As filed with the Securities and Exchange Commission on November 4, 1994
Registration No. 33-54925
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form S-1, Amendment
No. 4 to Form S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
UNITED INNS, INC.
(Exact name of registrant as specified in its charter)
7011
(Primary Standard Industrial
Classification Code Number)
DELAWARE 58-0707789
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
SUITE 2300, 5100 POPLAR AVENUE
MEMPHIS, TENNESSEE 38137
(901) 767-2880
(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive offices)
AUGUSTUS B. RANDLE, III
SECRETARY AND GENERAL COUNSEL
UNITED INNS, INC.
SUITE 2300, 5100 POPLAR AVENUE
MEMPHIS, TENNESSEE 38137
(901) 767-2880
(Name,address, including zip code, and telephone number,
including area code, of agent for service)
With Copies to:
ROY KEATHLEY
HEISKELL, DONELSON, BEARMAN, ADAMS, WILLIAMS & CALDWELL
2000 FIRST TENNESSEE BUILDING
165 MADISON AVENUE
MEMPHIS, TENNESSEE 38103
(901) 526-2000
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable after this Registration Statement becomes
effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X].
THE COMPANY HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE COMPANY SHALL
FILE AN AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
UNITED INNS, INC.
Cross-Reference Sheet for Registration Statement on Form S-1
ITEMS OF FORM S-1 PROSPECTUS CAPTION OR LOCATION
Part I. INFORMATION REQUIRED IN PROSPECTUS
Item 1. Forepart of the Registration Facing Page, Cross-Reference Sheet,
Statement and Outside Front Outside Front Cover Page of
Cover Page of Prospectus Prospectus
Item 2. Inside Front and Outside Back Inside Front Cover Page, Outside
Cover Pages of Prospectus Back Cover Page
Item 3. Summary Information, Risk Summary
Factors and Ratio of Earnings
to Fixed Charges
Item 4. Use of Proceeds Use of Proceeds
Item 5. Determination of Offering Front Cover Page of Prospectus,
Price Summary
Item 6. Dilution Not applicable
Item 7. Selling Security Holders Selling Shareholders
Item 8. Plan of Distribution Front Cover Page of Prospectus,
Summary, Selling Shareholders
Item 9. Description of Securities Description of UII Capital Stock
Item 10. Interests of Named Experts Legal Matters, Experts
and Counsel
Item 11. Information with Respect to Summary, Five Year Summary of
the Company Selected Consolidated Financial
Data, Management's Discussion and
Analysis of Financial Condition and
Results of Operations, Business,
Market for the Company's Common
Equity and Related Stockholder
Matters, Management, Principal
Shareholders
Item 12. Disclosure of Commission Not applicable
Position on Indemnification
for Securities Act
Liabilities
PROSPECTUS
UNITED INNS, INC.
60,000 SHARES OF COMMON STOCK
This Prospectus relates to 60,000 shares of the common stock, $1.00 par
value per share ("Common Stock") of United Inns, Inc. ("UII" or the "Company"),
including 35,000 shares which may be issued upon exercise of options as
described herein (the "Option Shares"). The 60,000 shares of Common Stock that
are offered for resale hereby are collectively referred to as the "Shares."
The Shares may be offered by certain shareholders of UII (the "Selling
Shareholders") from time to time in transactions in the market, in negotiated
transactions or a combination of such methods of sale, at fixed prices which may
be changed, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices. The Selling
Shareholders may effect such transactions by selling the Shares to or through
broker-dealers, and such broker-dealers may receive compensation in the form
of discounts, concessions or commissions from the Selling Shareholders and/or
the purchasers of the Shares for whom such broker-dealers may act as agents or
to whom they sell as principals, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions). See "Selling
Shareholders" and "Sale of the Shares."
The Selling Shareholders listed in the table on page 3 acquired the Shares
and will acquire the Option Shares in connection with that certain Consulting
Agreement by and between UII and Geller & Co., an Illinois corporation dated
August 13, 1993 (the "Consulting Agreement"). See "The Consulting Agreement."
None of the proceeds from the sale of the Shares by the Selling
Shareholders will be received by UII. UII will bear all expenses (other than
selling commissions and fees) in connection with the registration of the Shares
being offered by the Selling Shareholders.
The outstanding shares of Common Stock are included for quotation on the
New York Stock Exchange ("NYSE"). The last reported sale price of UII Common
Stock on the NYSE on November __, 1994 was $____ per share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
Price to public Underwriting discounts Proceeds to Selling
and commissions Shareholders
- --------------------------------------------------------------------------------------------
Per share of Common Stock $ $ $
- --------------------------------------------------------------------------------------------
Total $ $ $
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE HEREIN CONTAINED
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY UII OR THE SELLING SHAREHOLDERS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF ANY OFFER
TO BUY, THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM
IT IS UNLAWFUL TO MAKE AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF UII SINCE THE DATE
HEREOF.
_____________________________________
THE DATE OF THIS PROSPECTUS IS NOVEMBER __, 1994
Table of Contents
Page
Available Information 2
Summary 3
Five Year Summary of Selected Consolidated Financial Data 4
Management's Discussion and Analysis of 5
Consolidated Financial Condition and
Results of Operations
Business 11
Market for the Company's Common Equity 14
and Related Stockholder Matters
Management 15
Principal Shareholders 18
Selling Shareholders 19
Sale of the Shares 19
The Consulting Agreement 19
Description of UII Capital Stock 19
Use of Proceeds 19
Legal Matters 19
Experts 19
Index to Consolidated Financial Statements
AVAILABLE INFORMATION
UII is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "SEC"). Copies of such reports, proxy statements and other
information can be obtained, upon payment of prescribed fees, from the Public
Reference Section of the SEC at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549. In addition, such reports, proxy statements and
other information can be inspected at the SEC's facilities referred to above and
at the SEC's Regional Offices at 7 World Trade Center, Suite 1300, New York, New
York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. The UII Common Stock is included for quotation on the NYSE, the
Pacific Stock Exchange, Incorporated and the Philadelphia Stock Exchange, Inc.
and such reports, proxy statements and other information concerning UII should
be available for inspection and copying at the offices of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005; the offices of the
Pacific Stock Exchange, Incorporated, 301 Pine Street, San Francisco,
California 94104; and the offices of the Philadelphia Stock Exchange, Inc.,
Philadelphia Stock Exchange Building, 1900 Market Street, Philadelphia,
Pennsylvania 19103. This Prospectus is part of a Registration Statement filed
and effective under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to the shares of Common Stock to be sold. This Prospectus
does not contain all the information set forth in the Registration Statement.
Such additional information may be obtained from the SEC's principal office in
Washington, D.C. Statements contained in this Prospectus or in any document
incorporated by reference in this Prospectus as to the contents of any
contract or other document referred to herein or therein are not necessarily
complete, and in each instance reference is made to the copy of such contract
or other document filed as an exhibit to the Registration Statement or such
other document, each such statement being qualified in all respects by such
reference.
2
RECENT DEVELOPMENTS
In July 1994, due to the improved economic conditions in market factors
in the hotel industry, the Company retained Smith Barney, Inc., as financial
advisor to the Company, to analyze and evaluate various opportunities to
maximize shareholder value, including the possible sale of all or a portion of
the Company's assets and the possible merger of the Company for the
consideration of stock or cash or a combination of stock and cash. The Company
has entered into negotiations with a party regarding a proposed business
combination pursuant to which its shareholders would be offered cash for their
shares. The purpose of these negotiations is to determine whether the parties
can agree to a definitive agreement, which would be subject to the approval of
the Board of Directors of the Company. There can be no assurance that a
definitive agreement can be agreed to or that the Board of Directors would
recommend approval of a proposed definitive agreement or that all of the
conditions to a proposed business combination can be satisfied. The Company has
also entered into an exclusive negotiation agreement with such party, which
provides that the Company, subject to its fiduciary obligations under applicable
law, will negotiate exclusively with such party to determine whether the Company
and such party can agree to a definitive agreement and that, in certain
circumstances, the Company will pay the other party's reasonable out-of-pocket
expenses in certain categories and will pay a termination fee to the other party
which escalates over time. The period during which the Company will negotiate
exclusively with such party expires on the earlier of the signing of a
definitive agreement, but not later than January 31, 1995.
SUMMARY
The following information is qualified in its entirety by reference to
the more detailed information and consolidated financial statements (including
the notes thereto) appearing elsewhere in this Prospectus. Each prospective
investor is urged to read the Prospectus in its entirety.
The Company
UII is a Delaware corporation which, since 1956, through its subsidiaries
primarily owns and operates hotels. For the most part, UII engages in the
operation of hotels under Holiday Inns, Inc. licenses. UII currently operates
26 hotels: 8 in Atlanta, Georgia; 6 in Houston, Texas; 4 in Jackson,
Mississippi; 3 in Dallas, Texas; 2 in Colorado Springs, Colorado; 1 each in
Flagstaff and Scottsdale, Arizona; and Santa Barbara, California.
The Offering
Securities offered ....... 60,000 shares by Selling Shareholders
Proceeds.................. None of the proceeds from the sale of Shares
by the Selling Shareholders will be received
by the Company. However, at the time the
Option Shares are issued pursuant to the
exercise of the options, the Company will
receive $159,250.
Market for the Company's Stock
The Company's Common Stock is listed on the NYSE. The last reported sale
price of the Common Stock on the NYSE on November __, 1994 was $____ per share.
3
FIVE YEAR SUMMARY OF SELECTED CONSOLIDATED FINANCIAL DATA
The following table summarizes certain selected consolidated financial data
which should be read in conjunction with the Company's consolidated financial
statements and related notes and with Management's Discussion and Analysis of
Financial Condition and Results of Operations included elsewhere herein. The
selected consolidated financial data for as of September 30, 1993 and 1992 and
for each of the years in the three year period ended September 30, 1993, 1992
and 1991 have been derived from, and are qualified by reference to, audited
financial statements included elsewhere herein. The selected consolidated
financial data as of and for the nine months ended June 30, 1994 and 1993 have
been derived from the unaudited consolidated financial statements of the Company
and its subsidiaries. Such unaudited consolidated financial statements, in the
opinion of management, include all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of the results for
those interim periods.
(in thousands except per share data, rooms in operation and percentages)
NINE MONTHS ENDED FISCAL YEAR ENDED SEPTEMBER 30
JUNE 30, ----------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
-------- -------- -------- -------- -------- -------- --------
OPERATING RESULTS:
Revenues........................................ $ 67,792 $ 68,683 $ 92,923 $ 99,161 $112,591 $120,924 $116,088
-------- -------- -------- -------- -------- -------- --------
Costs and expenses.............................. 54,599 57,932 76,389 84,376 95,709 97,708 98,393
Depreciation.................................... 6,739 6,660 9,031 9,939 11,159 11,319 11,597
Interest and financing.......................... 7,307 7,482 9,946 9,803 13,943 15,968 16,613
Minority interest............................... 61 55 54 39 91 109 (243)
-------- -------- -------- -------- -------- -------- --------
68,706 72,129 95,420 104,157 120,902 125,104 126,360
-------- -------- -------- -------- -------- -------- --------
Income (loss) from continuing operations........ (914) (3,446) (2,497) (4,996) (8,311) (4,180) (10,272)
Gain (loss) from property dispositions.......... (6,287) 1,406 1,251 (3,634) 8,319 2,460
Loss contingency................................ 388 (1,718) (7,044)
-------- -------- -------- -------- -------- -------- --------
Income (loss) from continuing operations
before income taxes............................ (7,201) (2,040) (1,246) (8,242) (10,029) 4,139 (14,856)
Income taxes.................................... (2,255) (630) (430) (3,291) (3,317) 4,741 (5,222)
-------- -------- -------- -------- -------- -------- ---------
Income (loss) from continuing operations........ (4,946) (1,410) (816) (4,951) (6,712) (602) (9,634)
Discontinued operations
Income (loss) from operations of
(net of applicable income taxes)
Furniture Manufacturing...................... 139 1,022
Gain on disposal of business segments
(net of applicable income taxes).............. 4,329
-------- -------- -------- -------- -------- -------- --------
Net income (loss) before extraordinary item..... (4,946) (1,410) (816) (4,951) (6,712) 3,866 (8,612)
Extraordinary item-gain on settlement
of debt (net of applicable income taxes)....... 1,907
-------- -------- -------- -------- -------- -------- --------
Net income (loss).............................. $ (4,946) $ (1,410) $ (816) $ (3,044) $ (6,712) $ 3,866 $ (8,612)
--------- --------- -------- -------- -------- -------- --------
--------- --------- -------- -------- -------- -------- --------
Per share of common stock
Income (loss) before discontinued operations... $ (1.87) $ (0.53) $ (0.31) $ (1.87) $ (2.54) $ (0.23) $ (3.65)
Income (loss) from discontinued operations..... 0.05 0.39
Gain (loss) on disposal of business segments... 1.64
Extraordinary item............................. 0.72
-------- -------- -------- -------- -------- -------- --------
Net income (loss)............................. $ (1.87) $ (0.53) $ (0.31) $ (1.15) $ (2.54) $ 1.46 $ (3.26)
--------- -------- -------- -------- -------- -------- --------
Dividends per share............................. $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00
-------- -------- -------- -------- -------- -------- --------
Average number of shares outstanding............ 2,641 2,641 2,641 2,641 2,641 2,641 2,641
-------- -------- -------- -------- -------- -------- --------
OTHER INFORMATION:
Total assets.................................... $137,532 $147,528 $146,733 $152,517 $162,085 $198,592 $193,469
-------- -------- -------- -------- -------- -------- --------
Property and equipment.......................... 96,294 115,017 116,306 120,401 135,685 157,628 153,276
-------- -------- -------- -------- -------- -------- --------
Long-term debt.................................. 91,691 101,250 101,165 101,603 104,551 121,771 127,628
-------- -------- -------- -------- -------- -------- --------
Shareholder' equity............................. 16,024 20,377 20,970 21,786 24,831 31,543 27,678
-------- -------- -------- -------- -------- -------- --------
Book value per share............................ $ 6.07 $ 7.72 $ 7.94 $ 8.25 $ 9.40 $ 11.94 $ 10.48
-------- -------- -------- -------- -------- -------- --------
% of shareholders' equity to total assets....... 11.7% 13.8% 14.3% 14.3% 15.2% 15.9% 14.3%
-------- -------- -------- -------- -------- -------- --------
Ratio of total liabilities to stockholders'
equity......................................... 7.6:1 6.2:1 6.0:1 6.0:1 5.6:1 5.3:1 6.0:1
-------- -------- -------- -------- -------- -------- --------
Rooms in operation.............................. 6,753 7,095 7,095 7,489 8,629 8,675 8,745
-------- -------- -------- -------- -------- -------- --------
Occupancy....................................... 52.9% 50.4% 51.7% 48.7% 49.7% 58.6% 56.8%
-------- -------- -------- -------- -------- -------- --------
Average Daily Room Rate......................... $ 54.78 $ 51.61 $ 51.91 $ 50.35 $ 51.40 $ 47.64 $ 45.92
-------- -------- -------- -------- -------- -------- --------
4
MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
Historically cash flow from operations and sales of surplus assets have
been the primary sources of liquidity for the Company.
The Company reported cash flow from operating activities for the first
nine months of fiscal 1994 in the amount of $4.9 million, a compared with $2.6
million for the same period in 1993. Total cash flow for fiscal year to date
1994 was $2.4 million, as compared with a deficit of $1.2 million for the 1993
nine month period.
In the third quarter of fiscal 1994 sales proceeds of $1.1 million were
received from the sale of a hotel in Houston which had been closed since 1988.
During second quarter of fiscal 1994 sales proceeds of $2.0 million were
received from the sale of surplus vacant land in Atlanta and a former car wash
site in Dallas.
During the first nine months of fiscal 1993, the Company realized net
sales proceeds of $3.2 million on the sale of a hotel and five operating car
wash units.
During the first nine months of fiscal 1994 the Company expended $3.4
million on capital expenditures, consisting principally of renovation projects
on nine hotels and television replacements at twelve hotels. Funding of these
expenditures was accomplished with $.7 million in installment sales contracts;
$.8 million from restricted cash deposits; with the remaining $1.9 million
provided from operating cash flows.
Available proceeds, provided by the sale of a hotel subsequent to the close
of the third quarter of fiscal 1994, amounting to $8.1 million were applied to
payment of outstanding debt on the property sold and other properties included
in a loan agreement with one of the Company's major lenders. Retirement of
this debt will result in an annual interest savings of $590,000 for the term of
the agreement, which matures on September 30, 1997.
With improving cash flows and sale of targeted properties, the Company
believes short term cash flow needs for working capital and renovation programs
will be provided.
Cash flow from operating activities for fiscal 1993 was $5.2 million, an
increase of $1.1 million over the 1992 level of $4.1 million.
During fiscal 1993 the Company expended $6.7 million on capital
expenditures, consisting principally of expenditures on renovation projects on
eight hotels. Included in these, are three projects converting existing full
service Holiday Inn hotels to Holiday Inn Express hotels, Holiday Inn
Worldwide's limited service hotel. Funding of the expenditures was accomplished
with $.9 million in a purchase money note and installment sales contracts;
$1.4 million from restricted cash deposits; and the remaining $4.4 million was
provided from operating cash flow.
