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Execution of Key Strategic Elements Positions Red Lion Brand for Future Growth
SPOKANE, Wash., Oct. 27 /PRNewswire-FirstCall/ -- Red Lion Hotels Corporation (NYSE:RLH) today announced results for the third quarter and the nine months ended September 30, 2005.
Key Third Quarter Results
-- RevPAR at system wide hotels increased by 5.5%, to $55.90
-- Revenues from continuing operations increased to $47.2 million
-- Net income from continuing operations increased to $2.8 million
-- Net income applicable to common shareholders increased to $6.8 million
-- EBITDA from continuing operations increased to $10.8 million
-- Completed the sale of six hotel properties
-- Changed the company name to Red Lion Hotels Corporation
-- Launched a new brand image and growth initiatives
"This was a very active and positive quarter for our company. We demonstrated our commitment to the Red Lion brand by changing our company name, introducing our new brand image and announcing our plan to expand to 100 markets. We completed the sale of six non-core hotel properties under our asset sale program and our capital reinvestment program is on track. Renovations progressed at three of our company-owned hotels and we are pleased with the gains in ADR achieved at these hotels. The results were in line with our expectations and validate our renovation strategy," said Mr. Arthur M. Coffey, President and CEO of Red Lion Hotels Corporation.
Financial Results
Total revenues from continuing operations during the quarter were $47.2 million, up 0.3% from the same quarter of 2004. Revenues in the hotel segment were up 1.7% to $43.0 million. This increase was due to a 4.2% increase in RevPAR, which was partially offset by a decline in banquet revenue from reduced group business. Franchise and management revenues increased 15.9% to $0.8 million. Revenues in the entertainment segment were down $0.7 million or 27.8%, due to the fact that no shows were presented during the quarter, compared to four shows in the same quarter last year. Revenues in the real estate segment grew modestly to $1.3 million.
EBITDA from continuing operations was $10.8 million, up 4.6% from the same quarter of 2004, reflecting a slightly improved profit margin. Net income from continuing operations was $2.8 million, or $0.22 per fully diluted share, up 6.1% from the same quarter last year. Net income applicable to common shareholders was $6.8 million, or $0.51 per fully diluted share, up 93.2% from the same quarter last year, and includes a $2.7 million net after-tax gain from the sale of non-core hotel properties.
Total revenues from continuing operations for the nine months ended September 30, 2005 were $126.9 million, up 1.7% from the same period last year. EBITDA from continuing operations increased 2.7%, to $20.1 million. Net income from continuing operations was $0.6 million, or $0.05 per fully diluted share, down 53.2%% from the same period last year. Net income applicable to common shareholders was $5.4 million, or $0.41 per fully diluted share, up 240% from the same period last year, and includes a $2.7 million net after-tax gain from the sale of non-core hotel properties.
Hotel Operations
In the third quarter of 2005, RevPAR (revenue per available room) for comparable system-wide hotels (hotels owned, leased, managed and franchised for at least one year) increased by 5.5% over the same quarter of the previous year, to $55.90. This increase was primarily the result of a 4.7% increase in ADR (average daily rate) to $78.92, and a 0.6 point increase in average occupancy.
RevPAR from continuing operations at owned and leased hotels increased by 4.2%, driven by a 4.7% increase in ADR and offset by a 0.3 point decline in average occupancy. Average occupancy has not been adjusted to reflect out-of-service rooms related to the renovation program. Hotel revenues from continuing operations increased 1.7%, to $43.0 million. This was due to the 4.2% increase in RevPAR, and partially offset by the previously discussed decline in banquet revenue associated with reduced group business. Hotel operating expenses increased 1.6%, to $31.4 million. Hotel gross margin was unchanged at 27.0%.
"This marks the seventh consecutive quarter of RevPAR growth at Red Lion Hotels. We continued to improve our hotel metrics despite the potential for disruptions related to our renovation program. This demonstrates that our plan to minimize disruption and displacement at locations undergoing renovation is proceeding successfully," commented John Taffin, Executive Vice President, Hotel Operations. "We also continued to focus on elevating our service standards. Our newly expanded service training program is designed to reinforce the high standards of personal connection and service that represent the 'Red Lion Way.'"
