SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
POCONO HOTELS CORPORATION
------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
N/A
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item
22(a)(2) of Schedule 14A
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE>
POCONO HOTELS CORPORATION
1209 ORANGE STREET
WILMINGTON, DELAWARE 19801
------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 23, 1996
------------------------------
April 5, 1996
Dear Stockholder:
Notice is hereby given that the Annual Meeting of Stockholders of Pocono
Hotels Corporation, a Delaware Corporation (the 'Company'), will be held at
Wilmington Country Club, 4825 Kennett Pike, Greenville, Delaware 19807, on
Thursday, May 23, 1996 at 12:00 Noon, for the following purposes:
1. To elect four directors to serve for a term of three years and
until their successors are duly elected and qualified;
2. To ratify the selection of KPMG Peat Marwick L.L.P. as the
Company's auditors for the year ending December 31, 1996; and
3. To transact such other business as may properly be brought before
the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 25, 1996 as
the record date for determination of the stockholders entitled to notice of and
to vote at the Annual Meeting. Whether or not you plan to attend the Annual
Meeting in person, it is important that your shares be represented. Returning
your proxy card does not deprive you of your right to attend the meeting and
vote your shares in person. Accordingly, please sign the enclosed proxy and
return it promptly in the envelope provided.
By order of the Board of Directors,
/s/ John B. Hogan
------------------------------------
John B. Hogan
Secretary
<PAGE>
POCONO HOTELS CORPORATION
1209 ORANGE STREET
WILMINGTON, DELAWARE 19801
------------------------------
PROXY STATEMENT
------------------------------
The accompanying proxy is solicited by the Board of Directors of Pocono
Hotels Corporation (the 'Company') for use at the Annual Meeting of Stockholders
on May 23, 1996, and at any adjournment or adjournments thereof, for the
purposes set forth in the accompanying Notice of Annual Meeting of Stockholders.
As of March 25, 1996, the record date for determination of stockholders entitled
to notice of, and to vote at, the meeting, the Company had outstanding 9,812
shares of Common Stock. Each share of Common Stock is entitled to one vote on
all matters to come before the Annual Meeting. A complete list of the
stockholders entitled to vote at the meeting will be available for inspection at
the address set forth above during ordinary business hours at least ten days
prior to the meeting. This Proxy Statement is expected to be mailed to
stockholders on or about April 5, 1996.
Any holder of the Common Stock of the Company executing and delivering a
proxy has the power to revoke it at any time before it is exercised by
delivering a written notice of revocation or subsequently executed proxy to the
secretary of the meeting or by voting in person at the meeting.
The cost of soliciting proxies will be borne by the Company. It is
anticipated that banks, brokerage houses and other custodians will be requested
to forward solicitation material to their principals to obtain authorizations
for the execution of proxies. In addition to solicitation by mail, officers and
regular employees of the Company may, without additional compensation, solicit
proxies by telephone, telegraph or in person.
I. ELECTION OF DIRECTORS
The Company's Board of Directors currently consists of 12 members, divided
into three classes of four directors each. Directors are chosen for a term of
three years and the term of one class of directors expires each year.
Shares represented by properly signed proxies, unless such proxies are
marked to the contrary, will be voted FOR all of the following four nominees for
director for a three-year term expiring in 1999: Gardner R. Cunningham, John V.
N. Klein, Dan Raymond and Charles E. Stokes, III. Each nominee presently serves
as a director of the Company.
If any nominee should for any reason become unavailable to serve as a
director of the Company at the time of the election, the persons named in the
accompanying proxy intend to vote for such other person as the Board of
Directors shall recommend as a replacement for any such nominee. The Board is
not aware of any nominee unable or unwilling to serve as a director. Information
regarding the nominees for election as directors and other directors appears
below. Assuming a quorum is present, the four nominees receiving the highest
number of votes cast at the annual meeting will be elected directors. For such
purposes, the withholding of authority to vote or the specific direction not to
cast a vote, such as a broker non-vote, will not constitute the casting of a
vote in the election of directors.
The following table sets forth as of March 26, 1996 certain information
with respect to each nominee for election as a director and each director whose
term of office will continue after the meeting:
-1-
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AT PRESENT
AND DURING PAST FIVE YEARS;
NAME DIRECTORSHIPS IN OTHER PUBLIC CORPORATIONS AGE DIRECTOR SINCE
- ----------------------------------------------- ----------------------------------------------- ----------- ---------------
<S> <C> <C> <C>
NOMINEES FOR A TERM EXPIRING IN 1999
Cunningham, Gardner R. (1)(2)(4)(5)(6)......... Retired; formerly Chairman of the Board and 73 1987
Chief Executive Officer of the Company (1991 to
1995); Consultant to William Zinsser & Co.,
Inc., a manufacturer of natural and synthetic
resins (1987-1995).
Klein, John V.N. (2)(4)(5)..................... Partner in the law firm of Meyer, 64 1990
Suozzi, English & Klein,
Mineola, NY since 1980;
director, Reckson Associates
Realty Corp., a real estate
investment trust since 1995.
Raymond, Dan (1)(2)(4)(5)(6)(7)................ Vice President of the Company; Retired since 58 1985
1995; Vice President and Secretary of First
Brands Corporation, a manufacturer and seller
of plastic wrap and bags, automotive care
products and pet products, Danbury, CT until
1995.
Stokes, Charles E., III (1)(3)(7).............. President of The Home Rubber Company, Trenton, 66 1986
NJ, a manufacturer of industrial rubber goods;
Director, Trenton Savings Bank, a financial
institution.
TERM EXPIRES 1998
Campbell, Stewart F. (4)(7)(8)................. Chairman and Chief Executive Officer of the 64 1992
Company since 1995; Financial Vice President
and Secretary of the Alfred P. Sloan Foundation,
a philanthropic foundation.
Cotter, John J................................. Partner in the law firm of Cotter, Cotter & 71 1980
Sohon, Bridgeport, CT.
