8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

Current Report Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 21, 2003

Extended Stay America, Inc.

(Exact name of registrant as specified in its charter)

Delaware	001-13125	36-3996573
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(IRS Employer Identification No.)

101 N. Pine Street

Spartanburg, SC 29302

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (864) 573-1600

N/A

(Former name or former address, if changed since last report)

Item 7. Financial Statements and Exhibits.

(c) Exhibits.

Exhibit Number	Description of Exhibit
99.1	Press Release, dated April 21, 2003, of Extended Stay America, Inc., announcing its first quarter 2003 earnings.

Item 9. Regulation FD Disclosure (Information is Being Provided Under Item 12).

On April 21, 2003, Extended Stay America, Inc. issued a Press Release announcing its first quarter 2003 earnings. The Press Release is incorporated herein by reference, and is included as Exhibit 99.1 to this Current Report on Form 8-K.

Exhibit 99.1 to this report contains references to EBITDA, which is a “non-GAAP financial measure” as defined in Item 10 of Regulation S-K of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). EBITDA represents earnings before interest, income taxes, depreciation, and amortization. EBITDA is provided because it is commonly used in the lodging and real estate industries as a measure of liquidity and as a means of determining the value of a company or cash producing properties. EBITDA is not a measurement of financial performance under generally accepted accounting principles. EBITDA is not necessarily comparable with similarly titled measures for other companies. EBITDA is reconciled to cash flows provided by operating activities, the most comparable measure under generally accepted accounting principles, as set forth in the schedule on the last page of the Press Release.

The information furnished under “Item 9. Regulation FD Disclosure” is intended to be furnished under “Item 12. Results of Operations and Financial Condition” in accordance with SEC Release No. 33-8216. The information in this Form 8-K and the exhibit attached hereto shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: April 21, 2003

Extended Stay America, Inc.
By:	/s/ GREGORY R. MOXLEY
	Gregory R. Moxley Chief Financial Officer

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EX-99.1

Exhibit 99.1

[Extended Stay America, Inc. logo]

For Immediate Release	For More Information, Contact:
	Robert A. Brannon, President & COO
	(864) 573-1603
	Gregory R. Moxley, CFO
	(864) 573-1635

EXTENDED STAY AMERICA, INC.

RELEASES FIRST QUARTER, 2003 FINANCIAL REPORT

Spartanburg, SC — April 21, 2003 — Extended Stay America, Inc. (NYSE:ESA), a leading provider of extended stay lodging, today reported the results of its operations for the three months ended March 31, 2003. Reflecting the continued impact on travel resulting from the weakened U.S. economy, the war in Iraq, and frequent terrorism alerts, net income for the first quarter of 2003 was $5.1 million or $0.05 per diluted share. Net income for the first quarter of 2002, including the benefits associated with the 2002 Winter Olympics ($0.01 per diluted share) and a change in estimated annual effective income tax rate ($0.03 per diluted share), was $0.12 per diluted share.

The Company opened 2 EXTENDED STAYAMERICA Efficiency Studios during the quarter resulting in a total of 457 operating hotels (39 Crossland Economy Studios, 323 EXTENDED STAYAMERICA Efficiency Studios, and 95 StudioPLUS Deluxe Studios) as of March 31, 2003. In addition, the Company had 18 EXTENDED STAYAMERICA Efficiency Studios under construction as of March 31, 2003. The total of 20 hotels opened or under construction in the first quarter of 2003 will have total estimated development costs of approximately $163 million. The Company expects to open 6 hotels in the second quarter, 9 hotels in the third quarter, 2 hotels in the fourth quarter, and 1 hotel in the first quarter of 2004.

Due to continued weakness in the U.S. economy, declines in occupancy at the Company’s properties, and the prospect of further reduction in travel as a result of geo-political events, the Company decided late in 2002 to defer the commencement of new construction projects. At March 31, 2003, the Company had 38 sites under option and had acquired 2 parcels for future development. The Company will continue to seek the necessary approvals and permits for these sites and for additional sites. Construction will commence as soon as possible within the constraints of the Company’s amended credit agreement and contingent upon a number of factors, including improvements in the overall U.S. economy, improvements in demand for lodging products in the overall lodging industry, and improvements in demand for the Company’s extended stay lodging products.

As of March 31, 2003, the Company had invested approximately $2.6 billion in the 457 open hotels and had invested approximately $108 million in hotels under development. The Company had cash balances of approximately $5.8 million and had outstanding loans of $1.16 billion, leaving $185 million committed and available under its credit facilities at March 31, 2003.

