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Previous: FIRST TRUST OF INSURED MUNICIPAL BONDS SERIES 45, 24F-2NT, 1995-05-11 |
Next: PRICE T ROWE INTERNATIONAL FUNDS INC, 497, 1995-05-11 |
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
--------------
OR
( ) 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: No 1934 act file number assigned
(1933 act file no. 2-65481)
SADDLEBROOK RESORTS, INC.
-------------------------
(Exact name of registrant as specified in its charter)
Florida 59-1917822
------- ----------
(State of incorporation) (IRS employer identification no.)
5700 Saddlebrook Way, Wesley Chapel, Florida 33543-4499
-------------------------------------------------------
(Address of principal executive offices)
813-973-1111
------------
(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
----- -----
Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date:
Not Applicable*
---------------
* Registrant has no common stock subject to this annual report.
Page 1 of 13
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Saddlebrook Resorts, Inc.
Balance Sheets at March 31, 1995 and December 31, 1994 3
Statements of Operations for the three months ended March 31, 1995
and 1994 4
Statements of Cash Flows for the three months ended March 31, 1995
and 1994 5
Notes to Financial Statements 6
Saddlebrook Rental Pool Operation
Balance Sheets at March 31, 1995 and December 31, 1994 8
Statements of Operations for the three months ended March 31, 1995
and 1994 9
Statements of Changes in Participants' Fund Balance for the three months
ended March 31, 1995 and 1994 10
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Saddlebrook Resorts, Inc. 11
Saddlebrook Rental Pool Operation 12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 6. Exhibits and Reports on Form 8-K 13
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
SADDLEBROOK RESORTS, INC.
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
----------------- ----------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 537,635 $ 595,502
Escrowed cash deposits 41,647 120,010
Escrowed short-term investments 382,648 382,648
Accounts receivable, net 5,212,338 2,314,631
Related parties receivable 100,391 117,827
Inventory and supplies 1,263,808 1,327,484
Prepaid expenses and other assets 407,103 445,800
----------------- ----------------
Total current assets 7,945,570 5,303,902
Escrowed long-term investments 399,407 399,407
Property, buildings and equipment, net 22,154,755 21,549,219
Intangible assets and deferred charges, net 282,874 304,075
----------------- ----------------
$ 30,782,606 $ 27,556,603
================= ================
Liabilities and Shareholder's Equity
Current liabilities:
Current portion of notes payable $ 1,694,047 $ 1,231,547
Escrowed deposits 823,702 902,065
Accounts payable 829,860 997,904
Accrued rental distribution 2,238,198 1,265,856
Accrued payroll and related expenses 504,932 678,330
Accrued interest 127,209 120,686
Accrued taxes 240,551 36,519
Guest deposits 516,605 724,761
Other liabilities and accrued expenses 769,691 1,256,145
Due to related parties 1,622,697 1,324,099
----------------- ----------------
Total current liabilities 9,367,492 8,537,912
Notes payable due after one year 16,178,754 16,212,522
----------------- ----------------
Total liabilities 25,546,246 24,750,434
----------------- ----------------
Shareholder's equity:
Common stock, $1.00 par value, 100,000 shares
authorized and outstanding 100,000 100,000
Additional paid-in capital 1,013,127 1,013,127
Accumulated earnings 4,123,233 1,693,042
----------------- ----------------
Total shareholder's equity 5,236,360 2,806,169
----------------- ----------------
$ 30,782,606 $ 27,556,603
================= ================
</TABLE>
The accompanying Notes to Financial Statements are
an integral part of these financial statements
3
<PAGE> 4
SADDLEBROOK RESORTS, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
------------------------------
1995 1994
------------- -------------
<S> <C> <C>
Revenues $ 12,569,161 $ 11,185,267
------------- -------------
Costs and expenses:
Operating costs 7,529,931 6,464,416
Sales and marketing 793,315 684,567
General and administrative 886,865 832,846
Depreciation and amortization 293,493 259,910
Interest 325,684 281,070
------------- -------------
Total costs and expenses 9,829,288 8,522,809
------------- -------------
Net income 2,739,873 2,662,458
Distribution to shareholder (309,682) (111,622)
Accumulated earnings at beginning of period 1,693,042 783,189
------------- -------------
Accumulated earnings at end of period $ 4,123,233 $ 3,334,025
============= =============
</TABLE>
The accompanying Notes to Financial Statements are
an integral part of these financial statements
4
<PAGE> 5
SADDLEBROOK RESORTS, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
-------------------------------
1995 1994
-------------- --------------
<S> <C> <C>
Operating activities:
Net income $ 2,739,873 $ 2,662,458
Non-cash items included in net income:
Provision for doubtful accounts 6,200 --
Depreciation and amortization 293,493 259,910
(Increase) decrease in:
Accounts receivable (2,903,907) (2,311,033)
Inventory and supplies 63,676 108,167
Prepaid expenses 38,697 162,536
Increase (decrease) in:
Accounts payable (168,044) 325,021
Accrued expenses 314,889 569,818
Net payable to related parties 316,034 274,057
-------------- --------------
700,911 2,050,934
-------------- --------------
Investing activities:
Capital expenditures (877,828) (457,573)
-------------- --------------
(877,828) (457,573)
-------------- --------------
Financing activities:
Notes payable borrowings 500,000 --
Payments on notes payable (71,268) (20,845)
Distribution to shareholder (309,682) (111,622)
-------------- --------------
119,050 (132,467)
-------------- --------------
Net increase (decrease) in cash (57,867) 1,460,894
Cash at beginning of period 595,502 302,872
-------------- --------------
Cash at end of period $ 537,635 $ 1,763,766
============== ==============
Cash paid for interest $ 357,366 $ 277,853
============== ==============
</TABLE>
The accompanying Notes to Financial Statements are
an integral part of these financial statements.
