8-K 1 l17090ae8vk.htm BOYKIN LODGING COMPANY 8-K Boykin Lodging Company 8-K
 

 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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): November 18, 2005
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)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
  o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
  o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
  o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
  o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 

 

 

SECTION 2 FINANCIAL INFORMATION
ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
    On November 18, 2005, Boykin San Diego, LLC, a joint venture between Boykin Lodging Company (“Boykin”) and Outrigger Lodging Services, sold the Hampton Inn San Diego Airport/Sea World (“San Diego”) in San Diego, California, for a price of $23.0 million to Newport Taft, Inc. and Mansour Brothers Inc., as tenants in common, unrelated third parties. The sales price for the transaction was the result of arms-length negotiations.

Subsequent to the closing of the sale, certain subsidiaries of Boykin purchased Outrigger Lodging Services’ ownership interest in Boykin San Diego, LLC.
 
    Boykin structured the transaction to qualify as a potential like-kind exchange pursuant to Section 1031 of the Internal Revenue Code.
SECTION 9 FINANCIAL STATEMENTS AND EXHIBITS
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired.
    None.
(b) Pro Forma Financial Information.
    The following unaudited pro forma condensed consolidated financial information for Boykin Lodging Company gives effect to the disposition of the Hampton Inn San Diego Airport/Sea World in San Diego, California, and all other current year sales, as well as the receipt of proceeds from the sales as described in this Current Report on Form 8-K.
 
    The September 30, 2005 unaudited Pro Forma Condensed Consolidated Balance Sheet presents the disposition of the Hampton Inn San Diego Airport/Sea World as if it was effective September 30, 2005, and all other current year sales as of their actual disposition date. The unaudited Pro Forma Condensed Consolidated Statements of Operations for the nine months ended September 30, 2005 and each of the years in the three year period ended December 31, 2004 assume the sales were effective as of the beginning of the fiscal year ended December 31, 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 2004 Annual Report on Form 10-K.
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.

 

 

BOYKIN LODGING COMPANY
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2005
(unaudited, dollar amounts in thousands)
                                 
          Pro Forma Adjustments        
    (a)     (b)     (c)        
            Prior              
    Historical     Transactions     San Diego     Pro Forma  
Investment in hotel properties
   $ 519,093       —       (10,983 )   $ 508,110  
Accumulated depreciation
     (138,819 )     —       3,303       (135,516 )
 
                        
Investment in hotel properties, net
     380,274       —       (7,680 )     372,594  
Cash and cash equivalents
     17,307       —       20,117 (d)     37,424  
Restricted cash
     9,917       —       —       9,917  
Accounts receivable, net of allowance for doubtful accounts of $405
     15,638       —       —       15,638  
Receivables from lessee
     340       —       (340 )     —  
Inventories
     1,309       —       —       1,309  
Deferred financing costs and other, net
     2,378       —       —       2,378  
Investment in unconsolidated joint ventures
     1,197       (421 )     —       776  
Other assets
     12,036       —       (25 )     12,011  
 
                        
 
   $ 440,396       (421 )     12,072     $ 452,047  
 
                        
LIABILITIES AND SHAREHOLDERS’ EQUITY
                                
Borrowings against credit facility
   $ 40,000       —       —     $ 40,000  
Term notes payable
     99,531       —       —       99,531  
Accounts payable and accrued expenses
     35,903       —       (727 )     35,176  
Accounts payable to related party
     1,389       —       —       1,389  
Dividends/distributions payable
     1,188       —       —       1,188  
Deferred lease revenue
     488       —       (488 )     —  
Minority interest in joint ventures
     992       —       (966 )     26  
Minority interest in operating partnership
     12,900       (63) (e)     2,119 (e)     14,956  
SHAREHOLDERS’ EQUITY:
                                
Preferred shares, without par value; 10,000,000 shares authorized; 181,000 shares issued and outstanding as of September 30, 2005 (liquidation preference of $45,250)
     —       —       —       —  
Common shares, without par value; 40,000,000 shares authorized; 17,594,081 issued and outstanding as of September 30, 2005
     —       —       —       —  
Additional paid-in capital
     361,309       —       —       361,309  
Distributions and losses in excess of income
     (110,565 )     (358) (e)     12,134 (e)     (98,789 )
Unearned compensation — restricted shares
     (2,739 )     —       —       (2,739 )
 
                        
Total shareholders’ equity
     248,005       (358 )     12,134       259,781  
 
                        
 
   $ 440,396       (421 )     12,072     $ 452,047  
 
                        

 

 

BOYKIN LODGING COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005
(unaudited, amounts in thousands, except for per share data)
                                 
          Pro Forma Adjustments        
    (a)     (b)     (f)        
            Prior              
    Historical     Transactions     San Diego     Pro Forma  
Revenues:
                                
