SEC Info  
  Home     Search     My Interests     Help     Sign In     Please Sign In  

Family Golf Centers Inc · 424B1 · On 7/8/96

Confirming Copy   ·   Filed On 7/8/96   ·   SEC File 333-04541   ·   Accession Number 950136-96-569

  in   Show  and 
  As Of               Filer                 Filing     On/For/As Docs:Pgs              Issuer               Agent

 7/08/96  Family Golf Centers Inc           424B1©                 1:228                                    950136

Prospectus   ·   Rule 424(b)(1)
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 424B1       Definitive Materials                                 228  1,014K 


Document Table of Contents

Page (sequential) | (alphabetic) Top
 
11st Page
"Common Stock
"Jefferies & Company, Inc
"Hampshire Securities Corporation
3Prospectus Summary
4The Offering
7Risk Factors
"Expansion Strategy
8Golden Bear License
"Competition
9Additional Financing Requirements
"Dependence Upon Key Employee; Recruitment of Additional Personnel
10Dividend Policy
"Shares Eligible for Future Sale; Registration Rights
11Preferred Stock; Possible Anti-Takeover Effects of Certain Charter, By-Law and Contractual Provisions
12Use of proceeds
"Price Range of Common Stock
13Capitalization
14Selected Financial Data
16Management's Discussion and Analysis of Financial Condition and Results of Operations
"General
23Business
26The Golf Centers
27Operations
"Recently Opened or Acquired Facilities
29The El Segundo and Gilroy Golf Facilities
31Other Potential Sites
33Employees
"Governmental Regulation
34Properties
35Management
38Stock Option Plans
39Employment Agreements
40Principal Stockholders
42Certain Relationships and Related Transactions
44Description of Capital Stock
45Outstanding Options and Warrants
46Underwriting
47Legal Matters
"Experts
49Available Information
"Index to Financial Statements
54FAMILY GOLF CENTERS, INC. AND SUBSIDIARIES Pro Forma Unaudited Condensed Balance Sheet as of March 31, 1996
58Acquired Companies
811995
86Inventory
"Property and Equipment
101Deferred Charges
115Revenues
132Accounts Receivable
133Note Payable -- Bank
161Depreciation
165Cash Flows From Financing Activities
170Sales
177Balance Sheet at December 31, 1994
195Cash and cash equivalents
209Golf Masters Limited Partnership
211Statement of Changes in Partners' Capital for the Year Ended December 31, 1994
212Statements of Income and Expense for the Year Ended December 31, 1994 and for the Nine Months Ended September 30, 1995
222Notes to the Financial Statements
424B11st Page of 228TOCTopPreviousNextBottomJust 1st
Filed Pursuant to Rule 424(b)(1) Registration File Nos. File No. 333-4541 and File No. 333-7489 PROSPECTUS 3,000,000 SHARES ############################################################################# GRAPHIC OMITTED ############################################################################# FAMILY GOLF CENTERS, INC. COMMON STOCK All of the 3,000,000 shares of common stock, par value $0.01 per share (the "Common Stock"), offered hereby (the "Offering"), are being sold by Family Golf Centers, Inc. (the "Company"). The Common Stock is quoted on the Nasdaq National Market under the symbol "FGCI." On July 2, 1996, the last sale price of the Common Stock as reported by the Nasdaq National Market was $28 1/8 per share. See "Price Range of Common Stock." SEE "RISK FACTORS" BEGINNING ON PAGE 7 HEREIN FOR A DISCUSSION OF CERTAIN MATTERS THAT SHOULD BE CONSIDERED BY POTENTIAL INVESTORS. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. · Download Table PRICE TO UNDERWRITING PROCEEDS TO PUBLIC DISCOUNT (1) COMPANY (2) -------------- -------------- --------------- Per Share .. $27.00 $1.89 $25.11 Total(3) .... $81,000,000 $5,670,000 $75,330,000 (1) The Company and certain stockholders of the Company have agreed to indemnify the several underwriters identified elsewhere herein (the "Underwriters") against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the "Securities Act"). See "Underwriting." (2) Before deducting expenses payable by the Company estimated at $500,000. (3) Certain stockholders of the Company (the "Selling Stockholders") have granted the Underwriters a 30-day option to purchase up to 450,000 additional shares of Common Stock on the same terms and conditions as set forth above, solely to cover over-allotments, if any. If the Underwriters exercise this option in full, the total Price to Public, Underwriting Discount, Proceeds to Company and proceeds to the Selling Stockholders will be $93,150,000, $6,520,500, $75,330,000 and $11,299,500, respectively. See "Principal Stockholders" and "Underwriting." The shares of Common Stock are offered by the Underwriters, subject to prior sale, when, as and if issued to and accepted by the Underwriters and subject to approval of certain legal matters by counsel for the Underwriters. It is expected that delivery of the Common Stock will be made against payment therefor on or about July 9, 1996, in New York, New York. JEFFERIES & COMPANY, INC. HAMPSHIRE SECURITIES CORPORATION July 3, 1996
424B12nd Page of 228TOC1stPreviousNextBottomJust 2nd
############################################################################# IMAGE OMITTED [Map depicting Locations of Family Golf Centers, Inc. Facilities ############################################################################# ############################################################################# IMAGES OMITTED ON INSIDE FRONT COVER AND INSIDE BACKCOVER OF PROSPECTUS VARIOUS PHOTOGRAPHS DEPICTING FAMILY GOLF CENTERS, INC. FACILITIES ############################################################################# IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. IN CONNECTION WITH THE OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP MEMBERS (IF ANY) OR THEIR RESPECTIVE AFFILIATES MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK ON THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE 10b-6A UNDER THE SECURITIES EXCHANGE ACT OF 1934. SEE "UNDERWRITING."
