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KAHLER REPORTS THIRD QUARTER AND NINE MONTH FINANCIAL RESULTS STRONG; FUNDS FLOW FROM OPERATIONS; NET INCOME AND REVENUES REPORT MAJOR GAINS

 ROCHESTER, Minn., Oct. 21 /PRNewswire/ -- Kahler's (NASDAQ-NMS: KHLR) 1993 third quarter results maintained the strong financial trends reported for the first two quarters of 1993. Key results for the third quarter and for the first nine months compared to a year ago were:
 Third Quarter Nine Months
 1993 1993
 Funds flow from operations (a)
 -- $ increase $187,000 $3,655,000
 -- pct. increase 7.7 95.0
 Net income -- $ increase $1,525,000 $2,272,000
 Total revenues -- $ increase $3,380,000 $9,052,000
 -- pct. increase 12.6 11.6
 "Kahler's strong operating performance started in mid-1992 and continues to improve," said Harold W. Milner, president and chief executive officer. "Kahler's operating personnel are doing an excellent job in obtaining sales and in keeping costs in line. This accounts for the almost 100 percent increase in Funds flow from operations(a). This trend should continue."
 (a) Funds flow from operations is calculated by adding depreciation and amortization to gross operating profit, deducting interest expense, adjusting the result to reflect actual cash generated by properties Kahler owns in conjunction with others and deducting actual fixed asset expenditures and actual income taxes paid.
 During the third quarter, the following key events transpired:
 -- Kahler and a partner acquired a 232 full-service room hotel in Provo, Utah. The hotel will be renamed the Provo Park and managed by Kahler.
 -- Kahler acquired a majority interest in the entity that owns the Ogden Park Hotel in Ogden, Utah. As a result of this transaction, the property's financing was favorably renegotiated.
 -- A disagreement with the Securities and Exchange Commission was resolved. At issue was the accounting for the University Park Hotel as an "asset held for sale" in 1988 and 1989. Kahler agreed to restate its financial statements; and, Kahler, and two of its officers, without admitting any wrongdoing, have agreed to comply with SEC rules and regulations.
 -- Kahler's board of directors declared a common stock dividend of $.02 per share.
 Kahler Corporation was founded in 1917 to provide lodging for individuals visiting the Mayo Clinic in Rochester. From that beginning, Kahler's Rochester operations have expanded to include four hotels. The 700-plus room Kahler Hotel is one of the largest hotels in the upper Midwest and the full-service 194-room Kahler Plaza is one of Minnesota's finest hotels. In April of 1991, Kahler opened an additional 128 suite- type rooms at the Clinic View Inn and Suites in Rochester. Kahler also owns and operates the Holiday Inn-Downtown.
 Kahler's Intermountain West operations include the University Park Hotel and the Salt Lake Hilton in Salt Lake City, the Best Western Ogden Park Hotel in Ogden, the Olympia Park Hotel and Conference Center in Park City and the Provo Park Hotel in Provo. Kahler is the largest hotel operator in the Salt Lake metropolitan area. Kahler also operated the 130-suite Boise Park Suite Hotel in Boise, Idaho.
 In Morgantown, W. Va., Kahler operates the Lakeview Resort and the Euro-Suites Hotel. Kahler also operates the Green Oaks Inn and Conference Center in Fort Worth, Texas; the Sheraton San Marcos Golf Resort and Conference Center in Chandler, Ariz; the Kahler Park Hotel in Hibbing, Minn.; the Knights Inn in Racine, Wis.; the Knights Inn in Port Huron, Mich.; and the Plaza One Hotel, Rock Island, Ill.
 Kahler's other businesses include Textile Care Services, an institutional laundry with facilities in Rochester and Salt Lake City that provide laundry services for Kahler's hotels, as well as other customers. In April 1993, Kahler opened a new 87,000 square foot laundry in Rochester; this laundry will be one of the largest and most modern facilities of its kind in the United States.
 Kahler also owns and operates Anderson's, a wholesale and retail formal wear supplier. Anderson's has warehouses and distribution centers in Rochester, Kansas City, Dallas and Denver.
 Kahler's stock is traded on the NASDAQ National Markets listing service. Its trading symbol is KHLR.
 KAHLER CORPORATION AND SUBSIDIARIES
 Consolidated Statements of Operations
 (Dollars in thousands except per share data)
 (Unaudited)
 Third Quarter Ended Year-to-Date Through
 10/3/93 9/27/92 10/3/93 9/27/92
 REVENUES
 Revenue of owned
 operations $25,978 $20,305 $72,999 $54,230
 Other properties managed
 and/or partially
 owned 4,150 6,443 13,913 23,630
 Total revenues $30,128 $26,748 $86,912 $77,860
 REVENUE OF OWNED
 OPERATIONS
 Lodging
 - rooms 12,759 9,463 34,591 24,318
 - food and beverage 6,268 4,342 18,052 12,111
 - other 2,471 2,198 7,271 5,640
 Formal wear, laundry
 and other 4,118 3,936 12,034 11,088
 Interest income 362 366 1,051 1,073
 Total revenue of
 owned operations 25,978 20,305 72,999 54,230
 OPERATING COSTS AND EXPENSES
 Lodging
 - rooms 3,171 2,180 8,555 5,937
 - food and beverage 4,993 3,550 14,407 10,066
 - other 8,059 5,616 22,043 15,640
 Formal wear, laundry
 and other 3,137 3,023 9,633 8,870
 Corporate expenses 800 831 2,540 2,580
 Depreciation and
 amortization 2,232 1,705 6,074 4,819
 Total operating costs
 and expenses 22,392 16,905 63,252 47,912
 GROSS OPERATING
 PROFIT 3,586 3,400 9,747 6,318
 Interest expense (2,543) (1,796) (6,698) (5,211)
 Equity earnings (loss)
 of affiliates 37 (946) 64 (709)
 Gain (loss) on sale of
 assets -- (280) 12 (280)
 Non-recurring charges -- (1,477) -- (2,677)
 INCOME (LOSS) FROM
 OPERATIONS BEFORE INCOME
 TAXES 1,080 (1,099) 3,125 (2,559)
 Provision (credit) for
 income taxes 324 (330) 937 (770)
 Income (loss) before
 extraordinary item and
 change in accounting
 principle 756 (769) 2,188 (1,789)
 Extraordinary item net of
 income taxes -- -- -- 1,955
 Cumulative effect of change
 in accounting for nonpension
 postretirement benefits -- -- -- 250
 NET INCOME (LOSS) $756 $(769) $2,188 $(84)
 PER COMMON SHARE DATA
 Income (loss) before
 extraordinary item and
 change in accounting
 principle $.21 $(.23) $.63 $(.54)
 Plus: extraordinary
 item -- -- -- $.59
 Less: change in
 accounting principle -- -- -- $(.08)
 Net income (loss) $.21 $(.23) $.63 $(.03)
 Less: preferred stock
 dividends net of
 offering cost
 amortization (.02) (.02) (.06) (.06)
 Income (loss) applicable
 to common stock $.19 $(.25) $.57 $(.09)
 -0- 10/21/93
 /CONTACT: Mary Farrell of Kahler Corporation, 507-285-2707/
 (KHLR)


CO: Kahler Corporation ST: Minnesota IN: LEI SU: ERN

DB-AL -- MN018 -- 5353 10/21/93 15:00 EDT
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Publication:PR Newswire
Date:Oct 21, 1993
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