<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934.
For quarterly period ended July 31, 2000
-------------
Commission file number 0-17517
-------
Sea Pines Associates, Inc.
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
South Carolina 57-0845789
------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
32 Greenwood Drive
Hilton Head Island, South Carolina 29928
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(843) 785-3333
--------------
(Registrant's telephone number, including area code)
No Change
---------
(Former name, former address and former fiscal year, if
changed since last report.)
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 [ ]
The number of shares outstanding of the registrant's common stock as of July 31,
2000 was 3,545,400.
<PAGE> 2
INDEX TO FORM 10-Q
FOR SEA PINES ASSOCIATES, INC.
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as
of July 31, 2000 and October 31, 1999 3 - 4
Condensed Consolidated Statements of Operations for
the Quarter and Nine Months Ended July 31, 2000 and 1999 5
Condensed Consolidated Statements of Cash Flows
for the Nine Months ended July 31, 2000 and 1999 6
Notes to Condensed Consolidated Financial Statements 7 - 11
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 12 - 21
Item 3 - Quantitative and Qualitative Disclosures About Market Risk 21
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings 21
Item 2 - Changes in Securities and Use of Proceeds 22
Item 3 - Defaults Upon Senior Securities 22
Item 4 - Submission of Matters To Vote of
Security Holders 22
Item 5 - Other Information 22
Item 6 - Exhibits and Reports on Form 8-K 22
Signatures 23
</TABLE>
<PAGE> 3
SEA PINES ASSOCIATES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
JULY 31, OCTOBER 31,
2000 1999
(UNAUDITED) (NOTE)
--------------------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents:
Unrestricted $ 870 $ 662
Restricted 3,962 2,380
--------------------------
4,832 3,042
Accounts and notes receivable, net of allowance for
doubtful accounts of $39 and $41 at July 31, 2000 and
October 31, 1999, respectively 1,086 1,189
Income tax refund receivable 346 346
Current portion of notes receivable 56 373
Inventories 652 737
Prepaid expenses 352 140
--------------------------
Total current assets 7,324 5,827
Notes receivable, less current portion 1,233 1,687
Deferred income taxes -- 83
Deferred financing costs, net 134 36
Other assets, net 75 78
--------------------------
1,442 1,884
Real estate assets
Construction in progress 10,937 6,575
Operating properties, net 30,951 23,765
Properties held for future development 4,623 4,623
--------------------------
46,511 34,963
--------------------------
Total assets $55,277 $42,674
==========================
</TABLE>
Note: The condensed consolidated balance sheet at October 31, 1999 has been
derived from the audited financial statements at that date but does not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.
See accompanying notes.
<PAGE> 4
SEA PINES ASSOCIATES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
JULY 31, OCTOBER 31,
2000 1999
(UNAUDITED) (NOTE)
--------------------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 6,474 $ 3,300
Advance deposits 2,983 2,155
Current portion of deferred revenue 399 537
Income tax payable 70 --
Current maturities of long-term debt 29,683 400
--------------------------
Total current liabilities 39,609 6,392
Long-term debt -- 19,483
Deferred revenue 545 905
Company-obligated redeemable preferred securities of
a subsidiary trust holding solely the Junior
Subordinated Debentures 2,480 --
--------------------------
Total liabilities 42,634 26,780
--------------------------
Commitments and contingencies
Shareholders' equity:
Series A cumulative preferred stock, no par value,
2,000,000 shares authorized; 220,900 shares and
1,228,350 shares issued and outstanding at
July 31, 2000 and October 31, 1999, respectively
(liquidation preference $1,678,840 and $9,335,460) 1,294 7,218
Series B junior cumulative preferred stock, no par
value, 20,000 shares authorized; none issued or
outstanding -- --
Common stock 23,000,000 shares authorized; 3,545,400
shares and 1,842,525 shares issued and outstanding at
July 31, 2000 and October 31, 1999, respectively 7,343 2,166
Retained earnings 4,006 6,510
--------------------------
Total shareholders' equity 12,643 15,894
--------------------------
Total liabilities and shareholders' equity $55,277 $42,674
==========================
</TABLE>
Note: The condensed consolidated balance sheet at October 31, 1999 has been
derived from the audited financial statements at that date but does not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.
See accompanying notes.
<PAGE> 5
SEA PINES ASSOCIATES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
JULY 31, JULY 31,
2000 1999 2000 1999
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
---------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $ 15,017 $ 14,786 $ 37,660 $ 34,725
Cost and expenses:
Cost of revenues 11,643 10,271 28,340 24,025
Sales and marketing expenses 660 609 2,053 1,854
General and administrative expenses 1,441 1,546 4,421 4,342
Depreciation and amortization 436 313 1,143 919
---------------------------------------------------------
Total costs and expenses 14,180 12,739 35,957 31,140
---------------------------------------------------------
Income from operations 837 2,047 1,703 3,585
Other income (expense):
Interest income 36 51 97 112
Interest expense (412) (296) (1,019) (916)
Gain (loss) on sale of assets (130) 524 (130) 524
Exchange offer costs (6) -- (201) --
---------------------------------------------------------
Total other income (expense) (512) 279 (1,253) (280)
---------------------------------------------------------
Income before income taxes 325 2,326 450 3,305
Income tax provision 111 791 153 1,124
---------------------------------------------------------
Net income 214 1,535 297 2,181
Preferred stock dividend requirement (40) (222) (302) (667)
---------------------------------------------------------
Net income (loss) attributable to common
stock $ 174 $ 1,313 $ (5) $ 1,514
=========================================================
Per share of common stock
Net income $ 0.05 $ 0.71 $ 0.00 $ 0.82
=========================================================
</TABLE>
See accompanying notes.
