##### 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,
    2003                                             

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 September 11, 2003, the registrant had
39,095,578 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 $303.2 million.

DOCUMENTS INCORPORATED BY REFERENCE

Part III Portions of the Registrants Proxy
Statement relating to the 2003 Annual Meeting of Stockholders.

Part IV Portions of previously filed reports and
registration statements.









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TABLE OF CONTENTS



|                                                                                             |  |  |  |  |  |  |  | 
|-------------------------------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|INDEX TO FORM 10-K                                                                          
|PART I                                                                                      
|Item 1. Business                                                                            
|Item 2. Properties                                                                          
|Item 3. Legal Proceedings                                                                   
|Item 4. Submission of Matters to a Vote of Security Holders                                 
|PART II                                                                                     
|Item 6. Selected Financial Data                                                             
|Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations
|Item 7A.Quantitative and Qualitative Disclosure About Market Risk                           
|Item 8.Financial Statements and Supplementary Data                                          
|Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|Item 9A. Controls and Procedures                                                            
|PART III                                                                                    
|PART IV                                                                                     
|Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K                   
|EXHIBIT INDEX                                                                               
|Second Amended & Restated Credit Agreement                                                  
|Consent of Ernst & Young LLP                                                                
|Notice Regarding Consent of Arthur Andersen LLP                                             
|Certification Pursuant to Section 302 - Huizenga                                            
|Certification Pursuant to Section 302 - Moor                                                
|Certification Pursuant to Section 906                                                       



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##### Table of Contents






INDEX

TO FORM 10-K


|         |  |                                                                                           |  |        |    | 
|-------- |  | ----------------------------------------------------------------------------------------- |  | ------ | -- | 
|         |  |                                                                                           |  | Page  
|         |  |                                                                                           |  | Number
|         |  |                                                                                           |  |       
|PART I  
|Item 1.  |  | Business                                                                                  |  |        | 1  | 
|Item 2.  |  | Properties                                                                                |  |        | 9  | 
|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 and
    Related Stockholder Matters                 |  |        | 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                            |  |        | 22 | 
|Item 8.  |  | Financial Statements and Supplementary Data                                               |  |        | 23 | 
|Item 9.  |  | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure  |  |        | 48 | 
|Item 9A  |  | Controls and Procedures                                                                   |  |        | 48 | 
|PART III
|Item 10. |  | Directors and Executive Officers of the Registrant                                        |  |        | 49 | 
|Item 11. |  | Executive Compensation                                                                    |  |        | 49 | 
|Item 12. |  | Security Ownership of Certain Beneficial Owners
    and Management                        |  |        | 49 | 
|Item 13. |  | Certain Relationships and Related Transactions                                            |  |        | 49 | 
|Item 14. |  | Principal Accountant Fees and Services                                                    |  |        | 49 | 
|PART IV 
|Item 15. |  | Exhibits, Financial Statement Schedules and
    Reports on Form 8-K                       |  |        | 49 | 

i



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##### Table of Contents






PART I




Item 1.  Business

Introduction

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 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,
accordingly, the entertainment and sports business has been
accounted for as discontinued operations.

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 (the Grande Oaks Golf Club in Davie and Naples Grande
Golf Club in Naples) that serve as additional amenities to the
Companys resorts as well as components of the
Companys exclusive social club, known as the Premier Club
and the Company owns and operates two golf courses in Boca Raton
that are part of the Boca Raton Resort & Club. Previously,
the Company owned the Arizona Biltmore Resort & Spa, which
was sold in December 2000.

The Companys resorts possess significant
competitive and operational strengths. The resorts are unique,
irreplaceable assets in desirable locations with strong
recognition and positioning in their markets. The Companys
resorts provide multiple and diverse revenue streams and attract
primarily upscale business and leisure customers. In addition,
through the development of additional guestrooms and/or resort
amenities, the resorts have opportunities to increase revenue
and cash flow.

The Companys website is located at
www.bocaresortsinc.com. It is the Companys policy to post
on its website its Annual Report on Form 10-K, its
Quarterly Reports on Form 10-Q, its Current Reports on
Form 8-K and amendments to those Reports filed pursuant to
Section 13(a) or 15(d) 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. 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.

For a discussion of the Companys revenue,
income and assets, see Managements Discussion and
Analysis of Financial Condition and Results of Operations
and the Consolidated Financial Statements included later herein.
The Company was incorporated in Florida in 1996 and
re-incorporated in Delaware in 1997.

Business Strategy

While management continuously evaluates
ownership, acquisition and divestiture alternatives, its current
strategy is to focus on internal expansion and development
opportunities at its existing properties. The Companys
objective is to maximize the cash flow from, and the value of,
the Companys business by:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Continuing Internal Growth Through Capital
    Improvements at the Resorts.
    Management believes that the Companys resorts have the
    opportunity for continued internal growth. In addition to normal
    recurring capital expenditures from 1998 to the present, over
    $250.0 million has been invested (or is committed to be
    invested) in the resorts on capital projects. 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 water-view room
    marina hotel and marina slips (the Yacht Club), a
    50,000 square foot spa complex, a golf clubhouse, additional
    retail and restaurant space, a 140,000 square foot conference
    center (the Mizner Center), a redesigned golf
    course, a tennis and fitness center and a four story parking
    garage; at the Registry Resort at Pelican Bay, a new aquatic
    center, additional meeting space and beachfront improvements;
    and at the Radisson Bahia Mar Resort and Yachting Center, a
    marina renovation that will include 242 slips sized to
    accommodate yachts ranging in size from 80 feet to 200 plus
    feet. Additionally, to enhance the Premier Club golf experience

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| |  |                                                                                                                                                           
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | and to add to the Companys resort
    amenities, the Company renovated Grande Oaks Golf Club in 1999
    and constructed Naples Grande Golf Club in 2000.

Management believes that these capital
expenditures have resulted in, and will continue to produce,
increases to the average daily room rates, occupancy and
non-room sources of revenue at its resorts. Management also
believes that the high quality of the Companys resorts
will continue to attract higher spending corporate groups, which
in turn will increase total revenue per available room. Despite
the economic recession, together with travel disruption in the
aftermath of the events of September 11, 2001, the average
daily room rate, excluding the Arizona Biltmore Resort &
Spa, was $214.06, $210.43 and $209.79 for the years ended
June 30, 2003, 2002 and 2001, respectively.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Continuing to Focus on Upscale Business and
    Leisure Customers.Management believes
    that its primary focus on corporate group customers and upscale
    leisure and business customers allows the Company to maximize
    total revenue per available room. It has been managements
    experience that these customers are more likely to use the
    additional fee-for-use amenities and facilities available at the
    resorts, thereby increasing revenue. Additionally, group
    customers tend to book reservations 12 to 36 months in
    advance of their stay, which enables management to better
    estimate future revenue streams and manage corresponding
    expenses. Group business has also been used by the Company to
    fill off-peak leisure periods. Management believes that by
    targeting upscale customers the Company is 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. Management also believes the resorts will
    be able to capitalize on these trends given the properties
    unique nature and locations. The Companys ability to
    capitalize on these trends is enhanced by the high barriers of
    entry into the luxury resort industry.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | Continuing to Capitalize on Integration and
    Cost-Saving Opportunities. All of the
    Companys resorts were acquired and, as a result,
    management continues integrating the operations of its
    properties, including reservations, purchasing, training,
    information systems, insurance and marketing, in order to
    achieve greater operating efficiencies and improved profit
    margins. In addition, management believes that managing all of
    the 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.The Company continues to
    enhance its Premier Club, which was first introduced in 1991 at
    the Boca Raton Resort & Club, by expanding its amenity base.
    In addition, the Company expanded its Premier Club operations
    with the opening of Grande Oaks Golf Club in June 1999 and
    Naples Grande Golf Club in February 2000. Membership in the Boca
    Raton Resort Premier Club allows Premier Club members access to
    the Boca Raton Resort & Club grounds, restaurants,
    recreational facilities and other private social functions,
    which are otherwise restricted to resort guests. The Company has
    recently added to the resort amenity base with projects such as
    the spa complex and golf clubhouse at the Boca Raton Resort
    & Club and the aquatic center at the Registry Resort at
    Pelican Bay. In addition to attracting new club members who
    provide an additional revenue base, the Company is able to offer
    guests of the Companys Fort Lauderdale and Naples resorts
    play at the 18-hole championship facilities at Grande Oaks and
    Naples Grande and is able to offer reciprocal amenities to the
    Boca Raton Resort & Club Premier Club members. With its
    Premier Clubs, the Company generates substantial additional
    revenue by leveraging off of its existing facilities and
    services. During the year ended June 30, 2003, the Company
    recognized $14.5 million in revenue associated with annual
    Premier Club dues, together with nearly $9.0 million in
    revenue associated with Premier Club member use of amenities
    available to them on a fee-for-use basis. Management anticipates
    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.

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The following table sets forth a summary of the
key physical attributes of each of the Companys resorts:

|                                              |  |       |     |         |  |            |       |           |  |           |         |          |  |       |   |          |  |        |    |     |  |  |    |     |  |  |     |     |  |  |    |  |  |  |    | 
|--------------------------------------------- |  | ----- | --- | ------- |  | ---------- | ----- | --------- |  | --------- | ------- | -------- |  | ----- | - | -------- |  | ------ | -- | --- |  |  | -- | --- |  |  | --- | --- |  |  | -- |  |  |  | -- | 
|                                              |  |       |     |         |  |            |       | Access to |  | Access to |         |          |  | No.   |   | No. of   |  |       
|                                              |  |       |     | No. of  |  | Conference |       | No. of    |  | No. of    |         | No. of   |  | of    |   | Food &   |  | No. of
|                                              |  |       |     | Rooms   |  | Space      |       | Golf      |  | Tennis    |         | Swimming |  | Boat  |   | Beverage |  | Retail
|                                              |  | Acres |     | /Suites |  | Sq. Ft.    |       | Courts    |  | Courts    |         | Pools    |  | Slips |   | Sites    |  | Shops 
|                                              |  |       |     |         |  |            |       |           |  |           |         |          |  |       |   |          |  |       
|Boca Raton Resort & Club                      |  |       | 337 |         |  |            | 1,041 |           |  |           | 156,966 |          |  |       | 4 | (a)      |  |        | 30 |     |  |  | 5  |     |  |  | 32  |     |  |  | 16 |  |  |  | 12 | 
|Registry Resort at Pelican Bay                |  |       | 18  |         |  |            | 474   |           |  |           | 43,020  |          |  |       | 4 | (b)      |  |        | 15 |     |  |  | 5  |     |  |  |    |     |  |  | 8  |  |  |  | 5  | 
|Edgewater Beach Hotel                         |  |       | 3   |         |  |            | 126   |           |  |           | 3,450   |          |  |       |   | (b)      |  |        |    | (c) |  |  | 1  | (c) |  |  |    |     |  |  | 3  |  |  |  | 1  | 
|Hyatt Regency Pier 66 Hotel and Marina        |  |       | 24  |         |  |            | 380   |           |  |           | 26,905  |          |  |       | 1 | (d)      |  |        | 2  |     |  |  | 2  |     |  |  | 127 |     |  |  | 6  |  |  |  | 2  | 
|Radisson Bahia Mar Resort and Yachting Center |  |       | 39  |         |  |            | 296   |           |  |           | 20,150  |          |  |       |   | (d)      |  |        | 4  |     |  |  | 1  |     |  |  | 242 | (f) |  |  | 3  |  |  |  | 5  | 
|                                              |  |       |     |         |  |            |       |           |  |           |         |          |  |       |   |          |  |        |    |     |  |  |    |     |  |  |     |     |  |  |    |  |  |  |    | 
|                                              |  |       | 421 | (e)     |  |            | 2,317 |           |  |           | 250,491 |          |  |       | 9 |          |  |        | 51 |     |  |  | 14 |     |  |  | 401 |     |  |  | 36 |  |  |  | 25 | 
|                                              |  |       |     |         |  |            |       |           |  |           |         |          |  |       |   |          |  |        |    |     |  |  |    |     |  |  |     |     |  |  |    |  |  |  |    | 






|    |                                                                                                                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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 two
    18-hole golf courses through use agreements, one of which
    expires in the Fall of 2003.
|(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 is owned by the Company, and to three
    18-hole golf courses through use agreements.                                       
|(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, which is owned by the Company.                                                                                                     
|(e) | Excludes the acreage associated with Grande Oaks
    and Naples Grande Golf Clubs.                                                                                                                                                                                        

|    |                                                                                                                                                                                                                                                                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(f) | The Bahia Mar Resort and Yachting Center is
    currently undergoing a marina renovation, which involves the
    reconfiguration of the existing boat slips. The renovation will
    result in reconfigured boat slips, sized to accommodate larger
    yachts ranging from 80 feet to 200 plus feet, without reducing
    the rentable linear feet.

Amenities and services at the 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 the resorts
provide the Company with substantial non-room revenue. For the
years ended June 30, 2003, 2002 and 2001, 60%, 60% and 58%,
respectively, of resort revenue was generated from non-room
sources. In addition, these luxury amenities and services allow
the Company to maintain premium pricing for its rooms.

The 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. The Company maintains its 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 the
Companys hotel guests, the 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 other private social functions,
which are otherwise restricted to resort guests. The Boca Raton
Resort Premier Club currently requires an initial membership fee
of $50,000 and annual social dues starting at $3,400. Additional
dues are required for members who wish to use the resorts
golf and 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 the Companys Fort Lauderdale and Naples resorts
play at these championship golf facilities and provide
reciprocal amenities to other Premier Club members. The Company
currently charges $33,500 and $40,000 for membership initiation
fees at Grande Oaks Golf Club and Naples Grande Golf Club,
respectively, and annual golf dues of $5,950 and $4,800 at
Grande Oaks Golf Club and Naples Grande Golf Club, respectively.

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Summary Resort Information

Boca Raton Resort & Club



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Renovations/Expansion.In January 2002, the Company completed
    the new Yacht Club at the Boca Raton Resort & Club. The
    Yacht Club consists of 112 water-view luxury guestrooms,
    additional meeting space and reconfigured marina slips. In
    December 2001, the Company completed a new 50,000 square foot
    world-class spa complex and a new golf clubhouse and casual
    restaurant. In 2000, the Company opened a new Tuscan-style
    restaurant and added retail space. In 1999, the Company
    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,
    the Company completed a new 140,000 square foot conference
    facility, a tennis and fitness center complex and a new Gene
    Bates-designed 18-hole golf course, replacing one of its
    previous 18-hole golf courses.
|
| |  | Distinctions.Boca
    Raton Resort & Club has been awarded numerous honors
    including Successful Meetings Pinnacle Award in 2003, Meeting
    and Conventions Gold Tee Award in 2003, the Readers Award
    as one of the Top Hotels in North America by Travel
    & Leisure magazine in 2001, Meetings and Conventions Gold
    Key Award for 2002 (and for the previous twenty-two consecutive
    years), Corporate Meetings and Incentives Paragon Award in 2002
    and Golf magazine Silver Medal Award for 2002.                                                                                                                                                                                                                                                                                                                                                                                                                        

Registry Resort at Pelican Bay



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Renovations/Expansion.In January 2003, the Company completed a comprehensive room
    renovation covering 395 guestrooms, which included all new
    furnishings and new five fixture bathrooms. In December 2000,
    the Company added 6,000 square feet of flexible meeting space
    providing the Registry Resort with the largest meeting venue in
    the Naples market. The Company also completed a new aquatic
    center, which features a Mangrove Mountain 100-foot water slide
    to the main pool and private cabana rentals and completed beach
    improvements.
|
| |  | 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 Meetings
    and Conventions Gold Key Award for 2001 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.Edgewater Beach Hotel completed the
    final phase of its guest suite renovation in January 2003.                                                                                              
|
| |  | 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 completed a
    renovation of its guestrooms in November 1998 and is currently
    undertaking planning and design work for expanded conference
    space and spa services.                                                                                      
|
| |  | Distinctions.Hyatt
    Regency Pier 66 received AAAs Four Diamond Award for 2003
    and in each of the previous twenty years, Successful Meetings
    Magazines Pinnacle Award for 2003 and Meetings and
    Conventions Gold Key Award for 2003.                                                         
|
| |  | Franchise Agreement.The Company has 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

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| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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
    comprehensive room renovation in 2000 and is undergoing a marina
    renovation, which will be completed in the Fall of 2003. The
    principal element of the refurbishment is the replacement of 330
    fixed concrete and wood slips with a 242-slip floating dock
    system aimed at accommodating mega yachts ranging in size from
    80 feet to 200 plus feet. Even though the reconfiguration will
    result in fewer slips, the rentable linear feet will remain the
    same and provide the Company with better utilization.
|
| |  | Distinctions.Radisson Bahia Mar has consistently
    received the Mobil Travel Guides Three Star Award and the
    AAAs Three Diamond Award and was previously 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.The Company has a license agreement
    with Radisson Hotels International, Inc., (Radisson)
    which expires in July 2004. The terms of the Radisson license
    agreement allow the Company to operate the hotel using
    Radissons proprietary hotel management system and require
    the Company to pay annual fees to Radisson equal to 5% of
    Radisson Bahia Mars gross room revenue.                                                                                                                                                                            
|
| |  | Leases.The site of
    the resort is subject to a land lease that expires in 2062.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

In addition to the resort properties discussed
above, the Company also owns 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 newly constructed
clubhouse. Naples Grande Golf Club was designed by golf
architect Rees Jones and has been recognized as one of the
Top 100 Golf Courses by Golf Digest and Fodors
Places to Play.

