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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
OR
[_] TRANSITION REPORT PURSUANT TO SECTION B OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _____ TO _____
COMMISSION FILE NUMBER: 1-9614
GILLETT HOLDINGS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 51-0291762
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION
INCORPORATION OR ORGANIZATION) NO.)
POST OFFICE BOX 7
VAIL, COLORADO 81658
(ADDRESS OF PRINCIPAL EXECUTIVE (ZIP CODE)
OFFICE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (970) 845-2950
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FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
REPORT.
NONE
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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
--- ---
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes X No
--- ---
As of May 1, 1996, 10,000,000 shares of Common Stock were issued and
outstanding, of which 6,401,312 shares were Class 1 Common Stock and 3,598,688
shares were Class 2 Common Stock.
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TABLE OF CONTENTS
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PART I
Item 1. Financial Statements............................................... F-1
Item 2. Management's Discussion and Analysis of Financial Condition and Re-
sults of Operations....................................................... 2
PART II
Item 1. Legal Proceedings.................................................. 5
Item 2. Changes in Securities.............................................. 5
Item 3. Defaults Upon Senior Securities.................................... 5
Item 4. Submission of Matters to a Vote of Security-Holders................ 5
Item 5. Other Information.................................................. 5
Item 6. Exhibits and Reports on Form 8-K................................... 6
</TABLE>
1
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PART I
ITEM 1. FINANCIAL STATEMENTS
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Consolidated Balance Sheets as of March 31, 1996 and September 30, 1995.... F-2
Consolidated Statements of Operations for the Six Months Ended March 31,
1996 and 1995............................................................. F-3
Consolidated Statements of Operations for the Three Months Ended March 31,
1996 and 1995............................................................. F-4
Consolidated Statements of Cash Flows for the Six Months Ended March 31,
1996 and 1995............................................................. F-5
Notes to Consolidated Financial Statements................................. F-6
</TABLE>
F-1
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GILLETT HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
1996 1995
----------- -------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................... $ 8,235 $ 47,534
Receivables......................................... 11,787 5,135
Inventories......................................... 4,891 4,221
Deferred income taxes (Note 4)...................... 9,500 9,500
Other current assets................................ 1,717 3,716
-------- --------
Total current assets.................................. 36,130 70,106
Property, plant, and equipment, net................... 208,094 205,151
Real estate held for sale............................. 49,834 54,858
Deferred charges and other assets..................... 7,423 6,106
Intangible assets..................................... 89,254 93,407
-------- --------
Total assets.......................................... $390,735 $429,628
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses............... $ 32,550 $ 35,605
Income taxes payable (Note 4)....................... 81 81
Other current liabilities........................... 403 1,814
Long-term debt due within one year (Note 3)......... 63 63
-------- --------
Total current liabilities............................. 33,097 37,563
Long-term debt (Note 3)............................... 104,719 191,250
Other long-term liabilities........................... 12,437 3,821
Deferred income taxes (Note 4)........................ 46,462 29,300
Commitments and contingencies (Note 6)................
Stockholders' equity (Notes 2 and 7):
Common stock--
Class 1 common stock, $.01 par value, 10,000,000
shares authorized, 6,401,312 and 6,408,846 shares
issued and outstanding as of March 31, 1996 and
September 30, 1995, respectively................. 64 64
Class 2 common stock, $.01 par value, 15,000,000
shares authorized, 3,598,688 and 3,471,992 shares
issued and outstanding as of March 31, 1996 and
September 30, 1995, respectively................. 36 35
Additional paid-in capital.......................... 137,649 135,660
Retained earnings................................... 56,271 31,935
-------- --------
Total stockholders' equity............................ 194,020 167,694
-------- --------
Total liabilities and stockholders' equity............ $390,735 $429,628
======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these balance sheets.
F-2
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GILLETT HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX
MONTHS
SIX ENDED
MONTHS MARCH 31,
ENDED 1995
MARCH 31, (AS RESTATED-
1996 NOTE 2)
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Net revenues:
Resort.............................................. $ 118,205 $ 108,810
Real estate......................................... 33,036 7,561
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Net revenues......................................... 151,241 116,461
Operating expenses:
Resort.............................................. 60,951 54,814
Real estate......................................... 27,537 8,613
Corporate expenses.................................. 1,456 3,253
----------- ----------
Operating expenses excluding depreciation and
amortization....................................... 89,944 66,680
Depreciation........................................ 5,716 5,439
Amortization of intangible assets................... 3,392 3,370
----------- ----------
Total operating expenses............................. 99,052 75,489
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Income from operations............................... 52,189 40,972
Other income (expense):
Investment income................................... 855 1,900
Interest expense (Note 3)........................... (10,424) (10,930)
Other............................................... (663) 974
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Income before income taxes........................... 41,957 32,916
Provision for income taxes (Note 4).................. 17,622 14,062
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Net income........................................... $ 24,335 $ 18,854
=========== ==========
Income per common share (Note 2):
Net income........................................ $ 2.36 $ 1.84
=========== ==========
Weighted average shares outstanding............... 10,292,434 10,265,479
=========== ==========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
F-3
<PAGE>
GILLETT HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE
MONTHS
THREE ENDED
MONTHS MARCH 31,
ENDED 1995
MARCH 31, (AS RESTATED-
1996 NOTE 2)
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Net revenues:
Resort............................................. $ 86,023 $ 79,348
Real estate........................................ 5,209 1,272
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Net revenues........................................ 91,232 80,620
Operating expenses:
Resort............................................. 38,289 32,176
Real estate........................................ 3,911 2,022
Corporate expenses................................. 590 1,819
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Operating expenses excluding depreciation and
amortization...................................... 42,790 36,017
Depreciation....................................... 2,677 2,640
Amortization of intangible assets.................. 1,695 1,763
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Total operating expenses............................ 47,162 40,420
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Income from operations.............................. 44,070 40,200
Other income (expense):
Investment income.................................. 403 1,148
Interest expense (Note 3).......................... (4,158) (4,859)
Other.............................................. (591) 809
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Income before income taxes.......................... 39,724 37,298
Provision for income taxes (Note 4)................. (16,672) (15,698)
