Red
Lion Reports Second Quarter 2009 Results
SPOKANE, Wash., Aug. 5, 2009 - Red Lion Hotels Corporation
today announced its results for the second quarter and six-month period
ended June 30, 2009. Summary results for the three and six-month
periods follow:
($ in thousands, except per share)
Three months ended Six months ended June 30, June 30, 2009 2008 % change 2009 2008 % change ---- ---- -------- ---- ---- --------
Total revenue, as reported $44,934 $49,812 -9.8% $79,269 $89,370 -11.3% -----------------------------------------------------------------------
Results before 2008 Special Item: (1)
EBITDA $10,132 $10,431 -2.9% $12,378 $13,642 -9.3%
Net income (loss) $1,769 $ 2,301 -23.1% $(1,109) $147 NM
Earnings (loss) per share - diluted $0.10 $0.12 -16.7% $(0.06) $0.01 NM -----------------------------------------------------------------------
Results as reported:
EBITDA $10,132 $10,431 -2.9% $12,378 $9,988 23.9%
Net income (loss) $1,769 $2,301 -23.1% $(1,109) $(2,210) 49.8%
Earnings (loss) per share - diluted $0.10 $0.12 -16.7% $(0.06) $(0.12) 50.0% -----------------------------------------------------------------------
(1) Excludes $3.7 million of cash and non-cash separation costs incurred in the first quarter of 2008 related to the retirement of the company's former President and CEO, net of its impact on income taxes. A schedule called "Disclosure of Special Items" is included with this release.
In addition, key hotel operating metrics, on a comparable
basis, and
reported hotel operating margins for the three and six-month periods
ended June 30, 2009 and June 30, 2008 are highlighted below for owned
and leased hotels:
Three months ended Six months ended June 30, June 30, 2009 2008 % change 2009 2008 % change ---- ---- -------- ---- ---- -------- RevPAR (revenue per available room) $52.92 $60.57 -12.6% $45.37 $52.73 -14.0%
ADR (average daily rate) $85.73 $89.57 -4.3% $83.73 $87.31 -4.1%
Occupancy 61.7% 67.6% -590 bp 54.2% 60.4% -620 bp
Hotel Direct Operating Margin 30.1% 28.4% +170 bp 23.3% 22.6% +70 bp
Commenting on the second quarter results, President and Chief
Executive Officer Anupam Narayan said, "In the face of another quarter
of economic weakness and a difficult lodging market, I am pleased that
the Red Lion team continued to rise to the challenge. Even with lower
revenues in the second quarter, our team delivered about the same level
of EBITDA as last year. We were able to do this by maintaining our
disciplined focus on revenue management, sales and cost containment."
Narayan continued, "From a balance sheet standpoint, we have
no
near-term debt maturities and expect to continue to fund cash needs
through operating cash flow and cash on hand. Given the challenging
outlook and limited visibility for the industry, we will continue to
focus on managing our costs, but at the same time will be aggressive
with sales and marketing initiatives to drive revenues."
Second Quarter Results
Red Lion's total revenue during the second quarter of 2009 was
$44.9
million, compared to $49.8 million for the prior-year period. Revenue
from hotels was $41.0 million, down 12.3% from the second quarter of
2008, due primarily to the weak economic and industry environment.
RevPAR for owned and leased hotels on a comparable basis for
the
second quarter of 2009 was down 12.6%, due to a 590 basis point
decrease in occupancy and a 4.3% decrease in ADR. Despite the lower
revenues, hotel direct operating margin for the quarter was 30.1%, an
increase of 170 basis points from the prior-year period. System-wide
RevPAR (which includes franchised hotels) on a comparable basis for the
quarter decreased 12.4%, caused by a 620 basis point decrease in
occupancy and a 3.2% decrease in ADR.
Franchise and management revenue was $0.7 million, an increase
of
$0.3 million from the prior-year period due primarily to the receipt of
a settlement received in connection with the termination of a franchise
that occurred in the second quarter of 2008. Entertainment revenue was
$2.6 million, an increase of $0.7 million compared to the same quarter
in 2008.
EBITDA for the second quarter of 2009 was $10.1 million,
compared to
$10.4 million for the second quarter of 2008, a 2.9% decline on a
year-over-year basis. The company's net income was $1.8 million,
compared to net income of $2.3 million for the prior-year period.
Diluted earnings per share were $0.10, compared to diluted earnings per
share of $0.12 for the second quarter of 2008.
First Half 2009 Results
Red Lion's total revenue for the six months ended June 30,
2009 was
$79.3 million, compared to $89.4 million in the same period in 2008.
