<PAGE> 1
F O R M 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
--------------------
Quarterly Report Pursuant to Section 13 or 15 (d)
of The Securities Exchange Act of 1934
--------------------
For Quarter Ended September 30, 1997
Commission File No. 2-64309
GOLF HOST RESORTS, INC.
STATE OF COLORADO EMPLOYER IDENTIFICATION NO. 84-0631130
Post Office Drawer 3131, Durango, Colorado 81302
Telephone Number (303) 259-2000
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 twelve months, and (2) has been subject to the filing
requirements for the past 90 days. - Yes X No ____
Issuer has no common stock subject to this report.
Page 1 of 19
<PAGE> 2
GOLF HOST RESORTS, INC.
(A WHOLLY OWNED SUBSIDIARY OF GOLF HOSTS, INC.)
BALANCE SHEETS
ASSETS
(Substantially all pledged - Notes 2 and 3)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
(unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 4,901,703 $ 488,685
Accounts receivable 3,560,600 4,380,108
Notes receivable -- 163,942
Inventories and supplies 4,828,631 5,123,966
Prepaid expenses and other 1,096,481 956,054
Intercompany receivables 586,821 724,312
----------- -----------
Total current assets 14,974,236 11,837,067
INTANGIBLES 17,207,148 --
PROPERTY AND EQUIPMENT, at cost
less accumulated depreciation
and amortization 45,125,577 40,038,322
OTHER DEFERRED CHARGES 699,426 238,627
LONG-TERM RECEIVABLES, less
amounts currently due -- 1,021,178
----------- -----------
$78,006,387 $53,135,194
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
Page 2
<PAGE> 3
GOLF HOST RESORTS, INC.
(A WHOLLY OWNED SUBSIDIARY OF GOLF HOSTS, INC.)
BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
(unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 3,810,858 $ 2,258,702
Accrued expenses 4,867,739 4,577,981
Deposits and prepaid fees 2,549,645 2,755,297
Notes payable -- 734,429
Maturing long-term obligations -- 2,788,764
----------- -----------
Total current liabilities 11,228,242 13,115,173
----------- -----------
LONG-TERM OBLIGATIONS,
less current maturities 76,848,748 17,777,544
----------- -----------
LONG-TERM INTERCOMPANY 3,302,968 4,951,895
----------- -----------
LONG-TERM CONTINGENCY -- 2,221,938
----------- -----------
SHAREHOLDERS' INVESTMENT:
Common stock, $1 par, 5,000
shares authorized and out-
standing 5,000 5,000
5.6% cumulative preferred
stock, $1 par, 4,577,000
shares authorized and
outstanding 4,577,000 4,577,000
Paid-in capital (13,557,000) 2,329,447
Retained (deficit) equity (4,398,571) 8,157,197
----------- -----------
Total shareholders' (Deficit) Equity (13,373,571) 15,068,644
----------- -----------
$78,006,387 $53,135,194
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 3
<PAGE> 4
GOLF HOST RESORTS, INC.
STATEMENTS OF INCOME
(a wholly owned subsidiary of Golf Hosts, Inc.)
(unaudited)
<TABLE>
<CAPTION>
Quarters Ended September 30 174 Day 99 Day Nine Months
------------------------------ Period Ended Period Ended
1997 1996 June 23, 1997 September 30, 1997 September 30, 1996
------------ ------------ ------------- ------------------ ------------------
<S> <C> <C> <C> <C> <C>
REVENUES:
Hotel $ 3,460,723 $ 4,015,763 $ 10,775,626 $ 3,807,006 $15,024,753
Food and beverage 2,331,983 2,978,483 8,106,385 2,607,673 11,615,409
Golf 2,970,131 2,801,712 9,347,282 3,176,358 12,321,416
Other 944,151 1,167,186 3,340,715 1,066,884 4,607,048
Real estate activities - 671,105 180,000 - 656,817
------------ ------------ ------------ ------------ -----------
9,706,988 11,634,249 31,750,008 10,657,921 44,225,443
------------ ------------ ------------ ------------ -----------