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Net income.......................................... $ 23,052 $ 21,600
=========== ==========
Income per common share (Note 2):
Net income....................................... $ 2.24 $ 2.11
=========== ==========
Weighted average shares outstanding.............. 10,292,434 10,258,926
=========== ==========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
F-4
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GILLETT HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX
MONTHS
SIX ENDED
MONTHS MARCH 31,
ENDED 1995
MARCH 31, (AS RESTATED-
1996 NOTE 2)
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Cash flows from operating activities:
Net income............................................ $ 24,336 $ 18,854
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization....................... 9,108 8,809
Deferred compensation payments in excess of expense. (456) (737)
Noncash cost of real estate sales................... 21,735 5,424
Noncash compensation related to stock grants (Note
7)................................................. 816
Deferred financing costs amortized.................. 124 124
(Gain) loss on disposal of fixed assets............. (6) 151
Deferred income taxes (Note 4)...................... 17,162 13,786
Changes in assets and liabilities:
Accounts receivable, net............................ (6,652) (8,364)
Inventories......................................... (670) (2,483)
Accounts payable and accrued expenses............... (2,599) 8,328
Other assets and liabilities........................ 1,241 (3,876)
-------- --------
Net cash provided by operating activities......... 63,323 40,832
Cash flows from investing activities:
Capital expenditures.................................. (15,791) (14,605)
Purchase of marketable securities..................... (34,000)
Investment in joint venture........................... (300) (213)
Other................................................. 275
-------- --------
Net cash used in investing activities............. (16,091) (48,543)
Cash flows from financing activities:
Proceeds from borrowings under long-term debt......... 40,000 151,000
Payments on long-term debt............................ (126,531) (209,885)
-------- --------
Net cash used in financing activities............. (86,531) (58,885)
-------- --------
Net decrease in cash and cash equivalents.............. (39,299) (66,596)
Cash and cash equivalents:
Beginning of period................................... 47,534 83,015
-------- --------
End of period......................................... $ 8,235 $ 16,419
======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
F-5
<PAGE>
GILLETT HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996 AND SEPTEMBER 30, 1995
1. BASIS OF PRESENTATION
Gillett Holdings, Inc. ("GHI"), is organized as a holding company and
operates through various subsidiaries. GHI and its subsidiaries (the
"Company") are in a single business, the ownership and operation of ski
resorts. Vail Holdings, Inc. and its subsidiaries ("Vail Associates") operate
one of the world's largest skiing facilities on Vail Mountain, Beaver Creek
Mountain and Arrowhead Mountain in Colorado and have related real estate
operations.
The accompanying consolidated financial statements reflect, in the opinion
of the Company, all adjustments necessary to present fairly its financial
position, results of operations and cash flows for the interim periods.
Results for such interim periods are not necessarily indicative of the results
for the entire year.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents--The Company considers all highly liquid debt
instruments purchased with a maturity of three months or less to be cash
equivalents.
Inventories--Inventories are valued at the lower of cost, determined on the
first-in, first-out (FIFO) method, or market.
Property, Plant and Equipment--Property, plant and equipment is carried at
cost net of accumulated depreciation. Depreciation is calculated using the
straight-line method based on the following useful lives:
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Buildings and terminals................................................. 40
Land improvements....................................................... 40
Ski lifts............................................................... 15
Ski trails.............................................................. 20
Machinery, equipment, furniture and fixtures............................ 3-12
Automobiles and trucks.................................................. 3-5
</TABLE>
The Company has Term Special Use Permits which allow it to operate ski
lifts, trails, and related activities on United States Forest Service land.
These permits expire in 2031 for Vail Mountain and 2006 for Beaver Creek
Mountain.
Deferred Financing Costs--Costs incurred with the issuance of debt
securities are included in deferred charges and other assets, net of
accumulated amortization. Amortization is charged to income over the
respective original lives of the applicable long-term debt and is included as
an other expense.
Intangible Assets--During the three and six month periods ended March 31,
1995 in previously issued financial statements, the Company amortized
Reorganization Value in Excess of Amounts Allocable to Indentifiable Assets
("Excess Reorganization Value") on a straight line basis over 40 years. The
Company believes that it was justified in using a 40 year amortization period
under generally accepted accounting principles. The Securities and Exchange
Commission, however, believes that Excess Reorganization Value should be
amortized over a period of no more than 20 years. The Company has agreed to
restate the previously issued financial statements for these periods to effect
a 20 year amortization period for Excess Reorganization Value rather than a 40
year amortization period. The effect of this restatement was to increase
amortization of intangible assets in the consolidated statements of operations
for the three and six month periods ended March 31, 1995 by $262,000 and
$524,000, respectively, and to reduce net income by $262,000 and $524,000,
respectively. Net income per common share decreased by $.02 and $.04,
respectively as a result of this restatement.
The cost of other intangible assets with determinable lives is charged to
operations based on their respective economic lives, which range from 7 to 40
years, using the straight line method.
F-6
<PAGE>
GILLETT HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Revenue Recognition--Revenues are recognized as services are performed with
the exception of real estate sales which are accounted for as follows:
A. Profit is not recognized until title has been transferred.
B. Profit is deferred if the receivable is subject to subordination until
such time as all costs have been recovered.
C. Until the initial down payment and subsequent collection of principal
and interest are by contract substantial, cash received from the buyer is
reported as a deposit on the contract.
The Company capitalizes as land held for sale the original acquisition cost,
direct construction and development costs, property taxes, interest accrued on
costs related to land under development, and other related costs (engineering,
surveying, marketing, landscaping, etc.) until the property reaches its
intended use. The cost of sales for individual parcels of real estate or
condominium units within a project is determined using the relative sales
value method. Selling expenses are charged against income in the period
incurred.
Cost of Products Sold--The cost of products sold in the accompanying
consolidated statements of operations includes the cost of real estate sold as
well as the cost of products sold related to Vail Associates' food and retail
operations.
Common Stock--The Company's certificate of incorporation requires that if
shares of Class 1 Common Stock are transferred by a holder to a person other
than an affiliate of the holder, the shares transferred will be converted to
an equal number of shares of Class 2 Common Stock. The certificate of
incorporation also allows a holder of Class 1 Common Stock to voluntarily
convert his shares of Class 1 Common Stock to an equal number of shares of
Class 2 Common Stock. Through March 31, 1996, 989,491 shares of Class 1 Common
Stock have been converted to shares of Class 2 Common Stock.
Earnings (loss) per common share--Earnings (loss) per common share are based
on the weighted average number of shares outstanding during the period after
consideration of the dilutive effect of stock grants, warrants and options
(see Note 7).
Reclassifications--Certain amounts in the prior year financial statements
have been reclassified to conform to the current year presentation.
