SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) - March 2, 1998
FLORIDA PANTHERS HOLDINGS, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 1-13173 65-0676005
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(State or Other Jurisdiction of (Commission (IRS Employer
Incorporation) File Number) Identification No.)
450 East Las Olas Boulevard, Fort Lauderdale, Florida 33301
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(Address of Principal Executive Offices) (Zip Code)
(954) 712-1300
- --------------------------------------------------------------------------------
(Registrants Telephone Number, Including Area Code)
Not Applicable
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On March 2, 1998, Florida Panthers Holdings, Inc. (the "Company") acquired
a controlling ownership interest in the Arizona Biltmore Hotel ("Arizona
Biltmore") pursuant to a contribution and exchange agreement, dated as of
December 19, 1997 (the "Contribution and Exchange Agreement"), by and among the
Company, Biltmore Hotel Partners, AZB Limited Partnership, W&S Realty Investment
Group L.L.C., Samuel Grossman, Charles Carlise, W. Matthew Crow, AZ Biltmore
Hotel Limited Partnership, Southwest Associates, El Camino Associates, Grossman
Investment Corp., and The Crow Irrevocable Trust.
The consideration paid for the controlling ownership interest in Arizona
Biltmore included: (i) payment of $126.0 million in cash, (ii) payment in the
future of $100.3 million either in cash or shares of the Company's Class A
Common Stock, par value $ .01 ("Class A Common Stock"), (iii) warrants to
purchase 500,000 shares of the Company's Class A Common Stock exercisable at
$24.00 per share and (iv) the assumption of $63.1 million of debt. The $100.3
million payment bears interest at a rate of 5% per annum and, at the election of
the seller, shall be paid in either cash or shares of Class A Common Stock. If
the seller elects to receive cash, it must make such election during specified
election periods occurring between May 25, 1998 and March 2, 2000. Once an
election for cash is made, the Company shall make payment within 120 days after
such election. Alternatively, the seller may elect to receive shares of Class A
Common Stock at a per share price of $26.00 at any time from March 2, 1998
through March 2, 2008. Subject to meeting certain profit levels over a 36 month
period ending on March 31, 2001, up to an additional $50 million is payable at
the election of the seller, either in cash or shares of Class A Common Stock at
a per share price of not less than $19.00. The acquisition was accounted for
under the purchase method of accounting.
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
Page
(a) Financial Statements of Business Acquired
Biltmore Hotel Partners
Report of Independent Auditors 4
Balance Sheets as of December 31, 1997 and 1996 5
Statements of Income for the Years Ended December 31, 1997,
1996 and 1995 6
Statements of Partners' Capital (Deficit) for the Years Ended
December 31, 1997, 1996 and 1995 7
Statements of Cash Flows for the Years Ended December 31, 1997,
1996 and 1995 8
Notes to Financial Statements 9
The Rental Pool Operations of the Biltmore Villas
Report of Independent Auditors 14
Historical Summaries of Revenues and Direct Operating Expenses 15
Notes to Historical Summaries of Revenues and Direct Operating Expenses 16
(b) Unaudited Pro forma Consolidated Financial Statements
Introduction to Unaudited Pro forma Consolidated Financial Statements 17
Unaudited Pro forma Consolidated Statement of Operations for the
Year Ended June 30, 1997 19
Unaudited Pro forma Consolidated Statement of Operations for the Nine Months
Ended March 31, 1998 20
Notes to Unaudited Pro forma Consolidated Financial Statements 21
(c) Exhibits
Exhibit No. Description
10.1 Contribution and Exchange Agreement dated December 19, 1997 by
and among Florida Panthers Holdings, Inc., Wright-Bilt Corp.,
Biltmore Hotel Partners, AZB Limited Partnership, W&S Realty
Investment Group L.L.C., Samuel Grossman, Charles Carlise, W.
Matthew Crow, AZ Biltmore Hotel Limited Partnership, Southwest
Associates, El Camino Associates, Grossman Investment Corp., and
The Crow Irrevocable Trust. (*)
23 Consent of Ernst & Young LLP
99.1 Press release dated March 3, 1998 (*)
(*) Incorporated by reference to Form 8-K filed on March 5, 1998.
<PAGE>
Report of Independent Auditors
To the Partners of
Biltmore Hotel Partners
We have audited the balance sheets of Biltmore Hotel Partners (an Arizona
General Partnership), as of December 31, 1997 and 1996, and the related
statements of income, partners' capital (deficit), and cash flows for each of
the three years in the period ended December 31, 1997. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
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 Biltmore Hotel Partners (an
Arizona General Partnership) as of December 31, 1997 and 1996, and the results
of its operations and its cash flows for each of the three years in the period
ended December 31, 1997, in conformity with generally accepted accounting
principles.
