<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 15, 1997
REGISTRATION STATEMENT NO. 333-23133
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
POST EFFECTIVE AMENDMENT
NO. 1 TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
FLORIDA PANTHERS HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<C> <C> <C>
FLORIDA 7941 65-0676005
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification
incorporation or organization) Classification Code Number) Number)
H. WAYNE HUIZENGA
CHAIRMAN OF THE BOARD
FLORIDA PANTHERS HOLDINGS, INC.
100 NORTHEAST THIRD AVENUE, SECOND FLOOR 100 NORTHEAST THIRD AVENUE, SECOND FLOOR
FORT LAUDERDALE, FLORIDA 33301 FORT LAUDERDALE, FLORIDA 33301
(954) 768-1900 (954) 768-1900
(Address, including zip code, and telephone (Name, address, including zip code, and telephone
number, including number, including area code, of agent for service)
area code, of registrant's principal executive
offices)
</TABLE>
------------------------
Copies to:
STEPHEN K. RODDENBERRY, ESQ.
AKERMAN, SENTERFITT & EIDSON, P.A.
ONE S.E. THIRD AVENUE, 28TH FLOOR
MIAMI, FLORIDA 33131-1704
(305) 374-5600
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of the Registration Statement.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
================================================================================
<PAGE> 2
PROSPECTUS
[FLORIDA PANTHERS LOGO]
17,669,444 SHARES
FLORIDA PANTHERS HOLDINGS, INC.
CLASS A COMMON STOCK
------------------------
This Prospectus relates to an aggregate of 17,669,444 shares (the "Shares")
of Class A Common Stock, par value $.01 per share (the "Class A Common Stock"),
of Florida Panthers Holdings, Inc. (the "Company"), which may be offered for
sale hereby, from time to time, for the account of the persons listed herein
(the "Selling Shareholders") who have acquired certain of the Shares in private
placement transactions or acquisitions of businesses by the Company not
involving a public offering or who may be deemed to be affiliates of the Company
under Rule 405 of the Securities Act of 1933, as amended (the "Securities Act").
The Shares are being registered under the Securities Act on behalf of the
Selling Shareholders in order to permit the public sale or other distribution of
the Shares.
The Shares may be sold or distributed from time to time by or for the
account of the Selling Shareholders or their pledgees through underwriters or
dealers, through brokers or other agents, or directly to one or more purchasers
including pledgees, at market prices prevailing at the time of sale or at prices
otherwise negotiated. This Prospectus may also be used, with the Company's prior
consent, by donees of the Selling Shareholders, or by other persons acquiring
certain of the Shares and who wish to offer and sell such Shares under
circumstances requiring or making desirable its use. The Company will not
receive any of the proceeds from the sale of the Shares offered hereby and will
bear certain expenses incident to their registration. See "Selling Shareholders"
and "Plan of Distribution."
The Selling Shareholders and brokers through whom the sale of the Class A
Common Stock are made may be deemed to be "underwriters" within the meaning of
Section(2)11 of the Securities Act of 1933, as amended (the "Securities Act").
In addition, any profits realized by the Selling Shareholders or such brokers on
the sale of such Class A Common Stock may be deemed to be underwriting
commissions under the Securities Act.
The Company has two classes of Common Stock: Class A Common Stock, which is
offered hereby, and the Company's Class B Common Stock, par value $.01 per share
(the "Class B Common Stock"), which is currently owned by Mr. H. Wayne Huizenga.
Each share of Class A Common Stock is entitled to one vote, and each share of
Class B Common Stock is entitled to 10,000 votes, on all matters submitted to
the shareholders for approval. Accordingly, Mr. Huizenga, as the sole holder of
the Class B Common Stock, is able to control the management and policies of the
Company and substantially all the matters submitted to the shareholders for
approval, including the election of the directors. The shares of Class A Common
Stock and Class B Common Stock are subject to certain NHL requirements and
restrictions with respect to ownership. In addition, unless otherwise permitted
by the NHL, Mr. Huizenga is required to maintain voting control of the Company
at all times. THE SHARES OF CLASS B COMMON STOCK WERE ISSUED TO MR. HUIZENGA TO
SATISFY THE CONTROL REQUIREMENTS OF THE NHL. See "The National Hockey
League -- Restriction on Ownership -- Control Requirement" and "Description of
Capital Stock."
The Class A Common Stock is traded on The Nasdaq National Market under the
symbol "PUCK." On April 11, 1997, the last reported sales price of Class A
Common Stock as reported by The Nasdaq National Market was $23 1/8 per share.
SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE CLASS A COMMON STOCK
OFFERED HEREBY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
April , 1997
<PAGE> 3
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. This Prospectus contains certain forward-looking
statements which may involve certain risks and uncertainties. The actual results
may differ materially from the results anticipated in these forward-looking
statements as a result of certain factors set forth under "Risk Factors" and
elsewhere in this Prospectus.
Florida Panthers Holdings, Inc. (the "Company") currently conducts
substantially all of its business through its subsidiaries, which include the
Florida Panthers (the "Panthers"), a professional hockey team of the National
Hockey League (the "NHL"), Arena Development Company, Ltd. ("Arena
Development"), a limited partnership formed for the purpose of developing a new
multi-purpose sports and entertainment center (the "Broward County Civic Arena"
or the "Facility") in Broward County, Florida, Arena Operating Company ("Arena
Operator"), a limited partnership formed for the purposes of managing and
operating the Broward County Civic Arena, Florida Panthers Ice Ventures, Inc., a
corporation formed for the purpose of developing ice rink facilities (the "Ice
Rink Business"), and the Hyatt Regency Pier 66 Hotel ("Pier 66") and Radisson
Bahia Mar and Yachting Center ("Bahia Mar"), both resort and marina properties
located in Fort Lauderdale, Florida. The Company owns Pier 66 and Bahia Mar
through 2301 SE 17th St. Ltd. ("2301 Ltd.") and Rahn Bahia Mar, Ltd. ("Rahn
Ltd."). In addition, the Company owns approximately 78% of the partnership
interests in Decoma Miami Associates, Ltd. ("Decoma"), a Florida limited
partnership, which operates the Miami Arena in which the Panthers currently
play. Unless the context otherwise requires, all references to the Company shall
mean Florida Panthers Holdings, Inc. and its subsidiaries.
THE COMPANY
The Company currently operates through two business segments: (i) sports
and entertainment (the "Sports and Entertainment Business") and (ii) leisure and
recreation (the "Leisure and Recreation Business"). The Sports and Entertainment
Business currently consists of the Company's hockey operations, arena
development and management operations and ice skating rink operations. The
Leisure and Recreation Business consists of the Company's resort property
operations, including Pier 66 and Bahia Mar. The Company has also entered into a
definitive agreement to acquire the Boca Raton Hotel and Club, a destination
luxury resort and private club in Boca Raton, Florida.
SPORTS AND ENTERTAINMENT BUSINESS
Panthers Hockey Operations
The Panthers commenced play in the NHL on October 4, 1993 and, in their
third season, reached the Stanley Cup Finals. The Company's hockey revenue is
primarily derived from (i) the sale of tickets to the Panthers' home games, (ii)
contracts with broadcast organizations and (iii) advertising and promotions. A
substantial portion of the Company's annual revenue from its hockey operations
is determinable at the commencement of each hockey season based on season ticket
sales and contracts with broadcast organizations and sponsors.
The Company intends to capitalize on the increasing popularity of hockey,
in general, and the success achieved by the Panthers during the 1995-96 season,
in particular, by continuing to advertise and market the Panthers, as well as
continuing to enhance the service and entertainment provided at games.
Arena Development and Operations
In June 1996, the Company entered into an agreement (the "Development
Agreement") with Broward County to develop the Broward County Civic Arena, which
will be owned by Broward County. Pursuant to the Development Agreement, Broward
County purchased a 135 acre parcel of land (the "Development Site"), which will
be used primarily for the development of the Facility and also for possible
future ancillary development. Broward County has agreed to provide up to $184.7
million for the development of the Broward County Civic Arena, including the
purchase of the Development Site. See "Risk Factors -- Sports and
2
<PAGE> 4
Entertainment Business -- Development of the Broward County Civic Arena" and
"Business -- Sports and Entertainment Business -- Development of the Broward
County Civic Arena."
In connection with the development of the Broward County Civic Arena, the
Company entered into a 30-year license agreement (the "License Agreement") and
co-terminus operating agreement (the "Operating Agreement") with Broward County,
pursuant to which the Company will utilize and operate the Broward County Civic
Arena beginning on October 1, 1998, provided that construction is completed on a
timely basis. Under the License Agreement, the Company is entitled to retain 95%
of the revenue derived from the sale of general seating tickets to the Panthers'
home games, and all of certain other hockey related advertising and
merchandising revenue. Five percent of the revenue derived from the sale of
general seating tickets, together with revenues from luxury suites, premium
seating and parking, are considered Facility operating revenue which is the
primary source of revenue, in determining net operating income. Net operating
income is the difference between Facility operating revenue and Facility
operating expense. Under the License Agreement, the Company is entitled to
receive the first $14.0 million of net operating income generated from the
Broward County Civic Arena and 80% (with Broward County receiving 20%) of the
net operating income in excess of $14.0 million. The Company believes that
successful operation of the Broward County Civic Arena will significantly
enhance the Company's total revenue. See "Business -- Sports and Entertainment
Business -- Arena Development and Operations."
The Company owns approximately 78% of the partnership interests in Decoma.
Decoma derives all of its revenue from its Miami Arena operations. This revenue
is primarily derived from (i) seat use charges imposed on tickets sold at the
Miami Arena, (ii) net operating income and (iii) fixed and variable operating
payments generated from the Miami Arena. See "Risk Factors -- Sports and
Entertainment Business -- Litigation Relating to Miami Arena."
The Company also owns and operates a twin-pad ice rink facility located in
Coral Springs, Florida ("Incredible Ice") and has contracted to acquire the
lease rights of an ice skating rink facility in Pompano Beach, Florida ("Gold
Coast"). Incredible Ice and Gold Coast are open to the general public and derive
revenues from, among other things, (i) fees charged to the public for use of the
facilities for various hockey and skating programs and open skating sessions,
(ii) food and beverage sales and (iii) retail sales.
LEISURE AND RECREATION BUSINESS
Resorts
The Company currently owns two resort and marina properties in South
Florida and has entered into a definitive agreement to acquire a third property
in South Florida.
Pier 66 is a Fort Lauderdale Intracoastal Waterway luxury resort and marina
encompassing 23 acres and consisting of 380 luxury guest rooms, a 142 slip
marina, three swimming pools, 22,000 square feet of meeting space and six
restaurants and lounges. It has received the Mobil Travel Guide's Four Star
Award and AAA's Four Diamond Award. Bahia Mar is a resort and marina complex
encompassing 40 acres and consisting of 297 rooms, a 350 slip marina, four
tennis courts, 20,000 square feet of flexible meeting space and 23,000 square
feet of retail space. Bahia Mar is situated on oceanfront property in South
Florida and has received the Mobile Travel Guide's Three Star Award and AAA's
Three Diamond Award, as well as the 1995 Radisson President's Award and a City
of Fort Lauderdale Community Appearance Award. The marina is host to the
International Boat Show, an annual six day boating and marine event.
The Company also has reached an agreement to acquire the Boca Raton Hotel
and Club, a destination luxury resort and private club, encompassing 298 acres
of land fronting on both the Atlantic Ocean and Intracoastal Waterway in Boca
Raton, Florida and consisting of 963 luxury guest rooms, a 70,000 sq. ft.
convention center, a separate 130,000 sq. ft. convention center currently under
construction, a 25 slip marina, two 18-hole championship golf courses, 31 tennis
courts, five swimming pools, an indoor basketball court, two indoor racquetball
courts, three fitness centers and 15 food and beverage sites, ranging from five
star cuisine to beachside grills. See "Business -- Recent Developments". The
Company believes that attractive opportunities exist to acquire other luxury
resorts.
3
<PAGE> 5
RECENT DEVELOPMENTS
On January 30, 1997, the Company issued and sold 2,460,000 shares of Class
A Common Stock in a private placement transaction (the "Private Placement") at a
price of $27.75 per share. The Private Placement was exempt from registration
pursuant to Section 4(2) of the Securities Act and resulted in net proceeds to
the Company of approximately $67.0 million after deducting placement agency
fees.
On March 20, 1997, the Company entered into a definitive agreement (the
"Contribution and Exchange Agreement") with Boca Raton Hotel and Club Limited
Partnership, a Florida limited partnership ("Boca Partnership"), BRMC, L.P., a
Delaware limited partnership and the general partner of Boca Partnership (the
"General Partner"), and BRMC Corporation, a Delaware corporation and general
partner of the General Partner ("BRMC"). Pursuant to the Contribution and
Exchange Agreement, substantially all the assets of Boca Raton Hotel and Club
Limited Partnership, a Florida limited partnership ("Boca Partnership"), will be
transferred to Panthers BRHC Limited, a newly-formed Florida limited partnership
in which the managing general partner and the limited partner will be
wholly-owned by the Company ("Panthers BRHC"), in exchange for: (i) a
non-managing general partner interest in Panthers BRHC, (ii) rights (the
"Rights") which may be exercised to acquire approximately 4,928,917 shares of
Class A Common Stock, (iii) warrants to purchase approximately 919,621 shares of
the Class A Common Stock at a price of $29.01 per share and (iv) the assumption
of indebtedness of Boca Partnership in the amount of approximately $195.0
million, of which approximately $85.0 million will be repaid immediately upon
consummation of the transactions contemplated by the Contribution and Exchange
Agreement (the "Contribution and Exchange"). Of the $85.0 million to be repaid,
$45.0 million will be paid from the Company's working capital and $40.0 million
will be paid from incurrence of additional debt. Consummation of the acquisition
is subject to customary conditions, including the receipt of requisite approvals
from the shareholders of the Company and the limited partners of Boca
Partnership.
The Company's principal executive offices are located at 100 Northeast
Third Avenue, Second Floor, Fort Lauderdale, Florida 33301 and its telephone
number is (954) 768-1900. The Company was incorporated in Florida on July 3,
1996.
THE OFFERING
<TABLE>
<S> <C>
Class A Common Stock Offered................. 17,669,444 shares
Common Stock to be Outstanding after the
Offering
Class A Common Stock(1)................. 23,393,444 shares
Class B Common Stock(2)................. 255,000 shares
Total................................. 23,648,444 shares
Use of Proceeds.............................. The Company will not receive any proceeds
from the sale of Class A Common Stock hereby
offered by the Selling Shareholders.
Nasdaq National Market Symbol................ PUCK
</TABLE>
- ------------------------------
(1) Does not include 2,600,000 shares of Common Stock reserved for issuance
under the Company's stock option plan, of which 1,042,444 shares are
subject to outstanding options at exercise prices ranging from $10 per
share to $26 5/8 per share. The exercise price of each of these options is
the fair market value of the Class A Common Stock on the date of grant. See
"Management -- Stock Option Plan."
(2) All the outstanding shares of Class B Common Stock are currently owned by
Mr. Huizenga.
4
<PAGE> 6
SUMMARY FINANCIAL DATA
(IN THOUSANDS EXCEPT PER SHARE DATA)
The summary financial data set forth below is derived from and should be
read in conjunction with the financial statements of the Company, including the
notes thereto, the unaudited pro forma financial statements and "Management's
Discussion and Analysis of Financial Condition and Results of Operations of the
Company" contained elsewhere in this Prospectus. The summary financial data as
of December 31, 1996 and for the six months ended December 31, 1996 and 1995 are
derived from unaudited interim financial statements contained elsewhere herein.
Operating results for the six months ended December 31, 1996 are not necessarily
indicative of results that may be expected for the year ending June 30, 1997.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31, FISCAL YEARS ENDED JUNE 30,
------------------------------------ ---------------------------------------------------
1996 1996
----------------------- -------------------------
ACTUAL PRO FORMA 1995 ACTUAL PRO FORMA 1995 1994
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenue:
Sports and Entertainment
Tickets................... $ 8,659 $ 8,659 $ 8,389 $ 23,226 $ 23,226 $ 9,559 $ 14,784
Other..................... 6,724 6,874 4,723 10,861 10,861 8,187 6,898
Leisure and Recreation
Rooms..................... -- 25,430 -- -- 65,331 -- --
Food and Beverage......... -- 20,799 -- -- 44,153 -- --
Retail and other.......... -- 22,887 -- -- 42,971 -- --
-------- -------- -------- -------- -------- -------- --------
Total Revenue........ 15,383 84,649 13,112 34,087 186,542 17,746 21,682
Cost of Revenue............ 20,048 78,402 18,686 44,329 164,466 22,779 25,701
Amortization and
depreciation.............. 1,795 8,450 2,730 9,815 23,141 6,266 6,444
-------- -------- -------- -------- -------- -------- --------
Net operating loss......... (6,460) (2,203) (8,304) (20,057) (1,065) (11,299) (10,463)
Interest and other, net.... (2,339) (7,985) (2,233) (5,082) (15,691) (4,087) (2,463)
-------- -------- -------- -------- -------- -------- --------
Net loss................... $ (8,799) $(10,188) $(10,537) $(25,139) (16,756) $(15,386) $(12,926)
======== ======== ======== ======== ======== ======== ========
PRO FORMA DATA:
Net loss per share......... $ (1.19)(b) $ (0.39)(d) $ (2.00)(a) $ (4.76)(a) $ (0.66)(c) $ (2.96)(a) $ (2.93)(a)
Weighted average shares
outstanding............... 7,418(b) 26,032(d) 5,276(a) 5,276(a) 25,309(c) 5,203(a) 4,405(a)
<CAPTION>
INCEPTION
(DECEMBER 2, 1992)
THROUGH
JUNE 30, 1993
<S> <C>
STATEMENT OF OPERATIONS
DATA:
Revenue:
Sports and Entertainment
Tickets................... $ 0
Other..................... 0
Leisure and Recreation
Rooms..................... --
Food and Beverage......... --
Retail and other.......... --
-----
Total Revenue........ 0
Cost of Revenue............ 768
Amortization and
depreciation.............. 2
-----
Net operating loss......... (770)
Interest and other, net.... (167)
-----
Net loss................... $ (937)
=====
PRO FORMA DATA:
Net loss per share......... $(0.21)(a)
Weighted average shares
outstanding............... 4,405(a)
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1996
---------------------------
ACTUAL PRO FORMA
------------ ---------
<S> <C> <C>
BALANCE SHEET DATA:
Total current assets........................................ $31,036 $ 89,678
Total current liabilities................................... 20,353 80,422
Total assets................................................ 73,737 627,419
Long-term obligations....................................... 3,341 234,588
Shareholders' equity........................................ 50,043 312,409
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31, FISCAL YEARS ENDED JUNE 30,
------------------------------------ -------------------------------------------------
1996 1996
----------------------- 1995 ----------------------- 1995 1994
PRO PRO
ACTUAL FORMA ACTUAL FORMA
<S> <C> <C> <C> <C> <C> <C> <C>
Supplemental Cash Flow
Data(e)........................ $ (4,665) $ 8,056 $ (5,574) $(10,242) $ 26,152 $ (5,033) $ (4,019)
<CAPTION>
INCEPTION
(DECEMBER 2, 1992)
THROUGH
JUNE 30, 1993
<S> <C>
Supplemental Cash Flow
Data(e)........................ $ (768)
</TABLE>
- ---------------
(a) Net loss per share and weighted average shares outstanding are determined
based on the 5,275,678 shares issued in connection with the reorganization
of Panthers Holdings consummated on November 18, 1996 (the "Reorganization")
as follows:
(i) The 4,404,710 shares issued in exchange for the partnership interests of
the Panthers, as if they had been outstanding for the entire period
presented.
(ii) The 870,968 shares issued in exchange for the partnership interests in
Decoma, as if they had been outstanding since August 6, 1994, the date
of their acquisition by Mr. Huizenga.
(b) 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) 7,300,000 shares issued in connection with the Company's
initial public offering of 2,700,000 shares of Class A Common Stock and
concurrent offering of 4,600,000 shares of Class B Common Stock (the "Prior
Offerings") for the period for which they were actually outstanding.
(c) 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) 4,838,710 shares (of the 7,300,000 shares offered in
the Prior Offerings) issued to repay the Company's outstanding indebtedness,
(iii) 8,400,000 shares issued in connection with the acquisition of Pier 66
and Bahia Mar (4,450,000 shares for 2301 Ltd. and 3,950,000 shares for Rahn
Ltd.) (the "Exchanges"), (iv) 212,766 shares issued in the acquisition of
Incredible Ice, (v) 4,928,917 shares issued in connection with the
acquisition of the Boca Raton Hotel and Club and (vi) 1,652,589 shares (of
the 2,460,000 issued in the Private Placement) to be used to repay
outstanding indebtedness to be assumed in connection with the acquisition of
Boca Raton Hotel and Club as if they had been outstanding for the entire
period presented.
5
<PAGE> 7
(d) 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) 4,838,710 shares (of the 7,300,000 shares issued in the
Prior Offerings) issued to repay the Company's outstanding indebtedness as
if they had been outstanding for the period prior to the Prior Offerings,
(iii) 7,300,000 shares issued in connection with the Prior Offerings for the
period for which they were actually outstanding, (iv) 8,400,000 shares
issued in connection with the Exchanges, (v) 212,766 shares issued in the
acquisition of Incredible Ice, (vi) 4,928,917 shares issued in connection
with the acquisition of the Boca Raton Hotel and Club and (vii) 1,652,589
shares (of the 2,460,000 issued in the Private Placement) to be used to
repay outstanding indebtedness to be assumed in connection with the
acquisition of Boca Raton Hotel and Club as if they had been outstanding for
the entire period presented.
(e) Represents the difference between Revenue and Cost of revenue, plus Premier
Club membership deposits for the pro forma periods.
6
<PAGE> 8
RISK FACTORS
Prospective investors should consider carefully the following risk factors,
together with the other information contained in this Prospectus, in evaluating
an investment in the shares of Class A Common Stock offered hereby. The
following factors and other information set forth in this Prospectus contain
certain forward-looking statements involving risks and uncertainties. The
Company's actual results may differ materially from the results anticipated in
these forward-looking statements as a result of certain factors set forth in
this section and elsewhere in this Prospectus.
GENERAL
HISTORY OF LOSSES AND UNCERTAINTY OF FUTURE RESULTS
The Company has not generated any earnings to date and has incurred net
losses of approximately $8.8 million, $25.1 million, $15.4 million, $12.9
million and $937,000 for the six months ended December 31, 1996, the years ended
June 30, 1996, 1995, 1994 and the seven months ended June 30, 1993,
respectively. There can be no assurance that the Company will ever achieve a
profitable level of operations or that profitability, if achieved, can be
sustained on an ongoing basis. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
NEED FOR ADDITIONAL CAPITAL
The Company's business may require substantial capital infusions on a
continuing basis. The Company's additional needs for capital could include cash
needs for potential acquisitions as well as capital to be used for the
development of recreational ice rink facilities for use in the Ice Rink
Business. The Company intends to use the remaining portion of the net proceeds
from its initial public offering and concurrent offering (collectively, the
"Prior Offerings"), the net proceeds from the Private Placement and cash flow
from operations to meet its capital needs. Additional capital needs may require
additional borrowings or the sale of debt or equity securities, or some
combination thereof. In the event the Company cannot generate sufficient cash
flow from its operations, or is unable to borrow or otherwise obtain additional
funds to finance its operations, the Company's financial condition or results of
operations could be adversely affected. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."
RISKS RELATING TO EXPANSION OF BUSINESS; USES OF EXCESS PROCEEDS
The Company may, as part of its growth strategy, consider making additional
acquisitions of certain sports-related or non-sports-related businesses as well
as certain commercial properties, including properties which may be owned by Mr.
Huizenga or his affiliates. The Company may make such acquisitions with cash or
with stock or a combination thereof. If the Company does make any such
acquisitions, various associated risks may be encountered, including potential
dilution to the shares of Class A Common Stock then outstanding due to
additional shares of Class A Common Stock or Class B Common Stock (collectively,
the "Common Stock") being issued in connection with the acquisitions, incurrence
or assumption of debt, possible goodwill amortization or additional depreciation
on acquired fixed assets, diversion of management's attention, possible
environmental and other regulatory costs and unanticipated problems or
liabilities, some or all of which could have a material adverse effect on the
Company's financial condition or results of operations. In addition,
transactions, including acquisitions, which would result in the issuance of a
significant number of shares of Common Stock may require consent of the NHL.
There is no assurance that the Company will be able to obtain such consent from
the NHL. See "-- Sports and Entertainment Business -- Restrictions on the
Company and Certain of its Shareholders as a Result of League Membership."
CONTROL BY H. WAYNE HUIZENGA; VOTING RIGHTS
The Company has a dual class of common stock, comprised of Class A Common
Stock and Class B Common Stock. The Company has issued shares of Class B Common
Stock to Mr. Huizenga to satisfy certain control requirements of the NHL. In
accordance with the NHL Constitution and the Bylaws, a change in the controlling
shareholder must be approved by the NHL. As such, Mr. Huizenga is required to
maintain control
7
<PAGE> 9
of the Company unless the NHL approves the transfer of his controlling
interests. See "The National Hockey League -- Control Requirement." The Class A
Common Stock and Class B Common Stock generally vote together on each matter
submitted to the shareholders for approval. Each share of Class A Common Stock
is entitled to one vote, and each share of Class B Common Stock is entitled to
10,000 votes. Consequently, Mr. Huizenga, as the sole holder (holding 255,000
shares) of the Class B Common Stock, will be able to control the management and
policies of the Company and the outcome of substantially all of the matters
submitted to the shareholders for approval, including the election of directors.
See "Management," "Certain Transactions" and "Principal Shareholders."
Neither the Company's charter nor its bylaws restrict the transfer of the
Class B Common Stock. Accordingly, subject to the requirements of federal and
state securities laws, the 180 day lock-up agreement with the underwriters in
connection with the Offerings and the approval of the NHL, shares of Class B
Common Stock may be owned by persons other than Mr. Huizenga. As a result,
control of the Company may be transferred by Mr. Huizenga to other persons
without the approval of the holders of Class A Common Stock and Mr. Huizenga may
receive a control premium, which may be significant, in connection with such
sale.
DEPENDENCE ON KEY PERSONNEL
For the foreseeable future, the Company will be materially dependent upon
the services of Mr. Huizenga, the Chairman of the Board, Mr. Richard H. Evans,
President and Chief Operating Officer, and Mr. William A. Torrey, President of
Florida Panthers Hockey Club, Inc. The loss of the services of any of these
individuals could have a material adverse effect on the Company. See
"Management -- Directors and Executive Officers." The Company does not carry key
man life insurance on any of its officers.
SHARES OF CLASS A COMMON STOCK ELIGIBLE FOR FUTURE SALE
As of April 7, 1997, the Company had 23,393,444 shares of Class A Common
Stock outstanding, of which 7,300,000 shares of Class A Common Stock are freely
tradeable without restriction under the Securities Act of 1933, as amended (the
"Securities Act"), unless purchased by "affiliates" of the Company, as that term
is defined in Rule 144 under the Securities Act. The remaining 16,093,444 shares
of Class A Common Stock, together with 1,576,000 shares of Class A Common Stock
owned by "affiliates" of the Company, are being registered hereby for resale.
The directors and officers of the Company, including Mr. Huizenga, have agreed
not to sell any shares of Common Stock held by them for a period of 180 days
from November 13, 1996, in connection with the Prior Offerings without the
consent of Donaldson, Lufkin & Jenrette Securities Corporation, subject to
certain exceptions, including pursuant to a loan for which shares of Class A
Common Stock have been pledged as collateral. In addition, recipients of the
8,400,000 shares of Class A Common Stock, which were issued in connection with
the Exchanges, have agreed not to sell such shares for a period of 180 days from
March 4, 1997, the date the Exchanges were consummated. The Company will also be
obligated to register 5,246,777 shares of Class A Common Stock in connection
with the consummation of the Contribution and Exchange. The Company has
registered under the Securities Act the 2,600,000 shares of Common Stock
reserved for issuance under the Company's Stock Option Plan (the "Stock Option
Plan"). In addition, the 6,000,000 shares of Class A Common Stock being
registered contemporaneously with this Registration Statement may be issued in
connection with potential future acquisitions and resales thereof by the
recipients. Shares so registered could be sold in the public market. No
predictions can be made as to the effect, if any, that market sales of shares of
Class A Common Stock or the availability of the shares of Class A Common Stock
for sale will have on the market price for shares of Class A Common Stock
prevailing from time to time. Sales of substantial amounts of shares of Class A
Common Stock in the public market could adversely affect the market price of the
Class A Common Stock and could impair the Company's future ability to raise
capital through an offering of equity securities.
POSSIBLE VOLATILITY OF STOCK PRICE
The trading price of the Company's Class A Common Stock could be subject to
significant fluctuations in response to variations in quarterly results and
other factors. In addition, in recent years the stock market has
8
<PAGE> 10
experienced extreme price fluctuations which have often been unrelated to the
operating performance of affected companies.
ABSENCE OF DIVIDENDS
The Company does not intend to pay any cash dividends with respect to its
Common Stock in the foreseeable future. Furthermore, the Company's ability to
declare or pay dividends on its Common Stock is limited by the provisions of the
NHL Bylaws and is expected to be limited by the terms of its new credit
facility. See "Dividend Policy" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."
CLASS ACTION LITIGATION
On January 28, 1997, February 3, 1997 and March 14, 1997, purported class
action lawsuits were filed against the Company and Messrs. Huizenga, George D.
Johnson, Jr., Richard C. Rochon, Steven R. Berrard, Harris W. Hudson, Steven M.
Dauria and Evans in the United States District Court for the Southern District
of Florida. The suits allege, among other things, that the defendants violated
Section 10(b) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and Rule 10b-5 thereunder, by making untrue statements or omitting to
state material facts, in connection with sales of the Company's Class A Common
Stock by the plaintiff and others in the purported class between November 13,
1996 and December 22, 1996. The suits generally seek, among other things,
certification as a class and an award of damages in an amount to be determined
at trial. The Company intends to vigorously defend against these suits.
SPORTS AND ENTERTAINMENT BUSINESS
HISTORY OF LOSSES; UNCERTAINTY OF FUTURE RESULTS.
The Panthers currently play in the Miami Arena, which has a seating
capacity of 14,703, the smallest arena in the NHL. Under the terms of the
Panthers' current agreement, the Miami Heat of the National Basketball
Association, as the primary tenant, controls revenue generated from the sale of
suites and a majority of the advertising, limiting the Company's ability to
generate certain revenue which is generally available to other NHL franchises.
In addition, the size of the Miami Arena limits the Company's ability to
generate revenue from the sale of additional tickets. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business -- Sports and Entertainment Business -- Hockey Operations -- Miami
Arena." It is currently anticipated that the Panthers will incur net losses
which could exceed $20.0 million per annum while playing at the Miami Arena. In
the event the Broward County Civic Arena is not completed in time for the
1998-99 season, the Panthers could incur additional operating losses. There can
be no assurance that the Panthers will ever achieve a profitable level of
operations or that profitability, if achieved, can be sustained on an ongoing
basis. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
COMPETITION
The Panthers compete for sports entertainment dollars not only with other
major league sports, but also with college athletics and other sports-related
entertainment. During parts of the hockey season, the Panthers experience
competition from professional basketball (the Miami Heat), professional football
(the Miami Dolphins) and professional baseball (the Florida Marlins). Mr.
Huizenga controls the Miami Dolphins and the Florida Marlins. In addition, the
colleges and universities in South Florida, as well as public and private
secondary schools, offer a full schedule of athletic events throughout the year.
The Panthers also compete for attendance and advertising revenue with a wide
range of other entertainment and recreational activities available in South
Florida.
DEPENDENCE ON COMPETITIVE SUCCESS OF THE PANTHERS
The financial results of the Company are expected to depend in part on the
Panthers continuing to achieve success in the NHL. By achieving and maintaining
success, the Panthers expect to generate greater fan enthusiasm, resulting in
higher ticket sales throughout the regular season and capturing greater shares
of
9
<PAGE> 11
the local television and radio audience. Furthermore, any participation in the
playoffs will provide the Panthers with additional revenue from sales of tickets
for home playoff games and from broadcasts of playoff games under local media
contracts. Conversely, revenue could be adversely affected by a poor performance
by the Panthers. There can be no assurance that the Panthers will perform well
or qualify for the playoffs.
UNCERTAINTIES OF INCREASES IN PLAYERS' SALARIES
Players' salaries in the NHL have increased significantly over the last two
seasons. The aggregate Panthers players' salaries nearly doubled from
approximately $10.2 million during the 1993-94 season to approximately $20.1
million during the 1995-96 season. In comparison, average aggregate players'
salaries for NHL teams have increased 48% from approximately $14.3 million
during the 1993-94 season to approximately $21.2 million during the 1995-96
season. The NHL Collective Bargaining Agreement is designed, in part, to control
the rate of increase in players' salaries. However, there can be no assurance
that the rate of increase in players' salaries will be effectively controlled.
Significant increases in players' salaries could have a material adverse effect
on the Company's financial condition or results of operations.
LITIGATION RELATING TO MIAMI ARENA
On June 17, 1996, the Miami Sports and Exhibition Authority ("MSEA" or the
"Plaintiff") filed a lawsuit against, among others, Messrs. Huizenga and Rochon,
the Panthers, Decoma, Arena Development and Arena Operator (collectively, the
"Defendants") in the United States District Court of the Southern District of
Florida. The suit alleges that the Defendants have conspired to restrain trade
in the South Florida sports and entertainment facility market by monopolizing or
attempting to monopolize such market in violation of federal antitrust laws. The
Plaintiff seeks, among other things, to (i) nullify certain provisions of the
Miami Arena Contract, dated as of December 13, 1990 (the "Miami Arena
Contract"), by and between Decoma and MSEA, specifically provisions restricting
MSEA from developing a new state-of-the-art arena in Miami (the "New Arena"),
and (ii) force the Defendants to divest their control over the Miami Arena and
the Broward County Civic Arena. In addition, the Plaintiff seeks treble damages
as well as reimbursement for reasonable attorneys' fees and costs. The
Defendants believe that the suit is without merit and intend to vigorously
defend against this suit. An unfavorable outcome of this litigation may have a
material adverse effect on the Company's financial condition or results of
operations.
UNCERTAINTY REGARDING AVAILABILITY AND OCCUPANCY OF MIAMI ARENA
In May 1996, the Company entered into an amendment to the license for the
Miami Arena (the "Arena License Amendment"), extending the term of the license
(which was scheduled to expire at the end of the 1995-96 season) to July 31,
1998, with two one-year options for the 1998-99 season and the 1999-2000 season.
The Arena License Amendment contained substantially the same economic terms as
the existing Miami Arena license and was subject to the approval of MSEA, which
approval, according to the Miami Arena license, could not be unreasonably
withheld. In June 1996, MSEA rejected the Arena License Amendment and demanded
that the Panthers vacate the Miami Arena. Subsequently, the Company sought and
obtained a preliminary injunction enjoining MSEA from taking actions to prevent
the Panthers from utilizing the Miami Arena pursuant to the Arena License
Amendment. The Panthers are, therefore, currently playing their home games at
the Miami Arena. MSEA has recently appealed the decision rendered by the court.
Although the Company believes that MSEA will not prevail in its appeal, if MSEA
is successful, the Company may need to find and enter into an agreement for an
alternative playing site, which may be outside South Florida, until such time as
the Broward County Civic Arena is completed. In the event the Panthers are
required to play outside South Florida, the Company may incur additional
operating costs (including travel costs) and generate less revenue as a result
of playing outside its local market. There can be no assurance that the Company
will be able to find and enter into an agreement for an alternative playing site
or that the use of such alternative playing site will not adversely affect the
Company's financial condition or results of operations.
The Company owns approximately 78% of the partnership interests in Decoma,
which derives all of its revenue from its Miami Arena operations. The City of
Miami recently announced that it intends to build the New Arena which will be
utilized by the Miami Heat. In the event that the New Arena is completed and
upon
10
<PAGE> 12
completion of the Broward County Civic Arena, the Miami Arena will not have a
base tenant and will compete with these new facilities for the rights to host
various events, including sports events and concerts. Decoma revenues for the
six months ended December 31, 1996 and the year ended June 30, 1996 directly
attributable to the Panthers and Miami Heat were approximately $190,000 and
$130,000, and $500,000 and $380,000, respectively. Management plans to seek
other tenants to offset reduced revenues resulting from the potential loss of
the Miami Arena's base tenants. There can be no assurance that the Miami Arena
can successfully compete with the New Arena and the Broward County Civic Arena.
In the event the Miami Arena is unable to attract various sports and non-sports
events, the results of operations of Decoma will be adversely affected.
DEPENDENCE ON TALENTED PLAYERS
The success of the Panthers will depend, in part, upon their ability to
retain and attract talented players. The Panthers compete with other NHL and
non-NHL hockey teams for available players. There can be no assurance that the
Panthers will be able to retain players upon expiration of their contracts or
identify and obtain new players of adequate talent to replace players who retire
or are injured, traded or released. Even if the Panthers are able to retain or
obtain players who have had successful college or professional careers, there
can be no assurance of their quality of performance for the Panthers.
ABSENCE OF INSURANCE; RISK OF INJURIES
Player contracts generally provide that a player is entitled to receive his
salary even if, as a result of injuries sustained from hockey-related activities
during the course of his employment, he is unable to play. These salaries
represent significant financial commitments of the Panthers. Disability
insurance for NHL players (which provides for up to 80% of salary reimbursement
after 30 consecutive regular season games are missed) is costly to maintain, and
the Panthers carry it only for certain highly compensated players. In the event
an injured player is not insured or insurance does not cover the entire amount
of the injured player's salary, the Company may be obligated to pay all or a
portion, as the case may be, of the injured player's salary. In addition, the
Company would be required to pay the salary of a player who replaces the injured
player. To the extent that financial results of the Company are dependent on the
Panthers' competitive success (as discussed above), the likelihood of achieving
such success is substantially reduced by serious injuries to key players. There
can be no assurance that key players for the Panthers will not sustain serious
injuries during any given season.
SEASONALITY OF HOCKEY OPERATIONS
The NHL season begins during the fall and ends in late spring. As a result,
the Company realizes the vast majority of its hockey revenue and incurs the vast
majority of its hockey expenses during that period.
UNCERTAINTIES RELATING TO LABOR RELATIONS IN PROFESSIONAL SPORTS
During the 1994-95 season, the NHL experienced labor relations difficulties
in the form of a player lock-out in a dispute over its collective bargaining
agreement, which adversely affected the Company's results of operations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." The NHL and the NHL Players' Association entered into a new
seven-year collective bargaining agreement (the "NHL Collective Bargaining
Agreement") on August 11, 1995 that took retroactive effect as of September 16,
1993. There can be no assurance that the NHL will not experience labor relations
difficulties in the future which could have a material adverse effect on the
Company's financial condition or results of operations. See "The National Hockey
League -- Collective Bargaining Agreement."
RESTRICTIONS ON THE COMPANY AND CERTAIN OF ITS SHAREHOLDERS AS A RESULT OF
LEAGUE MEMBERSHIP
Because the NHL is a joint venture, the Panthers and other members of the
NHL are generally jointly and severally liable for the debts and obligations of
the league. Any failure of other members of the NHL to pay their pro rata share
of any such debt or obligation could adversely affect the Panthers. The success
of the
11
<PAGE> 13
NHL and its members depends in part on the competitiveness of the teams in the
NHL and their ability to maintain fiscally sound franchises. Certain NHL
franchises have at times encountered financial difficulties, and there can be no
assurance that the NHL and its respective franchises will continue to be able to
operate on a fiscally stable and effective basis. In addition, the Panthers and
their personnel are bound by a number of rules, regulations and agreements,
including, but not limited to, the Constitution and Bylaws of the NHL, national
television contracts and the NHL Collective Bargaining Agreement. Any change to
the rules, regulations and agreements adopted by the NHL will be binding upon
the Panthers and their personnel, regardless of whether the Panthers agree or
disagree with such changes, and it is possible that any such change could
adversely affect the Panthers.
The Commissioner of the NHL (the "Commissioner") has the exclusive power to
interpret the Constitution, Bylaws, rules and regulations of the NHL, and his
interpretations are final and binding on the members of the NHL. In addition, a
member of the NHL is precluded from resorting to the courts to enforce or
maintain rights or claims against any other member. All disputes must be
submitted to the Commissioner for his determination, and such determination,
when rendered, is final and binding. See "The National Hockey
League -- Governance."
The NHL Constitution and Bylaws contain provisions which may in some
circumstances operate to prohibit a person from acquiring Class A Common Stock
and affect the value of such Class A Common Stock. In general, any acquisition
of shares of Class A Common Stock which will result in a person or a group of
persons holding a 5% or more interest in the Company, and each acquisition of
shares of Class A Common Stock which will result in a person or a group of
persons holding any multiple of a 5% interest, will require the prior approval
of the NHL, which may be granted or withheld in the sole discretion of the NHL.
The prospective purchaser will be required to submit to the NHL an application,
in a form to be prescribed from time to time by the NHL, providing certain
information relating to that person's background. Upon receipt of such
application, the Commissioner shall have the right to conduct an investigation
with respect to the prospective purchaser, which may include an interview by the
Commissioner's office or one or more NHL owners and the submission of such
information about the prospective purchaser, whether or not confidential, as the
Commissioner shall deem relevant in his sole discretion. In addition, the NHL
may condition its approval upon the execution, delivery and performance by the
prospective purchaser of such documents as the Commissioner shall prescribe. The
expenses of the NHL's investigation must be paid by the prospective purchaser,
whether or not its application is approved. If and when a prospective purchaser
receives the NHL's consent to acquire a 5% or more interest in the Company, such
prospective purchaser will be required to acknowledge that the purchaser shall
be bound by the applicable provisions of the NHL Constitution and Bylaws.
In addition, no person who directly or indirectly owns any interest in a
privately-held NHL team, or a 5% or more interest in any other publicly-held NHL
team, may own, directly or indirectly, a 5% or more interest in the Company,
without the prior approval of the NHL. The NHL Constitution and Bylaws also
contain provisions which would prohibit an owner of a 5% or more interest in the
Company from engaging in certain activities, such as wagering on any game in
which an NHL team participates. NHL players and referees and employees of the
NHL and its member clubs (other than the Company) are not eligible to purchase
or hold Common Stock. The NHL could in the future adopt different or additional
restrictions which could adversely affect the shareholders.
Furthermore, the grant of a security interest in any of the assets of the
Panthers, or any direct or indirect ownership interest in the Company, of 5% or
more, shall require the prior approval of the NHL, which may be withheld in the
NHL's sole discretion and, in that connection, the NHL will require a consent
agreement satisfactory to the NHL. NHL rules limit the amount of debt that may
be secured by the assets of, or ownership interests in, an NHL club and require
that the parties to any secured loan that is approved execute an agreement
limiting the rights of the lenders and the club (or shareholder) under certain
circumstances, including upon an event of default or foreclosure. These
limitations may adversely affect the rights of the club (or shareholder) under
certain circumstances.
12
<PAGE> 14
Failure by a holder of a 5% or more interest to comply with these
restrictions may result in a forced sale of such holder's interest in the
Company or the repurchase of such interests by the Company. The Company's
Articles of Incorporation provide that the Company may redeem, at the lower of
fair market value or cost, shares held by any person or entity who becomes the
owner of 5% or more of the Company's shares without the approval of the NHL.
These restrictions will be contained in a legend on each certificate issued
evidencing shares of Class A Common Stock.
Neither the NHL, any of its affiliates or members nor any of their
respective officers, employees or representatives, other than the Company, has
reviewed in advance the information being provided in this Prospectus or
elsewhere to potential investors in connection with the Offerings, or assumes
any responsibility for the accuracy of any representations made by the Company
to any potential investors.
POSSIBILITY OF INCREASED COMPETITION AS A RESULT OF NHL EXPANSION
It is currently anticipated that the NHL may grant additional franchises
within the next five years. While such expansion affords the NHL the opportunity
to expand into new markets, it also increases the competition for talented
players among the NHL teams. In the event the NHL expands, the expansion teams
are permitted to select in an expansion draft certain unprotected players
playing for the various NHL teams. There can be no assurance that the Panthers
will be able to retain all of their key players in the event of an expansion
draft or that the rules regarding the expansion draft will not change to the
detriment of the Company. In addition, to the extent the NHL teams share equally
in the revenue generated from national television contracts and sale of NHL
merchandise, the Company may receive less revenue from the NHL as the result of
the league expansion.
UNCERTAINTIES REGARDING RENEWAL OF MEDIA CONTRACTS
Prior to the commencement of the 1994-95 season, the NHL entered into a
new, seven-year $275.0 million television contract (the "Fox Contract") with Fox
Broadcasting Co. ("Fox") and extended its existing contract with ESPN, Inc.
("ESPN") through the end of the 1998-99 season (pursuant to which ESPN agreed to
pay the NHL approximately $65.0 million) for the national broadcast of certain
games in the U.S. Under the Fox Contract, Fox may choose to terminate the
contract after five years. In the event Fox chooses to terminate the contract
after five seasons, Fox is required to pay the NHL the difference between the
amount paid through the date of termination pursuant to the Fox Contract prior
to termination and $155.0 million. In addition, the NHL also renewed its
contract with Molson Breweries of Canada Limited ("Molson") for the national
broadcast of certain NHL games in Canada. A percentage of the revenue generated
from such contracts is divided equally among the members of the NHL. For the
year ended June 30, 1996, this revenue constituted approximately 8% of the
Company's total revenue. There can be no assurance that Fox, after the initial
five-year period, will choose to continue its contract with the NHL or that the
NHL, upon expiration of its contracts with each of Fox, ESPN and Molson, will be
able to enter into new agreements on terms as favorable as those in the current
contracts.
In August 1996, the Company entered into a letter of intent (the
"SportsChannel Letter of Intent") with SportsChannel Florida Associates, a
Florida limited partnership which is 50% owned by Mr. Huizenga ("SportsChannel
Florida"), for the proposed local broadcast (other than radio broadcast) of the
Panthers' pre-season, regular season and certain post-season games during the
1996-97 hockey season. See "Certain Transactions." Although the Panthers' games
are currently being broadcast pursuant to the SportsChannel Letter of Intent,
there can be no assurance that the Company and SportsChannel Florida will enter
into a comparable arrangement for the 1997-98 hockey season.
In addition, in August 1996, the Company entered into a letter of intent
(the "Sunshine Letter of Intent") with Sunshine Wireless Company, Inc.
("Sunshine"), for the proposed local English language radio broadcast of all the
Panthers games during the 1996-97 hockey season. On October 24, 1996, the
Company entered into a letter of intent (the "Beasley-Reed Letter of Intent")
with Beasley-Reed Acquisition Corporation for the proposed local English
language radio broadcast of all the Panthers games during the 1997-98, 1998-99,
1999-2000, 2000-01 and 2001-02 hockey seasons.
13
<PAGE> 15
DEVELOPMENT OF THE BROWARD COUNTY CIVIC ARENA
The Company recently entered into the Development Agreement, pursuant to
which the Company will develop the Broward County Civic Arena. Construction
projects, such as the development of a new civic center, entail significant
risks, including regulatory and licensing requirements, shortages of materials
or skilled labor, unforeseen engineering, environmental or geological problems,
work stoppages, weather interferences, unanticipated cost increases and
challenges from local residents. There can be no assurance that the Company can
successfully develop the Broward County Civic Arena or that costs associated
with the development of the Facility will not exceed the $184.7 million to be
provided by Broward County. Under the Development Agreement, the Company will be
responsible for all costs relating to the development of the Broward County
Civic Arena in excess of $184.7 million. See "Business -- Sports and
Entertainment Business -- Arena Development and Operations -- Development of the
Broward County Civic Arena." Although the Company anticipates that the Broward
County Civic Arena will be completed in time for the 1998-99 season, there can
be no assurance that the Facility will be completed within the contemplated time
frame.
In addition, on January 9, 1997, a lawsuit was filed by Arena Development,
seeking a determination as to the applicability of Broward County's Prevailing
Wage Ordinance to the construction of the Broward County Civic Arena. The suit
was filed in the Seventeenth Judicial Circuit in and for Broward County,
Florida. The complaint filed alleged that the Prevailing Wage Ordinance did not
apply to the construction of the Facility for two reasons: (i) the Prevailing
Wage Ordinance only applies to construction contracts in excess of $250,000 to
which Broward County is a party and Broward County is not a party to the
construction contract between Arena Development and the general contractor, and
(ii) the Development Agreement contains all the obligations and responsibilities
of both parties and does not include a provision mandating that Arena
Development comply with the Prevailing Wage Ordinance. The Prevailing Wage
Ordinance requires that all contracts to which the ordinance applies must
contain such a provision. The lawsuit asked for a declaratory judgement finding
the Prevailing Wage Ordinance did not apply to the construction of the Facility
and that Arena Development could continue without reference to the ordinance. On
February 21, 1997, the Seventeenth Judicial Circuit Court ruled against the
Company's complaint, finding that the Prevailing Wage Ordinance was applicable.
The Company has not yet determined whether or not to pursue an appeal. An
unfavorable outcome of this suit may require the Company to incur additional
costs up to $7,500,000.
OPERATION OF THE BROWARD COUNTY CIVIC ARENA
In June 1996, the Company entered into the License Agreement and the
Operating Agreement pursuant to which the Company will utilize and operate the
Broward County Civic Arena. In connection therewith, Broward County will receive
revenue (the "County Preferred Revenue") from the operations of the Broward
County Civic Arena. See "Business -- Sports and Entertainment Business -- Arena
Development and Operations -- Operation of the Broward County Civic Arena." The
Company has provided Broward County a guaranty pursuant to which the Company
will be obligated to pay Broward County any deficiency in the County Preferred
Revenue (the "County Preferred Revenue Obligation"). The Company believes that
the revenue generated from the operations of the Facility will be sufficient to
provide Broward County with the County Preferred Revenue. In the event such
revenue is not sufficient to provide Broward County with the County Preferred
Revenue, the Company will be required to meet its County Preferred Revenue
Obligation. There can be no assurance that the revenue generated from Broward
County Civic Arena will be sufficient to meet the Company's obligations to
Broward County.
LEISURE AND RECREATION BUSINESS
OPERATING RISKS
Pier 66 and Bahia Mar (collectively, the "Resort Facilities") are subject
to all operating risks common to the resort and hotel industry. These risks
include, among other things, over-building in the resort and hotel industry
which adversely affects rates charged by the Resort Facilities; increases in
operating costs due to inflation and other factors; dependence on tourism and
weather conditions; increases in energy costs and other
14
<PAGE> 16
expenses of travel; and adverse effects of general and local economic
conditions. Any of these factors could have a material adverse effect on the
Company's financial condition or results of operations.
COMPETITION
The resort and hotel industry is highly competitive. Competitive factors
within the resort and hotel industry include room rates, quality of
accommodations, service levels, convenience of location, reputation, reservation
systems, name recognition and supply and availability of alternative resort and
hotel operations in local markets. Each of the Resort Facilities compete with a
number of competitors. The number of competitive resort and hotel facilities in
each of the Resort Facilities' respective markets could have a material adverse
effect on the levels of occupancy and average room rates of each of the Resort
Facilities. Further, there can be no assurance that new or existing competitors
will not significantly reduce their rates or offer greater convenience, services
or amenities or significantly expand, improve or develop facilities in the
markets in which the Resort Facilities compete, thereby adversely affecting the
Company's resort and hotel operations.
