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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For fiscal year ended December 31, 1996 Commission file Number 1-8431
---------
AMERICANA HOTELS AND REALTY CORPORATION
(Exact name of registrant as specified in its charter)
MARYLAND 36-3163723
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
535 Boylston Street, Boston, MA 02116
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code - (617) 247-3358
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $1.00 par value
(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 and (2) has been subject to such filing requirements for
the past 90 days. YES X NO
--- ---
Indicate by check mark if disclosure of 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. YES X NO
--- ---
The aggregate market value of the common stock held by non-affiliates of the
registrant as of March 4, 1997 was approximately $4,567,000. The number of
shares of common stock outstanding as of March 4, 1997 was 6,524,375.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Corporation's definitive proxy statement for the 1997 Annual
Meeting of stockholders are incorporated by reference in Parts I and III hereof.
Such proxy statement will be filed with the Securities and Exchange Commission
no later than 120 days after the registrant's year ended December 31, 1996.
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Page 1 of 24 Exhibit index located at page 11.
1
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AMERICANA HOTELS AND REALTY CORPORATION
1996 FORM 10-K ANNUAL REPORT
Table of Contents
PART I
PAGE
Item 1. Business......................................... 3
Item 2. Properties....................................... 7
Item 3. Legal Proceedings................................ 7
Item 4. Submission Of Matters to a Vote of Security
Holders........................................ 7
PART II
Item 5. Market For Registrant's Common
Equity and Related Stockholder Matters......... 8
Item 6. Selected Financial Data.......................... 8
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations.. 9
Item 8. Financial Statements and Supplementary Data...... 11
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure......... 21
PART III
Item 10. Directors and Executive Officers of
The Registrant................................. 22
Item 11. Executive Compensation........................... 23
Item 12. Security Ownership of Certain Beneficial
Owners and Management.......................... 23
Item 13. Certain Relationships and Related Transactions... 23
PART IV
Item 14. Exhibits, and Reports on Form 8-K.................. 23
SIGNATURES
2
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PART I
ITEM 1. BUSINESS
General
- -------
Americana Hotels and Realty Corporation ("AHRC" or the "Corporation") was
incorporated under the laws of the State of Maryland in December 1981. The
Corporation's principal business objective was investing in hotels, resorts, and
other facilities in the accommodations field. The Corporation has operated as a
Real Estate Investment Trust (a "REIT") under Sections 856-860 of the Internal
Revenue Code since its inception.
On June 28, 1988 the stockholders of the Corporation approved a Plan of
Disposition of Assets and Liquidation (the "Plan of Liquidation") whereby all
the remaining investments held by the Corporation would be disposed of and the
proceeds distributed to stockholders in complete liquidation of the Corporation.
Consistent with the Plan, the Corporation proceeded to dispose of its
investments and has made liquidating distributions of $8.00 per share on August
1, 1989, $3.50 per share on December 14, 1990, $0.75 per share on April 7, 1992,
$0.50 per share on March 6, 1995, and $2.00 per share on June 18, 1996. As of
December 31, 1996, the Corporation's only remaining real estate investment
consists of a leasehold interest in a non-operating hotel property acquired by
foreclosure in Palm Springs, California.
Pursuant to an advisory agreement, Americana Corporation (the "Advisor"),
advises the Corporation with respect to its investments and administers the
day-to-day operations of the Corporation, subject to the supervision of the
Corporation's Board of Directors. The advisory agreement is more fully described
herein under "Advisory Agreement".
History
- -------
The Corporation commenced operations in November 1982 when it received
approximately $112 million in proceeds of a public offering of its common
shares. The Corporation was sponsored by Americana Hotels Corporation ("AHC"), a
privately owned company. Using the proceeds of the public offering, the
Corporation provided long term mortgages with equity participations on 21 hotels
which were managed, and through subsidiaries or affiliates were owned in whole
or in part by AHC.
Toward the end of 1985 it became apparent that the operating results of the
hotel properties in which the Corporation had invested had dramatically
worsened. In addition to these adverse developments and other developments
separate and apart from its arrangement with the Corporation, AHC informed the
Corporation that, except on an interim basis in order to permit the phasing in
of a new investment advisor and new hotel managers, AHC did not intend to
continue to act as the Corporation's investment advisor or continue to manage
the hotel properties in which the Corporation had invested.
To respond to these events, the Board of Directors of the Corporation and AHC
developed a Restructuring Plan in February 1986. The Restructuring Plan called
for termination of the relationship with AHC and its affiliates
3
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and the creation of new advisory arrangements. The Restructuring Plan also
called for the disposition or restructuring of the ownership and management of
the hotel properties in which the Corporation had investments. Several
properties were authorized for sale, with the Corporation's net proceeds from
the dispositions to be used to repay bank borrowings and renovate the hotels to
be retained. Thus, it was anticipated that at the completion of the renovation
phase of the Restructuring Plan, the Corporation would have a significantly
smaller portfolio of investments, but of a higher quality and with improved
earnings potential.
Under the Restructuring Plan, during 1986 and 1987 the Corporation disposed of
or restructured all of its hotel investments, with total net losses of
approximately $16.5 million charged to the Investment Loss Reserve. At the end
of 1987, the Corporation held 12 hotel investments, three owned subject to a
lease, three acquired by deed in lieu of foreclosure, three short-term
mortgages, and three land leaseback/mortgage loans subject to a purchase option.
