<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) - March 4, 1997
FLORIDA PANTHERS HOLDINGS, INC.
-------------------------------
(Exact Name of Registrant as Specified in Charter)
Florida 0-21435 65-0676005
------- ------- ----------
(State or Other Jurisdiction (Commission (IRS Employer of
of Incorporation) File Number) Identification No.)
100 Northeast Third Avenue, Second Floor, Fort Lauderdale, FL 33301
- ------------------------------------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
(Registrant's Telephone Number, Including Area Code) (954) 768-1900
- ---------------------------------------------------------------------
Not Applicable
- --------------------------------------------------------------------------------
(Former Name or Former Address; if Changed Since Last Report)
Page 1 of ___ pages.
Exhibit Index at Page ___.
<PAGE> 2
Item 2. Acquisition or Disposition of Assets.
On December 22, 1996, Florida Panthers Holdings, Inc. (the "Company")
entered into two definitive agreements (the "Exchange Agreements"), relating to
the acquisition by the Company of direct and indirect ownership interests in
each of 2301 SE 17th St., Ltd., a Florida limited partnership ("2301 Ltd."),
and Rahn Bahia Mar, Ltd., a Florida limited partnership ("Rahn Ltd."), in
exchange for 4,450,000 shares and 3,950,000 shares of the Company's Class A
Common Stock, respectively (together the "Exchanges"). 2301 Ltd. owns and
operates the Hyatt Regency Pier 66 Hotel ("Pier 66"), a luxury resort and marina
located in Fort Lauderdale, Florida. Rahn Ltd. owns and operates the Radisson
Bahia Mar Resort and Yachting Center ("Bahia Mar"), a resort and marina also
located in Fort Lauderdale, Florida. The Exchanges were consummated on March 4,
1997.
Certain of the Company's directors owned direct or indirect interests
in 2301 Ltd. and Rahn Ltd. prior to the consummation of the Exchanges and,
therefore, had a financial interest in the Exchanges. The Company's Board of
Directors, including all directors without a financial interest in the
Exchanges, unanimously approved each of the Exchanges on December 20, 1996 and
December 22, 1996, subject to the receipt of an acceptable fairness opinion from
Donaldson, Lufkin & Jenrette Securities Corporation, which opinion was received
on January 15, 1997, and subject to the receipt of requisite shareholder
approval, which approval was received on March 4, 1997.
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
(a) Financial Statements of Business Acquired
2301 SE 17TH ST., LTD. ("PIER 66")
Reports of Independent Certified Public Accountants........... 4
Balance Sheets as of December 31, 1996 and 1995 .............. 6
Statements of Operations for the periods ended
December 31, 1996, 1995 and 1994............................ 7
Statements of Partners' Equity for the periods ended
December 31, 1996, 1995 and 1994............................ 8
Statements of Cash Flows for the periods ended
December 31, 1996, 1995 and 1994............................ 9
Notes to Financial Statements................................. 10
RAHN BAHIA MAR, LTD. ("BAHIA MAR")
Report of Independent Certified Public Accountants............ 16
Balance Sheets as of December 31, 1996 and 1995............... 17
Statements of Operations for the periods ended
December 31, 1996, 1995 and 1994............................ 18
Statements of Partners' Equity for the periods ended
December 31, 1996, 1995 and 1994............................ 19
Statements of Cash Flows for the periods ended
December 31, 1996, 1995 and 1994............................ 20
Notes to Financial Statements................................. 21
(b) Pro Forma Financial Information
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Introduction to Unaudited Pro Forma Financial Information..... 25
Unaudited Pro Forma Consolidated Balance Sheet as of
December 31, 1996........................................... 26
Unaudited Pro Forma Consolidated Statement of Operations
for the six months ended December 31, 1996.................. 27
Unaudited Pro Forma Consolidated Statement of Operations
for the year ended June 30, 1996............................ 28
Notes to Unaudited Pro Forma Consolidated Financial
Statements.................................................. 29
</TABLE>
2
<PAGE> 3
(c) Exhibits.
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
4.1 Exchange Agreement (Hyatt Regency Pier 66) dated as of
December 22, 1996 (incorporated by reference to the
Company's Definitive Consent Solicitation Statement
filed on March 4, 1997 (SEC File No. 0-21435)
4.2 Exchange Agreement (Radisson Bahia Mar) dated
December 22, 1996 (incorporated by reference to the
Company's Definitive Consent Solicitation Statement
filed on March 4, 1997 (SEC File No. 0-21435)
</TABLE>
3
<PAGE> 4
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Partners of
2301 SE 17th St., Ltd.:
We have audited the accompanying balance sheet of 2301 SE 17th St., Ltd.
(the "Partnership", a Florida limited partnership) as of December 31, 1996, and
the related statements of operations, partners' equity and cash flows for the
year then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit 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 audit provides 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 2301 SE 17th St., Ltd. as of
December 31, 1996, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Fort Lauderdale, Florida,
January 10, 1997.
4
<PAGE> 5
INDEPENDENT AUDITORS' REPORT
The Partners
2301 SE 17th St., Ltd.:
We have audited the accompanying balance sheet of 2301 SE 17th St., Ltd. (a
Florida limited partnership) as of December 31, 1995, and the related statements
of operations, partners' equity and cash flows for each of the years in the two
year period ended December 31, 1995. These financial statements are the
responsibility of the Partnership'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 2301 SE 17th St., Ltd. at
December 31, 1995, and the results of its operations and its cash flows for each
of the years in the two year period ended December 31, 1995 in conformity with
generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Fort Lauderdale, Florida,
April 19, 1996
5
<PAGE> 6
2301 SE 17TH ST., LTD.
BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
ASSETS
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents................................. $ 5,665,918 $ 5,296,563
Accounts receivable, net of allowance for doubtful
accounts of $25,000 as of December 31, 1996 and 1995... 1,270,539 1,510,354
Inventories............................................... 417,775 360,691
Prepaid expenses and other current assets................. 52,650 112,827
----------- -----------
Total current assets.............................. 7,406,882 7,280,435
PROPERTY AND EQUIPMENT, net of accumulated depreciation of
$4,989,415 and $3,402,512 as of December 31, 1996 and
1995, respectively........................................ 28,435,871 29,045,675
OTHER ASSETS, net of accumulated amortization of $1,659,860
and $1,575,526 as of December 31, 1996 and 1995,
respectively.............................................. 350,338 387,638
----------- -----------
Total assets...................................... $36,193,091 $36,713,748
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES:
Accounts payable.......................................... $ 734,140 $ 1,210,721
Accrued liabilities....................................... 974,562 1,070,441
Advance deposits.......................................... 400,049 522,622
----------- -----------
Total current liabilities......................... 2,108,751 2,803,784
LONG-TERM DEBT.............................................. 25,741,929 25,522,398
----------- -----------
Total liabilities................................. 27,850,680 28,326,182
COMMITMENTS AND CONTINGENCIES (Notes 1 and 9)
PARTNERS' EQUITY:
General Partner........................................... 83,424 83,875
Class A Limited Partners.................................. 8,258,887 8,303,591
Class B Limited Partners.................................. 100 100
----------- -----------
Total partners' equity............................ 8,342,411 8,387,566
----------- -----------
Total liabilities and partners' equity............ $36,193,091 $36,713,748
=========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
balance sheets.
