-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CR/wLrkedhSCkl8dNu+57f+MdFR0tA2SbkM4iR0123xA0pCSDlhv3yv4xi2rpjAn KIDxlpxzxZBbaZFy+tpZ6w== 0000950152-03-009448.txt : 20031107 0000950152-03-009448.hdr.sgml : 20031107 20031107163035 ACCESSION NUMBER: 0000950152-03-009448 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20030825 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20031107 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BOYKIN LODGING CO CENTRAL INDEX KEY: 0001015859 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 341824586 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-11975 FILM NUMBER: 03985572 BUSINESS ADDRESS: STREET 1: GUILDHALL BLDG 45 W PROSPECT AVE STREET 2: SUITE 1500 CITY: CLEVELAND STATE: OH ZIP: 44115 BUSINESS PHONE: 2164301200 MAIL ADDRESS: STREET 1: GUILDHALL BLDG 45 W PROSPECT AVE STREET 2: SUITE 1500 CITY: CLEVELAND STATE: OH ZIP: 44115 FORMER COMPANY: FORMER CONFORMED NAME: BOYKIN LODGING TRUST INC DATE OF NAME CHANGE: 19960604 8-K/A 1 l04033ae8vkza.htm BOYKIN LODGING COMPANY BOYKIN LODGING COMPANY
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K/A

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

Date of Report (Date of earliest event reported): August 25, 2003

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

         
Ohio
(State or Other
Jurisdiction of
Incorporation)
  001-11975
(Commission File Number)
  34-1824586
(IRS Employer Identification Number)
 
     
Guildhall Building, Suite 1500, 45 W. Prospect Avenue, Cleveland, Ohio
(Address of Principal Executive Offices)
  44115
(Zip Code)

(216) 430-1200
(Registrant’s telephone number, including area code)

Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

 


ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
Combined Balance Sheets
Combined Statements of Operations
Combined Statements of Net Assets
Combined Statements of Cash Flows
Notes to Combined Financial Statements
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
SIGNATURE
EX-23.1 INDEPENDENT AUDITORS CONSENT


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This Form 8-K/A is being filed to report additional financial information regarding the acquisition of Radisson Suite Beach Resort on Marco Island, Florida, which was reported in a Form 8-K, filed September 4, 2003, which this form amends.

ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS

  On August 25, 2003, Boykin Lodging Company (“Boykin” or the “Company”) acquired the 233-suite Radisson Suite Beach Resort (the “Resort”) located on Marco Island, Florida, for a price of $27.25 million from MeriStar Hospitality Corporation, an unrelated third party. The purchase price for the Resort was the result of arms-length negotiations. Boykin obtained the funds for the acquisition utilizing availability under its then existing credit facility. The Resort will be managed by Boykin Management Company Limited Liability Company under a management agreement which expires December 31, 2004 and is cancelable by Boykin without penalty upon providing 90 days notice.
 
  The Resort is situated along the Gulf of Mexico on Florida’s Marco Island, just south of Naples. The 233 deluxe one- and two-bedroom suites are centered on a courtyard and all contain screened balconies and views of the Gulf. Other amenities of the property include meeting areas capable of accommodating both large and small groups, an outdoor pool and whirlpool, fine dining and poolside restaurants, a lounge and other resort amenities.
 
  Certain matters discussed within this press release may contain “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934 regarding the Company, including those statements regarding the Company’s and management’s beliefs and expectations. Except for historical information, the matters discussed in this release are forward- looking statements that involve risks and uncertainties that may cause results to differ materially from those set forth in those statements. Among other things, factors that could cause actual results to differ materially from those expressed in such forward-looking statements include financial performance, real estate conditions, execution of hotel acquisition programs, changes in local or national economic conditions, and other similar variables and other matters disclosed in the Company’s filings with the SEC, which can be found on the SEC’s website at http://www.sec.gov.

ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.

(a)  Financial Statements of Business Acquired.

  The financial statements of the Radisson Suite Beach Resort as of December 31, 2002 and 2001 and for the years then ended are set forth in this Report.

