Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

 

FORM 10-Q

 

 

(Mark one)

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

For the quarterly period ended September 30, 2009

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: 333-147447

 

 

SALAMANDER INNISBROOK, LLC

(Exact name of registrant as specified in its charter)

 

 

 

Florida		26-0442888
(State of incorporation)		(IRS employer identification no.)

36750 US Highway 19 North, Palm Harbor, FL 34684

(Address of principal executive offices)

727-942-2000

(Registrant’s telephone number, including area code)

 

 

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  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of the Regulation S-T (229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    YES  ¨    NO  ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer		¨		Accelerated filer		¨
Non-accelerated filer		¨		Smaller reporting company		x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES  ¨    NO  x

The Rental Pool operated by the Registrant has 603 Participants.

 

 

 

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INDEX

 

		Page
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
Salamander Innisbrook, LLC
Condensed Balance Sheets at September 30, 2009 (Unaudited) and December 31, 2008		4
Condensed Statements of Operations and Changes in Member’s Equity (Unaudited) for the three and nine months ended September 30, 2009 and 2008		5
Condensed Statements of Cash Flows (Unaudited) for the nine months ended September 30, 2009 and 2008		6
Notes to Condensed Financial Statements (Unaudited)		7
Innisbrook Rental Pool Operation
Condensed Balance Sheets at September 30, 2009 (Unaudited) and December 31, 2008		9
Condensed Statements of Operations (Unaudited) for the three and nine months ended September  30, 2009 and 2008		10
Condensed Statements of Changes in Participants’ Fund Balance (Unaudited) for the nine months ended September 30, 2009 and 2008		11
Notes to Condensed Financial Statements (Unaudited)		12
Item  2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		13
Item 3. Quantitative and Qualitative Disclosures about Market Risk		14
Item 4. Controls and Procedures		14
PART II — OTHER INFORMATION
Item 1. Legal Proceedings		15
Item 1 A. Risk Factors		16
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		16
Item 3. Defaults Upon Senior Securities		16
Item 4. Submission of Matters to a Vote of Security Holders		16
Item 5. Other information		16
Item 6. Exhibits		16
Signature		17
EX-31.1		18
EX-31.2		19
EX-32.1		20
EX-32.2		21

 

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Cautionary Note Regarding Forward-Looking Statements

The following report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are statements that predict or describe future events or trends and that do not relate solely to historical matters. All of our projections in this quarterly report are forward-looking statements. You can generally identify forward-looking statements as statements containing the words “believe,” “expect,” “will,” “anticipate,” “intend,” “estimate,” “project,” “assume” or other similar expressions. You should not place undue reliance on our forward-looking statements because the matters they describe are subject to known (and unknown) risks, uncertainties and other unpredictable factors, many of which are beyond our control. Our forward-looking statements are based on the limited information currently available to us and speak only as of the date on which this report was filed with the SEC. Our continued internet posting or subsequent distribution of this dated report does not imply continued affirmation of the forward-looking statements included in it. We undertake no obligation, and we expressly disclaim any obligation, to issue any updates to our forward-looking statements, even if subsequent events cause our expectations to change regarding the matters discussed in those statements. Future events are inherently uncertain. Moreover, it is particularly difficult to predict business activity levels at the Resort with any certainty. Accordingly, our projections in this quarterly report are subject to particularly high uncertainty. Our projections should not be regarded as legal promises, representations or warranties of any kind whatsoever. Over time, our actual results, performance or achievements will likely differ from the anticipated results, performance or achievements that are expressed or implied by our forward-looking statements, and such differences might be significant and harmful to your interests.

 

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PART I — FINANCIAL INFORMATION

 

Item 1.

