8-K

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): August 9, 2004

Lodgian, Inc.

(Exact Name of Registrant as Specified in Charter)

Delaware		52-2093696
(State or other jurisdiction of incorporation)	001-14537 (Commission File Number)	(I.R.S. Employer Identification No.)

3445 Peachtree Road, N.E., Suite 700
Atlanta, GA 30326
(Address of principal executive offices)

(404) 364-9400
(Registrant’s telephone number, including area code)

TABLE OF CONTENTS

EX-99.1 PRESS RELEASE DATED AUGUST 9, 2004

Item 12. Results of Operations and Financial Condition.

The information furnished in this Form 8-K and the accompanying exhibit shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be incorporated by reference in any filing under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.

On August 9, 2004, Lodgian, Inc. (the “Company”) issued a press release relating to results for the second quarter and six months ended June 30, 2004. A copy of that press release is attached hereto as Exhibit 99.1

2

SIGNATURES

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

Lodgian, Inc.
By:	/s Daniel E. Ellis
	Daniel E. Ellis
	Senior Vice President, General Counsel and Secretary

Dated: August 9, 2004

3

EXHIBIT INDEX

99.1  Press Release relating to results for the second quarter and six months ended June 30, 2004.

4

EX-99.1

EXHIBIT 99.1

For Immediate Release
Contact:
Debi Ethridge	Jerry Daly or Carol McCune
Vice President, Finance & Investor Relations	Daly Gray Public Relations (Media)
dethridge@lodgian.com	jerry@dalygray.com
(404) 365-2719	(703) 435-6293

Lodgian Reports 2004 Second Quarter Results

     ATLANTA, Ga., August 9, 2004—Lodgian, Inc. (AMEX: LGN), one of the nation’s largest independent owners and operators of full-service hotels, reported results for the second quarter and six months ended June 30, 2004.

     Second quarter 2004 room revenues from continuing operations increased 5.4 percent to $64.3 million, and total revenues from continuing operations rose 4.5 percent to $86.6 million. During the quarter, eight hotels were under renovation, causing a displacement of $0.5 million of rooms revenue.

     Earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations for the 2004 second quarter, reconciled to loss-continuing operations in the attached schedules, increased 36.5 percent to $20.8 million, including $0.1 million of bankruptcy-related charges, from $15.2 million for the same period last year, including $1.8 million of bankruptcy-related charges. Adjusting EBITDA to exclude bankruptcy-related charges would result in an adjusted EBITDA for the second quarter 2004 and 2003 of $20.9 million and $17.0 million, respectively.

Lodgian
Page 2

     Loss from continuing operations was $11.8 million, including $13.7 million of costs related to Lodgian’s recent debt refinancing and preferred stock redemption and $4.2 million of preferred stock dividends reported as interest expense, compared to a $0.6 million loss for the second quarter of 2003, during which the preferred stock dividends were not reported as interest expense.

     Income from discontinued operations was $4.6 million, including a $4.2 million gain on sale of assets, compared to a $1.8 million loss in the second quarter of 2003. Lodgian’s net loss attributable to common stock for the second quarter of 2004 was $7.2 million, or $(2.04) per share. This compares to a net loss attributable to common stock of $6.3 million, or $(2.68) per share for the second quarter of 2003.

     “We achieved several important milestones during the second quarter, including $370 million of new debt financing to retire existing debt, an 18.3 million share common stock offering and the exchange of 1,483,558 shares of preferred stock for 3,941,115 shares of common stock,” said Tom Parrington, president and chief executive officer. “In July, we used a portion of the offering proceeds to redeem the remaining shares of preferred stock. The balance of the proceeds will be used to fund the remainder of our renovation program and pursue our planned growth strategy. We now have the strength, stability and flexibility to take advantage of the growth opportunities ahead.”