Ernst & Young LLP
Phoenix, Arizona
February 5, 1998, except for Note 8 which the date is March 2, 1998
<PAGE>
Biltmore Hotel Partners
(An Arizona General Partnership)
Balance Sheets
(In Thousands)
December 31
-----------
1997 1996
---- ----
Assets
Current assets:
Cash and cash equivalents $ - $ 765
Accounts receivable, net of allowance for
doubtful accounts of $1,212 in 1997 and
$941 in 1996 6,739 5,964
Due from related parties - 123
Inventories 1,083 984
Prepaid expenses 209 67
Reserve funds 896 967
-------- --------
Total current assets 8,927 8,870
-------- --------
Property and equipment:
Land and land improvements 14,344 14,345
Building and improvements 39,608 39,484
Furniture, fixtures and vehicles 27,387 25,171
Equipment under capital leases 1,459 1,459
China, linen, silverware, glassware and uniforms 981 981
--------- ---------
83,779 81,440
Less accumulated depreciation and amortization (23,428) (17,751)
--------- ---------
60,351 63,689
--------- ---------
Other assets:
Intangible assets, net of accumulated amortization
of $5,150 in 1997 and $4,336 in 1996 2,759 3,609
Reserve funds - 1,489
Other 7 7
--------- ---------
2,766 5,105
--------- ---------
$ 72,044 $ 77,664
========= =========
Liabilities and partners' capital
Current liabilities:
Accounts payable and bank overdraft $ 3,918 $ 1,986
Accrued expenses and other liabilities 7,658 5,967
Current maturities of capital lease obligations 25 428
Current maturities of mortgage notes payable 1,235 1,137
Due to related parties 249 382
--------- ---------
Total current liabilities 13,085 9,900
--------- ---------
Mortgage note payable, net of current maturities 62,192 63,328
Capital lease obligations, net of current maturities - 26
Partners' capital (deficit) ( 3,233) 4,410
--------- ---------
$ 72,044 $ 77,664
========= =========
See accompanying notes.
<PAGE>
Biltmore Hotel Partners
(An Arizona General Partnership)
Statements of Income
(In Thousands)
Years Ended December 31
-----------------------
1997 1996 1995
---- ---- ----
Revenues
Rooms $ 26,068 $ 25,348 $ 21,835
Food and beverage 24,196 20,676 17,378
Other operating revenues 7,021 6,769 5,607
--------- --------- --------
57,285 52,793 44,820
--------- --------- --------
Departmental costs and expenses
Rooms 5,699 5,167 4,052
Food and beverage 13,198 12,108 10,503
Other operating costs 3,136 2,728 2,749
--------- --------- --------
22,033 20,003 17,304
--------- --------- --------
Gross operating income 35,252 32,790 27,516
--------- --------- --------
Undistributed operating expenses
Administrative and general 4,394 5,097 4,122
Marketing 4,290 3,927 3,767
Energy 1,539 1,506 1,545
Property operation and maintenance 2,719 2,537 2,379
--------- --------- --------
12,942 13,067 11,813
--------- --------- --------
Income before other charges 22,310 19,723 15,703
Other charges
Management fees 841 540 446
Property taxes, insurance and rent 2,293 2,302 2,336
Interest expense 5,292 4,908 4,311
Depreciation and amortization 6,491 6,438 6,070
Other 206 122 344
--------- --------- ---------
Net income before extraordinary loss 7,187 5,413 2,196
Extraordinary loss from early
extinguishment of debt - 653 -
--------- --------- ---------
Net income $ 7,187 $ 4,760 $ 2,196
========= ========= =========
See accompanying notes.
<PAGE>
Biltmore Hotel Partners
(An Arizona General Partnership)
Statements of Partners' Capital (Deficit)
Years Ended December 31, 1997, 1996 and 1995
(In Thousands)
<TABLE>
<S>
<C> <C> <C> <C> <C> <C> <C>
W&S/W&S Investments AZB Limited Partnership
------------------------------------------------------ -----------------------------------
Accumulated
Preferred Preferred Capital Capital Capital Accumulated
Return Capital Contribution (Deficit) Contribution Deficit Total
------ ------- ------------ --------- ------------ ------- -----
Balance, December 31, 1994 $ ( 472) $ 22,000 $ 8,000 $ (4,836) $ 8,000 $ (6,337) $ 26,355
Distributions - - (2,180) - (2,180) - (4,360)
Unpaid preferred return ( 133) - - - - - ( 133)
Distribution of preferred
return (1,473) - - - - - (1,473)
Net income - - - 1,679 - 517 2,196
--------- --------- --------- -------- -------- -------- --------
Balance, December 31, 1995 (2,078) 22,000 5,820 (3,157) 5,820 (5,820) 22,585
Contributions - - - - 10 - 10
Distribution of preferred
capital - (22,000) - - - - (22,000)
Distribution of preferred
return ( 945) - - - - - ( 945)
Net income - - - - 2,565 2,195 4,760
--------- --------- --------- -------- --------- ------- --------
Balance, December 31, 1996 (3,023) - 5,820 ( 592) 5,830 (3,625) 4,410
Distributions - - (7,415) - - (7,415) (14,830)
Net income - - - 3,594 - 3,593 7,187
--------- --------- --------- --------- --------- -------- --------
Balance, December 31, 1997 $ (3,023) $ - $ (1,595) $ 3,002 $ 5,830 $ (7,447) $ (3,233)
========= ========= ========= ========= ========= ======== ========
</TABLE>
See accompanying notes.