Financial Statements

SALAMANDER INNISBROOK, LLC

CONDENSED BALANCE SHEETS

 

		September 30, 2009			December 31, 2008
		(Unaudited)
Assets
Current assets:
Cash		$	457,765		$	1,081,096
Accounts receivable trade, net			1,487,711			2,746,240
Inventories and supplies			1,069,485			1,061,977
Prepaid expenses and other			648,564			345,295
Total current assets			3,663,525			5,234,608
Property, buildings and equipment, net			46,142,149			42,260,243
Intangibles, net			10,276,120			12,151,661
Other Assets			134,563			411,099
Total assets		$	60,216,357		$	60,057,611
Liabilities and Member’s Equity
Current liabilities:
Accounts payable		$	136,908		$	2,205,480
Accrued liabilities			2,319,941			1,812,441
Deposits and deferred revenue			2,083,230			3,128,063
Current portion long-term refurbishment			561,348			2,239,077
Current portion of capital lease obligations			113,545			149,362
Due to affiliates			103,860			88,515
Total current liabilities			5,318,832			9,622,938
Deferred revenue			1,033,093			893,458
Refurbishment obligation, net of current portion			67,896			84,871
Capital lease obligations, net of current portion			164,323			300,100
Total liabilities			6,584,144			10,901,367
Members’ Equity:			53,632,213			49,156,244
Total liabilities and member’s equity		$	60,216,357		$	60,057,611

See accompanying notes to unaudited condensed financial statements.

 

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SALAMANDER INNISBROOK, LLC

CONDENSED STATEMENTS OF OPERATIONS AND CHANGES IN MEMBER’S EQUITY

(Unaudited)

 

		For the three months ended September 30,								For the nine months ended September 30,
		2009				2008				2009				2008
Resort revenues		$	4,851,243			$	5,757,972			$	26,121,474			$	28,202,773
Costs and Expenses:
Operating costs and expenses			3,179,684				3,465,719				12,198,354				13,224,890
General and administrative			4,236,401				4,582,589				14,909,104				15,593,074
Depreciation and amortization			1,278,250				1,229,837				3,834,612				3,689,513
Total costs and expenses			8,694,335				9,278,145				30,942,070				32,507,477
Loss before interest			(3,843,092	)			(3,520,173	)			(4,820,596	)			(4,304,704	)
Interest (income) expense, net			(16,548	)			48,742				131,205				181,778
Net loss			(3,826,544	)			(3,568,915	)			(4,951,801	)			(4,486,482	)
Member’s equity, beginning of period			54,952,100				43,382,355				49,156,244				42,028,207
Member contribution			2,506,657				6,288,785				9,427,770				8,560,500
Member’s equity, end of period		$	53,632,213			$	46,102,225			$	53,632,213			$	46,102,225

See accompanying notes to unaudited condensed financial statements.

 

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SALAMANDER INNISBROOK, LLC

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

 

		For the nine months ended September 30,
		2009				2008
Cash flows from operating activities:
Net loss		$	(4,951,801	)		$	(4,486,482	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Bad debt expense			34,047				36,071
Depreciation and amortization			3,834,612				3,689,513
Other changes in operating assets and liabilities			(1,520,799	)			903,450
Net cash provided by operating activities			(2,603,941	)			142,552
Cash flows used in investing activities:
Capital expenditures			(5,501,906	)			(8,075,235	)
Intangibles			(78,956	)			—
Net cash used in investing activities			(5,580,862	)			(8,075,235	)
Cash flows from financing activities:
Member contributions			9,427,770				8,560,500
Repayment of capital lease obligations			(171,594	)			(342,000	)
Repayment of refurbishment obligations:			(1,694,704	)			(1,274,288	)
Net cash provided by financing activities			7,561,472				6,944,212
Net decrease in cash		$	(623,331	)		$	(988,471	)
Cash at beginning of period			1,081,096				2,195,089
Cash at end of period		$	457,765			$	1,206,618
Supplemental disclosure of cash flow information:

See accompanying notes to unaudited condensed financial statements.

