Arlington Hospitality, Inc. Announces Fourth Quarter and Year-end 2002 Results; 2002 Same-Room RevPAR Up 3.7 Percent.Business Editors ARLINGTON HEIGHTS Arlington Heights, village (1990 pop. 75,460), Cook county, NE Ill., a residential suburb of Chicago; founded 1836, inc. 1887. Its manufactures include machinery, drugs and medical equipment, and metal fabrication. Arlington Park racetrack is there. , Ill.--(BUSINESS WIRE)--March 17, 2003 Arlington Arlington, county, United States Arlington, county (1990 pop. 170,936), N Va., across the Potomac River from Washington, D.C. Arlington is a residential and commercial suburb of Washington. Hospitality, Inc. (Nasdaq/NM: HOST), a leading hotel development and management company, primarily of AmeriHost Inns, today announced results for the fourth quarter and year ended December December: see month. 31, 2002. Year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 2002 Results Revenues decreased slightly to $76.5 million in 2002, including hotel sale proceeds and commissions, from $77.2 million the prior year. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. declined to $2.0 million in 2002 from $5.6 million in 2001. Net loss for full-year 2002 was $(1.7) million, or $(0.34) per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to net income of $755,000, or $0.13 per diluted share, in 2001. The net loss included: (i) an extraordinary gain of $197,000, net of tax, from an insurance settlement; (ii) certain one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. expenses of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $683,000, pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta , relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc a change in management and recruitment recruitment /re·cruit·ment/ (re-krldbomact´ment) 1. the gradual increase to a maximum in a reflex when a stimulus of unaltered intensity is prolonged. 2. of a new CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. and (iii) non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. of approximately $642,000, pre-tax, for impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. adjustments on primarily non-core (non-AmeriHost Inn branded) hotels. The net loss was due primarily to further deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in results at the company's non-core assets (non-AmeriHost Inn hotels) and margin pressure at all hotels due to higher insurance and energy costs, as well as room rate compression compression, external stress applied to an object or substance, tending to cause a decrease in volume (see pressure). Gases can be compressed easily, solids and liquids to a very small degree if at all. . Net income plus depreciation and amortization was $3.6 million in 2002, compared to $5.4 million in the 2001 like period. Net income plus deprecation dep·re·cate tr.v. de·pre·cat·ed, de·pre·cat·ing, de·pre·cates 1. To express disapproval of; deplore. 2. To belittle; depreciate. is not defined by generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ), however, the company believes it provides relevant information about its operations and is important in understanding the company's results, given its significant investment in real estate. Net income plus depreciation and amortization is defined as net income before extraordinary items, adjusted to eliminate the impact of depreciation and amortization. "The prolonged pro·long tr.v. pro·longed, pro·long·ing, pro·longs 1. To lengthen in duration; protract. 2. To lengthen in extent. sluggish economy Sluggish Economy A state in the economy in which the growth is slow, flat or declining. The term can refer to the economy as a whole or a component of the economy, such as weak housing starts. and continuing concerns with geopolitical ge·o·pol·i·tics n. (used with a sing. verb) 1. The study of the relationship among politics and geography, demography, and economics, especially with respect to the foreign policy of a nation. 