During fiscal 1993 the Company sold its five car wash units located
in Memphis, realizing net proceeds of $1.0 million and receipt of a six year
note of $.3 million. Also during fiscal 1993 a hotel located in Houston and a
car wash site in Atlanta were sold resulting in net proceeds of $2.1 million and
$.1 million, respectively.
5
During fiscal year 1993 the purchaser of a hotel in fiscal 1992 elected to
take a prepayment discount on a $1.0 million purchase money note with a payment
of $.5 million cash.
During fiscal year 1993 $1.0 million was deposited to restricted cash
accounts held to fund capital expenditures on six of the Company's hotel
properties. These deposits are reflected in the caption "Other investing
activities" of the Consolidated Statement of Cash Flows.
With improved cash flows and sale of targeted properties, the Company
believes short term cash flow needs for working capital and renovation programs
will be provided. Three renovation programs were in process at fiscal year end
with anticipated remaining expenditures of less than $.5 million to complete.
During fiscal 1994 the Company expects to complete its program of
replacement of a major portion of the television sets in its hotels which was
started in fiscal 1993. Additionally, the Company plans to begin a two year
program of replacement of all guest room door locks with modern technology
electronic door locks and selective replacement of telephone systems in several
of its hotels. Estimated costs for these projects during fiscal 1994 are from
$1.6 million to $1.8 million, which are to be financed through lease purchase
contracts and available cash. The Company has budgeted a moderate sum of
$1.5 million to $2.0 million during fiscal 1994 for minor refurbishment projects
and an additional $.5 million for completion of renovations in progress at three
of its hotels. Funds for these renovations and the normal ongoing replacement
of furnishings and equipment in the hotels are expected to be provided from
available cash, restricted capital funds and cash flow. Timing of work on other
longer term projects could be advanced should additional funds become available
from sale of unused land parcels.
The Company, as part of its asset management policy, analyzes its
properties on a continuing basis to evaluate their market potentials as to
location, guest requirements and brand affiliation. These evaluations are
intensified when approaching significant decision points such as franchise and
lease expiration dates. In the past the evaluation process has resulted in
relicensing with same brand affiliation, change of brand affiliation, or
disposal through sale or nonrenewal of property lease.
In fiscal 1994 the Company will analyze two properties with leases
which expire at the end of fiscal 1994 and early fiscal 1995 with the intention
of renegotiating more favorable terms to allow the Company to continue its
lessee position, or secure management contracts to operate the properties for
the lessor. If the Company fails to secure more favorable terms, the
Company will probably allow these leases to expire. During fiscal 1993 the
combined gross revenue was $5.5 million and the combined net loss was $214,000
for these two hotels.
The Company holds seven unused land parcels, one closed hotel, and
five car wash sites of which all except one land parcel are available for sale.
Results of Operations
The following table sets forth for the periods indicated, percentages which
certain items reflected in the financial data bear to total revenues of the
Company and the percentage increase or decrease in amounts of such items as
compared to the indicated prior period:
6
Relationship to Total Revenues Period to Period
Year Ended Increase (Decrease)
September 30 Years Ended
---------------------------------------- -------------------------
1993 1992 1991 1993-92 1992-91
---------- ----------- ----------- ---------- -----------
Revenues:
Rooms 76.2 % 71.9 % 70.4 % (0.8)% (10.1)%
Restaurants 17.2 18.0 18.4 (10.4) (13.6)
Car washes 1.6 5.1 6.0 (70.0) (24.6)
Telephone & Sundry 5.0 5.0 5.2 (6.0) (16.1)
---------- ----------- -----------
Total Revenues 100.0 100.0 100.0 (6.3) (11.9)
---------- ----------- -----------
Operating costs and expenses:
Direct: *
Rooms 66.9 69.2 68.8 (4.1) (9.5)
Restaurants 100.4 101.3 102.3 (11.2) (14.4)
Car washes 109.1 88.2 93.7 (62.9) (29.0)
Telephone and sundry 41.6 42.5 40.6 (7.8) (12.2)
Marketing, administrative and general 10.1 10.4 10.1 (9.3) (8.9)
Depreciation 9.7 10.0 9.9 (9.1) (10.9)
---------- ----------- -----------
Total operating costs and expenses: 91.9 95.1 94.9 (9.4) (11.7)
---------- ----------- -----------
Operating income 8.1 4.9 5.1 54.8 (15.3)
Interest expense (10.7) (9.9) (12.4) (1.5) 29.7
Minority interest (0.1) 0.0 (0.1) (39.6) 57.4
Gain (loss) on disposition of assets 1.3 (3.7) 0.0 134.4 0.0
Loss contingency 0.0 0.4 (1.5) (100.0) 122.6
---------- ----------- -----------
Income (loss) from operations
before income taxes (1.4) (8.3) (8.9) 84.9 17.8
Income taxes (credit) (0.5) (3.3) (2.9) 86.9 0.8
---------- ----------- ----------- ---------- -----------
Income (loss) before extraordinary item (0.9) (5.0) (6.0) 83.5 26.2
Extraordinary item-gain on
settlement of debt (net of applicable taxes) 0.0 1.9 0.0 (100.0) 0.0
---------- ----------- ----------- ---------- -----------
Net income (loss) (0.9)% (3.1)% (6.0)% 73.2 % 54.6 %
---------- ----------- ----------- ---------- -----------
<FN> ---------- ----------- ----------- ---------- -----------
* Percentages of direct costs and expenses are expressed as a percentage of the applicable revenue
item, e.g. Direct-Rooms is stated as a percentage of Rooms Revenue, consequently, the sum of
percentages of the Operating Costs and Expenses will not equal Total Operating Costs and Expenses.
7
Nine Months Ended June 30, 1994 Compared to Nine Months Ended June 30, 1993
REVENUES - total revenues for the nine months ended June 30, 1994 decreased by
$.9 million over the corresponding period ended June 30, 1993. Decreased
revenues resulted from decreased car wash revenues of $.5 million as compared
with the same period of fiscal 1993, influenced by the fact that only one car
wash unit was operated during the 1994 nine months period. In fiscal 1993 six
other car wash units were operated for just over two months of that year. Five
were sold in early December, 1992 and one other unit was closed.
Although gross hotel revenues declined by $.4 million for the nine months of
fiscal 1994, gross revenues attributable to two hotels which were disposed of
in fiscal 1993 amounted to $1.5 million. The Company's most important revenue
element, hotel room revenue, improved by $.7 million for the nine months,
however same hotel room revenue increased by $2.0 million.
Following is a table comparing room revenues, relative occupancy levels and
average daily room rates (ADR) of the twenty-eight hotels remaining in the
system for the nine months and quarter ended June 30:
NINE MONTHS QUARTER
------------------------ -------------------------
1994 1993 1994 1993
----------- ----------- ----------- -----------
Room Revenue $52,463,000 $50,490,000 $18,956,000 $18,626,000
Occupancy 52.89% 50.95% 56.55% 55.97%
ADR $54.78 $51.86 $55.19 $52.20
Food and beverage and sundry revenues decreased by $1.1 million for the nine
months and decreased by $.4 million for the quarter from the same periods last
year. Decreased other revenues attributable to the two hotels disposed of were
$.3 million and $.1 million for the respective periods.
OPERATING COSTS AND EXPENSES - total operating costs and expenses decreased by
$3.3 million for the nine month period and decreased by $1.2 million for the
quarter ended June 31, 1994. The reduction attributable to the two hotels which
were disposed of was $1.8 million for the nine months and $.4 million for the
quarter. Additionally, operating costs and expenses of the car washes decreased
by $.9 million for the nine months and by $.1 million for the quarter.
GAIN ON DISPOSITION OF ASSETS - subsequent to the close of the third quarter an
operating hotel located in Houston was sold at a loss of $6.64 million. The
carrying value of the property was adjusted to its net realizable value and the
loss was recognized in the third quarter. Additionally, another hotel located
in Houston, which had been closed since 1988 was sold at a loss of $540,000. A
gain of $.9 million was recognized upon the sale during the second quarter of
fiscal 1994 of an unimproved tract of land in Atlanta and a former car wash unit
in Dallas. During second quarter of fiscal 1993 the Company reported a gain
of $1.2 million on the sale of a hotel in Houston, and recognized a deferred
gain of $.2 million on the pay off of a note from a prior year hotel sale.
8
INCOME TAXES - effective October 1, 1993 the Company changed its method of
accounting for income taxes from the deferred method to the liability method
required by Statement of Financial Accounting Standards ("FAS") No. 109,
"Accounting for Income Taxes". As permitted under the new rule, prior years'
financial statements have not been restated. The cumulative effect of adopting
this statement as of October 1, 1993 was immaterial to net earnings. The
effective tax rates for the 1994 nine months period was a tax credit of 31.3%,
compared with a credit of 30.9% for the same period last year. For the quarters,
the effective tax rate was a credit of 32.9% for 1994 as compared with a tax
expense of 166.4% for the 1993 third quarter. The combined effect of several
factors during the third quarter of fiscal 1993 resulted in the abnormally high
effective tax rate:
* There was a near breakeven income before tax ($96,000)
* Taxable income was earned in states with state income taxes
while losses were incurred in states having no state income
taxes
* Provision was made for $70,000 alternative minimum federal taxes
during the quarter
* $73,000 in nondeductible expenses were reflected in income
before taxes
9
1993 Compared to 1992
REVENUES - total revenues for fiscal 1993 were $92.9 million, or a decrease of
$6.2 million from those reported in 1992. Dispositions of hotels, five in
fiscal 1992, and two in fiscal 1993, affected the net change in revenues
markedly. Additionally, in fiscal 1992 seventeen car wash units were in
operation at the beginning of that year, while only seven were in operation at
the close of the year. In fiscal 1993 five of the units were sold in early
December 1992 and one was closed in May 1993.
Following is a table reflecting the various elements of the net change in
revenue:
In Millions
Increase
(Decrease)
--------------
Currently operating 28 hotels $ 2.9
Hotels disposed of (5.6)
Car wash units (3.5)
--------
Net change in revenue $ (6.2)
--------
--------
Following is a table comparing the Company's most significant revenue
element, room revenues, and relative occupancy levels and average daily room
rates (ADR) of the 28 hotels remaining in the system at fiscal year end:
1993 1992
------------ ------------
Room revenue $ 69,447,000 $65,720,000
Occupancy 52.17% 50.59%
ADR $52.11 $50.78
OPERATING COSTS AND EXPENSES - total operating costs and expenses decreased by
$8.9 million in fiscal 1993 as compared with fiscal 1992. The reduction of
operating costs and expenses attributable to the seven hotels which were
disposed of was $6.9 million. Additionally, operating costs and expenses of the
car washes decreased by $3.4 million.
INTEREST EXPENSE - while the net change in interest expense for fiscal 1993 was
an increase of only $143,000, two factors are worthy of note in this comparison.
Interest expense attributable to the seven hotels which were disposed of
reflected a decrease of $1.1 million. In 1992 there was a $1.8 million credit
for interest forbearance in the renewal of $42.3 million in first mortgage debt.
GAIN (LOSS) ON DISPOSITION OF ASSETS - a gain of $1.2 million was recognized on
the sale of a hotel in Houston. A deferred gain of $.2 million was recognized
when the purchaser of a hotel during fiscal 1992 prepaid the outstanding
purchase money note. A loss of $.2 million was recorded upon the termination of
a lease on a hotel in Dallas.
PROVISION FOR INCOME TAXES - the effective tax rate for 1993 was a net credit of
34.5% resulting principally from recognition of Federal income tax benefits in
1993 through the elimination of net deferred tax credits. A detailed
reconciliation of the effective tax rate with statutory rates is set out in
Note 2 of Notes to Consolidated Financial Statements.
1992 Compared to 1991
REVENUES - total revenues for fiscal 1992 decreased by $13.4 million from those
reported in fiscal 1991. Decreased revenues resulted primarily from decreased
hotel room revenue of $8.0 million. Reduced hotel room revenues attributable to
the hotels which were disposed of were $6.2 million. Following is a table
comparing relative occupancy and average daily room rates of the thirty hotels
remaining in the system at fiscal year end:
1992 1991
------------- -------------
Room revenue $ 68,016,000 $ 69,856,000
Occupancy 50.01% 50.81%
ADR $50.38 $51.54
Additionally, combined food and beverage, and telephone and sundry revenues
of the hotels decreased by $3.4 million, and car wash revenues decreased by $1.6
million.
10
OPERATING COSTS AND EXPENSES - total operating costs and expenses decreased by
$12.6 million in fiscal 1992 as compared with fiscal 1991. Hotel operating
costs and expenses were decreased by $10.5 million The reduction of operating
costs and expenses attributable to the hotels which were disposed of was
$7.7 million. Additionally, operating costs and expenses of the car washes
decreased by $2.2 million.
INTEREST EXPENSE - net decreased interest and financing costs of $4.1 million
were realized, with $1.8 million of the decrease attributable to interest
forbearance in the renewal of $42.3 million in first mortgage debt. Additionally
there was a $1.3 million reduction of interest cost related to the two
properties conveyed to the lender in the second quarter of fiscal 1992.
GAIN (LOSS) FROM PROPERTY DISPOSITIONS - the sale of two hotels located in
Atlanta and Jacksonville, Florida combined with the termination of a lease in
Jackson, Mississippi resulted in a reported net gain of less than $20,000. A
loss of $1.2 million was recognized upon the demolition of a closed hotel in
Dallas, representing a write off of the book value of the improvements of
$1.0 million and $.2 million in demolition costs. Also included in this
caption was the write off of $.4 million of unfunded prior year losses of the
joint venture partner upon the Company's exercise of a purchase option of the
joint venturer's interest in a hotel located in Atlanta.
LOSS CONTINGENCY - a loss contingency of $1.7 million was provided at fiscal
year end, September 30, 1991, estimating the loss to be recognized upon the
conveyance of two hotels to the lender in partial settlement of related mortgage
debt of $17.4 million. Upon completion of the conveyance in March, 1992 the
actual loss recognized was $1.3 million, resulting in a credit adjustment to the
loss contingency of $ .4 million.
PROVISION FOR INCOME TAXES - the effective tax rate for 1992 was a net credit of
41.9% resulting principally from recognition of Federal income tax benefits in
1992 through the elimination of net deferred tax credits. A detailed
reconciliation of the effective tax rate with statutory rates is set out in
Note 2 of Notes to Consolidated Financial Statements.
BUSINESS
UII is a Delaware corporation which, since 1956, through its subsidiaries
primarily owns and operates hotels. For the most part, UII engages in the
operation of hotels under Holiday Inns, Inc. licenses. UII currently operates
26 hotels: eight in Atlanta, Georgia; six in Houston, Texas; four in Jackson,
Mississippi; three in Dallas, Texas; two in Colorado Springs, Colorado; one each
in Flagstaff and Scottsdale, Arizona; and Santa Barbara, California.
All hotels are equipped with year round temperature control, a swimming pool,
telephone and free television in each room, 24-hour switchboard service, wall-
to-wall carpeting, on-premises parking and free advance reservation services.
All hotels contain restaurants operated by UII and sell liquor, except for the
three Hampton Inns located in Jackson, Mississippi; Atlanta, Georgia; and
Houston, Texas; the Days Inn Dallas Regal Row; the two Holiday Inn Express
properties located in Atlanta, Georgia and one property in Colorado Springs,
Colorado, which are limited service hotels located within line of sight of
various food and beverage facilities.
During fiscal year 1993, the Company sold the Days Inn, I-10 Katy West
located in Houston, Texas.
During fiscal year 1993, the Company terminated its property lease and
ceased to operate the former Holiday Inn Park Central in Dallas, Texas.
During fiscal year 1993, the Company converted three (3) full service
Holiday Inn hotels to the limited service brand, Holiday Inn Express. These
hotels were the I-85 Northcrest and I-20 East hotels located in Atlanta, Georgia
and the Colorado Springs Central hotel in Colorado Springs, Colorado.
During fiscal year 1993, the Company converted the Holiday Inn San Jose
Airport to a limited service Super 8 Motel.
During fiscal year 1993, the Company converted the Holiday Inn
Scottsdale to a full service Howard Johnson Hotel.
UII also owns and operates a Mr. Pride Car Wash in Houston, Texas. The car
wash center uses modern semi-automatic car washing equipment. Automobiles are
pulled by a conveyor through a series of washing, rinsing and drying cycles. The
unit is operated on leased property with a lease expiration date of October 31,
1995. Additionally, UII owns several closed car wash units and an undeveloped
leased site which are being held for disposition.
Additionally, the Company owns several closed car wash units and an
undeveloped leased site which are being held for disposition.
During fiscal year 1993, the Company sold its interest in five (5) car
wash units in Memphis, Tennessee.
During fiscal year 1993, the Company closed one (1) car wash unit in
Houston, Texas.
There has been no significant changes in the kinds of products produced or
services rendered by UII or in the markets or methods of distribution since the
beginning of the fiscal year, October 1, 1993. UII currently has no new hotel
developments underway or planned.
At June 30, 1994, UII had consolidated total assets of approximately $137
million and stockholders' equity of $16 million.
The principal executive offices of UII are located at Suite 2300, 5100
Poplar Avenue, Memphis, Tennessee 38137, and its telephone number is (901)
767-2880.
