Attached files
| file | filename |
|---|---|
| EX-99.1 - EX-99.1 - Red Lion Hotels CORP | d502269dex991.htm |
| 8-K - FORM 8-K - Red Lion Hotels CORP | d502269d8k.htm |
Exhibit 99.2
Unaudited Proforma Financial Statements
The following Unaudited Pro Forma Financial Statements are based on Red Lion Hotels Corporation’s (the “Company’s”) historical consolidated results of operations and financial position, adjusted to give effect to the asset sales described in Item 2.01 of this Form 8-K, as if they had been completed on March 31, 2018 with respect to the pro forma unaudited condensed balance sheet and as of January 1, 2017 with respect to the pro forma unaudited condensed statements of operations. This transaction does not represent discontinued operations under ASC 205, Presentation of Financial Statements.
The Unaudited Pro Forma Financial Statements and the accompanying notes should be read together with the Company’s audited consolidated financial statements and accompanying notes as of and for the year ended December 31, 2017, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 (“Annual Report”). The Unaudited Pro Forma Financial Statements may differ materially from the future financial position or results of operations due to a number of factors described in “Risk Factors” under Item 1A of Part 1 of our Annual Report and “Forward-Looking Statements” under Item 1 of Part 1 of our Annual Report.
Red Lion Hotels Corporation
Unaudited Pro Forma Condensed Consolidated Balance Sheet
March 31, 2018
| March 31, 2018 | Less: Bend and Post Falls Hotel Assets(q) |
Less: Port Angeles Hotel Assets Sold |
Add: Pro Forma Adjustments |
Pro Forma | ||||||||||||||||
| ASSETS |
(in thousands) | |||||||||||||||||||
| Current assets: |
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| Cash and cash equivalents |
$ | 25,426 | $ | 2,380 | $ | 4,830 | (a) | $ | 645 | (f) | $ | 30,878 | ||||||||
| (3,178 | )(h) | |||||||||||||||||||
| 775 | (g) | |||||||||||||||||||
| Restricted cash |
13,681 | (585 | ) | (775 | )(g) | 12,321 | ||||||||||||||
| Accounts receivable, net |
12,957 | (98 | ) | (91 | )(f) | 12,768 | ||||||||||||||
| Accounts receivable from related parties |
1,870 | (29 | ) | 1,841 | ||||||||||||||||
| Notes receivable, net |
1,239 | 1,239 | ||||||||||||||||||
| Inventories |
406 | (44 | )(f) | 362 | ||||||||||||||||
| Prepaid expenses and other |
5,911 | (67 | ) | (60 | )(f) | 5,784 | ||||||||||||||
| Assets held for sale |
12,446 | (12,446 | ) | 0 | ||||||||||||||||
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| Total current assets |
73,936 | (10,845 | ) | 4,830 | (2,728 | ) | 65,193 | |||||||||||||
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| Property and equipment, net |
155,849 | (7,778 | )(b) | 148,071 | ||||||||||||||||
| Goodwill |
9,404 | 9,404 | ||||||||||||||||||
| Intangible assets |
50,255 | 50,255 | ||||||||||||||||||
| Other assets, net |
4,858 | 4,858 | ||||||||||||||||||
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| Total assets |
$ | 294,302 | $ | (10,845 | ) | $ | (2,948 | ) | $ | (2,728 | ) | $ | 277,781 | |||||||
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| LIABILITIES |
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| Current liabilities: |
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| Accounts payable |
$ | 5,667 | $ | (60 | ) | $ | (38 | )(f) | 5,569 | |||||||||||
| Accrued payroll and related benefits |
3,113 | (64 | ) | (47 | )(f) | 3,002 | ||||||||||||||
| Other accrued liabilities |
5,551 | (366 | ) | (34 | )(c) | (136 | )(f) | 5,015 | ||||||||||||
| Long-term debt, due within one year |
33,924 | (10,509 | ) | (14,477 | )(d) | 8,938 | ||||||||||||||
| Contingent consideration for acquisition due to related party, due within one year |
5,446 | 5,446 | ||||||||||||||||||
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| Total current liabilities |
53,701 | (10,998 | ) | (14,511 | ) | (221 | ) | 27,971 | ||||||||||||
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| Long-term debt, due after one year, net of debt issuance |
39,593 | 39,593 | ||||||||||||||||||
| Contingent consideration for acquisition due to related party, due after one year |
— | |||||||||||||||||||
| Deferred income and other long term liabilities |
1,407 | (0 | ) | 1,407 | ||||||||||||||||
| Deferred income taxes |
2,301 | 2,301 | ||||||||||||||||||
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| Total liabilities |
97,002 | (10,998 | ) | (14,511 | ) | (221 | ) | 71,272 | ||||||||||||