3. LONG-TERM DEBT
Long-term debt as of March 31 , 1996 and September 30, 1995 is summarized as
follows (in thousands):
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
1996 1995
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<S> <C> <C>
Senior Subordinated Notes,
due June 30, 2002(a)..... $ 62,647 $117,147
Industrial Development
Bonds(b)................. 37,903 37,903
Vail credit facility(c)... 4,000 36,000
Other..................... 232 263
-------- --------
104,782 191,313
Less--current
maturities............. 63 63
-------- --------
$104,719 $191,250
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</TABLE>
F-7
<PAGE>
GILLETT HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
3. LONG-TERM DEBT--(CONTINUED)
- --------
(a) The Senior Subordinated Notes are unsecured, bear interest at 12 1/4% and
mature on June 30, 2002. The Company, pursuant to the covenants in the
Senior Subordinated Indenture (the "Indenture"), may not incur additional
indebtedness unless expressly permitted in the Indenture; make certain
Restricted Payments (as defined in the Indenture); sell assets of the
Company or its subsidiaries unless within the guidelines set forth in the
Indenture; engage in certain transactions with affiliates; or make certain
acquisitions in excess of specific limitations.
(b) The Industrial Development Bonds mature in August 2009 with interest
payable semiannually at 8%.
(c) The Company refinanced its previous credit facility on March 31, 1995. The
new credit facility (the "Credit Facility") provides for total
availability of $135,000,000, which is comprised of a $105,000,000
Revolver ("Facility A") and a $30,000,000 Revolver ("Facility B").
Facility A requires that no more than $75,000,000 be outstanding for a 30
day period each year. Due to the long term nature of Facility A, all
amounts outstanding are considered to be noncurrent liabilities. The
maximum borrowings available under Facility A will be reduced by
$25,000,000 on March 31, 1999 with all outstanding principal due on March
31, 2000. No borrowings under Facility B are permitted unless the maximum
borrowings under Facility A are outstanding. The maximum borrowings
available under Facility B will be reduced by $10,000,000 on March 31,
1997 and further reduced by an additional $10,000,000 on March 31, 1998
with all outstanding principal due on March 31, 1999. Interest on
outstanding advances under the Credit Facility is payable monthly or
quarterly at rates based upon either LIBOR plus a margin (ranging from
.75% to 1.75%) or prime plus a margin (up to .25%). These rates fluctuate
depending on the ratio of funded debt to resort cash flow as defined in
the Credit Facility. The Company is also required to pay an unused
commitment fee ranging from .25% to .375%.
The Credit Facility is available for the seasonal working capital needs of
the Company and for capital expenditures and other general corporate
purposes, including the issuance of up to $50,000,000 of letters of credit
("LOC"). Of the $50,000,000 of LOC availability, approximately $42,000,000
will ultimately be used to credit enhance the Smith Creek Metropolitan
District revenue bonds (see Note 6). The Company currently has $27,581,000
of LOC's outstanding related to this credit enhancement and is using
approximately $6,097,000 of LOC's for other Vail Associates corporate
purposes. Fees for LOC's outstanding are payable when LOC's are issued at
rates ranging from .875% to 1.875%. Vail Associates is permitted under the
Credit Facility to make 1) quarterly dividend payments to the Company in
the amount of net cash proceeds from real estate sales, 2) annual dividend
payments (payable in March and April each year) based upon annual excess
cash flow excluding cash proceeds from real estate sales, and 3) management
fee payments not to exceed $3,000,000 per year. The Credit Facility and the
Industrial Development Bonds (see (b) above) are secured by the stock of
the subsidiaries of Vail Associates, Inc. and the Term Special Use Permits
granted by the United States Forest Service (see Note 2).
4. INCOME TAXES
The Company utilizes the liability method to account for income taxes as
required by Financial Accounting Standards Board Statement No. 109,
"Accounting for Income Taxes". The Company files a consolidated federal income
tax return along with its wholly owned subsidiaries.
At October 8, 1992 (the "Effective Date"), the Company had net operating
loss (NOL) carryforwards for federal income tax purposes of $575 million
("Effective Date NOLs"). Due to discharge of indebtedness income relating to
the restructuring, these NOLs were reduced by $214 million. Pursuant to
Section 382 of the Internal Revenue Code (IRC), due to the change in control
of the Company as described in Note 1, the Company will be limited in its use
of these NOLs which existed on the Effective Date. The Company will be able to
use Effective Date NOLs to the extent of approximately $8 million per year in
each of the 15 years subsequent to the Effective Date. In
F-8
<PAGE>
GILLETT HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
4. INCOME TAXES--(CONTINUED)
addition, the Company will be able to use Effective Date NOLs to the extent
that built-in gains (excess of fair market value over tax basis at October 8,
1992) are recognized on asset sales which occur through October 8, 1997.
Accordingly, at October 8, 1992 the financial statements reflected the benefit
of the expected use of $120 million of Effective Date NOLs. As the likelihood
is low that the Company will be able to recognize a significant portion of the
remaining Effective Date NOLs, the accompanying financial statements do not
recognize any benefits related to the remaining Effective Date NOLs, except to
the extent realized. To the extent any additional tax benefits from these
Effective Date NOLs are recognized, there will be a reduction to the
reorganization value in excess of amounts allocable to identifiable assets
recorded at October 8, 1992. During the years ended September 30, 1995 and
1994, the Company recognized the benefit of Effective Date tax attributes
which were recorded as reductions to the reorganization value in excess of
amounts allocable to identifiable assets of $278,000 and $2,764,000,
respectively. At September 30, 1995, the Company has total federal NOL
carryforwards of approximately $380 million for income tax purposes that
expire in years 2002 through 2008, $65 million of which are not subject to any
Section 382 limitation.
The Company has provided for income taxes in the accompanying statements of
operations at the estimated effective income tax rates for fiscal 1996 and
1995, respectively.
5. RELATED-PARTY TRANSACTIONS
Under the Company's debt instruments, the Company is permitted to pay up to
$500,000 per year for management services and related expenses to an affiliate
of the majority holder of the Company's common stock. This arrangement was
approved by the Board of Directors of the Company in 1993. The Company
recognized $125,000 and $250,000 of corporate expenses related to this
arrangement during each of the three and six month periods ended March 31,
1996 and 1995, respectively.
