UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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, 2000
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
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(Address of principal executive office, including Zip Code)
Issuer's telephone number, including area code (480) 829-7600
Securities registered under Section 12(b) of the Act:
Name of each exchange
Title of Each Class on which registered
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NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock $.01 par value
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(Title of Class)
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. $4,738,729
As of June 26, 2000, there were 694,457 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 $598,000.
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Page
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PART I
Item 1. Business 3
Item 2. Properties 5
Item 3. Legal Proceedings 6
Item 4. Submission of Matters to a Vote of Security Holders 7
PART II
Item 5. Market for the Registrant's Common Stock and Related
Security Holder Matters 7
Item 6. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Item 7. Financial Statements and Supplemental Data 12
Item 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 23
PART III
Item 9. Directors and Executive Officers of the Registrant 23
Item 10. Executive Compensation 24
Item 11. Security Ownership of Certain Beneficial Owners and
Management 25
Item 12. Certain Relationships and Related Transactions 26
PART IV
Item 13. Exhibits (including Exhibit Index), Financial Statements,
Schedules and Reports on Form 8-K 27
2
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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 the 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 in 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 major redevelopment plans in fiscal years 1995 and 1996
which included construction of a new main lodge building, 92 new cabin units, a
maintenance building and a laundry facility. 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 new cabin units replaced 42 rustic cabin units, which were removed from the
property and a 54-unit motel.
During fiscal year 2000, 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 72% and 73%, respectively, of Flagg's fiscal 2000 and 1999
operating revenues.
3
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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 to 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 for only one to two nights.
The winter season, which runs from mid-December through mid-March accounted
for 28% and 27%, respectively, of Flagg's fiscal 2000 and 1999 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 Flagg entrance 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 2000, 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 2000, 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.
4
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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 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 required the NPS to prepare an environmental impact
statement ("EIS"), during which time period the Park continued activities under
the then existing winter visitor-use plan.
Upon completion of the EIS, the NPS prepared a draft winter-use plan with
several alternatives. The NPS has indicated that the alternative which
eliminates snowmobiling from the Park is the preferred alternative. They have
also indicated that once the winter-use plan is adopted, there would be a
phase-in period of up to two years during which time the winter snowmobiling
operation could be continued. It is currently anticipated that the NPS will
adopt a final winter-use plan around October of 2000.
If the NPS goes forward with its plans to eliminate snowmobiling from
Yellowstone National Park, then Flagg Ranch would have to suspend or discontinue
winter operations completely. This would have a significant negative impact on
the revenues and financial results of the Company.
The extensive capital investments which were required by the Company's
current Contract, were made based on the Park providing road access in the
winter and full winter services (i.e. snowmobile rentals) for the duration of
the Contract. These services are necessary to allow the Company to recover its
substantial investment and provide a reasonable opportunity to realize a profit
consistent with the Contract and applicable law. The Company relied on the
Park's representations to expend millions of dollars in facilities improvements.
Precluding the Company from offering its full spectrum of winter activities
would materially and fundamentally alter key contract features and substantially
interfere with the Company's ability to recover its investments or realize
planned profit.
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
5
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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.
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. During fiscal year 2000, the Company incurred
additional costs of approximately $625,000 related to this move. 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 1998, was not
available for guest lodging during fiscal year 1999 or 2000 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 Snake River and make
other improvements prior to December 31, 2002. The remaining cost is estimated
to be between $250,000 and $500,000 depending on the extent of additional
improvements required by the NPS.
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
The Department of Labor ("DOL") has notified the Company, on behalf of
current and past employees, that additional overtime is due for the period
beginning November 1, 1997. Currently the Company pays overtime for any hours in
excess of 48 during a one week period. The Company, as well as other Park
concessioners in the area, have operated under an exemption that exists in the
Fair Labor Standards Act. The DOL has claimed that this exemption does not apply
due to conflicting language in the Contract Work Hours Safety Standard Act which
requires overtime to be paid to laborers and mechanics working on a government
contract after 40 hours worked during a week. If the DOL prevails, the estimate
of the additional expense to the Company ranges from $30,000 to $50,000. While
there is no guarantee, the Company believes it will not be subject to the
additional overtime payments.
There are no other material legal proceedings against International Leisure
Hosts, Ltd.
6
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
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 1999 and 2000.
