FORM 10-Q/A
AMENDMENT No. 1
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, 1998
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 No X (see Form 12b-25 filed June 30, 1997)
----- -----
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 11, 1998 -- $.80 par value,
Class A -- 2,068,215
<PAGE>
EXPLANATORY NOTE
The purpose of this filing is to change a date on the Statement of Operations
table. This is the only material change between this document and the previously
filed Form 10-Q (SEC Accession No. 0001029869-98-000662).
<PAGE>
FORM 10-Q
Part I - Item 1. Financial Information
--------------------------------------
SONESTA INTERNATIONAL HOTELS CORPORATION
CONSOLIDATED BALANCE SHEETS
March 31, 1998 (Unaudited) and December 31, 1997
------------------------------------------------
<TABLE>
<CAPTION>
(in thousands)
-------------------------------------
March 31 December 31
1998 1997
---------------- --------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 493 $ 5,581
Accounts and notes receivables:
Trade, less allowance of $126,000
($118,000 at December 31, 1997) for doubtful accounts 6,575 6,549
Interest receivable 259 400
Other 1,566 1,268
--------- --------
Total accounts and notes receivable 8,400 8,217
Current portion of deferred taxes 307 351
Inventories 805 792
Prepaid expenses 1,154 771
--------- --------
Total current assets 11,159 15,712
Long-term receivables and advances 13,287 14,296
Property and equipment, at cost:
Land and land improvements 3,013 3,010
Buildings 41,067 40,272
Furniture and equipment 22,139 19,879
Leasehold improvements 2,924 2,911
Projects in progress 275 1,436
-------- --------
69,418 67,508
Less accumulated depreciation and
amortization 24,305 23,077
-------- ---------
Net property and equipment 45,113 44,431
Other long-term assets 1,952 1,977
-------- ---------
$ 71,511 $ 76,416
======== =========
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE>
FORM 10-Q
SONESTA INTERNATIONAL HOTELS CORPORATION
CONSOLIDATED BALANCE SHEETS
March 31, 1998 (Unaudited) and December 31, 1997
------------------------------------------------
<TABLE>
<CAPTION>
(in thousands)
-------------------------------------
March 31 December 31
1998 1997
---------------- --------------
<S> <C> <C>
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 640 $ --
Current portion of long-term debt and
capitalized lease obligations 4,001 3,730
Accounts payable 2,367 4,961
Advance deposits 2,346 2,089
Federal, foreign and state income taxes 679 583
Accrued liabilities:
Salaries and wages 1,158 1,808
Rentals 2,098 5,549
Interest 228 215
Employee benefits 1,380 1,408
Other 1,963 1,172
--------- ---------
Total accrued liabilities 6,827 10,152
--------- ---------
Total current liabilities 16,860 21,515
Long-term debt 27,250 27,727
Deferred federal and state income taxes 2,462 2,494
Other non-current liabilities 1,063 937
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 28,220 28,087
Treasury shares--982,873, at cost (8,126) (8,126)
--------- ----------
Total common stockholders' equity 23,582 23,449
--------- ----------
$ 71,511 $ 76,416
========= ==========
</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, 1998 March 31, 1997
---------------- ----------------
<S> <C> <C>
Revenues:
Rooms $ 10,717 $ 9,976
Food and beverage 4,082 3,963
Management, license and
service fees 1,882 1,771
Parking, telephone and other 1,327 1,237
-------- -------
18,008 16,947
-------- -------
Costs and expenses:
Costs and operating expenses 7,074 6,854
Advertising and promotion 1,429 1,456
Administrative and general 3,147 3,160
Human resources 383 395
Maintenance 1,304 1,264
Rentals 2,354 2,341
Property taxes 297 295
Depreciation and amortization 1,228 1,141
-------- --------
17,216 16,906
-------- --------
Operating income 792 41
Other income (deductions):
Interest expense (725) (726)
Interest income 323 228
Foreign exchange loss (1) --
Gain on sales of assets 14 6
-------- ---------
(389) (492)
Income (loss) before income taxes 403 (451)
Federal, foreign and state income tax provision (benefit) 267 (92)
-------- ---------
Net income (loss) 136 (359)
Retained earnings at beginning of period 28,087 27,790
Cash dividends on preferred stock (3) (3)
-------- ---------
Retained earnings at end of period $ 28,220 $ 27,428
======== =========
Basic and diluted earnings (loss) per share of common stock $ .06 $ (.17)
========== =========
Weighted average number of shares
outstanding 2,068 2,068
========== =========
</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
1998 1997
---------------- --------------
<S> <C> <C>
Cash provided (used) by operating activities
Net income (loss) $ 136 $ (359)
Items not (providing) requiring cash
Pension expense 153 189
Depreciation and amortization 1,228 1,141
Amortization of loan costs 22 20
Deferred federal income tax provision (benefit) 12 (38)
Gain on sales of assets (14) (6)
Changes in assets and liabilities
