ITEM 1. BUSINESS.
(a) The Registrant was organized in 1956 as a corporation. The Registrant engages primarily in the operation of hotels under Holiday Inns, Inc. licenses. The Registrant currently operates twenty-five (25) hotels; eight (8) in Atlanta, Georgia; six (6) in Houston, Texas; four (4) in Jackson, Mississippi; two (2) in Dallas, Texas; two (2) in Colorado Springs, Colorado; one (1) each in Flagstaff, Arizona; Santa Barbara, California; and Scottsdale, Arizona. All the hotels are equipped with year round temperature control, a swimming pool, telephone and free television in each room, twenty four hour switchboard service, wall to wall carpeting, on-premises parking and free advance reservation services. All hotels contain restaurants operated by the Registrant and sell liquor, except for the three (3) Hampton Inns located in Jackson, Mississippi; Atlanta, Georgia; and Houston, Texas; the Days Inn Dallas Regal Row; the two (2) Holiday Inn Express properties located in Atlanta, Georgia, and Colorado Springs, Colorado; which are limited service hotels located within line of sight of various food and beverage facilities.
During fiscal year 1994, the Registrant sold the Holiday Inn Near Greenway Plaza located in Houston, Texas; sold a closed hotel located in Houston, Texas; and allowed its property lease to expire on the Super 8 Motel located in San Jose, California. Also during fiscal year 1994 the Registrant negotiated a short term license agreement for a leased property, and converted it from a Holiday Inn to a Howard Johnson Hotel, and subsequent to the close of the fiscal year, on November 30, 1994 allowed its lease to expire and ceased to operate the property.
The Registrant owns and operates one (1) Mr. Pride Car Wash unit in Houston, Texas. The car wash center uses modern semi-automatic car washing equipment. Automobiles are pulled by a conveyer through a series of washing, rinsing and drying cycles. The unit is operated on leased property with a lease expiration date of October 31, 1995.
Additionally, the Registrant owns four(4) closed car wash units which are being held for disposition.
During fiscal year 1994, the Registrant sold one (1) car wash unit in Dallas, Texas.
There have been no significant changes in the kinds of products produced or services rendered by the Registrant or in the markets or methods of distribution since the beginning of the fiscal year, October 1, 1993.
The Registrant currently has no new hotel developments underway or planned.
See Current Developments, Item 1 (d).
ITEM 1. (cont.)
(b) (1) The Registrant's businesses are highly competitive. The hotels are in competition with hotels and other motels within their immediate area. Due to the highly competitive nature of the lodging industry, the Registrant is required to make continuing expenditures for modernizing, refurnishing and maintaining existing facilities.
(2) The Registrant's business is not materially dependent upon a single or few customers, the loss of whom would have a material adverse effect on the business of the Registrant.
(3) The license agreements that have been issued by Holiday Inns, Inc., Hampton Inns, Days Inns of America Franchising, Inc., Ramada, Inc., and Howard Johnson Franchise Systems, Inc. to the Registrant are considered to be of considerable importance. The Registrant has location licenses for its properties. The original license agreement for new hotels is generally for a period of twenty (20) years. License agreements for hotel conversions are generally issued for periods of ten (10) to fifteen (15) years. The Registrant may request license extensions from its licensors prior to the end of the term of the license. Each license is terminable by licensors for cause, including failure to conform to certain minimum standards.
(4) An insignificant sum was spent by the Registrant during each of the last two fiscal years on research activities.
(5) Compliance with federal, state and local provisions regulating the discharge of materials into the environment or otherwise relating to the protection of the environment, has not required any capital expenditures of a material nature, nor has it had any material effect on earnings or the competitive position of the Registrant and its subsidiaries.
(6) On November 24, 1994, the Registrant had approximately 1,887 employees, including approximately 297 part-time employees who work an average of less than 30 hours per week.
(7) Four (4) of the Registrant's hotels located in Colorado and Arizona are dependent to a large extent upon the summer and winter vacation seasons.
(c) The Registrant has one primary business segment, the operation of hotel properties. This segment represents greater than 90% of consolidated revenue operating profit and identifiable assets. All revenues were derived from domestic operations. There are no material customers and no material government contracts.
(d) Current Development - On November 14, 1994, the Company entered into an Agreement and Plan of Merger with United/Harvey Holdings, L.P., United/Harvey Hotels, Inc. and United/Harvey Sub, Inc. Reference is made to the disclosure concerning such agreement contained in Part II, Item 7, Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operation, under the caption "Current Developments".
ITEM 2.
ITEM 2. PROPERTIES
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS.
No material legal proceedings are pending against the Registrant.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.
No matters were submitted to a vote of security holders in the fourth quarter of the fiscal year covered by this report.
A description of the Company's executive officers is contained under Part III, Item 10 below.
PART II
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS.
The Registrant's Common Stock is traded on the New York Stock Exchange, Pacific Stock Exchange, and Philadelphia Stock Exchange under the symbol "UI". The following table gives the high and low sale prices per share of the Registrant's Common Stock on the New York Stock Exchange - Composite Tape, for the past two fiscal years, as reported by the New York Stock Exchange.
As of December 12, 1994, the approximate number of shareholders was 1,366. No dividends were paid during fiscal 1994 or 1993.
ITEM 6.
ITEM 6. FIVE YEAR SUMMARY OF SELECTED FINANCIAL DATA
Item 7.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Current Developments
On November 14, 1994, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") (a copy of which is attached to this Form 10-K, as Exhibit 2.0 and incorporated by reference herein) with United/Harvey Holdings, L.P. ("Purchaser"), United/Harvey Hotels, Inc. ("United/Harvey") and United/Harvey Sub, Inc. ("Merger Sub"), pursuant to which the Purchaser agreed to acquire all the shares of the issued and outstanding Common Stock of the Company (the "Shares") at a price of $25.00 per Share (the "Per Share Amount") in cash net to the selling stockholders ("Sellers"). The information set forth in Item 3(b)(ii), "Merger Agreement," in the Schedule 14D-9 filed by the Company with the Securities and Exchange Commission ("SEC") on November 23, 1994, attached hereto as Exhibit 2.1 (the "Schedule 14D-9"), is incorporated by reference herein.
The acquisition of the Shares is to occur pursuant to an Offer to Purchase dated November 21, 1994, (the "Offer to Purchase") and the related Letter of Transmittal (which together constitute the "Offer") provided to the stockholders of the Company by the Purchaser and filed by the Purchaser with the SEC as exhibits to a Tender Offer Statement on Schedule 14D-1 on November 21, 1994. The information set forth in Item 3(b)(ii), "Merger Agreement; The Offer," in the Schedule 14D-9, is incorporated by reference herein.