<PAGE>
Biltmore Hotel Partners
(An Arizona General Partnership)
Statements of Cash Flows
(In Thousands)
Years Ended December 31
-----------------------
1997 1996 1995
---- ---- ----
Cash flows from operating activities
Net income $ 7,187 $ 4,760 $ 2,196
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization 6,491 6,439 6,070
Changes in assets and liabilities
Accounts receivable ( 774) ( 1,796) 546
Due from related parties 123 ( 123) -
Inventories ( 100) ( 189) 142
Prepaid expenses ( 142) 165 ( 26)
Current reserve funds 1,560 ( 967) -
Other assets 36 ( 29) 154
Accounts payable and bank overdraft 1,932 627 ( 385)
Due to related parties ( 132) 172 210
Accrued expenses and other
liabilities 1,690 ( 1,716) 1,746
-------- -------- --------
Net cash provided by operating activities 17,871 7,343 10,653
-------- -------- --------
Cash flows from investing activities
Purchases of property and equipment ( 2,339) ( 2,347) ( 2,942)
Reserve funds for property and equipment
replacement ( 1,489) - -
-------- -------- ---------
Net cash used in investing activities ( 2,339) ( 3,836) ( 2,942)
-------- -------- ---------
Cash flows from financing activities
Net proceeds from refinancing - 14,271 -
Payment of refinance costs - ( 813) -
Payment of principal on note payable ( 1,039) ( 706) ( 199)
Payment of preferred return - ( 1,078) ( 1,732)
Payment of preferred capital - (22,000) -
Net decrease in capital lease obligations ( 428) ( 468) ( 427)
Capital contributions - 10 -
Capital distributions (14,830) ( 4,360) -
-------- -------- ---------
Net cash used in financing activities (16,297) (10,784) ( 6,718)
-------- -------- ---------
Net increase (decrease) in cash ( 765) ( 7,277) 993
Cash at beginning of year 765 8,042 7,049
-------- -------- --------
Cash at end of year $ - $ 765 $ 8,042
======== ======== ========
Supplemental disclosure of cash flow
information
Cash paid for interest $ 4,856 $ 4,766 $ 4,212
======== ======== ========
See accompanying notes.
<PAGE>
Biltmore Hotel Partners
(An Arizona General Partnership)
Notes to Financial Statements
December 31, 1997 and 1996
(In Thousands)
1. Organization and Summary of Significant Accounting Policies
Organization
Biltmore Hotel Partners, an Arizona general partnership (the Partnership), was
formed on June 8, 1992 for the purpose of acquiring, owning, operating and
renovating the Arizona Biltmore Hotel (the Hotel), a resort hotel located in
Phoenix, Arizona. The Partnership was formed by AZB Limited Partnership, a
Delaware limited partnership (AZB) and Aoki Realty Corporation of Arizona, an
Arizona corporation and wholly owned subsidiary of Aoki Corporation, a Japanese
corporation (Aoki Arizona and Aoki, respectively). AZB and AZ Biltmore Hotel (AZ
Biltmore), an Arizona limited partnership and general partner of AZB, are
responsible for the administration of the partnership, including all accounting
and record keeping.
On May 12, 1995, W&S Hotel Holding Corp, a wholly owned subsidiary of W&S Hotel
L.L.C., acquired all of the outstanding capital stock of Westin Hotel Company
(Westin) from Aoki. Concurrently, W&S Arizona Corp., also a wholly owned
subsidiary of W&S Holding Corp., acquired all the issued and outstanding stock
of Aoki Arizona. Subsequently, Aoki Arizona changed its name to W&S Realty
Corporation of Arizona (W&S).
On February 14, 1997 W&S Realty Investment Group L.L.C., an Arizona limited
liability company and an affiliate of AZB (W&S Investments), acquired the
interest of W&S Realty Corporation of Arizona in the Partnership as of January
1, 1997.
On December 19, 1997 the Partnership entered into a contribution and exchange
agreement to admit Wright-Bilt Corp, a Delaware corporation (Wright-Bilt) and a
wholly owned subsidiary of Florida Panthers Holdings, Inc., a Delaware
corporation (NYSE:PAW) to the Partnership. Upon the admission of Wright-Bilt to
the Partnership, the Partnership will be converted to a limited liability
limited partnership in which AZB and Wright-Bilt will be the general partners
and AZB will be the managing general partner. (See Note 8.)
Summary of Significant Accounting Policies
Basis of Presentation
The financial statements include the consolidated accounts of the Hotel and the
restaurants and other facilities wholly owned by the Partnership. The
Partnership is also affiliated with the operation of a rental pool with respect
to certain units of the Arizona Biltmore Hotel Villas Condominiums (Villas)
located on property adjacent to the Hotel. Cash receipts generated from rental
of the Villas are processed by the front desk system of the Hotel and then
subsequently transferred to AZB for payment of a management fee and distribution
of payments to Villas owners. The balance sheet and related statement of
operation and cash flow for this affiliated operation are not included in these
financial statements.
Cash and Cash Equivalents
Cash and cash equivalents includes amounts in-house, amounts in demand
depository accounts, and liquid investments with maturities at date of purchase
of 90 days or less.
<PAGE>
Biltmore Hotel Partners
(An Arizona General Partnership)
Notes to Financial Statements (continued)
December 31, 1997 and 1996
(In Thousands)
Inventories
Inventories consist of food, beverage, operating supplies and retail store
merchandise, and are stated at the lower of cost or market. Cost is primarily
determined using the first-in, first-out method.
Reserve Funds
Reserve Funds represent amounts on deposit with the Partnership's lender
relating to property taxes, insurance and future furniture, fixture and
equipment expenditures (see Note 2).
Property and Equipment
During 1996, the Partnership adopted SFAS No. 121, Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of, which requires
impairment losses to be recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amount.
Impaired assets are written down to fair value. At December 31, 1997 and 1996,
the Partnership does not hold any assets that meet the impairment criteria of
SFAS No. 121.
Property and equipment are recorded at cost and are depreciated using the
straight-line method over their estimated useful lives as follows:
Assets Useful Lives
- ------------------------------------------------- -------------
Buildings and improvements 35 years
Land improvements 15 years
Furniture, fixtures and vehicles 3 - 12 years
China, linen, silverware, glassware and uniforms 5 years
One-half of the allocated costs of china, linen, silverware, glassware and
uniforms purchased on June 8, 1992 has been amortized over five years. The
remaining balance will be maintained as par stock. Subsequent purchases of such
items are expensed.
