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Press Release: Candlewood Hotel Company, Inc.
November 18, 2002
WICHITA, KS -- Candlewood Hotel Company, Inc. (OTC Bulletin Board: CNDL), a leading owner, manager, and franchisor
of high-quality, value-oriented, business-travel hotels, Nov. 14 announced results for its third quarter ended
September 30, 2002.
Third Quarter 2002 Results
Comparing the operating results of the Candlewood hotels owned, leased and managed by the Company for the third
quarter of 2002, occupancy increased 2.1 points to 78.4 percent, compared to 76.3 percent in the third quarter
of 2001. Average daily rate (ADR) during the quarter was $55.36, a 6.1% decrease compared to $58.98 in the third
quarter of 2001. Revenue per available room (RevPAR) was $43.38, a decrease of 3.6 percent from $45.01 in the third
quarter of 2001.
Total hotel operating revenue for the three-month period ended September 30, 2002 was $33.3 million, compared with
$34.6 million for the same period in 2001. Income from hotel operations (hotel operating revenues less hotel and
related corporate operating expenses and hotel opening costs) was $11.8 million for the third quarter of 2002,
compared with $13.5 million for the comparable period in 2001.
Loss before preferred dividends was $1.5 million for the three months ended September 30, 2002, compared with a
loss of $525,000 for the same time period in 2001. The net loss over the comparable period during 2001 was primarily
attributable to lower revenue.
During the third quarter, four franchise hotels went under construction. Since the end of the third quarter, one
additional franchised hotel opened, bringing the total additional properties year-to-date to four new franchise
hotels and one acquisition. As of September 30, 2002, there were six Candlewood franchised hotels under construction.
The Company ended the quarter with $12.9 million of cash and $59 million of debt.
Form 10Q Certifications
The Company plans to file its Form 10Q Report for the quarterly period ended September 30, 2002 prior to November
14, 2002. The Form will be accompanied by the certificates of the Chief Executive Officer and Chief Financial Officer
as provided in Section 9.06 of the Sarbanes-Oxley Act of 2002.
About the Company
Candlewood Hotel Company, headquartered in Wichita, Kansas, owns, operates and franchises Candlewood Suites and
Cambridge Suites -- hotel properties that offer high-quality accommodations for all guests, while catering to mid-market
and upscale business and personal travelers seeking multiple night stays. Jack DeBoer, Chairman and CEO and founder
of Residence Inn, started Candlewood Hotel Company in late 1995.
The financial results may not be indicative of results for future periods. The matters in this press release include
"forward looking statements" within the meaning of the safe harbor provisions of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are qualified by cautionary statements contained
herein and in Candlewood Hotel Corporation filings with the Securities and Exchange Commission. Factors which may
affect our results include: the impact of terrorist attacks or general economic recession on our results from operations,
the inability to extend or modify the terms of our outstanding indebtedness, the inability to secure additional
market share due to competition and other factors, the inability to improve RevPAR through the management of occupancy
levels and pricing, the risk that overbuilding in the hospitality industry will adversely affect occupancy levels
and pricing, our ability to lower operating expenses and gain market share through sales efforts, operating performance
of our hotels and general economic conditions, the availability of financing to franchisees on acceptable terms,
the market acceptance of the Candlewood brand, the ability to attract and retain franchisees, the risk that signed
franchise agreements may not result in the construction or opening of hotels, the ability to attract and retain
quality personnel and the risk that openings may be delayed. Actual results may differ materially from management's
expectations.
The forward-looking statements made in this release reflect the opinion of management as of the date of the release.
Please be advised that subsequent developments are likely to cause these statements to become outdated with the
passage of time. We do not intend, however, to update this press release or any statement made herein prior to
our next quarterly earnings release.
www.candlewoodsuites.com
CANDLEWOOD HOTEL COMPANY, INC.
THIRD QUARTER OPERATING RESULTS
(Unaudited) (In thousands, except share and per share data)
For the three- For the nine-
months ended months ended
September 30, September 30,
2002 2001 2002 2001
Revenues:
Hotel operations $32,493 $33,493 $94,866 $98,046
Other income 778 1,097 2,121 2,842
Total hotel operating
revenues 33,271 34,590 96,987 100,888
Proceeds from sales of
hotels, net of deferred gain
of $0 and $0, respectively - 28,850 145,000 28,850
Deferred gain recognition on
sales of hotels 406 357 1,044 1,049
Total revenues 33,677 63,797 243,031 130,787
Operating costs and expenses:
Hotel operating expenses 20,196 19,615 59,968 55,760
Corporate operating expenses 1,279 1,509 4,447 4,884
Rent expense on leased hotels 11,470 6,807 29,590 19,468
Hotel opening costs - - - 230
Depreciation and amortization 1,144 3,203 4,934 8,833
Impairment loss on assets held for
sale - - 8,604 -
Loss on extinguishment of debt - - 2,115 -
Total operating costs
and expenses 34,089 31,134 109,658 89,175
Costs of hotels sold - 29,064 145,000 29,064
(412) 3,599 (11,627) 12,548
Interest income 73 219 258 600
Interest expense (1,172) (4,343) (6,127) (13,467)
Income (loss) before preferred
stock dividends (1,511) (525) (17,496) (319)
Preferred stock dividends (2,023) (2,023) (6,002) (6,002)
Net (loss) available to common
stockholders $(3,534) $(2,548) $(23,498) $(6,321)
Per share data:
Net (loss) per share of common
stock - basic and diluted $(0.39) $(0.28) $(2.60) $(0.70)
Weighted average shares
outstanding - basic and
diluted 9,025 9,025 9,025 9,025
CANDLEWOOD HOTEL COMPANY, INC.
For the three- For the nine-
months ended months ended
September 30, September 30,
2002 2001 2002 2001
Hotel statistics (Candlewood
owned, leased or managed)
# of Hotels 78 77 78 77
Average occupancy % 78.4% 76.3% 76.7% 73.7%
Average daily rate $55.36 $58.98 $55.50 $60.88
Revenue per available room $43.38 $45.01 $42.55 $44.86
Growth -3.6% -5.1%
Hotel statistics - comparable
hotels (owned, leased or
managed open as of beginning
of period)
# of Hotels - - - -
Average occupancy % 78.4% 76.3% 76.6% 74.2%
Average daily rate $55.42 $58.98 $53.92 $59.87
Revenue per available room $43.43 $45.01 $41.32 $44.44
Growth -3.5% -7.0%
As of September 30,
2002 2001
Open Hotels
Owned 11 31
Leased 57 36
Managed (A) 2 2
Joint Venture 9 9
Franchised 29 26
Total Open 108 104
Under Construction
Owned - -
Leased - -
Managed - -
Joint Venture - -
Franchised 6 3
Total Under Construction 6 3
Total Hotels 114 107
Open Rooms
Owned 1,300 3,786
Leased 6,888 4,292
Managed (A) 203 179
Joint Venture 1,159 1,159
Franchised 2,959 2,637
Total Open 12,509 12,053
Under Construction Rooms
Owned - -
Leased - -
Managed - -
Joint Venture - -
Franchised 647 303
Total Under Construction 647 303
Total Rooms 13,156 12,356
Signed Franchise Agreements 20 23
(A) Includes two managed hotels not under the Candlewood brand.
Source: Candlewood Hotel Company, Inc.