<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
--------------
/x/ Quarterly report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended March 31, 1997.
/ / Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from _____ to _____.
- -------------------------------------------------------------------------------
Commission File Number 000-22091
GOLF TRUST OF AMERICA, INC.
(Exact name of registrant as specified in its charter)
Maryland 33-0724736
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
14 North Adger's Wharf, Charleston, South Carolina 29401
(Address of principal executive offices) (Zip Code)
(803) 723-4653
(Registrant's telephone number, including area code)
- -------------------------------------------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
--- ---
On May 15,1997 there were 3,910,000 common shares outstanding of the
registrant's only class of common stock.
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<PAGE>
GOLF TRUST OF AMERICA, INC.
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1997
INDEX
PAGE
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements 3-16
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 17-22
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 23
Item 2. Changes in Securities 23
Item 3. Defaults upon Senior Securities 23
Item 4. Submission of Matters to a Vote of
Security Holders 23-24
Item 5. Other Information 24
Item 6. Exhibits and Reports on Form 8-K 24-26
SIGNATURES
2
<PAGE>
PART I--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GOLF TRUST OF AMERICA, INC.
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
PAGE
----
GOLF TRUST OF AMERICA, INC.:
Condensed Consolidated Balance Sheets as of December 31, 1996
and March 31, 1997.............................................. 4
Condensed Consolidated Statements of Income for the Period from
February 12, 1997 to March 31, 1997 and Pro Forma Three Months
Ended March 31, 1996 and 1997................................... 5
Condensed Consolidated Statement of Cash Flows for the Period
from February 12, 1997 to March 31, 1997........................ 6
Notes to Condensed Consolidated Financial Statements............... 7-11
LEGENDS GOLF:
Combined Condensed Balance Sheets--December 31, 1996 and
March 31, 1997................................................. 12
Combined Condensed Statements of Operations--Quarter Ended
March 31, 1996 and 1997........................................ 13
Combined Condensed Statements of Cash Flows--Quarter Ended
March 31, 1996 and 1997........................................ 14
Notes to Combined Condensed Financial Statements................... 15-16
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
GOLF TRUST OF AMERICA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
DECEMBER 31, MARCH 31,
1996 1997
----------- ----------
(UNAUDITED)
ASSETS
Property and equipment:
Land . . . . . . . . . . . . . . . . . . . . . $ - $ 14,906
Golf course improvements . . . . . . . . . . . - 43,353
Buildings. . . . . . . . . . . . . . . . . . . - 10,162
Furniture, fixtures, and equipment . . . . . . - 4,936
--------- ---------
Total property and equipment . . . . . . . . . . - 73,357
Less accumulated depreciation. . . . . . . . . - 11,173
--------- ---------
Property and equipment, net. . . . . . . . . . . - 62,184
--------- ---------
Cash and cash equivalents. . . . . . . . . . . . - 24,549
Other. . . . . . . . . . . . . . . . . . . . . . - 151
--------- ---------
Total assets . . . . . . . . . . . . . . . . . . $ - $ 86,884
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Notes payable. . . . . . . . . . . . . . . . . . $ - $ 4,325
Accounts payable and other liabilities . . . . . - 813
--------- ---------
Total liabilities. . . . . . . . . . . . . . . . - 5,138
--------- ---------
Minority interest. . . . . . . . . . . . . . . . - 42,407
--------- ---------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value,
10,000,000 shares authorized,
no shares issued. . . . . . . . . . . . . . . - -
Common stock, $.01 par value,
90,000,000 shares authorized,
3,910,000 shares issued and outstanding . . . - 39
Additional paid-in capital . . . . . . . . . . - 38,584
Retained earnings. . . . . . . . . . . . . . . - 716
--------- ---------
Stockholders' equity . . . . . . . . . . . . . . - 81,746
--------- ---------
Total liabilities and stockholders' equity . . . $ - $ 86,884
--------- ---------
--------- ---------
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
GOLF TRUST OF AMERICA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
PERIOD FROM FOR THE THREE FOR THE THREE
FEBRUARY 12 TO MONTHS ENDED MONTHS ENDED
MARCH 31, 1997 MARCH 31, 1997 MARCH 31, 1996
-------------------------------------------------------
(UNAUDITED) (PRO FORMA) (PRO FORMA)
<S> <C> <C> <C>
Minimum rents. . . . . . . . . . . . . . . . . . . . . . . $ 1,940 $ 3,750 $ 2,821
Capital expenditure reserve. . . . . . . . . . . . . . . . 67 - -
Percentage rents . . . . . . . . . . . . . . . . . . . . . 35 35 -
-------------------------------------------------------
Total revenues . . . . . . . . . . . . . . . . . . . . . . 2,042 3,785 2,821
-------------------------------------------------------
EXPENSES:
Depreciation and amortization. . . . . . . . . . . . . . 346 794 770
General and administrative . . . . . . . . . . . . . . . 313 524 410
-------------------------------------------------------
Total expenses . . . . . . . . . . . . . . . . . . . . . . 659 1,318 1,180
-------------------------------------------------------
Operating income . . . . . . . . . . . . . . . . . . . . . 1,383 2,467 1,641
-------------------------------------------------------
OTHER INCOME (EXPENSE):
Interest income. . . . . . . . . . . . . . . . . . . . . 131 131 -
Interest expense . . . . . . . . . . . . . . . . . . . . (40) (92) (92)
-------------------------------------------------------
Total other income (expense) . . . . . . . . . . . . . . . 91 39 (92)
-------------------------------------------------------
Net income before minority interest. . . . . . . . . . . . 1,474 2,506 1,549
Income applicable to minority interest . . . . . . . . . . 758 1,288 796
-------------------------------------------------------
Net income . . . . . . . . . . . . . . . . . . . . . . . . $ 716 $ 1,218 $ 753
-------------------------------------------------------
-------------------------------------------------------
Net income per common share. . . . . . . . . . . . . . . . $ 0.18 $ 0.31 $ 0.19
-------------------------------------------------------
-------------------------------------------------------
Weighted average number of common shares outstanding . . . 3,910 3,910 3,910
-------------------------------------------------------
-------------------------------------------------------
Distribution declared per common share outstanding . . . . $ 0.21 $ 0.41 $ 0.41
-------------------------------------------------------
-------------------------------------------------------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
GOLF TRUST OF AMERICA, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
PERIOD FROM
FEBRUARY 12 TO
MARCH 31, 1997
-------------
(UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . . . . $ 716
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization. . . . . . . . . . . . . 346
Income applicable to minority interest . . . . . . . . 758
Increase in prepaid/other assets . . . . . . . . . . . (151)
Increase in accounts payable . . . . . . . . . . . . . 813
----------
Net cash provided by operating activities. . . . . . . . . 2,482
----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Golf course acquisitions . . . . . . . . . . . . . . . . (54,555)
----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt . . . . . . . . . . . . . . 4,325
Net proceeds from offering . . . . . . . . . . . . . . . 73,055
Increase in minority interest. . . . . . . . . . . . . . (758)
----------
Net cash provided by financing activities. . . . . . . . . 76,622
----------
Net increase in cash . . . . . . . . . . . . . . . . . . . 24,549
Cash, beginning of period. . . . . . . . . . . . . . . . . -
----------
Cash, end of period. . . . . . . . . . . . . . . . . . . . $ 24,549
----------
----------
See accompanying notes to condensed consolidated financial statements.