CAPITAL EXPENDITURES
The Resort Facilities have an ongoing need for routine renovations and
other capital improvements, including periodic replacement of furniture,
fixtures and equipment. The cost of such capital improvements could have a
material adverse effect on the Company's financial condition or results of
operations. In addition, the Resort Facilities may require non-routine
renovations in the future. Such renovations involve certain risks, including the
possibility of environmental problems, the possibility that the Company will not
have available cash to fund renovations or that financing for renovations will
not be available on favorable terms, uncertainties as to market demand or
deterioration in market demand after commencement of renovation and the
emergence of unanticipated competition from resorts and hotels and alternative
lodging facilities.
ENVIRONMENTAL MATTERS
The Company's operating costs may be affected by the obligation to pay for
the cost of complying with existing environmental laws, ordinances and
regulations, as well as the cost of future legislation. Under various federal,
state and local environmental laws, ordinances and regulations, a current or
previous owner or operator of real property may be liable for the costs of
removal or remediation of hazardous or toxic substances on, under or in such
property. Such laws often impose liability whether or not the owner or operator
knew of, or was responsible for, the presence of such hazardous or toxic
substances. In addition, the presence of contamination from hazardous or toxic
substances, or the failure to properly remediate such contaminated property, may
adversely affect the owner's ability to use or sell such real property or borrow
using such real property as collateral. Persons who arrange for the disposal or
treatment of hazardous or toxic substances also may be liable for the costs of
removal or remediation of such substances at the disposal or treatment facility,
whether or not such facility is or ever was owned or operated by such person.
Certain environmental laws and common law principles could be used to impose
liability for releases of hazardous materials, including asbestos-containing
materials ("ACMs"), into the environment, and third parties may seek recovery
from owners or operators of real properties for personal injury associated with
exposure to released ACMs or other hazardous materials. Environmental laws also
may impose restrictions on the manner in which property may be used or
transferred or in which businesses may be operated, and these restrictions may
require expenditures. In connection with the ownership of its properties, the
Company may be potentially liable for any such costs. The costs of defending
against claims of liability or remediating contaminated property and the cost of
complying with environmental laws could have a material adverse effect on the
Company's financial condition and results of operations.
PROPERTY TAX AND INSURANCE FLUCTUATIONS
Each of the Resort Facilities is subject to real property taxes. Real
property taxes may increase or decrease as property tax rates change and as the
Resort Facilities are assessed or reassessed by taxing authorities. In addition,
each of the Resort Facilities is covered by property and casualty insurance.
Property and casualty insurance rates may increase depending upon claims
experience, insurance market conditions and
15
<PAGE> 17
the replacement value of the Resort Facilities. A significant increase in the
tax rate, the amount assessed by the taxing authority or the casualty insurance
rate could have a material adverse effect on the Company's financial condition
and results of operations.
SEASONALITY OF THE RESORT BUSINESS; ADVERSE WEATHER
The business of the Resort Facilities is generally seasonal. The Resort
Facilities, both of which are located in Fort Lauderdale, Florida, have
historically experienced higher revenues and operating profits in the first and
fourth quarters of each calendar year due to increased rates of occupancy and
room rental rates during the winter months. This seasonality also results in
higher operating costs during these quarters. In addition, South Florida is
subject to tropical weather and storms which, if severe (as in the case of a
hurricane), can interrupt the normal operations of the Resort Facilities and
affect tourism.
LOSSES IN EXCESS OF INSURANCE COVERAGE
The Company intends to maintain comprehensive insurance on the Resort
Facilities, including liability, fire and extended coverage, in the types and
amounts customarily obtained by an owner and operator in the resort and hotel
industry. Nevertheless, there are certain types of losses, generally of a
catastrophic nature, such as hurricanes, earthquakes and floods, that may be
uninsurable or not economically insurable. The Company will use its discretion
in determining amounts, coverage limits and deductibility provisions of
insurance, with a view to obtaining appropriate insurance on the Resort
Facilities at a reasonable cost and on suitable terms. This may result in
insurance coverage that, in the event of a loss, would not be sufficient to pay
the full current market value or current replacement value of the Company's lost
investment and the insurance proceeds received by the Company might not be
adequate to restore its economic position with respect to such Resort
Facilities.
16
<PAGE> 18
PRICE RANGE OF CLASS A COMMON STOCK
The Class A Common Stock began trading on The Nasdaq National Market on
November 13, 1996 under the symbol "PUCK." The following table sets forth, for
the quarters indicated, the range of the high and low sale prices per share for
the Class A Common Stock on The Nasdaq National Market.
<TABLE>
<CAPTION>
PRICE RANGE
OF COMMON STOCK
---------------
HIGH LOW
----- ----
<S> <C> <C>
1996
Second Fiscal Quarter (from November 13, 1996 through
December 31, 1996)........................................ $20 $10
1997
Third Fiscal Quarter (from January 1, 1997 through April 11,
1997)..................................................... $32 1/2 $16 1/4
</TABLE>
On April 11, 1997, the last reported sale price of the Class A Common Stock
was $23 1/8. There were approximately 7,133 record holders of the Class A Common
Stock at April 11, 1997.
DIVIDEND POLICY
The Company does not intend to pay any cash dividends with respect to its
Common Stock in the foreseeable future. It is expected that the New Credit
Facility will limit the Company's ability to pay cash dividends. In addition,
the NHL Bylaws prohibit the Company from paying cash dividends, unless paying
such cash dividends will not impair the Company's ability to (i) meet its
projected expenses for the ensuing 12 month period without the use of borrowed
funds, other than short-term borrowings, and (ii) maintain adequate reserves to
fund the future payment of all deferred player compensation and other deferred
obligations for past services. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."
17
<PAGE> 19
SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The following information has been derived from the financial statements of
the Company and the unaudited pro forma financial statements contained elsewhere
in this Prospectus. The financial statements of the Company as of and for the
periods ended June 30, 1996, 1995, 1994 and 1993 have been audited by Arthur
Andersen LLP, independent certified public accountants. The audited financial
statements as of June 30, 1996 and 1995 and for the three years ended June 30,
1996 are included elsewhere herein. The selected financial data as of December
31, 1996 and for the six months ended December 31, 1996 and 1995 are derived
from the unaudited interim financial statements contained elsewhere herein. The
selected financial data provided below do not reflect the purchase of the Resort
Facilities (the "Resort Facilities Acquisition"), which is reflected elsewhere
in this Prospectus. Operating results for the six months ended December 31, 1996
are not necessarily indicative of results that may be expected for the year
ending June 30, 1997. The financial data set forth below should be read in
conjunction with the financial statements and notes thereto contained elsewhere
in this Prospectus. See also "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
<TABLE>
<CAPTION>
SIX MONTHS ENDED INCEPTION
DECEMBER 31, FISCAL YEARS ENDED JUNE 30, (DECEMBER 2, 1992)
-------------------- ---------------------------------- THROUGH JUNE 30,
1996 1995 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF
OPERATIONS DATA:
Revenue.............. $15,383 $ 13,112 $ 34,087 $ 17,746 $ 21,682 $ --
Cost of Revenue...... 20,048 18,686 44,329 22,779 25,701 768
Amortization and
depreciation....... 1,795 2,730 9,815 6,266 6,444 2
------- -------- -------- -------- -------- -------
Net operating loss... (6,460) (8,304) (20,057) (11,299) (10,463) (770)
Interest and other,
net................ (2,339) (2,233) (5,082) (4,087) (2,463) (167)
------- -------- -------- -------- -------- -------
Net loss............. $(8,799) $(10,537) $(25,139) $(15,386) $(12,926) $ (937)
======= ======== ======== ======== ======== =======
PRO FORMA DATA:
Net loss per share... $ (1.19)(b) $ (2.00)(a) $ (4.76)(a) $ (2.96)(a) $ (2.93)(a) $ (0.21)(a)
Weighted average
shares
outstanding........ 7,418(b) 5,276(a) 5,276(a) 5,203(a) 4,405(a) 4,405(a)
</TABLE>
<TABLE>
<CAPTION>
JUNE 30,
DECEMBER 31, --------------------------------------------
1996 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total current assets.............. $31,036 $ 3,756 $ 3,408 $ 2,996 $ 9,117
Total current liabilities......... 20,353 67,786 50,292 17,712 15,605
Total assets...................... 73,737 47,760 53,587 49,019 59,669
Long-term obligations............. 3,341 28,277 25,643 45,169 45,000
Shareholders' equity (deficit).... 50,043 (48,303) (22,348) (13,862) (937)
</TABLE>
- ---------------
(a) 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 follows:
(i) The 4,404,710 shares issued in exchange for the partnership interests of
the Panthers, as if they had been outstanding for the entire period
presented.
(ii) The 870,968 shares issued in exchange for the partnership interests in
Decoma, as if they had been outstanding since August 6, 1994, the date of
their acquisition by Mr. Huizenga.
(b) 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) 7,300,000 shares issued in connection with the Prior
Offerings for the period for which they were actually outstanding.
18
<PAGE> 20
SELECTED UNAUDITED PRO FORMA FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The following unaudited pro forma financial data for the six months ended
December 31, 1996 and the year ended June 30, 1996 give effect to the
Contribution and Exchange, the Resort Facilities Acquisition and the acquisition
of Incredible Ice (collectively, the "Acquisitions"), and the Private Placement,
in the aggregate, as if all such transactions had occurred at the beginning of
the periods presented for results of operations data and as if all such
transactions had occurred as of the balance sheet date for balance sheet data.
The selected unaudited pro forma financial data was derived from, and should be
read in conjunction with, the unaudited pro forma financial statements and the
notes thereto appearing elsewhere in this Prospectus. The unaudited pro forma
data is not necessarily indicative of the combined results of operations or
financial position that would have occurred if the Contribution and Exchange,
the Acquisitions or the Private Placement had occurred at the beginning of the
periods presented nor are they necessarily indicative of future operating
results. There can be no assurance that the Contribution and Exchange will be
completed.
<TABLE>
<CAPTION>
SIX MONTHS FISCAL YEAR
ENDED ENDED
DECEMBER 31, 1996 JUNE 30, 1996
--------------------- ----------------------
ACTUAL PRO FORMA ACTUAL PRO FORMA
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue....................................... $15,383 $ 84,649 $ 34,087 $186,542
Cost of revenue............................... 20,048 78,402 44,329 164,462
Amortization and depreciation................. 1,795 8,450 9,815 23,141
------- -------- -------- --------
Net operating (loss) income................... (6,460) (2,203) (20,057) (1,065)
Interest and other, net....................... (2,339) (7,985) (5,082) (15,691)
------- -------- -------- --------
Net loss...................................... $(8,799) $(10,188) $(25,139) $(16,756)
======= ======== ======== ========
PRO FORMA DATA:
Net loss per share............................ $ (1.19)(d) $ (0.39)(c) $ (4.76)(a) $ (0.66)(b)
Weighted average shares outstanding........... 7,418(d) 26,032(c) 5,276(a) 25,309(b)
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1996
-------------------
ACTUAL PRO FORMA
<S> <C> <C>
BALANCE SHEET DATA:
Total current assets........................................ $31,036 $ 89,678
Total current liabilities................................... 20,353 80,422
Total assets................................................ 73,737 627,419
Long-term obligations....................................... 3,341 234,588
Shareholders' equity........................................ 50,043 312,409
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS FISCAL YEAR
ENDED ENDED
DECEMBER 31, 1996 JUNE 30, 1996
--------------------- ----------------------
ACTUAL PRO FORMA ACTUAL PRO FORMA
<S> <C> <C> <C> <C>
Supplemental Cash Flow Data(e)................ $(4,665) $ 8,056 $(10,242) $ 26,152
</TABLE>
- ---------------
(a) 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.
(b) 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) 4,838,710 shares (of the 7,300,000 shares offered in
the Prior Offerings) issued to repay the Company's outstanding indebtedness,
(iii) 8,400,000 shares issued in connection with the Exchanges (4,450,900
shares for Pier 66 and 3,950,000 shares for Bahia Mar), (iv) 212,766 shares
issued in the acquisition of Incredible Ice, (v) 4,928,917 shares to be
issued in connection with the acquisition of the Boca Raton Hotel and Club,
and (vi) 1,652,589 shares
19
<PAGE> 21
(of the 2,460,000 issued in the Private Placement) to be used to repay
outstanding indebtedness to be assumed in connection with the acquisition of
the Boca Raton Hotel and Club as if they had been outstanding for the entire
period presented.
(c) 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) 4,838,710 shares (of the 7,300,000 shares issued in the
Prior Offerings) issued to repay the Company's outstanding indebtedness as
if they had been outstanding for the period prior to the Prior Offerings,
(iii) 7,300,000 shares issued in connection with the Prior Offerings for the
period for which they were outstanding, (iv) 8,400,000 shares issued in
connection with the Exchanges, (v) 212,766 shares issued in the acquisition
of Incredible Ice, (vi) 4,928,917 shares to be issued in connection with the
acquisition of the Boca Raton Hotel and Club, and (vii) the 1,652,589 shares
(of the 2,460,000 issued in the Private Placement) to be used to repay
outstanding indebtedness to be assumed in connection with the acquisition of
the Boca Raton Hotel and Club, as if they had been outstanding for the
entire period presented.
(d) 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) 7,300,000 shares
issued in connection with the Prior Offerings for the period for which they
were outstanding.
(e) Represents the difference between Revenue and Cost of revenue, plus Premier
Club membership deposits for the pro forma periods.
20
<PAGE> 22
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Certain of the data contained herein may include forward-looking
information and actual results could differ from that set forth below. The
following discussion should be read in conjunction with the unaudited condensed
consolidated financial statements and notes thereto included elsewhere herein.
In addition, reference should be made to the audited consolidated financial
statements and notes thereto and related Management's Discussion and Analysis of
Financial Condition and Results of Operations included elsewhere herein.
The historical selected financial data of the Company included herein
include the financial position and results of operations of Decoma Investment,
Inc. I ("Decoma I") and Decoma Investment, Inc. II ("Decoma II"), which Mr.
Huizenga acquired in August of 1994; however, such historical selected financial
data do not incorporate the Resort Facilities Acquisition. As this transaction
was among entities under common control, it has been accounted for on a
historical cost basis in a manner similar to a pooling of interests, and,
accordingly, the Company's historical balance sheets, statements of operations,
statements of shareholders' equity and statements of cash flows have been
presented as if the Company were combined with Decoma I and Decoma II
(collectively, the "Decoma Entities") as of the date Mr. Huizenga acquired the
Decoma Entities.
OVERVIEW
Florida Panthers Hockey Club, Ltd., ("Panthers Ltd.") now a 100% subsidiary
of the Company, was formed in December 1992 to own and operate the Panthers. In
April 1993, the NHL awarded Panthers Ltd. a hockey franchise, and the Panthers
commenced play in the NHL in October 1993. The Company currently derives its
hockey-related revenue from (i) the sale of tickets to home games, (ii)
contracts with broadcast organizations and (iii) advertising and promotion. A
large portion of Panthers Ltd.'s annual revenue and operating expenses is
determinable at the commencement of each hockey season based on season ticket
sales and the Panthers' multi-year contracts with its players, broadcast
organizations and sponsors.
Additionally, the Company owns Arena Development, a Florida limited
partnership formed for the purpose of developing the Broward County Civic Arena,
and Arena Operator, a Florida limited partnership formed for the purpose of
managing and operating the Broward County Civic Arena. Through its ownership of
the Decoma Entities, the Company also owns approximately 78% of the partnership
interests in Decoma, a Florida limited partnership which operates the Miami
Arena in which the Panthers currently play.
The operations of Panthers Ltd. are seasonal. Panthers Ltd. receives a
substantial portion of its receipts from the advance sale of regular season
tickets during the months of July and August, prior to the commencement of the
NHL regular season. For financial reporting purposes, hockey related revenue and
team operating expenses are recognized during the regular season, which extends
from early October through mid-April. In the event the Panthers participate in
the playoffs, additional revenue will be realized and additional expenses will
be incurred for each playoff series.
During the seven month period from inception on December 2, 1992 through
June 30, 1993, Panthers Ltd. did not realize revenue or incur expenses from
hockey operations. Panthers Ltd. incurred approximately $770,000 of various
general and administrative start-up costs during such seven month period.
The 1994-95 season was shortened (from the normal 84 game schedule to a 48
game schedule) as a result of a player lockout in a dispute over the then
existing collective bargaining agreement, and the results of operations for the
year ended June 30, 1995 reflect the reduced number of games played.
During the 1995-96 season, the Panthers participated in all four rounds of
the Stanley Cup playoffs (playing in 22 playoff games) and derived additional
revenue and incurred additional expenses as a result of their participation in
the playoffs.
21
<PAGE> 23
The Company incurred net losses of approximately $8.8 million, $25.1
million, $15.4 million and $12.9 million during the six month period ended
December 31, 1996 and the years ended June 30, 1996, 1995 and 1994,
respectively. Such net losses were primarily a result of Panthers Ltd. having
entered into an unfavorable lease with the Miami Arena which does not provide
Panthers Ltd. with certain sources of revenue, including revenue from the sale
of suites and parking and a majority of the advertising space, which are
generally available to other hockey franchises. The Miami Arena, with a seating
capacity of 14,703, is currently the smallest arena in the NHL. These seating
limitations have precluded Panthers Ltd. from receiving additional revenue from
the sale of additional tickets. In addition, Panthers Ltd.'s net losses were
abnormally high due to the amortization of the original franchise cost totaling
approximately $9.1 million, $5.7 million and $6.2 million for the years ended
June 30, 1996, 1995 and 1994. Approximately $25.7 million of the Panthers'
original franchise cost was allocated to player contracts and is being amortized
over approximately six years, of which $20.3 million had been amortized as of
December 31, 1996. The remaining $24.3 million of the original franchise cost is
being amortized over 40 years. Interest expense incurred during the six month
period ending December 31, 1996 and the three years ended June 30, 1996, 1995,
1994 were approximately $2.3 million, $5.0 million, $4.1 million and $2.5
million, respectively. Such interest expense related to the two term loans and
advances from Mr. Huizenga. The bank term loans were repaid after the
consummation of the Prior Offerings. The cumulative advances provided by Mr.
Huizenga were contributed pursuant to the Reorganization prior to the
consummation of the Prior Offerings.
In May 1996, Panthers Ltd. entered into the Lease Amendment, extending the
term of the lease (which was scheduled to expire at the end of the 1995-96
season) to July 31, 1998, with two one-year options for the 1998-99 season and
the 1999-2000 season. The Lease Amendment contained substantially the same
economic terms as the existing Miami Arena lease and was subject to the approval
of MSEA, which approval, according to the Miami Arena lease, could not be
unreasonably withheld. In June 1996, MSEA rejected the Lease Amendment and
demanded that the Panthers vacate the Miami Arena. Subsequently, Panthers Ltd.
sought and obtained a preliminary injunction enjoining MSEA from taking actions
to prevent the Panthers from utilizing the Miami Arena pursuant to the Lease
Amendment. MSEA has recently appealed the decision rendered by the court.
Although Panthers Ltd. believes that MSEA will not prevail, if MSEA is
successful, Panthers Ltd. may need to find and enter into a lease for an
alternative playing site, which may be outside South Florida, until such time as
the Broward County Civic Arena is completed. In the event the Panthers are
required to play outside South Florida, Panthers Ltd. may incur additional
operating costs (including travel costs) and generate less revenue as a result
of playing outside its local market.
There can be no assurance that Panthers Ltd. will be able to find and enter
into a lease for an alternative playing site or that the use of such alternative
playing site will not adversely affect the Company's financial condition or
results of operations.
RESULTS OF OPERATIONS
SIX MONTHS ENDED DECEMBER 31, 1996, AS COMPARED TO THE SIX MONTHS ENDED
DECEMBER 31, 1995
Revenue. Revenues increased 17%, or approximately $2.3 million, mainly
attributable to approximately $1.1 million of increased broadcasting and
advertising revenues and approximately $270,000 increase in exhibition season
ticket revenues. Even though there were four fewer home games played in the six
month period ended December 31, 1996, as compared to the six month period ended
December 31, 1995, net ticket revenues showed no change since all games played
through December 31, 1996 were sold out resulting in average net ticket revenues
per game being up approximately 27%. Additionally, revenue earned by Decoma
increased approximately $740,000 mainly attributable to an increased net
operating income distribution from the Miami Arena. Coming off the successful
1995-96 season, regular season hockey revenues are projected to surpass prior
year's total regular season revenues by approximately 25%.
Cost of Revenue. Cost of revenues increased approximately 7%, or $1.4
million. Team costs increased approximately $580,000 or 4% primarily due to
higher cost of the current season's exhibition and training camps. Additionally
selling, general and administrative ("SG&A") costs increased approximately 21%,
or $700,000 primarily attributable to various legal and professional fees
incurred by Panthers Ltd. and Decoma.
22
<PAGE> 24
Amortization and Depreciation. Depreciation and amortization decreased by
34% or approximately $940,000 because the unamortized base of players contracts
was reduced by $3.1 million during fiscal 1996.
Interest and Other, Net. Net interest and other costs were approximately
$2.3 million in both six month periods. First quarter ended September 30, 1996
results showed an increase in interest expense as compared to the quarter ended
September 30, 1995 which was offset in the second quarter ended December 31,
1996 by decrease in interest costs due to the pay down of debt and exchange of
Mr. Huizenga's note for Common Stock as compared to the second quarter ended
December 31, 1995.
YEAR ENDED JUNE 30, 1996 COMPARED TO YEAR ENDED JUNE 30, 1995
Revenue. Revenue increased 92%, or approximately $16.3 million. Most of the
increase was derived from ticket sales which increased 143%, or approximately
$13.7 million. This increase was primarily attributable to the fact that the
Panthers (i) participated in all four rounds of the 1995-96 Stanley Cup playoffs
which generated ticket sales of approximately $6.6 million, of which Panthers
Ltd. retained approximately $4.6 million after the various league playoff
assessments, and (ii) played only 24 home games during the shortened 1994-95
regular season as compared to 41 home games during the 1995-96 regular season,
resulting in an increase in regular season ticket sales of approximately $7.1
million. Average ticket revenue, net of sales tax, per regular season home game
increased 8% to approximately $395,000.
Additionally, television and radio revenue increased 38%, or approximately
$1.4 million. This increase was primarily attributable to the fact that 51 games
(including 10 Stanley Cup playoff games) were televised during the 1995-96
season as compared to 34 games during the shortened 1994-95 season.
Other revenue increases including advertising, promotions and concessions,
also resulted from the increase in the number of home games played.
Cost of Revenue. Cost of revenue increased 95%, or approximately $21.6
million. Approximately 70-75% of cost of revenues pertains to team operations
which consists primarily of player salary costs, as well as, hockey operating
costs, scouting, and player development costs. Approximately $17.0 million of
the increase was attributable to team operations of which players' salaries were
approximately $11.8 million higher primarily because there were increases in the
total compensation paid to the first and second round draft picks during the
1995-96 season and players were paid only 58% (pro-rated for the shortened
season) of their contracted salaries during the 1994-95 season.
Additionally, ticketing and arena operating costs increased $1.8 million,
as a result of the increase in the number of home games played (including the
Stanley Cup playoffs), with arena rent accounting for most of the increase. SG&A
also increased approximately $2.8 million mostly due to increased playoff costs.
Amortization and Depreciation. Amortization and depreciation costs
increased 57%, or approximately $3.5 million, and were solely comprised of an
increase to the amortization of player contracts. Panthers Ltd. were required to
pay a $50.0 million franchise fee to the NHL when the expansion franchise was
granted, of which approximately $25.7 million was allocated to the contracts of
players selected in the 1993 expansion draft and is being amortized over the
estimated useful lives of such contracts, which have been determined to be
approximately six years. The remaining portion of the franchise fee is being
amortized over 40 years. For the year ended June 30, 1996, amortization of
player contracts was approximately $8.5 million, including $4.9 million related
to the write-off of unamortized player costs as a result of four contracts
terminated due to buy-outs or player releases and adjustments to remaining
balances to better reflect the current values. For the year ended June 30, 1995,
amortization of the player contracts was approximately $5.1 million, which
included approximately $960,000 related to the write-off of three players'
contracts.
Interest and Other, Net. Net interest and other costs increased 24%, or
approximately $1.0 million. For the years ended June 30, 1996 and 1995, interest
expense consisted of interest accrued on long-term debt and interest accrued on
accumulated borrowings from Mr. Huizenga at the prime rate. Net interest expense
increased 33%, or approximately $1.2 million, primarily as a result of the
increase in accumulated borrowings from Mr. Huizenga which were used to fund
operating losses.
23
<PAGE> 25
YEAR ENDED JUNE 30, 1995 COMPARED TO YEAR ENDED JUNE 30, 1994
Revenue. Revenue decreased 18%, or approximately $3.9 million with $5.2
million of the decrease pertaining to revenue from ticket sales. This decrease
was primarily attributable to the fact that ticket revenue for the year ended
June 30, 1995 included only 24 regular season home games, while ticket revenue
for the year ended June 30, 1994 included 41 home games. Average net ticket
revenue, in the 1994-95 season, increased 10% to approximately $365,000 per
game, primarily as a result of increased ticket prices.
Offsetting this decrease to revenues was the introduction of arena
operations revenues earned by Decoma of $1.4 million. Mr. Huizenga acquired an
ownership interest in Decoma in August of 1994; thus, the historical results of
the Company presented here, reflect various net operating income distributions
to Decoma, from the Miami Arena, in the year ended June 30, 1995 as if Decoma
was combined with the Company.
Cost of Revenue. Cost of revenue decreased 11%, or approximately $2.9
million, of which approximately $2.0 million related to team operating costs.
This decrease was primarily the result of the decrease in players' salaries of
15%, or approximately $1.5 million, which was due to $5.8 million reduction in
actual salaries paid as a result of the shortened season, partially offset by
annual player contract increases of approximately $4.3 million. Ticketing and
arena operating costs also decreased as a result of playing fewer home games.
Amortization and Depreciation. Amortization and depreciation costs showed
minimal change in the periods being compared. For the years ended June 30, 1995
and 1994, amortization of player contracts totaled approximately $5.1 million
and $5.6 million, respectively, of which approximately $960,000 and $1.5
million, respectively, related to the write-off of unamortized player contract
costs due to the release of players or termination of players' contracts.
Offsetting this $500,000 decrease was the addition of approximately $400,000 for
Decoma's depreciation of the Miami Arena Contract which has been shown in the
historical combined consolidated statement of operations for the year ended June
30, 1995.
Interest and Other, Net. Net interest and other costs increased 66%, or
approximately $1.6 million, primarily attributable to interest expense relating
to the accumulated borrowings from Mr. Huizenga which increased approximately
$490,000 as Panthers Ltd.'s operating losses accumulated and net interest
expense relating to Panthers Ltd.'s longterm debt increased approximately
$720,000, as a result of rising interest rates. The remainder is attributable to
minority interest expense.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $1.6 million in the six
months ended December 31, 1996. Net cash used for operating activities were
$17.4 million, $8.8 million and $11.6 million for the years ended June 30, 1996,
1995, and 1994, respectively. Capital expenditures of approximately $650,000
were made during the six months ended December 31, 1996 and were approximately
$140,000, $160,000 and $1.3 million during the years ended June 30, 1996, 1995
and 1994, respectively. Cash flow from financing activities during the six month
period ended December 31, 1996 consisted primarily of the net proceeds of the
Prior Offerings which totaled approximately $66.3 million and consisted entirely
of borrowings and repayments of the loans from Mr. Huizenga for the years ended
June 30, 1996, 1995 and 1994, respectively.
Since the formation of the franchise in December 1992 and through the date
of the Prior Offerings, all net operating losses of Panthers Ltd. were financed
primarily with loans from Mr. Huizenga. Such loans, including interest thereon
accrued through September 30, 1996 totaled approximately $41.0 million. This
entire cumulative advance was exchanged for shares of Common Stock as part of
the reorganization and formation of the Company. The Company does not anticipate
borrowing any additional funds from Mr. Huizenga.
Additionally, Decoma I and Decoma II made distributions to their minority
owners of approximately $70,000, $400,000, and $490,000, during the six months
ended December 31, 1996, the year ended December 31, 1995, and the period from
August 6, 1994 to December 31, 1994, respectively. Future cash distributions to
minority owners of Decoma I and Decoma II will not have a material impact on the
Company.
24
<PAGE> 26
Approximately $45.0 million of the net proceeds of the Prior Offerings was
used to repay the Company's outstanding indebtedness under two term loans in
November of 1996. The remaining $21.3 million of the net proceeds from the Prior
Offerings and the $65.8 million of net proceeds from the Private Placement are
available to the Company for general working capital purposes, which includes
funding of net operating losses. Such remaining net proceeds have been invested
in short-term, investment grade, interest bearing investments.
The Company is in the process of negotiating a new credit facility. It is
anticipated that the new credit facility will provide for a line of credit up to
$50.0 million and will be secured by all tangible and intangible assets of the
Company. The new credit facility is expected to limit the Company's ability to
pay cash dividends. In addition, the NHL's Bylaws preclude any one of its
members from paying cash dividends, unless paying such cash dividends will not
impair the member's ability to (i) meet its projected expenses for the ensuing
12 month period without the use of borrowed funds, other than short-term
borrowings, and (ii) maintain adequate reserves to fund the future payment of
all deferred player compensation and other deferred obligations for past
services.
The grant of a security interest in any of the assets of the Company, or
any direct or indirect ownership interest in the Company, of 5% or more, shall
require the prior approval of the NHL, which may be withheld in the NHL's sole
discretion and, in that connection, the NHL will require a consent agreement
satisfactory to the NHL. NHL rules limit the amount of debt that may be secured
by the assets of, or ownership interests in, an NHL club and require that the
parties to any secured loan that is approved execute an agreement limiting the
rights of the lenders and the club (or shareholder) under certain circumstances,
including upon an event of default or foreclosure. These limitations may
adversely affect the rights of the club (or shareholder) under certain
circumstances.
On November 15, 1996, construction began on the new Broward County Civic
Arena. All construction costs are currently being funded by Broward County.
Pursuant to the Development Agreement with Broward County, the Company will bear
all costs related to the development of the Broward County Civic Arena in excess
of $184.7 million. To date, all construction efforts are on schedule and within
budget, and it is not anticipated that the Company's cash flow will be affected
by the project.
FINANCIAL CONDITION
The reduction of indebtedness with the net proceeds of the Prior Offerings
has improved the Company's liquidity by reducing both interest expense and the
principal amount of the indebtedness required to be repaid in the future.
Without considering the impact of the acquisition by the Company of the
ownership interests in Pier 66 and Bahia Mar, the Company expects negative cash
flows and net losses to continue until the Panthers begin playing at the new
Broward County Civic Arena which is expected to be completed in time for the
1998-99 hockey season. The Company believes that the net proceeds from the Prior
Offerings and the Private Placement, together with its existing cash and cash
equivalents, revenues from its future operations and available borrowings under
the new credit facility, will be sufficient to enable it to maintain its current
and planned operations until the opening of the Broward County Civic Arena.
As of September 30, 1996, the last quarter prior to the Prior Offerings,
the Company had a net deficit in working capital of approximately $53.7 million.
After the Prior Offerings and recapitalization of Mr. Huizenga's cumulative
advances, the Company's net shareholders' equity improved to approximately $50.0
million as of December 31, 1996. Net cash flows needed for the Company are
anticipated to be as much as $15.0 to $20.0 million each year until the
completion of the Broward County Civic Arena in 1998. With the acquisitions of
Pier 66 and Bahia Mar, net cash flows are expected to improve approximately
$12.5 million per year. The unaudited pro forma consolidated balance sheet,
which gives effect to the Resort Facilities Acquisition and the Private
Placement, shows a net equity balance of $129.0 million as of December 31, 1996.
Cash and cash equivalents at December 31, 1996 were approximately $23.7
million as compared to approximately $470,000 at June 30, 1996. The increase was
attributable primarily to the net proceeds of the Prior Offerings on November
13, 1996.
25
<PAGE> 27
Accounts receivables at December 31, 1996 were approximately $6.0 million
as compared to $3.1 million at June 30, 1996. This increase was mainly caused by
increased contractual advertising and broadcasting receivables for the 1996-97
season.
Prepaid expenses and other assets at December 31, 1996 were approximately
$1.3 million compared to approximately $200,000 at June 30, 1996. This increase
was mainly attributable to the pre-payment of team air charter costs in
September of 1996.
Deferred revenues at December 31, 1996 were approximately $11.6 million, as
compared to approximately $1.0 million at June 30, 1996. This increase was
caused by season ticket collections which occurred in August and September of
1996 which are being recognized on a per game basis over the regular 1996-97
season. The approximate $1 million deferred revenue balance at June 30, 1996
represented playoff ticket dollars collected but not earned in the prior year
Stanley Cup Finals because the final round of playoffs ended after four games.
ACCOUNTING STANDARDS
In March 1995, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of" ("SFAS No. 121"). SFAS No. 121 requires
that long-lived assets and certain identifiable intangibles to be disposed of be
recorded at the lower of carrying amount or fair value less cost to sell. The
Company adopted the provisions of this statement, effective July 1995. Such
adoption did not have a material effect on the Company's financial statements.
In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation" ("SFAS No. 123"). Under SFAS No. 123, companies can either measure
the compensation cost of equity instruments issued under employee compensation
plans using a fair value based method, or can continue to recognize compensation
cost under the provisions of Accounting Principles Board Opinion No. 25
("Opinion No. 25"). However, if the provisions of Opinion No. 25 are utilized,
pro forma disclosures of net income and earnings per share must be presented in
the financial statements as if the fair value method had been applied. The
Company intends to recognize compensation costs under the provisions of Opinion
No. 25, and, upon adoption of SFAS No. 123, will disclose the effects of SFAS
No. 123 on net earnings and earnings per share for the years ended June 30, 1996
and 1995 and the six month period ended December 31, 1996.
26
<PAGE> 28
THE NATIONAL HOCKEY LEAGUE
GOVERNANCE
The NHL is generally responsible for regulating the conduct of its members.
The NHL establishes the regular season and playoff schedules of the teams. It
also negotiates, on behalf of its members, the league's national over-the-air
and cable television contracts and the collective bargaining agreement with the
NHL Players' Association. Because the NHL is a joint venture, each of its
members is, in general, jointly and severally liable for the league's
liabilities and obligations and shares in its profits. Under the terms of the
Constitution and Bylaws of the NHL, league approval is required under certain
circumstances, including in connection with the sale or relocation of a member.
The NHL is governed by a Board of Governors, which consists of one
representative from each member. Mr. Torrey serves as the Panthers'
representative on the Board of Governors. The Board of Governors selects the
Commissioner, who administers the daily affairs of the league, including
dealings with the NHL Players' Association, interpretation of playing rules and
arbitration of conflicts among members. The Commissioner also has the power to
impose sanctions, including fines and suspensions, for violations of league
rules. Mr. Gary B. Bettman has been the Commissioner of the NHL since 1993.
The Commissioner has the exclusive power to interpret the Constitution,
Bylaws, rules and regulations of the NHL, and his interpretations are final and
binding. Members of the NHL are precluded from resorting to the courts to
enforce or maintain rights or claims against other members. Instead, all
disputes must be submitted to the Commissioner for his determination, and, such
determination, when rendered, is final and binding.
RESTRICTION ON OWNERSHIP
The NHL Constitution and Bylaws contain provisions which may in some
circumstances operate to prohibit a person from acquiring the Class A Common
Stock and affect the value of such Class A Common Stock. In general, any
acquisition of shares of Class A Common Stock which will result in a person or a
group of persons holding a 5% or more interest in the Company, and each
acquisition of shares of Class A Common Stock which will result in a person or a
group of persons holding any multiple of a 5% interest, will require the prior
approval of the NHL, which may be granted or withheld in the sole discretion of
the NHL. The prospective purchaser will be required to submit to the NHL an
application, in a form to be prescribed from time to time by the NHL, providing
certain information relating to that person's background. Upon receipt of such
application, the Commissioner shall have the right to conduct an investigation
with respect to the prospective purchaser, which may include an interview by the
Commissioner's office or one or more NHL owners and the submission of such
information about the prospective purchaser, whether or not confidential, as the
Commissioner shall deem relevant in his sole discretion. In addition, the NHL
may condition its approval upon the execution, delivery and performance by the
prospective purchaser of such documents as the Commissioner shall prescribe. The
expenses of the NHL's investigation must be paid by the prospective purchaser,
whether or not its application is approved. If and when a prospective purchaser
receives the NHL's consent to acquire a 5% or more interest in the Company, such
prospective purchaser will be required to acknowledge that the purchaser shall
be bound by the applicable provisions of the NHL Constitution and Bylaws.
In addition, no person who directly or indirectly owns any interest in a
privately-held NHL team, or a 5% or more interest in any other publicly-held NHL
team, may own, directly or indirectly, a 5% or more interest in the Company,
without the prior approval of the NHL. The NHL Constitution and Bylaws also
contain provisions which would prohibit an owner of a 5% or more interest in the
Company from engaging in certain activities, such as wagering on any game in
which an NHL team participates. NHL players and referees and employees of the
NHL and its member clubs (other than the Company) are not eligible to purchase
or hold Common Stock. The NHL could in the future adopt different or additional
restrictions which could adversely affect the shareholders.
27
<PAGE> 29
Furthermore, the grant of a security interest in any of the assets of the
Panthers, or any direct or indirect ownership interest in the Company, of 5% or
more, shall require the prior approval of the NHL, which may be withheld in the
NHL's sole discretion and, in that connection, the NHL will require a consent
agreement satisfactory to the NHL. NHL rules limit the amount of debt that may
be secured by the assets of, or ownership interests in, an NHL club and require
that the parties to any secured loan that is approved execute an agreement
limiting the rights of the lenders and the club (or shareholder) under certain
circumstances, including upon an event of default or foreclosure. These
limitations may adversely affect the rights of the club (or shareholder) under
certain circumstances.
Failure by a holder of a 5% or more interest to comply with these
restrictions may result in a forced sale of such holder's interest in the
Company or the repurchase of such interests by the Company. The Company's
Articles of Incorporation provide that the Company may redeem, at the lower of
fair market value or cost, shares held by any person or entity who becomes the
owner of 5% or more of the Company's shares without the approval of the NHL.
These restrictions will be contained in a legend on each certificate issued
evidencing shares of Class A Common Stock.
CONTROL REQUIREMENT
Unless otherwise permitted by the NHL, Mr. Huizenga is required to maintain
voting control of the Company at all times. The Company issued to Mr. Huizenga
shares of Class B Common Stock to satisfy the control requirements of the NHL.
See "Risk Factors -- General -- Control by H. Wayne Huizenga; Voting Rights."
COLLECTIVE BARGAINING AGREEMENT
The NHL and the NHL Players' Association entered into a seven-year NHL
Collective Bargaining Agreement on August 11, 1995 that took retroactive effect
as of September 16, 1993. The NHL Collective Bargaining Agreement expires on
September 15, 2000.
FREE AGENTS
Under the NHL Collective Bargaining Agreement, when a player completes the
term of his contract, he becomes a free agent. Based upon the player's age,
experience and prior year's salary, he will either be classified as an
unrestricted or restricted free agent. The two main groups of unrestricted free
agents are as follows:
Group III Free Agent: Any player who is 32 years of age or older
(commencing with the 1997-98 season any player who is 31 years of age or
older) as of June 30 of the year he becomes a free agent and has been on an
NHL player roster for at least 40 games per season (30 games per season if
the player is a goalie) for at least four seasons.
Group V Free Agent: Any player who has played a minimum of 10 seasons as a
professional hockey player and whose salary in the final year of his
contract was less than that year's NHL average salary. A player may opt to
become a Group V Free Agent only once during his NHL career.
An unrestricted free agent is free to negotiate and sign with any other
team in the NHL following the expiration of his contract, and the team signing
such unrestricted free agent to a contract is not obligated to compensate the
player's former team.
A restricted free agent may also negotiate and sign with another team in
the NHL following the expiration of his contract; however, that player's current
team may exercise its right of first refusal and match the offers made by other
NHL teams. In the event the player's current team chooses not to exercise its
right of first refusal, it is entitled to draft pick(s) as compensation from the
player's new team. The compensation is dependent on the annual salary offer
secured by the restricted free agent.
As of October 5, 1996, the opening day of the regular season, the Panthers
did not have any NHL player eligible for restricted free agency.
28
<PAGE> 30
BUSINESS
GENERAL
The Company currently operates through two business segments: (i) the
Sports and Entertainment Business and (ii) the Leisure and Recreation Business.
The Sports and Entertainment Business is comprised of the Company's ownership
and operation of the Panthers, Arena Development, Arena Operator and the Ice
Rink Business. In addition, the Company owns approximately 78% of the
partnership interests in Decoma. The Leisure and Recreation Business is
comprised of the Company's ownership of Pier 66 and Bahia Mar. In addition, the
Company has entered into a definitive agreement to acquire the Boca Raton Hotel
and Club.
The Panthers commenced play in the NHL on October 4, 1993 and, in its third
season, reached the Stanley Cup Finals. The Company's hockey revenue is derived
from (i) the sale of tickets to the Panthers' home games, (ii) contracts with
broadcasting organizations and (iii) advertising and promotions. A substantial
portion of the Company's annual revenue from its hockey operations is
determinable at the commencement of each hockey season based on season ticket
sales and the Company's contracts with broadcast organizations and sponsors. The
Company intends to capitalize on the growing popularity of hockey, in general,
and the success achieved by the Panthers during the 1995-96 season, in
particular, by continuing to advertise and market the Panthers as well as
continuing to enhance the service and entertainment provided at home games.
In June 1996, the Company entered into the Development Agreement to develop
the Broward County Civic Arena. Pursuant to the Development Agreement, Broward
County purchased the Development Site which will be used primarily for the
development of the Facility and also for possible future ancillary development.
Broward County has agreed to provide up to $184.7 million for the development of
the Broward County Civic Arena, including the purchase of the Development Site.
In connection with the development of the Broward County Civic Arena, the
Company entered into the License Agreement and the Operating Agreement with
Broward County, pursuant to which the Company will utilize and operate the
Broward County Civic Arena beginning on October 1, 1998, provided that
construction is completed on a timely basis. Under the License Agreement, the
Company is entitled to retain 95% of the revenue derived from the sale of
general seating tickets to the Panthers' home games, and all of certain other
hockey related advertising and merchandising revenue. Five percent of the
revenue derived from the sale of general seating tickets, together with revenues
from luxury suites, premium seating and parking, are considered Facility
operating revenue which is the primary source of revenue in determining net
operating income. Net operating income is the difference between Facility
operating revenue and Facility operating expense. Under the License Agreement,
the Company is entitled to receive the first $14.0 million of net operating
income generated from the Broward County Civic Arena and 80% (with Broward
County receiving 20%) of the net operating income in excess of $14.0 million.
The Company believes that successful operation of the Broward County Civic Arena
will significantly enhance the Company's total revenue.
The Company owns approximately 78% of the partnership interests in Decoma,
which derives all of its revenue from its Miami Arena operations. Such revenue
is derived from (i) seat use charges imposed on tickets sold at the Miami Arena,
(ii) net operating income and (iii) fixed and variable operating payments
generated from the Miami Arena.
The Company also owns and operates Incredible Ice and has contracted to
acquire the lease rights to Gold Coast. Incredible Ice and Gold Coast are open
to the general public and derives its revenue from, among other things, (i) fees
charged to the public for the use of the facility for various hockey and skating
programs and open skating sessions, (ii) food and beverage sales and (iii)
retail sales.
The Company also owns Pier 66 and Bahia Mar. Pier 66 is a Fort Lauderdale
Intracoastal Waterway resort and marina encompassing 23 acres and consisting of
380 luxury guest rooms, a 142 slip marina, three pools, 22,000 square feet of
meeting space and six restaurants and lounges. Bahia Mar is a Fort Lauderdale
resort hotel complex encompassing 40 acres and consisting of 297 rooms, a 350
slip marina, four tennis courts, 20,000 square feet of flexible meeting space
and 23,000 square feet of retail space. The operations of Pier 66 and Bahia Mar
are managed by Rahn Pier Mgt., Inc. ("Pier 66 Management") and Rahn Bahia Mar
Mgmt.,
29
<PAGE> 31
Inc. ("Bahia Mar Management"), respectively, pursuant to separate management
agreements, each with a remaining term of approximately three years.
The Company also has reached an agreement to acquire the Boca Raton Hotel
and Club, a destination luxury resort and private club encompassing 298 acres of
land fronting on both the Atlantic Ocean and Intracoastal Waterway in Boca
Raton, Florida and consisting of 963 luxury guest rooms, a 70,000 sq. ft.
convention center, a separate 130,000 sq. ft. convention center currently under
construction, a 25 slip marina, two 18-hole championship golf courses, 31 tennis
courts, five swimming pools, an indoor basketball court, two indoor racquetball
courts, three fitness centers and 15 food and beverage sites, ranging from five
star cuisine to beachside grills. The Company believes that attractive
opportunities exist to acquire other luxury resorts.
SPORTS AND ENTERTAINMENT BUSINESS
HOCKEY OPERATIONS
Sources of Revenue
The Company derives its hockey revenue principally from the sale of tickets
to the Panthers' home games, contracts with broadcast organizations and
advertising and promotions.
Ticket Sales. The Panthers play an equal number of home games and away
games during the 82 game NHL regular season. In addition, the Panthers play one
to two exhibition home games prior to the commencement of the regular season.
Under the NHL Constitution and Bylaws, the Company receives all revenue from the
sale of tickets to regular season home games and no revenue from the sale of
tickets to the Panthers' regular season away games. During the exhibition
season, the Company retains all the revenue from the Panthers' home games and
shares the revenue for certain exhibition games played at neutral sites. During
its first three seasons, the Panthers have sold an average of 8,300 season
tickets. Due primarily to the success achieved in the 1995-96 playoffs, the
Panthers' season ticket base has risen to 11,500 in the 1996-97 season. Ticket
prices for regular season home games during the 1996-97 season at the Miami
Arena range from $12 to $95 per game with an average paid ticket price of $36.
The average individual ticket price is approximately 17% higher than the average
ticket price paid by season ticket holders.
National Television. In 1994, the NHL entered into a seven-year $275.0
million television contract with Fox, pursuant to which the NHL granted Fox
exclusive commercial over-the-air television rights to broadcast certain NHL
regular season and playoff games within the United States. Under the terms of
the Fox Contract, Fox may choose to terminate the contract after five seasons.
In the event Fox chooses to terminate the contract after five seasons, Fox is
required to pay the NHL the difference between the amounts paid through the date
of termination pursuant to the Fox Contract and $155.0 million. In addition, in
1994, the NHL extended its existing contract with ESPN through the end of the
1998-99 season pursuant to which ESPN agreed to pay the NHL approximately $65.0
million for cable rights to broadcast certain NHL regular season and playoff
games within the United States.
The NHL also renewed its contract with Molson prior to the commencement of
the 1994-95 season, pursuant to which the NHL granted Molson the rights to
broadcast certain NHL games throughout Canada for four seasons. In return Molson
agreed to pay the NHL approximately $171.0 million.
The revenue from the foregoing broadcasting contracts allocated to the
Company (constituting 1/26 of the NHL's revenue from the broadcasting contracts)
are as follows:
<TABLE>
<CAPTION>
THE COMPANY'S SHARE
SEASON (IN THOUSANDS)
------ -------------------------
<S> <C>
1994-95.......................................... $ 2,750
1995-96.......................................... 2,980
1996-97.......................................... 3,275
1997-98.......................................... 3,697
1998-99.......................................... 2,307(1)
----------
Total.................................. $15,009
==========
</TABLE>
- ---------------
(1) Does not include the broadcasting contract with Molson which expires
after the 1997-98 season.
30
<PAGE> 32
Local Television, Cable and Radio. In August 1996, the Company entered
into the SportsChannel Letter of Intent with SportsChannel Florida for the local
broadcast (other than radio broadcast) of the Panthers' games. Under the terms
of the SportsChannel Letter of Intent, the Company granted to SportsChannel
Florida broadcast rights (other than radio broadcast rights) to a pre-determined
number of the Panthers' pre-season, regular season and certain post-season games
during the 1996-97 season. The SportsChannel Letter of Intent provides that the
Company shall have the option to grant SportsChannel Florida exclusive or
nonexclusive broadcast rights. In return, the Company shall be entitled to 11%
(for the grant of exclusive broadcast rights) or 5.5% (for the grant of
non-exclusive broadcast rights) of SportsChannel Florida's gross receipts for
the 1996-97 season, provided that the Company shall in no event receive less
than $2.5 million or $1.2 million, respectively.
In addition, in August 1996, the Company entered into the Sunshine Letter
of Intent with Sunshine for the local radio broadcast of all the Panthers' games
during the 1996-97 hockey season. Under the terms of the Sunshine Letter of
Intent, the Company granted to Sunshine local radio broadcast rights for
broadcast of all of the Panthers' pre-season, regular season and post-season
games during the 1996-97 season. On October 24, 1996, the Company entered into
the Beasley-Reed Letter of Intent for the proposed local English language radio
broadcast of all the Panthers games during the 1997-98, 1998-99, 1999-2000,
2000-01 and 2001-02 hockey seasons.
Advertising and Promotions. The Company also generates revenue from the
sale of advertising at certain limited locations at the Miami Arena as well as
in the game programs. In addition, the Company derives promotional revenue from
various sponsored events.
Miami Arena
The Panthers currently play in the Miami Arena, which has a seating
capacity of 14,703, the smallest arena in the NHL. Under the terms of the
Panthers' current agreement with the Miami Arena, the Miami Heat of the National
Basketball Association, as the primary tenant, controls revenue generated from
the sale of suites and a majority of the advertising, limiting the Company's
ability to generate certain revenue which is generally available to other NHL
franchises. In addition, the size of the Miami Arena limits the Company's
ability to generate revenue from the sale of additional tickets.
In May 1996, the Company entered into the Arena License Amendment,
extending the term of the license (which was scheduled to expire at the end of
the 1995-96 season) to July 31, 1998, with two one-year options for the 1998-99
season and the 1999-2000 season. The Arena License Amendment contained
substantially the same economic terms as the existing Miami Arena license and
was subject to the approval of MSEA, which approval, according to the Miami
Arena license, could not be unreasonably withheld. In June 1996, MSEA rejected
the Arena License Amendment and demanded that the Panthers vacate the Miami
Arena. Subsequently, the Company sought and obtained a preliminary injunction
enjoining MSEA from taking actions to prevent the Panthers from utilizing the
Miami Arena pursuant to the Arena License Amendment. MSEA has recently appealed
the decision rendered by the court. Although the Company believes that MSEA will
not prevail, if MSEA is successful, the Company may need to find and enter into
an agreement for an alternative playing site until such time as the Broward
County Civic Arena is completed. There can be no assurance that the Company will
be able to find and enter into an agreement for an alternative playing site or
that the use of such alternative playing site will not adversely affect the
Company's financial condition and results of operations.
