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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Boykin Lodging Company
(Exact Name of Registrant as Specified in Its Charter)

(216) 430-1200

     Indicate by check mark whether the registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes      X        No            

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes                No     X     

     The number of common shares, without par value, outstanding as of November 7, 2002: 17,270,472

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PART I

ITEM 1. FINANCIAL STATEMENTS

BOYKIN LODGING COMPANY
INDEX TO FINANCIAL STATEMENTS

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BOYKIN LODGING COMPANY

See notes to consolidated financial statements.

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BOYKIN LODGING COMPANY

See notes to consolidated financial statements.

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BOYKIN LODGING COMPANY

See notes to consolidated financial statements.

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BOYKIN LODGING COMPANY

See notes to consolidated financial statements.

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BOYKIN LODGING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2002
(unaudited, dollar amounts in thousands except per share data)

1. BACKGROUND:

     Boykin Lodging Company (“Boykin”), an Ohio corporation, is a real estate investment trust (“REIT”) that owns hotels throughout the United States of America. As of September 30, 2002, Boykin owned interests in 33 hotels containing a total of 9,252 guest rooms located in 19 states.

Formation and Significant Events

     Boykin was formed and completed an initial public offering (“IPO”) in 1996 to continue and expand the over 40-year history of hotel ownership, acquisition, redevelopment and repositioning activities of its predecessors, Boykin Management Company and its affiliates. Boykin Hotel Properties, L.P., an Ohio limited partnership (the “Partnership”), is the operating partnership that transacts business and holds the direct and indirect ownership interest in Boykin’s hotels. As of September 30, 2002, Boykin had an 84.9% ownership interest in and is the sole general partner of the Partnership.

     Since the IPO, Boykin has expanded its hotel portfolio by using capital raised through a combination of common share issuances, various debt financings, capital from strategic joint venture partners and cash flow generated from operations.

Taxable REIT Subsidiaries

     The Work Incentives Improvement Act of 1999 (“REIT Modernization Act”) amended the tax laws to permit REITs, like Boykin, to lease hotels to a subsidiary that qualifies as a taxable REIT subsidiary (“TRS”) as long as the TRS engages an independent hotel management company to operate those hotels under a management contract. Boykin implemented this structure for the properties previously leased to Boykin Management Company Limited Liability Company (“BMC”) and certain of its subsidiaries and Interstate Hotels and Resorts (“Interstate”) effective January 1, 2002.

     In conjunction with the transaction, the Partnership acquired 16 subsidiaries of BMC. The Partnership acquired these entities, whose primary assets were leasehold interests in 25 hotel properties owned by the Partnership, and certain working capital assets and liabilities of those hotels, for consideration comprised of 1,427,142 limited partnership units valued at $11.4 million (based upon the average closing price of the common shares of Boykin for the five-day period prior to the closing of the transaction), and the assumption of $1.6 million of working capital liabilities in excess of assets relating to Westboy LLC (“Westboy”), one of the subsidiaries. The Partnership then contributed the acquired subsidiaries to Bellboy, Inc. (“Bellboy”), a wholly owned subsidiary of the Partnership. Bellboy has elected to be treated as a TRS.

     Effective December 31, 2001, Boykin terminated percentage lease agreements with affiliates of Interstate for two hotel properties owned by Boykin. These hotel properties were re-leased to subsidiaries of Bellboy. An Interstate affiliate also assigned a percentage lease agreement for a third hotel property Boykin owns to a subsidiary of Bellboy.

     Effective January 1, 2002, Boykin entered into new management agreements with BMC to operate 15 of the hotels previously leased to BMC and with Interstate to operate the three hotels previously leased to them. The BMC Management Agreements have terms of three to nine years, but are cancelable by Boykin without penalty upon 90 days notice. The Interstate management agreements have terms of five to six years, and are also cancelable by Boykin without penalty upon 90 days notice.

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     Westboy (one of the lessees acquired from BMC) leases ten Doubletree branded hotels from Boykin. Westboy is party to an existing long-term management agreement with a subsidiary of Hilton Hotels Corporation (“Hilton”) to operate these hotels. This management agreement has an initial term which expires in April 2012 and Hilton has renewal options to extend the term. Except with respect to the three Doubletree hotels located in the state of Washington, the agreement with Hilton may not be terminated without penalty.