The Company predominantly utilized cash flow from
operations to fund the previously discussed renovations and
expansion at its resorts and golf clubs.

Customers and Marketing

The core customer base for the Companys
business consists of corporate and other group customers,
affluent local residents, upscale leisure travelers and
individual business travelers. The Companys marketing
efforts involve (1) use of a sales force to develop national
corporate and other group business for the 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 individual
business travelers and upscale leisure 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. The Companys franchised resorts also benefit
from the national reservation systems of the franchisors of the
Hyatt and Radisson brands. The Company continues to expand its
Internet presence and sales capabilities to increase revenue. In
addition, the Company is integrating its proprietary customer
databases, in order to sell additional products and services to
existing customers, improve occupancy rates and create
additional marketing opportunities.

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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 the Companys competitors are
private management firms, 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 the Company.

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. Management uses its discretion in
determining amounts, coverage limits and deductible provisions
of insurance, with a view to obtaining appropriate insurance on
its 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 the Company might not be
adequate to restore its economic position. Certain insurance
risks for medical and workers compensation are
self-insured by the Company 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. 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
management believes would have a material adverse effect on the
business, nor is management 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, management 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 management is
unaware.

Employees

At June 30, 2003, the Company employed 3,259
full-time and 646 part-time employees. In addition, the Company
employs 13 corporate administrative personnel. None of the
employees are subject to any collective bargaining agreement,
and the Company believes that its relationship with its
employees is good.

Seasonality

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. Historically,

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16%, 25%, 35% and 24% 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), 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.


Trademarks

The Company has registered trademarks and service
marks, some of which, including several relating to the Boca
Resort name and Registry name, are of material importance to the
Companys business. The Companys other related marks,
while valuable, are not material to its 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.
The Company presently uses two national trade names for two of
its 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

Management periodically reviews the
Companys business with the view to identifying properties
or other assets that no longer complement its operations.

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.

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

In July 2001, the Company sold its 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.

In December 2000, the Company executed a
definitive agreement and closed on the sale of the Arizona
Biltmore Resort & Spa for $335.0 million, plus certain
working capital adjustments. The net proceeds from the asset
sale amounted to $279.0 million and was substantially used to
repay indebtedness. The gain on the sale was nominal.

Risk Factors

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



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company faces risks relating to travel.The Companys 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, war or political unrest
    could have a material adverse effect on the Companys
    financial position and results of operations.
|
| | The Company faces a variety of risks
    associated with operating resorts.The
    Company may encounter risks common to the operations of resorts,
    including over-building (which may lower room                                                                                                                                                                                                                                                                                                                                                                                         

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | rates), increases in operating costs due to
    inflation or other factors and decreases in revenue due to
    moderate or severe economic downturns. The Company may also face
    risks relating to the concentration of its resorts in South
    Florida. Any of these risks could have a material adverse effect
    on the Companys financial position and results of
    operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| | The Company may make significant capital
    expenditures to further develop the resorts and these
    expenditures involve risks.The
    Companys growth strategy contemplates expanding the
    infrastructure at certain of its 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 the Companys
    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.
|
| | The Company may need to make capital
    expenditures in order to comply with the Americans with
    Disabilities Act.The 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. Management believes that the resorts and
    other properties are in substantial compliance with the ADA and
    that the Company 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 the Company were required to make
    substantial alterations in one or more of the resorts or other
    properties in order to comply with the ADA, its financial
    position and results of operations could be adversely affected.                                                                                                                                                                                                                                                                                                                     
|
| | The Company 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 the 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 the Company to
    incur costs to remedy, based on current information, none of
    these matters appears likely to have a material adverse effect
    on the business, assets, results of operations or liquidity.
    However, because these assessments cannot give full and complete
    knowledge of environmental liability and compliance matters,
    management 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.                                                                                     
|
| | The Companys resort business is
    seasonal.The resort operations are
    generally seasonal. The resorts historically experience greater
    revenue, costs and income in the second and third quarters of
    the fiscal year ended June 30 due to increased occupancy
    and room rates during the winter months.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| | The hotel and leisure industry is highly
    competitive.The Companys
    properties compete for customers with other hotel and resort
    properties, and, with respect to its Premier Club, with other
    operators of social clubs and golf courses. Some of the
    Companys competitors may have substantially greater
    marketing and financial resources and they may improve their
    facilities, reduce their prices or expand or improve their
    marketing programs in ways that could adversely affect the
    Companys financial position and results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| | The Companys financing agreements limit
    operating flexibility.Certain of the
    Companys loan agreements restrict, among other things, the
    ability to borrow money; pay dividends on stock or make                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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. These debt instruments also require
    the Company to maintain specified consolidated financial ratios
    and satisfy certain consolidated financial tests. Although
    management is confident that the Company will continue to
    satisfy all of these requirements, the Companys ability to
    meet those financial ratios and financial tests may be affected
    by events beyond its control, and management cannot assure you
    that the Company will meet those tests.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | Control by H. Wayne Huizenga.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.
    As of June 30, 2003, Mr. Huizenga, the Companys
    Chairman and Chief Executive Officer, beneficially owned voting
    stock of the 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 the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | The Company depends on key personnel.For the foreseeable future, the
    Company will be materially dependent on the services of
    Mr. Huizenga. The loss of Mr. Huizengas services
    could have a material adverse effect on the business. The
    Company does not carry key man life insurance on
    Mr. Huizenga or on any of the officers or directors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | The Company may face a variety of risks if it
    enters into business acquisitions, joint ventures and/or
    divestitures in the future.The
    Company may pursue acquisitions of resort-related or other types
    of businesses. In addition, the Company may pursue joint
    ventures and/or divestitures in the future. The Companys
    success will depend upon the 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 the Company acquires; 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.                                                   
|
| | The Company may seek additional financing.Management believes that the cash flow
    from operations will be sufficient to finance the business
    operations, meet the debt obligations and fund the short-term
    growth strategy of the Company. However, management cannot
    assure you that the business will generate the level of cash
    flow from operations that it expects or that future borrowings
    under credit facilities will be available to the Company. If the
    plans or assumptions change or if the Company experiences
    unanticipated costs or competitive pressures, or if the Company
    cannot reduce its cost of borrowing or increase its borrowing
    base it may seek additional capital. Management believes the
    Company can obtain additional capital by selling debt (provided
    certain incurrence tests are met pursuant to existing debt
    agreements) or equity securities and/or by borrowing money,
    although no assurances can be provided that it will be able to
    do so. If additional capital is not obtained when it is needed,
    this may have a material adverse effect on the Companys
    financial position and results of operations.




Item 2.  Properties

The Companys corporate headquarters are
located at the Boca Raton Resort & Club. The Company
considers its resorts to be leading establishments with respect
to desirability of location, size of facilities,

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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 the Companys resorts serve as security under a
revolving credit facility. See Note 8 to the Consolidated
Financial Statements included later herein.





Item 3.  Legal
Proceedings

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.




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 and Related Stockholder
Matters

The Class A Common Stock began trading on
The Nasdaq National Market on November 13, 1996 under the
symbol PUCK. On July 11, 1997, the Class A
Common Stock began trading on the New York Stock Exchange
(NYSE) under the symbol PAW. On
September 29, 1999, the 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 the Class A
Common Stock.

|                                     |                |                        |   |       |  |  |   |       | 
|------------------------------------ | -------------- | ---------------------- | - | ----- |  |  | - | ----- | 
|                                     |                |                       
|                                     |                | Price Range of Class A
|                                     |                | Common Stock          
|                                     |                |                       
|                                     |                | High                   |   | Low  
|                                     |                |                        |   |      
|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 | 
|Fiscal year Ended June 30,
    2002: |                |                        |   |       |  |  |   |      
|                                     | First Quarter  |                        | $ | 14.50 |  |  | $ | 9.00  | 
|                                     | Second Quarter |                        |   | 13.08 |  |  |   | 9.32  | 
|                                     | Third Quarter  |                        |   | 13.40 |  |  |   | 11.55 | 
|                                     | Fourth Quarter |                        |   | 14.18 |  |  |   | 12.37 | 

On September 11, 2003 the last reported
sales price of the Class A Common Stock on the NYSE was
$13.00. As of the same date, there were approximately 8,900
holders of record of the Class A Common Stock.

Since its inception, the Company has not paid any
cash dividends on the Class A Common Stock or the
Class B Common Stock. The Company does not intend to pay
any cash dividends with respect to its common stock in the
foreseeable future. The Companys current ability to pay
dividends is limited in dollar amount under covenants of its
outstanding senior subordinated notes. These covenants also
limit the Companys ability to pay dividends in the future.
See Note 9 to the Consolidated Financial Statements included
later herein.

Equity Compensation Plans

The following table summarizes the Company stock
option plans as of June 30, 2003:

|                                           |  |                     |           |                     |  |                         |       |  |  |  |           | 
|------------------------------------------ |  | ------------------- | --------- | ------------------- |  | ----------------------- | ----- |  |  |  | --------- | 
|                                           |  | Number of           |           |                     |  |                        
|                                           |  | Securities to be    |           |                     |  | Number of Securities   
|                                           |  | Issued Upon         |           | Weighted Average    |  | Remaining Available    
|                                           |  | Exercise of         |           | Exercise Price of   |  | for Future Issuance    
|                                           |  | Outstanding Options |           | Outstanding Options |  | Under Stock Option Plan
|                                           |  |                     |           |                     |  |                        
|Stock option plan approved by stockholders |  |                     | 6,981,055 |                     |  | $                       | 13.68 |  |  |  | 1,679,727 | 

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Item 6.  Selected Financial
Data

The financial data set forth below should be read
in conjunction with the Companys Consolidated Financial
Statements and Notes thereto contained in Part II, Item 8
of this Annual Report on Form 10-K. In July 2001, the
Company sold its entertainment and sports business. Accordingly,
the Companys 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,     
|                                                                        |                                 |                                  
|                                                                        |                                 | 2003                              |         | 2002 |         | 2001 |         | 2000 |         | 1999
|                                                                        |                                 |                                   |         |      |         |      |         |      |         |     
|                                                                        |                                 |                                   |         |      |         |     
|                                                                        |                                 | (In thousands, except share data) |         |      |         |     
|Statement of Operations Data:                                           |                                 |                                   |         |      |         |      |         |      |         |      |          |        |         |   |         |        |         |   |          |     
|Leisure and recreation revenue                                          |                                 | $                                 | 290,174 |      |         | $    | 273,043 |      |         | $    | 329,171  |        |         | $ | 361,360 |        |         | $ | 327,001  |     
|Operating expenses:                                                     |                                 |                                   |         |      |         |      |         |      |         |      |          |        |         |   |         |        |         |   |          |     
|Cost of leisure and recreation services                                 |                                 |                                   | 130,272 |      |         |      | 123,529 |      |         |      | 143,567  |        |         |   | 156,620 |        |         |   | 141,456  |     
|Selling, general and administrative expenses                            |                                 |                                   | 85,983  |      |         |      | 83,146  |      |         |      | 89,624   |        |         |   | 98,731  |        |         |   | 94,856   |     
|Amortization and depreciation                                           |                                 |                                   | 38,026  |      |         |      | 34,790  |      |         |      | 35,490   |        |         |   | 34,436  |        |         |   | 28,343   |     
|Loss on early retirement of debt                                        |                                 |                                   | 149     |      |         |      | 3,073   |      |         |      | 2,026    |        |         |   |        |        |         |   | 4,430    |     
|                                                                        |                                 |                                   |         |      |         |      |         |      |         |      |          |        |         |   |         |        |         |   |          |     
|                                                                        |                                 | Total operating expenses          |         |      | 254,430 |      |         |      | 244,538 |      |          |        | 270,707 |   |         |        | 289,787 |   |          |      | 269,085 | 
|                                                                        |                                 |                                   |         |      |         |      |         |      |         |      |          |        |         |   |         |        |         |   |          |     
|Operating income                                                        |                                 |                                   | 35,744  |      |         |      | 28,505  |      |         |      | 58,464   |        |         |   | 71,573  |        |         |   | 57,916   |     
|Interest and other income                                               |                                 |                                   | 227     |      |         |      | 1,240   |      |         |      | 5,164    |        |         |   | 1,529   |        |         |   | 2,826    |     
|Interest and other expense                                              |                                 |                                   | (21,664 | )    |         |      | (23,903 | )    |         |      | (47,150  | )      |         |   | (55,040 | )      |         |   | (55,377  | )   
|                                                                        |                                 |                                   |         |      |         |      |         |      |         |      |          |        |         |   |         |        |         |   |          |     
|Income from continuing operations before income
    taxes               |                                 |                                   | 14,307  |      |         |      | 5,842   |      |         |      | 16,478   |        |         |   | 18,062  |        |         |   | 5,365    |     
|Provision (benefit) for income taxes                                    |                                 |                                   | 5,508   |      |         |      | 1,336   |      |         |      | 3,934    |        |         |   | 805     |        |         |   | (472     | )   
|                                                                        |                                 |                                   |         |      |         |      |         |      |         |      |          |        |         |   |         |        |         |   |          |     
|Income from continuing operations                                       |                                 |                                   | 8,799   |      |         |      | 4,506   |      |         |      | 12,544   |        |         |   | 17,257  |        |         |   | 5,837    |     
|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 | )       |   |          | (436 | )      
|                                                                        |                                 |                                   |         |      |         |      |         |      |         |      |          |        |         |   |         |        |         |   |          |     
|Net income                                                              |                                 | $                                 | 8,799   |      |         | $    | 30,691  |      |         | $    | 3,682    |        |         | $ | 13,486  |        |         | $ | 5,401    |     
|                                                                        |                                 |                                   |         |      |         |      |         |      |         |      |          |        |         |   |         |        |         |   |          |     
|Diluted net income (loss) per share:                                    |                                 |                                   |         |      |         |      |         |      |         |      |          |        |         |   |         |        |         |   |          |     
|Income from continuing operations                                       |                                 | $                                 | .22     |      |         | $    | .11     |      |         | $    | .31      |        |         | $ | .42     |        |         | $ | .16      |     
|Income (loss) from discontinued operations                              |                                 |                                   |        |      |         |      | .65     |      |         |      | (.22     | )      |         |   | (.09    | )      |         |   | (.01     | )   
|                                                                        |                                 |                                   |         |      |         |      |         |      |         |      |          |        |         |   |         |        |         |   |          |     
|Net income per share  diluted                                          |                                 | $                                 | .22     |      |         | $    | .76     |      |         | $    | .09      |        |         | $ | .33     |        |         | $ | .15      |     
|                                                                        |                                 |                                   |         |      |         |      |         |      |         |      |          |        |         |   |         |        |         |   |          |     
|Other Data:                                                             |                                 |                                   |         |      |         |      |         |      |         |      |          |        |         |   |         |        |         |   |          |     
|Cash provided by operating activities                                   |                                 | $                                 | 50,683  |      |         | $    | 48,377  |      |         | $    | 37,033   |        |         | $ | 40,027  |        |         | $ | 71,590   |     
|Cash provided by (used in) investing activities                         |                                 | $                                 | (37,276 | )    |         | $    | 7,868   |      |         | $    | 222,347  |        |         | $ | (36,913 | )      |         | $ | (115,445 | )   
|Cash provided by (used in) financing activities                         |                                 | $                                 | (8,988  | )    |         | $    | (62,463 | )    |         | $    | (257,267 | )      |         | $ | (3,244  | )      |         | $ | 19,619   |     
|EBITDA(1)                                                               |                                 | $                                 | 73,919  |      |         | $    | 66,368  |      |         | $    | 95,980   |        |         | $ | 106,009 |        |         | $ | 90,689   |     
|EBITDA margin(2)                                                        |                                 |                                   | 25%     |      |         |      | 24%     |      |         |      | 29%      |        |         |   | 29%     |        |         |   | 28%      |     
|Capital expenditures                                                    |                                 | $                                 | 50,142  |      |         | $    | 66,965  |      |         | $    | 60,778   |        |         | $ | 63,090  |        |         | $ | 98,514   |     

