SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A, NO. 1
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1996 Commission file number 0-9032
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ______________ to ________________.
SONESTA INTERNATIONAL HOTELS CORPORATION
(Exact name of registrant as specified in its charter)
NEW YORK 13-5648107
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
200 Clarendon Street, Boston, Massachusetts 02116
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 421-5400
Securities registered pursuant to Section 12(g) of the Act:
Title of each class Name of each exchange on which registered
Class A Common Stock NONE
$ .80 par value
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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 and 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 [ ] No [X] (see Form 12b-25 filed June 30, 1997)
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (ss.229,405 of this chapter) is not contained herein and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this form 10-K [X]
The aggregate market value of the common stock held by non-affiliates of
the registrant as of the close of business on March 21, 1997 was $ 5,648,104.
The number of shares outstanding of the registrant's common stock as of the
close of business on March 21, 1997 was: 2,067,237
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Item 1. Business
This amendment is being filed to provide additional information regarding
certain accounting and disclosure items in the Form 10-K filed by Sonesta
International Hotels Corporation on March 28, 1997, in response to questions by
the Commission.
(a) General Development of Business: The Company is engaged in the operation of
hotels that it owns or leases in Boston (Cambridge), Massachusetts; New
Orleans, Louisiana; and Anguilla, B.W.I. It also operates, under management
agreements, hotels in Southampton, Bermuda; Curacao, Netherlands Antilles;
Key Biscayne, Florida; and New Orleans, Louisiana; and Cairo, Hurghada, El
Gouna, Port Said and Sharm el Sheikh, Egypt; and two Nile River cruise
vessels. The Company has paid $2 million for a 22% ownership interest in
the hotel and casino it operates in Curacao, Netherlands Antilles under a
management contract. The Company has entered into management agreements to
operate new hotels being created in Luxor, Egypt and Manama, Bahrain, both
of which are scheduled to open later this year. The Company also licenses
the use of the Sonesta name to three operating hotels. In November 1995,
the Company acquired the 100-room resort in Anguilla, B.W.I., known as
Casablanca Resort, which at that time was closed due to damage from
Hurricane Luis, in September. (For details of this transaction, reference
is made to Note 2-Operations, on page 11 of the 1996 Annual Report to
Shareholders.)
In December 1994, Company subsidiaries entered into agreements to acquire a
50% interest in a partnership to develop a beach resort and casino in
Guanacaste, Costa Rica. In March 1997, the Company notified its partner
that it was terminating its participation in that project, as allowed by
and pursuant to the partnership agreements. The Company's decision was
based on the delay that had occurred in the development of the project, in
particular with regard to securing financing for the project. After certain
deadlines expired by which the Company and its partner had anticipated that
financing would be arranged, the Company decided to terminate its
commitment to this project, and make its financial resources available for
other development opportunities. The Company has advanced $563,000 to the
project, which is in part secured by a mortgage on the hotel site. The
Company expects to fully recover this receivable.
In December 1994, Company subsidiaries entered into a partnership through
which it acquired a 50% interest in a building in New York City, with the
intent to develop a hotel. In July 1996, the Company liquidated its
investment, and received a payment of $5,792,000, which consisted of its
cash investment of $5,175,000, and distribution of income of $617,000. The
Company terminated its involvement in this project because it determined
that the lack of available financing and the anticipated cost of the
project did not make it a suitable project for the Company.
(b) Not applicable.
(c) Narrative Description of Business: The Company's business is to a great
extent dependent upon a high level of economic activity.
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The hotel business is highly competitive. The facilities of competitors are
often affiliated with national or regional chains having more room
accommodations and greater financial resources than the Company. The
Company follows the practice of refurnishing and redecorating the hotels
which it operates in order to keep the properties attractive and
competitive with new hotel properties, and this requires the Company to
make substantial capital expenditures. During the two years ended December
31, 1996, the Company made capital expenditures for its hotels totalling
approximately $10,900,000.00.
The Company endeavors to create individual and distinctive features for
each hotel property while utilizing common corporate identification in
order to obtain the benefits of chain operation. The Company is using the
name "Sonesta" for all of its hotels, except Ambassador Club in Hurghada,
Egypt, which is identified by the words: "Managed by Sonesta Hotels".
The Company has approximately 1,523 employees. Approximately 263 of these
employees are covered by a collective bargaining agreement. The Company
considers its relations with its employees to be satisfactory.
While the business of the Company's individual hotels is seasonal, the
diverse locations of the three owned or leased properties tend to mitigate
the impact of this factor. Traditionally, the second and fourth quarters
have produced greater revenues and operating income than the first and
third quarters, although these seasonal fluctuations do not materially
affect the Company's business activities.
