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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20459
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 1998; COMMISSION FILE NUMBER 0-1957
UPTOWNER INNS, INC.
(Exact Name of Registrant as Specified in its Charter)
West Virginia 55-0457171
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
1415 4th Avenue, Huntington, West Virginia 25701
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including area code (304) 525-7741
Securities registered pursuant to Section 12 (g) of the Act:
1,583,563 shares of common stock - $0.50 par value
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and, (2) has been subject to such filing requirements for
the past 90 days.
X Yes No
The aggregate market value of the voting stock held by non-
affiliates of the registrant, as of the 30th day of June 1998, was
$583,668.
As of June 30, 1998, the close of the period covered by this
report, the registrant had 1,583,563 shares of its common capital
stock issued and outstanding. The registrant has issued no other
stock.
DOCUMENTS INCORPORATED BY REFERENCE
The definitive proxy statement to be filed by the registrant,
pursuant to Regulation 14A, is incorporated herein by reference in
Part III, Items 10 and 11.
PART I
ITEM 1. BUSINESS.
(a) The registrant, Uptowner Inns, Inc., was incorporated in the
State of West Virginia on July 1, 1961. The registrant operates a 137 room,
full service hotel built in 1962 by the registrant. On January 17, 1997,
the Holiday Inn franchise was terminated. The franchise required standard
fees for advertising, reservation system, etc.
The clientele are predominately business travelers due to the downtown
location and occupancy for the year averaged 33.8% with an average of $50.
rate per room. This yielded a revenue for available rooms of $6,100.
per year.
In late August 1998, the registrant opened a 135 room Holiday Inn
Hotel & Suites facility adjacent to the Huntington Civic Arena. The
future use of the original facility has not been determined and it is
continuing to operate as a full service hotel.
A wholly owned subsidiary of the registrant, Motel and Restaurant
Supply, which was incorporated in the State of West Virginia on
July 16, 1966, has had no activity since 1981.
Neither the registrant nor any of its subsidiaries has experienced
bankruptcy, receivership or similar proceedings; has been involved in
reclassification, merger or consolidation; has acquired or, except as
hereinafter set forth, disposed of any material amount of assets otherwise
than in the ordinary course of business; or has undertaken any material
change in the mode of conducting its business.
(b) The registrant is engaged in substantially two lines of
businesses, to wit, the operation of motor hotels with dining and
banquet facilities, and residential/commercial rentals. The income
of the registrant from rentals exceeds ten percent of the consolidated
revenue of the registrant and its subsidiaries, which consolidated
revenue did not exceed $50,000,000. during any of the last three fiscal
years.
The hotel industry is highly competitive with the registrant
competing against numerous national hotel franchises in Huntington,
West Virginia. As the Companies' operations are generally one
business segment, its competition locally includes Radisson hotel,
Ramada Inn, Best Western, Comfort Inn, Red Roof Inn, and Hampton Inn.
Seasonality directly affects this business as a result of
people not traveling or vacationing in large numbers in the late fall
and winter because of poor weather at these geographical locations.
At June 30, 1998, the registrant and its subsidiaries employ
approximately 50 employees.
(d) The registrant has no foreign operation.
ITEM 2. PROPERTIES.
(a) The main physical property of the registrant is a 140
unit, four story motor hotel, with swimming pool, dining, banquet, and
lounge facilities, located in downtown Huntington, West Virginia, at
1415 Fourth Avenue. This property is owned in fee by the registrant.
The motor hotel is subject to a mortgage in favor of the Twentieth
Street Bank, Huntington, West Virginia, in the original amount of
$2,000,000., payable in monthly installments of $22,568. per month,
including interest at 10% until February 4, 2004, when the amount
due must be paid in full. The balance at June 30, 1998 is $1,330,369.
(b) The registrant owns in fee two lots, used for the over-
flow parking, across the street from its main motor hotel at 1432-34
Fourth Avenue, in Huntington, West Virginia.
(c) The registrant owns in fee an undeveloped lot acquired
for future development or parking, across an alley from its main
motor hotel at 1400 Fifth Avenue in Huntington, West Virginia. The lot
is available for sale.
(d) The registrant owns in fee a lot improved by a three
story brick building used as a fraternity house, across an alley from
its main motor hotel, 1434 Fifth Avenue, in Huntington, West Virginia,
acquired for rental and for future development. This property will be
sold in the next fiscal year.
