U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
or
[ ] TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _________ to _________
Commission File Number: 0-22745
Janus Hotels and Resorts, Inc.
(Exact name of registrant as specified in its charter)
DELAWARE 13-2572712
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2300 Corporate Blvd., N.W.,
Suite 232
Boca Raton, Florida 33431-8596
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (561) 994-4800
(Former name, former address and former fiscal year, if changed since last
report)
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 | |
Number of shares of common stock outstanding as of May 8, 2000: 8,671,092
1
<PAGE>
JANUS HOTELS AND RESORTS, INC.
FORM 10-Q
FOR QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999
Part I. Financial Information Page No.
--------
Item 1. Financial Statements
Unaudited Consolidated Balance Sheets As Of
March 31, 2000 and December 31, 1999 3
Unaudited Consolidated Statements Of Operations
For The Three Months Ended March 31, 2000 and 1999 4
Unaudited Consolidated Statements Of Cash Flows
For The Three Months Ended March 31, 2000 and 1999 5
Notes To Unaudited Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis Of Financial Condition
and Results of Operations 7
Part II. Other Information
Items 1-5 8
Item 6. Exhibits and Reports on Form 8-K 8
Signature Page 9
2
<PAGE>
JANUS HOTELS AND RESORTS, INC.
<TABLE>
<CAPTION>
UNAUDITED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2000 AND DECEMBER 31,1999
March 31, December 31,
2000 1999
----------- ------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 7,874,887 $ 8,859,888
Restricted cash 953,729 1,251,297
Accounts receivable 2,049,855 1,743,241
Current portion of notes receivable 182,226 182,226
Other current assets 189,997 212,082
----------- ------------
Total current assets 11,250,694 12,248,734
----------- ------------
Property held for sale 12,656,270 12,641,199
Property and equipment, net 84,561,693 84,059,513
Mortgage notes receivable 3,360,008 3,392,709
Goodwill, net 7,490,298 7,542,376
Deferred tax asset 2,500,000 2,566,000
Other assets 5,528,115 5,241,958
----------- ------------
$127,347,078 $127,692,489
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 3,803,594 $ 3,776,846
Accounts payable 1,915,381 2,215,038
Accrued expenses 1,912,159 1,959,960
Dividends payable 314,777 -
----------- ------------
Total current liabilities 7,945,911 7,951,844
----------- ------------
Long-term debt, net of current portion 67,794,193 67,933,460
Deferred tax liabilities 2,345,275 2,345,275
Minority interest 2,469,571 2,465,995
Stockholders' equity:
Preferred stock, series B; par value $0.01 per share; 20,000 shares authorized;
16,788.08 shares issued and outstanding 168 168
Common stock, par value $0.01 per share; 15,000,000 shares authorized;
11,883,220 shares issued 118,833 118,833
Additional paid-in capital 52,582,257 52,582,257
Accumulated deficit (4,492,631) (4,288,844)
Treasury stock, 3,212,128 common shares, at cost (1,416,499) (1,416,499)
----------- ------------
Total stockholders' equity 46,792,128 46,995,915
----------- ------------
$127,347,078 $127,692,489
=========== ===========
</TABLE>
See notes to unaudited consolidated financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
2000 1999
----------- -----------
<S> <C> <C>
Revenues:
Room and related services $ 7,361,647 $ 7,436,508
Food and beverage 2,515,199 2,381,785
Management fees 857,583 561,993
Other 195,021 217,532
---------- ----------
Total revenues 10,929,450 10,597,818
---------- ----------
Operating expenses:
Direct:
Room and related services 1,955,554 1,921,078
Food and beverage 1,865,930 1,863,205
Selling and general 501,271 455,956
---------- ----------
Total direct expenses 4,322,755 4,240,239
---------- ----------
Occupancy expenses 1,596,810 1,617,727
Selling, general and administrative expenses 2,584,998 2,518,090
Depreciation 829,620 1,275,046
Amortization 75,779 78,426
---------- ----------
Total operating expenses 9,409,962 9,729,528
---------- ----------
Operating income 1,519,488 868,290
Other income (expense):
Interest expense (1,531,564) (1,671,070)
Interest income 177,227 197,048
Other - 20,000
---------- ----------
Income (loss) from continuing operations before income taxes and minority interest 165,151 (585,732)
Provision for income taxes 68,000 -
---------- ----------
Income (loss) from continuing operations before minority interest 97,151 (585,732)
Minority interest 3,576 9,823
---------- ----------
Income (loss) from continuing operations 93,575 (595,555)
Gain on disposal of discontinued operations, net of taxes 17,415 -
---------- ----------
Net income (loss) 110,990 (595,555)
Less preferred dividend requirement 314,777 268,802
---------- ----------
Net income (loss) applicable to common stock $ (203,787) $ (864,357)
========== ==========
Basic income (loss) per common share:
Income (loss) from continuing operations $ (0.02) $ (0.10)
Gain on disposal of discontinued operations - -
----- -----
Net income (loss) $(0.02) $(0.10)
===== =====
Diluted income (loss) per common share:
Income (loss) from continuing operations $ (0.02) $ (0.10)
Gain on disposal of discontinued operations - -
----- -----
Net income (loss) $(0.02) $(0.10)
===== =====
Weighted average common shares:
Basic 8,671,092 8,682,858
========= =========
Diluted 8,671,092 8,682,858
========= =========
</TABLE>
See notes to unaudited consolidated financial statements.
