##### Table of Contents









SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549




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FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS

PURSUANT TO SECTIONS 13 OR 15(d) OF THE


SECURITIES EXCHANGE ACT OF 1934


(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,
    2002                                             

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

As of September 20, 2002, the registrant had
39,292,578 shares of Class A common stock, $.01 par value
(the Class A Common Stock), outstanding and, at
such date, the aggregate market value of the shares of
Class A Common Stock held by non-affiliates of the
registrant was approximately $287.8 million. As of
September 20, 2002 the registrant had 255,000 shares
of Class B common stock, $.01 par value (the
Class B Common Stock), outstanding, none of
which was held by a non-affiliate of the registrant.

DOCUMENTS INCORPORATED BY REFERENCE

Part III Portions of the Registrants
Proxy Statement relating to the 2002 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 5. Market for the Registrants Common Equity and Related Stockholder Matters            
|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 
|PART III                                                                                     
|PART IV                                                                                      
|Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K                    
|SIGNATURES                                                                                   
|EXHIBIT INDEX                                                                                
|CONSENT OF EARNST & YOUNG LLP                                                                
|NOTICE REGARDING CONSENT OF ARTHUR ANDERSEN LLP                                              
|CERTIFICATION OF CEO AND CFO                                                                 



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INDEX

TO FORM 10-K


|         |  |                                                                                           |  |        |    | 
|-------- |  | ----------------------------------------------------------------------------------------- |  | ------ | -- | 
|         |  |                                                                                           |  | Page  
|         |  |                                                                                           |  | Number
|         |  |                                                                                           |  |       
|PART I  
|Item 1.  |  | Business                                                                                  |  |        | 1  | 
|Item 2.  |  | Properties                                                                                |  |        | 10 | 
|Item 3.  |  | Legal Proceedings                                                                         |  |        | 10 | 
|Item 4.  |  | Submission of Matters to a Vote of Security
    Holders                                   |  |        | 10 | 
|PART II 
|Item 5.  |  | Market for Registrants Common Equity 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 |  |        | 14 | 
|Item 7A  |  | Quantitative and Qualitative Disclosures About
    Market Risk                            |  |        | 24 | 
|Item 8.  |  | Financial Statements and Supplementary Data                                               |  |        | 25 | 
|Item 9.  |  | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure  |  |        | 49 | 
|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 | 
|PART IV 
|Item 14. |  | Exhibits, Financial Statement Schedules and
    Reports on Form 8-K                       |  |        | 49 | 

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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 (the Panthers) and
related arena management operations. This business was sold on
July 25, 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 championship golf courses
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. Previously, the Company owned the Arizona Biltmore Resort
& Spa, however, this property 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 facilities and
amenities at the Companys resorts provide multiple and
diverse revenue streams and attract upscale business and leisure
customers. In addition, through the development of additional
guestrooms and/or resort amenities, the resorts have
opportunities to significantly increase revenue and cash flow.

For a discussion of the Companys revenue,
profits 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 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: 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
    encompass 242 boat slips sized to accommodate larger yachts.
    Additionally, the Company has constructed Grande Oaks Golf Club
    and Naples Grande Golf Club.

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

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daily room rate, excluding the Arizona Biltmore
Resort & Spa, was $210.43, $209.79 and $201.08 for the years
ended June 30, 2002, 2001 and 2000 respectively.




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Continued focus on upscale business and
    leisure customers.Management believes
    that its focus on corporate group customers and upscale business
    and leisure 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 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,
    thus enabling 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.Management
    believes that as an owner and operator of resort properties, the
    integration of certain aspects of the resort operations will
    allow the Company to realize significant operating efficiencies.
    Management continues integrating the operations of all of its
    resorts, 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 improve the efficiency of the resort
    operations, create economies of scale and offer employees
    internal promotional 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. 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, 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. 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 these 18-hole championship facilities
    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 from its
    existing facilities and services. 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 |         |          |  |        |   |             |  | No.   
|                                              |  |       |     | No. of |  | Conference |       | Access to   |  | No. of    |         | No. of   |  | No. of |   | No. of Food |  | of    
|                                              |  |       |     | Rooms/ |  | Space      |       | No. of Golf |  | Tennis    |         | Swimming |  | Boat   |   | & Beverage  |  | Retail
|                                              |  | Acres |     | Suites |  | Sq. Ft.    |       | Courses     |  | Courts    |         | Pools    |  | Slips  |   | Sites       |  | Shops 
|                                              |  |       |     |        |  |            |       |             |  |           |         |          |  |        |   |             |  |       
|Boca Raton Resort & Club                      |  |       | 343 |        |  |            | 1,041 |             |  |           | 156,966 |          |  |        | 4 | (a)         |  |        | 30 |     |  |  | 5  |     |  |  | 27  |     |  |  | 16 |  |  |  | 13 | 
|Registry Resort at Pelican Bay                |  |       | 24  |        |  |            | 474   |             |  |           | 43,020  |          |  |        | 4 | (b)         |  |        | 15 |     |  |  | 5  |     |  |  |    |     |  |  | 8  |  |  |  | 7  | 
|Edgewater Beach Hotel                         |  |       | 3   |        |  |            | 126   |             |  |           | 3,450   |          |  |        | 4 | (b)         |  |        |   | (c) |  |  | 1  | (c) |  |  |    |     |  |  | 3  |  |  |  | 1  | 
|Hyatt Regency Pier 66 Hotel and Marina        |  |       | 24  |        |  |            | 380   |             |  |           | 26,928  |          |  |        | 1 | (d)         |  |        | 2  |     |  |  | 2  |     |  |  | 136 |     |  |  | 6  |  |  |  | 2  | 
|Radisson Bahia Mar Resort and Yachting Center |  |       | 44  |        |  |            | 296   |             |  |           | 20,150  |          |  |        | 1 | (d)         |  |        | 4  |     |  |  | 1  |     |  |  | 330 | (f) |  |  | 3  |  |  |  | 5  | 
|                                              |  |       |     |        |  |            |       |             |  |           |         |          |  |        |   |             |  |        |    |     |  |  |    |     |  |  |     |     |  |  |    |  |  |  |    | 
|                                              |  |       | 438 | (e)    |  |            | 2,317 |             |  |           | 250,514 |          |  |        | 9 |             |  |        | 51 |     |  |  | 14 |     |  |  | 493 |     |  |  | 36 |  |  |  | 28 | 
|                                              |  |       |     |        |  |            |       |             |  |           |         |          |  |        |   |             |  |        |    |     |  |  |    |     |  |  |     |     |  |  |    |  |  |  |    | 






|    |  |                                                                                                                                                                                                                                                                                                                                                     
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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.                                                                                                                        
|(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 242 reconfigured boat slips, sized to accommodate
    larger yachts ranging from 80 feet to 200+ feet, without
    reducing the linear rentable feet.

Amenities and services at the resorts include
conference facilities, golf courses, tennis facilities, spas,
fitness centers, marinas, restaurants, retail outlets, swimming
pools, 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 year ended
June 30, 2002, approximately 60% 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 $52,500 and annual social dues starting at $3,300. 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. The
Company opened Grande Oaks Golf Club in June 1999 and Naples
Grande Golf Club in February 2000 offering 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

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and Naples Grande Golf Club, respectively, and
annual golf dues of $5,750 and $4,700 at Grande Oaks Golf Club
and Naples Grande Golf Club, respectively.


Summary Resort Information

Boca Raton Resort & Club



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Renovations/Expansion.In January 2002, the Company completed
    the new Yacht Club. The Yacht Club consists of 112 water-view
    luxury guestrooms, additional meeting space and reconfigured
    marina slips. In December 2001, the Company completed a new
    state-of-the-art 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 an accelerated 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 state-of-the-art tennis and
    fitness center complex and a new 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 the Readers Award as one of the Top Hotels
    in North America by Travel & Leisure magazine in 2001,
    received Meetings and Conventions Gold Key Award for 2002 and
    Corporate Meetings and Incentives Paragon Award in 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

Registry Resort at Pelican Bay



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Renovations/Expansion.In December 2000, the Company added 6,000 square feet of
    flexible meeting space at the Registry Resort providing it 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. The
    Registrys 395 tower rooms are currently undergoing a
    complete renovation, which will include five fixture bathrooms
    and all new case goods.
|
| |  | 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 a
    renovation of all of its tower guestrooms in December 2001 and
    is expected to renovate most of the remaining rooms by December
    2002.              
|
| |  | 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.                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | Distinctions.In
    2001, the general manager of Hyatt Regency Pier 66 was named
    General Manager of the Year by the Florida Hotel and Motel
    Association and was named United States General Manager of the
    Year for an Outstanding Medium Sized Property by the American
    Hotel and Lodging Association. In addition, Hyatt Regency Pier
    66 has consistently received AAAs Four Diamond Award,
    Successful Meetings Magazines Pinnacle Award in 2001 and
    Meetings and Conventions Gold Key Award in 2002.

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Franchise Agreement.Upon the acquisition of Hyatt Regency
    Pier 66, the Company assumed the rights under a 20-year
    franchise agreement with Hyatt Franchise Corporation
    (Hyatt). The Hyatt franchise agreement terminates in
    November 2014. The agreement provides for the payment of monthly
    royalty fees equal to 5% of gross room revenue. The agreement
    also provides for the payment to Hyatt of certain Hyatt
    allocable chain expenses relating to sales and
    marketing costs based on the total number of guestrooms at Hyatt
    Regency Pier 66 compared to the average number of guestrooms in
    all Hyatt hotels in the United States, and the agreement
    provides for the payment of a fee for using the Hyatt
    reservation system. The agreement requires that Hyatt Regency
    Pier 66 maintain a reserve, equal to 4% of gross room revenue,
    for replacement of furniture, fixtures and equipment and for
    those repairs and maintenance costs that are capitalizable under
    generally accepted accounting principles. The agreement requires
    significant renovations of guestrooms, corridors and other
    public areas every five to six years. The replacement of other
    furniture, fixtures and equipment, as defined in the agreement,
    is required every 10 to 12 years.

Radisson Bahia Mar Resort and Yachting
Center



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Renovations/Expansion.Radisson Bahia Mar completed a
    comprehensive room renovation in 2000 and is currently planning
    a marina renovation, which will involve the reconfiguration of
    the existing boat slips. The renovation is expected to begin in
    November 2002 and is expected to 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+ feet,
    without reducing the linear rentable feet.               
|
| |  | 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
    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.Upon the acquisition of Radisson Bahia
    Mar, the Company assumed the rights under the Radisson 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 hit 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, which opened in February
2000, was designed by golf architect Rees Jones. He created an
optimum environment for golfers, relying on the natural
surroundings and existing foliage. The Company financed the
previously discussed renovations and expansion at its resorts
and golf clubs with the proceeds of long-term debt and from
operations.

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.

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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.


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 deductibility
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.

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 no material environmental
liabilities or compliance concerns of which management is
unaware.

Employees

At June 30, 2002, the Company employed 3,324
full-time and 627 part-time employees. In addition, the Company
employs 14 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.

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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, approximately 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 (December 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, 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. On
July 25, 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 25, 2002) and the assumption by the purchasers of
certain off-balance sheet contingencies including a $10 million
construction obligation secured by a performance bond which the
purchasers are in the process of securing. The purchasers have
given the Company written assurances that the off-balance sheet
contingencies shall be fully assumed not later than
December 16, 2002. The net proceeds from the sale of the
business after payment of disposal costs and income taxes will
exceed $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 have been restated to report
separately the net assets and liabilities and operating results
of this discontinued operation.

On December 22, 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.

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, including the matters discussed below. 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, many of which are
    dependent upon commercial airlines as a primary means of
    transportation. A change in travel patterns resulting from
    slowing economic conditions, a change in corporate policies
    relating to group meetings, air

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 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 at these properties. 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 profits 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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 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, 2002, Mr. Huizenga, the Companys
    Chairman, beneficially owned voting stock of the Company with
    the power to vote approximately 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 non-extraordinary 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                                                                                                                                                                    

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| |                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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, 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
elsewhere 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,
    2002: |  |                        |         |     |  |   |         | 
|First Quarter                        |  | $                      | 14.5000 |     |  | $ | 9.0000  | 
|Second Quarter                       |  |                        | 13.0800 |     |  |   | 9.3200  | 
|Third Quarter                        |  |                        | 13.4000 |     |  |   | 11.5500 | 
|Fourth Quarter                       |  |                        | 14.1800 |     |  |   | 12.3700 | 
|Fiscal Year Ended June 30,
    2001: |  |                        |         |     |  |   |         | 
|First Quarter                        |  | $                      | 12.1250 |     |  | $ | 9.5625  | 
|Second Quarter                       |  |                        | 15.6875 |     |  |   | 10.7500 | 
|Third Quarter                        |  |                        | 14.3750 |     |  |   | 11.3300 | 
|Fourth Quarter                       |  |                        | 14.7300 |     |  |   | 10.8500 | 

On September 20, 2002 the last reported
sales price of the Class A Common Stock on The New York
Stock Exchange was $9.90. As of the same date, there were
approximately 9,000 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. Certain of the Companys credit
facilities restrict the ability of the Company to pay dividends.
See Note 9 to the Consolidated Financial Statements included
elsewhere herein.

