SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20459
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED MARCH 31, 2002, COMMISSION FILE NUMBER 0-1957
UPTOWNER INNS, INC.
(Exact Name of Registrant as Specified in its Charter)
West Virginia 55-0457171
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
1415 4th Avenue, Huntington, West Virginia 25701
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including area code (304) 525-8162
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
_______ ______
Indicate the number of Shares outstanding of each of the Issuer's classes
of Common Stock, as of the close of the period covered by this report.
Class Outstanding at March 31, 2002
______ _______________________________
Common Stock - $.50 par value 1,583,563 shares
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PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
UPTOWNER INNS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
AT MARCH 31, 2002 and JUNE 30, 2001
ASSETS
March 31, June 30,
2002 2001
(Unaudited) (a)
Current Assets:
Cash $ 819,122 $ 186,912
Accounts and notes receivable 184,532 72,830
Inventories 7,507 7,715
Prepaid expenses 77,397 48,392
Property held for resale 330,052 327,811
Total current assets 1,418,610 643,660
Property, Plant and Equipment:
Land 1,529,252 1,519,252
Building and improvements 10,755,637 10,680,357
Furniture and equipment 2,812,355 2,761,410
Construction in progress 37,434 -
Less accumulated
depreciation
and amortization 5,174,393 4,846,594
Property, plant and
equipment - net 9,960,285 10,114,425
Other Assets:
Deposits and other 193,112 141,837
Total Assets $ 11,572,007 $ 10,899,922
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UPTOWNER INNS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
AT MARCH 31, 2002 and JUNE 30, 2001
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, June 30,
2002 2001
(Unaudited) (a)
Current Liabilities:
Accounts payable $ 270,239 $ 232,588
Accrued liabilities 134,812 200,484
Taxes other than Federal
income taxes 283,191 313,480
Current portion of long-term
debt 272,093 1,400,385
Total current liabilities 960,335 2,146,937
Long-Term Liabilities:
Notes and mortgages payable 8,663,284 6,636,076
Total liabilities 9,623,619 8,783,013
Stockholders' Equity:
Common stock - par value
$.50 per share; authorized
5,000,000 shares; issued
1,583,563 shares 791,782 791,782
Additional paid-in capital 1,032,290 1,032,290
Retained earnings 124,316 292,837
Total stockholders' equity 1,948,388 2,116,909
Total Liabilities and
Stockholders' Equity $11,572,007 $10,899,922
(a) Financial information as of June 30, 2001 has been derived from the
audited, consolidated financial statements of the registrant.
The accompanying notes to the consolidated financial statements
are an integral part of these statements.
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UPTOWNER INNS, INC. AND SUBSIDIARY
CONSOLIDATED INCOME STATEMENT (UNAUDITED)
For the periods of three and nine months ended March 31, 2002 and 2001
Three Months Ended Nine Months Ended
3/31/02 3/31/01 3/31/02 3/31/01
Revenues:
Rooms $ 695,021 $ 826,996 $ 2,348,322 $ 2,679,709
Food and beverage 22,809 41,502 88,718 149,120
Telephone 29,694 13,267 39,088 41,136
Rents 57,394 54,146 165,097 159,058
Other 19,512 4,947 34,052 16,582
Total revenues 824,430 940,858 2,675,277 3,045,605
Costs and Expenses:
Operating Departments:
Cost of sales 60,055 43,927 131,006 149,036
Salaries and wages 187,077 216,616 626,915 707,158
Other 92,249 73,480 223,355 208,464
General and Administrative 96,103 63,747 243,832 243,754
Advertising 55,187 67,863 166,460 213,199
Utilities 64,822 66,293 188,104 188,567
Repairs and Maintenance 15,147 23,359 69,020 77,698
Interest 149,821 187,059 536,239 569,724
Taxes and licenses 100,568 91,384 276,404 289,266
Insurance 18,295 21,436 54,885 48,231
Depreciation and Amortization 109,321 116,683 327,799 326,489
Total costs and expenses 948,645 971,847 2,844,019 3,021,586
Operating income (loss) (124,215) (30,989) (168,742) 24,019
Other Income:
Interest income 221 1,124 221 1,243
Total other income 221 1,124 221 1,243
Net Income (Loss) before Income
Taxes (123,994) (29,865) (168,521) 25,262
Income Taxes 0 0 0 0
Net Income (Loss) $ (123,994) $ (29,865) $ (168,521) $ 25,262
Earnings (Loss) per Share $ (0.08) $ (.02) $ (.11) $ .02
The accompanying notes to the consolidated financial statements
are an integral part of these statements.
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UPTOWNER INNS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
For the nine months ended March 31, 2002 and 2001
2002 2001
<s> <c> <c>
Cash Flows From Operating Activities:
Net income $ (168,521) $ 25,262
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 327,799 326,488
(Increase) decrease in deposits (51,274) 15,543
(Increase) decrease in current assets:
Accounts receivable (111,703) (14,405)
Inventories 208 4,682
Prepaid expenses (29,006) 20,696
Increase (decrease) in current
liabilities:
Accounts payable 37,652 (62,113)
Accrued liabilities (65,672) 8,441
Taxes other than Federal income tax (30,289) (68,665)
Total adjustments 77,715 230,667
Net Cash Provided By Operating Activities $ (90,806) $ 255,929
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UPTOWNER INNS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
For the nine months ended March 31, 2002 and 2001
2002 2001
<s> <c> <c>
Cash Flows From Investing Activities:
Capital Expenditures $ (175,900) $ (130,026)
Net cash used in investing activities (175,900) (130,026)
Cash Flows From Financing Activities:
Loan proceeds 979,104 100,000
Payment on notes and mortgages (80,188) (274,562)
Net cash used in
financing activities 898,916 (174,562)
Net Increase (Decrease) in Cash
and Cash Equivalents 632,210 (48,659)
Cash and Cash Equivalents at Beginning of Year 186,912 348,064
Cash and Cash Equivalents at End of Period $ 819,122 $ 299,405
Supplemental Disclosures of Cash Flow Information:
Cash Paid During The Period For:
Interest $ 576,568 $ 566,137
The accompanying notes to the consolidated financial statements
are an integral part of these statements.
