Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - Red Lion Hotels CORP | f8k_101017.htm |
| EX-99.1 - EXHIBIT 99.1 - Red Lion Hotels CORP | exh_991.htm |
Exhibit 99.2
Unaudited Pro Forma 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 Sale, as defined in Item 2.01 of this Form 8-K, as if it had been completed on June 30, 2017 with respect to the pro forma unaudited condensed balance sheet and as of January 1, 2014 with respect to the pro forma unaudited condensed statements of operations.
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, 2016, 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, 2016 (“Annual Report”) and its unaudited condensed consolidated financial statements and accompanying notes as of and for the six months ended June 30, 2017 and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company's Quarterly Report on Form 10-Q ("Quarterly Report") for the six months ended June 30, 2017. 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
June 30, 2017
| As Reported | Less: Deconsolidation of the Entertainment Segment | Add: Pro Forma Adjustments | Pro Forma | |||||||||||||||
| ASSETS | (in thousands) | |||||||||||||||||
| Current assets: | ||||||||||||||||||
| Cash and cash equivalents | $ | 32,198 | $ | (8,527 | ) | (a) | $ | 4,700 | (b) | $ | 28,371 | |||||||
| Restricted cash | 12,940 | - | - | 12,940 | ||||||||||||||
| Accounts receivable, net | 14,933 | (1,429 | ) | (a) | - | 13,504 | ||||||||||||
| Accounts receivable from related parties | 1,575 | - | - | 1,575 | ||||||||||||||
| Notes receivable, net | 1,600 | - | - | 1,600 | ||||||||||||||
| Inventories | 663 | (16 | ) | (a) | - | 647 | ||||||||||||
| Prepaid expenses and other | 4,482 | (494 | ) | (a) | 300 | (b) | 4,288 | |||||||||||
| Total current assets | 68,391 | (10,466 | ) | 5,000 | 62,925 | |||||||||||||
| Property and equipment, net | 206,267 | (225 | ) | (a) | - | 206,042 | ||||||||||||
| Goodwill | 12,566 | (3,161 | ) | (a) | - | 9,405 | ||||||||||||
| Intangible assets | 51,823 | (6 | ) | (a) | - | 51,817 | ||||||||||||
| Other assets, net | 2,153 | (225 | ) | (a) | 300 | (b) | 2,228 | |||||||||||
| Total assets | $ | 341,200 | $ | (14,083 | ) | $ | 5,300 | $ | 332,417 | |||||||||
| LIABILITIES | ||||||||||||||||||
| Current liabilities: | ||||||||||||||||||
| Accounts payable | $ | 6,529 | $ | (402 | ) | (a) | $ | - | $ | 6,127 | ||||||||
| Accrued payroll and related benefits | 6,352 | (156 | ) | (a) | - | 6,196 | ||||||||||||
| Other accrued entertainment liabilities | 9,215 | (9,215 | ) | (a) | - | - | ||||||||||||
| Other accrued liabilities | 5,557 | (83 | ) | (a) | - | 5,474 | ||||||||||||
| Long-term debt, due within one year | 15,030 | - | - | 15,030 | ||||||||||||||
| Contingent consideration for acquisition due to related party, due within one year | 6,785 | - | - | 6,785 | ||||||||||||||
| Total current liabilities | 49,468 | (9,856 | ) | - | 39,612 | |||||||||||||
| Long-term debt, due after one year, net of debt issuance costs | 96,027 | - | - | 96,027 | ||||||||||||||
| Contingent consideration for acquisition due to related party, due after one year | 4,443 | - | - | 4,443 | ||||||||||||||
| Deferred income and other long term liabilities | 1,891 | - | - | 1,891 | ||||||||||||||
