<PAGE> 1
FORM 10-Q/A
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.
-----------------------
(Exact name of registrant as specified in its charter)
Colorado 84-0631130
- -------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Post Office Box 3131, Durango, Colorado 81302-3131
- ---------------------------------------------------
(Address of principal executive offices) (Zip Code)
(970)-259-2000
- --------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section13 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)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
----------- -----------
(unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 919,832 $ 488,685
Accounts receivable, net 2,720,444 4,380,108
Notes receivable -- 163,942
Inventories and supplies 2,870,337 5,123,966
Prepaid expenses and other assets 853,338 956,054
Intercompany receivables 4,552,350 724,312
----------- -----------
11,916,301 11,837,067
Assets held for sale 6,275,246 --
----------- -----------
Total current assets 18,191,547 11,837,067
INTANGIBLES, net 34,399,665 --
PROPERTY AND EQUIPMENT, at cost, less
accumulated depreciation and amortization 35,956,819 40,038,322
OTHER ASSETS 572,204 238,627
LONG-TERM RECEIVABLES -- 1,021,178
----------- -----------
$89,120,235 $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 $ 3,389,120 $ 2,258,702
Accrued expenses 4,126,347 4,577,981
Deposits and prepaid fees 1,979,404 2,755,297
Notes payable -- 734,429
Maturing long-term obligations -- 2,788,764
------------- -----------
Total current liabilities 9,494,871 13,115,173
LONG-TERM OBLIGATIONS 76,673,914 17,777,544
DEFERRED INCOME TAXES 14,929,374 4,951,895
LONG-TERM CONTINGENCY -- 2,221,938
------------- -----------
Total liabilities 101,098,159 38,066,550
SHAREHOLDERS' (DEFICIT) EQUITY:
Common stock, $1 par, 5,000 shares
authorized, issued and outstanding 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 (3,002,924) 8,157,197
------------- -----------
Total shareholders' (deficit) equity (11,977,924) 15,068,644
------------- -----------
Total liabilities and shareholders'
(deficit) equity $ 89,120,235 $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>
Quarter Ended September 30, 99 Day 174 Day Nine Months
------------------------------ Period Ended Period Ended Ended
1997 1996 September 30, 1997 June 23, 1997 September 30, 1996
------------ ----------- ------------------ -------------- ------------------
<S> <C> <C> <C> <C> <C>
REVENUES:
Resort facilities $ 1,738,987 $ 3,978,191 $ 2,085,270 $10,775,626 $14,853,314
Food and beverage 1,421,176 2,923,444 1,696,866 8,106,385 11,497,395
Golf 1,877,970 2,801,712 2,114,198 9,347,282 12,321,416
Other 667,050 1,303,403 789,783 3,340,715 4,960,517
Real estate activities - 671,105 - 180,000 656,817
----------- ----------- ----------- ----------- -----------
5,705,183 11,677,855 6,686,117 31,750,008 44,289,459
----------- ----------- ----------- ----------- -----------
COSTS AND OPERATING EXPENSES:
Resort facilities 1,949,972 3,570,192 2,258,224 9,083,194 12,625,972
Food and beverage 1,307,088 2,265,814 1,510,303 5,591,373 7,789,587
Golf 1,221,933 1,320,423 1,334,547 3,247,628 4,606,662
Other 2,866,716 3,940,124 3,214,518 7,672,813 11,914,851
General and administrative 828,991 902,864 922,486 2,374,385 2,829,865
Real estate activities - 279,750 - 90,618 280,227
----------- ----------- ----------- ----------- -----------
8,174,700 12,279,167 9,240,078 28,060,011 40,047,164
----------- ----------- ----------- ----------- -----------
OPERATING (LOSS) INCOME (2,469,517) (601,312) (2,553,961) 3,689,997 4,242,295
INTEREST, NET 2,055,237 494,740 2,215,237 945,481 1,490,460
----------- ----------- ----------- ----------- -----------
(LOSS) INCOME BEFORE INCOME TAXES (4,524,754) (1,096,052) (4,769,198) 2,744,516 2,751,835
PARENT INCOME TAX CHARGE (BENEFIT) (1,743,614) (412,400) (1,835,281) 967,800 1,012,000
----------- ----------- ----------- ----------- -----------
(LOSS) INCOME BEFORE
EXTRAORDINARY ITEMS (2,781,140) (683,652) (2,933,917) 1,776,716 1,739,835
LOSS ON EARLY EXTINGUISHMENT OF
LONG TERM DEBT (NET OF
TAXES OF $155,400) - - - (288,600) -
----------- ----------- ----------- ----------- -----------
