Attached files
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
(Mark
One)
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S
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ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
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SECURITIES
EXCHANGE ACT OF 1934
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For
the fiscal year ended December 31, 2009
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OR
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£
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
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SECURITIES
EXCHANGE ACT OF 1934
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For
the transition period from
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to
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Commission
file number 0-9032
SONESTA
INTERNATIONAL HOTELS CORPORATION
(Exact
name of registrant as specified in its charter)
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NEW
YORK
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13-5648107
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(State
or other jurisdiction or incorporation or organization)
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(I.R.S.
Employer Identification No.)
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116
Huntington Avenue, Boston, MA 02116
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(Address
of principal executive offices, including zip
code)
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617-421-5400
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(Registrant’s
telephone number, including area
code)
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Securities to be registered
pursuant to Section 12 (b) of the
Act:
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Title of each class
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Name of each exchange on which
registered
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Class
A Common Stock
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NASDAQ
Global Market
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$.80
par value per share
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Securities registered pursuant
to Section 12 (g) of the
Act: None
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Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes £ No
S
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes £ No
S
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports) and (2) has been subject to such filing requirements for
the past 90 days. Yes S No £.
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. S
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definition of “large accelerated filer”, “accelerated
filer” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act:
Large
accelerated filer £
Accelerated filer £
Non-accelerated filer £
Smaller
reporting company S
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes £ No
S
The
aggregate market value of the common stock held by non-affiliates of the
registrant as of the close of business on June 30, 2009 was
$13,489,273.
The
number of shares outstanding of the registrant's common stock as of the close of
business on March 22, 2010 was 3,698,230.
Documents
incorporated by reference:
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1.
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Portions
of the Annual Report to Shareholders for the year ended December 31, 2009
are incorporated by reference into Parts I and II. The 2009
Annual Report is filed with this Form 10-K as Exhibit
13.
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2.
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Portions
of the proxy statement for the 2010 annual meeting of stockholders are
incorporated by reference into Part
III.
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An Index
to Exhibits appears on pages 16 through 18 of this Form 10-K.
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SONESTA INTERNATIONAL HOTELS CORPORATION
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FORM
10-K TABLE OF CONTENTS
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FISCAL
YEAR ENDED DECEMBER 31, 2009
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Page
No.
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Item
1. Business
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(a)
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General Development of
Business. The Company, a New York corporation formed in
1923, is engaged in the operation of hotels that it owns in
Boston (Cambridge), Massachusetts; and leases in New Orleans,
Louisiana. It also operates, under management agreements,
hotels in Coconut Grove, Florida; Sunny Isles Beach, Florida (through
March 2008); and Cairo, Luxor, Port Said (through March 2009), Taba,
Hurghada and Sharm el Sheikh (2), Egypt; and six (6) Nile River cruise
vessels. On January 1, 2008, the Company commenced management of a hotel
in Hurghada, Egypt. The Company has also entered into
management agreements to operate a new hotel being created in Jaco, Costa
Rica. In addition, the Company has signed management agreements
for hotels which have yet to start construction in Miami, Florida; and in
San Carlos, Mexico. The Company also has franchise agreements
for hotels in St. Maarten (2), Brazil (2), Chile (3), Colombia (1) and
Peru (7). The Company launched a domestic franchise program
during 2009. Franchise agreements were entered into in late
2009 for a hotel in Orlando, which was reflagged as a Sonesta Hotel in
January 2010. In 2008, the Company terminated its management
contract for Trump Sonesta Resort, in Sunny Isles, Florida.
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 was a
50% owner. The hotel discontinued operations in August
2006. The partnership sold its assets in September
2009. 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 deteriorated during 2009. Revenues of
Royal Sonesta Hotel Boston and Royal Sonesta Hotel New Orleans both
decreased. In addition, income from management activities
decreased in 2009 compared to 2008.
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(b)
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Financial Information About
Segments. This information is incorporated by reference
from Note 9 to the Company’s consolidated financial statements (pages 23
and 24 of the 2009 Annual Report to Shareholders, filed herewith as
Exhibit 13).
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(c)
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Narrative Description of
Business and Competition. The Company's business is to a
great extent dependent on 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 in 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, 2009, the
Company made such capital expenditures totaling approximately $8.1
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.
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The
Company has approximately 698 employees. The Company considers its
relations with its employees to be satisfactory.
Business
at the Company’s hotels is seasonal. At Royal Sonesta Hotel
Boston, the first quarter is traditionally the slowest of the
year. The third quarter summer season is Royal Sonesta Hotel
New Orleans’ slowest period. Therefore, the Company generates
less revenues during the first and third quarters compared to the second
and fourth quarters.
