|
SPOKANE, Wash., Feb. 28, 2013 -- Red Lion Hotels Corporation
(NYSE: RLH), a western U.S. based owner and franchisor of midscale
hotels, today announced its results for the fourth quarter and year
ended December 31, 2012.
Fourth Quarter and Full Year Highlights:
- Fourth quarter RevPAR for comparable owned and leased
hotels increased 4.3 percent year over year; RevPAR was up 5.5 percent
for the full year
- Fourth quarter ADR for comparable owned and leased
hotels also increased 4.3 percent year over year; ADR was up 1.5
percent for the full year
- Occupancy was up 240 basis points for the full year
- Closed on the sale of three hotel properties using the
proceeds to pay down $17.7 million in
debt
- Ended year with 20 franchise hotels and two signed
agreements for franchise hotels that opened subsequent to year end.
Comparable operating results and data from continuing
operations (as disclosed in the table by the same title) for the
periods included in this release exclude from hotel operations the
results of the Red Lion Hotel on Fifth Avenue in Seattle, which was sold in the second
quarter of 2011, the Red Lion Colonial Hotel in Helena, Montana, which was sold in the
third quarter of 2012, and the Red Lion Hotel Denver Southeast, which
was sold in the fourth quarter of 2012. Following the sales, these
properties continue to operate as franchised hotels and the company is
therefore required to report their financial results in continuing
operations. Throughout this release the company refers to certain
non-GAAP financial measures. Please refer to the tables attached to
this release for a reconciliation of these non-GAAP financial measures
to their most directly comparable financial measure determined in
accordance with GAAP.
"I am pleased with Red Lion's accomplishments in 2012," said Jon E. Eliassen, President and Chief
Executive Officer of Red Lion Hotels Corporation. "We increased our
RevPAR and ADR, grew our hotel network, better defined our product
offerings and strengthened our balance sheet by using proceeds from
asset sales to pay down debt. We are well-positioned to refinance our
maturing debt."
"We continue to execute our asset sale strategy which is
providing additional capital to further invest in our owned hotels,"
Eliassen said. "At the same time, we continue to make progress on
growing our network of hotels through franchising. During the fourth
quarter, we opened two new locations and converted a formerly owned
hotel in Denver. We also signed two new franchises, which converted
subsequent to year end."
Fourth Quarter 2012 Results
Comparable revenue from owned and leased hotels of $27.1 million increased $0.6
million or 2.1 percent compared to the same period a year ago.
Comparable RevPAR increased 4.3 percent year over year to $41.20 driven by a 4.3 percent increase in ADR
to $80.53. Comparable hotel direct
operating margin declined to 9.6 percent from 14.7 percent in the same
period in 2011. Fourth quarter 2011 results benefitted from workers'
compensation expense adjustments, reductions of real property tax
assessments and labor cost reductions that did not reoccur in the 2012
period.
Franchise revenue increased to $1.2
million from $1.1 million from
the same period a year ago. Profitability in the segment was negatively
impacted by increased investment in sales and marketing initiatives.
Entertainment revenue grew to $2.8
million, up $0.4 million from
2011. This increase was primarily driven by the timing and mix of
shows. However, profitability declined year over year as the ticketing
division continues to see decreased demand.
On a comparable basis, total company EBITDA from continuing
operations before special items was $0.2 million
for the fourth quarter compared to $1.3 million
in the prior year period. As mentioned above, the fourth quarter of the
prior year benefitted from certain non-recurring favorable adjustments
relating to worker's compensation expense, real property tax
assessments and labor cost reductions.
Net loss from continuing operations in the fourth quarter of
2012 was $3.8 million, including $0.6 million in pre-tax impairment charges,
compared to $20.5 million in the prior
year period. The prior year period included $21
million in pre-tax impairment charges related to goodwill and
certain assets held for sale.
Full Year Ended December 31, 2012
Results
Comparable revenue from owned and leased hotels of $126.6 million increased $5.5 million, or 4.6 percent compared to prior
year. Comparable RevPAR increased 5.5 percent driven by a 240 basis
point increase in occupancy and a 1.5 percent increase in ADR. RevPAR
results exceeded the company's guidance of 3 to 5 percent growth, due
to stronger than anticipated ADR performance. Comparable hotel direct
operating margin declined to 19.4 percent from 19.9 percent in the
prior year due to increased occupancy-related costs, including
reservations and commissions expenses, as well as prior year
adjustments to workers' compensation expense and labor cost reductions.
Franchise revenue increased to $5.2
million from $4.0 million in
2011. Revenue and profitability improved year over year primarily due
to the addition of franchises to the system.
Entertainment revenue of $9.2 million
decreased $2.2 million from the prior
year primarily driven by a change in the mix of productions during the
year and a decline in ticketing revenue due to weak demand for
entertainment events in the company's markets. Profitability for the
segment declined as the prior year Best of Broadway series included a
sold out 11-day run of the hit, "Wicked," and there was not a similar
production in 2012.
On a comparable basis, total company EBITDA from continuing
operations before special items was $14.2
million for the full year ended December
31, 2012 compared to $12.5 million
in the prior year, an increase of 13.7 percent.
Net loss from continuing operations for 2012 was $10.5 million compared to $5.6 million in the prior year. The comparison
of the two years is impacted by the timing of asset sales, impairment
charges, gain on property sales, and income tax adjustments. Major
items impacting 2012 include partial year results of assets that were
sold during the year and $9.4 million in
pre-tax asset impairment charges. Major items impacting 2011 include
pre-tax goodwill and asset impairment charges of $23.1
million, a $33.5 million pre-tax
gain on the sale of a property, and the income tax effect of a
non-deductible goodwill impairment charge.
