Red Lion Hotels Corporation
Consolidated Statements of Operations
(unaudited)
($ in thousands, except footnotes)
Three months ended March 31,
2008 2007
$ Change % Change
Revenue:
Hotels
$35,235 $34,381
$854 2.5%
Franchise and management
335 789
(454) -57.5%
Entertainment
3,211 3,347
(136) -4.1%
Other
778 787
(9) -1.1%
Total revenues
39,559 39,304
255 0.6%
Operating expenses:
Hotels
30,000 29,974
26 0.1%
Franchise and management
73 263
(190) -72.2%
Entertainment
3,060 2,855
205 7.2%
Other
538 483
55 11.4%
Depreciation and amortization
4,394 4,020
374 9.3%
Hotel facility and land lease
1,786 1,714
72 4.2%
Gain on asset dispositions, net
(107) (190)
83 43.7%
Undistributed corporate
expenses
5,082 1,450
3,632 250.5%
Total expenses
44,826 40,569
4,257 10.5%
Operating loss
(5,267) (1,265) (4,002)
-316.4%
Other income (expense):
Interest expense
(2,279) (2,242)
(37) -1.7%
Minority interest in
partnerships, net
17 12
5 41.7%
Other income, net
412 309
103 33.3%
Loss from continuing operations
before income taxes
(7,117) (3,186) (3,931)
-123.4%
Income tax benefit
(2,607) (1,206) (1,401)
-116.2%
Net loss from continuing
operations
(4,510) (1,980) (2,530)
-127.8%
Discontinued operations:
Loss from operations of
discontinued business units,
net of income tax benefit of
$8
- (14)
14 100.0%
Net loss on disposal of
discontinued business units,
net of income tax benefit of
$6
- (12)
12 -100.0%
Loss from discontinued operations
- (26)
26 100.0%
Net loss
$(4,510) $(2,006) $(2,504) -124.8%
Loss per share - basic and
diluted: (1)
Net loss from continuing
operations
$(0.25) $(0.10) $(0.15)
Loss from discontinued
operations
- -
-
Net loss
$(0.25) $(0.10) $(0.15)
Weighted average shares - basic
and diluted
18,231 19,148
EBITDA (2)
$(444) $3,034 $(3,478)
-114.6%
EBITDA as a percentage of
revenues (3)
-1.1% 7.6%
EBITDA from continuing
operations (2)
$(444) $3,076 $(3,520)
-114.4%
EBITDA from continuing
operations (3) as a percentage
of revenues
-1.1% 7.8%
(1) For the three months ended March 31, 2008 and
2007, all of the
1,324,540 and 1,159,080
options to purchase common shares outstanding
as of those dates, respectively,
were considered anti-dilutive due to
the loss for the period.
Likewise, all of the 44,837 and 142,663
convertible operating
partnership ("OP") units, respectively, were
considered anti-dilutive,
as were the 41,938 and 25,803 units of
unissued restricted stock
outstanding.
(2) The definition of "EBITDA" and how that measure
relates to net loss is
discussed further in this
release under Non-GAAP Financial Measures.
(3) The calculation of EBITDA as a percentage of
revenues is based upon
total operating revenues,
from both continuing and discontinued
operations, of $39,559,000
and $39,887,000 for the three months ended
March 31, 2008 and 2007,
respectively. EBITDA from continuing
operations as a percentage
of revenues is based upon the operating
results of continuing
business units as presented in the financial
statements.