11
The Company's businesses are highly competitive. The hotels are in
competition with hotels and other motels within their immediate area. Due to
the highly competitive nature of the lodging industry, the Company is
required to make continuing expenditures for modernizing, refurnishing and
maintaining existing facilities.
The Company's business is not materially dependent upon a single or few
customers, the loss of whom would have a material adverse effect on the business
of the Company.
The license agreements that have been issued by Holiday Inns, Inc., Hampton
Inns, Days Inns of America Franchising, Inc., Ramada, Inc., and Howard Johnson
Franchise Systems, Inc. to the Company are considered to be of considerable
importance. The Company has location licenses for its properties. The
original license agreement for new hotels is generally for a period of twenty
(20) years. License agreements for hotel conversions are generally issued for
periods of ten (10) to fifteen (15) years. The Company may request license
extensions from its licensors prior to the end of the term of the license.
Each license is terminable by licensors for cause, including failure to
conform to certain minimum standards.
An insignificant sum was spent by the Company during each of the last
two fiscal years on research activities.
Compliance with federal, state and local provisions regulating the
discharge of materials into the environment or otherwise relating to the
protection of the environment, has not required any capital expenditures of a
material nature, nor has it had any material effect on earnings or the
competitive position of the Company and its subsidiaries.
Four (4) of the Company's hotels located in Colorado and Arizona are
dependent to a large extent upon the summer and winter vacation seasons.
The Company has one primary business segment, the operation of hotel
properties. This segment represents greater than 90% of consolidated revenue
operating profit and identifiable assets. All revenues were derived from
domestic operations. There are no material customers and no material
government contracts.
12
PROPERTIES
HOTEL DIVISION NUMBER OF ROOMS
- -------------- ---------------
Originally Presently
Holiday Inn Hotels:
Atlanta, Georgia
Airport North - owned(2) 301 492
South (I-75/U.S. 41) - owned(2) 180 180
I-285/Powers Ferry Rd. - owned(2) 300 300
Perimeter Mall/Dunwoody Area - owned(2) 252 250
Colorado Springs, Colorado
North - owned 220 220
Dallas, Texas
Brook Hollow/Love Field - owned(2) 358 356
Houston, Texas
Intercontinental Airport - owned(2) 210 400(4)
West Loop Near the Galleria - owned(2) 214 318(4)
Medical Center - owned(3) 298 296
I-10 West at Loop 610 - owned(2) 252 249
Near Greenway Plaza - owned(2)(5) 361 361(4)
Jackson, Mississippi
North - owned 74 254
Southwest - owned(2) 102 289
Downtown - owned(2) 359 358
Santa Barbara, California - owned(2) 159 154
Holiday Inn Express Hotels:
Atlanta Georgia
I-85 N/Northcrest (Express) - owned(2) 112 198
I-20 East (Express) - owned(2) 167 165(4)
Colorado Springs, Colorado
Central (Express) - owned(2) 167 207
Hampton Inns:
Jackson, Mississippi
I-55 North - owned(2) 118 118
Marietta, Georgia
I-75N (Marietta) - owned(2) 140 140
Houston, Texas
I-10 East - owned 89 89
Days Inns:
Flagstaff, Arizona
1000 West Highway 66 - owned 120 156
Dallas, Texas
Stemmons & Regal Row - owned(2) 202 200
Houston, Texas
I-10 East/Mercury Drive - owned 156 156
Ramada Inn:
Atlanta, Georgia
Downtown - owned(2) 263 473
Howard Johnson Hotels:
Dallas, Texas
Downtown - (1994)(1) 312 308
Scottsdale, Arizona - lease of land (2) 216 216
Super 8 Motel:
San Jose, California Airport (1)(6) 199 192
---
Total: 7,095
13
<FN>
(1) Expiration dates, including renewal options, of material leases covering
land and buildings.
(2) Subject to first mortgage.
(3) Subject to first and second mortgages.
(4) Properties with rooms in reserve, not currently in active inventory:
Atlanta:
I-20 East 65
Houston:
Intercontinental Airport 96
West Loop Near the Galleria 106
Near Greenway Plaza 147
(5) This property was sold August 2, 1994.
(6) The lease on this property was teminated effective September 30, 1994.
Legal Proceedings.
No material legal proceedings are pending against the Company.
Employees
On December 7, 1993, Company had approximately 1,879 employees,
including approximately 295 part-time employees who work an average of less than
30 hours per week.
MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The following table gives the high and low sale prices of the Company's
Common Stock on the New York Stock Exchange - Composite Tape, for the past two
fiscal years, as reported by the New York Stock Exchange.
1994 1993
--------------- ---------------
High Low High Low
---- --- ---- ---
1st Quarter 9 1/4 5 1/2 2 3/8 1 1/2
2nd Quarter 14 1/2 7 1/2 5 2 3/8
3rd Quarter 14 1/4 8 7/8 4 3/8 3 5/8
4th Quarter 18 12 6 3/4 3 5/8
As of Septeber 30, 1994, the approximate number of shareholders was 1460.
No dividends were paid during fiscal 1994 or 1993.
14
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is certain information concerning the directors and
executive officers of the Company.
Director
Name Age Since Position
- ---- --- -------- --------
Don Wm. Cockroft 56 1967 President and Chief Executive
(brother of Officer and Director
Robert L. Cockroft Mr. Cockroft joined the
and Janet C. Virgin, Company in 1963 and in
brother-in-law of 1966 was elected Vice
J. Howard Lammons) President in charge of
construction. On January
18, 1973, he was elected
President of the
Company.
J. Howard Lammons 65 1957 Director
(brother-in-law of Retired from active
Don Wm. Cockroft, service as an executive
Robert L. Cockroft officer on March 31, 1994.
and Janet C. Virgin)
Robert L. Cockroft 52 1971 Director
(brother of Don Wm. Physician-Memphis
Cockroft and Janet C. Radiological Professional
Virgin, brother-in-law Corporation -
of J. Howard Lammons) Practitioner of
Medicine.
Howard W. Loveless 67 1977 Director
President - Haas, Inc., a
private investment
advisory company.
Janet C. Virgin 60 1991 Director
(sister of Don Wm. Private Investor
Cockroft and Robert L.
Cockroft; sister-in-law
of J. Howard Lammons)
Ronald J. Wareham 50 1993 Director
President - R. J. Wareham
& Company Incorporated, a
corporate financial
advisory firm.
Augustus B. Randle, III 53 Secretary and General
Counsel
Mr. Randle joined the
Company in 1972.
15
J. Don Miller 59 Vice President - Finance
Mr. Miller joined the
Company in 1970 as
Comptroller. In 1975 he
was named Vice
President - Finance.
John M. Dollar 53 Vice President
Mr. Dollar joined the
Company in 1971. He
was elected Vice
President in charge of
construction in 1973.
The Company's directors and executive officers have had the principal
occupation described above for at least five years, except for Ronald J.
Wareham. Ronald J. Wareham has been President of R. J. Wareham & Company,
Incorporated, a corporate financial advisory firm since 1991. From 1984 to 1991
he was a managing director of Dean Witter Reynolds' Corporate Finance Office in
Atlanta, Georgia.
16
Share Ownership of Directors and Executive Officers
Ownership as of September 30, 1994, of Company Common Stock by all current
directors, including all nominees to the Board of Directors, the chief
executive officer and the three additional most highly compensated executive
officers of the Company, as well as by all directors and executive officers of
the Company as a group, is as follows:
% of Shares
Shares of Company Outstanding
Common Stock (net of
Name Beneficially Owned treasury shares)
----- ------------------ ----------------
DIRECTORS
Don Wm. Cockroft 1,891 (l) *
J. Howard Lammons 950 (l) *
Robert L. Cockroft 0
Howard W. Loveless 500 *
Janet C. Virgin 31 *
Ronald J. Wareham 0 *
NON-DIRECTOR
EXECUTIVE OFFICERS
John M. Dollar 24 *
All Officers and Directors as a 4,996 (2) *
group (9) including the seven above
*less than l%
<FN>
(1) Includes: (a) 1,800 shares owned by the wife and dependent child of Don
Wm. Cockroft; (b) 490 shares owned by the wife of J. Howard Lammons.
Except as noted hereinabove, all of the shares are owned directly by said
persons with sole voting and investment power.
(2) Does not include 1,209,214 shares owned by Cockroft Consolidated
Corporation. The controlling shareholders of Cockroft Consolidated
Corporation are Don Wm. Cockroft; Robert L. Cockroft; Katherine Lammons,
the wife of J. Howard Lammons; and Janet C. Virgin. See "Principal
Shareholders."
Summary Compensation Table
The following table sets forth the compensation awarded to, earned by or
paid to the Company's Chief Executive Officer and its three other most highly
compensated executive officers for services rendered in all capacities during
the fiscal years ended September 30, 1993, 1992 and 1991.
Annual Compensation
--------------------
All Other
Name and Principal Salary Compensation
Position Year ($)(2) ($)(1)(3)
- ------------------- ---- ------ -------------
Don Wm. Cockroft 1993 216,000 169,262
President 1992 216,000
1991 205,750
J. Howard Lammons (4) 1993 155,000 270,142
Executive Vice President 1992 155,000
1991 148,750
John M. Dollar 1993 113,000 47,191
Vice President 1992 113,000
1991 106,000
David L. Potts (5) 1993 101,000 35,012
Vice President 1992 101,000
1991 96,000
<FN>
(1) In accordance with transitional provisions of the Securities and Exchange
Commission's rules on executive compensation disclosure in proxy
statements, amounts of All Other Compensation have not been included for
fiscal years 1992 and 1991.
(2) Salary includes base salary earned and paid in cash during the fiscal
year and the amount of base salary deferred at the election of the
executive officer under the United Inns, Inc. Retirement Savings Plan
(401(K) Plan) for fiscal years 1992 and 1993.
(3) All Other Compensation consists of (a) the amount ($3,564) in insurance
premiums provided to each executive officer through the Company's Group
Health Insurance Plan that is not available generally to all salaried
employees, and (b) matching contributions to the Company's Retirement and
Savings Plan (401(K) Plan); Such amounts, respectively, were as follows
for 1993: Mr. Cockroft, $8,316; Mr. Lammons, $6,080; Mr. Dollar, $4,520;
and Mr. Potts, $4040, and (c) distributions under the Company's Pension
Plan that was adopted effective October 1, 1979, and terminated during
fiscal year ending September 30, 1993, after necessary regulatory
approvals for the termination of the Pension Plan had been received.
Benefits were frozen under the Pension Plan on September 30, 1989. Such
amounts, respectively, were as follows: Mr. Cockroft, $157,382; Mr.
Lammons, $260,498; Mr. Dollar, $39,107; and Mr. Potts, $27,408.
(4) Mr. Lammons retired from service as an executive officer on March 31,
1994.
(5) Mr. Potts resigned effective January 31, 1994.
17
Compensation of Directors
For fiscal 1994 all Directors are to be paid a fee of $750 for each Board
meeting attended. In addition, Directors who are not employees of the Company
are to be paid a quarterly fee of $1,500, plus $400 for each Board Committee
meeting attended.
The Company has a consulting arrangement with R. J. Wareham & Company
Incorporated under the terms of which R. J. Wareham & Company, Incorporated
is to be paid by the Company for Ronald J. Wareham's time and expenses for
financial advice to the Company related to a variety of corporate projects.
Mr. Ronald J. Wareham is the sole shareholder of R. J. Wareham & Company
Incorporated. The Company has not made any payments to R. J. Wareham &
Company Incorporated during the fiscal year ended September 30, 1993,
subsequent to Ronald J. Wareham's election to the Board of Directors on
August 2, 1993.
Change in Control Arrangements
On June 1, 1987, the Company entered into severance agreements with
certain executive officers. Under the agreements with Mr. John M. Dollar and
Mr. David L. Potts, a former executive officer, they would be entitled to
severance compensation in the event that their employment is terminated
following a change in control of the Company. The amount of compensation would
be equal to a maximum of 200% of their base compensation for the twelve months
prior to their termination. The maximum amount of compensation which would be
payable to Mr. Dollar, and Mr. Potts, if their employment were terminated at
this time, would be $226,000 and $202,000, respectively. Mr. Potts resigned
effective January 31, 1994.
PRINCIPAL SHAREHOLDERS
The following table sets forth information with respect to any persons
who, to the knowledge of the Company, owned beneficially more than five (5%)
per cent of the common stock of the Company, as of September 30, 1994. Of the
shares beneficially owned, each owner has sole voting and investment power
unless otherwise indicated.
Number
Name and Address of Shares
of Beneficial Title of Beneficially Percent
Owner Class Owned of Class
__________________________________________________________________________
Cockroft Consolidated Common 1,209,214 (1) 45.8
Corporation
Suite 2300
5100 Poplar Avenue
Memphis, TN 38137
Dimensional Fund Common 182,400 (2) 6.9
Advisors Inc.
1299 Ocean Avenue, Ste. 650
Santa Monica, CA 90401
Mario J. Gabelli Common 581,300 (3) 22.0
One Corporate Center
Rye, New York 10580
<FN>
(1) Don Wm. Cockroft, Robert L. Cockroft, Janet Virgin, and Katherine Lammons
beneficially own all of the shares through their controlling interest in
Cockroft Consolidated Corporation.
(2) According to Schedule 13G as filed with the Securities and Exchange
Commission by Dimensional Fund Advisors Inc., reporting ownership as of
February 19, 1991, Dimensional Fund Advisors Inc. has beneficial
ownership of 182,400 shares. Dimensional Fund Advisors Inc. has sole
voting and sole dispositive power over 116,600 of these shares and
officers of Dimensional Fund Advisors Inc. have sole voting and
dispositive power over 65,800 of these shares. The shares of Dimensional
Fund Advisors Inc., a registered investment advisor, are held in
portfolios of DFA Investment Dimensions Group Inc., a registered open-end
investment company, or the DFA Group Trust, an investment vehicle for
qualified employee benefit plans, both of which Dimensional Fund Advisors
Inc. serves as investment manager. Dimensional Fund Advisors Inc.
disclaims beneficial ownership of all such shares.
(3) According to Schedule 13D as filed with the Securities and Exchange
Commission by Gabelli Funds, Inc., Gamco Investors, Inc. Gabelli
International Limited II, and Mario J. Gabelli ("the Reporting Persons")
reporting ownership as of June 6, 1994, Gamco Investors, Inc. is deemed to
have beneficial ownership of 420,800 of these shares; Gabelli Funds, Inc.
is deemed to have beneficial ownership of 160,000 of these shares; Gabelli
International Limited II is deemed to have beneficial ownership of 500 of
these shares; Maro J. Gabelli is deemed to have beneficial ownership of all
of the 581,300 shares; and Gabelli Funds, Inc. is deemed to have beneficial
ownership of the securities owned by each of the foregoing persons other
than Mario J. Gabelli. Each of the Reporting Persons and Covered Persons
has the sole power to vote and sole power to dispose of the securities
reported except that Gamco Investors, Inc. does not have the authority to
vote 50,000 of the reported shares; except that Gabelli Funds, Inc. has
sole dispositive and voting power with respect to the shares of the Issuer
held by The Gabelli Asset Fund, The Gabelli Growth Fund, The Gabelli
Convertible Securities Fund, The Gabelli Value Fund, Inc., The Gabelli
Small Cap Growth Fund, The Gabelli Equity Income Fund, The Gabelli Equity
Trust, The Gabelli Global Telecommunications Fund, The Gabelli Global
Convertible Securities Fund, The Gabelli Interactive Couch Potato Fund,
and/or the Gabelli ABC Fund with respect to the 160,000 shares held by one
or more of such funds, and except that the power of Mr. Mario J. Gabelli
and Gabelli Funds, Inc. is indirect with respect to securities beneficially
owned directly by other Reporting Persons. The Reporting Persons do not
admit that they constitute a group.
18
SELLING SHAREHOLDERS
The following table shows the name of each Selling Shareholder and the
number of Shares being offered by each. After completion of the offering,
assuming all of the Shares being offered are sold, the Selling Shareholders will
not own any shares of Common Stock.
COMMON STOCK BENEFICIALLY OWNED
Upon Percentage
Completion Owned Upon
Prior to Offered of the Completion of
Selling Shareholder Offering Hereby Offering Offering
- ------------------- -------- ------- ---------- -------------
Geller & Co has furnished consulting services to UII since August 13, 1993.
UII has agreed to bear all expenses (other than selling commissions and
fees) in connection with the registration and sale of the Shares being offered
by the Selling Shareholders in market transactions or in negotiated
transactions. See "Sale of the Shares." UII has filed with the Commission a
Registration Statement on Form S-1 under the Securities Act with respect to the
resale of the Shares from time to time in the market or in negotiated
transactions and has agreed to prepare and file such amendments and supplements
to the Registration Statement as may be necessary. This Prospectus forms a part
of such Registration Statement.
SALE OF THE SHARES
The sale of the Shares by the Selling Shareholders may be effected from
time to time in transactions in the market, in negotiated transactions or
through a combination of such methods of sale, at fixed prices, which may be
changed, at market prices prevailing at the time of the sale, at prices related
to such prevailing market prices or at negotiated prices. The Selling
Shareholders may effect such transactions by selling the Shares to or through
broker-dealers, and such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Shareholders and/or the
purchasers of the Shares for which such broker-dealers may act as agents or to
whom they sell as principals, or both (which compensation as to a particular
broker-dealer may be in excess of customary compensation).