(e) The registrant owns in fee two lots immediately west of
its motor hotel, 1401 Fourth Avenue, in Huntington, West Virginia,
acquired for future development and currently used for parking.
This property is subject to a first mortgage in favor of the
Twentieth Street Bank in the original amount of $2,000,000. as noted
in Item 2 (a).
(f) The registrant owns in fee and operates a 40 unit, two
story apartment building within one city block of the motor hotel, at
1340 Fourth Avenue, in Huntington, West Virginia.
(g) The registrant owns in fee a lot acquired and used for
parking, across the street from its main motor hotel at 1420
Fourth Avenue, in Huntington, West Virginia.
(h) The registrant owns in fee an undeveloped lot acquired
for future development or for parking, across an alley from its main
motor hotel at 1438 Fifth Avenue, in Huntington, West Virginia.
It is anticipated the lot will be sold within the next fiscal year.
(i) The registrant owns in fee a vacant lot within one
city block of the main motor hotel at 1326 Fourth Avenue, in
Huntington, West Virginia. The lot will be sold within the next fiscal year.
(j) The registrant owns in fee a lot improved by a three story
building originally used as a store and apartment, within one city
block of the main motor hotel at 1416-18 Fourth Avenue, in Huntington,
West Virginia, acquired for rental and for future development,
subject to a mortgage in favor of Betty M. Dove, in the original
amount of $76,000., 10% interest, maturing June 2002, the balance of
which was $29,497. at June 30, 1998.
(k) The registrant owns in fee two parcels within one city
block of the main motor hotel at 1436-38 Fourth Avenue and 1440-42
Fourth Avenue, in Huntington, West Virginia which will be sold in
the next fiscal year.
(l) The registrant owns in fee a vacant lot on the west side
of Huntington approximately 3 miles from the main motor hotel and at
an exit for Interstate 64. This purchase was finalized in October 1988
from an option entered into in 1983. The property is currently used as a
parking lot until it is deemed beneficial to build and operate a
decent motel in that location.
(m) The registrant purchased a parcel of real estate with a
residential building in January 1990. This property is across an
alley from the main motor hotel and was acquired for future
development and parking.
(n) The registrant purchased a parcel of real estate with a
building housing residential and commercial tenants in July 1991.
This property is across the street from its main motor hotel and
adjacent to other rental properties and parking facilities. The
property has been renovated and is now fully utilized as rental
property. The property is subject to a mortgage in favor of West
Virginia Housing Development Fund in the original amount of $500,000.,
5.5% rate of interest, maturing November 2018, the balance of which
is $451,411.
(o) The registrant owns in fee a lot improved by construction
in progress of a Holiday Inn Hotel & Suites located in downtown Huntington
at 800 Third Avenue. This purchase was finalized in December 17, 1996
from a contract entered into on November 21, 1995. The property is subject
to a mortgage in favor of Huntington Urban Renewal Authority in the amount
of $540,000., 8.5% rate of interest, maturing February 2004, the balance
of which is $540,000. and subject to a line of credit in the amount of
$4,144,899., prime plus 1% rate of interest for construction in progress.
The facility was completed in August 1998 and is being marketed
for convention and business travelers. It is adjacent to the Huntington
Civic Arena and will be used as a major part of marketing for conventions
and meetings in the Tri-State area.
Annual reviews of insurance coverage are done and adequate insurance
is maintained on all properties.
ITEM 3. LEGAL PROCEEDINGS:
A $10,000,000. suit in which the Uptowner Inns, Inc. is a defendant
has been filed by James R. Burton, an individual, who was severely
injured in an auto accident by a patron of the lounge in Cabell County
Court. Legal counsel believes that good defenses exist in this action,
and that the case will ultimately be resolved in Uptowner Inns, Inc.'s favor.
The insurance company has denied liability in this case and legal counsel
believes the risk of loss will fall to Uptowner Inns, Inc.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year covered by this report.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED
SECRUITY HOLDER MATTERS
(a) The common stock of the registrant is traded in the over-the-
counter market. During the past two years, there has been limited activity
of common stock. These shares were traded for between $.50 and $.65
per share.
