Boykin Lodging (BOY) 8-K Acquisition or disposition of assets

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):July 11, 2003

Boykin Lodging Company

(Exact Name of Registrant as Specified in its Charter)

Ohio
(State or Other Jurisdiction of
Incorporation) 001-11975
(Commission File Number) 34-1824586
(IRS Employer Identification Number)

Guildhall Building, Suite 1500, 45 W. Prospect Avenue, Cleveland, Ohio
(Address of Principal Executive Offices) 44115
(Zip Code)

(216) 430-1200

(Registrant’s telephone number, including area code)

TABLE OF CONTENTS

ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
	PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2003
	PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2003
	PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2002
	PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2001
	PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2000
SIGNATURE

ITEM 2.	ACQUISITION OR DISPOSITION OF ASSETS
	On July 11, 2003, Boykin Lodging Company (“Boykin”) sold its hotel located in Springfield, Oregon, for a price of $6.5 million to an unrelated third party. Net proceeds from the sale of approximately $6.2 million were used to pay off the outstanding balance of the Company’s senior secured line of credit ($4.0 million), to pay a termination fee to Hilton Hotels Corporation accrued in accordance with the Modification Agreement entered into on April 30, 2003 ($0.7 million), and for general corporate purposes. The hotel previously was used as collateral for the Company’s $130.0 million term loan. However, the collateral was released in connection with substitution of another property into the loan and therefore, no payment on the term loan was required in connection with the sale.
	On June 18, 2003, Boykin sold its Holiday Inn hotel located in Cornelius, North Carolina, for a price of $2.55 million to an unrelated third party. Net proceeds from the sale of approximately $2.3 million were applied to the outstanding balance of the Company’s $108.0 million term loan. Additional corporate funds of $0.3 million were also applied to the term loan.
	On February 24, 2003, Boykin sold its Hampton Inn hotel located in Cornelius, North Carolina, for a price of $3.7 million to an unrelated third party. Net proceeds from the sale of approximately $3.5 million were applied to the outstanding balance of the Company’s $108.0 million term loan. Additional corporate funds of $0.5 million were also applied to the term loan.
	On February 18, 2003, Boykin sold its Hilton hotel located in Knoxville, Tennessee, for a price of $11.5 million to an unrelated third party. Net proceeds from the sale were approximately $11.3 million of which $10.25 million was applied to the outstanding balance of the Company’s $108.0 million term loan. The remaining proceeds were used for general corporate purposes.
	For each of the above sales, sales prices were the result of arms-length negotiations.
ITEM 7.	INANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.

(a)   Financial Statements of Business Acquired.

                   None.

(b)   Pro Forma Financial Information.

The following unaudited pro forma condensed consolidated financial information for Boykin Lodging Company give effect to the sale of the Hilton hotel in Knoxville, Tennessee, the Hampton Inn hotel located in Cornelius, North Carolina, the Holiday Inn hotel located in Cornelius, North Carolina, and the hotel located in Springfield, Oregon as well as the use of proceeds from the sales, as described in this Current Report on Form 8-K.

The March 31, 2003 unaudited Pro Forma Condensed Consolidated Balance Sheet is presented as if all previously unconsummated sales and the related debt reductions were effective March 31, 2003. The unaudited Pro Forma Condensed Consolidated Statements of Operations for the three months ended March 31, 2003, and for each of the years in the three year period ended December 31, 2002 assume the sale and the reduction of debt were effective as of the beginning of the fiscal year ended December 31, 2000.

The unaudited pro forma condensed consolidated financial information should be read in conjunction with the consolidated financial statements and related footnotes included in Boykin Lodging Company’s 2002 Annual Report on Form 10-K and Boykin Lodging Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2003.

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

BOYKIN LODGING COMPANY
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 2003
(unaudited, amounts in thousands, except share data)