Hotel revenues
                                
Rooms
   $ 100,995       —       —     $ 100,995  
Food and beverage
     44,291       —       —       44,291  
Other
     13,522       —       —       13,522  
 
                        
Total hotel revenues
     158,808       —       —       158,808  
Lease revenue
     1,782       —       (1,782 )     —  
Other operating revenue
     160       (49 )     —       111  
 
                        
Total revenues
     160,750       (49 )     (1,782 )     158,919  
 
                        
Expenses:
                                
Hotel operating expenses
                                
Rooms
     24,513       —       —       24,513  
Food and beverage
     30,150       —       —       30,150  
Other direct
     4,427       —       —       4,427  
Indirect
     47,907       —       —       47,907  
Management fees to related party
     4,627       —       —       4,627  
 
                        
Total hotel operating expenses
     111,624       —       —       111,624  
Property taxes, insurance and other
     12,674       —       —       12,674  
Real estate related depreciation and amortization
     17,180       (9 )     (304 )     16,867  
Corporate general and administrative
     9,084       —       (8 )     9,076  
Impairment of real estate
     5,500       —       —       5,500  
 
                        
Total operating expenses
     156,062       (9 )     (312 )     155,741  
 
                        
 
                                
Operating income
     4,688       (40 )     (1,470 )     3,178  
 
                                
Interest income
     762       —       (10 )     752  
Other income
     —       —       —       —  
Interest expense
     (8,872 )     —       —       (8,872 )
Amortization of deferred financing costs
     (1,089 )     —       —       (1,089 )
Minority interest in earnings of joint ventures
     (133 )     —       133       —  
Minority interest in income of operating partnership
     (1,860 )     1,634       200       (26 )
Equity in income of unconsolidated joint ventures including gain on sale
     11,131       (10,947 )     —       184  
 
                        
 
                                
Income (loss) before preferred dividends, gain (loss) on sale/disposal of assets and discontinued operations
     4,627       (9,353 )     (1,147 )     (5,873 )
 
                                
Preferred dividends
     (3,563 )     —       —       (3,563 )
 
                        
 
                                
Income (loss) attributable to common shareholders before gain (loss) on sale/disposal of assets and discontinued operations
   $ 1,064     $ (9,353 )   $ (1,147 )   $ (9,436 )
 
                        
 
                                
Income (loss) attributable to common shareholders before gain (loss) on sale/disposal of assets and discontinued operations per share
                                
Basic
   $ 0.06                     $ (0.54 )
Diluted
   $ 0.06                     $ (0.54 )
 
                                
Weighted average number of common shares outstanding
                                
Basic
     17,558                       17,558  
Diluted
     17,846                       17,846  

 

 

BOYKIN LODGING COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2004
(unaudited, amounts in thousands, except for per share data)
                                 
          Pro Forma Adjustments        
    (g)     (b)     (f)        
            Prior              
    Historical     Transactions     San Diego     Pro Forma  
Revenues:
                                
Hotel revenues
                                
Rooms
   $ 129,706       (2,201 )     —     $ 127,505  
Food and beverage
     58,951       (1,160 )     —       57,791  
Other
     10,756       (73 )     —       10,683  
 
                        
Total hotel revenues
     199,413       (3,434 )     —       195,979  
Lease revenue
     2,045       —       (2,045 )     —  
Other operating revenue
     184       —       —       184  
Revenues from condominium development and unit sales
     7,541       —       —       7,541  
 
                        
Total revenues
     209,183       (3,434 )     (2,045 )     203,704  
 
                        
Expenses:
                                
Hotel operating expenses
                                
Rooms
     32,746       (690 )     —       32,056  
Food and beverage
     40,352       (1,042 )     —       39,310  
Other direct
     5,641       (78 )     —       5,563  
Indirect
     64,061       (1,318 )     —       62,743  
Management fees to related party
     5,454       —       —       5,454  
Management fees — other
     59       (59 )     —       —  
 
                        
Total hotel operating expenses
     148,313       (3,187 )     —       145,126  
Property taxes, insurance and other
     14,619       (178 )     —       14,441  
Cost of condominium development and unit sales
     5,509       —       —       5,509  
Real estate related depreciation and amortization
     22,958       (297 )     (480 )     22,181  
Corporate general and administrative
     8,787       (3 )     (6 )     8,778  
 
                        
Total operating expenses
     200,186       (3,665 )     (486 )     196,035  
 
                        
 
                                
Operating income
     8,997       231       (1,559 )     7,669  
 
                                
Interest income
     387       (1 )     (9 )     377  
Other income
     8       —       —       8  
Interest expense
     (13,629 )     —       —       (13,629 )
Amortization of deferred financing costs
     (1,367 )     —       —       (1,367 )
Minority interest in earnings of joint ventures
     (141 )     —       141       —  
Minority interest in loss of operating partnership
     1,563       (35 )     213       1,741  
Equity in income of unconsolidated joint ventures
     121       —       —       121  
 
