-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BhV0iRG1R1lf6EhYm+9BbJOQJOxhVdUOjHa5eXnqZm5IgxtvGwHm3VmpuT4Ov1Qf ITrMhpHGW3Ok9znzptB2Vw== 0000914760-00-000128.txt : 20000516 0000914760-00-000128.hdr.sgml : 20000516 ACCESSION NUMBER: 0000914760-00-000128 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERIHOST PROPERTIES INC CENTRAL INDEX KEY: 0000778423 STANDARD INDUSTRIAL CLASSIFICATION: HOTELS & MOTELS [7011] IRS NUMBER: 363312434 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-15291 FILM NUMBER: 631928 BUSINESS ADDRESS: STREET 1: 2400 E DEVON AVE STE 280 CITY: DES PLAINES STATE: IL ZIP: 60018 BUSINESS PHONE: 7082984500 MAIL ADDRESS: STREET 1: 2400 E DEVON AVE STREET 2: SUITE 280 CITY: DES PLAINES STATE: IL ZIP: 60018 FORMER COMPANY: FORMER CONFORMED NAME: AMERICA POP INC DATE OF NAME CHANGE: 19871111 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [x] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended MARCH 31, 2000 ---------------------- OR [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File No. 0-15291 AMERIHOST PROPERTIES, INC. -------------------------- (Exact name of Registrant as specified in its charter) DELAWARE 36-3312434 -------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2355 S. ARLINGTON HEIGHTS ROAD, SUITE 400, ARLINGTON HEIGHTS, ILLINOIS 60005 - ---------------------------------------------------------------------- ----- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (847) 228-5400 ---------------- Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No As of May 12, 2000, 4,973,573 shares of the Registrant's Common Stock were outstanding. AMERIHOST PROPERTIES, INC. FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 2000 INDEX PART I: Financial Information Page ----------------------------- ---- Consolidated Balance Sheets as of March 31, 2000 and December 31, 1999 4 Consolidated Statements of Operations for the Three Months Ended March 31, 2000 and 1999 6 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2000 and 1999 7 Notes to Consolidated Financial Statements 9 Management's Discussion and Analysis 13 Item 3 - Quantitative and Qualitative Disclosures About Market Risk 18 Schedule of Earnings Before Interest/Rent, Taxes and Depreciation/Amortization for the Three Months Ended March 31, 2000 and 1999 19 PART II: Other Information -------------------------- Item 6 - Exhibits and Reports on Form 8-K 20 Signatures 20 Part I: Financial Information Item 1: Financial Statements AMERIHOST PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED)
March 31, December 31, 2000 1999 --------------- -------------- ASSETS Current assets: Cash and cash equivalents $ 2,957,724 $ 3,766,323 Accounts receivable (including $432,051 and $213,911 from related parties) 3,414,063 2,901,615 Notes receivable, current portion 568,485 568,485 Prepaid expenses and other current assets 343,039 971,836 Refundable income taxes 905,359 56,876 Costs and estimated earnings in excess of billings on uncompleted contracts with related parties 1,104,126 834,820 --------------- -------------- Total current assets 9,292,796 9,099,955 --------------- -------------- Investments in and advances to unconsolidated hotel joint ventures 6,312,179 7,332,806 --------------- -------------- Property and equipment: Land 9,870,897 8,786,189 Buildings 60,529,451 56,670,991 Furniture, fixtures and equipment 19,510,232 17,758,161 Construction in progress 1,538,391 1,062,888 Leasehold improvements 2,046,517 1,990,822 Assets held for sale - 7,967,318 --------------- -------------- 93,495,488 94,236,369 Less accumulated depreciation and amortization 16,163,109 15,466,013 --------------- -------------- 77,332,379 78,770,356 --------------- -------------- Notes receivable, less current portion 669,411 692,662 Deferred income taxes 4,120,000 4,327,000 Other assets, net of accumulated amortization of $805,998 and $1,871,416 2,820,352 2,885,388 --------------- -------------- 7,609,763 7,905,050 $ 100,547,117 $ 103,108,167 =============== ==============
(continued) AMERIHOST PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) =================================================================================================================
March 31, December 31, 2000 1999 --------------- -------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 2,663,434 $ 2,623,390 Bank line-of-credit 7,586,742 7,560,214 Accrued payroll and related expenses 381,820 777,725 Accrued real estate and other taxes 2,081,958 2,260,048 Other accrued expenses and current liabilities 1,379,280 1,127,504 Current portion of long-term debt 1,556,821 1,567,643 --------------- -------------- Total current liabilities 15,650,055 15,916,524 --------------- -------------- Long-term debt, net of current portion 57,669,985 58,781,609 --------------- -------------- Deferred income 13,732,835 14,001,231 --------------- -------------- Commitments Minority interests 204,074 228,235 Shareholders' equity: Preferred stock, no par value; authorized 100,000 shares; none issued - - Common stock, $.005 par value; authorized 25,000,000 shares; issued and outstanding 4,973,548 shares at March 31, 2000 and 4,968,673 shares at December 31, 1999 24,868 24,843 Additional paid-in capital 13,063,724 13,050,069 Retained earnings 638,451 1,542,531 --------------- -------------- 13,727,043 14,617,443 Less: Stock subscriptions receivable (436,875) (436,875) --------------- -------------- 13,290,168 14,180,568 $ 100,547,117 $ 103,108,167 =============== ============== See notes to consolidated financial statements.
