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 March 31, 1997
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 ISSUERS:
Number of Shares of Common Stock Outstanding
as of May 13, 1997 -- $.80 par value,
Class A -- 2,068,215
<PAGE>
FORM 10-Q
Part I - Item 1. Financial Information
--------------------------------------
SONESTA INTERNATIONAL HOTELS CORPORATION
CONSOLIDATED BALANCE SHEETS
March 31, 1997 (Unaudited) and December 31, 1996
------------------------------------------------
<TABLE>
<CAPTION>
(in thousands)
----------------------
March 31 December 31
1997 1996
-------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,165 $ 3,692
Accounts and notes receivables:
Trade, less allowance of $118,000
($108,000 at December 31, 1996) for doubtful accounts 5,364 6,049
Interest receivable 164 140
Other 753 821
-------- --------
Total accounts and notes receivable 6,281 7,010
Current portion of deferred taxes 319 317
Inventories 814 852
Prepaid expenses 1,324 1,040
-------- --------
Total current assets 9,903 12,911
Long-term receivables and advances 14,438 13,567
Investments in hotels -- 563
Other long-term assets 1,590 --
Property and equipment, at cost:
Land 2,931 2,877
Buildings 39,418 37,792
Furniture and equipment 19,740 17,319
Leasehold improvements 3,140 3,140
Projects in progress -- 2,036
-------- --------
65,229 63,164
Less accumulated depreciation and
amortization 22,362 21,234
-------- --------
Net property and equipment 42,867 41,930
-------- --------
$ 68,798 $ 68,971
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE>
FORM 10-Q
SONESTA INTERNATIONAL HOTELS CORPORATION
CONSOLIDATED BALANCE SHEETS
March 31, 1997 (Unaudited) and December 31, 1996
<TABLE>
<CAPTION>
(in thousands)
-----------------------
March 31 December 31
1997 1996
-------- -----------
<S> <C> <C>
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt and
capitalized lease obligations $ 1,110 $ 1,005
Accounts payable 2,100 5,484
Advance deposits 1,737 2,324
Federal, foreign and state income taxes 513 706
Accrued liabilities:
Salaries and wages 963 1,775
Rentals 2,107 5,031
Interest 193 23
Employee benefits 570 567
Other 1,609 1,007
-------- --------
Total accrued liabilities 5,442 8,403
-------- --------
Total current liabilities 10,902 17,922
Long-term debt 30,867 23,795
Deferred federal and state income taxes 2,246 2,282
Other non-current liabilities 1,699 1,526
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 27,428 27,790
Treasury shares--982,873, at cost (8,126) (8,126)
-------- --------
Total common stockholders' equity 22,790 23,152
-------- --------
$ 68,798 $ 68,971
======== ========
</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
March 31,1997 March 31, 1996
------------- --------------
<S> <C> <C>
Revenues:
Rooms $ 9,976 $ 8,330
Food and beverage 3,963 3,247
Management, license and
service fees 1,771 1,428
Other 1,237 1,177
-------- --------
16,947 14,182
-------- --------
Costs and expenses:
Costs and operating expenses 6,854 6,176
Advertising and promotion 1,456 1,383
Administrative and general 3,160 2,690
Human resources 395 327
Maintenance 1,264 1,170
Rentals 2,341 1,709
Property taxes 295 270
Depreciation and amortization 1,141 1,000
-------- --------
16,906 14,725
-------- --------
Operating income (loss) 41 (543)
Other income (deductions):
Interest expense (726) (498)
Interest income 228 298
Foreign exchange loss -- (1)
Equity in net loss of hotel and casino -- (16)
Gain on sales of assets 6 183
-------- --------
(492) (34)
Loss before income taxes (451) (577)
Federal, foreign and state income tax provision (benefit) (92) 53
-------- --------
Net loss (359) (630)
Retained earnings at beginning of period 27,790 28,235
Cash dividends on preferred stock (3) (3)
-------- --------
Retained earnings at end of period $ 27,428 $ 27,602
======== ========
Earnings per share of common stock:
Net loss $ (.17) $ (.31)
======== ========
Weighted average number of shares
outstanding 2,068 2,071
======== ========
</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)
---------------------------
Three Months Ended March 31
1997 1996
------ ------
<S> <C> <C>
Cash provided (used) by operating activities
Net loss $ (359) $ (630)
Items not (providing) requiring cash
Foreign exchange gain -- 1
Pension expense 189 151
