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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, 1999; 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 1999, was
$791,782.
As of June 30, 1999, 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 and operated by the
registrant. On January 17, 1997, the Holiday Inn franchise was terminated.
The franchise required standard fees for advertising, reservation system, etc.
In late August 1998, the registrant opened a 135-room Holiday Inn Hotel &
Suites facility adjacent to the Huntington Civic Arena.
The clientele are predominately business travelers due to the downtown
location. Main hotel occupancy for the year averaged 27% with an average of
$45. rate per room. This yielded a revenue for available rooms of $4,450.
per year. The new Holiday Inn Hotel & Suites occupancy for the year averaged
59% with an average of $81. rate per room. This yielded a revenue for
available rooms of $17,500.
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 exceeded ten percent of the consolidated
revenue of the registrant and its subsidiaries for the years prior to
1999. For the year ended June 30, 1999, income from rentals did not
exceed ten percent. 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, 1999, the registrant and its subsidiaries employ
approximately 85 employees.
(c) 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, 1999 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 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).
(e) 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.
(f) 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.
(g) 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.
(h) 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 $23,370. at June 30, 1999.
(i) 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.
(j) 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.
(k) 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 $439,086.
(l) The registrant owns in fee a Holiday Inn Hotel & Suites,
a 135 room motor hotel, 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 hotel officially opened for business
August 38, 1998. 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 and maturing February 2004, the balance is $483,790. at
June 30, 1999 and is subject to a line of credit in the amount of
$4,392,891., with interest at prime plus 1%.
The facility is being marketed for convention and business
travelers. It is adjacent to the Huntington Civic Arena and is 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 1999, the approximate number
of record holders of common stock securities of the registrant was 1,424.
(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, 1999, June 30, 1998, June 30
1997, June 30, 1996, and June 30, 1995, 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
1999 1998 1997 1996 1995
Operating
Revenues 3,357,351 1,479,921 1,867,013 2,098,085 2,317,690
Income from
Operations 546,029 87,267 279,055 316,577 424,570
Net Income
(Loss) 113,029 (125,643) 74,257 89,458 494,600
Net Income (Loss)
per share .07 (.08) .05 .06 .31
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 11,462,295 10,878,715 6,535,810 5,011,385 5,119,107
Long-Term
Debt 6,913,472 6,931,165 3,119,901 2,322,279 2,527,941
The decline in 1996 resulted from fewer tours booking stays at the hotel
and the further decline in 1997 resulted from general business decline and
the loss of the Holiday Inn franchise in 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. The increase in 1999 was entirely the result of the new
hotel, which operated for over ten months.
ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
REVENUES
1999 1998 1997
Total Revenues $ 3,357,351. $ 1,479,921. $ 1,867,013.
Percentage Increase
(Decrease) 126.9% ( 20.7)% ( 11.0)%
Motor Inn Revenues 2,670,754. 850,775. 1,198,307.
Percentage Increase
(Decrease) 213.9% ( 29.0)% ( 9.4)%
Percentage of Total Revenues 79.5% 57.5% 64.2%
Food and Beverage 380,236. 316,759. 352,279.
Percentage Increase
(Decrease) 20.0% ( 10.1)% ( 19.2)%
Rents 235,270. 256,371. 235,986.
Percentage Increase
(Decrease) ( 8.2)% 8.6% .9%
Motor inn revenue decreased in 1998 due to increased competition
from other facilities and the concern that the older facility would
close in February 1998, when the Holiday Inn operating 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.
The motor inn revenues increased in 1999 due to the opening of the new
facility in late August 1998. The revenues have been consistently higher
than had been anticipated in room and beverage. Revenues decreased in
the older facility in rooms and food operations, due to the lack of a
franchise and the continued uncertainty by the public as to the continuation
of that operation. The acquisition of the Travelodge franchise for this
facility is expected to improve revenues. Rents decreased due to the
sale of properties.
[CAPTION]
OPERATING COST AND EXPENSES AND INTEREST EXPENSES
1999 1998 1997 1996
Cost of Sales $ 447,582. $ 212,117. $ 291,619. $ 362,029.
Percentage increase
(decrease) 111.0% (28.3)% (19.5)% (8.9)%
Salaries 841,724. 441,308. 475,893. 475,637.
