<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _________________
Commission file number 0-9032
SONESTA INTERNATIONAL HOTELS CORPORATION
(Exact name of registrant as specified in its charter)
NEW YORK 13-5648107
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
200 Clarendon Street, Boston, MA 02116
(Address of principal executive offices)
(Zip Code)
617-421-5400
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15 (d)
of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No ____
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13 or
15 (d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
Yes ____ No ____
APPLICABLE ONLY TO CORPORATE ISSURERS:
Number of Shares of Common Stock Outstanding
as of November 10, 1995 -- $.80 par value,
Class A -- 2,071,281
<PAGE>
FORM 10-Q
PART I - ITEM 1. FINANCIAL INFORMATION
SONESTA INTERNATIONAL HOTELS CORPORATION
CONSOLIDATED BALANCE SHEETS
September 30, 1995 (Unaudited) and December 31, 1994
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------------------
SEPTEMBER 30 DECEMBER 31
1995 1994
------------ -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 4,534 $ 3,669
Accounts and notes receivables:
Trade, less allowance of $97,000
($84,000 at December 31, 1994) for doubtful accounts 4,660 4,997
Interest receivable 140 3
Current portion of long-term receivables 65 26
Other 349 893
------- -------
Total accounts and notes receivable 5,214 5,919
Refundable income taxes -- 959
Inventories 632 653
Prepaid expenses 525 358
------- -------
Total current assets 10,905 11,558
Long-term receivables and advances 13,646 14,477
Investments in hotels 5,956 5,648
Property and equipment, at cost:
Land 2,202 2,202
Buildings 30,866 30,866
Furniture and equipment 15,274 13,409
Leasehold improvements 701 483
------- -------
49,043 46,960
Less accumulated depreciation and
amortization 20,749 18,529
Net property and equipment 28,294 28,431
------- -------
$58,801 $60,114
------- -------
------- -------
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE>
FORM 10-Q
SONESTA INTERNATIONAL HOTELS CORPORATION
CONSOLIDATED BALANCE SHEETS
September 30, 1995 (Unaudited) and December 31, 1994
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------------------
SEPTEMBER 30 DECEMBER 31
1995 1994
------------ -----------
<S> <C> <C>
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to banks $ -- $ 500
Current portion of long-term debt and
capitalized lease obligations 925 937
Accounts payable 3,244 5,440
Federal, foreign and state income taxes 179 290
Current portion-deferred taxes 318 623
Accrued liabilities:
Salaries and wages 1,349 1,662
Rentals 4,056 3,218
Interest 133 143
Taxes, other than income taxes 286 38
Employee benefits 1,000 1,134
Other 1,321 891
------- -------
Total accrued liabilities 8,145 7,086
------- -------
Total current liabilities 12,811 14,876
Long-term debt 19,488 20,089
Deferred federal and state income taxes 3,044 3,021
Non-current pension liabilities 360 135
Other non-current liabilities 118 179
Redeemable preferred stock, $25 par value, at
redemption value 294 294
Commitments and contingencies
Common stockholders' equity:
Common Stock:
Class A, $.80 par value:
Authorized--10,000,000 shares
Issued--3,051,088 shares at stated value 3,488 3,488
Retained earnings 27,295 26,095
Treasury shares--979,807 (975,807 at December 31, 1994) at cost (8,097) (8,063)
------- -------
Total common stockholders' equity 22,686 21,520
------- -------
$58,801 $60,114
------- -------
------- -------
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
FORM 10-Q
SONESTA INTERNATIONAL HOTELS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands except for per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
------------------ -----------------
1995 1994 1995 1994
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues:
Rooms $ 7,822 $ 7,255 $24,369 $23,145
Food and beverage 2,974 2,683 9,649 9,388
Management, license and
service fees 1,483 1,247 4,048 3,630
Other 1,138 1,025 3,298 3,206
------- ------- ------- -------
13,417 12,210 41,364 39,369
------- ------- ------- -------
Costs and expenses:
Costs and operating expenses 5,708 5,481 16,968 16,508
Advertising and promotion 1,156 1,229 3,472 3,535
Administrative and general 2,452 2,099 6,991 6,306
Human resources 288 254 874 766
Maintenance 1,042 992 3,083 3,045
Rentals 753 569 4,237 2,588
Property taxes 320 321 930 920
Depreciation and amortization 847 1,093 2,506 3,284
------- ------- ------- -------
12,566 12,038 39,061 36,952
------- ------- ------- -------
Operating income 851 172 2,303 2,417
Other income (deductions):
Interest expense (438) (483) (1,343) (1,115)
Interest income 192 60 758 183
Foreign exchange gain (loss) (1) (31) 12 (47)
Equity in net loss of hotel and
casino (302) (322) (547) (459)
Gain (loss) on sales of assets (2) 9 548 (96)
Other -- 118 -- 118
Gain from casualty insurance 155 -- 520 --
------- ------- ------- -------
(396) (649) (52) (1,416)
------- ------- ------- -------
Income (loss) before income taxes 455 (477) 2,251 1,001
Federal, foreign and state income
tax provision (benefit) 135 (153) 730 464
------- ------- ------- -------
Net income (loss) 320 (324) 1,521 537
Retained earnings at beginning
of period 26,979 26,812 26,095 26,268
Cash dividends on preferred stock (4) (4) (10) (10)
Cash dividends on common stock -- -- (311) (311)
------- ------- ------- -------
Retained earnings at end of period $27,295 $26,484 $27,295 $26,484
------- ------- ------- -------
Earnings per share of common stock $ .15 $ (.16) $ .73 $ .26
------- ------- ------- -------
Weighted average number of shares
outstanding 2,075 2,075 2,075 2,075
------- ------- ------- -------
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
FORM 10-Q
SONESTA INTERNATIONAL HOTELS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Increase (Decrease) in Cash
<TABLE>
<CAPTION>
(IN THOUSANDS)
-------------------------
NINE MONTHS ENDED SEPT 30
1995 1994
------- -------
<S> <C> <C>
Cash provided (used) by operating activities
Net income $ 1,521 $ 537
Items not (providing) requiring cash
Foreign exchange loss (gain) (12) 47
Pension expense 429 399
Depreciation and amortization 2,506 3,284
Deferred federal income taxes (282) (1,695)
Net (gain) loss on sales of assets (548) 96
Gain from casualty insurance (520) --
Provision for doubtful accounts 20 (23)
Equity in net loss of hotel and casino 547 459
Changes in assets and liabilities
Accounts and notes receivable 843 (75)
Refundable income taxes 959 (994)
Inventories 21 125
Prepaid expenses (167) (8)
Accounts Payable (l,661) (1,345)
Federal, foreign and state income taxes (111) (233)
Accrued liabilities 852 178
------- -------
Cash provided by operating activities 4,397 752
Cash provided (used) by investing activities
Proceeds from sales of assets 27 350
Proceeds from casualty insurance 450 --
Expenditures for property and equipment (2,464) (2,006)
Investments in hotels (855) (2,000)
New loans and advances (125) (571)
Payments received on long-term receivables
and advances 956 1,936
------- -------
Cash used by investing activities (2,011) (2,291)
Cash provided (used) by financing activities
Repayment under lines of credit (500) --
Proceeds from issuance of long-term debt -- 2,000
Payments on long-term debt (601) (434)
Payments on capitalized lease obligations (74) (730)
Purchase of common stock (33) --
Cash dividends paid (321) (321)
------- -------
Cash provided (used) by financing activities (1,529) 515
Gain (loss) from effect of exchange rate
changes on cash 8 (29)
------- -------
Net increase (decrease) in cash 865 (1,053)
Cash and cash equivalents at beginning of period 3,669 6,919
------- -------
Cash and cash equivalents at end of period $ 4,534 $ 5,866
------- -------
------- -------
</TABLE>
4
<PAGE>
FORM 10-Q
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (continued)
SUPPLEMENTAL SCHEDULE OF INTEREST AND INCOME TAXES PAID
Cash paid for interest in the 1995 nine-month period and the
1994 nine-month period was approximately $1,353,000 and
$1,085,000 respectively. Cash paid for income taxes in the
1995 and 1994 nine-month periods was approximately $164,000
and $3,288,000, respectively.
See accompanying notes to consolidated financial statements.