Plan of Disposition of Assets and Liquidation of the Corporation
- ----------------------------------------------------------------
While progress under the Restructuring Plan had been significant, in early 1988
the Directors initiated a review of alternatives for maximizing stockholder
value. The Directors authorized the Plan of Disposition of Assets and
Liquidation after it concluded that a program combining the orderly disposition
of the investments and subsequent distribution of funds to stockholders was the
best way to maximize values for stockholders. The Plan of Disposition of Assets
and Liquidation was approved by a vote of the stockholders on June 28, 1988.
Under the Plan of Disposition of Assets and Liquidation, the Corporation
disposed of its interests in three properties during 1988; three properties
during 1989; two properties in 1990; and one property in 1992. In 1994, the
Corporation received repayment of its second mortgage loan on a hotel property
in Wilmington, North Carolina and in 1995, sold its hotel property in Kansas
City, Missouri. In March 1996 the Corporation sold its restructured first
mortgage loan on the JFK Airport Hilton.
Investment Held for Disposition
- -------------------------------
At December 31, 1996 the Corporation's only remaining real estate investment was
a leasehold interest in the Canyon Resort Hotel and related property in Palm
Springs, California. This interest was acquired by foreclosure in September
1988. Title to the fee simple estate of the property, consisting of
approximately 500 acres, is vested in approximately 30 American Indians. The
master ground lease, which expires in 2031, is administered through the United
States Bureau of Indian Affairs. The Corporation's leasehold interest in the
property consists of a 173 room hotel and convention center which has been
closed since June, 1987; an operating 18 hole public golf course; and subleases
on approximately 550 homesites, an apartment complex and a private golf course
and country club. The subleases have annual rentals, including fixed and
percentage payments, which currently are approximately $900,000. Due to the
Corporation's status as a trustee resulting from the foreclosure sale, the
Corporation is not currently paying ground rent under the Indian master lease.
4
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In December 1989, the Corporation entered into an approximately $18 million
purchase and sale agreement to sell its leasehold interest in the property to a
potential buyer (Canyon Development) who planned a major development project on
the hotel and golf course sites and adjacent properties. Among the factors which
have inhibited or delayed Canyon Development's project were protracted
negotiations with the Indian lessors and the Bureau of Indian Affairs regarding
an extended master ground lease, difficulties in obtaining project entitlements
from the City of Palm Springs, environmental and other legal challenges to the
project and, most recently, difficulties in obtaining financing. Through June
1995, Canyon Development had paid a total of $2.7 million to the Corporation in
non-refundable deposits and option payments in connection with the purchase of
the leasehold interest. In addition, Canyon Development made substantial
payments to the Indian lessors. Since June 1995, no further payments have been
made to the Corporation or the Indian lessors; however, Canyon Development has
on several occasions since June 1995 informed the Corporation that interim
financing was being arranged and it was in the process of negotiating a
financing in order to complete the acquisition of the Corporation's leasehold
interest. Nevertheless, presently, the Corporation has no evidence of Canyon
Development's financing, no outstanding contract with Canyon Development and no
assurance that a closing will take place. In 1996 the Indian lessors instituted
proceedings to terminate their contractual relationships with Canyon
Development. The Corporation has put its leasehold interest back on the market
for sale, but has received no acceptable offer to date.
In order to more accurately estimate the current fair value of the Palm Springs
investment for the 1996 financial statements the Corporation had the fair value
of the Corporation's leasehold interest independently appraised. The independent
appraiser concluded that the fair value of the Corporation's leasehold interest
was $6,000,000 as of February 1997. This appraised value was determined based
upon the present value of the cashflows through the expiration of the master
ground lease in 2031. The cashflows included the future collection of the rents
from approximately 550 residential homesites, an apartment complex and a private
golf course and country club; together with the operation of an improved public
golf course. There was no value assigned to the closed hotel structures, nor any
value for the potential renewal or extension of either the master lease or any
subleases. Therefore the Corporation recorded a provision for investment losses
in the 1996 financial statements to adjust the carrying value of the investment
to the fair value less estimated costs to sell.
Advisory Agreement
- ------------------
Americana Corporation, the Advisor, administers the day-to-day operations of the
Corporation and provides executive and administrative personnel, office space,
and services as may be required in connection with the performance of services
for the Corporation. It conducts negotiations with respect to the investments of
the Corporation and provides investigation and reports as the Directors may
request in formulating and modifying policies of the Corporation with respect to
its investments.
5
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The advisory agreement provides that directors, officers, or employees of the
Advisor may serve as directors, officers or employees of the Corporation; and
that the Advisor or any director, officer, or employee of the Advisor may engage
in any other business or render services of any kind to any other entity; and
that the Advisor and its affiliates will be indemnified against certain
liabilities in connection with the Advisor's performance of its obligations
under the advisory agreement. The Corporation's President, George H. Bigelow is
the sole shareholder of the Advisor. Of the four Directors of the Corporation,
only one, George H. Bigelow, is affiliated with the Advisor.
The advisory fee was modified in September, 1996 to reduce the base fee to
$240,000 annually from $460,000 which was the fee in effect since November 1995.