5
<PAGE> 6
SADDLEBROOK RESORTS, INC.
NOTES TO FINANCIAL STATEMENTS
Note 1. Basis of Presentation
The accompanying balance sheets and statements of operations and cash flows are
unaudited but reflect all adjustments which are, in the opinion of management,
necessary for a fair presentation of the results for the interim periods
presented. All such adjustments are of a normal recurring nature.
The Registrant's business is seasonal. Therefore, the results of operations for
the interim periods shown in this report are not necessarily indicative of
results to be expected for the fiscal year.
These financial statements and related notes are presented for interim periods
in accordance with the requirements of Form 10-Q and consequently, do not
include all disclosures normally provided in the Registrant's Annual Report on
Form 10-K. Accordingly, these financial statements and related notes should be
read in conjunction with the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1994.
Certain amounts from the December 31, 1994 financial statements have been
reclassified in order to conform to the current financial statement
presentation in this Form 10-Q.
Note 2. Accounts Receivable
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
----------------- -----------------
<S> <C> <C>
Trade accounts receivable $ 5,309,711 $ 2,414,321
Less reserve for bad debts (97,373) (99,690)
----------------- -----------------
$ 5,212,338 $ 2,314,631
================= =================
</TABLE>
Note 3. Fixed Assets
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
----------------- -----------------
<S> <C> <C>
Land and land improvements $ 4,478,982 $ 4,478,982
Buildings and recreational facilities 17,131,024 17,129,142
Furnishings and equipment 6,197,988 5,614,055
Construction in progress 2,058,667 1,766,654
----------------- -----------------
29,866,661 28,988,833
Less accumulated depreciation (7,711,906) (7,439,614)
----------------- -----------------
$ 22,154,755 $ 21,549,219
================= =================
</TABLE>
6
<PAGE> 7
Note 4. Intangible assets and deferred charges
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
----------------- -----------------
<S> <C> <C>
Noncompete agreement with prior owner $ 1,000,000 $ 1,000,000
Management contract with prior owner 500,000 500,000
Acquisition costs 41,577 41,577
Refinancing costs 424,014 424,014
----------------- -----------------
1,965,591 1,965,591
Less accumulated amortization (1,682,717) (1,661,516)
----------------- -----------------
$ 282,874 $ 304,075
================= =================
</TABLE>
Note 5. Notes Payable
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
----------------- -----------------
<S> <C> <C>
Note payable to bank, variable rate currently 8.125% $ 15,651,000 $ 15,651,000
Note payable to bank, variable rate currently 6.825% 314,800 323,800
Line of credit at bank, variable rate currently 10% 1,334,006 1,383,008
Line of credit at bank, variable rate currently 10% 500,000 --
Capital leases 72,995 86,261
----------------- -----------------
17,872,801 17,444,069
Less current portion (1,694,047) (1,231,547)
----------------- -----------------
$ 16,178,754 $ 16,212,522
================= =================
</TABLE>
The Registrant is also currently the guarantor of amounts that are owed by its
sole shareholder and an affiliated company of $670,000 and $779,000,
respectively.
Note 6. Income Taxes
The Registrant has elected S Corporation status. Accordingly, the Registrant
has had no income tax expense since the election as the tax is assessed at the
shareholder level.
