<PAGE>
- ------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
TO CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities and Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):
October 21, 1996
FAMILY GOLF CENTERS, INC.
- ------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-25098 11-3223246
---------------- ------------------ ----------------
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) No.)
225 Broadhollow Road
Melville, New York 11747
------------------------------------------
(Address of principal executive offices)
Registrant's Telephone Number, including
area code: (516) 694-1666
---------------------------------------------------------
(Former Address, if changed since last report)
- ------------------------------------------------------------------------------
<PAGE>
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
By Current Report on Form 8-K, dated October 30, 1996 and by Current
Report on Form 8-K, dated November 13, 1996 (the "Original Forms 8-K"),
Family Golf Centers, Inc. (the "Company") reported the completion of
its acquisitions of certain assets of Mt. Olive Golf Center, Inc. and
Margate Partners Limited Partnership and all of the outstanding capital stock
of The Seven Iron, Inc. At the time of the filing of the Original
Forms 8-K with the Securities and Exchange Commission it was impractical to
file the financial statements of the businesses acquired as required by
Item 7(a) of Form 8-K and the pro forma financial information as required by
Item 7(b) of Form 8-K. The financial information required by Item 7 of Form 8-K
is now available. Accordingly, Item 7 is supplemented by the addition of the
following:
(a) Financial Statements of Businesses Acquired.
In accordance with Item 7(a)(4) of Form 8-K, attached hereto as Exhibits
1 through 3 are the financial statements of The Seven Iron, Inc. and certain
assets of Margate Partners Limited Partnership prepared pursuant to Regulation
S-X. The financial statements of Mt. Olive Golf Center, Inc. are not included
since they are not required pursuant to Item 310(c) of Regulation S-B.
(b) Pro Forma Financial Information.
In accordance with Item 7(b)(2) of Form 8-K, attached hereto as Exhibit 3
are the pro forma financial statements required by Article 11 of Regulation
S-X.
(c) Exhibits.
1. Audited Financial Statements of The Seven Iron, Inc. for the year
ended December 31, 1995.
2. Audited Financial Statements of Margate Partners Limited Partnership
for the year ended December 31, 1995.
3. Unaudited pro forma condensed statements of operations of the Company
and its subsidiaries for the year ended December 31, 1995 and for the nine
months ended September 30, 1996.
<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 hereunto duly authorized.
Date: January 3, 1997
FAMILY GOLF CENTERS, INC.
By: /s/ Dominic Chang
----------------------------
Dominic Chang,
President and Chief Executive Officer
<PAGE>
INDEX TO EXHIBITS
Exhibit Page Number
------- -----------
1. Audited Financial Statements of The Seven Iron, Inc.
for the year ended December 31, 1995.
2. Audited Financial Statements of Margate Partners Limited
Partnership for the year ended December 31, 1995.
3. Unaudited pro forma condensed statements of operations
of the Company and its subsidiaries for the year ended
December 31, 1995 and for the nine months ended
September 30, 1996.
<PAGE>
SEVEN IRON, INC.
(d.b.a. KENNEDY GOLF COURSE)
FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1995
<PAGE>
SEVEN IRON, INC.
(d.b.a. KENNEDY GOLF COURSE)
CONTENTS
Accountants' Report 4
Balance Sheet 3
Statement of Revenue, Expenses and Retained Earnings 5
Statement of Cash Flows 6
Supplemental Schedule of Departmental Revenue and
Operating Expenses 7
Notes to Financial Statments 8-10
<PAGE>
[MICHAEL B. JOHNSON & CO., P.C. LETTERHEAD]
Board of Directors
Seven Iron, Inc.
d.b.a. Kennedy Golf Course
Denver, Colorado 80014
We have audited the accompanying balance sheet of Seven Iron, Inc. (A
Colorado Corporation) as of December 31, 1995 and the related statements of
revenue expenses and retained earnings and cash flows, for the year ended
December 31, 1995. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Seven Iron, Inc.
at December 31, 1995, and the results of its operations and its cash flows
for the fiscal year ended December 31, 1995, in conformity with generally
accepted accounting principles.
/s/Michael B. Johnson & Co., P.C.
Denver, Colorado
December 17, 1996
<PAGE>
SEVEN IRON, INC.
(d.b.a. KENNEDY GOLF COURSE)
BALANCE SHEET
DECEMBER 31, 1995
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents $ 77,678
Trade receivable and advances 8,732
Shareholder advances 345,228
Inventories 28,546
Prepaid expenses 1,741
-----------
TOTAL CURRENT ASSETS 461,925
PROPERTY AND EQUIPMENT:
Leasehold improvements 1,461,604
Furniture and fixtures 44,739
Equipment 18,161
Motor vehicles 3,831
-----------
TOTAL PROPERTY AND EQUIPMENT 1,528,335
Less-accumulated depreciation (493,054)
-----------
PROPERTY AND EQUIPMENT, NET 1,035,281
-----------
TOTAL ASSETS $ 1,497,206
-----------
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable $ 19,957
Accrued expenses 40,528
Current portion of notes payable 59,330
-----------
TOTAL CURRENT LIABILITIES 119,815
NOTES PAYABLE, NET OF CURRENT PORTION 586,113
STOCKHOLDERS' EQUITY:
Common stock, no par value, 50,000 shares
authorized, 4,000 shares issued and outstanding 10,200
Retained earnings 841,078
Less treasury stock, at cost, 6,000 shares (60,000)
-----------
TOTAL STOCKHOLDERS' EQUITY 791,278
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,497,206
===========
See accompanying notes to financial statements.
