<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
----------------
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
MAY 15, 1997
--------------------------------------
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
SIGNATURE RESORTS, INC.
--------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
MARYLAND 000-21193 95-4582157
(STATE OR OTHER JURISDICTION (COMMISSION TITLE NUMBER) (IRS EMPLOYER
OF INCORPORATION) IDENTIFICATION NUMBER)
</TABLE>
5933 WEST CENTURY BOULEVARD, SUITE 210
LOS ANGELES, CALIFORNIA 90045
--------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(310) 348-1000
--------------------------------------
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of businesses acquired. The financial statements
for Plantation Resorts Group, Inc. ("PRG") and subsidiaries required by this
Item 7(a) are included herein as pages F-1 through F-12.
(b) Pro forma financial information.
PRO FORMA FINANCIAL INFORMATION OF THE COMPANY
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
The following table sets forth summary pro forma financial information of
Signature Resorts, Inc. and its subsidiaries (the "Company"). The pro forma
information for the three month period ended March 31, 1997 gives effect to
the acquisition of PRG and its subsidiaries on May 15, 1997 (the "PRG Merger")
and the pro forma information for the year ended December 31, 1996 and for the
three month period ended March 31, 1996 gives effect to the exchange of direct
and indirect interests in, and obligations of, certain predecessor limited
partnerships, limited liability companies and other corporations of the
Company for shares of Common Stock in the Company ("the Consolidation
Transactions"), the initial public offering of shares of the Company's Common
Stock in August 1996 (the "Initial Public Offering"), the offering of $138.0
million aggregate principal amount of its 5.75% Convertible Subordinated Notes
due 2007 and the offering (together the "Concurrent Offerings") of 4.0 million
shares of Common Stock (including 2.4 million secondary shares sold by certain
selling stockholders) in February 1997 and the PRG Merger, in each case, as if
each had occurred as of the beginning of the period presented. The pro forma
information for the years ended December 31, 1995 and 1994 gives effect to the
PRG Merger. Due to seasonality, other market factors and additions to the
number of the Company's resorts, the pro forma results for the three months
ended March 31, 1997 and 1996 are not necessarily indicative of results for a
full year.
<TABLE>
<CAPTION>
PRO FORMA (UNAUDITED)
--------------------------------------------------
THREE MONTHS ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
--------------------- ----------------------------
1997 1996 1996 1995 1994
---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
REVENUES:
Vacation Interval sales.... $ 53,930 $ 31,175 $ 157,042 $118,552 $ 99,058
Interest income............ 8,416 5,655 24,935 20,006 15,747
Other income............... 2,367 1,731 10,133 7,144 1,033
---------- ---------- ---------- -------- --------
Total revenues............. 64,713 38,561 192,110 145,702 115,838
---------- ---------- ---------- -------- --------
COSTS AND OPERATING
EXPENSES:
Vacation Interval cost of
sales..................... 14,572 8,514 42,618 34,077 28,992
Advertising, sales and
marketing................. 24,527 14,712 78,029 54,610 47,081
Loan portfolio:
Interest expense--
treasury................ 1,012 1,231 693 10,077 8,224
Other expenses........... 1,422 789 4,010 2,018 1,460
Provision for doubtful
accounts................ 2,138 1,296 8,009 3,500 1,956
General and
administrative............ 8,225 4,512 30,692 13,599 8,463
Resort property valuation
allowance................. -- -- 2,620 -- --
Depreciation and
amortization.............. 1,057 705 4,639 2,154 990
Merger costs............... 1,693 -- -- -- --
---------- ---------- ---------- -------- --------
Total costs and operating
expenses.................. 54,646 31,759 171,310 120,035 97,166
---------- ---------- ---------- -------- --------
Income from operations...... 10,067 6,802 20,800 25,667 18,672
Interest expense--other.... 2,035 2,093 8,370 1,515 1,313
Equity loss on investment
in joint venture.......... 70 147 626 1,649 271
Minority interest in
income of consolidated
limited partnership....... 24 -- 199 -- --
---------- ---------- ---------- -------- --------
Income before provision for
income taxes............... 7,938 4,562 11,605 22,503 17,088
Provision for income
taxes..................... 3,175 1,825 4,642 9,001 6,664
---------- ---------- ---------- -------- --------
Net income.................. $ 4,763 $ 2,737 $ 6,963 $ 13,502 $ 10,424
========== ========== ========== ======== ========
Pro forma unaudited net
income per common and
common equivalent shares
outstanding ............... $ 0.21 $ 0.12 $ 0.30
========== ========== ==========
Pro forma unaudited weighted
average common and common
equivalent shares
outstanding ............... 22,925,016 22,276,470 23,101,628
</TABLE>
2
<PAGE>
SIGNATURE RESORTS, INC.
PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
The pro forma statements of operations data set forth below for the year
ended December 31, 1996 and for the three months ended March 31, 1997 and 1996
gives effect, individually and in the aggregate, to the following: (i) the
Consolidation Transactions, the Initial Public Offering and the Concurrent
Offerings and (ii) the PRG Merger, in each case, as if each had occurred at
the beginning of the period. The Company's actual statement of operations data
reflects the combined operations of the Company and AVCOM International, Inc.
using pooling-of-interests accounting for all periods presented. The pro forma
adjustments are based upon currently available information and certain
assumptions that management of the Company believes are reasonable under
current circumstances.
