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1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 year ended December 31, 1996
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 the 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 31
Page 1 of 38
2
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 on November 14,
1988 for approximately $24,116,000. 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 14, 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.
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, 1996, there were approximately 810 persons employed by the
Registrant.
- 2 -
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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 has been 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 condominiums which were sold or
are for sale to outside parties of which there were 545 rental units
participating in a rental pooling program at December 31, 1996 (see Exhibit 28 -
Interest Being Registered of this Form 10-K, which is incorporated herein by
reference). As of December 31, 1996, there were 20 condominiums owned by the
Registrant.
In addition, the resort facilities include a 117,000 square foot convention
facility with approximately 60,000 square feet of meeting space, two 18-hole
golf courses, 45 tennis courts, a luxury health spa, three swimming pools, three
restaurants, a fitness center, shops and other facilities necessary for the
operation of a resort.
Item 3. Legal Proceedings
On May 12, 1989, the Circuit Court of the Sixth Judicial Circuit in and for
Pasco County, Florida, in the lawsuit, James H. Porter and Martha Porter,
Trustees, et al v. Saddlebrook Resorts, Inc. and the County of Pasco, Florida,
Case No. 83-1860, entered a judgment against the Registrant in the amount of
$8,082,000 relating to damages to adjacent property for surface water effects.
In addition, an injunction was entered to remediate damages relating thereto.
On October 14, 1989, the Registrant and Pittway Corporation entered into an
agreement, and on July 16, 1993 an amended agreement, to split equally the costs
of the defense of the litigation, the ultimate judgment and the mandated
remedial work. The agreements provide for Pittway Corporation to make
subordinated loans to the Registrant, if required, to enable the Registrant to
pay for its half of these costs (see Item 1. Business of this Form 10-K, which
is incorporated herein by reference).
On March 18, 1992, the Florida Second District Court of Appeal issued an opinion
reversing and vacating the jury verdict and judgment against the Registrant and
ordering a new trial due to the false testimony of plaintiffs' expert
hydrologist. On December 22, 1993, the Registrant filed a motion for summary
judgment in the trial court on grounds that the findings in its favor by an
administrative law judge in a related proceeding bar further litigation of this
matter. An order granting the summary judgment and dismissing the action was
entered on January 7, 1995. On August 16, 1996, the Florida Second District
Court of Appeal filed an opinion affirming, in part, and reversing, in part, the
summary judgment. On November 19, 1996, the Registrant filed a motion with the
trial court to determine the issues that remain for retrial. Oral argument is
scheduled for April 4, 1997. Management currently believes that the Registrant's
position in further litigation would be meritorious.
The Registrant is involved in other 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.
- 3 -
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Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
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 the security is real estate, no dividends have been paid or
will be paid.
Item 6. Selected Financial Data
Year ended December 31,
----------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Operating revenues $37,309,000 $35,625,000 $33,550,000 $30,391,000 $28,208,000
Net income before taxes 1,740,000 1,797,000 2,079,000 703,000 616,000
Total assets 29,519,000 29,157,000 27,557,000 25,057,000 26,688,000
Notes payable 19,567,000 18,764,000 17,444,000 17,098,000 20,600,000
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity and Capital Resources
Construction of the resort facilities was substantially complete as of December
31, 1982. During the fiscal period ended December 31, 1996, the Registrant
constructed a new fitness center and commenced an upgrade of the previous
fitness center area into a luxury spa at a total projected cost of $1,100,000.
During the fiscal period ended December 31, 1995, the Registrant completed
several capital projects for an aggregate cost of approximately $2,277,000.
However, no individual project had a cost in excess of $1,000,000. During the
fiscal period ended December 31, 1994, the Registrant renovated and expanded its
hotel lobby, lobby terrace and Polo Lounge at a cost of approximately
$1,226,000. There were no other major capital additions or improvements during
the fiscal years ended December 31, 1996, 1995 and 1994.
Other than the completion of the aforementioned spa, 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 financing within the
terms of the Registrant's
- 4 -
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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
debt agreement (see Note 6 - Notes Payable of the Notes to the Financial
Statements in Item 8 of this Form 10-K, which is incorporated herein by
reference).
Management is not aware of any environmental matters other than the issue in
Item 3. Legal Proceedings of this Form 10-K, which is incorporated herein by
reference. 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, 1996.