The Company owns approximately 78% of the partnership interests in Decoma,
which derives all of its revenue from Miami Arena operations. The City of Miami
recently announced that it intends to build the New Arena which will be utilized
by the Miami Heat. Upon its completion, the New Arena will compete with the
Miami Arena for the rights to host various events, including sports events and
concerts. There can be no assurance that the Miami Arena can successfully
compete with the New Arena. In the event the Miami Arena is unable to attract
various sports and non-sports events, the financial condition and results of
operations of Decoma will be adversely affected.
31
<PAGE> 33
ARENA DEVELOPMENT AND OPERATIONS
Development of the Broward County Civic Arena
In June 1996, the Company entered into the Development Agreement to develop
the Broward County Civic Arena, which will be owned by Broward County. Pursuant
to the Development Agreement, Broward County purchased the Development Site,
which will be used primarily for the development of the Facility and also for
possible future ancillary development. Broward County has agreed to provide
$184.7 million for the development of the Facility, including the purchase of
the Development Site. The Broward County Civic Arena will be located on the
Development Site and Broward County will reimburse the Company for all costs
relating to environmental remediation of the purchased land. The Company will
bear all costs relating to the development of the Broward County Civic Arena in
excess of $184.7 million; however, it may require Broward County to advance an
additional $18.5 million, which the Company will repay as supplemental rent.
Operation of the Broward County Civic Arena
In June 1996, the Company entered into the License Agreement and the
Operating Agreement pursuant to which the Company will utilize and operate the
Broward County Civic Arena. Under the License Agreement, the Company is entitled
to retain 95% of all revenue derived from the sale of general seating tickets to
the Panthers' home games and all of certain other hockey-related advertising and
merchandising revenue. Five percent of the revenue derived from the sale of
general seating tickets together with luxury suites, premium seating and
parking, are considered Facility operating revenue, which is the primary source
of revenue in determining net operating income. Net operating income is the
difference between the Facility operating revenue and Facility operating
expense. The Company is entitled to receive the first $14.0 million of the net
operating income generated from the Broward County Civic Arena and 80% (with
Broward County receiving 20%) of all net operating income in excess of $14.0
million. The License Agreement provides that the Company loan to Broward County
such an amount as necessary to allow Broward County to meet certain financial
obligations relating to the Broward County Civic Arena at an interest rate of
prime plus two percent. Broward County is required to repay any loan made by the
Company on a priority basis from revenue generated from the collection of taxes.
The License Agreement commencement date will occur upon 30 days notice of
the completion of construction of the Broward County Civic Arena, which is
currently scheduled for October 1, 1998; however, the commencement of the
License Agreement may be deferred by the Company until the following NHL hockey
season in the event the Broward County Civic Arena is completed between March 1
and July 1 of 1999. Once commenced, the License Agreement is for a term of 30
years, which term may be extended for five year periods, subject to certain
conditions, pursuant to options granted to the Company by Broward County.
The License Agreement entitles the Company to the exclusive use of the
Broward County Civic Arena during the playing of all of the Panthers' home
games, and provides for nonexclusive use by the Panthers for practices and other
team uses. Additionally, the License Agreement provides the Company with
exclusive use of certain space within the Broward County Civic Arena to be used
for a retail store, offices, a box office, a locker room and a training and
weight room. The License Agreement contains a use covenant which requires the
Panthers to play all of their home games at the Broward County Civic Arena
during the term of the License Agreement.
Ice Rinks
The Company currently owns and operates Incredible Ice and has contracted
to acquire the lease rights to Gold Coast. Incredible Ice and Gold Coast are
opened to the general public and derives its revenue from, among other things,
(i) fees charged to the public for use of the facility for various hockey and
skating programs and open skating sessions, (ii) food and beverage sales and
(iii) retail sales. In addition, the Company owns the architectural designs to
Incredible Ice as well as predevelopment rights to develop other similar ice
rink facilities at various sites located throughout Florida. The Company
contemplates that, as part
32
<PAGE> 34
of its strategy to expand the Ice Rink Business and as opportunities arise in
the future, it may develop and operate other similar ice rinks throughout
Florida.
Decoma
The Company owns approximately 78% of the partnership interests in Decoma,
which derives all of its revenue from its Miami Arena operations. Such revenue
is derived from (i) seat use charges imposed on tickets sold at the Miami Arena,
(ii) net operating income and (iii) fixed and variable operating payments
generated from the Miami Arena operations. The City of Miami recently announced
that it intends to build the New Arena which will be utilized by the Miami Heat.
Upon its completion, the New Arena will compete with the Miami Arena for the
right to host various events, including sports events and concerts. There can be
no assurance that the Miami Arena can successfully compete with the New Arena.
In the event the Miami Arena is unable to attract various sports and non-sports
events, the results of operations of Decoma will be adversely affected.
LEISURE AND RECREATION BUSINESS
RESORT FACILITIES
Pier 66 is a Fort Lauderdale Intracoastal Waterway luxury resort and marina
encompassing 23 acres and consisting of 380 luxury guest rooms, a 142 slip
marina, three pools, 22,000 square feet of meeting space and six restaurants and
lounges. It is situated on oceanfront property in South Florida and has received
the Mobil Travel Guide's Four Star Award and AAA's Four Diamond Award. Bahia Mar
is a resort and marina encompassing 40 acres and consisting of 297 rooms, a 350
slip marina, four tennis courts, 20,000 square feet of flexible meeting space
and 23,000 square feet of retail space. Bahia Mar is situated on oceanfront
property in South Florida and has received the Mobile Travel Guide's and AAA's
Three Diamond Award, as well as the 1995 Radisson President's Award and a City
of Fort Lauderdale Community Appearance Award. The marina is host to the
International Boat Show, an annual six day boating and marine event.
33
<PAGE> 35
KEY STATISTICS
Pier 66
<TABLE>
<S> <C>
Number of guest rooms..................... 380
Year Built................................ The first 100 Pier 66 guest rooms were constructed in
1957. Twice since then, in 1967 and 1986, additional
rooms were added bringing the current total to 380.
Completed renovations..................... In 1993, Pier 66 underwent renovations costing
approximately $3.75 million.
Seasonality............................... Approximately 46% of Pier 66 resort revenues are earned
from January through April.
Average occupancy......................... 67%
Average daily rate........................ $138
Total room revenue per available room..... $93
</TABLE>
Pier 66 Marina
<TABLE>
<S> <C>
Services provided......................... Full service marina includes water, electricity, cable
and telephone as well as fuel and other ship-related
supplies.
Seasonality............................... Approximately 42% of Pier 66 marina revenues are earned
from January through April.
Average size of slips rented.............. 65 feet
Average daily rate per slip............... $79
Average marina occupancy.................. 61%
</TABLE>
Bahia Mar Resort
<TABLE>
<S> <C>
Number of guest rooms..................... 297
Year built................................ The first 115 Bahia Mar guest rooms were constructed in
1966. The Tower, with 182 rooms, was added in 1975.
Completed renovations..................... During 1994 and the early part of 1995, Bahia Mar spent
approximately $8.1 million in extensive renovations.
Seasonality............................... Approximately 46% of Bahia Mar resort revenues are
earned from January through April.
Average occupancy......................... 61%
Average daily rate........................ $104
Total room revenue per available room..... $63
</TABLE>
Bahia Mar Marina
<TABLE>
<S> <C>
Services provided......................... Full service marina includes water, electricity, cable
and telephone as well as close proximity to fuel and
other ship-related supplies.
Seasonality............................... Approximately 47% of Bahia Mar marina revenues are
earned from January through April.
Average size of slips rented.............. 60 feet
Average daily rate per slip............... $47
Average marina occupancy.................. 49%
</TABLE>
The Company also has reached an agreement to acquire the Boca Raton Hotel
and Club, a destination luxury resort and private club encompassing 298 acres of
land fronting on both the Atlantic Ocean and Intracoastal Waterway in Boca
Raton, Florida and consisting of 963 luxury guest rooms, a 70,000 sq. ft.
convention center, a separate 130,000 sq. ft. convention center currently under
construction, a 25 slip marina, two 18-hole championship golf courses, 31 tennis
courts, five swimming pools, an indoor basketball court, two
34
<PAGE> 36
indoor racquetball courts, three fitness centers and 15 food and beverage sites,
ranging from five star cuisine to beachside grills. The Company believes that
attractive opportunities exist to acquire other luxury resorts.
BUSINESS/CREDIT 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 each of Pier 66's
and Bahia Mar's business. In addition, each of Pier 66 and Bahia Mar is subject
to competition from other entities engaged in the business of resort development
and operations, including interval ownership facilities, condominiums, hotels
and motels.
Pier 66's receivables contain significant amounts due from cruise lines
which are granted credit by Pier 66. Such credit is granted by Pier 66 to
attract the substantial business directed by cruise lines through package
vacations and otherwise. The amount of such credit is determined by Pier 66's
management on a case-by-case basis.
MANAGEMENT AGREEMENTS
The Company is a party to a hotel management agreement (the "Pier 66
Management Agreement") with Pier Management pursuant to which Pier 66 Management
operates Pier 66. Pier 66 Management has managed Pier 66 since June 29, 1993.
The term of the Pier 66 Management Agreement is for three (3) years, and it
provides for an annual 2% management fee of approximately $500,000, payable in
monthly installments.
The Company is also a party to a separate hotel management agreement (the
"Bahia Mar Management Agreement") with Bahia Mar Management pursuant to which
Bahia Mar Management operates Bahia Mar. Bahia Mar Management has managed Bahia
Mar since June 30, 1994. The remaining term of the Bahia Mar Management
Agreement is approximately three years, and it requires Bahia Mar Management to
set aside cash from Bahia Mar 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 reserved is three percent of Bahia
Mar's gross revenues each month during the term of the Bahia Mar Management
Agreement.
FRANCHISE, OWNER AND LICENSE AGREEMENTS
Franchise Agreements
On November 14, 1994, Pier 66 Management entered into a franchise agreement
(the "Hyatt Franchise Agreement") with Hyatt Franchise Corporation ("Hyatt").
The agreement is for a 20 year term ending November 14, 2014 and which contains
various early termination provisions and which provides for liquidated damages
upon such early termination. The Hyatt Franchise Agreement provides for monthly
royalty fees based on a percentage of gross room revenue, in the amount of four
percent from December 1, 1996 through November 30, 1997 and five percent
thereafter. Royalty fees totaled $398,175 in 1996.
The Hyatt Franchise Agreement also provides for the pro rata allocation of
certain Hyatt "allocable chain expenses" based on the relation of Pier 66's
total number of guest rooms to the average number of guest rooms in all Hyatt
hotels 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 Pier 66. Total Hyatt expenses other than the royalty
fees amounted to $502,658 as of December 31, 1996 and are included primarily in
rooms and marketing expense in the accompanying financial statements.
The Hyatt Franchise Agreement requires that a reserve, equal to four
percent of gross room revenues, be maintained in respect of 2301 Ltd. for
replacement of furniture, fixtures and equipment and those repairs and
maintenance costs which are capitalizable under generally accepted accounting
principles. The franchise agreement also requires the significant renovation of
guest rooms, corridors and other public areas to be performed every five to six
years. The replacement of other furniture, fixtures and equipment, as defined in
the agreement, is to occur every 10 to 12 years.
35
<PAGE> 37
Ownership Agreement
The Company, Pier 66 Management and Hyatt are parties to a Hyatt Hotel
Franchise Owner Agreement dated November 14, 1994 (the "Owner Agreement")
pursuant to which the parties agree that Hyatt shall notify the Company upon a
voluntary surrender, a default or a breach by Pier 66 Management under the Hyatt
Franchise Agreement and the Company shall have an opportunity to cure any such
breach or default. In addition, upon any termination of Pier 66 Management under
the Pier 66 Management Agreement, the Hyatt Franchise Agreement shall terminate
and the Company shall have the right to employ a substitute manager that Hyatt
will approve provided such manager is qualified under the terms of this
agreement. The substitute manager shall assume the duties and responsibilities
as franchisee under the Hyatt Franchise Agreement. The Owner Agreement also
contains requirements that Hyatt consent to any financing transactions, sales or
other transfers involving Pier 66, which consent shall not be unreasonably
withheld or delayed by Hyatt. The Owner Agreement also obligates the Company to
observe and be bound by certain terms, conditions and restrictions contained in
the Hyatt Franchise Agreement.
License and Franchise Agreement
On June 28, 1994, Bahia Mar Management entered into a 10-year license
agreement (the "Radisson License Agreement") with Radisson Hotels International,
Inc. ("Radisson"). The terms of the Radisson License Agreement allow Bahia Mar
Management to operate the hotel using Radisson's proprietary hotel management
system. Annual fees payable to Radisson pursuant to the Rahn License Agreement
range from one percent to four percent (increasing one percent each year) of the
first $7.0 million of gross room sales and five percent of gross room sales (as
defined by the license agreement) in excess of $7.0 million through December 31,
1997. The remainder of the term requires fees in the amount of five percent of
gross room sales. Fees paid to Radisson pursuant to the Radisson License
Agreement totaled $206,438 in 1996.
PROPERTIES
The property on which Pier 66 is situated 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 ("Kemper").
In addition, the Company assumed 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. The mortgage notes require monthly payments of interest only
throughout the term. A balloon payment of the entire outstanding principal
amount, together with the final monthly payment of interest, will be due at
maturity. At maturity, the Company will either refinance the property or pay off
the mortgage note depending on the Company's working capital position and
business plan at that time. 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 Pier 66 Management Agreement.
The outstanding balances of the notes at December 31, 1996 were as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1996
-----------------
<S> <C>
Note 1...................................................... $21,951,325
Note 2...................................................... 4,000,000
-----------
25,951,325
Less unamortized discount based on imputed interest rate of
9.0%...................................................... (209,396)
-----------
$25,741,929
</TABLE>
As required by the loan agreement relating to Note 1 and Note 2 (the "Pier
66 Loan Agreement"), the Company maintains a Capital Expenditure Program ("CEP")
reserve fund for the replacement of capital assets. The CEP reserve equals three
percent of gross revenues net of amounts expended by Pier 66 for replacement of
capital assets and is funded quarterly for the preceding quarter. Beginning July
1, 1995, Pier 66
36
<PAGE> 38
voluntarily increased the CEP reserve to four percent of gross revenues,
however, the loan agreement fund is only funded for the required three percent.
The CEP fund is also pledged as additional security for the loan obligation. At
December 31, 1996, the balance of the CEP reserve was $1,284 and was included in
other assets. The Pier 66 Loan Agreement also requires the Company to maintain a
reserve fund for property taxes to provide for each year's anticipated payments.
Property taxes are to be paid no later than March 31 each calendar year for the
preceding calendar year.
The Company leases the Bahia Mar site from the City of Fort Lauderdale
under an operating lease (the "Rahn Lease Agreement") which was initially
extended through September 30, 2037. On January 4, 1995, the term of the Rahn
Lease Agreement was further extended for a period commencing October 1, 2037
through August 31, 2062 (the "Second Extended Term"). Under the Rahn Lease
Agreement, the Company is required to pay the lessor an annual rental (payable
in quarterly installments) equal to the greater of (i) a percentage (4.0%
through September 30, 2012 and 4.25% thereafter) of the annual gross operating
revenue, as defined in the Rahn Lease Agreement, or (ii) a minimum annual rent
payment. Minimum annual lease payments are $300,000. During the Second Extended
Term, the minimum annual rent shall be the greater of $300,000 or 80% 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 Rahn Lease Agreement totaled $632,907 for the year ended
December 31, 1996.
The Rahn Lease Agreement requires the Company to set aside cash for the
purchase, replacement and upgrade of furniture, fixtures and equipment. The
amount to be restricted is three percent of Bahia Mar's revenues, as defined in
the Rahn Lease Agreement. All cash was spent on its required purpose at December
31, 1996.
The Company currently has 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%
at December 31, 1996) and is collateralized by substantially all property and
equipment. In addition to the monthly interest payments, the Bahia Mar Note
requires monthly principal installments of $65,000. The maturity date for the
note is June 30, 1997, which date may be extended under a one year extension
option. As of the date of this Prospectus, the Company's option to extend the
mortgage note has not been exercised. If the option is exercised during the
extension period, monthly principal installments will increase to $75,000, the
interest rate will increase by 1% and an extension fee equal to .0025% of the
then outstanding balance will be due prior to the extension. The final balloon
payment would then be due June 30, 1998.
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 Company
to set aside cash for the purchase, replacement and upgrade of furniture,
fixtures, equipment and property at Bahia Mar in the amount of $25,000 each
month. All cash was spent on its required purpose at December 31, 1996.
The Company also leases certain equipment used in its operations under
operating leases. Future minimum lease payments, including property leases 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>
COMPETITION
The resort and hotel industry is highly competitive. Competitive factors
within the resort and hotel industry include room rates, quality of
accommodations, service levels, convenience of location, reputation, reservation
systems, name recognition, and supply and availability of alternative resort and
hotel operations in
37
<PAGE> 39
local markets. Each of Pier 66 and Bahia Mar compete with a number of
competitors. An increase in the number of competitive resorts and hotels
facilities in each of Pier 66's or Bahia Mar's respective markets could have a
material adverse effect on the levels of occupancy and average room rates of
each of Pier 66 and Bahia Mar. Further, there can be no assurance that new or
existing competitors will not significantly reduce their rates or offer greater
convenience, services, or amenities or significantly expand, improve, or develop
facilities in the markets in which Pier 66 or Bahia Mar compete, thereby
adversely affecting the Company's resort and hotel operations.
ENVIRONMENTAL MATTERS
Under various federal, state, and local laws and regulations, an owner or
operator of real estate may be liable for the costs of removal or remediation of
certain hazardous or toxic substances on such property. Such laws often impose
such liability without regard to whether the owner knew of, or was responsible
for, the presence of hazardous or toxic substances. Furthermore, a person that
arranges for the disposal or transports for disposal or treatment a hazardous
substance at a property owned by another may be liable for the costs of removal
or remediation of hazardous substances released into the environment at that
property. The costs of remediation or removal of such substances may be
substantial, and the presence of such substances, or the failure to properly
remediate such substances, may adversely affect the owner's ability to sell such
real estate or to borrow using such real estate as collateral. In connection
with the ownership and operation of its properties, the Company may be
potentially liable for any such costs.
A Phase I environmental site assessment (the "Phase I Surveys") has been
obtained for the real property on which Pier 66 and Bahia Mar are located. A
Phase I Survey is intended to identify potential environmental contamination and
regulatory compliance concerns. A Phase I Survey generally includes historical
reviews of the property, reviews of certain public records, preliminary
investigations of the site and surrounding properties and the preparation and
issuance of written reports. A Phase I Survey generally does not include
invasive procedures, such as soil sampling or ground water analysis.
The Phase I Survey has not revealed any environmental liability or
compliance concerns that the Company believes would have a material adverse
effect on the Company's, Pier 66's or Bahia Mar's business, assets, results of
operations or liquidity of its Leisure and Recreation Business, nor is the
Company aware of any such liability or concern. Nevertheless, it is possible
that a Phase I Survey will not reveal all environmental liabilities or
compliance concerns or that there will be material environmental liabilities or
compliance concerns of which Pier 66 will not be aware. Moreover, no assurances
can be given that (i) future laws, ordinances, or regulations will not impose
any material environmental liability, or (ii) the current environmental
condition of Pier 66's or Bahia Mar's existing and future properties will not be
affected by condition of the neighboring properties (such as the presence of
leaking underground storage tanks) or by third parties unrelated to Pier 66 or
Bahia Mar.
EMPLOYEES
The Company employs 27 hockey players and 91 other persons. During the
hockey season, the Company also uses part-time employees, most of whom are
employed as statisticians and press attendants during the Panthers hockey games.
The Company also employs 50 part-time employees at Incredible Ice for various
guest services and food and beverage positions. All 471 persons working at Pier
66 and all 269 persons working at Bahia Mar are employees of Pier 66 Management
and Bahia Mar Management, respectively. None of these employees or the Company's
employees, other than the hockey players, are subject to any collective
bargaining agreement and each of the Company, Pier 66 Management and Bahia Mar
Management believes that its relationship with its employees is good.
INSURANCE
The Company maintains various insurance coverages on behalf of its hockey
players through the NHL, including through the league's affiliated Bermuda
insurance company, Intra-Continental Ensurers Ltd. ("ICE"). Such insurance, of
which the players are the beneficiaries, includes medical and dental, permanent
38
<PAGE> 40
total disability, group life, accidental death and dismemberment ("AD&D"), and
spousal group life and AD&D.
The Company also maintains various types of insurance on behalf of the
Panthers through ICE. Workers' compensation insurance is maintained with a
$100,000 per injury deductible. The NHL Catastrophe Insurance Plan covers the
entire Panthers' roster in the amount of $1.0 million per player. In addition,
the ICE program requires that each team cover their top five salaried players
with at least two years remaining on their contract with Total Temporary
Disability Insurance. This insurance pays a benefit of up to 80% of the covered
players' compensation after 30 consecutive regular season games are missed. From
time to time, the Panthers may obtain additional insurance coverage for its
players as may be necessary or required.
In addition to hockey related insurance, the Company maintains the types
and amounts of insurance coverage that it considers appropriate for its other
businesses. Furthermore, under the Operating Agreement, the License Agreement
and the Development Agreement, the Company will have insurance requirements
which include (i) workers' compensation insurance, (ii) casualty insurance
against loss or damage to the Facility in such amount not less than full
replacement cost of the Facility and the equipment and machinery therein and
(iii) occupancy insurance in an amount not less than estimated annual revenue to
be derived from the Facility. While the Company believes that its insurance
coverage is adequate, if the Company were held liable for amounts exceeding the
limits of its insurance coverage or for claims outside the scope of its
insurance coverage, such liability could have a material adverse effect on the
Company's financial condition or results of operations.
LITIGATION
On June 23, 1996, MSEA filed a lawsuit against the Defendants in the United
States District Court of the Southern District of Florida. The suit alleges that
the Defendants have conspired to restrain trade in the South Florida sports and
entertainment facility market by monopolizing or attempting to monopolize such
market in violation of federal antitrust laws. The Plaintiff seeks, among other
things, to (i) nullify certain provisions of the Miami Arena operating contract,
specifically provisions restricting MSEA from developing the New Arena and (ii)
force the Defendants to divest their control over the Miami Arena and the
Broward County Civic Arena. In addition, the Plaintiff seeks treble damages as
well as reimbursement for reasonable attorneys' fees and costs. The Defendants
believe that the suit is without merit and intend to vigorously defend against
this suit. An unfavorable outcome of the suit may have a material adverse effect
on the Company's financial condition or results of operations.
In May 1996, the Company entered into the Lease Amendment, extending the
term of the Miami Arena lease (which was scheduled to expire at the end of the
1995-96 season) to July 31, 1998, with two one-year options for the 1998-99
season and the 1999-2000 season. The Lease Amendment contained substantially the
same economic terms as the existing Miami Arena lease and was subject to the
approval of MSEA, which approval, according to the Miami Arena lease, could not
be unreasonably withheld. In June 1996, MSEA rejected the Lease Amendment and
demanded that the Panthers vacate the Miami Arena. Subsequently, the Company
sought and obtained a preliminary injunction enjoining MSEA from taking actions
to prevent the Panthers from utilizing the Miami Arena pursuant to the Lease
Amendment. MSEA has recently appealed the decision rendered by the court.
Although the Company believes that MSEA will not prevail, if MSEA is successful,
the Company may need to find and enter into a lease for an alternative playing
site, which may be outside South Florida, until such time as the Broward County
Civic Arena is completed. There can be no assurance that the Company will be
able to find and enter into a lease for an alternative playing site.
On September 4, 1996, Timothy Johanson, Walter Johanson and Veronica
Juliano (the "ADA Plaintiffs") filed a lawsuit against the Company, among
others, in the United States District Court of the Southern District of Florida.
The suit alleges that the Company violated the Americans with Disabilities Act
in connection with the development of the Broward County Civic Arena by (i)
failing to make reasonable modifications in policies, practices or procedures,
(ii) failing to take such steps as may be necessary to ensure that no individual
with a disability is excluded, denied services, segregated or otherwise treated
differently and (iii) failing to remove architectural barriers and
communications barriers. The ADA Plaintiffs seek, among other things, to (A)
obtain a judgment mandating the Company to revise, modify and remove certain
barriers
39
<PAGE> 41
at the Broward County Civic Arena that may prevent persons with disabilities
from having access to the Facility and take steps necessary to ensure that no
person with a disability is excluded, denied services, segregated or otherwise
treated differently, to the extent required by law, and (B) be awarded
reasonable attorneys' fees, costs and expenses incurred in connection with the
suit. The Company believes that it has complied with the requirements of the
Americans with Disabilities Act and that the suit is without merit. An
unfavorable outcome of the suit may require the Company to incur additional
costs.
A lawsuit was filed on January 9, 1997 by Arena Development, seeking a
determination as to the applicability of Broward County's Prevailing Wage
Ordinance to the construction of the Broward County Civic Arena. The suit was
filed in the Seventeenth Judicial Circuit in and for Broward County, Florida.
The complaint filed alleged that the Prevailing Wage Ordinance did not apply to
the construction of the Facility for two reasons: (i) the Prevailing Wage
Ordinance only applies to construction contracts in excess of $250,000 to which
Broward County is a party and Broward County is not a party to the construction
contract between Arena Development and the general contractor, and (ii) the
Development Agreement contains all the obligations and responsibilities of both
parties and does not include a provision mandating that Arena Development comply
with the Prevailing Wage Ordinance. The Prevailing Wage Ordinance requires that
all contracts to which the ordinance applies must contain such a provision. The
lawsuit asked for a declaratory judgement finding the Prevailing Wage Ordinance
did not apply to the construction of the Facility and that Arena Development
could continue without reference to the ordinance. On February 21, 1997, the
Seventeenth Judicial Circuit Court ruled against the Company's complaint,
finding that the Prevailing Wage Ordinance was applicable. The Company has not
yet determined whether or not to pursue an appeal. An unfavorable outcome of
this suit may require the Company to incur additional costs up to $7,500,000.
On April 9, 1997, Allied Minority Contractors Association, Inc., Overnight
Success Construction, Inc., Reed, Jr. Plumbing, Inc. and Christopher Mallard
(collectively, the "Broward County Plaintiffs") filed a suit against Broward
County and Arena Development in the Seventeenth Judicial Circuit in and for
Broward County, Florida. This suit alleges that Broward County entered into the
Development Agreement in violation of Florida law and Broward County ordinances.
The Broward County Plaintiffs seek, among other things, to nullify the
Development Agreement. The Company believes that this suit is without merit and
intends to vigorously defend against this suit. An unfavorable outcome of the
suit may have a material adverse effect on the Company's financial condition or
results of operations.
On January 28, 1997 and February 3, 1997, purported class action lawsuits
were filed against the Company and Messrs. Huizenga, Johnson, Rochon, Berrard,
Hudson, Dauria and Evans in the United States District Court for the Southern
District of Florida. The suits allege, among other things, that the defendants
violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, by making
untrue statements or omitting to state material facts, in connection with sales
of the Company's Class A Common Stock by the plaintiff and others in the
purported class between November 13, 1996 and December 22, 1996. The suits
generally seek, among other things, certification as a class and an award of
damages in an amount to be determined at trial. The Company intends to
vigorously defend against these suits.
The Company is not presently involved in any other material legal
proceedings. However, the Company may from time to time become a party to legal
proceedings arising in the ordinary course of business.
RECENT DEVELOPMENTS
Private Placement Transaction. On January 30, 1997, the Company issued and
sold 2,460,000 shares of Class A Common Stock in the Private Placement at a
price of $27.75 per share. The Private Placement was exempt from registration
pursuant to Section 4(2) of the Securities Act and resulted in net proceeds to
the Company of approximately $67.0 million after deducted placement agency and
advisory fees.
Boca Raton Hotel and Club Acquisition. On March 20, 1997, the Company
entered into the Contribution and Exchange Agreement with the Boca Partnership,
the General Partner and BRMC. Pursuant to the Contribution and Exchange
Agreement, substantially all the assets of Boca Partnership will be transferred
to Panthers BRHC in exchange for: (i) a non-managing general partner interest in
Panthers BRHC, (ii) rights to acquire approximately 4,928,917 shares of Class A
Common Stock, (iii) warrants to
40
<PAGE> 42
purchase approximately 919,621 shares of the Class A Common Stock at a price of
$29.01 per share and (iv) the assumption of indebtedness of Boca Partnership in
the amount of approximately $195.0 million, of which approximately $85.0 million
will be repaid immediately upon consummation of the Contribution and Exchange.
Of the $85.0 million to be repaid, $45.0 million will be paid from the Company's
working capital and $40.0 million will be paid from the incurrence of additional
debt. Consummation of the acquisition is subject to customary conditions
including the receipt of requisite approvals from the shareholders of the
Company and the limited partners of Boca Partnership.
41
<PAGE> 43
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The directors and the executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
H. Wayne Huizenga............................ 59 Chairman of the Board
Richard C. Rochon............................ 39 Vice Chairman of the Board
Richard H. Evans............................. 52 President and Director
William A. Torrey............................ 62 President of Florida Panthers Hockey
Club, Inc. and Director
Alex Muxo.................................... 41 President of Arena Development and Arena
Operator
William M. Pierce............................ 46 Senior Vice President and Chief
Financial Officer
Steven M. Dauria............................. 36 Vice President and Corporate Controller
Steven R. Berrard............................ 42 Director
Harris W. Hudson............................. 54 Director
George D. Johnson, Jr........................ 54 Director
</TABLE>
All directors are elected to serve until the next annual meeting of
shareholders and until their successors are elected and qualified. Officers
serve at the pleasure of the Board.
H. Wayne Huizenga has been the Company's Chairman of the Board since
September 1996. Mr. Huizenga also has been Chairman of the Board of Republic
Industries, Inc. ("Republic"), a diversified company with operations in the
solid waste, electronic security services and out-of-home advertising
industries, since August 1995. Mr. Huizenga served as Chief Executive Officer of
Republic from August 1995 until October 1996, and has served as Co-Chief
Executive Officer of Republic since October 1996. Mr. Huizenga has been Chairman
of the Board of Extended Stay America, Inc. ("Extended Stay"), an extended stay
lodging facilities company, since January 1995. Mr. Huizenga served as the Vice
Chairman of Viacom, Inc. ("Viacom"), a diversified media and entertainment
company, from September 1994 until October 1995. Mr. Huizenga also served as the
Chairman of the Board of Blockbuster Entertainment Group, a division of Viacom,
from September 1994 until October 1995. From April 1987 through September 1994,
Mr. Huizenga served as the Chairman of the Board and Chief Executive Officer of
Blockbuster Entertainment Corporation ("Blockbuster"), during which time he
helped build Blockbuster from a 19-store chain into the world's largest video
and music retailer. In September 1994, Blockbuster merged into Viacom. In 1971,
Mr. Huizenga co-founded Waste Management, Inc., now known as WMX Technologies,
Inc. ("Waste Management"), which he helped build into the world's largest
integrated environmental services company, and he served in various capacities,
including the President, the Chief Operating Officer and a director from its
inception until 1984. Mr. Huizenga also owns or controls the Miami Dolphins and
the Florida Marlins, both professional sports franchises, as well as Pro Player
Stadium, in South Florida. Mr. Huizenga is the brother-in-law of Mr. Hudson.
Richard C. Rochon has been a director of the Company since September 1996
and has served as the Company's Vice Chairman since April 1997. Mr. Rochon is
also the President of Huizenga Holdings, a position he has held since 1988.
Prior to joining Huizenga Holdings, he was a certified public accountant at
Coopers & Lybrand, an international public accounting firm.
Richard H. Evans has been the Company's President and a director and has
also been the President and Chief Executive Officer of Huizenga Sports and
Entertainment Group since September 1996. Prior to joining the Company, Mr.
Evans served as a director of Genesco, Inc. and Bass Pro Shops. From April 1993
to October 1996, Mr. Evans served as the Chief Operating Officer of Gaylord
Entertainment Company ("Gaylord Entertainment"), a diversified entertainment and
communications company. Prior to joining Gaylord Entertainment, Mr. Evans served
as President and Chief Executive Officer of Dorna USA, a subsidiary of
Madrid-based Dorna Promocion del Deporte, a marketing company, from January 1992
to
42
<PAGE> 44
February 1993. Mr. Evans also served as the President and Chief Executive
Officer of Madison Square Garden Corporation from January 1987 to August 1991.
William A. Torrey has been the President of Florida Panthers Hockey Club,
Inc. and a director of the Company since September 1996. Since April 1993, Mr.
Torrey has served as the President and Governor of the Panthers. Prior to
joining the Company, Mr. Torrey was associated with the New York Islanders
Hockey Club (the "Islanders") for twenty-one years in various capacities. From
June 1989 to August 1992, Mr. Torrey served as the Chairman of the Board of the
Islanders. From September 1978 to August 1992 Mr. Torrey served as the President
of the Islanders, and from February 1972 to August 1992 he served as the General
Manager of the Islanders.
Alex Muxo has been the President of Arena Development and Arena Operator
since September 1996. From January 1995 to July 1996, Mr. Muxo served as the
Vice President of Huizenga Holdings. Prior to joining Huizenga Holdings, Mr.
Muxo served as the Vice President for Planning for Blockbuster from May 1994 to
January 1995. Prior thereto, Mr. Muxo was the City Manager of City of Homestead,
Florida.
William M. Pierce has been the Company's Senior Vice President and Chief
Financial Officer since March 1997 and a Director of Florida Panthers Hockey
Club, Inc. since November 1996. Mr. Pierce has been an officer of Huizenga
Holdings since January 1990, and has served as Chief Financial Officer and
Director of numerous private companies owned by Mr. Huizenga.
Steven M. Dauria served as the Company's Vice President and Chief Financial
Officer from September 1996 through March 1997. As of March 31, 1997, Mr. Pierce
began serving as Senior Vice President and Chief Financial Officer of the
Company, and Mr. Dauria began serving as the Company's Vice President and
Corporate Controller. Mr. Dauria has also served as the Vice President and Chief
Financial Officer of Florida Panthers Hockey Club since July 1996. From July
1994 to July 1996, Mr. Dauria served as Director of Finance and Administration
and Chief Financial Officer of Florida Panthers Hockey Club, and, from December
1993 to July 1994, Mr. Dauria served as the Controller of both Florida Panthers
Hockey Club and the Florida Marlins. Prior to joining the Panthers, Mr. Dauria
served as the Controller of the New York Yankees, a Major League Baseball
franchise, from November 1991 to December 1993, and was previously associated
with Time Warner, Inc. and Coopers & Lybrand, an international public accounting
firm.
Steven R. Berrard has been a director of the Company since September 1996.
Mr. Berrard has been Co-Chief Executive Officer, President and director of
Republic since October 1996. Since March 1996, Mr. Berrard has served as Chief
Executive Officer of AutoNation Incorporated ("AutoNation"), which owns and
operates a developing national chain of used vehicle retailing megastores, and
which was acquired by Republic in January 1997. From September 1994 through
March 1996, Mr. Berrard served as President and Chief Executive Officer of
Blockbuster Entertainment Group. Mr. Berrard joined Blockbuster in June 1987 as
Senior Vice President, Treasurer and Chief Financial Officer and became a
director of Blockbuster in May 1989. He became Vice Chairman of the Board of
Blockbuster in November 1989 and served as Blockbuster's President and Chief
Operating Officer from January 1993 until September 1994. In addition, Mr.
Berrard served as President and Chief Executive Officer and a director of
Spelling Entertainment Group Inc., a television and film entertainment producer
and distributor, from March 1993 through March 1996, and served as a director of
Viacom from September 1994 until March 1996.
Harris W. Hudson has been a director of the Company since September 1996.
Mr. Hudson has been a director of Republic since August 1995 and Vice-Chairman
of Republic since October 1996. From August 1995 to October 1996, Mr. Hudson
served as the President of Republic. Prior thereto, Mr. Hudson served as the
Chairman of the Board, Chief Executive Officer and President of Hudson
Management Corporation. Mr. Hudson is the brother-in-law of Mr. Huizenga.
George D. Johnson, Jr. has been a director of the Company since September
1996. Mr. Johnson has served as a director of Republic since November 1995.
Since January 1995, Mr. Johnson has served as President, Chief Executive Officer
and a director of Extended Stay. From August 1993 until January 1995, Mr.
Johnson served in various executive positions with Blockbuster Entertainment
Group and, prior to its merger with Viacom, with Blockbuster, including as
President of the Consumer Products Division, and also as a director of
Blockbuster. From July 1987 until August 1993, Mr. Johnson was the managing
general partner of WJB Video Limited Partnership, which became the largest
Blockbuster franchisee with over 200 video
43
<PAGE> 45
stores prior to its merger with Blockbuster in August 1993. Mr. Johnson also
serves as a director of Duke Power Company.
DIRECTORS' COMPENSATION
The Company's policy is not to pay compensation in the form of salaries or
fees to directors. However, the directors are entitled to receive options to
purchase shares of Class A Common Stock pursuant to the Stock Option Plan.
EXECUTIVE COMPENSATION
The following table shows remuneration paid or accrued by the Company
during the year ended June 30, 1996 to the Chief Executive Officer and to each
of the four most highly compensated executive officers of the Company, other
than the Chief Executive Officer (together, the "Named Executive Officers"), for
services in all capacities while they were employees of the Company, and the
capacities in which the services were rendered.
<TABLE>
<CAPTION>
ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS COMPENSATION
<S> <C> <C> <C>
H. Wayne Huizenga...................................... -- -- --
Chairman of the Board of Directors
Richard H. Evans....................................... -- -- --
President(1)
William A. Torrey...................................... $400,000(2) $43,000(3) $21,000(4)
President of Florida Panthers Hockey Club, Inc.
Alex Muxo.............................................. 150,000 -- 19,000(4)
President of Arena Development and Arena Operator
Steven M. Dauria....................................... 90,000 10,000(3) 14,000(4)
Vice President and Corporate Controller
</TABLE>
- ------------------------------
(1) Mr. Evans joined the Company as its President in September 1996. As such,
Mr. Evans did not receive any compensation from the Company during fiscal
1996.
(2) Includes deferred compensation of $100,000 earned by Mr. Torrey during
fiscal 1996.
(3) Represents bonus amounts earned in fiscal 1996 and paid in fiscal 1997.
(4) Comprised of insurance premiums paid by the Company on behalf of these
employees.
STOCK OPTION PLAN
Under the Company's Stock Option Plan, 2,600,000 shares of Class A Common
Stock are reserved for issuance upon the exercise of stock options. The Stock
Option Plan is designed as a means to attract, retain and motivate directors and
key employees. A committee (the "Committee") consisting of two or more non-
employee directors appointed by the Board of Directors will administer and
interpret the Stock Option Plan.
Options are granted under the Stock Option Plan on such terms and at such
prices as determined by the Committee, except that the per share exercise price
of the options cannot be less than the fair market value of the Class A Common
Stock on the date of grant. Each option shall be for a term of not less than
five years or more than ten years, as shall be determined by the Committee.
However, in the event of a change of control (as such term is defined in the
Stock Option Plan), all outstanding options shall be immediately exercisable.
Options granted under the Stock Option Plan are not transferable other than by
will or by the laws of descent and distribution.
The Company has granted options to purchase an aggregate of 1,042,444
shares of Class A Common Stock with exercise prices ranging from $10 per share
to $26 5/8 per share. The exercise price of all of these options was the fair
market value of the Class A Common Stock on the date of grant.
44
<PAGE> 46
EMPLOYMENT AGREEMENTS
Mr. Torrey's employment agreement (the "Torrey Employment Agreement")
provides that Mr. Torrey is entitled to an annual base salary for the 1996-97,
1997-98 and 1998-99 hockey seasons of $400,000, $450,000 and $500,000,
respectively. Additionally, Mr. Torrey is entitled to receive a bonus which is
equal to the average amount awarded and payable by the NHL to the players of the
Panthers for participation in post-season play. The Torrey Employment Agreement
contains certain confidentiality and non-competition provisions and terminates
in July 1999, unless terminated prior thereto, either for or without cause. If
Mr. Torrey's employment were to be terminated for cause, he would be entitled to
all accrued compensation up to the date of termination. If his employment were
to be terminated without cause, Mr. Torrey would be entitled to all benefits
provided for in the Torrey Employment Agreement, provided that he makes
substantial efforts to obtain other employment.
DIRECTORS AND OFFICERS OF FLORIDA PANTHERS HOCKEY CLUB, INC.
Florida Panthers Hockey Club, Inc., a subsidiary of the Company, serves as
the sole general partner of Panthers Ltd. and, as such, is responsible for the
management of Panthers Ltd. The officers and directors of Florida Panthers
Hockey Club, Inc. are as follows:
<TABLE>
<CAPTION>
NAME POSITION
<S> <C>
H. Wayne Huizenga..................... Chairman
William A. Torrey..................... President and Director
Dean J. Jordan........................ Executive Vice President
J. Ronald Castell..................... Senior Vice President
Steven M. Dauria...................... Vice President and Chief Financial Officer
Bryan Murray.......................... Vice President and General Manager
Declan Bolger......................... Vice President Marketing
Stephen B. Dangerfield................ Vice President Operations
Martha J. Huizenga.................... Director
Richard C. Rochon..................... Director
Cris V. Branden....................... Director
Robert J. Henninger, Jr............... Director
Pamela Huizenga-Van Hart.............. Director
Ray Goldsby-Huizenga.................. Director
H. Wayne Huizenga, Jr................. Director
William M. Pierce..................... Director
</TABLE>
45
<PAGE> 47
CERTAIN TRANSACTIONS
In connection with the Prior Offerings, the following events occurred: (i)
Mr. Huizenga, as the sole shareholder of Decoma Investment, Inc. III ("Decoma
III"), caused Decoma III to transfer all but 1% of its ownership interest in
Decoma to Decoma II, following which Decoma II owned a 51% interest in Decoma,
resulting in Decoma I and Decoma II collectively owning approximately a 78%
interest in Decoma, Decoma III owning a 1% interest in Decoma and various
unrelated third parties owning the remaining 21% interest in Decoma (Prior to
the completion of the Prior Offerings, Decoma I and II owned 66 2/3% of the
partnership interest of Decoma Venture. The remaining 33 1/3% of the partnership
interest of Decoma Venture were owned by Decoma III. Upon completion of the
Prior Offerings, Decoma I and Decoma II owned 99% of the partnership interest in
Decoma Venture, which own approximately 78% interest in Decoma); (ii) Mr.
Huizenga contributed (A) a note (the "Panthers Ltd. Note"), representing the
outstanding amount which the Company borrowed from Mr. Huizenga plus interest,
and (B) all the outstanding capital stock of each of Decoma I and Decoma II to
the capital of Panthers Ltd.; (iii) Mr. Huizenga, as the sole limited partner
and the sole general partner (through his ownership of Florida Panthers Hockey
Club, Inc.) of Panthers Ltd., contributed all of the partnership interests in
Panthers Ltd. to the Company; and (iv) Mr. Huizenga, as the sole limited partner
(through his ownership of Panthers Ltd.) and the sole general partner (through
his ownership of the Arena Development Company, Inc. and Arena Operating
Company, Inc., respectively) of each of Arena Development and Arena Operator,
contributed all the limited partnership interests in each of Arena Development
and Arena Operator as well as all the outstanding capital stock of each of Arena
Development Company, Inc. and Arena Operator Company, Inc. to the Company. In
exchange for all of the foregoing capital contributions, Mr. Huizenga received
5,275,678 shares of Common Stock, of which 5,020,678 shares were Class A Common
Stock and 255,000 shares were Class B Common Stock. The number of shares issued
was derived by dividing by $9.30 (the assumed initial public offering price of
the Class A Common Stock less underwriting discounts and commissions) the sum of
(A) the Panthers Ltd. Note (approximately $41.0 million), which resulted in the
issuance of 4,404,710 shares of Common Stock and (B) the approximately 78%
interest in Decoma (approximately $8.1 million, representing costs incurred by
Mr. Huizenga in acquiring the Decoma Interests), which resulted in the issuance
of 870,968 shares of Common Stock.
In 1994, Mr. Huizenga purchased a 50% interest in Leisure Management
International ("LMI"), which manages the Miami Arena pursuant to a management
agreement (the "Management Agreement") with Decoma. Under the terms of the
Management Agreement, LMI received from Decoma a management fee of approximately
$58,000 and $110,000 for the six months ended December 31, 1996 and the year
ended June 30, 1996, respectively.
In August 1996, the Company entered into the SportsChannel Letter of Intent
with SportsChannel Florida for the local broadcast (other than radio broadcast)
of the Panthers' games. Under the terms of the SportsChannel Letter of Intent,
the Company shall grant to SportsChannel Florida broadcast rights (other than
radio broadcast rights) to all of the Panthers' pre-season, regular season and
certain post-season away games during the 1996-97 season. The SportsChannel
Letter of Intent provides that the Company shall have the option to grant
SportsChannel Florida exclusive or nonexclusive broadcast rights. In return, the
Company shall be entitled to 11% (for the grant of exclusive broadcast rights)
or 5.5% (for the grant of non-exclusive broadcast rights) of SportsChannel
Florida's gross receipts for the 1996-97 season, provided that the Company shall
in no event receive less than $2.5 million or $1.2 million, respectively. The
SportsChannel Letter of Intent may be extended for an additional season upon
notice by the Company. Mr. Huizenga currently owns 50% of SportsChannel Florida,
and he holds an option to purchase an additional 20% ownership interest in
SportsChannel Florida.
The Company pays Huizenga Holdings, Inc. ("HHI") a management fee equal to
1% of the Company's gross revenue, excluding NHL generated revenues, in exchange
for services including, but not limited to, assisting the Company in obtaining
financing, developing tax planning strategies and formulating risk management
strategies, as well as advising the Company with respect to securities matters
and future acquisitions. Such 1% management fees totaled approximately $293,000,
$132,000 and $194,000 for the years ended June 30, 1996, 1995 and 1994,
respectively.
46
<PAGE> 48
The Company incurred charges of $94,613 during the year ended June 30, 1994
for the lease of certain private corporate aircraft owned by HHI.
In June 1993, the Company entered into a $25.0 million revolving credit
facility with NationsBank of Florida, N.A. ("NationsBank") for the purpose of
financing a portion of the $50.0 million NHL expansion franchise fee and
obtaining working capital for use by the Company. The credit facility was
subsequently converted to a $25.0 million term loan (the "Term Loan").
Subsequent to the consummation of the Prior Offerings, the Company repaid all
amounts outstanding under the Term Loan from the net proceeds of the Prior
Offerings.
In addition, in June 1993, Panthers Investment Venture, an affiliate of the
Company controlled by Mr. Huizenga ("PIV"), entered into a loan agreement with
NationsBank pursuant to which it borrowed $20.0 million. PIV, in turn, loaned
the $20.0 million borrowed from NationsBank to the Company pursuant to a
separate loan agreement. In connection therewith, the Company issued to PIV a
promissory note on terms substantially similar to the promissory note (the
"NationsBank Promissory Note") issued by PIV to NationsBank. Mr. Huizenga
provided certain debt service guarantees of the Company's obligations relating
to the NationsBank Promissory Note. The Company repaid the $20.0 million debt
owed to PIV from the net proceeds of the Prior Offerings.
No independent determination has been made as to the fairness and
reasonableness of the terms of the transactions described above. However, the
Company, based on its prior experience, believes that the terms of each such
transaction were as favorable to the Company as it could have obtained from an
unaffiliated party.
In connection with the Resort Facilities Acquisition, Messrs. Huizenga,
Berrard, Johnson and Rochon received 972,018, 592,877, 451,248 and 379,062
shares of the Company's Class A Common Stock, respectively, in exchange for
their ownership interests in the Resort Facilities. Based, in part, on a
fairness opinion received from Donaldson, Lufkin & Jenrette Securities
Corporation, the Company believes that the Resort Facilities Acquisition was
fair to the Company's shareholders and that the terms of the Resort Facilities
Acquisition were as favorable to the Company as it could have obtained from an
unaffiliated party in a comparable transaction.
47
<PAGE> 49
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Class A Common Stock (including shares which the
named individuals have the right to acquire within 60 days upon the exercise of
outstanding options or the conversion of outstanding convertible securities) as
of the date of this Prospectus, by (a) each of the Company's directors, (b) all
executive officers and directors of the Company as a group and (c) all persons
who own beneficially more than 5% of the Company's Class A Common Stock.
<TABLE>
<CAPTION>
CLASS A COMMON STOCK
BENEFICIALLY OWNED
-----------------------
NAME SHARES PERCENT(1)
<S> <C> <C>
H. Wayne Huizenga(2)........................................ 6,147,696(3) 26.0%
Richard C. Rochon........................................... 770,062 3.3%
Richard H. Evans............................................ 100,000 *
William A. Torrey........................................... 50,000 *
Alex Muxo................................................... 40,000 *
William M. Pierce........................................... 67,545 *
Steven M. Dauria............................................ 5,000 *
Steven R. Berrard........................................... 974,877 4.2%
Harris W. Hudson............................................ 391,000 1.7%
George D. Johnson, Jr....................................... 863,248 3.7%
All directors and executive officers as a group (10
persons).................................................. 9,409,428 39.8%
</TABLE>
- ------------------------------
* Less than one percent (1%).
(1) Percentage of beneficial ownership is based on 23,648,444 shares of Common
Stock outstanding at April 11, 1997, which consists of 23,393,444 shares of
Class A Common Stock and 255,000 shares of Class B Common Stock, with
regard to Mr. Huizenga and 23,393,444 shares of Class A Common Stock
outstanding at April 11, 1997 with regard to the other directors and
executive officers.
(2) Mr. Huizenga's address is 450 East Las Olas Blvd., Suite 1500, Fort
Lauderdale, Florida 33301.
(3) Includes 255,000 shares of Class B Common Stock, each of which is
convertible into one share of Class A Common Stock.
48
<PAGE> 50
SELLING SHAREHOLDERS
The following table sets forth the number of shares of outstanding Class A
Common Stock beneficially owned by the Selling Shareholders as of the date of
this Prospectus, the aggregate number of shares of Class A Common Stock that
each Selling Shareholder may offer and sell pursuant to this Prospectus and the
aggregate number of shares of Class A Common Stock to be beneficially owned by
each Selling Shareholder upon completion of the offering made hereby. Because
the Selling Shareholders may sell all or a portion of the Shares at any time and
from time to time after the date hereof, no estimate can be made of the number
of shares of Class A Common Stock that each Selling Shareholder may retain upon
completion of the offering made hereby. To the knowledge of the Company, none of
the Selling Shareholders has had within the past three years any material
relationship with the Company or any of its predecessors or affiliates, except
as set forth in the footnotes to the following table.
