EX-99.2 3 d502269dex992.htm EX-99.2 EX-99.2

Exhibit 99.2

Unaudited Proforma Financial Statements

The following Unaudited Pro Forma Financial Statements are based on Red Lion Hotels Corporation’s (the “Company’s”) historical consolidated results of operations and financial position, adjusted to give effect to the asset sales described in Item 2.01 of this Form 8-K, as if they had been completed on March 31, 2018 with respect to the pro forma unaudited condensed balance sheet and as of January 1, 2017 with respect to the pro forma unaudited condensed statements of operations. This transaction does not represent discontinued operations under ASC 205, Presentation of Financial Statements.

The Unaudited Pro Forma Financial Statements and the accompanying notes should be read together with the Company’s audited consolidated financial statements and accompanying notes as of and for the year ended December 31, 2017, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 (“Annual Report”). The Unaudited Pro Forma Financial Statements may differ materially from the future financial position or results of operations due to a number of factors described in “Risk Factors” under Item 1A of Part 1 of our Annual Report and “Forward-Looking Statements” under Item 1 of Part 1 of our Annual Report.


Red Lion Hotels Corporation

Unaudited Pro Forma Condensed Consolidated Balance Sheet

March 31, 2018

 

     March 31, 2018     Less:
Bend and
Post Falls
Hotel
Assets(q)
    Less: Port
Angeles
Hotel
Assets Sold
    Add: Pro
Forma
Adjustments
    Pro Forma  

ASSETS

     (in thousands)  

Current assets:

          

Cash and cash equivalents

   $ 25,426     $ 2,380     $ 4,830 (a)    $ 645 (f)    $ 30,878  
           (3,178 )(h)   
           775 (g)   

Restricted cash

     13,681       (585       (775 )(g)      12,321  

Accounts receivable, net

     12,957       (98       (91 )(f)      12,768  

Accounts receivable from related parties

     1,870       (29         1,841  

Notes receivable, net

     1,239             1,239  

Inventories

     406           (44 )(f)      362  

Prepaid expenses and other

     5,911       (67       (60 )(f)      5,784  

Assets held for sale

     12,446       (12,446         0  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total current assets

     73,936       (10,845     4,830       (2,728     65,193  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Property and equipment, net

     155,849         (7,778 )(b)        148,071  

Goodwill

     9,404             9,404  

Intangible assets

     50,255             50,255  

Other assets, net

     4,858             4,858  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

   $ 294,302     $ (10,845   $ (2,948   $ (2,728   $ 277,781  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

LIABILITIES

          

Current liabilities:

          

Accounts payable

   $ 5,667     $ (60     $ (38 )(f)      5,569  

Accrued payroll and related benefits

     3,113       (64       (47 )(f)      3,002  

Other accrued liabilities

     5,551       (366     (34 )(c)      (136 )(f)      5,015  

Long-term debt, due within one year

     33,924       (10,509     (14,477 )(d       8,938  

Contingent consideration for acquisition due to related party, due within one year

     5,446             5,446  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total current liabilities

     53,701       (10,998     (14,511     (221     27,971  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Long-term debt, due after one year, net of debt issuance

     39,593             39,593  

Contingent consideration for acquisition due to related party, due after one year

             —    

Deferred income and other long term liabilities

     1,407       (0         1,407  

Deferred income taxes

     2,301             2,301  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

     97,002       (10,998     (14,511     (221     71,272  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Commitments and contingencies

          

STOCKHOLDERS’ EQUITY

          

Red Lion Hotels Corporation stockholders’ equity Preferred stock - 5,000,000 shares authorized; $0.01 par value; no shares issued or outstanding

     —            

Common stock - 50,000,000 shares authorized; $0.01 par value: 24,125,600 shares issued and outstanding

     241             241  

Additional paid-in capital, common stock

     178,318             178,318  

Accumulated deficit

     (13,390     1,902       11,563 (e)      (104 )(e)      (29
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Red Lion Hotels Corporation stockholders’

     165,169       1,902       11,563       (104     178,530  

Noncontrolling interest

     32,131       (1,749       (2,403 )(i)      27,979  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total stockholders’ equity

