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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
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FORM 10-Q/A
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(Amendment No. 1)
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number 000-21193
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SIGNATURE RESORTS, INC.
(Exact name of registrant as specified in its charter)
Maryland 95-4582157
(State of incorporation) (I.R.S. Employer
Identification No.)
1875 South Grant Avenue, Suite 650
San Mateo, California 94402
(Address of principal executive offices, including zip code)
(650) 312-7171
(Registrant's telephone number, including area code)
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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
Number of shares of common stock outstanding of the issuer's Common
Stock, par value $0.01 per share, as of March 31, 1997: 19,890,841
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Signature Resorts, Inc. and Subsidiaries
INDEX
<TABLE>
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1 Financial Statements
Consolidated statements of operations for the three months ended
March 31, 1997 and March 31, 1996 . . . . . . . . . . . . . . . . . . 1
Consolidated balance sheets as of March 31, 1997 and December 31, 1996 . . 2
Consolidated statements of cash flows for the three months ended
March 31, 1997 and March 31, 1996 . . . . . . . . . . . . . . . . . . . 3
Notes to the consolidated financial statements . . . . . . . . . . . . . . 4
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
</TABLE>
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Item 1 of the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997, filed with the Securities and Exchange Commission on May
14, 1997 is hereby amended and restated in its entirety as follows:
Signature Resorts, Inc. and Subsidiaries
Consolidated Statements of Operations
Three Months Ended March 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
March 31, March 31,
1997 1996
------------ ------------
<S> <C> <C>
Revenues:
Interval sales $ 45,796,000 $ 19,890,000
Interest income 5,393,000 2,489,000
Other income 2,366,000 1,648,000
------------ ------------
Total Revenues 53,555,000 24,027,000
Costs and Operating expenses:
Interval cost of sales 12,061,000 5,036,000
Advertising sales and marketing 20,760,000 9,456,000
Loan portfolio:
Interest expense - treasury 2,341,000 1,541,000
Other expenses 844,000 410,000
Provision for doubtful accounts 2,057,000 717,000
General and administrative 7,122,000 4,134,000
Depreciation and amortization 919,000 601,000
Merger costs 1,693,000 --
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Total Costs and Operating Expenses 47,797,000 21,895,000
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Net Operating Income 5,758,000 2,132,000
Other interest expense (net of capitalized
interest of $494,000, $847,000 at March 31, 1997
and 1996, respectively) 1,337,000 834,000
Minority interest in income of consolidated
limited partnership 24,000 --
Equity loss on investment in joint venture 70,000 1,000
------------ ------------
Income before taxes 4,327,000 1,297,000
Provision for income taxes 1,731,000 (414,000)
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Net Income $ 2,596,000 $ 1,711,000
============ ============
Weighted average number of common and common
equivalent shares outstanding 19,990,454 12,237,741
Earnings per common and common equivalent share $ 0.13 $ 0.14
============ ============
</TABLE>
See accompanying notes to the consolidated financial statements.
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Signature Resorts, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
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<S> <C> <C>
ASSETS
Cash and cash equivalents $ 106,545,000 $ 7,244,000
Cash in escrow 2,333,000 1,281,000
Mortgages receivable, net of an allowance of $11,116,000
and $9,840,000 at March 31, 1997 and
December 31, 1996, respectively 167,547,000 148,488,000
Due from related parties 7,180,000 7,333,000
Other receivables, net 4,925,000 7,903,000
Prepaid expenses and other assets 7,932,000 9,683,000
Investment in joint venture 7,327,000 7,397,000
Real estate and development costs 132,422,000 122,821,000
Property and equipment, net 11,465,000 9,922,000
Intangible assets, net 6,532,000 3,156,000
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Total assets $ 454,208,000 $ 325,228,000
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 15,201,000 $ 20,490,000
Accrued liabilities 27,890,000 32,737,000
Due to related parties 718,000 1,656,000
Income taxes payable 2,285,000 438,000
Deferred taxes 4,990,000 5,493,000
Notes payable to financial institutions 110,586,000 165,934,000
Convertible Subordinated Notes 138,000,000 --
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Total liabilities $ 299,670,000 $ 226,748,000
Partners' equity 1,545,000 1,538,000
Stockholders' equity:
Preferred stock (25,000,000 shares authorized -- --
and none outstanding)
Common stock ($0.01 par value, 50,000,000
shares authorized and 19,890,841
and 18,275,241 outstanding as of
March 31, 1997 and
December 31, 1996, respectively) 199,000 183,000
Additional paid in capital 153,597,000 100,158,000
Accumulated deficit (803,000) (3,399,000)
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Total stockholders' equity 152,993,000 96,942,000
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Total liabilities and equity $ 454,208,000 $ 325,228,000
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</TABLE>
See accompanying notes to the consolidated financial statements.