The Merger Agreement provides, among other things, that after completion of the Offer, subject to the terms and conditions of the Merger Agreement, Merger Sub will be merged into the Company (the "Merger") and the Company will survive as the surviving corporation and as a wholly-owned subsidiary of United/Harvey. Each outstanding Share, other than those held by United/Harvey or any subsidiary of the Company or in the treasury of the Company (all of which will be cancelled) and those Shares held by stockholders of the Company who promptly demand and perfect appraisal rights under the General Corporation Law of the State of Delaware, will be converted at the effective time of the Merger into the right to receive the Per Share Amount, in cash, without interest thereon. As described in the Offer to Purchase, Purchaser has expressly reserved the right, following the consummation of the Offer, to cause the Merger Agreement to be amended to provide non-tendering stockholders the option (the "Cash/Stock Option") to elect to receive in exchange for each share converted in the merger either (i) cash in the amount at least equal to the Per Share Amount or (ii) shares of common stock of United/Harvey. The Offer to Purchase provides that a number of factors will influence whether or not Purchaser makes the Cash/Stock Option available to non-tendering stockholders. The information set forth in Item 2, "Tender Offer of the Bidder" and in Item 3(b)(ii), "Merger Agreement; The Merger," in the Schedule 14D-9, is incorporated by reference herein.
It is contemplated that, upon the purchase of Shares by Purchaser pursuant to the Offer, the Company's Board of Directors will be reconstituted in its entirety to consist soley of Purchaser's designees. Any action of the Company's Board of Directors following the consummation of the Offer with respect to any amendment to the Merger Agreement will constitute an action of the Company's Board of Directors as then reconstituted. The information set forth in Item 3(b)(ii), "Merger Agreement; The Board," in Schedule 14D-9 is incorporated by reference herein.
At a special meeting of Company's Board of Directors held on November 14, 1994, the Board of Directors unanimously (a) determined that the Offer and the cash Merger are in the best interests of the Company's stockholders, (b) approved the Merger Agreement and the transactions contemplated thereby, including the Offer and the cash Merger, and (c) resolved to recommend that the Company's stockholders accept the Offer.
The Board of Directors recommends that the Company's stockholders accept the Offer as set forth in the Company's response to the Offer filed on Schedule 14D-9. The information set forth in Item 3(b)(ii), "The Offer; Conditions to the Offer," Item 3(b)(ii), "The Merger," and Item 4, "The Solicitation or Recommendation," in the Schedule 14D-9 is incorporated by reference herein.
Cockroft Consolidated Corporation, the owner of approximately 45.4% of the Shares, has agreed to and has tendered the Shares owned by it into the Offer pursuant to an agreement between Purchaser and Cockroft Consolidated Corporation (the "Cockroft Agreement"). The information set forth in Item 3(b)(v), "Cockroft Agreement," in the Schedule 14D-9 is incorporated by reference herein
The Offer expires January 20, 1995.
Item 7 (cont.)
Liquidity and Capital Resources
Historically cash flow from operations and sales of surplus assets have been the primary sources of liquidity for the Company.
Cash flow from operating activities for fiscal 1994 was $8.5 million, an increase of $3.3 million over the 1993 level of $5.2 million.
During fiscal 1994 the Registrant expended $5.5 million on capital improvements, consisting principally of $3 million in expenditures on mid-scale renovation projects at ten (10) hotels, $.8 million on the replacement of television sets at thirteen (13) hotels and $.7 million on the purchase and installation of electronic door locks at eight (8) hotels and a telephone system for one (1) hotel. Funding of the expenditures was accomplished with $1.5 million in lease/purchase financing; $1.0 million from restricted cash deposits; with the remaining $3.0 million being provided from operating cash flow.
During fiscal 1994 the Registrant sold an operating Holiday Inn in Houston; a hotel in Houston, which had been closed since 1988; surplus vacant land in Atlanta; and a former car wash site in Dallas. Total gross sales proceeds net of the commissions and other costs related to the sales amounted to $11.4 million with $8.7 million applied to payment of debt and property taxes related to the properties, for a net proceeds of $2.7 million. Additionally, $.2 million of sales proceeds were received on the sale of old television sets and other furnishings and equipment. During its ten months of operation in fiscal 1994, the Holiday Inn in Houston had gross revenues of $2.8 million and a net loss before the sale, of $.6 million.
The lease on one hotel in San Jose, California expired on the last day of fiscal 1994 and another lease on a hotel in Dallas expired on November 30, 1994. Inasmuch as the Registrant was unable to negotiate acceptable renewal terms or other arrangements the leases were allowed to expire. During fiscal 1994 the combined gross revenue was $3.8 million and the combined net loss was $550,000 for these two hotels.
During fiscal year 1994 $1.1 million was deposited into restricted cash accounts held to fund capital expenditures on six of the Registrant's hotel properties. These deposits are reflected in the caption "Other investing activities" of the Consolidated Statement of Cash Flows.
At the end of Fiscal 1994 the Registrant had four (4) minor renovation projects underway which it expects to complete at a cost of $ .7 million.
As of December 31, 1994, the Registrant failed to meet certain ratios on a first mortgage loan on one of its hotels. Under the loan agreement the lender may, at its option, declare the Registrant to be in default under the loan agreement, accelerate the maturity of the loan, and require future management fees charged to the hotel to be paid to the lender and applied to principal reduction. In addition, the lender has advised the Company that consummation of the Merger will also constitute an event of default and that the lender will not waive the default. The balance on this loan at September 30, 1994, was $1,725,000. Management fees charged to this hotel during fiscal 1994 amounted to $181,770.
Item 7 (cont.)
The Registrant holds seven unused land parcels and four car wash sites of which all except one land parcel are available for sale, however, none were actively being marketed at the close of year.
Results of Operations The following table sets forth for the periods indicated, percentages which certain items reflected in the financial data bear to total revenues of the Company and the percentage increase or decrease in amounts of such items as compared to the indicated prior period:
Item 7 (cont.)
1994 Compared to 1993
REVENUES - total revenues for fiscal 1994 were $93.1 million or an increase of $.2 million from those reported in fiscal 1993. Gross revenues attributable to two hotels which were disposed of in fiscal 1993 were $1.7 million. While the two hotels with expiring leases, referred to in the discussion of liquidity and capital resources, were operated for the full fiscal year 1994, gross revenues on these hotels decreased by $1.7 million. Gross revenues of the operating hotel in Houston sold in fiscal 1994 decreased $.8 million. Additionally, gross revenues from car washes declined by $ .6 million over those reported in fiscal 1993 resulting principally from the disposition of five car wash units in December 1992 and closing of one other in May 1993. Revenues of the twenty-five continuing operating hotels and corporate increased by $5.0 million.