Hogan, John B. (2)(3)(5)....................... Secretary of the Company; Partner in the law 66 1992
firm of Hogan & Sarzynski, Binghamton, NY.
Price, Richard L., Jr. (1)(2)(4)(6)............ Vice President of the Company; President and 42 1994
Director, Ray Price Chevrolet, Inc.; President
and Director, Raymond Price, Inc., Cresco, PA,
a Ford dealership; President and Director, Ray
Price Mt. Pocono Ford Sales, Inc.
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AT PRESENT
AND DURING PAST FIVE YEARS;
NAME DIRECTORSHIPS IN OTHER PUBLIC CORPORATIONS AGE DIRECTOR SINCE
- ----------------------------------------------- ----------------------------------------------- ----------- ---------------
<S> <C> <C> <C>
TERM EXPIRES 1997
Campbell, John B. (4)(5)....................... Vice President of the Company; Director of 73 1982
Mannington Mills, Inc., a manufacturer of vinyl
flooring, and Wellco Carpet Corporation, a
manufacturer of contract carpets; Director, New
Jersey Manufacturing Insurance Company and New
Jersey Manufacturing Reinsurance Company,
Trenton, NJ.
Clarke, F. David (6)........................... Director of Clarke-Hook Corporation, a company 70 1991
engaged in the business of industrial property
construction, ownership and management.
Doherty, Evelyn M. (3)(5)...................... Sales Associate for Rumson Realty, Rumson, NJ 54 1991
since 1991; Sales Associate for Bob Warncke
Associates, Middletown, NJ, prior thereto.
Miller, Donald H. (1)(3)(4).................... Treasurer of the Company; Chairman of the Board 74 1981
and President, Donald H.
Miller, Inc., a marine
insurance company; Treasurer of
the Company from 1989 to 1992;
Chairman of the Board of
National Cargo Bureau, Inc., a
national marine cargo and ship
surveying company.
</TABLE>
- ------------------
(1) Member of the Audit and Finance Committee.
(2) Member of the Nominating Committee.
(3) Member of the Insurance Committee.
(4) Member of the Executive Committee.
(5) Member of the Planning and Development Committee.
(6) Member of the Maintenance Committee.
(7) Member of the Compensation Committee.
(8) Mr. Stewart F. Campbell is an ex-officio member of the Audit and Finance,
Insurance, Maintenance, Nominating, and Planning and Development Committees.
In 1995, the Board of Directors held five formal meetings. The Board of
Directors has several standing committees, including an Executive Committee, a
Compensation Committee, an Audit and Finance Committee and a Nominating
Committee. The Executive Committee is authorized to exercise the powers of the
full Board of Directors between meetings thereof, except that its authority does
not extend to certain fundamental matters. The Company's Executive Committee did
not meet during 1995. The Compensation Committee, which met twice during 1995,
reviews and recommends changes in management compensation. The Audit and Finance
Committee is primarily concerned with recommending the selection of the
Company's independent certified public accountants and reviewing the scope of
their audit and the Company's annual financial reports. In 1995, the Audit and
Finance Committee met four times. The Nominating Committee, which met twice
during 1995, is responsible for recommending nominees to serve on the Board of
Directors. The Nominating Committee will consider stockholder suggestions of
persons to be considered as nominees to fill future vacancies on the Board.
Stockholders should, no later than December 6, 1996, send any such suggestions
to the attention of the Corporate Secretary of the
-3-
<PAGE>
Company at the address set forth on the first page hereof if they wish such
suggestions to be considered with respect to the 1997 Annual Meeting.
The Company also has a Maintenance Committee, Insurance Committee and
Planning and Development Committee, each of which met once. The Maintenance
Committee formulates and recommends plans and procedures for maintaining
facilities at Skytop Lodge. The Insurance Committee reviews the insurance
coverage for the Company and its subsidiary, Skytop Lodges, Inc. The Planning
and Development Committee formulates and recommends plans for development of the
real property surrounding Skytop Lodge.
During 1995, each of the directors attended at least 75% of the aggregate
number of meetings of the Board of Directors and of each committee of which he
or she was a member during the periods that he or she served.
II. SECURITY OWNERSHIP
The following table presents information as of December 31, 1995, as to
Common Stock and Preferred Stock of the Company beneficially owned by each
director and nominee for director and by all directors, nominees for director
and executive officers of the Company as a group. To the Company's knowledge, no
person owns more than 5% of any class of the Company's voting securities. The
address of each director, nominee for director and executive officer of the
Company is: c/o Pocono Hotels Corporation, Skytop Lodge, Skytop, Pennsylvania
18357.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED PERCENT OF CLASS
------------------------------ ------------------------------
NAME COMMON PREFERRED COMMON PREFERRED
- ---------------------------------------------------------- ------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C>
John B. Campbell.......................................... 25(1) 25(1) * *
Stewart F. Campbell....................................... 35 25 * *
F. David Clarke........................................... 60 60 * *
John J. Cotter............................................ 35(2) 35(2) * *
Gardner R. Cunningham..................................... 47(3) 45(3) * *
Evelyn M. Doherty......................................... 178 140 1.8 1.5
John B. Hogan............................................. 20 20 * *
John V.N. Klein........................................... 10 10 * *
Donald H. Miller.......................................... 100 100 1.0 1.1
Richard L. Price, Jr...................................... 30 35 * *
Dan Raymond............................................... 62 62 * *
Charles E. Stokes, III.................................... 5(4) 5(4) * *
All Directors, nominees and executive officers as a group
(12 persons) (1)(2)(3)(4)................................. 607 562 6.2 6.0
</TABLE>
- ------------------
*Less than 1%
(1) Includes 15 shares of Common Stock and 15 shares of Preferred Stock owned by
Mr. Campbell's wife as to which Mr. Campbell disclaims beneficial ownership.
(2) Includes 25 shares of Common Stock and 25 shares of Preferred Stock owned by
Mr. Cotter's wife as to which Mr. Cotter disclaims beneficial ownership.
