-----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, R4bpO0YoJgJ4FpmtoZkHcfs/clVxY7Se4bcXOEXOQL5jhJysBL+HO1lj6W18Ro7w ogv/sapZGopa/DLSthasgg== 0000950152-97-004551.txt : 19970618 0000950152-97-004551.hdr.sgml : 19970618 ACCESSION NUMBER: 0000950152-97-004551 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970404 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970617 SROS: NONE 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: 97625266 BUSINESS ADDRESS: STREET 1: 1500 TERMINAL TOWER STREET 2: 50 PUBLIC SQUARE CITY: CLEVELAND STATE: OH ZIP: 44113 BUSINESS PHONE: 2162416375 MAIL ADDRESS: STREET 1: 1500 TERMINAL TOWER STREET 2: 50 PUBLIC SQUARE CITY: CLEVELAND STATE: OH ZIP: 44113 FORMER COMPANY: FORMER CONFORMED NAME: BOYKIN LODGING TRUST INC DATE OF NAME CHANGE: 19960604 8-K/A 1 BOYKIN MANAGEMENT 8-K/A 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934 Date of Report: April 4, 1997 (Date of earliest event reported) Boykin Lodging Company ---------------------- (Exact Name of registrant as specified in its charter)
Ohio 001-11975 34-1824586 ---- --------- ---------- (State or other jurisdiction of (Commission File Number) (IRS Employer Identification Incorporation) Number)
Terminal Tower, Suite 1500, 50 Public Square, Cleveland, Ohio 44113-2258 ------------------------------------------------------------- ---------- (Address of Principal Executive Offices) (Zip Code) (216) 241-6375 -------------- (registrant's telephone number, including area code) 2 THIS FORM 8-K HAS BEEN AMENDED TO INCLUDE THE FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL INFORMATION OMITTED FROM THE INITIAL REPORT ON FORM 8-K FILED ON APRIL 21, 1997. ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS - -------------------------------------------- French Lick, Indiana business purchase - -------------------------------------- On April 4, 1997, the Company acquired the French Lick Springs Resort in French Lick, Indiana. The acquisition price was $20 million and was funded with cash proceeds from the Company's secured line of credit obtained in November 1996 from a lending syndicate led by Lehman Brothers Holdings, Inc. The seller was French Lick Springs Resort, Inc., a privately held corporation. Neither the Company nor any of its shareholders, directors or officers own any interests in the seller. The independent resort, opened in 1904, contains 485 guest rooms in four and six story guest wings, has approximately 60,000 square feet of meeting space including a 24,000 square foot exhibit hall, an 88 seat gourmet dining room, a 300 seat family dining room, a 100 seat country club dining room and lounge, a 175 seat Bistro, a 600 seat showroom, the 60 seat Derby bar, several retail shops, indoor and outdoor pools, a six lane bowling alley, complete spa facilities (including mineral baths, massages, facials, hair styling and exercise equipment), two 18 hole golf courses, indoor and outdoor tennis facilities, horseback riding trails and other full service resort hotel amenities. The purchase includes approximately 2,050 acres of land, six main buildings, and several outbuildings. The Company has leased the resort to Boykin Management Company Limited Liability Company (the Lessee), an entity in which the Company's chairman and chief executive officer, Robert W. Boykin, owns a 53.8% interest. The Lessee will continue the business of operating the resort. In determining the price to be paid for the resort, the Company considered the historical and expected cash flow from the hotel, the nature of the occupancy and average daily rate trends, current operating costs and taxes, the physical condition of the property, the potential to increase its cash flow and other factors including the sales prices of similar properties. No independent appraisal of the resort was performed in connection with the acquisition. 3 ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Boykin Lodging Company: We have audited the accompanying balance sheets of the French Lick Springs Resort, Inc. as of December 31, 1995 and 1996 and the related statements of income, shareholder's equity and cash flows for each of the three years in the period ended December 31, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial 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 financial statements referred to above present fairly, in all material respects, the financial position of the French Lick Springs Resort, Inc. as of December 31, 1995 and 1996 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Cleveland, Ohio, May 16, 1997. 4 FRENCH LICK SPRINGS RESORT, INC. -------------------------------- BALANCE SHEETS -------------- DECEMBER 31, 1995 AND 1996 --------------------------