Reported revenue from hotels was $71.8 million, down 12.4% from the
prior-year period, primarily due to the weak economic and industry
environment. Hotel direct operating profit decreased 9.5% to $16.7
million, but direct operating margin increased 70 basis points to 23.3%.
RevPAR for owned and leased hotels on a comparable basis for
the
first six months of 2009 was down 14.0%, due to a 620 basis point
decrease in occupancy and a 4.1% decrease in ADR. System-wide, RevPAR
on a comparable basis decreased 12.4% from the prior-year period, with
a 570 basis point decrease in occupancy and a 3.1% decrease in ADR.
Franchise and management revenue was $1.0 million, up $0.2
million
from the prior-year period, due to the receipt of a settlement payment
in connection with the termination of a franchise that occurred in the
second quarter of 2008. Entertainment revenue was $5.1 million,
comparable to the prior-year period.
EBITDA for the six-month period ending June 30, 2009 was $12.4
million, compared to $13.6 million for the prior-year period before a
one-time expense for separation costs. The company's net loss was $1.1
million, compared to net income of $0.1 million for the prior-year
period before the one-time expense for separation costs. Loss per share
for the six-month period ending June 30, 2009 was $0.06, compared to
diluted earnings of $0.01 per share for the prior-year period before
the one-time expense for separation costs.
Liquidity and Balance Sheet
As of June 30, 2009, the company had approximately $6.8
million in
cash and cash equivalents, and outstanding debt of $142.7 million.
During the quarter, the company paid down $6 million of its variable
rate credit facility. The debt balance is comprised of $30.0 million
outstanding under the company's variable rate credit facility, $13.5
million under a variable rate note with a bank, $30.8 million of
publicly traded unsecured debt in the form of deeply subordinated trust
preferred securities and a total of $68.4 million in thirteen
fixed-rate non-recourse notes collateralized by individual properties.
The company's first term debt maturity is in September 2011 in the
aggregate amount of $22.2 million. Only the credit facility, which also
matures in September 2011, and the variable rate bank note have
restrictive financial covenants, with which the company is in
compliance as of June 30, 2009.
Capital expenditures for the first six months of 2009 totaled
$12.5
million, including $5.4 million and $2.3 million spent on renovations
at our Anaheim and Denver Southeast properties, respectively. We expect
to spend another $1.0 million on additional renovations at Denver
Southeast in the second half of 2009 and another $4.5 million on normal
capital expenditures at other properties. Combined, the total expected
capital expenditures for 2009 will now be approximately $18 million.
Given current economic conditions, the company continues to closely
monitor capital spending.
Outlook for 2009
With the challenging economic environment and, based on
currently
available information, the company is adjusting its broad guidance for
2009 as follows:
-- 2009 RevPAR for company owned and leased hotels is expected to decline 10% to 14% from 2008 -- 2009 direct hotel operating margin is expected to range from down 50 basis points to up 100 basis points
-- EBITDA is expected to be $28 to $32 million, before any special items
Conference Call Information
The company will hold a conference call at 11:00 a.m. Pacific
Time
(2:00 p.m. Eastern Time) on August 6, 2009, to discuss the results for
interested investors, analysts and portfolio managers. Management on
the call will include President and CEO Anupam Narayan and Chief
Financial Officer Anthony Dombrowik.
To participate in the conference call, please dial the
following
number ten minutes prior to the scheduled time: (888) 639-6205.
International callers should dial (703) 925-2608.
This conference call will also be webcast live at http://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, download and install any
necessary audio software. For those unable to participate during the
live broadcast, a replay will be available at 1:30 p.m. PDT on August
6, 2009, through September 6, 2009 at (800) 475-6701 or (320) 365-3844
(International) access code - 108702. 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 ownership, operation and franchising of
upscale and midscale hotels under its Red Lion brand. As of June 30,
2009, the RLH hotel network was comprised of 46 hotels located in nine
states and one Canadian province, with 8,803 rooms and 436,355 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, 2008 and in other documents filed by the company
with the Securities and Exchange Commission.
