================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended MARCH 31, 1999
----------------------
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File No. 0-15291
--------
AMERIHOST PROPERTIES, INC.
--------------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 36-3312434
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2400 EAST DEVON AVE., SUITE 280, DES PLAINES, ILLINOIS 60018
- ------------------------------------------------------ -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (847) 298-4500
--------------
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
-- --
As of May 13, 1999, 6,038,332 shares of the Registrant's Common Stock were
outstanding.
================================================================================
<PAGE>
AMERIHOST PROPERTIES, INC.
FORM 10-Q
FOR THE THREE MONTHS ENDED MARCH 31, 1999
INDEX
PART I: Financial Information Page
----------------------------- ----
Consolidated Balance Sheets as of March 31, 1999
and December 31, 1998 4
Consolidated Statements of Operations for the Three Months
Ended March 31, 1999 and 1998 6
Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 1999 and 1998 7
Notes to Consolidated Financial Statements 9
Management's Discussion and Analysis 12
Quantitative and Qualitative Disclosures About Market Risk 21
Schedule of Earnings Before Interest/Rent, Taxes and
Depreciation/Amortization for the Three Months
Ended March 31, 1999 and 1998 22
PART II: Other Information
--------------------------
Item 6 - Exhibits and Reports on Form 8-K 23
Signatures 23
<PAGE>
Part I: Financial Information
Item 1: Financial Statements
<PAGE>
<TABLE>
AMERIHOST PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
=================================================================================================================
March 31, December 31,
1999 1998
--------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 4,327,374 $ 4,493,834
Accounts receivable (including $239,107 and $290,859
from related parties) 2,439,728 2,931,216
Notes receivable, current portion 168,061 168,061
Prepaid expenses and other current assets 950,180 902,457
Refundable income taxes 1,597,126 1,261,194
Costs and estimated earnings in excess of billings on
uncompleted contracts with related parties 345,306 649,858
--------------- --------------
Total current assets 9,827,775 10,406,620
--------------- --------------
Investments in and advances to unconsolidated
hotel joint ventures 5,852,830 5,331,247
--------------- --------------
Property and equipment:
Land 10,399,194 11,170,463
Buildings 66,280,138 68,405,566
Furniture, fixtures and equipment 18,551,509 19,081,593
Construction in progress 3,204,477 6,743,319
Leasehold improvements 1,045,303 1,156,174
--------------- --------------
99,480,621 106,557,115
Less accumulated depreciation and amortization 14,552,162 15,219,135
--------------- --------------
84,928,459 91,337,980
--------------- --------------
Notes receivable, less current portion 1,165,577 1,181,962
Deferred income taxes 4,748,000 3,904,000
Other assets, net of accumulated amortization of
$1,731,174 and $1,602,338 3,188,941 3,118,979
--------------- --------------
9,102,518 8,204,941
$ 109,711,582 $ 115,280,788
=============== ==============
(continued)
</TABLE>
<PAGE>
<TABLE>
AMERIHOST PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
==================================================================================================================
March 31, December 31,
1999 1998
--------- --------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,071,697 $ 5,638,250
Bank line-of-credit - 1,961,213
Accrued payroll and related expenses 1,062,011 1,180,674
Accrued real estate and other taxes 2,045,798 2,285,333
Other accrued expenses and current liabilities 1,364,944 756,308
Current portion of long-term debt 5,389,686 5,508,498
--------------- --------------
Total current liabilities 13,934,136 17,330,276
--------------- --------------
Long-term debt, net of current portion 64,131,038 66,332,566
--------------- --------------
Deferred income 15,004,363 13,164,007
--------------- --------------
Commitments
Minority interests 170,878 138,131
Shareholders' equity:
Preferred stock, no par value; authorized 100,000 shares;
none issued - -
Common stock, $.005 par value; authorized 25,000,000 shares;
issued and outstanding 6,066,350 shares at March 31,
1999, and 6,089,550 shares at December 31, 1998 30,332 30,448
Additional paid-in capital 17,300,761 17,380,295
Retained earnings (deficit) (423,051) 1,341,940
16,908,042 18,752,683
Less:
Stock subscriptions receivable (436,875) (436,875)
16,471,167 18,315,808
$ 109,711,582 $ 115,280,788
=============== ==============
See notes to consolidated financial statements.
</TABLE>
<PAGE>
AMERIHOST PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31,
(UNAUDITED)
1999 1998
-------------- -----------
Revenue:
Hotel operations:
AmeriHost Inn(R)hotels $ 10,008,296 $ 4,160,006
Other hotels 2,435,095 3,330,680
Development and construction 370,745 2,964,577
Management services 314,656 602,150
Employee leasing 1,590,155 2,980,296
------------ ------------
14,718,947 14,037,709
Operating costs and expenses:
Hotel operations:
AmeriHost Inn(R)hotels 8,123,201 3,673,665
Other hotels 2,379,939 3,062,826
Franchising 87,381 --
Development and construction 403,551 2,810,991
Management services 284,821 345,966
Employee leasing 1,520,093 2,907,667
------------ ------------
12,798,986 12,801,115
1,919,961 1,236,594
Depreciation and amortization 1,154,519 1,253,489
Leasehold rents - hotels 1,768,275 393,612
Corporate general and administrative 382,535 342,260
Operating loss (1,385,368) (752,767)
Other income (expense):
Interest expense (1,553,587) (1,471,089)
Interest income 233,803 101,122
Other income 15,795 57,977
Equity in net income and losses of affiliates (165,215) (55,921)
Loss before minority interests and income taxes (2,854,572) (2,120,678)
Minority interests in (income) loss of
consolidated subsidiaries and partnerships (38,419) 207,587
Loss before income tax (2,892,991) (1,913,091)
Income tax benefit 1,128,000 784,000
Net loss $ (1,764,991) $ (1,129,091)
============ ============
Loss per share:
Basic $ (0.29) $ (0.18)
============ ============
Diluted $ (0.29) $ (0.19)
============ ============
See notes to consolidated financial statements.
