| November 6, 2002 - La Quinta Corporation today
announced financial results for the third quarter ended September 30, 2002.
"The third quarter was challenging -- particularly in September -- as
the continued slow economy, coupled with lodging demand weakness in both
business and leisure travel, resulted in reduced occupancy," said Francis
W. ("Butch") Cash, President and Chief Executive Officer. "While market
weakness has been disappointing, we are pleased to report La Quinta maintains
a RevPAR (Revenue per Available Room) premium to its local market competition.
We believe the revenue initiatives we have been rolling out will allow
us to increase our premium."
The company reported the following financial results, which include
the impact from healthcare asset sales:
-
Third quarter revenues were $137 million, a 14% decline compared to 2001.
-
Third quarter Earnings Before Interest, Taxes, Depreciation and Amortization
(EBITDA) was $42 million, a 35% decline compared to 2001.
-
Third quarter net loss available to common shareholders was $27 million,
or ($0.19) per share in 2002, versus a net loss of $11 million, or ($0.08)
per share, in 2001.
-
Excluding non-recurring items, La Quinta reported a net loss of $5 million,
or ($0.03) per share, in the third quarter of 2002 versus net income of
$3 million, or $0.02 per share, in the third quarter of 2001. Significant
non-recurring items included asset impairments, impairment of goodwill,
gains on sale of assets and other income and expenses.
-
Cash earnings were $23 million, or $0.16 per share, in the third quarter
of 2002, versus $38 million, or $0.26 per share, in the third quarter of
2001.
Lodging Results
RevPAR for total company-owned hotels declined 3.7% to $36.77 during
the third quarter while RevPAR for comparable hotels declined 5.0% to $36.83.
RevPAR at the Company's Inns and Inn & Suites declined 3.4% and 5.6%
to $35.31 and $41.03, respectively. Occupancy for comparable hotels declined
2.3 percentage points to 61.2% during the third quarter, reflecting reduced
lodging demand. Inn occupancy declined 2.0 percentage points to 61.2% and
Inn & Suites occupancy declined 1.8 percentage points to 60.6%. Average
daily rates (ADR) for comparable hotels fell 1.4% to $60.18 during the
third quarter, primarily reflecting a change in business mix in response
to reduced demand. ADR at the Company's Inns declined 0.3% to $57.67 while
ADR at the Company's Inn & Suites declined 2.6% to $67.76.
Lodging EBITDA for the third quarter was $42 million, a 21% decrease
over the same period last year. Included in third quarter lodging expenses
are start-up costs of approximately $3 million related to the newly redesigned
La Quinta Returns(R) guest frequency program.
"A key revenue driver for us going forward is our enhanced frequent-stayer
program -- La Quinta Returns," said Mr. Cash. "We believe La Quinta Returns,
launched in late September, is one of the best frequency programs in our
segment and will entice new members to join the program and more effectively
reward our existing loyal customers. Another important revenue initiative
is electronic distribution, where we added several new channels during
the third quarter. In addition to these investments, we are currently reshaping
and expanding our sales force to put more emphasis on backyard sales while
continuing to go after national accounts.
"We are focused on improving our revenue performance notwithstanding
that RevPAR has been soft in a number of our key markets. In our top ten
markets, which account for over 35% of our owned hotels, we have a higher
concentration than many of our competitors. These markets -- Dallas/Ft.
Worth, Houston, Denver, San Antonio, Austin, New Orleans, Atlanta, Orlando,
Miami/Ft. Lauderdale and Phoenix -- have been hit particularly hard
with RevPAR down 11% year-to-date. We are pleased, however, that the La
Quinta brand has a RevPAR premium over these local competitors.
"Growing distribution continues to be an important part of our strategy,"
continued Mr. Cash. "During the third quarter, we opened 233 franchise
rooms. With our pipeline of over 4,200 rooms approved, we continue
to anticipate having approximately 6,000 franchise rooms (80 franchise
hotels) open by year-end."
