Exhibit 99.1
PRESS RELEASE |
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| Contact: | Sheryl Seyer |
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| Investor Relations |
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| 877-777-6560 |
LA QUINTA® ANNOUNCES THIRD QUARTER 2003 FINANCIAL RESULTS
RevPAR Increases 8% From Prior Year
Dallas, Texas (October 30, 2003) – La Quinta Corporation (NYSE: LQI) today announced financial results for the third quarter ended September 30, 2003. La Quinta will hold a conference call today to discuss these results and its business.
The Company reported the following financial results. A detailed schedule reconciling net loss to Adjusted EBITDA is included in the supplemental tables.
For the third quarter 2003, La Quinta reported:
• Revenues of $142 million, a 6% increase compared to 2002.
• Net loss of $9 million, or ($0.06) per share, versus net loss of $27 million, or ($0.19) per share, in 2002.
• RevPAR for total company owned hotels of $39.63, an 8% increase compared to 2002.
• Adjusted EBITDA of $49 million, a 16% increase compared to 2002.
“We are very pleased with our third quarter results,” said Francis W. (“Butch”) Cash, President and Chief Executive Officer. “The emphasis we have placed on guest satisfaction and revenue improvement, coupled with expense management, has driven our strong RevPAR and Adjusted EBITDA performance. Industry fundamentals are improving, as supply growth remains low amidst strengthening demand.”
Operating Results
La Quinta’s total company RevPAR increased 8% during the third quarter, with the improvement driven by increased occupancy. In addition, La Quinta improved its performance relative to its local market competition. For the quarter, in the Company’s top ten markets - Dallas/Ft. Worth, Houston, Denver, San Antonio, Austin, New Orleans, Atlanta, Orlando, Miami/Ft. Lauderdale and Phoenix - RevPAR of La Quinta’s direct competitors declined 1% while La Quinta’s RevPAR increased 3%. RevPAR of La Quinta’s direct competitors in all markets increased 2% while La Quinta’s comparable RevPAR increased 7%.
“We have made substantial improvements in our RevPAR results,” said Mr. Cash. “RevPAR growth during the quarter exceeded that of our local markets as well as the national averages. Our customer satisfaction scores have continued to increase over the prior year. The initiatives we have
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focused on this year are resulting in strong revenue improvements. Third quarter 2003 revenues from electronic distribution increased 54% from third quarter 2002 and revenues from our frequent stayer program have now increased to approximately 30% of total revenues.”
During the third quarter, franchise rooms increased by 752 rooms (7 hotels). As of September 30, 2003, La Quinta had nearly doubled the number of franchise rooms to 7,435 compared to September 30, 2002 and continues to anticipate having approximately 9,000 rooms open by the end of this year.
Financial Results
La Quinta reported a net loss of $9 million, or ($0.06) per share, for the third quarter of 2003 compared to a net loss of $27 million, or ($0.19) per share, for the third quarter of 2002. La Quinta intends to sell its non-strategic business, TeleMatrix, within the next 12 months. As a result, the financial results for TeleMatrix and one hotel have been moved to discontinued operations. In the third quarter of 2003, loss before discontinued operations was ($0.04) per share compared to loss before discontinued operations of ($0.13) per share in the third quarter of 2002. The decrease in net loss was primarily due to revenue improvements driven by the Company’s initiatives and lower impairments taken on property, plant and equipment. During the third quarter, La Quinta recorded $3 million of non-cash charges for impairments compared to $29 million for the third quarter of 2002.
Adjusted EBITDA for the third quarter was $49 million, a 16% increase compared to the third quarter of 2002 primarily as a result of revenue improvement. “In addition to driving revenues, our Inn managers did an excellent job of leveraging our revenue growth by reducing cost per occupied room,” said Mr. Cash.