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| Commitments and contingencies |
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| STOCKHOLDERS’ EQUITY |
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| Red Lion Hotels Corporation stockholders’ equity Preferred stock - 5,000,000 shares authorized; $0.01 par value; no shares issued or outstanding |
— | |||||||||||||||||||
| Common stock - 50,000,000 shares authorized; $0.01 par value: 24,125,600 shares issued and outstanding |
241 | 241 | ||||||||||||||||||
| Additional paid-in capital, common stock |
178,318 | 178,318 | ||||||||||||||||||
| Accumulated deficit |
(13,390 | ) | 1,902 | 11,563 | (e) | (104 | )(e) | (29 | ) | |||||||||||
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| Total Red Lion Hotels Corporation stockholders’ |
165,169 | 1,902 | 11,563 | (104 | ) | 178,530 | ||||||||||||||
| Noncontrolling interest |
32,131 | (1,749 | ) | (2,403 | )(i) | 27,979 | ||||||||||||||
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| Total stockholders’ equity |
197,300 | 153 | 11,563 | (2,507 | ) | 206,509 | ||||||||||||||
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| Total liabilities and stockholders’ equity |
$ | 294,302 | $ | (10,845 | ) | $ | (2,948 | ) | $ | (2,728 | ) | $ | 277,781 | |||||||
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Red Lion Hotels Corporation
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For Year Ended December 31, 2017
| As Reported | Less: Redding, Eureka, Boise, Richland, Pasco, Bend, and Post Falls Hotel Assets(m) |
Less: Port Angeles Hotel Asset Sold |
Pro Forma | |||||||||||||
| (in thousands) | ||||||||||||||||
| Revenue: |
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| Company operated hotels |
$ | 119,186 | $ | (33,528 | ) | $ | (7,230 | )(k) | $ | 78,428 | ||||||
| Other revenues from managed properties |
3,914 | 3,914 | ||||||||||||||
| Franchised hotels |
48,559 | 2,887 | 662 | (l) | 52,108 | |||||||||||
| Other |
267 | 267 | ||||||||||||||
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| Total revenues |
171,926 | (30,641 | ) | (6,568 | ) | 134,717 | ||||||||||
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| Operating expenses: |
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| Company operated hotels |
91,622 | (27,018 | ) | (4,365 | )(k) | 60,239 | ||||||||||
| Other costs from managed properties |
3,914 | 3,914 | ||||||||||||||
| Franchised hotels |
34,794 | 1,758 | 403 | (n) | 36,954 | |||||||||||
| Other |
(9 | ) | (9 | ) | ||||||||||||
| Depreciation and amortization |
18,824 | (3,444 | ) | (549 | )(k) | 14,831 | ||||||||||
| Hotel facility and land lease |
4,806 | (70 | ) | 4,736 | ||||||||||||
| Gain on asset dispositions, net |
(449 | ) | 5 | (444 | ) | |||||||||||
| General and administrative expenses |
15,792 | 1,142 | 177 | (o) | 17,110 | |||||||||||
| Acquisition and integration costs |
1,529 | 1,529 | ||||||||||||||
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| Total operating expenses |
170,823 | (27,627 | ) | (4,334 | ) | 138,862 | ||||||||||
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| Operating income (loss) |
1,103 | (3,014 | ) | (2,234 | ) | (4,145 | ) | |||||||||
| Other income (expense): |
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| Interest expense |
(8,252 | ) | 1,714 | 542 | (p) | (5,996 | ) | |||||||||
| Other income, net |
818 | 818 | ||||||||||||||
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| Total other income (expense) |
(7,434 | ) | 1,714 | 542 | (5,178 | ) | ||||||||||
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| Income (loss) from continuing operations before taxes |
(6,331 | ) | (1,301 | ) | (1,691 | ) | (9,323 | ) | ||||||||
| Income tax expense |
(4,662 | ) | (4,662 | ) | ||||||||||||
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| Net income (loss) from continuing operations |
(1,669 | ) | (1,301 | ) | (1,691 | ) | (4,661 | ) | ||||||||
| Net (income) loss attributable to noncontrolling interest |
2,069 | (110 | ) | 644 | (i) | 2,602 | ||||||||||
| Net income (loss) attributable to RLH Corporation from continuing operations |
$ | 400 | $ | (1,411 | ) | $ | (1,048 | ) | $ | (2,058 | ) | |||||
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| Earnings (loss) per share - basic |
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| Income (loss) from continuing operations attributable to RLH Corporation |
$ | 0.01 | $ | (0.09 | ) | |||||||||||