Accounts and notes receivable (301) 966
Inventories (13) 38
Prepaid expenses (383) (279)
Accounts payable (2,284) (3,074)
Advance deposits 257 (587)
Federal, foreign and state income taxes 96 (193)
Accrued liabilities (3,351) (2,967)
------- -------
Cash used by operating activities (4,442) (5,149)
Cash provided (used) by investing activities
Proceeds from sales of assets 14 9
Expenditures for property and equipment (1,907) (2,082)
Cash in escrow -- (1,883)
Cash reimbursed from escrow -- 840
New loans and advances -- (1,106)
Payments received on long-term receivables
and advances 1,126 413
------- -------
Cash used by investing activities (767) (3,809)
Cash provided (used) by financing activities
Changes in notes payable 640 --
Proceeds from issuance of long-term debt -- 24,580
Cost of financing -- (423)
Payments on long-term debt (191) (17,400)
Payments on capitalized lease obligations (15) (13)
Cash dividends paid (313) (313)
------- --------
Cash provided by financing activities 121 6,431
Net decrease in cash (5,088) (2,527)
Cash and cash equivalents at beginning of period 5,581 3,692
------- ------
Cash and cash equivalents at end of period $ 493 $1,165
======= ======
</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 1998 three-month period and the 1997
three-month period was approximately $712,000 and $556,000,
respectively. Cash paid for income taxes in the 1998 three-month period
and the 1997 three-month period was approximately $159,000 and
$139,000, 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, 1998 and December 31, 1997, and
the results of its operations for the three month periods ended March 31, 1998
and 1997 and its cash flows for the three month periods ended March 31, 1998 and
1997, and should be read in conjunction with the 1997 Annual Report.
The results of operations for these periods are not necessarily indicative of
the results for the full years.
During the first quarter of 1998, the Company agreed to terminate the license
agreement it had for the Sonesta Hotel in Santiago, Chile, effective February
28, 1998. In connection with the cancellation, the Company received a
termination fee of $335,000.
The Company operates the Sonesta Beach Resort and Casino Curacao under a long
term management agreement. The owner of the hotel has the right to terminate the
agreement if the hotel does not achieve certain levels of operating income. For
1997, the hotel did not achieve the stipulated level of income. The owner has
notified the Company that it does want to cancel the agreement, and the Company
has decided not to exercise its right under the agreement to cure the deficit
and avoid cancellation. The owner of the hotel is currently looking for a new
operator of the resort. Before a cancellation of the agreement becomes
effective, the Company must receive back from the owner the investment it made
in the hotel in May 1994 of $2,000,000.
The Company manages the Sonesta Beach Resort Key Biscayne under a management
agreement. The Company has made loans to the owner of the hotel, which
aggregated $10,720,000 at March 31, 1998 (see Note 2 - Long-Term Receivables and
Advances). Included in these receivables is a second mortgage loan of
$7,306,000, which matured on December 31, 1997, but was not paid. The owner and
the Company have entered into agreements to effect the transfer of ownership of
the hotel to an entity controlled by the Company in exchange for a release of
the owner's obligations to the Company. As part of this transaction, a
pre-approved bankruptcy plan was filed with the Bankruptcy Court for the
Southern District of Florida in April 1998. The plan provides that the owner of
the hotel and the Company will complete the proposed transaction promptly
following confirmation of the plan.
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
1998 1997
---------------- --------------
<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) 2,414 3,254
---------------- --------------
Total Key Biscayne receivables 10,720 11,560
Sharm El Sheikh (c) 1,000 1,000
Cairo, Egypt, net of discount (d) 595 851
Other 1,380 1,268
---------------- --------------
Total long-term receivables 13,695 14,679
Less: current portion 408 383
---------------- --------------
Net long-term receivables $13,287 $14,296
================ ==============
</TABLE>
(a) The Company's mortgage notes receivable are subordinate to a first mortgage
of $22,431,000 at March 31, 1998. 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. The
Company's total receivable recorded at March 31, 1998 from Sonesta Beach
Resort Key Biscayne was $10,720,000 (see also (b) below). Of these
receivables, an amount of $7,306,000 was due on December 31, 1997. The
Company believes that the value of the hotel exceeds the amount of the
first mortgage and the Company's total receivable recorded at March 31,
1998. 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. (see also Note 1 - Operations).
