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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, 1998
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
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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.
On June 29, 1998, each share of the Registrant's outstanding capital stock was
exchanged for one share of Saddlebrook Holdings, Inc. ("SHI"). 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, 1998, there were approximately 860 persons employed by the
Registrant. Management's relationship with employees is excellent and there are
no collective bargaining agreements.
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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 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, 1998 (see Exhibit
99.1 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 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, a fitness center, three swimming pools,
three restaurants, 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. (see Item 1. Business of this Form 10-K, which is incorporated
herein by reference).
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Item 3. Legal Proceedings (continued)
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 the
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. On April 1, 1998, the trial court ruled that the Plaintiffs
will be prohibited from introducing evidence on some, but not all, of the
damages sought. A pre-trial hearing is scheduled for April 1, 1999. The matter
should proceed to trial in the latter part of 1999. Management currently
believes that the Registrant's position in further litigation of this matter
will 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.
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 99.1 - 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.
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Item 6. Selected Financial Data
Year ended December 31,
-----------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
Operating revenues $48,395,000 $41,753,000 $37,309,000 $35,625,000 $33,550,000
Net income before
taxes 5,675,000 3,133,000 1,740,000 1,797,000 2,079,000
Total assets 40,956,000 32,707,000 29,519,000 29,157,000 27,557,000
Notes payable 25,530,000 18,687,000 19,567,000 18,764,000 17,444,000
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity and Capital Resources
On June 29, 1998, the Registrant obtained financing from a third-party lender
which replaced its prior debt. The new debt has a fixed annual interest rate of
7.7%, monthly principal and interest payments of approximately $244,000 and
matures on June 30, 2013. The Registrant may obtain additional financing from
the same lender of $5,000,000 provided certain financial covenants are met (see
Note 7 Note Payable of the Notes to Financial Statements in Item 8 of this Form
10-K, which is incorporated herein by reference).
Construction of the resort facilities was substantially complete as of December
31, 1982. During the fiscal period ended December 31, 1998, the Registrant
completed several capital projects for an aggregate cost of approximately
$2,187,000. However, no individual project had a cost in excess of $1,000,000.
During the fiscal periods ended December 31, 1997 and 1996, the Registrant
constructed a new fitness and recreation center and upgraded its previous
fitness center area into a luxury spa at an aggregate cost of $1,410,000. There
were no other major capital additions or improvements during the fiscal years
ended December 31, 1998, 1997 and 1996.
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 provided by the refinancing of the Registrant's debt discussed
above.
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.
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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Management is aware of the issues associated with the programming code in
existing computer systems as the millennium (year 2000) approaches. The
Registrant's systems for property management and financial accounting had been
in use for many years which necessitated an upgrading to the current
technological standards for its industry. Consequently, the Registrant replaced
its hardware and software for both systems in 1998 at an aggregate cost of
approximately $395,000. Based on testing of the new computer systems,
management anticipates that they will be year 2000-compliant and the effects of
the millennium on the Registrant's operations will be minimized. However,
although management has made inquiries, it cannot be certain that entities
which it does business with have successfully addressed this issue. Problems
encountered by these entities could have a possible effect on the Registrant's
operations.
There are no adverse purchase or other commitments outstanding as of December
31, 1998.
Results of Operations
Revenues for the fiscal years ended December 31, 1998, 1997 and 1996 were
comprised of the following areas of operation:
Year ended December 31,
------------------------
1998 1997 1996
------ ------ ------
Hotel revenues 48% 48% 49%
Merchandise sales 37 36 36
Club fees 13 15 15
Other income 2 1 --
------ ------ ------
100% 100% 100%
====== ====== ======
Total revenues increased $6,642,000 or 16% for the fiscal year ended December
31, 1998 when compared with the previous year. Total revenues increased
$4,443,000 or 12% for the fiscal year ended December 31, 1997 when compared
with its previous year. These improvements were the result of increases in
occupied unit nights, average daily rates and number of guests who stayed at
the resort for each fiscal period when compared to the prior period. The above
improvements in guest occupancies are attributed to various remodeling projects
and the upgrading of the resort property that occurred over the last few years.
Projections for occupied unit nights and revenues for 1999 and subsequent
fiscal periods are expected to remain at the resort's current volume of
business.