PRO FORMA FINANCIAL INFORMATION OF THE COMPANY
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
-----------------------------------------------------
PRO FORMA ADJUSTMENTS
-----------------------------------------
CONSOLIDATION
TRANSACTIONS/
INITIAL
PUBLIC OFFERING/
COMPANY CONCURRENT THE PRG COMPANY
ACTUAL OFFERINGS(a) MERGER(b) PRO FORMA
---------- ---------------- --------- ----------
<S> <C> <C> <C> <C>
REVENUES:
Vacation Interval sales... $ 121,330 $ -- $ 35,712 $ 157,042
Interest income........... 12,254 -- 12,681 24,935
Other income.............. 9,891 210 (c) 32 10,133
---------- --------- --------- ----------
Total revenues........... 143,475 210 48,425 192,110
---------- --------- --------- ----------
COSTS AND OPERATING
EXPENSES:
Vacation Interval cost of
sales.................... 31,302 (50)(d) 11,366 42,618
Advertising, sales and
marketing................ 61,495 -- 16,534 78,029
Loan portfolio:
Interest expense--
treasury................ 6,466 (12,789)(d) 7,016 693
Other expenses........... 2,260 (66)(d) 1,816 4,010
Provision for doubtful
accounts................ 6,286 -- 1,723 8,009
General and
administrative........... 27,836 -- 2,856 30,692
Resort property valuation
allowance................ 2,620 -- -- 2,620
Depreciation and
amortization............. 4,219 -- 420 4,639
---------- --------- --------- ----------
Total costs and operating
expenses................. 142,484 (12,905) 41,731 171,310
---------- --------- --------- ----------
Income from operations.... 991 13,115 6,694 20,800
Interest expense--other... 3,725 4,645 (d) -- 8,370
Equity loss on investment
in joint venture......... 236 390 (e) -- 626
Minority interest in
income of consolidated
limited partnership...... 199 -- -- 199
---------- --------- --------- ----------
Income before provision
for income taxes......... (3,169) 8,080 6,694 11,605
Provision for income
taxes.................... (4,907) 6,871 (f) 2,678 4,642
---------- --------- --------- ----------
Net income (loss)......... $ 1,738 $ 1,209 $ 4,016 $ 6,963
========== ========= ========= ==========
Pro forma earnings per
common and common
equivalent shares........ $ 0.12 $ 0.30
========== ==========
Pro forma weighted average
number of common and
common equivalent shares
outstanding.............. 14,730,268 5,970,131 2,401,229(g) 23,101,628
</TABLE>
- -------
(a) Reflects the Consolidation Transactions and the issuance of 11,354,705
shares of Common Stock pursuant thereto, and the Initial Public Offering
of 6,037,500 shares of Common Stock, each in August 1996 and the
Concurrent Offerings of $138 million of 5.75% Convertible Subordinated
Notes due 2007 and 1,600,000 shares of Common Stock sold by the Company in
February 1997.
(b) The pro forma adjustments for the PRG Merger assume pooling-of-interests
accounting, reflect the historical statement of operations of PRG for the
year ended December 31, 1996 and assume PRG had been treated as a C
corporation rather than as a limited partnership for federal income tax
purposes.
(c) Reflects increase in interest income due to the purchase of loans from
certain combining interests of $2.7 million relating to loans made by such
combining interests to the joint venture. The loans carry interest at 12%
per annum.
(d) Reflects the following: (i) the elimination or reduction of interest
expense due to the retirement of $140.4 million of debt; (ii) the
reduction of Vacation Interval cost of sales due to the reduction of
capitalized interest related to the retirement of debt; (iii) the
elimination of financing fees on advances not required as a result of the
debt retirement and (iv) the incurrence of interest expense of 5.75% on
$138 million of Convertible Subordinated Notes due 2007. The weighted
average interest rate on the debt retired was 11% per annum.
(e) Reflects the increase of goodwill amortization on the purchase of a joint
venture interest.
(f) Reflects the effect on 1996 historical statement of operations data of
(c)-(e) above and assumes the combined Company had been treated as a
C corporation rather than as limited partnerships and limited liability
companies for federal income tax purposes.
(g) Represents 2,401,229 shares issuable in connection with the PRG Merger.
3
<PAGE>
PRO FORMA STATEMENTS OF OPERATIONS DATA (UNAUDITED)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
MARCH 31, 1997 MARCH 31, 1996
----------------------------------------------- -------------------------------------------------------
PRO FORMA ADJUSTMENTS PRO FORMA ADJUSTMENTS
------------------------------------ -------------------------------------------
CONSOLIDATION
TRANSACTIONS/
INITIAL PUBLIC
COMPANY CONCURRENT COMPANY COMPANY OFFERING/CONCURRENT COMPANY
ACTUAL OFFERINGS(a) PRG(b) PRO FORMA ACTUAL OFFERINGS(a)(c) PRG(b) PRO FORMA
---------- ------------ --------- ---------- ---------- ------------------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES:
Vacation Interval
sales............ $ 45,796 $ -- $ 8,134 $ 53,930 $ 19,890 $ -- $ 11,285 $ 31,175
Interest income... 5,393 -- 3,023 8,416 2,489 -- 3,166 5,655
Other income...... 2,366 -- 1 2,367 1,648 80 (d) 3 1,731
---------- ------- --------- ---------- ---------- --------- --------- ----------
Total revenues.... 53,555 -- 11,158 64,713 24,027 80 14,454 38,561
---------- ------- --------- ---------- ---------- --------- --------- ----------
COSTS AND OPERATING
EXPENSES:
Vacation Interval
cost of sales.... 12,061 -- 2,511 14,572 5,036 (15)(e) 3,493 8,514
Advertising,
sales and
marketing........ 20,760 -- 3,767 24,527 9,456 -- 5,256 14,712
Loan portfolio:
Interest
expense--
treasury....... 2,341 (3,088) 1,759 1,012 1,541 (1,981)(e) 1,671 1,231
Other expenses.. 844 -- 578 1,422 410 (17)(e) 396 789
Provision for
doubtful
accounts....... 2,057 -- 81 2,138 717 -- 579 1,296
General and
administrative... 7,122 -- 1,103 8,225 4,134 -- 378 4,512
Depreciation and
amortization..... 919 -- 138 1,057 601 -- 104 705
Merger costs...... 1,693 -- -- 1,693 -- -- -- --
---------- ------- --------- ---------- ---------- --------- --------- ----------
Total costs and
operating
expenses......... 47,797 (3,088) 9,937 54,646 21,895 (2,013) 11,877 31,759
---------- ------- --------- ---------- ---------- --------- --------- ----------
Income from
operations........ 5,758 3,088 1,221 10,067 2,132 2,093 2,577 6,802
Interest
expense--other... 1,337 698 -- 2,035 834 1,259 (e) -- 2,093
Equity loss on
investment in
joint venture.... 70 -- -- 70 1 146 (f) -- 147
Minority interest
in income of
consolidated
limited
partnership...... 24 -- -- 24 -- -- -- --
---------- ------- --------- ---------- ---------- --------- --------- ----------
Income before
provision for
income taxes...... 4,327 2,390 1,221 7,938 1,297 688 2,577 4,562
Provision for
income taxes..... 1,731 956 488 3,175 (414) 1,208 (g) 1,031(f) 1,825
---------- ------- --------- ---------- ---------- --------- --------- ----------
Net income......... $ 2,596 $ 1,434 $ 733 $ 4,763 $ 1,711 $ (520) $ 1,546 $ 2,737
========== ======= ========= ========== ========== ========= ========= ==========
Pro forma earnings
per common and
common equivalent
shares............ $ 0.13 $ 0.21 $ 0.14 $ 0.12
========== ========== ========== ==========
Pro forma weighted
average number of
common and common
equivalent shares
outstanding ...... 19,990,454 533,333 2,401,229(h) 22,925,016 12,237,741 7,637,500 (i) 2,401,229(h) 22,276,470
</TABLE>
- -------
(a) Reflects the Concurrent Offerings of $138 million of 5.75% Convertible
Subordinated Notes due 2007 and 1,600,000 shares of Common Stock sold by
the Company in February 1997.