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|                          |  |             |         |      |  |      |         |      |  |      |         |  |  |   |           |  |  |   |           | 
|------------------------- |  | ----------- | ------- | ---- |  | ---- | ------- | ---- |  | ---- | ------- |  |  | - | --------- |  |  | - | --------- | 
|                          |  |            
|                          |  | At June 30,
|                          |  |            
|                          |  | 2003        |         | 2002 |  | 2001 |         | 2000 |  | 1999
|                          |  |             |         |      |  |      |         |      |  |     
|Balance Sheet Data:       |  |             |         |      |  |      |         |      |  |      |         |  |  |   |           |  |  |   |           | 
|Cash and cash equivalents |  | $           | 8,110   |      |  | $    | 3,691   |      |  | $    | 9,909   |  |  | $ | 7,796     |  |  | $ | 7,926     | 
|Restricted cash           |  | $           | 641     |      |  | $    | 721     |      |  | $    | 500     |  |  | $ | 10,176    |  |  | $ | 31,686    | 
|Total current assets      |  | $           | 43,196  |      |  | $    | 39,041  |      |  | $    | 96,779  |  |  | $ | 106,802   |  |  | $ | 124,499   | 
|Total assets              |  | $           | 920,150 |      |  | $    | 916,736 |      |  | $    | 946,132 |  |  | $ | 1,271,115 |  |  | $ | 1,256,524 | 
|Total current liabilities |  | $           | 57,956  |      |  | $    | 55,240  |      |  | $    | 51,294  |  |  | $ | 135,108   |  |  | $ | 93,325    | 
|Total debt                |  | $           | 208,224 |      |  | $    | 211,915 |      |  | $    | 273,511 |  |  | $ | 583,195   |  |  | $ | 584,105   | 
|Non-current obligations   |  | $           | 342,145 |      |  | $    | 345,224 |      |  | $    | 409,195 |  |  | $ | 633,813   |  |  | $ | 672,919   | 
|Shareholders equity      |  | $           | 520,049 |      |  | $    | 516,272 |      |  | $    | 485,643 |  |  | $ | 502,194   |  |  | $ | 490,280   | 






|    |                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------
|(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 the Consolidated Financial Statements and Notes
thereto of the Company, which are included later herein.

Managements Discussion and Analysis of
Financial Condition and Results of Operations
(MD&A) discusses the Companys 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 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 which is both important to the portrayal of the
Companys 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. The Company
believes that 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 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.

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##### Table of Contents



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. On July 1, 2001,
the Company adopted Statement of Financial Accounting Standards
(SFAS) No. 142, Goodwill and Other
Intangible Assets which states, among other things, that
goodwill is no longer 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, both upon adoption of
SFAS No. 142 and annually as of July 1, 2003 and 2002.
The Company had no impairment of goodwill for the years ended
June 30, 2003 and 2002 or at July 1, 2003.

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. 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.

Property
and Equipment

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. Depreciation and
amortization 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   | 

Business Philosophy

The Companys business strategy is to focus
on internal expansion and development opportunities at its
existing resort properties. However, management continuously
evaluates ownership, acquisition and divestiture alternatives
with the intention of maximizing shareholder value.

Seasonality

The resort operations are generally seasonal. The
resorts historically experience greater revenue, costs and
income in the second and third quarters of the fiscal year ended
June 30 due to increased occupancy and room rates during
the winter months. Historically, 16%, 25%, 35% and 24% of annual
revenue has been derived during the first, second, third and
fourth fiscal quarters, respectively.

Events of September 11, 2001

During the three-month period following the
September 11, 2001 terrorist attacks on New Yorks
World Trade Center towers and on the Pentagon, the
Companys results of operations were adversely affected by
travel disruption and short-term cancellation of group bookings
at its properties. The Companys operating results continue
to track modestly below pre-September 11, 2001 levels.

14



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##### Table of Contents



Impact of Inflation

Inflation and changing prices have not had a
material impact on the Companys revenue and results of
operations. Based on the current economic climate, the Company
does not expect that inflation and changing prices will have a
material impact on the Companys revenue or income during
the 2004 fiscal year. Many of the costs of operating the 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). The Company has 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 the Companys debt service costs may be adversely
affected. See Note 8 to the Consolidated Financial Statements,
included later herein.

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 the Companys 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.

Impact of Recently Issued Accounting
Standards

In August 2001, the Financial Accounting
Standards Board (FASB) issued SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived
Assets. The new rules apply to the classification and
impairment analysis conducted on long-lived assets other than
intangible assets and was adopted by the Company on July 1,
2002. The new rules provide a single accounting treatment for
the impairment of long-lived assets and implementation guidance
regarding impairment calculations. This statement also modifies
accounting and disclosure requirements for discontinued
operations. The adoption of SFAS No. 144 did not have a
material impact on the Companys results of operations or
financial position.

In April 2002, the FASB issued SFAS No. 145,
which rescinds SFAS No. 4, Reporting Gains and Losses
from Extinguishment of Debt. Previously, SFAS No. 4
required all gains and losses from extinguishment of debt to be
aggregated and, if material, classified as an extraordinary
item, net of related income tax effect. Under SFAS No. 145,
gains and losses from extinguishment of debt are classified as
extraordinary items only if they meet the criteria in APB
Opinion No. 30, Reporting the Results of Operations
 Discontinued Events and Extraordinary Items.
Applying the provisions of APB Opinion No. 30 distinguishes
transactions that are part of an entitys recurring
operations from those that are unusual or infrequent, or that
meet the criteria for classification as an extraordinary item.
The Company adopted SFAS No. 145 on July 1, 2002.
Accordingly, losses on the retirement of debt that were
classified as an extraordinary item in the prior periods
presented, have been reclassified to recurring operations.

In June 2002, the FASB issued SFAS No. 146,
Accounting for Costs Associated with Exit or Disposal
Activities. This Statement addresses financial accounting
and reporting for costs associated with exit or disposal
activities and nullifies Emerging Issues Task Force Issue
No. 94-3, Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity.
The provisions of this Statement are effective for exit or
disposal activities initiated after March 31, 2003. This
Statement requires that a liability for a cost associated with
an exit or disposal activity be recognized when the liability is
incurred. Under Issue 94-3, a liability for an exit cost was
recognized at the date of an entitys commitment to an exit
plan. The adoption of SFAS No. 146 did not have a material
impact on the Companys results of operations or financial
position.

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##### Table of Contents



In November 2002, the FASB issued FASB
Interpretation No. (FIN) 45, Guarantors
Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others, an interpretation
of SFAS No. 5, 57, and 107 and rescission of
FIN 34. FIN 45 addresses the disclosures to be made
by a guarantor in its interim and annual financial statements
about its obligations under guarantees. It also requires that a
guarantor recognize a liability, at the inception of a
guarantee, for the fair value of the obligation undertaken in
issuing the guarantee. The initial measurement and recognition
provisions of FIN 45 are effective for guarantees issued or
modified after December 31, 2002. The adoption of FIN 45
did not impact the Companys results of operations or
financial position.

In December 2002, the FASB issued SFAS
No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure. This
statement amends SFAS No. 123, Accounting for
Stock-Based Compensation to provide alternative methods of
transition for a voluntary change to the fair value based method
of accounting for stock-based employee compensation. In
addition, this statement amends the disclosure requirements of
SFAS No. 123 to require prominent disclosures in both
annual and interim financial statements about the method of
accounting for stock-based compensation and the effect of the
method used on reporting results. The provisions of this
statement have been incorporated into this Annual Report on
Form 10-K. See Note 11.

In January 2003, the FASB issued FIN 46
Consolidations of Variable Interest Entities. This
interpretation requires a company to consolidate variable
interest entities (VIE) if the enterprise is a
primary beneficiary (holds a majority of the variable interest)
of the VIE and the VIE possesses specific characteristics. It
also requires additional disclosure for parties involved with
VIEs. Since the Company does not have any unconsolidated VIEs,
the adoption of FIN 46 did not have a material impact on
the Companys results of operations or financial position.

16



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##### Table of Contents



RESULTS OF OPERATIONS  HISTORICAL
COMPARISON

The accompanying table for the years ended
June 30 (000s omitted) is set forth on a historical
basis which includes operating results from the Arizona Biltmore
Resort & Spa (sold in December 2000) and the entertainment
and sports business (presented as a discontinued operation and
sold in July 2001).

|                                                                        |                                               |                        |                          |         |        |         |         |         |         |         |          |         |         |         | 
|----------------------------------------------------------------------- | --------------------------------------------- | ---------------------- | ------------------------ | ------- | ------ | ------- | ------- | ------- | ------- | ------- | -------- | ------- | ------- | ------- | 
|                                                                        |                                               | 2003                   |                          | 2002    |        | 2001   
|                                                                        |                                               |                        |                          |         |        |        
|Leisure and recreation revenue                                          |                                               | $                      | 290,174                  |         |        | $       | 273,043 |         |         | $       | 329,171  |        
|Operating expenses:                                                     |                                               |                        |                          |         |        |         |         |         |         |         |          |        
|                                                                        | Cost of leisure and recreation services       |                        |                          | 130,272 |        |         |         | 123,529 |         |         |          | 143,567 |        
|                                                                        | Selling, general and administrative expenses: |                        |                          |         |        |         |         |         |         |         |          |         |        
|                                                                        |                                               | Leisure and recreation |                          |         | 78,205 |         |         |         | 74,561  |         |          |         | 81,398  |        
|                                                                        |                                               | Corporate              |                          |         | 7,778  |         |         |         | 8,585   |         |          |         | 8,226   |        
|                                                                        | Amortization and depreciation:                |                        |                          |         |        |         |         |         |         |         |          |         |        
|                                                                        |                                               | Leisure and recreation |                          |         | 37,821 |         |         |         | 34,571  |         |          |         | 35,195  |        
|                                                                        |                                               | Corporate              |                          |         | 205    |         |         |         | 219     |         |          |         | 295     |        
|                                                                        | Loss on early retirement of debt              |                        |                          | 149     |        |         |         | 3,073   |         |         |          | 2,026   |        
|                                                                        |                                               |                        |                          |         |        |         |         |         |         |         |          |        
|                                                                        |                                               |                        | Total operating expenses |         |        | 254,430 |         |         |         | 244,538 |          |         |         | 270,707 | 
|                                                                        |                                               |                        |                          |         |        |         |         |         |         |         |          |        
|                                                                        | Operating income (loss):                      |                        |                          |         |        |         |         |         |         |         |          |         |        
|                                                                        |                                               | Leisure and recreation |                          |         | 43,876 |         |         |         | 40,382  |         |          |         | 69,011  |        
|                                                                        |                                               | Corporate              |                          |         | (8,132 | )       |         |         | (11,877 | )       |          |         | (10,547 | )      
|                                                                        |                                               |                        |                          |         |        |         |         |         |         |         |          |        
|                                                                        |                                               |                        | Total operating income   |         |        | 35,744  |         |         |         | 28,505  |          |         |         | 58,464  | 
|Interest and other income                                               |                                               |                        | 227                      |         |        |         | 1,240   |         |         |         | 5,164    |        
|Interest expense                                                        |                                               |                        | (21,664                  | )       |        |         | (23,903 | )       |         |         | (47,150  | )      
|                                                                        |                                               |                        |                          |         |        |         |         |         |         |         |          |        
|Income from continuing operations before income
    taxes               |                                               |                        | 14,307                   |         |        |         | 5,842   |         |         |         | 16,478   |        
|Provision for income taxes                                              |                                               |                        | 5,508                    |         |        |         | 1,336   |         |         |         | 3,934    |        
|                                                                        |                                               |                        |                          |         |        |         |         |         |         |         |          |        
|Income from continuing operations                                       |                                               |                        | 8,799                    |         |        |         | 4,506   |         |         |         | 12,544   |        
|Gain on disposition of discontinued operations,
    net of income taxes |                                               |                        |                         |         |        |         | 26,185  |         |         |         |         |        
|Loss from discontinued operations, net of income
    tax benefit        |                                               |                        |                         |         |        |         |        |         |         |         | (8,862   | )      
|                                                                        |                                               |                        |                          |         |        |         |         |         |         |         |          |        
|Net income                                                              |                                               | $                      | 8,799                    |         |        | $       | 30,691  |         |         | $       | 3,682    |        
|                                                                        |                                               |                        |                          |         |        |         |         |         |         |         |          |        
|Net cash provided by operating activities                               |                                               | $                      | 50,683                   |         |        | $       | 48,377  |         |         | $       | 37,033   |        
|                                                                        |                                               |                        |                          |         |        |         |         |         |         |         |          |        
|Net cash provided by (used in) investing
    activities                 |                                               | $                      | (37,276                  | )       |        | $       | 7,868   |         |         | $       | 222,347  |        
|                                                                        |                                               |                        |                          |         |        |         |         |         |         |         |          |        
|Net cash used in financing activities                                   |                                               | $                      | (8,988                   | )       |        | $       | (62,463 | )       |         | $       | (257,267 | )      
|                                                                        |                                               |                        |                          |         |        |         |         |         |         |         |          |        
|EBITDA                                                                  |                                               | $                      | 73,919                   |         |        | $       | 66,368  |         |         | $       | 95,980   |        
|                                                                        |                                               |                        |                          |         |        |         |         |         |         |         |          |        

The accompanying table reconciles EBITDA to
income from continuing operations before income taxes, the most
comparable GAAP measure, for the years ended June 30
(000s omitted):

|                                                          |  |      |         |      |  |      |         |   |  |   |         |  
|--------------------------------------------------------- |  | ---- | ------- | ---- |  | ---- | ------- | - |  | - | ------- | -
|                                                          |  | 2003 |         | 2002 |  | 2001
|                                                          |  |      |         |      |  |     
|EBITDA                                                    |  | $    | 73,919  |      |  | $    | 66,368  |   |  | $ | 95,980  |  
|Less: Loss on early retirement of debt                    |  |      | (149    | )    |  |      | (3,073  | ) |  |   | (2,026  | )
|Less: Amortization and depreciation                       |  |      | (38,026 | )    |  |      | (34,790 | ) |  |   | (35,490 | )
|Less: Interest expense                                    |  |      | (21,664 | )    |  |      | (23,903 | ) |  |   | (47,150 | )
|Plus: Interest income                                     |  |      | 227     |      |  |      | 1,240   |   |  |   | 5,164   |  
|                                                          |  |      |         |      |  |      |         |   |  |   |         |  
|Income from continuing operations before income
    taxes |  | $    | 14,307  |      |  | $    | 5,842   |   |  | $ | 16,478  |  
|                                                          |  |      |         |      |  |      |         |   |  |   |         |  

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

|                                                            |                          |                                      |         |          |         |      |    |          |    |      |         |         |         |  |     |     |     |    |         |         |         | 
|----------------------------------------------------------- | ------------------------ | ------------------------------------ | ------- | -------- | ------- | ---- | -- | -------- | -- | ---- | ------- | ------- | ------- |  | --- | --- | --- | -- | ------- | ------- | ------- | 
|                                                            |                          | 2003                                 |         | % Change |         | 2002 |    | % Change |    | 2001
|                                                            |                          |                                      |         |          |         |      |    |          |    |     
|Revenue:                                                    |                          |                                      |         |          |         |      |    |          |    |      |         |         |         |  |     |     |     |    |         |        
|                                                            | Room revenue             |                                      | $       | 116,785  |         |      |    | 7%       |    |      | $       | 108,859 |         |  |     | (22 | )%  |    | $       | 139,107 |        
|                                                            | Non-room related revenue |                                      |         | 173,389  |         |      |    | 6%       |    |      |         | 164,184 |         |  |     | (14 | )%  |    |         | 190,064 |        
|                                                            |                          |                                      |         |          |         |      |    |          |    |      |         |         |         |  |     |     |     |    |         |        
|                                                            |                          | Total leisure and recreation revenue |         | $        | 290,174 |      |    |          | 6% |      |         | $       | 273,043 |  |     |     | (17 | )% |         | $       | 329,171 | 
|Operating Statistics:                                       |                          |                                      |         |          |         |      |    |          |    |      |         |         |         |  |     |     |     |    |         |        
|Available room nights                                       |                          |                                      | 845,705 |          |         |      | 2% |          |    |      | 828,089 |         |         |  | (12 | )%  |     |    | 943,425 |        
|Average Daily Rate                                          |                          | $                                    | 214.06  |          |         |      | 2% |          |    | $    | 210.43  |         |         |  |    |     |     | $  | 209.68  |        
|Occupancy                                                   |                          |                                      | 64.5%   |          |         |      | 3% |          |    |      | 62.5%   |         |         |  | (11 | )%  |     |    | 70.3%   |        
|Room revenue per available room                             |                          | $                                    | 138.09  |          |         |      | 5% |          |    | $    | 131.46  |         |         |  | (11 | )%  |     | $  | 147.45  |        
|Total leisure and recreation revenue per
    available room |                          | $                                    | 343.13  |          |         |      | 4% |          |    | $    | 329.73  |         |         |  | (5  | )%  |     | $  | 348.91  |        

Leisure and Recreation Revenue

The Company generates a diversified stream of
revenue. Leisure and recreation revenue totaled $290.2 million,
$273.0 million and $329.2 million for the years ended
June 30, 2003, 2002 and 2001, respectively. Non-room
revenue, which represented nearly 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 $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. However, during the year ended June 30,
2003, business at the Companys Naples properties was
disrupted by comprehensive room renovations at both the Registry
Resort and Edgewater Beach Hotel.

