<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 June 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 18
<PAGE> 2
GOLF HOST RESORTS, INC.
(A WHOLLY OWNED SUBSIDIARY OF GOLF HOSTS, INC.)
BALANCE SHEETS
ASSETS
(Substantially all pledged)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
------------ -----------
(unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 2,974,688 $ 488,685
Accounts receivable, net 3,560,495 4,380,108
Notes receivable -- 163,942
Inventories and supplies 2,989,301 5,123,966
Prepaid expenses and other assets 463,335 956,054
Intercompany receivables 4,705,194 724,312
----------- -----------
14,693,013 11,837,067
Assets held for sale 6,575,000 --
----------- -----------
Total current assets 21,268,013 11,837,067
INTANGIBLES, net 34,617,494 --
PROPERTY AND EQUIPMENT, at cost, less
accumulated depreciation and amortization 34,851,692 40,038,322
OTHER ASSETS 579,136 238,627
LONG-TERM RECEIVABLES -- 1,021,178
----------- -----------
$91,316,335 $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>
JUNE 30, DECEMBER 31,
1997 1996
----------- -----------
(unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 1,669,431 2,258,702
Accrued expenses 5,039,693 4,577,981
Deposits and prepaid fees 1,641,238 2,755,297
Notes payable -- 734,429
Maturing long-term obligations -- 2,788,764
----------- -----------
Total current liabilities 8,350,362 13,115,173
LONG-TERM OBLIGATIONS 75,600,166 17,777,544
DEFERRED INCOME TAXES 16,498,514 4,951,895
LONG-TERM CONTINGENCY -- 2,221,938
----------- -----------
Total liabilities 100,449,042 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) earnings (157,707) 8,157,197
----------- -----------
Total shareholders' (deficit) equity (9,132,707) 15,068,644
----------- -----------
Total liabilities and shareholders'
(deficit) equity $91,316,335 $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>
Seven day 84 day Quarter Seven day 174 day Six months
period ended period ended ended period ended period ended ended
June 30, 1997 June 23, 1997 June 30, 1996 June 30, 1997 June 23, 1997 June 30, 1996
------------- ------------- ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
Resort facilities $ 346,283 $ 4,106,527 $ 4,174,702 $ 346,283 $10,775,626 $10,875,123
Food and beverage 275,690 3,485,895 3,746,335 275,690 8,106,385 8,573,951
Golf 236,227 3,745,237 3,665,311 236,227 9,347,282 9,519,704
Other 122,733 1,442,607 1,861,398 122,733 3,340,715 4,186,024
Real estate activities - - - - 180,000 (14,288)
---------- ----------- ----------- ---------- ----------- -----------
980,933 12,780,266 13,447,746 980,933 31,750,008 33,140,514
---------- ----------- ----------- ---------- ----------- -----------
COSTS AND OPERATING EXPENSES:
Resort facilities 308,252 3,805,167 3,698,205 308,252 9,083,194 8,913,047
Food and beverage 203,215 2,475,719 2,524,660 203,215 5,591,373 5,523,773
Golf 112,614 1,538,916 1,554,343 112,614 3,247,628 3,286,239
Other 347,802 3,707,736 4,250,767 347,802 7,672,813 8,646,370
General and administrative 93,495 1,221,000 832,586 93,495 2,374,385 1,927,001
Real estate activities - 1,989 - - 90,618 477
---------- ----------- ----------- ---------- ----------- -----------
1,065,378 12,750,527 12,860,561 1,065,378 28,060,011 28,296,907
---------- ----------- ----------- ---------- ----------- -----------
OPERATING (LOSS) INCOME (84,445) 29,739 587,185 (84,445) 3,689,997 4,843,607
INTEREST, NET 160,000 480,143 481,523 160,000 945,481 995,720
---------- ----------- ----------- ---------- ----------- -----------
(LOSS) INCOME BEFORE INCOME TAXES (244,445) (450,404) 105,662 (244,445) 2,744,516 3,847,887
PARENT INCOME TAX CHARGE (BENEFIT) (91,667) (234,400) 20,500 (91,667) 967,800 1,424,400
---------- ----------- ----------- ---------- ----------- -----------
(LOSS) INCOME BEFORE
EXTRAORDINARY ITEMS (152,778) (216,004) 85,162 (152,778) 1,776,716 2,423,487
LOSS ON EARLY EXTINGUISHMENT OF
LONG TERM DEBT (NET OF
