<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES ACT OF 1934
For quarterly period ended March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number: 333-61433
EPIC RESORTS, LLC
(Exact name of registrant as specified in its charter)
DELAWARE 23-2888968
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
1150 FIRST AVENUE, SUITE 900 19407
KING OF PRUSSIA, PA (Zip Code)
(Address of principal executive offices)
(610) 992-0100
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
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Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
As of March 31, 1999, 1,118,000 membership interests of the registrant
were outstanding.
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PART I. - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
EPIC RESORTS, LLC
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
March 31, December 31,
1999 1998
---- ----
<S> <C> <C>
ASSETS
------
Cash and cash equivalents $ 11,994,000 $ 16,095,000
Cash in escrow 8,779,000 8,586,000
Investment in residual interests 17,356,000 15,223,000
Mortgages receivable, net of allowance of $1,523,000 and $991,000 as of March 31, 1999 16,598,000 11,771,000
and December 31, 1998, respectively
Inventory 71,583,000 73,042,000
Property and equipment, net 12,986,000 11,909,000
Deferred financing costs, net 6,347,000 6,823,000
Other assets 3,812,000 3,324,000
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$ 149,455,000 $ 146,773,000
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Total assets
LIABILITIES AND MEMBER'S EQUITY
-------------------------------
Accounts payable $ 1,550,000 $ 1,154,000
Accrued expenses 653,000 1,743,000
Accrued interest payable 4,961,000 736,000
Advance deposits 94,000 76,000
Deferred revenue 405,000 268,000
Notes payable 620,000 621,000
Senior secured notes payable 127,530,000 127,432,000
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Total liabilities 135,813,000 132,030,000
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Commitments and contingencies -- --
Warrants 2,757,000 2,757,000
Member's equity 10,885,000 11,986,000
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Total liabilities and member's equity $ 149,455,000 $ 146,773,000
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</TABLE>
The accompanying notes and management assumptions are an integral part of
these financial statements.
3
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EPIC RESORTS, LLC
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months Ended March 31
1999 1998
---- ----
<S> <C> <C>
Revenue:
Sales of vacation ownership interests $ 15,651,000 $ 7,413,000
Resort operations 3,450,000 1,497,000
Gain on sales of receivables 1,780,000 --
Other income 720,000 1,199,000
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21,601,000 10,109,000
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Costs and expenses:
Cost of sales of vacation ownership interests 3,127,000 1,795,000
Resort operations 3,680,000 938,000
Selling and marketing costs 6,648,000 2,903,000
General and administrative 3,298,000 793,000
Provision for doubtful accounts 735,000 327,000
Depreciation 212,000 198,000
Financing and closing costs 140,000 222,000
Interest expense 4,799,000 1,017,000
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22,639,000 8,194,000
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(Loss) income before minority interest (1,038,000) 1,915,000
Minority interest -- 543,000
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Net (loss) income $ (1,038,000) $ 1,372,000
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</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
EPIC RESORTS, LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
For the three months ended
March 31,
1999 1998
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (1,038,000) $ 1,372,000
Adjustments to reconcile net income (loss) to net cash used in operating activities-
Depreciation 212,000 198,000
Amortization of financing costs 573,000 43,000
Provision for doubtful accounts 735,000 327,000
Gain on sales of receivables (1,780,000) --
Minority interest -- 543,000
Change in assets and liabilities--
Mortgages receivable (10,896,000) (3,738,000)
Inventory of vacation ownership intervals 1,459,000 731,000
Other assets (488,000) (491,000)
Accounts payable 396,000 (167,000)
Accrued expenses (1,090,000) 159,000
Accrued interest payable 4,225,000 (56,000)
Advance deposits 18,000 216,000
Deferred revenue 137,000 --
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Net cash used in operating activities (7,537,000) (863,000)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (1,288,000) (223,000)
Investment in residual interests (2,133,000) --
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Net cash used in investing activities (3,421,000) (223,000)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable -- 5,340,000
Payments on notes payable (1,000) (3,908,000)
Payment of deferred financing costs -- (559,000)
Interest escrows (193,000) (149,000)
Proceeds from sales of receivables 7,121,000 --
Contributions from sole member -- 163,000
Distributions to sole member (70,000) --
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Net cash provided by financing activities 6,857,000 887,000
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NET DECREASE IN CASH AND CASH EQUIVALENTS (4,101,000) (199,000)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 16,095,000 248,000
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CASH AND CASH EQUIVALENTS, END OF PERIOD $ 11,994,000 $ 49,000
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $ 1,000 $ 1,005,000
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</TABLE>
The accompanying notes are an integral part of these financial statements
5
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EPIC RESORTS, LLC
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
1. BASIS OF PRESENTATION:
The consolidated financial statements have been prepared by the
Registrant, pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Registrant believes that the disclosures are adequate
to make the information presented not misleading. It is suggested that these
consolidated financial statements be read in conjunction with the audited
financial statements and the notes thereto included in the Registrant's latest
annual report on Form 10-K. In the opinion of the Registrant, all adjustments,
consisting only of normal recurring adjustments, necessary to present fairly the
consolidated financial position and the consolidated results of its operations
and its cash flows, have been included. The results of operations for such
interim periods are not necessarily indicative of the results for the full year.
2. NATURE OF BUSINESS:
Epic Resorts, LLC (a sole-member Delaware Limited Liability Company)
and its wholly-owned subsidiaries (the "Company") generate revenue from the sale
and financing of vacation ownership interests in its resorts. Customers acquire
the right to use a fully-furnished vacation residence, generally for a one-week
period each year, in perpetuity ("Vacation Ownership Interests"). The Company's
principal operations consist of (i) acquiring, developing and operating vacation
ownership resort locations, (ii) marketing and selling Vacation Ownership
Interests in its resorts, and (iii) providing customer financing to individual
purchasers of Vacation Ownership Interests at its resorts. The Company also
generates income from the transient rental of resort accommodations.
Beginning in the first quarter of 1999, the Company began selling
membership interests into Epic Vacation Club (the "Club"), a Delaware nonprofit
mutual benefit corporation formed in 1998, at all of its resorts. The Club was
formed for the specific purpose of owning and managing the real property
conveyed to it by the Company and its resort subsidiaries. The Club provides
purchasers significant flexibility in their vacation planning, a wider variety
of vacation options and easier access to the Company's network of resorts. The
Club sells points, which entitle the customer to reserve units at any of the
Company's six resorts in increments as short as one day. The number of
points required to stay one day at one of the Company's resorts varies depending
upon the particular resort, the size of the unit, the season and the day of the
week.
3. RELATED PARTY TRANSACTIONS:
The Company has accrued $1,071,000 and $829,000 as of March 31, 1999
and December 31, 1998, respectively, as a receivable from various homeowners'
associations at its resorts. The Company generally accrues receivables from
homeowners' associations for management fees and certain other expenses paid on
behalf of the homeowners' associations. This receivable is included in other
assets in the accompanying consolidated balance sheets.
4. SEGMENT AND GEOGRAPHIC INFORMATION:
The Company operates in one industry segment, which includes the
development, acquisition, marketing, selling, financing, and management of
vacation ownership resorts. The Company does not operate outside of the
United States. The Company's customers are not concentrated in any specific
geographic region and no single customer accounts for a significant amount of
the Company's sales.
6
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this amendment to its quarterly report on
Form 10-Q to be signed on its behalf by the undersigned thereunto duly
authorized.
EPIC RESORTS, LLC
Dated: MAY 14, 1999 By: /s/ Scott J. Egelkamp
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Scott J. Egelkamp
President and Chief Financial Officer
(Duly Authorized Principal Financial
Officer)