6
<PAGE> 7
2301 SE 17TH ST., LTD.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
OPERATING REVENUES:
Rooms.......................................... $ 12,885,858 $ 11,778,303 $ 9,784,119
Yachting and marina service.................... 3,613,361 3,186,513 3,157,742
Food, beverage and banquets.................... 8,756,909 8,151,581 6,889,860
Telephone, retail and other.................... 2,466,427 2,516,960 2,100,903
------------ ------------ ------------
Total operating revenues............... 27,722,555 25,633,357 21,932,624
COSTS AND EXPENSES:
Rooms.......................................... 2,801,808 2,659,149 2,443,787
Yachting and marina service.................... 1,199,177 984,456 869,688
Food, beverage and banquets.................... 6,543,959 6,273,101 5,670,050
Telephone, retail and other.................... 1,098,451 1,121,172 1,082,039
Selling, general and administrative............ 3,389,522 3,488,941 3,020,107
Property operations, maintenance and energy
costs....................................... 2,723,454 2,535,241 2,423,787
Royalty fees, property taxes, insurance,
etc......................................... 1,404,356 1,189,549 1,103,749
Depreciation and amortization.................. 1,675,608 1,566,582 1,428,172
Related party management fee................... 530,000 514,000 560,000
------------ ------------ ------------
Total costs and expenses............... 21,366,335 20,332,191 18,601,379
Income from operations................. 6,356,220 5,301,166 3,331,245
OTHER INCOME (EXPENSE):
Interest income................................ 233,859 225,111 120,989
Interest expense............................... (2,375,634) (2,424,040) (2,168,908)
Loss on disposal of fixed assets............... (59,600) (114,230) (12,523)
------------ ------------ ------------
NET INCOME....................................... 4,154,845 2,988,007 1,270,803
PRO FORMA INCOME TAX PROVISION (Note 3).......... 1,620,389 1,165,323 495,613
------------ ------------ ------------
PRO FORMA NET INCOME AFTER INCOME TAXES.......... $ 2,534,456 $ 1,822,684 $ 775,190
============ ============ ============
NET INCOME ALLOCATED TO:
General Partner................................ $ 41,549 $ 29,880 $ 12,708
Class A Limited Partners....................... 4,113,296 2,958,127 1,258,095
Class B Limited Partners....................... -- -- --
------------ ------------ ------------
Total Net income....................... $ 4,154,845 $ 2,988,007 $ 1,270,803
============ ============ ============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
7
<PAGE> 8
2301 SE 17TH ST., LTD.
STATEMENTS OF PARTNERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
CLASS A CLASS B
GENERAL PARTNER LIMITED PARTNERS LIMITED PARTNERS TOTAL
--------------- ---------------- ---------------- -----------
<S> <C> <C> <C> <C>
PARTNERS' EQUITY, December 31,
1993........................... $ 76,287 $ 7,552,369 $100 $ 7,628,756
Partner distributions.......... (10,000) (990,000) -- (1,000,000)
Net income..................... 12,708 1,258,095 -- 1,270,803
-------- ----------- ------ -----------
PARTNERS' EQUITY, December 31,
1994........................... 78,995 7,820,464 100 7,899,559
Partner distributions.......... (25,000) (2,475,000) -- (2,500,000)
Net income..................... 29,880 2,958,127 -- 2,988,007
-------- ----------- ------ -----------
PARTNERS' EQUITY, December 31,
1995........................... 83,875 8,303,591 100 8,387,566
Partner distributions.......... (42,000) (4,158,000) -- (4,200,000)
Net income..................... 41,549 4,113,296 -- 4,154,845
-------- ----------- ------ -----------
PARTNERS' EQUITY, December 31,
1996........................... $ 83,424 $ 8,258,887 $100 $ 8,342,411
======== =========== ====== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
8
<PAGE> 9
2301 SE 17TH ST., LTD.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income........................................ $ 4,154,845 $ 2,988,007 $ 1,270,803
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization.................. 1,675,608 1,566,582 1,428,172
Amortization of debt discount.................. 219,532 484,462 540,505
Loss on disposal of fixed assets............... 59,600 114,230 12,523
Changes in assets and liabilities:
Accounts receivable.......................... 239,815 (553,103) 262,716
Inventories.................................. (57,084) 4,009 67,323
Prepaid expenses and other current assets.... 60,177 13,538 91,229
Other assets................................. 6,706 37,494 31,515
Restricted cash fund......................... -- 21,357 482,585
Accounts payable and accrued liabilities..... (572,461) 794,087 (1,386,047)
Advance deposits............................. (122,573) (124,738) 304,176
----------- ----------- -----------
Total adjustments......................... 1,509,320 2,357,918 1,834,697
----------- ----------- -----------
Net cash provided by operating
activities.............................. 5,664,165 5,345,925 3,105,500
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment............... (1,094,810) (1,049,310) (1,103,095)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt...................... -- -- 994,105
Repayment of long-term debt....................... -- -- (48,000)
Distributions to partners......................... (4,200,000) (2,500,000) (1,000,000)
----------- ----------- -----------
Net cash used in financing activities..... (4,200,000) (2,500,000) (53,895)
----------- ----------- -----------
Net increase (decrease) in cash and cash
equivalents............................. 369,355 1,796,615 1,948,510
CASH AND CASH EQUIVALENTS, beginning of period...... 5,296,563 3,499,948 1,551,438
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, end of period............ $ 5,665,918 $ 5,296,563 $ 3,499,948
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest.......... $ 2,156,102 $ 1,936,838 $ 1,628,403
=========== =========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
9
<PAGE> 10
2301 SE 17TH ST., LTD.
NOTES TO FINANCIAL STATEMENTS
(1) BACKGROUND OF THE PARTNERSHIP AND OPERATIONS:
2301 SE 17th St., Ltd. (the "Partnership"), a Florida limited partnership,
was formed on March 5, 1993 for the purpose of acquiring, owning and operating
Pier 66 Resort Hotel and Marina, a 380-room resort hotel and conference facility
and a marina which accommodates 142 yachts, located on approximately 23 acres in
Fort Lauderdale, Florida, (the "Resort"). The partnership agreement, amended and
modified on June 29, 1993, is hereinafter referred to as the "Partnership
Agreement".
The Partnership acquired its interest in the Resort from SSA Associates and
Pier Operating Associates, Ltd. on June 29, 1993. The aggregate purchase price
paid by the Partnership for its interest in the Resort was approximately
$30,310,000. Of this amount, $22,000,000 was funded by refinancing the existing
mortgage loan on the Resort.
The Partnership will terminate on December 31, 2035, or sooner, in
accordance with the terms of the Partnership Agreement (see Note 11). The
General Partner of the Partnership is 2301 Mgt., Ltd. (the "General Partner").
2301 Joint Venture and Rahn Pier, Inc. are Class A Limited Partners and First
Winthrop Corporation and Sixty-Six Inc. are Class B Limited Partners.
Class B Limited Partners are not required to make additional capital
contributions, have no rights to vote on partnership matters and do not
participate in the allocation of partnership profits and losses. If the General
Partner and the Class A Limited Partners have both received the Minimum
Qualified Distributions (as defined in the Partnership Agreement), then 15
percent of the distributions with respect to a Capital Transaction (as defined
in the Partnership Agreement) that would otherwise have been made to the General
Partner and the Class A Limited Partners will instead be made to the Class B
Limited Partners.
After any special allocations required by the Partnership Agreement,
profits and losses of the Partnership shall be allocated 1 percent to the
General Partner and 99 percent to the Class A Limited Partners.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
(a) Basis of Accounting --
The accompanying financial statements include the accounts of the
Partnership prepared on the accrual basis of accounting in accordance with
generally accepted accounting principles.
(b) Cash and Cash Equivalents --
The Partnership considers all highly liquid investments purchased with a
maturity of three months or less to be cash equivalents. Cash equivalents are
stated at cost, which approximates market, and consist of repurchase agreements
and money market funds at December 31, 1996 and 1995.
(c) Inventories --
Inventories are stated at the lower of first-in, first-out cost or market.
Inventories consist of food and beverage, marina fuel, retail merchandise and
general store items.
(d) Depreciation --
The following estimated useful lives are used for depreciating property and
equipment on a straight-line basis.
<TABLE>
<S> <C>
Land improvements.............................. 20 years
Building and improvements...................... 40 years
Furnishings and equipment...................... 5-7 years
</TABLE>
10
<PAGE> 11
2301 SE 17TH ST., LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(e) Property and Equipment --
The Partnership's assets are carried at the lower of cost or estimated fair
value. All subsequent expenditures for improvements are capitalized. The costs
of repairs and maintenance are charged to expense as incurred.