COSTS AND OPERATING EXPENSES:
Hotel 3,205,526 3,535,003 9,083,194 3,513,778 12,492,239
Food and beverage 2,044,651 2,377,124 5,591,373 2,247,866 8,143,986
Golf 1,469,714 1,330,935 3,247,628 1,582,328 4,636,719
Other 3,893,109 3,721,495 7,672,813 4,240,911 11,346,243
General and administrative 1,051,472 991,252 2,374,385 1,187,366 3,083,734
Real estate activities - 279,750 90,618 - 280,227
------------ ------------ ------------ ------------ -----------
11,664,472 12,235,559 28,060,011 12,772,249 39,983,148
------------ ------------ ------------ ------------ -----------
OPERATING INCOME (LOSS) (1,987,484) (601,310) 3,689,991 2,114,328 4,242,295
INTEREST, NET 2,055,237 494,740 945,481 2,215,236 1,490,460
INCOME (LOSS) BEFORE INCOME TAXES (4,042,721) (1,096,050) 2,744,516 (4,329,564) 2,751,835
PARENT INCOME TAX CHARGE (CREDIT) - (412,400) 967,800 - 1,012,000
INCOME (LOSS) BEFORE EXTRAORDINARY
ITEMS (4,042,721) (683,650) 1,776,716 (4,329,564) 1,739,835
LOSS ON EARLY EXTINGUISHMENT OF
LONG TERM DEBT (NET OF TAXES
OF $155,400) - - (288,600) - -
------------ ------------ ------------ ------------ -----------
INCOME (LOSS) BEFORE DIVIDEND
REQUIREMENTS ON PREFERRED STOCK (4,042,721) (683,650) 1,488,116 (4,329,564) 1,739,835
DIVIDEND REQUIREMENTS ON
PREFERRED STOCK 64,078 64,078 123,227 69,007 192,234
------------ ------------ ------------ ------------ -----------
NET INCOME (LOSS) AVAILABLE
TO COMMON SHAREHOLDERS $ (4,106,799) $ (747,728) $ 1,364,889 $ (4,398,571) $ 1,547,601
============ ============ ============ ============ ============
EARNINGS (LOSS) PER COMMON SHARE $ (821.36) $ (149.55) $ 272.98 $ (879.71) $ 309.52
============ ============ ============ ============ =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 4
<PAGE> 5
GOLF HOST RESORTS, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
(a wholly owned subsidiary of Golf Hosts, Inc.)
(unaudited)
<TABLE>
<CAPTION>
$1 Par Value 5.6% Cumulative Retained Total
Common Stock Preferred Stock Paid-In (Deficit) Shareholders'
---------------- ------------------------ ------------ ----------- ----------------
Shares Amount Shares Amount Capital Earnings (Deficit) Equity
------ ------ --------- ---------- ------------ ----------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1995 5,000 $5,000 4,577,000 $4,577,000 $ 2,329,447 $ 7,042,986 $ 13,954,433
----- ------ --------- ---------- ------------ ----------- ------------
Net income available to
common shareholders - - - - - 1,114,211 1,114,211
----- ------ --------- ---------- ------------ ----------- ------------
Balance, December 31, 1996 5,000 5,000 4,577,000 4,577,000 2,329,447 8,157,197 15,068,644
Notes receivable
distribution (Note 1) - - - - - (3,941,666) (3,941,666)
Net income available to
common shareholders - - - - - 1,364,889 1,364,889
----- ------ --------- ---------- ------------ ----------- ------------
Balance, June 23, 1997 5,000 $5,000 4,577,000 $4,577,000 $ 2,329,447 $ 5,580,420 $ 12,491,867
===== ====== ========= ========== ============ =========== ============
Balance, June 24, 1997 5,000 $5,000 4,577,000 $4,577,000 $ (4,582,000) - $ -
Distribution to shareholder - - - - (8,975,000) - (8,975,000)
Net income (loss) available
to common shareholder - - - - - (4,398,571) (4,398,571)
----- ------ --------- ---------- ------------ ----------- ------------
Balance, June 30, 1997 5,000 $5,000 4,577,000 $4,577,000 $(13,557,000) $(4,398,571) $(13,373,571)
===== ====== ========= ========== ============ =========== ============
</TABLE>
Page 5
<PAGE> 6
GOLF HOST RESORTS, INC.