Following is a table reflecting the elements of the net change in revenue:
Following is a table comparing room revenues, relative occupancy levels and average daily room rates (ADR) of the twenty-five hotels remaining in the system at fiscal year end and after termination of lease of one hotel in November 1994:
OPERATING COSTS AND EXPENSES - total operating costs and expenses decreased by $2.0 million in fiscal 1994 as compared with fiscal 1993. The reduction of operating costs and expenses attributable to the two hotels which were disposed of in 1993 was $1.9 million, costs and expenses of the two hotels with expiring leases decreased by $1.2 million. Operating costs and expenses on the operating hotel in Houston, sold in fiscal 1994 decreased $.7 million. Additionally, operating costs and expenses from car washes decreased $.9 million. Operating costs and expenses of the twenty-five continuing operating hotels and corporate increased by $2.7 million.
INTEREST EXPENSE - interest expense increased by $171,000 in fiscal 1994 as compared with fiscal 1993 interest expense, reflecting increases due to addition of $1.5 million in lease/purchase financing of television sets, electronic locks and a telephone system; and provision for interest on estimated additional income taxes.
Item 7 (cont.)
GAIN (LOSS) ON DISPOSITION OF ASSETS - a loss of $6.6 million was recognized on the sale of a hotel in Houston. Additionally, a loss of $548,000 was recognized upon the sale of another hotel in Houston, which had been closed since 1988. In addition, gains were recognized on the sale of an unimproved tract of land in Atlanta and a former car wash unit in Dallas, in the amounts of $.775 million and $.1 million, respectively.
PROVISION FOR INCOME TAXES - the effective tax rate for 1994 was a net credit of 19.1%. The federal statutory rate of 34% was reduced by 5.9% resulting from the change in valuation allowance in accounting for income taxes under the liability method required by Statement of Financial Standards No. 109. The relatively high overall effective income tax rate was influenced by the fact that taxable income was earned in states with state income taxes, while losses were incurred in states having no state income taxes. A detailed reconciliation of the effective tax rate with statutory rates is set out in Note 2 of Notes to Consolidated Financial Statements.
1993 Compared to 1992
REVENUES - total revenues for fiscal 1993 decreased by $6.2 million from those reported in fiscal 1992. Hotel rooms revenues decreased by $.5 million and gross hotel revenues, including rooms, decreased by $2.7 million. Hotel dispositions, five in fiscal 1992 and two in fiscal 1993 affected the net change in revenues markedly. Gross revenues attributable to these seven hotels reflected a net decrease in gross revenues of $5.6 million. Gross revenues of the twenty-eight hotels remaining in the system at the end of fiscal 1993 reflected an increase in gross revenue of $2.9 million.
Following is a table comparing room revenues, relative occupancy levels and average daily room rates (ADR) of the twenty-eight hotels remaining in the system at fiscal year end:
Additionally, gross revenues of the car wash units declined by $3.5 million due to sales and closings of units in 1992. Seventeen units were in operation at the beginning of the year while only seven were in operation at the close of the year. In fiscal 1993 five of the units were sold in early December, 1992 and one was closed during the year. Only one unit is in current operation.
Item 7 (cont.)
OPERATING COSTS AND EXPENSES - total operating costs and expenses decreased by $8.9 million in fiscal 1993 as compared with fiscal 1992. The reduction of operating costs and expenses attributable to the seven hotels which were disposed of was $6.9 million. Additionally, operating costs and expenses of the car washes decreased by $3.4 million.
INTEREST EXPENSE - while the net change in interest expense for fiscal 1993 was an increase of only $143,000, two factors are worthy of note in this comparison. Interest expense attributable to the seven hotels which were disposed of reflected a decrease of $1.1 million. In 1992 there was a $1.8 million credit for interest forbearance in the renewal of $42.3 million in first mortgage debt.
GAIN (LOSS) ON DISPOSITION OF ASSETS - a gain of $1.2 million was recognized on the sale of a hotel in Houston. A deferred gain of $.2 million was recognized when the purchaser of a hotel during fiscal 1992 prepaid the outstanding purchase money note. A loss of $.2 million was recorded upon the termination of a lease on a hotel in Dallas.
PROVISION FOR INCOME TAXES - the effective tax rate for 1993 was a net credit of 34.5% resulting principally from recognition of Federal income tax benefits in 1993 through the elimination of net deferred tax credits. A detailed reconciliation of the effective tax rate with statutory rates is set out in Note 2 of Notes to Consolidated Financial Statements.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors and Stockholders United Inns, Inc. Memphis, Tennessee
We have audited the accompanying consolidated balance sheets of United Inns, Inc., and subsidiaries as of September 30, 1994 and 1993, and the related consolidated statements of income and stockholders' equity and cash flows for each of the three years in the period ended September 30, 1994. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of United Inns, Inc. and subsidiaries as of September 30, 1994 and 1993, and the results of their operations and their cash flows for each of the three years in the period ended September 30, 1994 in conformity with generally accepted accounting principles.
FRAZEE, TATE & ASSOCIATES /s/ Frazee, Tate & Associates
Memphis, Tennessee December 8, 1994
Item 8 (cont.)
UNITED INNS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
The accompanying notes are an integral part of the financial statements.
Item 8 (cont.)
LIABILITIES AND STOCKHOLDERS' EQUITY
Item 8 (cont.)
UNITED INNS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
The accompanying notes are an integral part of the financial statements.
Item 8 (cont.)
UNITED INNS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
The accompanying notes are an integral part of the financial statements.
Item 8 (cont.)
UNITED INNS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
The accompanying notes are an integral part of the financial statements.
Item 8 (cont.)
UNITED INNS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS CONTINUED
The accompanying notes are an integral part of the financial statements.
Item 8 (cont.)
UNITED INNS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the results of operations, account balances and cash flows of the Company, its wholly-owned subsidiaries, and a 75% owned subsidiary. During 1992 a 50% owned joint venture which was previously consolidated was acquired in full. All material intercompany transactions and accounts have been eliminated in consolidation.
RECLASSIFICATIONS The consolidated financial statements for prior years reflect certain reclassifications as the result of a Securities and Exchange Commission review. The SEC believes it more appropriate to classify the operations and property sales of the Company's car wash division as continuing operations rather than discontinued operations as previously reported. From 1990 through the present year, the Company has been in the process of selling car wash properties and withdrawing from the car wash business. At present the Company has disposed of or closed all locations except for one operating unit under a lease expiring October 31, 1995. Certain other reclassifications have been made to prior years to conform with income and expense classifications adopted in the year ended September 30, 1993. These reclassifications have no effect on net income (loss) or stockholders' equity as previously reported.
