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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
(Mark one)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the fiscal period ended December 31, 2001
OR
( ) 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: No 1934 act file number assigned
(1933 act file no. 2-65481)
SADDLEBROOK RESORTS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-1917822
------------------------ ---------------------------------
(State of incorporation) (IRS employer identification no.)
5700 Saddlebrook Way, Wesley Chapel, Florida 33543-4499
-------------------------------------------------------
(Address of principal executive offices)
813-973-1111
----------------------------------------------------
(Registrant's telephone number, including area code)
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 X NO
----- -----
State the aggregate value of voting stock held by nonaffiliates of the
registrant: None*
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date: Not applicable*
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Form S-1 Registration Statement (no. 2-65481) as
declared effective December 28, 1979 are incorporated by reference into Part IV.
* Registrant has no common stock subject to this annual report.
Exhibit index on Page 28
Page 1 of 28
PART I
Item 1. Business
Saddlebrook Resorts, Inc., (the "Registrant") was incorporated in the State of
Florida on June 20, 1979 as a wholly-owned subsidiary of Pittway Real Estate,
Inc. ("PREI"). PREI was a wholly-owned subsidiary of Penton Publishing, Inc.
which, in turn, was a wholly-owned subsidiary of Pittway Corporation of
Northbrook, Illinois. The Registrant was formed to acquire an existing golf
course and tennis club and develop it into a condominium resort and residential
homes project.
Thomas L. Dempsey ("Dempsey") effectively purchased one hundred percent (100%)
of the authorized and issued stock of the Registrant from PREI in November 1988.
Dempsey is the former Chairman of the Board of Penton Publishing, Inc. and a
former Director and Vice President of Pittway Corporation. Dempsey subsequently
gifted 13,000 shares of the Registrant's non-voting stock to family trusts (see
Item 12. Security Ownership of Certain Beneficial Owners and Management of this
Form 10-K, which is incorporated herein by reference).
Prior to November 1988, the Registrant operated and reported the results of its
operations in two industry segments: (1) the real estate segment was engaged in
the development, construction and sales of resort and residential condominium
units, homes and residential lots and (2) the resort segment was engaged in the
ownership and operation of the resort including its facilities for hotel,
convention, food and beverage, golf, tennis and other recreational activities.
In connection with and immediately prior to the sale of the stock of the
Registrant to Dempsey, the Registrant deeded the property which comprised its
real estate segment to PREI as a dividend from a subsidiary to its parent. The
property that was conveyed to PREI was not used as part of the resort or by its
rental guests or condominium owners.
In June 1998, each share of the Registrant's outstanding capital stock was
exchanged for one share of Saddlebrook Holdings, Inc. ("SHI") stock. After the
exchange, Dempsey and the family trusts own 100% of SHI which owns 100% of the
Registrant.
The operations of the Registrant are not considered to be dependent upon the
availability of raw materials, nor the effect of the duration of patents,
licenses, franchises or concessions held.
The Registrant's resort operations are seasonal with a higher volume of sales
during the winter and spring seasons.
The Registrant's competition includes major golf and tennis resorts nationwide,
which provide luxury accommodations and facilities for conventions and
recreational activities.
At December 31, 2001, there were approximately 710 persons employed by the
Registrant. Management's relationship with employees is excellent and there are
no collective bargaining agreements.
2
Item 2. Properties
Saddlebrook Resort is located in south Pasco County, near Tampa, Florida. The
property originally consisted of approximately 330 acres which the Registrant
purchased in July 1979. In addition, approximately 170 and 11 adjoining acres
were purchased and added to the Saddlebrook project in 1984 and 1985,
respectively. The Registrant's property was approved for 950 residential and
condominium units.
A portion of the Registrant's property that was being developed as residential
single family and cluster homes and improved residential lots, known as Fairway
Village, was deeded to PREI in November 1988 (see Item 1. Business of this Form
10-K, which is incorporated herein by reference).
Property improvements for the resort consist of condominium units which were
sold or are for sale to outside parties of which there were 549 rental units
participating in a rental pooling program at December 31, 2001 (see Exhibit 28 -
Interest Being Registered of this Form 10-K, which is incorporated herein by
reference).
Certain condominium units and their contents, tennis courts and tracts of real
property held for development which were owned by the Registrant are no longer
encumbered by the Registrant's debt (see Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations of this Form 10-K,
which is incorporated herein by reference). Accordingly, concurrent with the
1998 refinancing of its prior debt, the Registrant effectively distributed the
unencumbered property to SHI at its aggregate book value of approximately
$2,515,000.
In addition to condominium units, resort facilities owned by the Registrant and
its affiliates include a 135,000 square foot convention facility with
approximately 78,000 square feet of meeting space, two 18-hole golf courses, 45
tennis courts, a luxury health spa, a fitness center, three swimming pools,
three restaurants, shops and other facilities necessary for the operation of a
resort.
Item 3. Legal Proceedings
The Registrant is involved in litigation in the ordinary course of business. In
the opinion of management, these matters are adequately covered by insurance or
indemnification from other third parties. The effect, if any, of these claims
is, in management's opinion, immaterial to the Registrant's financial condition
and results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
3
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
The Registrant's stock is privately held and there is no established market for
the stock (see Item 12. Security Ownership of Certain Beneficial Owners and
Management of this Form 10-K, which is incorporated herein by reference).
Condominium units that were developed and sold by the Registrant are deemed to
be securities due to the rental pool feature (see Exhibit 28 - Interest Being
Registered of this Form 10-K, which is incorporated herein by reference).
However, there is no market for such securities other than the normal real
estate market. Since it is real estate, no dividends have been paid or will be
paid related to the registered securities.
