Exhibit 99.1
PRESS RELEASE
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For Immediate Release
Date: July 31, 2003
Contact: Stephen Barbieri
Title: VP, Chief Communications Officer
Phone: 1-509-323-7211
Internet:InvestorRelations@WestCoastHotels.com
www.westcoasthotels.com
www.ticketswest.com
www.redlion.com
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WestCoast Hospitality Corporation Announces Second Quarter Financial Results
July 31, 2003
SPOKANE, Wash. - WestCoast Hospitality Corporation (NYSE:WEH) today reported
second quarter financial results for the period ended June 30, 2003. The Company
reported total revenue of $48.1 million compared to $51.6 million in the second
quarter of 2002, and earnings per share of $0.09 compared to $0.24 in the prior
year comparable quarter. Earnings per share were impacted by five significant
events during the quarter which included: the Company completed the refinance of
its revolving credit facility to long-term fixed rate debt, resulting in a
non-cash write-off of $790 thousand in loan fees, recapture of non-cash
depreciation expense due to termination of the sale agreement for Kalispell
Center for $520 thousand, loss on disposition of partnership interest of $443
thousand offset by other income of $350 thousand from a contract termination fee
and $230 thousand associated with a franchise contract termination. The
combination of these items reduced earnings per share by $0.06. Direct expenses
declined $1.1 million during the quarter, from $42.9 million to $41.7 million,
partially offsetting reduced revenue.
Arthur Coffey, President and Chief Executive Officer of WestCoast Hospitality
Corporation, said, "We aggressively pursued cost containment initiatives in the
quarter because of the continued lackluster pace of the economic recovery in the
U.S. Given the state of the economy, we were pleased to have strengthened our
balance sheet through our refinancing activities. Trends continue to be
difficult to predict, with periods of strong lodging demand followed by periods
of softness. In the third quarter we will continue to manage our expenses and
focus on capturing market share through improved yield management systems that
are being administered through our new central reservations software. Beyond the
hotel division, we are pleased with our ticketing and real estate divisions,
which both achieved higher operating income results this quarter versus last
year."
During the quarter, the Company completed a $55.2 million mortgage refinancing
that allowed the Company to completely pay down outstanding borrowings under its
revolving credit facility. The refinancing completed the Company's stated goal
of removing current debt from the credit facility through refinancing with
long-term fixed rate debt and taking advantage of historically low interest
rates, at 6.7% fixed for ten years.
Hotel and restaurant revenue for the quarter was $43.3 million compared to $46.7
million in the comparable period of 2002. RevPAR (Revenue Per Available Room)
declined 5.0% on a 1.4 percentage point decline in occupancy and 2.8% decline in
average daily rate. Hotel operating expenses declined partly in proportion to
decreased revenue and partly as a result of cost containment initiatives, from
$37.2 million in the second quarter of 2002 to $35.1 million during the same
period of 2003. Hotel occupancy rates continue to fluctuate as compared to prior
year with softness still being experienced in corporate travel. Certain leisure
travel markets have had room revenue increases and are benefiting from U.S.
travelers seeking drive-to destinations within the United States. Hotels in
larger markets continue to feel the impact of curtailed business spending.
Franchise, central services and development revenue declined $295 thousand
during the period, due to a decrease in franchise royalty fees and central
services fees. Franchise royalty fees declined due to the discontinuation of
certain franchise relationships earlier in 2003 and reduced revenue levels at
the Company's remaining franchised properties. The revenue decline was partially
offset by royalty fee income from three new Red Lion franchisees signed during
the year. During the quarter, two new Red Lion Hotels were added to the system
in Portland, Oregon and Lawton, Oklahoma.
Revenue in the Company's TicketsWest division declined slightly during the
quarter, from $1.5 million to $1.4 million, primarily due to scheduling of the
Company's Broadway series, which included two series presentations in April 2002
compared to no series presentations in April of 2003. The revenue decline
associated with the Broadway series was partially offset by increased ticket
sales for operations in Eastern Washington and Colorado. Direct costs in
TicketsWest for the three months ended June 30, 2003 were down $176 thousand as
a result of decreased costs associated with not having Broadway productions in
the period and ongoing cost control programs initiated early in 2003. The
reductions in direct expenses resulted in an increase to operating income of $67
thousand. TicketsWest continues to add venues and events to its system.