 

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SALAMANDER INNISBROOK, LLC

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Nature of Business, Basis of Presentation and Summary of Significant Accounting Policies

Nature of business

On July 16, 2007, Salamander Innisbrook, LLC (the “Company”, “we”, or the “Successor”), together with its affiliates, Salamander Securities, LLC. and Salamander Innisbrook Condominium, LLC, completed the purchase of the Innisbrook Resort and Golf Club (the “Resort”) and all of the equity interest in Golf Host Securities, Inc. from Golf Trust of America, Inc. and its subsidiaries and affiliates. The Resort is a 72-hole destination golf and conference facility located near Tampa, Florida. The Resort features 1216 condominium rooms, all of which are owned by third parties or affiliates. Approximately 603 condominium owners participate in a rental pool (the “Rental Pool”) operated by the Company.

Basis of presentation

The accompanying condensed financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America and the instructions of Quarterly Report on Form 10-Q, consequently, do not include all disclosures normally provided in the Company’s Annual Report on Form 10-K. Accordingly, these condensed financial statements and related notes should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.

In the opinion of management, the condensed financial statements reflect all adjustments which are necessary for a fair presentation of the results for the interim periods presented. All such adjustments are of a normal recurring nature. These results are not necessarily indicative of results for any other period or for a full year. It is important to note that the Company’s business is seasonal.

Note 2. Accounts Receivable

 

		September 30, 2009 (Unaudited)				December 31, 2008
Trade accounts receivable		$	1,138,478			$	2,258,156
Less allowance for bad debts			(57,449	)			(20,007	)
Other receivables			406,682				508,091
		$	1,487,711			$	2,746,240

Note 3. Property, Buildings and Equipment

 

		September 30, 2009 (Unaudited)				December 31, 2008
Land and land improvements		$	17,007,645			$	15,520,401
Buildings			23,463,125				17,274,568
Furniture, fixtures and equipment			9,705,278				7,094,331
Construction in progress			273,936				5,058,778
			50,449,984				44,948,078
Less accumulated depreciation			(4,307,834	)			(2,687,835	)
		$	46,142,150			$	42,260,243

Note 4. Intangibles

Intangible assets represent the value of contractual arrangements assumed as of July 16, 2007, including trade names, water contract, rental pool, club memberships and future bookings. The intangible assets are being amortized over the specific term or benefit period of each related contract.

 

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SALAMANDER INNISBROOK, LLC

NOTES TO CONDENSED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

 

Note 5. Long-term Obligations

Leases - Leases, which transfer substantially all of the benefits and risks of ownership of property, are classified as capital leases. Assets and liabilities are recorded at amounts equal to the present value of the minimum lease payments at the beginning of the lease term. Interest expense relating to the lease liabilities is recorded to affect constant rates of interest over the terms of the leases.

Leases, which do not transfer substantially all of the benefits and risks of ownership of property, are classified as operating leases, and the related rentals are charged to expense as incurred.

Master Lease Refurbishment Program – On July 16, 2007, the Company assumed a liability to certain condominium owners under the refurbishment program committed to in the Rental Pool Master Lease Agreement (“MLA”). The liability of $629,244 represents the Company’s obligation to pay certain Rental Pool participants an amount equal to 25% or 50% of the cost to refurbish their respective units. Principal and interest payments are due quarterly for the five year repayment period of the program.

Note 6. Due to Affiliate

Due to affiliates represents non interesting bearing advances due to affiliates and are payable on demand.

RENTAL POOL LEASE OPERATIONS

The operation of the Rental Pool is tied closely to the Resort Operation. The MLA provides for quarterly distribution of a percentage of the Company room revenues to participating condominium owners (“Participants”). Because the participants share a percentage of the Company’s room revenue, the condominium units allowing Rental Pool participation are deemed securities. However, there is no market for these securities other than the normal real estate market. Since the security is real estate, no dividends have been paid or will be. However, Participants are entitled to a contractual distribution paid quarterly, as defined in the lease agreements, for the Company’s right to use the Participants’ condominium units in resort operations.

