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Acquisition
9 Months Ended
Sep. 30, 2014
Acquisition  
Acquisition

5.Acquisition.

 

On September 10, 2014, TWC, through its Czech subsidiary, TWH&E, entered into a purchase agreement to acquire all of the partnership interests of a private family partnership that owned the Hotel Columbus, a four-star 117-room hotel property (the “Hotel Columbus”) located in Seligenstadt, Germany, near Frankfurt, for approximately $7,400, excluding transfer taxes and closing costs.  Although the transaction closed, and TWH&E acquired the Hotel Columbus on September 10, 2014, the signing parties agreed to set the acquisition date retroactive to September 1, 2014, which had no impact on the purchase price.  The purchase agreement called for the cash purchase by TWC of all of the partnership interests subject to a final reconciliation of the purchase price.

 

The Company acquired the partnership through a combination of cash payment from its available cash, totaling approximately EUR 2,100, or approximately $2,700, and financed the remainder by means of a EUR 3,600, or approximately $4,700, 15-year amortizable loan from a local German bank, Bank Sparkasse Langen-Seligenstadt (the “Sparkasse Loan”), at a fixed interest rate of 3.1% for the first ten years, followed by a prevailing market-based rate for this type of loan for the remainder of the term.  The loan is secured by a cash deposit equaling one year’s principal and interest payments and is held in a savings account with, and a mortgage on the hotel in favor of, the lender.  The restricted cash arising from this deposit of approximately $375 is recognized within the Company’s “Deposits and other assets” of the consolidated balance sheets.

 

The Sparkasse Loan was signed on September 9, 2014 and the purchase agreement was signed on September 10, 2014.  The Hotel Columbus is owned under TWC’s wholly-owned German subsidiary, Trans World Hotels Germany GmbH (“TWHG”).  Operating results from the Hotel Columbus for the month of September are included in the Company’s condensed consolidated income statement and comprehensive income (loss) for the three and nine months ended September 30, 2014, and the assets and liabilities are reflected in TWC’s condensed consolidated balance sheet as of September 30, 2014.

 

The Company accounts for its business acquisitions under the acquisition method of accounting as indicated in FASB Accounting Standards Codification 805 (“ASC 805”), Business Combinations, which requires the acquiring entity in a business combination to recognize the fair value of all assets acquired, liabilities assumed, and establishes the acquisition date as the fair value measurement point. Accordingly, the Company recognizes assets acquired and liabilities assumed in business combinations, including contingent assets and liabilities, based on fair value estimates as of the date of acquisition.

 

The fair value of all acquired assets and liabilities assumed summarized below is provisional pending finalization of the Company’s acquisition accounting. The Company believes that such preliminary allocations provide a reasonable basis for estimating the fair values of assets acquired and liabilities assumed but the Company is waiting for additional information necessary to finalize fair value. The Company expects to finalize the valuation and complete the purchase price allocation as soon as practicable but no later than one year from the acquisition date. Final determination of the fair value may result in further adjustments. There have been no measurement period adjustments to date.

 

Total Purchase Consideration

 

$

7,400 

 

 

 

 

 

Assets Acquired and Liabilities Assumed:

 

 

 

Land

 

800 

 

Buildings

 

5,500 

 

Property & Equipment

 

1,100 

 

Total Tangible Assets and Liabilities

 

$

7,400 

 

 

There were no intangible assets acquired and no goodwill derived from the purchase.

 

The following unaudited pro forma results of operations for the interim period presented are provided for illustrative purposes only and assume the acquisition occurred as of January 1, 2013 and do not assume any cost savings from TWC’s management of the operations. The unaudited pro forma financial results do not purport to be indicative of the results of operations for future periods or the results that actually would have been realized had TWC operated the Hotel Columbus during these periods. The unaudited pro forma results are presented in thousands, except share and per share information.

 

 

 

Nine Months Ended September 30,

 

Three Months Ended September 30,

 

 

 

2014

 

2013

 

2014

 

2013

 

In thousands (000) except share and per share information

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

REVENUES

 

$

30,176 

 

$

27,849 

 

$

10,351 

 

$

9,411 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

$

2,405 

 

$

1,592 

 

$

1,063 

 

$

768 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

 

 

 

 

 

 

 

 

 

Basic

 

8,811,991 

 

8,826,375 

 

8,816,571 

 

8,825,335 

 

Diluted

 

9,116,988 

 

9,052,827 

 

9,124,206 

 

9,051,787 

 

 

 

 

 

 

 

 

 

 

 

EARNINGS PER COMMON SHARE:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.27 

 

$

0.18 

 

$

0.12 

 

$

0.09 

 

Diluted

 

$

0.26 

 

$

0.18 

 

$

0.12 

 

$

0.08