6. COMMITMENTS AND CONTINGENCIES
Vail Associates has effective control of the Beaver Creek Resort Company
(Resort Company), a non-profit entity formed for the benefit of property
owners in Beaver Creek. Vail Associates has agreed to relinquish its right to
appoint certain directors effective December 31, 1995, and subsequent to that
date may no longer have effective control of the Resort Company. Vail
Associates has a management agreement with the Resort Company, renewable for
one-year periods, to provide management services on a fixed fee basis without
any profit. In accordance with a cash flow agreement, Vail Associates will
fund the operating losses of the Resort Company, including debt service, until
such time as the Resort Company's assessments enable it to fully meet its
operating requirements. During fiscal years 1991 through 1995, the Resort
Company was able to meet its operating requirements through its own
operations.
In March 1995, the Smith Creek Metropolitan District ("SCMD") and the
Bachelor Gulch Metropolitan District ("BGMD") were organized as quasi-
municipal corporations and political subdivisions of the State of Colorado. It
is contemplated that the two districts will cooperate in the financing,
construction and operation of basic public infrastructure serving the BGMD.
SCMD was organized primarily to own, operate and maintain water, street,
traffic and safety, transportation, fire protection, emergency medical, parks
and recreation, television relay and translation, sanitation and certain other
facilities and equipment of the BGMD. SCMD is comprised of approximately 150
acres of open space land owned by the Company and members of the Board of
Directors of the SCMD. The BGMD is located adjacent to the SCMD and covers an
area of approximately 1,250 acres of land in an unincorporated portion of
Eagle County, Colorado between the Beaver Creek and Arrowhead ski mountains.
All of the land in the BGMD has received final approval by Eagle County for
development as two
F-9
<PAGE>
GILLETT HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)
6. COMMITMENTS AND CONTINGENCIES--(CONTINUED)
planned unit developments including various single family, two-family, cluster
home and townhouse units and related uses. All of the land in the BGMD is
currently owned by the Company. The Company is currently preparing to offer
the land for sale to persons, including builders, who may construct up to 600
units of various dwelling types over the next several years.
Of the $50 million of letter of credit availability under the Company's
Credit Facility, (see Note 3), approximately $42 million will ultimately be
used to credit enhance the SCMD revenue bonds in order to secure the timely
payment of principal and interest on the bonds. Currently, SCMD has issued
$26,000,000 of revenue bonds which have been credit enhanced with a
$27,581,000 letter of credit issued under the Credit Agreement. The SCMD bonds
are variable rate bonds which mature on October 1, 2035.
In June, 1995, Vail Associates entered into an agreement with Cordillera
Valley Club Investors Limited Partnership and Stag Gulch Partners to purchase
100 Cordillera Club memberships for resale to purchasers of residential lots.
The obligation to purchase memberships is secured by a $4,400,000 Letter of
Credit. As of March 31, 1996, Vail Associates has paid $850,000 in connection
with this agreement and has resold memberships costing $807,500 to purchasers
of residential lots.
7. STOCK GRANTS, OPTIONS AND WARRANTS
Pursuant to an employment agreement, George N. Gillett, Jr. (GNG), the
Company's Chairman and Chief Executive Officer, earned, as additional
performance-based compensation over the three year period ending on October 8,
1995, 357,488 shares of Class 2 Common Stock, warrants (with an exercise price
of $13.70 per share) for an additional 204,082 shares of Class 2 Common Stock
and long-term stock options (with an exercise price of $23.67 per share,
increasing 20% per year) for 582,404 shares of Class 2 Common Stock. These
warrants, long-term stock options and shares of Class 2 Common Stock have all
been issued to GNG.
The Company has adopted a stock option plan pursuant to which options
covering an aggregate of 1,022,755 shares of Common Stock may be issued to key
employees, directors, consultants, and advisors of the Company or its
subsidiaries. Options covering 896,650 shares of common stock have been issued
to various key executives of Vail Associates. All of the options vest in equal
installments over five years, with exercise prices ranging from $13.70 per
share to $21.50 per share. As of March 31, 1996, 394,604 of these options were
exercisable.
F-10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The following discussion and analysis of financial condition and results of
operations of the Company should be read in conjunction with the September 30,
1995 Form 10-K and the consolidated financial statements as of March 31, 1996
and September 30, 1995 and for the three and six month periods ended March 31,
1996 and 1995, included in Part I, Item 1 of this Form 10-Q, which provide
additional information regarding financial condition and operating results.
SIX MONTHS ENDED MARCH 31, 1996 VERSUS SIX MONTHS ENDED MARCH 31, 1995
Net revenues increased $34,780,000 (30%) for the six months ended March 31,
1996 as compared to the six months ended March 31, 1995 due to increases in
both resort revenues and revenues from real estate transactions. Resort
revenues increased $9,395,000 (9%) due to both increased skier days and
increased revenue per skier. Real estate revenues increased $25,475,000 (337%)
due primarily to residential lot sales in the Strawberry Park development at
the Beaver Creek Resort and commercial sales in Beaver Creek Village.
Operating expenses, excluding depreciation and amortization, increased
$23,264,000 (39%) for the six months ended March 31, 1996 as compared to the
six months ended March 31, 1995 due to increases in operating expenses related
to both resort operations and real estate transactions. The increase in resort
operations operating expenses of $6,137,000 (11%) corresponds to the increase
in resort operations revenues. The increase in operating expenses related to
real estate transactions of $18,924,000 (220%) results from the higher
residential lot and commercial sales at the Beaver Creek Resort. Corporate
expenses decreased $1,797,000 (55%) for the six months ended March 31, 1996 as
compared to the six months ended March 31, 1995 due primarily to the Company
no longer incurring compensation expense related to stock grants subsequent to
September 30, 1995 (see Note 7 to the consolidated financial statements), as
well as other cost cutting measures.
The increase in income from operations from $40,972,000 for the six months
ended March 31, 1995 to $52,189,000 for the six months ended March 31, 1996
was attributable primarily to an increase in both resort operations revenues
and residential lot and commercial sales at the Beaver Creek Resort, offset by
related operating expenses.
During the six months ended March 31, 1996 and 1995, the Company recorded
interest expense of $10,424,000 and $10,930,000, respectively, which relates
primarily to the interest on the Company's Senior Subordinated Notes and the
Industrial Development Bonds and Credit Facility of Vail Associates. The
decrease in interest expense from 1995 to 1996 is attributable to the
redemptions of $30,000,000 principal amount of Senior Subordinated Notes on
December 11, 1995 and $24,500,000 on February 2, 1996, offset by call premiums
paid in connection with those redemptions (see "Liquidity and Capital
Resources").