 


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RADISSON SUITE BEACH RESORT ON MARCO ISLAND

Combined Financial Statements

June 30, 2003 (unaudited), December 31, 2002 and 2001

(With Independent Auditors’ Report Thereon)

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Independent Auditors’ Report

To MeriStar Hospitality Corporation:

We have audited the accompanying combined balance sheets for the Radisson Suite Beach Resort on Marco Island (the Hotel), which is wholly-owned by a subsidiary of MeriStar Hospitality Operating Partnership (MHOP), as of December 31, 2002 and 2001, and the related combined statements of operations, net assets and cash flows for the years then ended. These financial statements are the responsibility of the management of MeriStar Hospitality Corporation. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the combined financial statements referred to above present fairly, in all material respects, the financial position of the Hotel as of December 31, 2002 and 2001, and the results of its operations, and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

/s/ KPMG LLP

August 22, 2003

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RADISSON SUITE BEACH RESORT ON MARCO ISLAND

Combined Balance Sheets

June 30, 2003 (unaudited), December 31, 2002 and 2001

                         
    June 30   December 31
    2003   2002   2001
   
 
 
    (unaudited)                
Assets
                       
Investments in hotel property
  $ 26,451,386     $ 53,485,908     $ 52,783,805  
Accumulated depreciation
          (8,002,880 )     (6,012,231 )
 
   
     
     
 
 
    26,451,386       45,483,028       46,771,574  
Inventories
    64,638       65,318       48,588  
Prepaid expenses and other assets
    103,731       294,301       187,380  
Accounts receivable, net of allowance for doubtful accounts ($0 in 2003 (unaudited) and 2002 and $25,533 in 2001)
    288,428       295,282       223,109  
Cash
    269,066       210,272       199,316  
 
   
     
     
 
Total assets
  $ 27,177,249     $ 46,348,201     $ 47,429,967  
 
   
     
     
 
Liabilities and Net Assets
                       
Liabilities:
                       
Accounts payable and accrued expenses
  $ 814,198     $ 518,361     $ 486,705  
Due to Interstate Hotels & Resorts, Inc.
    63,304       142,585       110,808  
Advance deposits
    57,868       51,018       48,954  
 
   
     
     
 
Total liabilities
    935,370       711,964       646,467  
 
   
     
     
 
Net assets
    26,241,879       45,636,237       46,783,500  
 
   
     
     
 
 
  $ 27,177,249     $ 46,348,201     $ 47,429,967  
 
   
     
     
 

See accompanying notes to combined financial statements.

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RADISSON SUITE BEACH RESORT ON MARCO ISLAND

Combined Statements of Operations

Six Months Ended June 30, 2003 and 2002 (unaudited)

and Years Ended December 31, 2002 and 2001

                                       
          Six months ended June 30   Years ended December 31
         
 
          2003   2002   2002   2001
         
 
 
 
          (unaudited)                
Revenue:
                               
 
Hotel operations:
                               
     
Rooms
  $ 5,851,094     $ 5,298,384     $ 8,210,140     $ 10,127,570  
     
Food and beverage
    1,184,038       1,039,849       1,742,302       2,275,702  
     
Other hotel operations
    857,022       661,728       1,214,048       1,372,944  
 
   
     
     
     
 
Total revenue
    7,892,154       6,999,961       11,166,490       13,776,216  
 
   
     
     
     
 
Hotel operating expenses:
                               
   
Rooms
    1,243,461       1,104,243       2,086,144       2,289,390  
   
Food and beverage
    983,204       883,477       1,620,411       2,023,235  
   
Other hotel operating expenses
    656,419       465,015       918,459       951,784  
 
                               
Other operating expenses:
                               
   
General and administrative
    1,118,609       1,067,559       1,970,801       2,100,759  
   
Property operating costs
    921,152       913,368       1,679,872       1,903,961  
   
Depreciation
    1,016,817       993,400       1,990,649       1,945,876  
   
Management fees
    197,304       175,019       279,162       344,405  
   
Loss on asset impairment
    18,074,937                    
   
Property taxes, insurance and other
    511,470       390,550       910,642       764,953  
 
   
     
     
     
 
Operating expenses
    24,723,373       5,992,631       11,456,140       12,324,363  
 
   
     
     
     
 
Net (loss) income
  $ (16,831,219 )   $ 1,007,330     $ (289,650 )   $ 1,451,853  
 
   
     
     
     
 

See accompanying notes to combined financial statements.

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RADISSON SUITE BEACH RESORT ON MARCO ISLAND

Combined Statements of Net Assets

Six Months Ended June 30, 2003 (unaudited)

and Years Ended December 31, 2002 and 2001

           
Balance at December 31, 2000
  $ 47,996,071  
 
Distributions
    (2,664,424 )
 
Net income
    1,451,853  
 
   
 
Balance at December 31, 2001
    46,783,500  
 
Distributions
    (857,613 )
 
Net loss
    (289,650 )
 
   
 
Balance at December 31, 2002
    45,636,237  
 
Distributions (unaudited)
    (2,563,139 )
 
Net loss (unaudited)
    (16,831,219 )
 
   
 
Balance at June 30, 2003 (unaudited)
  $ 26,241,879  
 
   
 

See accompanying notes to combined financial statements.