6
<PAGE>
GOLF TRUST OF AMERICA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
1. ORGANIZATION AND BASIS OF PRESENTATION
Golf Trust of America, Inc. (the "Company") was incorporated in Maryland on
November 8, 1996. The Company is a self-administered real estate investment
trust ("REIT") formed to capitalize upon consolidation opportunities in the
ownership of golf courses in the United States. The principal business strategy
of the Company is to acquire high quality golf courses and to lease the golf
courses to qualified third party operators, including affiliates of the sellers.
Title to the acquired courses is held by Golf Trust of America, L.P., a Delaware
limited partnership (the "Operating Partnership"), in which the Company is the
sole general partner.
Golf Trust of America, Inc., through its wholly owned subsidiaries GTA GP,
Inc. ("GTA GP") and GTA LP, Inc. ("GTA LP"), holds a 48.6% interest in the
Operating Partnership. GTA GP is the sole general partner of the Operating
Partnership and owns a 0.2% interest therein. GTA LP is a limited partner in
the Operating Partnership and owns a 48.4% interest therein.
In February 1997, the Company raised net proceeds of approximately $73
million in its initial public offering ("the IPO"). In the IPO the Company sold
3,910,000 shares of common stock at $21.00 per share (including 510,000 shares
sold pursuant to the underwriters' over-allotment option, which was exercised in
full). The Company contributed the net proceeds of the IPO to the Operating
Partnership in exchange for 48.6% interest in the Operating Partnership.
Concurrently with the closing of the IPO, the Operating Partnership acquired ten
golf courses (the "Initial Courses") from their prior owners ( the "Prior
Owners").
The Prior Owners were paid an aggregate of approximately $6.2 million in
cash and approximately $43.1 million in repayment of mortgage and other
indebtedness and were issued approximately 4.1 million OP units which represents
a 51% limited partnership interest in the Operating Partnership. Control of the
Operating Partnership remains in the Company as the sole general partner.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared by the management of the Company in accordance with
generally accepted accounting principles for interim financial information
and in conformity with the rules and regulations of the Securities and
Exchange Commission. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring adjustments) considered necessary for a fair
presentation have been included. The results of operations for the period
from February 12, 1997 through March 31, 1997 are not necessarily indicative
of the results that may be expected for the full year. These financial
statements should be read in conjunction with the Company's December 31, 1996
financial statement and notes thereto included in the Company's Annual Report
on Form 10-K.
The unaudited Pro Forma Condensed Consolidated Statements of Income for
the three months ended March 31, 1996 and 1997, is presented as if the
Formation Transaction had occurred January 1, 1996. In management's opinion,
all adjustments necessary to reflect the effects of the Formation Transaction
have been made. The Pro Forma Condensed Consolidated Statements of Income
are not necessarily indicative of what the Company's actual results of
operations would have been assuming the formation transactions had occurred
on January 1, 1996, nor do they purport to represent the future operating
results of the Company.
7
<PAGE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PRINCIPLES OF CONSOLIDATION
The accompanying condensed consolidated financial statements include the
accounts of the Company, its wholly owned subsidiaries, and the Operating
Partnership. All significant intercompany transactions and balances have
been eliminated in consolidation.
REVENUE RECOGNITION
The Company recognizes rental revenue on an accrual basis over the terms of
the leases.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid debt instruments with an original
maturity of three months or less to be cash equivalents.
CONCENTRATION OF CREDIT RISK
The Company has cash and cash equivalents in a financial institution which
is insured by the Federal Deposit Insurance Corporation (FDIC) up to $100,000
per institution. As March 31, 1997, the Company had amounts in excess of FDIC
limits. The Company limits its risk by placing its cash and cash equivalents in
a high quality financial institution.
PROPERTY AND EQUIPMENT
Property and equipment is carried at the lower of cost or net realizable
value. Depreciation is computed on a straight-line basis over the estimated
useful lives of the assets as follows:
Golf course improvements 15 years
Buildings and improvements 30 years
Furniture and equipment 3-8 years
The leases presently provide that at the end or termination of the existing
leases, all improvements and fixtures placed on the rental property become
property of the Company. In addition, the leases provide for a capital
replacement reserve to be established by the Company for each property. The
Company will approve disbursements from this fund for capital improvements to
the properties.
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.
8
<PAGE>
3. ACQUISITION OF GOLF COURSES
On February 12, 1997, concurrent with the initial public offering of the
Company's stock, the Company acquired the ten initial golf courses in exchange
for 4.1 million Operating Partnership units, assumptions of $43.1 million of
notes payable and affiliate debt and $6.2 million cash. The debt was repaid
concurrent with the acquisition. The seven golf courses acquired from The
Legends Group have been accounted for at historical cost as The Legends Group is
considered the accounting acquirer under APB No. 16. The other three courses
have been accounted for as a purchase. The following is a summary of the golf
courses and related property and equipment acquired:
<TABLE>
<CAPTION>
OTHER
LEGENDS COURSES TOTAL
-------------------------------------
<S> <C> <C> <C>
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,532 $ 10,374 $ 14,906
Golf course improvements . . . . . . . . . . . . . . . . . 35,063 8,290 43,353
Buildings and improvements . . . . . . . . . . . . . . . . 4,254 5,908 10,162
Furniture and equipment. . . . . . . . . . . . . . . . . . 3,299 1,637 4,936
-------------------------------------
Property and equipment . . . . . . . . . . . . . . . . . . 47,148 26,209 73,357
Less accumulated depreciation and amortization . . . . . . (10,827) - (10,827)
-------------------------------------
Property and equipment, net. . . . . . . . . . . . . . . . $ 36,321 $ 26,209 $ 62,530
-------------------------------------
-------------------------------------
</TABLE>
4. LEASES
The Company leases its Golf Courses to affiliates of the prior owners
under non-cancelable lease agreements over an initial period of ten years.
From the minimum lease payments, the Company is required to make available a
reserve of 2-3% of the annual gross golf revenue for capital expenditures by
the lessor. Capital expenditures are approved in advance by the Company and
reimbursed to the lessor.