TAXES OF $155,400) - (288,600) - - (288,600) -
---------- ----------- ----------- ---------- ----------- -----------
NET (LOSS) INCOME (152,778) (504,604) 85,162 (152,778) 1,488,116 2,423,487
DIVIDEND REQUIREMENTS ON
PREFERRED STOCK 4,929 59,149 64,078 4,929 123,227 128,156
---------- ----------- ----------- ---------- ----------- -----------
NET CHANGE IN EARNINGS (DEFICIT) $ (157,707) $ (563,753) $ 21,084 $ (157,707) $ 1,364,889 $ 2,295,331
========== =========== =========== ========== =========== ===========
(LOSS) EARNINGS PER COMMON SHARE $ (31.54) $ (112.75) $ 4.22 $ (31.54) $ 272.97 $ 459.07
========== =========== =========== ========== =========== ===========
</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 - - - - - (157,707) (157,707)
----- ------ --------- ---------- ------------ ----------- -----------
Balance, June 30, 1997 5,000 $5,000 4,577,000 $4,577,000 $(13,557,000) $ (157,707) $(9,132,707)
===== ====== ========= ========== ============ =========== ===========
</TABLE>
Page 5
<PAGE> 6
GOLF HOST RESORTS, INC.
(A WHOLLY OWNED SUBSIDIARY OF GOLF HOSTS, INC.)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Seven day 174 day Six months
period ended period ended ended
June 30, June 23, June 30,
1997 1997 1996
------------ -------------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (152,778) $ 1,488,116 $ 2,423,487
Noncash items included in income:
Provision for bad debts -- 89,609 --
Depreciation and amortization 7,480 1,282,510 1,240,200
Decrease in deferred tax (91,667) -- --
Changes in operating working capital 236,965 (2,059,667) (107,551)
------------ ------------ -----------
Cash provided by operations -- 800,568 3,556,136
------------ ------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
(Decreases) increases in other assets -- 62,302 --
Purchases of property and equipment -- (1,517,431) (1,142,757)
Net recovery of cost of property and
equipment sold or retired -- -- 12,190
Increase in assets held for sale -- -- --
Additions to notes receivable -- -- (17,517)
Reduction in notes receivable -- 1,185,120 550,800
------------ ------------ -----------
Cash (used for) investing -- (270,009) (597,284)
------------ ------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in notes payable -- -- (1,285,673)
Increases in long-term obligations -- -- 454,012
Decreases in long-term obligations -- -- (917,198)
Net proceeds from merger transactions -- -- --
Increases in long-term intercompany -- -- 871,034
Increases in long-term contingency -- -- 70,476
Additional borrowings -- 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 -- 1,955,444 (807,349)
------------ ------------ -----------
NET (DECREASE) INCREASE IN CASH -- 2,486,003 2,151,503
CASH, BEGINNING OF PERIOD 2,974,688 488,685 312,603
------------ ------------ -----------
CASH, END OF PERIOD $ 2,974,688 $ 2,974,688 $ 2,464,106
============ ============ ===========
NONCASH FINANCING AND INVESTING ACTIVITIES:
Preferred stock dividend liability to Golf Hosts, Inc.
satisfied through the intercompany account $ 4,929 $ 123,227 $ 128,156
The Company transferred its investment in
GTA to GHI $ 8,975,000 $ -- $ --
OTHER INFORMATION
Interest paid in cash $ -- $ 965,117 $ 1,020,860
Income taxes paid in cash $ -- $ 118,090 $ 266,316
</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
JUNE 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 position. Certain of the Company's
operations are seasonal in nature and, therefore, interim results from
operations are not necessarily indicitive of a full year.
The financial statements as of and for the period from the merger to June
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 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) 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
loss from operations subsequent to June 23, 1997, related to these assets
held for sale and the interest expense on the allocated debt, have been
excluded from the current year's consolidated statement of earnings.