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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. On
July 25, 2001, 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. 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,     
|                                     |                                                                                         |                                  
|                                     |                                                                                         | 2002                              |         | 2001    |        | 2000 |         | 1999    |       | 1998
|                                     |                                                                                         |                                   |         |         |        |      |         |         |       |     
|                                     |                                                                                         |                                  
|                                     |                                                                                         | (In thousands, except share data)
|Statement of Operations Data:        |                                                                                         |                                   |         |         |        |      |         |         |       |      |         |         |        |   |         |         |       |   |         |        
|Leisure and recreation revenue       |                                                                                         | $                                 | 273,043 |         |        | $    | 329,171 |         |       | $    | 361,360 |         |        | $ | 327,001 |         |       | $ | 252,603 |        
|Operating expenses:                  |                                                                                         |                                   |         |         |        |      |         |         |       |      |         |         |        |   |         |         |       |   |         |        
|                                     | Cost of leisure and recreation services                                                 |                                   |         | 123,529 |        |      |         | 143,567 |       |      |         | 156,620 |        |   |         | 141,456 |       |   |         | 110,084 |      
|                                     | Selling, general and administrative expenses                                            |                                   |         | 83,146  |        |      |         | 89,624  |       |      |         | 98,731  |        |   |         | 94,856  |       |   |         | 81,300  |      
|                                     | Amortization and depreciation                                                           |                                   |         | 34,790  |        |      |         | 35,490  |       |      |         | 34,436  |        |   |         | 28,343  |       |   |         | 17,987  |      
|                                     |                                                                                         |                                   |         |         |        |      |         |         |       |      |         |         |        |   |         |         |       |   |         |        
|                                     | Total operating expenses                                                                |                                   |         | 241,465 |        |      |         | 268,681 |       |      |         | 289,787 |        |   |         | 264,655 |       |   |         | 209,371 |      
|                                     |                                                                                         |                                   |         |         |        |      |         |         |       |      |         |         |        |   |         |         |       |   |         |        
|                                     | Operating income                                                                        |                                   |         | 31,578  |        |      |         | 60,490  |       |      |         | 71,573  |        |   |         | 62,346  |       |   |         | 43,232  |      
|                                     | Interest and other income                                                               |                                   |         | 1,240   |        |      |         | 5,164   |       |      |         | 1,529   |        |   |         | 2,826   |       |   |         | 2,064   |      
|                                     | Interest and other expense                                                              |                                   |         | (23,903 | )      |      |         | (47,150 | )     |      |         | (55,040 | )      |   |         | (55,377 | )     |   |         | (25,290 | )    
|                                     |                                                                                         |                                   |         |         |        |      |         |         |       |      |         |         |        |   |         |         |       |   |         |        
|                                     | Income from continuing operations before income
    taxes                               |                                   |         | 8,915   |        |      |         | 18,504  |       |      |         | 18,062  |        |   |         | 9,795   |       |   |         | 20,006  |      
|                                     | Provision for income taxes                                                              |                                   |         | 2,565   |        |      |         | 4,724   |       |      |         | 805     |        |   |         | 1,300   |       |   |         |        |      
|                                     |                                                                                         |                                   |         |         |        |      |         |         |       |      |         |         |        |   |         |         |       |   |         |        
|                                     | Income from continuing operations                                                       |                                   |         | 6,350   |        |      |         | 13,780  |       |      |         | 17,257  |        |   |         | 8,495   |       |   |         | 20,006  |      
|                                     | Gain on disposition of discontinued operations,
    net of income taxes                 |                                   |         | 26,185  |        |      |         |        |       |      |         |        |        |   |         |        |       |   |         |        |      
|                                     | Loss from discontinued operations, net of income
    taxes                              |                                   |         |        |        |      |         | (8,862  | )     |      |         | (3,771  | )      |   |         | (436    | )     |   |         | (18,733 | )    
|                                     | Extraordinary loss on early extinguishment of
    debt, net of benefit for income taxes |                                   |         | (1,844  | )      |      |         | (1,236  | )     |      |         |        |        |   |         | (2,658  | )     |   |         |        |      
|                                     |                                                                                         |                                   |         |         |        |      |         |         |       |      |         |         |        |   |         |         |       |   |         |        
|                                     |                                                                                         | Net income                        |         | $       | 30,691 |      |         | $       | 3,682 |      |         | $       | 13,486 |   |         | $       | 5,401 |   |         | $       | 1,273 | 
|                                     |                                                                                         |                                   |         |         |        |      |         |         |       |      |         |         |        |   |         |         |       |   |         |        
|Diluted net income (loss) per share: |                                                                                         |                                   |         |         |        |      |         |         |       |      |         |         |        |   |         |         |       |   |         |        
|                                     | Income from continuing operations                                                       |                                   | $       | 0.16    |        |      | $       | 0.34    |       |      | $       | 0.42    |        |   | $       | 0.23    |       |   | $       | 0.57    |      
|                                     | Income (loss) from discontinued operations                                              |                                   |         | 0.65    |        |      |         | (0.22   | )     |      |         | (0.09   | )      |   |         | (0.01   | )     |   |         | (0.53   | )    
|                                     | Extraordinary loss on early extinguishment of debt                                      |                                   |         | (0.05   | )      |      |         | (0.03   | )     |      |         |        |        |   |         | (0.07   | )     |   |         |        |      
|                                     |                                                                                         |                                   |         |         |        |      |         |         |       |      |         |         |        |   |         |         |       |   |         |        
|                                     |                                                                                         | Net income per share              |         | $       | 0.76   |      |         | $       | 0.09  |      |         | $       | 0.33   |   |         | $       | 0.15  |   |         | $       | 0.04  | 
|                                     |                                                                                         |                                   |         |         |        |      |         |         |       |      |         |         |        |   |         |         |       |   |         |        

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|            |                                               |                                   |   |         |   |      |   |          |   |      |   |         |   |  |   |          |   |  |   |          |  
|----------- | --------------------------------------------- | --------------------------------- | - | ------- | - | ---- | - | -------- | - | ---- | - | ------- | - |  | - | -------- | - |  | - | -------- | -
|            |                                               |                                  
|            |                                               | For the Years Ended June 30,     
|            |                                               |                                  
|            |                                               | 2002                              |   | 2001    |   | 2000 |   | 1999     |   | 1998
|            |                                               |                                   |   |         |   |      |   |          |   |     
|            |                                               |                                  
|            |                                               | (In thousands, except share data)
|Other Data: |                                               |                                   |   |         |   |      |   |          |   |      |   |         |   |  |   |          |   |  |   |         
|            | Cash flow from operating activities           |                                   | $ | 48,377  |   |      | $ | 37,033   |   |      | $ | 40,027  |   |  | $ | 71,590   |   |  | $ | 27,895   |  
|            | Cash flow from investing activities           |                                   | $ | 7,868   |   |      | $ | 222,347  |   |      | $ | (36,913 | ) |  | $ | (115,445 | ) |  | $ | (281,831 | )
|            | Cash flow from financing activities           |                                   | $ | (62,463 | ) |      | $ | (257,267 | ) |      | $ | (3,244  | ) |  | $ | 19,619   |   |  | $ | 279,614  |  
|            | EBITDA(1)                                     |                                   | $ | 66,368  |   |      | $ | 95,980   |   |      | $ | 106,009 |   |  | $ | 90,689   |   |  | $ | 61,219   |  
|            | Membership fees deferred during the period(2) |                                   |   | 3,452   |   |      |   | 11,848   |   |      |   | 12,532  |   |  |   | 8,198    |   |  |   | 5,814    |  
|            |                                               |                                   |   |         |   |      |   |          |   |      |   |         |   |  |   |          |   |  |   |         
|            | Adjusted EBITDA(3)                            |                                   | $ | 69,820  |   |      | $ | 107,828  |   |      | $ | 118,541 |   |  | $ | 98,887   |   |  | $ | 67,033   |  
|            |                                               |                                   |   |         |   |      |   |          |   |      |   |         |   |  |   |          |   |  |   |         
|            | EBITDA margin(4)                              |                                   |   | 24      | % |      |   | 29       | % |      |   | 29      | % |  |   | 28       | % |  |   | 24       | %
|            | Adjusted EBITDA margin(5)                     |                                   |   | 25      | % |      |   | 32       | % |      |   | 32      | % |  |   | 30       | % |  |   | 26       | %
|            | Capital expenditures                          |                                   | $ | 66,965  |   |      | $ | 60,778   |   |      | $ | 63,090  |   |  | $ | 98,514   |   |  | $ | 50,736   |  

|                    |                           |             |   |         |  |      |   |         |  |      |   |           |  |  |   |           |  |  |   |           | 
|------------------- | ------------------------- | ----------- | - | ------- |  | ---- | - | ------- |  | ---- | - | --------- |  |  | - | --------- |  |  | - | --------- | 
|                    |                           |            
|                    |                           | At June 30,
|                    |                           |            
|                    |                           | 2002        |   | 2001    |  | 2000 |   | 1999    |  | 1998
|                    |                           |             |   |         |  |      |   |         |  |     
|Balance Sheet Data: |                           |             |   |         |  |      |   |         |  |      |   |           |  |  |   |           |  |  |   |          
|                    | Cash and cash equivalents |             | $ | 3,691   |  |      | $ | 9,909   |  |      | $ | 7,796     |  |  | $ | 7,926     |  |  | $ | 32,162    | 
|                    | Restricted cash           |             | $ | 721     |  |      | $ | 500     |  |      | $ | 10,176    |  |  | $ | 31,686    |  |  | $ | 18,207    | 
|                    | Total current assets      |             | $ | 39,041  |  |      | $ | 96,779  |  |      | $ | 106,802   |  |  | $ | 124,499   |  |  | $ | 130,740   | 
|                    | Total assets              |             | $ | 916,736 |  |      | $ | 946,132 |  |      | $ | 1,271,115 |  |  | $ | 1,256,524 |  |  | $ | 1,092,835 | 
|                    | Total current liabilities |             | $ | 55,240  |  |      | $ | 51,294  |  |      | $ | 135,108   |  |  | $ | 93,325    |  |  | $ | 373,801   | 
|                    | Total debt                |             | $ | 211,915 |  |      | $ | 273,511 |  |      | $ | 583,195   |  |  | $ | 584,105   |  |  | $ | 540,626   | 
|                    | Non-current obligations   |             | $ | 345,224 |  |      | $ | 409,195 |  |      | $ | 633,813   |  |  | $ | 672,919   |  |  | $ | 288,523   | 
|                    | Shareholders equity      |             | $ | 516,272 |  |      | $ | 485,643 |  |      | $ | 502,194   |  |  | $ | 490,280   |  |  | $ | 430,511   | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | EBITDA represents earnings before interest
    expense, interest income, income taxes, depreciation,
    amortization, extraordinary items and discontinued operations.
    EBITDA and Adjusted EBITDA (see below) are used by management
    and certain investors as indicators of the Companys
    historical ability to service debt, to sustain potential future
    increases in debt and to satisfy capital requirements. However,
    neither EBITDA nor Adjusted EBITDA is intended to represent cash
    flows for the period. In addition, they have not been presented
    as alternatives 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 are thus susceptible to
    varying calculations. EBITDA as presented may not be comparable
    to other similarly titled measures of other companies.
|(2) | Represents the annual change in net deferred
    revenue from the Companys Premier Clubs. The Premier Clubs
    currently require a non-refundable initial membership fee.
    Initial membership fees are recorded as revenue over the
    estimated life of the membership. Unrecognized portions of the
    initial membership fees are included in deferred revenue in the
    accompanying Consolidated Balance Sheets. Direct expenses
    associated with originating a sale are also deferred and
    recognized over the estimated life of the membership.                                                                                                                                                                                                                                                                                                                                                                                                       
|(3) | Adjusted EBITDA represents EBITDA plus the amount
    of the Companys Premier Club net membership fees deferred
    during the period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|(4) | EBITDA margin is defined as EBITDA divided by
    revenue.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(5) | Adjusted EBITDA margin is defined as Adjusted
    EBITDA divided by the sum of revenue plus the Companys
    Premier Club net membership fees deferred during the period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

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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 elsewhere 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 revenues 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 and
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.

On December 20, 2001, the Securities and
Exchange Commission (SEC) 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 initial membership fees
originated after December 31, 1997 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.

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. 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 will be tested for
impairment annually at the reporting unit level 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, 2002, by determining whether the carrying
amount of a reporting unit exceeded its fair value. The Company
had no impairment of goodwill during the year ended
June 30, 2002 or at July 1, 2002.

Accounting
for Impairment of Long-Lived Assets

The carrying value of long-lived assets is
reviewed if the facts and circumstances suggest that it 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

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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 resorts, are capitalized. Interest has been
capitalized using the average borrowing rate of the Company.
Depreciation and amortization has been computed using the
straight-line method over the following estimated useful lives:

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

Business Philosophy

The Companys current 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
profits 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, approximately 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 resorts experienced an
increase in demand during the three months ended March 31, 2002
and June 30, 2002 and management is cautiously optimistic
that its lodging fundamentals will continue to advance and
operations will continue to approach pre-September 11, 2001
levels.

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 earnings during
the 2003 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 guest 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 elsewhere herein.

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 becomes effective for

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financial statements issued for fiscal years
beginning after December 15, 2001. 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 is not anticipated to 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. Under SFAS No. 4 all
gains and losses from extinguishment of debt were required to be
aggregated and, if material, classified as an extraordinary
item, net of related income tax effect. SFAS No. 145
eliminates SFAS No. 4 and, thus, gains and losses from
extinguishment of debt should be classified as extraordinary
items only if they meet the criteria in Accounting Principles
Board, (APB) Opinion 30, Reporting the Results
of Operations  Discontinued Events and Extraordinary
Items. Applying the provisions of APB Opinion 30 will
distinguish 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 provisions of this Statement related to the rescission
of SFAS No. 4 shall be applied in fiscal years beginning
after May 15, 2002. Any gain or loss on extinguishment of
debt that was classified as an extraordinary item in prior
periods presented, that does not meet the criteria in APB
Opinion No. 30 for classification as an extraordinary item,
shall be reclassified. Accordingly, upon adoption of SFAS
No. 145, the Company will reclassify extraordinary losses
resulting from the early extinguishment of debt associated with
previous periods 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 shall be effective for exit or
disposal activities initiated after December 31, 2002. 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 is not anticipated to
have a material impact on the Companys results of
operations or financial position.

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##### Table of Contents



RESULTS OF
OPERATIONS  HISTORICAL COMPARISON

The accompanying table for the years ended
June 30 (expressed in 000s) 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).