The Company's real estate division also contributed higher operating income
during the quarter with a 10.5% increase in revenue, from $2.1 million to $2.4
million, partially offset by an increase in direct expenses from $1.0 million in
the second quarter of 2002 to $1.2 million in the same period of 2003. Revenue
increases were due to rental income from new tenants in two Company-owned
commercial real estate buildings as well as the addition of real estate
management contracts and associated leasing and brokerage fees.
WestCoast Hospitality Corporation owns, manages, franchises and develops hotels
providing care, comfort and value. Red Lion Hotels and WestCoast Hotels focus on
serving business, convention and leisure travelers in first, second and third
tier markets. WestCoast provides entertainment services through TicketsWest,
including event ticketing for venues in the United States and Canada, and
aggregates content for travel and entertainment that is sold in real time at its
www.ticketswest.com website. TicketsWest also includes WestCoast Entertainment,
a Broadway and special event presenting company. G&B Real Estate Services, the
real estate division of WestCoast Hospitality Corporation, owns and manages
commercial and residential properties. Registered trademarks of WestCoast
Hospitality Corporation and its affiliates protect the use of "WestCoast", "Red
Lion", "TicketsWest" and "G&B" and various derivatives of those usages.
This press release contains forward-looking statements within the meaning of
federal securities law, including statements concerning plans, objectives,
goals, strategies, projections of future events or performance and underlying
assumptions (many of which are based, in turn upon further assumptions). The
forward-looking statements in this press release are inherently subject to a
variety of risks and uncertainties that could cause actual results to differ
materially from those expressed. Such risks and uncertainties include, among
others, economic cycles; international conflicts; changes in future demand and
supply for hotel rooms; competitive conditions in the lodging industry;
relationships with franchisees and properties; impact of government regulations;
ability to obtain financing; changes in energy, healthcare, insurance and other
operating expenses; ability to sell non-core assets; ability to locate lessees
for rental property and managing and leasing properties owned by third parties;
dependency upon the ability and experience of executive officers and ability to
retain or replace such officers as well as other matters discussed in the
Company's annual report on Form 10-K for the 2002 fiscal year and in other
documents filed by the Company with the Securities and Exchange Commission.
SOURCE: WestCoast Hospitality Corporation
###
WestCoast Hospitality Corporation
Consolidated Statements of Operations
(unaudited)
($ in thousands)
Three months ended June 30,
2003 2002 $ Change % Change
Revenues:
Hotels & restaurants $ 43,346 $ 46,736 $ (3,390) -7.3%
Franchise, central services and development 888 1,183 (295) -24.9%
TicketsWest 1,384 1,493 (109) -7.3%
Real estate division 2,363 2,139 224 10.5%
Corporate services 87 72 15 20.8%
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Total revenues 48,068 51,623 (3,555) -6.9%
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Operating expenses:
Hotels & restaurants 35,124 37,174 (2,050) -5.5%
Franchise, central services and development 413 568 (155) -27.3%
TicketsWest 1,291 1,467 (176) -12.0%
Real estate division 1,216 1,030 186 18.1%
Corporate services 83 53 30 56.6%
Depreciation and amortization 3,157 2,659 498 18.7%
(Gain) loss on asset dispositions including recoveries 364 (83) 447 538.6%
Conversion expenses 79 6 73 1216.7%
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Total direct expenses 41,727 42,874 (1,147) -2.7%
Undistributed corporate expenses 587 332 255 76.8%
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Total expenses 42,314 43,206 (892) -2.1%
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Operating income 5,754 8,417 (2,663) -31.6%
Other income (expense):
Interest expense (2,713) (2,655) 58 2.2%
Interest income 103 116 (13) -11.2%
Other income (expense) (312) 9 (321) -3566.7%
Equity income in investments 21 16 5 31.3%
Minority interest in partnerships 18 (61) 79 129.5%
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Income before income taxes 2,871 5,842 (2,971) -50.9%
Income tax expense 1,078 2,062 (984) -47.7%
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Net income 1,793 3,780 (1,987) -52.6%
Preferred stock dividend (640) (645) (5) -0.8%
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Net income to common shareholders $ 1,153 $ 3,135 $ (1,982) -63.2%
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EBITDA(1) $ 9,275 $ 10,993 $ (1,718) -15.6%
EBITDA % of revenues 19.3% 21.3%
(1) Represents income before income taxes, interest expense and income,
depreciation and amortization, other income (expense), gain (loss) on asset
disposals, minority interest and equity income in investments. EBITDA is not
intended to represent cash flow from operations as defined by generally accepted
accounting principles and such information should not be considered as an
alternative to net income, cash flow from operations or any other measure of
performance prescribed by generally accepted accounting principles. While not
all companies calculate EBITDA in the same fashion, and therefore EBITDA as
presented may not be comparable to similarly titled measures of other companies,
EBITDA is included herein because management believes that certain investors
find it to be a useful tool for measuring the Company's ability to service debt
and invest in properties and equipment. EBITDA is not necessarily available for
management's discretionary use due to restrictions included in the Company's
various borrowing agreements and other considerations. For additional details
refer to the EBITDA reconciliation.