Tamarron generated a net loss in the current period. The impact of the
sale will have a positive impact on earnings and liquidity.
Page 7
<PAGE> 8
(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 in certain revenue of the Innisbrook property securing the
loan above certain predefined levels.
<TABLE>
<CAPTION>
June 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 $ 70,600,166 $ -
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)
------------- --------------
75,600,166 20,566,308
Less-current maturities - (2,788,764)
$ 75,600,166 $ 17,777,544
============= =============
</TABLE>
(4) CHANGE IN INNISBROOK PROPERTY MANAGER
Concurrently 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 8
<PAGE> 9
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 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, occupied room nights fell 2.1% from the prior year. On
a divisional basis, occupied room nights at Innisbrook rose 2.3%, while
Tamarron's room nights declined 20.1%. The increase in Innisbrook's occupancy
resulted primarily from the social segment. The decline in Tamarron's room
nights occurred mostly in the conference segment.
Revenues from resort operations increased 2.3% for the quarter. The revenue per
occupied room night totaled $332.50, a 4.5% increase over the prior year's
$318.15. Innisbrook's revenue per occupied room night increased 3.2% to $348.47,
while Tamarron's rose 4.2% to $248.64. The comparable prior year amounts were
$337.58 and $238.53, respectively. The improvement in guest spending at both
resorts offset the impact of the lower occupancy at Tamarron, yielding a
$313,000 increase in resort operations revenue. Consistent with the prior year,
there was no real estate revenue generated during the quarter.
Costs and operating expenses increased to 100.4% of revenues from 95.6%. As a
result, operating income declined $642,000 from the prior year to a loss of
$55,000. Resort facilities expense increased disproportionately to the occupancy
change as a result of an approximately $190,000 adjustment to related
inventories. Other costs and operating expenses decreased 4.6%, or approximately
$195,000. General and administrative expense increased $482,000 over the prior
year. Included in this increase are an additional $l80,000 in costs relative to
the change in control of the Company discussed in the notes to financial
statements and the above-mentioned management transition, and an increase of
$135,000 in bad debt expense.
Interest expense increased $159,000 to $640,000, primarily as a result of
additional interest from the new borrowings as a result of the merger
transactions described in Note 1 to the financial statements. In addition,
repayment of previous indebtedness of the Company resulted in an extraordinary
loss on early retirement of debt of approximately $444,000, presented net of a
related tax benefit of $155,000 primarily relating to the write-off of
unamortized debt discounts and related deferred expenses.
For the six months ended June 30, 1997, occupied room nights declined 2.3% from
the prior year level. Improved levels of spending per occupied room, up 1.1%,
served to somewhat mitigate the decline in occupancy, yielding a slight decline
in revenues of 1.2%. As a percentage of revenues, cost and operating expenses
rose from 85.4% to 89.0%. The reduction in income before income taxes of
$1,348,000 reflects the impact of the above items coupled with the first quarter
reduction in occupancy, 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 third and fourth quarters 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 at June 30, 1997 (exclusive of Assets
Held for Sale) was $6,343,000, compared with $1,841,000 at June 30, 1996 and a
deficit of $1,278,000 at December 31, l996. 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 9
<PAGE> 10
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 six months ended June 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 10
<PAGE> 11
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 /s/ Merrick Kleeman
------------------------ --------------------------
Merrick Kleeman
President
Date: June 29, 1998 By /s/ Richard L. Akin
------------------------ --------------------------
Richard L. Akin
Vice President and Treasurer
Page 11
<PAGE> 12
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 six months ended June 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 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 12
<PAGE> 13
INNISBROOK RENTAL POOL LEASE OPERATION
BALANCE SHEETS
JUNE 30, 1997 AND 1996
DISTRIBUTION FUND
<TABLE>
<CAPTION>
1997 1996
----------- ----------
ASSETS
<S> <C> <C>
RECEIVABLE FROM GOLF HOST RESORTS, INC.
