<PAGE> 1
FORM 10-Q/A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
----------------------------------------------
For the First Quarter Ended April 20, 1997 Commission File No. 0-19840
----------------------------------------------
SHOLODGE, INC.
(Exact name of registrant as specified in its charter)
----------------------------------------------
TENNESSEE 62-1015641
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
217 WEST MAIN STREET, GALLATIN, TENNESSEE 37066
(address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (615) 452-7200
----------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period as the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the registrant's classes of
common stock as of the latest practicable date.
As of May 30, 1997, there were 8,235.152 shares of ShoLodge, Inc.
common stock outstanding.
<PAGE> 2
SHOLODGE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
APRIL 20, DECEMBER 29,
1997 1996 (1)
(AS RESTATED)
(SEE NOTE C)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $ 4,736,479 $ 4,259,768
ACCOUNTS RECEIVABLE - NET 3,560,586 2,676,083
CONSTRUCTION CONTRACTS 197,343 259,785
PREPAID EXPENSES 1,103,504 471,823
OTHER CURRENT ASSETS 517,848 559,982
------------ ------------
TOTAL CURRENT ASSETS 10,115,760 8,227,441
DIRECT FINANCING LEASES, LESS CURRENT PORTION 468,370 611,492
PROPERTY AND EQUIPMENT 278,466,358 262,264,264
LESS ACCUMULATED DEPRECIATION AND AMORTIZATION -36,838,064 -33,888,495
------------ ------------
241,628,294 228,375,769
DEFERRED CHARGES 9,970,611 9,899,544
SECURITIES HELD TO MATURITY - RESTRICTED 8,468,479 8,255,810
SECURITIES AVAILABLE FOR SALE 212,062 212,062
EXCESS OF COST OVER FAIR VALUE
OF NET ASSETS ACQUIRED 3,090,819 3,136,965
OTHER 3,257,844 4,990,095
------------ ------------
TOTAL ASSETS $277,212,239 $263,709,178
============ ============
</TABLE>
(1) DERIVED FROM FISCAL YEAR ENDED DECEMBER 29, 1996 AUDITED FINANCIAL
STATEMENTS. SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE> 3
SHOLODGE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
APRIL 20, DECEMBER 29,
1997 1996 (1)
(AS RESTATED)
(SEE NOTE C)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 9,438,524 $ 12,045,715
TAXES OTHER THAN ON INCOME 1,259,017 984,855
INCOME TAXES PAYABLE 0 1,116,972
CURRENT PORTION OF LONG-TERM DEBT
AND CAPITALIZED LEASE OBLIGATIONS . 3,725,013 15,824,914
------------ ------------
TOTAL CURRENT LIABILITIES 14,422,554 29,972,456
LONG-TERM DEBT ASSOCIATED WITH LODGING FACILITIES 39,370,946 40,104,802
OTHER LONG-TERM DEBT 127,216,597 97,227,576
CAPITALIZED LEASE OBLIGATIONS 1,295,379 1,462,044
DEFERRED INCOME TAXES 3,656,144 4,702,144
MINORITY INTERESTS IN EQUITY OF
CONSOLIDATED SUBSIDIARIES AND PARTNERSHIPS 633,858 504,028
------------ ------------
TOTAL LIABILITIES 186,595,478 173,973,050
------------ ------------
SHAREHOLDERS' EQUITY:
SERIES A REDEEMABLE NONPARTICIPATING STOCK
(NO PAR VALUE; 1,000 SHARES AUTHORIZED, NONE
ISSUED AND OUTSTANDING) -- --
COMMON STOCK (NO PAR VALUE; 20,000,000 SHARES
AUTHORIZED, 8,233,985 SHARES ISSUED AND OUTSTANDING
AS OF APRIL 20, 1997 AND 8,233,318 SHARES ISSUED
AND OUTSTANDING AS OF DECEMBER 29, 1996) 1,000 1,000
ADDITIONAL PAID-IN CAPITAL 42,217,646 42,212,042
RETAINED EARNINGS 48,338,376 47,463,347
UNREALIZED GAIN ON SECURITIES AVAILABLE FOR SALE (NET OF TAX) 59,739 59,739
------------ ------------
TOTAL SHAREHOLDERS' EQUITY 90,616,761 89,736,128
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $277,212,239 $263,709,178
============ ============
</TABLE>
