##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2010
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number: 001-13957
 Red Lion Hotels Corporation
 (Exact name of registrant as specified in its charter)
 Washington(State or other jurisdiction of 
incorporation or organization)
    
    91-1032187(I.R.S. Employer
Identification No.)201 W. North River Drive, Suite 100 Spokane Washington(Address of principal executive offices)
    
    99201(Zip Code)
 (509) 459-6100
 þ o
 o o
  Large accelerated filer oAccelerated filer þNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company o o þ




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##### 



TABLE OF CONTENTS
 Item No.
    
    Description
    
    Page No.PART I  FINANCIAL INFORMATIONItem 1
    
    Financial Statements (unaudited):Consolidated Balance Sheets September 30, 2010 and December 31, 2009
    
    3Consolidated Statements of Operations Three and Nine Months Ended September 30, 2010
and 2009
    
    4Consolidated Statements of Cash Flows Nine Months Ended September 30, 2010 and 2009
    
    5Condensed Notes to Consolidated Financial Statements
    
    6Item 2
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    14Item 3
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    25Item 4
    
    Controls and Procedures
    
    26PART II  OTHER INFORMATIONItem 1
    
    Legal Proceedings
    
    27Item 1A.
    
    Risk Factors
    
    27Item 2
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    27Item 3
    
    Defaults Upon Senior Securities
    
    27Item 4
    
    Reserved
    
    27Item 5
    
    Other Information
    
    27Item 6
    
    Exhibits
    
    28Signatures
    
    29EX-31.1EX-31.2EX-32.1EX-32.2
  2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 
 RED LION HOTELS CORPORATION
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
September 30, 2010 and December 31, 2009
 September 30,
    
    
    December 31,2010
    
    
    2009(In thousands, except share data)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    3,046
    
    
    $
    3,881Restricted cash
    
    
    5,643
    
    
    
    3,801Accounts receivable, net
    
    
    8,626
    
    
    
    6,993Inventories
    
    
    1,329
    
    
    
    1,341Prepaid expenses and other
    
    
    2,564
    
    
    
    3,199Assets of discontinued operations
    
    
    
    
    
    
    61Total current assets
    
    
    21,208
    
    
    
    19,276Property and equipment, net
    
    
    278,340
    
    
    
    285,601Goodwill
    
    
    28,042
    
    
    
    28,042Intangible assets, net
    
    
    10,067
    
    
    
    10,199Other assets, net
    
    
    7,211
    
    
    
    7,337Noncurrent assets of discontinued operations
    
    
    
    
    
    
    181Total assets
    
    $
    344,868
    
    
    $
    350,636LIABILITIESCurrent liabilities:Accounts payable
    
    $
    9,570
    
    
    $
    6,079Accrued payroll and related benefits
    
    
    3,417
    
    
    
    2,402Accrued interest payable
    
    
    263
    
    
    
    318Advance deposits
    
    
    725
    
    
    
    496Other accrued expenses
    
    
    10,638
    
    
    
    7,910Revolving credit facility, due within one year
    
    
    16,000
    
    
    
    Current portion of long-term debt
    
    
    20,481
    
    
    
    3,171Liabilities of discontinued operations
    
    
    
    
    
    
    29Total current liabilities
    
    
    61,094
    
    
    
    20,405Revolving credit facility
    
    
    
    
    
    
    26,000Long-term debt, due after one year
    
    
    57,483
    
    
    
    77,151Deferred income
    
    
    8,068
    
    
    
    8,638Deferred income taxes
    
    
    11,341
    
    
    
    12,595Debentures due Red Lion Hotels Capital Trust
    
    
    30,825
    
    
    
    30,825Total liabilities
    
    
    168,811
    
    
    
    175,614Commitments and contingenciesSTOCKHOLDERS EQUITYRed Lion Hotels Corporation stockholders equityPreferred 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;
18,578,423 and 18,180,104 shares issued and outstanding
    
    
    186
    
    
    
    182Additional paid-in capital, common stock
    
    
    144,901
    
    
    
    142,479Retained earnings
    
    
    30,957
    
    
    
    32,346Total Red Lion Hotels Corporation stockholders equity
    
    
    176,044
    
    
    
    175,007Noncontrolling interest
    
    
    13
    
    
    
    15Total equity
    
    
    176,057
    
    
    
    175,022Total liabilities and stockholders equity
    
    $
    344,868
    
    
    $
    350,636
  3




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##### Table of Contents



RED LION HOTELS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Three and Nine Months Ended September 30, 2010 and 2009
 Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009(In thousands, except per share data)Revenue:Hotels
    