 

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INNISBROOK RENTAL POOL OPERATION

CONDENSED BALANCE SHEETS

DISTRIBUTION FUND

 

		September 30, 2009			December 31, 2008
ASSETS
Receivable from Salamander Innisbrook, LLC for distribution		$	385,673		$	528,644
Interest receivable from Rental Pool Escrow Fund			4,514			10,509
		$	390,187		$	539,153
LIABILITIES AND PARTICIPANTS’ FUND BALANCES
Due to Participants for distribution		$	215,443		$	391,628
Due to Maintenance Escrow fund			174,744			147,525
		$	390,187		$	539,153

MAINTENANCE ESCROW FUND

 

		September 30, 2009			December 31, 2008
ASSETS
Cash		$	136,246		$	206,118
Cash equivalents			1,715,000			1,425,000
Receivable from Distribution fund			174,912			147,525
Receivable from Salamander Innisbrook, LLC			952			5,877
Inventory			—			4,098
Interest receivable			2,855			11,372
		$	2,029,965		$	1,799,990
LIABILITIES AND PARTICIPANTS’ FUND BALANCES
Accounts payable		$	—		$	98,682
Interest payable to Distribution fund			2,851			11,603
Carpet Care reserve			110,945			82,650
Participants’ fund balances			1,916,169			1,607,055
		$	2,029,965		$	1,799,990

See accompanying notes to unaudited financial statements

 

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INNISBROOK RENTAL POOL OPERATION

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

 

		For the three months ended September 30,								For the nine months ended September 30,
		2009				2008				2009			2008
GROSS REVENUES		$	1,132,650			$	1,557,365			6,913,330			$	8,132,169
DEDUCTIONS:
Agents’ commissions			19,157				24,050			183,764				245,358
Credit card fees			32,082				43,876			213,416				229,562
Audit fees			45,000				11,250			72,500				33,750
Uncollectible room rents			—				13,637			517				13,637
Linen replacements			22,338				22,454			64,967				45,292
Rental pool complimentary fees			2,507				2,442			14,676				9,562
			121,084				117,709			549,840				577,161
ADJUSTED GROSS REVENUES			1,011,566				1,439,656			6,363,490				7,555,008
AMOUNT RETAINED BY LESSEE			(606,939	)			(863,794	)		(3,818,094	)			(4,533,005	)
GROSS INCOME DISTRIBUTION			404,627				575,862			2,545,396				3,022,003
ADJUSTMENTS TO GROSS INCOME DISTRIBUTION:
General pooled expense			(1,257	)			(3,818	)		(6,306	)			(8,047	)
Miscellaneous pooling adjustments			(88	)			—			2,585				—
Corporate complimentary occupancy fees			4,877				19,895			22,053				41,822
Interest			(2,876	)			(3,024	)		(4,871	)			(9,073	)
Occupancy fees			(174,744	)			(208,696	)		(788,075	)			(823,229	)
Advisory Committee expenses			(28,906	)			(29,850	)		(89,973	)			(96,831	)
NET INCOME DISTRIBUTION			201,633				350,369			1,680,809				2,126,645
ADJUSTMENTS TO NET INCOME DISTRIBUTION:
Occupancy fees			174,744				208,696			788,075				823,229
Hospitality suite fees			231				252			2,845				4,170
Associate room fees			9,065				9,898			42,091				42,287
AVAILABLE FOR DISTRIBUTION TO PARTICIPANTS			385,673				569,215			2,513,820				2,996,331

See accompanying notes to the unaudited financial statements.

 

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INNISBROOK RENTAL POOL OPERATION

CONDENSED STATEMENTS OF CHANGES IN PARTICIPANTS’ FUND BALANCES

(Unaudited)

DISTRIBUTION FUND

 

		For the three months ended September 30,								For the nine months ended September 30,
		2009				2008				2009				2008
BALANCE, beginning of period		$	—			$	—			$	—			$	—
ADDITIONS:
Amounts available for distribution			385,673				569,215				2,513,750				2,996,332
Interest received or receivable from Maintenance Escrow Fund			4,514				14,831				32,668				53,099
REDUCTIONS:
Amounts withheld for Maintenance Escrow Fund			(174,744	)			(187,827	)			(729,046	)			(737,647	)
Amounts accrued or paid to participants			(215,443	)			(396,219	)			(1,817,372	)			(2,311,784	)
BALANCE, end of period		$	—			$	—			$	—			$	—