Contact: Red Lion Hotels Corporation Julie Langenheim, Investor Relations Manager (509) 777-6322
Investor Relations: ICR Inc. William Schmitt (203) 682-8200
Red Lion Hotels Corporation Consolidated Statements of Operations (unaudited) ($ in thousands, except footnotes)
Three months ended June 30, 2009 2008 $ Change % Change ---- ---- -------- --------
Revenue: Hotels $40,956 $46,693 $(5,737) -12.3% Franchise 733 445 288 64.7% Entertainment 2,584 1,895 689 36.4% Other 661 779 (118) -15.1% --- --- ---- -----
Total revenues 44,934 49,812 (4,878) -9.8% ------ ------ ------ ----
Operating expenses: Hotels 28,633 33,452 (4,819) -14.4% Franchise 8 73 (65) -89.0% Entertainment 2,273 2,114 159 7.5% Other 544 527 17 3.2% Depreciation and amortization 5,306 4,632 674 14.6% Hotel facility and land lease 1,834 1,860 (26) -1.4% Gain on asset dispositions, net (45) (33) 12 36.4% Undistributed corporate expenses 1,721 1,882 (161) -8.6% ----- ----- ---- ----
Total expenses 40,274 44,507 (4,233) -9.5% ------ ------ ------ ----
Operating income 4,660 5,305 (645) -12.2%
Other income (expense): Interest expense (2,182) (2,356) 174 7.4% Other income, net 172 499 (327) -65.5% --- --- ---- -----
Income before income taxes 2,650 3,448 (798) -23.1%
Income tax expense 876 1,142 (266) -23.3% --- ----- ---- -----
Net income 1,774 2,306 (532) -23.1% ----- ----- ---- -----
Net income attributable to noncontrolling interest (5) (5) - - --- --- --- ---
Net income attributable to Red Lion Hotels Corporation 1,769 2,301 (532) -23.1% ===== ===== ==== =====
Earnings per share attributable to Red Lion Hotels Corporation: Basic $0.10 $0.13 Diluted $0.10 $0.12
Weighted average shares - basic (1) 18,095 18,237 Weighted average shares - diluted (1) 18,140 18,531
EBITDA (2) $10,133 $10,431 $(298) -2.9% EBITDA as a percentage of revenues 22.6% 20.9%
(1) For the three months ended June 30, 2009, none of the 1,213,691 options to purchase common shares outstanding as of that date were considered dilutive, as the grant date stock price of all options outstanding were below the Company's stock price at June 30, 2009. Similarly, none of the 246,396 restricted stock units outstanding were considered dilutive during the second quarter of 2009. For the three months ended June 30, 2008, 233,446 of the 1,433,048 options to purchase common shares outstanding as of that date were considered dilutive. Of the 55,715 restricted stock units outstanding, 16,040 shares were considered dilutive during the second quarter of 2008. For both comparative periods, all of the 44,837 convertible operating partnership units, respectively, were considered dilutive.
(2) The definition of "EBITDA" and how that measure relates to net income attributable to Red Lion Hotels Corporation is discussed further in this release under Non-GAAP Financial Measures.
Red Lion Hotels Corporation Consolidated Statements of Operations (unaudited) ($ in thousands, except footnotes)
Six months ended June 30, 2009 2008 $ Change % Change ---- ---- -------- --------
Revenue: Hotels $71,760 $81,928 $(10,168) -12.4% Franchise 1,008 780 228 29.2% Entertainment 5,107 5,106 1 0.0% Other 1,394 1,556 (162) -10.4% ----- ----- ---- -----
Total revenues 79,269 89,370 (10,101) -11.3% ------ ------ ------- -----
Operating expenses: Hotels 55,036 63,452 (8,416) -13.3% Franchise 144 145 (1) -0.7% Entertainment 4,388 5,174 (786) -15.2% Other 1,081 1,065 16 1.5% Depreciation and amortization 10,263 9,028 1,235 13.7% Hotel facility and land lease 3,650 3,646 4 0.1% Gain on asset dispositions, net (47) (140) (93) -66.4% Undistributed corporate expenses 2,987 6,963 (3,976) -57.1% ----- ----- ------ -----
Total expenses 77,502 89,333 (11,831) -13.2% ------ ------ ------- -----
Operating income 1,767 37 1,730 nm
Other income (expense): Interest expense (4,029) (4,635) 606 13.1% Other income, net 348 911 (563) -61.8% --- --- ---- -----
Loss before income taxes (1,914) (3,687) 1,773 48.1%
Income tax benefit (805) (1,465) (660) -45.1% ---- ------ ---- -----
Net loss (1,109) (2,222) 1,113 50.1% ------ ------ ----- ----
Net loss attributable to noncontrolling interest - 12 12 nm --- --- --- ---
Net loss attributable to Red Lion Hotels Corporation $(1,109) $(2,210) 1,101 49.8% ======= ======= ===== ====
Loss per share attributable to Red Lion Hotels Corporation: Basic $(0.06) $(0.12) Diluted $(0.06) $(0.12)
Weighted average shares - basic (1) 18,054 18,234 Weighted average shares - diluted (1) 18,054 18,234
EBITDA (2) $12,378 $9,988 $2,390 23.9% EBITDA as a percentage of revenues 15.6% 11.2%
(1) For the six months ended June 30, 2009 and 2008, all of the 1,213,691 and 1,433,048 options to purchase common shares, respectively, and the 246,396 and 55,715 restricted stock units outstanding as of those dates were considered anti-dilutive due to the loss for the period. In addition, all of the 44,837 convertible operating partnership units outstanding during both periods were anti-dilutive.