2. a. events had a significant impact on the lodging Lodging or holiday accommodation is a type of accommodation. People who travel and stay away from home for more than a day need lodging mainly for sleeping. Other purposes are safety, shelter from cold and rain, having a place to store luggage and being able to take a industry throughout the year," said Jerry Jer·ry n. pl. Jer·ries Chiefly British Slang A German, especially a German soldier. [Alteration of German. H. Herman Herman only goal in life becomes winning at cards. [Russ. Opera: Tchaikovsky, Queen of Spades, Westerman, 401] See : Obsessiveness , Arlington Hospitality president and chief executive officer. "Despite one of the most difficult operating periods in hotel industry history, the company's same-room revenue per available room (RevPAR RevPAR A performance metric in the hotel industry which stands for "revenue per available room." RevPAR is typically calculated by multiplying a hotel's average daily room rate (ADR) by its occupancy rate. ) for its 66 owned AmeriHost Inn hotels rose 3.7 percent in 2002 to $33.86, compared to a 0.6 percent decline for the mid-scale without food and beverage F&B is a common abbreviation in the United States and Commonwealth countries, including Hong Kong. F&B is typically the widely accepted abbreviation for "Food and Beverage," which is the sector/industry that specializes in the conceptualization, the making of, and delivery of foods. segment, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Smith Travel Research," he pointed out. Occupancy Gaining or having physical possession of real property subject to, or in the absence of, legal right or title. In a fire insurance policy, for example, the term occupancy rose to 59.1 percent, while average daily rate declined to $57.26. "We attribute (1) In relational database management, a field within a record. (2) In object technology, a single element of data. See instance attribute and static attribute. the RevPAR improvement to our drive-to locations, primarily in smaller towns, which have been less impacted by the general economy, and to aggressive marketing by our hotels." Fourth Quarter 2002 Results Revenues improved to $19.6 million from $18.2 million during the 2001 fourth quarter. Fourth quarter 2002 operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. was $(1.7) million, compared to operating income of $466,162 in the 2001 fourth quarter. For the three months ended December 31, 2002, the company reported a net loss of $(1.9) million, or $(0.39) per diluted share, compared to a net loss of $(634,000), or $(0.13) per diluted share during the same period a year earlier. The net loss was due primarily to the seasonality of the company's business and other factors as discussed above. In addition, the net loss includes: (i) an extraordinary gain of $197,000, net of tax, from an insurance settlement; (ii) certain one-time expenses of approximately $300,000, pre-tax, relating to a change in management and recruitment of a new CEO and (iii) non-cash charges of approximately $542,000, pre-tax, for impairment adjustments on primarily non-core hotels. Hotel Sales Selling AmeriHost and non-strategic hotels from its portfolio is a key component of the company's growth strategy. In 2002, the company was involved in the sale of seven AmeriHost properties and one non-core hotel, compared to nine hotels the prior year. Four of the seven AmeriHost hotels were 100 percent owned by the company and sold in the aggregate for gross proceeds of $9.6 million, resulting in a gain of $1.4 million and a $7.1 million reduction in debt for the company. "We are evaluating ways to accelerate the turnover of our assets and reinvest re·in·vest tr.v. re·in·vest·ed, re·in·vest·ing, re·in·vests To invest (capital or earnings) again, especially to invest (income from securities or funds) in additional shares. the proceeds in new projects," Herman said. "In 2003 year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. , the company and a joint venture in which the company has an ownership interest, already has sold three AmeriHost Inns and have an additional four hotels under contract for sale." The company expects to consummate To carry into completion; to fulfill; to accomplish. A Common-Law Marriage is consummated when the parties live in a manner intended to bring about public recognition of their relationship as Husband and Wife. these transactions during the next six months. Although the company has these hotels under contract for sale with non-refundable cash deposits in most cases, certain conditions to closing remain and there can be no assurance that these sales will be consummated con·sum·mate tr.v. con·sum·mat·ed, con·sum·mat·ing, con·sum·mates 1. a. To bring to completion or fruition; conclude: consummate a business transaction. b. as anticipated. Hotel Development Herman noted that the company also continued to develop hotels in 2002, one of its core growth strategies. During the year, the company began construction on three AmeriHost Inns; opened four AmeriHost Inns, including one property for a joint venture in which the