Future minimum rents to be received by the Company under the Leases for
the next five years ending December 31 and in total thereafter are as follows:
AMOUNT
----------
1997. . . . . . . . . . . . . . . . . . . . . . . . . $ 13,222
1998. . . . . . . . . . . . . . . . . . . . . . . . . 14,988
1999. . . . . . . . . . . . . . . . . . . . . . . . . 14,988
2000. . . . . . . . . . . . . . . . . . . . . . . . . 14,988
2001. . . . . . . . . . . . . . . . . . . . . . . . . 14,988
Thereafter. . . . . . . . . . . . . . . . . . . . . . 74,940
----------
$148,114
----------
----------
9
<PAGE>
4. LEASES (CONTINUED)
The non-cancelable leases provide for the Company to receive the greater
of the Base Rent Escalation or an amount equal to Participating Rent plus the
Base Rent Escalation payable under each non-cancelable lease. Participating
rent will be paid to the Company each year in the amount, if any, by which
the sum of 33 and 1/3% of Gross Golf Revenue exceeds the cumulative Base Rent
Escalation since the commencement date of such Leases. The base rent will be
increased each year by the lesser of (i) 3 percent or (ii) 200 percent of the
annual percentage increase in the Consumer Price Index ("CPI"). Annual
increases in lease payments are limited to 5 percent during the first five
years of the initial lease term.
The Company has options to extend the term of each lease six consecutive
times for a period of 5 years each.
5. NOTE PAYABLE
Note payable consists of a $4,500,000 bridge loan with a bank which
matures in 120 days from February 12, 1997. Amounts outstanding bear
interest at LIBOR plus 2.00 percent. The loan is secured by the property and
equipment of Heritage Golf Club and is personally guaranteed by the prior
owner of Northgate Country Club.
The Company and NationsBank, N.A. have signed a term sheet relating to a
$75 million line of credit (the "Line of Credit") which will be used
primarily for acquisitions. Definitive documentation on the Line of Credit is
currently being finalized. The Company expects the Line of Credit facility to
be available in the second quarter of 1997. However, the Company has not
consummated the Line of Credit and there can be no assurance that such credit
will be extended to the Company.
6. COMMON STOCK AND EMPLOYEE INCENTIVE PLANS
In February, 1997, the Company adopted the 1997 Stock Incentive Plan (the
"1997 Plan") and the 1997 Non-Employee Directors' Plan (the "Directors' Plan").
Under the Plans, the Compensation Committee of the Board of Directors is
authorized to grant stock awards to purchase shares of the Company's common
stock at prices equal to the fair value of the stock on the date of grant.
Options under the 1997 Plan vest ratably over a period of three years
from the date of grant and expire ten years from the date of grant.
Transactions involving both plans are summarized as follows:
WEIGHTED
AVERAGE
OPTION SHARES SHARES EXERCISE PRICE
------------- ---------------------------
Outstanding at December 31, 1996. . . . - $ -
Granted . . . . . . . . . . . . . . . . 335,000 21.00
Exercised . . . . . . . . . . . . . . . - -
Expired and/or canceled . . . . . . . . - -
-------- --------
Outstanding at March 31, 1997 . . . . . 335,000 $ 21.00
-------- --------
-------- --------
10
<PAGE>
GOLF TRUST OF AMERICA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
7. COMMON STOCK AND EMPLOYEE INCENTIVE PLANS
The Company has adopted Statement of Financial Accounting Standards
(SFAS) 123, "Accounting for Stock-Based Compensation," effective February,
1997. In accordance with the provisions of SFAS No. 123, the Company
continues to apply APB Opinion 25 and related interpretation in accounting
for its stock option plans and, accordingly, has not recognized compensation
cost. If the Company had elected to recognize compensation cost based on
fair value of the options granted at the grant date as prescribed by SFAS No.
123, net income per quarter and earnings per share would have been reduced to
the pro forma amounts indicated in the table below (in thousands, except per
share amounts):
THREE MONTHS
ENDED
MARCH 31, 1997
--------------
Net income--as reported . . . . . . . . $ 716
Net income--pro forma . . . . . . . . . $ 669
Earnings per share--as reported . . . . $0.17
Earnings per share--pro forma . . . . . $0.16
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option-pricing model with the following assumptions:
THREE MONTHS
ENDED
MARCH 31, 1997
--------------
(IN THOUSANDS)
Expected dividend yield . . . . . . . . 6.40%
Expected stock price volatility . . . . 7.50%
Risk-free interest rate . . . . . . . . 6.94%
Expected life of options. . . . . . . . 6 years
8. SUBSEQUENT EVENT
On April 25, 1997, the Board of Directors declared an initial
distribution of $.21 per share for the quarter ended March 31, 1997, to
stockholders of record on May 7, 1997, which distribution will be paid on May
15, 1997. The distribution represents a pro rata distribution for the period
from February 12, 1997 through March 31, 1997, based on the anticipated
regular quarterly distribution rate of $.41 for a full quarter.
11
<PAGE>
LEGENDS GOLF
COMBINED CONDENSED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1996 1997
------------------------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT:
Cash .................................................... $ 841 $ 458
Accounts receivable ..................................... 1,290 2,944
Inventories ............................................. 502 566
----------- -----------
Total current assets ................................ 2,633 3,968
----------- -----------
Property and equipment, less accumulated depreciation
and amortization ......................................... 35,060 1,865
----------- -----------
Other assets:
Investment in Golf Trust of America, LP ................. - 1,644
Advances to affiliates .................................. 11,673 12,679
Other ................................................... 438 66
----------- -----------
Total other assets................................... 12,111 14,389
----------- -----------
$49,804 $ 20,222
----------- -----------
----------- -----------
LIABILITIES AND OWNERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses.................... $ 2,150 $ 2,648
Current maturities of long-term debt..................... 26,697 -
----------- ---------
Total current liabilities............................ 28,847 2,648
Advances from affiliates................................... 13,167 7,085
Long-term debt, less current maturities.................... 616 789
----------- ---------
Total liabilities.................................... 42,630 10,522
----------- ---------
Commitments and contingencies
Owners' equity:
Common stock, $1 par--shares authorized, 300,000;
outstanding, 1,000...................................... 3 3
Members' contributions................................... 1 7
Additional paid-in capital............................... 300 3,832
Members' accumulated deficit............................. (1,970) (3,549)
Retained earnings........................................ 8,840 9,407
----------- ---------
Total owners' equity................................. 7,174 9,700
----------- ---------
$49,804 $ 20,222
----------- ---------
----------- ---------
</TABLE>
See accompanying notes to combined condensed financial statements.
12
<PAGE>
LEGENDS GOLF
COMBINED CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE QUARTER
ENDED
MARCH 31,
-----------------------
1996 1997
-----------------------
(UNAUDITED)
<S> <C> <C>
REVENUES:
Gross golf revenues....................................... $3,727 $ 4,006
Other revenues............................................ 950 1,101
------ ----------
Total revenues........................................ 4,677 5,107
COSTS AND EXPENSES:
General and administrative................................ 923 1,405
Operating expenses........................................ 1,218 1,887
Depreciation and amortization............................. 437 723
Rents..................................................... 210 1,696
------ ----------
Total costs and expenses.............................. 2,788 5,711
Operating income (loss)..................................... 1,889 (604)
Interest expense............................................ 220 408
------ ----------
Net income (loss)........................................... $1,669 $ (1,012)
</TABLE>
See accompanying notes to combined condensed financial statements.