Results of Operations
Revenues for the fiscal years ended December 31, 1996, 1995 and 1994 were
comprised of the following areas of operation:
Year ended December 31,
----------------------------------------------
1996 1995 1994
---- ---- ----
Hotel revenues 49% 50% 50%
Merchandise sales 36 36 36
Club fees 15 13 14
Other income - 1 -
--- --- ---
100% 100% 100%
=== === ===
Total revenues increased 5% for the fiscal year ended December 31, 1996 when
compared with the previous year. This improvement was a result of increases in
occupied unit nights and number of guests who stayed at the resort, which were
offset slightly by a decrease in the average daily rate, for 1996 when compared
to the prior fiscal period. These increases are attributed to the recent
remodeling and upgrading of the resort property that is discussed above. Total
revenues increased 6% for the fiscal year ended December 31, 1995 when compared
with its previous year. This improvement was a result of an increase in the
average daily rate, which was offset slightly by decreases in occupied unit
nights and number of guests who stayed at the resort, for 1995 when compared to
the prior fiscal period. Projections for occupied unit nights and revenues for
1997 and subsequent fiscal periods are expected to continue this slight growth
trend.
Net income decreased 3% for the fiscal year ended December 31, 1996 when
compared with the previous year. Net income decreased 14% for the fiscal year
ended December 31, 1995 when compared with its previous year. These decreases
were a result of increased depreciation and interest expense related to the
recent capital improvements along with increased general costs of operation.
- 5 -
6
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
The Registrant elected S Corporation status effective February 1, 1990.
Accordingly, the Registrant has subsequently had no income tax expense as the
tax is assessed at the shareholder level (see Note 8 - Income Taxes of the Notes
to the 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 1996, 1995 and 1994.
Saddlebrook Rental Pool Operation
The Saddlebrook Rental Pool Operation (the "Rental Pool") is described in Note 2
- - Significant Accounting Policies of the Notes to the 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 occupancy for fiscal 1996, 1995 and 1994 was 51%, 49% and 50%,
respectively. The average distribution of Net Rental Income per participating
rental unit for fiscal 1996, 1995 and 1994 was $9,881, $9,733 and $9,248,
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 28. An index to the
financial statements is on page 10.
The following financial statement schedule should be read in conjunction with
the aforementioned financial statements. Financial statement schedules not
included in this Form 10-K have been omitted because they are not applicable or
the required information is shown in the financial statements or notes thereto.
Schedule II Valuation and Qualifying Accounts and Reserves Page 30
Item 9. Changes in and Disagreements on Accounting and Financial Disclosure
Not applicable.
- 6 -
7
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: 70 President and Chief Publishing, Inc., Cleveland, OH,
5327 Cobblestone Ct. Executive Officer Vice President and Director,
Wesley Chapel, FL Pittway Corp., Northbrook, IL
Eleanor Dempsey Director, Merchandizing Wife of Thomas Dempsey
5327 Cobblestone Ct. Manager
Wesley Chapel, FL
Richard Boehning Director, Executive Vice General Manager, Doral Hotel
Age: 62 President and General and Country Club, Miami, FL
5017 Pinelake Road Manager
Wesley Chapel, FL
Gregory R. Riehle Director, Vice President Son-in-law of Thomas Dempsey,
Age: 40 and Secretary Attorney, Shumaker, Loop &
30338 Laurelwood Lane Kendrick, Tampa, FL
Wesley Chapel, FL
Maureen Dempsey Director, Vice President Daughter of Thomas Dempsey,
Age: 38 and Assistant Secretary President, Saddlebrook
4947 Mill Pond Road International Tennis, Inc.
Wesley Chapel, FL
Diane L. Riehle Director, Vice President Daughter of Thomas Dempsey,
Age: 36 and Assistant Secretary Regional Sales Manager,
30338 Laurelwood Lane Saddlebrook Resorts, Inc.
Wesley Chapel, FL
Donald L. Allen Vice President and Controller, Kiawah Island,
Age: 57 Treasurer Charleston, SC
1314 Foxwood Drive
Lutz, FL
Robert A. Shaw Assistant Treasurer and Controller, Gulf Shores Plantation,
Age: 40 Controller Gulf Shores, AL, CPA, Price
5404 Saddlebrook Way Waterhouse, Indianapolis, IN
Wesley Chapel, FL
- 7 -
8
Item 11. Executive Compensation
The directors and executive officers of the Registrant as of December 31, 1996
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, 1996 was $903,000. Of
this amount, Thomas Dempsey received $163,000, Richard Boehning received
$257,000 and Gregory Riehle received $101,000. No other director or executive
officer received compensation 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 has no other compensation
plans for directors and executive officers.