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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Net income increased $2,542,000 or 81% for the fiscal year ended December 31,
1998 when compared with the previous year. Net income increased $1,393,000 or
80% for the fiscal year ended December 31, 1997 when compared with its previous
year. These improvements are a direct result of the increased revenues which
were offset by expected 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 1998, 1997 and 1996.
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 occupancy for fiscal 1998, 1997 and 1996 was 57%, 54% and 51%,
respectively. The average distribution of Net Rental Income per participating
rental unit for fiscal 1998, 1997 and 1996 was $12,106, $11,093 and $9,881,
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 12 to 22 and
for Saddlebrook Rental Pool Operation on pages 23 to 27. An index to the
financial statements is on page 11.
Financial statement schedules have been omitted because they are not applicable
or the required information is shown in the financial statements or notes
thereto.
Item 9. Changes in and Disagreements on Accounting and Financial Disclosure
Not applicable.
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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 72 President and Chief Publishing, Inc., Cleveland, OH,
29822 Fairway Dr. Executive Officer Vice President and Director,
Wesley Chapel, FL Pittway Corp., Northbrook, IL
Eleanor Dempsey Director, Vice Wife of Thomas Dempsey
29822 Fairway Dr. President - Merchandising
Wesley Chapel, FL
Richard Boehning Director, Executive Vice General Manager, Doral Hotel
Age 64 President and General and Country Club, Miami, FL
5017 Pinelake Rd. Manager
Wesley Chapel, FL
Gregory R. Riehle Director, Vice President Son-in-law of Thomas Dempsey,
Age 42 and Secretary Attorney, Shumaker, Loop &
30338 Laurelwood Ln. Kendrick, Tampa, FL
Wesley Chapel, FL
Maureen Dempsey Director, Vice President Daughter of Thomas Dempsey,
Age 40 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 38 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 59 Treasurer Charleston, SC
1314 Foxwood Dr.
Lutz, FL
Robert A. Shaw Assistant Treasurer and Controller, Gulf Shores
Age: 42 Controller Plantation, Gulf Shores, AL,
5404 Saddlebrook Way CPA, Price Waterhouse,
Wesley Chapel, FL Indianapolis, IN
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Item 11. Executive Compensation
The directors and executive officers of the Registrant as of December 31, 1998
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, 1998 was $1,042,000.
Of this amount, Thomas Dempsey received $113,000, Richard Boehning received
$295,000, Maureen Dempsey received $107,000, Diane Riehle received $101,000 and
Gregory Riehle received $190,000. 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 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 Dempsey to each of two family
trusts.
On June 29, 1998, each share of the Registrant's outstanding capital stock was
exchanged for one share of Saddlebrook Holdings, Inc. ("SHI"). After the
exchange, 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, 1998, 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 8 Related Party Transactions of the Notes to
Financial Statements in Item 8 of this Form 10-K, which is incorporated herein
by reference.
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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, 1998.
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 26, 1999 /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 26, 1999.
/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
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SADDLEBROOK RESORTS, INC.
INDEX TO FINANCIAL STATEMENTS
Page
Financial Statements
SADDLEBROOK RESORTS, INC.
Report of Independent Certified Public Accountants 12
Balance Sheets at December 31, 1998 and 1997 13
Statements of Income for each of the three years in the period
ended December 31, 1998 14
Statements of Changes in Shareholders' Equity for each of the
three years in the period ended December 31, 1998 15
Statements of Cash Flows for each of the three years in the
period ended December 31, 1998 16
Notes to Financial Statements 17-22
SADDLEBROOK RENTAL POOL OPERATION
Report of Independent Certified Public Accountants 23
Balance Sheets at December 31, 1998 and 1997 24
Statements of Operations for each of the three years in the period
ended December 31, 1998 25
Statements of Changes in Participants' Fund Balance for each of
the three years in the period ended December 31, 1998 26
Notes to Financial Statements 27
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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
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. at
December 31, 1998 and 1997, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1998, 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.
PricewaterhouseCoopers LLP
Tampa, Florida
March 10, 1999
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SADDLEBROOK RESORTS, INC.