(b) As of the 20th day of September 1998, the approximate number
of record holders of common stock securities of the registrant was 1,434.
(c) The registrant has paid no dividends with respect to its
common stock during the past two years.
ITEM 6. SELECTED FINANCIAL DATA
The following financial information of Uptowner Inns, Inc., and
Subsidiaries is for the years ended June 30, 1998, June 30, 1997, June 30
1996, June 30, 1995, and June 30, 1994, on a scope similar to that set
forth in the report included elsewhere in this report. These Summaries
should be read in conjunction with the financial statements and related
notes included elsewhere in this report.
UPTOWNER INNS, INC.
SELECTED FINANCIAL DATA
1998 1997 1996 1995 1994
Operating
Revenues 1,479,921 1,867,013 2,098,085 2,317,690 2,114,079
Income from
Operations 87,267 279,055 316,577 424,570 121,169
Net Income
(Loss) (125,643) 74,257 89,458 494,600 (81,046)
Net Income (Loss)
per share (.08) .05 .06 .31 ( .05)
Weighted Average Number
of Shares 1,583,563 1,583,563 1,583,563 1,583,563 1,583,563
Cash Dividends
Per Share - - - - -
Total
Assets 10,878,715 6,535,810 5,011,385 5,119,107 4,976,461
Long-Term
Debt 6,931,165 3,119,901 2,322,279 2,527,941 2,924,973
Revenues increased in 1995 due to marketing tour buses and a
generally improved economic clientele. The decline in 1996 resulted from
the tour bus increase being temporary and the further decline in 1997
resulted from general business decline and the loss of the Holiday Inn
franchise in January 1997. The 1998 decline was due to increased competition
by operations close to the interstate and the concern that the facility would
be closed due to the opening of the new Holiday Inn Hotel & Suites, which
had been originally planned for February 1998.
ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
REVENUES
1998 1997 1996
Total Revenues $ 1,479,921. $ 1,867,013. $ 2,098,085.
Percentage Increase
(Decrease) ( 20.7)% ( 11.0)% ( 9.5)%
Motor Inn Revenues 850,775. 1,198,307. 1,322,668.
Percentage Increase
(Decrease) ( 29.0)% ( 9.4)% ( 13.5)%
Percentage of Total Revenues 57.5% 64.2% 63.0%
Food and Beverage 316,759. 352,279. 435,756
Percentage Increase
(Decrease) ( 10.1)% ( 19.2)% ( 5.9)%
Rents 256,371. 235,986. 233,853.
Percentage Increase
(Decrease) 8.6% .9% 3.4%
Motor inn revenue decreased in 1996 due to reductions in bus tours in
the area and competion from other facilities. The decrease in subsequent
years resulted from the increase in competition with new franchises opening
in the area and the concern that the older facility would close in
February 1998, when the Holiday Inn operation was originally scheduled to
open. Food and Beverage revenues decreased due to fewer guests and
increased competition in the area due to more restaurants. Rents increased
due to slightly improved occupancy and some rate increases.
[CAPTION]
OPERATING COST AND EXPENSES AND INTEREST EXPENSES
1998 1997 1996 1995
Cost of Sales $ 212,117. $ 291,619. $ 362,029. $ 397,215.
Percentage increase
(decrease) (28.3)% (19.5)% (8.9)% (13.3)%
Salaries 441,308. 475,893. 475,637. 489,763.
Percentage increase
(decrease) (7.3)% .1% (2.9)% (21.4)%
Advertising 36,779. 80,171. 117,833. 136,137.
Percentage increase
(decrease) (54.1)% (32.0)% (13.4)% (2.7)%
Utilities 115,676. 118,048. 150,454. 142,520.
Percentage increase
(decrease) (2.0)% (21.5)% 5.6% (6.7)%
Repairs and Maint. 44,495. 64,610. 66,769. 95,049.
Percentage increase
(decrease) (31.1)% (3.2)% (29.8)% (39.4)%
Taxes and License 205,010. 196,937. 197,093. 208,048.
Percentage increase
(decrease) 4.1% ( .1)% (5.3)% 68.0%
Insurance and Other 40,252. 36,145. 34,912. 45,027.
Percentage increase
(decrease) 11.4% ( 3.4)% (22.5)% (3.3)%
Total Cost
and Expenses 1,392,654. 1,587,958. 1,781,508. 1,893,120.