AMERIHOST PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, (UNAUDITED)
2000 1999 --------------------- ------------- Revenue: Hotel operations: AmeriHost Inn(R)hotels $ 10,411,503 $ 10,008,296 Other hotels 2,472,789 2,435,095 Development and construction 1,096,518 370,745 Management services 289,843 314,656 Employee leasing 1,428,871 1,590,155 Franchising 167,525 - --------------- -------------- 15,867,049 14,718,947 --------------- -------------- Operating costs and expenses: Hotel operations: AmeriHost Inn(R)hotels 8,183,697 8,123,201 Other hotels 2,363,946 2,379,939 Development and construction 914,731 403,551 Management services 219,803 284,821 Employee leasing 1,396,980 1,520,093 Franchising 237,554 87,381 --------------- -------------- 13,316,711 12,798,986 --------------- -------------- 2,550,338 1,919,961 Depreciation and amortization 1,103,824 1,154,519 Leasehold rents - hotels 1,698,362 1,768,275 Corporate general and administrative 398,953 382,535 --------------- -------------- Operating loss (650,801) (1,385,368) Other income (expense): Interest expense (1,499,716) (1,553,587) Interest income 231,757 233,803 Other income 100,861 15,795 Equity in net income and losses of affiliates 68,751 (165,215) Gain on sale of assets 171,579 - --------------- -------------- Loss before minority interests and income taxes (1,577,569) (2,854,572) Minority interests in operations of consolidated subsidiaries and partnerships 18,489 (38,419) --------------- -------------- Loss before income tax (1,559,080) (2,892,991) Income tax benefit 655,000 1,128,000 --------------- -------------- Net loss $ (904,080) $ (1,764,991) ================ =============== Loss per share: Basic $ (0.18) $ (0.29) ================ =============== Diluted $ (0.18) $ (0.29) ================ =============== See notes to consolidated financial statements.
AMERIHOST PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, (UNAUDITED)
2000 1999 ------------------- ----------------- Cash flows from operating activities: Cash received from customers $ 15,350,850 $ 15,633,372 Cash paid to suppliers and employees (15,495,191) (17,275,643) Interest received 311,295 203,737 Interest paid (1,576,971) (1,587,677) Income taxes received (paid) 13,517 (51,932) --------------- -------------- Net cash used in operating activities (1,396,500) (3,078,143) ---------------- --------------- Cash flows from investing activities: Distributions, and collections on advances, from affiliates 1,768,667 335,379 Purchase of property and equipment (1,743,365) (3,772,438) Purchase of investments in, and advances to, minority owned affiliates (683,895) (592,500) Acquisitions of partnership interests, net of cash acquired - 85,314 Collections on notes receivable 23,251 16,385 Proceeds from sale of assets 2,311,344 12,816,969 --------------- -------------- Net cash provided by investing activities 1,676,002 8,889,109 --------------- -------------- Cash flows from financing activities: Proceeds from issuance of long-term debt 800,000 5,087,386 Principal payments on long-term debt (1,922,636) (9,018,277) Net (repayments of) proceeds from line of credit 26,528 (1,961,213) Decrease in minority interest (5,672) (5,672) Common stock repurchases - (79,650) Other 13,679 - --------------- -------------- Net cash used in financing activities (1,088,101) (5,977,426) --------------- -------------- Net decrease in cash (808,599) (166,460) Cash and cash equivalents, beginning of year 3,766,323 4,493,834 --------------- -------------- Cash and cash equivalents, end of period $ 2,957,724 $ 4,327,374 =============== ==============
(continued) AMERIHOST PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, (UNAUDITED) =============================================================================================================
2000 1999 ---------------------- ------------- Reconciliation of net loss to net cash used in operating activities: Net loss $ (904,080) $ (1,764,991) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 1,103,824 1,154,519 Equity in net (income) loss of affiliates and amortization of deferred income (68,751) 165,215 Minority interests in net income of subsidiaries (18,489) 38,419 Amortization of deferred interest and loan discount - 11,348 Amortization of deferred gain (380,070) (321,027) Deferred income taxes 207,000 (844,000) Gain on sale of fixed assets (171,579) - Changes in assets and liabilities, net of effects of acquisition: (Increase) decrease in accounts receivable (591,450) 623,581 Decrease (increase) in prepaid expenses and other current assets 707,799 (77,501) Increase in refundable income taxes (848,483) (335,932) (Increase) decrease in costs and estimated earnings in excess of billings (269,306) 304,552 Decrease (increase) in other assets 2,796 (343,346) Increase (decrease) in accounts payable 40,045 (1,586,806) Decrease in accrued payroll and other accrued expenses and current liabilities (244,781) (27,233) Decrease in accrued interest (78,663) (45,438) Increase (decrease) in deferred income 117,688 (29,503) --------------- -------------- Net cash used in operating activities $ (1,396,500) $ (3,078,143) ================ =============== See notes to consolidated financial statements.