The $56.1 million decrease in leisure and
recreation revenue for the year ended June 30, 2002,
compared to the year ended June 30, 2001, was partially
because the prior year twelve-month period included $39.9
million in revenue from the Arizona Biltmore Resort & Spa,
which was sold in December 2000. In addition, while the same
property average daily rate was flat year over year, same
property occupancy decreased to 62.5% for the year ended
June 30, 2002, from 70.3% for the year ended June 30,
2001, as a result of travel disruption following the
September 11, 2001 terrorist attacks.

Leisure and Recreation Operating
Expenses

Cost of leisure and recreation services totaled
$130.3 million, or 45% of revenue for the year ended
June 30, 2003, $123.5 million, or 45% of revenue for the
year ended June 30, 2002, $143.6 million, or 44% of
revenue, for the year ended June 30, 2001. 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 $78.2
million, or 27% of revenue, for the year ended June 30,
2003, $74.6 million, or 27% of revenue, for the year ended
June 30, 2002 and $81.4 million, or 25% of revenue, for the
year ended June 30, 2001. Leisure and recreation S,G&A
primarily consisted of utility and property costs, real estate
taxes, insurance, franchise agreement fees, and administrative
salaries and expenses.

Leisure and recreation cost of services and
S,G&A were affected by an increase in certain fixed costs
including energy and insurance for the year ended June 30,
2003, compared to the year ended June 30, 2002. The
increase in leisure and recreation cost of services and
S,G&A as a percent of revenue for the year ended
June 30, 2002, compared to the year ended June 30,
2001, was primarily due to a reduction in revenue following the
September 11, 2001 terrorist attacks.

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Amortization and depreciation expense from
leisure and recreation operations totaled $37.8 million, $34.6
million and $35.2 million for the years ended June 30,
2003, 2002 and 2001, respectively. The increase in amortization
and 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. The decrease in amortization and depreciation expense for
the year ended June 30, 2002, compared to the year ended
June 30, 2001, was primarily due to a $4.5 million decrease
in amortization and depreciation expense, due to the sale of the
Arizona Biltmore Resort & Spa, and a $1.0 million decrease
because goodwill is no longer subject to amortization pursuant
to SFAS No. 142 Goodwill and Other Intangible
Assets, partially offset by an increase in depreciation
expense following the completion of several capital projects at
the Boca Raton Resort & Club.

Leisure and Recreation Operating
Income

Leisure and recreation operating income totaled
$43.9 million, $40.4 million and $69.0 million for the years
ended June 30, 2003, 2002 and 2001, respectively. 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.
The decrease in leisure and recreation operating income for the
year ended June 30, 2002, compared to the year ended
June 30, 2001, was due to an $8.0 million decline in
operating income resulting from the sale of the Arizona Biltmore
Resort & Spa mid-way through the prior fiscal year, together
with an overall decrease in operating income from the
Companys other resort properties following the
September 11, 2001 terrorist attacks.

Corporate General and Administrative
Expenses

Corporate general and administrative expenses
totaled $7.8 million, $8.6 million and $8.2 million for the
years ended June 30, 2003, 2002, and 2001, respectively.
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
the Companys Chairman and Chief Executive Officer.
Pursuant to the management services agreement, HHI provides
certain administrative, financing, tax, investor relations,
legal and strategy related services to the Company. The increase
in corporate general and administrative expenses for the year
ended June 30, 2002, compared to the year ended
June 30, 2001, was primarily because of an increase in
non-recurring legal costs, partially offset by a decrease in the
management fee payable to HHI. The decrease in total revenue
which yielded a decrease in the management fee for the year
ended June 30, 2002, compared to the year ended
June 30, 2001, was due to decreased demand at the
Companys resorts following the September 11, 2001
terrorist attacks and because of the sale of the Arizona
Biltmore Resort & Spa. See Note 14 to the Consolidated
Financial Statements included later herein.

Loss on Early Retirement of Debt

For the year ended June 30, 2003, the
Company repurchased $2.8 million principal amount of its 9.875%
senior subordinated notes payable and recognized a loss of
$149,000. For the year ended June 30, 2002, the Company
repurchased $80.1 million principal amount of its senior
subordinated notes payable and recognized a loss of $3.1
million. For the year ended June 30, 2001, the Company
repurchased $67.0 million principal amount of its senior
subordinated notes payable and recognized a loss of $2.0 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.

Interest and Other Income

Interest and other income totaled $227,000, $1.2
million and $5.2 million for the years ended June 30, 2003,
2002 and 2001, 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 the Company invested
proceeds from the sale of the

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entertainment and sports business in interest
bearing time deposit accounts during the prior year until such
proceeds were used to reduce higher rate indebtedness. The
decrease in interest and other income for the year ended
June 30, 2002, compared to the year ended June 30,
2001, was because the Company invested proceeds from the sale of
the Arizona Biltmore Resort & Spa in interest bearing time
deposit accounts during the prior year until such proceeds were
used to reduce higher rate indebtedness. See discussion of
Interest Expense to follow.


Interest Expense

Interest expense totaled $21.7 million, $23.9
million and $47.2 million for years ended June 30, 2003,
2002 and 2001, respectively. The Companys average cost of
borrowing was 10.0%, 10.1% and 10.0% for the years ended June
30, 2003, 2002 and 2001, respectively, while the Companys
average outstanding indebtedness was $217.8 million, $235.0
million and $472.0 million for the years ended June 30,
2003, 2002 and 2001, respectively. The decrease in the average
outstanding indebtedness for the year ended June 30, 2002,
compared to the year ended June 30, 2001, was primarily
because the Company reduced debt with the proceeds from the sale
of the Arizona Biltmore Resort & Spa and entertainment and
sports businesses.

Provision for Income Taxes

The Company recorded a provision for income taxes
totaling $5.5 million, $1.3 million and $3.9 million for the
years ended June 30, 2003, 2002 and 2001, respectively.
During the year ended June 30, 2001, the Companys
provision for income taxes was net of the release of its tax
valuation allowance. The Company continued to maintain a tax
valuation allowance prior to June 30, 2001 because
management believed the Companys ability to generate
future taxable income and realize the deferred tax asset was not
more likely than not due to the volatility of the
entertainment and sports business. This business was
subsequently sold and, therefore, the tax valuation allowance
totaling $2.7 million was released during the three months ended
June 30, 2001.

Income from Continuing Operations

Income from continuing operations totaled $8.8
million, $4.5 million and $12.5 million for the years ended
June 30, 2003, 2002 and 2001, respectively. As indicated
earlier, 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.
The decrease in income from continuing operations for the year
ended June 30, 2002, compared to the year ended
June 30, 2001, was due to an $8.0 million decline in
operating income resulting from the sale of the Arizona Biltmore
Resort & Spa mid-way through the prior fiscal year, together
with an overall decrease in operating income from the
Companys other resort properties following the
September 11, 2001 terrorist attacks.

Discontinued Operations

The Company sold its 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.
Accordingly, the operations have been accounted for as
discontinued operations. The loss from discontinued operations
was $8.9 million for the year ended June 30, 2001, which
figure is net of a $5.4 million benefit for income taxes. A
portion of the Companys interest expense has been included
in discontinued operations based upon its average borrowing cost
and the average funds the discontinued operations borrowed from
the parent for the year ended June 30, 2001. Selling,
general and administrative expenses incurred by the Company
during the year ended June 30, 2001 have also been included
in discontinued operations based upon the specific
identification method.

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Liquidity

Unrestricted cash and cash equivalents increased
to $8.1 million at June 30, 2003, from $3.7 million at
June 30, 2002, which decreased from $9.9 million at
June 30, 2001. The major components of the change are
discussed below.

Net
Cash Provided by Operating Activities

Net cash provided by operating activities totaled
$50.7 million, $48.4 million and $37.0 million for the years
ended June 30, 2003, 2002 and 2001, respectively. 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 primarily because during the prior
period the Company received less cash from its business than
during the current year due to a decline in income and
corresponding net cash flow following the September 11,
2001 terrorist attacks. The increase in cash flow from operating
activities during the year ended June 30, 2002, compared to the
year ended June 30, 2001, was primarily due to the sale of
the entertainment and sports business (which incurred cash flow
deficits and was sold in July 2001). The increase in cash flow
from operating activities during the year ended June 30,
2002, compared to the year ended June 30, 2001, occurred in
spite of a decrease in cash flow from the Companys resorts
primarily due to the impact of the events of September 11,
2001.

Net
Cash Provided by (Used in) Investing Activities

Net cash used in investing activities totaled
$37.3 million for the year ended June 30, 2003. Net cash
provided by investing activities amounted to $7.9 million and
$222.3 million for the years ended June 30, 2002 and 2001,
respectively. The change for all periods was largely because of
the Companys disposition activities. During the year ended
June 30, 2003, the Company received $12.8 million from the
sale of land parcels located in Naples, Florida and Plantation,
Florida. During the year ended June 30, 2002, the Company
received $75.1 million from the sale of the entertainment and
sports business, while during the year ended June 30, 2001
the Company received $279.0 million in net proceeds from the
disposition of the Arizona Biltmore Resort & Spa. Other
changes in investing activities are discussed below.

Capital expenditures totaled $50.1 million, $67.0
million and $60.8 million for the years ended June 30,
2003, 2002 and 2001, respectively. 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. The Company also renovated 60 guest suites at the
Edgewater Beach Hotel and is continuing work on a marina
renovation at the Bahia Mar Resort and Yachting Center, which
includes the reconfiguration of the existing boat slips. This
extensive marina renovation, which is being funded substantially
from free cash flow, will result in a state-of-the art yachting
center with 242 reconfigured boat slips, sized to accommodate
larger yachts ranging from 80 feet to 200 plus feet, without
reducing the rentable linear feet. During the year ended
June 30, 2002, the Company completed construction on
various projects at the Boca Raton Resort & Club including a
marina hotel with 112 new water-view rooms, additional meeting
space and marina slips at the Yacht Club, 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. During the
year ended June 30, 2001, the Company commenced work on the
Yacht Club, Spa Palazzo and golf clubhouse at the Boca Raton
Resort & Club, as well as completed a new Tuscan style
restaurant and retail pavilion, which opened in November 2000.
During the year ended June 30, 2001, the Company also
completed a new pool/aquatic center, 6,000 square feet of
additional conference space and enhancements to the beach
facility and boardwalk at the Registry Resort and renovated the
296 guestrooms at the Bahia Mar Resort and Yachting Center.

Restricted cash totaled $641,000, $721,000 and
$500,000 at June 30, 2003, 2002 and 2001, respectively.
Restricted cash primarily consisted of purchased guarantees
(letters of credit) that ensure the Companys payment to
third parties under certain lease agreements.

Cash used in investing activities from
discontinued operations totaled $2.3 million during the year
ended June 30, 2001. No cash was generated from investing
activities from discontinued operations for the years ended
June 30, 2003 and 2002 as this business was sold in July
2001.

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Net
Cash Used in Financing Activities

Net cash used in financing activities totaled
$9.0 million, $62.5 million and $257.3 for the years ended
June 30, 2003, 2002 and 2001, respectively. Cash flows for
each period primarily represent borrowings under credit
facilities, net of the repayment of indebtedness (including the
repurchase of senior subordinated notes) and sales/repurchases
of Class A Common Stock. During the year ended
June 30, 2001, $289.4 million of indebtedness was repaid
and $6.8 million of Class A Common Stock repurchased,
substantially by using proceeds from the sale of the Arizona
Biltmore Resort & Spa.

Capital Resources

The Companys capital resources are provided
from both internal and external sources. The primary capital
resources from internal operations include (1) room
rentals, food and beverage sales, retail sales, spa revenue,
golf revenue, tennis revenue, marina and conference service
revenue at the resorts and (2) Premier Club membership
revenue. The primary external sources of liquidity have been the
issuance of debt securities, borrowing under term loans and
credit lines and the issuance of Company stock for property
acquisitions.

As of July 31, 2003, the Company had $23.0
million outstanding under its revolving credit line (which
matures on June 30, 2005) and had $68.0 million in
immediate availability. The Company has an additional $190.1
million in outstanding senior subordinates notes which mature in
April 2009. As a result of the current availability under the
Companys credit line and expected cash from operations
over the ensuing year, management believes the Company has
sufficient funds to continue its capital maintenance and
expansion plans and support on-going operations, including
meeting debt service obligations as they come due.

Working Capital

Current liabilities exceeded current assets by
$14.8 million and $16.2 million at June 30, 2003 and
June 30, 2002, respectively. Current liabilities exceeded
current assets primarily because the Company repurchased $149.9
million principal amount of senior subordinated notes over the
past three years and such notes would have otherwise matured in
April 2009. The repurchase of the notes resulted in, among other
things, a decrease in the Company average cost of borrowing.
However, the ratio of current liabilities to current assets is
not indicative of a lack of liquidity as the Company maintains a
revolving credit line that represents an additional and
immediate potential source of liquidity. See Capital
Resources.

Forward Looking Statements

Some of the information in this report may
contain 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 the Companys 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 the
Companys properties; competition in the Companys
principal business; the availability of financing on terms
suitable to the Company and the Companys 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
|                                                                                                     |  |     
|Reports of Independent Certified Public
    Accountants                                              |  |      | 24 | 
|Consolidated Balance Sheets as of June 30,
    2003 and 2002                                         |  |      | 26 | 
|Consolidated Statements of Operations for the
    Years Ended June 30, 2003, 2002 and 2001           |  |      | 27 | 
|Consolidated Statements of Shareholders
    Equity for the Years Ended June 30, 2003, 2002 and 2001 |  |      | 28 | 
|Consolidated Statements of Cash Flows for the
    Years Ended June 30, 2003, 2002 and 2001           |  |      | 29 | 
|Notes to Consolidated Financial Statements                                                           |  |      | 30 | 

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REPORT OF INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS

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

We have audited the accompanying consolidated
balance sheets of Boca Resorts, Inc. and subsidiaries as of
June 30, 2003 and 2002, and the related consolidated
statements of operations, shareholders equity and cash
flows for the years then ended. 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
auditing standards generally accepted in the 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. and
subsidiaries at June 30, 2003 and 2002, and the
consolidated results of their operations and their cash flows
for the years then ended, in conformity with accounting
principles generally accepted in the United States.



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

Miami, Florida

August 22, 2003


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REPORT OF INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS

To the Shareholders of Boca Resorts, Inc.:

We have audited the accompanying consolidated
balance sheets of Boca Resorts, Inc. and subsidiaries as of
June 30, 2001 and 2000, and the related consolidated
statements of operations, shareholders equity and cash
flows for each of the three years in the period ended
June 30, 2001. 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
auditing standards generally accepted in the 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 financial
position of Boca Resorts, Inc. and subsidiaries as of
June 30, 2001 and 2000, and the results of their operations
and their cash flows for each of the three years in the period
ended June 30, 2001, in conformity with accounting
principles generally accepted in the United States.

ARTHUR ANDERSEN LLP

Fort Lauderdale, Florida,

August 6, 2001.


This is a copy of the audit report previously
issued by Arthur Andersen LLP in connection with Boca Resorts
Inc.s filing on Form 10-K for the year ended June 30,
2001. This audit report has not been reissued by Arthur Andersen
LLP in connection with this filing on Form 10-K. See
Exhibit 23.2 for further discussion. The consolidated
balance sheet as of June 30, 2001 and the consolidated
statements of operations, stockholders equity and cash
flows for the year ended June 30, 2000 are not required to
be and have not been included in the accompanying financial
statements.