Discontinued Operations
At December 31, 2012, the
operations of the company's commercial mall in Kalispell, Montana were classified as
discontinued operations. Additional operating results classified as
discontinued include the property in Medford,
Oregon and the ownership of certain real estate in Sacramento, California. This presentation
as required under generally accepted accounting principles ("GAAP")
separately reports the results including any related asset impairment
charges, net of income taxes as "net income (loss) from discontinued
operations" on the company's statement of operations for all periods
presented.
The operating results of the Red Lion Inn Missoula in Montana had been classified as discontinued
operations since the fourth quarter of 2011 because the property was
not expected to continue to operate as a Red Lion franchise. Upon
closing of the sale of this property on February
20, 2013, however, the buyers signed a franchise agreement with
the company. The company therefore reclassified the results of the
property as a continuing operation for the fourth quarter and all
comparable periods presented.
Asset Impairments
During the fourth quarter, the company recorded $0.4 million and $0.2
million in pre-tax asset impairment charges in continuing
operations related to its properties held for sale in Pendleton, Oregon and Missoula, Montana respectively. For the
full year, pre-tax asset impairment charges from continuing operations
totaled $9.4 million relating to the
company's properties held for sale or sold in Southeast
Denver, Colorado, Helena and Missoula, Montana and Pendleton, Oregon.
Reported EBITDA from continuing operations before special
items for 2012 excludes these impairment charges which are separately
identified in the company's operating results.
Liquidity and Balance Sheet
At December 31, 2012, the
company had $6.5 million in cash and
cash equivalents and $10.0 million
available on its line of credit. Additionally, at December 31, 2012, the company had outstanding
debt of $80.0 million, of which $49.2 million is current. This compares to
outstanding debt of $100.5 million, of
which $3.3 million was current, at December 31, 2011. Based on the reduction in
debt and strengthening of the balance sheet, the company believes it
will be well-positioned to refinance its debt that matures in 2013.
Capital expenditures for the full year ended December 31, 2012, totaled $8.4 million primarily for hotel improvement
projects.
Assets Sold or Held for Sale
During 2012, the company sold three properties:
- Red Lion Colonial Hotel in Helena,
Montana closed in July 2012 for $5.6 million
- Red Lion Hotel Sacramento at Arden Village in California closed in August
2012 for $9.0 million
- Red Lion Hotel Denver Southeast in Aurora, Colorado closed in October 2012 for $13.0
million
At December 31, 2012, the
following assets were classified as held for sale on the balance sheet:
the Red Lion Hotel Medford, the Red Lion Inn Missoula, the Red Lion
Hotel Pendleton and the commercial mall in Kalispell.
Subsequent to year end, the company closed on the sale of the
Red Lion Inn Missoula in Montana for $1.95 million. Upon closing of the sale of
this property, the buyers signed a franchise agreement with the company.
Franchise Update
In 2012, the company signed six franchise agreements; four
with owners of new locations and two with the buyers of the company's
previously owned properties:
- Red Lion Colonial Hotel, Helena,
Montana, effective in July 2012
(formerly owned by the company)
- Red Lion Hotel Woodlake Conference Center Sacramento,
converted in October 2012
- Red Lion Hotel Denver Southeast, effective in October 2012 (formerly owned by the company)
- Red Lion Inn & Suites Cathedral City, converted in December 2012
- Red Lion Inn & Suites Denver Airport, converted in January 2013
- Red Lion Inn & Suites Kent,
Washington, converted in February 2013
Subsequent Events
In January, the company announced The Leo Hotel Collection, a
new soft brand for independent owners of unique, boutique, historic and
destination hotels looking for access to a franchise distribution
system, while maintaining the individual identity of their hotels. In
February, the company announced the first member of the Leo Hotel
Collection, the LVH – Las Vegas Hotel & Casino, a 2,956 room resort
adjacent to the Las Vegas Convention
Center. The company will earn incremental revenue based on the
reservations delivered to the LVH through select Red Lion distribution
channels.
Also in January and February, the company opened two new
franchise locations, the Red Lion Inn & Suites Denver Airport in Colorado and the Red Lion Inn & Suites
Kent in Washington.
In February, the company closed on the sale of its Red Lion
Inn Missoula in Montana for $1.95 million. Upon closing of the sale of
this property, the buyers signed a franchise agreement with the company.
Outlook for 2013
Based on the outlook for the markets in which the company
operates and on currently available information, the company is
providing the following RevPAR guidance and plans for capital
expenditures for 2013:
- Full year 2013 RevPAR for comparable owned and leased
hotels is expected to increase 1 to 3 percent over 2012, driven
primarily by ADR increases.
- The company expects to invest $10-12
million in capital improvements in 2013. The timing of future
asset sales could increase this investment up to an additional $10 million.
Conference Call Information
The company will conduct a conference call on February 28, 2013, at 2:00
p.m. Pacific Time (5:00 p.m. Eastern Time),
to discuss the results for interested investors, analysts and portfolio
managers. Hosting the call will be President and Chief Executive
Officer Jon E. Eliassen and Executive
Vice President and Chief Financial Officer Julie
Shiflett. Executive Vice President and Chief Operating Officer George Schweitzer will also be available to
answer questions.
To participate in the conference call, please dial the
following number ten minutes prior to the scheduled time, (800)
230-1085. International callers should dial (612) 288-0337.
This conference call will also be webcast live on www.RedLion.com in
the Investor Relations section of the website. To listen to the live
call, please go to the Red Lion website at least fifteen minutes prior
to the start of the call to register and to download and install any
necessary audio software. For those unable to participate during the
live broadcast, a replay will be available at 4:00
p.m. Pacific Time on February 28, 2013,
through March 14, 2013, at (800)
475-6701 or (320) 365-3844 (International) access code - 282568. The
replay will also be available shortly after the call on the Red Lion
website.