The Company's hotels: Royal Sonesta Hotel, Boston (Cambridge), a 400-room
hotel; Royal Sonesta Hotel, New Orleans, a 500-room hotel; and Sonesta
Beach Resort Anguilla, B.W.I., a 90-room beach resort hotel, reported a
combined average daily room rate and average occupancy rate of $136.24 and
75.7%, respectively, for the year ended December 31, 1996. (Sonesta Beach
Resort Anguilla reopened January 18, 1996 after having been closed from
Hurricane Luis on September 5, 1995.)
The Company has established and maintains trademark protection for certain
service marks it uses in conducting its business, including the service
marks "Sonesta", "Sonesta Beach", "Just Us Kids", and the Company's
stylized "S" logo. Trademarks are maintained in numerous countries, besides
the United States. Each mark is generally protected for several years,
subject to periodic renewal.
For revenues by class of service for the three years ended December 31,
1996, reference is made to the Consolidated Statements of Operations and
Retained Earnings which appears on page 6 of the 1996 Annual Report to
Shareholders.
(d) Financial Information about Foreign and Domestic Operations: This
information is incorporated by reference to Note 2 on pages 11 and 12 of
the 1996 Annual Report to Shareholders.
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Additional hotel information with regard to owned and managed hotels is provided
as follows:
Table A This table discloses for owned and leased hotels the number of
guestrooms, the year the hotel was acquired (Anguilla) or built
(Cambridge and New Orleans), total annual revenues and revenues per
available room. Please note that the Boston (Cambridge) hotel was
originally built as a 200-room hotel, and was expanded in 1984. The
Sonesta Beach Resort Anguilla was originally developed in 1991-1992;
it was purchased by the Company in 1995 following severe damage from
Hurricane Luis and was reopened on January 18, 1996.
TABLE A: OWNED AND LEASED HOTELS
<TABLE>
<CAPTION>
TOTAL REVENUES (in thousands)
YEAR NUMBER
HOTEL OPENED OF ROOMS 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Sonesta Beach Resort Anguilla, B.W.I. Owned 1996 90 $ 2,717 $ - $ -
Royal Sonesta Hotel Boston (Cambridge) Owned 1963/1984 400 22,891 20,969 19,765
Royal Sonesta Hotel New Orleans Leased 1969 500 30,802 29,318 28,615
</TABLE>
<TABLE>
<CAPTION>
TOTAL REVENUES PER AVAILABLE
ROOM, PER DAY
HOTEL 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Sonesta Beach Resort Anguilla, B.W.I. Owned 1996 90 $ 87 $ - $ -
Royal Sonesta Hotel Boston (Cambridge) Owned 1963/1984 400 156 144 135
Royal Sonesta Hotel New Orleans Leased 1969 500 168 161 157
</TABLE>
Table B: This table provides for managed properties, by region: number of
hotels, total number of rooms and total revenues.
TABLE B: HOTELS OPERATED UNDER MANAGEMENT AGREEMENTS
<TABLE>
<CAPTION>
NUMBER OF HOTELS / ROOMS TOTAL REVENUES ( in thousands )
1996 1995 1994 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
United States 2 / 535 2 / 535 1 / 292 $ 33,284 $27,850 $20,107
Caribbean 2 / 648 2 / 648 2 / 648 42,925 39,266 42,562
Egypt 8 / 1,041 7 / 969 7 / 969 30,992 26,366 21,594
---------- ---------- ---------- -------- ------- --------
Total 12 / 2,224 11 / 2,152 10 / 1,909 $107,201 $93,482 $84,263
</TABLE>
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It is the Company's policy to treat financial information reported by its
managed hotels as proprietary information, and, therefore, it is not made
public.
The Sonesta Beach Resort Key Biscayne is operated by the Company under a
long-term management agreement. The Company has outstanding notes receivables
from the owner of the hotel related to the sale of the property by the Company
in 1984 and because of advances made by the Company during 1993 and 1994, after
the hotel was severely damaged by Hurricane Andrew. The Company's total
receivable recorded at December 31, 1996 was $12,313,000. Of these receivables,
an amount of $7,306,000 is due on December 31, 1997. The Company and the owner
are currently discussing the repayment of the loans due at December 31, 1997.
The alternative solutions being discussed include repayment of the loans with
new loan proceeds or sale proceeds, acquisition of the resort by the Company, or
an extension of the current loan agreements. The Company's receivables are
subordinate to a first mortgage of $22,431,000. The Company believes that all
amounts due from the hotel will be realized based on its assessment of the value
of the hotel, which in its opinion exceeds the amount of the first mortgage and
the Company's total receivable recorded at December 31, 1997, of $12,313,000.
Management bases this belief on its evaluation of sales of comparable hotel
properties in the recent past, and the cash flow generated by the resort.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
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
(Registrant)
By: /s/ ________________________________ Date: September 15, 1997
Boy van Riel
Vice President and Treasurer
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