Financial Position
At September 30, 2002, total indebtedness was $665 million. During the
third quarter, La Quinta repaid approximately 18%, or $146 million, of
its total debt. In addition, La Quinta repurchased 863,800 shares of its
common stock at an average price of $5.06 during the third quarter. La
Quinta currently has authorization for $16 million worth of additional
stock repurchases. La Quinta's cash position was $24 million at September
30, 2002.
As part of the Company's previously-announced program to upgrade its
lodging portfolio, La Quinta sold one hotel during the third quarter for
gross proceeds of $2 million and recorded a slight loss after previously
recorded impairments of $2 million. As of September 30, 2002, the Company
had 13 properties with a net book value of $33 million remaining to be
sold under this program.
During the third quarter, La Quinta sold the remaining healthcare assets
that the Company had held for sale for gross proceeds of approximately
$61 million and recorded a gain of approximately $4 million after previously
recorded impairments of $24 million. As previously announced, the Company
intends to continue holding four healthcare receivables totaling approximately
$59 million through maturity.
"We are pleased to have completed our healthcare asset sale strategy
ahead of schedule," said David L. Rea, Executive Vice President and Chief
Financial Officer. "Since the beginning of 2000, we have sold approximately
$2 billion of healthcare assets with proceeds used to reduce our debt from
$2.6 billion to $665 million."
The Company recorded a net loss from non-recurring items of $35 million
during the third quarter of 2002. This amount reflects $29 million of net
impairments recorded, an $8 million impairment of goodwill and a $2 million
provision on a healthcare asset sale obligation, offset by a $4 million
gain on asset sales.
Current Outlook
For the fourth quarter of 2002, La Quinta currently anticipates total
company RevPAR to be flat over 2001 levels. Lodging EBITDA is currently
anticipated to be approximately $27 million in the fourth quarter. EPS
is currently anticipated to be approximately ($0.11) and cash EPS is currently
anticipated to be approximately $0.06 in the fourth quarter.
The Company is in the midst of its planning process for 2003. While
visibility remains low, the Company currently anticipates total company
RevPAR growth to be in the low single-digits in 2003. Lodging EBITDA is
currently anticipated to be between flat and a low single-digit increase.
Capital expenditures are currently anticipated to be approximately $70
million, which includes $15 million for a hotel redevelopment project.
The Company continues to anticipate adding an additional 4,000 franchise
rooms (50 hotels) to the system next year.
"As we position La Quinta for 2003, our primary goals are to improve
revenues, grow product distribution and manage our financial structure,"
said Mr. Cash. "We believe that with an improving economy and meaningful
recovery in our key markets in 2003, coupled with execution of our top-line
initiatives, we will return to positive RevPAR growth. We believe we have
the brand, the people and the financial flexibility to enhance our position
as a leader in the limited service lodging business."
La Quinta Corporation
Schedule A
Financial Results
(Unaudited)
Operating Data
Three months ended Nine months ended
(In thousands,
September 30, September
30,
except per
share data) 2002
2001 2002
2001
Revenues
Lodging
$ 135,344 $146,261 $409,370 $458,013
Other
1,392 13,541 11,344
65,527
Total revenues
136,736 159,802 420,714
523,540
Expenses
Direct
lodging operations 61,360 65,186
178,799 192,275
Other
lodging expenses 20,615
19,045 58,883 58,182
General
and administrative 12,632 10,790
37,909 35,551
Interest,
net
14,353 20,782 51,529
79,130
Depreciation
and
amortization
29,583 29,122 92,005
