UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street
Washington, D.C. 20549
FORM 10-KSB
ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended March 31, 1999
Commission File NO. 0-3858
INTERNATIONAL LEISURE HOSTS, LTD.
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(Exact name of Registrant as specified in its charter)
Wyoming 86-0224163
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
3207 S. Hardy Drive, Tempe, AZ 85282
- --------------------------------------- ----------
(Address of principal executive office) (Zip Code)
Issuer's telephone number, including area code (602) 829-7600
1702 East Highland Avenue, Suite 312, Phoenix, Arizona 85016 (Former address)
Securities registered under Section 12(b) of the Act:
Name of each exchange
Title of Each Class on which registered
------------------- -------------------
NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock $.01 par value
---------------------------
(Title of Class)
<PAGE>
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days:
YES [X] NO [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B. If not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year. $4,218,365
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As of June 8, 1999, there were 694,577 shares of common stock outstanding and
the aggregate market value of the common shares (based on the average of the bid
and ask price of these shares on the NASDAQ over the counter market) of ILHL
held by non-affiliates was approximately $696,375.
2
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PART I
Page
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Item 1. Business 4
Item 2. Properties 6
Item 3. Legal Proceedings 7
Item 4. Submission of Matters to a Vote of Security Holders 7
PART II
Item 5. Market for the Registrant's Common 8
Stock and Related Security Holder Matters
Item 6. Management's Discussion and Analysis 9
of Financial Condition and Results of
Operations
Item 7. Financial Statements and Supplemental Data 12
Item 8. Changes in and Disagreements with 23
Accountants on Accounting and Financial
Disclosure
PART III
Item 9. Directors and Executive Officers of the Registrant 23
Item 10. Executive Compensation 24
Item 11. Security Ownership of Certain 25
Beneficial Owners and Management
Item 12. Certain Relationships and Related Transactions 26
PART IV
Item 13. Exhibits (including Exhibit Index), 27
Financial Statements, Schedules and
Reports on Form 8-K
3
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PART I
ITEM 1. BUSINESS
The statements contained in this Report regarding management's
anticipation of the Company's facility completion schedules, quality of
facilities, fulfillment of National Park Service requirements, consumer response
to marketing efforts, ability to offset inflation and adequacy of financing,
constitute "forward-looking" statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Management's anticipation is based
upon assumptions regarding levels of competition, acceptance of facilities by
consumers, favorable weather conditions, ability to complete facility
construction, the market in which the Company operates, the stability of the
economy and stability of the regulatory environment. Any of these assumptions
could prove inaccurate, and therefore there can be no assurance that the
forward-looking information will prove to be accurate.
International Leisure Hosts, Ltd. (the "Company") was formed under
Wyoming law as a corporation on October 18, 1962. The principal business of the
Company is the ownership and operation of Flagg Ranch Resort ("Flagg"), a
full-service resort motel and trailer park located on the John D. Rockefeller
Jr. Memorial Parkway approximately four miles north of Grand Teton National Park
("Grand Teton") and two miles south of the southern entrance of Yellowstone
National Park ("Yellowstone").
Flagg undertook a major redevelopment plan in fiscal year 1995 which
included construction of a new main lodge building, plus 50 new cabin units. The
new lodge and cabins opened for business in May 1995. The lodge, which replaced
existing facilities, includes a restaurant, lounge, gift shop, grocery store,
front desk and gasoline station. The 50 new cabin units replaced 42 rustic cabin
units, which will be removed from the property. During fiscal year 1996, the
Company began construction of an additional 42 new cabin units, a maintenance
building and a laundry facility. The 42 new cabins were substantially complete
in December 1996. Although these cabins were ready for occupancy during the
winter, certain finish items on the outside of the cabins could not be completed
until the summer of 1997. The 42 cabins replaced the Company's 54-unit motel
which was used for visitors through the summer of 1998 and then converted to
employee housing. The new maintenance and laundry facilities were completed by
August 31, 1997.
During fiscal year 1999, Flagg provided overnight accommodations to
national park visitors for up to 328 persons per night via its 92 cabins. In
addition to the cabin units, Flagg operates a full service trailer park and
campground that provides water, electrical and sewer connections for 97
recreational vehicles, plus 74 campsites without utility hookups.
Flagg is operated as a seasonal resort. The two seasons, summer and
winter, coincide with the opening and closing dates of the two national parks.
The summer season, which runs from approximately May 15th through October 15th
of each year, is the height of activity at Flagg. In addition to the motel and
trailer park/campground accommodations, Flagg offers numerous services and
activities for the guests' enjoyment including Snake River float trips,
horseback riding and a variety of scenic hiking trails. The summer season
accounted for 73% respectively of Flagg's fiscal 1999 and 1998 operating
revenues.
4
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Prior to the recently completed redevelopment of its facilities, Flagg
was not a destination stop in the summer, but instead provided basic services
for visitors to the two national parks. Most of the guests stayed one to two
nights and the majority of the patrons represented overflow from other national
park facilities similar to those provided by Flagg. However, with the completion
of the new main lodge and cabin units, management believes that Flagg now offers
facilities equal or superior to those of other national park concessionaires. As
a result, Flagg intends to develop a reputation as a destination location for
visitors in addition to catering to guests staying only one to two nights.
The winter season, which runs from mid-December through mid-March
accounted for 27% of Flagg's fiscal 1999 and 1998 operating revenues.
Yellowstone receives approximately 150 to 400 inches of snowfall per year which
turns the park into a winter recreational destination. The National Park Service
("NPS") grooms, but does not plow, the snow on the roads inside the park. The
only modes of transportation into the park are snowmobile and snowcoach.
Management believes that Flagg's location at the south entrance to
Yellowstone makes it a premiere location for winter visitors. The road is well
plowed from Jackson, Wyoming to the entrance to Flagg offering easy access to
Flagg for visitors. However, visitors cannot proceed past Flagg and into
Yellowstone unless they are traveling via snowmobile or snowcoach. Flagg is the
only vendor licensed by the NPS with unguided snowmobile tours at the south
entrance to Yellowstone. In fiscal year 1999, Flagg had a fleet of 85 Polaris
snowmobiles available to the public for rental. In addition, Flagg offers daily
trips to Old Faithful Lodge in Yellowstone via its two 11-passenger snowcoachs.