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 Thomas L. Dempsey 100.0% 87.0%
Common Maureen Dempsey Trust 6.5% 6.5%
Common Diane Lynn Riehle Trust 6.5% 6.5%
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 Dempsey to each of two family trusts.
Item 13. Certain Relationships and Related Transactions
As of December 31, 1996, present and past executive officers and/or directors of
the Registrant have personally accounted for real estate sales totalling
$2,748,000 since inception of the project. Other relationships and related
transactions are described in Note 7 - Related Party Transactions of the Notes
to the Financial Statements in Item 8 of this Form 10-K, which is incorporated
herein by reference.
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, 1996.
- 8 -
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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: March 12, 1997 /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 March 12, 1997.
/s/ Thomas L. Dempsey /s/ Richard Boehning
---------------------------- -----------------------
Thomas L. Dempsey Richard Boehning
President and Chairman Director and Executive
of the Board Vice 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 Controller
- 9 -
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Saddlebrook Resorts, Inc.
INDEX TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------
PAGE
Financial Statements
- --------------------
SADDLEBROOK RESORTS, INC.
Report of Independent Certified Public Accountants 11
Balance Sheets at December 31, 1996 and 1995 12
Statements of Income for each of the three years in
the period ended December 31, 1996 13
Statements of Changes in Shareholders' Equity for each of
the three years in the period ended December 31, 1996 14
Statements of Cash Flows for each of the three years in the
period ended December 31, 1996 15
Notes to Financial Statements 16-22
SADDLEBROOK RENTAL POOL OPERATION
Report of Independent Certified Public Accountants 23
Balance Sheets at December 31, 1996 and 1995 24
Statements of Operations for each of the three years
in the period ended December 31, 1996 25
Statements of Changes in Participants' Fund Balance
for each of the three years in the period ended
December 31, 1996 26
Notes to Financial Statements 27-28
Financial Statement Schedules
- -----------------------------
Report of Independent Certified Public Accountants on
Financial Statement Schedule 29
Schedule II - Valuation and Qualifying Accounts and Reserves 30
- 10 -
11
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
March 12, 1997
To the Board of Directors and Shareholders of
Saddlebrook Resorts, Inc.
In our opinion, the accompanying balance sheets and the related statements of
income and changes in shareholders' equity and of cash flows present fairly, in
all material respects, the financial position of Saddlebrook Resorts, Inc. (the
"Company") at December 31, 1996 and 1995, and the results of its operations and
its cash flows for each of the three years in the period ended December 31,
1996, in conformity with generally accepted accounting principles. 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
generally accepted auditing standards 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 the opinion expressed
above.
PRICE WATERHOUSE LLP
Tampa, Florida
- 11 -
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Saddlebrook Resorts, Inc.
BALANCE SHEETS
- -------------------------------------------------------------------------------------------------------------------
DECEMBER 31,
1996 1995
ASSETS
Current assets:
Cash and cash equivalents $ 418,197 $ 40,702
Escrowed cash 216,687 106,096
Short-term escrowed investments 99,796 399,635
Trade accounts receivable, net of allowances for
doubtful accounts of $96,548 and $122,976 3,456,189 3,349,779
Due from related parties 276,284 114,004
Resort inventory and supplies 1,459,095 1,472,689
Prepaid expenses and other assets 375,209 526,424
---------------- -----------------
Total current assets 6,301,457 6,009,329
Long-term escrowed investments 299,431 299,500
Property, buildings and equipment, net 22,720,248 22,580,998
Deferred charges, net of accumulated amortization of
$334,736 and $212,470 197,867 266,702
---------------- -----------------
$ 29,519,003 $ 29,156,529
================ =================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of notes payable $ 950,000 $ 1,486,722
Accounts payable 597,980 1,325,265
Accrued rental distribution 1,443,512 1,037,865
Accrued payroll and related expenses 908,053 743,077
Accrued interest 146,207 141,491
Accrued taxes 83,372 43,178
Guest deposits 1,090,718 798,444
Escrowed deposits 615,914 805,231
Accrued expenses and other liabilities 1,023,305 676,566
Due to related parties 551,070 1,923,461
---------------- -----------------
Total current liabilities 7,410,131 8,981,300
Notes payable due after one year 18,616,920 17,276,920
---------------- -----------------
Total liabilities 26,027,051 26,258,220
---------------- -----------------
Commitments and contingencies (Note 9)
Shareholders' equity:
Common stock, $1.00 par value, 50,000 voting and
50,000 nonvoting shares authorized, issued and outstanding 100,000 100,000
Additional paid-in capital 1,013,127 1,013,127
Accumulated earnings 2,378,825 1,785,182
---------------- -----------------
Total shareholders' equity 3,491,952 2,898,309
---------------- -----------------
$ 29,519,003 $ 29,156,529
================ =================
The accompanying Notes to Financial Statements are
an integral part of these financial statements.