(A WHOLLY OWNED SUBSIDIARY OF GOLF HOSTS, INC.)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
99 day 174 day Nine months
period ended period ended ended
September 30, 1997 June 23, 1997 September 30, 1996
------------------ ------------- ------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) before dividend requirements
on preferred stock $(4,329,564) $ 1,488,116 $ 1,739,835
Noncash items included in income:
Depreciation and amortization 912,718 1,240,111 1,870,300
----------- ----------- -----------
Cash provided by income (3,416,846) 2,728,227 3,610,135
Changes in operating working capital 2,091,480 417,429 (850,824)
----------- ----------- -----------
Cash provided by operations (1,325,366) 3,145,656 2,759,311
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increases in other deferred charges 15,896 62,302 (260,826)
Purchases of property and equipment (1,802,373) (1,517,432) (1,642,429)
Net recovery of cost of property and
equipment sold or retired 52,247 (56,063) 66,771
Additions to notes receivable - (378,788) (7,782)
Reduction in notes receivable - 413,278 592,096
----------- ----------- -----------
Cash (used for) investing (1,734,230) (1,476,703) (1,252,170)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in notes payable - (734,429) (672,582)
Increases in long-term obligations - - 480,105
Decreases in long-term obligations 1,073,747 (436,002) (1,411,429)
Net proceeds from merger transactions - 5,965,529 -
Increases in long-term intercompany (69,007) (123,227) 657,274
Increases in long-term contingency - 127,050 108,157
----------- ----------- -----------
Cash provided (used) for financing 1,004,740 4,798,921 (838,475)
----------- ----------- -----------
NET INCREASE IN CASH (2,054,856) 6,467,874 668,666
CASH, BEGINNING OF PERIOD 6,956,559 488,685 312,603
----------- ----------- -----------
CASH, END OF PERIOD $ 4,901,703 $ 6,956,559 $ 981,269
=========== =========== ===========
NONCASH FINANCING AND INVESTING ACTIVITIES:
Preferred stock dividend liability to Golf Hosts, Inc.
satisfied through the intercompany account $ 69,007 $ 123,227 $ 192,236
The Company transferred undeveloped land
to inventory $ - $ 69,628 $ -
Distributions to shareholders $(8,975,000) $(3,941,666) $ -
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 6
<PAGE> 7
GOLF HOST RESORTS, INC.
(A WHOLLY OWNED SUBSIDIARY OF GOLF HOSTS, INC.)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(1) ORGANIZATION, BUSINESS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
On June 23, 1997, TM Golf Hosts, Inc. ("TMGHI") acquired all of the
outstanding stock of Golf Hosts, Inc. ("GHI"), previously an 80% owner of
Golf Host Resorts, Inc. (the "Company"), and the 20% of the Company's
stock not held by GHI. Concurrently, TMGHI and GHI merged with the legal
survivor being GHI, which now owns 100% of the Company. Total
consideration for the acquisition of the outstanding stock of GHI and the
Company was approximately $63 million, including assumption of certain
liabilities. The transaction was financed with new borrowing and all
previous indebtedness of the Company was repaid, resulting in an
extraordinary loss on early retirement of debt primarily relating to the
write-off of unamortized debt discounts and related deferred expenses.
Under the terms of the agreement, certain long term receivables were
transferred to the selling shareholders immediately prior to the
transaction. In addition, certain marketable securities and investments
with ascribed values aggregating $8,975,000 were distributed from the
Company to its parent, GHI, subsequent to the transaction.
The interim financial statements are unaudited and were prepared from the
books and records of the Company. In the opinion of management, they
include all adjustments necessary for a fair presentation of the
Company's operations and financial positon. Certain of the Company's
operations are seasonal in nature and, therefore, interim results from
operations are not necessarily indicative of a full year.
The financial statements as of and for the period from the merger to
September 30, 1997 reflect the allocation of the purchase price based
upon the fair value of the assets acquired and the liabilities assumed in
connection with the merger and are, therefore, not comparable to the
financial statements of the Company presented herein as of or for periods
prior to the merger, which are based upon its previous historical cost. A
portion of the purchase price was allocated to certain intangible assets
including those relating to the golf course operations and the operations
of the resort pursuant to the rental pool arrangement with the
condominium owners. These intangibles are being amortized on a straight
line basis over a 20 year period based on the contract term of the
Innisbrook management agreement.
(2) LONG-TERM OBLIGATIONS
As a part of the transaction referred to in Note 1, all previously
existing long-term obligations were replaced by a mortgage note with Golf
Trust of America, L.P. The participating mortgage is for a term of thirty
years and is secured by certain real and personal property of the Company
and guaranteed by GHI. The loan allows for certain additional borrowings
for capital improvements. The loan has an initial base pay rate
increasing annually. The loan also includes participation above certain
predefined levels in certain revenue of the Innisbrook property securing
the loans.
