in order to accommodate its
plan for growth and expansion. South Seas intends to pursue resort
and/or hotel acquisitions and to a lesser extent development
opportunities in order to achieve growth in its portfolio of properties.
A portion of the expenditures associated with this growth strategy will
be funded with cash generated from operations and approximately $6.5
million in proceeds from the Notes Offering.
In addition, under the terms of the indenture (executed in connection
with the Notes Offering), South Seas may release, under certain
conditions, the $3.3 million in funds reserved for interest payments on
the Notes. These funds would also be available for renovations and/or
acquisitions. However, South Seas anticipates that implementation of
its growth strategy will require it to obtain additional debt or equity
financing. The amount of additional financing required by South Seas in
order to implement its growth strategy will depend on several factors,
including the purchase price and renovation costs associated with
acquisitions and South Seas' available cash resources at the time of a
particular transaction. Although there can be no assurance as to South
Seas' ability to obtain financing in the amounts it requires on
commercially reasonable terms, if at all, South Seas believes that,
based upon its current financial condition and results of operations,
such financing will be available to it. South Seas' inability to obtain
additional financing could have a material adverse effect on its results
of operations, financial condition and future prospects. The indenture
places restrictions on the amount of additional Funded Indebtedness (as
defined in the prospectus delivered in connection with the Notes
Offering) that South Seas may incur.
On March 31, 1996, South Seas had cash and cash equivalents of $22.7
million, and restricted cash, which was primarily funds held as a
interest reserve fund on notes payable, of $3.4 million. Cash and cash
equivalents increased by $7.3 million during the three months ended
March 31, 1996.
Cash flow from operations was approximately $4.2 million for the three
months ended March 31, 1996 as compared to $6.6 million in the prior
period. Cash flow from operations was negatively impacted by a $2.3
million increase in interest paid during 1996. This significant
increase in interest paid was attributed to the early retirement of
numerous notes, bonds and accrued interest thereon with the proceeds
from the public offering. South Seas' other major source of cash in the
1996 period was proceeds of $43.5 million from the Notes Offering. In
addition to funding its operating activities, South Seas' major uses of
cash during the 1996 period were principal payments on outstanding debt
of approximately $29.7 million (primarily through proceeds of the Notes
Offering), capital expenditures and asset purchases of approximately
$1.9 million, and distributions to partners of approximately $302,000.
South Seas is not currently a party to any legal proceeding which, in
Management's opinion, is likely to have a material adverse effect on its
operating results or financial position.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In October 1995, FASB issued SFAS No. 123, "Accounting for Stock Based
<PAGE>
Compensation," effective for fiscal years beginning after
December 15, 1995. SFAS No. 123 requires a fair value based method of
accounting for stock-based compensation. South Seas has not utilized
any stock-based compensation plans, however, South Seas has adopted a
Management Equity Incentive Plan subsequent to December 31, 1995.
Management has not yet determined the impact of adopting SFAS No. 123,
since no Units have been granted under the Management Equity Incentive
Plan.
<PAGE>
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SOUTH SEAS PROPERTIES COMPANY LIMITED PARTNERSHIP
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 2. Change in Partnership Units
With the consent of South Seas limited partners, the two
individuals holding general partner interests, transferred a
portion of their general partnership units (43,086 units or 1%
of all outstanding units) on February 26, 1996 to T&T Resorts,
L.C. ("T&T"), a newly formed Florida limited liability company,
in exchange for 100% of the ownership of T&T. Simultaneous with
this transfer, their remaining general partner interests were
converted into limited partner interests.
Item 3. Defaults upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
On February 13, 1996, the partners were asked via proxy, (no
meeting was held) to vote on two matters requiring the vote of
security holders. The first vote was to amend and restate the
Agreement of Limited Partnership to incorporate all prior
amendments into one document and to modernize the form of the
agreement to include current tax laws.
Number of votes cast for amending
Agreement of Limited Partnership 3,917,628
Number of votes cast against amending
Agreement of Limited Partnership 12,475
Number of non-returned ballots 378,465
Total units outstanding 4,308,568
The second vote was to approve the addition of T&T Resorts, L.C.
as a general partner of South Seas Properties Company Limited
Partnership.
Number of votes cast for approving
T&T Resorts, L.C. as an additional
general partner 3,917,628
Number of votes cast against approving
T&T Resorts, L.C. as an additional
general partner 12,475
Number of non-returned ballots 378,465
Total units outstanding 4,308,568
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit I - Weighted Average Units Outstanding
(b) Reports on Form 8-K
Not applicable
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SOUTH SEAS PROPERTIES COMPANY LIMITED PARTNERSHIP
SIGNATURES
MARCH 31, 1996
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.