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Saddlebrook Resorts, Inc.
STATEMENTS OF INCOME
- -------------------------------------------------------------------------------------------------------------------
YEAR ENDED
DECEMBER 31,
1996 1995 1994
Resort revenues $ 37,309,372 $ 35,625,389 $ 33,549,984
---------------- ---------------- -----------------
Costs and expenses:
Operating costs of resort 25,683,947 24,342,402 22,811,961
Sales and marketing 3,172,772 3,089,655 2,898,398
General and administrative 3,548,758 3,593,224 3,430,035
Depreciation and amortization 1,392,180 1,326,441 1,109,849
Interest 1,771,766 1,476,569 1,221,190
---------------- ---------------- -----------------
Total costs and expenses 35,569,423 33,828,291 31,471,433
---------------- ---------------- -----------------
Net income $ 1,739,949 $ 1,797,098 $ 2,078,551
================ ================ =================
The accompanying Notes to Financial Statements are
an integral part of these financial statements.
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Saddlebrook Resorts, Inc.
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
- -------------------------------------------------------------------------------------------------------------------
TOTAL
COMMON ADDITIONAL ACCUMULATED SHAREHOLDERS'
STOCK PAID-IN CAPITAL EARNINGS EQUITY
Balance at December 31, 1993 $ 500 $ 1,112,627 $ 783,189 $ 1,896,316
Net income for the year 2,078,551 2,078,551
Distribution to shareholder (1,168,698) (1,168,698)
Common stock
recapitalization (Note 1) 99,500 (99,500)
--------------- --------------- --------------- ---------------
Balance at December 31, 1994 100,000 1,013,127 1,693,042 2,806,169
Net income for the year 1,797,098 1,797,098
Distributions to shareholders (1,704,958) (1,704,958)
--------------- --------------- --------------- ---------------
Balance at December 31, 1995 100,000 1,013,127 1,785,182 2,898,309
Net income for the year 1,739,949 1,739,949
Distributions to shareholders (1,146,306) (1,146,306)
--------------- --------------- --------------- ---------------
Balance at December 31, 1996 $ 100,000 $ 1,013,127 $ 2,378,825 $ 3,491,952
=============== =============== =============== ===============
The accompanying Notes to Financial Statements are an integral
part of these financial statements.
- 14 -
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Saddlebrook Resorts, Inc.
STATEMENTS OF CASH FLOWS
- -------------------------------------------------------------------------------------------------------------------
YEAR ENDED
DECEMBER 31,
1996 1995 1994
Cash flows from operating activities:
Net income $ 1,739,949 $ 1,797,098 $ 2,078,551
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,392,180 1,326,441 1,109,849
Loss (gain) on disposal of property, buildings
and equipment 39,036 7,596 (600)
Provision for doubtful accounts 42,900 33,000 21,700
Change in assets and liabilities:
(Increase) decrease in:
Escrowed cash (110,591) 13,914 150,057
Escrowed investments 299,908 82,920 (192,094)
Trade accounts receivable (149,310) (1,068,148) (246,195)
Due from related parties (162,280) 3,823 73,375
Resort inventory and supplies 13,594 (145,205) (7,046)
Prepaid expenses and other assets 151,215 (80,624) (79,332)
Increase (decrease) in:
Accounts payable (727,285) 327,361 562,567
Accrued rental distribution 405,647 (227,991) 161,429
Guest deposits 292,274 73,683 88,938
Escrowed deposits (189,317) (96,834) 42,037
Accrued expenses and other liabilities 556,625 (487,368) 82,875
Due to related parties (1,372,391) 599,362 (44,341)
--------------- --------------- ---------------
Net cash provided by operating
activities 2,222,154 2,159,028 3,801,770
--------------- --------------- ---------------
Cash flows from investing activities:
Proceeds from sale of equipment 2,581 4,042 8,327
Capital expenditures (1,450,781) (2,277,326) (3,011,737)
--------------- --------------- ---------------
Net cash used in investing activities (1,448,200) (2,273,284) (3,003,410)
--------------- --------------- ---------------
Cash flows from financing activities:
Proceeds from notes payable 2,290,000 2,926,284 1,415,676
Payments on notes payable (1,486,722) (1,606,711) (1,069,165)
Distribution to shareholders (1,146,306) (1,704,958) (818,698)
Finance costs (53,431) (55,159) (33,543)
--------------- --------------- ---------------
Net cash used in financing activities (396,459) (440,544) (505,730)
--------------- --------------- ---------------
Net increase (decrease) in cash and cash equivalents 377,495 (554,800) 292,630
Cash and cash equivalents, beginning of year 40,702 595,502 302,872
--------------- --------------- ---------------
Cash and cash equivalents, end of year $ 418,197 $ 40,702 $ 595,502
=============== =============== ===============
SUPPLEMENTAL DISCLOSURE:
Cash paid for interest $ 1,767,050 $ 1,455,764 $ 1,196,447
=============== =============== ===============
The accompanying Notes to Financial Statements are
an integral part of these financial statements.