(1) DERIVED FROM FISCAL YEAR ENDED DECEMBER 29, 1996 AUDITED FINANCIAL
STATEMENTS. SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE> 4
SHOLODGE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
FOR THE SIXTEEN WEEKS ENDED APRIL 20, 1997 AND APRIL 21, 1996
<TABLE>
<CAPTION>
16 WEEKS ENDED
APRIL 20, APRIL 21,
1997 1996
(AS RESTATED)
(SEE NOTE C)
-----------------------------------
<S> <C> <C>
REVENUES:
HOTEL $ 20,694,148 $14,080,821
CONSTRUCTION AND DEVELOPMENT -- 514,234
CONSTRUCTION AND DEVELOPMENT - OTHER -- 200,000
FRANCHISING 1,181,884 1,064,992
MANAGEMENT 37,355 48,908
------------ -----------
TOTAL OPERATING REVENUES 21,913,387 15,908,955
COSTS AND EXPENSES:
OPERATING EXPENSES:
HOTEL 11,676,097 8,307,842
CONSTRUCTION AND DEVELOPMENT 170,869 690,499
FRANCHISING . 711,579 984,093
------------ -----------
TOTAL OPERATING EXPENSES 12,558,545 9,982,434
------------ -----------
GROSS OPERATING PROFIT 9,354,842 5,926,521
GENERAL AND ADMINISTRATIVE 757,645 954,238
DEPRECIATION AND AMORTIZATION 2,929,057 2,084,212
------------ -----------
NET OPERATING PROFIT (BEFORE INTEREST AND TAXES) 5,668,140 2,888,071
OTHER INCOME AND EXPENSES:
INTEREST EXPENSE 2,866,225 481,046
INTEREST INCOME 353,856 631,808
------------ -----------
NET INTEREST EXPENSE (INCOME) 2,512,369 -150,762
OTHER INCOME 223,202 175,981
------------ -----------
EARNINGS BEFORE INCOME TAXES MINORITY INTERESTS
AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE 3,378,973 3,214,814
INCOME TAXES 1,210,000 1,185,000
MINORITY INTEREST IN EARNINGS OF CONSOLIDATED
SUBSIDIARIES & PARTNERSHIPS 129,830 35,373
------------ -----------
EARNINGS BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE 2,039,143 1,994,441
CUMULATIVE EFFECT OF CHANGE IN AN ACCOUNTING
PRINCIPLE - NET OF $691,000 OF RELATED TAX EFFECT (1,164,114)
============ ===========
NET EARNINGS $ 875,029 $ 1,994,441
============ ===========
EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE
EARNINGS BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE $ 0.24 $ 0.24
CUMULATIVE EFFECT OF ACCOUNTING CHANGE $ (0.14)
NET EARNINGS $ 0.10 $ 0.24
PRO FORMA:
NET EARNINGS ASSUMING ACCOUNTING CHANGE IS
APPLIED RETROACTIVELY $ 2,039,143 $ 1,762,922
EARNINGS PER SHARE $ 0.24 $ 0.21
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING
PRIMARY AND FULLY DILUTED 8,354,236 8,396,361
------------ -----------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE> 5
SHOLODGE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIXTEEN WEEKS ENDED APRIL 20, 1997 AND APRIL 21, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
16 WEEKS ENDED
APRIL 20, APRIL 21,
1997 1996
(AS RESTATED)
(SEE NOTE C)
------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
EARNINGS BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE $ 2,039,143 $ 1,994,441
ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION 2,929,057 2,084,212
DECREASE IN DEFERRED INCOME TAXES -355,000 0
INCREASE IN MINORITY INTEREST IN EQUITY
OF CONSOLIDATED SUBSIDIARIES AND PARTNERSHIPS 129,830 35,373
ACCRETION OF DISCOUNT ON SECURITIES
HELD TO MATURITY -212,669 -196,240
CHANGES IN ASSETS AND LIABILITIES:
(INCREASE) DECREASE IN ACCOUNTS RECEIVABLE -822,061 586,380
INCREASE IN PREPAID EXPENSES -631,681 -282,735
DECREASE IN OTHER ASSETS 73,361 1,437,285
(DECREASE) INCREASE IN ACCOUNTS PAYABLE
AND ACCRUED EXPENSES -2,607,191 3,632,388
(DECREASE) INCREASE IN INCOME AND OTHER TAXES -842,810 173,701
- ---------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES -300,021 9,464,805
CASH FLOWS FROM INVESTING ACTIVITIES:
REPAYMENT FROM RELATED PARTIES--NET 0 42,418,759
SALE OF SECURITIES AVAILABLE FOR SALE 0 847,120
CAPITAL EXPENDITURES -16,202,094 -32,993,424
- ---------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES -16,202,094 10,272,455
CASH FLOWS FROM FINANCING ACTIVITIES:
INCREASE IN DEFERRED CHARGES -158,499 -332,346
PROCEEDS FROM DIRECT FINANCING LEASES 143,122 18,069
PROCEEDS FROM LONG-TERM DEBT 17,900,000 20,182,371
PAYMENTS ON LONG-TERM DEBT -744,736 -36,646,744
PAYMENTS ON CAPITALIZED LEASE OBLIGATIONS -166,665 -226,884
DISTRIBUTIONS TO MINORITY INTERESTS 0 -174,978
EXERCISE OF STOCK OPTIONS 5,604 25,192
- ---------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 16,978,826 -17,155,320
- ---------------------------------------------------------------------------------------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS $ 476,711 $ 2,581,940
===================================================================================================
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD $ 4,259,768 $ 2,444,990
===================================================================================================
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 4,736,479 $ 5,026,930
===================================================================================================
</TABLE>
See notes to consolidated financial statements.
<PAGE> 6
SHOLODGE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
A. BASIS OF PRESENTATION
The consolidated financial statements have been prepared by
the Company without audit. In Management's opinion, the
information and amounts furnished in this report reflect all
adjustments which are necessary for the fair presentation of
the financial position and results of operations for the
periods presented. All adjustments are of a normal and
recurring nature. It is suggested that these financial
statements be read in conjunction with the Company's Annual
Report or Form 10-K for the fiscal year ended December 29,
1996.
The fiscal year consists of a 52/53 week year ending the last
Sunday of the year.
The Company has historically reported lower earnings in the
first and fourth quarters of the year due to the seasonality
of the Company's business. The results of operations for the
quarters ended April 20, 1997 and April 21, 1996 are not
necessarily indicative of the operating results for the entire
year.
B. ACCOUNTING CHANGE
In the fourth quarter of fiscal 1997, the Company changed its
method of accounting for pre-opening costs, effective December
30, 1996, whereby pre-opening costs are expensed as incurred
rather than the previous method of capitalizing such costs and
amortizing them over a three-year period. The Company believes
the new method is preferable in the circumstances and conforms
to the predominant practice in the industry.
The cumulative effect of the change for periods prior to
fiscal 1997, net of income tax effect, is a reduction in net
earnings of $1,164,000 or $0.14 per share and was recognized
in the first quarter of 1997. The pro forma effect on the
first quarter of 1996, as if the change in accounting for
pre-opening costs had been adopted prior to fiscal 1996, would
be to increase hotel operating expenses by $521,000 and to
reduce depreciation and amortization expense by $152,000,
resulting in a reduction of earnings before income taxes of
$369,000 ($231,000 after income taxes) to $1,763,000, or $0.21
per share for the first quarter of 1996, from $1,994,000 or
$0.24 per share as previously reported.