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, 1998) 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. (see also Note 1 -
Operations).
(c) The Company has agreed to loan $1,500,000 to the owner of the Sonesta Beach
Resort, Sharm El Sheikh, to finance certain improvements to the resort,
including construction of 160 additional guestrooms, conference and other
hotel facilities. The loan bears interest at the prime rate (8 1/2% at
March 31, 1998) with repayment in eight annual installments of $187,500,
together with interest, commencing January 1, 1998. At March 31, 1998, the
Company has advanced $1,000,000, and the remaining $500,000 will be
advanced once the improvements are substantially completed.
(d) The remaining balance of this loan, made in February 1997 to the owner of
the Sonesta Hotel Cairo, will be repaid with one payment of $330,000 on
March 1, 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 1998. Cash payments
received during the same period were $978,000.
3. Borrowing Arrangements
The Company has a $2,000,000 line of credit which expires on September 30, 1998.
This line of credit bears interest at the prime rate (8 1/2% at March 31, 1998).
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. At March 31, 1998, an
amount of $640,000 was outstanding under this line of credit.
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, 2000. 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, 1998) 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, 1998.
4. Long-Term Debt
<TABLE>
<CAPTION>
(in thousands)
-----------------------------------------------
March 31, December 31,
1998 1997
-------------------- --------------------
<S> <C> <C>
Charterhouse of Cambridge Trust and Sonesta of
Massachusetts Inc.:
First mortgage note (a) $22,300 $22,416
Sonesta Hotels of Anguilla, Ltd:
First mortgage note (b) 6,115 6,190
Note from Seller (c) 800 800
Sonesta Curacao Hotel Corporation, N.V.:
Bank term loan (d) 2,000 2,000
-------------------- --------------------
31,215 31,406
Less current portion of long-term debt 3,965 3,679
-------------------- --------------------
Total long-term debt $27,250 $27,727
==================== ====================
</TABLE>
(a) This 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 $24,122,000 at March 31, 1998. The interest
rate on the 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 until January 2000.
(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.
9
<PAGE>
FORM 10-Q
SONESTA INTERNATIONAL HOTELS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The property is included in fixed assets at a book value of $13,696,000 at
March 31, 1998. In addition, an amount of $1,900,000 is secured by a
Company guaranty. The loan requires minimum principal payments of $325,000,
$725,000, $3,965,000 and $1,100,000 in the years 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,
1998 was 7 15/16%.
(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. The Company has reduced this loan by $200,000 to which it is
entitled under the agreements with the Seller, and has further rights to
offset certain receivables from the Seller from this loan.
(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, 1998, 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
Resort & 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
1998 1997
-------------- ------------
<S> <C> <C>
Direct departmental costs
Rooms $2,442 $2,308
Food and beverage 3,305 3,152
Heat, light and power 602 625
Other 725 769
------ ------
$7,074 $6,854
====== ======
</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
1998 1997
-------------- ------------
<S> <C> <C>
Deferred federal income tax provision (benefit) $ 12 $ (38)
Current federal income tax provision (benefit) 64 (124)
Current foreign income tax 135 18
Current state income tax 56 52
-------- --------
$ 267 $ (92)
======== ========
</TABLE>
11
<PAGE>
FORM 10-Q
Part I - Item 2
---------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
FIRST QUARTER 1998 COMPARED TO 1997
- -----------------------------------
REVENUES
- --------
<TABLE>
<CAPTION>
TOTAL REVENUES
(in thousands)
------------------------------------------------------
NO. OF
ROOMS 1998 1997
----- ---- ----
<S> <C> <C> <C>
Sonesta Beach Resort Anguilla, BWI 100 $ 1,704 $ 1,537
Royal Sonesta Hotel Boston (Cambridge) 400 5,013 4,275
Royal Sonesta Hotel New Orleans 500 9,156 9,119
Management and service fees 1,882 1,771
Other revenues 253 245
-------- --------
Total revenues $ 18,008 $ 16,947
======== ========
</TABLE>
Total revenues for the first quarter ended March 31, 1998 were $18,008,000
compared to $16,947,000 in 1997, an increase of approximately $1,061,000.
