Arlington Hospitality, Inc. Announces Third Quarter 2002 Earnings Results; 3rd Quarter AmeriHost Inn Same Room RevPAR Up 5.6%.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)--Nov. 13, 2002 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) today announced its earnings results for the third quarter ended September 30, 2002. Net income for the quarter was $745,687, or $0.14 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 $1.9 million, or $0.35 per diluted share in 2001. Net income for the third quarter of 2002 reflects an accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. of $383,000 for severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when benefits to be paid to the outgoing 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. , subject to certain conditions. Revenues decreased 18.5%, to $18.4 million in the third quarter of 2002, from $22.6 million in 2001. For the nine months ended September 30, 2002, net income was $222,003, compared to net income of $1.4 million during the nine months ended September 30, 2001. Revenues for the first nine months decreased 3.4%, to $57.0 million during 2002, from $59.0 million during 2001. 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 three and nine months ended September 30, 2002 for all AmeriHost Inn hotels owned by the Company increased 5.6% and 5.4%, respectively. In comparison, RevPAR for the overall U.S. hotel industry increased by 0.5% during the three months ended September 30, 2002 and decreased 4.8% during the nine months ended September 30, 2002, 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. Michael P. Holtz, President and Chief Executive Officer commented, "The Company's AmeriHost Inn hotels 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. the overall 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 with regard to same room revenues. Increased demand from leisure travelers and favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. pricing for corporate business helped fuel the 9.4% increase in same room occupancy achieved during the quarter. This increase was partially offset by a decrease of $2.05 in average daily rate. Our focus is to maximize revenues through an aggressive marketing and room rate management plan. Our hotel operations segment continues to show strong signs of improvement over 2001 as the gross operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. for the same room AmeriHost Inn hotels increased by approximately $1.6 million, or 14.7%, during the first nine months of 2002, compared to 2001." During the third quarter of 2002, the Company did not sell, open or acquire any AmeriHost Inn hotels for its own account. However, during the third quarter, a joint venture in which the Company is a partner sold one AmeriHost Inn hotel located in San Marcos, Texas San Marcos is a city in Texas, USA. The population was 34,733 at the 2000 census. It is the county seat of Hays County.GR6 Texas State University-San Marcos (formerly Southwest Texas State University) is located in the city. , and another joint venture opened one AmeriHost Inn hotel built by the Company located in Maumee, Ohio ? Maumee is a city in Lucas County, Ohio, United States. It is a suburb of Toledo along the Maumee River. The population was 15,237 at the 2000 census. Maumee was also declared an All-America City by the National Civic League in June of 2006. . During the twelve months ended September 2002, in addition to the above-mentioned joint venture activity during the third quarter of 2002, the Company sold four Company-owned AmeriHost Inn hotels, opened three newly constructed AmeriHost Inn hotels for its own operation, and acquired the remaining ownership interest from its joint venture partners in one AmeriHost Inn hotel. In addition, during the last twelve months, the Company built an AmeriHost Inn for an operator who was referred to the Company by Cendant Corporation, the franchisor of the AmeriHost Inn brand. Holtz continued, "New hotel development for third parties and the sale of hotels continues at a slower pace as a result of the difficulty of hotel developers and buyers obtaining suitable financing. However, we have begun to experience increased activity with regard to the sale of hotels. We are confident that as the financing market returns to the hotel industry, this segment will again contribute strong earnings and cash flow for the Company." Subsequent to September 30, 2002, another joint venture in which the Company is a partner sold an AmeriHost Inn hotel located in Delaware, Ohio Delaware is a city in the U.S. state of Ohio and the county seat of Delaware CountyGR6. The municipality is located near the center of the state of Ohio, about 20 miles (32 km) north of Columbus, Ohio. Delaware was founded in 1808, incorporated in 1816. . The Company currently has three AmeriHost Inn & Suites hotels under construction. These hotels are located in Redding, California Redding (pop. 104,295) is the county seat of Shasta County, California, USA, located on the Sacramento River and on Interstate 5 south of Shasta Lake. It is the largest city north of Sacramento, as well as the northernmost designated metropolitan area and city with over 100,000 ; DeWitt, Michigan DeWitt is a city in Clinton County in the U.S. state of Michigan. The population was 4,702 at the 2000 census. The city is located within DeWitt Township, though it is politically independent. ; and