##### Table of Contents









UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549




---

FORM 10-K

(Mark One)



| |     |                                                                                         
| | --- | ----------------------------------------------------------------------------------------
| | [X] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934
|
| |     | For the fiscal year ended June 30,
    2004                                             

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: 1-13173

Boca Resorts, Inc.

(Exact Name of Registrant as Specified in its
Charter)


|                                            |  |                                     
|------------------------------------------- |  | ------------------------------------
|Delaware                                    |  | 65-0676005                          
|(State of Incorporation)                    |  | (I.R.S. Employer Identification No.)
|                                           
|501 E. Camino Real, Boca Raton,
    Florida |  | 33432                               
|(Address of Principal Executive Offices)    |  | (Zip Code)                          

Registrants telephone number, including
area code:  (561) 447-5300

Securities registered pursuant to
Section 12(b) of the Act:

|                                                   |  |                                          
|-------------------------------------------------- |  | -----------------------------------------
|Title of class                                     |  | Name of each exchange on which registered
|                                                   |  |                                          
|Class A Common Stock,
    par value $.01 per share |  | New York Stock Exchange                  

Securities registered pursuant to
Section 12(g) of the Act:

None

(Title of class)


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 o

Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be
contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to
this Form 10-K. x

Indicate by check mark whether the registrant is
an accelerated filer (as defined in Exchange Act
Rule 12b-2).  Yes x  No o

As of August 31, 2004, the registrant had
39,985,789 shares of Class A common stock, $ .01 par value
(the Class A Common Stock), outstanding and
255,000 shares of Class B common stock, $.01 par value (the
Class B Common Stock), outstanding.

The aggregate market value of the
Registrants common equity held by non-affiliates computed
by reference to the price at which the common equity was last
sold as of the last business day of the Registrants most
recently completed second fiscal quarter was $455.4 million.

DOCUMENTS INCORPORATED BY REFERENCE

Part III Portions of the Registrants Proxy
Statement relating to the 2004 Annual Meeting of Stockholders.

Part IV Portions of previously filed reports and
registration statements.









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INDEX

TO FORM 10-K


|                                              |  |                                                                                                                      |  |        |    | 
|--------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------- |  | ------ | -- | 
|                                              |  |                                                                                                                      |  | Page  
|                                              |  |                                                                                                                      |  | Number
|                                              |  |                                                                                                                      |  |       
|PART I                                       
|Item 1.                                       |  | Business                                                                                                             |  |        | 1  | 
|Item 2.                                       |  | Properties                                                                                                           |  |        | 10 | 
|Item 3.                                       |  | Legal Proceedings                                                                                                    |  |        | 10 | 
|Item 4.                                       |  | Submission of Matters to a
    Vote of Security Holders                                                              |  |        | 10 | 
|PART II                                      
|Item 5.                                       |  | Market for Registrants
    Common Equity, Related Stockholder Matters and Issuer Purchases
    of Equity Securities |  |        | 11 | 
|Item 6.                                       |  | Selected Financial Data                                                                                              |  |        | 12 | 
|Item 7.                                       |  | Managements Discussion
    and Analysis of Financial Condition and Results of Operations                            |  |        | 13 | 
|Item 7A.                                      |  | Quantitative and Qualitative
    Disclosures About Market Risk                                                       |  |        | 23 | 
|Item 8.                                       |  | Financial Statements and
    Supplementary Data                                                                      |  |        | 24 | 
|Item 9.                                       |  | Changes in and Disagreements
    with Accountants on Accounting and Financial Disclosure                             |  |        | 46 | 
|Item 9A.                                      |  | Controls and Procedures                                                                                              |  |        | 46 | 
|Item 9B.                                      |  | Other Information                                                                                                    |  |        | 46 | 
|PART III                                     
|Item 10.                                      |  | Directors and Executive
    Officers of the Registrant                                                               |  |        | 46 | 
|Item 11.                                      |  | Executive Compensation                                                                                               |  |        | 46 | 
|Item 12.                                      |  | Security Ownership of
    Certain Beneficial Owners and Management                                                   |  |        | 46 | 
|Item 13.                                      |  | Certain Relationships and
    Related Transactions                                                                   |  |        | 46 | 
|Item 14.                                      |  | Principal Accountant Fees
    and Services                                                                           |  |        | 46 | 
|PART IV                                      
|Item 15.                                      |  | Exhibits, Financial
    Statement Schedules and Reports on Form 8-K                                                  |  |        | 46 | 
|Credit Agreement                             
|Amendment to Credit Agreement                
|Consent of Ernst & Young LLP                 
|Sec 302 Chief Executive Officer Certification
|Sec 302 Chief Financial Officer Certification
|Sec 906 CEO & CFO Certification              



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PART I




Item 1.     Business

Introduction

Unless the context otherwise indicates,
references to we, us and our
mean Boca Resorts, Inc., a company incorporated in Florida in
1996 and re-incorporated in Delaware in 1997.

We are an owner and operator of five distinctive
destination resorts located in Florida with hotels, conference
facilities, golf courses, spas, marinas and private clubs. We
have focused on the luxury and upscale resort segment because we
believe these segments outperform other lodging industry
segments, particularly in times of economic downturn. We
previously owned an entertainment and sports business, which
primarily included the operations of the Florida Panthers Hockey
Club and related arena management operations. This business was
sold in July 2001 and, therefore, our entertainment and sports
business has been accounted for as discontinued operations.

Our resorts include the Boca Raton
Resort & Club (Boca Raton), the Registry Resort at
Pelican Bay (Naples), the Edgewater Beach Hotel (Naples), the
Hyatt Regency Pier 66 Hotel and Marina (Fort Lauderdale)
and the Radisson Bahia Mar Resort and Yachting Center (Fort
Lauderdale). We also own and operate two golf clubs located in
Florida (Grande Oaks Golf Club in Davie and Naples Grande Golf
Club in Naples) that serve as additional amenities to our
resorts, as well as components of our exclusive social club,
known as the Premier Club. In addition, we own and operate two
golf courses in Boca Raton that are part of the Boca Raton
Resort & Club.

Our resorts possess considerable competitive and
operational strengths. They are unique, irreplaceable assets in
desirable waterfront locations with strong name recognition and
positioning in their respective markets. We believe it would be
difficult for potential competitors to replicate our resorts
and, therefore, we benefit from high barriers to entry. Our
resorts provide us with multiple, diverse revenue streams and
primarily attract corporate groups and affluent leisure
customers. We further believe that each of our properties is
well positioned to maintain or increase market share. We
historically increased revenue and cash flow in large part
through the development of additional guestrooms and resort
amenities at our existing properties and believe there are
additional opportunities for development initiatives to our
portfolio in the future.

Our corporate website is located at
www.bocaresortsinc.com. It is our policy to post on our website
our Annual Report on Form 10-K, Quarterly Reports on
Form 10-Q, Current Reports on Form 8-K and amendments
to those Reports filed pursuant to Section 13(a) of the
Securities Exchange Act of 1934, as amended, as soon as
reasonably practicable after we electronically file them with
the Securities and Exchange Commission. We also make available
on our website beneficial ownership reports (Forms 3, 4 and
5) filed by our directors, our officers and other reporting
persons under Section 16 of the Securities Exchange Act of
1934. Our Code of Business Conduct, corporate governance
guidelines, important committee charters and committee and board
composition are also available through our corporate website.
Information contained on our website is not part of this Annual
Report on Form 10-K or our other filings with the
Securities and Exchange Commission.

This Annual Report on Form 10-K is available
at no charge upon written request to Boca Resorts, Inc.,
Attention: Investor Relations, 501 E. Camino Real,
Boca Raton, Florida 33432.

For a discussion of our revenue, income and
assets, see Managements Discussion and Analysis of
Financial Condition and Results of Operations and the
Consolidated Financial Statements included later in this report.

Business Strategy

Our objective is to enhance shareholder value
principally through improvements in earnings, cash flow and the
quality of our resorts. While management continuously evaluates
ownership, acquisition and

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divestiture alternatives, we continue to pursue
internal expansion and development opportunities at our existing
properties. Specifically, we are focused on the following
business strategy:




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Continuing internal growth through capital
    improvements at our resorts.We
    believe our resorts have the opportunity for continued internal
    growth. We have invested over $350.0 million in our resort
    portfolio since 1997 to enhance our properties unique
    character and market leadership. In addition to comprehensive
    guestroom renovations at all of our properties, capital
    enhancements have included the following projects: at the Boca
    Raton Resort & Club, a new 112 room yacht club
    overlooking our marina, a world-class 50,000 square foot spa
    complex, a golf clubhouse, additional retail and restaurant
    space, a 140,000 square foot conference center known as the
    Mizner Center, a redesigned golf course, a tennis and fitness
    center and a five story parking garage; at the Registry Resort
    at Pelican Bay, a new aquatic center, additional meeting space,
    newly renovated restaurant and night club facilities and
    beachfront improvements; at the Radisson Bahia Mar Resort and
    Yachting Center, a state-of-the-art marina renovation that
    includes 245 slips sized to accommodate yachts ranging in size
    from 80 feet to over 200 feet; at Hyatt Regency Pier 66
    Hotel and Marina additional meeting space and the opening of
    Grille 66, an elegant restaurant with a waterfront setting;
    and at the Edgewater Beach Hotel additional meeting space and
    the construction of the Market on Gulf Shore, a new gourmet
    market. To enhance the Premier Club golf experience and further
    add to our resort amenities, we renovated Grande Oaks Golf Club
    in 1999 and constructed Naples Grande Golf Club in 2000.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We believe that these capital expenditures have
    resulted in, and will continue to produce, increases in room and
    non-room revenue at our resorts. We also believe that the high
    quality of our resorts will continue to attract higher spending
    corporate groups, which in turn will increase total revenue per
    available room. Despite the economic recession and world events
    outside of our control including terrorism, war and political
    unrest, room revenue per available room was $146.02, $138.09 and
    $131.46 for the years ended June 30, 2004, 2003 and 2002,
    respectively, while total revenue per available room was
    $369.59, $343.12 and $329.73 for the years ended June 30,
    2004, 2003 and 2002, respectively.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Continuing to focus on corporate groups and
    affluent leisure customers.We believe
    that our primary focus on corporate group customers and upscale
    leisure customers allows us to maximize total revenue per
    available room. It has been our experience that these customers
    are more likely to use the additional fee-for-use amenities and
    facilities available at our resorts, thereby increasing revenue.
    Additionally, group customers tend to book reservations 12 to 36
    months in advance of their stay, which enables us to better
    estimate future revenue streams and manage corresponding
    expenses. We have also used group business to fill off-peak
    leisure periods. We believe by targeting upscale customers we
    are well positioned to take advantage of demographic trends
    (which include an aging baby-boom population with
    increasing disposable income) that are creating increased demand
    for luxury resorts and related amenities. We also believe we
    will be able to capitalize on these trends given our
    properties unique nature and locations. Our ability to
    capitalize on these trends is enhanced by the high barriers of
    entry into the luxury and upscale resort industries.
|
| |  | Continuing to capitalize on integration and
    cost-saving opportunities.We own and
    operate all of our properties. As a result, we continue to
    integrate the operations of our properties, including
    reservations, purchasing, training, information systems,
    insurance, benefits and marketing, in order to achieve greater
    operating efficiencies and improved profit margins. In addition,
    we believe that managing all of our resorts by a single
    management team with established practices and systems will
    continue to improve the efficiency of the resort operations,
    create economies of scale and offer employees internal
    advancement opportunities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | Continuing to enhance Premier Club
    value.We continue to enhance our
    Premier Club, which was first introduced in 1991 at the Boca
    Raton Resort & Club, by expanding its amenity base.
    Since the Boca Raton Resort is a private facility restricted to
    resort guests, membership in the Premier Club allows
    members access to the Boca Raton Resort grounds,
    restaurants, recreational facilities and other private social
    functions. We have consistently added to the resort amenity base
    with projects such as the world-class spa complex and golf
    clubhouse at the Boca Raton Resort and the aquatic center at the                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

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| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Registry Resort at Pelican Bay. We expanded
    Premier Club operations with the opening of Grande Oaks Golf
    Club in June 1999 and Naples Grande Golf Club in February 2000.
    All Premier Club members have reciprocal privileges at each
    club. In addition to attracting new club members who provide an
    additional revenue base, we are able to offer guests of our Fort
    Lauderdale and Naples resorts play at the 18-hole championship
    facilities at Grande Oaks and Naples Grande. With our Premier
    Club, we generate substantial additional revenue by leveraging
    off of the resorts existing facilities and services.
    During the year ended June 30, 2004, we recognized
    $14.7 million in revenue associated with annual Premier
    Club dues, together with $12.7 million in revenue
    associated with Premier Club member use of amenities available
    to them on a fee-for-use basis. We anticipate that the Premier
    Club will continue to be successful in marketing resort
    amenities, including restaurants, pools, and where available,
    tennis, golf, spas and other leisure and recreational facilities
    to residents in local communities in a country club/social club
    setting.

The following table sets forth a summary of the
key physical attributes of each of our resorts:

|                                              |  |       |     |         |  |            |       |           |  |           |         |          |  |       |   |          |  |        |    |     |  |  |    |     |  |  |     |  |  |  |    |  |  |  |    | 
|--------------------------------------------- |  | ----- | --- | ------- |  | ---------- | ----- | --------- |  | --------- | ------- | -------- |  | ----- | - | -------- |  | ------ | -- | --- |  |  | -- | --- |  |  | --- |  |  |  | -- |  |  |  | -- | 
|                                              |  |       |     |         |  |            |       | Access to |  | Access to |         |          |  | No.   |   | No. of   |  | No.   
|                                              |  |       |     | No. of  |  | Conference |       | No. of    |  | No. of    |         | No. of   |  | of    |   | Food &   |  | of    
|                                              |  |       |     | Rooms   |  | Space      |       | Golf      |  | Tennis    |         | Swimming |  | Boat  |   | Beverage |  | Retail
|                                              |  | Acres |     | /Suites |  | Sq. Ft.    |       | Courses   |  | Courts    |         | Pools    |  | Slips |   | Sites    |  | Shops 
|                                              |  |       |     |         |  |            |       |           |  |           |         |          |  |       |   |          |  |       
|Boca Raton Resort & Club                      |  |       | 337 |         |  |            | 1,041 |           |  |           | 156,966 |          |  |       | 4 | (a)      |  |        | 30 |     |  |  | 5  |     |  |  | 30  |  |  |  | 17 |  |  |  | 11 | 
|Registry Resort at Pelican Bay                |  |       | 18  |         |  |            | 474   |           |  |           | 43,020  |          |  |       | 1 | (b)      |  |        | 15 |     |  |  | 5  |     |  |  |    |  |  |  | 8  |  |  |  | 5  | 
|Edgewater Beach Hotel                         |  |       | 3   |         |  |            | 125   |           |  |           | 3,050   |          |  |       |   | (b)      |  |        |    | (c) |  |  | 1  | (c) |  |  |    |  |  |  | 3  |  |  |  |   | 
|Hyatt Regency Pier 66 Hotel and Marina        |  |       | 24  |         |  |            | 380   |           |  |           | 26,905  |          |  |       |   | (d)      |  |        | 2  |     |  |  | 2  |     |  |  | 127 |  |  |  | 6  |  |  |  | 2  | 
|Radisson Bahia Mar Resort and Yachting Center |  |       | 39  |         |  |            | 296   |           |  |           | 20,150  |          |  |       |   | (d)      |  |        | 4  |     |  |  | 1  |     |  |  | 245 |  |  |  | 3  |  |  |  | 2  | 
|                                              |  |       |     |         |  |            |       |           |  |           |         |          |  |       |   |          |  |        |    |     |  |  |    |     |  |  |     |  |  |  |    |  |  |  |    | 
|                                              |  |       | 421 | (e)     |  |            | 2,316 |           |  |           | 250,091 |          |  |       | 5 |          |  |        | 51 |     |  |  | 14 |     |  |  | 402 |  |  |  | 37 |  |  |  | 20 | 
|                                              |  |       |     |         |  |            |       |           |  |           |         |          |  |       |   |          |  |        |    |     |  |  |    |     |  |  |     |  |  |  |    |  |  |  |    | 



---



|    |                                                                                                                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Boca Raton Resort & Club maintains one
    18-hole golf course on premises and another at the resorts
    country club location. In addition, the resort has access to
    Grande Oaks Golf Club, which we own and to one 18-hole golf
    course through a use agreement.
|   
|(b) | Guests at the Registry Resort at Pelican Bay and
    the Edgewater Beach Hotel have access to the 18-hole Naples
    Grande Golf Club, which we own.                                                                                                                       
|   
|(c) | Edgewater Beach Hotel guests have access to the
    tennis courts and aquatic complex at the Registry Resort at
    Pelican Bay.                                                                                                                                           
|   
|(d) | Hyatt Regency Pier 66 Hotel and Marina and
    Radisson Bahia Mar Resort and Yachting Center have access to
    Grande Oaks Golf Club.                                                                                                                                     
|   
|(e) | Excludes the acreage associated with Grande Oaks
    and Naples Grande Golf Clubs.                                                                                                                                                                                         

Amenities and services at our resorts include
conference facilities, golf courses, tennis facilities, spas,
fitness centers, marinas, restaurants, retail outlets, swimming
pools, beach access and other activities and services. The
diversity and number of amenities and services at our resorts
provide us with substantial non-room revenue. For each of the
years ended June 30, 2004, 2003 and 2002, 60% of resort
revenue was generated from non-room sources. In addition, these
luxury amenities and services allow us to maintain premium
pricing for our rooms.

Our resorts conference facilities and other
amenities make them attractive locations for group functions.
The conference facilities include over 250,000 square feet of
conference space. We maintain our own in-house planning and
logistics capabilities that allow sales and marketing personnel
to market multiple resort locations to corporate and association
groups that prefer to change conference locations from year to
year.

In addition to being available for our hotel
guests, our resorts extensive amenity base is also
available to Premier Club members. Membership in the Boca Raton
Resort Premier Club allows Premier Club members access to the
Boca Raton Resort & Club grounds, restaurants,
recreational facilities and private social functions, which are
otherwise restricted to resort guests. During the year ended
June 30, 2004, the Boca Raton Resort Premier Club charged
an initial membership fee of $50,000 and annual dues starting at
$3,400

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for a social member and up to approximately
$10,000 for a golf member with a household consisting of two
adults. Additional golf dues are required for households with
more than two adult members and for members who wish to use the
resorts tennis facilities. In addition, Premier Club
members generate revenue through the use of existing resort
facilities and services, which are available on a fee-for-use
basis. Grande Oaks Golf Club and Naples Grande Golf Club offer
members and guests of our Fort Lauderdale and Naples resorts
play at these championship golf facilities and provide
reciprocal amenities to other Premier Club members. During the
year ended June 30, 2004, Naples Grande Premier Club
charged an initial membership fee of $40,000 and annual dues
starting at $1,900 for a social member and approximately $6,700
for a golf member. During the year ended June 30, 2004,
Grande Oaks Golf Club charged an initial membership fee of
$33,500 and annual dues of $5,950.


Summary Resort Information

Boca Raton Resort & Club



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Renovations/ Expansion.In January 2002, we completed the new
    yacht club. The yacht club consists of 112 water-view luxury
    guestrooms, additional meeting space and reconfigured marina
    slips. In December 2001, we completed a new 50,000 square foot
    world-class spa complex and a new golf clubhouse and casual
    restaurant. In 2000, we opened a new Tuscan-style restaurant and
    added retail space. In 1999, we completed a parking facility, a
    chiller plant and commenced activity on a room renovation, which
    encompassed most of the guestrooms and was concluded in December
    2001. In January 1998, we completed a new 140,000 square foot
    conference facility, a tennis and fitness center complex and
    renovated the on site resort course through golf designer Gene
    Bates.
|
| |  | Distinctions.Boca
    Raton Resort & Club has been awarded numerous honors
    including Travel & Leisure magazine Best Hotels in the
    World in 2004, Departures magazine Top Ten Luxury Resorts in
    2004, Successful Meetings Pinnacle Award in 2003, Meeting and
    Conventions Gold Tee Award in 2003, Meetings and Conventions
    Gold Key Award for 2003 (and for the previous twenty-three
    consecutive years), Corporate Meetings and Incentives Paragon
    Award in 2002, Golf magazine Silver Medal Award for 2002 and the
    Readers Award as one of the Top Hotels in North
    America by Travel & Leisure magazine in 2001.                                                                                                                                                                             

Registry Resort at Pelican Bay



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Renovations/Expansion.In January 2004, we completed a renovation of the Café
    Chablis Restaurant and the Registrys popular nightclub. In
    January 2003, we completed a comprehensive room renovation
    covering 395 guestrooms, which included all new furnishings and
    new five fixture bathrooms. In December 2000, we added 6,000
    square feet of flexible meeting space providing the resort with
    the largest meeting venue in the Naples market. We also
    completed a new aquatic center, which features Mangrove
    Mountain, a 100-foot water slide to the main pool and private
    cabana rentals and we completed beach improvements consisting of
    a new food and beverage outlet and a beach amenity rental center.
|
| |  | Distinctions.Registry Resort has received
    AAAs Four Diamond Award and been named to Zagats Top
    10 Resorts in Florida every year since 1988, been named to Conde
    Nast Traveler Gold List every year since 1995, received both
    Meetings and Conventions Gold Key Award and Corporate Meetings
    and Incentives Paragon Award in 2001 and been named among the
    Top 100 Worlds Best Resorts in the Continental U.S. by
    Travel & Leisure magazine in 2000.                                                                                                                                                                                                                                                                       

Edgewater Beach Hotel



| |   |                                                                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Renovations/Expansion.In January 2004, we opened a new
    gourmet market deli and added meeting space. We also completed
    the final phase of the Edgewater Beach Hotels guest suite
    renovation in January 2003.

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| |   |                                                                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Distinctions.Edgewater Beach Hotel has consistently
    received AAAs Four Diamond Award, been featured in Resorts
    and Great Hotels and been named to Conde Nast Travelers
    Best Places to Stay in the World.