<PAGE>
<TABLE>
AMERIHOST PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31,
(UNAUDITED)
<CAPTION>
==================================================================================================================
1999 1998
------------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers $ 15,633,372 $ 14,711,995
Cash paid to suppliers and employees (17,275,643) (14,390,331)
Interest received 203,737 186,090
Interest paid (1,587,677) (1,466,921)
Income taxes paid (51,932) (103,391)
Net cash used in operating activities (3,078,143) (1,062,558)
------------ ------------
Cash flows from investing activities:
Distributions, and collections on advances,
from affiliates 335,379 353,599
Purchase of property and equipment (3,772,438) (3,933,390)
Purchase of investments in, and advances
to, minority owned affiliates (592,500) (1,001,157)
Acquisitions of partnership interests,
net of cash acquired 85,314 (731,107)
Collections on notes receivable 16,385 26,077
Preopening and management contract costs -- (76,536)
Proceeds from sale of assets 12,816,969 --
Net cash provided by (used in) investing activities 8,889,109 (5,362,514)
------------ ------------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 5,087,386 5,876,229
Principal payments on long-term debt (9,018,277) (2,625,036)
Net (repayments of) proceeds from line of credit (1,961,213) 3,768,214
Decrease in minority interest (5,672) (19,259)
Common stock repurchases (79,650) --
Net cash (used in) provided by financing activities (5,977,426) 7,000,148
Net (decrease) increase in cash (166,460) 575,076
Cash and cash equivalents, beginning of year 4,493,834 2,349,503
Cash and cash equivalents, end of period $ 4,327,374 $ 2,924,579
============ ============
</TABLE>
(continued)
<PAGE>
<TABLE>
AMERIHOST PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31,
(UNAUDITED)
<CAPTION>
=================================================================================================================
1999 1998
------------------- -----------
<S> <C> <C>
Reconciliation of net loss to net
cash used in operating activities:
Net loss $ (1,764,991) $ (1,129,091)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 1,154,519 1,253,489
Equity in net (income) loss of affiliates and
amortization of deferred income 165,215 55,921
Minority interests in net income of subsidiaries 38,419 (207,587)
Amortization of deferred interest and loan discount 11,348 9,940
Amortization of deferred gain (321,027) -
Deferred income taxes (844,000) -
Changes in assets and liabilities, net of effects
of acquisition:
Decrease in accounts receivable 623,581 57,461
Increase in prepaid expenses and
other current assets (77,501) (91,570)
Increase in refundable income taxes (335,932) (887,391)
Decrease in costs and estimated earnings
in excess of billings 304,552 506,100
Increase in other assets (343,346) (223,776)
Decrease in accounts payable (1,586,806) (360,136)
Decrease in accrued payroll and other accrued
expenses and current liabilities (27,233) (192,208)
Decrease in accrued interest (45,438) (7,180)
(Decrease) increase in deferred income (29,503) 153,470
------------- --------------
Net cash used in operating activities $ (3,078,143) $ (1,062,558)
============== ==============
See notes to consolidated financial statements.
</TABLE>
<PAGE>
AMERIHOST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
===============================================
1. BASIS OF PREPARATION:
---------------------
The financial statements included herein have been prepared by the Company,
without audit. In the opinion of the Company, the accompanying unaudited
financial statements contain all adjustments, which consist only of
recurring adjustments necessary to present fairly the financial position of
Amerihost Properties, Inc. and subsidiaries as of March 31, 1999 and
December 31, 1998 and the results of its operations and cash flows for the
three months ended March 31, 1999 and 1998. The results of operations for
the three months ended March 31, 1999 are not necessarily indicative of the
results to be expected for the full year. It is suggested that the
accompanying financial statements be read in conjunction with the financial
statements and the notes thereto included in the Company's 1998 Annual
Report on Form 10-K. Certain reclassifications have been made to the 1998
financial statements in order to conform with the 1999 presentation.
2. PRINCIPLES OF CONSOLIDATION:
----------------------------
The consolidated financial statements include the accounts of the Company,
its wholly-owned subsidiaries, and partnerships in which the Company has a
majority ownership interest. Significant intercompany accounts and
transactions have been eliminated.
3. INCOME (LOSS) PER SHARE:
------------------------
Basic income (loss) per share of common stock is computed by dividing net
income (loss) by the weighted average number of shares of common stock
outstanding. Diluted income (loss) per share of common stock is computed by
dividing the adjusted net income (loss) by the weighted average number of
shares of common stock and dilutive common stock equivalents outstanding.
The Company is a general partner in three partnerships where the limited
partners have the right at certain times and under certain conditions to
convert their limited partner interests into 249,350 shares of the Company's
common stock. The following are the calculations of basic and diluted
earnings per share:
<TABLE>
Three Months Ended March 31,
----------------------------
1999 1998
---- ----
<S> <C> <C>
Net loss $ (1,764,991) $ (1,129,091)
Impact of convertible partnership interests (34,215) (95,158)
---------------- -------------
$ (1,799,206) $ (1,224,249)
================ ==============
Weighted average common shares outstanding 6,077,725 6,212,762
Dilutive effect of convertible partnership interests and
common stock equivalents 249,350 376,225
Dilutive common shares outstanding 6,327,075 6,588,987
=============== ==============
Basic net loss per share $ (0.29) $ (0.18)
=============== =============
Diluted net loss per share $ (0.29) $ (0.19)
=============== =============
</TABLE>
<PAGE>
AMERIHOST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
===============================================
4. INCOME TAXES:
-------------
Deferred income taxes are provided on the differences in the bases of the
Company's assets and liabilities determined for tax and financial reporting
purposes.
The income tax expense (benefit) for the three months ended March 31, 1999
and 1998 was based on the Company's estimate of the effective tax rate
expected to be applicable for the full year. The Company expects the
effective tax rate to approximate the Federal and state statutory rates.