<PAGE> 6
SEA PINES ASSOCIATES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
JULY 31,
2000 1999
(UNAUDITED) (UNAUDITED)
-----------------------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income $ 297 $ 2,181
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 1,143 919
Loss on sale of assets (130) --
Deferred revenue (498) (28)
Allowance for doubtful accounts (2) 5
Deferred income taxes 83 --
Changes in assets and liabilities:
Restricted cash (1,582) (1,909)
Accounts and notes receivable 876 18
Inventories 85 (17)
Prepaid expenses (212) (199)
Other assets (95) 34
Accounts payable and accrued expenses 2,769 1,900
Advance deposits 828 739
Income taxes payable 70 11
-----------------------------
Net cash provided by operating activities 3,632 3,654
-----------------------------
Cash Flows from Investing Activities:
Capital expenditures and property acquisitions (12,561) (4,399)
Proceeds from sale of assets -- 524
-----------------------------
Net cash used in investing activities (12,561) (3,875)
-----------------------------
Cash Flows from Financing Activities:
Additional borrowing on long-term debt 9,800 1,341
Borrowings on line of credit -- (184)
Dividends paid (663) (667)
-----------------------------
Net cash provided by financing activities 9,137 490
-----------------------------
Net increase in unrestricted cash and cash equivalents 208 269
Unrestricted cash and cash equivalents at beginning of period 662 591
-----------------------------
Unrestricted cash and cash equivalents at end of period $ 870 $ 860
=============================
</TABLE>
See accompanying notes
<PAGE> 7
SEA PINES ASSOCIATES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 2000 AND OCTOBER 31, 1999
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the nine month period ended July 31, 2000
are not necessarily indicative of the results that may be expected for the year
ended October 31, 2000. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's annual
report on Form 10-K for the year ended October 31, 1999.
NOTE 2 - INVENTORIES
Inventories consist of the following (amounts in thousands):
<TABLE>
<CAPTION>
July 31, October 31,
2000 1999
---- ----
<S> <C> <C>
Merchandise $504 $628
Supplies, parts and accessories 36 37
Food and beverages 80 44
Other 32 28
---- ----
$652 $737
==== ====
</TABLE>
<PAGE> 8
NOTE 3- OPERATING PROPERTIES
Operating properties consist of the following (amounts in thousands):
<TABLE>
<CAPTION>
July 31, October 31,
2000 1999
-------- --------
<S> <C> <C>
Land and land Improvements $ 20,834 $ 19,047
Buildings 14,034 8,466
Machinery and equipment 7,921 7,308
-------- --------
42,789 34,821
Less - Accumulated depreciation (11,838) (11,056)
-------- --------
$ 30,951 $ 23,765
======== ========
</TABLE>
NOTE 4 - LONG-TERM DEBT AND LINE OF CREDIT AGREEMENTS
Long-term debt consists of the following (in thousands of dollars):
<TABLE>
<CAPTION>
July 31, October 31,
2000 1999
-------- --------
<S> <C> <C>
Term note payable to bank, bearing interest at various London Interbank Offered
Rates (LIBOR) 6.645% at July 31, 2000, plus 1.25% to 1.5% collateralized by
substantially all assets of the Company. Principal is payable monthly from May
through October each year in amounts ranging from $66,602 in 2000 to $220,979 in
2008. Interest is payable monthly. The note matures November 1, 2008. $ 17,933 $ 18,133
$18.3 million revolving line of credit to bank, pre-approved for use in
construction of the Company's inn, conference center and golf course renovation,
bearing interest at various London Interbank Offered Rates (LIBOR) at 6.645%
July 31, 2000, plus 1.25% to 1.5% collateralized by substantially all assets
of the Company. Interest is payable monthly. The line matures October 31, 2003. 11,750 1,750
-------- --------
Less current portion of long-term debt 29,683 19,883
Total long-term debt (29,683) (400)
-------- --------
$ -- $ 19,483
======== ========
</TABLE>
<PAGE> 9
Under the terms of the Master Credit Agreement with the bank, the Company is
required to maintain certain financial covenants which are calculated on a
quarterly basis. The Company did not meet its requirement for one of these
financial covenants for the third quarter ended July 31, 2000 and has received a
waiver from the bank for this non-compliance through July 31, 2000. Because the
Company does not expect to meet these financial covenants in future quarters,
the Company has classified all of its outstanding debt as current maturities of
long-term debt on its balance sheet as of July 31, 2000. The Company is
currently renegotiating a modification to these required financial covenants and
expects to complete this modification prior to its fiscal year-end on October
31, 2000.
In addition, the Company maintains a $4,500,000 seasonal line of credit (the
"Seasonal Line") with the same bank. Interest is payable monthly at LIBOR plus
1.5% and the Seasonal Line expires October 31, 2003. Borrowings under the
Seasonal Line are also collateralized by substantially all of the assets of the
Company. There was no outstanding balance as of July 31, 2000.
NOTE 5 - EARNINGS PER SHARE
Income (loss) per share of common stock is calculated by dividing net income or
loss after preferred stock dividend requirements by the weighted average number
of outstanding shares of common stock. Basic and diluted earnings per share are
identical for all periods presented. Potentially diluted securities consist of
additional shares of common stock issuable when the stock rights become
exercisable. These contingently issuable shares have not been included in basic
or diluted earnings per share as the stock rights are not yet exercisable.
NOTE 6 - PREFERRED STOCK EXCHANGE OFFERING
Effective February 1, 2000, the Company completed its Exchange Offer pursuant to
the December 21, 1999 Exchange Offer Prospectus. The Exchange Offer allowed
holders of the Company's Series A Preferred Stock to exchange each preferred
share for either 2 1/2 shares of the Company's common stock or an equivalent
number of new 9.5% Company-obligated redeemable preferred securities of a
subsidiary trust holding solely the Junior Subordinated Debentures ("Trust
Preferred Securities") issued by Sea Pines Associates, Inc. Holders of
approximately 56% of the preferred stock exchanged their shares for Common
Stock. Holders of approximately 26% of the preferred stock exchanged their
shares for the new Trust Preferred Security. Holders of approximately 18% of the
Series A Preferred Stock did not exchange their shares.