NET (LOSS) INCOME (2,781,140) (683,652) (2,933,917) 1,488,116 1,739,835
DIVIDEND REQUIREMENTS ON
PREFERRED STOCK 64,078 64,078 69,007 123,227 192,234
----------- ----------- ----------- ----------- -----------
NET CHANGE IN (DEFICIT) EARNINGS $(2,845,218) $ (747,730) $(3,002,924) $ 1,364,889 $ 1,547,601
=========== =========== =========== =========== ===========
(LOSS) EARNINGS PER COMMON SHARE $ (569.04) $ (149.55) $ (600.58) $ 272.97 $ 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
Common Stock Preferred Stock Retained Total
----------------- --------------------- 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 - - - - - (3,002,924) (3,002,924)
----- ------ --------- ---------- ------------ ----------- ------------
Balance, September 30, 1997 5,000 $5,000 4,577,000 $4,577,000 $(13,557,000) $(3,002,924) $(11,977,924)
===== ====== ========= ========== ============ =========== ============
</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 (loss) income $ (2,933,917) $ 1,488,116 $ 1,739,835
Noncash items included in income:
Provision for bad debts -- 89,609 --
Depreciation and amortization 852,993 1,282,510 1,870,300
Decrease in deferred tax (1,660,807) -- --
Changes in operating working capital 2,039,253 (2,059,667) (1,303,889)
----------------- ----------------- -----------------
Cash provided by operations (1,702,478) 800,568 2,306,246
----------------- ----------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Decreases (increases) in other assets 6,932 62,302 --
Purchases of property and equipment (1,732,812) (1,517,431) (1,642,429)
Decrease in assets held for sale 299,754 -- --
Net recovery of cost of property and
equipment sold or retired -- -- 66,776
Additions to notes receivable -- -- (7,782)
Reduction in notes receivable -- 1,185,120 592,096
----------------- ----------------- -----------------
Cash provided by (used for) investing (1,426,126) (270,009) (991,339)
----------------- ----------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in notes payable -- -- (672,582)
Increases in long-term obligations -- -- 480,105
Decreases in long-term obligations -- -- (1,411,429)
Increases in long-term intercompany -- -- 849,508
Increases in long-term contingency -- -- 108,157
Additional borrowings 1,073,748 1,514,587 --
Proceeds from sale of company -- 63,524,946 --
Repayment of existing debt -- (25,037,262) --
Proceeds to selling shareholders -- (38,046,827) --
----------------- ----------------- -----------------
Cash provided (used for) financing 1,073,748 1,955,444 (646,241)
----------------- ----------------- -----------------
NET (DECREASE) INCREASE IN CASH (2,054,856) 2,486,003 668,666
CASH, BEGINNING OF PERIOD 2,974,688 488,685 312,603
----------------- ----------------- -----------------
CASH, END OF PERIOD $ 919,832 $ 2,974,688 $ 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 its investment in
GTA to GHI $ 8,975,000 $ -- $ --
OTHER INFORMATION
Interest paid in cash $ 1,118,595 $ 965,117 $ 1,503,969
Income taxes paid in cash $ -- $ 118,090 $ 192,001
</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 $66 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.
Page 7
<PAGE> 8
(2) ASSETS HELD FOR SALE
The Company intends to sell certain resort assets (the Tamarron Hilton
Resort and a portion of the non-operating assets at Innisbrook) within
one year from the date of acquisition. The Tamarron related net assets
related to these operations have been recorded at their estimated
proceeds, as adjusted for estimated cash flows from operations and
estimated interest expense during the holding period on the incremental
debt incurred to finance the purchase as required by EITF 87-11. The net
income from operations subsequent to June 23, 1997, related to these
assets held for sale of approximately $291,000 and the interest expense
on the allocated debt of approximately $238,000 has been excluded from
the current year's consolidated statement of earnings. The impact of the
sale will have a positive impact on earnings and liquidity.
(3) NOTE PAYABLE AND LONG-TERM OBLIGATIONS
As a part of the transaction referred to in Note 1, the previously
existing note payable and all 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.
