| May 1, 2003 - La Quinta Corporation today announced financial results
for the first quarter ended March 31, 2003. La Quinta will hold a conference
call today to discuss these results and its business.
The Company reported the following financial results, which included
the impact from healthcare asset sales. A detailed schedule reconciling
net loss to EBITDA is included in the supplemental tables.
For the first quarter 2003, La Quinta reported:
-
Revenues of $121 million, a 12% decline compared to 2002.
-
Net loss of $50 million, or ($0.35) per share, versus net loss of $460
million, or ($3.22) per share, in 2002.
-
EBITDA of $32 million, a 30% decline compared to 2002.
"Weakness in business travel and some softening in leisure travel negatively
impacted our quarterly results," said Francis W. ("Butch") Cash, President
and Chief Executive Officer. "The soft economy and concerns surrounding
anticipation of a war in Iraq weighed heavily on the lodging industry.
Once the war actually began, travel dropped off significantly. Despite
the challenging environment, we were able to improve our guest satisfaction
scores and strengthen our balance sheet and credit profile."
Lodging Results
RevPAR for total company and comparable owned hotels declined 6.2% and
7.2%, respectively, during the first quarter. In the Company's top ten
markets --
Dallas/Ft. Worth, Houston, Denver, San Antonio, Austin, New Orleans,
Atlanta, Orlando, Miami/Ft. Lauderdale and Phoenix -- RevPAR of our direct
competitors in these markets declined 7% during the quarter while La Quinta's
RevPAR declined 11%. RevPAR was impacted by occupancy declines, which were
partially offset by improvements in average daily rates. EBITDA for the
first quarter was $32 million, decreasing $14 million over the same period
last year.
"While La Quinta and the rest of the lodging industry continue to face
sluggish demand and pricing pressures, we are focused on improving our
business," said Mr. Cash. "We have upgraded our properties with significant
refurbishments. Our focus on guest satisfaction is resulting in improving
customer ratings. While not satisfied with our revenue results, we believe
the recent investments we have made in our frequent stayer program, electronic
distribution and sales force -- coupled with improvements in our product
and service -- will lead to stronger top line performance as our programs
gain traction."
"The La Quinta brand continues to be well received by the franchise
community, even in today's tough financing environment," continued Mr.
Cash. "During the quarter, we opened 226 franchise rooms (3 hotels).
With a pipeline of 3,600 rooms approved, we currently continue to anticipate
having approximately 10,000 franchise rooms opened by the end of this year."
Financial Position
At March 31, 2003, La Quinta had total indebtedness of $915 million
and cash of $208 million. In March, the Company successfully completed
an offering of $325 million 8 7/8% senior notes due 2011. A portion of
the proceeds from the offering was used in March and April to fund tender
offers for notes maturing or redeemable at the holders' option in 2003
and 2004. As a result, as of April 2, 2003, the Company had total indebtedness
of $810 million and $106 million of cash. The remaining proceeds from the
offering will be used to fund $84 million of notes maturing or redeemable
at the holders' option in 2003 and 2004 that were not tendered to the Company,
as well as for general corporate purposes.
In addition, the Company amended certain terms of its revolver, which
will now mature on January 4, 2004. The size of the revolver has been reduced
to $125 million, reflecting the additional liquidity raised from the senior
note offering completed in March. At March 31, 2003, the Company had $102
million available under its revolver (net of $23 million in letters of
credit).
"We are very pleased with the enhancements we made to our balance sheet
during the quarter," said David L. Rea, Executive Vice President and Chief
Financial Officer. "With the completion of the $325 million debt offering
and related tender offers, we were able to double our weighted average
debt maturity to five years. As a result, we now have the liquidity to
address our maturities through August 2005."
During the first quarter, the Company recorded $65 million of charges,
which include $62 million of non-cash charges for impairments, based on
a quarterly examination of its real estate portfolio in accordance with
generally accepted accounting principles, a $2 million loss on the early
extinguishments of debt related to the refinancing and $1 million related
to the Company's former healthcare business.
Current Outlook
The Company has updated its guidance to give effect for the U.S. military
action in Iraq. For the second quarter of 2003, La Quinta currently anticipates
a total company RevPAR decline of approximately 5%, reflecting weakness
stemming from the war in Iraq and continued weakness in lodging demand.
EBITDA is currently anticipated to be approximately $44 million. EPS is
currently anticipated to be approximately ($0.06).
La Quinta currently anticipates full year 2003 total company RevPAR
to be down approximately 2-3%, reflecting the impact of the war in Iraq
and continued weakness in key La Quinta markets, offset by the impact of
the Company's revenue initiatives later in the year. EBITDA is currently
anticipated to be approximately $145 million. Full year EPS is currently
anticipated to be approximately ($0.57) per share. EPS guidance reflects
an increase in interest expense from the first quarter of 2003 and certain
non-cash charges.
The Company currently anticipates self-funding its capital expenditures
in 2003. Capital expenditures are currently anticipated to be approximately
$60 million.
La Quinta Corporation
Schedule A
Financial Results
(Unaudited)
Three months ended
Operating Data
March 31,
2003
2002
(In thousands, except per share data)
Revenues
Lodging
$120,242
$131,902
Other
1,231
6,620
Total revenues
121,473
138,522
Expenses
Direct
lodging operations
55,278
58,044
Other
lodging expenses
18,559
19,730
General
and administrative
15,211
14,626
Interest,
net
14,249
18,596
Depreciation
and amortization
31,928
29,759
Impairment
of property, plant
and equipment
62,012
--
Other
expense (income)
3,183
(2,660)
Total expenses
200,420
138,095
Income (loss) before
minority
interest,
income taxes, and
cumulative
effect of change
in accounting
principle
(78,947)
427
Minority
interest
(4,510)
(4,626)
Income
tax benefit (expense)
33,169
(196,672)
Loss before cumulative
effect of change in accounting principle
(50,288)
(200,871)
Cumulative
effect of change
in accounting principle
--
(258,957)
Net loss
$(50,288)
$(459,828)
Net loss per share
- basic and diluted $(0.35)
$(3.22)
Weighted average
shares outstanding -
basic and
diluted
142,701
142,980
Prior period results have been reclassified to conform to current period
presentation.