Operating Results

     Lodgian posted substantially improved operating results in the 2004 second quarter. “Our revenue per available room (RevPAR) from continuing operations rose 5.4 percent in the

Lodgian
Page 3

2004 second quarter. Of particular note is that the RevPAR improvement was driven more by room rate, which rose 3.8 percent, than by occupancy, up 1.6 percent—another positive sign that the hotel economy is improving. Higher rate also translated into better adjusted EBITDA margins for us—24.2 percent versus 20.6 percent in last year’s second quarter.”

     Parrington noted that the company spent $7.9 million on capital expenditures during the 2004 second quarter, bringing to $12.9 million the total amount invested through the 2004 first half. “Short-term, these renovations will have a negative impact on our hotels. In the 2004 second quarter, for example, we tracked $0.5 million of displaced revenues directly attributable to the renovation program. However, we expect to see significant improvements in revenues over the long term as these hotels complete their renovation programs and become much more competitive in their respective markets.”

     Lodgian expects to invest approximately $43 million in capital improvements during 2004, with an additional $11 million that will be spent in the first quarter 2005 to complete the projects started in 2004. These improvements, funded with proceeds from its recent common stock offering and with cash reserves, will substantially complete all of Lodgian’s deferred renovations.

Disposition/Acquisition Program

     During the quarter, the company sold three hotels for net proceeds of approximately $18.8 million as part of its previously announced plan to sell non-strategic assets. To date since October 2003, the company has sold a total of 10 hotels and an office building and used the proceeds to pay down approximately $38.7 million of debt. “We have an additional nine hotels

Lodgian
Page 4

and three land parcels earmarked for sale,” Parrington said. “Our objective remains to complete the disposition program by year-end 2004.”

     Parrington said the company had $54.0 million in cash on hand at June 30, 2004 for operations and future growth plans. “Short-term, we are focusing primarily on our renovation program and internal growth. During this interim period, we expect to be more opportunistic than aggressive in our acquisitions. Our goal is to buy quality assets that have long-term upside potential.”

     The company’s acquisition profile remains primarily upscale, premium-branded, limited-service hotels, with 100 to 250 rooms, in strong suburban and urban markets. To a lesser extent, the company will review smaller upper upscale, full-service hotels, as well.

Capital Structure

     During the quarter, the company closed on the $370 million refinance secured by 64 of its hotels. The company obtained a $110 million floating rate facility, priced at LIBOR plus 340 basis points and secured by 29 hotels, and a five-year, fixed rate, $260 million facility carrying an interest rate of 6.58 percent, secured by 35 hotels. The floating rate facility will mature in two years, with three optional one year extensions. As a result of the refinancing, the company reduced its percentage of floating rate debt from 80 percent to 24 percent, with a weighted average interest rate for all of its debt of 6.6 percent at June 30, 2004.

     In late June, the company completed a public offering of 18.3 million shares of its common stock at $10.50 per share. Net proceeds of $176.2 million will be used to redeem Lodgian’s Series A Preferred stock in July 2004; fund capital expenditures; fund a reserve

Lodgian
Page 5

account pursuant to requirements in the company’s debt financing; for general corporate purposes and the company’s growth strategy. In addition, certain significant holders of Lodgian’s Series A Preferred stock—Oaktree Capital Management, Blackstone Real Estate Advisors and Merrill Lynch, Pierce, Fenner & Smith Incorporated—exchanged shares of their outstanding Series A Preferred stock, valued at approximately $41.4 million, for approximately 3.9 million shares of common stock at $10.50 per share. Total number of common shares outstanding following the offering and preferred stock exchange is 24.6 million.

     “With this refinancing, we have completed the restructuring of our balance sheet and attained a debt-to-total capital ratio, excluding debt on assets held for sale, of 60.4 percent—a level that we are comfortable with,” he said. “By redeeming our preferred stock, which carried a coupon rate of 12.25 percent, we substantially reduced our fixed charges. We now have a much stronger balance sheet and greater flexibility to respond to opportunities as the hotel industry continues its recovery.”