In addition to the base fee there is an incentive fee of up to 15% of proceeds
in excess of defined amounts from foreclosed property dispositions. The advisory
agreement can be terminated upon two months' notice by the Corporation, or six
months' notice by the Advisor, and has no provision for termination fees.
Aggregate fees paid to the Advisor were $405,000 in 1996, $560,000 in 1995, and
$580,000 in 1994.
Employees
- ---------
On December 31, 1996, the Corporation had no employees. The Advisor provides all
the executive and administrative personnel required by the Corporation.
Federal Income Tax
- ------------------
The Corporation has elected to qualify as a real estate investment trust
("REIT") under Sections 856-860 (the "REIT Provisions") of the Internal Revenue
Code (the "Code"). Under the REIT Provisions a real estate investment trust is
generally not subject to Federal income tax with respect to qualified income
which it distributes to its stockholders.
While it is intended that the Plan of Liquidation will be carried out in a
manner that will allow the Corporation to qualify under the REIT Provisions, no
assurance can be given that the Corporation will not lose or terminate its
status under the REIT Provisions. Qualification as a REIT involves the
application of highly technical and complex Code provisions for which there are
only limited judicial or administrative interpretations and the determination of
various factual matters and circumstances not entirely within the Corporation's
control. Should the Corporation fail to meet the requirements of the REIT
Provisions it may be required to make penalty payments in order to retain its
REIT status; or it could become taxable as a corporation for Federal income tax
purposes and would be liable for Federal income taxes with respect to its
taxable income, beginning with the taxable year in which its qualification under
the REIT Provisions was terminated. However, there are existing net operating
loss carryforwards of approximately $5.6 million at December 31, 1996, expiring
between the years 2002 and 2012, that would be available to reduce any taxable
income.
Distributions in liquidation will not be dividend income when received by
stockholders. Distributions in liquidation are first used to reduce the basis of
a stockholder's stock in the Corporation (non-taxable return of
6
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capital), with any excess constituting a capital gain if the stock is held as a
capital asset. If the sum of all liquidating distributions is less than a
stockholder's basis in his stock, the difference will constitute a capital loss.
As of December 31, 1996 the Corporation had made liquidating distributions
totaling $14.75 per share.
ITEM 2. PROPERTIES
The Corporation's assets includes one property referred to under Item 1 above,
to which reference is hereby made for a description of the property.
ITEM 3. LEGAL PROCEEDINGS
On December 31, 1996 there were no material pending legal proceedings to which
the Corporation was a party or to which any of its investments were subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
This item is not applicable, as no matter was submitted to the Corporation's
stockholders during the fourth quarter of the fiscal year covered by this
report.
7
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
The Corporation's shares of common stock were traded on the New York Stock
Exchange under the symbol "AHRC" from 1982 through February 17, 1997. Since then
the shares have been traded on the National Association of Securities Dealers
"NASD" Over The Counter Market "OTC" under the symbol "AHTC". As of January
1997, the number of stockholders known to the Corporation was approximately 700.
Because a substantial number of stockholders' shares are held in custody,
commonly called "Street Name", the Corporation estimates that the total number
of individual stockholders is approximately 5,000. The Corporation declared
quarterly dividends from commencement of business in 1982 through 1985, and has
not declared dividends since 1985. The Corporation paid an initial liquidating
distribution of $8.00 on August 1, 1989; a second liquidating distribution of
$3.50 on December 14, 1990; a third liquidating distribution of $0.75 on April
7, 1992; a fourth liquidating distribution of $0.50 on March 6, 1995; and a
fifth liquidating distribution of $2.00 on June 18, 1996.
Stock Prices
------------ Liquidating
High Low Distributions
---- --- -------------
1996
----
Quarter Ended:
March 31................... $3 3/8 $2 5/8 -
June 30.................... 3 1/2 1 3/8 $2.00
September 30............... 1 1/2 1 1/8 -
December 31................ 1 1/4 1 -
1995
----
Quarter Ended:
March 31................... $3 5/8 $2 7/8 $0.50
June 30.................... 3 3/8 3 1/8 -
September 30............... 3 5/8 3 -
December 31................ 3 1/2 3 1/8 -
ITEM 6. SELECTED FINANCIAL DATA
(In thousands, except per share data)
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Short-Term Investments $ 2,400 $ 4,165 $ 3,446 $ 600 $ 400
Assets $ 8,608 $28,958 $33,038 $35,062 $ 35,492
Mortgage Loans Payable $ 2,538 $ 3,036 $ 3,489 $ 3,901 $ 4,276
Revenues $ 706 $ 2,053 $ 1,966 $ 1,422 $ 534
Net Earnings (Loss) $(5,092) $ (282) $(1,591) $ 324 $ 1,275
Net Earnings (Loss)
Per Share $(.78) $(.04) $(.24) $.05 $.20
Dividends Declared
Per Share - - - - -
Liquidating Distributions
Per Share $2.00 $.50 - - $.75
</TABLE>
8
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ITEM 7. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
a) Liquidity and Capital Resources
At December 31, 1996 the Corporation had $2,560,000 of cash and
short-term investments and one investment held for disposition.
In February 1997, the Corporation arranged an extension of the
maturity date of its $2.5 million mortgage loan which was due March
1, 1997. The Corporation will pay down the loan by $1 million and
the remaining balance will be fully amortized with interest at 9.5%
by monthly payments of approximately $47,900 through March 1, 2000.