La Quinta Corporation
Schedule B Other Expense (Income)
(Unaudited)
Three months ended
March 31,
2003
2002
(In thousands)
Other Expense (Income)
Bad
debt recoveries (1)
$(4)
$(7)
Gain
on sale of assets
and related costs
(86)
(2,492)
Loss
(gain) on early
extinguishments of debt (2)
1,934
(161)
Other
(3)
1,339
--
Total other expense (income)
$3,183
$(2,660)
(1) Amounts
relate to recovery of healthcare receivables previously written off.
(2)
Incurred in connection with the prepayment of principal on notes payable.
(3)
Primarily related to an adjustment of actuarial assumptions on deferred
compensation agreements and changes in net cash surrender values of key
man life policies in the healthcare business.
La Quinta Corporation
Schedule C
Supplemental Non-GAAP Financial Data
(Unaudited)
EBITDA Reconciliation
Three months ended
March 31,
2003
2002
(In thousands)
Net loss (per GAAP)
$(50,288)
$(459,828)
Add:
Depreciation
and amortization
31,928
29,759
Impairment
of property, plant
and equipment
62,012
--
Minority
interest
4,510
4,626
Income
tax (benefit) expense
(33,169)
152 (1)
Nonrecurring
restructuring
income tax charge
--
196,520 (1)
Cumulative
effect of change
in accounting principle
--
258,957
Interest,
net
14,249
18,596
Other
expense (income)
3,183
(2,660)
Total EBITDA (Non-GAAP)
$32,425
$46,122
(1) Income
tax (benefit) expense for the three months March 31, 2002 was $196,672
including net deferred tax expense of $196,520 associated with a non-recurring
charge recorded in January 2002 to establish the net deferred tax liability
of La Quinta as a result of our legal restructure.
EBITDA Reconciliation
(Current 2003 Outlook)
Three Months
Ended
Full Year
June 30, 2003
2003
(In millions)
Net loss (per GAAP)
$(9)
$(81)
Add:
Depreciation
and amortization
30
122
Impairment
of property,
plant and equipment
--
62
Minority
interest
5
18
Income
tax (benefit) expense
(4)
(47)
Interest,
net
18
64
Other
expense (income)
4
7
Total EBITDA (Non-GAAP)
$44
$145
La Quinta Corporation
Schedule D
Other Supplemental Information
(Unaudited)
Three months ended
Capital Expenditures
March 31,
2003
2002
(In thousands)
Capital expenditures
$16,579
$29,110
Selected Balance
Sheet Data
March 31,
December 31,
2003
2002
(In millions)
(Audited)
Property, plant
and equipment, net $2,235
$2,310
Cash and cash equivalents
(A)
208
10
Total assets
2,680
2,548
Total indebtedness
(B)
915
665
Total liabilities
1,209
1,028
Minority interest
(C)
206
206
Total shareholders'
equity (D)
1,264
1,313
Net debt to total
capitalization
Equal to (B-A) /
(D+C+B-A)
32%
30%
Debt Maturity Schedule
March 31,
April 2,
2003
2003 (1)
(In millions)
2003
31 (2)
31 (2)
2004
158 (3)
53 (4)
2005
116
116
2006
20
20
2007
210
210
2008 and thereafter
380
380
Total debt
915
810
(1) Reflects
senior notes tendered through the Company's tender offer, which closed
April 2, 2003.
(2)
Assumes $24 million of 7.82% Notes due in 2026 are redeemed at the option
of the holders.
(3)
Assumes $94 million of 7.114% Notes due in 2011 are redeemed at the option
of the holders.
(4)
Assumes $33 million of 7.114% Notes due in 2011 are redeemed at the option
of the holders.
La Quinta Corporation
Schedule E
Lodging Statistics
(Unaudited)
Three months ended
Three months ended
March 31, 2003
March 31, 2002
Occ ADR RevPAR
Occ ADR RevPAR
Comparable
Hotels (1,2)
54.2% $62.33 $33.79
59.3% $61. $36.43
Company Owned (1)
Inns
53.2% $58.49 $31.12
57.8% $56.99 $32.91
Inns
& Suites 57.0% $72.17
$41.10 62.2% $72.43
$45.03
Total
54.2% $62.27 $33.75
58.9% $61.11 $35.97
Change
Occ ADR RevPAR
Comparable
Hotels
(1,2)
(5.1) pts 1.4% (7.2)%
Company Owned (1)
Inns
(4.6) pts 2.6% (5.4)%
Inns
& Suites
(5.2) pts (0.4)% (8.7)%
Total
(4.7) pts 1.9% (6.2)%
Hotel and Room Count
Data
March 31, 2003
March 31, 2002
Number of Number of Number of
Number of
Hotels Rooms
Hotels Rooms
Comparable Hotels
(2) 282
36,844 282
36,855
Company-Owned
284 37,124
291 37,989
Franchised Hotels
68 6,009
43 3,270
Total
352 43,133
334 41,259
(1) Excludes
franchised operating statistics.
(2)
Comparable hotels for the three months ended March 31, 2003 and 2002 excludes
two hotels that were undergoing redevelopment at the beginning of 2002,
representing 280 rooms in aggregate. Both properties are now open. |
Dallas-based La Quinta Corporation , a leading limited service lodging
company, owns, operates or franchises over 350 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. |