In conjunction with the Exchange Offer, the Company declared a cash payment of
$0.722 per share to be paid only to holders of record of Series A Preferred
Stock who exchanged shares of Series A Preferred Stock in the Exchange Offer.
This dividend will be paid in four approximately equal quarterly installments,
the first two of which were paid on April 17, 2000 and July 17, 2000. Additional
quarterly installments will be paid on October 17, 2000 and January 15, 2001.
<PAGE> 10
The Company incurred approximately $293,000 in professional fees and other costs
relating to this transaction. Costs of $201,000 have been expensed relating to
the Common Stock Exchange. The remaining costs of $92,000 were capitalized as
deferred financing costs and will be amortized over the 30-year life of the
Trust Preferred Securities.
The Trust Preferred Securities bear interest at 9.5% per annum with payments due
quarterly, nine months in arrears. The first interest payment is payable January
31, 2001. The Trust Preferred Securities mature on January 31, 2030. The Company
has the right to redeem the Trust Preferred Securities on or after January 31,
2003 as specified in the indenture agreement. The Trust Preferred Securities are
subordinate in right of payment to all senior debt of the Company.
NOTE 7 - BUSINESS SEGMENT INFORMATION
The Company has two reportable business segments. The Company's reportable
segments are organized by the type of operations and include: (1) resort
activities, including home and villa rental management operations, golf course
operations, food and beverage operations, and various other recreational
activities; and (2) real estate brokerage for buyers and sellers of real estate
in the Hilton Head Island, South Carolina, area.
The Company evaluates performance and allocates resources based on earnings
before interest, depreciation and other non-cash items. The accounting policies
of the reportable segment are the same as those described in the summary of
significant accounting policies (Note 1). All inter-company transactions between
segments have been eliminated upon consolidation.
<PAGE> 11
NOTE 7 - BUSINESS SEGMENT INFORMATION (continued)
Segment information as of and for the quarter and nine months ended July 31,
2000 and 1999 are as follows: (amounts in thousands)
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
JULY 31, JULY 31,
2000 1999 2000 1999
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
--------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Resort $ 9,757 $10,111 $ 23,573 $21,735
Real estate brokerage 5,260 4,675 14,087 12,990
--------------------------------------------------------
$ 15,017 $14,786 $ 37,660 $34,725
========================================================
Interest expense:
Resort $ 412 $ 296 $ 1,019 $ 916
========================================================
Depreciation and amortization expense:
Resort $ 421 $ 302 $ 1,101 $ 888
Real estate brokerage 15 11 42 31
--------------------------------------------------------
$ 436 $ 313 $ 1,143 $ 919
========================================================
Segment income (loss) before income taxes:
Resort $ (98) $ 1,714 $ (593) $ 1,725
Real estate brokerage 423 612 1,043 1,580
--------------------------------------------------------
$ 325 $ 2,326 $ 450 $ 3,305
========================================================
Identifiable assets:
Resort $ 52,368 $39,964 $ 52,368 $39,964
Real estate brokerage 2,909 2,710 2,909 2,710
--------------------------------------------------------
$ 55,277 $42,674 $ 55,277 $42,674
========================================================
</TABLE>
<PAGE> 12
PART I
THIS REPORT ON FORM 10-Q AND OTHER STATEMENTS ISSUED OR MADE FROM TIME TO TIME
BY THE COMPANY OR ITS REPRESENTATIVES CONTAIN STATEMENTS WHICH MAY CONSTITUTE
"FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE SECURITIES ACT OF 1933,
AS AMENDED, AND THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THOSE
STATEMENTS INCLUDE STATEMENTS REGARDING THE INTENT, BELIEF OR CURRENT
EXPECTATIONS OF THE COMPANY AND MEMBERS OF ITS MANAGEMENT TEAM, AS WELL AS THE
ASSUMPTIONS ON WHICH SUCH STATEMENTS ARE BASED. PROSPECTIVE INVESTORS ARE
CAUTIONED THAT ANY SUCH FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE
PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES, AND THAT ACTUAL RESULTS MAY
DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY SUCH FORWARD-LOOKING STATEMENTS.
IMPORTANT FACTORS CURRENTLY KNOWN TO MANAGEMENT THAT COULD CAUSE ACTUAL RESULTS
TO DIFFER MATERIALLY FROM THOSE IN FORWARD-LOOKING STATEMENTS INCLUDE THOSE SET
FORTH IN THIS REPORT, AS WELL AS THOSE CONTAINED IN THE SAFE HARBOR COMPLIANCE
STATEMENT FOR FORWARD-LOOKING STATEMENTS INCLUDED AS EXHIBIT 99.1 TO THIS REPORT
ON FORM 10-Q, WHICH FACTORS ARE HEREBY INCORPORATED BY REFERENCE. THE COMPANY
UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE FORWARD-LOOKING STATEMENTS TO
REFLECT CHANGED ASSUMPTIONS, THE OCCURRENCE OF UNANTICIPATED EVENTS OR CHANGES
TO FUTURE OPERATING RESULTS OVER TIME.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The Company's operations are conducted primarily through two
wholly-owned subsidiaries. Sea Pines Company, Inc. operates all of the resort
assets, including three resort golf courses, a racquet club facility, a home and
villa rental management business, retail sales outlets, food service operations
and other resort recreational facilities. Sea Pines Real Estate Company, Inc. is
an independent real estate brokerage firm with sixteen offices serving Hilton
Head Island and its neighboring communities.
<PAGE> 13
Results of Operations for 3rd Quarter 2000 as Compared with 3rd Quarter 1999
Revenues for the third quarter 2000 totaled $15,017,000, a 1.6% increase over
third quarter 1999 revenues, while income from operations declined 59.1% during
the same period. The revenue increase is summarized as follows (amounts in
thousands):
<TABLE>
<CAPTION>
3rd Qtr. 3rd Qtr.