-4-
<PAGE>
SEVEN IRON, INC.
(d.b.a. KENNEDY GOLF COURSE)
STATEMENT OF REVENUE, EXPENSES AND RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1995
REVENUE $ 1,475,182
COST OF REVENUE 206,112
-----------
GROSS PROFIT 1,269,070
OPERATING AND ADMINISTRATIVE EXPENSES:
Salaries and wages 517,885
Rent 102,600
Depreciation 87,692
Supplies 61,812
Lease and equipment rental 47,673
Professional fees 45,445
Payroll taxes 40,782
Utilities 34,436
Insurance 27,610
Repairs and maintenance 23,004
Telephone 12,834
Travel and entertainment 12,734
Auto expense 10,869
Consulting and outside services 20,796
Advertising 10,058
Other taxes 8,956
Fuel 7,530
Bank service fees 5,705
Penalties 4,695
Property taxes 2,626
Security 2,184
Dues and subscriptions 1,240
Miscellaneous 1,135
Contributions 150
-----------
TOTAL OPERATING AND ADMINISTRATIVE EXPENSES 1,090,451
-----------
INCOME FROM OPERATIONS 178,619
OTHER INCOME (EXPENSE):
Gain on sales of equipment 48,378
Other income 1,931
Interest income 13,457
Interest expense (68,485)
-----------
TOTAL OTHER INCOME (EXPENSE) (4,719)
-----------
NET INCOME 173,900
RETAINED EARNINGS, BEGINNING OF PERIOD 667,178
-----------
RETAINED EARNINGS, END OF PERIOD $ 841,078
===========
See accompanying notes to financial statements.
-5-
<PAGE>
SEVEN IRON, INC.
(d.b.a. KENNEDY GOLF COURSE)
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 173,900
ADJUSTMENTS TO RECONCILE NET INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
Depreciation 87,692
Gain on sale of equipment (48,378)
CHANGE IN OPERATING ASSETS AND LIABILITIES:
Decrease in trade receivable and advances 2,411
(Increase) in shareholder advances (313,581)
Decrease in notes receivable 87,000
(Increase) in inventories (8,821)
Decrease in prepaid expenses 3,538
Increase in accounts payable and accruals 42,810
(Decrease) in deposits (92,000)
---------
NET CASH PROVIDED BY OPERATING ACTIVITIES (65,429)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (129,070)
Proceeds from sale of equipment 124,500
---------
NET CASH (USED IN) INVESTING ACTIVITIES (4,570)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on notes payable (606,566)
Proceeds from notes payable 684,850
---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 78,284
---------
NET INCREASE IN CASH AND CASH EQUIVALENTS 8,285
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 69,393
---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 77,678
---------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for interest $ 65,042
=========
See accompanying notes to financial statements.
-6-
<PAGE>
[MICHAEL B. JOHNSON & CO., P.C. LETTERHEAD]
INDEPENDENT AUDITORS' REPORT ON SUPPLEMENTAL INFORMATION
Board of Directors
Seven Iron, Inc.
d.b.a. Kennedy Golf Course
Denver, Colorado
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The information contained in the following
schedule is presented for purposes of additional analysis and is not a required
part of the basic financial statement. Such information has been subjected to
the audit procedures applied in the audit of the basic financial statements
and, is fairly stated in all material respects in relation to te basic
financial statements taken as a whole.
/s/Michael B. Johnson & Co., P.C.
Denver, Colorado
December 17, 1996
<PAGE>
SEVEN IRON, INC.
