Restatement of Previously Issued Consolidated Financial Statements

9 Months Ended

Sep. 30, 2014

Restatement of Previously Issued Consolidated Financial Statements

Restatement of Previously Issued Consolidated Financial Statements

Note 1A — Restatement of Previously Issued Consolidated Financial Statements

On August 1, 2014, we entered into a purchase and sale agreement for the sale of the Country Inn & Suites and three adjacent land parcels totaling 5.64 acres in San Antonio, Texas for $7.9 million.  The sale closed on October 21, 2014.  During the three months ended September 30, 2014, we recorded an estimated impairment loss of $3.6 million related to the transaction, which was intended to, but did not fully reflect the expected loss on the sale. In the fourth quarter of 2014, we determined that the loss on the sale was $8.2 million and we had underestimated the amount of the impairment loss in the third quarter of 2014 by $4.6 million.  As a result, we are restating our unaudited consolidated financial statements to reflect an increase in the Loss on Impairment of Assets from $3.6 million to $8.2 million for the three months ended September 30, 2014 and an increase in the Loss on Impairment of Assets from $4.3 million to $8.9 million for the nine months ended September 30, 2014.  Additionally, Land Held for Development reflected on the Unaudited Consolidated Balance Sheet has been reduced from $13.8 million to $9.2 million at September 30, 2014 to reflect the impairment of the assets related to the sale transaction.

In addition to the restatement of our unaudited consolidated financial statements, we have restated the following notes to the unaudited consolidated financial statements to reflect certain changes noted above:

· Note 3 — Hotel Property Acquisitions

· Note 5 — Assets Held for Sale

· Note 10 — Loss on Impairment of Assets

· Note 15 — Earnings per Share

The following tables present the effect of the adjustments to our previously reported unaudited consolidated financial statements for the three and nine months ended September 30, 2014 (in thousands, except per share amounts).

	Condensed Balance Sheets as of September 30, 2014
	(As Reported)			Adjustments			(As Restated)
Land held for development	$	13,748		$	(4,573	)	$	9,175
Total assets	1,472,626			(4,573		)	1,468,053
Accumulated deficit and distributions	(93,736		)	(4,517		)	(98,253		)
Total stockholders’ equity	791,768			(4,517		)	787,251
Noncontrolling interests in operating partnership	7,595			(56		)	7,539
Total equity	799,363			(4,573		)	794,790
Total liabilities and equity	1,472,626			(4,573		)	1,468,053

	Condensed Consolidated Statements of Operations
	Three Months Ended September 30, 2014								Nine Months Ended September 30, 2014
	(As Reported)		Adjustments			(As Restated)			(As Reported)		Adjustments			(As Restated)
Loss on impairment of assets	$	3,614	$	4,573		$	8,187		$	4,274	$	4,573		$	8,847
Net income	8,280		(4,573		)	3,707			20,765		(4,573		)	16,192
Income (loss) attributable to non-controlling interests:
Operating partnership	50		(56		)	(6		)	101		(56		)	45
Net income attributable to Summit Hotel Properties, Inc.	8,230		(4,517		)	3,713			20,663		(4,517		)	16,146
Net income (loss) attributable to common stockholders	4,083		(4,517		)	(434		)	8,222		(4,517		)	3,705
Basic and diluted net income (loss) per share	0.05		(0.06		)	(0.01		)	0.10		(0.06		)	0.04

	Condensed Statements of Cash Flows for the Nine Months Ended September 30, 2014
	(As Reported)		Adjustments			(As Restated)
Net income	$	20,765	$	(4,573	)	$	16,192
Adjustments to reconcile net income to net cash provided by operating activities:
Loss on impairment of assets	4,674		4,573			9,247
Net cash provided by operating activities	79,013		—			79,013