Item 6. Selected Financial Data
Year ended December 31,
--------------------------------------------------------------------------------------------
2001 2000 1999 1998 1997
------------ ------------ ------------ ------------ ------------
Operating revenues $ 46,185,000 $ 52,782,000 $ 49,704,000 $ 48,395,000 $ 41,753,000
Net income 3,387,000 4,203,000 2,336,000 5,675,000 3,133,000
Dividends Paid 1,300,000 -- 3,800,000 2,707,000 1,653,000
Total assets 37,558,000 40,940,000 37,773,000 40,956,000 32,707,000
Notes payable 22,343,000 23,530,000 24,628,000 25,530,000 18,687,000
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity and Capital Resources
The Registrant obtained financing from a third-party lender in June 1998, which
replaced its prior debt. The financing has a fixed annual interest rate of 7.7%,
monthly principal and interest payments of approximately $244,000 and matures on
July 1, 2013. The current debt contains additional financing from the same
lender of $5,000,000 provided the Registrant remains in compliance with certain
financial covenants (see Note 7 Notes Payable of the Notes to Financial
Statements in Item 8 of this Form 10-K, which is incorporated herein by
reference).
Construction of Saddlebrook Resort was substantially complete as of December
1982. During the fiscal period ended December 31, 2001, the Registrant made
improvements to its main conference center building and repaired a portion of it
that was damaged by a minor fire at a aggregate anticipated cost of
approximately $3,498,000 before application of related insurance proceeds of
$2,630,000. The Registrant also commenced construction of new laundry and
warehouse facilities to replace a structure that was damaged by a separate fire.
The anticipated cost for this project is approximately $1,800,000, before
application of related insurance proceeds of $923,000. During the fiscal periods
ended December 31, 1999 and 2000, the Registrant constructed a new facility
which expanded its group function space by 18,000 square feet. This structure,
named the Grand Pavilion, was completed in the spring of 2000 at a cost of
approximately $2,060,000. There were no other major capital additions or
improvements during the fiscal years ended December 31, 2001, 2000 and 1999.
4
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Significant capital expenditures are not anticipated in the next year. Future
operating costs and planned expenditures for minor capital additions and
improvements will be funded by the resort operations of the Registrant or by
additional funds available under the Registrant's debt agreement discussed
above.
Management is not aware of any environmental matters that are currently present.
The Registrant's operations are not considered to be dependent on any individual
or small group of customers, the loss of whom would have a material adverse
effect.
There are no adverse purchase or other commitments outstanding as of December
31, 2001.
Results of Operations
Revenues for the fiscal years ended December 31, 2001, 2000 and 1999 were
comprised of the following areas of operation:
Year ended December 31,
------------------------
2001 2000 1999
------ ------ ------
Hotel revenues 51% 51% 49%
Merchandise sales 35 35 37
Club fees 13 13 13
Other income 1 1 1
------ ------ ------
100% 100% 100%
====== ====== ======
Total revenues decreased $6,597,000 or 13% for the fiscal year ended December
31, 2001 when compared with the previous year. This decrease resulted from fewer
occupied unit nights in the resort, partially offset by a slightly higher
average daily room rate, for the current year when compared to the prior year.
This downturn in business was concentrated in the second half of the current
year due to the slowdown in the nation's economy and concerns about national
security that adversely affected travel. Total revenues increased $3,078,000 or
6% for the fiscal year ended December 31, 2000 when compared with its previous
year. This improvement was the result of increases in both occupied unit nights
and the average daily rate at the resort, for that fiscal period when compared
to its prior period. Projections for occupied room nights in the year 2002 and
subsequent fiscal periods are expected to be lower than the resort's current
volume of business pending an improvement in national concerns.
5
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Net income decreased $815,000 or 19% for the fiscal year ended December 31, 2001
when compared with the previous year. This decrease is a result of lower
revenues which were mitigated by cost-control measures implemented to reduced
operating and administrative expenses during the second half of the year. The
net income for the fiscal year ended December 31, 2000 increased $1,867,000 or
80% when compared with its prior year. This improvement was a direct result of
the increased revenues which were offset by increases in general costs of
operation.
The Registrant previously elected S Corporation status and is currently a member
of a Qualified Subchapter S Subsidiary Group. Accordingly, the Registrant has
had no income tax expense since the initial election as the tax is assessed at
the shareholder level (see Note 2 Significant Accounting Policies of the Notes
to Financial Statements in Item 8 of this Form 10-K, which is incorporated
herein by reference).
In management's estimation, the effects of inflation and changing prices on the
Registrant's results of operations were negligible in 2001, 2000 and 1999.
Saddlebrook Rental Pool Operation
The Saddlebrook Rental Pool Operation (the "Rental Pool") is described in Note 2
Significant Accounting Policies of the Notes to Financial Statements of
Saddlebrook Resorts, Inc. and in Note 1 Rental Pool Operations and Rental Pool
Agreement of the Notes to Financial Statements of Saddlebrook Rental Pool
Operation in Item 8 of this Form 10-K, which are incorporated herein by
reference.
The average occupancies for the Rental Pool for fiscal 2001, 2000 and 1999 were
44%, 53% and 52%, respectively. The average distributions of Net Rental Income
per participating rental unit for fiscal 2001, 2000 and 1999 were $10,289,
$12,122 and $11,394, respectively.
Item 8. Financial Statements and Supplementary Data
The financial statements, including the Reports of Independent Certified Public
Accountants, for Saddlebrook Resorts, Inc. are included on pages 11 to 22 and
for Saddlebrook Rental Pool Operation on pages 23 to 27. An index to the
financial statements is on page 10.
Financial statement schedules have been omitted because they are not applicable
or the required information is shown in the financial statements or notes
thereto.
The Registrant does not believe its accounting principles are currently subject
to significant estimates which would materially impact its financial statements
referenced herein.
Item 9. Changes in and Disagreements on Accounting and Financial Disclosure
Not applicable.