5. SUPPLEMENTAL CASH FLOW DATA:
----------------------------
The following represents the supplemental schedule of noncash investing and
financing activities for the three months ended March 31:
1999 1998
------- -------
Issuance of note payable in exchange for
partnership interest $ 281,523 $ -
6. HOTEL LEASES:
-------------
The Company leases 35 hotels as of March 31, 1999 (including 30 sale/leaseback
hotels - Note 8), the operations of which are included in the Company's
consolidated financial statements. All of these leases are triple net and
provide for monthly base rent payments ranging from $9,500 to $26,667. The
Company leases or subleases three of these hotels from partnerships in which
the Company owns equity interests of up to 16.33%. These three leases also
provide for additional rent payments ranging from $36,000 to $72,000 per
annum, plus percentage rents equal to 10% of room revenues in excess of
stipulated amounts. The leases and sub-leases expire through March 23, 2009.
The five leases, other than the sale/leaseback hotels, provide for an option
to purchase the hotel. Some of the purchase prices are based upon a multiple
of gross room revenues for the preceding twelve months with a specified
maximum, and the others are based on a fixed amount. At March 31, 1999, the
aggregate purchase price for these leased hotels was approximately
$16,230,000.
Limited partnership guaranteed distributions:
---------------------------------------------
The Company is a general partner in three partnerships where the Company has
guaranteed minimum annual distributions to the limited partners in the amount
of 10% of their original capital contributions.
7. INVESTMENTS:
------------
During the first three months of 1999, the Company acquired the remaining
ownership interest in one hotel joint venture. The following is a summary of
this acquisition:
Fair value of assets acquired $ 1,570,109
Cash acquired 85,314
--------------
Liabilities assumed $ 1,655,423
==============
<PAGE>
AMERIHOST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
================================================
8. SALE/LEASEBACK OF HOTELS:
-------------------------
On June 30, 1998, the Company completed the sale of 26 AmeriHost Inn(R)
hotels to PMC Commercial Trust ("PMC") for $62.2 million. The company
completed the sale of four additional AmeriHost Inn(R) hotels to PMC during
March 1999 for $10.8 million. Upon the sales to PMC, the Company entered into
agreements to lease back the hotels for an initial term of ten years, with
two five year renewal options. The lease payments are fixed at 10% of the
sale price for the first three years. Thereafter, the lease payments are
subject to a CPI increase with a 2% annual maximum. The Company has deferred
the gain on the sale of these hotels pursuant to sale/leaseback accounting.
This deferral will be recognized over the initial term of the lease as a
reduction of leasehold rent expense.
9. BUSINESS SEGMENTS:
------------------
Effective in 1998, the Company adopted Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and Related
Information," which establishes standards for the way companies report
information about operating segments in both interim and annual financial
statements and related disclosures. The adoption did not change the
Company's reportable segments. The Company's business is primarily involved
in five segments: (1) hotel operations, consisting of the operations of all
hotels in which the Company has a 100% or majority ownership or leasehold
interest, (2) hotel franchising, (3) hotel development, consisting of
development, construction and renovation activities, (4) hotel management,
consisting of hotel management activities and (5) employee leasing,
consisting of the leasing of employees to various hotels. Results of
operations of the Company's business segments are reported in the
consolidated statements of operations. The following represents revenues,
operating costs and expenses, operating income, identifiable assets, capital
expenditures and depreciation and amortization for the three months ended
March 31, 1999 and 1998, for each business segment, which is the information
utilized by the Company's decision makers in managing the business:
Revenues 1999 1998
-------- --------------- -------------
Hotel operations $ 12,443,391 $ 7,490,686
Hotel franchising - -
Hotel development 370,745 2,964,577
Hotel management 314,656 602,150
Employee leasing 1,590,155 2,980,296
-------------- -------------
$ 14,718,947 $ 14,037,709
============== =============
Operating costs and expenses
----------------------------
Hotel operations $ 10,503,140 $ 6,736,491
Hotel franchising 87,381 -
Hotel development 403,551 2,810,991
Hotel management 284,821 345,966
Employee leasing 1,520,093 2,907,667
-------------- -------------
$ 12,798,986 $ 12,801,115
============== =============
<PAGE>
AMERIHOST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
================================================
9. BUSINESS SEGMENTS (CONTINUED):
------------------------------
Operating income 1999 1998
---------------- ------------- --------------
Hotel operations $ (955,263) $ (759,325)
Hotel franchising (87,381) -
Hotel development (39,345) 133,864
Hotel management 18,795 166,956
Employee leasing 69,162 71,729
Corporate (391,336) (365,991)
--------------- --------------
$ (1,385,368) $ (752,767)
=============== ==============
Identifiable assets
-------------------
Hotel operations $ 99,211,614 $ 104,076,512
Hotel franchising 183,149 -
Hotel development 853,145 2,309,240
Hotel management 730,028 899,660
Employee leasing 944,976 978,985
Corporate 7,788,670 7,016,391
-------------- -------------
$ 109,711,582 $ 115,280,788
============== =============
Capital Expenditures
Hotel operations $ 3,740,065 $ 3,901,292
Hotel franchising - -
Hotel development - 2,596
Hotel management 24,329 18,126
Employee leasing - 1,380
Corporate 8,044 9,996
-------------- -------------
$ 3,772,438 $ 3,933,390
============== =============
Depreciation/Amortization
Hotel operations $ 1,127,238 $ 1,119,909
Hotel franchising - -
Hotel development 6,539 19,721
Hotel management 11,040 89,227
Employee leasing 900 900
Corporate 8,802 23,732
-------------- -------------
$ 1,154,519 $ 1,253,489
============== =============
<PAGE>
AMERIHOST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
==================================================
10. SUBSEQUENT EVENT:
-----------------
On May 3, 1999, the Company commenced a "Dutch Auction" whereby the Company
offered to buy back shares of its common stock at a price within a specified
range. The Company is committed to purchase up to 1,000,000 shares at a
price determined by the tendering shareholders, ranging from $3.375 to $4.00
per share. This transaction is scheduled to close on June 3, 1999, unless
extended by the Company. The Company plans to purchase the tendered shares
with operational cash flow and, if necessary, proceeds from the
line-of-credit.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
-----------------------------------------------------------------------
GENERAL
The Company is engaged in the development of AmeriHost Inn(R) hotels, its
proprietary brand, and the ownership, operation and management of AmeriHost
Inn(R) hotels and other mid-price hotels. As of March 31, 1999, there were 77
AmeriHost Inn(R) hotels open, of which 63 were wholly-owned or leased, one was
majority-owned, 12 were minority-owned, and one was managed for an unrelated
third party. A total of 15 AmeriHost Inn(R) hotels were opened during the past
twelve months. The Company intends to use the AmeriHost Inn(R) brand when
expanding its hotel operations segment. As of March 31, 1999, one wholly-owned
AmeriHost Inn(R) hotel was under construction. Same room revenues for all
AmeriHost Inn(R) hotels (including minority owned and managed only) increased
approximately 9.3% during the first quarter of 1999, compared to the first
quarter of 1998, attributable to an increase of $2.16 in average daily rate, and
a 4.9% increase in occupancy. These results relate to the 65 AmeriHost Inn(R)
hotels that were operating for at least thirteen full months during the three
months ended March 31, 1999.
