Arlington Hospitality, Inc. Announces Second Quarter Results.Business Editors/Travel Writers 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)--Aug. 14, 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 hotel development and management company, today announced results for the second quarter and six months ended June June: see month. 30, 2003. Arlington is the nation's largest owner and operator of AmeriHost Inn hotels, a mid-market, limited service hotel brand with approximately 100 properties located in 20 states. Arlington Hospitality owns and operates 61 AmeriHost Inn hotels. 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, Corporation (NYSE NYSE See: New York Stock Exchange : CD) is the franchisor of the AmeriHost Inn brand. Second Quarter and Year to Date 2003 Results Revenues fell 13.8 percent and 2.2 percent to $15.8 million and $33.6 million during the three and six months ended June 30, 2003, compared to $18.3 million and $34.4 million during the same periods a year earlier, due primarily to decreases in hotel development revenue and revenues related to hotel operations as a result of owning fewer hotels, partially offset by an increase in hotel real estate sales and commissions and incentive and royalty-sharing fees. Net income (loss), and its components, is summarized as follows for the three and six months ended June 30, 2003, compared to June 30, 2002:
Three Months Ended June 30, Six Months Ended June 30,
2003 2002 2003 2002
Net income
(loss) from
continuing
operations,
before
impairment $ 171,494 $ 359,573 $ (788,870) $ 29,138
Impairment
provision, net
of tax (2,738,512) - (2,798,512) -
Net income
(loss) from
continuing
operations $ (2,567,018) $ 359,573 $ (3,587,382) $ 29,138
Discontinued
operations (790,767) (125,505) (1,252,924) (552,822)
Net income
(loss) $ (3,357,785) $ 234,068 $ (4,840,306)$ (523,684)
Net income
(loss) per
share - Basic:
From
continuing
operations $ (0.51) $ 0.08 $ (0.72) $ -
From
discontinued
operations (0.16) (0.03) (0.25) (0.11)
$ (0.67) $ 0.05 $ (0.97) $ (0.11)
Net income
(loss) per
share -
Diluted:
From
continuing
operations $ (0.51) $ 0.07 $ (0.72) $ -
From
discontinued
operations (0.16) (0.02) (0.25) (0.11)
$ (0.67) $ 0.05 $ (0.97) $ (0.11)
The hotel 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. charges were recorded in connection with the company's previously disclosed implementation of a plan for the disposition of certain hotels over the next two years, based on the difference between the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of the hotels and their anticipated net realizable values Net realizable value (NRV) is a commonly used method of evaluating an asset's worth in the field of inventory accounting. NRV is part of GAAP rules that apply to valuing inventory, so as to not overstate or understate the value of inventory goods. . Discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. relates to the operations of the non-AmeriHost Inn hotels sold, or to be sold within the next 12 months, which have been reclassified as such for all periods discussed herein, including a non-cash impairment charge related to these hotels during the three and six months ended June 30, 2003. "Although the implementation of our hotel disposition program resulted in the significant non-cash impairment charge for the second quarter of 2003, this strategic initiative will allow us to unlock capital to pay down debt and to accelerate our hotel development growth plan as part of our new business plan," said Jerry Herman Jerry Herman (born Gerald Herman on July 10, 1931 in New York City) is an American composer/lyricist of the Broadway musical theater. He composed the scores for the hit Broadway musicals Hello, Dolly!, Mame, and La Cage aux Folles. , president and chief executive officer. "Furthermore, we expect such steps taken with regard to our disposition program and the other elements of our business plan will lead to an enhancement of the company's core strengths and profitability." Assets Held for Sale and Discontinued Operations In accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System No. 144, "Accounting for Long-Lived long-lived adj. 1. Having a long life: a long-lived aunt. 2. Lasting a long time; persistent: a long-lived rumor. 3. Assets," the company's hotel assets earmarked for sale within the next 12 months have been classified as "held for sale" on the accompanying balance sheet as of June 30, 2003. The operations of the non-AmeriHost Inn hotels that have been determined to be discontinued operations have been eliminated from the company's continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the and presented as "discontinued operations" on the consolidated statements of operation. In addition, the "discontinued operations" includes $517,000, after tax, of non-cash impairment charges related to these hotels recorded in the second quarter of 2003. These hotels are considered to be "discontinued operations" since they have been sold, or are expected to be sold within the next 12 months, and the company will have no continuing involvement after their disposition. Although certain AmeriHost Inn hotels have been classified as "held for sale" on the accompanying consolidated balance sheet consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. , the operations of these hotels has not been treated as "discontinued operations" in the consolidated statement of operations See Income statement. due to the company's 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. royalty-sharing agreement with Cendant for all AmeriHost Inn hotels, which provides for a revenue stream to the company after the properties are sold to a new or existing AmeriHost Inn franchisee. AmeriHost Inn Room Revenues 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 the company's AmeriHost Inn hotels decreased 1.1 percent to $35.11 for the 2003 second quarter, compared to