Page 7
<PAGE> 8
Long-term obligations consist of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
<S> <C> <C>
Participating mortgage note at varying,
increasing pay rates maturing in 2027 $71,848,748 -
Mortgage note at 6.34%, maturing
in 2002 5,000,000 -
Mortgage notes at varying rates, ranging
from 8.3% to 9%, maturing from
from 1998 to 2007 - 15,487,194
Equipment revolving credit line
at prime, maturing serially
from 1997 to 2001 - 3,891,728
A $2,000,000 revolving credit line at 9%
maturing in 2007 - 1,368,000
Other - 286,386
Unamortized debt discount and expense - (467,000)
----------- -----------
76,848,748 20,566,308
Less-current maturities - (2,788,764)
----------- -----------
$76,848,748 $17,777,544
=========== ===========
</TABLE>
(3) ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
<S> <C> <C>
Rental pool lease operations $ 1,911,567 $ 2,134,459
Salaries 933,385 1,456,267
Taxes, other than income taxes 637,757 242,820
Other 1,385,030 744,435
----------- -----------
$ 4,867,739 $ 4,577,981
=========== ===========
</TABLE>
(4) INCOME TAX ALLOCATION AND SHARING POLICY
Effective concurrently with the merger, the Company and GHI elected to be
subsequently treated as S-Corporations for federal and state tax
purposes. As a result, the Company will generally no longer be subject to
federal and state income taxes and the tax effects of its activities will
accrue to the shareholders of GHI. The Company will be responsible for
entity level corporate taxes on certain built-in gains (where the fair
market value of the related assets at the effective date the election was
made exceeds the carryover tax basis) on property if sold within a ten
year period. Estimated deferred tax liabilities relating to these
potential entity level taxes, based on management's current plans, have
been reflected in these financial statements.
Page 8
<PAGE> 9
(5) SUPPLEMENTAL CASH FLOW DATA
The (increases) decreases in working capital other than cash are as
follows:
<TABLE>
<CAPTION>
99 day 174 day Nine months
period ended period ended ended
September 30, 1997 September 23, 1997 September 30, 1997
------------------ ------------------ ------------------
<S> <C> <C> <C>
Accounts receivable $ 822,663 $ (3,155) $ (284,382)
Inventories and supplies 168,715 253,620 (452,934)
Prepaid expenses and other (349,074) 208,647 194,330
Intercompany 90,262 (319,029) (151,413)
Accounts payable 1,692,214 (140,060) 279,978
Accrued expenses (582,283) 872,041 (124,508)
Deposits and prepaid fees 248,983 (454,635) (311,895)
----------- ----------- -----------
$ 2,091,480 $ 417,429 $ (850,824)
=========== =========== ===========
</TABLE>
(6) CHANGE IN INNISBROOK PROPERTY MANAGER
Concurrently with the merger, the Company entered into an agreement to
terminate the existing Innisbrook hotel operation management agreement effective
July 15, 1997 for a $600,000 termination fee. A new hotel property manager was
engaged effective on that date. Such termination fee was included in determining
the cost of the acquisition.
Page 9
<PAGE> 10
GOLF HOST RESORTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
For purposes of discussing comparative results from operations for 1996 and
1997, the results for the periods prior to and subsequent to the June 23, 1997
merger transaction, described in Note 1 to the financial statements, are
combined.
For the current quarter, room nights occupied fell 21.1% from the same prior
year quarter. Occupied room nights on a divisional basis declined 24.6% at
Innisbrook while Tamarron experienced a 15.4% decline. The decline in occupancy
occurred mostly in the conference segment at both resorts.
Revenues from resort operations decreased 12.3% for the quarter. Revenue per
occupied room night of $289.55 reflected an 11.1% increase over the prior year
amount of $260.53. Revenue per occupied room night at Innisbrook increased 12.4%
to $283.62 while Tamarron's spending rose 8.9% to $298.15. The prior year
amounts were $252.35 and $273.83, respectively. The guest spending improvement
was unable to offset the lower occupancy impact, yielding a $1,381,000 decrease
in resort operations revenue. There was no real estate revenue generated during
the quarter, while $671,000 was produced in the prior year quarter.
Resort operations costs and operating expenses increased to 120.2% of revenues
from the prior year 109.1%, resulting in an operating income decline of $965,000
from the prior year loss of $992,000. Other costs and expenses rose 4.6%, or
approximately $172,000, including intangible asset amortization of $218,000,
while related revenue declined $223,000. General and administrative expense
increased $60,000 over the prior year.
Interest expense increased $1,560,000 to $2,055,000 as a result of additional
interest from the new borrowings related to the merger transactions described in
Note 1 to the financial statements.
For the nine months ended September 30, 1997, occupied room nights declined 8.2%
from the prior year. The 5.3% improvement in guest spending per occupied room
somewhat mitigated the decline in occupancy, yielding a decline in revenues of
3.3%.