company has an ownership interest; and one property for an unrelated third party. In addition, the company acquired one AmeriHost Inn hotel from a joint venture in which it had a minority interest. The company currently is building two AmeriHost Inn hotels, which are expected to open in the 2003 second quarter. "We believe we are at or near the bottom of the cycle and are examining a number of new development opportunities so that we can be on the leading edge when the economy begins to rebound rebound (rē´bownd), n/v 1. a recovery from illness. n 2. an outbreak of fresh reflex activity after withdrawal of a stimulus rebound adjective ," Herman said. "We have extensive experience in developing for third parties, as well as for our own account, and want to maximize the significant opportunities we see ahead. Our focus will be to expand primarily through joint ventures, which will allow us to maximize the number of properties in development, subject to rigorous market and investment analysis." Cendant Cendant Corporation was a New York-based provider of business and consumer services, primarily within the real estate and travel industries. Although the company was based out of New York City, the majority of Cendant's headquarters employees were located in Parsippany-Troy Hills, Relationship Herman commented that the company will continue to aggressively assist Cendant Corporation (NYSE NYSE See: New York Stock Exchange : CD), the franchisor of AmeriHost Inn hotels, in expansion of the brand. Arlington Hospitality sold the AmeriHost Inn brand name to Cendant in 2000. During 2002, the Company received $2.0 million in development incentive fees and royalty Compensation for the use of property, usually copyrighted works, patented inventions, or natural resources, expressed as a percentage of receipts from using the property or as a payment for each unit produced. sharing fees as a result of its agreement with Cendant, a portion of which is accounted for as deferred income. "We have very attractive incentives to develop and sell AmeriHost Inn properties, and we will accelerate our activity as conditions warrant. "The AmeriHost chain has approximately 100 properties, which gives the brand the economies of scale to market more aggressively, including national advertising. In addition, Cendant has indicated that it will launch a guest frequency program later in the year to build guest loyalty. We believe these and other initiatives by Cendant will increase brand awareness and, as a result, will enhance returns and the value of the properties. In addition, the AmeriHost product is a growing brand comprised primarily of new-construction properties, which are in top physical condition, making these branded hotels highly attractive for acquisition," he said. Other 2002 Highlights -- Development proficiency--In 2002, the company opened four properties in an average construction time of 125 days per hotel, after pouring the foundation slab. This speed of completion, coupled with a low average construction cost of $39,500 to $42,500 per room, makes Arlington Hospitality one of the most efficient and cost-effective hotel developers in the mid-market, limited-service segment. -- Balance sheet strength--Total shareholders' equity was approximately $17.4 million, or $3.50 per outstanding common share, at December 31, 2002. In addition, the company had approximately $10.9 million in deferred income as of December 31, 2002, or $1.31 per outstanding share after tax, which represents cash already received by the company and will be amortized into income in future periods for financial reporting purposes pursuant to GAAP. -- Corporate governance--Since June 2002, Arlington Hospitality has adopted strong corporate governance changes that enhance the independent composition and independent functioning of the company's board. Key elements include mandating that a super-majority of two-thirds of the board and 100 percent of its key committees be composed of independent directors. To date, five new directors have been elected to the seven-member board. The board meets regularly in non-management executive session, and the chairman of the board position has been made independent and separate from the chief executive officer. In February 2003, an independent director was named vice chairman as part of the board's program to improve succession planning. -- Management depth--Jerry Herman, a 20-year hotel and real estate veteran, joined the company as chief executive officer and member of the board in early January 2003. In January, Herman purchased 40,000 shares of restricted common stock of the company at a price of $3.16 per share. 