The Selling Shareholders and any broker-dealers who act in connection with
the sale of the Shares hereunder may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act, and any commissions received by
them and profit on any resale of the Shares as principals might be deemed to be
underwriting discounts and commissions under the Securities Act.
THE CONSULTING AGREEMENT
The Company entered a Consulting Agreement in August 1993 with Geller & Co.
for the performance of consulting services related to its hotel operations and
corporate structure. Compensation under the agreement consisted of a monthly
retainer fee, a contractual right to a restricted stock award of 25,000 shares
of the Common Stock and an option to purchase an additional 35,000 shares at the
then current average market price which was $4.55 per share. The above mentioned
shares and option to purchase shares were to be fully vested, earned and
delivered upon the completion of the full term and substantial performance under
the conditions of the agreement, one year from the date of execution.
Satisfactory completion of the consultant's performance under the agreement
occurred during the fourth quarter of the fiscal year ended September 30, 1994.
DESCRIPTION OF UII CAPITAL STOCK
The following summaries of certain provisions of the Certificate of
Incorporation, as amended (the "Charter"), and Bylaws, as amended, of UII, do
not purport to be complete, are qualified in their entirety by reference to such
instruments, each of which is an exhibit to the Registration Statement of which
this Prospectus is a part, and are subject, in all respects, to applicable
Delaware law.
Authorized Capital Stock
The authorized capital stock of UII currently consists of 10,000,000 shares
of Common Stock, $1.00 par value per share, which may be issued from time to
time by resolution of the UII Board. As of June 30, 1994, there were 2,640,899
shares of UII Common Stock outstanding. Also, 300,000 shares of UII Common
Stock are reserved for issuance under a stock plan. The holders of the UII
Common Stock are entitled to receive such dividends as may be declared by the
UII Board from funds legally available therefor. The holders of the outstanding
shares of UII Common Stock are entitled to one vote for each such share on all
matters presented to shareholders and are not entitled to cumulate votes for the
election of directors. Upon any dissolution, liquidation or winding up of UII
resulting in a distribution of assets to the shareholders, the holders of UII
Common Stock are entitled to receive such assets ratably according to their
respective holdings after payment of all liabilities and obligations. The
shares of UII Common Stock have no preemptive, redemption, subscription or
conversion rights. The Transfer Agent for the Common Stock is The First
National Bank of Boston.
The UII Board is elected each year. In addition, the Charter and the
Bylaws, among other things, generally give to the UII Board the authority to fix
the number of directors on the UII Board and to fill vacancies on the UII Board.
USE OF PROCEEDS
None of the proceeds from the sale of the Shares by the Selling
Shareholders will be received by UII. However, at the time the Option Shares
are issued pursuant to the exercise of the options, the Company will receive
$159,250. Such funds will be used for general corporate purposes.
LEGAL MATTERS
A legal opinion to the effect that the Shares offered hereby, when sold,
will be validly issued, fully paid and nonassessable, has been rendered by
Heiskell, Donelson, Bearman, Adams, Williams & Caldwell, counsel for UII.
EXPERTS
The consolidated financial statements of UII and its subsidiaries
for the year ended September 30, 1993 have been audited by Frazee, Tate &
Associates, independent public accountants, as set forth in their report
thereon dated December 3, 1993, included herein. Such consolidated financial
statements are included herein in reliance on such report given upon the
authority of such firm as experts in accounting and auditing.
19
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Consolidated Balance Sheets as of June 30, 1994
and September 30, 1993 (Unaudited) 20
Consolidated Statements of Income for the
Nine Months and Quarter Ended June 30, 1994
and 1993 (Unaudited) 21
Consolidated Statements of Cash Flows for the
Nine Months Ended June 30, 1994 and 1993
(Unaudited) 22
Notes to Consolidated Financial Statements
(Unaudited) 23
Report of Independent Accountants 24
Consolidated Balance Sheets as of
September 30, 1993 and 1992 25
Consolidated Statements of Income For the
Years Ended September 30, 1993, 1992
and 1991 27
Consolidated Statements of Stockholders'
Equity for the Years Ended September 30,
1993, 1992 and 1991 28
Consolidated Statements of Cash Flows for
the Years Ended September 30, 1993,
1992 and 1991 29
Notes to Consolidated Financial Statements 31
UNITED INNS, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
JUN 30, 94 SEP 30, 93
------------- -------------
CURRENT ASSETS:
Cash and cash equivalents (Note B) $6,445,979 $4,095,215
Current portion of long-term receivables 1,022,927 1,072,113
Accounts receivable - net of allowance
for bad debts of $77,530 for June 94
and $78,835 for Sep 93:
Trade 3,340,580 2,593,459
Other 512,396 1,085,197
Inventories (Note C) 887,403 886,483
Prepaid expenses 7,112,290 6,084,713
Property held for sale (Note D) 8,229,000
------------- -------------
Total current assets 27,550,575 15,817,180
------------- -------------
INVESTMENTS:
Long-term receivables less
current maturities 259,489 313,424
Land not in use - at cost 8,018,648 8,907,151
Other investments - at cost 10,000 10,000
------------- -------------
8,288,137 9,230,575
------------- -------------
PROPERTY AND EQUIPMENT - at cost:
Land 12,361,728 13,696,986
Building and improvements 137,098,771 155,159,524
Furnishings and equipment 25,013,363 30,508,425
Property under capital leases 3,714,804 3,714,804
------------- -------------
178,188,666 203,079,739
Less accumulated depreciation 86,581,185 91,457,432
------------- -------------
91,607,481 111,622,307
Construction in progress 2,658,351 575,851
Property held for sale 2,028,603 4,107,880
------------- -------------
96,294,435 116,306,038
------------- -------------
OTHER ASSETS:
Franchises 619,005 674,143
Deferred loan and other expenses 1,615,393 1,590,596
Restricted cash 3,164,438 3,114,320
------------- -------------
5,398,836 5,379,059
------------- -------------
$137,531,983 $146,732,852
------------- -------------
------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
JUN 30, 94 SEP 30, 93
------------- ------------
CURRENT LIABILITIES:
Long-term debt due within one year $10,538,997 $3,243,325
Notes payable 541,050 261,160
Accounts payable - trade 1,952,709 2,418,739
Sales and occupancy taxes 1,324,336 1,211,561
Accrued expenses:
Payroll and payroll taxes 1,854,983 1,421,127
Rent and property taxes 2,327,051 2,706,849
Insurance 3,542,203 3,281,682
Interest and other 2,521,443 2,183,724
Income taxes payable 211,041 219,802
------------- ------------
Total current liabilities 24,813,813 16,947,969
------------- ------------
LONG-TERM DEBT:
First Mortgages 100,565,544 102,926,861
Capital lease obligations 185,566 542,121
Chattel mortgages 1,171,679 625,934
Installment loans and other 307,356 313,692
------------- ------------
102,230,145 104,408,608
Less amounts due within one year 10,538,997 3,243,325
------------- ------------
91,691,148 101,165,283
------------- ------------
Minority Interest 578,348 517,096
------------- ------------
Deferred Other 1,265,437 1,410,978
------------- ------------
Deferred Income Taxes 3,159,504 5,721,882
------------- ------------
STOCKHOLDERS' EQUITY:
Common Stock - $1 par 10 Mill shares
authorized shares issued 4,117,813 4,117,813 4,117,813
Paid in capital 14,613,138 14,613,138
Retained earnings 41,381,262 46,327,055
------------- ------------
60,112,213 65,058,006
Less treasury shares at cost
1,476,914 in 1994 ; 1,476,904 in 1993 44,088,480 44,088,362
------------- ------------
Total stockholders' equity 16,023,733 20,969,644
------------- ------------
$137,531,983 $146,732,852
------------- ------------
------------- ------------
20
UNITED INNS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
NINE MONTHS ENDED QUARTER ENDED
--------------------------- ---------------------------
30-Jun-94 30-Jun-93 30-Jun-94 30-Jun-93
------------- ------------- ------------- -------------
Revenues
Rooms $52,462,722 $51,727,456 $18,956,384 $18,900,023
Restaurants 11,419,253 12,239,913 3,716,539 4,015,857
Car washes 735,695 1,192,238 207,593 278,189
Telephone & sundry 3,174,715 3,523,468 1,117,794 1,206,748
------------- ------------- ------------- -------------
67,792,385 68,683,075 23,998,310 24,400,817
------------- ------------- ------------- -------------
Operating costs and expenses:
Direct:
Rooms 33,900,001 35,399,762 11,664,587 12,357,893
Restaurants 11,253,692 12,280,777 3,689,313 4,079,557
Car washes 709,323 1,388,946 215,169 310,563
Telephone & sundry 1,343,943 1,444,754 441,334 496,627
Marketing, administrative and gen 7,391,868 7,418,128 2,472,525 2,470,902
Depreciation 6,739,495 6,660,236 2,219,055 2,158,591
------------- ------------- ------------- -------------
61,338,322 64,592,603 20,701,983 21,874,133
------------- ------------- ------------- -------------
Operating income 6,454,063 4,090,472 3,296,327 2,526,684
Interest expense (7,306,564) (7,481,515) (2,406,905) (2,583,562)
Minority interest (61,252) (54,530) (22,579) (31,011)
Gain (loss) on disposition of ass (6,287,511) 1,406,265 (7,178,059) 183,927
------------- ------------- ------------- -------------
Income (loss) before income taxes (7,201,264) (2,039,308) (6,311,216) 96,038
Income taxes (credit) (2,255,471) (629,708) (2,075,369) 159,762
------------- ------------- ------------- -------------
Net income (loss) ($4,945,793) ($1,409,600) ($4,235,847) ($63,724)
============= ============= ============= =============
Per share of common stock
Net income (loss) ($1.87) ($0.53) ($1.60) ($0.02)
============= ============= ============= =============
Weighted average shares
of common stock 2,640,905 2,640,909 2,640,899 2,640,909
============= ============= ============= =============
Dividends per share $0.00 $0.00 $0.00 $0.00
============= ============= ============= =============
21
UNITED INNS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended June 30,
1994 1993
-------------- --------------
OPERATING ACTIVITIES:
Net income (loss) ($4,945,793) ($1,409,600)
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 7,077,979 6,961,761
Loss (gain) from property dispositions 6,218,848 (1,391,220)
Deferred income taxes (2,562,378) (919,522)
Minority interest 61,252 54,530
Changes to operating assets and liabilities:
Accounts receivable (174,320) (346,888)
Inventories (12,592) 28,987
Prepaid expenses (749,826) (195,583)
Accounts payable (575,970) 200,684
Accrued expenses 604,592 (330,277)
Income taxes payable (8,761) (96,301)
-------------- --------------
Net cash provided by operating activities 4,933,031 2,556,571
-------------- --------------
INVESTING ACTIVITIES:
Purchase of property, plant and equipment (1,911,297) (4,077,119)
Proceeds from sale of fixed assets 3,216,207 3,206,468
Payments received on notes receivable 103,120 502,436
Other investing activities (1,061,875) (1,114,635)
-------------- --------------
Net cash provided by (used for) investing activities 346,155 (1,482,850)
-------------- --------------
FINANCING ACTIVITIES:
Payments on long-term debt (2,928,304) (2,296,293)
Other financing activities (118) (5,049)
-------------- --------------
Net cash provided (used for) financing activities (2,928,422) (2,301,342)
-------------- --------------
Increase (Decrease) in cash and cash equivalents 2,350,764 (1,227,621)
Cash and cash equivalents at beginning of year 4,095,215 3,916,377
-------------- --------------
Cash and cash equivalents at end of period $6,445,979 $2,688,756
-------------- --------------
-------------- --------------
Supplemental disclosures of cash flow information:
Cash paid (received) during the nine months for:
Interest $7,033,418 $7,764,285
State and federal income taxes 311,533 337,109
Supplemental schedule of non-cash investing and
financing activities:
Debt to acquire property, plant and equipment 800,715 87,967
Restricted cash used to purchase property,
plant and equipment 762,676 568,458
Loss recognized on property sold subsequent
to close of third quarter 6,637,807
Note received in exchange for property 300,000
22
UNITED INNS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
June 30, 1994
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. They do not include all information and notes required by
generally accepted accounting principles for complete financial statements.
However, except as disclosed herein, there has been no material change in the
information disclosed in the notes to consolidated financial statements included
in the Annual Report of Form 10-K of United Inns, Inc. for the year ended
September 30, 1993. The statement of income for the nine months ended June 30,
1993 has been restated in certain instances for comparability purposes. In the
opinion of Management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the nine month period ended June 30, 1994 are not necessarily
indicative of the results that may be expected for the year ending September 30,
1994.
Note B-Cash and Cash Equivalents
Includes $2,748,645 of cash and cash equivalents of a wholly owned
subsidiary subject to loan covenant agreements limiting the use of the funds
to the financial benefit of six of the Company's hotel properties.
Note C-Inventories
Inventories are stated at the lower of cost or market on a first in, first
out basis. Included in inventory classified as Supplies are hotel linens and
restaurant supplies, consisting primarily of china, silverware, and cooking
utensils, car wash operating and cleaning supplies. Following is a summary of
items included under the caption, "Inventories":
June 30, 1994 September 30, 1993
------------- ------------------
Merchandise:
Food and Beverage $ 306,407 $ 297,064
Car Wash 2,160 15,681
----------- -----------
308,567 312,745
Supplies 578,836 573,738
----------- -----------
Total Inventories $ 887,403 $ 886,483
----------- -----------
----------- -----------
Note D-Property Held For Sale
Represents realizable value of a hotel sold in the fourth quarter fiscal
1994 on which the loss was recognized in the Company's income statement for
the nine months ended June 30, 1994.
23
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors of Stockholders
United Inns, Inc.
Memphis, Tennessee
We have audited the accompanying consolidated balance sheets of United Inns,
Inc., and subsidiaries as of September 30, 1993 and 1992, and the related
consolidated statements of income and stockholders' equity and cash flows for
each of the three years in the period ended September 30, 1993. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of United Inns, Inc.
and subsidiaries as of September 30, 1993 and 1992, and the results of their
operations and their cash flows for each of the three years in the period ended
September 30, 1993 in conformity with generally accepted accounting principles.
/s/ Frazee, Tate & Associates
------------------------------
FRAZEE, TATE & ASSOCIATES
Memphis, Tennessee
December 3, 1993
24
UNITED INNS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
SEPTEMBER 30,
-----------------------------
1993 1992
------------ ------------
CURRENT ASSETS
Cash and cash equivalents $ 4,095,215 $ 3,916,377
Current portion of long-term receivables 1,072,113 1,001,502
Accounts receivable - net of allowance
for bad debts of $78,835 in 1993 and
$82,225 in 1992
Trade 2,593,459 3,095,289
Other 1,085,197 823,501
Inventories (Note 1) 886,483 1,006,563
Prepaid expenses 6,084,713 5,068,995
Property held for sale 1,500,000
------------ ------------
Total current assets 15,817,180 16,412,227
------------ ------------
INVESTMENTS (Note 1)
Long-term receivables less
current maturities 313,424 1,061,178
Land not in use - at cost 8,907,151 8,524,748
Other investments 10,000 10,000
------------ ------------
9,230,575 9,595,926
------------ ------------
PROPERTY AND EQUIPMENT - at cost (Notes 1 and 3)
Land 13,696,986 13,827,013
Buildings and improvements 155,159,524 156,077,953
Furnishings and equipment 30,508,425 32,192,454
Leased property under capital leases (Note 4) 3,714,804 5,135,159
------------ ------------
203,079,739 207,232,579
Less accumulated depreciation 91,457,432 91,681,925
------------ ------------
111,622,307 115,550,654
Construction in progress 575,851 327,793
Property held for sale 4,107,880 4,522,509
------------ ------------
116,306,038 120,400,956
------------ ------------
OTHER ASSETS (Note 1)
Franchises 674,143 727,326
Deferred loan and other expenses 1,590,596 1,911,572
Restricted cash 3,114,320 3,469,021
------------ ------------
5,379,059 6,107,919
------------ ------------
$146,732,852 $152,517,028
------------ ------------
------------ ------------
The accompanying notes are an integral part of the financial statements.