As a percentage of revenues, costs and operating expenses rose from 91.1% to
96.5%. Income before income taxes declined $3,975,000, reflecting the impact of
the above items, related lost economies of scale relative to operating income
margin and the impact of the minimum wage hike.
FINANCIAL CONDITION AND LIQUIDITY
As more fully discussed in Note 1 to the financial statements, on June 23, 1997
all the stock of the Company and its parent Golf Hosts, Inc. was acquired by
previously unrelated parties in a transaction financed by new debt obligations
of the Company. These transactions have generally resulted in improved financial
liquidity as a result of additional cash and borrowing facilities.
The Company's working capital position at September 30, 1997 was $4,372,000 as
compared with $445,000 at September 30, 1996 and a deficit of $1,278,000 at
December 31, 1996. The Company typically experiences seasonal fluctuations in
its net working capital position without impairing its ability to pay trade
creditors in a timely manner and satisfy its financial obligations in an orderly
fashion.
As a result of the change in control previously discussed, the Company's former
lenders were replaced with a single lender on June 23, 1997. Reference is made
in the notes to financial statements regarding the new lender.
While the Company has a substantial retained deficit, based on existing cash
levels, expected operating levels for the balance of the year and the existence
of credit facilities with its parent, the Company assesses its liquidity as
satisfactory.
Page 10
<PAGE> 11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Registrant is not currently involved in lawsuits other than ordinary
routine litigation incidental to its business.
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
Not applicable.
Item 5. Other Information
Pursuant to an agreement with the SEC staff, included in this 10-Q
filing are unaudited financial statements of the Innisbrook Rental
Pool Lease Operation and the Tamarron Rental Pool Lease Operation for
the quarter and nine months ended September 30, 1997.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K
Form 8-K, reporting changes in control of registrant and
change in registrant's certifying accountant, was filed with
the SEC on July 8, 1997.
Page 11
<PAGE> 12
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 HOST RESORTS, INC.
Date: November 14, 1997 By: /s/ Merrick Kleeman
------------------------------ -------------------------
Merrick Kleeman
President
Date: November 14, 1997 By: /s/ R. L. Akin
------------------------------- ------------------------
Richard L. Akin
Vice President
and Treasurer
Page 12
<PAGE> 13
RENTAL POOL LEASE OPERATIONS
The following unaudited financial statements of the Innisbrook Rental Pool Lease
Operation and the Tamarron Rental Pool Lease Operation (the Rental Pools) are
for the quarter and nine months ended September 30, 1997.
The operations of the Rental Pools are tied closely to that of Golf Host
Resorts, Inc. (the Company), and provide for distribution of a percentage of the
Company's room revenues, as defined in the Rental Pool Master Lease Agreements,
to participating condominium owners (Participants).
The operations of the Rental Pools are more fully discussed in Form 10-K, for
the fiscal year ended December 31, 1996 (File No. 2-64309).
As discussed in Note 1 to the Golf Host Resorts, Inc. financial statement, on
June 23, 1997, TM Golf Hosts, Inc. ("TMGHI") acquired all of the outstanding
stock of Golf Hosts, Inc. ("GHI") and the 20% of the Company's stock not held by
GHI. Concurrently, TMGHI and GHI merged with the legal survivor being GHI.
Concurrently with the merger, the Company entered into an agreement to terminate
the existing management agreement, effective July 15, 1997, with the current
hotel operations manager for Innisbrook for a $600,000 termination fee. A new
hotel property manager was engaged effective on that date. Neither the change in
ownership nor the change in hotel managers at Innisbrook is expected to have an
adverse affect on the participants in the Rental Pools.
Page 13
<PAGE> 14
INNISBROOK RENTAL POOL LEASE OPERATION
BALANCE SHEETS
SEPTEMBER 30, 1997 AND 1996
DISTRIBUTION FUND
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
ASSETS
RECEIVABLE FROM GOLF HOST RESORTS, INC
FOR DISTRIBUTION - FULLY SECURED $ 1,140,133 $ 1,160,240
INTEREST RECEIVABLE FROM MAINTENANCE
ESCROW FUND 30,326 19,021
----------- -----------
$ 1,170,459 $ 1,179,261
=========== ===========
LIABILITIES AND PARTICIPANTS' FUND BALANCES
DUE TO PARTICIPANTS FOR DISTRIBUTION $ 778,608 $ 808,871
DUE TO MAINTENANCE ESCROW FUND 191,096 245,640
RESERVE FOR ESTIMATED LIFE-SAFETY
REIMBURSEMENT 200,755 124,750
PARTICIPANTS' FUND BALANCES - -
----------- -----------
$ 1,170,459 $ 1,179,261
=========== ===========
MAINTENANCE ESCROW FUND
ASSETS
CASH AND CASH EQUIVALENTS $ 1,888,704 $ 1,467,308
INVENTORIES - 251
RECEIVABLE FROM DISTRIBUTION FUND 191,096 245,640
INTEREST RECEIVABLE 33,383 20,216
----------- -----------
$ 2,113,183 $ 1,733,415
=========== ===========
LIABILITIES AND PARTICIPANTS' FUND BALANCES
ACCOUNTS PAYABLE $ 40,453 $ 34,792
INTEREST PAYABLE TO DISTRIBUTION FUND 30,326 19,021
CARPET CARE RESERVE 31,651 38,720
PARTICIPANTS' FUND BALANCES 2,010,753 1,640,882
----------- -----------
$ 2,113,183 $ 1,733,415
=========== ===========
</TABLE>
These balance sheets were prepared from the books and records of the Rental Pool
without audit and, in the opinion of management, include all adjustments which
are necessary for a fair presentation.