AMERIHOST PROPERTIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2000 1. BASIS OF PREPARATION: --------------------- The financial statements included herein have been prepared by the Company, without audit. In the opinion of the Company, the accompanying unaudited financial statements contain all adjustments, which consist only of recurring adjustments necessary to present fairly the financial position of Amerihost Properties, Inc. and subsidiaries as of March 31, 2000 and December 31, 1999 and the results of its operations and cash flows for the three months ended March 31, 2000 and 1999. The results of operations for the three months ended March 31, 2000 are not necessarily indicative of the results to be expected for the full year. It is suggested that the accompanying financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's 1999 Annual Report on Form 10-K. Certain reclassifications have been made to the 1999 financial statements in order to conform with the 2000 presentation. 2. PRINCIPLES OF CONSOLIDATION: ---------------------------- The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries, and entities in which the Company has a majority ownership interest. Significant intercompany accounts and transactions have been eliminated. 3. EARNINGS (LOSS) PER SHARE: -------------------------- The Company calculates earnings per share in accordance with Financial Accounting Standards Board ("FASB") Statement No. 128, "Earnings Per Share" (FAS 128). Basic earnings per share ("EPS") is calculated by dividing the income (loss) available to common shareholders by the weighted average number of common shares outstanding for the period, without consideration for common stock equivalents. The Company excluded stock options which had an anti-dilution effect on the EPS computations. Diluted EPS gives effect to all dilutive potential common shares outstanding for the period. The following are the calculations of basic and diluted earnings per share: Three Months Ended March 31, ------------------------------- 2000 1999 ------------ --------------- Net loss $ (904,080) $ (1,764,991) Impact of convertible partnership interests (33,897) (34,215) ---------------- ---------------- $ (937,977) $ (1,799,206) ================ ================ Weighted average common shares outstanding 4,972,304 6,077,725 Dilutive effect of convertible partnership interests and common stock equivalents 249,350 249,350 --------------- --------------- Dilutive common shares outstanding 5,221,654 6,327,075 =============== =============== Basic net loss per share $ (0.18) $ (0.29) ============== =============== Diluted net loss per share $ (0.18) $ (0.29) ============== ===============
AMERIHOST PROPERTIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2000 4. INCOME TAXES: ------------- Deferred income taxes are provided on the differences in the bases of the Company's assets and liabilities determined for tax and financial reporting purposes and relate principally to depreciation of property and equipment and deferred income. The income tax expense (benefit) for the three months ended March 31, 2000 and 1999 was based on the Company's estimate of the effective tax rate expected to be applicable for the full year. The Company expects the effective tax rate to approximate the Federal and state statutory rates. 5. HOTEL LEASES: ------------- The Company leases 34 hotels as of March 31, 2000 (including 30 sale/leaseback hotels - Note 8), the operations of which are included in the Company's consolidated financial statements. All of these leases are triple net and provide for monthly base rent payments ranging from $14,000 to $26,667. The Company leases or subleases two of these hotels from partnerships in which the Company owns equity interests of up to 16.33%. These two leases also provide for additional rent payments ranging from approximately $37,000 to $74,000 per annum, plus percentage rents equal to 10% of room revenues in excess of stipulated amounts. The leases and sub-leases expire through March 23, 2009, except for the two leases from partnerships in which the Company owns an equity interest which expired December 31, 1999. The Company is continuing to operate these hotels under the same terms as provided in the original lease. The four leases, other than the sale/leaseback hotels, provide for an option to purchase the hotel. Some of the purchase prices are based upon a multiple of gross room revenues for the preceding twelve months with a specified maximum, and the others are based on a fixed amount. At March 31, 2000, the aggregate purchase price for these leased hotels was approximately $14,030,000. 6. LIMITED PARTNERSHIP GUARANTEED DISTRIBUTIONS: --------------------------------------------- The Company is a general partner in three partnerships where the Company has guaranteed minimum annual distributions to the limited partners in the amount of 10% of their original capital contributions. 7. INVESTMENTS: ------------ Effective January 1, 1999, the Company acquired the remaining ownership interest in one hotel joint venture. The following is a summary of this acquisition: Fair value of assets acquired $ 1,916,070 Cash paid, net of cash acquired (260,648) -------------- Liabilities assumed $ 1,655,422 ============= AMERIHOST PROPERTIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2000 8. SALE/LEASEBACK OF HOTELS: ------------------------- On June 30, 1998, the Company completed the sale of 26 AmeriHost Inn(R) hotels to a Real Estate Investment Trust ("REIT") for $62.2 million. The company completed the sale of four additional AmeriHost Inn(R) hotels to the same REIT during March 1999 for $10.8 million. Upon the sales to the REIT, the Company entered into agreements to lease back the hotels for an initial term of ten years, with two five year renewal options. The lease payments are fixed at 10% of the sale price for the first three years. Thereafter, the lease payments are subject to a CPI increase with a 2% annual maximum. The Company has deferred the gain on the sale of these hotels pursuant to sale/leaseback accounting. This deferral will be recognized over the initial term of the lease as a reduction of leasehold rent expense. 