Revenues from hotel operations consist of the revenues from all hotels in which
the Company has a 100% or majority ownership or leasehold interest
("Consolidated" hotels). Investments in other entities in which the Company has
a minority ownership interest are accounted for using the equity method. As a
result of the Company's focus on increasing the number of Consolidated hotels,
the Company expects that revenues from the hotel operations segment will
increase over time as a percentage of the Company's overall revenues.
Development and construction revenues consist of one-time fees for new
construction and renovation activities performed by the Company for
minority-owned hotels and unrelated third parties. The Company also receives
revenue from management and employee leasing services provided to minority-owned
hotels and unrelated third parties.
The results for the first three months of 1999 were consistent with the
Company's primary objective of increasing the number of wholly-owned or leased,
Consolidated AmeriHost Inn(R) hotels. Due to the Company's focus on developing
and constructing a significant number of Consolidated AmeriHost Inn(R) hotels
during 1998 and the first three months of 1999, as well as acquiring the
remaining ownership interests in a significant number of AmeriHost Inn(R) hotels
which were previously minority-owned, the Company recognized lower revenues from
the development and construction of hotels for minority-owned and unrelated
third parties during 1999. In addition, the Company disposed of one
non-AmeriHost Inn(R) hotel during the past twelve months, as part of the
Company's plan to invest all available resources into the AmeriHost Inn(R) hotel
brand. Although this strategy has a short-term negative impact on revenues and
earnings, the Company believes that the long-term benefits will be substantial.
Revenues from Consolidated AmeriHost Inn(R) hotels increased 140.6% to $10.0
million during the first quarter of 1999, from revenues of $4.2 million during
the first quarter of 1998, due to the net addition of 33 Consolidated AmeriHost
Inn(R) hotels during the past twelve months. Revenues from the hotel management
and employee leasing segments decreased by 46.8% in total during the first
quarter of 1999, due primarily to the acquisition of the remaining ownership
interest in 25 minority-owned joint venture hotels during the last twelve
months, 24 of which are AmeriHost Inn(R) hotels. Revenues from Consolidated
non-AmeriHost Inn(R) hotels decreased 26.9% during the first quarter of 1999,
compared to 1998, as a result of the disposition of one Consolidated
non-AmeriHost Inn(R) hotel during the second quarter of 1998. Total revenues
increased 4.9% to $14.7 million during the first quarter of 1999, from $14.0
million during the first quarter of 1998. The Company recorded a net loss of
$1.8 million for the first quarter of 1999, or ($0.29) per diluted share,
compared to a net loss of $1.1 million, or ($0.19) per diluted share in 1998.
After approximately 10 years of developing and using the AmeriHost Inn(R) name
exclusively for the Company's own account and for joint ventures in which the
Company maintains an ownership interest, the Company has decided to franchise
the AmeriHost Inn(R) brand name. Currently, the Company is qualified to sell
AmeriHost Inn(R) franchises in nearly all states and expects to be qualified in
the remaining states by the end of the second quarter. To date, the Company has
entered into one AmeriHost Inn(R) franchise agreement. However, the Company does
not anticipate the franchising activity to have a significant impact on the
operations of the Company in 1999, and there can be no assurance that the
Company will be successful in selling AmeriHost Inn(R) franchises in the future.
<PAGE>
The Company uses EBITDA as a supplemental performance measure, along with net
income, to report its operating results. EBITDA is defined as net income before
extraordinary items, adjusted to eliminate the impact of (i) interest expense;
(ii) interest and other income; (iii) leasehold rents for hotels, which the
Company considers to be financing costs similar to interest; (iv) income tax
expense (benefit), (v) depreciation and amortization; and (vi) gains or losses
from property transactions. EBITDA should not be considered as an alternative to
operating income (as determined in accordance with Generally Accepted Accounting
Principles, "GAAP") as an indicator of the Company's operating performance or to
cash flows from operating activities (as determined in accordance with GAAP) as
a measure of liquidity. EBITDA, as defined by the Company, is included herein
due to numerous requests by investors and analysts. Management believes that
investors and analysts find it to be a useful tool for measuring the Company's
ability to service debt. EBITDA increased 27.5% to $1.3 million during the three
months ended March 31, 1999, from $1.0 million during the three months ended
March 31, 1998. An EBITDA schedule is included herein.
On June 30, 1998, the Company completed the sale of 26 AmeriHost Inn(R) hotels
to PMC Commercial Trust ("PMC") for $62.2 million. The Company sold an
additional four AmeriHost Inn(R) hotels to PMC during March 1999 for $10.8
million. Upon the sale to PMC, the Company entered into agreements to lease back
the hotels for an initial term of ten years, with two five year renewal options.
The lease payments are fixed at 10% of the sale price for the first three years.
Thereafter, the lease payments are subject to a CPI increase with a 2% annual
maximum. The Company has deferred the gain on the sale of these hotels pursuant
to sale/leaseback accounting. This deferral will be recognized over the initial
term of the lease as a reduction of leasehold rent expense.