| Earnings (loss) per share - diluted |
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| Income (loss) from continuing operations attributable to RLH Corporation |
$ | 0.01 | $ | (0.09 | ) | |||||||||||
| Weighted average shares - basic |
23,669 | 23,699 | ||||||||||||||
| Weighted average shares - diluted |
24,253 | 23,699 | ||||||||||||||
Red Lion Hotels Corporation
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For Three Months March 31, 2018
| As Reported | Less: Redding, Eureka, Boise, Richland, Pasco, Bend, and Post Falls Hotel Assets(m) |
Less: Port Angeles Hotel Asset Sold |
Pro Forma | |||||||||||||
| (in thousands) | ||||||||||||||||
| Revenue: |
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| Company operated hotels |
$ | 22,003 | $ | (3,924 | ) | $ | (1,018 | )(k) | $ | 17,061 | ||||||
| Other revenues from managed properties |
893 | 893 | ||||||||||||||
| Franchised hotels |
10,123 | 221 | 62 | (l) | 10,406 | |||||||||||
| Other |
20 | 20 | ||||||||||||||
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| Total revenues |
33,039 | (3,703 | ) | (956 | ) | 28,380 | ||||||||||
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| Operating expenses: |
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| Company operated hotels |
19,547 | (3,986 | ) | (834 | )(k) | 14,728 | ||||||||||
| Other costs from managed properties |
893 | 893 | ||||||||||||||
| Franchised hotels |
7,901 | 80 | 22 | (n) | 8,004 | |||||||||||
| Other |
(7 | ) | (7 | ) | ||||||||||||
| Depreciation and amortization |
4,392 | (130 | )(k) | 4,262 | ||||||||||||
| Hotel facility and land lease |
1,204 | (17 | ) | 1,187 | ||||||||||||
| Gain on asset dispositions, net |
(14,043 | ) | 13,926 | (i) | (117 | ) | ||||||||||
| General and administrative expenses |
3,486 | 221 | 46 | (o) | 3,753 | |||||||||||
| Acquisition and integration costs |
104 | — | 104 | |||||||||||||
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| Total operating expenses |
23,477 | 10,224 | (895 | ) | 32,807 | |||||||||||
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| Operating income (loss) |
9,562 | (13,927 | ) | (61 | ) | (4,426 | ) | |||||||||
| Other income (expense): |
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| Interest expense |
(2,247 | ) | 694 | 114 | (p) | (1,439 | ) | |||||||||
| Other income, net |
158 | 158 | ||||||||||||||
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| Total other income (expense) |
(2,089 | ) | 694 | 114 | (1,281 | ) | ||||||||||
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| Income (loss) from continuing operations before taxes |
7,473 | (13,233 | ) | 53 | (5,707 | ) | ||||||||||
| Income tax expense |
135 | 135 | ||||||||||||||
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| Net income (loss) from continuing operations |
7,338 | (13,233 | ) | 53 | (5,842 | ) | ||||||||||
| Net (income) loss attributable to noncontrolling interest |
(4,750 | ) | 5,833 | (50 | )(i) | 1,033 | ||||||||||
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| Net income (loss) attributable to RLH Corporation from continuing operations |
$ | 2,588 | $ | (7,400 | ) | $ | 3 | $ | (4,810 | ) | ||||||
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| Earnings (loss) per share - basic |
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| Income (loss) from continuing operations attributable to RLH Corporation |
$ | 0.11 | $ | (0.20 | ) | |||||||||||
| Earnings (loss) per share - diluted |
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| Income (loss) from continuing operations attributable to RLH Corporation |
$ | 0.10 | $ | (0.20 | ) | |||||||||||
| Weighted average shares - basic |
24,101 | 24,101 | ||||||||||||||
| Weighted average shares - diluted |
25,166 | 24,101 | ||||||||||||||
Notes to Unaudited Pro Forma Condensed Financial Information
Note 1 — Basis of presentation
The historical consolidated financial statements have been adjusted in the unaudited pro forma condensed financial statements to give effect to pro forma events that are (1) directly attributable to the sale of the asset, (2) factually supportable and (3) with respect to the unaudited pro forma condensed statements of operations, expected to have a continuing impact on the results following the sale of the assets. These proforma financial statements also reflect the impact of the sales of hotels in Eureka, CA, Redding, CA, Boise, ID, Post Falls, ID, Richland, WA Pasco, WA and Bend, OR which were previously reported.