9. BUSINESS SEGMENTS: ------------------ The Company's business is primarily involved in five segments: (1) hotel operations, consisting of the operations of all hotels in which the Company has a 100% or majority ownership or leasehold interest, (2) hotel development, consisting of development, construction and renovation activities, (3) hotel management, consisting of hotel management activities and (4) employee leasing, consisting of the leasing of employees to various hotels, and (5) AmeriHost Inn(R) hotel franchising. Results of operations of the Company's business segments are reported in the consolidated statements of operations. The following represents revenues, operating costs and expenses, operating income, identifiable assets, capital expenditures and depreciation and amortization for the three months ended March 31, 2000 and 1999, for each business segment, which is the information utilized by the Company's decision makers in managing the business: Revenues 2000 1999 -------- ---------------- -------------- Hotel operations $ 12,884,292 $ 12,443,391 Hotel development 1,096,518 370,745 Hotel management 289,843 314,656 Employee leasing 1,428,871 1,590,155 Hotel franchising 167,525 - ------------- ------------- $ 15,867,049 $ 14,718,947 ============= ============= Operating costs and expenses Hotel operations $ 10,547,643 $ 10,503,140 Hotel development 914,731 403,551 Hotel management 219,803 284,821 Employee leasing 1,396,980 1,520,093 Hotel franchising 237,554 87,381 ------------- ------------- $ 13,316,711 $ 12,798,986 ============= ============= AMERIHOST PROPERTIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2000 9. BUSINESS SEGMENTS (CONTINUED): ------------------------------ Operating loss 2000 1999 -------------- -------------- -------------- Hotel operations $ (443,900) $ (955,263) Hotel development 177,030 (39,345) Hotel management 58,201 18,795 Employee leasing 31,312 69,162 Hotel franchising (71,496) (87,381) Corporate (401,948) (391,336) -------------- -------------- $ (650,801) $ (1,385,368) ============== ============== Identifiable assets ------------------- Hotel operations $ 91,288,124 $ 94,606,864 Hotel development 1,813,014 1,272,184 Hotel management 246,834 674,489 Employee leasing 481,529 494,806 Hotel franchising 68,517 164,485 Corporate 6,649,099 5,895,339 ------------- ------------- $ 100,547,117 $ 103,108,167 ============= ============= Capital expenditures -------------------- Hotel operations $ 1,592,157 $ 3,740,065 Hotel development 5,018 - Hotel management 21,261 24,329 Employee leasing - - Hotel franchising 18,732 - Corporate 106,197 8,044 ------------- ------------- $ 1,743,365 $ 3,772,438 ============= ============= Depreciation/Amortization ------------------------- Hotel operations $ 1,082,186 $ 1,127,238 Hotel development 4,757 6,539 Hotel management 11,840 11,040 Employee leasing 579 900 Hotel franchising 1,467 - Corporate 2,995 8,802 ------------- ------------- $ 1,103,824 $ 1,154,519 ============= ============= ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS ------------------------------------------------------------------------ OF OPERATIONS - ------------- GENERAL The Company is engaged in the development of AmeriHost Inn(R) hotels, its proprietary brand, and the ownership, operation and management of AmeriHost Inn(R) hotels and other mid-price hotels. As of March 31, 2000, there were 77 AmeriHost Inn(R) hotels open, of which 60 were wholly-owned or leased, one was majority-owned, 11 were minority-owned, and five were owned and operated by franchisees. A total of six AmeriHost Inn(R) hotels were opened during the past fifteen months. The Company intends to use the AmeriHost Inn(R) brand when expanding its hotel operations segment. As of March 31, 2000, one wholly-owned AmeriHost Inn(R) hotel and four minority-owned AmeriHost Inn(R) hotels were under construction. Same room revenues for all AmeriHost Inn(R) hotels (including minority owned and franchised) increased approximately 7.6% during the first quarter of 2000, compared to the first quarter of 1999, attributable to an increase of $0.95 in average daily rate, and a 4.6% increase in occupancy. These results relate to the 73 AmeriHost Inn(R) hotels that were operating for at least thirteen full months during the three months ended March 31, 2000. Revenues from hotel operations consist of the revenues from all hotels in which the Company has a 100% or majority ownership or leasehold interest ("Consolidated" hotels). Investments in other entities in which the Company has a minority ownership interest are accounted for using the equity method. Development and construction revenues consist of one-time fees for new construction and renovation activities performed by the Company for minority-owned hotels and unrelated third parties. The Company also receives revenue from management and employee leasing services provided to minority-owned hotels and unrelated third parties. Revenues from Consolidated AmeriHost Inn(R) hotels increased 4.0% to $10.4 million during the first quarter of 2000, from revenues of $10.0 million during the first quarter of 1999, due primarily to a strong increase in same room revenues, offset by the sale of hotels to franchisees. Revenues from the hotel management and employee leasing segments decreased by 9.8% in total during the first quarter of 2000, due primarily to the sale of hotels under management contracts. Revenues from Consolidated non-AmeriHost Inn(R) hotels increased 1.6% during the first quarter of 2000, compared to 1999, as a result of the renovation of one Consolidated non-AmeriHost Inn(R) hotel and the increased occupancy therefrom, offset by the sale of two non-AmeriHost Inn(R) hotels. Total revenues increased 7.8% to $15.9 million during the first quarter of 2000, from $14.7 million during the