7
<PAGE> 8
SADDLEBROOK RENTAL POOL OPERATION
BALANCE SHEETS
(Unaudited)
DISTRIBUTION FUND
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
----------------- -----------------
<S> <C> <C>
Assets
Receivable from Saddlebrook Resorts, Inc. $ 2,156,237 $ 1,267,078
================= =================
Liabilities and Participants' Fund Balance
Due to participants $ 1,765,421 $ 1,042,311
Due to maintenance escrow fund 390,816 224,767
Participants' fund balance -- --
----------------- -----------------
$ 2,156,237 $ 1,267,078
================= =================
</TABLE>
MAINTENANCE ESCROW FUND
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
----------------- -----------------
<S> <C> <C>
Assets
Cash and cash equivalents $ 25,147 $ 101,335
Investments 782,055 782,055
Receivables:
Distribution fund 390,816 224,767
Interest 19,343 9,106
Prepaid maintenance 141,012 69,317
----------------- -----------------
$ 1,358,373 $ 1,186,580
================= =================
Liabilities and Participants' Fund Balance
Accounts payable $ 255,146 $ 187,224
Participants' fund balance 1,103,227 999,356
----------------- -----------------
$ 1,358,373 $ 1,186,580
================= =================
</TABLE>
8
<PAGE> 9
SADDLEBROOK RENTAL POOL OPERATION
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
------------------------------
1995 1994
------------- -------------
<S> <C> <C>
Rental pool revenue $ 5,318,538 $ 4,251,581
------------- -------------
Deductions:
Marketing expense 398,890 318,869
Management expense 664,817 531,448
Travel agent commissions 282,183 193,760
Credit card expense 49,490 37,843
------------- -------------
1,395,380 1,081,920
------------- -------------
Net rental income 3,923,158 3,169,661
Less operator share of net rental income (1,765,421) (1,426,347)
Other revenues (expenses):
Complimentary room revenues 31,850 30,147
Minor repairs and replacements (33,350) (26,978)
------------- -------------
Amount available for distribution $ 2,156,237 $ 1,746,483
============= =============
</TABLE>
9
<PAGE> 10
SADDLEBROOK RENTAL POOL OPERATION
STATEMENTS OF CHANGES IN PARTICIPANTS' FUND BALANCE
(Unaudited)
DISTRIBUTION FUND
<TABLE>
<CAPTION>
Three months ended
March 31,
------------------------------
1995 1994
------------- -------------
<S> <C> <C>
Balance at beginning of period $ -- $ --
Additions:
Amount available for distribution 2,156,237 1,746,483
Reductions:
Amount withheld for maintenance escrow fund (390,816) (320,136)
Amount accrued of paid to participants (1,765,421) (1,426,347)
------------- -------------
Balance at end of period $ -- $ --
============= =============
</TABLE>
MAINTENANCE ESCROW FUND
<TABLE>
<CAPTION>
Three months ended
March 31,
------------------------------
1995 1994
------------- -------------
<S> <C> <C>
Balance at beginning of period $ 999,356 $ 1,048,576
Additions:
Amount withheld from distribution fund 390,816 320,136
Unit owner payments 25,519 40,205
Interest earned 11,936 6,443
Reductions:
Escrow account refunds (182,245) (184,713)
Maintenance charges (87,904) (29,243)
Major unit upgrades (22,600) (126,177)
Linen replacement (31,651) (6,268)
------------- -------------
Balance at end of period $ 1,103,227 $ 1,068,959
============= =============
</TABLE>
10
<PAGE> 11
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
The Registrant's operations are seasonal with the highest volume of sales
occurring during the first quarter of each calendar year. The third quarter has
historically had the lowest volume of sales of the fiscal period and the second
and fourth quarters have historically had marginal financial performance.
Accordingly, the Registrant experienced an improvement in its financial
condition as of March 31, 1995 when compared with its fiscal year-end of
December 31, 1994. The primary effect of this seasonal period was an increase
in accounts receivable and accumulated earnings.
The Registrant completed the construction of a renovation and expansion of its
hotel lobby, lobby terrace and Polo Lounge at a total cost of approximately
$1,430,000. The project has been partially funded by financing from the
Registrant's line of credit for capital additions discussed below. Several
other smaller capital improvements have been completed. However, there were no
other major capital additions or improvements during the three months ended
March 31, 1995. No other significant capital projects are anticipated in the
remaining fiscal period. Future operating costs and planned expenditures for
minor additions and improvements are expected to be funded by the resort
operations of the Registrant or by additional financing within the terms of the
Registrant's debt agreement.
The Registrant's debt agreement includes a line of credit of $1,500,000 which
is limited to the value of certain accounts receivable, inventories and
equipment of the Registrant and an affiliate. As of March 31, 1995, this full
line of credit was available and a draw of $500,000 was outstanding. The
Registrant has obtained an additional line of credit from the same lender of
$3,500,000 which may be used to finance capital additions. As of March 31,
1995, $1,334,000 is outstanding on this line of credit (see Note 5. Notes
Payable of the Notes to the Financial Statements in Part I, Item 1 of this Form
10-Q, which is incorporated herein by reference).