424B13rd Page of 228TOC1stPreviousNextBottomJust 3rd
PROSPECTUS SUMMARY The following summary is qualified in its entirety by the more detailed information and financial statements, including the notes thereto, appearing elsewhere in this Prospectus. Unless otherwise indicated, the information in this Prospectus assumes that the Underwriters' over-allotment option is not exercised. As used in this Prospectus, the term "Company" means, unless the context requires otherwise, Family Golf Centers, Inc. and its subsidiaries. Prospective investors are urged to read this Prospectus in its entirety. THE COMPANY Family Golf Centers, Inc. operates golf centers designed to provide a wide variety of practice opportunities, including facilities for driving, chipping, putting, pitching and sand play. In addition, the Company's golf centers typically offer golf lessons instructed by PGA-certified golf professionals, full-line pro shops and other amenities to encourage family participation. The Company currently owns, leases or manages 24 golf facilities, comprised of 17 golf centers and seven combination golf center and golf course facilities located in ten states. Of the golf centers, seven are currently operated under the name "Golden Bear Golf Centers," licensed from Jack Nicklaus' licensing company, Golden Bear Golf Centers, Inc. Of the seven combination golf center and golf course facilities, six include par-3 golf courses, generally designed to facilitate the practice of golf, and one includes a regulation 18-hole golf course. The Company has experienced significant recent growth, primarily through the acquisition or opening of 20 facilities since the Company's initial public offering in November 1994. The Company's total revenue increased from $1.9 million in 1992 to $12.4 million for the year ended December 31, 1995. During the same period, the Company's net income increased from a net loss of $22,000 to a net profit of $1.1 million. The Company's strategy is to grow revenue and net income by (i) increasing the number of golf centers it owns, leases or manages by (a) identifying and acquiring well-located ranges that have the potential for improvement under better management and with improved or expanded facilities, including the addition of enclosed hitting areas, full-line pro shops, miniature golf courses and other amenities and (b) building new centers in locations where suitable acquisition opportunities are not available and (ii) seeking to realize economies of scale through centralized purchasing, accounting, management information systems and cash management. According to the National Golf Foundation (the "NGF"), there were approximately 25 million golfers in the United States in 1995. According to the Golf Range and Recreational Association, there are currently between 1,900 and 2,300 stand-alone driving ranges in the United States. The NGF estimates that in 1993 92% of all stand-alone driving ranges were managed by owner-operators. The Company believes that many of these owner-operated ranges are managed by individuals who may lack the experience, expertise and financial resources to compete effectively. The Company believes this highly fragmented industry presents numerous opportunities for the Company to acquire, upgrade and renovate golf centers and driving ranges. The Company believes that it attracts customers to its golf centers primarily due to the quality, convenience and comfort of its facilities and their appeal to the whole family. The Company's golf centers are designed around a driving range with target greens, bunkers and traps to simulate golf course conditions. The ranges are lighted to permit night play and the hitting tees are enclosed or sheltered from above and from the rear in a climate-controlled environment and, in three cases, all or a portion of the range is enclosed under an air inflated dome to permit all-weather play. There are approximately 80 to 100 hitting tees in facilities with the two-tier design and approximately 30 to 60 hitting tees at smaller golf centers. In addition to the driving range, the Company's golf centers include a number of amenities designed to appeal to golfers and their families, such as a 4,000-6,000 square foot clubhouse (including a full-line pro shop, locker facilities, a restaurant or snack bar and video games), PGA-certified golf instructors, landscaped 18-hole miniature golf courses and a short game practice area (with putting green and sand traps). The Company's pro shops are stocked with clubs, bags, shoes, apparel, videos and related accessories from a number of suppliers, including brand name manufacturers such as Karsten Manufacturing Corporation (Ping), Callaway Golf Company, Tommy Armour Golf, Wilson Golf Company, 3
424B14th Page of 228TOC1stPreviousNextBottomJust 4th
Mizuno Golf Company, Spalding Sports Worldwide, Titleist and Footjoy Worldwide (Division of American Brands, Inc.), Ashworth Clothing Company and Nicklaus Golf Equipment Company. The Company was incorporated in the State of Delaware on July 13, 1994. The Company operates through its wholly-owned subsidiaries, the first of which was incorporated on March 27, 1991. The Company's principal executive offices are located at 225 Broadhollow Road, Melville, New York 11747 and its telephone number is (516) 694-1666 and its World Wide Web address is http://www.familygolf.com. THE OFFERING · Enlarge/Download Table Common Stock offered by the Company ................... 3,000,000 shares Common Stock to be outstanding after the Offering .... 11,598,025 shares(1) Use of proceeds ....................................... To repay approximately $6.6 million of bank indebtedness, for the acquisition, leasing, development and improvement of golf facilities and for general working capital purposes. See "Use of Proceeds." Nasdaq National Market symbol ......................... FGCI --------------- (1) Does not include 760,705 shares of Common Stock issuable upon exercise of outstanding options and warrants. See "Description of Capital Stock--Outstanding Options and Warrants." 4
424B15th Page of 228TOC1stPreviousNextBottomJust 5th
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA AND OTHER DATA The following table presents, for the periods and dates indicated, summary historical and pro forma financial data and other data of the Company. The pro forma condensed statements of operations data for the year ended December 31, 1995 and for the three months ended March 31, 1996 give effect to the acquisitions of Pelham Enterprises, Inc., the Hiland Park Golf Course, RFC Enterprises, Inc., Upper Hembree Partners, L.P., The Practice Tee, Inc. ("TPT"), Golf Masters Limited Partnership and Air Dome Limited Partnership (collectively, "Valley View"), Owl's Creek Golf Center, Inc., Flemington Golf and Sports Center, LLC and associated land, 202 Golf Associates, Inc. ("Yorktown Heights"), Indian River Golf-O-Rama, Inc. ("Indian River"), K.G. Golf, Inc. ("Fairfield"), Catalina Golf Center ("Tucson"), Tree Court Golf & Recreational Complex, Inc. ("St. Louis") and Golf & Sports Center of the Palm Beaches, Inc. and W.A.G.N. Partners (collectively, "West Palm Beach") as if they had been consummated as of January 1, 1995. The pro forma as adjusted statement of operations data for the three months ended March 31, 1996 also give effect to the sale of 199,124 shares of Common Stock offered hereby by the Company at an offering price of $27 