first quarter of 1999. The Company recorded a net loss of $904,080 for the first quarter of 2000, or ($0.18) per diluted share, compared to a net loss of $1.8 million, or ($0.29) per diluted share in 1999. In 1999, the Company began to franchise the AmeriHost Inn(R) brand name. Currently, the Company is qualified to sell AmeriHost Inn(R) franchises in all states, Canada and Mexico. To date, the Company has entered into 18 AmeriHost Inn(R) franchise agreements. However, the Company does not anticipate the franchising activity to have a significant impact on the operations of the Company in 2000, and there can be no assurance that the Company will be successful in selling AmeriHost Inn(R) franchises in the future. The results for the first three months of 2000 were consistent with the Company's primary objective of increasing the number of franchised AmeriHost Inn(R) hotels, including the sale of two AmeriHost Inn(R) hotels owned by the Company to franchisees. The Company uses EBITDAR as a supplemental performance measure, along with net income, to report its operating results. EBITDAR is defined as net income before extraordinary items, adjusted to eliminate the impact of (i) interest expense; (ii) interest and other income; (iii) leasehold rents for hotels, which the Company considers to be financing costs similar to interest; (iv) income tax expense (benefit), (v) depreciation and amortization; and (vi) gains or losses from property transactions. EBITDAR should not be considered as an alternative to operating income (as determined in accordance with Generally Accepted Accounting Principles, "GAAP") as an indicator of the Company's operating performance or to cash flows from operating activities (as determined in accordance with GAAP) as a measure of liquidity. EBITDAR, as defined by the Company, is included herein due to numerous requests by investors and analysts. Management believes that investors and analysts find it to be a useful tool for measuring the Company's ability to service debt. EBITDAR increased 67.8% to $2.2 million during the three months ended March 31, 2000, from $1.3 million during the three months ended March 31, 1999. An EBITDAR schedule is included herein. Amerihost had an ownership interest in 82 hotels at March 31, 2000 versus 89 hotels at March 31, 1999 (excluding hotels under construction). The increased ownership from the development of AmeriHost Inn(R) hotels for the Company's own account and for minority-owned entities was offset by the sale of AmeriHost Inn(R) hotels to franchisees and non-AmeriHost Inn(R) hotels to unrelated third parties. These figures include a net decrease of five Consolidated hotels, from 73 at March 31, 1999 to 68 at March 31, 2000. RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THE THREE MONTHS ENDED MARCH 31, 1999 Revenues increased 7.8% to $15.9 million during the three months ended March 31, 2000, from $14.7 million during the three months ended March 31, 1999. Revenues increased from Consolidated AmeriHost Inn(R) hotels, non-AmeriHost Inn(R) hotels, hotel development, and hotel franchising, partially offset by decreases from the hotel management and employee leasing segments. Hotel operations revenue increased 3.5% to $12.9 million during the three months ended March 31, 2000, from $12.4 million during the three months ended March 31, 1999. Revenues from Consolidated AmeriHost Inn(R) hotels increased 4.0% to $10.4 million during the three months ended March 31, 2000, from $10.0 million during the three months ended March 31, 1999. These increases were attributable primarily to the addition of four newly constructed Consolidated AmeriHost Inn(R) hotels during the first quarter of 1999, partially offset by the sale of three Consolidated AmeriHost Inn(R) hotels to franchisees during the remainder of 1999 and the first quarter of 2000. In addition, same room revenues for the Consolidated AmeriHost Inn(R) hotels increased 6.6%. Revenue from Consolidated other brand hotels increased 1.6% during the three month period, due to a same room revenue increase of 17.3% which is attributable to the complete renovation of one hotel which significantly increased its occupancy, partially offset by the sale of two non-AmeriHost Inn(R) hotels during the second half of 1999. The hotel operations segment included the operations of 68 Consolidated hotels (including 61 AmeriHost Inn(R) hotels) comprising 4,807 rooms at March 31, 2000, compared to 73 Consolidated hotels (including 64 AmeriHost Inn(R) hotels) comprising 5,160 rooms at March 31, 1999. After considering the Company's ownership interest in the majority-owned Consolidated hotels, this translates to 4,564 and 4,891 equivalent owned rooms as of March 31, 2000 and 1999, respectively, or a decrease of 6.7%. Recently, the Company has experienced an increase in competition in certain markets, primarily from newly constructed hotels. As a result, there is increased downward pressure on occupancy levels and average daily rates. The Company believes that as the number of AmeriHost Inn(R) hotels increases, the greater the benefits will be at all locations from marketplace recognition and repeat business. In addition, the Company typically builds new hotels in growing markets where it anticipates a certain level of additional hotel development. Hotel development revenue increased 195.8% to $1.1 million during the three months ended March 31, 2000, from $370,745 during the three months ended March 31, 1999. Hotel development revenues are directly related to the number of hotels being developed and constructed for minority-owned entities or unrelated third parties. The Company was constructing four hotels for minority-owned entities during the first quarter of 2000, compared to one hotel during the three months ended March 31, 1999. The Company also had several additional projects in various stages of pre-construction development during both three month periods. Hotel management revenue decreased 7.9% to $289,843 during the three months ended