Willows, California Willows is the county seat of Glenn County, California. The population was 6,220 at the 2000 census. It is a city with mostly I-5 traveler services, such as fast-food, gasoline, and motels. . In addition, the Company is currently building an AmeriHost Inn hotel for a minority-owned joint venture located in Columbus, Ohio Columbus is the capital and the largest city of the American state of Ohio. Named for explorer Christopher Columbus, the city was founded in 1812 at the confluence of the Scioto and Olentangy rivers, and assumed the functions of state capital in 1816. . The Company intends to continue developing and constructing AmeriHost Inn hotels for itself as well as third parties for the foreseeable fore·see tr.v. fore·saw , fore·seen , fore·see·ing, fore·sees To see or know beforehand: foresaw the rapid increase in unemployment. future. Currently, the Company owns and operates 64 AmeriHost Inn hotels, in addition to the hotels under construction and development. The Company has entered into a series of severance agreements Noun 1. severance agreement - an agreement on the terms on which an employee will leave agreement, understanding - the statement (oral or written) of an exchange of promises; "they had an agreement that they would not interfere in each other's business"; "there was with its outgoing CEO, Michael P. Holtz, which have been filed by the Company as exhibits to a Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. filing Current Report with the Securities and Exchange Commission made on November 8, 2002. The settlement agreement provides for a severance payment of $325,000 plus fringe benefits fringe benefits, n.pl the benefits, other than wages or salary, provided by an employer for employees (e.g., health insurance, vacation time, disability income). for a period of one year in full satisfaction of the obligations under his employment agreement. As of September 30, 2002, the Company has accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. $383,000 for these severance benefits, which has been included in corporate general and administrative expense in the Company's financial statements. This settlement is contingent upon Adj. 1. contingent upon - determined by conditions or circumstances that follow; "arms sales contingent on the approval of congress" contingent on, dependant on, dependant upon, dependent on, dependent upon, depending on, contingent the successful closing on the sale of two hotels to Mr. Holtz for a total purchase price of approximately $5.2 million. In addition, the Company will be entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: to a five-year contingent purchase price participation in the appreciation of the hotels above certain specified amounts. The Company expects to record pretax income pretax income Reported income before the deduction of income taxes. Pretax income is sometimes considered a better measure of a firm's performance than aftertax income because taxes in one period may be influenced by activities in earlier periods. from the sale of these hotels of approximately $550,000 upon closing. The closing is expected to be in December 2002, and a condition to the transaction is that it must close no later than February 15, 2003. There can be no assurance that these hotel sales transactions, and the severance agreement, 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. . Arlington Hospitality, Inc. is a hotel management and development company that builds and manages mid-priced hotels. As of September 30, 2002, Arlington Hospitality, Inc. owns or manages 76 properties in 17 states, including 65 AmeriHost Inn hotels, for a total of 5,629 rooms, with four additional AmeriHost Inn & Suites hotels under construction. Each hotel offers an amenity a·men·i·ty n. pl. a·men·i·ties 1. The quality of being pleasant or attractive; agreeableness. 2. Something that contributes to physical or material comfort. 3. package not often found in other mid-priced hotels. For additional information on the Company, please visit our web site at http://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 changing factors, risks and uncertainties, some of which are outside the Company's control, 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, operation and sale of hotels, the availability of capital to finance growth, and the historical cyclicality of the lodging industry. There is also risk that all the agreements relating to the CEO severance may be rendered null A character that is all 0 bits. Also written as "NUL," it is the first character in the ASCII and EBCDIC data codes. In hex, it displays and prints as 00; in decimal, it may appear as a single zero in a chart of codes, but displays and prints as a blank space. and void if the conditions to closing are not met or the closing do not otherwise occur. There can be no assurances that the Company will be successful in locating a suitable replacement for Mr. Holtz, in continuing to dispose of To determine the fate of; to exercise the power of control over; to fix the condition, application, employment, etc. of; to direct or assign for a use. See also: Dispose hotels in a profitable manner or in closing the severance settlement transactions contemplated above. In addition, numerous other factors could occur which could adversely impact the above forward looking statements.
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Arlington Hospitality, Inc.