The company's new service training program will be implemented across all hotels in the Red Lion network, beginning with the newly renovated hotels. This first phase of the program is designed to capitalize on the synergies between the physical enhancements made to the hotels and the company's increased focus on connecting with guests on a personal level. The program will be instituted at all owned, managed and franchised hotels.
Capital Reinvestment Program and Renovation Update
In the quarter, the company continued renovations at the Red Lion Hotel Seattle Airport in Washington, Red Lion Hotel Boise Downtowner in Idaho and the Red Lion Hotel Kelso in Washington. Third quarter results from these three hotels showed significant growth in ADR that contributed to their aggregate RevPAR growth, despite lower occupancy rates caused by renovated rooms being out of service. Renovations at these hotels are scheduled to be completed during the fourth quarter of 2005.
In October, renovations commenced at additional hotels and by year-end, 17 hotels will either be undergoing or have completed the renovation process. The company expects rate increases at these hotels, followed by growth in average occupancy as the upgrades are completed and all of the rooms are made available. The full scope of this $40 million capital reinvestment plan involves the upgrade of 31 company-owned Red Lion Hotels by mid-2006, giving the company a strong network of upgraded hotels as it enters the high travel season in the summer of 2006.
Recent Events
In the quarter, the company completed the sales of six hotel properties generating aggregate gross proceeds of $25.4 million. In addition, the company has non-contingent sale agreements in place for another hotel and the Crescent Court commercial complex, which are expected to close in the fourth quarter and generate gross proceeds of $24.2 million. The company also has contingent agreements for the sale of two other hotels. The company is selling these non-core assets to finance its $40 million capital reinvestment program. There are two remaining hotel properties that the company continues to market under this program.
In July, the company completed the sale of a fifty percent interest in the Kalispell Center retail and hotel complex in Kalispell, Montana. The purchaser was GVD Commercial Properties, Inc., an experienced developer that will help drive a multi-phase expansion and renovation of the retail property and allow the company to focus on its core hotel business.
Also in July 2005, Red Lion launched its newly designed website, http://www.redlion.com/, another key element in the company's plan to enhance its infrastructure. Among the site's many industry-leading tools and functions are reference rates that give a guest an idea of costs even if the guest does not know travel dates, the ability to compare Red Lion's rates against rates on other travel sites, online access to a live reservation agent and online redemption of the company's proprietary "Only4Me Web Deals."
After focusing for the past several years on developing a modern, scalable and efficient infrastructure, the company unveiled its new and revitalized brand image in September 2005. To demonstrate its commitment to the Red Lion brand, the company also changed its name from WestCoast Hospitality Corporation (NYSE:WEH) to Red Lion Hotels Corporation (NYSE:RLH). In addition, the company adopted a new corporate logo which communicates the strength, vitality and aggressiveness that represent today's Red Lion. The new logo is available for viewing at http://www.redlion.com/graphics.
Also in September 2005, the company announced its growth strategy that leverages its brand equity in the Western U.S. to expand the Red Lion brand to more than 100 markets over the next five years. The initial focus of the expansion program will be in major cities in California, Arizona, Colorado, Minnesota and Texas. At the end of September 2005, the company highlighted the revitalized Red Lion brand and launched its new franchise initiative at The Lodging Conference in Phoenix, Arizona.
"This is an exciting time for our company. During the quarter, we continued to execute on our plan to rejuvenate the Red Lion brand and implement our growth strategy. We are laying the foundation that will support our growth, and we will continue to implement our strategies to expand the Red Lion brand," Coffey concluded.
Conference Call
The company will host a conference call at 11:00 a.m. PDT (2:00 p.m. EDT) on Thursday, October 27, 2005 to discuss earnings for the third quarter of 2005. To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: 888-639-6205. International callers should dial 703-925-2608. There is no pass code required for this call. This conference call will also be broadcast live over the Internet and can be accessed by all interested parties at http://www.redlion.com/, in the Investor Relations portion 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 shortly after the call on the Red Lion website for 90 days.
