<PAGE> 1
FORM 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 June 30, 1998
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.)
36750 US 19 N., Palm Harbor, Florida 34684
- ---------------------------------------- ---------
(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 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 or 18
<PAGE> 2
GOLF HOST RESORTS, INC. AND SUBSIDIARY
(A WHOLLY OWNED SUBSIDIARY OF GOLF HOSTS, INC.)
BALANCE SHEETS
ASSETS
(Substantially all pledged)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
----------- -----------
(unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 54,447 $ 56,090
Restricted cash 2,978,561 2,238,767
Accounts receivable, net 4,985,561 5,472,228
Inventories and supplies 1,405,981 1,899,598
Prepaid expenses and other assets 787,544 684,497
Intercompany receivables 2,394,123 2,857,240
----------- -----------
12,606,217 13,208,420
Assets held for sale 10,740,847 9,038,309
----------- -----------
Total current assets 23,347,064 22,246,729
INTANGIBLES, net 32,443,728 32,879,352
PROPERTY AND EQUIPMENT, at cost, less
accumulated depreciation and amortization 38,157,621 35,725,251
OTHER ASSETS 2,173,984 1,996,301
----------- -----------
$96,122,397 $92,847,633
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
Page 2
<PAGE> 3
GOLF HOST RESORTS, INC. AND SUBSIDIARY
(A WHOLLY OWNED SUBSIDIARY OF GOLF HOSTS, INC.)
BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
----------- -----------
(unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 6,610,019 $ 7,854,720
Accrued expenses 5,767,787 5,552,488
Deposits and prepaid fees 2,022,797 2,907,472
----------- -----------
Total current liabilities 14,400,603 16,314,680
----------- -----------
LONG-TERM OBLIGATIONS 80,712,166 77,999,163
DEFERRED INCOME TAXES (Note 3) -- 13,134,558
----------- -----------
Total liabilities 95,112,769 107,448,401
----------- -----------
SHAREHOLDER'S EQUITY (DEFICIT)
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, issued, and outstanding 4,577,000 4,577,000
Paid-in capital (13,557,000) (13,557,000)
Retained earnings (deficit) 9,984,628 (5,625,768)
----------- -----------
Total shareholder's equity (deficit) 1,009,628 (14,600,768)
----------- -----------
Total liabilities and shareholder's
equity (deficit) $96,122,397 $92,847,633
=========== ===========
</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 Seven day 84 day Six months Seven day
ended period ended period ended ended period ended
June 30, 1998 June 30, 1997 June 23, 1997 June 30, 1998 June 30, 1997
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
REVENUES:
Resort facilities $ 4,586,871 $ 346,283 $ 4,106,527 $ 12,406,347 $ 346,283
Food and beverage 4,358,864 275,690 3,485,895 9,364,667 275,690
Golf 4,090,597 236,227 3,745,237 10,238,702 236,227
Other 1,958,387 122,733 1,442,607 3,962,913 122,733
Real estate activities - - - - -
------------- ------------- ------------- ------------- -------------
14,994,719 980,933 12,780,266 35,972,629 980,933
------------- ------------- ------------- ------------- -------------
COSTS AND OPERATING EXPENSES:
Resort facilities 3,502,391 308,252 3,805,167 8,818,985 308,252
Food and beverage 2,854,922 203,215 2,475,719 6,085,295 203,215
Golf 1,862,878 112,614 1,538,916 3,841,072 112,614
Other 3,549,683 347,802 3,707,736 7,445,023 347,802
General and administrative 1,252,384 93,495 1,221,000 2,369,060 93,495
Real estate activities - - 1,989 - -
------------- ------------- ------------- ------------- -------------
13,022,258 1,065,378 12,750,527 28,559,435 1,065,378
------------- ------------- ------------- ------------- -------------
