FORM 10-Q/A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 2000
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ___________ to __________
Commission File Number: 0-20961
COMMODORE HOLDINGS LIMITED
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(Exact Name of Registrant as Specified in its Charter)
BERMUDA N/A
--------------------------------- ----------------------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
4000 Hollywood Boulevard, Suite 385, South Tower, Hollywood, FL 33021
--------------------------------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
(954) 967-2100
----------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant has (1) 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) been subject to such filing requirements
for the past 90 days.
Yes [X] No [ ]
The Registrant had 8,649,118 Shares of Common Stock, par value $.01 per share,
outstanding at August 14, 2000.
<PAGE>
Commodore Holdings Limited
Table of Contents
Page No.
Part I Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets 2
Consolidated Statements of Operations 3
Consolidated Statement of Stockholders' Equity 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6
<PAGE>
Part I: Financial Information
Item 1: Financial Statements
COMMODORE HOLDINGS LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
2000 1999
------------- -------------
(UNAUDITED) (AUDITED)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 5,453,000 $ 20,504,000
Restricted cash 336,000 977,000
Trade and other receivables, net 1,873,000 1,044,000
Due from affiliates 663,000 2,903,000
Inventories 3,329,000 2,614,000
Prepaid expenses 4,827,000 2,214,000
Other current assets 408,000 69,000
------------- -------------
Total current assets 16,889,000 30,325,000
Property and equipment, net 149,680,000 49,722,000
Investment in joint ventures 1,531,000 1,974,000
Long-term receivable - affiliate 4,201,000 4,973,000
Other assets 2,600,000 1,693,000
------------- -------------
$ 174,901,000 $ 88,687,000
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $ 9,740,000 $ 3,652,000
Note payable 2,000,000 --
Accounts payable 16,036,000 8,692,000
Accrued liabilities 2,675,000 1,695,000
Due to affiliates 1,620,000 1,564,000
Customer deposits 14,776,000 8,720,000
Accrued interest 135,000 192,000
Capital lease obligations 314,000 61,000
------------- -------------
Total current liabilities 47,296,000 24,576,000
Long-term debt, including capital lease obligations
of $488,000 and $171,000, respectively 96,102,000 26,996,000
Convertible subordinated debentures 5,000,000 --
Due to affiliates - long-term 1,000,000 --
Minority interest in subsidiaries 39,000 2,940,000
Redeemable preferred stock 2,500,000 --
Stockholders' equity
Preferred stock - Series B - authorized 800,000
shares of $.01 par value; issued and outstanding
500,000 and 400,000 shares, respectively 5,000 4,000
Common stock - authorized 100,000,000 shares
of $.01 par value; issued and outstanding
8,649,118 and 7,647,618 shares, respectively 86,000 76,000
Paid-in capital 26,971,000 21,481,000
(Accumulated deficit) retained earnings (4,098,000) 12,614,000
------------- -------------
Total stockholders' equity 22,964,000 34,175,000
------------- -------------
$ 174,901,000 $ 88,687,000
============= =============
</TABLE>
The accompanying notes are an integral part of these statements.