the 2002 second quarter, and compared to a 2.1 percent estimated decrease for the midscale 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 of the hotel industry for the 2003 second quarter, 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. Occupancy decreased 0.7 percent to 60.9 percent, while average daily rate (ADR ADR - Astra Digital Radio ) decreased 0.4 percent to $57.65. On a trailing 12-month basis, RevPAR increased 0.9 percent, based on a 2.1 percent increase in occupancy and a 1.1 percent decrease in ADR. Same-room RevPAR for the company's AmeriHost Inn hotels decreased 1.2 percent to $31.23 for the first six months of 2003, compared to the same period in 2002, and compared to a 1.9 percent estimated decrease for the midscale without food and beverage segment of the hotel industry for the first six months of 2003 according to Smith Travel Research. Occupancy declined 0.4 percent to 55.4 percent, while ADR fell 0.7 percent to $56.42. Arlington Hospitality's AmeriHost Inn Second Quarter 2003 Results(a)
Three Months Six Months Twelve Months
Ended Ended Ended
June 30, 2003 June 30, 2003 June 30, 2003
Occupancy - current period 60.9% 55.4% 58.0%
Occupancy - prior period 61.3% 55.6% 56.8%
Increase (decrease) (0.7%) (0.4%) 2.1%
Average Daily Rate
- current period $57.65 $56.42 $57.14
Average Daily Rate
- prior period $57.86 $56.79 $57.76
Increase (decrease) (0.4%) (0.7%) (1.1%)
RevPAR - current period $35.11 $31.23 $33.11
RevPAR - prior period $35.46 $31.58 $32.80
Increase (decrease) (1.1%) (1.2%) 0.9%
(a)Results are presented on a "same-room" basis, and include the
company's AmeriHost Inn hotels which have been open for at least 13
months during the period presented.
"Our second quarter results reflect the difficult industry fundamentals resulting from a persistently 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. , which has dampened business travel, and the war in Iraq Iraq or Irak (both: ēräk`, ĭrăk`), officially Republic of Iraq, republic (2005 est. pop. 26,075,000), 167,924 sq mi (434,924 sq km), SW Asia. ," Herman Herman only goal in life becomes winning at cards. [Russ. Opera: Tchaikovsky, Queen of Spades, Westerman, 401] See : Obsessiveness commented. "Following a weak April, which was directly impacted by the war, May rebounded strongly although those gains did not continue in June. However, we aggressively contained costs during the quarter, which helped alleviate Alleviate To make something easier to be endured. Mentioned in: Kinesiology, Applied pressure on our margins, and we are in the process of implementing significant enhancements to our hotels sales and marketing efforts, which we expect will produce positive revenue growth at many of our hotels. "Business travel demand remains well below historical levels, although we are beginning to see some encouraging signs in this area. We are cautiously optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about the remainder of the year. Furthermore, per Smith Travel Research statistics in terms of RevPAR changes during the second quarter and first six months of 2003, as well as the trailing 12 months, we continue to outperform Outperform An analyst recommendation meaning a stock is expected to do slightly better than the market return. Notes: Exact definitions vary by brokerage, but in general this rating is better than neutral and worse than buy or strong buy. our competitors in the mid scale without food and beverage segment." New Business Plan Adopted Herman said that during the second quarter Arlington had begun to implement its previously announced growth-oriented business plan. The plan, when fully executed, will focus the company on building and selling hotels, primarily AmeriHost Inns through joint venture arrangements, and reducing the amount of capital invested in hotel ownership. As part of the plan, the company plans to sell approximately 25 to 30 of its existing hotel properties over the next two years. The sale of these hotels is expected to: -- reduce outstanding debt -- increase operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. -- accelerate the generation and realization of sales and royalty-sharing fees related to the company's agreements with Cendant Corporation -- provide capital for future hotel development -- provide capital to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. and retire common stock at attractive prices. "The asset disposition program is a key to our business plan for the future, and is designed to provide the means to accelerate our development program and expand the AmeriHost Inn brand, which, in turn, we expect will allow us to realize the full value of our relationship with Cendant," Herman said. Corporate Restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). "In anticipation of our reduced hotel ownership, on July July: see month. 16, 2003, we announced that the company had implemented a plan to reduce its corporate and regional operations staff by approximately 20 percent, primarily in the areas of hotel management and accounting," Herman said. "At the same time, we are augmenting our business and development team to assist in our expanded development initiative." The company expects to incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. non-recurring restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of approximately $140,000 over the next six months. "Now that we have fully charted our course for the future, we are actively repositioning repositioning Laparoscopic surgery The changing of a Pt's position during a procedure to improve access or visualization of the operative field, which may be linked to complications, as it changes anatomic planes of operation. Cf Laparoscopic surgery. ourselves for both the short- and long-term to improve shareholder profitability," he added. Hotel Sales During the second quarter, the company completed the sale of one wholly owned