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): July 22, 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.)

100 Dunbar Street

Spartanburg, SC 29306

(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 July 22, 2003, of Extended Stay America, Inc., announcing its second quarter 2003 earnings.

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

On July 22, 2003, Extended Stay America, Inc. issued a Press Release announcing its second 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 Page 3 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.

Page-1

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: July 22, 2003

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

Page-2

EX-99.1

[LOGO APPEARS HERE]

Exhibit 99.1

For Immediate Release

For More Information, Contact:

Corry W. Oakes, III, President & COO

(864) 573-1615

Gregory R. Moxley, CFO

(864) 573-1635

EXTENDED STAY AMERICA, INC.

RELEASES 2nd QUARTER, 2003 FINANCIAL REPORT

Spartanburg, SC — July 22, 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 and six months ended June 30, 2003. Reflecting the continued impact on travel resulting from the weakened U.S. economy and the war in Iraq, net income for the second quarter of 2003 was $15.0 million or $0.16 per diluted share compared with $17.1 million or $0.18 per diluted share for the same quarter of last year.

Net income for the six months ended June 30, 2003 was $0.21 per diluted share compared with $0.29 per diluted share for the same period of last year. Net income for the six months ended June 30, 2002 includes benefits associated with one-time rental contracts during the 2002 Winter Olympics of approximately $1.2 million ($0.01 per diluted share) at three properties in Salt Lake City, Utah (the “Olympic Properties”) and a reduction in the Company’s estimated annual effective income tax rate of approximately $3.0 million ($0.03 per diluted share).

Revenue for the second quarter was $141.2 million, a decrease of 1% compared to the second quarter of 2002. Earnings before interest, taxes, depreciation and amortization (EBITDA) was $63.7 million (45% of revenue) for the quarter. Property level EBITDA, including 20 hotels that were open for less than one year at the beginning of the quarter or that were opened during the quarter, was 54% of revenue or $76.1 million for the quarter, compared to 56% of revenue or $79.7 million for the same quarter of 2002. Property level EBITDA does not include corporate operating and site selection expenses of $12.3 million (9% of revenue) for the quarter, compared to $12.1 million (8% of revenue) for the second quarter of 2002.

The Company realized an overall decrease of 3.9% in REVPAR (revenue per available room) with average occupancies of 68% and average weekly room rates of $323 for the second quarter of 2003, as compared to average occupancies of 72% and average weekly room rates of $317 for the second quarter of 2002. Average occupancy rates for Crossland, EXTENDED STAYAMERICA, and StudioPLUS were 67%, 68%, and 67%, respectively, while average weekly room rates were $221, $336, and $331, respectively, for the second quarter of 2003.

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

	Crossland		EXTENDED STAYAMERICA		StudioPLUS		Total
Comparable Hotels	39		257		93		389
Occupancy	(6.0	)%	(7.1	)%	(5.6	)%	(6.7	)%
Average Weekly Rate	0.4	%	1.2	%	0.9	%	1.1	%
REVPAR	(5.6	)%	(6.0	)%	(4.7	)%	(5.7	)%

EXTENDED STAY AMERICA, INC.

RELEASES SECOND QUARTER, 2003 FINANCIAL REPORT

PAGE TWO

The Company opened 6 EXTENDED STAYAMERICA Efficiency Studios hotels during the quarter resulting in a total of 463 operating hotels (39 Crossland Economy Studios, 329 EXTENDED STAYAMERICA Efficiency Studios, and 95 StudioPLUS Deluxe Studios) as of June 30, 2003. In addition, the Company had 12 EXTENDED STAYAMERICA Efficiency Studios under construction as of June 30, 2003. The Company expects to open 9 hotels in the third quarter and 3 hotels in the fourth quarter of 2003, for a total of 20 hotels during the year with total estimated development costs of approximately $163 million.

At June 30, 2003, the Company had 30 sites for which it holds purchase options 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, and may acquire additional parcels of real estate for future development. 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. Assuming recent trends continue through the remainder of the year, the Company currently intends to commence construction, primarily during the fourth quarter, on 8 to 10 sites having total development costs of approximately $70 million.

As of June 30, 2003, the Company had invested approximately $2.7 billion in the 463 open hotels and had invested approximately $89 million in hotels under development. The Company had cash balances of approximately $10.4 million and had outstanding loans of $1.16 billion, leaving $180 million committed and available under its credit facilities at June 30, 2003.

While the Company believes that improvements in the U. S. economy should 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 second quarter and thus far in July, the Company currently anticipates that it will experience declines in REVPAR for its comparable hotels when compared to the prior year of 1% to 3% for the third quarter of 2003 and will realize REVPAR declines of 2% to 4% for the year. Based on these operating assumptions, earnings for the third quarter in the range of $0.19 to $0.21 per diluted share and annual earnings for 2003 in the range of $0.45 to $0.50 per diluted share would be expected.

George D. Johnson, Jr., CEO, commented: “We remain extremely confident in our business model and the long-term prospects for extended stay lodging. Our occupancy rates continue to exceed those of the overall lodging industry and our property operating margins continue to exceed 50%. We believe we will benefit in future years from the dramatic reduction in the supply of new hotel rooms, and we look forward to improving conditions in the U.S. economy and the resumption of our development program.”

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.

# # #

EXTENDED STAY AMERICA, INC.

Condensed Consolidated Statements of Operations (Unaudited)

(In thousands, except per share data)

	Three Months Ended				Six Months Ended
	June 30, 2003		June 30, 2002		June 30, 2003		June 30, 2002
Revenue	$	141,239	$	142,802	$	266,457	$	267,594
Property operating expenses		65,174		63,110		131,121		123,417
Property operating income		76,065		79,692		135,336		144,177
Corporate operating and property management expenses		12,318		12,108		24,342		24,184
Income before interest, income taxes, depreciation, and amortization		63,747		67,584		110,994		119,993
Depreciation and amortization		20,048		19,696		39,998		38,923
Interest expense, net		19,121		19,929		38,089		39,168
Income before income taxes		24,578		27,959		32,907		41,902
Provision for income taxes		9,586		10,904		12,834		13,318
Net income	$	14,992	$	17,055	$	20,073	$	28,584
Net income per common share – Basic	$	0.16	$	0.18	$	0.21	$	0.31
Net income per common share – Diluted	$	0.16	$	0.18	$	0.21	$	0.29
Weighted average shares:
Basic		94,090		93,668		94,021		93,553
Effect of dilutive options		1,443		3,284		1,382		3,405
Diluted		95,533		96,952		95,403		96,958

EXTENDED STAY AMERICA, INC.

Reconciliation of Net Cash Provided by Operating Activities to

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

(In thousands)

	Three Months Ended						Six Months Ended
	June 30, 2003			June 30, 2002			June 30, 2003			June 30, 2002
Net cash provided by operating activities	$	40,988		$	51,343		$	76,799		$	89,136
Interest expense, net		19,121			19,929			38,089			39,168
Provision for income taxes		9,586			10,904			12,834			13,318
Amortization of deferred loan costs included in interest expense		(1,088	)		(1,043	)		(2,177	)		(2,086	)
Change in deferred income tax		(6,640	)		(5,289	)		(9,678	)		(6,654	)
Changes in other operating assets and liabilities		1,780			(8,260	)		(4,873	)		(12,889	)
EBITDA	$	63,747		$	67,584		$	110,994		$	119,993