EXHIBIT 99.1
Contact: Paul Muellner FOR IMMEDIATE RELEASE
---------------------
Chief Financial Officer
John Q. Hammons Hotels, Inc.
417-864-4300
JOHN Q. HAMMONS HOTELS, INC. REPORTS
REVPAR UP 3.0% FOR THE FIRST QUARTER OF 2003
(SPRINGFIELD, MO., May 12, 2003) ---- John Q. Hammons Hotels, Inc. (AMEX: JQH)
today reported on its first quarter 2003 results.
FIRST QUARTER RESULTS
Basic and diluted earnings per share for the three months ended April 4, 2003
were $0.04, compared to basic and diluted earnings per share of $0.05 for the
same period in 2002. Net income was $0.2 million for the 2003 and 2002 first
quarters. Total revenues for the 2003 first quarter were $110.1 million, an
increase of $2.7 million, or 2.5%, compared to the 2002 first quarter.
Total earnings before interest expense, taxes, depreciation and amortization,
minority interest and extraordinary item (EBITDA) were $30.7 million for the
2003 first quarter, down 1.3% compared to the 2002 first quarter EBITDA of $31.1
million. The decrease was primarily attributable to a significant increase in
property insurance and worker's compensation costs, as well as smaller increases
in a number of general, administrative and sales expenses.
Our Revenue Per Available Room (RevPAR), once again above industry levels, was
$63.69 for the 2003 first quarter, up 3.0% compared to prior year's level of
$61.86, while the industry's RevPAR was down 1.6% as reported by Smith Travel
Research. Our RevPAR results for the 2002 period are more than 37% higher than
the hotel industry's RevPAR of $46.35.
CHAIRMAN COMMENTS
"Our quality hotels in strategic secondary and tertiary markets continue to help
insulate us from severe downturns in the economy," stated Mr. John Q. Hammons,
Chairman and Chief Executive Officer. "Although we are pleased with our
continued RevPAR performance in relation to the industry, we will continue to
strive toward improved margins and operational efficiencies.
FINANCING ACTIVITIES
The current portion of long-term debt as of April 4, 2003 ($13.8 million) is
attributable to principal amortization on various individual hotel mortgages and
includes a $6.4 million mortgage (Springdale Hampton Inn), which matures in the
four
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th quarter of 2003. We intend to refinance that debt prior to maturity. We
anticipate that the absence of any significant short-term maturities will allow
us to continue to reduce debt and strengthen our balance sheet.
CAPITAL INVESTMENTS
We believe the quality of our assets is an important factor to the success of
our company, and have continued to invest in our properties even throughout this
difficult time for our industry. In the first quarter of 2003, we spent
approximately $3.1 million in capital improvements, compared to approximately
$4.7 million (approximately $1.3 million of which was related to correcting
moisture related issues) in the first quarter of 2002.
OPERATIONS OUTLOOK
We forecast that our second quarter 2003 year-over-year RevPAR comparisons will
remain comparable to last year's levels. We expect second quarter 2003 revenues
and EBITDA to be slightly below the 2002 second quarter. EBITDA continues to be
slightly depressed due to increased property insurance and worker's compensation
costs discussed earlier. We expect to continue our cash generation and will
maintain our focus on operational efficiencies.
We are a leading independent owner and manager of affordable upscale, full
service hotels located primarily in key secondary markets. We own 47 hotels
located in 20 states, containing 11,629 guest rooms or suites, and manage 10
additional hotels located in six states, containing 2,375 guest rooms or suites.
The majority of these 57 hotels operate under the Embassy Suites, Holiday Inn
and Marriott trade names. Most of our hotels are located near a state capitol,
university, convention center, corporate headquarters, office park or other
stable demand generator. A copy of this press release announcing our earnings as
well as other statistical information will be available in the Investor
Relations section of our website at www.jqhhotels.com.
***
NOTE - FORWARD-LOOKING STATEMENTS: This press release contains "forward-looking
statements" within the meaning of Section 21E of the Securities Exchange Act of
1934, regarding, among other things, our operations outlook, business strategy,
prospects and financial position. These statements contain the words "believe,"
"anticipate," "estimate," "expect," "project," "intend," "may," "will," and
similar words. These forward-looking statements are not guarantees of future
performance, and involve known and unknown risks, uncertainties and other
factors that may cause our actual results to be materially different from any
future results expressed or implied by such forward-looking statements. Such
factors include, among others:
o General economic conditions, including the duration and
severity of the current economic slowdown and the pace at
which the lodging industry adjusts to the continuing war on
terrorism;
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o The impact of Severe Acute Respiratory Syndrome (SARS) or any
other serious communicable diseases on travel, particularly if
cases significantly increase or spread beyond the currently
affected areas;
o Competition;
o Changes in operating costs, particularly energy and labor
costs;
o Unexpected events, such as the September 11, 2001 terrorist
attacks;
o Risks of hotel operations, such as hotel room supply exceeding
demand, increased energy and other travel costs and general
industry downturns;
o Seasonality of the hotel business;
o Cyclical over-building in the hotel and leisure industry;
o Requirements of franchise agreements, including the right of
some franchisors to immediately terminate their respective
agreements if we breach certain provisions; and
o Costs of complying with applicable state and federal
regulations.