THREE MONTHS ENDED MARCH 31, 1996 VERSUS THREE MONTHS ENDED MARCH 31, 1995
Net revenues increased $10,612,000 (13%) for the three months ended March
31, 1996 as compared to the three months ended March 31, 1995 due to increases
in both resort revenues and revenues from real estate transactions. Resort
revenues increased $6,675,000 (8%) due to both increased skier days and
increased revenue per skier. Real estate revenues increased $3,937,000 (310%)
due to residential lot sales in the Strawberry Park development at the Beaver
Creek Resort and commercial sales in Beaver Creek Village.
Operating expenses, excluding depreciation and amortization, increased
$6,773,000 (19%) for the three months ended March 31, 1996 as compared to the
three months ended March 31, 1995 due primarily to increases in operating
expenses related to both resort operations and real estate transactions. The
increase in resort operations operating expenses of $6,720,000 (21%)
corresponds to the increase in resort operations revenues. The increase in
operating expenses related to real estate transactions of $1,889,000 (93%)
results from the higher residential lot and commercial sales at the Beaver
Creek Resort. Corporate expenses decreased
2
<PAGE>
$1,229,000 (68%) for the three months ended March 31, 1996 as compared to the
three months ended March 31, 1995 due primarily to the Company no longer
incurring compensation expense related to stock grants subsequent to September
30, 1995 (see Note 7 to the consolidated financial statements), as well as
other cost cutting measures.
The increase in income from operations from $40,200,000 for the three months
ended March 31, 1995 to $44,070,000 for the three months ended March 31, 1996
was attributable primarily to an increase in both resort operations revenues
and residential lot and commercial sales at the Beaver Creek Resort, offset by
related operating expenses.
During the three months ended March 31, 1996 and 1995, the Company recorded
interest expense of $4,158,000 and $4,859,000, respectively, which relates
primarily to the interest on the Company's Senior Subordinated Notes and the
Industrial Development Bonds and Credit Facility of Vail Associates. The
decrease in interest expense from 1995 to 1996 is primarily attributable to
the redemptions of $30,000,000 principal amount of Senior Subordinated Notes
on December 11, 1995 and $24,500,000 on February 2, 1996, offset by the call
premium paid in connection with the $24,500,000 redemption (see "Liquidity and
Capital Resources").
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically provided funds for debt service, capital
expenditures and acquisitions through a combination of cash flow from
operations, short-term and long-term borrowings and sales of real estate.
At September 30, 1995, the Company had outstanding $117,147,000 of Senior
Subordinated Notes maturing on June 30, 2002. On December 11, 1995 and
February 2, 1996, the Company redeemed principal amounts of $30,000,000 and
$24,500,000, respectively, of Senior Subordinated Notes pursuant to the
optional redemption provisions of the Indenture. Under these provisions, the
Company was required to pay a call premium in the amount of 5% of the
principal redeemed for each of these redemptions. At March 31, 1996, the
principal amount of Senior Subordinated Notes outstanding is $62,647,000. Cash
to make debt service payments on the Senior Subordinated Notes will be
provided to the Company through dividends or other payments from Vail
Associates.
Under the covenants in the Indenture the Company may not, among other
things, incur additional indebtedness unless expressly permitted in the
Indenture; make certain Restricted Payments (as defined in the Indenture);
sell assets of the Company or its subsidiaries unless within the guidelines
set forth in the Indenture; engage in certain transactions with Affiliates (as
defined in the Indenture); or make certain acquisitions in excess of specific
limitations. However, the Senior Subordinated Indenture does not restrict the
Company and its subsidiaries from incurring additional indebtedness if the
Company and its subsidiaries maintain a specified minimum ratio between
earnings and debt service obligations. The Indenture also permits the Company
and its subsidiaries to refinance outstanding indebtedness and to incur
intercompany indebtedness, among other permitted indebtedness.
Vail Associates has $41,200,000 of outstanding Industrial Development Bonds
issued by Eagle County, Colorado which accrue interest at an 8% tax-exempt,
fixed rate and mature on August 1, 2009. Interest is payable semi-annually on
February 1 and August 1.
Vail Associates also has a credit facility (the "Credit Facility") that
provides for total availability of $135,000,000, which is comprised of a
$105,000,000 Facility A Revolver and a $30,000,000 Facility B Revolver. The
maximum borrowings available under Facility A will be reduced by $25,000,000
on March 31, 1999 with all outstanding principal due on March 31, 2000. No
borrowings under Facility B are permitted unless the maximum borrowings under
Facility A are outstanding. The maximum borrowings available under Facility B
will be reduced by $10,000,000 on March 31, 1997 and further reduced by an
additional $10,000,000 on March 31, 1998 with all outstanding principal due on
March 31, 1999. Interest on outstanding advances under the Credit Facility is
payable monthly or quarterly at rates based upon either LIBOR plus a margin
(ranging from .75% to
3
<PAGE>
1.75%) or prime plus a margin (up to .25%). These rates fluctuate depending on
the ratio of funded debt to resort cash flow as defined in the Credit
Facility. The Company is also required to pay an unused commitment fee ranging
from .25% to .375%. The Credit Facility is available for the seasonal working
capital needs of the Company and for capital expenditures and other general
corporate purposes, including the issuance of up to $50,000,000 of letters of
credit. Outstanding letters of credit at March 31, 1996 total $33,678,000.
Vail Associates is permitted under the Credit Facility to make, to the
Company, quarterly dividend payments in the amount of net cash proceeds from
real estate sales, annual dividend payments, payable in March and April of
each year, based upon annual Excess Cash Flow as defined in the Credit
Facility, and management fee payments to a subsidiary of the Company not to
exceed $3,000,000 per year. At September 30, 1995, borrowings outstanding
under Facility A totalled $36,000,000. During the six months ended March 31,
1996, Vail Associates borrowed $40,000,000 under Facility A and repaid
$72,000,000 resulting in an outstanding balance of $4,000,000 at March 31,
1996.
Based on current levels of operations and anticipated growth and cash
availability from Vail Associates, the Company does not anticipate that it
will default on its obligations under any of its debt prior to maturity.