4
<PAGE>
JANUS HOTELS AND RESORTS, INC.
<TABLE>
<CAPTION>
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
2000 1999
----------- -----------
<S> <C> <C>
Operating activities:
Net income (loss) $ 110,990 $ (595,555)
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization 829,620 1,275,046
Amortization of intangible assets 75,779 78,426
Deferred taxes 66,000 -
Minority Interest 3,576 9,823
Changes in operating assets and liabilities:
Accounts receivable (306,614) 761,276
Other current assets 22,085 41,041
Other asset (309,858) 343,917
Accounts payable and accrued expenses (347,458) (98,787)
--------- ----------
Net cash provided by operating activities 144,120 1,815,187
--------- ----------
Investing activities:
Acquisition of hospitality business, net of noncash consideration and cash acquired - 462,008
Purchases of property and equipment (961,099) (1,140,159)
Collections of notes receivable 32,701 20,764
--------- ----------
Net cash used in investing activities (928,398) (657,387)
--------- ----------
Financing activities:
Dividends paid - (268,802)
Decrease (Increase) in restricted cash 297,568 (304,385)
Repayments of long-term borrowings (498,291) (1,216,343)
--------- ----------
Net cash used in financing activities (200,723) (1,789,530)
--------- ----------
Increase (decrease) in cash and cash equivalents (985,001) (631,730)
Cash and cash equivalents, beginning of period 8,859,888 12,383,741
--------- ----------
Cash and cash equivalents, end of period $7,874,887 $11,752,011
========= ==========
Supplemental disclosure of cash flow data:
Interest paid $1,531,564 $ 1,671,070
========= ==========
Noncash investing and financing transactions:
Dividends declared not paid $ 314,777 $ -
========= ==========
Acquisitions of equipment through capital leases $ 385,772 $ -
========= ==========
Acquisition of hospitality business
Assets acquired $ - $27,192,451
Liabilities assumed - 20,856,251
--------- ----------
Value of stock issued $ - $ 6,336,200
========= ==========
</TABLE>
See notes to unaudited consolidated financial statements.
5
<PAGE>
JANUS HOTELS AND RESORTS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 -- Unaudited interim financial statements:
In the opinion of management, the accompanying unaudited consolidated
financial statements reflect all adjustments, consisting of normal
recurring accruals, necessary to present fairly the financial position
of Janus Hotels and Resorts, Inc. and subsidiaries (the "Company" or
"Janus") as of March 31, 2000, its results of operations for the three
months ended March 31, 2000 and 1999 and its cash flows for the three
months ended March 31, 2000. Certain terms used herein are defined in
the audited consolidated financial statements of the Company as of
December 31, 1999 and for the years then ended (the "Audited Janus
Financial Statements") included in the Company's form 10-KSB previously
filed with the Securities and Exchange Commission. Accordingly, these
unaudited consolidated financial statements should be read in
conjunction with the Audited Janus Financial Statements and the other
financial statements included in the Form 10-KSB.
The results of operations for the three months ended March 31, 2000 are
not necessarily indicative of the results of operations for the full
year ending December 31, 2000.
Note 2 -- Organization:
As of March 31, 2000, the Company owned and operated sixteen hotels (of
which fourteen are wholly-owned, one is 85% owned and one is 75% owned)
and a hotel management company which manages hotels for unrelated
parties.
Note 3 - Subsequent event:
Effective April 30, 2000, the President of the Company resigned. It is
anticipated that the cost of the severance package, which is being
negotiated, will approximate $500,000.
Note 4 -- Litigation:
The Company is a party to various legal proceedings. In the opinion of
management, these actions are routine in nature and will not have a
material adverse effect on the Company's consolidated financial
statements in subsequent years.
6
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Overview
The operations of the Company are comprised primarily of the operations of owned
hotels and the Company's management of hotels owned by third parties.
The Company had net income of $110,990 for the three months ended March 31, 2000
compared to a net loss of $(595,555) for the three months ended March 31, 1999.