25
LIABILITIES AND STOCKHOLDERS' EQUITY
SEPTEMBER 30,
----------------------------
1993 1992
------------ ------------
CURRENT LIABILITIES
Long-term debt due within one year $ 3,243,325 $ 5,240,271
Note payable 261,160 83,989
Accounts payable 2,418,739 2,365,369
Sales and occupancy taxes 1,211,561 1,331,688
Accrued expenses:
Payroll and payroll taxes 1,421,127 1,720,250
Rent and property taxes 2,706,849 2,999,075
Insurance 3,281,682 3,037,252
Interest and other 2,183,724 2,440,885
Income taxes payable (Note 2) 219,802 292,535
------------ ------------
Total current liabilities 16,947,969 19,511,314
------------ ------------
LONG-TERM DEBT (Note 3)
First mortgages 102,926,861 105,156,344
Capitalized lease obligations 542,121 1,256,996
Chattel mortgages 625,934 108,538
Installment loans and other 313,692 321,680
------------ ------------
104,408,608 106,843,558
Less amounts due within one year 3,243,325 5,240,271
------------ ------------
101,165,283 101,603,287
------------ ------------
MINORITY INTEREST 517,096 513,164
------------ ------------
DEFERRED OTHER 1,410,978 2,652,509
------------ ------------
DEFERRED INCOME TAXES (Note 2) 5,721,882 6,450,633
------------ ------------
COMMITMENTS AND CONTINGENCIES (Notes 4 and 6)
STOCKHOLDERS' EQUITY
Common stock - $1 par value -
authorized 10,000,000 shares -
issued 4,117,813 shares 4,117,813 4,117,813
Paid-in capital 14,613,138 14,613,138
Retained earnings 46,327,055 47,143,532
------------ ------------
65,058,006 65,874,483
Less treasury shares at cost - 1,476,904
shares in 1993 and 1992 44,088,362 44,088,362
------------ ------------
Total stockholders' equity 20,969,644 21,786,121
------------ ------------
$146,732,852 $152,517,028
------------ ------------
------------ ------------
26
UNITED INNS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
YEAR ENDED SEPTEMBER 30,
-------------------------------------------
1993 1992 1991
------------- ------------- -------------
Revenues
Rooms $ 70,772,351 $ 71,322,112 $ 79,349,738
Restaurants 15,999,888 17,856,821 20,663,772
Car washes 1,516,848 5,054,354 6,702,216
Telephone and sundry 4,633,732 4,927,705 5,875,290
------------ ------------ ------------
92,922,819 99,160,992 112,591,016
------------ ------------ ------------
Operating costs and expenses:
Direct:
Rooms 47,347,003 49,387,399 54,563,235
Restaurants 16,069,407 18,093,393 21,128,753
Car washes 1,654,204 4,456,532 6,281,216
Telephone and sundry 1,929,668 2,093,579 2,383,680
Marketing, administrative and general 9,388,355 10,345,753 11,352,220
Depreciation 9,030,861 9,938,793 11,159,283
------------ ------------ ------------
85,419,498 94,315,449 106,868,387
------------ ------------ ------------
Operating income 7,503,321 4,845,543 5,722,629
Interest expense (net of capitalized
interest) (9,946,202) (9,802,783) (13,943,462)
Minority interest (53,932) (38,636) (90,717)
Gain (loss) on disposition of assets 1,250,732 (3,633,571)
Loss contingency 387,839 (1,718,279)
------------ ------------ ------------
Income (loss) before income taxes (1,246,081) (8,241,608) (10,029,829)
Income taxes (credit) (429,604) (3,290,512) (3,317,701)
------------ ------------ ------------
Income (loss) before extraordinary item (816,477) (4,951,096) (6,712,128)
Extraordinary item-gain on settlement
of debt (net of income taxes of
$1,092,511) 1,906,834
------------ ------------ ------------
Net income (loss) $ (816,477) $ (3,044,262) $ (6,712,128)
------------ ------------ ------------
------------ ------------ ------------
Per share of common stock
Income (loss) before extraordinary
item ($0.31) ($1.87) ($2.54)
Income (loss) from extraordinary item 0.00 0.72 0.00
------------ ------------ ------------
Net income (loss) ($0.31) ($1.15) ($2.54)
------------ ------------ ------------
------------ ------------ ------------
Weighted average shares of common stock 2,640,909 2,640,942 2,640,979
------------ ------------ ------------
------------ ------------ ------------
Cash dividends per share $0.00 $0.00 $0.00
------------ ------------ ------------
------------ ------------ ------------
The accompanying notes are an integral part of the financial statements.
27
UNITED INNS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
COMMON STOCK
--------------------- PAID-IN RETAINED TREASURY
SHARES AMOUNT CAPITAL EARNINGS STOCK
--------- ---------- ----------- ----------- ------------
Balance September 30,
1990 4,117,813 $4,117,813 $14,613,138 $56,899,922 $(44,088,110)
Net loss for year (6,712,128)
--------- ---------- ----------- ----------- ------------
Balance September 30,
1991 4,117,813 4,117,813 14,613,138 50,187,794 (44,088,110)
Purchase of 70
treasury shares (252)
Net loss for year (3,044,262)
--------- ---------- ----------- ----------- ------------
Balance September 30,
1992 4,117,813 4,117,813 14,613,138 47,143,532 (44,088,362)
Net loss for year (816,477)
--------- ---------- ----------- ----------- ------------
Balance September 30,
1993 4,117,813 $4,117,813 $14,613,138 $46,327,055 $(44,088,362)
--------- ---------- ----------- ----------- ------------
--------- ---------- ----------- ----------- ------------
The accompanying notes are an integral part of the financial statements.
28
UNITED INNS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED SEPTEMBER 30,
---------------------------------------
1993 1992 1991
----------- ----------- -----------
OPERATING ACTIVITIES
Net loss $ (816,477) $(3,044,262) $(6,712,128)
Adjustments to reconcile net loss
to net cash provided by
operating activities:
Depreciation and amortization 9,476,776 10,173,167 11,771,893
Loss (gain) from properties
sold (1,250,732) 246,386 1,826,188
Deferred income taxes (728,751) (2,561,308) 3,453,304)
Minority interest 3,932 3,636 90,717
Changes to operating assets and
liabilities:
Accounts receivable 260,134 (294,709) 1,477,058
Inventories 110,346 274,421 162,039
Prepaid expenses (667,787) (743,961) (339,250)
Accounts payable 74,420 (726,816) (239,042)
Accrued expenses (1,158,771) 579,402 (1,116,266)
Income taxes payable (72,733) 195,263 (1,979,970)
----------- ----------- -----------
Net cash provided by operating
activities 5,230,357 4,101,219 1,487,935
----------- ------------ ----------
INVESTING ACTIVITIES
Payments on settlement on car wash
assets (1,200,000)
Purchase of property, plant and
equipment (4,437,071) (2,980,300) (5,275,576)
Proceeds from sales of fixed assets 3,233,854 5,208,873 460,125
Payments received on notes
receivable 504,274 26,598 40,987
Other investing activities (1,136,277) (1,606,767) (1,866,943)
----------- ----------- ----------
Net cash used for investing activities (1,835,220) (551,596) (6,641,407)
----------- ----------- ----------
FINANCING ACTIVITIES
Proceeds from long-term borrowings 2,000,000
Payments on long-term debt (3,214,299) (4,455,184) 7,004,095)
Purchase of treasury shares (252)
Other financing activities (2,000) 187,660 (33,496)
---------- ----------- -----------
Net cash used for financing activities (3,216,299) (2,267,776) (7,037,591)
----------- ----------- -----------
Increase (decrease) in cash and cash
equivalents 178,838 1,281,847 (12,191,063)
Cash and cash equivalents at beginning
of year 3,916,377 2,634,530 14,825,593
---------- ----------- ----------
Cash and cash equivalents at end
of year $ 4,095,215 $ 3,916,377 $ 2,634,530
----------- ----------- -----------
----------- ----------- -----------
The accompanying notes are an integral part of the financial statements.
29
UNITED INNS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED SEPTEMBER 30,
-------------------------------------
1993 1992 1991
----------- ----------- -----------
Supplemental disclosures of cash flow
information:
Cash paid during the year for:
Interest, net of amounts
capitalized $ 9,981,680 $ 8,168,690 $14,304,307
Income taxes 368,120 198,422 2,339,334
Supplemental schedule of non-cash
investing and financing activities:
Debt to acquire property, plant and
equipment 879,793
Loss contingency 1,718,279
Restricted cash used to purchase
property, plant and equipment 1,369,863 512,401 390,258
Acquisition (revaluation)
of car wash assets (1,168,774) 225,702
Debt to acquire partnership interest 1,698,693
Note received in exchange for
property 300,000 1,000,000
Property disposition under debt
settlement agreement 15,818,650
Other property dispositions 1,951,899
The accompanying notes are an integral part of the financial statements.
30
UNITED INNS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the results of operations,
account balances and statement of cash flows of the Company, its wholly-owned
subsidiaries, and a 75% owned subsidiary. During 1992 a 50% owned joint venture
which was previously consolidated was acquired in full. All material
intercompany transactions and accounts have been eliminated in consolidation.
RECLASSIFICATIONS
The consolidated financial statements for prior years reflect certain
reclassifications as the result of a Securities and Exchange Commission review.
The SEC believes it more appropriate to classify the operations and property
sales of the Company's car wash division as continuing operations rather than
discontinued operations as previously reported. From 1990 through the present
year, the Company has been in the process of selling car wash properties and
withdrawing from the car wash business. At present the Company has disposed of
or closed all locations except for one operating unit under a lease expiring
October 31, 1995. Certain other reclassifications have been made to prior years
to conform with income and expense classifications adopted in the current year.
These reclassifications have no effect on net income (loss) or stockholders'
equity as previously reported.
CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents. The Company
places its temporary cash investments with high credit quality financial
institutions. At times such investments may be in excess of the FDIC
insurance limit.
INVENTORIES
Inventories are valued at the lower of cost or market. Cost is determined
by the first-in, first-out method.
INVESTMENTS
Classified as land not in use are various parcels of land held for possible
future development or sale.
PROPERTY AND EQUIPMENT
Property and equipment are depreciated on the straight line method over the
estimated useful life of the property. The cost of replacements and
improvements are capitalized. Property held for sale is stated at the lower of
cost or estimated net realizable value.
The estimated useful lives utilized for computation of depreciation on
property and equipment are as follows:
Buildings and Improvements 10 To 40 Years
Furnishings and Equipment 3 To 10 Years
Capitalized Leases 25 Years
31
UNITED INNS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Interest costs of $76,359 for 1992 and $153,739 for 1991 were capitalized
on major renovation projects. No interest was capitalized for 1993.
OTHER ASSETS
Franchise costs, deferred mortgage, loan and other expenses exclusive of
security deposits are amortized on a straight line basis over the terms of the
related agreements. Restricted cash is held for capital improvements on six of
the Company's properties.
EARNINGS PER SHARE
Earnings per share are based on the weighted average number of shares
outstanding during the respective periods. Primary and fully diluted earnings
are the same on a per share basis.
POST RETIREMENT BENEFITS
The Company adopted Statement of Financial Accounting Standards No.
106 "Employer's Accounting for Post Retirement Benefits Other Than Pensions" in
the current year ending September 30, 1993. The Company does not provide
any form of post-retirement benefits for retired employees other than retirement
benefits under a Section 401-K Plan, therefore adoption of the new standard had
no impact on the Company's financial statements.
2. FEDERAL AND STATE INCOME TAXES
The Company files a consolidated federal income tax return. Deferred taxes
are provided for the timing differences between tax and financial statement
income. The deferred income tax liability presented in the balance sheet
represents income taxes at enacted statutory rates on temporary differences
which primarily result from tax over book depreciation, capitalized taxes and
interest, capitalized leases, and net operating losses.
The effect of these timing differences on deferred income tax expense are
summarized below:
YEAR ENDED SEPTEMBER 30,
----------------------------------------
1993 1992 1991
----------- ------------ -----------
Accelerated depreciation $ (309,752) $(3,136,146) $ (457,448)
Capitalized interest and taxes (8,894) (848,489) 27,554
Capitalized leases 193,075 101,171 116,640
Other (25,435) (447) 94,448
Reinstatement (elimination) of
net deferred tax credits (577,741) 1,319,087 (3,234,491)
---------- ----------- -----------
$ (728,747) $(2,564,824) $(3,453,297)
---------- ----------- -----------
---------- ----------- -----------
32
UNITED INNS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. FEDERAL AND STATE INCOME TAXES (Continued)
The statutory federal income tax rate and the effective tax rate are
reconciled below:
YEAR ENDED SEPTEMBER 30,
---------------------------
1993 1992 1991
--------- ------ ------
Statutory tax rate (34.0%) (34.0%) (34.0%)
Increases (decreases) in tax resulting from:
New jobs credit (0.5) (0.4)
State taxes net of U.S. federal benefit 4.7 0.3 (0.7)
Other (7.9) (10.3) 2.0
Minimum tax 2.7 2.6
------ ------ ------
Effective tax rate (34.5%) (41.9%) (33.1%)
------ ------ -----
------ ------ -----
The income tax provision (benefit) consists of:
YEAR ENDED SEPTEMBER 30,
---------------------------------------------
1993 1992 1991
----------- ----------- ------------
Current - Federal $ 194,565 $ 233,386 $ 204,731
State 104,578 133,437 (69,135)
----------- ----------- -----------
299,143 366,823 135,596
----------- ----------- -----------
Deferred - Federal (713,094) (2,454,957) (3,410,419)
State (15,653) (109,867) (42,878)
----------- ----------- ----------
(728,747) (2,564,824) (3,453,297)
---------- ----------- ----------
$ (429,604) $(2,198,001) $(3,317,701)
----------- ----------- -----------
----------- ----------- -----------
Income tax expense for fiscal 1992 consists of ($3,290,512) on loss from
operations and $1,092,511 on the extraordinary item.
For Federal tax reporting purposes, net operating losses of $21,200,000 and
tax credits of $657,020 are available to be carried to future periods expiring
in fiscal years 2002 through 2008.
For financial reporting purposes, deferred tax liabilities have been
reduced by the tax effect of net operating loss carryforwards to the extent the
liabilities consist of temporary differences such as depreciation which are
expected to reverse during the statutory carryforward periods. Upon recognition
$8,974,480 will be credited to deferred taxes.
Provision for income taxes was calculated according to Accounting
Principles Board Opinion No. 11 "Accounting for Income Taxes" in 1993, 1992 and
1991. Effective October 1, 1993, the Company will change its method of
accounting for income taxes to the asset and liability method required by
Statement of Financial Accounting Standards No. 109. Prior years' financial
statements will not be restated. The cumulative effect of adopting this
accounting statement will not be material.
33
UNITED INNS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. LONG-TERM DEBT
The range of interest rates and maturities of the long-term debt at
September 30, 1993, are summarized below:
First mortgages - prime + 1.5% to 11.125%, due 1994 to 2007
Capitalized leases - 10.5%, due 1994 to 1995
Chattel mortgages - 11% to 12.684%, due 1994 to 1998
Installment loans and others - 6.5% to 10%, due 1994 to 2000
Long-term debt including capitalized leases matures as follows:
YEAR ENDED SEPTEMBER 30,
-----------------------------------
1993 1992
------------- ------------
1993 $ $ 5,240,271
1994 3,243,325 3,201,446
1995 10,353,060 9,833,393
1996 38,205,212 36,513,578
1997 40,722,026 40,589,710
1998 1,798,862
Subsequent 10,086,123 11,465,160
------------- ------------
104,408,608 $106,843,558
------------- -------------
------------- -------------
The major portion of the Company's property and equipment is pledged as
collateral on mortgage and lease obligations. The Company is guarantor of the
major portion of the debt of its subsidiaries.
Under terms of a debt renewal agreement completed on December 22, 1992,
with one of its major lenders, the Company refinanced $42,269,013 of debt, on
which the Company gave an unlimited guarantee for a period of one year. Stock
of a Company subsidiary is pledged for the debt. The lender retained a first
mortgage on previously secured assets and obtained a second mortgage on
additional property which was owned by the Company's subsidiary. The agreement
contains certain covenants including limitations on dividend distributions and
fixed charge ratios of a subsidiary. The debt matures September 30, 1997.
34
UNITED INNS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. LEASES
The Company is obligated under long-term leases primarily for the lease of
various hotel properties and equipment. In addition to specified minimum annual
rentals, some of the leases provide for contingent rentals based on percentages
of revenue; most require payment by the lessee of property taxes, insurance and
maintenance. The leases extend for varying periods; some contain renewal
options. Rentals to be received from noncancelable subleases are not material.
The Company's property held under capital leases, included in property, plant,
and equipment in the balance sheet, consists of real estate of $3,714,804 in
1993 and $5,135,159 in 1992. Accumulated depreciation was $3,938,283 in 1993
and $5,082,199 in 1992.
Rent expense included in the accompanying consolidated statements of income
was as follows:
YEAR ENDED SEPTEMBER 30,
-----------------------------------
1993 1992 1991
---------- ---------- ----------
Capital Leases:
Minimum rentals $ 633,655 $ 656,488 $ 734,928
Contingent rentals 515,914 633,266 705,618
---------- ---------- ----------
1,149,569 1,289,754 1,440,546
---------- ---------- ----------
Operating Leases:
Minimum rentals 1,053,342 1,313,731 1,436,566
Contingent rentals 641,842 493,975 1,101,188
---------- ---------- ----------
1,695,184 1,807,706 2,537,754
---------- ---------- ----------
$2,844,753 $3,097,460 $3,978,300
---------- ---------- ----------
---------- ---------- ----------
The future minimum rental commitments for all noncancelable leases at
September 30, 1993, are summarized below:
YEARS ENDING CAPITAL OPERATING
SEPTEMBER 30, LEASES LEASES
------------- ---------- ----------
1994 $ 522,100 $ 835,814
1995 54,600 176,744
1996 67,849
1997 66,889
1998 66,889
Subsequent years 2,020,205
---------- ----------
Total minimum rentals 576,700 $3,234,390
Less interest portion 34,579 ----------
---------- ----------
Present value of net minimum rentals $ 542,121
-----------
-----------
The interest rate on the capital leases is 10.5%; this rate was used in
computing the present value.