Capital expenditures of the Company for the six months ended March 31, 1996
were $15,791,000, all of which relate to the resort and real estate activities
of Vail Associates. These expenditures included infrastructure and other
development costs for Bachelor Gulch and Arrowhead Villages and mountain
improvements for Bachelor Gulch. The Company plans to make additional capital
expenditures of approximately $54,000,000 in the second half of the fiscal
year ending September 30, 1996, consisting primarily of real estate
development costs and mountain improvements for Bachelor Gulch and Arrowhead,
a redeveloped base area, two replacement ski lifts, and various other
equipment. The Company plans to fund fiscal 1996 capital expenditures, as well
as debt service and operating expenses, through a combination of existing cash
balances, cash flow from operations and availability under the Credit Facility
as discussed above.
The Company believes that inflation during the past three years has had
little effect on its performance and that any impact on costs has been largely
offset by increased pricing.
4
<PAGE>
PART II
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
5
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Index to Exhibits
The following exhibits are incorporated by reference to the documents
indicated in parentheses which have previously been filed with the Securities
and Exchange Commission.
<TABLE>
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NUMBER DESCRIPTION PAGE
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2.1 Stock Purchase Agreement dated August 31, 1994 between
Gillett Holdings, Inc. and PPC Acquisition Co., (with
selected exhibits). (Incorporated by reference to
Exhibit 2.1 of the report on Form 8-K of Gillett
Holdings, Inc. for the reportable event occurring on
August 31, 1994.)
3.1 Amended and Restated Certificate of Incorporation filed
with the Secretary of State of the State of Delaware on
the Effective Date. (Incorporated by reference to
Exhibit 3.1 of the Registration Statement on Form S-4
of Gillett Holdings, Inc. (Registration No. 33-52854)
including all amendments thereto.)
3.2 Amended and Restated By-Laws adopted on the Effective
Date. (Incorporated by reference to Exhibit 3.2 of the
Registration Statement on Form S-4 of Gillett Holdings,
Inc. (Registration No. 33-52854) including all
amendments thereto.)
4.1 Form of Senior Subordinated Indenture by and between
Gillett Holdings, Inc., as Issuer, and the United
States Trust Company of New York, as Trustee.
(Incorporated by reference to Exhibit T3C to
Registrant's Application for Qualification under the
Trust Indenture Act of 1939 on Form T-3 filed September
15, 1992, File No. 22-22538.)
4.2 Form of Class 2 Common Stock Registration Rights
Agreements between the Company and holders of Class 2
Common Stock. (Incorporated by reference to Exhibit
4.13 of the Registration Statement on Form S-4 of
Gillett Holdings, Inc. (Registration No. 33-52854)
including all amendments thereto.)
10.1 Management Agreement by and between Beaver Creek Resort
Company of Colorado and Vail Associates, Inc.
(Incorporated by reference to Exhibit 10.1 of the
Registration Statement on Form S-4 of Gillett Holdings,
Inc. (Registration No. 33-52854) including all
amendments thereto.)
10.2 Forest Service Term Special Use Permit for Beaver Creek
ski area. (Incorporated by reference to Exhibit 10.2 of
the Registration Statement on Form S-4 of Gillett
Holdings, Inc. (Registration No. 33-52854) including
all amendments thereto.)
10.3 Forest Service Special Use Permit for Beaver Creek ski
area. (Incorporated by reference to Exhibit 10.3 of the
Registration Statement on Form S-4 of Gillett Holdings,
Inc. (Registration No. 33-52854) including all
amendments thereto.)
10.4 Forest Service Unified Permit for Vail ski area.
(Incorporated by reference to Exhibit 10.4 of the
Registration Statement on Form S-4 of Gillett Holdings,
Inc. (Registration No. 33-52854) including all
amendments thereto.)
10.5(a) Employment Agreement dated October 8, 1992 by and among
Gillett Holdings, Inc., Vail Associates, Inc., Vail
Associates Real Estate, Inc., Beaver Creek Associates,
Inc., Packerland Packing Company, Inc. and George N.
Gillett, Jr. (Incorporated by reference to Exhibit 10.7
of the Registration Statement on Form S-4 of Gillett
Holdings, Inc. (Registration No. 33-52854) including
all amendments thereto.)
10.5(b) First Amendment to GNG Employment Agreement dated as of
September 1, 1993 by and among the Company, Vail
Associates, Inc., Vail Associates Real Estate, Inc.,
Beaver Creek Associates, Inc., Packerland Packing
Company, Inc., and George N. Gillett, Jr. (Incorporated
by reference to Exhibit 10.7(b) of the report on Form
10-K of Gillett Holdings, Inc. for the period from
October 9, 1992 through September 30, 1993.)
</TABLE>
6
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<TABLE>
<CAPTION>
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EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
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<C> <S> <C>
10.6 Employment Agreement dated October 8, 1992 between
Vail Associates, Inc. and Andrew P. Daly.
(Incorporated by reference to Exhibit 10.15 of the
Registration Statement on Form S-4 of Gillett
Holdings, Inc. (Registration No. 33-52854) including
all amendments thereto.)
10.7 Employment Agreement dated October 30, 1992 between
Vail Associates, Inc. and James Kent Myers.
(Incorporated by reference to Exhibit 10.10 of the
report on Form 10-K of Gillett Holdings, Inc. for the
period from October 9, 1992 through September 30,
1993.)
10.8 Joint Liability Agreement by and among Gillett
Holdings, Inc. and the subsidiaries of Gillett
Holdings, Inc. (Incorporated by reference to Exhibit
10.10 of the Registration Statement on Form S-4 of
Gillett Holdings, Inc. (Registration No. 33-52854)
including all amendments thereto.)
10.9(a) Management Agreement between Gillett Holdings, Inc.
and Gillett Group Management, Inc. dated as of the
Effective Date. (Incorporated by reference to Exhibit
10.11 of the Registration Statement on Form S-4 of
Gillett Holdings, Inc. (Registration No. 33-52854)
including all amendments thereto.)
10.9(b) Amendment to Management Agreement by and among the
Company and its subsidiaries dated as of November 23,
1993. (Incorporated by reference to Exhibit 10.12(b)
of the report on Form 10-K of Gillett Holdings, Inc.
for the period from October 9, 1992 through September
30, 1993.)
10.10(a) Tax Sharing Agreement between Gillett Holdings, Inc.
dated as of the Effective Date. (Incorporated by
reference to Exhibit 10.12 of the Registration
Statement on Form S-4 of Gillett Holdings, Inc.
(Registration No. 33-52854) including all amendments
thereto.)
10.10(b) Amendment to Tax Sharing Agreement by and among the
Company and its subsidiaries dated as of November 23,
1993. (Incorporated by reference to Exhibit 10.13(b)
of the report on Form 10-K of Gillett Holdings, Inc.
for the period from October 9, 1992 through September
30, 1993.)