88,366
Amortization
of goodwill ---
5,296 ---
16,508
Impairment
of property,
plant and equipment,
mortgages and other
notes receivable
29,187 21,268 29,187
81,876
Impairment
of goodwill 8,000
--- 8,000
---
Other
(1,771) (6,941) (14,373)
285
Total expenses
173,959 164,548 441,939
552,173
Loss before minority
interest,
income taxes,
and cumulative
effect of
change in
accounting
principle
(37,223) (4,746) (21,225)
(28,633)
Minority
interest
(4,621) (120) (13,878)
(485)
Income
tax benefit
(expense)
15,196 (1,632) (186,900)
(2,025)
Loss before cumulative
effect of
change in
accounting
principle (26,648)
(6,498) (222,003) (31,143)
Cumulative
effect of
change in accounting
principle
--- --- (258,957)
856
Net loss
(26,648) (6,498) (480,960) (30,287)
Preferred
stock
dividends
--- (4,500)
--- (13,500)
Net loss available to
common shareholders $(26,648) $(10,998)
$(480,960) $(43,787)
Net loss per paired
common share:
Basic
$(0.19) $(0.08) $(3.36)
$(0.30)
Diluted
$(0.19) $(0.08) $(3.36)
$(0.30)
Weighted average
shares
outstanding:
Basic
143,325 143,077 143,151
143,013
Diluted
143,325 143,077 143,151
143,013
La Quinta Corporation
Schedule B
Supplemental Financial Data
(Unaudited)
Neither EBITDA, recurring net income
(loss) available to common shareholders or cash earnings are intended to
represent any measure of performance in accordance with generally accepted
accounting principles ("GAAP"). EBITDA, recurring net income and cash earnings
are included herein because management believes that certain investors
find them to be useful tools for measuring the Company's performance. Cash
earnings is a non-GAAP measure of cash flow generated by the Company to
support its maintenance capital expenditures, debt reduction and growth
initiatives.
Recurring Net Income
(Loss),
Cash Earnings
&
Three months ended Nine months ended
EBITDA Reconciliation
September 30, September
30,
(In thousands)
2002 2001
2002 2001
Net loss available
to
common shareholders
(per GAAP)
$(26,648) $(10,998) $(480,960) $(43,787)
Add:
Cumulative
effect of
change in accounting
principle
--- ---
258,957 (856)
Impairment
of goodwill 8,000
--- 8,000
---
Nonrecurring
restructuring
income tax charge
--- ---
196,520 ---
Other,
net
13,863(A) 14,327 5,585(B)
82,161
Recurring net (loss)
income
available
to common
shareholders
(Non-GAAP) (4,785)
3,329 (11,898) 37,518 Add:
Depreciation
and
amortization
29,583 29,122 92,005
88,366
Amortization
of goodwill ---
5,296 ---
16,508
Deferred
income
tax benefit
(1,423)(C) ---
(247)(D) ---
Cash Earnings (Non-GAAP)
23,375 37,747 79,860
142,392
Add:
Minority
interest
4,621 120
13,878 485
Dividends/distributions
to shareholders
--- 4,500
--- 13,500
Current
income tax
(benefit) expense
(220)(E) 1,632 (144)(F)
2,025
Interest
expense
14,353 20,782 51,529
79,130
Total EBITDA (Non-GAAP)
$42,129 $ 64,781 $145,123 $ 237,532
Recurring net (loss)
income
per common
share (Basic) $(0.03) $0.02
$(0.08) $0.26
Cash earnings per
common share
(Basic) $0.16
$0.26 $0.56
$1.00
(A) Other for the
three months ended September 30, 2002 is comprised of pre-tax expense of
$27,416 less $13,553 of tax-related items.
(B) Other for the
nine months ended September 30, 2002 is comprised of pre-tax expense of
$14,814 less $9,229 of tax-related items.
(C) Deferred income
tax benefit for the three months ended September 30, 2002 was $9,477 less
net deferred tax benefit of $8,054 associated with non-recurring items.
(D) Deferred income
tax benefit for the nine months ended September 30, 2002 was $3,977 less
net deferred tax benefit of $3,730 associated with non-recurring items.
(E) The current
tax benefit for the three months ended September 30, 2002 was $5,720 less
current tax benefits of $5,500 associated with nonrecurring items.
(F) The current
tax benefit for the nine months ended September 30, 2002 was $5,644 less
current tax benefits of $5,500 associated with nonrecurring items.
