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
BASIC EARNINGS OF $0.06 PER SHARE
FOR THE FIRST HALF OF 2003
(SPRINGFIELD, MO., August 12, 2003) ---- John Q. Hammons Hotels, Inc. (AMEX:
JQH) today reported on its second quarter 2003 results.
YEAR-TO-DATE RESULTS
Basic earnings per share for the six months ended July 4, 2003 were $0.06,
compared to a loss per share of ($0.15) for the six months ended June 28, 2002.
Net income for the six months ended July 4, 2003 was $0.3 million, compared to a
net loss of ($0.8) million for the same period in 2002. The 2002 six months
included a charge of $6.8 million applicable to debt extinguishment costs,
primarily related to the refinancing of a significant portion of our long-term
debt completed in May of 2002. We produced EBITDA for the six months ended July
4, 2003 of $61.3 million, compared to $65.1 million in the 2002 period (See
attached table for reconciliation of net income to EBITDA and for the definition
of EBITDA). The decrease was primarily attributable to increases in property
insurance, guest frequency program costs and rising natural gas prices.
Total revenues for the 2003 six months were $218.8 million, a decrease of $3.8
million, compared to the same period in 2002. Revenue Per Available Room
(RevPAR) was $64.43 for the 2003 six months, virtually equal to the prior year's
level of $64.72, while the industry's RevPAR for the first six months of 2003
was down 2.5% from the first half of 2003, to $48.70, as reported by Smith
Travel Research.
SECOND QUARTER RESULTS
Basic earnings per share for the three months ended July 4, 2003 were $0.02,
compared to a loss per share of ($0.20) for the same period in 2002. Net income
was $0.1 million for the 2003 quarter, compared to a loss of ($1.0) million for
the 2002 quarter. The 2002 quarter included the debt extinguishment costs
discussed above. EBITDA was $30.6 million for the 2003 quarter, down $3.4
million compared to the 2002 second quarter EBITDA of $34.0 million (See
attached table for reconciliation of net income to EBITDA and for the definition
of EBITDA). The decrease was primarily attributable increases in property
insurance, guest frequency program costs and rising natural gas prices.
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Total revenues for the 2003 second quarter were $108.7 million, compared to
$115.2 million for the 2002 quarter, reflecting the ongoing weakness in the
association and corporate group travel segments of the hospitality industry. Our
Revenue Per Available Room (RevPAR) was $65.16 for the 2003 second quarter,
compared to the prior year's level of $67.58, while the industry's RevPAR for
the second quarter of 2003 was down 3.2% compared to the same period in 2002, to
$51.31 as reported by Smith Travel Research.
CHAIRMAN COMMENTS
"Although the ongoing weakness in the industry has been difficult, our goal of
strengthening our balance sheet has helped to improve the financial picture of
this company," stated Mr. John Q. Hammons, Chairman and Chief Executive Officer.
"We continue to reduce debt and maintain quality service levels, thereby
positioning ourselves for the economic and industry recovery."
FINANCING ACTIVITIES
We retired a $6.3 million mortgage (Springdale Hampton Inn) at 9.25%, which was
due to mature in the fourth quarter of 2003, bringing total debt reduction in
the first half of 2003 to $10.1 million. The remaining current portion of
long-term debt ($7.7 million) is attributable only to scheduled principal
amortization on various individual hotel mortgages.
OPERATIONS OUTLOOK
We forecast that the lingering industry weakness will continue throughout the
third quarter of 2003, generating year-over-year RevPAR comparable to, or
slightly below last year's levels. Despite this weakness, 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 11
additional hotels located in seven states, containing 2,623 guest rooms or
suites. The majority of these 58 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
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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;
o The impact of any serious communicable diseases on travel,
including any increase or further spread in Severe Respiratory
Syndrome (SARS);
o Competition;
o Changes in operating costs, particularly energy and labor
costs;
o Unexpected events, such as the September 11, 2001 terrorist
attacks, or outbreaks of war;
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 - -
JOHN Q. HAMMONS HOTELS, INC.