10.11 Form of Gillett Holdings, Inc. Deferred Compensation
Agreement for certain GHTV employees. (Incorporated by
reference to Exhibit 10.13(b) of the Registration
Statement on Form S-4 of Gillett Holdings, Inc.
(Registration No. 33-52854) including all amendments
thereto.)
10.12(a) Credit Agreement dated as of March 31, 1995 among The
Vail Corporation, the Banks named therein and
NationsBank of Texas, N.A., as issuing banks and
agent. (Incorporated by reference to Exhibit 10.12(a)
of the report on Form 10-Q of Gillett Holdings, Inc.
for the quarterly period ended March 31, 1995.)
10.12(b) Second Amended and Restated Credit Agreement dated as
of March 31, 1995 among The Vail Corporation, the
banks named therein and NationsBank of Texas, N.A., as
issuing banks and agent. (Incorporated by reference to
Exhibit 10.12(b) of the report on Form 10-Q of Gillett
Holdings, Inc. for the quarterly period ended March
31, 1995.)
10.12(c) Pledge Agreement dated as of March 31, 1995 among
Gillett Holdings, Inc. and NationsBank of Texas, N.A.
as agent. (Incorporated by reference to Exhibit
10.12(c) of the report on Form 10-Q of Gillett
Holdings, Inc. for the quarterly period ended March
31, 1995.)
10.12(d) Guaranty dated as of November 23, 1993 by subsidiaries
named therein for the benefit of NationsBank of Texas,
N.A., as agent. (Incorporated by reference to Exhibit
10.17(b) of the report on Form 10-K of Gillett
Holdings, Inc. for the period from October 9, 1992
through September 30, 1993.)
</TABLE>
7
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<TABLE>
<CAPTION>
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EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
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<C> <S> <C>
10.12(e) Collateral Agency Agreement dated as of November 23,
1993 among Vail Associates, Inc., The Vail
Corporation, Beaver Creek Associates, Inc.,
NationsBank of Texas, N.A., as Collateral agent and
agent, Colorado National Bank as Beaver Creek
Indenture Trustee and Vail Indenture Trustee.
(Incorporated by reference to Exhibit 10.17(c) of the
report on Form 10-K of Gillett Holdings, Inc. for the
period from October 9, 1992 through September 30,
1993.)
10.12(f) Pledge Agreement dated as of November 23, 1993 among
The Vail Corporation, Vail Associates, Inc., Beaver
Creek Associates, Inc., Vail Associates Real Estate
Group, Inc., Vail Associates Real Estate, Inc., as
obligors and NationsBank of Texas, N.A., as collateral
agent. (Incorporated by reference to Exhibit 10.17(d)
of the report on Form 10-K of Gillett Holdings, Inc.
for the period from October 9, 1992 through September
30, 1993.)
10.12(g) Trust Indenture dated as of September 1, 1992 between
Eagle County, Colorado, and Colorado National Bank, as
Trustee, securing Sports Housing Facilities Revenue
Refunding Bonds. (Incorporated by reference to Exhibit
10.16(g) of the Registration Statement on Form S-4 of
Gillett Holdings, Inc. (Registration No. 33-52854)
including all amendments thereto.)
10.12(h) First Amendment to Trust Indenture dated as of
November 23, 1993 between Eagle County, Colorado and
Colorado National Bank, as Trustee, securing Sports
and Housing Facilities Revenue Refunding Bonds.
(Incorporated by reference to Exhibit 10.17(f) of the
report on Form 10-K of Gillett Holdings, Inc. for the
period from October 9, 1992 through September 30,
1993.)
10.12(i) Trust Indenture dated as of September 1, 1992 between
Eagle County, Colorado, and Colorado National Bank, as
Trustee, securing Sports Facilities Revenue Refunding
Bonds. (Incorporated by reference to Exhibit 10.16(h)
of the Registration Statement on Form S-4 of Gillett
Holdings, Inc. (Registration No. 33-52854) including
all amendments thereto.)
10.12(j) First Amendment to Trust Indenture dated as of
November 23, 1993 between Eagle County, Colorado and
Colorado National Bank, as Trustee, securing Sports
Facilities Revenue Refunding Bonds. (Incorporated by
reference to Exhibit 10.17(h) of the report on Form
10-K of Gillett Holdings, Inc. for the period from
October 9, 1992 through September 30, 1993.)
10.12(k) Sports and Housing Facilities Financing Agreement
dated as of September 1, 1992 between Eagle County,
Colorado and Vail Associates, Inc. (Incorporated by
reference to Exhibit 10.16(i) of the Registration
Statement on Form S-4 of Gillett Holdings, Inc.
(Registration No. 33-52854) including all amendments
thereto.)
10.12(l) First Amendment to Sports and Housing Facilities
Financing Agreement and Assignment and Assumption
Agreement dated as of November 23, 1993 between Eagle
County, Colorado, Vail Associates, Inc. and The Vail
Corporation. (Incorporated by reference to Exhibit
10.17(j) of the report on Form 10-K of Gillett
Holdings, Inc. for the period from October 9, 1992
through September 30, 1993.)
10.12(m) Sports Facilities Financing Agreement dated as of
September 1, 1992 between Eagle County, Colorado and
Beaver Creek Associates, Inc., with Vail Associates,
Inc. as Guarantor. (Incorporated by reference to
Exhibit 10.16(j) of the Registration Statement on Form
S-4 of Gillett Holdings, Inc. (Registration No. 33-
52854) including all amendments thereto.)
</TABLE>
8
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<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ----------- ------------
<C> <S> <C>
10.12(n) First Amendment to Sports Facilities Financing Agreement and Assignment and
Assumption Agreement dated as of November 23, 1993 by and among Eagle County,
Colorado, Beaver Creek Associates, Inc., Vail Associates, Inc., and The Vail
Corporation. (Incorporated by reference to Exhibit 10.17(1) of the report on Form 10-K
of Gillett Holdings, Inc. for the period from October 9, 1992 through September 30,
1993.)
10.12(o) Guaranty dated as of September 1, 1992, by Vail Associates, Inc. delivered to Colorado
National Bank, as Trustee. (Incorporated by reference to Exhibit 10.16(k) of the
Registration Statement on Form S-4 of Gillett Holdings, Inc. (Registration No. 33-
52854) including all amendments thereto.)
