[TEST]
<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended March 31, 1995
Commission File Number 0-9659
SIGNATURE INNS, INC.
_________________________________________________________
(Exact name of registrant as specified in its charter)
Indiana 35-1426996
_____________________________ __________________________
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) No.)
250 East 96th Street, Suite 450
Indianapolis, Indiana 46240
_______________________________________________ _________
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (317) 581-1111
Check whether the Registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months, and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
___ ___
7,783,827 Common Shares were outstanding as of May 10, 1995.
<PAGE>
SIGNATURE INNS, INC.
INDEX
Part I - FINANCIAL INFORMATION
______________________________
Item 1. Financial Statements (Unaudited)
Consolidated Statements of Operations
Three months ended March 31, 1995 and 1994
Consolidated Balance Sheets
March 31, 1995 and December 31, 1994
Consolidated Statements of Shareholders' Equity
Three months ended March 31, 1995 and
Year ended December 31, 1994
Consolidated Statements of Cash Flows
Three months ended March 31, 1995 and 1994
Note to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Part II - OTHER INFORMATION
___________________________
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<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
- -----------------------------------------------------------------
Three months ended March 31 1995 1994
- -----------------------------------------------------------------
<S> <C> <C>
Revenues:
Hotel revenues $753,911 1,032,131
Management and franchise fees 631,923 623,914
_________ _________
1,385,834 1,656,045
_________ _________
Costs and expenses:
Hotel costs and expenses 404,656 604,560
Hotel depreciation and amortization 65,439 133,227
General and administrative expenses 581,316 542,714
Corporate depreciation and amortization 27,867 27,531
_________ _________
1,079,278 1,308,032
_________ _________
Operating income 306,556 348,013
_________ _________
Other income (deductions):
Equity in income (losses) of hotel
limited partnerships, net (4,518) (12,086)
Interest income 48,395 18,425
Interest expense - hotels (158,546) (298,860)
Interest expense - corporate (104,327) (106,139)
Capital appreciation fee (225,118) (26,700)
Other (22,810) 6,024
_________ _________
(466,924) (419,336)
_________ _________
Net loss $(160,368) (71,323)
_________ _________
_________ _________
Net loss per common share ($0.02) (0.02)
_________ _________
Weighted average number of
common shares outstanding 7,783,827 3,425,807
_________ _________
_________ _________
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
<CAPTION>
- -----------------------------------------------------------------
March 31, December 31,
1995 1994
- -----------------------------------------------------------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents:
Corporate $1,748,712 1,153,753
Consolidated hotels 868,715 881,760
_________ __________
2,617,427 2,035,513
Other current assets 574,253 491,886
_________ __________
Total current assets 3,191,680 2,527,399
_________ __________
Hotel limited partnerships:
Equity investments 661,004 1,377,930
Receivables, net 3,479,712 3,429,712
_________ __________
4,140,716 4,807,642
_________ __________
Property and equipment, net:
Consolidated hotels 5,322,177 5,327,740
Land held for sale 913,739 913,739
Corporate 284,165 301,726
_________ __________
6,520,081 6,543,205
_________ __________
Deferred costs and other assets,
net of accumulated amortization
of $463,556 and $452,990 247,505 215,721
_________ _________
$14,099,982 14,093,967
__________ __________
__________ __________
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt:
Consolidated hotels 3,127,837 3,128,478
Corporate - -
Other current liabilities 557,857 527,037
_________ _________
Total current liabilities 3,685,694 3,655,515
_________ _________
Long-term debt, less current portion:
Consolidated hotels 3,594,358 3,596,888
Corporate 3,814,128 3,589,010
_________ _________
7,408,486 7,185,898
_________ _________
Other partners' equity 61,985 148,369
__________ __________
Total liabilities 11,156,165 10,989,782
__________ __________
Shareholders' equity:
Common stock, no par value.