per share and the application of the net proceeds therefrom to repay bank indebtedness of $5.0 million as described under "Use of Proceeds" as if such transaction had occurred as of January 1, 1996. The pro forma condensed balance sheet as of March 31, 1996 gives effect to the acquisition of Yorktown Heights, Indian River, Fairfield, Tucson, St. Louis and West Palm Beach as if they had occurred on March 31, 1996. The pro forma as adjusted balance sheet at March 31, 1996 also gives effect to the sale of 3,000,000 shares of Common Stock offered hereby by the Company at an offering price of $27 per share and the application of $5.0 million of the net proceeds therefrom to repay bank indebtedness as described under "Use of Proceeds" (excluding $1.6 million borrowed in contemplation of a potential acquisition of a golf recreational facility in San Jose, California). This information should be read in conjunction with "Capitalization," "Selected Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations," Pro Forma Unaudited Condensed Financial Information and the Company's Financial Statements and the notes thereto, each included elsewhere herein. The pro forma data set forth below is not necessarily indicative of what the actual results of operations would have been had the transactions occurred at the dates referred to above, nor do they purport to indicate the results of future operations. · Enlarge/Download Table YEAR ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31, ---------------------------------------- --------------------------------- PRO FORMA PRO PRO AS HISTORICAL FORMA HISTORICAL FORMA ADJUSTED ------------------------------- ------- -------------- ------ -------- 1992 1993 1994 1995 1995 1995 1996 1996 1996 ------ ------ ------ ------ ------- -------------- ------ -------- (IN THOUSANDS, EXCEPT PER SHARE DATA) STATEMENT OF OPERATIONS DATA: Total revenue ........................ $1,887 $2,632 $6,362 $12,432 $18,979 $1,782 $3,362 $3,973 $3,973 Operating expenses ................... 1,128 2,247 4,215 6,614 12,750 1,061 2,252 2,755 2,755 Cost of merchandise sold ............. 320 459 750 1,779 2,222 295 457 523 523 Selling, general and administrative expenses ............................ 351 615 548 1,242 2,576 352 643 743 743 ------ ------ ------ ------- ------- ------ ------ ------ ------ Operating income (loss) .............. 88 (689) 849 2,797 1,431 74 10 (48) (48) Interest expense ..................... (111) (192) (313) (939) (2,188) (92) (100) (176) (51) Other income ......................... 1 106 16 66 76 22 197 125 125 ------ ------ ------ ------- ------- ------ ------ ------ ------ Income (loss) before income taxes, minority interest and extraordinary item ................................ (22) (775) 552 1,924 (681) 4 107 (99) (26) Income tax expense (benefit) ......... -- -- (65) 669 (246) 2 38 (36) (9) ------ ------ ------ ------- ------- ------ ------ ------ ------ Income (loss) before minority interest and extraordinary item .... (22) (775) 617 1,255 (435) 2 69 (63) (17) Minority interest in (income) loss .. -- 12 (129) -- -- -- -- -- -- Extraordinary item (net of tax effect) ............................. -- -- -- 181 -- -- -- -- -- ------ ------ ------ ------- ------- ------ ------ ------ ------ Net income (loss) .................... $ (22) $ (763) $ 488 $ 1,074 $ (435) $ 2 $ 69 $ (63) $ (17) ====== ====== ====== ======= ======= ====== ====== ====== ====== Net income (loss) per share before extraordinary item .................. $(0.23) $ 0.13 $ 0.24 $ (0.08) $ 0.00 $ 0.01 $(0.01) $ 0.00 Extraordinary item ................... -- -- (.04) -- -- -- -- -- ------ ------ ------- ------- ------ ------ ------ ------ Net income (loss) per share .......... $(0.23) $ 0.13 $ 0.20 $ (0.08) $ 0.00 $ 0.01 $(0.01) $ 0.00 ====== ====== ======= ======= ====== ====== ====== ====== Weighted average number of common shares outstanding .................. 3,272 3,636 5,271 5,637 4,938 8,648 8,779 8,978 ====== ====== ======= ======= ====== ====== ====== ====== 5
424B16th Page of 228TOC1stPreviousNextBottomJust 6th
· Enlarge/Download Table AT DECEMBER 31, 1995 AT MARCH 31, 1996 -------------------- ----------------------------------------- PRO FORMA AS HISTORICAL HISTORICAL PRO FORMA ADJUSTED(1) -------------------- ------------- ----------- ------------- (DOLLARS IN THOUSANDS) BALANCE SHEET DATA: Cash and cash equivalents ............. $23,121 $11,147 $ 7,532 $ 77,362 Working capital ....................... 20,598 12,950 4,373 79,203 Total assets .......................... 61,582 63,130 68,800 138,630 Short-term borrowings ................. 5,000 Total long-term debt, including current maturities ................... 8,193 8,752 8,752 8,752 Total stockholders' equity ............ 49,388 51,986 52,586 127,416 · Enlarge/Download Table THREE MONTHS YEAR ENDED DECEMBER 31, ENDED MARCH 31, ------------------------------ --------------- 1992 1993 1994 1995 1995 1996 ------ ------ ------ ------ ------ ------- OTHER DATA: Facilities open at beginning of period .............................. 0 1 2 5 5 14 Facilities built during period ...... 1 1 2 1 1 1 Facilities or management contracts acquired during period .............. 0 0 1 8 0 3 ------ ------ ------ ------ ------ ------ Facilities open at end of period .... 1 2 5 14 6 18(2) ====== ====== ====== ====== ====== ====== (1) Assumes that as of March 31, 1996 the sale by the Company of 3,000,000 shares of Common Stock in the Offering at an offering price of $27 per share and the application of the net proceeds therefrom to repay indebtedness of $5.0 million as set forth in "Use of Proceeds" had occurred. (2) Subsequent to March 31, 1996, the Company acquired six golf facilities. 6
424B17th Page of 228TOC1stPreviousNextBottomJust 7th
RISK FACTORS Prospective investors should carefully consider the specific factors set forth below, as well as the other information included in this Prospectus, before deciding to invest in the Common Stock offered hereby. This Prospectus contains forward-looking statements that involve risks and uncertainties. The Company's actual results could differ materially from the results discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in "Risk Factors," as well as those discussed elsewhere in this Prospectus. LIMITED OPERATING HISTORY The Company opened its first golf center in March 1992 and, accordingly, has only a limited history of operations. The Company generated net income of approximately $488,000 during the year ended December 31, 1994, approximately $1.1 million during the year ended December 31, 1995 and approximately $69,000 for the three months ended March 31, 1996. However, the Company experienced losses prior to 1994 and there can be no assurance that the Company will operate profitably in the future or that recent results of operations will be indicative of future results. See "Risk Factors--Expansion Strategy" and Pro Forma Unaudited Condensed Statement of Operations. EXPANSION STRATEGY The Company's ability to significantly increase revenue, net income and operating cash flow over time depends in large part upon its success in acquiring or leasing and constructing additional golf facilities at suitable locations upon satisfactory terms. There can be no assurance that suitable golf facility acquisition or lease opportunities will be available or that the Company will be able to consummate acquisition or leasing transactions on satisfactory