John Q. Hammons Hotels, Inc. Reports Basic and Diluted Earnings of
$0.34 and $0.29 Per Share, Respectively, for the First Half of 2004
SPRINGFIELD, Mo., Aug. 9 /PRNewswire-FirstCall/ -- John Q. Hammons
Hotels, Inc. (AMEX:JQH) today reported results for the second
quarter and first six months of 2004. Year-to-Date Results Total
revenues for the 2004 six months ended July 2, 2004 were $229.5
million, an increase of 4.9% compared to the 2003 six months ended
July 4, 2003. We produced EBITDA for the 2004 six months of $59.7
million, down 2.6% compared to $61.3 million in the 2003 six months
primarily attributable to the asset impairment charge discussed
below. (See attached table for reconciliation of net income to
EBITDA and for our definition of EBITDA). The asset impairment
charge had a negative effect on EBITDA of $4.6 million for the 2004
six month period. Basic and diluted earnings per share for the six
months ended July 2, 2004 were $0.34 and $0.29, respectively,
compared to basic and diluted earnings per share of $0.06 and
$0.05, respectively, for the six months ended July 4, 2003. Net
income for the 2004 six month period was $1.7 million, compared to
$0.3 million for the same period in 2003. The 2004 results included
two items, which, after giving effect to minority interest, had a
net impact of $0.3 million on the Company's net income. One of the
items was the recognition of a $1.1 million asset impairment, net
of minority interest, due to our decision to sell certain
non-strategic hotels and reflects the difference between the net
book value, less selling costs, and the current estimated fair
market value of these hotels. The other item includes $1.4 million
for the recapture of the limited partners' losses we absorbed in
the fourth quarter of 2003 and second quarter of 2004. An
additional $2.4 million must be recaptured before the limited
partners can be allocated future earnings in minority interest. The
following represents a reconciliation of the net income (loss), as
reported, to net income, as adjusted (in thousands): Three Months
Ended Six Months Ended July 2, July 4, July 2, July 4, 2004 2003
2004 2003 Net income (loss), as reported ($2,622) $79 $1,727 $286
Additions (subtractions): Asset impairment, net of expected
minority interest 1,115 --- 1,115 --- Reallocation of minority
interest losses (gains) 1,928 --- (1,394) --- Sub total 3,043 ---
(279) --- Net income, as adjusted $421 $79 $1,448 $286 Executive
Comments "We are pleased with our results for the first six months
of 2004," stated Mr. John Q. Hammons, Chairman and Chief Executive
Officer, "We believe our outstanding performance, coupled with the
planned sale of non-strategic hotels and debt reduction, will
continue to have a positive impact on the value of our Company for
our shareholders." Second Quarter Results Total revenues for the
three months ended July 2, 2004 were $115.2 million, an increase of
6.0% compared to the three months ended July 4, 2003. We produced
EBITDA for the 2004 quarter of $26.4 million, down compared to
$30.6 million in the 2003 quarter primarily attributable to the
asset impairment charge discussed below. (See attached table for
reconciliation of net income to EBITDA and for the definition of
EBITDA). The asset impairment charge reduced EBITDA by $4.6 million
for the 2004 quarter. Basic and diluted loss per share for the
three months ended July 2, 2004 was ($0.51), compared to basic and
diluted earnings per share of $0.02 and $0.01, respectively, for
the three months ended July 4, 2003. Net loss for the 2004 second
quarter was $2.6 million, compared to net income of $0.1 million
for the 2003 quarter. The 2004 results included two items, which,
after giving effect to minority interest, had a negative impact of
$3.0 million on the Company's net loss. One of the items was the
recognition of a $1.1 million asset impairment, net of minority
interest, due to our decision to sell certain non-strategic hotels
and reflects the difference between the net book value, less
selling costs, and the current estimated fair market value of these
hotels. The other item includes $1.9 million of the limited
partners' losses we absorbed due to the inability of the limited
partners' net contribution to fall below zero. A total of $2.4
million must be recaptured before the limited partners can be
allocated future earnings in minority interest. Revenue Per
Available Room (RevPAR) was $68.19 for the 2004 quarter, up 4.7%
from the prior year's level of $65.16. Financing and Investing
Activities Since the beginning of 2003, we have reduced total debt
by over $29 million, including scheduled principal amortization.