At September 30, 2003, La Quinta had total indebtedness of $895 million, cash of $119 million, and short-term investments of $117 million. Included in total indebtedness is $150 million principal amount of 7.114% Notes issued by La Quinta as part of a 1997 financing. The Notes are held by a trust, which has issued $150 million of Exercisable Put Option Securities (the “Securities”) that pass through payments on the Notes to Securities owners. The Company currently owns $117 million of the Securities that are classified as short-term investments. Historically, La Quinta has presented the 7.114% Notes net of the related Securities owned. Beginning this quarter, the Company will present the related Securities owned separately from the Notes. Net debt (total indebtedness less cash and short-term investments) at September 30, 2003 was $659 million compared to $679 million at June 30, 2003.
As part of La Quinta’s previously announced program to upgrade its lodging portfolio, La Quinta sold one hotel during the third quarter for gross proceeds of approximately $4 million. As of September 30, 2003, the Company had assets with a net book value of approximately $21 million that it intends to sell.
“The results of our hard work and focused initiatives are reflected in our positive results,” said David L. Rea, Executive Vice President and Chief Financial Officer. “We are encouraged by the improving industry fundamentals and believe the strategic decisions and investments we have made will continue to enhance La Quinta’s financial performance.”
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Current Outlook
For the fourth quarter of 2003, La Quinta currently anticipates total company RevPAR to increase approximately 4% over the fourth quarter of 2002. Adjusted EBITDA is currently anticipated to be approximately $25 million, reflecting seasonally low demand in the fourth quarter, and net loss per share is currently anticipated to be approximately ($0.12). The Company continues to anticipate self-funding its 2003 capital expenditures of approximately $60 million.
For the year 2003, La Quinta currently anticipates total company RevPAR to be flat as compared to 2002 and Adjusted EBITDA to be approximately $148 million. The Company has revised its 2003 RevPAR and Adjusted EBITDA expectations upward to reflect the strong third quarter performance. The Company anticipates net loss per share to be approximately ($0.63).
La Quinta is in the early stages of budgeting for 2004. Preliminary expectations for 2004 are for 3% to 4% RevPAR growth, continued growth in franchising, and modest increases in overhead costs. Capital expenditures for 2004 are anticipated to be approximately $60 million, including $20 million for the redevelopment of our downtown San Antonio property. The Company will provide further guidance regarding its 2004 outlook when reporting full year 2003 financial results.
Conference Call and Where You Can Find Additional Information
As previously announced, at 11:30AM (EST) on October 30, 2003, La Quinta will hold a conference call and audio webcast to discuss its financial results and business outlook. During the conference call, La Quinta may discuss and answer one or more questions concerning business and financial matters and trends affecting the Company. The Company’s responses to these questions, as well as other matters discussed during the conference call, may contain or constitute information that has not been previously disclosed.
Simultaneous with the conference call, an audio webcast of the call will be available via a link on the La Quinta website, www.LQ.com, in the Investor Relations–Webcasts section. The conference call can be accessed by dialing 800-257-1836 (International: 303-262-2194). An access code is not required. A replay of the call will be available from 12:30 PM (EST) on October 30, 2003 through 11:59pm PM (EST) on November 7, 2003 by dialing 800-405-2236 (International: 303-590-3000) and entering the access code of 557524. The replay will also be available in the Investor Relations-Webcasts section of the La Quinta website, www.LQ.com.
About La Quinta Corporation
Dallas based La Quinta Corporation (NYSE: LQI), a leading limited service lodging company, owns, operates or franchises over 350 La Quinta Inns and La Quinta Inn & Suites in 33 states. Today’s news release, as well as other information about La Quinta, is available on the Internet at www.LQ.com.