(2) The definition of "EBITDA" and how that measure relates to net loss attributable to Red Lion Hotels Corporation is discussed further in this release under Non-GAAP Financial Measures.
Red Lion Hotels Corporation Consolidated Balance Sheets (unaudited) ($ in thousands, except share data)
June 30, December 31, 2009 2008 ---- ---- Assets: Current assets: Cash and cash equivalents $6,779 $18,222 Restricted cash 2,666 3,890 Accounts receivable, net 10,265 11,337 Inventories 1,315 1,375 Prepaid expenses and other 3,334 2,574 Total current assets 24,359 37,398 ------ ------
Property and equipment, net 300,919 298,496 Goodwill 28,042 28,042 Intangible assets, net 10,289 10,376 Other assets, net 7,140 6,460 ----- -----
Total assets $370,749 $380,772 ======== ========
Liabilities: Current liabilities: Accounts payable $6,527 $10,990 Accrued payroll and related benefits 4,362 4,925 Accrued interest payable 284 314 Advance deposits 1,395 398 Other accrued expenses 10,091 7,756 Long-term debt, due within one year 3,088 3,008 Total current liabilities 25,747 27,391 ------ ------
Revolving credit facility 30,000 36,000 Long-term debt, due after one year 78,752 80,323 Deferred income 9,018 8,476 Deferred income taxes 15,405 16,366 Debentures due Red Lion Hotels Capital Trust 30,825 30,825 ------ ------ Total liabilities 189,747 199,381 ------- -------
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; 18,118,106 and 17,977,205 shares issued and outstanding 181 180 Additional paid-in capital, common stock 141,856 141,137 Retained earnings 38,946 40,055 ------ ------ Total Red Lion Hotels Corporation stockholders' equity 180,983 181,372
Noncontrolling interest 19 19 --- --- Total equity 181,002 181,391 ------- -------
Total liabilities and stockholders' equity $370,749 $380,772 ======== ========
Red Lion Hotels Corporation Consolidated Statement of Cash Flows (unaudited) ($ in thousands)
Six months ended June 30, 2009 2008 ---- ---- Operating activities: Net loss $(1,109) $(2,222) Adjustments to reconcile net loss attributable to Red Lion Hotels Corporation to net cash provided by operating activities: Depreciation and amortization 10,263 9,028 Gain on disposition of property, equipment and other assets, net (47) (140) Deferred income tax (benefit) provision (961) 176 Equity in investments 31 28 Imputed interest expense - 111 Stock based compensation expense 680 1,905 Provision for (collection of) doubtful accounts 64 (16) Change in current assets and liabilities: Restricted cash 1,224 1,173 Accounts receivable 1,008 (1,609) Inventories 60 99 Prepaid expenses and other (760) (1,573) Accounts payable (4,463) 1,437 Accrued payroll and related benefits (563) 1,210 Accrued interest payable (30) (11) Deferred lease income 900 - Other accrued expenses and advance deposits 3,208 (344) ----- ---- Net cash provided by operating activities 9,505 9,252 ----- -----
Investing activities: Purchases of property and equipment (12,479) (35,418) Non-current restricted cash for sublease tenant improvements, net (576) 1,727 Proceeds from disposition of property and equipment 8 5 Advances to Red Lion Hotels Capital Trust (27) (27) Other, net (423) 647 ---- ---
Net cash used in investing activities (13,497) (33,066) ------- -------
Financing activities: Borrowings on revolving credit facility - 23,000 Repayment of revolving credit facility (6,000) (1,000) Repayment of long-term debt (1,491) (4,433) Common stock redeemed (11) (926) Proceeds from issuance of common stock under employee stock purchase plan 51 71 --- ---
Net cash (used in) provided by financing activities (7,451) 16,712 ------ ------
Change in cash and cash equivalents: Net decrease in cash and cash equivalents (11,443) (7,102) Cash and cash equivalents at beginning of period 18,222 15,044 ------ ------
Cash and cash equivalents at end of period $6,779 $7,942 ====== ======
Red Lion Hotels Corporation Additional Hotel Statistics (unaudited)
System-wide Hotels as of June 30, 2009 -------------------------------------- Meeting Space Hotels Rooms (sq. ft.) ------ ----- --------- Red Lion Owned and Leased Hotels 32 6,243 309,684 Red Lion Franchised Hotels (1) 14 2,560 126,671 --- ----- ------- Total Red Lion Hotels 46 8,803 436,355 === ===== =======