Hyatt Regency Pier 66 Hotel and
Marina



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Renovations/ Expansion.Hyatt Regency Pier 66 opened
    Grille 66 an upscale waterfront restaurant in December
    2003, completed a renovation of its guestrooms in November 1998
    and is currently undertaking exploratory design and permitting
    work for a marina redevelopment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | Distinctions.Hyatt
    Regency Pier 66 received AAAs Four Diamond Award for
    2004 and in each of the previous twenty-one years, Successful
    Meetings magazines Pinnacle Award for 2004 and Meetings
    and Conventions Gold Key Award for 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | Franchise Agreement.We have a franchise agreement with
    Hyatt Franchise Corporation (Hyatt) that terminates
    in November 2014. The agreement provides for the payment of
    monthly royalty fees equal to 5% of gross room revenue. The
    agreement also provides for the payment to Hyatt of certain
    Hyatt allocable chain expenses relating to sales and
    marketing costs based on the total number of guestrooms at Hyatt
    Regency Pier 66 compared to the average number of
    guestrooms in all Hyatt hotels in the United States, and the
    agreement provides for the payment of a fee for using the Hyatt
    reservation system. The agreement requires that Hyatt Regency
    Pier 66 maintain a reserve, equal to 4% of gross room
    revenue, for replacement of furniture, fixtures and equipment
    and for those repairs and maintenance costs that are
    capitalizable under generally accepted accounting principles.
    The agreement requires significant renovations of guestrooms,
    corridors and other public areas every five to six years. The
    replacement of other furniture, fixtures and equipment, as
    defined in the agreement, is required every 10 to 12 years.

Radisson Bahia Mar Resort and Yachting
Center



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Renovations/Expansion.Radisson Bahia Mar completed a marina
    renovation in October 2003 and a comprehensive room renovation
    in 2000. The principal element of the marina refurbishment was
    the replacement of 330 fixed concrete and wood slips with a
    245-slip floating dock system aimed at accommodating mega yachts
    ranging in size from 80 feet to over 200 feet.                                                                                                                                                                                                                                                                  
|
| |  | Distinctions.Radisson Bahia Mar received the Inner
    Circle award in 2004 from Association Meetings magazine and has
    consistently received the Mobil Travel Guides Three Star
    Award and the AAAs Three Diamond Award. The Radisson Bahia
    Mar has previously been awarded the Radisson Hotels Worldwide
    Presidents Award and the Anchor Award presented by Marine
    Industries Association of South Florida. Each Fall, the Radisson
    Bahia Mar marina is host to the Fort Lauderdale International
    Boat Show, an annual six-day boating and marine event, which is
    believed to be the worlds largest in-water boat show.
|
| |  | License Agreement.We have a license agreement with
    Radisson Hotels International, Inc., (Radisson)
    which expires in December 2004. The terms of the Radisson
    license agreement allow us to operate the hotel using
    Radissons proprietary hotel management system and require
    us to pay annual fees to Radisson equal to 5% of Radisson Bahia
    Mars gross room revenue. We are presently in discussions
    with Radisson concerning the license agreement and its renewal
    terms.                                                                                                                                            
|
| |  | Leases.The site of
    the resort is subject to a land lease with the City of Fort
    Lauderdale that expires in 2062.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

In addition to the resort properties discussed
above, we also own and operate Grande Oaks Golf Club and Naples
Grande Golf Club. Grande Oaks Golf Club was formerly known as
Rolling Hills Golf Club, site of the movie comedy Caddy
Shack. The property now features a redesigned 18-hole
championship golf course designed by Raymond Floyd, a 35-acre,
newly designed practice facility and a renovated clubhouse. Golf
architect Rees Jones designed Naples Grande Golf Club. Varied
elevations and unique water features have

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been carefully incorporated into the indigenous
Florida foliage, which forms a spectacular backdrop for this par
72 championship course.


We predominantly utilized cash flow from
operations to fund the previously discussed renovations and
expansion at our resorts and golf clubs.

Customers and Marketing

Our core customer base consists of corporate and
other group customers, affluent local residents, upscale leisure
travelers and individual business travelers. Our marketing
efforts involve (1) the use of a sales force to develop
national corporate and other group business for our resort
facilities by identifying, obtaining and maintaining corporate
and other group accounts whose employees conduct business
nationwide, and (2) the use of advertisements that target
upscale leisure travelers and individual business travelers in
magazines such as Conde Nast Traveler, Travel and Leisure,
Travel Weekly and Meetings and Conventions and in newspapers
such as The New York Times. Our two franchised resorts also
benefit from the national reservation systems of the Hyatt and
Radisson brands. We continue to expand our Internet presence and
sales capabilities to increase revenue. In addition, we are
integrating our proprietary customer databases, in order to sell
additional products and services to existing customers, improve
occupancy rates and create additional marketing opportunities.

Competition

The resort and hotel industry is highly
competitive. Competitive factors include room rates, quality of
accommodations, service levels, convenience of location,
reputation, reservation systems, name recognition, and
availability of alternative resort and hotel operations in local
markets. While some of our competitors are privately managed,
several are large national and international chains that own and
operate hotels or manage hotels owned by third parties. A
variety of brands compete directly with us.

Insurance

We maintain comprehensive insurance on our
properties, including liability, business interruption, fire and
extended coverage including windstorm and flood, in the types
and amounts we believe are customary for the resort and hotel
industry. Management uses discretion in determining amounts,
coverage limits and deductible provisions of insurance, with a
view to obtaining appropriate insurance on our properties at a
reasonable cost and on suitable terms. This may result in
insurance coverage that, in the event of a total loss, might not
be sufficient to cover the full current market value of the
property. In addition, in the event of such loss, the insurance
proceeds received by us might not be adequate to restore the
properties economic position. Certain insurance risks for
medical and workers compensation are self-insured by us
subject to certain stop-loss thresholds.

Environmental Matters

Under various federal, state, and local
environmental laws and regulations, an owner or operator of real
property may be liable for the costs of removal or remediation
of certain hazardous or toxic substances on such real property,
as well as for the costs of complying with environmental laws
regulating on-going operations. We have obtained Phase I
environmental site assessments for the real property on which
each of our resorts is located. In addition, Phase II
environmental assessments have been conducted at several
properties. Phase I assessments are intended to identify
existing, potential and suspected environmental contamination
and regulatory compliance concerns, and generally include
historical reviews of the property, reviews of certain public
records, preliminary visual investigations of the site and
surrounding properties and the preparation and issuance of
written reports. Phase II assessments involve the sampling
of environmental media, such as subsurface soil and groundwater,
to confirm whether contamination is present at areas of concern
identified during the course of a Phase I assessment.

The Phase I and Phase II assessments
have not revealed any environmental liability or compliance
concerns that we believe would have a material adverse effect on
our business, nor are we aware of any such material liability or
concern. Phase I and Phase II assessments cannot
provide full and complete knowledge of

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environmental conditions and compliance matters.
Therefore, we cannot assure you that: (1) material
environmental liabilities or compliance concerns do not exist;
(2) an identified matter that does not appear reasonably
likely to be material will not result in significantly greater
expenditures than is currently anticipated; or (3) there
are not material environmental liabilities or compliance
concerns of which we are unaware.


Employees

At June 30, 2004, we employed 3,218
full-time and 613 part-time employees. In addition, we employed
12 corporate administrative personnel. None of our employees are
subject to a collective bargaining agreement, and we believe
that our relationship with our employees is good.

Seasonality

Our revenue and income are seasonal in nature and
are directly affected by the strength and seasonality of the
tourism and leisure industry. Tourism is dependent upon weather
and the traditional seasons for travel. Because of this
variability in demand, our revenue fluctuates
quarter-to-quarter, and revenue for the first quarter of each
fiscal year can be expected to be lower than the remaining
quarters. Historically, approximately 16%, 23%, 36% and 25% of
annual revenue has been derived during the first, second, third
and fourth fiscal quarters, respectively. Although historically
the trend in quarterly revenue for the second, third and fourth
fiscal quarters of each year (October through June) is generally
higher than the first fiscal quarter (July through September),
we cannot assure you that this will occur in future periods.
Accordingly, quarterly or other interim results should not be
considered indicative of results to be expected for any future
quarter or for the full year.

Trademarks

We have registered trademarks and service marks,
some of which, including several relating to the Boca Resort
name and Registry name, are of material importance to our
business. Our other related marks, while valuable, are not
material to our business. Trademarks are valid as long as they
are in use and/or their registrations are properly maintained
and they have not been found to be generic. We presently use
national trade names for two of our resorts pursuant to
licensing arrangements with national franchisors. The duration
for use pursuant to the licensing arrangements is disclosed
under Franchise Agreement and License
Agreement.

Disposition Opportunities and Discontinued
Operations

We periodically review our business with the view
to identify properties or other assets that no longer complement
our operations.

In December 2002, we sold a land parcel located
in Plantation, Florida for $7.2 million, which yielded net
proceeds of $7.1 million. We recorded an impairment loss of
$2.4 million to reflect the difference between the carrying
value of this land parcel and the net proceeds.

In August 2002, we sold a land parcel located in
Naples, Florida for $5.7 million, which yielded net
proceeds of $5.6 million. We recorded a gain on the
disposition of $2.3 million.

In July 2001, we sold our entertainment and
sports business after a thorough examination of its strategic
relationship to the core leisure and recreation operations. The
selling price for the business, which incorporated certain
working capital adjustments, consisted of $83.5 million in
cash, an $11.3 million secured promissory note (which was
paid January 2002) and the assumption by the purchasers of
certain off-balance sheet contingencies including a
$10 million construction obligation secured by a
performance bond. The net proceeds from the sale of the business
after payment of disposal costs exceeded $70.0 million and
the gain on disposition was $26.2 million.

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Risk Factors

Our business, financial position, results of
operations and future prospects and the prevailing market price
and performance of our Class A Common Stock, may be
adversely affected by a number of factors. Such factors, among
other items, include:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We face risks relating to travel.Our customers consist of corporate and
    other group customers, upscale leisure travelers and individual
    business travelers. A change in travel patterns resulting from
    slowing economic conditions, a change in corporate policies
    relating to group meetings, air or other travel disruption,
    third party increases in travel costs or disruption caused by
    natural disaster (including hurricanes which are common to South
    Florida), war or political unrest could have a material adverse
    effect on our financial position and results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| | We face a variety of risks associated with
    operating resorts.We may encounter
    risks common to the operations of resorts, including
    over-building (which may lower room rates), increases in
    operating costs due to inflation or other factors and decreases
    in revenue due to moderate or severe economic downturns. We may
    also face risks relating to the concentration of our resorts in
    South Florida. Any of these risks could have a material adverse
    effect on our financial position and results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | We may make significant capital expenditures
    to further develop the resorts and these expenditures involve
    risks.Our growth strategy
    contemplates expanding the infrastructure at certain of our
    resorts. The resorts may also need periodic renovations or other
    capital improvements to keep them well maintained and
    competitive. Unexpected excessive costs of any expansion or
    needed renovation or capital improvements could have a material
    adverse effect on our financial position and results of
    operations. Also, any capital expenditure for expansion,
    renovation or improvement of the resorts may not generate the
    financial returns expected. Such capital expenditures could
    involve certain risks, including the possibility of
    environmental problems; the possibility that cash to fund
    renovations will not be available or that financing for
    renovations will not be available on favorable terms;
    uncertainties as to market demand or deterioration in market
    demand after commencement of renovations; the emergence of
    unanticipated zoning, environmental and regulatory requirements;
    so called acts of God, such as hurricanes that could
    adversely impact a project and competition from other resorts,
    hotels and alternative lodging facilities.
|
| | We may need to make capital expenditures in
    order to comply with the Americans with Disabilities
    Act.Our resorts and other properties
    are subject to the requirements of the Americans with
    Disabilities Act (the ADA), which generally requires
    that public accommodations be made accessible to disabled
    persons. We believe that our resorts and other properties are in
    substantial compliance with the ADA and we will not be required
    to make substantial capital expenditures to address the current
    requirements of the ADA. However, compliance with the ADA could
    require removal of access barriers and noncompliance could
    result in the imposition of fines by the federal government or
    the award of damages to private litigants. If we were required
    to make substantial alterations in one or more of the resorts or
    other properties in order to comply with the ADA, our financial
    position and results of operations could be adversely affected.                                                                                                                                                                                                                                                                                                                                     
|
| | We may become subject to liabilities under
    environmental laws.Operating costs
    may be affected by the obligation to pay for the cost of
    complying with existing environmental laws, ordinances and
    regulations, including the cleanup of contamination, as well as
    the cost of complying with future legislation. In connection
    with the acquisition of our resorts and other properties,
    Phase I, and in some instances Phase II, environmental
    site assessments were obtained in order to evaluate potential
    environmental liabilities. Although these assessments have
    identified certain matters that will require us to incur costs
    to remedy, based on current information, none of these matters
    appears likely to have a material adverse effect on our
    business, assets, results of operations or liquidity. However,
    because these assessments cannot give full and complete
    knowledge of environmental liability and compliance matters, we
    cannot assure you that the costs of complying with environmental
    laws and of defending against claims of liability arising under
    environmental laws will not have a material adverse effect on
    the financial position and results of operations.                                                                                      

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our resort business is
    seasonal.Our resort operations are
    generally seasonal. The resorts historically experience greater
    revenue, costs and income in the third and fourth quarters of
    the fiscal year ended June 30 due to increased occupancy
    and room rates during the winter and spring months.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| | The hotel and leisure industry is highly
    competitive.Our properties compete
    for customers with other hotel and resort properties, and, with
    respect to our Premier Club, with other operators of social
    clubs and golf courses. Some of our competitors may have
    substantially greater marketing and financial resources than we
    have and may improve their facilities, reduce their prices or
    expand or improve their marketing programs in ways that could
    adversely affect our financial position and results of
    operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | Our financing agreement limits operating
    flexibility.Our new senior secured
    credit facility requires us to maintain specified financial
    ratios and satisfy certain financial tests that could limit our
    ability to borrow money; pay dividends on stock or make certain
    other restricted payments; use assets as security in other
    transactions; make investments; enter into certain transactions
    with affiliates; and sell certain assets or merge with other
    companies. Although we are confident that we will continue to
    satisfy all of these requirements, our ability to meet those
    financial ratios and financial tests may be affected by events
    beyond our control, and we cannot assure you that we will meet
    those tests.                                                                                                                                                                                                                                                                                                                           
|
| | Control by H. Wayne Huizenga.We have two classes of common stock,
    Class A Common Stock and Class B Common Stock. On each
    matter submitted for stockholder approval, each share of
    Class A Common Stock is entitled to one vote, and each
    share of Class B Common Stock is entitled to 10,000 votes.
    As of June 30, 2004, Mr. Huizenga, our Chairman and
    Chief Executive Officer, beneficially owned voting stock in our
    company with the power to vote 98.5% of the total votes entitled
    to be cast on any matter submitted to a vote of stockholders. As
    the sole owner of Class B Common Stock, Mr. Huizenga
    has the ability to indirectly control the management and
    policies, as well as the outcome of substantially all matters
    submitted to the stockholders for approval, including the
    election of directors.                                                                                                                                                                                                                                      
|
| | Nothing in the charter or bylaws restricts the
    transfer of Class B Common Stock. As a result,
    Mr. Huizenga may sell his controlling interest without the
    approval of the holders of Class A Common Stock and
    Mr. Huizenga may receive a substantial premium price for
    selling his controlling interest in our company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| | We depend on key personnel.For the foreseeable future, we will be
    materially dependent on the services of Mr. Huizenga. The
    loss of Mr. Huizengas services could have a material
    adverse effect on our business. We do not carry key man life
    insurance on Mr. Huizenga or on any of our officers or
    directors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| | We may face a variety of risks if we enter
    into business acquisitions, joint ventures and/or divestitures
    in the future.We may pursue
    acquisitions of resort-related or other types of businesses. In
    addition, we may pursue joint ventures and/or divestitures in
    the future. Our success will depend upon our ability to identify
    and finance attractive alternative business acquisitions,
    ventures and/or divestitures. The risks related to acquisitions,
    joint ventures and/or divestitures include: potential diversion
    of management; unanticipated liabilities or contingencies from
    acquired businesses or ventures; environmental and other
    regulatory costs; suitability of a joint venture partner;
    increased interest costs and costs related to integration of
    acquisitions; integrating the businesses that we acquire; need
    to manage growth of acquired businesses or joint ventures;
    potential corporate reorganization and reallocation of resources
    due to divestitures and potential one-time losses on
    divestitures.
|
| | We may seek additional financing.We believe that cash on hand together
    with cash flow from operations will be sufficient to finance our
    business operations, meet our debt obligations and fund our
    short-term growth strategy. However, we cannot assure you that
    the business will generate the level of cash flow from
    operations that we expect or that future borrowings under credit
    facilities will be available to us. If the plans or assumptions
    change or if we experience unanticipated costs or competitive
    pressures, or if we cannot reduce our cost of borrowing or
    increase our borrowing base we may seek additional capital. We
    believe we can obtain additional capital by selling debt
    (provided certain incurrence tests are met pursuant to the
    existing debt agreement) or equity securities and/or by
    borrowing money, although                                                                                                                                                                                                    

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| |                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | we cannot assure you that we will be able to do
    so. If additional capital is not obtained when it is needed,
    this may have a material adverse effect on our financial
    position and results of operations.




Item 2.     Properties

Our corporate headquarters are located at the
Boca Raton Resort & Club. We consider our resorts to be
leading establishments with respect to desirability of location,
size of facilities, physical condition, quality and variety of
services offered in the areas in which they are located. See
further description of properties under Business.
Certain of our resorts serve as security under a revolving
credit facility at June 30, 2004 and under our new senior
credit facility entered into on July 22, 2004. See
Note 8 to the Consolidated Financial Statements included
later in this report.






|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings

We are not involved in any material legal
proceedings. However, we may from time to time become a party to
legal proceedings arising in the ordinary course of business,
which are incidental to our business.






|        |                                                        
|------- | -------------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security
    Holders

None.

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PART II






|        |                                                                                                                         
|------- | ------------------------------------------------------------------------------------------------------------------------
|Item 5. | Market for the Registrants Common
    Equity, Related Stockholder Matters and Issuer Purchases of
    Equity Securities

Our Class A Common Stock began trading on
The Nasdaq National Market on November 13, 1996 under the
symbol PUCK. On July 11, 1997, our Class A
Common Stock began trading on the New York Stock Exchange
(NYSE) under the symbol PAW. On
September 29, 1999, our Class A Common Stock began
trading on the NYSE under the symbol RST. The
following table sets forth, for the periods indicated, the range
of the high and low sales prices per share for our Class A
Common Stock.

|                                     |                |                        |   |       |  |  |   |       | 
|------------------------------------ | -------------- | ---------------------- | - | ----- |  |  | - | ----- | 
|                                     |                |                       
|                                     |                | Price Range of Class A
|                                     |                | Common Stock          
|                                     |                |                       
|                                     |                | High                   |   | Low  
|                                     |                |                        |   |      
|Fiscal year Ended June 30,
    2004: |                |                        |   |       |  |  |   |      
|                                     | First Quarter  |                        | $ | 13.53 |  |  | $ | 12.34 | 
|                                     | Second Quarter |                        |   | 15.43 |  |  |   | 12.93 | 
|                                     | Third Quarter  |                        |   | 17.87 |  |  |   | 15.06 | 
|                                     | Fourth Quarter |                        |   | 19.92 |  |  |   | 16.83 | 
|Fiscal year Ended June 30,
    2003: |                |                        |   |       |  |  |   |      
|                                     | First Quarter  |                        | $ | 13.30 |  |  | $ | 9.60  | 
|                                     | Second Quarter |                        |   | 11.87 |  |  |   | 9.60  | 
|                                     | Third Quarter  |                        |   | 11.86 |  |  |   | 10.00 | 
|                                     | Fourth Quarter |                        |   | 13.20 |  |  |   | 10.96 | 

On August 31, 2004 the last reported sales
price of our Class A Common Stock on the NYSE was $19.20.
As of the same date, there were approximately 8,800 holders of
record of our Class A Common Stock.

Since our inception, we have not paid any cash
dividends on our Class A Common Stock or the Class B
Common Stock. Our ability to pay dividends had been limited in
dollar amount under covenants of our outstanding senior
subordinated notes. The senior subordinated notes were fully
redeemed in August 2004 with proceeds from a new senior credit
facility. The covenants under the new senior credit facility,
including those relating to the payment of dividends, are less
restrictive than those under which the senior subordinated notes
were issued. See Note 9 to the Consolidated Financial Statements
included later in this report. We did not have any repurchases
of our common stock during the year ended June 30, 2004.