13
<PAGE>
LEGENDS GOLF
COMBINED CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE QUARTER
ENDED
MARCH 31,
-------------------
1996 1997
-------------------
(UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)............................................ $1,669 $ (1,012)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization.............................. 425 723
Decrease (increase) in:
Accounts receivable....................................... (1,634) (1,443)
Inventories............................................... (94) (68)
Prepaid expenses/other assets............................. 12 130
Increase (decrease) in:
Accounts payable.......................................... 408 (463)
Accrued expenses.......................................... 198 961
------ -------
Net cash provided by (used in) operating activities............ 984 (1,172)
------ -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment additions............................. (39) -
Increase in advances to affiliates........................... (600) (884)
------ -------
Net cash used in investing activities.......................... (639) (884)
------ -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt................................... (104) (70)
Increase in advances from affiliates......................... - 1,954
Increase in advances from stockholder........................ - (211)
------ -------
Net cash provided by (used in) financing activities............ (104) 1,673
------ -------
Net increase (decrease) in cash................................ 241 (383)
Cash, beginning of period...................................... 400 841
------ -------
Cash, end of period............................................ $ 641 $ 458
------ -------
------ -------
</TABLE>
See accompanying notes to combined condensed financial statements.
14
<PAGE>
LEGENDS GOLF
NOTES TO COMBINED CONDENSED FINANCIAL STATEMENTS
(IN THOUSANDS)
1. ORGANIZATION AND BASIS OF PRESENTATION
The accompanying combined condensed financial statements include the
accounts of three S-Corporations (Seaside Resorts, Ltd. d/b/a Oyster Bay Golf
Club; Heritage Golf Club, Ltd.; and Golf Legends, Ltd.) and five limited
liability companies (Legends of Virginia, LC; Oyster Bay Golf Management, LLC;
Heritage Golf Management, LLC; Legends Golf Management, LLC; and Virginia
Legends Golf Management, LLC). The entities, referred to collectively as
Legends Golf, are engaged in the operation of golf courses in North Carolina,
South Carolina, and Virginia.
The accompanying combined condensed financial statements of Legends Golf
have been presented on a historical cost basis since Legends Golf was the
subject of a business combination upon the contribution of real estate and other
properties in exchange for interest in a limited partnership formed by the
operating partnership for inclusion in a public offering. All significant
intercompany balances and transactions have been eliminated. Additionally,
certain classifications may vary from those of the individual Companies'
financial statements.
Minority interest attributed to the minority shareholder of Legends of
Virginia, LC is not reflected as the company is in a capital deficit position.
Therefore, the total deficit is attributed to the majority owner.
The Companies' financial statements are being presented on a combined basis
as under the terms of the operating leases implemented under the Formation
Transactions, the lease obligations are cross-collateralized among all four
Legends lessees. This presentation better presents the ability of the lessees
to service the leases.
2. CONTRIBUTION OF ASSETS
On February 12, 1997, the Companies contributed the golf course land and
improvements, buildings and certain equipment with a net book value of
$36,321, net of related debt of $26,454 to Golf Trust of America, LP (GTA,
LP). Concurrently with the contribution of assets, the majority owner
contributed the underlying land for four of the courses to the Companies.
The majority owner's basis in the land was $3,532. The contribution was
concurrent with an initial public offering of the common stock of Golf Trust
of America, Inc. (GTA, Inc.), its general partner. The Companies received
limited partnership units convertible to common shares of GTA, Inc. and cash
of $8.4 million which was used to repay certain affiliate indebtedness.
Concurrent with the contribution of assets, the Companies transferred the
operations of the golf courses along with related assets and liabilities to four
newly formed affiliated lessee companies, Oyster Bay Golf Management, LLC;
Heritage Golf Management, LLC; Legends Golf Management, LLC; and Virginia Golf
Management, LLC (Legends Lessees) which have entered into lease agreements with
GTA, LP (Note 3).
The remaining assets of the Companies consist of limited partnership units
in GTA, LP and receivables and payables from affiliates.
15
<PAGE>
3. LEASES
Concurrent with the Formation Transactions, the Legends Lessees entered
into leases to operate the golf courses. The Company is obligated under the
non-cancelable lease agreements for an initial period of ten years. Under the
lease agreements, the Legends Lessees are responsible for all operating expenses
and fixed asset purchases and improvements. However, the lessee is required to
make available 2-3 percent of the annual gross golf revenue to the lessor for
reimbursement of fixed asset expenditures. Capital expenditures must be
approved in advance by the lessor.
Future minimum rental obligations to be paid by the Company under the
Leases for the next five years ending December 31 and in total thereafter are as
follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, AMOUNT
- ------------------------ ------
<S> <C>
1997..................................... $ 10,637
1998..................................... 12,057
1999..................................... 12,057
2000..................................... 12,057
2001..................................... 12,057
Thereafter............................... 60,285
-----------
$119,150
-----------
-----------
</TABLE>
The non-cancelable leases require the Company to pay the greater of the
Base Rent Escalation or an amount equal to Participating Rent plus the Base
Rent Escalation payable under each non-cancelable lease. Participating rent
will be paid by the Company each year in the amount, if any, by which the sum
of 33 and 1/3 percent of Gross Golf Revenue exceeds the cumulative Base Rent
Escalation since the commencement date of such Leases. The base rent will be
increased each year by the lesser of (i) 3 percent or (ii) 200 percent of the
annual percentage increase in the Consumer Price Index ("CPI"). Annual
increases in lease payments are limited to 5 percent during the first five
years of the initial lease term.
The Company has options to extend the term of each lease six consecutive
times for a period of 5 years each.
16
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
Golf Trust of America, Inc. (collectively with its subsidiaries, the
"Company") was incorporated in Maryland on November 8, 1996. The Company is
a self-administered real estate investment trust ("REIT") formed to
capitalize upon consolidation opportunities in the ownership of golf courses
in the United States. The Company's principal business strategy is to
acquire high quality golf courses and then lease the golf courses to
qualified third party operators, including affiliates of the sellers. Title
to the acquired courses is held by Golf Trust of America, L.P., a Delaware
limited partnership (the "Operating Partnership"), in which the Company is
the sole general partner. The Company has the ability to issue units of
limited partnership interest ("OP Units") in the Operating Partnership. OP
Units are redeemable by their holder for cash or, at the election of the
Company, for shares of the Company's common stock ("Common Stock") on a
one-for-one basis (the "Redemption Rights"). When the Company acquires a
golf course in exchange for OP Units, the seller of the course does not
recognize taxable income until it exercises the OP Units' Redemption Rights.