Six Months Results

     For the first six months, room revenues from continuing operations increased 6.1 percent to $121.9 million, and total revenues from continuing operations rose 4.6 percent to $163.4 million. EBITDA rose to $33.7 million, including $0.3 million of bankruptcy-related charges, up from $23.1 million, including $5.2 million in bankruptcy-related charges. Loss from continuing operations was $18.2 million, including $13.7 million of costs related to Lodgian’s debt refinancing and preferred stock redemption and $8.5 million of preferred stock dividends reported as interest expense, compared to a loss of $6.4 million for the first six months of 2003.

Lodgian
Page 6

During the period, 11 hotels were under renovation, causing a displacement of $0.9 million of room revenues.

Outlook

     “We are increasingly confident about the industry recovery and particularly pleased to see improving business transient demand as the corporate sector gains strength,” Parrington said. “For 2004, we will remain focused on internal growth and enhancing the quality of our hotel portfolio through renovations and reflaggings. While we are not yet focused on acquisitions, we will evaluate appropriate candidates as they come along.”

Guidance

     For the 2004 third quarter, the company expects RevPAR growth from continuing operations in a range of 2 percent to 4 percent, net of displacement impact of approximately 2 percent. Estimated EBITDA from continuing operations for 2004, excluding anticipated non-recurring items, special charges and reorganization expenses, is projected in a range of $63 million to $66 million.

Non-GAAP Financial Measures

     The non-GAAP financial measures included in this press release are reconciled to the comparable GAAP measures in the schedules attached to this press release.

About Lodgian

     Lodgian is one of the largest independent owners and operators of full-service hotels in the United States. The company currently manages a portfolio of 87 hotels with 16,366 rooms located in 30 states and Canada. Of the company’s 87-hotel portfolio, 74 are under the

Lodgian
Page 7

InterContinental Hotels Group (Crowne Plaza, Holiday Inn, Holiday Inn Select and Holiday Inn Express) and Marriott brands (Courtyard by Marriott, Fairfield Inn and Residence Inns), and 10 are affiliated with four other nationally recognized hospitality brands. Three hotels are independent, unbranded properties. For more information about Lodgian, visit the company’s Website: www.lodgian.com.

     This press release includes forward-looking statements related to Lodgian’s operations that are based on management’s current expectations, estimates and projections. These statements are not guarantees of future performance and actual results could differ materially.

     The words “may,” “should,” “expect,” “believe,” “anticipate,” “project,” “estimate,” “plan,” and similar expressions are intended to identify forward-looking statements. Certain factors are not within the company’s control and readers are cautioned not to put undue reliance on forward-looking statements. These statements involve risks and uncertainties including, but not limited to, the company’s ability to generate sufficient working capital from operations and other risks detailed from time- to-time in the company’s SEC reports. The company undertakes no obligations to update events to reflect changed assumptions, the occurrence of unanticipated events or changes to future results over time.

LODGIAN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30, 2004			December 31, 2003
	(Unaudited in thousands, except share data)
ASSETS
Current assets:
Cash and cash equivalents	$	170,198		$	10,897
Cash, restricted		9,612			7,084
Accounts receivable (net of allowances: 2004 - $737; 2003 - $689)		11,104			8,169
Inventories		5,951			5,609
Prepaid expenses and other current assets		19,879			17,068
Assets held for sale		39,636			68,567
Total current assets		256,380			117,394
Property and equipment, net		561,744			563,818
Deposits for capital expenditures		36,234			15,782
Other assets, net		7,689			12,180
	$	862,047		$	709,174
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	9,250		$	7,131
Other accrued liabilities		32,420			31,432
Advance deposits		2,634			1,882
Current portion of long-term debt		14,403			16,563
12.25% Cumulative preferred shares subject to mandatory redemption		110,893			142,177
Liabilities related to assets held for sale		37,335			57,948
Total current liabilities		206,935			257,133
Long-term debt:
Long-term obligations		408,921			409,115
Total long-term debt		408,921			409,115
Total liabilities		615,856			666,248
Minority interests		2,538			2,320
Commitments and contingencies
Stockholders’ equity:
Common stock, $.01 par value, 60,000,000 shares authorized; 24,559,690 and 2,333,591 issued and outstanding at June 30, 2004 and December 31, 2003, respectively		246			23
Additional paid-in capital		307,211			89,874
Unearned stock compensation		(408	)		(508	)
Accumulated deficit		(64,440	)		(50,107	)
Accumulated other comprehensive income		1,044			1,324
Total stockholders’ equity		243,653			40,606
	$	862,047		$	709,174