The
following tables reflect total revenues, annual occupancy percentages,
average room rates and room revenues per available room ("REVPAR") for the
Company's owned and leased properties for the years 2009, 2008 and
2007. REVPAR is calculated by dividing annual room revenue by
the total number of rooms available during the year.
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Hotel
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Number
of Rooms
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Year
Built of Acquired
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Total
Revenues
(in
thousands)
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2009
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2008
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2007
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Royal
Sonesta Hotel Boston
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Owned
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400 | 1963/1984 | $ | 24,462 | $ | 30,778 | $ | 29,377 | ||||||||||||
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Royal
Sonesta Hotel New Orleans
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Leased
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500 |
1969
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31,679 | 32,795 | 31,888 | |||||||||||||||
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Hotel
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Average
Occupancy
Percentage
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Average
Daily Rate
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2009
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2008
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2007
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2009
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2008
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2007
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Royal
Sonesta Hotel Boston
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68.2 | % | 71.5 | % | 68.5 | % | $ | 158 | $ | 195 | $ | 192 | ||||||||||||
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Royal
Sonesta Hotel New Orleans
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68.5 | % | 70.8 | % | 71.5 | % | 163 | 165 | 158 | |||||||||||||||
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“REVPAR”
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Hotel
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2009
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2008
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2007
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Royal
Sonesta Hotel Boston
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$ | 108 | $ | 139 | $ | 132 | ||||||
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Royal
Sonesta Hotel New Orleans
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112 | 117 | 113 | |||||||||
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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, 2009, reference is made to the Consolidated Statements of Operations
which appear on page 13 of the 2009 Annual Report to Shareholders, filed
herewith as Exhibit 13.
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(d)
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Financial Information about
Foreign and Domestic Operations. This information is incorporated
by reference from Note 9 on pages 23 and 24 of the 2009 Annual Report to
Shareholders, filed herewith as Exhibit
13.
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(e)
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Environmental
Compliance. The Company’s 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.
New
laws and regulations regarding limiting greenhouse gas emissions, which
the federal government and certain states are considering, could affect
the operation of our hotels, and potentially result in additional
expense. The impact on expenses depends on the specific
requirements of such new laws and regulations. Therefore, it is
uncertain what the actual cost impact will be going
forward.
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(f)
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Internet Address and Company
SEC Filings. The Company’s internet address is
www.Sonesta.com. On the corporate governance portion of our
website, under the Investor Relations section, the Company provides a link
to the U.S. Securities and Exchange Commission
website. Included on this website are the Company’s annual
reports on Form 10-K, the Company’s quarterly reports on Form 10-Q, the
Company’s current reports on Form 8-K and any amendments to these
reports. The Company’s website is included as a textual
reference only and the information on the website is not incorporated by
reference into this annual report on Form
10-K.
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The
Company’s Executive Officers are:
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Name
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Present Position
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Age
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Employment History
2004 to Present
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Peter
J. Sonnabend
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Executive
Chairman of the Board
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56
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Chief
Executive Officer and Vice Chairman until January 2009
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Stephanie
Sonnabend
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Chief
Executive Officer and President
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57
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Chief
Executive Officer and President
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Carol
Beggs
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Vice
President, Technology
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49
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Vice
President, Technology
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Felix
Madera
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Executive
Vice President, International
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61
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Vice
President, International until May 2009
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Kathy
Rowe
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Senior
Vice President
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51
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Senior
Vice President
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Philip
M. Silberstein
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Executive
Vice President of Development
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57
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Vice
President Development, Carlson Hotels Worldwide, until September
2008
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Jacqueline
Sonnabend
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Executive
Vice President
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55
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Executive
Vice President
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Boy
van Riel
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Vice
President and Treasurer
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51
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Vice
President and Treasurer
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Item
1A. Risk
Factors
The
Company’s business is subject to various risks that could have a negative effect
on the Company’s results from operations and its financial
condition. These risks could cause results to differ materially from
those expressed in forward-looking statements made by the Company, including
those contained in the Managements’ Discussion and Analysis and the footnotes to
the consolidated financial statements appearing in the Company’s 2009 Annual
Report, which is filed herewith as Exhibit 13. These forward-looking
statements are based on current expectations and, except as required by law, we
assume no obligation to update this information. The following risk
factors are not the only risk factors facing our Company. Additional
risks and uncertainties not presently known to us or that we currently deem
immaterial may also affect our business. Our business, financial
condition and results of operations could be seriously harmed if any of the
events underlying any of these risks or uncertainties actually
occurs. In that event, the price for our common stock could decline,
and shareholders may lose all or part of their investments.