The Royal Sonesta Hotel Boston (Cambridge) had an increase in revenues of
$738,000 in the first quarter of 1998 compared to 1997 due to a 9% increase in
average room rates, a 3% increase in occupancy levels, and increased food and
beverage revenues. The Company's Sonesta Beach Resort Anguilla had an increase
in revenues of $167,000 in the 1998 quarter compared to the 1997 quarter
primarily due to a 23% increase in average room rates. The Royal Sonesta Hotel
New Orleans had an increase in revenues of $37,000 in the first quarter of 1998
compared to 1997. Revenues from management activities and other sources
increased by $119,000 in 1998 compared to 1997. This is primarily due to a
termination fee of $335,000 the Company received for agreeing to cancel the
license agreement for a hotel in Santiago, Chile, partially offset by lower
income from the Company's managed properties in Egypt.
OPERATING INCOME
- ----------------
<TABLE>
<CAPTION>
OPERATING INCOME
(in thousands)
-----------------------------------------------
<S> <C> <C>
1998 1997
---- ----
Sonesta Beach Resort
Anguilla, BWI $ 79 $(115)
Royal Sonesta Hotel
Boston (Cambridge) (23) (338)
Royal Sonesta Hotel
New Orleans 763 707
----- -----
Operating income from hotels
after management
and service fees 819 254
Management activities and other (27) (213)
----- -----
Operating income $ 792 $ 41
===== =====
</TABLE>
Operating income for the three-month period ending March 31, 1998, was $792,000,
compared to operating income of $41,000 in 1997, an increase of approximately
$751,000.
12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION (CONTINUED)
The Company's Boston (Cambridge) hotel had a decrease in its first quarter
operating loss of $315,000 primarily because of increased revenues of $738,000,
partially offset by increased expenses, primarily cost and operating expenses,
of $423,000. The Company's Anguilla Resort had operating income in the 1998
first quarter of $79,000 compared to an operating loss of $115,000 in 1997, an
increase of $194,000. This was primarily due to increased revenues of $167,000
and a net decrease in expenses, primarily cost and operating expenses, of
$27,000. This decrease is due to the fact that the hotel has leased out one of
its restaurants. The Royal Sonesta New Orleans experienced an increase in
operating income of $56,000 in 1998 compared to 1997 due to a $37,000 increase
in revenues and a net decrease in expenses of $19,000. Operating loss from
management and other activities decreased by $186,000 because of increased
revenues of $119,000 and a net decrease in expenses related to these activities
of $67,000.
OTHER INCOME (DEDUCTIONS)
- -------------------------
Interest income increased by $95,000 in the three month period ending March 31,
1998, compared to the same period last year, primarily due to interest earned on
the Company's loans to the owner of Sonesta Beach Resort Sharm El Sheikh.
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 $1,040,000 is held in escrow by the lender at
March 31, 1998 for certain improvements to the hotel. These escrow funds are
included in Other long-term assets at March 31, 1998.
The Company has a loan of $2,000,000 which is due on June 30, 1998 (see Note 4 -
Long-term debt). The Company plans to repay this loan with a payment of
$2,000,000 it is entitled to from the owner of the Sonesta Beach Resort Curacao,
in case its management agreement is terminated. The Company plans to ask for an
extension of the loan in case the contract termination is not effective on the
maturity date of the loan. (see also Note 1 Operations)
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 1998, 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 of 1998 was higher than the
statutory rate due to state taxes provided on the Company's profits from its
operations in Louisiana, and due to foreign taxes paid on a termination fee of
$335,000 the Company received related to the cancellation of a license agreement
for a hotel in Santiago, Chile.
PART II - Other Information
---------------------------
Item Numbers 1, 2, 3, 4, 5 and 6
- --------------------------------
Not applicable during the quarter ended March 31, 1998.
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: May 14, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 493
<SECURITIES> 0
<RECEIVABLES> 6,701
<ALLOWANCES> 126
<INVENTORY> 805
<CURRENT-ASSETS> 11,159
<PP&E> 69,418
<DEPRECIATION> 24,305
<TOTAL-ASSETS> 71,511
<CURRENT-LIABILITIES> 16,860
<BONDS> 27,250
0
294
<COMMON> 3,488
<OTHER-SE> 20,094
<TOTAL-LIABILITY-AND-EQUITY> 71,511
<SALES> 4,082
<TOTAL-REVENUES> 18,008
<CGS> 934
<TOTAL-COSTS> 7,074
<OTHER-EXPENSES> 10,142
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 725
<INCOME-PRETAX> 403
<INCOME-TAX> 267
<INCOME-CONTINUING> 136
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 136
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
</TABLE>
