Westcoast Hospitality (NYSE:WEH)
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Red Lion Hotels Deliver Strong RevPAR Growth, Driving 115%
Increase in Net Income; WestCoast Hospitality Corporation Announces Second
Quarter Financial Results
SPOKANE, Wash., July 28 /PRNewswire-FirstCall/ -- WestCoast Hospitality
Corporation (NYSE:WEH) today announced results for the quarter ended June 30,
2005.
Hotel Statistics
In the second 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 8.5% over the 2004 second quarter level to $47.64.
This increase was generated by a 2.9 point increase in average occupancy, to
64.7%, and a 3.7% increase in ADR (average daily rate), to $73.68. For hotels
carrying the Red Lion brand, RevPAR increased 9.0% in the quarter, to $47.46,
driven by a 3.2 point increase in average occupancy, to 65.5%, and a 3.8%
increase in ADR, to $72.51.
Consolidated Company Performance
Total revenue from continuing operations in the second quarter was $44.2
million, up 6.5% from the comparable period in 2004. Revenues in the hotels
division were higher as a result of increased RevPAR. Revenues for the
entertainment division increased 42.6% to $2.6 million. Revenues for the real
estate division were down 6.6% to $1.2 million.
For the second quarter of 2005, the net income was $1.7 million or $0.13 per
share compared to net income of $0.8 million or $0.06 per share in the second
quarter of 2004, an increase of 115%. This net income increase was primarily
driven by positive flow-through from hotel operations. EBITDA (earnings before
interest, taxes, depreciation and amortization) from continuing operations was
up 10.8% in the quarter to $7.5 million. For the year to date, net loss
applicable to common shareholders was $1.3 million ($0.11 per share), compared
to a net loss of $1.9 million ($0.15 per share) for the same period in 2004.
Arthur M. Coffey, President and Chief Executive Officer, said, "The Red Lion
brand is building momentum that is being reflected in our financial results.
With our ongoing investments in our Red Lion hotels, the improved lodging
market and our implementation of major brand initiatives, including our
redesigned redlion.com website, we are optimistic that the company will
continue to drive improved financial results. We intend to take advantage of
this momentum to increase our development and franchising of Red Lion hotels."
Recent Events
On May 19, 2005, the shareholders of the company elected Ryland P. "Skip" Davis
as a new director to replace Stephen Blank. Mr. Davis has been Chief Executive
Officer of Providence Health Care since 1998 and Chief Executive Officer of
Sacred Heart Medical Center in Spokane since 1996. He brings a wealth of
strategic management experience to the company's board of directors.
On July 22, 2005, the company sold a 50% interest in its Kalispell Center
retail and hotel complex located in Kalispell, Montana to GVD Commercial
Properties, Inc., which has substantial experience in shopping center and
retail development. G & B Real Estate Services, a division of WestCoast
Hospitality Corporation, will continue to manage the retail component of
Kalispell Center. WestCoast will lease back the hotel at Kalispell Center,
which will be re-named the Red Lion Kalispell Hotel after undergoing a complete
renovation and expansion.
In the last week, the company completed the sale of the Red Lion Inn in
Aberdeen, Washington and the Red Lion ParkCenter Suites in Boise, Idaho. The
aggregate sales price for these two transactions was approximately $15.8
million. The company currently has five additional hotel properties and one
office building subject to purchase agreements. It anticipates closing sales
on as many as five of these properties in the third quarter. Proceeds of these
sales will be used to reinvest in the company's Red Lion hotels.
Hotels Division Performance
For the second quarter of 2005, the company reported hotel revenue from
continuing operations of $39.4 million, up $2.1 million from the previous
comparable quarter. Direct expenses increased $1.1 million to $30.4 million.
RevPAR from continuing operations at owned and leased hotels was up 9.7% from
the second quarter of 2004, generated by a 3.4 point increase in occupancy and
a 4.1% increase in ADR. John Taffin, Executive Vice President, Hotel
Operations, said, "Red Lion hotels continue to deliver increases in occupancy
and ADR that are providing strong profit growth for our hotels. As we invest
an additional $40 million in renovating our Red Lion hotels, we look forward to
the positive impacts we expect these upgrades will bring. Guest reaction to
renovations in the hotels has been very positive." The company has also
completed installation of the new MICROS Systems, Inc. Opera property
management system in 15 of its Red Lion hotels. This system shares a single
database with the company's central reservations system, allowing for better
management of rates and availability. "These property management systems and
our redesigned redlion.com website further enhance our ability to manage
reservations generated through electronic channels," said Mr. Taffin. He
added, "The new tools position us very well to take advantage of the explosion
of internet travel bookings."