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Combined Statements of Cash Flows

Six Months Ended June 30, 2003 and 2002 (unaudited)

and Years Ended December 31, 2002 and 2001

                                       
          Six Months Ended June 30   Years Ended December 31
         
 
          2003   2002   2002   2001
         
 
 
 
          (unaudited)                
Operating activities:
                               
 
Net (loss) income
  $ (16,831,219 )   $ 1,007,330     $ (289,650 )   $ 1,451,853  
 
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
                               
   
Depreciation
    1,016,817       993,400       1,990,649       1,945,876  
   
Loss on asset impairment
    18,074,937                    
   
Changes in operating assets and liabilities:
                               
     
Inventories
    680       (10,744 )     (16,730 )     (48,588 )
     
Prepaid expenses and other assets
    190,570       (28,029 )     (106,921 )     (187,380 )
     
Accounts receivable
    6,854       108,344       (72,173 )     (223,109 )
     
Due to Interstate Hotels & Resorts, Inc.
    (79,281 )     1,483       31,777       554,948  
     
Accounts payable, accrued expenses and advance deposits
    302,687       438,541       33,720       337,615  
 
   
     
     
     
 
Net cash provided by operating activities
    2,682,045       2,510,325       1,570,672       3,831,215  
 
   
     
     
     
 
Investing activities:
                               
 
Investments in hotel property
    (60,112 )     (324,098 )     (702,103 )     (967,475 )
 
   
     
     
     
 
Net cash used in investing activities
    (60,112 )     (324,098 )     (702,103 )     (967,475 )
 
   
     
     
     
 
Financing activities:
                               
 
Distributions
    (2,563,139 )     (2,200,324 )     (857,613 )     (2,664,424 )
 
   
     
     
     
 
Net cash used in financing activities
    (2,563,139 )     (2,200,324 )     (857,613 )     (2,664,424 )
 
   
     
     
     
 
Net increase (decrease) in cash
    58,794       (14,097 )     10,956       199,316  
Cash beginning of year
    210,272       199,316       199,316        
 
   
     
     
     
 
Cash end of year
  $ 269,066     $ 185,219     $ 210,272     $ 199,316  
 
   
     
     
     
 

See accompanying notes to combined financial statements.

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Notes to Combined Financial Statements

December 31, 2002 and 2001

(1) Significant Accounting Policies

  (a)   Description of Business
 
      The Radisson Suite Beach Resort on Marco Island, Florida (the Hotel) is a full-service hotel with 268 rooms. The hotel is owned by MeriStar Sub 5H, LLC (the MeriStar Sub), a wholly-owned subsidiary of MeriStar Hospitality Operating Partnership, L.P. (MHOP), which is a subsidiary of MeriStar Hospitality Corporation (MeriStar). MeriStar is a real estate investment trust (REIT) under the Internal Revenue Code and owns and operates a portfolio of 100 hotels. MeriStar Hotel Lessee, Inc., a taxable REIT subsidiary (the TRS) wholly-owned by MHOP, leases the Hotel from the MeriStar Sub and records the results of the Hotel’s operations.
 
      As further described in note 1(h), the Hotel is managed by a subsidiary of Interstate Hotels & Resorts, Inc. (Interstate) through an agreement with the TRS. MeriStar and Interstate have one common director, the Chairman of the Board.
 
  (b)   Basis of Preparation
 
      The financial statements combine the MeriStar Sub’s investment in the hotel property and the Hotel operations recorded by the TRS since both parties are controlled by MHOP. Transactions conducted between the two companies, including lease payments, are eliminated when combined. The Hotel generates cash from its operations, which in turn is used to fund its operations, capital expenditures, and real estate tax payments. Any excess cash is distributed to MHOP.
 
      MHOP pays certain costs on behalf of the Hotel, including insurance, property taxes and certain other general and administrative expenses. Insurance costs are allocated to each of the hotels that MHOP owns. Property insurance is allocated based on various factors, including replacement costs and the level of business interruption coverage. General liability and worker’s compensation insurance is allocated based on average losses at each individual hotel and the amount of total revenues at each individual hotel compared to the total MeriStar portfolio of revenues. Total general liability and property insurance expense allocated during 2002 and 2001 was $452,574 and $319,056, respectively, and is included in property taxes, insurance and other in the combined statements of operations. Total worker’s compensation insurance allocated during 2002 and 2001 was $91,012 and $116,431, respectively, and is included in property operating costs in the combined statements of operations.
 