The lodging industry is highly
competitive. The Company competes with much larger hotel
chains, and its ability to compete successfully depends on its ability to offer
business and leisure travelers lodging products and services that are perceived
to be of equal of better quality and value than those offered by its
competitors.
The Company is subject to a range of
operating risks common to the hotel industry. These operating
risks include, but are not limited to:
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1)
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the
availability of and demand for hotel rooms in the markets where we
operate;
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2)
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international,
national and regional economic and political conditions; current economic
conditions, which have resulted in lower consumer demand for lodging and
diminished corporate spending, have affected the Company’s business
starting with the 2008 fourth quarter. This trend continued
throughout 2009. Revenues have stabilized during the 2010 first
quarter compared to the 2009 first
quarter.
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3)
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the
impact of war and terrorist activity (including threats of terrorist
activity) and other matters that influence and/or limit travel, such as
travelers’ fears of contagious
diseases;
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4)
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the
occurrence of natural disasters, such as
hurricanes;
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5)
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taxes
and government regulations that influence or determine wages, and the cost
of goods and services the Company uses to operate its
hotels;
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6)
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the
availability and cost of capital needed by us and potential hotel owners
and joint venture partners to fund
investments;
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7)
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relationships
and disputes with owners of our hotels operated under management
agreements; and
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8)
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failure
to maintain the integrity of our computerized systems with regards to
internal and customer data, including credit card
information.
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Certain
risks, described below, pose more significant threats to the Company’s future
results and financial condition, because of the particular businesses the
Company is involved in and the markets in which we operate.
Because the Company’s U.S. hotels
are located in only three markets, a decline in market conditions in any of
these markets could have an adverse impact on the Company’s results from
operations. A major portion of the Company’s revenues and
income is derived from its owned and leased hotels, and from its managed hotel,
in the United States. The three U.S. hotels the Company operated at
the end of 2009 are located in Miami, Florida, New Orleans, Louisiana, and
Cambridge, Massachusetts. This means the Company’s future results are
heavily dependent on the market conditions and the supply of and demand for
hotel rooms in these specific markets.
Hurricanes and other natural
disasters can damage our properties and affect our results from
operations. Two of the Company’s three U.S. hotels operating
at the end of 2009 are located in New Orleans, Louisiana and in Miami,
Florida. These areas are prone to hurricanes, and the Company’s
financial condition will be affected if its hotels suffer damage from
hurricanes, as well as from the loss of business due to hurricane activity in
these areas. As a result of the high cost of insurance for these
catastrophic risks, damage to hotels and loss of income may only be partially
covered by insurance, since the Company, and the owner of the Company’s managed
hotel, have significant deductibles, and certain caps on coverages for windstorm
and flood.
The Company’s fee income from its
operations in Egypt may be adversely impacted by
terrorism. During 2009, the Company’s management revenues from
its hotels in Egypt totaled approximately $2.4 million ($3.5 million in
2008). In previous years, Egypt experienced terrorist activity, which
affected tourism. Potential future terrorist incidents will affect
tourism to Egypt, and the Company’s management income from this
region.
Under its management agreement for
Sonesta Bayfront Hotel Coconut Grove, the owner is entitled to receive minimum
owner returns. The Company operates Sonesta Bayfront Hotel
Coconut Grove under a management agreement, under which it is committed to fund
net operating losses, and provide the owner with minimum annual returns
($419,000 during 2009). In addition, the management agreement can be
terminated by the owner if the Company elects not to cure shortfalls against a
minimum target return ($978,000 during 2009). Both the minimum return
and the minimum target return are adjusted annually by increases in the Consumer
Price Index. If the earnings of the hotel are insufficient to meet
the minimum return, the Company will have to reduce its fee income from the
hotel. If the shortfall in earnings exceeds the fee income, the
Company will incur an expense to cure the shortfall.
Item
1B. Unresolved
Staff Comments
None.
Item
2. Properties
The
Company's hotels are primarily metropolitan and resort hotels in popular
vacation areas which emphasize luxury accommodations and personal
service.
The
Company has fee ownership in Royal Sonesta Hotel, Boston (Cambridge),
Massachusetts. Reference is made to Note 5 to the consolidated
financial statements of the Company which appears on page 21 of the Company's
2009 Annual Report to Shareholders, filed herewith as Exhibit 13, for details of
the mortgage lien on the Boston (Cambridge), Massachusetts
property.