Cross-country skis and snowshoes are also available for rental.
The Company receives its operating authorization from the NPS. The NPS
Contract (the "Contract") which became effective on January 1, 1990 will expire
on December 31, 2009. The Contract requires the Company to provide certain
services to the public and authorizes other services that may be offered each
year. It grants the NPS the right to regulate the adequacy, types and charges of
all services offered to the public. The terms and conditions of the Contract are
under the direct supervision of the Superintendent of Grand Teton National Park.
The fee payable to the NPS under the Contract is subject to review and
adjustment every five years. For fiscal 1999, the fee was calculated at 2% of
the Company's gross receipts (as defined in the Contract).
Flagg faces competition from hotels, camping areas and trailer
facilities in Yellowstone and in Grand Teton as well as from a large number of
hotels and motels in Wyoming, Montana and Idaho offering some facilities which
are similar to those offered by Flagg. In addition, the business of Flagg is
susceptible to weather conditions and unfavorable trends in the economy as a
whole.
Business could be significantly affected negatively depending upon
actions which might be taken by the NPS if cutbacks are made to their budget. If
the NPS decides to close Yellowstone for the winter months, then Flagg would
have to discontinue its winter operations. NPS budget cutbacks could also
negatively impact the length of the summer season and the number of visitors to
the parks and have a corresponding negative impact on Flagg revenues.
5
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On May 20, 1997, the Fund for Animals, Biodiversity Legal Foundation
et. al. filed a lawsuit against the NPS challenging the action of the NPS
regarding winter use of Yellowstone and Grand Teton National Parks. The
plaintiffs have asked the Federal Court to stop winter activities, primarily
snowmobiling and related snow grooming, until environmental impacts are
documented. A settlement agreement was reached that requires the NPS to prepare
an environmental impact statement ("EIS") over the next three years, during
which time period the parks will continue activities under the existing winter
visitor-use plan. If the NPS is required to suspend or terminate winter
activities in Yellowstone National Park, Flagg Ranch would have to suspend or
discontinue its winter operations.
YEAR 2000 COMPLIANCE
The Year 2000 Issue is the result of computer programs being written
using two digits rather than four to define the applicable year. Any of the
Company's computer programs that have time-sensitive software may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result in
a system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions,
send invoices, or engage in similar normal business activities.
Both the Company's accounting software as well as its reservation
systems are already year 2000 compliant. Management has determined that the year
2000 issue will not pose significant operational problems for its computer
systems. As a result, all costs associated with this conversion
are being expensed as incurred.
In addition, the Company has communicated with others with whom it does
significant business to determine their Year 2000 Compliance readiness and the
extent to which the Company is vulnerable to any third party Year 2000 issues.
However, there can be no guarantee that the systems of other companies on which
the Company's systems rely will be timely converted, or that a failure to
convert by another company, or a conversion that is incompatible with the
Company's systems, would not have a material adverse effect on the Company.
ITEM 2. PROPERTIES
The Flagg facilities are located on approximately 70 acres in the John
D. Rockefeller Jr. Memorial Parkway. This entire tract of land which the Company
utilizes is owned by the Federal Government and its usage is governed by the
terms of the Contract.
Proprietary rights to certain facility improvements constructed by the
Company (including the new lodge and new cabin units) have been granted to the
Company under the terms of the Contract; however, the NPS may terminate the
Contract and purchase the Company's improvements, upon a determination that the
public interest requires Federal Government ownership of the improvements. In
such event, the Federal Government is required to pay a price for said
improvements equal to the cost of reconstruction less depreciation. If, however
the Contract is terminated by the Federal Government for default by the Company
for unsatisfactory performance as defined in the Contract, then the Federal
Government is required to pay a price equal to the tax basis of the
improvements. At the end of the Contract, if the Company is not the successful
bidder on a new contract for the property, then the Federal Government is
required to purchase from the Company the improvements (including the new lodge
and new cabin units) made to the property at a price equal to the cost of
reconstruction less depreciation.
6
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During fiscal year 1998, the Company incurred costs of approximately
$216,000 to complete construction of the 42 new cabins as well as other related
improvements. During fiscal year 1999, the Company incurred costs of
approximately $800,000 to begin moving its employee housing from its current
location to the high ground above the river. With the completion of the 42 new
cabin units in December 1998, the Company had a total of 146 lodging units
consisting of 92 cabin units and a 54-unit riverside motel complex available
during the majority of fiscal year 1998. The 54-unit riverside motel, which was
converted to employee housing in December 1997, was not available for guest
lodging during fiscal year 1999 and the number of lodging units available for
rent was 92.
Under the terms of the Contract, the Company is required to move the
existing 54-unit riverside motel, which has been converted to employee housing,
from its current location to the high ground above the river and make other
improvements prior to December 31, 1999. The remaining cost is estimated to be
between $1,200,000 and $1,500,000 depending on the extent of additional
improvements required by the NPS. If the Company elects to build new lodging
units to replace the converted 54-unit riverside motel, the additional cost to
build these units is estimated to be between $1,000,000 and $1,200,000. This
would result in a total remaining cost of relocation and new construction
combined of between $2,200,000 and $2,700,000.
On a temporary basis, during the summer of 1997, twenty-five
recreational vehicle sites and one tent site were not available for rental to
the public. These sites were utilized by construction workers during the
construction period and by employees until the new employee recreational vehicle
sites were completed. This reduced the campground facility from 97 to 72
recreational vehicle sites and from 74 to 73 tent sites, and thus negatively
impacted campground revenues during fiscal year 1998.
ITEM 3. LEGAL PROCEEDINGS
There are no material legal proceedings against International Leisure
Hosts, Ltd.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
7
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS
International Leisure Hosts, Ltd. common stock is traded on the OTC
bulletin board, quoted by NASDAQ under the symbol "ILHL". The following table
sets forth the high and low bid prices for the stock for each quarter for fiscal
years 1998 and 1999.