The Corporation believes it has adequate liquidity available for
its foreseeable needs from resources on hand. It is anticipated
that the Corporation will continue to make liquidating
distributions of cash to stockholders as funds are available.
b) Results of Operations
1996 versus 1995
----------------
Results for the year ended December 31, 1996 produced a net loss of
$5,092,000 or $(.78) per share, compared to a net loss of $282,000
or $(.04) per share for the year ended December 31, 1995. The 1996
results included a $800,000 credit to expenses for a change in the
estimate of the ultimate costs of liquidation, and a provision of
$5,770,000 for an increase to the investment loss reserve to adjust
the carrying value of the Palm Springs investment to fair value
less costs to sell. The 1996 net loss also reflects the substantial
decline in interest income after the sale of the JFK Airport Hotel
mortgage loan in March 1996.
Interest income decreased 66% in 1996 compared to 1995. In 1995
interest income included earnings from the JFK Airport Hotel loan
which was sold in March 1996, the six month purchase money note
received upon the sale of the Kansas City property in February 1995
and earnings on larger short-term investments balance throughout
1995.
Advisory fees decreased 28% in 1996 compared to 1995 due to two
reductions in the advisory agreement's base fee effective in
November 1995 and September 1996.
The administrative expenses incurred in 1996 decreased 31% from
1995. Included in this change was a substantial decrease in
Directors' fees and the costs of the Directors' Deferred
Compensation Plan. In September 1996, the Directors reduced their
annual fees to only a meeting fee and terminated the deferred
compensation plan.
In 1996 the Corporation reassessed the costs to ultimately
liquidate the Corporation after the disposition of the final
investment and distribution of final proceeds to stockholders. A
liquidation
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reserve of $900,000; together with other accrued expensed totaling
$300,000 had been previously estimated. Based upon the present
status of the liquidation, and current cost estimates the
Corporation concluded that as of December 31, 1996 a liquidation
reserve of $400,000 is a reasonable estimate for the anticipated
expenses of the Corporation's ultimate liquidation.
Legal expense decreased approximately 60% in 1996 compared to 1995
due to the conclusion of the bankruptcy proceedings involving the
JFK Airport Hotel mortgage loan in 1995 and the ultimate sale of
the mortgage loan in March 1996.
The net result of cash receipts and disbursements from operations
of the leasehold interest in the Palm Springs property was
approximately $200,000 in both 1995 and 1996. This total surplus of
$400,000 was credited to the investment loss reserve at December
31, 1996.
1995 versus 1994
----------------
Results for the year ended December 31, 1995 produced a net loss of
$282,000 or $(.04) per share. The 1995 results included a charge of
$1,100,000 for an increase to the investment loss reserve. This
additional loss provision reflected an anticipated loss from the
sale of the JFK Airport Hotel mortgage note based upon a sale
finalized on March 27, 1996. The results of operations for 1994
were a net loss of $1,591,000 or $(.24) per share, which included a
charge of $2,000,000 for an increase to the investment loss reserve
related to the sale of the Kansas City hotel foreclosed property.
Interest income increased 4% in 1995 compared to 1994. In 1995
interest income included earnings from the six month purchase money
note received upon the sale of the Kansas City property in February
1995 and increased short-term investment interest due to larger
invested cash balances in 1995 compared to 1994. The increase in
1995 interest is net of a small decrease (5%) in the monthly
interest received on the restructured JFK Airport Hotel mortgage
loan. In 1994 the Corporation received court mandated payments of
$150,000 a month and in 1995 under the restructured loan monthly
interest payments were $143,000 a month.
Advisory fees decreased slightly in 1995 compared to 1994 due to a
reduction in the advisory agreement's base fee effective in
November 1995.
The administrative expenses incurred in 1995 increased 5% over
1994. Included in this change was a 47% increase in the costs of
the Directors' Deferred Compensation Plan due to an increase in the
Corporation's stock price, which was partially offset by a 30%
decrease in the cost of the directors' and officers' insurance.
Legal expense decreased approximately 69% in 1995 compared to 1994
due to the conclusion of the bankruptcy proceedings related to the
borrower on the JFK Airport Hotel mortgage loan.
10
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ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
AMERICANA HOTELS AND REALTY CORPORATION
Index to Financial Statements
Page
Independent Auditors' Report.................................. 12
Financial Statements:
Balance Sheet
December 31, 1996 and 1995........................... 13
Statement of Earnings
Years ended December 31, 1996, 1995 and 1994 .........14
Statement of Stockholders' Equity
Years ended December 31, 1996, 1995 and 1994......... 15
Statement of Cash Flows
Years ended December 31, 1996, 1995 and 1994 .........16
Notes to Financial Statements............................. 17
All financial statement schedules for which provision is made in
the applicable accounting regulations of the Securities and
Exchange Commission are either not required under the related
instructions or the required information is set forth in the
financial statements or notes thereto, and therefore have been
omitted.
11
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INDEPENDENT AUDITORS' REPORT
----------------------------
The Directors and Stockholders
Americana Hotels and Realty Corporation:
We have audited the financial statements of Americana Hotels and Realty
Corporation as listed in the accompanying index. These financial statements are
the responsibility of the Corporation's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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.