About WestCoast Hospitality Corporation
WestCoast Hospitality 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) and WestCoast(R)
brands. In addition, through its entertainment division, which includes its
TicketsWest.com, Inc. subsidiary, it engages in event ticket distribution and
promotes and presents a variety of entertainment productions. G&B Real Estate
Services, its real estate division, engages in traditional real estate-related
services, including developing, managing and brokering sales and leases of
commercial and multi-unit residential properties.
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: Anupam Narayan, Executive Vice President, Chief Financial Officer of
WestCoast Hospitality Corporation, +1-509-459-6100, or .
WestCoast Hospitality Corporation
Consolidated Statements of Operations
(unaudited)
($ in thousands, except footnotes)
Three months ended June 30,
2005 2004 $ Change % Change
Revenue:
Hotels $39,423 $37,364 $2,059 5.5%
Franchise and
management 607 712 (105) -14.7%
Entertainment 2,613 1,833 780 42.6%
Real estate 1,229 1,316 (87) -6.6%
Other 348 313 35 11.2%
Total revenues 44,220 41,538 2,682 6.5%
Operating expenses:
Hotels 30,437 29,323 1,114 3.8%
Franchise and
management 165 257 (92) -35.8%
Entertainment 2,321 1,847 474 25.7%
Real estate 890 777 113 14.5%
Other 246 206 40 19.4%
Depreciation and
amortization 2,881 2,600 281 10.8%
Hotel facility and
land lease 1,745 1,798 (53) -2.9%
Gain on asset
dispositions, net (119) (208) 89 42.8%
Undistributed
corporate expenses 1,051 848 203 23.9%
Total expenses 39,617 37,448 2,169 5.8%
Operating income 4,603 4,090 513 12.5%
Other income (expense):
Interest expense (3,598) (3,657) 59 1.6%
Minority interest in
partnerships, net (34) (8) (26) -325.0%
Other income
(expense), net 90 124 (34) -27.4%
Income from continuing
operations before
income taxes 1,061 549 512 93.3%
Income tax expense 279 135 144 106.7%
Net income from
continuing operations 782 414 368 88.9%
Discontinued operations:
Income from operations
of discontinued
business units, net of
income tax expense
of $577 and $211 951 391 560 143.2%
Net income and income
applicable to common
shareholders $1,733 $805 $928 115.3%
EBITDA(1) $9,479 $8,449 $1,030 12.2%
EBITDA as a percentage
of revenues(2) 18.4% 17.3%
EBITDA from continuing
operations(1) $7,540 $6,806 $734 10.8%
EBITDA from continuing
operations(2)
as a percentage
of revenues 17.1% 16.4%
(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 $51,601,000 and $48,936,000 for the three months ended
June 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.
WestCoast Hospitality Corporation
Earnings Per Share and Hotel Statistics
(unaudited)
(shares in thousands)
Three months ended June 30,
2005 2004
Earnings per common share:
Basic
Income applicable to common shareholders
before discontinued operations(1) $0.06 $0.03
Income from discontinued operations 0.07 0.03
Income applicable to common shareholders $0.13 $0.06
Diluted
Income applicable to common shareholders
before discontinued operations(1) $0.06 $0.03
Income on discontinued operations 0.07 0.03
Income applicable to common shareholders $0.13 $0.06
Weighted average shares - basic 13,092 13,046
Weighted average shares - diluted(2) 13,416 13,335
Key Comparable
Hotel Statistics: Three months ended June 30,
2005 2004 $ Change % Change
Combined (owned, leased,
managed and franchised)(3)
Average occupancy(4) 64.7% 61.8%
ADR(5) $73.68 $71.06 $2.62 3.7%
RevPAR(6) $47.64 $43.90 $3.74 8.5%
(1) The net income used to calculate the net earnings per share
applicable to common shareholders before discontinued operations
includes all dividends on the retired cumulative preferred shares if
applicable for the period presented.
(2) For the three months ended June 30, 2005, 38,644 outstanding options
to purchase common shares were considered dilutive, of the 1,024,019
options outstanding as of that date. For the three months ended
June 30, 2004, 3,596 outstanding options to purchase common shares
were considered dilutive, of the 675,445 options outstanding as of
that date. In addition, the 286,161 convertible operating partnership
("OP") units were considered dilutive and are therefore included in
the calculation of diluted weighted average shares for both those
same periods.