These risks and uncertainties should be considered in evaluating any
forward looking statements contained in this press release. We undertake no
obligation to update or revise publicly any forward looking statement, whether
as a result of new information, future events or otherwise, other than as
required by law.
- - Tables Attached - -
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JOHN Q. HAMMONS HOTELS, INC.
AND COMPANIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(000'S omitted, except share data)
<Table>
<Caption>
THREE MONTHS ENDED (A)
APR. 4, MAR. 29,
2003 2002
------------ ------------
REVENUES:
Rooms $ 67,403 $ 65,490
Food and beverage 29,139 29,287
Meeting room rental, related party management fee and other 13,588 12,652
------------ ------------
Total revenues 110,130 107,429
OPERATING EXPENSES:
Direct operating costs and expenses:
Rooms 16,280 16,056
Food and beverage 21,906 22,155
Other 692 709
General, administrative, sales and management expenses 36,075 33,009
Repairs and maintenance 4,453 4,355
Depreciation and amortization 12,481 12,992
------------ ------------
Total operating costs 91,887 89,276
------------ ------------
INCOME FROM OPERATIONS 18,243 18,153
OTHER INCOME (EXPENSE):
Other income 175 --
Interest expense and amortization of deferred financing
fees, net of interest income (17,433) (16,998)
------------ ------------
INCOME BEFORE MINORITY INTEREST, PROVISION FOR
INCOME TAXES 985 1,155
Minority interest in earnings of partnership (748) (877)
------------ ------------
INCOME BEFORE PROVISION FOR INCOME TAXES 237 278
Provision for income taxes (30) (30)
------------ ------------
NET INCOME ALLOCABLE TO THE COMPANY $ 207 $ 248
============ ============
BASIC EARNINGS PER SHARE:
Net earnings allocable to Company $ 0.04 $ 0.05
============ ============
BASIC WEIGHTED AVERAGE SHARES OUTSTANDING 5,083,829 5,076,279
============ ============
DILUTED EARNINGS PER SHARE:
Net earnings allocable to Company $ 0.04 $ 0.05
============ ============
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING 5,151,081 5,108,791
============ ============
</Table>
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JOHN Q. HAMMONS HOTELS, INC.
AND COMPANIES
(Amounts in thousands except earnings per share and operating data)
<Table>
<Caption>
THREE MONTHS ENDED
APR. 4, MAR. 29,
2003 2002
---------- ----------
RECONCILIATION OF INCOME FROM OPERATIONS TO EBITDA:
Income from Operations $ 18,243 $ 18,153
Depreciation and Amortization 12,481 12,992
---------- ----------
EBITDA(a) $ 30,724 $ 31,145
========== ==========
EBITDA MARGIN (% OF TOTAL REVENUE) 27.9% 29.0%
</Table>
(a) EBITDA is defined as income before interest expense, income tax expense,
depreciation, amortization, minority interest and other income. Management
considers EBITDA to be one measure of operating performance for the Company
before debt service that provides a relevant basis for comparison, and EBITDA is
presented to assist investors in analyzing the performance of the Company. This
information should not be considered as an alternative to any measure of
performance as promulgated under accounting principles generally accepted in the
United States, nor should it be considered as an indicator of the overall
financial performance of the Company. The Company's calculation of EBITDA may be
different from the calculation used by other companies and, therefore,
comparability may be limited.
<Table>
<Caption>
THREE MONTHS ENDED
APR. 4, MAR. 29,
2003 2002
-------- --------
TOTAL OWNED HOTELS:
Occupancy 62.8% 62.4%
Average Room Rate $ 101.42 $ 99.12
RevPar (Room Revenue per available room) $ 63.69 $ 61.86
</Table>
<Table>
<Caption>
APR. 4, JAN. 3,
2003 2003
-------- --------
BALANCE SHEET DATA SELECTED
- ---------------------------
Current Assets $ 69,152 $ 52,020
Total Assets $ 868,735 $ 859,972
Current Liabilities Excluding Debt $ 50,428 $ 40,789
Current Portion of Debt $ 13,768 $ 13,683
Total Debt Including Current Portion $ 804,422 $ 806,342
Total Cash and Equivalents, Restricted Cash and
Marketable Securities $ 53,075 $ 35,358
Net Debt $ 751,347 $ 770,984
</Table>
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