10.13(a) Agreement for Purchase and Sale dated as of August 25, 1993 by and among
Arrowhead at Vail, Arrowhead Ski Corporation, Arrowhead at Vail Properties
Corporation, Arrowhead Property Management Company and Vail Associates, Inc.
(Incorporated by reference to Exhibit 10.19(a) of the report on Form 10-K of Gillett
Holdings, Inc. for the period from October 9, 1992 through September 30, 1993.)
10.13(b) Amendment to Agreement for Purchase and Sale dated September 8, 1993 by and
between Arrowhead at Vail, Arrowhead Ski Corporation, Arrowhead at Vail Properties
Corporation, Arrowhead Property Management Company and Vail Associates, Inc.
(Incorporated by reference to Exhibit 10.19(b) of the report on Form 10-K of Gillett
Holdings, Inc. for the period from October 9, 1992 through September 30, 1993.)
10.13(c) Second Amendment to Agreement for Purchase and Sale dated September 22, 1993 by
and between Arrowhead at Vail, Arrowhead Ski Corporation, Arrowhead at Vail
Properties Corporation, Arrowhead Property Management Company and Vail
Associates, Inc. (Incorporated by reference to Exhibit 10.19(c) of the report on Form
10-K of Gillett Holdings, Inc. for the period from October 9, 1992 through September
30, 1993.)
10.13(d) Third Amendment to Agreement for Purchase and Sale dated November 30, 1993 by
and between Arrowhead at Vail, Arrowhead Ski Corporation, Arrowhead at Vail
Properties Corporation, Arrowhead Property Management Company and
Vail/Arrowhead, Inc. (Incorporated by reference to Exhibit 10.19(d) of the report on
Form 10-K of Gillett Holdings, Inc. for the period from October 9, 1992 through
September 30, 1993.)
10.14 1992 Stock Option Plan of Gillett Holdings, Inc. (Incorporated by reference to Exhibit
10.20 of the report on Form 10-K of Gillett Holdings, Inc. for the period from October
9, 1992 through September 30, 1993.)
10.15 Agreement to Settle Prospective Litigation and for Sale of Personal Property dated May
10, 1993, between the Company, Clifford E. Eley, as Chapter 7 Trustee of the Debtor's
Bankruptcy Estate, and George N. Gillett, Jr. (Incorporated by reference to Exhibit
10.21 of the report on Form 10-K of Gillett Holdings, Inc. for the period from October
9, 1992 through September 30, 1993.)
10.16 Employment Agreement dated April 1, 1994 between Gillett Holdings, Inc. and James
S. Mandel (Incorporated by reference to Exhibit 10.22 of the report on Form 10-K of
Gillett Holdings, Inc. for the year ended September 30, 1994.)
10.17 Employment Agreement dated April 1, 1994 between Vail Associates, Inc. and James
S. Mandel (Incorporated by reference to Exhibit 10.23 of the report on Form 10-K of
Gillett Holdings, Inc. for the year ended September 30, 1994.)
</TABLE>
9
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<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
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16. Letter from Ernst & Young LLP regarding change in
certifying accountant. (Incorporated by reference to
Exhibit 16 of the report on Form 8-K of Gillett
Holdings, Inc. for the reportable event occurring on
October 25, 1994.)
21. List of subsidiaries of Gillett Holdings, Inc.
(Incorporated by reference to Exhibit 21 of the report
on Form 10-K of Gillett Holdings, Inc. for the year
ended September 30, 1995.)
99.1(a) Debtor's Second Amended Joint Disclosure Statement
Pursuant to Section 1125 of the Bankruptcy Code for the
Second Amended Joint Plan of Reorganization of the
Debtors. (Incorporated by reference to Exhibit T3E.1 of
Registrant's Application for Qualification under the
Trust Indenture Act of 1939 on Form T-3 filed September
15, 1992, File No. 22-22538.)
99.1(b) Exhibits to Debtor's Second Amended Joint Disclosure
Statement Pursuant to Section 1125 of the Bankruptcy
Code for the Second Amended Joint Plan of
Reorganization of the Debtors. (Incorporated by
reference to Exhibit T3E.1 of Registrant's Application
for Qualification under the Trust Indenture Act of 1939
on Form T-3 filed September 15, 1992, File No. 22-
22538.)
99.2 Supplement to Debtor's Second Amended Joint Disclosure
Statement Pursuant to Section 1125 of the Bankruptcy
Code for the Second Amended Joint Plan of
Reorganization of the Debtors. (Incorporated by
reference to Exhibit 28.2 of the Registration Statement
on Form S-4 of Gillett Holdings, Inc. (Registration No.
33-52854) including all amendments thereto.)
99.3 Exhibits to the Second Amended Joint Plan of
Reorganization of the Debtors. (Incorporated by
reference to Exhibit 28.3 of the Registration Statement
on Form S-4 of Gillett Holdings, Inc. (Registration No.
33-52854) including all amendments thereto.)
</TABLE>
(b) No reports on Form 8-K have been filed during the three months ended March
31, 1996.
10
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED ON MAY 14, 1996.
Gillett Holdings, Inc.
/s/ Gerald E. Flynn
By __________________________________
Gerald E. Flynn
Senior Vice President and Chief
Financial Officer
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 INDICATED ON MAY 14, 1996.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- ----------------------------------
<S> <C>
/s/ David A. Barnhill
- ------------------------------------
David A. Barnhill Vice President, Chief Accounting
Officer and Treasurer
/s/ Gerald E. Flynn
- ------------------------------------
Gerald E. Flynn Senior Vice President and Chief
Financial Officer
</TABLE>
II-1
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Form
10-Q for the quarter ended March 31, 1996 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 8,235
<SECURITIES> 0
<RECEIVABLES> 11,787
<ALLOWANCES> 0
<INVENTORY> 4,891
<CURRENT-ASSETS> 36,130
<PP&E> 208,094
<DEPRECIATION> 0
<TOTAL-ASSETS> 390,735
<CURRENT-LIABILITIES> 33,097
<BONDS> 0
0
0
<COMMON> 100
<OTHER-SE> 193,920
<TOTAL-LIABILITY-AND-EQUITY> 390,735
<SALES> 0
<TOTAL-REVENUES> 91,232
<CGS> 0
<TOTAL-COSTS> 42,790
<OTHER-EXPENSES> 4,372
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,158
<INCOME-PRETAX> 39,724
<INCOME-TAX> 16,672
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23,052
<EPS-PRIMARY> 2.24
<EPS-DILUTED> 0
</TABLE>