2003 Goals "We are deep into the process of redefining our growth strategies and goals, not only for 2003 but for the long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. ," said Herman. "As previously reported, for the first two months of 2003 our RevPAR was down 2.9 percent, in line with industry results for the mid-priced without food and beverage hotel segment." Looking ahead, Herman commented: "While we have not yet established specific goals, our core growth strategies for the future will be: -- Develop AmeriHost Inn hotels primarily via joint ventures and for third parties -- Accelerate the sale of non-core, non-AmeriHost Inn hotels -- Accelerate the sale of company-owned AmeriHost Inn hotels and reinvest the proceeds in new development, primarily via joint ventures -- Expand the relationship with Cendant to accelerate the flow of franchise and development fees -- Improve operations and returns from existing hotels. From time to time, the company may utilize cash to purchase its own common stock. Currently, the board of directors has authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: the company to buy back, at any time and without notice, up to 1 million shares of its common stock under certain conditions. "We have a solid team in place, which has many years of combined hotel experience, a great product and compelling economics to expand the AmeriHost Inn brand," said Herman. "While the short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. operating climate remains difficult, we are increasingly optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about our long-term growth potential as our plans begin to take shape." Management will conduct a conference call today at noon Eastern Time to review fourth quarter and full-year 2002 financial results and current year-to-date progress, followed by a question and answer period. Stockholders and other interested parties may listen to the conference call by calling (800) 218-0713, pass code 528614. A recording of the call will be available by telephone until midnight on Monday Monday: see week. , March 24, by dialing (800) 405-2236, reference number 528614. Arlington Hospitality, Inc. is a hotel development and management company that builds, operates and sells mid-market hotels, primarily the AmeriHost Inn brand. Arlington Hospitality, Inc. currently owns or manages 71 properties in 17 states, including 61 AmeriHost Inn hotels, for a total of 5,209 rooms, with two additional AmeriHost Inn & Suites hotels under construction. The AmeriHost Inn brand is a mid-market, limited service hotel brand, created by Arlington in 1989 and sold to Cendant Corporation in 2000. The brand has approximately 100 properties located in 20 states. For more information about Arlington Hospitality, visit the company's web site at www.arlingtonhospitality.com. The statements appearing in this press release can be construed as forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of Section 27A of the Securities Act of 1933, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements, including without limitation, risks relating to the development and operation of hotels, the timing, consummation CONSUMMATION. The completion of a thing; as the consummation of marriage; (q.v.) the consummation of a contract, and the like. 2. A contract is said to be consummated, when everything to be done in relation to it, has been accomplished. and final terms of hotel sales, the availability of capital to finance growth, geopolitical events, competition and the historical cyclicality of the lodging industry.
Arlington Hospitality, Inc.
As of December 31, 2002
Owned AmeriHost Inn Hotels
Same Room RevPAR Performance
Three Months Twelve Months
December 31, December 31,
% Inc % Inc
2002 2001 (dec) 2002 2001 (dec)
------ ------ ------ ------ ------ ------
AmeriHost Inn
Average Daily Rate $56.43 $56.11 0.6% $57.26 $58.63 (2.3%)
Occupancy 53.1% 53.8% (1.3%) 59.1% 55.6% 6.3%
RevPAR $29.97 $30.20 (0.8%) $33.86 $32.62 3.7%
Property Ownership and Room Management
Hotel Properties # of Rooms
-------------------- --------------------
AmeriHost Inn Hotels
Consolidated hotels 53 3,385
Minority owned hotels 9 610
SUBTOTAL 62 3,995
Other Hotels
Consolidated hotels 8 1,045
Minority owned hotels 2 228
SUBTOTAL 10 1,273
GRAND TOTAL 72 5,268
ARLINGTON HOSPITALITY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Year Ended
December 31, December 31,
