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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
__________________________________
Quarterly Report Under Section 13 or 15 (d) of
the Securities Exchange Act of 1934
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For Quarter ended December 31, 1993 -- Commission File Number
1-6848
UNITED INNS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 58-0707789
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
5100 Poplar Ave.- Suite 2300, Memphis, Tennessee 38137
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code - 901-767-2880
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Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the Security
Exchange Act of 1934 during the preceding 12 months (or for such reports),
and (2) has been subject to such filing requirements for the past 90 days.
YES X NO
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Indicate the number of shares outstanding of each issuer's
classes of common stock as of the close of the period covered
by this report.
Class Outstanding at December 31, 1993
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Common Stock, $1 par value 2,640,909 shares
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UNITED INNS, INC.
Form 10-Q Quarterly Report
December 31, 1993
Index
Part I Financial Information: Page No.
Consolidated Balance Sheet 3
December 31, 1993 and September 30, 1993
Consolidated Statement of Income
Three Months Ended December 31, 1993 and 1992 4
Consolidated Statement of Cash Flows
Three Months Ended December 31, 1993 and 1992 5
Notes to Financial Statements 6
Management's Discussion and Analysis of Consolidated 7-8
Financial Condition and Results of Operations
Review by Independent Certified Public Accountants 9
Part II Other Information:
Other Information. 9
Signature 9
Exhibit 1 -- Report on Review by Independent Certified
Public Accountants 10
2
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UNITED INNS, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
ASSETS 31-Dec-93 30-Sep-93
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<S> <C> <C>
CURRENT ASSETS:
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Cash and cash equivalents $2,216,895 $4,095,215
Current portion of long-term receivables 1,022,245 1,072,113
Accounts receivable - net of allowance
for bad debts of $77,530 for Dec 93
and $78,835 for Sep 93:
Trade 2,567,992 2,593,459
Other 696,413 1,085,197
Inventories (See note) 907,565 886,483
Prepaid expenses 5,735,646 6,084,713
Property held for sale 888,503
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Total current assets 14,035,259 15,817,180
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INVESTMENTS:
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Long-term receivables less
current maturities 262,148 313,424
Land not in use - at cost 8,018,648 8,907,151
Other investments - at cost 10,000 10,000
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8,290,796 9,230,575
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PROPERTY AND EQUIPMENT - at cost:
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Land 13,696,986 13,696,986
Building and improvements 155,161,513 155,159,524
Furnishings and equipment 30,154,753 30,508,425
Property under capital leases 3,714,804 3,714,804
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202,728,056 203,079,739
Less accumulated depreciation 92,588,242 91,457,432
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110,139,814 111,622,307
Construction in progress 1,450,349 575,851
Property held for sale 4,051,025 4,107,880
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115,641,188 116,306,038
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OTHER ASSETS:
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Franchises 684,642 674,143
Deferred loan and other expenses 1,581,478 1,590,596
Restricted cash 2,880,549 3,114,320
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5,146,669 5,379,059
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$143,113,912 $146,732,852
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LIABILITIES AND STOCKHOLDERS' EQUITY 31-Dec-93 30-Sep-93
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CURRENT LIABILITIES:
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Long-term debt due within one year $3,330,092 $3,243,325
Notes payable 0 261,160
Accounts payable - trade 2,182,127 2,418,739
Sales and occupancy taxes 970,740 1,211,561
Accrued expenses:
Payroll and payroll taxes 1,493,687 1,421,127
Rent and property taxes 2,740,609 2,706,849
Insurance 3,094,827 3,281,682
Interest and other 1,839,677 2,183,724
Income taxes payable 20,101 219,802
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Total current liabilities 15,671,860 16,947,969
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LONG-TERM DEBT:
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First Mortgages 102,288,620 102,926,861
Capital lease obligations 429,596 542,121
Chattel mortgages 1,137,623 625,934
Installment loans and other 311,614 313,692
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104,167,453 104,408,608
Less amounts due within one year 3,330,092 3,243,325
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100,837,361 101,165,283
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Minority Interest 532,151 517,096
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Deferred Other 1,311,876 1,410,978
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Deferred Income Taxes 5,086,354 5,721,882
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STOCKHOLDERS' EQUITY:
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Common Stock - $1 par 10 Mill shares
authorized shares issued 4,117,813 4,117,813 4,117,813
Paid in capital 14,613,138 14,613,138
Retained earnings 45,031,721 46,327,055
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63,762,672 65,058,006
Less treasury shares at cost
1,476,904 shares 44,088,362 44,088,362