Bid
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Quarter Ended High Low
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June 30, 1997 6 1/8 5 1/4
September 30, 1997 7 5 1/2
December 31, 1997 7 1/4 6 3/8
March 31, 1998 6 3/4 5 3/4
June 30, 1998 6 1/4 5 7/8
September 30, 1998 5 3/4 5 1/2
December 31, 1998 4 3/4 4 1/4
March 31, 1999 5 3/4 5 1/2
Over-the-counter market quotations reflect inter-dealer prices, without
retail markup, markdown or commissions and may not necessarily represent actual
transactions. As of March 31, 1999, there were 694,577 shares of outstanding
common stock and an estimated 900 shareholders of record.
The level of trading during fiscal year 1999 was approximately 4,100
shares the first quarter, 3,500 shares the second quarter, 1,500 shares the
third quarter, and 2,700 shares the fourth quarter ending March 31, 1999.
Trading activity with respect to the common stock has been limited and the
volume of transactions should not of itself be deemed to constitute an
"established public trading market." A public trading market having the
characteristics of depth, liquidity and orderliness depends on the existence of
market makers as well as the presence of willing buyers and sellers, which are
circumstances over which the Company does not have control.
It is the policy of the Company not to pay dividends but instead to
retain earnings for use in the operation and expansion of its business.
SELECTED FINANCIAL DATA
The selected financial data for each of the five years in the period
ended March 31, 1999 have been derived from the Company's audited financial
statements, and should be read in conjunction with the financial statements and
related notes thereto and other financial information appearing elsewhere herein
and in Item 6. The selected financial data is not required by Form 10-KSB and is
included herein as an unnumbered item.
8
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FISCAL YEAR ENDED MARCH 31,
(In thousands except per share amounts)
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
Total Revenues $4,218 $4,631 $4,094 $3,976 $3,781
Net Income (Loss) 292 156 (113) 199 458
Net Income (Loss) Per Share- .42 .23 (.16) .29 .66
Basic
Total Assets 6,212 5,393 5,363 4,266 4,431
Long-Term Obligations 0 0 446 0 0
Shareholders' Equity 4,120 3,828 3,672 3,785 3,604
Book Value Per Share 5.93 5.51 5.29 5.45 5.16
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The Company's net income was $292,000, $.42 per share for the year
ended March 31, 1999. This compares to net income of $156,000, $.23 per share,
in 1998 and a net loss of $113,000, ($.16) per share, in 1997. The primary
factor contributing to the $136,000 increase in 1999 net income was a reduction
in labor and other operating costs resulting from an increase in efficiency.
Changes in the Company's revenues and expenses for the fiscal years 1999 and
1998 are summarized below. All references to years represent fiscal years ended
March 31.
Total revenues for 1999 decreased by $413,000 or 9% over 1998. Of this
decrease, $237,000 was from lodging, $108,000 from food service, $40,000 from
float trip revenue, $33,000 from trail ride revenue, $123,000 from snowmobile
revenue, $3,000 from transportation revenue and $1,000 from miscellaneous
revenue. Increases of $22,000 in RV/Tent rental, $55,000 in gift shop sales,
$38,000 in grocery store sales, $10,000 in gasoline sales and $7,000 in
snowcoach revenue partially offset the above decreases. The decrease in lodging
revenue is mainly attributable to the decrease in total number of rental units
available during the summer season from 146 in fiscal 1998 to 92 in fiscal 1999.
The decreased number of guests contributed to the decreases in food service,
trail ride and float trip revenue. Increases in gift shop and grocery store
revenue is mainly attributable to increased shelf space and better merchandise
display in both areas as well as less employee turnover and more attention to
the merchandise mix. Increases in RV/tent rental as well as gasoline sales is
attributed to a higher number of campsites available during the summer.
9
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While lodging revenue for the 1999 winter season was essentially
unchanged from 1998, the number of snowmobile rentals decreased from 4,622 in
1998 to 3,868 in 1999. Some of the decrease can be explained by the closure of
Yellowstone Park for several days during the very busy Christmas to New Year's
time period. The balance of the decrease is attributed to increased competition
from the Jackson Hole snowmobile rental companies as well as a decrease in the
overall number of winter visitors due to Delta Airlines decision to discontinue
full size jet service to Jackson Hole.
Total revenues for 1998 increased by $538,000 or 13% over 1997. Of this
increase, $295,000 was from lodging, $74,000 from food service, $58,000 from
float trip revenue, $25,000 from trail ride revenue, $165,000 from snowmobile
revenue, $38,000 from snowcoach revenue and $2,000 from transportation revenue.
Decreases of $52,000 in gift shop sales, $35,000 in grocery store sales, $1,000
in interest income, $17,000 in gasoline sales and $15,000 in miscellaneous
revenue partially offset the above increases. The increase in lodging revenue is
mainly attributable to the increase in total number of rental units available
during the summer season from 104 in fiscal 1997 to 146 in fiscal 1998. The
increased number of guests contributed to the increases in food service, trail
ride and float trip revenue. Decreases in gift shop and grocery store revenue is
mainly attributable to a higher than normal employee turnover in those areas
which resulted in less continuity of operations, less attention to the
merchandise mix and a resulting decrease in sales.
The 1998 winter season was longer than the 1997 winter season due to
mild weather which resulted in fewer road, airport and park closures. The 1998
winter season consisted of 81 days compared to 67 days in 1997. The number of
winter visitors through the south entrance of Yellowstone increased 46% in 1998
compared to 1997. As a result, the number of snowmobile rentals increased from
3,995 in 1997 to 4,622 in 1998.
COSTS AND EXPENSES
The ratio of cost of merchandise sold to sales of merchandise was 60%
in 1999, 59% in 1998, and 61% in 1997. Ending merchandise inventories increased
from approximately $50,000 at March 31, 1998 to approximately $92,000 at March
31, 1999 primarily due to the prior year inventory level being abnormally low.