5
<PAGE>
FORM 10-Q
SONESTA INTERNATIONAL HOTELS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. OPERATIONS
The accompanying unaudited consolidated financial statements include the
accounts of the Company and all foreign and domestic subsidiaries. In the
opinion of management, these financial statements reflect all adjustments
consisting of normally recurring items necessary to present fairly the
financial position of the Company at September 30, 1995 and December 31,
1994, and the results of its operations for the three and nine month periods
ended September 30, 1995 and 1994 and its cash flows for the nine month
periods ended September 30, 1995 and 1994, and should be read in conjunction
with the 1994 Annual Report.
The results of operations for these periods are not necessarily indicative of
the results for the full years.
In the first quarter of 1995, the Company recognized a pre-tax gain on sale
of assets of $535,000. This was a result of a settlement, for amounts less
than previously recorded, of liabilities related to the sale in 1991 of the
Company's Amsterdam Sonesta Hotel. In 1994, the Company settled a dispute
related to foreign taxes on the same transaction, which resulted in
refundable federal income taxes of $959,000. The Company received payment for
this in March 1995, together with interest.
In May 1994, the Company acquired a 22% equity interest in the Sonesta Beach
Hotel & Casino, Curacao. Included in the statement of operations for the nine
month periods ended September 30, 1995 and 1994 is equity in net loss of
$547,000 and $459,000 respectively, which represents the Company's share of
the net losses of the hotel.
In April 1995, the Company opened the Chateau Sonesta Hotel in New Orleans,
Louisiana. This 243-room full-service hotel is located in the French Quarter.
The Company operates this hotel under a long-term management agreement, and
will receive management and marketing fees based on revenues, and incentive
fees based on cash flow. The Company guarantees debt service payments of
approximately $1,500,000 per year on the hotel's first mortgage of
$12,600,000 for a period of 5 years following the opening of the hotel.
Advances made under this guaranty, if required, would be secured by a
mortgage.
In October 1994, the Company exercised the first of three ten-year options to
extend the lease under which it operates the Royal Sonesta Hotel in New
Orleans. As of the renewal date, no fixed rent is payable, but percentage
rent, based on net income, increased.
6
<PAGE>
FORM 10-Q
SONESTA INTERNATIONAL HOTELS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In May 1995, heavy rains in New Orleans caused damage to the Royal Sonesta
Hotel, which is operated by the Company under a long-term lease. The hotel is
covered under its insurance program for both property damage and loss of
profits due to business interruption. The Company and the insurer have
estimated the damages to the furniture, fixtures and equipment to be
approximately $600,000. These assets were substantially depreciated and
accordingly the Company recorded an estimated pre-tax gain of $520,000 at
September 30, 1995. No recovery for lost profits has been recorded at
September 30, 1995.
In December 1994, Company subsidiaries entered into a partnership, through
which it acquired a 50% interest in a building in the Soho district of New
York City. At September 30, 1995, the Company's investment in the project was
$4,612,000. Together with its partner, the Company intends to develop the
building into a deluxe, 78 room hotel with retail space. No financing has
been obtained by the partnership at this point in time to build the hotel.
Although the Company is still actively involved in the development, it has
the option to realize its investment through a sale of its partnership
interest during 1996.
2. LONG-TERM RECEIVABLES AND ADVANCES
<TABLE>
<CAPTION>
(IN THOUSANDS)
---------------------------
SEPTEMBER 30 DECEMBER 31
1995 1994
------------ -----------
<S> <C> <C>
The Sonesta Beach Resort,
Key Biscayne, Florida:
Second mortgage receivable,
14-1/2% interest (of which
11% is payable quarterly and
3-1/2% deferred until maturity)
due 12/31/97 $ 5,000 $ 5,000
Deferred interest receivable 2,306 2,306
$6,500,000 fourth mortgage
receivable, 10% simple interest
due 12/31/04, net of $5,500,000
reserve (a) 1,000 1,000
Loan to owner (b) 2,134 2,272
Loan to owner (c) 2,338 2,791
Sharm el Sheikh (d) 490 800
Other 443 334
------- -------
Total long-term receivables $13,711 $14,503
Less: current portion 65 26
------- -------
Net long-term receivables $13,646 $14,477
------- -------
------- -------
</TABLE>
7
<PAGE>
FORM 10-Q
SONESTA INTERNATIONAL HOTELS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(a) The Company's mortgage notes receivable are subordinate to a first
mortgage of $23,338,000 at September 30, 1995. The maturity date of the
first mortgage loan is October 1, 2000. Based on the Company's analysis
of the present situation in the hotel industry, it has stopped,
effective July 1, 1992, recording as income the deferred portion of
interest on the second mortgage.