Authorized 20,000,000 shares 9,736,348 9,736,348
Accumulated deficit (6,792,531) (6,632,163)
___________ ___________
Total shareholders' equity 2,943,817 3,104,185
___________ ___________
$14,099,982 14,093,967
___________ ___________
___________ ___________
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<CAPTION>
Common Stock
_______________________________ Accumulated
Shares Amount Deficit Total
__________________________________________________________________________________________
<S> <C> <C> <C>
Balance at December 31, 1993 3,425,807 $9,235,445 (8,738,218) 497,227
Net income 2,106,055 2,106,055
Common shares issued 4,358,020 779,403 779,403
Notes receivable (278,500) (278,500)
_________ __________ __________ __________
Balance at December 31, 1994 7,783,827 9,736,348 (6,632,163) 3,104,185
Net loss (160,368) (160,368)
_________ __________ __________ _________
Balance at March 31, 1995 7,783,827 $9,736,348 (6,792,531) 2,943,817
_________ __________ ___________ __________
_________ __________ ___________ __________
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
- ---------------------------------------------------------------------------------------
Three months ended March 31 1995 1994
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(160,368) (71,323)
Items which do not use (provide) cash:
Depreciation of property and equipment 82,739 142,561
Amortization of deferred costs 10,567 18,198
Equity in losses of hotel
limited partnerships, net 4,518 12,086
Other partners' equity in income 36,669 906
Capital appreciation fee accrual 225,118 26,700
Other current items (51,548) (11,032)
Other non-current items (6,463) 1,935
_________ _________
Net cash provided by operating activities 141,232 120,031
_________ _________
Cash flows from investing activities:
Property and equipment additions (58,690) (12,990)
Distributions received from
hotel limited partnership 717,947 451,651
Loans to hotel limited partnerships (50,000) (30,000)
Deferred costs and other assets (42,351) (3,740)
_________ _________
Net cash provided by investing activities 566,906 404,921
_________ _________
Cash flows from financing activities:
Repayments of long-term debt (3,171) (18,956)
Cash distributions to partners
by consolidated hotel (123,053) (7,500)
_________ _________
Net cash used by financing activities (126,224) (26,456)
_________ _________
Change in cash and cash equivalents 581,914 498,496
Cash and cash equivalents at beginning of period 2,035,513 1,219,946
__________ __________
Cash and cash equivalents at end of period $2,617,427 1,718,442
__________ __________
__________ __________
Supplemental information:
Interest paid $179,909 315,253
__________ _________
__________ _________
Income taxes paid $2,000 0
__________ _________
__________ _________
</TABLE>
<PAGE>
SIGNATURE INNS, INC.
NOTE TO FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1995
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been
prepared in accordance with generally accepted accounting
principles for interim financial information. Accordingly, the
financial statements do not include all of the information and
footnotes required by generally accepted accounting principles
for complete financial statements. 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 interim period are not necessarily
indicative of the results that may be expected for the year ended
December 31, 1995. For further information, refer to the
financial statements included in the Registrant's annual report
on Form 10-KSB for the year ended December 31, 1994.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
HOTEL OPERATIONS
Hotel operations of two hotels owned by consolidated affiliates
(South and Elkhart) are included in the statement of operations
for the three months ended March 31, 1995 and 1994. The
operating results of the Company-owned Knoxville hotel is
reflected through May 1994, the date the hotel was sold to an
affiliated partnership.
Hotel revenues of $753,911 for the three months ended March 31,
1995 represented a $278,220 decrease compared to the same period
of 1994. Hotel revenues from the two hotels owned by
consolidated affiliates increased $107,334 for the three months
and the offsetting decrease resulted from the disposition of the
Company-owned Knoxville hotel in May 1994. The increased
revenues of the two hotels owned by consolidated affiliates
resulted from a 12.2% increase in occupancy and a 3.4% increase
in average room rates for the period.
Hotel costs and expenses of $404,656 for the three months ended
March 31, 1995 represented a $199,904 decrease compared to the
same period of 1994. Hotel costs and expenses from the two
hotels owned by consolidated affiliates increased $15,690 for the
period, due primarily to the increase in the number of rooms
sold, and the offsetting decrease resulted from the disposition
of the Company-owned Knoxville hotel in May 1994.
Hotel depreciation and amortization expense decreased $67,788 for
the three months ended March 31, 1995 compared to the same period
of 1994 due primarily to the hotel disposition in May 1994.
Hotel depreciation and amortization includes $65,439 and $72,807
for the three months ended March 31, 1995 and 1994, respectively,
relating to the two hotels owned by consolidated affiliates.
CORPORATE OPERATIONS
Management and franchise fees increased $8,009 for the three
months ended March 31, 1995 compared to the same period in 1994.