OP Units can thus provide an attractive tax-deferred sale structure for golf
course sellers. The Company believes its ability to issue OP Units and its
utilization of the multiple independent lessee structure, together with the
substantial industry knowledge, experience and relationships within the golf
community of Company management and the golf course lessees provide it with a
distinct competitive advantage in the acquisition of high quality golf
courses, including those which might not otherwise be available for purchase.
In February 1997, the Company raised net proceeds of approximately
$73 million in its initial public offering (the "IPO") and consummated the
transactions described below (collectively the "Formation Transactions"). In
the IPO the Company sold 3,910,000 shares of Common Stock at $21.00 per share
(including 510,000 shares sold pursuant to the underwriters' over-allotment
option, which was exercised in full). The Company contributed the net
proceeds of the IPO to the Operating Partnership in exchange for a 48.6%
interest in the Operating Partnership. Concurrently with the closing of the
IPO, the Operating Partnership acquired ten golf courses (the "Initial
Courses") from their prior owners (the "Prior Owners").
The ten Initial Courses are located in South Carolina (4), Virginia
(2), Alabama, Georgia, North Carolina and Texas. Title to the Initial
Courses is held by the Operating Partnership. The Initial Courses were
contributed by their Prior Owners to the Operating Partnership in exchange
for approximately $6.2 million in cash, the assumption of approximately $43.1
million of mortgage and other indebtedness and approximately 4.1 million OP
Units, which represent a 51% limited partnership interest in the Operating
Partnership. Control of the Operating Partnership remains in the hands of
the Company, as the sole general partner.
Concurrently with the closing of the IPO, the Initial Courses were
leased to newly formed entities (the "Initial Lessees"), each of whom is
affiliated with the Prior Owner of the leased course. The Company believes
it will benefit from the continuity of golf course management provided by the
Initial Lessees, whose affiliates developed and operated each of the Initial
Courses since their inception. Neither the Company nor its executive
officers own any interest in, or participate in the management of, the
Initial Lessees. The leases between the Operating Partnership, as lessor, and
17
<PAGE>
each Initial Lessee (the "Participating Leases") provide for the payment of
lease payments ("Lease Payments") comprised of minimum base rent ("Base Rent")
and participating rent based on growth in revenue at the Initial Course
("Participating Rent").
The Company currently has approximately $4.3 million of outstanding
indebtedness, which was incurred in connection with the acquisition of one of
the Initial Courses so as to minimize certain adverse tax consequences for
that course's Prior Owner.
The following discussion and analysis of financial condition and
results of operations of the Company, and certain Prior Owners and Initial
Lessees is based upon the Company's financial statements as of March 31,
1997, the pro forma condensed consolidated income statements of the Company
for the quarters ended March 31, 1996 and 1997, and the historical condensed
combined financial statements of The Legends Group, the accounting acquiror,
with respect to seven of the Initial Courses. The pro forma financial
information for the Company and the Initial Lessees reflects initial Base
Rent and, to the extent realized, Participating Rent.
RESULTS OF OPERATIONS OF THE COMPANY
For the period from February 12, 1997 to March 31, 1997, the Company
received $2,042,000 in revenue from the Participating Leases for the Initial
Courses.
Total expenses of $699,000 for the period from February 12 through
March 31, 1997 reflect depreciation and amortization, general and
administrative expenses and interest expense. Depreciation expense is based
on the Company's cost of acquiring the Initial Courses, except for the seven
Initial Courses acquired by the Company from The Legends Group. The
contribution of these seven Initial Courses is treated for accounting
purposes as a reorganization of the interests of Legends Golf in the
contributed courses and has been accounted for at historical cost.
Net income before minority interest for the period from February 12
through March 31, 1997 is $1,474,000.
LIQUIDITY AND CAPITAL RESOURCES OF THE COMPANY
Cash flow from operating activities for the period from February 12
through March 31, 1997, was $2,482,000. This reflects net income before
minority interest, plus non-cash charges to income for depreciation and loan
fee amortization and working capital changes. Cash flows used in investing
activities reflect net capital contributions of $54,555,000. Cash flows
provided by financing activities, totaling $76,622,000 represents the initial
borrowing of $4,325,000 in 1997 and net proceeds of the offering of
$73,055,000.
Concurrent with the closing of the IPO, the Company borrowed
approximately $4,325,000 which, together with the net proceeds of the IPO,
was used to retire mortgage indebtedness and other debt of the Prior Owners,
to fund the cash portion of the purchase of the Initial Courses and to
18
<PAGE>
provide approximately $24,119,700 in initial working capital. The Company
has agreed to maintain approximately $4,325,000 of indebtedness for up to 10
years to accommodate a Prior Owner's efforts to seek to minimize certain
adverse tax consequences from its contribution of one of the Initial Courses
to the Company. Additionally, the Company has signed a term sheet for a $75
million Line of Credit and is finalizing the documentation therefor to be
used primarily for the acquisition of additional golf courses, but a portion
of which may also be used for acquisition of the Expansion Facilities, for
capital expenditures or for general working capital purposes. The Company has
not, however, finalized the Line of Credit and there can be no assurance that
the Company will have access to sufficient debt and equity financing to
pursue its acquisition strategy. The Company anticipates that the Line of
Credit lender, NationsBank, N.A., will impose certain conditions on the
Company's ability to draw on the Line of Credit. If the Company is not able to
successfully finalize the Line of Credit, the Company anticipates that
future acquisitions would be funded with debt financing to be secured by the
particular acquisition property, or with proceeds of additional equity
offerings or OP Units. In the future, the Company may negotiate additional
credit facilities or issue corporate debt instruments. Any debt issued or
incurred by the Company may be secured or unsecured, long-term or short-term,
fixed or variable interest rate and may be subject to such other terms as
the Board of Directors deems prudent.
The Company's acquisition capabilities are enhanced by its initial
capital structure. The Company intends to maintain a capital structure with
consolidated indebtedness representing no more than 50 percent of its total
market capitalization.
The Company intends to invest in additional golf courses as suitable
opportunities arise, but the Company will not undertake investments unless
adequate sources of financing are available. Future acquisitions of golf
courses will be financed, in whole or in part, with proceeds from the Line of
Credit, additional issuances of OP Units or shares of Common Stock,
borrowings under financing arrangements or other securities issuances. The
Company currently has no agreement to acquire any additional golf courses,
and there can be no assurance that the Company will acquire any more golf
courses.
PRO FORMA RESULTS OF OPERATIONS OF THE COMPANY
On a pro forma basis for the quarters ended March 31, 1996, and
March 31, 1997, the Company would have received $2,821,000 and $3,785,000,
respectively, in revenue from the Participating Leases for the Initial
Courses. This amount does not include $929,000 in rent from Legends of
Virginia LC for the quarter ended March 31, 1996 related to its two courses,
Stonehouse Golf Club and Royal New Kent, because such courses opened in July
1996 and August 1996, respectively. As these golf courses are now fully
operational, the Company is contractually entitled to receive base rent of
approximately $14,988,000 in its first full year of operation.