Amerihost had an ownership interest in 89 hotels at March 31, 1999 versus 80
hotels at March 31, 1998 (excluding hotels under construction). This increased
ownership was achieved primarily through the development of AmeriHost Inn(R)
hotels for the Company's own account and for minority-owned entities. These
figures include a net increase of 32 Consolidated hotels, from 41 at March 31,
1998 to 73 at March 31, 1999.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THE
THREE MONTHS ENDED MARCH 31, 1998
Revenues increased 4.9% to $14.7 million during the three months ended March 31,
1999, from $14.0 million during the three months ended March 31, 1998. The
increase in revenue from the Consolidated AmeriHost Inn(R) hotels was partially
offset by the decreases from the hotel management and employee leasing segments,
a decrease from the hotel development and construction segment, as well as the
decrease from non-AmeriHost Inn(R) hotel operations.
Hotel operations revenue increased 66.1% to $12.4 million during the three
months ended March 31, 1999, from $7.5 million during the three months ended
March 31, 1998. Revenues from Consolidated AmeriHost Inn(R) hotels increased
140.6% to $10.0 million during the three months ended March 31, 1999, from $4.2
million during the three months ended March 31, 1998. These increases were
attributable primarily to the net addition of 33 Consolidated AmeriHost Inn(R)
hotels from April 1, 1998 through March 31, 1999, including the addition of
eight newly constructed Consolidated AmeriHost Inn(R) hotels and the acquisition
of additional ownership interests in 26 existing hotels causing them to become
Consolidated AmeriHost Inn(R) hotels. In addition, same room revenues for the
Consolidated AmeriHost Inn(R) hotels increased 11.2%. The increase in
Consolidated AmeriHost Inn(R) hotel revenue was offset by a 26.9% decrease in
Consolidated other brand hotel revenue during the three month period. This
decrease was the result of the sale of one non-AmeriHost Inn(R) Consolidated
hotel. The hotel operations segment included the operations of 73 Consolidated
hotels (including 64 AmeriHost Inn(R) hotels) comprising 5,160 rooms at March
31, 1999, compared to 41 Consolidated hotels (including 31 AmeriHost Inn(R)
hotels) comprising 3,275 rooms at March 31, 1998. After considering the
Company's ownership interest in the majority-owned Consolidated hotels, this
translates to 4,891 and 2,955 equivalent owned rooms as of March 31, 1999 and
1998, respectively, or an increase of 65.6%. Recently, the Company has
experienced an increase in competition in certain markets, primarily from newly
constructed hotels. As a result, there is increased downward pressure on
occupancy levels and average daily rates. The Company believes that as the
number of AmeriHost Inn(R) hotels increases, the greater the benefits will be at
all locations from marketplace recognition and repeat business. In addition, the
Company typically builds new hotels in growing markets where it anticipates a
certain level of additional hotel development.
<PAGE>
Hotel development revenue decreased 87.5% to $370,745 during the three months
ended March 31, 1999, from $3.0 million during the three months ended March 31,
1998. Hotel development revenues are directly related to the number of hotels
being developed and constructed for minority-owned entities or unrelated third
parties. The Company was constructing one hotel for a minority-owned entity
during the first quarter of 1999, compared to five hotels during the three
months ended March 31, 1998. The Company also had several additional projects in
various stages of pre-construction development during both three month periods.
Hotel management revenue decreased 47.7% to $314,656 during the three months
ended March 31, 1999, from $602,150 during the three months ended March 31,
1998. The number of hotels managed for third parties and minority-owned entities
decreased from 47 hotels, representing 3,655 rooms, at March 31, 1998 to 20
hotels, representing 1,817 rooms, at March 31, 1999. The addition of management
contracts for five newly constructed hotels (312 rooms) was more than offset by
the termination of three management contracts (187 rooms) with minority-owned
entities as a result of the sale of the hotels (non-AmeriHost Inn(R) hotels),
the termination of 25 management contracts (1,604 rooms) with minority-owned
hotels which became Consolidated hotels due to the Company acquiring additional
ownership interests, and the termination of four management contracts for hotels
with unrelated third parties (359 rooms) as a result of the sale of the hotels
in two of the four instances.
Employee leasing revenue decreased 46.6% to $1.6 million during the three months
ended March 31, 1999, from $3.0 million during the three months ended March 31,
1998, due primarily to the reduction in hotels managed for minority-owned
entities and unrelated third parties as described above, and the associated
decrease in payroll costs which is the basis for the employee leasing revenue.
Total operating costs and expenses remained constant at $12.8 million during the
three months ended March 31, 1999 and March 31, 1998, or 87.0% and 91.2% of
total revenues during the three months ended March 31, 1999 and 1998,
respectively. Operating costs and expenses in the hotel operations segment
increased 55.9% to $10.5 million during the three months ended March 31, 1999,
from $6.7 million during the three months ended March 31, 1998. This increase
resulted primarily from the net addition of 32 Consolidated hotels to this
segment and is directly related to the 140.6% increase in Consolidated AmeriHost
Inn(R) revenues during the three months ended March 31, 1999, offset by the
26.9% decrease in non-AmeriHost Inn(R) hotel revenues during the three months
ended March 31, 1999. Hotel operations segment operating costs and expenses as a
percentage of segment revenue decreased to 84.4% during the three months ended
March 31, 1999, from 89.9% during the three months ended March 31, 1998.
Operating costs and expenses as a percentage of revenues from the Consolidated
AmeriHost Inn(R) hotels decreased to 81.2% during the three months ended March
31, 1999, from 88.3% during the three months ended March 31, 1998.
Operating costs and expenses for the hotel development segment decreased 85.6%
to $403,551 during the three months ended March 31, 1999, from $2.8 million
during the three months ended March 31, 1998, consistent with the 87.5% decrease
in hotel development revenues for the three months ended March 31, 1999.