(d.b.a. KENNEDY GOLF COURSE)
SUPPLEMENTAL SCHEDULE OF DEPARTMENTAL REVENUE
AND OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Range Proshop Restaurant Administrative Total
-------- --------- ---------- -------------- -----
<S> <C> <C> <C> <C> <C>
REVENUE $ 704,275 $ 418,351 $ 352,556 $ -- $ 1,475,182
COST OF REVENUE -- 68,707 137,405 -- 206,112
----------- ----------- ----------- ----------- -----------
GROSS PROFIT 704,275 349,644 215,151 -- 1,269,070
OPERATING AND
ADMINISTRATIVE EXPENSES
Salaries and wages 128,264 65,284 109,182 215,155 517,885
Rent 52,219 23,835 26,546 -- 102,600
Depreciation 44,797 7,238 31,312 4,345 87,692
Supplies 47,162 3,417 4,764 6,469 61,812
Lease and equipment rental 120 43,414 3,309 831 47,673
Professional fees -- -- -- 45,445 45,445
Payroll taxes 11,827 6,733 11,042 11,180 40,782
Utilities 18,754 5,035 10,647 -- 34,436
Insurance 14,929 3,978 6,598 2,105 27,610
Repairs and maintenance 12,678 2,778 6,023 1,525 23,004
Telephone 144 -- -- 12,690 12,834
Travel and entertainment -- -- 5,850 6,884 12,734
Auto expense -- -- -- 10,869 10,869
Consulting and outside services -- -- 7,902 12,894 20,796
Advertising 2,289 1,727 5,436 606 10,058
Other taxes 343 1,707 6,906 -- 8,956
Fuel -- 7,530 -- -- 7,530
Bank service fees -- 2,525 -- 3,180 5,705
Penalties -- -- -- 4,695 4,695
Property taxes -- -- -- 2,626 2,626
Security 1,314 110 331 429 2,184
Dues and subscriptions -- -- -- 1,240 1,240
Miscellaneous -- 46 746 343 1,135
Contributions -- -- -- 150 150
----------- ----------- ----------- ----------- -----------
TOTAL OPERATING AND
ADMINISTRATIVE EXPENSES 334,840 175,356 236,594 343,661 1,090,451
----------- ----------- ----------- ----------- -----------
INCOME FROM OPERATIONS 369,435 174,288 (21,443) (343,661) 178,619
OTHER INCOME (EXPENSE):
Gain on sales of equipment -- -- -- 48,378 48,378
Other income 103 1,380 448 -- 1,931
Interest income -- -- -- 13,457 13,457
Interest expense -- -- -- (68,485) (68,485)
----------- ----------- ----------- ----------- -----------
TOTAL OTHER INCOME (EXPENSES) 103 1,380 448 (6,650) (4,719)
----------- ----------- ----------- ----------- -----------
NET INCOME $ 369,538 $ 175,668 $ (20,995) $ (350,311) $ 173,900
=========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
-7-
<PAGE>
SEVEN IRON, INC.
d.b.a. KENNEDY GOLF COURSE
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS ACTIVITY
Seven Iron, Inc., was incorporated in Colorado in 1973. The Company leases
a golf course facility from the City and County of Denver known as Kennedy
Golf Course. As concessionaire, the Company operates the bar and restaurant,
driving range and miniature golf as profit center activities. The City and
County of Denver owns the land and building structures, and maintains the
golf course facility. The Company collects and remits all green fees to the
City and County of Denver less a 1% commission fee.
BASIS OF PRESENTATION
The accompanying financial statements have been prepared using the accrual
method of accounting.
CASH AND CASH EQUIVALENT
Cash and cash equivalents include cash on hand and on deposit and highly
liquid debt instruments with maturities generally of three months or less.
INVENTORIES
Inventories are stated at cost and are primarily valued on the first-in,
first-out basis.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Expenditures for maintenance
and repairs are charged to expense as incurred. Renewals and betterments are
capitalized. Provision for depreciation has been made based upon the
estimated useful lives of the assets using the straight line method for
assets acquired before January 1, 1981, and accelerated methods for assets
acquired after December 31, 1980. Estimated useful lives are as follows:
<TABLE>
<CAPTION>
<S> <C>
Building 31 years
Furniture and fixtures 5-10 years
Leasehold improvements 5-9 years
Auto and trucks 3-5 years
Leased equipment 5 years
</TABLE>
INCOME TAXES
On March 1, 1993 the sole shareholder elected Subchapter S status for the
corporation. The corporation now pays no taxes and the corporations profit or
loss is now reflected in the personal return of the sole shareholder.
8
<PAGE>
SEVEN IRON, INC.
d.b.a. KENNEDY GOLF COURSE
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 2 LONG-TERM DEBT
The notes payable as of December 31, 1995 consist of the following:
Two separate notes payable to the same bank. The principal
balances as of 12/31/95 was $530,610 and 114,833.
Both notes are payable to a bank in monthly installments of
$7634 and $3163 principal plus accrued interest at a fixed
rate of approximately 10%, collateralized by accounts
receivable, inventory, equipment and general intangibles,
assignment of contract and stockholder's personal assets. 645,443
---------
Less current maturities 59,330
---------
586,113
---------
The following is summary of principal maturities of long-term debt during
the next years ended December 31.
1996 62,364
1997 62,364
1998 62,364
1999 62,364
2000 and Beyond 395,987
---------
Total 645,443
---------
NOTE 3 CAPITAL LEASE OBLIGATION
The Company entered into four capital lease arrangement to acquire Yamaha
golf cars. The leases calls for monthly payments of approximately $9500 from
April through September of each year. The final lease terminates on June 30,
2000.
The future minimum lease payment under the capitalized lease and the
present value of the net minimum lease payments as of December 31, 1995.
1996 56,712
1997 56,712
1998 56,000
1999 55,458
2000 2,379
----------
Total lease payments 227,261
Less amount representing interest (42,225)
----------
Present value of net minimum lease payments 185,036
----------
9
<PAGE>
NOTE 4 CONTINGENT LIABILITIES
The Company was required by the City and County of Denver to execute a
contingent note payable for $50,000 secured by a letter of credit, to be used
in the event of possible or subsequent loss of green fees charged to the
public for the use of the golf course facility. In the event of a loss, the
letter of credit will grant the City and County of Denver the right to draw
against the letter of credit. The Company has deposited the funds in a
certificate of deposit.