See notes to condensed consolidated financial statements.

LODGIAN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	Three months ended						Six months ended
	June 30, 2004			June 30, 2003			June 30, 2004			June 30, 2003
	(Unaudited in thousands, except						(Unaudited in thousands, except
	per share data)						per share data)
Revenues:
Rooms	$	64,325		$	61,010		$	121,888		$	114,924
Food and beverage		19,436			18,977			35,924			35,584
Other		2,816			2,838			5,570			5,696
		86,577			82,825			163,382			156,204
Operating expenses:
Direct:
Rooms		16,960			16,730			32,978			32,093
Food and beverage		12,713			12,365			24,247			24,099
Other		2,077			1,842			4,049			3,780
		31,750			30,937			61,274			59,972
		54,827			51,888			102,108			96,232
Other operating expenses:
Other hotel operating costs		23,822			22,797			47,894			45,272
Property and other taxes, insurance and leases		5,376			6,923			11,127			13,584
Corporate and other		4,782			6,075			9,195			12,045
Depreciation and amortization		6,870			7,573			13,675			14,995
Impairment of long-lived assets		—			1,378			—			1,378
Other operating expenses		40,850			44,746			81,891			87,274
		13,977			7,142			20,217			8,958
Other income (expenses):
Interest income and other		66			124			109			207
Interest expense and other financing costs:
Preferred stock dividend		(4,233	)		—			(8,518	)		—
Other interest expense		(19,920	)		(6,919	)		(28,079	)		(13,198	)
Loss on preferred stock redemption		(1,592	)		—			(1,592	)		—
Loss before income taxes, reorganization items and minority interests		(11,702	)		347			(17,863	)		(4,033	)
Reorganization items		—			(808	)		—			(2,045	)
Loss before income taxes and minority interest		(11,702	)		(461	)		(17,863	)		(6,078	)
Minority interests		(71	)		(69	)		(218	)		(217	)
Loss before income taxes — continuing operations		(11,773	)		(530	)		(18,081	)		(6,295	)
Provision for income taxes — continuing operations		(75	)		(75	)		(151	)		(151	)
Loss — continuing operations		(11,848	)		(605	)		(18,232	)		(6,446	)
Discontinued operations:
Income (loss) from discontinued operations before income taxes		4,601			(1,836	)		3,899			(5,079	)
Income tax provision		—			—			—			—
Income (loss) from discontinued operations		4,601			(1,836	)		3,899			(5,079	)
Net loss		(7,247	)		(2,441	)		(14,333	)		(11,525	)
Preferred stock dividend		—			(3,818	)		—			(7,594	)
Net loss attributable to common stock	$	(7,247	)	$	(6,259	)	$	(14,333	)	$	(19,119	)
Basic and diluted loss per common share:
Net loss attributable to common stock	$	(2.04	)	$	(2.68	)	$	(4.87	)	$	(8.20	)

See notes to condensed consolidated financial statements.