(3) Includes 22 shares of Common Stock and 20 shares of Preferred Stock owned by
Mr. Cunningham's wife as to which Mr. Cunningham disclaims beneficial
ownership.
(4) Includes 5 shares of Common Stock and 5 shares of Preferred Stock owned of
record by Mr. Stokes' mother as to which Mr. Stokes holds power of attorney.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock and Preferred Stock of the
-4-
<PAGE>
Company. Such persons are also required to furnish the Company with copies of
all Section 16(a) forms they file. To the Company's knowledge, based solely upon
a review of the copies of such reports furnished to the Company and
representations that no other reports were required, during the fiscal year
ended December 31, 1995, all persons subject to these reporting requirements
complied with all applicable Section 16(a) filing requirements.
The following table lists certain information regarding the Company's
Executive Officers as of March 26, 1996.
EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
PRESENT POSITIONS
WITH REGISTRANT AND
PRINCIPAL OCCUPATION HAS HELD PRESENT OFFICE(S)
NAME AGE DURING PAST FIVE YEARS WITH REGISTRANT SINCE
- ------------------------------ ----------- ---------------------------------- ----------------------------------
<S> <C> <C> <C>
Stewart F. Campbell........... 64 Chief Executive Officer Director since 1992;
of the Registrant; Chairman of the Board
Financial Vice President and Chief Executive
and Secretary of the Alfred Officer since 1995
P. Sloan Foundation, a
Philanthropic foundation
</TABLE>
The executive officer does not have any family relationship with any
director, or any person nominated or chosen by the Company to become a director
or executive officer and was not selected as an officer pursuant to an
arrangement or understanding between him and any other person.
III. EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth certain information
concerning the compensation paid or accrued by the Company for services rendered
during fiscal 1995, 1994 and 1993 by the Company's Chief Executive Officers (the
"Named Officers"). None of the Company's executive officers received
compensation in excess of $100,000 during fiscal 1995. The Company does not have
any stock option plans or deferred compensation plans applicable to the Named
Officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------------------
NAME AND ALL OTHER
PRINCIPAL POSITION YEAR SALARY COMPENSATION (1)
- --------------------------------------------------------------------------- --------- ----------- -------------------
<S> <C> <C> <C>
Stewart F. Campbell........................................................ 1995 $ 0 $ 3,450
(Chairman of the Board and
Chief Executive Officer)
Gardner R. Cunningham...................................................... 1995 $ 0 $ 3,450
(formerly the Chairman and Chief 1994 $ 0 $ 3,000
Executive Officer) 1993 $ 0 $ 4,500
</TABLE>
- ------------------
(1) Reflects directors fees.
Each director receives a fee of $750 for each meeting of Directors attended
and is entitled to a reduced rate, subject to certain limitations, for stays at
Skytop Lodge. No other fees are paid to the Named Officers or directors for
services rendered in that capacity.
-5-
<PAGE>
IV. INDEPENDENT PUBLIC ACCOUNTANTS
On the recommendation of the Finance and Audit Committee, the firm of KPMG
Peat Marwick L.L.P. has been appointed by the Board of Directors to audit the
Company's financial statements for the current fiscal year. The same firm
conducted the audit for the Company's fiscal years ended December 31, 1993,
December 31, 1994 and December 31, 1995. The persons named in the accompanying
proxy will vote to ratify the appointment of KPMG Peat Marwick L.L.P. as the
Company's auditors for 1996 unless contrary instructions are received. If the
stockholders do not ratify this appointment, other auditors will be considered
and appointed by the Board of Directors. Management does not anticipate that a
representative from KPMG Peat Marwick L.L.P. will attend the Annual Meeting.
V. OTHER MATTERS
The Board of Directors does not intend to present for action at the Annual
Meeting any matters other than those discussed herein and knows of no matters
which other persons may present to the meeting for action. However, if any other
matters should properly come before the meeting, it is the intention of the
persons named in the accompanying form of proxy to vote the shares of stock
represented by proxies held by them on any such matters in accordance with their
judgment of what is in the best interest of the Company.
In order to be considered for inclusion in the 1997 proxy and proxy
statement, stockholder proposals for the 1997 Annual Meeting must be received by
the Company no later than December 6, 1996 at the address set forth on the first
page hereof, Attention: Secretary.
The Annual Report of the Company, which includes financial statements for
the fiscal year ended December 31, 1995, on which no action will be asked at the
Annual Meeting, is being mailed to stockholders together with this proxy
statement. It is not to be regarded as proxy solicitation material.
-6-
<PAGE>
POCONO HOTELS CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all prior proxies, hereby appoints Stewart F.
Campbell and Dan Raymond, or either of them, with full power of substitution, as
the undersigned's proxies to vote all the shares of Common Stock of Pocono
Hotels Corporation (the "Company") held of record by the undersigned on March
25, 1996, at the Annual Meeting of Stockholders of the Company to be held May
23, 1996 and at any adjournment thereof.
1. ELECTION OF DIRECTORS:
Nominees: Gardner R. Cunningham, John V. N. Klein, Dan Raymond and Charles
E. Stokes, III
/ / FOR / / WITHHOLD AUTHORITY
All nominees listed To vote for all nominees listed
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW)
------------------------------------------------------------------------------
2. Appointment of KPMG Peat Marwick LLP as independent public accountants
for the Company for the year ending December 31, 1996.
/ / FOR / / AGAINST / / ABSTAIN
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
You are urged to sign and return this proxy so that you
may be sure that your shares will be voted.
(CONTINUED ON REVERSE SIDE)
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2.
Please sign exactly as your name
appears hereon, date and return
promptly. When shares are held by
joint tenants, both should sign.
Executors, administrators,
trustees and other fiduciaries
should indicate their capacity
when signing.
Dated: ___________________ , 1996
---------------------------------
Signature of Stockholder
---------------------------------
Signature of Stockholder
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE
<PAGE>
Annual Report
POCONO HOTELS CORPORATION
Wilmington, Delaware 19801
April 5, 1996
Dear Pocono Hotels Stockholder:
Enclosed is the Annual Report from our Company for the year ending
December 31, 1995, as well as a Notice of Meeting, Proxy Statement, Proxy Card
and return envelope.