Intangibles
Intangibles represent principally the estimated value of established bookings,
which are being amortized over a five year period, and the estimated value of
certain contracts with third parties, which are being amortized over the terms
of the related contracts, at the date of acquisition of the Hotel by the
Partnerships in 1992.
Financial Instruments
The carrying amount of receivables, accounts payable and accrued expenses, and
the notes and loans payable approximates their fair value.
<PAGE>
Biltmore Hotel Partners
(An Arizona General Partnership)
Notes to Financial Statements (continued)
December 31, 1997 and 1996
(In Thousands)
Income Taxes
No federal or state income taxes are payable by the Partnership and none have
been provided in the accompanying combined financial statements. The partners
are to include their respective share of taxable income or loss in their
respective separate federal and state income tax returns.
Use of Estimates
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
2. Mortgage Notes Payable
During June 1996, the Partnership executed four notes payable to lenders
totaling $65,000. These notes are secured by a Deed of Trust, Security
Agreement, Assignment of Rents and Revenues and Fixture Filing with respect to
the real and personal property of the Partnership related to the ownership and
operation of the Hotel and other related security documents including a Pledge
and Security Agreement and a Security Agreement. A substantial portion of the
proceeds from the notes were used to repay the Partnership's previous mortgage
note discussed below. The notes require monthly payments of principal and
interest totaling $534 and mature on July 1, 2016. Interest is payable at the
rate of 8.25% per annum.
The Pledge and Security Agreement requires the Partnership to deposit 2.5% of
the preceding month's gross revenue of the Hotel into a security account for
future furniture, fixture and equipment expenditures. During 1997 and 1996 the
Partnership deposited $1,422 and $1,489 or 2.5% and 3.0%, respectively, of the
1997 and 1996 annual gross revenues of the Hotel into the security account and
withdrew $2,912 from the account in 1997. The balance of this fund is recorded
as Other Assets - Reserve Funds on the accompanying balance sheet as of December
31, 1997.
In addition to the reserve for future furniture, fixture and equipment
expenditures, the Security Agreement requires the Partnership to deposit into a
second security account amounts related to the payment of property taxes and
insurance. The Partnership has on deposit $896 and $967 in this security account
as of December 31, 1997 and 1996, respectively. These amounts are recorded as
Current Assets - Reserve Funds on the accompanying balance sheets.
Prior to June 1996, the mortgage note payable was due to The Equitable Life
Assurance Society of the United States and was collateralized by the assets of
the Hotel. All principal and unpaid interest relating to the note was due June
7, 2002. Prepayment of the note was permitted, however, a prepayment premium of
the lessor of (i) 3% of the principal amount being prepaid, or (ii) a Yield
Maintenance Payment, as defined in the note, was required. The Partnership paid
a prepayment penalty of $1,522 related to the early payoff of this note in June
1996. At the same time, the Partnership recognized as income previously accrued
interest of $869 relating to the notes graduated interest rate. The net of these
two amounts has been classified as an extraordinary item, during the year ended
December 31, 1996.
<PAGE>
Biltmore Hotel Partners
(An Arizona General Partnership)
Notes to Financial Statements (continued)
December 31, 1997 and 1996
(In Thousands)
Future minimum principal payments on the notes payable for the years ended
December 31 are as follows:
1998 $ 1,235
1999 1,341
2000 1,455
2001 1,580
2002 1,716
Thereafter 56,100
-------
$63,427
=======
3. Management Agreement
The Partnership entered into a Marketing and Technical Services Agreement (the
Agreement) on August 1, 1994 through December 21, 2012 with Westin. The
Partnership has the right to extend the Agreement on the same terms and
conditions for up to 20 years. The Agreement provides for payments to Westin of
2% of the Hotel's monthly gross revenues during the first three years of the
Agreement and 4% thereafter. The Partnership incurred $1,038 and $890 in fees
under the Agreement during 1996 and 1995, respectively. Amounts payable under
the Agreement at December 31, 1996 are included in amounts due to related
parties.
As of December 31, 1996, the Partnership terminated the Agreement with Westin
and entered into a new Marketing and Technical Services Agreement (the W&S
Agreement) with W&S Investments concurrently with W&S Investments' acquisition
of W&S's interest in the Partnership. The W&S Agreement expires on December 31,
2012, can be extended by the Partnership for an additional period of 20 years
and provides for payments to W&S Investments of 2% of the Hotel's monthly gross
revenues through July 31, 1997 and 4% thereafter. The Partnership incurred
$1,683 in fees under the W&S Agreement during 1997. Amounts payable under the
W&S Agreement at December 31, 1997 are included in amounts due to related
parties.
The Partnership entered into an informal Management Services Agreement with AZ
Biltmore during the year ended December 31, 1994 (the MS Agreement). Under the
terms of the MS Agreement, the partnership pays AZ Biltmore a fee of 1% of the
Hotel's monthly gross revenues through July 31, 1997 and 2% of monthly gross
revenues thereafter. The Partnership incurred management fees of $841, $539 and
$446 to AZ Biltmore in 1997, 1996 and 1995, respectively. Amounts payable under
the MS Agreement at December 31, 1997 and 1996 are included in amounts due to
related parties.
4. Leases
The Partnership has capital leases for a telephone system and cooling system
which expire at various times through August 1998. The Partnership also has
various operating leases for office equipment.