<TABLE>
<CAPTION>
NUMBER OF
SHARES BENEFICIALLY
NUMBER OF NUMBER OF OWNED AFTER SALE(1)
SHARES BENEFICIALLY SHARES OFFERED -------------------
SELLING SHAREHOLDERS OWNED(1) HEREBY NUMBER %
-------------------- ------------------- -------------- -------- -----
<S> <C> <C> <C> <C>
H. Wayne Huizenga(2)(3)......................... 5,892,696(4)(5) 5,892,696 0 0
Martha J. Huizenga.............................. 100,000 100,000 0 0
Steven R. Berrard(2)(3)......................... 974,877 974,877 0 0
Dean Buntrock(3)................................ 972,018 972,018 0 0
Donald Flynn(3)................................. 324,084 324,084 0 0
Kevin F. Flynn(3)............................... 323,888 323,888 0 0
Brian J. Flynn(3)............................... 323,888 323,888 0 0
Harris W. Hudson(2)............................. 391,000 391,000 0 0
George D. Johnson, Jr.(2)(6).................... 863,248 863,248 0 0
John J. Melk(3)................................. 386,503 121,503 265,000 1.1%
Janet Melk(3)................................... 121,502 121,502 0 0
Thomas Melk(3).................................. 243,004 243,004 0 0
Cynthia Melk(3)................................. 243,004 243,004 0 0
Daniel Melk(3).................................. 243,004 243,004 0 0
Peer Pedersen(3)................................ 976,702 971,702 5,000 *
Richard C. Rochon(2)(3)......................... 770,062 770,062 0 0
John H. Anderson(3)............................. 711,815 706,815 5,000 *
Peter H. Roberts(3)............................. 710,815 706,815 4,000 *
Robert J. Stirk(3).............................. 159,570 157,070 2,500 *
First Winthrop Corporation(7)................... 60,115 60,115 0 0
Sixty-Six, Inc.(7).............................. 486,383 486,383 0 0
Drake and Company............................... 200,000 200,000 0 0
Deborah O'Brien................................. 100 100 0 0
Westbury (Bermuda) Ltd.......................... 414,900 99,900 315,000 1.3%
Smith Barney Inc., FAO Hedge Capital Ltd........ 6,000 6,000 0 0
Rudder & Co..................................... 209,000 209,000 0 0
Resilient & Co.................................. 85,000 85,000 0 0
Shipmaster & Co................................. 240,000 240,000 0 0
International Alliance Services, Inc............ 100,000 100,000 0 0
Raptor Global Fund Ltd.......................... 129,000 129,000 0 0
Tudor Arbitrage Partners L.P.................... 15,000 15,000 0 0
Raptor Global Fund L.P.......................... 51,500 51,500 0 0
Tudor BVI Futures, Ltd.......................... 124,500 124,500 0 0
Sandpiper & Co.................................. 217,800 200,000 17,800 *
Kane & Co....................................... 500,000 500,000 0 0
RIGHTNOW & Co................................... 55,000 55,000 0 0
Delaware Group Premium Fund, Inc. for the
Emerging Growth Series........................ 36,000 36,000 0 0
Delaware Group Trend Fund, Inc.................. 409,000 409,000 0 0
Brian Brisbane.................................. 212,766 212,766 0 0
</TABLE>
- ---------------
* Less than one percent
(1) As used herein, beneficial ownership means the sole power to vote, or direct
the voting of, a security, or the sole or shared power to dispose, or
direct the disposition of, a security. Except as otherwise indicated, the
Selling Shareholders have (i) sole voting power and investment power with
respect to his shares of Class A Common Stock, except to the extent that
authority is shared by his spouse under applicable law, and (ii) record and
beneficial ownership with respect to his/her shares of Class A Common
Stock.
(2) Currently serves as a director of the Company. Such director has agreed not
to sell any shares of Class A Common Stock or Class B Common Stock held by
him for a period of 180 days from November 13, 1996, in connection with the
Offerings, without the consent of Donaldson, Lufkin & Jenrette Securities
Corporation, subject to certain limited exceptions.
49
<PAGE> 51
(3) Held ownership interests in 2301 Ltd. and Rahn Ltd. prior to the Company's
acquisition of the ownership interests therein.
(4) Excludes the 255,000 shares of Class B Common Stock, constituting 100% of
the outstanding Class B Common Stock, owned by Mr. Huizenga.
(5) On November 18, 1996, Mr. Huizenga transferred by gift to Martha J.
Huizenga, his wife, 100,000 shares of Class A Common Stock. Mr. Huizenga
disclaims any beneficial ownership of such shares.
(6) Held an ownership interest in Rahn Ltd. prior to the Company's acquisition
of the ownership interests therein.
(7) Held an ownership interest in 2301 Ltd. prior to the Company's acquisition
of the ownership interests therein.
50
<PAGE> 52
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital consists of 100,000,000 shares of Class A
Common Stock, par value $.01 per share, and 10,000,000 shares of Class B Common
Stock, par value $.01 per share. No preferred stock is authorized.
COMMON STOCK
As of April 11, 1997, there were 23,393,444 shares of Class A Common Stock
and 255,000 shares of Class B Common Stock outstanding. The Class A Common Stock
and Class B Common Stock are identical in all respects, except that each share
of Class A Common Stock is entitled to one vote, and each share of Class B
Common Stock is entitled to 10,000 votes. In the event of a liquidation,
dissolution or winding up of the Company, the holders of Class A Common Stock
and Class B Common Stock are entitled to share equally and ratably in the assets
of the Company, if any, remaining after paying all debts and liabilities of the
Company. The holders of Class A and Class B Common Stock are entitled to receive
dividends, on a share-for-share basis if, as and when declared by the Board of
Directors out of funds legally available therefor, subject to any dividend
restrictions in the Company's credit facilities and the NHL Bylaws. See
"Dividend Policy." Holders of Class B Common Stock are entitled to convert each
share of Class B Common Stock into one share of Class A Common Stock at any
time.
The NHL Constitution and Bylaws contain provisions which may in some
circumstances operate to prohibit a person from acquiring the Class A Common
Stock and affect the value of such Class A Common Stock. In general, any
acquisition of shares of Class A Common Stock which will result in a person or a
group of persons holding a 5% or more interest in the Company, and each
acquisition of shares of Class A Common Stock which will result in a person or a
group of persons holding any multiple of a 5% interest, will require the prior
approval of the NHL, which may be granted or withheld in the sole discretion of
the NHL. The prospective purchaser will be required to submit to the NHL an
application, in a form to be prescribed from time to time by the NHL, providing
certain information relating to that person's background. Upon receipt of such
application, the Commissioner shall have the right to conduct an investigation
with respect to the prospective purchaser, which may include an interview by the
Commissioner's office or one or more NHL owners and the submission of such
information about the prospective purchaser, whether or not confidential, as the
Commissioner shall deem relevant in his sole discretion. In addition, the NHL
may condition its approval upon the execution, delivery and performance by the
prospective purchaser of such documents as the Commissioner shall prescribe. The
expense of the NHL's investigation must be paid by the prospective purchaser,
whether or not its application is approved. If and when a prospective purchaser
receives the NHL's consent to acquire a 5% or more interest in the Company, such
prospective purchaser will be required to acknowledge that the purchaser shall
be bound by the applicable provisions of the NHL Constitution and Bylaws.
In addition, no person who directly or indirectly owns any interest in a
privately-held NHL team, or a 5% or more interest in any other publicly-held NHL
team, may own, directly or indirectly, a 5% or more interest in the Company,
without the prior approval of the NHL. The NHL Constitution and Bylaws also
contain provisions which would prohibit an owner of a 5% or more interest in the
Company from engaging in certain activities, such as wagering on any game in
which an NHL team participates. NHL players and referees and employees of the
NHL and its member clubs (other than the Company) are not eligible to purchase
or hold Common Stock. The NHL could in the future adopt different or additional
restrictions which could adversely affect the shareholders of the Company.
Furthermore, the grant of a security interest in any of the assets of the
Panthers, or any direct or indirect ownership interest in the Company, of 5% or
more, shall require the prior approval of the NHL, which may be withheld in the
NHL's sole discretion and, in that connection, the NHL will require a consent
agreement satisfactory to the NHL. NHL rules limit the amount of debt that may
be secured by the assets of, or ownership interests in, an NHL club and require
that the parties to any secured loan that is approved execute an agreement
limiting the rights of the lenders and the club (or shareholder) under certain
circumstances,
51
<PAGE> 53
including upon an event of default or foreclosure. These limitations may
adversely affect the rights of the club (or shareholder) under certain
circumstances.
Failure by a holder of a 5% or more interest to comply with these
restrictions may result in a forced sale of such holder's interest in the
Company or the repurchase of such interests by the Company. The Company's
Articles of Incorporation provide that the Company may redeem, at the lower of
fair market value or cost, shares held by any person or entity who becomes the
owner of 5% or more of the Company's shares without the approval of the NHL.
These restrictions will be contained in a legend on each certificate issued
evidencing shares of Class A Common Stock.
The transfer agent and registrar for the Class A Common Stock is The First
National Bank of Boston.
CERTAIN PROVISIONS OF FLORIDA LAW
The directors of the Company are subject to the "general standards for
directors" provisions set forth in the Florida Business Corporation Act (the
"FBCA"). These provisions provide that in discharging his or her duties and
determining what is in the best interests of the Company, a director may
consider such factors as the director deems relevant, including the long-term
prospects and interests of the Company and its shareholders and the social,
economic, legal or other effects of any proposed action on the employees,
suppliers or customers of the Company, the community in which the Company
operates and the economy in general. Interests of other constituencies in
addition to the Company's shareholders may be considered, and directors who take
into account these other factors may make decisions which are less beneficial to
some, or a majority, of the shareholders than if the law did not permit
consideration of such other factors.
The Company has elected to opt out of the Florida Control Share Act and the
Florida Affiliated Transactions Act. The Florida Control Share Act generally
provides that shares acquired in a "control share acquisition" will not possess
any voting rights unless such voting rights are approved by a majority of the
corporation's disinterested shareholders. A "control share acquisition" is an
acquisition, directly or indirectly, by any person of ownership of, or the power
to direct the exercise of voting power with respect to, issued and outstanding
"control shares" of a publicly held Florida corporation. "Control shares" are
shares, which, except for the Florida Control Share Act, would have voting power
that, when added to all other shares owned by a person or in respect to which
such person may exercise or direct the exercise of voting power, would entitle
such person, immediately after acquisition of such shares, directly or
indirectly, alone or as a part of a group, to exercise or direct the exercise of
voting power in the election of directors within any of the following ranges:
(i) at least 20% but less than 33 1/3% of all voting power; (ii) at least 33 1/3
but less than a majority of all voting power; or (iii) a majority or more of all
voting power. The Florida Affiliated Transactions Act generally requires
supermajority approval by disinterested shareholders of certain specified
transactions between a public corporation and holders of more than 10% of the
outstanding voting shares of the corporation (or their affiliates).
LIMITED LIABILITY AND INDEMNIFICATION
Under the FBCA, a director is not personally liable for monetary damages to
the corporation or any other person for any statement, vote, decision, or
failure to act unless (i) the director breached or failed to perform his duties
as a director and (ii) the director's breach of, or failure to perform, those
duties constitutes: (A) a violation of the criminal law, unless the director had
reasonable cause to believe his conduct was lawful or had no reasonable cause to
believe his conduct was unlawful, (B) a transaction from which the director
derived an improper personal benefit either directly or indirectly, (C) a
circumstance under which an unlawful distribution is made, (D) in a proceeding
by or in the right of the corporation to procure a judgment in its favor or by
or in the right of a shareholder, conscious disregard for the best interest of
the corporation or willful misconduct, or (E) in a proceeding by or in the right
of someone other than the corporation or shareholder, recklessness or an act or
omission which was committed in bad faith or with malicious purpose or in a
manner exhibiting wanton and willful disregard of human rights, safety or
property. A corporation may purchase and maintain insurance on behalf of any
director or officer against any liability asserted against him and incurred by
him in his capacity or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability under
the FBCA.
The Articles of Incorporation and Bylaws of the Company provide that the
Company shall, to the fullest extent permitted by applicable law, as amended
from time to time, indemnify all directors of the Company, as well as any
officers or employees of the Company to whom the Company has agreed to grant
indemnification.
52
<PAGE> 54
PLAN OF DISTRIBUTION
The Selling Shareholders or pledgees may sell or distribute some or all of
the shares of Class A Common Stock offered hereby (the "Shares") from time to
time through underwriters or dealers or brokers or other agents or directly to
one or more purchasers, including pledgees, in transactions (which may involve
crosses and block transactions) on Nasdaq, privately negotiated transactions
(including sales pursuant to pledges) or in the over-the-counter market, or in a
combination of such transactions or by any other legally available means. Such
transactions may be effected by the Selling Shareholders at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, at negotiated prices, or at fixed prices, which may be changed. Brokers,
dealers, agents or underwriters participating in such transactions as agent may
receive compensation in the form of discounts, concessions or commissions from
the Selling Shareholders (and, if they act as agent for the purchaser of such
shares, from such purchaser). Such discounts, concessions or commissions as to a
particular broker, dealer, agent or underwriter might be in excess of those
customary in the type of transaction involved. This Prospectus also may be used,
with the Company's consent, by donees of the Selling Shareholders, or by other
persons acquiring Shares and who wish to offer and sell such Shares under
circumstances requiring or making desirable its use. To the extent required, the
Company will file, during any period in which offers or sales are being made,
one or more supplements to this Prospectus to set forth the names of donees of
Selling Shareholders and any other material information with respect to the plan
of distribution not previously disclosed.
The Selling Shareholders and any such underwriters, brokers, dealers or
agents that participate in such distribution may be deemed to be "underwriters"
within the meaning of the Securities Act, and any discounts, commissions or
concessions received by any such underwriters, brokers, dealers or agents might
be deemed to be underwriting discounts and commissions under the Securities Act.
Neither the Company nor the Selling Shareholders can presently estimate the
amount of such compensation. The Company knows of no existing arrangements
between the Selling Shareholders and any underwriter, broker, dealer or other
agent relating to the sale or distribution of the Shares.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of any of the Shares may not simultaneously engage in
market activities with respect to the Common Stock for a period of nine business
days prior to the commencement of such distribution. In addition and without
limiting the foregoing, the Selling Shareholders will be subject to applicable
provisions of the Exchange Act and the rules and regulations thereunder,
including without limitation Rule 10b-5 and Regulation M, which provisions may
limit the timing of purchases and sales of any of the Shares by the Selling
Shareholders. All of the foregoing may affect the marketability of the Common
Stock.
The Company will pay substantially all of the expenses incident to the
offering of the Shares by the Selling Shareholders to the public other than
commissions and discounts of underwriters, brokers, dealers or agents. The
Selling Shareholders may indemnify any broker, dealer, agent or underwriter that
participates in transactions involving sales of the Shares against certain
liabilities, including liabilities arising under the Securities Act. The Company
has agreed to indemnify the Selling Shareholders and any such underwriters and
controlling persons of such underwriters against certain liabilities, including
certain liabilities under the Securities Act.
If Shares are sold in an underwritten offering, the Shares may be acquired
by the underwriters for their own account and may be further resold from time to
time in one or more transactions, including negotiated transactions, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices, at negotiated prices, or at fixed prices. The names of the
underwriters with respect to any such offering and the terms of the
transactions, including any underwriting discounts, concessions or commissions
and other items constituting compensation of the underwriters and
broker-dealers, if any, will be set forth in a supplement to this Prospectus
relating to such offering. Any public offering price and any discounts,
concessions or commissions allowed or reallowed or paid to broker-dealers may be
changed from time to time. Unless otherwise set forth in a supplement to this
Prospectus, the obligations of the underwriters to purchase the Shares will be
subject to certain conditions precedent and the underwriters will be obligated
to purchase all of the shares specified in such supplement if any such Shares
are purchased.
53
<PAGE> 55
If the Shares are sold in an underwritten offering, the underwriters and
selling group members (if any) may engage in passive market making transactions
in the Common Stock on Nasdaq immediately prior to the commencement of the sale
of shares in such offering, in accordance with Regulation M under the Exchange
Act. Passive market making presently consists of displaying bids on Nasdaq
limited by the bid prices of market makers not connected with such offering and
purchases limited by such prices and effected in response to order flow. Net
purchases by a passive market maker on each day are limited in amount to 30% of
the passive market maker's average daily trading volume in the Common Stock
during the period of the two full consecutive calendar months prior to the
filing with the Commission of the Registration Statement of which this
Prospectus is a part and must be discontinued when such limit is reached.
Passive market making may stabilize the market price of the Common Stock at a
level above that which might otherwise prevail and, if commenced, may be
discontinued at any time.
In order to comply with certain states' securities laws, if applicable, the
Shares will be sold in such jurisdictions only through registered or licensed
brokers or dealers. In addition, in certain states the Common Stock may not be
sold unless the Common Stock has been registered or qualified for sale in such
state or an exemption from registration or qualification is available and is
complied with.
LEGAL MATTERS
The validity of shares of the Class A Common Stock offered hereby will be
passed upon for the Company by Akerman, Senterfitt & Eidson, P.A., Miami,
Florida. Certain attorneys at Akerman, Senterfitt & Eidson, P.A. own shares of
Class A Common Stock.
EXPERTS
The audited financial statements of Florida Panthers Holdings, Inc. as of
June 30, 1996 and 1995 and for each of the three years in the period ended June
30, 1996; the audited financial statements of 2301 Ltd. as of December 31, 1996
and the year then ended; the audited financial statements of Rahn Bahia Mar,
Ltd. as of December 31, 1996 and 1995, and for the years ended December 31, 1996
and 1995 and the period from inception (June 28, 1994) to December 31, 1994; and
the audited financial statements of Coral Springs Ice, Ltd. as of December 31,
1996 and for the period from inception (February 26, 1996) to December 31, 1996
appearing elsewhere in this Solicitation Statement/Prospectus and registration
statement have been audited by Arthur Andersen LLP, independent certified public
accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in giving
said reports.
The audited financial statements of 2301 Ltd. as of December 31, 1995, and
for each of the years in the two year period ended December 31, 1995, have been
included herein and in the registration statement in reliance upon the report of
KPMG Peat Marwick LLP, independent certified public accountants, appearing
elsewhere herein, and upon the authority of said firm as experts in accounting
and auditing. The financial statements of the Boca Raton Hotel and Club Limited
Partnership as of December 31, 1996 and for the year then ended included in this
Solicitation Statement/Prospectus and Registration Statement have been so
included in reliance on the report of Price Waterhouse LLP, independent
certified public accountants given on the authority of said firm as experts in
auditing and accounting. The financial statements of Boca Raton Hotel and Club
Limited Partnership at December 31, 1995, and for each of the two years in the
period ended December 31, 1995 appearing in this Solicitation
Statement/Prospectus and Registration Statement have been audited by Ernst &
Young LLP, independent certified public accountants, as set forth in their
report thereon appearing elsewhere herein, and are given upon the authority of
such firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
This Prospectus constitutes a part of a Registration Statement filed by the
Company with the Securities and Exchange Commission (the "Commission") under the
Securities Act with respect to the Class A Common Stock offered hereby. This
Prospectus omits certain of the information contained in the Registration
54
<PAGE> 56
Statement, and reference is hereby made to the Registration Statement and
related exhibits and schedules for further information with respect to the
Company and the Class A Common Stock offered hereby. Any statements contained
herein concerning the provisions of any document are not necessarily complete,
and in each such instance reference is made to the copy of such document filed
as an exhibit to the Registration Statement. Each such statement is qualified in
its entirety by such reference. The Registration Statement and the exhibits and
schedules forming a part thereof can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, DC 20549, and should also be available for
inspection and copying at the following regional offices of the Commission: 7
World Trade Center, 14th Floor, New York, New York 10048; and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of
such material can be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, DC 20549, at prescribed rates.
The Commission maintains a Web Site (http://www.sec.gov.) that contains reports,
proxy statements and other information filed by the Company.
55
<PAGE> 57
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
THE REGISTRANT
FLORIDA PANTHERS HOLDINGS, INC.
Report of Independent Certified Public Accountants........ F-3
Consolidated Balance Sheets as of June 30, 1996 and
1995................................................... F-4
Consolidated Statements of Operations for the years ended
June 30, 1996, 1995 and 1994........................... F-5
Consolidated Statements of Shareholders' Equity (Deficit)
for the years ended June 30, 1996, 1995 and 1994....... F-6
Consolidated Statements of Cash Flows for the years ended
June 30, 1996, 1995 and 1994........................... F-7
Notes to Consolidated Financial Statements................ F-8
FLORIDA PANTHERS HOLDINGS, INC. -- UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
Unaudited Condensed Consolidated Balance Sheets as of
December 31 and June 30, 1996.......................... F-17
Unaudited Condensed Consolidated Statements of Operations
for the three and six month periods ended December 31,
1996 and 1995.......................................... F-18
Unaudited Condensed Consolidated Statements of Cash Flows
for the six months ended December 31, 1996 and 1995.... F-19
Notes to Unaudited Condensed Consolidated Financial
Statements............................................. F-20
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Introduction to Unaudited Pro Forma Financial
Information............................................ F-22
Unaudited Pro Forma Consolidated Balance Sheet as of
December 31, 1996...................................... F-24
Unaudited Pro Forma Consolidated Statement of Operations
for the six months ended December 31, 1996............. F-25
Unaudited Pro Forma Consolidated Statement of Operations
for the year ended June 30, 1996....................... F-26
Notes to Unaudited Pro Forma Consolidated Financial
Statements............................................. F-27
BUSINESSES ACQUIRED AND TO BE ACQUIRED
2301 SE 17TH ST., LTD. ("PIER 66")
Reports of Independent Certified Public Accountants....... F-30
Balance Sheets as of December 31, 1996 and 1995........... F-32
Statements of Operations for the years ended December 31,
1996, 1995 and 1994.................................... F-33
Statements of Partners' Equity for the years ended
December 31, 1996, 1995 and 1994....................... F-34
Statements of Cash Flows for the years ended December 31,
1996, 1995 and 1994.................................... F-35
Notes to Financial Statements............................. F-36
</TABLE>
F-1
<PAGE> 58
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
RAHN BAHIA MAR, LTD. ("BAHIA MAR")
Report of Independent Certified Public Accountants........ F-42
Balance Sheets as of December 31, 1996 and 1995........... F-43
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......................... F-44
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......... F-45
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......................... F-46
Notes to Financial Statements............................. F-47
CORAL SPRINGS ICE, LTD.
Report of Independent Certified Public Accountants........ F-51
Balance Sheet as of December 31, 1996..................... F-52
Statement of Operations for the Period from Inception
(February 26, 1996) to December 31, 1996............... F-53
Statement of Partners' Equity for the Period from
Inception (February 26, 1996) to
December 31, 1996...................................... F-54
Statement of Cash Flows for the Period from Inception
(February 26, 1996) to
December 31, 1996...................................... F-55
Notes to Financial Statements............................. F-56
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
Reports of Independent Certified Public Accountants....... F-58
Balance Sheets as of December 31, 1996 and 1995........... F-59
Statements of Operations for the years ended December 31,
1996, 1995 and 1994.................................... F-60
Statements of Changes in Partners' Deficit for the years
ended December 31, 1996, 1995 and 1994................. F-61
Statements of Cash Flows for the years ended December 31,
1996, 1995 and 1994.................................... F-62
Notes to Financial Statements............................. F-63
</TABLE>
F-2
<PAGE> 59
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of
Florida Panthers Holdings, Inc.:
We have audited the accompanying consolidated balance sheets of Florida
Panthers Holdings, Inc. (a Florida corporation) and subsidiaries as of June 30,
1996 and 1995 and the related statements of operations, shareholders' equity and
cash flows for each of the three years in the period ended June 30, 1996. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Florida Panthers Holdings,
Inc. and subsidiaries as of June 30, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the period ended
June 30, 1996 in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Fort Lauderdale, Florida,
November 13, 1996
(except with respect to the
matters discussed in Note 8,
as to which the date is March 20, 1997)
F-3
<PAGE> 60
FLORIDA PANTHERS HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JUNE 30, JUNE 30,
1996 1995
-------- --------
<S> <C> <C>
ASSETS
Current Assets:
Cash and equivalents...................................... $ 465 $ 1,237
Accounts receivable....................................... 3,119 1,924
Prepaid expenses and other................................ 172 247
-------- --------
Total current assets................................... 3,756 3,408
Property and equipment, net................................. 972 1,114
Franchise cost, net of accumulated amortization of $1,823
and $1,216 in 1996 and 1995, respectively................. 22,489 23,096
Player contract acquisition costs, net of accumulated
amortization of $19,181 and $10,676 in 1996 and 1995,
respectively.............................................. 6,507 15,012
Investment in Miami Arena operating contract................ 8,886 9,271
Capitalized signing bonuses, net of accumulated amortization
of $3,089 and $837 in 1996 and 1995, respectively......... 4,674 1,138
Other assets................................................ 476 548
-------- --------
Total assets........................................... $ 47,760 $ 53,587
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Deferred revenue.......................................... $ 988 $ 3,917
Note payable-related party................................ 40,172 22,226
Related party debt........................................ 20,000 20,000
Accounts payable and accrued expenses..................... 2,313 1,375
Other current liabilities................................. 4,313 2,774
-------- --------
Total current liabilities.............................. 67,786 50,292
Long-term debt.............................................. 25,000 25,000
Other non-current liabilities............................... 3,277 643
Commitments and contingencies (Notes 7 and 8)
Shareholders' Equity (Deficit):
Class A common stock, $.01 par value, 100,000,000 shares
authorized and 870,968 shares issued and outstanding in
1996 and 1995.......................................... 9 9
Class B common stock, $.01 par value, 10,000,000 shares
authorized and none issued and outstanding............. -- --
Contributed capital....................................... (48,312) (22,357)
-------- --------
Total shareholders' equity (deficit)................... (48,303) (22,348)
-------- --------
Total liabilities and shareholders' equity (deficit)... $ 47,760 $ 53,587
======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these balance sheets.
F-4
<PAGE> 61
FLORIDA PANTHERS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
--------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Revenue:
Tickets.................................................. $ 23,226 $ 9,559 $ 14,784
Television and radio..................................... 5,141 3,717 3,163
Advertising and promotions............................... 2,192 1,297 1,534
NHL Enterprise rights.................................... 885 846 761
Decoma arena operations.................................. 1,082 1,415 --
Other, primarily arena concessions....................... 1,561 912 1,440
-------- -------- --------
Total revenue.................................... 34,087 17,746 21,682
Cost of revenue:
Team operations.......................................... 32,639 15,652 17,691
Ticketing and arena operations........................... 3,319 1,558 2,498
Selling, general and administrative...................... 8,371 5,569 5,512
-------- -------- --------
Total cost of revenue............................ 44,329 22,779 25,701
Amortization and depreciation.............................. (9,815) (6,266) (6,444)
-------- -------- --------
Operating loss............................................. (20,057) (11,299) (10,463)
Interest and other, net.................................... (5,082) (4,087) (2,463)
-------- -------- --------
Net loss................................................... $(25,139) $(15,386) $(12,926)
======== ======== ========
Pro Forma net loss per share............................... $ (4.76) $ (2.96) $ (2.93)
======== ======== ========
Pro Forma weighted average shares outstanding.............. 5,276 5,203 4,405
======== ======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-5
<PAGE> 62
FLORIDA PANTHERS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
CLASS A
COMMON STOCK
------------------ TOTAL
NUMBER OF CONTRIBUTED SHAREHOLDERS'
SHARES AMOUNT CAPITAL EQUITY (DEFICIT)
--------- ------ ----------- ----------------
<S> <C> <C> <C> <C>
Balance, July 1, 1993.............................. -- $-- $ (936) $ (936)
Net loss......................................... -- -- (12,926) (12,926)
------- --- -------- --------
Balance, June 30, 1994............................. -- -- (13,862) (13,862)
Acquisition of Decoma Entities................... 870,968 9 8,193 8,202
Net loss......................................... -- -- (15,386) (15,386)
Dividends-Decoma................................. -- -- (1,302) (1,302)
------- --- -------- --------
Balance, June 30, 1995............................. 870,968 9 (22,357) (22,348)
Net loss......................................... -- -- (25,139) (25,139)
Dividends-Decoma................................. -- -- (816) (816)
------- --- -------- --------
Balance June 30, 1996.............................. 870,968 $ 9 $(48,312) $(48,303)
======= === ======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-6
<PAGE> 63
FLORIDA PANTHERS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss.................................................. $(25,139) $(15,386) $(12,926)
Adjustments to reconcile net loss to net cash used in
operating activities --
Depreciation and amortization.......................... 9,815 6,266 6,444
Deferred compensation.................................. 1,334 363 169
Minority interest...................................... 174 384 --
Changes in operating assets and liabilities --
Accounts receivable.................................... (1,195) 440 (1,322)
Prepaid expenses and other assets...................... (3,425) (604) (1,468)
Accounts payable and accrued expenses.................. 938 448 1,403
Deferred revenue and other liabilities................. 138 (705) (3,905)
-------- -------- --------
Net cash used in operating activities............. (17,360) (8,794) (11,605)
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures...................................... (140) (161) (1,275)
-------- -------- --------
Net cash used in investing activities............. (140) (161) (1,275)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on note payable -- related party................. (3,500) (7,200) (5,500)
Borrowings from note payable -- related party............. 21,446 17,733 10,749
Payment of dividends -- Decoma............................ (816) (1,302) --
Distribution to minority interests -- Decoma.............. (402) (486) --
-------- -------- --------
Net cash provided by financing activities......... 16,728 8,745 5,249
-------- -------- --------
Net decrease in cash and equivalents.............. (772) (210) (7,631)
CASH AND EQUIVALENTS:
Balance, beginning of year................................ 1,237 1,447 9,078
-------- -------- --------
Balance, end of year...................................... $ 465 $ 1,237 $ 1,447
======== ======== ========
Supplemental Cash Flow Information:
Cash paid during the year for interest.................... $ 3,750 $ 3,461 $ 2,510
======== ======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-7
<PAGE> 64
FLORIDA PANTHERS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
(1) ORGANIZATION AND BASIS OF PRESENTATION
(a) General
Florida Panthers Holdings, Inc. (the "Company"), through its wholly-owned
subsidiary, Florida Panthers Hockey Club, Ltd. ("Limited" or the "Club"), owns
and operates the Florida Panthers, a professional hockey team (the "Panthers")
of the National Hockey League (the "NHL"). Additionally, the Company owns Arena
Development Company Ltd., a Florida limited partnership formed for the purpose
of developing a new multi-purpose, state-of-the-art sports and entertainment
center (the "Broward County Civic Arena") in Broward County, Florida, and Arena
Operating Company Ltd., a Florida limited partnership formed for the purpose of
managing and operating the Broward County Civic Arena. Through its ownership of
Decoma Investment, Inc. I ("Decoma I") and Decoma Investment, Inc. II ("Decoma
II"), the Company also owns approximately 78% of the partnership interests in
Decoma Miami Associates Ltd., a Florida limited partnership ("DMAL") which
operates the Miami Arena in which the Panthers currently play.
(b) Initial Public Offering and Reorganization
On November 13, 1996, the Company completed an initial public offering of
its Class A common stock. Prior to the completion of the initial public offering
and the concurrent offering (the "Prior Offerings") Mr. H. Wayne Huizenga, the
Company's chairman, contributed the Club's Note Payable -- Related Party to the
partnership. Following this contribution, all of the Club's partnership
interests were exchanged for 4,149,710 shares of the Company's Class A common
stock and 255,000 shares of the Company's Class B common stock (the
"Recapitalization"). In addition, prior to the completion of the Prior
Offerings, all of the partnership interests of Decoma I and Decoma II
(collectively, "the Decoma Entities") were acquired by the Company in exchange
for a total of 870,968 shares of its Class A common stock. As this transaction
was among entities under common control, it has been accounted for on an
historical cost basis in a manner similar to a pooling of interests as of August
6, 1994, the date of their acquisition by Mr. Huizenga, and the Financial
Statements have been revised accordingly.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Hockey Revenue and Expense
Revenue from Tickets, Television and radio broadcasting, and Advertising
and promotions revenues generally are recorded at the time the game to which
such proceeds relate is played. Team operations expenses, principally player
compensation and game and playoff expenses (principally arena rentals and
travel) are recorded as expenses on the same basis. Accordingly, advance ticket
sales and payments on television and radio broadcasting contracts and payments
for team and game expenses not earned or incurred are recorded as deferred
revenues. Capitalized signing bonuses are amortized ratably as regular season
games are played.
(b) Arena Management Revenue and Expense
Arena management revenue is recognized as earned and the related costs are
charged to operations as incurred, in accordance with the terms of the Miami
Arena Contract (the "MAC").
(c) Pro Forma Net Loss Per Share
Pro forma net loss per share is calculated assuming that the 4,404,710
shares of the Company's common stock issued in connection with the consummation
of the Recapitalization described in Note 1 were outstanding at the beginning of
all periods presented and that the 870,968 shares issued in connection with the
F-8
<PAGE> 65
FLORIDA PANTHERS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
acquisition of the Decoma Entities were outstanding since August 6, 1994, the
date such entities were acquired by Mr. Huizenga.
(d) Cash and Equivalents
Cash and equivalents consist primarily of cash in banks and highly-liquid
investments with original maturities of 90 days or less.
(e) Note Payable -- Related Party
Note payable-related party represents a short-term borrowing of cash
required for working capital from the Company's chairman. Such note bears
interest at prime (8.25% at June 30, 1996) and is required to be repaid on
demand.
(f) Property and Equipment
Property and equipment is recorded at cost. Depreciation and amortization
have been computed using the straight-line method over the following estimated
useful lives:
<TABLE>
<CAPTION>
YEARS
-----
<S> <C>
Leasehold improvements...................................... 5-20
Furniture, fixtures and equipment........................... 5- 7
</TABLE>
(g) Franchise Cost
The Club was required to pay a $50,000,000 franchise fee to the NHL, of
which $25,688,000 was allocated to the contracts of players selected in the 1993
expansion draft. The allocation was based upon the fair value of the player
contracts acquired as determined by an independent appraisal firm. The portion
allocable to player contracts is being amortized on a straight-line basis over
the estimated useful lives of the contracts which has been determined to be
approximately 6 years. The remaining portion of the franchise fee is classified
as Franchise costs in the accompanying balance sheets and is being amortized on
a straight-line basis over a 40 year life. For the fiscal years ended June 30,
1996, 1995 and 1994, the Club amortized $8,504,800, $5,083,856 and $5,592,189,
respectively, in player contract acquisition costs. The amortization for the
fiscal years ended June 30, 1996, 1995 and 1994 includes $4,899,630, $961,638
and $1,469,971 respectively, related to the write-off of unamortized player
contract costs due to the outright release of certain players and the
write-downs of contracts of active players to reflect reductions in remaining
value.
The Club accounts for trades of player contracts as like-kind exchanges,
whereby the recorded basis of the contract of the acquired player(s) is equal to
the net book value of the contract of the traded player(s) plus or minus any
cash consideration.
The Club continually evaluates whether events and circumstances have
occurred that indicate that the remaining estimated useful life of intangible
assets, such as franchise cost and player contract acquisition costs, may
warrant revision or that the remaining balance of the intangible asset may not
be recoverable. If factors indicate that the franchise cost or player contract
acquisition costs may be impaired, the Club uses an estimate of the remaining
value of the franchise rights or the individual player's contract in measuring
whether the intangible asset is recoverable. Unrecoverable amounts are charged
to operations in the applicable period.
Effective July 1, 1995, the Company implemented the provisions of the
Financial Accounting Standards Board's ("FASB") Statement of Financial
Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of." As the Company
had continually evaluated the realizability of its long-lived assets, adoption
of the statement did not have a material effect on the Company's financial
statements at the date of adoption.
F-9
<PAGE> 66
FLORIDA PANTHERS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(h) Player Contract Costs
Signing bonuses are amortized over the life of the player contract. Such
signing bonuses expensed totaled approximately $2,251,700, $617,000 and $220,000
in the years ended June 30, 1996, 1995 and 1994, respectively, and have been
included in Team operations in the accompanying consolidated statements of
operations.
Employment contracts with certain players require future compensation under
certain circumstances. Generally, these contracts are executory in nature;
accordingly, related payments are charged to operations over the contract
playing seasons.
The Club has obtained disability insurance policies for several of its
players under multi-year contracts. Benefits would become payable after thirty
consecutive games were missed by the insured player. The policies provide for
payment of a portion of the player's salary for the remaining term of the
contract or until the player can resume playing.
(i) Investment in Miami Arena Contract
Amounts invested in the MAC have been reflected as Investment in Miami
Arena contract in the accompanying consolidated balance sheets. Such amounts are
being amortized using the straight-line method over the remaining term of the
MAC.
(j) Deferred Revenue
Deferred revenue as of June 30, 1996, 1995 and 1994 consists primarily of
payments for ticket purchases for the respective upcoming seasons. Ticket
revenue is recognized as the underlying games are played.
(k) Income Taxes
The Company, as of the date of its incorporation, has adopted the
provisions of SFAS No. 109, "Accounting for Income Taxes". SFAS No. 109
requires, among other things, recognition of future tax benefits measured at
enacted rates attributable to the deductible temporary differences between the
financial statement and income tax bases of assets and liabilities and net
operating loss carryforwards to the extent that the realization of said benefits
is "more likely than not". The adoption of SFAS No. 109 did not have a material
impact on the financial position or results of operations of the Company.
Prior to the Recapitalization, the Company's subsidiaries were non-tax
paying entities. Accordingly, for all periods presented, no income tax provision
has been provided, nor have any deferred tax assets or liabilities been
established.
(l) Concession Agreement
Certain unrelated companies have the right, at home games, to sell
consumable and non-consumable concessions. The Club is entitled to effectively
receive amounts ranging from 7% to 35% of the hockey net consumable and
non-consumable concessions income. The Club recorded $832,303, $363,401 and
$763,651 for the years ended June 30, 1996, 1995 and 1994, respectively, in
hockey net consumable and non-consumable concessions income. Such amounts have
been included as a component of Other revenue in the accompanying consolidated
statements of operations.
(m) Television and Radio Agreements
In August 1996, the Company entered into a letter of intent with
SportsChannel Florida ("SportsChannel") for the local broadcast of the Panthers'
games. The Company's chairman currently owns 50% of SportsChannel and he holds
an option to purchase an additional 20% ownership interest of SportsChannel.
Under the terms of this letter of intent, the Company granted to SportsChannel
broadcast rights (other than
F-10
<PAGE> 67
FLORIDA PANTHERS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
radio broadcast rights) to all of the Panthers' pre-season, regular season and
certain post-season away games during the 1996-97 season. The letter of intent
may be extended for an additional season upon notice by the Company. There can
be no assurance that the Company and SportsChannel will enter into a definitive
agreement. Currently, the Company and SportsChannel are operating under the
terms of this letter of intent.
In addition, the Club entered into a letter of intent with Sunshine
Wireless Company Inc. ("Sunshine") for the local radio broadcast of all of the
Panthers' games. Under the terms of this letter of intent, Sunshine has local
radio broadcast rights to all of the Panthers' pre-season, regular season and
post-season games during the 1996-97 season. Currently, the Company and Sunshine
are operating under the terms of this letter of intent.
(n) Advertising Agreements
The Club has entered into multi-year agreements with several sponsors for
advertising and promotional activities. Such agreements expire at various dates
through June 30, 1998. The Club recognizes this revenue on a pro-rata basis over
the respective terms of the underlying agreements.
(o) Fair Value of Financial Instruments
As of June 30, 1996 and 1995, the carrying amount of cash and equivalents,
accounts receivable, note payable-related party, accounts payable and accrued
expenses and long-term debt are reflected in the financial statements at cost
which approximates fair value.
(p) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(q) Presentation
The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated. Certain amounts in the
accompanying financial statements have been reclassified to conform with the
current year presentation.
(r) Stock-Based Compensation
In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation". Under the provisions of SFAS No. 123, companies can either
measure the compensation cost of equity instruments issued under employee
compensation plans using a fair value based method, or can continue to recognize
compensation cost using the intrinsic value method under the provisions of
Accounting Principles Board Opinion ("APB") No. 25. However, if the provisions
of APB No. 25 are continued, pro forma disclosures of net income or loss and
earnings or loss per share must be presented in the financial statements as if
the fair value method had been applied. The Company intends to recognize
compensation costs under the provisions of APB No. 25, and upon adoption of SFAS
No. 123 as of July 1, 1996, will provide the expanded disclosure required by
SFAS No. 123.
F-11
<PAGE> 68
FLORIDA PANTHERS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(3) THE MIAMI ARENA
The Miami Arena (the "Arena") is owned by the Miami Sports and Exhibition
Authority ("MSEA"), an agency of the City of Miami. Under the terms of the MAC
between MSEA and DMAL, DMAL operates the Arena. The MAC is scheduled to expire
on July 8, 2020. Leisure Management Miami, Inc. ("LMMI"), manages the operations
of the Arena, including rental of space, advertising, promotion, marketing,
events management, box office, public relations and all custodial and support
services. During 1994, subsequent to the execution of the MAC, approximately 50%
of LMMI was acquired by the Company's chairman.
A summary of certain terms of the MAC is presented below:
(a) Operating Income (Loss)
Under the terms of the MAC, the Arena's operating income (as defined by the
MAC) is used to fund certain expenses and required payments before any
distributions are made to DMAL and MSEA.
(b) Seat Use Fee
In accordance with the terms of the MAC, a $.75 to $1.00 seat use fee is
collected by the Arena as part of the purchase price of all tickets sold. This
charge is remitted quarterly to DMAL and MSEA based on percentages detailed in
the MAC and is recognized by the Decoma Entities in the period during which the
amount of such fees has been estimated and is determined to be collectible.
(c) Operating Payment
Under the terms of the MAC, DMAL is to receive a management fee from the
Arena consisting of a fixed and variable operating payment. The fixed operating
payment is based on an annual amount of $275,000, as adjusted for inflation. The
variable operating payment is calculated as defined in the MAC, based upon the
revenues of the Arena. In accordance with the terms of the MAC, the variable
operating payment is made only after the Arena's operating income (as defined in
the MAC) has been used to fund certain operating expenses and required payments.
Any unpaid management fees are deferred up to a maximum of $1,000,000. DMAL is
not entitled to recover any unpaid management fees in excess of $1,000,000. The
Decoma Entities recognize variable operating payments as revenue in the period
during which the amount of such payments has been determined and the
collectibility is considered to be probable.
(4) RELATED PARTY TRANSACTIONS
During the year ended June 30, 1994, certain private corporate aircraft
owned by Huizenga Holdings, Inc. ("HHI", a corporation whose sole shareholder is
the Company's chairman) and its subsidiaries were leased by the Club. To the
extent that such aircraft were used by Club employees, the actual operating and
overhead costs related to such aircraft were charged back to the Club based on
its pro-rata share of flight hours used during any given month. The Club
incurred $94,613 of such charges in the year ended June 30, 1994. No such
related party charges were incurred during the years ended June 30, 1996 and
1995.
The Club pays a management fee to HHI equal to 1% of total revenue,
excluding all NHL national television revenue and NHL Enterprise rights. Such
fees totaled $293,239, $132,339 and $193,576 for the years ended June 30, 1996,
1995 and 1994, respectively, and are reflected as a component of Selling,
general and administrative expenses in the accompanying consolidated statements
of operations.
During 1996, 1995 and 1994, the Company incurred interest expense of
$3,448,136, $2,306,986 and $1,364,624, respectively, to related parties.
F-12
<PAGE> 69
FLORIDA PANTHERS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(5) RELATED PARTY AND LONG-TERM DEBT
In June 1993, the Company entered into a $25,000,000 revolving credit
facility with a bank for the purpose of financing a portion of the $50,000,000
NHL franchise fee and to obtain working capital for use by Limited. The credit
facility was subsequently converted to a $25,000,000 term loan. The Company is
required to make quarterly interest payments through June 30, 1997 and quarterly
principal and interest payments commencing July 1, 1997 and expiring May 31,
2001. The interest rate is LIBOR plus .75 percent per annum (6.34% at June 30,
1996). Following the completion of the Prior Offerings, this term loan was
repaid in full.
In June 1993, Limited entered into an agreement with an affiliate, Panthers
Investment Venture ("PIV"), whereby Limited borrowed $20,000,000 bearing
interest at LIBOR plus .75 percent per annum (6.34% at June 30, 1996). This note
was issued contemporaneously with, and with terms similar to, a promissory note
issued by PIV to a bank. PIV was a joint venture between the Company's chairman
and Blockbuster Entertainment Corporation ("BEC"). However, during fiscal 1996,
the terms of the joint venture agreement were modified such that BEC was no
longer a party to the venture. PIV's note payable to the bank is guaranteed by
the Company's chairman. This note is subordinated to the $25,000,000 term loan
discussed above. Following the completion of the Prior Offerings discussed
above, this note was repaid in full.
The Club paid a commitment fee of $225,000 in connection with disbursements
under these long-term debt arrangements. This amount has been capitalized as
Other assets in the accompanying consolidated balance sheets and is being
amortized over the period of the debt.
The Club has entered into a series of interest rate swap agreements which
synthetically fix the interest rates on the long-term debt agreements at 5.19%
and 4.85% for the $25,000,000 term loan and the $20,000,000 PIV note payable,
respectively. Such agreements expire concurrently with the underlying debt
agreements. The Club accounts for these agreements as a hedge against the risk
of future increases in interest rates. For the years ended June 30, 1996 and
1994, the Club recognized interest expense and income of approximately $353,000
and $134,000, respectively, as a result of entering into these interest rate
swap agreements. For the year ended June 30, 1995, the Club recognized interest
income and expense of $329,000 and $63,000, respectively, as a result of
entering into these interest rate swap agreements. Amounts related to these
interest rate swap agreements are reflected as a component of net interest
expense in the accompanying consolidated statements of operations.
(6) EMPLOYEE BENEFIT PLANS
The Club's NHL hockey players are covered under the NHL Club Pension Plan
and Trust (the "Plan") which is administered by the NHL and represents a
multi-employer defined contribution plan. The Club's contributions to the Plan
totaled $179,606, $89,379 and $183,564 for the years ended June 30, 1996, 1995
and 1994, respectively. Such contributions are included in Team operations in
the accompanying consolidated statements of operations.
Certain of the Club's employees are participants in a 401(k) Savings and
Retirement Plan (the "401(k)"), a defined contribution plan for non-players. The
401(k) is available to employees over the age of 21 with at least one year of
service who work a minimum of 1,000 hours per year. Game day arena employees are
ineligible to participate in the 401(k). The Club may match a discretionary
percentage of the amount contributed by the participant up to a limit of 6% of
annual compensation. Employees may contribute up to 10% of their annual
compensation. Participants are automatically vested in compensation deferrals.
Vesting in Club matching contributions is at the rate of 20% after one year of
plan participation, 40% after two years, 60% after three years, 80% after four
years and 100% after five years. The Club did not make a discretionary
contribution in 1996, 1995 or 1994.
Through March 31, 1995, the Club's employees other than players and coaches
were covered under a self-insured group health plan sponsored by HHI. The Club
fully reimbursed the third-party administrator for
F-13
<PAGE> 70
FLORIDA PANTHERS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
its actual billed cost, including the cost of all paid claims for all Club
employees other than coaches and players. Beginning April 1, 1995 the Club
obtained commercial insurance coverage to cover such employees' health care
costs for which employees make partial contributions. Players and coaches are
covered under the NHL Medical and Dental Plan administered by the NHL, for which
the Club pays 100% of the premiums.
(7) COMMITMENTS AND CONTINGENCIES
The Club is a party to a license agreement with LMII for the use of the
Arena, for its home games. In May 1996, the Company entered into an amendment to
the license for the Miami Arena (the "License Agreement"), extending the term of
the license (which was scheduled to expire at the end of the 1995-96 season) to
July 31, 1998, with two one-year options for the 1998-99 season and the
1999-2000 season. The License Agreement contained substantially the same
economic terms as the Miami Arena license and was subject to approval of MSEA.
In June 1996, MSEA rejected the License Agreement and demanded that the Panthers
vacate the Miami Arena. Subsequently, the Company sought and obtained a
preliminary injunction enjoining MSEA from taking actions to prevent the
Panthers from utilizing the Miami Arena pursuant to the License Agreement. MSEA
has indicated that it plans to appeal the decision rendered by the court. In the
event MSEA is ultimately successful in its appeal, the Company will need to find
and enter into an agreement for an alternative playing site (within or outside
of Florida) until such time as the Broward County Civic Arena is completed.
There can be no assurance that the Company will be able to find and enter into
an agreement for an alternative playing site.
The terms of the license and the related agreements provide for the Club to
pay minimum rent of $9,000 per home game, a seat use charge of $.75 per ticket
sold and 7.5% of gross ticket sales proceeds over $200,000 per season plus
utilities, staffing and other operating expenses. For the years ended June 30,
1996, 1995 and 1994, rent expense for the license of the Arena was $1,787,795,
$729,382 and $1,173,181, respectively.
The Club has entered into employment agreements with various player and
non-player employees which expire at various dates through June of 1999. As of
June 30, 1996, the terms of these employment agreements require future payments,
excluding bonuses, as follows:
<TABLE>
<CAPTION>
FISCAL
- ------
<S> <C>
1997........................................................ $17,757,121
1998........................................................ 11,351,083
1999........................................................ 2,013,049
-----------
$31,121,253
===========
</TABLE>
In June 1996, the Company entered into a license agreement for the use of
the Broward County Civic Arena (the "Broward License Agreement"). In connection
therewith, Broward County will receive revenue (the "County Preferred Revenue")
from the operations of the Broward County Civic Arena for an amount to be
determined concurrent with the issuance of the bonds. The Company has provided
Broward County a guaranty pursuant to which the Company will be obligated to pay
Broward County the County Preferred Revenue Obligation. The Company believes
that the revenue generated from the operations of the Broward County Civic Arena
will be sufficient to provide Broward County with the County Preferred Revenue.
The Broward License Agreement commences upon the completion of construction of
the Broward County Civic Arena, which is currently scheduled for October 1,
1998; however, the commencement of the Broward License Agreement may be deferred
by the Club until the following NHL hockey season in the event the Broward
County Civic Arena is completed between March 1 and July 1, 1999. Once
commenced, the Broward License Agreement is for a term of 30 years, which may be
extended for five year periods, subject to certain conditions, pursuant to
options granted to the Club by Broward County.
F-14
<PAGE> 71
FLORIDA PANTHERS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Broward License Agreement entitles the Company to exclusive use of the
Broward County Civic Arena during the playing of all its home games, and
provides for nonexclusive use by the Club for practices and other team uses.
Additionally, the License Agreement provides the Company with exclusive use of
certain spaces within the Broward County Civic Arena to be used for a retail
store, offices, a box office, a locker room and a training and weight room. The
Broward License Agreement contains a use covenant which requires the Company to
play all of its home games at the Broward County Civic Arena during the term of
the Broward License Agreement.
Pursuant to the Broward License Agreement, the Company is entitled to
receive all revenues from the sale of (i) general seating ticket sales for its
home games to be played at the Broward County Civic Arena, (ii) non-consumable
concession items at the Broward County Civic Arena during its home games, (iii)
items in the Club's retail store to be located within the Broward County Civic
Arena, (iv) (in conjunction with and subject to the rights of the NHL) the
rights to all television and radio and other media broadcasting rights for
hockey related events at the Broward County Civic Arena, (v) advertising within
or on certain designated locations at the Broward County Civic Arena during
hockey related events and (vi) Panthers' related sponsorships or NHL league-wide
sponsorships. In addition, the Club is entitled to receive the first $14 million
of "net operating income" generated by the Broward County Civic Arena and 80%
with Broward County receiving 20% of all net operating income generated by the
Broward County Civic Arena in excess of $14 million. "Net operating income" is
defined to include revenues from building naming rights fees, food and beverage
concessions, parking, non-hockey related advertising and all other revenues
generated from non-hockey related events offset by certain arena operating and
financing costs.