Operating costs and expenses in the hotel development segment as a percentage of
segment revenue increased during the three months ended March 31, 1999 due
primarily to the overall decrease in the level of hotel development and
construction activity performed for minority-owned entities and unrelated third
parties and the relatively higher level of construction activity performed in
1999 compared to 1998, versus the level of pre-construction development
activity. Construction activity has significantly higher operating costs
compared to the pre-construction development activity. Hotel management segment
operating costs and expenses decreased 17.7% to $284,821 during the three months
ended March 31, 1999, from $345,966 during the three months ended March 31,
1998. This decrease was due to the decrease in the number of hotels managed for
minority-owned hotels and unaffiliated third parties, offset by the allocation
of preopening costs associated with the hotels opened during the three months
ended March 31, 1998. Beginning in 1999, all preopening costs are expensed as
incurred. Employee leasing operating costs and expenses decreased 47.7% to $1.5
million during the three months ended March 31, 1999, from $2.9 million during
the three months ended March 31, 1998, which is consistent with the 46.6%
decrease in segment revenue for the three months ended March 31, 1999.
Depreciation and amortization expense decreased 7.9% to $1.2 million during the
three months ended March 31, 1999, from $1.3 million during the three months
ended March 31, 1998. The decrease was primarily attributable to the completion
of the sale and leaseback of 26 hotels on June 30, 1998, plus four additional
hotels in March 1999, partially offset by the net addition of 32 Consolidated
hotels to the hotel operations segment and the resulting depreciation and
amortization therefrom. The Company does not recognize any depreciation on the
assets sold in the sale/leaseback transaction.
<PAGE>
Leasehold rents - hotels increased 349.2% to $1.8 million during the three
months ended March 31, 1999, from $393,612 during the three months ended March
31, 1998. This increase was due primarily to the sale and leaseback transaction
with PMC. The Company anticipates leasehold rents - hotels to continue
increasing going forward as a result of the sale/leaseback transaction.
Corporate general and administrative expense increased 11.8% to $382,535 during
the three months ended March 31, 1999, from $342,260 during the three months
ended March 31, 1998, which can be attributed primarily to the overall growth of
the Company.
The Company's operating loss increased 84.0% to ($1.4) million during the three
months ended March 31, 1999, from ($752,767) during the three months ended March
31, 1998. The following discussion of operating income by segment is exclusive
of any corporate general and administrative expense. Operating loss from
Consolidated AmeriHost Inn(R) hotels increased 26.4% to ($365,537) during the
three months ended March 31, 1999, from ($289,218) during the three months ended
March 31, 1998. This increase in operating loss was due to the significant
number of Consolidated AmeriHost Inn(R) hotels still operating in 1999 during
their pre-stabilization period when revenues are typically lower, and the
increased impact of seasonality as the number of Consolidated AmeriHost Inn(R)
hotels has grown, offset by the increase in same room revenues. Operating income
from the hotel development segment decreased to a loss of ($39,345) during the
three months ended March 31, 1999, from income of $133,864 during the three
months ended March 31, 1998. The fluctuation in hotel development operating
income was due to the timing of hotels developed and constructed for third
parties and minority-owned entities during the first quarter of 1999, compared
with the first quarter of 1998, and the overall decrease in the number of hotels
developed and constructed for minority-owned entities and unrelated third
parties. The hotel management segment operating income decreased 88.7% to
$18,795 during the three months ended March 31, 1999, from $166,956 during the
three months ended March 31, 1998. This decrease was due primarily to the
significant decrease in the number of hotels managed for minority owned and
unaffiliated entities, and the expensing of start-up costs as incurred during
1999. Employee leasing operating income decreased 3.6% to $69,162 during the
three months ended March 31, 1999, from $71,729 during the three months ended
March 31, 1998, due to the decrease in employee leasing agreements with
minority-owned entities and unrelated third parties.
Interest expense increased 5.6% to $1.6 million during the three months ended
March 31, 1999, from $1.5 million during the three months ended March 31, 1998.
The increase was attributable to the additional mortgage financing of newly
constructed and acquired Consolidated AmeriHost Inn(R) hotels, offset by the
sale and leaseback transaction with PMC, whereby the Company did not recognize
any interest expense on the sold hotels after the sale date.
The Company's share of equity in income (loss) of affiliates decreased to
($165,215) during the three months ended March 31, 1999, from ($55,921) during
the three months ended March 31, 1998. The fluctuation in equity of affiliates
during the three months ended March 31, 1999, compared to the three months ended
March 31, 1998, was primarily due to the sale of a minority owned hotel at a
significant gain during the first quarter of 1998 and the acquisition of a
significant number of minority owned hotels by the Company after March 31, 1998
resulting in 100% ownership positions. Distributions from affiliates were
$37,229 during the three months ended March 31, 1999, compared to $238,332
during the three months ended March 31, 1998.
LIQUIDITY AND CAPITAL RESOURCES
The Company has four main sources of cash from operating activities: (i)
revenues from hotel operations; (ii) fees from development, construction and
renovation projects; (iii) fees from management contracts; and (iv) fees from
employee leasing services. Cash from hotel operations is typically received at
the time the guest checks out of the hotel. Approximately 10% of the Company's
hotel operations revenues is generated through other businesses and contracts
and is usually paid within 30 to 45 days from billing. Fees from development,
construction and renovation projects are typically received within 15 to 45 days
from billing. Due to the procedures in place for processing its construction
draws, the Company typically does not pay its contractors until the Company
receives its draw from the equity or lending source. Management fee revenues
typically are received by the Company within five working days from the end of
each month. Cash from the Company's employee leasing segment typically is
received 24 to 48 hours prior to the pay date.
<PAGE>
During the first three months of 1999, the Company used cash for operations of
$3.1 million, compared to using $1.1 million during the first three months of
1998, or an increase in cash used by operations of $2.0 million. The decrease in
cash flow from operations during the first three months of 1999, when compared
to 1998, can be attributed to the increasing impact of seasonality and the
significant number of hotels operating during their pre-stabilization period as
the number of Consolidated hotels increased from 41 hotels at March 31, 1998 to
73 hotels at March 31, 1999. In addition, the first quarter of 1999 had
significantly less revenue from the development and construction of hotels for
minority-owned entities, as the Company continued to focus on the construction
of wholly owned hotels.