Page 2
<PAGE>
COMMODORE HOLDINGS LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND FOR THE NINE MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Nine months ended
June 30, June 30,
2000 1999 2000 1999
--------------------------- ---------------------------
<S> <C> <C> <C> <C>
Revenues $ 24,740,000 $ 16,755,000 $ 61,925,000 $ 41,021,000
Expenses
Operating 20,786,000 10,558,000 49,538,000 27,044,000
Marketing, selling and administrative 5,142,000 2,733,000 10,756,000 6,960,000
Depreciation and amortization 1,643,000 665,000 3,561,000 1,755,000
--------------------------- ---------------------------
27,571,000 13,956,000 63,855,000 35,759,000
--------------------------- ---------------------------
Operating (loss) income (2,831,000) 2,799,000 (1,930,000) 5,262,000
Other income (expense)
Interest income 123,000 156,000 452,000 442,000
Interest expense (2,528,000) (536,000) (4,658,000) (1,333,000)
Unusual and nonrecurring losses (14,929,000) -- (14,929,000) --
Minority interest share of unusual
and nonrecurring losses 4,629,000 -- 4,629,000 --
Minority interest share of loss (earnings)
of other consolidated joint ventures 1,966,000 (506,000) 1,901,000 (838,000)
Equity in net (loss) earnings of
unconsolidated joint ventures (660,000) 252,000 (1,532,000) (323,000)
--------------------------- ---------------------------
(11,399,000) (634,000) (14,137,000) (2,052,000)
--------------------------- ---------------------------
Net (loss) earnings before cumulative effect of change
in accounting principle and provision for preferred
stock dividend (14,230,000) 2,165,000 (16,067,000) 3,210,000
Cumulative effect of change in accounting principle -- -- 231,000 --
--------------------------- ---------------------------
Net (loss) earnings before provision for
preferred stock dividend (14,230,000) 2,165,000 (16,298,000) 3,210,000
Preferred stock dividend 176,000 100,000 414,000 167,000
--------------------------- ---------------------------
Net (loss) earnings available for common stockholders $(14,406,000) $ 2,065,000 $(16,712,000) $ 3,043,000
=========================== ===========================
(Loss) earnings per share available for common
stockholders - Basic
Net (loss) earnings before cumulative effect of
change in accounting principle $ (1.67) $ 0.28 $ (2.06) $ 0.41
Cumulative effect of change in accounting principle -- -- (0.03) --
--------------------------- ---------------------------
Net (loss) earnings available for common stockholders $ (1.67) $ 0.28 $ (2.09) $ 0.41
=========================== ===========================
Weighted average number of common stock
outstanding - Basic 8,649,000 7,504,000 7,985,000 7,433,000
=========================== ===========================
(Loss) earnings per share available for common
stockholders - Diluted
Net (loss) earnings before cumulative effect of
change in accounting principle $ (1.67) $ 0.22 $ (2.06) $ 0.35
Cumulative effect of change in accounting principle -- -- (0.03) --
--------------------------- ---------------------------
Net (loss) earnings available for common stockholders $ (1.67) $ 0.22 $ (2.09) $ 0.35
=========================== ===========================
Weighted average number of common stock
outstanding - Diluted 8,649,000 9,724,000 7,985,000 9,178,000
=========================== ===========================
</TABLE>
The accompanying notes are an integral part of these statements.
Page 3
<PAGE>
COMMODORE HOLDINGS LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
Preferred Stock Common Stock (Accumulated
------------------------------------- Additional Deficit)
Number of Par Number of Par Paid-in Retained
Shares Value Shares Value Capital Earnings Total
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at
September 30, 1999 400,000 $ 4,000 7,647,618 $ 76,000 $21,481,000 $12,614,000 $34,175,000
Redemption of
preferred stock (400,000) (4,000) (3,996,000) - (4,000,000)
Issuance of
preferred stock, net 500,000 5,000 4,735,000 - 4,740,000
Issuance of
common stock 1,001,500 10,000 4,494,000 - 4,504,000
Fair value of options
to nonemployees - - - - 257,000 - 257,000
Net loss - - - - - (16,712,000) (16,712,000)
-----------------------------------------------------------------------------
Balances at
June 30, 2000 500,000 $ 5,000 8,649,118 $ 86,000 $26,971,000 $(4,098,000) $22,964,000
=============================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
Page 4
<PAGE>
COMMODORE HOLDINGS LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
2000 1999
------------ -----------
<S> <C> <C>
Cash flows from operating activities
Net (loss) earnings $(16,298,000) $ 3,210,000
Adjustments to reconcile net (loss) earnings to net cash
provided by operating activities
Cumulative effect of change in accounting principle 231,000 -
Impairment loss 11,704,000 -
Depreciation of property and equipment 3,561,000 1,755,000
Amortization of deferred drydock 1,851,000 1,454,000
Amortization of deferred loan costs 131,000 -
Fair value of options to nonemployees 53,000 88,000
Undistributed equity in loss of joint ventures 1,532,000 323,000
(Increase) decrease in operating assets