1995 1996 ---------- ---------- ASSETS ------ INVESTMENT IN HOTEL PROPERTY, at cost: Land $1,089,081 $1,089,081 Buildings and improvements 2,517,040 2,574,254 Furniture and equipment 3,390,703 3,490,202 ---------- ---------- 6,996,824 7,153,537 Less-Accumulated depreciation 2,462,164 3,236,605 --------- ---------- Net investment in hotel property 4,534,660 3,916,932 ---------- ---------- CASH AND CASH EQUIVALENTS 559,658 717,049 ACCOUNTS RECEIVABLE, net of bad debt reserve of $9,500 and $8,100 at December 31, 1995 and 1996, respectively 305,201 294,616 DUE FROM RELATED PARTIES 362,392 112,967 INVENTORIES 238,977 245,078 PREPAIDS AND OTHER ASSETS 115,603 123,005 ---------- ---------- $6,116,491 $5,409,647 ========== ========== LIABILITIES AND SHAREHOLDER'S EQUITY ------------------------------------ LONG TERM DEBT $3,822,060 $ 542,050 NOTE PAYABLE DUE RELATED PARTY - 1,500,000 ACCOUNTS PAYABLE 291,266 385,040 ACCRUED REAL ESTATE AND PERSONAL PROPERTY TAXES 256,312 269,113 ACCRUED DISTRIBUTIONS TO SHAREHOLDER - 51,300 OTHER ACCRUED EXPENSES AND LIABILITIES 292,496 352,141 COMMITMENTS AND CONTINGENCIES ---------- ---------- 4,662,134 3,099,644 ---------- ----------
5 -2-
1995 1996 ---------- ---------- SHAREHOLDER'S EQUITY: Common stock, 1,000 shares authorized, $10 stated value, 100 shares issued and outstanding $ 1,000 $ 1,000 Retained earnings 1,453,357 2,309,003 ---------- ---------- 1,454,357 2,310,003 ---------- ---------- $6,116,491 $5,409,647 ========== ==========
The accompanying notes to financial statements are an integral part of these balance sheets. 6 FRENCH LICK SPRINGS RESORT, INC. -------------------------------- STATEMENTS OF INCOME -------------------- FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996 ----------------------------------------------------
1994 1995 1996 ------------ ------------ ------------ REVENUES: Room revenue $ 4,147,908 $ 4,125,953 $ 4,266,643 Food and beverage revenue 4,187,994 3,978,642 4,253,615 Other revenue 2,712,075 2,638,873 2,577,614 ------------ ------------ ------------ Total revenues 11,047,977 10,743,468 11,097,872 ------------ ------------ ------------ EXPENSES: Departmental expenses- Rooms 922,504 933,354 1,021,159 Food and beverage 2,619,549 2,552,028 2,799,061 Other 1,426,385 1,470,065 1,464,139 General and administrative 866,501 788,575 823,809 Advertising and promotion 482,047 455,104 486,395 Utilities 601,823 585,387 695,780 Repairs and maintenance 869,390 759,569 694,938 Real estate and personal property taxes, insurance and rent 342,938 339,442 360,690 Interest expense 193,174 207,082 188,165 Depreciation and amortization 673,569 796,176 787,475 Gain on property insurance recovery -- -- (290,000) Other 118,552 136,164 122,178 ------------ ------------ ------------ Total expenses 9,116,432 9,022,946 9,153,789 ------------ ------------ ------------ NET INCOME $ 1,931,545 $ 1,720,522 $ 1,944,083 ============ ============ ============
The accompanying notes to financial statements are an integral part of these statements. 7 FRENCH LICK SPRINGS RESORT, INC. -------------------------------- STATEMENTS OF SHAREHOLDER'S EQUITY ---------------------------------- FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996 ----------------------------------------------------
Common Retained Stock Earnings ----------- ----------- BALANCE, DECEMBER 31, 1993 $ 1,000 $ 1,132,490 Net income -- 1,931,545 Cash distributions -- (1,542,000) ----------- ----------- BALANCE, DECEMBER 31, 1994 1,000 1,522,035 Net income -- 1,720,522 Cash distributions -- (1,789,200) ----------- ----------- BALANCE, DECEMBER 31, 1995 1,000 1,453,357 Net income -- 1,944,083 Cash distributions -- (1,088,437) ----------- ----------- BALANCE, DECEMBER 31, 1996 $ 1,000 $ 2,309,003 =========== ===========
The accompanying notes to financial statements are an integral part of these statements. 8 FRENCH LICK SPRINGS RESORT, INC. -------------------------------- STATEMENTS OF CASH FLOWS ------------------------ FOR THE YEARS ENDED DECEMBER 1994, 1995 AND 1996 ------------------------------------------------