35
UNITED INNS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. PENSION AND EXECUTIVE BONUS PLANS
The Company's defined benefit pension plan covered substantially all
employees who met certain minimum employment requirements and who were not
covered by a collective bargaining agreement. The Company's funding policy was
to contribute annually the minimum amount that could be deducted for federal
income tax purposes. Contributions were intended to provide not only for
benefits attributed to service to date but also for those expected to be earned
in the future. The Company adopted Financial Accounting Standards Board
Statement Number 87 "Employers' Accounting for Pensions" in 1990.
The following table sets forth the plan's funded status and amounts
recognized in the Company's financial statements at September 30, 1993, 1992 and
1991.
1993 1992 1991
----------------- ---------------- --------------
Actuarial present value of benefit
obligations:
Accumulated benefit obligation,
including vested benefits of
$3,015,972 in 1991 $ $ $ 3,015,972
------------ ------------ -----------
------------ ------------ -----------
Projected benefit obligation for
service rendered to date $ $ $(3,015,972)
Plan assets at fair value, primarily
insurance contract 3,016,030
------------ ------------ -----------
Projected plan assets in excess of
benefit obligation $ $ $ 58
------------ ------------ ------------
------------ ------------ ------------
Previously recognized net obligation $ $ $ 210,253
Net obligation recognized in current
fiscal year (210,253)
------------ ------------ ------------
Recognized net obligation $ $ $ -0-
------------ ------------ ------------
------------ ------------ ------------
Net pension cost includes the
following components:
FASB 87 obligation $ $ $ (210,253)
Net pension expenses 76,785 85,635 105,505
------------ ------------ ------------
Net pension cost $ 76,785 $ 85,635 $ (104,748)
------------ ------------ ------------
------------ ------------ ------------
The weighted-average discount rate and rate of decrease in future
compensation levels used in determining the actuarial present value of the
projected benefit obligation were 8 percent and 5 percent, respectively. The
expected long-term rate of return on assets was 8 percent.
36
UNITED INNS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. PENSION AND EXECUTIVE BONUS PLANS (Continued)
Effective September 30, 1989 the Company began termination of the plan and
settlement of the vested accumulated obligation. The Company has substantially
completed the distribution of all vested benefits due under the pension plan.
The Company has an executive bonus plan which covers full time executive
officers of the Company. The plan provides for a distribution of 1% to 3% of
consolidated income before taxes and unusual items. No amounts were approved
for distribution in 1993, 1992 or 1991.
Effective January, 1992, the Company adopted a Retirement Savings 401(k)
Plan. The plan is available to all employees with one year of service who are
not covered by a collective bargaining agreement who have attained age 21. The
Company deposits elective deferral contributions which have been withheld from
employee compensation. The Company may also make a discretionary contribution
in such amount it deems advisable. No discretionary contributions have been
made by the Company. In addition, the Company matches a portion of the
employee contribution up to 4% of their annual earnings. Company contribution
was $287,923 for 1993 and $178,635 for 1992. All contributions to the Plan,
other than discretionary contributions, are 100% non-forfeitable.
6. COMMITMENTS AND CONTINGENCIES
Under the terms of the Holiday Inn, Hampton Inn, Ramada, Howard Johnson,
Super 8 and Days Inn franchises, the Company is committed to make annual
payments for franchise fees, reservation service, and advertising. The amounts
due under the agreements were $5,735,441 for 1993, $5,757,912 for 1992, and
$6,370,896 for 1991.
There are a number of guest and customer claims, employee wage claims, and
other disputed amounts outstanding against the Company, all of which occurred in
the ordinary course of business. Counsel has advised that there is no material
exposure to the Company in these matters.
The Company is self insured for various levels of general liability,
worker's compensation and employee medical coverages. Accrued insurance claims
include the accrual of estimated settlements from known and anticipated claims.
37
UNITED INNS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. (UNAUDITED) QUARTERLY RESULTS OF OPERATIONS
The following is a summary of the (unaudited) quarterly results of
operations for the years ended September 30, 1993, and September 30, 1992:
QUARTERS
---------------------------------------------------------
FIRST SECOND THIRD FOURTH
------------ ------------ ------------ -----------
1993
Revenues $21,400,817 $22,881,441 $24,400,817 $24,239,744
------------ ------------ ------------ -----------
Net income (loss) $(1,909,569) $ 563,693 $ (63,724) $ 593,123
------------ ------------ ------------ -----------
Earnings per share $ (0.72) $ 0.21 $ (0.02) $ 0.22
------------ ------------ ------------ -----------
------------ ------------ ------------ -----------
1992
Revenues $24,702,066 $25,093,342 $23,787,513 $25,578,071
------------ ------------ ------------ -----------
Net income (loss) before
extraordinary item $(2,637,953) $ (161,026) $ (736,788) $(1,415,329)
Extraordinary item - gain
on settlement of debt
(net of income tax) 1,906,465 369
----------- ----------- ----------- ----------
Net income (loss) $(2,637,953) $ 1,745,439 $ (736,419) $(1,415,329)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Earnings per share:
Income (loss) before
extraordinary item $ (1.00) $ (0.06) $ (0.27) $ (0.54)
Income from extraordinary
item 0.72
----------- ----------- ----------- -----------
Net income (loss) $ (1.00) $ 0.66 $ (0.27) $ (0.54)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
38
UNITED INNS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. SEGMENT INFORMATION
The Company has one primary business segment, the operation of hotel
properties. This segment represents more than 90% of consolidated revenue,
operating profit and identifiable assets. All revenues were derived from
domestic operations. There are no major customers and no government contracts.
9. GAIN (LOSS) FROM PROPERTY DISPOSITIONS
Gain on property dispositions in 1993 include gain of $1,257,943 on the
sale of one property, recognition of a deferred gain of $183,927 on a property
sold in 1992 and a loss of $191,138 on termination of a lease.
Included in 1992 property dispositions were the sale of two operating
properties for a net gain of $482,378, the demolition and write off of a
closed hotel for a loss of $1,187,963, and a loss of $431,454 resulting from
the exercise of a purchase option for the joint venture partner's 50% interest
in a hotel. Additionally the termination of a lease on an operating property
resulted in a loss of $464,467. A $2,029,865 loss resulting from the sale and
write down of car wash properties was also recognized in 1992.
10. DEBT EXTINGUISHMENT AND LOSS CONTINGENCY
In March, 1992 a conveyance was made of two hotels to the mortgage holder,
resulting in a debt deficiency of $4,200,000. This deficiency was settled for
a cash payment of $1,200,000 resulting in a net of tax gain of $1,906,834 on the
debt settlement. An estimated loss contingency of $1,718,279 recorded in 1991
on the property conveyance was settled at $1,330,440 in March, 1992 resulting
in a loss recovery credit of $387,839.
39
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Registration fee to the SEC. . . . . . . . . . . . . . . . . . .$ 295
Printing expense . . . . . . . . . . . . . . . . . . . . . . . . . 250
Accounting fees and expense. . . . . . . . . . . . . . . . . . . 1,000
Legal fees and expenses. . . . . . . . . . . . . . . . . . . . . 2,500
Miscellaneous expenses . . . . . . . . . . . . . . . . . . . . . 955
------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$5,000
------
------
All fees and expenses are estimates except for the registration fee to the
SEC.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Laws of the State of Delaware
authorize a corporation to provide for the indemnification of officers,
directors, employees and agents in terms sufficiently broad to permit
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933,
as amended. UII has adopted the provisions of the Delaware statute pursuant to
Section 4 of its Bylaws. Also, UII has a "Directors' and Officers' Liability
Insurance Policy" which provides coverage sufficiently broad to permit
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933,
as amended.
Section 102(b)(7) of the General Corporation Laws of the State of Delaware,
permits the inclusion in the certificate of incorporation charter of a Delaware
corporation of a provision, with certain exceptions, eliminating the personal
monetary liability of directors to the corporation or its shareholders for
breach of the duty of care. UII has adopted the provisions of the statute in
Article 9 of its certificate of incorporation.
The shareholders of UII have approved an amendment to Article 9 of the
Bylaws pursuant to which UII is required to indemnify each director and any
officers designated by the UII Board, and advance expenses, to the maximum
extent not prohibited by law.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
None
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Exhibits
Number Description
------ -----------
3.1 Articles of Incorporation and Amendments (1)
3.2 Bylaws of Company as currently in effect (4)
3.3 Articles of Incorporation Amendment 2/16/87 (9)
10.1 Holiday Inns, Inc. License Agreement 9/18/61 (1)
10.2 Holiday Inns, Inc. License Agreement 10/29/62 (1)
10.3 Holiday Inns, Inc. License Agreement 5/08/67 (1)
10.4 Holiday Inns, Inc. License Agreement 5/08/67 (1)
10.5 Holiday Inns, Inc. License Agreement 9/05/67 (1)
10.6 Holiday Inns, Inc. License Agreement 9/13/67 (1)
10.7 Holiday Inns, Inc. License Agreement 7/16/68 (1)
10.8 Holiday Inns, Inc. License Agreement 7/16/68 (1)
10.9 Holiday Inns, Inc. License Agreement 8/29/69 (1)
10.10 Holiday Inns, Inc. License Agreement 2/06/70 (1)
10.11 Holiday Inns, Inc. License Agreement 3/22/71 (1)
10.12 Holiday Inns, Inc. License Agreement 11/22/71 (1)
10.13 Holiday Inns, Inc. License Agreement 11/22/71 (1)
10.14 Holiday Inns, Inc. License Agreement 3/20/72 (1)
10.15 Holiday Inns, Inc. License Agreement 8/21/72 (1)
10.16 Holiday Inns, Inc. License Agreement 8/21/72 (1)
10.17 Holiday Inns, Inc. License Agreement 8/21/72 (1)
10.18 Holiday Inns, Inc. License Agreement 8/21/72 (1)
10.19 Holiday Inns, Inc. License Agreement 8/21/72 (1)
II-1
Exhibits
Number Description
------ -----------
10.20 Holiday Inns, Inc. License Agreement 8/11/72 (1)
10.21 Holiday Inns, Inc. License Agreement 8/21/72 (1)
10.22 Holiday Inns, Inc. License Agreement 8/21/72 (1)
10.23 Holiday Inns, Inc. License Agreement 8/21/72 (1)
10.24 Holiday Inns, Inc. License Agreement 6/25/76 (1)
10.25 Holiday Inns, Inc. License Agreement 9/01/78 (1)
10.26 Holiday Inns, Inc. License Agreement 9/01/78 (1)
10.27 Holiday Inns, Inc. Licenses
Extension Agreement 3/5/76 (1)
10.28 Lease, Millsaps College Development Corp. to
Jackson Med.-Center Inn, Inc. (2)
10.29 Lease, Paul Drummett to Houston
Airport Inn, Inc. (2)
10.30 Addendum to Lease, Paul Drummett to Houston
Airport Inn, Inc., Item 10.29 above. (1)
10.31 Lease, Mid Atlanta Investment Company to
Lammons Hotel Courts, Inc. (2)
10.32 Amendments to Lease, Mid Atlanta Investment
Company to Lammons Hotel Courts, Inc., Item
10.31 above. (1)
10.33 Lease, Natala Corp. to United Enterprises, Inc. (2)
10.34 Amendments to Lease, Natala Corp. to United
Enterprises, Inc., Item 10.33 above. (1)
10.35 Lease Marietta Inns, Inc. to Hardy Inn, Inc. (2)
10.36 Lease, Paul Barkley to United Enterprises, Inc. (2)
10.37 Lease, 555 Real Estate Company to Jacksonville
Motor Inn, Inc. (2)
10.38 Lease, Gaines Manufacturing Co., Inc. and
City of McKenzie (2)
10.39 Amendment to Lease, Gaines Manufacturing Co.,
Inc. and City of McKenzie, Item 10.38 above (1)
10.40 Sub-lease, C.W.S. Scottsdale, Inc. and
Transcontinental Motor Hotels, Inc. and
underlying ground lease between Raymond
and Lenore R. Silverman and
C.W.S. Scottsdale, Inc. (1)
10.41 Lease, C.W.S. San Jose, Inc. to TMH Motor
Hotels, Inc. with option agreement and
underlying sub-lease between Claitor
Properties, Inc. and C.W.S. San Jose, Inc.
and ground lease between Dorothy
Kiersted and Claitor Properties (filed
as Exhibits 13(b)(1) through 13(b)(8) to
Midwestern Companies, Inc. (which subsequently
changed its name to Transcontinental Motor
Hotels, Inc., which merged with Company on
December 1, 1972) Form 8-K for month of November,
1968 filed on December 9, 1968 and incorporated
herein by reference) (1)
10.42 Lease and Amendment, B.R.S.T. Corporation
and Transcontinental Motor Hotels, Inc. (1)
10.43 Lease, Amendment and Guaranties, Elm Place
Corp. and Transcontinental Motor Hotels, Inc. (1)
10.44 Lease and Amendment, Trammell Crow and
Glenjon, Inc. (1)
10.45 Joint Venture Agreement between Allied
Investments and Northside Inns, Inc.
and Management Agreement between the Joint
Venture (Northside Hotel Investors) and
United Inns of Tennessee, Inc. (1)
10.46 Description of the criteria of the Executive
Bonus Plan of United Inns, Inc. (1)
II-2
Exhibits
Number Description
------ -----------
10.47 Holiday Inns, Inc. License
Agreement 2/10/78 (3)
10.48 Holiday Inns, Inc. License
Agreement 2/16/79 (3)
10.49 Holiday Inns, Inc. License
Agreement 10/2/80 (3)
10.50 Holiday Inns, Inc. License
Agreement 1/23/81 (3)
10.51 Holiday Inns, Inc. License
Agreement 5/11/81 (3)
10.52 Amendments to Joint Venture
Agreement between Allied
Investments and Northside Inn, Inc.,
Item 10.45 above (3)
10.53 Assignment of interest in
Master Lease to Transcontinental
Motor Hotels, Inc., Item
10.40 above (3)
10.54 United Inns, Inc. Employees
Pension Plan (3)
10.55 Holiday Inns, Inc. License
Agreement 10/2/80 (4)
10.56 Hilton Inns, Inc. License
Agreement 10/27/80 (4)
10.57 Holiday Inns, Inc. License
Agreement 12/19/80 (4)
10.58 Holiday Inns, Inc. License
Agreement 12/19/80 (4)
10.59 Holiday Inns, Inc. License
Agreement 3/27/81 (4)
10.60 Holiday Inns, Inc. License
Agreement 4/7/81 (4)
10.61 Holiday Inns, Inc. License (5)
Agreement 5/2/79
10.62 Holiday Inns, Inc. License (5)
Agreement 12/19/80
10.63 Holiday Inns, Inc. License (5)
Agreement 3/31/81
10.64 Holiday Inns, Inc. License (5)
Agreement 5/12/83
10.65 Holiday Inns, Inc. License (6)
Agreement 4/25/84
10.66 Executives Optional Deferred (7)
Compensation Plan of United
Inns, Inc. 10/1/84
10.67 Hilton Inns, Inc. (7)
License Agreement 6/13/85
II-3
Exhibits
Number Description
------ -----------
10.68 Termination of Lease and Guaranty (7)
(Exhibit 10.37) 10/31/85
10.69 Hampton Inns, Inc., a division (8)
of Holiday Inns, Inc.
License Agreement 10/23/85
10.70 Holiday Inns, Inc. (8)
License Agreement 1/17/86
10.71 Hampton Inns, Inc., a division (8)
of Holiday Inns, Inc.
License Agreement 7/10/86
10.72 Best Western International, Inc. (8)
License Agreement 7/28/86
10.73 Termination of Lease and Agreement (9)
(Exhibit 10.35) 5/19/87
10.74 Days Inns of America Franchising, Inc.
License Agreement 4/17/89 (Flagstaff) (10)
10.75 Days Inns of America Franchising, Inc. (11)
License Agreement 12/29/89 (Houston I-10
East)
10.76 Days Inns of America Franchising, Inc. (11)
License Agreement 12/29/89 (Houston I-10
West)
10.77 Days Inns of America Franchising, Inc. (11)
License Agreement 02/07/90 (Dallas Regal
Row)
10.78 Ramada, Inc. License Agreement 09/17/91 (12)
(Atlanta Downtown)
10.79 Hampton Inn Hotel Division of Embassy (12)
Suites, Inc. License Agreement 03/20/91
Houston I-10 East)
10.80 Holiday Inns Franchising, Inc. License (12)
Agreement 10/11/90 (Jackson Medical
Center)
10.81 Holiday Inns Franchising, Inc. License (12)
Agreement 06/18/91 (Houston Medical
Center)
10.82 Holiday Inn Franchising, Inc. License (12)
Agreement 06/18/91 (Santa Barbara)
10.83 Termination of Lease and Agreement (12)
(Exhibit 10.33) 02/10/91
10.84 Hanna Acceptance Corporation, John (12)
Mitchell, Inc., Chapter 11 Trustee of
Daniel C. Hanna
*11 Statement Regarding Computation of
Earnings Per Share
*22 Subsidiaries of the Company
*23(b) Consent of Heiskell, Donelson, Bearman, Adams,
Williams & Caldwell, included in Exhibit 5
*24 Consent of Frazee, Tate and Associates
*28 Consulting Agreement dated as of August 13, 1993
by and between United Inns, Inc. and Geller & Co.