The Company invests cash in three principal areas: (i) the purchase of property
and equipment through the construction and renovation of Consolidated hotels;
(ii) the purchase of equity interests in hotels; and (iii) the making of loans
to affiliated and non-affiliated hotels for the purpose of construction,
renovation and working capital. During the first three months of 1999, the
Company received $8.9 million from investing activities compared to using $5.4
million during the first three months of 1998. During the first three months of
1999, the Company received $12.8 million from the sale of five hotels, used $3.8
million to purchase property and equipment for Consolidated AmeriHost Inn(R)
hotels, and used $257,121 for investments in and advances to affiliates, net of
distributions and collections. During the first three months of 1998, the
Company used cash primarily for the purchase of $3.9 million in property and
equipment for Consolidated AmeriHost Inn(R) hotels, used $647,558 for
investments in and advances to affiliates, net of distributions and collections,
and used $731,107 for the acquisition of hotel partnership interests, net of
cash acquired.
Cash used in financing activities was $6.0 million during the first three months
of 1999 compared to cash provided by financing activities of $7.0 million during
the first three months of 1998. In 1999, the primary factors were principal
repayments of $9.0 million, including the repayment of mortgages in connection
with the sale of hotels, offset by $5.1 million in proceeds from the mortgage
financing of Consolidated hotels, and net repayments of $2.0 million on the
Company's operating line-of-credit. In 1998, the contributing factors were
proceeds of $3.3 million from the mortgage financing of Consolidated hotels, net
of principal repayments, and $3.8 million in net proceeds from the Company's
operating line-of-credit.
At March 31, 1999, the Company had zero outstanding under its operating
line-of-credit. The operating line-of-credit (i) has a limit of $7.0 million
(ii) is collateralized by a security interest in certain of the Company's
assets, including its interest in various joint ventures; (iii) bears interest
at an annual rate equal to the lending bank's base rate plus 1/2% (with a
minimum interest rate of 7.5%); and (iv) matures October 15, 1999. At March 31,
1999, the Company also had outstanding $2.25 million of its 7% Subordinated
Notes which are unsecured obligations due October 9, 1999 and which pay interest
quarterly. Pursuant to the terms of the 7% Subordinated Notes, no dividends may
be paid on any capital stock of the Company until the 7% Subordinated Notes have
been paid in full. At the Company's sole discretion, the 7% Subordinated Notes
may be prepaid at any time without penalty. The Company plans to repay the 7%
Subordinated Notes when due with operational cash flow and, if necessary,
proceeds from its line-of-credit.
On May 3, 1999, the Company commenced a "Dutch Auction," whereby the Company
offered to buy back shares of its common stock at a price within a specified
range. The Company is committed to purchase up to 1,000,000 shares at a price
determined by the tendering shareholders, ranging from $3.375 to $4.00 per
share. This transaction is scheduled to close on June 3, 1999, unless extended
by the Company. The Company plans to purchase the tendered shares with
operational cash flow and, if necessary, proceeds from its line-of-credit.
In March 1998, the Company's Board of Directors authorized the repurchase, from
time to time on the open market, of up to $1.0 million of Common Stock over the
next year. Through March 31, 1999, the Company repurchased 146,100 shares of the
Company's Common Stock for approximately $557,000.
The Company expects cash from operations to be sufficient to pay all operating
and interest expenses in 1999.
<PAGE>
YEAR 2000
The Year 2000 issue is the result of computer systems that use two digits rather
than four to define the applicable year, which may prevent such systems from
accurately processing dates ending in the year 2000 and after. This could result
in system failures or in miscalculations causing disruption of operations,
including, but not limited to, an inability to process transactions, to send and
receive electronic data, or to engage in routine business activities and
operations.
In 1997, the Company established a Year 2000 task force to develop and implement
a Year 2000 compatibility program. The Company has developed a Year 2000
compatibility plan, and has completed the audit, assessment and scope phases of
the plan. The Company has completed an inventory of the software applications
that it uses and has determined which applications are not Year 2000 compatible.
The Company's compatibility plan includes purchasing and installing software
releases which are Year 2000 compatible as well as testing these systems. The
Company's goal is to be substantially Year 2000 compatible by August 1, 1999, to
allow for any remaining testing during the remainder of 1999.
In addition, the Company has begun evaluating computer hardware, such as
personal computers, as well as furniture and equipment used at the Company's
hotels. The Company is presently in the process of evaluating these systems for
Year 2000 compatibility. The Company's goal is to complete the remediation of
these systems by June 30, 1999.
In addition to reviewing its internal systems, the Company has had formal
communications with its significant customers, vendors and freight companies
concerning Year 2000 compliance, including electronic commerce. There can be no
assurance that the systems of other companies that interact with the Company
will be sufficiently Year 2000 compatible so as to avoid an adverse impact on
the Company's operations, financial condition and results of operations. The
Company does not believe that its products and services involve any Year 2000
risks. The Company does not presently anticipate that the costs to address the
Year 2000 issue will have a material adverse effect on the Company's financial
condition, results of operation or liquidity.
The Company presently anticipates that it will complete its Year 2000 assessment
and remediation by August 1, 1999. However, there can be no assurance that the
Company will be successful in implementing its Year 2000 remediation plan
according to the anticipated schedule. In addition, the Company may be adversely
affected by the inability of other companies whose systems interact with the
Company to become Year 2000 compatible and by potential interruptions of
utility, communication or transportation systems as a result of Year 2000
issues.
Although the Company expects its internal systems to be Year 2000 compliant as
described above, the Company intends to prepare a contingency plan that will
specify what it plans to do if it or important external companies are not Year
2000 compatible in a timely manner. The Company expects to prepare its
contingency plan during 1999.
THIS IS A YEAR 2000 READINESS DISCLOSURE STATEMENT WITHIN THE MEANING OF THE
YEAR 2000 INFORMATION AND READINESS DISCLOSURE ACT (P.L. 105-271).