Page 14
<PAGE> 15
INNISBROOK RENTAL POOL LEASE OPERATION
STATEMENTS OF OPERATIONS
FOR THE QUARTERS AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
DISTRIBUTION FUND
<TABLE>
<CAPTION>
Current Quarter Year-to-Date
----------------------------- -------------------------------
1997 1996 1997 1996
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
GROSS REVENUES $ 1,734,022 $ 2,090,975 $ 11,377,240 $ 11,710,587
----------- ----------- ------------ ------------
REDUCTIONS:
Agents' commissions 31,266 4,685 188,342 207,955
Audit fees 3,000 3,000 9,100 9,100
----------- ----------- ------------ ------------
34,266 7,685 197,442 217,055
----------- ----------- ------------ ------------
ADJUSTED GROSS REVENUES 1,699,756 2,083,290 11,179,798 11,493,532
MANAGEMENT FEE (798,885) (979,146) (5,254,504) (5,401,960)
----------- ----------- ------------ ------------
GROSS INCOME DISTRIBUTION 900,871 1,104,144 5,925,294 6,091,572
ADJUSTMENTS TO GROSS INCOME
DISTRIBUTION:
Corporate complimentary
occupany fees 5,202 1,451 13,696 6,592
Occupancy fees (254,792) (327,518) (1,175,044) (1,281,474)
Advisory Committee expenses (25,230) (20,447) (79,543) (66,525)
Life-safety reimbursement 28,807 (79,456) (200,755) (124,750)
----------- ----------- ------------ ------------
NET INCOME DISTRIBUTION 654,858 678,174 4,483,648 4,625,415
ADJUSTMENTS TO NET INCOME
DISTRIBUTION:
Occupancy fees 254,792 327,518 1,175,044 1,281,474
Hospitality suite fees 2,217 2,672 7,298 9,853
Greens fees 10,276 9,186 66,956 66,239
Additional participation credits 17,235 17,940 52,555 54,325
----------- ----------- ------------ ------------
AMOUNT AVAILABLE FOR DISTRIBUTION
TO PARTICIPANTS $ 939,378 $ 1,035,490 $ 5,785,501 $ 6,037,306
=========== =========== ============ ============
Average daily distribution $ 10.94 $ 11.83 $ 23.91 $ 24.47
Average room rate $ 85.91 $ 78.14 $ 118.74 $ 111.40
Occupied room nights 20,185 26,761 95,818 105,119
Available room nights 85,904 87,543 241,952 246,679
Occupancy percentage 23.5% 30.6% 39.6% 42.6%
Average number of available units 934 952 886 900
</TABLE>
These statements were prepared from the books and records of the Rental Pool
without audit and, in the opinion of management, include all adjustments which
are necessary for a fair presentation.