      MeriStar provides certain corporate administrative functions, which indirectly benefit all hotels in its portfolio, including corporate human resource administration, corporate legal services, corporate finance services, and asset management. The costs associated with these functions cannot be specifically identified with any individual hotel in MeriStar’s portfolio. The Hotel’s “General and Administrative” expenses therefore included an allocation of MeriStar’s corporate overhead costs totaling $37,553 and $41,474 for the years ended December 31, 2002 and 2001, respectively. These costs were allocated based upon the total number of hotels in the MeriStar portfolio during those time periods.

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RADISSON SUITE BEACH RESORT ON MARCO ISLAND

Notes to Combined Financial Statements

December 31, 2002 and 2001

      The Hotel is allocated capitalized interest on MeriStar’s debt obligations based on the amount of renovations completed each year as compared to renovations at all of MeriStar’s other owned hotels. Total capitalized interest allocated during 2002 and 2001 was $81,758 and $39,394, respectively, and is included in the investments in hotel property in the combined balance sheets. Interest expense is not allocated to the Hotel as there is no debt directly related to the Hotel and MeriStar has not historically allocated interest expense to each of its individual hotels. Both the TRS and the MeriStar Sub are two of many guarantor subsidiaries for certain debt at MeriStar and MHOP.
 
      Management of the hotel believes that the allocations described above are reasonable; however, costs incurred for the services allocated to the Hotel by MHOP may have differed had the Hotel operated under a different structure during the reporting periods.
 
  (c)   Use of Estimates
 
      Preparing financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from these estimates.
 
  (d)   Investments in Hotel Property
 
      Investments in hotel property are stated at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. The estimated life of the building and improvements is 40 years, while furniture and fixtures is five to seven years.
 
  (e)   Impairment of Long-Lived Assets
 
      MHOP adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” on January 1, 2002. The provisions of SFAS No. 144 require that whenever events or changes in circumstances indicate that the carrying value of a long-lived asset may be impaired that an analysis be performed to determine the recoverability of the asset’s carrying value. MHOP makes estimates of the undiscounted cash flows from the expected future operations or potential sale of the asset. If the analysis indicates that the carrying value is not recoverable from these estimates of cash flows, MHOP writes down the asset to estimated fair value and recognizes an impairment loss at the MeriStar Sub level.
 
  (f)   Inventories
 
      Inventories, consisting primarily of food and beverage, are stated at the lower of cost or market. Cost is determined generally by the first-in, first-out method.

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Notes to Combined Financial Statements

December 31, 2002 and 2001

  (g)   Income Taxes
 
      Income taxes are recognized pursuant to SFAS No. 109, “Accounting for Income Taxes” and have been allocated to the TRS operations as though the operations of the TRS were operated on a stand-alone basis. Deferred income taxes reflect the tax consequences on future years of differences between the tax and financial reporting bases of assets and liabilities. No income tax provision has been calculated on the MeriStar Sub, as the MeriStar Sub is a multi-member limited liability company, which is taxed as a partnership and therefore is not subject to income tax.
 
  (h)   Management Agreement
 
      In October 1998, the TRS entered into a management agreement with a subsidiary of Interstate to manage the hotel for 10 years. The management fee is equal to a specified percentage of aggregate hotel operating revenues, increased or reduced, as the case may be, by 20% of the positive or negative difference between:

    The actual excess of total operating revenues over total operating expenses; and
 
    A projected excess of total operating revenues over total operating expenses.

      The total management fee for any fiscal year will not be less than 2.5% or greater than 4.0% of aggregate hotel operating revenues. The TRS incurred $279,162 and $344,405 of management fees for the years ended December 31, 2002 and 2001, respectively.
 
  (i)   Revenue Recognition
 
      The Hotel recognizes revenues as hotel services are delivered.