| Deferred income taxes | 5,980 | - | - | 5,980 | ||||||||||||||
| Total liabilities | 157,809 | (9,856 | ) | - | 147,953 | |||||||||||||
| Commitments and contingencies | ||||||||||||||||||
| STOCKHOLDERS’ EQUITY | ||||||||||||||||||
| 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; 23,564,176 and 23,434,480 shares issued and outstanding | 235 | - | - | 235 | ||||||||||||||
| Additional paid-in capital, common stock | 172,350 | - | - | 172,350 | ||||||||||||||
| Accumulated deficit | (19,657 | ) | (4,227 | ) | (a)(c) | 5,300 | (c) | (18,584 | ) | |||||||||
| Total Red Lion Hotels Corporation stockholders' equity | 152,928 | (4,227 | ) | 5,300 | 154,001 | |||||||||||||
| Noncontrolling interest | 30,463 | - | - | 30,463 | ||||||||||||||
| Total stockholders’ equity | 183,391 | (4,227 | ) | 5,300 | 184,464 | |||||||||||||
| Total liabilities and stockholders’ equity | $ | 341,200 | $ | (14,083 | ) | $ | 5,300 | $ | 332,417 | |||||||||
Red Lion Hotels Corporation
Unaudited Pro Forma Condensed Consolidated Statement of Operations
Six Months Ended June 30, 2017
| As Reported | Less: Deconsolidation of the Entertainment Segment (a) | Pro Forma | ||||||||||
| (in thousands) | ||||||||||||
| Revenue: | ||||||||||||
| Company operated hotels | $ | 56,970 | $ | - | $ | 56,970 | ||||||
| Other revenues from managed properties | 1,993 | - | 1,993 | |||||||||
| Franchised hotels | 23,331 | - | 23,331 | |||||||||
| Entertainment | 6,081 | (6,081 | ) | - | ||||||||
| Other | 116 | - | 116 | |||||||||
| Total revenues | 88,491 | (6,081 | ) | 82,410 | ||||||||
| Operating expenses: | ||||||||||||
| Company operated hotels | 45,166 | - | 45,166 | |||||||||
| Other costs from managed properties | 1,993 | - | 1,993 | |||||||||
| Franchised hotels | 17,402 | - | 17,402 | |||||||||
| Entertainment | 5,817 | (5,817 | ) | - | ||||||||
| Other | 7 | - | 7 | |||||||||
| Depreciation and amortization | 9,139 | (58 | ) | 9,081 | ||||||||
| Hotel facility and land lease | 2,403 | - | 2,403 | |||||||||
| Gain on asset dispositions, net | (217 | ) | (4 | ) | (221 | ) | ||||||
| General and administrative expenses | 7,708 | - | 7,708 | |||||||||
| Acquisition and integration costs | 11 | - | 11 | |||||||||
| Total operating expenses | 89,429 | (5,879 | ) | 83,550 | ||||||||
| Operating income (loss) | (938 | ) | (202 | ) | (1,140 | ) | ||||||
| Other income (expense): | ||||||||||||
| Interest expense | (3,995 | ) | - | (3,995 | ) | |||||||
| Other income, net | 224 | - | 224 | |||||||||
| Total other income (expense) | (3,771 | ) | - | (3,771 | ) | |||||||
| Income (loss) from operations before taxes | (4,709 | ) | (202 | ) | (4,911 | ) | ||||||
| Income tax expense | 339 | - | 339 | |||||||||
| Net income (loss) | (5,048 | ) | (202 | ) | (5,250 | ) | ||||||
| Net (income) loss attributable to noncontrolling interest | 1,378 | - | 1,378 | |||||||||
| Net income (loss) attributable to Red Lion Hotels Corporation | $ | (3,670 | ) | $ | (202 | ) | $ | (3,872 | ) | |||
| Earnings (loss) per share - basic | $ | (0.16 | ) | $ | (0.16 | ) | ||||||
| Earnings (loss) per share - diluted | $ | (0.17 | ) | $ | (0.16 | ) | ||||||
| Weighted average shares - basic | 23,509 | 23,509 | ||||||||||
| Weighted average shares - diluted | 24,199 | 24,199 | ||||||||||
Red Lion Hotels Corporation