LODGIAN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Six months ended
	June 30, 2004			June 30, 2003
	(Unaudited in thousands)
Operating activities:
Net loss	$	(14,333	)	$	(11,525	)
Less: loss (income) from discontinued operations		(3,899	)		5,079
Loss — continuing operations		(18,232	)		(6,446	)
Adjustments to reconcile loss from continuing operations to net cash provided by operating activities:
Depreciation and amortization		13,675			15,008
Impairment of long-lived assets		—			1,377
Amortization of unearned stock compensation		100			—
Preferred stock dividends		8,518			—
Loss on redemption of preferred stock		1,592			—
Minority interests		218			217
Write-off and amortization of deferred financing costs		9,855			1,363
Other		859			1,238
Changes in operating assets and liabilities:
Accounts receivable, net of allowances		(2,935	)		(2,512	)
Inventories		(342	)		(33	)
Prepaid expenses, other assets and restricted cash		(4,877	)		7,794
Accounts payable		2,305			(2,223	)
Other accrued liabilities		2,913			2,377
Advance deposits		752			795
Net cash provided by operating activities from continuing operations		14,401			18,955
Net cash used in operating activities from discontinued operations		(2,250	)		(5,793	)
Net cash provided by operating activities		12,151			13,162
Investing activities:
Capital improvements		(12,881	)		(19,454	)
Net proceeds from disposition of discontinued operations		33,890			—
Withdrawals for capital expenditures		(20,452	)		6,975
Other		(60	)		(853	)
Net cash provided by (used in) investing activities		497			(13,332	)
Financing activities:
Proceeds from issuance of long term debt		370,000			80,000
Proceeds from exercise of stock options and issuance of common stock		176,183			—
Shares redeemed from reverse stock split		(5	)		—
Principal payments on long-term debt		(393,071	)		(78,791	)
Payments of deferred financing costs		(6,454	)		(4,438	)
Net cash provided by (used in) financing activities		146,653			(3,229	)
Effect of exchange rate changes on cash		—			—
Net increase in cash and cash equivalents		159,301			(3,399	)
Cash and cash equivalents at beginning of period		10,897			10,875
	$	170,198		$	7,476
Supplemental cash flow information:
Cash paid during the period for:
Interest, net of the amounts capitalized shown below	$	20,918		$	13,491
Interest capitalized		190			493
Income taxes, net of refunds		586			40
Supplemental disclosure of non-cash investing and financing activities:
Net non-cash debt increase (decrease)		(228	)		(15,808	)
Issuance of promissory notes as consideration for taxation liabilities		2,369			852

See notes to consolidated financial statements.

LODGIAN, INC. AND SUBSIDIARIES
Reconciliation of EBITDA (a non-GAAP measure) with Loss from Continuing Operations (a GAAP measure)

	Three months ended						Six months ended
	June 30, 2004			June 30, 2003			June 30, 2004			June 30, 2003
	(Unaudited in thousands)						(Unaudited in thousands)
Continuing operations:
Loss — continuing operations	$	(11,848	)	$	(605	)	$	(18,232	)	$	(6,446	)
Depreciation and amortization		6,870			7,573			13,675			14,995
Impairment of long-lived assets		—			1,378			—			1,378
Interest income and other		(66	)		(124	)		(109	)		(207	)
Interest expense and other financing costs		19,920			6,919			28,079			13,198
Preferred stock dividends		4,233			—			8,518			—
Loss on preferred stock redemption		1,592			—			1,592			—
Provision for income taxes — continuing operations		75			75			151		$	151
EBITDA	$	20,776		$	15,216		$	33,674			23,069

Loss — continuing operations is after deducting post-emergence Chapter 11 expenses, included in general, administrative and other on the consolidated statement of operations, of $0.1 million and $1.0 million for the three months ended June 30, 2004 and June 30, 2003, respectively, and $0.3 million and $3.2 million for the six months ended June 30, 2004 and June 30, 2003, respectively. EBITDA for the three and six months ended June 30, 2003 is also after deducting reorganization expenses of $0.8 million and $2.0 million, respectively.