6
PART III
Item 10. Directors and Executive Officers of the Registrant
The Directors and Executive Officers of the Registrant are as follows:
Name Position Background
- ------------------ ---------------------- --------------------------------
Thomas L. Dempsey Chairman of the Board, Chairman of the Board, Penton
Age 75 and Chief Executive Publishing, Inc., Cleveland, OH,
29822 Fairway Dr. Officer Vice President and Director,
Wesley Chapel, FL Pittway Corp., Northbrook, IL
Eleanor Dempsey Vice Chairman of the Wife of Thomas Dempsey
29822 Fairway Dr. Board
Wesley Chapel, FL
Richard Boehning Director and President General Manager, Doral Hotel
Age 67 and Country Club, Miami, FL
5017 Pinelake Rd.
Wesley Chapel, FL
Gregory R. Riehle Director, Vice President Son-in-law of Thomas Dempsey,
Age 45 and Secretary Attorney, Shumaker, Loop &
30338 Laurelwood Ln. Kendrick, Tampa, FL
Wesley Chapel, FL
Maureen Dempsey Director, Vice President Daughter of Thomas Dempsey,
Age 43 and Assistant Secretary President, Saddlebrook
29812 Fairway Dr. International Tennis, Inc.
Wesley Chapel, FL
Diane L. Riehle Director, Vice President Daughter of Thomas Dempsey,
Age 41 and Assistant Secretary Regional Sales Manager,
30338 Laurelwood Ln. Saddlebrook Resorts, Inc.
Wesley Chapel, FL
Donald L. Allen Vice President and Controller, Kiawah Island,
Age 62 Treasurer Charleston, SC
1314 Foxwood Dr.
Lutz, FL
Robert A. Shaw Assistant Treasurer and Controller, Gulf Shores
Age 45 Corporate Controller Plantation, Gulf Shores, AL,
5404 Saddlebrook Way CPA, Price Waterhouse,
Wesley Chapel, FL Indianapolis, IN
7
Item 11. Executive Compensation
The directors and executive officers of the Registrant as of December 31, 2001
are listed in Item 10 of this Form 10-K, which is incorporated herein by
reference. The aggregate remuneration from the Registrant for all directors and
executive officers for the fiscal year ended December 31, 2001 was $1,238,000.
Of this amount, the Registrant's compensation to Thomas Dempsey was $217,000,
Eleanor Dempsey was $170,000, Richard Boehning was $278,000, Maureen Dempsey was
$182,000 and Diane Riehle was $182,000. No other director or executive officer
received compensation from the Registrant in excess of $100,000.
Directors and executive staff are allowed to use the Registrant's resort
facilities and are provided various discounts on related purchases in accordance
with hospitality industry standards. The Registrant had no other compensation
plans for directors and executive officers at December 31, 2001.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Title of Name of beneficial Amount and nature of Percent
class owner beneficial ownership of class
Common Saddlebrook Holdings, Inc. 100.0% 100%
Common Thomas L. Dempsey 100.0% 0%
Common Maureen Dempsey Trust 6.5% 0%
Common Diane Lynn Riehle Trust 6.5% 0%
In December 1994, the Registrant's Articles of Incorporation were amended to
increase the number of shares of authorized common stock from 25,000 to 100,000
shares. Each of the 500 shares of stock that was previously outstanding was then
exchanged for 100 shares of voting stock and 100 shares of nonvoting stock. The
par value of each share remains unchanged at $1. On October 1, 1995, 6,500
shares of nonvoting stock was gifted by Thomas L. Dempsey to each of two family
trusts.
In June 1998, each share of the Registrant's outstanding capital stock was
exchanged for one share of Saddlebrook Holdings, Inc. ("SHI") stock. After the
exchange, Thomas L. Dempsey and the family trusts own 100% of SHI which owns
100% of the Registrant.
Item 13. Certain Relationships and Related Transactions
As of December 31, 2001, present and past executive officers and/or directors of
the Registrant have personally accounted for real estate sales totaling
$2,748,000 since inception of the project. Other relationships and related
transactions are described in Note 9 Related Party Transactions of the Notes to
Financial Statements in Item 8 of this Form 10-K, which is incorporated herein
by reference.
8
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) Financial statements and schedules required to be filed are listed in
Item 8 of this Form 10-K, which is incorporated herein by reference.
Exhibits required to be attached by Item 601 of Regulation S-K are
listed in the Index to Exhibits attached to this Form 10-K, which is
incorporated herein by reference.
(b) The Registrant was not required to file a Form 8-K during the year
ended December 31, 2001.
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, thereunto duly authorized.
SADDLEBROOK RESORTS, INC.
(Registrant)
Date: April 1, 2002 /s/ Donald L. Allen
-----------------------------
Donald L. Allen
Vice President and Treasurer
(Principal Financial and
Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities indicated on April 1, 2002.
/s/ Thomas L. Dempsey /s/ Richard Boehning
----------------------------------- --------------------------------
Thomas L. Dempsey Richard Boehning
Chairman of the Board Director and President
(Principal Executive Officer)
/s/ Gregory R. Riehle /s/ Robert A. Shaw
----------------------------------- --------------------------------
Gregory R. Riehle Robert A. Shaw
Director and Vice President Assistant Treasurer
and Corporate Controller
9
SADDLEBROOK RESORTS, INC.
INDEX TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
PAGE(S)
Financial Statements
SADDLEBROOK RESORTS, INC.
Report of Independent Certified Public Accountants 11
Balance Sheets at December 31, 2001 and 2000 12
Statements of Income for each of the three years in the period
ended December 31, 2001 13
Statements of Changes in Shareholder's Equity for each of the
three years in the period ended December 31, 2001 14
Statements of Cash Flows for each of the three years in the
period ended December 31, 2001 15
Notes to Financial Statements 16-22
SADDLEBROOK RENTAL POOL OPERATION
Report of Independent Certified Public Accountants 23
Balance Sheets at December 31, 2001 and 2000 24
Statements of Operations for each of the three years in the period
ended December 31, 2001 25
Statements of Changes in Participants' Fund Balance for each of
the three years in the period ended December 31, 2001 26
Notes to Financial Statements 27
10
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholder of
Saddlebrook Resorts, Inc.
