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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Sonesta International Hotels Corp. (MM) | NASDAQ:SNSTA | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 30.91 | 0 | 01:00:00 |
x
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
|
|
SECURITIES
EXCHANGE ACT OF 1934
|
||
For
the fiscal year ended December 31, 2007
|
||
OR
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
|
|
SECURITIES
EXCHANGE ACT OF 1934
|
For
the transition period from
|
to
|
NEW
YORK
|
13-5648107
|
|
(State
or other jurisdiction or incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
116
Huntington Avenue, Boston, MA 02116
|
(Address
of principal executive offices, including zip
code)
|
617-421-5400
|
(Registrant’s
telephone number, including area
code)
|
Securities to be registered
pursuant to Section 12 (b) of the
Act:
|
Title of each class
|
Name of each exchange on which
registered
|
|
Class
A Common Stock
|
NASDAQGM
|
|
$.80
par value per share
|
Securities registered pursuant
to Section 12 (g) of the
Act: None
|
1.
|
Portions
of the Annual Report to Shareholders for the year ended December 31, 2007
are incorporated by reference into Parts I and II. The 2007
Annual Report is filed with this Form 10-K as Exhibit
13.
|
2.
|
Portions
of the proxy statement for the 2008 annual meeting of stockholders are
incorporated by reference into Part
III.
|
SONESTA INTERNATIONAL HOTELS
CORPORATION
|
FORM
10-K TABLE OF CONTENTS
|
FISCAL
YEAR ENDED DECEMBER 30, 2007
|
Page
No.
|
||
Part
I
|
||
Part
II
|
||
Part
III
|
||
Part
IV.
|
||
Item
1.
|
Business
|
(a)
|
General Development of
Business
. The Company, a New York corporation formed in
1923, is engaged in the operation of hotels that it owns or
leases in Boston (Cambridge), Massachusetts; Key Biscayne, Florida (until
August 2006); and New Orleans, Louisiana. It also operates,
under management agreements, hotels in Coconut Grove, Florida; Sunny Isles
Beach, Florida; and Cairo, Luxor, Port Said, Taba, Hurghada and Sharm el
Sheikh (2), Egypt; and five Nile River cruise vessels. The Company has
also entered into management agreements to operate new hotels being
created in Orlando, Florida; Jaco, Costa Rica; and San Carlos,
Mexico. In addition, the Company has franchise agreements for
hotels in St. Maarten (2), Brazil (2) and Peru (6). During
2007, the Company commenced management of a hotel in Hurghada, Egypt;
terminated its management contract for Chateau Sonesta Hotel, in New
Orleans and entered into a license agreement for that hotel; and announced
the termination of its management contract for Trump Sonesta Resort, in
Sunny Isles, Florida, effective April 1, 2008.
The
Company owned and operated a hotel in Key Biscayne, Florida. In
April 2005, the Company transferred the land and improvements of Sonesta
Beach Resort Key Biscayne to a development partnership, of which it is a
50% owner. The hotel closed for operations in August
2006. Detailed information regarding this major transaction is
incorporated by reference from Note 3 to the Company’s consolidated
financial statements (pages 20 and 21 of the Annual Report to
Shareholders, filed herewith as Exhibit 13).
In
general, business levels improved during 2007. Revenues of
Royal Sonesta Hotel Boston and Royal Sonesta Hotel New Orleans
increased. Sonesta Beach Resort Key Biscayne, which closed in
August 2006 for redevelopment, was not in operation during any part of
2007. In addition, income from management activities increased
in 2007 compared to 2006.
|
(b)
|
Financial Information About
Segments
. This information is incorporated by reference
from Note 9 to the Company’s consolidated financial statements (page 25 of
the 2007 Annual Report to Shareholders, filed herewith as Exhibit
13).
|
(c)
|
Narrative Description of
Business and Competition
. The Company's business is to a
great extent dependent upon a high level of economic activity. The hotel
business is highly competitive. In the major markets where we
operate, which are New Orleans, Miami and Boston, we compete with many
other hotels of the same quality. A substantial number of these
hotels compete for the same market segments as our hotels. The
facilities of competitors are often affiliated with national or regional
chains having more room accommodations and greater financial resources
than the Company. The Company follows the practice of
refurbishing and redecorating the hotels which it operates in order to
keep the properties attractive and competitive with new hotel properties,
and this requires the Company to make substantial capital
expenditures. During the two years ended December 31, 2007, the
Company made such capital expenditures totaling approximately $10.5
million.