CASH EQUIVALENTS The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The Company places its temporary cash investments with high credit quality financial institutions. At times such investments may be in excess of the FDIC insurance limit.
INVENTORIES Inventories are valued at the lower of cost or market. Cost is determined by the first-in, first-out method.
INVESTMENTS Classified as land not in use are various parcels of land held for possible future development or sale. This cost is not in excess of net realizable value.
PROPERTY HELD FOR SALE Properties classified as current have an approved contract to sell or were sold before issuance of the financial statements. Noncurrent properties are either operating properties that management is actively seeking to sell or idle properties which are no longer operating. Both current and noncurrent are stated at the lower of cost or estimated net realizable value.
Item 8 (cont.)
UNITED INNS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
PROPERTY AND EQUIPMENT Property and equipment are depreciated on the straight line method over the estimated useful life of the property. The cost of replacements and improvements are capitalized. Estimated useful lives utilized for computation of depreciation on property and equipment are as follows:
Interest costs of $76,359 for 1992 were capitalized on major renovation projects. No interest was capitalized for 1994 or 1993.
OTHER ASSETS Franchise costs, deferred mortgage, loan and other expenses exclusive of security deposits are recorded at cost and amortized on a straight line basis over the terms of the related agreements. These are presented net of accumulated amortization of $2,400,280 and $2,209,108 at September 30, 1994 and 1993 respectively. Restricted cash is held for capital improvements on six of the Company's properties.
EARNINGS PER SHARE Earnings per common share are based on the weighted average number of shares outstanding during the period plus (in periods in which they have a dilutive effect) the effect of common shares contingently issuable from stock options.
SELF INSURANCE The Company is self insured for various levels of general liability, worker's compensation and employee medical coverages. Accrued insurance includes the accrual of estimated settlements from known and anticipated claims.
INCOME TAXES Effective October 1, 1993, the Company changed its method of accounting for income taxes from the deferred method of Accounting Principles Board Opinion No. 11 to the asset and liability method required by Statement of Financial Accounting Standards No. 109. Prior year financial statements were not restated. The cumulative effect of adopting this accounting statement was immaterial. The effect of the adoption on income before income taxes was not significant.
Item 8 (cont.)
UNITED INNS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. FEDERAL AND STATE INCOME TAXES
The Company files a consolidated federal income tax return. Deferred income taxes and benefits are provided for significant income and expense items recognized in different years for tax and financial reporting purposes.
The statutory federal income tax rate and the effective tax rate are reconciled below:
Item 8 (cont.)
UNITED INNS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. FEDERAL AND STATE INCOME TAXES (Continued)
For Federal tax reporting purposes, net operating losses of $20,047,975 and tax credits of $657,020 are available to be carried to future periods expiring in fiscal years 2002 through 2008. A valuation allowance of $3,441,517 at September 30, 1994, has been recognized to offset the deferred tax assets related to these items.
Following is a summary of the significant components of the Company's deferred tax assets and (liabilities):
The Company is presently under examination by a state revenue department. The Company has determined and provided for an estimated liability. It is expected that resolution of this matter will be lengthy and may require litigation.
3. LONG-TERM DEBT
The range of interest rates and maturities of the long-term debt at September 30, 1994, are summarized below:
First mortgages - 7.25% to prime + 2%, due 1995 to 2007 Capitalized lease - 10.5%, due 1995 Chattel mortgages - 11% to 12.77%, due 1995 to 1999 Installment loans and others - 6.5% to 10%, due 1995 to 2000
Long-term debt including capitalized leases matures as follows:
Item 8 (cont.)
UNITED INNS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. LONG-TERM DEBT (Continued)
The major portion of the Company's property and equipment is pledged as collateral on mortgage and lease obligations. The Company is guarantor of the major portion of the debt of its subsidiaries.
Under terms of a debt renewal agreement completed on December 22, 1992, with one of its major lenders, the Company refinanced $42,269,013 of debt, on which the Company gave an unlimited guarantee for a period of one year. Stock of a Company subsidiary is pledged for the debt. The lender retained a first mortgage on previously secured assets and obtained a second mortgage on additional property which was owned by the Company's subsidiary. The agreement contains certain covenants including limitations on dividend distributions and fixed charge ratios of a subsidiary. The debt matures September 30, 1997.
The Company has failed to meet the minimum cash flow coverage ratio on one of its loans. If such failure continues through December 31, 1994, the lender may, at their option, declare the Company to be in default under the loan agreement, and the accrued incentive management fee may not be paid for that period. Subsequent management fees would then be required to be paid to the lender and applied to principal reduction. The balance on this loan at September 30, 1994, is $1,725,000 and this is included as noncurrent.
4. LEASES
The Company is obligated under long-term leases primarily for the lease of various hotel properties and equipment. In addition to specified minimum annual rentals, some of the leases provide for contingent rentals based on percentages of revenue; most require payment by the lessee of property taxes, insurance and maintenance. The leases extend for varying periods; some contain renewal options. Rentals to be received from noncancelable subleases are not material. The Company's property held under capital leases, included in property, plant, and equipment in the balance sheet, consists of real estate of $2,891,392 in 1994 and $4,608,045 in 1993. Accumulated depreciation was $2,872,121 in 1994 and $4,404,447 in 1993.
Lease payments included in the accompanying consolidated statements of income were as follows:
Item 8 (cont.)
UNITED INNS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. LEASES (Continued)
The future minimum rental commitments for all noncancelable leases at September 30, 1994, are summarized below:
The interest rate on the capital lease is 10.5%; this rate was used in computing the present value.
5. PENSION, POSTEMPLOYMENT AND BONUS PLANS
The Company's 1993 Stock Incentive Plan for key employees and directors provides for the issuance of stock options at not less than fair market value on the date of grant. Options are exercisable from one to five years after the grant date. No options may be granted after October 1, 2003. At September 30, 1994, 296,000 shares were available for the granting of additional options. The Company issues treasury shares to fulfill its obligations under the stock option plans.
Transactions since inception are summarized as follows:
The Company granted 25,000 shares and an option for 35,000 shares to a consultant outside of the plan in 1993. The fair market value of $4.25 per share at contract date was used to measure consulting expense of $106,250 and the exercise price of the option. The 35,000 share option is exercisable up to 1999.