OPERATING (LOSS) INCOME 1,972,461 (84,445) 29,739 7,413,194 (84,445)
INTEREST, NET 2,478,750 160,000 480,143 4,719,067 160,000
------------- ------------- ------------- ------------- -------------
(LOSS) INCOME BEFORE INCOME TAXES (506,289) (244,445) (450,404) 2,694,127 (244,445)
PARENT INCOME TAX CHARGE (BENEFIT) (818,543) (91,667) (234,400) 381,614 (91,667)
------------- ------------- ------------- ------------- -------------
INCOME (LOSS) BEFORE EXTRAORDINARY
ITEMS 312,254 (152,778) (216,004) 2,312,513 (152,778)
GAIN FROM CHANGE IN TAX STATUS 13,426,039 - - 13,426,039 -
LOSS ON EARLY EXTINGUISHMENT OF
LONG TERM DEBT (NET OF TAXES OF $155,400) - - (288,600) - -
------------- ------------- ------------- ------------- -------------
NET INCOME (LOSS) 13,738,293 (152,778) (504,604) 15,738,552 (152,778)
DIVIDEND REQUIREMENTS ON
PREFERRED STOCK 64,078 4,929 59,149 128,156 4,929
------------- ------------- ------------- ------------- -------------
NET CHANGE IN EARNINGS (DEFICIT) $ 13,674,215 ($ 157,707) ($ 563,753) $ 15,610,396 ($ 157,707)
============= ============= ============= ============= =============
EARNINGS (LOSS) PER COMMON SHARE $ 2,734.84 ($ 31.54) ($ 112.75) $ 3,122.08 ($ 31.54)
============= ============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
174 day
period ended
June 23, 1997
REVENUES: -------------
<S> <C>
Resort facilities $ 10,775,626
Food and beverage 8,106,385
Golf 9,347,282
Other 3,340,715
Real estate activities 180,000
-------------
31,750,008
-------------
COSTS AND OPERATING EXPENSES:
Resort facilities 9,083,194
Food and beverage 5,591,373
Golf 3,247,628
Other 7,672,813
General and administrative 2,374,385
Real estate activities 90,618
-------------
28,060,011
-------------
OPERATING (LOSS) INCOME 3,689,997
INTEREST, NET 945,481
-------------
(LOSS) INCOME BEFORE INCOME TAXES 2,744,516
PARENT INCOME TAX CHARGE (BENEFIT) 967,800
-------------
INCOME (LOSS) BEFORE EXTRAORDINARY
ITEMS 1,776,716
GAIN FROM CHANGE IN TAX STATUS -
LOSS ON EARLY EXTINGUISHMENT OF
LONG TERM DEBT (NET OF TAXES OF $155,400) (288,600)
-------------
NET INCOME (LOSS) 1,488,116
DIVIDEND REQUIREMENTS ON
PREFERRED STOCK 123,227
-------------
NET CHANGE IN EARNINGS (DEFICIT) $ 1,364,889
=============
EARNINGS (LOSS) PER COMMON SHARE $ 272.98
=============
</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 Earnings Shareholder's
Shares Amount Shares Amount Capital (Deficit) Equity (Deficit)
-------- -------- --------- --------- ------------ ------------ ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
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 - - - - - (3,941,666) (3,941,666)
Net change in earnings - - - - - 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 change in deficit - - - - - (5,625,768) (5,625,768)
-------- -------- --------- ---------- ------------ ------------ ------------
Balance, December 31, 1997 5,000 5,000 4,577,000 4,577,000 (13,557,000) (5,625,768) (14,600,768)
Net change in earnings - - - - - 15,610,396 15,610,396
-------- -------- --------- ---------- ------------ ------------ ------------
Balance, June 30, 1998 5,000 $ 5,000 4,577,000 $4,577,000 ($13,557,000) $ 9,984,628 $ 1,009,628
======== ======== ========= ========== ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 5
<PAGE> 6
GOLF HOST RESORTS, INC. AND SUBSIDIARY
(A WHOLLY OWNED SUBSIDIARY OF GOLF HOSTS, INC.)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six months Seven day 174 day
ended period ending period ended
June 30, June 30, June 23,
1998 1997 1997
------------- ------------- -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ 15,738,552 ($ 152,778) $ 1,488,116