AmeriHost Inn hotel and facilitated the sale of one non-AmeriHost Inn hotel owned by a joint venture. The sale of the one wholly owned property generated gross sales Gross Sales A measure of overall sales that isn't adjusted for customer discounts or returns, calculated simply by adding all sales invoices, and not including operating expenses, cost of goods sold, payment of taxes, or any other charge. proceeds of approximately $2.6 million, of which approximately $1.4 million was used to reduce mortgage debt. In addition, the sale of the non-AmeriHost hotel by a joint venture resulted in mortgage debt reduction of approximately $925,000 since this was a consolidated joint venture included in the company's financial statements. Subsequent to June 30, 2003, as previously announced on August 13, 2003, the company sold another wholly owned AmeriHost Inn hotel and has used a portion of the proceeds to pay off the related mortgage debt in the amount of approximately $3.1 million. Year to date in 2003, the company has sold four wholly owned AmeriHost Inn hotels, resulting in net revenues of $13.6 million, of which $8.7 million was used to reduce mortgage debt. The company currently has five AmeriHost Inn hotels under contract for sale, including hotels owned by joint ventures. These transactions are expected to 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. during the next six months. The revenue and profit/loss from the sale of hotels, as well as the reduction of debt, will be reported in the company's financial statements as of the date the sale transactions close. Although the company has these hotels under contract for sale, with nonrefundable Nonrefundable Not permitted, under the terms of an indenture, to be refundable. cash deposits in certain cases, certain conditions to closing remain, and there can be no assurance that these sales will be consummated as anticipated. The amount of revenue and debt reduction described above relates solely to closed or pending sales activities. Any forecasted amounts from closed or pending sales could differ from the final amounts included in the company's applicable quarterly and annual financial statements when issued. Furthermore, such forecasted amounts do not represent guidance on, or forecasts of, the results of the company's entire consolidated operations, which are reported on a quarterly basis. Information on Arlington's hotels being brokered for sale by Thompson Thompson, city, Canada Thompson, city (1991 pop. 14,977), central Man., Canada, on the Burntwood River. A mining town, it developed after large nickel deposits were discovered in the area in 1956. Calhoun Cal·houn , John Caldwell 1782-1850. Vice President of the United States (1825-1832) under John Quincy Adams and Andrew Jackson. In his political philosophy he maintained that the states had the right to nullify federal legislation that they deemed Fair can be found at www.tcfhotels.com, or by calling Mark Fair at 404-995-8970. Hotel Development Arlington Hospitality also provides turnkey See turnkey system. hotel development services for new construction hotel projects, including AmeriHost Inn hotels. In the second quarter 2003, the company opened one newly constructed AmeriHost Inn hotel for its own account and one newly constructed AmeriHost Inn hotel for a joint venture in which the company is a partner. The company has recently commenced construction on a new AmeriHost Inn hotel in Weirton, W.V. with a long-standing joint venture partner. "Our development pipeline is very active, and we have several additional hotel projects in various stages of the pre-construction development process. Our goal is to reach a level where we are developing 10 to 15 hotels a year, primarily in larger markets, particularly in the Midwest, where the AmeriHost brand has high consumer awareness, and in California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). ." For more information regarding turnkey development services, and on all hotels owned by the company, contact Steve Miller The name Steve Miller might refer to:
Other Matters 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 1,000,000 shares of it own common stock under certain conditions. Year to date, the company has purchased 27,300 shares under this authorization The right or permission to use a system resource; the process of granting access. See access control. . About Arlington Hospitality Arlington Hospitality, Inc. is a hotel development and management company that builds, operates and sells mid-market hotels, primarily the AmeriHost Inn brand. Currently, Arlington Hospitality, Inc. owns or manages 70 properties in 17 states, including 61 AmeriHost Inn hotels, for a total of 5,144 rooms, with additional AmeriHost Inn & Suites hotels under development. The AmeriHost Inn brand is a mid-market, limited service hotel brand with approximately 100 properties located in 20 states. This press release may contain 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 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are statements that are not historical, including statements regarding management's intentions, beliefs, expectations, representations, plans or predictions of the future, and are typically identified by words such as "believe," "expect," "anticipate," "intend," "estimate," "may," "will," "should," and "could." There are numerous 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 relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc 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 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, competition and the historical cyclicality of 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. All forward-looking statements included in this press release are based on information available at the time of the release, and Arlington Hospitality assumes no obligation to update any forward-looking statement.