MAINTENANCE ESCROW FUND

 

		For the three months ended September 30,								For the nine months ended September 30,
		2009				2008				2009				2008
BALANCE, beginning of period		$	1,840,932			$	2,462,098			$	1,639,345			$	2,185,657
ADDITIONS:
Amounts withheld from occupancy fees			174,912				187,827				729,213				737,647
Interest earned			2,851				14,831				30,481				53,099
Charges to participants to establish or restore escrow balances			115,056				152,802				295,196				481,431
REDUCTIONS:
Maintenance charges			(175,816	)			(209,792	)			(651,921	)			(735,079	)
Carpet care reserve deposit			(6,787	)			(7,304	)			(28,295	)			(28,735	)
Interest accrued or paid to Distribution Fund			(2,851	)			(14,831	)			(30,481	)			(53,099	)
Refunds to participants as prescribed by the master lease agreements			(24,886	)			(41,914	)			(60,127	)			(97,204	)
BALANCE, end of period		$	1,923,411			$	2,543,717			$	1,923,411			$	2,543,717

See accompanying notes to the unaudited financial statements.

 

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INNISBROOK RENTAL POOL LEASE OPERATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

1. Rental Pool Lease Operations

Organization and operations

The Company follows accounting policies that require estimates that are based on assumptions and judgment, which affect revenues, expenses, assets, liabilities and disclosure of contingencies in our financial statements. These estimates and assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. However, actual results may differ from these estimates due to different conditions.

The Rental Pool consists of condominiums at the Resort which are leased by the Company from their owners and used as hotel accommodations for the Resort. The Company has assumed the Master Lease Agreement (“MLA”) from the predecessor owner which provides that on an annual basis each Participant may elect to participate in the Rental Pool for the following year by signing an Annual Lease Agreement (“ALA”). Any condominium unit owner who does not sign the ALA is not permitted to participate in the Rental Pool for the following year. Under the MLA, 40% of the Adjusted Gross Revenues, as defined in the MLA, are distributed to the Rental Pool Participants and the remaining 60% is retained by the Company.

The Lessors’ Advisory Committee (“LAC”), consists of nine Participants who are elected by the Participants to advise the Company of Rental Pool Matters and to negotiate amendments to the lease agreement, the Annual Lease Agreement (“ALA”) and the MLA.

The Rental Pool consists of two funds: the Distribution Fund and the Maintenance Escrow Fund. The Distribution Fund balance sheet primarily reflects amounts receivable from the Company for the Rental Pool distribution payable to Participants and amounts due to the Maintenance Escrow Fund. The operations of the Distribution Funds reflect Participants’ earnings in the Rental Pool. The Maintenance Escrow Fund reflects the accounting for certain escrowed assets of the Participants and, therefore, has no operations. It consists primarily of amounts escrowed by Participants or due to the Distribution Fund to meet escrow requirements, fund the carpet care reserve and maintain the interior of the units.

In addition, the MLA provided to the Participants a reimbursement of an amount up to 50% of the actual unit refurbishments costs, plus interest at a rate of 5% per annum on such amounts. For newly refurbished units entering the Rental Pool during 2005, the Company assumed the obligation to reimburse the Participants an amount up to 25% of the actual unit refurbishment costs, plus interest at a rate of 2.5% per annum. The obligation to reimburse the refurbishment costs and pay interest thereon applies only if certain minimum participation thresholds are maintained.

Maintenance Escrow Fund Accounts

The MLA generally provides that 90% of the occupancy fees earned by each Participant are ultimately deposited in that Participant’s Maintenance Escrow Fund account. The account provides funds for payment of amounts that are due from all Participants for maintenance and refurbishment services for or related to their condominium unit. In the event that a Participant’s balance falls below the amount necessary to pay for maintenance and replacements in the Participants unit, the Participant is required to restore the escrow balance to a defined minimum level. The MLA requires specific fund balances be maintained, by unit type, size and age of refurbishment.