Operating expenses decreased by $545,000 or 22% in 1999 as compared to
1998. In addition, the ratio of operating costs to operating revenues decreased
to 47% in 1999 from 55% in 1998. The major decreases consisted of $363,000 in
labor, $20,000 in utilities, $6,000 in office supplies, $82,000 in repairs and
maintenance, $26,000 in equipment rental, $107,000 in outside services, $12,000
in commissions, $9,000 in franchise fee, and $24,000 in miscellaneous. The above
decreases were partially offset by increases of $8,000 in operating supplies,
$7,000 in snowmobile parts and gas, $31,000 in advertising, $22,000 in
telephone, $6,000 in travel, $3,000 in printing, $9,000 in credit card costs,
$3,000 in postage and freight, $14,000 in licenses and fees, and $2,000 in
insurance. The labor cost decrease was primarily due to elimination of
guaranteed bonus/severance agreements as well as an overall reduction in the
size of the labor force. Outside services decreased due to the trail ride
operation being handled in house as well as an overall reduction in float and
trail ride revenue.
10
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Operating expenses increased by $189,000 or 8% in 1998 as compared to
1997. In addition, the ratio of operating costs to operating revenues decreased
to 55% in 1998 from 57% in 1997. The major increases consisted of $257,000 in
labor, $69,000 in outside services, and $20,000 in credit card/collection fees.
These increases were partially offset in part by the elimination of snowmobile
rental expense of $169,000 (which was partially offset by depreciation of
snowmobiles of $31,000 and loss on sale of snowmobiles of $94,000) and minor
decreases in other expenses. The labor increase was mainly the result of
increased managerial costs due to guaranteed bonus payments and severance
agreements. The increase in outside services costs were due to increased revenue
in both the float and horse activities which resulted in higher payments due per
lease agreements with the operators. The higher credit card/collection fees were
a result of higher gross revenues and corresponding increases in the use of
credit cards. Snowmobile rental expense was eliminated this year with the
Company's decision to purchase the snowmobiles.
General and administrative expenses decreased by $48,000 or 18% in 1999
as compared to 1998. The decrease consisted primarily of reductions in travel
and transportation of $24,000, legal and accounting of $26,000, and management
fees of $4,000. These reductions were partially offset by increases in office
supplies of $6,000.
General and administrative expenses decreased by $230,000 or 47% in
1998 as compared to 1997. The decrease consisted primarily of reductions in
telephone expense of $10,000 and management fees of $253,000 which was a result
of a change in management philosophy and structure. These reductions were
partially offset by increases in professional fees of $33,000.
During 1998, the Company had a loss on asset disposals of $94,000
partly resulting from the sale to a related party of the snowmobiles used in the
winter operation. Previously the Company had rented snowmobiles from a related
party and had included the rental cost in operating expenses.
INFLATION
The Company expects that it will be able to offset increased costs and
expenses, principally labor, caused by inflation, by increasing prices on its
services with minimal effect on operations.
LIQUIDITY AND CAPITAL RESOURCES
During fiscal 1999, the Company incurred costs of approximately
$800,000 related to certain construction projects. As a result, working capital
decreased to a negative $1,481,000 at March 31, 1999 from a negative $945,000 at
March 31, 1998. The Company may incur additional costs of between $1,200,000 and
$1,500,000 prior to December 31, 1999 to complete the relocation of employee
housing units as required under the NPS Contract.
The Company intends to fund these improvements through existing cash
funds and cash generated from operations. Cash generated from operations was
$964,000, $432,000, and $430,000 for the fiscal years ended 1999, 1998 and 1997,
respectively. The construction funds will have to be obtained from outside
sources to the extent they exceed cash generated from operations. There is no
guarantee that the Company will be able to procure financing on favorable terms.
11
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ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
International Leisure Hosts, Ltd.
Tempe, Arizona
We have audited the accompanying consolidated balance sheets of International
Leisure Hosts, Ltd. and subsidiary (the "Company") as of March 31, 1999 and
1998, and the related consolidated statements of operations, shareholders'
equity, and cash flows for each of the three years in the period ended March 31,
1999. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company at March 31, 1999 and
1998, and the results of its operations and its cash flows for each of the three
years in the period ended March 31, 1999 in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Phoenix, Arizona
June 8, 1999
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INTERNATIONAL LEISURE HOSTS, LTD.
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1999 AND 1998
- --------------------------------------------------------------------------------
1999 1998
----------- -----------
ASSETS (Note 5)
CURRENT ASSETS:
Cash & cash equivalents $ 296,291 $ 212,593
Accounts receivable 9,854 23,300
Accounts receivable from related party (Note 4) 82,800
Income tax refund receivable 23,471
Merchandise inventories 92,481 50,394
Prepaid expenses and other 18,936 10,491
Deferred income taxes (Note 2) 19,603
----------- -----------
Total current assets 417,562 422,652
----------- -----------
PROPERTY AND EQUIPMENT (Notes 3 and 5):
Buildings and improvements 5,421,138 5,017,059
Equipment 1,815,620 1,421,234
Leasehold improvements 325,600 325,600
Construction in progress 446,206 48,145
----------- -----------
Total property and equipment 8,008,564 6,812,038
Less accumulated depreciation and amortization 2,215,754 1,845,325
----------- -----------
Property and equipment - net 5,792,810 4,966,713
----------- -----------
DEPOSITS 1,500 3,402
----------- -----------
TOTAL $ 6,211,872 $ 5,392,767
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable under line of credit (Note 5) $ 1,460,000 $ 1,105,000
Accounts payable:
Trade 110,240 70,570
Related party (Note 4) 17,929
Income taxes payable 117,684
Accrued liabilities 44,257 61,323
Advance deposits 166,842 113,093
----------- -----------
Total current liabilities 1,899,023 1,367,915
DEFERRED INCOME TAXES (Note 2) 193,076 196,589
----------- -----------
Total liabilities 2,092,099 1,564,504
----------- -----------
SHAREHOLDERS' EQUITY:
Preferred stock, $5 par value - authorized
100,000 shares: none issued
Common stock,
$.01 par value - authorized 2,000,000 shares:
718,373 shares issued 7,184 7,184
Additional paid-in capital 656,426 656,426