FOR DISTRIBUTION - FULLY SECURED $1,982,583 $1,808,415
INTEREST RECEIVABLE FROM MAINTENANCE
ESCROW FUND 29,522 16,784
---------- ----------
$2,012.105 $1,825,199
========== ==========
LIABILITIES AND PARTICIPANTS' FUND BALANCES
DUE TO PARTICIPANTS FOR DISTRIBUTION $1,464,014 $1,469,054
DUE TO MAINTENANCE ESCROW FUND 318,529 310,851
RESERVE FOR ESTIMATED LIFE-SAFETY
REIMBURSEMENT 229,562 45,294
PARTICIPANTS' FUND BALANCES -- --
---------- ----------
$2,012,105 $1,825,199
========== ==========
MAINTENANCE ESCROW FUND
ASSETS
CASH AND CASH EQUIVALENTS $2,134,454 $1,345,193
INVENTORIES -- 251
RECEIVABLE FROM DISTRIBUTION FUND 318,529 310,851
INTEREST RECEIVABLE 29,135 13,260
---------- ----------
$2,482,118 $1,669,555
========== ==========
LIABILITIES AND PARTICIPANTS' FUND BALANCES
ACCOUNTS PAYABLE $ 378 $ 268
INTEREST PAYABLE TO DISTRIBUTION FUND 29,522 16,784
CARPET CARE RESERVE 34,293 45,420
PARTICIPANTS' FUND BALANCES 2,417,925 1,607,083
---------- ----------
$2,482,118 $1,669,555
========== ==========
</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 13
<PAGE> 14
INNISBROOK RENTAL POOL LEASE OPERATION
STATEMENTS OF OPERATIONS
FOR THE QUARTERS AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
DISTRIBUTION FUND
<TABLE>
<CAPTION>
Current Quarter Year-to-Date
------------------------------ ------------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
GROSS REVENUES $ 3,761,563 $ 3,453,553 $ 9,643,218 $ 9,619,612
----------- ----------- ----------- -----------
REDUCTIONS:
Agents' commissions 54,459 84,723 157,076 203,270
Audit fees 3,000 3,000 6,100 6,100
----------- ----------- ----------- -----------
57,459 87,723 163,176 209,370
----------- ----------- ----------- -----------
ADJUSTED GROSS REVENUES 3,704,104 3,365,830 9,480,042 9,410,242
MANAGEMENT FEE (1,740,929) (1,581,940) (4,455,619) (4,422,814)
----------- ----------- ----------- -----------
GROSS INCOME DISTRIBUTION 1,963,175 1,783,890 5,024,423 4,987,428
ADJUSTMENTS TO GROSS INCOME
DISTRIBUTION:
Corporate complimentary
occupany fees 4,574 2,135 8,494 5,141
Occupancy fees (424,702) (414,465) (920,252) (953,956)
Advisory Committee expenses (25,601) (23,838) (54,313) (46,078)
Life-safety reimbursement (47,596) (39,559) (229,562) (45,294)
----------- ----------- ----------- -----------
NET INCOME DISTRIBUTION 1,469,850 1,308,163 3,828,790 3,947,241
ADJUSTMENTS TO NET INCOME
DISTRIBUTION:
Occupancy fees 424,702 414,465 920,252 953,956
Hospitality suite fees 2,059 2,852 5,081 7,181
Greens fees 20,890 19,546 56,680 57,053
Additional participation credit 17,485 18,095 35,320 36,385
----------- ----------- ----------- -----------
AMOUNT AVAILABLE FOR DISTRIBUTION
TO PARTICIPANTS $ 1,934,986 $ 1,763,121 $ 4,846,123 $ 5,001,816
=========== =========== =========== ===========
Average daily distribution $ 23.59 $ 21.13 $ 31.06 $ 31.43
Average room rate $ 108.20 $ 101.63 $ 127.50 $ 122.76
Occupied room nights 34,766 33,980 75,633 78,358
Available room nights 80,026 83,444 156,048 159,136
Occupancy percentage 42.4% 40.7% 48.5% 49.2%
Average number of available units 901 917 862 874
</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 14
<PAGE> 15
INNISBROOK RENTAL POOL OPERATION
STATEMENTS OF CHANGES IN PARTICIPANTS' FUND BALANCES
FOR THE QUARTERS AND SIX MONTHS ENDED JUNE 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 1,800,617 1,802,680 4,893,720 5,047,110