Unaudited Pro Forma Condensed Consolidated Statement of Operations
Year Ended December 31, 2016
| As Reported | Less: Deconsolidation of the Entertainment Segment (a) | Pro Forma | ||||||||||
| (in thousands) | ||||||||||||
| Revenue: | ||||||||||||
| Company operated hotels | $ | 117,641 | $ | - | $ | 117,641 | ||||||
| Other revenues from managed properties | 5,948 | - | 5,948 | |||||||||
| Franchised hotels | 24,634 | - | 24,634 | |||||||||
| Entertainment | 15,719 | (15,719 | ) | - | ||||||||
| Other | 128 | - | 128 | |||||||||
| Total revenues | 164,070 | (15,719 | ) | 148,351 | ||||||||
| Operating expenses: | ||||||||||||
| Company operated hotels | 91,572 | - | 91,572 | |||||||||
| Other costs from managed properties | 5,948 | - | 5,948 | |||||||||
| Franchised hotels | 19,315 | - | 19,315 | |||||||||
| Entertainment | 13,635 | (13,635 | ) | - | ||||||||
| Other | 42 | - | 42 | |||||||||
| Depreciation and amortization | 16,281 | (186 | ) | 16,095 | ||||||||
| Hotel facility and land lease | 4,740 | - | 4,740 | |||||||||
| Gain on asset dispositions, net | (2,437 | ) | 1 | (2,436 | ) | |||||||
| General and administrative expenses | 11,109 | - | 11,109 | |||||||||
| Acquisition and integration costs | 2,112 | - | 2,112 | |||||||||
| Total operating expenses | 162,317 | (13,820 | ) | 148,497 | ||||||||
| Operating income (loss) | 1,753 | (1,899 | ) | (146 | ) | |||||||
| Other income (expense): | ||||||||||||
| Interest expense | (6,764 | ) | - | (6,764 | ) | |||||||
| Other income, net | 483 | 158 | 641 | |||||||||
| Total other income (expense) | (6,281 | ) | 158 | (6,123 | ) | |||||||
| Income (loss) from operations before taxes | (4,528 | ) | (1,741 | ) | (6,269 | ) | ||||||
| Income tax expense | 312 | - | 312 | |||||||||
| Net income (loss) | (4,840 | ) | (1,741 | ) | (6,581 | ) | ||||||
| Net (income) loss attributable to noncontrolling interest | 163 | - | 163 | |||||||||
| Net income (loss) attributable to Red Lion Hotels Corporation | $ | (4,677 | ) | $ | (1,741 | ) | $ | (6,418 | ) | |||
| Earnings (loss) per share - basic | $ | (0.23 | ) | $ | (0.31 | ) | ||||||
| Earnings (loss) per share - diluted | $ | (0.23 | ) | $ | (0.31 | ) | ||||||
| Weighted average shares - basic | 20,427 | 20,427 | ||||||||||
| Weighted average shares - diluted | 20,427 | 20,427 | ||||||||||
Red Lion Hotels Corporation
Unaudited Pro Forma Condensed Consolidated Statement of Operations
Year Ended December 31, 2015
| As Reported | Less: Deconsolidation of the Entertainment Segment (a) | Pro Forma | ||||||||||
| (in thousands) | ||||||||||||
| Revenue: | ||||||||||||
| Company operated hotels | $ | 116,187 | $ | - | $ | 116,187 | ||||||
| Other revenues from managed properties | 3,586 | - | 3,586 | |||||||||
| Franchised hotels | 12,039 | - | 12,039 | |||||||||
| Entertainment | 11,057 | (11,057 | ) | - | ||||||||
| Other | 51 | - | 51 | |||||||||
| Total revenues | 142,920 | (11,057 | ) | 131,863 | ||||||||
| Operating expenses: | ||||||||||||
| Company operated hotels | 92,057 | - | 92,057 | |||||||||
| Other costs from managed properties | 3,586 | - | 3,586 | |||||||||
| Franchised hotels | 11,233 | - | 11,233 | |||||||||
| Entertainment | 10,118 | (10,118 | ) | - | ||||||||
| Other | 35 | - | 35 | |||||||||
| Depreciation and amortization | 13,315 | (254 | ) | 13,061 | ||||||||