Fiscal 1995 was an encouraging year for Skytop Lodges, Inc., the
Company's subsidiary. Continued marketing promotions and sales efforts helped
increase occupancy from 45.7% to 49.5%, which resulted in a 12% revenue
improvement over 1994. Profit for Skytop Lodges, Inc. increased as a result of
improved sales and cost containment programs, which allowed us to maintain an
aggressive capital spending program. No cluster homes were sold during 1995,
however, which resulted in an overall negative impact on sales and profitability
for Skytop Lodges, Inc.
With the increased available cash in 1995, we completed several
significant capital improvements, including roof dormer upgrades and repairs,
upgraded banquet/meeting room facilities, a complete redesign and reconstruction
of the front desk/reservations areas and sales office, development of a new
driving range and an expanded in-house laundry. These capital improvements have
improved guest service and employee working conditions. Our goal is to provide
our guests with the best service possible.
The cluster homes project continued in 1995 with the construction of
two additional units, bringing the total to 30 units built and 28 sold. The cost
of these two additional units was funded internally. In 1996, we expect to sell
the remaining two units and complete the construction and sale of the last two
units of this project for a total of 32 units. In addition, with the
implementation of our new sales and marketing computer systems, we should see
continued successful marketing initiatives. Along with other capital
improvements, a major room renovation project has begun as well as construction
of a new guest cottage.
Most importantly, we want to recognize the outstanding contributions
that our managers and employees have made to Skytop. The success of Skytop in
1995 is a result of their hard work, creativity, dedication, teamwork and
effort, of which we are most appreciative. Their devotion to the many wonderful
traditions of Skytop has continued to ensure that it is a great place to visit
and work.
We thank you for your continued support.
Sincerely,
/s/ Stewart F. Campbell /s/ Edward F. Mayotte
Stewart F. Campbell Edward F. Mayotte
Chairman of the Board Vice President
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
Positions with Pocono Hotels
Corporation and Present Occupation
----------------------------------
<S> <C>
JOHN B. CAMPBELL......................... Director and Vice President of the Company;
Director of Mannington Mills, Inc.,
a manufacturer of vinyl flooring,
and Wellco Carpet Corporation, a
manufacturer of contract carpets.
*STEWART F. CAMPBELL..................... Director; Chairman of the Board and Chief
Executive Officer; Financial Vice President and
Secretary of the Alfred P. Sloan Foundation.
F. DAVID CLARKE.......................... Director; Director of Clarke-Hook Corporation, a
company engaged in industrial property
construction, ownership and management.
JOHN J. COTTER........................... Director; Partner, Cotter, Cotter & Sohon,
attorneys, Bridgeport, CT.
GARDNER R. CUNNINGHAM.................... Director; Retired.
EVELYN M. DOHERTY........................ Director; Sales Associate for Rumson Realty,
Rumson, NJ.
JOHN B. HOGAN............................ Director and Secretary of the Company; Partner,
Hogan & Sarzynski, Attorneys, Binghamton, NY.
JOHN V.N. KLEIN.......................... Director; Partner, Meyer, Suozzi, English &
Klein, Attorneys, Mineola, NY.
DONALD H. MILLER......................... Director and Treasurer of the Company; Chairman
of the Board and President, Donald H. Miller,
Inc., a marine insurance company.
RICHARD L. PRICE, JR..................... Director and Vice President of the Company;
President and Director, Ray Price
Chevrolet Inc.; Cresco, PA.;
President and Director Raymond
Price, Inc., Cresco, PA.; President
and Director Ray Price Mt.
Pocono Ford Sales, Inc.
DAN RAYMOND.............................. Director and Vice President of the Company;
Retired.
CHARLES E. STOKES, III................... Director; President of The Home Rubber Company,
Trenton, NJ, a manufacturer of
industrial rubber goods; Director,
Trenton Savings Bank, a financial
institution.
</TABLE>
- --------------------------
* Executive Officer of Pocono Hotels Corporation
The Annual Report of Pocono Hotels Corporation on Form 10-KSB for the
fiscal year ended December 31, 1995 (including financial statements and
schedules but without exhibits) is available without charge on written request.
Copies of exhibits to the Form 10-KSB also will be furnished upon request and
the payment of a reasonable fee. Please address your request to Pocono Hotels
Corporation, 1209 Orange Street, Wilmington, Delaware 19801, Attention:
Secretary.
-1-
<PAGE>
SELECTED FINANCIAL DATA
The following table sets forth certain selected consolidated financial
data and is qualified in its entirety by the more detailed Consolidated
Financial Statements included herein:
<TABLE>
<CAPTION>
Year Ended December 31,
Selected Income Statement Data -------------------------------------------
(In Thousands Except Per Common Share Data) 1995 1994 1993 1992 1991
------------------------------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenues.............................................. $9,396 $9,660 $9,277 $9,364 $9,609
Income (loss) before extraordinary item............... 102 218 (246) (46) (11)
Net income (loss)..................................... 41 101 (124) 225 (11)
Earnings per Common Share ............................ (2.49) 3.60 (19.39) 16.26 (7.82)
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
Selected Balance Sheet Data --------------------------------------------
(In Thousands) 1995 1994 1993 1992 1991
---------------------------
<S> <C> <C> <C> <C> <C>
Total assets.......................................... $5,471 $5,422 $5,356 $6,211 $5,621
Long-term debt........................................ --- --- --- --- 15
Stockholders' equity.................................. 4,362 4,443 4,408 4,570 4,382
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SUMMARY
The following table sets forth for the periods indicated percentages,
which certain items contained in the financial data bear to revenues of the
Company:
Relationship to
Total Revenues
Year Ended
December 31,
-----------------
1995 1994
---- ----
Revenues
Rooms 44.6% 40.2%
Food and Beverage 39.7 33.9
Golf and Other Sports 8.4 8.1
Sundry Departments 3.0 2.9
Sale of Clustered Homes 0.4 13.4
Other Income 4.0 1.4
---- -----
Total Revenues 100.0 100.0
Food and Beverage Expense 30.3 26.1
Cost of Clustered Homes 0.4 10.0
Other Operating Expense 44.6 38.7
----- -----
Gross Margin 24.7 25.2
Administrative and General Expenses 17.2 17.1
Interest Expense --- .2
Depreciation 6.4 5.7
Provision for Income Taxes 0.7 1.2
---- ----
Net Income (loss) 0.4% 1.0%
==== ====
LIQUIDITY AND CAPITAL RESOURCES:
Working Capital Ratios: This ratio is considered to indicate a
Company's ability to meet its short-term obligations.