C. RESTATEMENT
Subsequent to the issuance of the consolidated financial
statements for the first three quarters of fiscal 1997, the
Company's management determined that certain transactions,
primarily relating to the capitalization of various expenses,
the timing of recognition of profits on the sales of real
estate, and the recording of depreciation and amortization,
bad debts and income tax expense, were improperly recorded in
the consolidated financial statements. As a result, the
consolidated financial statements for the first three quarters
of fiscal 1997 have been restated from the amounts previously
reported.
A summary of the effects of the restatement, and the effect of
the accounting change discussed in Note B above, on the
consolidated financial statements as of and for the sixteen
weeks ended April 20, 1997 (amounts in thousands, except per
share data) is as follows:
<TABLE>
<CAPTION>
As Previously
Reported As Restated
-------- -----------
<S> <C> <C>
For the sixteen weeks ended April 20, 1997:
Hotel revenues $20,853 $20,694
Operating expenses:
Hotel 11,348 11,676
Construction and development -- 171
Franchising 639 712
Operating profit 10,086 9,355
General and administrative expense 603 758
Depreciation and amortization 3,249 2,929
Interest expense 2,705 2,866
Other income 375 223
Income taxes 1,565 1,210
Minority interests 58 130
Cumulative effect of accounting change -- 1,164
Net earnings 2,635 875
Earnings per common share:
Earnings before cumulative effect of
accounting change .32 .24
Cumulative effect of accounting change -- (.14)
Net earnings .32 .10
At April 20, 1997:
Accounts receivable-net 3,779 3,561
Construction contracts 252 197
Other current assets 530 518
Property and equipment 278,926 278,466
Accumulated depreciation & amortization (36,809) (36,838)
Deferred charges 9,976 9,971
Other assets 5,111 3,258
Accounts payable & accrued expenses 9,338 9,439
Deferred income taxes 4,702 3,656
Minority interests in subsidiaries 562 634
Retained earnings 50,098 48,338
</TABLE>
D. EARNINGS PER SHARE
The net earnings per share is computed by dividing net
earnings by the weighted average number of common and common
equivalent shares outstanding. Fully diluted earnings per
share is not presented as the after tax effects of the
conversion of the Company's subordinated convertible
debentures is antidilutive.
The Company will adopt Statement of Financial Accounting
Standards No. 128 "Earnings Per Share" for the year ended
December 28, 1997. This accounting pronouncement requires the
disclosure of basic and diluted earnings per share. The
Company believes that, upon adoption, diluted earnings per
share will approximate earnings per share as previously
reported. Because the concept of basic earnings per share does
not include the impact of common stock equivalents, such as
stock warrants and stock options, basic earnings per share
will be generally higher than diluted earnings per share.
<PAGE> 7
ShoLodge, Inc. and Subsidiaries Management's Discussion and Analysis of
Financial Condition and Results of Operations
Restatement and Accounting Change
The Company has restated previously issued financial results, for the
first three quarters of fiscal 1997. After the consolidated financial statements
were originally issued, the Company became aware of additional information
indicating that certain transactions had been improperly reported. The
restatements involve all non-cash items and relate primarily to capitalization
of various expenses; the timing of recognition of profits on the sales of real
estate; depreciation and amortization expense; increases of reserves for
doubtful accounts; and adjustment of income tax provisions.
Additionally, the Company has, effective December 30, 1996, changed its
accounting for pre-opening costs to expense such costs as incurred, rather than
capitalizing those expenditures and amortizing them over a three year period.
See Notes B and C of the Notes to the consolidated financial statements for a
discussion of the effects of the restatement and accounting change on the
Company's previously reported results of operations and financial position.