(3) Includes all hotels owned, leased, managed and franchised for greater
than one year by WestCoast Hospitality Corporation.
No adjustment has been made for hotels classified as discontinued
operations.
(4) Average occupancy represents total paid rooms divided by total
available rooms. Total available rooms represents the number of
rooms available multiplied by the number of days in the reported
period.
(5) Average daily rate ("ADR") represents total room revenues divided by
the total number of paid rooms occupied by hotel guests.
(6) Revenue per available room ("RevPAR") represents total room and
related revenues divided by total available rooms.
WestCoast Hospitality Corporation
Consolidated Statements of Operations
(unaudited)
($ in thousands, except footnotes)
Six months ended June 30,
2005 2004 $ Change % Change
Revenue:
Hotels $69,765 $67,431 $2,334 3.5%
Franchise and
management 1,418 1,321 97 7.3%
Entertainment 5,418 5,418 -- 0.0%
Real estate 2,458 2,937 (479) -16.3%
Other 633 575 58 10.1%
Total revenues 79,692 77,682 2,010 2.6%
Operating expenses:
Hotels 58,086 56,502 1,584 2.8%
Franchise and
management 262 463 (201) -43.4%
Entertainment 4,789 4,649 140 3.0%
Real estate 1,728 1,705 23 1.3%
Other 462 412 50 12.1%
Depreciation and
amortization 5,720 5,076 644 12.7%
Hotel facility and
land lease 3,485 3,778 (293) -7.8%
Gain on asset
dispositions, net (307) (396) 89 22.5%
Undistributed
corporate expenses 2,003 1,633 370 22.7%
Total expenses 76,228 73,822 2,406 3.3%
Operating income 3,464 3,860 (396) -10.3%
Other income (expense):
Interest expense (7,199) (6,503) (696) -10.7%
Minority interest
in partnerships, net 15 43 (28) -65.1%
Other income, net 86 254 (168) -66.1%
Loss from continuing
operations before
income taxes (3,634) (2,346) (1,288) -54.9%
Income tax benefit (1,416) (960) (456) -47.5%
Net loss from
continuing operations (2,218) (1,386) (832) -60.0%
Discontinued operations:
Income (loss) from
operations of
discontinued business
units, net of income
tax expense (benefit)
of $456 and ($85) 828 (157) 985 627.4%
Net loss (1,390) (1,543) 153 9.9%
Preferred stock dividend -- (377) 377 100.0%
Loss applicable to
common shareholders $(1,390) $(1,920) $530 27.6%
EBITDA(1) $11,391 $11,073 $318 2.9%
EBITDA as a percentage
of revenues(2) 12.3% 12.2%
EBITDA from continuing
operations(1) $9,285 $9,233 $52 0.6%
EBITDA from continuing
operations (2) as a
percentage of revenues 11.7% 11.9%
(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 $92,238,000 and $90,566,000 for the six months ended
June 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.
WestCoast Hospitality Corporation
Earnings Per Share and Hotel Statistics
(unaudited)
(shares in thousands)
Six months ended June 30,
2005 2004
Earnings per common share:
Basic
Loss applicable to common shareholders
before discontinued operations(1) $(0.17) $(0.14)
Income (loss) on discontinued operations 0.06 (0.01)
Loss applicable to common shareholders $(0.11) $(0.15)
Diluted
Loss applicable to common shareholders
before discontinued operations(1) $(0.17) $(0.14)
Income (loss) on discontinued operations 0.06 (0.01)
Loss applicable to common shareholders $(0.11) $(0.15)
Weighted average shares - basic 13,085 13,035
Weighted average shares - diluted(2) 13,085 13,035
Key Comparable
Hotel Statistics: Six months ended June 30,
2005 2004 $ Change % Change
Combined (owned,
leased, managed
and franchised)(3)
Average occupancy(4) 58.4% 56.2%
ADR(5) $71.37 $70.00 $1.37 2.0%
RevPAR(6) $41.70 $39.36 $2.34 5.9%
(1) The net income or loss used to calculate the net earnings or loss per
share applicable to common shareholders before discontinued
operations includes all dividends on the retired cumulative preferred
shares if applicable for the period presented.
(2) For the six months ended June 30, 2005 and 2004, all 1,024,019 and
675,455 options outstanding to purchase common stock were
anti-dilutive and are therefore not included in the calculation of
earnings per common share. In addition, the 286,161 convertible
operating partnership ("OP") units were anti-dilutive and are
therefore not included in the calculation of diluted weighted average
shares for those same periods.
