* Operating income increased over 300% to $1.5 million.
* The Trust continues to benefit from improvement in the operations of the Trust's core hotels, successful rate management strategies and stable industry conditions.
InnSuites Hospitality Trust reported operating income of $1.5 million for the fiscal year ended January 31, 2007, an improvement of $1.2 million from the prior year operating income of $349,000. This increase of over 300% reflects continuing improvement in the operations of the Trust's core hotels and successful rate management strategies.
The Trust reported a loss of $(46,000) attributable to Shares of Beneficial Interest or $(0.01) per basic and diluted share, for the fiscal year ended January 31, 2007, down from net income of $542,000, or $0.06 per basic share and $0.02 per diluted share in the prior fiscal year. Prior year earnings reflected a $1.8 million gain on the sale of the Phoenix, AZ property, $1.3 million of which was attributable to Trust shareholders.
The Trust had a net loss attributable to Shares of Beneficial Interest of $(385,000), or $(0.04) per basic and diluted share, for the fourth fiscal quarter of fiscal year 2007, which was $223,000 lower than the $(162,000) reported for the same period in fiscal year 2006. This decrease was primarily due to a sharp increase in the income tax provision in the fourth quarter, which also adversely affected the Trust's full year results.
The Trust reported earnings before minority interest, interest, taxes, depreciation and amortization (Adjusted EBITDA) of $4.6 million for the twelve months ended January 31, 2007, compared to $4.4 million in fiscal year 2006 and $6.8 million in fiscal year 2005. Gains on sale of hotels and properties totaling $139,000, $1.8 million and $5.1 million are included in Adjusted EBITDA for fiscal years 2007, 2006 and 2005 respectively. Adjusted EBITDA is a non-GAAP financial measure that management believes provides meaningful insight into the Trust's cash flow performance. A reconciliation of EBITDA to net income attributable to Shareholders of Beneficial Interest follows:
FY 2007 FY 2006 FY 2005
Net income (loss)
Beneficial Interest ($46,430) $541,578 $240,442
Minority interest 428,855 (267,265) 1,384,985
Depreciation 2,032,955 2,118,492 2,755,499
Interest expense 1,816,371 1,909,097 2,259,581
Income tax expense 316,164 75,175 160,000
Interest income (3,431) (2,134) (7,517)
ADJUSTED EBITDA $4,551,346 $4,374,943 $6,792,990
The Trust reported revenue of $21.8 million for the fiscal year ended January 31, 2007, an increase of 2.5% from $21.2 million for the prior year. The increase in revenues is primarily due to an increase in both occupancy and room rates.
The Trust's hotel operations continue to improve as economic and industry conditions remain stable. In addition, the Trust continues to benefit from management and trademark licensing agreements acquired during the fiscal year 2005.
The Board of Trustees is exploring potential strategic alternatives, including the possibility of selling one or more of the Trust's hotels. Management believes that the market value of each of the Trust's hotels exceeds that hotel's net book value and outstanding debt, and the Trust intends to sell a Hotel only if the sale price were to exceed the hotel's net book value and outstanding debt. Such a sale would result in a profit to the extent the sale price exceeded the net book value and cash flow to the extent the sale price exceeded the outstanding debt. The cash generated from any hotel sales will be used initially to reduce the Trust's outstanding debt.
The Trust listed its Yuma, Arizona hotel property for sale at a price above its net book value and outstanding debt.
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