| Hotel facility and land lease | 6,569 | - | 6,569 | |||||||||
| Gain on asset dispositions, net | (17,692 | ) | - | (17,692 | ) | |||||||
| General and administrative expenses | 9,819 | - | 9,819 | |||||||||
| Acquisition and integration costs | 779 | - | 779 | |||||||||
| Total operating expenses | 129,819 | (10,372 | ) | 119,447 | ||||||||
| Operating income | 13,101 | (685 | ) | 12,416 | ||||||||
| Other income (expense): | ||||||||||||
| Interest expense | (6,979 | ) | - | (6,979 | ) | |||||||
| Loss on early retirement of debt | (2,847 | ) | - | (2,847 | ) | |||||||
| Other income, net | 826 | (46 | ) | 780 | ||||||||
| Total other income (expense) | (9,000 | ) | (46 | ) | (9,046 | ) | ||||||
| Income from operations before taxes | 4,101 | (731 | ) | 3,370 | ||||||||
| Income tax expense | 85 | - | 85 | |||||||||
| Net income | 4,016 | (731 | ) | 3,285 | ||||||||
| Net (income) loss attributable to noncontrolling interest | (1,297 | ) | - | (1,297 | ) | |||||||
| Net income attributable to Red Lion Hotels Corporation | $ | 2,719 | $ | (731 | ) | $ | 1,988 | |||||
| Earnings per share - basic | $ | 0.14 | $ | 0.10 | ||||||||
| Earnings per share - diluted | $ | 0.13 | $ | 0.10 | ||||||||
| Weighted average shares - basic | 19,983 | 19,983 | ||||||||||
| Weighted average shares - diluted | 20,200 | 20,200 | ||||||||||
Red Lion Hotels Corporation
Unaudited Pro Forma Condensed Consolidated Statement of Operations
Year Ended December 31, 2014
| As Reported | Less: Deconsolidation of the Entertainment Segment (a) | Pro Forma | ||||||||||
| (in thousands) | ||||||||||||
| Revenue: | ||||||||||||
| Company operated hotels | $ | 118,616 | $ | - | $ | 118,616 | ||||||
| Franchised hotels | 9,618 | - | 9,618 | |||||||||
| Entertainment | 17,115 | (17,115 | ) | - | ||||||||
| Other | 77 | - | 77 | |||||||||
| Total revenues | 145,426 | (17,115 | ) | 128,311 | ||||||||
| Operating expenses: | ||||||||||||
| Company operated hotels | 94,241 | - | 94,241 | |||||||||
| Franchised hotels | 7,004 | - | 7,004 | |||||||||
| Entertainment | 14,785 | (14,785 | ) | - | ||||||||
| Other | 318 | - | 318 | |||||||||
| Depreciation and amortization | 12,762 | (349 | ) | 12,413 | ||||||||
| Hotel facility and land lease | 5,210 | - | 5,210 | |||||||||
| Gain on asset dispositions, net | (4,006 | ) | - | (4,006 | ) | |||||||
| General and administrative expenses | 8,353 | - | 8,353 | |||||||||
| Acquisition and integration costs | - | - | - | |||||||||
| Total operating expenses | 138,667 | (15,134 | ) | 123,533 | ||||||||
| Operating income | 6,759 | (1,981 | ) | 4,778 | ||||||||
| Other income (expense): | ||||||||||||
| Interest expense | (4,575 | ) | - | (4,575 | ) | |||||||
| Loss on early retirement of debt | - | - | - | |||||||||
| Other income, net | 339 | (17 | ) | 322 | ||||||||
| Total other income (expense) | (4,236 | ) | (17 | ) | (4,253 | ) | ||||||
| Income from operations before taxes | 2,523 | (1,998 | ) | 525 | ||||||||
| Income tax expense | 31 | - | 31 | |||||||||
| Net income from continuing operations | 2,492 | (1,998 | ) | 494 | ||||||||
| Discontinued operations: | ||||||||||||
| Loss from discontinued business units, net of income tax of $0 | (187 | ) | - | (187 | ) | |||||||
