John Q. Hammons Hotels, Inc. (AMEX: JQH) today
reported on its second quarter 2002 results.
Second Quarter Results:
Basic and diluted earnings per share before extraordinary item for the three months ended June 28,
2002 were $0.12, compared to basic earnings per share of $0.13 and diluted earnings per share of
$0.12 for the second quarter of 2001. The extraordinary item in the second quarter of 2002 was
related to the refinancing of a significant portion of our mortgage debt and greatly contributed to the
basic and diluted loss per share of $0.20 for the second quarter.
Total revenues for the 2002 second quarter were $115.2 million, a decrease of $1.8 million, or 1.5%
compared to the 2001 second quarter. Although the lingering economic slowdown adversely affected
our performance, we continue to surpass the industry’s Revenue Per Available Room (RevPAR)
performance. For example, our RevPAR was $67.58 for the 2002 second quarter, down 0.9% from
$68.22 in the 2001 second quarter, compared to an industry decrease of 4.8%. In addition, it should
be noted that in July 2002, we completed the conversion of two properties from the Radisson brand
to the Marriott brand. The Company’s RevPAR for the quarter would have exceeded prior year by
2.1% after excluding these properties’ results during their renovation periods.
Total earnings before interest expense, taxes, depreciation, and amortization (EBITDA) were $34.0
million for the 2002 second quarter, down 1.7% compared to the 2001 EBITDA of $34.6 million.
EBITDA as a percentage of total revenue was virtually equal to prior year, reflecting continued cost
control measures implemented as business volume decreased.
Basic and diluted earnings per share before extraordinary item for the six months ended June 28,
2002 were $0.17, compared to basic earnings per share of $0.18 and diluted earnings per share of
$0.17 for the first half of 2001. After giving effect to the extraordinary item (early retirement of
debt), basic and diluted loss per share for the first half of 2002 was $0.15.
Total revenues for the 2002 first half were $222.6 million, a decrease of $9.7 million, or 4.2%
compared to the same period in 2001. Revenue Per Available Room (RevPAR) was $64.72 for the
2002 first half, down 3.6% from $67.15 in the 2001 first half. These results are more than 29%
higher than the hotel industry and 5% higher than the RevPAR in the upscale hotel sector.
Total earnings before interest expense, taxes, depreciation, and amortization (EBITDA) were $65.1 million for the 2002 first half, down 3.7% compared to the 2001 EBITDA of $67.6 million.
EBITDA as a percentage of total revenue was up slightly compared to prior year, once again
reflecting cost control measures implemented as business volume decreased.
On April 22, we announced a cash tender offer to permit a proposed refinancing of the two
outstanding First Mortgage Notes, due in 2004 and 2005. After the successful tender offer, we
concluded the process by refinancing our $300m 8 7/8% First Mortgage Notes due 2004, our $90m
9 3/4% First Mortgage Notes due in 2005 and five construction loans. The new issuance was
comprised of $510 million of First Mortgage Notes at 8 7/8% due in 2012. The refinancing
established a debt maturity schedule which we believe will prove favorable for the Company into the
future. The existing current portion of long-term debt ($8.3 million) is attributable only to principal
amortization on various mortgages. The next maturities of $29 million occur in the fourth quarter of
“Our refinancing extends looming maturities and provides flexibility for future debt reduction. With
this transaction now complete and industry stability slowly returning, we are in a great position to
accelerate our cash production. We closed the refinancing at an ideal time, capitalizing on the
market’s receptiveness to our high quality hotel assets in strategic locations,” stated Mr. John Q.
Hammons, Chairman and Chief Executive Officer.