The Partnership adopted Statement of Financial Accounting Standards No.
121 -- Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed of, as of January 1, 1995, and accordingly evaluates its
real estate investments periodically to assess whether any impairment
indications are present, including recurring operating losses and significant
adverse changes in legal factors or business climate that affect the recovery of
the recorded value. If any real estate investment is considered impaired, a loss
is provided to reduce the carrying value of the property to its estimated fair
value. The implementation of this standard had no impact on the financial
statements.
(f) Use of Estimates --
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts in the financial statements and
accompanying notes. Actual results could differ from those estimates.
(g) Fair Value of Financial Instruments --
The fair values of the Partnership's financial instruments, including
accounts receivable, long-term debt, accounts payable and accrued liabilities,
advance deposits, and other financial instruments, generally determined using
the present value of estimated future cash flows using a discount rate
commensurate with the risks involved, approximate their carrying or contract
values.
(h) Business Risk --
Any substantial change in economic conditions or any significant price
fluctuations related to the travel and tourism industry could affect
discretionary consumer spending and have a material impact on the Company's
business. In addition, the Company is subject to competition from other entities
engaged in the business of resort development and operation, including interval
ownership, condominiums, hotels and motels.
(i) Concentration of Credit Risk --
The Partnership's receivables contain significant amounts due from cruise
lines which are granted credit by the Partnership. The amount of such credit is
determined by the Partnership's management on an individual basis. Amounts
outstanding at December 31, 1996 are $181,228 and are included in Accounts
receivable in the accompanying balance sheet.
(3) INCOME TAXES:
No provision for income taxes is reflected in the accompanying financial
statements. The partners are required to report on their individual income tax
returns, their allocable share of income, gains, losses, deductions and credits
of the Partnership. The pro forma income tax provision in the accompanying
statements of operations is presented for informational purposes as if the
Partnership was a C corporation during the years presented. Pro forma taxes have
been computed based on an overall estimated effective rate of 39%.
11
<PAGE> 12
2301 SE 17TH ST., LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(4) ACCRUED LIABILITIES:
Accrued liabilities consist of the following as of December 31, 1996 and
1995:
<TABLE>
<CAPTION>
1996 1995
-------- ----------
<S> <C> <C>
Accrued salaries and wages........................... $195,613 $ 168,736
Accrued vacation..................................... 227,883 191,046
Sales tax payable.................................... 129,306 108,621
Other accrued liabilities............................ 421,760 602,038
-------- ----------
$974,562 $1,070,441
======== ==========
</TABLE>
(5) LONG-TERM DEBT:
The property was acquired subject to assumption of a portion of the
existing mortgage loan in the principal amount of $22,000,000 ("Note 1") from
Kemper Investors Life Insurance Company. In addition, the Partnership obtained
an additional mortgage note from Kemper for $4,000,000 ("Note 2") to be drawn
upon to finance the cost of certain capital improvements, to provide initial
working capital, and to fund interest accrued on the mortgage notes between
January 1, 1994 and December 31, 1995 to the extent cash flows from operations
are insufficient for such payment. Both mortgage notes mature on June 28, 2000
and bear interest at varying rates for specified periods. This rate was 8.39
percent and 8.0 percent at December 31, 1996 and 1995, respectively. The
mortgage notes require monthly payments of interest only throughout the term. A
balloon payment on the entire outstanding principal amount, together with the
final monthly payment of interest, will be due at maturity. Both mortgage notes
are collateralized by substantially all property and equipment including the
alcoholic beverage license, a security interest in the Hyatt franchise
agreement, an assignment of leases, rents and profits, trademarks and the
management agreement.
The outstanding balances of the notes at December 31, 1996 and 1995 were as
follows:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Note 1............................................ $21,951,325 $21,951,325
Note 2............................................ 4,000,000 4,000,000
----------- -----------
25,951,325 25,951,325
Less: Unamortized discount based on imputed
interest rate of 9%............................. (209,396) (428,927)
----------- -----------
$25,741,929 $25,522,398
=========== ===========
</TABLE>
As required by the loan agreement, the Partnership maintains a Capital
Expenditure Program ("CEP") reserve fund for the replacement of capital assets.
The CEP reserve equals 3 percent of gross revenues net of amounts expended by
the Resort for replacement of capital assets and is funded quarterly for the
preceding quarter. The CEP establishes a minimum level of fixed asset
expenditures to be made by the Partnership. To the extent these minimum
expenditure levels are not achieved, such shortfall is to be included in the CEP
fund. Beginning July 1, 1995, the Resort voluntarily increased the CEP reserve
to 4 percent of gross revenues; however, the loan agreement fund is only funded
for the required 3 percent. The CEP fund is also pledged as additional security
for the loan obligation. At December 31, 1996 and 1995, the balance of the CEP
reserve is $1,284 and $9,218, respectively, and is included in Other assets in
the accompanying balance sheets.
(6) MANAGEMENT AGREEMENT:
The Partnership entered into a hotel management agreement with Rahn Pier
Mgt., Inc., a company affiliated by common ownership and management with the
general partner and Class A limited partners, effective June 29, 1993. The
agreement provides for a management fee equal to three percent of gross
12
<PAGE> 13
2301 SE 17TH ST., LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
revenues during the first year, payable monthly. Management fees for the second
year equal two percent of gross revenues and for each year thereafter through
December 31, 2003, an amount equal to the total management fee during the second
year.
Management fees for the Resort amounted to approximately $530,000, $514,000
and $560,000, in 1996, 1995 and 1994, respectively, and are included in Related
party management fee in the accompanying statements of operations. Fees payable
to Rahn Pier Mgt., Inc. were approximately $50,000 as of December 31, 1996 and
1995. In addition, during 1994 construction management fees of $48,000 were paid
to Rahn Properties, Inc., an affiliate of the general partner and Class A
limited partners and are included in Royalty fees, property taxes, insurance,
etc., in the accompanying statements of operations.
(7) LICENSE AND FRANCHISE AGREEMENTS:
Hyatt Franchise--
As of November 14, 1994, Rahn Pier Mgt., Inc. entered into a franchise
agreement with Hyatt Franchise Corporation. The agreement is for a 20 year term
ending November 14, 2014 with various early termination provisions and
liquidated damages for early termination. The franchise agreement provides a
reimbursement of not more than $15,000 for out-of-pocket expenses incurred
relating to the granting of the franchise and monthly royalty fees based on a
percentage of gross room revenue: one percent from December 1, 1994 through
November 30, 1995, three percent from December 1, 1995 through November 30,
1996, four percent from December 1, 1996 through November 30, 1997 and five
percent thereafter. Royalty fees amounted to $398,175 and $132,449 in 1996 and
1995, respectively.
The agreement also provides for the pro-rata allocation of certain Hyatt
"allocable chain expenses" based on the relation of the Resort's total number of
guest rooms to the average number of guest rooms in all Hyatt Resorts in the
United States along with assessments for Gold Passport and national/regional
sales promotions. A fee for the use of the Hyatt reservation system is also
allocated to the Hotel. Total Hyatt expenses other than the royalty fees
amounted to $501,752 and $502,658 for the years ended December 31, 1996 and
1995, respectively, and are included in Rooms and Selling, general, and
administrative expenses in the accompanying statements of operations.
The franchise agreement requires the Partnership to maintain a reserve for
replacement of furniture, fixtures and equipment and those repairs and
maintenance costs which are capitalizable under generally accepted accounting
principles. This reserve is determined as a percentage of gross room revenues:
three percent through November 1995 and four percent thereafter.
The franchise agreement requires the significant renovation of guest rooms,
corridors and other public areas to be performed every five to six years. In
addition, the replacement of other furniture, fixtures and equipment, as defined
in the agreement, is to occur every 10 to 12 years.