1995 1994
---- ----
Working Capital (in thousands) $88.4 $636.0
Working Capital Ratio 1.09x1 1.77x1
-2-
<PAGE>
Reference is made to the Consolidated Statement of Changes in Financial
Condition contained herein.
Cash flow from operations, together with available credit facilities,
are the Company's primary source of liquidity. Net cash provided by operating
activities was approximately $110,000 in 1995 and $1,055,000 in 1994, the
decrease primarily due to the lack of cluster homes sales in 1995.
Capital expenditures totaled approximately $627,000 and $310,000 in
1995 and 1994, respectively. Capital expenditures during 1995 consisted of roof
dormer upgrades and repairs, upgraded banquet/meeting room facilities, a
complete redesign and reconstruction of the front desk/reservation areas and
sales office, development of a new driving range and an expanded in-house
laundry. Capital improvements planned for 1996 include spending of approximately
$1,000,000 on the commencement of a major rooms renovation project, an
additional guest cottage and continuing upgrades to our facilities and grounds.
During 1992, the Company, through its subsidiary, negotiated a
construction loan line of credit for $2,500,000, which expired on December 31,
1994 and was not renewed, related to its clustered homes development project.
During 1994, the Company drew on approximately $279,000 to construct three
clustered home units, all of which was repaid from the sale of four units.
During 1995, the Company constructed two additional cluster homes, funded
internally. At December 31, 1995 the Company had two units available for sale.
The Company has additional available unsecured lines of credit totaling
$1,500,000, expiring between June 1996 and August 1996, which provide for
interest at the lender's prime rate. The lines of credit are utilized to support
hotel operations during the hotel's off season and are expected to be renewed or
renegotiated prior to their expiration on comparable terms.
The Company presently expects to be able to meet its debt obligations,
finance operations and capital expenditures, as well as provide for the
completion of its clustered homes development project through internally
generated cash flow and utilization of bank credit and loan facilities.
RESULTS OF OPERATIONS
The Company's net income for 1995 was $41,472 or $(2.49) per common
share, compared to 1994's net income of $101,317 or $3.60 per share. The
decrease is due to the reduced activity in the sale of clustered homes in 1995
compared to 1994.
Revenues: Revenues for the Company in 1995 decreased to $9,396,395 from
$9,659,794 in 1994, primarily due to the lack of cluster home sales in 1995
($28,234 in 1995 versus $1,298,391 in 1994) partially offset by an increase in
total lodge revenue ($9,356,146 in 1995 versus $8,360,432 in 1994). The
occupancy of the resort increased to 49.5% in 1995 from 45.7% in 1994. Guest
counts increased to 57,527 in 1995 from 53,138 in 1994. The improvement in the
general economy and a concentrated sales effort contributed to the improvement
in group business.
Operating Costs and Expenses: Food and beverage costs and expenses
increased by $328,607 in 1995, to $2,846,285, compared to $2,517,678 in 1994.
This increase resulted primarily from an increase in sales related to increased
occupancy, which caused a proportional increase in cost of sales and other
variable costs. Other operating expenses increased to $4,185,281 in 1995 from
$3,736,165 in 1994, primarily due to the increase in sales volume. Improvements
to employee uniforms, guest room supplies, promotional activity, guest
entertainment and employee compensation all contributed to the increase in
operating costs. Cost of clustered homes also decreased, dropping to $32,666 in
1995 from $970,008 in 1994. This decrease resulted from no sales in 1995
compared to four units in 1994.
Administrative, General and Other Overhead Expenses: Administrative and
general expenses decreased to $1,620,180 in 1995 from $1,647,405 in 1994,
primarily due to lower workers' compensation costs. Interest expense decreased
by approximately $17,000 due to decreased borrowing needs.
Provisions for Income Taxes: The provision for income taxes was $60,641
at December 31, 1995, as compared to income tax of $116,329 at December 31,
1994.
-3-
<PAGE>
Independent Auditors' Report
The Stockholders
Pocono Hotels Corporation:
We have audited the accompanying consolidated balance sheets of Pocono Hotels
Corporation and subsidiaries as of December 31, 1995 and 1994, and the related
consolidated statements of operations, changes in stockholders' equity, and cash
flows for the years then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated 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, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Pocono Hotels
Corporation and subsidiaries as of December 31, 1995 and 1994 and the results of
their operations and their cash flows for the years then ended in conformity
with generally accepted accounting principles.