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
-------------- --------------
<S> <C> <C>
Note payable under $6,000,000 line
of credit $ - $ 734,429
============== ==============
Long-term obligations:
Participating mortgage note at varying,
increasing pay rates maturing in 2027 $ 71,673,914 $ --
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)
-------------- --------------
76,673,914 20,566,308
Less-current maturities -- (2,788,764)
-------------- --------------
$ 76,673,914 $ 17,777,544
============== ==============
</TABLE>
Page 8
<PAGE> 9
(4) CHANGE IN INNISBROOK PROPERTY MANAGER
Concurrent with the merger, the Company entered into an agreement to
terminate the existing Innisbrook management agreement effective July 15, 1997
for a $600,000 termination fee. A new property manager, Westin Hotel Company
(Westin), 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.
(A WHOLLY OWNED SUBSIDIARY OF GOLF HOSTS, 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. In addition, the discussion includes the operations of Tamarron which
are included in Assets Held for Sale as discussed in Note 2.
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 conference business at both resorts.
Revenues from resort operations decreased 11.8% for the quarter. Revenue per
occupied room night of $284.69 reflected an 11.7% increase over the prior year
amount of $254.83. Revenue per occupied room night at Innisbrook increased 13.5%
to $284.64 while Tamarron's spending rose 8.9% to $287.65. The prior year
amounts were $249.12 and $264.12, respectively. The guest spending improvement
was unable to offset the lower occupancy impact, yielding a $1,300,000 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 109.0%, resulting in an operating income decline of $995,000
from the prior year loss of $992,000. Other costs and expenses declined 1.2%, or
approximately $47,000, while related revenue declined $359,000. General and
administrative expense increased $149,000 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 5.4% improvement in guest spending per occupied room
somewhat mitigated the decline in occupancy, yielding a decline in revenues of
3.2%.
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 resulted in the termination of the Company's
accounts receivable line of credit, which will negatively impact the Company's
ability to meet its cash needs during the latter part of the year. Due to the
seasonal nature of the Company's business, the Company expects cash flow
deficits from operations during the fourth quarter of 1997. The Company has
evaluated the cash needs with respect to these deficits and scheduled capital
expenditures and has reason to believe that cash flow generated from operations
during the first half of the year coupled with available capital expenditure
financing will not be sufficient to meet the expected cash needs during the
second half of 1997. Management recognizes that the Company must generate
additional cash resources to ensure the continuation of operations. To achieve
this, the Company may obtain up to $2,500,000 from a Westin annual minimum cash
flow guarantee and may also enter into an unsecured capital expenditure sharing
agreement with Westin whereby Westin will fund 50% of capital expenditures
incurred subsequent to the June 23, 1997 merger transaction in excess of
$6,000,000, plus capital reserve requirements as defined. In addition, the
Company is negotiating with its primary lender to release Innisbrook's accounts
receivable from its collateral and the Company will then negotiate an accounts
receivable line of credit with a major financial institution. The Company
anticipates these efforts will yield adequate cash flow for the remainder of
1997.
The Company's working capital position (exclusive of Assets Held for Sale) at
September 30, 1997 was $2,421,000 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 material legal proceedings
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/A
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: July 10, 1998 By: /a/ Merrick Kleeman
------------------------- ---------------------------------
Merrick Kleeman
President
Date: June 29, 1998 By: /s/ Richard 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
operations manager for Innisbrook for a $600,000 termination fee. A new property
manager was engaged effective on that date. Neither the change in ownership nor
the change in 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
-------------- --------------
ASSETS
<S> <C> <C>
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 1997 1996
---------- ---------- --------- ---------
<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 98,871
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 19
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1
<CURRENCY> U.S. 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> 919,832
<SECURITIES> 0
<RECEIVABLES> 2,731,479
<ALLOWANCES> (11,035)
<INVENTORY> 2,870,337
<CURRENT-ASSETS> 18,191,547
<PP&E> 57,779,200
<DEPRECIATION> (21,822,381)
<TOTAL-ASSETS> 89,120,235
<CURRENT-LIABILITIES> 9,494,871
<BONDS> 76,673,914
0
4,577,000
<COMMON> 5,000
<OTHER-SE> (16,559,924)
<TOTAL-LIABILITY-AND-EQUITY> 89,120,235
<SALES> 11,532,206
<TOTAL-REVENUES> 38,436,125
<CGS> 3,434,178
<TOTAL-COSTS> 37,300,089
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 78,100
<INTEREST-EXPENSE> 3,160,718
<INCOME-PRETAX> (2,024,682)
<INCOME-TAX> (867,481)
<INCOME-CONTINUING> (1,157,201)
<DISCONTINUED> 0
<EXTRAORDINARY> (288,600)
<CHANGES> 0
<NET-INCOME> (1,638,035)
<EPS-PRIMARY> (327.61)
<EPS-DILUTED> (327.61)
</TABLE>