The Company adopted in 1994 a severance pay policy concerning termination of employment due to elimination of an employee's position as a result of a reduction in force, merger with another entity, sale of Company assets or other similar events. The Company pays for unused vacation plus severance pay based on years of service.
Item 8 (cont.)
UNITED INNS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. PENSION, POSTEMPLOYMENT AND BONUS PLANS (Continued)
The Company has an executive bonus plan which covers full time executive officers of the Company. The plan provides for a distribution of 1% to 3% of consolidated income before taxes and unusual items. No amounts were approved for distribution in 1994, 1993 or 1992.
Effective January, 1992, the Company adopted a Retirement Savings 401(k) Plan. The plan is available to all employees with one year of service who are not covered by a collective bargaining agreement and who have attained age 21. The Company deposits elective deferral contributions which have been withheld from employee compensation. The Company may also make a discretionary contribution in such amount it deems advisable. No discretionary contributions have been made by the Company. In addition, the Company matches a portion of the employee contribution up to 4% of their annual earnings. The Company contribution was $292,926 for 1994, $287,923 for 1993 and $178,635 for 1992. All contributions to the Plan, other than discretionary contributions, are 100% non-forfeitable.
6. COMMITMENTS AND CONTINGENCIES
Under the terms of the Holiday Inn, Hampton Inn, Ramada, Howard Johnson, Super 8 and Days Inn franchises, the Company is committed to make annual payments for franchise fees, reservation service, and advertising. The amounts due under the agreements were $5,896,426 for 1994, $5,735,441 for 1993, and $5,757,912 for 1992.
There are a number of guest and customer claims, employee wage claims, and other disputed amounts outstanding against the Company, all of which occurred in the ordinary course of business. Counsel has advised that there is no material exposure to the Company in these matters.
Item 8 (cont.)
UNITED INNS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. (UNAUDITED) QUARTERLY RESULTS OF OPERATIONS
The following is a summary of the (unaudited) quarterly results of operations for the years ended September 30, 1994, and September 30, 1993:
8. SEGMENT INFORMATION
The Company has one primary business segment, the operation of hotel properties. This segment represents more than 90% of consolidated revenue, operating profit and identifiable assets. All revenues were derived from domestic operations. There are no major customers and no government contracts.
Item 8 (cont.)
UNITED INNS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. GAIN (LOSS) FROM ASSET DISPOSITIONS
Loss from disposition in 1994 includes a $6,599,719 loss on sale of an operating hotel and a loss of $548,407 on sale of a closed hotel. Gains of $774,597 and $110,969 were recognized on the sales of an unimproved tract of land and a former car wash unit.
Gain on asset dispositions in 1993 include gain of $1,257,943 on the sale of one property, recognition of a deferred gain of $183,927 on a property sold in 1992 and a loss of $191,138 on termination of a lease.
Included in 1992 property dispositions were the sale of two operating properties for a net gain of $482,378, the demolition and write off of a closed hotel for a loss of $1,187,963, and a loss of $431,454, resulting from the exercise of a purchase option for the joint venture partner's 50% interest in a hotel. Additionally the termination of a lease on an operating property resulted in a loss of $464,467. A $2,029,865 loss resulting from the sale and write down of car wash properties was also recognized in 1992.
10. DEBT EXTINGUISHMENT AND LOSS CONTINGENCY
In March, 1992, a conveyance was made of two hotels to the mortgage holder, resulting in a debt deficiency of $4,200,000. This deficiency was settled for a cash payment of $1,200,000 resulting in a net of tax gain of $1,906,834 on the debt settlement. An estimated loss contingency of $1,718,279 recorded in 1991 on the property conveyance was settled at $1,330,440 in March, 1992, resulting in a loss recovery credit of $387,839.
11. SUBSEQUENT EVENTS
On November 14, 1994, the Company entered into a merger agreement with the United/Harvey Holdings, L.P. (purchaser) whereby the purchaser has tendered an offer to acquire all of the outstanding shares of the Company at $25 per share. At November 14, 1994, the Company had 2,665,899 shares issued and outstanding and 39,000 shares subject to outstanding options. Under the merger agreement, the Company along with Harvey Hotels, an operator of eight hotels, will become wholly owned subsidiaries of United/Harvey, a wholly owned subsidiary of the purchaser.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
There were no disagreements on accounting and financial disclosure.
PART III
ITEM 10.
ITEM 10. DIRECTOR AND EXECUTIVE OFFICERS' OF THE REGISTRANT.
The above directors and executive officers have had the principal occupations set forth above for at least five years, except for Mr. Wareham, Mr. Lammons and Mr. Loveless. Mr. Wareham has been President of R. J. Wareham & Company, Incorporated, a corporate financial advisory firm since 1991. From
1984 to 1991, he was a managing director of Dean Witter Reynolds' Corporate Finance Office in Atlanta, Georgia. Mr. Lammons has been principally involved in private investment activities since his retirement from the Company in March 1994. Prior to his retirement, Mr. Lammons served as Executive Vice-President of the Company since 1978. Mr. Loveless has been principally involved in private consulting activities since January 1, 1994. Prior to that date and for over five years prior thereto, Mr. Loveless served as President of Haas, Inc., a private investment advisory company.
It is contemplated that, upon the purchase of Shares by the Purchaser pursuant to the Offer, that the Company's Board of Directors will be reconstituted in its entirety to consist solely of Purchaser's designees. Information regarding such Purchaser designees is contained under the caption "Individuals Designated by Purchaser As Purchaser Designees" found in Annex A to the Schedule 14D-9, which information is incorporated by reference herein.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
The following table sets forth the compensation awarded to, earned by or paid to the Company's Chief Executive Officer and its other most highly compensated executive officer, whose total annual salary and bonus for the Company's 1994 fiscal year exceeded $100,000, for services rendered in all capacities during the fiscal years ended September 30, 1994, 1993 and 1992.
ANNUAL COMPENSATION
CHANGE IN CONTROL CONTRACTS
On June 1, 1987, the Company entered into a severance agreement with Mr. John M. Dollar. Under this agreement, Mr. Dollar would be entitled to severance compensation in the event that his employment is terminated following a change in control of the Company. The amount of compensation would be equal to a maximum of 200% of his base compensation for the twelve months prior to his termination plus an additional amount for benefits. The maximum amount of compensation which would be payable to Mr. Dollar, if his employment was terminated, as of November 14, 1994, would be $236,000 plus an additional amount for benefits.