    $
    46,221
    
    
    $
    44,756
    
    
    $
    115,473
    
    
    $
    115,929Franchise
    
    
    999
    
    
    
    1,046
    
    
    
    2,446
    
    
    
    2,845Entertainment
    
    
    2,048
    
    
    
    3,861
    
    
    
    6,866
    
    
    
    8,968Other
    
    
    575
    
    
    
    592
    
    
    
    1,815
    
    
    
    1,986Total revenues
    
    
    49,843
    
    
    
    50,255
    
    
    
    126,600
    
    
    
    129,728Operating expenses:Hotels
    
    
    31,652
    
    
    
    30,233
    
    
    
    86,864
    
    
    
    85,357Franchise
    
    
    789
    
    
    
    646
    
    
    
    2,177
    
    
    
    1,764Entertainment
    
    
    1,545
    
    
    
    2,987
    
    
    
    5,544
    
    
    
    7,375Other
    
    
    438
    
    
    
    528
    
    
    
    1,275
    
    
    
    1,609Depreciation and amortization
    
    
    5,216
    
    
    
    5,322
    
    
    
    15,590
    
    
    
    15,544Hotel facility and land lease
    
    
    1,987
    
    
    
    1,750
    
    
    
    5,512
    
    
    
    5,271Gain on asset dispositions, net
    
    
    (118
    )
    
    
    (85
    )
    
    
    (273
    )
    
    
    (140
    )Undistributed corporate expenses
    
    
    1,431
    
    
    
    1,540
    
    
    
    5,237
    
    
    
    4,526Total expenses
    
    
    42,940
    
    
    
    42,921
    
    
    
    121,926
    
    
    
    121,306Operating income
    
    
    6,903
    
    
    
    7,334
    
    
    
    4,674
    
    
    
    8,422Other income (expense):Interest expense
    
    
    (2,282
    )
    
    
    (2,268
    )
    
    
    (6,832
    )
    
    
    (6,297
    )Other income, net
    
    
    265
    
    
    
    49
    
    
    
    312
    
    
    
    111Income (loss) before taxes
    
    
    4,886
    
    
    
    5,115
    
    
    
    (1,846
    )
    
    
    2,236Income tax expense (benefit)
    
    
    1,729
    
    
    
    1,723
    
    
    
    (843
    )
    
    
    589Net Income (loss) from continuing operations
    
    
    3,157
    
    
    
    3,392
    
    
    
    (1,003
    )
    
    
    1,647Discontinued OperationsIncome (loss) from discontinued business units,
net of income tax benefit (expense) of $36 and $(128)
for the three months ended and $181 and $(97) for the
nine months ended September 30, 2010 and 2009, respectively
    
    
    (68
    )
    
    
    248
    
    
    
    (351
    )
    
    
    188Income (loss) on disposal of discontinued business units, net of
income tax benefit (expense) of $20 and $0 for the three months
ended
and $20 and $3 for the nine months ended September 30, 2010
and 2009, respectively
    
    
    (38
    )
    
    
    
    
    
    
    (38
    )
    
    
    (5
    )Net income (loss) from discontinued operations
    
    
    (106
    )
    
    
    248
    
    
    
    (389
    )
    
    
    183Net Income (loss)
    
    
    3,051
    
    
    
    3,640
    
    
    
    (1,392
    )
    
    
    1,830Net income (loss) attributable to noncontrolling interest
    
    
    (7
    )
    
    
    (5
    )
    
    
    3
    
    
    
    (5
    )Net income (loss) attributable to Red Lion Hotels
Corporation
    
    $
    3,044
    
    
    $
    3,635
    
    
    $
    (1,389
    )
    
    $
    1,825Earnings per share  BasicNet income (loss) from continuing operations
    
    $
    0.17
    
    
    $
    0.19
    
    
    $
    (0.05
    )
    
    $
    0.09Net income (loss) from discontinued operations
    
    $
    (0.01
    )
    
    $
    0.01
    
    
    $
    (0.02
    )
    
    $
    0.01Net income (loss) attributable to Red Lion Hotels Corporation
    
    $
    0.16
    
    
    $
    0.20
    
    
    $
    (0.07
    )
    
    $
    0.10Weighted average shares -basic
    
    
    18,514
    
    
    
    18,157
    
    
    
    18,402
    
    
    