1994 1995 1996 ----------- ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 1,931,545 $ 1,720,522 $ 1,944,083 Adjustments to reconcile net income to net cash provided by operating activities- Depreciation and amortization expense 673,569 796,176 787,475 Changes in assets and liabilities- Accounts receivable (275,995) 218,103 10,585 Due from related parties (15,867) (346,525) 249,425 Inventories, prepaids and other assets 41,857 4,826 (13,503) Accounts payable, accrued expenses and other liabilities 64,412 (53,981) 166,220 ----------- ----------- ----------- Net cash provided by operating activities 2,419,521 2,339,121 3,144,285 ----------- ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sales of timber 392,500 - - Improvements and additions to hotel property, net (1,125,187) (574,911) (169,747) ----------- ----------- ----------- Net cash used for investing activities (732,687) (574,911) (169,747) ----------- ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from long term borrowings 50,000 325,000 1,500,000 Principal payments on mortgage notes payable (40,649) (52,726) (3,280,010) Distributions paid (1,542,000) (1,789,200) (1,037,137) ----------- ----------- ----------- Net cash used for financing activities (1,532,649) (1,516,926) (2,817,147) ----------- ----------- ----------- NET CHANGE IN CASH AND CASH EQUIVALENTS 154,185 247,284 157,391 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 158,189 312,374 559,658 ----------- ----------- ----------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 312,374 $ 559,658 $ 717,049 =========== =========== ===========
9 -2-
1994 1995 1996 ----------- ------------ -------- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Interest paid $ 190,000 $ 199,000 $196,000 NONCASH INVESTING AND FINANCING ACTIVITIES: Accrued distributions to shareholder $ -- $ -- $ 51,300
The accompanying notes to financial statements are an integral part of these statements. 10 FRENCH LICK SPRINGS RESORT, INC. -------------------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- DECEMBER 31, 1994, 1995 AND 1996 -------------------------------- 1. BASIS OF PRESENTATION: - ------------------------- French Lick Springs Resort (the Resort) was purchased by Boykin Lodging Company (the Company) in April 1997 for $20 million from French Lick Springs Resort, Inc. The Resort consists of a 485-room hotel, two 18-hole golf courses, tennis facilities, horseback riding trails, and other full service resort hotel amenities. The accompanying financial statements are prepared on the accrual basis of accounting and include the accounts of the Resort using its historical cost basis. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: - ---------------------------------------------- Investment in Hotel Property - ---------------------------- Hotel property is stated at cost. Depreciation is computed using the straight-line method based upon the following estimated useful lives: Buildings 30 years Building improvements 10 years Furniture and equipment 5 years
The shareholder and management of the Resort review the hotel property for impairment when events or changes in circumstances indicate the carrying amount of the hotel property may not be recoverable. When such conditions exist, management estimates the future cash flows from operations and disposition of the hotel property. If the estimated undiscounted future cash flows are less than the carrying amount of the asset, an adjustment to the related estimated fair market value would be recorded and an impairment loss would be recognized. No such impairment losses have been recognized. Maintenance and repairs are charged to operations as incurred; major renewals and betterments are capitalized. Upon the sale or disposition of a fixed asset, the asset and related accumulated depreciation are removed from the accounts, and the gain or loss is included in the determination of net income. Cash and Cash Equivalents - ------------------------- All highly liquid investments with an original maturity date of three months or less are considered to be cash equivalents. Revenue Recognition - ------------------- Revenue is recognized as earned. Ongoing credit evaluations are performed and an allowance for potential credit losses is provided against the portion of accounts receivable which is estimated to be uncollectible. Such losses have been within management's expectations. 11 -2- Income Taxes - ------------ The French Lick Springs Resort, Inc. is an S-Corporation and therefore is not subject to federal or state income taxes; however, it must file informational income tax returns and the shareholder must take income or loss of the Resort into consideration when filing his respective tax returns. Management's Use of Estimates in the Preparation of Financial Statements - ----------------------------------- The preparation of financial statements in conformity with generally accepted accounting principles 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 from those estimates. 3. LONG-TERM DEBT: - ------------------