WestCoast Hospitality Corporation
Earnings Per Share and Hotel Statistics
(unaudited)
Three months ended June 30,
2003 2002 $ Change % Change
Earnings per share:
Basic $ 0.09 $ 0.24
Diluted $ 0.09 $ 0.24
Weighted average shares - basic 12,994,163 12,970,473
Weighted Average shares - diluted (1) (2) 13,280,324 13,315,085
Hotel Statistics:
Combined (owned, managed and franchised) (3)
Average Occupancy(4) (7) 58.8% 60.2%
ADR(5) $ 71.14 $ 73.17 $ (2.03) -2.8%
RevPAR(6) (7) $ 41.83 $ 44.05 $ (2.22) -5.0%
(1)June 30, 2003 balance reflects dilution from operating partnership units
outstanding. Options to purchase common stock for that period were
anti-dilutive.
(2)June 30, 2002 balance reflects dilution from both outstanding options to
purchase common stock and operating partnership units outstanding.
(3)Includes hotels owned, managed and franchised for greater than one year by
WestCoast Hospitality Corporation.
(4)Average occupancy represents total paid rooms occupied divided by total
available rooms. Total available rooms represents the number of rooms available
multiplied by the number of days in the reported period.
(5)Average daily rate ("ADR") represents total room revenues divided by the
total number of paid rooms occupied by hotel guests.
(6)Revenue per available room ("RevPAR") represents total room and related
revenues divided by total available rooms, net of rooms out of service due to
significant renovations.
(7)Rooms under renovation were excluded from RevPAR and average occupancy
percentage. Due to the short duration of renovation, in the opinion of
management, excluding these rooms did not have a material impact on RevPAR and
average occupancy.
WestCoast Hospitality Corporation
Consolidated Statements of Operations
(unaudited)
($ in thousands)
Six months ended June 30,
2003 2002 $ Change % Change
Revenues:
Hotels & restaurants $ 77,442 $ 83,941 $ (6,499) -7.7%
Franchise, central services and development 1,978 1,934 44 2.3%
TicketsWest 3,985 3,472 513 14.8%
Real estate division 4,665 4,611 54 1.2%
Corporate services 174 134 40 29.9%
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Total revenues 88,244 94,092 (5,848) -6.2%
Operating expenses:
Hotels & restaurants 67,755 71,694 (3,939) -5.5%
Franchise, central services and development 892 1,019 (127) -12.5%
TicketsWest 3,481 2,911 570 19.6%
Real estate division 2,434 2,242 192 8.6%
Corporate services 160 101 59 58.4%
Depreciation and amortization 5,764 5,376 388 7.2%
(Gain) loss on asset dispositions including recoveries 696 (3,097) 3,793 122.5%
Conversion expenses 367 7 360 5142.9%
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Total direct expenses 81,549 80,253 1,296 1.6%
Undistributed corporate expenses 1,327 905 422 46.6%
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Total expenses 82,876 81,158 1,718 2.1%
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Operating income 5,368 12,934 (7,566) -58.5%
Other income (expense):
Interest expense (5,355) (5,522) (167) -3.0%
Interest income 207 158 49 31.0%
Other income (expense) (293) 4 (297) -7425.0%
Equity income (loss) in investments 80 (12) 92 766.7%
Minority interest in partnerships 131 (66) 197 298.5%
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Income before income taxes 138 7,496 (7,358) -98.2%