Red Lion Hotels Corporation
Consolidated Balance Sheets
(unaudited)
($ in thousands, except share data)
March 31, December 31,
2008
2007
Assets:
Current assets:
Cash and cash equivalents
$11,628 $15,044
Restricted cash
4,113
4,439
Accounts receivable, net
10,257
10,330
Inventories
1,320
1,416
Prepaid expenses and other
5,511
3,352
Total current assets
32,829
34,581
Property and equipment, net
259,436 260,574
Goodwill
28,042
28,042
Intangible assets, net
11,452
11,582
Other assets, net
8,250
9,730
Total assets
$340,009 $344,509
Liabilities:
Current liabilities:
Accounts payable
$4,054
$4,189
Accrued payroll and related
benefits
5,666
6,166
Accrued interest payable
353
356
Advance deposits
859
345
Other accrued expenses
10,727
10,419
Long-term debt, due within one
year
5,660
5,547
Total current liabilities
27,319
27,022
Long-term debt, due after one year
77,021
77,673
Deferred income
8,996
9,169
Deferred income taxes
17,119
17,294
Minority interest in partnerships
14
31
Debentures due Red Lion Hotels
Capital Trust
30,825
30,825
Total liabilities
161,294 162,014
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;
18,228,271 and 18,312,756 shares
issued and outstanding
182
183
Additional paid-in capital, common
stock
141,284 140,553
Retained earnings
37,249
41,759
Total stockholders' equity
178,715 182,495
Total liabilities and
stockholders' equity
$340,009 $344,509
Red Lion Hotels Corporation
Consolidated Statement of Cash Flows
(unaudited)
($ in thousands)
Three months ended March 31,
2008
2007
Operating activities:
Net loss
$(4,510) $(2,006)
Adjustments to reconcile
net loss to net cash
used in operating activities:
Depreciation and
amortization 4,394
4,028
Gain on disposition
of property,
equipment
and other assets, net (107)
(190)
Deferred income
tax provision (175)
(12)
Minority interest
in
partnerships
(17)
(12)
Equity in investments
9
9
Imputed interest
expense
55
52
Compensation expense
related
to stock issuance
1,581
217
Provision for (collection
of)
doubtful accounts
(121)
(13)
Change in current
assets and
liabilities:
Restricted cash
326
(1,296)
Accounts receivable
203
(414)
Inventories
96
30
Prepaid expenses and other (2,159)
(726)
Accounts payable
(135)
(1,242)
Accrued payroll and related
benefits
(500)
(1,705)
Accrued interest payable
(3)
(58)
Other accrued expenses and
advance deposits
766
1,396
Net cash used in
operating
activities
(297)
(1,942)
Investing activities:
Purchases of property and equipment
(2,968)
(5,160)
Non-current restricted cash for
sublease tenant improvements
805
-
Proceeds from short-term liquid
investments
-
7,635
Advances to Red Lion Hotels Capital
Trust
(27)
(17)
Other, net
516
(41)
Net cash (used in) provided
by
investing activities
(1,674)
2,417
Financing activities:
Repayment of long-term debt
(594)
(572)
Common Stock Redeemed
(922)
-
Proceeds from issuance of common
stock under employee stock
purchase plan
71
88
Proceeds from stock option
exercises
-
379
Net cash used in financing
activities
(1,445)
(105)
Net cash in discontinued
operations
-
(32)
Change in cash and cash
equivalents:
Net (decrease) increase in cash
and cash equivalents
(3,416)
338
Cash and cash equivalents at
beginning of period
15,044
13,262
Cash and cash equivalents at
end of period
$11,628
$13,600
Red
Lion Hotels Corporation
Additional Hotel Statistics
(unaudited)
System-wide Hotels as of March 31,
2008
Meeting Space
Hotels Rooms (sq. ft.)
Red Lion Owned and
Leased Hotels
30 5,456 279,684
Other Leased Hotel (1)
1 310 5,000
Red Lion Franchised
Hotels (6)
22 3,500 156,956
Total
53 9,266 441,640
Total Red Lion Hotels
52 8,956 436,640
Comparable Hotel
Statistics (2)
Three months ended
Three months ended
March 31, 2008
March 31, 2007
Average
Average
Occupancy RevPAR
Occupancy RevPAR
(3) ADR (4) (5)
(3) ADR (4) (5)
Owned and Leased
Hotels
52.8% $85.00 $44.91 52.5%
$82.27 $43.23
Franchised Hotels
47.9% $73.51 $35.22 55.7%
$70.92 39.50
Total System Wide
51.2% $81.44 $41.69 53.6%
$78.35 41.99
Change from prior
comparative period:
Owned and Leased
Hotels
0.3 3.3% 3.9%
Franchised Hotels
(7.8) 3.7% -10.8%
Total System Wide
(2.4) 3.9% -0.7%
(1) Represents a hotel acquired in the fourth quarter
of 2007 that is
being repositioned as
a Red Lion, although until that time has been
flagged as an independent.