(b) In 1993, a subsidiary of the Company loaned $2,684,000 to the
hotel's owner. Of this loan, $550,000 accrues interest at a rate of 14
1/2%, while the balance accrues interest at the prime rate. Principal
and interest are payable out of hotel cash flow remaining after payment
of first and second mortgage interest and a payment to the owner equal
to 3/4 of 1% of the revenues of the hotel. Of this loan, an amount of
$550,000 and interest thereon is secured by the Company's second
mortgage, while the remaining amount is secured by a third mortgage on
the hotel property. Payments received of $550,000 for 1994 interest on
the Company's second mortgage (see 2 (a) above) have been used to reduce
the principal balance to $2,134,000 at September 30, 1995.
(c) In 1993, a subsidiary of the Company made loans totalling
$2,791,000 to the owner of the hotel. These loans earn interest at
rates ranging from 10% to prime plus two percentage points. Principal
and interest is payable out of hotel cash flow available after payment
of first and second mortgage interest. Payments of $453,000 during 1995
have reduced the principal balance to $2,338,000 at September 30, 1995.
(d) A subsidiary of the Company has loaned $800,000 to the owner of the
Sonesta Beach Resort, Sharm el Sheikh which opened in May, 1994. This
receivable earns interest at an annual rate of ten percent. Principal
and interest is payable in 18 monthly installments out of hotel cash
flow following the opening of the hotel. Payments of $310,000 during
1995 have reduced the principal balance to $490,000 at September 30,
1995.
3. BORROWING ARRANGEMENTS
The Company has a $2,000,000 line of credit which expires on September 30,
1996. This line of credit bears interest at the prime rate. The terms of the
line require a certain minimum net worth, a minimum amount of unrestricted
cash or available credit lines during part of each calendar year, and
approval for additional borrowings by the Company. No amount was outstanding
under this line at September 30, 1995.
8
<PAGE>
FORM 10-Q
SONESTA INTERNATIONAL HOTELS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
A subsidiary of the Company has a $5,000,000 line of credit which will expire
on December 31, 1997. The terms of the loan require certain minimum levels of
earnings and net worth, limit cash dividends and purchases of the Company's
stock, and specify a maximum defined debt to net worth ratio. The loan is
secured by the Company's leasehold interest in the Royal Sonesta Hotel, New
Orleans. The interest rate as of January 1, 1995 is prime less one-eighth
percent, and the commitment fee on the unused portion of the line is .65% per
annum. No amount was outstanding under this line at September 30, 1995.
4. LONG-TERM DEBT
<TABLE>
<CAPTION>
(IN THOUSANDS)
---------------------------
SEPTEMBER 30 DECEMBER 31
1995 1994
------------ -----------
<S> <C> <C>
Charterhouse of Cambridge Trust:
First mortgage notes (a) $18,137 $18,738
Sonesta Curacao Hotel Corporation, N.V.:
Bank term loan (b) 2,000 2,000
Other 188 188
------- -------
20,325 20,926
Less current portion of long-term debt 837 837
------- -------
Total long-term debt $19,488 $20,089
------- -------
------- -------
</TABLE>
(a) The loan is secured by a first mortgage and first lien security
interest on the Royal Sonesta Hotel Boston (Cambridge) property. This
property is included in fixed assets at a net book value of
approximately $19,100,000 at September 30, 1995. In addition, the stock
of Sonesta of Massachusetts, Inc. and the shares of Charterhouse of
Cambridge Trust have been pledged as security for the mortgage loan
along with an unconditional assignment of the lease. The loan was
extended for an additional five years as of April, 1992. The loan
requires monthly principal payments of $66,777. Interest on the loan was
5% until April 1994, and is two percentage points over the LIBOR rate
for the remaining three years of the extension term. The interest rate
at September 30, 1995 was 7.875%.