|                                                                              |                                               |                        |                          |         |        |         |          |         |        |         |         |         |        |         | 
|----------------------------------------------------------------------------- | --------------------------------------------- | ---------------------- | ------------------------ | ------- | ------ | ------- | -------- | ------- | ------ | ------- | ------- | ------- | ------ | ------- | 
|                                                                              |                                               | 2002                   |                          | 2001    |        | 2000   
|                                                                              |                                               |                        |                          |         |        |        
|Leisure and recreation revenue                                                |                                               | $                      | 273,043                  |         |        | $       | 329,171  |         |        | $       | 361,360 |        
|Operating expenses:                                                           |                                               |                        |                          |         |        |         |          |         |        |         |         |        
|                                                                              | Cost of leisure and recreation services       |                        |                          | 123,529 |        |         |          | 143,567 |        |         |         | 156,620 |       
|                                                                              | Selling, general and administrative expenses: |                        |                          |         |        |         |          |         |        |         |         |         |       
|                                                                              |                                               | Leisure and recreation |                          |         | 74,561 |         |          |         | 81,398 |         |         |         | 89,271 |        
|                                                                              |                                               | Corporate              |                          |         | 8,585  |         |          |         | 8,226  |         |         |         | 9,460  |        
|                                                                              | Amortization and depreciation:                |                        |                          |         |        |         |          |         |        |         |         |         |       
|                                                                              |                                               | Leisure and recreation |                          |         | 34,571 |         |          |         | 35,195 |         |         |         | 34,265 |        
|                                                                              |                                               | Corporate              |                          |         | 219    |         |          |         | 295    |         |         |         | 171    |        
|                                                                              |                                               |                        |                          |         |        |         |          |         |        |         |         |        
|                                                                              |                                               |                        | Total operating expenses |         |        | 241,465 |          |         |        | 268,681 |         |         |        | 289,787 | 
|                                                                              |                                               |                        |                          |         |        |         |          |         |        |         |         |        
|                                                                              | Operating income (loss):                      |                        |                          |         |        |         |          |         |        |         |         |         |       
|                                                                              |                                               | Leisure and recreation |                          |         | 40,382 |         |          |         | 69,011 |         |         |         | 81,204 |        
|                                                                              |                                               | Corporate              |                          |         | (8,804 | )       |          |         | (8,521 | )       |         |         | (9,631 | )      
|                                                                              |                                               |                        |                          |         |        |         |          |         |        |         |         |        
|                                                                              |                                               |                        | Total operating income   |         |        | 31,578  |          |         |        | 60,490  |         |         |        | 71,573  | 
|Interest and other income                                                     |                                               |                        | 1,240                    |         |        |         | 5,164    |         |        |         | 1,529   |        
|Interest and other expense                                                    |                                               |                        | (23,903                  | )       |        |         | (47,150  | )       |        |         | (55,040 | )      
|                                                                              |                                               |                        |                          |         |        |         |          |         |        |         |         |        
|Income from continuing operations before income
    taxes                     |                                               |                        | 8,915                    |         |        |         | 18,504   |         |        |         | 18,062  |        
|Provision for income taxes                                                    |                                               |                        | 2,565                    |         |        |         | 4,724    |         |        |         | 805     |        
|                                                                              |                                               |                        |                          |         |        |         |          |         |        |         |         |        
|Income from continuing operations                                             |                                               |                        | 6,350                    |         |        |         | 13,780   |         |        |         | 17,257  |        
|Gain on disposition of discontinued operations,
    net of income taxes       |                                               |                        | 26,185                   |         |        |         |         |         |        |         |        |        
|Loss from discontinued operations, net of income
    tax benefit              |                                               |                        |                         |         |        |         | (8,862   | )       |        |         | (3,771  | )      
|Extraordinary loss on early retirement of debt,
    net of income tax benefit |                                               |                        | (1,844                   | )       |        |         | (1,236   | )       |        |         |        |        
|                                                                              |                                               |                        |                          |         |        |         |          |         |        |         |         |        
|                                                                              |                                               |                        | Net income               |         | $      | 30,691  |          |         | $      | 3,682   |         |         | $      | 13,486  | 
|                                                                              |                                               |                        |                          |         |        |         |          |         |        |         |         |        
|Net cash provided by operating activities                                     |                                               | $                      | 48,377                   |         |        | $       | 37,033   |         |        | $       | 40,027  |        
|                                                                              |                                               |                        |                          |         |        |         |          |         |        |         |         |        
|Net cash provided by (used in) investing
    activities                       |                                               | $                      | 7,868                    |         |        | $       | 222,347  |         |        | $       | (36,913 | )      
|                                                                              |                                               |                        |                          |         |        |         |          |         |        |         |         |        
|Net cash used in financing activities                                         |                                               | $                      | (62,463                  | )       |        | $       | (257,267 | )       |        | $       | (3,244  | )      
|                                                                              |                                               |                        |                          |         |        |         |          |         |        |         |         |        
|EBITDA (loss):                                                                |                                               |                        |                          |         |        |         |          |         |        |         |         |        
|                                                                              | Leisure and recreation                        |                        | $                        | 74,953  |        |         | $        | 104,206 |        |         | $       | 115,469 |       
|                                                                              | Corporate                                     |                        |                          | (8,585  | )      |         |          | (8,226  | )      |         |         | (9,460  | )     
|                                                                              |                                               |                        |                          |         |        |         |          |         |        |         |         |        
|                                                                              |                                               |                        | Total                    |         | $      | 66,368  |          |         | $      | 95,980  |         |         | $      | 106,009 | 
|                                                                              |                                               |                        |                          |         |        |         |          |         |        |         |         |        
|Adjusted EBITDA (loss):                                                       |                                               |                        |                          |         |        |         |          |         |        |         |         |        
|                                                                              | Leisure and recreation                        |                        | $                        | 78,405  |        |         | $        | 116,054 |        |         | $       | 128,001 |       
|                                                                              | Corporate                                     |                        |                          | (8,585  | )      |         |          | (8,226  | )      |         |         | (9,460  | )     
|                                                                              |                                               |                        |                          |         |        |         |          |         |        |         |         |        
|                                                                              |                                               |                        | Total                    |         | $      | 69,820  |          |         | $      | 107,828 |         |         | $      | 118,541 | 
|                                                                              |                                               |                        |                          |         |        |         |          |         |        |         |         |        

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

|                      |                                                             |      |   |          |   |      |  |          |    |      |   |         |   |  |  |     |    |  |   |           |  
|--------------------- | ----------------------------------------------------------- | ---- | - | -------- | - | ---- |  | -------- | -- | ---- | - | ------- | - |  |  | --- | -- |  | - | --------- | -
|                      |                                                             | 2002 |   | % Change |   | 2001 |  | % Change |    | 2000
|                      |                                                             |      |   |          |   |      |  |          |    |     
|Revenue:              |                                                             |      |   |          |   |      |  |          |    |      |   |         |   |  |  |     |    |  |   |          
|                      | Room revenue                                                |      | $ | 108,859  |   |      |  | (22      | )% |      | $ | 139,107 |   |  |  | (11 | )% |  | $ | 156,607   |  
|                      | Non-room related revenue                                    |      |   | 164,184  |   |      |  | (14      | )% |      |   | 190,064 |   |  |  | (7  | )% |  |   | 204,753   |  
|                      |                                                             |      |   |          |   |      |  |          |    |      |   |         |   |  |  |     |    |  |   |          
|                      | Total leisure and recreation revenue                        |      | $ | 273,043  |   |      |  | (17      | )% |      | $ | 329,171 |   |  |  | (9  | )% |  | $ | 361,360   |  
|Operating Statistics: |                                                             |      |   |          |   |      |  |          |    |      |   |         |   |  |  |     |    |  |   |          
|                      | Available room nights                                       |      |   | 828,089  |   |      |  | (12      | )% |      |   | 943,425 |   |  |  | (12 | )% |  |   | 1,074,672 |  
|                      | ADR                                                         |      | $ | 210.43   |   |      |  |         |    |      | $ | 209.68  |   |  |  |    |    |  | $ | 209.42    |  
|                      | Occupancy                                                   |      |   | 62.5     | % |      |  | (11      | )% |      |   | 70.3    | % |  |  | 1   | %  |  |   | 69.6      | %
|                      | Room revenue per available room                             |      | $ | 131.46   |   |      |  | (11      | )% |      | $ | 147.45  |   |  |  | 1   | %  |  | $ | 145.73    |  
|                      | Total leisure and recreation revenue per
    available room |      | $ | 329.73   |   |      |  | (5       | )% |      | $ | 348.91  |   |  |  | 4   | %  |  | $ | 336.25    |  

Leisure and Recreation Revenue

The Company generates a diversified stream of
revenue. Leisure and recreation revenue totaled
$273.0 million, $329.2 million and $361.4 million for the
years ended June 30, 2002, 2001 and 2000, respectively.
Non-room revenue, which represented at least 57% 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 $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 and short-term
cancellations of group business in the wake of the
September 11, 2001 terrorist attacks and economic recession.

The $32.2 million decrease in leisure and
recreation revenue for the year ended June 30, 2001
compared to the year ended June 30, 2000 followed a
decrease in available room nights due to the sale of the Arizona
Biltmore Resort & Spa mid-way through the fiscal year in
December 2000 accounting for a $53.7 million decrease in
revenue. The decrease in revenue resulting from the sale of the
Arizona Biltmore Resort & Spa was partially offset by a
$21.5 million increase in revenue derived from the
Companys other resort properties.

Leisure and Recreation Operating
Expenses

Cost of leisure and recreation services totaled
$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 and $156.6 million, or 43% of
revenue, for the year ended June 30, 2000. 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 $74.6
million, or 27% of revenue, for the year ended June 30,
2002, $81.4 million, or 25% of revenue, for the year ended
June 30, 2001 and $89.3 million, or 25% of revenue, for the
year ended June 30, 2000. 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.

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, was primarily due to a reduction in
revenue following the September 11, 2001 terrorist attacks.
While certain reductions were made to both variable cost of
services and S,G&A expenses, such as labor costs, by
June 30, 2002, management continues to actively work with
the Companys resort managers to

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substantially reduce the operating costs of each
resort. These initiatives include further reducing labor costs
and streamlining staffing and service delivery.


Amortization and depreciation expense totaled
$34.6 million, $35.2 million and $34.3 million
for the years ended June 30, 2002, 2001 and 2000,
respectively. The decrease 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. The increase in
amortization and depreciation expense for the year ended
June 30, 2001, compared to the year ended June 30,
2000, was primarily due to the completion of several capital
projects at the Boca Raton Resort & Club and Registry
Resort resulting in additional depreciation expense, partially
offset by a $4.2 million decrease in amortization and
depreciation expense due to the sale of the Arizona Biltmore
Resort & Spa.

Leisure and Recreation Operating
Income

Leisure and recreation operating income totaled
$40.4 million, $69.0 million and $81.2 million
for the years ended June 30, 2002, 2001 and 2000,
respectively. 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 a $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. The decrease in
leisure and recreation operating income for the year ended
June 30, 2001, compared to the year ended June 30,
2000, was due to a $17.6 million decline in operating
income resulting from the sale of the Arizona Biltmore
Resort & Spa mid-way through the 2001 fiscal year,
offset by an overall increase in operating income from the
Companys other resort properties. (See table of same
property operating results under Results of
Operations  Pro Forma to Exclude the Arizona Biltmore
Resort & Spa later herein).

Corporate General and Administrative
Expenses

Corporate general and administrative expenses
totaled $8.6 million, $8.2 million and
$9.5 million for the years ended June 30, 2002, 2001,
and 2000, respectively. 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, equal to 1% of total
revenue, payable to Huizenga Holdings, Inc., (HHI) a
corporation whose sole shareholder is the Companys
Chairman. The decrease in corporate general and administrative
expenses for the year ended June 30, 2001, compared to the
year ended June 30, 2000, was primarily because of a
decline in legal expense and because of a decrease in the
management fee payable to HHI. Pursuant to the management
services agreement, HHI provides certain administrative,
financing, tax, investor relations and strategy related services
to the Company. 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. The decrease
in total revenue for the year ended June 30, 2001, compared
to the year ended June 30, 2000, was substantially due to
the sale of the Arizona Biltmore Resort & Spa.

Interest and Other Income

Interest and other income totaled
$1.2 million, $5.2 million and $1.5 million for
the years ended June 30, 2002, 2001 and 2000, respectively.
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 and Other Expense to follow.

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Interest and Other Expense

Interest and other expense totaled
$23.9 million, $47.2 million and $55.0 million
for years ended June 30, 2002, 2001 and 2000, respectively.
The Companys average cost of borrowing was 10.1%, 10.0%
and 10% for the years ended June 30, 2002, 2001 and 2000,
respectively, while the Companys average outstanding
indebtedness was $235.0 million, $472.0 million and
$550.0 million for the years ended June 30, 2002, 2001
and 2000, respectively. The decrease in the average outstanding
indebtedness for the year ended June 30, 2002, compared to
the year ended June 30, 2001 and 2000, 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 $2.6 million, $4.7 million and $805,000 for
the years ended June 30, 2002, 2001 and 2000, 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
was released during the three months ended June 30, 2001.

EBITDA

EBITDA represents earnings before extraordinary
items, interest expense, interest income, income taxes,
depreciation, amortization and discontinued operations. EBITDA
totaled $66.4 million, $96.0 million and
$106.0 million for the years ended June 30, 2002,
2001, and 2000, respectively. The decrease in EBITDA for the
year ended June 30, 2002, compared to the year ended
June 30, 2001, was because the prior year period included
$13.0 million in EBITDA from the Arizona Biltmore
Resort & Spa which was sold in December 2000 and
because of a decline in revenue and corresponding profits
following the September 11, 2001 terrorist attacks. The
decrease in EBITDA for the year ended June 30, 2001,
compared to the year ended June 30, 2000, was primarily
because the year ended June 30, 2000 included an additional
$21.8 million in EBITDA from the Arizona Biltmore
Resort & Spa, partially offset by an increase in
revenue and profits derived at the Companys other resort
properties. (See table of same property operating results under
Results of Operations  Pro Forma to Exclude the
Arizona Biltmore Resort & Spa later herein).
EBITDA and Adjusted EBITDA (see below) are used by management
and certain investors as indicators of the Companys
historical ability to service debt, to sustain potential future
increases in debt and to satisfy capital requirements. However,
neither EBITDA nor Adjusted EBITDA is intended to represent cash
flows for the period. In addition, they have not been presented
as alternatives 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 are thus susceptible to
varying calculations. EBITDA as presented may not be comparable
to other similarly titled measures of other companies.

Adjusted EBITDA

Adjusted EBITDA represents EBITDA plus the amount
of net membership fees deferred for the periods presented. The
net membership fees deferred represents the annual change in
deferred revenue arising from the Premier Clubs at the Boca
Raton Resort & Club, Naples Grande and Grande Oaks Golf
Clubs. See Revenue Recognition for Premier Club Initiation Fees
discussed above. Net memberships deferred totaled $3.5 million,
$11.8 million and $12.5 million for the years ended
June 30, 2002, 2001, and 2000 respectively. The Company
opened Naples Grande Golf Club in February 2000, which resulted
in strong introductory membership sales for the years ended
June 30, 2001 and 2000.

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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 losses from discontinued operations
were $8.9 million and $3.8 million for the years ended
June 30, 2001 and 2000, respectively. The figures for the
year ended June 30, 2001 and June 30, 2000 are net of
a $5.4 million and $805,000 benefit for income taxes,
respectively. The decrease in operating results for the year
ended June 30, 2001 compared to the year ended
June 30, 2000 was primarily due to a decline in average
paid attendance at Panther home games and higher players
salaries.

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. Certain selling, general
and administrative expenses incurred by the Company have also
been included in discontinued operations based upon the specific
identification method.

Extraordinary Loss on Early Extinguishment of
Debt, Net of Income Tax Benefit

For the year ended June 30, 2002, the
Company repurchased $80.1 million principal amount of its
9.875% senior subordinated notes payable and recognized an
extraordinary loss of $3.1 million (or $1.8 million,
net of a benefit for income taxes). For the year ended
June 30, 2001, the Company repurchased $67.0 million
principal amount of its 9.875% senior subordinated notes payable
and recognized an extraordinary loss of $2.0 million (or
$1.2 million, net of a benefit for income taxes). The
extraordinary losses represent the non-cash charge-off of a pro
rata portion of the debt issuance costs previously capitalized
when the notes were issued together with the premium paid to
acquire the notes.

