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Form 10-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

ANNUAL REPORT

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2000

Commission File No. 2-64309

GOLF HOST RESORTS, INC.

State of Colorado Employer Identification No. 84-0631130

591 W. Putnam Ave., Greenwich, CT 06830

Telephone Number (727) 942-2000

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

None

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

None

Indicate by check mark whether the registrant

(1)		has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and
(2)		has been subject to such filing requirements for the past 90 days.

Yes         No        

Issuer has no common stock subject to this report.

PART I

Item 1. Business

		Golf Host Resorts, Inc. (the “Company”) was formed in July 1972 and is engaged in the operation of The Westin Innisbrook Resort in Tarpon Springs, Florida (“Innisbrook”) and Sheraton Tamarron Resort in Durango, Colorado (“Tamarron”). Innisbrook and Tamarron (the “Resorts”) offer championship quality golf facilities, restaurant and conference facilities, recreational activities including swimming and tennis and related resort activities. The Resorts are managed by Westin Hotel Company and Sheraton Operating Corporation, respectively, under long-term management agreements. Hilton Hotel Corporation (“HHC”) managed Tamarron from December 1, 1995 to August 31, 1998. Subsequent to year end, Tamarron was sold to an unaffiliated entity.
		Prior to June 23, 1997, the Company was an 80% owned subsidiary of Golf Hosts, Inc. (“GHI”). The minority shareholders of the Company were also the majority shareholders of GHI. On June 23, 1997, TM Golf Hosts, Inc. (“TMGHI”) acquired all of the outstanding shares of the Company. Concurrently, TMGHI and GHI merged with the legal survivor being GHI, which now owns 100% of the Company.
		The Company receives significant revenue from food and beverage sales, and from golf operations (primarily golf fees and merchandise sales). Also, during 1994, the Company undertook the development of nine residential homesites at Tamarron, identified as Estates at Tamarron-Highpoint. All of the homesites have been sold and closed with the last closing occurring in 1997. During 1995, the Company began a second development of nine residential homesites, Estates at Tamarron-Pine Ridge. Two of the sites were sold and closed during 1996, four during 1998, and the remaining three were sold and closed during 1999.
		During 1999, the Company began a third development of nine residential homesites, Estates at Tamarron –Crescent Ridge. All nine homesites were sold and closed during 2000.
		The majority of the condominium owners at the Resorts provide such apartments as resort accommodations under rental pool lease operations. The Resorts are the lessees under the lease operation agreements, which provide for the distribution of a percentage of room revenues, as defined, to participating condominium owners. Accordingly, the Company does not bear the expense of financing as well as certain other operating costs of the rental units.
		Condominium ownership, simply stated, is a realty subdivision in which the individual “lots” are apartment units. Instead of owning a plot of ground, the condominium owner owns the air space where his condominium unit is located. This leaves substantial properties in interest which are not individually owned, e.g., the underlying land, roadways, parking lots, building foundations, exterior walls and roofs, garden areas, utility lines, et cetera. These areas are termed “common property” or “common elements” and each condominium owner has an undivided fractional interest in such property. The condominium owners at each of the Resorts have established an “Association of Condominium Owners” to administer and maintain such property and to conduct business of the condominium owners, such as maintaining insurance on the real property, upkeep of the structures, maintenance of the grounds, and provisions for certain utilities. The Associations assess fees to defray such expenses and to establish necessary reserves. Such charges, if not timely paid, may constitute a lien upon the separate condominium units. Each condominium owner must pay ad valorem property taxes and assessments for electricity, and to such matters independent of the other unit owners. These expenses would be incurred by owners of condominium units, regardless of an election to participate in the rental pool. With respect to governing the affairs of the Association, which is subject to state statutes, the participating condominium owners are accorded one (1) vote per condominium unit owned.

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The percentages of the foregoing revenue components to total revenues are as follows:

		The Company hosts more than a thousand conferences and related group meetings each year with its clients coming from a variety of industries, primarily from the central and eastern United States. Accordingly, the loss of a single client or a few clients would have no significant adverse effect on the Company’s business.
		The conference-oriented resort business is quite competitive; however, the Company has established itself as a leader in its industry and enjoys an excellent reputation with its clients. Its major competitors are other conference and golf-oriented resorts throughout the country.
		The Resorts’ revenues are seasonal, with Innisbrook’s peak season being in the winter and spring and Tamarron’s being in the summer.
		The Company has, on average, approximately 1,200 employees (900 at Innisbrook and 300 at Tamarron).