terms. The acquisition of golf facilities may become more expensive in the future to the extent that demand and competition increases. The likelihood of the success of the Company must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered in connection with the construction and opening of new golf facilities. See "Risk Factors--Additional Financing Requirements," "Risk Factors--Dependence Upon Key Employee; Recruitment of Additional Personnel," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business." To successfully implement its expansion strategy, the Company must integrate acquired or newly- opened golf facilities into its existing operations. As the Company grows, there can be no assurance that additional golf facilities can be readily assimilated into the Company's operating structure. Inability to efficiently integrate golf facilities could have a material adverse effect on the Company's financial condition and results of operations. In addition, a number of the golf facilities which the Company has acquired have, and golf facilities it may acquire in the future may have, experienced losses. On a pro forma basis, as adjusted to give effect to the acquisitions consummated after January 1, 1995 as if they had occurred as of January 1, 1995, the Company had a net loss before extraordinary item of $435,000 (as compared to income before extraordinary item of $1.3 million on a historical basis) for the year ended December 31, 1995 and a net loss of $63,000 (as compared to net income of $69,000 on a historical basis) for the three months ended March 31, 1996. There can be no assurance that golf facilities recently acquired by the Company or those that the Company may acquire in the future will operate profitably and will not adversely affect the Company's results of operations. See "Business" and Pro Forma Unaudited Condensed Statement of Operations. TERMINATION OF LEASES Although after giving effect to renewal options none of the Company's leases for its golf centers or facilities is expected to expire until 2007, the leases may be terminated prior to their scheduled expiration should the Company default in its obligations thereunder. Such obligations include the Company's timely payment of rent and maintenance of adequate insurance coverage. The termination of any of the Company's leases could have an adverse effect on the Company. If any of the Company's leases were to be terminated, there can be no assurance that the Company would be able to enter into leases for comparable properties on favorable terms, or at all. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." 7
424B18th Page of 228TOC1stPreviousNextBottomJust 8th
TERMINATION OF MANAGEMENT AGREEMENTS The Company's management agreement with the City of New York (the "City") for the Douglaston, New York golf center, which expires on December 31, 2006, is terminable by the City at will. During the year ended December 31, 1995, the management agreement accounted for 17% of the Company's total revenue. Pursuant to the management agreement, as of March 31, 1996 the Company had made approximately $2.3 million of capital improvements to the Douglaston center. If the management agreement is terminated, the City may retain, and is not obligated to pay the Company for the value of, such capital improvements. Unless reimbursed, for accounting purposes the Company would immediately have to write off the undepreciated value of these capital improvements and the goodwill related to its purchase of the limited partners' minority interest (the "Minority Interest") in Alley Pond Associates, L.P., which are currently being depreciated and amortized over the life of the management agreement. Accordingly, termination of the management agreement with the City could have a material adverse effect on the Company. See "Business--Properties." The Company's management agreement with the City of El Segundo for the El Segundo golf facility terminates on June 30, 1998, unless earlier terminated by either party, with or without cause, as of the end of any operating year during the term of the agreement, upon at least 90 days prior written notice. Termination of the management agreement with the City of El Segundo may have an adverse effect on the Company. See "Business--Properties." GOLDEN BEAR LICENSE The Company operates seven of its golf centers, and intends to operate at least one additional golf center, under the name "Golden Bear Golf Center" pursuant to a non-exclusive license agreement (the "License Agreement"), expiring August 2002, with Golden Bear Golf Centers, Inc. (the "Licensor"). The License Agreement is terminable by the Licensor prior to August 2002 under certain circumstances, including if the current directors of the Company at any time constitute less than 50% of the Company's directors. In September 1995, the Company agreed to cure an alleged default of the License Agreement (principally by making certain capital improvements by November 1996). Failure by the Company to take the agreed upon actions by such date could result in the termination of the License Agreement. Termination of the License Agreement could adversely affect the Company's Golden Bear Golf Centers and, possibly, the Company. The value of the "Golden Bear" name is dependent, in part, upon the continued popularity of Jack Nicklaus. Accordingly, the occurrence of any event which diminishes the reputation of Mr. Nicklaus and the related "Golden Bear" symbol could adversely affect the Company's Golden Bear Golf Centers. See "Risk Factors--Competition" and "Business--Golden Bear License." COMPETITION The golf center industry is highly competitive and includes competition from other golf centers, traditional golf ranges, golf courses and other recreational pursuits. The Company may face imitation and other forms of competition and the Company cannot prevent or restrain others from utilizing a similar operational strategy. Many of the Company's competitors and potential competitors have considerably greater financial and other resources, experience and customer recognition than does the Company. Until September 1995, the Company had the exclusive right to open Golden Bear Golf Centers in certain territories. As a result of a change in the License Agreement in September 1995, the Licensor now is permitted to establish, or license others to establish, "Golden Bear" golf centers that compete with the Company's golf centers, including its Golden Bear Golf Centers. Golden Bear Golf, Inc., an affiliate of the Licensor, has recently publicly indicated that it intends to focus its efforts on the direct ownership and operation of golf facilities through the acquisition or development of additional golf centers and to pursue new licensees and enter into additional territorial development agreements only in locations and territories where it and its affiliates do not intend to acquire or develop their own facilities. There can be no assurance that such competition will not adversely affect the Company's ability to acquire additional properties. See "Business--Competition." VULNERABILITY TO WEATHER CONDITIONS AND SEASONAL RESULTS Historically, the second and third quarters of the year have accounted for a greater portion of the Company's operating revenue than have the first and fourth quarters of the year. This is primarily due to an outdoor playing season limited by inclement weather. Although most of the Company's driving ranges are designed to be all-weather facilities (including the domed facilities), and although the Company has recently expanded its operations into territories where inclement weather may have less of an impact than 8