NOTE 5 LEASE COMMITMENT
On July 28, 1993, the Company agreed to a new lease arrangement extending
the present lease terms to expire on December 31, 2009. As a condition to the
lease, the Company is required to incur major capital improvements in the
amount of $1,217,900. the terms of the lease calls for monthly rent to be
based on 8% of gross sales excluding merchandise sales and other miscellaneous
items but no lower than the rent for the previous five (5) year period. The
Company shall be required to maintain the facility at a minimum of $100,000
over the term of the lease. The City and County of Denver shall provide overall
golf course maintenance and clubhouse structural maintenance as well as easy
access to and from the parking area. The Company shall also be required to
replace 80 new golf carts every six (6) years.
The future minimum rental commitment is as follows:
1996 102,600
1997 102,600
1998 102,600
1999 102,600
2000 102,600
---------
513,000
---------
NOTE 6 SUBSEQUENT EVENT
In 1996 Seven Iron, Inc., sold the Kennedy Golf Course facility to Family
Golf Center, Inc.
10
<PAGE>
MARGATE PARTNERS
LIMITED PARTNERSHIP
FINANCIAL STATEMENTS
DECEMBER 31, 1995
<PAGE>
MARGATE PARTNERS LIMITED PARTNERSHIP
TABLE OF CONTENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
INDEPENDENT AUDITORS' REPORT ........................... 1
FINANCIAL STATEMENTS
Balance sheet ......................................... 2
Statement of income and changes in partners' capital . 3
Statement of cash flows ............................... 4
Notes to financial statements ......................... 5-7
</TABLE>
<PAGE>
[KAMMERER & COMPANY LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners
Margate Partners Limited Partnership
We have audited the accompanying balance sheet of Margate Partners Limited
Partnership as of December 31, 1995, and the related statements of income,
changes in partner's capital, and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management.
Our responsibility is to express an opinion on these financial statements
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Margate Partners Limited
Partnership as of December 31, 1995, and the results of its operations and
its cash flows for the year then ended in conformity with generally accepted
accounting principles.
/s/ Kammerer & Company
October 11, 1996
<PAGE>
MARGATE PARTNERS LIMITED PARTNERSHIP
BALANCE SHEET
DECEMBER 31, 1995
ASSETS
INVESTMENT IN REAL ESTATE (Note 2)
Land $ 1,365,109
Land Improvements 232,237
Miniature Golf 161,426
Building 416,772
Batting Cage 149,858
Equipment 105,525
Driving Range 66,390
-----------
2,497,317
Less accumulated depreciation (134,161)
Allowance for loss (363,156)
-----------
Net investment in real estate 2,000,000
OTHER ASSETS
Deferred charges 63,018
Organizational expenses 21,531
Other 2,301
Less accumulated amortization (7,396)
-----------
79,454
-----------
$ 2,079,454
===========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Mortgage payable (Note 3) $ 1,110,227
Notes payable (Note 4) 930,215
Accrued interest payable (Note 4) 230,795
Due contractors 208,392
Accrued liabilities 42,579
Real Estate tax payable 59,731
-----------
2,581,939
PARTNER'S CAPITAL (502,485)
-----------
$ 2,079,454
===========
See accompanying notes and independent auditors' report
-2-
<PAGE>
MARGATE PARTNERS LIMITED PARTNERSHIP
STATEMENT OF INCOME AND CHANGES IN PARTNERS' CAPITAL
FOR THE YEAR ENDING DECEMBER 31, 1995
REVENUES $ 349,483
EXPENSES
Provision for loss on real estate 363,156
Interest expense 232,734
Salaries 167,569
Depreciation and amortization 130,124
Real estate tax 29,457
Food and beverage 21,241
Grounds maintenance 20,500
Equipment lease 31,229
Electricity 21,890
Professional fees 19,165
Advertising 16,689
Repairs and maintenance 16,203
Payroll tax 15,589
Insurance 11,468
Workers compensation 11,101
Miscellaneous 19,175
Office supplies 7,838
-----------
TOTAL EXPENSES 1,135,128
-----------
NET LOSS (785,645)
Beginning partner's capital 283,160
-----------
Ending partner's capital $ (502,485)
===========
See accompanying notes and independent auditors' report
-3-
<PAGE>
MARGATE PARTNERS LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDING DECEMBER 31, 1995
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(785,645)
Adjustments to reconcile net loss to Net Cash
Provided by Operating Activities
Provision for loss on real estate 363,156
Depreciation and amortization 130,124
Decrease in other assets 4,820
Increase in accrued interest payable 122,217
Increase in real estate tax payable 29,457
Increase in due contractors 208,392
Increase in accrued liabilities 9,927
Increase in payroll taxes payable 82
Increase in sales tax payable 20,671
---------
NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES 103,201
CASH FLOWS FROM INVESTING ACTIVITIES
Capital improvements (307,818)
---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable 192,882
Principal paid on mortgage notes (4,539)
---------
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 188,343
---------
NET DECREASE IN CASH (16,274)
CASH AT BEGINNING OF YEAR 4,375
---------
CASH AT END OF YEAR $ (11,899)
=========
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
Cash paid during the year for:
Interest $ 110,516
=========
See accompanying notes and independent auditors' report
-4-
<PAGE>
MARGATE PARTNERS LIMITED PARTNERSHIP
Notes to Financial Statements
December 31, 1995
NOTE 1 -- Organization and Summary of Significant Accounting Policies
NATURE OF ORGANIZATION
Margate Partners Limited Partnership is a limited partnership organized
under the laws of the State of Florida on July 23, 1993. The partnership
operates a golf driving range and entertainment facility which includes
miniature golf and batting cages located on Banks Road, Margate, Florida.