BALANCE SHEETS
DECEMBER 31,
1998 1997
ASSETS
Current assets:
Cash and cash equivalents $ 8,604,005 $ 854,596
Escrowed cash 91,326 92,520
Short-term escrowed investments 1,180,327 690,828
Trade accounts receivable, net of allowances for
doubtful accounts of $271,000 and $262,000 5,185,155 4,041,440
Due from related parties 643,681 391,148
Resort inventory and supplies 1,582,488 1,567,972
Prepaid expenses and other assets 670,643 523,675
----------- -----------
Total current assets 17,957,625 8,162,179
Long-term escrowed investments 498,485 598,437
Property, buildings and equipment, net 21,937,929 23,838,237
Deferred charges, net of accumulated amortization of
$19,000 and $461,000 561,904 107,928
----------- -----------
$40,955,943 $32,706,781
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of note payable $ 996,764 $18,686,920
Accounts payable 1,598,704 541,281
Accrued rental distribution 1,613,142 1,449,795
Accrued payroll and related expenses 818,240 1,168,790
Accrued interest and taxes 63,067 190,049
Guest deposits 1,988,483 2,161,620
Escrowed deposits 1,770,138 1,381,785
Accrued expenses and other liabilities 1,338,098 1,290,581
Due to related parties 811,398 863,618
----------- -----------
Total current liabilities 10,998,034 27,734,439
Note payable due after one year 24,532,820 --
----------- -----------
Total liabilities 35,530,854 27,734,439
----------- -----------
Commitments and contingencies (Note 9)
Shareholders' equity:
Common stock 100,000 100,000
Additional paid-in capital 1,013,127 1,013,127
Accumulated earnings 4,311,962 3,859,215
----------- -----------
Total shareholders' equity 5,425,089 4,972,342
----------- -----------
$40,955,943 $32,706,781
=========== ===========
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,
1998 1997 1996
Resort revenues $48,394,775 $41,752,786 $37,309,372
----------- ----------- -----------
Cost and expenses:
Operating costs of resort 31,515,915 28,128,453 25,683,947
Sales and marketing 3,548,950 3,529,378 3,172,772
General and administrative 4,297,181 3,785,816 3,548,758
Depreciation and amortization 1,573,902 1,489,063 1,392,180
Interest 1,784,187 1,687,092 1,771,766
----------- ----------- -----------
Total costs and expenses 42,720,135 38,619,802 35,569,423
----------- ----------- -----------
Net income $ 5,674,640 $ 3,132,984 $ 1,739,949
=========== =========== ===========
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, 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
Net income for the year 3,132,984 3,132,984
Distributions to shareholders (1,652,594) (1,652,594)
-------- ---------- ------------ ------------
Balance at December 31, 1997 100,000 1,013,127 3,859,215 4,972,342
Net income for the year 5,674,640 5,674,640
Distributions to shareholders (2,707,361) (2,707,361)
Distribution of fixed assets to
shareholder (2,514,532) (2,514,532)
-------- ---------- ------------ ------------
Balance at December 31, 1998 $100,000 $1,013,127 $ 4,311,962 $ 5,425,089
======== ========== ============ ============
The accompanying Notes to Financial Statements are
an integral part of these financial statements.
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SADDLEBROOK RESORTS, INC.
STATEMENTS OF CASH FLOWS
YEAR ENDED
DECEMBER 31,
1998 1997 1996
Cash flows from operating activities:
Net income $ 5,674,640 $ 3,132,984 $ 1,739,949
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,573,902 1,489,063 1,392,180
(Gain) loss on disposal of property, buildings
and equipment (124,217) 4,629 39,036
Provision for doubtful accounts 125,300 77,100 42,900
Change in assets and liabilities:
(Increase) decrease in:
Escrowed cash 1,194 124,167 (110,591)
Escrowed investments (389,547) (890,038) 299,908
Trade accounts receivable (1,269,015) (662,351) (149,310)
Due from related parties (252,533) (93,664) (162,280)
Resort inventory and supplies (14,516) (108,877) 13,594
Prepaid expenses and other assets (146,968) (148,466) 151,215
Increase (decrease) in:
Accounts payable 1,057,423 (56,699) (727,285)
Accrued rental distribution 163,347 6,283 405,647
Guest deposits (173,137) 1,070,902 292,274
Escrowed deposits 388,353 765,871 (189,317)
Accrued expenses and other liabilities (430,015) 488,483 556,625
Due to related parties (52,220) 291,348 (1,372,391)
------------ ----------- -------------
Net cash provided by operating
activities 6,131,991 5,490,735 2,222,154
------------ ----------- -------------
Cash flows from investing activities:
Proceeds from sales of equipment 210,000 555,400 2,581
Capital expenditures (2,187,248) (3,040,501) (1,450,781)
------------ ----------- -------------
Net cash used in investing activities (1,977,248) (2,485,101) (1,448,200)
------------ ----------- -------------
Cash flows from financing activities:
Proceeds from notes payable 26,000,000 -- 2,290,000
Payments on notes payable (19,157,336) (880,000) (1,486,722)
Distribution to shareholders (2,707,361) (1,652,594) (1,146,306)
Financing costs (540,637) (36,641) ( 53,431)
------------ ----------- -------------
Net cash provided by (used in)
financing activities 3,594,666 (2,569,235) (396,459)
------------ ----------- -------------
Net increase in cash and cash equivalents 7,749,409 436,399 377,495
Cash and cash equivalents, beginning of year 854,596 418,197 40,702
------------ ----------- -------------
Cash and cash equivalents, end of year $ 8,604,005 $ 854,596 $ 418,197
============ =========== =============
SUPPLEMENTAL DISCLOSURE:
Cash paid for interest $ 1,918,953 $ 1,608,123 $ 1,767,050
Distribution of fixed assets to shareholder $ 2,514,532 $ -- $ --
The accompanying Notes to Financial Statements are
an integral part of these financial statements.