Percentage increase
(decrease) (12.3)% (10.9)% (5.9)% (3.0)%
Interest 212,910. 204,798. 222,742. 236,900.
Percentage increase
(decrease) 4.0% (8.1)% (6.0)% 17.2%
Cost of sales decreased due to the decrease in the revenues and
better management of food and beverage costs. Advertising decreased in 1996
due to the room revenue decrease that affected the change under the
Holiday Inn franchise for advertising and further decreased in 1997 due to
termination of the franchise in January. Utilities decreased due to the
decreased business and the milder weather in the last fiscal year. The
registrant has accomplished only needed repairs and maintenance due to the
new facility being constructed and some uncertainty as to the use of the
current motel property in early 1998. Interest decreased due to the
principal reductions and began to increase in the last year due to increased
borrowing to construct the new facility. Taxes and license increased in 1995
due to real estate tax changes. Total costs and expenses are consistently
decreasing due to the factors affecting the major items (noted above).
That is, declining business has been a major factor in the declining costs
and expenses.
[CAPTION]
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE FEDERAL INCOME TAXES
1998 1997 1996
$( 125,643.) $ 74,257. $ 93,835.
INCOME TAXES
1998 1997 1996
Income taxes (benefit) $ - $ - $ 4,377.
Effective tax rate - - 4.7%
For the year ended June 30, 1997, the Company utilized operating
loss carryforwards in the amount of $11,501. to offset taxable income.
The Company has a carryforward loss for taxable income until the year
2012.
INCOME (LOSS)
1998 1997 1996
$ 125,643. $ 74,257. $ 89,458.
The loss of the Holiday Inn franchise for the motor inn and
construction in progress of the Holiday Inn Hotel & Suites has had an
obvious impact on income resulting in a decrease in revenues of $231,072.
in 1997 and decreased costs and expenses of $211,494. resulting in a
decrease in Income of $15,201. in 1997.
Continued revenue declines due to lack of a franchise and some
uncertainty as to the continuation of hotel operations resulted in a
decrease of revenues totaling $387,092. The decreased costs and
expenses of $187,192. and the revenue decrease resulted in a net decrease
in income of $199,900. from the prior year and, thus, the net loss for
1998 of $125,643.
Management will seek new business for the older facility that is
not in competition with the new hotel and will consider alternative
uses for the older property to attempt a reduction in losses.
[CAPTION]
LIQUIDITY AND CAPITAL RESOURCES
1998 1997
Resources available at
June 30, 1998 and 1997
Cash $ 90,015. $ 245,427.
The registrant had significant reductions in liquidity for each
year since 1995 due to the acquisition and development of property for
the Holiday Inn Hotel & Suites adjacent to the Huntington Civic Arena.
The registrant's accounts payable in 1997 include over $408,000. for
costs in the construction project.
The investing activities account for the significant decline in
liquidity with over $900,000. of the cash used in investing activities
coming from currently available revenues (including the increased accounts
payable).
The registrant anticipates the liquidity will continue at a below
normal level for the next several years, but should show some slight
improvement by the last quarter of the current year and into the year
following when the new facility is completed.
UPTOWNER INNS, INC. AND SUBSIDIARIES
ITEM 8. FINANCIAL STATEMENTS
Financial Statements:
Uptowner Inns, Inc. and Subsidiaries
Opinion of Independent Certified Public Accountant
Consolidated Balance Sheets as of June 30, 1998 and 1997
Consolidated Statement of Operations for the
Year Ended June 30, 1998, 1997 and 1997
Consolidated Statement of Stockholders' Equity
for the Year Ended June 30, 1998, 1997 and 1996
Consolidated Statement of Cash Flows for the
Year Ended June 30, 1998, 1997 and 1996
Notes to Consolidated Financial Statements
Uptowner Inns, Inc. and Subsidiaries
Opinion of Independent Certified Public Accountant
Consolidated Statement of Income for the
Year Ended June 30, 1997, 1996 and 1995
Consolidated Statement of Stockholders' Equity
for the Year Ended June 30, 1997, 1996 and 1995
Consolidated Statement of Cash Flows for the
Year Ended June 30, 1997, 1996 and 1995
Notes to Consolidated Financial Statements
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE:
NONE
UPTOWNER INNS, INC. AND SUBSIDIARIES
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by Item 10, Part III, will be set forth
in the definitive proxy statement to be filed by the registrant,
pursuant to Regulation 14A, under the captions "Election of Directors"
and "Executive Officers of the Company" and is incorporated herein
by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11, Part III, will be set forth
in the definitive proxy statement to be filed by the registrant,
pursuant to Regulation 14A, under the caption "Remuneration of
Directors and Executive Officers", and is incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) The registrant has issued only one type of security,
namely, common capital stock. The following table sets forth certain
information as to the persons and groups who are known to the
registrant to be the beneficial owners of more than five percent of
its voting securities.