(3) Includes all hotels owned, leased, managed and franchised for greater
than one year by WestCoast Hospitality Corporation.
No adjustment has been made for hotels classified as discontinued
operations.
(4) Average occupancy represents total paid rooms divided by total
available rooms. Total available rooms represents the number of
rooms available multiplied by the number of days in the reported
period.
(5) Average daily rate ("ADR") represents total room revenues divided by
the total number of paid rooms occupied by hotel guests.
(6) Revenue per available room ("RevPAR") represents total room and
related revenues divided by total available rooms.
WestCoast Hospitality Corporation
Consolidated Balance Sheets
(unaudited)
($ in thousands, except share data)
June 30, December 31,
2005 2004
Assets:
Current assets:
Cash and cash equivalents $7,756 $9,577
Restricted cash 3,468 4,092
Accounts receivable, net 9,093 8,464
Inventories 1,779 1,831
Prepaid expenses and other 5,806 3,286
Assets held for sale:
Assets of discontinued operations 62,452 61,757
Other assets held for sale 1,599 1,599
Total current assets 91,953 90,606
Property and equipment, net 226,048 223,132
Goodwill 28,042 28,042
Intangible assets, net 13,248 13,641
Other assets, net 8,507 9,191
Total assets $367,798 $364,612
Liabilities:
Current liabilities:
Accounts payable $6,031 $4,841
Accrued payroll and related benefits 5,154 4,597
Accrued interest payable 671 700
Advance deposits 546 188
Other accrued expenses 11,499 7,322
Long-term debt, due within one year 7,181 7,455
Liabilities of discontinued operations 22,508 22,879
Total current liabilities 53,590 47,982
Long-term debt, due after one year 124,393 125,756
Deferred income 8,147 8,524
Deferred income taxes 16,592 15,992
Minority interest in partnerships 2,533 2,548
Debentures due WestCoast Hospitality
Capital Trust 47,423 47,423
Total liabilities 252,678 248,225
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; 13,106,670
and 13,064,626 shares issued and outstanding 131 131
Additional paid-in capital, common stock 84,590 84,467
Retained earnings 30,399 31,789
Total stockholders' equity 115,120 116,387
Total liabilities and
stockholders' equity $367,798 $364,612
WestCoast Hospitality Corporation
Consolidated Statement of Cash Flows
(unaudited)
($ in thousands)
Six months ended June 30,
2005 2004
Operating activities:
Net loss $(1,390) $(1,543)
Adjustments to reconcile net loss
to net cash provided by operating activities:
Depreciation and amortization 5,788 6,291
(Gain) on disposition of property,
equipment and other assets (214) (396)
Write-off of deferred loan fees 5 --
Deferred income tax provision 600 500
Minority interest in partnerships (15) (120)
Equity in investments 30 (8)
Compensation expense related to stock issuance 9 --
Provision for (recovery of) doubtful accounts 73 (2)
Change in current assets and liabilities:
Restricted cash 612 432
Accounts receivable (1,084) (1,423)
Inventories 83 105
Prepaid expenses and other (2,788) (3,736)
Accounts payable 1,134 (824)
Accrued payroll and related benefits 559 664
Accrued interest payable (33) 19
Other accrued expenses and advance deposits 4,778 3,908
Net cash provided by operating activities 8,147 3,867
Investing activities:
Purchases of property and equipment (8,276) (15,094)
Proceeds from disposition of
property and equipment 30 40
Proceeds from disposition of investment -- 94
Investment in WestCoast Hospitality Capital Trust -- (1,403)
Advances to WestCoast Hospitality Capital Trust (20) (2,065)
Distributions from equity investee 117 449
Proceeds from collections under note receivable 480 1,718
Other, net 92 (184)
Net cash used in investing activities (7,577) (16,445)
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 3,835 83
Repayment of long-term debt (6,027) (2,189)
Proceeds from issuance of common
stock under employee stock purchase plan 67 50
Preferred stock dividend payments -- (1,011)
Proceeds from option exercises 46 140
Additions to deferred financing costs (279) (47)
Net cash provided by (used in)
financing activities (2,358) 15,037
Net cash in discontinued operations (33) (231)
Change in cash and cash equivalents:
Net increase (decrease) in cash
and cash equivalents (1,821) 2,228
Cash and cash equivalents at
beginning of period 9,577 7,884
Cash and cash equivalents at end of period $7,756 $ 10,112
WestCoast Hospitality Corporation
Additional Hotel Statistics
(unaudited)
System Hotels as of June 30, 2005
Meeting Space
Hotels Rooms (sq. ft.)