The LAC, subject to the restriction in the MLA, invests the Maintenance Escrow Fund on behalf of the Participants. Income earned on the investments of the Maintenance Escrow Funds is allocated proportionately to the respective Maintenance Escrow Fund accounts and paid quarterly through the Distribution Fund. The funds are held in certificates of deposits.

 

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Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

The Company operates Innisbrook Resort and Golf Club (the “Resort”) in Innisbrook, Florida, which contains 1216 condominium units of which all have been sold to third parties or to affiliates of the Company. The majority of the condominium units, 603, are hotel accommodations that participate in a rental-pooling program (the “Rental Pool”) that provides its owners with a percentage distribution of related room revenues minus certain fees and expenses; the remainder of the condominium units is owner-occupied. Other resort property owned by the Company and its affiliates include golf courses, restaurants, tennis courts, a spa and fitness center, swimming pools, conference center facilities as well as administrative offices.

Results of Operations

The Resort is a destination golf resort that appeals to group and transient guests within all market segments. The Resort provides condominium accommodations, food and beverage dining locations (three restaurants, room service, banquet and/or catering options) and recreational entertainment to members, business meetings, group guests, leisure guests and their families. The Resort offers room-only rates, golf packages, and family vacation packages.

As a destination golf resort, open year round, the Resort’s performance is sensitive to weather conditions and seasonality as well as general trends in the economy, with any economic downturn adversely affecting operating results. The Company’s operations are seasonal with the highest volume of revenue generated in the first two quarters of each calendar year. Due to the seasonal business of the Company, the results of operations for the interim periods shown in this report are not necessarily indicative of results to be expected for the full fiscal year.

Results of operations for the three months ended September 30, 2009 and 2008 (unaudited)

 

		For the three months ended September 30, (unaudited)
		2009							2008							Increase (Decrease)				Percentage Change
Resort revenues		$	4,851,243			100.0	%		$	5,757,972			100.0	%		$	(906,729	)		-15.7	%
Costs and Expenses:
Operating costs and expenses			3,179,684			65.5	%			3,465,719			60.2	%			(286,035	)		-8.3	%
General and administrative			4,236,401			87.3	%			4,582,589			79.6	%			(346,188	)		-7.6	%
Depreciation and amortization			1,278,250			26.3	%			1,229,837			21.4	%			48,413			3.9	%
Total costs and expenses			8,694,335			179.2	%			9,278,145			161.1	%			(583,810	)		-6.3	%
Loss before interest			(3,843,092	)		-79.2	%			(3,520,173	)		-61.1	%			(322,919	)		9.2	%
Interest (income) expense, net			(16,548	)		-0.3	%			48,742			0.8	%			(65,290	)		-134.0	%
Net loss		$	(3,826,544	)		-78.9	%		$	(3,568,915	)		-62.0	%		$	(257,629	)		7.2	%

The recent global recession continues to negatively impact the results of the overall hotel market and has impacted Innisbrook during the quarter. For the three-month period ended September 30, 2009, resort revenues were $4,851,000 down 15.7% or $907,000 when compared to the third quarter in 2008. Transient and golf group travelers continued to be consistent with prior year trends and picked up where group declined in the third quarter.

Costs and Expenses for the three-month period were $8,694,336 which was 179.2% of revenues resulting in a loss before interest of $3,843,092 or -79.2% of revenues. Interest expense, realized a credit of 16,548, resulting in net loss for the three month period of $3,826,544.

Given the current business environment, Innisbrook’s marketing division continues to focus on a feasible marketing mix as well as strategies that could help the resort reap the most benefit while keeping a rein on spending. These strategies, which include increased print and electronic advertising and the use of third party distribution channels are all continuing elements of our efforts to offset the group market downturn.