Additionally, on June 1, 1987 the Company has entered into Severance Agreements with two other executive officers of the Company. Under the agreements, Mr. Augustus B. Randle, III and Mr. J. Don Miller are entitled to severance compensation in the event that their employment is terminated following a change in control of the Company. Reference is made to the Schedule 14D-9, Item 3(b)(vi) "Severance Agreements" which sets forth in greater detail the terms of these agreements.
COMPENSATION OF DIRECTORS
For fiscal year 1994 all directors are to be paid a fee of $750 for each Board meeting attended. In addition, directors who are not employees of the Company are to be paid a quarterly fee of $1,500, plus $400 for each Board Committee meeting attended.
The Company has a consulting arrangement with R. J. Wareham & Company, Incorporated ("Wareham & Co."), under the terms of which Wareham & Co. is to be paid by the Company for Ronald J. Wareham's time and expenses for financial advice to the Company related to a variety of corporate projects. Mr. Wareham is the sole shareholder of Warehem & Co. The Company has made payments in the aggregate amount of $26,450 to Wareham & Co., during the Company's fiscal year ended September 30, 1994.
The Company's 1993 Stock Incentive Plan provides that each director who is not also an employee of the Company and who is incumbent at the date of each of the five consecutive annual meetings of stockholders beginning with the Company's 1994 annual meeting of stockholders shall automatically be granted, immediately after the conclusion of each such annual meeting, an option to purchase 1,000 shares of Common Stock. In connection with the Company's 1994 annual meeting of shareholders held on February 11, 1994, pursuant to the Company's 1993 Stock Incentive Plan the Company granted to each of Robert L. Cockroft, Howard W. Loveless, Janet C. Virgin and Ronald J. Wareham, an option to purchase up to 1,000 shares of Common Stock at an exercise price of $12.87 per share of Common Stock.
EXECUTIVE BONUS PLAN
The Company has an executive bonus plan under which individual discretionary awards can be made to the full-time executive officers of the Company. The sum to be distributed ranges from 1% to 3% of the consolidated net income of the Company before income taxes. No cash amounts have been paid under such plan since the fiscal year ended September 30, 1985.
LONG-TERM INCENTIVES
Stock options are authorized to be granted as long-term incentives to certain key employees of the Company, including executive officers, under the Company's 1993 Stock Incentive Plan (the "1993 Plan"). Under the terms of this plan, the Company may grant options to key employees (determined by the Compensation Committee) to purchase such number of shares of the Common Stock of the Company as is determined by the Compensation Committee.
The number of shares for which options will be granted to executive officers will be determined by the Compensation Committee based upon performance, potential and other subjective factors. However, no set criteria will be used and other factors may influence the Compensation Committee's determination with respect to the number of shares granted, such as the promotion of an individual to a higher position, a desire to retain a valued executive or the number of shares then available for grant under 1993 Plan. The stock option holdings of an individual at the time of a grant will not generally be considered in determining the size of a grant to that individual.
EMPLOYEE BENEFIT PLANS
The material which follows in this section describes the provisions of employee benefit plans now in effect, or in effect during the Company's last fiscal year, other than group life and accident insurance, group hospitalization and other similar group payments and benefits, in which some or all of the employees of the Company participate.
1993 STOCK INCENTIVE PLAN
On November 19, 1993, the Company's Board of Directors adopted the 1993 Plan, which was approved by the Company's stockholders at the Company's annual meeting of stockholders held on February 11, 1994 (the "1994 Annual Meeting"). The 1993 Plan provides for the granting of options to purchase for cash an aggregate of not more than 300,000 shares of Common Stock. Such options may be granted to key employees, including officers of the Company and its subsidiaries, as may be designated by the Compensation Committee of the Board. At November 14, 1994, the Company had granted an aggregate of 4,000 options to non-employee directors of the Company at an exercise price of $12.87 per share of Common Stock.
Under the terms of the 1993 Plan, the Compensation Committee may from time to time grant options to key employees to purchase Common Stock at a price which may not be less than the fair market value of the shares, as determined by the mean between the high and low prices of the stock on the New York Stock Exchange on the date the option is granted. In addition, the 1993 Plan provides that each director who is not also an employee of the Company and who is an incumbent at the date of each of the five consecutive annual meetings of stockholders beginning with the 1994 Annual Meeting shall automatically be granted, immediately after the conclusions of each such annual meeting, an option to purchase 1,000 Shares. Each person who is not also an employee of the Company and who is elected or appointed a director during such five-year period other than at an annual meeting shall, upon such election or appointment, be granted an option to purchase 1,000 shares of Common Stock. The exercise price of options granted to directors under the 1993 Plan must be equal to the mean between the high and low prices of the stock on the New York Stock Exchange on the date of grant of the option and the right to exercise such options will vest one year from the date of the grant, if not earlier upon the occurrence of certain specified events as described below.
Options may not be exercised later than five years after the date of grant. Subject to the limitations imposed by the provisions of the Internal Revenue Code, certain of the options granted under the 1993 Plan to key employees may be designated "incentive stock options." The Company may make interest-free demand loans to holders of options not designated as incentive stock options for the purpose of exercising such options and paying any tax liability associated with such exercise.
Except as provided herein, no option may be exercised until the optionee has completed one year of service after the option is granted, except in the case of termination of an employee's employment or a director's directorship because of death or disability, nor may an option be exercised after termination of an employee's employment or a director's directorship for any reason other than death, disability, retirement or for cause. Options may be exercised within twelve months (a) after the optionee retires, (b) after termination of an employee's employment or a director's directorship on account of permanent disability, or (c) after death when in the service of the Company or any of its subsidiaries. Options may also be exercised within three months after termination of an employee's employment or director's directorship if termination is for reasons other than death, disability or retirement so long as such termination is not for cause, as determined by the Compensation Committee. If termination is for cause, all unexercised options of optionee terminated for cause shall immediately terminate and be of no further force or effect. In the event of death within the twelve- month period following termination of an employee's employment or a director's directorship for retirement or permanent disability, options may be exercised by the optionee's legal representative within twelve months following the date of death. However, under no circumstances may an option be exercised after the expiration of the stated period of the option.
No cash consideration is paid for the granting of the options. Payment in full of the option price must be made upon exercise of any option.
The 1993 Plan provides for the use of treasury shares.
No options or awards may be granted under the 1993 Plan after October 1, 2003, but options or awards granted prior to October 1, 2003, may extend beyond that date. The 1993 Plan may be discontinued by the Company's Board of Directors, but no termination may impair options or awards granted prior hereto.