Title of Name and Address Amount and Nature of Percent
Class of Beneficial Owner Beneficial Ownership of Class
Common Violet Midkiff 726,082 Direct and 45.9
922 Eleventh Street Indirect
Huntington, West Virginia
(b) The following table sets forth certain information as
to each class of equity securities of the registrant beneficially
owned by all directors and officers of the registrant as a group.
Title of Name and Address Amount and Nature of Percent
Class of Beneficial Owner Beneficial Ownership of Class
Common Arthur J. Huber 30,049 Indirect 1.9
Common James R. Camp 8,371 Direct .5
Common Violet Midkiff 726,082 Direct and 45.9
Indirect
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT (Cont'd)
Title of Name and Address Amount and Nature of Percent
Class of Beneficial Owner Beneficial Ownership of Class
Common Louis Abraham 3,656 Direct .2
Common Carl Midkiff 15,311 Direct and 1.0
Indirect
Common Olive Hager 21,870 Direct 1.4
Common Six Officers and 805,339 Direct and 50.9
Directors as a Indirect
Group
(c) There is no arrangement, known to the registrant, the
operation of which may at a subsequent date result in a change in
control of the registrant.
PART IV
UPTOWNER INNS, INC. AND SUBSIDIARIES
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A)(2) Schedules:
Schedule VIII -- Valuation of Qualifying Accounts
(A)(3) Exhibits:
(22) Subsidiaries of Uptowner Inns, Inc.:
All other required exhibits are incorporated in the
Registration Statement Number 2-90194 of Uptowner Inns, Inc.
No reports on Form 8-K have been filed during the period
covered by this report.
UPTOWNER INNS, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
Schedule VIII
Column A Column B Column C Column D Column E Column F
Additions
Balance at Charged to Charged to Deductions Balance at
Beginning Profit and Other From End of
Description Period Loss Accounts Reserves Period
As to Uptowner Inns, Inc.:
Year ended June 30, 1998
Reserve for
doubtful
accounts $ 3,000. $ - $ - $ - $ 3,000.
Year ended June 30, 1997
Reserve for
doubtful
accounts $ 3,000. $ - $ - $ - $ 3,000.
Year ended June 30, 1996
Reserve for
doubtful
accounts $ 3,000. $ - $ - $ - $ 3,000.
As to Uptowner Inns, Inc.
and Subsidiaries:
Year ended June 30, 1998:
Reserve for
doubtful
accounts $ 3,000. $ - $ - $ - $ 3,000.
Year ended June 30, 1997:
Reserve for
doubtful
accounts $ 3,000. $ - $ - $ - $ 3,000.
Year ended June 30, 1996:
Reserve for
doubtful
accounts $ 3,000. $ - $ - $ - $ 3,000.
Exhibit 22 - Subsidiaries of Uptowner Inns, Inc.
* Motel & Restaurant Supply
100% Owned Subsidiary
Incorporated in the State of West Virginia
* Represents a Corporation which had no
activity during fiscal year June 30, 1998 or 1997
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
(Registrant) UPTOWNER INNS, INC.
By: /s/Violet Midkiff
Violet Midkiff, President
January 1999
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates
indicated.
By: /s/ Arthur Huber
Arthur Huber, Vice President
January 1999
By: /s/James R. Camp
James R. Camp, Treasurer and Director
January 1999
By: /s/Olive Hager
Olive Hager, Secretary and Director
January 1999
By: /s/Carl E. Midkiff
Carl E. Midkiff, Director
January 1999
By: /s/Louis Abraham
Louis Abraham, Director
January 1999