Equity Compensation Plans

The following table summarizes our stock option
plans as of June 30, 2004:

|                                               |  |                     |           |                     |  |                     |       |  |  |  |           | 
|---------------------------------------------- |  | ------------------- | --------- | ------------------- |  | ------------------- | ----- |  |  |  | --------- | 
|                                               |  |                     |           |                     |  | Number of          
|                                               |  | Number of           |           |                     |  | Securities         
|                                               |  | Securities to be    |           |                     |  | Remaining Available
|                                               |  | Issued Upon         |           | Weighted Average    |  | for Future Issuance
|                                               |  | Exercise of         |           | Exercise Price of   |  | Under Stock Option 
|                                               |  | Outstanding Options |           | Outstanding Options |  | Plan               
|                                               |  |                     |           |                     |  |                    
|Stock option plan approved by stockholders     |  |                     | 6,590,304 |                     |  | $                   | 14.15 |  |  |  | 1,185,977 | 
|Stock option plan not approved by stockholders |  |                     |          |                     |  |                     |      |  |  |  |          | 
|                                               |  |                     |           |                     |  |                     |       |  |  |  |           | 
|Total                                          |  |                     | 6,590,304 |                     |  | $                   | 14.15 |  |  |  | 1,185,977 | 
|                                               |  |                     |           |                     |  |                     |       |  |  |  |           | 

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|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data

The financial data set forth below should be read
in conjunction with our Consolidated Financial Statements and
Notes thereto contained in Part II, Item 8 of this Annual Report
on Form 10-K. In July 2001, we sold our entertainment and
sports business. Therefore, our entertainment and sports
business has been accounted for as discontinued operations and
the accompanying selected financial data has been restated to
report separately the net assets and liabilities and operating
results of this discontinued operation.

|                                                                        |                          |                                     |         |         |  |      |         |         |  |      |         |         |  |   |          |         |  |   |         |         | 
|----------------------------------------------------------------------- | ------------------------ | ----------------------------------- | ------- | ------- |  | ---- | ------- | ------- |  | ---- | ------- | ------- |  | - | -------- | ------- |  | - | ------- | ------- | 
|                                                                        |                          |                                    
|                                                                        |                          | For the Years Ended June 30,       
|                                                                        |                          |                                    
|                                                                        |                          | 2004                                |         | 2003    |  | 2002 |         | 2001    |  | 2000
|                                                                        |                          |                                     |         |         |  |      |         |         |  |     
|                                                                        |                          |                                    
|                                                                        |                          | In thousands, except per share data
|Statement of Operations Data:                                           |                          |                                     |         |         |  |      |         |         |  |      |         |         |  |   |          |         |  |   |         |        
|Leisure and recreation revenue                                          |                          | $                                   | 313,335 |         |  | $    | 290,174 |         |  | $    | 273,043 |         |  | $ | 329,171  |         |  | $ | 361,360 |        
|Operating expenses:                                                     |                          |                                     |         |         |  |      |         |         |  |      |         |         |  |   |          |         |  |   |         |        
|Cost of leisure and recreation services                                 |                          |                                     | 137,426 |         |  |      | 130,272 |         |  |      | 123,529 |         |  |   | 143,567  |         |  |   | 156,620 |        
|Selling, general and administrative expenses                            |                          |                                     | 85,840  |         |  |      | 85,983  |         |  |      | 83,146  |         |  |   | 89,624   |         |  |   | 98,731  |        
|Amortization and depreciation                                           |                          |                                     | 40,038  |         |  |      | 38,026  |         |  |      | 34,790  |         |  |   | 35,490   |         |  |   | 34,436  |        
|Loss on early retirement of debt                                        |                          |                                     |        |         |  |      | 149     |         |  |      | 3,073   |         |  |   | 2,026    |         |  |   |        |        
|                                                                        |                          |                                     |         |         |  |      |         |         |  |      |         |         |  |   |          |         |  |   |         |        
|                                                                        | Total operating expenses |                                     |         | 263,304 |  |      |         | 254,430 |  |      |         | 244,538 |  |   |          | 270,707 |  |   |         | 289,787 | 
|                                                                        |                          |                                     |         |         |  |      |         |         |  |      |         |         |  |   |          |         |  |   |         |        
|Operating income                                                        |                          |                                     | 50,031  |         |  |      | 35,744  |         |  |      | 28,505  |         |  |   | 58,464   |         |  |   | 71,573  |        
|Interest and other income                                               |                          |                                     | 199     |         |  |      | 227     |         |  |      | 1,240   |         |  |   | 5,164    |         |  |   | 1,529   |        
|Interest and other expense                                              |                          |                                     | (20,943 | )       |  |      | (21,664 | )       |  |      | (23,903 | )       |  |   | (47,150  | )       |  |   | (55,040 | )      
|                                                                        |                          |                                     |         |         |  |      |         |         |  |      |         |         |  |   |          |         |  |   |         |        
|Income from continuing operations before income
    taxes               |                          |                                     | 29,287  |         |  |      | 14,307  |         |  |      | 5,842   |         |  |   | 16,478   |         |  |   | 18,062  |        
|Provision for income taxes                                              |                          |                                     | (11,276 | )       |  |      | (5,508  | )       |  |      | (1,336  | )       |  |   | (3,934   | )       |  |   | (805    | )      
|                                                                        |                          |                                     |         |         |  |      |         |         |  |      |         |         |  |   |          |         |  |   |         |        
|Income from continuing operations                                       |                          |                                     | 18,011  |         |  |      | 8,799   |         |  |      | 4,506   |         |  |   | 12,544   |         |  |   | 17,257  |        
|Gain on disposition of discontinued operations,
    net of income taxes |                          |                                     |        |         |  |      |        |         |  |      | 26,185  |         |  |   |         |         |  |   |        |        
|Loss from discontinued operations, net of benefit
    for income taxes  |                          |                                     |        |         |  |      |        |         |  |      |        |         |  |   | (8,862   | )       |  |   | (3,771  | )      
|                                                                        |                          |                                     |         |         |  |      |         |         |  |      |         |         |  |   |          |         |  |   |         |        
|Net income                                                              |                          | $                                   | 18,011  |         |  | $    | 8,799   |         |  | $    | 30,691  |         |  | $ | 3,682    |         |  | $ | 13,486  |        
|                                                                        |                          |                                     |         |         |  |      |         |         |  |      |         |         |  |   |          |         |  |   |         |        
|Diluted net income per share:                                           |                          |                                     |         |         |  |      |         |         |  |      |         |         |  |   |          |         |  |   |         |        
|Income from continuing operations                                       |                          | $                                   | .44     |         |  | $    | .22     |         |  | $    | .11     |         |  | $ | .31      |         |  | $ | .42     |        
|Income (loss) from discontinued operations                              |                          |                                     |        |         |  |      |        |         |  |      | .65     |         |  |   | (.22     | )       |  |   | (.09    | )      
|                                                                        |                          |                                     |         |         |  |      |         |         |  |      |         |         |  |   |          |         |  |   |         |        
|Net income per share  diluted                                          |                          | $                                   | .44     |         |  | $    | .22     |         |  | $    | .76     |         |  | $ | .09      |         |  | $ | .33     |        
|                                                                        |                          |                                     |         |         |  |      |         |         |  |      |         |         |  |   |          |         |  |   |         |        
|Other Data:                                                             |                          |                                     |         |         |  |      |         |         |  |      |         |         |  |   |          |         |  |   |         |        
|Cash provided by operating activities                                   |                          | $                                   | 76,519  |         |  | $    | 50,683  |         |  | $    | 48,377  |         |  | $ | 37,033   |         |  | $ | 40,027  |        
|Cash provided by (used in) investing activities                         |                          | $                                   | (27,802 | )       |  | $    | (37,276 | )       |  | $    | 7,868   |         |  | $ | 222,347  |         |  | $ | (36,913 | )      
|Cash used in financing activities                                       |                          | $                                   | (9,240  | )       |  | $    | (8,988  | )       |  | $    | (62,463 | )       |  | $ | (257,267 | )       |  | $ | (3,244  | )      
|EBITDA(1)                                                               |                          | $                                   | 90,522  |         |  | $    | 74,194  |         |  | $    | 66,368  |         |  | $ | 95,980   |         |  | $ | 106,009 |        
|EBITDA margin(2)                                                        |                          |                                     | 29%     |         |  |      | 26%     |         |  |      | 24%     |         |  |   | 29%      |         |  |   | 29%     |        
|Capital expenditures                                                    |                          | $                                   | 28,305  |         |  | $    | 50,142  |         |  | $    | 66,965  |         |  | $ | 60,778   |         |  | $ | 63,090  |        

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|                          |  |             |         |      |  |      |         |      |  |      |         |  |  |   |         |  |  |   |           | 
|------------------------- |  | ----------- | ------- | ---- |  | ---- | ------- | ---- |  | ---- | ------- |  |  | - | ------- |  |  | - | --------- | 
|                          |  |            
|                          |  | At June 30,
|                          |  |            
|                          |  | 2004        |         | 2003 |  | 2002 |         | 2001 |  | 2000
|                          |  |             |         |      |  |      |         |      |  |     
|Balance Sheet Data:       |  |             |         |      |  |      |         |      |  |      |         |  |  |   |         |  |  |   |           | 
|Cash and cash equivalents |  | $           | 47,587  |      |  | $    | 8,110   |      |  | $    | 3,691   |  |  | $ | 9,909   |  |  | $ | 7,796     | 
|Restricted cash           |  | $           | 138     |      |  | $    | 641     |      |  | $    | 721     |  |  | $ | 500     |  |  | $ | 10,176    | 
|Total current assets      |  | $           | 85,435  |      |  | $    | 43,196  |      |  | $    | 39,041  |  |  | $ | 96,779  |  |  | $ | 106,802   | 
|Total assets              |  | $           | 948,583 |      |  | $    | 920,150 |      |  | $    | 916,736 |  |  | $ | 946,132 |  |  | $ | 1,271,115 | 
|Total current liabilities |  | $           | 57,848  |      |  | $    | 57,956  |      |  | $    | 55,240  |  |  | $ | 51,294  |  |  | $ | 135,108   | 
|Total debt                |  | $           | 190,145 |      |  | $    | 208,224 |      |  | $    | 211,915 |  |  | $ | 273,511 |  |  | $ | 583,195   | 
|Non-current obligations   |  | $           | 341,628 |      |  | $    | 342,145 |      |  | $    | 345,224 |  |  | $ | 409,195 |  |  | $ | 633,813   | 
|Shareholders equity      |  | $           | 549,107 |      |  | $    | 520,049 |      |  | $    | 516,272 |  |  | $ | 485,643 |  |  | $ | 502,194   | 



---



|    |                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------
|(1) | See Managements Discussion and
    Analysis of Financial Condition and Results of Operations 
    Non-GAAP Financial Measures.
|   
|(2) | EBITDA margin is defined as EBITDA divided by
    revenue.                                                                        






|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis
    of Financial Condition and Results of Operations

The following discussion should be read in
conjunction with our Consolidated Financial Statements and Notes
thereto, which are included later in this report.

Overview

We are an owner and operator of five distinctive
destination resorts located in Florida with hotels, conference
facilities, golf courses, spas, marinas and private clubs. We
have focused on the luxury and upscale resort segment because we
believe these segments outperform other lodging industry
segments, particularly in times of economic downturn. We
previously owned an entertainment and sports business, which
primarily included the operations of the Florida Panthers Hockey
Club and related arena management operations. This business was
sold in July 2001 and, therefore, our entertainment and sports
business has been accounted for as discontinued operations.

Our resorts include the Boca Raton Resort &
Club (Boca Raton), the Registry Resort at Pelican Bay (Naples),
the Edgewater Beach Hotel (Naples), the Hyatt Regency Pier 66
Hotel and Marina (Fort Lauderdale) and the Radisson Bahia Mar
Resort and Yachting Center (Fort Lauderdale). We also own and
operate two golf clubs located in Florida (Grande Oaks Golf Club
in Davie and Naples Grande Golf Club in Naples) that serve as
additional amenities to our resorts, as well as, components of
our exclusive social club, known as the Premier Club. In
addition, we own and operate two golf courses in Boca Raton that
are part of the Boca Raton Resort & Club.

Our resorts possess considerable competitive and
operational strengths. They are unique, irreplaceable assets in
desirable waterfront locations with strong name recognition and
positioning in their respective markets. We believe it would be
difficult for potential competitors to replicate our resorts
and, therefore, we benefit from high barriers to entry. Our
resorts provide us with multiple, diverse revenue streams and
primarily attract corporate groups and affluent leisure
customers. We further believe that each of our properties is
well positioned to maintain or increase market share. We
historically increased revenue and cash flow in large part
through the development of additional guestrooms and resort
amenities at our existing properties and believe there are
additional opportunities for development initiatives to our
portfolio in the future.

Critical Accounting Policies

Managements Discussion and Analysis of
Financial Condition and Results of Operations
(MD&A) discusses our consolidated financial
statements, which have been prepared in accordance with
accounting principles generally accepted in the United States.
The preparation of these consolidated financial statements

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requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities
at the date of the consolidated financial statements and the
reported amounts of revenue and costs and expenses during the
reporting periods. On an ongoing basis, management evaluates its
estimates and judgments, including those relating to revenue
recognition, bad debts, inventories, property and equipment,
goodwill and intangible assets, income taxes, financing
operations, contingencies and litigation.


Management bases its estimates and judgments on
historical experience and on various other factors that are
believed to be reasonable under the circumstances, the results
of which form the basis for making judgments about the carrying
value of assets and liabilities that are not readily available
from other sources. Actual results may differ from these
estimates under different assumptions and conditions.

The Securities and Exchange Commission
(SEC) has requested that all registrants list their
most critical accounting policies in MD&A. The
SEC indicated that a critical accounting policy is
one that is both important to the portrayal of our financial
position and results of operations and requires
managements most difficult, subjective or complex
judgments, often as a result of the need to make estimates about
the effect of matters that are inherently uncertain. We believe
the following accounting policies fit this definition:

Revenue
Recognition for Premier Club Initiation Fees

Revenue from Premier Club nonrefundable initial
membership fees is deferred and recognized ratably over the
average expected life of the memberships, which has been
estimated to be eight years. The average estimated life is based
on our best estimate using company specific historical
information. We have not changed the estimated life used to
recognize the Premier Club membership initiation fees since
adoption in January 1998 (when Premier Club membership
initiation fees became nonrefundable), but would revise such
estimate if, in our opinion, changing trends in membership
experience warranted such a change.

Intangible
Assets

Intangible assets consist of goodwill, which
represents the excess of the cost over the fair value of net
assets of the acquired business, as well as, identified
intangible assets with indefinite lives. Statement of Financial
Accounting Standards (SFAS) No. 142,
Goodwill and Other Intangible Assets states, among
other things, that goodwill is not subject to amortization over
its estimated useful life. Under the provisions of SFAS
No. 142, goodwill that is not subject to amortization is
tested for impairment annually using a two-step impairment
assessment. Impairment testing must be performed more frequently
if events or changes in circumstances indicate that the asset
might be impaired. We tested for potential impairment upon
adoption of SFAS No. 142 and annually each year thereafter.
We have had no impairment of goodwill for the periods presented.

Long-Lived
Assets and Assets to be Disposed Of

The carrying value of long-lived assets is
reviewed if the facts and circumstances suggest that they may be
impaired in accordance with SFAS No. 144, Accounting for
Impairment or Disposal of Long-Lived Assets. If this
review indicates that long-lived assets will not be recoverable
based on the undiscounted cash flows of the entity over the
remaining amortization period, the carrying value of the
long-lived assets will be reduced by the amount by which the
carrying value exceeds fair value. Fair value is determined
using our best estimate of the discounted net operating cash
flows over the remaining life of the assets.

Property
and Equipment

Expenditures for maintenance, repairs and
renewals of items that do not extend the service life or
increase the capacity of our assets are charged to expense as
incurred. Significant additions, along with interest incurred
during the construction period for expansion at our properties,
are capitalized. Depreciation has been

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computed using the straight-line method over the
shorter of the estimated useful lives or, in the case of
leasehold agreements, the term of the leasehold agreement as
follows:


|                                  |  |       |       | 
|--------------------------------- |  | ----- | ----- | 
|                                  |  | Years
|                                  |  |      
|Building and improvements         |  |       | 15-40 | 
|Land improvements                 |  |       | 15    | 
|Leasehold improvements            |  |       | 5-20  | 
|Furniture, fixtures and equipment |  |       | 3-7   | 

Business Strategy

Our objective is to enhance shareholder value
principally through improvements in earnings, cash flow and the
quality of our resorts. While management continuously evaluates
ownership, acquisition and divestiture alternatives, we continue
to pursue internal expansion and development opportunities at
our existing properties.

Seasonality

Our revenue and income are seasonal in nature and
are directly affected by the strength and seasonality of the
tourism and leisure industry. Historically, approximately 16%,
23%, 36% and 25% of annual revenue has been derived during the
first, second, third and fourth fiscal quarters, respectively.
Although historically the trend in quarterly revenue for the
second, third and fourth fiscal quarters of each year (October
through June) is generally higher than the first fiscal quarter
(July through September), we cannot assure you that this will
occur in future periods. Accordingly, quarterly or other interim
results should not be considered indicative of results to be
expected for any future quarter or for the full year.

Impact of Inflation

Inflation and changing prices have not had a
material impact on our revenue and results of operations. Based
on the current economic climate, we do not expect that inflation
and changing prices will have a material impact on our revenue
or income during the 2005 fiscal year. Many of the costs of
operating our resorts can be fixed for certain periods of time,
reducing the short-term effects of changes in the rate of
inflation. Room rates, which are set on a daily basis, can be
rapidly changed to meet changes in inflation rates (as well as
other changing market conditions). We have less flexibility in
changing group rates since group reservations are typically made
12 to 36 months in advance of the stay. To the extent
inflationary trends affect short-term interest rates, a portion
of our debt service costs may be adversely affected. See Note 8
to the Consolidated Financial Statements, included later in this
report.

Non-GAAP Financial Measures

This Annual Report on Form 10-K contains a
non-GAAP financial measure, within the meaning of applicable SEC
rules, which we believe is useful to investors. This financial
measure is earnings before extraordinary and non-recurring
items, interest expense, interest income, income taxes,
depreciation and amortization (EBITDA). EBITDA is
used by management, the lodging industry and certain investors
as an indicator of our historical ability to service debt, to
sustain potential future increases in debt and to satisfy
capital requirements. However, EBITDA is not intended to
represent cash flows for the period. In addition, it has not
been presented as an alternative to either (a) operating
income (as determined by GAAP) as an indicator of operating
performance or (b) cash flows from operating, investing and
financing activities (as determined by GAAP) and is thus
susceptible to varying calculations. EBITDA as presented may not
be comparable to other similarly titled measures of other
companies.

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##### Table of Contents



Impact of Recently Issued Accounting
Standards

In December 2003, the Financial Accounting
Standards Board issued Interpretation No. 46
(FIN 46R), Consolidation of Variable
Interest Entities. This Interpretation requires existing
unconsolidated variable interest entities to be consolidated by
their primary beneficiaries. The primary beneficiary of a
variable interest entity is the party that absorbs a majority of
the entitys expected losses, receives a majority of its
expected residual returns, or both, as a result of holding
variable interests. Prior to FIN 46R, a company generally
included another entity in its consolidated financial statements
only if it controlled the entity through voting interests. Since
we do not have any variable interest entities, the adoption of
FIN 46R has no impact on our results of operations or financial
position.

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##### Table of Contents



RESULTS OF OPERATIONS  HISTORICAL
COMPARISON

The accompanying table sets forth our operating
results for the years ended June 30, 2004, 2003 and 2002
(000s omitted):

|                                                                        |                                               |                        |                          |         |        |         |         |         |        |         |         |         |         |         | 
|----------------------------------------------------------------------- | --------------------------------------------- | ---------------------- | ------------------------ | ------- | ------ | ------- | ------- | ------- | ------ | ------- | ------- | ------- | ------- | ------- | 
|                                                                        |                                               | 2004                   |                          | 2003    |        | 2002   
|                                                                        |                                               |                        |                          |         |        |        
|Leisure and recreation revenue                                          |                                               | $                      | 313,335                  |         |        | $       | 290,174 |         |        | $       | 273,043 |        
|Operating expenses:                                                     |                                               |                        |                          |         |        |         |         |         |        |         |         |        
|                                                                        | Cost of leisure and recreation services       |                        |                          | 137,426 |        |         |         | 130,272 |        |         |         | 123,529 |        
|                                                                        | Selling, general and administrative expenses: |                        |                          |         |        |         |         |         |        |         |         |         |        
|                                                                        |                                               | Leisure and recreation |                          |         | 77,430 |         |         |         | 78,205 |         |         |         | 74,561  |        
|                                                                        |                                               | Corporate              |                          |         | 8,410  |         |         |         | 7,778  |         |         |         | 8,585   |        
|                                                                        | Depreciation:                                 |                        |                          |         |        |         |         |         |        |         |         |         |        
|                                                                        |                                               | Leisure and recreation |                          |         | 39,869 |         |         |         | 37,821 |         |         |         | 34,571  |        
|                                                                        |                                               | Corporate              |                          |         | 169    |         |         |         | 205    |         |         |         | 219     |        
|                                                                        | Loss on early retirement of debt              |                        |                          |        |        |         |         | 149     |        |         |         | 3,073   |        
|                                                                        |                                               |                        |                          |         |        |         |         |         |        |         |         |        
|                                                                        |                                               |                        | Total operating expenses |         |        | 263,304 |         |         |        | 254,430 |         |         |         | 244,538 | 
|                                                                        |                                               |                        |                          |         |        |         |         |         |        |         |         |        
|                                                                        | Operating income (loss):                      |                        |                          |         |        |         |         |         |        |         |         |         |        
|                                                                        |                                               | Leisure and recreation |                          |         | 58,610 |         |         |         | 43,876 |         |         |         | 40,382  |        
|                                                                        |                                               | Corporate              |                          |         | (8,579 | )       |         |         | (8,132 | )       |         |         | (11,877 | )      
|                                                                        |                                               |                        |                          |         |        |         |         |         |        |         |         |        
|                                                                        |                                               |                        | Total operating income   |         |        | 50,031  |         |         |        | 35,744  |         |         |         | 28,505  | 
|Interest and other income                                               |                                               |                        | 199                      |         |        |         | 227     |         |        |         | 1,240   |        
|Interest expense                                                        |                                               |                        | (20,943                  | )       |        |         | (21,664 | )       |        |         | (23,903 | )      
|                                                                        |                                               |                        |                          |         |        |         |         |         |        |         |         |        
|Income from continuing operations before income
    taxes               |                                               |                        | 29,287                   |         |        |         | 14,307  |         |        |         | 5,842   |        
|Provision for income taxes                                              |                                               |                        | (11,276                  | )       |        |         | (5,508  | )       |        |         | (1,336  | )      
|                                                                        |                                               |                        |                          |         |        |         |         |         |        |         |         |        
|Income from continuing operations                                       |                                               |                        | 18,011                   |         |        |         | 8,799   |         |        |         | 4,506   |        
|Gain on disposition of discontinued operations,
    net of income taxes |                                               |                        |                         |         |        |         |        |         |        |         | 26,185  |        
|                                                                        |                                               |                        |                          |         |        |         |         |         |        |         |         |        
|Net income                                                              |                                               | $                      | 18,011                   |         |        | $       | 8,799   |         |        | $       | 30,691  |        
|                                                                        |                                               |                        |                          |         |        |         |         |         |        |         |         |        
|Net cash provided by operating activities                               |                                               | $                      | 76,519                   |         |        | $       | 50,683  |         |        | $       | 48,377  |        
|                                                                        |                                               |                        |                          |         |        |         |         |         |        |         |         |        
|Net cash provided by (used in) investing
    activities                 |                                               | $                      | (27,802                  | )       |        | $       | (37,276 | )       |        | $       | 7,868   |        
|                                                                        |                                               |                        |                          |         |        |         |         |         |        |         |         |        
|Net cash used in financing activities                                   |                                               | $                      | (9,240                   | )       |        | $       | (8,988  | )       |        | $       | (62,463 | )      
|                                                                        |                                               |                        |                          |         |        |         |         |         |        |         |         |        
|EBITDA                                                                  |                                               | $                      | 90,522                   |         |        | $       | 74,194  |         |        | $       | 66,368  |        
|                                                                        |                                               |                        |                          |         |        |         |         |         |        |         |         |        

We derive all significant revenue from a single
line of business, hotel and resort real estate ownership, which
we characterize as leisure and recreation revenue. Corporate
expenses have been segregated in the preceding table and in the
accompanying discussion because they largely relate to public
company compliance costs and corporate governance expenses.

