BOSTON, Nov. 13, 2006 (PRIMEZONE) -- Sonesta International Hotels Corporation (Nasdaq:SNSTA) today reported a net loss of $2,196,000, or $(0.59) per share, in the quarter ended September 30, 2006, compared to net income of $1,570,000, or $0.42 per share, in the quarter ended September 30, 2005. Operating revenues, excluding other revenues from managed and affiliated properties, were $15,618,000 in the 2006 quarter, compared to $16,225,000 in the 2005 quarter. The Company had an operating loss of $3,104,000 in the third quarter of 2006, compared to an operating loss of $3,320,000 during the same period in 2005.
For the nine month period ended September 30, 2006, the net loss was $2,419,000, or $(0.65) per share, compared to net income of $6,566,000, or $1.77 per share, for the nine month period ended September 30, 2005. Operating revenues, excluding other revenues from managed and affiliated properties, were $62,395,000 in the 2006 period, compared to $67,253,000 in 2005. The operating loss was $2,398,000 during the first nine months of 2006 compared to operating income of $78,000 in the first nine months of 2005.
The $607,000 decrease in operating revenues during the 2006 third quarter compared to last year was entirely due to a $1,730,000 decrease in revenues of Sonesta Beach Resort Key Biscayne, which hotel closed on August 31, 2006. This decrease in revenues was partially offset by increased revenues at Royal Sonesta Hotel Boston (Cambridge) during the 2006 third quarter compared to a year ago. Operating losses during the 2006 third quarter decreased by $216,000 compared to the 2005 third quarter. Increases in operating income from Royal Sonesta Hotel Boston (Cambridge) and Royal Sonesta Hotel New Orleans were offset by a decrease in earnings of Sonesta Beach Resort Key Biscayne. This decrease was mainly due to a $606,000 increase in depreciation expense in 2006 compared to last year due to additional depreciation charges resulting from the revision of the useful lives of certain furniture and equipment used in connection with the operations of the Hotel, which closed on August 31, 2006. A partnership in which the Company is a 50% owner intends to redevelop the site with a new, luxury condominium hotel and residences.
The overall decrease in operating revenues of $4,858,000 during the nine month period ended September 30, 2006 compared to the same period a year ago was mainly due to a $2,165,000 decrease in revenues of Sonesta Beach Resort Key Biscayne, which hotel closed on August 31, 2006, and a $4,307,000 revenue decline at Royal Sonesta Hotel New Orleans. Royal Sonesta New Orleans, along with other hotels in New Orleans, experienced a substantial decrease in group and convention business in 2006. The decline in revenues in New Orleans and Key Biscayne was partially offset by an 11% increase in 2006 revenues compared to 2005 of Royal Sonesta Hotel Boston (Cambridge). The decrease in operating income of $2,476,000 during the first nine months of 2006 compared to 2005 was primarily due to decreased income of Sonesta Beach Resort Key Biscayne of $2,267,000. The resort closed on August 31, 2006. The decrease in Key Biscayne resulted primarily from a $1,996,000 increase in depreciation expense in 2006 compared to 2005 related to the closure of the hotel.
The higher net income during the 2005 third quarter, and the nine month period ending September 2005, was also due to:
1. A pre-tax gain of $3,950,000 on the sale in the third quarter of 2005 of land the Company had owned in Costa Rica since 1995. The site was intended for a new resort to be operated by the Company, but the development never proceeded.
2. The Company recorded a net tax benefit during the nine-month period ended September 30, 2005 of $4,872,000 despite its pretax income of $1,694,000. 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 if the Company would realize a future benefit for losses incurred primarily during 2003 and 2004. Because of the Sonesta Beach Resort Key Biscayne transaction, in April 2005, the Company realized substantial taxable income in 2005, and was able to utilize these loss carry-forwards. Therefore, the valuation allowances were reversed during the first quarter of 2005. In addition, during the third quarter of 2005, the Company received a tax benefit from the remittance to the parent Company of the proceeds of the sale of land in Costa Rica owned by a foreign subsidiary of the Company.
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 Nine months ended
September 30 September 30
2006 2005 2006 2005
Operating revenues $15,618 $16,225 $62,395 $67,253
Other revenues
from managed and
affiliated properties 8,063 3,402 16,474 10,560
------- ------- ------- -------
Total revenues 23,681 19,627 78,869 77,813
Costs and expenses,
including depreciation and
amortization (18,722) (19,545) (64,793) (67,175)
Other expenses from
managed and affiliated
properties (8,063) (3,402) (16,474) (10,560)
------- ------- ------- -------
Total expenses (26,785) (22,947) (81,267) (77,735)
Operating income (loss) (3,104) (3,320) (2,398) 78
Other income (deductions):
Interest expense (759) (759) (2,253) (3,206)
Interest income 439 342 1,155 753
Gain on sales of assets -- 3,954 4 4,079
Other income (deductions) (3) -- 29 (10)
------- ------- ------- -------
(323) 3,537 (1,065) 1,616
Income (loss) before
income taxes (3,427) 217 (3,463) 1,694
Federal, foreign and state
income tax benefit (1,231) (1,353) (1,044) (4,872)
------- ------- ------- -------
Net income (loss) ($2,196) $1,570 ($2,419) $6,566
Net income (loss) per share
of common stock ($0.59) $0.42 ($0.65) $1.77
Average number of common
shares outstanding 3,698 3,698 3,698 3,698