- 15 -
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Saddlebrook Resorts, Inc.
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
1. THE COMPANY:
Saddlebrook Resorts, Inc. (the "Company") 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. In addition, the resort facilities include two 18 hole golf
courses, 45 tennis courts, three swimming pools, three restaurants, a
117,000 square foot convention facility with approximately 60,000 square
feet of meeting space, a luxury health spa, a fitness center, shops and
other facilities necessary for the operation of a luxury resort. The
Company was purchased by its current majority shareholder in 1988.
In December 1994, the Company's sole shareholder approved an amendment to
the Company's Articles of Incorporation increasing the amount of
authorized shares of common stock to 50,000 voting and 50,000 nonvoting
shares from 25,000 shares. Each share of voting stock outstanding was
exchanged for 100 shares of voting and 100 shares of nonvoting stock. Par
value of the stock remained unchanged at $1 per share.
Effective October 1, 1995, the Company's sole shareholder gifted 6,500
nonvoting shares to each of two family trusts. The ownership percentages
are 87%, 6.5% and 6.5% for the controlling shareholder and the two trusts,
respectively.
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 generally
accepted accounting principles 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 equivalents
All highly liquid debt instruments purchased with an original maturity of
3 months or less are considered to be cash equivalents.
Resort inventories and supplies
Inventories include operating materials and supplies and are accounted for
at the lower of first-in, first-out cost or market.
- 16 -
17
Saddlebrook Resorts, Inc.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Investments
Investments of the Company, which are held to maturity, are recorded at
amortized cost, which approximates fair market value.
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. With the retirement or other disposition of property, buildings
and equipment, 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.
Management periodically reviews the potential impairment of property,
buildings and equipment in order to determine the proper carrying value of
property, buildings and equipment as of each balance sheet date presented.
Deferred charges
In connection with the Company's refinancing of its debt during 1993 and
further consolidation of debt through 1996, costs in the amount of
$532,603 have been incurred and capitalized. These debt issuance costs are
being amortized using a method that approximates the interest method over
5 years, the life of the related debt outstanding.
Amortization expense for deferred charges amounted to $122,266, $92,531
and $80,891 for the years ended December 31, 1996, 1995 and 1994,
respectively.
Rental pool operations
Resort revenues include 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, 1996, 1995 and 1994 include rental pool distributions
approximating $5,385,000, $5,285,000 and $4,985,000, respectively.
Reclassifications
Certain reclassifications have been made to the prior year financial
statements to conform with current year presentation.
- 17 -
18
Saddlebrook Resorts, Inc.
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
3. ESCROWED CASH:
Escrowed cash, restricted as to use, at December 31 is comprised of the
following:
1996 1995
Rental pool unit owner deposits for maintenance
reserve fund held in bank accounts which bear an
interest rate of 2.20% (2.18% in 1995) $ 194,287 $ 76,314
Security deposits held on long-term rentals 22,400 29,782
---------- -----------
$ 216,687 $ 106,096
========== ===========
4. ESCROWED INVESTMENTS:
Escrowed investments at December 31 are comprised of the following:
1996 1995
Certificates of deposit $ - $ 100,000
U.S. Treasury Securities 399,227 599,135
---------- ------------
399,227 699,135
Less current portion (99,796) (399,635)
---------- ------------
$ 299,431 $ 299,500
========== ============
Escrowed investments relate to rental pool unit owner deposits for the
maintenance reserve fund which bear interest at rates ranging from 5.86%
to 7.18%. Long term portions of these investments mature in 1998 through
2001.