In our opinion, the accompanying balance sheets and the related statements of
income, of changes in shareholder's equity and of cash flows present fairly, in
all material respects, the financial position of Saddlebrook Resorts, Inc. at
December 31, 2001 and 2000, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 2001 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.
/S/ PricewaterhouseCoopers LLP
Tampa, Florida
March 15, 2002
11
SADDLEBROOK RESORTS, INC.
BALANCE SHEETS
DECEMBER 31,
--------------------------------
2001 2000
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 6,724,259 $ 8,109,135
Escrowed cash 217,550 298,912
Short-term investments -- 345,300
Short-term escrowed investments 989 96,979
Trade accounts receivable, net of allowances for
doubtful accounts of $19,142 and $65,000 1,681,780 3,718,729
Due from related parties 849,952 159,406
Resort inventory and supplies 1,834,400 1,977,469
Prepaid expenses and other assets 516,923 405,179
------------ ------------
Total current assets 11,825,853 15,111,109
Long-term investments 300,000 --
Long-term escrowed investments -- 495,499
Property, buildings and equipment, net 24,974,266 24,836,026
Deferred charges, net of accumulated amortization of
$140,000 and $100,000 457,486 497,266
------------ ------------
Total assets $ 37,557,605 $ 40,939,900
============ ============
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Current portion of notes payable $ 1,281,697 $ 1,186,270
Escrowed deposits 218,540 891,390
Accounts payable 704,018 877,581
Accrued rental distribution 247,692 1,512,299
Accrued expenses and other liabilities 2,176,962 2,555,838
Guest deposits 1,411,575 2,763,681
Due to related parties 205,282 646,348
------------ ------------
Total current liabilities 6,245,766 10,433,407
Notes payable due after one year 21,061,638 22,343,335
------------ ------------
Total liabilities 27,307,404 32,776,742
------------ ------------
Commitments and contingencies (Note 10)
Shareholder's equity:
Common stock, $1 par, 100,000 shares authorized, 100,000 100,000
issued and outstanding
Additional paid-in capital 1,013,127 1,013,127
Retained earnings 9,137,074 7,050,031
------------ ------------
Total shareholder's equity 10,250,201 8,163,158
------------ ------------
Total liabilities and shareholder's equity $ 37,557,605 $ 40,939,900
============ ============
The accompanying notes are an integral part of these financial statements.
12
SADDLEBROOK RESORTS, INC.
STATEMENTS OF INCOME
YEAR ENDED
DECEMBER 31,
2001 2000 1999
------------ ------------ ------------
Resort revenues (Note 8) $ 46,184,832 $ 52,781,765 $ 49,703,533
------------ ------------ ------------
Cost and expenses:
Operating costs of resort (Note 8) 31,089,979 35,766,731 34,689,429
Sales and marketing 3,229,921 3,897,922 3,781,059
General and administrative 4,623,742 5,003,277 5,256,616
Depreciation and amortization 2,087,341 2,057,050 1,755,644
Interest 1,766,806 1,854,283 1,885,218
------------ ------------ ------------
Total costs and expenses 42,797,789 48,579,263 47,367,966
------------ ------------ ------------
Net income $ 3,387,043 $ 4,202,502 $ 2,335,567
============ ============ ============
The accompanying notes are an integral part of these financial statements.
13
SADDLEBROOK RESORTS, INC.
STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
ADDITIONAL TOTAL
COMMON PAID-IN RETAINED SHAREHOLDER'S
STOCK CAPITAL EARNINGS EQUITY
------------ ------------ ------------ ------------
Balance at December 31, 1999 $ 100,000 $ 1,013,127 $ 2,847,529 $ 3,960,656
Net income -- -- 4,202,502 4,202,502
------------ ------------ ------------ ------------
Balance at December 31, 2000 100,000 1,013,127 7,050,031 8,163,158
Net income -- -- 3,387,043 3,387,043
Distributions to shareholder -- -- (1,300,000) (1,300,000)
------------ ------------ ------------ ------------
Balance at December 31, 2001 $ 100,000 $ 1,013,127 $ 9,137,074 $ 10,250,201
============ ============ ============ ============
The accompanying notes are an integral part of these financial statements.
14
SADDLEBROOK RESORTS, INC.
STATEMENTS OF CASH FLOWS
Year ended
December 31,
2001 2000 1999
------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,387,043 $ 4,202,502 $ 2,335,567
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 2,087,341 2,057,050 1,755,644
Loss (gain) on disposal of property, buildings
and equipment 166 (2,132) 1,188
Provision for doubtful accounts -- 49,348 12,844
Change in assets and liabilities:
(Increase) decrease in:
Escrowed cash 81,362 73,192 (280,778)
Investments 45,300 (345,300) --
Escrowed investments 591,489 1,326 1,085,008
Trade accounts receivable 2,036,949 (893,515) 2,297,749
Resort inventory and supplies 143,069 (144,931) (250,050)
Prepaid expenses and other assets (111,744) 145,651 119,813
Increase (decrease) in:
Escrowed deposits (672,850) (74,518) (804,230)
Accounts payable (173,563) (637,582) (83,541)
Accrued rental distribution (1,264,607) 80,998 (181,841)
Accrued expenses and other liabilities (378,876) (366,099) 702,532
Guest deposits (1,352,106) 854,164 (78,966)
------------ ------------ ------------
Net cash provided by operating activities 4,418,973 5,000,154 6,630,939
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of equipment -- 9,000 1,625
Insurance proceeds from loss of capital assets 1,938,657 -- --
Capital expenditures (4,124,624) (1,930,137) (4,587,029)
------------ ------------ ------------
Net cash used in investing activities (2,185,967) (1,921,137) (4,585,404)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on notes payable (1,186,270) (1,097,965) (1,025,244)
Distribution to shareholder (1,300,000) -- (3,800,000)
Financing costs -- -- (15,438)
Due to/from related parties (1,131,612) 576,803 (257,578)
------------ ------------ ------------
Net cash used in financing activities (3,617,882) (521,162) (5,098,260)
------------ ------------ ------------
Net (decrease) increase in cash and cash
equivalents (1,384,876) 2,557,855 (3,052,725)
Cash and cash equivalents, beginning of year 8,109,135 5,551,280 8,604,005
------------ ------------ ------------
Cash and cash equivalents, end of year $ 6,724,259 $ 8,109,135 $ 5,551,280
============ ============ ============
SUPPLEMENTAL DISCLOSURE:
Cash paid for interest $ 1,772,379 $ 1,854,283 $ 1,942,398
NON-CASH FINANCING AND INVESTING ACTIVITIES:
Capital lease obligation $ -- $ -- $ 123,229
The accompanying notes are an integral part of these financial statements.