The
Company operates the Royal Sonesta Hotel, in New Orleans, Louisiana under a
long-term lease which expires on September 30, 2024, provided the Company
exercises its remaining ten-year extension option. As of March 20,
2010, the Company has exercised options through September 30, 2014.
The
Company also currently operates under management agreements hotels in Coconut
Grove (Miami), Florida; and Cairo, Luxor, Taba, Hurghada and Sharm el Sheikh
(2), Egypt; and six Nile River cruise vessels. At December 31, 2009,
the Company has granted licenses for the use of its name to seven hotels in
Peru, two hotels in St. Maarten, two hotels in Brazil, three hotels in Chile and
one hotel in Colombia.
In
addition to the properties listed above, the Company leases space for its
executive offices at 116 Huntington Avenue, Boston, Massachusetts
02116. That lease commenced May 1, 2002, and has a 10-year
term.
Item
3. Legal
Proceedings
From time
to time, the Company is subject to routine litigation incidental to its
business, and generally covered by insurance. The Company believes
that the results of such litigation will not have a materially adverse effect on
the Company’s financial condition.
Item
4. Submission
of Matters to a Vote of Security Holders
No
matters were submitted to security holders during the fourth quarter of the
fiscal year ended December 31, 2009.
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Item 5.
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Market
for the Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
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Common
stock market prices and dividends and the number of shareholders of record are
incorporated by reference from page 2 of the 2009 Annual Report to Shareholders,
filed herewith as Exhibit 13.
A
dividend of $0.10 was declared in December 2007, but paid in January
2008. A special dividend of $1.00 per share was paid in February
2008. In addition, during 2008 a dividend of $0.10 per share was paid
in July, and a dividend of $0.10 and a special dividend of $0.15 were declared
in October 2008, but paid in January 2009. An additional special
dividend of $1.00 per share was paid in November 2009. Other
information required by this item is incorporated by reference from the
Consolidated Statements of Stockholders' Equity which appears on page 16 of the
2008 Annual Report to Shareholders, filed herewith as Exhibit 13.
Item
6. Selected
Financial Data
Selected
Financial Data, which appears on page 2 of the 2009 Annual Report to
Shareholders, filed herewith as Exhibit 13, is incorporated herein by
reference.
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Item 7.
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Management's
Discussion and Analysis of Financial Condition and Results of
Operations
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This
information is incorporated by reference from pages 4 through 12 of the 2009
Annual Report to Shareholders, filed herewith as Exhibit 13.
Item
7A. Quantitative
and Qualitative Disclosures About Market Risk
This
information is incorporated by reference from page 11 of the 2009 Annual Report
to Shareholders, filed herewith as Exhibit 13.
Item
8. Consolidated
Financial Statements and Supplementary Data
The
financial statements listed in the Index to Consolidated Financial Statements
filed as part of this Annual Report on Form 10-K, together with the report of
Caturano and Company, P.C., dated March 25, 2010 are incorporated herein by
reference from the 2009 Annual Report to Shareholders, filed herewith as Exhibit
13.
Selected
Quarterly Financial Data are incorporated by reference on page 11 of the 2009
Annual Report to Shareholders, filed herewith as Exhibit 13.
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Item 9.
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Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
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There
were no disagreements with the Company’s independent auditors on accounting
principles or practices or financial statement disclosures during
2009.
Item
9A.(T) Controls
and Procedures
Management’s Report on Internal
Control over Financial Reporting. Company management is
responsible for establishing and maintaining adequate internal control over
financial reporting for the Company. Internal control over financial
reporting is a process to provide reasonable assurance regarding the reliability
of our financial reporting for external purposes in accordance with accounting
principles generally accepted in the United States of
America. Internal control over financial reporting includes
maintaining records that in reasonable detail accurately and fairly reflect our
transactions; providing reasonable assurance that transactions are recorded as
necessary for preparation of our financial statements; providing reasonable
assurance that receipts and expenditures of Company assets are made in
accordance with management authorization; and providing reasonable assurance
that unauthorized acquisition, use or disposition of Company assets that could
have a material effect on our financial statements would be prevented or
detected on a timely basis. Because of its inherent limitations,
internal control over financial reporting is not intended to provide absolute
assurance that misstatements of our financial statements would be prevented or
detected.
Management
conducted an evaluation of the effectiveness of our internal control over
financial reporting as of December 31, 2009, based on the framework in Internal Control – Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission. The evaluation included a full scale, documented
risk assessment, based on the principles described in the framework, and
included identification of key controls. Based on the evaluation,
management concluded that the Company’s internal control over financial
reporting was effective as of December 31, 2009.