About Red Lion Hotels Corporation:
Red Lion Hotels Corporation is a hospitality and leisure
Company primarily engaged in the franchising, ownership and operation
of hotels under its Red Lion Hotel, Red Lion Inn & Suites and Leo
Hotel Collection brands. As of December 31, 2012,
the RLH hotel network was comprised of 48 hotels located in nine states
and one Canadian province, with 9,015 rooms and 484,693 square feet of
meeting space. The Company also owns and operates an entertainment and
event ticket distribution business. For more information, please visit
the Company's website at www.redlion.com.
This press release contains forward-looking statements
within the meaning of federal securities law, including statements
concerning plans, objectives, goals, strategies, projections of future
events or performance and underlying assumptions (many of which are
based, in turn, upon further assumptions). The forward-looking
statements in this press release are inherently subject to a variety of
risks and uncertainties that could cause actual results to differ
materially from those expressed. Such risks and uncertainties include,
among others, economic cycles; international conflicts; changes in
future demand and supply for hotel rooms; competitive conditions in the
lodging industry; relationships with franchisees and properties; impact
of government regulations; ability to obtain financing; changes in
energy, healthcare, insurance and other operating expenses; ability to
sell non-core assets; ability to locate lessees for rental property;
dependency upon the ability and experience of executive officers and
ability to retain or replace such officers as well as other matters
discussed in the Company's annual report on Form 10-K for the year
ended December 31, 2011 and in other
documents filed by the Company with the Securities and Exchange
Commission.
Company Contact:
Pam Scott
Director of Corporate Communications
(509) 777-6393
|
Red
Lion Hotels Corporation
|
|
Consolidated
Statements of Operations
|
|
(unaudited)
|
|
($
in thousands, except footnotes and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
Three
months ended December 31,
|
|
|
|
|
|
2012
|
2011
|
$
Change
|
%
Change
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
Hotels
|
|
$
27,552
|
$
29,113
|
$
(1,561)
|
-5.4%
|
|
Franchise
|
|
1,224
|
1,085
|
139
|
12.8%
|
|
Entertainment
|
|
2,809
|
2,440
|
369
|
15.1%
|
|
Other
|
|
116
|
102
|
14
|
13.7%
|
|
|
|
|
|
|
|
|
Total
revenues
|
|
31,701
|
32,740
|
(1,039)
|
-3.2%
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
Hotels
|
|
25,278
|
25,112
|
166
|
0.7%
|
|
Franchise
|
|
1,271
|
941
|
330
|
35.1%
|
|
Entertainment
|
|
2,775
|
2,348
|
427
|
18.2%
|
|
Other
|
|
228
|
184
|
44
|
23.9%
|
|
Depreciation
and amortization
|
|
3,711
|
4,239
|
(528)
|
-12.5%
|
|
Hotel
facility and land lease
|
|
1,226
|
1,289
|
(63)
|
-4.9%
|
|
Goodwill
impairment
|
|
-
|
14,236
|
(14,236)
|
-100.0%
|
|
Asset
impairment
|
|
644
|
6,715
|
(6,071)
|
-90.4%
|
|
Loss
(gain) on asset dispositions, net
|
|
64
|
319
|
255
|
79.9%
|
|
Undistributed
corporate expenses
|
|
1,137
|
1,148
|
(11)
|
-1.0%
|
|
|
|
|
|
|
|
|
Total
expenses
|
|
36,334
|
56,531
|
(20,197)
|
-35.7%
|
|
|
|
|
|
|
|
|
Operating
income (loss)
|
|
(4,633)
|
(23,791)
|
19,158
|
80.5%
|
|
|
|
|
|
|
|
|
Other
income (expense):
|
|
|
|
|
|
|
Interest
expense
|
|
(1,571)
|
(1,802)
|
231
|
12.8%
|
|
Other
income, net
|
|
154
|
22
|
132
|
n/m
|
|
|
|
|
|
|
|
|
Income
(loss) before income taxes
|
|
(6,050)
|
(25,571)
|
19,521
|
76.3%
|
|
|
|
|
|
|
|
|
Income
tax (benefit) expense
|
|
(2,281)
|
(5,100)
|
(2,819)
|
-55.3%
|
|
|
|
|
|
|
|
|
Net
income (loss) from continuing operations
|
|
(3,769)
|
(20,471)
|
16,702
|
81.6%
|
|
|
|
|
|
|
|
|
Discontinued
operations (3,4,5):
|
|
|
|
|
|
|
Income
(loss) from operations of discontinued business units, net of
income tax (benefit) expense of $75 and $(47) respectively
|
|
132
|
(82)
|
214
|
n/m
|
|
Loss
on disposal and impairment of the assets of the discontinued business units,
net income tax (benefit) expense of $0 and $(210) respectively
|
|
-
|
(369)
|
369
|
100.0%
|
|
|
|
|
|
|
|
|
Net
income (loss) from discontinued operations
|
|
132
|
(451)
|
583
|
129.3%
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
(3,637)
|
(20,922)
|
17,285
|
82.6%
|
|
|
|
|
|
|
|
|
Less
net income or loss attributable to noncontrolling interest
|
|
-
|
(9)
|
9
|
100.0%
|
|
|
|
|
|
|
|
|
Net
income (loss) attributable to Red Lion Hotels Corporation
|
|
$
(3,637)
|
$
(20,913)
|
$
17,276
|
82.6%
|
|
|
|
|
|
|
|
|
Earnings
per share - basic and diluted
|
|
|
|
|
|
|
Net
income (loss) from continuing operations
|
|
$
(0.20)
|
$
(1.07)
|
|
|
|
Net
Income (loss) from discontinued operations
|
|
$ 0.01
|
$
(0.02)
|
|
|
|
Net
income (loss) attributable to Red Lion Hotels Corporation
|
|
$
(0.19)
|
$
(1.09)
|
|
|
|
Weighted
average shares - basic
|
|
19,426
|
19,123
|
|
|
|
Weighted
average shares - diluted
|
|
19,426
|
19,123
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Financial Measures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
(1)
|
|
$ (560)
|
$
(19,941)
|
$
19,381
|
97.2%
|
|
EBITDA
as a percentage of revenues
|
|
-1.8%
|
-60.9%
|
|
|
|
|
|
|
|
|
|
|
Comparable
EBITDA from continuing operations before special items (2)
|
|
$ 154
|
$ 1,330
|
$
(1,176)
|
-88.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The
definition of "EBITDA" and how that measure relates to net income
(loss) attributable to Red Lion Hotels Corporation is discussed further
in this release under Non-GAAP Financial Measures.