March 31, 2000, from $314,656 during the three months ended March 31, 1999. The number of hotels managed for third parties and minority-owned entities decreased from 20 hotels, representing 1,817 rooms, at March 31, 1999 to 17 hotels, representing 1,635 rooms, at March 31, 2000. The decrease was the result of the termination of two management contracts (121 rooms) with minority-owned entities as a result of the sale of the hotels (one non-AmeriHost Inn(R) hotel and one AmeriHost Inn(R) hotel which was sold to a franchisee), and the termination of one management contract for a hotel with an unrelated third party (61 rooms). Employee leasing revenue decreased 10.1% to $1.4 million during the three months ended March 31, 2000, from $1.6 million during the three months ended March 31, 1999, due primarily to the reduction in hotels managed for minority-owned entities and unrelated third parties as described above, and the associated decrease in payroll costs which is the basis for the employee leasing revenue. Total operating costs and expenses increased 4.0% to $13.3 million during the three months ended March 31, 2000, from $12.8 million during the three months ended March 31, 1999, or 83.9% and 87.0% of total revenues during the three months ended March 31, 2000 and 1999, respectively. Operating costs and expenses in the hotel operations segment remained constant at $10.5 million during the three months ended March 31, 2000 and 1999. A decrease in operating costs associated with the fewer number of hotels included in this segment (68 hotels and March 31, 2000 versus 73 hotels at March 31, 1999), as well as a significant amount of pre-opening start-up expenses incurred during the first quarter of 1999 which were not present in the first quarter of 2000, was offset by the inflationary increases in operating expenses and the greater number of stabilized hotels. Consequently, hotel operational efficiency improved as total operating costs and expenses as a percentage of segment revenue decreased to 81.9% during the three months ended March 31, 2000, from 84.4% during the three months ended March 31, 1999. Operating costs and expenses as a percentage of revenues from the Consolidated AmeriHost Inn(R) hotels decreased to 78.6% during the three months ended March 31, 2000, from 81.2% during the three months ended March 31, 1999. Operating costs and expenses for the hotel development segment increased 126.7% to $914,731 during the three months ended March 31, 2000, from $403,551 during the three months ended March 31, 1999, consistent with the 195.8% increase in hotel development revenues for the three months ended March 31, 2000. Operating costs and expenses in the hotel development segment as a percentage of segment revenue decreased during the three months ended March 31, 2000 due primarily to the overall increase in the level of hotel development and construction activity performed for minority-owned entities, as well as the relatively higher level of pre-construction development activity performed in 2000 compared to 1999. Construction activity has significantly higher operating costs compared to the pre-construction development activity. Hotel management segment operating costs and expenses decreased 22.8% to $219,803 during the three months ended March 31, 2000, from $284,821 during the three months ended March 31, 1999. This decrease was due to the decrease in the number of hotels managed for minority-owned hotels and unaffiliated third parties. Employee leasing operating costs and expenses decreased 8.1% to $1.4 million during the three months ended March 31, 2000, from $1.5 million during the three months ended March 31, 1999, which is consistent with the 10.1% decrease in segment revenue for the three months ended March 31, 2000. Depreciation and amortization expense decreased 4.4% to $1.1 million during the three months ended March 31, 2000, from $1.2 million during the three months ended March 31, 1999. The decrease was primarily attributable to the decrease in Consolidated hotels and the completion of the sale and leaseback of four hotels in March 1999. The Company does not recognize any depreciation on the assets sold in the sale/leaseback transaction. Leasehold rents - hotels decreased 4.0% to $1.7 million during the three months ended March 31, 2000, from $1.8 million during the three months ended March 31, 1999. This decrease was due primarily to the sale of two larger non-AmeriHost Inn(R) hotels during the second half of 1999, partially offset by the sale and leaseback of four AmeriHost Inn(R) hotels in March 1999. Corporate general and administrative expense increased 4.3% to $398,953 during the three months ended March 31, 2000, from $382,535 during the three months ended March 31, 1999, which can be attributed primarily to the overall growth of the Company. The Company's operating loss decreased 53.0% to ($650,801) during the three months ended March 31, 2000, from ($1.4) million during the three months ended March 31, 1999. The following discussion of operating income (loss) by segment is exclusive of any corporate general and administrative expense. Operating loss from Consolidated AmeriHost Inn(R) hotels decreased 79.7% to ($74,168) during the three months ended March 31, 2000, from ($365,537) during the three months ended March 31, 1999. This decrease in operating loss was due to the increase in same room revenues as well as a significant number of Consolidated AmeriHost Inn(R) hotels operating closer to full stabilization in the first quarter of 2000 as compared to the first quarter of 1999. Operating income from the hotel development segment increased to operating income of $177,030 during the three months ended March 31, 2000, from an operating loss of ($39,345) during the three months ended March 31, 1999. The fluctuation in hotel development operating income was due to the timing of hotels developed and constructed for third parties and minority-owned entities during the first quarter of 2000, compared with the first