 

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Results of operations for the nine months ended September 30, 2009 and 2008 (unaudited)

 

		For the nine months ended September 30, (unaudited)
		2009							2008							Increase (Decrease)				Percentage Change
Resort revenues		$	26,121,474			100.0	%		$	28,202,773			100.0	%		$	(2,081,299	)		-7.4	%
Costs and Expenses:
Operating costs and expenses			12,198,354			46.7	%			13,224,890			46.9	%			(1,026,536	)		-7.8	%
General and administrative			14,909,104			57.1	%			15,593,073			55.3	%			(683,969	)		-4.4	%
Depreciation and amortization			3,834,612			14.7	%			3,689,513			13.1	%			145,099			3.9	%
Total costs and expenses			30,942,070			118.5	%			32,507,476			115.3	%			(1,565,406	)		-4.8	%
Loss before interest			(4,820,596	)		-18.5	%			(4,304,703	)		-15.3	%			(515,893	)		12.0	%
Interest expense, net			131,205			0.5	%			181,778			0.6	%			(50,573	)		-27.8	%
Net loss		$	(4,951,801	)		-19.0	%		$	(4,486,481	)		-15.9	%		$	(465,320	)		10.4	%

The Resort continues to experience very short booking windows as a result of the economy and weakening real estate market. For the nine month period ended September 30, 2009, resort revenues were $26,121,474 compared to $28,202,773 in the prior year. Costs and Expenses were $30,942,070, 118.5% of revenues, which resulted in a loss before interest of $4,820,596 or -18.5% of revenues. Interest expense related primarily to leases was $131,205 resulting in net loss of $4,951,801.

Liquidity and Capital Resources

Future operating costs and planned expenditures for capital additions and improvements are expected to be adequately funded by cash generated by the Resort’s operations and its affiliates’ current cash reserves.

The operation of the Resort is not considered to be dependent on any individual of small group of customers, the loss of which could have a material adverse effect on the Company’s business or financial condition.

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

 

Item 4.

Controls and Procedures

Disclosure Controls and Procedures

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) at September 30, 2009. Based upon that evaluation, the Company’s Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2009 in timely alerting them to material information required to be included in the Company’s periodic SEC filings.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

The Company has established disclosure controls and procedures to ensure that information disclosed in this annual report on Form 10-Q was properly recorded, processed, summarized and reported to the Company’s Executive Committee. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

 

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PART II — OTHER INFORMATION

 

Item 1.

Legal Proceedings

In the normal course of our operations, we are subject to claims and lawsuits. We do not believe that the ultimate resolution of such matters will materially impair operations or have an adverse effect on our financial position and results of operations.

Tina Pipinos v. Salamander Innisbrook, LLC and Salamander Hospitality, LLC

Case No. 09-14563-CI, Division 07    F&H No. 017082-0001

A former employee filed a lawsuit against Salamander Innisbrook, LLC and Salamander Hospitality, LLC on or about August 18, 2009 for alleged unlawful employment practices in the Circuit Court of the Sixth Judicial Circuit in and for Pinellas County, Florida. Plaintiff’s complaint alleges violations of the Family Medical Leave Act (FMLA), specifically that she was terminated for her absences while on intermittent FMLA leave. Plaintiff seeks reinstatement, equitable relief, damages for back pay and benefits, interest, liquidated damages, attorneys fees and costs.

Defendants’ answer and defenses was filed on October 23, 2009. The parties are engaged in discovery. Once written discovery and non-party discovery has concluded, we will take the Plaintiff’s deposition. 

Although it is impossible to predict the outcome of this case because of the uncertainty involved in litigating any matter, at this time, the likelihood of an unfavorable outcome is small. Salamander maintains that all employment actions were for legitimate, nondiscriminatory business reasons, that discrimination policies and procedures were implemented and followed, and is prepared to vigorously defend this matter.

Michael LeFave, et al. v. Salamander Innisbrook, LLC

USDC Case No. 8:09-CV-00432-T-JDW-EAJ / Lower Case No. 09-1603-CI, Division 7    F&H No. 017082-0002

Four former employee filed a lawsuit against Salamander Innisbrook, LLC on or about January 14, 2009, for alleged unlawful employment practices in the Circuit Court of the Sixth Judicial Circuit in and for Pinellas County, Florida. Plaintiffs’ complaint alleges violations of the Florida Civil Rights Act, specifically that they were each terminated on the basis of their age. On February 27, 2009, Plaintiffs filed an Amended Complaint additionally claiming violations under the Age Discrimination in Employment Act (ADEA) and to sue on behalf of themselves and others similarly situated. Plaintiffs seek conditional class certification, injunctive relief, damages for back pay and benefits, interest, front pay and benefits, compensatory damages for emotional pain and suffering, punitive damages, attorneys fees and costs.