15
SADDLEBROOK RESORTS, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
1. ORGANIZATION AND BUSINESS:
Saddlebrook Resorts, Inc. (the "Company"), a wholly-owned subsidiary of
Saddlebrook Holdings, Inc. ("SHI"), was incorporated in the State of
Florida in June 1979 at which time it purchased a golf course and tennis
complex, as well as certain undeveloped land, located in Pasco County,
Florida, which was developed as a resort-condominium and residential homes
project. Property improvements for the resort consist of condominiums which
were sold or are for sale to outside parties. The majority of the
condominium units sold are provided as hotel accommodations by their owners
under a Rental Pool and Agency Appointment Agreement (the "Rental Pool").
The resort facilities include two 18 hole golf courses, 45 courts, three
swimming pools, three restaurants, a 135,000 square foot convention
facility with approximately 78,000 square feet of meeting space, a luxury
health spa, a fitness center, shops and other facilities necessary for the
operation of a luxury resort.
2. SIGNIFICANT ACCOUNTING POLICIES:
A summary of the Company's significant accounting policies follows:
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Cash and Cash Equivalents
All short-term highly liquid instruments purchased with an original
maturity of three months or less are considered to be cash equivalents.
Resort Inventory and Supplies
Inventory includes operating materials and supplies and is accounted for at
the lower of first-in, first-out cost or market.
Investments
Investments held at December 31, 2001 consist of a U.S. Treasury Security,
bearing interest at 2.2% which matures in April 2002, and a certificate of
deposit, bearing interest at 1.88%, which matures in June 2002. Investments
are held to maturity, and recorded at amortized cost, which approximates
fair market value. Escrowed investments relate to Rental Pool unit owner
deposits for the maintenance reserve fund.
Property, Buildings and Equipment
Property, buildings and equipment are stated at cost. Depreciation is
provided over the estimated useful lives of the assets on a straight-line
basis.
Expenditures for renewals and improvements that significantly add to or
extend the useful life of an asset are capitalized. Expenditures for
repairs and maintenance are charged to expense as incurred. When property,
buildings and equipment are retired or otherwise disposed, the cost of the
assets and related accumulated depreciation amounts are removed from the
accounts, and any resulting gains or losses are reflected in operations.
16
SADDLEBROOK RESORTS, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
Management periodically reviews the potential impairment of property,
buildings and equipment in order to determine its proper carrying value as
of each balance sheet date presented. Based on this review, there were no
adjustments made to the carrying value of operating properties during the
three years ended December 31, 2001.
Deferred Charges
In connection with the Company's refinancing of its debt during 1998,
financing costs in the amount of $597,000 were incurred and capitalized.
These financing costs are being amortized using a method that approximates
the effective interest method over fifteen years, the life of the related
debt outstanding.
Amortization expense for deferred charges amounted to $40,000, $40,000 and
$41,000 for the years ended December 31, 2001, 2000 and 1999, respectively.
Resort Revenues
Resort revenues are recognized as the related service is performed and
includes rental revenues for condominium units owned by third parties
participating in the Rental Pool. If these rental units were owned by the
Company, normal costs associated with ownership such as depreciation, real
estate taxes, maintenance, and other costs would have been incurred.
Instead, resort operating expenses for the years ended December 31, 2001,
2000 and 1999 include rental pool distributions to condominium unit owners
approximating $5,659,000, $6,619,000 and $6,278,000, respectively.
Income Taxes
Effective February 1, 1990, the Company elected S Corporation status for
federal and state income tax purposes. Taxable income and losses are
ultimately passed through to the shareholders and, accordingly, no
provision for income taxes has been made in the accompanying financial
statements. As of December 31, 2001, the Company has approximately $470,000
in tax net operating loss carryforwards, which expire in 2002, available
only to offset future C Corporation taxable income.
Employee Benefit Plans
Effective January 1, 2001, SRI sponsors a defined contribution plan (the
"Plan"), which provides retirement benefits for all eligible employees who
have elected to participate. Employees must fulfill a one year service
requirement to be eligible. The Company currently matches one-half of the
first 2% of an employee's contribution. Company contributions approximated
$72,000 for the year ended December 31, 2001.
Recent Accounting Pronouncements
On October 3, 2001, the Financial Accounting Standards Board ("FASB")
issued FASB Statement No. 144 ("FAS 144"), Accounting for the Impairment or
Disposal of Long-Lived Assets. FAS 144 excludes goodwill from its scope and
therefore, eliminates the requirement to allocate goodwill to long-lived
assets to be tested for impairment. The provisions of FAS 144 will be
effective for fiscal years beginning after December 15, 2001. The Company
has not completed the process of evaluating the impact that will result
from adopting FAS 144; however, currently does not believe its long-lived
assets are impaired.
17
SADDLEBROOK RESORTS, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
Reclassifications
Certain prior year balances have been reclassified to conform with current
year presentation.
3. COMMON STOCK:
At December 31, 2001 and 2000, the Company had 50,000 shares of voting
common stock and 50,000 shares of nonvoting common stock authorized, issued
and outstanding. The par value of the voting and nonvoting common stock was
$1.00 at December 31, 2001 and 2000.
