to Hurricane Damage, the Holiday Inn Melbourne
and the Crowne Plaza West Palm Beach
|ATLANTA, Ga., November 8, 2004 — Lodgian, Inc. (AMEX: LGN), one of
the nation’s largest independent owners and operators of full-service hotels,
today provided additional information on the financial effects experienced
by Lodgian from the four hurricanes that struck Florida and South Carolina
in the 2004 third quarter.
Eight of the company’s hotels sustained damage. Two hotels remain closed for major repairs and are expected to reopen in the 2005 second quarter: the 295-room Holiday Inn Melbourne, Fla., near Cape Canaveral, in which Lodgian has a 50 percent ownership interest; and the 219-room Crowne Plaza West Palm Beach, Fla.
Two hotels in Pensacola, Fla.—the 122-room Holiday Inn Express and the 152-room Holiday Inn—as well as the 228-room Holiday Inn Winter Haven, Fla., sustained considerable damage but remained open. Repairs are underway and will continue for several months. However, the company does not anticipate significant disruption from the remaining repairs, and only a small number of rooms will be out of service.
Three properties in South Carolina sustained less damage and remained fully operational following the hurricanes: the 133-room Holiday Inn Myrtle Beach; the 202-room Holiday Inn Oceanfront, Hilton Head; and the 197-room Clarion hotel at the Charleston airport. The repair work is effectively complete at those properties.
During the third quarter, Lodgian incurred $1.2 million in clean-up and repair expenses, wrote off damaged assets with a net book value of $3.8 million and recorded $3.0 million as an insurance receivable to cover a portion of these repairs and asset replacements, net of insurance deductibles. As a result, the company believes that the net impact of the hurricane damage results in a $2.0 million reduction in 2004 third quarter results of operations and EBITDA.
In addition, the company estimates that hurricane closures and evacuations resulted in an approximately $0.7 million reduction in previously projected 2004 third quarter results of operations and EBITDA.
“We have comprehensive insurance coverage on our hotels, and we expect a significant portion of our lost income will be covered by our business interruption insurance,” said W. Thomas Parrington, president and chief executive officer. He noted, however, that due to the complexity of these claims, business interruption insurance proceeds will not be recorded until final settlement is made with the company’s insurance carriers.
Parrington added that the company will continue to report hurricane clean-up and repair expenses and additional asset write-offs in the 2004 fourth quarter. “We believe that substantially all of these additional expenses will be offset by insurance proceeds,” he said. “Until the restoration is complete, we won’t have a final number, but our best estimate now is that the hurricane damage will result in an approximate $0.3 million to $0.5 million impact on fourth quarter results of operations and EBITDA.”
The impact of the two hotels that will remain closed is estimated to reduce projected fourth quarter results of operations and EBITDA by approximately $0.7 million, which is expected to be substantially covered by business interruption insurance.
Parrington said the corresponding business interruption insurance proceeds will not be recorded until the final settlement is made.
“We are making excellent progress in our repair efforts and are aggressively booking business for when the hotels reopen,” he said. Lodgian will report its third quarter operating results on November 11.
Earnings before interest, taxes, depreciation and amortization (“EBITDA”) is a non-GAAP measure and should not be used as a substitute for measures such as net income (loss), cash flows from operating activities, or other measures computed in accordance with GAAP. The company uses EBITDA to measure its performance and to assist in the assessment of hotel property values. EBITDA is also a widely used industry measure which Lodgian believes provides pertinent information to investors and is an additional indicator of the company’s operating performance.
Lodgian is one of the largest independent owners and operators of full-service hotels in the United States. The company currently manages a portfolio of 87 hotels with 16,366 rooms located in 30 states and Canada. Of the company’s 87-hotel portfolio, 74 are under the InterContinental Hotels Group (Crowne Plaza, Holiday Inn, Holiday Inn Select and Holiday Inn Express) and Marriott brands (Courtyard by Marriott, Fairfield Inn and Residence Inns), and 10 are affiliated with four other nationally recognized hospitality brands. Three hotels are independent, unbranded properties.
This press release includes forward-looking statements related to Lodgian’s operations that are based on management’s current expectations, estimates and projections.
Vice President, Finance & Investor Relations
|Also See:||Lodgian Sells West Palm Beach Office Building, Retains Ownership of Connecting Crowne Plaza Hotel / December 2003|
|Lodgian Sales Three Holiday Inns for Aggregate Price of $9.2 million / February 2004|