As discussed in Note 2 to the financial statements, the Corporation has adopted
a Plan of Disposition of Assets and Liquidation. In connection with the Plan,
the Corporation will dispose of its assets, settle its liabilities, distribute
the proceeds to its stockholders and dissolve the Corporation.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Americana Hotels and Realty
Corporation as of December 31, 1996 and 1995, and the results of its operations
and its cash flows for each of the years in the three-year period ended December
31, 1996 in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Boston, Massachusetts
February 27, 1997; except as to
Note 7 which is as of April 14, 1997.
12
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AMERICANA HOTELS AND REALTY CORPORATION
Balance Sheet
December 31,
----------------------
1996 1995
---- ----
ASSETS
Investments held for disposition $12,170,000 $26,670,000
Less: Investment loss reserve (6,170,000) (2,178,000)
----------- -----------
Net investments 6,000,000 24,483,000
Cash 160,000 89,000
Short-term investments, at cost, which
approximates market 2,400,000 4,165,000
Accrued interest receivable 7,000 143,000
Other assets 41,000 78,000
----------- -----------
$ 8,608,000 $28,958,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued expenses $ 65,000 $ 383,000
Directors' deferred compensation - 893,000
Liquidation reserve 400,000 900,000
Mortgage loan payable 2,538,000 3,036,000
----------- -----------
3,003,000 5,212,000
----------- -----------
Stockholders' Equity:
Common stock - $1.00 par value,
20,000,000 shares authorized,
6,524,375 shares outstanding 6,524,000 6,524,000
Additional paid-in capital 8,627,000 21,676,000
Accumulated deficit (9,546,000) (4,454,000)
----------- -----------
5,605,000 23,746,000
----------- -----------
$ 8,608,000 $28,958,000
=========== ===========
See notes to financial statements.
13
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AMERICANA HOTELS AND REALTY CORPORATION
Statement of Earnings
Year Ended December 31,
---------------------------------
1996 1995 1994
---- ---- ----
REVENUES
Interest income $ 706,000 $2,053,000 $1,966,000
EXPENSES
Advisory fees 405,000 560,000 580,000
Administrative expenses:
Directors' fees 89,000 118,000 114,000
Deferred compensation plan 45,000 125,000 85,000
D&O Insurance 82,000 99,000 126,000
Shareholder relations 60,000 66,000 57,000
Other 84,000 110,000 96,000
Liquidation and other
expenses (credit) (800,000) - -
Legal expenses 63,000 157,000 499,000
Provision for investment
losses 5,770,000 1,100,000 2,000,000
----------- ----------- -----------
5,798,000 2,335,000 3,557,000
----------- ----------- -----------
NET LOSS $(5,092,000) $ (282,000) $(1,591,000)
=========== =========== ===========
Net loss per share $(.78) $(.04) $(.24)
Average number of shares
outstanding 6,524,000 6,524,000 6,524,000
See notes to financial statements.
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AMERICANA HOTELS AND REALTY CORPORATION
Statement of Stockholders' Equity
Years Ended December 31, 1996, 1995, and 1994
Common Stock Additional
------------ Paid-In Accumulated
Shares Amount Capital Deficit
------ ------ ---------- -----------
Balance at
December 31, 1993 6,524,375 $ 6,524,000 $24,938,000 $(2,581,000)
Net (loss) (1,591,000)
--------- ----------- ----------- -----------
Balance at
December 31, 1994 6,524,375 6,524,000 24,938,000 (4,172,000)
Liquidating
Distribution (3,262,000)
Net (loss) (282,000)
--------- ----------- ----------- -----------
Balance at
December 31, 1995 6,524,375 6,524,000 21,676,000 (4,454,000)
Liquidating
Distribution (13,049,000)
Net (loss) (5,092,000)
--------- ----------- ----------- -----------
Balance at
December 31, 1996 6,524,375 $ 6,524,000 $ 8,627,000 $(9,546,000)
========= =========== =========== ===========
See notes to financial statements.
15
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AMERICANA HOTELS AND REALTY CORPORATION
Statement Of Cash Flows
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net loss $ (5,092,000) $ (282,000) $ (1,591,000)
Adjustments to net loss:
Operations of foreclosed
property credited (charged)
to investment loss reserve 437,000 -- (555,000)
Provision for investment losses 5,770,000 1,100,000 2,000,000
Decrease(increase) in accrued
interest receivable 136,000 (143,000) 32,000
Decrease in other assets 37,000 54,000 1,000
Decrease in accounts payable and
accrued expenses and directors'
deferred compensation (1,211,000) (83,000) (6,000)
Decrease in liquidation
reserve (500,000) -- (15,000)
------------ ------------ ------------
Net Cash Provided by (Used in)
Operating Activities (423,000) 646,000 (134,000)
------------ ------------ ------------
Cash Flows from Investing Activities
Disposition/reduction
of investments 12,276,000 2,737,000 1,060,000
Principal payments received -- -- 3,400,000
------------ ------------ ------------
Net Cash Provided by
Investing Activities 12,276,000 2,737,000 4,460,000
------------ ------------ ------------
Cash Flows from Financing Activities
Amortization of mortgage
loan payable (498,000) (453,000) (412,000)
Liquidating distributions (13,049,000) (3,262,000) --
------------ ------------ ------------
Net Cash Used in
Financing Activities (13,547,000) (3,715,000) (412,000)
------------ ------------ ------------
Increase/(Decrease) in Cash
and Short-term Investments (1,694,000) (332,000) 3,914,000
Cash and Short-term Investments
At Beginning of the Year 4,254,000 4,586,000 672,000
------------ ------------ ------------
Cash and Short-term Investments
At End of the Year $ 2,560,000 $ 4,254,000 $ 4,586,000
============ ============ ============
</TABLE>
See notes to financial statements.
