SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 30, 1998
AMERIHOST PROPERTIES, INC.
(Exact name of registrant as specified in charter)
Delaware 0-15291 36-3312434
(State of other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2400 East Devon Avenue, Suite 280 Des Plaines, Illinois 60018
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 298-4500
(Former name or former address, if changed since last report)
Item 2. ACQUISITION OR DISPOSITION OF ASSETS
Registrant completed the sale of 26 wholly-owned Amerihost Inn(R) hotels to
PMC Commercial Trust for $62.2 million, including the assumption of mortgage
debt, on June 30, 1998. Registrant also entered into an agreement to lease
back these hotels for 10 years at an initial fixed payment of $6.22 million
per year, with annual CPI increases beginning after the third year, at a
maximum of two percent. As a result of the transaction, Registrant will
realize an $11.8 million pre-tax gain which will be accounted for under
sale/lease back accounting. In addition, mortgage debt will be reduced by
approximately $37.5 million on its consolidated balance sheet and the Company
will realize pre-tax net proceeds of approximately $18.7 million.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(b) Pro forma financial information:
The following unaudited condensed consolidated pro forma balance sheet
at March 31, 1998, and the unaudited condensed consolidated pro forma
statements of operation for the three months ended March 31, 1998 and
the fiscal year ended December 31, 1997 give effect to the sale and
leaseback of 26 hotels with PMC Commercial Trust. The pro forma
statements of operation assume the transaction occurred on January 1,
1997. The pro forma balance sheet assumes the transaction occurred on
March 31, 1998. The unaudited pro forma financial information is based
on the historical financial statements of Amerihost Properties, Inc.,
giving effect to the sale and leaseback, and to the assumptions and
adjustments in the accompanying notes to the unaudited pro forma
financial information.
The unaudited pro forma financial statements are presented for
informational purposes only and do not purport to be indicative of the
financial position which would actually have existed or the results of
operations which would actually have been obtained if the transaction
had occurred in the periods indicated below or which may exist or be
obtained in the future. The ultimate use of the proceeds may differ
from the assumptions used herein. The unaudited pro forma financial
information should be read in conjunction with the notes thereto and the
historical Amerihost Properties, Inc. consolidated financial statements
and notes thereto included in Amerihost Properties, Inc. latest annual
report on Form 10-K and latest quarterly report on Form 10-Q.
AMERIHOST PROPERTIES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1998 (UNAUDITED)
As Pro forma
ASSETS Reported Adjustments Pro forma
Current assets:
Cash and cash equivalents $ 2,924,579 $ 18,735,893 (1) $ 21,660,472
Other current assets 9,819,922 (3,230,125) (2) 6,589,797
Total current assets 12,744,501 15,505,768 28,250,269
Investments in and advances to unconsolidated
hotel joint ventures 5,895,375 (41,207) (3) 5,854,168
Property and equipment 86,966,665 (47,221,850) (4) 39,744,815
Less: accumulated depreciation and amortization 10,732,697 (2,935,124) (4) 7,797,573
76,233,968 (44,286,726) 31,947,242
Other assets, net of accumulated amortization 5,430,332 (686,195) (5) 4,744,137
Deferred income taxes - 4,710,000 (6) 4,710,000
5,430,332 4,023,805 9,454,137
$ 100,304,176 $ (24,798,360) $ 75,505,816
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Other current liabilities $ 12,147,658 $ 1,368,035 (2) $ 13,515,693
Current portion of long-term debt 5,188,433 (860,593) (7) 4,327,840
Total current liabilities 17,336,091 507,442 17,843,533
Long-term debt, net of current portion 60,558,502 (36,633,335) (7) 23,925,167
Deferred income taxes 108,000 (108,000) (6) -
Deferred income 1,067,700 11,751,888 (8) 12,819,588
Minority interests 773,894 - 773,894
Shareholders' equity:
Common stock 31,061 - 31,061
Additional paid-in capital 17,856,880 - 17,856,880
Retained earnings 3,008,923 (316,355) 2,692,568
20,896,864 (316,355) 20,580,509
Less: Subscriptions receivable (436,875) - (436,875)
20,459,989 (316,355) 20,143,634
$ 100,304,176 $ (24,798,360) $ 75,505,816
See notes to pro forma condensed consolidated financial statements.
AMERIHOST PROPERTIES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(UNAUDITED)
As Pro forma
Reported Adjustments Pro forma
Revenue $ 14,037,709 $ - $ 14,037,709
Operating costs and expenses 12,801,115 - 12,801,115
1,236,594 - 1,236,594
Depreciation and amortization 1,253,489 (643,956) 609,533
Leasehold rents - hotels, net of amortization
of deferred gain on sale 393,612 1,122,898 1,516,510
Corporate general and administrative 342,260 - 342,260
Operating loss (752,767) (478,942) (1,231,709)
Interest expense (1,471,089) 816,354 (654,735)
Other income (expense), net 103,178 16,170 119,348
Loss before minority interests and income taxes (2,120,678) 353,582 (1,767,096)
Minority interests in (income) loss of
consolidated subsidiaries and partnerships 207,587 - 207,587
Loss from continuing operations before income tax (1,913,091) 353,582 (1,559,509)
Income tax benefit 784,000 (145,000) 639,000
Net loss from continuing operations $ (1,129,091) $ 208,582 $ (920,509)
Net loss from continuing operations per share:
Basic $ (0.18) $ (0.15)
Diluted $ (0.19) $ (0.15)
See notes to pro forma condensed consolidated financial statements.