|
|
(2)
|
The
definition of "Comparable EBITDA from continuing operations before
special items" can be found in the table named "Comparable Operating
Results and Data From Continuing Operations".
|
|
(3)
|
During
the fourth quarter 2011, the company listed for sale its hotel in
Medford, Oregon, a non-core asset in which the company does not expect
to maintain significant continuing involvement following a sale.
Accordingly, the operations of this property have been classified as
discontinued operations for all periods presented.
|
|
(4)
|
During
the second quarter 2012, based on the company's right to sell its hotel
in Sacramento, California to its tenant and on negotiations regarding
transaction terms, the operating results from the ownership of this
real estate and land were classified as discontinued operations for all
periods presented. This hotel sale was completed in the third quarter
of 2012.
|
|
(5)
|
During
the third quarter 2012, the company listed for sale its commercial mall
in Kalispell, Montana. The company does not expect to maintain
significant continuing involvement in the property following a sale.
Accordingly, the operations of this property have been classified as
discontinued operations for all periods presented.
|
|
Red
Lion Hotels Corporation
|
|
Consolidated
Statements of Operations
|
|
(unaudited)
|
|
($
in thousands, except footnotes and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
Year
ended December 31,
|
|
|
|
|
|
2012
|
2011
|
$
Change
|
%
Change
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
Hotels
|
|
$
135,923
|
$
139,424
|
$
(3,501)
|
-2.5%
|
|
Franchise
|
|
5,177
|
3,955
|
1,222
|
30.9%
|
|
Entertainment
|
|
9,165
|
11,379
|
(2,214)
|
-19.5%
|
|
Other
|
|
442
|
423
|
19
|
4.5%
|
|
|
|
|
|
|
|
|
Total
revenues
|
|
150,707
|
155,181
|
(4,474)
|
-2.9%
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
Hotels
|
|
110,614
|
112,382
|
(1,768)
|
-1.6%
|
|
Franchise
|
|
4,758
|
3,838
|
920
|
24.0%
|
|
Entertainment
|
|
9,020
|
10,584
|
(1,564)
|
-14.8%
|
|
Other
|
|
828
|
706
|
122
|
17.3%
|
|
Depreciation
and amortization
|
|
15,195
|
17,869
|
(2,674)
|
-15.0%
|
|
Hotel
facility and land lease
|
|
4,859
|
6,599
|
(1,740)
|
-26.4%
|
|
Goodwill
impairment
|
|
-
|
14,236
|
(14,236)
|
-100.0%
|
|
Asset
impairment
|
|
9,440
|
8,871
|
569
|
6.4%
|
|
Loss
(gain) on asset dispositions, net
|
|
(159)
|
(33,379)
|
(33,220)
|
-99.5%
|
|
Undistributed
corporate expenses
|
|
6,022
|
5,503
|
519
|
9.4%
|
|
|
|
|
|
|
|
|
Total
expenses
|
|
160,577
|
147,209
|
13,368
|
9.1%
|
|
|
|
|
|
|
|
|
Operating
income (loss)
|
|
(9,870)
|
7,972
|
(17,842)
|
n/m
|
|
|
|
|
|
|
|
|
Other
income (expense):
|
|
|
|
|
|
|
Interest
expense
|
|
(6,959)
|
(8,355)
|
1,396
|
16.7%
|
|
Other
income, net
|
|
229
|
432
|
(203)
|
-47.0%
|
|
|
|
|
|
|
|
|
Income
(loss) before income taxes
|
|
(16,600)
|
49
|
(16,649)
|
n/m
|
|
|
|
|
|
|
|
|
Income
tax (benefit) expense
|
|
(6,133)
|
5,697
|
11,830
|
n/m
|
|
|
|
|
|
|
|
|
Net
income (loss) from continuing operations
|
|
(10,467)
|
(5,648)
|
(4,819)
|
-85.3%
|
|
|
|
|
|
|
|
|
Discontinued
operations (3,4,5):
|
|
|
|
|
|
|
Income
(loss) from operations of discontinued business units, net of
income tax (benefit) expense of $176 and $(593) respectively
|
|
312
|
(1,045)
|
1,357
|
129.9%
|
|
Loss
on disposal and impairment of the assets of the discontinued business units,
net of income tax (benefit) expense of $(2,566) and $(210) respectively
|
|
(4,526)
|
(369)
|
(4,157)
|
n/m
|
|
|
|
|
|
|
|
|
Net
income (loss) from discontinued operations
|
|
(4,214)
|
(1,414)
|
(2,800)
|
n/m
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
(14,681)
|
(7,062)
|
(7,619)
|
n/m
|
|
|
|
|
|
|
|
|
Less
net income or loss attributable to noncontrolling interest
|
|
(7)
|
86
|
(93)
|
n/m
|
|
|
|
|
|
|
|
|
Net
income (loss) attributable to Red Lion Hotels Corporation
|
|
$
(14,674)
|
$
(7,148)
|
$
(7,526)
|
n/m
|
|
|
|
|
|
|
|
|
Earnings
per share - basic and diluted
|
|
|
|
|
|
|
Net
income (loss) from continuing operations
|
|
$
(0.54)
|
$
(0.30)
|
|
|
|
Net
Income (loss) from discontinued operations
|
|
$
(0.22)
|
$
(0.08)
|
|
|
|
Net
income (loss) attributable to Red Lion Hotels Corporation
|
|
$
(0.76)
|
$
(0.38)
|
|
|
|
Weighted
average shares - basic
|
|
19,327
|
19,053
|
|
|
|
Weighted
average shares - diluted
|
|
19,327
|
19,053
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Financial Measures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
(1)
|
|
$ (423)
|
$
25,139
|
$
(25,562)
|
n/m
|
|
EBITDA
as a percentage of revenues
|
|
-0.3%
|
16.2%
|
|
|
|
|
|
|
|
|
|
|
Comparable
EBITDA from continuing operations before special items (2)
|
|
$
14,210
|
$
12,496
|
$ 1,714
|
13.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The
definition of "EBITDA" and how that measure relates to net income
(loss) attributable to Red Lion Hotels Corporation is discussed further
in this release under Non-GAAP Financial Measures.