Bid
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Quarter Ended High Low
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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
June 30, 1999 5 1/4 4 3/4
September 30, 1999 5 4
December 31, 1999 5 5
March 31, 2000 5 4 1/4
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, 2000, there were 694,457 shares of outstanding
common stock and an estimated 600 shareholders of record.
The level of trading during fiscal year 2000 was approximately 2,200 shares
the first quarter, 200 shares the second quarter, 1,800 shares the third
quarter, and 15,800 shares the fourth quarter ended March 31, 2000. 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.
7
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SELECTED FINANCIAL DATA
The selected financial data for each of the five years in the period ended
March 31, 2000 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.
FISCAL YEAR ENDED MARCH 31,
(In thousands except per share amounts)
2000 1999 1998 1997 1996
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Total Revenues $4,739 $4,218 $4,631 $4,094 $3,976
Net Income (Loss) 341 292 156 (113) 199
Net Income (Loss) Per Share-Basic .49 .42 .23 (.16) .29
Total Assets 6,533 6,212 5,393 5,363 4,266
Long-Term Obligations 0 0 0 446 0
Shareholders' Equity 4,460 4,120 3,828 3,672 3,785
Book Value Per Share 6.42 5.93 5.51 5.29 5.45
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The Company's net income was $341,000, $.49 per share for the year ended
March 31, 2000. This compares to net income of $292,000, $.42 per share, in 1999
and net income of $156,000, $.23 per share, in 1998. The primary factor
contributing to the $49,000 increase in 2000 net income was an increase in
occupancy due to higher Park attendance for the year. Changes in the Company's
revenues and expenses for the fiscal years 2000 and 1999 are summarized below.
All references to years represent fiscal years ended March 31.
Total revenues for 2000 increased by $520,000 or 12% over 1999. Of this
increase, $63,000 was from lodging, $91,000 from RV/tent rental, $48,000 from
food service, $45,000 in gift shop sales, $51,000 in grocery store sales,
$55,000 in gasoline sales, $18,000 from float trip revenue, $30,000 from trail
ride revenue, $82,000 from snowmobile revenue, $26,000 from snowcoach revenue,
8
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$4,000 from transportation revenue, and $10,000 in interest income. A decrease
of $3,000 in other revenue offset these increases. The increased occupancy
levels and number of guests contributed to the increases in food service, gift
shop, grocery store/gasoline sales and activity rentals. In addition, increases
in gasoline prices also contributed to the increase in gasoline sales.
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.
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 normally 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.
COSTS AND EXPENSES
The ratio of cost of merchandise sold to sales of merchandise was 60% in
2000, 60% in 1999, and 59% in 1998. Ending merchandise inventories increased
from approximately $92,000 at March 31, 1999 to approximately $101,000 at March
31, 2000 mainly due to an increase in the gift shop inventory.
Operating expenses increased by $153,000 or 8% in 2000 as compared to 1999;
however, the ratio of operating costs to operating revenues decreased to 45% in
2000 from 47% in 1999. The major increases in expenses consisted of $21,000 in
labor, $19,000 in utilities, $36,000 in snowmobile parts and gas, $3,000 in
Company vehicle/travel, $32,000 in outside services, $7,000 in printing, $11,000
in credit card costs, $43,000 in insurance, $13,000 in franchise fee, and
$17,000 in miscellaneous. The above increases were partially offset by decreases
of $32,000 in operating supplies, $8,000 in telephone, and $9,000 in licenses
and fees. The increase in insurance costs was the result of implementing a
health insurance plan for year round employees. Outside services increased due
to the increased revenue from the horse and float activities. Snowmobile parts
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and gas increased due to half of the snowmobile fleet being out of warranty and
due to the increased rentals which include the first tank of gas.
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 $25,000 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.
General and administrative expenses increased by $66,000 or 31% in 2000 as
compared to 1999. The increases consisted of $63,000 in management fees, $2,000
in postage and freight, $1,000 in travel/transportation and $3,000 in legal and
accounting fees. These increases were offset by a decrease in office expenses of
$3,000.
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.
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
Working capital increased to a negative $1,339,000 at March 31, 2000 from a
negative $1,481,000 at March 31, 1999. Current assets increased by $138,000
primarily due to an increase in accounts receivable of $121,000 due to the sale
of snowmobiles at the end of the year for $119,000. Current liabilities at March
31, 2000 of $1,894,000 were comparable to current liabilities at March 31, 1999
of $1,899,000.
