BOSTON, May 10, 2006 (PRIMEZONE) -- Sonesta International Hotels Corporation (Nasdaq:SNSTA) today reported net income of $10,000, or $0.003 per share, in the quarter ended March 31, 2006, compared to net income of $4,103,000, or ($1.110) per share, in the quarter ended March 31, 2005. Gross revenues were $23,938,000 in the 2006 quarter, compared to $25,128,000 in the 2005 quarter. The Company had operating income of $591,000 in the first quarter of 2006, compared to operating income of $1,349,000 during the same period in 2005.
The Company recorded a net tax benefit of approximately $4,150,000 during the 2005 first quarter. Prior to December 31, 2004, the Company recorded valuation allowances of $4,158,000 against federal and state income tax benefits, because it was uncertain whether it would realize a future benefit for losses incurred primarily during 2003 and 2004. A transaction involving the redevelopment of Sonesta Beach Resort Key Biscayne, which included the transfer in April 2005 of the land and improvements of the hotel to a partnership in which the Company is a 50% owner, resulted in substantial taxable income in 2005. Because the Company was able to utilize the loss carry-forwards, it reversed the valuation allowances in the 2005 first quarter.
The $1,190,000 decrease in revenues in the 2006 quarter compared to 2005 was due to reduced food and beverage revenues at the Company's Royal Sonesta Hotel New Orleans, due to the lack of group and convention business. The hotel's operating income was virtually the same as in 2005 due to cost savings and significant government business during the 2006 first quarter.
The reduction in interest expense resulted from the repayment of the mortgage loan on Sonesta Beach Resort Key Biscayne, and the reduction of the principal balance of the mortgage loan on Royal Sonesta Hotel Boston (Cambridge), both in April 2005. These loan repayments were also related to the transaction involving the redevelopment of Sonesta Beach Resort Key Biscayne into a new, luxury condominium resort. Interest income during 2006 benefited from the increase in short term investment income on the Company's cash balances, which included cash proceeds related to the Key Biscayne transaction.
The 2006 first quarter depreciation expense included a $675,000 additional depreciation charge resulting from the revision during 2005 of the useful lives of certain furniture and equipment used in connection with the operations of Sonesta Beach Resort Key Biscayne. This hotel is scheduled to close in August 2006.
Sonesta's stock is traded on the Nasdaq stock market under the symbol SNSTA.
SONESTA INTERNATIONAL HOTELS CORPORATION
Financial Summary
(000 omitted except for per share data)
Three months ended
March 31
2006 2005
Operating revenues $23,938 $25,128
Operating income before depreciation
and amortization expense 3,100 3,337
Depreciation and amortization 2,509 1,988
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Operating income 591 1,349
Other income (deductions):
Interest expense (743) (1,524)
Interest income 374 138
Other income (deductions) 10 (10)
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(359) (1,396)
Income (loss) before income taxes 232 (47)
Income tax provision (benefit) 222 (4,150)
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Net income $10 $4,103
Net income per share of common stock $0.003 $1.110
Average number of shares outstanding 3,698 3,698