2000 1999 Change
------- -------- -------
<S> <C> <C> <C>
Revenues:
Resort
Lodging $ 5,538 $ 5,132 $ 406
Golf 2,311 3,479 (1,168)
Food & beverage 1,079 489 590
Other resort 829 1,011 (182)
------- -------- -------
9,757 10,111 (354)
Real estate brokerage 5,260 4,675 585
------- -------- -------
Total revenues $15,017 $ 14,786 $ 231
======= ======== =======
</TABLE>
Lodging revenues from the Company's home and villa rental management operation
increased by $406,000, or 7.9%, during the third quarter 2000 as compared with
the third quarter 1999. This increase is primarily the result of increased
lodging rates in fiscal year 2000. The average daily rate was $193.20 through
July 31, 2000, an 8.2% increase over 1999.
Golf revenues declined by $1,168,000, or 33.6%, during the third quarter 2000 as
compared with the third quarter 1999. This significant decline in revenues is
the result of the closure of the Harbour Town Golf Links for a major renovation
project. The golf course was closed in May 2000 for a complete renovation of the
greens, tees, bunkers and cart paths and is expected to reopen during the first
quarter 2001.
Food and beverage revenues totaled $1,079,000 in the third quarter 2000, a
$590,000 increase over third quarter 1999 or 120.7%. The Company took over
operational control of its food and beverage facilities in June 1999. Prior to
June 1999, these facilities were leased to independent operators. The increase
in food and beverage revenues is the result of this change in operational
control.
Other resort revenues declined by $182,000, or 18.0%, during the third quarter
2000 as compared with the third quarter 1999. This decrease is attributed to a
reduction in commercial rental revenues resulting from the change in food and
beverage operations as discussed above.
Real estate brokerage revenues increased by $585,000, or 12.5%, during the third
quarter 2000 as compared with the same period last year. This increase in real
estate brokerage revenues reflects both the continued strength in market demand
and continued appreciation in property values within the Hilton Head Island
market area.
<PAGE> 14
Income from operations totaled $714,000 in the third quarter 2000, a $1,333,000
decline, or 65.1%, over the same period in 1999. This significant decline is
summarized as follows (amounts in thousands):
<TABLE>
<CAPTION>
3rd Qtr. 3rd Qtr.
2000 1999 Change
------- ------- -------
<S> <C> <C> <C>
Income (loss) from operations:
Resort
Lodging $ 1,164 $ 1,015 $ 149
Golf 932 1,912 (980)
Food & beverage (44) (59) 15
Other resort (1,623) (1,422) (201)
------- ------- -------
429 1,446 (1,017)
Real estate brokerage 408 601 (193)
------- ------- -------
Total income from operations $ 837 $ 2,047 $ 1,210
======= ======= =======
</TABLE>
Income from lodging operations increased by $149,000, or 14.7%, during the third
quarter 2000 as compared with the third quarter 1999. This increase is
attributed to the increase in lodging revenues reduced by the applicable cost of
these revenues.
Income from golf operations significantly declined by $980,000, or 51.3%, during
the third quarter 2000 as compared with the same period last year. This decline
is the result of the closure of the Harbour Town Golf Links for a major
renovation project as previously discussed.
The Company's food and beverage operation produced an operating loss of $44,000
during the third quarter 2000, an improvement of $15,000, or 25.4%, over the
loss incurred during the third quarter 1999.
Other resort departments include general and administrative costs along with
tennis operations and other recreational operations. These departments produced
an operating loss of $1,623,000 during the third quarter 2000, a 14.1% increase
over the loss incurred in the third quarter 1999. Several factors caused this
increase in operating loss, including: the reduction in commercial rental
revenues as previous discussed; an increase in conference sales costs due to
expanded marketing efforts relating to the new Harbour Town Conference Center
which opened in April 2000; and, an increase in certain other general and
administrative costs.
Income from real estate brokerage operations declined by $193,000, or 32.11%, in
the third quarter 2000 as compared with the third quarter 1999. This decline in
income from operations is the result of an increase in cost of revenues and an
increase in payroll and operating expenses. Cost of real estate brokerage
revenues increased by $607,000, or 20.9%, resulting from an increase in revenue
volume and a 5.2% increase in the cost of revenue percentage. The average
commissions paid to the Company's real estate agents as a percentage of revenue
increased from 68.6% in the third quarter of 1999 to 73.8% in the third quarter
of 2000. Payroll and operating expenses relating to the real
<PAGE> 15
estate brokerage operations increased by $108,000, or 12.5%, in the third
quarter 2000 as compared with the same period last year. These cost increases
primarily result from the opening of several new real estate offices in 1999 and
2000.
Consolidated cost of revenues increased by $1,372,000, or 13.4%, during the
third quarter 2000 as compared to the same period last year. This increase is
attributable to volume increases in lodging revenues and real estate brokerage,
an increase in the average commission paid to real estate agents, and the
addition of food and beverage costs resulting from the operational change as
previously discussed.
Sales and marketing expenses increased by $51,000, or 8.4%, during the third
quarter 2000 as compared with the third quarter 1999. This increase results from
costs associated with additional marketing efforts of the Company's food and
beverage operations and conference sales.
General and administrative expenses decreased by $105,000, or 6.8%, during the
third quarter 2000 as compared with the third quarter 1999.
Depreciation and amortization costs increased by $123,000, or 39.3%, during the
third quarter 2000 as compared with the same period last year. This increase
results from depreciation of the Company's new Harbour Town Conference Center
and the renovation project completed at Sea Pines Racquet Club in April 2000.
Interest income remained relatively constant at $36,000 and $51,000 for the
third quarter of 2000 and 1999, respectively. Interest expense increased by
$116,000, or 39.2%, during the third quarter 2000 as compared with the same
period last year. This increase is attributable to interest on the new Trust
Preferred Securities which were issued by the Company in February 2000 in
connection with the Exchange Offer and an increase in outstanding debt from the
building projects currently under construction.