The comments included in this Management's Discussion and Analysis
have been revised to give effect to the restatement and accounting change.
<PAGE> 8
Results of Operations
For the Quarters Ended April 20, 1997 and April 21, 1996
Total operating revenues for the quarter ended April 20, 1997, were
$21.9 million, or 37.7% more than the total operating revenues for the first
quarter of 1996.
Revenues from hotel operations increased by $6.6 million, or 47.0%,
over the $14.1 million reported for the same period last year. For the 33 same
hotels opened for all of both quarterly periods, an increase of 3.7% in average
daily room rates, from $51.27 in first quarter 1996 to $53.19 in first quarter
1997, partially offset by a decline in average occupancy rates on these hotels
from 58.1% last year to 56.8% this year, resulted in a net increase in same
hotel revenues of 1.7%, from $13.8 million in first quarter 1996 to $14.1
million in first quarter 1997. The 13 hotels opened since the end of 1995
contributed $6.6 million to hotel operating revenues in first quarter this year,
compared to only $232,000 in first quarter 1995.
There were no revenues from regular construction and development in
first quarter this year, compared with $514,000 for the same period last year.
This was due to no outside construction projects by the company during the first
quarter of 1997 versus the final portion of one project completed in early first
quarter last year. Revenues from construction and development can vary widely
from quarter to quarter depending upon the volume of outside contract work and
the timing of those projects. No outside construction contracts are currently in
progress.
<PAGE> 9
Revenues of $200,000 from "Construction and development - other" in
first quarter 1996 represents a portion of profits not previously recognized on
installment sales. No revenues from this source is expected to recur subsequent
to 1996.
Franchising revenues increased by $117,000, or 11.0%, in first quarter
1997 from first quarter 1996. Room revenues of franchised inns increased by 8.8%
from first quarter 1996, due to an increase in the number of franchised inns,
resulting in an increase of $141,000 in fees based upon percentages of sales.
Management contract revenues represent only a small segment of the business.
Revenue from this source decreased by $12,000, or 23.6%, from the $49,000
reported for first quarter 1996.
Operating expenses from hotel operations for the first quarter of 1997
increased by $3.4 million, or 40.5%, from $8.3 million in first quarter 1996 to
$11.7 million in first quarter 1997, due primarily to operating expenses
associated with the 47.0% increase in hotel operating revenues. $173,000 of the
increase was due to the change in accounting for pre-opening costs to expense
these costs as incurred. Operating expenses as a percentage of operating
revenues for this activity decreased from 59.0% in first quarter 1996 to 56.4%
in first quarter 1997. The gross profit margin on same hotels increased from
41.1% in first quarter 1996 to 43.4% in first quarter 1997. The 13 hotels opened
since the end of 1995 produced a gross profit margin of 44.0% in first quarter
1997, due primarily to significantly higher average daily room rates than for
all hotels as a whole. However, the first quarter 1997 new hotel profit margin
was negatively impacted by $173,000 due to a change in accounting for
pre-opening costs in 1997 to expense these costs as incurred.
Costs and expenses of construction and development in first quarter
1996 were $690,000. One project was completed in early first quarter 1996. No
outside construction projects were in progress during first quarter 1997 and
none are currently under way. However, internal development expenses of $171,000
were incurred in the first quarter of 1997.
Franchising operating expenses decreased by $273,000, or 27.7%, from
first quarter 1996, due primarily to the elimination of royalty fees paid prior
to October 25, 1996 to an affiliate of Shoney's, Inc. (See 1996 Form 10-K
description of "Shoney's Transaction").
General and administrative expenses decreased by $197,000 from the
comparable quarter last year, due primarily to reduced professional fees.
Depreciation and amortization expense increased by $845,000, or 40.5%, over last
year's first quarter. This was due primarily to the 13 new hotels opened,
beginning in first quarter 1996. Amortization of pre-opening costs in the first
quarter of 1996 was $152,000, versus none in 1997 due to the accounting change
in 1997 to expense these costs as incurred.