Upon the occurrence of a Change in Control (as defined in the 1993 Plan) of the Company, each holder of an unexpired option under the 1993 Plan will have the right to exercise the option in whole or in part without regard to the date that such option would be first exercisable, except no option may be exercised less than six months from the date of grant, and such right will continue, with respect to any such holder whose employment with the Company or subsidiary or whose directorship terminates following a change in control, for a period ending on the earlier of the date of expiration of such option or the date which is twelve months after such termination of employment or directorship.
The Compensation Committee may alter or amend the 1993 Plan at any time. No amendment by the Compensation Committee, however, may increase the total number of shares reserved for purposes of the 1993 Plan, reduce the option price to an amount less than the fair market value at the time the option was granted, extend the duration of the 1993 Plan or modify the provision for the automatic grant of options to directors, unless such amendment is approved by the stockholders. No amendment or alteration may impair the rights of optionees with respect to options theretofore granted, except the Compensation Committee may revoke and cancel any outstanding options which, in the aggregate, would create a significant adverse effect on the Company's financial statement in the event that the Financial Accounting Standards Board issues a statement requiring an accounting treatment which causes such adverse effect with respect to options then outstanding. The Compensation Committee has the power to interpret the 1993 Plan and to make all other determinations necessary or advisable for its administration.
Under current federal tax law, non-incentive stock options granted under the 1993 Plan will not result in any taxable income to the optionee at the time of grant or any tax deduction to the Company. Upon the exercise of such option, the excess of the market value of the shares acquired over their cost is taxable to the optionee as compensation income and is generally deductible by the Company. The optionee's tax basis for the shares is the market value thereof at the time of exercise.
Neither the grant nor the exercise of an option designated as an incentive stock option results in any federal tax consequences to either the optionee or the Company. At the time the optionee sells shares acquired pursuant to the exercise of an incentive stock option, the excess of the sale price over the exercise price will qualify as a capital gain, provided the applicable holding period is satisfied. If the optionee disposes of such shares within two years of the date of grant or within one year of the date of exercise, an amount equal to the lesser of (a) the difference between the fair market value of the shares on the date of exercise and the exercise price, or (b) the difference between the exercise price, and the sale price will be taxed as ordinary income and the Company will be entitled to a deduction in the same amount. The excess, if any, of the sale price over the sum of the exercise price and the amount taxed as ordinary income will qualify as capital gain if the applicable holding period is satisfied. If the optionee exercises an incentive stock option more than three months after his or her termination of employment due to retirement, he or she is deemed to have exercised a non-incentive stock option.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITIES BENEFICIALLY OWNED BY DIRECTORS AND MANAGEMENT
(3) According to Schedule 13D as filed with the SEC by Gabelli Funds, Inc., Gamco Investors, Inc., Gabelli International Limited II, and Mario J. Gabelli (the "Reporting Persons") reporting ownership as of June 6, 1994, Gamco Investors, Inc. is deemed to have beneficial ownership of 420,800 of these shares; Gabelli Funds, Inc. is deemed to have beneficial ownership of 160,000 of these shares; Gabelli International Limited II is deemed to have beneficial ownership of 500 of these shares; Mario J. Gabelli is deemed to have beneficial ownership of all of the 581,300 shares; and Gabelli Funds, Inc. is deemed to have beneficial ownership of the securities owned by each of the foregoing persons other than Mario J. Gabelli. Each of the Reporting Persons has the sole power to vote and sole power to dispose of the securities reported except that Gamco Investors, Inc. does not have the authority to vote 50,000 of the reported shares; except that Gabelli Funds, Inc. has sole dispositive and voting power with respect to the shares held by The Gabelli Asset Fund, The Gabelli Growth Fund, The Gabelli Convertible Securities Fund, The Gabelli Value Fund, Inc., The Gabelli Small Cap Growth Fund, The Gabelli Equity Income Fund, The Gabelli Equity Trust, The Gabelli Global Telecommunications Fund, The Gabelli Global Convertible Securities Fund, The Gabelli Interactive Couch Potato Fund, and/or The Gabelli ABC Fund with respect to the 160,000 shares held by one or more of such funds, and except that the power of Mr. Mario J. Gabelli and Gabelli Funds, Inc. is indirect with respect to securities beneficially owned directly by other Reporting Persons. The Reporting Persons do not admit that they constitute a group.
The following table sets forth, as of November 14, 1994, the amount and percentage of the Shares beneficially owned by each director and executive officer and by the directors and officers as a group:
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
There are no relationships or related transactions to report.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8K:
(a) 1. Financial statements required are reported in Item 8 of this Report.
2. Financial Statement Schedules Required By Item 8:
PAGE ----
Report of Independent Accountants (45)
Schedules:
Schedule III--Condensed Financial Information of the Registrant (Parent Company):
Comparative Balance Sheet--September 30, 1994, 1993, and 1992 (46)
Comparative Statement of Income--Years ended September 30, 1994, 1993 and 1992. (48)
Comparative Statement of Retained Earnings--Years Ended September 30, 1994, 1993 and 1992. (49)
Statement of Comparative Cash Flows--Years ended September 30, 1994, 1993 and 1992. (50)
Notes to Financial Statements (51)
Schedule IV---Indebtedness Of Affiliates And Other Persons--Not Current--Three Years Ended September 30, 1994. (52)
Schedule V----Property And Equipment--Three Years Ended September 30, 1994. (53)
Schedule VI---Accumulated Depreciation Of Property And Equipment--Three Years Ended September 30, 1994. (54)
Schedule VIII-Valuation And Qualifying Accounts-- Three Years Ended September 30, 1994. (55)
Schedule X----Supplementary Income Statement Information--Three Years Ended September 30, 1994. (56)
Other schedules are omitted due to the absence of conditions under which they are required or because the required information is provided in the financial statements or notes thereto.
(b) Reports on Form 8-K:
The Registrant did not file any reports on Form 8-K during the last quarter of the period covered by this Report.