     197,300       153       11,563       (2,507     206,509  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 294,302     $ (10,845   $ (2,948   $ (2,728   $ 277,781  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


Red Lion Hotels Corporation

Unaudited Pro Forma Condensed Consolidated Statement of Operations

For Year Ended December 31, 2017

 

     As Reported     Less: Redding,
Eureka, Boise,
Richland,
Pasco, Bend,
and Post Falls
Hotel
Assets(m)
    Less: Port
Angeles Hotel
Asset Sold
    Pro Forma  
     (in thousands)  

Revenue:

        

Company operated hotels

   $ 119,186     $ (33,528   $ (7,230 )(k)    $ 78,428  

Other revenues from managed properties

     3,914           3,914  

Franchised hotels

     48,559       2,887       662 (l)      52,108  

Other

     267           267  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     171,926       (30,641     (6,568     134,717  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

        

Company operated hotels

     91,622       (27,018     (4,365 )(k)      60,239  

Other costs from managed properties

     3,914           3,914  

Franchised hotels

     34,794       1,758       403 (n)      36,954  

Other

     (9         (9

Depreciation and amortization

     18,824       (3,444     (549 )(k)      14,831  

Hotel facility and land lease

     4,806       (70       4,736  

Gain on asset dispositions, net

     (449     5         (444

General and administrative expenses

     15,792       1,142       177 (o)      17,110  

Acquisition and integration costs

     1,529           1,529  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     170,823       (27,627     (4,334     138,862  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     1,103       (3,014     (2,234     (4,145

Other income (expense):

        

Interest expense

     (8,252     1,714       542 (p)      (5,996

Other income, net

     818           818  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other income (expense)

     (7,434     1,714       542       (5,178
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before taxes

     (6,331     (1,301     (1,691     (9,323

Income tax expense

     (4,662         (4,662
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) from continuing operations

     (1,669     (1,301     (1,691     (4,661

Net (income) loss attributable to noncontrolling interest

     2,069       (110     644 (i)      2,602  

Net income (loss) attributable to RLH Corporation from continuing operations

   $ 400     $ (1,411   $ (1,048   $ (2,058
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings (loss) per share - basic

        

Income (loss) from continuing operations attributable to RLH Corporation

   $ 0.01         $ (0.09

Earnings (loss) per share - diluted

        

Income (loss) from continuing operations attributable to RLH Corporation

   $ 0.01         $ (0.09

Weighted average shares - basic

     23,669           23,699  

Weighted average shares - diluted

     24,253           23,699  


Red Lion Hotels Corporation

Unaudited Pro Forma Condensed Consolidated Statement of Operations

For Three Months March 31, 2018

 

     As Reported     Less: Redding,
Eureka, Boise,
Richland,
Pasco, Bend,
and Post Falls
Hotel
Assets(m)
    Less: Port
Angeles Hotel
Asset Sold
    Pro Forma  
     (in thousands)  

Revenue:

        

Company operated hotels

   $ 22,003     $ (3,924   $ (1,018 )(k)    $ 17,061  

Other revenues from managed properties

     893           893  

Franchised hotels

     10,123       221       62 (l)      10,406  

Other

     20           20  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     33,039       (3,703     (956     28,380  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

        

Company operated hotels

     19,547       (3,986     (834 )(k)      14,728  

Other costs from managed properties

     893           893  

Franchised hotels

     7,901       80       22 (n)      8,004  

Other

     (7         (7

Depreciation and amortization

     4,392         (130 )(k)      4,262  

Hotel facility and land lease

     1,204       (17       1,187  

Gain on asset dispositions, net

     (14,043     13,926 (i)        (117

General and administrative expenses

     3,486       221       46 (o)      3,753  

Acquisition and integration costs

     104         —         104  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     23,477       10,224       (895     32,807  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     9,562       (13,927     (61     (4,426

Other income (expense):

        

Interest expense

     (2,247     694       114 (p)      (1,439

Other income, net

     158           158  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other income (expense)

     (2,089     694       114       (1,281
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before taxes

     7,473       (13,233     53       (5,707

Income tax expense

     135           135  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) from continuing operations

     7,338       (13,233     53       (5,842

Net (income) loss attributable to noncontrolling interest

     (4,750     5,833       (50 )(i)      1,033  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to RLH Corporation from continuing operations

