-----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, Pm77wNb540gWgejQR2F0Dg8JsnIXVikcjXsXHzLuz+AnKN9NU7kFWjKWFC4/+8Ql a9PR0ZxomtR/oeoAuGiLdw== 0000950137-05-006113.txt : 20050517 0000950137-05-006113.hdr.sgml : 20050517 20050517140037 ACCESSION NUMBER: 0000950137-05-006113 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050516 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050517 DATE AS OF CHANGE: 20050517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARLINGTON HOSPITALITY INC CENTRAL INDEX KEY: 0000778423 STANDARD INDUSTRIAL CLASSIFICATION: HOTELS & MOTELS [7011] IRS NUMBER: 363312434 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-15291 FILM NUMBER: 05838123 BUSINESS ADDRESS: STREET 1: 2355 SOUTH ARLINGTON HEIGHTS ROAD STREET 2: SUITE 400 CITY: ARLINGTON HEIGHTS STATE: IL ZIP: 60005 BUSINESS PHONE: 8472285400 MAIL ADDRESS: STREET 1: 2355 SOUTH ARLINGTON HEIGHTS ROAD STREET 2: SUITE 400 CITY: ARLINGTON HEIGHTS STATE: IL ZIP: 60005 FORMER COMPANY: FORMER CONFORMED NAME: AMERIHOST PROPERTIES INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: AMERICA POP INC DATE OF NAME CHANGE: 19871111 8-K 1 c95411e8vk.txt CURRENT REPORT 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: May 16, 2005 (Date of earliest event reported) ------------------ ARLINGTON HOSPITALITY, INC. (Exact name of registrant as specified in its charter) ------------------ Delaware 0-15291 36-3312434 (State or other jurisdiction of (Commission File No.) (IRS Employer Identification No.) incorporation)
2355 South Arlington Heights Road Suite 400 Arlington Heights, Illinois 60005 (Address of Principal Executive Offices) (847) 228-5400 (Registrant's telephone number, including area code) NOT APPLICABLE (Former name or former address, if changed since last report) ------------------ 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): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 2.02 - RESULTS OF OPERATIONS AND FINANCIAL CONDITION On May 16, 2005, the Company issued a press release announcing its financial results for the quarter ended March 31, 2005. A copy of the Company's press release is attached to this Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein by reference. ITEM 9.01 - FINANCIAL STATEMENTS AND EXHIBITS 99.1 Press Release of Arlington Hospitality, Inc. dated May 16, 2005 announcing financial results for the quarter ended March 31, 2005. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. DATE: May 17, 2005 Arlington Hospitality, Inc. (Registrant) By: /s/ Stephen K. Miller --------------------------------------- Stephen K. Miller Interim Chief Executive Officer By: /s/ James B. Dale --------------------------------------- James B. Dale Senior Vice President and Chief Financial Officer EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION ----------- -------------- 99.1 Press Release of Arlington Hospitality, Inc. dated May 16, 2005.
EX-99.1 2 c95411exv99w1.txt PRESS RELEASE EXHIBIT 99.1 [AH LOGO] For Immediate Release CONTACT: MEDIA CONTACT: James B. Dale, Chief Financial Officer Jerry Daly or Carol McCune 847-228-5401 x 361 703-435-6293 jimdale@arlingtonhospitality.com jerry@dalygray.com ARLINGTON HOSPITALITY, INC. ANNOUNCES 2005 FIRST QUARTER RESULTS ARLINGTON HEIGHTS, Ill., May 16, 2005 -- Arlington Hospitality, Inc. (Nasdaq/SmallCap: HOST), a hotel development and management company, today announced financial and operating results for the first quarter ended March 31, 2005. 10-Q FILING AND FIRST QUARTER CONFERENCE CALL The company expects to file its form 10-Q with the Securities and Exchange Commission later today. The document will be accessible through the SEC's electronic filings database at www.sec.gov, and on the company's Web site, www.arlingtonhospitality.com. At 3 p.m. ET on Tuesday, May 17, 2005, the company's chairman and senior management will conduct a conference call to discuss the first quarter results and current strategies, followed by a question-and-answer period. Stockholders and other interested parties may participate in the conference call by calling (800) 218-0204, reference number 11030677. FIRST QUARTER 2005 RESULTS In the 2005 first quarter, revenues were $12.5 million, a decrease of $4.5 million from $17.0 million in the same period a year earlier. The lower revenues were due primarily to a $1.5 Arlington results Page 2 million decrease in hotel operating revenue, as the company had divested 13 consolidated AmeriHost Inn hotels over the last 15 months, and a $2.7 million decrease in aggregate sale prices of the particular consolidated AmeriHost Inn hotels sold during the first quarter of 2005, compared to the aggregate sale prices of those sold in the first quarter of 2004. The revenue decrease was partially offset by a 28.7 percent increase in incentive and royalty-sharing fees during the 2005 first quarter, to approximately $325,000. The improvement is due to the amortization of a larger number of development incentive fees received from Cendant Corporation (NYSE: CD) and an increase in royalty-sharing fees received from Cendant. Net loss in the 2005 first quarter was approximately $(1.5) million, or ($0.30) per share, compared to net loss of approximately $(1.6) million, or ($0.31) per share, in the 2004 first quarter. The 2004 first quarter results include impairment charges of $320,000 pre-tax ($192,000 after tax). No impairment charges were recorded in the 2005 first quarter. Net loss from continuing operations was $(1.5) million, or ($0.31) per share, during the first quarter of 2005, compared to ($933,000), or ($0.18) per share, during the first quarter of 2004. The decrease in operating loss to ($542,000) during the first quarter of 2005, from ($686,000) during the first quarter of 2004, was due primarily to the capital lease accounting treatment for 17 of the PMC leased hotels pursuant to a fourth quarter 2004 lease modification whereby the leasehold rent expense decreased, at the same time depreciation, interest and leasehold termination expense increased. In addition, there were no impairment charges in the first quarter of 2005 and corporate general and administrative expense decreased approximately $274,000, or 32 percent. These reductions in operating loss were partially offset by lower operating income Arlington results Page 3 realized from the sale of hotels in the first quarter of 2005, compared to 2004, the reduction in the number of consolidated hotels and increased due diligence and entitlement costs for new hotel development sites. The results also include net income from discontinued operations of $36,000 in the 2005 first quarter, compared to a net loss of ($643,000) in the first quarter of 2004. Discontinued operations relates to the operations of all the company's consolidated non-AmeriHost Inn hotels. Discontinued operations for the 2005 first quarter include the results of three hotels, two of which were disposed of during the first quarter, compared to the results of five hotels in the same period a year earlier. "With the pending sale of our last non-AmeriHost Inn hotel, expected to be consummated within the next three months, we will wrap up this important component of our formal hotel disposition program implemented nearly two years ago," said Kenneth M. Fell, Arlington's chairman of the board. "We continue to work towards the sale of certain AmeriHost Inn hotels and obtaining the necessary financing to achieve our development plans." During the quarter, Arlington paid down $4.0 million in long-term mortgage debt, primarily in conjunction with the sale of two consolidated hotels in the 2005 first quarter. The company has reduced its debt by $42.6 million since it announced its Operation Sell program in the summer of 2003. Arlington results Page 4 AMERIHOST INN OPERATIONS Same-room revenue per available room (RevPAR) in the 2005 first quarter, for the company's 46 AmeriHost Inn hotels was basically flat compared to the 2004 first quarter, at $27.40.
Trailing Three Months Twelve Months Ended Ended March 31 March 31 ------------ ------------- Occupancy - 2005 47.8% 56.6% Occupancy - 2004 48.9% 56.3% Increase (decrease) (2.2)% (0.5%) Average Daily Rate - 2005 $57.35 $58.15 Average Daily Rate - 2004 $56.11 $57.53 Increase (decrease) 2.2% 1.1% RevPAR - 2005 $27.40 $32.91 RevPAR - 2004 $27.46 $32.40 Increase (decrease) (0.2)% 1.6%
According to Smith Travel Research, the comparable mid-scale hotel without food and beverage segment in the East North Central region of the United States (defined by Smith Travel Research as Illinois, Indiana, Michigan, Ohio and Wisconsin) rose 4.1 percent in the first quarter of 2005. "The negative variance in RevPAR growth between our AmeriHost Inn hotels and the results reported by Smith Travel Research is due primarily to the company's smaller hotels located in smaller, rural markets, which are lagging behind the hotels located in and around urban and secondary markets," Fell said. "Many of our hotels with RevPAR growth below the Smith Travel Research industry segment average are included in our hotel disposition plan." Arlington results Page 5 DEVELOPMENT On May 5, 2005, the company opened a newly constructed hotel in Lansing, Mich. The new 82-room AmeriHost Inns & Suites hotel, in which Arlington is a joint-venture partner and manager, is approximately one-third larger than the average size of most of the hotels in the company's existing portfolio. The three-story building features an attractive two-story lobby, a meeting room, a breakfast room, guest laundry, and a large, indoor swimming pool, spa and fitness center. The company also broke ground in May on an 87-room AmeriHost Inn and Suites at the Columbus, Ohio airport, in which it is a joint-venture partner. The hotel utilizes the company's first new "T" shaped design, which contains more public space and includes many of the same features as the Lansing, Mich. hotel, plus a business center, a sundries shop, and an expanded lobby and breakfast area with fireplace. This design is expected to be used frequently in the company's future development projects. The company has five additional sites under purchase contracts in California and along the Eastern seaboard, pending arrangement of both debt and equity financing. The company is negotiating with