RESULTS OF OPERATIONS  PRO
FORMA TO EXCLUDE THE ARIZONA BILTMORE RESORT &
SPA

The accompanying table for the years ended
June 30 (expressed in 000s) is set forth on a pro
forma basis, which excludes the operating results from the
Arizona Biltmore Resort & Spa, which was sold in
December 2000. Management believes the pro forma information,
which is supplemental to the Results of Operations 
Historical Comparison, provides readers with a meaningful
comparison to the previous year.

|                               |                                               |                        |                          |         |        |         |         |         |        |         | 
|------------------------------ | --------------------------------------------- | ---------------------- | ------------------------ | ------- | ------ | ------- | ------- | ------- | ------ | ------- | 
|                               |                                               | 2002                   |                          | 2001   
|                               |                                               |                        |                          |        
|Leisure and recreation revenue |                                               | $                      | 273,043                  |         |        | $       | 289,315 |        
|Operating expenses:            |                                               |                        |                          |         |        |         |         |        
|                               | Cost of leisure and recreation services       |                        |                          | 123,529 |        |         |         | 126,892 |       
|                               | Selling, general and administrative expenses: |                        |                          |         |        |         |         |         |       
|                               |                                               | Leisure and recreation |                          |         | 74,561 |         |         |         | 70,784 |        
|                               |                                               | Corporate              |                          |         | 8,585  |         |         |         | 8,226  |        
|                               | Amortization and depreciation:                |                        |                          |         |        |         |         |         |       
|                               |                                               | Leisure and recreation |                          |         | 34,571 |         |         |         | 30,674 |        
|                               |                                               | Corporate              |                          |         | 219    |         |         |         | 295    |        
|                               |                                               |                        |                          |         |        |         |         |        
|                               |                                               |                        | Total operating expenses |         |        | 241,465 |         |         |        | 236,871 | 
|                               |                                               |                        |                          |         |        |         |         |        
|                               | Operating income (loss):                      |                        |                          |         |        |         |         |         |       
|                               |                                               | Leisure and recreation |                          |         | 40,382 |         |         |         | 60,965 |        
|                               |                                               | Corporate              |                          |         | (8,804 | )       |         |         | (8,521 | )      
|                               |                                               |                        |                          |         |        |         |         |        
|                               |                                               |                        | Total operating income   |         | $      | 31,578  |         |         | $      | 52,444  | 
|                               |                                               |                        |                          |         |        |         |         |        
|EBITDA:                        |                                               |                        |                          |         |        |         |         |        
|                               |                                               | Leisure and recreation |                          | $       | 74,953 |         |         | $       | 91,639 |        
|                               |                                               | Corporate              |                          |         | (8,585 | )       |         |         | (8,226 | )      
|                               |                                               |                        |                          |         |        |         |         |        
|                               |                                               |                        | Total                    |         | $      | 66,368  |         |         | $      | 83,413  | 
|                               |                                               |                        |                          |         |        |         |         |        

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|                 |                        |       |   |        |        |  |   |         |        | 
|---------------- | ---------------------- | ----- | - | ------ | ------ |  | - | ------- | ------ | 
|                 |                        | 2002  |   | 2001  
|                 |                        |       |   |       
|Adjusted EBITDA: |                        |       |   |        |        |  |   |        
|                 | Leisure and recreation |       | $ | 78,405 |        |  | $ | 103,487 |       
|                 | Corporate              |       |   | (8,585 | )      |  |   | (8,226  | )     
|                 |                        |       |   |        |        |  |   |        
|                 |                        | Total |   | $      | 69,820 |  |   | $       | 95,261 | 
|                 |                        |       |   |        |        |  |   |        

Select pro forma operating data for the Company
for the year ended June 30 is set forth below (in
000s except operating statistics):

|                      |                                 |                                                             |   |         |         |        |   |         |         |  |  |     |    |   
|--------------------- | ------------------------------- | ----------------------------------------------------------- | - | ------- | ------- | ------ | - | ------- | ------- |  |  | --- | -- | --
|                      |                                 | 2002                                                        |   | 2001    |         | % Chg.
|                      |                                 |                                                             |   |         |         |       
|Revenue:              |                                 |                                                             |   |         |         |        |   |         |         |  |  |    
|                      | Room revenue                    |                                                             | $ | 108,859 |         |        | $ | 122,943 |         |  |  | (11 | )%
|                      | Non-room related revenue        |                                                             |   | 164,184 |         |        |   | 166,372 |         |  |  | (1  | )%
|                      |                                 |                                                             |   |         |         |        |   |         |         |  |  |    
|                      |                                 | Total leisure and recreation revenue                        |   | $       | 273,043 |        |   | $       | 289,315 |  |  |     | (6 | )%
|Operating Statistics: |                                 |                                                             |   |         |         |        |   |         |         |  |  |    
|                      | Available room nights           |                                                             |   | 828,089 |         |        |   | 817,337 |         |  |  | 1   | % 
|                      | Average daily rate              |                                                             | $ | 210.43  |         |        | $ | 209.79  |         |  |  |    | % 
|                      | Occupancy                       |                                                             |   | 62.5    | %       |        |   | 71.7    | %       |  |  | (13 | )%
|                      | Room revenue per available room |                                                             | $ | 131.46  |         |        | $ | 150.42  |         |  |  | (13 | )%
|                      |                                 | Total leisure and recreation revenue per
    available room |   | $       | 329.73  |        |   | $       | 353.97  |  |  |     | (7 | )%

Liquidity

Unrestricted cash and cash equivalents decreased
to $3.7 million at June 30, 2002, from
$9.9 million at June 30, 2001 and $7.8 million at
June 30, 2000. The major components of the change are
discussed below.



| |                                              
| | ---------------------------------------------
| | Net Cash Provided by Operating
    Activities

Net cash provided by operating activities totaled
$48.4 million, $37.0 million and $40.0 million during
the years ended June 30, 2002, 2001 and 2000, respectively.
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 because the Company incurred no
cash operating deficits from discontinued operations due to the
disposition of the entertainment and sports business in July
2001, partially offset by a decrease in cash flow from its
resorts primarily due to the impact of the events of
September 11, 2001. The decrease in cash flow from
operating activities during the year ended June 30, 2001,
compared to the year ended June 30, 2000, was primarily the
result of an increase of $9.8 million in income taxes paid,
offset by an increase in cash derived from the Companys
resorts. The income taxes paid during the year ended
June 30, 2001 included certain estimated quarterly tax
payments for fiscal 2001, as well as actual income taxes
incurred for fiscal 2000.



| |                                                        
| | -------------------------------------------------------
| | Net Cash Provided by (Used in) Investing
    Activities

Net cash provided by investing activities
amounted to $7.9 million and $222.3 million during the
years ended June 30, 2002 and 2001, respectively, compared
to net cash used in investing activities of $36.9 million
during the year ended June 30, 2000. The change was largely
because of the Companys disposition activities. 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 $67.0 million,
$60.8 million, $63.1 million during the years ended
June 30, 2002, 2001 and 2000, respectively. 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 (the Yacht Club), which
opened in January 2002 and a new 50,000 square foot
state-of-the-art spa complex (the Spa Palazzo), as
well as, a new golf clubhouse with

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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.
During the year ended June 30, 2000, capital spending
primarily related to the construction of a guest parking
facility and commencement of a luxury guestroom renovation at
the Boca Raton Resort & Club, golf related improvements at
the Naples Grande golf course and the acquisition of commercial
property located near the Companys Fort Lauderdale resorts.


Restricted cash totaled $721,000, $500,000 and
$10.2 million at June 30, 2002, 2001 and 2000,
respectively. At June 30, 2002 and 2001, restricted cash
primarily consisted of purchased guarantees (letters of credit)
that ensure the Companys payment to third parties under
certain lease agreements. At June 30, 2000, restricted cash
primarily related to escrow accounts maintained in accordance
with the terms of mortgage-note agreements, which notes were
subsequently paid by the Company.

Cash used in investing activities from
discontinued operations totaled $2.3 million during the
year ended June 30, 2001. Cash provided by investing
activities from discontinued operations totaled
$8.7 million during the year ended June 30, 2000 and
included a $10.5 million termination fee pursuant to the
termination of the Miami Arena Contract, a portion of which was
paid to vendors and third party investors. See Note 14 to
the Consolidated Financial Statements included later herein. No
cash was generated from investing activities from discontinued
operations during the year ended June 30, 2002 as this
business was sold in July 2001.



| |                                          
| | -----------------------------------------
| | Net Cash Used in Financing
    Activities

Net cash used in financing activities totaled
$62.5 million, $257.3 million and $3.2 million
during the years ended June 30, 2002, 2001 and 2000,
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 a substantial amount of
indebtedness was repaid, and Class A Common Stock
repurchased, using a portion of the 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 services at
the resorts and (2) Premier Club memberships. The primary
external sources of liquidity have been the issuance of debt
securities and borrowing under term loans and credit lines.

As of July 31, 2002, the Company had
$24.7 million outstanding under its revolving credit line
(which matures on October 31, 2003) and had
$91.6 million in immediate availability. As a result of the
current availability under this credit line and expected cash
from operations, 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
$16.2 million at June 30, 2002, compared to positive
working capital of $45.5 million at June 30, 2001. The
change is primarily because the Company used cash to repurchase
$80.1 million principal amount of 9.875% senior
subordinated notes during the year ended June 30, 2002,
which would have otherwise matured in April 2009. 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.

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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, including a
change in travel patterns resulting from slowing economic
conditions, a change in corporate policies relating to group
meetings and air or other travel disruption; 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.




Item 7A.     Quantitative
and Qualitative Disclosure About Market Risk

Not applicable.

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##### Table of Contents






Item 8.     Financial
Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL
STATEMENTS

|                                                                                                     |  |      |    | 
|---------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                                                                                     |  | Page
|                                                                                                     |  |     
|Reports of Independent Certified Public
    Accountants                                              |  |      | 26 | 
|                                                                                                    
|Consolidated Balance Sheets as of June 30,
    2002 and 2001                                         |  |      | 28 | 
|                                                                                                    
|Consolidated Statements of Operations for the
    Years Ended June 30, 2002, 2001 and 2000           |  |      | 29 | 
|                                                                                                    
|Consolidated Statements of Shareholders
    Equity for the Years Ended June 30, 2002, 2001 and 2000 |  |      | 30 | 
|                                                                                                    
|Consolidated Statements of Cash Flows for the
    Years Ended June 30, 2002, 2001 and 2000           |  |      | 31 | 
|                                                                                                    
|Notes to Consolidated Financial Statements                                                           |  |      | 32 | 

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REPORT OF INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS

To the Shareholders of Boca Resorts, Inc.:

We have audited the accompanying consolidated
balance sheet of Boca Resorts, Inc. (a Delaware corporation) and
subsidiaries as of June 30, 2002, and the related
consolidated statements of operations, shareholders equity
and cash flows for the year 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 audit.

We conducted our audit 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 audit
provides 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 at June 30,
2002, and the results of their operations and their cash flows
for the year then ended, in conformity with accounting
principles generally accepted in the United States.



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

Miami, Florida

August 12, 2002


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##### Table of Contents



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. (a Delaware corporation)
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, 2000 and the
consolidated statements of operations, stockholders equity
and cash flows for the year ended June 30, 1999 have not
been included in the accompanying financial
statements.

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##### Table of Contents



BOCA RESORTS, INC.

CONSOLIDATED BALANCE SHEETS

As of June 30,


|                                                   |                                                                                                                                                                                     |                                            |         |         |         |  |         |         |         | 
|-------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------- | ------- | ------- |  | ------- | ------- | ------- | 
|                                                   |                                                                                                                                                                                     | 2002                                       |         | 2001   
|                                                   |                                                                                                                                                                                     |                                            |         |        
|                                                   |                                                                                                                                                                                     |                                           
|                                                   |                                                                                                                                                                                     | (In thousands, except                     
|                                                   |                                                                                                                                                                                     | share data)                               
|ASSETS                                            
|Current assets:                                    |                                                                                                                                                                                     |                                            |         |         |         |  |         |        
|                                                   | Cash and cash equivalents                                                                                                                                                           |                                            | $       | 3,691   |         |  | $       | 9,909   |        
|                                                   | Restricted cash                                                                                                                                                                     |                                            |         | 721     |         |  |         | 500     |        
|                                                   | Accounts receivable, net                                                                                                                                                            |                                            |         | 21,591  |         |  |         | 23,415  |        
|                                                   | Inventory                                                                                                                                                                           |                                            |         | 6,433   |         |  |         | 7,232   |        
|                                                   | Current portion of Premier Club notes receivable                                                                                                                                    |                                            |         | 3,382   |         |  |         | 4,009   |        
|                                                   | Other current assets                                                                                                                                                                |                                            |         | 3,223   |         |  |         | 6,003   |        
|                                                   | Net assets of discontinued operations                                                                                                                                               |                                            |         |        |         |  |         | 45,711  |        
|                                                   |                                                                                                                                                                                     |                                            |         |         |         |  |         |        
|                                                   |                                                                                                                                                                                     | Total current assets                       |         |         | 39,041  |  |         |         | 96,779  | 
|Property and equipment, net                        |                                                                                                                                                                                     |                                            | 822,630 |         |         |  | 792,094 |        
|Intangible assets, net                             |                                                                                                                                                                                     |                                            | 34,518  |         |         |  | 34,518  |        
|Long-term portion of Premier Club notes receivable |                                                                                                                                                                                     |                                            | 7,410   |         |         |  | 8,224   |        
|Other assets                                       |                                                                                                                                                                                     |                                            | 13,137  |         |         |  | 14,517  |        
|                                                   |                                                                                                                                                                                     |                                            |         |         |         |  |         |        
|                                                   |                                                                                                                                                                                     | Total assets                               |         | $       | 916,736 |  |         | $       | 946,132 | 
|                                                   |                                                                                                                                                                                     |                                            |         |         |         |  |         |        
|LIABILITIES AND SHAREHOLDERS
    EQUITY          
|Current liabilities:                               |                                                                                                                                                                                     |                                            |         |         |         |  |         |        
|                                                   | Accounts payable and accrued expenses                                                                                                                                               |                                            | $       | 30,222  |         |  | $       | 32,402  |        
|                                                   | Current portion of deferred revenue and advance
    deposits                                                                                                                        |                                            |         | 22,355  |         |  |         | 18,683  |        
|                                                   | Net liabilities of discontinued operations                                                                                                                                          |                                            |         | 2,436   |         |  |         |        |        
|                                                   | Current portion of credit line and note payable                                                                                                                                     |                                            |         | 227     |         |  |         | 209     |        
|                                                   |                                                                                                                                                                                     |                                            |         |         |         |  |         |        
|                                                   |                                                                                                                                                                                     | Total current liabilities                  |         |         | 55,240  |  |         |         | 51,294  | 
|Credit line and note payable                       |                                                                                                                                                                                     |                                            | 18,793  |         |         |  | 342     |        
|Deferred revenue, net of current portion           |                                                                                                                                                                                     |                                            | 38,073  |         |         |  | 35,479  |        
|Other liabilities                                  |                                                                                                                                                                                     |                                            | 9,695   |         |         |  | 10,160  |        
|Deferred income taxes                              |                                                                                                                                                                                     |                                            | 30,052  |         |         |  | 32,436  |        
|Senior subordinated notes payable                  |                                                                                                                                                                                     |                                            | 192,895 |         |         |  | 272,960 |        
|Premier Club refundable membership fees            |                                                                                                                                                                                     |                                            | 55,716  |         |         |  | 57,818  |        
|Commitments and contingencies (Note 12)            |                                                                                                                                                                                     |                                            |         |         |         |  |         |        
|Shareholders equity:                              |                                                                                                                                                                                     |                                            |         |         |         |  |         |        
|                                                   | Class A Common Stock, $.01 par value,
    100,000,000 shares authorized and 39,538,479 and 39,621,027
    shares issued and outstanding at June 30, 2002 and 2001,
    respectively |                                            |         | 395     |         |  |         | 396     |        
|                                                   | Class B Common Stock, $.01 par value,
    10,000,000 shares authorized and 255,000 shares issued
    and outstanding at June 30, 2002 and 2001                                      |                                            |         | 3       |         |  |         | 3       |        
|                                                   | Contributed capital                                                                                                                                                                 |                                            |         | 464,565 |         |  |         | 464,626 |        
|                                                   | Retained earnings                                                                                                                                                                   |                                            |         | 51,309  |         |  |         | 20,618  |        
|                                                   |                                                                                                                                                                                     |                                            |         |         |         |  |         |        
|                                                   |                                                                                                                                                                                     | Total shareholders equity                 |         |         | 516,272 |  |         |         | 485,643 | 
|                                                   |                                                                                                                                                                                     |                                            |         |         |         |  |         |        
|                                                   |                                                                                                                                                                                     | Total liabilities and shareholders equity |         | $       | 916,736 |  |         | $       | 946,132 | 
|                                                   |                                                                                                                                                                                     |                                            |         |         |         |  |         |        

See accompanying notes to consolidated financial
statements.