Retained earnings 3,534,075 3,242,565
----------- -----------
4,197,685 3,906,175
Less common stock in Treasury - at cost,
23,796 shares (77,912) (77,912)
----------- -----------
Total shareholders' equity - net 4,119,773 3,828,263
----------- -----------
TOTAL $ 6,211,872 $ 5,392,767
=========== ===========
See notes to consolidated financial statements
13
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INTERNATIONAL LEISURE HOSTS, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED MARCH 31, 1999, 1998 AND 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
REVENUES:
Sales of merchandise $ 1,833,844 $ 1,821,890 $ 1,874,158
Room, cabin and trailer space rentals 1,578,763 1,810,328 1,515,218
Snowmobile rentals 562,284 670,537 505,973
Other rentals and income 240,313 324,520 194,167
Interest 3,161 3,511 4,043
----------- ----------- -----------
Total revenues 4,218,365 4,630,786 4,093,559
----------- ----------- -----------
COSTS AND EXPENSES:
Cost of merchandise 1,099,505 1,080,088 1,147,788
Operating (Note 3) 1,979,078 2,523,588 2,165,001
Operating - related party (Note 4) 169,100
General and administrative 56,330 100,816 78,200
General and administrative - related party (Note 4) 155,713 159,464 412,286
Net loss on asset disposals (Note 4) 13,628 94,387
Depreciation and amortization 395,757 364,848 291,329
Interest - related party (Notes 4 and 5) 69,966 91,602 14,594
----------- ----------- -----------
Total costs and expenses 3,769,977 4,414,793 4,278,298
----------- ----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES 448,388 215,993 (184,739)
PROVISION (BENEFIT) FOR INCOME TAXES (Note 2) 156,878 59,538 (71,975)
----------- ----------- -----------
NET INCOME (LOSS) $ 291,510 $ 156,455 $ (112,764)
=========== =========== ===========
NET INCOME (LOSS) PER COMMON SHARE-
BASIC (Note 1) $ 0.42 $ 0.23 $ (0.16)
=========== =========== ===========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
14
<PAGE>
INTERNATIONAL LEISURE HOSTS, LTD.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED MARCH 31, 1999, 1998 AND 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ADDITIONAL
COMMON STOCK PAID-IN RETAINED TREASURY
SHARES AMOUNT CAPITAL EARNINGS STOCK
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
BALANCE, APRIL 1, 1996 718,373 $ 7,184 $ 656,426 $3,198,874 $ (77,512)
Purchases of common stock (400)
Net loss (112,764)
---------- ---------- ---------- ---------- ----------
BALANCE, MARCH 31, 1997 718,373 7,184 656,426 3,086,110 (77,912)
Net income 156,455
---------- ---------- ---------- ---------- ----------
BALANCE, MARCH 31, 1998 718,373 7,184 656,426 3,242,565 (77,912)
Net income 291,510
---------- ---------- ---------- ---------- ----------
BALANCE, MARCH 31, 1999 718,373 $ 7,184 $ 656,426 $3,534,075 $ (77,912)
========== ========== ========== ========== ==========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15
<PAGE>
INTERNATIONAL LEISURE HOSTS, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 1999, 1998, AND 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 291,510 $ 156,455 $ (112,764)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 395,757 364,848 291,329
Deferred income taxes 16,090 59,538 (60,403)
Net loss (gain) on asset disposals 13,628 94,387 (120)
Changes in assets and liabilities:
Accounts receivable 13,446 8,528 (26,195)
Accounts receivable from related party 82,800 (73,000) (5,000)
Income tax refund receivable 23,471 43,793 14,028
Merchandise inventories (42,087) 68,024 48,586
Prepaid expenses and other (8,445) 6,554 (6,024)
Deposits 1,902 (925)
Accounts payable - trade 39,670 (57,457) 68,284
Accounts payable - related party (17,929) 17,929
Accounts payable - construction (29,226)
Income taxes payable 117,684
Accrued liabilities (17,066) (18,024) 198,206
Accrued liabilities to related party (163,209)
Advance deposits 53,749 (46,698) 19,856
----------- ----------- -----------
Net cash provided by operating activities 964,180 431,517 429,783
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (1,301,447) (652,117) (1,340,235)
Sale of marketable investment securities
Cash and accounts payable segregated for construction of (30,293)
replacement property
Proceeds from sale of property and equipment 65,965 214,935 4,758
----------- ----------- -----------
Net cash used in investing activities (1,235,482) (437,182) (1,365,770)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Common stock purchased for treasury (400)
Proceeds from long-term debt 60,000 935,000
Payments on long-term debt (995,000)
Proceeds from line of credit 395,000 1,105,000
Payments on line of credit (40,000)
----------- ----------- -----------
Net cash provided by financing activities 355,000 170,000 934,600
----------- ----------- -----------
</TABLE>
(Continued)
16
<PAGE>
INTERNATIONAL LEISURE HOSTS, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 1999, 1998, AND 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
NET INCREASE (DECREASE) IN CASH AND 83,698 164,335 (1,387)
CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 212,593 48,258 49,645
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 296,291 $ 212,593 $ 48,258
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION - Cash paid for interest $ 108,985 $ 96,284 $ 14,594
=========== =========== ===========
</TABLE>
(Concluded)
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17
<PAGE>
INTERNATIONAL LEISURE HOSTS, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 1999, 1998 AND 1997
- --------------------------------------------------------------------------------
1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
International Leisure Hosts, Ltd. (the "Company") operates in one
business segment, the ownership and operation of Flagg Ranch Resort, a
full-service resort motel and trailer park located in the John D.
Rockefeller Jr. Memorial Parkway, approximately four miles north of
Grand Teton National Park and two miles south of the southern entrance
to Yellowstone National Park.
As of March 31, 1997, the financial statements include the accounts of
International Leisure Hosts, Ltd. and Lewis & Clark Lodge, its
wholly-owned subsidiary. All intercompany transactions and accounts
were eliminated in consolidation.
During 1998, a majority of the outstanding shares of the Company was
purchased by an unrelated third party. Subsequent to the purchase,
Lewis & Clark Lodge was dissolved and its assets and liabilities were
transferred to the Company at their historical cost basis.
SIGNIFICANT ACCOUNTING POLICIES are as follows:
a. MERCHANDISE INVENTORIES are stated at the lower of aggregate
cost (first-in, first-out basis) or market.
b. PROPERTY AND EQUIPMENT are stated at cost. Depreciation is
computed by straight-line and accelerated methods over the
estimated useful lives, which range from 5 to 40 years, for
such assets. Leasehold improvements are amortized using the
straight-line method over the lesser of the estimated useful
life of the related asset or the term of the lease.