(b) This loan is for a three year period ending April 30, 1997. No
principal payments are required during the term. The interest rate was
9.75% at September 30, 1995, and is subject to periodic review by the
bank. This loan may be prepaid on 60 days notice. The loan is secured by
a Company guaranty, and by an assignment of the right to receive fees
under the management agreement for the Sonesta Beach Hotel & Casino,
Curacao.
9
<PAGE>
FORM 10-Q
SONESTA INTERNATIONAL HOTELS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. HOTEL COSTS AND OPERATING EXPENSES
Hotel costs and operating expenses in the accompanying Consolidated
Statements of Operations are summarized below:
<TABLE>
<CAPTION>
(IN THOUSANDS)
---------------------------------------
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
-------------- --------------
1995 1994 1995 1994
------ ------ ------- -------
<S> <C> <C> <C> <C>
Direct Departmental Costs
Rooms $2,060 $2,010 $ 6,036 $ 5,783
Food and Beverage 2,494 2,348 7,738 7,401
Other 681 655 1,901 1,953
------ ------ ------- -------
5,235 5,013 15,675 15,137
Heat, light and power 473 468 1,293 1,371
------ ------ ------- -------
$5,708 $5,481 $16,968 $16,508
------ ------ ------- -------
------ ------ ------- -------
</TABLE>
Direct departmental costs include payroll expenses and related payroll
burden, the cost of food and beverage consumed and other departmental costs.
6. FEDERAL, FOREIGN AND STATE INCOME TAX
The provision for income taxes in the accompanying Consolidated Statements of
Operations is summarized below:
<TABLE>
<CAPTION>
(IN THOUSANDS)
------------------------------
NINE MONTHS ENDED SEPTEMBER 30
1995 1994
------ -------
<S> <C> <C>
Deferred United States income
tax benefit $ (282) $(1,695)
Current United States income tax (benefit) (354) 1,919
Current foreign income tax 1,217 30
Current state income tax 149 210
------ -------
$ 730 $ 464
------ -------
------ -------
</TABLE>
10
<PAGE>
FORM 10-Q
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FIRST NINE MONTHS 1995 COMPARED TO 1994
REVENUES
Total revenues for the first nine months ended September 30, 1995 were
$41,364,000 compared to $39,369,000 in 1994, an increase of $1,995,000.
The Company's Boston (Cambridge) hotel had increased revenues in 1995 of
$1,097,000 due principally to a 6.8% increase in average room rate and
increased food and beverage revenues. The Company's New Orleans hotel had an
increase in revenues of $360,000 due principally to a 4.4% increase in
average room rate, partly offset by the adverse effect on revenues by the
flooding which occurred in May, 1995 (see Note 1--Operations). The remaining
revenue increase of $538,000 results principally from increases in management
and service fee income.
OPERATING INCOME
Operating income for the nine-month period ended September 30, 1995 was
$2,303,000 compared to $2,417,000 in 1994, a decrease of $114,000. The
Company's Boston (Cambridge) hotel operations showed a $787,000 increase in
income compared to the 1994 period, due to increased revenues of $1,097,000,
partially offset by increased operating expenses of $310,000. The New Orleans
hotel showed a $1,318,000 decrease in operating income, due to an increase of
$1,810,000 in percentage rent expense in the 1995 period, partially offset by
increased revenues and a net decrease in other operating expenses (see Note
1--Operations). Operating income from other sources increased by $417,000.
OTHER INCOME (DEDUCTIONS)
The 1995 period includes a pre-tax gain of approximately $535,000 related to
the sale of its Amsterdam Sonesta Hotel in 1991 (see Note 1--Operations).
The 1995 period includes a pre-tax gain of $520,000 related to a property
insurance claim as a result of flood damage at the Company's New Orleans
hotel in May (see Note 1--Operations).
The 1995 and 1994 periods include pre-tax losses of $547,000 and $459,000,
respectively, representing the Company's share of net losses of the Curacao
hotel (see Note 1--Operations).
Interest expense increased by $228,000 compared to 1994 due to an increase in
the interest rate of the Company's mortgage on the Boston (Cambridge) hotel
in April 1994, and the additional borrowing of a $2,000,000 bank term loan in
May 1994 (see Note 4--Long-Term Debt).