                        
 
                                
Income (loss) before preferred dividends, gain (loss) on sale/disposal of assets and discontinued operations
     (4,061 )     195       (1,214 )     (5,080 )
 
                                
Preferred dividends
     (4,751 )     —       —       (4,751 )
 
                        
 
                                
Income (loss) attributable to common shareholders before gain (loss) on sale/disposal of assets and discontinued operations
   $ (8,812 )   $ 195     $ (1,214 )   $ (9,831 )
 
                        
 
                                
Income (loss) attributable to common shareholders before gain (loss) on sale/disposal of assets and discontinued operations per share
                                
Basic
   $ (0.51 )                   $ (0.56 )
Diluted
   $ (0.51 )                   $ (0.56 )
 
                                
Weighted average number of common shares outstanding
                                
Basic
     17,426                       17,426  
Diluted
     17,553                       17,553  

 

 

BOYKIN LODGING COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2003
(unaudited, amounts in thousands, except for per share data)
                                 
          Pro Forma Adjustments        
    (g)     (b)     (f)        
            Prior              
    Historical     Transactions     San Diego     Pro Forma  
Revenues:
                                
Hotel revenues
                                
Rooms
   $ 118,771       (2,959 )     —     $ 115,812  
Food and beverage
     54,791       (1,450 )     —       53,341  
Other
     7,347       (127 )     —       7,220  
 
                        
Total hotel revenues
     180,909       (4,536 )     —       176,373  
Lease revenue
     1,958       —       (1,958 )     —  
Other operating revenue
     120       —       —       120  
Revenues from condominium development and unit sales
     36,883       —       —       36,883  
 
                        
Total revenues
     219,870       (4,536 )     (1,958 )     213,376  
 
                        
Expenses:
                                
Hotel operating expenses
                                
Rooms
     29,769       (788 )     —       28,981  
Food and beverage
     38,009       (1,092 )     —       36,917  
Other direct
     4,513       (107 )     —       4,406  
Indirect
     57,765       (1,650 )     —       56,115  
Management fees to related party
     3,976       —       —       3,976  
Management fees — other
     882       (136 )     —       746  
 
                        
Total hotel operating expenses
     134,914       (3,773 )     —       131,141  
Property taxes, insurance and other
     13,785       78       —       13,863  
Cost of condominium development and unit sales
     24,645       —       —       24,645  
Real estate related depreciation and amortization
     24,773       (271 )     (472 )     24,030  
Corporate general and administrative
     8,109       —       (11 )     8,098  
 
                        
Total operating expenses
     206,226       (3,966 )     (483 )     201,777  
 
                        
 
                                
Operating income
     13,644       (570 )     (1,475 )     11,599  
 
                                
Interest income
     602       —       (5 )     597  
Other income
     28       —       —       28  
Interest expense
     (14,923 )     —       —       (14,923 )
Amortization of deferred financing costs
     (1,906 )     —       —       (1,906 )
Minority interest in earnings of joint ventures
     (133 )     —       133       —  
Minority interest in loss of operating partnership
     1,649       86       203       1,938  
Equity in loss of unconsolidated joint ventures
     (133 )     —       —       (133 )
 
                        
 
                                
Income (loss) before preferred dividends, gain (loss) on sale/disposal of assets and discontinued operations
     (1,172 )     (484 )     (1,144 )     (2,800 )
 
                                
Preferred dividends
     (4,751 )     —       —       (4,751 )
 
                        
 
                                
Income (loss) attributable to common shareholders before gain (loss) on sale/disposal of assets and discontinued operations
   $ (5,923 )   $ (484 )   $ (1,144 )   $ (7,551 )
 
                        
 
                                
Income (loss) attributable to common shareholders before gain (loss) on sale/disposal of assets and discontinued operations per share
                                
Basic
   $ (0.34 )                   $ (0.44 )
Diluted
   $ (0.34 )                   $ (0.44 )
 
                                
Weighted average number of common shares outstanding
                                
Basic
     17,336                       17,336  
Diluted
     17,470                       17,470  

 

 

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        
    (g)     (b)     (f)        
            Prior              
    Historical     Transactions     San Diego     Pro Forma  
Revenues:
                                
Hotel revenues:
                                
Rooms
   $ 124,496       (3,186 )     —     $ 121,310  
Food and beverage
     57,804       (1,528 )     —       56,276  
Other
     7,602       (151 )     —       7,451  
 
                        
Total hotel revenues
     189,902       (4,865 )     —       185,037  
Lease revenue
     1,885       —       (1,885 )     —  
Other operating revenue
     279       —       (28 )     251  
Revenues from condominium development and unit sales
     8,715       —       —       8,715  
 