About Red Lion Hotels Corporation
Red Lion Hotels Corporation is a hospitality and leisure company primarily engaged in the ownership, management, development and franchising of upper mid-scale, full service hotels under its Red Lion(R) brand. The RLH hotel network is comprised of over 66 hotels located in 11 states and one Canadian province, with more than 11,600 rooms and 564,000 square feet of meeting space. The company also operates an entertainment and event ticket distribution business and a real estate business that develops, manages and brokers sales and leases of commercial real estate. The company is headquartered in Spokane, WA. For more information, please visit our website at http://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 and managing and leasing properties owned by third parties; 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 2004 fiscal year 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
or
CCG Investor Relations
Crocker Coulson, President
310-231-8600 ext. 103
Red Lion Hotels Corporation
Consolidated Statements of Operations
(unaudited)
($ in thousands, except footnotes)
Three months ended September 30,
2005 2004 $ Change % Change
Revenue:
Hotels $43,021 $42,295 $726 1.7%
Franchise and
management 810 699 111 15.9%
Entertainment 1,828 2,533 (705) -27.8%
Real estate 1,258 1,234 24 1.9%
Other 298 296 2 0.7%
Total revenues 47,215 47,057 158 0.3%
Operating expenses:
Hotels 31,417 30,920 497 1.6%
Franchise and management 145 360 (215) -59.7%
Entertainment 1,607 2,349 (742) -31.6%
Real estate 961 799 162 20.3%
Other 248 195 53 27.2%
Depreciation and
amortization 2,950 2,657 293 11.0%
Hotel facility and
land lease 1,718 1,728 (10) -0.6%
Gain on asset
dispositions, net (550) (133) (417) -313.5%
Undistributed
corporate expenses 1,058 672 386 57.4%
Total expenses 39,554 39,547 7 0.0%
Operating income 7,661 7,510 151 2.0%
Other income (expense):
Interest expense (3,607) (3,661) 54 1.5%
Minority interest in
partnerships, net (168) (55) (113) -205.5%
Other income, net 374 226 148 65.5%
Income from continuing
operations before
income taxes 4,260 4,020 240 6.0%
Income tax expense 1,449 1,371 78 5.7%
Net income from
continuing operations 2,811 2,649 162 6.1%
Discontinued operations:
Income from operations
of discontinued business
units, net of income
tax expense of $685
and $457 1,245 849 396 46.6%
Net gain on disposal
of discontinued business
units, net of income
tax expense of $1,487 2,702 -- 2,702
Income from discontinued
operations 3,947 849 3,098 364.9%
Net income and income
applicable to common
shareholders $6,758 $3,498 $3,260 93.2%
EBITDA(1) $17,248 $12,690 $4,558 35.9%
EBITDA as a percentage
of revenues(2) 31.5% 22.7%
EBITDA from continuing
operations(1) $10,817 $10,338 $479 4.6%
EBITDA from continuing
operations(2)
as a percentage
of revenues 22.9% 22.0%
(1) The definition of "EBITDA" and how that measure relates to net
income is discussed further in this release under Non-GAAP Financial
Measures. EBITDA represents net income (or loss) before interest
expense, income tax benefit or expense, depreciation, and
amortization. EBITDA is not intended to represent net income as
defined by generally accepted accounting principles in the United
States and such information should not be considered as an
alternative to net income, cash flows from operations or any other
measure of performance prescribed by generally accepted accounting
principles in the United States. We utilize EBITDA because
management believes that investors find it 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 on-
going operations. EBITDA from continuing operations is calculated in
the same manner, but excludes the operating activities of business
units identified as discontinued.
(2) The calculation of EBITDA as a percentage of revenues is based upon
total operating revenues, from both continuing and discontinued
operations, of $54,819,000 and $55,987,000 for the three months
ended September 30, 2005 and 2004, respectively. EBITDA from
continuing operations as a percentage of revenues is based upon the
operating results of continuing business units as presented in the
statements.