11
<PAGE>
FORM 10-Q
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS (continued)
Interest income increased by $575,000 in the 1995 period. The 1995 period
includes $413,000 from the Company's second mortgage receivable in Key
Biscayne. The Company decided to resume recording this interest as income
effective January 1, 1995, as a result of improved cash flow from the hotel,
compared to 1994. The remaining increase in interest income of $162,000 is
principally due to interest the Company received on a $959,000 federal income
tax refund (see Note 1--Operations).
THIRD QUARTER 1995 COMPARED TO 1994
REVENUES
Total revenues for the third quarter ended September 30, 1995 were
$13,417,000 compared to $12,210,000 in 1994, an increase of $1,207,000.
The Company's Boston (Cambridge) hotel had increased revenues in 1995 of
$605,000 due principally to a 9.6% increase in average room rate and
increased food and beverage revenues. The Company's New Orleans hotel had an
increase in revenues of $295,000 due principally to a 6.5% increase in
average room rates. The remaining revenue increase of $307,000 results
principally from increases in management and service fee and other income.
OPERATING INCOME
Operating income for the three-month period ended September 30, 1995 was
$851,000 compared to operating income of $172,000 in 1994, an increase of
$679,000. The Company's Boston (Cambridge) hotel operations showed a $440,000
increase in operating income compared to the 1994 period, due principally to
increased revenues. The New Orleans hotel showed a $57,000 increase in
operating income, due principally to a $295,000 increase in revenues and a
net decrease of $8,000 in other operating expenses, partially offset by an
increase of $246,000 in percentage rent expense in the 1995 period (see Note
1-Operations). Operating income from other sources increased by $182,000.
OTHER INCOME (DEDUCTION)
The 1995 period includes an additional pre-tax gain of $155,000 related to a
property insurance claim as a result of damage sustained due to the flooding
of the Company's New Orleans hotel in May (see Note 1--Operations).
12
<PAGE>
FORM 10-Q
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
Interest income increased by $132,000 in the 1995 period. The 1995 period
includes $138,000 from the Company's second mortgage receivable in Key
Biscayne. The Company decided to resume recording this interest as income
effective January 1, 1995, as a result of improved cash flow from the hotel,
compared to 1994. Interest income from other sources decreased by $6,000.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1995 the Company has a negative working capital balance of
approximately $1,900,000, due principally to the accrual of percentage rent
(which is included under Accrued Rentals) due under the lease for the Royal
Sonesta Hotel in New Orleans, which is not payable until March of 1996.
The Company believes that its present cash balances plus its available
borrowing capacity and the expected cash flow generated during the remainder
of the calendar year 1995 will be adequate to meet all of it obligations.
PART II - OTHER INFORMATION
ITEM NUMBERS 1, 2, 3, 4, 5 AND 6
Not applicable during the quarter ended September 30, 1995.
13
<PAGE>
FORM 10-Q
SIGNATURE
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.
SONESTA INTERNATIONAL HOTELS CORPORATION
By: /s/ BOY van RIEL
---------------------------------------------
Boy van Riel
Vice President and Treasurer
(Authorized to sign on behalf of the Registrant as Principal
Financial Officer)
DATE: November 10, 1995
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 4,534
<SECURITIES> 0
<RECEIVABLES> 4,757
<ALLOWANCES> 97
<INVENTORY> 632
<CURRENT-ASSETS> 10,905
<PP&E> 49,043
<DEPRECIATION> 20,749
<TOTAL-ASSETS> 58,801
<CURRENT-LIABILITIES> 12,811
<BONDS> 19,488
<COMMON> 3,488
0
294
<OTHER-SE> 19,198
<TOTAL-LIABILITY-AND-EQUITY> 58,801
<SALES> 9,649
<TOTAL-REVENUES> 41,364
<CGS> 2,313
<TOTAL-COSTS> 16,968
<OTHER-EXPENSES> 22,093
<LOSS-PROVISION> 20
<INTEREST-EXPENSE> 1,343
<INCOME-PRETAX> 2,251
<INCOME-TAX> 730
<INCOME-CONTINUING> 1,521
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,521
<EPS-PRIMARY> .73
<EPS-DILUTED> .73
</TABLE>