There
were no changes in our internal control over financial reporting during the
quarter ended December 31, 2009 that have materially affected, or are reasonably
likely to materially affect, our internal control over financial
reporting.
This
Annual Report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial
reporting. Management’s report was not subject to attestation by the
Company’s registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the Company to provide only
management’s report in this Annual Report.
Evaluation of Disclosure Controls
and Procedures. As of December 31, 2009, Company management
carried out an evaluation, under the supervision and with the participation of
the Company’s Executive Chairman of the Board, Chief Executive Officer and
President, and Vice President and Treasurer, of the effectiveness of the design
and operation of the Company’s disclosure controls and procedures pursuant to
Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of
1934. Based on that evaluation, the Company’s Executive Chairman of
the Board, Chief Executive Officer and President, and Vice President and
Treasurer concluded that the Company’s disclosure controls and procedures are
effective, as of December 31, 2009. Disclosure controls and
procedures are designed to ensure that information required to be disclosed by
us in the reports that we file or submit under the Exchange Act (i) is recorded,
processed, summarized and reported within the time periods specified in the
SEC’s rules and forms and (ii) is accumulated and communicated to management,
including the Executive Chairman of the Board, Chief Executive Officer and
President and Vice President and Treasurer, as appropriate, to allow timely
decisions regarding required disclosures.
Item
9B. Other
Information
None.
Item
10. Directors, Executive Officers and
Corporate Governance
Directors of the Company and
Compliance with Section 16 (a). The information required by
this item is incorporated herein by reference from the Company’s proxy statement
for the 2010 Annual Meeting of Stockholders, which will be held in May
2010.
Code of Ethics for Senior Financial
Executives and Directors. The Company, for many years, has had
in place a written Code of Ethics covering, among other subjects, ethical
behavior, compliance with laws, and conflicts of interest. This Code
of Ethics was adopted by the Company's Board of Directors and is applicable to
all Company employees, including Senior Financial Officers and
Directors. Each year, Company Directors, officers, management,
supervisory and administrative employees are required to acknowledge, in
writing, that they have read and understood the Company's Code of
Ethics.
A copy of
the Company’s Code of Ethics is posted on its web site at
www.sonesta.com. The Company intends to disclose on its website any
amendments of waivers to its Code of Ethics applicable to its principal
executive officer(s), principal financial and accounting officer or any person
performing similar functions.
Audit Committee Charter. The Company’s
Audit Committee Charter, which is posted on the Company’s website at
www.Sonesta.com, outlines the Committee’s purpose, responsibilities, and
authorities, and is reviewed and reassessed by the Audit Committee on an annual
basis.
Audit Committee Members and Financial
Expert. The Company's Board of Directors has an Audit
Committee consisting of Ms. Jean C. Tempel, and Mssrs. Joseph L. Bower, Charles
J. Clark and Clarence A. Davis. All members of the Audit Committee are
financially literate and independent. Mr. Clark, who the Company
considers a financial expert, as defined by NASDAQ rules, and an audit committee
financial expert, as defined by SEC rules, serves as Chairman of the Audit
Committee. Mr. Clark has 35 years of experience as a commercial
banker, 25 years of which were spent managing a commercial lending department,
and 2 years as head of a commercial credit department. Mr. Clark has
vast experience in reviewing and evaluating financial statements.
Item
11. Executive
Compensation
The
information required by this Item 11 is incorporated herein by reference from
the Company’s proxy statement for the 2010 Annual Meeting of Stockholders, which
will be held in May 2010.
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Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholders Matters
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This
information is incorporated by reference from the Company’s proxy statement for
the 2010 Annual Meeting of Stockholders, which will be held in May
2010.
The
Company has no equity compensation plans for which disclosure under Item 201(d)
of Regulation S-K is required.
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Item 13.
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Certain
Relationships and Related Transactions, and Director
Independence
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This
information is incorporated by reference from the Company’s Proxy Statement for
the 2010 Annual Meeting of Stockholders, which will be held in May
2010.
Information
regarding related person transactions is also incorporated by reference from
Note 11 to the Company’s consolidated financial statements, filed herewith as
Exhibit 13.
Item
14. Principal
Accountant Fees and Services
Auditors. Caturano
and Company, P.C. has served as the Company’s independent registered public
accounting firm since 2004. A representative of Caturano and Company
P.C. is expected to be present at our Annual Meeting of Stockholders, with the
opportunity to make a statement if he or she desires to do so. This
representative will be available to respond to appropriate questions from
shareholders who are present at our annual meeting.