						Pro Forma Adjustments
						(a)		(a)		(b)			(c)
						Hilton		Hampton Inn		Holiday Inn
			Historical			Knoxville		Cornelius		Cornelius			Springfield			Pro Forma
Investment in hotel properties			$	612,201			—		—		4,792			8,956		$	598,453
	Accumulated depreciation			(138,224	)		—		—		(2,070	)		(2,534	)		(133,620	)
Investment in hotel properties, net				473,977			—		—		2,722			6,422			464,833
Cash and cash equivalents				18,102			—		—		300			(6,190	)(d)		23,992
Restricted cash				16,718			—		—		—			—			16,718
Accounts receivable, net of allowance for doubtful accounts				14,360			—		—		13			117			14,230
Rent receivable from lessees				311			—		—		—			—			311
Inventories				2,035			—		—		14			34			1,987
Deferred financing costs and other, net				2,579			—		—		64			—			2,515
Investment in unconsolidated joint ventures				16,570			—		—		—			—			16,570
Other assets				11,756			—		—		42			182			11,532
			$	556,408			—		—		3,155			565		$	552,688
LIABILITIES AND SHAREHOLDERS’ EQUITY
Term notes payable			$	260,952			—		—		2,625			—		$	258,327
Accounts payable and accrued expenses				39,357			—		—		97			473			38,787
Dividends/distributions payable				4,851			—		—		—			—			4,851
Due to lessees				101			—		—		—			—			101
Deferred lease revenue				187			—		—		—			—			187
Minority interest in joint ventures				2,384			—		—		—			—			2,384
Minority interest in operating partnership				12,888			—		—		65	(e)		14	(e)		12,809
SHAREHOLDERS’ EQUITY:
	Preferred shares, without par value; 10,000,000 shares authorized; 181,000 shares issued and outstanding			—			—		—		—			—			—
	Common shares, without par value; 40,000,000 shares authorized; 17,323,712 shares outstanding			—			—		—		—			—			—
	Additional paid-in capital			357,305			—		—		—			—			357,305
	Distributions in excess of income			(118,870	)		—		—		368	(e)		78	(e)		(119,316	)
	Other comprehensive loss			(787	)		—		—		—			—			(787	)
	Unearned compensation – restricted shares			(1,960	)		—		—		—			—			(1,960	)
		Total shareholders’ equity		235,688			—		—		368			78			235,242
			$	556,408			—		—		3,155			565		$	552,688

BOYKIN LODGING COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2003
(unaudited, amounts in thousands, except for per share data)

						Pro Forma Adjustments
						(a)		(a)		(f)			(g)
						Hilton		Hampton Inn		Holiday Inn
			Historical			Knoxville		Cornelius		Cornelius			Springfield			Pro Forma
Revenues:
	Hotel revenues
		Rooms	$	36,002			—		—		166			701		$	35,135
		Food and beverage		17,063			—		—		67			432			16,564
		Other		2,850			—		—		4			27			2,819
	Total hotel revenues			55,915			—		—		237			1,160			54,518
	Lease revenue			337			—		—		—			—			337
	Revenues from condominium development and unit sales			9,810			—		—		—			—			9,810
		Total revenues		66,062			—		—		237			1,160			64,665
Expenses:
	Hotel operating expenses
		Rooms		9,383			—		—		93			252			9,038
		Food and beverage		12,945			—		—		84			408			12,453
		Other direct		1,762			—		—		5			22			1,735
		Indirect		18,326			—		—		132			390			17,804
		Management fees – related party		946			—		—		8			—			938
		Management fees – third party		728			—		—		—			35			693
	Total hotel operating expenses			44,090			—		—		322			1,107			42,661
	Property taxes, insurance and other			4,323			—		—		23			68			4,232
	Cost of condominium development and unit sales			6,332			—		—		—			—			6,332
	Real estate related depreciation and amortization			7,140			—		—		45			121			6,974
	Corporate general and administrative			1,716			—		—		—			1			1,715
		Total operating expenses		63,601			—		—		390			1,297			61,914
		Operating income (loss)		2,461			—		—		(153	)		(137	)		2,751
	Interest income			64			—		—		—			—			64
	Other income			90			—		—		—			—			90
	Interest expense			(4,340	)		—		—		(24	)		—			(4,316	)
	Amortization of deferred financing costs			(687	)		—		—		(2	)		—			(685	)
	Minority interest in earnings of joint ventures			(20	)		—		—		—			—			(20	)
	Minority interest in loss of operating partnership			957			—		—		27			21			909
	Equity in loss of unconsolidated joint ventures			(844	)		—		—		—			—			(844	)
Loss from continuing operations				(2,319	)		—		—		(152	)		(116	)		(2,051	)
Loss from continuing operations per share:
	Basic		$	(0.13	)											$	(0.12	)
	Diluted		$	(0.13	)											$	(0.12	)
Weighted average number of common shares outstanding:
	Basic			17,317													17,317
	Diluted			17,413													17,413