Owned or Leased Hotels:(1)
Red Lion Hotels 38 6,637 312,528
WestCoast Hotels 3 692 40,500
Other Brands 1 153 3,945
42 7,482 356,973
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 22 3,665 153,101
WestCoast Hotels 1 257 15,000
23 3,922 168,101
Total 68 11,880 568,108
Comparable Hotel Statistics(2)
Three months ended Three months ended
June 30, 2005 June 30, 2004
Average Average
Occupancy(3) ADR(4) RevPAR(5)Occupancy(3)ADR(4) RevPAR(5)
Owned or
Leased Hotels:
Continuing
Operations 67.1% $74.32 $49.87 63.7% $71.37 $45.46
Discontinued
Operations 53.9% 61.67 33.23 53.5% 59.61 31.88
64.1% 71.91 46.10 61.4% 69.05 42.38
Combined System
Wide (6)
64.7% $73.68 $47.64 61.8% $71.06 $43.90
Red Lion Hotels
(Owned, Leased,
Managed and
Franchised) (7)
65.5% $72.51 $47.46 62.3% $69.88 $43.54
Six months ended Six months ended
June 30, 2005 June 30, 2004
Average Average
Occupancy(3) ADR(4) RevPAR(5)Occupancy(3)ADR(4) RevPAR(5)
Owned or
Leased Hotels:
Continuing
Operations 60.6% $71.22 $43.16 57.5% $69.81 $40.14
Discontinued
Operations 45.7% 59.57 27.23 45.9% 57.19 26.23
57.2% 69.11 39.55 54.9% 67.42 36.99
Combined System
Wide (6)
58.4% $71.37 $41.70 56.2% $70.00 $39.36
Red Lion Hotels
(Owned, Leased,
Managed and
Franchised) (7)
59.4% $70.14 $41.67 57.0% $69.00 $39.30
(1) Statistics include 11 hotels previously identified as discontinued
business units, aggregating 1,694 rooms and 57,645 square feet of
meeting space.
(2) Includes all hotels owned, leased, managed and franchised for greater
than one year by WestCoast Hospitality Corporation.
(3) Average occupancy represents total paid rooms divided by total
available rooms. Total available rooms represents the number of
rooms available multiplied by the number of days in the reported
period.
(4) Average daily rate ("ADR") represents total room revenues divided by
the total number of paid rooms occupied by hotel guests.
(5) Revenue per available room ("RevPAR") represents total room and
related revenues divided by total available rooms.
(6) Includes all hotels owned, leased, managed and franchised for greater
than one year by WestCoast Hospitality Corporation.
No adjustment has been made for hotels classified as discontinued
operations.
(7) Includes all hotels owned, leased, managed and franchised for greater
than one year operated under the Red Lion brand name.
No adjustment has been made for hotels classified as discontinued
operations.
WestCoast Hospitality Corporation
Reconciliation of EBITDA to Net Income
(unaudited)
($ in thousands)
The following is a reconciliation of EBITDA and EBITDA from continuing
operations to net income (loss) for the periods presented:
Three months ended Six months ended
June 30, June 30,
2005 2004 2005 2004
EBITDA from
continuing operations $7,540 $6,806 $9,285 $9,233
Income tax (expense)
benefit - continuing
operations (279) (135) 1,416 960
Interest expense -
continuing
operations (3,598) (3,657) (7,199) (6,503)
Depreciation and
amortization -
continuing operations (2,881) (2,600) (5,720) (5,076)
Net income (loss) from
continuing operations 782 414 (2,218) (1,386)
Income (loss) on
discontinued operations 951 391 828 (157)
Net income (loss) $1,733 $805 $(1,390) $(1,543)
EBITDA $9,479 $8,449 $11,391 $11,073
Income tax (expense)
benefit (856) (346) 960 1,045
Interest expense (3,975) (4,083) (7,953) (7,370)
Depreciation and
amortization (2,915) (3,215) (5,788) (6,291)
Net income (loss) $1,733 $805 $(1,390) $(1,543)
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: WestCoast Hospitality Corporation
CONTACT: Anupam Narayan, Executive Vice President, Chief Financial
Officer of WestCoast Hospitality Corporation, +1-509-459-6100, or
Web site: http://www.westcoasthotels.com/
Web site: http://www.wchc.com/
Web site: http://www.redlion.com/
Web site: http://www.ticketswest.com/
Web site: http://www.g-b.com/