     We own Marriott’s Hunt Valley Inn through a joint venture with Davidson Hotel Company (“Davidson”). The joint venture formed a new subsidiary which qualifies as a TRS to lease the hotel effective September 1, 2002. Davidson continues to manage the hotel under a new management agreement also effective September 1.

     Subsequent to this most recent transaction, all but one of the 33 hotel properties Boykin owns an interest in is operated under the TRS structure.

     As a result of the TRS transactions discussed above, the consolidated financial statements from the effective date of each transaction going forward include the operating results of the consolidated hotels operated by BMC, Hilton, Interstate and Davidson, as applicable. Previously, revenues were derived primarily from lease payments which were made out of the net operating income of the properties; now revenues are generated from total revenues from the properties with the related operating expenses also being reported.

Consolidated Joint Ventures

     As of September 30, 2002, Boykin owned three hotels through joint venture structures with three hotel operators. The following table sets forth the joint ventures established with these hotel operators:

Unconsolidated Joint Ventures

     Boykin currently has a 25% ownership interest in a joint venture with AEW Partners III, L.P. (“AEW”), an investment partnership managed by AEW Capital Management, L.P., a Boston-based real estate investment firm. The Boykin/AEW venture has a 75% ownership interest in Boykin Chicago, LLC, which owns a hotel in downtown Chicago. Boykin owns the remaining 25% ownership interest in Boykin Chicago, LLC thereby resulting in Boykin’s total ownership percentage in the hotel of 43.75%.

     In July 2001, Boykin formed a joint venture with Concord Hospitality Enterprises (“Concord”), a privately owned hotel investment and management company based in Cleveland, Ohio. Boykin has a 50% ownership interest in the joint venture, which acquired a 227-room full-service hotel in Lyndhurst, New Jersey.

     Because of the non-controlling nature of Boykin’s ownership interests in these joint ventures, Boykin accounts for these investments using the equity method.

     Boykin’s carrying value of its investment in the joint ventures differs from its share of the partnership equity reported in the balance sheets of the unconsolidated joint ventures due to Boykin’s cost of its investment in excess of the historical net book values related to the direct investment in Boykin Chicago, LLC. Boykin’s additional basis is allocated to depreciable assets and is recognized on a straight-line basis over 30 years.

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     The following table sets forth the total assets, liabilities, revenues and net income (loss) of the unconsolidated joint ventures discussed above as of September 30, 2002 and December 31, 2001 and the nine and twelve month periods then ended:

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Basis of Presentation

     The separate financial statements of Boykin, the Partnership, Bellboy and the consolidated joint ventures discussed above are consolidated because Boykin exercises unilateral control over these entities. All significant intercompany transactions and balances have been eliminated.

     These financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine-month period ended September 30, 2002 are not necessarily indicative of the results that may be expected for the year ending December 31, 2002. The operations of the hotels have historically been seasonal. Twenty-nine hotels historically maintained higher occupancy rates during the second and third quarters while the four hotels located in Florida have historically experienced their highest occupancy in the first quarter. For further information, refer to the consolidated financial statements and footnotes thereto included in Boykin’s annual report on Form 10-K for the year ended December 31, 2001.

Inventories

     Inventories consisting primarily of food and beverages and gift store merchandise are stated at the lower of first-in, first-out cost or market.

Revenue Recognition

	Hotel revenues — Hotel revenues including room, food, beverage and other hotel revenues are recognized as earned. Ongoing credit evaluations are performed and an allowance for potential credit losses is provided against the portion of accounts receivable that is estimated to be uncollectible.

Lease revenue — Actual payments due from tenants under the percentage leases were $1,536 and $18,365 for the three months ended September 30, 2002 and 2001, respectively. However, under the Securities and Exchange Commission Staff Accounting Bulletin (“SAB”) No. 101 “Revenue Recognition in Financial Statements”, a portion of Boykin’s percentage lease revenues are deferred in the first, second and third quarters, and will be recognized in the fourth quarter as specified targets are achieved. Percentage lease revenue is recorded net of deferred lease revenue of $158 and $951 for the three months ended September 30, 2002 and 2001, respectively. Actual payments due from tenants under the percentage leases were $4,466 and $58,765 for the nine months ended September 30, 2002 and 2001, respectively. Percentage lease

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     revenue is recorded net of deferred lease revenue of $421 and $8,776 for 2002 and 2001, respectively. SAB No. 101 has no impact on
     Boykin’s interim cash flow or year-ended results of operations.