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BOCA RESORTS, INC.

CONSOLIDATED BALANCE SHEETS

As of June 30,


(In thousands, except share data)


|                                                   |                                                                                                                                                                                     |                                            |         |         |         |  |         |         |         | 
|-------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------- | ------- | ------- |  | ------- | ------- | ------- | 
|                                                   |                                                                                                                                                                                     | 2003                                       |         | 2002   
|                                                   |                                                                                                                                                                                     |                                            |         |        
|ASSETS                                            
|Current assets:                                    |                                                                                                                                                                                     |                                            |         |         |         |  |         |        
|                                                   | Cash and cash equivalents                                                                                                                                                           |                                            | $       | 8,110   |         |  | $       | 3,691   |        
|                                                   | Restricted cash                                                                                                                                                                     |                                            |         | 641     |         |  |         | 721     |        
|                                                   | Accounts receivable, net                                                                                                                                                            |                                            |         | 20,960  |         |  |         | 21,591  |        
|                                                   | Inventory                                                                                                                                                                           |                                            |         | 6,616   |         |  |         | 6,433   |        
|                                                   | Current portion of Premier Club notes receivable                                                                                                                                    |                                            |         | 3,631   |         |  |         | 3,382   |        
|                                                   | Other current assets                                                                                                                                                                |                                            |         | 3,238   |         |  |         | 3,223   |        
|                                                   |                                                                                                                                                                                     |                                            |         |         |         |  |         |        
|                                                   |                                                                                                                                                                                     | Total current assets                       |         |         | 43,196  |  |         |         | 39,041  | 
|Property and equipment, net                        |                                                                                                                                                                                     |                                            | 823,681 |         |         |  | 822,630 |        
|Intangible assets, net                             |                                                                                                                                                                                     |                                            | 35,937  |         |         |  | 35,937  |        
|Long-term portion of Premier Club notes receivable |                                                                                                                                                                                     |                                            | 8,157   |         |         |  | 7,410   |        
|Other assets                                       |                                                                                                                                                                                     |                                            | 9,179   |         |         |  | 11,718  |        
|                                                   |                                                                                                                                                                                     |                                            |         |         |         |  |         |        
|                                                   |                                                                                                                                                                                     | Total assets                               |         | $       | 920,150 |  |         | $       | 916,736 | 
|                                                   |                                                                                                                                                                                     |                                            |         |         |         |  |         |        
|LIABILITIES AND SHAREHOLDERS
    EQUITY          
|Current liabilities:                               |                                                                                                                                                                                     |                                            |         |         |         |  |         |        
|                                                   | Accounts payable and accrued expenses                                                                                                                                               |                                            | $       | 33,515  |         |  | $       | 30,222  |        
|                                                   | Current portion of deferred revenue and advance
    deposits                                                                                                                        |                                            |         | 23,288  |         |  |         | 22,355  |        
|                                                   | Net liabilities of discontinued operations                                                                                                                                          |                                            |         | 1,074   |         |  |         | 2,436   |        
|                                                   | Current portion of credit line and note payable                                                                                                                                     |                                            |         | 79      |         |  |         | 227     |        
|                                                   |                                                                                                                                                                                     |                                            |         |         |         |  |         |        
|                                                   |                                                                                                                                                                                     | Total current liabilities                  |         |         | 57,956  |  |         |         | 55,240  | 
|Credit line and note payable                       |                                                                                                                                                                                     |                                            | 18,000  |         |         |  | 18,793  |        
|Deferred revenue, net of current portion           |                                                                                                                                                                                     |                                            | 33,498  |         |         |  | 38,073  |        
|Other liabilities                                  |                                                                                                                                                                                     |                                            | 9,560   |         |         |  | 9,695   |        
|Deferred income taxes                              |                                                                                                                                                                                     |                                            | 34,242  |         |         |  | 30,052  |        
|Senior subordinated notes payable                  |                                                                                                                                                                                     |                                            | 190,145 |         |         |  | 192,895 |        
|Premier Club refundable membership fees            |                                                                                                                                                                                     |                                            | 56,700  |         |         |  | 55,716  |        
|                                                   |                                                                                                                                                                                     |                                            |         |         |         |  |         |        
|                                                   |                                                                                                                                                                                     | Total liabilities                          |         |         | 400,101 |  |         |         | 400,464 | 
|                                                   |                                                                                                                                                                                     |                                            |         |         |         |  |         |        
|Commitments and contingencies (Note 12)            |                                                                                                                                                                                     |                                            |         |         |         |  |         |        
|Shareholders equity:                              |                                                                                                                                                                                     |                                            |         |         |         |  |         |        
|                                                   | Class A Common Stock, $.01 par value,
    100,000,000 shares authorized and 39,035,078 and 39,538,479
    shares issued and outstanding at June 30, 2003 and 2002,
    respectively |                                            |         | 390     |         |  |         | 395     |        
|                                                   | Class B Common Stock, $.01 par value,
    10,000,000 shares authorized and 255,000 shares issued and
    outstanding at June 30, 2003 and 2002.                                     |                                            |         | 3       |         |  |         | 3       |        
|                                                   | Contributed capital                                                                                                                                                                 |                                            |         | 459,548 |         |  |         | 464,565 |        
|                                                   | Retained earnings                                                                                                                                                                   |                                            |         | 60,108  |         |  |         | 51,309  |        
|                                                   |                                                                                                                                                                                     |                                            |         |         |         |  |         |        
|                                                   |                                                                                                                                                                                     | Total shareholders equity                 |         |         | 520,049 |  |         |         | 516,272 | 
|                                                   |                                                                                                                                                                                     |                                            |         |         |         |  |         |        
|                                                   |                                                                                                                                                                                     | Total liabilities and shareholders equity |         | $       | 920,150 |  |         | $       | 916,736 | 
|                                                   |                                                                                                                                                                                     |                                            |         |         |         |  |         |        

See accompanying notes to consolidated financial
statements.

26



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##### Table of Contents



BOCA RESORTS, INC.

CONSOLIDATED STATEMENTS OF
OPERATIONS

For the Years Ended June 30,


(In thousands, except per share
data)


|                                                                             |                                              |                          |         |         |         |      |         |         |         |   |         |         |         | 
|---------------------------------------------------------------------------- | -------------------------------------------- | ------------------------ | ------- | ------- | ------- | ---- | ------- | ------- | ------- | - | ------- | ------- | ------- | 
|                                                                             |                                              | 2003                     |         | 2002    |         | 2001
|                                                                             |                                              |                          |         |         |         |     
|Leisure and recreation revenue                                               |                                              | $                        | 290,174 |         |         | $    | 273,043 |         |         | $ | 329,171 |        
|Operating expenses:                                                          |                                              |                          |         |         |         |      |         |         |         |   |         |        
|                                                                             | Cost of leisure and recreation services      |                          |         | 130,272 |         |      |         | 123,529 |         |   |         | 143,567 |        
|                                                                             | Selling, general and administrative expenses |                          |         | 85,983  |         |      |         | 83,146  |         |   |         | 89,624  |        
|                                                                             | Amortization and depreciation                |                          |         | 38,026  |         |      |         | 34,790  |         |   |         | 35,490  |        
|                                                                             | Loss on early retirement of debt             |                          |         | 149     |         |      |         | 3,073   |         |   |         | 2,026   |        
|                                                                             |                                              |                          |         |         |         |      |         |         |         |   |         |        
|                                                                             |                                              | Total operating expenses |         |         | 254,430 |      |         |         | 244,538 |   |         |         | 270,707 | 
|                                                                             |                                              |                          |         |         |         |      |         |         |         |   |         |        
|Operating income                                                             |                                              |                          | 35,744  |         |         |      | 28,505  |         |         |   | 58,464  |        
|Interest and other income                                                    |                                              |                          | 227     |         |         |      | 1,240   |         |         |   | 5,164   |        
|Interest expense                                                             |                                              |                          | (21,664 | )       |         |      | (23,903 | )       |         |   | (47,150 | )      
|                                                                             |                                              |                          |         |         |         |      |         |         |         |   |         |        
|Income from continuing operations before income
    taxes                    |                                              |                          | 14,307  |         |         |      | 5,842   |         |         |   | 16,478  |        
|Provision for income taxes                                                   |                                              |                          | 5,508   |         |         |      | 1,336   |         |         |   | 3,934   |        
|                                                                             |                                              |                          |         |         |         |      |         |         |         |   |         |        
|Income from continuing operations                                            |                                              |                          | 8,799   |         |         |      | 4,506   |         |         |   | 12,544  |        
|Gain on disposition of discontinued operations,
    net of income taxes      |                                              |                          |        |         |         |      | 26,185  |         |         |   |        |        
|Loss from discontinued operations, net of benefit
    for income taxes       |                                              |                          |        |         |         |      |        |         |         |   | (8,862  | )      
|                                                                             |                                              |                          |         |         |         |      |         |         |         |   |         |        
|Net income                                                                   |                                              | $                        | 8,799   |         |         | $    | 30,691  |         |         | $ | 3,682   |        
|                                                                             |                                              |                          |         |         |         |      |         |         |         |   |         |        
|Basic net income per share:                                                  |                                              |                          |         |         |         |      |         |         |         |   |         |        
|Income from continuing operations                                            |                                              | $                        | .22     |         |         | $    | .11     |         |         | $ | .31     |        
|Income (loss) from discontinued operations                                   |                                              |                          |        |         |         |      | .66     |         |         |   | (.22    | )      
|                                                                             |                                              |                          |         |         |         |      |         |         |         |   |         |        
|Net income per share  basic                                                 |                                              | $                        | .22     |         |         | $    | .77     |         |         | $ | .09     |        
|                                                                             |                                              |                          |         |         |         |      |         |         |         |   |         |        
|Diluted net income per share:                                                |                                              |                          |         |         |         |      |         |         |         |   |         |        
|Income from continuing operations                                            |                                              | $                        | .22     |         |         | $    | .11     |         |         | $ | .31     |        
|Income (loss) from discontinued operations                                   |                                              |                          |        |         |         |      | .65     |         |         |   | (.22    | )      
|                                                                             |                                              |                          |         |         |         |      |         |         |         |   |         |        
|Net income per share  diluted                                               |                                              | $                        | .22     |         |         | $    | .76     |         |         | $ | .09     |        
|                                                                             |                                              |                          |         |         |         |      |         |         |         |   |         |        
|Weighted average shares used in computing net
    income per share  basic   |                                              |                          | 39,345  |         |         |      | 39,793  |         |         |   | 40,317  |        
|                                                                             |                                              |                          |         |         |         |      |         |         |         |   |         |        
|Weighted average shares used in computing net
    income per share  diluted |                                              |                          | 39,951  |         |         |      | 40,551  |         |         |   | 40,958  |        
|                                                                             |                                              |                          |         |         |         |      |         |         |         |   |         |        

See accompanying notes to consolidated financial
statements.

27



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##### Table of Contents



BOCA RESORTS, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS
EQUITY

(In thousands)


|                        |                                                  |              |        |              |   |        |     |        |   |             |     |          |  |               |   |   |  |   |         |        |   |   |        |        |  |   |         |        |  
|----------------------- | ------------------------------------------------ | ------------ | ------ | ------------ | - | ------ | --- | ------ | - | ----------- | --- | -------- |  | ------------- | - | - |  | - | ------- | ------ | - | - | ------ | ------ |  | - | ------- | ------ | -
|                        |                                                  |              |        |              |   |        |     |        |   |            
|                        |                                                  | Class A      |        | Class B      |   |        |     |        |   |            
|                        |                                                  | Common Stock |        | Common Stock |   |        |     |        |   |            
|                        |                                                  |              |        |              |   |        |     |        |   |            
|                        |                                                  | Number       |        |              |   | Number |     |        |   |             |     |          |  | Total        
|                        |                                                  | of           |        |              |   | of     |     |        |   | Contributed |     | Retained |  | Shareholders
|                        |                                                  | Shares       |        | Amount       |   | Shares |     | Amount |   | Capital     |     | Earnings |  | Equity       
|                        |                                                  |              |        |              |   |        |     |        |   |             |     |          |  |              
|Balance, June 30, 2000. |                                                  |              | 40,606 |              |   | $      | 406 |        |   |             | 255 |          |  | $             | 3 |   |  | $ | 484,849 |        |   | $ | 16,936 |        |  | $ | 502,194 |       
|                        | Net income                                       |              |        |             |   |        |     |       |   |             |     |         |  |               |   |  |  |   |         |       |   |   |        | 3,682  |  |   |         | 3,682  |  
|                        | Repurchase of Class A Common Stock at cost       |              |        | (593         | ) |        |     | (6     | ) |             |     |         |  |               |   |  |  |   |         | (6,821 | ) |   |        |       |  |   |         | (6,827 | )
|                        | Tax effect of stock issuance to acquire an asset |              |        |             |   |        |     |       |   |             |     |         |  |               |   |  |  |   |         | (4,561 | ) |   |        |       |  |   |         | (4,561 | )
|                        | Expiration of exchange rights                    |              |        | (448         | ) |        |     | (4     | ) |             |     |         |  |               |   |  |  |   |         | (9,639 | ) |   |        |       |  |   |         | (9,643 | )
|                        | Exercise of stock options                        |              |        | 56           |   |        |     |       |   |             |     |         |  |               |   |  |  |   |         | 546    |   |   |        |       |  |   |         | 546    |  
|                        | Other stock option activity                      |              |        |             |   |        |     |       |   |             |     |         |  |               |   |  |  |   |         | 252    |   |   |        |       |  |   |         | 252    |  
|                        |                                                  |              |        |              |   |        |     |        |   |             |     |          |  |               |   |   |  |   |         |        |   |   |        |        |  |   |         |       
|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  |  
|                        | 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    |  
|                        | Other stock option activity                      |              |        |             |   |        |     |       |   |             |     |         |  |               |   |  |  |   |         | 275    |   |   |        |       |  |   |         | 275    |  
|                        |                                                  |              |        |              |   |        |     |        |   |             |     |          |  |               |   |   |  |   |         |        |   |   |        |        |  |   |         |       
|Balance, June 30, 2003  |                                                  |              | 39,035 |              |   | $      | 390 |        |   |             | 255 |          |  | $             | 3 |   |  | $ | 459,548 |        |   | $ | 60,108 |        |  | $ | 520,049 |       
|                        |                                                  |              |        |              |   |        |     |        |   |             |     |          |  |               |   |   |  |   |         |        |   |   |        |        |  |   |         |       

See accompanying notes to consolidated financial
statements.

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##### Table of Contents



BOCA RESORTS, INC.