AND COMPANIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(000's omitted, except share data)
<Table>
<Caption>
THREE MONTHS ENDED SIX MONTHS ENDED
JULY 4, 2003 JUNE 28, 2002 JULY 4, 2003 JUNE 28, 2002
------------- ------------- ------------- -------------
REVENUES:
Rooms $ 68,959 $ 71,551 $ 136,362 $ 137,041
Food and beverage 27,390 30,101 56,529 59,388
Meeting room rental, related party management fee and other 12,315 13,509 25,903 26,161
------------- ------------- ------------- -------------
Total revenues 108,664 115,161 218,794 222,590
OPERATING EXPENSES:
Direct operating costs and expenses:
Rooms 17,046 17,712 33,326 33,768
Food and beverage 21,982 23,219 43,888 45,374
Other 701 896 1,393 1,605
General, administrative, sales and management expenses 33,747 34,770 69,822 67,779
Repairs and maintenance 4,585 4,602 9,038 8,957
Depreciation and amortization 12,586 13,096 25,067 26,088
------------- ------------- ------------- -------------
Total operating costs 90,647 94,295 182,534 183,571
------------- ------------- ------------- -------------
INCOME FROM OPERATIONS 18,017 20,866 36,260 39,019
OTHER INCOME (EXPENSE):
Other income -- -- 175 --
Interest income 156 194 335 448
Interest expense and amortization of deferred financing fees (17,595) (18,232) (35,207) (35,484)
Extinguishment of debt costs -- (6,792) -- (6,792)
------------- ------------- ------------- -------------
INCOME (LOSS) BEFORE MINORITY INTEREST AND PROVISION
FOR INCOME TAXES 578 (3,964) 1,563 (2,809)
Minority interest in (earnings) loss of partnership (439) 3,011 (1,187) 2,134
------------- ------------- ------------- -------------
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES 139 (953) 376 (675)
Provision for income taxes (60) (60) (90) (90)
------------- ------------- ------------- -------------
NET INCOME (LOSS) ALLOCABLE TO THE COMPANY $ 79 $ (1,013) $ 286 $ (765)
============= ============= ============= =============
BASIC EARNINGS (LOSS) PER SHARE:
Net earnings (loss) allocable to Company $ 0.02 $ (0.20) $ 0.06 $ (0.15)
============= ============= ============= =============
BASIC WEIGHTED AVERAGE SHARES OUTSTANDING 5,089,728 5,081,008 5,086,778 5,078,644
============= ============= ============= =============
DILUTED EARNINGS (LOSS) PER SHARE:
Net earnings (loss) allocable to Company $ 0.01 $ (0.20) $ 0.05 $ (0.15)
============= ============= ============= =============
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING 5,372,627 5,081,008 5,369,677 5,078,644
============= ============= ============= =============
</Table>
JOHN Q. HAMMONS HOTELS, INC.
AND COMPANIES
(AMOUNTS IN THOUSANDS EXCEPT EARNINGS PER SHARE AND OPERATING DATA)
<Table>
<Caption>
THREE MONTHS ENDED SIX MONTHS ENDED
JULY 4, 2003 JUNE 28, 2002 JULY 4, 2003 JUNE 28, 2002
------------- ------------- ------------- -------------
RECONCILIATION OF NET INCOME TO EBITDA:
Net Income (Loss) $ 79 $ (1,013) $ 286 $ (765)
Provision for income taxes 60 60 90 90
Minority interest in earnings (loss) of partnership 439 (3,011) 1,187 (2,134)
Extinguishment of debt costs 0 6,792 0 6,792
Interest expense and amortization of deferred financing fees 17,595 18,232 35,207 35,484
Interest income (156) (194) (335) (448)
Other income 0 0 (175) 0
Depreciation and amortization 12,586 13,096 25,067 26,088
------------- ------------- ------------- -------------
EBITDA (a) $ 30,603 $ 33,962 $ 61,327 $ 65,107
============= ============= ============= =============
EBITDA MARGIN (% OF TOTAL REVENUE) 28.2% 29.5% 28.0% 29.2%
</Table>
(a) EBITDA is defined as income before interest income and expense, income tax
expense, depreciation and amortization, minority interest, extinguishment of
debt costs and other income. Management considers EBITDA to be one measure of
operating performance for the Company before debt service that provides a
relevant basis for comparison, and EBITDA is presented to assist investors in
analyzing the performance of the Company. This information should not be
considered as an alternative to any measure of performance as promulgated under
accounting principles generally accepted in the United States, nor should it be
considered as an indicator of the overall financial performance of the Company.
The Company's calculation of EBITDA may be different from the calculation used
by other companies and, therefore, comparability may be limited.
<Table>
<Caption>
THREE MONTHS ENDED SIX MONTHS ENDED
JULY 4, 2003 JUNE 28, 2002 JULY 4, 2003 JUNE 28, 2002
------------- ------------- ------------- -------------
TOTAL OWNED HOTELS:
Occupancy 65.7% 68.2% 64.2% 65.3%
Average Room Rate $ 99.21 $ 99.11 $ 100.29 $ 99.11
RevPAR (Room Revenue per available room) $ 65.16 $ 67.58 $ 64.43 $ 64.72
</Table>
<Table>
<Caption>
July 4, Jan. 3, Dec. 28,
2003 2003 2001
-------- -------- --------
SELECTED BALANCE SHEET DATA
Current Assets $ 60,489 $ 52,020 $ 60,673
Total Assets $851,433 $859,972 $881,724
Current Liabilities Excluding Debt $ 40,628 $ 40,789 $ 45,072
Current Portion of Long-Term Debt $ 7,734 $ 13,683 $ 38,862
Total Long-Term Debt Including Current Portion $796,205 $806,342 $813,007
Total Cash and Equivalents, Restricted Cash and Marketable Securities $ 48,558 $ 35,358 $ 44,196
Net Debt $747,647 $770,984 $768,811
</Table>