|
|
(2)
|
The
definition of "Comparable EBITDA from continuing operations before
special items" can be found in the table named "Comparable Operating
Results and Data From Continuing Operations".
|
|
(3)
|
During
the fourth quarter 2011, the company listed for sale its hotel in
Medford, Oregon, a non-core asset in which the company does not expect
to maintain significant continuing involvement following a sale.
Accordingly, the operations of this property have been classified as
discontinued operations for all periods presented.
|
|
(4)
|
During
the second quarter 2012, based on the company's right to sell its hotel
in Sacramento, California to its tenant and on negotiations regarding
transaction terms, the operating results from the ownership of this
real estate and land were classified as discontinued operations for all
periods presented. This hotel sale was completed in the third quarter
of 2012.
|
|
(5)
|
During
the third quarter 2012, the company listed for sale its commercial mall
in Kalispell, Montana. The company does not expect to maintain
significant continuing involvement in the property following a sale.
Accordingly, the operations of this property have been classified as
discontinued operations for all periods presented.
|
|
Red
Lion Hotels Corporation
|
|
Consolidated
Balance Sheets
|
|
(unaudited)
|
|
($
in thousands, except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31,
|
|
December
31,
|
|
|
|
|
|
2012
|
|
2011
|
|
Assets:
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash
and cash equivalents
|
$ 6,477
|
|
$ 1,981
|
|
|
Restricted
cash
|
2,417
|
|
3,358
|
|
|
Accounts
receivable, net
|
5,774
|
|
7,381
|
|
|
Notes
receivable
|
4,112
|
|
210
|
|
|
Inventories
|
1,329
|
|
1,346
|
|
|
Prepaid
expenses and other
|
2,648
|
|
1,973
|
|
|
Deferred
income taxes
|
2,342
|
|
4,291
|
|
|
Assets
held for sale
|
18,288
|
|
30,380
|
|
|
|
|
Total
current assets
|
43,387
|
|
50,920
|
|
|
|
|
|
|
|
|
|
Property
and equipment, net
|
195,012
|
|
232,589
|
|
Goodwill
|
8,512
|
|
8,512
|
|
Intangible
assets
|
6,992
|
|
6,992
|
|
Notes
receivable, long term
|
2,902
|
|
628
|
|
Other
assets, net
|
4,137
|
|
5,255
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
$
260,942
|
|
$
304,896
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
$ 5,967
|
|
$ 4,928
|
|
|
Accrued
payroll and related benefits
|
2,504
|
|
2,103
|
|
|
Accrued
interest payable
|
190
|
|
231
|
|
|
Advance
deposits
|
248
|
|
380
|
|
|
Other
accrued expenses
|
9,286
|
|
9,249
|
|
|
Revolving
credit facility
|
-
|
|
844
|
|
|
Long-term
debt, due within one year
|
49,178
|
|
3,274
|
|
|
|
|
Total
current liabilities
|
67,373
|
|
21,009
|
|
|
|
|
|
|
|
|
|
Long-term
debt, due after one year
|
-
|
|
66,378
|
|
Deferred
income
|
3,923
|
|
4,643
|
|
Deferred
income taxes
|
5,913
|
|
16,176
|
|
Debentures
due Red Lion Hotels Capital Trust
|
30,825
|
|
30,825
|
|
|
|
|
Total
liabilities
|
108,034
|
|
139,031
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
Red
Lion Hotels Corporation stockholders' equity
|
|
|
|
|
|
Preferred
stock - 5,000,000 shares authorized; $0.01 par value;
|
|
|
|
|
|
no
shares issued or outstanding
|
-
|
|
-
|
|
|
Common
stock - 50,000,000 shares authorized; $0.01 par value;
|
|
|
|
|
|
19,451,849
and 19,172,670 shares issued and outstanding
|
195
|
|
192
|
|
|
Additional
paid-in capital, common stock
|
150,798
|
|
149,027
|
|
|
Retained
earnings
|
1,915
|
|
16,589
|
|
|
|
|
Total
Red Lion Hotels Corporation stockholders' equity
|
152,908
|
|
165,808
|
|
|
|
|
|
|
|
|
|
Noncontrolling
interest
|
-
|
|
57
|
|
|
|
|
Total
stockholders' equity
|
152,908
|
|
165,865
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders' equity
|
$
260,942
|
|
$
304,896
|
|
Red
Lion Hotels Corporation
|
|
Additional
Hotel Statistics
|
|
(unaudited)
|
|
|
System-wide
Hotels as of December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
Meeting
Space
|
|
|
|
|
|
|
Hotels
|
Rooms
|
(sq.