Depreciation and amortization 1,141 1,000
Amortization of loan costs 20 3
Deferred federal income tax provision (benefit) (38) 39
Gain on sales of assets (6) (183)
Provision for doubtful accounts 10 9
Equity in net loss of hotel and casino -- 16
Changes in assets and liabilities
Accounts and notes receivable 956 281
Inventories 38 (105)
Prepaid expenses (279) (916)
Accounts payable (3,074) (1,317)
Advance deposits (587) (19)
Federal, foreign and state income taxes (193) (19)
Accrued liabilities (2,967) 1,131
-------- --------
Cash used by operating activities (5,149) (558)
Cash provided (used) by investing activities
Proceeds from sales of assets 9 8
Expenditures for property and equipment (2,082) (941)
Cash in escrow (1,883) --
Cash reimbursed from escrow 840
Investments in hotels -- (91)
New loans and advances (1,106) (89)
Payments received on long-term receivables
and advances 413 594
-------- --------
Cash used by investing activities 3,809 (519)
Cash provided (used) by financing activities
Changes in notes payable -- (273)
Proceeds from issuance of long-term debt 24,580 --
Cost of financing (423) --
Payments on long-term debt (17,400) (350)
Payments on capitalized lease obligations (13) (27)
Cash dividends paid (313) (314)
-------- --------
Cash provided (used) by financing activities 6,431 (964)
Loss from effect of exchange rate
changes on cash -- (1)
-------- --------
Net decrease in cash (2,527) (2,042)
Cash and cash equivalents at beginning of period 3,692 3,370
-------- --------
Cash and cash equivalents at end of period $ 1,165 $ 1,328
======== ========
</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 1997 three-month period and the 1996
three-month period was approximately $556,000 and $527,000,
respectively. Cash paid for income taxes in the 1997 three-month period
and the 1996 three-month period was approximately $139,000 and $33,000,
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 March 31, 1997 and December 31, 1996, and
the results of its operations for the three month periods ended March 31, 1997
and 1996 and its cash flows for the three month periods ended March 31, 1997 and
1996, and should be read in conjunction with the 1996 Annual Report.
The results of operations for these periods are not necessarily indicative of
the results for the full years.
In January 1997, Company subsidiaries refinanced the mortgage loan on the Royal
Sonesta Hotel Boston (Cambridge), (see also Note 4--Long-term debt).
During the first quarter of 1997 the Company loaned $1,000,000 to the owner of
the Sonesta Hotel Cairo, Egypt, to partially finance improvements to the hotel,
which include additional rooms. The owner of the hotel also agreed to extend the
management agreement until May 2012. The original agreement was to expire in
2002, and the owner had the right to convert the agreement to a license
agreement as of 1997, which would have reduced the Company's management fee
income.
In December 1994, Company subsidiaries entered into agreements to acquire a 50%
interest in a partnership to develop a 320-room beach resort and casino in
Guanacaste, Costa Rica. To date, the Company has advanced $563,000 which is in
part secured by a mortgage on the hotel site, to acquire the hotel site and for
other project-related expenses. As permitted under the partnership agreements,
in March 1997 the Company notified its partner that it does not intend to
proceed with the project. The Company expects to fully recover its investment,
which is included in Long-term receivables and advances at March 31, 1997.
Included in Accrued rentals at March 31, 1996 is percentage rent of $5,269,000
for the year ended December 31, 1995, related to the Royal Sonesta Hotel in New
Orleans, which is operated by the Company under a long-term lease. This amount
was paid in April 1996. Percentage rent of $5,031,000 for the year ended
December 31, 1996 was paid in March 1997.
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings per Share, which is required to be adopted on December 31,
1997. At that time, the Company will be required to change the method currently
used to compute earnings per share and to restate all prior periods if there is
a change to the previously reported amount. Statement 128 is not expected to
have any effect on the calculation of earnings per share.