ROBERT M. TAYLOR RICHARD E. KRICHBAUM
CHAIRMAN OF VICE PRESIDENT OF FINANCE
T&T RESORTS, L.C., GENERAL S.S. RESORT MANAGEMENT L.C
PARTNER OF SOUTH SEAS PROPERTIES GENERAL PARTNER OF SOUTH SEAS
COMPANY LIMITED PARTNERSHIP RESORTS COMPANY, L.P.
(SIGNATURE) (SIGNATURE)
MAY 14, 1996 MAY 14,1996
TIMOTHY R. BOGOTT VIRGINIA S. BROOKS
PRESIDENT CORPORATE CONTROLLER OF SOUTH
S.S. RESORT MANAGEMENT, L.C. SEAS RESORTS COMPANY L.P.
GENERAL PARTNER OF SOUTH SEAS AND SOUTH SEAS PROPERTIES
RESORTS COMPANY, L.P. COMPANY L.P.
(SIGNATURE) (SIGNATURE)
MAY 14, 1996 MAY 14, 1996
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<CAPTION>
SOUTH SEAS PROPERTIES COMPANY LIMITED PARTNERSHIP
CALCULATION OF WEIGHTED AVERAGE UNITS OUTSTANDING
The weighted average number of partnership units used in the computation
of earnings per unit is as follows:
Three Months
Ended March 31
1995 1996
<S> <C> <C>
Weighted average number of units
outstanding at the beginning of the
period 4,219,464 4,308,568
Weighted average number of units issued
during the period - -
Weighted average number of units at the
end of the period 4,219,464 4,308,568
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 22,681,000
<SECURITIES> 0
<RECEIVABLES> 7,625,000
<ALLOWANCES> (93,000)
<INVENTORY> 1,964,000
<CURRENT-ASSETS> 37,547,000
<PP&E> 112,533,000
<DEPRECIATION> (35,339,000)
<TOTAL-ASSETS> 128,674,000
<CURRENT-LIABILITIES> 25,301,000
<BONDS> 43,500,000
0
0
<COMMON> 0
<OTHER-SE> (6,598,000)
<TOTAL-LIABILITY-AND-EQUITY> 128,674,000
<SALES> 37,603,000
<TOTAL-REVENUES> 37,603,000
<CGS> 31,179,000
<TOTAL-COSTS> 31,179,000
<OTHER-EXPENSES> 18,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,553,000
<INCOME-PRETAX> 6,406,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 6,406,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,406,000
<EPS-PRIMARY> 1.49
<EPS-DILUTED> 1.49
</TABLE>
SOUTH SEAS PROPERTIES COMPANY LIMITED PARTNERSHIP
MANAGEMENT EQUITY INCENTIVE PLAN
1. Establishment, Premises and Purpose.
SOUTH SEAS PROPERTIES COMPANY LIMITED PARTNERSHIP, an Ohio
limited partnership (the "Company"), hereby establishes the SOUTH
SEAS PROPERTIES COMPANY LIMITED PARTNERSHIP MANAGEMENT EQUITY
INCENTIVE PLAN (the "Plan").
The purpose of the Plan is to promote the long term growth
and profitability of the Company by providing key employees of
the Company and its affiliates with incentives to contribute to
the success of the Company and its affiliates and to enable the
Company and its affiliates to attract, retain and reward the best
available persons for positions of substantial responsibility.
The Plan permits the award or sale of restricted or
unrestricted units of limited partnership interest in the Company
("Units") and/or the award of options to purchase Units to key
employees of the Company or its affiliates.
2. Definitions.
(a) the word "Affiliate" shall mean any corporation,
partnership, or other entity which controls, is
controlled by, or is under common control with the
Company.
(b) The word "Code" shall mean the United States Internal
Revenue Code (Title 26 of the United States Code).
The word "Committee" shall mean the Compensation
Committee appointed by T&T Resorts, L.C., the Company's
general partner.
(d) The word "Company" shall mean South Seas Properties
Company Limited Partnership, an Ohio limited
partnership, and any successor thereto which shall
maintain the Plan, and, as the context may require, as
determined in the sole discretion of the Committee, any
Affiliate.
(e) The word "Employee" shall mean a common-law employee of
the Company or an Affiliate.