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UPTOWNER INNS, AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2002
1. BASIS OF PRESENTATION
The financial statements presented reflect Uptowner Inns, Inc. and its
consolidated subsidiary, Motel and Restaurant Supply.
The foregoing statements are unaudited; however, in the opinion of
management, all adjustments (comprising only normal recurring accruals)
necessary for a fair presentation of the financial statements have been
included. The results of operations for interim periods are not
necessarily indicative of the results that may be expected for a full
year or any other interim period. A summary of the Corporation's
significant accounting policies is set forth in Note 1 to the Consolidated
Financial Statements in the Corporation's Annual Report to shareholders
and Form 10-K for June 30, 2001.
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UPTOWNER INNS, AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
2. CONTINGENCY
None.
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UPTOWNER INNS, INC. AND SUBSIDIARY
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
Certain matters disclosed herein may be deemed to be forward-looking
statements that involve risks and uncertainties, including the facilities
utilization, costs associated with maintaining the operations, liquidity
issues, and other risks. Actual strategies and results in future time
periods may differ materially from those currently expected. Such
forward-looking statements represent management's judgment as of the
current date. The Company disclaims, however, any intent of obligation
to update such forward-looking statements.
RESULTS OF OPERATION
THREE MONTHS ENDED MARCH 31, 2002 AND 2001
Due to the closing of the Travelodge property, room revenues have
declined 16.0% in the three months ended March 31, 2002 relative to the
comparable period in 2001. The decision was made to close down the
Travelodge property due to the cash drain for the last several years.
Also, the location of this property did not warrant keeping the property
open. At one time this was an ideal location, but with the build up of
interstate hotels and increased competition in the market, it was not
economically feasible to keep the property open. The Star Report,
generated by Smith Travel Research, continues to show the Holiday Inn
Hotel and Suites increasing their market share in the Huntington area,
providing positive cash flow for the Company. The 45.0% decrease in food
and beverage revenue in the quarter ended March 31, 2002 relative to the
comparable period in 2001, is attributed to the closing of the Travelodge
property, thus the closing of the hotel lounge. Cost of sales have
increased 123.8% from 2001 due to posting errors corrected in March of
2002. The Holiday Inn Hotel and Suites refinanced for 6.8 million dollars
at 8.25%, with a twenty-year amortization and a ten-year balloon. The
refinancing will generate approximately $75,000 per year in additional
cash flow.
Total cost and expenses have decreased 2.4% primarily due to interest
expense attributed to the refinancing of the Holiday Inn property.
Additionally, salaries and wages has decreased 13.6% due to closing of the
Travelodge property. General and administrative have increased 50.8% due
to increases in legal costs, employee group insurance, and the increased
efforts in closing down the Travelodge property.
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RESULTS OF OPERATION, CONTINUED
NINE MONTHS ENDED MARCH 31, 2002 AND 2001
Room Revenues have decreased by 12.4% in the nine months ended
March 31, 2002 relative to the comparable period in 2001. Food and
beverage revenues have decreased by 40.5% in the nine months ended March
31, 2002 relative to the comparable period in 2001. These differences, as
well as the variances in expenses, are due to the explanations above for
the three months ending March 31, 2002.
LIQUIDITY
The liquidity, as measured by current assets divided by current
liabilities, has increased from .30 at June 30, 2001 to 1.48 at March 31,
2002. This increase is a result of the refinancing of the Holiday Inn
property.
The Holiday Inn Hotel and Suites refinanced for 6.8 million dollars
at 8.25%, with a twenty-year amortization and a ten-year balloon. The
refinancing will generate approximately $75,000 per year in additional
cash flow.
On July 3, 2002, the Company closed on the sale of the Uptowner Inn
Hotel. Existing loans with balances totaling $1,633,608 as of June 30,
2002 were paid off upon closing. In addition, the Company received cash
totaling $63,085.
CAPITAL RESOURCES
The registrant is in the beginning stages of building a new hotel at
the new Kinetic Park project in Huntington, WV. The Kinetic Park project
is in the early stages of development, but are in the process of taking
bids for the purchase of land within the Park. The registrant is planning
on building a Holiday Inn Express at the location, and has obtained
approval from Holiday Inn's corporate office to have a franchise at this
site.
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UPTOWNER INNS, INC. AND SUBSIDIARY
PART II: OTHER INFORMATION
Item 5. Other Information
a. Refinancing of Holiday Inn Hotel & Suites for 6.8 million
dollars at 8.25% interest, with a twenty-year amortization
and a ten-year balloon.
b. Sale of Uptowner Motel at 1415 Fourth Avenue, Huntington, WV
for $1,770,072.19. Closing on July 3, 2002.
c. Purchase of Treasury Stock for $10,109.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
1 - Bailes, Craig & Yon Letter regarding purchase price per
acre at Kinetic Park location.
b. The Company was not required to file Form 8-K for the quarter
ended March 31, 2002.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
(Registrant) UPTOWNER INNS, INC.
By /s/ Carl Midkiff,
CEO and Secretary
September 27, 2002
By /s/ David Robinson,
Treasurer
September 27, 2002
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