(b) The pro forma adjustments for the PRG Merger assume pooling-of-interests
accounting, reflect the historical statements of operations data for PRG
and assume PRG had been treated as a C corporation rather than as a
limited partnership for federal income tax purposes.
(c) The consolidated pro forma statements of operations all give effect to the
Consolidation Transactions as if they had occurred at the beginning of the
period indicated. The Consolidation Transactions were consummated
concurrently with the Initial Public Offering in August 1996.
(d) Reflects increase in interest income due to the assumption of notes
receivable in the Consolidation Transactions of $2.7 million. Such notes
bear interest at a rate of 12% per annum.
(e) Reflects the following: (i) the elimination or reduction of interest
expense due to the retirement of $72.0 million of debt retirement with
respect to the period ended March 31, 1996; (ii) the reduction of Vacation
Interval cost of sales due to the reduction of capitalized interest
related to the retirement of construction debt; (iii) the elimination of
financing fees on advances not required as a result of the debt retirement
and (iv) the incurrence of interest expense of 5.75% on $138 million of
Convertible Subordinated Notes due 2007. The weighted average interest
rate on a per annum basis on the debt retired was 11% for the three months
ended March 31, 1996.
(f) Reflects the increase in goodwill amortization on the purchase of a joint
venture interest.
(g) Reflects the effects on historical statements of operations data of (d)-
(f) above and assumes the combined Company had been treated as a
C corporation rather than as individual limited partnerships and limited
liability companies for federal income tax purposes.
(h) Reflects 2,401,229 shares issuable in connection with the PRG Merger.
(i) Reflects the Initial Public Offering of shares of Common Stock and the
concurrent offering of 1.6 million shares of Common Stock by the Company.
4
<PAGE>
PRO FORMA STATEMENTS OF OPERATIONS DATA (UNAUDITED)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------------------------------
DECEMBER 31, 1995 DECEMBER 31, 1994
----------------------------- ----------------------------
PRO FORMA ADJUSTMENTS PRO FORMA ADJUSTMENTS
--------------------- ---------------------
COMPANY COMPANY COMPANY COMPANY
ACTUAL PRG(a) PRO FORMA ACTUAL PRG(a) PRO FORMA
-------- ------- --------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
REVENUES:
Vacation Interval
sales................. $ 92,302 $26,250 $118,552 $64,399 $34,659 $99,058
Interest income........ 7,523 12,483 20,006 3,863 11,884 15,747
Other income........... 7,052 92 7,144 882 151 1,033
-------- ------- -------- ------- ------- -------
Total revenues......... 106,877 38,825 145,702 69,144 46,694 115,838
-------- ------- -------- ------- ------- -------
COSTS AND OPERATING
EXPENSES:
Vacation Interval cost
of sales.............. 26,731 7,346 34,077 19,186 9,806 28,992
Advertising, sales and
marketing............. 42,408 12,202 54,610 30,977 16,104 47,081
Loan portfolio:
Interest expense--
treasury............ 3,887 6,190 10,077 1,691 6,533 8,224
Other expenses....... 1,667 351 2,018 1,244 216 1,460
Provision for
doubtful accounts... 2,579 921 3,500 1,294 662 1,956
General and
administrative........ 11,148 2,451 13,599 6,625 1,838 8,463
Resort property
valuation allowance .. -- -- -- -- -- --
Depreciation and
amortization.......... 1,861 293 2,154 635 355 990
Merger costs........... -- -- -- -- -- --
-------- ------- -------- ------- ------- -------
Total costs and
operating expenses.... 90,281 29,754 120,035 61,652 35,514 97,166
-------- ------- -------- ------- ------- -------
Income from operations.. 16,596 9,071 25,667 7,492 11,180 18,672
Interest expense--
other................. 1,515 -- 1,515 1,313 -- 1,313
Equity loss on
investment in joint
venture............... 1,649 -- 1,649 271 -- 271
Minority interest in
income of
consolidated limited
partnership........... -- -- -- -- -- --
-------- ------- -------- ------- ------- -------
Income before provision
for income taxes....... 13,432 9,071 22,503 5,908 11,180 17,088
Provision for income
taxes................. 5,373(b) 3,628 9,001 2,304(b) 4,360 6,664
-------- ------- -------- ------- ------- -------
Net income.............. $ 8,059 $ 5,443 $ 13,502 $ 3,604 $ 6,820 $10,424
======== ======= ======== ======= ======= =======
</TABLE>
- -------
(a) The pro forma adjustments for the PRG Merger assume pooling-of-interests
accounting, reflect the historical statements of operations data of PRG
for the years ended December 31, 1995 and 1994 and assume PRG had been
treated as a C corporation rather than as a limited partnership for
federal income tax purposes.
(b) Reflects the effects on historical statements of operations data and
assumes the combined Company had been treated as a C corporation rather
than as individual limited partnerships and limited liability companies
for federal income tax purposes.
5
<PAGE>
The pro forma balance sheet data set forth below at March 31, 1997 give
effect to the PRG Merger as if it had occurred on March 31, 1997. The pro forma
adjustments are based upon currently available information and certain
assumptions that management of the Company believes are reasonable under
current circumstances.