/s/ KPMG PEAT MARWICK LLP
New York, New York
February 19, 1996
-4-
<PAGE>
POCONO HOTELS CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents (note 1)............................. $222,661 $862,297
Accounts receivable ........................................... 432,288 351,180
Inventories (note 1)........................................... 153,011 148,232
Prepaid expenses............................................... 255,246 103,009
-------- ---------
Total current assets....................................... 1,063,206 1,464,718
--------- ---------
Investments:
Other, at cost................................................. 42,851 42,851
--------- ---------
Property, plant and equipment, at cost:
Land and land improvements..................................... 1,771,054 1,654,038
Buildings...................................................... 6,976,600 6,698,868
Furniture, equipment and other assets.......................... 6,142,177 5,909,723
---------- ----------
Total...................................................... 14,889,831 14,262,629
Less accumulated depreciation and
amortization................................................... 11,354,675 10,749,953
---------- ----------
3,535,156 3,512,676
Construction in progress.......................................... -- 36,581
---------- ----------
3,535,156 3,549,257
---------- ----------
Clustered homes held for sale (note 1)............................ 830,064 365,307
---------- ----------
$5,471,277 $5,422,133
========== ==========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable............................................... $ 330,952 $ 294,358
Accrued expenses............................................... 224,300 234,567
Accrued taxes (note 3)......................................... 146,798 96,261
Advance deposits............................................... 272,765 203,498
---------- ----------
Total current liabilities.................................. 974,815 828,684
---------- ----------
Deferred income tax liability (note 3)............................ 134,313 150,143
---------- ----------
Commitments (notes 2 and 4).......................................
Stockholders' equity (note 2):
Capital stock:
Preferred stock -- 7% cumulative -- $100 par value; authorized 12,000
shares, issued and outstanding
9,423 shares............................................... 942,300 942,300
Common stock -- no par value; authorized
16,000 shares, issued 13,994 shares........................ 259,080 259,080
---------- ----------
Total capital stock........................................... 1,201,380 1,201,380
Retained earnings.............................................. 3,217,466 3,298,623
---------- ----------
4,418,846 4,500,003
Less treasury stock, at cost:
Common stock -- 4,182 shares................................... 56,697 56,697
---------- ---------
Total stockholders' equity................................. 4,362,149 4,443,306
========== =========
$5,471,277 5,422,133
</TABLE>
See accompanying notes to consolidated financial statements.
-5-
<PAGE>
POCONO HOTELS CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
Years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
-------- -------
<S> <C> <C>
Revenues:
Rooms............................................................ $4,189,845 3,884,634
Food and beverage................................................ 3,730,503 3,278,652
Sales of cluster homes........................................... 28,234 1,298,391
Golf and other sports............................................ 793,207 782,253
Sundry departments............................................... 280,682 278,058
Other income..................................................... 373,924 137,806
---------- ----------
9,396,395 9,659,794
---------- ----------
Operating costs and expenses:
Food and beverage............................................. 2,846,285 2,517,678
Hotel operating............................................... 4,185,281 3,736,165
Cost of cluster homes......................................... 32,666 970,008
Administrative and general.................................... 1,620,180 1,647,405
Interest expense (note 4)..................................... 5,148 22,315
Depreciation and amortization................................. 604,722 548,577
--------- ----------
9,294,282 9,442,148
---------- ----------
Income before provision for
income taxes................................................ 102,113 217,646
Provision for income taxes (note 3).............................. 60,641 116,329
--------- ----------
Net income.................................................... 41,472 101,317
Dividends on preferred stock (note 1)............................ 65,961 65,961
--------- ----------
Net (loss) income applicable to
common stockholders.......................................... $(24,489) 35,356
========= ==========
Net (loss) income per common share (note 1)...................... $ (2.49) 3.60
========= ==========
</TABLE>
See accompanying notes to consolidated financial statements.
-6-
<PAGE>
POCONO HOTELS CORPORATION AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity
Years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
Total
Preferred Common Treasury Retained stockholders'
stock stock stock earnings equity
-------- -------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1993................. $942,300 259,080 (56,697) 3,263,337 4,408,020
Net income for the year..................... --- --- --- 101,317 101,317
Dividends on preferred stock at $7
per share (note 2)........................ --- --- --- (66,031) (66,031)
------- ------- -------- --------- ---------
Balance at December 31, 1994................. 942,300 259,080 (56,697) 3,298,623 4,443,306
Net income for the year...................... --- --- --- 41,472 41,472
Dividends on preferred stock at $13
per share (note 2)......................... --- --- --- (122,629) (122,629)
Balance at December 31, 1995................. $942,300 259,080 (56,697) 3,217,466 4,362,149
======== ======== ======== ========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
-7-
<PAGE>
POCONO HOTELS CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income..................................................................... $ 41,472 101,317
-------- ---------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization.............................................. 604,722 548,577
Changes in operating assets and liabilities:
Increase in accounts receivable........................................... (81,108) (2,989)
Increase in inventories................................................... (4,779) (1,957)
(Increase) decrease in prepaid expenses................................... (152,237) 31,209
(Increase) decrease in clustered homes
held for sale......................................................... (464,757) 290,747
Decrease in construction in progress...................................... 36,581 37,964
Increase (decrease) in accounts payable................................... 36,594 (48,449)
Decrease in deferred income tax liability................................. (15,830) (15,677)
Decrease (increase) in accrued expenses................................... (10,267) 115,173
Increase in accrued taxes................................................. 50,537 30,754
Increase (decrease) in advance deposits................................... 69,267 (32,056)
-------- ---------
Total adjustments..................................................... 68,723 953,296
-------- ---------
Net cash provided by operating activities............................. 110,195 1,054,613
-------- ---------
Cash flows from investing activities:
Purchase of property, plant and equipment...................................... (627,202) (309,712)
--------- ---------
Cash flows from financing activities:
Proceeds of construction loan.................................................. -- 278,883
Payments on construction loan.................................................. -- (278,883)
Dividends...................................................................... (122,629) (66,031)
--------- --------
Net cash used in financing activities...................................... (122,629) (66,031)
--------- ---------
Net (decrease) increase in cash and
cash equivalents.......................................................... (639,636) 678,870
Cash and cash equivalents at beginning of year...................................... 862,297 183,427
-------- ---------
Cash and cash equivalents at end of year............................................ $222,661 862,297
======== =========
Supplemental disclosures of cash flow information:
Income taxes paid.............................................................. 116,460 25,949
========= =========
Interest paid (net of amounts capitalized)..................................... $ -- 22,315
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
-8-
<PAGE>
POCONO HOTELS CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1995 and 1994
(1) Significant Accounting Policies
Consolidation
The consolidated financial statements include the accounts of Pocono Hotels
Corporation (the Company) and its wholly owned subsidiaries, Skytop Lodges,
Inc. and its subsidiary, Skytop Development Corporation (the Subsidiary)
and Hotel Securities Corporation. In consolidation, all intercompany
balances and all intercompany profit and losses on transactions were
eliminated.