Note 2 — The transaction
On July 9, 2018 RL Port Angeles, LLC completed the sale of the Red Lion Hotel Port Angeles in Port Angeles, Washington to BGP PA, LLC, an Oregon limited liability company (the “Purchaser”). The purchase price for the hotel was $19.5 million, which was paid in cash at closing.
At closing, an affiliate of the Purchaser entered into a franchise agreement with Red Lion Hotels Franchising, Inc., a wholly owned subsidiary of Red Lion Hotels Corporation, to continue to operate the hotel under the Red Lion® brand. The franchise agreement provides for a 10 year term and the payment of monthly royalty and program fees equal to a percentage of the hotel’s gross room revenue. Early termination of the franchise agreement by Red Lion Franchising upon default of the franchisee, or termination of the agreement by the franchisee without cause, will require the franchisee to pay a termination fee.
RL Port Angeles, LLC is a wholly owned subsidiary of RL Venture, LLC. RL Venture, LLC is a variable interest entity in which Red Lion Hotels Corporation holds a 55% interest, and therefore the registrant consolidates the assets, liabilities and results of operations of this entity.
Note 3 — Pro forma adjustments
The following adjustments have been reflected in the unaudited pro forma condensed financial information:
| (a) | Reflects the cash from the sale of assets less selling costs and repayment of debt. |
| (b) | Reflects the basis of the assets sold. |
| (c) | Reflects the capital leases assumed by the purchaser. |
| (d) | Represents the related debt payment made at the closing of the sale of the assets. |
| (e) | Reflects the gain on sale and/or settlement of the assets. |
| (f) | Reflects the settlement of all other assets and liabilities related to the Port Angeles assets sold. |
| (g) | Represents the release of restricted cash related to the assets sold. |
| (h) | Represents the proforma distribution of cash to the noncontrolling interest. |
| (i) | Reflects the removal of the noncontrolling interest portion of the transaction. |
| (j) | Removes the gain on the sales of the hotels in Eureka, CA, Redding, CA, Boise, ID, Richland, WA, and Pasco, WA which were reported in the three months ended March 31, 2018. |
| (k) | Reflects the elimination of direct revenues and expenses related to the Port Angeles assets sold. |
| (l) | Represents the franchise income that would have been received under the existing intercompany franchise agreement. Does not represent the impact of the franchise agreements with the new owners of the assets. |
| (m) | Impact of the sales of hotels in Eureka, CA, Redding, CA, Boise, ID, Post Falls, ID, Richland, WA, Pasco, WA and Bend, OR which were previously reported. |
| (n) | Represents the marketing and other costs to support the franchise income that would have been received under the existing intercompany franchise agreement. Does not represent the impact of the franchise agreements with the new owners of the assets. |
| (o) | Reflects the corporate and administrative expenses which were previously allocated to the assets sold. |
| (p) | Reflects interest expense on allocated debt related to assets sold. |
| (q) | Reflects the sales of the hotels in Bend, OR and Post Falls, ID as these transactions closed after March 31, 2018. |
(d) Exhibits.