(2)   Investments in Hotel Property
 
    Investments in hotel property consisted of the following as of December 31, 2002 and 2001:

                 
    2002   2001
   
 
Land
  $ 7,119,902     $ 7,119,902  
Building and improvements
    38,616,056       37,494,914  
Furniture and fixtures
    7,402,788       7,247,134  
Construction in progress
    347,162       921,855  
 
   
     
 
 
    53,485,908       52,783,805  
Accumulated depreciation
    (8,002,880 )     (6,012,231 )
 
   
     
 
 
  $ 45,483,028     $ 46,771,574  
 
   
     
 

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Notes to Combined Financial Statements

December 31, 2002 and 2001

(3)   Income Taxes
 
    Deferred income taxes allocated to the TRS operations reflect the net effects of temporary differences between the amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

                   
      2002   2001
     
 
Net operating loss carryforwards
  $ 295,703     $ 32,076  
Valuation allowance
    (295,703 )     (32,076 )
 
   
     
 
 
Net deferred tax asset
  $     $  
 
   
     
 

    Based on projections of the TRS’s operations and the ability to utilize the net operating loss carryforwards, a valuation allowance has been recorded to reduce the carrying value of the net operating loss carryforward deferred tax asset to zero at December 31, 2002 and 2001. As there is no capital tax in the state of Florida, there is no current income tax for 2002 and 2001. The TRS’s effective income tax rate is 35%.
 
(4)   Related Party Transactions
 
    In the normal course of managing the hotel, Interstate incurs operating costs, which are reimbursed by the Hotel. The balance due to Interstate of $142,585 and $110,808 at December 31, 2002 and 2001, respectively, included amounts due for management fees, and reimbursements due for insurance, employee benefits, sales and marketing expenses, and other miscellaneous operating expenses. These amounts do not bear interest and are normally paid within 30 days.
 
(5)   Subsequent Event (unaudited)
 
    On August 25, 2003, MHOP sold the Hotel to Boykin Marco LLC, an indirect, majority owned subsidiary of Boykin Lodging Company (NYSE: BOY) for $27,250,000. During the second quarter of 2003, MHOP revised its expected holding period of the Hotel, which resulted in an impairment loss of $18,074,937.

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(b)   Pro Forma Financial Information.
 
    The accompanying unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2003, is presented as if the acquisition of the Radisson Suite Beach Resort and the sale of the Springfield hotel occurred on June 30, 2003. The Springfield hotel was sold in July 2003 and was not classified as held for sale as of June 30, 2003 as the sale of the property required the lender of the underlying term loan to grant a release. The release was granted in July 2003.
 
    The unaudited Pro Forma Condensed Consolidated Statements of Operations for the six months ended June 30, 2003 and for the year ended December 31, 2002 assume that the acquisition of the Radisson Suite Beach Resort and the sale of the Springfield hotel occurred on January 1, 2002.
 
    The unaudited pro forma condensed consolidated financial information should be read in conjunction with the consolidated financial statements and related footnotes included in Boykin Lodging Company’s 2002 Annual Report on Form 10-K and Boykin Lodging Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003.

THE FOLLOWING UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
INFORMATION IS PRESENTED FOR ILLUSTRATIVE PURPOSES ONLY AND IS NOT
NECESSARILY AN INDICATION OF THE FUTURE FINANCIAL POSITION OR RESULTS
OF OPERATIONS OF BOYKIN LODGING COMPANY.

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BOYKIN LODGING COMPANY
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2003
(unaudited, amounts in thousands, except share data)

                                     
                Pro Forma Adjustments        
               
       
        (a)   (b)   (c)        
        Boykin           Boykin
        Lodging       Radisson   Lodging
        Company       Suite Beach   Company
        Historical   Springfield   Resort   Pro Forma
       
 
 
 
ASSETS
                               
Investment in hotel properties
  $ 613,347       (8,956 )     28,302 (d)   $ 632,693  
 
Accumulated depreciation
    (144,963 )     2,651             (142,312 )
 
   
     
     
     
 
Investment in hotel properties, net
    468,384       (6,305 )     28,302       490,381  
Cash and cash equivalents
    17,313       1,490 (e)     31       18,834  
Restricted cash
    16,113                   16,113  
Accounts receivable, net of allowance for doubtful accounts of $195
    21,763       (120 )     21       21,664  
Rent receivable from lessees
    332                   332  
Inventories
    1,898       (40 )           1,858  
Deferred financing costs and other, net
    2,050             15       2,065  
Investment in unconsolidated joint ventures
    16,700                   16,700  
Other assets
    8,367       (141 )     (655) (f)     7,571  
 
   
     
     
     
 
 
  $ 552,920       (5,116 )     27,714     $ 575,518  
 
   
     
     
     