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Total stockholders' equity 19,674,310 20,969,644
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$143,113,912 $146,732,852
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</TABLE>
3
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UNITED INNS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED
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31-Dec-93 31-Dec-92
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<S> <C> <C>
Revenues
Rooms $15,326,012 $15,523,816
Restaurants 3,881,061 4,213,363
Car washes 243,000 579,701
Telephone & sundry 919,892 1,083,937
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20,369,965 21,400,817
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Operating costs and expenses:
Direct:
Rooms 10,793,204 11,516,464
Restaurants 3,778,781 4,135,540
Car washes 242,775 704,449
Telephone & sundry 453,944 486,611
Marketing, administrative and general 2,382,529 2,560,798
Depreciation 2,219,119 2,284,348
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19,870,352 21,688,210
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Operating income 499,613 (287,393)
Interest expense (2,448,290) (2,483,857)
Minority interest (15,055) (5,793)
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Income (loss) before income taxes (1,963,732) (2,777,043)
Income taxes (credit) (668,398) (867,474)
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Net income (loss) ($1,295,334) ($1,909,569)
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Per share of common stock
Net income (loss) ($0.49) ($0.72)
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Weighted average shares
of common stock 2,640,909 2,640,909
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Dividends per share $0.00 $0.00
============= =============
</TABLE>
4
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UNITED INNS, INC. AND SUBSIDIARIES
Consolidated Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended December 31,
1993 1992
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<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) ($1,295,334) ($1,909,569)
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 2,321,948 2,386,909
Loss (gain) from property dispositions (43,392) 7,961
Deferred income taxes (635,528) (834,280)
Minority interest 15,055 5,793
Changes to operating assets and liabilities:
Accounts receivable 414,251 911,828
Inventories (21,082) 21,154
Prepaid expenses 87,907 (58,612)
Accounts payable (237,357) 256,290
Accrued expenses (714,501) (913,369)
Income taxes payable (199,701) (116,094)
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Net cash provided by (used for) operating activities (307,734) (241,989)
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INVESTING ACTIVITIES
Purchase of property, plant and equipment (513,320) (1,613,484)
Proceeds from sale of fixed assets 43,447 1,014,099
Payments received on notes receivable 51,143 1,025
Other investing activities (339,304) (670,070)
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Net cash provided by (used for) investing activities (758,034) (1,268,430)
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FINANCING ACTIVITIES
Payments on long-term debt (812,552) (726,717)
Other financing activities 39,270
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Net cash provided (used for) financing activities (812,552) (687,447)
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Increase (Decrease) in cash and cash equivalents (1,878,320) (2,197,866)
Cash and cash equivalents at beginning of year 4,095,215 3,916,377
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Cash and cash equivalents at end of period $2,216,895 $1,718,511
============== ==============
Supplemental disclosures of cash flow information:
Cash paid (received) during the nine months for:
Interest $2,335,085 $2,419,619
State and federal income taxes 179,175 69,018
Supplemental schedule of non-cash investing and
financing activities:
Debt to acquire property, plant and equipment 551,677
Restricted cash used to purchase property,
plant and equipment 488,583 154,681
Note received in exchange for property 300,000
</TABLE>
5
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UNITED INNS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
December 31, 1993
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Rule 10-01 of Regulation S-X. They do not include all information and
notes required by generally accepted accounting principles for complete
financial statements. However, except as disclosed herein, there has been
no material change in the information disclosed in the notes to
consolidated financial statements included in the Annual Report of
Form 10-K of United Inns, Inc. for the year ended September 30, 1993.
In the opinion of Management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ended
December 31, 1993 are not necessarily indicative of the results that may
be expected for the year ending September 30, 1994.
Note B-Inventories
Inventories are stated at the lower of cost or market on a first in, first
out basis. Included in inventory classified as Supplies are hotel linens
and restaurant supplies, consisting primarily of china, silverware, and
cooking utensils, car wash operating and cleaning supplies. Following is a
summary of items included under the caption, "Inventories":
<TABLE>
<CAPTION>
December 31, 1993 September 30, 1993
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<S> <C> <C>
Merchandise:
Food and Beverage $ 318,592 $ 297.064
Car Wash 12.085 15.681
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330,677 312,745
Supplies 576,888 573,738
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Total Inventories $ 907.565 $ 886,483
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</TABLE>
6
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Registrant reported deficit cash flows from operating activities for the
first quarter of fiscal 1994 in the amount of $.3 million, as compared with $.2
million for the same period in 1993.