6
<PAGE>
FORM 10-Q
SONESTA INTERNATIONAL HOTELS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Long-Term Receivables and Advances
----------------------------------
<TABLE>
<CAPTION>
(in thousands)
--------------------------------
March 31, December 31,
1997 1996
-------- ------------
<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 (a) $5,000 $5,000
Deferred interest receivable (a) 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
Loans to owner (b) 3,654 4,007
Sharm El Sheikh (c) -- 10
Sharm El Sheikh (d) 500 500
Cairo, Egypt, net of discount (e) 851 --
Other 1,413 781
------- -------
Total long-term receivables 14,724 13,604
Less: current portion 286 37
------- -------
Net long-term receivables $14,438 $13,567
======= =======
</TABLE>
(a) The Company's mortgage notes receivable are subordinate to a first
mortgage of $22,431,000 at March 31, 1997. The maturity date of the
first mortgage loan is October 1, 2000. The Company has not recorded as
income the deferred portion of interest on the second mortgage since
July 1, 1992. A substantial part of these receivables are due on
December 31, 1997. The Company and the owner of the hotel are currently
discussing alternatives to address the repayment of these loans, the
outcome of which is uncertain at this point. Management expects that
all amounts due from the hotel will be realized.
7
<PAGE>
FORM 10-Q
SONESTA INTERNATIONAL HOTELS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(b) Under five separate agreements, a subsidiary of the Company loaned
$5,475,000 to the hotel's owner during 1993 and 1994. These loans earn
interest at rates ranging from the prime rate (8 1/2% at March 31,
1997) to 14 1/2%. Of these loans, an amount of $2,684,000, and interest
thereon is secured by second and third mortgages on the hotel property.
Principal and interest are payable out of hotel cash flow remaining
after payment of first and second mortgage loan interest, and a
payment to the hotel's owner equal to 3/4 of 1% of revenues of the
hotel.
(c) A subsidiary of the Company loaned $800,000 to the owner of the Sonesta
Beach Resort, Sharm el Sheikh which opened in May 1994. The principal
balance of this loan was repaid in full at March 31, 1997.
(d) The Company had agreed to loan $1,000,000 to the owner of the Sonesta
Beach Resort, Sharm El Sheikh, to finance certain improvements to the
resort, including construction of 80 additional guestrooms, conference
and other hotel facilities. This loan earned interest at LIBOR plus two
percentage points (7 13/16% at March 31, 1997), and was to be repaid in
twelve annual installments of $83,333, together with interest,
commencing January 1, 1998. In April 1997, the Company amended its loan
agreement to increase the loan facility by $500,000, to a total of
$1,500,000, to provide financing for the construction of 80 more
guestrooms. The entire loan now bears interest at the prime rate
with repayment in eight annual installments of $187,500, together with
interest, commencing January 1, 1998. An amount of $500,000 was
advanced in December 1996. An additional amount of $500,000 was
advanced in April 1997 and the remaining $500,000 will be advanced once
the improvements are substantially completed.
(e) This loan, made in February 1997 to the owner of the Sonesta Hotel
Cairo, will be repaid with two payments of $330,000 each on March 1,
1998 and 1999, and a final payment of $340,000 on March 1, 2000. There
is no interest due during the term of the loan.
In connection with its Key Biscayne notes receivable, the Company recorded
interest income of $137,500 during the first quarter of 1997. Cash payments
received during the same period were $490,000.
3. Borrowing Arrangements
----------------------
The Company has a $2,000,000 line of credit which expires on September 30, 1997.
This line of credit bears interest at the prime rate (8 1/2% at March 31, 1997).
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 March 31, 1997.
8
<PAGE>
FORM 10-Q
SONESTA INTERNATIONAL HOTELS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A subsidiary of the Company has a $5,000,000 line of credit which will expire
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, and by a Company guaranty. The interest rate is prime (8 1/2% at March
31, 1997) 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
March 31, 1997.
A foreign subsidiary has an operating line of credit of $500,000, which is
guaranteed by the Company. The interest rate is at the prime rate (8 1/2% at
March 31, 1997) plus one percentage point. This line of credit is subject to
periodic review by the bank. No amount was outstanding under this line at March
31, 1997.
