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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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): October 15, 1996
RED LION HOTELS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-13700 91-1634199
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(State of (Commission File Number) (IRS Employer
Incorporation) Identification No.)
4001 Main Street, Vancouver, Washington 98663
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(Address of principal executive offices) (Zip Code)
(360) 696-0001
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(Registrant's telephone number, including area code)
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(former name or former address, if changed since last report)
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Item 5. Other Events.
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On October 15, 1996, Red Lion Hotels, Inc. issued a press release,
a copy of which is attached hereto as Exhibit 99.1. The information contained in
such press release is incorporated by reference herein in its entirety.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
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(c) The following exhibits are filed as part of this Report:
99.1 Press Release of Red Lion Hotels, Inc. dated October 15,
1996.
2
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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 hereunto duly authorized.
Dated: October 16, 1996
RED LION HOTELS, INC.
By: /s/ Beth Ugoretz
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Name: Beth Ugoretz
Title: Senior Vice President,
General Counsel
3
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EXHIBIT INDEX
Exhibits.
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99.1 Press Release of Red Lion Hotels, Inc. dated October 15, 1996.
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EXHIBIT 99.1
RED LION HOTELS, INC. REPORTS 24 PERCENT
INCREASE IN THIRD QUARTER EARNINGS
FOR IMMEDIATE RELEASE
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VANCOUVER, WA., October 16, 1996 -- Red Lion Hotels, Inc. (NYSE:RL) today
reported its net income increased 24 percent to $15.1 million, or $.48 per
share, in the third quarter of 1996. In the comparable quarter of 1995, Red
Lion earned pro forma net income of $12.1 million, or $.39 per share.
For the nine months ended September 30, 1996, Red Lion's net income increased 28
percent to $33.9 million, or $1.08 per share. Red Lion earned pro forma net
income of $26.5 million, or $.85 per share, for the first nine months of 1995.
Increasing revenues and operating margins combined with lower net interest costs
contributed most of the earnings improvement in both periods.
"I am pleased to report another strong quarter for Red Lion," said David J.
Johnson, Red Lion's chairman and chief executive officer. "Our ongoing record of
operating and financial success continues to reflect Red Lion's commitment to
customer service, strong market position and a culture of high individual
performance."
Revenues for the third quarter of 1996 increased 9.5 percent to $141.8 million,
compared to pro forma revenues of $129.5 million for the third quarter of 1995.
Revenue per available room (REVPAR) increased 5.2 percent to $65.32. Red Lion's
average daily rate rose 7.1 percent to $82.39 in the third quarter of 1996,
while occupancy decreased 1.4 percentage points to 79.3 percent.
Gross operating profit margin improved to 40.1 percent in the third quarter of
1996, compared to 39.7 percent in the comparable period of 1995. Operating
income for the third quarter of 1996 increased to $29.4 million, compared to pro
forma operating income of $10.4 million in the third quarter of 1995. Expenses
resulting from Red Lion's formation and offering/1/ reduced the 1995 operating
income, but had no material impact on net income due to a related deferred tax
benefit which substantially offset those expenses.
During the third quarter of 1996, Red Lion completed the previously announced
acquisitions of hotels in Houston, Texas and Modesto, California. These
acquisitions did not materially affect Red Lion's third quarter results.
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Page Two
October 16, 1996
For the first nine months of 1996, revenues increased 8.0 percent to $399.8
million, compared to pro forma revenues of $370.3 million for the comparable
period of 1995. REVPAR for the first nine months of 1996 increased 4.9 percent
to $59.59. Red Lion's average daily rate for the first nine months increased
6.7 percent to $80.72, and occupancy declined 1.3 percentage points to 73.8
percent.
Gross operating profit margin for the first nine months of 1996 increased to
37.3 percent, compared to 36.3 percent in the comparable period of 1995.
Operating income increased to $68.1 million for the first nine months of 1996,
compared to pro forma operating income of $42.8 million in the comparable period
of 1995.
Headquartered in Vancouver, Washington, Red Lion Hotels, Inc. is a leading full
service hospitality company operating 56 hotels containing 14,859 rooms in the
western United States. In September 1996, Red Lion agreed to be acquired by
Doubletree Corporation in a cash-and-stock merger valued at approximately $1.2
billion. The transaction is expected to close prior to year-end 1996.
Note: Statements in this press release which are not strictly historical are
"forward-looking" and are subject to risks and uncertainties which affect the
Company's business. Those uncertainties would include such factors as general
business conditions and growth in the hospitality industry, the balance between
supply and demand for hotel rooms, competition for hotel acquisitions, continued
access to financial markets and other factors as described in the Company's
filings with the Securities and Exchange Commission.