Further, during fiscal 2000, the Company incurred costs of approximately
$625,000 related to certain construction projects. The Company may incur
additional costs of between $250,000 and $500,000 prior to December 31, 2001 to
complete the relocation of employee housing units as required under the NPS
contract.
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The Company intends to fund these improvements through existing cash funds
and cash generated from operations. Cash generated from operations was $706,000,
$964,000, and $432,000 for the fiscal years ended 2000, 1999 and 1998,
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.
During October 1999, the Company renewed a line of credit agreement
("Agreement") with an affiliated company expiring September 30, 2000, which
provides for collateralized 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, 2000. 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, 2000, the Company was not in compliance with the
minimum cash flow requirement. On June 22, 2000, the Company received a waiver
of noncompliance for the year ended March 31, 2000.
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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, 2000 and
1999, and the related consolidated statements of income, shareholders' equity,
and cash flows for each of the three years in the period ended March 31, 2000.
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 auditing standards generally accepted
in the United States of America. 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, 2000 and
1999, and the results of its operations and its cash flows for each of the three
years in the period ended March 31, 2000 in conformity with accounting
principles generally accepted in the United States of America.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Phoenix, Arizona
June 26, 2000
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INTERNATIONAL LEISURE HOSTS, LTD.
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2000 AND 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
2000 1999
----------- -----------
<S> <C> <C>
ASSETS (Note 5)
CURRENT ASSETS:
Cash and cash equivalents $ 306,354 $ 296,291
Accounts receivable 130,436 9,854
Merchandise inventories 100,936 92,481
Prepaid expenses and other 17,466 18,936
----------- -----------
Total current assets 555,192 417,562
----------- -----------
PROPERTY AND EQUIPMENT (Notes 3 and 5):
Buildings and improvements 6,248,824 5,421,138
Equipment 1,701,557 1,815,620
Leasehold improvements 325,600 325,600
Construction in progress 294,176 446,206
----------- -----------
Total property and equipment 8,570,157 8,008,564
Less accumulated depreciation and amortization 2,592,796 2,215,754
----------- -----------
Property and equipment - net 5,977,361 5,792,810
----------- -----------
DEPOSITS 1,500
----------- -----------
TOTAL $ 6,532,553 $ 6,211,872
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable under line of credit from related
party (Note 5) $ 1,460,000 $ 1,460,000
Accounts payable:
Trade 105,291 110,240
Related party (Note 4) 70,563
Income taxes payable 59,851 117,684
Accrued liabilities 49,371 44,257
Advance deposits 149,151 166,842
----------- -----------
Total current liabilities 1,894,227 1,899,023
DEFERRED INCOME TAXES (Note 2) 178,076 193,076
----------- -----------
Total liabilities 2,072,303 2,092,099
----------- -----------
COMMITMENTS AND CONTINGENCIES (Note 3)
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 3,875,352 3,534,075
----------- -----------
4,538,962 4,197,685
Less common stock in treasury - at cost,
23,916 (2000) and 23,796 (1999) shares (78,712) (77,912)
----------- -----------
Shareholders' equity - net 4,460,250 4,119,773
----------- -----------
TOTAL $ 6,532,553 $ 6,211,872
=========== ===========
</TABLE>
See notes to consolidated financial statements
13
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INTERNATIONAL LEISURE HOSTS, LTD.
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED MARCH 31, 2000, 1999 AND 1998
--------------------------------------------------------------------------------
2000 1999 1998
---------- ---------- ----------
REVENUES (Note 3):
Sales of merchandise $2,016,254 $1,833,844 $1,821,890
Room, cabin and trailer space rentals 1,748,613 1,578,763 1,810,328
Snowmobile rentals 629,559 562,284 670,537
Other rentals and income 331,128 240,313 324,520
Interest 13,175 3,161 3,511
---------- ---------- ----------
Total revenues 4,738,729 4,218,365 4,630,786
---------- ---------- ----------
COSTS AND EXPENSES:
Cost of merchandise 1,217,105 1,099,505 1,080,088
Operating (Note 3) 2,132,352 1,979,078 2,523,588
General and administrative 59,255 56,330 100,816
General and administrative - related
party (Note 4) 219,038 155,713 159,464
Net loss on asset disposals (Note 4) 55,849 13,628 94,387
Depreciation and amortization 454,555 395,757 364,848
Interest - related party (Notes 4 and 5) 78,298 69,966 91,602
---------- ---------- ----------
Total costs and expenses 4,216,452 3,769,977 4,414,793
---------- ---------- ----------
INCOME BEFORE INCOME TAXES 522,277 448,388 215,993
PROVISION FOR INCOME TAXES (Note 2) 181,000 156,878 59,538
---------- ---------- ----------
NET INCOME $ 341,277 $ 291,510 $ 156,455
========== ========== ==========
NET INCOME PER COMMON SHARE - BASIC
(Note 1) $ 0.49 $ 0.42 $ 0.23
========== ========== ==========
See notes to consolidated financial statements
14
<PAGE>
INTERNATIONAL LEISURE HOSTS, LTD.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED MARCH 31, 2000, 1999 AND 1998
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
-------------------- PAID-IN RETAINED TREASURY
SHARES AMOUNT CAPITAL EARNINGS STOCK
------ ------ ------- -------- -----
<S> <C> <C> <C> <C> <C>
BALANCE, APRIL 1, 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)
Purchase of common stock (800)
Net income 341,277
-------- ------ -------- ---------- --------
BALANCE, MARCH 31, 2000 718,373 $7,184 $656,426 $3,875,352 ($78,712)
======== ====== ======== ========== ========
</TABLE>
See notes to consolidated financial statements
15
<PAGE>
INTERNATIONAL LEISURE HOSTS, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 2000, 1999, AND 1998
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
2000 1999 1998
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 341,277 $ 291,510 $ 156,455
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 454,555 395,757 364,848
Deferred income taxes (15,000) 16,090 59,538
Net loss on asset disposals 55,849 13,628 94,387
Changes in assets and liabilities:
Accounts receivable (120,582) 13,446 8,528
Accounts receivable from related party 82,800 (73,000)
Income tax refund receivable 23,471 43,793
Merchandise inventories (8,455) (42,087) 68,024
Prepaid expenses and other 2,970 (8,445) 6,554
Deposits 1,902 (925)
Accounts payable - trade (4,949) 39,670 (57,457)
Accounts payable - related party 70,563 (17,929) 17,929
Accounts payable - construction (29,226)
Income taxes payable (57,833) 117,684
Accrued liabilities 5,114 (17,066) (18,024)
Accrued liabilities to related party (163,209)
Advance deposits (17,691) 53,749 (46,698)
----------- ----------- -----------
Net cash provided by operating activities 705,818 964,180 431,517
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (916,114) (1,301,447) (652,117)
Proceeds from sale of property and equipment 221,159 65,965 214,935
----------- ----------- -----------
Net cash used in investing activities (694,955) (1,235,482) (437,182)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Common stock purchased for treasury (800)
Proceeds from long-term debt 60,000
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 (used in) provided by financing
activities (800) 355,000 170,000
----------- ----------- -----------
</TABLE>
(Continued)
16
<PAGE>
INTERNATIONAL LEISURE HOSTS, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 2000, 1999, AND 1998
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
2000 1999 1998
----------- ----------- -----------
<S> <C> <C> <C>
NET INCREASE IN CASH AND CASH EQUIVALENTS 10,063 83,698 164,335
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 296,291 212,593 48,258
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 306,354 $ 296,291 $ 212,593
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION -
Cash paid for interest $ 123,230 $ 108,985 $ 96,284
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements
17
<PAGE>
INTERNATIONAL LEISURE HOSTS, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2000, 1999 AND 1998
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.
SIGNIFICANT ACCOUNTING POLICIES - The Company prepares its financial
statements in accordance with accounting principles generally accepted in
the United States of America. A summary of significant accounting policies
is 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 accounting principles generally accepted in the United
States of America 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 PER COMMON SHARE - Basic net income 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 694,492, 694,577, and 694,577 for 2000, 1999
and 1998, respectively. Diluted net income per share reflects
potential dilution that could occur from common shares issuable
through stock options, warrants or other convertible securities;
however, the Company has no dilutive securities.
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, and accrued expenses
approximate fair values due to the short-term maturities or market
rates of interest.
h. NEW ACCOUNTING PRONOUNCEMENT - The Financial Accounting Standards
Board ("FASB") issued SFAS No. 133, ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES. The effective date of SFAS No. 133
is fiscal years beginning after June 15, 2000. 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. Management has not completed the analysis of the effects
SFAS No. 133 will have on its financial statements.
2. INCOME TAXES
The provision for federal income taxes for the years ended March 31
consists of the following:
2000 1999 1998
--------- -------- -------
Current $ 196,000 $140,788
Deferred (15,000) 16,090 $59,538
--------- -------- -------
Total $ 181,000 $156,878 $59,538
========= ======== =======
19
<PAGE>
A reconciliation of the provision 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:
2000 1999 1998
-------- -------- --------
Income taxes at federal rates $177,574 $152,400 $ 73,500
Other - net 3,426 4,478 (13,962)
-------- -------- --------
Provision for income taxes $181,000 $156,878 $ 59,538
======== ======== ========
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
$259,000, $0, and $18,250 during the years ended March 31, 2000, 1999 and
1998, 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, 2002, the Company is required to move
its existing 54-unit riverside motel from its current location to the high
ground above the Snake 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 2002. The remaining cost
of this relocation is estimated to be between $250,000 and $500,000
depending on the number of employee housing units and the extent of
additional improvements required by the NPS.
The Contract fee to the NPS is calculated at 2 percent of gross receipts
(as defined), subject to review and possible adjustment every five years.
For the years ended March 31, 2000, 1999 and 1998, this fee amounted to
$93,064, $79,712, and $88,374, 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
20
<PAGE>
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.
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 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 required the NPS to
prepare an environmental impact statement ("EIS") during which time period
the Parks continued activities under the then existing winter visitor-use
plan.
Upon completion of the EIS, the NPS prepared a draft winter-use plan with
several alternatives. The NPS has indicated that the alternative which
eliminates snowmobiling from the Park is the preferred alternative. They
have also indicated that once the winter-use plan is adopted, there would
be a phase-in period of up to two years during which time the winter
snowmobiling operation could be continued. It is currently anticipated that
the NPS will adopt a final winter-use plan around October of 2000.
If the NPS goes forward with its plans to eliminate snowmobiling from
Yellowstone National Park, then Flagg Ranch would have to suspend or
discontinue winter operations completely. This would have a significant
negative impact on the revenues and financial results of the Company.
During fiscal 2000, winter operations accounted for approximately 27% of
total revenues.
The Department of Labor ("DOL") has notified the Company, on behalf of
current and past employees, that additional overtime is due for the period
beginning November 1, 1997. Currently the Company pays overtime for any
hours in excess of 48 during a one week period. The Company, as well as
other Park concessioners in the area, have operated under an exemption that
exists in the Fair Labor Standards Act. The DOL has claimed that this
exemption does not apply due to conflicting language in the Contract Work
Hours Safety Standard Act which requires overtime to be paid to laborers
and mechanics working on a government contract after 40 hours worked during
a week. If the DOL prevails, the estimate of the additional expense to the
Company ranges from $30,000 to $50,000. While there is no guarantee, the
Company believes it will not be subject to the additional overtime
payments.
4. TRANSACTIONS WITH RELATED PARTIES
General and administrative - related party expenses for the years ended
March 31, 2000, 1999 and 1998 represent management fees and administrative
expenses paid to related parties and totaled approximately $219,000,
21
<PAGE>
$156,000, and $160,000, respectively. Related parties during the years
ended March 31, 2000, 1999 and 1998 are owned by the Company's current
majority owner, Robert Walker, or family members. Related parties during
the year ended March 31, 2000 also include a company owned by the Company's
current President, Michael P. Perikly.
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, 2000, 1999 and 1998 was $123,230, $108,985 and $91,602, respectively.
For fiscal years 2000 and 1999, the Company capitalized $44,932 and $39,019
of interest, respectively.
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
of these snowmobiles for a total of $82,800. 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, 2000, the Company recorded payables of $70,563 to related
parties for certain operating expenses paid by the related parties on
behalf of the Company.
During the years ended March 31, 2000 and 1999, the Company paid
approximately $30,000 each year 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 1999, the Company renewed a line of credit agreement
("Agreement") with an affiliated company expiring September 30, 2000, which
provides for collateralized 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, 2000. 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, 2000,
the Company was not in compliance with the minimum cash flow requirement.
On June 22, 2000, the Company received a waiver of noncompliance for the
year ended March 31, 2000.
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
---- --- ---------------------- ----------------
Robert L. Walker 66 Chairman and CEO/Director 12/97 - Present
A. Clarene Law 66 Director 6/92 - Present
Bonnie J. Walker 64 Director 4/99 - Present
William S. Levine 62 Director 4/99 - Present
Victor W. Riches 49 Director 4/99 - Present
Michael P. Perikly 48 President 4/99 - Present
Thomas J. Kase 55 Treasurer 4/99 - Present
Robert L. Walker was elected Chairman and C.E.O. on April 23, 1999 and was
elected to the Board of Directors in December, 1997. He also served as President
from September 30, 1997 to April 22, 1999. 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.
Bonnie J. Walker was elected to the Board of Directors on April 23, 1999.
She has served on numerous boards and committees of various charitable
organizations and since late 1997 has been associated with the Company in
various capacities.
William S. Levine was elected to the Board of Directors on April 23, 1999.
He has been the Chairman and C.E.O. of Outdoor Systems, Inc., a national
billboard company that recently merged with the National Broadcasting Company.
Additionally he has served on various boards of directors of both private and
public companies.
Victor W. Riches was elected to the Board of Directors on April 23, 1999.
He graduated from the Arizona State University College of Law (Magna Cum Laude)
in 1975. He has served on numerous Boards, committees and held offices of both
charitable and non-charitable organizations, including: Turf Paradise, Inc.;
23
<PAGE>
Arizona Center for the Handicapped; Bethany Ranch Home; YMCA of Metropolitan
Phoenix; as well as many others. Mr. Riches has published numerous articles in a
variety of trade magazines. He currently is a real estate developer in Arizona,
Nevada and California.
Michael P. Perikly, CPA, was elected President of the Company on April 23,
1999. Prior to that he served as Treasurer and Chief Financial Officer of the
Company from September 30, 1997 to April 22, 1999. He also served on the Board
of Directors from December, 1997 until April, 1999. 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.
ITEM 10. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
Name and principal Position Year Salary
--------------------------- ---- ------
Michael P. Perikly 2000 $75,000
President*
Robert L. Walker 1999 --
President** 1998
Elizabeth A. Nicoli 1998 --
President and Chairman**
All executive officers
as a group (three) 2000 $75,000
(three) 1999 $36,000
(three) 1998 $28,000
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.
* Michael P. Perikly became President of the Company on April 23, 1999.
** Robert L. Walker became Chairman of the Company and its Chief Executive
Officer on April 23, 1999 and served as President from September 30, 1997
to April 22, 1999.
*** 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.
24
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table indicates as of June 8, 2000, 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 361,669 52.08%
Director and C.E.O.
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 *
President
3207 S. Hardy Drive
Tempe, Arizona 85282
William S. Levine 124,233 (A) 17.9%
Director
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 491,402 70.76%
Directors as a group (4 persons)
* Less than 1%
(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.
25
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
General and administrative - related party expenses for the years ended
March 31, 2000, 1999 and 1998 represent management fees and administrative
expenses paid to related parties and totaled approximately $219,000, $156,000
and $160,000, respectively. Related parties during the years ended March 31,
2000, 1999 and 1998 are owned by the Company's current majority owner, Robert
Walker, or family members. Related parties during the year ended March 31, 2000
also include a company owned by the Company's current President, Michael P.
Perikly.
The Company incurred borrowings under a line of credit agreement with a
related party. Interest incurred for the fiscal years ended March 31, 2000, 1999
and 1998 was $123,230, $108,985 and $91,602, respectively. For fiscal years 2000
and 1999, the Company capitalized $44,932 and $39,019 of interest, respectively.
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 of
these snowmobiles for a total of $82,800. 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, 2000 the Company recorded payables of $70,563 to related
parties for certain operating expenses paid by the related parties on behalf of
the Company.
During the years ended March 31, 2000 and 1999, the Company paid
approximately $30,000 each year 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) Financial Statements
The following consolidated financial statements of International
Leisure Hosts, Ltd. and Subsidiary are included in Part II, Item 7:
Page
----
Independent Auditors' Report 12
Consolidated Balance Sheets - March 31, 2000 and 1999 13
Consolidated Statements of Income - years ended
March 31, 2000, 1999 and 1998 14
Consolidated Statements of Shareholders' Equity -
years ended March 31, 2000, 1999 and 1998 16
Consolidated Statements of Cash Flows- years ended
March 31, 2000, 1999 and 1998 17
Notes to consolidated financial statements 19
(b) Exhibits
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
27 Financial Data Schedule
(c) Reports on Form 8-K
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/ Michael P. Perikly
----------------------------------
Michael P. Perikly, President
Date: 6/27/00
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/ Michael P. Perikly /s/ Thomas J. Kase
--------------------------- ---------------------------
Michael P. Perikly Thomas J. Kase
President Treasurer
Date: 6/27/00 Date: 6/27/00
28