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Safe Harbor Statement
Certain matters discussed in this press release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “believes,” “anticipates,” “expects,” “intends,” “estimates,” “projects” and other similar expressions, which are predictions of or indicate future events and trends, typically identify forward-looking statements. Our forward-looking statements are subject to a number of risks and uncertainties, which could cause actual results or the timing of certain events to differ materially from those projected in or contemplated by the forward-looking statements. Accordingly, we cannot assure you that the expectations set forth in these forward-looking statements will be attained. Some of the factors that could cause actual results or the timing of certain events to differ from those described in these forward-looking statements include, without limitation, our ability to successfully grow revenues (through our revenue initiatives or otherwise) and profitability of our lodging business and franchising program; concentration of our properties in certain geographic areas; our ability to realize sustained labor or other cost savings; the availability and costs of insurance for our properties and business; competition within the lodging industry, including in the franchising of the La Quinta® brand; our ability to generate attractive rates of return on new lodging investments; the cyclicality of the lodging business; the impact of U.S. military action abroad and/or additional terrorist activities; the effects of the general economic slowdown, including decreases in consumer confidence and business spending, which may continue to adversely affect our business and industry; interest rates; the ultimate outcome of litigation filed against us; the availability of capital for corporate purposes including for debt repayment, acquisitions and capital expenditures; the conditions of the capital markets in general; our ability to continue to successfully sell assets; and other risks detailed from time to time in our filings with the Securities and Exchange Commission, including, without limitation, the risks described in our Joint Current Report on Form 8-K, event date October 20, 2003, filed with the Securities and Exchange Commission on October 21, 2003, in the section entitled “Certain Factors You Should Consider About Our Companies, Our Businesses and Our Securities.” We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Statement Concerning Non-GAAP Measurement Tools
La Quinta uses Adjusted EBITDA as a supplemental measure of the Company’s performance because we believe it gives the reader a more complete understanding of our financial condition and operating results. We use this metric to calculate various financial ratios and to measure our performance, and we believe some debt and equity investors also utilize this metric for similar purposes. Adjusted EBITDA includes adjustments for non-cash income or expenses such as depreciation, amortization and other non-cash items. Adjusted EBITDA is also adjusted for income taxes, interest expense and minority interest (which includes our preferred stock dividends of La Quinta Properties, Inc.), as well as certain cash income or expense that we believe otherwise distort the comparability of the measure. Adjusted EBITDA is intended to show unleveraged, pre-tax operating results. The impact of investing and financing transactions, as well as income taxes, should also be considered in evaluating overall results. Adjusted EBITDA is not intended to represent any measure of performance in accordance with generally accepted accounting principles (“GAAP”) and our calculation and use of this measure may differ from our competitors. This non-GAAP measure should not be read in isolation or as a substitute for a measure of performance or liquidity prepared in accordance with GAAP. A detailed schedule reconciling GAAP net loss to Adjusted EBITDA is included in the attached supplemental tables.
Supplemental Schedules | ||
Financial Results |
| A |
Other Expense (Income) |
| B |
Supplemental Non-GAAP Financial Data |
| C |
Other Supplemental Information |
| D |
La Quinta Summary Lodging Statistics |
| E |
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La Quinta Corporation
Schedule A
Financial Results
(Unaudited)
Operating Data: |
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(In thousands, except per share data) |
| 2003 |
| 2002 |
| 2003 |
| 2002 |
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Revenues |
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Lodging |
| $ | 140,297 |
| $ | 132,682 |