A loss of $130,000 from the disposal of assets associated with the renovation of
the Harbour Town Golf Links was recorded in the third quarter 2000. A gain of
$524,000 from the sale of the South Beach swimming pool was recorded in the
third quarter 1999.
<PAGE> 16
Results of Operations for Nine Months of 2000 as Compared with Nine Months of
1999
Revenues for the nine months of 2000 totaled $37,660,000, an 8.4% increase over
nine months of 1999 revenues, while income from operations declined 52.5% during
the same period. The revenue increase is summarized as follows (amounts in
thousands):
<TABLE>
<CAPTION>
Nine Months Nine Months
2000 1999 Change
------- ------- -------
<S> <C> <C> <C>
Revenues:
Resort
Lodging $ 9,684 $ 8,711 $ 973
Golf 8,014 8,937 (923)
Food & beverage 2,730 718 2,012
Other resort 3,145 3,141 4
------- ------- -------
23,573 21,507 2,066
Real estate brokerage 14,087 13,218 869
------- ------- -------
Total revenues $37,660 $34,725 $ 2,935
======= ======= =======
</TABLE>
Lodging revenues from the Company's home and villa rental management operation
increased by $973,000, or 11.1%, during the nine months of 2000 as compared with
the nine months of 1999. This increase is primarily the result of increased
lodging rates in fiscal year 2000. The average daily rate was $193.20 through
July 31, 2000, an 8.2% increase over 1999.
Golf revenues declined by $923,000, or 10.3%, during the nine months of 2000 as
compared with the nine months of 1999. This significant decline in revenues is
the result of the closure of the Harbour Town Golf Links for a major renovation
project. The golf course was closed in May 2000 for a complete renovation of the
greens, tees, bunkers and cart paths and is expected to reopen during the first
quarter 2001.
Food and beverage revenues totaled $2,730,000 in the nine months of 2000, a
$2,012,000 increase over 1999, or 280.2%. The Company took over operational
control of its food and beverage facilities in June 1999. Prior to June 1999,
these facilities were leased to independent operators. The increase in food and
beverage revenues is the result of this change in operational control.
Other resort revenues increased by $4,000, or .13%, during the nine months of
2000 as compared with the nine months of 1999.
Real estate brokerage revenues increased by $869,000, or 6.6%, during the nine
months of 2000 as compared with the same period last year. This increase in real
estate brokerage revenues reflects both the continued strength in market demand
and continued appreciation in property values within the Hilton Head Island
market area.
<PAGE> 17
Income from operations totaled $1,703,000 in the nine months of 2000, a
$1,882,000 decline, or 52.5%, over the same period in 1999. This significant
decline is summarized as follows (amounts in thousands):
<TABLE>
<CAPTION>
Nine Months Nine Months
2000 1999 Change
------- ------- -------
<S> <C> <C> <C>
Income (loss) from operations:
Resort
Lodging $ 1,511 $ 1,273 $ 238
Golf 3,577 4,564 (987)
Food & beverage (190) (146) (44)
Other resort (4,238) (3,686) (552)
------- ------- -------
660 2,005 (1,345)
Real estate brokerage 1,043 1,580 (537)
------- ------- -------
Total income from operations $ 1,703 $ 3,585 $ (1882)
======= ======= =======
</TABLE>
Income from lodging operations increased by $238,000, or 18.7%, during the nine
months of 2000 as compared with the nine months of 1999. This increase is
attributed to the increase in lodging revenues reduced by the applicable cost of
these revenues.
Income from golf operations significantly declined by $987,000, or 21.6%, during
the nine months of 2000 as compared with the same period last year. This decline
is the result of the closure of the Harbour Town Golf Links for a major
renovation project as previously discussed.
The Company's food and beverage operation produced an operating loss of $190,000
during the nine months of 2000, as compared to the $146,000 loss incurred during
the nine months of 1999.
Other resort departments include general and administrative costs along with
tennis operations and other recreational operations. These departments produced
an operating loss of $4,238,000 during the nine months of 2000, a 14.9% increase
over the loss incurred in the nine months of 1999. Several factors caused this
increase in operating loss, including: the reduction in commercial rental
revenues as previously discussed; an increase in conference sales costs due to
expanded marketing efforts relating to the new Harbour Town Conference Center
which opened in April 2000; and an increase in certain other general and
administrative costs.
Income from real estate brokerage operations declined by $537,000, or 33.9%, in
the nine months of 2000 as compared with the nine months of 1999. This decline
in income from operations is the result of an increase in cost of revenues and
an increase in payroll and operating expenses. Cost of real estate brokerage
revenues increased by $1,179,000, or 12.9%, resulting from an increase in
revenue volume and a 3.0% increase in the cost of revenue percentage. The
average commissions paid to the Company's real estate agents as a percentage of
revenue increased from 69.9% in the nine months of 1999 to 72.9% in the nine
months of 2000. Payroll and operating expenses relating to
<PAGE> 18
the real estate brokerage operations increased by $455,000, or 19.6%, in the
nine months of 2000 as compared with the same period last year. These cost
increases primarily result from the opening of several new real estate offices
in 1999 and 2000.
Consolidated cost of revenues increased by $4,315,000, or 17.9%, during the nine
months of 2000 as compared to the same period last year. This increase is
attributable to volume increases in lodging revenues and real estate brokerage,
an increase in the average commission paid to real estate agents, and the
addition of food and beverage costs resulting from the operational change as
previously discussed.
Sales and marketing expenses increased by $199,000, or 10.7%, during the nine
months of 2000 as compared with the nine months of 1999. This increase results
from costs associated with additional marketing efforts of the Company's food
and beverage operations and conference sales.
General and administrative expenses increased by $79,000, or 1.8%, during the
nine months of 2000 as compared with the nine months of 1999.
Depreciation and amortization costs increased by $224,000, or 24.4%, during the
nine months of 2000 as compared with the same period last year. This increase
results from depreciation of the Company's new Harbour Town Conference Center
and the renovation project completed at Sea Pines Racquet Club in April 2000.