                        
Total revenues
     200,781       (4,865 )     (1,913 )     194,003  
Expenses:
                                
Hotel operating expenses:
                                
Rooms
     30,209       (859 )     —       29,350  
Food and beverage
     39,798       (1,080 )     —       38,718  
Other direct
     4,542       (108 )     —       4,434  
Indirect
     53,632       (1,577 )     —       52,055  
Management fees to related party
     3,359       —       —       3,359  
Management fees — other
     2,261       (137 )     —       2,124  
 
                        
Total hotel operating expenses
     133,801       (3,761 )     —       130,040  
Property taxes, insurance and other
     12,453       (196 )     —       12,257  
Cost of condominium development and unit sales
     6,474       —       —       6,474  
Real estate related depreciation and amortization
     22,038       (246 )     (430 )     21,362  
Corporate general and administrative
     6,404       (1 )     (8 )     6,395  
 
                        
Total operating expenses
     181,170       (4,204 )     (438 )     176,528  
 
                        
 
                                
Operating income
     19,611       (661 )     (1,475 )     17,475  
 
                                
Interest income
     126       —       (3 )     123  
Other income
     80       —       —       80  
Interest expense
     (18,068 )     —       —       (18,068 )
Amortization of deferred financing costs
     (2,105 )     —       —       (2,105 )
Minority interest in earnings of joint ventures
     (133 )     —       133       —  
Minority interest in loss of operating partnership
     598       100       203       901  
Equity in loss of unconsolidated joint ventures
     (224 )     —       —       (224 )
 
                        
 
                                
Income (loss) before preferred dividends, gain (loss) on sale/disposal of assets and discontinued operations
     (115 )     (561 )     (1,142 )     (1,818 )
 
                                
Preferred dividends
     (1,109 )     —       —       (1,109 )
 
                        
 
                                
Income (loss) attributable to common shareholders before gain (loss) on sale/disposal of assets and discontinued operations
   $ (1,224 )   $ (561 )   $ (1,142 )   $ (2,927 )
 
                        
 
                                
Income (loss) attributable to common shareholders before gain (loss) on sale/disposal of assets and discontinued operations per share
                                
Basic
   $ (0.07 )                   $ (0.17 )
Diluted
   $ (0.07 )                   $ (0.17 )
 
                                
Weighted average number of common shares outstanding
                                
Basic
     17,248                       17,248  
Diluted
     17,383                       17,383  

 

 

 
(a)   Historical data presented reflects amounts reported on Form 10-Q for the quarterly period ended September 30, 2005 filed on November 8, 2005.
 
(b)   On March 30, 2005, Boykin Chicago, L.L.C., a joint venture between Boykin and AEW Partners III L.P., sold Hotel 71 in Chicago, Illinois, for a price of $95.05 million to Chicago H&S Hotel Property, LLC, an unrelated third party. Since Boykin accounts for its investment in Boykin Chicago, L.L.C. using the equity method, amounts relating to this entity or the sale of Hotel 71 have not been reclassified to discontinued operations within the historical September 30, 2005 financial statements. Historical data for periods prior to 2005 in this Form 8-K, obtained from the Form 8-K filed on April 14, 2005, reflect this reclassification.
 
    On June 15, 2005, Boykin sold its Clarion Hotel & Conference Center (“Yakima”) in Yakima, Washington to an unrelated third party for a price of $4.2 million. The effect of the sale of Yakima is already reflected within the historical September 30, 2005 financial statements. The effect of the sale, however, has not been reflected within historical data for periods prior to 2005.
 
    The necessary adjustments for these transactions are reflected as “Prior Transactions” within this Form 8-K.
 
(c)   Represents the necessary adjustments to Boykin’s historical financial statements to remove the assets and liabilities associated with San Diego, as applicable, as well as to reflect the receipt of the sales proceeds.
 
(d)   Represents the net proceeds from the sale and the purchase of the minority partner’s interest totaling approximately $20.1 million.
 
(e)   Reflects the estimated impact of the sales on minority interest and shareholders’ equity as if the sales took place on September 30, 2005. The actual impact of the transactions was based upon the carrying value of the assets at the time of the sale.
 
(f)   Reflects the adjustment to Boykin’s historical financial statements to present them as if the disposition of San Diego had occurred on January 1, 2002. The gain or loss on the sale is not reflected in the pro forma condensed consolidated statements of operations. Boykin anticipates that the actual gain on the sale, net of minority interests, will approximate $11.5 million.
 
(g)   Historical data presented reflects amounts reported on Form 8-K filed on April 14, 2005.

 

 

(c)   Exhibits.
               None
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
 		  
  By:   /s/ Shereen P. Jones    
    Shereen P. Jones   
    Executive Vice President, Chief Financial and Investment Officer   
 
Date: November 21, 2005