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
                               
Borrowings against credit facility
  $ 4,000       (4,000) (e)     26,504     $ 26,504  
Term notes payable
    259,832                   259,832  
Accounts payable and accrued expenses
    36,696       (938) (e)     1,210       36,968  
Accounts payable to related party
    923                   923  
Dividends/distributions payable
    1,188                   1,188  
Due to lessees
    113                   113  
Deferred lease revenue
    284                   284  
Minority interest in joint ventures
    2,403                   2,403  
Minority interest in operating partnership
    12,457       (27) (g)           12,430  
SHAREHOLDERS’ EQUITY:
                               
 
Preferred shares, without par value; 10,000,000 shares authorized; 181,000 shares issued and outstanding (liquidation preference of $45,250)
                      --  
 
Common shares, without par value; 40,000,000 shares authorized; 17,340,050 outstanding
                      --  
 
Additional paid-in capital
    357,298                   357,298  
 
Distributions and losses in excess of income
    (120,500 )     (151) (g)           (120,651 )
 
Unearned compensation – restricted shares
    (1,774 )                 (1,774 )
 
   
     
     
     
 
   
Total shareholders’ equity
    235,024       (151 )           234,873  
 
   
     
     
     
 
 
  $ 552,920       (5,116 )     27,714     $ 575,518  
 
   
     
     
     
 

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BOYKIN LODGING COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2003
(unaudited, amounts in thousands, except for per share data)

                                       
                  Pro Forma Adjustments        
                 
       
          (a)   (h)   (i)        
          Boykin       Radisson   Boykin
          Lodging       Suite   Lodging
          Company       Beach   Company
          Historical   Springfield   Resort   Pro Forma
         
 
 
 
Revenues:
                               
   
Hotel revenues
                               
     
Rooms
  $ 76,555       (1,481 )     5,851     $ 80,925  
     
Food and beverage
    36,992       (851 )     1,184       37,325  
     
Other
    6,401       (56 )     857       7,202  
 
   
     
     
     
 
   
Total hotel revenues
    119,948       (2,388 )     7,892       125,452  
   
Lease revenue
    674                   674  
   
Revenues from condominium development and unit sales
    17,096                   17,096  
 
   
     
     
     
 
     
Total revenues
    137,718       (2,388 )     7,892       143,222  
 
   
     
     
     
 
Expenses:
                               
   
Hotel operating expenses
                               
     
Rooms
    19,357       (522 )     1,243       20,078  
     
Food and beverage
    26,967       (816 )     983       27,134  
     
Other direct
    4,075       (45 )     656       4,686  
     
Indirect
    37,003       (1,294 )     2,040       37,749  
     
Management fees to related party
    2,151                   2,151  
     
Management fees to third parties
    1,254       (72 )     237 (j)     1,419  
 
   
     
     
     
 
   
Total hotel operating expenses
    90,807       (2,749 )     5,159       93,217  
   
Property taxes, insurance and other
    8,610       (109 )     511       9,012  
   
Cost of condominium development and unit sales
    11,685                   11,685  
   
Real estate related depreciation and amortization
    16,074       (238 )     398 (k)     16,234  
   
Corporate general and administrative
    3,822       (1 )           3,821  
 
   
     
     
     
 
     
Total operating expenses
    130,998       (3,097 )     6,068       133,969  
 
   
     
     
     
 
     
Operating income (loss)
    6,720       709       1,824       9,253  
 
   
     
     
     
 
   
Interest income
    119                   119  
   
Other income
    191                   191  
   
Interest expense
    (8,697 )           (603) (l)     (9,300 )
   
Amortization of deferred financing costs
    (1,409 )                 (1,409 )
   
Minority interest in earnings of joint ventures
    (39 )                 (39 )
   
Minority interest in loss of operating partnership
    1,288       (107 )     (184) (m)     997  
   
Equity in loss of unconsolidated joint ventures
    (709 )                 (709 )
 
   
     
     
     
 
Loss from continuing operations
  $ (2,536 )     602       1,037     $ (897 )
 
                               
Loss from continuing operations per share:
                               
 
Basic
  $ (0.15 )                   $ (0.05 )
 
Diluted
  $ (0.15 )                   $ (0.05 )
 
                               
Weighted average number of common shares outstanding:
                               
 
Basic
    17,328                       17,328  
 
Diluted
    17,418                       17,418  

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BOYKIN LODGING COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2002
(unaudited, amounts in thousands, except for per share data)

                                         
                    Pro Forma Adjustments        
                   
       
            (n)   (o)   (i)        
            Boykin Lodging   Previously reported   Radisson Suite   Boykin Lodging
            Company Historical   dispositions   Beach Resort   Company Pro Forma
           
 
 
 
Revenues:
                               