PRO FORMA BALANCE SHEET
MARCH 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, 1997
----------------------------
PRO FORMA ADJUSTMENTS
---------------------
COMPANY THE PRG COMPANY
ACTUAL MERGER(A) PRO FORMA
-------- --------- ---------
<S> <C> <C> <C>
ASSETS:
Cash and cash equivalents......................... $106,545 $ 5,995 $112,540
Cash in escrow.................................... 2,333 611 2,944
Mortgages receivable.............................. 167,547 64,794 232,341
Due from related parties.......................... 7,180 5,440 12,620
Other receivables, net............................ 4,925 -- 4,925
Prepaid expenses and other assets................. 7,932 1,658 9,590
Investment in joint venture....................... 7,327 -- 7,327
Real estate and development costs................. 132,422 16,231 148,653
Property and equipment, net....................... 11,465 1,561 13,026
Intangible assets, net............................ 6,532 1,268 7,800
Deferred income taxes............................. -- 2,340 2,340
-------- ------- --------
Total assets.................................. $454,208 $99,898 $554,106
======== ======= ========
LIABILITIES AND EQUITY:
Accounts payable.................................. $ 15,201 $ 3,475 $ 18,676
Accrued liabilities............................... 27,890 933 28,823
Deferred revenue.................................. -- 2,354 2,354
Due to related parties............................ 718 -- 718
Income taxes payable.............................. 2,285 -- 2,285
Deferred taxes.................................... 4,990 -- 4,990
Notes payable to financial institutions........... 110,586 68,429 179,015
Convertible subordinated notes.................... 138,000 -- 138,000
-------- ------- --------
Total liabilities............................. 299,670 75,191 374,861
Minority interest in consolidated limited
partnership...................................... 1,545 -- 1,545
Equity............................................ 152,993 24,707 177,700
-------- ------- --------
Total liabilities and equity.................. $454,208 $99,898 $554,106
======== ======= ========
</TABLE>
- --------
(a) The pro forma adjustments for the PRG Merger represent the historical
financial statements of PRG using the pooling-of-interests accounting
method.
6
<PAGE>
(c) Exhibits.
<TABLE>
<C> <S>
2.1 Agreement and Plan of Merger dated as of May 15, 1997 between
Signature and PRG is filed herewith in accordance with the provisions
of Item 601 of Regulation S-K (previously filed).
</TABLE>
<TABLE>
<C> <S>
4 Registration Rights Agreement dated as of May 15, 1997 between
Signature and the PRG Shareholders is filed herewith in accordance
with the provisions of Item 601 of Regulation S-K (previously filed).
</TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
SIGNATURE RESORTS, INC.
By: /s/ Andrew D. Hutton___________
Name: Andrew D. Hutton
Title: Vice President and General
Counsel
Dated: July 29, 1997
7
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To Plantation Resorts Group, Inc.:
We have audited the accompanying consolidated balance sheets of Plantation
Resorts Group, Inc. (a Virginia corporation) and subsidiaries as of December
31, 1995 and 1996, and the related consolidated statements of income, equity
and cash flows for each of the three years in the period then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Plantation Resorts Group,
Inc. and subsidiaries as of December 31, 1995 and 1996, and the results of
their operations and their cash flows for each of the three years in the
period then ended in conformity with generally accepted accounting principles.
Arthur Andersen LLP
Orlando, Florida
March 28, 1997 (except with respect to
the matter discussed in Note 10,
as to which the date
is May 15, 1997)
F-1
<PAGE>
PLANTATION RESORTS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1995 1996 MARCH 31, 1997
------------ ------------ --------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS:
Cash and cash equivalents........... $ 10,657,091 $ 7,142,739 $ 5,994,697
Cash in escrow...................... 802,719 430,681 611,156
Mortgages receivable, net of an
allowance of $6,938,806, $7,148,915
and $6,506,000 at March 31, 1997,
December 31, 1996 and 1995,
respectively....................... 63,315,332 65,964,496 64,793,823
Due from related parties............ 14,132,963 4,426,678 5,440,012
Real estate and development costs,
net................................ 10,513,808 14,580,222 16,231,464
Property and equipment, net......... 2,281,462 1,582,036 1,560,865
Prepaid expenses.................... 5,561,859 4,502,403 1,657,748
Intangible assets, net.............. 1,550,531 1,338,517 1,267,560
Deferred income taxes............... -- 1,948,626 2,340,582
------------ ------------ -----------
Total assets..................... $108,815,765 $101,916,398 $99,897,907
============ ============ ===========
LIABILITIES AND EQUITY:
Accounts payable.................... $ 2,492,141 $ 1,923,294 $ 3,474,853
Accrued liabilities................. 771,186 1,380,227 933,198
Deferred revenue.................... 8,123,190 5,661,152 2,353,373
Notes payable to financial
institutions....................... 69,278,148 69,755,720 68,429,288
------------ ------------ -----------
Total liabilities................ 80,664,665 78,720,393 75,190,712
Stockholders equity:
Common stock (no par value, 5,000
shares authorized and 973
outstanding)..................... -- -- --
Additional paid-in capital........ 410,998 410,998 410,998
Retained deficit ................. (294,927) (5,260,604) (5,900,111)
Venturer's equity................... 28,035,029 28,045,611 30,196,308
------------ ------------ -----------
Total equity........................ 28,151,100 23,196,005 24,707,195
------------ ------------ -----------
Total liabilities and equity..... $108,815,765 $101,916,398 $99,897,907
============ ============ ===========
</TABLE>
See accompanying notes to the consolidated financial statements.