Page 15
<PAGE> 16
INNISBROOK RENTAL POOL OPERATION
STATEMENTS OF CHANGES IN PARTICIPANTS' FUND BALANCES
FOR THE QUARTERS AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
DISTRIBUTION FUND
<TABLE>
<CAPTION>
Current Quarter Year-to-Date
---------------------------- ----------------------------
1997 1996 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
BALANCE, beginning of period $ - $ - $ - $ -
ADDITIONS:
Amounts available for distribution
before life-safety reimbursement 910,571 1,114,946 5,986,256 6,162,056
Interest received or receivable from
Maintenance Escrow Fund 30,326 19,021 81,910 60,152
REDUCTIONS:
Amount withheld for Maintenance Escrow Fund (191,096) (245,640) (881,290) (961,112)
Amounts held in reserve for estimated
life-safety reimbursement 28,807 (79,456) (200,755) (124,750)
Amounts accrued or paid to participants (778,608) (808,871) (4,986,121) (5,136,346)
----------- ----------- ----------- -----------
BALANCE, end of period $ - $ - $ - $ -
=========== =========== =========== ===========
MAINTENANCE ESCROW FUND
BALANCE, beginning of period $ 2,417,925 $ 1,607,083 $ 1,734,415 $ 1,141,259
ADDITIONS:
Amounts withheld from occupancy fees 191,096 245,640 881,290 961,112
Interest earned 30,326 19,021 81,910 60,152
Charges to participants to establish
or restore escrow balances 164,492 319,098 994,837 838,563
REDUCTIONS:
Maintenance charges (722,489) (493,740) (1,498,557) (1,210,085)
Carpet care reserve deposit (5,098) (6,553) (28,092) (25,638)
Interest accrued or paid to
Distribution Fund (30,326) (19,021) (81,910) (60,152)
Refunds to participants as prescribed
by Master Lease Agreement (35,173) (30,646) (73,140) (64,329)
----------- ----------- ----------- -----------
BALANCE, end of period $ 2,010,753 $ 1,640,882 $ 2,010,753 $ 1,640,882
=========== =========== =========== ===========
</TABLE>
These statements were prepared from the books and records of the Rental Pool
without audit and, in the opinion of management, include all adjustments which
are necessary for a fair presentation.
Page 16
<PAGE> 17
TAMARRON RENTAL POOL LEASE OPERATION
BALANCE SHEETS
SEPTEMBER 30, 1997 AND 1996
DISTRIBUTION FUND
<TABLE>
<CAPTION>
1997 1996
----------- -----------
ASSETS
<S> <C> <C>
CASH $ 1,000 $ 1,000
RECEIVABLE FROM GOLF HOST RESORTS, INC
FOR DISTRIBUTION 771,434 837,169
INTEREST RECEIVABLE FROM MAINTENANCE
ESCROW FUND 203 481
----------- -----------
$ 772,637 $ 838,650
=========== ===========
LIABILITIES AND PARTICIPANTS' FUND BALANCES
DUE TO PARTICIPANTS FOR DISTRIBUTION $ 666,146 $ 751,101
DUE TO MAINTENANCE ESCROW FUND 106,491 87,549
PARTICIPANTS' FUND BALANCES - -
----------- -----------
$ 772,637 $ 838,650
=========== ===========
MAINTENANCE ESCROW FUND
ASSETS
CASH AND CASH EQUIVALENTS 21,598 75,509
DUE FROM DISTRIBUTION FUND 106,491 87,549
INTEREST RECEIVABLE - -
INVENTORY:
Linen 89,480 99,871
Materials and supplies 13,643 7,229
DEPOSITS - 86,077
----------- -----------
$ 231,212 $ 355,235
=========== ===========
LIABILITIES AND PARTICIPANTS' FUND BALANCES
ACCOUNTS PAYABLE $ 4,150 $ 5,033
INTEREST PAYABLE TO DISTRIBUTION FUND 203 481
PARTICIPANTS' FUND BALANCES 226,859 349,721
----------- -----------
$ 231,212 $ 355,235
=========== ===========
</TABLE>
These balance sheets were prepared from the books and records of the Rental Pool
without audit and, in the opinion of management, include all adjustments which
are necessary for a fair presentation.