The
Company endeavors to create individual and distinctive features for each
hotel property while utilizing common corporate identification in order to
obtain the benefits of chain operation. The Company is using
the name "Sonesta" for all of its hotels.
|
Hotel
|
Number
of Rooms
|
Year
Built of
Acquired
|
Total
Revenues
(in
thousands)
|
||||||||||||||||||
2007
|
2006
|
2005
|
|||||||||||||||||||
Sonesta
Beach Resort Key Biscayne
|
Leased
(1)
|
300
|
1998
|
$ | -- | $ | 19,341 | $ | 27,395 | ||||||||||||
Royal
Sonesta Hotel Boston
|
Owned
|
400
|
1963/1984 | 29,377 | 26,408 | 23,986 | |||||||||||||||
Royal
Sonesta Hotel New Orleans
|
Leased
|
500
|
1969
|
31,888 | 27,894 | 32,757 |
(1)
|
In
April 2005 the Company transferred the land and improvements of Sonesta
Beach Resort Key Biscayne to a development partnership of which the
Company is a 50% owner. The hotel closed on August 31,
2006.
|
Hotel
|
Average
Occupancy
Percentage
|
Average
Daily Rate
|
||||||||||||||||||||||
2007
|
2006
|
2005
|
2007
|
2006
|
2005
|
|||||||||||||||||||
Sonesta
Beach Resort Key Biscayne
|
-- | 71.4 | % | 66.0 | % | $ | -- | $ | 224 | $ | 208 | |||||||||||||
Royal
Sonesta Hotel Boston
|
68.5 | % | 64.6 | % | 65.5 | % | 192 | 177 | 155 | |||||||||||||||
Royal
Sonesta Hotel New Orleans
|
71.5 | % | 67.1 | % | 82.2 | % | 158 | 154 | 163 |
“REVPAR”
|
|||
Hotel
|
2007
|
2006
|
2005
|
Sonesta
Beach Resort Key Biscayne
|
$ --
|
$160
|
$137
|
Royal
Sonesta Hotel Boston
|
132
|
114
|
102
|
Royal
Sonesta Hotel New Orleans
|
113
|
103
|
134
|
Note: Royal
Sonesta Hotel New Orleans did not generate revenues for a 15 day period
following Hurricane Katrina, which struck New Orleans on August 29,
2005. Sonesta Beach Resort Key Biscayne closed for operations
on August 31, 2006. The number of rooms available is adjusted
accordingly.
|
The
Company has established and maintains trademark protection for certain
service marks it uses in conducting its business, including the service
marks "Sonesta", "Sonesta Beach", "Just Us Kids", and the Company's
stylized "S" logo. Trademarks are maintained in numerous
countries, besides the United States. Each mark is generally
protected for several years, subject to periodic renewal.
For
revenues by types of services provided for the three years ended December
31, 2007, reference is made to the Consolidated Statements of Operations
which appear on page 12 of the 2007 Annual Report to Shareholders, filed
herewith as Exhibit 13
|
(d)
|
Financial Information about
Foreign and Domestic Operations
. This information is incorporated
by reference from Note 9 on pages 24 and 25 of the 2007 Annual Report to
Shareholders, filed herewith as Exhibit
13.
|
(e)
|
Environmental
Compliance.
Our compliance with laws and regulations
relating to environmental protection and discharge of hazardous materials
has not had a material impact on our capital expenditures or
earnings. We do not anticipate any material impact from such
compliance in the future.
|
(f)
|
Internet Address and Company
SEC Filings.