16
<PAGE>
AMERICANA HOTELS AND REALTY CORPORATION
Notes to Financial Statements
December 31, 1996, 1995 and 1994
1. Significant Accounting Policies
Basis of Presentation
---------------------
The financial statements are prepared on the accrual basis of accounting
in accordance with generally accepted accounting principles. The
preparation of financial statements requires the Corporation to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
Federal Income Taxes
--------------------
The Corporation has elected to be taxed as a real estate investment trust
under Sections 856-860 of the Internal Revenue Code. Accordingly, no
provisions have been made for Federal income taxes in the financial
statements.
Fair Value of Financial Instruments
-----------------------------------
The Corporation's financial instruments, other than debt are generally
short-term in nature and contain minimal credit risk. The carrying amount
of these assets and liabilities on the balance sheet are assumed to be at
fair value. The Corporation's mortgage loan payable is at a fixed-rate,
and when compared with borrowing rates currently available to the
Corporation with similar terms, approximates fair value. The Corporation
invests its short-term cash investments with one financial institution.
Cash balances are insured by the Federal Deposit Insurance Corporation up
to $100,000, and at December 31, 1996 the Corporation's uninsured cash
balance totaled $2,460,000.
Foreclosed Properties
---------------------
Properties acquired through foreclosure or a deed in lieu of foreclosure
are recorded at the lower of their cost or fair value at the date of
acquisition. Provision for subsequent declines in value is recorded as an
increase in the investment loss reserve. Operating losses or income of
foreclosed properties, including related interest expense, are charged or
credited to the investment loss reserve.
In March, 1995 the Financial Accounting Standards Board issued Statement
No.121,"Accounting for Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of", which provides guidance for recognition and
measurement of impairment of certain assets. The Corporation adopted
Statement No.121 on January 1, 1996. Statement No.121 had no effect on
the financial position or results of operations of the Corporation.
17
<PAGE>
Investment Loss Reserve
-----------------------
The Corporation provides an investment loss reserve and regularly
evaluates it for adequacy based upon comparing the carrying value of
individual investments with their estimated fair value, including the
estimated cost of holding the property through disposition. While it is
believed that the investment loss reserve is adequate, it is possible
that adjustments may be necessary in the near term.
Preferred Stock
---------------
The Corporation has 15,000,000 shares of $1.00 par value preferred stock
authorized but not issued.
Statement of Cash Flows
-----------------------
For purposes of the statement of cash flows, the Corporation considers
all short-term investments with maturities, at date of purchase, of three
months or less to be cash equivalents. Cash paid for interest related to
the mortgage loan payable on the foreclosed property in Palm Springs,
California, which interest was charged to the property's operations, was
$267,000 in 1996, $312,000 in 1995, and $353,000 in 1994.
2. Plan of Disposition of Assets and Liquidation
On June 28, 1988 the Stockholders of the Corporation approved a Plan of
Disposition of Assets and Liquidation whereby all the remaining
investments held by the Corporation will be sold and the proceeds will be
distributed to stockholders in complete liquidation and dissolution of
the Corporation. The Corporation made liquidating distributions of $8.00
per share on August 1, 1989, $3.50 per share on December 14, 1990, $.75
per share on April 7, 1992, $.50 per share on March 6, 1995, and $2.00
per share on June 18, 1996.
3. Advisory Agreement
In accordance with an advisory agreement, Americana Corporation (the
"Advisor") advises the Corporation with respect to its investments and
administers the day-to-day operations of the Corporation, all subject to
the general supervision of the Corporation's Board of Directors. The
officers and shareholder of the Advisor are officers of the Corporation,
and one of the Directors of the Corporation is the shareholder of the
Advisor.
The advisory fee was modified in September, 1996 to reduce the base fee
to $240,000 annually from $460,000 which was the fee in effect since
November 1995. In addition to the base fee, there is an incentive fee of
up to 15% of proceeds in excess of defined amounts from foreclosed
property dispositions. The advisory agreement can be terminated upon two
months' notice by the Corporation, or six months' notice by the Advisor,
and has no provision for termination fees. Aggregate fees paid to the
Advisor were $405,000 in 1996, $560,000 in 1995, and $580,000 in 1994.
18
<PAGE>
4. Investments Held for Disposition
December 31,
----------------------------
1996 1995
---- ----
Foreclosed property:
Leasehold interest in Palm Springs,CA $ 12,170,000 $ 12,170,000
Mortgage loan:
Mortgage loan on hotel at JFK Airport, NY -- 14,500,000
------------ ------------
Total 12,170,000 26,670,000
Less investment loss reserve (6,170,000) (2,187,000)
------------ ------------
Net investments $ 6,000,000 $ 24,483,000
============ ============
The foreclosed property is a leasehold interest located in Palm Springs,
CA. The leasehold interest includes a 173-room closed hotel, originally
constructed in 1965, an operating public golf course and subleases on
approximately 550 homesites, an apartment complex and a private golf
course and country club. The Corporation's interest was acquired by
foreclosure in September, 1988. At December 31, 1995 the investment was
recorded at the leasehold interest's fair value at the date of
foreclosure less $2,700,000 of non-refundable fees and option payments
received in connection with efforts to sell the investment, including
$420,000 received in 1995. In February 1997, the Corporation had the
leasehold interest appraised to determine the fair value of the
investment. The appraised value was $6 million; and therefore an increase
to the investment loss reserve was provided to adjust the net investment
to fair value less estimated costs to sell at December 31, 1996. The
property is subject to a first mortgage and has a cost basis for federal
income tax purposes of approximately $10.2 million.