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Signature Resorts, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------
March 31, March 31,
1997 1996
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<S> <C> <C>
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES
Net income $ 2,596,000 $ 1,711,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 919,000 601,000
Provision for bad debt expense 2,057,000 717,000
Minority interest in profits of limited partnership 24,000 --
Equity loss on investment in joint venture 70,000 1,000
Changes in operating assets and liabilities:
Cash in escrow (1,052,000) (22,000)
Due from related parties 153,000 (223,000)
Prepaid expenses and other assets 1,751,000 (2,422,000)
Real estate and development costs (9,601,000) (13,130,000)
Other receivables 2,978,000 1,468,000
Accounts payable (5,289,000) 2,397,000
Accrued liabilities (4,847,000) 5,098,000
Income taxes payable 1,847,000 (200,000)
Deferred taxes payable (503,000) (816,000)
Due to related parties (938,000) 42,000
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Net cash used in operating activities (9,835,000) (4,778,000)
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CASH FLOWS USED IN INVESTING ACTIVITIES
Expenditures for property and equipment (1,945,000) (3,287,000)
Expenditures for intangible assets (3,893,000) (106,000)
Mortgages receivable (21,116,000) (16,097,000)
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Net cash used in investing activities (26,954,000) (19,490,000)
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CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES
Proceeds from notes payable 13,444,000 37,825,000
Payments on notes payable (68,792,000) (14,651,000)
Proceeds from convertible notes 138,000,000 --
Proceeds from notes payable to related parties -- 205,000
Payments on notes payable to related parties -- (669,000)
Proceeds from public offering 53,237,000 --
Proceeds from exercise of options 218,000 --
Distributions to limited partners (17,000) --
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Net cash provided by financing activities 136,090,000 22,710,000
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Net increase (decrease) in cash and cash equivalents 99,301,000 (1,558,000)
Cash and cash equivalents, beginning of period 7,244,000 6,149,000
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Cash and cash equivalents, end of period $ 106,545,000 $ 4,591,000
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Supplemental disclosure of cash flow information:
Interest paid $ 2,464,000 $ 3,246,000
Taxes paid $ 235,000 $ 342,000
</TABLE>
See accompanying notes to the consolidated financial statements.
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Signature Resorts, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
Note 1 - Background
These consolidated statements reflect the Company's February 1997
acquisition of AVCOM International, Inc. under the pooling of interest method of
accounting for all periods presented (see Note 5) and should be read in
conjunction with the audited consolidated financial statements and footnotes
included in the Company's 1996 Annual Report on Form 10-K (File No. 000-21193).
The accounting policies used in preparing these consolidated financial
statements are the same as those described in the aforementioned annual report.
In the opinion of management, all adjustments considered necessary for a
fair presentation have been included and are of a normal recurring nature.
Operating results for three months ended March 31, 1997 are not necessarily
indicative of the results that may be expected for the year ending December 31,
1997.
Note 2 - Pro Form Financial Information
The following table reflects selected pro forma information for the
Company for the three month period ended March 31, 1996.
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1996
Actual Pro Forma Adjustments(a) Pro Forma
------ ------------------------ ---------
<S> <C> <C> <C>
Income before taxes $ 1,297,000 $ 1,371,000 $2,668,000
Provision for income taxes (414,000) 1,481,000(b) 1,067,000
----------- ----------- ----------
Net income $ 1,711,000 $ (110,000) $1,601,000
=========== =========== ==========
Weighted average number of common
and common equivalent shares outstanding 12,237,741 6,037,500 18,275,241
Earnings per share:
- ------------------
Net income $ 0.14 $ 0.09
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</TABLE>
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(a) The pro forma adjustments give effect to the consolidation of the Company's
predecessor corporations, partnerships and limited liability companies and
the Company's initial public offering as if they had occurred at the
beginning of the period ended March 31, 1996. The pro forma adjustments are
based upon currently available information and certain assumptions that the
Company's management believes are reasonable under current circumstances.
(b) Reflects the effect on historical statement of operations data set forth in
footnote (a) above and assumes the combined Company had been treated as a C
corporation rather than as limited partnerships and limited liability
companies for federal and state income tax purposes.
Note 3 - Earnings Per Share
During February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128 (SFAS 128), Earnings Per
Share. The statement establishes standards for computing and presenting earnings
per share (EPS) and applies to publicly held common stock or potential common
stock. The statement simplifies the standards for computing EPS previously
found in APB Opinion No. 15, Earnings Per Share (Opinion 15). It replaces
presentation of primary EPS with a presentation of basic EPS. It also requires
dual presentation of basic and diluted EPS on the face of the income statement
for all entities with complex capital structures.