16
17
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, eight 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.
On June 29, 1998, the Company's shareholders exchanged each share of the
outstanding common stock for one share of common stock of Saddlebrook
Holdings, Inc. ("SHI"). After the exchange, the Company's prior
shareholders own 100% of SHI which owns 100% of the Company.
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 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 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.
17
18
SADDLEBROOK RESORTS, INC.
NOTES TO FINANCIAL STATEMENTS
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.
Based on this review, there were no adjustments made to the carrying value
of operating properties in 1998 or 1997.
Deferred charges
In connection with the Company's refinancing of its debt during 1998,
costs in the amount of $581,000 have been incurred and capitalized. These
debt issuance costs are being amortized using a method that approximates
the interest method over fifteen years, the life of the related debt
outstanding.
Amortization expense for deferred charges amounted to $87,000, $127,000
and $122,000 for the years ended December 31, 1998, 1997 and 1996,
respectively.
Operating costs of resort
Included in operating costs of resort are reimbursements and service fee
revenue associated with banquets and other large events. Such amounts were
$2,577,000, $1,993,000 and $1,588,000 for the years ended December 31,
1998, 1997 and 1996, 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, 1998, 1997 and 1996 include rental pool distributions
approximating $6,646,000, $6,090,000 and $5,385,000, 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
passed through to the shareholders, and accordingly, no provision for
income taxes has been made in the accompanying financial statements. As of
December 31, 1998, the Company has approximately $470,000 in tax net
operating loss carryforwards, respectively, which expire in 2002 available
only to offset future C Corporation taxable income.
Reclassifications
Certain prior year balances have been reclassified to conform with current
year presentation.
3. COMMON STOCK:
At December 31, 1998 and 1997, 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, 1998 and 1997.
18
19
SADDLEBROOK RESORTS, INC.
NOTES TO FINANCIAL STATEMENTS
4. ESCROWED CASH:
Escrowed cash, restricted as to use, at December 31 is comprised of the
following:
1998 1997
Rental pool unit owner deposits for maintenance reserve fund
held in a bank account which bears an interest rate of 2.20% $ 74,676 $ 66,570
Security deposits held on long-term rentals 16,650 25,950
-------- ---------
$ 91,326 $ 92,520
======== =========
5. ESCROWED INVESTMENTS:
Escrowed investments at December 31 are comprised of the following:
1998 1997
U.S. Treasury Securities $ 1,678,812 $ 1,289,265
Less current portion (1,180,327) (690,828)
----------- -----------
$ 498,485 $ 598,437
=========== ===========
Escrowed investments relate to rental pool unit owner deposits for the
maintenance reserve fund which bear interest at rates ranging from 4.36%
to 7.125%. Long term portions of these investments mature in 2000 through
2003.