| $ | 391,525 |
| $ | 400,204 |
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Other |
| 1,270 |
| 1,392 |
| 3,865 |
| 11,344 |
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Total revenues |
| 141,567 |
| 134,074 |
| 395,390 |
| 411,548 |
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Expenses |
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Direct lodging operations |
| 62,595 |
| 61,160 |
| 177,092 |
| 178,284 |
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Other lodging expenses |
| 18,259 |
| 18,629 |
| 54,163 |
| 52,885 |
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General and administrative |
| 11,914 |
| 12,289 |
| 41,011 |
| 36,228 |
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Interest, net |
| 16,203 |
| 14,348 |
| 46,954 |
| 51,510 |
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Depreciation and amortization |
| 32,699 |
| 29,241 |
| 96,686 |
| 91,033 |
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Impairment of property, plant and equipment |
| 3,218 |
| 29,187 |
| 69,808 |
| 29,187 |
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Other expense (income) |
| 461 |
| (1,771 | ) | 7,594 |
| (14,373 | ) | ||||
Total expenses |
| 145,349 |
| 163,083 |
| 493,308 |
| 424,754 |
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Loss before minority interest, income taxes, cumulative effect of change in accounting principle and discontinued operations |
| (3,782 | ) | (29,009 | ) | (97,918 | ) | (13,206 | ) | ||||
Minority interest |
| (4,534 | ) | (4,621 | ) | (13,646 | ) | (13,878 | ) | ||||
Income tax benefit (expense) |
| 1,920 |
| 15,159 |
| 41,353 |
| (186,997 | ) | ||||
Loss before discontinued operations and cumulative effect of change in accounting principle |
| (6,396 | ) | (18,471 | ) | (70,211 | ) | (214,081 | ) | ||||
Discontinued operations, net |
| (3,036 | ) | (8,177 | ) | (3,136 | ) | (18,521 | ) | ||||
Loss before cumulative effect of change in accounting principle |
| (9,432 | ) | (26,648 | ) | (73,347 | ) | (232,602 | ) | ||||
Cumulative effect of change in accounting principle |
| — |
| — |
| — |
| (248,358 | ) | ||||
Net loss |
| $ | (9,432 | ) | $ | (26,648 | ) | $ | (73,347 | ) | $ | (480,960 | ) |
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Per Share Data: |
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Loss before discontinued operations and cumulative effect of change in accounting principle |
| $ | (0.04 | ) | $ | (0.13 | ) | $ | (0.49 | ) | $ | (1.50 | ) |
Discontinued operations, net of tax |
| (0.02 | ) | (0.06 | ) | (0.02 | ) | (0.13 | ) | ||||
Cumulative effect of change in accounting principle |
| — |
| — |
| — |
| (1.73 | ) | ||||
Net loss per share – basic and assuming dilution |
| $ | (0.06 | ) | $ | (0.19 | ) | $ | (0.51 | ) | $ | (3.36 | ) |
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Weighted average shares outstanding |
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Basic |
| 143,225 |
| 143,325 |
| 143,116 |
| 143,151 |
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Assuming dilution |
| 143,225 |
| 143,325 |
| 143,116 |
| 143,151 |
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Prior period results have been reclassified to conform to current period presentation.
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Schedule B
Other Expense (Income)
(Unaudited)
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(In thousands) |
| 2003 |
| 2002 |
| 2003 |
| 2002 |
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Provision for loss on interest and other receivables |
| $ | — |
| $ | 1,900 |
| $ | — |
| $ | 1,900 |
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Loss (gain) on sale of assets and related costs |
| 34 |
| (3,939 | ) | 30 |
| (10,461 | ) | ||||
Loss on early extinguishments of debt |
| — |
| 558 |
| 6,202 |
| 1,029 |
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Gain on settlement |
| — |
| 29 |
| — |
| (5,442 | ) | ||||
Other (1) |
| 427 |
| (319 | ) | 1,362 |
| (1,399 | ) | ||||
Total other expense (income) |
| $ | 461 |
| $ | (1,771 | ) | $ | 7,594 |
| $ | (14,373 | ) |
(1) For the three months ended September 30, 2003, other consists primarily of an accrual of lease termination expense, a gain on settlement related to a split dollar life insurance policy and an adjustment of employee retirement plan liability related to on going settlement of obligations under the terminated plan. Additionally, the nine months ended September 30, 2003 included an adjustment of actuarial assumptions on deferred compensation agreement and changes in net cash surrender values of key man life policies in the healthcare business.