The Company reviews the carrying values of its long-lived
assets and identifiable intangibles for possible impairment
whenever events or changes in circumstances indicate that the
carrying amount of assets to be held and used may not be
recoverable. For assets to be disposed of, the Company reports
long-lived assets and certain identifiable intangibles at the
lower of carrying amount or fair value less cost to sell.
c. INCOME TAXES - Deferred income taxes have been provided for
the temporary differences between financial statement and
income tax reporting on certain transactions.
d. USE OF ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles
necessarily requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
18
<PAGE>
e. NET INCOME (LOSS) PER COMMON SHARE - Net income (loss) per
common share is computed by dividing net income by the
weighted average number of common shares outstanding. The
weighted average number of common shares outstanding was
694,577, 694,577, and 694,610 shares for 1999, 1998 and 1997,
respectively.
f. STATEMENTS OF CASH FLOWS - For purposes of the consolidated
statements of cash flows, cash and cash equivalents represent
cash in banks, money market funds, and certificates of deposit
with initial maturities of three months or less.
g. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS - The Company
has estimated the fair value of its financial instruments
using available market data. However, considerable judgment is
required in interpreting market data to develop estimates of
fair value. The use of different market assumptions or
methodologies may have a material effect on the estimates of
fair values. The carrying values of cash, receivables, lines
of credit, accounts payable, accrued expenses, and long-term
debt approximate fair values due to the short-term maturities
or market rates of interest.
h. NEW ACCOUNTING PRONOUNCEMENT - In June 1998, the Financial
Accounting Standards Board ("FASB") issued SFAS No. 133,
ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES,
but is considering delaying the effective date from fiscal
years beginning after June 15, 1999 to June 15, 2000.
Management has not completed the analysis of the effects SFAS
No. 133 will have on its financial statements. SFAS No. 133
establishes accounting and reporting standards for derivative
instruments, including certain derivatives embedded in other
contracts, and for hedging activities. It requires that
entities record all derivatives as either assets or
liabilities, measured at fair value.
2. INCOME TAXES
The provision (benefit) for federal income taxes for the years ended
March 31 consists of the following:
1999 1998 1997
-------- -------- --------
Current $140,788 $(53,238)
Deferred 16,090 $ 59,538 (18,737)
-------- -------- --------
Total $156,878 $ 59,538 $(71,975)
======== ======== ========
19
<PAGE>
A reconciliation of the provision (benefit) for income taxes and the
amount that would be computed using statutory federal income tax rates
on income before income taxes for the years ended March 31 is set forth
below:
1999 1998 1997
-------- -------- --------
Income taxes at federal rates $152,400 $ 73,500 $(63,000)
Other - net 4,478 (13,962) (8,975)
-------- -------- --------
Provision (benefit) for
income taxes $156,878 $ 59,538 $(71,975)
======== ======== ========
Deferred income taxes result from temporary differences on the
recognition of certain revenue and expense items for tax and financial
statement purposes, principally the gain on settlement of involuntary
conversion in 1982, which resulted from fire damage, which resulted in
a deferred tax liability of $194,990. The Company paid income taxes of
approximately $0, $18,250, and $50,000 during the years ended March 31,
1999, 1998 and 1997, respectively.
3. COMMITMENTS AND CONTINGENCIES
The Company receives its operating authorization from the National Park
Service ("NPS"). The NPS Contract (the "Contract") which became
effective on January 1, 1990, will expire on December 31, 2009. Under
the terms of the Contract, prior to December 31, 1999, the Company is
required to move its existing 54-unit riverside motel from its current
location to the high ground above the river, to provide for new
employee housing and make certain other improvements. The Company has
chosen to meet these requirements by moving the riverside motel and
converting it into employee housing, plus building additional employee
support facilities, which began in summer 1998, with expected
completion in summer 2000. The cost of this relocation is estimated to
be between $1,200,000 and $1,500,000 depending on the number of
employee housing units and the extent of additional improvements
required by the NPS. If the Company builds new lodging units to replace
the 54-unit riverside motel, the additional cost to build these units
is estimated to be between $1,000,000 and $1,200,000. This would result
in a combined total cost of relocation and new construction of between
$2,200,000 and $2,700,000. The Company has not made a decision at this
time regarding replacing the riverside motel with new lodging units.
The Contract fee to the NPS is calculated at 2% of gross receipts (as
defined), subject to review and possible adjustment every five years.
For the years ended March 31, 1999, 1998 and 1997, this fee amounted to
$79,712, $88,374, and $76,041, respectively, which has been recorded as
operating expense.
Flagg Ranch faces competition from hotels, camping areas and trailer
facilities in Yellowstone and Grand Teton National Parks, as well as
from a large number of hotels and motels in Wyoming, Montana and Idaho,
offering some facilities which are similar to those offered by Flagg
Ranch. In addition, the business of Flagg Ranch is susceptible to
weather conditions and unfavorable trends in the economy as a whole.
Business could be significantly affected depending upon actions which
might be taken by the NPS if cutbacks are made to their budget. If the
NPS decides to close Yellowstone National Park for the winter months,
then Flagg Ranch would have to discontinue its winter operations. NPS
budget cutbacks could also negatively impact the length of the summer
season and the number of visitors to the Parks and have a corresponding
negative impact on Flagg Ranch revenues.
20
<PAGE>
On May 20, 1997, the Fund for Animals, Biodiversity Legal Foundation
et. al. filed a lawsuit against the NPS challenging the action of the
NPS regarding winter use of Yellowstone and Grand Teton National Parks.
The plaintiffs have asked the Federal Court to stop winter activities,
primarily snowmobiling and related snow grooming, until environmental
impacts are documented. A settlement agreement was reached that
requires the NPS to prepare an environmental impact statement ("EIS")
over the next three years, during which time period the Parks will
continue activities under the existing winter visitor-use plan. If the
NPS is required to suspend or terminate winter activities in
Yellowstone National Park, Flagg Ranch would have to suspend or
discontinue its winter operations.