Condominium Units

     During 2001, Boykin completed a $2,700 renovation of a 60-unit tower at the Pink Shell Beach Resort in Ft. Myers Beach, Florida. These renovated studio units are being sold as Sanibel View Villas Condominiums, with the expectation that the unit owners will make their units available by contract for rental as hotel rooms. The revenue related to the sale of the units is recorded upon closing of the sale. Through September 30, 2002, 19 of these units have sold, generating revenues in excess of the renovation cost of the entire project. The cost basis of the unsold units as of September 30, 2002 of $6,108 is reflected in the consolidated balance sheets as other assets.

     During 2002, Boykin also began construction of a new 92-unit tower at the Pink Shell Beach Resort. In order to prepare the site for construction of the tower, Boykin paid for the removal of 38 cottages. Depreciation of the cottages was accelerated through the period of disposal resulting in an additional $1.7 million charge, in accordance with the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets” as they relate to asset abandonment. The costs of removing the cottages and preparing the site for construction of the new building have been capitalized to the extent that total expected costs do not exceed the expected net realizable value for the project.

     Deposits received for the purchase of units in the 92-unit tower are currently reflected in restricted cash with an offsetting liability. Revenue will be recorded on the sale of the units under the percentage of completion method of accounting after the project meets certain required criteria.

Fair Value of Financial Instruments

     Effective January 1, 2001 Boykin adopted the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 133 “Accounting for Derivative Instruments and Hedging Activities”. This statement requires companies to carry all derivative instruments, including embedded derivatives, in the balance sheet at fair value. The accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and, if so, on the reason for holding it. For financial reporting purposes, the change in market value of the effective portion of the hedge flows through the other comprehensive income component of equity. All other changes will flow through earnings.

     The adoption of SFAS No. 133 resulted in an unrealized loss of $373, net of minority interest of $32, related to Boykin’s existing interest rate cap, which is reflected as a cumulative effect of a change in accounting principle in Boykin’s statement of operations and comprehensive income for the nine months ended September 30, 2001. The interest rate cap is with a third party and has no value at September 30, 2002 based upon estimated market valuations. Changes in the fair value of the interest rate cap are recorded through the statement of operations.

     In March 2001, Boykin entered into an interest rate swap that fixes the overall interest rate at 7.32% on $83,000 of debt. The estimated fair market value of the swap as of September 30, 2002 is reflected as other comprehensive loss of $2,333 in shareholders’ equity, with a corresponding liability in the accompanying balance sheet. In connection with the execution of this swap contract, Boykin wrote an option contract (reverse cap contract) until July 2003 with a notional balance of $83,000 and a LIBOR based strike price of 7.90%, obligating Boykin as the floating rate counterparty. This contract is with a third party and has no value at September 30, 2002. Changes in the contract’s fair value are recorded in the statement of operations.

New Accounting Pronouncements

     Effective January 1, 2002, Boykin adopted the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”. The adoption of SFAS No. 144 had no impact on the accompanying financial statements.

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     Reclassifications

     Certain reclassifications have been made to the prior year financial statements to conform with the current year presentation.

3. EARNINGS PER SHARE:

     Basic earnings per share is based on the weighted average number of common shares outstanding during the period whereas diluted earnings per share adjusts the weighted average shares outstanding for the effect of all dilutive securities. For the three and nine months ended September 30, 2002 and 2001, the weighted average basic and diluted common shares outstanding were as follows:

4. MINORITY INTEREST/LIMITED PARTNERSHIP UNITS OUTSTANDING:

     A total of 2,718,256 and 1,291,114 limited partnership units were issued and outstanding at September 30, 2002 and 2001, respectively. The weighted average number of limited partnership units outstanding for the three and nine month periods ended September 30, 2002 and 2001 were 2,718,256 and 1,291,114, respectively. For the three and nine months ended September 30, 2002 and 2001, the weighted average basic and diluted common shares and limited partnership units outstanding were as follows:

5. CREDIT FACILITY:

     In March 2002, Boykin negotiated new terms to its secured credit facility which enables Boykin to borrow up to $65,000, subject to borrowing base and loan-to-value limitations, at a rate that ranges between LIBOR plus 2.25% to LIBOR plus 4.00% (5.38% as of September 30, 2002), as defined. Boykin is required to pay a .25% fee on the unused portion of the credit facility. The facility expires in July 2003 and contains a one-year extension option, subject to certain approvals. The credit facility is secured by seven hotel properties with a net carrying value of $94,964 at September 30, 2002. Outstanding borrowings against the credit facility at September 30, 2002 and December 31, 2001 were $39,589 and $39,000, respectively.

     The credit facility requires Boykin, among other things, to maintain a minimum net worth, a coverage ratio of EBITDA to debt service, a coverage ratio of EBITDA to debt service and fixed charges and a maximum leverage ratio. Further, Boykin is required to maintain the franchise agreement at each hotel secured by the facility and to maintain its REIT status. The terms of the amendment provide certain restrictions on common share dividends, however, Boykin is entitled to distribute up to 100% of REIT taxable income. Boykin was in compliance with its covenants at September 30, 2002.

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6. TERM NOTES PAYABLE:

     Red Lion Inns Operating L.P. (“OLP”), a wholly-owned subsidiary of the Partnership, has a $130,000 term loan agreement that expires in June 2023 and may be prepaid without penalty after May 21, 2008. The outstanding balance as of September 30, 2002 and December 31, 2001 was $125,408 and $126,971, respectively. The loan bears interest at a fixed rate of 6.9% until May 2008, and at a new fixed rate to be determined thereafter. The loan is secured by ten Doubletree hotels with a net carrying value of $227,898 and $230,812 at September 30, 2002 and December 31, 2001, respectively and requires principal repayments based on a 25-year amortization schedule. Under covenants in the loan agreement, assets of OLP are not available to pay the creditors of any other Boykin entity, except to the extent of permitted cash distributions from OLP to Boykin. Likewise, the assets of other Boykin entities are not available to pay the creditors of OLP. The loan agreement also requires OLP to hold funds in escrow for the payment of capital expenditures, insurance and real estate taxes. The term note also requires OLP to maintain certain financial reporting requirements. OLP was in compliance with these requirements at September 30, 2002.

     In March 2002, Boykin renegotiated the terms of the $45,000 term loan agreement which had an original maturity date of October 2002 with an option to extend to July 2003. Boykin exercised its option to extend the maturity date and the loan will now mature in July 2003. The loan is secured by three hotel properties with a net carrying value of $43,477 and $44,582 at September 30, 2002 and December 31, 2001, respectively and bears interest at a rate that fluctuates at LIBOR plus 2.00% to LIBOR plus 4.00% (5.32% at September 30, 2002). The loan agreement requires Boykin, among other things, to maintain a minimum net worth, a coverage ratio of EBITDA to debt service and fixed charges, and to maintain a leverage ratio below a specified level. Boykin is required to maintain the franchise agreement at each hotel secured by the loan and to maintain its REIT status. Boykin was in compliance with its covenants at September 30, 2002.

     Boykin Holding, LLC (“BHC”), a wholly-owned subsidiary of the Partnership, has a $108,000 term loan agreement. The loan matures in July 2003 and contains two one-year extension options. The loan is secured by nine hotel properties with a net carrying value of $74,830 and $76,477 at September 30, 2002 and December 31, 2001, respectively and bears interest at a rate that fluctuates at LIBOR plus 2.35% (4.17% at September 30, 2002). Under covenants in the loan agreement, assets of BHC are not available to pay the creditors of any other Boykin entity, except to the extent of permitted cash distributions from BHC to Boykin. Likewise, the assets of other entities are not available to pay the creditors of BHC. The loan agreement also requires BHC to hold funds in escrow for the payment of capital expenditures, insurance and real estate taxes and requires BHC to maintain certain financial reporting requirements. BHC was in compliance with these requirements at September 30, 2002.