During the first three months of fiscal 1994 the Registrant expended $1.6
million on capital expenditures, consisting principally of renovation projects
on six hotels and television replacements at seven hotels. Funding of these
expenditures was accomplished with $.6 million in installment sales contracts;
$.5 million from restricted cash deposits; and the remaining $.5 million from
operating cash flow.
With improving cash flows and sale of targeted properties, the Registrant
believes short term cash flow needs for working capital and renovation programs
will be provided.
RESULTS OF OPERATIONS
REVENUES - total revenues for the three months ended December 31, 1993 decreased
by $1.0 million over the corresponding period ended December 31, 1992. Decreased
revenues resulted primarily from decreased hotel gross revenues of $.7 million
as compared with the same period of fiscal 1992. Gross revenues attributable to
two hotels which were disposed of in fiscal 1993 were $.8 million. The
Registrant's most important revenue element, hotel room revenue decreased by $.2
million for the quarter, however same hotel room revenue increased by $.4
million.
Following is a table comparing room revenues, relative occupancy levels and
average daily room rates (ADR) of the twenty-eight hotels remaining in the
system for the quarter ended December 31:
<TABLE>
<CAPTION>
1993 1992
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<S> <C> <C>
Room Revenue $15,326,000 $14,894,000
Occupancy 48.40% 45.49%
ADR $52.29 $50.94
</TABLE>
Food and beverage and sundry revenues decreased by $.5 million for the fiscal
1994 first quarter from the same period last year. Decreased other revenues
attributable to the two hotels disposed of were $.2 million.
7
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Additionally, car wash revenues, which are derived from the one remaining
operating car wash unit, reflected a $.3 million decrease over revenues reported
during first quarter 1992, which were derived from seven units. Five of the car
wash units were sold in early December 1992 and one was closed in May 1993.
OPERATING COSTS AND EXPENSES - total operating costs and expenses decreased by
$1.8 million for the first quarter of fiscal 1994 as compared with the prior
year's first quarter. The reduction attributable to the two hotels which were
disposed of was $.8 million. Additionally, operating costs and expenses of the
car washes decreased by $.6 million.
INTEREST EXPENSE - interest expense of $2.4 million for the first quarter 1993
was basically flat with that of first quarter 1992 which was $2.5 million.
INCOME TAXES - effective October 1, 1993 the Registrant changed its method of
accounting for income taxes from the deferred method to the liability method
required by Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes". As permitted under the the new rule, prior years' financial
statements have not been restated. The cumulative effect of adopting this
statement as of October 1, 1993 was immaterial to net earnings. The effective
tax rate for the first quarter of fiscal 1994 was a net credit of 34.04% as
compared with an effective net credit rate of 31.24% for the same period last
year.
8
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REVIEW BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Frazee, Tate and Associates independent certified public accountants, have
performed a review of the consolidated balance sheet as of December 31 1993 and
September 30, 1993, and the consolidated statement of income, and the
consolidated statement of cash flows for the three months ended December 31,
1993 and 1992, included in this report. Such reviews were made in accordance
with standards established by the American Institute of Certified Public
Accountants. All adjustments or additional disclosures proposed by Frazee, Tate
and Associates have been reflected in the data presented.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders during the
quarter ended December 31, 1993.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
Exhibit 1 - Report on Review by Independent Certified
Public Accountants.
(b) Reports on Form 8-K -- There were no reports on Form
8-K filed for the quarter ended December 31, 1993, as no events which
require the filing of Form 8-K occurred during the quarter.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNITED INNS, INC.
(Registrant)
/s/ J D Miller
----------------------------
J. D. Miller
Vice President - Finance and
Date: 2/22/94 Chief Accounting Officer
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9
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Board of Directors
United Inns, Inc.
Memphis, Tennessee
We have made a review of the consolidated balance sheet of United Inns, Inc. and
Subsidiaries as of December 31, 1993, and September 30, 1993, and the
consolidated statement of income, and the consolidated statement of cash flows
for the three month period ended December 31, 1993 and 1992, in accordance with
standards established by the American Institute of Certified Public Accountants.
A review of interim financial information consists principally of obtaining an
understanding of the system for the preparation of interim financial
information, applying analytical review procedures to financial data, and
making inquiries of persons responsible for financial and accounting matters. It
is substantially less in scope than an examination in accordance with generally
accepted auditing standards, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole. Accordingly, we do
not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying consolidated financial statements for them to be
in conformity with generally accepted accounting principles.
FRAZEE, TATE & ASSOCIATES
Certified Public Accountants
Memphis, Tennessee
February 21, 1994
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