5. Litigation
The Partnership is currently involved in certain legal proceedings with the
Maricopa County Assessor related to the value of the Hotel for real property tax
purposes. In 1993, the Partnership contested the
<PAGE>
Biltmore Hotel Partners
(An Arizona General Partnership)
Notes to Financial Statements (continued)
December 31, 1997 and 1996
(In Thousands)
valuation of the Hotel for 1992 and paid the real estate taxes assessed for 1992
under protest. During the appeal process, the valuation of the Hotel for 1992
was increased and the Partnership accrued an additional $450 in real estate
taxes pending the final outcome of this litigation. During 1997, the Arizona
Court of appeals remanded the case to the trial court with directions to adjust
the valuation of the Hotel to reflect the value of intangibles included in the
purchase price of the Hotel.
For 1993, 1994 and 1995, the Partnership has accrued real property taxes as
assessed, but paid these taxes under protest and appealed the valuation of the
Hotel. These proceedings have been stayed pending the outcome of the 1992
appeal.
Management of the Partnership is of the opinion that settlement of such
proceeedings will not have a materially adverse effect on the financial
position, results of operations or cash flows of the Partnership.
6. Partners' Capital
Partner capital accounts are maintained for each Partner in accordance with the
terms of the Agreement of Partnership of Biltmore Hotel Partners, as amended
(the Partnership Agreement). Capital accounts include initial partner
contributions and have been increased by subsequent contributions and decreased
by subsequent cash distributions. Profits and losses are allocated under the
terms of the Partnership Agreement to the partners in a manner which causes each
partner's adjusted capital account balance to equal the amounts that would be
distributed to such partner if all the Partnership's assets were sold at book
value and the proceeds distributed.
Under the terms of the Partnership Agreement, W&S was required to contribute up
to $30,000 for renovation of the Hotel which would be W&S Preferred Capital as
defined in the Partnership Agreement. All other capital contributions by
partners are subordinated to the W&S Preferred Capital. W&S earned a preferred
return on the Preferred Capital contributed, other than any capital contributed
to pay the W&S Preferred Return, computed as simple interest at LIBOR plus 125
basis points. The Partnership Agreement provided that W&S was to contribute
additional Preferred Capital to pay the W&S Preferred Return if cash flows from
the operations of the Partnership were insufficient to pay the Preferred Return.
During 1996, the Partnership distributed to W&S the W&S Preferred Capital and
the balance of the W&S Preferred Return.
7. Year 2000 (Unaudited)
The Partnership is assessing the modification or replacement of its software
that may be necessary for its computer systems to function properly with respect
to dates in the year 2000 and thereafter. The Partnership does not believe that
the cost of either modifying existing software or converting to new software
will be significant, or that the year 2000 issue will pose significant
operational problems for its computer systems.
8. Subsequent Event
On March 2, 1998, an affiliate of Florida Panthers Holdings, Inc. acquired a
controlling ownership interest in the Arizona Biltmore Hotel pursuant to a
contribution and exchange agreement dated December 19, 1997 described in Note 1.
<PAGE>
Report of Independent Auditors
Board of Directors
Florida Panthers Holdings, Inc.
We have audited the accompanying Historical Summaries of Revenues and Direct
Operating Expenses of the Rental Pool Operations of the Biltmore Villas (the
Rental Pool), for the years ended December 31, 1997 and 1996. These Historical
Summaries are the responsibility of the management of the Rental Pool. Our
responsibility is to express an opinion on these Historical Summaries based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the Historical Summaries are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amount and disclosures in the Historical Summaries. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the Historical
Summaries. We believe that our audits provide a reasonable basis for our
opinion.
The Historical Summaries have been prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission for
inclusion in the Current Report on Form 8-K/A of Florida Panthers Holdings, Inc.
as described in Note 1, and are not intended to be a complete presentation of
the financial position and operations of the entity which manages the Rental
Pool.
In our opinion, the Historical Summaries referred to above present fairly in all
material respects, the revenues and direct operating expenses of the Rental Pool
Operations of the Biltmore Villas, as described in Note 1, for the years ended
December 31, 1997 and 1996, in conformity with generally accepted accounting
principles.
Ernst & Young LLP
Phoenix, Arizona
May 4, 1998
<PAGE>
The Rental Pool Operations of the Biltmore Villas
Historical Summaries of Revenues and Direct Operating Expenses
(In Thousands)
Years ended December 31
-----------------------
1997 1996
---- ----
Villa room revenues $ 6,413 $ 3,680
Credit card and travel agent commissions ( 309) ( 170)
-------- --------
Villa revenues 6,104 3,510
Revenue participation to villa owners (3,018) (1,730)
-------- --------
3,086 1,780
Direct operating expenses ( 247) ( 129)
-------- --------
Excess of revenues over direct operating expenses $ 2,839 $ 1,651
======== ========
See accompanying notes.
<PAGE>
The Rental Pool Operations of the Biltmore Villas
Notes to Historical Summaries of Revenues and Direct Operating Expenses
December 31, 1997 and 1996
(Dollars in Thousands)
1. Organization and Basis of Presentation
The Rental Pool Operations of the Biltmore Villas (the Rental Pool) represent
the presentation of the operations of nightly rental of participating
condominium units (Villas) which are located adjacent to the Arizona Biltmore
Hotel, a resort hotel located in Phoenix, Arizona. The Villas are owned by
affiliated and unaffiliated individuals who have entered into agreements (the
Rental Pool Agreements) with AZ Biltmore Hotel Limited Partnership (the
Partnership) whereby the Villas are operated as hotel units and revenue
participation payments are paid to the Villas owners (see Note 3).
At December 31, 1997 and 1996, there were 61 and 41 Villas, respectively, under
management by the Partnership.