Red Lion Hotels Corporation
Earnings Per Share and Hotel Statistics
(unaudited)
(shares in thousands)
Three months ended September 30,
2005 2004
Earnings per common share:
Basic
Income applicable to
common shareholders
before discontinued
operations(1) $0.22 $0.20
Income from
discontinued
operations 0.30 0.07
Income applicable to
common shareholders $0.52 $0.27
Diluted
Income applicable to
common shareholders
before discontinued
operations(1) $0.22 $0.20
Income on
discontinued
operations 0.29 0.06
Income applicable to
common shareholders $0.51 $0.26
Weighted average
shares - basic 13,120 13,059
Weighted average
shares - diluted(2) 13,445 13,345
Key Comparable Hotel Statistics:
Three months ended September 30,
2005 2004 $ Change % Change
Combined (owned,
leased, managed
and franchised)(3)
Average occupancy(4) 70.8% 70.3%
ADR(5) $78.92 $75.39 $3.53 4.7%
RevPAR(6) $55.90 $52.97 $2.93 5.5%
(1) The net income used to calculate the net earnings per share
applicable to common shareholders before discontinued operations
includes all dividends on the retired cumulative preferred shares if
applicable for the period presented.
(2) For the three months ended September 30, 2005, 39,113 outstanding
options to purchase common shares were considered dilutive, of the
1,018,895 options outstanding as of that date. For the three months
ended September 30, 2004, none of the 593,033 options to purchase
common shares outstanding as of that date were considered dilutive.
In addition, the 286,161 convertible operating partnership ("OP")
units were considered dilutive and are therefore included in the
calculation of diluted weighted average shares for both those same
periods.
(3) Includes all hotels owned, leased, managed and franchised for
greater than one year by Red Lion Hotels Corporation.
No adjustment has been made for hotels classified as discontinued
operations.
(4) Average occupancy represents total paid rooms divided by total
available rooms. Total available rooms represents the number of
rooms available multiplied by the number of days in the reported
period.
(5) Average daily rate ("ADR") represents total room revenues divided by
the total number of paid rooms occupied by hotel guests.
(6) Revenue per available room ("RevPAR") represents total room and
related revenues divided by total available rooms.
Red Lion Hotels Corporation
Consolidated Statements of Operations
(unaudited)
($ in thousands, except footnotes)
Nine months ended September 30,
2005 2004 $ Change % Change
Revenue:
Hotels $112,786 $109,726 $3,060 2.8%
Franchise and
management 2,228 2,021 207 10.2%
Entertainment 7,246 7,951 (705) -8.9%
Real estate 3,716 4,171 (455) -10.9%
Other 931 870 61 7.0%
Total revenues 126,907 124,739 2,168 1.7%
Operating expenses:
Hotels 89,503 87,422 2,081 2.4%
Franchise and management 408 823 (415) -50.4%
Entertainment 6,396 6,998 (602) -8.6%
Real estate 2,689 2,504 185 7.4%
Other 709 607 102 16.8%
Depreciation and
amortization 8,671 7,733 938 12.1%
Hotel facility and
land lease 5,203 5,506 (303) -5.5%
Gain on asset
dispositions, net (857) (529) (328) -62.0%
Undistributed
corporate expenses 3,061 2,305 756 32.8%
Total expenses 115,783 113,369 2,414 2.1%
Operating income 11,124 11,370 (246) -2.2%
Other income (expense):
Interest expense (10,806) (10,164) (642) -6.3%
Minority interest in
partnerships, net (153) (11) (142) 1290.9%
Other income, net 459 480 (21) -4.4%
Income from continuing
operations before
income taxes 624 1,675 (1,051) -62.7%
Income tax expense
(benefit) 33 411 (378) 92.0%
Net income from
continuing operations 591 1,264 (673) -53.2%
Discontinued operations:
Income from operations
of discontinued
business units, net of
income tax expense
of $1,137 and $372 2,073 691 1,382 -200.0%
Net gain on disposal
of discontinued
business units, net
of income tax expense
of $1,487 2,702 -- 2,702
Income from
discontinued
operations 4,775 691 4,084 591.0%
Net income 5,366 1,955 3,411 174.5%
Preferred stock dividend -- (377) 377 100.0%
Income applicable to
common shareholders $5,366 $1,578 $3,788 240.1%
EBITDA(1) $28,638 $23,764 $4,874 20.5%
EBITDA as a percentage
of revenues(2) 19.5% 16.2%
EBITDA from continuing
operations(1) $20,101 $19,572 $529 2.7%
EBITDA from continuing
operations (2) as a
percentage of revenues 15.8% 15.7%
(1) The definition of "EBITDA" and how that measure relates to net
income is discussed further in this release under Non-GAAP Financial
Measures. EBITDA represents net income (or loss) before interest
expense, income tax benefit or expense, depreciation, and
amortization. EBITDA is not intended to represent net income as
defined by generally accepted accounting principles in the United
States and such information should not be considered as an
alternative to net income, cash flows from operations or any other
measure of performance prescribed by generally accepted accounting
principles in the United States. We utilize EBITDA because
management believes that investors find it 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 on-
going operations. EBITDA from continuing operations is calculated in
the same manner, but excludes the operating activities of business
units identified as discontinued.