Restricted cash 641,000 (902,000)
Trade and other receivables (829,000) (674,000)
Due from affiliates 2,240,000 (1,803,000)
Inventories (715,000) (339,000)
Prepaid expenses and other current assets (4,497,000) (3,084,000)
Other assets (1,144,000) (378,000)
Increase (decrease) in operating liabilities
Accounts payable 7,344,000 (2,144,000)
Accrued liabilities (718,000) 1,431,000
Due to affiliate 56,000 1,154,000
Customer deposits 6,056,000 2,378,000
Accrued interest (57,000) 26,000
------------ -----------
Net cash provided by operating activities 11,142,000 2,495,000
------------ -----------
Cash flows from investing activities
Capital expenditures (108,592,000) (5,770,000)
Long-term receivable - affiliate 772,000 (2,614,000)
Investments - restricted - 4,629,000
Investment in unconsolidated joint ventures (1,089,000) (251,000)
(Decrease) increase in minority interest in subsidiaries (1,901,000) 837,000
------------ -----------
Net cash used in investing activities (110,810,000) (3,169,000)
------------ -----------
Cash flows from financing activities
Principal payments on debt (2,153,000) (12,181,000)
Proceeds from long-term debt 77,345,000 16,600,000
Proceeds from notes payable 2,000,000 -
Proceeds from sale of redeemable preferred stock 2,500,000 -
Redemption of preferred stock (4,000,000) -
Proceeds from sale of preferred stock, net 4,740,000 3,670,000
Proceeds from exercise of warrants 4,000 528,000
Proceeds from sale of convertible subordinated debentures 5,000,000 -
Payment of loan costs (405,000) (394,000)
Preferred stock dividends paid (414,000) (328,000)
------------ -----------
Net cash provided by financing activities 84,617,000 7,895,000
------------ -----------
Net (decrease) increase in cash and cash equivalents (15,051,000) 7,221,000
Cash and cash equivalents at beginning of period 20,504,000 3,172,000
------------ -----------
Cash and cash equivalents at end of period $ 5,453,000 $10,393,000
============ ===========
Supplemental disclosure of cash flow information
Cash paid during the period for interest $ 4,501,000 $ 1,071,000
============ ===========
Cash paid during the period for taxes $ - $ -
============ ===========
</TABLE>
The accompanying notes are an integral part of these statements.
Page 5
<PAGE>
COMMODORE HOLDINGS LIMITED AND SUBSIDIARIES
Notes to Consolidated Financial Statements
1. The financial statements for the nine months ended June 30, 2000 and 1999,
included herein have been prepared by Commodore Holdings Limited (the "Company")
without audit pursuant to the rules and regulations of the Securities and
Exchange Commission. All adjustments which are, in the opinion of management,
necessary for a fair statement for the results of the three months and nine
months ended June 30, 2000 and 1999, are included. Certain information and
footnote disclosure normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. These financial statements
should be read in conjunction with the financial statements for the year ended
September 30, 1999, contained in the Company's annual report on Form 10-K.
2. EARNINGS PER SHARE. The Company's basic earnings per share is calculated by
dividing net earnings available for common shareholders by the weighted average
shares outstanding during the period. The computation of diluted earnings per
share includes all dilutive common stock equivalents in the weighted average
shares outstanding.
Financial Accounting Standards Board (FASB) Statement No. 128 "Earnings
Per Share" requires the dual presentation of basic and diluted earnings per
share on the face of the statement of earnings. The reconciliation between the
computation is as follows:
<TABLE>
<CAPTION>
Three Net (loss) Net (loss)
months ended earnings- Basic Basic earnings- Diluted Diluted
June 30, Basic Shares EPS Diluted Shares EPS
------------ ------------ --------- -------- ------------ --------- --------
<S> <C> <C> <C> <C> <C> <C>
2000 $(14,406,000) 8,649,000 $ (1.67) $(14,406,000) 8,649,000 $ (1.67)
1999 $ 2,065,000 7,504,000 $ 0.28 $ 2,165,000 9,724,000 $ 0.22
</TABLE>
<TABLE>
<CAPTION>
Nine Net (loss) Net (loss)
months ended earnings- Basic Basic earnings- Diluted Diluted
June 30, Basic Shares EPS Diluted Shares EPS
------------ ------------ --------- -------- ------------ --------- --------
<S> <C> <C> <C> <C> <C> <C>
2000 $(16,712,000) 7,985,000 $ (2.09) $(16,712,000) 7,985,000 $ (2.09)
1999 $ 3,043,000 7,433,000 $ 0.41 $ 3,210,000 9,178,000 $ 0.35
</TABLE>
Included in diluted shares are common stock equivalents relating to
options, warrants and preferred stock of 0 and 2,220,000 for the three months
ended June 30, 2000 and 1999, respectively and 0 and 1,745,000 for the nine
months ended June 30, 2000 and 1999, respectively. Net earnings were adjusted to
calculate the diluted earnings per share by adding back $100,000 and $167,000 of
preferred stock dividends for the three and nine months ended June 30, 1999,
respectively. Common stock equivalents were not considered in the calculation of
diluted earnings per share, for the three and nine month periods ended June 30,
2000, due to their antidilutive effect.