Our internet address is
www.Sonesta.com. On the corporate governance portion of our
website, under the Investor Relations section, we provide a link to the
U.S. Securities and Exchange Commission website. Included on
this website are our annual reports on Form 10-K, our quarterly reports on
Form 10-Q, our current reports on Form 8-K and any amendments to these
reports.
|
Item
1A.
|
Risk
Factors
|
1)
|
the
availability of and demand for hotel rooms in the markets we
operate;
|
2)
|
international,
national and regional economic and political
conditions;
|
3)
|
the
impact of war and terrorist activity (including threats of terrorist
activity and other matter that influence and/or limit travel, such as
travelers’ fears of contagious diseases (i.e. Bird
Flu);
|
4)
|
the
occurrence of natural disasters, such as
hurricanes;
|
5)
|
taxes
and government regulations that influence or determine wages, and cost
prices of goods and services the Company uses to operate its
hotels;
|
6)
|
the
availability and cost of capital to allow us and potential hotel owners
and joint venture partners to fund
investments;
|
7)
|
relationships
and disputes with owners of our hotels operated under management
agreements.
|
Item
1B.
|
Unresolved Staff
Comments
|
Item
2.
|
Properties
|
Item
3.
|
Legal
Proceedings
|
Item
4.
|
Submission of Matters to a Vote of Security
Holders
|
Item
5.
|
Market for the Registrant's Common Equity,
Related Stockholder Matters and Issuer Purchases of Equity
Securities
|
Item
6.
|
Selected Financial
Data
|
Item
7.
|
Management's Discussion and Analysis of
Financial Condition and Results of
Operations
|
Item
7A.
|
Quantitative and Qualitative Disclosures
About Market Risk
|
Item
8.
|
Consolidated Financial Statements and
Supplementary Data
|
Item
9.
|
Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure
|
Item
9A.
|
Controls and
Procedures
|
Item
9B.
|
Other
Information
|
Item
10.
|
Directors, Executive Officers and Corporate
Governance
|
Name
|
Present
Position
|
Age
|
Employment History
2002 to
Present
|
Roger
P. Sonnabend
|
Executive
Chairman of the Board
|
82
|
Chairman
and Chief Executive Officer until December 2003
|
Peter
J. Sonnabend
|
Chief
Executive Officer and Vice Chairman
|
54
|
Vice
Chairman and Vice President until December 2003, Secretary until May
2003
|
Stephanie
Sonnabend
|
Chief
Executive Officer and President
|
55
|
President
until December 2003
|
Stephen
Sonnabend
|
Senior
Vice President
|
76
|
Senior
Vice President
|
Boy
van Riel
|
Vice
President and Treasurer
|
49
|
Vice
President and Treasurer
|
Carol
Beggs
|
Vice
President, Technology
|
47
|
Vice
President, Technology
|
Felix
Madera
|
Vice
President, International
|
59
|
Vice
President, International
|
Kathy
Rowe
|
Senior
Vice President
|
49
|
Vice
President, Food and Beverage until December 2003
|
Jacqueline
Sonnabend
|
Executive
Vice President
|
53
|
Executive
Vice President
|
Alan
M. Sonnabend
|
Vice
President, Development
|
50
|
Vice
President and General Manager, Trump International Sonesta Beach Resort,
until October 2004
|
Item
11.
|
Executive
Compensation
|
Item
12.
|
Security Ownership of Certain Beneficial Owners and
Management and Related Stockholders
Matters
|
Item
13.
|
Certain Relationships and Related Transactions,
and Director Independence
|
Item
14.
|
Principal Accountant Fees and
Services
|
FY
2006
|
FY
2007
|
|||||||
Audit Fees
|
$ | 130,000 | $ | 130,000 | ||||
Audit
of Pension and 401(k)
|
||||||||
Benefit Plans
|
14,000 | 15,000 | ||||||
Other Fees
(1)
|
700 | 2,450 | ||||||
Total
Fees
|
$ | 144,700 | $ | 147,450 |
Item
15.
|
Exhibits and Financial Statement
Schedules
|
(a)
|
1.
|
Financial
Statements: The financial statements listed in the accompanying Index to
Consolidated Financial Statements are incorporated by reference from the
2007 Annual Report to Shareholders, filed herewith as Exhibit
13.
|
2.