F-2
<PAGE>
PLANTATION RESORTS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------------- -----------------------
1994 1995 1996 1996 1997
----------- ----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES:
Vacation Interval
sales................ $34,659,161 $26,249,708 $35,712,455 $11,284,685 $ 8,133,678
Interest income....... 11,883,479 12,483,200 12,681,108 3,166,380 3,023,608
Other income.......... 151,263 91,661 31,660 2,986 1,071
----------- ----------- ----------- ----------- -----------
Total revenues...... 46,693,903 38,824,569 48,425,223 14,454,051 11,158,357
----------- ----------- ----------- ----------- -----------
COSTS AND OPERATING
EXPENSES:
Vacation Interval cost
of sales............. 9,806,598 7,345,649 11,366,259 3,493,016 2,510,934
Advertising, sales and
marketing............ 16,103,507 12,202,283 16,534,132 5,255,614 3,766,607
Loan portfolio:
Interest expense--
treasury........... 6,533,220 6,189,582 7,016,109 1,670,508 1,758,903
Other expenses...... 215,684 351,006 1,816,246 395,692 578,035
Provision for
doubtful accounts . 661,822 920,619 1,722,832 579,869 80,687
General and
administrative ...... 1,838,268 2,450,752 2,855,882 378,316 1,103,520
Depreciation and
amortization ........ 354,867 293,126 419,944 104,017 138,836
----------- ----------- ----------- ----------- -----------
Total costs and
operating expenses. 35,513,966 29,753,017 41,731,404 11,877,032 9,937,522
----------- ----------- ----------- ----------- -----------
Income before
(benefit) provision
for income taxes..... 11,179,937 9,071,552 6,693,819 2,577,019 1,220,835
(Benefit) provision
for income taxes..... 1,351,376 1,533,193 (337,365) 418,314 (380,456)
----------- ----------- ----------- ----------- -----------
Net income............ $ 9,828,561 $ 7,538,359 $ 7,031,184 $ 2,158,705 $ 1,601,291
=========== =========== =========== =========== ===========
PRO FORMA INCOME DATA
(UNAUDITED):
Income before taxes... $11,179,937 $ 9,071,552 $ 6,693,819 $ 2,577,019 $ 1,220,835
Pro forma provision
for income taxes..... 4,360,175 3,628,621 2,677,528 1,030,808 488,334
----------- ----------- ----------- ----------- -----------
Pro forma net income.. $ 6,819,762 $ 5,442,931 $ 4,016,291 $ 1,546,211 $ 732,501
=========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to the consolidated financial statements.
F-3
<PAGE>
PLANTATION RESORTS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
<TABLE>
<CAPTION>
COMMON STOCK TOTAL
------------------ ADDITIONAL RETAINED STOCKHOLDERS'
SHARES PAID-IN EARNINGS EQUITY VENTURERS' TOTAL
OUTSTANDING AMOUNT CAPITAL (DEFICIT) (DEFICIT) EQUITY EQUITY
----------- ------ ---------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1993................... 973 -- $410,998 $ 1,507,551 $ 1,918,549 $17,960,948 $19,879,497
Net (loss) income....... -- -- -- (1,069,617) (1,069,617) 10,898,178 9,828,561
Distributions........... -- -- -- -- -- (4,434,248) (4,434,248)
--- --- -------- ----------- ----------- ----------- -----------
Balance at December 31,
1994................... 973 -- 410,998 437,934 848,932 24,424,878 25,273,810
Net (loss) income....... -- -- -- (732,861) (732,861) 8,271,220 7,538,359
Distributions........... -- -- -- -- -- (4,811,069) (4,811,069)
Contributions........... -- -- -- -- -- 150,000 150,000
--- --- -------- ----------- ----------- ----------- -----------
Balance at December 31,
1995................... 973 -- 410,998 (294,927) 116,071 28,035,029 28,151,100
Net (loss) income....... -- -- -- (1,076,002) (1,076,002) 8,107,186 7,031,184
Distributions........... -- -- -- -- -- (4,648,096) (4,648,096)
Assignment to venturers'
of receivable due from
related party ......... -- -- -- -- -- (3,448,508) (3,448,508)
Write-off of receivable
from related party..... -- -- -- (3,889,675) (3,889,675) -- (3,889,675)
--- --- -------- ----------- ----------- ----------- -----------
Balance at December 31,
1996................... 973 -- 410,998 (5,260,604) (4,849,606) 28,045,611 23,196,005
(Unaudited interim
financial information):
Net (loss) income....... -- -- -- (639,507) (639,507) 2,240,798 1,601,291
Distributions........... -- -- -- -- -- (90,101) (90,101)
--- --- -------- ----------- ----------- ----------- -----------
Balance at March 31,
1997 (unaudited)....... 973 -- $410,998 $(5,900,111) $(5,489,113) $30,196,308 $24,707,195
=== === ======== =========== =========== =========== ===========
</TABLE>
See accompanying notes to the consolidated financial statements.
F-4
<PAGE>
PLANTATION RESORTS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------- ------------------------
1994 1995 1996 1996 1997
----------- ----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income.............. $ 9,828,561 $ 7,538,359 $ 7,031,184 $ 2,158,705 $ 1,601,291
Adjustments to reconcile
net income to net cash
(used in) provided by
operating activities:
Depreciation and
amortization.......... 354,867 293,126 419,944 104,017 138,836
Provision for doubtful
accounts.............. 661,822 920,619 1,722,832 579,869 80,687
Loss on disposal of
property and
equipment............. -- -- 572,820 337,135 --
Changes in operating
assets and
liabilities:
Cash in escrow....... (133,002) (7,619) 372,038 92 (180,475)
Due from related
parties............. (4,854,354) (1,425,553) 2,368,102 1,562,220 (1,013,334)
Real estate and
development costs... 800,222 (4,532,302) (4,066,414) (131,578) (1,651,242)
Prepaid expenses..... 983,322 (2,422,705) 1,059,456 2,901,951 2,844,655
Accounts payable..... 476,699 186,869 (568,847) 337,531 1,551,559
Accrued liabilities.. (127,057) (36,869) 609,041 (350,917) (447,029)
Deferred revenue..... (2,114,669) 3,852,447 (2,462,038) (3,840,200) (3,307,779)
Deferred income
taxes............... -- -- (1,948,626) (57,000) (391,956)
----------- ----------- ----------- ----------- -----------
Net cash (used in)
provided by operating
activities............. 5,876,411 4,366,372 5,109,492 3,601,825 (774,787)
----------- ----------- ----------- ----------- -----------
INVESTING ACTIVITIES:
Mortgages receivable.... (5,848,598) (1,957,056) (4,371,996) (991,071) 1,089,986
Expenditures for
property and equipment. (486,220) (1,600,236) (16,524) (16,524) (46,708)
Expenditures for
intangible assets...... (152,680) (903,183) (64,800) (11,217) --
----------- ----------- ----------- ----------- -----------
Net cash provided by
(used in) investing
activities............. (6,487,498) (4,460,475) (4,453,320) (1,018,812) 1,043,278
----------- ----------- ----------- ----------- -----------
FINANCING ACTIVITIES:
Net (payments of)
proceeds from notes
payable to financial
institutions........... 2,562,796 5,261,579 477,572 (760,977) (1,326,432)
Contributions........... -- 150,000 -- -- --
Distributions........... (4,434,248) (4,811,069) (4,648,096) (1,958,002) (90,101)