(c) EXHIBITS FORM 10-K
INDEX TO EXHIBITS
EXHIBIT NO. EXHIBIT DESCRIPTION PAGE NO. - ----------- ------------------- --------
2.0 Agreement and Plan of Merger dated November 14, 1994. (13)
2.1 Schedule 14D-9 filed with the Commission on November 23, 1994.
2.2 Agreement between Purchaser and Cockroft Consolidated, dated November 21, 1994. (14)
3.1 Articles of Incorporation and Amendments (1)
3.2 Bylaws of Registrant as currently in effect
3.3 Articles of Incorporation Amendment 2/16/87 (9)
10.1 Holiday Inns, Inc. License Agreement 9/18/61 (1)
10.2 Holiday Inns, Inc. License Agreement 10/29/62 (1)
10.3 Holiday Inns, Inc. License Agreement 5/08/67 (1)
10.4 Holiday Inns, Inc. License Agreement 5/08/67 (1)
10.5 Holiday Inns, Inc. License Agreement 9/05/67 (1)
10.6 Holiday Inns, Inc. License Agreement 9/13/67 (1)
10.7 Holiday Inns, Inc. License Agreement 7/16/68 (1)
10.8 Holiday Inns, Inc. License Agreement 7/16/68 (1)
10.9 Holiday Inns, Inc. License Agreement 8/29/69 (1)
10.10 Holiday Inns, Inc. License Agreement 2/06/70 (1)
10.11 Holiday Inns, Inc. License Agreement 3/22/71 (1)
10.12 Holiday Inns, Inc. License Agreement 11/22/71 (1)
10.13 Holiday Inns, Inc. License Agreement 11/22/71 (1)
10.14 Holiday Inns, Inc. License Agreement 3/20/72 (1)
10.15 Holiday Inns, Inc. License Agreement 8/21/72 (1)
10.16 Holiday Inns, Inc. License Agreement 8/21/72 (1)
10.17 Holiday Inns, Inc. License Agreement 8/21/72 (1)
10.18 Holiday Inns, Inc. License Agreement 8/21/72 (1)
10.19 Holiday Inns, Inc. License Agreement 8/21/72 (1)
10.20 Holiday Inns, Inc. License Agreement 8/11/72 (1)
10.21 Holiday Inns, Inc. License Agreement 8/21/72 (1)
10.22 Holiday Inns, Inc. License Agreement 8/21/72 (1)
10.23 Holiday Inns, Inc. License Agreement 8/21/72 (1)
10.24 Holiday Inns, Inc. License Agreement 6/25/76 (1)
10.25 Holiday Inns, Inc. License Agreement 9/01/78 (1)
10.26 Holiday Inns, Inc. License Agreement 9/01/78 (1)
10.27 Holiday Inns, Inc. Licenses Extension Agreement 3/5/76 (1)
INDEX TO EXHIBITS (cont.)
INDEX TO EXHIBITS (cont.)
INDEX TO EXHIBITS (cont.)
INDEX TO EXHIBITS (cont.)
INDEX TO EXHIBITS (cont.)
SIGNATURES
Pursuant to the requirements of Section 13 of 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.
UNITED INNS, INC.
By: /s/ Don Wm. Cockroft -------------------------------- Don Wm. Cockroft Principal Executive Officer and Director
By: /s/ J. D. Miller -------------------------------- J. D. Miller Vice President Finance Principal Financial Officer Principal Accounting Officer
Date: 1/12/95 ------------------------
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:
/s/ Howard W. Loveless 1/12/95 - ------------------------------- --------------------------- By: Howard W. Loveless Date Director
/s/ J. Howard Lammons 1/12/95 - ------------------------------- --------------------------- By: J. Howard Lammons Date Director
/s/ Robert L. Cockroft 1/12/95 - ------------------------------- --------------------------- By: Robert L. Cockroft Date Director
/s/ Janet C. Virgin 1/12/95 - ------------------------------- --------------------------- By: Janet C. Virgin Date Director
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors and Stockholders United Inns, Inc. Memphis, Tennessee
We have audited, in accordance with generally accepted auditing standards, the consolidated financial statements of United Inns, Inc., and subsidiaries included in this Form 10-K, and have issued our report thereon dated December 8, 1994. Our audit was made for the purpose of forming an opinion on those statements taken as a whole. The supplemental financial statement schedules listed in the index on page 37 of this Form 10-K are presented for purposes of complying with the Securities and Exchange Commission's rules and are not part of the basic consolidated financial statements. These supplemental schedules have been subjected to the auditing procedures applied in the audit of the basic consolidated financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the basic consolidated financial statements taken as a whole.
FRAZEE, TATE AND ASSOCIATES /s/ Frazee, Tate and Associates
Memphis, Tennessee December 8, 1994
SCHEDULE III--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
UNITED INNS, INC. (PARENT COMPANY)
COMPARATIVE BALANCE SHEET
The accompanying notes are an integral part of the financial statements.
SCHEDULE III--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
UNITED INNS, INC. (PARENT COMPANY)
COMPARATIVE BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
SCHEDULE III--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
UNITED INNS, INC. (PARENT COMPANY)
COMPARATIVE STATEMENT OF INCOME
The accompanying notes are an integral part of the financial statements.
SCHEDULE III--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
UNITED INNS, INC. (PARENT COMPANY)
COMPARATIVE STATEMENT OF RETAINED EARNINGS
The accompanying notes are an integral part of the financial statements.
SCHEDULE III--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
UNITED INNS, INC. (PARENT COMPANY)
COMPARATIVE STATEMENT OF CASH FLOWS
YEAR ENDED SEPTEMBER 30,
The accompanying notes are an integral part of the financial statements.
UNITED INNS, INC. (PARENT COMPANY)
NOTES TO FINANCIAL STATEMENTS
INVESTMENTS
Investments in, and notes and advances to, subsidiaries (eliminated in consolidation) are stated at cost and have been adjusted for net advances, note payments, and undistributed earnings and losses since acquisition.
LONG-TERM DEBT
The long-term debt of Parent Company matures as follows:
The Parent Company is guarantor of the major portion of the debt of its subsidiaries.
OTHER MATTERS
Refer to the notes to the consolidated financial statements for further information.
SCHEDULE IV -- INDEBTEDNESS OF AFFILIATES -- NOT CURRENT
UNITED INNS, INC.
FOR THE THREE YEARS ENDED SEPTEMBER 30, 1994 (IN THOUSANDS OF DOLLARS)
SCHEDULE V--PROPERTY AND EQUIPMENT
UNITED INNS, INC. AND SUBSIDIARIES FOR THE THREE YEARS ENDED SEPTEMBER 30, 1994 (IN THOUSANDS OF DOLLARS)
SCHEDULE VI--ACCUMULATED DEPRECIATION OF PROPERTY AND EQUIPMENT
UNITED INNS, INC. AND SUBSIDIARIES FOR THE THREE YEARS ENDED SEPTEMBER 30, 1994 (IN THOUSANDS OF DOLLARS)
SCHEDULE VIII--VALUATION AND QUALIFYING ACCOUNTS
UNITED INNS, INC. AND SUBSIDIARIES FOR THE THREE YEARS ENDED SEPTEMBER 30, 1994 (IN THOUSANDS OF DOLLARS)
SCHEDULE X--SUPPLEMENTARY INCOME STATEMENT INFORMATION
UNITED INNS, INC. AND SUBSIDIARIES (IN THOUSANDS OF DOLLARS)