Three Months Ended March 31, 2000 Compared to the Three Months Ended March 31,
1999
Room and related services revenue decreased 1.0% to $7,361,647 in 2000 from
$7,436,508 in 1999. The decrease was attributable primarily to properties
disposed of in 1999. The average daily room rate increased to $57.62 for 2000
from $55.87 (excluding disposed properties) in 1999. Occupancy increased in 2000
to 54.2% from 50.7% (excluding disposed properties). Excluding the properties
disposed of in 1999, room and related services revenue increased 3.1%.
Food and beverage revenues are principally a function of the number of guests
who stay at each owned hotel, local walk-in business and catering sales. These
revenues increased 5.6% to $2,515,199 in 2000 from $2,381,785 in 1999. This
increase is related primarily to increased occupancy. The properties disposed of
in 1999 had no effect on food and beverage revenues.
Management fee income increased 52.6% to $857,583 in 2000 from $561,993 in 1999.
This increase is primarily due to the addition of new third party management
contracts. In addition, one-time incentive fees of approximately $69,000 were
realized in the first quarter of 2000.
Total direct operating expenses increased 2.0% to $4,322,755 in 2000 from
$4,240,239 in 1999 and increased as a percentage of room and related services
and food and beverage revenues to 43.8% from 43.2%. Excluding the properties
disposed of in 1999, total direct operating expenses increased 5.0% as result of
increased occupancy.
Occupancy expenses decreased 1.3% to $1,596,810 from $1,617,727 in 1999.
Excluding the properties disposed of in 1999, occupancy expenses increased 5.6%
as utility costs increased and maintenance projects at various hotels were
completed.
Selling, general and administrative expenses increased 2.7% to $2,584,998 in
2000 from $2,518,090 in 1999 and decreased as a percentage of total revenues to
23.7% from 23.8%. Excluding the properties disposed of in 1999, selling, general
and administrative expenses increased 25.4% as additional regional management
personnel were required to manage the new hotels under contract.
Depreciation decreased by $445,426 in 2000 from $1,275,046 in 1999. The decrease
was primarily attributable to the change in estimated useful lives, the
adjustment of the purchase allocation for four hotel properties based on an
acquisition appraisal, and the cessation of depreciation on one hotel property
held for sale.
Interest income decreased to $177,227 in 2000 from $197,048 in 1999.
Interest expense decreased to $1,531,564 in 2000 from $1,671,070 in 1999. The
decrease was attributable to the properties disposed of in 1999, no short-term
borrowings in the first quarter of 2000 and traditional amortization.
Minority interest decreased to $3,576 in 2000 from $9,823 in 1999 reflecting the
results of operations from the Kings Dominion partnership and the Days Inn
Pompano hotel in 2000.
Liquidity and Capital Resources
Total assets decreased to $127,347,078 at March 31, 2000 from $127,692,489 at
December 31, 1999.
Net cash provided by operating activities decreased to $144,120 in the three
months ended March 31, 2000 from $1,815,187 in the three months ended March 31,
1999. The decrease is primarily the result of the increase in accounts
receivable and lower depreciation.
Net cash used in investing activities increased to $928,398 in the three months
ended March 31, 2000 from $657,387 in the three months ended March 31, 1999. The
Company plans to spend an additional $1,515,000 on capital improvements during
the remainder of 2000.
Net cash used in financing activities was $200,723 in the three months ended
March 31, 2000 compared to $1,789,530 used by financing activities in the three
months ended March 31, 1999. The change is the result of lower debt repayments,
a decrease in restricted cash and dividends paid subsequent to the end of the
quarter.
7
<PAGE>
Earnings before interest, taxes, depreciation and amortization ("EBITDA")
increased to $2,424,887 during the three months ended March 31, 2000 compared to
$2,221,762 for the three months ended March 31, 1999. EBITDA is defined as
operating income plus depreciation and amortization. The Company considers this
definition of EBITDA to be an indicative measure of the Company's operating
performance because it can be used to measure the Company's abilities to service
debt, fund capital expenditures and expand its business; such information should
not be considered as an alternative to net income, operating profit, cash flows
from operations or any other operating or liquidity measure prescribed by
generally accepted accounting principles.
The Company maintains a number of commercial banking relationships and maintains
aggregate lines of credit totaling $2,200,000, which had no amount outstanding
at March 31, 2000.
The Company's principal sources of liquidity are cash on hand (including escrow
deposits and replacement reserves), cash from operations, earnings on invested
cash and, when required, principally in connection with acquisitions, borrowings
(consisting primarily of loans secured by mortgages on real property owned or to
be acquired by the Company). The Company's continuing operations are funded
through cash generated from its hotel operations. Acquisitions of hotels are
expected to be financed through a combination of cash on hand, internally
generated cash, issuance of equity securities and borrowings, some of which is
likely to be secured by assets of the Company.
Seasonality
Demand at many of the Company's hotels is affected by seasonal patterns. Demand
for hotel rooms in the industry generally tends to be lower during the first and
fourth quarters and higher in the second and third quarters. Accordingly, the
Company's revenues reflect similar seasonality.