a number of potential joint-venture partners and mortgage lenders to provide the funding for these projects. NEED FOR FURTHER RESTRUCTURING OF LEASED HOTEL PORTFOLIO The company has been in discussions with PMC Commercial Trust (AMEX: PCC) ("PMC"), the landlord for 18 AmeriHost Inn hotels Arlington currently operates, with the goal of further modifying the existing leases. The leases were modified in October 2004. The October Arlington results Page 6 modifications included partially reduced rent payments and a plan to terminate the leases over a four-year period upon the sale of the hotels, with a significant termination fee payable to PMC, and subject to substantial, above-market hotel value guarantees by Arlington in favor of PMC. However, through the first quarter of 2005, the 18 hotels continue to operate at a significant negative cash flow, even after the reduced lease payment. Over the past five years, the cash flow from the leased properties has been insufficient to cover the lease payments to PMC, yet throughout this period Arlington continued to fund these significant operating deficiencies using other sources, primarily proceeds from the sale of owned hotels. Arlington's board of directors has decided that it is in the best interest of the company to no longer fund the lease payments at the present rate. As such, the company did not pay PMC the May 2005 lease payment, and as of May 13, 2005, upon expiration of the stated cure period, Arlington is in default of the lease agreements. PMC is entitled to pursue all remedies under the leases, including terminating the leases, taking possession of the hotels, and seeking recovery against the company, as guarantor of the leases, for payments due under the leases. Arlington is hopeful that future discussions with PMC will lead to an amicable settlement of the lease defaults wherein the PMC leases will be amended to provide for restructured lease payments and the elimination of above-market hotel value guarantees. In the event an amicable settlement of the default cannot be reached, the company will consider all of its alternatives, as more fully described in the company's report on form 10-Q for the three months ended March 31, 2005 as filed with the Securities and Exchange Commission. Arlington results Page 7 HOTEL SALES In the 2005 first quarter, Arlington completed the disposition of six properties as follows. The company sold one wholly owned AmeriHost Inn, one AmeriHost Inn held in an unconsolidated joint venture, one non-AmeriHost Inn held in a consolidated joint venture and one vacant land parcel. In addition, the lease for a non-AmeriHost Inn hotel was terminated pursuant to the sale of the hotel by the landlord, and the PMC lease was terminated for an AmeriHost Inn hotel upon its sale pursuant to the October 2004 PMC lease modification. The company currently has eight properties under contract for sale, including two PMC leased hotels and the company's last remaining non-AmeriHost Inn hotel. PRESIDENT AND CHIEF EXECUTIVE OFFICER The company continues to review candidates for its president and CEO position, which became vacant December 31, 2004. Stephen Miller, the company's senior development officer, currently serves as interim president and chief executive officer. ABOUT ARLINGTON HOSPITALITY Arlington Hospitality, Inc. is a hotel development and management company that builds, operates and sells mid-market hotels. Arlington is the nation's largest owner and franchisee of AmeriHost Inn hotels, a 105-property mid-market, limited-service hotel brand owned and presently franchised in 20 states and Canada by Cendant Corporation (NYSE: CD). Currently, Arlington Hospitality, Inc. owns or manages 45 properties in 12 states, including 44 AmeriHost Inn hotels, for a total of 3,098 rooms, with one additional AmeriHost Inn & Suites hotel under construction. Arlington results Page 8 This press release may contain forward-looking statements. Forward-looking statements are statements that are not historical, including statements regarding management's intentions, beliefs, expectations, representations, plans or predictions of the future and are typically identified by words such as "believe," "expect," "anticipate," "intend," "estimate," "may," "will," "should," and "could." There are numerous risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements. For a discussion of these factors, see the company's report on Form 10-K for the year ended December 31, 2004 and report on Form 10-Q for the three months ended March 31, 2005, under the section headed "Management's Discussion and Analysis of Financial Condition and Results of Operations - Risk Factors." ARLINGTON HOSPITALITY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