<PAGE> 10
Interest expense increased by $2.4 million while interest income
decreased by $278,000 from first quarter 1996, for an increase of $2.7 million
in net interest expense. The primary cause of the decrease in interest income
was the elimination of interest earned from Suites of America on first mortgage
notes receivable, the balance of which was collected early in first quarter
1996; first quarter 1996 included $238,000 interest earned on these notes,
versus none in first quarter 1997. The increase in interest expense was due
primarily to the additional borrowings for the 12 hotels opened in 1996 and the
one hotel opened in January, 1997.
Other income increased by $47,000 from first quarter 1996 to first
quarter 1997. Revenue from this source varies widely from quarter to quarter due
to the nature of other (miscellaneous) income. Minority interest in earnings and
losses of consolidated subsidiaries and partnerships was $130,000 in first
quarter 1997 compared to $35,000 in first quarter 1996 due to more profitable
consolidated entities which include minority ownership, and to a negative
adjustment of $72,000 in minority interests receivable.
Liquidity and Capital Resources
Net cash provided from operations was $15.8 million in fiscal 1996,
$31.6 million in fiscal 1995, and $5.8 million in fiscal 1994. Fiscal 1995 was
an unusual year due to the AmeriSuites Transaction discussed in the Company's
fiscal 1996 Form 10-K. The Company currently has a $75 million unsecured
three-year revolving credit facility with a group of five banks, which became
effective April 30, 1997. The interest rate on this credit facility is at the
lenders' prime rate plus 0.25%, or two hundred basis points over the 30, 60, 90,
or 180 day LIBOR rate, at the Company's option. As of April 30, 1997 (the
initial funding date), the Company had $41.0 million outstanding under this
credit facility. The Company also has a $1.5 unsecured line of credit with
another bank, bearing interest at the lender's prime rate, maturing May 31,
1998. As of April 20, 1997, no borrowings were outstanding on this facility. In
November of 1996 the Company issued $33.2 million in senior subordinated notes
in the first series of notes issued under a $125 million shelf registration,
leaving $91.8 million available to issue in the future under this registration.
The Company requires capital principally for the construction and
acquisition of new lodging facilities and the purchase of equipment and
leasehold improvements. Capital expenditures for such purposes were $86.6
million in 1996 and $56.2 million in 1995.
The Company opened two Shoney's Inns and ten Sumner Suites hotels in
1996 and one Sumner Suites hotel thus far in 1997. Additionally, renovations of
several existing properties were completed in 1996 and several others are
scheduled for completion in fiscal 1997. The Company plans to develop and open
an additional eight to ten Sumner Suites hotels by the end of fiscal 1997 and an
additional eight to ten hotels by the end of 1998. A new corporate headquarters
building is also under construction and is scheduled for completion by mid-1997.
The Company expects that approximately
<PAGE> 11
$85.0 million in additional capital funds will be necessary through first
quarter 1998 to fulfill these plans.
The Company has principal payments totaling approximately $3.7 million
due under existing debt instruments through first quarter 1998. The Company
believes that a combination of net proceeds from future offerings under the $125
million registration, net cash provided from operations, borrowings under
existing or new credit facilities, proceeds from the sale of excess land and
available furniture, fixtures and equipment financing packages will be
sufficient to fund its scheduled development and debt repayments for the next
twelve months.
<PAGE> 12
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
6 (a) Exhibits -
11 Statement Re: Computation of per share earnings
18 Letter Re: Change in accounting principles
27 Financial Data Schedule (for SEC use only)
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 thereunto duly authorized.
ShoLodge, Inc.