The mortgage loan secured by a hotel located at JFK Airport, NY was a
restructured first mortgage on the 330-room JFK Hilton Hotel. This loan
was originally due in June 1990; but was not repaid at maturity and the
borrower filed for protection under Chapter 11 of the Bankruptcy Code. In
December 1994, the borrower's plan of reorganization was approved by the
Bankruptcy Court, which modified the terms of the loan and reinstated the
payment of interest at 10.75% with a maturity date of December 31, 1998.
On March 27, 1996 the Corporation sold the loan to a third party for
$12,276,000 in cash, resulting in a loss of $2,224,000 which was charged
off against the investment loss reserve in 1996.
5. Investment Loss Reserve
The activity in the Corporation's investment loss reserve is summarized
as follows:
<TABLE>
<CAPTION>
1996 1995 1994
------ ------ -----
<S> <C> <C> <C>
Balance at beginning of year $2,187,000 $3,770,000 $2,325,000
Provision for losses 5,770,000 1,100,000 2,000,000
Amounts charged off (2,224,000) (2,683,000) -
Operation of foreclosed properties 437,000 - (555,000)
---------- ---------- ----------
Balance at end of year $6,170,000 $2,187,000 $3,770,000
========== ========== ==========
</TABLE>
19
<PAGE>
6. Liquidation Reserve
In 1990 the Corporation established a liquidation reserve of $2,500,000
based upon the estimated operating expenses under the Plan of Liquidation
and future costs to complete the final liquidation. This estimate was
based upon an anticipated two to three year period to complete the
liquidation. Liquidation-related administrative expenses were charged to
the liquidation reserve through December 31, 1993. The remaining balance
in the liquidation reserve was $900,000 which was estimated to be the
cost of the Corporation's ultimate liquidation, and, therefore, all
ongoing administrative expenses were charged to operations instead of the
liquidation reserve. Based upon the reduction in operations and expenses
achieved during 1996, the Corporation has revised its estimated future
liquidation costs and accrued expenses as of December 31, 1996. As a
result, the Corporation has reduced the amount of the Liquidation Reserve
by $500,000 and other accrued expenses by $300,000. These adjustments in
estimate are reflected in the 1996 financial statements as a $800,000
liquidation and other expenses credit.
7. Mortgage Loan Payable
The mortgage loan payable is a first mortgage loan secured by the
Corporation's leasehold interest in Palm Springs, CA. The loan is without
recourse to the Corporation, bears interest at 9.5%, and matured on March
1, 1997. In February 1997, the Corporation reached agreement in principal
with the lender to a three year extension of the maturity date of the
loan; pending the approval of the ground lease lessors. The lessors'
approval was received in April 1997 and the Corporation paid down the
loan by $1 million with the remaining balance being fully amortized with
interest at 9.5% by monthly payments of approximately $47,900 through
March 1, 2000. Total mortgage interest expense paid was $267,000 in 1996,
$312,000 in 1995, and $353,000 in 1994.
8. Deferred Compensation Plan
In 1983, the Corporation adopted a Directors' Deferred Compensation Plan
whereby Directors could elect to defer payment of their fees until a
future date. The plan included an option to allow fees to be notionally
invested in the Corporation's shares. Deferred fees were credited
interest at a rate of prime plus 1/2%, and as liquidating distributions
were made corresponding amounts were paid on any notional share balances.
In September 1996, the plan was terminated and deferred amounts totaling
$822,000 were paid to the Directors that participated in the plan.
20
<PAGE>
9. Quarterly Financial Data (Unaudited)
The following is a summary of the unaudited quarterly financial
information for the years ended December 31, 1996 and 1995.
Year Ended December 31, 1996
-----------------------------------------------
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter
------- ------- ------- -------
Revenues $447,000 $ 193,000 $ 42,000 $ 24,000
Net earnings (loss) $162,000 $ (56,000) $ (137,000) $(5,061,000)
Net earnings (loss)
per share $ .02 $ (.01) $ (.02) $ (.77)
Cash dividends declared
per share -- -- -- --
Liquidating distribution
per share -- $ 2.00 -- --
Year Ended December 31, 1995
-----------------------------------------------
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter
------- ------- ------- -------
Revenues $ 517,000 $ 506,000 $ 500,000 $ 530,000
Net earnings (loss) $ 125,000 $ 168,000 $ 228,000 $(803,000)
Net earnings (loss)
per share $ .02 $ .02 $ .04 $ (.12)
Cash dividends declared
per share -- -- -- --
Liquidating distribution
per share $ .50 -- -- --
The substantial losses incurred in the 4th quarters of both 1995 and 1996
reflect provisions to increase the investment loss reserve made as of the end of
each year based upon specific subsequent events that occurred after the end of
the year. The 1995 results reflect the sale of the JFK Airport mortgage loan in
March 1996, and the 1996 results reflect the appraisal of the Palm Springs
leasehold interest in February 1997.