On January 1, 1998 the Partnership assigned the rights and obligations of the
Rental Pool Agreements to Biltmore Hotel Partners (BHP). On March 2, 1998, an
affiliate of Florida Panthers Holdings, Inc. acquired a controlling interest in
BHP. Thus, the accompanying Historical Summaries have been prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in the Current Report on Form 8-K/A of Florida
Panthers Holdings, Inc. The Historical Summaries are not a complete presentation
of the financial position and operations of the Partnership for the years ended
December 31, 1997 and 1996, as no other assets, liabilities or operations of the
Partnership are applicable to the Rental Pool Agreements assigned to BHP.
2. Summary of Significant Accounting Policies
Use of Estimates
The preparation of Historical Summaries in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts included in the Historical Summaries and
accompanying notes thereto. Actual results could differ from those estimates.
Direct Operating Expenses
Direct operating expenses are primarily comprised of maintenance and
administrative costs.
3. Revenue Participation to Villa Owners
In accordance with individual Rental Pool Agreements, each Villa owner is
entitled to participate in the revenues generated from the rental of all Villa
units on a given day in proportion to the total number of Villa units
participating in the rental pool on that day. The Villa owners participation is
equal to 50 percent of net villa revenues (on a per-villa basis) up to $100
annually, and 35 percent of such net villa revenues in excess of $100.
<PAGE>
FLORIDA PANTHERS HOLDINGS, INC.
INTRODUCTION TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Florida Panthers Holdings, Inc. (the "Company") is a holding company with
subsidiaries currently operating in two business segments:(i) leisure and
recreation (the "Leisure and Recreation Business") and (ii) entertainment and
sports (the "Entertainment and Sports Business").
The Leisure and Recreation Business presently consists of the Company's
ownership of the Boca Raton Resort and Club ("Boca Resort"), the Arizona
Biltmore Hotel ("Arizona Biltmore"), the Hyatt Regency Pier 66 Hotel and Marina
("Pier 66"), the Radisson Bahia Mar Beach Resort and Yachting Center ("Bahia
Mar") and the Rolling Hills Golf Club ("Rolling Hills"). The Company also
maintains an ownership interest in the Registry Hotel at Pelican Bay ("Registry
Resort") and on April 22, 1998 acquired the Edgewater Beach Hotel. Boca Resort,
Arizona Biltmore, Pier 66, Bahia Mar and Registry Resort are collectively
referred to as the "Resort Facilities".
The Entertainment and Sports Business consists of the Florida Panthers Hockey
Club (the "Panthers"), the operations of two ice skating rinks, the arena
operating and development companies associated with the new Broward County Arena
and an interest in the operations of the Miami Arena.
Seasonality
The Company has historically experienced, and expects to continue to experience,
seasonal fluctuations in its gross revenue and net earnings. Peak season at the
Resort Facilities extends from January through April, while regular season for
the Panthers commences in October and ends in April.
General
The unaudited pro forma financial statements included herein, reflect
adjustments to the Company's historical results of operations to give effect to
the transactions discussed below as if such transactions had been consummated at
the beginning of the periods presented.
The Initial Offerings
The Unaudited Pro forma Statement of Operations for the year ended June 30,
1997 reflects the Company's initial public offering and concurrent offering
directly to certain investors (the "Initial Offerings"), which was effective
November 13, 1996 and the application of the net proceeds therefrom, as if these
offerings had occurred at the beginning of the period presented.
Private Placement Transaction
In January 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"). The Private
Placement resulted in net proceeds to the Company of $65.6 million after
deducting underwriting fees and other expenses. The application of the net
proceeds of the Private Placement has been reflected in the Unaudited Pro forma
Consolidated Statement of Operations for the year ended June 30, 1997 as if it
had occurred at the beginning of the period presented.
Subsequent Offering
In August 1997, the Company issued and sold 6,000,000 shares of Class A Common
Stock at a price of $19.25 per share (the "Subsequent Offering") resulting in
net proceeds to the Company of $108.8 million after deducting underwriting fees
<PAGE>
FLORIDA PANTHERS HOLDINGS, INC.
INTRODUCTION TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
and other expenses. The application of the net proceeds of the Subsequent
Offering has been reflected in the Unaudited Pro Forma Consolidated Statement of
Operations for the year ended June 30, 1997 and nine months ended March 31, 1998
as if it had occurred at the beginning of the period presented.
Business Combinations
Prior to the completion of the Initial Offerings, the Company acquired from its
Chairman approximately 78% of the partnership interest in Decoma Miami
Associates, Ltd., a Florida limited partnership ("DMAL"), in exchange for
870,968 shares of Class A Common Stock. DMAL derives revenue from the operations
of the Miami Arena which includes seat use charges imposed on tickets sold, net
operating income and fixed and variable operating payments. The transaction was
accounted for on a historical cost basis in a manner similar to a pooling of
interests as of the date of the acquisition by the Company's Chairman.
The businesses discussed below have been accounted for under the purchase method
of accounting and are included in the historical financial statements from the
date of acquisition. For pro forma financial statement purposes, these
acquisitions have been reflected as if they occurred at the beginning of the
periods presented, as applicable.
In March 1998, the Company acquired a controlling ownership interest in
Arizona Biltmore in exchange for $126.0 million in cash at closing, payment of
$100.3 million with interest at a rate of 5% per annum, warrants to purchase
500,000 shares of the Company's Class A Common Stock and the assumption of $63.1
million of debt. The $100.3 million is payable at the election of the seller,
either in cash or in shares of Class A Common Stock. The information presented
in the Unaudited Pro forma Statement of Operations for the Arizona Biltmore
includes the accounts of Biltmore Hotel Partners and the Rental Pool Operations
of the Biltmore Villas.