REAL ESTATE, EQUIPMENT AND DEPRECIATION
Depreciation
The investment in real estate and equipment is recorded at cost.
Depreciation is computed using straight-line methods based on the useful life
of each asset.
Assets
The Partnership's assets are carried at the lower of cost or estimated
fair value. All subsequent expenditures for improvements are capitalized. The
costs of repairs and maintenance are charged to expense as incurred.
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Unless otherwise indicated, the fair values of all reported assets and
liabilities which represent financial instruments approximate the carrying
values of such amounts.
INCOME TAXES
Margate Partners Limited Partnership is a partnership and has no liability
for federal income taxes. The Limited Partners include in their individual
income tax returns their proportionate share of any income or loss of the
Partnership.
-5-
<PAGE>
MARGATE PARTNERS LIMITED PARTNERSHIP
Notes to Financial Statements
December 31, 1995
NOTE 2 -- Property and Equipment -- The following items of property and
equipment are being depreciated over their estimated useful lives as follows:
ESTIMATED USEFUL
LIFE (YEARS) COST
---------------- ------------
Land -- $1,365,109
Land Improvements 15 202,118
Miniature golf 15 161,426
Building 40 373,481
Batting cage 15 149,858
Equipment 10 148,816
Driving range 15 66,390
Netting 10 23,445
Signs 10 6,674
------------
2,497,317
Less accumulated depreciation .. (134,161)
Less allowance for loss ......... (363,156)
------------
Net investment in real estate $2,000,000
============
In accordance with Financial Accounting Standards No. 121 -- Accounting
for Impairment of Long Lived Assets, the partnership has recorded a provision
for loss in the amount of $363,156 based upon the sale of the property
described in Note 5.
NOTE 3 -- Mortgage Notes Payable
Mortgage notes payable consist of the following:
11.5% first mortgage note payable to GET Capital Corp in the principal
amount of $1,110,227 with a maturity of October 22, 2018, due monthly in
the amount of $11,898. The mortgage is collateralized by the partnership's
land, buildings and improvements. Interest expense for the year ending
December 31, 1995 amounted to $110,516.
The following are maturities of mortgage notes payable:
1996 $ 13,282
1997 14,893
1998 16,699
1999 18,724
2000 20,994
Thereafter 1,025,635
-----------
$1,110,227
===========
-6-
<PAGE>
MARGATE PARTNERS LIMITED PARTNERSHIP
Notes to Financial Statements
December 31, 1995
NOTE 4 -- Notes Payable
The partnership has a note payable to Gary Hamilton, a limited partner and
sole shareholder of All American Family Golf and Games, Inc., the corporate
general partner of the partnership and Ron Schroeder, a limited partner, in
the aggregate amount of $930,215 plus accrued interest of $230,795 that is
payable on demand with interest payable at 15%. Interest expense related to
notes payable for the year ending December 31, 1995 amounted to $122,218. The
fair value of the note payable is approximately $666,823 and the accrued
interest is $0. Such fair values were determined by the proceeds available at
closing on October 18, 1996 (See Note 5 below).
NOTE 5 -- Subsequent Event
On october 18, 1996, the partnership sold all the assets of the
partnership for $2,000,000 cash less closing costs, escrow amounts and payoff
of the existing first mortgage resulting in net proceeds of $666,823.
NOTE 6 -- Contingencies
The partnership may be the subject of unasserted claims and assessments
resulting from the construction, management and other services received in
the formation of this entertainment facility. The partnership does not
believe such claims will have a material effect on the financial position of
the partnership.
<PAGE>
FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES
PRO FORMA UNAUDITED CONDENSED
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
The following pro forma condensed statements of operations reflect the
acquisitions of the Pelham Enterprises, Inc., Hiland Park Golf Course, RFC
Enterprises, Inc., Upper Hembree Partners, L.P., The Practice Tee, Inc ("TPT"),
Golf Masters Limited Partnership and Air Dome Limited Partnership (collectively,
"Valley View"), Owls' Creek Golf Center, Inc., ("Virginia Beach"), Flemington
Golf and Sports Center, LLC ("Flemington") and associated land, 202 Golf
Associates Inc., ("Yorktown") Indian River Golf-O-Rama, Inc. ("Indian River"),
K.G. Golf, Inc. ("Fairfield"), Catalina Golf Center ("Tucson"), Tree Court
Golf & Recreational Facility, Inc. ("St. Louis"), Golf and Sports Center of
the Palm Beaches, Inc. ("West Palm Beach"), Pin High Golf Center ("San Jose"),
Privatization Plus, Inc. ("Glen Burnie"), Tri-Town Sports, Inc. ("Easton"), KKL
Golf Partnership ("Carolina Springs"), Swingmaster Golf at Centennial, Ltd.