1995 1996 --------- --------- Line of credit payable upon demand with quarterly interest payments; the interest rate is variable and is 8.75% and 8.25% at December 31, 1995 and 1996, respectively; secured by certain assets $335,000 $ 109,900 Promissory note due to Euro Canadian Bank, interest was payable quarterly at a rate of 5.50%; the note was retired in 1996 3,000,000 -- Promissory note due to the town of French Lick, Indiana in monthly installments of principal and interest of $5,500 at an interest rate of 5% and matures in March 2004. The note is collateralized by certain real and personal property 447,060 402,150 Promissory note due to an unrelated individual, payable in annual installments of $10,000 plus accrued interest at a rate of 7%. The note is collateralized by certain real property 40,000 30,000 --------- --------- $3,822,060 $ 542,050 ========== =========
The above long-term debt was retired in connection with the Company's acquisition of the Resort in April 1997. 4. GAIN ON PROPERTY INSURANCE RECOVERY: - --------------------------------------- During 1996, the Resort received proceeds of $290,000 from an insurance company as settlement for property damage caused by an ice storm. 12 -3- 5. RELATED PARTY TRANSACTIONS: - ------------------------------ In 1995 and 1996, the Resort loaned funds to the son of the principal shareholder, funding such loans through borrowings against the line of credit. No principal repayment terms were specified on the loans. The loans bear interest at the same rate as the line of credit. The Resort has recorded the outstanding principal and accrued interest as of December 31, 1995 and 1996 as amounts due from related parties. During each of the three years presented herein, the Resort has advanced amounts to the principal shareholder's family members for various purposes. Such advances do not bear interest and no repayment terms were specified. The outstanding balances as of December 31, 1995 and 1996 have been recorded as amounts due from related parties. In 1996, the Resort retired the note payable to Euro Canadian Bank. The note repayment was funded partially with proceeds from a loan from the spouse of the principal shareholder of the Resort. No principal repayment terms were specified under the loan agreement. The loan bears interest at 8.75%. The Resort has recorded the loan as a note payable due related party in the accompanying balance sheets. The following table summarized interest income and expense on related party transactions for the years presented:
1994 1995 1996 ------- ------- -------- Related party- Interest income $ - $5,200 $ 8,400 Interest expense - - 79,200
6. FAIR VALUE OF FINANCIAL INSTRUMENTS: - --------------------------------------- Statement of Financial Accounting Standards No. 107 requires disclosure about fair value for all financial instruments, whether or not recognized for financial statement purposes. Disclosure about fair value of financial instruments is based on pertinent information available to management as of December 31, 1996. Considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts which could be realized on disposition of the financial instruments. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Cash Equivalents - ---------------- Management estimates that the fair value of cash equivalents approximates carrying value due to the relatively short maturity of these instruments. Long-Term and Related Party Debt - -------------------------------- Management estimates that the fair values of debt instruments approximate carrying values based upon the Resort's effective borrowing rate for issuance of debt with similar terms and remaining maturities. 13 -4- 7. COMMITMENTS AND CONTINGENCIES: - --------------------------------- In 1996, certain union welfare-pension funds have issued a claim against French Lick Springs Resort, Inc. for alleged delinquent contributions in the amount of approximately $243,000 including interest and applicable expenses. The Resort is contesting the claim, but the ultimate outcome of this matter is uncertain. The Company assumed no obligation to satisfy this claim in the purchase agreement and has been indemnified by French Lick Springs Resort, Inc. against any liability in this regard. Accordingly, the Resort has not recorded any liability or loss related to the claim in the accompanying financial statements. 