Noncash items included in income:
Provision for bad debts - - 89,609
Depreciation and amortization 1,431,639 7,480 1,282,510
Gain from change in tax status (13,426,039)
Decrease in deferred tax 291,481 (91,667) -
Changes in operating working capital (1,441,673) 236,965 (2,059,667)
------------- ------------- -------------
Cash provided by operations 2,593,960 - 800,568
------------- ------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
(Decreases) increases in other assets (177,683) - 62,302
Purchases of property and equipment (3,416,166) - (1,517,431)
Net recovery of cost of property and
equipment sold or retired (12,219) - -
Increase in assets held for sale (1,702,538) - -
Reductions in notes receivable - - 1,185,120
------------- ------------- -------------
Cash (used for) investing (5,308,606) - (270,009)
------------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Decreases in long-term obligations (355,987) - -
Additional borrowings 3,068,990 - 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 by financing 2,713,003 - 1,955,444
------------- ------------- -------------
NET (DECREASE) INCREASE IN CASH (1,643) - 2,486,003
CASH, BEGINNING OF PERIOD 56,090 2,974,688 488,685
------------- ------------- -------------
CASH, END OF PERIOD $ 54,447 $ 2,974,688 $ 2,974,688
============= ============= =============
NONCASH FINANCING AND INVESTING ACTIVITIES:
Preferred stock dividend liability of Golf Hosts, Inc.
satisfied through the intercompany account $ 128,156 $ 4,929 $ 123,227
The Company transferred its investment in
GTA to GHI $ - $ 8,975,000 $ -
OTHER INFORMATION
Interest paid in cash $ 1,933,198 $ - $ 965,117
Income taxes paid in cash $ - $ - $ 118,090
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 6
<PAGE> 7
GOLF HOST RESORTS, INC. AND SUBSIDIARY
(A WHOLLY OWNED SUBSIDIARY OF GOLF HOSTS, INC.)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 AND 1997
(1) ORGANIZATION, BUSINESS, LIQUIDITY AND ACCOUNTING POLICIES
During the quarter, there was no significant change from the 10-K filing on
December 31, 1997.
Financial Statement Presentation
Certain reclassifications have been made to the June 1997 financial
statements to conform to the December 1997 presentation.
(2) LONG-TERM OBLIGATIONS
Long-term obligations consist of the following:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
------------- -------------
<S> <C> <C>
Participating mortgage note at varying pay
rates maturing in 2027 $ 69,725,000 $ 69,975,000
$9,000,000 participating mortgage note
credit facility 6,093,152 3,024,163
Mortgage note at 6.34%, maturing in 2002 4,894,014 5,000,000
------------- -------------
$ 80,712,166 $ 77,999,163
============= =============
</TABLE>
(3) INCOME TAXES
On April 17, 1998, the Company filed an election with the Internal Revenue
Service to change its tax status to a qualified subchapter S subsidiary
effective February 3, 1998. As as result of this election all deferred tax
liability has been removed from the balance sheet and reflected as an
extraordinary item in the statements of income.
Page 7
<PAGE> 8
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 of operations for 1998 and 1997,
the results of operations of Tamarron, which are included in Assets Held for
Sale at June 30, 1998, are included.
Guest occupancy for the quarter, measured in room nights, increased 8.1% from
the level of the prior year. On a divisional basis, Innisbrook's occupancy rose
9.7% while Tamarron experienced a decline in occupancy of .6%. The increase in
Innisbrook's occupancy occurred primarily in conference room nights while golf
groups and social room nights posted a modest improvement.