(f) The word "Participant" shall mean a key Employee who is
awarded or purchases restricted Units pursuant to the
Plan and/or is awarded an option to purchase Units.
(g) The words "Partnership Agreement" shall mean the South
Seas Properties Company Limited Partnership Amended and
Restated Agreement of Limited Partnership, effective
February 26, 1996, as it may be later amended.
(h) The word "Plan" shall mean the South Seas Properties
Company Limited Partnership Management Equity Incentive
Plan, as it was originally adopted and as it may later
be amended.
(I) The word "Unit" shall mean a unit of limited partnership
interest in the Company.
3. Administration.
The Plan shall be administered by a Committee (the
"Committee") of not less than three members who are disinterested
persons. "Disinterested persons" shall have the meaning set forth
in Rule 16b-3 of the Securities and Exchange Commission.
The Committee shall, consistent with the provisions of the
Plan, be authorized to (I) select eligible persons to participate
in the Plan, (ii) determine the form and substance of awards or
sales made under the Plan to each Participant, and the conditions
and restrictions, if any, subject to which such awards or sales
will be made, (iii) interpret the Plan and (iv) adopt, amend, or
rescind such rules and regulations for carrying out the Plan as
it may deem appropriate. Decisions of the Committee on all
matters relating to the Plan shall be in the Committee's sole
discretion and shall be conclusive and binding on all persons,
including the Company and the Participants. The validity,
construction and effect of the Plan and any rules and regulations
relating to the Plan shall be determined in accordance with
applicable federal and state laws and rules and regulations
promulgated pursuant thereto.
4. Units Available for the Plan.
Subject to adjustment as provided in Section 13 below, an
aggregate of 840,000 Units may be issued pursuant to the Plan.
If any option awarded under the Plan expires or terminates
unexercised, or if any restricted Units are forfeited or
repurchased by the Company at less than fair market value, such
unpurchased, forfeited, or repurchased Units shall thereafter be
available for further awards under the Plan.
5. Participation.
Participation in the Plan is limited to the key Employees
selected by the Committee. Nothing in the Plan or any award or
sale under the Plan shall confer any right upon a Participant to
continue as an Employee.
6. Awards or Sales of Units.
Subject to the other applicable provisions of the Plan, the
Committee may at any time and from time to time award or sell
Units to eligible persons in such numbers as it determines. Each
award or sale of Units shall specify the applicable restrictions,
if any, on such Units, the duration of such restrictions, and the
time or times at which such restrictions shall lapse with respect
to all or any number of the Units that are part of the award or
sale. The Committee may reduce or shorten the duration of any
restriction applicable to any Units awarded or sold to any
Participant under the Plan.
Except as otherwise provided by the Committee, during such
period of restriction the Participant shall have all of the
rights of a limited partner of the Company in respect of the
Units awarded or sold to him, including but not limited to the
rights to receive distributions in respect of the Units and to
vote the Units.
7. Options to Purchase Units.
Subject to the other applicable provisions of the Plan, the
Committee may from time to time award to eligible persons options
to acquire Units. The options awarded shall be subject to the
following terms and conditions:
(a) Price. The price per Unit payable upon the exercise of
each option ("exercise price") shall be set by the Committee and
may be more or less than the fair market value of a Unit at the
date the Option is awarded.
(b) Payment. Options may be exercised in whole or in part
upon payment in immediately available funds of the exercise price
of the Units to be acquired.
Terms of Options. The period during which each option
may be exercised shall be determined by the Committee, but in no
event shall an option be exercisable more than ten years from the
date it is awarded. All rights to purchase Units pursuant to an
option shall, unless sooner terminated, expire at the date
designated by the Committee. Except as otherwise determined by
the Committee, an option may be exercised only while a
Participant is an Employee. The Committee shall determine the
date on which each option shall become exercisable and may
provide that an option shall become exercisable in installments
and/or upon the occurrence of specified events including, without
limitation, an initial public offering of the Units or a sale of
the Company's business. The Committee may establish criteria for
the forfeiture of Options including, without limitation, a
Participant's ceasing to be an Employee. All or any number of
the Units constituting each
installment may be purchased at any time after such installment
becomes exercisable, subject to such minimum exercise requirement
as may be designated by the Committee, and the Committee may
accelerate the time at which any option may be exercised. The
Committee may permit a Participant, in lieu of purchasing Units
pursuant to exercise of the option, to receive in cash the
difference between the exercise price and the fair market value
of the Units, upon such terms as the Committee shall prescribe.