4. TRANSACTIONS WITH RELATED PARTIES
General and administrative - related party expenses for the years ended
March 31, 1999, 1998 and 1997, represent management fees and
administrative expenses paid to related parties and totaled
approximately $156,000, $160,000, and $412,000, respectively. For the
year ended March 31, 1997 all related parties referred to in these
financial statements were owned by family members of Elizabeth A.
Nicoli who were the majority owners of the Company in 1997. Related
parties during the years ended March 31, 1999 and March 31, 1998 are
owned by the Company's current majority owner, Robert Walker, or family
members.
Operating - related party expenses for the year ended March 31, 1997
represent leased snowmobiles under short-term leases from a related
party.
The Company incurred borrowings under a line of credit agreement with a
related party (Note 5). Interest incurred for the fiscal years ended
March 31, 1999, 1998 and 1997 was $108,985, $91,602 and $14,594
respectively. For fiscal year 1999, the Company capitalized $39,019 of
interest.
In March 1998, the Company sold 96 snowmobiles for total proceeds of
$144,000 and a loss of $94,387. A related party of the Company
purchased 46 snowmobiles for a total of $82,800, all of which was
recorded as a receivable at March 31, 1998. During 1999, the Company
repurchased 41 snowmobiles from the related party for $75,645. The
Company subsequently sold the snowmobiles to an unrelated entity and
recognized a loss of approximately $14,000.
21
<PAGE>
At March 31, 1998, the Company recorded a payable of $17,929 to a
related party for certain operating expenses paid by the related party
on behalf of the Company.
During the year ended March 31, 1999, the Company paid approximately
$30,000 to a related party for construction costs related to the new
employee housing and other facility improvements.
5. NOTE PAYABLE UNDER LINE OF CREDIT
During October 1998, the Company entered into a line of credit
agreement ("Agreement") with an affiliated company expiring September
30, 1999, which provides for secured borrowings of up to $1,500,000 at
an interest rate of prime plus .5 percent. Borrowings under the
Agreement are collateralized by the assets and improvements of Flagg
Ranch. The Company has borrowed $1,460,000 on this line of credit as of
March 31, 1999. The Company used, in part, the proceeds from the
drawdown on the Agreement to fund its construction costs. The terms of
the Agreement contain, among other provisions, requirements for
maintaining minimum cash flows (as defined in the Agreement) and places
limitations on the Company's ability to make loans. As of March 31,
1999, the Company was not in compliance with the minimum cash flow
requirement. On June 8, 1999, the Company received a waiver of
noncompliance for the year ended March 31, 1999.
22
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
None
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Name Age Positions With Company Term as Director
---- --- ---------------------- ----------------
Elizabeth A. Nicoli 69 Chairman/Director 10/75 - Present
Robert L. Walker 65 President/Director 12/97 - Present
A. Clarene Law 65 Director 6/92 - Present
F. Ray Evarts 73 Director/Secretary 9/22 - Present
Michael P. Perikly 47 Director/Treasurer/CFO 12/97 - Present
Mrs. Elizabeth A. Nicoli was elected to the Board of Directors in
October, 1975, and has been associated with the Company in various capacities.
Upon the death of Mr. Nicoli, the former Chairman, Treasurer, President and CEO
of the Company, on October 22, 1996, she was elected as President and Chairman,
and served as President until September 29, 1997.
Robert L. Walker was elected as President on September 30, 1997 and was
elected to the Board of Directors in December, 1997. Mr. Walker has been an
executive with numerous companies over the last 35 years. From 1976 to the
present, he has been President of PNI, Inc., a privately owned investment
company. From 1989 to 1994, he was President and Chairman of Turf Paradise,
Inc., an Arizona based, publicly traded company that owns and operates a
thoroughbred horse racing facility conducting pari-mutuel wagering.
A. Clarene Law was elected to the Board of Directors on September 11,
1992. She is the owner and Chief Executive Officer of Elk Country Motels which
operates four motel properties aggregating 270 rooms in Jackson, Wyoming. Mrs.
Law has over 35 years experience in the hospitality industry.
F. Ray Evarts was elected to the Board of Directors on September 11,
1992. He was elected Assistant Secretary of the Company on June 6, 1994 and
Secretary on August 5, 1997. He is currently self-employed as a real estate
consultant in Arizona and California, for planning, developing and leasing of
commercial and multi-family properties as well as consulting in all phases of
the restaurant business. From 1982 to 1992, he was Project Manager for Warren
Properties, Inc., a California based, privately held hotel and apartment
developer and owner with properties in 18 states.
Michael P. Perikly, CPA, was elected as Treasurer and Chief Financial
Officer of the Company on September 30, 1997 and was elected to the Board of
Directors in December, 1997. From 1990 to the present, he has been Chief
Financial Officer of PNI, Inc., a privately owned investment company. From 1989
to 1994, Mr. Perikly was the Chief Financial Officer, Secretary and Treasurer of
Turf Paradise, Inc., an Arizona based, publicly traded company that owns and
operates a thoroughbred horse racing facility conducting pari-mutuel wagering.
23
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
Name and principal
Position Year Salary
------------------ ---- ------
Robert L. Walker 1999 --
President* 1998
Elizabeth A. Nicoli 1998 --
President and Chairman** 1997 --
John L. Bradley 1997 $ 75,464
President***
All executive officers
as a group (three) 1999 $ 36,000
(three) 1998 $ 28,000
(three) 1997 $188,904
All executive officers as a group received cash compensation for
services rendered to the Company over the three years, a portion of which was
paid pursuant to the management contracts described under the heading "Item 12
Certain Relationships and Related Transactions."
There are no compensation arrangements for directors.
* Robert L. Walker became President of the Company on September 30, 1997.
** Elizabeth A. Nicoli became Chairman of the Company on October 23, 1996 and
served as President from October 23, 1996 until her resignation on
September 29, 1997.
*** John Bradley served as President until the termination of his employment
with the Company on July 31, 1996, at which time Anthony J. Nicoli became
President.
24
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table indicates as of June 8, 1999, the common stock of
the Registrant owned beneficially by each director, by all directors and
executive officers as a group and by each person who is known by the Registrant
to own beneficially more than 5% of the outstanding common stock.