The accompanying table reconciles EBITDA to net
income from continuing operations for the years ended
June 30 (000s omitted):

|                                       |  |      |         |      |  |      |         |   |  |   |         |  
|-------------------------------------- |  | ---- | ------- | ---- |  | ---- | ------- | - |  | - | ------- | -
|                                       |  | 2004 |         | 2003 |  | 2002
|                                       |  |      |         |      |  |     
|EBITDA                                 |  | $    | 90,522  |      |  | $    | 74,194  |   |  | $ | 66,368  |  
|Less: Loss on early retirement of debt |  |      |        |      |  |      | (149    | ) |  |   | (3,073  | )
|Less: Non cash compensation expense    |  |      | (453    | )    |  |      | (275    | ) |  |   |        |  
|Less: Depreciation                     |  |      | (40,038 | )    |  |      | (38,026 | ) |  |   | (34,790 | )
|Less: Interest expense                 |  |      | (20,943 | )    |  |      | (21,664 | ) |  |   | (23,903 | )
|Plus: Interest income                  |  |      | 199     |      |  |      | 227     |   |  |   | 1,240   |  
|Less: Provision for income taxes       |  |      | (11,276 | )    |  |      | (5,508  | ) |  |   | (1,336  | )
|                                       |  |      |         |      |  |      |         |   |  |   |         |  
|Net income from continuing operations  |  | $    | 18,011  |      |  | $    | 8,799   |   |  | $ | 4,506   |  
|                                       |  |      |         |      |  |      |         |   |  |   |         |  

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See Consolidated Statements of Cash Flows
included later in this report for a reconciliation of net income
to net cash flow provided by operating activities.

Select operating data for us for the years ended
June 30 is set forth below (000s omitted except
operating statistics):

|                                                            |                          |                                      |         |            |         |      |      |            |    |      |         |         |         |  |   |   |   |   |         |         |         | 
|----------------------------------------------------------- | ------------------------ | ------------------------------------ | ------- | ---------- | ------- | ---- | ---- | ---------- | -- | ---- | ------- | ------- | ------- |  | - | - | - | - | ------- | ------- | ------- | 
|                                                            |                          |                                      |         | % Change   |         |      |      | % Change   |    |     
|                                                            |                          |                                      |         | over Prior |         |      |      | over Prior |    |     
|                                                            |                          | 2004                                 |         | Year       |         | 2003 |      | Year       |    | 2002
|                                                            |                          |                                      |         |            |         |      |      |            |    |     
|Revenue:                                                    |                          |                                      |         |            |         |      |      |            |    |      |         |         |         |  |   |   |   |   |         |        
|                                                            | Room revenue             |                                      | $       | 123,789    |         |      |      | 6%         |    |      | $       | 116,785 |         |  |   | 7 | % |   | $       | 108,859 |        
|                                                            | Non-room related revenue |                                      |         | 189,546    |         |      |      | 9%         |    |      |         | 173,389 |         |  |   | 6 | % |   |         | 164,184 |        
|                                                            |                          |                                      |         |            |         |      |      |            |    |      |         |         |         |  |   |   |   |   |         |        
|                                                            |                          | Total leisure and recreation revenue |         | $          | 313,335 |      |      |            | 8% |      |         | $       | 290,174 |  |   |   | 6 | % |         | $       | 273,043 | 
|                                                            |                          |                                      |         |            |         |      |      |            |    |      |         |         |         |  |   |   |   |   |         |        
|Operating Statistics:                                       |                          |                                      |         |            |         |      |      |            |    |      |         |         |         |  |   |   |   |   |         |        
|Available room nights                                       |                          |                                      | 847,779 |            |         |      |     |            |    |      | 845,705 |         |         |  | 2 | % |   |   | 828,089 |        
|Average daily rate                                          |                          | $                                    | 211.98  |            |         |      | (1)% |            |    | $    | 214.06  |         |         |  | 2 | % |   | $ | 210.43  |        
|Occupancy                                                   |                          |                                      | 68.9%   |            |         |      | 7%   |            |    |      | 64.5%   |         |         |  | 3 | % |   |   | 62.5%   |        
|Room revenue per available room                             |                          | $                                    | 146.02  |            |         |      | 6%   |            |    | $    | 138.09  |         |         |  | 5 | % |   | $ | 131.46  |        
|Total leisure and recreation revenue per
    available room |                          | $                                    | 369.59  |            |         |      | 8%   |            |    | $    | 343.13  |         |         |  | 4 | % |   | $ | 329.73  |        

Leisure and Recreation Revenue

We generate a diversified stream of revenue.
Leisure and recreation revenue totaled $313.3 million,
$290.2 million and $273.0 million for the years ended
June 30, 2004, 2003 and 2002, respectively. Non-room
revenue, which represented 60% of leisure and recreation revenue
for each period presented, was derived from sources such as food
and beverage sales, yachting and marina revenue, spa revenue,
golf revenue, Premier Club membership fees and dues, retail
sales and other resort amenities.

The $23.1 million increase in revenue for
the year ended June 30, 2004, compared to the year ended
June 30, 2003, resulted primarily from increases in
occupancy at each of our properties, as well as, increased
revenue derived from non-room sources such as food and beverage
revenue, yachting and marina revenue, and spa revenue. We
believe increases in resort occupancy are largely the result of
an improving economic landscape, significant property
enhancements, the high quality of our assets, our commitment to
quality customer service resulting in strong guest loyalty and a
favorable market mix that combines high-end leisure travelers
and corporate groups.

The $17.1 million increase in leisure and
recreation revenue for the year ended June 30, 2003,
compared to the year ended June 30, 2002, was primarily
because the prior year was adversely impacted by travel
disruption and short-term cancellations of group business in the
wake of the September 11, 2001 terrorist attacks and
economic recession. During the year ended June 30, 2003,
business at our Naples properties was disrupted by comprehensive
room renovations at both the Registry Resort and Edgewater Beach
Hotel. We continued to be affected by factors outside our
control including political unrest and increased terror threat
levels.

Leisure and Recreation Operating
Expenses

Cost of leisure and recreation services totaled
$137.4 million, or 44% of revenue for the year ended
June 30, 2004, $130.3 million, or 45% of revenue for
the year ended June 30, 2003 and $123.5 million, or
45% of revenue for the year ended June 30, 2002. Cost of
services primarily consisted of direct costs to service rooms,
marinas, food and beverage operations, retail establishments and
other amenities at the resorts.

Leisure and recreation selling, general and
administrative expenses (S,G&A) totaled
$77.4 million, or 25% of revenue for the year ended
June 30, 2004, $78.2 million, or 27% of revenue, for
the year ended June 30, 2003 and $74.6 million, or 27%
of revenue, for the year ended June 30, 2002. Leisure and
recreation S,G&A

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primarily consisted of utility and property
maintenance costs, real estate taxes, property and casualty
insurance, franchise agreement fees, sales and marketing
expenses and administrative salaries and expenses.


Leisure S,G&A decreased following the
expiration of two operating leases at country club facilities
during the year ended June 30, 2004, compared to the year
ended June 30, 2003. Leisure and recreation S,G&A was
adversely affected by an increase in certain fixed costs
including energy and property/casualty insurance for the year
ended June 30, 2003, compared to the year ended
June 30, 2002.

Depreciation expense from leisure and recreation
operations totaled $39.9 million, $37.8 million and
$34.6 million for the years ended June 30, 2004, 2003
and 2002, respectively. The increase in depreciation expense for
the year ended June 30, 2004, compared to the year ended
June 30, 2003, was primarily the result of an increase in
depreciation expense following the completion of room
renovations at the Registry Resort and Edgewater Beach Hotel
(which were completed midway through the prior fiscal year) and
a marina renovation at the Bahia Mar Resort & Yachting
Center (which was completed in October 2003). The increase in
depreciation expense for the year ended June 30, 2003,
compared to the year ended June 30, 2002, was primarily due
to the completion of comprehensive room renovations at the
Edgewater Beach Hotel and Registry Resort, as well as, a full
year of depreciation on several capital projects completed
mid-way through the prior year at the Boca Raton Resort &
Club.

Leisure and Recreation Operating
Income

Leisure and recreation operating income totaled
$58.6 million, $43.9 million and $40.4 million for the
years ended June 30, 2004, 2003 and 2002, respectively. The
increase in operating income for the year ended June 30,
2004, compared with the year ended June 30, 2003 was
primarily due to higher revenue and better profit margins. The
improvement in operating results for the year ended
June 30, 2003, compared to the year ended June 30,
2002, was primarily because the prior year figures were
adversely impacted by a decrease in revenue and corresponding
income following the September 11, 2001 terrorist attacks
and economic recession.

Corporate General and Administrative
Expenses

Corporate general and administrative expenses
totaled $8.4 million, $7.8 million and $8.6 million
for the years ended June 30, 2004, 2003, and 2002,
respectively. The increase in corporate general and
administrative expenses for the year ended June 30, 2004,
compared with the year ended June 30, 2003 was partially
the result of a $300,000 increase in public company governance
expenses. The decrease in corporate general and administrative
expenses for the year ended June 30, 2003, compared to the
year ended June 30, 2002, was primarily because of an
$800,000 decline in the management fee payable to Huizenga
Holdings, Inc., (HHI) a corporation whose sole
shareholder is our Chairman and Chief Executive Officer.
Pursuant to the management services agreement, HHI provides us
certain administrative, financing, tax, investor relations,
legal and strategy related services.

Loss on Early Retirement of Debt

For the year ended June 30, 2003, we
repurchased $2.8 million principal amount of our 9.875%
senior subordinated notes payable and recognized a loss of
$149,000. For the year ended June 30, 2002, we repurchased
$80.1 million principal amount of our senior subordinated
notes payable and recognized a loss of $3.1 million. The
losses represent the non-cash expense associated with the
write-off of a pro rata portion of the debt issuance costs
previously capitalized when the notes were issued together with
the premium paid to acquire the notes. The remaining senior
subordinated notes were retired in August 2004. See
Capital Resources.

Interest and Other Income

Interest and other income totaled $199,000,
$227,000 and $1.2 million for the years ended June 30,
2004, 2003 and 2002, respectively. The decrease in interest and
other income for the year ended June 30, 2003, compared to
the year ended June 30, 2002, was because we invested
proceeds from the sale of the

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entertainment and sports business in interest
bearing time deposit accounts during the year ended
June 30, 2002 until such proceeds were used to reduce
higher rate indebtedness.


Interest Expense

Interest expense totaled $20.9 million,
$21.7 million and $23.9 million for years ended
June 30, 2004, 2003 and 2002, respectively. Our average
cost of borrowing was 10.6%, 10.0% and 10.1% for the years ended
June 30, 2004 , 2003 and 2002, respectively, while the
Companys average outstanding indebtedness was
$197.8 million, $217.8 million and $235.0 million for
the years ended June 30, 2004, 2003 and 2002, respectively.
The reduction in our average outstanding indebtedness followed
payments under our revolving credit facility with free cash from
operations.

Provision for Income Taxes

We recorded a provision for income taxes totaling
$11.3 million (38.5% of income before taxes),
$5.5 million (38.5% of income before taxes) and $1.3
million (22.9% of income before taxes) for the years ended
June 30, 2004, 2003 and 2002, respectively. We recently
adopted a tax accounting policy whereby we use tax lives and
methods for our property and equipment as permitted by the
Internal Revenue Service in various rulings and regulations. The
tax accounting policy has resulted in a decrease in income taxes
currently payable, as well as, a net refund of income taxes paid
in prior years totaling approximately $12.8 million. The
income tax accounting method change has no impact on our total
income tax expense for financial reporting purposes. As a result
of the tax accounting method change, we have available state net
operating loss carryforwards of approximately $15.9 million
for tax purposes to offset future taxable income. The net
operating loss carryforwards, if not fully utilized, begin to
expire in 2023.

Discontinued Operations

We sold our entertainment and sports business in
July 2001 and recognized a gain, net of income taxes, of
$26.2 million for the year ended June 30, 2002.
Therefore, the operations have been accounted for as
discontinued operations.

Liquidity

Unrestricted cash and cash equivalents increased
to $47.6 million at June 30, 2004, from $8.1 million
at June 30, 2003 and from $3.7 million at
June 30, 2002. The major components of the change are
discussed below.

Net
Cash Provided by Operating Activities

Net cash provided by operating activities totaled
$76.5 million, $50.7 million and $48.4 million for the
years ended June 30, 2004, 2003 and 2002, respectively. The
increase in net cash provided by operating activities for the
year ended June 30, 2004, compared to the year ended
June 30, 2003, was partially the result of an increase in
resort revenue and corresponding cash flow. We believe that
increases in resort revenue and cash flow are largely due to an
improving economic landscape, our significant property
enhancements, the high quality and desirability of our assets,
our commitment to quality customer service resulting in strong
guest loyalty and a favorable market mix that combines high-end
leisure travelers and corporate groups. In addition to increased
resort cash flow, we conserved cash through certain income tax
accounting method changes during the year ended June 30,
2004. Furthermore, we received a net refund of income taxes paid
in prior years totaling approximately $12.8 million. See
Note 15 to Consolidated Financial Statements included later
in this report.

The slight increase in net cash provided by
operating activities for the year ended June 30, 2003,
compared to the year ended June 30, 2002, was due to modest
improvement in income and corresponding net cash flow following
the September 11, 2001 terrorist attacks. However, we were
still affected by events outside our control including political
unrest and increased terror threat levels that adversely
affected our cash flow during the year ended June 30, 2003.

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Net
Cash Provided by (Used in) Investing Activities

Net cash used in investing activities totaled
$27.8 million and $37.3 million for the years ended
June 30, 2004 and 2003, respectively. Net cash provided by
investing activities amounted to $7.9 million for the year
ended June 30, 2002. During the year ended June 30,
2004, investing activities primarily consisted of capital
expenditures as more fully described below. During the year
ended June 30, 2003, we received $12.8 million from
the sale of land parcels located in Naples, Florida and
Plantation, Florida, offset by $50.1 million in capital
expenditures. During the year ended June 30, 2002, we
received $75.1 million from the sale of the entertainment
and sports business, partially offset by $67.0 million in
capital expenditures.

Capital expenditures totaled $28.3 million,
$50.1 million and $67.0 million for the years ended
June 30, 2004, 2003 and 2002, respectively. During the year
ended June 30, 2004, capital expenditures included
completion of a marina renovation at the Bahia Mar Resort and
Yachting Center. The extensive marina renovation results in 245
reconfigured boat slips, sized to accommodate larger yachts
ranging from 80 feet to over 200 feet. Improved amenities at the
marina include a revamped floating fuel dock offering a
high-speed diesel system, as well as, fiber optic high-speed
Internet service (which was also implemented at each of our
resort properties) and cable TV for each slip. We also continued
to enhance the amenity base at the Boca Raton Resort & Club
with the complete renovation of the central pool area and
pool-side restaurant, the addition of global positioning systems
for its fleet of golf carts, a redesigned driving range, an
improved golf staging area, an enlarged croquet lawn and
renovations of a casual restaurant at the beach club. At Pier
66, we opened a newly renovated and themed upscale restaurant
with outdoor seating fronting the intracoastal waterway. We also
renovated one of our full service restaurants and our nightclub
at the Registry Resort. During the year ended June 30,
2003, capital projects included a comprehensive room renovation
at the Registry Resort covering 395 guestrooms, which includes
all new furnishings and new five fixture bathrooms. We also
renovated the remaining 60 guest suites at the Edgewater Beach
Hotel and continued work on a marina renovation at the Bahia Mar
Resort and Yachting Center. During the year ended June 30,
2002, we completed construction on various projects at the Boca
Raton Resort & Club including a yacht club with 112 new
water-view rooms, additional meeting space and renovated marina
slips, which opened in January 2002, and a new 50,000 square
foot world-class spa complex, Spa Palazzo, as well as, a new
golf clubhouse with casual restaurant, which opened in December
2001.

Net Cash Used in
Financing Activities

Net cash used in financing activities totaled
$9.2 million, $9.0 million and $62.5 million for
the years ended June 30, 2004, 2003 and 2002, respectively.
Cash flows for each period represent borrowings under credit
facilities, net of the repayment of indebtedness (including the
repurchase of senior subordinated notes), proceeds from the
exercise of stock options and repurchases of our Class A
Common Stock.

Off-Balance Sheet Arrangements

Leases

We lease the site of the Radisson Bahia Mar
Resort and Yachting Center from the City of Fort Lauderdale
under an operating lease, which has a term through
August 31, 2062. Under the lease agreement, we are required
to pay annual rent equal to the greater of a percentage (4.0%
through September 30, 2012 and 4.25% thereafter) of annual
gross operating revenue, as defined, or a $300,000 minimum
annual rent (potentially escalating after September 2037). Rent
expense under this lease totaled $949,000, $764,000 and $780,000
for the years ended June 30, 2004, 2003 and 2002,
respectively. The lease agreement also requires us to set aside
3% of Bahia Mars revenue annually, as defined in the lease
agreement, for the purchase, replacement and upgrade of
furniture, fixtures and equipment. All such restricted funds
have been spent on their required purpose through June 30,
2004.

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Future minimum lease obligations under various
non-cancelable operating leases with initial terms in excess of
one year at June 30, 2004 (including the lease described in
the preceding paragraph) are as follows (000s omitted):

|           |  |   |        | 
|---------- |  | - | ------ | 
|2005       |  | $ | 1,769  | 
|2006       |  |   | 1,234  | 
|2007       |  |   | 1,013  | 
|2008       |  |   | 735    | 
|2009       |  |   | 414    | 
|Thereafter |  |   | 15,993 | 
|           |  |   |        | 
|           |  | $ | 21,158 | 
|           |  |   |        | 

Contractual
Obligations

At June 30, 2004, we had $190.1 million
in outstanding 9.875% senior subordinated notes payable. The
notes were redeemed in full on August 27, 2004. See Note 9
to the Consolidated Financial Statements included later in this
report.

Capital
Expenditures

At June 30, 2004, we had commitments
outstanding for capital expenditures under purchase orders and
contracts approximating $888,000.

Capital Resources

Our capital resources are provided from both
internal and external sources. The primary capital resources
from internal sources include (1) room rentals, food and
beverage sales, retail sales, spa revenue, golf revenue, tennis
revenue, marina revenue and conference service revenue at our
resorts and (2) Premier Club membership revenue, net of
related costs. The primary external sources of liquidity have
been the issuance of debt securities, borrowing under term loans
and credit lines, the issuance of our stock for property
acquisitions and the exercise of non-qualified stock options by
employees pursuant to our stock option plan.

In July 2004, we closed on a new
$325.0 million senior credit facility. The senior credit
facility consists of a term loan in the principal amount of
$200.0 million which matures in July 2009 and a revolving
credit facility in the principal amount of $125.0 million
which expires in July 2007. The interest rate on the new
facility is tied to consolidated leverage ratios, but generally
ranges from LIBOR plus 225 basis points to 250 basis points on
the term loan and from LIBOR plus 175 basis points to 250 basis
points on the revolver. The proceeds of the term loan were used
in August 2004 to redeem in full our outstanding senior
subordinated notes payable. As a result, we will record a loss
on the early extinguishment of debt during the quarter ending
September 30, 2004 of approximately $13.1 million,
which includes the premium paid to redeem the notes, together
with the write-off of debt issuance costs previously capitalized
in connection with the issuance of the notes. The
$125.0 million revolving credit facility replaces our
previous revolver, which was scheduled to mature in June 2005.
We have no borrowings under the new revolving credit facility.
As a result of our cash on hand, our availability under the new
revolving credit facility and expected cash from operations over
the ensuing year, we believe we have sufficient funds to
continue our capital maintenance and expansion plans and support
on-going operations, including meeting debt service obligations
as they come due.

Working Capital

Current assets exceeded current liabilities by
$27.6 million at June 30, 2004. Current liabilities
exceeded current assets by $14.8 million at June 30,
2003. The increase in working capital during the year ended
June 30, 2004, compared to the year ended June 30,2003
was primarily because we generated more resort cash flow, made
certain income tax accounting method changes resulting in
reduced tax outlays and incurred lower capital expenditures,
partially offset by increased prepaid insurance.

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Forward Looking Statements

Some of the information in this report contains
forward-looking statements. Such statements can be identified by
the use of forward-looking terminology such as may,
will, expect, anticipate,
estimate, continue or other similar
words. These statements discuss future expectations, contain
projections of results of operations or of financial position or
state other forward-looking information. When
considering such forward-looking statements, you should keep in
mind the risk factors and other cautionary statements in this
report. The risk factors include certain known and unknown risks
and uncertainties, and could cause our actual results to differ
materially from those contained in any forward looking statement.

These risk factors have been previously described
and include, among others, risks relating to travel; risks
associated with construction and development at our properties;
competition in our principal business; the availability of
financing on terms suitable to us and our dependence on key
personnel. Risks relating to travel include a change in travel
patterns resulting from slowing economic conditions and
geopolitical conditions, as well as changes in corporate
policies relating to group meetings and air or other travel
disruption.






|         |                                                              
|-------- | -------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosure
    About Market Risk

Not applicable.