5. PROPERTY, BUILDINGS AND EQUIPMENT:
Property, buildings and equipment at December 31 consist of the following:
ESTIMATED
USEFUL
1996 1995 LIVES
Land and land improvements $ 4,591,278 $ 4,478,982
Buildings and recreational
facilities 19,563,084 18,862,973 10-40
Machinery and equipment 7,600,876 7,587,232 2-15
Construction in progress 513,906 300,308
---------------- ----------------
32,269,144 31,229,495
Less accumulated depreciation (9,548,896) (8,648,497)
---------------- ----------------
$ 22,720,248 $ 22,580,998
================ ================
- 18 -
19
Saddlebrook Resorts, Inc.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Substantially all property, buildings and equipment are mortgaged, pledged
or otherwise subject to lien under loan agreements of the Company and
certain related parties (Notes 6 and 9).
Depreciation expense amounted to $1,269,914, $1,233,911 and $1,028,958 for
the years ended December 31, 1996, 1995 and 1994, respectively.
The Company leases certain equipment under operating leases. Some of the
leases contain annual renewal options after the initial lease term. Lease
expense amounted to $229,521, $297,545 and $371,441 for the years ended
December 31, 1996, 1995 and 1994, respectively. Future minimum lease
payments for noncancelable operating leases with initial lease terms in
excess of one year approximate:
1997 $ 83,983
1998 4,956
1999 826
2000 and thereafter -
---------
$ 89,765
=========
6. NOTES PAYABLE:
Notes payable at December 31 consist of the following:
1996 1995
Note payable to bank secured by all real and personal property and
subsequently acquired real and personal property, guaranteed by
Saddlebrook International Tennis, Inc. ("SIT") and majority shareholder,
at 8.875% (8.75% in 1995), principal due in annual installments of
$950,000 through 1997, balance due in 1998 $ 19,566,920 $ 18,226,920
Line of credit payable to bank, secured by all real and personal property
and subsequently acquired real and personal property, guaranteed by SIT
and majority shareholder, at prime + 1% (9.5% at December 31, 1995),
principal paid in 1996 - 500,000
Notes payable under various capital leases - 36,722
------------- -------------
19,566,920 18,763,642
Less current portion (950,000) (1,486,722)
------------- -------------
$ 18,616,920 $ 17,276,920
============= =============
The $19,566,920 note payable agreement requires, among other things, that
the Company and its affiliates on a consolidated basis maintain tangible
net worth, as defined, of $1,500,000 as of December 31, 1996 and a debt
service coverage ratio of 125% over the term of the loan. The agreement
also contains restrictive covenants regarding lease agreements, assignment
of contracts, capital expenditures, and other indebtedness.
- 19 -
20
Saddlebrook Resorts, Inc.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Principal maturities of notes payable are due as follows: 1997 -
$950,000 and 1998 - $18,616,920.
Accrued interest outstanding on the Company's notes payable was $146,207
and $141,491 at December 31, 1996 and 1995, respectively.
7. RELATED PARTY TRANSACTIONS:
SIT, solely owned by the Company's majority shareholder, is a tennis
academy operating at the resort. The Company is reimbursed for expenses
paid on behalf of SIT. In addition, certain operating expenses are
allocated to SIT which amounted to approximately $1,908,000, $1,557,000
and $1,382,000 for the years ended December 31, 1996, 1995 and 1994,
respectively. As of December 31, 1996, a net receivable of $78,433 was due
from SIT for accounting, management and other services provided, as well
as for operating cash transfer transactions. At December 31, 1995, a net
payable amounting to $1,481,059 was due SIT relating to amounts borrowed
by SIT held by the Company and for other operating cash transfer
transactions (Note 9).
Saddlebrook Investments, Inc. ("SII"), solely owned by the Company's
majority shareholder, is a broker/dealer for sales of Saddlebrook Resort
condominium units. Saddlebrook Realty, Inc., solely owned by the Company's
majority shareholder, is a broker/dealer for the sale of other general
real estate. The Company provided certain accounting, management and other
services to these companies which amounted to $14,400, $13,920 and $13,920
for each of the three years ended December 31, 1996. At December 31, 1996
and 1995, a net payable of approximately $201,000 and $92,400,
respectively, was due these companies for brokerage services and operating
cash transfers provided to the Company.
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 $946,900, $935,686 and $943,648 for the years
ended December 31, 1996, 1995 and 1994, respectively. The Association also
charges the Company certain amounts for condominium assessments. At
December 31, 1996 and 1995, a net receivable of $134,119 and $15,060,
respectively, was due from the Association for accounting, management and
other services rendered.
Dividends declared to the Company's shareholder during 1994 in the amount
of $350,000 were unpaid as of December 31, 1996. This distribution payable
is reflected as a distribution in the Statements of Changes in
Shareholders' Equity and as a payable due to related parties in the
Balance Sheets.