Item 2. Description of Properties

		Innisbrook is a condominium resort project situated on approximately 850 acres of land located in the northern portion of Pinellas County, Florida, near the Gulf of Mexico. It is north of Clearwater (approximately 9 miles) and west of Tampa (approximately 20 miles). There are 938 condominium units, 36 of which are strictly residential, with the balance eligible for rental pool participation. Of these 902 eligible units, 550, on average, participate in the rental pool. The resort complex includes 72 holes of golf; practice ranges; three clubhouses with retail golf, food and beverage outlets; three conference and exhibit buildings; five swimming pools; a themed water attraction; a recreation center; tennis/fitness facility and numerous administrative and support structures.
		Tamarron is a condominium resort project situated on approximately 730 acres of land located in the northern portion of La Plata County, Colorado. It is north of Durango (approximately 18 miles) and south of Silverton (approximately 28 miles). The property is surrounded on three sides by the San Juan National Forest and is readily accessible via U. S. Highway 550. There are 381 condominium units, all of which are eligible for rental pool participation. Approximately 275 units, on average, participate in the rental pool. The resort complex includes 18 holes of golf; a practice range; an indoor swimming pool/fitness facility; several restaurants and lounges; a conference facility; a tennis complex and numerous administrative and support facilities and structures.
		During 1994 and 1995, approximately 24 acres of land at Tamarron were set aside for the Estates at Tamarron residential homesite development. As of this filing, 27 homesites have been sold and closed.

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At December 31, 2000, the properties are encumbered by various mortgages totaling $82,142,921. Reference is made to Note 7 of Notes to Consolidated Financial Statements of Golf Host Resorts, Inc. and Subsidiary contained elsewhere in this filing for a more detailed description of these mortgages.

Item 3. Legal Proceedings

		The Company, in the normal course of operations, is subject to claims and lawsuits. The Company does not believe that the ultimate resolution of such matters will materially impair operations or have an adverse effect on the Company’s financial position and results of operations.
		The Company has been named as a defendant in a consolidated class action lawsuit wherein the plaintiffs allege a breach of contract in connection with the Rental Pool Master Lease Agreement. The plaintiffs are seeking unspecified damages and a declaratory judgement declaring that the plaintiffs are entitled to participate in the rental pool if one exists and a limitation of golf course access to persons who are either condominium owner members, their accompanied guests, or guests of the resort. Depositions of class members and others, including depositions of prior executives of Golf Host Resorts, have taken place and additional discovery remains. A court date has not been set. As this litigation is in its early stages, the Company is not yet able to determine whether the resolution of this matter will have a material adverse effect on the Company’s financial condition or results of operations although the Company believes it has successful defenses and intends to vigorously defend this action.

Item 4. Submission of Matters to a Vote of Security Holders

Not applicable

Part II

Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters

		The Company’s stock is privately held and there is no established market for the stock.
		There are a total of 1,283 condominium units allowing rental pool participation by their owners, of which three are owned by a subsidiary of the Company, Golf Host Condominium, Inc. (GHC). Of the units not owned by GHC, 1,259 were sold under Registration Statements effective through March 1, 1983. The remaining 21 units were sold via private offerings exempt from registration with the Securities and Exchange Commission. The condominium units not owned by the Company or its affiliate are held by 1,145 different owners.
		The condominium units sold by the Company, allowing rental pool participation, are deemed to be securities because of the rental pool feature (see Item 1); however, there is no market for such securities other than the normal real estate market.
		Since the security is real estate, no dividends have been paid or will be paid.

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Item 6. Selected Financial Data

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Item 7. Results of Operations

Guest occupancy during the last three years, measured by room nights, was as follows:

		2000 Compared to 1999
		For the years ended December 31, 2000, and December 31, 1999, the Company recognized total revenue in the approximate amount of $56,592,000 and $59,665,000, respectively, from the rental of condominium units, sales of food and beverage, golf operations, and auxiliary services. The net reduction in overall revenue in the amount of $3,073,000 or 5.2% results from the reduction in room nights noted above equating to revenue reduction of $2,737,000 compounded by a decrease in average spending per room night in the aggregate of $336,000. Average spending per room night decreased from $347.01 in 1999 to $344.96 in 2000. Room nights at both the Innisbrook and Tamarron properties experienced a reduction from 1999. Innisbrook and Tamarron had approximately 7,300 and 600 fewer room nights, respectively. These decreases reflect the continuing increase in competition within this market segment in addition to a general slow down during 2000 in the hospitality industry. The Company continues to seek ways to identify expanded markets for our product. In addition, the Sales and Marketing department has been restructured to further focus and emphasize the core golf aspects of our properties as a competitive advantage.
		Operating expenses and losses on assets held for sale totaled approximately $61,812,000 and $55,970,000 for the year ended December 31, 2000, and December 31, 1999, respectively. This increase of $5,842,000 or 10% is a result of: a decrease in the rental pool distribution of $751,000, which is directly related to the reduced room nights noted above; a reduction in Tamarron’s operating losses of $297,000; decreased Sales and Marketing expenses amounting to $233,000; a reduction in the gain on land sales in the amount of $1,295,000; an increase in depreciation and amortization in the amount of $301,000; a provision for intangible impairment of $7,441,000; an increase in payroll and related expenses of $22,000; and a net decrease in all other expenses such as repairs and maintenance, fertilizers and chemicals, office supplies, housekeeping supplies, etc. in the aggregate of $1,935,000. These reductions were implemented in anticipation of reduced operating revenues for the period. Management continues to focus on cost containment measures directed at protecting the Company’s cash flow position.
		Interest, net for the year ended December 31, 2000, was approximately $9,586,000 as compared to $9,219,000 for the year ended December 31, 1999. This $367,000 increase, or 4.0%, results from the increase in payments and accruals relating to the GTA financing amounting to $70,000, an increase in utilization of the account receivable credit line generating an $85,000 increase in expense, a reduction in balances owed to the former shareholders producing $10,000 in reduced interest expense, an increase in interest expense associated with accrued property taxes, short-term affiliate loans, capital leases and financial institution service charges, all in the aggregate of approximately $48,000; and a reduction of interest earnings on affiliate advances in the amount of $174,000.
		Effective February 3, 1998, the Company’s election to be treated as a Subchapter S corporation became effective. Subsequent to the 1998 filing period, income taxes are no longer provided for at the Company level.

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		During 1999, the Company changed its accounting procedures for start-up costs related to the transition from Hilton Hotel Corporation to Westin Hotels and Resorts. This change in accounting policy resulted in a one time write-off of $1,673,000 in 1999.
		1999 Compared to 1998
		Revenues from resort operations rose from approximately $58,185,000 to $59,665,000. This increase was a result of a 2.5% increase in guest spending; offset by a 2.8% decrease in occupancy.
		Operating expense and losses on assets held for sale increased primarily due to reduced gains on land sales at Innisbrook in the amount of $1,295,000. This net increase in expenses was mitigated by management’s efforts to reduce operating expenses across the board and on a net basis held the increase in expenses to approximately $536,000.
		The increase in interest expense is primarily attributable to the contractual increase in the GTA interest rate. That change was approximately $1,282,000.
		Parent income tax charges decreased from the 1998 amount of $13,473,000 to $0 due to the Company’s change to a Subchapter S Corporation during 1998.

Income Tax Status

Reference is made to the Notes to Consolidated Financial Statements regarding income taxes.

Financial Condition and Liquidity

		The Company’s working capital at December 31, 2000, exclusive of assets held for sale, was a deficit of $12,904,000 and the Company’s cash flow from operational sources are currently tight. The Company typically experiences seasonal fluctuation in its net working capital position without significantly impairing its ability to pay trade creditors in a timely manner and satisfy its financial obligations in an orderly fashion. In addition to operational cash flows, the Company anticipates funding its working capital needs through the following sources: available accounts receivable revolving line of credit at Innisbrook amounting to $3,000,000, cash funding by Westin pursuant to the management agreement of up to $2,500,000 per year.
		The Company is also working with its primary lender, Golf Trust of America, to re-negotiate the participating mortgage. One alternative being discussed is to implement a debt service obligation consistent with available cash flows generated by operations. Changing this loan repayment structure would create a more manageable cash environment. Although this restructuring has not been finalized, a favorable agreement with Golf Trust of America along this line of re-structuring will substantially improve the Company’s ability to meet its obligations.
		As a result of the additional cash sources described above, the Company assesses its liquidity as manageable.

Year 2000 Issue

The Company has carefully reviewed the impact of the Year 2000 issues on its information technology and other electronic systems as well as its vendors and suppliers. It has determined the consequences of its Year 2000 issues did not have and will not have a material impact on either the future operating results or financial condition of the Company.