Interest income remained relatively constant at $97,000 and $112,000 for the
nine months of 2000 and 1999, respectively. Interest expense increased by
$103,000, or 11.2%, during the nine months of 2000 as compared with the same
period last year. This increase is attributable to interest on the new Trust
Preferred Securities which were issued by the Company in February 2000 in
connection with the Exchange Offer and an increase in outstanding debt from the
building projects currently under construction.
A loss of $130,000 from the disposal of assets associated with the renovation of
the Harbour Town Golf Links was recorded in the third quarter 2000. A gain of
$524,000 from the sale of the South Beach swimming pool was recorded in the
third quarter 1999.
Liquidity and Capital Resources
The Company's financial results from its resort operations and real estate
brokerage activities experience fluctuations by season. The period from November
through March has historically been the Company's lowest resort revenue and real
estate sales season and the period from April through October has historically
been the Company's highest season.
Cash and cash equivalents increased by $1,790,000 during the third quarter of
2000 and totaled $4,832,000 at July 31, 2000, $3,962,000 of which was
restricted. The Company's working capital deficit increased by $30,179,000 in
the third quarter resulting in a working capital deficit of $32,285,000 at July
31, 2000.
<PAGE> 19
Under the terms of the Master Credit Agreement with the bank, the Company is
required to maintain certain financial covenants which are calculated on a
quarterly basis. The Company did not meet its requirement for one of these
financial covenants for the third quarter ended July 31, 2000 and has received a
waiver from the bank for this non-compliance through July 31, 2000. Because the
Company does not expect to meet these financial covenants in future quarters,
the Company has classified all of its outstanding debt as current maturities of
long-term debt on its balance sheet as of July 31, 2000. The Company is
currently renegotiating a modification to these required financial covenants and
expects to complete this modification prior to its fiscal year-end on October
31, 2000.
Under a Master Credit Agreement with its principal corporate lender, the Company
maintains a term loan, a revolving line of credit and a seasonal line of credit.
Available funds under these facilities total $40,933,000 of which $29,683,000
was outstanding at July 31, 2000.
The term loan in the principal sum of $18,500,000 matures on October 31, 2008.
As of July 31, 2000, $17,933,000 was outstanding under the term loan.
An $18,300,000 revolving line of credit is maintained by the Company and
primarily used to fund its capital projects. The bank has approved $15,000,000
of the line for use in the construction of the Company's inn, conference center
and racquet club renovations. The remaining $3,300,000 has been approved for use
in the Harbour Town Golf Links renovation. As of July 31, 2000, $11,750,000 was
outstanding under the revolving line of credit.
The seasonal line of credit in the amount of $4,500,000 is designed to meet cash
requirements during the Company's off-season winter months. As of July 31, 2000,
the seasonal line of credit had no outstanding balance.
Preferred stock dividends are declared and paid one year in arrears. At its
December 13, 1999 Board of Directors meeting, the Company declared a cash
dividend to holders of record on January 4, 2000, April 3, 2000, July 3, 2000
and October 2, 2000 of Series A Cumulative Preferred Stock of $0.722 per share.
This dividend is payable in equal quarterly installments of approximately $0.181
per share, the first three of which were paid on January 17, 2000, April 17,
2000 and July 17, 2000. An additional quarterly installment will be paid on
October 17, 2000 to shareholders of record on October 2, 2000, and represents
the accrued dividend for the fiscal year ended October 31, 1999. Declared, but
unpaid, amounts are recorded as dividends payable. In conjunction with the
Exchange Offer, the Company also declared a cash payment of $0.722 per share to
be paid only to holders of record of Series A Preferred Stock who exchanged
shares of Series A Preferred Stock in the Exchange Offer. This payment will be
made in four approximately equal quarterly installments, the first two of which
were paid on April 17, 2000 and July 17, 2000. Additional quarterly installments
will be paid on October 17, 2000 and January 15, 2001.
<PAGE> 20
Business Outlook and Recent Developments
Construction Project:
The Company began a significant construction and renovation project in fiscal
year 1999 involving several of the Company's existing facilities and the
construction of new facilities in the Harbour Town area within Sea Pines. The
project includes the construction of a new inn and a new conference center, and
the renovation of the Sea Pines Racquet Club and the Harbour Town Golf Links.
All four components of this project are expected to be completed in fiscal year
2000 or fiscal year 2001. Construction costs of the project are estimated to
total $20,715,000. As of July 31, 2000, construction costs incurred to date have
totaled $15,915,000.
The Inn at Harbour Town will be a 47,000 square-foot building featuring 60 inn
rooms and will be adjacent to and provide views of the Harbour Town Golf Links.
Construction costs of the Inn at Harbour Town are estimated to total
$10,821,000. As of July 31, 2000, construction costs incurred to date have
totaled $6,873,000. Completion of the Inn at Harbour Town is expected during the
first quarter of fiscal year 2001.
The Harbour Town Conference Center is a 16,000 square-foot building adjacent to
the Company's existing Harbour Town Clubhouse. Construction of the Harbour Town
Conference Center was completed on April 1, 2000 at a total cost of $5,555,000.
The renovation of the Sea Pines Racquet Club involves a reconfiguration and
reconstruction of the tennis court facilities, landscaping and surrounding area.
The renovation of the Sea Pines Racquet Club was completed during the second
quarter of 2000 at a total cost of $1,189,000, of which $1,071,000 had been
billed and paid as of July 31, 2000.
The renovation of the Harbour Town Golf Links began during May 2000 and includes
a significant reconstruction of the greens, tees, bunkers and cart paths.
Renovation costs of the Harbour Town Golf Links are estimated to total
$3,150,000. As of July 31, 2000, $2,413,000 has been incurred. The golf course
is closed during the renovation and grow-in period and is expected to reopen for
play during the first quarter of 2001. The closure of the golf course will
result in lower golf revenues and significantly lower earnings for the Company
during this period. This golf course is currently expected to be closed for
approximately eight months.
