Press Release: Arlington Hospitality, Inc.
August 12, 2002
ARLINGTON HEIGHTS, IL -- Arlington Hospitality, Inc. (Nasdaq/NM: HOST) August 7 announced its earnings results
for the second quarter ended June 30, 2002. Net income for the quarter was $234,068, or $0.05 per diluted share,
compared to net income of $152,596, or $0.03 per diluted share in 2001. Revenues increased 21.7%, to $20.6 million
in the second quarter of 2002, from $17.0 million in 2001. Net income plus depreciation and amortization was up
26.1%, to $1.6 million during the second quarter of 2002, compared to $1.3 million during the second quarter of
2001.
For the six months ended June 30, 2002, the net loss was ($523,684), compared to a net loss of ($467,522) during
the six months ended June 30, 2001. During the first six months of 2002, the Company reported a gain from the sale
of property and equipment of $327,076, compared to $590,445 during the first six months of 2001. Revenues for the
first six months increased 5.9%, to $38.6 million during 2002, from $36.4 million during 2001. Net income plus
depreciation and amortization was up 22.4% to $2.2 million during the first six months of 2002, compared to $1.8
million during the first six months of 2001.
Same room Revenue Per Available Room ("RevPAR") for the three months ended June 30, 2002 for all AmeriHost
Inn hotels managed by the Company increased 5.3%. Michael P. Holtz, President and Chief Executive Officer commented,
"The significant 8.6% increase in same room occupancy achieved during the first half of 2002, was primarily
the result of the increase in demand from leisure travelers. This increase was partially offset by a decrease of
$1.93 in average daily rate. The objective is to maximize revenue opportunity, and our strategies to achieve this
goal seem to be working. In fact, RevPAR for the overall hotel industry decreased 7.9%. Our hotel operations segment
continues to show strong signs of improvement over 2001 as the gross operating profit for the same room AmeriHost
Inn hotels increased by $1.2 million during the first six months of 2002, compared to 2001."
During the last twelve months, the Company sold seven AmeriHost Inn hotels, opened five newly constructed AmeriHost
Inn hotels (including one which was built for an operator who was referred to the Company by Cendant Corporation,
the franchisor of the AmeriHost Inn brand), and acquired the remaining ownership interest from its joint venture
partners in one AmeriHost Inn hotel. Holtz continued, "Our development segment continues to experience a significant
slowdown, both in terms of new hotel development for third parties and the sale of hotels. We believe that this
is a direct result of the current economic environment and the difficulty of hotel developers and buyers to obtain
suitable financing. We are confident that as the financing market returns to the hotel industry, this segment will
again contribute strong earnings and cash flow for your Company."
During the second quarter of 2002, the Company sold one AmeriHost Inn hotel located in Waverly, Iowa, and opened
one AmeriHost Inn hotel in Moses Lake, Washington which was built for a franchisee of Cendant. The Company currently
has four AmeriHost Inn & Suites hotels under construction. These hotels are located in Redding, California;
DeWitt, Michigan; Willows, California; and Maumee, Ohio. The Company anticipates starting construction on additional
AmeriHost Inn hotels in Columbus, Ohio and Weed, California before the end of this year.
The Company has several additional hotel projects in various stages of development and intends to begin construction
on a total of 4-6 hotels during 2002. Currently, the Company owns and operates 66 AmeriHost Inn hotels, in addition
to the hotels under construction and development.
Arlington Hospitality, Inc. is a hotel management and development company that builds and manages mid-priced hotels.
As of June 30, 2002, Arlington Hospitality, Inc. owns or manages 77 properties in 17 states, including 65 AmeriHost
Inn hotels, for a total of 5,747 rooms, with four additional AmeriHost Inn & Suites hotels under construction.
Each hotel offers an amenity package not often found in other mid-priced hotels.
The statements appearing in this press release can be construed as forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. These statements are subject to 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 the development
and operation of hotels, the availability of capital to finance growth, and the historical cyclicality of the lodging
industry.
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Arlington Hospitality, Inc.