Inventories
Food, beverage and other hotel supplies are stated at the lower of cost or
market, with cost determined principally on a first-in, first-out basis.
Inventories consist of:
December 31,
-------------------------
1995 1994
-------- -------
Food $ 47,928 62,811
Beverage 17,253 22,364
Other hotel supplies 87,830 63,057
------- -------
$153,011 148,232
======= =======
Clustered Homes Held for Sale
Land and improvements in process relating to the Subsidiary cluster
home project are carried at cost, which is not in excess of net
realizable value. Interest on the construction loan and other costs
directly related to inventory are capitalized to completion of
construction. For the years ended December 31, 1995 and 1994
approximately $0 and $5,100 of interest was capitalized in inventory,
respectively. At December 31, 1995, the Company had two units available
for sale.
Depreciation and Amortization
Depreciation and amortization of property, plant and equipment is
provided as follows:
<TABLE>
<CAPTION>
Method of
depreciation
Estimated and
useful life amortization
----------- ------------
<S> <C> <C>
Buildings 10-56 years Straight-line and
Furniture, equipment 3-15 years various accelerated
and other assets methods
Dams 20-75 years Straight-line
Water and Sewerage 10-50 years Straight-line and
System various accelerated
methods
</TABLE>
-9-
<PAGE>
POCONO HOTELS CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Repair and maintenance expenditures are charged to expense when
incurred. Expenditures for betterments and major renewals are added to
the applicable property or equipment account. Upon sale or retirement
of property, the cost and accumulated depreciation are removed from the
accounts and any gain or loss is recognized in the statement of
operations.
Revenue Recognition
Sales of cluster homes and related costs and expenses are recognized
when construction is completed and the sale is closed. Cost of units
sold is determined on the basis of direct cost accumulations applicable
to such units increased by their proportionate share of estimated total
project development costs.
Cash and Cash Equivalents
For the purpose of the statements of cash flows, the Company considers
all highly liquid debt instruments with maturities of three months or
less to be cash equivalents.
December 31,
-----------------------------
1995 1994
-------- --------
On hand and in banks $102,396 854,081
Money market funds 120,265 8,216
------- -------
$222,661 862,297
======= =======
Income Taxes
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered
or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes
the enactment date.
Financial Instruments
The Financial Accounting Standards Board's Statement of Financial
Accounting Standards No. 107, Disclosures about Fair Value of Financial
Instruments, defines fair value of a financial instrument as the amount
at which the instrument could be exchanged in a current transaction
between willing parties. The Company's cash and interest-bearing
deposits, accounts receivable, accounts payable, accrued expenses,
accrued taxes, advance deposits and long-term debt are carried at cost,
which approximates fair value.
-10-
<PAGE>
POCONO HOTELS CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements -- (Continued)
December 31, 1995 and 1994
Use of Estimates
Management of the Company has made a number of estimates and
assumptions relating to the reporting of assets and liabilities and the
disclosure of contingent assets and liabilities to prepare these
financial statements in conformity with generally accepted accounting
principles. Actual results could differ from those estimates.
Earnings Per Share
Income (loss) per common share, based on the weighted average number of
shares outstanding of 9,812 in 1995 and 1994 after recognition of
preferred stock dividend requirements of $65,961 in 1995 and 1994,
respectively, is as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Net income $ 4.23 10.32
Dividends on preferred stock (6.72) (6.72)
----- -----
Net (loss) income applicable
to common stockholders $ (2.49) 3.60
===== =====
</TABLE>
Reclassifications
Certain items in 1994 have been reclassified to conform with the 1995
presentation.
(2) Capital Stock
During 1981, the Board of Directors authorized the Company's Executive
Committee, at its discretion, to purchase, on the open market, shares
of the Company's 7% cumulative preferred stock and common stock,
provided that such purchases do not impair the capital of the Company.
It was further resolved that any shares of 7% cumulative preferred
stock purchased would be retired and any shares of common stock
acquired would be held in treasury.
The 7% cumulative preferred stock of the Company may be redeemed in
whole or in part at the option of the Board of Directors by paying the
cumulative preferred stock dividends in arrears to such shares. No
shares of 7% cumulative preferred stock were redeemed during 1995 and
1994.
At December 31, 1995 and 1994, the Company's arrearage in cumulative
preferred stock dividends per share amounted to $223.50 and $229.50,
respectively. The total for all such shares outstanding at those dates
amounted to $2,106,040.50 and $2,162,578.50, respectively.
During 1995, the Company declared and paid preferred dividends of $13
per share, representing the 1994 dividend of $7 per share and $6 per
share representing the remaining dividends for 1992 and 1991. During
1994, the Company declared and paid preferred dividends of $7 per
share, representing the 1993 dividend.
-11-
<PAGE>
POCONO HOTELS CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements -- (Continued)
December 31, 1995 and 1994
(3) Income Taxes
Income tax provision (recovery) is comprised of the following:
1995 1994
-------- -------
Current:
Federal income tax $ 34,564 69,884
State income tax 41,907 30,137
------- -------
76,471 100,021
------- -------
Deferred:
Federal income tax (5,418) 16,308
State income tax (10,412) --
------- -------
(15,830) 16,308
$ 60,641 116,329
======== =======
Total tax expense varies from the amount which would be provided by
applying the Federal normal income tax rate (34%) to income before
provision for (recovery of) income taxes. The reasons for the
difference are as follows:
1995 1994
-------- ------
Tax (recovery of) computed at
statutory rates (34%) $ 28,362 73,800
State income tax 23,620 19,890
Permanent difference 8,659 22,639
-------- -------
Total $ 60,641 116,329
======== =======
Deferred tax assets of approximately $45,000 and $51,800 at December
31, 1995 and 1994, respectively, are principally comprised of temporary
differences arising from the recognition of certain costs. In addition,
the Company has a deferred tax liability of approximately $180,000 and
$202,000 at December 31, 1995 and 1994, respectively, which is
principally comprised of temporary differences which arose from the
recognition of a gain resulting from the involuntary conversion of
fully depreciated assets destroyed in a fire.