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Item 8.     Financial
Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL
STATEMENTS

|                                                                                                     |  |      |    | 
|---------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                                                                                     |  | Page
|                                                                                                     |  |     
|Report of Independent Registered Public
    Accounting Firm                                          |  |      | 25 | 
|Consolidated Balance Sheets as of June 30,
    2004 and 2003                                         |  |      | 26 | 
|Consolidated Statements of Operations for the
    Years Ended June 30, 2004, 2003 and 2002           |  |      | 27 | 
|Consolidated Statements of Shareholders
    Equity for the Years Ended June 30, 2004, 2003 and 2002 |  |      | 28 | 
|Consolidated Statements of Cash Flows for the
    Years Ended June 30, 2004, 2003 and 2002           |  |      | 29 | 
|Notes to Consolidated Financial Statements                                                           |  |      | 30 | 

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REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM

To the Board of Directors and Shareholders of
Boca Resorts, Inc.:

We have audited the accompanying consolidated
balance sheets of Boca Resorts, Inc. as of June 30, 2004
and 2003, and the related consolidated statements of operations,
shareholders equity and cash flows for each of the three
years in the period ended June 30, 2004. These financial
statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with the
standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred
to above present fairly, in all material respects, the
consolidated financial position of Boca Resorts, Inc. at
June 30, 2004 and 2003, and the consolidated results of
their operations and their cash flows for each of the three
years in the period ended June 30, 2004, in conformity with
U.S. generally accepted accounting principles.



| |                      
| | ---------------------
| | /s/ ERNST & YOUNG LLP

Miami, Florida 
 August 11, 2004, except for Notes 8 and 9, as to
which the date is August 27, 2004

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BOCA RESORTS, INC.

CONSOLIDATED BALANCE SHEETS

As of June 30,


(In thousands, except share data)


|                                                   |                                                                                                                                                                                     |                                            |         |         |         |  |         |         |         | 
|-------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------- | ------- | ------- |  | ------- | ------- | ------- | 
|                                                   |                                                                                                                                                                                     | 2004                                       |         | 2003   
|                                                   |                                                                                                                                                                                     |                                            |         |        
|ASSETS                                            
|Current assets:                                    |                                                                                                                                                                                     |                                            |         |         |         |  |         |        
|                                                   | Cash and cash equivalents                                                                                                                                                           |                                            | $       | 47,587  |         |  | $       | 8,110   |        
|                                                   | Restricted cash                                                                                                                                                                     |                                            |         | 138     |         |  |         | 641     |        
|                                                   | Accounts receivable, net                                                                                                                                                            |                                            |         | 18,616  |         |  |         | 20,960  |        
|                                                   | Inventory                                                                                                                                                                           |                                            |         | 6,774   |         |  |         | 6,616   |        
|                                                   | Current portion of Premier Club notes receivable                                                                                                                                    |                                            |         | 5,301   |         |  |         | 3,631   |        
|                                                   | Other current assets                                                                                                                                                                |                                            |         | 7,019   |         |  |         | 3,238   |        
|                                                   |                                                                                                                                                                                     |                                            |         |         |         |  |         |        
|                                                   |                                                                                                                                                                                     | Total current assets                       |         |         | 85,435  |  |         |         | 43,196  | 
|Property and equipment, net                        |                                                                                                                                                                                     |                                            | 808,734 |         |         |  | 823,681 |        
|Intangible assets, net                             |                                                                                                                                                                                     |                                            | 35,937  |         |         |  | 35,937  |        
|Long-term portion of Premier Club notes receivable |                                                                                                                                                                                     |                                            | 10,516  |         |         |  | 8,157   |        
|Other assets                                       |                                                                                                                                                                                     |                                            | 7,961   |         |         |  | 9,179   |        
|                                                   |                                                                                                                                                                                     |                                            |         |         |         |  |         |        
|                                                   |                                                                                                                                                                                     | Total assets                               |         | $       | 948,583 |  |         | $       | 920,150 | 
|                                                   |                                                                                                                                                                                     |                                            |         |         |         |  |         |        
|LIABILITIES AND SHAREHOLDERS
    EQUITY          
|Current liabilities:                               |                                                                                                                                                                                     |                                            |         |         |         |  |         |        
|                                                   | Accounts payable and accrued expenses                                                                                                                                               |                                            | $       | 30,708  |         |  | $       | 33,515  |        
|                                                   | Current portion of deferred revenue and advance
    deposits                                                                                                                        |                                            |         | 26,095  |         |  |         | 23,288  |        
|                                                   | Net liabilities of discontinued operations                                                                                                                                          |                                            |         | 1,045   |         |  |         | 1,074   |        
|                                                   | Current portion of credit line and note payable                                                                                                                                     |                                            |         |        |         |  |         | 79      |        
|                                                   |                                                                                                                                                                                     |                                            |         |         |         |  |         |        
|                                                   |                                                                                                                                                                                     | Total current liabilities                  |         |         | 57,848  |  |         |         | 57,956  | 
|Credit line and note payable                       |                                                                                                                                                                                     |                                            |        |         |         |  | 18,000  |        
|Deferred revenue, net of current portion           |                                                                                                                                                                                     |                                            | 31,172  |         |         |  | 33,498  |        
|Other liabilities                                  |                                                                                                                                                                                     |                                            | 9,560   |         |         |  | 9,560   |        
|Deferred income taxes                              |                                                                                                                                                                                     |                                            | 56,553  |         |         |  | 34,242  |        
|Senior subordinated notes payable                  |                                                                                                                                                                                     |                                            | 190,145 |         |         |  | 190,145 |        
|Premier Club refundable membership fees            |                                                                                                                                                                                     |                                            | 54,198  |         |         |  | 56,700  |        
|                                                   |                                                                                                                                                                                     |                                            |         |         |         |  |         |        
|                                                   |                                                                                                                                                                                     | Total liabilities                          |         |         | 399,476 |  |         |         | 400,101 | 
|                                                   |                                                                                                                                                                                     |                                            |         |         |         |  |         |        
|Commitments and contingencies (Note 12)            |                                                                                                                                                                                     |                                            |         |         |         |  |         |        
|Shareholders equity:                              |                                                                                                                                                                                     |                                            |         |         |         |  |         |        
|                                                   | Class A Common Stock, $.01 par value,
    100,000,000 shares authorized and 39,919,579 and 39,035,078
    shares issued and outstanding at June 30, 2004 and 2003,
    respectively |                                            |         | 399     |         |  |         | 390     |        
|                                                   | Class B Common Stock, $.01 par value,
    10,000,000 shares authorized and 255,000 shares issued and
    outstanding at June 30, 2004 and 2003.                                     |                                            |         | 3       |         |  |         | 3       |        
|                                                   | Contributed capital                                                                                                                                                                 |                                            |         | 470,586 |         |  |         | 459,548 |        
|                                                   | Retained earnings                                                                                                                                                                   |                                            |         | 78,119  |         |  |         | 60,108  |        
|                                                   |                                                                                                                                                                                     |                                            |         |         |         |  |         |        
|                                                   |                                                                                                                                                                                     | Total shareholders equity                 |         |         | 549,107 |  |         |         | 520,049 | 
|                                                   |                                                                                                                                                                                     |                                            |         |         |         |  |         |        
|                                                   |                                                                                                                                                                                     | Total liabilities and shareholders equity |         | $       | 948,583 |  |         | $       | 920,150 | 
|                                                   |                                                                                                                                                                                     |                                            |         |         |         |  |         |        

See accompanying notes to consolidated financial
statements.

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BOCA RESORTS, INC.

CONSOLIDATED STATEMENTS OF
OPERATIONS

For the Years Ended June 30,


(In thousands, except per share
data)


|                                                                             |                                              |                          |         |         |         |      |         |         |         |   |         |         |         | 
|---------------------------------------------------------------------------- | -------------------------------------------- | ------------------------ | ------- | ------- | ------- | ---- | ------- | ------- | ------- | - | ------- | ------- | ------- | 
|                                                                             |                                              | 2004                     |         | 2003    |         | 2002
|                                                                             |                                              |                          |         |         |         |     
|Leisure and recreation revenue                                               |                                              | $                        | 313,335 |         |         | $    | 290,174 |         |         | $ | 273,043 |        
|Operating expenses:                                                          |                                              |                          |         |         |         |      |         |         |         |   |         |        
|                                                                             | Cost of leisure and recreation services      |                          |         | 137,426 |         |      |         | 130,272 |         |   |         | 123,529 |        
|                                                                             | Selling, general and administrative expenses |                          |         | 85,840  |         |      |         | 85,983  |         |   |         | 83,146  |        
|                                                                             | Depreciation                                 |                          |         | 40,038  |         |      |         | 38,026  |         |   |         | 34,790  |        
|                                                                             | Loss on early retirement of debt             |                          |         |        |         |      |         | 149     |         |   |         | 3,073   |        
|                                                                             |                                              |                          |         |         |         |      |         |         |         |   |         |        
|                                                                             |                                              | Total operating expenses |         |         | 263,304 |      |         |         | 254,430 |   |         |         | 244,538 | 
|                                                                             |                                              |                          |         |         |         |      |         |         |         |   |         |        
|Operating income                                                             |                                              |                          | 50,031  |         |         |      | 35,744  |         |         |   | 28,505  |        
|Interest and other income                                                    |                                              |                          | 199     |         |         |      | 227     |         |         |   | 1,240   |        
|Interest expense                                                             |                                              |                          | (20,943 | )       |         |      | (21,664 | )       |         |   | (23,903 | )      
|                                                                             |                                              |                          |         |         |         |      |         |         |         |   |         |        
|Income from continuing operations before income
    taxes                    |                                              |                          | 29,287  |         |         |      | 14,307  |         |         |   | 5,842   |        
|Provision for income taxes                                                   |                                              |                          | (11,276 | )       |         |      | (5,508  | )       |         |   | (1,336  | )      
|                                                                             |                                              |                          |         |         |         |      |         |         |         |   |         |        
|Income from continuing operations                                            |                                              |                          | 18,011  |         |         |      | 8,799   |         |         |   | 4,506   |        
|Gain on disposition of discontinued operations,
    net of income taxes      |                                              |                          |        |         |         |      |        |         |         |   | 26,185  |        
|                                                                             |                                              |                          |         |         |         |      |         |         |         |   |         |        
|Net income                                                                   |                                              | $                        | 18,011  |         |         | $    | 8,799   |         |         | $ | 30,691  |        
|                                                                             |                                              |                          |         |         |         |      |         |         |         |   |         |        
|Basic net income per share:                                                  |                                              |                          |         |         |         |      |         |         |         |   |         |        
|Income from continuing operations                                            |                                              | $                        | .45     |         |         | $    | .22     |         |         | $ | .11     |        
|Income from discontinued operations                                          |                                              |                          |        |         |         |      |        |         |         |   | .66     |        
|                                                                             |                                              |                          |         |         |         |      |         |         |         |   |         |        
|Net income per share  basic                                                 |                                              | $                        | .45     |         |         | $    | .22     |         |         | $ | .77     |        
|                                                                             |                                              |                          |         |         |         |      |         |         |         |   |         |        
|Diluted net income per share:                                                |                                              |                          |         |         |         |      |         |         |         |   |         |        
|Income from continuing operations                                            |                                              | $                        | .44     |         |         | $    | .22     |         |         | $ | .11     |        
|Income from discontinued operations                                          |                                              |                          |        |         |         |      |        |         |         |   | .65     |        
|                                                                             |                                              |                          |         |         |         |      |         |         |         |   |         |        
|Net income per share  diluted                                               |                                              | $                        | .44     |         |         | $    | .22     |         |         | $ | .76     |        
|                                                                             |                                              |                          |         |         |         |      |         |         |         |   |         |        
|Weighted average shares used in computing net
    income per share  basic   |                                              |                          | 39,754  |         |         |      | 39,345  |         |         |   | 39,793  |        
|                                                                             |                                              |                          |         |         |         |      |         |         |         |   |         |        
|Weighted average shares used in computing net
    income per share  diluted |                                              |                          | 40,995  |         |         |      | 39,951  |         |         |   | 40,551  |        
|                                                                             |                                              |                          |         |         |         |      |         |         |         |   |         |        

See accompanying notes to consolidated financial
statements.

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##### Table of Contents



BOCA RESORTS, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS
EQUITY

(In thousands)


|                       |                                                                                             |                |        |                |   |        |     |        |   |             |     |          |  |               |   |   |  |   |         |        |   |   |        |        |  |   |         |        |  
|---------------------- | ------------------------------------------------------------------------------------------- | -------------- | ------ | -------------- | - | ------ | --- | ------ | - | ----------- | --- | -------- |  | ------------- | - | - |  | - | ------- | ------ | - | - | ------ | ------ |  | - | ------- | ------ | -
|                       |                                                                                             |                |        |                |   |        |     |        |   |            
|                       |                                                                                             | Class A Common |        | Class B Common |   |        |     |        |   |            
|                       |                                                                                             | Stock          |        | Stock          |   |        |     |        |   |            
|                       |                                                                                             |                |        |                |   |        |     |        |   |            
|                       |                                                                                             | Number         |        |                |   | Number |     |        |   |             |     |          |  | Total        
|                       |                                                                                             | of             |        |                |   | of     |     |        |   | Contributed |     | Retained |  | Shareholders
|                       |                                                                                             | Shares         |        | Amount         |   | Shares |     | Amount |   | Capital     |     | Earnings |  | Equity       
|                       |                                                                                             |                |        |                |   |        |     |        |   |             |     |          |  |              
|Balance, June 30, 2001 |                                                                                             |                | 39,621 |                |   | $      | 396 |        |   |             | 255 |          |  | $             | 3 |   |  | $ | 464,626 |        |   | $ | 20,618 |        |  | $ | 485,643 |       
|                       | Net income                                                                                  |                |        |               |   |        |     |       |   |             |     |         |  |               |   |  |  |   |         |       |   |   |        | 30,691 |  |   |         | 30,691 |  
|                       | Repurchase of Class A Common Stock at cost                                                  |                |        | (235           | ) |        |     | (2     | ) |             |     |         |  |               |   |  |  |   |         | (2,303 | ) |   |        |       |  |   |         | (2,305 | )
|                       | Exercise of stock options                                                                   |                |        | 148            |   |        |     | 1      |   |             |     |         |  |               |   |  |  |   |         | 1,437  |   |   |        |       |  |   |         | 1,438  |  
|                       | Tax deduction associated with exercise of stock
    options and other stock option activity |                |        | 4              |   |        |     |       |   |             |     |         |  |               |   |  |  |   |         | 805    |   |   |        |       |  |   |         | 805    |  
|                       |                                                                                             |                |        |                |   |        |     |        |   |             |     |          |  |               |   |   |  |   |         |        |   |   |        |        |  |   |         |       
|Balance, June 30, 2002 |                                                                                             |                | 39,538 |                |   |        | 395 |        |   |             | 255 |          |  |               | 3 |   |  |   | 464,565 |        |   |   | 51,309 |        |  |   | 516,272 |       
|                       | Net income                                                                                  |                |        |               |   |        |     |       |   |             |     |         |  |               |   |  |  |   |         |       |   |   |        | 8,799  |  |   |         | 8,799  |  
|                       | Repurchase of Class A Common Stock at cost                                                  |                |        | (591           | ) |        |     | (6     | ) |             |     |         |  |               |   |  |  |   |         | (6,168 | ) |   |        |       |  |   |         | (6,174 | )
|                       | Exercise of stock options                                                                   |                |        | 88             |   |        |     | 1      |   |             |     |         |  |               |   |  |  |   |         | 876    |   |   |        |       |  |   |         | 877    |  
|                       | Tax deduction associated with exercise of stock
    options and other stock option activity |                |        |               |   |        |     |       |   |             |     |         |  |               |   |  |  |   |         | 275    |   |   |        |       |  |   |         | 275    |  
|                       |                                                                                             |                |        |                |   |        |     |        |   |             |     |          |  |               |   |   |  |   |         |        |   |   |        |        |  |   |         |       
|Balance, June 30, 2003 |                                                                                             |                | 39,035 |                |   |        | 390 |        |   |             | 255 |          |  |               | 3 |   |  |   | 459,548 |        |   |   | 60,108 |        |  |   | 520,049 |       
|                       | Net income                                                                                  |                |        |               |   |        |     |       |   |             |     |         |  |               |   |  |  |   |         |       |   |   |        | 18,011 |  |   |         | 18,011 |  
|                       | Exercise of stock options                                                                   |                |        | 885            |   |        |     | 9      |   |             |     |         |  |               |   |  |  |   |         | 8,830  |   |   |        |       |  |   |         | 8,839  |  
|                       | Tax deduction associated with exercise of stock
    options and other stock option activity |                |        |               |   |        |     |       |   |             |     |         |  |               |   |  |  |   |         | 2,208  |   |   |        |       |  |   |         | 2,208  |  
|                       |                                                                                             |                |        |                |   |        |     |        |   |             |     |          |  |               |   |   |  |   |         |        |   |   |        |        |  |   |         |       
|Balance, June 30, 2004 |                                                                                             |                | 39,920 |                |   | $      | 399 |        |   |             | 255 |          |  | $             | 3 |   |  | $ | 470,586 |        |   | $ | 78,119 |        |  | $ | 549,107 |       
|                       |                                                                                             |                |        |                |   |        |     |        |   |             |     |          |  |               |   |   |  |   |         |        |   |   |        |        |  |   |         |       

See accompanying notes to consolidated financial
statements.

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BOCA RESORTS, INC.

CONSOLIDATED STATEMENTS OF CASH
FLOWS

For the Years Ended June 30,


(In thousands)


|                                                   |                                                                                       |                                                                         |                                                         |         |        |         |        |         |        |         |         |         |         |         |  
|-------------------------------------------------- | ------------------------------------------------------------------------------------- | ----------------------------------------------------------------------- | ------------------------------------------------------- | ------- | ------ | ------- | ------ | ------- | ------ | ------- | ------- | ------- | ------- | ------- | -
|                                                   |                                                                                       | 2004                                                                    |                                                         | 2003    |        | 2002   
|                                                   |                                                                                       |                                                                         |                                                         |         |        |        
|Operating activities:                              |                                                                                       |                                                                         |                                                         |         |        |         |        |         |        |         |         |        
|                                                   | Net income                                                                            |                                                                         | $                                                       | 18,011  |        |         | $      | 8,799   |        |         | $       | 30,691  |        
|                                                   | Adjustments to reconcile net income to net cash
    provided by operating activities: |                                                                         |                                                         |         |        |         |        |         |        |         |         |         |        
|                                                   |                                                                                       | Depreciation                                                            |                                                         |         | 40,038 |         |        |         | 38,026 |         |         |         | 34,790  |        
|                                                   |                                                                                       | Provision for deferred income taxes                                     |                                                         |         | 2,504  |         |        |         | 853    |         |         |         | (960    | )      
|                                                   |                                                                                       | Non-cash compensation expense                                           |                                                         |         | 453    |         |        |         | 275    |         |         |         |        |        
|                                                   |                                                                                       | Impairment loss on land parcel                                          |                                                         |         |       |         |        |         | 2,396  |         |         |         |        |        
|                                                   |                                                                                       | Gain on sale of land parcel                                             |                                                         |         |       |         |        |         | (2,291 | )       |         |         |        |        
|                                                   |                                                                                       | Loss on early retirement of debt                                        |                                                         |         |       |         |        |         | 149    |         |         |         | 3,073   |        
|                                                   |                                                                                       | Gain on disposition of discontinued operations,
    net of income taxes |                                                         |         |       |         |        |         |       |         |         |         | (26,185 | )      
|                                                   | Changes in operating assets and liabilities                                           |                                                                         |                                                         |         |        |         |        |         |        |         |         |         |        
|                                                   |                                                                                       | Accounts receivable                                                     |                                                         |         | 2,344  |         |        |         | 631    |         |         |         | 1,824   |        
|                                                   |                                                                                       | Other assets                                                            |                                                         |         | (6,750 | )       |        |         | 1,537  |         |         |         | 3,327   |        
|                                                   |                                                                                       | Accounts payable and accrued expenses                                   |                                                         |         | 407    |         |        |         | 1,126  |         |         |         | (541    | )      
|                                                   |                                                                                       | Deferred taxes and other liabilities                                    |                                                         |         | 19,541 |         |        |         | 544    |         |         |         | 2,358   |        
|                                                   |                                                                                       | Net assets/liabilities from discontinued
    operations                 |                                                         |         | (29    | )       |        |         | (1,362 | )       |         |         |        |        
|                                                   |                                                                                       |                                                                         |                                                         |         |        |         |        |         |        |         |         |        
|                                                   |                                                                                       |                                                                         | Net cash provided by operating activities               |         |        | 76,519  |        |         |        | 50,683  |         |         |         | 48,377  |  
|                                                   |                                                                                       |                                                                         |                                                         |         |        |         |        |         |        |         |         |        
|Investing activities:                              |                                                                                       |                                                                         |                                                         |         |        |         |        |         |        |         |         |        
|                                                   | Capital expenditures                                                                  |                                                                         |                                                         | (28,305 | )      |         |        | (50,142 | )      |         |         | (66,965 | )      
|                                                   | Change in restricted cash                                                             |                                                                         |                                                         | 503     |        |         |        | 80      |        |         |         | (221    | )      
|                                                   | Net proceeds from the sale of land parcels                                            |                                                                         |                                                         |        |        |         |        | 12,786  |        |         |         |        |        
|                                                   | Net proceeds from the disposition of discontinued
    operations                      |                                                                         |                                                         |        |        |         |        |        |        |         |         | 75,054  |        
|                                                   |                                                                                       |                                                                         |                                                         |         |        |         |        |         |        |         |         |        
|                                                   |                                                                                       |                                                                         | Net cash provided by (used in) investing
    activities |         |        | (27,802 | )      |         |        | (37,276 | )       |         |         | 7,868   |  
|                                                   |                                                                                       |                                                                         |                                                         |         |        |         |        |         |        |         |         |        
|Financing activities:                              |                                                                                       |                                                                         |                                                         |         |        |         |        |         |        |         |         |        
|                                                   | Borrowings under credit facilities                                                    |                                                                         |                                                         | 24,000  |        |         |        | 42,000  |        |         |         | 43,195  |        
|                                                   | Payments under long-term debt agreements and
    credit facilities                    |                                                                         |                                                         | (42,079 | )      |         |        | (42,941 | )      |         |         | (24,726 | )      
|                                                   | Proceeds from exercise of stock options                                               |                                                                         |                                                         | 8,839   |        |         |        | 877     |        |         |         | 1,438   |        
|                                                   | Repurchases of senior subordinated notes payable                                      |                                                                         |                                                         |        |        |         |        | (2,750  | )      |         |         | (80,065 | )      
|                                                   | Repurchases of common stock                                                           |                                                                         |                                                         |        |        |         |        | (6,174  | )      |         |         | (2,305  | )      
|                                                   |                                                                                       |                                                                         |                                                         |         |        |         |        |         |        |         |         |        
|                                                   |                                                                                       |                                                                         | Net cash used in financing activities                   |         |        | (9,240  | )      |         |        | (8,988  | )       |         |         | (62,463 | )
|                                                   |                                                                                       |                                                                         |                                                         |         |        |         |        |         |        |         |         |        
|Cash provided by (used in) continuing operations   |                                                                                       |                                                                         | 39,506                                                  |         |        |         | 5,781  |         |        |         | (81,272 | )      
|Cash provided by (used in) discontinued operations |                                                                                       |                                                                         | (29                                                     | )       |        |         | (1,362 | )       |        |         | 75,054  |        
|Cash and cash equivalents, at beginning of period  |                                                                                       |                                                                         | 8,110                                                   |         |        |         | 3,691  |         |        |         | 9,909   |        
|                                                   |                                                                                       |                                                                         |                                                         |         |        |         |        |         |        |         |         |        
|Cash and cash equivalents, at end of period        |                                                                                       | $                                                                       | 47,587                                                  |         |        | $       | 8,110  |         |        | $       | 3,691   |        
|                                                   |                                                                                       |                                                                         |                                                         |         |        |         |        |         |        |         |         |        

See accompanying notes to consolidated financial
statements.