(2) The calculation of EBITDA as a percentage of revenues is based upon
total operating revenues, from both continuing and discontinued
operations, of $147,057,000 and $146,553,000 for the nine months
ended September 30, 2005 and 2004, respectively. EBITDA from
continuing operations as a percentage of revenues is based upon the
operating results of continuing business units as presented in the
statements.
Red Lion Hotels Corporation
Earnings Per Share and Hotel Statistics
(unaudited)
(shares in thousands)
Nine months ended September 30,
2005 2004
Earnings per common share:
Basic
Income applicable to
common shareholders
before discontinued
operations(1) $0.05 $0.07
Income on discontinued
operations 0.36 0.05
Income applicable to
common shareholders $0.41 $0.12
Diluted
Income applicable to
common shareholders
before discontinued
operations(1) $0.05 $0.07
Income on discontinued
operations 0.36 0.05
Income applicable to
common shareholders $0.41 $0.12
Weighted average
shares - basic 13,096 13,043
Weighted average
shares - diluted(2) 13,317 13,330
Key Comparable Hotel Statistics:
Nine months ended September 30,
2005 2004 $ Change % Change
Combined (owned, leased,
managed and franchised)(3)
Average occupancy(4) 62.8% 61.1%
ADR(5) $74.49 $72.36 $2.13 2.9%
RevPAR(6) $46.78 $44.19 $2.59 5.9%
(1) The net income or loss used to calculate the net earnings or loss
per share applicable to common shareholders before discontinued
operations includes all dividends on the retired cumulative
preferred shares if applicable for the period presented.
(2) For the nine months ended September 30, 2005, 28,606 outstanding
options to purchase common shares were considered dilutive, of the
1,018,895 options outstanding as of that date. For the nine months
ended September 30, 2004, 752 options of the 593,033 options to
purchase common shares outstanding as of that date were considered
dilutive. In addition, the 286,161 convertible operating
partnership ("OP") units were considered dilutive and are therefore
included in the calculation of diluted weighted average shares for
both those same periods.
(3) Includes all hotels owned, leased, managed and franchised for
greater than one year by Red Lion Hotels Corporation.
No adjustment has been made for hotels classified as discontinued
operations.
(4) Average occupancy represents total paid rooms divided by total
available rooms. Total available rooms represents the number of
rooms available multiplied by the number of days in the reported
period.
(5) Average daily rate ("ADR") represents total room revenues divided by
the total number of paid rooms occupied by hotel guests.
(6) Revenue per available room ("RevPAR") represents total room and
related revenues divided by total available rooms.