ft.)
|
|
|
|
|
|
Red
Lion Owned or Leased Hotels (1):
|
|
|
|
|
|
|
|
|
Comparable Continuing Operations
|
27
|
5,012
|
240,714
|
|
|
|
|
|
Discontinued Operations
|
1
|
185
|
9,552
|
|
|
|
|
|
Red
Lion Franchised Hotels (1)
|
20
|
3,818
|
234,427
|
|
|
|
|
|
Total
Red Lion Hotels
|
48
|
9,015
|
484,693
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable
Hotel Statistics from Continuing Operations (1,2)
|
|
|
|
|
|
|
|
Three
months ended December 31, 2012
|
|
Three
months ended December 31, 2011
|
|
|
Average
|
|
|
|
Average
|
|
|
|
|
Occupancy
(3)
|
ADR
(4)
|
RevPAR
(5)
|
|
Occupancy
(3)
|
ADR
(4)
|
RevPAR
(5)
|
|
Owned
and Leased Hotels
|
51.2%
|
$ 80.53
|
$ 41.20
|
|
51.2%
|
$ 77.19
|
$ 39.50
|
|
Franchised
Hotels
|
50.3%
|
$ 86.75
|
$ 43.59
|
|
51.6%
|
$ 80.80
|
$ 41.70
|
|
Total
System Wide
|
50.8%
|
$ 82.62
|
$ 42.01
|
|
51.3%
|
$ 78.43
|
$ 40.25
|
|
|
|
|
|
|
|
|
|
|
Change
from prior comparative period:
|
|
|
|
|
|
|
|
|
Owned
and Leased Hotels
|
-
|
4.3%
|
4.3%
|
|
|
|
|
|
Franchised Hotels
|
(1.3)
|
7.4%
|
4.5%
|
|
|
|
|
|
Total
System Wide
|
(0.5)
|
5.3%
|
4.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
ended December 31, 2012
|
|
Year
ended December 31, 2011
|
|
|
Average
|
|
|
|
Average
|
|
|
|
|
Occupancy
(3)
|
ADR
(4)
|
RevPAR
(5)
|
|
Occupancy
(3)
|
ADR
(4)
|
RevPAR
(5)
|
|
Owned
and Leased Hotels
|
61.7%
|
$ 83.98
|
$ 51.79
|
|
59.3%
|
$ 82.71
|
$ 49.07
|
|
Franchised
Hotels
|
60.9%
|
$ 86.71
|
$ 52.77
|
|
60.9%
|
$ 83.97
|
$ 51.10
|
|
Total
System Wide
|
61.4%
|
$ 84.90
|
$ 52.13
|
|
59.8%
|
$ 83.15
|
$ 49.76
|
|
|
|
|
|
|
|
|
|
|
Change
from prior comparative period:
|
|
|
|
|
|
|
|
|
Owned
and Leased Hotels
|
2.4
|
1.5%
|
5.5%
|
|
|
|
|
|
Franchised Hotels
|
-
|
3.3%
|
3.3%
|
|
|
|
|
|
Total
System Wide
|
1.6
|
2.1%
|
4.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes all hotels owned, leased and franchised,
presented on a comparable basis for hotel statistics. The Seattle,
Helena and Denver Southeast properties have been excluded from the owned and leased hotel
statistics and included in the franchised statistics for all periods
shown.
|
|
(2)
|
Excludes one hotel identified as a discontinued
operation.
|
|
(3)
|
Average occupancy represents total paid rooms
divided by total available rooms. Total available rooms represents the
number of rooms available multiplied by the number of days in the
reported period and includes rooms taken out of service for renovation.
|
|
(4)
|
Average daily rate ("ADR") represents total room
revenues divided by the total number of paid rooms occupied by hotel
guests.
|
|
(5)
|
Revenue per available room ("RevPAR") represents
total room and related revenues divided by total available rooms.