Property Ownership and Room Management
As of June 30, 2002
Hotel Properties # of Rooms
AmeriHost Inn Hotels
Consolidated hotels 54 3,484
Minority owned hotels 11 720
SUBTOTAL 65 4,204
Other Hotels
Consolidated hotels 8 1,051
Minority owned hotels 2 243
Managed only hotels 2 249
SUBTOTAL 12 1,543
GRAND TOTAL 77 5,747
AmeriHost Inn Hotels
Same Room RevPAR Performance
Three Months Six Months
June 30, June 30,
2002 2001 2002 2001
AmeriHost Inn
Average Daily Rate ($) $57.64 $59.88 $56.75 58.68
Occupancy (%) 64.3% 58.7% 58.1% 53.5%
RevPAR ($) $37.05 $35.17 $32.98 $31.42
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ARLINGTON HOSPITALITY, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
----------------------------------------------------------------------
June 30, December 31,
2002 2001
-------------- ---------------
ASSETS
Current assets:
Cash and cash equivalents $ 3,415,730 $ 4,748,156
Accounts receivable 1,975,083 2,343,423
Notes receivable 518,499 518,499
Prepaid expenses and other current
assets 1,577,130 998,559
Costs and estimated earnings in
excess of billings on uncompleted
contracts with related parties 1,738,937 1,079,137
-------------- --------------
Total current assets 9,225,379 9,687,774
Investments in and advances to
affiliates 5,849,430 5,404,744
Property and equipment, net 101,401,110 92,895,038
Notes receivable, less current portion 993,279 1,000,000
Other assets, net 5,084,243 6,186,900
-------------- --------------
$ 122,553,441 $ 115,174,456
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,941,621 $ 2,467,704
Bank line-of-credit 7,156,287 6,793,702
Accrued expenses and other current
liabilities 3,524,017 3,476,164
Current portion of long-term debt 6,382,654 2,110,652
-------------- --------------
Total current liabilities 20,004,579 14,848,222
Long-term debt, net of current portion 73,289,190 70,088,269
Deferred income (Note 11) 10,335,945 10,714,735
Minority interests 380,933 456,631
Shareholders' equity 18,542,794 19,066,599
-------------- --------------
$ 122,553,441 $ 115,174,456
============== ==============
ARLINGTON HOSPITALITY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
----------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ------------------------
2002 2001 2002 2001
----------- ----------- ----------- -----------
Revenue:
Hotel operations:
AmeriHost Inn
hotels $11,685,235 $12,251,152 $20,845,162 $22,117,815
Other hotels 2,976,625 2,963,923 5,233,178 5,138,261
Development and
construction 3,154,027 42,018 5,219,310 107,175
Hotel sales and
commissions 1,540,451 93,373 4,748,348 5,858,068
Management services 262,772 242,090 496,709 471,898
Employee leasing 867,814 1,370,134 1,720,175 2,730,016
Other 156,318 - 317,988 -
----------- ----------- ----------- -----------
20,643,242 16,962,690 38,580,870 36,423,233
----------- ----------- ----------- -----------
Operating costs and expenses:
Hotel operations:
AmeriHost Inn
hotels 7,824,102 8,507,534 15,403,551 16,692,558
Other hotels 2,504,103 2,098,862 5,099,282 4,274,177
Development and
construction 2,626,326 211,256 4,623,893 587,424
Hotel sales and
commissions 1,497,732 - 3,528,680 3,717,468
Management services 184,297 159,455 338,827 351,912
Employee leasing 856,165 1,341,867 1,676,802 2,696,781
Other 28,798 - 45,621 -
----------- ----------- ----------- -----------
15,521,523 12,318,974 30,716,656 28,320,320
----------- ----------- ----------- -----------
5,121,719 4,643,716 7,864,214 8,102,913
Depreciation and
amortization 1,406,141 1,148,002 2,729,830 2,269,348
Leasehold rents -
hotels 1,336,840 1,705,280 2,818,652 3,461,139
Corporate general
and administrative 386,435 411,804 773,594 1,025,432
----------- ----------- ----------- -----------
Operating income 1,992,303 1,378,630 1,542,138 1,346,994
Other income (expense):
Interest expense (1,451,102) (1,389,474) (2,874,776) (2,797,047)
Interest income 134,392 122,163 258,222 270,029
Other income
(expense) (22,650) 63,143 37,360 106,388
Gain on sale of
property - 275,207 327,076 590,445
Equity in net income
and (losses) of
affiliates (208,551) (159,767) (121,583) (272,540)
----------- ----------- ----------- -----------
Income (loss) before
minority interests
and income taxes 444,392 289,902 (831,563) (755,731)
Minority interests
in (income) loss of
consolidated
subsidiaries and
partnerships (50,324) (34,306) (37,121) (30,791)
----------- ----------- ----------- -----------
Income (loss) before
income taxes 394,068 255,596 (868,684) (786,522)
Income tax expense
(benefit) 160,000 103,000 (345,000) (319,000)
----------- ----------- ----------- -----------
Net income (loss) $ 234,068 $ 152,596 $ (523,684) $ (467,522)
=========== =========== =========== ===========
Net income (loss)
per share
- Diluted $ 0.05 $ 0.03 $ (0.11) $ (0.10)
=========== =========== =========== ===========
Weighted Average
shares outstanding
- Diluted 5,118,566 5,229,255 5,043,054 5,148,053
=========== =========== =========== ===========
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Contact:
Arlington Hospitality, Inc.
James B. Dale, 847/228-5401 x 361
jimdale@arlingtonhospitality.com