March 31, 2005 December 31, (Unaudited) 2004 ------------ ------------ ASSETS Current assets: Cash and cash equivalents $ 3,817,089 $ 2,558,384 Accounts receivable, less an allowance of $76,500 at March 31, 2005 and December 31, 2004 (including approximately $806,000 and $372,000 from related parties) 2,137,851 1,365,454 Notes receivable, current portion 126,042 76,042 Prepaid expenses and other current assets 684,584 808,478 Refundable income taxes 91,099 67,538 Costs and estimated earnings in excess of billings on uncompleted contracts 228,327 467,144 Assets held for sale - AmeriHost Inn hotels 19,771,036 19,214,269 Assets held for sale - other brands 4,596,684 6,525,844 Capital lease assets held for sale - AmeriHost Inn hotels 15,078,787 15,379,638 ------------ ------------ Total current assets 46,531,499 46,462,791 ------------ ------------ Investments in and advances to unconsolidated hotel joint ventures 1,798,449 1,970,095 Property and equipment: Land 3,926,886 5,138,978 Buildings 25,262,838 26,579,543 Furniture, fixtures and equipment 8,890,200 9,172,897 Construction in progress -- 313,458 Leasehold improvements 96,735 96,735 Capital lease assets 11,525,669 13,088,840 ------------ ------------ 49,702,329 54,390,451 Less accumulated depreciation and amortization 11,499,879 11,423,246 ------------ ------------ 38,202,450 42,967,205 ------------ ------------ Notes receivable, less current portion 375,000 450,000 Deferred income taxes 10,046,846 9,210,846 Other assets, net of accumulated amortization of approximately $765,000 at March 31, 2005 and $673,000 at December 31, 2004 2,113,964 2,300,704 ------------ ------------ Total long term assets 52,536,709 56,898,850 ------------ ------------ Total assets $ 99,068,208 $103,361,641 ============ ============
ARLINGTON HOSPITALITY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
March 31, 2005 December 31, (Unaudited) 2004 ------------- ------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 2,873,925 $ 2,321,786 Bank line-of-credit 4,000,000 2,225,000 Accrued payroll and related expenses 691,142 566,889 Accrued real estate and other taxes 1,679,879 1,860,480 Other accrued expenses and current liabilities 1,723,361 1,181,677 Current portion of long-term debt 906,120 1,130,701 Liabilities of assets held for sale - AmeriHost Inns 18,139,489 18,491,277 Liabilities of assets held for sale - other brands 4,804,078 6,939,989 Capital lease obligations of assets held for sale - AmeriHost Inn hotels 17,842,178 18,077,035 ------------- ------------- Total current liabilities 52,660,172 52,794,834 ------------- ------------- Long-term debt, net of current portion 20,849,449 22,046,112 Capital lease obligation 13,979,739 15,641,463 ------------- ------------- Total long term liabilities 34,829,188 37,687,575 ------------- ------------- Deferred income 6,331,182 6,125,788 Commitments and contingencies Minority interests 224,885 246,063 Shareholders' equity: Preferred stock, no par value; authorized 100,000 shares; none issued -- -- Common stock, $.005 par value; authorized at 25,000,000 shares; 4,956,123 and 4,956,098 were issued and outstanding at March 31, 2005 and December 31, 2004 respectively 24,781 24,781 Additional paid-in capital 13,140,324 13,140,256 Retained deficit (8,142,324) (6,657,656) ------------- ------------- Total shareholders' equity 5,022,781 6,507,381 ------------- ------------- Total liabilities and shareholders' equity $ 99,068,208 $ 103,361,641 ============= =============
ARLINGTON HOSPITALITY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, (UNAUDITED)
Revenue 2005 2004 ------------ ------------ Hotel operations $ 6,354,302 $ 7,819,524 Development and construction 1,017,224 1,200,654 Hotel sales and commissions 4,188,600 6,839,249 Management services 43,599 100,622 Employee leasing 324,591 562,276 Incentive and royalty sharing 364,761 283,408 Office building rental 162,156 173,907 ------------ ------------ 12,455,233 16,979,639 ------------ ------------ Operating costs and expenses: Hotel operations 5,936,270 7,028,727 Development and construction 1,479,703 1,480,392 Hotel sales and commissions 3,524,337 5,543,601 Management services 28,030 90,381 Employee leasing 300,712 545,130 Office building rental 134,290 41,112 ------------ ------------ 11,403,342 14,729,343 ------------ ------------ Depreciation and amortization 731,991 552,331 Leasehold rents - hotels 172,856 1,196,545 Corporate general and administrative 593,505 867,227 Impairment provision -- 320,133 Lease termination expense 95,376 -- ------------ ------------ Operating loss (541,837) (685,940) Other income (expense): Interest expense (2,229,904) (974,874) Interest income 4,917 125,938 Other income 980 20,135 Equity in net income (losses) from unconsolidated joint ventures 413,141 (6,166) ------------ ------------ Loss before minority interests and income taxes (2,352,703) (1,520,907) Minority interests in operations of consolidated joint ventures (23,950) (33,812) ------------ ------------ Loss before income tax (2,376,653) (1,554,719) Income tax benefit 856,000 621,979 ------------ ------------ Net loss from continuing operations (1,520,653) (932,740) Discontinued operations, net of tax 35,985 (642,666) ------------ ------------ Net Loss $ (1,484,668) $ (1,575,406) ============ ============ Net loss per share from continuing operations: Basic $ (0.31) $ (0.18) Diluted $ (0.31) $ (0.18) Net loss per share: Basic $ (0.30) $ (0.31) Diluted $ (0.30) $ (0.31)
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