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##### Table of Contents



BOCA RESORTS, INC.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS


June 30, 2004


(1) Nature of Operations

Boca Resorts, Inc. (the Company) is
an owner and operator of five luxury resorts located in Florida
with hotels, conference facilities, golf courses, spas, marinas
and private clubs. The Companys resorts include the Boca
Raton Resort & Club (Boca Raton), the Registry Resort at
Pelican Bay (Naples), the Edgewater Beach Hotel (Naples), the
Hyatt Regency Pier 66 Hotel and Marina (Fort Lauderdale), and
the Radisson Bahia Mar Resort and Yachting Center (Fort
Lauderdale). The Company also owns and operates two golf clubs
located in Florida, Grande Oaks Golf Club in Davie and Naples
Grande Golf Club in Naples, and owns and operates two golf
courses in Boca Raton that are part of the Boca Raton Resort
& Club.

As discussed in Note 5, the Company sold its
entertainment and sports business, which primarily consisted of
the operations of the Florida Panthers Hockey Club and related
arena management operations in July 2001. Accordingly, the
Companys entertainment and sports business has been
accounted for as discontinued operations in the accompanying
Consolidated Financial Statements presented in this report.

(2) Summary of Significant Accounting
Policies

Principles
of Consolidation

The accompanying Consolidated Financial
Statements include the accounts of the Company and its wholly
owned subsidiaries after the elimination of significant
intercompany accounts and transactions.

Use
of Estimates

The preparation of the Consolidated Financial
Statements in conformity with accounting principles generally
accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in
the Consolidated Financial Statements and accompanying Notes.
Actual results may differ from those estimates.

Cash
and Cash Equivalents/Restricted Cash

Cash and cash equivalents primarily consist of
cash in banks and highly liquid investments with original
maturities of 90 days or less when purchased. Restricted
cash primarily consisted of purchased guarantees (letters of
credit) that ensure the Companys payment to third parties
under certain lease agreements at June 30, 2003.
Concentration of credit risk and market risk associated with
cash, cash equivalents and restricted cash are considered low
due to the credit quality of the issuers of the financial
instruments held by the Company and due to their short-term
nature.

Accounts
Receivable

Accounts receivable are primarily due from major
credit card companies and other large corporations. The Company
performs ongoing credit evaluations of its significant customers
and generally does not require collateral or a significant
allowance for uncollectible balances.

Inventory

Inventory is stated at the lower of cost or
market value and primarily consists of food, beverages, marina
fuel, retail merchandise and operating supplies. Cost is
determined using the first-in, first-out method.

Premier
Club Notes Receivable

Premier Club notes receivable are carried at
cost. The accrual of interest income is suspended on all notes
receivable when principal or interest payments are more than
three months contractually past due and is not

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BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

resumed until such loans become contractually
current. The amount of loans more than three months
contractually past due was not material at June 30, 2004.
The Company performs credit evaluations of customers who finance
their Premier Club membership and generally does not require
additional security or establish a significant allowance for
uncollectible balances.

Other
Current Assets

Other current assets primarily consist of prepaid
expenses, which totaled $5.3 million and $3.1 million
at June 30, 2004 and 2003, respectively.

Property
and Equipment

Property and equipment is stated at cost less
accumulated depreciation. Expenditures for maintenance, repairs
and renewals of items that do not extend the service life or
increase the capacity of assets are charged to expense as
incurred. Significant additions, along with interest incurred
during the construction period for expansion at the
Companys properties, are capitalized. Interest has been
capitalized using the average borrowing rate of the Company.
Interest capitalized for the years ended June 30, 2004,
2003 and 2002 totaled $332,000, $1.0 million and
$1.9 million, respectively. Depreciation has been computed
using the straight-line method over the shorter of the estimated
useful lives or, in the case of leasehold agreements, the term
of the leasehold agreement as follows:

|                                  |  |       |       | 
|--------------------------------- |  | ----- | ----- | 
|                                  |  | Years
|                                  |  |      
|Building and improvements         |  |       | 15-40 | 
|Land improvements                 |  |       | 15    | 
|Leasehold improvements            |  |       | 5-20  | 
|Furniture, fixtures and equipment |  |       | 3-7   | 

Intangible
Assets

Intangible assets consist of goodwill (which
totaled $34.7 million at June 30, 2004 and 2003), which
represents the excess of the cost over the fair value of net
assets of the acquired business, as well as, identified
intangible assets with indefinite lives (which totaled
$1.2 million at June 30, 2004 and 2003). Statement of
Financial Accounting Standards (SFAS) No. 142,
Goodwill and Other Intangible Assets states, among
other things, that goodwill is not subject to amortization over
its estimated useful life. Under the provisions of SFAS
No. 142, goodwill that is not subject to amortization is
tested for impairment annually using a two-step impairment
assessment. Impairment testing must be performed more frequently
if events or changes in circumstances indicate that the asset
might be impaired. The Company tested for potential impairment,
upon adoption of SFAS No. 142 and on July 1 each year
thereafter. The Company had no impairment of goodwill for the
periods presented.

Long-Lived
Assets and Assets to be Disposed Of

The carrying value of long-lived assets is
reviewed if the facts and circumstances suggest that they may be
impaired in accordance with SFAS No. 144, Accounting for
Impairment or Disposal of Long-Lived Assets. If this
review indicates that long-lived assets will not be recoverable
based on the undiscounted cash flows of the entity over the
remaining amortization period, the carrying value of the
long-lived assets will be reduced by the amount by which the
carrying value exceeds fair value. Fair value is determined
using managements best estimate of the discounted net
operating cash flows over the remaining life of the assets. See
Note 5.

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BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Debt
Issuance Costs

Costs associated with obtaining financing have
been capitalized and are amortized on a straight-line basis
(which approximates the effective interest method) over the
terms of the related debt. Debt issuance costs are charged off
to the extent the related indebtedness is permanently retired.
See Note 9 to the Consolidated Financial Statements. Debt
issuance costs are included in other assets in the accompanying
Consolidated Balance Sheets.

Fair
Value of Financial Instruments

The carrying amounts of cash and cash
equivalents, restricted cash, accounts receivable and accounts
payable approximates fair value at June 30, 2004 due to
their short-term nature. The carrying amount of Premier Club
notes receivable approximates fair value based on discounted
future cash flows. The carrying amount of the Companys
9.875% senior subordinated notes payable at June 30, 2004
is $190.1 million, compared to an estimated fair value of
$200.1 million, which is based on the quoted market price as of
June 30, 2004 in the over-the-counter bond market. The fair
value of Premier Club refundable membership fees cannot be
reasonably estimated based on the uncertainty of the date of
refund.

Other
Liabilities

The Company acquired the Boca Raton Resort &
Club in June 1997 in exchange for (1) 272,303 shares of
Class A Common Stock, (2) rights to acquire 4,242,586
shares of Class A Common Stock for no additional
consideration and with no conditions for issuance of the shares
to occur, (3) warrants to purchase 869,810 shares of
Class A Common Stock at a purchase price of $29.01 per
share and (4) the assumption of approximately
$205.9 million in debt. The warrants to purchase 869,810
shares of Class A Common Stock expired unexercised in
December 1999. The predecessor owners had the ability to
exchange their rights to acquire 4,242,586 shares of
Class A common stock at any time through April 30,
2001. The holders of exchange rights had no entitlements to
distributions of income, losses or cash flows from the Boca
Raton Resort & Club.

The exchange rights, together with the common
stock and warrants, were accounted for as part of the purchase
price for this acquisition pursuant to Accounting Principles
Board (APB) Opinion No. 16, Business
Combinations with the exchange rights being reflected as
issued because all conditions occurred necessary for issuance of
the shares and because the Company believed beyond a reasonable
doubt that all predecessor owners would exchange their
partnership interests for freely tradable Class A Common
Stock of the Company since there was an economic disincentive
not to exchange.

As of June 30, 2001, 90% of the exchange
rights were exercised leaving 440,013, expired and unexercised.
Accordingly, other liabilities were increased (and
shareholders equity decreased) to reflect the outside
proportionate minority interest equal to the 440,013 expired,
unexercised exchange rights multiplied by $21.53 (the initial
per share allocation of purchase price).

Segment
Information

The Company derives all significant revenue from
a single line of business, hotel and resort real estate
ownership.

Revenue
Recognition

Revenue associated with room rentals, food and
beverage sales and use of the recreational amenities at the
Companys resorts is recognized when services are rendered.
Deferred revenue arises as a normal part of business for advance
payments for resort accommodations, club membership dues and
club initiation fees. Annual membership dues from the
Companys Premier Clubs are recognized ratably over the
membership

32



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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

year. Revenue from Premier Club nonrefundable
initial membership fees is deferred and recognized ratably over
the average expected life of the memberships, which has been
estimated to be eight years. The average estimated life is based
on managements best estimate using Company specific
historical information. The Company has not changed the
estimated life used to recognize the Premier Club membership
initiation fees since adoption in January 1998 (when Premier
Club membership initiation fees became nonrefundable), but would
revise such estimate if, in managements opinion, changing
trends in membership experience warrant such a change. Direct
expenses associated with originating a membership sale are also
deferred and recognized over the estimated life of the
membership.

Initiation fees relating to club memberships
originated prior to January 1998 (and for a limited time from
January 2003 to April 2003) are fully refundable and,
accordingly, are reflected as a liability captioned Premier Club
refundable membership fees in the accompanying Consolidated
Balance Sheets. See Note 10.

Advertising
Expense

The Company expenses advertising costs the first
time the advertising takes place. Advertising expense was
$3.7 million, $3.7 million and $4.2 million for the
years ended June 30, 2004, 2003 and 2002, respectively.
Prepaid advertising for each of the periods presented was not
material.

Costs
of Start-Up Activities

Pre-operating, pre-opening, research and
development and organization costs are expensed as incurred.

Income
Taxes

The Company accounts for income taxes under the
asset and liability method in accordance with SFAS No. 109,
Accounting for Income Taxes. See Note 15.

Stock-Based
Compensation

The Company grants stock options for a fixed
number of shares to employees with an exercise price equal to
the fair value of the shares at the date of grant. The Company
has elected to account for stock option grants in accordance
with APB Opinion No. 25 Accounting for Stock Issued
to Employees as interpreted in Financial Accounting
Standards Board (FASB) Interpretation No. 44,
Accounting for Certain Transactions Involving Stock
Compensation and, accordingly, recognizes no compensation
expense in connection with stock option grants made to
employees. See Note 11.

No stock-based employee compensation cost is
reflected in net income, except for certain non-cash
compensation expense associated with the modification in terms
of stock option awards which totaled $453,000 (or $279,000 net
of benefit for income taxes) during the year ended June 30,
2004 and $275,000 (or $169,000 net of benefit for income taxes)
during the year ended June 30, 2003. The following table

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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

summarizes the effect of accounting for stock
option awards as if the fair value recognition provisions of
SFAS No. 123, as amended by SFAS No. 148, had been applied
for the year ended June 30 (000s omitted):

|                                                                                                                             |  |      |        |      |  |      |       |  |  |   |        | 
|---------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------ | ---- |  | ---- | ----- |  |  | - | ------ | 
|                                                                                                                             |  | 2004 |        | 2003 |  | 2002
|                                                                                                                             |  |      |        |      |  |     
|Net income as reported                                                                                                       |  | $    | 18,011 |      |  | $    | 8,799 |  |  | $ | 30,691 | 
|Less: total stock based compensation determined
    under fair value based method for awards, net of related tax
    effects |  |      | 1,577  |      |  |      | 1,591 |  |  |   | 1,861  | 
|                                                                                                                             |  |      |        |      |  |      |       |  |  |   |        | 
|Pro forma net income                                                                                                         |  | $    | 16,434 |      |  | $    | 7,208 |  |  | $ | 28,830 | 
|                                                                                                                             |  |      |        |      |  |      |       |  |  |   |        | 
|Basic net income per share:                                                                                                  |  |      |        |      |  |      |       |  |  |   |        | 
|Income per share from continuing operations, as
    reported                                                                 |  | $    | .45    |      |  | $    | .22   |  |  | $ | .11    | 
|Income per share from discontinued operations, as
    reported                                                               |  |      |       |      |  |      |      |  |  |   | .66    | 
|                                                                                                                             |  |      |        |      |  |      |       |  |  |   |        | 
|Net income per share  basic, as reported                                                                                    |  | $    | .45    |      |  | $    | .22   |  |  | $ | .77    | 
|                                                                                                                             |  |      |        |      |  |      |       |  |  |   |        | 
|Diluted net income per share:                                                                                                |  |      |        |      |  |      |       |  |  |   |        | 
|Income per share from continuing operations, as
    reported                                                                 |  | $    | .44    |      |  | $    | .22   |  |  | $ | .11    | 
|Income per share from discontinued operations, as
    reported                                                               |  |      |       |      |  |      |      |  |  |   | .65    | 
|                                                                                                                             |  |      |        |      |  |      |       |  |  |   |        | 
|Net income per share  diluted, as reported                                                                                  |  | $    | .44    |      |  | $    | .22   |  |  | $ | .76    | 
|                                                                                                                             |  |      |        |      |  |      |       |  |  |   |        | 
|Basic net income per share, Pro forma:                                                                                       |  |      |        |      |  |      |       |  |  |   |        | 
|Income per share from continuing operations, Pro
    forma                                                                   |  | $    | .41    |      |  | $    | .18   |  |  | $ | .07    | 
|Income per share from discontinued operations,
    Pro forma                                                                 |  |      |       |      |  |      |      |  |  |   | .66    | 
|                                                                                                                             |  |      |        |      |  |      |       |  |  |   |        | 
|Net income per share  basic, Pro forma                                                                                      |  | $    | .41    |      |  | $    | .18   |  |  | $ | .72    | 
|                                                                                                                             |  |      |        |      |  |      |       |  |  |   |        | 
|Diluted income per share, Pro forma:                                                                                         |  |      |        |      |  |      |       |  |  |   |        | 
|Income per share from continuing operations, Pro
    forma                                                                   |  | $    | .40    |      |  | $    | .18   |  |  | $ | .07    | 
|Income per share from discontinued operations,
    Pro forma                                                                 |  |      |       |      |  |      |      |  |  |   | .65    | 
|                                                                                                                             |  |      |        |      |  |      |       |  |  |   |        | 
|Net income per share  diluted, Pro forma                                                                                    |  | $    | .40    |      |  | $    | .18   |  |  | $ | .71    | 
|                                                                                                                             |  |      |        |      |  |      |       |  |  |   |        | 

Earnings
Per Common Share

SFAS No. 128, Earnings Per Share
requires a dual presentation of basic and diluted earnings per
share. Basic earnings per share equals net income divided by the
number of weighted average common shares outstanding. Diluted
earnings per share includes the effects of common stock
equivalents to the extent they are dilutive. The computation of
diluted earnings per share for the year ended June 30, 2002
excludes 325,000 warrants. The warrants expired unexercised in
August 2002. The following table sets forth the weighted average
shares used to compute basic and diluted earnings per share
(000s omitted):

|                                            |  |      |        |      |  |      |        |  |  |  |        | 
|------------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ |  |  |  | ------ | 
|                                            |  | 2004 |        | 2003 |  | 2002
|                                            |  |      |        |      |  |     
|Basic weighted average shares outstanding   |  |      | 39,754 |      |  |      | 39,345 |  |  |  | 39,793 | 
|Stock options                               |  |      | 1,241  |      |  |      | 606    |  |  |  | 758    | 
|                                            |  |      |        |      |  |      |        |  |  |  |        | 
|Diluted weighted average shares outstanding |  |      | 40,995 |      |  |      | 39,951 |  |  |  | 40,551 | 
|                                            |  |      |        |      |  |      |        |  |  |  |        | 

Shareholders
Equity

The Company has two classes of common stock,
Class A Common Stock and Class B Common Stock. On each
matter submitted for stockholder approval, each share of
Class A Common Stock is entitled to one vote, and each
share of Class B Common Stock is entitled to 10,000 votes. The
Companys Chairman and

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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Chief Executive Officer, H. Wayne Huizenga, owns
all the shares of Class B common stock giving him 98.5% of
the voting control of the Companys common stock.

Treasury
Stock

In May 2001, the Companys Board of
Directors approved a two-year share repurchase program
authorizing the Company to purchase up to $30.0 million of
its outstanding Class A Common Stock. The share repurchase
program was extended in November 2002 for an additional two
years. As of June 30, 2004, the Company had repurchased
1.4 million shares of Class A Common Stock for
$15.3 million. The Company accounts for repurchases of its
Class A Common Stock using the cost method with common
stock in treasury classified in the Consolidated Balance Sheets
as a reduction of shareholders equity.

Impact
of Recently Issued Accounting Standards

In December 2003, the FASB issued Interpretation
No. 46 (FIN 46R), Consolidation of
Variable Interest Entities. This Interpretation requires
existing unconsolidated variable interest entities to be
consolidated by their primary beneficiaries. The primary
beneficiary of a variable interest entity is the party that
absorbs a majority of the entitys expected losses,
receives a majority of its expected residual returns, or both,
as a result of holding variable interests. Prior to FIN 46R, a
company generally included another entity in its consolidated
financial statements only if it controlled the entity through
voting interests. Application of FIN 46R was required in
financial statements of public entities that have interests in
variable interest entities for periods ending after
March 15, 2004. Since the Company does not have any
variable interest entities, the adoption of FIN 46R has no
impact on the Companys results of operations or financial
position.

(3) Supplemental Cash Flow
Information

Interest
and Income Taxes Paid

Interest paid (net of amounts capitalized)
totaled $19.7 million, $20.1 million and $23.2 million
during the years ended June 30, 2004, 2003 and 2002,
respectively. The Company recently adopted a tax accounting
policy whereby it uses tax lives and methods for its property
and equipment as permitted by the Internal Revenue Service in
various rulings and regulations. The tax accounting policy has
resulted in a decrease in income taxes currently payable, as
well as, a net refund of income taxes paid in prior years
totaling approximately $12.8 million, which was received in
April 2004. The income tax accounting method change has no
impact on the Companys total income tax expense for
financial reporting purposes. Income taxes paid totaled $3.7
million and $3.1 million during the years ended
June 30, 2003, and 2002, respectively. The Company also
paid $500,000 and $18.8 million in income taxes relating to
its gain on the disposition of the entertainment and sports
business during the years ended June 30, 2003 and 2002,
respectively. See Note 15.

(4) Premier Club Notes
Receivable

The Company offers internal financing to
qualified purchasers of Premier Club memberships. Premier Club
notes receivable generally carry repayment terms that range from
two to six years, are unsecured, and bear interest at fixed
interest rates (which rates are believed to be indicative of
rates at which similar loans with similar maturities would be
made to borrowers with similar credit risk). Financed portions
of initial

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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

membership fees may be prepaid without penalty at
any time during the financing term. Based on the terms of the
agreements, the membership notes will be collected as follows
(000s omitted):

|           |  |   |        | 
|---------- |  | - | ------ | 
|2005       |  | $ | 5,301  | 
|2006       |  |   | 3,312  | 
|2007       |  |   | 2,970  | 
|2008       |  |   | 2,438  | 
|2009       |  |   | 1,478  | 
|Thereafter |  |   | 318    | 
|           |  |   |        | 
|           |  | $ | 15,817 | 
|           |  |   |        | 

(5) Discontinued Operations and
Divestitures

In December 2002, the Company sold a land parcel
located in Plantation, Florida for $7.2 million, which
yielded net proceeds of $7.1 million. The Company recorded
an impairment loss of $2.4 million to reflect the
difference between the carrying value of this land parcel and
the net proceeds. The impairment loss is included in interest
and other income in the accompanying Consolidated Statements of
Operations.

In August 2002, the Company sold a land parcel
located in Naples, Florida for $5.7 million. The
transaction yielded net proceeds of $5.6 million and a
pre-tax gain of $2.3 million, which is included in interest
and other income in the accompanying Consolidated Statements of
Operations.

In July 2001, the Company sold its entertainment
and sports business. The selling price for the business, which
incorporated certain working capital adjustments, consisted of
$83.5 million in cash, an $11.3 million secured
promissory note (which was paid January 2002) and the assumption
by the purchasers of certain off-balance sheet contingencies
including a $10 million construction obligation secured by
a performance bond. The net proceeds from the sale of the
business after payment of disposal costs and income taxes
exceeded $70.0 million and the gain on disposition was
$26.2 million. Accordingly, the Companys
entertainment and sports business has been accounted for as
discontinued operations and the accompanying Consolidated
Financial Statements report separately the net assets and
operating results of this discontinued operation.

The net liabilities of discontinued operations
totaling $1.1 million in the Consolidated Balance Sheets at
June 30, 2004 and 2003, respectively, consists of estimated
income taxes payable and other disposal costs.