|
Financial
Statement Schedules: The financial statement schedules required
to be filed by Item 8 of this form are listed in the accompanying Index to
Consolidated Financial Statements, and are included in the notes to the
financial statements, incorporated by reference from the 2007 Annual
Report to Shareholders, filed herewith as Exhibit
13.
|
3.
|
A
list of Exhibits is included on pages 15 through 18 of this report on Form
10-K.
|
Item
15(a) (1) and (2)
|
References
(Page)
|
|
Form
10-K
|
2007 Annual Report to
Shareholders*
|
|
Consolidated
Balance Sheets at December 31, 2007 and 2006
|
13,
14
|
|
For
the years ended December 31, 2007, 2006, and 2005:
|
||
Consolidated Statements of
Operations
|
12
|
|
Consolidated Statements of
Stockholder’sEquity and Comprehensive Income (Loss)
|
15,
16
|
|
Consolidated Statements of Cash
Flow
|
17
|
|
Notes to Consolidated Financial
Statements
|
18
|
|
Consolidated
Financial Statement Schedule II for the year ended December 31,
2007
|
||
Consolidated Valuation and
Qualifying Accounts
|
14
|
SONESTA
INTERNATIONAL HOTELS CORPORATION
|
||||||||||||||||
SCHEDULE
II
|
||||||||||||||||
Consolidated
Valuation and Qualifying Accounts
|
||||||||||||||||
Three
Years Ended December 31, 2007
|
||||||||||||||||
Balance
Beginning
Of
Year
|
Amounts
Charged
To
Income
|
Amounts
Written
Off
|
Balance
End
of
Year
|
|||||||||||||
Year
Ended December 31, 2005
|
||||||||||||||||
Allowance for doubtful
accounts
|
$ | 211,947 | $ | 1,425 | $ | 119,666 | $ | 93,706 | ||||||||
Year
Ended December 31, 2006
|
||||||||||||||||
Allowance for doubtful
accounts
|
$ | 93,706 | $ | 2,000 | $ | 9,013 | $ | 86,693 | ||||||||
Year
Ended December 31, 2007
|
||||||||||||||||
Allowance for doubtful
accounts
|
$ | 86,693 | $ | 2,000 | $ | 22,829 | $ | 65,864 | ||||||||
SONESTA
INTERNATIONAL HOTELS CORPORATION
|
|
Index
to Exhibits
|
|
NUMBER
|
DESCRIPTION
|
3.1
|
Certificate
of Incorporation, as amended to date. (9)
|
3.2
|
Company
By-laws, as amended to date. (9)
|
10.1
|
Management
Agreement, between Sonesta Hotels of Florida, Inc., and Sunny Isles Luxury
Ventures L.C., Trustee, dated as of June 21, 2001. (7)
|
10.1
(a)
|
Management
Agreement, between Sonesta Coconut Grove, Inc. (“SCG”), and Mutiny on the
Park, Ltd. (“Mutiny”), dated December 22, 2000. (6)
|
10.1
(b)
|
Letter
of Amendment of Management Agreement, between SCG and Mutiny, dated
January 5, 2001. (6)
|
10.1
(c)
|
Intercreditor
Agreement, between SCG, Mutiny and Ricardo Dunin Borkowsky (“Dunin”),
dated December 22, 2000. (6)
|
10.1
(e)
|
Promissory
Note ($4,000,000) in favor of SCG, dated December 22, 2000.
(6)
|
10.1
(g)
|
Collateral
Pledge and Escrow Agreement ($4,000,000), dated December 22, 2000.