Revenues from resort operations on a per occupied room basis increased 12.2%
from $334.22 to $373.57. The improved guest spending is primarily attributable
to Innisbrook, which enjoyed a 24% increase in gross operating revenue while
Tamarron's gross operating revenue rose only 3%. In addition to higher occupancy
levels, Innisbrook's average room rate improved 8.4%. Food and beverage revenue
posted a 29.5% improvement as the increased room nights were generated entirely
by conference business and the revenue per meal increased 6.5%. Innisbrook golf
revenues also reflected improved spending per occupied room as revenue per
player rose 5.5%. On a divisional basis, Innisbrook's and Tamarron's revenue per
occupied room for the second quarter of 1998 and 1997 were $393.04 and $267.41
as compared to $348.82 and $257.55, respectively. As a result of the improved
occupancy and guest spending, total resort operations revenues rose $2.9
million, or 21%. Real estate activities did not generate revenue in the second
quarter of either year. Six of the nine Pine Ridge homesites remain unsold.
Relative to total resort operations revenues, costs and operating expenses
declined to 90.8% as compared to 100.7% in 1997. At Innisbrook, gross operating
income grew 22.8% as relative departmental operating expense levels remained in
line with the revenue growth. Fixed charges and other expenses approximated the
prior year as increased marketing costs and management fees were offset by a
16.0% decline in rental pool distribution expense. Tamarron's cost and operating
expenses grew slightly to 136.2% of revenues as compared to 132.6% the prior
year.
FINANCIAL CONDITION AND LIQUIDITY
The Company's working capital position (exclusive of Assets Held for Sale) was a
deficit of $1,794,000 as compared to a deficit of $3,106,000 at December 31,
1997. The Company typically experiences seasonal fluctuations in its net working
capital position without normally impairing its ability to pay trade creditors
in a timely manner and satisfy its financial obligations in an orderly fashion.
However, 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 1998. The Company has evaluated the cash needs with respect to these deficits
and planned capital expenditures and has reason to believe that cash flow
generated from operations during the first half of the year will not be
sufficient to meet the expected cash needs of the second half of 1998.
Management recognizes that the Company must generate additional cash resources
to ensure the continuation of operations and anticipates funding any cash flow
deficits by obtaining additional financing from lending institutions, deferring
certain capital expenditures, sales of investments under appropriate market
conditions, sales of certain significant operating and non-operating assets,
additional cash advances by the Company's parent and Westin, and the infusion of
additional capital by the shareholders of the Company's parent. Management
expects these efforts to generate enough cash to cover any cash deficiency
experienced during the year. In this vein, the Company has entered 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 an accounts receivable line of
credit with major financial institutions.
While the Company has a substantial retained deficit, based on existing cash
levels and the additional cash sources discussed above, the Company assesses its
liquidity as satisfactory.
Page 8
<PAGE> 9
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
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, 1998.
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
None
- ----------
* As previously reported on 10-Q
Page 9
<PAGE> 10
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: 8/14/98 By: /s/ Merrick Kleeman
------------------ ---------------------------
Merrick Kleeman
President
Date: 8/14/98 By: /s/ R.L. Akin
------------------ ---------------------------
Richard L. Akin
Vice President and Treasurer
Page 10
<PAGE> 11
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, 1998 and 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, 1997 (file No. 2-64309).