quarter of 1999, and the overall increase in the number of hotels developed and constructed for minority-owned entities. The hotel management segment operating income increased 209.7% to $58,200 during the three months ended March 31, 2000, from $18,795 during the three months ended March 31, 1999. This increase was due primarily to operational efficiencies. Employee leasing operating income decreased 54.7% to $31,312 during the three months ended March 31, 2000, from $69,162 during the three months ended March 31, 1999, due to the decrease in employee leasing agreements with minority-owned entities and unrelated third parties. Interest expense decreased 3.5% to $1.5 million during the three months ended March 31, 2000, from $1.6 million during the three months ended March 31, 1999. The decrease was attributable to the decrease in Consolidated hotels with mortgage financing, including the sale and leaseback of four hotels in the first quarter of 1999, whereby the Company did not recognize any interest expense on the sold hotels after the sale date. The Company's share of equity in income (loss) of affiliates increased to $68,751 during the three months ended March 31, 2000, from ($165,215) during the three months ended March 31, 1999. The fluctuation in equity of affiliates during the three months ended March 31, 2000, compared to the three months ended March 31, 1999, was primarily due to the sale of a minority owned hotel at a significant gain during the first quarter of 2000. Distributions from affiliates were $262,232 during the three months ended March 31, 2000, compared to $37,229 during the three months ended March 31, 1999. LIQUIDITY AND CAPITAL RESOURCES The Company has five main sources of cash from operating activities: (i) revenues from hotel operations; (ii) fees from development, construction and renovation projects, including proceeds from the sale of assets held for sale; (iii) fees from management contracts; (iv) fees from employee leasing services; and (v) fees from franchise agreements. Cash from hotel operations is typically received at the time the guest checks out of the hotel. Approximately 10% of the Company's hotel operations revenues is generated through other businesses and contracts and is usually paid within 30 to 45 days from billing. Fees from development, construction and renovation projects are typically received within 15 to 45 days from billing. Due to the procedures in place for processing its construction draws, the Company typically does not pay its contractors until the Company receives its draw from the equity or lending source. Management fee revenues typically are received by the Company within five working days from the end of each month. Cash from the Company's employee leasing segment typically is received 24 to 48 hours prior to the pay date. Franchise fees are typically received within ten days from the end of each month. During the first three months of 2000, the Company used cash for operations of $1.4 million, compared to using $3.1 million during the first three months of 1999, or a decrease in cash used by operations of $1.7 million. The increase in cash flow from operations during the first three months of 2000, when compared to 1999, can be attributed to the increasing number of hotels operating closer to stabilization in 2000 and the increase in same room revenues. In addition, during the first quarter of 2000, the Company had significantly less development and construction activity on hotels which were being built for the Company's own account. The Company invests cash in four principal areas: (i) the purchase of property and equipment through the construction and renovation of Consolidated hotels; (ii) the purchase of equity interests in hotels; and (iii) the making of loans to affiliated and non-affiliated hotels for the purpose of construction, renovation and working capital; and (iv) the purchase of property and equipment held for sale. During the first three months of 2000, the Company received $1.7 million from investing activities compared to $8.9 million during the first three months of 1999. During the first three months of 2000, the Company received $2.3 million from the sale of one hotel, used $1.7 million to purchase property and equipment for Consolidated AmeriHost Inn(R) hotels, and received $1.1 million in distributions and collections on advances from affiliates, net of investments in and advances to affiliates. During the first three months of 1999, the Company received $12.8 million from the sale of five hotels, used $3.8 million to purchase property and equipment for Consolidated AmeriHost Inn(R) hotels, and used $257,121 for investments in and advances to affiliates, net of distributions and collections. Cash used in financing activities was $1.1 million during the first three months of 2000 compared to $6.0 million during the first three months of 1999. In 2000, the primary factors were principal repayments of $1.9 million, including the repayment of a mortgage in connection with the sale of a hotel, offset by $800,000 in proceeds from the mortgage financing of Consolidated hotels. In 1999, the contributing factors were principal repayments of $9.0 million, including the repayment of mortgages in connection with the sale of hotels, offset by $5.1 million in proceeds from the mortgage financing of Consolidated hotels, and net repayments of $2.0 million on the Company's operating line-of-credit. At March 31, 2000, the Company had $7.6 million outstanding under its operating line-of-credit. The operating line-of-credit (i) has a limit of $8.5 million (ii) is collateralized by a security interest in certain of the Company's assets, including its interest in various joint ventures; (iii) bears interest at an annual rate equal to the lending bank's base rate plus 1/2% (with a minimum interest rate of 7.5%); and (iv) matures May 15, 2000. The lender has indicated the line-of-credit will be extended for an additional one year period. The Company expects cash from