(6) Property and Equipment, net

A summary of property and equipment at
June 30 is as follows (000s omitted):

|                                                |  |      |           |      |  |   |          |  
|----------------------------------------------- |  | ---- | --------- | ---- |  | - | -------- | -
|                                                |  | 2004 |           | 2003
|                                                |  |      |           |     
|Land and land improvements                      |  | $    | 275,096   |      |  | $ | 274,172  |  
|Buildings and improvements                      |  |      | 593,796   |      |  |   | 566,129  |  
|Furniture, fixtures and equipment               |  |      | 128,267   |      |  |   | 124,048  |  
|Construction in progress                        |  |      | 5,874     |      |  |   | 15,990   |  
|                                                |  |      |           |      |  |   |          |  
|                                                |  |      | 1,003,033 |      |  |   | 980,339  |  
|Less: accumulated depreciation and amortization |  |      | (194,299  | )    |  |   | (156,658 | )
|                                                |  |      |           |      |  |   |          |  
|                                                |  | $    | 808,734   |      |  | $ | 823,681  |  
|                                                |  |      |           |      |  |   |          |  

Depreciation expense on property and equipment
included in the Consolidated Statements of Operations was
$40.0 million, $38.0 million and $34.8 million
for the years ended June 30, 2004, 2003 and 2002,
respectively.

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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(7) Accounts Payable and Accrued
Expenses

Accounts payable and accrued expenses as of
June 30 consists of the following (000s omitted):

|                                  |  |      |        |      |  |   |        | 
|--------------------------------- |  | ---- | ------ | ---- |  | - | ------ | 
|                                  |  | 2004 |        | 2003
|                                  |  |      |        |     
|Accrued payroll and related costs |  | $    | 10,815 |      |  | $ | 9,471  | 
|Accounts payable                  |  |      | 4,645  |      |  |   | 7,942  | 
|Other accrued liabilities         |  |      | 5,689  |      |  |   | 5,430  | 
|Accrued property taxes            |  |      | 5,127  |      |  |   | 5,098  | 
|Accrued interest payable          |  |      | 3,945  |      |  |   | 4,065  | 
|Accrued legal settlements         |  |      | 487    |      |  |   | 250    | 
|Income taxes payable              |  |      |       |      |  |   | 1,259  | 
|                                  |  |      |        |      |  |   |        | 
|                                  |  | $    | 30,708 |      |  | $ | 33,515 | 
|                                  |  |      |        |      |  |   |        | 

(8) Credit Line and Note
Payable

Credit line and note payable at June 30 is
as follows (000s omitted):

|                                                                                                                         |  |      |   |      |  |   |        | 
|------------------------------------------------------------------------------------------------------------------------ |  | ---- | - | ---- |  | - | ------ | 
|                                                                                                                         |  | 2004 |   | 2003
|                                                                                                                         |  |      |   |     
|Revolving credit facility with bank, variable
    interest rate, 4.31% at June 30, 2003, terminated on
    July 22, 2004 |  | $    |  |      |  | $ | 18,000 | 
|Capital lease on operating equipment, fixed
    interest rate of 8.0%, due on November 15, 2003                          |  |      |  |      |  |   | 79     | 
|                                                                                                                         |  |      |   |      |  |   |        | 
|Total outstanding including current portion                                                                              |  | $    |  |      |  | $ | 18,079 | 
|                                                                                                                         |  |      |   |      |  |   |        | 

The Companys revolving credit line required
the maintenance of customary capital expenditure reserves for
the replacement of assets. In addition, the Company was required
to comply with certain covenants, including without limitation,
requirements to maintain a minimum net worth and maintain
certain leverage ratios. The Company was in compliance with
these covenants at June 30, 2004 and 2003. The Companys
availability under its revolving credit line was
$135.6 million at June 30, 2004.

On July 22, 2004, the Companys credit
line was terminated pursuant to a new $325.0 million senior
credit facility. The senior credit facility consists of a term
loan in the principal amount of $200.0 million and a new
revolving credit facility in the principal amount of
$125.0 million. The proceeds of the term loan were used on
August 27, 2004 to redeem in full the Companys
outstanding 9.875% senior subordinated notes. See Note 9. The
interest rate on the new facility is tied to consolidated
leverage ratios, but generally ranges from LIBOR plus 225 basis
points to 250 basis points on the term loan and from LIBOR plus
175 basis points to 250 basis points on the revolver. The term
loan matures in July 2009 and the revolving credit facility
expires in July 2007. The Company will be required to comply
with certain covenants under the new credit facility, including
without limitation, requirements to maintain a minimum net worth
and maintain certain leverage ratios.

(9) Senior Subordinated Notes
Payable

On April 21, 1999, the Company issued
$340.0 million aggregate principal amount of 9.875% senior
subordinated notes due April 15, 2009 (the
Notes) in a private placement offering (the
Offering). The Notes were subsequently registered
with the Securities and Exchange Commission. Interest on the
Notes was payable semiannually on April 15 and
October 15 of each year. During the years ended
June 30, 2003, 2002 and 2001, the Company repurchased an
aggregate $149.9 million principal amount of Notes, leaving
$190.1 million principal amount of Notes outstanding.

37



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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The Notes were senior obligations of the Company
and rank pari passu in right of payment with all existing and
future senior indebtedness of the Company and rank senior in
right of payment to all existing and future subordinated
obligations of the Company. None of the assets of the Company
secured its obligations under the Notes, and the Notes were
effectively subordinated to secured indebtedness of the Company
to any third party to the extent of assets serving as security.

The Notes were unconditionally guaranteed,
jointly and severally, by each of the Companys existing
and future domestic subsidiaries (the Subsidiary
Guarantors). Each subsidiary guarantor was 100% owned by
the parent, with the exception of a minor subsidiary in which
there was a 1% minority interest (and the Company had an
unconditional purchase option to acquire such minority interest
for $1,000) and a subsidiary in which the outside minority
interest holders have no practical entitlements to profits,
losses or cash flow of such subsidiary. In addition, the parent
company has no independent assets or operations, the guarantees
are full and unconditional and joint and several, and all
subsidiaries of the parent company are Subsidiary Guarantors.

The Notes contained certain covenants limiting
the Companys ability to incur additional indebtedness, pay
dividends and make investments and other restricted payments,
enter into transactions with 5% stockholders or affiliates,
create liens, and sell assets. The Company was in compliance
with these covenants at June 30, 2004 and 2003.

The Company fully redeemed the Notes on
August 27, 2004 at 104.9375% with the proceeds from a new
credit facility. The Company will record a loss on the early
extinguishment of debt during the quarter ending
September 30, 2004 of approximately $13.1 million,
which includes the premium paid to redeem the Notes, together
with the write-off of debt issuance costs previously capitalized
in connection with the issuance of the Notes. See Note 8.

(10) Premier Club Refundable Membership
Fees

Fully paid initiation fees associated with
Premier Club memberships at the Boca Raton Resort & Club
executed prior to January 1998 (and for a limited time from
January 2003 to April 2003) are refundable upon the death of a
member or a members spouse and upon the expiration of the
30-year membership term (subject to renewal at the members
option). The fee is also refundable upon a members
resignation from the Premier Club, but only out of the proceeds
of subsequent new members to join the Premier Club following
refund of all previously resigned members fees. If any
member paying over time suspends payment, amounts paid to date
are forfeited and recognized as income. Amounts forfeited to
date have not been material. Premier Club refundable membership
fees have been reflected as a non-current liability in the
accompanying Consolidated Balance Sheets.

38



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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(11) Stock Options

The Company has a stock option plan under which
options to purchase shares of common stock may be granted to key
employees and directors of the Company. Options granted under
the plan are non-qualified and are granted at a price equal to
the fair market value of the common stock at the date of grant.
Generally, options granted will have a term of ten years from
the date of grant, and will vest in increments of 25% per year
over a four-year period on the annual anniversary of the date of
grant. A summary of stock option transactions for the three
years ended June 30, 2004 is as follows:

|                                      |  |           |           |             |  |               |           |                |  |             |                |  |  |   |       |  |  |  |           | 
|------------------------------------- |  | --------- | --------- | ----------- |  | ------------- | --------- | -------------- |  | ----------- | -------------- |  |  | - | ----- |  |  |  | --------- | 
|                                      |  | Number of |           | Number of   |  |               |           | Weighted       |  | Number of  
|                                      |  | Shares    |           | Options     |  | Range in      |           | Average        |  | Options    
|                                      |  | Reserved  |           | Outstanding |  | Option Prices |           | Exercise Price |  | Exercisable
|                                      |  |           |           |             |  |               |           |                |  |            
|Balance at June 30, 2001              |  |           | 1,241,102 |             |  |               | 6,155,969 |                |  | $           | 9.31 - $26.38  |  |  | $ | 14.49 |  |  |  | 3,480,986 | 
|Granted                               |  |           | (913,000  | )           |  |               | 913,000   |                |  | $           | 9.32 - $11.95  |  |  | $ | 9.52  |  |  |  |           | 
|Exercised                             |  |           |          |             |  |               | (148,289  | )              |  | $           | 9.31 - $10.00  |  |  | $ | 9.70  |  |  |  |           | 
|Forfeited                             |  |           | 388,750   |             |  |               | (388,750  | )              |  | $           | 9.31 - $26.38  |  |  | $ | 14.04 |  |  |  |           | 
|                                      |  |           |           |             |  |               |           |                |  |             |                |  |  |   |       |  |  |  |           | 
|Balance at June 30, 2002              |  |           | 716,852   |             |  |               | 6,531,930 |                |  | $           | 9.31 - $26.38  |  |  | $ | 13.92 |  |  |  | 4,350,657 | 
|Additional shares reserved under plan |  |           | 1,500,000 |             |  |               |          |                |  |             |               |  |  |   |      |  |  |  |           | 
|Granted                               |  |           | (773,000  | )           |  |               | 773,000   |                |  | $           | 10.70 - $11.16 |  |  | $ | 11.13 |  |  |  |           | 
|Exercised                             |  |           |          |             |  |               | (88,000   | )              |  | $           | 9.32 - $10.00  |  |  | $ | 9.97  |  |  |  |           | 
|Forfeited                             |  |           | 235,875   |             |  |               | (235,875  | )              |  | $           | 9.32 - $23.06  |  |  | $ | 13.36 |  |  |  |           | 
|                                      |  |           |           |             |  |               |           |                |  |             |                |  |  |   |       |  |  |  |           | 
|Balance at June 30, 2003              |  |           | 1,679,727 |             |  |               | 6,981,055 |                |  | $           | 9.31 - $26.38  |  |  | $ | 13.68 |  |  |  | 5,012,680 | 
|Granted                               |  |           | (575,000  | )           |  |               | 575,000   |                |  | $           | 13.55          |  |  | $ | 13.55 |  |  |  |           | 
|Exercised                             |  |           |          |             |  |               | (884,501  | )              |  | $           | 9.31 - $13.69  |  |  | $ | 9.99  |  |  |  |           | 
|Forfeited                             |  |           | 81,250    |             |  |               | (81,250   | )              |  | $           | 9.32 - $26.38  |  |  | $ | 15.08 |  |  |  |           | 
|                                      |  |           |           |             |  |               |           |                |  |             |                |  |  |   |       |  |  |  |           | 
|Balance at June 30, 2004              |  |           | 1,185,977 |             |  |               | 6,590,304 |                |  | $           | 9.31 - $26.38  |  |  | $ | 14.15 |  |  |  | 4,857,804 | 
|                                      |  |           |           |             |  |               |           |                |  |             |                |  |  |   |       |  |  |  |           | 

The weighted average exercise price and weighted
average remaining contractual life of the Companys
outstanding options at June 30, 2004 is set forth below.

|                         |  |             |           |             |  |          |           |             |  |               |       |  |  |  |           |  |  |   |       | 
|------------------------ |  | ----------- | --------- | ----------- |  | -------- | --------- | ----------- |  | ------------- | ----- |  |  |  | --------- |  |  | - | ----- | 
|                         |  |             |           | Weighted    |  |          |           |             |  | (Vested Only)
|                         |  |             |           | Average     |  | Weighted |           |             |  | Weighted     
|                         |  | Number of   |           | Remaining   |  | Average  |           |             |  | Average      
|                         |  | Options     |           | Contractual |  | Exercise |           | Options     |  | Exercise     
|Range of Exercise Prices |  | Outstanding |           | Life        |  | Price    |           | Exercisable |  | Price        
|                         |  |             |           |             |  |          |           |             |  |              
|$ 9.31   $9.75          |  |             | 1,668,591 |             |  |          | 5.9 years |             |  | $             | 9.43  |  |  |  | 1,320,841 |  |  | $ | 9.45  | 
|$10.00  $11.16          |  |             | 1,412,722 |             |  |          | 5.9 years |             |  | $             | 10.59 |  |  |  | 835,472   |  |  | $ | 10.29 | 
|$11.95  $13.69          |  |             | 1,488,750 |             |  |          | 7.4 years |             |  | $             | 13.61 |  |  |  | 681,250   |  |  | $ | 13.66 | 
|$17.25  $23.06          |  |             | 1,331,295 |             |  |          | 3.2 years |             |  | $             | 18.23 |  |  |  | 1,331,295 |  |  | $ | 18.23 | 
|$23.50  $26.38          |  |             | 688,946   |             |  |          | 3.0 years |             |  | $             | 26.18 |  |  |  | 688,946   |  |  | $ | 26.18 | 
|                         |  |             |           |             |  |          |           |             |  |               |       |  |  |  |           |  |  |   |       | 
|                         |  |             | 6,590,304 |             |  |          | 5.4 years |             |  | $             | 14.15 |  |  |  | 4,857,804 |  |  | $ | 14.96 | 
|                         |  |             |           |             |  |          |           |             |  |               |       |  |  |  |           |  |  |   |       | 

The fair value for these options was estimated at
the date of grant using a Black-Scholes option-pricing model
with the following assumptions for the year ended June 30:

|                        |  |      |         |      |  |      |         |  |  |  |         | 
|----------------------- |  | ---- | ------- | ---- |  | ---- | ------- |  |  |  | ------- | 
|                        |  | 2004 |         | 2003 |  | 2002
|                        |  |      |         |      |  |     
|Risk free interest rate |  |      | 1.00%   |      |  |      | 1.00%   |  |  |  | 1.50%   | 
|Expected lives          |  |      | 6 years |      |  |      | 6 years |  |  |  | 6 years | 
|Expected volatility     |  |      | 30%     |      |  |      | 30%     |  |  |  | 30%     | 

39



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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The weighted average fair value of options
granted for the years ended June 30, 2004, 2003 and 2002
was $3.35, $3.09 and $4.44, respectively.

(12) Commitments and
Contingencies

Capital
Expenditures

At June 30, 2004, the Company had
commitments outstanding for capital expenditures under purchase
orders and contracts approximating $888,000.

Leases

The Company leases the site of the Radisson Bahia
Mar Resort and Yachting Center from the City of Fort Lauderdale
under an operating lease, which has a term through
August 31, 2062. Under the lease agreement, the Company is
required to pay annual rent equal to the greater of a percentage
(4.0% through September 30, 2012 and 4.25% thereafter) of
annual gross operating revenue, as defined, or a $300,000
minimum annual rent (potentially escalating after September
2037). Rent expense under this lease totaled $949,000, $764,000
and $780,000 for the years ended June 30, 2004, 2003 and
2002, respectively. The lease agreement also requires the
Company to set aside 3% of Bahia Mars revenue annually, as
defined in the lease agreement, for the purchase, replacement
and upgrade of furniture, fixtures and equipment. All such
restricted funds have been spent on their required purpose
through June 30, 2004.

Future minimum lease obligations under various
non-cancelable operating leases with initial terms in excess of
one year at June 30, 2004 (including the lease described in
the preceding paragraph) are as follows (000s omitted):

|           |  |   |        | 
|---------- |  | - | ------ | 
|2005       |  | $ | 1,769  | 
|2006       |  |   | 1,234  | 
|2007       |  |   | 1,013  | 
|2008       |  |   | 735    | 
|2009       |  |   | 414    | 
|Thereafter |  |   | 15,993 | 
|           |  |   |        | 
|           |  | $ | 21,158 | 
|           |  |   |        | 

Insurance

The Company maintains comprehensive insurance on
its properties, including liability, business interruption, fire
and extended coverage including windstorm and flood, in the
types and amounts management believes are customary for the
resort and hotel industry. Certain insurance risks for medical
and workers compensation are self-insured by the Company
subject to certain stop-loss thresholds. A $1.4 million
certificate of deposit and a $1.3 million standby letter of
credit have been posted as collateral pursuant to the
Companys workers compensation self-insurance
agreements. Under the Companys self-insurance program,
claims are expensed on an as incurred basis. The estimated
liability for claims incurred but unpaid at June 30, 2004
and 2003 was not material.

Litigation

The Company is not involved in any material legal
proceedings. However, the Company may from time to time become a
party to legal proceedings arising in the ordinary course of
business, which are incidental to its business.

40



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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Environmental
Matters

Under various federal, state, and local
environmental laws and regulations, an owner or operator of real
property may be liable for the costs of removal or remediation
of certain hazardous or toxic substances on such real property,
as well as for the costs of complying with environmental laws
regulating on-going operations. The Company may be potentially
liable for any such costs in connection with the ownership and
operation of its properties. The Company has obtained Phase I
environmental site assessments for the real property on which
each of the resorts is located. In addition, Phase II
environmental assessments have been conducted at several
properties. Phase I assessments are intended to identify
existing, potential and suspected environmental contamination
and regulatory compliance concerns, and generally include
historical reviews of the property, reviews of certain public
records, preliminary visual investigations of the site and
surrounding properties and the preparation and issuance of
written reports. Phase II assessments involve the sampling of
environmental media, such as subsurface soil and groundwater, to
confirm whether contamination is present at areas of concern
identified during the course of a Phase I assessment.

The Phase I and Phase II assessments have not
revealed any environmental liability or compliance concerns that
the Company believes would have a material adverse effect on its
business, nor is the Company aware of any such material
liability or concern. Phase I and Phase II assessments cannot
provide full and complete knowledge of environmental conditions
and compliance matters. Therefore, there can be no assurances
that: (1) material environmental liabilities or compliance
concerns do not exist; (2) an identified matter that does
not appear reasonably likely to be material will not result in
significantly greater expenditures than is currently
anticipated; or (3) there are not material environmental
liabilities or compliance concerns of which the Company is
unaware.

(13) License and Franchise
Agreements

The Company has a franchise agreement with Hyatt
Franchise Corporation (Hyatt) that expires in
November 2014 with various early termination provisions and
liquidated damages for early termination. The agreement provides
for payments of monthly royalty fees equal to 5.0% of gross room
revenue. The agreement also provides for the payment of certain
Hyatt allocable chain expenses primarily relating to
sales and marketing. Aggregate Hyatt royalty fees and chain
expenses amounted to $1.5 million, $1.5 million and
$1.4 million for the years ended June 30, 2004, 2003
and 2002, respectively. The agreement also requires maintenance
of a customary reserve for replacement of furniture, fixtures
and equipment equal to 4.0% of gross room revenue. All such
restricted funds have been spent for their required purpose
through June 30, 2004.

The Company has a license agreement with Radisson
Hotels International, Inc. (Radisson), which expires
in December 2004. The terms of the agreement allow the Company
to operate the resort using the Radisson system. Annual fees
payable to Radisson pursuant to the agreement equal 5.0% of
gross room revenue. Fees paid to Radisson pursuant to the
license agreement totaled $453,000, $406,000 and $383,000 for
the years ended June 30, 2004, 2003 and 2002, respectively.

(14) Related Party Transactions

The following is a summary of certain agreements
and transactions between or among the Company and certain
related parties. It is the Companys policy to enter into
any such transactions with related parties on terms that, on the
whole, are no less favorable than those that would be available
from unaffiliated parties. Based on managements experience
and the terms of the Companys transactions with
unaffiliated parties, it is managements belief that all of
the transactions described below involving the Company met that
standard at the time such transactions were effected.

41



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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The Company paid a management fee to Huizenga
Holdings, Inc., a corporation whose sole shareholder is the
Companys Chairman and Chief Executive Officer, H. Wayne
Huizenga, equal to $1.9 million, $1.9 million and
$2.7 million for the years ended June 30, 2004, 2003
and 2002, respectively. Following the resignation of Richard C.
Rochon as President of the Company (where he served without
salary), and as President of Huizenga Holdings, Inc., the
management agreement was amended to limit the management fee
payable for the fiscal year ending June 30, 2004 and 2003
to the lesser of 1% of total revenue, or $1.9 million. The
limit on the management fee for the fiscal year ending
June 30, 2004 and 2003 was principally due to
Mr. Rochons resignation. Prior to that, the
management fee was equal to 1% of the total revenue of the
Company. It is anticipated that the management agreement and fee
will continue to be reviewed annually by the Audit Committee of
the Board of Directors. Pursuant to the agreement, Huizenga
Holdings, Inc. primarily provides certain administrative,
financing, tax, legal, investor relations and strategy related
services to the Company.

The Company paid Callaghan & Partners, Ltd.
$326,000 during the year ended June 30, 2002, which
represented 1.5% of the budgeted construction and development
cost of certain approved projects. No amounts were paid or owed
during the year ended June 30, 2004 and 2003. Dennis J.
Callaghan, a director of the Company, is President of Callaghan
& Partners, Ltd., an entity founded by Mr. Callaghan to
acquire, develop, finance, renovate and manage resorts, hotels
and residential and commercial properties in the United States
and abroad.

(15) Income Taxes

The income tax effect of temporary differences
comprising the deferred tax assets and deferred tax liabilities
in the accompanying Consolidated Balance Sheets at June 30
is set forth below (000s omitted):

|                                      |  |      |         |      |  |   |         |  
|------------------------------------- |  | ---- | ------- | ---- |  | - | ------- | -
|                                      |  | 2004 |         | 2003
|                                      |  |      |         |     
|Deferred tax assets:                  |  |      |         |      |  |   |         |  
|Deferred revenue and other            |  | $    | 16,066  |      |  | $ | 13,242  |  
|Deferred tax liabilities:             |  |      |         |      |  |   |         |  
|Book basis in property over tax basis |  |      | (72,619 | )    |  |   | (47,484 | )
|                                      |  |      |         |      |  |   |         |  
|Net deferred tax liabilities          |  | $    | (56,553 | )    |  | $ | (34,242 | )
|                                      |  |      |         |      |  |   |         |  

Realization of future tax benefits related to
deferred tax assets is dependent on many factors, including the
Companys ability to generate future taxable income.
Management believes the Companys ability to generate
future taxable income and realize the deferred tax asset is
more likely than not.