Prior to the exercise of the option and issuance of Units
pursuant to exercise of the option, the Participant shall have no
rights to any distributions or be entitled to any voting rights
in respect of any such Units subject to outstanding options.
8. Withholding of Taxes.
The Company shall require that a Participant pay to the
Company in cash or, if approved by the Committee, otherwise make
arrangements to pay, any federal, state or local taxes of any
kind required by law to be withheld with respect to any award or
sale of Units or delivery of Units upon exercise of an option.
9. Written Agreement.
Each Participant to whom either an award or sale of Units or
an award of an option to purchase Units is made under the Plan
shall enter into a written agreement with the Company that shall
contain such provisions, not inconsistent with the provisions of
the Plan, as may be prescribed by the Committee.
10. Transferability.
No restricted Units awarded or sold under the Plan or option
awarded under the Plan shall be transferable by a Participant
otherwise than by will or the laws of descent and distribution
or, to the extent approved by the Committee, pursuant to a
qualified domestic relations order as defined by the Code or the
rules thereunder. An option may be exercised only by the
Participant or his guardian or legal representative.
11. Listing and Registration.
If the Committee determines that the listing, registration or
qualification upon any securities exchange or under any law of
either Units subject to any option or any Units to be awarded or
sold hereunder is necessary or desirable as a condition of, or in
connection with, the award of the option or the award or sale of
Units under the Plan, no such option may be exercised in whole or
in part and no such Units may be awarded or sold unless such
listing, registration or qualification is effected free of any
conditions not acceptable to the Committee.
12. Transfer of Employee.
Transfer of a Participant's employment from the Company to an
Affiliate, from an Affiliate to the Company, or from one
Affiliate to another Affiliate shall not affect the Participant's
status as an Employee. Furthermore, a Participant's status as an
Employee shall not be affected if the Participant is placed on
military or sick leave or such other leave of absence which is
considered by the Company as continuing intact the employment
relationship, until the Participant's right to reemployment shall
no longer be guaranteed either by law or contract.
13. Adjustment of Number of Units.
If, because of a Unit split, combination or exchange of
Units, exchange of Units for other securities, reclassification,
reorganization, redesignation, merger, consolidation,
recapitalization, spin-off, split-off, split-up or similar
transaction, the Units are increased or decreased or changed into
or exchanged for a different number of Units or different
securities, then (I) there shall automatically be substituted for
each Unit subject to an option the number and kind of securities
into which each outstanding Unit shall be exchanged, (ii) the
option price per Unit or unit of securities shall be increased or
decreased proportionately so that the aggregate purchase price
for the securities subject to the option shall remain the same as
immediately prior to such event, and (iii) the Committee shall
make such other adjustments to the securities subject to the
option as may be appropriate and equitable, and any such
adjustment shall be final, binding and conclusive as to the
Optionee. Any such adjustment may provide for the elimination of
fractional Units if the Committee shall so direct.
14. Provisions of Partnership Agreement.
Any Units which are awarded or sold and any Units which are
delivered upon exercise of an option under the Plan shall at all
times be subject to all of the terms and conditions set forth in
the Partnership Agreement.
15. Termination and Modification of the Plan.
The Company may modify or terminate the Plan without the
approval of the Participants. The Committee may amend or modify
the agreement governing any outstanding option or restricted Unit
award in any manner to the extent that the Committee would have
had the authority to make such award as so modified or amended,
including without limitation to change the date or dates as of
which an option becomes exercisable or restrictions on Units
lapse; provided, however, that without the prior approval of the
affected Participant, no modification may be made that would
materially adversely affect the rights of the Participant with
respect to any restricted Units previously awarded or sold or
option previously awarded under the Plan. The Committee is
authorized to make modifications to the Plan and outstanding
awards of a minor or administrative nature or that may be
required, authorized or made desirable by federal or state laws
applicable to the Company or an Affiliate.
16. Termination Date.
No further awards of options to purchase Units or awards or
sales of restricted Units may be made under the Plan following
the close of business on April 1, 2006.
IN WITNESS WHEREOF, the Company, by its general partner, has
executed this document this 1st day of April, 1996.
SOUTH SEAS PROPERTIES COMPANY
LIMITED PARTNERSHIP
T&T Resorts, L.C., General Partner
By:________________________________
Robert M. Taylor, Chairman
(SIGNATURE)
91\17537CRD.60K