operations to be sufficient to pay all operating and interest expenses in 2000. YEAR 2000 The following disclosure is a Year 2000 readiness disclosure statement pursuant to the Year 2000 Readiness Disclosure Act. In order to minimize or eliminate the effect of the Year 2000 risk on our business systems and applications, we identified, evaluated, implemented and tested changes to our computer systems, applications and software necessary to achieve Year 2000 compliance. Our computer systems and equipment successfully transitioned to the Year 2000 with no significant issues. Costs incurred to achieve Year 2000 compliance were not material. We continue to keep our Year 2000 project management in place to monitor latent problems that could surface at key dates or events in the future. We do not anticipate any significant problems related to these events. SEASONALITY The lodging industry, in general, is seasonal by nature. The Company's hotel revenues are generally greater in the second and third calendar quarters than in the first and fourth quarters due to weather conditions in the markets in which the Company's hotels are located, as well as general business and leisure travel trends. This seasonality can be expected to continue to cause quarterly fluctuations in the Company's revenues, and is expected to have a greater impact as the number of Consolidated hotels increases. Quarterly earnings may also be adversely affected by events beyond the Company's control, such as extreme weather conditions, economic factors and other general factors affecting travel. In addition, hotel construction is seasonal, depending upon the geographic location of the construction projects. Construction activity in the Midwest may be slower in the first and fourth calendar quarters due to weather conditions. INFLATION Management does not believe that inflation has had, or is expected to have, any significant adverse impact on the Company's financial condition or results of operations for the periods presented. PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 All statements contained herein that are not historical facts, including, but not limited to, statements regarding the Company's hotels under construction and the operation of AmeriHost Inn(R) hotels are based on current expectations. These statements are forward looking in nature and involve a number of risks and uncertainties. Actual results may differ materially. Among the factors that could cause actual results to differ materially are the following: the availability of sufficient capital to finance the Company's business plan on terms satisfactory to the Company; competitive factors, such as the introduction of new hotels or renovation of existing hotels in the same markets; changes in travel patterns which could affect demand for the Company's hotels; changes in development and operating costs, including labor, construction, land, equipment, and capital costs; general business and economic conditions; and other risk factors described from time to time in the Company's reports filed with the Securities and Exchange Commission. The Company wishes to caution readers not to place undue reliance on any such forward looking statements, which statements are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK - ------- The Company's exposure to market risk for changes in interest rates relates primarily to the Company's long-term debt obligations. The Company has some cash flow exposure on its long-term debt obligations to changes in market interest rates. The Company primarily enters into long-term debt obligations in connection with the development and financing of hotels. The Company maintains a mix of fixed and floating debt to mitigate its exposure to interest rate fluctuations. The Company's management believes that fluctuations in interest rates in the near term would not materially affect the Company's consolidated operating results, financial position or cash flows as the Company has limited risks related to interest rate fluctuations. AMERIHOST PROPERTIES, INC. AND SUBSIDIARIES SCHEDULE OF EARNINGS BEFORE INTEREST/RENT, TAXES AND DEPRECIATION/AMORTIZATION (UNAUDITED)
Three Months Ended March 31, ---------------- 2000 1999 ------------- ----- Revenue $ 15,867,049 $ 14,718,947 Operating costs and expenses 13,316,711 12,798,986 --------------- -------------- 2,550,338 1,919,961 Corporate general and administrative (398,953) (382,535) Equity in net income and losses of affiliates 68,751 (165,215) --------------- -------------- Earnings before minority interests 2,220,136 1,372,211 Minority interests in earnings of consolidated subsidiaries and partnerships 18,489 (38,419) --------------- -------------- Earnings before interest/rent, taxes and depreciation/amortization $ 2,238,625 $ 1,333,792 =============== ==============
PART II: Other Information Item 6. Exhibits and Reports on Form 8-K: - ------- (a) Exhibits: Exhibit No. ----------- 27.0 Financial Data Schedule (b) Reports on Form 8-K: There were no reports on Form 8-K filed during this period covered by this report. Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AMERIHOST PROPERTIES, INC. -------------------------- Registrant Date: May 11, 2000 By: /s/ James B. Dale ---------------------- James B. Dale Treasurer/Senior Vice President, Finance By: /s/ Michael E. Kirk ------------------------ Michael E. Kirk Corporate Controller EX-27 2
5 3-MOS 3-MOS DEC-31-2000 DEC-31-1999 MAR-31-2000 MAR-31-1999 2,957,724 4,327,374 0 0 5,086,674 2,953,095 0 0 0 0 9,292,796 9,827,775 93,495,488 99,480,621 16,163,109 14,552,162 100,547,117 109,711,582 15,650,055 13,934,136 0 0 0 0 0 0 24,868 30,332 13,265,300 16,440,835 100,547,117 109,711,582 15,867,049 14,718,947 15,867,049 14,718,947 13,316,711 12,798,986 13,316,711 12,798,986 3,201,139 3,305,329 0 0 1,499,716 1,553,587 (1,559,080) (2,892,991) (655,000) (1,128,000) (904,080) (1,764,991) 0 0 0 0 0 0 (904,080) (1,764,991) (0.18) (0.29) (0.18) (0.29)
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