AMERIHOST PROPERTIES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
As Pro forma
Reported Adjustments Pro forma
Revenue $ 62,665,516 $ - $ 62,665,516
Operating costs and expenses 52,284,877 - 52,284,877
10,380,639 - 10,380,639
Depreciation and amortization 4,532,500 (1,757,442) 2,775,058
Leasehold rents - hotels, net of amortization
of deferred gain on sale 1,728,933 3,073,871 4,802,804
Corporate general and administrative 2,139,647 - 2,139,647
Operating loss 1,979,559 (1,316,429) 663,130
Interest expense (4,053,933) 2,307,934 (1,745,999)
Other income (expense), net 374,550 55,378 429,928
Gain on sale of property and equipment 1,697,999 - 1,697,999
Contractual termination expenses (1,874,492) - (1,874,492)
Loss before minority interests and income taxes (1,876,317) 1,046,883 (829,434)
Minority interests in (income) loss of
consolidated subsidiaries and partnerships 172,874 - 172,874
Loss from continuing operations before income tax (1,703,443) 1,046,883 (656,560)
Income tax benefit 737,000 (429,000) 308,000
Net loss from continuing operations $ (966,443) $ 617,883 $ (348,560)
Net loss from continuing operations per share:
Basic $ (0.15) $ (0.06)
Diluted $ (0.19) $ (0.10)
See notes to pro forma condensed consolidated financial statements.
AMERIHOST PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The pro forma condensed consolidated balance sheet pro forma adjustments
column at March 31, 1998 reflects the following:
(1) Represents the net cash proceeds from the sale of the hotels,
including estimated cash proceeds from the sale of two joint
venture hotels, after closing and other costs of approximately
$619,000, and the repayment of mortgage debt.
(2) Refundable income taxes included in other current assets at March
31, 1998 has been eliminated and income taxes payable have been set
up as a result of the estimated income taxes due upon the sale of
the hotels.
(3) Investments in and advances to unconsolidated hotel joint ventures
was increased by the Company's share of the gain on the sale of two
joint venture hotels, and reduced by the estimated cash
distribution assumed to be received.
(4) Property and equipment, as well as the related accumulated
depreciation and amortization, have been reduced for all hotels
which have been sold.
(5) Other assets have been reduced by the elimination of unamortized
deferred loan costs associated with the mortgage notes which have
been repaid from the proceeds of the sale.
(6) Deferred income taxes have been provided due to the current
recognition of the gain on sales for income tax purposes, and the
deferral of the gain on sales for book purposes based on sale
leaseback accounting.
(7) Current portion of long-term debt and long-term debt have been
reduced as a result of the repayment of the mortgage notes upon the
sale of the hotels.
(8) The gain on the sale of the hotels has been deferred pursuant to
sale leaseback accounting. This deferred gain will be recognized
over the ten year term of the lease as a reduction to leasehold
rent expense. The actual deferred gain recorded at June 30, 1998
will differ from the estimated deferred gain reflected on the
March 31, 1998 pro forma condensed consolidated balance sheet.
AMERIHOST PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The pro forma condensed consolidated statements of operations for the three
months ended March 31, 1998, and for the year ended December 31, 1997, have
been adjusted for (i) the elimination of depreciation and amortization on the
property and equipment which has been assumed to be sold January 1, 1997;
(ii) the elimination of the amortization of deferred loan costs related to
the mortgage notes assumed to be repaid on January 1, 1997; (iii) the
additional leasehold rent expense associated with the leaseback of the sold
hotels, reduced by the amortization of the deferred gain on the sale; (iv)
the reduction of interest expense from mortgage notes assumed to be repaid
January 1, 1997; and (v) an adjustment to the equity in income of affiliates
from the sale and leaseback accounting for the two joint ventures sold.
(c) Exhibits.
(2) Agreement of Purchase and Sale dated May 21, 1998, with description
of omitted exhibits.
(99) Form of Property Lease dated June 30, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMERIHOST PROPERTIES, INC.
Date: July 15, 1998 By: /s/ Michael P. Holtz
Michael P. Holtz
Its: President and Chief Executive Officer
EXHIBIT INDEX
Exhibit Number Page Number
(2) Agreement of Purchase and Sale dated May 21, 1998, with
description of omitted exhibits. 10
(99) Form of Property Lease dated June 30, 1998. 53