Income tax expense 113 2,646 (2,533) -95.7%
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Net income 25 4,850 (4,825) -99.5%
Preferred stock dividend (1,281) (1,291) (10) -0.8%
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Net income (loss) to common shareholders $ (1,256) $ 3,559 $ (4,815) -135.3%
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EBITDA(1) $ 11,828 $ 15,213 $ (3,385) -22.3%
EBITDA % of revenues 13.4% 16.2%
(1) Represents income before income taxes, interest expense and income,
depreciation and amortization, other income (expense), gain (loss) on asset
disposals, minority interest and equity income in investments. EBITDA is not
intended to represent cash flow from operations as defined by generally accepted
accounting principles and such information should not be considered as an
alternative to net income, cash flow from operations or any other measure of
performance prescribed by generally accepted accounting principles. While not
all companies calculate EBITDA in the same fashion, and therefore EBITDA as
presented may not be comparable to similarly titled measures of other companies,
EBITDA is included herein because management believes that certain investors
find it to be a useful tool for measuring the Company's ability to service debt
and invest in properties and equipment. EBITDA is not necessarily available for
management's discretionary use due to restrictions included in the Company's
various borrowing agreements and other considerations. For additional details
refer to the EBITDA reconciliation.
WestCoast Hospitality Corporation
Earnings Per Share and Hotel Statistics
(unaudited)
Six months ended June 30,
2003 2002 $ Change % Change
Earnings per share:
Basic $ (0.10) $ 0.27
Diluted $ (0.10) $ 0.27
Weighted average shares - basic 12,993,257 12,970,473
Weighted Average shares - diluted (1) (2) 12,993,257 13,318,930
Hotel Statistics:
Combined (owned, managed and franchised) (3)
Average Occupancy(4) (7) 53.8% 54.3%
ADR(5) $ 69.24 $ 72.57 $ (3.33) -4.6%
RevPAR(6) (7) $ 37.28 $ 39.38 $ (2.10) -5.3%
(1)Due to the loss, options to purchase common stock and operating partnership
units outstanding are anti-dilutive for the six months. ended June 30, 2003.
(2)June 30, 2002 balance reflects dilution from both outstanding options to
purchase common stock and operating partnership units outstanding.
(3)Includes hotels owned, managed and franchised for greater than one year by
WestCoast Hospitality Corporation.
(4)Average occupancy represents total paid rooms occupied divided by total
available rooms. Total available rooms represents the number of rooms available
multiplied by the number of days in the reported period.
(5)Average daily rate ("ADR") represents total room revenues divided by the
total number of paid rooms occupied by hotel guests.
(6)Revenue per available room ("RevPAR") represents total room and related
revenues divided by total available rooms, net of rooms out of service due to
significant renovations.
(7)Rooms under renovation were excluded from RevPAR and average occupancy
percentage. Due to the short duration of renovation, in the opinion of
management, excluding these rooms did not have a material impact on RevPAR and
average occupancy.