Total pro forma expenses totaling $1,272,000 and $1,410,000 for the
quarters ended March 31, 1996 and 1997, respectively, reflect
depreciation and amortization, general and administrative expenses and
interest expense. Pro forma expenses
19
<PAGE>
for the quarter ended March 31, 1996 does not include depreciation related to
the Legends of Virginia Golf Courses totaling $304,000 related to the period
these courses were not operational in 1996. If these courses had been
operational in all of 1996, total pro forma expenses for the quarter ended
March 31, 1996 would have been $1,576,000.
Pro forma net income for the quarter ended March 31, 1996 is
$753,000 ($315,000 higher if the Legends of Virginia Initial Courses had been
fully operational). Pro forma net income for the quarter ended March 31,
1997 is $1,218,000.
THE LEGENDS GROUP RESULTS OF OPERATIONS
As part of the Formation Transactions, the Company acquired the
following seven Initial Courses from The Legends Group: Heritage Golf Club,
Heathland, Moorland, Parkland, Oyster Bay, Royal New Kent and Stonehouse Golf
Club. These seven Initial Courses are operated by four Legends Lessees. The
Legends Resort Courses -- Heathland, Moorland and Parkland -- share a common
clubhouse, driving range, golf carts and other facilities and are leased by a
single Legends Lessee pursuant to a single Participating Lease. The newly
opened Initial Courses --Royal New Kent and Stonehouse Golf Club -- are in
similar stages of operation and are leased by a single Legends Lessee
pursuant to separate Participating Leases. Each of the other two Legends
Initial Courses is leased by separate Legends Lessees.
The following discussion and analysis addresses the combined
historical results of operations of the Initial Courses contributed by The
Legends Group. However, the results of operations of such courses do not
purport to represent the pro forma results of operations of the Legends
Lessees or the Company and should not be used to assess the operating
performance of the Legends Lessees or the Company. Two of the Initial
Courses contributed by The Legends Group, Stonehouse Golf Club and Royal New
Kent, opened in June and August 1996, respectively.
For purposes of financial presentations, the term "Legends Golf"
refers to the combined operations of all seven Initial Courses contributed by
The Legends Group, and the term "Golf Legends" refers to operations of the
three Initial Courses located at the Legends Resort.
QUARTERS ENDED MARCH 31, 1996 AND 1997
Revenue from golf operations increased 7.5% from $3,727,000 to
$4,006,000 while the revenue per player decreased (principally as a result of
increased play in the initial months of the quarter when rates are lower)
from $58.06 to $55.22, while the total rounds played increased 13% from
64,193 to 72,552. The increase in the total number of rounds was due, in
addition to the lower rates, to the opening of the two Legends of Virginia
courses in mid-1996. Of the 12,717 increase in rounds, Legends of Virginia LC
accounted for 4,413 rounds and a total revenue increase of $271,000. The
increase in total revenues in 1997, due to the two new courses, approximated
$271,000.
20
<PAGE>
The number of rounds played significantly influences other revenue
sources, including food and beverage and merchandise sales. While the number
of rounds increased 13%, other revenue increased 15.9% to $1,101,000 from
$950,000 principally due to an 25.4% increase in food and beverage sales
resulting from additional demand created by occupants of the newly
constructed golf villas at the Legends Resort.
Operating expenses increased 105% to $5,711,000 from $2,788,000.
Principal components of the $2,923,000 increase were (i) initial operating
losses of approximately $1,579,000 associated with the two Legends of
Virginia courses opened in mid-1996, (ii) lease payments to Golf Trust, land
lease payments to the prior owner and depreciation expense totaling
$1,430,000 for 1997 compared to $647,000 for 1996 (an increase of $783,000)
when there were no lease payments to Golf Trust, (iii) food and beverage
operations of approximately $102,000 attributed to an increase in revenues
and (iv) an increase in repairs and maintenance expense.
Interest expense increased 86% to $408,000 from $220,000 as a result
of increased expense related to the Virgina courses where interest was
capitalized during construction in 1996, net of lower borrowings outstanding
related to debt for the courses which was transferred in connection with the
Formation Transaction's retirement of debt.
Net income decreased $2,681,000 from $1,669,000 to $(1,012,000).
21
<PAGE>
IMPORTANT FACTORS RELATED TO FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
The preceding section, "Management's Discussion and Analysis of
Financial Condition and Results of Operations," and other sections of this
Quarterly Report contain various "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, which represent the
Company's expectations or beliefs concerning future events, including,
without limitation, statements containing the words "believes,"
"anticipates," "expects" and words of similar import; and also including,
without limitation, the following: statements regarding the Company's
continuing ability to target and acquire high quality golf courses; the
expected availability of the Line of Credit and other debt and equity
financing; the sufficiency of the Company's working capital, cash flow and
financing to support the Company's future operating and capital requirements;
the Initial Lessees' future cash flows, results of operations and overall
financial performance; the planned acquisition and/or financing of certain
golf courses; the expected completion and acquisition of the Expansion
Facilities; the expected dividend distribution rate; the intended limit on
the Company's level of consolidated indebtedness; the expected tax treatment
of the Company's operations; the Company's beliefs about continued growth in
the golf industry; statements regarding the possible redemption of OP Units
and exercise of the Lessee Performance Options; and the expected completion
of real estate developments near certain Initial Courses. Such
forward-looking statements relate to future events and the future financial
performance of the Company and the industry and involve known and unknown
risks, uncertainties and other important factors which could cause actual
results, performance or achievements of the Company or industry to differ
materially from the future results, performance or achievements expressed or
implied by such forward-looking statements.
Investors should carefully consider the various factors identified
in the preceding section, "Management's Discussion and Analysis of Financial
Condition and Results of Operation," and elsewhere in this Quarterly Report
that could cause actual results to differ materially from the results
predicted in the forward-looking statements. Further, the Company
specifically cautions investors to consider the following important factors
in conjunction with the forward-looking statements: the possible decline in
the Company's ability to locate and acquire quality golf courses and to
negotiate acceptable lease terms; the possibility that negotiations regarding
the Line of Credit will fail; the possibility that Company management lacks
the skill to manage the Company's planned process of acquisitions and
expansions; the possible adverse effect of changing economic conditions,
including interest rate movements and changes in the real estate market both
locally and nationally; the effect of severe weather or natural disasters;
and the effect of competitive pressures from other golf course acquirors and
other golf course lessors. Because of the foregoing factors, the actual
results achieved by the Company in the future may differ materially from the
expected results described in the forward-looking statements.
22
<PAGE>
PART II--OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Not Applicable.
