The company's consolidated financial statements, filed with the Securities and Exchange Commission, use the term "2002 combined period" to describe its operations before and after the 2002 Chapter 11 emergence. Fourth-quarter revenue from continuing operations totaled $73.7 million compared to $74.9 million in the comparable quarter of the 2002 combined period. Revenue per available room was down less than 1% during the quarter. The company's gross profit margins on its portfolio of 77 owned hotels were flat.
The $16.5-million quarterly loss from continuing operations include an impairment charge of $10.2 million; dividends on preferred stock of $4.1 million; and post-emergence Chapter 11 expenses and other general and administrative expenses of $600,000.
For all of 2003, revenue from continuing operations totaled $311.4 million versus $324.6 million from continuing operations in the 2002 combined period. Lodgian president and CEO W. Thomas Parrington says the lower revenues resulted from "a decline in occupancy; room rates and catering revenue that reflected a general weakness in travel demand; business disruptions associated with renovations at a number of the company's hotels; brand changes and declining results at hotels in need of renovation."
The $26.8-million loss from continuing operations for all of 2003 included a $12.7-million impairment charge; $4.6 million for post-emergence Chapter 11 and other general and administrative expenses; and $8.1 million of preferred stock dividends reported as interest expense. By comparison, the loss in the 2002 combined period was $1.2 million.
"2003 was a transitional year for us," says Parrington. "Despite a very difficult operating environment, a weak economy and uncertainty surrounding the war in Iraq, we were able to successfully complete our financial restructuring, transition to a strong new management team, and implement an asset improvement program that will allow us to accelerate repayment of our debt and fund a renovation program at our continuing hotels."
Lodgian spent $30.8 million on capital expenditures at its continuing hotels in 2003; sold five hotels and an office building in 2003 and the first two months of 2004; and used $14.6 million of the net proceeds to reduce debt. The company wants to sell an additional 14 non-strategic hotels this year. The properties are primarily full-service operations in small markets.
"Our remaining properties have long-term growth potential and are being upgraded and positioned to take advantage of the forecasted rebound in travel and the lodging industry," Parrington says.
He adds, "As the business climate improves and our portfolio strengthens, we also will consider buying hotels in strategic partnership arrangements" because the company's realigned portfolio is "more focused on larger, mid-market full-service and premium limited-service properties in primary and selected secondary markets.
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