13
<PAGE> 14
2301 SE 17TH ST., LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(8) PROPERTY AND EQUIPMENT:
Property and equipment consists of the following:
<TABLE>
<CAPTION>
1996 1995
-------------------- --------------------
<S> <C> <C>
Land and land improvements........................ $ 6,547,452 $ 6,547,452
Building and improvements......................... 18,937,564 18,396,035
Furnishings and equipment......................... 7,742,848 7,315,209
Operating equipment............................... 197,422 189,491
----------- -----------
33,425,286 32,448,187
Less: Accumulated depreciation.................... (4,989,415) (3,402,512)
----------- -----------
$28,435,871 $29,045,675
=========== ===========
</TABLE>
(9) LEASES:
Leases for operating equipment are contracted under the Partnership's name.
The following is a schedule of future minimum lease payments for the operating
leases, with initial or remaining terms in excess of one year, as of December
31, 1996:
<TABLE>
<S> <C>
1997............................................ $ 75,825
1998............................................ 48,196
1999............................................ 2,136
2000............................................ 356
Thereafter...................................... --
--------
$126,513
========
</TABLE>
Operating lease costs totaled $89,073, $92,717 and $91,820, for 1996, 1995
and 1994, respectively.
The Resort also has various marina and long-term tenant leases. The
receipts on these tenant leases are included in Telephone, retail and other.
Lease income totaled $381,296, $351,006 and $347,949, for 1996, 1995 and 1994,
respectively.
The Partnership leased a restaurant located at the Resort to an unrelated
party in August 1993 for a period of 5 years beginning November 1, 1993 with
four, five-year renewal options. Annual rent is $204,000 plus 7 percent of
annual gross sales in excess of $3,500,000.
Other leases for building space have been contracted with unrelated parties
for operation of a spa and a yacht broker. The spa lease is for a period of
three years beginning February 1, 1992 with two three-year renewal options. The
lease was renewed on February 1, 1995 with annual rent of $27,336 plus five
percent of gross sales. The yacht broker lease is for three years beginning
January 1, 1995 with one three-year renewal option. Annual rent is $92,812.
The following is a schedule of future minimum cash receipts for tenant
operating leases with initial term in excess of one year, as of December 31,
1996:
<TABLE>
<S> <C>
1997............................................ $239,373
1998............................................ 191,554
Thereafter...................................... --
</TABLE>
14
<PAGE> 15
2301 SE 17TH ST., LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(10) DEFERRED COMPENSATION PLAN:
The Rahn Pier Mgt., Inc. offers its employees a deferred compensation plan
(the "Plan") created in accordance with Internal Revenue Code Section 401(k).
The Plan is available to all employees with a minimum of 21 years of age and one
year of service. All of the costs are reimbursed by the Partnership.
The Plan's participants may contribute from one percent to 14 percent of
their compensation during the Plan year. Rahn Pier Mgt., Inc. matches 25 percent
of the first four percent contributed by each Plan participant and effective
January 1, 1996, the matched contributed percentage was increased to six
percent. Rahn Pier Mgt., Inc. incurred expenses related to the Plan of $48,359,
$40,791 and $45,973, in 1996, 1995 and 1994, respectively.
(11) EXCHANGE AGREEMENT:
On December 22, 1996, the Partnership entered into a definitive exchange
agreement with Florida Panthers Holdings, Inc. ("Holdings"), whereby Holdings
will acquire the Partnership in exchange for 4.45 million shares of Holdings'
Class A common stock. The transaction is subject to the approval of Holdings'
shareholders and as of January 10, 1997, had not been finalized.
15
<PAGE> 16
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Partners of
Rahn Bahia Mar, Ltd.:
We have audited the accompanying balance sheets of Rahn Bahia Mar, Ltd.
(the "Partnership", a Florida limited partnership) as of December 31, 1996 and
1995, and the related statements of operations, partners' equity and cash flows
for the years ended December 31, 1996 and 1995 and for the period from inception
(June 28, 1994) to December 31, 1994. These financial statements are the
responsibility of the Partnership'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 Rahn Bahia Mar, Ltd. as of
December 31, 1996 and 1995, and the results of its operations and its cash flows
for the years ended December 31, 1996 and 1995 and for the period from inception
(June 28, 1994) to December 31, 1994 in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Fort Lauderdale, Florida,
January 10, 1997.
16
<PAGE> 17
RAHN BAHIA MAR, LTD.
BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
ASSETS
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents................................. $ 2,653,789 $ 1,010,993
Accounts receivable, net of allowance for doubtful
accounts of $9,506 and $9,600 as of December 31, 1996
and 1995............................................... 604,720 519,779
Inventories............................................... 204,860 180,713
Prepaid expenses and other current assets................. 63,522 124,681
----------- -----------
Total current assets................................... 3,526,891 1,836,166
PROPERTY AND EQUIPMENT, net of accumulated depreciation of
$4,311,773 and $2,381,116 as of December 31, 1996 and
1995...................................................... 28,907,213 30,005,394
OTHER ASSETS................................................ 191,591 287,375
----------- -----------
Total assets...................................... $32,625,695 $32,128,935
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES:
Accounts payable.......................................... $ 292,067 $ 434,870
Accrued liabilities....................................... 567,160 476,064
Advance deposits.......................................... 486,313 385,864
Current portion of long-term debt......................... 15,495,000 710,000
----------- -----------
Total current liabilities......................... 16,840,540 2,006,798
LONG-TERM DEBT, net of current portion...................... -- 15,495,000
----------- -----------
Total liabilities................................. 16,840,540 17,501,798
COMMITMENTS AND CONTINGENCIES (Notes 1 and 7)
PARTNERS' EQUITY:
General Partner........................................... 157,852 146,272
Limited Partners.......................................... 15,627,303 14,480,865
----------- -----------
Total partners' equity............................ 15,785,155 14,627,137
----------- -----------
Total liabilities and partners' equity............ $32,625,695 $32,128,935
=========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
balance sheets.
17
<PAGE> 18
RAHN BAHIA MAR, LTD.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995 AND
FOR THE PERIOD FROM INCEPTION (JUNE 28, 1994) TO DECEMBER 31, 1994
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION
(JUNE 28, 1994) TO
1996 1995 DECEMBER 31, 1994
----------- ----------- ------------------
<S> <C> <C> <C>
OPERATING REVENUES:
Rooms.......................................... $ 6,881,263 $ 5,338,328 $1,421,161
Yachting and marina service.................... 3,870,609 4,213,381 1,995,704
Food, beverage and banquets.................... 2,686,536 1,782,380 621,207
Telephone, retail and other.................... 2,571,326 2,135,405 671,859
----------- ----------- ----------
Total operating revenues............... 16,009,734 13,469,494 4,709,931
COSTS AND EXPENSES:
Rooms.......................................... 1,499,432 1,294,583 572,516
Yachting and marina service.................... 765,719 996,900 536,137
Food, beverage and banquets.................... 2,104,675 1,593,065 758,372
Telephone, retail and other.................... 1,126,165 1,060,365 399,090
Selling, general and administrative............ 1,789,949 1,759,968 671,422
Property operations, maintenance and energy
costs....................................... 1,406,022 1,286,357 760,174
Royalty fees, property taxes, insurance,
etc......................................... 1,881,905 1,851,898 745,386
Depreciation and amortization.................. 1,970,770 1,848,544 593,033
----------- ----------- ----------
Total costs and expenses............... 12,544,637 11,691,680 5,036,130
----------- ----------- ----------
Income (loss) from operations............... 3,465,097 1,777,814 (326,199)
OTHER INCOME (EXPENSE):
Interest income................................ 98,126 57,983 18,288
Interest expense............................... (1,405,205) (1,455,129) (443,629)
Loss on disposal of fixed assets............... -- (1,991) --
----------- ----------- ----------
(1,307,079) (1,399,137) (425,341)
----------- ----------- ----------
NET INCOME (LOSS)................................ 2,158,018 378,677 (751,540)
PRO FORMA INCOME TAX BENEFIT (PROVISION) (Note
3)............................................. (841,626) (147,684) 293,101
----------- ----------- ----------
PRO FORMA NET INCOME (LOSS) AFTER INCOME TAXES... $ 1,316,392 $ 230,993 $ (458,439)
=========== =========== ==========
NET INCOME (LOSS) ALLOCATED TO:
General Partner................................ $ 21,580 $ 3,787 $ (7,515)
Limited Partners............................... 2,136,438 374,890 (744,025)
----------- ----------- ----------
Total Net income (loss)................ $ 2,158,018 $ 378,677 $ (751,540)
=========== =========== ==========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
18
<PAGE> 19
RAHN BAHIA MAR, LTD.