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
					(h)			(i)			(f)			(g)
					Hilton			Hampton Inn			Holiday Inn
		Historical			Knoxville			Cornelius			Cornelius			Springfield			Pro Forma
Revenues:
Hotel revenues:
	Rooms	$	162,479			5,443			1,390			1,285			3,206		$	151,155
	Food and beverage		76,939			1,723			—			485			1,863			72,868
	Other		13,371			139			25			49			120			13,038
Total hotel revenues			252,789			7,305			1,415			1,819			5,189			237,061
Lease revenue			4,730			—			—			—			—			4,730
Revenues from condominium development and unit sales			8,715			—			—			—			—			8,715
	Total revenues		266,234			7,305			1,415			1,819			5,189			250,506
Expenses:
Hotel operating expenses:
	Rooms		40,638			1,398			396			469			1,030			37,345
	Food and beverage		54,169			1,203			—			450			1,693			50,823
	Other direct		8,501			81			35			23			99			8,263
	Indirect		74,332			2,228			656			722			1,560			69,166
	Management fees – related party		4,351			268			52			58			—			3,973
	Management fees – third party		3,059			—			—			—			145			2,914
Total hotel operating expenses			185,050			5,178			1,139			1,722			4,527			172,484
Property taxes, insurance and other			15,901			316			83			87			285			15,130
Cost of condominium development and unit sales			6,474			—			—			—			—			6,474
Real estate related depreciation and amortization			30,174			602			183			196			479			28,714
Corporate general and administrative			6,714			47			1			(15	)		4			6,677
	Total operating expenses		244,313			6,143			1,406			1,990			5,295			229,479
	Operating income (loss)		21,921			1,162			9			(171	)		(106	)		21,027
Interest income			357			—			—			—			—			357
Other income			1,095			—			—			—			—			1,095
Interest expense			(20,011	)		(431	)		(168	)		(110	)		—			(19,302	)
Amortization of deferred financing costs			(2,182	)		(34	)		(13	)		(9	)		—			(2,126	)
Minority interest in loss of joint ventures			(133	)		—			—			—			—			(133	)
Minority interest in (earnings) loss of operating partnership			640			(105	)		26			44			16			659
Equity in loss of unconsolidated joint ventures			(2,040	)		—			—			—			—			(2,040	)
Income (loss) from continuing operations			(353	)		592			(146	)		(246	)		(90	)		(463	)
Loss from continuing operations per share:
Basic		$	(0.02	)													$	(0.03	)
Diluted		$	(0.02	)													$	(0.03	)
Weighted average number of common shares outstanding:
Basic			17,248															17,248
Diluted			17,383															17,383

BOYKIN LODGING COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2001
(unaudited, amounts in thousands, except for per share data)

									Pro Forma Adjustments
									(h)			(i)			(f)			(g)
									Hilton			Hampton Inn			Holiday Inn
						Historical			Knoxville			Cornelius			Cornelius			Springfield			Pro Forma
Revenues:
	Lease revenue from related party					$	60,243			1,881			589			657			1,294		$	55,822
	Other lease revenue						11,747			—			—			—			—			11,747
	Hotel revenues						6,663			—			—			—			—			6,663
		Total revenues					78,653			1,881			589			657			1,294			74,232
Expenses:
	Property taxes, insurance and other						10,922			323			58			62			200			10,279
	Real estate related depreciation and amortization						28,474			571			237			296			558			26,812
	Corporate general and administrative						6,230			44			1			1			1			6,183
	Impairment of real estate						24,000			—			1,100			2,700			2,000			18,200
	Costs associated with termination of leases			(j	)		2,006			—			—			—			—			2,006
	Related party costs associated with termination of leases			(j	)		12,994			—			—			—			—			12,994
	Expenses related to hotel operations						5,203			—			—			—			—			5,203
	Management fees – related party						208			—			—			—			—			208
		Total operating expenses					90,037			938			1,396			3,059			2,759			81,885
			Operating income (loss)				(11,384	)		943			(807	)		(2,402	)		(1,465	)		(7,653	)
	Interest income						409			—			—			—			—			409
	Other income						1,071			—			—			—			—			1,071
	Interest expense						(21,916	)		(671	)		(262	)		(172	)		—			(20,811	)
	Amortization of deferred financing costs						(1,205	)		(34	)		(13	)		(9	)		—			(1,149	)
	Minority interest in loss of joint ventures						193			—			—			—			—			193
	Minority interest in (earnings) loss of operating partnership						2,806			(19	)		85			203			115			2,384
	Equity in income of unconsolidated joint ventures						589			—			—			—			—			589
Income (loss) from continuing operations						$	(29,437	)		219			(997	)		(2,380	)		(1,350	)	$	(24,929	)
Loss  from continuing operations per share:
	Basic					$	(1.71	)													$	(1.45	)
	Diluted					$	(1.71	)													$	(1.45	)
Weighted average number of common shares outstanding:
	Basic						17,176															17,176
	Diluted						17,281															17,281

BOYKIN LODGING COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2000
(unaudited, amounts in thousands, except for per share data)