Percentage increase
(decrease) 90.7% (7.3)% .1% (2.9)%
Advertising 181,349. 36,779. 80,171. 117,833.
Percentage increase
(decrease) 393.1% (54.1)% (32.0)% (13.4)%
Utilities 205,282. 115,676. 118,048. 150,454.
Percentage increase
(decrease) 77.5% (2.0)% (21.5)% 5.6%
Repairs and Maint. 73,821. 44,495. 64,610. 66,769.
Percentage increase
(decrease) 65.9% (31.1)% (3.2)% (29.8)%
Taxes and License 367,595. 205,010. 196,937. 197,093.
Percentage increase
(decrease) 79.3% 4.1% ( .1)% (5.3)%
Insurance and Other 63,321. 40,252. 36,145. 34,912.
Percentage increase
(decrease) 57.3% 11.4% ( 3.4)% (22.5)%
Total Cost
and Expenses 2,811,322. 1,392,654. 1,587,958. 1,781,508.
Percentage increase
(decrease) 101.9% (12.3)% (10.9)% (5.9)%
Interest 677,000. 212,910. 204,798. 222,742.
Percentage increase
(decrease) 218.0% 4.0% (8.1)% (6.0)%
Cost of sales decreases were 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 in 1997 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 1998 due to increased
borrowing to construct the new facility. Total costs and expenses have
consistently decreased 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 through 1998.
The increase in 1999 of all areas of expense can be attributed to the
opening of the new facility in late August 1998. Expenses for the older
facility were not significantly different in 1999.
[CAPTION]
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE FEDERAL INCOME TAXES
1999 1998 1997
$ 113,029. $( 125,643.) $ 74,257.
INCOME TAXES
1999 1998 1997
Income taxes (benefit) $ - $ - $ -
Effective tax rate - - -
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
2014.
INCOME (LOSS)
1999 1998 1997
$ 113,029. $ 125,643. $ 74,257.
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. in 1998. 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 has obtained a Travelodge franchise for the older
facility and will seek new business that is not in competition with the
new hotel. Continued monitoring of costs and expenses will be done to
improve the operating results for the Company.
In 1999, revenues increased $1,981,649. and total costs and
expenses increased $1,632,977. resulting in an increase in net income over
1998 of $238,672. Due to significant net operating losses extending to
2014, no income tax expense will be incurred.
[CAPTION]
LIQUIDITY AND CAPITAL RESOURCES
1999 1998
Resources available at
June 30, 1999 and 1998
Cash $ 322,663. $ 90,015.
The registrant anticipates liquidity will continue at a
below normal level for the next several years, but will show some
slight improvement due to the completion of the new facility. Resources
available have increased $232,648. as a result of operating activities
providing substantially more than the net outflows for capital
expenditures paid for from Company funds.
Liquidity has improved from .09 in 1998 to .24 in 1999 due to the
sale of properties and the improved operating activities from the new
hotel. Although this is a positive improvement this year, it is not expected
to improve substantially in the next few years.
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, 1999 and 1998
Consolidated Statement of Operations for the
Year Ended June 30, 1999, 1998 and 1997
Consolidated Statement of Stockholders' Equity
for the Year Ended June 30, 1999, 1998 and 1997
Consolidated Statement of Cash Flows for the
Year Ended June 30, 1999, 1998 and 1997
Notes to Consolidated 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 Income for the
Year Ended June 30, 1998, 1997 and 1996
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
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 763,258 Direct and 48.2
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 -0- Indirect 0
Common James R. Camp 8,371 Direct .5
Common Violet Midkiff 763,258 Direct and 48.2
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 812,466 Direct and 51.3
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, 1999
Reserve for
doubtful
accounts $ 3,000. $ - $ - $ - $ 3,000.
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.
As to Uptowner Inns, Inc.
and Subsidiaries:
Year ended June 30, 1999:
Reserve for
doubtful
accounts $ 3,000. $ - $ - $ - $ 3,000.
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.
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, 1999 or 1998
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
September 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
September 1999
By: /s/James R. Camp
James R. Camp, Treasurer and Director
September 1999
By: /s/Olive Hager
Olive Hager, Secretary and Director
September 1999
By: /s/Carl E. Midkiff
Carl E. Midkiff, Director
September 1999
By: /s/Louis Abraham
Louis Abraham, Director
September 1999