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Item 8. Financial Statements and Supplementary Data

All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.

Item 9. Changes in and Disagreements on Accounting and Financial Disclosure

Not applicable.

Part III

Item 10. Directors and Executive Officers of the Registrant

All directors and officers serve a one-year term or until their successors are elected.

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Item 11. Executive Compensation

		All items for Golf Host Resorts, Inc., except those set forth below, have been omitted as not applicable or not required.
		Summary Compensation Table
		The following table sets forth the remuneration paid, distributed or accrued by Golf Host Resorts, Inc. and its parent, Golf Hosts, Inc., during the three years in the period ended December 31, 2000, to the Company’s executive officers.

		(1) Total of annual salary and bonus was not greater than $100,000 for the years where dollar amounts are not presented.
		(2) R. Keith Wilt became an officer August 1, 1999.
		(3) Resigned effective May 31, 1999

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		Pension Plan
		The Company and its parent, Golf Hosts, Inc., provided a supplemental retirement income plan (the Plan) for officers who had completed 15 years of service, were employed at age 65 by the Company and retired, and were elected to participate in the Plan by the Golf Hosts, Inc. Board of Directors. The Plan provided an annual income of $10,000 for a period of 10 years.
		Concurrent with the sale of the Company and Golf Hosts, Inc., the Plan was terminated and the related liability, which approximated $297,000, was distributed in cash to the participants.

Item 12. Security Ownership of Certain Beneficial Owners and Management

(a)

Security ownership of certain beneficial owners:

	(b)		Security ownership of management of the Company in Golf Hosts, Inc. (GHI):
			None
	(c)		Changes in control:
			None

Item 13. Certain Relationships and Related Transactions

(a)

Transactions with Management and Others

		GHI charges administrative and other expenses to the Company on the basis of estimated time and expenses incurred as reasonably determined by GHI.
		As part of the terms of the management agreement for Innisbrook, Westin guaranteed minimum cash flow to Innisbrook. The terms of the agreement provide that if incentive cash flow, as defined, is less than the minimum annual payment, as defined, for the operating year, Westin will advance Innisbrook the shortage up to $2.5 million with the advance being repayable when the Company has available cash, as defined. In addition, the Company signed an agreement under which Westin will provide 50% of the funding for approved capital expenditures incurred subsequent to the Acquisition in excess of $6 million, plus 50% of capital expenditures in excess of capital reserve requirements on an annual basis, as defined.

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	(b)		Certain Business Relationships
			None
	(c)		Indebtedness of Management
			None
	(d)		Transactions with Promoters
			Not applicable

Part IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

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\

SIGNATURES

Pursuant to the Requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, therefore duly authorized.

Dated: March 30, 2001

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Golf Host Resorts, Inc.
and Subsidiary
Financial Statements
December 31, 2000 and 1999

Report of Independent Certified Public Accountants

To the Shareholder and Board of Directors of Golf Host Resorts, Inc.

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, of changes in shareholder’s deficit and of cash flows present fairly, in all material respects, the financial position of Golf Host Resorts, Inc. and subsidiary at December 31, 2000 and 1999, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2000 in conformity with accounting principles generally accepted in the United States of America. 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 audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 3 to the consolidated financial statements, the Company changed its method of accounting for start-up costs in 1999.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 of the notes to the consolidated financial statements, the Company has suffered recurring losses from operations, has negative working capital and has a shareholder’s deficit that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also discussed in Note 1. Additionally, as described in Note 12, subsequent to December 31, 2000, the Company has defaulted under the terms of its debt agreement and is a defendant to a class action lawsuit. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

/s/ PricewaterhouseCoopers LLP
Tampa, Florida

March 30, 2001, except for the information in Note 12,
   for which the date is December 26, 2001

F-1

Golf Host Resorts, Inc. and Subsidiary

Consolidated Balance Sheets

The accompanying notes are an integral part of these consolidated financial statements.

F-2

Golf Host Resorts, Inc. and Subsidiary

Consolidated Statements of Operations

The accompanying notes are an integral part of these consolidated financial statements.

F-3

Golf Host Resorts, Inc. and Subsidiary

Consolidated Statements of Changes in Shareholder’s Deficit

The accompanying notes are an integral part of these consolidated financial statements.

F-4

Golf Host Resorts, Inc. and Subsidiary

Consolidated Statements of Cash Flows