Page 17
<PAGE> 18
TAMARRON RENTAL POOL LEASE OPERATION
STATEMENTS OF OPERATIONS
FOR THE QUARTERS AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
DISTRIBUTION FUND
<TABLE>
<CAPTION>
Current Quarter Year-to-Date
----------------------------- -----------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
GROSS REVENUES $ 1,711,566 $ 1,887,216 $ 2,992,542 $ 3,142,727
----------- ----------- ----------- -----------
REDUCTIONS:
Sales and marketing expenses 136,925 160,413 239,405 267,131
Agents' commissions 27,916 50,520 98,381 102,880
Audit fees 2,595 2,601 7,795 7,803
----------- ----------- ----------- -----------
167,436 213,534 345,581 377,814
----------- ----------- ----------- -----------
ADJUSTED GROSS REVENUES 1,544,130 1,673,682 2,646,961 2,764,913
MANAGEMENT FEE (772,065) (836,841) (1,323,480) (1,382,457)
----------- ----------- ----------- -----------
GROSS INCOME DISTRIBUTION 772,065 836,841 1,323,481 1,382,456
ADJUSTMENTS TO GROSS INCOME
DISTRIBUTION:
Corporate complimentary
occupancy fees 1,466 1,989 2,952 3,587
Occupancy fees (140,935) (131,790) (302,638) (255,948)
Designated items (35,022) (20,653) (88,954) (54,312)
Advisory Committee expenses (2,097) (1,661) (9,816) (7,424)
----------- ----------- ----------- -----------
POOLED INCOME 595,477 684,726 925,025 1,068,359
ADJUSTMENTS TO POOLED INCOME:
Hospitality suite fees - - - 53
Occupancy fees 140,935 131,790 302,638 255,948
----------- ----------- ----------- -----------
NET INCOME DISTRIBUTION $ 736,412 $ 816,516 $ 1,227,663 $ 1,324,360
=========== =========== =========== ===========
Average daily distribution $ 29.36 $ 32.01 $ 15.84 $ 17.17
Average room rate $ 123.03 $ 114.85 $ 99.45 $ 98.15
Room nights 13,912 16,432 30,092 32,019
Occupancy percentage 55.5% 64.4% 38.8% 41.5%
Average number of available units 273 277 284 282
Number of units in Rental Pool at
end of period 293 302 - -
</TABLE>
These statements were prepared from the books and records of the Rental Pool
without audit and, in the opinion of management, include all adjustments which
are necessary for a fair presentation.
Page 18
<PAGE> 19
TAMARRON RENTAL POOL LEASE OPERATION
STATEMENTS OF CHANGES IN PARTICIPANTS' FUND BALANCES
FOR THE QUARTERS AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
DISTRIBUTION FUND
<TABLE>
<CAPTION>
Current Quarter Year-to-Date
------------------------------- -------------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
BALANCE, beginning of period $ - $ - $ - $ -
ADDITIONS:
Amounts available for distribution 736,412 816,516 1,227,663 1,324,360
Interest received or receivable from
Maintenance Escrow Fund 204 480 589 2,807
REDUCTIONS:
Amounts withheld for Maintenance Escrow Fund (70,470) (65,895) (151,325) (127,975)
Amounts accrued or paid to participants (666,146) (751,101) (1,076,927) (1,199,192)
----------- ----------- ----------- -----------
BALANCE, end of period $ - $ - $ - $ -
=========== =========== =========== ===========
MAINTENANCE ESCROW FUND
BALANCE, beginning of period $ 206,837 $ 336,079 $ 197,548 $ 328,336
ADDITIONS:
Amounts withheld from occupancy fees 70,470 65,895 151,325 127,975
Interest earned 204 480 589 2,807
Reimbursement of designated items 35,022 20,653 88,954 54,312
Charges to participants to establish
or restore escrow balances 7,564 85,132 23,859 227,764
REDUCTIONS:
Maintenance and inventory charges (40,840) (30,995) (93,068) (119,617)
Refurbishing charges (14,206) (98,167) (38,875) (191,716)
Interest accrued or paid to
Distribution Fund (204) (480) (589) (2,807)
Designated items (35,022) (20,653) (88,953) (54,313)
Refunds to participants as prescribed
by Master Lease Agreement (2,966) (8,223) (13,931) (23,020)
----------- ----------- ----------- -----------
BALANCE, end of period $ 226,859 $ 349,721 $ 226,859 $ 349,721
=========== =========== =========== ===========
</TABLE>
These statements were repared from the books and records of the Rental Pool
without audit and, in the opinion of management, include all adjustments which
are necessary for a fair presentation.
Page l9
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 4,901,703
<SECURITIES> 3,595,210
<RECEIVABLES> 0
<ALLOWANCES> 34,610
<INVENTORY> 4,828,631
<CURRENT-ASSETS> 14,974,236
<PP&E> 73,012,818
<DEPRECIATION> 27,887,241
<TOTAL-ASSETS> 78,006,387
<CURRENT-LIABILITIES> 11,228,242
<BONDS> 76,848,748
0
4,577,000
<COMMON> 5,000
<OTHER-SE> (17,955,571)
<TOTAL-LIABILITY-AND-EQUITY> 78,006,387
<SALES> 14,015,995
<TOTAL-REVENUES> 42,407,929
<CGS> 4,383,683
<TOTAL-COSTS> 40,832,260
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 115,723
<INTEREST-EXPENSE> 3,160,717
<INCOME-PRETAX> (1,585,048)
<INCOME-TAX> 967,800
<INCOME-CONTINUING> (2,552,848)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,033,682)
<EPS-PRIMARY> (606.73)
<EPS-DILUTED> (606.73)
</TABLE>