Our current portion of long-term debt ($7.5 million) is
attributable to scheduled principal amortization on various
individual hotel mortgages. Operations Outlook We forecast that the
industry will continue recovery throughout 2004, generating RevPAR
and EBITDA above our 2003 levels. This recovery should enhance our
cash generation and produce favorable results as we focus on
operational efficiencies. Although we are not developing new
hotels, Mr. Hammons personally has numerous projects in various
stages of development, which we will manage upon completion,
including properties in St. Charles and Springfield, Missouri;
Junction City, Kansas; Frisco, Texas; Albuquerque, New Mexico;
North Charleston, South Carolina and Hampton, Virginia. John Q.
Hammons Hotels, Inc. is a leading independent owner and manager of
affordable upscale, full service hotels located primarily in key
secondary markets. We own 47 hotels located in 20 states,
containing 11,630 guest rooms or suites, and manage 12 additional
hotels located in seven states, containing 2,889 guest rooms or
suites. The majority of these 59 hotels operate under the Embassy
Suites, Holiday Inn and Marriott trade names. Most of our hotels
are located near a state capitol, university, convention center,
corporate headquarters, office park or other stable demand
generator. A copy of this press release announcing our earnings as
well as other financial information will be available in the
Investor Relations section of our website at
http://www.jqhhotels.com/ . NOTE -- FORWARD-LOOKING STATEMENTS:
This press release contains "forward- looking statements" within
the meaning of Section 21E of the Securities Exchange Act of 1934,
regarding, among other things, our operations outlook, business
strategy, prospects and financial position. These statements
contain the words "believe," "anticipate," "estimate," "expect,"
"forecast," "project," "intend," "may," "will," and similar words.
These forward-looking statements are not guarantees of future
performance, and involve known and unknown risks, uncertainties and
other factors that may cause our actual results to be materially
different from any future results expressed or implied by such
forward-looking statements. Such factors include, among others: --
General economic conditions, including the speed and strength of
the economic recovery; -- The impact of any serious communicable
diseases on travel; -- Competition; -- Changes in operating costs,
particularly energy and labor costs; -- Unexpected events, such as
the September 11, 2001 terrorist attacks, or outbreaks of war; --
Risks of hotel operations, such as hotel room supply exceeding
demand, increased energy and other travel costs and general
industry downturns; -- Seasonality of the hotel business; --
Cyclical over-building in the hotel and leisure industry; --
Requirements of franchise agreements, including the right of some
franchisors to immediately terminate their respective agreements if
we breach certain provisions; and -- Costs of complying with
applicable state and federal regulations. These risks and
uncertainties should be considered in evaluating any
forward-looking statements contained in this press release. We
undertake no obligation to update or revise publicly any forward
looking statement, whether as a result of new information, future
events or otherwise, other than as required by law. - - Tables
Attached - - JOHN Q. HAMMONS HOTELS, INC. AND COMPANIES CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (000's omitted,
except share data) Three Months Ended Six Months Ended July 2, July
4, July 2, July 4, 2004 2003 2004 2003 REVENUES: Rooms $72,157
$68,959 $142,345 $136,362 Food and beverage 29,528 27,390 59,602
56,529 Meeting room rental, related party management fee and other
13,465 12,315 27,579 25,903 Total revenues 115,150 108,664 229,526
218,794 OPERATING EXPENSES: Direct operating costs and expenses:
Rooms 17,673 17,046 34,957 33,326 Food and beverage 23,134 21,982
45,270 43,888 Other 578 701 1,194 1,393 General, administrative,
sales and management service expenses 37,749 33,747 74,106 69,822
Repairs and maintenance 4,968 4,585 9,674 9,038 Asset Impairment
4,619 --- 4,619 --- Depreciation and amortization 12,079 12,586
24,010 25,067 Total operating expenses 100,800 90,647 193,830
182,534 INCOME FROM OPERATIONS 14,350 18,017 35,696 36,260 OTHER
INCOME (EXPENSE): Other income --- --- --- 175 Interest income 159
156 277 335 Interest expense and amortization of deferred financing
fees (17,050) (17,595) (34,135) (35,207) INCOME (LOSS) BEFORE
MINORITY INTEREST AND PROVISION FOR INCOME TAXES (2,541) 578 1,838
1,563 Minority interest in income of partnership --- (439) ---
(1,187) INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES (2,541) 139
1,838 376 Provision for income taxes (81) (60) (111) (90) NET
INCOME (LOSS) ALLOCABLE TO THE COMPANY $(2,622) $79 $1,727 $286
BASIC EARNINGS (LOSS) PER SHARE: Net earnings (loss) allocable to
Company $(0.51) $0.02 $0.34 $0.06 BASIC WEIGHTED AVERAGE SHARES
OUTSTANDING 5,143,119 5,089,728 5,127,195 5,086,778 DILUTED
EARNINGS (LOSS) PER SHARE: Net earnings (loss) allocable to Company
$(0.51) $0.01 $0.29 $0.05 DILUTED WEIGHTED AVERAGE SHARES
OUTSTANDING 5,143,119 5,372,627 5,902,355 5,369,677 JOHN Q. HAMMONS
HOTELS, INC. AND COMPANIES (Amounts in thousands except earnings
per share and operating data) Three Months Ended Six Months Ended
July 2, July 4, July 2, July 4, 2004 2003 2004 2003 Reconciliation
of Net Income to EBITDA: Net income (loss) ($2,622) $79 $1,727 $286
Provision for income taxes 81 60 111 90 Minority interest in
earnings of partnership 0 439 0 1,187 Interest expense and
amortization of deferred financing fees, net 16,891 17,439 33,858
34,872 Other income 0 0 0 (175) Depreciation and amortization
12,079 12,586 24,010 25,067 EBITDA (a) (b) $26,429 $30,603 $59,706
$61,327 EBITDA Margin (% of Total Revenue) 23.0% 28.2% 26.0% 28.0%
(a) EBITDA is defined as income before interest income and expense,
income tax expense, depreciation and amortization, minority
interest, extinguishment of debt costs and other income. Management
considers EBITDA to be one measure of operating performance for the
Company before debt service that provides a relevant basis for
comparison, and EBITDA is presented to assist investors in
analyzing the performance of the Company. This information should
not be considered as an alternative to any measure of performance
as promulgated under accounting principles generally accepted in
the United States, nor should it be considered as an indicator of
the overall financial performance of the Company. The Company's
calculation of EBITDA may be different from the calculation used by
other companies and, therefore, comparability may be limited. (b)
EBITDA for the 2004 periods includes an Asset Impairment charge of
$4.6 million. Three Months Ended Six Months Ended July 2, July 4,
July 2, July 4, 2004 2003 2004 2003 Total Owned Hotels: Occupancy
67.3% 65.7% 66.4% 64.2% Average Room Rate $101.35 $99.21 $101.32
$100.29 RevPAR (Room Revenue per available room) $68.19 $65.16
$67.26 $64.43 July 2, Jan. 2, Jan. 3, 2004 2004 2003 Selected
Balance Sheet Data Current Assets $72,605 $54,022 $52,020 Total
Assets $821,680 $822,183 $859,972 Current Liabilities Excluding
Debt $41,989 $41,043 $40,789 Current Portion of Long-Term Debt
$7,492 $7,423 $13,683 Total Long-Term Debt Including Current
Portion $777,106 $781,072 $806,342 Total Cash and Equivalents,
Restricted Cash and Marketable Securities $81,806 $61,222 $50,368
Net Debt (Total Long-Term Debt less Total Cash and Equivalents,
Restricted Cash and Marketable Securities) $695,300 $719,850
$755,974 DATASOURCE: John Q. Hammons Hotels, Inc. CONTACT: Paul
Muellner, Chief Financial Officer of John Q. Hammons Hotels, Inc.,
+1-417-864-4300 Web site: http://www.jqhhotels.com/
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