[LIVE]
<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, 1996 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 No.)
incorporation or organization)
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
-------- --------
7,784,327 Common Shares were outstanding as of May 7, 1996.
<PAGE>
<TABLE>
SIGNATURE INNS, INC.
INDEX
<CAPTION>
Part I - FINANCIAL INFORMATION Page
- ------------------------------ ----
<S> <C>
Item 1. Financial Statements (Unaudited)
Consolidated Statements of Operations 1
Three months ended March 31, 1996 and 1995
Consolidated Balance Sheets 2
March 31, 1996 and December 31, 1995
Consolidated Statements of Shareholders' Equity 3
Three months ended March 31, 1996 and
Year ended December 31, 1995
Consolidated Statements of Cash Flows 4
Three months ended March 31, 1996 and 1995
Note to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of 6
Financial Condition and Results of Operations
Part II - OTHER INFORMATION 8
- ---------------------------
SIGNATURES 9
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE INNS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
- ------------------------------------------------------------------------------
Three months Ended March 31, 1996 1995
- ------------------------------------------------------------------------------
<S> <C> <C>
Revenues:
Hotel revenues $1,136,768 753,911
Management and franchise fees 678,575 631,923
---------- ----------
1,815,343 1,385,834
---------- ----------
Costs and expenses:
Hotel costs and expenses 677,084 404,656
Hotel depreciation and amortization 97,344 65,439
General and administrative expenses 625,184 581,316
Other depreciation and amortization 26,967 27,867
---------- ----------
1,426,579 1,079,278
---------- ----------
Operating income 388,764 306,556
---------- ----------
Other income (deductions):
Equity in income of hotel
limited partnerships, net 20,364 (4,518)
Interest income 53,018 48,395
Interest expense - hotels (227,224) (158,546)
Interest expense - corporate (43,022) (104,327)
Capital appreciation fee - (225,118)
Other partners' equity in income (53,425) (36,669)
Other 8,263 13,859
---------- ----------
(242,026) (466,924)
---------- ----------
Net Income (loss) $ 146,738 (160,368)
========== ==========
Earnings (loss) per share $ 0.02 (0.02)
========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE INNS, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
- ------------------------------------------------------------------------------
March 31, December 31,
1996 1995
- ------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents:
Corporate $ 1,091,552 1,213,078
Consolidated hotel 1,181,650 1,402,047
----------- ----------
2,273,202 2,615,125
Other current assets 670,052 500,492
----------- ----------
Total current assets 2,943,254 3,115,617
----------- ----------
Hotel limited partnerships:
Equity 1,466,587 2,224,857
Receivables, net 3,611,648 3,571,648
---------- ----------
5,078,235 5,796,505
---------- ----------
Property and equipment, net: 8,697,207 8,763,787
Deferred costs and other assets, net of
accumulated amortization of $537,730
and $530,114 607,244 338,542
----------- ----------
$17,325,940 18,014,451
=========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt:
Corporate - 533,340
Consolidated hotels 605,933 3,188,376
Accounts payable and other current 923,565 822,961
---------- ----------
Total current liabilities 1,529,498 4,544,677
---------- ----------
Long-term debt, less current portion:
Corporate 1,611,110 2,166,660
Consolidated hotels 9,038,493 6,471,734
----------- ---------
10,649,603 8,638,394
----------- ---------
Other partners' equity - 40,154
----------- ----------
Total liabilities 12,179,101 13,223,225
---------- ----------
Shareholders' equity:
Common stock, no par value.
Authorized 20,000,000 shares 10,014,848 9,805,973
Accumulated deficit (4,868,009)(5,014,747)
----------- -----------
Total shareholders' equity 5,146,839 4,791,226
----------- -----------
$17,325,940 18,014,451
=========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE INNS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)
Common Stock
_____________________ Accumulated
Shares Amount Deficit Total
______________________________________________________________________________
<S> <C> <C> <C> <C>
Balance at January 1, 1994 3,426,307 $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 7,784,327 9,736,348 (6,632,163) 3,104,185
Net income - - 1,617,416 1,617,416
Collection of notes
receivable - 69,625 - 69,625
----------- ---------- ------------ ----------
Balance at December 31, 1995 7,784,827 9,805,973 (5,014,747) 4,791,226
Net income - - 146,738 146,738
Collection of notes
receivable - 208,875 - 208,875
----------- ------------ ---------- ----------
Balance at March 31, 1996 7,784,327 $10,014,848($4,868,009)$5,146,839
=========== ============ ========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE INNS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
- ------------------------------------------------------------------------------
Three months ended March 31 1996 1995
- ------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 146,738 (160,368)
Adjustements to reconcile net income to net
cash provided by operating activities:
Depreciation and authorization 124,311 93,306
Equity in income of hotel limited
partnerships, net of distributions
received of $783,761 and $717,947 763,397 722,465
Other partners' equity in income 53,425 36,669
Capital appreciation fee - 225,118
Other items (172,536) (58,011)
--------- ---------
Net cash provided by
operating activities 915,335 859,179
---------- ----------
Cash flows from investing activities:
Property and equipment additions (48,784) (58,690)
Advances to hotel limited partnership, net (40,000) (50,000)
Deferred costs and other assets (44,450) (42,351)
---------- ----------
Net cash used by investing activities (133,234) (151,041)
---------- ----------
Cash flows from financing activities:
Repayments of long-term debt (104,574) (3,171)
Net repayments on revolving line of credit (1,000,000) -
Proceeds from issuance of common stock 208,875 -
Distributions to other partners
by consolidated hotel (228,325) (123,053)
---------- ----------
Net cash used by financing activities (1,124,024) (126,224)
----------- ----------
Net increase (decrease) in cash and
cash equivalents (341,923) 581,914
Cash and cash equivalents at beginning of period 2,615,125 2,035,513
---------- ----------
Cash and cash equivalents at end of period $2,273,202 2,617,427
========== ==========
Supplemental information:
Interest paid $ 171,943 179,909
========== ==========
Income taxes paid $ 9,000 2,000
========== ==========
</TABLE>
<PAGE>
SIGNATURE INNS, INC.