Property Ownership and Room Management
As of September 30, 2002
Hotel Properties # of Rooms
AmeriHost Inn Hotels
Consolidated hotels 55 3,544
Minority owned hotels 10 684
SUBTOTAL 65 4,228
Other Hotels
Consolidated hotels 8 1,051
Minority owned hotels 3 350
SUBTOTAL 11 1,401
GRAND TOTAL 76 5,629
AmeriHost Inn Hotels
Same Room RevPAR Performance
Three Months Nine Months
September 30, September 30,
2002 2001 2002 2001
AmeriHost Inn
Average Daily Rate ($) $58.73 $60.78 $57.42 $59.43
Occupancy (%) 67.6% 61.8% 61.4% 56.2%
RevPAR ($) $39.73 $37.59 $35.24 $33.42
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ARLINGTON HOSPITALITY, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
September 30, December 31,
2002 2001
-------------- --------------
ASSETS
Current assets:
Cash and cash equivalents $ 2,379,390 $ 4,748,156
Accounts receivable 2,111,700 2,343,423
Notes receivable 15,000 518,499
Prepaid expenses and other current
assets 458,837 998,559
Refundable income taxes 914,482 -
Costs and estimated earnings in excess
of billings on uncompleted contracts
with related parties 1,187,821 1,079,137
-------------- --------------
Total current assets 7,067,230 9,687,774
Investments in and advances to affiliates 6,598,715 5,404,744
Property and equipment, net 101,771,488 92,895,038
Notes receivable, less current portion 435,000 1,000,000
Other assets, net 4,840,907 6,186,900
-------------- --------------
$120,713,340 $115,174,456
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,526,392 $ 2,467,704
Bank line-of-credit 5,981,287 6,793,702
Accrued expenses and other current
liabilities 3,643,752 3,476,164
Current portion of long-term debt 7,584,938 2,110,652
-------------- --------------
Total current liabilities 19,736,369 14,848,222
Long-term debt, net of current portion 70,884,468 70,088,269
Deferred income 10,457,758 10,714,735
Minority interests 346,264 456,631
Shareholders' equity 19,288,481 19,066,599
-------------- --------------
$120,713,340 $115,174,456
============== ==============
ARLINGTON HOSPITALITY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
2002 2001 2002 2001
----------- ----------- ----------- -----------
Revenue:
Hotel operations:
AmeriHost
Inn hotels $12,737,246 $12,939,843 $33,582,408 $35,057,658
Other hotels 3,242,781 3,121,609 8,475,959 8,259,870
Development and
construction 1,060,605 847,745 6,279,915 954,920
Hotel sales and
commissions - 4,231,045 4,748,348 10,089,113
Management
services 266,931 257,808 763,640 729,706
Employee leasing 929,164 1,157,587 2,649,339 3,887,603
Other 153,254 - 471,242 -
----------- ----------- ----------- -----------
18,389,981 22,555,637 56,970,851 58,978,870
----------- ----------- ----------- -----------
Operating costs
and expenses:
Hotel operations:
AmeriHost Inn
hotels 8,271,494 8,505,417 23,675,045 25,197,975
Other hotels 2,534,850 2,392,241 7,634,132 6,666,418
Development and
construction 944,824 251,607 5,568,717 839,031
Hotel sales and
commissions - 3,118,210 3,528,680 6,835,678
Management services 165,628 195,742 504,455 547,654
Employee leasing 916,318 1,152,710 2,593,120 3,849,491
Other 71,297 1,618 116,918 1,618
----------- ----------- ----------- -----------
12,904,411 15,617,545 43,621,067 43,937,865
----------- ----------- ----------- -----------
5,485,570 6,938,092 13,349,784 15,041,005
Depreciation and
amortization 1,324,173 1,129,657 4,054,003 3,399,005
Leasehold rents
- hotels 1,305,386 1,611,347 4,124,038 5,072,486
Corporate general
and administrative 755,036 451,520 1,528,630 1,476,952
----------- ----------- ----------- -----------
Operating income 2,100,975 3,745,568 3,643,113 5,092,562
Other income
(expense):
Interest expense (1,446,107) (1,207,437) (4,320,883) (4,004,484)
Interest income 151,538 233,891 409,760 503,920
Other income 452,170 507,836 489,530 614,224
Gain on sale of
property and
equipment - 295,893 327,076 886,338
Equity in net
income and
(losses) of
affiliates 61,697 (122,329) (59,886) (394,869)
----------- ----------- ----------- -----------
Income before
minority interests
and income taxes 1,320,273 3,453,422 488,710 2,697,691
Minority interests
in (income) loss
of consolidated
subsidiaries and
partnerships (55,586) (304,300) (92,707) (335,091)
----------- ----------- ----------- -----------
Income before
income taxes 1,264,687 3,149,122 396,003 2,326,600
Income tax expense 519,000 1,292,000 174,000 973,000
----------- ----------- ----------- -----------
Net income $745,687 $1,857,122 $222,003 $1,389,600
=========== =========== =========== ===========
Net income per
share - Basic $0.15 $0.37 $0.04 $0.28
Net income per
share - Diluted $0.14 $0.35 $0.04 $0.25
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