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La Quinta Corporation
Schedule C
Supplemental Non-GAAP Financial Data
(Unaudited)
Adjusted EBITDA Reconciliation |
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(In thousands) |
| 2003 |
| 2002 |
| 2003 |
| 2002 |
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Net loss (per GAAP) |
| $ | (9,432 | ) | $ | (26,648 | ) | $ | (73,347 | ) | $ | (480,960 | ) |
Add: |
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Depreciation and amortization |
| 32,699 |
| 29,241 |
| 96,686 |
| 91,033 |
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Impairment of property, plant and equipment |
| 3,218 |
| 29,187 |
| 69,808 |
| 29,187 |
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Minority interest |
| 4,534 |
| 4,621 |
| 13,646 |
| 13,878 |
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Income tax (benefit) expense (1) |
| (1,920 | ) | (15,159 | ) | (41,353 | ) | 186,997 |
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Cumulative effect of change in accounting principle (2) |
| — |
| — |
| — |
| 248,358 |
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Interest, net |
| 16,203 |
| 14,348 |
| 46,954 |
| 51,510 |
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Other expense (income) (3) |
| 461 |
| (1,771 | ) | 7,594 |
| (14,373 | ) | ||||
Discontinued operations, net (4) |
| 3,036 |
| 8,177 |
| 3,136 |
| 18,521 |
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Adjusted EBITDA (Non-GAAP) |
| $ | 48,799 |
| $ | 41,996 |
| $ | 123,124 |
| $ | 144,151 |
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(1) Income tax expense for the nine months ended September 30, 2002 was $186,997 including net deferred tax expense of $196,520 associated with a non-recurring charge recorded in January 2002 to establish the net deferred tax liability of La Quinta as a result of our legal restructure.
(2) In January 2002, we adopted the requirements of SFAS 142 and as a result recorded a charge to earnings of approximately $248,358 to reflect an adjustment to goodwill.
(3) See attached Schedule B for details.
(4) The Companies have decided to sell one company-owned hotel and TeleMatrix, a non-strategic business. As a result, the separately identifiable results of operations have been reported as discontinued operations for all periods presented, net of tax.
Adjusted EBITDA Reconciliation (Current 2003 Outlook)
(In millions)
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| Three Months Ended |
| Full Year |
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Net loss (per GAAP) |
| $ | (17 | ) | $ | (90 | ) |
Add: |
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Depreciation and amortization |
| 30 |
| 127 |
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Impairment of property, plant and equipment |
| — |
| 70 |
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Minority interest |
| 5 |
| 18 |
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Income tax benefit |
| (10 | ) | (51 | ) | ||
Interest, net |
| 16 |
| 63 |
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Other expense and discontinued operations |
| 1 |
| 11 |
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Adjusted EBITDA (Non-GAAP) |
| $ | 25 |
| $ | 148 |
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La Quinta Corporation
Schedule D
Other Supplemental Information
(Unaudited)
Capital Expenditures |
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(In millions) |
| 2003 |
| 2002 |
| 2003 |
| 2002 |
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Capital expenditures |
| $ | 9 |
| $ | 23 |
| $ | 41 |
| $ | 81 |
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Selected Balance Sheet Data
(In millions)
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| September 30, |
| December 31, |
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| (Audited) |
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Property, plant and equipment, net |
| $ | 2,166 |
| $ | 2,302 |
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Cash and cash equivalents (A) |
| 119 |
| 9 |
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Investment in securities (B) (1) |
| 117 |
| 56 |
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Total assets |
| 2,621 |
| 2,604 |
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Total indebtedness (C) |
| 895 |
| 721 |
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Total liabilities |
| 1,174 |
| 1,084 |
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Minority interest (D) |
| 206 |
| 206 |
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Total shareholders’ equity (E) |
| 1,241 |
| 1,313 |
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Net debt to total capitalization |
| 31 | % | 30 | % | ||
(1) 7.114% Exercisable Put Option Securities (the “Securities”) owned by the Company were previously presented as an offset to the $150 million principal amount of the related 7.114% Notes issued by the Company. The Company has reclassified the Securities as an asset for all periods presented.