Interest received or receivable from
Maintenance Escrow Fund 29,522 16,784 51,584 41,131
REDUCTIONS:
Amount withheld for Maintenance Escrow Fund (318,529) (310,851) (690,194) (715,472)
Amounts held in reserve for estimated
life-safety reimbursement (47,596) (39,559) (229,562) (45,294)
Amounts accrued or paid to participants (1,464,014) (1,469,054) (4,025,548) (4,327,475)
----------- ----------- ----------- -----------
BALANCE, end of period $ -- $ -- $ -- $ --
=========== =========== =========== ===========
MAINTENANCE ESCROW FUND
BALANCE, beginning of period $ 2,329,421 $ 1,496,895 $ 1,734,415 1,141,259
ADDITIONS:
Amounts withheld from occupancy fees 318,529 310,851 690,194 715,472
Interest earned 29,522 16,784 51,584 41,131
Charges to participants to establish
or restore escrow balances 377,022 279,991 830,345 519,465
REDUCTIONS:
Maintenance charges (564,468) (449,856) (776,068) (716,345)
Carpet care reserve deposit (8,497) (8,293) (22,994) (19,085)
Interest accrued or paid to
Distribution Fund (29,522) (16,784) (51,584) (41,131)
Refunds to participants as prescribed
by Master Lease Agreement (34,082) (22,505) (37,967) (33,683)
----------- ----------- ----------- -----------
BALANCE, end of period $ 2,417,925 $ 1,607,083 $ 2,417,925 $ 1,607,083
=========== =========== =========== ===========
</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
TAMARRON RENTAL POOL LEASE OPERATION
BALANCE SHEETS
JUNE 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 256,200 317,655
INTEREST RECEIVABLE FROM MAINTENANCE
ESCROW FUND 132 1,147
---------- ----------
$ 257,332 $ 319,802
========== ==========
LIABILITIES AND PARTICIPANTS' FUND BALANCES
DUE TO PARTICIPANTS FOR DISTRIBUTION $ 190,016 $ 264,791
DUE TO MAINTENANCE ESCROW FUND 67,316 55,011
PARTICIPANTS' FUND BALANCES -- --
---------- ----------
$ 257,332 $ 319,802
========== ==========
MAINTENANCE ESCROW FUND
ASSETS
CASH AND CASH EQUIVALENTS $ 13,301 $ 149,252
DUE FROM DISTRIBUTION FUND 67,316 55,011
INTEREST RECEIVABLE -- 934
INVENTORY:
Linen 114,241 114,237
Materials and supplies 17,224 8,285
DEPOSITS -- 16,000
---------- ----------
$ 212,082 $ 343,719
========== ==========
LIABILITIES AND PARTICIPANTS' FUND BALANCES
ACCOUNTS PAYABLE $ 5,113 $ 6,493
INTEREST PAYABLE TO DISTRIBUTION FUND 132 1,147
PARTICIPANTS' FUND BALANCES 206,837 336,079
---------- ----------
$ 212,082 $ 343,719
========== ==========
</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
STATEMENTS OF OPERATIONS
FOR THE QUARTERS AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
DISTRIBUTION FUND
<TABLE>
<CAPTION>
Current Quarter Year-to-Date
----------------------- ---------------------------
1997 1996 1997 1996
--------- --------- ----------- -----------
<S> <C> <C> <C> <C>
GROSS REVENUES $ 579,286 $ 721,149 $ 1,280,976 $ 1,255,511
--------- --------- ----------- -----------
DEDUCTIONS:
Agents' commissions 12,418 15,781 70,465 52,360
Sales and marketing expenses 46,345 61,297 102,480 106,718
Audit fees 2,600 2,601 5,200 5,202
--------- --------- ----------- -----------
61,363 79,679 178,145 164,280
--------- --------- ----------- -----------
ADJUSTED GROSS REVENUES 517,923 641,470 1,102,831 1,091,231
MANAGEMENT FEE (258,961) (320,735) (551,415) (545,616)
--------- --------- ----------- -----------