On March 11, 2009, Defendant removed Plaintiffs’ claim to the United States District Court, Middle District of Florida, Tampa Division, on the basis of Plaintiffs’ amendment to include claims under the Federal statute (ADEA). Defendant’s answer and defenses was filed on April 7, 2009. On May 29, 2009, Plaintiffs’ filed Plaintiffs’ Motion to Create Conditional Opt-in Class and Motion to Authorize Notice to Putative Class Members. Defendant filed its motion in opposition on June 29, 2009. Magistrate Judge Elizabeth Jenkins entered a Report and Recommendation granting in part and denying in part Plaintiffs’ motion for conditional certification on October 9, 2009. Specifically, Magistrate Jenkins recommended the conditional certification of a collective class, but limited to former employees with claims that arose between August 18, 2007 and June 13, 2008. Plaintiffs filed objections to Magistrate Jenkins’ Report and Recommendation on October 19, 2009. Defendant’s response to Plaintiffs’ objections is due on Monday, November 16, 2009. In addition to the four named plaintiffs, twelve individuals have opted into the suit to date.

Although it is impossible to predict the outcome of this case because of the uncertainty involved in litigating any matter, at this time, the likelihood of an unfavorable outcome is small. Salamander maintains that all employment actions were for legitimate, nondiscriminatory business reasons, that discrimination policies and procedures were implemented and followed, and is prepared to vigorously defend this matter.

 

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Carolyn Boswell v. Salamander Innisbrook, LLC

USDC Case No. 8:09-CV-01704-T-SDM-MAP    F&H No. 017082-0003

A former employee filed a lawsuit against Salamander Innisbrook, LLC on or about August 18, 2009, for alleged unlawful employment practices in the United States District Court, Middle District of Florida, Tampa Division. Plaintiff’s complaint alleges violations of the Age Discrimination in Employment Act and Florida Civil Rights Act of 1992 pursuant to the Notice of Right to Sue issued by the Equal Employment Opportunity Commission on July 21, 2009. 

Defendant’s answer and defenses to Plaintiff’s Amended Complaint was filed on October 6, 2009. Pursuant to Federal Rule of Civil Procedure 16, counsel for the parties met and prepared the Case Management Report setting forth agreements to discovery and pretrial deadlines and suggesting to the Court that the parties could be available for trial any time after September 1, 2010. The Case Management Report was filed on October 28, 2009, however, the Court has yet to enter its Scheduling Order agreeing to the preliminary deadlines and setting the case on a trial docket. 

Although it is impossible to predict the outcome of this case because of the uncertainty involved in litigating any matter, at this time, the likelihood of an unfavorable outcome is small. Salamander maintains that all employment actions were for legitimate, nondiscriminatory business reasons, that discrimination policies and procedures were implemented and followed, and is prepared to vigorously defend this matter.

 

Item 1A.

Risk Factors

Not required

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable

 

Item 3.

Defaults Upon Senior Securities

Not applicable

 

Item 4.

Submission of Matters to a Vote of Security Holders

Not applicable

 

Item 5.

Other information

Not applicable

 

Item 6.

Exhibits

(a). Exhibits

 

Exhibit		Item
31.1		Certification of Principal Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002
31.2		Certification of Principal Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002
32.1*		Certification of Principal Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002
32.2*		Certification of Principal Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002

 

*

This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 of the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.

 

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

		SALAMANDER INNISBROOK, LLC (Registrant)
Date: November 16, 2009		/S/    CHUCK POMERANTZ
		Chuck Pomerantz
		Managing Director and Vice President
Date: November 16, 2009		/S/    DALE PELLETIER
		Dale Pelletier
		Chief Financial Officer

 

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