4. ESCROWED CASH:
Escrowed cash, restricted as to use, is comprised of the following:
DECEMBER 31,
2001 2000
Rental pool unit owner deposits for maintenance reserve fund
held in a bank account which bears an interest rate of 3.6% $ 195,300 $ 282,562
Security deposits held on long-term rentals 22,250 16,350
--------- ---------
$ 217,550 $ 298,912
========= =========
5. PROPERTY, BUILDINGS AND EQUIPMENT, NET:
Property, buildings and equipment, consist of the following:
ESTIMATED
USEFUL DECEMBER 31,
LIVES 2001 2000
Land and land improvements -- $ 4,412,746 $ 4,412,746
Buildings and recreational facilities 10-40 23,792,806 23,689,312
Machinery and equipment 2-15 12,480,733 11,848,663
Construction in progress -- 1,191,540 90,715
------------ ------------
41,877,825 40,041,436
Accumulated depreciation (16,903,559) (15,205,410)
------------ ------------
$ 24,974,266 $ 24,836,026
============ ============
Substantially all property, buildings and equipment are mortgaged, pledged
or otherwise subject to lien under loan agreements (Note 7).
Depreciation expense amounted to $2,047,000, $2,017,000 and $1,715,000 for
the years ended December 31, 2001, 2000 and 1999, respectively.
18
SADDLEBROOK RESORTS, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
The Company leases equipment under an agreement which is classified as a
capital lease. The equipment and obligations related to the lease are
recorded at the present value of the minimum lease payments. During 2001
and 2000, the Company recorded approximately $9,000 and $7,000,
respectively, of interest expense related to the lease. Depreciation is
computed on a straight-line basis over the estimated useful life of the
asset. Total depreciation expense on the asset under lease was
approximately $24,000 during 2001 and 2000. Future minimum lease payments
under this lease are payable as follows:
2002 $ 30,792
2003 23,094
2004 and thereafter --
--------------
53,886
Less: amount representing interest (4,943)
--------------
$ 48,943
==============
The Company also leases equipment under operating leases. Some of the
leases contain annual renewal options after the initial lease term. Lease
expense amounted to $269,000, $228,000 and $319,000 for the years ended
December 31, 2001, 2000 and 1999, respectively. Future minimum lease
payments under noncancelable operating leases with initial lease terms in
excess of one year are as follows:
2002 $ 218,148
2003 210,717
2004 138,532
2005 110,940
2006 and thereafter 138,675
---------------
$ 817,012
===============
6. ACCRUED EXPENSES AND OTHER LIABILITIES
Accrued expenses and other liabilities consist of the following:
December 31,
2001 2000
Accrued payroll and related expenses $ 836,277 $1,060,383
Accrued taxes 35,446 38,250
Accrued insurance 513,812 864,164
Other accrued expenses and liabilities 791,427 593,041
---------- ----------
$2,176,962 $2,555,838
========== ==========
19
SADDLEBROOK RESORTS, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
7. NOTES PAYABLE:
Notes payable consists of the following:
DECEMBER 31,
2001 2000
Note payable to lender, 15 year term (maturity date of
July 1, 2013), 7.70% fixed interest rate, monthly ratable
principal and interest payments, secured by all current
and subsequently acquired real and personal property $ 22,294,392 $ 23,456,539
Capital lease obligation 48,943 73,066
Less current portion (1,281,697) (1,186,270)
------------- -------------
$ 21,061,638 $ 22,343,335
============= =============
Under the terms of the agreement, the Company is required to meet debt
service coverage ratios as defined. The Company was in compliance at
December 31, 2001. The Company has the ability to obtain an additional $5
million from the same lender under the terms of the agreement.
Principal maturities of the note payable are due as follows: 2003 -
$1,377,062; 2004 - $1,463,058; 2005 - $1,579,776; 2006 and thereafter -
$16,641,740.
8. RESORT REVENUES AND OPERATING COSTS OF RESORT:
Resort revenues and operating costs of resort are comprised of the
following:
FOR THE YEAR ENDED DECEMBER 31,
2001 2000 1999
Resort Revenues
Room revenue subject to rental pool agreement $ 14,116,593 $ 16,444,206 $ 15,555,374
Food and beverage 13,559,984 15,683,605 14,764,053
Resort facilities and other 18,508,255 20,653,954 19,384,106
------------ ------------ ------------
$ 46,184,832 $ 52,781,765 $ 49,703,533
============ ============ ============
Operating Costs of Resort
Room expense subject to rental pool agreement $ 5,659,162 $ 6,618,602 $ 6,278,003
Food and beverage 10,606,085 10,383,120 10,239,266
Resort facilities and other 14,824,732 18,765,009 18,172,160
------------ ------------ ------------
$ 31,089,979 $ 35,766,731 $ 34,689,429
============ ============ ============
20
SADDLEBROOK RESORTS, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
9. RELATED PARTY TRANSACTIONS
Amounts due from related parties are comprised of the following:
December 31,
2001 2000
Saddlebrook Resort Condominium Association, Inc. $111,075 $ 94,931
Saddlebrook International Tennis, Inc. 576,305 --
Saddlebrook Realty, Inc. -- 40,548
Other 162,572 23,927
-------- --------
$849,952 $159,406
======== ========
Amounts due to related parties are comprised of the following:
2001 2000
Saddlebrook International Tennis, Inc. $ -- $427,377
Saddlebrook Holdings, Inc. 74,936 156,301
Saddlebrook Realty, Inc. 6,388 --
Other 123,958 62,670
-------- --------
$205,282 $646,348
======== ========
The Company reimburses SHI, the Company's parent, for intercompany charges
and cash transfers. At December 31, 2001 and 2000, amounts payable to SHI
were approximately $75,000 and $156,000, respectively.