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BOCA RESORTS, INC.

CONSOLIDATED STATEMENTS OF
OPERATIONS

For the Years Ended June 30,


|                                                                                        |                                              |                                       |         |         |         |      |         |         |         |   |         |         |         | 
|--------------------------------------------------------------------------------------- | -------------------------------------------- | ------------------------------------- | ------- | ------- | ------- | ---- | ------- | ------- | ------- | - | ------- | ------- | ------- | 
|                                                                                        |                                              | 2002                                  |         | 2001    |         | 2000
|                                                                                        |                                              |                                       |         |         |         |     
|                                                                                        |                                              |                                      
|                                                                                        |                                              | (In thousands, except per share data)
|Leisure and recreation revenue                                                          |                                              | $                                     | 273,043 |         |         | $    | 329,171 |         |         | $ | 361,360 |        
|Operating expenses:                                                                     |                                              |                                       |         |         |         |      |         |         |         |   |         |        
|                                                                                        | Cost of leisure and recreation services      |                                       |         | 123,529 |         |      |         | 143,567 |         |   |         | 156,620 |        
|                                                                                        | Selling, general and administrative expenses |                                       |         | 83,146  |         |      |         | 89,624  |         |   |         | 98,731  |        
|                                                                                        | Amortization and depreciation                |                                       |         | 34,790  |         |      |         | 35,490  |         |   |         | 34,436  |        
|                                                                                        |                                              |                                       |         |         |         |      |         |         |         |   |         |        
|                                                                                        |                                              | Total operating expenses              |         |         | 241,465 |      |         |         | 268,681 |   |         |         | 289,787 | 
|                                                                                        |                                              |                                       |         |         |         |      |         |         |         |   |         |        
|Operating income                                                                        |                                              |                                       | 31,578  |         |         |      | 60,490  |         |         |   | 71,573  |        
|Interest and other income                                                               |                                              |                                       | 1,240   |         |         |      | 5,164   |         |         |   | 1,529   |        
|Interest and other expense                                                              |                                              |                                       | (23,903 | )       |         |      | (47,150 | )       |         |   | (55,040 | )      
|                                                                                        |                                              |                                       |         |         |         |      |         |         |         |   |         |        
|Income from continuing operations before income
    taxes                               |                                              |                                       | 8,915   |         |         |      | 18,504  |         |         |   | 18,062  |        
|Provision for income taxes                                                              |                                              |                                       | 2,565   |         |         |      | 4,724   |         |         |   | 805     |        
|                                                                                        |                                              |                                       |         |         |         |      |         |         |         |   |         |        
|Income from continuing operations                                                       |                                              |                                       | 6,350   |         |         |      | 13,780  |         |         |   | 17,257  |        
|Gain on disposition of discontinued operations,
    net of income taxes                 |                                              |                                       | 26,185  |         |         |      |        |         |         |   |        |        
|Loss from discontinued operations, net of benefit
    for income taxes                  |                                              |                                       |        |         |         |      | (8,862  | )       |         |   | (3,771  | )      
|Extraordinary loss on early extinguishment of
    debt, net of benefit for income taxes |                                              |                                       | (1,844  | )       |         |      | (1,236  | )       |         |   |        |        
|                                                                                        |                                              |                                       |         |         |         |      |         |         |         |   |         |        
|                                                                                        |                                              | Net income                            |         | $       | 30,691  |      |         | $       | 3,682   |   |         | $       | 13,486  | 
|                                                                                        |                                              |                                       |         |         |         |      |         |         |         |   |         |        
|Basic net income per share:                                                             |                                              |                                       |         |         |         |      |         |         |         |   |         |        
|Income from continuing operations                                                       |                                              | $                                     | 0.16    |         |         | $    | 0.34    |         |         | $ | 0.42    |        
|Income (loss) from discontinued operations                                              |                                              |                                       | 0.66    |         |         |      | (0.22   | )       |         |   | (0.09   | )      
|Extraordinary loss on early extinguishment of debt                                      |                                              |                                       | (0.05   | )       |         |      | (0.03   | )       |         |   |        |        
|                                                                                        |                                              |                                       |         |         |         |      |         |         |         |   |         |        
|                                                                                        |                                              | Net income per share  basic          |         | $       | 0.77    |      |         | $       | 0.09    |   |         | $       | 0.33    | 
|                                                                                        |                                              |                                       |         |         |         |      |         |         |         |   |         |        
|Diluted net income per share:                                                           |                                              |                                       |         |         |         |      |         |         |         |   |         |        
|Income from continuing operations                                                       |                                              | $                                     | 0.16    |         |         | $    | 0.34    |         |         | $ | 0.42    |        
|Income (loss) from discontinued operations                                              |                                              |                                       | 0.65    |         |         |      | (0.22   | )       |         |   | (0.09   | )      
|Extraordinary loss on early extinguishment of debt                                      |                                              |                                       | (0.05   | )       |         |      | (0.03   | )       |         |   |        |        
|                                                                                        |                                              |                                       |         |         |         |      |         |         |         |   |         |        
|                                                                                        |                                              | Net income per share  diluted        |         | $       | 0.76    |      |         | $       | 0.09    |   |         | $       | 0.33    | 
|                                                                                        |                                              |                                       |         |         |         |      |         |         |         |   |         |        
|Shares used in computing net income per
    share  basic                               |                                              |                                       | 39,793  |         |         |      | 40,317  |         |         |   | 40,861  |        
|                                                                                        |                                              |                                       |         |         |         |      |         |         |         |   |         |        
|Shares used in computing net income per
    share  diluted                             |                                              |                                       | 40,551  |         |         |      | 40,958  |         |         |   | 40,868  |        
|                                                                                        |                                              |                                       |         |         |         |      |         |         |         |   |         |        

See accompanying notes to consolidated financial
statements.

29



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BOCA RESORTS, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS
EQUITY

|                       |                                                  |                |        |              |      |        |     |        |    |             |     |          |   |               |   |   |   |   |         |        |        |   |        |        |   |   |         |        |        |  
|---------------------- | ------------------------------------------------ | -------------- | ------ | ------------ | ---- | ------ | --- | ------ | -- | ----------- | --- | -------- | - | ------------- | - | - | - | - | ------- | ------ | ------ | - | ------ | ------ | - | - | ------- | ------ | ------ | -
|                       |                                                  |                |        |              |      |        |     |        |    |            
|                       |                                                  | Class A        |        | Class B      |      |        |     |        |    |            
|                       |                                                  | Common Stock   |        | Common Stock |      |        |     |        |    |            
|                       |                                                  |                |        |              |      |        |     |        |    |            
|                       |                                                  | Number         |        |              |      | Number |     |        |    |             |     |          |   | Total        
|                       |                                                  | of             |        |              |      | of     |     |        |    | Contributed |     | Retained |   | Shareholders
|                       |                                                  | Shares         |        | Amount       |      | Shares |     | Amount |    | Capital     |     | Earnings |   | Equity       
|                       |                                                  |                |        |              |      |        |     |        |    |             |     |          |   |              
|                       |                                                  |               
|                       |                                                  | (In thousands)
|Balance, June 30, 1999 |                                                  |                | 40,551 |              |      | $      | 406 |        |    |             | 255 |          |   | $             | 3 |   |   | $ | 486,421 |        |        | $ | 3,450  |        |   | $ | 490,280 |       
|                       | Net income                                       |                |        |             |      |        |     |       |    |             |     |         |   |               |   |  |   |   |         |       |        |   |        | 13,486 |   |   |         | 13,486 |       
|                       | Warrant activity                                 |                |        |             |      |        |     |       |    |             |     |         |   |               |   |  |   |   |         | (1,080 | )      |   |        |       |   |   |         | (1,080 | )     
|                       | Stock issued in acquisitions                     |                |        | 50           |      |        |     |       |    |             |     |         |   |               |   |  |   |   |         | 539    |        |   |        |       |   |   |         | 539    |       
|                       | Tax effect of stock issuance to acquire an asset |                |        |             |      |        |     |       |    |             |     |         |   |               |   |  |   |   |         | (1,078 | )      |   |        |       |   |   |         | (1,078 | )     
|                       | Exercise of stock options                        |                |        | 5            |      |        |     |       |    |             |     |         |   |               |   |  |   |   |         | 47     |        |   |        |       |   |   |         | 47     |       
|                       |                                                  |                |        |              |      |        |     |        |    |             |     |          |   |               |   |   |   |   |         |        |        |   |        |        |   |   |         |       
|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   |        |              | (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               |                |        | (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 |       
|                       |                                                  |                |        |              |      |        |     |        |    |             |     |          |   |               |   |   |   |   |         |        |        |   |        |        |   |   |         |       

See accompanying notes to consolidated financial
statements.

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BOCA RESORTS, INC.

CONSOLIDATED STATEMENTS OF CASH
FLOWS

For the Years Ended June 30,


|                                                  |                                                                                                                                                   |                                                                         |                                                         |         |         |         |       |          |        |          |        |         |         |         |  
|------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------- | ------------------------------------------------------- | ------- | ------- | ------- | ----- | -------- | ------ | -------- | ------ | ------- | ------- | ------- | -
|                                                  |                                                                                                                                                   | 2002                                                                    |                                                         | 2001    |         | 2000   
|                                                  |                                                                                                                                                   |                                                                         |                                                         |         |         |        
|                                                  |                                                                                                                                                   |                                                                        
|                                                  |                                                                                                                                                   | (In thousands)                                                         
|Operating activities:                             |                                                                                                                                                   |                                                                         |                                                         |         |         |         |       |          |        |          |        |        
|                                                  | Net income                                                                                                                                        |                                                                         | $                                                       | 30,691  |         |         | $     | 3,682    |        |          | $      | 13,486  |        
|                                                  | Extraordinary loss on early extinguishment of
    debt, net of benefit for income taxes                                                           |                                                                         |                                                         | 1,844   |         |         |       | 1,236    |        |          |        |        |        
|                                                  | Adjustments to reconcile income before
    extraordinary loss, net of benefit for income taxes, to net cash
    provided by operating activities: |                                                                         |                                                         |         |         |         |       |          |        |          |        |         |        
|                                                  |                                                                                                                                                   | Amortization and depreciation                                           |                                                         |         | 34,790  |         |       |          | 35,490 |          |        |         | 34,436  |        
|                                                  |                                                                                                                                                   | 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   |        
|                                                  |                                                                                                                                                   | Imputed interest on indebtedness with no stated
    rate                |                                                         |         |        |         |       |          | 725    |          |        |         | 1,868   |        
|                                                  |                                                                                                                                                   | Provision for deferred income taxes                                     |                                                         |         | 2,384   |         |       |          | 3,207  |          |        |         | 3,214   |        
|                                                  | Changes in operating assets and liabilities                                                                                                       |                                                                         |                                                         |         |         |         |       |          |        |          |        |         |        
|                                                  |                                                                                                                                                   | Accounts receivable                                                     |                                                         |         | 1,824   |         |       |          | (5,701 | )        |        |         | (5,014  | )      
|                                                  |                                                                                                                                                   | Other assets                                                            |                                                         |         | 3,327   |         |       |          | (1,788 | )        |        |         | (595    | )      
|                                                  |                                                                                                                                                   | Accounts payable and accrued expenses                                   |                                                         |         | (541    | )       |       |          | (5,644 | )        |        |         | (6,531  | )      
|                                                  |                                                                                                                                                   | Deferred revenue and other liabilities                                  |                                                         |         | 243     |         |       |          | 3,014  |          |        |         | 5,619   |        
|                                                  |                                                                                                                                                   | Net assets from discontinued operations                                 |                                                         |         |        |         |       |          | (6,050 | )        |        |         | (10,227 | )      
|                                                  |                                                                                                                                                   |                                                                         |                                                         |         |         |         |       |          |        |          |        |        
|                                                  |                                                                                                                                                   |                                                                         | Net cash provided by operating activities               |         |         | 48,377  |       |          |        | 37,033   |        |         |         | 40,027  |  
|                                                  |                                                                                                                                                   |                                                                         |                                                         |         |         |         |       |          |        |          |        |        
|Investing activities:                             |                                                                                                                                                   |                                                                         |                                                         |         |         |         |       |          |        |          |        |        
|                                                  | Capital expenditures                                                                                                                              |                                                                         |                                                         | (66,965 | )       |         |       | (60,778  | )      |          |        | (63,090 | )      
|                                                  | Change in restricted cash                                                                                                                         |                                                                         |                                                         | (221    | )       |         |       | 6,415    |        |          |        | 21,510  |        
|                                                  | 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 business acquisitions                                                                                                                |                                                                         |                                                         |        |         |         |       |         |        |          |        | (4,016  | )      
|                                                  | Cash provided by (used in) investing activities
    from discontinued operations                                                                  |                                                                         |                                                         |        |         |         |       | (2,258   | )      |          |        | 8,683   |        
|                                                  |                                                                                                                                                   |                                                                         |                                                         |         |         |         |       |          |        |          |        |        
|                                                  |                                                                                                                                                   |                                                                         | Net cash provided by (used in) investing
    activities |         |         | 7,868   |       |          |        | 222,347  |        |         |         | (36,913 | )
|                                                  |                                                                                                                                                   |                                                                         |                                                         |         |         |         |       |          |        |          |        |        
|Financing activities:                             |                                                                                                                                                   |                                                                         |                                                         |         |         |         |       |          |        |          |        |        
|                                                  | Borrowings under credit facilities                                                                                                                |                                                                         |                                                         | 43,195  |         |         |       | 38,430   |        |          |        | 43,753  |        
|                                                  | Payments under long-term debt agreements and
    credit facilities                                                                                |                                                                         |                                                         | (24,726 | )       |         |       | (222,376 | )      |          |        | (46,929 | )      
|                                                  | Repurchases of 9.875% senior subordinated notes
    payable                                                                                       |                                                                         |                                                         | (80,065 | )       |         |       | (67,040  | )      |          |        |        |        
|                                                  | Repurchases of common stock                                                                                                                       |                                                                         |                                                         | (2,305  | )       |         |       | (6,827   | )      |          |        |        |        
|                                                  | Proceeds from exercise of stock options                                                                                                           |                                                                         |                                                         | 1,438   |         |         |       | 546      |        |          |        | 47      |        
|                                                  | Cash used in financing activities from
    discontinued operations                                                                                |                                                                         |                                                         |        |         |         |       |         |        |          |        | (115    | )      
|                                                  |                                                                                                                                                   |                                                                         |                                                         |         |         |         |       |          |        |          |        |        
|                                                  |                                                                                                                                                   |                                                                         | Net cash used in financing activities                   |         |         | (62,463 | )     |          |        | (257,267 | )      |         |         | (3,244  | )
|                                                  |                                                                                                                                                   |                                                                         |                                                         |         |         |         |       |          |        |          |        |        
|Cash provided by (used in) continuing operations  |                                                                                                                                                   |                                                                         | (81,272                                                 | )       |         |         | 1,559 |          |        |          | (2,242 | )      
|Cash provided by discontinued operations          |                                                                                                                                                   |                                                                         | 75,054                                                  |         |         |         | 554   |          |        |          | 2,112  |        
|Cash and cash equivalents, at beginning of period |                                                                                                                                                   |                                                                         | 9,909                                                   |         |         |         | 7,796 |          |        |          | 7,926  |        
|                                                  |                                                                                                                                                   |                                                                         |                                                         |         |         |         |       |          |        |          |        |        
|Cash and cash equivalents, at end of period       |                                                                                                                                                   | $                                                                       | 3,691                                                   |         |         | $       | 9,909 |          |        | $        | 7,796  |        
|                                                  |                                                                                                                                                   |                                                                         |                                                         |         |         |         |       |          |        |          |        |        