Family Circle Cup:
The Family Circle Cup, a tier-one women's professional tennis tournament, moved
to Charleston following the April 2000 tournament. Sea Pines has hosted the
event since its inception in 1973. While the Company regrets the change in
venue, it believes the move will have a minimal impact on its ongoing
operations. The tournament has been held during the height of the spring tourism
season, and the Company believes that tournament revenues can be replaced during
this period with additional social and group lodging revenue. It is, however,
difficult to measure any impact that might result from the loss of the extensive
media coverage and exposure provided during the tournament.
<PAGE> 21
Exchange Offer:
Effective February 1, 2000, the Company completed its Exchange Offer pursuant to
the December 21, 1999 Exchange Offer Prospectus. The Exchange Offer allowed
holders of the Company's Series A Preferred Stock to exchange each preferred
share for either 2 1/2 shares of the Company's common stock or an equivalent
number of new 9.5% Company-obligated redeemable preferred securities of a
subsidiary trust holding solely the Junior Subordinated Debentures ("Trust
Preferred Securities") issued by Sea Pines Associates, Inc. The purpose of the
Exchange Offer was to refinance Series A Preferred Stock. Holders of
approximately 56% of the preferred stock exchanged their shares for Common
Stock. Holders of approximately 26% of the preferred stock exchanged their
shares for the new Trust Preferred Security. This refinancing benefits the
Company in two ways: (i) to the extent shares of Series A Preferred Stock were
exchanged for the Trust Preferred Securities, the Company will be able to deduct
interest payable on these Junior Subordinated Debentures for income tax
purposes, while dividends on shares of Series A Preferred Stock were not tax
deductible, and (ii) to the extent shares of Series A Preferred Stock were
exchanged for Common Stock, which do not currently pay a dividend, the Company's
quarterly cash payment obligation will be eliminated.
As a result of the exchange, the Company's annual Preferred Stock dividend
requirement will decrease by $727,000. Interest payments on the new Trust
Preferred Securities will require $152,000 of annual cash flow, including
approximately $79,000 in income tax savings. Because the Preferred Stock
dividend is paid in arrears, the Company will continue to make quarterly
payments on all Preferred Stock shares until January 15, 2001, when the dividend
for the period ended January 31, 2000 (the date of the Preferred Stock exchange)
will be paid. Holders of approximately 18% of the Series A Preferred Stock did
not exchange their shares and hence the Company will continue to incur and pay
dividends on these shares, which will amount to an annual payment of $159,490,
unless these shares are otherwise retired. The Company incurred $293,000 in
professional fees and other costs relating to this transaction. Costs of
$201,000 were expensed relating to the Common Stock Exchange. The remaining
costs of $92,000 were capitalized as deferred financing costs and will be
amortized over the 30-year life of the Trust Preferred Securities.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
During the nine months ended July 31, 2000, there were no material changes to
the quantitative and qualitative disclosures about market risks presented in the
Company's Annual Report on Form 10-K for the year ended October 31, 1999.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
There have been no material changes in any of the legal proceedings discussed in
the Company's 1999 Annual Report on Form 10-K, except as discussed below. See
Item 3 "Legal Proceedings" of Form 10-K for a complete discussion.
<PAGE> 22
In December 1999, the Company executed a settlement agreement relating to a
lawsuit in which the plaintiffs claimed ownership to numerous parcels of real
property and certain personal property. The Company received quit claim deeds
from the plaintiffs for all material parcels of real property and all of the
personal property involved in the lawsuit. The lawsuit has been settled with no
adverse financial effect on the Company.
The Company is subject to other claims and suits in the ordinary course of
business. In management's opinion, such currently pending legal proceedings and
claims and suits against the Company will not, in the aggregate, have a material
adverse effect on the Company.
Item 2. Changes in Securities and Use of Proceeds
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
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
See attached Exhibit Index
(b) Reports on Form 8-K
None
<PAGE> 23
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.
SEA PINES ASSOCIATES, INC.
Date: September 14, 2000 s/ Norman P. Harberger
------------------ --------------------------------------------
Norman P. Harberger
Chairman (duly authorized officer)
Date: September 14, 2000 s/ Thomas C. Morton
------------------ --------------------------------------------
Thomas C. Morton
Treasurer (principal financial officer)
<PAGE> 24
EXHIBIT INDEX
Pursuant to Item 601 of Regulation S-K
<TABLE>
<CAPTION>
Exhibit No.
-----------
<S> <C>
3(a) Articles of Incorporation of Registrant
(Incorporated by reference to Exhibit 3
to Registration Statement on Form 10
filed March 1, 1989)
3(b) Articles of Amendment to Articles of
Incorporation of Registrant (Incorporated
by reference to Exhibit 3(b) to the
Registrants' Form 10-K for the fiscal
year ended December 31, 1989 filed on
January 29, 1990)
3(c) Articles of Amendment to Articles of
Incorporation of Registrant (Incorporated
by reference to Exhibit 3(c) to Form 10-K
filed January 26, 1994)
3(d) Amended Bylaws of Registrant Revised October 25, 1999
(Incorporated by reference to Exhibit 3(d)
to Form 10-K filed January 27, 2000)
4(a) First Amended and Restated Rights Agreement
between Sea Pines Associates, Inc. and
EquiServe Trust Company, NA dated as of
August 23, 1993 and Amended and Restated
as of July 20, 1999 (Incorporated by reference
to Form 8A12G/A filed August 8, 1999)
4(b) Certificate of Trust of Sea Pines Associates Trust I
dated December 14, 1999 (Incorporated by
reference to Form 10-Q filed June 14, 2000)
4(c) Trust Agreement dated December 14, 1999 by
Sea Pines Associates, Inc. (Incorporated by
reference to Form 10-Q filed June 14, 2000)
4(d) Junior Subordinated Indenture dated
February 1, 2000 between Sea Pines
Associates, Inc. and First Union National Bank
(Incorporated by reference to Form 10-Q filed
June 14, 2000)
</TABLE>
<PAGE> 25
<TABLE>
<CAPTION>
Exhibit No.