Page 11
<PAGE> 12
INNISBROOK RENTAL POOL LEASE OPERATION
BALANCE SHEETS
JUNE 30, 1998 AND 1997
DISTRIBUTION FUND
<TABLE>
<CAPTION>
1998 1997
---------- ----------
ASSETS
<S> <C> <C>
RECEIVABLE FROM GOLF HOST RESORTS, INC
FOR DISTRIBUTION - FULLY SECURED $1,843,159 $1,982,583
INTEREST RECEIVABLE FROM MAINTENANCE
ESCROW FUND 22,127 29,522
---------- ----------
$1,865,286 $2,012,105
========== ==========
LIABILITIES AND PARTICIPANTS' FUND BALANCES
DUE TO PARTICIPANTS FOR DISTRIBUTION $1,447,419 $1,464,014
DUE TO MAINTENANCE ESCROW FUND 417,867 318,529
RESERVE FOR ESTIMATED LIFE-SAFETY
REIMBURSEMENT - 229,562
PARTICIPANTS' FUND - -
---------- ----------
$1,865,286 $2,012,105
========== ==========
MAINTENANCE ESCROW FUND
ASSETS
CASH AND CASH EQUIVALENTS $1,862,745 $2,134,454
INVENTORIES - -
RECEIVABLES FROM DISTRIBUTION FUND 417,867 318,529
INTEREST RECEIVABLE 31,295 29,135
---------- ----------
$2,311,907 $2,482,118
========== ==========
LIABILITIES AND PARTICIPANTS' FUND BALANCES
ACCOUNTS PAYABLE $ 17,716 $ 378
INTEREST PAYABLE TO DISTRIBUTION FUND 22,127 29,522
CARPET CARE RESERVE 19,509 34,293
PARTICIPANTS' FUND BALANCES 2,252,555 2,417,925
---------- ----------
$2,311,907 $2,482,118
========== ==========
</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 12
<PAGE> 13
INNISBROOK RENTAL POOL LEASE OPERATION
STATEMENTS OF OPERATIONS
FOR THE QUARTERS AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997
DISTRIBUTION FUND
<TABLE>
<CAPTION>
Current Quarter Year-to-Date
----------------------------- ------------------------------
1998 1997 1998 1997
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
GROSS REVENUES $ 4,648,684 $ 3,761,563 $ 12,393,503 $ 9,643,218
----------- ----------- ------------ -----------
DEDUCTIONS:
Agents' commissions 209,030 54,459 459,819 157,076
Credit card fees 37,556 - 119,857 -
Audit fees 3,250 3,000 6,499 6,100
----------- ----------- ------------ -----------
249,836 57,459 586,175 163,176
----------- ----------- ------------ -----------
ADJUSTED GROSS REVENUES 4,398,848 3,704,104 11,807,328 9,480,042
AMOUNT RETAINED BY LESSEE (2,190,295) (1,740,929) (5,880,163) (4,455,619)
----------- ----------- ------------ -----------
GROSS INCOME DISTRIBUTION 2,208,553 1,963,175 5,927,165 5,024,423
ADJUSTMENTS TO GROSS INCOME
DISTRIBUTION:
Management fee (238,143) - (636,865) -
Marketing fee (129,896) - (347,380) -
Miscellaneous pooled expense (12,666) - (38,009) -
Corporate complimentary
occupancy fee 9,544 4,574 16,553 8,494
Westin Associate room fees 7,960 - 7,960 -
Occupancy fees (469,464) (424,702) (1,052,771) (920,252)
Advisory Committee expenses (6,883) (25,601) (16,408) (54,313)
Life-safety reimbursement - (47,596) - (229,562)
----------- ----------- ------------ -----------
NET INCOME DISTRIBUTION 1,369,005 1,469,850 3,860,245 3,828,790
ADJUSTMENTS TO NET INCOME
DISTRIBUTION:
Occupancy fees 469,464 424,702 1,052,771 920,252
Hospitality suite fees 134 2,059 134 5,081
Greens fees 3,236 20,890 8,759 56,680
Additional participation credit 1,320 17,485 2,640 35,320
----------- ----------- ------------ -----------
AMOUNT AVAILABLE FOR
DISTRIBUTION TO PARTICIPANTS 1,843,159 1,934,986 4,924,549 4,846,123
=========== =========== ============ ===========
Average daily distribution $ 23.23 $ 23.59 $ 32.53 $ 31.06
Average room rate $ 121.83 $ 108.20 $ 143.93 $ 127.50
Occupied room nights 38,156 34,766 86,107 75,633