4. Long-Term Debt
--------------
<TABLE>
<CAPTION>
(in thousands)
-----------------------------------
March 31, December 31,
1997 1996
------- ------------
<S> <C> <C>
Charterhouse of Cambridge Trust:
First mortgage notes (a) $22,748 $17,068
Sonesta Hotels of Anguilla, Ltd:
First mortgage notes (b) 6,190 4,690
Note from Seller (c) 800 800
Sonesta Curacao Hotel Corporation, N.V.:
Bank term loan (d) 2,000 2,000
Other 188 188
------- -------
31,926 24,746
Less current portion of long-term debt 1,059 951
------- -------
Total long-term debt $30,867 $23,795
======= =======
</TABLE>
(a) The mortgage loan on the Royal Sonesta Hotel Boston (Cambridge) was
refinanced in January 1997. The new loan is secured by a first mortgage
on the Royal Sonesta Hotel Boston (Cambridge) property. This property
is included in fixed assets at a net book value of approximately
$22,419,000 at March 31, 1997. The interest rate on the new loan is
8.86% for the term of the loan, and monthly payments for interest and
principal are $203,802. The mortgage loan matures in December 2003, and
no prepayments are allowed during the first three years of the loan.
(b) The loan is secured by a first mortgage on the Sonesta Beach Resort
Anguilla property, and an assignment to the lender of the hotel's
furniture, fixtures and equipment. The
9
<PAGE>
FORM 10-Q
SONESTA INTERNATIONAL HOTELS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Company increased the loan by $1,700,000 in March 1997 to partially
finance improvements to the resort made during the winter of 1996/97.
The property is included in fixed assets at a book value of $13,162,000
at March 31, 1997. In addition, an amount of $1,900,000 is secured by a
Company guaranty. The loan requires minimum principal payments of
$450,000, $650,000, $725,000, $3,490,000 and $1,075,000 in the years
1997, 1998, 1999, 2000 and 2001, respectively. In addition, principal
payments are required equal to 25% of the hotel's annual excess cash
flow, as defined. The interest rate on the loan is LIBOR plus 2 1/4
percentage points. The interest rate at March 31, 1997 was 8%.
(c) This loan from the Seller of the Sonesta Beach Resort Anguilla is for a
three year period ending November 28, 1998. The interest rate is 8% per
annum. Principal payments of up to $300,000 are required during the
term of the loan if certain conditions are met. The Company has reduced
this loan by $200,000 to which it is entitled under the agreements with
the Seller.
(d) This loan matures June 30, 1998. No principal payments are required
during the term. The interest rate was 9 3/4% at March 31, 1997, 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.
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 March 31
1997 1996
------ ------
<S> <C> <C>
Direct departmental costs
Rooms $2,308 $2,114
Food and beverage 3,152 2,844
Heat, light and power 625 556
Other 769 662
------ ------
$6,854 $6,176
====== ======
</TABLE>
Direct departmental costs include payroll expenses and related payroll burden,
the cost of food and beverage consumed and other departmental costs.
10
<PAGE>
FORM 10-Q
SONESTA INTERNATIONAL HOTELS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. Federal, Foreign and State Income Tax
-------------------------------------
The provision (benefit) for income taxes in the accompanying Consolidated
Statements of Operations is summarized below:
<TABLE>
<CAPTION>
(in thousands)
---------------------------
Three Months Ended March 31
1997 1996
---------- -----------
<S> <C> <C>
Deferred federal income tax provision (benefit) $ (38) $ 39
Current federal income tax benefit (124) (52)
Current foreign income tax 18 15
Current state income tax 52 51
----- -----
$ (92) $ 53
===== =====
</TABLE>
11
<PAGE>
FORM 10-Q
Part I - Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
FIRST QUARTER 1997 COMPARED TO 1996
- -----------------------------------
REVENUES
- --------
Total revenues for the first quarter ended March 31, 1997 were $16,947,000
compared to $14,182,000 in 1996, an increase of approximately $2,765,000.
The Royal Sonesta Hotel New Orleans had an increase in revenue of $1,306,000 in
the first quarter of 1997 compared to 1996, due to an increase in occupancy from
77% to 84%, an 8% increase in average room rate and an increase in food and
beverage revenues. The Company's Sonesta Beach Resort Anguilla, which opened
January 18, 1996, had an increase in revenues of $952,000 in the 1997 quarter
compared to the 1996 quarter. The Royal Sonesta Hotel Boston (Cambridge) had a
slight increase in revenues of $98,000 in 1997 compared to 1996. Revenues from
management activities and other sources increased by $409,000 in 1997 compared
to 1996, primarily because of increases in management and service fee income, in
particular from the company's management activities in Egypt.