Comparable Hotel Statistics (2) -------------- Three months ended Three months ended June 30, 2009 June 30, 2008 ------------------- ------------------- Average Average Occupancy ADR RevPAR Occupancy ADR RevPAR (3) (4) (5) (3) (4) (5) ---------- ---- ------- ---------- ---- ------- Owned and Leased Hotels 61.7% $85.73 $52.92 67.6% $89.57 $60.57 Franchised Hotels 54.5% $78.48 $42.76 61.5% $78.78 $48.46 ---- ------ ------ ---- ------ ------ Total System Wide 59.6% $83.74 $49.87 65.8% $86.54 $56.93 ==== ====== ====== ==== ====== ======
Change from prior comparative period: Owned and Leased Hotels (5.9) -4.3% -12.6% Franchised Hotels (7.0) -0.4% -11.8% ---- ---- ----- Total System Wide (6.2) -3.2% -12.4% ==== ==== =====
Six months ended Six months ended June 30, 2009 June 30, 2008 ----------------- ----------------- Average Average Occupancy ADR RevPAR Occupancy ADR RevPAR (3) (4) (5) (3) (4) (5) ---------- ---- ------- ---------- ---- ------- Owned and Leased Hotels 54.2% $83.73 $45.37 60.4% $87.31 $52.73 Franchised Hotels 51.9% $76.89 $39.93 56.4% $76.86 $43.33 ---- ------ ------ ---- ------ ------ Total System Wide 53.5% $81.81 $43.80 59.2% $84.43 $50.01 ==== ====== ====== ==== ====== ======
Change from prior comparative period: Owned and Leased Hotels (6.2) -4.1% -14.0% Franchised Hotels (4.5) 0.0% -7.8% ---- --- ---- Total System Wide (5.7) -3.1% -12.4% ==== ==== =====
(1) In July 2009, the 132-room Red Lion Baton Rouge franchise agreement will terminate and not be renewed.
(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.
Red Lion Hotels Corporation Disclosure of Special Items (unaudited)
In the first quarter of 2008, the Company recorded an expense of $3.7 million in separation costs from the retirement of the Company's former President and Chief Executive Officer. As a result, the operations as presented in the accompanying financial statements for the six months ended June 30, 2009 compared to 2008 do not reflect a meaningful comparison between periods. The follow table represents a reconciliation of certain earnings measures before special items to income (loss) after special items.
Six months ended Six months ended June 30, 2009 June 30, 2008
($ in thousands Net except per share Net Diluted Income Diluted data) Loss EBITDA EPS (Loss) EBITDA EPS ---- ------ -------- ------- ------ --------
Amount before special item $(1,109) $12,378 $(0.06) $147 $13,642 $0.01
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 $(1,109) $12,378 $(0.06) $(2,210) $9,988 $(0.12) ======= ======= ====== ======= ====== ======
Change from the comparative period: Amount before special item nm -9.3% nm Amount per consolidated statement of operations -49.8% 23.9% -48.8%
(1) Amount as included in the line item "Undistributed corporate expenses" on the accompanying consolidated statements of operations.
(2) Represents taxes on special items at the Company's expected incremental tax rate as applicable.
Red Lion Hotels Corporation Reconciliation of EBITDA to Net Income (Loss) Attributable to Red Lion Hotels Corporation (unaudited) ($ in thousands)
The following is a reconciliation of EBITDA to net income (loss) attributable to Red Lion Hotels Corporation for the periods presented:
Three months ended Six months ended June 30, June 30, 2009 2008 2009 2008 ---- ---- ---- ----
EBITDA $10,133 $10,431 $12,378 $9,988 Income tax (expense) benefit (876) (1,142) 805 1,465 Interest expense (2,182) (2,356) (4,029) (4,635) Depreciation and amortization (5,306) (4,632) (10,263) (9,028) ------ ------ ------- ------ Net income (loss) $1,769 $2,301 $(1,109) $(2,210) ====== ====== ======= =======
NON-GAAP FINANCIAL MEASURES --------------------------- EBITDA is defined as net income (loss) 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 (loss) 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 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) 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 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) 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.
Source: Red Lion Hotels
Corporation
|