The Club is obligated to pay rent in the amount of $7,500 per home game
played by the Panthers at the Broward County Civic Arena and to pay certain
utility and event staffing expenses, but the combined amounts payable by the
Club under the Broward License Agreement will not exceed 5% of the gross
receipts from the sale of general seating tickets to the Panthers' home games.
(8) SUBSEQUENT EVENTS
(a) Exchange Agreements
On December 22, 1996, 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 the Hyatt Regency Pier 66
Resort & Marina and the Radisson Bahia Mar Beach Resort, in exchange for
4,450,000 shares and 3,950,000 shares of the Company's Class A Common Stock,
respectively (together, the "Exchanges"). The Exchanges were consummated on
March 4, 1997.
(b) Broward County Litigation
A lawsuit was filed on January 9, 1997 by Arena Development, seeking a
determination as to the applicability of Broward County's Prevailing Wage
Ordinance to the construction of the Broward County Civic Arena. The suit was
filed in the Seventeenth Judicial Circuit in and for Broward County, Florida.
The complaint filed alleged that the Prevailing Wage Ordinance did not apply to
the construction of the Broward County Civic Arena for two reasons: (i) the
Prevailing Wage Ordinance only applies to construction contracts in excess of
$250,000 to which Broward County is a party and Broward County is not a party to
the construction contract between Arena Development and the general contractor,
and (ii) the Development Agreement contained all the obligations and
responsibilities of both parties and does not include a provision mandating that
Arena Development comply with the Prevailing Wage Ordinance. The Prevailing Wage
Ordinance requires that all contracts to which the ordinance applies must
contain such a provision. The lawsuit asked for a declaratory judgement finding
the Prevailing Wage Ordinance did not apply to the construction of the Facility
and that Arena Development could continue without reference to the ordinance. On
February 21, 1997, the Seventeenth Judicial Circuit Court ruled against the
Company's complaint, finding
F-15
<PAGE> 72
FLORIDA PANTHERS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
that the Prevailing Wage Ordinance was applicable. The Company has not yet
determined whether or not to pursue an appeal. An unfavorable outcome of this
suit may require the Company to incur additional costs of up to $7,500,000.
(c) Acquisition of Ice Rink Business
On January 31, 1997, the Company acquired substantially all of the
business, assets and operations of Iceland (Coral Springs) Corp. and Iceland
Holdings, Inc., including the business, assets and operations of an operating
twin pad ice rink facility. In addition, the Company acquired from an
architectural firm and its principal certain architectural plans and designs
relating to the ice rink facility. The consideration paid by the Company in
connection with these acquisitions consisted of the assumption by the Company of
a maximum obligation of approximately $8,100,000 in construction-related
obligations, of which approximately $6,700,000 was repaid upon consummation of
the referenced acquisition, $1,000,000 in cash and 212,766 shares of
unregistered, but otherwise unrestricted, Class A Common Stock with a market
value, if registered and tradeable, of $5,000,000. These acquisitions will be
accounted for as a purchase business combination.
(d) Private Placement Transaction
On January 30, 1997, the Company issued and sold 2,460,000 unregistered,
but otherwise unrestricted (i.e., such shares are not subject to any type of
"lockup" agreement), shares of 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 approximately $70,000,000 after deducting placement agency fees.
(e) Securities Litigation
On January 28, 1997 and February 3, 1997, purported class action lawsuits
were filed against the Company and certain of its officers and directors which
allege, among other things, that the defendants violated the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), in connection with sales of the
Company's Class A Common Stock by the plaintiff and others in the purported
class between November 13, 1996 and December 22, 1996. The suits generally seek,
among other things, certification as a class and an award of damages in an
amount to be determined at trial. The Company intends to vigorously defend
against these suits.
(f) Boca Raton Hotel and Club
On March 20, 1997, the Company entered into a contribution and exchange
agreement related to the acquisition of substantially all of the assets of Boca
Raton Hotel and Club Limited Partnership ("Boca") in exchange for certain
consideration, including rights and warrants to acquire shares of the Company's
Class A common stock, together with the assumption of certain indebtedness of
Boca.
F-16
<PAGE> 73
FLORIDA PANTHERS HOLDINGS, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1996 1996
------------ --------
<S> <C> <C>
ASSETS
Current Assets:
Cash and equivalents...................................... $23,668 $ 465
Accounts receivable....................................... 6,021 3,119
Prepaid expenses and other................................ 1,347 172
------- --------
Total current assets................................. 31,036 3,756
Property and equipment, net................................. 1,467 972
Franchise cost, net of accumulated amortization of $2,127
and $1,823 as of December 31, 1996 and June 30, 1996,
respectively.............................................. 22,185 22,489
Player contract acquisition costs, net of accumulated
amortization of $20,312 and $19,180 as of December 31,
1996 and June 30, 1996 respectively....................... 5,375 6,507
Investment in Miami Arena contract.......................... 8,701 8,886
Other assets................................................ 4,973 5,150
------- --------
Total assets.............................................. $73,737 $ 47,760
======= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Deferred revenue.......................................... $11,588 $ 988
Note payable-related party (Note 4)....................... -- 40,172
Related party debt (Note 4)............................... -- 20,000
Accounts payable and accrued expenses..................... 5,481 2,313
Other current liabilities................................. 3,284 4,313
------- --------
Total current liabilities............................ 20,353 67,786
Long-term debt (Note 4)..................................... -- 25,000
Other non-current liabilities............................... 3,341 3,277
Shareholders' equity:
Class A Common Stock, $.01 par value, 100,000,000 shares
authorized and 12,320,678 shares issued and
outstanding............................................ 123 9
Class B Common Stock, $.01 par value, 10,000,000 shares
authorized and 255,000 shares issued and outstanding... 3 --
Contributed capital....................................... 51,680 (48,312)
Accumulated deficit....................................... (1,763) --
------- --------
Total shareholders' equity (deficit)................. 50,043 (48,303)
------- --------
Total liabilities and shareholders' equity (deficit)...... $73,737 $ 47,760
======= ========
</TABLE>
The accompanying notes to condensed consolidated financial statements are an
integral part of these balance sheets.
F-17
<PAGE> 74
FLORIDA PANTHERS HOLDINGS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------------------ ----------------------
1996 1995 1996 1995
------- -------------- ------- -----------
<S> <C> <C> <C> <C>
Revenue:
Tickets.................................. 7,976 7,958 8,659 8,389
Other revenue............................ 6,240 4,318 6,724 4,723
------- ------- ------- --------
Total revenue.................... 14,216 12,276 15,383 13,112
Cost of Revenue:
Team operations.......................... 12,351 11,346 14,667 14,090
Other costs of revenue................... 3,537 2,899 5,381 4,596
------- ------- ------- --------
Total cost of revenue............ 15,888 14,245 20,048 18,686
Amortization & depreciation................ 884 1,367 1,795 2,730
------- ------- ------- --------
Net operating loss.................... (2,556) (3,336) (6,460) (8,304)
Interest expense and other, net............ (969) (1,157) (2,339) (2,233)
------- ------- ------- --------
Net loss.............................. $(3,525) $(4,493) $(8,799) $(10,537)
======= ======= ======= ========
Per share data (Note 3):
Pro forma net loss per share............. $ (0.37) $ (0.85) $ (1.19) $ (2.00)
======= ======= ======= ========
Weighted average shares outstanding........ 9,560 5,276 7,418 5,276
======= ======= ======= ========
</TABLE>
The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
F-18
<PAGE> 75
FLORIDA PANTHERS HOLDINGS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss.................................................. $ (8,799) $(10,537)
Adjustments to reconcile net loss to net cash used for
operating activities-
Depreciation and amortization.......................... 1,795 2,730
Deferred compensation.................................. (321) 375
Minority interest...................................... 289 140
Changes in operating assets and liabilities-
Accounts receivable.................................... (2,902) (2,620)
Prepaid expenses and other assets...................... (1,018) (4,826)
Accounts payable and accrued expenses.................. 2,971 793
Deferred revenue and other liabilities................. 9,598 6,744
-------- --------
Net cash provided by (used in) operating
activities...................................... 1,613 (7,201)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures................................... (649) (63)
-------- --------
Net cash used in investing activities............. (649) (63)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of Common Stock............. 66,322 --
Payment on related party debt.......................... (20,000) --
Payments on note payable-related party................. -- (3,500)
Increase to note payable-related party................. 1,131 12,027
Payment of Long-term debt.............................. (25,000) --
Payment of dividends-Decoma............................ (140) (199)
Distribution to minority interests-Decoma.............. (74) (57)
-------- --------
Net cash provided by financing activities......... 22,239 8,271
-------- --------
Net increase in cash and equivalents.............. 23,203 1,007
Cash at beginning of period................................. 465 1,237
-------- --------
Cash at end of period....................................... $ 23,668 $ 2,244
======== ========
</TABLE>
NON-CASH TRANSACTIONS:
In conjunction with the Prior Offerings and the Reorganization, total note
payable-related party of $40,963 was exchanged for 4,149,710 shares of Class A
Common Stock and 255,000 shares of Class B Common Stock of Florida Panthers
Holdings, Inc.
The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
F-19
<PAGE> 76
FLORIDA PANTHERS HOLDINGS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS)
1. INTERIM FINANCIAL STATEMENTS
The accompanying unaudited condensed consolidated financial statements of
Florida Panthers Holdings, Inc. (the "Company") have been prepared by the
Company without audit pursuant to the rules and regulations of the Securities
and Exchange Commission. All significant intercompany accounts and transactions
have been eliminated. Certain information related to the Company's organization,
significant accounting policies and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. These unaudited condensed
consolidated financial statements reflect, in the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
fairly state the financial position and the results of operations for the
periods presented and the disclosures herein are adequate to make the
information presented not misleading. Operating results for the interim periods
presented are not indicative of the results that can be expected for a full
year.
The accompanying statements of operations cover the three month periods,
and six month periods, ended December 31, 1996 and 1995. For financial reporting
purposes, the Company recognizes all hockey related revenues and expenses over
the course of the hockey season on a per game basis. With the National Hockey
League (NHL) regular season beginning in early October, the three month period
ended December 31, 1996 encompassed 17 of the 41 Panthers regular season home
games. Based on the present NHL regular season schedule, which extends from
early October through mid April, most of the Company's revenues and expenses
will be reported in the second and third quarters. In the event the Panthers
participate in the playoffs, the Company will realize additional revenue and
incur additional expenses during the fourth quarter.
2. THE OFFERINGS
The Company sold a total of 7.3 million shares of Class A Common Stock in
the Prior Offerings. Of the 7.3 million shares, 2.7 million were sold to the
public in an Initial Public Offering ("IPO") and 4.6 million shares were sold in
a Concurrent Offering directly to certain investors at a price equal to the IPO
price per share less underwriting discounts and commissions but including the
Placement Agent fee. The Prior Offerings were declared effective by the
Securities and Exchange Commission on November 8, 1996 and shares of Class A
Common Stock began trading on NASDAQ on November 13, 1996.
In connection with the Prior Offerings, and pursuant to an agreement, the
Company acquired all of the partnership interests of Florida Panthers Hockey
Club, Ltd. (the "Partnership") in exchange for 4,149,710 shares of its Class A
Common Stock and 255,000 shares of its Class B Common Stock. Additionally, the
Company acquired all of the outstanding stock of Decoma Investment, Inc. I
(formerly BIL Development, Inc.), and Decoma Investment, Inc. II (formerly
Linbeck Miami Corporation), and, in turn, approximately 78% of the Partnership
interests in Decoma Miami Associates Ltd., a Florida limited partnership
("Decoma"), in exchange for 870,968 shares of its Class A Common Stock.
Collectively, these transactions are referred to as the Reorganization.
<TABLE>
<CAPTION>
COMMON STOCK OUTSTANDING AFTER THE PRIOR OFFERINGS:
- -------------------------------------------------------------------------
<S> <C>
Class A Common Stock................................ 12,320,678 shares
Class B Common Stock................................ 255,000 shares
-----------------
Total............................................... 12,575,678 shares
=================
</TABLE>
3. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated statements of operations
present the combined results of operations of the Partnership and Decoma for the
periods presented. The accompanying unaudited
F-20
<PAGE> 77
FLORIDA PANTHERS HOLDINGS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(IN THOUSANDS OF DOLLARS)
condensed consolidated balance sheets present the combined financial position of
the Partnership and Decoma as of June 30, and December 31, 1996.
Pro forma weighted average shares outstanding for the three and six month
periods ended December 31, 1996 and 1995 include the 5,275,678 shares issued in
accordance with the provisions of the Reorganization as if the Reorganization
had occurred at the beginning of such periods presented. Such pro forma weighted
average shares outstanding include the 7.3 million shares sold in the Prior
Offerings from the date of issuance.
4. USE OF PROCEEDS/REPAYMENT OF OUTSTANDING DEBT
The net proceeds from the sale of stock in the Prior Offerings totaled
approximately $66.3 million. Shortly after the completion of the Prior
Offerings, $45.0 million of the net proceeds of the Prior Offerings was used to
repay the Company's indebtedness outstanding under the two term loans (which
were used to pay the Company's cost of acquiring its NHL franchise).
Additionally, in conjunction with the Prior Offerings and the Reorganization,
Mr. Huizenga received 4,149,710 shares of Class A Common Stock and 255,000
shares of Class B Common Stock in exchange for a note owed to him by the Company
which represented cumulative advances, plus interest, totaling approximately
$41.0 million as of September 30, 1996.
F-21
<PAGE> 78
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."), Radisson Bahia Mar Resort and Yachting Center ("Rahn Ltd."),
Incredible Ice and Boca Raton Resort & Club 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.
SEASONALITY
The Company operates in two separate business segments, both of which are
seasonal. Hockey related revenues and team operating expenses are recognized
during the regular season which extends from early October through mid-April. In
addition, approximately 45% to 50% of the resort net operating revenues are
earned during the period from January through April. As a result of these
factors, the pro forma operating results of the Company for the six month period
ended December 31, 1996 do not include a substantial portion of the Company's
annual net operating revenues.
THE PRIOR OFFERINGS
The Unaudited Pro Forma Statements of Operations reflect the Company's
Prior Offerings, 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. The application of the
net proceeds of the Private Placement has been reflected in the Unaudited Pro
Forma Consolidated Statements of Operations as if it had occurred at the
beginning of the periods presented.
2301 LTD. AND RAHN LTD.
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 the Company's 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 the Company's 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.
F-22
<PAGE> 79
INCREDIBLE ICE
On January 31, 1997, the Company acquired substantially all of the
business, assets and operations of Iceland (Coral Springs) Corp. and Iceland
Holdings, Inc. ("Incredible Ice"), including the business, assets and operations
of a twin pad ice rink facility. In addition, the Company acquired from an
architectural firm and such architectural firm's principal certain architectural
plans and designs relating to the ice rink facility. The consideration paid by
the Company in connection with these acquisitions consisted of the assumption by
the Company of a maximum of approximately $8,100,000 in construction-related
obligations, of which approximately $6,700,000 was repaid upon consummation of
the referenced acquisition, $1,000,000 in cash and 212,766 shares of
unregistered, but otherwise unrestricted, Class A Common Stock with a market
value, if registered and tradeable, of $4,000,000. These acquisitions will be
accounted for as a purchase business combination.
BOCA RATON HOTEL AND CLUB
On March 20, 1997, the Company entered into a definitive agreement (the
"Contribution and Exchange Agreement") with Boca Raton Hotel and Club Limited
Partnership, a Florida limited partnership ("Boca Partnership"), BRMC, L.P., a
Delaware limited partnership and the general partner of the Boca Partnership
(the "General Partner"), and BRMC Corporation, a Delaware corporation and
general partner of the General Partner ("BRMC"). Pursuant to the Contribution
and Exchange Agreement, substantially all the assets of Boca Raton Hotel and
Club Limited Partnership, a Florida limited partnership, will be transferred to
Panthers BRHC Limited, a newly-formed Florida limited partnership in which the
managing general partner and the limited partner will be wholly-owned by the
Company ("Panthers BRHC"), in exchange for: (i) a non-managing general partner
interest in Panthers BRHC, (ii) rights which may be exercised to acquire
approximately 4,928,917 shares of the Company's Class A Common Stock, (iii)
warrants to purchase approximately 919,621 shares of Class A Common Stock at a
price of $29.01 per share and (iv) the assumption of indebtedness of Boca
Partnership in the amount of approximately $195.0 million, approximately $85.0
million of which will be repaid upon consummation of the transactions
contemplated by the Contribution and Exchange Agreement (the "Contribution and
Exchange"). Of the $85.0 million to be repaid, $45.0 million will be paid from
the Company's working capital and $40.0 million will be paid from incurrence of
additional debt. Consummation of the Contribution and Exchange is subject to
customary conditions, including the receipt of requisite approvals from the
shareholders of the Company and the limited partners of Boca Partnership.
F-23
<PAGE> 80
FLORIDA PANTHERS HOLDINGS, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
BUSINESSES ACQUIRED
----------------------
PRO FORMA
FLORIDA ADJUSTMENTS PRO FORMA
PANTHERS FOR PRIVATE FOR PRIVATE
HOLDINGS, INC. PLACEMENT(K) PLACEMENT 2301 LTD. RAHN LTD.
-------------- ------------ ----------- --------- ----------
<S> <C> <C> <C> <C> <C>
Current Assets:
Cash and equivalents................................... $23,668 $66,977 $ 90,645 $ 5,666 $ 2,654
Accounts receivable.................................... 6,021 6,021 1,271 605
Prepaid expenses and other............................. 1,347 1,347 470 268
------- ------- -------- ------- -------
Total current assets................................... 31,036 66,977 98,013 7,407 3,527
Property and equipment, net............................. 1,467 1,467 28,436 28,907
Franchise cost, net..................................... 22,185 22,185
Player contract acquisition costs, net.................. 5,375 5,375
Investment in Miami Arena contract...................... 8,701 8,701
Goodwill................................................
Other assets............................................ 4,973 4,973 350 192
------- ------- -------- ------- -------
Total assets........................................... $73,737 $66,977 $140,714 $36,193 $32,626
======= ======= ======== ======= =======
Current Liabilities:
Deferred revenue....................................... $11,588 $ 11,588
Accounts payable and accrued expenses.................. 5,481 5,481 $ 2,109 $ 1,346
Current portion of long-term debt...................... 15,495
Other current liabilities.............................. 3,284 3,284
------- ------- -------- ------- -------
Total current liabilities.............................. 20,353 20,353 2,109 16,841
Long-term debt.......................................... 25,742
Other non-current liabilities........................... 3,341 3,341
Shareholders' Equity
Class A Common Stock................................. 123 25 148
Class B Common Stock................................. 3 3
Contributed capital.................................. 51,680 66,952 118,632 8,342 15,785
Accumulated deficit.................................. (1,763) (1,763)
------- ------- -------- ------- -------
Total shareholders' equity........................... 50,043 66,977 117,020 8,342 15,785
------- ------- -------- ------- -------
Total liabilities and shareholders' equity........... $73,737 $66,977 $140,714 $36,193 $32,626
======= ======= ======== ======= =======
<CAPTION>
BUSINESSES ACQUIRED
---------------------------------------------------------
PRO FORMA
AS
ADJUSTED
FOR THE BOCA RATON
ACQUISITION ACQUISITION BUSINESSES HOTEL &
ADJUSTMENTS INCREDIBLE ICE ADJUSTMENTS ACQUIRED CLUB
----------- -------------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Current Assets:
Cash and equivalents................................... $ (8,320)(a) $ 36 $(7,875)(l) $ 82,806 $ 1,126
Accounts receivable.................................... (1,876)(a) 63 107(y) 6,191 16,043
Prepaid expenses and other............................. (738)(a) 128 1,475 27,037
-------- -------- ------- -------- --------
Total current assets................................... (10,934) 227 (7,768) 90,472 44,206
Property and equipment, net............................. 62,833(b) 6,298 127,941 115,728
Franchise cost, net..................................... 22,185
Player contract acquisition costs, net.................. 5,375
Investment in Miami Arena contract...................... 8,701
Goodwill................................................ 6,092(l) 6,092
Other assets............................................ (542)(a) 138 5,111 18,326
-------- -------- ------- -------- --------
Total assets........................................... $ 51,357 $ 6,663 $(1,676) $265,877 $178,260
======== ======== ======= ======== ========
Current Liabilities:
Deferred revenue....................................... $ 160 $ 11,748 $ 7,232
Accounts payable and accrued expenses.................. $ (3,455)(a) 827 6,308 17,403
Current portion of long-term debt...................... 6,542 (6,542)(l) 15,495 400
Other current liabilities.............................. 3,284 6,752
-------- -------- ------- -------- --------
Total current liabilities.............................. (3,455) 7,529 (6,542) 36,835 31,787
Long-term debt.......................................... 25,742 174,800
Other non-current liabilities........................... 3,341 55,905
Shareholders' Equity
Class A Common Stock................................. 84(c) 2(l) 234
Class B Common Stock................................. 3
Contributed capital.................................. 54,728 (a)(c) (866) 4,864(l) 201,485 (84,232)
Accumulated deficit.................................. (1,763)
-------- -------- ------- -------- --------
Total shareholders' equity........................... 54,812 (866) 4,866 199,959 (84,232)
-------- -------- ------- -------- --------
Total liabilities and shareholders' equity........... $ 51,357 $ 36,663 $(1,676) $265,877 $178,260
======== ======== ======= ======== ========
<CAPTION>
BUSINESS TO BE ACQUIRED
------------------------------
PRO FORMA
AS ADJUSTED
FOR THE
ACQUISITION BUSINESS TO BE
ADJUSTMENTS ACQUIRED
----------- --------------
<S> <C> <C>
Current Assets:
Cash and equivalents................................... $(45,000)(p) $ 38,932
Accounts receivable.................................... 22,234
Prepaid expenses and other............................. 28,512
-------- --------
Total current assets................................... (45,000) 89,678
Property and equipment, net............................. 238,362(m) 482,031
Franchise cost, net..................................... 22,185
Player contract acquisition costs, net.................. 5,375
Investment in Miami Arena contract...................... 8,701
Goodwill................................................ 6,092
Other assets............................................ (10,080)(o) 13,357
-------- --------
Total assets........................................... $183,282 $627,419
======== ========
Current Liabilities:
Deferred revenue....................................... $ 18,980
Accounts payable and accrued expenses.................. $ 11,800(o) 35,511
Current portion of long-term debt...................... 15,895
Other current liabilities.............................. 10,036
-------- --------
Total current liabilities.............................. 11,800 80,422
Long-term debt.......................................... 19,800(o) 175,342
(45,000)(p)
Other non-current liabilities........................... 59,246
Shareholders' Equity
Class A Common Stock................................. 49(n) 283
Class B Common Stock................................. 3
Contributed capital.................................. 196,633(n) 313,886
Accumulated deficit.................................. (1,763)
-------- --------
Total shareholders' equity........................... 196,682 312,409
-------- --------
Total liabilities and shareholders' equity........... $183,282 $627,419
======== ========
</TABLE>
The accompanying notes to unaudited pro forma consolidated financial statements
are an integral part of these statements.
F-24
<PAGE> 81
FLORIDA PANTHERS HOLDINGS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED DECEMBER 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
FLORIDA
BUSINESSES ACQUIRED(J)
-----------------------------------
PANTHERS PRO FORMA
HOLDINGS, INC. OFFERING AS ACQUISITION
ACTUAL ADJUSTMENTS ADJUSTED 2301 LTD. RAHN LTD. ADJUSTMENTS
-------------- ----------- ------------ --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Ticket sales......................... $ 8,659 $ 8,659
Television and radio................. 2,795 2,795
Advertising and promotion............ 1,503 1,503
Arena operations..................... 1,301 1,301
Rooms................................ $ 5,461 $ 2,913
Yachting and marina services......... 1,567 2,011
Food, beverage and banquets.......... 3,956 1,233
Retail and other..................... 1,101 1,192
Other, primarily concessions......... 1,125 1,125
------- ------ ------- ------- ------- ---
Total revenue................... 15,383 15,383 12,085 7,349
Cost of revenue:
Team operations...................... 14,667 14,667
Ticketing and arena operations....... 1,284 1,284
Rooms................................ 1,333 724
Yachting and marina services......... 494 433
Food, beverage and banquets.......... 3,097 1,026
Telephone, retail and other.......... 509 541
Selling, general and
administrative..................... 4,097 4,097 3,883 2,531 $ 194(aa)
------- ------ ------- ------- ------- ---
Total cost of revenue........... 20,048 20,048 9,316 5,255 194
Amortization and depreciation......... (1,795) (1,795) (851) (996) (729)(e)
------- ------ ------- ------- ------- ---
Operating income (loss)............... (6,460) (6,460) 1,918 1,098 (923)
Interest and other, net............... (2,339) $2,069(d) (270) (1,107) (608)
------- ------ ------- ------- ------- ---
Net income (loss)..................... $(8,799) $2,069 $(6,730) $ 811 $ 490 $(923)
======= ====== ======= ======= ======= ===
Net loss per share.................... $ (1.19)(f) $ (0.62)(g)
Pro Forma weighted average shares
outstanding.......................... 7,418(f) 10,837(g)
<CAPTION>
PRO FORMA AS
BUSINESSES ACQUIRED(J) BUSINESS TO BE ACQUIRED(J)
------------------------------------------------- ------------------------------
ADJUSTED FOR THE
INCREDIBLE ACQUISITION BUSINESSES BOCA RATON HOTEL ACQUISITION
ICE ADJUSTMENTS ACQUIRED & CLUB ADJUSTMENTS
---------- ----------- ----------------- ---------------- -----------
<S> <C> <C> <C> <C> <C>
Revenue:
Ticket sales......................... $ 8,659
Television and radio................. 2,795
Advertising and promotion............ 1,503
Arena operations..................... 1,301
Rooms................................ 8,374 $17,056
Yachting and marina services......... 3,578
Food, beverage and banquets.......... 5,189 15,610
Retail and other..................... 2,293 17,016
Other, primarily concessions......... $ 150 1,275
--- --- ----- ----- -------
Total revenue................... 150 34,967 49,682
Cost of revenue:
Team operations...................... 14,667
Ticketing and arena operations....... 1,284
Rooms................................ 2,057 5,005
Yachting and marina services......... 927
Food, beverage and banquets.......... 4,123 12,865
Telephone, retail and other.......... 1,050 8,922
Selling, general and
administrative..................... 998 $(689)(x)(aa) 11,014 17,132 $ (644)(r)(aa)
--- --- ----- ----- -------
Total cost of revenue........... 998 (689) 35,122 43,924 (644)
Amortization and depreciation......... (18) (76)(q) (4,465) (3,108) (877)(e)
--- --- ----- ----- -------
Operating income (loss)............... (866) 612 (4,621) 2,650 (232)
Interest and other, net............... (1,985) (8,242) 2,242(s)
--- --- ----- ----- -------
Net income (loss)..................... $(866) $ 612 $(6,606) $(5,592) $ 2,010
=== === ===== ===== =======
Net loss per share.................... $ (0.34)(t)
Pro Forma weighted average shares
outstanding.......................... 19,450(t)
<CAPTION>
PRO FORMA AS
ADJUSTED FOR THE
BUSINESS TO BE
ACQUIRED
----------------
<S> <C>
Revenue:
Ticket sales......................... $ 8,659
Television and radio................. 2,795
Advertising and promotion............ 1,503
Arena operations..................... 1,301
Rooms................................ 25,430
Yachting and marina services......... 3,578
Food, beverage and banquets.......... 20,799
Retail and other..................... 19,309
Other, primarily concessions......... 1,275
------
Total revenue................... 84,649
Cost of revenue:
Team operations...................... 14,667
Ticketing and arena operations....... 1,284
Rooms................................ 7,062
Yachting and marina services......... 927
Food, beverage and banquets.......... 16,988
Telephone, retail and other.......... 9,972
Selling, general and
administrative..................... 27,502
------
Total cost of revenue........... 78,402
Amortization and depreciation......... (8,450)
------
Operating income (loss)............... (2,203)
Interest and other, net............... (7,985)
------
Net income (loss)..................... $(10,188)
======
Net loss per share.................... $ (0.39)(u)
Pro Forma weighted average shares
outstanding.......................... 26,032(u)
</TABLE>
The accompanying notes to unaudited pro forma consolidated financial statements
are an integral part of these statements.
F-25
<PAGE> 82
FLORIDA PANTHERS HOLDINGS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
BUSINESSES ACQUIRED(J)
----------------------
FLORIDA
PANTHERS
HOLDINGS, INC. OFFERING PRO FORMA
ACTUAL ADJUSTMENTS AS ADJUSTED 2301 LTD. RAHN LTD.
-------------- ----------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C>
Revenue:
Ticket Sales..................................... $ 23,226 $ 23,226
Television and radio............................. 5,141 5,141
Advertising and promotion........................ 2,192 2,192
Arena operations................................. 1,082 1,082
Rooms............................................ $12,036 $ 6,251
Yachting and marina services..................... 3,481 3,813
Food, beverage and banquets...................... 8,309 2,379
Retail and other................................. 2,513 2,365
Other, primarily concessions..................... 2,446 2,446
-------- ------ -------- ------- -------
Total revenue............................... 34,087 34,087 26,339 14,808
Cost of revenue:
Team operations.................................. 32,639 32,639
Ticketing and arena operations................... 3,319 3,319
Rooms............................................ 2,698 1,402
Yachting and marina services..................... 1,175 733
Food, beverage and banquets...................... 6,340 1,870
Telephone, retail and other...................... 1,078 1,088
Selling, general and administrative.............. 8,371 8,371 7,957 5,068
-------- ------ -------- ------- -------
Total cost of revenue....................... 44,329 44,329 19,248 10,161
Amortization and depreciation.................... (9,815) (9,815) (1,608) (1,935)
-------- ------ -------- ------- -------
Operating income (loss)........................... (20,057) (20,057) 5,483 2,712
Interest and other, net........................... (5,082) $5,030(d) (52) (2,299) (1,340)
-------- ------ -------- ------- -------
Net income (loss)................................. $(25,139) $5,030 $(20,109) $ 3,184 $ 1,372
======== ====== ======== ======= =======
Net loss per share................................ $ (4.76)(h) $ (1.99)(i)
Pro Forma weighted average shares outstanding..... 5,276(h) 10,114(i)
<CAPTION>
BUSINESSES ACQUIRED(J)
----------------------------------------------------------
PRO FORMA
AS ADJUSTED FOR
THE
ACQUISITION INCREDIBLE ACQUISITION BUSINESSES
ADJUSTMENTS ICE(Z) ADJUSTMENTS ACQUIRED
----------- ---------- ----------- ---------------
<S> <C> <C> <C> <C>
Revenue:
Ticket Sales..................................... $ 23,226
Television and radio............................. 5,141
Advertising and promotion........................ 2,192
Arena operations................................. 1,082
Rooms............................................ 18,287
Yachting and marina services..................... 7,294
Food, beverage and banquets...................... 10,688
Retail and other................................. 4,878
Other, primarily concessions..................... 2,446
------- -- --- --------
Total revenue............................... 75,234
Cost of revenue:
Team operations.................................. 32,639
Ticketing and arena operations................... 3,319
Rooms............................................ 4,100
Yachting and marina services..................... 1,908
Food, beverage and banquets...................... 8,210
Telephone, retail and other...................... 2,166
Selling, general and administrative.............. $ 411(aa) 21,807
------- -- --- --------
Total cost of revenue....................... 411 74,149
Amortization and depreciation.................... (1,458)(e) $(152)(q) (14,968)
------- -- --- --------
Operating income (loss)........................... (1,869) (152) (13,883)
Interest and other, net........................... (3,691)
------- -- --- --------
Net income (loss)................................. $(1,869) $ $(152) $(17,574)
======= == === ========
Net loss per share................................ $ (0.94)(v)
Pro Forma weighted average shares outstanding..... 18,727(v)
<CAPTION>
BUSINESS TO BE ACQUIRED(J)
--------------------------
PRO FORMA AS
ADJUSTED FOR
THE
BOCA RATON ACQUISITION BUSINESS TO BE
HOTEL & CLUB ADJUSTMENTS ACQUIRED
------------ ----------- --------------
<S> <C> <C> <C>
Revenue:
Ticket Sales..................................... $ 23,226
Television and radio............................. 5,141
Advertising and promotion........................ 2,192
Arena operations................................. 1,082
Rooms............................................ $ 47,044 65,331
Yachting and marina services..................... 7,294
Food, beverage and banquets...................... 33,465 44,153
Retail and other................................. 30,799 35,677
Other, primarily concessions..................... 2,446
-------- ------- --------
Total revenue............................... 111,308 186,542
Cost of revenue:
Team operations.................................. 32,639
Ticketing and arena operations................... 3,319
Rooms............................................ 10,895 14,995
Yachting and marina services..................... 1,908
Food, beverage and banquets...................... 25,597 33,807
Telephone, retail and other...................... 16,771 18,937
Selling, general and administrative.............. 38,223 $(1,169)(r)(aa) 58,861
-------- ------- --------
Total cost of revenue....................... 91,486 (1,169) 164,466
Amortization and depreciation.................... (6,420) (1,753)(e) (23,141)
-------- ------- --------
Operating income (loss)........................... 13,402 (584) (1,065)
Interest and other, net........................... (15,697) 3,697(s) (15,691)
-------- ------- --------
Net income (loss)................................. $ (2,295) $ 3,113 $(16,756)
======== ======= ========
Net loss per share................................ $ (0.66)(w)
Pro Forma weighted average shares outstanding..... 25,309(w)
</TABLE>
The accompanying notes to unaudited pro forma consolidated financial statements
are an integral part of these statements.
F-26
<PAGE> 83
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 Prior Offerings. The
loans had an interest rate of LIBOR plus .75% per annum. In November 1996
these loans were repaid with the proceeds of the Prior Offerings.
(e) Represents the additional depreciation expense associated with the
stepped-up basis of the property and equipment of the acquired companies.
(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) 7,300,000 shares issued in connection with the Prior
Offerings for the period for which they were actually outstanding.
(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) 4,838,710 shares (of the 7,300,000 shares issued in the
Prior Offerings) issued to repay the Company's outstanding indebtedness as
if they had been outstanding for the period prior to the Prior Offerings
and (iii) 7,300,000 shares issued in connection with the Prior 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 5,275,678 shares issued in connection with the Reorganization
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 (i) 5,275,678 shares issued in connection with the
Reorganization and (ii) 4,838,710 shares (of the 7,300,000 shares
F-27
<PAGE> 84
issued in the Prior Offerings) issued to repay the Company's outstanding
indebtedness as if they had been outstanding for the entire period
presented.
(j) 2301 Ltd., Rahn Ltd., Incredible Ice and Boca Raton Resort and Club have
fiscal years which end on December 31. Reflected hereon are the results of
operations for 2301 Ltd., Rahn Ltd., Incredible Ice and Boca Raton Resort
and the Club for the six month period ended December 31, 1996 and the
twelve month period ended June 30, 1996.
(k) 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.
(l) Represents the acquisition of substantially all of the net assets of
Incredible Ice. The consideration paid includes approximately $6,700,000 of
debt, which was retired (the balance of which was $6,542,000 at December
31, 1996) and related closing costs, $1,000,000 in cash and 212,766 shares
of Class A Common Stock, valued at $4,000,000, which was based upon the
share price at execution of the definitive purchase agreement reduced by a
discount to reflect the unregistered nature of the securities and the size
of the stock issued. The excess of the purchase price over the historical
cost was allocated to goodwill since the assets were thereby constructed
and, therefore, historical cost approximated fair market value.
(m) 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>
HISTORICAL STEP-UP AS ADJUSTED
---------- -------- -----------
<S> <C> <C> <C>
Land........................................... $ 26,851 $ 79,376 $106,227
Building, net.................................. 63,923 159,986 222,909
Furniture and equipment, net................... 18,204 18,204
Construction-in-progress....................... 6,750 6,750
-------- -------- --------
Total fixed assets........................... $115,728 $238,362 $354,090
======== ======== ========
</TABLE>
The relative market values of property and equipment were determined by the
Company's management in consultation with representatives of the current
property owners. Factors considered in the allocation include trends in the
hospitality industry and local real estate market. Although such allocation
is preliminary, management believes that no material adjustments will be
required once the Company's due diligence process has been completed.
(n) Represents the issuance of 4,928,917 shares of Class A Common Stock in
exchange for the property and equipment detailed in note (m) less the fair
value of long-term debt, per the Contribution and Exchange Agreement. The
fair market value of the net assets received is based on the average share
price for 5 days before and 5 days after execution of the Contribution and
Exchange Agreement reduced by a discount which was based upon the nature of
the securities received (convertible limited partnership units) and the
size of the block of shares to be ultimately issued. The adjustment amount
is a combination of the partners' deficit and the fair value noted.
(o) Represents adjustments to outstanding debt and related costs, including
yield maintenance adjustment of $19,800,000 resulting from the early
retirement of debt in connection with the change of control, reduction of
deferred loan costs of $10,080,000 and accrual of acquisition closing costs
of $11,800,000.
(p) Represents the use of Private Placement proceeds to repay approximately
$45,000,000 of outstanding debt.
(q) Represents the amortization of the excess of purchase price over the
historical cost basis of assets of Incredible Ice ($6,092,000) over an
estimated useful life of 40 years.
(r) Represents the net difference in contracted expenses incurred prior to the
acquisition versus those to be incurred subsequent to the acquisition. Such
costs include payments under employment contracts and management
agreements.
F-28
<PAGE> 85
(s) Represents the reduction of interest expense associated with approximately
$150,000,000 of the adjusted debt balances related to the acquisition of
the Boca Raton Hotel and Club.
(t) 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) 4,838,710 shares (of the 7,300,000 shares issued in the
Prior Offerings) issued to repay the Company's outstanding indebtedness as
if they had been outstanding for the period prior to the Prior Offerings,
(iii) 7,300,000 shares issued in connection with the Prior Offerings for
the period for which they were actually outstanding, (iv) 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.) and (v) 212,766 shares issued
in the acquisition of Incredible Ice as if they had been outstanding for
the entire period presented.
(u) 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) 4,838,710 shares (of the 7,300,000 shares issued in the
Prior Offerings) issued to repay the Company's outstanding indebtedness as
if they had been outstanding for the period prior to the Prior Offerings,
(iii) 7,300,000 shares issued in connection with the Prior Offerings for
the period for which they were actually outstanding, (iv) 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.), (v) 212,766 shares issued in
the acquisition of Incredible Ice, (vi) 4,928,917 shares issued in
connection with the acquisition of Boca Raton Hotel and Club and (vii)
1,652,589 shares (of the 2,460,000 issued in the Private Placement) to be
used to repay outstanding indebtedness to be assumed in connection with the
acquisition of Boca Raton Hotel and Club as if they had been outstanding
for the entire period presented.
(v) 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) 4,838,710 shares (of the 7,300,000 shares offered in
the Prior Offerings) issued to repay the Company's outstanding
indebtedness, (iii) 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.) and (iv) 212,766 shares issued in the acquisition of Incredible Ice
as if they had been outstanding for the entire period presented.
(w) 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) 4,838,710 shares (of the 7,300,000 shares offered in
the Prior Offerings) issued to repay the Company's outstanding
indebtedness, (iii) 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.), (iv) 212,766 shares issued in the acquisition of Incredible Ice, (v)
4,928,917 shares issued in connection with the acquisition of Boca Raton
Hotel and Club and (vi) 1,652,589 shares (of the 2,460,000 issued in the
Private Placement) to be used to repay outstanding indebtedness to be
assumed in connection with the acquisition of Boca Raton Hotel and Club as
if they had been outstanding for the entire period presented.
(x) Represents the removal of certain costs incurred by the previous owners
including start-up financing and legal fees.
(y) Represents amounts due to be received from the former owner of Incredible
Ice.
(z) Incredible Ice commenced its operations during November, 1996. Accordingly,
there are no results of operations included hereon for the period ended
June 30, 1996.
(aa) Represents a management fee equal to 1% of revenue payable to Huizenga
Holdings.
F-29
<PAGE> 86
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.
F-30
<PAGE> 87
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
F-31
<PAGE> 88
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.
F-32
<PAGE> 89
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.
F-33
<PAGE> 90
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.
F-34
<PAGE> 91
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 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.
F-35
<PAGE> 92
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>
F-36
<PAGE> 93
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%.
F-37
<PAGE> 94
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
F-38
<PAGE> 95
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.
F-39
<PAGE> 96
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>
F-40
<PAGE> 97
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.
F-41
<PAGE> 98
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.
F-42
<PAGE> 99
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.
F-43
<PAGE> 100
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.
F-44
<PAGE> 101
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.
F-45
<PAGE> 102
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.
F-46
<PAGE> 103
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.
F-47
<PAGE> 104
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.
F-48
<PAGE> 105
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
F-49
<PAGE> 106
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 the Company, 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.
F-50
<PAGE> 107
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Partners of
Coral Springs Ice, Ltd.:
We have audited the accompanying balance sheet of Coral Springs Ice, Ltd.
(a Florida limited partnership) as of December 31, 1996, and the related
statements of operations, partners' equity and cash flows for the period from
inception (February 26, 1996) to December 31, 1996. 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 Coral Springs Ice, Ltd. as
of December 31, 1996, and the results of its operations and its cash flows for
the period from inception (February 26, 1996) to December 31, 1996 in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Fort Lauderdale, Florida,
February 7, 1997.
F-51
<PAGE> 108
CORAL SPRINGS ICE, LTD.
BALANCE SHEET
DECEMBER 31, 1996
<TABLE>
<S> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................. $ 35,614
Accounts receivable....................................... 62,513
Inventories............................................... 71,847
Prepaid expenses and other current assets................. 56,883
----------
Total current assets.............................. 226,857
Buildings and Equipment, at cost, net of accumulated
depreciation of $17,285................................... 6,298,340
Other Assets................................................ 138,000
----------
Total assets...................................... $6,663,197
==========
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Accounts payable.......................................... $ 181,659
Accrued expenses.......................................... 376,684
Deferred revenue.......................................... 159,869
Retainage payable......................................... 269,333
Note payable.............................................. 6,541,849
----------
Total current liabilities......................... 7,529,394
Partners' Equity (Deficit).................................. (866,197)
----------
Total liabilities and partners' equity............ $6,663,197
==========
</TABLE>
The accompanying notes to financial statements are an integral part of this
balance sheet.
F-52
<PAGE> 109
CORAL SPRINGS ICE, LTD.
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM INCEPTION (FEBRUARY 26, 1996) TO DECEMBER 31, 1996
<TABLE>
<S> <C>
Revenues.................................................... $ 149,653
Cost of revenues............................................ (49,155)
---------
Gross profit...................................... 100,498
Selling, General and Administrative Expenses................ (966,795)
---------
Net loss.......................................... $(866,297)
=========
</TABLE>
The accompanying notes to financial statements are an integral part of this
statement.
F-53
<PAGE> 110
CORAL SPRINGS ICE, LTD.
STATEMENT OF PARTNERS' EQUITY
FOR THE PERIOD FROM INCEPTION (FEBRUARY 26, 1996) TO DECEMBER 31, 1996
<TABLE>
<CAPTION>
GENERAL LIMITED
PARTNER PARTNER TOTAL
--------- -------- ---------
<S> <C> <C> <C>
Partners' Equity:
Capital contribution at inception.................. $ 90 $ 10 $ 100
Net loss........................................... (779,667) (86,630) (866,297)
--------- -------- ---------
Partners' deficit at December 31, 1996..... $(779,577) $(86,620) $(866,197)
========= ======== =========
</TABLE>
The accompanying notes to financial statements
are an integral part of this statement.
F-54
<PAGE> 111
CORAL SPRINGS ICE, LTD.
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM INCEPTION (FEBRUARY 26, 1996) TO DECEMBER 31, 1996
<TABLE>
<S> <C>
Cash Flows From Operating Activities:
Net loss.................................................. $ (866,297)
Adjustments to reconcile net loss to net cash used by
operating activities --
Depreciation and amortization.......................... 17,285
Changes in assets and liabilities:
Accounts receivable.................................. (62,513)
Inventories.......................................... (71,847)
Prepaid expenses..................................... (56,883)
Other assets......................................... (138,000)
Accounts payable..................................... 181,659
Accrued expenses..................................... 326,684
Deferred revenue..................................... 159,869
Retainage payable.................................... 269,333
-----------
Net cash used in operating activities............. (240,710)
-----------
Cash Flows From Investing Activities:
Capital expenditures...................................... (6,315,625)
-----------
Net cash used in investing activities............. (6,315,625)
-----------
Cash Flows From Financing Activities:
Proceeds from note payable................................ 6,541,849
Advances from related parties............................. 50,000
Capital contributions..................................... 100
-----------
Net cash provided by financing activities......... 6,591,949
-----------
Net increase in cash and cash equivalents......... 35,614
Cash and Cash Equivalents, beginning of period.............. --
-----------
Cash and Cash Equivalents, end of period.................... $ 35,614
===========
</TABLE>
The accompanying notes to financial statements
are an integral part of this statement.
F-55
<PAGE> 112
CORAL SPRINGS ICE, LTD.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
(1) BACKGROUND OF THE PARTNERSHIP AND OPERATIONS:
Coral Springs Ice, Ltd., a Florida limited partnership (the "Partnership"),
was organized on February 26, 1996 with Coral Springs Ice, Inc. as the general
partner as well as a limited partner and Iceland (Coral Springs) Corp. as the
other limited partner. The Partnership was formed to construct, operate and
manage an enclosed twin ice rink facility (the "Facility") in Coral Springs,
Florida. The Facility will operate as the concessionaire under a Concession
Agreement with the City of Coral Springs. The Partnership completed construction
and commenced operation of the Facility in November, 1996.
(2) 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) 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.
(c) Inventories
Inventories are stated at the lower of first-in, first-out cost or market.
Inventories consist of hockey and figure skating retail goods and food and
beverage items.
(d) Buildings and Equipment
The Partnership's assets are carried at the lower of cost or estimated fair
value. All expenditures for improvements are capitalized. The costs of repairs
and maintenance are charged to expense as incurred.
(e) Depreciation
The following estimated useful lives are used for depreciating property and
equipment on a straight-line basis.
<TABLE>
<S> <C>
Building and improvements................................... 40 years
Furniture, fixtures and equipment........................... 5-7 years
</TABLE>
(f) 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.
(g) Deferred Revenue
The Partnership collects fees in advance from customers for hockey and
figure skating programs and records such fees as deferred revenue. Revenue is
recognized as the related services are provided.
(h) Fair Value of Financial Instruments
The fair values of the Partnership's financial instruments, including
accounts receivable, long-term debt, accounts payable, accrued expenses and
other financial instruments, generally determined using the present
F-56
<PAGE> 113
CORAL SPRINGS ICE, LTD.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
value of estimated future cash flows using a discount rate commensurate with the
risks involved, approximate their carrying or contract values.
(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.
(4) MANAGEMENT AGREEMENT:
In November 1996, Real Ice Sports Facility Management, Inc. began providing
management services to the Partnership for a monthly fee of $6,250 included in
selling, general and administrative expenses. Coral Springs Ice, Ltd. operated
under the terms of a management agreement with this company through January
1997, although the agreement was never signed.
(5) BUILDINGS AND EQUIPMENT:
The balance of buildings and equipment at December 31, 1996, consists of
the following:
<TABLE>
<S> <C>
Building and improvements................................... $5,892,195
Furniture, fixtures and equipment........................... 423,430
----------
6,315,625
Less -- Accumulated depreciation............................ (17,285)
----------
Building and equipment, net................................. $6,298,340
==========
</TABLE>
Included in the building costs is $269,333 of retainage. This represents
the construction holdback of 5% of costs to date as per the construction
contract. It will be paid to the contractor when all work is satisfactorily
completed.
(6) NOTE PAYABLE:
The Partnership obtained a loan from Trizec Ice, Inc. (the sole owner of
Coral Springs Ice, Inc.) to fund construction costs of the Facility and related
costs. The outstanding loan balance ($6,678,874 as of January 31, 1997) was
repaid in connection with the sale of assets (see Note 8).
(7) CONCESSION AGREEMENT:
The Partnership is party to a concession agreement with the City of Coral
Springs which allows the Partnership to utilize city-owned land upon which the
Facility is located. The term of this agreement is 49 years with an option to
extend for two 25 year periods. The concession agreement requires the
Partnership to pay a minimum monthly rental of $2,500 (plus six percent sales
tax) to the City of Coral Springs. The agreement requires additional contingent
payments that are dependent on the level of revenues. In the first five years of
operations, four percent of total revenues, to the extent that this exceeds the
minimum monthly charge, is payable to the City of Coral Springs each month.
(8) SALE OF ASSETS:
On January 31, 1997, the Partnership completed the sale of substantially
all of its operating assets to Florida Panthers Ice Ventures, Inc., a
wholly-owned subsidiary of Florida Panthers Holdings, Inc.
F-57
<PAGE> 114
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Partners of
Boca Raton Hotel and Club Limited Partnership
In our opinion, the accompanying balance sheet and the related statements
of operations, of changes in partners' deficit and of cash flows present fairly,
in all material respects, the financial position of Boca Raton Hotel and Club
Limited Partnership at December 31, 1996, and the results of its operations and
its cash flows for the year in conformity with generally accepted accounting
principles. 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 of these
statements in accordance with generally accepted auditing standards which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Fort Lauderdale, Florida
January 29, 1997, except as to Note 12, which is
as of March 20, 1997
F-58
<PAGE> 115
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Partners
Boca Raton Hotel and Club Limited Partnership
We have audited the accompanying balance sheet of the Boca Raton Hotel and
Club Limited Partnership (A Limited Partnership) (the Partnership) as of
December 31, 1995, and the related statements of operations, changes in
partners' deficit and cash flows for each of the two years in the 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 the Boca Raton Hotel and
Club Limited Partnership (A Limited Partnership) at December 31, 1995, and the
results of its operations and its cash flows for each of the two years in the
period ended December 31, 1995, in conformity with generally accepted accounting
principles.