OPERATING INCOME
- ----------------
Operating income for the three-month period ending March 31, 1997, was $41,000,
compared to operating loss of $543,000 in 1996, an increase of approximately
$584,000.
The Company's Sonesta Beach Resort Anguilla, which opened on January 18, 1996,
had a decrease in its operating loss during the first quarter of $367,000
compared to 1996. This was primarily due to increased revenues of $952,000. The
Royal Sonesta New Orleans experienced an increase in operating income of
$151,000 in 1997 compared to 1996, because of strong revenue increases of
$1,306,000 during the quarter, partially offset by increases in expense,
primarily rent expense, of $1,155,000. The Company operates the Royal Sonesta
Hotel New Orleans under a lease under which it pays a percentage rent based on
profits. The Royal Sonesta Boston (Cambridge) had an increase in its operating
loss during the first quarter of $174,000 compared to 1996. Increases in
expenses of $272,000 exceeded the slight revenue increase of $98,000. Operating
loss from management and other activities decreased by $240,000, because of
increased revenues of $409,000, which exceeded the $169,000 increase in
expenses related to these activities.
OTHER INCOME (DEDUCTIONS)
- -------------------------
Interest expense increased by $228,000 in the first quarter of 1997 compared to
the first quarter of 1996, primarily due to the additional indebtedness related
to the refinancing of the Royal Sonesta Hotel Boston (Cambridge) (see Note
4--Long-term Debt).
Interest income decreased by $70,000 in the three month period ending March 31,
1997, compared to the same period last year, primarily due to a $137,000
decrease in interest recorded on the Key Biscayne notes receivable (see
Note 2--Long-term receivables and advances) partially offset by higher interest
income on the Company's cash balances.
12
<PAGE>
FORM 10-Q
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION (CONTINUED)
In the first quarter of 1996 the Company recorded a gain on sale of $175,000
resulting from a reduction of accrued costs related to a prior year sale of
certain assets in Cambridge, Massachusetts.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
In January 1997 the Company refinanced the mortgage loan on the Royal Sonesta
Hotel Boston (Cambridge). The net proceeds of this refinancing were
approximately $5,357,000, of which $1,880,000 is held in escrow by the lender
for certain improvements to the hotel. The Company received $840,000 of these
funds in April 1997, after completion of part of the improvements. This amount
is included in Cash at March 31, 1997. The remaining $1,040,000 of escrow funds
is included in Other long-term assets at March 31, 1997.
The Company increased the mortgage loan on the Sonesta Beach Resort Anguilla by
$1,700,000 in March 1997. These funds were used to partially finance
improvements to the resort made during the winter of 1996/97.
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 1997, will be more than adequate to meet of all of its
obligations.
FEDERAL, FOREIGN AND STATE INCOME TAXES
- ---------------------------------------
The provision for income taxes for the first quarter 1996 was higher than the
statutory rate due to certain losses from the Company's foreign subsidiary
which operated the Sonesta Beach Resort Anguilla, B.W.I., which were not
deductible for U.S. income taxes.
PART II - Other Information
---------------------------
Item Numbers 1, 2, 3, 4, 5 and 6
- --------------------------------
Not applicable during the quarter ended March 31, 1997.
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: _____________________________________________
Boy van Riel
Vice President and Treasurer
(Authorized to sign on behalf of the Registrant as
Principal Financial Officer)
DATE: May 13, 1997
14
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000091741
<NAME> Sonesta International Hotels Corporation
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,165
<SECURITIES> 0
<RECEIVABLES> 5,482
<ALLOWANCES> 118
<INVENTORY> 814
<CURRENT-ASSETS> 9,903
<PP&E> 65,229
<DEPRECIATION> 22,362
<TOTAL-ASSETS> 68,798
<CURRENT-LIABILITIES> 10,902
<BONDS> 30,867
0
294
<COMMON> 3,488
<OTHER-SE> 19,302
<TOTAL-LIABILITY-AND-EQUITY> 68,798
<SALES> 3,963
<TOTAL-REVENUES> 16,947
<CGS> 958
<TOTAL-COSTS> 6,854
<OTHER-EXPENSES> 10,052
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 726
<INCOME-PRETAX> (451)
<INCOME-TAX> (92)
<INCOME-CONTINUING> (359)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (359)
<EPS-PRIMARY> (0.17)
<EPS-DILUTED> (0.17)
</TABLE>