STATEMENTS OF PARTNERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995 AND
FOR THE PERIOD FROM INCEPTION (JUNE 28, 1994) TO DECEMBER 31, 1994
<TABLE>
<CAPTION>
GENERAL PARTNER LIMITED PARTNERS
(1%) (99%) TOTAL
--------------- ---------------- -----------
<S> <C> <C> <C>
PARTNERS' CONTRIBUTION, June 28, 1994............ $150,000 $14,850,000 $15,000,000
Net loss....................................... (7,515) (744,025) (751,540)
-------- ----------- -----------
PARTNERS' EQUITY, December 31, 1994.............. 142,485 14,105,975 14,248,460
Net income..................................... 3,787 374,890 378,677
-------- ----------- -----------
PARTNERS' EQUITY, December 31, 1995.............. 146,272 14,480,865 14,627,137
Partner Distributions.......................... (10,000) (990,000) (1,000,000)
Net income..................................... 21,580 2,136,438 2,158,018
-------- ----------- -----------
PARTNERS' EQUITY, December 31, 1996.............. $157,852 $15,627,303 $15,785,155
======== =========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
19
<PAGE> 20
RAHN BAHIA MAR, LTD.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995 AND
FOR THE PERIOD FROM INCEPTION (JUNE 28, 1994) TO DECEMBER 31, 1994
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION
(JUNE 28, 1994) TO
1996 1995 DECEMBER 31, 1994
----------- ----------- ------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).............................. $ 2,158,018 $ 378,677 $ (751,540)
Adjustments to reconcile net income (loss) to
cash provided by operating activities --
Depreciation and amortization............... 1,970,770 1,848,544 593,033
Loss on disposal of fixed assets............ -- 1,991 --
Changes in assets and liabilities:
Accounts receivable....................... (84,941) (143,063) (376,716)
Inventories............................... (24,147) (5,469) (175,244)
Prepaid expenses and other current
assets................................. 61,159 (2,270) (122,411)
Other assets.............................. 95,784 (44,983) (302,522)
Accounts payable, accrued liabilities and
advance deposits....................... 48,742 (1,298,268) 2,595,066
----------- ----------- ------------
Total adjustments...................... 2,067,367 356,482 2,211,206
----------- ----------- ------------
Net cash provided by operating
activities........................... 4,225,385 735,159 1,459,666
----------- ----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment............ (872,589) (3,776,347) (28,612,485)
----------- ----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term debt proceeds........................ -- 3,553,715 13,196,285
Long-term debt repayments...................... (710,000) (545,000) --
Partners' capital contribution................. -- -- 15,000,000
Partners' capital distribution................. (1,000,000) -- --
----------- ----------- ------------
Net cash provided by (used in)
financing activities................. (1,710,000) 3,008,715 28,196,285
----------- ----------- ------------
Net increase (decrease) in cash and
cash equivalents..................... 1,642,796 (32,473) 1,043,466
CASH AND CASH EQUIVALENTS, beginning of period... 1,010,993 1,043,466 --
----------- ----------- ------------
CASH AND CASH EQUIVALENTS, end of period......... $ 2,653,789 $ 1,010,993 $ 1,043,466
=========== =========== ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest....... $ 1,405,205 $ 1,328,496 $ 497,043
=========== =========== ============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
20
<PAGE> 21
RAHN BAHIA MAR, LTD.
NOTES TO FINANCIAL STATEMENTS
(1) BACKGROUND OF THE PARTNERSHIP AND OPERATIONS:
Rahn Bahia Mar, Ltd. (the "Partnership"), a Florida limited partnership,
was formed and began operations on June 28, 1994 for the purpose of owning the
Bahia Mar Resort and Yachting Center (the "Resort"), in Fort Lauderdale,
Florida. Rahn Bahia Mar, G.P., Ltd. (the "General Partner"), a Florida limited
partnership, is the general partner of the Partnership (1% owner) and engages in
transactions on the Partnership's behalf. Limited partners include Rahn Bahia
Mar, Inc., a Florida corporation (19.5% owner), and Bahia Mar Joint Venture, a
Florida general partnership (79.5% owner). The term of the partnership agreement
is 50 years and expires December 31, 2044.
The Partnership's tax basis profits, losses and excess net cash flows, as
defined by the Partnership agreement (the "Agreement"), are allocated to the
partners on the basis of their respective percentage interests in the
Partnership, as defined by the Agreement.
On June 28, 1994, the Partnership entered into a license agreement with
Radisson Hotels International, Inc. ("Radisson"), covering a period of 10 years.
The terms of the agreement allow the Partnership to operate the Resort using the
Radisson system. Annual fees payable to Radisson pursuant to the agreement range
from one percent to four percent (increasing one percent each year) of the first
$7,000,000 of gross room sales and five percent of gross room sales (as defined
by the agreement) in excess of $7,000,000 through December 31, 1997. The
remainder of the term requires fees in the amount of five percent of gross room
sales.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
(a) Basis of Accounting --
The accompanying financial statements include the accounts of the
Partnership prepared on the accrual basis of accounting in accordance with
generally accepted accounting principles.
(b) Cash and Cash Equivalents --
The Partnership considers all highly liquid investments purchased with a
maturity of three months or less to be cash equivalents. Cash equivalents are
stated at cost, which approximates market, and consist of repurchase agreements
and money market funds at December 31, 1996 and 1995.
(c) Inventories --
Inventories are stated at the lower of first-in, first-out cost or market.
Inventories consist of food and beverage, marina fuel, retail merchandise and
general store items.
(d) Depreciation --
The following estimated useful lives are used for depreciating property and
equipment on a straight-line basis:
<TABLE>
<S> <C>
Land improvements.................................. 15 years
Building and improvements.......................... 40 years
Furnishings........................................ 7 years
</TABLE>
(e) Property and Equipment --
The Partnership's assets are carried at the lower of cost or estimated fair
value. All subsequent expenditures for improvements are capitalized. The costs
of repairs and maintenance are charged to expense as incurred.
21
<PAGE> 22
RAHN BAHIA MAR, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Partnership adopted Statement of Financial Accounting Standards No.
121 -- Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed of, as of January 1, 1995, and accordingly evaluates its
real estate investments periodically to assess whether any impairment
indications are present, including recurring operating losses and significant
adverse changes in legal factors or business climate that affect the recovery of
the recorded value. If any real estate investment is considered impaired, a loss
is provided to reduce the carrying value of the property to its estimated fair
value. At the date of implementation, this standard had no impact on the
Partnership's financial statements.
(f) Use of Estimates --
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts in the financial statements and
accompanying notes. Actual results could differ from those estimates.
(g) Fair Value of Financial Instruments --
The fair values of the Partnership's financial instruments, including
accounts receivable, long-term debt, accounts payable and accrued liabilities,
advance deposits, and other financial instruments, generally determined using
the present value of estimated future cash flows using a discount rate
commensurate with the risks involved, approximate their carrying or contract
values.
(h) Business Risk --
Any substantial change in economic conditions or any significant price
fluctuations related to the travel and tourism industry could affect
discretionary consumer spending and have a material impact on the Partnership's
business. In addition, the Partnership is subject to competition from other
entities engaged in the business of resort development and operation, including
interval ownership, condominiums, hotels and motels.
(i) Concentration of Credit Risk --
The Partnership's receivables contain significant amounts due from cruise
lines which are granted credit by the Partnership. The amount of such credit is
determined by the Partnership's management on an individual basis.
(3) INCOME TAXES:
Provisions for federal and state income taxes have not been made in the
accompanying financial statements, as the Partnership's tax basis profits and
losses are allocated to the partners (see Note 1). The pro forma income tax
provision in the accompanying statement of operations is presented for
informational purposes as if the Partnership was a C corporation during the
years for which pro forma information is presented. Such pro forma taxes have
been computed on an overall estimated effective rate of 39%.
(4) RELATED PARTY TRANSACTIONS:
Rahn Properties, Inc. ("Rahn"), provided renovation management services to
the Partnership. Fees totaling $88,000 and $114,000 in 1995 and 1994,
respectively, were paid to Rahn in connection with the renovation of the Hotel
and are reflected in the cost of the property. The Partnership also reimbursed
Rahn for various expenses incurred in performing these services including the
renovation management and administrative staff salaries, telephone, utilities
and postage. Reimbursements totaling $9,955 and $9,862 in 1995 and 1994,
respectively, are also reflected in the cost of the property. No such fees or
reimbursements were made in 1996. Included in accounts payable at December 31,
1995 are amounts due to Rahn of $8,576. No such amounts were payable at December
31, 1996.
22
<PAGE> 23
RAHN BAHIA MAR, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Partnership has a management agreement with Rahn Bahia Mar Mgmt., Inc.
("Rahn Management") for a period of ten years ending June 30, 2004. The
agreement requires a management fee of three percent of gross revenues, as
defined in the management agreement, during the first eighteen months of the
agreement and a two percent fee for 1996 and thereafter. Management fees paid to
Rahn Management totaled $321,193, $405,261 and $141,298 in 1996, 1995 and 1994,
respectively.
The management agreement requires Rahn Management to set aside cash from
Hotel operations for the purchase, replacement and renewal of furniture,
fixtures and equipment and non-routine repairs and maintenance to the building.
The amount to be restricted is three percent of the Hotel's gross revenues each
month during the term of the agreement. All cash was spent on its required
purpose at December 31, 1996.
Fees paid to Radisson pursuant to the license agreement with Radisson (see
Note 1) totaled $206,438 $107,127, and $13,395, in 1996, 1995 and 1994,
respectively.
(5) LONG-TERM DEBT:
Long-term debt consists of a $15,495,000 mortgage note payable to a bank.
The note bears interest at a variable rate as defined by the agreement (8.8125
percent at December 31, 1996) and is collateralized by substantially all
property and equipment. In addition to the monthly interest payments, the note
has monthly principal installments of $45,000 commencing in February 1995. The
principal payments increased to $55,000 in August 1995 and $65,000 in August
1996. The maturity date for the note is June 30, 1997, but may be extended under
a one year extension option. During the extension period, the monthly principal
installments will increase to $75,000, the interest rate will increase by 1
percent and an extension fee equal to .0025 percent of the then outstanding
balance will be due prior to the extension. The final balloon payment would then
be due June 30, 1998.
Capitalized interest paid in 1994 and included in the cost of the property
is $53,414. Effective February 1, 1995, and continuing on the first day of each
month thereafter during the term of the note, the note agreement requires the
Partnership to set aside cash for the purchase, replacement and upgrade of
furniture, fixtures, equipment and property in the amount of $25,000 each month.
All cash was spent on its required purpose at December 31, 1996.
(6) PROPERTY AND EQUIPMENT:
Property and equipment consists of the following:
<TABLE>
<CAPTION>
1996 1995
-------------------- --------------------
<S> <C> <C>
Land and improvements............................. $ 8,202,702 $ 8,127,597
Buildings and improvements........................ 18,149,511 17,798,505
Furnishings and equipment......................... 6,779,921 6,338,365
Operating equipment............................... 86,852 122,043
----------- -----------
33,218,986 32,386,510
Less: Accumulated depreciation.................... (4,311,773) (2,381,116)
----------- -----------
$28,907,213 $30,005,394
=========== ===========
</TABLE>
(7) COMMITMENTS AND CONTINGENCIES:
The Partnership leases the Resort site under an operating lease which had a
term through September 30, 2037. On January 4, 1995, the term of this lease was
extended for an additional period commencing October 1, 2037 through August 31,
2062 (the "Second Extended Term"). Under the lease agreement, the Partnership is
required to pay the lessor an annual rental (payable in quarterly installments)
equal to the greater of a
23
<PAGE> 24
RAHN BAHIA MAR, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
percentage (4 percent through September 30, 2012 and 4.25 percent thereafter) of
the annual gross operating revenue, as defined in the lease agreement, or a
minimum annual rent payment. Minimum lease payments were $150,000 a year through
September 30, 1995; effective October 1, 1995 the minimum annual rent is
$300,000 payable in quarterly installments. During the Second Extended Term, the
minimum annual rent shall be the greater of $300,000 or eighty percent of the
average total annual rent paid during the three lease years immediately
preceding the lease year for which the minimum annual rent is being calculated.
Rent expense under the lease totaled $632,907 and $510,956 for the years ended
December 31, 1996 and 1995, respectively, and $174,174 for the period from
inception (June 28, 1994) to December 31, 1994.
Effective October 1, 1995 and continuing annually for the remaining term of
the lease, the lease agreement requires the Partnership to set aside cash for
the purchase, replacement and upgrade of furniture, fixtures and equipment. The
amount to be restricted is three percent of the Resort's revenues, as defined in
the lease agreement. All cash was spent on its required purpose at December 31,
1996.
The Hotel also leases certain equipment used in its operations under
operating leases. Future minimum lease payments, including the property lease
and operating leases, are as follows:
<TABLE>
<S> <C>
1997............................................ $ 407,080
1998............................................ 406,137
1999............................................ 391,241
2000............................................ 343,784
2001............................................ 304,126
Thereafter...................................... 18,200,000
-----------
$20,052,368
===========
</TABLE>
(8) DEFERRED COMPENSATION PLAN:
Effective July 1, 1995, Rahn Management offered its employees a
multi-employer deferred compensation plan (the "Plan") created in accordance
with Internal Revenue Code Section 401(k). The Plan is available to all
employees with a minimum of 21 years of age and one year of service. All of the
costs are reimbursed by the Partnership.
The Plan's participants may contribute from 1 percent to 14 percent of
their compensation during the Plan year. Rahn Management matched 25 percent of
the first 4 percent contributed by each Plan participant, prior to January 1,
1996. Effective January 1, 1996, Rahn Management matches 25 percent of the first
six percent contributed by each Plan participant. Rahn Management contributed
$16,002 and $9,721 to the Plan in 1996 and 1995, respectively.
(9) EXCHANGE AGREEMENT:
On December 22, 1996, the Partnership entered into a definitive exchange
agreement with Florida Panthers Holdings, Inc. ("Holdings"), whereby Holdings
will acquire the Partnership in exchange for 3,950,000 shares of Holdings'
Class A common stock. The transaction is subject to the approval of Holdings'
shareholders and, as of January 10, 1997, had not been finalized.
24
<PAGE> 25
FLORIDA PANTHERS HOLDINGS, INC.
INTRODUCTION TO
UNAUDITED PRO FORMA FINANCIAL INFORMATION
GENERAL
The following Unaudited Pro Forma Consolidated Balance Sheet as of December
31, 1996 and the Unaudited Pro Forma Statements of Operations for the year ended
June 30, 1996 and six months ended December 31, 1996 reflect adjustments to
Florida Panthers Holdings, Inc.(the "Company"), Hyatt Regency Pier 66 Hotel
("2301 Ltd.") and Radisson Bahia Mar Resort and Yachting Center ("Rahn, Ltd.")
historical financial position and results of operations to give effect to the
transactions discussed below as if such transactions had been consummated at
December 31, 1996, or at the beginning of the period presented.
THE EXCHANGES
Pursuant to the Pier 66 Exchange Agreement, on March 4, 1997 all of the
ownership interests, comprised of capital stock and partnership interests, of
each of the entities which own, directly or indirectly, all of the general and
limited partnership interests in 2301 Ltd. were exchanged for 4,450,000 shares
of Class A Common Stock. Pursuant to the Bahia Mar Exchange Agreement, on March
4, 1997 all of the ownership interests, comprised of capital stock and
partnership interests, of each of the entities which own, directly or
indirectly, all of the general and limited partnership interests in Rahn Ltd.
were exchanged for 3,950,000 shares of Class A Common Stock. After the
consummation of the transactions contemplated by the Exchange Agreements, the
Company owns all of the ownership interests of each of the entities which own,
directly or indirectly, all of the general and limited partnership interests in
2301 Ltd. and Rahn Ltd.
THE OFFERINGS
The Unaudited Pro Forma Statements of Operations reflect the Company's
initial public offering and concurrent offering, which were effective November
13, 1996 and the application of the net proceeds therefrom, as if these
offerings had occurred at the beginning of the periods presented.
PRIVATE PLACEMENT TRANSACTION
On January 30, 1997, the Company issued and sold 2,460,000 shares of
unregistered, but otherwise unrestricted, Class A Common Stock in a Private
Placement at a price of $27.75 per share. The Private Placement resulted in net
proceeds to the Company of $66,976,550 after deducting placement agency fees and
other expenses and has been reflected in the Unaudited Pro Forma Consolidated
Balance Sheet as if it had occurred on December 31, 1996.
25
<PAGE> 26
FLORIDA PANTHERS HOLDINGS, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA BUSINESSES ACQUIRED(M) PRO FORMA AS
FLORIDA ADJUSTMENTS PRO FORMA ------------------------------------ ADJUSTED FOR
PANTHERS FOR PRIVATE FOR PRIVATE ACQUISITION THE BUSINESSES
HOLDINGS, INC. PLACEMENT(N) PLACEMENT 2301 LTD. RAHN LTD. ADJUSTMENTS ACQUIRED(M)
-------------- ------------ ----------- --------- ---------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and equivalents..... $23,668 $66,977 $ 90,645 $ 5,666 $ 2,654 $ (8,320)(a) $ 90,645
Accounts receivable...... 6,021 6,021 1,271 605 (1,876)(a) 6,021
Prepaid expenses and
other.................. 1,347 1,347 470 268 (738)(a) 1,347
------- ------- -------- ------- ------- -------- --------
Total current assets..... 31,036 66,977 98,013 7,407 3,527 (10,934) 98,013
Property and equipment,
net...................... 1,467 1,467 28,436 28,907 62,833(b) 121,643
Franchise cost, net........ 22,185 22,185 22,185
Player contract acquisition
costs, net............... 5,375 5,375 5,375
Investment in Miami Arena
operating contract....... 8,701 8,701 8,701
Other assets............... 4,973 4,973 350 192 (542)(a) 4,973
------- ------- -------- ------- ------- -------- --------
Total assets............. $73,737 $66,977 $140,714 $36,193 $32,626 $ 51,357 $260,890
======= ======= ======== ======= ======= ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Deferred revenue......... $11,588 $ 11,588 $ 11,588
Accounts payable and
accrued expenses....... 5,481 5,481 $ 2,109 $ 1,346 $ (3,455)(a) 5,481
Current portion of
long-term debt......... -- 15,495 15,495
Other current
liabilities............ 3,284 3,284 3,284
------- ------- -------- ------- ------- -------- --------
Total current
liabilities............ 20,353 20,353 2,109 16,841 (3,455) 35,848
Long-term debt............. -- 25,742 25,742
Other non-current
liabilities.............. 3,341 3,341 3,341
Shareholders' Equity
Class A Common Stock... 123 25 148 84(c) 232
Class B Common Stock... 3 3 3
Contributed capital.... 51,680 66,952 118,632 8,342 15,785 54,728 (a)(c 197,487
Accumulated deficit.... (1,763) (1,763) (1,763)
------- ------- -------- ------- ------- -------- --------
Total shareholders'
equity............... 50,043 66,977 117,020 8,342 15,785 54,812 195,959
------- ------- -------- ------- ------- -------- --------
Total liabilities and
shareholders'
equity............... $73,737 $66,977 $140,714 $36,193 $32,626 $ 51,357 $260,890
======= ======= ======== ======= ======= ======== ========
</TABLE>
26
<PAGE> 27
FLORIDA PANTHERS HOLDINGS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRO FORMA
FLORIDA BUSINESSES ACQUIRED(1) AS ADJUSTED
PANTHERS PRO FORMA ----------------------------------- FOR THE
HOLDINGS, INC. OFFERING AS ACQUISITION BUSINESSES
ACTUAL ADJUSTMENT ADJUSTED 2301 LTD. RAHN LTD. ADJUSTMENTS ACQUIRED(M)
-------------- ----------- --------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Ticket sales............... $ 8,659 $ 8,659 $ 8,659
Television and radio....... 2,795 2,795 2,795
Advertising and
promotion................ 1,503 1,503 1,503
Arena operations........... 1,301 1,301 1,301
Rooms...................... $ 5,461 $ 2,913 8,374
Yachting and marina
services................. 1,567 2,011 3,578
Food, beverage and
banquets................. 3,956 1,233 5,189
Telephone, retail and
other.................... 1,101 1,192 2,293
Other, primarily
concessions.............. 1,125 1,125 1,125
------- ------ ------- ------- ------- ----- -------
Total revenue........ 15,383 15,383 12,085 7,349 34,817
Cost of revenues:
Team operations............ 14,667 14,667 14,667
Ticketing and arena
operations............... 1,284 1,284 1,284
Rooms...................... 1,333 724 2,057
Yachting and marina
services................. 494 433 927
Food, beverage and
banquets................. 3,097 1,026 4,123
Telephone, retail and
other.................... 509 541 1,050
Selling, general and
administrative........... 4,097 4,097 3,883 2,531 10,511
------- ------ ------- ------- ------- ----- -------
Total cost of
revenue............ 20,048 20,048 9,316 5,255 34,619
Amortization and
depreciation............... (1,795) (1,795) (851) (996) $(729)(e) (4,371)
------- ------ ------- ------- ------- ----- -------
Operating income (loss)...... (6,460) (6,460) 1,918 1,098 (729) (4,173)
Interest and other, net...... (2,339) $2,069(d) (270) (1,107) (608) (1,985)
------- ------ ------- ------- ------- ----- -------
Net income (loss)............ $(8,799) $2,069 $(6,730) $ 811 $ 490 $(729) $(6,158)
======= ====== ======= ======= ======= ===== =======
Loss per share............... $ (1.19)(f) $ (0.62)(g) $ (0.32)(h)
======= ======= =======
Pro Forma weighted average
shares outstanding......... 7,418(f) 10,837(g) 19,237(h)
======= ======= =======
</TABLE>
27
<PAGE> 28
FLORIDA PANTHERS HOLDINGS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
PRO FORMA
FLORIDA BUSINESSES ACQUIRED(L) AS ADJUSTED
PANTHERS PRO FORMA ----------------------------------- FOR THE
HOLDINGS, INC. OFFERING AS ACQUISITION BUSINESSES
ACTUAL ADJUSTMENT ADJUSTED 2301 LTD. RAHN LTD. ADJUSTMENTS ACQUIRED(M)
-------------- ---------- --------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Ticket sales................ $ 23,226 $ 23,226 $ 23,226
Television and radio........ 5,141 5,141 5,141
Advertising and promotion... 2,192 2,192 2,192
Arena operations............ 1,082 1,082 1,082
Rooms....................... $12,036 $ 6,251 18,287
Yachting and marina
services.................. 3,481 3,813 7,294
Food, beverage and
banquets.................. 8,309 2,379 10,688
Telephone, retail and
other..................... 2,513 2,365 4,878
Other, primarily
concessions............... 2,446 2,446 2,446
-------- ------ -------- ------- ------- -------- --------
Total revenue......... 34,087 34,087 26,339 14,808 75,234
Cost of revenue:
Team operations............. 32,639 32,639 32,639
Ticketing and arena
operations................ 3,319 3,319 3,319
Rooms....................... 2,698 1,402 4,100
Yachting and marina
services.................. 1,175 733 1,908
Food, beverage and
banquets.................. 6,340 1,870 8,210
Telephone, retail and
other..................... 1,078 1,088 2,166
Selling, general and
administrative............ 8,371 8,371 7,957 5,068 21,396
-------- ------ -------- ------- ------- -------- --------
Total cost of
revenue............. 44,329 44,329 19,248 10,161 73,738
Amortization and
depreciation................ (9,815) (9,815) (1,608) (1,935) $ (1,458)(e) (14,816)
-------- ------ -------- ------- ------- -------- --------
Operating income (loss)....... (20,057) (20,057) 5,483 2,712 (1,458) (13,320)
Interest and other, net....... (5,082) $5,030(d) (52) (2,299) (1,340) (3,691)
-------- ------ -------- ------- ------- -------- --------
Net income (loss)............. $(25,139) $5,030 $(20,109) $ 3,184 $ 1,372 $ (1,458) $(17,011)
======== ====== ======== ======= ======= ======== ========
Loss per share................ $ (4.76)(i) $ (1.99)(j) $ (0.92)(k)
======== ======== ========
Pro Forma weighted average
shares outstanding.......... 5,276(i) 10,114(j) 18,514(k)
======== ======== ========
</TABLE>
28
<PAGE> 29
FLORIDA PANTHERS HOLDINGS, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS
(a) Represents the removal of certain assets and liabilities of the businesses
acquired (principally working capital which are not subject to the Exchange
Agreements) from the balance sheet.
(b) Amount represents the step-up in cost basis of property and equipment
acquired. The excess of purchase price over historical cost is allocated
based upon the relative market values as follows (in 000's):
<TABLE>
<CAPTION>
2301 LTD. RAHN LTD. TOTAL
--------- --------- -------
<S> <C> <C> <C>
Land.......................................... $13,345 $13,345
Land improvements............................. 2,235 2,235
Building improvements......................... 22,143 $23,708 45,851
Furniture, fixtures and equipment............. 1,402 1,402
------- ------- -------
$39,125 $23,708 $62,833
======= ======= =======
</TABLE>
The relative market values of property and equipment were determined by the
Company's management in consultation with representatives of Rahn
Properties, the current property manager. Factors considered in the
allocation include trends in the hospitality industry and local real estate
market as well as previously performed independent market valuations of the
acquired properties. Although such allocation is preliminary, management
believes that no material adjustments will be required once the Company's
due diligence process has been completed.
(c) Represents the issuance of 8,400,000 shares of unregistered common stock,
which are subject to a shareholder lock-up agreement which prohibits
disposition of such shares for a period of six months from the date of
issuance, in exchange for the property and equipment detailed in Note (b)
less the fair value of long-term debt, per the Exchange Agreements
(4,450,000 shares for 2301 Ltd. and 3,950,000 shares for Rahn Ltd.). The
fair market value of net assets received ($78,939,000 or $9.40 per share)
is based on the average share price for 5 days before and 5 days after
execution of the Exchange Agreements reduced by a discount which was based
on factors including the restriction on the parties receiving the shares
from disposing of such shares for 180 days from the date of consummation of
the Exchanges, as well as the size of the blocks of shares to be issued and
the limited capacity of the market to absorb such blocks of shares over
reasonable periods of time without adverse pricing consequences.
(d) Represents the elimination of interest expense related to the term loan and
the related party debt for the period prior to the Offerings. The loans had
an interest rate at LIBOR plus .75% per annum. In November 1996 these loans
were repaid with the proceeds of the Offerings.
(e) Represents the additional depreciation expense associated with the
stepped-up basis of the property and equipment of the acquired companies as
follows (in 000's):
<TABLE>
<CAPTION>
DEPRECIATION EXPENSE
-----------------------
YEAR SIX
ESTIMATED ENDED MONTHS ENDED
USEFUL JUNE 30, DECEMBER 31,
2301 LTD. RAHN LTD. TOTAL LIFE 1996 1996
--------- --------- ------- --------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Land................. $13,345 $13,345
Land improvements.... 2,235 2,235 20 years $ 112 $ 56
Building
improvements....... 22,143 $23,708 45,851 40 years 1,146 573
Furniture, fixtures
and equipment...... 1,402 1,402 7 years 200 100
------- ------- ------- ------ ----
$39,125 $23,708 $62,833 $1,458 $729
======= ======= ======= ====== ====
</TABLE>
(f) Net loss per share and weighted average shares outstanding are determined
based on the (i) 5,275,678 shares issued in connection with the
Reorganization as if they had been outstanding for the entire period
presented and (ii) the 7,300,000 shares issued in connection with the
Offerings for the period for which they were actually outstanding.
29
<PAGE> 30
(g) Net loss per share and weighted average shares outstanding are determined
based on the (i) 5,275,678 shares issued in connection with the
Reorganization as if they had been outstanding for the entire period
presented, (ii) the 4,838,710 shares (of the 7,300,000 shares issued in the
Offerings) issued to repay the Company's outstanding indebtedness as if
they had been outstanding for the period prior to the Offerings and (iii)
the 7,300,000 shares issued in connection with the Offerings for the period
for which they were actually outstanding.
(h) Net loss per share and weighted average shares outstanding are determined
based on the (i) 5,275,678 shares issued in connection with the
Reorganization as if they had been outstanding for the entire period
presented, (ii) the 4,838,710 shares (of the 7,300,000 shares issued in the
Offerings) issued to repay the Company's outstanding indebtedness as if
they had been outstanding for the period prior to the Offerings, (iii) the
7,300,000 shares issued in connection with the Offerings for the period for
which they were actually outstanding and (iv) the 8,400,000 shares issued
in connection with the Exchange Agreements (4,450,000 shares for 2301 Ltd.
and 3,950,000 shares for Rahn Ltd.) as if they had been outstanding for the
entire period presented.
(i) Net loss per share and weighted average shares outstanding are determined
based on the 5,275,678 shares issued in connection with the Reorganization
as if they had been outstanding for the entire period presented.
(j) Net loss per share and weighted average shares outstanding are determined
based on the (i) 5,275,678 shares issued in connection with the
Reorganization and (ii) the 4,838,710 shares (of the 7,300,000 shares
issued in the Offerings) issued to repay the Company's outstanding
indebtedness as if they had been outstanding for the entire period
presented.
(k) Net loss per share and weighted average shares outstanding are determined
based on the (i) 5,275,678 shares issued in connection with the
Reorganization, (ii) the 4,838,710 shares (of the 7,300,000 shares offered
in the Offerings) issued to repay the Company's outstanding indebtedness
and (iii) the 8,400,000 shares issued in connection with the Exchange
Agreements (4,450,000 shares for 2301 Ltd. and 3,950,000 shares for Rahn
Ltd.) as if they were outstanding for the entire period presented.
(l) 2301 Ltd. and Rahn Ltd. have fiscal years which end on December 31.
Reflected hereon are the results of operations for 2301 Ltd. and Rahn Ltd.
for the six month period ended December 31, 1996 and the twelve month
period ended June 30, 1996.
(m) Upon consummation of the Exchanges, the Company operates in two separate
business segments. As such, generally accepted accounting principles
require separate financial information for each segment to be reported in
the financial statements.
(n) Reflects the balance sheet impact of the sale of 2,460,000 shares of
unregistered, but otherwise unrestricted, Class A Common Stock on January
30, 1997 in a Private Placement at a price of $27.75 per share. The Private
Placement resulted in net proceeds to the Company of $66,976,550 after
deducting placement agency fees and other expenses. This Private Placement
does not impact the pro forma consolidated statements of operations as the
proceeds of such private placement were not used to repay any of the
Company's indebtedness.
30
<PAGE> 31
SIGNATURE
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 hereunto duly authorized.
FLORIDA PANTHERS HOLDINGS, INC.
March 19, 1997
By: /s/ Steven M. Dauria
-------------------------------
Steven M. Dauria
Vice President and Chief Financial Officer
31