14 PRO FORMA FINANCIAL INFORMATION ------------------------------- The following unaudited Pro Forma Consolidated Balance Sheet of Boykin Lodging Company (the Company) as of March 31, 1997 is presented as if the acquisition of the French Lick Springs Resort (the Resort) had been consummated as of March 31, 1997. The unaudited Pro Forma Consolidated Statements of Income of the Company for the year ended December 31, 1996 and the three months ended March 31, 1997 are presented as if (i) the Company's initial public offering as of November 4, 1996 (the Offering) and the related formation transactions as discussed in the Company's Form S-11, as amended, dated October 4, 1996, (ii) the acquisition of the Holiday Inn Crabtree on March 19, 1997, and (iii) the acquisition of the Resort had been consummated as of January 1, 1996. The pro forma information does not reflect the acquisition of the Melbourne Beach Hilton which occured on March 13, 1997. The pro forma information is not necessarily indicative of what actual financial position or results of operations of the Company would have been had such transactions been consummated as of the dates indicated, nor does it purport to represent the financial position or results of operations for future periods. 15 BOYKIN LODGING COMPANY ---------------------- PRO FORMA CONSOLIDATED BALANCE SHEET ------------------------------------ AS OF MARCH 31, 1997 -------------------- (Unaudited, amounts in thousands)
Historical Resort Company Acquisition Pro Forma ----------- ------------- ----------- (A) (B) (C) ASSETS ------ INVESTMENTS IN HOTEL PROPERTIES, net $133,395 $ 20,000 $153,395 CASH AND CASH EQUIVALENTS 476 -- 476 RENT RECEIVABLE FROM THE LESSEE 2,172 -- 2,172 DEFERRED EXPENSES, net 1,480 -- 1,480 OTHER ASSETS 1,081 -- 1,081 -------- -------- -------- $138,604 $ 20,000 $158,604 ======== ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ BORROWINGS AGAINST CREDIT FACILITY $ 1,000 $ 20,000 $ 21,000 ACCOUNTS PAYABLE AND ACCRUED EXPENSES 2,285 -- 2,285 DIVIDENDS/DISTRIBUTIONS PAYABLE 4,902 -- 4,902 DUE TO LESSEE 442 -- 442 MINORITY INTEREST IN PARTNERSHIP 13,869 -- 13,869 SHAREHOLDERS' EQUITY 116,106 -- 116,106 -------- -------- -------- $138,604 $ 20,000 $158,604 ======== ======== ========
See the accompanying notes to pro forma consolidated balance sheet. 16 BOYKIN LODGING COMPANY ---------------------- NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET --------------------------------------------- AS OF MARCH 31, 1997 -------------------- (Unaudited, amounts in thousands) (A) Represents the Company's historical balance sheet as of March 31, 1997 as reported in the Company's Form 10-Q for the three month period then ended. (B) Represents the pro forma adjustments to reflect the Company's acquisition of the Resort for $20,000 and the borrowing against the Credit Facility to fund the purchase price. 17 BOYKIN LODGING COMPANY ---------------------- PRO FORMA CONSOLIDATED STATEMENT OF INCOME ------------------------------------------ FOR THE YEAR ENDED DECEMBER 31, 1996 ------------------------------------ (Unaudited, amounts in thousands except per share data)
Holiday Inn Historical Offering and Crabtree Resort Pro Company Formation Acquisition Acquisition Forma ------------ --------------- -------------- ------------- ------- (A) (B) (C) (C) LEASE REVENUE $ 3,258 $ 24,553 $ 1,354 $ 3,000 $ 32,165 INTEREST INCOME 120 -- -- (120) -- -------- -------- -------- -------- -------- Total revenue 3,378 24,553 1,354 2,880 32,165 -------- -------- -------- -------- -------- REAL ESTATE RELATED DEPRECIATION AND AMORTIZATION 1,344 6,792 279 819 9,234 REAL ESTATE AND PERSONAL PROPERTY TAXES, INSURANCE AND GROUND RENT 620 3,438 88 361 4,507 GENERAL AND ADMINISTRATIVE 450 1,000 -- -- 1,450 INTEREST EXPENSE 54 (54) -- 1,688 1,688 AMORTIZATION OF DEFERRED FINANCING COSTS 69 367 -- -- 436 -------- -------- -------- -------- --------- 2,537 11,543 367 2,868 17,315 -------- -------- -------- -------- -------- INCOME BEFORE MINORITY INTEREST AND EXTRAORDINARY ITEM 841 13,010 987 12 14,850 MINORITY INTEREST (40) (1,517) (153) (2) (1,712) -------- -------- -------- -------- -------- INCOME BEFORE EXTRAORDINARY ITEM $ 801 $ 11,493 $ 834 $ 10 $ 13,138 ======== ======== ======== ======== ======== INCOME PER SHARE BEFORE EXTRAORDINARY ITEM $ .09 $ 1.38 ======== ======== WEIGHTED AVERAGE SHARES OUTSTANDING 8,981 9,516
See the accompanying notes to pro forma consolidated statements of income. 18 BOYKIN LODGING COMPANY ---------------------- PRO FORMA CONSOLIDATED STATEMENT OF INCOME ------------------------------------------ FOR THE THREE MONTHS ENDED MARCH 31, 1997 ----------------------------------------- (Unaudited, amounts in thousands except per share data)