CONSOLIDATED STATEMENTS OF CASH
FLOWS

For the Years Ended June 30,


(In thousands)


|                                                   |                                                                                       |                                                                            |                                                         |         |        |         |         |         |         |         |       |          |        |          |  
|-------------------------------------------------- | ------------------------------------------------------------------------------------- | -------------------------------------------------------------------------- | ------------------------------------------------------- | ------- | ------ | ------- | ------- | ------- | ------- | ------- | ----- | -------- | ------ | -------- | -
|                                                   |                                                                                       | 2003                                                                       |                                                         | 2002    |        | 2001   
|                                                   |                                                                                       |                                                                            |                                                         |         |        |        
|Operating activities:                              |                                                                                       |                                                                            |                                                         |         |        |         |         |         |         |         |       |         
|                                                   | Net income                                                                            |                                                                            | $                                                       | 8,799   |        |         | $       | 30,691  |         |         | $     | 3,682    |       
|                                                   | Adjustments to reconcile net income to net cash
    provided by operating activities: |                                                                            |                                                         |         |        |         |         |         |         |         |       |          |       
|                                                   |                                                                                       | Amortization and depreciation                                              |                                                         |         | 38,026 |         |         |         | 34,790  |         |       |          | 35,490 |         
|                                                   |                                                                                       | Impairment loss on land parcel                                             |                                                         |         | 2,396  |         |         |         |        |         |       |          |       |         
|                                                   |                                                                                       | Gain on sale of land parcel                                                |                                                         |         | (2,291 | )       |         |         |        |         |       |          |       |         
|                                                   |                                                                                       | Non-cash compensation expense and other non-cash
    stock option activity |                                                         |         | 275    |         |         |         |        |         |       |          |       |         
|                                                   |                                                                                       | Loss on early retirement of debt                                           |                                                         |         | 149    |         |         |         | 3,073   |         |       |          | 2,026  |         
|                                                   |                                                                                       | Gain on disposition of discontinued operations,
    net of income taxes    |                                                         |         |       |         |         |         | (26,185 | )       |       |          |       |         
|                                                   |                                                                                       | Loss from discontinued operations, net of benefit
    for income taxes     |                                                         |         |       |         |         |         |        |         |       |          | 8,862  |         
|                                                   |                                                                                       | Imputed interest on indebtedness with no stated
    rate                   |                                                         |         |       |         |         |         |        |         |       |          | 725    |         
|                                                   |                                                                                       | Provision for deferred income taxes                                        |                                                         |         | 853    |         |         |         | (960    | )       |       |          | (6,779 | )       
|                                                   | Changes in operating assets and liabilities                                           |                                                                            |                                                         |         |        |         |         |         |         |         |       |          |       
|                                                   |                                                                                       | Accounts receivable                                                        |                                                         |         | 631    |         |         |         | 1,824   |         |       |          | (5,701 | )       
|                                                   |                                                                                       | Other assets                                                               |                                                         |         | 1,537  |         |         |         | 3,327   |         |       |          | (1,788 | )       
|                                                   |                                                                                       | Accounts payable and accrued expenses                                      |                                                         |         | 1,126  |         |         |         | (541    | )       |       |          | (5,644 | )       
|                                                   |                                                                                       | Deferred revenue and other liabilities                                     |                                                         |         | 544    |         |         |         | 2,358   |         |       |          | 12,210 |         
|                                                   |                                                                                       | Net assets/liabilities from discontinued
    operations                    |                                                         |         | (1,362 | )       |         |         |        |         |       |          | (6,050 | )       
|                                                   |                                                                                       |                                                                            |                                                         |         |        |         |         |         |         |         |       |         
|                                                   |                                                                                       |                                                                            | Net cash provided by operating activities               |         |        | 50,683  |         |         |         | 48,377  |       |          |        | 37,033   |  
|                                                   |                                                                                       |                                                                            |                                                         |         |        |         |         |         |         |         |       |         
|Investing activities:                              |                                                                                       |                                                                            |                                                         |         |        |         |         |         |         |         |       |         
|                                                   | Capital expenditures                                                                  |                                                                            |                                                         | (50,142 | )      |         |         | (66,965 | )       |         |       | (60,778  | )     
|                                                   | Change in restricted cash                                                             |                                                                            |                                                         | 80      |        |         |         | (221    | )       |         |       | 6,415    |       
|                                                   | Net proceeds from the sale of land parcels                                            |                                                                            |                                                         | 12,786  |        |         |         |        |         |         |       |         |       
|                                                   | Net proceeds from the disposition of discontinued
    operations                      |                                                                            |                                                         |        |        |         |         | 75,054  |         |         |       |         |       
|                                                   | Net proceeds from the sale of the Arizona
    Biltmore Resort & Spa                   |                                                                            |                                                         |        |        |         |         |        |         |         |       | 278,968  |       
|                                                   | Cash used in investing activities from
    discontinued operations                    |                                                                            |                                                         |        |        |         |         |        |         |         |       | (2,258   | )     
|                                                   |                                                                                       |                                                                            |                                                         |         |        |         |         |         |         |         |       |         
|                                                   |                                                                                       |                                                                            | Net cash provided by (used in) investing
    activities |         |        | (37,276 | )       |         |         | 7,868   |       |          |        | 222,347  |  
|                                                   |                                                                                       |                                                                            |                                                         |         |        |         |         |         |         |         |       |         
|Financing activities:                              |                                                                                       |                                                                            |                                                         |         |        |         |         |         |         |         |       |         
|                                                   | Borrowings under credit facilities                                                    |                                                                            |                                                         | 42,000  |        |         |         | 43,195  |         |         |       | 38,430   |       
|                                                   | Payments under long-term debt agreements and
    credit facilities                    |                                                                            |                                                         | (42,941 | )      |         |         | (24,726 | )       |         |       | (222,376 | )     
|                                                   | Repurchases of senior subordinated notes payable                                      |                                                                            |                                                         | (2,750  | )      |         |         | (80,065 | )       |         |       | (67,040  | )     
|                                                   | Repurchases of common stock                                                           |                                                                            |                                                         | (6,174  | )      |         |         | (2,305  | )       |         |       | (6,827   | )     
|                                                   | Proceeds from exercise of stock options                                               |                                                                            |                                                         | 877     |        |         |         | 1,438   |         |         |       | 546      |       
|                                                   |                                                                                       |                                                                            |                                                         |         |        |         |         |         |         |         |       |         
|                                                   |                                                                                       |                                                                            | Net cash used in financing activities                   |         |        | (8,988  | )       |         |         | (62,463 | )     |          |        | (257,267 | )
|                                                   |                                                                                       |                                                                            |                                                         |         |        |         |         |         |         |         |       |         
|Cash provided by (used in) continuing operations   |                                                                                       |                                                                            | 5,781                                                   |         |        |         | (81,272 | )       |         |         | 1,559 |         
|Cash provided by (used in) discontinued operations |                                                                                       |                                                                            | (1,362                                                  | )       |        |         | 75,054  |         |         |         | 554   |         
|Cash and cash equivalents, at beginning of period  |                                                                                       |                                                                            | 3,691                                                   |         |        |         | 9,909   |         |         |         | 7,796 |         
|                                                   |                                                                                       |                                                                            |                                                         |         |        |         |         |         |         |         |       |         
|Cash and cash equivalents, at end of period        |                                                                                       | $                                                                          | 8,110                                                   |         |        | $       | 3,691   |         |         | $       | 9,909 |         
|                                                   |                                                                                       |                                                                            |                                                         |         |        |         |         |         |         |         |       |         

See accompanying notes to consolidated financial
statements.

29



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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

June 30, 2003


(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 and the accompanying
Consolidated Financial Statements presented herein have been
restated to report separately the net assets and operating
results of this discontinued operation. In addition, the Company
sold the Arizona Biltmore Resort & Spa in December 2000.

(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 consist primarily of
cash in banks and highly liquid investments with original
maturities of 90 days or less when purchased. At
June 30, 2003 and 2002, restricted cash primarily consisted
of purchased guarantees (letters of credit) that ensure the
Companys payment to third parties under certain lease
agreements. 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 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.

30



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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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 resumed until
such loans become contractually current. The amount of loans
more than three months contractually past due was not material
at June 30, 2003. 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.

Property
and Equipment

Property and equipment is stated at cost less
accumulated depreciation and amortization. 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,
2003, 2002 and 2001 totaled $1.0 million, $1.9 million and $1.1
million, respectively. Depreciation and amortization 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   | 

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.

Intangible
Assets

Intangible assets consist of goodwill (which
totaled $34.7 million at June 30, 2003 and 2002), 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, 2003 and 2002). On July 1, 2001,
the Company adopted Statement of Financial Accounting Standards
(SFAS) No. 142, Goodwill and Other
Intangible Assets which states, among other things, that
goodwill is no longer 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, both upon adoption of
SFAS No. 142 and annually as of July 1, 2003 and 2002.
The Company had no impairment of goodwill for the years ended
June 30, 2003 and 2002 or at July 1, 2003. During the
year ended June 30, 2001 goodwill was amortized on a
straight-line basis over 40 years. The following table sets
forth reported net income and earnings per share, as adjusted to

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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

exclude goodwill amortization expense for the
year ended June 30, 2001 (000s omitted, except per
share amounts):

|                                                                                          |  |   |        | 
|----------------------------------------------------------------------------------------- |  | - | ------ | 
|Income from continuing operations, as reported                                            |  | $ | 12,544 | 
|Add back of amortization expense, net of taxes                                            |  |   | 976    | 
|                                                                                          |  |   |        | 
|Income from continuing operations, as adjusted                                            |  | $ | 13,520 | 
|                                                                                          |  |   |        | 
|Net income, as reported                                                                   |  | $ | 3,682  | 
|Add back of amortization expense, net of taxes                                            |  |   | 976    | 
|                                                                                          |  |   |        | 
|Net income, as adjusted                                                                   |  | $ | 4,658  | 
|                                                                                          |  |   |        | 
|Earnings per common share from continuing
    operations (basic and diluted), as reported |  | $ | .31    | 
|                                                                                          |  |   |        | 
|Earnings per common share from continuing
    operations (basic), as adjusted             |  | $ | .34    | 
|                                                                                          |  |   |        | 
|Earnings per common share from continuing
    operations (diluted), as adjusted           |  | $ | .33    | 
|                                                                                          |  |   |        | 
|Earnings per common share (basic and diluted), as
    reported                            |  | $ | .09    | 
|                                                                                          |  |   |        | 
|Earnings per common share (basic), as adjusted                                            |  | $ | .12    | 
|                                                                                          |  |   |        | 
|Earnings per common share (diluted), as adjusted                                          |  | $ | .11    | 
|                                                                                          |  |   |        | 

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. 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.

Financial
Instruments

SFAS No. 107, Disclosures about Fair
Value of Financial Instruments requires disclosure of the
fair value of financial instruments held by the Company. The
carrying amounts of cash and cash equivalents, restricted cash,
accounts receivable and accounts payable approximates fair value
due to their short-term nature. The carrying amounts of Premier
Club notes receivable and credit line and notes payable
approximates fair value based on discounted future cash flows.
The carrying amount of the Companys senior subordinated
notes payable at June 30, 2003 is $190.1 million, compared
to an estimated fair value of $204.4 million, which is based on
the quoted market price as of June 30, 2003 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 maturity.

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 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

32



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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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 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, $4.2 million and $5.3 million for the years ended
June 30, 2003, 2002 and 2001, 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 Accounting Principles Board (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. The
following

33



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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

table 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):

|                                                                                                                             |  |      |       |      |  |      |        |  |  |   |       |  
|---------------------------------------------------------------------------------------------------------------------------- |  | ---- | ----- | ---- |  | ---- | ------ |  |  | - | ----- | -
|                                                                                                                             |  | 2003 |       | 2002 |  | 2001
|                                                                                                                             |  |      |       |      |  |     
|Net income as reported                                                                                                       |  | $    | 8,799 |      |  | $    | 30,691 |  |  | $ | 3,682 |  
|Less: total stock based compensation determined
    under fair value based method for awards, net of related tax
    effects |  |      | 1,591 |      |  |      | 1,861  |  |  |   | 4,412 |  
|                                                                                                                             |  |      |       |      |  |      |        |  |  |   |       |  
|Pro forma net income (loss)                                                                                                  |  | $    | 7,208 |      |  | $    | 28,830 |  |  | $ | (730  | )
|                                                                                                                             |  |      |       |      |  |      |        |  |  |   |       |  
|Basic net income per share:                                                                                                  |  |      |       |      |  |      |        |  |  |   |       |  
|Income per share from continuing operations, as
    reported                                                                 |  | $    | .22   |      |  | $    | .11    |  |  | $ | .31   |  
|Income (loss) per share from discontinued
    operations, as reported                                                        |  |      |      |      |  |      | .66    |  |  |   | (.22  | )
|                                                                                                                             |  |      |       |      |  |      |        |  |  |   |       |  
|Net income per share  basic, as reported                                                                                    |  | $    | .22   |      |  | $    | .77    |  |  | $ | .09   |  
|                                                                                                                             |  |      |       |      |  |      |        |  |  |   |       |  
|Diluted net income per share:                                                                                                |  |      |       |      |  |      |        |  |  |   |       |  
|Income per share from continuing operations, as
    reported                                                                 |  | $    | .22   |      |  | $    | .11    |  |  | $ | .31   |  
|Income (loss) per share from discontinued
    operations, as reported                                                        |  |      |      |      |  |      | .65    |  |  |   | (.22  | )
|                                                                                                                             |  |      |       |      |  |      |        |  |  |   |       |  
|Net income per share  diluted, as reported                                                                                  |  | $    | .22   |      |  | $    | .76    |  |  | $ | .09   |  
|                                                                                                                             |  |      |       |      |  |      |        |  |  |   |       |  
|Basic net income per share, Pro Forma:                                                                                       |  |      |       |      |  |      |        |  |  |   |       |  
|Income per share from continuing operations, Pro
    forma                                                                   |  | $    | .18   |      |  | $    | .07    |  |  | $ | .20   |  
|Income (loss) per share from discontinued
    operations, Pro forma                                                          |  |      |      |      |  |      | .66    |  |  |   | (.22  | )
|                                                                                                                             |  |      |       |      |  |      |        |  |  |   |       |  
|Net income (loss) per share  basic,
    Pro forma                                                                           |  | $    | .18   |      |  | $    | .72    |  |  | $ | (.02  | )
|                                                                                                                             |  |      |       |      |  |      |        |  |  |   |       |  
|Diluted income per share, Pro Forma:                                                                                         |  |      |       |      |  |      |        |  |  |   |       |  
|Income per share from continuing operations, Pro
    forma                                                                   |  | $    | .18   |      |  | $    | .07    |  |  | $ | .20   |  
|Income (loss) per share from discontinued
    operations, Pro forma                                                          |  |      |      |      |  |      | .65    |  |  |   | (.22  | )
|                                                                                                                             |  |      |       |      |  |      |        |  |  |   |       |  
|Net income (loss) per share  diluted,
    Pro forma                                                                         |  | $    | .18   |      |  | $    | .71    |  |  | $ | (.02  | )
|                                                                                                                             |  |      |       |      |  |      |        |  |  |   |       |  

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. Warrants totaling
325,000 for the years ended June 30, 2002 and 2001 have been
excluded from the computation of diluted earnings per share. 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):

|                                            |  |      |        |      |  |      |        |  |  |  |        | 
|------------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ |  |  |  | ------ | 
|                                            |  | 2003 |        | 2002 |  | 2001
|                                            |  |      |        |      |  |     
|Basic weighted average shares outstanding   |  |      | 39,345 |      |  |      | 39,793 |  |  |  | 40,317 | 
|Stock options                               |  |      | 606    |      |  |      | 758    |  |  |  | 641    | 
|                                            |  |      |        |      |  |      |        |  |  |  |        | 
|Diluted weighted average shares outstanding |  |      | 39,951 |      |  |      | 40,551 |  |  |  | 40,958 | 
|                                            |  |      |        |      |  |      |        |  |  |  |        | 

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.

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 and (3) warrants to purchase 869,810 shares of
Class A Common Stock at a purchase price of $29.01 per
share. The warrants expired unexercised in December 1999 and the
predecessor owners had the ability to exchange their rights for
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 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 April 30, 2001, 90% of the exchange
rights were exercised leaving just 447,892, expired and
unexercised. Upon issuance of the shares relating to rights that
were exercised, the tax effect of the book-tax bases difference
resulting from the exchange is reflected as an adjustment to
contributed capital in the accompanying Consolidated Statements
of Shareholders Equity. At June 30, 2001,
shareholders equity was reduced to exclude the 447,892
expired, unexercised exchange rights based on the initial per
share allocation of purchase price and a corresponding liability
(reflected in Other liabilities in the accompanying
Consolidated Balance Sheets) was recorded to reflect the outside
proportionate minority interest.

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 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, 2003, 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 August 2001, the FASB issued SFAS
No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets. The new rules apply to the
classification and impairment analysis conducted on long-lived
assets other than intangible assets and was adopted by the
Company on July 1, 2002. The new rules provide a single
accounting treatment for the impairment of long-lived assets and
implementation guidance regarding impairment calculations. This
statement also modifies accounting and disclosure requirements
for discontinued operations. The adoption of SFAS No. 144
did not have a material impact on the Companys results of
operations or financial position.

In April 2002, the FASB issued SFAS No. 145,
which rescinds SFAS No. 4, Reporting Gains and Losses
from Extinguishment of Debt. Previously, SFAS No. 4
required all gains and losses from extinguishment of debt to be
aggregated and, if material, classified as an extraordinary
item, net of related income tax effect. Under SFAS No. 145,
gains and losses from extinguishment of debt are classified as
extraordinary items only if they meet the criteria in APB
Opinion No. 30, Reporting the Results of Operations
 Discontinued Events and Extraordinary Items.
Applying the provisions of APB Opinion No. 30 distinguishes
transactions that are part of an entitys recurring
operations from those that are unusual or

35



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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

infrequent, or that meet the criteria for
classification as an extraordinary item. The Company adopted
SFAS No. 145 on July 1, 2002. Accordingly, losses on
the retirement of debt that were classified as an extraordinary
item in the prior periods presented, have been reclassified to
recurring operations.

In June 2002, the FASB issued SFAS No. 146,
Accounting for Costs Associated with Exit or Disposal
Activities. This Statement addresses financial accounting
and reporting for costs associated with exit or disposal
activities and nullifies Emerging Issues Task Force Issue
No. 94-3, Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity.
The provisions of this Statement are effective for exit or
disposal activities initiated after March 31, 2003. This
Statement requires that a liability for a cost associated with
an exit or disposal activity be recognized when the liability is
incurred. Under Issue 94-3, a liability for an exit cost was
recognized at the date of an entitys commitment to an exit
plan. The adoption of SFAS No. 146 did not have a material
impact on the Companys results of operations or financial
position.