(2) Includes all hotels owned, leased and franchised,
presented on a
comparable basis for hotel
statistics.
(3) Average occupancy represents total paid rooms
divided by total
available rooms.
Total available rooms represents the number of rooms
available multiplied by
the number of days in the reported period and
includes rooms taken out
of service for renovation.
(4) Average daily rate ("ADR") represents total
room revenues divided by
the total number of paid
rooms occupied by hotel guests.
(5) Revenue per available room ("RevPAR") represents
total room and
related revenues divided
by total available rooms.
(6) In April 2008, franchise agreements with three
hotels expired and were
not renewed. In
addition, we terminated a franchise agreement another
hotel for non-performance.
This reduces the total number of
franchised hotels in the
system to 18, and the total hotels in the
system to 49 as of the
date of this release.
Red Lion Hotels Corporation
Reconciliation of EBITDA to Net Loss
(unaudited)
($ in thousands)
The following is a reconciliation of EBITDA
and EBITDA from continuing
operations to net loss for the periods
presented:
Three months ended March 31,
2008 2007
EBITDA from continuing operations
$(444) $3,076
Income tax benefit - continuing
operations
2,607 1,206
Interest expense - continuing
operations
(2,279) (2,242)
Depreciation and amortization
-
continuing operations
(4,394) (4,020)
Net loss from continuing operations
(4,510) (1,980)
Loss from discontinued operations
- (26)
Net loss
$(4,510) $(2,006)
EBITDA
$(444) $3,034
Income tax benefit
2,607 1,220
Interest expense
(2,279) (2,231)
Depreciation and amortization
(4,394) (4,029)
Net loss
$(4,510) $(2,006)
NON-GAAP FINANCIAL MEASURES
EBITDA is defined as net income (loss) 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 (loss) and
other financial performance measures provided in accordance with generally
accepted accounting principles in the United States ("GAAP"). EBITDA from
continuing operations is calculated in the same manner, but excludes the
operating results of business units identified as discontinued under GAAP.
We use EBITDA to measure the financial performance of
our owned and leased hotels 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 (loss), which is the most comparable financial measure calculated
and presented in accordance with GAAP. EBITDA does not represent cash generated
from operating activities determined in accordance with GAAP, and should
not be considered as an alternative to operating income (loss) or net income
(loss) 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.
Disclosure of Special Items
(unaudited)
As previously announced, the Company's
former President and Chief
Executive Officer retired in February
2008. In connection with the
retirement agreement, the Company
recorded an expense of $3.7 million in
separation costs during the first
quarter of 2008. As a result, the
operations as presented in the accompanying
financial statements do not
reflect a meaningful comparison of
continuing operations between
periods. The follow table represents
a reconciliation of certain
earnings measures from continuing
operations before special items to
loss from continuing operations after
special items.
Three months ended March Three months ended March
31, 2008
31, 2007
($ in thousands
except per share
Diluted
Diluted
data)
Net Loss EBITDA EPS Net Loss
EBITDA EPS
from from from
from from from
Contin- Contin- Contin- Contin- Contin- Contin-
uing uing uing
uing uing uing
Operat- Operat- Operat- Operat- Operat- Operat-
ions ions ions
ions ions ions
Amount before special
item
$(2,153) $3,210 $(0.12) $(1,980) $3,076 $(0.10)
Special items:
Separation
costs (1)
(3,654) (3,654) (0.20) -
- -
Income tax
expense of
special item
(2)
1,297 - 0.07
- -
-
Amount per
consolidated
statement of
operations
$(4,510) $(444) $(0.25) $(1,980) $3,076 $(0.10)
Change from the
comparative period:
Amount before special
item
-8.7% 4.4% -20.7%
Amount per
consolidated
statement of
operations
-127.8% -114.4% 150.0%
(1) Amount as included in the line item "Undistributed
corporate expenses"
on the accompanying consolidated
statements of operations.
(2) Represents taxes on special items at the Company's
expected
incremental tax rate as
applicable. |