The fees
for services provided by Caturano and Company, P.C. to the Company in the last
two fiscal years were as follows:
|
FY 2008
|
FY 2009
|
|||||||
|
Audit Fees
|
$ | 137,500 | $ | 153,500 | ||||
|
Audit
of Pension and 401(k)
|
||||||||
|
Benefit Plans
|
16,000 | 18,000 | ||||||
|
Other Fees
(1)
|
1,850 | 1,500 | ||||||
|
Total
Fees
|
$ | 155,350 | $ | 173,000 | ||||
(1)Other
fees include tax advisory fees.
The
Company’s Audit Committee has established policies and procedures which are
intended to control the services provided by the Company’s auditors and to
monitor their continued independence. Under these policies, no
services may be undertaken by the Company’s auditors unless the engagement is
specifically approved by the Company’s Audit Committee or the services are
included within a category which has been pre-approved by the Audit
Committee. The maximum charge for services is established by the
Audit Committee when the specific engagement or the category of services is
approved or pre-approved. In certain circumstances, management is
required to notify the Audit Committee when pre-approved services are undertaken
and the Committee or its Chairman may approve amendments or modifications of the
engagement or the maximum fees.
The
Company’s Audit Committee will not approve engagements of the Company’s auditors
to perform non-audit services for the Company if doing so will cause the
auditors to cease to be independent within the meaning of applicable SEC or
NASDAQ rules. In other circumstances, the Audit Committee considers
among other things, whether the auditors are able to provide the required
services in a more or less effective and efficient manner than other available
service providers.
All
services for which the Company engages the auditors are approved by the Audit
Committee. The total fees the Company paid to Caturano and Company
P.C. for services in 2008 and 2009 are set forth above.
The
Company’s Audit Committee approved the engagement of Caturano and Company P.C.
to provide audit related services and tax services in 2008 and 2009,
respectively (which include the annual
audits of
the Company’s Pension Plan and 401(k) Plan) because it determined that for
Caturano and Company, P.C. to provide these services would not compromise its
independence, and that its familiarity with the Company’s record keeping and
accounting systems would permit them to provide these services with equal or
higher quality, more quickly and at a cost similar to what the Company could
obtain these services from other providers.
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
2009 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 2009 Annual
Report to Shareholders, filed herewith as Exhibit
13.
|
|
3.
|
A
list of Exhibits is included on pages 16 through 18 of this annual report
on Form 10-K.
|
SONESTA
INTERNATIONAL HOTELS CORPORATION
Index
to Consolidated Financial Statements
and
Financial Statement Schedule
|
Item
15(a) (1) and (2)
|
References
(Page)
|
||||
|
Form 10-K
|
2009
Annual Report to Shareholders*
|
||||
|
Consolidated
Balance Sheets at December 31, 2009 and 2008
|
14, 15 | ||||
|
For
the years ended December 31, 2009 and 2008:
|
|||||
|
Consolidated Statements of
Operations
|
13 | ||||
|
Consolidated Statements of
Stockholder’sEquity and Comprehensive Income (Loss)
|
16 | ||||
|
Consolidated Statements of Cash
Flows
|
17 | ||||
|
Notes to Consolidated
FinancialStatements
|
18 | ||||
|
Consolidated
Financial Statement Schedule II for the year ended December 31,
2009
|
|||||
|
Consolidated Valuation and
QualifyingAccounts
|
15
|
||||
All other
schedules for which provision is made in the applicable accounting regulation of
the Securities and Exchange Commission are not required under the related
instructions or are inapplicable and therefore have been omitted.