The increase in fee income is due to increased revenues at the
partnership owned hotels and the recognition of fees in 1995 from
the partnership owned Knoxville hotel offset by fees earned from
non-affiliates under short-term agreements which expired in late
1994. Chainwide occupancy and average daily rate for the three
months ended March 31, 1995 increased .9 percentage points and
$2.82 , respectively. The hotel industry experienced continued
improvement compared to the same three months in 1994 and
industry wide occupancies are expected to continue to improve
throughout 1995. While the industry room demand growth rate is
increasing faster than the supply of new rooms, the Signature Inn
hotel markets are seeing new hotel rooms opening, under
construction or in the planning stages. Hotel occupancies at
certain of the partnership-owned hotels may be negatively
impacted which could negatively effect the Company's management
and franchise fee revenue.
General and administrative expenses for the three months ended
March 31, 1995 increased $38,602 compared to the same period of
1994. The increase is attributable to increased employee
compensation and legal costs.
OTHER INCOME (DEDUCTIONS)
Equity in income (losses) of hotel limited partnerships
represents the Company's share of the partnerships' income or
loss. The increase for the three months ended March 31, 1995 is
attributable to increased profitability of the partnership owned
hotels for the three months ended March 31, 1995 resulting from
increased occupancy and room rates
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Interest income for the three months ended March 31, 1995
increased $29,970 compared to the same period in 1994. The
increase was a result of higher investable cash balances earning
a higher yield and interest income earned from the Company's loan
participation agreements in connection with three hotels owned by
affiliated limited partnerships. Interest income includes
$13,495 and $10,436 of earnings on advances to affiliated hotel
partnerships for the three months ended March 31, 1995 and 1994,
respectively.
Interest expense for the three months ended March 31, 1995
represents a $142,126 decrease compared to the same period in
1994. Interest ceased on the $4.9 million hotel loan upon the
sale of the Knoxville hotel in May 1994.
A capital appreciation fee equal to 25% of the value of the
Company, as defined, is required to be paid to the variable rate
note lender no sooner than December 16, 1996. Through March 31,
1995, $514,128 of related expense was accrued representing the
present value of the estimated amount due the lender based on a
current estimate of the Company's value and a payment date in
December 1996.
CAPITAL RESOURCES AND LIQUIDITY
The Company believes that the cash generated from management and
franchising activities and hotel limited partnership investments,
along with additional borrowing capabilities and its cash balance
will provide adequate liquidity to meet its operating needs and
the payment requirements of its corporate obligations over the
next twelve months.
The capital appreciation fee agreement with the Company's
unsecured lender requires a fee at a date no earlier than
December 1996 or upon the sale of the Company. The payment
amount will be based upon a future valuation of the Company. The
Company believes the financial resources of the Company will be
adequate to fund the payment.
At March 31, 1995, a $3.1 million non-recourse hotel mortgage
loan of a consolidated hotel affiliate is reflected as a current
liability in the consolidated financial statements as it matures
in September 1995. The Company anticipates refinancing this
mortgage loan before its maturity.
<PAGE>
PART II - OTHER INFORMATION
___________________________
Item 1. Legal Proceedings
See note below
Item 2. Changes in Securities
See note below
Item 3. Default upon Senior Securities
See note below
Item 4. Submission of matters to a Vote of Security Holders
See note below
Item 5. Other Information
See note below
Item 6. Exhibits and Reports on Form 8-K
See note below
NOTE: The response to each of the above items is not
applicable or is in the negative and does not require a response
pursuant to the instructions.
<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.
SIGNATURE INNS, INC.
Date May 10, 1995 By__________________________________________
John D. Bontreger, President and C.E.O.
Date May 10, 1995 By__________________________________________
Mark D. Carney, Vice President Finance
and C.F.O.
Date May 10, 1995 By__________________________________________
Martin D. Brew, Treasurer/Controller
CMF\71250
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Statement and Consolidated Statement of Operations of
Signature Inns, Inc. as of and for the three months ended March 31, 1995, and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000352948
<NAME> SIGNATURE INNS, INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> MAR-31-1995
<CASH> 2,617,427
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,191,680
<PP&E> 6,520,081
<DEPRECIATION> 0
<TOTAL-ASSETS> 14,099,982
<CURRENT-LIABILITIES> 3,685,694
<BONDS> 7,408,486
<COMMON> 2,943,817
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 14,099,982
<SALES> 0
<TOTAL-REVENUES> 1,385,834
<CGS> 0
<TOTAL-COSTS> 1,079,278
<OTHER-EXPENSES> 22,810
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 487,991
<INCOME-PRETAX> (160,368)
<INCOME-TAX> 0
<INCOME-CONTINUING> (160,368)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (160,368)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