----------- ----------- ----------- ----------- -----------
Net cash (used in)
provided by financing
activities............. (1,871,452) 600,510 (4,170,524) (2,718,979) (1,416,533)
----------- ----------- ----------- ----------- -----------
Net (decrease) increase
in cash and cash
equivalents............ (2,482,539) 506,407 (3,514,352) (135,966) (1,148,042)
Cash and cash
equivalents, beginning
of period.............. 12,633,223 10,150,684 10,657,091 10,657,091 7,142,739
----------- ----------- ----------- ----------- -----------
Cash and cash
equivalents, end of
period................. $10,150,684 $10,657,091 $ 7,142,739 $10,521,125 $ 5,994,697
=========== =========== =========== =========== ===========
SUPPLEMENTAL DISCLOSURES
OF CASH FLOW
INFORMATION:
Cash paid during the
period for interest.... $ 6,802,821 $ 6,423,392 $ 7,027,982 $ 1,680,064 $ 1,763,604
Cash (received) paid
during the period for
income taxes........... $ 1,109,384 $ 1,683,360 $(1,048,213) $ 223,936 $ (391,755)
SUPPLEMENTAL DISCLOSURE
OF NON-CASH
INFORMATION:
Assignment to venturers
of receivable due from
related party recorded
as a reduction of
venturers' equity...... $ 3,448,508 $ 3,448,508
Write-off of receivable
from related party
recorded as a reduction
of stockholders'
equity................. $ 3,889,675
</TABLE>
See accompanying notes to the consolidated financial statements.
F-5
<PAGE>
PLANTATION RESORTS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1996
1.NATURE OF BUSINESS
Plantation Resorts Group, Inc. (the Company) generates revenues from the
sale and financing of vacation ownership interests in its resorts, which
typically entitle the owner to use a fully furnished vacation resort (in
perpetuity), typically for one-week each year (a Vacation Interval). The
Company's principal operations consist of (1) developing and acquiring
vacation ownership resorts and (2) providing consumer financing for the
purchase of Vacation Intervals at its resorts.
The Company was incorporated in April 1997 through a private placement of
its common stock in which certain predecessor joint ventures and corporations
(the "Entities") exchanged their interests for shares of the Company's common
stock (the "Consolidation Transactions"). The Entities are Powhatan
Associates, Greensprings Associates (Virginia joint ventures wholly-owned by
the Company), Powhatan Associates Mortgage Trust I (a Delaware trust wholly-
owned by the Company), RKG Corporation (RKG) and its wholly-owned
subsidiaries, Greensprings Plantation Resort, Inc. (GPR) and Williamsburg
Vacations, Inc. (WVI) (all Virginia corporations).
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation
The accompanying consolidated financial statements include the combined
accounts of the companies listed in Note 1, which became wholly-owned
subsidiaries of the Company through the Consolidation Transactions. As a
result, the combined accounts are now referred to as consolidated financial
statements for the historical periods presented. All significant intercompany
transactions and balances have been eliminated from these consolidated
financial statements.
The Consolidation Transactions have been accounted for as a reorganization
of entities under common control. Accordingly, the net assets of the
predecessor entities were recorded at the predecessor entities' basis. In
addition, the accompanying consolidated financial statements reflect the
historical results of operations of the predecessor entities on a combined
basis.
Interim Financial Statements
The accompanying unaudited interim financial statements at March 31, 1997
and for the three months ended March 31, 1996 and 1997, do not include all
disclosures provided in the annual financial statements. These interim
financial statements should be read in conjunction with the accompanying
annual audited financial statements and the footnotes thereto. Results for the
1997 interim period are not necessarily indicative of the results to be
expected for the year ended December 31, 1997. However, the accompanying
interim financial statements reflect all adjustments which are, in the opinion
of management, of a normal and recurring nature necessary for a fair
presentation of the financial position and results of operations of the
Company. Unless otherwise stated, all information subsequent to December 31,
1996, is unaudited.
Cash and Cash Equivalents
Cash and cash equivalents consist of all highly liquid investments purchased
with an original maturity of three months or less. Cash and cash equivalents
consist of cash and money market funds.
Cash in Escrow
Cash in escrow is restricted cash consisting of deposits received on sales
of Vacation Intervals that are held in escrow until a certificate of occupancy
is obtained or the legal rescission period has expired.
F-6
<PAGE>
PLANTATION RESORTS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Real Estate and Development Costs
Real estate is valued at the lower of cost or net realizable value.
Development costs include both hard and soft construction costs and, together
with real estate costs, is allocated to Vacation Intervals. Interest, taxes
and other carrying costs incurred during the construction period are
capitalized.
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment
of Long-lived Assets and for Long-lived Assets to Be Disposed Of" (SFAS 121),
which requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amount. SFAS 121 also addresses the accounting for long-lived assets
that are expected to be disposed of. The Company adopted SFAS 121 effective
January 1, 1996, and there has been no material impact on the Company's
operations or financial position.
Income Taxes
The Company accounts for income taxes using an asset and liability approach
in accordance with Statement of Financial Accounting Standards (SFAS) No. 109,
Accounting for Income Taxes, which requires the recognition of deferred tax
assets and liabilities for the expected future tax consequences of events that
have been recognized in the Company's financial statements or tax returns.
Deferred tax assets and liabilities are measured by applying enacted statutory
tax rates applicable to the future years in which the related deferred tax
assets or liabilities are expected to be settled or realized. Income tax
expense consists of the taxes payable for the current period and the change
during the period in deferred tax assets and liabilities.
Property and Equipment
Property and equipment consists of buildings used for sales presentations.
The buildings are recorded at cost and depreciated using the straight-line
method over their estimated useful life of 39 years.
Depreciation expense related to property and equipment was $89,394, $67,496
and $143,130 for the years ended December 31, 1994, 1995 and 1996
, respectively.