- --------------------
* Previously filed.
II-4
(1) Filed as an Exhibit to the Company's report on Form 10-K (File No.
1-6848) filed with the Commission on December 27, 1980 and incorporated
herein by reference.
(2) Filed as an Exhibit to Registration Statement No. 2-42059, Form S-1, filed
with the commission on October 7, 1971 and incorporated herein by
reference.
(3) Filed as an Exhibit to the Company's report on Form 10-K (File No.
1-6848) filed with the Commission on December 28, 1981 and incorporated
herein by reference.
(4) Filed as an Exhibit to the Company's report on (Form 10-K File No.
1-6848) filed with the Commission on December 28, 1982 and incorporated
herein by reference.
(5) Filed as an Exhibit to the Company's report on (Form 10-K File No.
1-6848) filed with the Commission on December 28, 1983 and incorporated
herein by reference.
(6) Filed as an Exhibit to the Company's report on (Form 10-K File No.
1-6848) filed with the Commission on December 28, 1984, and incorporated
herein by reference.
(7) Filed as an Exhibit to the Company's report on (Form 10-K File No.
1-6848) filed with the Commission on December 27, 1985, and incorporated
herein by reference.
(8) Filed as an Exhibit to the Company's report on (Form 10-K File No.
1-6848) filed with the Commission on January 12, 1987, and incorporated
herein by reference.
(9) Filed as an Exhibit to the Company's report on (Form 10-K File No.
1-6848) filed with the Commission on January 6, 1988, and incorporated
herein by reference.
(10) Filed as an Exhibit to the Company's report on (Form 10-K File No.
1-6848) filed with the Commission on January 4, 1990, and incorporated
herein by reference.
(11) Filed as an Exhibit to the Company's report on (Form 10-K File No.
1-6848) filed with the Commission on January 15, 1991, and incorporated
herein by reference.
(12) Filed as an Exhibit to the Company's report on (Form 10-K File No.
1-6848) filed with the Commission on January 14, 1992, and incorporated
herein by reference.
Financial Statement Schedules
Schedule III - Condensed Financial Information of Company
Schedule IV - Indebtedness of Affiliates - Not Current
Schedule V - Property and Equipment
Schedule VI - Accumulated Depreciation of Property and Equipment
Schedule VIII - Valuation and Qualifying Accounts
Schedule X - Supplementary Income Statement Information
II-5
ITEM 17. UNDERTAKINGS
(a) The undersigned Company hereby undertakes:
(1) to file, during any period in which offers or sales of the securities
are being made, a post-effective amendment to this Registration Statement:
(i) to include any Prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect any facts or events arising after the effective date (or
most recent post-effective amendment) which, individually, or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement;
(iii) to include any material information with respect to the plan of
distribution not previously disclosed or any material change to such
information set forth in the Registration Statement.
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the registration statement is on Form S-3 or Form S-8, and the information
required [or] to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Company
pursuant to section 13 or section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration statement.
(2) that, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment shall be deemed to be a
new Registration Statement relating to the securities offered therein and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) to remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Company for expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(c) The undersigned Company hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Company's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-6
SIGNATURES
Pursuant to the requirement of the Securities Act of 1933, the Company
has duly caused its Amendment No. 4 Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Memphis,
State of Tennessee, on November 1, 1994.
UNITED INNS, INC.
By:/s/Don W. Cockroft
----------------------------------------
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
Signature Title Date
--------- ----- ----
/s/ Don W. Cockroft President, Chief Executive November 1, 1994
- ------------------------ Officer and Director (principal
Don W. Cockroft executive officer)
/s/ J. Don Miller Vice President and Chief November 1, 1994
- ------------------------ Financial Officer (principal
J. Don Miller financial officer)
/s/ * Director November 1, 1994
- ------------------------
Robert L. Cockroft
/s/ * Director November 1, 1994
- ------------------------
J. Howard Lammons
Director November _, 1994
- ------------------------
Janet Virgin
Director November _, 1994
- ------------------------
Ronald J. Wareham
/s/ * Director November 1, 1994
- ------------------------
Howard W. Loveless
<FN>
* By /s/ Don W. Cockroft November 1, 1994
as Attorney-in-Fact
II-7
(c) INDEX TO EXHIBITS
Exhibit No. Exhibit Description Page No.
- ----------- ------------------- -------
3.1 Articles of Incorporation and Amendments (1)
3.2 Bylaws of Company as currently in effect (4)
3.3 Articles of Incorporation Amendment 2/16/87 (9)
10.1 Holiday Inns, Inc. License Agreement 9/18/61 (1)
10.2 Holiday Inns, Inc. License Agreement 10/29/62 (1)
10.3 Holiday Inns, Inc. License Agreement 5/08/67 (1)
10.4 Holiday Inns, Inc. License Agreement 5/08/67 (1)
10.5 Holiday Inns, Inc. License Agreement 9/05/67 (1)
10.6 Holiday Inns, Inc. License Agreement 9/13/67 (1)
10.7 Holiday Inns, Inc. License Agreement 7/16/68 (1)
10.8 Holiday Inns, Inc. License Agreement 7/16/68 (1)
10.9 Holiday Inns, Inc. License Agreement 8/29/69 (1)
10.10 Holiday Inns, Inc. License Agreement 2/06/70 (1)
10.11 Holiday Inns, Inc. License Agreement 3/22/71 (1)
10.12 Holiday Inns, Inc. License Agreement 11/22/71 (1)
10.13 Holiday Inns, Inc. License Agreement 11/22/71 (1)
10.14 Holiday Inns, Inc. License Agreement 3/20/72 (1)
10.15 Holiday Inns, Inc. License Agreement 8/21/72 (1)
10.16 Holiday Inns, Inc. License Agreement 8/21/72 (1)
10.17 Holiday Inns, Inc. License Agreement 8/21/72 (1)
10.18 Holiday Inns, Inc. License Agreement 8/21/72 (1)
10.19 Holiday Inns, Inc. License Agreement 8/21/72 (1)
10.20 Holiday Inns, Inc. License Agreement 8/11/72 (1)
10.21 Holiday Inns, Inc. License Agreement 8/21/72 (1)
10.22 Holiday Inns, Inc. License Agreement 8/21/72 (1)
10.23 Holiday Inns, Inc. License Agreement 8/21/72 (1)
10.24 Holiday Inns, Inc. License Agreement 6/25/76 (1)
10.25 Holiday Inns, Inc. License Agreement 9/01/78 (1)
10.26 Holiday Inns, Inc. License Agreement 9/01/78 (1)
10.27 Holiday Inns, Inc. Licenses
Extension Agreement 3/5/76 (1)
II-8
INDEX TO EXHIBITS (cont.)
Exhibit No. Exhibit Description Page No.
- ----------- ------------------- -------
10.28 Lease, Millsaps College Development Corp. to
Jackson Med.-Center Inn, Inc. (2)
10.29 Lease, Paul Drummett to Houston
Airport Inn, Inc. (2)
10.30 Addendum to Lease, Paul Drummett to Houston
Airport Inn, Inc., Item 10.29 above. (1)
10.31 Lease, Mid Atlanta Investment Company to
Lammons Hotel Courts, Inc. (2)
10.32 Amendments to Lease, Mid Atlanta Investment
Company to Lammons Hotel Courts, Inc., Item
10.31 above. (1)
10.33 Lease, Natala Corp. to United Enterprises, Inc. (2)
10.34 Amendments to Lease, Natala Corp. to United
Enterprises, Inc., Item 10.33 above. (1)
10.35 Lease Marietta Inns, Inc. to Hardy Inn, Inc. (2)
10.36 Lease, Paul Barkley to United Enterprises, Inc. (2)
10.37 Lease, 555 Real Estate Company to Jacksonville
Motor Inn, Inc. (2)
10.38 Lease, Gaines Manufacturing Co., Inc. and
City of McKenzie (2)
10.39 Amendment to Lease, Gaines Manufacturing Co.,
Inc. and City of McKenzie, Item 10.38 above (1)
10.40 Sub-lease, C.W.S. Scottsdale, Inc. and
Transcontinental Motor Hotels, Inc. and
underlying ground lease between Raymond
and Lenore R. Silverman and
C.W.S. Scottsdale, Inc. (1)
10.41 Lease, C.W.S. San Jose, Inc. to TMH Motor
Hotels, Inc. with option agreement and
underlying sub-lease between Claitor
Properties, Inc. and C.W.S. San Jose, Inc.
and ground lease between Dorothy
Kiersted and Claitor Properties (filed
as Exhibits 13(b)(1) through 13(b)(8) to
Midwestern Companies, Inc. (which subsequently
changed its name to Transcontinental Motor
Hotels, Inc., which merged with Company on
December 1, 1972) Form 8-K for month of November,
1968 filed on December 9, 1968 and incorporated
herein by reference) (1)
10.42 Lease and Amendment, B.R.S.T. Corporation
and Transcontinental Motor Hotels, Inc. (1)
10.43 Lease, Amendment and Guaranties, Elm Place
Corp. and Transcontinental Motor Hotels, Inc. (1)
10.44 Lease and Amendment, Trammell Crow and
Glenjon, Inc. (1)
II-9
INDEX TO EXHIBITS (cont.)
Exhibit No. Exhibit Description Page No.
- ----------- ------------------- -------
10.45 Joint Venture Agreement between Allied
Investments and Northside Inns, Inc.
and Management Agreement between the Joint
Venture (Northside Hotel Investors) and
United Inns of Tennessee, Inc. (1)
10.46 Description of the criteria of the Executive
Bonus Plan of United Inns, Inc. (1)
10.47 Holiday Inns, Inc. License
Agreement 2/10/78 (3)
10.48 Holiday Inns, Inc. License
Agreement 2/16/79 (3)
10.49 Holiday Inns, Inc. License
Agreement 10/2/80 (3)
10.50 Holiday Inns, Inc. License
Agreement 1/23/81 (3)
10.51 Holiday Inns, Inc. License
Agreement 5/11/81 (3)
10.52 Amendments to Joint Venture
Agreement between Allied
Investments and Northside Inn, Inc.,
Item 10.45 above (3)
10.53 Assignment of interest in
Master Lease to Transcontinental
Motor Hotels, Inc., Item
10.40 above (3)
10.54 United Inns, Inc. Employees
Pension Plan (3)
10.55 Holiday Inns, Inc. License
Agreement 10/2/80 (4)
10.56 Hilton Inns, Inc. License
Agreement 10/27/80 (4)
10.57 Holiday Inns, Inc. License
Agreement 12/19/80 (4)
10.58 Holiday Inns, Inc. License
Agreement 12/19/80 (4)
10.59 Holiday Inns, Inc. License
Agreement 3/27/81 (4)
10.60 Holiday Inns, Inc. License
Agreement 4/7/81 (4)
10.61 Holiday Inns, Inc. License (5)
Agreement 5/2/79
10.62 Holiday Inns, Inc. License (5)
Agreement 12/19/80
10.63 Holiday Inns, Inc. License (5)
Agreement 3/31/81
II-10
INDEX TO EXHIBITS (cont.)
Exhibit No. Exhibit Description Page No.
- ----------- ------------------- -------
10.64 Holiday Inns, Inc. License (5)
Agreement 5/12/83
10.65 Holiday Inns, Inc. License (6)
Agreement 4/25/84
10.66 Executives Optional Deferred (7)
Compensation Plan of United
Inns, Inc. 10/1/84
10.67 Hilton Inns, Inc. (7)
License Agreement 6/13/85
10.68 Termination of Lease and Guaranty (7)
(Exhibit 10.37) 10/31/85
10.69 Hampton Inns, Inc., a division (8)
of Holiday Inns, Inc.
License Agreement 10/23/85
10.70 Holiday Inns, Inc. (8)
License Agreement 1/17/86
10.71 Hampton Inns, Inc., a division (8)
of Holiday Inns, Inc.
License Agreement 7/10/86
10.72 Best Western International, Inc. (8)
License Agreement 7/28/86
10.73 Termination of Lease and Agreement (9)
(Exhibit 10.35) 5/19/87
10.74 Days Inns of America Franchising, Inc.
License Agreement 4/17/89 (Flagstaff) (10)
10.75 Days Inns of America Franchising, Inc. (11)
License Agreement 12/29/89 (Houston I-10
East)
10.76 Days Inns of America Franchising, Inc. (11)
License Agreement 12/29/89 (Houston I-10
West)
10.77 Days Inns of America Franchising, Inc. (11)
License Agreement 02/07/90 (Dallas Regal
Row)
10.78 Ramada, Inc. License Agreement 09/17/91 (12)
(Atlanta Downtown)
10.79 Hampton Inn Hotel Division of Embassy (12)
Suites, Inc. License Agreement 03/20/91
Houston I-10 East)
10.80 Holiday Inns Franchising, Inc. License (12)
Agreement 10/11/90 (Jackson Medical
Center)
10.81 Holiday Inns Franchising, Inc. License (12)
Agreement 06/18/91 (Houston Medical
Center)
II-11
INDEX TO EXHIBITS (cont.)
Exhibit No. Exhibit Description Page No.
- ----------- ------------------- -------
10.82 Holiday Inn Franchising, Inc. License (12)
Agreement 06/18/91 (Santa Barbara)
10.83 Termination of Lease and Agreement (12)
(Exhibit 10.33) 02/10/91
10.84 Hanna Acceptance Corporation, John (12)
Mitchell, Inc., Chapter 11 Trustee of
Daniel C. Hanna
11 Statement Regarding Computation of
Earnings Per Share
22 Subsidiaries of the Company
*23(b) Consent of Heiskell, Donelson, Bearman, Adams,
Williams & Caldwell, included in Exhibit 5
24 Consent of Frazee, Tate and Associates
*28 Consulting Agreement dated as of August 13, 1993
by and between United Inns, Inc. and Geller & Co.
<FN>
- ------------------------
* Previously filed
II-12
INDEX TO EXHIBITS (cont.)
(1) Filed as an Exhibit to the Company's report on Form 10-K (File No.
1-6848) filed with the Commission on December 27, 1980 and incorporated
herein by reference.
(2) Filed as an Exhibit to Registration Statement No. 2-42059, Form S-1, filed
with the commission on October 7, 1971 and incorporated herein by
reference.
(3) Filed as an Exhibit to the Company's report on Form 10-K (File No.
1-6848) filed with the Commission on December 28, 1981 and incorporated
herein by reference.
(4) Filed as an Exhibit to the Company's report on (Form 10-K File No.
1-6848) filed with the Commission on December 28, 1982 and incorporated
herein by reference.
(5) Filed as an Exhibit to the Company's report on (Form 10-K File No.
1-6848) filed with the Commission on December 28, 1983 and incorporated
herein by reference.
(6) Filed as an Exhibit to the Company's report on (Form 10-K File No.
1-6848) filed with the Commission on December 28, 1984, and incorporated
herein by reference.
(7) Filed as an Exhibit to the Company's report on (Form 10-K File No.
1-6848) filed with the Commission on December 27, 1985, and incorporated
herein by reference.
(8) Filed as an Exhibit to the Company's report on (Form 10-K File No.
1-6848) filed with the Commission on January 12, 1987, and incorporated
herein by reference.
(9) Filed as an Exhibit to the Company's report on (Form 10-K File No.
1-6848) filed with the Commission on January 6, 1988, and incorporated
herein by reference.
(10) Filed as an Exhibit to the Company's report on (Form 10-K File No.
1-6848) filed with the Commission on January 4, 1990, and incorporated
herein by reference.
(11) Filed as an Exhibit to the Company's report on (Form 10-K File No.
1-6848) filed with the Commission on January 15, 1991, and incorporated
herein by reference.
(12) Filed as an Exhibit to the Company's report on (Form 10-K File No.
1-6848) filed with the Commission on January 14, 1992, and incorporated
herein by reference.
Financial Statement Schedules
Schedule III - Condensed Financial Information of Company
Schedule IV - Indebtedness of Affiliates - Not Current
Schedule V - Property and Equipment
Schedule VI - Accumulated Depreciation of Property and Equipment
Schedule VIII - Valuation and Qualifying Accounts
Schedule X - Supplementary Income Statement Information
II-13
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors and Stockholders
United Inns, Inc.
Memphis, Tennessee
We have audited, in accordance with generally accepted auditing standards, the
consolidated financial statements of United Inns, Inc., and subsidiaries
included in this Registration Statement on Form S-1, and have issued our report
thereon dated December 3, 1993. Our audit was made for the purpose of forming
an opinion on those statements taken as a whole. The supplemental financial
statement schedules contained herein are presented for purposes of complying
with the Securities and Exchange Commission's rules and are not part of the
basic consolidated financial statements. These supplemental schedules have been
subjected to the auditing procedures applied in the audit of the basic
consolidated financial statements and, in our opinion, fairly state in all
material respects the financial data required to be set forth therein in
relation to the basic consolidated financial statements taken as a whole.