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1996
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, 1996. 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, 1995.
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Hotel Operations
- ----------------
Hotel operations of three hotels owned by consolidated affiliates
(Indianapolis South, Indianapolis East and Elkhart) are included in the
statement of operations for the three months ended March 31, 1996. Effective
December 29, 1995, the operating results of a third consolidated affiliate
(Indianapolis East) are included in the statement of operations; prior to
that date the Company's share of net income was reflected as equity in income
of hotel limited partnerships.
Hotel revenues of $1,136,768 for the quarter ended March 31, 1996 represented
a $382,857 increase compared to the same quarter of 1995. Hotel revenues from
Indianapolis South and Elkhart increased $5,295 for the quarter, with the
remainder of the increase attributable to the consolidation of Indianapolis
East. The increased revenues of Indianapolis South and Elkhart resulted from
an increase in average room rates.
Hotel costs and expenses of $677,084 for the quarter ended March 31, 1996
represented a $272,428 increase compared to 1995. Hotel costs and expenses
from Indianapolis South and Elkhart increased $62,258 for the quarter, with
the remainder of the increase attributable to the consolidation of
Indianapolis East.
Hotel depreciation and amortization expense increased $31,905 for the quarter
ended March 31, 1996 compared to 1995 due primarily to the consolidation of
Indianapolis East.
Corporate Operations
- --------------------
Management and franchise fees increased $46,652 for quarter ended March 31,
1996 compared to the same quarter of 1995. The increase in fee income is due
to increased revenues during the first quarter of 1996 compared to 1995 at the
unconsolidated partnership owned hotels. For the first quarter of 1996,
chainwide occupancy decreased 0.3 percentage points to 59.9% and average daily
rate increased $2.83 to $56.22.
General and administrative expenses for the quarter ended March 31, 1996 were
$625,184 which represented a $43,868 increase compared to the same quarter of
1995. The increase is attributable to increased employee compensation costs.
Other Income (Deductions)
- -------------------------
Equity in income of hotel limited partnerships represents the Company's share
of the unconsolidated partnerships' income or loss. The increase of $24,882
for the quarter ended March 31, 1996 compared to 1995 is attributable to
increased profitability of the partnership owned hotels in 1996 and an
increased ownership percentage in one hotel.
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Interest income for the quarter ended March 31, 1996 increased $4,623 compared
to 1995. The increase was a result of an increase in interest income earned
from the Company's loan participation agreements offset by lower interest
income from invested cash balances.
Interest expense - hotels increased $68,678 for the quarter ended March 31,
1996 compared to 1995 due to the consolidation of Indianapolis East. Interest
expense - corporate for the quarter ended March 31, 1996 represents a $61,305
decrease compared to 1995 due to decreased average outstanding indebtedness,
and a decrease in the interest rates on the Company's borrowing arrangements.
The Company satisfied the Capital Appreciation Fee arrangement on September 1,
1995. During the quarter ended March 31, 1995, $225,118 of related expense
was recorded using a present value estimate of the amount due the lender and a
December 1996 payment date.
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 cash balances will provide adequate liquidity to
meet its operating needs and the payment requirements of its corporate
obligations over the next twelve months.
<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 7, 1996 By:
----------- ---------------------------------------
John D. Bontreger, President and C.E.O.
Date May 7, 1996 By:
----------- ---------------------------------------
Mark D. Carney, Vice President Finance
and C.F.O.
Date May 7, 1996 By:
----------- ---------------------------------------
Martin D. Brew, Treasurer/Controller