Fair Value of Financial Instruments
SFAS No. 107, Disclosures about Fair Value of Financial Instruments,
requires that the Company disclose estimated fair values for its financial
instruments. The following methods and assumptions were used by the Company in
estimating its fair value disclosures for financial instruments:
Cash and cash equivalents and cash in escrow: The carrying amount reported
in the balance sheet for cash and cash equivalents and cash in escrow
approximates their fair value because of the short maturity of these
instruments.
Mortgages receivable: The carrying amount reported in the balance sheet for
mortgages receivable approximates its fair value because the weighted average
interest rate on the portfolio of mortgages receivable approximates current
interest rates to be received on similar current mortgages receivable.
Notes payable to financial institutions: The carrying amount reported in the
balance sheet for notes payable approximates its fair value because the
interest rates on these instruments approximate current interest rates charged
on similar current borrowings.
F-7
<PAGE>
PLANTATION RESORTS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Intangible Assets
Bond issuance costs and loan commitment fees incurred in connection with
obtaining funding for the Company have been capitalized and are being
amortized over the life of the respective loans.
Revenue Recognition
The Company recognizes sales of Vacation Intervals on an accrual basis after
a binding sales contract has been executed, a 10% minimum down payment has
been received, the rescission period has expired, construction is
substantially complete, and certain minimum sales levels have been achieved.
If all the criteria are met except that construction is not substantially
complete, then revenues are recognized on the percentage-of-completion (cost-
to-cost) basis. For sales that do not qualify for either accrual or
percentage-of-completion accounting, all revenue is deferred using the deposit
method.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses and disclosure of contingent assets and liabilities at the date
of the financial statements during the reporting period. Actual results could
differ from those estimates.
3.MORTGAGES RECEIVABLE
The Company provides financing to the purchasers of Vacation Intervals,
which is collateralized by the purchaser's deeded interest in such Vacation
Intervals. The mortgages receivable bear interest at the time of issuance of
16% per annum over the term of the loan, which is 10 years.
Mortgages receivable consisted of the following as of December 31, 1995 and
1996:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1995 1996
----------- -----------
<S> <C> <C>
Mortgages receivable............................... $68,713,899 $72,131,335
Accrued interest................................... 1,107,433 982,076
Allowance for doubtful accounts.................... (6,506,000) (7,148,915)
----------- -----------
$63,315,332 $65,964,496
=========== ===========
</TABLE>
The activity in the mortgages receivable allowance for doubtful accounts is
as follows for the years ended December 31, 1995 and 1996:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1995 1996
----------- -----------
<S> <C> <C>
Balance, beginning of period....................... $(6,500,000) $(6,506,000)
Provision........................................ (920,619) (1,722,832)
Receivables charged-off.......................... 914,619 1,079,917
----------- -----------
Balance, end of period............................. $(6,506,000) $(7,148,915)
=========== ===========
</TABLE>
F-8
<PAGE>
PLANTATION RESORTS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The following schedule reflects the principal maturities of mortgages
receivable as of December 31, 1996:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31, AMOUNT
------------ -----------
<S> <C>
1997.......................................................... $ 7,989,000
1998.......................................................... 9,186,000
1999.......................................................... 9,323,000
2000.......................................................... 9,281,000
2001.......................................................... 9,168,000
Thereafter.................................................... 27,184,335
-----------
Total principal maturities of mortgages receivable............ 72,131,335
Less--Allowance for doubtful accounts......................... (7,148,915)
-----------
Net principal maturities of mortgages receivable............ $64,982,420
===========
</TABLE>
4.REAL ESTATE AND DEVELOPMENT COSTS
Real estate and development costs and accumulated cost of Vacation Interval
sales consisted of the following as of December 31, 1995, and 1996:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1995 1996
------------ ------------
<S> <C> <C>
Land................................................ $ 3,275,476 $ 5,135,676
Development costs................................... 63,594,918 77,167,391
------------ ------------
Total real estate and development costs............. 66,870,394 82,303,067
Less--Accumulated cost of Vacation Interval sales... (56,356,586) (67,722,845)
------------ ------------
Real estate and development costs, net............ $ 10,513,808 $ 14,580,222
============ ============
</TABLE>
5.INTANGIBLE ASSETS
Intangible assets and accumulated amortization consisted of the following as
of December 31, 1995 and 1996:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1995 1996
---------- ----------
<S> <C> <C>
Bond issuance costs..................................... $ 933,184 $ 933,184
Loan commitment fees.................................... 991,468 1,056,268
---------- ----------
1,924,652 1,989,452
Accumulated amortization................................ (374,121) (650,935)
---------- ----------
Intangible assets, net................................ $1,550,531 $1,338,517
========== ==========
</TABLE>
Amortization expense related to intangible assets was $265,473, $225,630 and
$276,814 for the years ended December 31, 1994, 1995 and 1996, respectively.
During the year ended December 31, 1994, the Company wrote-off certain fully
amortized loan commitment fees related to expired loan agreements.
F-9
<PAGE>
PLANTATION RESORTS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
6.NOTES PAYABLE TO FINANCIAL INSTITUTIONS
Notes payable to financial institutions consisted of the following as of
December 31, 1995 and 1996 :
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1995 1996
----------- -----------
<S> <C> <C>
Bonds payable, bearing interest at 7.75% per annum,
payable from collections of mortgages receivable,
secured by mortgages receivable, matures April 2004. $23,179,521 $17,460,180
Construction loan, bearing interest at prime plus 2%,
payable by release fees on Vacation Interval sales,
secured by mortgages receivable, matures June 2001.. 3,692,321 2,055,635
Endpaper loan, bearing interest at prime plus 2%,
payable from collections of mortgages receivable,
secured by mortgages receivable, matures
December 2002....................................... 1,119,833 9,137,010
Endpaper loan, bearing interest at prime plus 1.25%,
payable from collections of mortgages receivable,
secured by mortgages receivable, matures June 2005.. 306,168 2,558,595
Endpaper loan, bearing interest at prime plus 2.25%,
payable from collections of mortgages receivable,
secured by mortgages receivable, matures April 2003. 7,088,997 7,963,092
Endpaper loan, bearing interest at prime plus 1.5%,
payable from collections of mortgages receivable,
secured by mortgages receivable, matures April 2003. 16,553,718 14,654,234
Endpaper loan, bearing interest at prime plus 1.25%,
payable from collections of mortgages receivable,
secured by mortgages receivable, matures
December 2002....................................... 1,798,148 2,700,252
Endpaper loan, bearing interest at prime plus 2.25%,
payable from collections of mortgages receivable,
secured by mortgages receivable, matures April 2003. 15,539,442 13,226,722
----------- -----------
$69,278,148 $69,755,720
=========== ===========
</TABLE>
The prime rate was 8.25% at December 31, 1996.