424B19th Page of 228TOC1stPreviousNextBottomJust 9th
in the Northeast, portions of the Company's facilities, including the miniature golf courses, are outdoors and vulnerable to weather conditions. Also, golfers are less inclined to practice when weather conditions limit their ability to play golf on outdoor courses. This seasonal pattern, as well as the timing of new center openings and acquisitions, may cause the Company's results of operations to vary significantly from quarter to quarter. Accordingly, period-to-period comparisons are not necessarily meaningful and should not be relied on as indicative of future results. In addition, variability in the Company's results of operations could cause the Company's stock price to fluctuate following the release of interim results of operations or other information and may have a material adverse effect on the Company and its stock price. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." ADDITIONAL FINANCING REQUIREMENTS As of March 31, 1996, the Company had working capital of approximately $13.0 million. The Company anticipates, based on its currently proposed expansion plans and assumptions relating to its operations, that the net proceeds of the Offering, together with availability under its primary credit facility and cash flow from operations, will be sufficient to permit the Company to conduct its operations and to carry on its contemplated expansion over at least the next 12 months. The Company also anticipates that it may need to raise substantial additional equity capital in the future to continue its longer term expansion plans. There can be no assurance that the Company will be able to obtain additional financing on favorable terms or at all. See "Use of Proceeds," "Capitalization" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." ENVIRONMENTAL REGULATION Operations at the Company's golf facilities involve the use and limited storage of various hazardous materials such as pesticides, herbicides, motor oil, gasoline and paint. Under various federal, state and local laws, ordinances and regulations, an owner or operator of real property is generally liable for the costs of removal or remediation of hazardous substances that are released on or in its property regardless of whether the property owner or operator knew of, or was responsible for, the release of hazardous materials. The Company has not been informed by any governmental authority of any non-compliance or violation of any environmental laws, ordinances or regulations and the Company believes that it is in substantial compliance with all such laws, ordinances and regulations applicable to its properties or operations. However, the Company is aware of one notice of violation issued by the New York Department of Environmental Conservation (the "DEC") against the owner of the land leased by the Company in Elmsford, New York alleging that certain hazardous materials were placed on the site. The owner has taken remedial action and the Company does not believe it will be affected by the alleged violation. To date, the Company has not incurred material costs of remediation in relation to any of its golf facilities and the Company knows of no material environmental liability to which it may become subject. Although the Company usually hires environmental consultants to conduct environmental studies, including invasive procedures such as soil sampling or ground water analysis on golf facilities it owns, operates or intends to acquire, in some cases only limited invasive procedures are conducted on such properties. Even when invasive procedures are used, environmental studies may fail to discover all potential environmental problems. Accordingly, there may be potential environmental liabilities or conditions of which the Company is not aware. See "Business--Governmental Regulation." DEPENDENCE UPON KEY EMPLOYEE; RECRUITMENT OF ADDITIONAL PERSONNEL The Company is heavily dependent on the services of Dominic Chang, its Chairman of the Board, President and Chief Executive Officer. The loss of the services of Mr. Chang could materially adversely affect the Company. Mr. Chang has entered into an employment agreement with the Company which terminates on December 31, 1999. See "Management--Employment Agreements." The Company owns, and is the sole beneficiary of, key person life insurance in the amount of $1.5 million on the life of Mr. Chang. The Company will also be required to hire additional personnel and PGA-certified professionals to staff the golf centers it intends to acquire, lease or construct. There can be no assurance that the Company will be able to attract and retain qualified personnel. See "Business--Operations," "Business--Employees" and "Management." 9
424B110th Page of 228TOC1stPreviousNextBottomJust 10th
DILUTION Purchasers in the Offering will experience immediate and substantial dilution of $16.02 in net tangible book value per share of the Common Stock. CONTROL BY CURRENT STOCKHOLDER Following the completion of the Offering, Dominic Chang will beneficially own 2,822,750 shares of Common Stock, constituting approximately 24.3% of the outstanding shares (or if the Underwriters' over-allotment option is exercised in full, Mr. Chang will beneficially own 2,549,334 shares of Common Stock, constituting approximately 22.0% of the outstanding shares). Mr. Chang will, therefore, be able to exercise significant influence with respect to the election of the directors of the Company and all matters submitted to a vote of the stockholders of the Company, including the acquisition or disposition of material assets. See "Management" and "Principal Stockholders." DEPENDENCE ON DISCRETIONARY CONSUMER SPENDING The amount spent by consumers on discretionary items, such as family and entertainment activities like those offered by the Company's golf facilities, have historically been dependent upon levels of discretionary income, which may be adversely affected by general economic conditions. A decrease in consumer spending on golf could have an adverse effect on the Company's financial condition and results of operations. BROAD DISCRETION IN USE OF PROCEEDS The Company intends to use substantially all of the net proceeds of the Offering for the acquisition, leasing, development and improvement of golf facilities and for general working capital purposes. Accordingly, the Company will have broad discretion as to the application of such proceeds. An investor will not have the opportunity to evaluate the economic, financial and other relevant information which will be utilized by the Company in determining the application of such proceeds in the acquisition, leasing, development and improvement of golf facilities. See "Use of Proceeds." DIVIDEND POLICY The Company has not paid any cash dividends on the Common Stock since inception and does not intend to pay any dividends to its stockholders in the foreseeable future. The Company currently intends to reinvest earnings, if any, in the development and expansion of its business. See "Dividend Policy." SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS The sale, or availability for sale, of substantial amounts of Common Stock in the public market subsequent to the