     In March 2001, the Partnership entered into an interest rate swap agreement, which fixes the overall interest rate at 7.32% on $83,000 of debt designated to BHC’s $108,000 term note until July 2003. BHC also has interest rate protection on the remaining $25,000 to cap the overall loan interest rate at no more than 10.25%.

     Maturities of long-term debt at September 30, 2002 are as follows:

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7. RELATED PARTY TRANSACTIONS:

     The Chairman and Chief Executive Officer of Boykin is the majority shareholder of BMC. BMC and Westboy LLC, previously a subsidiary of BMC, were a significant source of Boykin’s percentage lease revenue through December 31, 2001. As of December 31, 2001, Boykin had rent receivable of $1,118 due from related party lessees. As of December 31, 2001, Boykin had related party payables to BMC of $90 primarily for the reimbursement of capital expenditure costs incurred on behalf of Boykin. Boykin paid a $1,600 lease termination fee to BMC related to the sale of the Daytona Beach Radisson Resort in January 2001.

     As a result of the TRS transaction discussed in Note 1, Boykin acquired 16 subsidiaries of BMC whose primary assets were leasehold interests in 25 hotel properties owned by Boykin. At December 31, 2001, Boykin had recorded a receivable from BMC of $2,008 for the net working capital assets of the subsidiaries acquired. As of September 30, 2002, $321 of the receivable remains outstanding.

     Also in conjunction with the TRS transaction, effective January 1, 2002, BMC managed 16 of the properties in which Boykin owned an interest. Management fees earned by BMC related to these hotels during the three and nine month periods ended September 30, 2002 totaled $929 and $2,986, respectively. As of September 30, 2002, Boykin had related party payables to BMC of $555 primarily related to management fees and reimbursements of expenses on behalf of the hotel properties. During 2001, a subsidiary of BMC managed the Radisson Hotel Mt. Laurel pursuant to a management agreement. Boykin paid the BMC subsidiary management fees of $51 and $154, respectively, for the three and nine month periods ended September 30, 2001.

     Through September 30, 2002, Boykin paid a wholly-owned subsidiary of BMC $174 and $5 for design and project management services, respectively, related to capital improvements at its hotels. During 2001, the subsidiary sold a portion of its business to an unrelated third party. A portion of the sales price is contingent upon future revenues of the business, including revenues from Boykin.

8. STATEMENT OF CASH FLOWS, SUPPLEMENTAL DISCLOSURES:

     As of September 30, 2002, there was $3,638 of dividends and Partnership distributions which were declared but not paid. As of September 30, 2001, there were no dividends or Partnership distributions that were declared but not paid.

     Interest paid during the nine-month periods ended September 30, 2002 and 2001 was $15,427 and $16,176, respectively.

     In the first nine months of 2002, Boykin issued 101,170 common shares, valued at $856, and cancelled 11,315 shares, valued at $133, under Boykin’s Long-Term Incentive Plan.

9. INCOME TAXES:

     Upon the effective date of the establishment of Boykin’s TRSs, the subsidiaries become subject to federal and state income taxes. Boykin’s TRSs account for income taxes in accordance with the provisions of SFAS No. 109, “Accounting for Income Taxes.” As of September 30, 2002, Boykin’s TRSs have a deferred tax asset of approximately $1.1 million, prior to any valuation allowance, related to the assumption of the retained deficit of Westboy as well as the operating losses of the TRSs and their subsidiaries during the nine month period then ended. Boykin’s TRSs have recorded a 100% valuation allowance against this asset due to the uncertainty of realization of the deferred tax asset and therefore, no provision or benefit from income taxes is reflected in the accompanying consolidated statements of operations.

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10. PRO FORMA FINANCIAL INFORMATION (UNAUDITED):

     The following unaudited pro forma information for the three and nine months ended September 30, 2001 is presented as if the following transactions had occurred as of January 1, 2001:

•		acquisition of lessees from BMC;
•		the issuance of 1,427,142 Partnership units to a BMC subsidiary;
•		entering into the BMC management agreements;
•		termination/assignment of Interstate leases;
•		entering into the Interstate management agreements; and
•		termination of the percentage lease for a hotel in Chicago, Illinois owned by an unconsolidated joint venture, and a new TRS owned by that joint venture entering into a management contract with a BMC subsidiary.

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