The following schedule reflects the expected principal maturities of notes
payable to financial institutions as of December 31, 1996:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31, AMOUNT
------------ -----------
<S> <C>
1997.............................................. $12,813,000
1998....................................................... 12,857,000
1999....................................................... 12,799,000
2000....................................................... 12,549,000
2001....................................................... 12,215,000
Thereafter................................................. 6,522,720
-----------
Net principal maturities of debt........................... $69,755,720
===========
</TABLE>
F-10
<PAGE>
PLANTATION RESORTS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
7.DUE FROM RELATED PARTIES
Amounts due from related parties represent advances to affiliates and owners
of the Company. Amounts due from affiliates totalled $12,315,611 and
$4,043,942 at December 31, 1995 and 1996, respectively, and represent amounts
advanced to entities owned by Shareholders to fund working capital and
expansion. Amounts due from Shareholders totaled $1,817,352 and $382,736 at
December 31, 1995 and 1996, respectively. These amounts represent advances for
services to be provided to the Company. For each of the three years in the
period ended December 31, 1996, shareholders of the Company, through their
affiliates, provided certain marketing and development services to the Company
as follows:
<TABLE>
<CAPTION>
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Marketing .................................. $15,596,622 $11,812,369 $16,070,605
Development ................................ 9,006,376 10,612,475 13,572,473
</TABLE>
The above services were performed at rates negotiated by the Stockholders
and are reflected in the accompanying consolidated statements of income,
except for development-related costs, which have been capitalized as real
estate and development costs.
8.PREPAID EXPENSES
Prepaid expenses consisted of the following as of December 31, 1995 and
1996:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1995 1996
---------- ----------
<S> <C> <C>
Deferred selling and marketing costs...................... $5,050,726 $3,978,223
Other prepaid expenses.................................... 511,133 524,180
---------- ----------
$5,561,859 $4,502,403
========== ==========
</TABLE>
9.INCOME TAXES (PRO FORMA UNAUDITED)
In connection with the Company's merger with Signature Resorts Inc.
("Signature") (the "Signature Merger") discussed in Note 10, the Company
became a C corporation, which made it subject to federal and state income
taxes from the date of incorporation. In addition, the Company is now required
to record the impact of cumulative temporary differences between financial
reporting and tax reporting since the date of incorporation. RKG, GPR and WVI
were subject to federal and state income taxes for all periods presented. The
actual provision (benefit) for income taxes for RKG, GPR and WVI has been
included in the unaudited pro forma provision for income taxes for all periods
presented.
F-11
<PAGE>
PLANTATION RESORTS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The unaudited pro forma provision for income taxes represents the estimated
income taxes that would have been reported had the Company filed federal and
state income tax returns as a C corporation. The following summarizes the
unaudited pro forma provision for income taxes for the years ended December
31, 1994, 1995 and 1996:
<TABLE>
<CAPTION>
1994 1995 1996
---------- ---------- ----------
<S> <C> <C> <C>
Current:
Federal................................ $3,587,934 $4,049,536 $2,778,530
State.................................. 410,050 449,949 308,726
---------- ---------- ----------
3,997,984 4,499,485 3,087,256
Deferred:
Federal................................ 325,043 (783,777) (368,756)
State.................................. 37,148 (87,087) (40,972)
---------- ---------- ----------
362,191 (870,864) (409,728)
---------- ---------- ----------
Unaudited pro forma provision for income
taxes................................... $4,360,175 $3,628,621 $2,677,528
========== ========== ==========
</TABLE>
The reconciliation between the unaudited pro forma statutory provision for
income taxes and the unaudited pro forma provision for income taxes is shown
as follows for the years ended December 31, 1994, 1995 and 1996:
<TABLE>
<CAPTION>
1994 1995 1996
---------- ---------- ----------
<S> <C> <C> <C>
Unaudited pro forma provision for federal tax. $3,912,977 $3,265,759 $2,409,774
Unaudited pro forma provision for state tax,
net of federal benefit....................... 447,198 362,862 267,754
---------- ---------- ----------
Unaudited pro forma provision for income
taxes........................................ $4,360,175 $3,628,621 $2,677,528
========== ========== ==========
</TABLE>
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The significant
components of the pro forma net deferred tax liabilities were as follows as of
December 31, 1995 and 1996:
<TABLE>
<CAPTION>
1995 1996
----------- -----------
<S> <C> <C>
Deferred tax assets:
Allowance for doubtful accounts.................... $ 2,602,400 $ 4,813,343
----------- -----------
Total deferred tax assets............................ 2,602,400 4,813,343
----------- -----------
Deferred tax liabilities:
Book over tax sales................................ 6,332,526 8,218,071
Other.............................................. 262,754 178,424
----------- -----------
Total deferred tax liabilities....................... 6,595,280 8,396,495
----------- -----------
Pro forma net deferred tax liabilities............... $(3,992,880) $(3,583,152)
=========== ===========
</TABLE>
10.SUBSEQUENT EVENT
On May 15, 1997, the Company announced the signing of a merger agreement
with Signature. The Signature Merger was consummated through the issuance of
2,401,229 shares of Signature's common stock in the exchange for 100% of the
Company's outstanding Common Stock.
F-12
<PAGE>
EXHIBIT INDEX
<TABLE>
<C> <S>
2.1 Agreement and Plan of Merger dated as of May 15, 1997 between
Signature and PRG is filed herewith in accordance with the provisions
of Item 601 of Regulation S-K (previously filed).
</TABLE>
<TABLE>
<C> <S>
4 Registration Rights Agreement dated as of May 15, 1997 between
Signature and the PRG Shareholders is filed herewith in accordance
with the provisions of Item 601 of Regulation S-K (previously filed).
</TABLE>
E-1