_________________________________________________________
*Filed
herewith as Exhibit 13
|
SONESTA
INTERNATIONAL HOTELS CORPORATION
|
||||||||||||||||
|
SCHEDULE
II
|
||||||||||||||||
|
Consolidated
Valuation and Qualifying Accounts
|
||||||||||||||||
|
Three
Years Ended December 31, 2009
|
||||||||||||||||
|
Balance
Beginning
Of Year
|
Amounts
Charged
To Income
|
Amounts
Written Off
|
Balance
End
of
Year
|
|||||||||||||
|
Year
Ended December 31, 2008
|
||||||||||||||||
|
Allowance for doubtful
accounts
|
$ | 65,864 | $ | 47,705 | $ | 55,050 | $ | 58,519 | ||||||||
|
Year
Ended December 31, 2009
|
||||||||||||||||
|
Allowance for doubtful
accounts
|
$ | 58,519 | $ | 32,000 | $ | 20,399 | $ | 70,120 | ||||||||
|
SONESTA
INTERNATIONAL HOTELS CORPORATION
|
|
Index
to Exhibits
|
|
NUMBER
|
DESCRIPTION
|
|
3.1
|
Certificate
of Incorporation, as amended to date. (3)
|
|
3.2
|
Company
By-laws, as amended to date. (6)
|
|
10.2
|
Management
Agreement, between Sonesta Coconut Grove, Inc. (“SCG”), and Mutiny on the
Park, Ltd. (“Mutiny”), dated December 22, 2000. (1)
|
|
10.3
|
Letter
of Amendment of Management Agreement, between SCG and Mutiny, dated
January 5, 2001. (1)
|
|
10.4
|
Amendment
to Management Agreement between SCG and Mutiny, effective January 1,
2007. (5)
|
|
10.5
|
Amendment
to Management Agreement for Sonesta Club Sharm El Sheikh, dated January
24, 2008, between Sharm Today S.A.E. and Sonesta International Hotels
Limited. The Amendment includes the obligation by the Company
to make a loan of $558,571 to Sharm Today. (5)
|
|
10.6
|
Amendment
to Management Agreement for Sonesta Beach Resort Sharm el Sheikh, dated
January 24, 2008, between Masters of Tourism S.A.E. and Sonesta
International Hotels Limited. The Amendment includes the
obligation by the Company to make a loan of $1,020,672 to Masters of
Tourism. (5)
|
|
10.7
|
Indenture
of Lease, dated March 18, 2002, between ATC Realty, Inc. and Sonesta
International Hotels International Hotels Corporation. (2)
|
|
10.8
|
Hotel
Lease, dated December 12, 1967, between Chateau Louisiane, Inc., as
"Landlord", and The Royal Orleans, Inc., as
"Tenant". (6)
|
|
10.9
|
Hotel
Lease-Amendment No. 1, dated November 26, 1973, between Chateau Louisiane,
Inc. and Louisiana Sonesta Corporation. (6)
|
|
10.10
|
Hotel
Lease-Amendment No. 2, dated September 1, 1977, between Chateau Louisiane,
Inc. and Royal Sonesta, Inc. (6)
|
|
10.11
|
Summary
of Director compensation. (Filed herewith) (Management contract under Item
601(10)(iii)(A)).
|
|
10.12
|
Promissory
Note ($1,600,000), dated October 23, 2007, between 800 Canal Street
Limited Partnership and Sonesta Louisiana Hotels
Corporation. (5)
|
|
10.13
|
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. (3)
|
|
NUMBER
|
DESCRIPTION
|
|
10.14
|
First
Amendment to partnership agreement of SBR – Fortune Associates, LLLP,
dated as of January 17, 2005. (3)
|
|
10.15
|
Second
Amendment to partnership agreement of SBR - Fortune Associates, LLLP,
dated as of January 17, 2005. (3)
|
|
10.16
|
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”). (4)
|
|
10.17
|
Amendment
to partnership agreement of SBR – Fortune Associates, LLLP, dated as of
June 18, 2009. (7)
|
|
10.18
|
Term
Loan Agreement, dated February 12, 2010, between the Trustees of
Charterhouse of Cambridge Trust and Sonesta of Massachusetts, Inc. as
Borrower and RBS Citizens, National Association, as
Lender. (8)
|
|
10.19
|
Promissory
Note, dated February 12, 2010 from the Trustees of Charterhouse of
Cambridge Trust and Sonesta of Massachusetts, Inc. to RBS Citizens,
National Association. (8)
|
|
10.20
|
Mortgage
and Security Agreement, dated February 12, 2010 from the Trustees of
Charterhouse of Cambridge Trust and Sonesta of Massachusetts, Inc. as
Mortgagor to RBS Citizens, National Association, as
Mortgagee. (8)
|
|
10.30
|
Limited
Guaranty to RBS Citizens, National Association from Sonesta International
Hotels Corporation, dated February 12, 2010. (8)
|
|
10.31
|
Loan