WestCoast Hospitality Corporation
Consolidated Balance Sheets
(unaudited)
($ in thousands, except share data)
June 30, December 31,
2003 2002
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Assets:
Current assets:
Cash and cash equivalents $ 3,518 $ 752
Restricted cash 3,310 1,949
Accounts receivable, net 10,701 9,559
Inventories 1,919 2,040
Assets held for sale 21,705 34,408
Prepaid expenses and other 4,758 2,693
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Total current assets 45,911 51,401
Property and equipment, net 250,008 241,255
Goodwill 28,042 28,042
Intangible assets, net 14,804 15,188
Other assets, net 19,916 20,824
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Total assets $ 358,681 $ 356,710
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Liabilities:
Current liabilities:
Accounts payable $ 7,865 $ 6,773
Accrued payroll and related benefits 4,788 6,173
Accrued interest payable 640 695
Advance deposits 408 198
Other accrued expenses 10,515 8,494
Notes payable to bank - 52,100
Long-term debt, due within one year 5,804 4,889
Capital lease obligations, due within one year 84 268
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Total current liabilities 30,104 79,590
Long-term debt, due after one year 153,708 101,206
Deferred revenue 2,483 2,626
Deferred income taxes 16,961 16,261
Minority interest in partnerships 2,780 2,911
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Total liabilities 206,036 202,594
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Stockholders' equity:
Preferred stock - 5,000,000 shares authorized; $0.01 par value
597,138 and 602,630 shares issued and outstanding 6 6
Additional paid-in capital, preferred stock 29,851 30,125
Common stock - 50,000,000 shares authorized; $0.01 par value;
12,994,163 and 12,981,878 shares issued and outstanding 130 130
Additional paid-in capital, common stock 84,142 84,083
Retained earnings 38,516 39,772
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Total stockholders' equity 152,645 154,116
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Total liabilities and stockholders' equity $ 358,681 $ 356,710
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WestCoast Hospitality Corporation
Consolidated Statement of Cash Flows
(unaudited)
($ in thousands)
Six months ended June 30,
Operating activities: 2003 2002
Net income $ 25 $ 4,850
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 5,764 5,376
Gain on disposition of property and equipment and other assets 696 (3,097)
Non-cash reduction of preferred stock resulting in gain (230) -
Write-off of deferred loan fees 790 -
Deferred income tax provision 700 200
Minority interest in partnerships (131) 66
Equity in investments (80) 12
Compensation expense related to stock issuance 5 7
Provision for doubtful accounts 189 111
Change in current assets and liabilities:
Restricted cash (1,361) (594)
Accounts receivable (1,209) (1,112)
Inventories 121 (81)
Prepaid expenses and other (2,070) (1,676)
Accounts payable 1,068 3,972
Accrued payroll and related benefits (1,385) 875
Accrued interest payable (55) (36)
Other accrued expenses and advance deposits 1,596 1,495
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Net cash provided by operating activities 4,433 10,368
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Investing activities:
Additions to property and equipment (4,117) (2,468)
Proceeds from disposition of property and equipment 17 1,828
Proceeds from investment 350 -
Other, net 69 142
----- -----
Net cash used in investing activities (3,681) (498)
----- -----
Financing activities:
Proceeds from note payable to bank 35,300 -
Repayment of note payable to bank (87,400) (7,650)
Proceeds from long-term debt 55,200 -
Proceeds from short-term debt 2,658 -
Repayment of long-term debt (1,783) (1,563)
Proceeds from issuance of common stock under
employee stock purchase plan 54 49
Preferred stock dividend payments (646) (646)
Principal payments on capital lease obligations (184) (187)
Additions to deferred financing costs (1,185) (18)
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Net cash provided by financing activities 2,014 (10,015)
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Change in cash and cash equivalents:
Net increase in cash and cash equivalents 2,766 (145)
Cash and cash equivalents at beginning of period 752 4,613
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Cash and cash equivalents at end of period $ 3,518 $ 4,468
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WestCoast Hospitality Corporation
EBITDA Reconcilation
(unaudited)
($ in thousands)
The following is a reconciliation of EBITDA to its comparable measurement in
accordance with generally accepted accounting principles for each of the periods
presented:
Three months ended June 30,
2003 2002
EBITDA $ 9,275 $ 10,993
Income tax provision (1,078) (2,062)
Deferred income tax provision 350 100
Interest expense (2,713) (2,655)
Interest and other income, net (209) 125
Other non-cash operating activities 632 95
Change in working capital accounts (3,399) (2,009)
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Net cash provided by operating activities $ 2,858 $ 4,587
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Six months ended June 30,
2003 2002
EBITDA $ 11,828 $ 15,213
Income tax provision (113) (2,646)
Deferred income tax provision 700 200
Interest expense (5,355) (5,522)
Interest and other income, net (86) 162
Other non-cash operating activities 754 118
Change in working capital accounts (3,295) 2,843
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Net cash provided by operating activities $ 4,433 $ 10,368
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