|
|
Red
Lion Hotels Corporation
|
|
|
Comparable
Operating Results and Data From Continuing Operations
|
|
|
(unaudited)
|
|
|
($
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certain
operating results for the periods included in this report are shown on
a comparable hotel basis. Comparable hotels are defined as properties
that are owned or leased by the company and the operations
of which are included in the consolidated results from continuing
operations for the entirety of the reporting periods
being compared.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
months ended December 31,
|
|
Year
ended December 31,
|
|
|
|
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable
total revenue (2)
|
$
31,264
|
|
$
30,174
|
|
$
141,353
|
|
$
136,785
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable
hotel revenue (2)
|
27,115
|
|
26,547
|
|
126,569
|
|
121,028
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable
hotel operating expense(3)
|
24,520
|
|
22,649
|
|
102,064
|
|
96,897
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable
hotel direct operating profit(1)
|
2,595
|
|
3,898
|
|
24,505
|
|
24,131
|
|
|
Comparable
hotel direct operating margin (1)
|
9.6%
|
|
14.7%
|
|
19.4%
|
|
19.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable
total EBITDA from continuing operations before special items (4)
|
$
154
|
|
$
1,330
|
|
$
14,210
|
|
$
12,496
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Operating
profit margins are calculated by dividing the applicable operating
profit by the related revenue amount. GAAP margins are calculated using
amounts presented in the consolidated statements of
operations. Comparable margins are calculated using amounts presented
in the table above.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2)
|
The
reconciliation of total and hotel revenue per the consolidated
statements of operations to comparable total and hotel revenue is as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
months ended December 31,
|
|
Year
ended December 31,
|
|
|
|
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenue per the consolidated statements of operations
|
$
31,701
|
|
$
32,740
|
|
$
150,707
|
|
$
155,181
|
|
|
less:
Revenue from Seattle, Helena and Denver Southeast properties
|
(437)
|
|
(2,566)
|
|
(9,354)
|
|
(18,396)
|
|
|
Comparable
total revenue
|
$
31,264
|
|
$
30,174
|
|
$
141,353
|
|
$
136,785
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel
revenue per the consolidated statements of operations
|
$
27,552
|
|
$
29,113
|
|
$
135,923
|
|
$
139,424
|
|
|
less:
Revenue from Seattle, Helena and Denver Southeast properties
|
(437)
|
|
(2,566)
|
|
(9,354)
|
|
(18,396)
|
|
|
Comparable
hotel revenue
|
$
27,115
|
|
$
26,547
|
|
$
126,569
|
|
$
121,028
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
The
reconciliation of hotel operating expense per the consolidated
statements of operations to comparable hotel operating expense is as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
months ended December 31,
|
|
Year
ended December 31,
|
|
|
|
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel
operating expense per the consolidated statements of operations
|
$
25,278
|
|
$
25,112
|
|
$
110,614
|
|
$
112,382
|
|
|
less:
Operating expense from Seattle, Helena and Denver Southeast properties
|
(758)
|
|
(2,463)
|
|
(8,550)
|
|
(15,485)
|
|
|
Comparable
hotel operating expense
|
$
24,520
|
|
$
22,649
|
|
$
102,064
|
|
$
96,897
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4)
|
The
reconciliation of EBITDA from continuing operations before special
items per the table entitled "Disclosure of Special Items" to
comparable total EBITDA before
special items is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
months ended December 31,
|
|
Year
ended December 31,
|
|
|
|
|
|
|
|
2012
|
|
2011
|
|
2,012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
before special items per the table "Disclosure of Special Items"
|
$ (124)
|
|
$ 1,430
|
|
$
15,001
|
|
$
15,745
|
|
|
less:
EBITDA of Seattle, Helena and Denver Southeast properties
|
278
|
|
(100)
|
|
(791)
|
|
(3,249)
|
|
|
Comparable
total EBITDA from continuing operations before special items
|
$
154
|
|
$
1,330
|
|
$
14,210
|
|
$
12,496
|
|
|
|
|
Comparable
operating results from continuing operations and comparable operating
results from continuing operations before special items represent
reported operating results less the impact of the Seattle, Helena and
Denver Southeast properties' results and less the impact of certain
non-recurring charges that do not allow for a meaningful comparison
between periods. We utilize these measures because management finds
them a useful tool to perform more meaningful comparisons of past,
present and future operating results and as a means to evaluate the
results of core, ongoing operations. We also believe that investors
will find them to be a useful tool to perform more meaningful
comparisons of past, present and future operating results and as a
means to evaluate the results of core, ongoing operations. We believe
they are a complement to reported operating results. Comparable
operating results from continuing operations and comparable operating
results from continuing operations before special items are not
intended to represent reported operating results defined by generally
accepted accounting principles in the United States ("GAAP"), and such
information should not be considered as an alternative to reported
information or any other measure of performance prescribed by GAAP.
|
|
Red
Lion Hotels Corporation
|
|
Reconciliation
of EBITDA to Net Income Attributable to Red Lion Hotels Corporation
|
|
(unaudited)
|
|
($
in thousands)
|
|
|
|
|
|
|
|
|
|
|
The
following is a reconciliation of EBITDA and EBITDA from continuing
operations to net income (loss) attributable to Red Lion Hotels
Corporation for the periods presented:
|
|
|
|
|
|
|
|
|
|
|
|
Three
months ended December 31,
|
|
Year
ended December 31,
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
EBITDA from continuing operations
|
$ (768)
|
|
$
(19,521)
|
|
$ 5,561
|
|
$
26,187
|
|
Income
tax benefit (expense) - continuing operations
|
2,281
|
|
5,100
|
|
6,133
|
|
(5,697)
|
|
Interest
expense - continuing operations
|
(1,571)
|
|
(1,802)
|
|
(6,959)
|
|
(8,355)
|
|
Depreciation
and amortization - continuing operations
|
(3,711)
|
|
(4,239)
|
|
(15,195)
|
|
(17,869)
|
|
Net
income (loss) attributable to Red Lion Hotels Corporation from
continuing operations
|
(3,769)
|
|
(20,462)
|
|
(10,460)
|
|
(5,734)
|
|
Income
(loss) on discontinued operations, net of tax
|
132
|
|
(451)
|
|
(4,214)
|
|
(1,414)
|
|
Net
income (loss) attributable to Red Lion Hotels Corporation
|
$
(3,637)
|
|
$
(20,913)
|
|
$
(14,674)
|
|
$
(7,148)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
months ended December 31,
|
|
Year
ended December 31,
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
$ (560)
|
|
$
(19,941)
|
|
$ (423)
|
|
$
25,139
|
|
Income
tax benefit (expense)
|
2,206
|
|
5,357
|
|
8,523
|
|
(4,894)
|
|
Interest
expense
|
(1,571)
|
|
(1,802)
|
|
(6,959)
|
|
(8,372)
|
|
Depreciation
and amortization
|
(3,712)
|
|
(4,527)
|
|
(15,815)
|
|
(19,021)
|
|
Net
income (loss) attributable to Red Lion Hotels Corporation
|
$
(3,637)
|
|
$
(20,913)
|
|
$
(14,674)
|
|
$
(7,148)
|
|
NON-GAAP
FINANCIAL MEASURES
|
|
|
EBITDA
is defined as net income attributable to Red Lion Hotels Corporation,
before interest, taxes, depreciation and amortization. EBITDA is
considered a non-GAAP financial measurement. We believe it is a useful
financial performance measure for us and for our shareholders and is a
complement to net income attributable to Red Lion Hotels Corporation
and other financial performance measures provided in accordance with
generally accepted accounting principles in the United States ("GAAP").