These related party amounts are included in the due from/to related
parties captions in the accompanying Balance Sheets. Due from related
parties also consists of other miscellaneous receivables and employee
advances owed the Company of $63,732 and $98,944 at December 31, 1996 and
1995, respectively.
- 20 -
21
Saddlebrook Resorts, Inc.
NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
8. INCOME TAXES:
Effective February 1, 1990, the Company elected S Corporation status for
federal and state income tax purposes. As of December 31, 1996, the
Company has approximately $502,000 and $470,000 in book and tax net
operating loss carryforwards, respectively, which expire in 2002 available
only to offset future C Corporation taxable income.
9. COMMITMENTS AND CONTINGENCIES:
Litigation
On May 12, 1989, a judgment was entered against the Company in the amount
of $8,082,000 relating to damages to adjacent property owners for surface
water effects as a result of past development. In addition, an injunction
was entered to remediate damages relating thereto.
On March 18, 1992, the Florida Second District Court of Appeal issued an
opinion reversing and vacating the jury verdict and judgment against the
Company and ordered a new trial. On December 7, 1994, the trial court
heard oral argument on the merits of the Company's motion for summary
judgments based on collateral estoppel and ruled in the Company's favor.
On December 23, 1994, the plaintiffs filed a motion seeking clarification
of the court's December 7, 1994 ruling. Thereafter, on January 5, 1995 the
Company filed its response in opposition to that motion. On January 7,
1995 the court entered an order granting summary judgment in favor of the
Company and dismissing the action. Oral argument on said appeal was heard
on February 21, 1996. On August 16, 1996, the appellate court issued its
opinion affirming and reversing, in part, the trial court's grant of
summary judgment to the Company. On November 19, 1996, the Company filed a
motion to determine the issues that remain for retrial. Oral argument for
that motion is scheduled for April 4, 1997. No trial date has been set.
Management currently believes that the Company's position in further
litigation would be meritorious.
The Company is involved in other 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, 1996.
Loan guarantees
The Company is contingently liable for the notes payable to a bank in the
amount of $679,000 maturing in 1998 recorded by SIT, a related party, and
$270,000 maturing in 1998 received by the majority shareholder of the
Company.
- 21 -
22
Saddlebrook Resorts, Inc.
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
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 8%
and all amounts contributed as capital ($122,950 as of December 31, 1996)
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, 1996. The
Company may withdraw from the risk pool at any renewal date (annually).
- 22 -
23
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
March 12, 1997
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, 1996 and 1995, 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, 1996, in conformity with generally
accepted accounting principles. 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 generally accepted auditing
standards 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 the opinion expressed above.
PRICE WATERHOUSE LLP
Tampa, Florida
- 23 -
24
Saddlebrook Rental Pool Operation
BALANCE SHEETS
- -------------------------------------------------------------------------------------------------------------------
DISTRIBUTION FUND
DECEMBER 31,
1996 1995
ASSETS
Receivable from Saddlebrook Resorts, Inc. $ 1,381,418 $ 1,017,332
=============== ===============
LIABILITIES AND PARTICIPANTS' FUND BALANCE
Due to participants for rental pool distribution $ 1,132,612 $ 832,926
Due to maintenance escrow fund 248,806 184,406
Participants' fund balance - -
--------------- ---------------
$ 1,381,418 $ 1,017,332
=============== ===============
MAINTENANCE ESCROW FUND
DECEMBER 31,
1996 1995
ASSETS
Cash in bank $ 194,287 $ 76,314
Investments 399,227 699,135
Receivables:
Distribution fund 248,806 184,406
Interest 5,606 8,633
Prepaid maintenance 335,381 146,932
--------------- ---------------
$ 1,183,307 $ 1,115,420
=============== ===============
LIABILITIES AND PARTICIPANTS' FUND BALANCE
Accounts payable $ 36,998 $ 97,651
Participants' fund balance 1,146,309 1,017,769
--------------- ---------------
$ 1,183,307 $ 1,115,420
=============== ===============
The accompanying Notes to Financial Statements are
an integral part of these financial statements.