| Loss on disposal of the assets of the discontinued business units, net of income tax | (2 | ) | - | (2 | ) | |||||||
| Net loss from discontinued operations | (189 | ) | - | (189 | ) | |||||||
| Net income | 2,303 | (1,998 | ) | 305 | ||||||||
| Net (income) loss attributable to noncontrolling interest | - | - | - | |||||||||
| Net income attributable to Red Lion Hotels Corporation | 2,303 | (1,998 | ) | 305 | ||||||||
| Comprehensive income (loss) : | ||||||||||||
| Unrealized loss on cash flow hedge, net of tax | (44 | ) | - | (44 | ) | |||||||
| Comprehensive income | $ | 2,259 | $ | (1,998 | ) | $ | 261 | |||||
| Earnings (loss) per share - basic: | ||||||||||||
| Income from continuing operations attributable to RLHC | $ | 0.13 | $ | 0.02 | ||||||||
| Loss from discontinued operations | (0.01 | ) | (0.01 | ) | ||||||||
| Net income attributable to RLHC | $ | 0.12 | $ | 0.01 | ||||||||
| Earnings (loss) per share - diluted | ||||||||||||
| Income from continuing operations attributable to RLHC | $ | 0.13 | $ | 0.02 | ||||||||
| Loss from discontinued operations | (0.01 | ) | (0.01 | ) | ||||||||
| Net income attributable to RLHC | $ | 0.12 | $ | 0.01 | ||||||||
| Weighted average shares - basic | 19,785 | 19,785 | ||||||||||
| Weighted average shares - diluted | 19,891 | 19,891 | ||||||||||
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 business disposition, (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 business disposal.
The disposed business represented a separate, stand-along reporting segment.
Note 2 — The transaction
The company completed the sale of substantially all of the assets and the liabilities of TicketsWest.com, Inc., including WestCoast Entertainment, (TicketsWest or the Entertainment business segment) to Paciolan, LLC (Paciolan) for $6.0 million, resulting in a preliminary gain on sale of approximately $1.1 million, which will be recognized in the fourth quarter of 2017. The final sale price is subject to a working capital adjustment, which is expected to be finalized within 165 days of the closing date.
Note 3 — Pro forma adjustments
The following adjustments have been reflected in the unaudited pro forma condensed financial information:
| (a) | Reflects the elimination of the Entertainment segment’s asset and liability balances and results of operations. | |
| (b) | Represents the cash proceeds of $6.0 million, including $0.6 million held in escrow and classified in other current assets ($0.3 million) and other long-term assets ($0.3 million), from Paciolan for purchase of TicketsWest assets, less $0.7 million for transaction related expenses. | |
| (c) | The net of the amounts reflected in retained earnings ($1.1 million) represents the estimated gain on sale of the acquisition, net of transaction costs. The gain is calculated as the net cash received ($5.3 million after payment of transaction related expenses) less the net assets transferred ($4.2 million). Due to the availability of offsetting net operating loss carryforwards, there is no tax expense associated with the gain on sale. As the gain is directly attributable to the disposal and is not expected to have a continuing impact on the Company’s operations, it is only reflected in retained earnings on the pro forma unaudited condensed consolidated balance sheet. | |