|
|
|
We use
EBITDA to measure financial performance because it excludes interest,
taxes, depreciation and amortization, which bear little or no
relationship to operating performance. By excluding interest expense,
EBITDA measures our financial performance irrespective of our capital
structure or how we finance our properties and operations. We generally
pay federal and state income taxes on a consolidated basis, taking into
account how the applicable taxing laws apply to our company in the
aggregate. By excluding taxes on income, we believe EBITDA provides a
basis for measuring the financial performance of our operations
excluding factors that our hotels and other operations cannot control.
By excluding depreciation and amortization expense, which can vary from
hotel to hotel based on historical cost and other factors unrelated to
the hotels' financial performance, EBITDA measures the financial
performance of our hotels without regard to their historical cost. For
all of these reasons, we believe that EBITDA provides us and investors
with information that is relevant and useful in evaluating our
business.
|
|
|
However,
because EBITDA excludes depreciation and amortization, it does not
measure the capital we require to maintain or preserve our long-lived
assets. In addition, because EBITDA does not reflect interest expense,
it does not take into account the total amount of interest we pay on
outstanding debt nor does it show trends in interest costs due to
changes in our borrowings or changes in interest rates. EBITDA, as
defined by us, may not be comparable to EBITDA as reported by other
companies that do not define EBITDA exactly as we define the term.
Because we use EBITDA to evaluate our financial performance, we
reconcile all EBITDA measures to net income attributable to Red Lion
Hotels Corporation, which is the most comparable financial measure
calculated and presented in accordance with GAAP. EBITDA does not
represent cash provided by operating activities determined in
accordance with GAAP, and should not be considered as an alternative to
operating income or net income attributable to Red Lion Hotels
Corporation determined in accordance with GAAP as an indicator of
performance or as an alternative to cash flows from operating
activities as an indicator of liquidity.
|
|
Red
Lion Hotels Corporation
|
|
Disclosure
of Special Items
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
During
the fourth quarter of 2012, the Company recorded $0.4 million and $0.2
million in pre-tax impairment charges in continuing operations related
to its properties held for sale in Pendleton, Oregon and Missoula,
Montana, respectively. During the third quarter of 2012, the Company
recorded a $1.9 million pre-tax impairment charge in continuing
operations related to its property held for sale in Pendleton, Oregon.
During the second quarter of 2012, the Company recorded a $0.3 million
pre-tax impairment charge in continuing operations related to its sold
property in Helena, Montana. During the first quarter of 2012, the
Company recorded $3.9 million, $2.0 million and $0.7 million, in
pre-tax impairment charges in continuing operations related to its sold
Denver Southeast property, its sold property in Helena, Montana and its
held for sale property in Missoula, Montana, respectively. During the
fourth quarter of 2011, the Company recorded $4.6 million, $0.4
million, $1.7 million in pre-tax impairment charges in continuing
operations related to its sold Denver Southeast property and its held
for sale property in Missoula, Montana, and its property in Vancouver,
Washington, respectively. During the third quarter of 2011, the Company
recorded a $2.1 million pre-tax impairment charge in continuing
operations related to its sold property in Helena, Montana. In
addition, during the second quarter 2011, the Company recorded a $33.5
million gain from the sale of its hotel in Seattle, Washington. As a
result, the operations as presented in the accompanying financial
statements for the three months and year ended December 31, 2012
compared to 2011 do not reflect a meaningful comparison between
periods. The following table represents a reconciliation of EBITDA from
continuing operations before special items to EBITDA from continuing
operations per the consolidated statement of operations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
months ended December 31,
|
|
Year
ended December 31,
|
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
($
in thousands)
|
EBITDA
from continuing operations (1)
|
|
EBITDA
from continuing operations (1)
|
|
EBITDA
from continuing operations (1)
|
|
EBITDA
from continuing operations (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount
before special items
|
$ (124)
|
|
$ 1,430
|
|
$
15,001
|
|
$
15,745
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special
items:
|
|
|
|
|
|
|
|
|
|
|
Asset
impairment charges (2)
|
(644)
|
|
(6,715)
|
|
(9,440)
|
|
(8,871)
|
|
|
|
Goodwill
impairment charge (2)
|
|
|
(14,236)
|
|
|
|
(14,236)
|
|
|
|
Gain
on asset disposal (3)
|
-
|
|
-
|
|
-
|
|
33,549
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
from continuing operations
|
$ (768)
|
|
$
(19,521)
|
|
$ 5,561
|
|
$
26,187
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Amount
defined on the preceding table "Reconciliation of EBITDA to Net Income
Attributable to Red Lion Hotels Corporation".
|
|
|
|
(2)
|
Amounts
as included in the line items "Asset impairment" and "Goodwill
impairment" on the accompanying consolidated statements of operations.
|
|
(3)
|
Amount
as included in the line item "Loss (gain) on asset dispositions, net"
on the accompanying consolidated statements of operations.
|
|