(4) Commitments
The Company's Subsidiary has unsecured lines of credit totaling
$1,500,000 which require annual interest at the lender's prime rate and
expire between June 1996 and August 1996. The Company had no borrowings
at December 31, 1995 or 1994 under these lines of credit.
Letters of Credit
The Company, through its Subsidiary, has issued an irrevocable letter
of credit for $8,331 in favor of Barrett Township, which obligates the
Subsidiary to complete certain grading, road paving and installation of
utilities at the site. The letters of credit expire in November 7, 1996
or when the improvements are completed and inspected by the Township.
(5) Business Segment Information
The Company operates in two business segments: Resort Hotel
and Real Estate Development.
The Resort Hotel segment operates lodging, food and beverage, golf and
other recreational facilities, catering principally to family and
convention business.
-12-
<PAGE>
POCONO HOTELS CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements -- (Continued)
December 31, 1995 and 1994
The Real Estate Development segment constructs and markets cluster
homes and develops single family homes.
<TABLE>
<CAPTION>
Resort Real Estate
Hotel Development Total
----------- ----------- ----------
<S> <C> <C> <C>
For the year ended December 31, 1995:
Revenues......................................... $ 9,356,841 39,554 9,396,395
========= ====== =========
Operating profit................................. 203,643 (96,382) 107,261
========= ======
Interest expense................................. (5,148)
---------
Income before income taxes................ 102,113
=========
Identifiable assets.............................. $ 4,700,052 771,225 5,471,277
========= ======= =========
Capital expenditures............................ $ 627,000 -- 627,000
========= ======= =========
Depreciation and amortization.................... $ 600,716 4,006 604,722
========= ======= =========
For the year ended December 31, 1994:
Revenues......................................... $ 8,360,704 1,299,090 9,659,794
========= ========= =========
Operating profit................................. 79,770 160,191 239,961
Interest expense................................. (22,315)
---------
Income before income taxes................ 217,646
=========
Identifiable assets.............................. $ 4,620,770 853,171 5,473,941
========= ========= =========
Capital expenditures............................. $ 309,712 -- 309,712
========= ======== =========
Depreciation and amortization.................... $ 536,683 11,894 548,577
========= ========= =========
</TABLE>
(6) Savings and Investment Plan
Effective March 1, 1984, as amended January 1, 1988, the Board of
Directors of a subsidiary approved a defined contribution savings and
investment plan for all employees who have completed one year of
service. The plan permits qualified employees to contribute annually
from 2% to 10% of their salary not to exceed the maximum contributions
allowable under the Federal income tax code. The plan also requires
that the Board of Directors make an annual determination of the
subsidiary's contribution. Approved subsidiary contributions for
qualified employees equaled 50% of employees' contributions up to 6% of
their salary for 1995 and 100% of employees' contributions up to 6% of
their salary for 1994. The total expense related to this plan for 1995
and 1994 amounted to $62,953 and $58,051, respectively.
-13-
<PAGE>
ADDITIONAL INFORMATION
NATURE AND SCOPE OF BUSINESS
Pocono Hotels Corporation ("Pocono") is a holding company. Skytop Lodges,
Inc. ("Skytop"), a wholly-owned subsidiary of Pocono, owns and operates a
resort in Skytop, Pennsylvania. Skytop Development Corporation, a wholly-
owned subsidiary of Skytop, is engaged in the business of development and sale
of clustered homes.
The resort business is highly competitive. Skytop competes with similar
resorts located in the Pocono Mountain region of Pennsylvania and, because of
substantial improvements and increases in travel in recent years, throughout the
United States.
Skytop's resort business is seasonal. Traditionally, Skytop's operations
from May through October are responsible for nearly all its profits and those of
Pocono in any fiscal year. Operations during November through April are usually
at a loss. These seasonal fluctuations do not materially affect Pocono's or
Skytop's capital expenditures, inventories or the credit terms on which business
is done with customers.
Occupancy at the resort hotel operated by Skytop is derived primarily from
the family vacation trade, but is augmented by group business during non-peak
periods. Skytop markets its hotel services through various media, primarily
newspapers and magazines serving its major markets and direct mail advertising
to former guests.
STOCK PRICE AND DIVIDEND INFORMATION
Although there are a limited number of sales, there is no established
public trading market for the Common Stock of the Company. There were no
published asked prices during 1995 or 1994. During 1995 and 1994, the high and
low per share bid prices for the Company's Common Stock were as follows:
Fiscal Quarter High Bid Price Low Bid Price
-------------- -------------- -------------
First 1994 $60 $60
Second 1994 $60 $50
Third 1994 $60 $50
Fourth 1994 $60 $50
First 1995 $61 $50
Second 1995 $61 $61
Third 1995 $90 1/2 $61
Fourth 1995 $103 1/2 $88
According to the National Quotation Bureau, the above quotations
represent prices between dealers and do not include retail mark-up, mark-down or
commissions. They do not represent actual transactions.
Dividends of $7.00, $3.00 and $3.00 per share were paid on the
Preferred Stock on December 11, 1995, representing dividend arrearages on the
Preferred Stock for the years 1994, 1992 and 1991, respectively. A dividend of
$7.00 per share was paid on the Preferred Stock on December 12, 1994.
No dividends have been paid on the Common Stock since the formation of
Pocono in 1925. An existing dividend arrearage on the Preferred Stock must be
eliminated before dividends are payable on the Common Stock. See Note 2 to the
Consolidated Financial Statements.
-14-
<PAGE>
As of March 8, 1996, there were approximately 9,812 record holders of
the Common Stock and 436 record holders of the Preferred Stock.