The Registrant has additional financing that is available related to the matter
that is discussed in Part II, Item 1. Legal Proceedings of this Form 10-Q,
which is incorporated herein by reference.
Results of Operations
Total revenues increased $1,384,000 or 12% for the first quarter of 1995 when
compared with the same period in 1994. This improvement is a result of
increases in occupied unit nights, average daily rate and number of guests in
the hotel for the current period over the same period in 1994. Anticipated
occupied unit nights for the remainder of 1995 and subsequent fiscal periods
indicate a continuation of this gradual growth trend.
Net income for the first quarter of 1995 increased $77,000 or 3% from the net
income for the same period in 1994. This improvement is primarily due to the
increased revenues offset by increased general costs of operation. Net income
also suffered from an increase in interest expense due to draws for
construction expenditures and higher interest rates for the Registrant's debt
which are related to an increase in the prime lending rate for the current
period when compared to the prior year.
Due to the seasonal business of the Registrant, the results of operations for
the interim periods shown in this report are not necessarily indicative of
results to be expected for the full fiscal period.
11
<PAGE> 12
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Saddlebrook Rental Pool Operation
The results of the Saddlebrook Rental Pool Operation (the "Rental Pool") are
directly related to the hotel operations of the Registrant. The Registrant
operates the Rental Pool which provides for the distribution of a percentage of
net rental income to participating condominium owners. Rental pool income is
shared according to the provisions of an agreement and the level of the
Registrant's occupancy directly impacts revenues and expenses used to determine
this income.
The average occupancies for the quarters ended March 31, 1995 and 1994 were 64%
and 57%, respectively. The average distributions of net rental income per
participating condominium unit for the same periods were $3,978 and $3,246,
respectively. This increase in average net rental income was primarily due to
the increase in average occupancy.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On May 12, 1989, the Circuit Court of the Sixth Judicial Circuit in and for
Pasco County, Florida, in the lawsuit, James H. Porter and Martha Porter,
Trustees, et al v. Saddlebrook Resorts, Inc. and the County of Pasco, Florida,
Case No. 83-1860, entered a judgment against Registrant in the amount of
$8,082,000 relating to damages to adjacent property for surface water effects.
In addition, an injunction was entered to remediate damages relating thereto.
On October 14, 1989, the Registrant and Pittway Corporation entered into an
agreement and on July 16, 1993 an amended agreement, to split equally the costs
of the defense of the litigation, the ultimate judgment and the mandated
remedial work. The agreements provide for Pittway Corporation to make
subordinated loans to Registrant, if required, to enable Registrant to pay for
its half of these costs.
On March 18, 1992, the Florida Second District Court of Appeal issued an
opinion reversing and vacating the jury verdict and judgment against Registrant
and ordering a new trial. On December 22, 1993, the Registrant filed a motion
for summary judgment in the trial court on grounds that the findings in
Registrant's favor by an administrative law judge in a related proceeding bar
further litigation of this matter. An order granting the summary judgment and
dismissing the action was entered on January 7, 1995. An appeal of said order
is presently pending. Management currently believes that the Registrant's
position in further litigation would be meritorious.
The Registrant is involved in other litigation in the ordinary course of
business. In the opinion of management, these matters are adequately covered by
insurance or indemnification from other third parties. The effect, if any, of
these claims is, in management's opinion, immaterial to the Registrant's
financial condition and results of operations.
12
<PAGE> 13
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
27 Financial Data Schedule (for SEC use only)
(b) The Registrant was not required to file a Form 8-K during the
three months ended March 31, 1995.
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.
SADDLEBROOK RESORTS, INC.
-------------------------
(Registrant)
Date: May 11, 1995 /s/ Donald L. Allen
------------------ ----------------------------
Donald L. Allen
Vice President and Treasurer
(Principal Financial and
Accounting Officer)
13
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 537,635
<SECURITIES> 782,055
<RECEIVABLES> 5,309,711
<ALLOWANCES> 97,373
<INVENTORY> 1,263,808
<CURRENT-ASSETS> 7,945,570
<PP&E> 29,866,661
<DEPRECIATION> 7,711,906
<TOTAL-ASSETS> 30,782,606
<CURRENT-LIABILITIES> 9,367,492
<BONDS> 0
<COMMON> 100,000
0
0
<OTHER-SE> 1,013,127
<TOTAL-LIABILITY-AND-EQUITY> 30,782,606
<SALES> 12,569,161
<TOTAL-REVENUES> 12,569,161
<CGS> 0
<TOTAL-COSTS> 9,503,604
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 325,684
<INCOME-PRETAX> 2,739,873
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,739,873
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,739,873
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
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