										Pro Forma Adjustments
										(h)			(i)			(f)			(g)
										Hilton			Hampton Inn			Holiday Inn
							Historical			Knoxville			Cornelius			Cornelius			Springfield			Pro Forma
Revenues:
	Lease revenue from related party						$	71,922			2,157			570			636			1,455		$	67,104
	Other lease revenue							13,932			—			—			—			—			13,932
	Other hotel revenue							6,735			—			—			—			—			6,735
		Total revenues						92,589			2,157			570			636			1,455			87,771
Expenses:
	Property taxes, insurance and other							10,714			293			52			51			191			10,127
	Real estate related depreciation and amortization							30,374			540			327			415			645			28,447
	Corporate general and administrative							5,849			41			1			1			1			5,805
	Gain on property insurance recovery							(407	)		—			—			—			—			(407	)
	Impairment of real estate							7,000			—			—			—			—			7,000
	Expenses related to hotel operations							5,212			—			—			—			—			5,212
	Management fees – related party							209			—			—			—			—			209
			Total operating expenses					58,951			874			380			467			837			56,393
				Operating income				33,638			1,283			190			169			618			31,378
	Interest income							531			—			—			—			—			531
	Other income							631			—			—			—			—			631
	Interest expense							(24,291	)		(843	)		(329	)		(216	)		—			(22,903	)
	Amortization of deferred financing costs							(1,242	)		(46	)		(18	)		(12	)		—			(1,166	)
	Extinguishment of debt				(k	)		(745	)		(58	)		(23	)		(15	)		—			(649	)
	Minority interest in earnings of joint ventures							(534	)		—			—			—			—			(534	)
	Minority interest in (earnings) loss of operating partnership							(326	)		(26	)		14			6			(49	)		(271	)
	Equity in income of unconsolidated joint ventures							68			—			—			—			—			68
Income (loss) from continuing operations							$	7,730			310			(166	)		(68	)		569		$	7,085
Income from continuing operations per share:
	Basic						$	0.45														$	0.41
	Diluted						$	0.45														$	0.41
Weighted average number of common shares outstanding:
	Basic							17,137															17,137
	Diluted							17,305															17,305

Historical amounts have been reclassified to conform to current year presentation.

(a)	The sale of the Hilton Knoxville hotel and the Hampton Inn in Cornelius are already reflected in the historical March 31, 2003 financial statements as the sales were consummated prior to March 31, 2003. Therefore, no pro forma adjustments are necessary as of and for the three months ended March 31, 2003.
(b)	Reflects the removal of the assets and liabilities associated with the Holiday Inn in Cornelius, including the use of $0.3 million of corporate funds to repay the associated term loan.
(c)	Reflects the removal of the assets and liabilities associated with the hotel in Springfield, as well as the receipt of sale proceeds.
(d)	Net proceeds from the sale of approximately $6.2 million were used to pay off the outstanding balance of the Company’s senior secured line of credit ($4.0 million), to pay a termination fee to Hilton Hotels Corporation as agreed to in the Modification Agreement entered into on April 30, 2003 ($0.7 million), and for general corporate purposes. Both the termination fee and the borrowing on the line of credit were incurred subsequent to March 31, 2003. As such, that portion of proceeds is applied to cash for the purpose of these pro forma statements.
(e)	Reflects the estimated impact of the sale on minority interest and shareholders’ equity as if the sale took place on March 31, 2003. The actual impact of the sale transactions was based upon the carrying value of the assets at the time of the sale.
(f)	Reflects the removal of the earnings activity of the Holiday Inn in Cornelius as if the disposition had occurred on January 1, 2000. The gain or loss on sale is not reflected in the pro forma condensed consolidated statements of operations. The actual loss on the disposition was approximately $0.4 million.
(g)	Reflects the removal of the earnings activity of the hotel in Springfield as if the disposition had occurred on January 1, 2000. The gain or loss on sale is not reflected in the pro forma condensed consolidated statements of operations. The actual loss on the disposition was approximately $0.1 million.
(h)	Reflects the removal of the earnings activity of the Hilton in Knoxville as if the disposition had occurred on January 1, 2000. The gain or loss on sale is not reflected in the pro forma condensed consolidated statements of operations. The actual gain on the disposition was approximately $1.4 million.
(i)	Reflects the removal of the earnings activity of the Hampton Inn in Cornelius as if the disposition had occurred on January 1, 2000. The gain or loss on sale is not reflected in the pro forma condensed consolidated statements of operations. The actual loss on the disposition was approximately $0.1 million.
(j)	The costs associated with the lease terminations were not specifically allocated to individual properties and therefore are not included in the pro forma adjustments.
(k)	Reflects the reclassification of the loss on extinguishment of debt from extraordinary item to inclusion in income from continuing operations in compliance with Statement of Financial Accounting Standards No. 145. Accordingly, the expense has been presented gross in the reclassification, and minority interest has been adjusted.

(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: August 1, 2003.