This report contains certain forward-looking statements which involve risks and
uncertainties. When used in this report, the words "believe," "anticipate,"
"think," "intend," "goal," "forecast," "expect," and similar expressions
identify forward-looking statements. Forward-looking statements include, but are
not limited to, statements concerning anticipated income from operations and net
income for fiscal 1999. Such statements are subject to certain risks and
uncertainties which would cause actual results to differ materially from those
expressed or implied by such forward-looking statements. Readers are cautioned
not to place undue reliance on those forward-looking statements which speak only
as of the date of this report.
SEASONALITY
The lodging industry, in general, is seasonal by nature. The Company's hotel
revenues are generally greater in the second and third calendar quarters than in
the first and fourth quarters due to weather conditions in the markets in which
the Company's hotels are located, as well as general business and leisure travel
trends. This seasonality can be expected to continue to cause quarterly
fluctuations in the Company's revenues, and is expected to have a greater impact
as the number of Consolidated hotels increases. Quarterly earnings may also be
adversely affected by events beyond the Company's control, such as extreme
weather conditions, economic factors and other general factors affecting travel.
In addition, hotel construction is seasonal, depending upon the geographic
location of the construction projects. Construction activity in the Midwest may
be slower in the first and fourth calendar quarters due to weather conditions.
<PAGE>
INFLATION
Management does not believe that inflation has had, or is expected to have, any
significant adverse impact on the Company's financial condition or results of
operations for the periods presented.
RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1998, the FASB issued Statement of Financial Accounting Standards (SFAS)
No. 133, "Accounting for Derivative Instruments and Hedging Activities," which
establishes accounting and reporting standards for derivative instruments and
hedging activities. It requires that an entity recognize all derivatives as
either assets or liabilities in the statement of financial position and measure
those instruments at fair value. The Company, to date, has not engaged in
derivative or hedging activities.
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
All statements contained herein that are not historical facts, including, but
not limited to, statements regarding the Company's hotels under construction and
the operation of AmeriHost Inn(R) hotels are based on current expectations.
These statements are forward looking in nature and involve a number of risks and
uncertainties. Actual results may differ materially. Among the factors that
could cause actual results to differ materially are the following: the
availability of sufficient capital to finance the Company's business plan on
terms satisfactory to the Company; competitive factors, such as the introduction
of new hotels or renovation of existing hotels in the same markets; changes in
travel patterns which could affect demand for the Company's hotels; changes in
development and operating costs, including labor, construction, land, equipment,
and capital costs; general business and economic conditions; and other risk
factors described from time to time in the Company's reports filed with the
Securities and Exchange Commission. The Company wishes to caution readers not to
place undue reliance on any such forward looking statements, which statements
are made pursuant to the Private Securities Litigation Reform Act of 1995 and,
as such, speak only as of the date made.
Item 3. Quantitative And Qualitative Disclosures About Market Risk
- -------
The Company's exposure to market risk for changes in interest rates relates
primarily to the Company's long-term debt obligations. The Company has no cash
flow exposure on its long-term debt obligations to changes in market interest
rates. The Company primarily enters into long-term debt obligations in
connection with the development and financing of hotels. The Company maintains a
mix of fixed and floating debt to mitigate its exposure to interest rate
fluctuations.
The Company's management believes that fluctuations in interest rates in the
near term would not materially affect the Company's consolidated operating
results, financial position or cash flows as the Company has limited risks
related to interest rate fluctuations.
<PAGE>
AMERIHOST PROPERTIES, INC. AND SUBSIDIARIES
SCHEDULE OF EARNINGS BEFORE INTEREST/RENT,
TAXES AND DEPRECIATION/AMORTIZATION
(UNAUDITED)
================================================================================
Three Months Ended
March 31,
-----------------------
1999 1998
-------------- ---------------
Revenue $ 14,718,947 $ 14,037,709
Operating costs and expenses 12,798,986 12,801,115
1,919,961 1,236,594
Corporate general and administrative (382,535) (342,260)
Equity in net income and losses
of affiliates (165,215) (55,921)
Earnings before minority interests 1,372,211 838,413
Minority interests in earnings of
consolidated subsidiaries and
partnerships (38,419) 207,587
Earnings before interest/rent, taxes
and depreciation/amortization $ 1,333,792 $ 1,046,000
============== ==============
<PAGE>
PART II: Other Information
<PAGE>
Item 6. Exhibits and Reports on Form 8-K:
- ------
(a) Exhibits:
Exhibit No.
-----------
27.0 Financial Data Schedule
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed during this
period covered by this report.
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.
AMERIHOST PROPERTIES, INC.
--------------------------
Registrant
Date: May 13, 1999
By: /s/ James B. Dale
----------------------
James B. Dale
Treasurer/Senior Vice President, Finance
By: /s/ Michael E. Kirk
-----------------------
Michael E. Kirk
Corporate Controller
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-END> MAR-31-1999 MAR-31-1998
<CASH> 4,327,374 2,924,579
<SECURITIES> 0 0
<RECEIVABLES> 2,953,095 6,301,598
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 9,827,775 12,744,501
<PP&E> 99,480,621 86,966,665
<DEPRECIATION> 14,552,162 10,732,697
<TOTAL-ASSETS> 109,771,582 100,304,176
<CURRENT-LIABILITIES> 13,934,136 17,336,091
<BONDS> 0 0
0 0
0 0
<COMMON> 30,332 31,061
<OTHER-SE> 16,440,835 20,428,928
<TOTAL-LIABILITY-AND-EQUITY> 109,711,582 100,304,176
<SALES> 14,718,947 14,037,709
<TOTAL-REVENUES> 14,718,947 14,037,709
<CGS> 12,798,986 12,801,115
<TOTAL-COSTS> 12,798,986 12,801,115
<OTHER-EXPENSES> 3,305,329 1,989,361
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 1,553,587 1,471,089
<INCOME-PRETAX> (2,892,991) (1,913,091)
<INCOME-TAX> (1,128,000) (784,000)
<INCOME-CONTINUING> (1,764,991) (1,129,091)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (1,764,991) (1,129,091)
<EPS-PRIMARY> (0.29) (0.18)
<EPS-DILUTED> (0.29) (0.19)
</TABLE>