In November 2002, the FASB issued FASB
Interpretation No. (FIN) 45, Guarantors
Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others, an interpretation
of SFAS No. 5, 57, and 107 and rescission of
FIN 34. FIN 45 addresses the disclosures to be made
by a guarantor in its interim and annual financial statements
about its obligations under guarantees. It also requires that a
guarantor recognize a liability, at the inception of a
guarantee, for the fair value of the obligation undertaken in
issuing the guarantee. The initial measurement and recognition
provisions of FIN 45 are effective for guarantees issued or
modified after December 31, 2002. The adoption of FIN 45
did not impact the Companys results of operations or
financial position.

In December 2002, the FASB issued SFAS
No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure. This
statement amends SFAS No. 123, Accounting for
Stock-Based Compensation to provide alternative methods of
transition for a voluntary change to the fair value based method
of accounting for stock-based employee compensation. In
addition, this statement amends the disclosure requirements of
SFAS No. 123 to require prominent disclosures in both
annual and interim financial statements about the method of
accounting for stock-based compensation and the effect of the
method used on reporting results. The provisions of this
statement have been incorporated into this Annual Report on
Form 10-K. See Note 11.

In January 2003, the FASB issued FIN 46
Consolidations of Variable Interest Entities. This
interpretation requires a company to consolidate variable
interest entities (VIE) if the enterprise is a
primary beneficiary (holds a majority of the variable interest)
of the VIE and the VIE possesses specific characteristics. It
also requires additional disclosure for parties involved with
VIEs. Since the Company does not have any unconsolidated VIEs,
the adoption of FIN 46 did not have a material impact on
the Companys results of operations or financial position.

Reclassifications

Certain amounts previously reported have been
reclassified to conform with the current year presentation.

(3) Supplemental Cash Flow
Information

Interest
and Income Taxes Paid

Interest paid (net of amounts capitalized)
totaled $20.1 million, $23.2 million and $47.2 million during
the years ended June 30, 2003, 2002 and 2001, respectively.
Income taxes paid totaled $3.7 million, $3.1 million and $9.9
million during the years ended June 30, 2003, 2002 and 2001,
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. The income taxes paid
during

36



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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

2001 included certain estimated quarterly tax
payments for fiscal 2001 as well as actual income taxes incurred
for fiscal 2000. See Note 15.

Non-Cash
Investing and Financing Activities

The Company sold the Arizona Biltmore Resort
& Spa in December 2000. In connection with such transaction,
the buyer of the property assumed indebtedness totaling $59.4
million.

(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 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):

|           |  |   |        | 
|---------- |  | - | ------ | 
|2004       |  | $ | 3,631  | 
|2005       |  |   | 2,787  | 
|2006       |  |   | 2,224  | 
|2007       |  |   | 1,679  | 
|2008.      |  |   | 1,063  | 
|Thereafter |  |   | 404    | 
|           |  |   |        | 
|           |  | $ | 11,788 | 
|           |  |   |        | 

(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 presented
herein report separately the net assets and operating results of
this discontinued operation. Operating losses totaling $2.9
million from the measurement date through June 30, 2001
were deferred and were recognized during the quarter ended
September 30, 2001 (the quarter in which the gain on sale
was recognized). A portion of the Companys interest
expense has been included in discontinued operations for the
year ended June 30, 2001 based upon its average borrowing
cost and the average funds the discontinued operations borrowed
from the parent. Selling, general and administrative expenses
incurred by the Company have also been included in discontinued
operations for the year ended June 30, 2001 based upon the
specific identification method. Summary operating results of the
discontinued operations for the year ended June 30, 2001
are as follows (000s omitted):

37



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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

|                                                          |  |   |         |  
|--------------------------------------------------------- |  | - | ------- | -
|Revenue                                                   |  | $ | 55,213  |  
|                                                          |  |   |         |  
|Loss from discontinued operations before income
    taxes |  | $ | (14,217 | )
|Benefit for income taxes                                  |  |   | 5,355   |  
|                                                          |  |   |         |  
|Loss from discontinued operations                         |  | $ | (8,862  | )
|                                                          |  |   |         |  

The net liabilities of discontinued operations
totaling $1.1 million and $2.4 million in the Consolidated
Balance Sheets at June 30, 2003 and 2002, respectively,
consists of estimated income taxes payable and other disposal
costs.

In December 2000, the Company executed a
definitive agreement and closed on the sale of the Arizona
Biltmore Resort & Spa for $335.0 million, plus certain
working capital adjustments. The Company received $283.0 million
in gross cash proceeds and the buyer of the property assumed
$59.4 million in indebtedness. The net proceeds from the asset
sale amounted to $279.0 million and was substantially used to
repay indebtedness. The gain on the asset sale was nominal and
is included in interest and other income in the Consolidated
Statement of Operations for the year ended June 30, 2001.
The Company was contingently liable for certain litigation
relating to the Arizona Biltmore Resort & Spa, which was
settled in July 2002 for $2.9 million. Such amount is included
in accounts payable and accrued liabilities at June 30,
2002 in the accompanying Consolidated Balance Sheets. A portion
of the Companys interest expense has been included in the
operating results of the Arizona Biltmore Resort & Spa for
the year ended June 30, 2001 based upon the debt balance
attributable to its operations. Selling, general and
administrative expenses incurred by the Company for the year
ended June 30, 2001 have also been included in the
operating results of the Arizona Biltmore Resort & Spa based
upon the specific identification method. Summary operating
results of the Arizona Biltmore Resort & Spa for the period
owned for the year ended June 30, 2001 is as follows
(000s omitted):

|                 |  |   |        | 
|---------------- |  | - | ------ | 
|Revenue          |  | $ | 39,856 | 
|                 |  |   |        | 
|Operating income |  | $ | 8,446  | 
|                 |  |   |        | 






|    |                            
|--- | ---------------------------
|(6) | Property and Equipment, net

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

|                                                |  |      |          |      |  |   |          |  
|----------------------------------------------- |  | ---- | -------- | ---- |  | - | -------- | -
|                                                |  | 2003 |          | 2002
|                                                |  |      |          |     
|Land and land improvements                      |  | $    | 274,172  |      |  | $ | 285,933  |  
|Buildings and improvements                      |  |      | 566,129  |      |  |   | 544,579  |  
|Furniture, fixtures and equipment               |  |      | 124,048  |      |  |   | 110,598  |  
|Construction in progress                        |  |      | 15,990   |      |  |   | 4,733    |  
|                                                |  |      |          |      |  |   |          |  
|                                                |  |      | 980,339  |      |  |   | 945,843  |  
|Less: accumulated depreciation and amortization |  |      | (156,658 | )    |  |   | (123,213 | )
|                                                |  |      |          |      |  |   |          |  
|                                                |  | $    | 823,681  |      |  | $ | 822,630  |  
|                                                |  |      |          |      |  |   |          |  

Depreciation and amortization expense on property
and equipment included in the Consolidated Statements of
Operations was $38.0 million, $34.8 million and $33.8 million
for the years ended June 30, 2003, 2002 and 2001,
respectively.

(7) Accounts Payable and Accrued
Expenses

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

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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

|                                  |  |      |        |      |  |   |        | 
|--------------------------------- |  | ---- | ------ | ---- |  | - | ------ | 
|                                  |  | 2003 |        | 2002
|                                  |  |      |        |     
|Accrued payroll and related costs |  | $    | 9,471  |      |  | $ | 7,546  | 
|Accounts payable                  |  |      | 7,942  |      |  |   | 6,404  | 
|Other accrued liabilities         |  |      | 5,430  |      |  |   | 4,525  | 
|Accrued property taxes            |  |      | 5,098  |      |  |   | 4,688  | 
|Accrued interest payable          |  |      | 4,065  |      |  |   | 4,159  | 
|Accrued legal settlements         |  |      | 250    |      |  |   | 2,900  | 
|Income taxes payable              |  |      | 1,259  |      |  |   |       | 
|                                  |  |      |        |      |  |   |        | 
|                                  |  | $    | 33,515 |      |  | $ | 30,222 | 
|                                  |  |      |        |      |  |   |        | 

(8) Credit Line and Note
Payable

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

|                                                                                                                   |  |      |        |      |  |   |        | 
|------------------------------------------------------------------------------------------------------------------ |  | ---- | ------ | ---- |  | - | ------ | 
|                                                                                                                   |  | 2003 |        | 2002
|                                                                                                                   |  |      |        |     
|Revolving credit facility with bank, variable
    interest rate, 4.31% at June 30, 2003, due on June 30,
    2005. |  | $    | 18,000 |      |  | $ | 18,695 | 
|Capital lease on operating equipment, fixed
    interest rate of 8.0%, due on November 15, 2003.                   |  |      | 79     |      |  |   | 325    | 
|                                                                                                                   |  |      |        |      |  |   |        | 
|Total outstanding including current portion                                                                        |  | $    | 18,079 |      |  | $ | 19,020 | 
|                                                                                                                   |  |      |        |      |  |   |        | 

The Companys revolving credit line requires
the maintenance of customary capital expenditure reserves for
the replacement of assets. In addition, the Company is 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, 2003 and 2002. The Companys
availability under its revolving credit line was $71.8 million
at June 30, 2003. Minimum principal payments required on
the Companys credit line and note payable for fiscal years
subsequent to 2003 are as follows (000s omitted):

|     |  |   |        | 
|---- |  | - | ------ | 
|2004 |  | $ | 79     | 
|2005 |  |   | 18,000 | 
|     |  |   |        | 
|     |  | $ | 18,079 | 
|     |  |   |        | 

(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 is payable semiannually on
April 15 and October 15 of each year. The Notes are
redeemable at the option of the Company, in whole or in part, in
cash, on or after April 15, 2004, together with accrued and
unpaid interest, if any, to the date of redemption. The optional
redemption prices for the twelve month periods beginning
April 15 are: 2004  104.9375%; 2005 
103.2910%; 2006  101.6450% and 2007 and
thereafter  100.00%.

During the years ended June 30, 2003, 2002
and 2001, the Company repurchased $2.8 million, $80.1 million
and $67.0 million principal amount of Notes, respectively, and
recognized a loss of $149,000, $3.1 million and $2.0 million,
respectively. 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.

39



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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The Notes are 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
secure its obligations under the Notes, and the Notes are
effectively subordinated to secured indebtedness of the Company
to any third party to the extent of assets serving as security.

The Notes are unconditionally guaranteed, jointly
and severally, by each of the Companys existing and future
domestic subsidiaries (the Subsidiary Guarantors).
The Note guarantees are senior obligations of the Subsidiary
Guarantors and rank pari passu in right of payment with all
existing and future senior indebtedness of such Subsidiary
Guarantors and senior in right of payment to all existing and
future subordinated indebtedness of such Subsidiary Guarantors.

Each subsidiary guarantor is 100% owned by the
parent, with the exception of a minor subsidiary in which there
is a 1% minority interest (and the Company has 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 contain 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. Additionally, certain asset sales
or specific kinds of change of control may require the Company
to offer to repurchase the Notes. The Company was in compliance
with these covenants at June 30, 2003 and 2002.

(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.

40



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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, 2003 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, 2000.             |  |           | 2,310,040  |             |  |               | 5,142,644 |                |  | $           | 9.31 - $26.38  |  |  | $ | 14.56 |  |  |  | 2,269,633 | 
|Granted                               |  |           | (1,140,000 | )           |  |               | 1,140,000 |                |  | $           | 13.69          |  |  | $ | 13.69 |  |  |  |           | 
|Exercised                             |  |           |           |             |  |               | (55,613   | )              |  | $           | 9.31 - $10.00  |  |  | $ | 9.82  |  |  |  |           | 
|Forfeited                             |  |           | 71,062     |             |  |               | (71,062   | )              |  | $           | 9.31 - $13.69  |  |  | $ | 10.82 |  |  |  |           | 
|                                      |  |           |            |             |  |               |           |                |  |             |                |  |  |   |       |  |  |  |           | 
|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 | 
|                                      |  |           |            |             |  |               |           |                |  |             |                |  |  |   |       |  |  |  |           | 

The weighted average exercise price and weighted
average remaining contractual life of the Companys
outstanding options at June 30, 2003 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  $9.32           |  |             | 1,669,272 |             |  |          | 6.7 years |             |  | $             | 9.32  |  |  |  | 1,125,147 |  |  | $ | 9.32  | 
|$ 9.50  $10.19          |  |             | 1,403,542 |             |  |          | 5.2 years |             |  | $             | 9.88  |  |  |  | 1,202,292 |  |  | $ | 9.89  | 
|$10.38  $13.69          |  |             | 1,863,000 |             |  |          | 8.1 years |             |  | $             | 12.46 |  |  |  | 640,000   |  |  | $ | 13.14 | 
|$17.25  $25.00          |  |             | 1,430,241 |             |  |          | 4.2 years |             |  | $             | 18.65 |  |  |  | 1,430,241 |  |  | $ | 18.65 | 
|$26.38                   |  |             | 615,000   |             |  |          | 4.0 years |             |  | $             | 26.38 |  |  |  | 615,000   |  |  | $ | 26.38 | 
|                         |  |             |           |             |  |          |           |             |  |               |       |  |  |  |           |  |  |   |       | 
|                         |  |             | 6,981,055 |             |  |          | 6.0 years |             |  | $             | 13.68 |  |  |  | 5,012,680 |  |  | $ | 14.70 | 
|                         |  |             |           |             |  |          |           |             |  |               |       |  |  |  |           |  |  |   |       | 

41



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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The following table 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):

|                                                                                                                             |  |      |       |      |  |      |        |  |  |   |       |  
|---------------------------------------------------------------------------------------------------------------------------- |  | ---- | ----- | ---- |  | ---- | ------ |  |  | - | ----- | -
|                                                                                                                             |  | 2003 |       | 2002 |  | 2001
|                                                                                                                             |  |      |       |      |  |     
|Net income as reported                                                                                                       |  | $    | 8,799 |      |  | $    | 30,691 |  |  | $ | 3,682 |  
|Less: total stock based compensation determined
    under fair value based method for awards, net of related tax
    effects |  |      | 1,591 |      |  |      | 1,861  |  |  |   | 4,412 |  
|                                                                                                                             |  |      |       |      |  |      |        |  |  |   |       |  
|Pro forma net income (loss)                                                                                                  |  | $    | 7,208 |      |  | $    | 28,830 |  |  | $ | (730  | )
|                                                                                                                             |  |      |       |      |  |      |        |  |  |   |       |  
|Basic net income per share:                                                                                                  |  |      |       |      |  |      |        |  |  |   |       |  
|Income per share from continuing operations, as
    reported                                                                 |  | $    | .22   |      |  | $    | .11    |  |  | $ | .31   |  
|Income (loss) per share from discontinued
    operations, as reported                                                        |  |      |      |      |  |      | .66    |  |  |   | (.22  | )
|                                                                                                                             |  |      |       |      |  |      |        |  |  |   |       |  
|Net income per share  basic, as reported                                                                                    |  | $    | .22   |      |  | $    | .77    |  |  | $ | .09   |  
|                                                                                                                             |  |      |       |      |  |      |        |  |  |   |       |  
|Diluted net income per share:                                                                                                |  |      |       |      |  |      |        |  |  |   |       |  
|Income per share from continuing operations, as
    reported                                                                 |  | $    | .22   |      |  | $    | .11    |  |  | $ | .31   |  
|Income (loss) per share from discontinued
    operations, as reported                                                        |  |      |      |      |  |      | .65    |  |  |   | (.22  | )
|                                                                                                                             |  |      |       |      |  |      |        |  |  |   |       |  
|Net income per share  diluted, as reported                                                                                  |  | $    | .22   |      |  | $    | .76    |  |  | $ | .09   |  
|                                                                                                                             |  |      |       |      |  |      |        |  |  |   |       |  
|Basic net income per share, Pro Forma:                                                                                       |  |      |       |      |  |      |        |  |  |   |       |  
|Income per share from continuing operations, Pro
    forma                                                                   |  | $    | .18   |      |  | $    | .07    |  |  | $ | .20   |  
|Income (loss) per share from discontinued
    operations, Pro forma                                                          |  |      |      |      |  |      | .66    |  |  |   | (.22  | )
|                                                                                                                             |  |      |       |      |  |      |        |  |  |   |       |  
|Net income (loss) per share  basic,
    Pro forma                                                                           |  | $    | .18   |      |  | $    | .72    |  |  | $ | (.02  | )
|                                                                                                                             |  |      |       |      |  |      |        |  |  |   |       |  
|Diluted income per share, Pro Forma:                                                                                         |  |      |       |      |  |      |        |  |  |   |       |  
|Income per share from continuing operations, Pro
    forma                                                                   |  | $    | .18   |      |  | $    | .07    |  |  | $ | .20   |  
|Income (loss) per share from discontinued
    operations, Pro forma                                                          |  |      |      |      |  |      | .65    |  |  |   | (.22  | )
|                                                                                                                             |  |      |       |      |  |      |        |  |  |   |       |  
|Net income (loss) per share  diluted,
    Pro forma                                                                         |  | $    | .18   |      |  | $    | .71    |  |  | $ | (.02  | )
|                                                                                                                             |  |      |       |      |  |      |        |  |  |   |       |  

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:

|                        |  |      |         |      |  |      |         |  |  |  |         | 
|----------------------- |  | ---- | ------- | ---- |  | ---- | ------- |  |  |  | ------- | 
|                        |  | 2003 |         | 2002 |  | 2001
|                        |  |      |         |      |  |     
|Risk free interest rate |  |      | 1.00%   |      |  |      | 1.50%   |  |  |  | 4.00%   | 
|Expected lives          |  |      | 6 years |      |  |      | 6 years |  |  |  | 6 years | 
|Expected volatility     |  |      | 30%     |      |  |      | 30%     |  |  |  | 30%     | 

The weighted average fair value of options
granted for the years ended June 30, 2003, 2002 and 2001
was $3.09, $4.44 and $5.41, respectively.