/s/ Frazee, Tate & Associates
-----------------------------
FRAZEE, TATE & ASSOCIATES
Memphis, Tennessee
December 3, 1993
S-1
SCHEDULE III--CONDENSED FINANCIAL INFORMATION OF COMPANY
UNITED INNS, INC. (PARENT COMPANY)
COMPARATIVE BALANCE SHEET
ASSETS
September 30,
--------------------------------------------------------------
1993 1992 1991
--------------- ----------------- ------------------
Current Assets
Cash $ 124 $ 3,013,672 $ 1,559,642
Current portion of notes receivable 22,767
Accounts receivable--other 4,325 513,901 104,027
Prepaid expenses 5,477,653 4,261,480 1,296,737
Property held for sale 1,500,000
--------------- ----------------- ------------------
Total current assets 5,482,102 9,289,053 2,983,173
--------------- ----------------- ------------------
Investments
Investments in Subsidiaries (39,451,585) (37,047,574) (33,362,257)
Due from Subsidiaries 60,041,607 55,479,840 54,009,879
Investments--at cost 10,000 10,000 10,000
--------------- ----------------- ------------------
20,600,022 18,442,266 20,657,622
--------------- ----------------- ------------------
Other Assets
Deferred loan and other expenses 623,584 4,588,925 9,944,311
--------------- ----------------- ------------------
--------------- ----------------- ------------------
$ 26,705,708 $ 32,320,244 $ 33,585,106
--------------- ----------------- ------------------
--------------- ----------------- ------------------
The accompanying notes are an integral part of the financial statements.
S-2
SCHEDULE III--CONDENSED FINANCIAL INFORMATION OF COMPANY
UNITED INNS, INC. (PARENT COMPANY)
COMPARATIVE BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30,
-------------------------------------------------------
1993 1992 1991
-------------- --------------- ---------------
Current Liabilities
Bank overdraft $ 483,802 $ $
Long-term debt--current 14,436 1,078,605
Accounts payable--trade 287,231 2,186,129 3,815,705
Accrued expenses--interest and other 3,388,791 3,658,344 965,917
Income taxes payable 70,329 161,177 47,875
-------------- --------------- ---------------
Total current liabilities 4,230,153 6,020,086 5,908,102
-------------- --------------- ---------------
Long-Term Debt
First mortgages--deferred portion 2,378,459 1,887,557
-------------- --------------- ---------------
Deferred Other 1,363,849 1,916,833 433,611
-------------- --------------- ---------------
Deferred Income Taxes 142,057 218,745 525,201
-------------- --------------- ---------------
Stockholders' Equity
Common stock--$1 par value--
authorized 10,000,000 shares,
issued 4,117,813 shares 4,117,813 4,117,813 4,117,813
Paid-in capital 14,613,138 14,613,138 14,613,138
Retained earnings 46,327,060 47,143,532 50,187,794
-------------- --------------- ---------------
65,058,011 65,874,483 68,918,745
Less treasury shares at cost--
1,476,904 shares in 1993 and 1992
and 1,476,834 shares in 1991 44,088,362 44,088,362 44,088,110
-------------- --------------- ---------------
Total stockholders' equity 20,969,649 21,786,121 24,830,635
-------------- --------------- ---------------
$ 26,705,708 $ 32,320,244 $ 33,585,106
-------------- --------------- ---------------
-------------- --------------- ---------------
S-3
SCHEDULE III--CONDENSED FINANCIAL INFORMATION OF COMPANY
UNITED INNS, INC. (PARENT COMPANY)
COMPARATIVE STATEMENT OF INCOME AND RETAINED EARNINGS
YEAR ENDED SEPTEMBER 30,
------------- --------------------------------
1993 1992 1991
------------- -------------- --------------
Income from Subsidiaries
Fees $ 1,077,893 $ 1,507,634 $ 1,955,322
Interest 0 738,265 824,161
Income from Outsiders
Interest 216,422 211,901 579,453
Other 25,989 34,416 65,284
------------- ------------- -------------
1,320,304 2,492,216 3,424,220
------------- ------------- -------------
Expenses
Administrative and general 757,645 586,989 721,760
Interest and financing 224,975 667,726 487,939
------------- ------------- -------------
982,620 1,254,715 1,209,699
------------- ------------- -------------
Operating income 337,684 1,237,501 2,214,521
Loss on disposition of assets (2,029,865)
------------- ------------- -------------
Income (loss) from operations
before income taxes 337,684 (792,364) 2,214,521
------------- ------------- -------------
Income Taxes
State 29,662 3,499 8,193
U S Federal 12,776 1,011,580 681,556
------------- ------------- -------------
42,438 1,015,079 689,749
------------- ------------- -------------
Income (loss) before equity in
subsidiaries' net income 295,246 (1,807,443) 1,524,772
Subsidiaries' dividends 800,000 1,000,000 1,850,000
Equity in subsidiaries'
undistributed net income (1,911,718) (2,236,819) (10,086,900)
------------- ------------- ------------
Net income (loss) (816,472) (3,044,262) (6,712,128)
Beginning retained earnings 47,143,532 50,187,794 56,899,922
------------- ------------- -------------
Ending retained earnings $ 46,327,060 $ 47,143,532 $ 50,187,794
------------- ------------- -------------
------------- ------------- -------------
The accompanying notes are an integral part of the financial statements.
S-4
SCHEDULE III--CONDENSED FINANCIAL INFORMATION OF COMPANY
UNITED INNS, INC. (PARENT COMPANY)
COMPARATIVE STATEMENT OF CASH FLOWS
YEAR ENDED SEPTEMBER 30,
-------------------------------------------------------
1993 1992 1991
--------------- -------------- -----------------
OPERATING ACTIVITIES
Net loss $(816,472) $(3,044,262) $(6,712,128)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Amortization 417,054 702,820
Loss on disposal of assets 2,029,865
Deferred income taxes (76,688) (306,456) 136,352
Equity in subsidiaries' net loss 1,604,011 1,236,819 8,236,900
Changes to operating assets and liabilities:
Accounts receivable (409,874) 431,161
Prepaid expenses (1,093,573) (744,382) (191,687)
Bank overdraft 483,802
Accounts payable 449,101 (711,020) (194,088)
Accrued expenses 29,738 53,771 (981,183)
Income taxes payable (90,848) 113,302 (1,806,550)
--------------- -------------- -----------------
Net cash provided by (used in) operating activities 489,071 (1,365,183) (378,403)
--------------- -------------- -----------------
INVESTING ACTIVITIES
Proceeds from sale of assets 2,652,038
Payments on settlement on car wash assets (1,200,000)
Other intercompany transactions--net change (2,999,283) 2,265,039 (10,934,411)
Other investing activities 49,648 (355,667) (13,434)
--------------- -------------- -----------------
Net cash provided by (used in) investing activities (2,949,635) 3,361,410 (10,947,845)
--------------- -------------- -----------------
FINANCING ACTIVITIES
Payments on long-term debt (573,267) (1,110,416)
Purchase of treasury shares (252)
Other financing activities (552,984) 31,322
--------------- -------------- -----------------
Net cash used in financing activities (552,984) (542,197) (1,110,416)
--------------- -------------- -----------------
Increase (decrease) in cash and cash equivalents (3,013,548) 1,454,030 (12,436,664)
Cash and cash equivalents at beginning of year 3,013,672 1,559,642 13,996,306
--------------- -------------- -----------------
Cash and cash equivalents at end of year $124 $3,013,672 $1,559,642
--------------- -------------- -----------------
--------------- -------------- -----------------
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest, net of amounts capitalized $257,685 $543,838 $1,124,009
State and federal income taxes 189,865 1,851,017
Supplemental schedule of noncash investing and
financing activities:
Acquisition (revaluation) of car wash assets (1,168,774) 225,702
The accompanying notes are an integral part of the financial statements.
S-5
UNITED INNS, INC. (PARENT COMPANY)
NOTES TO FINANCIAL STATEMENTS
INVESTMENTS
Investments in, and notes and advances to, subsidiaries
(eliminated in consolidation) are stated at cost and have
been adjusted for net advances, note payments, and
undistributed earnings and losses since acquisition.
LONG-TERM DEBT
The long-term debt of Parent Company matures as follows:
Year Ended September 30,
----------------------------------------
1993 1992 1991
------------ ------------ ------------
1992 $ $ $ 1,078,605
1993 14,436 1,078,605
1994 39,628 808,952
1995 50,950
1996 68,273
1997 2,219,608
------------ ------------ ------------
$ 0 $ 2,392,895 $ 2,966,162
------------ ------------ ------------
------------ ------------ ------------
The Parent Company is guarantor of the major portion of the
debt of its subsidiaries.
OTHER MATTERS
Refer to the notes to the consolidated financial statements
for further information regarding the following subjects:
Federal income tax Note 2
Long-term debt Note 3
Pension and profit sharing Note 5
Commitments and contingencies Note 6
S-6
SCHEDULE IV--INDEBTEDNESS OF AFFILIATES--NOT CURRENT
UNITED INNS, INC.
FOR THE THREE YEARS ENDED SEPTEMBER 30, 1993
(IN THOUSANDS OF DOLLARS)
- --------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C & D COLUMN E
- --------------------------------------------------------------------------------------------
NAME OF PERSONS BALANCE AT BEGINNING NET BALANCE AT END
OF PERIOD TRANSACTIONS (A) OF PERIOD
- --------------------------------------------------------------------------------------------
ADVANCES TO WHOLLY-OWNED
SUBSIDIARIES
CONSOLIDATED IN THE
FINANCIAL STATEMENTS:
Year Ended
September 30, 1991 $ 41,104 $ 12,906 $ 54,010
--------- --------- ---------
--------- --------- ---------
Year Ended
September 30, 1992 $ 54,010 $ 1,470 $ 55,480
--------- --------- ---------
--------- --------- ---------
Year Ended
September 30, 1993 $ 55,480 $ 4,562 $ 60,042
--------- --------- ---------
--------- --------- ---------
Amounts consist of working capital advances to subsidiaries,
return of excess funds not required for the normal operation
of subsidiaries, administrative charges by the parent, and
federal income tax charges or credit.
S-7
SCHEDULE V--PROPERTY AND EQUIPMENT
UNITED INNS, INC. AND SUBSIDIARIES
FOR THE THREE YEARS ENDED SEPTEMBER 30, 1993
(IN THOUSANDS OF DOLLARS)
BALANCE AT ADDITIONS RETIREMENTS BALANCE AT
BEGINNING AT OR RECLASSIFY END
CLASSIFICATION OF PERIOD COST SALES OF PERIOD
- ------------------------------------------------------------------------------------------------------------ ----------------
Year Ended September 30, 1991
Land $ 24,638 $ $ $ (1,790) $ 22,848(1)
Buildings and improvements 180,265 3,466 (681) (21,154) 161,896
Furniture and equipment 44,558 3,776 (6,681) (4,112) 37,541
Leased property under capital leases 6,261 (1,126) 5,135
Property held for sale 11,288 11,288
------------- ------------- ------------- ------------- -------------
255,722 7,242 (8,488) (15,768) 238,708
Construction in progress 2,064 (1,639) 425
------------- ------------- ------------- ------------- -------------
$ 257,786 $ 5,603 $ (8,488) $ (15,768)(2) $ 239,133
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
Year Ended September 30, 1992
Land $ 22,848 $ $ (447) $ (49) $ 22,352(1)
Buildings and improvements 161,896 3,801 (9,606) (13) 156,078
Furniture and equipment 37,541 1,531 (6,879) (1) 32,192
Leased property under capital leases 5,135 5,135
Property held for sale 11,288 20 (6,785)(3) 4,523
------------- ------------- ------------- ------------- -------------
238,708 5,352 (23,717) (63) 220,280
Construction in progress 425 (97) 328
------------- ------------- ------------- ------------- -------------
$ 239,133 $ 5,255 $ (23,717) $ (63) $ 220,608
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
Year Ended September 30, 1993
Land $ 22,352 $ 382 $ (130) $ $ 22,604(1)
Buildings and improvements 156,078 2,201 (3,119) 155,160
Furniture and equipment 32,192 3,835 (5,519) 30,508
Leased property under capital leases 5,135 (1,420) 3,715
Property held for sale 4,523 (415)(3) 4,108
------------- ------------- ------------- ------------- -------------
220,280 6,418 (10,603) 0 216,095
Construction in progress 328 248 576
------------- ------------- ------------- ------------- -------------
$ 220,608 $ 6,666 $ (10,603) $ 0 $ 216,671
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
<FN>
(1)Land classified on balance sheet as:
1993 1992 1991
------------- ------------- -------------
Land not in use--under investments $ 8,907 $ 8,525 $ 7,837
Land in use--under property & equipment 13,697 13,827 15,011
------------- ------------- -------------
$ 22,604 $ 22,352 $ 22,848
------------- ------------- -------------
------------- ------------- -------------
(2)Reclassification: Land, buildings and improvements, and furnishings and equipment of two hotels
to Long-Term Debt (See Note 11 to Consolidated Financial Statements) and land, buildings and
and improvements, and furnishings and equipment of one hotel and car washes to Property Held For Sale.
(3)Property Held for Sale--Retirements/Sales
1993 1992 1991
------------- ------------- -------------
Net book value of property dispositions $ (151) $ (878) $
Recovery of prior years' costs (2,817)
Depreciation (264) (421)
Write down to estimated realizable value (1,169)
Reclassified to current assets (1,500)
------------- ------------- -------------
$ (415) $ (6,785) $ 0
------------- ------------- -------------
------------- ------------- -------------
S-8
SCHEDULE VI--ACCUMULATED DEPRECIATION OF PROPERTY AND EQUIPMENT
UNITED INNS, INC. AND SUBSIDIARIES
FOR THE THREE YEARS ENDED SEPTEMBER 30, 1993
(IN THOUSANDS OF DOLLARS)
BALANCE AT ADDITIONS RETIREMENTS BALANCE AT
BEGINNING AT OR RECLASSIFY END
CLASSIFICATION OF PERIOD COST SALES OF PERIOD
- --------------------------------------------------------------------------------------------------------------------------
Year Ended September 30, 1991:
Buildings and improvements $ 65,930 $ 6,207 $ (582) $ (6,363) $ 65,192
Furniture and equipment 31,008 4,720 (6,590) (3,595) 25,543
Leased property under capital leases 5,770 232 (1,125) 4,877
------------- ------------- ------------- ------------- -------------
$ 102,708 $ 11,159 $ (8,297) $ (9,958) $ 95,612
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
Year Ended September 30, 1992:
Buildings and improvements $ 65,192 $ 5,969 $ (7,026) $ (114) $ 64,021
Furniture and equipment 25,543 3,765 (6,422) (307) 22,579
Leased property under capital leases 4,877 205 5,082
------------- ------------- ------------- ------------- -------------
$ 95,612 $ 9,939 $ (13,448) $ (421) $ 91,682
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
Year Ended September 30, 1993
Buildings and improvements $ 64,021 $ 5,591 $ (2,356) $ $ 67,256
Furniture and equipment 22,579 2,979 (5,295) 20,263
Leased property under capital leases 5,082 196 (1,340) 3,938
------------- ------------- ------------- ------------- -------------
$ 91,682 $ 8,766 $ (8,991) $ 0 $ 91,457
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
1991 1992 1993
------------- ------------- -------------
Reclassifications:
Accumulated depreciation on car wash assets (to) from Property $ (705) $ (421) $
Held for Sale
Accumulated depreciation on two hotel properties to Long-Term (7,366)
Debt (See Note 11 to Consolidated Financial Statements)
Accumulated depreciation on one hotel to Property Held For Sale (1,887)
------------- ------------- -------------
$ (9,958) $ (421) $ 0
------------- ------------- -------------
------------- ------------- -------------
S-9
SCHEDULE VIII--VALUATION AND QUALIFYING ACCOUNTS
UNITED INNS, INC. AND SUBSIDIARIES
FOR THE THREE YEARS ENDED SEPTEMBER 30, 1993
(IN THOUSANDS OF DOLLARS)
- ----------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ----------------------------------------------------------------------------------------------------------
ADDITIONS DEDUCTIONS
BALANCE AT FROM RESERVES BALANCE AT
BEGINNING (CHARGED TO (ACCOUNTS END
DESCRIPTION OF PERIOD P & L) CHARGED OFF) OF PERIOD
- ----------------------------------------------------------------------------------------------------------
Year Ended September 30, 1991:
Bad debts $ 129 $ 419 $ 428 $ 120
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Year Ended September 30, 1992
Bad debts $ 120 $ 394 $ 432 $ 82
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Year Ended September 30, 1993
Bad debts $ 82 $ 466 $ 469 $ 79
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
S-10
SCHEDULE X--SUPPLEMENTARY INCOME STATEMENT INFORMATION
UNITED INNS, INC. AND SUBSIDIARIES
(IN THOUSANDS OF DOLLARS)
The following amounts were charged to costs and expenses:
YEAR ENDED SEPTEMBER 30,
-------------------------------------------
1993 1992 1991
------------- ------------- -------------
Consolidated:
Maintenance and repairs:
Other profit and loss accounts $ 3,174 $ 3,249 $ 3,868
------------- ------------- -------------
------------- ------------- -------------
Depreciation:
Costs and expenses--not allocated $ 9,031 $ 9,939 $ 11,159
------------- ------------- -------------
------------- ------------- -------------
Property Taxes:
Other profit and loss accounts $ 3,804 $ 4,195 $ 4,828
------------- ------------- -------------
------------- ------------- -------------
Media Advertising:
Other profit and loss accounts $ 41 $ 24 $ 134
------------- ------------- -------------
------------- ------------- -------------
S-11