Page 6
<PAGE>
3. INVESTMENT IN UNCONSOLIDATED JOINT VENTURE.
A condensed summary of the assets and liabilities and results of
operations of the Capri Cruises joint venture follows:
<TABLE>
<CAPTION>
As of
June 30,
--------
2000 1999
----------- ----------
<S> <C> <C>
Current assets $ 2,237,000 $3,588,000
Property and equipment, net 3,465,000 4,009,000
Other assets -- 96,000
----------- ----------
Total assets $ 5,702,000 $7,693,000
=========== ==========
Current liabilities $ 2,404,000 $4,341,000
Other liabilities 234,000 536,000
Partners' capital accounts 3,064,000 2,816,000
----------- ----------
Total liabilities and
partners' capital $ 5,702,000 $7,693,000
=========== ==========
</TABLE>
<TABLE>
<CAPTION>
Three Months Nine Months
Ended June 30, Ended June 30,
-------------------------- -----------------------------
2000 1999 2000 1999
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $6,662,000 $6,335,000 $17,752,000 $16,478,000
Expenses 6,443,000 5,831,000 17,937,000 17,125,000
---------- ---------- ----------- -----------
Net earnings (loss) $ 219,000 $ 504,000 $ (185,000) $ (647,000)
========== ========== =========== ===========
</TABLE>
4. LONG-TERM DEBT. On January 28, 2000, the Company purchased the Crown Dynasty
(the "Vessel") for $86,200,000. The Company financed its purchase of the Vessel
through loans in the aggregate principal amount of $51,720,000 from Merita Bank
Plc, Christiana Bank og Kreditkasse ASA, and Skandinaviska Enskilda Banken AB
(publ), and through a loan in the principal amount of $24,480,000 provided by
Eff-Shipping Limited, an affiliate of the seller of the Vessel. Such loans are
guaranteed by the Company and secured by mortgages on the Vessel and certain
other collateral related to the Vessel. The Company also used the proceeds from
the issuance of 11% convertible subordinated debentures in the principal amount
of $5,000,000 and 11% Series B Convertible Preferred Stock with a face value of
$5,000,000 to finance the balance of the purchase price. The Company also
redeemed $4,000,000 of Series B Convertible Preferred Stock at face value in
connection with the new issuances. The net proceeds from these financings, after
reduction for the redemption of the $4,000,000 of Series B Convertible Preferred
Stock, was approximately $81,131,000. The Company obtained the balance of the
purchase price for the Vessel from cash from its operations.
Under several of the Company's loan agreements, including the loans for
the acquisition of the Vessel, the Company is required to maintain certain
financial ratios related to liquidity, net worth, leverage and debt service
coverage. At June 30, 2000, the Company was not in compliance with certain of
its ratios and believed that it would not be in compliance with such ratios
between such date and the end of fiscal year 2000. The Company contacted its
lenders and obtained waivers or their written agreement to temporarily reset
these ratios through the end of fiscal 2000. In addition, one of the Company's
lenders agreed to loan the Company the short-term $2 million Nordbanken Note
Payable to assist the Company in its efforts to repay vendors of the Enchanted
Sun.
The Company plans to negotiate amendments to its loan agreements with
its lenders to permanently ease certain of its financial ratios. The Company's
lenders have indicated their willingness to reset such ratios, but have not yet
suggested to the Company what ratios will be acceptable to them. The Company
believes that the decision of its lenders will be based on its ability to
implement its business plan, including its ability to redeploy the Enchanted
Sun. The Company has been in discussions with several third parties regarding
the purchase or charter of the Enchanted Sun and believes that it will be able
to redeploy the vessel on terms acceptable to its lenders. If the Company is
successful, based on its lenders' actions in making the Nordbanken Note Payable
and waiving the ratio violations to date, the Company believes its lenders will
reset its financial ratios at levels it can meet. Based on these beliefs, the
Company has presented the portion of its debt due in the next twelve months as a
current liability with the balance shown as long-term debt.