Three months ended Nine months
ended
EBITDA by Segment
September 30,
September 30,
(In thousands)
2002 2001
2002 2001
Lodging
$ 42,077 $53,233
$ 138,891 $180,446
Other
52 11,548
6,232 57,086
Total
EBITDA $ 42,129
$64,781 $ 145,123 $237,532
Three months ended Nine
months ended
Capital Expenditures
September 30,
September 30,
(In thousands)
2002 2001
2002 2001
Capital expenditures
$23,471 $24,232
$81,833 $65,737
La Quinta Corporation
Schedule C
Other Supplemental Information
(Unaudited)
Capitalization
Schedule
September 30, December 31,
(In millions, except
for percentages)
2002 2001
Cash
$24 $138
Total indebtedness
665 1,000
Minority interest
206
7
Equity
1,345 2,025
Total capitalization
2,192 2,894
Net debt to total
capitalization
29% 30%
Balance Sheet
Data
September 30, December 31,
(In millions)
2002 2001
Property, plant
and equipment, net
$2,320 $2,540
Cash and cash equivalents
24 138
Total assets
2,579 3,215
Total indebtedness
665 1,000
Total liabilities
1,027 1,184
Minority interest
206
7
Total shareholders'
equity
1,345 2,025
Debt Maturity Schedule
September 30, 2002
(In millions)
Bonds and
Year Notes
Payable Bank Notes Mortgages
Total
2002
$--- $ ---
$--- $---
2003 (A)
107 ---
--- 107
2004 (B)
158 ---
--- 158
2005
116 ---
--- 116
2006
20 ---
--- 20
2007 and thereafter
264 ---
--- 264
Total debt
$665 $ ---
$--- $665
(A) Assumes $91 million
of Notes due in 2026 are put to the Company.
(B) Assumes $94
million of Notes due in 2011 are put to the Company.
La Quinta Corporation
Schedule D
Summary Lodging Statistics (Unaudited)
Occupancy Percentage (Occ), Average Daily Rate (ADR)
and Revenue per Available Room (RevPAR) Data
Three months ended Three months ended
September 30, 2002 September 30, 2001
Change
Occ ADR RevPAR Occ ADR
RevPAR Occ ADR RevPAR
Comparable
Hotels
(A,B) 61.2% $60.18 $36.83 63.5%
$61.03 $38.75 - 2.3 pts - 1.4% - 5.0%
Company-
Owned (A) 61.1% $60.22 $36.77 63.0% $60.62 $38.20
- 1.9 pts - 0.7% - 3.7%
Nine months ended Nine months ended
September 30, 2002 September 30, 2001
Change
Occ ADR RevPAR Occ ADR
RevPAR Occ ADR RevPAR
Comparable Hotels
(A,B) 62.1% $60.30 $37.45 65.8%
$62.40 $41.04 - 3.7 pts - 3.4% - 8.7%
Company- Owned
(A) 61.8% $60.30
$37.25 65.2% $61.87 $40.35 - 3.4 pts - 2.5% - 7.7%
Hotel and Room Count
Data
September 30, 2002 September 30, 2001
Number of Number of Number of
Number of
Hotels Rooms
Hotels Rooms
Comparable Hotels
(A,B) 282 36,673
282 36,660
Company-Owned (A)
287 37,478
293 38,057
Franchised Hotels
50 3,915
8 791
Total
337 41,393
301 38,848
(A) Excludes franchised
operating statistics.
(B) Comparable hotels
exclude four hotels that were undergoing redevelopment last year, representing
529 rooms in aggregate, and one new, 276 room, hotel also under development
last year. All five properties are now open.
|
Dallas-based La Quinta Corporation, a leading limited service lodging
company, owns, operates or franchises over 330 La Quinta Inns and La Quinta
Inn & Suites in 33 states.
Certain matters discussed in this press release may constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform
Act of 1995. Words such as "believes," "anticipates," "expects," "intends,"
"estimates," "projects" and other similar expressions, which are predictions
of or indicate future events and trends, typically identify forward-looking
statements. |