Ernst & Young LLP
West Palm Beach, Florida
January 26, 1996
F-59
<PAGE> 116
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1996 1995
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 1,126 $ 2,887
Restricted cash and short-term investments................ 18,887 13,671
Accounts receivable, net of allowance for doubtful
accounts of $412 and $50, respectively, in 1996 and
1995................................................... 12,203 12,249
Current portion of Premier Club promissory notes for
membership deposits.................................... 3,840 3,161
Other current assets...................................... 727 705
Prepaid insurance......................................... 1,697 2,074
Inventories............................................... 5,725 5,752
-------- --------
Total current assets.............................. 44,205 40,499
Premier Club promissory notes for membership deposits, less
current portion........................................... 8,246 6,964
Property and improvements:
Land...................................................... 26,851 26,851
Buildings and improvements................................ 114,199 103,354
Furnishings and equipment................................. 20,407 19,934
Construction in progress.................................. 6,750 4,199
-------- --------
168,207 154,338
Less accumulated depreciation............................. (52,479) (49,914)
-------- --------
115,728 104,424
Deferred loan costs and other, net.......................... 10,080 6,546
-------- --------
$178,259 $158,433
======== ========
LIABILITIES AND PARTNERS' DEFICIT
Current liabilities:
Accounts payable, trade................................... $ 4,490 $ 7,289
Advance deposits.......................................... 3,027 3,118
Accrued interest payable.................................. 3,296 2,559
Accrued payroll costs and employee benefits............... 3,015 3,108
Due to general partner.................................... 3,725 5,900
Other accounts payable and accrued expenses............... 6,102 5,654
Deferred membership revenue............................... 7,232 6,371
Current portion of mortgage and other loans payable....... 400 2,347
-------- --------
Total current liabilities......................... 31,287 36,346
Mortgage and other loans payable, less current portion...... 174,800 140,889
Accrued settlement costs.................................... 500 950
Premier Club membership deposits and credits, net........... 55,905 49,717
Partners' deficit........................................... (84,233) (69,469)
-------- --------
$178,259 $158,433
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-60
<PAGE> 117
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Revenue:
Rooms..................................................... $ 44,856 $ 44,050 $ 41,191
Food and beverage......................................... 34,762 32,764 32,841
Club Membership, Retail and Other......................... 34,109 31,376 29,339
-------- -------- --------
Total revenue..................................... 113,727 108,190 103,371
Costs and expenses:
Rooms..................................................... 10,913 10,228 10,038
Food and beverage......................................... 26,363 24,814 25,136
Club Membership, Retail and Other......................... 19,005 17,569 17,103
Selling, general and administrative....................... 17,999 16,679 19,498
Property operations, maintenance and energy costs......... 10,959 11,125 9,604
Other indirect costs........................................ 8,911 8,041 6,799
-------- -------- --------
Total cost of revenues...................................... 94,150 88,456 88,178
Depreciation and amortization............................... 6,215 6,623 7,108
-------- -------- --------
Income from operations...................................... 13,362 13,111 8,085
Interest expense, net....................................... 16,562 14,909 17,382
-------- -------- --------
Loss before extraordinary item.............................. (3,200) (1,798) (9,297)
Extraordinary item -- net gain (loss) on debt
restructuring............................................. (8,932) 10,328 6,704
-------- -------- --------
Net (loss) income........................................... $(12,132) $ 8,530 $ (2,593)
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-61
<PAGE> 118
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
(IN THOUSANDS)
<TABLE>
<CAPTION>
CLASS A CLASS B
GENERAL LIMITED LIMITED
PARTNER PARTNERS PARTNER TOTAL
------- -------- ------- --------
<S> <C> <C> <C> <C>
Partners' deficit at January 1, 1994.................... $(2,368) $(71,606) $(1,432) $(75,406)
Net loss.............................................. (52) (2,495) (46) (2,593)
------- -------- ------- --------
Partners' deficit at December 31, 1994.................. (2,420) (74,101) (1,478) (77,999)
Net income............................................ 171 8,209 150 8,530
------- -------- ------- --------
Partners' deficit at December 31, 1995.................. (2,249) (65,892) (1,328) (69,469)
Distribution.......................................... (2,500) (132) (2,632)
Net loss.............................................. (243) (11,675) (214) (12,132)
------- -------- ------- --------
Partners' deficit at December 31, 1996.................. $(2,492) $(80,067) $(1,674) $(84,233)
======= ======== ======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-62
<PAGE> 119
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
1996 1995 1994
---------- --------- ---------
<S> <C> <C> <C>
Operating activities:
Net income (loss)......................................... $ (12,132) $ 8,530 $ (2,593)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization.......................... 6,935 6,623 7,108
Loss (gain) on debt restructuring...................... 5,417 (10,328) (6,704)
Provision for settlement agreements.................... 300 -- 1,250
Changes in operating assets and liabilities:
Restricted cash and short-term investments........... (5,216) (10,964) 1,124
Accounts receivable.................................. (1,915) (2,193) (1,955)
Prepaid expenses and other assets.................... 354 1,146 (4,105)
Inventories.......................................... 27 (227) 703
Accounts payable, trade.............................. (2,799) 1,998 1,265
Advance deposits..................................... (91) 32 (210)
Accrued interest payable............................. 737 197 4,682
Accrued payroll costs and employee benefits.......... (93) (385) 898
Other accounts payable and accrued expenses.......... (4,184) 1,669 1,569
Deferred membership revenue.......................... 861 325 535
Premier Club membership deposits..................... 6,049 3,987 5,770
Accrued settlement costs............................. (750) -- --
--------- -------- --------
Net cash provided by (used in) operating
activities........................................ (6,500) 410 9,337
--------- -------- --------
Investing activities:
Additions to property and improvements.................... (14,829) (4,601) (3,454)
Additions to construction in progress..................... (2,551) -- --
--------- -------- --------
Net cash used in investing activities................ (17,380) (4,601) (3,454)
--------- -------- --------
Financing activities:
Proceeds from increase in mortgage and other loans
payable................................................ 155,000 60,000 48,583
Principal payments of mortgage and other loans payable.... (123,036) (54,313) (48,071)
Principal payment on Banyan mortgage loans................ -- (3,500) (1,000)
Payment of financing costs................................ (7,345) (725) --
Distributions to Limited Partners......................... (2,500) -- --
--------- -------- --------
Net cash (used in) provided by financing
activities........................................ 22,119 1,462 (488)
--------- -------- --------
Net increase (decrease) in cash and cash equivalents........ (1,761) (2,729) 5,395
Cash and cash equivalents at beginning of year.............. 2,887 5,616 221
--------- -------- --------
Cash and cash equivalents at end of year.................... $ 1,126 $ 2,887 $ 5,616
========= ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for interest...................... $ 14,148 $ 14,710 $ 12,633
========= ======== ========
Accrual of distribution payable to Class B Limited
Partners.................................................. $ 132 $ -- $ --
========= ======== ========
Accrual of General Partner Fees............................. $ 2,325 $ -- $ --
========= ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-63
<PAGE> 120
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 (IN THOUSANDS OF DOLLARS)
1. ORGANIZATION
The Boca Raton Hotel and Club Limited Partnership (the Partnership) was
formed in June 1983 under the laws of the State of Florida. The purpose of the
Partnership is to purchase, own, manage and operate the Boca Raton Resort and
Club, a 298-acre resort complex containing several hotel facilities with a total
of 963 guest rooms. In addition, the complex includes 31 tennis courts, 2 golf
courses, marina, beach club and other recreational facilities. Included within
the resort is the Boca Golf and Tennis Country Club (a separate facility) (see
Note 6). The Partnership also leases the food and beverage concessions, and has
contracted for golf access at the Deer Creek and Carolina country clubs.
As of January 15, 1993, the original general partner, VMS Realty Investment
Ltd. (VMSRIL), withdrew from the Partnership as general partner and was replaced
by the Boca Raton Management Company, a New York general partnership (BRMC/NY).
BRMC/NY was succeeded as general partner on October 1, 1993 by BRMC, L.P., a
Delaware limited partnership (BRMC) (see Note 3).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting principles and practices used in
the preparation of the financial statements follows:
BASIS OF FINANCIAL STATEMENT PRESENTATION
The Partnership prepares its financial statements in conformity with
generally accepted accounting principles. These principles require management to
(1) make estimates and assumptions that affect the reported amounts of assets
and liabilities, (2) disclose contingent assets and liabilities at the date of
the financial statements and (3) report amounts of revenue and expenses during
the reporting period. Actual results could differ from these estimates.
CASH EQUIVALENTS AND RESTRICTED CASH
The Partnership considers all highly liquid investments with a maturity of
three months or less from the date purchased to be cash equivalents. Restricted
cash consists principally of escrow accounts restricted as to use and maintained
in accordance with the terms of the Partnership's First Mortgage Notes. Short
term investments consist primarily of repurchase agreements.
FAIR VALUES OF FINANCIAL INSTRUMENTS
At December 31, 1996 and 1995, the carrying amounts of cash, cash
equivalents and short-term investments approximate their fair value due to their
short duration to maturity. The carrying amount of the mortgages and other loans
approximate their fair value.
CONCENTRATIONS OF CREDIT RISK AND MARKET RISK
Concentration of credit risk and market risk associated with cash, cash
equivalents, restricted cash and short-term investments are considered low due
to the credit quality of the issuers of the financial instruments held by the
Partnership and due to their short duration to maturity. Accounts receivable are
primarily from major credit card companies and other large corporations. The
Partnership performs ongoing credit evaluations of its significant customers and
generally does not require collateral.
PREMIER CLUB MEMBERSHIP DEPOSITS
The Partnership classifies premier club membership deposits as an operating
activity in the Statement of Cash Flows (see Note 10).
F-64
<PAGE> 121
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS) -- (CONTINUED)
PROPERTY, IMPROVEMENTS AND DEPRECIATION
Property and improvements are stated at cost and are depreciated on the
straight-line method over the estimated useful lives of the assets as follows:
<TABLE>
<S> <C>
Buildings and improvements.............................. 15 - 30 years
Furnishings and equipment............................... 3 - 10 years
</TABLE>
Provision for value impairments are recorded with respect to such assets
whenever the estimated future cash flows from operations and projected sales
proceeds are less than the net carrying value. The Partnership implemented
Statements on Financial Accounting Standards (FAS) No. 121, Accounting for
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,
effective January 1, 1996. The implementation of FAS No. 121 did not have a
material impact on the financial statements. Costs of major renewals and
improvements which extend useful lives are capitalized. Expenditures for
maintenance and repairs are charged to expense as incurred.
INVENTORIES
Inventories consisting of food, beverage and operating supplies are
determined using the first-in, first-out method and are stated at the lower of
cost or market.
DEFERRED LOAN COSTS
Deferred loan costs, primarily loan origination and related fees, are
capitalized and amortized on the straight-line basis over the terms of the
respective debt, which approximates the effective interest method. Deferred loan
costs are presented net of accumulated amortization. At December 31, 1996 and
1995, accumulated amortization totaled $643 and $1,320, respectively.
DEFERRED MEMBERSHIP REVENUE
Deferred membership revenue is recognized as income ratably over the
membership year commencing October 1.
RECLASSIFICATIONS
Certain items for 1994 and 1995 have been reclassified to conform to the
1996 presentation.
PARTNERSHIP RECORDS
The Partnership's records are maintained on the accrual basis of accounting
as adjusted for federal income tax reporting purposes. The accompanying
financial statements have been prepared from such records after making
adjustments, where applicable, to reflect the Partnership's accounts in
accordance with generally accepted accounting principles (GAAP). The net effect
of these items is summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------
1996 1995
-------------------- -------------------
GAAP TAX GAAP TAX
BASIS BASIS BASIS BASIS
--------- -------- -------- --------
<S> <C> <C> <C> <C>
Total assets................................. $ 178,259 $153,248 $158,433 $133,290
Partners' deficits:
General Partner............................ (2,492) (3,127) (2,249) (2,834)
Class A Limited Partners................... (80,067) (102,207) (65,892) (85,631)
Class B Limited Partner.................... (1,674) (1,964) (1,328) (1,706)
</TABLE>
F-65
<PAGE> 122
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS) -- (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------
1996 1995 1994
------------------- --------------- -----------------
GAAP TAX GAAP TAX GAAP TAX
BASIS BASIS BASIS BASIS BASIS BASIS
-------- -------- ------ ------ ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net income (loss):
General Partner................ $ (243) $ (293) $ 171 $ 182 $ (52) $ (163)
Class A Limited Partners....... (11,675) (14,076) 8,209 8,767 (2,495) (7,835)
Class B Limited Partner........ (214) (258) 150 161 (46) (144)
</TABLE>
INCOME TAXES
No provision has been recorded for income taxes or related credits in the
Partnership's financial statements as the results of operations are includable
in the income tax returns of the partners. The differences between financial
statement income or loss and tax income or loss relate primarily to the methods
and lives used to depreciate fixed assets, the treatment of costs of the Premier
Membership Program, the treatment of syndication costs and the treatment of the
1994, 1995 and 1996 debt restructurings.
3. PARTNERSHIP AGREEMENT
Operating profits and losses of the Partnership are allocated pursuant to
the terms of the partnership agreement or in accordance with Internal Revenue
Code Section 704(b). Profits and losses attributable to capital items such as a
sale or refinancing are allocated among the partners in accordance with the
Partnership agreement.
Distributions of cash flows are made, subject to the participation therein
of BRMC, as follows: (a) first, to the Limited Partners in an amount equal to
12% per annum (on a non-cumulative basis) of their aggregate capital
contributions (95% to Class A and 5% to Class B); (b) then, to BRMC, the payment
of a subordinated incentive fee, as defined in the Partnership Agreement; and
(c) then, of the balance, 98% to the Limited Partners (93.1% to Class A and 4.9%
to Class B) and 2% to BRMC.
Distributions of capital items are made as follows: (a) first, 100% to the
Limited Partners until such time as each Limited Partner has received
distributions sufficient to reduce their aggregate capital contribution to zero;
(b) then, 100% to BRMC until such time as BRMC has received distributions
sufficient to reduce its aggregate capital contributions to zero; (c) then, to
the Class A Limited Partners to the extent not previously paid from Cash Flow an
amount equal to: 10% per annum of their aggregate capital contributions (on a
cumulative basis from January 1, 1984); (d) then, first to the Limited Partners,
90% (85.5% to Class A and 4.5% to Class B) of the next $16,000 and then 10% of
such $16,000 to BRMC; and (3) then, 70% to the Limited Partners (66.5% to Class
A and 3.5% to Class B) and 30% to BRMC.
In 1996, the Partnership made capital distributions totaling $2,500 to the
Class A Limited Partners and accrued $132 for distributions to the Class B
Limited Partners.
The Partnership relies on mortgages and other loans to fund capital
improvements and construction projects. The Partnership expects to meet its cash
requirements through operations and the use of existing cash balances.
As general partner, BRMC is entitled to receive the following forms of
compensation and additional distributions (General Partner Compensation):
1. A supervisory management fee, the lesser of (a) $50 per month and
(b) 90% of the hypothetical supervisory fee formerly payable to an
affiliate of VMSRIL (see Note 8).
2. A debt restructuring fee with existing creditors, .5% of the
principal amount of the Partnership's indebtedness restructured (see Note
8).
F-66
<PAGE> 123
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS) -- (CONTINUED)
3. A debt or equity capital raising fee, 1.5% of the amount raised. To
the extent any capital raised is applied to repay indebtedness, no debt
restructuring fee referred to in 2 above shall be payable with respect to
the portion of the indebtedness for which a capital raising fee is charged
(see Note 8).
4. A debt reduction fee, 10% of the principal amount of the debt
extinguished. BRMC would receive 20% of its debt reduction fee at the
closing of the debt reduction transaction, with the balance paid from (a)
any excess proceeds from the refinancing of such debt, and (b) any
distributions resulting from any sale or refinancing as a preference to the
Limited Partners' distributions thereunder (see Note 8).
5. A participation in cash distributions, BRMC will receive the
following distributions:
<TABLE>
<CAPTION>
BRMC
CUMULATIVE AMOUNT DISTRIBUTED PERCENTAGE
- ----------------------------- ----------
<S> <C> <C>
First $10,000.................................................. 1%
Next $10,000.................................................. 2
Next $10,000.................................................. 3
Next $10,000.................................................. 4
Next $10,000.................................................. 5
Over $50,000.................................................. 10
</TABLE>
In the event the Limited Partners are diluted in connection with any
offering of new Partnership equity, the distribution breakpoints (DBP)
in the above table will be adjusted in accordance with the following
formula: DBP divided by that percentage of the Partnership's equity
owned by the existing Limited Partners upon completion of the financing.
Notwithstanding any of the foregoing, BRMC shall receive a total share
of such distributions of not less than $500. Such minimum shall not
apply in the event that the Limited Partners' cumulative distributions
have not exceeded Limited Partners' taxes due thereon.
6. The foregoing elements set forth in preceding subparagraphs 2, 3, 4
and 5 are limited by the provisions of the first mortgage notes (see Note
5).
4. LETTERS OF CREDIT
As of December 31, 1996 and 1995, the Partnership has two letters of credit
which secure two operating leases. The letters of credit are collateralized by
certificates of deposit totaling $500 which mature in August 1997 and are
included in restricted cash and short-term investments.
5. MORTGAGES AND OTHER LOANS PAYABLE
FIRST MORTGAGE NOTES
On August 22, 1996, the Partnership entered into an agreement with a
consortium of financial institutions to borrow $130,000 primarily for the
purpose of refinancing existing first mortgage notes. The agreement consists of
a $110,000 Senior Facility (Senior Notes) and a $20,000 Subordinate Facility
(Subordinate Notes). Both Facilities mature on August 22, 2001 and accrue
interest, based on a 360 day year, payable monthly in arrears. The Senior Notes
accrue interest at the lenders' base rate plus one-quarter percent (Base Rate)
or LIBOR plus two and one-quarter percent (LIBOR Rate). In 1996, the Partnership
selected the LIBOR Rate, averaging approximately 7.814%. The Subordinate Notes
accrue interest at a fixed rate of thirteen percent. Both Facilities are secured
by a first mortgage and lien on all assets held by the Partnership, except in
certain circumstances where other first liens are permitted. The outstanding
balance on the First Mortgage Notes at December 31, 1996 totaled $130,000.
The Partnership is required to make quarterly principal payments of $750 on
the Senior Notes commencing September 30, 1998 and increasing to $1,250 on
September 30, 1999 and to $1,750 on
F-67
<PAGE> 124
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS) -- (CONTINUED)
September 30, 2000. The Partnership is required to make additional principal
payments on the Senior Notes and initial principal payments on the Subordinate
Notes based upon certain cash flow conditions.
In accordance with the agreement, the Partnership deposits cash into
reserve accounts which are accumulated and restricted to support future debt
service, facility expansion, fixed asset replacement and real estate tax
payments. Both Facilities contain significant restrictions with respect to
payments to Partners and other debt holders.
SECOND MORTGAGE NOTE
On August 22, 1996, the Partnership entered into an agreement with an
institutional lender to borrow $35,000, as evidenced by a promissory note,
primarily for the purpose of the planned expansion of the Resort. The note is
secured by a second mortgage and lien on all assets held by the Partnership,
except in certain circumstances where other liens are permitted. At maturity,
August 21, 2003, or prepayment of the note, the Partnership is required to pay
an amount which will result in an annual internal rate of return to the lender
of eighteen and one-half percent (18.5%). Interest is payable quarterly in
arrears commencing October 1, 1996 at a rate of eight percent through December
31, 1998 and fourteen and one-half percent thereafter based on a 360 day year.
The Partnership accrues interest at 18.5% per annum. Additional interest and
principal payments are required based on certain cash flow conditions. The
outstanding balance on the Second Mortgage Note totaled $35,000 at December 31,
1996.
The Partnership may not prepay the note prior to its third anniversary
except in connection with a sale of Partnership assets to a third party. If
prepayment occurs before August 23, 2001, the Partnership is required to pay an
amount (Prepayment Amount) which would result in an 18.5% internal rate of
return to the lender through that date. The Prepayment Amount will be reduced by
the return which would result from the lenders' reinvestment of the repaid
principal at the United States Treasury Notes rate plus 250 basis points, if
prepayment results from sale of Partnership assets or from cash flow; or plus
150 basis points, if prepayment results from refinancing the note or sale or
issuance of any ownership interest in the Partnership.
THIRD MORTGAGE NOTE
On August 22, 1996, a note payable, which was previously secured by a first
mortgage, was replaced with a third mortgage and lien on all assets of the
Partnership. The note matures on September 30, 2003 and accrues interest at a
fixed rate of approximately 14.52% through September 30, 1998 and at a variable
rate thereafter payable quarterly in arrears. The outstanding balance on the
Third Mortgage Note at December 31, 1996 totaled $500.
The Partnership is required to make an additional payment (Final
Participation Interest) upon maturity of the loan or sale of the Partnership's
assets equaling the sum of $750, plus 5% of the Partnership's net asset value as
calculated based on certain criteria. In the event of refinancing of the
property, the Partnership is required to make a payment of 5% of the net
proceeds (Interim Participation Interest). Interim Participation Interest paid
will be deducted from the Final Participation Interest amount. In 1996, the
Partnership paid $125 of Interim Participation Interest.
OTHER NOTES PAYABLE
The Partnership's other notes payable represent two unsecured promissory
notes with original amounts of $8,000 and $2,000 dated October 7, 1994 related
to a settlement agreement whereby the Partnership terminated a 20-year
management agreement. Both promissory notes mature on October 7, 2004 and accrue
interest at a rate of 7% payable semi-annually in arrears.
The $8,000 promissory note requires future principal reductions of $320 on
October 7, 1997 and $400 on each October 7 from 1998 to 2003, with a balloon
payment of $5,040 due at maturity. The $2,000 promissory
F-68
<PAGE> 125
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS) -- (CONTINUED)
note payable requires future principal reductions of $80 on October 7, 1997 and
$100 on each October 7, from 1998 to 2003, with a balloon payment of $1,260 due
at maturity. The notes include limitations on additional senior debt.
At December 31, 1996, aggregate future maturities of mortgage and other
loans payable are as follows:
<TABLE>
<S> <C>
1997........................................................ $ 400
1998........................................................ 2,000
1999........................................................ 4,500
2000........................................................ 6,500
2001........................................................ 119,000
Thereafter.................................................. 42,800
--------
$175,200
========
</TABLE>
The following schedule reflects the mortgage and loan payable balances as
of December 31, 1995. Senior and subordinated notes were refinanced during 1996,
as disclosed above:
<TABLE>
<CAPTION>
1995
--------
<S> <C>
A senior note secured by the $130,000 first mortgage on
the principal resort property, improvements and all
assets and rights of the Partnership accruing interest
at 8.26%. The Partnership may pay the loan in whole or
in part at any time by paying a prepayment fee based on
a formula. $ 71,524
A subordinated note secured by the $130,000 first mortgage
on the principal resort property, improvements, and all
assets and rights of the Partnership accruing interest
at 14.52%. The balance at December 31, 1995 includes a
fee of $1,000 due upon payoff of the note. The loan has
a term of eight years and no amortization period [see
(b) and (d) below]. 51,000
A subordinated note secured by the $130,000 first mortgage
on the principal resort property, improvements and all
assets and rights of the Partnership accruing interest
at 14.52%. The note contains a provision whereby the
lender upon the sale or refinancing of the Partnership,
or substantially all of its assets, is entitled to an
amount based on a certain formula [see (a) below]. 500
Other loans payable:
A promissory note bearing interest at 14.5% per annum,
payable quarterly commencing April 1, 1996. The note is
collateralized by the notes receivable due from club
members for the Premier Membership Program at December
15, 1995 and additions thereafter (see Note 10). The
loan matures on December 15, 2002, at which time all
principal and any accrued unpaid interest is due. The
principal amount due at maturity of the note includes
an amount, in addition to principal and accrued
interest, sufficient to provide the lender an internal
rate of return of 18.5% per annum. [see (c) below]. 10,000
An unsecured promissory note dated October 7, 1994 with
interest at 7% per annum. The first interest payment is
due October 7, 1995, with subsequent payments of
interest due semiannually commencing April 1, 1996.
Principal payments commence October 7, 1996 in the
amount of $240 increasing to $400 in the year 2003 with
a balloon payment of $5,040 due October 7, 2004. 8,000
An unsecured promissory note dated October 7, 1994 with
interest at 7% per annum. The first interest payment is
due October 7, 1995, with subsequent payments of
interest due semiannually commencing April 1, 1996.
Principal payments commence October 7, 1996 in the
amount of $60 increasing to $100 in the year 2003 with
a balloon payment of $1,260 due October 7, 2004. 2,000
</TABLE>
F-69
<PAGE> 126
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS) -- (CONTINUED)
<TABLE>
<CAPTION>
1995
--------
<S> <C>
An unsecured promissory note dated October 7, 1994 with
interest at 7% per annum. Annual principal payments of
$100 plus interest commence October 7, 1995. $ 100
A note payable dated March 31, 1991 for $600 to fund the
redevelopment and renovation of a resort restaurant.
Principal and interest payments are made monthly over a
five-year term at an interest rate of prime plus 2.5%
(11.0% at December 31, 1995). 112
--------
143,236
Current portion of mortgage and other loans payable (2,347)
--------
$140,889
========
</TABLE>
- ---------------
(a) On October 11, 1994, the Partnership exercised its call option (the "1994
Refinancing") and paid $45,086 to reduce the then outstanding principal
balance of $55,000 on this subordinated note to $500, resulting in a gain on
debt restructuring of $6,704, net of $2,710 in capitalized costs on the
repaid subordinated note which were written off as a result of the
restructuring.
Also on October 11, 1994, the Partnership entered into a $48,500
subordinated note agreement with a new lender. The proceeds of the note
were reduced by a $1,000 commitment fee and used to make the $45,086
payment described above and to pay accrued interest of $216 on the repaid
subordinated note, resulting in net cash proceeds of $2,198.
(b) The Partnership's subordinated note in the original principal amount of
$48,500 was retired on September 29, 1995 (the "1995 Refinancing"). The
total principal and interest owed to the Lender under the note was $50,241.
An additional Payoff Premium of $1,500 was also owed to the Lender under the
note. The Partnership made a cash payment of $1,741 to the Lender for
accrued interest at September 29, 1995 and refinanced $50,000 with the
issuance of a $50,000 subordinated note. As a result of the 1995
Refinancing, approximately $1,696 in deferred loan costs were written off
resulting in a loss on extinguishment of debt of said amount.
In connection with the 1995 Refinancing, the Partnership paid $389 in
closing costs and legal fees. These loan costs were capitalized and are
being amortized on a straight line basis over the term of the loan.
(c) On December 15, 1995, the Partnership entered into a $10,000 promissory
note, the proceeds of which were deposited into an escrow account. The
balance in the escrow account at December 31, 1995 is $9,864 and is included
in restricted cash and short-term investments in the accompanying balance
sheet. The proceeds of the note are to be used for the construction of
certain hotel property.
The Note is prepayable at any time, provided that any prepayments made
prior to December 15, 2000 require a prepayment fee sufficient to provide
the holder an internal rate of return of 16% per annum through December 15,
2000 based upon a yield maintenance formula.
(d) The note calls for $1,000 fee due upon payoff. This fee is being accreted
over the life of the loan. At December 31, 1995, included in deferred loan
costs is approximately $968, which represents the $1,000 fee less
accumulated accretion of $32.
Under the terms of the senior and subordinated mortgage notes described
above, certain amounts are required to be deposited in an escrow account for the
purposes of paying personal and real property taxes. The balance in the personal
and real property taxes account was $853 at December 31, 1995. The terms of
these mortgages also require funds to be escrowed for capital repairs and
replacements to the resort. The balance in the capital repair and replacement
escrow account was $2,148 at December 31, 1995.
The mortgage loan agreements include certain restrictive covenants
including, among other things, the maintenance of a senior debt service ratio,
as defined, of 1.75 to 1 and a subordinate debt service coverage
F-70
<PAGE> 127
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS) -- (CONTINUED)
ratio, as defined, of 1.2 to 1, restrictions on general and limited partner
distributions and limitations on the incurrence of new debt.
6. BANYAN MORTGAGE LOANS
The Banyan mortgage loans consisted of three matured first mortgage loans
collateralized by certain land (the Marina Parcel) and the Boca Golf and Tennis
Country Club. At December 31, 1994, the mortgage loans had principal balances of
$8,100, $10,354 and $2,031 and accrued interest totaled $4,388. During 1994 and
1995, no principal payments were made, other than as described below, and, in
accordance with the terms of the agreements, interest totaling $2,419 was
incurred in 1994.
On December 29, 1994 (the Settlement Date), the Partnership entered into a
settlement agreement which called for the following: (1) a payment of $1,000,
which was made on November 29, 1994, and applied against outstanding principal;
(2) a payment to be made of $3,500, plus interest accrued from the Settlement
Date to the date of payment, to release the Boca Golf and Tennis Country Club
from the mortgage loans; and (3) a foreclosure sale on the Marina Parcel, to be
held subsequent to December 31, 1994.
On January 17, 1995, the Partnership made the $3,500 payment, plus accrued
interest of $18, and on January 26, 1995, a foreclosure sale was held and the
lender obtained ownership of the Marina Parcel.
The settlement is deemed to have occurred at the time the $3,500 payment
was made and the foreclosure sale was held. Accordingly, in 1995, the
Partnership recognized a net gain of $12,024 consisting of $21,373 in
forgiveness of principal and interest offset by a write-off of $9,349
representing the carrying value of the Marina Parcel.
The Partnership agreed to lease the Marina Parcel from the owner for $8 per
month which terminated December 1, 1996 and was subsequently extended to January
1, 1997. On January 2, 1997, the Partnership entered into an agreement with the
owner for the right of partial use of the marina property. The agreement's
initial term expires on September 1, 1997 and is automatically renewable upon
notice, unless terminated by either property owner or the Partnership.
7. SERVICES AGREEMENT
The Partnership has entered into a services agreement with an individual to
provide executive services. Pursuant to the agreement, the individual has agreed
to serve as a director of the corporate general partner of BRMC. The term of the
agreement is ten years commencing on January 1, 1993. As compensation for these
services, the individual receives the following:
1. Basic advisory fee of not less than $150 per year payable in equal
monthly installments.
2. For the first three calendar years, a guaranteed bonus equal to the
greater of $35 or 2.5% of the Partnership's adjusted contract year earnings
in excess of the contract year base level earnings.
3. Complimentary Premier Club membership.
The basic advisory fee of $150 was paid to the individual in 1994, 1995 and
1996. Cumulative bonuses totaling $107 have been accrued and are included in
other accounts payable and accrued expenses at December 31, 1996.
F-71
<PAGE> 128
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS) -- (CONTINUED)
8. OTHER RELATED PARTY TRANSACTIONS
As described in Note 3, BRMC is entitled to receive several forms of
compensation. In respect to Note 3 subparagraph 1, the Partnership paid $600 in
supervisory management fees during 1994, 1995 and 1996. In connection with Note
3 subparagraph 2, 3, 4 and 5, the following sets forth the extent of amounts
owed by the Partnership to BRMC.
<TABLE>
<S> <S> <C>
Fees incurred in 1993
Capital raising fee(1).................................... $ 1,650
Debt reduction fee(2)..................................... 1,416
---------
Balance due as of December 31, 1993......................... 3,066
Less: Payment made in 1994 in connection with balance due as
of December 31, 1993.................................. (500)
Plus: Fees incurred in 1994
Capital raising fee(3)................................ 728
Debt reduction fee(4)................................. 1,140
Settlement fee(5)..................................... 400
---------
Balance due as of December 31, 1994......................... 4,834
Plus: Fees incurred in 1995
Debt restructuring fee(6)............................. 243
Capital raising fee(7)................................ 173
Debt reduction fee(8)................................. 650
---------
Balance due as of December 31, 1995......................... 5,900
Less: Payment made in 1996 in connection with balance due as
of December 31, 1995.................................. (4,500)
Plus: Capital raising fee incurred in 1996(9)............... 2,325
---------
Balance due as of December 31, 1996......................... $ 3,725
=========
(1) Aggregate new money raised in 1993.......................... 110,000
Capital raising fee (@ 1.5%)................................ 1,650
(2) Original principal replaced................................. 154,908
Less: Replacement financing................................. (140,750)
---------
Debt reduction amount....................................... 14,158
=========
Debt reduction fee (@ 10%).................................. 1,416
(3) Aggregate new money raised in 1994.......................... 48,500
Capital raising fee (@ 1.5%)................................ 728
(4) Original principal replaced................................. 25,200
Less: Loan payments......................................... (4,500)
Value of Marina Parcel per settlement....................... (9,300)
---------
Debt reduction amount....................................... 11,400
=========
Debt reduction fee (@ 10%).................................. 1,140
(5) RMA settlement fee.......................................... 400
(6) Debt restructured in 1995................................... 48,500
Debt restructuring fee (@ 0.5%)............................. 243
(7) Aggregate new money raised in 1995.......................... 11,500
Capital raising fee (@ 1.5%)................................ 173
</TABLE>
F-72
<PAGE> 129
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS) -- (CONTINUED)
(8) Original principal replaced................................. 54,500
Less: Replacement financing payoff amount................... (51,000)
Plus: New money included in replacement financing........... 3,000
---------
Debt reduction amount....................................... 6,500
=========
Debt reduction fee (@ 10%).................................. 650
(9) Aggregate new money raised in 1996.......................... 155,000
Capital raising fee (@ 1.5%)................................ $ 2,325
Payment of the balance due BRMC at December 31, 1996 is restricted in
accordance with provisions of the First Mortgage Notes. There is $25 due to the
BRMC from future distribution to Limited Partners for the participation fee on
the $2,500 distribution made during 1996.
In 1994, the Partnership received $500 from an affiliate of VMSRIL for
reimbursement of a percentage of shared executives' salaries and benefits and
$60 for office space rental.
9. PROFIT SHARING PLAN
On January 1, 1987, the Partnership established the Boca Raton Hotel and
Beach Club Employees Savings and Thrift Plan and Trust (the "BEST Plan").
Substantially all employees are eligible to participate in the BEST Plan. The
BEST Plan allows participants to contribute up to 16% of their total
compensation. The Partnership is required to contribute 50% of the first 6% of
the employee's earnings. The Partnership's contributions to the BEST Plan were
$360, $362, and $387 for the years ended December 31, 1994, 1995, and 1996,
respectively.
10. PREMIER CLUB MEMBERSHIP DEPOSITS AND CREDITS
During 1991, the Partnership introduced the Premier Club at the resort
complex. The program requires an initial membership deposit and annual dues
based on the number and type of facilities the member uses.
Under the terms of the Premier Club, commencing in January 1991,
applications for membership required a deposit of $15 ($12 for members under a
prior program). The required deposit was increased to $18 as of May 1, 1992, $22
as of May 1, 1993, $25 as of May 1, 1994 and $28 as of May 1, 1995 and $30 as of
May 1, 1996. As of December 31, 1996, the Partnership has recorded membership
deposits of $59,287, of which $47,201 has been either received or credited. As
of December 31, 1996, $1,912 of membership notes bear interest at 7% per annum
and the remaining balance of $10,174 is non-interest bearing. The membership
notes will be collected by 2003 as follows:
<TABLE>
<S> <C>
1997........................................................ $ 3,840
1998........................................................ 3,327
1999........................................................ 2,723
2000........................................................ 1,565
2001........................................................ 565
Thereafter.................................................. 66
-------
$12,086
=======
</TABLE>
Premier Club deposits are net of a deposit credit of $3,584 and $3,462 at
December 31, 1995 and 1996, respectively, granted to members of a prior
membership program. The deposit credit is amortized on the interest method over
30 years. If any member paying over time suspends payments, amounts paid to date
will be forfeited and recognized as income. Fully paid deposits are refundable
upon the death of a member or a member's spouse and upon the expiration of the
30-year membership term (subject to renewal). The deposit is refundable upon a
member's resignation from the Premier Club, but only out of the proceeds of the
F-73
<PAGE> 130
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS) -- (CONTINUED)
membership deposit of the fifth new member to join the Premier Club following
refund of all previously resigned members' deposits.
11. COMMITMENTS, CONTINGENCIES AND OTHER MATTERS
On August 5, 1993, the Partnership entered into agreements to lease food
and beverage operations at the Deer Creek and Carolina country club facilities.
The Partnership is entitled to food and beverage revenues from the operation of
the facilities and is obligated to pay all employee costs, certain maintenance
costs and 50% of the following: real and personal property taxes, insurance
premiums and common area maintenance costs, and certain other items, in
accordance with the terms of the agreements. For the years ended December 31,
1994, 1995 and 1996, rental and other expenses include net losses from these
leases operations of $365, $261 and $431, respectively, which are net of food
and beverage revenues totaling $5,164, $5,241 and $5,018, respectively. Included
in the net losses from these operations are rent expense under the related
leases of $305, $397 and $321, respectively.
Minimum future obligations under operating leases, in effect at December
31, 1996, for certain equipment and the Deer Creek and Carolina food and
beverage operations are as follows:
<TABLE>
<S> <C>
1997........................................................ $1,620
1998........................................................ 1,522
1999........................................................ 1,386
2000........................................................ 343
2001........................................................ 327
Thereafter.................................................. 321
------
$5,519
======
</TABLE>
Rent expense under operating leases, excluding rent expense under the Deer
Creek and Carolina country club leases, totaled $566, $1,290 and $1,493 for the
years ended December 31, 1994, 1995 and 1996, respectively.
In conjunction with the closing of the First and Second Mortgage Notes,
bonuses totaling $1,000 were paid to certain employees of the Partnership.
State of Florida Department of Revenue performed audits of the
Partnership's Sales and Use and Intangible taxes for the periods March 31, 1991
to December 31, 1995 and January 1, 1991 to January 1, 1995, respectively. The
Partnership was assessed an additional $248 of taxes and $106 of interest. The
Partnership disputes the assessments and believes it will be successful in
defending its position. Accordingly, no additional liability has been accrued.
The Partnership and KSL Recreation Corporation (KSL) entered into a
settlement agreement and general release on April 24, 1996. In accordance with
the settlement agreement, the Partnership agreed to pay KSL an amount totaling
$1,250, in exchange for mutual releases and discharges from all actions and
obligations from their respective suits. In accordance with the agreement, the
Partnership paid $750 and agreed to pay $500 on or before June 30, 1998. At
December 31, 1995, $950 was included in accrued settlement cost in the
accompanying balance sheet.
The Partnership is subject to various actions arising out of the operations
of its business. Management is vigorously defending these actions and believes
that all actions are adequately covered by insurance.
In November 1995, the Partnership began Phase I of a planned $40,000
expansion of the Resort. At December 31, 1996, the Partnership incurred $15,148
of costs related to the expansion; $8,396 was completed in 1996 and includes
building of a parking garage and tennis courts. The balance of the expansion
plan encompasses construction of a new conference center, completion of a
fitness center and certain other minor
F-74
<PAGE> 131
BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS) -- (CONTINUED)
improvements to the Resort facilities. Construction of the new conference center
commenced in September 1996. As of December 31, 1996 and in connection with the
Project, the Partnership had contractual commitments for capital expenditures of
$28,406 of which $1,507 is included in other accounts payable and accrued
expenses in the accompanying balance sheet.
12. SUBSEQUENT EVENTS
On March 20, 1997, BRMC, BRMC's corporate general partner, and the
Partnership entered into a Contribution and Exchange Agreement with Florida
Panthers Holdings, Inc. (Panthers) and Panthers BRHC Limited to convey
substantially all of the assets and liabilities of the Partnership in exchange
for cash and ownership interests (as defined in the agreement) in Florida
Panthers Holdings, Inc. This exchange of interests, which is subject to approval
of the limited partners of the Partnership and the shareholders of Panthers, has
an agreed-upon value of approximately $325,000 and is to close within five days
of registering Panthers BRHC Limited shares and Panthers shares and warrants
under the Securities Act of 1933 and under applicable state securities law.
F-75
<PAGE> 132
======================================================
NO DEALER, SALESPERSON, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF AN
OFFER TO BUY ANY SECURITY OTHER THAN THE CLASS A COMMON STOCK OFFERED HEREBY.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Prospectus Summary.................... 2
Summary Financial Data................ 5
Risk Factors.......................... 7
Price Range of Class A Common Stock... 17
Dividend Policy....................... 17
Selected Financial Data............... 18
Selected Unaudited Pro Forma Financial
Data................................ 19
Management's Discussion and Analysis
of Financial Condition And Results
of Operations....................... 21
The National Hockey League............ 27
Business.............................. 29
Management............................ 42
Certain Transactions.................. 46
Principal Shareholders................ 48
Selling Shareholders.................. 49
Description of Capital Stock.......... 51
Plan of Distribution.................. 53
Legal Matters......................... 54
Experts............................... 54
Additional Information................ 54
Index to Financial Statements......... F-1
</TABLE>
======================================================
======================================================
17,669,444 SHARES
[FLORIDA PANTHERS LOGO]
FLORIDA PANTHERS HOLDINGS, INC.
CLASS A COMMON STOCK
------------------------
PROSPECTUS
------------------------
APRIL , 1997
======================================================
<PAGE> 133
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses in connection with the issuance of the securities
being registered, all of which will be paid by the Registrant pursuant to a
contractual obligation, are as follows:
<TABLE>
<S> <C>
SEC Registration Fee........................................ $ 97,740
Printing Expenses........................................... 20,000
Accounting Fees and Expenses................................ 15,000
Legal Fees and Expenses..................................... 15,000
Miscellaneous............................................... 2,259
--------
Total............................................. $150,000
========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Florida Business Corporation Act. Section 607.0850(1) of the Florida
Business Corporation Act (the "FBCA") provides that a Florida corporation, such
as the Company, shall have the power to indemnify any person who was or is a
party to any proceeding (other than an action by, or in the right of, the
corporation), by reason of the fact that he is or was a director, officer,
employee, or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee, or agent of the corporation or is
or was serving at the request of the corporation as a director, officer,
employee, or agent of another corporation, partnership, joint venture, trust, or
other enterprise against liability incurred in connection with such proceeding,
including any appeal thereof, if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
Section 607.0850(2) of the FBCA provides that a Florida corporation shall
have the power to indemnify any person, who was or is a party to any proceeding
by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee, or agent of
the corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses and amounts paid in
settlement not exceeding, in the judgment of the board of directors, the
estimated expense of litigating the proceeding to conclusion, actually and
reasonably incurred in connection with the defense or settlement of such
proceeding, including any appeal thereof. Such indemnification shall be
authorized if such person acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the corporation,
except that no indemnification shall be made under this subsection in respect of
any claim, issue, or matter as to which such person shall have been adjudged to
be liable unless, and only to the extent that, the court in which such
proceeding was brought, or any other court of competent jurisdiction, shall
determine upon application that, despite the adjudication of liability but in
view of all circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such court shall deem proper.
Section 607.850 of the FBCA further provides that: (i) to the extent that a
director, officer, employee or agent of a corporation has been successful on the
merits or otherwise in defense of any proceeding referred to in subsection (1)
or subsection (2), or in defense of any proceeding referred to in subsection (1)
or subsection (2), or in defense of any claim, issue, or matter therein, he
shall be indemnified against expense actually and reasonably incurred by him in
connection therewith; (ii) indemnification provided pursuant to Section 607.0850
is not exclusive; and (iii) the corporation may purchase and maintain insurance
on behalf of a director or officer of the corporation against any liability
asserted against him or incurred by him in any such capacity or arising out of
his status as such whether or not the corporation would have the power to
indemnify him against such liabilities under Section 607.0850.
II-1
<PAGE> 134
Notwithstanding the foregoing, Section 607.0850 of the FBCA provides that
indemnification or advancement of expenses shall not be made to or on behalf of
any director, officer, employee or agent if a judgment or other final
adjudication establishes that his actions, or omissions to act, were material to
the cause of action so adjudicated and constitute: (i) a violation of the
criminal law, unless the director, officer, employee or agent had reasonable
cause to believe his conduct was lawful or had no reasonable cause to believe
his conduct was unlawful; (ii) a transaction from which the director, officer,
employee or agent derived an improper personal benefit; (iii) in the case of a
director, a circumstance under which the liability provisions regarding unlawful
distributions are applicable; or (iv) willful misconduct or a conscious
disregard for the best interests of the corporation in a proceeding by or in the
right of the corporation to procure a judgment in its favor or in a proceeding
by or in the right of a shareholder.
Section 607.0831 of the FBCA provides that a director of a Florida
corporation is not personally liable for monetary damages to the corporation or
any other person for any statement, vote, decision, or failure to act, regarding
corporate management or policy, by a director, unless: (i) the director breached
or failed to perform his duties as a director; and (ii) the director's breach
of, or failure to perform, those duties constitutes: (A) a violation of criminal
law, unless the director had reasonable cause to believe his conduct was lawful
or had no reasonable cause to believe his conduct was unlawful; (B) a
transaction from which the director derived an improper personal benefit, either
directly or indirectly; (C) a circumstance under which the liability provisions
regarding unlawful distributions are applicable; (D) in a proceeding by or in
the right of the corporation to procure a judgment in its favor or by or in the
right of a shareholder, conscious disregard for the best interest of the
corporation, or willful misconduct; or (E) in a proceeding by or in the right of
someone other than the corporation or a shareholder, recklessness or an act or
omission which was committed in bad faith or with malicious purpose or in a
manner exhibiting wanton and willful disregard of human rights, safety, or
property.
Articles and Bylaws. The Company's Articles of Incorporation and the
Company's Bylaws provide that the Company shall, to the fullest extent permitted
by law, indemnify all directors of the Company, as well as any officers or
employees of the Company to whom the Company has agreed to grant
indemnification.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
On January 30, 1997, the Company issued and sold 2,460,000 shares of Class
A Common Stock in connection with the private placement (the "Private
Placement") at a price of $27.75 per share to certain accredited investors. The
Private Placement was exempt from registration pursuant to Section 4(2) of the
Securities Act and resulted in net proceeds to the Company of approximately $67
million after deducting placement agency fees and other expenses.
On January 31, 1997, the Company acquired substantially all of the
business, assets and operations of Iceland (Coral Springs) Corp. ("Iceland") and
Iceland Holdings, Inc. ("IHI"), including the business, assets and operations of
an operating twin-pad ice rink facility. The consideration paid by the Company
in connection with these acquisitions included 212,766 shares of Class A Common
Stock. The sale of these 212,766 shares of Class A Common Stock to the sole
shareholder of Iceland and IHI was exempt from registration pursuant to Section
4(2) of the Securities Act.
On March 4, 1997, the Company acquired all of the direct and indirect
ownership interests of Pier 66 and Bahia Mar in exchange for 4,450,000 and
3,950,000 shares of Class A Common Stock, respectively. The issuance of these
shares was exempt from registration pursuant to Section 4(2) of the Securities
Act.
II-2
<PAGE> 135
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
2.1 -- Exchange Agreement dated October 25, 1996 by and between the
Company and H. Wayne Huizenga.*
2.2 -- Purchase Agreement dated October 25, 1996 by and between
Decoma Investment, Inc. II and Decoma Investment, Inc. III.*
2.3 -- Partnership Exchange Agreement dated October 25, 1996 by and
between Florida Panthers Hockey Club, Ltd. and H. Wayne
Huizenga.*
2.4 -- Asset Purchase Agreement, dated as of January 18, 1997, by
and among Florida Panthers Ice Ventures, Inc., Iceland
(Coral Springs) Corp., Iceland Holdings, Inc. and Brian
Brisbin.**
2.5 -- Asset Purchase Agreement, dated as of January 18, 1997, by
and among Florida Panthers Ice Ventures, Inc., Brisbin Brook
Beynon, Architects and Brian Brisbin.**
2.6 -- Asset Purchase Agreement, dated as of January 18, 1997, by
and among Florida Panthers Ice Ventures, Inc. and Brian
Brisbin.**
2.7 -- Exchange Agreement (Hyatt Regency Pier 66), dated as of
December 22, 1996.***
2.8 -- Exchange Agreement (Raddison Bahia Mar), dated as of
December 22, 1996.***
2.9 -- Amended and Restated Contribution and Exchange Agreement,
dated as of March 20, 1997, by and among Florida Panthers
Holdings, Inc., Panthers BRHC Limited, Boca Raton Hotel and
Club Limited Partnership, BRMC, L.P. and BRMC Corporation
3.1 -- Amended and Restated Articles of Incorporation of the
Company*
3.2 -- Form of By-Laws of the Company*
5.1 -- Opinion of Akerman, Senterfitt & Eidson, P.A., Counsel to
the Company (previously filed)
10.1 -- Broward County Civic Arena License Agreement, dated as of
June 4, 1996, by and between Florida Panthers Hockey Club,
Ltd., Arena Operating Company, Ltd., and Broward County
Florida*
10.2 -- Broward County Civic Arena Operating Agreement, dated as of
June 4, 1996, by and between Arena Operating Company, Ltd.
and Broward County, Florida*
10.3 -- Amendment and Clarification to Operating Agreement and
License Agreement, dated as of June 4, 1996, by and between
Florida Panthers Hockey Club, Ltd., Arena Operating Company,
Ltd. and Broward County, Florida*
10.4 -- Broward County Civic Arena Development Agreement, dated as
of June 4, 1996, by and between Arena Development Company,
Ltd. and Broward County, Florida*
10.5 -- Employment Agreement by and between William A. Torrey and
the Company*
10.6 -- Management Agreement by and between the Company and Huizenga
Holdings, Inc.*
10.7 -- Miami Arena Contract, dated as of October 10, 1986, as
amended, by and between Miami Sports and Exhibition
Authority and Decoma Miami Associates, Ltd.*
10.8 -- First Amendment to Miami Arena Contract and Agreement, dated
as of December 13, 1990, by and between Miami Sports and
Exhibition Authority and Decoma Miami Associates, Ltd.*
10.9 -- Arena Management Agreement, dated as of October 10, 1986, by
and between Decoma Venture and Facility Management and
Marketing (predecessor to Leisure Management International)*
10.10 -- 1996 Stock Option Plan*
10.11 -- Concession Agreement, dated as of April 4, 1995, as amended,
by and between City of Coral Springs, Florida and Can Am
Investment Group, Inc.**
10.12 -- Assignment of Concession Agreement, dated as of January 31,
1997, by and between Coral Springs Ice, Ltd. and Florida
Panthers Holdings, Inc.**
10.13 -- Hotel Management Agreement (Pier 66), by and between 2301 SE
17th St., Ltd. and Rahn Pier Mgt., Inc.***
10.14 -- Hotel Management Agreement (Bahia Mar), by and between 2301
Rahn Bahia Mar, Ltd. and Rahn Bahia Mar Mgmt., Inc.***
21.1 -- Subsidiaries of the Company (previously filed)
23.1 -- Consent of Arthur Andersen LLP
23.2 -- Consent of KPMG Peat Marwick LLP
23.3 -- Consent of Price Waterhouse LLP
23.4 -- Consent of Ernst & Young LLP
</TABLE>
II-3
<PAGE> 136
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
23.5 -- Form of Consent of Akerman, Senterfitt & Eidson, P.A.
(included in their opinion filed as Exhibit 5.1)
24.1 -- Powers of Attorney (included on the signature page of this
Registration Statement)
27.1 -- Financial Data Schedule (for SEC use only)*
</TABLE>
- ---------------
* Incorporated by reference to the Company's Registration Statement on Form
S-1 -- SEC File No. 333-12191
** Incorporated by reference to the Company's Current Report on Form 8-K filed
on February 18, 1997 -- SEC File No. 0-21435
*** Incorporated by reference to the Company's Definitive Consent Solicitation
Statement filed on March 4, 1997 -- SEC File No. 0-21435
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
II-4
<PAGE> 137
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Fort
Lauderdale, State of Florida, on the 14th day of April, 1997.
Florida Panthers Holdings, Inc.
By: /s/ STEVEN M. DAURIA
------------------------------------
Steven M. Dauria
Vice President and Corporate
Controller
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Chairman of the Board April 14, 1997
- ----------------------------------------------------- (Principal Executive Officer)
H. Wayne Huizenga
* Vice Chairman April 14, 1997
- -----------------------------------------------------
Richard C. Rochon
* President and Director April 14, 1997
- -----------------------------------------------------
Richard H. Evans
* President of Florida Panthers April 14, 1997
- ----------------------------------------------------- Hockey Club, Inc. and
William A. Torrey Director
/s/ WILLIAM M. PIERCE Senior Vice President and Chief April 14, 1997
- ----------------------------------------------------- Financial Officer (Principal
William M. Pierce Financial Officer)
/s/ STEVEN M. DAURIA Vice President and Corporate April 14, 1997
- ----------------------------------------------------- Controller (Principal
Steven M. Dauria Accounting Officer)
Director April 14, 1997
- -----------------------------------------------------
Steven R. Berrard
Director April 14, 1997
- -----------------------------------------------------
Harris W. Hudson
* Director April 14, 1997
- -----------------------------------------------------
George D. Johnson, Jr.
*By: /s/ STEVEN M. DAURIA
-------------------------------------------------
Steven M. Dauria
Attorney-in-Fact
</TABLE>
II-5
<PAGE> 138
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
2.1 -- Exchange Agreement dated October 25, 1996 by and between the
Company and H. Wayne Huizenga.*
2.2 -- Purchase Agreement dated October 25, 1996 by and between
Decoma Investment, Inc. II and Decoma Investment, Inc. III.*
2.3 -- Partnership Exchange Agreement dated October 25, 1996 by and
between Florida Panthers Hockey Club, Ltd. and H. Wayne
Huizenga.*
2.4 -- Asset Purchase Agreement, dated as of January 18, 1997, by
and among Florida Panthers Ice Ventures, Inc., Iceland
(Coral Springs) Corp., Iceland Holdings, Inc. and Brian
Brisbin.**
2.5 -- Asset Purchase Agreement, dated as of January 18, 1997, by
and among Florida Panthers Ice Ventures, Inc., Brisbin Brook
Beynon, Architects and Brian Brisbin.**
2.6 -- Asset Purchase Agreement, dated as of January 18, 1997, by
and among Florida Panthers Ice Ventures, Inc. and Brian
Brisbin.**
2.7 -- Exchange Agreement (Hyatt Regency Pier 66), dated as of
December 22, 1996.***
2.8 -- Exchange Agreement (Raddison Bahia Mar), dated as of
December 22, 1996.***
2.9 -- Amended and Restated Contribution and Exchange Agreement,
dated as of March 20, 1997, by and among Florida Panthers
Holdings, Inc., Panthers BRHC Limited, Boca Raton Hotel and
Club Limited Partnership, BRMC, L.P. and BRMC Corporation
3.1 -- Amended and Restated Articles of Incorporation of the
Company*
3.2 -- Form of By-Laws of the Company*
5.1 -- Opinion of Akerman, Senterfitt & Eidson, P.A., Counsel to
the Company (previsously filed)
10.1 -- Broward County Civic Arena License Agreement, dated as of
June 4, 1996, by and between Florida Panthers Hockey Club,
Ltd., Arena Operating Company, Ltd., and Broward County
Florida*
10.2 -- Broward County Civic Arena Operating Agreement, dated as of
June 4, 1996, by and between Arena Operating Company, Ltd.
and Broward County, Florida*
10.3 -- Amendment and Clarification to Operating Agreement and
License Agreement, dated as of June 4, 1996, by and between
Florida Panthers Hockey Club, Ltd., Arena Operating Company,
Ltd. and Broward County, Florida*
10.4 -- Broward County Civic Arena Development Agreement, dated as
of June 4, 1996, by and between Arena Development Company,
Ltd. and Broward County, Florida*
10.5 -- Employment Agreement by and between William A. Torrey and
the Company*
10.6 -- Management Agreement by and between the Company and Huizenga
Holdings, Inc.*
10.7 -- Miami Arena Contract, dated as of October 10, 1986, as
amended, by and between Miami Sports and Exhibition
Authority and Decoma Miami Associates, Ltd.*
10.8 -- First Amendment to Miami Arena Contract and Agreement, dated
as of December 13, 1990, by and between Miami Sports and
Exhibition Authority and Decoma Miami Associates, Ltd.*
10.9 -- Arena Management Agreement, dated as of October 10, 1986, by
and between Decoma Venture and Facility Management and
Marketing (predecessor to Leisure Management International)*
10.10 -- 1996 Stock Option Plan*
10.11 -- Concession Agreement, dated as of April 4, 1995, as amended,
by and between City of Coral Springs, Florida and Can Am
Investment Group, Inc.**
10.12 -- Assignment of Concession Agreement, dated as of January 31,
1997, by and between Coral Springs Ice, Ltd. and Florida
Panthers Holdings, Inc.**
10.13 -- Hotel Management Agreement (Pier 66), by and between 2301 SE
17th St., Ltd. and Rahn Pier Mgt., Inc.***
10.14 -- Hotel Management Agreement (Bahia Mar), by and between 2301
Rahn Bahia Mar, Ltd. and Rahn Bahia Mar Mgmt., Inc.***
21.1 -- Subsidiaries of the Company (previously filed)
23.1 -- Consent of Arthur Andersen LLP
23.2 -- Consent of KPMG Peat Marwick LLP
23.3 -- Consent of Price Waterhouse LLP
23.4 -- Consent of Ernst & Young LLP
23.5 -- Form of Consent of Akerman, Senterfitt & Eidson, P.A.
(included in their opinion filed as Exhibit 5.1)
24.1 -- Powers of Attorney (included on the signature page of this
Registration Statement)
27.1 -- Financial Data Schedule (for SEC use only)*
</TABLE>
- ---------------
* Incorporated by reference to the Company's Registration Statement on Form
S-1 -- SEC File No. 333-12191
** Incorporated by reference to the Company's Current Report on Form 8-K filed
on February 18, 1997 -- SEC File No. 0-21435
*** Incorporated by reference to the Company's Definitive Consent Solicitation
Statement filed on March 4, 1997 -- SEC File No. 0-21435
<PAGE> 1
EXHIBIT 2.9
AMENDED AND RESTATED
CONTRIBUTION AND EXCHANGE AGREEMENT
(BOCA RATON HOTEL & CLUB)
This Contribution and Exchange Agreement (this "Agreement") is entered into
as of March 20, 1997 by and among FLORIDA PANTHERS HOLDINGS, INC., a Florida
corporation ("Panthers"); PANTHERS BRHC LIMITED, a Florida limited partnership
("Panthers BRHC Limited"); BOCA RATON HOTEL AND CLUB LIMITED PARTNERSHIP, a
Florida limited partnership ("Partnership"); BRMC, L.P., a Delaware limited
partnership ("General Partner") and BRMC CORPORATION, a Delaware corporation and
general partner of the General Partner ("BRMC").
RECITALS
The Board of Directors of Panthers has determined that it is in the best
interests of Panthers shareholders for Panthers to acquire, directly or
indirectly, all of the assets of the Partnership and the General Partner has
determined on behalf of the Partnership that it is in the best interests of the
Partnership and its limited partners to transfer all its assets to Panthers BRHC
Limited as provided herein.
TERMS OF AGREEMENT
In consideration of the mutual representations, warranties, covenants and
agreements contained herein, the parties hereto agree as follows:
ARTICLE I
THE EXCHANGE
1.1 The Closing. Subject to the terms and conditions of this Agreement,
the consummation of the transactions contemplated hereunder ("Closing") shall
take place on a date which is on or about five (5) business days after
satisfaction or waiver of the conditions set forth in Articles VI and VII, at
the offices of Panthers' counsel, Akerman, Senterfitt & Eidson, P.A., Miami,
Florida, or such other time and place as the parties may otherwise agree, it
being the intent of the parties to close as promptly as practicable. The date on
which the Closing occurs is hereinafter referred to as the Closing Date.
1.2 Partnership's Contribution of Assets. The Partnership shall convey,
transfer, assign and deliver to Panthers BRHC Limited at the Closing on the
terms and subject to the conditions set forth in this Agreement, all of its
assets, properties and business of every kind and description, whether real,
personal or mixed, tangible or intangible, wherever located (except those assets
of the Partnership which are specifically excluded as provided in Section 1.3
hereof) as shall exist on the Closing Date (collectively, the "Contributed
Assets"). Without limiting the generality of the foregoing, the Contributed
Assets shall include the following:
(a) all right, title and interest of the Partnership in and to the
Owned Property (as defined in Section 3.11 hereof) and as lessee under any
leases covering the properties leased by the Partnership;
(b) all machinery, equipment, tools, supplies, leasehold improvements,
constructions in progress, furniture and fixtures located at or on any
parcel of the Owned Property or leased premises;
(c) all inventory of the Partnership;
(d) all receivables of the Partnership, including without limitation,
all trade accounts receivable, notes receivable, and receivables from
insurance companies, service contract providers and any other vendors or
suppliers of the Partnership (whether on accounts owed as incentive
payments or otherwise), but excluding any receivables due from any
Affiliate of the Partnership or any Partner of the Partnership which shall
be paid or satisfied prior to the Closing;
<PAGE> 2
(e) all of the interests, rights and benefits accruing to the
Partnership under any sales contracts, supply contracts, service
agreements, purchase orders and purchase commitments made by the
Partnership in the ordinary course of business, all other agreements to
which the Partnership is a party or by which it is bound and all other
choses in action, causes of action and other rights of every kind of the
Partnership;
(f) all operating data and records of the Partnership, including
without limitation, customer lists and records, financial, accounting and
credit records, correspondence, budgets and other similar documents and
records;
(g) all of the proprietary rights of the Partnership, including
without limitation, all trademarks, trade names, patents, patent
applications, licenses thereof, trade secrets, technology, knowhow,
formulae, designs and drawings, computer software, slogans, copyrights,
processes, operating rights, other licenses and permits and other similar
intangible property and rights relating to the products or business of the
Partnership;
(h) all cash and cash equivalents and investments, whether short-term
or long-term, of the Partnership, including without limitation,
certificates of deposit, treasure bills and securities;
(i) all prepaid and deferred items of the Partnership, including
without limitation, prepaid rentals, insurance, taxes and unbilled charges
and deposits relating to the operations of the Partnership; and
(j) all right, title and interest of the Partnership in and to any
other intangible property of the Partnership.
1.3 Excluded Assets. The Contributed Assets shall exclude the following
assets of the Partnership: (i) the Exchange Rights (as defined in Section
1.8(i)) and the Panthers Warrants (as defined in Section 1.8(j)), and the Fee
Shares (as defined in Section 1.8(i)) and the rights of the Partnership under
this Agreement; (ii) the minute books and partnership interest transfer records
of the Partnership; and (iii) those assets set forth on Exhibit "A" attached
hereto ("Sold Assets"), which shall be sold by the Partnership to Panthers, or
its designee, at closing in consideration of the Exchange Rights and the
Panthers Warrants and the Fee Shares.
1.4 Assignment of Contracts. Notwithstanding anything in this Agreement to
the contrary, this Agreement shall not constitute an assignment of any claim,
contract, license, franchise, lease, commitment, sales contract, supply
contract, service agreement or purchase commitment if an attempted assignment
thereof without the consent of a third party thereto would constitute a breach
thereof or in any way adversely affect the rights of Panthers BRHC Limited
thereunder. If such consent is not obtained, or if any attempt at an assignment
thereof would be ineffective or would affect the rights of Panthers BRHC Limited
thereunder so that Panthers BRHC Limited would not in fact receive all such
rights, the Partnership, the General Partner and BRMC shall cooperate, to the
best of their ability, but at the cost and expense of Panthers BRHC Limited
without reduction of the purchase price calculated under Section 1.8(i), with
Panthers BRHC Limited to the extent necessary to provide for Panthers BRHC
Limited the benefits under such claim, contract, service agreement, purchase
order or purchase commitment, including enforcement for the benefit of Panthers
BRHC Limited of any and all rights of the Partnership against a third party
thereto arising out of the breach or cancellation by such third party or
otherwise. The provisions of this Section 1.4 shall not affect or modify any
other rights of Panthers BRHC Limited under this Agreement.
1.5 Panthers Contribution of Assets. At or prior to the Closing, Panthers,
or its designees, shall contribute or cause to be contributed to Panthers BRMC
Limited ((a), (b) and (c) below being referred to as the "Panthers Capital
Contribution"):
(a) Cash in an amount sufficient to pay off in full at the Closing
Date the obligations of the Partnership set forth on Schedule 1.5 attached
hereto;
(b) At the written election of BRMC, which shall be delivered within
five (5) days prior to the Closing Date, cash or 141,232 shares (adjusted,
as appropriate, for any stock split, reverse stock split, stock dividend or
"Special Transaction" generally in accordance with the provisions of
Exhibit "B"
A-2
<PAGE> 3
attached hereto) of the Class A common stock of Panthers, par value $.01
per share ("Panthers Common Stock") to satisfy the $3.725 million
Partnership's deferred fee obligations to BRMC; and
(c) The Sold Assets, which the parties agree will have a value of $30
million.
That portion of the Panthers Capital Contribution described in clause (a)
shall be determined with reference to the payoff letters required by Section
5.17 hereof. For purposes of Panthers BRHC Limited's partnership agreement, the
Panthers Capital Contribution shall also include: (i) the aggregate value of any
Panthers Common Stock issued upon exercise of any options granted to those
persons referred to in Section 6.8 hereof; (ii) any cash contributed to pay off
the $110 Million Senior Facility under the Loan Agreement ("Senior Facility"),
when and if permitted hereunder and under Panthers BRHC Limited's partnership
agreement; (iii) any additional cash contributed by Panthers to Panthers BRHC
Limited to pay transaction costs and expenses under Section 5.20 hereof, and
(iv) any other non-reimbursable expenses of Panthers BRHC Limited paid by
Panthers and additional cash contributed to the equity of Panthers BRHC Limited.
1.6 Assumed Liabilities. Panthers BRHC Limited shall at the Closing assume
and agree to pay, discharge, and perform when lawfully required all of the
obligations, duties and liabilities of the Partnership whether absolute or
contingent, known or unknown. The obligations, duties and liabilities assumed by
Panthers BRHC Limited pursuant to this Section 1.6 shall be referred to as the
"Assumed Liabilities."
1.7 No Expansion of Third Party Rights. The assumption by Panthers BRHC
Limited of the Assumed Liabilities, the transfer thereof by the Partnership, and
the limitations of such transfer shall in no way expand the rights or remedies
of any third party against Panthers BRHC Limited or the Partnership as compared
to the rights and remedies which such third party would have against the
Partnership had Panthers BRHC Limited not assumed such liabilities. Without
limiting the generality of the preceding sentence, the assumption by Panthers
BRHC Limited of the Assumed Liabilities shall not create any third party
beneficiary rights.
1.8 Procedure at the Closing. At the Closing, the parties agree that the
following shall occur:
(a) Panthers (or its designee) and the Partnership shall enter into a
partnership agreement for Panthers BRHC Limited, the form of which shall be
agreed upon no later than thirty (30) days from the date of this Agreement;
provided however, that such agreement shall provide that:
(i) Affiliates of Panthers will be the managing General Partner of
Panthers BRHC Limited and the holder of a limited partnership interest
therein (the "Panther Interest");
(ii) The Partnership shall acquire a non-managing general
partnership interest ("Boca LP Interest") in exchange for the
Contributed Assets;
(iii) Cash from operations determined by the managing general
partner to be available for distribution will be distributed (x) first
to the holders of the Panther Interest in payment of a profit share
equal to 15% per annum, cumulative and compounded, on the "Base Amount,"
which shall equal the Panthers Capital Contributions, and (y) next in
proportion to each of the partner's percentage interests in Panthers
BRHC Limited (the "Contribution Ratio"); provided, however, that if any
taxable income is allocated to the Partnership, cash equal to 40% of
such taxable income will be distributed to the Partnership; the initial
Contribution Ratio for the holders of the Panther Interest for the first
fiscal year ending after the Closing Date, expressed as a percentage,
will be determined by dividing (A) by (B). (A) equals the Capital
Contributions made by holders of the Panther Interest, which for the
first fiscal year will be determined as of forty-five days after the
Closing Date. (B) equals the sum of (A) plus the initial capital account
credit of the Partnership, which shall equal the dollar amount specified
in Section 1.8(i), less the value of the Sold Assets. The Contribution
Ratio shall be re-determined when Panthers or the Partnership contribute
additional capital to Panthers BRHC Limited. In such case (A) will equal
the Capital Contributions made by the holders of the Panther Interest as
of the end of the preceding fiscal year.
A-3
<PAGE> 4
(B) will equal the sum of (x)(A), (y) the initial capital account credit
of the Partnership and (z) additional capital, if any, contributed to
the equity of Panthers BRHC Limited by the Partnership. In the case of
any capital transaction involving Panthers BRHC Limited, which for this
purpose shall include the transaction specified in Section 1.8(a)(viii),
the Contribution Ratio shall be redetermined as of the close of the
calendar month in which the closing date of the capital transaction
occurs;
(iv) Cash from any sale or refinancing or other capital
transactions determined by the managing general partner of Panthers BRHC
Limited to be available for distribution will be distributed (1) first
to the holders of the Panther Interest in payment of their unpaid profit
share on the Base Amount, (2) next to the holders of the Panther
Interest in repayment of their capital accounts, (3) next in payment of
the capital account of the Partnership and (4) next in accordance with
the Contribution Ratio;
(v) Taxable income and loss will generally be allocated in
accordance with the Contribution Ratio except that the Panther Interest
will be specially allocated a profit share on the Base Amount;
(vi) The Partnership will have no voting rights under the limited
partnership agreement, except that for so long as Persons other than
Panthers (or its designees) own more than 51% of the limited partnership
interests of the Partnership, the Partnership, after due and proper
notice, shall have the right: (1) to approve any amendment (unless such
amendment will not have a material adverse impact on the Partnership) to
the partnership agreement of Panthers BRHC Limited (the provisions of
Section 5.13 hereof will be included in the partnership agreement); (2)
to approve any sale of all or substantially all of the Contributed
Assets of Panthers BRHC Limited prior to January 1, 2001; provided
however, if prior to January 1, 2001, Panthers Common Stock closes at an
average price of $52.75 for five consecutive trading days on the NASDAQ
Stock Market, the Partnership shall have no right to approve any sale of
all or substantially all of the Contributed Assets; (3) to consult with
the managing general partner to develop an annual budget provided,
however, that the managing general partner will have the sole authority
to approve such budget; and (4) to consult with the managing general
partner regarding the renewal or termination of employment agreements
between Panthers BRHC Limited and Operating Management employees;
(vii) An affiliate of Panthers shall have the right to manage the
Owned Property for a management fee equal to 3% of the gross revenues of
Panthers BRHC Limited;
(viii) At any time on or after January 31, 2001, Panthers (or its
designee) shall have the right to acquire, for cash, all or a portion of
the partnership interests of the Partnership in Panthers BRHC Limited at
a price equal to the Fair Market Value of the partnership interest being
acquired. The Fair Market Value of a partnership interest shall be
calculated as set forth on Exhibit "C" attached hereto. The acquisition
shall be automatically effected by Panthers after thirty days prior
written notice to the Partnership;
(ix) For federal income tax purposes, the Partnership is subject to
Section 704(c) of the Internal Revenue Code of 1986, as amended (the
"Code"), with respect to its transfer of assets to Panthers BRHC
Limited. Panthers agree to cause Panthers BRHC Limited to elect the
remedial allocation method specified in Treasury Regulation Section
1.704-3(d). Panthers shall allocate the book value of the Contributed
Assets to each asset or class of assets provided such allocation does
not cause or create on the Closing Date income to the Partnership under
Sections 752 and 731 of the Code;
(x) At the option of Panthers, Panthers BRHC Limited shall make an
election under Section 754 of the Code. At the request of Panthers, the
Partnership shall make timely election under Section 754 of the Code for
the taxable year ending on the Closing Date, and any other taxable year
of the Partnership following its termination under Section 708(b)1)(B)
of the Code;
A-4
<PAGE> 5
(xi) The partnership agreement will allow the holders of the
Panther Interest to cause after January 31, 2001, a tax termination of
Panthers BRHC Limited under Section 708(b)(1)(B) even if such action
creates an adverse effect to the Partnership;
(xii) The general partnership interest of the Partnership in
Panthers BRHC Limited will not be transferable, other than to Panthers
and its Affiliates;
(xiii) Panthers may admit additional limited partners to Panthers
BRHC Limited in return for capital contributions and/or grant lenders
participation rights in the profits of Panthers BRHC Limited, subject to
Section 5.13 and provided that any dilution of partnership interests
resulting therefrom shall be proportionate between the Partnership and
the holders of the Panther Interests;
(xiv) The Panther Interest which is a limited partnership interest
in Panthers BRHC Limited may be transferred. The Panther Interest which
is a general partnership interest may be transferred to a Panthers
Affiliate, or to a non-Affiliate with the consent of the Partnership.
Any transfer causing a tax termination of Panthers BRHC Limited under
Section 708(b)(1)(B) of the Code on or before January 31, 2001, shall be
prohibited unless there are no material adverse tax consequences to the
Partnership or its partners;
(xv) Panthers, or its designee, may elect to borrow from Panthers
BRHC Limited, and upon such election Panthers BRHC Limited shall loan to
Panthers, or its designee, the proceeds of any financing or refinancing
of the Contributed Assets and Sold Assets ("Refinancing") on terms and
conditions equal to those of the Refinancing; and
(xvi) The partnership agreement will also contain other standard
terms, including customary indemnification provisions in favor of the
direct and indirect general partners of Panthers BRHC Limited and
payment by Panthers BRHC Limited to the Partnership of an administrative
fee to reimburse the Partnership for certain of its expenses.
(b) The Partnership shall have satisfied each of the conditions set
forth in Article VI and shall deliver to Panthers BRHC Limited the
documents, certificates, opinions, consents and letters required by Article
VI, unless waived by Panthers.
(c) Panthers and Panthers BRHC Limited shall have satisfied each of
the conditions set forth in Article VII and shall deliver to the
Partnership the documents, certificates, consents and letters required by
Article VII, unless waived by the Partnership.
(d) The Partnership shall deliver to the Panthers BRHC Limited such
warranty deeds, bills of sale, endorsements, assignments, releases and
other instruments and documents (including certificates and resolutions) in
such form as is reasonably satisfactory to Panthers BRHC Limited and as
shall be sufficient to vest in Panthers BRHC Limited (or its assignee) good
and marketable title to the Contributed Assets.
(e) Panthers BRHC Limited shall deliver to the Partnership
instruments, in such form as is reasonably satisfactory to the Partnership
and as shall be sufficient to effect the assumption by Panthers BRHC
Limited of the Assumed Liabilities.
(f) Panthers, Panthers BRHC Limited and the Partnership shall execute
and deliver a cross-receipt acknowledging receipt of the Contributed
Assets, the Sold Assets, the Exchange Rights (defined below), the Panthers
Warrants (defined below) and the Fee Shares (defined below).
(g) The Partnership shall deliver to Panthers BRHC Limited payoff and
estoppel letters in accordance with Section 5.17, and Panthers BRHC Limited
shall pay off in full the debt referred to in Schedule 1.5 hereof.
(h) The Partnership shall pay the expenses referred to in Section 5.20
out of a portion of the cash contributed under Section 1.5(a).
A-5
<PAGE> 6
(i) Partnership shall sell to Panthers (or its designee) the Sold
Assets set forth on Exhibit "A" in consideration of delivery of the
Exchange Rights and Warrants described below, as well as a number of Shares
of Panthers Common Stock (the "Fee Shares") necessary to satisfy the
Partnership's obligations to pay certain fees to (i) the holder of the
third mortgage on the Partnership's assets, (ii) Temple Development Company
and (iii) Operating Management, as shall be designated by the General
Partner prior to Closing. Panthers shall deliver an Exchange Agreement
("Exchange Agreement") to the Partnership, granting to the Partnership (or
to the Partnership's partners) rights ("Exchange Rights") to acquire, in
exchange for all of the partnership interests in the Partnership, an
aggregate number of shares (rounded to the nearest whole share) of Panthers
Common Stock (the "Panthers Shares" and each, a "Panthers Share")
determined by dividing (i) the difference between Three Hundred Twenty
Million Dollars ($320,000,000) minus (w) the value of the Fee Shares
(determined using the Price per Share), minus (x) the outstanding principal
balance, and any accrued and unpaid interest thereon that is past due as of
the Closing Date, under the $110 Million Senior Facility evidenced by the
Loan Agreement, minus (y) the amount of cash contributed under Section
1.5(a) (other than the amount contributed to cover expenses as set forth in
Schedule 1.5, subsection (vii) and Schedule 5.20), minus (z) Three Million
Seven Hundred Twenty-Five Thousand Dollars; by (ii) $26.375 (the "Price per
Share"). In no case shall the number of Fee Shares and the number of
Panthers Shares underlying the Exchange Rights exceed that number of shares
determined in the preceding sentence without regard to clause (w). The
number of Panthers Shares shall be reserved by Panthers for issuance under
the Exchange Agreement and shall be subject to the anti-dilution provisions
set forth on Exhibit "B" attached hereto. The Exchange Agreement shall
provide: (a) for the mechanics of the exchange; (b) that in the event the
sale of all or substantially all of the Contributed Assets is consummated
prior to exercise of any Exchange Rights, upon notice to the holders of the
Exchange Rights, the Exchange Rights shall expire; (c) that Exchange Rights
to acquire an amount of Panthers Common Stock with a fair market value at
Closing equal to Two Million Five Hundred Thousand Dollars ($2,500,000) (as
determined pursuant to Section 9.3(d) below) shall be held back ("Held Back
Interests") subject to the provisions of Article IX hereof; (d) after due
and proper notice that any partnership interest in the Partnership so
exchanged shall be transferred to a designee of Panthers; and (e) that,
after due and proper notice, the Exchange Rights shall expire at January
31, 2001.
(j) Panthers shall deliver to the Partnership, registered in the name
of the holders specified by the Partnership in writing not less than five
(5) business days prior to Closing, an aggregate number of warrants to
acquire a number of shares of Panthers Common Stock equal to twenty (20%)
percent of the number of Fee Shares and the number of Panthers Shares
issued pursuant to the second sentence of Section 1.8(i) above ("Panthers
Warrants"). The Panthers Warrants shall be exercisable at a price of $29.01
per share. Fifty (50%) percent of the Panthers Warrants shall expire on
December 31, 1998 and the remaining fifty (50%) percent of the Panthers
Warrants shall expire on December 31, 1999. The number of Panthers Warrants
shall be subject to the anti-dilution provisions set forth in Exhibit "B"
attached hereto.
1.9 Filing of Documents. At the time of the Closing, the parties shall
cause to be filed with the Secretary of State of the State of Florida any
documents that Panthers or Panthers BRHC Limited determines to be required to
lawfully effect the purposes of this Agreement.
1.10 Tax Treatment. The parties hereto acknowledge and agree that the
receipt of the non-managing general partnership interest in Panthers BRHC
Limited by the Partnership contemplated hereby is intended to be a tax-free
transaction under Section 721 of the Code.
1.11 Option to Acquire General Partner's Interest in the Partnership. The
General Partner does hereby grant to Panthers the option to acquire, directly or
through its designee and exercisable upon the earlier of January 15, 2001 or at
such time as all of the Exchange Rights have been exercised, its general
partnership interest in the Partnership for $1.00 ("Option"). The Option shall
not expire unless waived in writing by Panthers. The General Partner shall
transfer its general partnership interest to Panthers' designee within five days
after Panthers' written notice to General Partner that it is electing to
exercise the Option.
A-6
<PAGE> 7
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF PANTHERS
As a material inducement to the Partnership to enter into this Agreement
and to consummate the transactions contemplated hereby, Panthers and Panthers
BRHC Limited make the following representations and warranties to the
Partnership:
2.1 Corporate Status. Panthers is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida. Panthers
has the requisite power and authority to carry on its business and to own or
lease its properties. Panthers BRHC Limited is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Florida. Panthers BRHC Limited has the requisite power and authority to carry on
its business and to own or lease its properties.
2.2 Corporate Power and Authority. Panthers and Panthers BRHC Limited each
have the power and authority to execute and deliver this Agreement, to perform
their respective obligations hereunder and to consummate the transactions
contemplated hereby. Other than Panthers obtaining shareholder approval, each of
Panthers and Panthers BRHC Limited have taken all action necessary to authorize
its execution and delivery of this Agreement, and the performance of their
respective obligations hereunder and the consummation of the transactions
contemplated hereby.
2.3 Enforceability. This Agreement has been duly executed and delivered by
Panthers and Panthers BRHC Limited and constitutes a legal, valid and binding
obligation of each of them, enforceable against each of them in accordance with
its terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and general equitable principles regardless of
whether such enforceability is considered in a proceeding at law or in equity.
2.4 Exchanged Securities. Upon consummation of the transactions
contemplated hereunder, the Panthers Warrants will be validly issued. Upon
exercise of any Exchange Rights under the Exchange Agreement for Panthers
Shares, and the issuance and delivery of certificates representing the Panthers
Shares to the holders of the Exchange Rights, the Panthers Shares will be
validly issued, fully paid and non-assessable shares of Panthers Common Stock.
Upon exercise of the Panthers Warrants, and payment of the exercise price with
respect thereto, the shares of Panthers Common Stock issued thereunder will be
validly issued, fully paid and non-assessable.
2.5 No Commissions. Panthers has not incurred any obligation for any
finder's or broker's or agent's fees or commissions or similar compensation in
connection with the transactions contemplated hereby.
2.6 No Violation. The execution and delivery of this Agreement by Panthers
and Panthers BRHC Limited and the performance by them of their respective
obligations hereunder and the consummation by them of the transactions
contemplated by this Agreement will not: (a) contravene any provision of the
articles of incorporation or bylaws of Panthers or the Partnership Agreement or
Certificate of Limited Partnership of Panthers BRHC Limited; (b) violate or
conflict with any law, statute, ordinance, rule, regulation, decree, writ,
injunction, judgment or order of any Governmental Authority or of any
arbitration award which is either applicable to, binding upon or enforceable
against Panthers or Panthers BRHC Limited; (c) conflict with, result in any
breach of, or constitute a default (or an event which would, with the passage of
time or the giving of notice or both, constitute a default) under, or give rise
to a right to terminate, amend, modify, abandon or accelerate, any Contract
which is applicable to, binding upon or enforceable against Panthers or Panthers
BRHC Limited; (d) result in or require the creation or imposition of any Lien
upon or with respect to any of the property or assets of Panthers or Panthers
BRHC Limited; or (e) require the consent, approval, authorization or permit of,
or filing with or notification to, any Governmental Authority, any court or
tribunal or any other Person, except any applicable filings required under the
HSR Act, any SEC filings required to be made by Panthers, any SEC and state
filings contemplated hereby, and any filings required to be made in connection
with the transfer of the licenses and permits contemplated hereunder as part of
the Contributed Assets and the Sold Assets.
A-7
<PAGE> 8
2.7 SEC Filings. From November 8, 1996 through the date hereof, Panthers
has duly and timely filed with the SEC all reports, proxy statements and other
information required to be filed by it under the Exchange Act (the "SEC
Filings"). The SEC Filings, at the time of filing did not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein necessary to make the statements contained therein, in light of
the circumstances under which they were made, not misleading. Except as
disclosed in the SEC Filings, since November 8, 1996 to the date hereof, there
has not been any Material Adverse Change in the business, financial position or
results of operations of Panthers. The Registration Statement and Prospectus to
be filed pursuant to Article VIII hereof at the time of filing will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading.
2.8 Capitalization. As of the date hereof, the authorized capital stock of
Panthers consists of 100,000,000 shares of Panthers Common Stock (which number
includes 2,600,000 shares of Panthers Common Stock reserved for issuance under
the Panthers' 1996 Stock Option Plan) and 10,000,000 shares of Class B common
stock, par value $.01 per share. Panthers has no shares of preferred stock
authorized. As of March 4, 1997: (a) 23,648,444 shares of Panthers Common Stock,
which number does not include 920,440 shares of Panthers Common Stock which are
subject to granted but currently unexercisable options, were validly issued and
outstanding, fully paid and nonassessable, and (b) 255,000 shares of Panthers
Class B Common Stock were validly issued and outstanding, fully paid and
nonassessable. As of the Closing Date, the number of shares of Panthers Common
Stock equal to the aggregate number of shares of Panthers Common Stock
underlying the Exchange Rights and the Panthers Warrants will be reserved for
issuance upon exercise of the Exchange Rights and upon exercise of the Panthers
Warrants.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE
PARTNERSHIP, THE GENERAL PARTNER AND BRMC
As a material inducement to Panthers and to Panthers BRHC Limited to enter
into this Agreement and to consummate the transactions contemplated hereby, the
Partnership, the General Partner and BRMC make the following representations and
warranties to the Panthers and Panthers BRHC Limited:
3.1 Partnership's Organization. (i) The Partnership is a limited
partnership duly organized, validly existing and in good standing under the laws
of the State of Florida, and (ii) the character of the properties owned or
leased by Partnership and the nature of Partnership's business do not require it
to be qualified and in good standing in any other state.
3.2 General Partner's and BRMC's Organization. General Partner is a
limited partnership, duly organized, validly existing and in good standing under
the laws of the State of Delaware and is qualified to do business under the laws
of the State of Florida. BRMC is a corporation, duly organized, validly existing
and in good standing under the laws of the State of Delaware and is qualified to
do business under the laws of the State of Florida. General Partner is the sole
general partner of Partnership and BRMC is the sole general partner of General
Partner.
3.3 Subsidiaries. Except as set forth on Schedule 3.3 hereof, the
Partnership does not own, directly or indirectly, any outstanding voting
securities of or other interests in, or control, any other corporation,
partnership, joint venture or other business entity.
3.4 Power and Authority. The Partnership has partnership power and
authority, as applicable, to: (i) to conduct its business as now conducted; (ii)
execute and deliver this Agreement, and (iii) subject to obtaining appropriate
limited partner consents required by its partnership agreement, close the
transactions contemplated by this Agreement. Each of the General Partner and
BRMC has full partnership or corporate power and authority to authorize and
consent to the execution and delivery by the Partnership of this Agreement, and,
subject to obtaining appropriate consents of the limited partners of the
Partnership and the General Partner, if any, the performance by Partnership of
its obligations hereunder. All of the consents of the general
A-8
<PAGE> 9
partner of each of the Partnership and the General Partner, and of the Board of
Directors of BRMC, required, if any, in connection with the execution, delivery
and performance of this Agreement have been obtained.
3.5 Due Execution/Enforceability. This Agreement has been duly executed
and delivered by Partnership, and assuming due authorization, execution and
delivery by Panthers and Panthers BRHC Limited, constitutes the legal, valid and
binding obligations of Partnership, enforceable against it in accordance with
the terms hereof and thereof, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
3.6 Litigation. Except as set forth on Schedule 3.6 hereof, there is no
action, suit or proceeding pending or, to the knowledge of any of the
Partnership, the General Partner and BRMC, threatened against or affecting any
of them that is not covered by insurance or, that if adversely determined would
materially affect the assets, business or operations of the Partnership or would
materially impair the ability of any of the Partnership, the General Partner or
BRMC to perform any of such entity's obligations under this Agreement.
3.7 Conflict. Except as set forth on Schedule 3.7, neither the execution
nor the delivery of this Agreement nor the performance by the Partnership, the
General Partner and BRMC of any of the provisions hereof, will conflict with or
result in a breach of any of the provisions of the Partnership's, the General
Partner's or BRMC's governing documentation, any applicable Legal Requirements,
or any Designated Contract (as defined in Section 3.23 hereof), or constitute a
default under any of the foregoing or result in the creation or imposition of
any lien, charge or encumbrance upon any property of such entity, or on all or a
portion of the Contributed Assets (including the Owned Property) or the Sold
Assets.
3.8 Governmental Consent. No consent, approval or other authorization of
or by any Governmental Authority is required in connection with the execution or
delivery by the Partnership, the General Partner or BRMC of this Agreement or
compliance by them with any of the provisions hereof, except with respect to the
transfer of the Permits (defined in Section 3.19) and except HSR or SEC filings
required by law, if any.
3.9 Financial Statements. Each of Partnership's 1995 audited, and
December, 1996 audited Financial Reports previously delivered to Panthers (i) in
the case of the accrual statement, has been audited by a certified public
accounting firm, which has issued its report thereon, (ii) is true and correct
in all material respects on and as of the dates and periods covered by such
statements and (iii) was prepared in accordance with GAAP. No event or
circumstance since the dates of such statements makes any of them untrue or
misleading in any material adverse manner. The balance sheet of the Partnership,
dated as of December 31, 1996, is referred to herein as the "Current Balance
Sheet." Partnership has delivered to Panthers a true and correct copy of its
1997 Budget as it relates to capital expenditures, repairs and maintenance, and
to furniture, fixtures and equipment, which was prepared in the ordinary course
of business and was approved by the General Partner, and which is subject to
adjustment from time to time.
3.10 Liabilities of the Partnership. (a) The Partnership does not have any
liabilities or obligations, whether accrued, absolute, contingent or otherwise,
except (i) to the extent reflected or taken into account in its Current Balance
Sheet and not heretofore paid or discharged, (ii) to the extent specifically set
forth in or incorporated by express reference in any of the Schedules attached
hereto, (iii) liabilities incurred in the ordinary course of business consistent
with past practice since the date of its Current Balance Sheet (none of which
relates to breach of contract, breach of warranty, tort, infringement or
violation of law, or which arose out of any action, suit, claim, governmental
investigation or arbitration proceeding), (iv) normal accruals,
reclassifications, and audit adjustments which would be reflected on an audited
financial statement and which would not be material in the aggregate, and (v)
liabilities incurred in the ordinary course of business prior to the date of its
Current Balance Sheet which, in accordance with GAAP consistently applied, were
not recorded thereon.
(b) The Partnership's Net Working Capital (defined below) minus the
Partnership's closing costs and expenses set forth in Section 5.20 hereof, shall
be $1.00 or more as of the last day of the month immediately preceding the
Closing Date (with the current portion of the Premier Club Accounts Receivable
being that amount due prior to the Settlement Date (defined in Section 9.2
hereof)) . The Partnership's "Net Working
A-9
<PAGE> 10
Capital" as of December 31, 1996 is set forth on Schedule 3.10 hereof, and shall
be recalculated by the Partnership for purposes of Closing in a manner
consistent with Schedule 3.10 as of the end of the calendar month immediately
preceding the Closing Date, and such recalculation shall be deemed a Schedule
attached to this Agreement ("Closing Net Working Capital Statement").
3.11 Real Estate. (a) The Partnership does not own any real property or
any interest therein except as set forth on Schedule 3.11(a) (the "Owned
Property"), which Schedule sets forth the location and principal improvements
and buildings on ("Improvements") the Owned Property, together with a list of
all title insurance policies relating to such properties, all of which policies
have previously been delivered or made available to Panthers by the Partnership.
(i) Partnership holds good, indefeasible and marketable fee simple
title to the Land and existing Improvements, free and clear of all
mortgages, deeds of trust, liens, encumbrances, ground rents, leases,
tenancies, licenses, contracts of sale, options, security interests,
covenants, conditions, restrictions, rights of way, easements,
encroachments and any other matters affecting title except the Permitted
Exceptions (set forth on Schedule 3.11(b));
(ii) The completion of the Expansion Plan and the use of the Expansion
Plan improvements will not violate any Permitted Exception;
(iii) To the best of each of the Partnership's, the General Partner's
and BRMC's knowledge, no Improvements upon the Owned Property encroaches
upon any adjacent property building line, setback line, side yard line, or
any recorded or visible easement (or other easement of which they are aware
or have reason to believe may exist) with respect to the Owned Property,
except insofar as the same may be a Permitted Exception or as disclosed on
the Survey; and
(iv) The Owned Property is taxed separately without regard to any
other property and has been subdivided from all other property in
compliance with applicable laws.
3.12 Condemnation. There is no pending condemnation, expropriation,
eminent domain or similar proceeding affecting the Owned Property or any portion
thereof, and Partnership has no knowledge and has not received any written or
oral notice that any such proceeding is contemplated.
3.13 No Management Agreement. There is no management agreement affecting
the Owned Property (other than with respect to Partnership's obligations to pay
General Partner the Supervisory Fee pursuant to the Partnership Agreement).
3.14 Ownership of Contributed Assets. Except as otherwise disclosed on
Schedule 3.14, the Partnership is the owner of all of its Contributed Assets and
Sold Assets, which Contributed Assets and Sold Assets are free and clear of any
Liens, other than as set forth on Schedule 3.11 or 3.14.
3.15 Compliance with Laws. (a) Partnership has complied in all material
respects with all Legal Requirements and all recorded instruments affecting the
Property. The use of the Owned Property complies, and after substantial
completion of the Expansion Plan, shall continue to comply in all material
respects, with all zoning and use-related Legal Requirements.
(b) The Partnership is and at all times has been in compliance in all
material respects with the terms and provisions of the Immigration Reform and
Control Act of 1986, as amended (the "Immigration Act"). With respect to each
Employee (as defined in 8 C.F.R. 274a.1(f)) of the Partnership for whom
compliance with the Immigration Act is required, the Partnership has on file a
true, accurate and complete copy of (i) each Employee's Form I-9 (Employment
Eligibility Verification Form) and (ii) all other records, documents or other
papers prepared, procured and/or retained by the Partnership pursuant to the
Immigration Act. The Partnership has not been cited, fined, served with a Notice
of Intent to Fine or, to the knowledge of the Partnership, the General Partner
or BRMC, with a Cease and Desist Order, nor has any action or administrative
proceeding been initiated or threatened against the Partnership, by the
Immigration and Naturalization Service by reason of any actual or alleged
failure to comply with the Immigration Act.
A-10
<PAGE> 11
(c) The Partnership is not subject to any Contract, decree or injunction in
which the Partnership is a party which restricts the continued operation of any
business of the Partnership or the expansion thereof to other geographical
areas, customers and suppliers or lines of business.
3.16 Labor and Employment Matters. The Partnership is not a party to or
bound by any collective bargaining agreement or any other agreement with a labor
union, and there has been no effort by any labor union during the 24 months
prior to the date hereof to organize any Employees of the Partnership into one
or more collective bargaining units. There is no pending or, to the knowledge of
the Partnership, the General Partner or BRMC, threatened labor dispute, strike
or work stoppage which affects or which may affect the business of the
Partnership or which may interfere with its continued operations. Neither the
Partnership nor, to the knowledge of the Partnership, any agent, representative
or Employee thereof has within the last 24 months committed any unfair labor
practice as defined in the National Labor Relations Act, as amended, and there
is no pending or threatened charge or complaint against the Partnership by or
with the National Labor Relations Board or any representative thereof. There has
been no strike, walkout or work stoppage involving any of the Employees of the
Partnership during the 24 months prior to the date hereof. The Partnership is
not aware that any key Employee or group of Employees has any plans to terminate
his, her or their employment with the Partnership as a result of the
transactions contemplated hereunder or otherwise. Schedule 3.16 lists each
contract, agreement or plan of the following nature, whether formal or informal,
and whether or not in writing, to which the Partnership is a party or under
which it has an obligation: (i) employment agreements, (ii) employee handbooks,
policy statements and similar plans, (iii) noncompetition agreements and (iv)
consulting agreements (true and correct copies of which the Partnership has
provided to the Panthers). The Partnership has complied with applicable laws,
rules and regulations relating to employment, civil rights and equal employment
opportunities, including but not limited to, the Civil Rights Act of 1964, the
Fair Labor Standards Act, and the Americans with Disabilities Act, as amended.
3.17 ERISA. Neither Partnership nor any member of a Controlled Group of
which Partnership is a member maintains any Plan for the benefit of employees of
Partnership and neither Partnership nor any member of such Controlled Group is
obligated to make contributions in respect of any such Plan.
3.18 Tax Matters. All federal, state and other tax returns and reports of
each of the Partnership, the General Partner and BRMC required to be filed have
been duly filed, and all federal, state and other taxes, assessments (including
assessments for municipal improvements), fees or other governmental charges
imposed upon the Partnership, the General Partner, BRMC, and the Contributed
Assets which are due and payable have been paid (other than with respect to the
State of Florida Department of Revenue sales tax audit). Partnership knows of no
proposed material tax or other assessments against Partnership, the Owned
Property or any of the improvements thereon, and no extension of time for
assessment or payment of any federal state or local tax requested by Partnership
is in effect.
3.19 Licenses and Permits. All licenses and governmental or official
approvals, permits or authorizations (collectively, the "Permits") issued to the
Partnership are listed on Schedule 3.19. All such Permits are valid and in full
force and effect, the Partnership is in compliance in all material respects with
the respective requirements thereof, and no governmental proceeding is pending
or, to the knowledge of the Partnership, the General Partner or BRMC, threatened
to revoke or amend any of them.
3.20 Insurance. A list of the insurance policies maintained by the
Partnership is set forth on Schedule 3.20 hereto. Such policies are in full
force and effect, all premiums due and payable therefor have been paid in full,
and true and correct copies thereof have been delivered to Panthers.
3.21 Adequacy of the Assets; Relationships with Customers and Suppliers;
Affiliated Transactions. The Contributed Assets and Sold Assets constitute, in
the aggregate, all of the assets and properties necessary for the conduct of the
business of the Partnership in the manner in which and to the extent to which
such business is currently being conducted. No current supplier to the
Partnership of items essential to the conduct of its business will or has
threatened to terminate its business relationship with it for any reason.
Neither the Partnership nor the General Partner nor BRMC has any direct or
indirect interest in any customer, supplier or competitor or in any person from
whom or to whom the Partnership leases real or personal property. Other
A-11
<PAGE> 12
than as specified in the partnership agreement of the Partnership, and other
than the Temple Agreement, neither the General Partner nor any Affiliate thereof
is a party to any Contract or transaction with the Partnership or has any
interest in any property used by the Partnership.
3.22 Intellectual Property. All trademarks, service marks, trade names,
copyrights, patents, licenses (including licenses for the use of computer
software programs) and other intellectual property used in the conduct of the
Partnership's business (the "Intellectual Property") are listed on Schedule 3.22
hereof. The Partnership is the owner of the Intellectual Property, except as set
forth on Schedule 3.22 hereof. The conduct of the business of the Partnership as
presently conducted does not infringe or misappropriate any rights held or
asserted by any Person with respect to, and no Person is infringing on, the
Intellectual Property. Except as set forth on Schedule 3.22, no payments are
required for the continued use of the Intellectual Property.
3.23 Contracts. As of the date of this Agreement, Schedule 3.23 sets forth
a list of each Designated Contract (defined below) to which the Partnership is a
party or by which it or its properties and assets are bound, copies of which
have been provided to Panthers. The copy of each Designated Contract furnished
to Panthers is a true and complete copy of the document it purports to represent
and reflects all amendments thereto made through the date of this Agreement. The
Partnership has not violated any of the material terms or conditions of any
Designated Contract or any term or condition which would permit termination or
material modification of any Designated Contract, and, to the knowledge of the
Partnership, the General Partner and BRMC, all of the covenants to be performed
by any other party thereto as of the date hereof have been fully performed and
there are no claims for breach or indemnification or notice of default or
termination under any Designated Contract. No event has occurred which
constitutes, or after notice or the passage of time, or both, would constitute,
a material default by the Partnership under any Designated Contract, and, to the
knowledge of the Partnership, the General Partner and BRMC, no such event has
occurred which constitutes or would constitute a material default by any other
party. The Partnership is not subject to any liability or payment resulting from
renegotiation of amounts payable by it under any Designated Contract. The term
Designated Contract shall mean: (a) loan agreements, indentures, mortgages,
pledges, hypothecations, deeds of trust, conditional sale or title retention
agreements, security agreements, equipment financing obligations or guaranties,
or other sources of contingent liability in respect of any indebtedness or
obligations to any other Person, or letters of intent or commitment letters with
respect to same; (b) contracts obligating the Partnership to provide products or
services for a period of one year or more and, irrespective of the term of the
Contract, requiring the Partnership to make payments of cash or property
totalling $100,000 or more; (c) leases of real property, and leases of personal
property not cancelable without penalty on notice of sixty (60) days or less or
calling for payment of an annual gross rental exceeding Ten Thousand Dollars
($10,000.00); (d) distribution, sales agency or franchise or similar agreements,
or agreements providing for an independent contractor's services, or letters of
intent with respect to same; (e) employment agreements, management service
agreements, consulting agreements, confidentiality agreements, non-competition
agreements and any other agreements relating to any employee, officer or
director of the Partnership; (f) licenses, assignments or transfers of
trademarks, trade names, service marks, patents, copyrights, trade secrets or
know how, or other agreements regarding proprietary rights or intellectual
property; (g) any Contract relating to pending capital expenditures by the
Partnership; and (h) other material Contracts or understandings, irrespective of
subject matter and whether or not in writing, not entered into in the ordinary
course of business by the Partnership and not otherwise disclosed on the
Schedules.
3.24 Access to Information. Each of the Partnership, the General Partner
and BRMC has had the opportunity to discuss the transactions contemplated hereby
with Panthers and Panthers BRMC Limited Partnership and has had the opportunity
to obtain such information pertaining to Panthers as has been requested,
including but not limited to filings made by Panthers with the SEC under the
Exchange Act.
3.25 Bank Accounts; Business Locations. Schedule 3.25 sets forth all
accounts of the Partnership with any bank, broker or other depository
institution, and the names of all persons authorized to withdraw funds from each
such account.
A-12
<PAGE> 13
3.26 Names. All names under which the Partnership does business as of the
date hereof are specified on Schedule 3.26. The Partnership has not changed its
name or used any assumed or fictitious name within the past three years.
3.27 No Commissions. The Partnership has not incurred any obligation for
any finder's or broker's or agent's fees or commissions or similar compensation
in connection with the transactions contemplated hereby, other than the
financial advisor's fee owing by the Partnership to BT Securities Corporation,
which fees and commissions shall be paid by the Partnership.
3.28 Premier Club Notes. (i) All of the Premier Club Notes outstanding as
of December 31, 1996 appear on the list set forth on Schedule 3.28, (ii)
Partnership is the holder and beneficial owner of all of the Premier Club Notes
free and clear of any encumbrances except as in favor of the holders of the
first, second and third mortgages encumbering the Owner Property, (iii) as of
December 31, 1996, the remaining unpaid principal balance of each Premier Club
Note is as set forth on Schedule 3.28, (iv) except as set forth on Schedule
3.28, (A) no default exists under any of the Premier Club Notes, (B) all of the
Premier Club Notes remain in full force and effect and have not been amended and
(c) no obliger under any Premier Club Note has any defenses or rights of set-off
or abatement against such obligor's obligations under the applicable Premier
Club Note, and (v) as of the Closing Date, Partnership has delivered to Panthers
BRMC Limited the originals of all of the Premier Club Notes including any
amendments and modifications made thereto.
3.29 Premier Club Deposits. All of the Premier Club Deposits as of
December 31, 1996 are set forth on Schedule 3.29 and as of such date, except as
set forth on Schedule 3.29, no Premier Club member has notified Partnership of
the exercise of its right to a refund of any or all of any Premier Club Deposit.