ITEM 2. CHANGES IN SECURITIES
Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual shareholders meeting for the year 1997 was scheduled by
the Board of Directors for January 28, 1997, with January 17, 1997 designated
as the record date for determination of shareholders entitled to vote. On
the record date, the sole shareholder was Mr. C.A. Hooks, Jr. The following
actions were taken by the written consent of Mr. Hooks acting without a
meeting as of January 28, 1997, pursuant to Section 2-505 of the General
Corporation Law of the State of Maryland and Article III, Section 12 of the
Company's original Articles of Incorporation permitting such action to be
taken.
1. The Articles of Amendment and Restatement of the Company (the
"Charter"), as recommended by the Board of Directors, were approved thereby
amending the Company's original Articles of Incorporation in order to provide
for listing of the Company's common stock on the American Stock Exchange and
to extend the expiration of the terms of each class of directors by one year
relative to the original Articles of Incorporation (the directors were not
classified until the initial public offering).
2. The Company's 1997 Non-Employee Directors' Plan and 1997 Stock
Incentive Plan were approved and adopted.
3. The three directors of the Company, W. Bradley Blair, II, David
J. Dick and Larry D. Young, whose terms were expiring pursuant to the
Articles of Incorporation, were re-elected. There were no other nominees.
On February 5, 1997, the Company's sole shareholder consented to the
Company's revocation of its election to be treated as an S corporation under
section 1362(a) of the Internal Revenue Code (the "Code"). The effective
date of the revocation was February 11, 1997, one day prior to the closing of
the IPO. As of May 7, 1997, C.A. Hooks, Jr. as the sole
23
<PAGE>
shareholder owning any stock during the short S year and the sole shareholder
owning stock on the first day of the short C year, consented to the Company's
election to close books upon S corporation termination (i.e. its election not
to have the pro rata allocation of S corporation items under section
1362(e)(2) of the Code apply to the S termination year).
ITEM 5. OTHER INFORMATION
Acting pursuant to the Charter and the Bylaws of the Company, on
February 6, 1997, the Board of Directors by resolution increased the
authorized number of directors from three to seven. Acting pursuant to
Section 2-407(b)(1)(ii) of the General Corporation Law of the State of
Maryland and Article VI, Section 4 of the Charter, the Board appointed Roy C.
Chapman, Raymond V. Jones, Fred W. Reams and Edward L. Wax as independent
directors to fill the four Board vacancies. Acting pursuant to the Charter,
the Board classified the directors as follows: Class I (with terms expiring
in 2000) is composed of Larry D. Young, Edward L. Wax and Fred W. Reams;
Class II (with terms expiring in 1999) is composed of W. Bradley Blair, II
and Raymond V. Jones; Class III (with terms expiring in 1998) is composed of
David J. Dick and Roy C. Chapman.
Concurrently with the initial public offering and acting pursuant to
Section 2-310 of the General Corporation Law of the State of Maryland, the
Company redeemed and acquired its one then-outstanding share of common stock,
such that upon their issuance the 3,910,000 shares of common stock issued in
the initial public offering comprised 100% of the issued and outstanding
shares of the Company's common stock. As of May 15, 1997, the Company has
issued no further shares of common stock.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
The following exhibits are part of this quarterly report on Form
10-Q for the quarterly period ended March 31, 1997 (and are numbered in
accordance with Item 601 of Regulation S-K).
Exhibit No. Description
- ----------- ------------------------------------------------------
3.1 Articles of Amendment and Restatement of the Company,
as filed with the State Department of Assessments and
Taxation of Maryland on January 31, 1997, (previously
filed as Exhibit 3.1A to the Company's Registration
Statement on Form S-11 (Commission File No. 333-15965)
Amendment No. 2 (filed January 30, 1997) and
incorporated herein by reference).
3.2 Bylaws of the Company as currently
in effect (previously filed as Exhibit 3.2 to the
Company's Registration Statement on Form S-11 (Commission
File No. 333-15965) Amendment No. 1 (filed January 15,
1997) and incorporated herein by reference).
10.1 First Amended and Restated Agreement of Limited
Partnership of the
24
<PAGE>
Operating Partnership (including Exhibit A
(schedule of partners and partnership interests) as
of March 24, 1997) (previously filed as Exhibit
10.1 to the Company's Annual Report on Form 10-K,
filed March 31, 1997 (Commission File No.
000-22091), and incorporated herein by reference).
10.2.0 Form of Participating Lease between the Operating
Partnership and the Initial Lessees relating to the
Initial Courses (previously filed as Exhibit 10.2
to the Company's Registration Statement on Form
S-11 (Commission File No. 333-15965) Amendment No.
1 (filed January 15, 1997) and incorporated herein
by reference).
10.2.1 Schedule of material differences among the Participating
Leases for the Initial Courses (included in lieu of
the full text of each lease pursuant to Instruction
2 to Item 601 of Regulation S-K) (previously filed
as Exhibit 10.2.1 to the Company's Annual Report on
Form 10-K, filed March 31, 1997 (Commission File
No. 000-22091), and incorporated herein by
reference).
10.3 Option to Purchase and Right of First Refusal
Agreement between (i) the Company and the Operating
Partnership and (ii) Larry D. Young dated as of
February 6, 1997 (previously filed as Exhibit 10.3
to the Company's Registration Statement on Form
S-11 (Commission File No. 333-15965) Amendment No.
2 (filed January 30, 1997) and incorporated herein
by reference).
10.4.0 Form of Contribution and Leaseback Agreement
between the Operating Partnership and the Prior
Owners relating to the Initial Courses (previously
filed as Exhibit 10.4 to the Company's Registration
Statement on Form S-11 (Commission File No.
333-15965) (filed November 12, 1996) and
incorporated herein by reference).
10.4.1 Schedule of material
differences among the Contribution and Leaseback
Agreements relating to the Initial Courses
(included in lieu of the full text of each
agreement pursuant to Instruction 2 to Item 601 of
Regulation S-K) (previously filed as Exhibit 10.4.1
to the Company's Annual Report on Form 10-K, filed
March 31, 1997 (Commission File No. 000-22091), and
incorporated herein by reference).
10.5 1997 Stock Incentive Plan of the Company (previously
filed as Exhibit 10.6 to the Company's Registration
Statement on Form S-11 (Commission File No.
333-15965) Amendment No. 1 (filed January 15, 1997)
and incorporated herein by reference).
10.6 1997 Non-Employee Directors' Plan (previously filed as
Exhibit 10.7 to the Company's Registration
Statement on Form S-11 (Commission File No.
333-15965) Amendment No. 1 (filed January 15, 1997)
and incorporated herein by reference).
25
<PAGE>
10.7 Employment Agreement between the Company and W. Bradley
Blair, II dated February 7, 1997 (previously filed as
Exhibit 10.7 to the Company's Annual Report on Form 10-K,
filed March 31, 1997 (Commission File No. 000-22091), and
incorporated herein by reference).
10.8 Employment Agreement between the Company and David J.
Dick dated February 7, 1997 (previously filed as Exhibit
10.8 to the Company's Annual Report on Form 10-K, filed
March 31, 1997 (Commission File No. 000-22091), and
incorporated herein by reference).