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
21
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following information pertains to the Directors and Executive Officers of
the Corporation as of March, 1997.
Principal Occupations and
Business Experience for Past
Name Age Five Years and Directorships
- ---- --- ----------------------------
George H. Bigelow 54 President, Americana Corporation, Boston,
(President and Chief Massachusetts since March 1986 and Chief
Financial Officer) Financial Officer since March 1997; Chairman,
President and Chief Executive Officer, HCW
Properties Incorporated, Boston,
Massachusetts 1984-1986; Senior Vice
President and Chief Investment Officer, Paine
Webber Properties Incorporated, Boston,
Massachusetts 1981-1984.
John A. Cervieri Jr. 66 Managing Trustee of Property Capital
(Chairman of the Board) Trust, Boston, Massachusetts since 1969;
Chairman and President of Property Capital
Associates, Inc. and its affiliates since
1971; Director, Bank of Boston Corporation,
Director of First National Bank of Boston,
Boston, Massachusetts, since 1996; Director
of BayBanks, Inc., Boston, Massachusetts,
1980-1996.
William A. Kaynor 73 Senior Counsel to law firm of Davis Polk &
Wardwell, New York, 1991-1995; Partner, Akin
Bay Company, Securities, New York City,
1991-1995; Secretary and Director, Segue
Software, Inc., Newton Centre, MA.,
1991-1995; consultant to Unit Investment
Trust Division, Merrill Lynch, Pierce Fenner
& Smith, Incorporated, 1989-1990; Partner,
Davis Polk & Wardwell, 1961-1989.
John F. Sexton 64 Chairman of the Board, Evans-McKinsey &
Company, Dallas, Texas; Director, Forum
Retirement Partners; Chairman and Director,
Mutual Equity Mortgage Company; Chief
Financial Officer, Lomas Financial
Corporation through 1992.
The Corporation's By-Laws provide that at the Annual Meeting of
Stockholders the stockholders shall elect directors to hold office until the
next annual meeting and until their successors are elected and qualify. All
individuals have served as Directors of the Corporation since 1981 except Mr.
John F. Sexton who was elected in 1982, and Mr. George H. Bigelow who was
elected in 1986.
22
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is hereby incorporated by reference
to the Corporation's definitive proxy statement related to its annual meeting of
shareholders to be held on May 20, 1997.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is hereby incorporated by reference
to the Corporation's definitive proxy statement related to its annual meeting of
shareholders to be held on May 20, 1997.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is hereby incorporated by reference
to the Corporation's definitive proxy statement related to its annual meeting of
shareholders to be held on May 20, 1997.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
Page
(a) Documents filed as part of this report:
1. Financial Statements of the Corporation:
See Item 8 of this Form 10-K 11
2. Financial Statement Schedules:
All financial statement schedules for which provision is made in
the applicable accounting regulations of the Securities and
Exchange Commission are either not required under the related
instructions or the required information is set forth in the
financial statements or notes thereto.
3. Articles of Incorporation and By-Laws
3.1 Composite Articles of Incorporation of the
Corporation (Exhibit 3.1 of the Corporation's
Annual Report on Form 10-K for the period ended
December 31, 1982).
3.2 By-Laws of the Corporation as amended (Exhibit
3.2 of the Corporation's Annual Report on
Form 10-K for the period ended December 31, 1983).
10. Material Contracts
10.1 Advisory Agreement between the
Corporation and the Advisor dated December 1, 1990.
(b) Reports on Form 8-K:
No Form 8-K was filed by the Corporation during the last quarter of the
period covered by this report.
23
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
AMERICANA HOTELS AND REALTY CORPORATION
REGISTRANT
By /s/ George H.Bigelow
-----------------------
George H. Bigelow
Chief Financial Officer
April 14, 1997
Pursuant to the requirements of the Securities and Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant and
in the capacities and on the date indicated.
<TABLE>
<S> <C> <C>
/s/ John A. Cervieri Chairman of the Board and
- ---------------------------- Principal Executive Officer March 17, 1997
John A. Cervieri Jr.
/s/ George H. Bigelow Director, President and
- ---------------------------- Chief Operating and Financial Officer March 17, 1997
George H. Bigelow
/s/ William A. Kaynor Director March 17, 1997
- ----------------------------
William A. Kaynor
/s/ John F. Sexton Director March 17, 1997
- ----------------------------
John F. Sexton
</TABLE>
24
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 16,000
<SECURITIES> 0
<RECEIVABLES> 7,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,608,000
<PP&E> 12,170,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 8,608,000
<CURRENT-LIABILITIES> 65,000
<BONDS> 2,938,000
0
0
<COMMON> 6,524,375
<OTHER-SE> (919,000)
<TOTAL-LIABILITY-AND-EQUITY> 8,608,000
<SALES> 0
<TOTAL-REVENUES> 706,000
<CGS> 0
<TOTAL-COSTS> 5,798,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 5,770,000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (5,092,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,092,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,092,000)
<EPS-PRIMARY> (.78)
<EPS-DILUTED> (.78)
</TABLE>