Date: March 25, 1998 /s/ Leon Moore
--------------------------------------
Leon Moore
President, Chairman of the Board
and Director (Chief Executive Officer)
Date: March 25, 1998 /s/ Bob Marlowe
--------------------------------------
Bob Marlowe
Secretary, Treasurer and Director
(Chief Accounting Officer)
Date: March 25, 1998 /s/ Michael A. Corbett
--------------------------------------
Michael A. Corbett
Chief Financial Officer
<PAGE> 1
EXHIBIT 11
SHOLODGE, INC AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
PRIMARY AND ASSUMING FULL DILUTION
<TABLE>
<CAPTION>
16 WEEKS ENDED
-----------------------------
APRIL 20, APRIL 21,
1997 1996
-----------------------------
<S> <C> <C>
PRIMARY:
EARNINGS APPLICABLE TO COMMON STOCK (PRIMARY):
BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE $ 2,039,143 $ 1,994,441
CUMULATIVE EFFECT OF A CHANGE IN AN ACCOUNTING PRINCIPLE $(1,164,114)
----------- -----------
NET EARNINGS $ 875,029 $ 1,994,441
=========== ===========
SHARES:
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 8,354,236 8,396,361
=========== ===========
PRIMARY EARNINGS PER SHARE:
BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE $ 0.24 $ 0.24
CUMULATIVE EFFECT OF A CHANGE IN AN ACCOUNTING PRINCIPLE $ (0.14)
----------- -----------
NET EARNINGS $ 0.10 $ 0.24
=========== ===========
</TABLE>
Fully diluted earnings per share are not presented as the effect of the
conversion of the Company's subordinated convertible debentures is antidilutive
<PAGE> 1
March 24, 1998
ShoLodge, Inc.
130 Maple Drive North
Hendersonville, Tennessee 37075
Dear Sirs:
At your request, we have read the description included in your Quarterly Report
on Form 10-Q/A to the Securities and Exchange Commission for the quarter ended
April 20, 1997, of the facts relating to the write-off of pre-opening costs. We
believe, on the basis of the facts so set forth and other information furnished
to us by appropriate officials of the Company, that the accounting change
described in your Form 10-Q/A is to an alternative accounting principle that is
preferable under the circumstances.
We have not audited any consolidated financial statements of ShoLodge, Inc. and
its consolidated subsidiaries as of any date or for any period subsequent to
December 29, 1996. Therefore, we are unable to express, and we do not express,
an opinion on the facts set forth in the above-mentioned Form 10-Q/A, on the
related information furnished to us by officials of the Company, or on the
financial position, results of operations, or cash flows of ShoLodge, Inc. and
its consolidated subsidiaries as of any date or for any period subsequent to
December 29, 1996.
Yours truly,
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Nashville, Tennessee
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS FINANCIAL INFORMATION EXTRACTED FROM THE QUARTERLY
FINANCIAL STATEMENTS FOR THE QUARTER ENDED APRIL 20, 1997 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-28-1997
<PERIOD-END> APR-20-1997
<CASH> 4,736,479
<SECURITIES> 212,062
<RECEIVABLES> 3,935,429
<ALLOWANCES> 177,500
<INVENTORY> 0
<CURRENT-ASSETS> 10,115,760
<PP&E> 278,466,358
<DEPRECIATION> 36,838,064
<TOTAL-ASSETS> 277,212,239
<CURRENT-LIABILITIES> 14,422,554
<BONDS> 167,882,922
0
0
<COMMON> 1,000
<OTHER-SE> 90,615,761
<TOTAL-LIABILITY-AND-EQUITY> 277,212,239
<SALES> 20,694,148
<TOTAL-REVENUES> 21,913,687
<CGS> 0
<TOTAL-COSTS> 16,245,247
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,866,225
<INCOME-PRETAX> 3,249,143
<INCOME-TAX> 1,210,000
<INCOME-CONTINUING> 2,039,143
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (1,164,114)
<NET-INCOME> 875,029
<EPS-PRIMARY> .10
<EPS-DILUTED> .10
</TABLE>