6. PROPERTY, BUILDINGS AND EQUIPMENT:
Property, buildings and equipment at December 31 consist of the following:
Estimated
Useful
Lives 1998 1997
Land and land improvements $ 3,820,478 $ 4,821,537
Buildings and recreational facilities 10-40 19,133,063 20,371,097
Machinery and equipment 2-15 9,147,470 8,422,251
Construction in progress 1,371,265 1,053,429
----------- -----------
33,472,276 34,668,314
Less accumulated depreciation (11,534,347) (10,830,077)
----------- -----------
$21,937,929 $23,838,237
=========== ===========
Substantially all property, buildings and equipment are mortgaged, pledged
or otherwise subject to lien under loan agreements of the Company (Note
7). On June 29, 1998, the Company distributed its unencumbered condominium
units and their contents, tennis courts and certain tracts of real
property to its shareholder at its aggregate book value of approximately
$2,515,000.
19
20
SADDLEBROOK RESORTS, INC.
NOTES TO FINANCIAL STATEMENTS
Depreciation expense amounted to $1,487,000, $1,362,000 and $1,270,000 for
the years ended December 31, 1998, 1997 and 1996, 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 $228,000, $203,000 and $230,000 for the years ended
December 31, 1998, 1997 and 1996, respectively. Future minimum lease
payments for noncancelable operating leases with initial lease terms in
excess of one year approximate:
1999 $ 182,508
2000 167,256
2001 57,191
2002 30,792
2003 and thereafter 7,698
--------------
$ 445,445
==============
7. NOTE PAYABLE:
Note payable at December 31 consists of the following:
1998 1997
Note payable to lender, 15 year term, 7.70% fixed interest rate,
monthly ratable principal and interest payments,
secured by all current and subsequently acquired real
and personal property $ 25,529,584 $ --
Note payable to bank secured by all real and personal
property and subsequently acquired real and personal
property, 8.375% interest rate, balance paid in 1998 -- 18,686,920
Less current portion (996,764) (18,686,920)
------------ ------------
$ 24,532,820 $ --
============ ============
On June 29, 1998, the Company financed a $26 million note payable. The
proceeds from the note payable were used to retire the prior note payable.
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, 1998. The Company has additional financing from the same
lender of $5 million if the Company meets additional covenants, as defined
in the agreement.
Principal maturities of the note payable are due as follows: 1999 -
$996,764; 2000 - $1,076,282; 2001 - $1,162,144; 2002 - $1,254,856; and
2003 and thereafter - $21,039,538.
Accrued interest outstanding on the Company's note payable was $0 and
$135,000 at December 31, 1998 and 1997, respectively.
20
21
SADDLEBROOK RESORTS, INC.
NOTES TO FINANCIAL STATEMENTS
8. RELATED PARTY TRANSACTIONS:
At December 31, 1998, a net receivable amounting to approximately $407,400
was due from SHI, the Company's parent (Note 1), primarily relating to
amounts paid by the Company on behalf of SHI for condominium improvements.
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 is reimbursed for allocated
expenses and other costs paid on behalf of SIT. In addition, the Company
charges SIT various amounts for services provided to SIT guests, which
amounted to approximately $1,947,000, $1,730,000 and $1,908,000 for the
years ended December 31, 1998, 1997 and 1996, respectively. At December
31, 1998 and 1997, a net payable amounting to approximately $274,000 and
$306,000, respectively, resulted from net intercompany charges and cash
transfers.
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, 1998 and
1997, a net payable of approximately $186,000 and $200,000, respectively,
resulted from net intercompany charges and cash transfers.
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 $975,600, $970,500 and $946,900 for
the years ended December 31, 1998, 1997 and 1996, respectively. The
Association also charges the Company certain amounts for condominium
assessments. At December 31, 1998 and 1997, a net receivable of
approximately $99,700 and $99,900, 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, 1998.
The Company and the original owner of the resort have an agreement to
split equally the costs of defense in the litigation and any ultimate
judgment or remedial work relating to litigation with the adjacent
property owners of the resort. A receivable for reimbursable costs of
defense and remedial work at December 31, 1998 and 1997 was approximately
$120,000 and $261,900, respectively. See Note 9 for discussion of
litigation.
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 approximately $14,900 and $21,400 at December
31, 1998 and 1997, respectively.
21
22
SADDLEBROOK RESORTS, INC.
NOTES TO FINANCIAL STATEMENTS
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 January 7, 1995, the court entered an order granting summary judgment
in favor of the Company and dismissing the action. The plaintiffs then
appealed said order to the Florida Second District Court of Appeal on
April 21, 1995. 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 took place on May 15, 1997. On April 1, 1998, the trial court
entered an order on the issues remaining to be tried. The plaintiff sought
rehearing of that order on April 13, 1998. Rehearing was denied on July
30, 1998. On October 27, 1998, the trial court held a case management
conference in this matter and subsequently set a pretrial conference for
April 1, 1999. 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, 1998.