In August 1997, the Company acquired interests constituting approximately 68% of
the Registry Resort in exchange for approximately $75.5 million in cash,
together with 918,174 shares and warrants to purchase 325,000 shares of the
Company's Class A Common Stock. As of March 31, 1998, the Company had paid an
additional $31.6 million to close on 133 units, increasing its ownership
interest to approximately 97%. The Company currently has outstanding offers to
acquire the remaining units of Registry Resort.
In June 1997, the Company acquired substantially all of the net assets of the
Boca Resort in exchange for 272,303 shares of Class A Common Stock, rights to
acquire approximately 4,242,586 shares of Class A Common Stock and warrants to
purchase 869,810 shares of Class A Common Stock.
In May 1997, the Company acquired the rights to operate the Gold Coast Ice Arena
in exchange for 34,760 shares of Class A Common Stock. Gold Coast is the current
practice home of the Florida Panthers Hockey Club and provides open skating, ice
hockey leagues and other programs to the public.
In March 1997, the Company acquired 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
Bahia Mar in exchange for 3,950,000 shares of Class A Common Stock.
In March 1997, the Company acquired all 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
Pier 66 in exchange for 4,450,000 shares of Class A Common Stock.
In January 1997, the Company acquired certain assets relating to the business of
a twin-pad ice facility in exchange for $1.0 million in cash, 212,766 shares of
the Company's Class A Common Stock and the assumption of a maximum of
approximately $8.1 million in construction-related obligations, of which
approximately $6.7 million was repaid upon consummation of the acquisition.
<PAGE>
FLORIDA PANTHERS HOLDINGS, INC.
UNAUDITED PRO FORMA CONSOLIDATED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended June 30, 1997
(In Thousands, Except Per Share Data)
<TABLE>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Pro forma
As Adjusted
Panthers --------------------------------------------------------- ----------------------- for the
Holdings, Incredible Boca Registry Acquisition Arizona Acquisition Businesses
Inc. Pier 66 Bahia Mar Ice Resort Resort Adjustments Biltmore Adjustments Acquired
---------- ---------------------------------------------------------- ---------- ----------- ----------
Revenue:
Leisure and recreation $ 17,567 $ 18,511 $ 11,578 $ - $ 116,194 $ 40,607 $ - $ 57,307 $ - $ 261,764
Entertainment and sports 36,695 - - 356 - - - - - 37,051
-------- -------- -------- ----- --------- -------- -------- --------- -------- ---------
Total revenue 54,262 18,511 11,578 356 116,194 40,607 - 57,307 - 298,815
Operating Expenses:
Cost of leisure and
recreation services 6,658 7,679 3,915 - 56,522 16,683 - 21,171 - 112,628
Cost of entertainment
and sports services 35,135 - - - - - - - - 35,135
Selling, general and
administrative expense 15,150 5,513 3,658 1,175 34,171 12,769 1,872 (a) 16,079 573 (a) 88,393
(1,926)(b) 1,000 (c)
(1,641)(c)
Amortization and
depreciation 5,698 1,155 1,348 36 6,145 1,035 4,206(d) 6,463 ( 86)(d) 26,000
-------- -------- -------- ------ -------- ------- ----------- --------- --------- ---------
Total operating expenses 62,641 14,347 8,921 1,211 96,838 30,487 4,152 43,713 (154) 262,156
-------- -------- -------- ------ -------- ------- ----------- --------- --------- ---------
Operating income (loss) (8,379) 4,164 2,657 (855) 19,356 10,120 (4,152) 13,594 154 36,659
Interest and other income 1,923 - - - 500 1,108 - - - 3,531
Interest and other expense
and minority interest (3,804) (1,487) (816) - (18,225) (4,310) 6,066 (e) (5,104) (15,095)(f)(42,775)
--------- --------- --------- ------- --------- ------- ---------- -------- ---------- ---------
Net income (loss) $(10,260) $ 2,677 $ 1,841 $ (855) $ 1,631 $ 6,918 $ 1,914 $ 8,490 $ (14,941) $( 2,585)
========= ========= ========= ======= ========= ======== =========== ======== ========== =========
Net loss per share - basic
and diluted $( 0.74) $( 0.08)
========= =========
Shares used in computing
net loss per share -
basic and diluted 13,829 34,243
========= =========
(h)
</TABLE>
<PAGE>
FLORIDA PANTHERS HOLDINGS, INC.