3.30 Environmental Matters. (a) Except as disclosed in the Environmental
Report, (i) the Partnership has not conducted and shall not hereafter conduct
and (ii) to the best knowledge of the Partnership, no prior owner or current or
prior tenant or occupant of all or any portion of the Partnership has conducted
or is conducting, any Hazardous Substance Activity at, on or under the Owned
Property (A) in violation of Environmental Laws that would have a Material
Adverse Effect on the operation of the Owned Property or (B) in a manner
inconsistent with the use of the Owned Property as a first class resort hotel
complex, business conference center and resort membership club;
(b) Except as disclosed by the Environmental Report the Owned Property does
not contain asbestos or any Asbestos-Containing Material and there is no current
or potential contamination of the Owned Property by asbestos fiber; and
(c) The Partnership fully cooperated with Law Engineering and Environmental
Services, Inc. in the preparation of the Environmental Report and, to the best
of the Partnership's knowledge, such Environmental Report is not inaccurate in
any material respect.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE CLOSING DATE
4.1 Conduct of Business by the Partnership Pending the Closing Date. The
Partnership covenants and agrees that, between the date of this Agreement and
the Closing Date, its business shall be conducted only in and it shall not take
any action except in, the ordinary course of business, consistent with past
practice. Completion of the Expansion Plan and completion of the sale of the
Albanese Lots and corresponding renovation of the golf course shall be deemed to
be within the ordinary course of business. The Partnership shall use its best
efforts to preserve intact its business organization, to keep available the
services of its current officers, employees and consultants, and to preserve its
present relationships with customers, suppliers and other persons with which it
has significant business relations. By way of amplification and not limitation,
except as contemplated by this Agreement, the Partnership shall not, between the
date of this Agreement and
A-13
<PAGE> 14
the Closing Date, directly or indirectly, do or propose or agree to do any of
the following without the prior written consent of Panthers and Panthers BRHC
Limited:
(a) amend or otherwise change its certificate of limited partnership
or partnership agreement or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, encumber, or authorize the
issuance, sale, pledge, disposition, grant or encumbrance of (i) any
partnership interests of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any partnership interest,
or (ii) any of its assets, tangible or intangible, except in the ordinary
course of business consistent with past practice;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, property or otherwise, with respect to any
of its partnership interests;
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its partnership
interests;
(e) (i) acquire (including, without limitation, for cash or shares of
stock or partnership interests, by merger, consolidation, or acquisition of
stock, partnership interest or assets) any interest in any corporation,
partnership or other business organization or division thereof or any
assets, or make any investment either by purchase of stock, partnership
interest or other securities, contributions of capital or property
transfer, or, except in the ordinary course of business, consistent with
past practice, purchase any property or assets of any other Person, (ii)
incur any indebtedness for borrowed money or issue any debt securities or
assume, guarantee or endorse or otherwise as an accommodation become
responsible for, the obligations of any Person, or make any loans or
advances, or (iii) enter into any Contract other than in the ordinary
course of business, consistent with past practice;
(f) except in the ordinary course of business consistent with past
practice, increase the compensation payable or to become payable to its
officers or employees, or, except as presently bound to do, grant any
severance or termination pay to, or enter into any employment or severance
agreement with, any of its directors, officers or other employees, or
establish, adopt, enter into or amend or take any action to accelerate any
rights or benefits which any collective bargaining, bonus, profit sharing,
trust, compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any
directors, officers or employees;
(g) take any action other than in the ordinary course of business and
in a manner consistent with past practice with respect to accounting
policies or procedures;
(h) pay, discharge or satisfy any existing claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business and consistent with past practice of due and
payable liabilities reflected or reserved against in its financial
statements, as appropriate, or liabilities incurred after the date hereof
in the ordinary course of business and consistent with past practice; or
(i) agree, in writing or otherwise, to take or authorize any of the
foregoing actions or any action which would make any representation or
warranty in Article III untrue or incorrect.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Further Assurances. Each party shall execute and deliver, to the
extent permitted by its respective governance agreements, such additional
instruments and other documents and shall take such further actions as may be
necessary or appropriate to effectuate, carry out and comply with all of the
terms of this Agreement and the transactions contemplated hereby.
A-14
<PAGE> 15
5.2 General Partner Obligations. The General Partner, as soon as
practically possible, shall send the consent solicitation required under the
Partnership's certificate of limited partnership and partnership agreement to
the limited partners of the Partnership and, subject to Section 5.4 below,
recommend and otherwise use its reasonable best efforts to facilitate the
Closing of the transaction contemplated hereby, unless the Termination Fee
becomes payable to Panthers under Section 5.12 hereof.
5.3 Cooperation. Each of the parties agrees to cooperate with the other
parties in the preparation and filing of all forms, notifications, reports and
information, if any, required or reasonably deemed advisable pursuant to any
law, rule or regulation or the rules of any exchange on which the Panthers
Common Stock is listed or the Nasdaq Stock Market in connection with the
transactions contemplated by this Agreement and to use its respective best
efforts to agree jointly on a method to overcome any objections by any
Governmental Authority to any such transactions.
5.4 HSR Act and Other Actions. Each of the parties hereto shall (i) make
promptly (and in no event later than ten (10) business days following the
attachment of all Schedules and Exhibits hereto) its respective filings, if any,
and thereafter make any other required submissions, under the HSR Act, with
respect to the transactions contemplated hereby, and (ii) use its reasonable
best efforts to take, or cause to be taken, all appropriate actions, and to do,
or cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated herein, including, without limitation, using its best efforts to
obtain all licenses, permits, consents, approvals, authorizations,
qualifications and orders of any Governmental Authority and parties to Contracts
with the Partnership and limited partners of the Partnership as are necessary
for the consummation of the transactions contemplated hereby. Each of the
parties shall make on a prompt and timely basis all governmental or regulatory
notifications and filings (including Panthers making all SEC filings necessary
to solicit shareholder consent to the transactions contemplated hereby and using
good faith efforts to obtain SEC approval of such filings) required to be made
by it for the consummation of the transactions contemplated hereby. The parties
also agree to use best efforts to defend all lawsuits or other legal proceedings
challenging this Agreement or the consummation of the transactions contemplated
hereby and to lift or rescind any injunction or restraining order or other order
adversely affecting the ability of the parties to consummate the transactions
contemplated hereby. If, on the date the General Partner mails its consent
solicitation to the limited partners of the Partnership, BT Securities
Corporation determines that it can not bring forward to a current date the
fairness opinion previously delivered to the General Partner on or about the
date hereof, the General Partner shall so advise the limited partners and shall
have no obligation to recommend the transaction contemplated hereby, but shall
also not recommend against the transaction contemplated hereby except as
required by law.
5.5 Access to Information. From the date hereof to the Closing Date, the
Partnership, the General Partner and BRMC shall (and shall cause its directors,
officers, employees, auditors, counsel and agents) afford Panthers and Panthers'
officers, employees, auditors, counsel and agents reasonable access on
reasonable notice at all reasonable times to its properties, offices, and other
facilities, to its officers and employees and to all books and records, and
shall furnish such persons with all financial, operating and other data and
information as may be requested. No information provided to or obtained by
Panthers shall affect any representation or warranty in this Agreement.
5.6 Notification of Certain Matters; Exhibits and Schedules. (a) The
Partnership, the General Partner and BRMC shall give prompt written notice to
Panthers of the occurrence or non-occurrence of any event which would likely
cause any representation or warranty contained herein (including with respect to
any Schedules attached hereto), to be untrue or inaccurate, or any covenant,
condition, or agreement contained herein not to be complied with or satisfied
and the occurrence or non-occurrence of which would be a Material Adverse Change
with respect to the Partnership. Upon receipt by Panthers of notice of any
Material Adverse Change, Panthers shall have ten (10) business days to terminate
this Agreement, and the parties shall thereafter have no further liability to
the other in respect of this Agreement.
(b) In the event any Exhibits or Schedules contemplated hereby are not
attached hereto at the time of execution of this Agreement, the parties hereto
will work and negotiate in good faith to complete and attach such Schedules and
Exhibits within ten (10) business days thereafter; provided, however, that
Panthers shall
A-15
<PAGE> 16
have the right to determine, in good faith, within two (2) business days of
receipt thereof that any Exhibit or Schedule prepared solely by Partnership
constitutes a Material Adverse Change in which case the provisions of Subsection
(a) above will apply.
5.7 Tax Treatment. Panthers, BRMC, and the Partnership will use their
respective best efforts to cause the receipt by the Partnership of the
partnership interest in Panthers BRHC Limited contemplated hereunder to qualify
as a tax-free transaction under the provisions of Section 721 of the Code and do
not presently intend to take any action after the transaction contemplated
hereunder is effected to cause such transaction to lose its tax-free status. All
parties hereto agree to comply with the Code and applicable Treasury Regulations
regarding reporting requirements relating to a transaction under Section 721 of
the Code.
5.8 Confidentiality; Publicity. Except as may be required by law or as
otherwise permitted or expressly contemplated herein, no party hereto or their
respective Affiliates, employees, agents and representatives shall disclose to
any third party this Agreement or the subject matter or terms hereof without the
prior consent of the other parties hereto. No press release or other public
announcement related to this Agreement or the transactions contemplated hereby
shall be issued by any party hereto without the prior approval of the other
parties, except that Panthers may make such public disclosure which it believes
in good faith to be required by law or by the terms of any listing agreement
with or requirements of a securities exchange or the NASDAQ Stock Market (in
which case Panthers will consult with an officer of the Partnership prior to
making such disclosure).
5.9 No Other Discussions. While this Agreement is in effect, neither the
Partnership, the General Partner nor BRMC or their respective Affiliates,
employees, agents and representatives will (i) initiate or encourage the
initiation by others of discussions or negotiations with third parties relating
to any merger, sale or other disposition of any substantial part of the assets,
business or properties of the Partnership (whether by merger, consolidation,
sale of stock or otherwise) or (ii) enter into any agreement or commitment
(whether or not binding) with respect to any of the foregoing transactions,
other than pursuant to the terms of Section 5.12 hereof. The Partnership, the
General Partner and BRMC will immediately notify Panthers if any third party
attempts to initiate any solicitation, discussion or negotiation with respect to
any of the foregoing transactions.
5.10 [Reserved]
5.11 Trading in Panthers Common Stock. Except as otherwise expressly
consented to by Panthers, from the date of this Agreement until the Closing
Date, neither the Partnership, the General Partner nor BRMC (or any Affiliates
thereof) will directly or indirectly purchase or sell (including short sales)
any shares of Panthers Common Stock in any transactions effected on the NASDAQ
Stock Market or otherwise.
5.12 Termination Fee. Prior to the acceptance by the Partnership of any
unsolicited third party offer for the assets to be acquired hereunder (or for a
majority of the limited partnership interests in the Partnership), the
Partnership shall notify Panthers in writing and Panthers shall have ten (10)
business days to match any such offer in writing (including by matching any
offer with Panthers Common Stock with a fair market value equal to the fair
market value of the third party offer). In the event Panthers does not match
such offer, the Partnership may terminate this Agreement and accept such offer
in which case the Partnership shall pay to Panthers $10,000,000 and reimburse
Panthers for its out-of-pocket costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby ("Termination Fee"). In
the event the limited partners of the Partnership fail to approve the
transaction contemplated by this Agreement, and a substantial part of the
assets, business or properties to be acquired hereunder are sold (or a majority
of the limited partnership interests of the Partnership are transferred) within
six months of the resulting termination, the Termination Fee shall also be
payable by the Partnership to Panthers. Panthers shall pay the Partnership
$10,000,000, plus reimburse the Partnership for its out-of-pocket costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby, in the event Panthers fails to close the transactions
contemplated by this Agreement solely due to Panthers' breach of this Agreement.
5.13 Maintenance of Loan Agreement. Prior to the earlier of January 1,
2001 or such date as Panthers Common Stock closes at an average price of $36.93
(adjusted, as appropriate, for any stock split, reverse stock split, stock
dividend or "Special Transaction" generally in accordance with the provisions of
Exhibit "A"
A-16
<PAGE> 17
attached hereto) for five consecutive trading days on the NASDAQ Stock Market,
Panthers BRHC Limited shall not prepay or modify the $110 million Senior
Facility, and will only refinance such $110 million Senior Facility on terms
which provide for the allocation of the refinanced indebtedness as Qualified
Non-Recourse Debt in the same manner as the $110 Million Senior Facility is
currently allocated.
5.14 Panthers BRHC Limited Appointed Attorney for the
Partnership. Effective at the Closing Date, the Partnership hereby constitutes
and appoints the Panthers Affiliate that becomes the managing general partner of
Panthers BRHC Limited and Panthers BRHC Limited, and its successors and assigns,
its true and lawful attorney, in the name of either Panthers BRHC Limited or the
Partnership (as Panthers BRHC Limited shall determine in its sole discretion)
but for the benefit and at the expense of Panthers BRHC Limited (except as
otherwise herein provided), (a) to institute and prosecute all proceedings which
Panthers BRHC Limited may deem proper in order to collect, assert or enforce any
claim, right or title of any kind in or to the Contributed Assets as provided
for in this Agreement; (b) to defend or compromise any and all actions, suits or
proceedings in respect of any of the Contributed Assets, and to do all such acts
and things in relation thereto as Panthers BRHC Limited shall deem advisable;
and (c) to take all action which Panthers BRHC Limited may reasonably deem
proper in order to provide for Panthers BRHC Limited the benefits under any of
the Contributed Assets where any required consent of another party to the sale
or assignment thereof to Panthers BRHC Limited pursuant to this Agreement shall
not have been obtained. The Partnership acknowledges that the foregoing powers
are coupled with an interest and shall be irrevocable. Panthers BRHC Limited
shall be entitled to retain for its own account any amounts collected pursuant
to the foregoing powers, including any amounts payable as interest in respect
thereof.
5.15 Execution of Further Documents. From and after the Closing, upon the
reasonable request of Panthers BRHC Limited, the Partnership shall execute,
acknowledge and deliver all such further deeds, bills of sale, assignments,
transfers, conveyances, powers of attorney and assurances as may be required or
appropriate to convey and transfer to and vest in Panthers BRHC Limited and
protect its right, title and interest in all of the Contributed Assets and the
Sold Assets and to carry out the transactions contemplated by this Agreement.
5.16 Employees of the Partnership. The Partnership agrees to use its
reasonable best efforts to aid Panthers BRHC Limited in engaging such of the
employees of the Partnership as are employed on the Closing Date whom Panthers
BRHC Limited desires to engage after the Closing Date.
5.17 Payoff Letters. Prior to Closing, (a) the Partnership shall request
payoff and estoppel letters with respect to any Indebtedness being repaid or
assumed by Panthers BRHC Limited, which letters shall contain payoff amounts,
per diems, wire transfer instructions and an agreement to deliver, upon full
payment, UCC-3 termination statements, satisfactions of mortgage or other
appropriate releases and any original promissory notes or other evidences of
indebtedness marked canceled, and (b) the Partnership shall provide Panthers
BRHC Limited with evidence of satisfaction in full or release of all guarantees,
notes, or obligations of the Partnership to or on behalf of any Affiliate of the
Partnership or the Partners.
5.18 Panthers Board of Directors. For so long as either of Messrs. Fowler
or Callaghan (or their respective firms) shall be employed by Panthers BRHC
Limited, Panthers shall nominate one of such persons for election to the Board
of Directors of Panthers at each annual meeting of Panthers.
5.19 Allocation of Consideration. The consideration paid by Panthers and
Panthers BRHC Limited for the Contributed Assets shall be allocated to the
Contributed Assets as set forth on Schedule 5.19 hereto.
5.20 Expenses. Subject to the reasonable approval of Panthers and the
Partnership, the Partnership shall pay, out of cash contributed by Panthers
pursuant to Section 1.5(a) hereof and listed in Schedule 1.5(vii), the direct
costs and expenses of Panthers and the Partnership (including but not limited to
financial advisory, brokerage, legal, accounting and printing fees, and fees
relating to the fairness opinion and consent solicitation) payable in connection
with the transaction contemplated hereby, together with all documentary stamp
and intangible taxes payable in connection with the transfer of title to any of
the Contributed Assets and the Sold Assets (including the Owned Property), all
fees and expenses payable in connection with the assumption or refinancing of
the $110 Million Senior Facility indebtedness, together with
A-17
<PAGE> 18
the costs and expenses (including the title insurance premium) charged in
connection with the issuance of a new Owners Title Insurance Policy (and
corresponding Mortgagee Policy or endorsement to the existing Senior Facility
Mortgagee policy, as appropriate) to Panthers BHRC Limited and any other
transaction fees or expenses. Panthers shall have the right to designate the
title company and title agent in its sole discretion.
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF THE PANTHERS
The obligations of the Panthers and Panthers BRMC Limited to effect the
transactions contemplated hereunder shall be subject to the fulfillment at or
prior to the Closing Date of the following conditions, any or all of which may
be waived in whole or in part by Panthers:
6.1 Accuracy of Representations and Warranties and Compliance with
Obligations. The representations and warranties of the Partnership, the General
Partner and BRMC contained in this Agreement shall be true and correct in all
material respects at and as of the Closing Date with the same force and effect
as though made at and as of that time except (i) for changes specifically
permitted by or disclosed pursuant to this Agreement, (ii) that those
representations and warranties which address matters only as of a particular
date shall remain true and correct in all material respects as of such date; and
(iii) those which are not a Material Adverse Change with respect to the
Partnership. The Partnership, the General Partner and BRMC shall have performed
and complied in all material respects with all of their respective obligations
required by this Agreement to be performed or complied with at or prior to the
Closing Date. The Partnership, the General Partner and BRMC shall have delivered
to Panthers a certificate, dated as of the Effective Date, duly signed (in the
case of the Partnership, by its General Partner), certifying that such
representations and warranties are true and correct in all material respects and
that all such obligations have been complied with and performed in all material
respects.
6.2 No Material Adverse Change or Destruction of Property. Between the
date hereof and the Closing Date, (i) there shall have been no Material Adverse
Change to the Partnership, (ii) there shall have been no adverse federal, state
or local legislative or regulatory change affecting in any material respect the
services, products or business of the Partnership, and (iii) none of the
properties and assets of the Partnership shall have been damaged by fire, flood,
casualty, act of God or the public enemy or other cause (regardless of insurance
coverage for such damage) which damages may have a Material Adverse Effect
thereon, and there shall have been delivered to the Panthers a certificate to
that effect, dated the Effective Date and signed by or on behalf of the
Partnership.
6.3 Partnership Certificate. The General Partner shall have delivered to
Panthers a certificate of good standing of the Partnership issued by the
Secretary of State of the State of Florida and each other state in which the
Partnership is qualified to do business as of a date not more than fifteen (15)
days prior to the Closing Date. The Partnership shall have delivered to Panthers
(x) a copy of the certificate of limited partnership and the agreement of
limited partnership as in effect immediately prior to the Closing Date and (y) a
copy of the certificate of the General Partner of the Partnership authorizing
the transactions contemplated by this Agreement, certified in the case of
subsections (x) and (y) of this Section 6.3 as of the Closing Date by the
General Partner as being true, correct and complete.
6.4 Opinion of Counsel. Panthers shall have received an opinion dated as
of the Closing Date from counsel for the Partnership, in form and substance
acceptable to Panthers, to the effect that:
(i) The Partnership is a limited partnership, duly organized, validly
existing and in good standing under the laws of the State of Florida and is
authorized to carry on the business now conducted by it and to own or lease
the properties now owned or leased by it;
(ii) The Partnership has obtained all necessary authorizations and
consents of its partners, and any other required consents under its
certificate of limited partnership and partnership agreement, as the case
may be, to effect the transactions contemplated hereunder;
A-18
<PAGE> 19
(iii) All general partnership interests of the Partnership are owned
as set forth in Schedule 3.2 hereto;
(iv) Such counsel does not know or have reason to believe that there
is any litigation, proceeding or investigation pending or threatened which
might result in any Material Adverse Change in the properties, business or
prospects or in the condition of the Partnership, or which questions the
validity of this Agreement, Panthers BRHC Limited's limited partnership
agreement and the Exchange Agreement (collectively, the "Transaction
Agreements"); and
(v) The Transaction Agreements are valid and binding obligations of
the Partnership, the General Partner and BRMC, and are enforceable against
the Partnership, the General Partner and BRMC, in accordance with their
respective terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws affecting the
enforcement of creditors' rights generally or general equitable principles.
6.5 Senior Credit Facility. The Partnership shall have received the
appropriate consents under the Loan Agreement from the Bank of Nova Scotia (as
Agent for the lenders thereunder), or the Partnership shall have refinanced the
Senior Credit Facility on terms equal to or better than those terms existing
under the Loan Agreement and otherwise acceptable to Panthers in its reasonable
discretion.
6.6 Other Consents. In addition to the consent required by Section 6.5,
the Partnership shall have received consents to the transactions contemplated
hereby and waivers of rights to terminate or modify any material rights or
obligations of the Partnership from any Person from whom such consent or waiver
is required under any Designated Contract as of a date not more than ten days
prior to the Closing Date, or who, as a result of the transactions contemplated
hereby, would have such rights to terminate or modify such Designated Contracts,
either by the terms thereof or as a matter of law, in each case where the
failure to obtain such consent or consents, individually or in the aggregate,
would have a Material Adverse Effect on the Partnership.
6.7 Securities Laws. Panthers and Panthers BRMC Limited shall have
received all necessary consents and otherwise complied with any state Blue Sky
or securities laws applicable to the issuance of their respective securities
hereunder, in connection with the transactions contemplated hereby.
6.8 Employment Agreement. Panthers BRHC Limited shall have entered into
employment agreements with Messrs. Glennie, Feder, March, Lawrence, Nylen and
Tolbert ("Operating Management") in the form of Exhibit "D" (terms attached as
Schedule D) attached hereto.
6.9 Supervisory Management. Messrs. Fowler and Callaghan (or their
respective firms) shall enter into employment or consulting agreements (as the
case may be) with Panthers BRHC Limited in the form of Exhibit "E" (terms
attached as Schedule E) attached hereto.
6.10 Advisory Director. Mr. Temple shall have entered into a consulting
agreement with Panthers BRHC Limited in the form of Exhibit "F" (terms attached
as Schedule F) attached hereto.
6.11 Acknowledgment of Receipt of SEC Filings. At or prior to the Closing,
the General Partner and the Partnership shall have delivered to Panthers a
letter agreement acknowledging receipt of SEC filings of Panthers, in form and
substance satisfactory to the Panthers.
6.12 Transfer of Assets. At the Closing, the Partnership shall have
delivered to Panthers BRHC Limited and to Panthers, as applicable, all
assignments, warranty deeds and other instruments reasonably required to
evidence the conveyance of all of the Contributed Assets and the Sold Assets.
6.13 No Adverse Litigation. There shall not be pending or threatened any
action or proceeding by or before any court or other governmental body which
shall seek to restrain, prohibit, invalidate or collect damages arising out of
the transaction contemplated hereunder or any other transaction contemplated
hereby, and which, in the judgment of Panthers, makes it inadvisable to proceed
with the transaction contemplated hereunder and other transactions contemplated
hereby.
A-19
<PAGE> 20
6.14 HSR Act Waiting Period. Any applicable HSR Act waiting period shall
have expired or been terminated.
6.15 Other Approvals. The SEC shall have approved Panthers' proxy
statement, consent solicitation statement or information statement (to be
determined in the absolute discretion of Panthers) to its shareholders and shall
have received all necessary approvals of the NASDAQ Stock Market.
6.16 Dissolution of the Partnership. Panthers shall have received an
agreement from the General Partner of the Partnership to dissolve the
Partnership at such time as Panthers (or its designee) elects, after acquisition
of the Partnership's interest in Panthers BRHC Limited; together with an
estoppel letter from the General Partner of the Partnership stating that upon
dissolution and liquidation of the Partnership, Panthers designees owning
limited partnership interests in the Partnership shall be entitled to receive a
pro rata portion of the Partnership's distributable assets equal to the quotient
obtained by dividing: (A) the total Panthers Shares actually issued upon
exercise of the Exchange Rights to date; by (B) the total Panthers Shares
available for issuance under the Exchange Agreement as calculated pursuant to
Section 1.8(i) hereof.
6.17 Accounting Treatment. There shall not have been a change in the rules
promulgated by the Securities and Exchange Commission which does not permit
Panthers to consolidate for financial reporting purposes, all of the results of
operations of Panthers BRHC Limited.
6.18 Panthers BRHC Limited Partnership Agreement and Exchange
Agreement. The Partnership shall have executed and delivered the limited
partnership agreement for Panthers BRHC Limited and the Exchange Agreement.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS
OF THE PARTNERSHIP
The obligations of the Partnership to effect the transactions contemplated
hereunder shall be subject to the fulfillment at or prior to the Closing Date of
the following conditions, any or all of which may be waived in whole or in part
by the Partnership:
7.1 Accuracy of Representations and Warranties and Compliance with
Obligations. The representations and warranties of Panthers and Panthers BRMC
Limited contained in this Agreement shall be true and correct at and as of the
Closing Date with the same force and effect as though made at and as of that
time except (i) for changes specifically permitted by or disclosed pursuant to
this Agreement, and (ii) that those representations and warranties which address
matters only as of a particular date shall remain true and correct as of such
date. Panthers and Panthers BRHC Limited shall have performed and complied with
all of its obligations required by this Agreement to be performed or complied
with at or prior to the Closing Date. Panthers and Panthers BRHC Limited shall
have delivered to a representative of the Partnership a certificate, dated as of
the Effective Date, and signed by a duly authorized executive officer,
certifying that such representations and warranties are true and correct and
that all such obligations have been complied with and performed.
7.2 Issuance of Securities and Delivery of Agreement. At the Closing, the
Partnership shall have received all of the Panthers Warrants contemplated by
Section 1.8(j) hereof, Panthers BRGP Corporation shall have executed and
delivered the limited partnership agreement for Panthers BRHC Limited in and
Panthers shall have executed and delivered the Exchange Agreement.
7.3 No Adverse Litigation. There shall not be pending or threatened any
action or proceeding by or before any court or other governmental body which
shall seek to restrain, prohibit, invalidate or collect damages arising out of
the transactions contemplated hereunder or any other transaction contemplated
hereby, and which in the judgment of the General Partner makes it inadvisable to
proceed with the transactions contemplated hereunder and other transactions
contemplated hereby.
A-20
<PAGE> 21
7.4 HSR Act Waiting Period. Any applicable HSR Act waiting period shall
have expired or been terminated.
7.5 Partner Consents. All required partner consents for this transaction
contemplated hereby under the Partnership's Partnership Agreement shall have
been obtained.
7.6 Registration Statement. The registration statement(s) required by
Article XIII hereof shall be effective.
7.7 Opinion of Counsel. The Partnership shall have received an opinion
dated as of the Closing Date from counsel for Panthers and Panthers BRHC
Limited, in form and substance acceptable to Partnership, to the effect that:
(i) Panthers is a corporation duly organized, validly existing and in
good standing under the laws of the State of Florida; Panthers has the
requisite power and authority to carry on its business as now being
conducted; Panthers BRHC Limited is a limited partnership duly organized,
validly existing and in good standing under the laws of the State of
Florida; and Panthers BRHC Limited has the requisite power and authority to
carry on its business as now being conducted;
(ii) Panthers (and Panthers Affiliates) and Panthers BRHC Limited each
have the power and authority to execute and deliver the Transaction
Agreements to which they are a party, to perform their respective
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby or thereby. Each of Panthers (and Panthers Affiliates)
and Panthers BRHC Limited have taken all action necessary to authorize the
execution and delivery of the Transaction Agreements to which they are a
party, including obtaining all required consents required by their
respective Articles of Incorporation and Bylaws, which consents have been
validly obtained, and the performance of their respective obligations
hereunder and thereunder and the consummation of the transactions
contemplated hereby and thereby;
(iii) The execution and delivery of the Transaction Agreements by
Panthers (and Panthers Affiliates) and Panthers BRHC Limited to which they
are a party and the performance of their respective agreements in the
Transaction Agreements do not violate the Articles of Incorporation, or the
Bylaws of Panthers (and Panthers Affiliates) or the Certificate of Limited
Partnership or Partnership Agreement of Panthers BRHC Limited,
respectively.
(iv) Each of the Transaction Agreements has been duly executed and
delivered by Panthers (and Panthers Affiliates) and Panthers BRHC Limited
(as applicable) and constitutes a legal, valid and binding obligation of
each of them, enforceable against each of them in accordance with its
terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and general equitable principles
regardless of whether such enforceability is considered in a proceeding at
law or in equity;
(v) Upon consummation of the transactions contemplated hereunder and
the issuance and delivery of the Panthers Warrants, the Panthers Warrants
will be validly issued; upon the exchange of any of the Exchange Rights for
Panthers Shares, and the issuance and delivery of certificates representing
the Panthers Shares to the holders of the Exchange Rights, the Panthers
Shares will be validly issued, fully paid and non-assessable shares of
Panthers Common Stock; and upon exercise of the Panthers Warrants in
accordance with the terms thereof, and payment of the exercise price with
respect thereto, and upon issuance and delivery of the certificates
representing shares of Panthers Common Stock therefore, the shares of
Panthers Common Stock issued thereunder will be validly issued, fully paid
and non-assessable; and
(vi) As of a date on or about the Closing Date, a statement of the
authorized capital stock of Panthers (including any shares of stock
reserved for issuance under any stock option plan); together with a
statement of the total number of securities issued by Panthers and
outstanding (and whether such securities are fully paid and
non-assessable); together with a statement of the total shares of Common
A-21
<PAGE> 22
Stock which are unissued but subject to granted but currently unexercised
options and which are reserved for issuance pursuant to the Exchange
Agreement and upon exercise of the Panthers Warrants.
7.8 Share Price. After the mailing of the solicitations for the limited
partner consents under Section 7.5, there shall not have occurred a Material
Adverse Effect with respect to Panthers which causes the stock price of Panthers
on the NASDAQ Stock Market to fall below $26.375.
ARTICLE VIII
REGISTRATION
8.1 Registration. Prior to the Closing Date, Panthers shall register under
the Securities Act of 1933 ("Securities Act") and under applicable state
securities law, the issuance of the Exchange Rights, Panthers Shares, the Fee
Shares and the Panthers Warrants to the Partnership. Panthers BRHC Limited and
Panthers shall use best efforts to keep the registration statements required by
this Section 8.1 effective for so long as shall be necessary to allow the resale
of any underlying Panthers Common Stock to be made by any holder thereof without
restriction under Section 4(1) of the Securities Act (but without taking into
account any status of such holder as an affiliate of Panthers or Panthers BRHC
Limited).
8.2 Expenses of Registration. Panthers and Panthers BRHC Limited shall pay
all expenses incurred in connection with the registration, qualification and/or
exemption of the securities to be issued hereunder, including any SEC and state
securities law registration and filing fees, printing expenses, fees and
disbursements of Panthers' and Panthers BRHC Limited's counsel and accountants,
transfer agents' and registrars' fees, fees and disbursements of experts used by
Panthers and Panthers BRHC Limited in connection with such registration,
qualification and/or exemption, and expenses incidental to any amendment or
supplement to the Registration Statements or prospectuses contained therein.
Panthers and Panthers BRHC Limited shall not, however, be liable for any sales,
broker's or underwriting commissions upon sale by any holder of any of the
Panthers Shares or Panthers Warrants.
ARTICLE IX
APPLICATION OF HELD BACK INTERESTS
9.1 Survival of Representations and Warranties. Each of the
representations and warranties of the Panthers and Panthers BRHC Limited in this
Agreement or pursuant hereto shall expire at the Closing Date. Each of the
representations and warranties made by the Partnership, the General Partner and
BRMC in this Agreement or pursuant hereto shall expire at the Closing Date,
provided however, that with respect to the Trade Accounts Receivable and Premier
Club Accounts Receivable "Loss Experience" (defined below), Panther's designee
(for example, for purposes of this Article IX, Panthers BRGP Corporation) shall
have recourse to the Held Back Interests as set forth in Section 9.2 hereof.
9.2 Loss Experience and Security for Loss Experience. The "Loss
Experience" with respect to the Trade Accounts Receivable and the Premier Club
Accounts Receivable identified on the Closing Net Working Capital Statement
shall be calculated as of December 31, 1997, unless the Closing occurs
subsequent to June 30, 1997, in which case the Loss Experience shall be
calculated as of a date which is the end of the calendar quarter and which falls
between six and nine months after the Closing Date ("Settlement Date"); for
example, if the Closing occurs on July 10, 1997, the Settlement Date would be
March 31, 1998.
(a) Trade Accounts Receivable Loss Experience shall equal: The total
amount of Trade Accounts Receivable listed on the Closing Net Working
Capital Statement which are uncollected at the Settlement Date.
(b) Premier Club Accounts Receivable Loss Experience shall equal: The
sum of (i) the total amount of Premier Club Accounts Receivable past due
(determined in good faith between Panthers and the Partnership) as of the
Settlement Date ("PCAR Delinquent Amount") plus (ii) the product of (1) the
percentage obtained by dividing (x) the PCAR Delinquent Amount by (y) the
total Premier Club
A-22
<PAGE> 23
Accounts Receivable set forth on the Closing Net Working Capital Statement
which were due on or before the Settlement Date; multiplied by (2) the
amount identified on the Closing Net Working Capital Statement as being due
subsequent to the Settlement Date.
9.3 Adjustment Amount. The Partnership shall pay to Panthers BRGP
Corporation the "Adjustment Amount," which shall equal: (i) the Trade Accounts
Receivable Loss Experience, plus (ii) any negative amount obtained by
subtracting from the Net Working Capital set forth on the Closing Net Working
Capital Statement: (1) the transaction costs referred to in Section 5.20; and
(2) the Premier Club Accounts Receivable Loss Experience. As security for the
agreement by the Partnership to pay the Adjustment Amount, the Partnership does
hereby grant a security interest in, and Pledge to Panthers BRGP Corporation the
Held Back Interests (as defined in Section 1.8(i)) and any Panthers Common Stock
exchangeable therefore and proceeds of all of the foregoing. Panthers BRGP
Corporation may set off against the Held Back Interests and against any proceeds
thereof the Adjustment Amount for which the Partnership may be responsible
pursuant to this Agreement, subject, however, to the following terms and
conditions:
(a) Panthers BRGP Corporation shall give written notice to the
Partnership of any claim for setoff against the Held Back Interests, which
notice shall set forth: (i) the amount of the Adjustment Amount; and (ii)
the basis of such claim;
(b) Such set off shall be effected on the later to occur of the
expiration of 30 days from the date of such notice (the "Notice of Contest
Period") or, if such claim is contested, the date the dispute is resolved,
and such set off shall be charged proportionally against the shares set
aside;
(c) If, prior to the expiration of the Notice of Contest Period, the
Partnership shall notify Panthers BRGP Corporation in writing of an
intention to dispute the claim, the parties shall in good faith negotiate
to resolve the claim or submit the matter to binding arbitration;
(d) For purposes of this Article, Panthers Shares for which each Held
Back Interest can be exercised shall be valued at the greater of the Price
per Share or the price per share of Panthers Common Stock at the close of
trading on the date the written notice is sent pursuant to clause (a)
above.
(e) Neither the Partnership nor the General Partner shall be liable to
Panthers or Panthers BRHC Limited or Panthers BRGP Corporation for any
deficiency resulting from the value of the Held Back Interests being less
than the Adjustment Amount, it being agreed that the only recourse against
Partnership by any party for the Adjustment Amount shall be to the Held
Back Interests.
9.4 Voting of and Dividends on the Held Back Interests. Except with
respect to Held Back Interests transferred pursuant to the foregoing right of
set off (and in the case of such Held Back Interests, until the same are
transferred), all Held Back Interests shall be deemed to be owned by the
Partnership and the Partnership shall be entitled to vote any proceeds thereof;
provided, however, that, there shall also be deposited with Panthers, subject to
the terms of this Article, all shares of Panthers Common Stock issued to the
Partnership as a result of any exercise of any Exchange Rights with respect to
Held Back Interests, and as a result of any stock dividend or stock split and
all cash issuable to the Partnership as a result of any cash dividend with
respect to Panthers Common Stock exchangeable therefore. All stock and cash
issued or paid upon Held Back Interests shall be distributed to the person or
entity entitled to receive such Held Back Interests together with such Held Back
Interests.
9.5 Delivery of Held Back Interests and Proceeds. Panthers BRGP
Corporation agrees to deliver to the Partnership promptly following the
Settlement Date any Held Back Interests (or proceeds thereof) then held by it
which it is not entitled to retain pursuant to Section 9.3, unless there then
remains unresolved any claim for an Adjustment Amount as to which notice has
been given, in which event any Held Back Interests remaining on deposit after
such claim shall have been satisfied shall be returned to the Partnership
promptly after the time of satisfaction.
9.6 Adjustment to Consideration. All setoffs made pursuant to this Article
shall be treated as adjustments to the consideration granted under Section 1.8
hereof.
A-23
<PAGE> 24
ARTICLE X
DEFINITIONS
10.1 Defined Terms. As used herein, the following terms shall have the
following meanings:
"Affiliate" shall have the meaning ascribed to it in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act, as in effect on the
date hereof.
"Asbestos-Containing Material" means any material containing more than
one percent (1%) asbestos.
"CERCLA" means the Comprehensive Environmental Response Compensation
and Liability Act of 1980 (42 U.S.C. 9601, et seq.), as heretofore or
hereafter amended from time to time.
"Contract" means any agreement, contract, lease, note, mortgage,
indenture, loan agreement, franchise agreement, covenant, employment
agreement, license, instrument, purchase and sales order, commitment,
undertaking, obligation, whether written or oral, express or implied.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated)
under common control which, together with any Person, are treated as a
single employer under Section 414(b) or 414(c) of the Internal Revenue
Code.
"Environmental Laws" collectively means and includes all present and
future laws and any amendments (whether common law, statute, rule, order,
regulation or otherwise), permits, and other requirements or guidelines of
governmental authorities applicable to the Owned Property and relating to
the environment and environmental conditions or to any Hazardous Substance
or Hazardous Substance Activity (including, without limitation, CERCLA, the
Federal Resource Conservation and Recovery Act of 1976, 42 U.S.C.
sec. 6901, et seq., the Hazardous Materials Transportation Act, 49 U.S.C.
sec. 6901, et seq., the Federal Water Pollution Control Act, 33 U.S.C.
sec. 1251, et seq., the Clean Air Act, 33 U.S.C. sec. 7401, et seq., the
Clean Air Act, 42 U.S.C. sec. 7401, et seq., the Toxic Substances Control
Act, 15 U.S.C. sec. 2601-2629, the Safe Drinking Water Act, 42 U.S.C.
sec. 300f-300j, the Emergency Planning and Community Right-to-Know Act, 42
U.S.C. sec. 1101, et seq., and any so-called "Super Fund" or "Super Lien"
law, environmental laws administered by the Environmental Protection
Agency, any similar state and local laws and regulations, all amendments
thereto and all regulations, orders, decisions, and decrees now or
hereafter promulgated thereunder).
"Environmental Report" means the "Report of Phase I Environmental Site
Assessment and Limited Visual Asbestos Survey" of the Boca Raton Resort and
Club dated August 8, 1996 prepared by Law Engineering and Environmental
Services, Inc., Project Number 40795-6-0505.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expansion Plan" shall have the meaning set forth in the Loan
Agreement.
"GAAP" means generally accepted accounting principles in effect in the
United States of America from time to time.
"Governmental Authority" means any nation or government, any state,
regional, local or other political subdivision thereof, and any entity or
official exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Hazardous Substance" means, at any time, (i) asbestos and any
Asbestos-Containing Material, (ii) any substance that is listed in, or
otherwise classified pursuant to, any Environmental Laws or any applicable
laws or regulations as a "hazardous substance", "hazardous material",
"hazardous waste", "infectious waste", "toxic substance", "toxic pollutant"
or any other formulation intended to define, list, or classify substances
by reason of deleterious properties such as ignitability, corrosivity,
reactivity, carcinogenicity, toxicity, reproductive toxicity, or "EP
toxicity", (iii) any petroleum and drilling fluids, produced waters, and
other wastes associated with the exploration, development or production of
crude
A-24
<PAGE> 25
oil, natural gas, or geothermal resources and (iv) petroleum productions,
ploychlorinated biphenyls, urea formaldehyde, radon gas, radioactive
matter, and medical waste.
"Hazardous Substance Activity" means any actual use, packaging,
labeling, treatment, leaching, spill, cleanup, storage, holding, existence,
release, emission, discharge, generation, processing, abatement, removal,
disposition, handling or transportation of any Hazardous Substance from,
under, into or on the Owned Property or surrounding property (but only
concerning surrounding property to the extent of seepage, release,
discharge, migration, disposal or other actions from the Owned Property to
the surrounding property or from the surrounding property to the Owned
Property).
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Legal Requirements" means all applicable laws, statutes, ordinances,
rulings, regulations, codes, decrees, orders, judgments, covenants,
conditions, restrictions, approvals, permits and requirements under any
Permitted Exception or for, from or by any Governmental Authority,
including zoning, subdivision, use, environmental, building, safety,
health, housing and fire.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including, but not limited to, any conditional
sale or other title retention agreement, any lease in the nature thereof,
and the filing of or agreement to give any financing statement under the
Uniform Commercial Code or comparable law or any jurisdiction in connection
with such mortgage, pledge, security interest, encumbrance, lien or
charge).
"Loan Agreement" means that certain Loan Agreement dated August 26,
1996 between the Partnership, as Borrower, the Bank's signatory thereto and
the Bank of Nova Scotia, as Agent.
"Material Adverse Change (or Effect)" means a change (or effect) in
the condition (financial or otherwise), properties, assets, liabilities,
rights, obligations, operations or business, which change (or effect)
individually or in the aggregate is materially adverse to such condition,
properties, assets, liabilities, rights, obligations, operations or
business.
"Permitted Exceptions" means those items set forth on Schedule 3.11(b)
hereof.
"Person" means an individual, partnership, corporation, business
trust, joint stock company, estate, trust, unincorporated association,
joint venture, Governmental Authority or other entity, of whatever nature.
"Plan" means an employee pension benefit plan which is covered by
Title IV of ERISA or subject to the minimum funding standards under Part 3
of Title I of ERISA or Section 412 of the Code and is either (a) maintained
by any Person or any member of a Controlled Group for employees of such
Person or any member of such Controlled Group or (b) maintained pursuant to
a collective bargaining agreement or any other arrangement under which more
than one employer makes contributions and to which such Person or any
member of a Controlled Group is then making or has any obligation to make
contributions or, within the preceding five plan years, has made or has had
any obligation to make contributions.
"Register", "registered" and "registration" refer to a registration of
the offering and sale of securities effected by preparing and filing a
registration statement in compliance with the Securities Act and the
declaration or ordering of the effectiveness of such registration
statement.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Survey" means the surveys described on Item 1 of the Permitted
Exceptions.
"Tax Return" means any tax return, filing or information statement
required to be filed in connection with or with respect to any Taxes; and
A-25
<PAGE> 26
"Taxes" means all taxes, fees or other assessments, including, but not
limited to, income, excise, property, sales, franchise, intangible,
withholding, social security and unemployment taxes imposed by any federal,
state, local or foreign governmental agency, and any interest or penalties
related thereto.
10.2 Other Definitional Provisions. (a) All terms defined in this
Agreement shall have the defined meanings when used in any certificates, reports
or other documents made or delivered pursuant hereto or thereto, unless the
context otherwise requires.
(b) Terms defined in the singular shall have a comparable meaning when used
in the plural, and vice versa.
(c) All matters of an accounting nature in connection with this Agreement
and the transactions contemplated hereby shall be determined in accordance with
GAAP, applied on a basis consistent with prior periods, where applicable.
(d) As used herein, the neuter gender shall also denote the masculine and
feminine, and the masculine gender shall also denote the neuter and feminine,
where the context so permits.
ARTICLE XI
TERMINATION
11.1 Termination. This Agreement may be terminated at any time prior to
the Closing Date:
(a) by mutual written consent of all of the parties hereto at any time
prior to the Closing;
(b) by Panthers, in the event of a breach by any of the Partnership,
the General Partner or BRMC of any provision of this Agreement which would
have a Material Adverse Effect upon the Partnership or upon the rights or
benefits of Panthers or Panthers BRHC Limited hereunder;
(c) by the Partnership in the event of a breach by Panthers or
Panthers BRHC Limited of any provision of this Agreement which would have a
Material Adverse Effect on the rights or benefits of the Partnership
hereunder;
(d) by either Panthers or the Partnership if the Closing shall not
have occurred by December 31, 1997;
(e) by either Panthers or the Partnership if the requisite consents of
the limited partners of the Partnership are not obtained within ninety (90)
days of the last mailing of the consent solicitation or any amendment
thereof; or
(f) by the Partnership upon payment of the Termination Fee set forth
in Section 5.12 hereof.
11.2 Effect of Termination. In the event of termination of this Agreement
pursuant to Section 11.1, this Agreement shall forthwith become void and of no
further force and effect and the parties shall be released from any and all
obligations hereunder; except that the provisions of Section 5.12 shall survive,
as applicable.
ARTICLE XII
GENERAL PROVISIONS
12.1 Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be delivered by certified
or registered mail (first class postage pre-paid), guaranteed overnight
delivery, or facsimile transmission if such transmission is confirmed by
delivery by certified or registered mail (first class postage pre-paid) or
guaranteed overnight delivery, to the following addresses and
A-26
<PAGE> 27
telecopy numbers (or to such other addresses or telecopy numbers which such
party shall designate in writing to the other party):
(a) IF TO THE PANTHERS:
Florida Panthers Holdings, Inc.
100 S.E. Third Avenue, Second Floor
Ft. Lauderdale, FL 33301
Attn: Steven M. Dauria
Telecopy: (954) 768-1920
WITH A COPY TO:
Akerman, Senterfitt & Eidson, P.A.
One Southeast Third Avenue, 28th Floor
Miami, Florida 33131
Attention: Stephen K. Roddenberry, Esq.
Telecopy: (305) 374-5095
(b) IF TO ANY OF THE PARTNERSHIP, THE GENERAL PARTNER OR BRMC TO:
Private Merchant Banking Company
380 Lexington Avenue, Suite 4500
New York, NY 10168
Attention: Theodore V. Fowler
Telecopy: (212) 689-9519
WITH A COPY TO:
Boca Raton Hotel and Club Limited Partnership
501 East Camino Real
Boca Raton, Florida 33432
Attn: Edward E. March
Telecopy: (561) 394-9183
WITH A COPY TO:
Rogers & Wells
200 Park Avenue
New York, New York 10166
Attn: James M. Asher, Esq.
Telecopy: (212) 878-3215
Notice shall be deemed given on the date sent if sent by overnight delivery
or facsimile transmission and on the date delivered (or the date of refusal of
delivery) if sent by certified or registered mail.
12.2 Entire Agreement. This Agreement (including the Exhibits and
Schedules attached hereto) and other documents delivered at the Closing pursuant
hereto, contains the entire understanding of the parties in respect of its
subject matter and supersedes all prior agreements and understandings (oral or
written) between or among the parties with respect to such subject matter,
including, but not limited to that certain Contribution and Exchange Agreement
dated as of March 20, 1997 by and among the parties hereto. The Exhibits and
Schedules constitute a part hereof as though set forth in full above.
12.3 Amendment; Waiver. This Agreement may not be modified, amended,
supplemented, canceled or discharged, except by written instrument executed by
all parties. No failure to exercise, and no delay in exercising, any right,
power or privilege under this Agreement shall operate as a waiver, nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
the exercise of any other right, power or privilege. No waiver of any breach of
any provision shall be deemed to be a waiver of any preceding or succeeding
breach of the same or any other provision, nor shall any waiver be implied from
any course of dealing between the parties. No extension of time for performance
of any obligations or other acts hereunder or under any other agreement shall be
deemed to be an extension of the time for performance of any other
A-27
<PAGE> 28
obligations or any other acts. The rights and remedies of the parties under this
Agreement are in addition to all other rights and remedies, at law or equity,
that they may have against each other.
12.4 Binding Effect; Assignment. The rights and obligations of this
Agreement shall bind and inure to the benefit of the parties and their
respective successors and assigns. Nothing expressed or implied herein shall be
construed to give any other person any legal or equitable rights hereunder.
Except as expressly provided herein, the rights and obligations of this
Agreement may not be assigned by any of the parties without the prior written
consent of the other party; provided however, that Panthers may designate that
its affiliates may hold the Panther Interest.
12.5 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.
12.6 Interpretation. When a reference is made in this Agreement to an
article, section, paragraph, clause, schedule or exhibit, such reference shall
be deemed to be to this Agreement unless otherwise indicated. The headings
contained herein and on the schedules are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement or the
schedules. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." Time shall be of the essence in this Agreement.
12.7 Governing Law; Interpretation. This Agreement shall be construed in
accordance with and governed for all purposes by the laws of the State of
Florida applicable to contracts executed and to be wholly performed within such
State.
12.8 Arm's Length Negotiations. Each party herein expressly represents and
warrants to all other parties hereto that (a) before executing this Agreement,
said party has fully informed itself of the terms, contents, conditions and
effects of this Agreement; (b) said party has relied solely and completely upon
its own judgment in executing this Agreement; (c) said party has had the
opportunity to seek and has obtained the advice of counsel before executing this
Agreement; (d) said party has acted voluntarily and of its own free will in
executing this Agreement; (e) said party is not acting under duress, whether
economic or physical, in executing this Agreement; and (f) this Agreement is the
result of arm's length negotiations conducted by and among the parties and their
respective counsel.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
FLORIDA PANTHERS HOLDINGS, INC., a
Florida corporation
By:
------------------------------------
Name:
-------------------------------
Title:
--------------------------------
PANTHERS BRHC LIMITED, a Florida
limited
partnership
By: Panthers BRGP Corporation
as general partner
By:
------------------------------------
Name:
-------------------------------
Title:
--------------------------------
A-28
<PAGE> 29
BOCA RATON HOTEL AND CLUB, LTD.,
a Florida limited partnership
By: BRMC, L.P., a Delaware limited
partnership, as general partner
By: BRMC, Inc., a Delaware
corporation, as general partner
By:
-------------------------------
Theodore V. Fowler, Chief
Executive Officer
BRMC, L.P., a Delaware limited
partnership
By: BRMC, INC., a Delaware
corporation, as general partner
By:
---------------------------------
Theodore V. Fowler, Chief
Executive Officer
BRMC, INC., a Delaware corporation
By:
------------------------------------
Theodore V. Fowler, Chief Executive
Officer
A-29
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the use
of our reports (and to all references to our firm) included in or made a part of
this registration statement.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Fort Lauderdale, Florida,
April 10, 1997.
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the use of our report included herein and to the reference to
our firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
KPMG PEAT MARWICK LLP
Fort Lauderdale, Florida,
April 10, 1997.
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
post-effective amendment No. 1 to Registration Statement on Form S-1 (No.
333-23133) of our report dated January 29, 1997, except as to the subsequent
event described in Note 12 which is as of March 20, 1997, relating to the
financial statements for the year ended December 31, 1996 of the Boca Raton
Hotel and Club Limited Partnership, which appears in such Prospectus. We also
consent to the references to us under the headings "Experts" in such Prospectus.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Fort Lauderdale, Florida
April 9, 1997
<PAGE> 1
EXHIBIT 23.4
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated January 26, 1996, with respect to the financial
statements of Boca Raton Hotel and Club Limited Partnership included in Post
Effective Amendment No. 1 to the Registration Statement (Form S-1 No.-333-23133)
and related Prospectus of Florida Panthers Holdings, Inc. for the registration
of 17,669,444 shares of its Class A Common Stock.
/s/ Ernst & Young LLP
------------------------------------
ERNST & YOUNG LLP
West Palm Beach, Florida
April 10, 1997