Forward Looking Statements
When used in this and in future filings by the Company with the Securities and
Exchange Commission, in the Company's press releases and in oral statements made
with the approval of an authorized executive officer of the Company, the words
or phrases "will likely result," "expects," "plans," "will continue," "is
anticipated," "estimated," "project" or "outlook" or similar expressions
(including confirmations by an authorized executive officer of the Company of
any such expressions made by a third party with respect to the Company) are
intended to identify forward-looking statements. The Company wishes to caution
readers not to place undue reliance on any such forward-looking statements, each
of which speak only as of the date made. Such statements are subject to certain
risks and uncertainties that could cause actual results to differ materially
from historical earnings and those presently anticipated or projected. Such
risks and other aspects of the Company's business and operations are described
in "Management's Discussion and Analysis of Financial Condition and Results of
Operations." The Company has no obligation to publicly release the result of any
revisions that may be made to any forward-looking statements to reflect
anticipated or unanticipated events or circumstances occurring after the date of
such statements.
PART II--OTHER INFORMATION
Items 1 to 4
None
Item 5 - Other Information
A. On April 28, 2000, the Board of Directors of the Company determined to
postpone the date of the Annual Meeting of Stockholders from May 19,
2000 to June 28, 2000. Any stockholder proposals received by the
Company for consideration at such meeting will be considered untimely.
B. Effective April 30, 2000, James E. Bishop, the President of the
Company and a member of the Board of Directors, resigned from his
positions with the Company.
Item 6 -- Exhibits and Reports on Form 8-K.
A. Exhibits
Exhibit 27: Financial Data Schedule
Exhibit 99.1: Press release dated May 9, 2000.
B. Reports on Form 8-K
There were no reports on Form 8-K for the three months ended March 31,
2000.
8
<PAGE>
SIGNATURES
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.
JANUS HOTELS AND RESORTS, INC.
Dated: May 12, 2000 /s/ Richard A. Tonges
------------ ---------------------------------------
Richard A. Tonges
Treasurer and Vice President of Finance
(Principal Financial and Accounting
Officer)
9
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 7,874,887
<SECURITIES> 0
<RECEIVABLES> 2,049,855
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 11,250,694
<PP&E> 91,475,470
<DEPRECIATION> 6,913,777
<TOTAL-ASSETS> 127,347,078
<CURRENT-LIABILITIES> 7,951,844
<BONDS> 0
0
168
<COMMON> 118,833
<OTHER-SE> 46,673,127
<TOTAL-LIABILITY-AND-EQUITY> 127,347,078
<SALES> 0
<TOTAL-REVENUES> 10,929,450
<CGS> 0
<TOTAL-COSTS> 4,322,755
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,531,564
<INCOME-PRETAX> 165,151
<INCOME-TAX> 68,000
<INCOME-CONTINUING> 93,575
<DISCONTINUED> 17,415
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 110,990
<EPS-BASIC> (.02)
<EPS-DILUTED> (.02)
</TABLE>
Exhibit 99.1
Janus Hotels and Resorts, Inc.
News Release
For Immediate Release: May 9, 2000
Contact: Louis S. Beck, Chairman
Telephone (561) 994-4800
E-mail [email protected]
Boca Raton, Fla.: (May 9, 2000) - Janus Hotels and Resorts, Inc. (JAGI-NASDAQ
SmallCap), a Florida based hospitality company, announced today that James E.
Bishop has resigned as President of the Company and from the Board of Directors
effective April 30, 2000.
Louis S. Beck, Chairman of the Board, has formed a search committee to identify
a new President of the Company. In the interim, Mr. Beck will assume the
responsibilities for the day-to-day operations and management of the Company.
Mr. Beck and the Board of Directors thanked Mr. Bishop for his leadership in the
formation and growth of Janus during his years of service and wished him the
best in his new endeavors.
When used in Janus' press releases and in oral statements made with the approval
of an authorized executive officer of Janus, the words or phrases "expects",
"plans", "outlook", will likely result" or similar expressions (including
confirmations by an authorized executive officer of Janus of any such
expressions made by a third party with respect to Janus) are intended to
identify forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Janus wishes to caution readers not to place
undue reliance on any such forward-looking statements, each of which speak only
as of the date made. Janus has no obligation to publicly release the results of
any revisions which may be made to any forward-looking statements to reflect
anticipated or unanticipated events or circumstances occurring after the date of
such statements.
L.G. Zangani, LLC provides financial public relations service to the Company. As
such, L. G. Zangani, LLC and/or its officers, agents and employees, receives
remuneration for public relations and/or other services performed for the
Company. This remuneration may take the form of cash, capital stock in the
Company, or warrants and/or options to purchase stock in the Company.
(end)