Debt Maturity Schedule
(In millions)
Year |
| At September 30, |
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2003 |
| $ | 0 |
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2004 (1) |
| 169 |
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2005 |
| 116 |
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2006 |
| 20 |
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2007 |
| 210 |
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2008 and thereafter |
| 380 |
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Total debt |
| 895 |
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Less: Cash |
| 119 |
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Less: Investment in securities |
| 117 |
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Net debt |
| $ | 659 |
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(1) The maturity schedule assumes the $150 million of 7.114% Notes due in 2011 are repaid by the Company at the option of the current holder or due to the Company exercising its call rights.
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La Quinta Corporation
Schedule E
Lodging Statistics
(Unaudited)
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| Change |
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| Occu- |
| Average |
| RevPAR |
| Occu- |
| Average |
| RevPAR |
| Occu- |
| Average |
| RevPAR |
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Comparable Hotels (1),(3) |
| 69.1 | % | $ | 57.63 |
| $ | 39.84 |
| 61.5 | % | $ | 60.75 |
| $ | 37.34 |
| 7.6 pts |
| (5.1 | )% | 6.7 | % |
Company Owned (1) |
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Inns |
| 69.0 | % | $ | 55.12 |
| $ | 38.04 |
| 61.2 | % | $ | 57.67 |
| $ | 35.31 |
| 7.8 pts |
| (4.4 | )% | 7.7 | % |
Inns & Suites |
| 68.9 | % | $ | 63.73 |
| $ | 43.91 |
| 60.6 | % | $ | 67.76 |
| $ | 41.03 |
| 8.3 pts |
| (5.9 | )% | 7.0 | % |
Total |
| 69.0 | % | $ | 57.45 |
| $ | 39.63 |
| 61.1 | % | $ | 60.22 |
| $ | 36.77 |
| 7.9 pts |
| (4.6 | )% | 7.8 | % |
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| Change |
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| Occu- |
| Average |
| RevPAR |
| Occu- |
| Average |
| RevPAR |
| Occu- |
| Average |
| RevPAR |
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Comparable Hotels (1),(2) |
| 62.4 | % | $ | 59.87 |
| $ | 37.39 |
| 62.4 | % | $ | 60.89 |
| $ | 38.01 |
| 0.0 pts |
| (1.7 | )% | (1.6 | )% |
Company Owned (1) |
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Inns |
| 61.8 | % | $ | 56.57 |
| $ | 34.95 |
| 61.3 | % | $ | 57.07 |
| $ | 34.97 |
| 0.5 pts |
| (0.9 | )% | (0.1 | )% |
Inns & Suites |
| 63.3 | % | $ | 67.53 |
| $ | 42.71 |
| 63.3 | % | $ | 69.49 |
| $ | 43.96 |
| 0.0 pts |
| (2.8 | )% | (2.8 | )% |
Total |
| 62.2 | % | $ | 59.56 |
| $ | 37.03 |
| 61.8 | % | $ | 60.30 |
| $ | 37.25 |
| 0.4 pts |
| (1.2 | )% | (0.6 | )% |
Hotel and Room Count Data
|
| September 30, 2003 |
| September 30, 2002 |
| ||||
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| Number of Hotels |
| Number of Rooms |
| Number of Hotels |
| Number of Rooms |
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Comparable Hotels (2) |
| 274 |
| 35,760 |
| 274 |
| 35,840 |
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Company-Owned |
| 280 |
| 36,535 |
| 287 |
| 37,478 |
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Franchised Hotels |
| 82 |
| 7,435 |
| 50 |
| 3,915 |
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Total |
| 362 |
| 43,970 |
| 337 |
| 41,393 |
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(1) Excludes franchised hotels, hotels held for sale and discontinued operations.
(2) Comparable hotels for the nine months ended September 30, 2003 and 2002 excludes two hotels that were undergoing redevelopment at the beginning of 2002 and three hotels classified as held for sale as well as one hotel included in discontinued operations, representing 775 rooms in aggregate.
(3) Comparable hotels for the quarter ended September 30, 2003 and 2002 includes two more hotels than the year-to-date as a result of their reopening in the first quarter 2002.
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