Available room nights 79,347 80,026 151,408 156,048
Occupancy percentage 48.1% 42.4% 56.9% 48.5%
Average number of available units 872 901 837 862
</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 OPERATION
STATEMENTS OF CHANGES IN PARTICIPANTS' FUND BALANCES
FOR THE QUARTERS AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997
DISTRIBUTION FUND
<TABLE>
<CAPTION>
Current Quarter Year-to-Date
---------------------------- ----------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
BALANCE, beginning of period $ - $ - $ - $ -
ADDITIONS:
Amounts available for distribution
before life-safety reimbursement 1,843,159 1,800,617 4,924,549 4,893,720
Interest received or receivable from
Maintenance Escrow Fund 22,127 29,522 43,103 51,584
REDUCTIONS:
Amount withheld for Maintenance Escrow Fund (417,867) (318,529) (937,145) (690,194)
Amounts held in reserve for estimated
life-safety reimbursement - (47,596) - (229,562)
Amounts accrued or paid to participants (1,447,419) (1,464,014) (4,030,507) (4,025,548)
----------- ----------- ----------- -----------
BALANCE, end of period $ - $ - $ - $ -
=========== =========== =========== ===========
MAINTENANCE ESCROW FUND
BALANCE, beginning of period $ 2,231,466 $ 2,329,421 $ 1,901,616 $ 1,734,415
ADDITIONS:
Amounts withheld from occupancy fees 417,867 318,529 937,145 690,194
Interest earned 22,127 29,522 43,103 51,584
Charges to participants to establish
or restore escrow balances 43,976 377,022 127,779 830,345
REDUCTIONS:
Maintenance charges (382,848) (564,468) (577,062) (776,068)
Carpet care reserve deposit (9,389) (8,497) (21,055) (22,994)
Interest accrued or paid to
Distribution Fund (22,127) (29,522) (43,103) (51,584)
Refunds to participants as prescribed
by Master Lease Agreement (48,517) (34,082) (115,868) (37,967)
----------- ----------- ----------- -----------
BALANCE, end of period $ 2,252,555 $ 2,417,925 $ 2,252,555 $ 2,417,925
=========== =========== =========== ===========
</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
TAMARRON RENTAL POOL LEASE OPERATION
BALANCE SHEETS
JUNE 30, 1998 AND 1997
DISTRIBUTION FUND
<TABLE>
<CAPTION>
1998 1997
------------- -------------
<S> <C> <C>
ASSETS
CASH $ 1,000 $ 1,000
RECEIVABLE FROM GOLF HOST RESORTS, INC
FOR DISTRIBUTION 283,690 256,200
INTEREST RECEIVABLE FROM MAINTENANCE
ESCROW FUND 376 132
------------- -------------
$ 285,066 $ 257,332
============= =============
LIABILITIES AND PARTICIPANTS' FUND BALANCES
DUE TO PARTICIPANTS FOR DISTRIBUTION $ 235,763 $ 190,016
DUE TO MAINTENANCE ESCROW FUND 49,303 67,316
PARTICIPANTS' FUND BALANCES - -
------------- -------------
$ 285,066 $ 257,332
============= =============
MAINTENANCE ESCROW FUND
ASSETS
CASH AND CASH EQUIVALENTS $ 33,553 $ 13,301
DUE FROM DISTRIBUTION FUND 49,303 67,316
INTEREST RECEIVABLE - -
INVENTORY:
Linen 44,147 114,241
Materials and supplies 15,274 17,224
DEPOSITS - -
------------- -------------
$ 142,277 $ 212,082
============= =============
LIABILITIES AND PARTICIPANTS' FUND BALANCES
ACCOUNTS PAYABLE $ 18,687 $ 5,113
INTEREST PAYABLE TO DISTRIBUTION FUND 376 132
PARTICIPANTS' FUND BALANCES 123,214 206,837
------------- -------------
$ 142,277 $ 212,082
============= =============
</TABLE>
These statements were prepared from the books and records of the Rental Pool
without audit and, in the opinion of management's, include all adjustments which
are necessary for a fair presentation.