Name and Address Common Stock Percent Held
- ---------------- ------------ ------------
Robert L. Walker 351,669 50.63%
Director
3207 S. Hardy Drive
Tempe, Arizona 85282
A. Clarene Law 3,000 *
Director
1702 E. Highland Ave., #312
Phoenix, Arizona 85016
Michael P. Perikly 2,500 *
Director
3207 S. Hardy Drive
Tempe, Arizona 85282
F. Ray Evarts 100 *
Director
1702 E. Highland Ave., #312
Phoenix, Arizona 85016
William S. Levine 124,233 (A) 17.9%
Levine Investments Limited
Partnership
2525 E. Camelback Rd., Suite #275
Phoenix, Arizona 85016
Krist A. Jake 73,800 (B) 10.6%
P.O. Box 640219
San Francisco, California 94164
Bar-B-Bar Corporation 37,307 (C) 5.4%
Max C. Chapman, Jr.
P.O. Box 194
Scarborough, New York 10510
All Executive Officers and 357,269 51.44%
Directors as a group (5 persons)
*Less than 1%
25
<PAGE>
(A) Based on Schedule 13G filed with the Securities and Exchange Commission
on March 12, 1998 by William S. Levine and Levine Investments Limited
Partnership.
(B) Based on Schedule 13D filed with the Securities and Exchange Commission
on June 7, 1997 by Krist A. Jake.
(C) Based on Schedule 13D filed with the Securities and Exchange Commission
on December 6, 1991 by Bar-B-Bar Corporation and Max C. Chapman, Jr.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
GENERAL AND ADMINISTRATIVE - related party expenses for the years ended March
31, 1999, 1998 and 1997, represent management fees and administrative expenses
paid to related parties and totaled approximately $156,000, $160,000, and
$412,000, respectively. For the year ended March 31, 1997 all related parties
referred to in these financial statements were owned by family members of
Elizabeth A. Nicoli who were the majority owners of the Company in 1997. Related
parties during the years ended March 31, 1999 and March 31, 1998 are owned by
the Company's current majority owner, Robert Walker, or family members.
OPERATING - related party expenses for the year ended March 31, 1997 represent
leased snowmobiles under short-term leases from a related party.
The Company incurred borrowings under a line of credit agreement with a related
party (Note 5). Interest incurred for the fiscal years ended March 31, 1999,
1998 and 1997 was $108,985, $91,602 and $14,594 respectively. For fiscal year
1999, the Company capitalized $39,019 of interest.
In March 1998, the Company sold 96 snowmobiles for total proceeds of $144,000
and a loss of $94,387. A related party of the Company purchased 46 snowmobiles
for a total of $82,800, all of which was recorded as a receivable at March 31,
1998. During 1999, the Company repurchased 41 snowmobiles from the related party
for $75,645. The Company subsequently sold the snowmobiles to an unrelated
entity and recognized a loss of approximately $14,000.
At March 31, 1998, the Company recorded a payable of $17,929 to a related party
for certain operating expenses paid by the related party on behalf of the
Company.
During the year ended March 31, 1999, the Company paid approximately $30,000 to
a related party for construction costs related to the new employee housing and
other facility improvements.
26
<PAGE>
PART IV
ITEM 13. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements Page
----
The following consolidated financial statements of International
Leisure Hosts, Ltd. and Subsidiary are included in Part II, Item 7:
Independent Auditors' Report 12
Consolidated Balance Sheets - March 31, 1999
and 1998 13
Consolidated Statements of Operations - years
ended March 31, 1999, 1998 and 1997 14
Consolidated Statements of Shareholders' Equity
years ended March 31, 1999, 1998 and 1997 15
Consolidated Statements of Cash Flows-
years ended March 31, 1999, 1998 and 1997 16
Notes to consolidated financial statements 18
3. The following exhibits are incorporated by reference
as indicated:
3.1 By-Laws-Adopted June 22, 1992 Filed with Form 10-K
dated March 31, 1992
3.2 Articles of Incorporation-filed with Form 10-K dated
March 31, 1986, pages 32-41
10.1 United States Department of the Interior National
Park Service Contract-filed with Form 10-Q dated
December 31, 1989
10.2 Pacific West Construction Contract for new lodge
building filed with Form 10-KSB dated March 31, 1994
10.3 Pacific West Construction Contract for 50 new lodging
units filed with Form 10-QSB dated June 30, 1994
10.4 Pacific West Construction contract for 42 new lodging
units filed with Form 10-QSB dated September 30, 1995
22. Subsidiaries of Registrant: incorporated by reference
from the Registrant's report on Form 10-KSB dated
March 31, 1994
(b) None.
All other schedules and exhibits for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not required
under the related instructions or are inapplicable and, therefore, have been
omitted.
27
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
and Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly authorized.
International Leisure Hosts, Ltd.
/s/ Robert L. Walker
------------------------------
Robert L. Walker, President
Date: 6/29/99
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the date indicated.
/s/ Robert L. Walker /s/ Michael P. Perikly
- ------------------------------ ------------------------------
Robert L. Walker Michael P. Perikly
President Chief Financial Officer/Treasurer
Date: 6/29/99 Date: 6/29/99
28
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 296,291
<SECURITIES> 0
<RECEIVABLES> 9,854
<ALLOWANCES> 0
<INVENTORY> 92,481
<CURRENT-ASSETS> 417,562
<PP&E> 8,008,564
<DEPRECIATION> 2,215,754
<TOTAL-ASSETS> 6,211,872
<CURRENT-LIABILITIES> 1,899,023
<BONDS> 0
0
0
<COMMON> 7,184
<OTHER-SE> 4,112,589
<TOTAL-LIABILITY-AND-EQUITY> 6,211,872
<SALES> 1,833,844
<TOTAL-REVENUES> 4,218,365
<CGS> 1,099,505
<TOTAL-COSTS> 3,700,011
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 69,966
<INCOME-PRETAX> 448,388
<INCOME-TAX> 156,878
<INCOME-CONTINUING> 291,510
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 291,510
<EPS-BASIC> .42
<EPS-DILUTED> .42
</TABLE>