Revenue increased to $125.2 million as compared to $124.8 million for the first quarter last year. Earnings before interest, taxes, depreciation and amortization (EBITDA) was $47.2 million (38% of revenue) for the quarter. Property level EBITDA, including 26 hotels that were opened during the quarter or were open for less than one year at the beginning of the quarter, was 47% of revenue or $59.3 million, compared to 52% of revenue or $64.5 million for the first quarter of 2002. Property level EBITDA does not include corporate operating and site selection expenses of $12.0 million (10% of revenue) for the quarter compared to $12.1 million (10% of revenue) for the first quarter of 2002. Operating results for the first quarter of 2002 include the impact of one-time rental contracts during the 2002 Winter Olympics at three properties in Salt Lake City, Utah (the “Olympic Properties”).

-more-

EXTENDED STAY AMERICA, INC.

RELEASES FIRST QUARTER, 2003 FINANCIAL REPORT

PAGE TWO

The Company realized average occupancies of 61% and average weekly room rates of $325 for the quarter. Average occupancy rates for Crossland, EXTENDED STAYAMERICA, and StudioPLUS were 64%, 61%, and 59%, respectively, while average weekly room rates were $222, $339, and $336, respectively, for the quarter.

Comparable hotels, consisting of the 389 properties opened for at least one year at the beginning of the first quarter of 2002 (excluding the Olympic Properties), realized the following percentage changes in the components of revenue per available room (REVPAR) for the first quarter of 2003 as compared with the first quarter of 2002 :

	Crossland	EXTENDED STAYAMERICA	StudioPLUS	Total
Comparable Hotels	39	257	93	389
Occupancy	(7.5%)	(8.8%)	(8.6%)	(8.6%)
Average Weekly Rate	1.5%	4.9%	2.5%	4.1%
REVPAR	(6.0%)	(4.3%)	(6.2%)	(4.9%)

While the Company believes that improvements in the U.S. economy will result in increased demand for its products, it is difficult to assess the timing and magnitude of such improvements. Based on trends experienced in the first quarter and thus far in April, the Company currently anticipates that it will experience declines in REVPAR for its comparable hotels when compared to the prior year of 4% to 6% for the second quarter of 2003. Assuming occupancy improves at a moderate rate in the second half of 2003, the Company would realize REVPAR declines for its comparable hotels of 2% to 4% for the year. Based on these operating assumptions, earnings for the second quarter in the range of $0.14 to $0.16 per diluted share and annual earnings for 2003 in the range of $0.46 to $0.52 per diluted share would be expected.

George D. Johnson, Jr., CEO, commented: “We are extremely confident in our business model and the long-term prospects for extended stay lodging. We are also confident in the resiliency of the U.S. economy. Due to the generally fixed nature of our operating costs, we feel we can convert incremental revenue into improved profits better than any other lodging product we are aware of as demand fundamentals improve in the years ahead.”

Certain statements and information included in this release constitute “forward-looking statements” within the meaning of the Federal Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance, or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied in such forward-looking statements. Additional discussion of factors that could cause actual results to differ materially from management’s projections, forecasts, estimates and expectations is contained in the Company’s SEC filings.

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EXTENDED STAY AMERICA, INC.

Condensed Consolidated Statements Of Income (Unaudited)

(In thousands, except per share data)

	Three Months Ended
	March 31, 2003		March 31, 2002
Revenue	$	125,218	$	124,792
Property operating expenses		65,947		60,306
Property operating income		59,271		64,486
Corporate operating and property management expenses		12,024		12,077
Income before interest, income taxes, depreciation, and amortization		47,247		52,409
Depreciation and amortization		19,950		19,228
Interest expense, net		18,968		19,239
Income before income taxes		8,329		13,942
Provision for income taxes		3,248		2,414
Net income	$	5,081	$	11,528
Net income per common share – Basic and Diluted:	$	0.05	$	0.12
Weighted average shares:
Basic		93,951		93,437
Effect of dilutive options		1,317		3,531
Diluted		95,268		96,968

EXTENDED STAY AMERICA, INC.

Reconciliation of Net Cash Provided by Operating Activities to

Earnings Before Interest, Income Taxes, Depreciation and Amortization (Unaudited)

(In thousands, except per share data)

	Three Months Ended
	March 31, 2003			March 31, 2002
Net cash provided by operating activities	$	35,811		$	37,793
Interest expense, net		18,968			19,239
Provision for income taxes		3,248			2,414
Amortization of deferred loan costs included in interest expense		(1,089	)		(1,043	)
Change in deferred income tax		(3,038	)		(1,365	)
Changes in other operating assets and liabilities		(6,653	)		(4,629	)
EBITDA	$	47,247		$	52,409