("Denver"), and USA Golf Centers, Ltd. 2 ("Westminster") The Seven Iron, Inc.
("Seven Iron") and Margate Partners, Limited Partnership ("Margate")
(collectively, the "Acquired Companies") acquired during 1995 and 1996 as if
the Acquired Companies had been acquired on January 1, 1995. The acquisitions
of the Acquired Companies except TPT have been accounted for as purchases in
accordance with Accounting Principles Board Opinion No. 16. Since TPT has been
acquired from related parties, the acquisition has been recorded using
historical basis. In the opinion of management of the Company, all adjustments
necessary to present fairly such pro forma statements of operations have been
made.
These pro forma condensed statements of operations should be read in
conjunction with the notes thereto, the financial statements of the Company
and the Acquired Companies and the related notes thereto, each included
elsewhere in this filing. The pro forma condensed statements of operations are
not necessarily indicative of what the actual results of operations would have
been had the transactions occurred at January 1, 1995, or January 1, 1996 nor do
they purport to indicate the results of future operations.
<PAGE>
FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES
PRO FORMA UNAUDITED CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
ACQUIRED COMPANIES
---------------------------------------------
HOLLAND UPPER
PELHAM PARK RFC HEMBREE
THE ENTERPRISES, GOLF ENTERPRISES PARTNERS,
COMPANY INC.(A) COURSE(A) INC.(A) L.P.(A)
------- ------------ ------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Operating revenues $ 9,795 $117 $ 100 $363 $386
Merchandise sales 2,637 150 17
------- ------------ ------- ----------- ---------
Total revenue 12,432 267 117 363 386
------- ------------ ------- ----------- ---------
Operating expenses 6,614 87 297 234 317
Cost of merchandise sold 1,779 111 152
Selling, general and administrative
expenses 1,242 39 44 110 46
------- ------------ ------- ----------- ---------
Operating income (loss) 2,797 30 (376) 19 23
Interest expense 939 16 61 112
Other income (expense) 66 6
------- ------------ ------- ----------- ---------
Income (loss) before income taxes and
extraordinary item 1,924 14 (376) (42) (83)
Income tax expense (benefit) 669
------- ------------ ------- ----------- ---------
INCOME (LOSS) before extraordinary
item $ 1,255 $ 14 $(376) $(42) $(83)
======= ============ ======= =========== =========
Income (loss) per share before
extraordinary item $ 0.24
=======
Weighted average shares outstanding 5,271 90 8 85
=======
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
VALLEY VIRGINIA YORKTOWN
TPT(A) VIEW BEACH(B) FLEMINGTON(B) HEIGHTS(B)
------ ------ -------- ----------- --------
<S> <C> <C> <C> <C> <C>
Operating revenues $ 244 $ 668 $616 $ 501 $ 388
Merchandise sales 44 92
------ ------ -------- ----------- --------
Total revenue 244 712 708 501 388
------ ------ -------- ----------- --------
Operating expenses 86 395 404 900 393
Cost of merchandise sold 36 72
Selling, general and administrative
expenses 264 404 119 101
------ ------ -------- ----------- --------
Operating income (loss) (106) (123) 113 (399) (106)
Interest expense 3 34 192 128 164
Other income (expense) 1 2 (2) (2,448)
------ ------ -------- ----------- --------
Income (loss) before income taxes and
extraordinary item (108) (155) (81) (2,975) (270)
Income tax expense (benefit) 1
------ ------ -------- ----------- --------
INCOME (LOSS) before extraordinary
item $(109) $(155) $(81) $(2,975) $(270)
====== ====== ======== =========== ========
Income (loss) per share before
extraordinary item
Weighted average shares outstanding 50 100
</TABLE>
- ------------
(a) Represents operations from January 1, 1995 through date of acquisition.
(b) Represents operations for the year ended December 31, 1995.