- 24 -
25
Saddlebrook Rental Pool Operation
STATEMENTS OF OPERATIONS
- -------------------------------------------------------------------------------------------------------------------
DISTRIBUTION FUND
YEAR ENDED
DECEMBER 31,
1996 1995 1994
Rental pool revenue $ 13,309,993 $ 13,126,672 $ 12,145,192
---------------- ---------------- -----------------
Deductions:
Marketing fee 998,250 984,500 910,890
Management fee 1,663,750 1,640,834 1,518,149
Travel agent commissions 634,791 710,063 457,200
Credit card expense 141,660 123,672 125,878
---------------- ---------------- -----------------
3,438,451 3,459,069 3,012,117
---------------- ---------------- -----------------
Net rental income 9,871,542 9,667,603 9,133,075
Operator share of net rental income (4,442,194) (4,350,421) (4,109,884)
Other revenues (expenses):
Complimentary room revenues 109,961 104,623 92,283
Minor repairs and replacements (154,318) (136,749) (130,793)
---------------- ---------------- -----------------
Amounts available for distribution to
participants and maintenance
escrow fund $ 5,384,991 $ 5,285,056 $ 4,984,681
================ ================ =================
The accompanying Notes to Financial Statements are
an integral part of these financial statements.
- 25 -
26
Saddlebrook Rental Pool Operation
STATEMENTS OF CHANGES IN PARTICIPANTS' FUND BALANCE
- -------------------------------------------------------------------------------------------------------------------
DISTRIBUTION FUND
YEAR ENDED
DECEMBER 31,
1996 1995 1994
Balance, beginning of period $ - $ - $ -
Additions:
Amounts available for distribution 5,384,991 5,285,056 4,984,681
Reductions:
Amounts withheld for maintenance
escrow fund (942,797) (934,635) (874,797)
Amounts accrued or paid to participants (4,442,194) (4,350,421) (4,109,884)
--------------- --------------- ---------------
Balance, end of period $ - $ - $ -
=============== =============== ===============
MAINTENANCE ESCROW FUND
YEAR ENDED
DECEMBER 31,
1996 1995 1994
Balance, beginning of period $ 1,017,769 $ 999,356 $ 1,048,576
Additions:
Amount withheld from distribution fund 942,797 934,635 874,797
Unit upgrade payments 69,773 93,302 119,647
Interest earned 43,744 48,724 29,856
Reductions:
Unit renovations (558,141) (51,577) (360,523)
Refunds of excess amounts in escrow accounts (39,321) (418,770) (448,844)
Maintenance charges (263,948) (499,359) (160,721)
Linen amortization (66,364) (88,542) (103,432)
--------------- --------------- ---------------
Balance, end of period $ 1,146,309 $ 1,017,769 $ 999,356
=============== =============== ===============
The accompanying Notes to Financial Statements are
an integral part of these financial statements.
- 26 -
27
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 certain escrowed assets to be 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 1/2%, a 12 1/2%
management fee, travel agent commissions and credit card expense.
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 existing 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 certificates of deposits and U.S. Treasury
Securities which bear interest at rates ranging from 5.86% to 7.18%
(4.38% to 7.13% for 1995). At December 31, 1996 and 1995, investments of
$99,796 and $399,635, respectively, mature in one year or less.
- 27 -
28
Saddlebrook Rental Pool Operation
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
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.
- 28 -
29
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
March 12, 1997
To the Board of Directors of
Saddlebrook Resorts, Inc.
Our audits of the financial statements referred to in our report dated March 12,
1997 appearing on page 11 also included an audit of the Financial Statement
Schedule listed in Item 8 on page 6 of this Form 10-K. In our opinion, this
Financial Statement Schedule presents fairly, in all material respects, the
information set forth therein when read in conjunction with the related
financial statements.
PRICE WATERHOUSE LLP
Tampa, Florida
- 29 -
30
Saddlebrook Resorts, Inc. Schedule II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
- ------------------------------------------------------------------------------------------
ADDITIONS
BALANCE AT CHARGED BALANCE
BEGINNING TO COSTS AND AT END
OF PERIOD EXPENSES DEDUCTIONS OF PERIOD
YEAR ENDED DECEMBER 31, 1994
Amortization of Debt Issue
Costs $ 39,048 $ 80,891 $ - $ 119,939
YEAR ENDED DECEMBER 31, 1995
Amortization of Debt Issue
Costs $ 119,939 $ 92,531 $ - $ 212,470
YEAR ENDED DECEMBER 31, 1996
Amortization of Debt Issue
Costs $ 212,470 $ 122,266 $ - $ 334,736
-30-
31
INDEX TO EXHIBITS
Sequential
Page Number
-----------
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. 32
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*).
27. Financial Data Schedule (SEC use only). 36
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. 37
* Identification of exhibit incorporated by reference from the Registration
Statement No. 265481 previously filed by Registrant, effective
December 28, 1979.
31