BOCA RATON, Fla., Sept. 11 /PRNewswire-FirstCall/ -- Boca Resorts, Inc. (NYSE:RST), an owner and operator of luxury resorts in Florida, reported net income of $5.1 million, or $0.13 per diluted share, for the three months ended June 30, 2002, compared to $3.3 million, or $0.08 per diluted share for the three months ended June 30, 2001. These figures include non-recurring gains relating to the Company's discontinued operation, which was sold in July 2001, and non-recurring losses related to the repurchase of a portion of the Company's outstanding 9.875% senior subordinated notes payable. Income from continuing operations (which excludes such non-recurring gains and losses) totaled $3.5 million, or $0.09 per diluted share, for the three months ended June 30, 2002 and is $0.02 better than the average consensus estimate as reported by market service, First Call/Thomson Financial. During the three months ended June 30, 2001, the Company's loss from continuing operations totaled $544,000, or $0.01 per diluted share. The increase in income from continuing operations during the recently concluded period was primarily due to the prior year quarter including an additional $4.0 million in provisions for income taxes. Additional details relating to comparative operating results are set forth below.
Quarterly Comparison to Prior Year
Leisure and recreation revenue totaled $75.8 million and $72.1 million for the three months ended June 30, 2002 and 2001, respectively. The $3.7 million increase in revenue was primarily the result of a strong financial performance at the Boca Raton Resort & Club which yielded period over period advances in occupancy, average daily rate and ancillary (non-room) customer spending. While the Boca Raton Resort & Club's business has rebounded post September 11, the Company continues to experience a slower recovery at its other properties.
Operating expenses totaled $66.0 million and $60.3 million for the three months ended June 30, 2002 and 2001, respectively. The increase in operating expenses primarily consisted of a $1.4 million rise in depreciation expense following the completion of several capital projects at the Company's resorts and the acceleration of depreciation for certain property and equipment. In addition, the Company continues to ramp up operations at its recently opened marina hotel wing named the Yacht Club and spa complex at the Boca Raton Resort & Club.
Interest expense, net of interest income, totaled $5.6 million for the three months ended June 30, 2002, down from $7.6 million for the three months ended June 30, 2001. The decrease was due to the Company's reduction of debt with the proceeds from the sale of the Arizona Biltmore Resort & Spa and entertainment and sports business.
A provision for income taxes totaling $691,000 and $4.7 million was recorded for the three months ended June 30, 2002 and 2001, respectively. The decrease in the provision for income taxes is primarily due to the fact that in the prior year the Company's full year income tax provision was generated during the fourth quarter.
During the three months ended June 30, 2002, the Company recognized an additional $2.5 million gain, net of income taxes, from the disposition of its discontinued operations (which primarily consisted of the Florida Panthers Hockey Club and related arena operations), which was sold in July 2001. The fourth quarter gain resulted from a reduction to the original estimate of income taxes payable and other costs expected to be incurred in connection with the disposal of this operation. During the three months ended June 30, 2001, the Company recognized income from discontinued operations of $3.2 million.
During the three months ended June 30, 2002, the Company recognized an $876,000 extraordinary loss, net of a benefit for income taxes, on the early extinguishment of debt relating to the repurchase of $23.1 million of its senior subordinated notes. The extraordinary loss represents the non-cash charge-off of a pro rata portion of the debt issuance costs previously capitalized when the notes were issued, together with the premium paid to repurchase the notes.
Twelve-Month Comparison to Prior Year
Leisure and recreation revenue totaled $273.0 million and $329.2 million for the year ended June 30, 2002 and 2001, respectively. Leisure and recreation revenue for the year ended June 30, 2001 included $39.9 million in revenue from the Arizona Biltmore Resort & Spa, which was sold in December 2000. In addition, leisure and recreation revenue decreased for the year ended June 30, 2002 due to a decline in same-hotel occupancy to 62.5%, from 71.7% for the same period of the prior year as a result of travel disruption and short-term cancellations of group business in the wake of the September 11 terrorist attacks and economic recession.
Operating expenses totaled $241.5 million and $268.7 million for the year ended June 30, 2002 and 2001, respectively. The $27.2 million decrease in operating expenses during the recently concluded twelve-month period compared to the year ended June 30, 2001 was primarily because the prior year period included $31.8 million in operating expenses from the Arizona Biltmore Resort & Spa, partially offset by an increase in current year depreciation expense following the completion of several capital projects at the Company's resorts.
Interest expense, net of interest income, totaled $22.7 million for the year ended June 30, 2002, down from $42.0 million for the year ended June 30, 2001. The decrease was due to the Company's reduction of debt with the proceeds from the sale of the Arizona Biltmore Resort & Spa and entertainment and sports business.
The Company recorded a gain on the disposition of the entertainment and sports business totaling $26.2 million, net of income taxes, during the year ended June 30, 2002 and incurred a loss from discontinued operations of $8.9 million, net of a benefit for income taxes during the year ended June 30, 2001. The Company also recognized extraordinary losses, net of income tax benefits, on the early extinguishment of debt relating to the repurchase of a portion of its senior subordinated notes in the amounts of $1.8 million and $1.2 million during the years ended June 30, 2002 and 2001, respectively.
Balance Sheet Data
At June 30, 2002, the Company had cash and cash equivalents of $3.7 million and indebtedness totaling $211.9 million. The Company also maintains a revolving credit line, which expires in October 2003 that represents an additional and immediate potential source of liquidity. As of June 30, 2002, the Company's credit facility had $18.7 million outstanding with $99.9 million in availability for additional future borrowings. In addition, a cash tender offer to purchase up to $26.3 million in senior subordinated notes at par (pursuant to the asset sale provisions of the indenture under which the notes were issued) expired on August 23, 2002 with no notes tendered.
Capital Enhancement Update
Capital enhancements totaled $67.0 million during the year ended June 30, 2002. At the Boca Raton Resort & Club, a new state-of-the-art 50,000 square foot spa complex, as well as a new golf clubhouse with casual restaurant, opened in December 2001 and the Yacht Club with 112 water-view rooms opened in January 2002. Work has begun on a number of additional capital development initiatives including a comprehensive room renovation of the tower rooms at the Registry Resort located in Naples, Florida and a marina renovation at the Radisson Bahia Mar Resort and Yachting Center located in Fort Lauderdale, Florida.
David S. Feder, President and Chief Operating Officer of Boca Resorts, Inc. commented, I am pleased with the financial performance at the Boca Raton Resort & Club where occupancy approached 77% during the recently concluded quarter, historically a non-peak operating season. With our industry still in the midst of a very challenging business environment, our Company remains focused on achieving our targeted financial results for the ensuing fiscal year. We are managing our costs, running our hotels effectively and exceeding our customers' expectations. Our balance sheet is extremely solid and our resort portfolio continues to be well positioned particularly following the completion of several capital enhancements.
Boca Resorts, Inc. owns luxury resort properties and golf courses in Florida. The Company's Florida resort and golf portfolio includes the Boca Raton Resort & Club in Boca Raton; the Registry Resort at Pelican Bay, the Edgewater Beach Hotel and Naples Grande Golf Club in Naples; and the Hyatt Regency Pier 66 Hotel and Marina, the Radisson Bahia Mar Resort and Yachting Center and Grande Oaks Golf Club in Fort Lauderdale.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding Boca Resorts, Inc.'s business which are not historical facts are forward-looking statements that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see Risk Factors in the Company's Annual Report on Form 10-K.
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BOCA RESORTS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Twelve Months Ended June 30
(In thousands, except per share data)
Unaudited
Three Months Twelve Months
2002 2001 2002 2001
Leisure and
recreation revenue $75,754
$72,054 $273,043 $329,171
Operating expenses:
Cost of leisure and
recreation services 34,500 31,895 123,529 143,567
Selling, general and
administrative
expenses 21,519 19,854 83,146 89,624
Amortization and
depreciation 9,948 8,537 34,790 35,490
Total operating
expenses 65,967 60,286 241,465 268,681
Operating income 9,787 11,768 31,578 60,490
Interest and other
income 206 1,097 1,240 5,164
Interest and
other expense (5,765) (8,685) (23,903) (47,150)
Income from continuing
operations before
income taxes 4,228 4,180 8,915 18,504
Provision for income
taxes(1) 691 4,724 2,565 4,724
Income (loss) from
continuing operations 3,537 (544) 6,350 13,780
Gain on disposition of
discontinued operations,
net of income taxes 2,457 -- 26,185 --
Income (loss) from
discontinued operations,
net of income tax
benefit -- 3,213 -- (8,862)
Extraordinary loss on
early retirement of
debt, net of income
tax benefit (876) 587 (1,844) (1,236)
Net income $5,118 $3,256 $30,691 $3,682
Income (loss) per share
from continuing
operations $0.09 $(0.01) $0.16 $0.34
Income (loss) per share
from discontinued
operations 0.06 0.08 0.66 (0.22)
Income (loss) per share
from extraordinary
item (0.02) 0.01 (0.05) (0.03)
Net income per share
-- basic $0.13 $0.08 $0.77 $0.09
Income (loss) per share
from continuing
operations $0.09 $(0.01) $0.16 $0.34
Income (loss) per share
from discontinued
operations 0.06 0.08 0.65 (0.22)
Income (loss) per share
from extraordinary
item (0.02) 0.01 (0.05) (0.03)
Net income per share
-- diluted $0.13 $0.08 $0.76 $0.09
Shares used in computing
income (loss) per share
-- basic 39,779 39,554 39,793 40,317
Shares used in computing
income (loss) per
share -- diluted 40,824 40,255 40,551 40,958
(1) The Company recorded a provision for income taxes net of the release of its remaining valuation allowance during the three and twelve months ended June 30, 2001.
BOCA RESORTS, INC.
CONSOLIDATED PRO FORMA OPERATING DATA (1)
For the Three and Twelve Months Ended June 30
(In thousands)
Unaudited
Three Months Twelve Months
2002 2001 2002 2001(1)
Leisure and recreation
revenue $75,754 $72,054 $273,043 $289,315
Operating expenses:
Cost of leisure and
recreation services 34,500 31,895 123,529 126,892
Selling, general and
administrative
expenses 21,519 19,854 83,146 79,010
Amortization and
depreciation 9,948 8,537 34,790 30,969
Total operating
expenses
65,967 60,286 241,465 236,871
Operating income $9,787 $11,768 $31,578 $52,444
EBITDA $19,735 $20,305 $66,368 $83,413
Adjusted EBITDA(2) $19,095 $23,418 $69,820 $95,261
(1) Information is set forth on a pro forma basis, which excludes the operating results from the Arizona Biltmore Resort & Spa which was sold in December 2000. Management believes the pro forma data provides readers with a meaningful comparison of the periods presented.
(2) Adjusted EBITDA represents EBITDA plus the amount of net membership fees deferred during the period. The net membership fees deferred during the period represents the change in deferred revenue arising from the Premier Clubs at the Boca Raton Resort and Club and Naples Grande and the Grande Oaks Golf Club.
BOCA RESORTS, INC.
UNAUDITED SAME RESORT DATA(1)
For the Three and Twelve Months Ended June 30
Three Months Twelve Months
2002 2001 2002 2001
Available room nights 210,847 203,749 828,089 817,337
Occupancy % 69.4% 75.6% 62.5% 71.7%
ADR $196.22 $192.92 $210.43 $209.79
RevPar $136.16 $145.76 $131.46 $150.42
Total RevPar $359.28 $353.65 $329.73 $353.98
(1) Represents the Company's resort portfolio information excluding the results from the Arizona Biltmore Resort & Spa for each period presented.
Logos, product and company names mentioned are the property of their respective owners.