5. REDEEMABLE PREFERRED STOCK. On March 30, 2000, the Company sold 250 shares of
its Series C Convertible Preferred Stock (the "Series C Stock") and a warrant to
purchase 75,000 shares of the Company's Common Stock at an exercise price of
$6.25 per share for an aggregate of
Page 7
<PAGE>
$2,500,000. The Series C Stock is convertible immediately into shares of the
Company's Common Stock at a rate of $4.50 per share. The proceeds of the sale
were used for general working capital purposes. In addition, commencing April
30, 2001, the holders of the Series C Stock have the right, for a 90-day period,
to request that the Company redeem all or a portion of the Series C Stock for
$10,500 per share. The Company has not identified how it proposes to fund this
repurchase if the holders of the Series C Stock exercise their option, assuming
the Company is legally permitted to repurchase the Series C Stock at the time
the holders exercise their option.
6. SUSPENSION OF OPERATIONS OF CORONADO SEAS, LLC. The Company announced on June
3, 2000 that its Coronado Seas joint venture had suspended day cruises between
San Diego, California and Rosarito, Mexico. Upon commencing operations in April
2000, Coronado Seas encountered logistical problems at the new pier in Rosarito
and was unable to disembark passengers at the pier on a regular basis. So as not
to disappoint passengers, the Company and one of its partners in Coronado Seas,
the Viejas Band of Kumeyaay Indians ("Viejas"), decided to suspend operations
indefinitely.
In connection with the shutdown of operations of Coronado and the
partial satisfaction of claims of vendors who provided goods and services to the
Enchanted Sun, the ship operated by Coronado Seas, Commodore agreed to lend $2
million and Viejas agreed to lend $1 million (the "Settlement Loans") to
Coronado and Albuferra Investments, Inc. ("Albuferra"), the owner of the
Enchanted Sun. Viejas also agreed write off all of its claims against Albuferra
and to satisfy certain other claims against Coronado and Albuferra equal to
approximately $1 million. The Settlement Loans do not bear interest and will be
repaid from the net proceeds of any charter, sale or other re-deployment of the
Enchanted Sun to each of Commodore and Viejas. The Viejas' portion of the
Settlement Loans is shown as "Due to affiliate-Long-term." The Settlement Loans
were made in May and June 2000.
Commodore is using the proceeds from the Settlement Loans exclusively
to settle the claims of Albuferra's vendors and to pay for the repositioning and
maintenance of the Enchanted Sun pending its re-deployment or sale by Albuferra.
Neither Commodore nor Viejas is required to loan any additional funds to either
Coronado or Albuferra; however, if the Settlement Loans are insufficient to
satisfy all of the vendor claims and pay for the repositioning and maintenance
of the Enchanted Sun, Commodore may loan additional funds to Albuferra. After
the last cruise operated by Coronado, Coronado removed the Viejas name from the
Enchanted Sun.
A condensed summary of the results of operations of the Coronado Seas joint
venture follows:
Three Months Nine Months
Ended Ended
June 30, 2000
----------------------------
Revenues $ 757,000 $ 757,000
Expenses 3,062,000 5,073,000
----------- -----------
Net loss $(2,305,000) $(4,316,000)
=========== ===========
Effective June 2000, the Company, pursuant to the Settlement Agreement
with Viejas, obtained majority ownership of Coronado Seas and began accounting
for it as a consolidated subsidiary of the Company.
In order to obtain its portion of the Settlement Loan, the Company
borrowed $2 million from Nordbanken AB on June 20, 2000. The loan is secured by
a second mortgage on the Enchanted Isle and bears interest at LIBOR plus 2% per
annum. The term of the loan is six months and principal and interest on the loan
are due at its maturity. The Company also agreed to grant a third mortgage in
the amount of $2 million on the Enchanted Isle to EFF-Shipping Limited as
additional security for its loan on the Vessel.
Page 8
<PAGE>
SIGNATURE
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.
COMMODORE HOLDINGS LIMITED
(Registrant)
/s/ Alan Pritzker
---------------------------------------------------
Alan Pritzker
Vice President, Finance and Chief Financial Officer
(Principal Financial and Accounting Officer)
August 16, 2000
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