Page 15
<PAGE> 16
TAMARRON RENTAL POOL LEASE OPERATION
STATEMENT OF OPERATIONS
FOR THE QUARTERS AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997
DISTRIBUTION FUND
<TABLE>
<CAPTION>
Current Quarter Year-to-Date
------------------------- -----------------------------
1998 1997 1998 1997
--------- --------- ----------- -----------
<S> <C> <C> <C> <C>
GROSS REVENUES $ 632,602 $ 579,286 $ 1,119,210 $ 1,280,976
--------- --------- ----------- -----------
DEDUCTIONS:
Agents' commission 9,633 12,418 59,305 70,465
Sales and marketing expenses 47,445 46,345 83,941 102,480
Audit fees 2,972 2,600 5,573 5,200
--------- --------- ----------- -----------
60,050 61,363 148,819 178,145
--------- --------- ----------- -----------
ADJUSTED GROSS REVENUES 572,552 517,923 970,391 1,102,831
MANAGEMENT FEE (286,276) (258,961) (485,195) (551,415)
--------- --------- ----------- -----------
GROSS INCOME DISTRIBUTION 286,276 258,962 485,196 551,416
ADJUSTMENTS TO GROSS INCOME
DISTRIBUTION:
Corporate complimentary occupancy fees 428 864 735 1,486
Occupancy fees (66,085) (66,586) (129,648) (161,703)
Designated items (15,259) (33,021) (31,878) (53,932)
Advisory Committee expenses (3,014) (3,626) (5,941) (7,719)
--------- --------- ----------- -----------
POOLED INCOME 202,346 156,593 318,464 329,548
ADJUSTMENTS TO POOLED INCOME:
Hospitality suite fees - - - -
Occupancy fees 66,085 66,586 129,648 161,703
--------- --------- ----------- -----------
NET INCOME DISTRIBUTION $ 268,431 $ 223,179 $ 448,112 $ 491,251
========= ========= =========== ===========
Average daily distribution $ 10.14 $ 8.34 $ 8.60 $ 9.37
Average room rate $ 96.20 $ 87.49 $ 87.47 $ 79.17
Room nights 6,576 6,621 12,795 16,180
Occupancy percentage 24.8% 24.7% 24.6% 30.9%
Average number of available units 291 294 288 290
</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
STATEMENT OF CHANGE IN PARTICIPANTS' FUND BALANCES
FOR THE QUARTERS AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997
DISTRIBUTION FUND
<TABLE>
<CAPTION>
Current Quarter Year-to-Date
------------------------ ------------------------
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
BALANCE, beginning of period $ - $ - $ - $ -
ADDITIONS:
Amounts available for distribution 268,431 223,179 448,112 491,251
Interest received or receivable from
Maintenance Escrow Fund 376 132 778 385
REDUCTIONS:
Amounts withheld for Maintenance Escrow Fund (33,044) (33,295) (64,828) (80,855)
Amounts accrued or paid to participants (235,763) (190,016) (384,062) (410,781)
--------- --------- --------- ---------
BALANCE, end of period $ - $ - $ - $ -
========= ========= ========= =========
MAINTENANCE ESCROW FUND
BALANCE, beginning of period $ 172,418 $ 210,371 $ 165,522 $ 197,548
ADDITIONS:
Amounts withheld from occupancy fees 33,044 33,295 64,828 80,855
Interest earned 376 132 778 385
Reimbursement of designated items 15,259 33,021 31,878 53,932
Charges to participants to establish
or restore escrow balances 96,422 4,209 201,694 16,295
REDUCTIONS:
Maintenance and inventory charges (147,408) (32,756) (180,484) (52,228)
Refurbishing charges (29,334) (2,237) (120,588) (24,668)
Interest accrued or paid to Distribution Fund (376) (132) (778) (385)
Designated items (15,259) (33,021) (31,878) (53,932)
Refunds to participants as prescribed
by Master Lease Agreement (1,928) (6,045) (7,758) (10,965)
--------- --------- --------- ---------
BALANCE, end of period $ 123,214 $ 206,837 123,214 $ 206,837
========= ========= ========= =========
</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