Red Lion Hotels Corporation
Consolidated Balance Sheets
(unaudited)
($ in thousands, except share data)
September 30, December 31,
2005 2004
Assets:
Current assets:
Cash and cash equivalents $27,327 $9,577
Restricted cash 8,863 4,092
Accounts receivable, net 10,053 8,464
Inventories 1,792 1,831
Prepaid expenses and other 2,147 3,286
Assets held for sale:
Assets of discontinued operations 42,567 61,757
Other assets held for sale 715 1,599
Total current assets 93,464 90,606
Property and equipment, net 229,080 223,132
Goodwill 28,042 28,042
Intangible assets, net 13,050 13,641
Other assets, net 8,727 9,191
Total assets $372,363 $364,612
Liabilities:
Current liabilities:
Accounts payable $4,128 $4,841
Accrued payroll and related benefits 5,068 4,597
Accrued interest payable 672 700
Advance deposits 250 188
Other accrued expenses 14,948 7,322
Long-term debt, due within one year 3,581 7,455
Liabilities of discontinued operations 14,058 22,879
Total current liabilities 42,705 47,982
Long-term debt, due after one year 127,145 125,756
Deferred income 7,958 8,524
Deferred income taxes 15,977 15,992
Minority interest in partnerships 9,044 2,548
Debentures due Red Lion Hotels Capital Trust 47,423 47,423
Total liabilities 250,252 248,225
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;
13,127,200 and 13,064,626 shares
issued and outstanding 131 131
Additional paid-in capital, common stock 84,825 84,467
Retained earnings 37,155 31,789
Total stockholders' equity 122,111 116,387
Total liabilities and stockholders' equity $372,363 $364,612
Red Lion Hotels Corporation
Consolidated Statement of Cash Flows
(unaudited)
($ in thousands)
Nine months ended September 30,
2005 2004
Operating activities:
Net income $5,366 $1,955
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 8,774 9,574
Gain on disposition of property,
equipment and other assets, net (752) (530)
Gain on disposition of discontinued
operations, net (4,189) --
Deferred income tax provision (15) 2,047
Minority interest in partnerships 153 (68)
Equity in investments 53 (89)
Compensation expense related to stock issuance 138 --
Provision for doubtful accounts 160 188
Change in current assets and liabilities:
Restricted cash (2,105) 320
Accounts receivable (1,920) (1,635)
Inventories 80 103
Prepaid expenses and other 1,061 (742)
Accounts payable (682) (1,443)
Accrued payroll and related benefits 261 1,185
Accrued interest payable (41) 25
Other accrued expenses and advance deposits 7,818 3,411
Net cash provided by operating activities 14,160 14,301
Investing activities:
Purchases of property and equipment (13,615) (19,069)
Proceeds from disposition of
property and equipment 4,808 198
Proceeds from disposition of
discontinued operations 14,938 --
Proceeds from disposition of investment -- 94
Investment in Red Lion Hotels Capital Trust -- (1,423)
Advances to Red Lion Hotels Capital Trust (20) (2,116)
Distributions from equity investee 117 449
Proceeds from collections under note receivable 493 1,725
Other, net 82 30
Net cash provided by (used in)
investing activities 6,803 (20,112)
Financing activities:
Proceeds from note payable to bank 50 11,000
Repayment of note payable to bank (50) (11,000)
Proceeds from debenture issuance -- 47,423
Repurchase and retirement of preferred stock -- (29,412)
Proceeds from long-term debt 3,875 83
Repayment of long-term debt (7,164) (3,335)
Proceeds from issuance of common
stock under employee stock purchase plan 151 113
Preferred stock dividend payments -- (1,011)
Proceeds from option exercises 69 140
Additions to deferred financing costs (318) (50)
Net cash provided by (used in)
financing activities (3,387) 13,951
Net cash in discontinued operations 174 (224)
Change in cash and cash equivalents:
Net increase (decrease) in cash
and cash equivalents 17,750 7,916
Cash and cash equivalents at
beginning of period 9,577 7,884
Cash and cash equivalents at end of period $27,327 $15,800
Red Lion Hotels Corporation
Additional Hotel Statistics
(unaudited)
System Hotels as of September 30, 2005
Meeting Space
Hotels Rooms (sq. ft.)