<PAGE>
<TABLE>
<CAPTION>
ACQUIRED COMPANIES
-----------------------------------------------------------------------------------
INDIAN WEST SAN JOSE GLEN
RIVER(B) FAIRFIELD(B) TUCSON(B) ST. LOUIS(B) PALM BEACH PIN HIGH BURNIE
-------- ------------ --------- ------------ ------------ ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Operating revenues $510 $ 791 $ 156 $ 443 $ 863 $ 533 $ 310
Merchandise sales 98 195 39
-------- ------------ --------- ------------ ------------ ---------- --------
Total revenue 608 791 156 443 863 728 349
-------- ------------ --------- ------------ ------------ ---------- --------
Operating expenses 607 800 214 544 1,029 53 309
Cost of merchandise sold 72 130 29
Selling, general and administrative
expenses 161 33 589 56
-------- ------------ --------- ------------ ------------ ---------- --------
Operating income (loss) (232) (9) (91) (101) (166) (44) (45)
Interest expense 104 132 77 182 172 71
Other income (expense) 5 (2) 1
-------- ------------ --------- ------------ ------------ ---------- --------
Income (loss) before income taxes and
extraordinary item (232) (113) (218) (180) (348) (216) (115)
Income tax expense (benefit) 1
-------- ------------ --------- ------------ ------------ ---------- --------
INCOME (LOSS) before extraordinary
item $(232) $(113) $(218) $(180) $ (348) $(217) $(115)
======== ============ ========= ============ ============ ========== ========
Income (loss) per share before
extraordinary item
Weighted average shares outstanding 102
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
ACQUIRED COMPANIES
--------------------------------------------------------------------------------------
CAROLINA
EASTON SPRINGS DENVER FLANDERS WESTMINSTER SEVEN IRON MARGATE
-------- ---------- -------- ---------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating revenues $526 $ 991 $ 73 $461 $600 1,344 $ 349
Merchandise sales 205 386 87
-------- ---------- -------- ---------- ------------- ------------- -----------
Total revenue 526 1,196 73 847 600 1,431 349
-------- ---------- -------- ---------- ------------- ------------- -----------
Operating expenses 302 1,021 179 289 511 1,098 540
Cost of merchandise sold 154 277 69
Selling, general and administrative
expenses 154 84 94 70 117
-------- ---------- -------- ---------- ------------- ------------- -----------
Operating income (loss) 70 21 (190) 187 19 147 (191)
Interest expense 145 196 22 4 4 232
Other income (expense) 97 (363)
-------- ---------- -------- ---------- ------------- ------------- -----------
Income (loss) before income taxes and
extraordinary item (75) (175) (212) 183 15 244 (786)
Income tax expense (benefit) 68
-------- ---------- -------- ---------- ------------- ------------- -----------
INCOME (LOSS) before extraordinary
item $(75) $ (175) $ (212) $183 $ 15 $ 176 $ (786)
======== ========== ======== ========== ============= ============= ===========
Income (loss) per share before
extraordinary item
Weighted average shares outstanding 40 75
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
ACQUIRED COMPANIES
---------------------
PRO FORMA PRO FORMA
ADJUSTMENTS
-------- ----------
<S> <C> <C>
Operating revenues $21,128
Merchandise sales 3,950
-------- ----------
Total revenue 0 25,078
-------- ----------
Operating expenses (81)(A) 17,142
Cost of merchandise sold 2,881
Selling, general and administrative
expenses 13 (A) 3,740
-------- ----------
Operating income (loss) 68 1,315
Interest expense 241 (A) 3,231
Other income (expense) 2,811 (A) 174
-------- ----------
Income (loss) before income taxes and
extraordinary item 2,638 (1,742)
Income tax expense (benefit) (1,741)(B) (1,002)
-------- ----------
INCOME (LOSS) before extraordinary
item $4,379 $ (740)
======== ==========
Income (loss) per share before
extraordinary item (0.13)
Weighted average shares outstanding 5,821
</TABLE>
<PAGE>
FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA UNAUDITED CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(A) Expense adjustments for the period ended December 31, 1995 to reflect
the acquisition of the Acquired Companies as if the acquisitions had
taken place at January 1, 1995:
<TABLE>
<CAPTION>
IMPAIRMENT
DATE INTEREST DEPRECIATION AMORTIZATION IN VALUE OF
COMPANY ACQUIRED ADJUSTMENT(1) ADJUSTMENT OF GOODWILL ASSETS OTHER
- ---------------------------- -------------- ------------- -------------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Pelham Enterprises, Inc. April 1995 $ (30) $ 12
Hiland Park Golf Course May 1995 (212) 14
RFC Enterprises, Inc. August 1995 9 (33) $ 8
Upper Hembree Partners, L.P. August 1995 (4) (108)
TPT November 1995 26
Valley View November 1995 (56)
Virginia Beach March 1996 12 22
Flemington March 1996 39 $2,448
Yorktown Heights April 1996 4 5
Indian River MAY 1996 140 (4)
Fairfield June 1996 36 25
Tucson June 1996 (22)
St. Louis June 1996 53 34
West Palm Beach June 1996 (7) (77)
San Jose July 1996 (172) 78
Glen Burnie August 1996 38
Easton July 1996 7 (21)
Carolina Springs August 1996 (127)
Denver August 1996 86
Flanders August 1996 54
Westminster September 1996 (18)
Seven Iron November 1996 433
Margate November 1996 (71) $ 363
------------- -------------- -------------- ------------ ------------
241 (81) 13 2,448 363
============= ============== ============== ============ ============
</TABLE>
- ------------
(1) Assumes average borrowing at 8%
(B) To reflect the income tax effect arising from the losses of the Acquired
Companies.
(C) To reflect the issuance of Common Stock for the Acquired Companies.