See accompanying notes to consolidated financial
statements.

31



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##### Table of Contents



BOCA RESORTS, INC.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

June 30, 2002


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 championship
golf courses located in Florida, Grande Oaks Golf Club in Davie
and Naples Grande Golf Club in Naples.

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 (the
Panthers) and related arena management operations on
July 25, 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 on December 22, 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. At June 30, 2002 and
2001, 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.

32



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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, 2002. 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 resorts, are capitalized. Interest has
been capitalized using the average borrowing rate of the
Company. Interest capitalized for the years ended June 30,
2002, 2001 and 2000 totaled $1.9 million, $1.1 million and $2.8
million, respectively. Depreciation and amortization has been
computed using the straight-line method over the following
estimated useful lives:

|                                  |  |       |      | 
|--------------------------------- |  | ----- | ---- | 
|                                  |  | Years
|                                  |  |      
|Building and improvements         |  |       | 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
represents the excess of the cost over the fair value of net
assets of the acquired business. 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 will be tested for
impairment annually at the reporting unit level 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, 2002, by determining whether the carrying
amount of a reporting unit exceeded its fair value. The Company
had no impairment of goodwill during the year ended
June 30, 2002 or at July 1, 2002. During the years
ended June 30, 2001 and 2000 goodwill was amortized on a
straight-line basis over 40 years. The following table sets
forth reported net

33



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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

income and earnings per share, as adjusted to
exclude goodwill amortization expense for the years ended
June 30 (in 000s, except per share amounts):

|                                                                                          |  |      |        |      |  |   |        | 
|----------------------------------------------------------------------------------------- |  | ---- | ------ | ---- |  | - | ------ | 
|                                                                                          |  | 2001 |        | 2000
|                                                                                          |  |      |        |     
|Income from continuing operations, as reported                                            |  | $    | 13,780 |      |  | $ | 17,257 | 
|Add back of amortization expense, net of taxes                                            |  |      | 976    |      |  |   | 1,365  | 
|                                                                                          |  |      |        |      |  |   |        | 
|Income from continuing operations, as adjusted                                            |  | $    | 14,756 |      |  | $ | 18,622 | 
|                                                                                          |  |      |        |      |  |   |        | 
|Net income, as reported                                                                   |  | $    | 3,682  |      |  | $ | 13,486 | 
|Add back of amortization expense, net of taxes                                            |  |      | 976    |      |  |   | 1,365  | 
|                                                                                          |  |      |        |      |  |   |        | 
|Net income, as adjusted                                                                   |  | $    | 4,658  |      |  | $ | 14,851 | 
|                                                                                          |  |      |        |      |  |   |        | 
|Earnings per common share from continuing
    operations (basic and diluted), as reported |  | $    | 0.34   |      |  | $ | 0.42   | 
|                                                                                          |  |      |        |      |  |   |        | 
|Earnings per common share from continuing
    operations (basic), as adjusted             |  | $    | 0.37   |      |  | $ | 0.46   | 
|                                                                                          |  |      |        |      |  |   |        | 
|Earnings per common share from continuing
    operations (diluted), as adjusted           |  | $    | 0.36   |      |  | $ | 0.46   | 
|                                                                                          |  |      |        |      |  |   |        | 
|Earnings per common share (basic and diluted), as
    reported                            |  | $    | 0.09   |      |  | $ | 0.33   | 
|                                                                                          |  |      |        |      |  |   |        | 
|Earnings per common share (basic), as adjusted                                            |  | $    | 0.12   |      |  | $ | 0.36   | 
|                                                                                          |  |      |        |      |  |   |        | 
|Earning per common share (diluted), as adjusted                                           |  | $    | 0.11   |      |  | $ | 0.36   | 
|                                                                                          |  |      |        |      |  |   |        | 



| |                                                   
| | --------------------------------------------------
| | Accounting for Impairment of Long-Lived
    Assets

The carrying value of long-lived assets is
reviewed if the facts and circumstances suggest that it 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, 2002 is $192.9 million, compared
to an estimated fair value of $198.9 million, which is based on
the quoted market price as of June 28, 2002 (the last
business day in June) 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 other recreational amenities use at the
Companys resort properties 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 initial membership
fees originated after December 31, 1997 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

34



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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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.

Initiation fees relating to club memberships
originated prior to December 31, 1997 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 $4.2
million, $5.3 million and $7.0 million for the years ended
June 30, 2002, 2001 and 2000, 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) No. 25
Accounting for Stock Issued to Employees and 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.



| |                          
| | -------------------------
| | 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, 2001 and 2000 were
antidilutive and have been excluded. The following table sets
forth weighted average shares used to compute basic and diluted
earnings per share (in 000s):

|                                            |  |      |        |      |  |      |        |  |  |  |        | 
|------------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ |  |  |  | ------ | 
|                                            |  | 2002 |        | 2001 |  | 2000
|                                            |  |      |        |      |  |     
|Basic weighted average shares outstanding   |  |      | 39,793 |      |  |      | 40,317 |  |  |  | 40,861 | 
|Stock options                               |  |      | 758    |      |  |      | 641    |  |  |  | 7      | 
|                                            |  |      |        |      |  |      |        |  |  |  |        | 
|Diluted weighted average shares outstanding |  |      | 40,551 |      |  |      | 40,958 |  |  |  | 40,868 | 
|                                            |  |      |        |      |  |      |        |  |  |  |        | 



| |                     
| | --------------------
| | 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,

35



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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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 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 profits, 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, approximately 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 share repurchase program authorizing the
Company to purchase up to $30 million of its outstanding
Class A Common Stock over the ensuing 24 months. As of
June 30, 2002, the Company had repurchased 827,466 shares
of Class A Common Stock for $9.1 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.



| |                     
| | --------------------
| | Comprehensive Income

Comprehensive income was the same as net income
for the years ended June 30, 2002, 2001 and 2000.



| |                                                   
| | --------------------------------------------------
| | 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 becomes effective for
financial statements issued for fiscal years beginning after
December 15, 2001. 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
is not anticipated to 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. Under SFAS No. 4 all
gains and losses from extinguishment of debt were required to be
aggregated and, if material, classified as an extraordinary
item, net of related income tax effect. SFAS No. 145
eliminates SFAS No. 4 and, thus, gains and losses from
extinguishment of debt should

36



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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

be classified as extraordinary items only if they
meet the criteria in APB Opinion 30, Reporting the Results
of Operations  Discontinued Events and Extraordinary
Items. Applying the provisions of APB Opinion 30 will
distinguish 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 provisions of this Statement related to the rescission
of SFAS No. 4 shall be applied in fiscal years beginning
after May 15, 2002. Any gain or loss on extinguishment of
debt that was classified as an extraordinary item in prior
periods presented, that does not meet the criteria in APB
Opinion No. 30 for classification as an extraordinary item,
shall be reclassified. Accordingly, upon adoption of SFAS
No. 145, the Company will reclassify extraordinary losses
resulting from the early extinguishment of debt associated with
previous periods 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 shall be effective for exit or
disposal activities initiated after December 31, 2002. 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 is not anticipated
to have a material impact on the Companys results of
operations or financial position.

3. Supplemental Cash Flow
Information



| |                               
| | ------------------------------
| | Interest and Income Taxes Paid

Interest paid totaled $25.1 million,
$48.3 million and $53.1 million during the years ended
June 30, 2002, 2001 and 2000, respectively. Income taxes
paid totaled $3.1 million, $9.9 million and $54,000
during the years ended June 30, 2002, 2001 and 2000,
respectively. The Company also paid approximately
$18.8 million in estimated income taxes relating to its
gain on the disposition of the entertainment and sports business
during the year ended June 30, 2002. The income taxes paid
during 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. The Company issued shares of Class A
Common Stock totaling 50,000 (which were valued at $539,000) in
connection with business acquisitions during the year ended
June 30, 2000.

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

37



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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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

|           |  |   |        | 
|---------- |  | - | ------ | 
|2003       |  | $ | 3,382  | 
|2004       |  |   | 2,861  | 
|2005       |  |   | 2,112  | 
|2006       |  |   | 1,496  | 
|2007       |  |   | 791    | 
|Thereafter |  |   | 150    | 
|           |  |   |        | 
|           |  | $ | 10,792 | 
|           |  |   |        | 

5. Discontinued Operations and
Divestiture

On July 25, 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 25,
2002) and the assumption by the purchasers of certain
off-balance sheet contingencies including a $10 million
construction obligation secured by a performance bond which the
purchasers are in the process of securing. The purchasers have
given the Company written assurances that the off-balance sheet
contingencies shall be fully assumed not later than
December 16, 2002. The net proceeds from the sale of the
business after payment of disposal costs and income taxes will
exceed $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 have been restated to
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
during the years ended June 30, 2001 and 2000 based upon
its average borrowing cost and the average funds the
discontinued operations borrowed from the parent. Certain
selling, general and administrative expenses incurred by the
Company have also been included in discontinued operations
during the years ended June 30, 2001 and 2000 based upon
the specific identification method. Summary operating results of
the discontinued operations for the years ended June 30 are
as follows (in 000s):

|                                                          |  |      |         |      |  |   |        |  
|--------------------------------------------------------- |  | ---- | ------- | ---- |  | - | ------ | -
|                                                          |  | 2001 |         | 2000
|                                                          |  |      |         |     
|Revenue                                                   |  | $    | 55,213  |      |  | $ | 60,187 |  
|Loss from discontinued operations before income
    taxes |  | $    | (14,217 | )    |  | $ | (4,576 | )
|Benefit (provision) for income taxes                      |  |      | 5,355   |      |  |   | 805    |  
|                                                          |  |      |         |      |  |   |        |  
|Loss from discontinued operations                         |  | $    | (8,862  | )    |  | $ | (3,771 | )
|                                                          |  |      |         |      |  |   |        |  

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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The net liabilities of discontinued operations
totaling $2.4 million in the Consolidated Balance Sheets at
June 30, 2002 consists of estimated income taxes payable
and other disposal costs. The net assets of the discontinued
operations in the Consolidated Balance Sheets at June 30,
2001 include the following (in 000s):

|                                      |                                       |   |        |        | 
|------------------------------------- | ------------------------------------- | - | ------ | ------ | 
|Cash and cash equivalents             |                                       | $ | 2,344  |       
|Restricted cash                       |                                       |   | 16,644 |       
|Accounts receivable, net              |                                       |   | 2,708  |       
|Inventory                             |                                       |   | 459    |       
|Other current assets                  |                                       |   | 1,893  |       
|Property and equipment, net           |                                       |   | 7,566  |       
|Intangible assets, net                |                                       |   | 24,915 |       
|Other non-current assets              |                                       |   | 10,193 |       
|Accounts payable and accrued expenses |                                       |   | (5,741 | )     
|Current portion of deferred revenue   |                                       |   | (3,431 | )     
|Other current liabilities             |                                       |   | (8,982 | )     
|Other non-current liabilities         |                                       |   | (2,857 | )     
|                                      |                                       |   |        |       
|                                      | Net assets of discontinued operations |   | $      | 45,711 | 
|                                      |                                       |   |        |       

On December 22, 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 paid 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 Sheet. A portion of the Companys
interest expense has been included in the operating results of
the Arizona Biltmore Resort & Spa during the years ended
June 30, 2001 and 2000 based upon the debt balance
attributable to its operations. Certain selling, general and
administrative expenses incurred by the Company during the years
ended June 30, 2001 and 2000 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 during the years ended June 30 are as follows (in
000s):

|                 |  |      |        |      |  |   |        | 
|---------------- |  | ---- | ------ | ---- |  | - | ------ | 
|                 |  | 2001 |        | 2000
|                 |  |      |        |     
|Revenue          |  | $    | 39,856 |      |  | $ | 93,616 | 
|Operating income |  |      | 8,446  |      |  |   | 26,072 | 

6. Property and Equipment, net

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

|                                                |  |      |          |      |  |   |         |  
|----------------------------------------------- |  | ---- | -------- | ---- |  | - | ------- | -
|                                                |  | 2002 |          | 2001
|                                                |  |      |          |     
|Land and land improvements                      |  | $    | 285,933  |      |  | $ | 283,546 |  
|Buildings and improvements                      |  |      | 544,579  |      |  |   | 482,187 |  
|Furniture, fixtures and equipment               |  |      | 110,598  |      |  |   | 87,954  |  
|Construction in progress                        |  |      | 4,733    |      |  |   | 22,566  |  
|                                                |  |      |          |      |  |   |         |  
|                                                |  |      | 945,843  |      |  |   | 876,253 |  
|Less: accumulated depreciation and amortization |  |      | (123,213 | )    |  |   | (84,159 | )
|                                                |  |      |          |      |  |   |         |  
|                                                |  | $    | 822,630  |      |  | $ | 792,094 |  
|                                                |  |      |          |      |  |   |         |  

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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Depreciation and amortization expense on property
and equipment included in the Consolidated Statements of
Operations was approximately $34.8 million,
$33.8 million and $32.0 million for the years ended
June 30, 2002, 2001 and 2000, respectively.