Basic EPS excludes dilution and is computed by dividing income available to
common stockholders by the weighted-average number of common shares outstanding
for the period. Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common stock that then shared
in the earnings of the entity. Diluted EPS is computed similarly to fully
diluted EPS pursuant to Opinion 15.
The statement requires implementation for the Company during the fourth
quarter of 1997 and does not allow for early implementation. However, if the
Company had implemented SFAS 128, both basic EPS and diluted EPS would have been
$0.13 and $0.14, for the three months ended March 31, 1997 and 1996,
respectively.
Note 4 - Convertible Subordinated Note and Common Stock Offerings
In February 1997, the Company consummated its offering (the "Convertible
Offering") of $138 million aggregate principal amount of its 5.75% Convertible
Subordinated Notes due 2007 (the "Convertible Notes") and its offering (the
"Stock Offering" and together with the Convertible Offering the "Offerings") of
4.0 million shares of its Common Stock (including 1.6 million primary shares
sold by the Company and 2.4 million secondary shares sold by certain selling
stockholders).
The net proceeds to the Company from the sale of the 1.6 million primary
shares of Common Stock offered by the Company in the Stock Offering, based on
public offering price of $36.50 per share, and from the sale of the $138 million
aggregate principal amount of 5.75% Convertible Subordinated Notes due 2007
offered by the Company in the Convertible Offering, based on a public price of
100% of the principal amount thereof, in each case after deducting underwriting
discounts and estimated expenses of the Offerings, were $53.1 million and $134.9
million, respectively.
Note 5 - Merger
On February 7, 1997, the Company consummated its merger (the "Merger") with
AVCOM International, Inc. AVCOM International, Inc. ("AVCOM") is the parent
company of All Seasons Resorts, a developer, marketer and operator of vacation
ownership resorts with a total of ten resorts located in Arizona, California,
and Texas. Pursuant to the terms of the Merger, AVCOM shareholders of record on
February 7, 1997 received one share of the Company Common Stock for every 6.1538
shares of AVCOM common stock, resulting in a total of 883,036 shares of the
Company Common Stock being issued as consideration in the Merger. The Company
has accounted for the merger under the pooling of interest method of accounting
for business combinations and has eliminated all intercompany transactions for
periods presented.
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As a result of the Merger, the Company recorded a one-time charge to
earnings of $1.7 million for charges that include fees and expenses payable to
financial advisors, legal fees, and other transaction related expenses related
to the Merger.
Total revenues of the combined entities were $53,555,000 and $24,027,000
during the three months ended March 31, 1997 and 1996, respectively. AVCOM
contributed $19,794,000 and $6,517,000 to the Company's total revenues for the
three months ended March 31, 1997 and 1996, respectively, and the Company
contributed the remaining $33,761,000 and $17,510,000 of total revenues for the
same periods.
Net income of the combined entities was $2,596,000 and $1,711,000 during
the three months ended March 31, 1997 and 1996, respectively. AVCOM contributed
net income of $1,149,000 and a net loss of $774,000 for the three months ended
March 31, 1997 and 1996, respectively, and the Company contributed the remaining
$1,447,000 and $2,485,000 of net income for the periods. The Company's income of
$1,447,000 during the three months ended March 31, 1997 reflects the one time
charge of $1.7 million.
Total revenues and net income of the combined entities for the month ended
January 31, 1997, the period ending prior to the Merger, were $15,674,000 and
$914,000, respectively. AVCOM contributed $5,873,000 and $320,000 of total
revenues and net income, respectively, and the Company contributed $9,801,000
and $594,000 of total revenues and net income, respectively, for the month
ended January 31, 1997.
Note 6 - Commitments
On March 13, 1997 the Company announced the execution of a definitive
agreement for the acquisition of the Savoy Hotel, located in the South Beach
district of Miami Beach, Florida. Following the acquisition of the Savoy Hotel,
which is expected to close in the second quarter of 1997, the Company intends to
convert the existing 40 completed hotel units and the 28 partially completed
units into approximately 65 studio, one and two bedroom vacation ownership
units. Following the closing and the receipt of necessary governmental
approvals, the Company intends to begin sales of vacation intervals at the Savoy
at South Beach during the third quarter of 1997.
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on it's behalf by the
undersigned thereunto duly authorized.
Date: October 6, 1997 By: /s/ ANDREW D. HUTTON
---------------------------------
Andrew D. Hutton
Vice President and General Counsel
Date: October 6, 1997 By: /s/ MICHAEL A. DEPATIE
---------------------------------
Michael A. Depatie
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
6