The components of the provision for income taxes
relating to continuing operations for the years ended
June 30 is set forth below (000s omitted).

|                                               |         |      |        |       |  |      |       |       |  |   |       |       | 
|---------------------------------------------- | ------- | ---- | ------ | ----- |  | ---- | ----- | ----- |  | - | ----- | ----- | 
|                                               |         | 2004 |        | 2003  |  | 2002
|                                               |         |      |        |       |  |     
|Current:                                       |         |      |        |       |  |      |       |       |  |   |       |      
|                                               | Federal |      | $      | 7,958 |  |      | $     | 4,224 |  |   | $     | 1,674 | 
|                                               | State   |      |        | 813   |  |      |       | 431   |  |   |       | 622   | 
|Federal and state deferred provision (benefit) |         |      | 2,505  |       |  |      | 853   |       |  |   | (960  | )    
|                                               |         |      |        |       |  |      |       |       |  |   |       |      
|Provision for income taxes                     |         | $    | 11,276 |       |  | $    | 5,508 |       |  | $ | 1,336 |      
|                                               |         |      |        |       |  |      |       |       |  |   |       |      

A reconciliation between the statutory federal
income tax expense relating to continuing operations and the
income tax expense at the Companys effective rate for the
years ended June 30, 2004, 2003 and 2002 is set forth below
(000s omitted).

42



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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

|                                                                                    |  |      |        |      |  |      |       |   |  |   |       |  
|----------------------------------------------------------------------------------- |  | ---- | ------ | ---- |  | ---- | ----- | - |  | - | ----- | -
|                                                                                    |  | 2004 |        | 2003 |  | 2002
|                                                                                    |  |      |        |      |  |     
|Computed expected income tax expense based on
    statutory federal income tax rate |  | $    | 10,251 |      |  | $    | 5,007 |   |  | $ | 2,045 |  
|State income taxes, net of federal benefit                                          |  |      | 1,047  |      |  |      | 512   |   |  |   | 193   |  
|Non-deductible expenses                                                             |  |      | 249    |      |  |      | 382   |   |  |   | 601   |  
|Credit for employer social security taxes                                           |  |      | (514   | )    |  |      | (613  | ) |  |   | (555  | )
|Other, net                                                                          |  |      | 243    |      |  |      | 220   |   |  |   | (948  | )
|                                                                                    |  |      |        |      |  |      |       |   |  |   |       |  
|Provision for income taxes                                                          |  | $    | 11,276 |      |  | $    | 5,508 |   |  | $ | 1,336 |  
|                                                                                    |  |      |        |      |  |      |       |   |  |   |       |  

The Company recently adopted a tax accounting
policy whereby it uses tax lives and methods for its property
and equipment as permitted by the Internal Revenue Service in
various rulings and regulations. The tax accounting policy has
resulted in a decrease in income taxes currently payable, as
well as, a net refund of income taxes paid in prior years
totaling approximately $12.8 million. The income tax
accounting method change has no impact on the Companys
total income tax expense for financial reporting purposes.

The Company has available state net operating
loss carryforwards of approximately $15.9 million for tax
purposes to offset future taxable income. The net operating loss
carryforwards, if not fully utilized, begin to expire in 2023.

(16) Employee Benefits

Employees of the Company, except for those
employed by the Hyatt Regency Pier 66 Hotel and Marina, the
Radisson Bahia Mar Resort and Yachting Center, the Boca Raton
Resort & Club and Grande Oaks Golf Club (who have separate
plans discussed below) may participate in a qualified 401(k)
Savings and Retirement Plan (the 401(k)), a defined
contribution plan. The 401(k) is available to full-time
employees who have completed one year of service in which 1,000
hours of service were rendered and are age twenty-one or older.
The Company may match a discretionary percentage, but not more
than 25%, of the amount contributed by the participant up to a
limit of 6% of annual compensation. The Company match has been
25% since April 1, 2003. Employees may contribute up to 80%
of their annual compensation subject to a maximum dollar amount
of deferrals as specified by applicable regulations.
Participants are automatically vested in compensation deferrals.
Vesting in Company matching contributions is at the rate of 20%
each year, after one year of service, reaching 100% after five
years. Matching contributions for the year ended June 30,
2004 and 2003 totaled $72,000 and $16,000, respectively. The
Company made no matching contributions for the year ended
June 30, 2002.

The Hyatt Regency Pier 66 Hotel and Marina and
the Radisson Bahia Mar Resort and Yachting Center also have a
qualified 401(k) Savings and Retirement Plan. This plan is
available to full-time employees of these resorts who have
completed one year of service in which 1,000 hours of service
were rendered and are age twenty-one or older. The Company was
required to contribute 25% of the first 6% of the
employees earnings and employees could contribute up to
14% of their annual compensation subject to a maximum dollar
amount as specified by applicable regulations. In addition,
participants immediately vested 100% of their individual and
employer match contributions to the plan. The plan was amended
effective March 1, 2004 whereby the Company may match a
discretionary percentage, but not more than 25%, of the amount
contributed by the participant up to a limit of 6% of annual
compensation. The Company match has been 25% since March 1,
2004. Employees may contribute up to 80% of their annual
compensation subject to a maximum dollar amount of deferrals as
specified by applicable regulations. Participants are
automatically vested in compensation deferrals. Vesting in
Company matching contributions is at the rate of 20% each year,
after one year of service, reaching 100% after five years.
Matching contributions totaled $57,000, $47,000 and $55,000 for
the years ended June 30, 2004, 2003 and 2002, respectively.

43



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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The Boca Raton Resort & Club and Grande Oaks
Golf Club had a non-qualified 401(a) Plan which was converted to
a qualified 401(k) Savings and Retirement Plan on March 30,
2003. The 401(a) plan was available to employees with at least
one year of service who worked a minimum of 1,000 hours per
year. The 401(a) plan allowed participants to contribute up to
16% of their total compensation. The Company was required to
make matching contributions equal to 50% of the first 6% of the
employees earnings. The 401(k) is available to full-time
employees who have completed one year of service in which 1,000
hours of service were rendered and are age twenty-one or older.
The Company may match a discretionary percentage, but not more
than 25%, of the amount contributed by the participant up to a
limit of 6% of annual compensation. The Company match has been
25% since April 1, 2003. Employees may contribute up to 80%
of their annual compensation subject to a maximum dollar amount
of deferrals as specified by applicable regulations.
Participants are automatically vested in compensation deferrals.
Vesting in Company matching contributions is at the rate of 20%
each year, after one year of service, reaching 100% after five
years. The Companys matching contribution totaled
$432,000, $1.0 million and $640,000 for the years ended
June 30, 2004, 2003 and 2002, respectively.

(17) Segment Reporting

The Company is an owner and operator of five
luxury resorts located in Florida with hotels, conference
facilities, food and beverage outlets, retail stores, golf
courses, spas, marinas and private clubs. Resort operating
personnel report to a chief operating decision maker (an
executive management group) that decides how to allocate
resources and assesses the performance of the resorts. The
executive management group manages, and underlying internal
financial and operating reports treat, the resorts as a single
operating segment that generates significant non-room revenue
(such as food and beverage sales, retail sales, etc.) by
predominantly leveraging off of its existing resort guests. For
financial reporting purposes, individual properties have been
aggregated as a single segment because of their common economic
and operating characteristics as provided for in SFAS
No. 131, Disclosures about Segments of an Enterprise
and Related Information.

Revenues of the Companys single operating
segment for each group of similar products and services for the
years ended June 30 is set forth below (000s omitted).

|                            |  |      |         |      |  |      |         |  |  |   |         | 
|--------------------------- |  | ---- | ------- | ---- |  | ---- | ------- |  |  | - | ------- | 
|                            |  | 2004 |         | 2003 |  | 2002
|                            |  |      |         |      |  |     
|Room                        |  | $    | 123,789 |      |  | $    | 116,785 |  |  | $ | 108,859 | 
|Food, beverage and banquets |  |      | 91,852  |      |  |      | 83,033  |  |  |   | 77,408  | 
|Yachting and marina         |  |      | 14,431  |      |  |      | 10,860  |  |  |   | 10,973  | 
|Retail and other            |  |      | 83,263  |      |  |      | 79,496  |  |  |   | 75,803  | 
|                            |  |      |         |      |  |      |         |  |  |   |         | 
|                            |  | $    | 313,335 |      |  | $    | 290,174 |  |  | $ | 273,043 | 
|                            |  |      |         |      |  |      |         |  |  |   |         | 

44



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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(18) Quarterly Financial Information
(Unaudited and in thousands except per share data)

|                                    |  |  |      |         |  |         |         |         |  |         |        |      |  |   |         |  |  |   |        |  |  |   |         | 
|----------------------------------- |  |  | ---- | ------- |  | ------- | ------- | ------- |  | ------- | ------ | ---- |  | - | ------- |  |  | - | ------ |  |  | - | ------- | 
|                                    |  |  |      | First   |  | Second  |         | Third   |  | Fourth  |        |     
|                                    |  |  |      | Quarter |  | Quarter |         | Quarter |  | Quarter |        | Year
|                                    |  |  |      |         |  |         |         |         |  |         |        |     
|Revenue                             |  |  | 2004 |         |  | $       | 46,989  |         |  | $       | 72,942 |      |  | $ | 113,120 |  |  | $ | 80,284 |  |  | $ | 313,335 | 
|                                    |  |  | 2003 |         |  | $       | 46,292  |         |  | $       | 67,046 |      |  | $ | 100,277 |  |  | $ | 76,559 |  |  | $ | 290,174 | 
|Operating income (loss)             |  |  | 2004 |         |  | $       | (10,477 | )       |  | $       | 7,836  |      |  | $ | 38,199  |  |  | $ | 14,473 |  |  | $ | 50,031  | 
|                                    |  |  | 2003 |         |  | $       | (9,169  | )       |  | $       | 4,879  |      |  | $ | 29,826  |  |  | $ | 10,208 |  |  | $ | 35,744  | 
|Net income (loss)                   |  |  | 2004 |         |  | $       | (9,533  | )       |  | $       | 1,551  |      |  | $ | 20,235  |  |  | $ | 5,758  |  |  | $ | 18,011  | 
|                                    |  |  | 2003 |         |  | $       | (9,071  | )       |  | $       | (333   | )    |  | $ | 15,042  |  |  | $ | 3,161  |  |  | $ | 8,799   | 
|Basic net income (loss) per share   |  |  | 2004 |         |  | $       | (.24    | )       |  | $       | .04    |      |  | $ | .51     |  |  | $ | .14    |  |  | $ | .45     | 
|                                    |  |  | 2003 |         |  | $       | (.23    | )       |  | $       | (.01   | )    |  | $ | .38     |  |  | $ | .08    |  |  | $ | .22     | 
|Diluted net income (loss) per share |  |  | 2004 |         |  | $       | (.24    | )       |  | $       | .04    |      |  | $ | .49     |  |  | $ | .14    |  |  | $ | .44     | 
|                                    |  |  | 2003 |         |  | $       | (.23    | )       |  | $       | (.01   | )    |  | $ | .38     |  |  | $ | .08    |  |  | $ | .22     | 

The Companys revenue and income are
seasonal in nature and are directly affected by the strength and
seasonality of the tourism and leisure industry. Tourism is
dependent upon weather and the traditional seasons for travel.
Because of this variability in demand, the Companys
revenue fluctuates quarter-to-quarter, and revenue for the first
quarter of each year can be expected to be lower than the
remaining quarters. Although historically the trend in quarterly
revenue for the second, third and fourth quarters of each year
is generally higher than the first quarter, there can be no
assurance that this will occur in future periods. Accordingly,
quarterly or other interim results should not be considered
indicative of results to be expected for any quarter or for the
full year.

45



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##### Table of Contents








|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure

None.






|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures

The Companys Chief Executive Officer and
Chief Financial Officer, after evaluating the effectiveness of
the Companys disclosure controls and
procedures (as defined in the Securities Exchange Act of
1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the
period covered by this annual report (the Evaluation
Date), have concluded that as of the Evaluation Date, the
Companys disclosure controls and procedures were adequate
and designed to ensure that material information relating to the
Company and its consolidated subsidiaries would be made known to
them by others within those entities.

There were no significant changes in the
Companys internal control over financial reporting (as
required by the Securities Exchange Act of 1934 Rules 13a-15(e)
or 15d-15(e)) that occurred during the Companys last
fiscal quarter that has materially affected, or is reasonably
likely to materially affect, the Companys internal control
over financial reporting.

In designing and evaluating the disclosure
controls and procedures, the Companys management
recognized that any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of
achieving the desired objectives and management necessarily was
required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures. It should be
noted that the design of any system of controls is based in part
upon certain assumptions about the likelihood of future events,
and there can be no assurance that any design will succeed in
achieving its stated goals under all potential future
conditions, regardless of how remote.






|         |                  
|-------- | -----------------
|Item 9B. | Other Information

None.




PART III

The information required by Items 10, 11, 12, 13
and 14 of Part III of Form 10-K will be set forth in the
Proxy Statement of the Company relating to the Companys
2004 Annual Meeting of Stockholders and is incorporated in this
report by reference.




PART IV




Item 15.     Exhibits,
Financial Statement Schedules and Reports on
Form 8-K

(a) (1) Financial Statements of the
Company are set forth in Part II, Item 8.



| |                                                                                                                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) All Financial Statement Schedules are
    omitted because they are not applicable, are not present in
    amounts sufficient to require submission of the schedules or the
    required information is presented in the Consolidated Financial
    Statements or related notes.
|
| | (3) Exhibits  (See Index to Exhibits
    included elsewhere in this report.)                                                                                                                                                                                                      

(b) Reports on Form 8-K



| |                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company filed a Current Report on
    Form 8-K on September 29, 2003 and furnished its
    earnings release for the three and twelve months ended June 30,
    2003.

46



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##### Table of Contents



SIGNATURES

Pursuant to the requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934, the Registrant
has duly caused this Annual Report on Form 10-K to be
signed on its behalf by the undersigned, thereunto duly
authorized.



| |                   
| | ------------------
| | BOCA RESORTS, INC.



| |     |               
| | --- | --------------
| | By: | /s/ WAYNE MOOR

| |                                                                 
| | ----------------------------------------------------------------
| |                                                                 
| | Wayne Moor                                                      
| | Senior Vice President, Treasurer and Chief
    Financial Officer

September 10, 2004


KNOW ALL MEN BY THESE PRESENTS, that each person
whose signature appears below constitutes and appoints Wayne
Moor and Richard L. Handley as his true and lawful
attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in any
and all capacities, to sign any and all amendments to this
Annual Report on Form 10-K and to file the same with all
exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to
be done in and about the foregoing, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his
substitute or substitutes, may lawfully do or cause to be done
by virtue thereof.

Pursuant to the requirements of the Securities
Exchange Act of 1934, this Annual Report on Form 10-K has
been signed by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated.

|                                           |  |                                                                                                |  |                   
|------------------------------------------ |  | ---------------------------------------------------------------------------------------------- |  | ------------------
|Signature                                  |  | Title                                                                                          |  | Date              
|                                           |  |                                                                                                |  |                   
|/s/ H. WAYNE HUIZENGAH. Wayne Huizenga     |  | Chairman of the Board and Chief Executive Officer                                              |  | September 10, 2004
|                                          
|/s/ DAVID S. FEDERDavid S. Feder           |  | President                                                                                      |  | September 10, 2004
|                                          
|/s/ WAYNE MOORWayne Moor                   |  | Senior Vice President, Treasurer and Chief
    Financial Officer (Principal Financial Officer) |  | September 10, 2004
|                                          
|/s/ MARYJO FINOCCHIAROMaryJo Finocchiaro   |  | Vice President and Corporate Controller
    (Principal Accounting Officer)                     |  | September 10, 2004
|                                          
|/s/ STEVEN R. BERRARDSteven R. Berrard     |  | Director                                                                                       |  | September 10, 2004
|                                          
|/s/ DENNIS J. CALLAGHANDennis J. Callaghan |  | Director                                                                                       |  | September 10, 2004
|                                          
|/s/ MICHAEL S. EGANMichael S. Egan         |  | Director                                                                                       |  | September 10, 2004

47



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##### Table of Contents



|                                                 |  |          |  |                   
|------------------------------------------------ |  | -------- |  | ------------------
|Signature                                        |  | Title    |  | Date              
|                                                 |  |          |  |                   
|/s/ HARRIS W. HUDSONHarris W. Hudson             |  | Director |  | September 10, 2004
|                                                
|/s/ GEORGE D. JOHNSON, JR.George D. Johnson, Jr. |  | Director |  | September 10, 2004
|                                                
|/s/ HENRY LATIMERHenry Latimer                   |  | Director |  | September 10, 2004
|                                                
|/s/ PETER H. ROBERTSPeter H. Roberts             |  | Director |  | September 10, 2004
|                                                
|/s/ RICHARD C. ROCHONRichard C. Rochon           |  | Director |  | September 10, 2004

48



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##### Table of Contents



EXHIBIT INDEX

|         |       |  |  |                        |  |                                                                                                                                                                                                                                                         
|-------- | ----- |  |  | ---------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibits |       |  |  | Description Of Exhibit
|         |       |  |  |                       
|         | 2.1   |  |  |                       |  | Exchange Agreement dated October 25, 1996 by
    and between the Company and H. Wayne Huizenga.(1)                                                                                                                                                      
|         | 2.3   |  |  |                       |  | Partnership Exchange Agreement dated
    October 25, 1996 by and between Florida Panthers Hockey
    Club, Ltd. and H. Wayne Huizenga.(1)                                                                                                               
|         | 2.9   |  |  |                       |  | Amended and Restated Contribution and Exchange
    Agreement, dated as of March 20, 1997, by and among Florida
    Panthers Holdings, Inc., Panthers BRHC Limited, Boca Raton Hotel
    and Club Limited Partnership, BRMC, L.P. and BRMC Corporation(2)
|         | 2.10  |  |  |                       |  | Merger Agreement, dated July 8, 1997, by and
    among the Company, FPH/ RHI Merger Corp., Inc., ResortHill, Inc.
    and Gary V. Chensoff.(3)                                                                                                          
|         | 2.11  |  |  |                       |  | Agreement and Plan of Merger dated as of
    November 17, 1997 by Boca Resorts, Inc. (formerly Florida
    Panthers Holdings, Inc.), a Delaware corporation.(2)                                                                                         
|         | 3.2   |  |  |                       |  | Amended and Restated By-Laws of the Registrant(4)                                                                                                                                                                                                       
|         | 10.6  |  |  |                       |  | Management Agreement by and between the Company
    and Huizenga Holdings, Inc.(1)                                                                                                                                                                      
|         | 10.7  |  |  |                       |  | Amended Management Agreement by and between the
    Company and Huizenga Holdings, Inc.(5)                                                                                                                                                              
|         | 10.10 |  |  |                       |  | Third Amended and Restated 1996 Stock Option
    Plan.(6)                                                                                                                                                                                               
|         | 10.15 |  |  |                       |  | Indenture dated April 21, 1999 between Boca
    Resorts, Inc. (formerly Florida Panthers Holdings, Inc.), The
    Guarantors and The Bank of New York as Trustee(7)                                                                                     
|         | 10.16 |  |  |                       |  | Second Amended and Restated Credit Agreement
    dated as of June 25, 2003(9)                                                                                                                                                                           
|         | 10.17 |  |  |                       |  | Credit Agreement dated as of July 22, 2004                                                                                                                                                                                                              
|         | 10.18 |  |  |                       |  | Amendment No. 1 to the Credit Agreement
    dated as of August 19, 2004                                                                                                                                                                                 
|         | 21.1  |  |  |                       |  | Subsidiaries of the Company(8)                                                                                                                                                                                                                          
|         | 23.1  |  |  |                       |  | Consent of Ernst & Young LLP                                                                                                                                                                                                                            
|         | 24.1  |  |  |                       |  | Powers of Attorney (included as part of the
    signature page of this Annual Report on Form 10-K).                                                                                                                                                     
|         | 31.1  |  |  |                       |  | Certification Pursuant to Section 302 of the
    Sarbanes-Oxley Act  H. Wayne Huizenga.                                                                                                                                                                
|         | 31.2  |  |  |                       |  | Certification Pursuant to Section 302 of the
    Sarbanes-Oxley Act  Wayne Moor.                                                                                                                                                                       
|         | 32.1  |  |  |                       |  | Certification Pursuant to Section 906 of the
    Sarbanes-Oxley Act.                                                                                                                                                                                    






|    |                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Incorporated by reference to the Companys
    Registration Statement on Form S-1  SEC File
    No. 333-12191                               
|   
|(2) | Incorporated by reference to the Companys
    Registration Statement on Form S-4  SEC
    File 333-28951                                   
|   
|(3) | Incorporated by reference to the Companys
    Registration Statement on Form S-1  SEC File
    No. 333-30925                               
|   
|(4) | Incorporated by reference to the Companys
    Annual Report on Form 10-K For the Fiscal Year Ended
    June 30, 2003  SEC File No. 1-13173.
|   
|(5) | Incorporated by reference to the Companys
    Quarterly Report on Form 10-Q For the Period Ended
    September 30, 2002.                    
|   
|(6) | Incorporated by reference to the Companys
    Definitive Proxy Statement Filed on September 30, 2002.                                       
|   
|(7) | Incorporated by reference to the Companys
    Registration Statement on Form S-8  SEC File
    No. 333-92227.                              
|   
|(8) | Incorporated by reference to the Companys
    Annual Report on Form 10-K For the Fiscal Year Ended
    June 30, 2002  SEC File No. 1-13173.
|   
|(9) | Incorporated by reference to the Companys
    Annual Report on Form 10-K For the Fiscal Year Ended
    June 30, 2003  SEC File No. 1-13173.

49