ARLINGTON HOSPITALITY, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
June 30, December 31,
2003 2002
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 4,204,410 $ 3,969,515
Accounts receivable 1,531,938 2,064,463
Notes receivable, current portion - 100,000
Prepaid expenses and other current
assets 402,985 975,432
Refundable income taxes 1,193,551 1,574,776
Costs and estimated earnings in excess
of billings on uncompleted contracts 569,463 1,479,101
Assets held for sale -
non-AmeriHost Inn hotels 12,075,880 -
Assets held for sale -
AmeriHost Inn hotels 27,683,102 -
Total current assets 47,661,329 10,163,287
Investments in and advances to
unconsolidated hotel joint ventures 3,598,630 4,291,504
Property and equipment, net 48,399,100 99,611,340
Notes receivable, less current portion 1,020,792 782,083
Deferred income taxes 5,564,000 2,427,000
Other assets 2,532,380 2,658,500
$ 108,866,231 $119,933,714
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,163,318 $ 3,965,028
Bank line-of-credit 4,400,000 6,384,287
Accrued payroll and related expenses 315,887 827,353
Accrued real estate and other taxes 2,594,957 1,969,297
Other accrued expenses and current
liabilities 1,302,596 1,974,350
Current portion of long-term debt 7,840,814 4,038,301
Liabilities of assets held for sale -
non-AmeriHost Inn hotels 11,161,147 -
Long-term debt of assets held for
sale - AmeriHost Inn hotels 25,741,339 -
Total current liabilities 55,520,058 19,158,616
Long-term debt, net of current portion 29,170,108 72,203,688
Deferred income 11,270,781 10,867,418
Minority interests 249,207 333,888
Shareholders' equity 12,656,077 17,370,104
$ 108,866,231 $119,933,714
ARLINGTON HOSPITALITY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30,
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
2003 2002 2003 2002
Revenue:
Hotel operations:
AmeriHost Inn
hotels $11,013,514 $11,685,234 $19,536,021 $20,845,162
Other hotels 509,345 651,551 846,180 1,005,310
Development and
construction 617,283 3,007,221 2,097,261 4,810,971
Hotel sales and
commissions 2,590,457 1,540,451 9,033,747 4,900,317
Management
services 117,301 262,772 228,455 496,709
Employee leasing 541,275 867,814 1,058,682 1,720,175
Incentive and
royalty sharing 223,994 146,805 429,649 256,369
Office building
rental 178,995 156,318 356,223 317,988
15,792,164 18,318,166 33,586,218 34,353,001
Operating costs
and expenses:
Hotel operations:
AmeriHost Inn
hotels 7,733,013 7,824,102 15,397,422 15,403,551
Other hotels 437,399 546,434 887,488 1,084,444
Development and
construction 544,350 2,626,326 2,136,477 4,623,893
Hotel sales and
commissions 2,093,614 1,497,732 7,334,431 3,528,680
Management
services 74,826 184,297 139,759 338,827
Employee leasing 524,792 856,165 1,026,714 1,676,802
Office building
rental 46,865 28,798 96,417 45,621
11,454,859 13,563,854 27,018,708 26,701,818
4,337,305 4,754,312 6,567,510 7,651,183
Depreciation and
amortization 1,032,098 1,099,653 2,066,133 2,133,374
Leasehold rents
- hotels 1,270,127 1,271,990 2,540,254 2,619,489
Corporate
general and
administrative 515,007 386,435 962,838 773,594
Impairment
provision 4,564,512 - 4,664,512 -
Operating income
(loss) (3,044,439) 1,996,234 (3,666,227) 2,124,726
Other income
(expense):
Interest expense (1,144,709) (1,249,035) (2,240,103) (2,526,939)
Interest income 120,922 134,392 240,881 258,222
Other income 43,353 (21,710) 42,021 39,237
Gain on sale of
property - - - 327,076
Equity in net
income and
(losses)
of affiliates (199,816) (208,551) (274,262) (121,583)
Income (loss)
before minority
interests and
income taxes (4,224,689) 651,330 (5,897,690) 100,739
Minority interests
in (income) loss
of consolidated
partnerships (53,329) (46,757) (81,692) (46,601)
Income (loss)
before income
taxes (4,278,018) 604,573 (5,979,382) 54,138
Income tax expense
(benefit) (1,711,000) 245,000 (2,392,000) 25,000
Net income (loss)
from continuing
operations (2,567,018) 359,573 (3,587,382) 29,138
Discontinued
operations, net
of tax (790,767) (125,505) (1,252,924) (552,822)
Net income (loss) $(3,357,785) $ 234,068 $(4,840,306) $ (523,684)
Net income (loss)
per share -
Diluted $ (0.67) $ 0.05 $ (0.97) $ (0.11)
Weighted Average
Shares Outstanding 5,019,588 5,033,591 5,011,478 5,043,054
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