Offering pursuant to Rule 144 under the Securities Act ("Rule 144") or otherwise could materially adversely affect the market price of the Common Stock and could impair the Company's ability to raise additional capital through the sale of its equity securities or debt financing. In general, under Rule 144 as currently in effect, a person (or persons whose shares are aggregated), including a person who may be deemed to be an "affiliate" of the Company as that term is defined under the Securities Act, would be entitled to sell within any three month period a number of shares beneficially owned for at least two years that does not exceed the greater of (i) 1% of the then outstanding shares of Common Stock, or (ii) the average weekly trading volume in the Common Stock during the four calendar weeks preceding such sale. Sales under Rule 144 are also subject to certain requirements as to the manner of sale, notice and the availability of current public information about the Company. However, a person who is not deemed to have been an affiliate of the Company during the 90 days preceding a sale by such person and who has beneficially owned shares of Common Stock for at least three years may sell such shares without regard to the volume, manner of sale or notice requirements of Rule 144. Of the 11,598,025 shares of Common Stock outstanding after the Offering, 7,980,075 shares will be freely tradeable without restrictions following completion of the Offering, unless held by "affiliates" of 10
424B111th Page of 228TOC1stPreviousNextBottomJust 11th
the Company who are subject to certain volume limitations and manner of sale restrictions, and 3,617,950 will be "restricted securities" as that term is defined in Rule 144. The two-year holding period for substantially all of the "restricted securities" will have been met by November 1996 and such securities may, subject to the agreements described below, be sold without registration under the Securities Act, subject to volume limitations and other restrictions. The holders of 3,161,950 shares of Common Stock (not including those shares to be sold if the Underwriters' over-allotment option is exercised) and the holders of options to purchase up to 169,000 shares of Common Stock will remain subject to an agreement entered into, in connection with the Company's public offering in December 1995 (the "Secondary Offering"), pursuant to which they cannot publicly sell or otherwise dispose of any securities of the Company until December 13, 1996 without the prior written consent of Jefferies & Company, Inc. ("Jefferies"). Mr. Chang has pledged 361,750 shares of Common Stock to two banks to secure personal loans, and may in the future pledge additional shares to secure additional personal loans, which shares are not, or would not be, subject to such agreements. The holders of warrants to purchase up to 300,000 shares of Common Stock issued to the representatives of the underwriters and their designees in the Secondary Offering have certain demand and "piggyback" registration rights commencing in December 1996. The holder of warrants to purchase up to 70,000 shares of Common Stock issued to a consultant have certain "piggyback" registration rights and certain demand registration rights commencing one month after the closing of the Offering. In addition, as of the date of this Prospectus, the holders of an aggregate of 247,100 shares of Common Stock (including 76,584 shares to be registered and sold if the Underwriters' over-allotment option is exercised in full) have certain "piggyback" registration rights, which commence on various dates in 1996. Of these 247,100 shares, approximately 64,351 are held in escrow, and will be released, subject to certain conditions, on various dates in 1996 and 1997. See "Description of Capital Stock--Outstanding Options and Warrants." PREFERRED STOCK; POSSIBLE ANTI-TAKEOVER EFFECTS OF CERTAIN CHARTER, BY-LAW AND CONTRACTUAL PROVISIONS The Company's Certificate of Incorporation authorizes the Board of Directors to issue up to 2,000,000 shares of preferred stock, par value $.10 per share. The preferred stock may be issued in one or more series, the terms of which may be determined at the time of issuance by the Board of Directors, without further action by stockholders. Although no preferred stock is currently outstanding and the Company currently has no plans for the issuance of any preferred stock, there can be no assurance that the Company will not do so in the future. The ability of the Board of Directors to issue preferred stock could have the effect of delaying, deferring or preventing a change of control of the Company or the removal of existing management and, as a result, could prevent the stockholders of the Company from being paid a premium over the market value for their shares of Common Stock. The Company's By-Laws contain provisions requiring advance notice of stockholder proposals and imposing certain procedural restrictions on stockholders wishing to call a special meeting of stockholders. In addition, the License Agreement may be terminated by the Licensor if the current members of the Company's Board of Directors do not constitute at least 50% of the Company's Board of Directors. Such provisions could discourage possible future attempts to gain control of the Company (which attempts, if stockholders were offered a premium over the market value of their Common Stock, might be viewed as beneficial to stockholders). See "Business--Golden Bear License" and "Description of Capital Stock." 11
424B112th Page of 228TOC1stPreviousNextBottomJust 12th
USE OF PROCEEDS The net proceeds to be received by the Company from the sale of the 3,000,000 shares of Common Stock being offered by the Company are estimated to be approximately $74.8 million, after deducting underwriting discounts and estimated offering expenses payable by the Company, based upon an offering price of $27 per share. Approximately $5.0 million of the net proceeds will be used to repay indebtedness outstanding under the Company's revolving line of credit with Chemical Bank, which expired on June 30, 1996 and which, as of June 27, 1996, bore interest at 8.5%. The Company has received a letter of intent from Chemical Bank to extend the line of credit to June 30, 1997. Such indebtedness was incurred to purchase the Tucson, Arizona, Fairfield, Ohio and St. Louis, Missouri golf centers and a portion of the West Palm Beach, Florida golf center. If the proposed acquisition of the golf recreational facility in San Jose, California is consummated, approximately $1.6 million of the net proceeds will be used to repay short-term indebtedness with Chemical Bank incurred in contemplation of that acquisition, which indebtedness matures on September 5, 1996 and bears interest at 8.5%. See "Business--Recently Opened or Acquired Facilities" and "--Other Potential Sites." The Company intends to use the balance of the net proceeds of the Offering for the acquisition, leasing, development and improvement of golf facilities and for general working capital purposes. Pending the uses described above, the net proceeds from the Offering will be invested in investment-grade, short-term, interest-bearing securities. The Company will not receive any proceeds from the sale of Common Stock by the Selling Stockholders in connection with any exercise of the Underwriters' over-allotment option. PRICE RANGE OF COMMON STOCK The Company's Common Stock is quoted on the Nasdaq National Market under the symbol "FGCI." The following table sets forth, for the periods indicated, the high and low last sale prices for the Common Stock as reported by the Nasdaq National Market. · Download Table STOCK PRICE ------------------- HIGH LOW ---------- ------- CALENDAR YEAR 1994: Fourth Quarter (from November 17, 1994 through December 31, 1994) .................. $ 7 1/4 $ 5 3/4 CALENDAR YEAR 1995: First Quarter ................................ $ 7 7/8 $ 6 Second Quarter ............................... 11 5 1/2 Third Quarter ................................ 19 5/8 10 1/4 Fourth Quarter ............................... 19 12 3/4 CALENDAR YEAR 1996: First Quarter ................................ $27 3/4 $17 1/8 Second Quarter ............................... 29 3/4 25 5/8 Third Quarter (through July 2, 1996) ........ 29 1/8 24 3/4 On July 2, 1996, the last reported sale price for the Company's Common Stock on the Nasdaq National Market was $28 1/8 per share. As of June 27, 1996, there were 90 stockholders of record of the Common Stock. DIVIDEND POLICY The Company has neither declared nor paid dividends on its Common Stock and does not intend to declare or pay any dividends in the foreseeable future. The Company currently intends to retain earnings, if any, for the development and expansion of its business. The declaration of dividends in the future will be at the election of the Board of Directors and will depend upon the earnings, capital requirements and financial position of the Company, general economic conditions and other pertinent factors. 12
424B113th Page of 228TOC1stPreviousNextBottomJust 13th
CAPITALIZATION The following table sets forth, at March 31, 1996, the actual short-term debt and capitalization of the Company, and the pro forma short-term debt and capitalization of the Company as if the acquisitions of Yorktown Heights, Indian River, Fairfield, Tucson, St. Louis and West Palm Beach had been consummated as of such date and as adjusted to give effect to the sale of 3,000,000 shares of Common Stock offered hereby by the Company at an offering price of $27 per share. This table should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations," Pro Forma Unaudited Condensed Balance Sheet and notes thereto and the Company's Financial Statements and notes thereto, each included elsewhere herein. · Enlarge/Download Table AT MARCH 31, 1996 ------------------------------------- PRO FORMA AS ACTUAL PRO FORMA ADJUSTED --------- ----------- ------------- (DOLLARS IN THOUSANDS) Current portion of long-term obligations and short-term debt $ 1,523 $ 6,523 $ 1,523 ========= =========== ============= Long-term obligations ........................................ $ 7,229 $ 7,229 $ 7,229 Stockholders' equity (1): Preferred stock, $0.10 par value, 1,000,000 shares authorized; as adjusted, 2,000,000 shares authorized (2), none outstanding ........................................... -- -- -- Common stock, $0.01 par value, 10,000,000 shares authorized; as adjusted, 50,000,000 shares authorized (2), 8,489,325 issued and outstanding (8,520,225 pro forma, 11,520,225 pro forma as adjusted) ......................................... 85 85 115 Additional paid-in capital .................................. 50,909 51,509 126,309 Retained earnings ........................................... 1,027 1,027 1,027 Treasury stock .............................................. (35) (35) (35) --------- ----------- ------------- Total stockholders' equity ................................. 51,986 52,586 127,416 --------- ----------- ------------- Total capitalization ...................................... $59,215 $59,815 $134,645 ========= =========== ============= ------------ (1) Does not include any shares issuable upon exercise of outstanding stock options or warrants. (2) Gives effect to the increase in the Company's authorized number of shares of preferred stock from 1,000,000 to 2,000,000 and the increase in the authorized number of shares of Common Stock from 10,000,000 to 50,000,000 subsequent to March 31, 1996. 13
424B114th Page of 228TOC1stPreviousNextBottomJust 14th
SELECTED FINANCIAL DATA The following table presents, for the periods and dates indicated, summary historical and pro forma financial data and other data of the Company. The pro forma condensed statements of operations data for the year ended December 31, 1995 and the three months ended March 31, 1996 give effect to the acquisitions of Pelham Enterprises, Inc., the Hiland Park Golf Course, RFC Enterprises, Inc., Upper Hembree Partners, L.P., TPT, Valley View, Owl's Creek Golf Centers, Inc., Flemington Golf and Sports Center, LLC and associated land, Yorktown Heights, Indian River, Fairfield, Tucson, St. Louis and West Palm Beach as if they had been consummated as of January 1, 1995. The pro forma as adjusted statement of operations data for the three months ended March 31, 1996 also give effect to the sale of 199,124 shares of Common Stock offered hereby by the Company at an offering price of $27 per share and the application of the net proceeds therefrom to repay bank indebtedness of $5.0 million as described under "Use of Proceeds" as if such transaction had occurred as of January 1, 1996. The pro forma condensed balance sheet as of March 31, 1996 gives effect to the acquisition of Yorktown Heights, Indian River, Fairfield, Tucson, St. Louis and West Palm Beach as if they had occurred on March 31, 1996. The pro forma as adjusted balance sheet at March 31, 1996 also gives effect to the sale of 3,000,000 shares of Common Stock offered hereby by the Company at an offering price of $27 per share and the application of $5.0 million of the net proceeds therefrom to repay bank indebtedness as described under "Use of Proceeds" (excluding $1.6 million borrowed in contemplation of a potential acquisition of a golf recreational facility in San Jose, California). This information should be read in conjunction with "Capitalization," "Selected Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations," Pro Forma Unaudited Condensed Financial Information and the Company's Financial Statements and the notes thereto, each included elsewhere herein. The pro forma data set forth below is not necessarily indicative of what the actual results of operations would have been had the transactions occurred at the dates referred to above, nor do they purport to indicate the results of future operations. · Enlarge/Download Table YEAR ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31, ---------------------------------------- --------------------------------- PRO FORMA PRO PRO AS HISTORICAL FORMA HISTORICAL FORMA ADJUSTED ------------------------------- ------- -------------- ------ -------- 1992 1993 1994 1995 1995 1995 1996 1996 1996 ------ ------ ------ ------ ------- -------------- ------ -------- (IN THOUSANDS, EXCEPT PER SHARE DATA) STATEMENT OF OPERATIONS DATA: Total revenue ........................ $1,887 $2,632 $6,362 $12,432 $18,979 $1,782 $3,362 $3,973 $3,973 Operating expenses ................... 1,128 2,247 4,215 6,614 12,750 1,061 2,252 2,755 2,755 Cost of merchandise sold ............. 320 459 750 1,779 2,222 295 457 523 523 Selling, general and administrative expenses ............................ 351 615 548 1,242 2,576 352 643 743 743 ------ ------ ------ ------- ------- ------ ------ ------ ------ Operating income (loss) .............. 