7. Accounts Payable and Accrued
Expenses

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

|                                  |  |      |        |      |  |   |        | 
|--------------------------------- |  | ---- | ------ | ---- |  | - | ------ | 
|                                  |  | 2002 |        | 2001
|                                  |  |      |        |     
|Accrued payroll and related costs |  | $    | 7,546  |      |  | $ | 7,439  | 
|Accounts payable                  |  |      | 6,404  |      |  |   | 6,900  | 
|Accrued property taxes            |  |      | 4,688  |      |  |   | 4,528  | 
|Other accrued liabilities         |  |      | 4,525  |      |  |   | 6,619  | 
|Accrued interest payable          |  |      | 4,159  |      |  |   | 5,690  | 
|Accrued legal settlements         |  |      | 2,900  |      |  |   |       | 
|Income taxes payable              |  |      |       |      |  |   | 1,226  | 
|                                  |  |      |        |      |  |   |        | 
|                                  |  | $    | 30,222 |      |  | $ | 32,402 | 
|                                  |  |      |        |      |  |   |        | 

8. Credit Line and Note Payable

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

|                                                                                                                     |                                             |      |        |        |  |   |     |     | 
|-------------------------------------------------------------------------------------------------------------------- | ------------------------------------------- | ---- | ------ | ------ |  | - | --- | --- | 
|                                                                                                                     |                                             | 2002 |        | 2001  
|                                                                                                                     |                                             |      |        |       
|Revolving credit facility with bank, variable
    interest rate, 4.84% at June 30, 2002, due on
    October 31, 2003 |                                             | $    | 18,695 |        |  | $ |    |    
|Capital lease on operating equipment, fixed
    interest rate of 8.0%, due on November 15, 2003                      |                                             |      | 325    |        |  |   | 551 |    
|                                                                                                                     |                                             |      |        |        |  |   |     |    
|                                                                                                                     | Total outstanding including current portion |      | $      | 19,020 |  |   | $   | 551 | 
|                                                                                                                     |                                             |      |        |        |  |   |     |    

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, 2002. The Companys
availability under its revolving credit line at June 30,
2002 was $99.9 million. Minimum principal payments required
on the Companys credit line and note payable for fiscal
years subsequent to 2002 are as follows (in 000s):

|     |  |   |        | 
|---- |  | - | ------ | 
|2003 |  | $ | 227    | 
|2004 |  |   | 18,793 | 
|     |  |   |        | 
|     |  | $ | 19,020 | 
|     |  |   |        | 

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%.

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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

During the years ended June 30, 2002 and
2001, the Company repurchased $80.1 million and
$67.0 million principal amount of Notes, respectively, and
recognized an extraordinary loss of $3.1 million (or
$1.8 million, net of a benefit for income taxes) and
$2.0 million (or $1.2 million, net of a benefit for
income taxes), respectively. The extraordinary losses represent
the non-cash charge-off of a pro rata portion of the debt
issuance costs previously capitalized when the Notes were issued
together with the premium paid to acquire the Notes.

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, 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 December 31, 1997 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 of approximately $55.7 million and
$57.8 million at June 30, 2002 and 2001, respectively,
have been reflected as a non-current liability in the
accompanying Consolidated Balance Sheets.

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

41



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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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, 2002 is as follows:

|                                      |           |           |           |             |   |               |           |           |   |             |               |               |  |   |       |       |  |  |           |  | 
|------------------------------------- | --------- | --------- | --------- | ----------- | - | ------------- | --------- | --------- | - | ----------- | ------------- | ------------- |  | - | ----- | ----- |  |  | --------- |  | 
|                                      |           |           |           |             |   |               |           | Weighted  |   |            
|                                      |           | Number of |           | Number of   |   |               |           | Average   |   | Number of  
|                                      |           | Shares    |           | Options     |   | Range in      |           | Exercise  |   | Options    
|                                      |           | Reserved  |           | Outstanding |   | Option Prices |           | Price     |   | Exercisable
|                                      |           |           |           |             |   |               |           |           |   |            
|Balance at June 30, 1999              |           |           | 502,502   |             |   |               | 4,454,884 |           |   | $           | 9.31 - $27.30 |               |  | $ | 15.53 |       |  |  | 1,247,273 | 
|Additional shares reserved under plan |           |           | 2,500,000 |             |   |               |          |           |   |             |              |               |  |   |      |       |  |  |           | 
|                                      | Granted   |           |           | (855,000    | ) |               |           | 855,000   |   |             | $             | 9.50 - $ 9.75 |  |   | $     | 9.73  |  |  |           |  | 
|                                      | Exercised |           |           |            |   |               |           | (4,702    | ) |             |               | $10.00        |  |   | $     | 10.00 |  |  |           |  | 
|                                      | Forfeited |           |           | 162,538     |   |               |           | (162,538  | ) |             | $             | 9.75 - $27.30 |  |   | $     | 14.63 |  |  |           |  | 
|                                      |           |           |           |             |   |               |           |           |   |             |               |               |  |   |       |       |  |  |           | 
|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 | 
|                                      |           |           |           |             |   |               |           |           |   |             |               |               |  |   |       |       |  |  |           | 

The weighted average exercise price and weighted
average remaining contractual life of the Companys
outstanding options at June 30, 2002 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 - $13.69           |  |             | 4,395,189 |             |  |          | 7.4 years |             |  | $             | 10.57 |  |  |  | 2,213,916 |  |  | $ | 10.21 | 
|$16.63 - $19.19          |  |             | 1,234,904 |             |  |          | 5.5 years |             |  | $             | 17.39 |  |  |  | 1,234,904 |  |  | $ | 17.39 | 
|$21.13 - $26.38          |  |             | 901,837   |             |  |          | 4.9 years |             |  | $             | 25.50 |  |  |  | 901,837   |  |  | $ | 25.50 | 
|                         |  |             |           |             |  |          |           |             |  |               |       |  |  |  |           |  |  |   |       | 
|                         |  |             | 6,531,930 |             |  |          |           |             |  | $             | 13.92 |  |  |  | 4,350,657 |  |  |   |       | 
|                         |  |             |           |             |  |          |           |             |  |               |       |  |  |  |           |  |  |   |       | 

Pro forma information relating to net income and
earnings per share is required by SFAS No. 123, and has
been determined as if the Company had accounted for its employee
stock options under the fair value method of that statement. 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:

|                                                             |  |      |            |      |  |      |          |   |  |   |           |  
|------------------------------------------------------------ |  | ---- | ---------- | ---- |  | ---- | -------- | - |  | - | --------- | -
|                                                             |  | 2002 |            | 2001 |  | 2000
|                                                             |  |      |            |      |  |     
|Pro forma net income (loss)                                  |  | $    | 28,830,000 |      |  | $    | (730,000 | ) |  | $ | 8,390,000 |  
|Pro forma net income (loss) per share                        |  | $    | 0.71       |      |  | $    | (0.02    | ) |  | $ | 0.21      |  
|Pro forma weighted average fair value of options
    granted |  | $    | 4.44       |      |  | $    | 5.41     |   |  | $ | 6.99      |  
|Risk free interest rate                                      |  |      | 1.50       | %    |  |      | 4.00     | % |  |   | 6.00      | %
|Expected lives                                               |  |      | 6 years    |      |  |      | 6 years  |   |  |   | 6 years   |  
|Expected volatility                                          |  |      | 30         | %    |  |      | 30       | % |  |   | 30        | %

42



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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

12. Commitments and
Contingencies

Capital
Expenditures

At June 30, 2002, the Company had
commitments outstanding for capital expenditures under purchase
orders and contracts of approximately $6.6 million
associated with capital projects at the Boca Raton Resort &
Club, the Registry Resort at Pelican Bay and 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 $780,000, $891,000
and $850,000 for the years ended June 30, 2002, 2001 and
2000, 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, 2002.

Future minimum lease obligations under various
noncancellable operating leases with initial terms in excess of
one year at June 30, 2002 (including the lease described in
the preceding paragraph) are as follows (in 000s):

|           |  |   |        | 
|---------- |  | - | ------ | 
|2003       |  | $ | 1,536  | 
|2004       |  |   | 917    | 
|2005       |  |   | 671    | 
|2006       |  |   | 386    | 
|2007       |  |   | 329    | 
|Thereafter |  |   | 16,500 | 
|           |  |   |        | 
|           |  | $ | 20,339 | 
|           |  |   |        | 

Letters of
Credit

As of June 30, 2002, 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, which matured and were rolled over in August
2002 and are included in restricted cash in the accompanying
Consolidated Balance Sheets.

Employment
Agreements

The Company entered into employment agreements
with certain resort personnel that expire at various dates
through October 2004. The terms of these employment agreements
require future payments, excluding bonuses, at June 30,
2002 as follows (in 000s):

|     |  |   |       | 
|---- |  | - | ----- | 
|2003 |  | $ | 791   | 
|2004 |  |   | 425   | 
|2005 |  |   | 123   | 
|     |  |   |       | 
|     |  | $ | 1,339 | 
|     |  |   |       | 

43



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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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.

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 no material
environmental liabilities or compliance concerns of which the
Company is unaware.

13. License and Franchise
Agreements

Upon the acquisition of the Hyatt Regency
Pier 66 Hotel and Marina, the Company assumed the rights of
a franchise agreement with Hyatt Franchise Corporation
(Hyatt). The franchise agreement 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 $1.4 million, $1.6 million and
$1.4 million for the years ended June 30, 2002, 2001
and 2000, 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, 2002.

Upon the acquisition of Radisson Bahia Mar Resort
and Yachting Center, the Company assumed the rights of a
ten-year 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
$383,000, $469,000 and $469,000 for the years ended
June 30, 2002, 2001 and 2000, respectively.

44



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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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.

The Company paid a management fee to Huizenga
Holdings, Inc., a corporation whose sole shareholder is the
Companys Chairman, H. Wayne Huizenga, equal to 1% of total
revenue, or approximately $2.7 million, $3.7 million
and $4.1 million for the years ended June 30, 2002,
2001 and 2000, 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 on 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 is principally due to Mr. Rochons recent
resignations. 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, investor
relations and strategy related services to the Company.

The Company paid Callaghan & Partners, Ltd.
$326,000, $448,000 and $501,000 during the years ended
June 30, 2002, 2001 and 2000, respectively. The Company was
obligated to pay Callaghan & Partners, Ltd. 1.5% of the
budgeted construction and development cost of certain approved
projects. As of June 30, 2002, there were no unpaid amounts
associated with such approved projects. 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.

Until June 30, 2000, Leisure Management
International, Inc. (LMI), an entity that was 50%
owned by Mr. Huizenga, managed the Miami Arena under a
management agreement with Decoma Miami Associates, Ltd., a
company in which the Company owned a 78% interest
(Decoma). Under the management agreement, LMI
received from Decoma management fees of approximately $142,000
for the year ended June 30, 2000. Decoma had a contract
(the MAC) with the Miami Sports and Exhibition
Authority (MSEA), an agency of the City of Miami, to
operate the Miami Arena through July 8, 2020. The MAC was
terminated June 30, 2000 pursuant to a settlement agreement
between MSEA and Decoma whereby Decoma was paid a termination
fee of $10.5 million. A portion of such proceeds was
allocated to third party investors. The Companys gain on
termination of approximately $797,000 is included in the line
item labeled Loss from discontinued operations, net of
taxes in the Consolidated Statements of Operations.
Following termination of Decomas contract with MSEA,
Decoma terminated its agreement with LMI and paid LMI a
termination fee of $400,000. The Company also entered into an
agreement with LMI to manage the National Car Rental Center,
home of the Florida Panthers Hockey Club (which was sold by the
Company in July 2001), and incurred management fees of
approximately $205,000 for the year ended June 30, 2000.
Mr. Huizenga disposed of his interest in LMIs ongoing
operations in March 2000.

The Florida Panthers Hockey Club had a contract
with SportsChannel Florida, a Florida limited partnership, 70%
of which was owned by Mr. Huizenga until January 2000, when
such entity was sold. Under the terms of the contract, the club
granted local television broadcast and pay television rights,
exclusively to SportsChannel Florida. Aggregate payments by
SportsChannel Florida totaled $5.5 million ($2.5 million of
which was paid before SportsChannel Florida was sold to the
unrelated party) for the year ended June 30, 2000. Amounts
paid to SportsChannel Florida during the year ended
June 30, 2000 are included in the line item labeled
Loss from discontinued operations, net of taxes in
the Consolidated Statements of Operations.

45



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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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 (in 000s):

|                                      |  |      |         |      |  |   |         |  
|------------------------------------- |  | ---- | ------- | ---- |  | - | ------- | -
|                                      |  | 2002 |         | 2001
|                                      |  |      |         |     
|Deferred tax assets:                  |  |      |         |      |  |   |         |  
|General tax credit carryforwards      |  | $    |        |      |  | $ | 3,679   |  
|Deferred revenue and other            |  |      | 22,199  |      |  |   | 16,411  |  
|Deferred tax liabilities:             |  |      |         |      |  |   |         |  
|Book basis in property over tax basis |  |      | (52,251 | )    |  |   | (52,526 | )
|                                      |  |      |         |      |  |   |         |  
|Net deferred tax liabilities          |  | $    | (30,052 | )    |  | $ | (32,436 | )
|                                      |  |      |         |      |  |   |         |  

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

|                                   |         |      |       |       |  |      |        |        |  |   |        |       | 
|---------------------------------- | ------- | ---- | ----- | ----- |  | ---- | ------ | ------ |  | - | ------ | ----- | 
|                                   |         | 2002 |       | 2001  |  | 2000
|                                   |         |      |       |       |  |     
|Current:                           |         |      |       |       |  |      |        |        |  |   |        |      
|                                   | Federal |      | $     | 2,749 |  |      | $      | 12,722 |  |   | $      | 6,290 | 
|                                   | State   |      |       | 776   |  |      |        | 1,528  |  |   |        | 717   | 
|Federal and state deferred benefit |         |      | (960  | )     |  |      | (6,779 | )      |  |   | (1,551 | )    
|Change in valuation allowance      |         |      |      |       |  |      | (2,747 | )      |  |   | (4,651 | )    
|                                   |         |      |       |       |  |      |        |        |  |   |        |      
|Provision for income taxes         |         | $    | 2,565 |       |  | $    | 4,724  |        |  | $ | 805    |      
|                                   |         |      |       |       |  |      |        |        |  |   |        |      

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 is adjusted in the period management
determines it is more likely than not that deferred tax assets
will or will not be realized. The Company continued to maintain
a tax valuation allowance prior to the three months ending
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.