   
Hotel revenues
                               
       
Rooms
  $ 162,479       (11,324 )     8,210     $ 159,365  
       
Food and beverage
    76,939       (4,071 )     1,742       74,610  
       
Other
    13,371       (333 )     1,214       14,252  
 
   
     
     
     
 
     
Total hotel revenues
    252,789       (15,728 )     11,166       248,227  
     
Lease revenue
    4,730                   4,730  
     
Revenues from condominium development and unit sales
    8,715                   8,715  
 
   
     
     
     
 
       
Total revenues
    266,234       (15,728 )     11,166       261,672  
 
   
     
     
     
 
Expenses:
                               
     
Hotel operating expenses
                               
       
Rooms
    40,638       (3,293 )     2,086       39,431  
       
Food and beverage
    54,169       (3,346 )     1,620       52,443  
       
Other direct
    8,501       (238 )     918       9,181  
       
Indirect
    74,332       (5,166 )     3,651       72,817  
       
Management fees to related party
    4,351       (378 )           3,973  
       
Management fees to third parties
    3,059       (145 )     335 (j)     3,249  
 
   
     
     
     
 
     
Total hotel operating expenses
    185,050       (12,566 )     8,610       181,094  
     
Property taxes, insurance and other
    15,901       (771 )     911       16,041  
     
Cost of condominium development and unit sales
    6,474                   6,474  
     
Real estate related depreciation and amortization
    30,174       (1,460 )     796 (k)     29,510  
     
Corporate general and administrative
    6,714       (37 )           6,677  
 
   
     
     
     
 
       
Total operating expenses
    244,313       (14,834 )     10,317       239,796  
 
   
     
     
     
 
       
Operating income (loss)
    21,921       (894 )     849       21,876  
 
   
     
     
     
 
     
Interest income
    357                   357  
     
Other income
    1,095                   1,095  
     
Interest expense
    (20,011 )     709       (1,285) (p)     (20,587 )
     
Amortization of deferred financing costs
    (2,182 )     56             (2,126 )
     
Minority interest in (earnings) loss of joint ventures
    (133 )                 (133 )
     
Minority interest in loss of operating partnership
    640       19       66 (q)     725  
     
Equity in loss of unconsolidated joint ventures
    (2,040 )                 (2,040 )
 
   
     
     
     
 
Loss from continuing operations
  $ (353 )     (110 )     (370 )   $ (833 )
 
                               
Loss from continuing operations per share:
                               
 
Basic
  $ (0.02 )                   $ (0.05 )
 
Diluted
  $ (0.02 )                   $ (0.05 )
 
                               
Weighted average number of common shares outstanding:
                               
 
Basic
    17,248                       17,248  
 
Diluted
    17,383                       17,383  

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(a)   Represents unaudited financial statements as of and for the six months ended June 30, 2003 as filed on Form 10-Q.
 
(b)   Reflects the removal of the assets and liabilities associated with the hotel in Springfield, as well as the receipt of sale proceeds.
 
(c)   Represents the purchase of the Radisson Suite Beach Resort as if it had occurred on June 30, 2003. The acquisition was financed with borrowings from the Company’s then existing credit facility.
 
(d)   The purchase price allocation to land, building and furniture, fixtures and equipment is $14.6 million, $12.6 million, and $1.1 million, respectively. The cost of the acquired assets and acquired or assumed liabilities described in this form 8-K/A have been allocated on their respective fair values. The purchase allocation adjustments made in connection with the development of the unaudited pro forma condensed consolidated financial statements are based on the information available at this time. Subsequent adjustments and refinements to the allocation may be made based on additional information.
 
(e)   Net proceeds from the sale of approximately $6.2 million were used to pay off the outstanding balance of the Company’s existing credit facility ($4.0 million), to pay a termination fee to Hilton Hotels Corporation as agreed to in the Modification Agreement entered into on April 30, 2003 ($0.7 million), and for general corporate purposes.
 
(f)   Amount represents costs incurred by the Company as of June 30, 2003 related to the acquisition. These costs were capitalized upon closing of the acquisition and are included in the investment in hotel properties line.
 
(g)   Reflects the estimated impact of the sale on minority interest and shareholders’ equity as if the transaction took place on June 30, 2003. The actual impact of the transaction is based upon the carrying value of the assets at the time of the transaction.
 
(h)   Reflects the removal of the earnings activity of the Springfield hotel as if the disposition had occurred on January 1, 2002. The gain on sale is not reflected in the pro forma condensed consolidated statements of operations. The actual gain on the disposition was approximately $0.1 million.
 