Holiday Inn Historical Crabtree Resort Pro Company Acquisition Acquisition Forma ------------ ----------- ----------- --------- (A) (C) (C) LEASE REVENUE $ 7,208 $ 246 $ 750 $ 8,204 INTEREST INCOME 231 -- (231) -- ------- ------- ----- ------- Total revenue 7,439 246 519 8,204 ------- ------- ----- ------- REAL ESTATE RELATED DEPRECIATION AND AMORTIZATION 1,941 70 204 2,215 REAL ESTATE AND PERSONAL PROPERTY TAXES, INSURANCE AND GROUND RENT 1,022 36 84 1,142 GENERAL AND ADMINISTRATIVE 488 -- -- 488 INTEREST EXPENSE 52 -- 370 422 AMORTIZATION OF DEFERRED FINANCING COSTS 109 -- -- 109 ------- ------- ----- ------- 3,612 106 658 4,376 ------- ------- ----- ------- INCOME BEFORE MINORITY INTEREST AND EXTRAORDINARY ITEM 3,827 140 (139) 3,828 MINORITY INTEREST (446) (22) 22 (446) ------- ------- ----- ------- NET INCOME BEFORE EXTRAORDINARY ITEM $ 3,381 $ 118 $(117) $ 3,382 ======= ======= ===== ======= EARNINGS PER SHARE $ .36 $ .36 ======= ======= WEIGHTED AVERAGE SHARES OUTSTANDING 9,516 9,516
See the accompanying notes to pro forma consolidated statements of income. 19 BOYKIN LODGING COMPANY ---------------------- NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF INCOME ---------------------------------------------------- FOR THE YEAR ENDED DECEMBER 31, 1996 AND ---------------------------------------- THE THREE MONTHS ENDED MARCH 31, 1997 ------------------------------------- (Unaudited, amounts in thousands) (A) With respect to the year ended December 31, 1996, reflects the Company's historical consolidated statement of income for the period November 4, 1996 (commencement of operations) through December 31, 1996. With respect to the three months ended March 31, 1997, reflects the Company's historical consolidated statement of income for the period indicated. (B) Represents pro forma adjustments to the Company's historical consolidated statement of income for the year ended December 31, 1996 to reflect the assumed consummation of the Offering and related formation transactions as of January 1, 1996. For additional information, please see pages F-1 through F-60 (Historical and Pro Forma Financial Statements) of the Company's Form S-11, as amended, dated October 29, 1996, and the Company's annual report on Form 10-K for the year ended December 31, 1996. (C) Represents pro forma adjustments to reflect the assumed consummation of the acquisitions of (i) the Resort, and (ii) the Holiday Inn Crabtree (previously reported on Form 8-K dated March 21, 1997) as of January 1, 1996. The pro forma adjustments include the following: 1. Pro forma lease payments to the Partnership calculated on a pro forma basis by applying the rent provision of the percentage lease agreements to the historical revenues of the Resort and the Holiday Inn Crabtree for the applicable period. As the hotel operating revenues will be earned by the Lessee, historical hotel operating revenues of the acquired hotel properties have not been reflected in the accompanying pro forma consolidated income statements. 2. Pro forma depreciation of the buildings and improvements and furniture and equipment of the Resort and the Holiday Inn Crabtree. Depreciation is computed using the straight-line method and is based upon estimated useful lives of 30 years for buildings and improvements and 7 years for furniture and equipment. The purchase price allocation related to the acquisition of the Resort and the Holiday Inn Crabtree, including transaction related costs, was as follows:
Holiday Inn Resort Crabtree --------- ----------- Land $ 2,000 $ 725 Buildings and improvements 16,000 6,534 Furniture and equipment 2,000 431 --------- -------- $20,000 $ 7,690 ========= ========
20 -2- 3. Historical amounts of real estate and personal property taxes, property and casualty insurance related to the Resort and the Holiday Inn Crabtree to be paid by the Partnership. All other hotel operating expenses will be incurred by the Lessee and, therefore, historical amounts of such expenses have not been reflected in the accompanying pro forma consolidated income statements. 4. Pro forma interest expense related to the $20,000 of borrowings used to fund the acquisition of the Resort. Historical interest income of the Company has been eliminated as after consummation of the acquisition of the Resort and the Holiday Inn Crabtree, the Company has no invested funds. 5. Minority interest related to the pro forma adjustments, calculated at 15.5%. 21 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused Amendment No. 1 to this report to be signed on its behalf by the undersigned hereunto duly authorized. BOYKIN LODGING COMPANY Date: June 17, 1997 By: /s/ RAYMOND P. HEITLAND Raymond P. Heitland, Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----