(6)
|
|
|
10.5
(a)
|
Unsecured
demand line of credit agreement, dated December 31, 2004, between Citizens
Bank of Massachusetts (“Citizens”) and Sonesta International Hotels
Corporation (“Sonesta”). (9)
|
10.5
(b)
|
Fifth
Allonge to $2,000,000 Commercial Promissory Note dated September 29, 2000
(the “Note”), dated December 31, 2004, between Sonesta and Citizens,
acknowledging that the Note is payable on demand. (9)
|
10.5
(c)
|
Commercial
Promissory Note ($2,000,000) from Sonesta to Citizens, dated September 29,
2000. (5)
|
10.6
(a)
|
Mortgage
and Loan Modification Agreement, dated as of March 24, 2004, between
SunAmerica, Charterhouse of Cambridge Trust (“Trust”) and Sonesta of
Massachusetts, Inc. (“Sonesta Mass”). (8)
|
NUMBER
|
DESCRIPTION
|
10.6
(b)
|
Reaffirmation
and Modification of Limited Guaranty Agreement and Environmental Indemnity
Agreement, dated as of March 24, 2004, between SunAmerica, Trust and
Sonesta Mass. (8)
|
10.6
(c)
|
Amended
and Restated Promissory Note ($41,000,000), dated May 30, 2000, from the
Trustees of Trust and Sonesta Mass to SunAmerica Life Insurance Company
(“SunAmerica”). (5)
|
10.6
(d)
|
Mortgage
and Loan Modification Agreement, dated as of May 30, 2000, between Trust
and Sonesta Mass, and SunAmerica. (5)
|
10.6
(e)
|
Reaffirmation
and Modification of Limited Guaranty Agreement and Environmental Indemnity
Agreement, dated as of May 30, 2000, between Trust, Sonesta Mass, and
Sonesta International Hotels Corporation (“Sonesta”), and SunAmerica.
(5)
|
10.6
(f)
|
Deficiency
Guaranty Agreement, dated as of May 30, 2000, between Trust, Sonesta Mass,
and SunAmerica, “Escrow Agent”. (5)
|
|
|
|
|
10.9
|
Indenture
of Lease, dated March 18, 2002, between ATC Realty, Inc. and Sonesta
International Hotels International Hotels Corporation. (7)
|
10.11
(a)
|
Hotel
Lease, dated December 12, 1967, between Chateau Louisiane, Inc., as
"Landlord", and The Royal Orleans, Inc., as "Tenant". (1)
|
10.11
(b)
|
Hotel
Lease-Amendment No. 1, dated November 26, 1973, between Chateau Louisiane,
Inc. and Louisiana Sonesta Corporation. (2)
|
10.11
(c)
|
Hotel
Lease-Amendment No. 2, dated September 1, 1977, between Chateau Louisiane,
Inc. and Royal Sonesta, Inc. (3)
|
10.12
(a)
|
Restated
Employment Agreement, dated January 1, 1992, between Sonesta and Paul
Sonnabend, together with letter agreement regarding permanent and total
disability. (4) (Management contract under Item 601 (10)(iii)
(A))
|
10.12
(b)
|
Restated
Employment Agreement, dated January 1, 1992, between Sonesta and Roger P.
Sonnabend, together with letter agreement regarding permanent and total
disability. (4) (Management contract under Item 601 (10) (iii)
(A)).
|
NUMBER
|
DESCRIPTION
|
10.12
(c)
|
Restated
Employment Agreement, dated January 1, 1992, between Sonesta and Stephen
Sonnabend together with letter agreement regarding permanent and total
disability. (4) (Management contract under Item 601 (10) (iii)
(A)).
|
10.12
(d)
|
Amendment
to Restated Employment Agreement, dated May 16, 2005, between Sonesta and
Paul Sonnabend. (11)
|
10.12
(e)
|
Amendment
to Restated Employment Agreement, dated May 16, 2005, between Sonesta and
Roger P. Sonnabend. (11)
|
10.12
(f)
|
Amendment
to Restated Employment Agreement, dated May 16, 2005, between Sonesta and
Stephen Sonnabend. (11)
|
10.12
(g)
|
Summary
of Director compensation. (11)
|
|
|
10.14
(a)
|
Agreement
of Limited Liability Limited Partnership of SBR-Fortune Associates, LLLP,
dated as of January 17, 2005, between Fortune KB GP, LLC, General Partner,
Fortune KB, LLC, Limited Partner, and Sonesta Beach Resort Limited
Partnership, Limited Partner. (9)
|
10.14
(b)
|
First
Amendment to partnership agreement of SBR – Fortune Associates, LLLP,
dated as of January 17, 2005. (9)
|
10.14
(c)
|
Second
Amendment to partnership agreement of SBR - Fortune 199 - 203 Associates,
LLLP, dated as of January 17, 2005. (9)
|
10.14
(d)
|
Agreement
of Merger, dated as of April 2005, by and among SBR-Fortune Associates,
LLLP, a Florida limited liability limited partnership (“SBR”), Sonesta
Beach Resort LLC, a Delaware limited liability company (the “Company”) and
Sonesta Beach Resort Limited Partnership, a Delaware limited partnership
(the “Sonesta”). (10)
|
10.14
(e)
|
Interim
Lease Agreement, dated as of April 19, 2005, by and between SBR-Fortune
Associates, LLLP, a Florida limited liability limited partnership
(“Landlord”), and Sonesta Beach Resort Limited Partnership, a Delaware
limited partnership (“Tenant”). (10)
|
|
|
|
|
2
2
|
|
NUMBER
|
DESCRIPTION
|
|
|
|
|
|
|
|
|
|
(1)
|
Incorporated
by reference to the Company's 1967 Report on Form 10 K.