10.9 Employment Agreement between the Company and Scott D.
Peters dated February 7, 1997 (previously filed as
Exhibit 10.9 to the Company's Annual Report on Form 10-K,
filed March 31, 1997 (Commission File No. 000-22091), and
incorporated herein by reference).
16.1 Letter of Price Waterhouse LLP, former independent
accountants of the Company (previously filed as Exhibit
16.1 to the Company's amended Current Report on Form
8-K/A dated February 26, 1997 (filed March 17, 1997) and
incorporated herein by reference).
27.1 Financial Data Schedule
(b) REPORTS ON FORM 8-K
A Current Report on Form 8-K dated February 26, 1997, was filed on March 4,
1997 and amended on March 17, 1997. It contained disclosure under Items 4 and 7
regarding the Company's change in its certifying accountant.
26
<PAGE>
SIGNATURES
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, thereunto duly authorized.
GOLF TRUST OF AMERICA, INC., registrant
Date: /S/ W. Bradley Blair, II
----------------------------------------------------
W. Bradley Blair, II
PRESIDENT, CHIEF EXECUTIVE OFFICER AND
CHAIRMAN OF THE BOARD OF DIRECTORS
Date: /S/ Scott D. Peters
----------------------------------------------------
Scott D. Peters
SENIOR VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
<PAGE>
EXHIBIT INDEX
Pursuant to Item 601(a)(2) of Regulation S-K, this exhibit index
immediately precedes the exhibits.
Exhibit No. Description
- ----------- ------------------------------------------------------
3.1 Articles of Amendment and Restatement of the Company,
as filed with the State Department of Assessments and
Taxation of Maryland on January 31, 1997, (previously
filed as Exhibit 3.1A to the Company's Registration
Statement on Form S-11 (Commission File No. 333-15965)
Amendment No. 2 (filed January 30, 1997) and
incorporated herein by reference).
3.2 Bylaws of the Company as currently
in effect (previously filed as Exhibit 3.2 to the
Company's Registration Statement on Form S-11 (Commission
File No. 333-15965) Amendment No. 1 (filed January 15,
1997) and incorporated herein by reference).
10.1 First Amended and Restated Agreement of Limited
Partnership of the Operating Partnership (including
Exhibit A (schedule of partners and partnership
interests) as of March 24, 1997) (previously filed as
Exhibit 10.1 to the Company's Annual Report on Form 10-K,
filed March 31, 1997 (Commission File No. 000-22091),
and incorporated herein by reference).
10.2.0 Form of Participating Lease between the Operating
Partnership and the Initial Lessees relating to the
Initial Courses (previously filed as Exhibit 10.2
to the Company's Registration Statement on Form
S-11 (Commission File No. 333-15965) Amendment No.
1 (filed January 15, 1997) and incorporated herein
by reference).
10.2.1 Schedule of material differences among the Participating
Leases for the Initial Courses (included in lieu of
the full text of each lease pursuant to Instruction
2 to Item 601 of Regulation S-K) (previously filed
as Exhibit 10.2.1 to the Company's Annual Report on
Form 10-K, filed March 31, 1997 (Commission File
No. 000-22091), and incorporated herein by
reference).
10.3 Option to Purchase and Right of First Refusal
Agreement between (i) the Company and the Operating
Partnership and (ii) Larry D. Young dated as of
February 6, 1997 (previously filed as Exhibit 10.3
to the Company's Registration Statement on Form
S-11 (Commission File No. 333-15965) Amendment No.
2 (filed January 30, 1997) and incorporated herein
by reference).
10.4.0 Form of Contribution and Leaseback Agreement
between the Operating Partnership and the Prior
Owners relating to the Initial Courses (previously
filed as Exhibit 10.4 to the Company's Registration
Statement on Form S-11 (Commission File No.
333-15965) (filed November 12, 1996) and
incorporated herein by reference).
10.4.1 Schedule of material
differences among the Contribution and Leaseback
Agreements relating to the Initial Courses
(included in lieu of the full text of each
agreement pursuant to Instruction 2 to Item 601 of
Regulation S-K) (previously filed as Exhibit 10.4.1
to the Company's Annual Report on Form 10-K, filed
March 31, 1997 (Commission File No. 000-22091), and
incorporated herein by reference).
10.5 1997 Stock Incentive Plan of the Company (previously
filed as Exhibit 10.6 to the Company's Registration
Statement on Form S-11 (Commission File No.
333-15965) Amendment No. 1 (filed January 15, 1997)
and incorporated herein by reference).
10.6 1997 Non-Employee Directors' Plan (previously filed as
Exhibit 10.7 to the Company's Registration
Statement on Form S-11 (Commission File No.
333-15965) Amendment No. 1 (filed January 15, 1997)
and incorporated herein by reference).
10.7 Employment Agreement between the Company and W. Bradley
Blair, II dated February 7, 1997 (previously filed as
Exhibit 10.7 to the Company's Annual Report on Form 10-K,
filed March 31, 1997 (Commission File No. 000-22091), and
incorporated herein by reference).
10.8 Employment Agreement between the Company and David J.
Dick dated February 7, 1997 (previously filed as Exhibit
10.8 to the Company's Annual Report on Form 10-K, filed
March 31, 1997 (Commission File No. 000-22091), and
incorporated herein by reference).
10.9 Employment Agreement between the Company and Scott D.
Peters dated February 7, 1997 (previously filed as
Exhibit 10.9 to the Company's Annual Report on Form 10-K,
filed March 31, 1997 (Commission File No. 000-22091), and
incorporated herein by reference).
16.1 Letter of Price Waterhouse LLP, former independent
accountants of the Company (previously filed as Exhibit
16.1 to the Company's amended Current Report on Form
8-K/A dated February 26, 1997 (filed March 17, 1997) and
incorporated herein by reference).
27.1 Financial Data Schedule
27
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM GOLF TRUST
OF AMERICA INC'S FORM 10-Q FOR THE PERIOD FROM FEBRUARY 12, 1997 TO MARCH 31,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> FEB-12-1997
<PERIOD-END> MAR-31-1997
<CASH> 24,549
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 73,357
<DEPRECIATION> 11,173
<TOTAL-ASSETS> 86,884
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 4,325
0
0
<COMMON> 39
<OTHER-SE> 81,707<F2>
<TOTAL-LIABILITY-AND-EQUITY> 86,884
<SALES> 2,042
<TOTAL-REVENUES> 2,042
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 659
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 40
<INCOME-PRETAX> 1,474<F3>
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,474<F3>
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,474<F3>
<EPS-PRIMARY> .17
<EPS-DILUTED> .17
<FN>
<F1>As Real Estate Investment Trust our balance sheet is not classified.
<F2>Inlcudes Minority Interest, Retained Earnings and paid in capital.
<F3>Net income before minority interest.
</FN>
</TABLE>