   $ 2,588     $ (7,400   $ 3     $ (4,810
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings (loss) per share - basic

        

Income (loss) from continuing operations attributable to RLH Corporation

   $ 0.11         $ (0.20

Earnings (loss) per share - diluted

        

Income (loss) from continuing operations attributable to RLH Corporation

   $ 0.10         $ (0.20

Weighted average shares - basic

     24,101           24,101  

Weighted average shares - diluted

     25,166           24,101  

Notes to Unaudited Pro Forma Condensed Financial Information

Note 1 — Basis of presentation

The historical consolidated financial statements have been adjusted in the unaudited pro forma condensed financial statements to give effect to pro forma events that are (1) directly attributable to the sale of the asset, (2) factually supportable and (3) with respect to the unaudited pro forma condensed statements of operations, expected to have a continuing impact on the results following the sale of the assets. These proforma financial statements also reflect the impact of the sales of hotels in Eureka, CA, Redding, CA, Boise, ID, Post Falls, ID, Richland, WA Pasco, WA and Bend, OR which were previously reported.

Note 2 — The transaction

On July 9, 2018 RL Port Angeles, LLC completed the sale of the Red Lion Hotel Port Angeles in Port Angeles, Washington to BGP PA, LLC, an Oregon limited liability company (the “Purchaser”). The purchase price for the hotel was $19.5 million, which was paid in cash at closing.


At closing, an affiliate of the Purchaser entered into a franchise agreement with Red Lion Hotels Franchising, Inc., a wholly owned subsidiary of Red Lion Hotels Corporation, to continue to operate the hotel under the Red Lion® brand. The franchise agreement provides for a 10 year term and the payment of monthly royalty and program fees equal to a percentage of the hotel’s gross room revenue. Early termination of the franchise agreement by Red Lion Franchising upon default of the franchisee, or termination of the agreement by the franchisee without cause, will require the franchisee to pay a termination fee.

RL Port Angeles, LLC is a wholly owned subsidiary of RL Venture, LLC. RL Venture, LLC is a variable interest entity in which Red Lion Hotels Corporation holds a 55% interest, and therefore the registrant consolidates the assets, liabilities and results of operations of this entity.

Note 3 — Pro forma adjustments

The following adjustments have been reflected in the unaudited pro forma condensed financial information:

 

  (a) Reflects the cash from the sale of assets less selling costs and repayment of debt.

 

  (b) Reflects the basis of the assets sold.

 

  (c) Reflects the capital leases assumed by the purchaser.

 

  (d) Represents the related debt payment made at the closing of the sale of the assets.

 

  (e) Reflects the gain on sale and/or settlement of the assets.

 

  (f) Reflects the settlement of all other assets and liabilities related to the Port Angeles assets sold.

 

  (g) Represents the release of restricted cash related to the assets sold.

 

  (h) Represents the proforma distribution of cash to the noncontrolling interest.

 

  (i) Reflects the removal of the noncontrolling interest portion of the transaction.

 

  (j) Removes the gain on the sales of the hotels in Eureka, CA, Redding, CA, Boise, ID, Richland, WA, and Pasco, WA which were reported in the three months ended March 31, 2018.

 

  (k) Reflects the elimination of direct revenues and expenses related to the Port Angeles assets sold.

 

  (l) Represents the franchise income that would have been received under the existing intercompany franchise agreement. Does not represent the impact of the franchise agreements with the new owners of the assets.

 

  (m) Impact of the sales of hotels in Eureka, CA, Redding, CA, Boise, ID, Post Falls, ID, Richland, WA, Pasco, WA and Bend, OR which were previously reported.

 

  (n) Represents the marketing and other costs to support the franchise income that would have been received under the existing intercompany franchise agreement. Does not represent the impact of the franchise agreements with the new owners of the assets.

 

  (o) Reflects the corporate and administrative expenses which were previously allocated to the assets sold.

 

  (p) Reflects interest expense on allocated debt related to assets sold.


  (q) Reflects the sales of the hotels in Bend, OR and Post Falls, ID as these transactions closed after March 31, 2018.

(d) Exhibits.