UNAUDITED PRO FORMA CONSOLIDATED CONSOLIDATED STATEMENT OF OPERATIONS
For the Nine Months Ended March 31, 1998
(In Thousands, Except Per Share Data)
<TABLE>
<S>
<C> <C> <C> <C> <C> <C>
Pro forma
Florida As Adjusted
Panthers for
Holdings Registry Acquisition Arizona Acquisition Businesses
Inc. Resort Adjustments Biltmore Adjustments Acquired
---- ------ ----------- -------- ----------- --------
Revenue:
Leisure and recreation $ 180,661 $ 3,135 $ - $ 48,008 $ - $ 231,804
Entertainment and sports 34,620 - - - - 34,620
---------- ------- ------- --------- -------- ----------
Total revenue 215,281 3,135 - 48,008 - 266,424
Operating Expenses:
Cost of leisure and
recreation services 76,299 1,764 - 18,381 - 96,444
Cost of entertainment
and sports services 39,795 - - - - 39,795
Selling, general and
administrative expense 66,223 1,310 31 (a) 12,328 480 (a) 79,660
750 (c)
(1,462) (c)
Amortization and depreciation 15,453 162 98 (d) 4,907 (124) (d) 20,496
---------- ------- ------- --------- --------- ----------
Total operating expenses 197,770 3,236 129 201,135 (356) 236,395
---------- ------- ------- --------- --------- ----------
Operating income (loss) 17,511 (101) (129) 17,281 356 30,029
Interest and other income 1,683 198 - 1,881 - 1,881
Interest and other expense (14,528) - - (14,528) (11,321) (f) (29,794)
Minority interest (1,743) (77) (1,820) - (1,820)
---------- -------- ------- --------- --------- ----------
Net income $ 2,923 $ 20 $ (129) $ 2,814 $ (10,965) $ 296
========== ======== ======= ======== ========== ==========
Net income per share - basic $ 0.09 $ 0.01
========== ===========
Net income per share - diluted $ 0.08 $ 0.01
========== ===========
Shares used in computing net income
per share - basic 34,067 35,109
========== ===========
(i)
Shares used in computing net income
per share - diluted 34,474 35,516
=========== ===========
(i)
</TABLE>
<PAGE>
FLORIDA PANTHERS HOLDINGS, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(a) Represents a management fee equal to 1% of revenue which is payable to
Huizenga Holdings, a related party controlled by the Chairman of the
Company.
(b) Represents the difference between contracted expenses incurred prior to the
acquisition of Boca Resort versus those incurred subsequent to the
acquisition. Such costs include payment under employment contracts and
management agreements.
(c) Pro forma adjustments represent a reduction in selling, general and
administrative expenses for the historical management and technical service
fees under a former agreement, offset by the cost of the new management fee
provided for under a recently executed agreement.
(d) Represents adjustments to depreciation expense associated with the
stepped-up basis of the property and equipment of the acquired companies as
well as the amortization of $6,092,000 which represents the excess of
purchase price over the fair value of the net assets of Incredible Ice. The
fair values of property and equipment were determined by the Company's
management in consultation with representatives of the prior property
owners. Factors considered include trends in the hospitality industry and
local real estate market, recent sales of comparable properties, estimated
replacement value of the properties and the present value of the expected
cash flows from operating the resort discounted at a market rate.
(e) Represents the reduction of interest expense associated with the retirement
of approximately $65.0 million of indebtedness from the proceeds of the
Private Placement and sale of 6,000,000 shares of Class A Common Stock.
(f) Represents additional interest expense associated with financing the
acquisition of Arizona Biltmore.
(g) A pro forma tax provision has been excluded from the presentation based on
the fact that the Company has adequate net operating loss carryforwards to
offset pro forma earnings presented.
(h) Net loss per share and weighted average shares outstanding for the year
ended June 30, 1997 is 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 Initial Offerings) issued to repay the Company's outstanding
indebtedness as if they been outstanding for the period prior to the prior
offerings, (iii) 7,300,000 shares issued in connection with the Initial
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 Pier 66 and 3,950,000 shares for Bahia Mar) as if
they had been outstanding for the entire period presented, (v) 212,766
shares issued in the acquisition of Incredible Ice as if they had been
outstanding for the entire period presented, (vi) 2,460,000 shares issued
in the Private Placement for the period for which they were actually
outstanding, (vii) 34,760 shares issued in the acquisition of Gold Coast as
if they had been outstanding for the entire period presented, (viii)
4,514,889 shares issued in connection with the acquisition of the Boca
Raton Resort and Club as if they had been outstanding for the entire period
presented, (ix) 918,174 shares issued in connection with the acquisition of
the Registry Resort as if they had been outstanding for the entire period
presented and (x) 6,000,000 shares issued in the Subsequent Offering as if
they had been outstanding for the entire period presented.
(i) Net income per share and weighted average shares outstanding for the nine
months ended March 31, 1998 is determined based on the (i) the shares
outstanding for the entire period, plus (i) 918,174 shares issued in
connection with the acquisition of the Registry Resort as if they had been
outstanding for the entire period presented and (iii) 6,000,000 shares
issued in the Subsequent Offering as if they had been outstanding for the
entire period presented.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FLORIDA PANTHERS HOLDINGS, INC.
Date: May 15, 1998 By: WILLIAM M. PIERCE
---------------------
William M. Pierce
Senior Vice President,
Treasurer and Chief
Financial Officer
By: STEVEN M. DAURIA
--------------------
Steven M. Dauria
Vice President and
Corporate Controller
Consent of Independent Certified Public Accountants
We consent to the incorporation by reference in Post Effective Amendment
No. 3 to the Registration Statement (Form S-3 No. 333-37789) for the
registration of 18,609,491 shares of Florida Panthers Holdings, Inc. Class A
Common Stock, Post Effective Amendment No. 6 to the Registration Statement (Form
S-4 No. 333-23135)for the registration of 6,000,000 shares of its Class A Common
Stock and Post Effective Amendment No. 4 to the Registration Statement (Form S-4
No. 333-28951) of our reports (a) dated February 5, 1998 (except Note 8, as to
which the date is March 2, 1998) with respect to the financial statements of
Biltmore Hotel Partners included in the Current Report on Form 8-K/A of Florida
Panthers Holdings, Inc., dated March 2, 1998, as amended; and (b) dated May 4,
1998 with respect to the Historical Summaries of the Rental Pool Operations of
the Biltmore Villas included in the Current Report on Form 8-K/A of Florida
Panthers Holdings, Inc., dated March 2, 1998, as amended.
Ernst & Young LLP
Pheonix, Arizona
May 13, 1998