Saddlebrook International Tennis, Inc. ("SIT") is a tennis training
facility and preparatory school operating at the resort. SIT is solely
owned by the Company's parent. The Company charges SIT various amounts for
services provided to SIT guests, which amounted to approximately
$2,527,000, $2,363,000 and $2,142,000 for the years ended December 31,
2001, 2000 and 1999, respectively. In addition, the Company was reimbursed
for actual expenses and other costs incurred on behalf of SIT. At December
31, 2001 and 2000, the amounts due from/to SIT were approximately $576,000
and $427,000, respectively.
Saddlebrook Investments, Inc. is a broker/dealer for sales of Saddlebrook
Resort condominium units. Saddlebrook Realty, Inc. is a broker/dealer for
the sale of other general real estate. These companies are solely owned by
the majority shareholder of the Company's parent. At December 31, 2001 and
2000, a net payable of approximately $6,300 and a net receivable of
approximately $41,000, respectively, resulted from net intercompany charges
and cash transfer within these entities.
21
SADDLEBROOK RESORTS, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
The Company performs certain accounting and property management activities
on behalf of the Saddlebrook Resort Condominium Association (the
"Association") and is reimbursed for expenses paid on behalf of the
Association. Expenses paid on behalf of and services provided to the
Association amounted to approximately $1,070,000, $1,050,000 and $1,012,000
for the years ended December 31, 2001, 2000 and 1999, respectively. At
December 31, 2001 and 2000, a net receivable of approximately $111,000 and
$95,000 respectively, was due from the Association.
Amounts from affiliated companies also consists of other miscellaneous
receivables and employee advances owed the Company of approximately
$162,000 and $23,000 at December 31, 2001 and 2000, respectively.
10. COMMITMENTS AND CONTINGENCIES
The Company is involved in litigation in the ordinary course of business.
In the opinion of management, these matters are adequately covered by
insurance or indemnification from other third parties and/or the effect, if
any, of these claims is not material to the reported financial condition or
results of operations of the Company as of December 31, 2001.
Insurance pool
The Company has pooled its risks with other resorts by forming an insurance
purchasing group in which they retain an equity interest and to which they
pay insurance premiums. The Company's ownership is less than 9% and all
amounts contributed as capital ($122,950 as of December 31, 2001) are
reflected as prepaid expenses and other assets in the accompanying balance
sheets. The Company's investment approximates the proportionate net book
value of the insurance company as of December 31, 2001. The Company may
withdraw from the risk pool annually at any renewal date.
11. INSURANCE CLAIMS
During 2001, the Company incurred fire damages to two separate buildings at
the resort which were adequately covered by insurance from third parties.
The Company has received approximately $1,939,000 of insurance proceeds as
of December 31, 2001.
22
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of Saddlebrook
Resorts, Inc., as Operators under the Saddlebrook
Rental Pool and Agency Appointment Agreement
In our opinion, the accompanying balance sheets and the related statements of
operations and of changes in participants' fund balance present fairly, in all
material respects, the financial position of the Saddlebrook Rental Pool
Operation (funds created for participants who have entered into a rental pool
agreement as explained in Note 1) at December 31, 2001 and 2000, and the results
of its operations and the changes in participants' fund balance for each of the
three years in the period ended December 31, 2001 in conformity with accounting
principles generally accepted in the United States of America. These financial
statements are the responsibility of the rental pool's operators; 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.
/s/ PricewaterhouseCoopers LLP
Tampa, Florida
March 15, 2002
23
SADDLEBROOK RENTAL POOL OPERATION
BALANCE SHEETS
DISTRIBUTION FUND
DECEMBER 31,
2001 2000
ASSETS
Receivable from Saddlebrook Resorts, Inc. $ 686,491 $ 1,551,111
---------- -----------
LIABILITIES AND PARTICIPANTS' FUND BALANCE
Due to participants for rental pool distribution $ 571,194 $ 1,290,258
Due to maintenance escrow fund 115,297 260,853
Participants' fund balance -- --
---------- -----------
$ 686,491 $ 1,551,111
========== ===========
MAINTENANCE ESCROW FUND
DECEMBER 31,
2001 2000
ASSETS
Cash in bank $ 195,300 $ 282,562
Investments 989 592,478
Receivables:
Distribution fund 115,297 260,853
Interest 4 17,774
Owner payments 234,055 --
Prepaid expenses and other assets 2,119,489 1,620,786
Linen inventory 299,879 250,360
---------- -----------
$2,965,013 $ 3,024,813
========== ===========
LIABILITIES AND PARTICIPANTS' FUND BALANCE
Due to Saddlebrook Resorts, Inc. $ 500,869 $ 155,299
Accounts payable 3,758 39,136
Participants' fund balance 2,460,386 2,830,378
---------- -----------
$2,965,013 $ 3,024,813
========== ===========
The accompanying notes are an integral part of these financial statements.
24
SADDLEBROOK RENTAL POOL OPERATION
STATEMENTS OF OPERATIONS
DISTRIBUTION FUND
YEAR ENDED
DECEMBER 31,
2001 2000 1999
Rental pool revenues $ 14,116,592 $ 16,444,206 $ 15,555,374
------------ ------------ ------------
Deductions:
Marketing fee 1,058,745 1,233,316 1,166,653
Management fee 1,764,574 2,055,526 1,944,422
Travel agent commissions 715,911 851,527 746,589
Credit card expense 169,624 205,612 197,293
Bad debt expense and other (3,197) -- 33,000
------------ ------------ ------------
3,705,657 4,345,981 4,087,957
============ ============ ============
Net rental income 10,410,935 12,098,225 11,467,417
Operator share of net rental income (4,684,921) (5,444,201) (5,160,338)
Other revenues (expenses):
Complimentary room revenues 105,489 103,144 103,488
Minor repairs and replacements (172,311) (138,566) (132,564)
------------ ------------ ------------
Amounts available for distribution to
participants and maintenance
escrow fund $ 5,659,192 $ 6,618,602 $ 6,278,003
============ ============ ============
The accompanying notes are an integral part of these financial statements.