(12) Commitments and
Contingencies

Capital
Expenditures

At June 30, 2003, the Company had
commitments outstanding for capital expenditures under purchase
orders and contracts of $7.7 million associated with capital
projects at several of the Companys properties, the

42



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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

most significant of which relates to a marina
renovation at the Radisson Bahia Mar Resort and Yachting Center.

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 $764,000, $780,000
and $891,000 for the years ended June 30, 2003, 2002 and
2001, 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, 2003.

Future minimum lease obligations under various
non-cancelable operating leases with initial terms in excess of
one year at June 30, 2003 (including the lease described in
the preceding paragraph) are as follows (000s omitted):

|           |  |   |        | 
|---------- |  | - | ------ | 
|2004       |  | $ | 1,584  | 
|2005       |  |   | 1,205  | 
|2006       |  |   | 763    | 
|2007       |  |   | 564    | 
|2008       |  |   | 454    | 
|Thereafter |  |   | 16,442 | 
|           |  |   |        | 
|           |  | $ | 21,012 | 
|           |  |   |        | 

Letters
of Credit

As of June 30, 2003, the Company has two
letters of credit, which secure two operating leases. The
letters of credit are collateralized by certificates of deposit
totaling $500,000 and are included in restricted cash in the
accompanying Consolidated Balance Sheets. The two operating
leases and corresponding letters of credit expire on
November 1, 2003.

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. Accruals for claims
under the Companys self-insurance program are recorded on
a claim-incurred basis. Under this program, the estimated
liability for claims incurred but unpaid at June 30, 2003
and 2002 was not material. In connection with the Companys
workers compensation self-insurance agreement (which was
originated during the year ended June 30, 2003), the
Company has obtained a standby letter of credit supporting the
estimated liability. Such standby letter of credit was not
material at June 30, 2003.

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.

43



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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, $1.4 million and $1.6 million
for the years ended June 30, 2003, 2002 and 2001,
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, 2003.

The Company has a license agreement with Radisson
Hotels International, Inc. (Radisson), which expires
in July 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 $406,000, $383,000 and $469,000 for
the years ended June 30, 2003, 2002 and 2001, 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.

44



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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, $2.7 million and $3.7 million
for the years ended June 30, 2003, 2002 and 2001,
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, 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, 2003 was principally due to
Mr. Rochons resignation. Prior to that, the
management fee was equal to 1% of total revenue of the Company.
It is anticipated that the management agreement and fee will
continue to be reviewed annually by the Company. 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 and $448,000 during the years ended June 30, 2002
and 2001, respectively, 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,
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):

|                                      |  |      |         |      |  |   |         |  
|------------------------------------- |  | ---- | ------- | ---- |  | - | ------- | -
|                                      |  | 2003 |         | 2002
|                                      |  |      |         |     
|Deferred tax assets:                  |  |      |         |      |  |   |         |  
|Deferred revenue and other            |  | $    | 13,242  |      |  | $ | 22,199  |  
|Deferred tax liabilities:             |  |      |         |      |  |   |         |  
|Book basis in property over tax basis |  |      | (47,484 | )    |  |   | (52,251 | )
|                                      |  |      |         |      |  |   |         |  
|Net deferred tax liabilities          |  | $    | (34,242 | )    |  | $ | (30,052 | )
|                                      |  |      |         |      |  |   |         |  

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).

|                                               |         |      |       |       |  |      |       |       |  |   |        |        | 
|---------------------------------------------- | ------- | ---- | ----- | ----- |  | ---- | ----- | ----- |  | - | ------ | ------ | 
|                                               |         | 2003 |       | 2002  |  | 2001
|                                               |         |      |       |       |  |     
|Current:                                       |         |      |       |       |  |      |       |       |  |   |        |       
|                                               | Federal |      | $     | 4,224 |  |      | $     | 1,674 |  |   | $      | 12,033 | 
|                                               | State   |      |       | 431   |  |      |       | 622   |  |   |        | 1,427  | 
|Federal and state deferred provision (benefit) |         |      | 853   |       |  |      | (960  | )     |  |   | (6,779 | )     
|Change in valuation allowance                  |         |      |      |       |  |      |      |       |  |   | (2,747 | )     
|                                               |         |      |       |       |  |      |       |       |  |   |        |       
|Provision for income taxes                     |         | $    | 5,508 |       |  | $    | 1,336 |       |  | $ | 3,934  |       
|                                               |         |      |       |       |  |      |       |       |  |   |        |       

45



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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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, 2003, 2002 and 2001 is set forth below
(000s omitted).

|                                                                                    |  |      |       |      |  |      |       |   |  |   |        |  
|----------------------------------------------------------------------------------- |  | ---- | ----- | ---- |  | ---- | ----- | - |  | - | ------ | -
|                                                                                    |  | 2003 |       | 2002 |  | 2001
|                                                                                    |  |      |       |      |  |     
|Computed expected income tax expense based on
    statutory federal income tax rate |  | $    | 5,007 |      |  | $    | 2,045 |   |  | $ | 5,767  |  
|State income taxes, net of federal benefit                                          |  |      | 512   |      |  |      | 193   |   |  |   | 660    |  
|Non-deductible amortization                                                         |  |      |      |      |  |      |      |   |  |   | 365    |  
|Non-deductible expenses                                                             |  |      | 382   |      |  |      | 601   |   |  |   | 449    |  
|Credit for employer taxes                                                           |  |      | (613  | )    |  |      | (555  | ) |  |   | (648   | )
|Decrease in valuation allowance                                                     |  |      |      |      |  |      |      |   |  |   | (2,747 | )
|Other, net                                                                          |  |      | 220   |      |  |      | (948  | ) |  |   | 88     |  
|                                                                                    |  |      |       |      |  |      |       |   |  |   |        |  
|Provision for income taxes                                                          |  | $    | 5,508 |      |  | $    | 1,336 |   |  | $ | 3,934  |  
|                                                                                    |  |      |       |      |  |      |       |   |  |   |        |  

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. The
tax valuation allowance was adjusted in the period management
determined it was more likely than not that deferred tax assets
would be realized. The Company continued to maintain a tax
valuation allowance prior to the three months ended
June 30, 2001 because management believed the
Companys ability to generate future taxable income and
realize the deferred tax asset was not more likely than
not due to the volatility of the entertainment and sports
business. This business was subsequently sold and, therefore,
the tax valuation allowance was released during the three months
ended June 30, 2001.

(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 and are 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 of the amount
contributed by the participant up to a limit of 6% of annual
compensation. 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 plan participation, reaching 100% after five
years. Matching contributions for the year ended June 30,
2003 totaled $16,000. The Company did not make any matching
contributions for the years ended June 30, 2002 or 2001.

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 is
required to contribute 25% of the first 6% of the
employees earnings. Employees may contribute up to 14% of
their annual compensation subject to a maximum dollar amount as
specified by applicable regulations. Participants immediately
vest 100% of their individual and employer match contributions
to the plan. Matching contributions totaled $47,000, $55,000 and
$55,000 for the years ended June 30, 2003, 2002 and 2001,
respectively.

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

46



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BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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 of the amount
contributed by the participant up to a limit of 6% of annual
compensation. 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 plan participation, reaching 100% after five
years. The Companys matching contribution totaled $1.0
million, $640,000 and $698,000 for the years ended June 30,
2003, 2002 and 2001, 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).

|                            |  |      |         |      |  |      |         |  |  |   |         | 
|--------------------------- |  | ---- | ------- | ---- |  | ---- | ------- |  |  | - | ------- | 
|                            |  | 2003 |         | 2002 |  | 2001
|                            |  |      |         |      |  |     
|Room                        |  | $    | 116,785 |      |  | $    | 108,859 |  |  | $ | 139,105 | 
|Food, beverage and banquets |  |      | 83,033  |      |  |      | 77,408  |  |  |   | 97,607  | 
|Yachting and marina         |  |      | 10,860  |      |  |      | 10,973  |  |  |   | 11,035  | 
|Retail and other            |  |      | 79,496  |      |  |      | 75,803  |  |  |   | 81,424  | 
|                            |  |      |         |      |  |      |         |  |  |   |         | 
|                            |  | $    | 290,174 |      |  | $    | 273,043 |  |  | $ | 329,171 | 
|                            |  |      |         |      |  |      |         |  |  |   |         | 

47



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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 share data)

|                                                               |  |  |      |         |  |         |         |         |  |         |        |      |  |   |         |  |  |   |        |  |  |   |         | 
|-------------------------------------------------------------- |  |  | ---- | ------- |  | ------- | ------- | ------- |  | ------- | ------ | ---- |  | - | ------- |  |  | - | ------ |  |  | - | ------- | 
|                                                               |  |  |      | First   |  | Second  |         | Third   |  | Fourth  |        |     
|                                                               |  |  |      | Quarter |  | Quarter |         | Quarter |  | Quarter |        | Year
|                                                               |  |  |      |         |  |         |         |         |  |         |        |     
|Revenue                                                        |  |  | 2003 |         |  | $       | 46,292  |         |  | $       | 67,046 |      |  | $ | 100,277 |  |  | $ | 76,559 |  |  | $ | 290,174 | 
|                                                               |  |  | 2002 |         |  | $       | 39,519  |         |  | $       | 57,782 |      |  | $ | 99,988  |  |  | $ | 75,754 |  |  | $ | 273,043 | 
|Operating income (loss)                                        |  |  | 2003 |         |  | $       | (9,169  | )       |  | $       | 4,879  |      |  | $ | 29,826  |  |  | $ | 10,208 |  |  | $ | 35,744  | 
|                                                               |  |  | 2002 |         |  | $       | (12,951 | )       |  | $       | 326    |      |  | $ | 32,803  |  |  | $ | 8,327  |  |  | $ | 28,505  | 
|Income (loss) from continuing operations                       |  |  | 2003 |         |  | $       | (9,071  | )       |  | $       | (333   | )    |  | $ | 15,042  |  |  | $ | 3,161  |  |  | $ | 8,799   | 
|                                                               |  |  | 2002 |         |  | $       | (11,513 | )       |  | $       | (2,739 | )    |  | $ | 16,096  |  |  | $ | 2,662  |  |  | $ | 4,506   | 
|Income from discontinued operations, net of
    income taxes   |  |  | 2003 |         |  | $       |        |         |  | $       |       |      |  | $ |        |  |  | $ |       |  |  | $ |        | 
|                                                               |  |  | 2002 |         |  | $       | 23,728  |         |  | $       |       |      |  | $ |        |  |  | $ | 2,457  |  |  | $ | 26,185  | 
|Net income (loss)                                              |  |  | 2003 |         |  | $       | (9,071  | )       |  | $       | (333   | )    |  | $ | 15,042  |  |  | $ | 3,161  |  |  | $ | 8,799   | 
|                                                               |  |  | 2002 |         |  | $       | 12,215  |         |  | $       | (2,739 | )    |  | $ | 16,096  |  |  | $ | 5,119  |  |  | $ | 30,691  | 
|Basic income (loss) per share from
    continuing operations   |  |  | 2003 |         |  | $       | (.23    | )       |  | $       | (.01   | )    |  | $ | .38     |  |  | $ | .08    |  |  | $ | .22     | 
|                                                               |  |  | 2002 |         |  | $       | (.29    | )       |  | $       | (.07   | )    |  | $ | .40     |  |  | $ | .07    |  |  | $ | .11     | 
|Diluted income (loss) per share from
    continuing operations |  |  | 2003 |         |  | $       | (.23    | )       |  | $       | (.01   | )    |  | $ | .38     |  |  | $ | .08    |  |  | $ | .22     | 
|                                                               |  |  | 2002 |         |  | $       | (.29    | )       |  | $       | (.07   | )    |  | $ | .40     |  |  | $ | .07    |  |  | $ | .11     | 
|Basic net income (loss) per share                              |  |  | 2003 |         |  | $       | (.23    | )       |  | $       | (.01   | )    |  | $ | .38     |  |  | $ | .08    |  |  | $ | .22     | 
|                                                               |  |  | 2002 |         |  | $       | .31     |         |  | $       | (.07   | )    |  | $ | .40     |  |  | $ | .13    |  |  | $ | .77     | 
|Diluted net income (loss) per share                            |  |  | 2003 |         |  | $       | (.23    | )       |  | $       | (.01   | )    |  | $ | .38     |  |  | $ | .08    |  |  | $ | .22     | 
|                                                               |  |  | 2002 |         |  | $       | .31     |         |  | $       | (.07   | )    |  | $ | .40     |  |  | $ | .13    |  |  | $ | .76     | 

The Companys quarterly results for fiscal
2002, particularly for the second fiscal quarter, were adversely
impacted by travel disruption and short-term cancellations of
group business at its resorts following the September 11,
2001 terrorist attacks. In addition, 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.




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.

48



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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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.




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
2003 Annual Meeting of Stockholders and is incorporated herein
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 herein.)

(b) Reports on Form 8-K



| |                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company filed a Current Report on
    Form 8-K on May 13, 2003 and furnished its earnings
    release for the fiscal third quarter ended March 31, 2003.

49



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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 26, 2003


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 26, 2003
|/s/ DAVID S. FEDERDavid S. Feder           |  | President                                                                                      |  | September 26, 2003
|/s/ WAYNE MOOREWayne Moore                 |  | Senior Vice President, Treasurer and Chief
    Financial Officer (Principal Financial Officer) |  | September 26, 2003
|/s/ MARYJO FINOCCHIAROMaryJo Finocchiaro   |  | Vice President and Corporate Controller
    (Principal Accounting Officer)                     |  | September 26, 2003
|/s/ STEVEN R. BERRARDSteven R. Berrard     |  | Director                                                                                       |  | September 26, 2003
|/s/ DENNIS J. CALLAGHANDennis J. Callaghan |  | Director                                                                                       |  | September 26, 2003

50



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##### Table of Contents



|                                                 |  |          |  |                   
|------------------------------------------------ |  | -------- |  | ------------------
|Signature                                        |  | Title    |  | Date              
|                                                 |  |          |  |                   
|/s/ MICHAEL S. EGANMichael S. Egan               |  | Director |  | September 26, 2003
|/s/ HARRIS W. HUDSONHarris W. Hudson             |  | Director |  | September 26, 2003
|/s/ GEORGE D. JOHNSON, JR.George D. Johnson, Jr. |  | Director |  | September 26, 2003
|/s/ HENRY LATIMERHenry Latimer                   |  | Director |  | September 26, 2003
|/s/ PETER H. ROBERTSPeter H. Roberts             |  | Director |  | September 26, 2003
|/s/ RICHARD C. ROCHONRichard C. Rochon           |  | Director |  | September 26, 2003

51



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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                                                                                                                                                                              
|         | 21.1  |  |  |                       |  | Subsidiaries of the Company(8)                                                                                                                                                                                                                          
|         | 23.1  |  |  |                       |  | Consent of Ernst & Young LLP                                                                                                                                                                                                                            
|         | 23.2  |  |  |                       |  | Notice Regarding Consent of Arthur Andersen 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, 2002  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, 2001  SEC File No. 1-13173.

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