(i)   Represents the historical hotel operations of the Radisson Suite Beach Resort for the six months ended June 30, 2003 and for the year ended December 31, 2002, except as noted.
 
(j)   Amount represents the management fees which would have been incurred by the Company pursuant to the management agreement entered into in conjunction with the acquisition and is calculated as three percent of total hotel revenues.
 
(k)   Real estate related depreciation and amortization is calculated on the operating real and personal property acquired. Depreciation is computed using the straight-line method and is based upon the estimated useful life of thirty years for building and three years for furniture, fixtures and equipment. The depreciable basis allocated to building and furniture, fixtures and equipment is $12,605 and $1,127 resulting in depreciation of $210 and $188, respectively for the six months ended June 30, 2003. For the year ended December 31, 2002, utilizing the same depreciable basis, depreciation of building and furniture, fixtures and equipment is $420 and $376, respectively.
 
(l)   Represents interest expense on $26,504 of borrowings against the Company’s facility as funding for the acquisition. The interest is based on the Company’s weighted average interest rate for the first six months of 2003 on the credit facility of approximately 4.8%, and is net of estimated unused commitment fees of $33.
 
(m)   Represents the minority interest effect of the Radisson Suite Beach Resort acquisition. Minority interest is calculated by using the Company’s weighted average minority interest percentage for the six months ended June 30, 2003 of 15.1%.

         
Pro forma income from continuing operations from Radisson Suite Beach Resort acquisition
  $ 1,824  
Less: Interest expense on assumed draw on credit facility
    (603 )
 
   
 
Pro forma income from continuing operations attributable to minority interest
    1,221  
Weighted average minority interest percentage
    15.1 %
 
   
 
Minority interest
  $ 184  

(n)   Represents audited financial statements for the year ended December 31, 2002 as filed on Form 10-K with certain amounts having been reclassified to conform to current year presentation.
 
(o)   Reflects the removal of the earnings activity for the four properties which were sold during 2003: Hilton Knoxville, Hampton Inn Cornelius, Holiday Inn Cornelius and Springfield. These amounts were previously disclosed, by property, in an 8-K filed on August 1, 2003, but have been combined in this report to focus on the impact of the acquisition of the Radisson Suite Beach Resort.
 
(p)   Represents interest expense on $26,504 of borrowings against the Company’s facility as funding for the acquisition. The interest is based on the Company’s weighted average interest rate for 2002 on the credit facility of approximately 5.1%, and is net of estimated unused commitment fees of $67.

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Table of Contents

(q)   Represents the minority interest effect of the Radisson Suite Beach Resort acquisition. Minority interest is calculated by using the Company’s weighted average minority interest percentage for the year ended December 31, 2002 of 15.1%.

         
Pro forma income from continuing operations from Radisson Suite Beach Resort acquisition
  $ 849  
Less: Interest expense on assumed draw on credit facility
    (1,285 )
 
   
 
Pro forma loss from continuing operations attributable to minority interest
    (436 )
Weighted average minority interest percentage
    15.1 %
 
   
 
Minority interest
  $ (66 )

(c)  Exhibits.

The following exhibit is included in this report:

     
Exhibit 23.1   Consent of KPMG

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 thereunto duly authorized.

         
        BOYKIN LODGING COMPANY
 
Date: November 7, 2003.   By: /s/ Shereen P. Jones

Shereen P. Jones
Executive Vice President, Chief Financial and
Investment Officer

17


Table of Contents

EXHIBIT INDEX

     
Exhibit Number   Description

 
23.1   Consent of KPMG LLP

  EX-23.1 3 l04033aexv23w1.htm EX-23.1 INDEPENDENT AUDITORS CONSENT EX-23.1 INDEPENDENT AUDITORS CONSENT

 

Exhibit 23.1

INDEPENDENT AUDITORS’ CONSENT

The Board of Directors
Boykin Lodging Company:

We consent to the incorporation by reference in the registration statement (No. 333-39369) on Form S-3 and registration statement (No. 333-39259) on Form S-8 of Boykin Lodging Company of our report dated August 22, 2003, with respect to the combined balance sheets of the Radisson Suite Beach Resort on Marco Island as of December 31, 2002 and 2001 and the related combined statements of operations, net assets, and cash flows for the years then ended, which report appears in the Form 8-K/A of Boykin Lodging Company dated August 25, 2003.

/s/ KPMG LLP
 
 
Washington, D.C.
November 7, 2003

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