agreement between Sonesta International Hotels Limited and Saint George
for Tourism Investment and Hotel Management, owner of Sonesta St. George
Hotel Luxor, dated as of August 18, 2009. (Filed
herewith)
|
|
10.32
|
Loan
agreement between Sonesta International Hotels Limited and Greaters for
Nile Tourism, owner of Sonesta St. George I Nile Cruise Ship, dated as of
August 18, 2009. (Filed herewith)
|
|
10.33
|
Loan
agreement between Sonesta Licensing Corporation and Resort of the World
N.V., owner of Sonesta Maho Beach Resort & Casino, St. Maarten, dated
December 18, 2009. (Filed herewith)
|
|
10.34
|
Loan
agreement between Sonesta Licensing Corporation and St. Maarten Resort
Hotel & Casino N.V., owner of Sonesta Great Bay Beach Resort &
Casino, St. Maarten, dated December 18, 2009. (Filed
herewith)
|
|
10.35
|
Loan
agreement between Sonesta International Hotels Limited and Masters of
Tourism, owner of Sonesta Beach Resort Sharm El Sheikh, dated as of
January 1, 2010. (Filed herewith)
|
|
NUMBER
|
DESCRIPTION
|
|
13
|
Annual
Report to Security Holders for the calendar year ended December 31,
2009. (Filed herewith)
|
|
21
|
Subsidiaries
of the Registrant. (Filed herewith)
|
|
23
|
Consent
of Caturano and Company, P.C. and audit report on schedule II
included in item 15(a)(2). (Filed herewith)
|
|
31
(a)
|
Certification
required by Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of
1934, as amended. (Filed herewith)
|
|
31
(b)
|
Certification
required by Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of
1934, as amended. (Filed herewith)
|
|
31
(c)
|
Certification
required by Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of
1934, as amended. (Filed herewith)
|
|
32
|
Certification
required by 18 U.S.C. Section 1350. (Furnished
herewith)
|
|
(1)
|
Incorporated
by reference to the Company’s 2001 Annual Report on Form 10-K (File No.
0-9032)
|
|
(2)
|
Incorporated
by reference to the Company’s 2002 Annual Report on Form 10-K (File No.
0-9032)
|
|
(3)
|
Incorporated
by reference to the Company’s 2004 Annual Report on Form 10-K (File No.
0-9032)
|
|
(4)
|
Incorporated
by reference to the Company’s Current Report on Form 8-K, filed
on April 22, 2005 (File No. 0-9032).
|
|
(5)
|
Incorporated
by reference to the Company’s 2007 Annual Report on Form 10-K (File No.
0-9032).
|
|
(6)
|
Incorporated
by reference to the Company’s 2008 Annual Report on Form 10-K (File No.
0-9032).
|
|
(7)
|
Incorporated
by reference to the Company’s Current Report on Form 8-K, filed on October
9, 2009 (File No. 0-9032).
|
|
(8)
|
Incorporated
by reference to the Company’s Current Report on Form 8-K, filed on
February 17, 2010 (File No.
0-9032).
|
Pursuant
to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
SONESTA
INTERNATIONAL HOTELS CORPORATION
(Registrant)
|
/s/
Boy van Riel
|
Date:
March 25, 2010
|
|
Boy
van Riel
Vice
President and Treasurer
|
Pursuant
to the requirements of the Securities and Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
|
/s/
Boy van Riel
|
Date:
March 25, 2010
|
|
Boy
van Riel
Vice
President and Treasurer
(Principal
Financial and Accounting Officer)
|
|
|
/s/
Peter J. Sonnabend
|
Date:
March 25, 2010
|
|
Peter
J. Sonnabend
Executive
Chairman of the Board, Director
(Principal
Executive Officer)
|
|
|
/s/
Stephanie Sonnabend
|
Date:
March 25, 2010
|
|
Stephanie
Sonnabend
Chief
Executive Officer and President, Director
(Principal
Executive Officer)
|
|
|
/s/
George S. Abrams
|
Date:
March 25, 2010
|
|
George
S. Abrams
Director
|
|
|
/s/
Joseph L. Bower
|
Date:
March 25, 2010
|
|
Joseph
L. Bower
Director
|
|
/s/
Charles J. Clark
|
Date:
March 25, 2010
|
|
Charles
J. Clark
Director
|
|
|
/s/
Clarence A. Davis
|
Date:
March 25, 2010
|
|
Clarence
A. Davis
Director
|
|
|
/s/
Irma Mann
|
Date:
March 25, 2010
|
|
Irma
Mann
Director
|
|
|
/s/
Jacqueline Sonnabend
|
Date:
March 25, 2010
|
|
Jacqueline
Sonnabend
Director
|
|
|
/s/
Stephen Sonnabend
|
Date:
March 25, 2010
|
|
Stephen
Sonnabend
Director
|
|
|
/s/
Jean C. Tempel
|
Date:
March 25, 2010
|
|
Jean
C. Tempel
Director
|
20