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CONTACT: Randall Oliver, Investor Relations (360) 750-4347
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RED LION HOTELS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share data)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
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1996 1995 1996 1995
ACTUAL PRO FORMA (1) ACTUAL PRO FORMA (1)
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<S> <C> <C> <C> <C>
REVENUES
Rooms $ 88,572 $ 79,248 $ 236,017 $ 215,166
Food and beverage 38,889 38,128 120,278 118,921
Other 14,377 12,094 43,510 36,208
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Total revenues 141,838 129,470 399,805 370,295
OPERATING COSTS AND EXPENSES
Departmental direct expenses
Rooms 20,428 17,941 57,419 51,475
Food and beverage 30,715 29,587 94,349 93,060
Other 4,920 4,578 14,999 13,738
Property indirect expenses 28,841 26,023 84,004 77,583
Other costs 8,303 8,882 26,331 25,836
Depreciation and amortization 5,470 4,646 14,637 14,530
Payments due to owners of managed
hotels 13,805 12,733 39,983 36,591
Expenses resulting from Formation and
Offering -- 14,662 -- 14,662
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OPERATING INCOME 29,356 10,418 68,083 42,820
EQUITY (LOSS) IN EARNINGS OF
UNCONSOLIDATED JOINT VENTURES (146) 196 1,277 1,885
INTEREST EXPENSE, NET (3,987) (4,572) (11,766) (14,613)
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INCOME BEFORE JOINT VENTURERS'
INTEREST 25,223 6,042 57,594 30,092
INCOME ATTRIBUTABLE TO JOINT
VENTURERS' INTERESTS (376) (304) (1,354) (463)
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INCOME BEFORE INCOME TAXES 24,847 5,738 56,240 29,629
INCOME TAX BENEFIT (EXPENSE) (9,739) 6,409 (22,296) (3,147)
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NET INCOME $ 15,108 $ 12,147 $ 33,944 $ 26,482
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EARNINGS PER COMMON SHARE $0.48 $0.39 $1.08 $0.85
=========== =========== =========== ===========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 31,312,600 31,312,500 31,312,500 31,312,500
=========== =========== =========== ===========
</TABLE>
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<TABLE>
<CAPTION>
AT SEPTEMBER 30,
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1996 1995
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<S> <C> <C>
SUMMARY OPERATING DATA
Number of Hotels: (2)
Owned Hotels 24 21
Management Contracts 15 15
Leased Hotels 17 17
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Total 56 53
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Number of Rooms: (2)
Owned Hotels 5,983 5,117
Management Contracts 4,887 4,777
Leased Hotels 3,989 3,989
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Total 14,859 13,883
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NINE MONTHS ENDED
SEPTEMBER 30,
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1996 1995
ACTUAL PRO FORMA (1)
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EBITDA (3) $85,627 $59,872
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</TABLE>
(1) On August 1, 1995, Red Lion, a California Limited partnership (the
"Partnership") operating 53 hotels, contributed substantially all of its
assets (excluding 17 hotels, the "Leased Hotels," and certain other assets)
and certain liabilities to Red Lion Hotels, Inc. (the "Formation"). Also
effective August 1, 1995, Red Lion Hotels, Inc. entered into a long-term
master lease with the Partnership for the Leased Hotels. Pro forma results
reported above represent the actual results of Red Lion Hotels, Inc. since
March 1, 1995, plus the Partnership's historical results for the first
quarter of 1995, which have been adjusted to give effect to the Formation,
the leasing of the Leased Hotels and the repayment and refinancing of
substantially all debt with borrowings under a new credit facility and the
net proceeds of the public offering (the "Offering"), assuming that such
events were completed on January 1, 1995.
Income taxes have been provided on a pro forma basis assuming an effective
tax rate of 40%. Common shares outstanding is based on the number of shares
of common stock outstanding after the Offering (including 1,312,500 shares
issued to cover over allotments) plus 350,000 shares issued in connection
with the termination of an incentive unit plan.
(2) The information reflects the 17 Red Lion Leased Hotels, which were owned
prior to August 1, 1995, as if the hotels were leased on each date
presented.
(3) EBITDA represents earnings before interest expense, income taxes, income
(loss) attributable to joint venturers' interest, depreciation and
amortization and certain other non-cash charges. EBITDA is not intended to
represent cash flow from operations as defined by GAAP, 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 GAAP. EBITDA is
included herein because management believes that certain investors find it
to be a useful tool for measuring the ability to service debt.