GROSS INCOME DISTRIBUTION 258,962 320,735 551,416 545,615
ADJUSTMENTS TO GROSS INCOME
DISTRIBUTION:
Corporate complimentary
occupancy fees 864 903 1,486 1,598
Occupancy fees (66,586) (67,475) (161,703) (124,158)
Designated items (33,021) (20,273) (53,932) (33,659)
Advisory Committee expenses (3,626) (3,983) (7,719) (5,763)
--------- --------- ----------- -----------
POOLED INCOME 156,593 229,907 329,548 383,633
ADJUSTMENTS TO POOLED INCOME:
Hospitality suite fees -- -- -- 53
Occupancy fees 66,586 67,475 161,703 124,158
--------- --------- ----------- -----------
NET INCOME DISTRIBUTION $ 223,179 $ 297,382 $ 491,251 $ 507,844
========= ========= =========== ===========
Average daily distribution $ 8.34 $ 11.38 $ 9.37 $ 9.83
Average room rate $ 87.49 $ 86.98 $ 79.17 $ 80.53
Room nights 6,621 8,288 16,180 15,587
Occupancy percentage 24.7% 31.7% 30.9% 30.l%
Average number of available units 294 288 290 284
Number of units in Rental Pool at
end of period 298 298 -- --
</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 17
<PAGE> 18
TAMARRON RENTAL POOL LEASE OPERATION
STATEMENTS OF CHANGES IN PARTICIPANTS' FUND BALANCES
FOR THE QUARTERS AND SIX MONTHS ENDED JUNE 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 223,179 297,382 491,251 507,844
Interest received or receivable from
Maintenance Escrow Fund 132 1,147 385 2,327
REDUCTIONS:
Amounts withheld for Maintenance Escrow Fund (33,295) (33,738) (80,855) (62,080)
Amounts accrued or paid to participants (190,016) (264,791) (410,781) (448,091)
--------- --------- --------- ---------
BALANCE, end of period $ -- $ -- $ -- $ --
========= ========= ========= =========
MAINTENANCE ESCROW FUND
BALANCE, beginning of period $ 210,371 $ 254,070 $ 197,548 $ 328,336
ADDITIONS:
Amounts withheld from occupancy fees 33,295 33,738 80,855 62,080
Interest earned 132 1,147 385 2,327
Reimbursement of designated items 33,021 20,273 53,932 33,659
Charges to participants to establish
or restore escrow balances 4,209 125,948 16,295 142,632
REDUCTIONS:
Maintenance and inventory charges (32,756) (51,905) (52,228) (88,622)
Refurbishing charges (2,237) (17,804) (24,668) (93,549)
Interest accrued or paid to
Distribution Fund (132) (1,147) (385) (2,327)
Designated items (33,021) (20,273) (53,932) (33,660)
Refunds to participants as prescribed
by Master Lease Agreement (6,045) (7,968) (10,965) (14,797)
--------- --------- --------- ---------
BALANCE, end of period $ 206,837 $ 336,079 $ 206,837 $ 336,079
========= ========= ========= =========
</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
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 2,974,688
<SECURITIES> 0
<RECEIVABLES> 4,484,822
<ALLOWANCES> (100,940)
<INVENTORY> 2,989,301
<CURRENT-ASSETS> 21,268,013
<PP&E> 71,331,156
<DEPRECIATION> (27,310,706)
<TOTAL-ASSETS> 91,316,335
<CURRENT-LIABILITIES> 8,350,362
<BONDS> 75,600,166
0
4,577,000
<COMMON> 5,000
<OTHER-SE> (13,714,707)
<TOTAL-LIABILITY-AND-EQUITY> 91,316,335
<SALES> 10,910,270
<TOTAL-REVENUES> 32,730,941
<CGS> 3,305,874
<TOTAL-COSTS> 28,060,011
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 89,609
<INTEREST-EXPENSE> 1,105,481
<INCOME-PRETAX> 2,500,071
<INCOME-TAX> 876,133
<INCOME-CONTINUING> 1,623,938
<DISCONTINUED> 0
<EXTRAORDINARY> (288,600)
<CHANGES> 0
<NET-INCOME> 1,207,182
<EPS-PRIMARY> 241.43
<EPS-DILUTED> 241.43
</TABLE>