Owned or
Leased Hotels:(1)
Red Lion Hotels 33 6,089 308,828
WestCoast Hotels 3 692 40,500
36 6,781 349,328
Managed Hotels:
Red Lion Hotels 1 150 5,234
WestCoast Hotels 1 72 1,800
Other Brands 1 254 36,000
3 476 43,034
Franchised Hotels:
Red Lion Hotels 26 4,138 156,801
WestCoast Hotels 1 257 15,000
27 4,395 171,801
Total 66 11,652 564,163
Comparable Hotel Statistics(2)
Three months ended Three months ended
September 30, 2005 September 30, 2004
Average Average
Occupancy(3) ADR(4) RevPAR(5)Occupancy(3) ADR(4)RevPAR(5)
Owned or
Leased Hotels:
Continuing
Operations 73.0% $79.47 $57.99 73.3% $75.90 $55.64
Discontinued
Operations 63.8% 69.20 44.16 59.8% 65.63 39.28
71.6% 78.13 55.96 71.3% 74.64 53.24
Combined System
Wide(6) 70.8% $78.92 $55.90 70.3% $75.39 $52.97
Red Lion Hotels
(Owned, Leased,
Managed and
Franchised)(7) 70.6% $77.81 $54.96 70.8% $74.51 $52.72
Nine months ended Nine months ended
September 30, 2005 September 30, 2004
Average Average
Occupancy(3) ADR(4) RevPAR(5)Occupancy(3) ADR(4)RevPAR(5)
Owned or
Leased Hotels:
Continuing
Operations 64.8% $74.35 $48.16 62.8% $72.20 $45.35
Discontinued
Operations 48.2% 65.23 31.47 46.7% 62.95 29.39
62.3% 73.32 45.71 60.5% 71.15 43.01
Combined System
Wide(6) 62.8% $74.49 $46.78 61.1% $72.36 $44.19
Red Lion Hotels
(Owned, Leased,
Managed and
Franchised)(7) 63.6% $73.31 $46.62 61.9% $71.46 $44.26
(1) Statistics include 5 hotels identified as discontinued business
units, aggregating 993 rooms and 50,000 square feet of meeting
space.
(2) Includes all hotels owned, leased, managed and franchised for
greater than one year by Red Lion Hotels Corporation.
(3) Average occupancy represents total paid rooms divided by total
available rooms. Total available rooms represents the number of
rooms available multiplied by the number of days in the reported
period.
(4) Average daily rate ("ADR") represents total room revenues divided by
the total number of paid rooms occupied by hotel guests.
(5) Revenue per available room ("RevPAR") represents total room and
related revenues divided by total available rooms.
(6) Includes all hotels owned, leased, managed and franchised for
greater than one year by Red Lion Hotels Corporation.
No adjustment has been made for hotels classified as discontinued
operations.
(7) Includes all hotels owned, leased, managed and franchised for
greater than one year operated under the Red Lion brand name.
No adjustment has been made for hotels classified as discontinued
operations.
Red Lion Hotels Corporation
Reconciliation of EBITDA to Net Income
(unaudited)
($ in thousands)
The following is a reconciliation of EBITDA and EBITDA from continuing
operations to net income for the periods presented:
Three months ended Nine months ended
September 30, September 30,
2005 2004 2005 2004
EBITDA from
continuing operations $10,817 $10,338 $20,101 $19,572
Income tax expense -
continuing operations (1,449) (1,371) (33) (411)
Interest expense -
continuing operations (3,607) (3,661) (10,806) (10,164)
Depreciation and
amortization -
continuing operations (2,950) (2,657) (8,671) (7,733)
Net income from
continuing operations 2,811 2,649 591 1,264
Income from
discontinued operations 3,947 849 4,775 691
Net income $6,758 $3,498 $5,366 $1,955
EBITDA $17,248 $12,690 $28,638 $23,764
Income tax expense (3,621) (1,827) (2,662) (783)
Interest expense (3,884) (4,082) (11,836) (11,452)
Depreciation and
amortization (2,985) (3,283) (8,774) (9,574)
Net income $6,758 $3,498 $5,366 $1,955
NON-GAAP FINANCIAL MEASURES
EBITDA is defined as net income (or 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 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, 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 or net
income 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.
DATASOURCE: Red Lion Hotels Corporation
CONTACT: Julie Langenheim, Investor Relations Manager of Red Lion Hotels
Corporation, +1-509-777-6322, or ; or Crocker
Coulson, President of CCG Investor Relations, +1-310-231-8600, ext. 103, or
, for Red Lion Hotels Corporation
Web site: http://www.redlion.com/