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, 2002, 2001 and 2000 is set forth below
(in 000s).

|                                                                                    |  |      |       |      |  |      |        |   |  |   |        |  
|----------------------------------------------------------------------------------- |  | ---- | ----- | ---- |  | ---- | ------ | - |  | - | ------ | -
|                                                                                    |  | 2002 |       | 2001 |  | 2000
|                                                                                    |  |      |       |      |  |     
|Computed expected income tax expense based on
    statutory federal income tax rate |  | $    | 3,120 |      |  | $    | 6,477  |   |  | $ | 6,322  |  
|State income taxes, net of federal benefit                                          |  |      | 347   |      |  |      | 740    |   |  |   | 722    |  
|Non-deductible amortization                                                         |  |      |      |      |  |      | 365    |   |  |   | 345    |  
|Non-deductible expenses                                                             |  |      | 601   |      |  |      | 449    |   |  |   |       |  
|Credit for employer taxes                                                           |  |      | (555  | )    |  |      | (648   | ) |  |   | (703   | )
|Decrease in valuation allowance                                                     |  |      |      |      |  |      | (2,747 | ) |  |   | (4,651 | )
|Other, net                                                                          |  |      | (948  | )    |  |      | 88     |   |  |   | (1,230 | )
|                                                                                    |  |      |       |      |  |      |        |   |  |   |        |  
|Provision for income taxes                                                          |  | $    | 2,565 |      |  | $    | 4,724  |   |  | $ | 805    |  
|                                                                                    |  |      |       |      |  |      |        |   |  |   |        |  

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

46



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##### Table of Contents



BOCA RESORTS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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 10% of their annual compensation
subject to a maximum dollar amount 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
did not make any matching contributions during the years ended
June 30, 2002, 2001 or 2000.

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 $55,000, $55,000 and
$52,000 during the years ended June 30, 2002, 2001 and
2000, respectively.

The Boca Raton Resort & Club and Grande Oaks
Golf Club have in place a non-qualified 401(a) Plan (the
Boca Plan). The Boca Plan is available to employees
with at least one year of service who work a minimum of
1,000 hours per year. The Boca Plan allows participants to
contribute up to 16% of their total compensation. The Company is
required to contribute 50% of the first 6% of the
employees earnings. The Companys matching
contribution totaled $640,000, $698,000 and $659,000 for the
years ended June 30, 2002, 2001 and 2000, 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 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 (in 000s).

|                            |  |      |         |      |  |      |         |  |  |   |         | 
|--------------------------- |  | ---- | ------- | ---- |  | ---- | ------- |  |  | - | ------- | 
|                            |  | 2002 |         | 2001 |  | 2000
|                            |  |      |         |      |  |     
|Room                        |  | $    | 108,859 |      |  | $    | 139,105 |  |  | $ | 156,607 | 
|Food, beverage and banquets |  |      | 77,408  |      |  |      | 97,607  |  |  |   | 113,616 | 
|Yachting and marina         |  |      | 10,973  |      |  |      | 11,035  |  |  |   | 10,114  | 
|Retail and other            |  |      | 75,803  |      |  |      | 81,424  |  |  |   | 81,023  | 
|                            |  |      |         |      |  |      |         |  |  |   |         | 
|                            |  | $    | 273,043 |      |  | $    | 329,171 |  |  | $ | 361,360 | 
|                            |  |      |         |      |  |      |         |  |  |   |         | 

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 per share data)

|                                                                              |  |  |      |         |  |         |         |         |  |         |        |      |  |   |         |   |  |   |        |   |  |   |         |  
|----------------------------------------------------------------------------- |  |  | ---- | ------- |  | ------- | ------- | ------- |  | ------- | ------ | ---- |  | - | ------- | - |  | - | ------ | - |  | - | ------- | -
|                                                                              |  |  |      | First   |  | Second  |         | Third   |  | Fourth  |        |     
|                                                                              |  |  |      | Quarter |  | Quarter |         | Quarter |  | Quarter |        | Year
|                                                                              |  |  |      |         |  |         |         |         |  |         |        |     
|Revenue                                                                       |  |  | 2002 |         |  | $       | 39,519  |         |  | $       | 57,782 |      |  | $ | 99,988  |   |  | $ | 75,754 |   |  | $ | 273,043 |  
|                                                                              |  |  | 2001 |         |  | $       | 59,586  |         |  | $       | 95,545 |      |  | $ | 101,986 |   |  | $ | 72,054 |   |  | $ | 329,171 |  
|                                                                             
|Operating income (loss)                                                       |  |  | 2002 |         |  | $       | (11,536 | )       |  | $       | 524    |      |  | $ | 32,803  |   |  | $ | 9,787  |   |  | $ | 31,578  |  
|                                                                              |  |  | 2001 |         |  | $       | (7,498  | )       |  | $       | 18,616 |      |  | $ | 37,604  |   |  | $ | 11,768 |   |  | $ | 60,490  |  
|                                                                             
|Income (loss) from continuing operations                                      |  |  | 2002 |         |  | $       | (10,663 | )       |  | $       | (2,620 | )    |  | $ | 16,096  |   |  | $ | 3,537  |   |  | $ | 6,350   |  
|                                                                              |  |  | 2001 |         |  | $       | (21,347 | )       |  | $       | 5,999  |      |  | $ | 29,672  |   |  | $ | (544   | ) |  | $ | 13,780  |  
|                                                                             
|Extraordinary loss on early retirement of debt,
    net of income tax benefit |  |  | 2002 |         |  | $       | (849    | )       |  | $       | (119   | )    |  | $ |        |   |  | $ | (876   | ) |  | $ | (1,844  | )
|                                                                              |  |  | 2001 |         |  | $       |        |         |  | $       |       |      |  | $ | (1,823  | ) |  | $ | 587    |   |  | $ | (1,236  | )
|                                                                             
|Income (loss) from discontinued operations, net
    of income taxes           |  |  | 2002 |         |  | $       | 23,728  |         |  | $       |       |      |  | $ |        |   |  | $ | 2,457  |   |  | $ | 26,185  |  
|                                                                              |  |  | 2001 |         |  | $       | (6,236  | )       |  | $       | (4,566 | )    |  | $ | (1,273  | ) |  | $ | 3,213  |   |  | $ | (8,862  | )
|                                                                             
|Net income (loss)                                                             |  |  | 2002 |         |  | $       | 12,216  |         |  | $       | (2,739 | )    |  | $ | 16,096  |   |  | $ | 5,118  |   |  | $ | 30,691  |  
|                                                                              |  |  | 2001 |         |  | $       | (27,583 | )       |  | $       | 1,433  |      |  | $ | 26,576  |   |  | $ | 3,256  |   |  | $ | 3,682   |  
|                                                                             
|Basic income (loss) per share from continuing
    operations                  |  |  | 2002 |         |  | $       | (0.27   | )       |  | $       | (0.07  | )    |  | $ | 0.40    |   |  | $ | 0.09   |   |  | $ | 0.16    |  
|                                                                              |  |  | 2001 |         |  | $       | (0.52   | )       |  | $       | 0.15   |      |  | $ | 0.73    |   |  | $ | (0.01  | ) |  | $ | 0.34    |  
|                                                                             
|Diluted income (loss) per share from continuing
    operations                |  |  | 2002 |         |  | $       | (0.27   | )       |  | $       | (0.07  | )    |  | $ | 0.40    |   |  | $ | 0.09   |   |  | $ | 0.16    |  
|                                                                              |  |  | 2001 |         |  | $       | (0.52   | )       |  | $       | 0.14   |      |  | $ | 0.71    |   |  | $ | (0.01  | ) |  | $ | 0.34    |  
|                                                                             
|Basic net income (loss) per share                                             |  |  | 2002 |         |  | $       | 0.31    |         |  | $       | (0.07  | )    |  | $ | 0.40    |   |  | $ | 0.13   |   |  | $ | 0.77    |  
|                                                                              |  |  | 2001 |         |  | $       | (0.68   | )       |  | $       | 0.04   |      |  | $ | 0.65    |   |  | $ | 0.08   |   |  | $ | 0.09    |  
|                                                                             
|Diluted net income (loss) per share                                           |  |  | 2002 |         |  | $       | 0.31    |         |  | $       | (0.07  | )    |  | $ | 0.40    |   |  | $ | 0.13   |   |  | $ | 0.76    |  
|                                                                              |  |  | 2001 |         |  | $       | (0.68   | )       |  | $       | 0.03   |      |  | $ | 0.64    |   |  | $ | 0.08   |   |  | $ | 0.09    |  

The Companys quarterly results for fiscal
2002, particularly for the second and third fiscal quarters,
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.

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##### Table of Contents








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

On June 26, 2002, upon the recommendation of
the Companys Audit Committee and Board of Directors, the
Company engaged Ernst & Young LLP (Ernst &
Young) to serve as its independent auditors. The
engagement was effective immediately and Ernst & Young, who
succeeded Arthur Andersen LLP (Arthur Andersen) as
the Companys independent auditors, completed the
Companys audit for the fiscal year ending June 30,
2002. The engagement of Ernst & Young followed the
Companys decision to seek proposals from independent
accountants to audit the Companys financial statements for
the fiscal year ending June 30, 2002. There were no
disagreements with Ernst & Young on any matter of accounting
principle or practice, financial statement disclosure or
auditing scope or procedure.

Arthur Andersens reports on the
Companys consolidated financial statements for each of the
years ended June 30, 2001 and 2000 did not contain an
adverse opinion or disclaimer of opinion, nor were such reports
qualified or modified as to uncertainty, audit scope or
accounting principles.

During each of the years ended June 30, 2001
and 2000 and through the date of this report, there were:
(i) no disagreements with Arthur Andersen on any matter of
accounting principle or practice, financial statement
disclosure, or auditing scope or procedure; and (ii) no
reportable events as defined in Item 304(a)(1)(v) of
Regulation S-K.

During each of the years ended June 30, 2001
and 2000 and through the date of this report, the Company did
not consult Ernst & Young with respect to any matters or
events set forth in Item 304(a)(2)(i) and (ii) of
Regulation S-K.




PART III

The information required by Items 10, 11, 12
and 13 of Part III of Form 10-K will be set forth in
the Proxy Statement of the Company relating to the
Companys 2002 Annual Meeting of Stockholders and is
incorporated herein by reference.




PART IV






|          |                                                                     
|--------- | --------------------------------------------------------------------
|Item  14. | 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 June 27, 2002 reporting that it had
engaged Ernst & Young to serve as its independent
auditor effective immediately.

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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/ RICHARD L. HANDLEY

| |                                 
| | --------------------------------
| |                                 
| | Richard L. Handley              
| | Senior Vice President, Secretary
| | and General Counsel             

September 27, 2002


KNOW ALL MEN BY THESE PRESENTS, that each person
whose signature appears below constitutes and appoints Steven M.
Dauria 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 (Principal Executive
    Officer)                                        |  | September 27, 2002
|/s/ RICHARD C. ROCHONRichard C. Rochon     |  | Vice Chairman and President                                                                    |  | September 27, 2002
|                                          
|/s/ WILLIAM M. PIERCEWilliam M. Pierce     |  | Chief Financial Officer, Treasurer and Senior
    Vice President (Principal Financial Officer) |  | September 27, 2002
|                                          
|/s/ STEVEN M. DAURIASteven M. Dauria       |  | Vice President and Corporate Controller
    (Principal Accounting Officer)                     |  | September 27, 2002
|/s/ STEVEN R. BERRARDSteven R. Berrard     |  | Director                                                                                       |  | September 27, 2002
|/s/ DENNIS J. CALLAGHANDennis J. Callaghan |  | Director                                                                                       |  | September 27, 2002

50



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|                                                 |  |          |  |                   
|------------------------------------------------ |  | -------- |  | ------------------
|Signature                                        |  | Title    |  | Date              
|                                                 |  |          |  |                   
|/s/ MICHAEL S. EGANMichael S. Egan               |  | Director |  | September 27, 2002
|/s/ HARRIS W. HUDSONHarris W. Hudson             |  | Director |  | September 27, 2002
|/s/ GEORGE D. JOHNSON, JR.George D. Johnson, Jr. |  | Director |  | September 27, 2002
|/s/ HENRY LATIMERHenry Latimer                   |  | Director |  | September 27, 2002
|/s/ PETER H. ROBERTSPeter H. Roberts             |  | Director |  | September 27, 2002

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##### Table of Contents



CERTIFICATIONS

I, H. Wayne Huizenga, certify that:

1. I have reviewed this Annual Report on
Form 10-K of Boca Resorts, Inc.:

2. Based on my knowledge, this annual report
does not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements made,
in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this
annual report;

3. Based on my knowledge, the financial
statements, and other financial information included in this
annual report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of and for the periods presented in this annual
report.

Date: September 27, 2002

/s/ H. Wayne Huizenga


H. Wayne Huizenga


Chairman of the Board (Principal Executive
Officer)


I, William M. Pierce, certify that:

1. I have reviewed this Annual Report on
Form 10-K of Boca Resorts, Inc.:

2. Based on my knowledge, this annual report
does not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements made,
in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this
annual report;

3. Based on my knowledge, the financial
statements, and other financial information included in this
annual report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of and for the periods presented in this annual
report.

Date: September 27, 2002

/s/ William M. Pierce


William M. Pierce


Senior Vice President, Treasurer and Chief
Financial Officer


EXPLANATORY NOTE REGARDING
CERTIFICATIONS: Representations 4, 5 and 6 of the
Certification as set forth in Form 10-K have been omitted,
consistent with the Transition Provisions of SEC Exchange Act
Release No. 34-46427, because this Annual Report on
Form 10-K covers a period ending before the Effective Date
of Rules 13a-14 and 15d-14.

52



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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)                                                                                                                                                                      
|         | 10.10 |  |  |                       |  | Second Amended and Restated 1996 Stock Option
    Plan.(5)                                                                                                                                                                                              
|         | 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(5)                                                                                     
|         | 10.16 |  |  |                       |  | Credit Agreement dated April 21, 1999
    between Florida Panthers Hotel Corporation, the Initial Lenders
    named therein, Bear, Stearns & Co. Inc. as Syndication Agent
    and Bankers Trust Company as Administrative Agent(6)                     
|         | 21.1  |  |  |                       |  | Subsidiaries of the Company(7)                                                                                                                                                                                                                          
|         | 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).                                                                                                                                                     
|         | 99.1  |  |  |                       |  | Certification of Chief Executive Officer and
    Chief Financial Officer pursuant to 18 U.S.C.
    Section 1350, as added by Section 906 of the
    Sarbanes-Oxley Act of 2002.                                                                         






|    |                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------
|(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, 2001  SEC File No. 1-13173.
|(5) | Incorporated by reference to the Companys
    Registration Statement on Form S-8  SEC File
    No. 333-92227.                              
|(6) | Incorporated by reference to the Companys
    Registration Statement on Form S-4  SEC File
    No. 333-77945.                              
|(7) | Incorporated by reference to the Companys
    Annual Report on Form 10-K For the Fiscal Year Ended
    June 30, 2000  SEC File No. 1-13173.

53