---------------------- ----------------------
2002 2001 2002 2001
-------- -------- -------- --------
Revenue:
Hotel Operations:
AmeriHost Inn
hotels $9,634,098 $10,023,773 $43,216,506 $45,081,431
Other hotels 2,156,901 3,041,147 10,632,860 11,301,017
Development and
construction 1,439,268 887,453 7,180,222 1,724,249
Hotel sales and
commissions 5,116,763 2,833,346 10,017,080 12,922,459
Management services 194,161 336,939 957,801 1,066,645
Employee leasing 618,152 790,586 3,267,491 4,678,189
Incentive and
royalty sharing
fees 201,947 91,509 588,938 209,633
Office building
rental and other 198,527 169,612 669,769 169,612
---------- ---------- ---------- ----------
19,559,817 18,174,365 76,530,667 77,153,235
---------- ---------- ---------- ----------
Operating costs and
expenses:
Hotel operations:
AmeriHost Inn
hotels 7,895,175 7,721,703 31,570,220 32,919,678
Other hotels 2,322,122 2,528,417 9,956,254 9,194,835
Development and
construction 1,636,611 640,916 7,205,328 1,479,947
Hotel sales and
commissions 4,630,779 2,785,858 8,159,459 9,621,536
Management services 210,193 169,148 714,648 716,802
Employee leasing 615,588 715,017 3,208,708 4,564,508
Office building
rental and other (60,161) 1,340 56,757 2,958
---------- ---------- ---------- ----------
17,250,307 14,562,399 60,871,374 58,500,264
---------- ---------- ---------- ----------
2,309,510 3,611,966 15,659,293 18,652,971
Depreciation and
amortization 1,462,299 1,277,064 5,516,302 4,676,069
Leasehold rents -
hotels 1,286,758 1,437,950 5,410,796 6,510,436
Corporate general
and administrative 670,010 430,790 2,198,640 1,907,742
Hotel impairment
adjustments 542,019 -- 542,019 --
---------- --------- --------- ---------
Operating income
(loss) (1,651,576) 466,162 1,991,536 5,558,724
---------- --------- --------- ---------
Other income
(expense):
Interest expense (1,193,882) (1,149,106) (5,514,765) (5,153,590)
Interest income 79,987 317,919 489,747 821,839
Other income
(expense) (103,654) (88,344) (14,124) 125,880
Gain on sale of
fixed assets -- -- 727,076 1,286,338
Equity in net income
and (losses) of
affiliates (352,208) (530,785) (412,094) (925,654)
---------- ---------- --------- ---------
Income (loss) before
minority interests
and income taxes (3,221,333) (984,154) (2,732,624) 1,713,537
Minority interests in
operations of
consolidated
subsidiaries and
partnerships 12,376 (8,346) (80,331) (343,437)
---------- --------- ---------- ---------
Income (loss) before
income taxes (3,208,957) (992,500) (2,812,955) 1,370,100
Income tax benefit
(expense) 1,080,000 358,000 906,000 (615,000)
---------- --------- ---------- ---------
Income (loss) before
extraordinary item (2,128,957) (634,500) (1,906,955) 755,100
Extraordinary item,
net of tax 197,023 -- 197,023 --
---------- --------- ---------- ---------
Net income (loss) $(1,931,934) $(634,500)$(1,709,932) $755,100
========== ========= ========== =========
Income (loss) per
common share-diluted $(0.39) $(0.13) $(0.34) $0.13
========== ========= ========== =========
Weighted average
shares
outstanding-
diluted basis 4,959,259 5,129,275 4,958,438 5,181,571
========== ========= ========== =========
ARLINGTON HOSPITALITY, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
December 31, December 31,
2002 2001
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $3,969,515 $4,748,156
Accounts receivable 2,064,463 2,343,423
Notes receivable -- 518,499
Prepaid expenses and other current
assets 975,432 998,559
Refundable income taxes 1,574,776 --
Costs and estimated earnings in excess
of
billings on uncompleted contracts 1,479,101 1,079,137
----------- ----------
Total current assets 10,063,287 9,687,774
Investments in and advances to
unconsolidated
hotel joint ventures 4,291,504 5,404,744
Property and equipment, net 99,611,340 92,895,038
Notes receivable, less current portion 882,083 1,000,000
Deferred income taxes 2,427,000 3,247,000
Other assets, net 2,658,500 2,939,900
---------- ----------
$119,933,714 $115,174,456
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $3,965,028 $2,467,704
Bank line-of-credit 6,384,287 6,793,702
Accrued expenses and other current
liabilities 4,771,000 3,476,164
Current portion of long-term debt 4,038,301 2,110,652
----------- -----------
Total current liabilities 19,158,616 14,848,222
Long-term debt, net of current portion 72,203,688 70,088,269
Deferred income 10,867,418 10,714,735
Minority interests 333,888 456,631
Shareholders' equity 17,370,104 19,066,599
----------- -----------
$119,933,714 $115,174,456
============ ============
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion