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Press Release: ShoLodge, Inc.
November 18, 2002
HENDERSONVILLE, TN -- ShoLodge, Inc. (Nasdaq: LODG) Friday announced results for its third quarter and 40-week
period ended October 6, 2002.
Total operating revenues for the third quarter of 2002 were $8.7 million compared with $12.7 million in the third
quarter a year ago, the decrease being due to a decrease of $5.0 million in construction and development revenues.
The Company reported a net loss of $1.5 million, or $0.29 per share, after the loss from discontinued operations,
net of tax, of $25,000. This compares with net income of $92,000, or $0.02 per share, after the earnings from discontinued
operations, net of tax, of $14,000, in the third quarter of 2001.
Total revenues from hotel operations were $3.5 million for the third quarter of 2002, compared with $2.9 million
in the third quarter of 2001. Three new hotels contributed $1.2 million to revenues in the third quarter of 2002.
For the 11 hotels opened for all of both quarterly periods (Same- Hotels), revenue decreased 20.2% to $2.3 million
in the third quarter of 2002 from $2.9 million in the third quarter of 2001. Same-Hotels RevPAR (Revenue Per Available
Room) from the company-owned Shoney's Inns and GuestHouse hotels was $21.80 in the third quarter of this year compared
with $26.82 in the third quarter of 2001.
For the 40 weeks ended October 6, 2002, total operating revenues were $26.1 million compared with $33.9 million
in the comparable period a year ago, the decrease being due to a decrease of $10.9 million in construction and
development revenues. The net loss was $1.1 million, or $0.22 per share, after the earnings from discontinued operations,
net of tax, of $165,000, or $0.03 per share, compared with net income of $1.7 million, or $0.31 per share, after
the earnings from discontinued operations, net of tax, of $71,000, or $0.01 per share, for the prior-year period.
Total revenues from hotel operations were $11.6 million for the first three quarters of 2002, compared with $10.1
million in the prior-year period. Three new hotels contributed $3.5 million to revenues in the first three quarters
of 2002, and two hotels sold in 2001 contributed $638,000 to hotel revenues in the first three quarters of 2001.
For the 11 Same-Hotels, revenue decreased 14.8% to $8.1 million in the first three quarters of this year from $9.5
million in the comparable period last year. Same-Hotels RevPAR from the Shoney's Inns and GuestHouse hotels decreased
to $22.66 in the first three quarters of 2002 compared with $26.22 in the first three quarters of 2001.
The first three quarters of 2002 included a pre-tax gain of $597,000 from the sale of properties, compared with
$3.8 million from the sale of properties in the first three quarters of 2001. Gains on early extinguishments of
debt totaled $2.6 million in the first three quarters of 2002 in contrast to $848,000 in the same period last year.
Additionally, the second quarter of this year reflects an arbitration award of $8.9 million on June 28, 2002, against
Prime Hospitality Corp. for monetary damages related to the non-use of ShoLodge's reservation center. Also, results
for the second quarter of 2002 include a one-time impairment charge of $6.8 million of intangible assets related
to the Sumner Suites trademark and the franchising rights of the Shoney's Inns brand name.
ShoLodge also announced the filing of a registration statement in connection with a possible exchange offer and
consent solicitation relating to its Senior Subordinated Notes. The exchange offer would involve the exchange of
new Senior Subordinated Notes for a portion of the existing Senior Subordinated Notes, with the new notes having
an increased interest rate of 40 basis points in exchange for consents to amend the indenture to relax certain
financial covenants and eliminate certain "put" rights currently available to noteholders. An amendment
to the registration statement was filed by the Company on October 29, 2002.
Leon Moore, chief executive officer of ShoLodge, said, "As announced in the second quarter of 2002, we acquired
the exclusive franchising rights for the GuestHouse Inns & Suites hotel brand, consisting of 71 properties
in 20 states. We are also currently the franchisor of 64 Shoney's Inns & Suites. We are on track with our previously
announced plan to convert all of the Shoney's brand properties to the GuestHouse brand and have successfully converted
eleven properties to date. With the completion of this conversion, we will have 135 franchised hotels with the
same brand name, further enhancing our presence in the marketplace and allowing for more effective use of advertising
dollars. We believe that the GuestHouse name suggests a warm hospitality and we are excited about the potential
growth opportunity to leverage the brand recognition and expand our market presence. The GuestHouse properties
were also added to ShoLodge's proprietary reservation center on August 12, 2002. Over the past year we have significantly
increased the number of hotels and resort properties served by our reservation center. Our growth strategy continues
to be focused on our franchising efforts and the expansion of our reservation services, as well as identifying
attractive opportunities to develop hotels for third parties."
This press release contains forward-looking statements relating to certain matters, which reflect management's
best judgment, based o n factors currently known and involve risks and uncertainties. Actual results could differ
materially from the anticipated results or expectations expressed in the Company's forward-looking statements.
Forward-looking information provided by the Company pursuant to the safe harbor established under the Private Securities
Litigation Reform Act of 1995 should be evaluated in the context of these factors which are contained in the Company's
Securities and Exchange Commission (SEC) filings, including its periodic reports filed under the Securities Exchange
Act of 1934, as amended. Copies of these filings are available upon request from the Company. In addition, the
Company disclaims any intent or obligation to update these forward-looking statements.
SHOLODGE, INC.
Unaudited Financial Highlights
(In thousands, except per share amounts)
12 Weeks Ended 40 Weeks Ended
10/6/02 10/7/01 10/6/02 10/7/01
Total operating revenues $8,685 $12,666 $26,054 $33,938
Hotel operating revenues $3,520 $2,905 $11,550 $10,115
(Loss) earnings from
continuing operations $(1,471) $78 $(1,303) $1,660
Discontinued operations (25) 14 165 71
Net (loss) earnings $(1,496) $92 $(1,138) $1,731
(Loss) earnings per common share:
Basic:
(Loss) earnings from
continuing operations $(0.29) $0.01 $(0.25) $0.30
Discontinued operations -- 0.01 0.03 0.01
Net (loss) earnings per
share $(0.29) $0.02 $(0.22) $0.31
Diluted:
(Loss) earnings from
continuing operations $(0.29) $0.01 $(0.25) $0.30
Discontinued operations -- 0.01 0.03 0.01
Net (loss) earnings per
share $(0.29) $0.02 $(0.22) $0.31
Average shares outstanding:
Basic: 5,119 5,522 5,113 5,534
Diluted 5,154 5,604 5,178 5,606
Source: ShoLodge, Inc.