25
SADDLEBROOK RENTAL POOL OPERATION
STATEMENTS OF CHANGES IN PARTICIPANTS' FUND BALANCE
DISTRIBUTION FUND
YEAR ENDED
DECEMBER 31,
2001 2000 1999
Balance, beginning of period $ -- $ -- $ --
Additions:
Amounts available for distribution 5,659, 192 6,618,602 6,278,003
Reductions:
Amounts withheld for maintenance
escrow fund (974,271) (1,174,401) (1,117,665)
Amounts accrued or paid to participants (4,684,921) (5,444,201) (5,160,338)
------------ ------------ ------------
Balance, end of period $ -- $ -- $ --
============ ============ ============
MAINTENANCE ESCROW FUND
YEAR ENDED
DECEMBER 31,
2001 2000 1999
Balance, beginning of period $ 2,830,378 $ 1,719,802 $ 2,440,102
Additions:
Amount withheld from distribution fund 974,271 1,174,401 1,117,665
Unit owner payments 938,236 1,393,582 288,909
Interest earned 23,044 57,273 77,792
Reductions:
Unit renovations (1,654,621) (904,795) (1,690,746)
Refunds of excess amounts in escrow accounts (76,690) (118,608) (209,874)
Maintenance charges (498,229) (421,461) (217,416)
Linen amortization (76,003) (69,816) (86,630)
------------ ------------ ------------
Balance, end of period $ 2,460,386 $ 2,830,378 $ 1,719,802
============ ============ ============
The accompanying notes are an integral part of these financial statements.
26
SADDLEBROOK RENTAL POOL OPERATION
NOTES TO FINANCIAL STATEMENTS
1. RENTAL POOL OPERATIONS AND RENTAL POOL AGREEMENT:
Condominium units are provided as rental (hotel) accommodations by
their owners under the Rental Pool and Agency Appointment Agreement
(the "Agreement") with Saddlebrook Resorts, Inc. (collectively, the
"Rental Pool"). Saddlebrook Resorts, Inc. ("Saddlebrook") acts as
operator of the Rental Pool, which provides for the distribution of a
percentage of net rental income, as defined, to the owners.
The Saddlebrook Rental Pool Operation consists of two funds, the Rental
Pool Income Distribution Fund ("Distribution Fund") and the Maintenance
and Furniture Replacement Escrow Fund ("Maintenance Escrow Fund"). The
operations of the Distribution Fund reflect the earnings of the Rental
Pool. The Distribution Fund balance sheets reflect amounts due from
Saddlebrook for the rental pool distribution payable to participants
and amounts due to the Maintenance Escrow Fund. The amounts due from
Saddlebrook are required to be distributed no later than forty-five
days following the end of each calendar quarter. The Maintenance Escrow
Fund reflects the accounting for escrowed assets used to maintain unit
interiors and replace furniture as it becomes necessary.
Rental pool participants and Saddlebrook share rental revenues
according to the provisions of the Agreement. Net Rental Income shared
consists of rentals received less a marketing surcharge of 7.5%, a
12.5% management fee, travel agent commissions, credit card expense and
provision for bad debts, if warranted. Saddlebrook receives 45% of Net
Rental Income as operator of the Rental Pool. The remaining 55% of Net
Rental Income after adjustments for complimentary room revenues (ten
percent of the normal unit rental price paid by Saddlebrook for
promotional use of the unit) and certain minor repair and replacement
charges is available for distribution to the participants and
maintenance escrow fund based upon each participants' respective
participation factor (computed using the value of a furnished unit and
the number of days it was available to the pool). Quarterly, 45% of Net
Rental Income is distributed to participants, and 10%, as adjusted for
complimentary room revenues and minor interior maintenance and
replacement charges, is deposited in an escrow account until a maximum
of 20% of the set value of the individual owner's furniture package has
been accumulated. Excess escrow balances are refunded to participants.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of accounting
The accounting records of the funds are maintained on the accrual basis
of accounting.
Investments
Investments consist of a U.S. Treasury Security which bears interest at
2.2%, with a maturity date of April 2002. At December 31, 2001 and
2000, investments of $989 and $293,652, respectively, mature in one
year or less.
Income taxes
No federal or state taxes have been reflected in the accompanying
financial statements as the tax effect of fund activities accrues to
the rental pool participants and operator.
27
INDEX TO EXHIBITS
Number and Description of Exhibit
3.1 Articles of Incorporation of Saddlebrook Resorts, Inc., a Florida
corporation (incorporated by reference to Exhibit A*).
3.2 Corporate By-laws of Saddlebrook Resorts, Inc. (incorporated by
reference to Exhibit B*).
4. Declaration of Condominium, together with the following: (1) Articles
of Incorporation of the Saddlebrook Association of Condominium Owners,
Inc. a Florida non-profit corporation; (2) By-laws of the Saddlebrook
Association of Condominium Owners, Inc., and (3) Rules and Regulations
of the Saddlebrook Association of Condominium Owners, Inc.
(incorporated by reference to Exhibit C*).
10.1 Management Contract between Saddlebrook Resorts, Inc. and the
Saddlebrook Association of Condominium Owners, Inc. (incorporated by
reference to Exhibit C*).
10.2 Saddlebrook Rental Pool and Agency Appointment Agreement.
10.3 Saddlebrook Rental Management Agency Employment (incorporated by
reference to Exhibit E*).
10.4 Form of Purchase Agreement (incorporated by reference to Exhibit H*).
10.5 Form of Deed (incorporated by reference to Exhibit I*).
10.6 Form of Bill of Sale (incorporated by reference to Exhibit J*).
28. Interest Being Registered. Pages 21 and 22 of the Post-Effective
Amendment No. 9 to Registration Statement on Form S-1 No. 2-65481 filed
by the Registrant on March 25, 1986.
(*) Identification of exhibit incorporated by reference from the
Registration Statement No. 2-65481 previously filed by Registrant,
effective December 28, 1979.
28