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, 1998)
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, 1998. The
Company may withdraw from the risk pool at any renewal date (annually).
22
23
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, 1998 and 1997, 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, 1998, 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.
PricewaterhouseCoopers LLP
Tampa, Florida
March 10, 1999
23
24
SADDLEBROOK RENTAL POOL OPERATION
BALANCE SHEETS
DISTRIBUTION FUND
DECEMBER 31,
1998 1997
ASSETS
Receivable from Saddlebrook Resorts, Inc. $ 1,549,733 $ 1,384,044
=========== ============
LIABILITIES AND PARTICIPANTS' FUND BALANCE
Due to participants for rental pool distribution $ 1,256,492 $ 1,138,469
Due to maintenance escrow fund 293,241 245,575
Participants' fund balance -- --
----------- ------------
$ 1,549,733 $ 1,384,044
=========== ============
MAINTENANCE ESCROW FUND
ASSETS DECEMBER 31,
1998 1997
Cash in bank $ 74,676 $ 66,570
Investments 1,678,812 1,289,265
Receivables:
Distribution fund 293,241 245,575
Interest 16,904 10,646
Prepaid maintenance 325,648 343,822
Linen inventory 145,109 --
----------- ------------
$ 2,534,390 $ 1,955,878
=========== ============
LIABILITIES AND PARTICIPANTS' FUND BALANCE
Accounts payable 94,288 103,294
Participants' fund balance 2,440,102 1,852,584
----------- ------------
$ 2,534,390 $ 1,955,878
=========== ============
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,
1998 1997 1996
Rental pool revenues $16,310,670 $ 14,981,287 $13,309,993
----------- ------------ -----------
Deductions:
Marketing fee 1,223,299 1,123,597 998,250
Management fee 2,038,834 1,872,661 1,663,750
Travel agent commissions 698,483 682,404 634,791
Credit card expense 160,148 151,701 141,660
Bad debt expense 53,000 10,000 --
----------- ------------ -----------
4,173,764 3,840,363 3,438,451
----------- ------------ -----------
Net rental income 12,136,906 11,140,924 9,871,542
Operator share of net rental income (5,461,608) (5,013,416) (4,442,194)
Other revenues (expenses):
Complimentary room revenues 92,121 105,871 109,961
Minor repairs and replacements (121,243) (143,369) (154,318)
----------- ------------ -----------
Amounts available for distribution to
participants and maintenance
escrow fund $ 6,646,176 $ 6,090,010 $ 5,384,991
=========== ============ ===========
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,
1998 1997 1996
---------- ----------- -----------
Balance, beginning of period
Additions: $ -- $ -- $ --
Amounts available for distribution 6,646,176 6,090,010 5,384,991
Reductions:
Amounts withheld for maintenance
escrow fund (1,184,568) (1,076,594) (942,797)
Amounts accrued or paid to participants (5,461,608) (5,013,416) (4,442,194)
----------- ----------- -----------
Balance, end of period $ -- $ -- $ --
=========== =========== ===========
MAINTENANCE ESCROW FUND
YEAR ENDED
DECEMBER 31,
1998 1997 1996
----------- ----------- -----------
Balance, beginning of period $ 1,852,584 $ 1,146,309 $ 1,017,769
Additions:
Amount withheld from distribution fund 1,184,568 1,076,594 942,797
Unit owner payments 554,024 238,174 69,773
Interest earned 79,361 49,901 43,744
Reductions:
Unit renovations (716,219) (144,458) (558,141)
Refunds of excess amounts in escrow accounts (145,966) (200,025) (39,321)
Maintenance charges (249,025) (221,687) (263,948)
Linen amortization (119,225) (92,224) (66,364)
----------- ----------- -----------
Balance, end of period $ 2,440,102 $ 1,852,584 $ 1,146,309
=========== =========== ===========
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 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 1/2%, a 12 1/2%
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 U.S. Treasury Securities which bear interest at
rates ranging from 4.36% to 7.125% (5.11% to 7.125% for 1997). At
December 31, 1998 and 1997, investments of $1,180,327 and $690,828,
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
28
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*).
27. Financial Data Schedule (SEC use only).
99.1 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