-----------
<S> <C>
4(e) Guarantee Agreement dated February 1, 2000
between Sea Pines Associates, Inc.
and First Union National Bank (Incorporated by
reference to Form 10-Q filed June 14, 2000)
4(f) Amended and Restated Trust Agreement
dated February 1, 2000 by
Sea Pines Associates, Inc. (Incorporated by
reference to Form 10-Q filed June 14, 2000)
10(a) Adjustable Rate Promissory Note between Sea Pines
Company, Inc. and Carolina Center Building
Corp. dated October 31, 1996 (Incorporated by reference
to Exhibit 10(t) to Form 10-K filed January 29, 1997)
10(b) Mortgage Assignment and Security Agreement
between Sea Pines Company, Inc. and
Carolina Center Building Corp. date
October 31, 1996 (Incorporated by reference to
Exhibit 10(u) to Form 10-K filed January 29, 1997)
10(c) Master Credit Agreement dated as of October 31, 1998
between Sea Pines Associates, Inc. and Sea Pines
Company, Inc. and Wachovia Bank, N.A.
(Incorporated by reference to Exhibit 10 (l) to
Form 10-K filed January 29, 1999)
10(d) Amended and Restated Term Note between Sea Pines
Associates, Inc. and Sea Pines Company, Inc. and
Wachovia Bank, N.A. in the principal sum of
$18,500,000 dated October 31, 1998 with respect
to the Credit Agreement in 10(c) above. (Incorporated
by reference to Exhibit 10(m) to Form 10-K filed
January 29, 1999)
10(e) Amended and Restated Revolving Line of Credit Note between
Sea Pines Associates, Inc. and Sea Pines Company, Inc.
and Wachovia Bank, N.A. in the principal sum of
$15,000,000 dated October 31, 1998 with respect to the
Credit Agreement in 10(c) above. (Incorporated by reference
to Exhibit 10(n) to Form 10-K filed January 29, 1999)
</TABLE>
<PAGE> 26
<TABLE>
<CAPTION>
Exhibit No.
-----------
<S> <C>
10(f) Amended and Restated Seasonal Line of Credit Note between
Sea Pines Associates, Inc. and Sea Pines Company, Inc.
and Wachovia Bank, N.A. in the principal sum of
$2,500,000 dated October 31, 1998 with respect to the
Credit Agreement in 10(c) above. (Incorporated by reference
to Exhibit 10(o) to Form 10-K filed January 29, 1999)
10(g) Mortgage Modification and Restatement Agreement dated
October 31, 1998 between Sea Pines Associates, Inc.
and Sea Pines Company, Inc. and Wachovia Bank,
N.A. with respect to the note in 10(d) above.
(Incorporated by reference to Exhibit 10(m) to
Form 10-K filed January 29, 1999)
10(h) Mortgage Modification and Restatement Agreement dated
October 31, 1998 between Sea Pines Associates, Inc.
and Sea Pines Company, Inc. and Wachovia Bank,
N.A. with respect to the note in 10(e) above.
(Incorporated by reference to Exhibit 10(q) to
Form 10-K filed January 29, 1999)
10(i) Mortgage Modification and Restatement Agreement dated
October 31, 1998 between Sea Pines Associates, Inc.
and Sea Pines Company, Inc. and Wachovia Bank,
N.A. with respect to the note in 10(f) above.
(Incorporated by reference to Exhibit 10 (r) to
Form 10-K filed January 29, 1999)
10(j) Swap Transaction confirmation between Sea Pines Company,
Inc. and Wachovia Bank, N.A. dated September 30, 1998.
(Incorporated by reference to Exhibit 10(s) to
Form 10-K filed January 29, 1999)
10(k) License and Use Agreement dated June 30, 1998 between
Sea Pines Company, Inc. and CC-Hilton Head, Inc.
(Incorporated by reference to Exhibit 10(t) to
Form 10-K filed January 29, 1999)
10(l) Asset Purchase Agreement dated July 31, 1997 between
Sea Pines Senior Living Center, Inc. and
The Rogers Center, L.L.C. (Incorporated by reference to
Exhibit 10(w) to Form 10-K filed February 13, 1998)
</TABLE>
<PAGE> 27
<TABLE>
<CAPTION>
Exhibit No.
-----------
<S> <C>
10(m) First Master Credit Agreement Modification Agreement
dated October 31, 1999 between Sea Pines Associates,
Inc. and Sea Pines Company, Inc. and Wachovia Bank, NA
(Incorporated by reference to Exhibit 10(m) to Form 10-K
filed January 27, 2000)
10(n) First Revolving Line of Credit Modification Agreement
dated October 31, 1999 between Sea Pines Associates,
Inc. and Sea Pines Company, Inc. and Wachovia Bank, NA
(Incorporated by reference to Exhibit 10(n) to Form 10-K
filed January 27, 2000)
10(o) First Seasonal Line of Credit Note Modification Agreement
dated December 20, 1999 between Sea Pines Associates,
Inc. and Sea Pines Company, Inc. and Wachovia Bank, NA
(Incorporated by reference to Exhibit 10(o) to Form 10-K
filed January 27, 2000)
10(p) First Term Note Modification Agreement dated December 20, 1999
between Sea Pines Associates, Inc. and Sea Pines Company,
Inc. and Wachovia Bank, NA (Incorporated by reference to
Exhibit 10(p) to Form 10-K filed January 27, 2000)
10(q) Standard Form of Agreement between Owner and Contractor dated
June 17, 1999 between Sea Pines Company, Inc. and Harden
Fraser Construction, Inc. (Incorporated by reference to
Exhibit 10(q) to Form 10-K filed January 27, 2000)
27 Financial Data Schedules (for SEC use only)
99.1 Safe Harbor Disclosure
</TABLE>