88 (689) 849 2,797 1,431 74 10 (48) (48) Interest expense ..................... (111) (192) (313) (939) (2,188) (92) (100) (176) (51) Other income ......................... 1 106 16 66 76 22 197 125 125 ------ ------ ------ ------- ------- ------ ------ ------ ------ Income (loss) before income taxes, minority interest and extraordinary item ................................ (22) (775) 552 1,924 (681) 4 107 (99) (26) Income tax expense (benefit) ......... -- -- (65) 669 (246) 2 38 (36) (9) ------ ------ ------ ------- ------- ------ ------ ------ ------ Income (loss) before minority interest and extraordinary item .... (22) (775) 617 1,255 (435) 2 69 (63) (17) Minority interest in (income) loss .. -- 12 (129) -- -- -- -- -- -- Extraordinary item (net of tax effect) ............................. -- -- -- 181 -- -- -- -- -- ------ ------ ------ ------- ------- ------ ------ ------ ------ Net income (loss) .................... $ (22) $ (763) $ 488 $ 1,074 $ (435) $ 2 $ 69 $ (63) $ (17) ====== ====== ====== ======= ======= ====== ====== ====== ====== Net income (loss) per share before extraordinary item .................. $(0.23) $ 0.13 $ 0.24 $ (0.08) $ 0.00 $ 0.01 $(0.01) $ 0.00 Extraordinary item ................... -- -- (.04) -- -- -- -- -- ------ ------ ------- ------- ------ ------ ------ ------ Net income (loss) per share .......... $(0.23) $ 0.13 $ 0.20 $ (0.08) $ 0.00 $ 0.01 $(0.01) $ 0.00 ====== ====== ======= ======= ====== ====== ====== ====== Weighted average number of common shares outstanding .................. 3,272 3,636 5,271 5,637 4,938 8,648 8,779 8,978 ====== ====== ======= ======= ====== ====== ====== ====== 14
424B115th Page of 228TOC1stPreviousNextBottomJust 15th
· Enlarge/Download Table AT DECEMBER 31, 1995 AT MARCH 31, 1996 -------------------- ----------------------------------------- PRO FORMA AS HISTORICAL HISTORICAL PRO FORMA ADJUSTED(1) -------------------- ------------ ----------- -------------- (DOLLARS IN THOUSANDS) BALANCE SHEET DATA: Cash and cash equivalents ......................... $23,121 $11,147 $ 7,532 $ 77,362 Working capital ................................... 20,598 12,950 4,373 79,203 Total assets ...................................... 61,582 63,130 68,800 138,630 Short-term borrowings ............................. 5,000 Total long-term debt, including current maturities 8,193 8,752 8,752 8,752 Total stockholders' equity ........................ 49,388 51,986 52,586 127,416 · Enlarge/Download Table THREE MONTHS YEAR ENDED DECEMBER 31, ENDED MARCH 31, ------------------------------ --------------- 1992 1993 1994 1995 1995 1996 ------ ------ ------ ------ ------ ------- OTHER DATA: Facilities open at beginning of period .... 0 1 2 5 5 14 Facilities built during period ............. 1 1 2 1 1 1 Facilities or management contracts acquired during period ............................. 0 0 1 8 0 3 ------ ------ ------ ------ ------ ------ Facilities open at end of period ........... 1 2 5 14 6 18(2) ====== ====== ====== ====== ====== ====== ------------ (1) Assumes that as of March 31, 1996 the sale by the Company of 3,000,000 shares of Common Stock in the Offering at an offering price of $27 per share and the application of the net proceeds therefrom to repay indebtedness of $5.0 million as set forth in "Use of Proceeds" had occurred. (2) Subsequent to March 31, 1996, the Company acquired six golf facilities. 15
424B116th Page of 228TOC1stPreviousNextBottomJust 16th
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with the Company's Financial Statements and the notes thereto appearing elsewhere in this Prospectus. This Prospectus contains forward-looking statements that involve risks and uncertainties. The Company's actual results could differ materially from the results discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in "Risk Factors," as well as those discussed elsewhere in this Prospectus. GENERAL The Company's strategy is to grow revenue and net income by (i) increasing the number of golf centers it owns, leases or manages by (a) identifying and acquiring well-located ranges that have the potential for improvement under better management and with improved or expanded facilities, including the addition of enclosed hitting areas, full-line pro shops, miniature golf courses and other amenities and (b) building new centers in locations where suitable acquisition opportunities are not available and (ii) seeking to realize economies of scale through centralized purchasing, accounting, management information and cash management systems. The Company currently owns, leases or manages 24 golf facilities, comprised of 17 golf centers and seven combination golf center and golf course facilities. Of the seven combination golf center and golf course facilities, six include par-3 golf courses, generally designed to facilitate the practice of golf, and one includes a regulation 18-hole golf course. The following table sets forth certain information as to the Company's golf facilities: · Enlarge/Download Table OWNED LEASED MANAGED TOTAL --------- ---------- ----------- --------- AT JANUARY 1, 1992 ............................................. -- -- -- 0 Facilities built during 1992 .................................. -- 1 -- 1 Facilities or management contracts acquired during 1992 ...... -- -- -- 0 --------- ---------- ----------- --------- AT JANUARY 1, 1993 ............................................. -- 1 -- 1 Facilities built during 1993 .................................. -- 1 -- 1 Facilities or management contracts acquired during 1993 ...... -- -- -- 0 --------- ---------- ----------- --------- AT JANUARY 1, 1994 ............................................. -- 2 -- 2 Facilities built during 1994 .................................. -- 1 1 2 Facilities or management contracts acquired during 1994 ...... -- 1 -- 1 --------- ---------- ----------- --------- AT JANUARY 1, 1995 ............................................. -- 4 1 5 Facilities built during 1995 .................................. -- 1 -- 1 Facilities or management contracts acquired during 1995 ...... 6 1 1 8 --------- ---------- ----------- --------- AT JANUARY 1, 1996 ............................................. 6 6 2 14 Facilities built during the first three months of 1996 ....... -- 1 -- 1 Facilities or management contracts acquired during the first three months of 1996 ......................................... 2 1 -- 3 Facilities or management contracts acquired after March 31, 1996 ............................................... 3 3 -- 6 --------- ---------- ----------- --------- AT JULY 2, 1996 ................................................ 11 11 2 24 ========= ========== =========== ========= The Company's golf facilities have opened at varying times over the past several years. As a result of changes in the number of golf centers open from period to period, the seasonality of operations, the completion of the Company's initial public offering in November 1994 (the "IPO") and the Secondary Offering in December 1995, results of operations for any particular period may not be indicative of the results of operations in the future. Most of the Company's revenues from its golf centers are derived from selling tokens for use in automated range-ball dispensing machines, pro shop merchandise sales, charging for rounds of miniature golf, golf lessons and management fees. The Company also derives revenues at its golf centers from food 16