|
(2)
|
Incorporated
by reference to the Company's 1973 Report on Form 10-K.
|
(3)
|
Incorporated
by reference to the Company's 1977 Report on Form 10-K.
|
(4)
|
Incorporated
by reference to the Company's 1992 Report on Form 10-K.
|
(5)
|
Incorporated
by reference to the Company’s 2000 Report on Form 10-K.
|
(6)
|
Incorporated
by reference to the Company’s 2001 Report on Form 10-K.
|
(7)
|
Incorporated
by reference to the Company’s 2002 Report on Form 10-K.
|
(8)
|
Incorporated
by reference to the Company’s 2003 Report on Form 10-K.
|
(9)
|
Incorporated
by reference to the Company’s 2004 Report on Form 10-K.
|
(10)
|
Incorporated
by reference to the Company’s current report on Form 8-K,
filed
on April 22, 2005.
|
(11)
|
Incorporated
by reference to the Company’s current report on Form 8-K,
Filed
on May 17, 2005.
|
Date:
March 19, 2008
|
By:
|
/s/ Boy van Riel | |
Name: Boy van Riel | |||
Title: VP and Treasurere, Principal Financial and Accounting Officer | |||
Date:
March 19, 2008
|
By:
|
/s/ Roger P. Sonnabend | |
Name: Roger P. Sonnabend | |||
Title: Executive Chairman of the Board, Director | |||
Date:
March 19, 2008
|
By:
|
/s/ Boy van Riel | |
Name: Boy van Riel | |||
Title: Vice President and Treasurer, Principal Financial and Accounting Officer | |||
Date:
March 19, 2008
|
By:
|
/s/ Peter J. Sonnabend | |
Name: Peter J. Sonnabend | |||
Title: Chief Executive Officer and Vice Chairman, Director | |||
Date:
March 19, 2008
|
By:
|
/s/ Stephanie Sonnabend | |
Name: Stephanie Sonnabend | |||
Title: Chief Executive Officer and President, Director | |||
Date:
March 19, 2008
|
By:
|
/s/ Stephen Sonnabend | |
Name: Stephen Sonnabend | |||
Title: Senior Vice President, Director | |||
Date:
March 19, 2008
|
By:
|
/s/ George Abrams | |
Name: George Abrams | |||
Title: Director | |||
Date:
March 19, 2008
|
By:
|
/s/ Vernon R. Alden | |
Name: Vernon R. Alden | |||
Title: Director | |||
Date:
March 19, 2008
|
By:
|
/s/ Joseph L. Bower | |
Name: Joseph L. Bower | |||
Title: Director | |||
Date:
March 19, 2008
|
By:
|
/s/ Charles J. Clark | |
Name: Charles J. Clark | |||
Title: Director | |||
Date:
March 19, 2008
|
By:
|
/s/ Irma Mann | |
Name: Irma Mann | |||
Title: Director | |||
Date:
March 19, 2008
|
By:
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/s/ Jean C. Tempel | |
Name: Jean C. Tempel | |||
Title: Director | |||
1 Year Sonesta Chart |
1 Month Sonesta Chart |
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