<PAGE>
FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES
PRO FORMA UNAUDITED CONDENSED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1996
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
ACQUIRED COMPANIES
-----------------------------------------------------------------------
THE VIRGINIA YORKTOWN INDIAN
COMPANY BEACH FLEMINGTON HEIGHTS RIVER TUCSON ST. LOUIS CINCINNATI
---------- -------- ---------- -------- ------ -------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating Revenues 16,234 35 74 54 39 164 83
Merchandise Sales 4,634 2 3 102
---------- -------- ---------- -------- ------ -------- --------- ----------
Total revenue 20,858 37 74 57 39 164 185
Operating expenses 9,109 39 25 88 40 11 188 106
Cost of merchandise
sold 3,043 2 3 77
Selling, general and
administrative
expenses 2,149 27 22 8 26 19
---------- -------- ---------- -------- ------ -------- --------- ----------
Operating income 6,567 (31) (25) (36) 6 2 (24) (17)
Interest expense 288 34 26 40 42 33
Other income
(expense) 1,155 (14) 3
---------- -------- ---------- -------- ------ -------- --------- ----------
Income before income
taxes 7,434 (79) (25) (59) 6 (38) (66) (50)
Income tax expense 2,676 0
---------- -------- ---------- -------- ------ -------- --------- ----------
Net income 4,758 (79) (25) (59) 6 (38) (66) (50)
========== ======== ========== ======== ====== ======== ========= ==========
Net income per share 0.48
Weighted average
shares outstanding 9,830 50 100 30
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
WEST
PALM GLEN CAROLINA
BEACH PIN HIGH BURNIE EASTON SPRINGS DENVER FLANDERS WESTMINSTER SEVEN IRON MARGATE(D)
------- -------- -------- -------- -------- --------- -------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Operating Revenues 221 294 183 203 668 154 286 311 643
Merchandise Sales 114 30 53 52 206 48
------- -------- -------- -------- -------- --------- -------- ----------- -----------
Total revenue 221 408 213 203 721 206 492 311 691
Operating expenses 191 288 164 194 499 141 200 631
Cost of merchandise
sold 71 23 48 39 146 38
Selling, general and
administrative
expenses 7 33 22 17 87 263 53 13 73
------- -------- -------- -------- -------- --------- -------- ----------- -----------
Operating income 23 16 4 (8) 87 (96) 152 98 (51)
Interest expense 102 36 69 30 4 4 36
Other income
(expense) 1 0 29
------- -------- -------- -------- -------- --------- -------- ----------- -----------
Income before income
taxes 23 (85) (32) (77) 87 (126) 148 94 (58)
Income tax expense
------- -------- -------- -------- -------- --------- -------- ----------- -----------
Net income 23 (85) (32) (77) 87 (126) 148 94 (58)
======= ======== ======== ======== ======== ========= ======== =========== ===========
Net income per share
Weighted average
shares outstanding
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
PRO FORM PRO FORMA
ADJUSTMENTS
------- -------
<S> <C>
Operating Revenues $ 19,686
Merchandise Sales 5,244
------- -------
Total revenue 0 24,930
Operating expenses 329 (A) 12,243
Cost of merchandise
sold 3,490
Selling, general and
administrative
expenses 2,819
------- -------
Operating income (329) 6,378
Interest expense 496 (A) 1,240
Other income
(expense) 96 (A) 1,270
------- -------
Income before income
taxes 71 6,408
Income tax expense 65 (B) 2,611
------- -------
Net income 136 3,797
======= =======
Net income per share 0.37
Weighted average
shares outstanding 221 (C) 10,272
</TABLE>
<PAGE>
FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA UNAUDITED CONDENSED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(A) Expense adjustments for the period ended September 30, 1996 to reflect
the acquisition of the Acquired Companies as if the acquisitions had
taken place at January 1, 1996:
<TABLE>
<CAPTION>
OTHER
INTERST DEPRECIATION (INCOME)
COMPANY DATE ACQUIRED ADJUSTMENT(1) ADJUSTMENT EXPENSE OTHER
- ---------------- -------------- ------------- -------------- --------- -------
<S> <C> <C> <C> <C> <C>
Virginia Beach March 1996 $ 34 $ (9) $15 $14
Flemington March 1996
Yorktown Heights April 1996 26 20
Indian River May 1996 (1) 17
Fairfield June 1996 (11) 6
Tucson June 1996 12
St. Louis June 1996 14 4
West Palm Beach June 1996 20 (19) 9
San Jose July 1996 30 25
Glen Burnie August 1996 17 10
Easton July 1996 12 (46)
Carolina Springs August 1996 (50) 14
Denver August 1996 60 7
Flanders August 1996 32 13
Westminster September 1996 11 67
Seven Iron November 1996 348 220
------------- -------------- --------- -------
$496 $306 $96 $23
============= ============== ========= =======
</TABLE>
- ------------
(1) Assumes average borrowing at 8%.
(B) To reflect the income tax effect arising from the losses of the Acquired
Companies.
(C) To reflect the issuance of Common Stock for the Acquired Companies.
(D) The operations of Margate are immaterial due to the fact that it was
closed for substantially the whole period.