    18,089Earnings per share  DilutedNet income (loss) from continuing operations
    
    $
    0.17
    
    
    $
    0.19
    
    
    $
    (0.05
    )
    
    $
    0.09Net income (loss) from discontinued operations
    
    $
    (0.01
    )
    
    $
    0.01
    
    
    $
    (0.02
    )
    
    $
    0.01Net income (loss) attributable to Red Lion Hotels Corporation
    
    $
    0.16
    
    
    $
    0.20
    
    
    $
    (0.07
    )
    
    $
    0.10Weighted average shares -diluted
    
    
    18,710
    
    
    
    18,306
    
    
    
    18,402
    
    
    
    18,119
  4




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RED LION HOTELS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Nine Months Ended September 30, 2010 and 2009
 Nine months ended September 30,2010
    
    
    2009(In thousands)Operating activities:Net income (loss)
    
    $
    (1,392
    )
    
    $
    1,830Adjustments to reconcile net income (loss) to net cash provided by operating activities:Depreciation and amortization
    
    
    15,624
    
    
    
    15,603Gain on disposition of property, equipment and other assets, net
    
    
    (273
    )
    
    
    (132
    )Impairment Loss
    
    
    58
    
    
    
    Deferred income tax provision (benefit)
    
    
    (1,254
    )
    
    
    872Equity in investments
    
    
    11
    
    
    
    16Stock based compensation expense
    
    
    1,341
    
    
    
    941Provision for doubtful accounts
    
    
    196
    
    
    
    103Change in current assets and liabilities:Restricted cash
    
    
    (1,842
    )
    
    
    178Accounts receivable
    
    
    (2,171
    )
    
    
    1,531Inventories
    
    
    21
    
    
    
    123Prepaid expenses and other
    
    
    680
    
    
    
    (679
    )Accounts payable
    
    
    3,490
    
    
    
    (5,344
    )Accrued payroll and related benefits
    
    
    1,252
    
    
    
    (1,011
    )Accrued interest payable
    
    
    (55
    )
    
    
    1Deferred income
    
    
    
    
    
    
    900Other accrued expenses and advance deposits
    
    
    2,713
    
    
    
    4,316Net cash (used in) provided by operating activities
    
    
    18,399
    
    
    
    19,248Investing activities:Purchases of property and equipment
    
    
    (7,902
    )
    
    
    (15,106
    )Proceeds from disposition of property and equipment
    
    
    100
    
    
    
    16Advances to Red Lion Hotels Capital Trust
    
    
    (27
    )
    
    
    (27
    )Other, net
    
    
    395
    
    
    
    (1,021
    )Net cash (used in) provided by investing activities
    
    
    (7,434
    )
    
    
    (16,138
    )Financing activities:Borrowings on revolving credit facility
    
    
    10,500
    
    
    
    5,000Repayment of revolving credit facility
    
    
    (20,500
    )
    
    
    (19,000
    )Repayment of long-term debt
    
    
    (2,358
    )
    
    
    (2,237
    )Proceeds from stock options exercised
    
    
    800
    
    
    
    Proceeds from issuance of common stock under employee stock
purchase plan
    
    
    130
    
    
    
    119Additions to deferred financing costs
    
    
    (292
    )
    
    
    (153
    )Common stock redeemed
    
    
    (84
    )
    
    
    (11
    )Net cash (used in) provided by financing activities
    
    
    (11,804
    )
    
    
    (16,282
    )Net cash in discontinued operations
    
    
    4
    
    
    
    (15
    )Change in cash and cash equivalents:Net (decrease) increase in cash and cash equivalents
    
    
    (835
    )
    
    
    (13,187
    )Cash and cash equivalents at beginning of period
    
    
    3,881
    
    
    
    18,216Cash and cash equivalents at end of period
    
    $
    3,046
    
    
    $
    5,029Supplemental disclosure of cash flow information:Cash paid during periods for:Income taxes
    
    $
    
    
    
    $
    Interest on long-term debt
    
    $
    6,777
    
    
    $
    6,752Cash received during periods for:Income taxes
    
    $
    672
    
    
    $
    Noncash investing activities:Conversion of accounts receivable to note receivable
    
    $
    377
    
    
    $
    
  5




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##### Table of Contents



RED LION HOTELS CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. Organization
      2. Basis of Presentation
     6




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##### Table of Contents



3. Liquidity, Financial Condition and Risks of Refinancing Debt
    4. Property and Equipment
  September 30,
    
    
    December 31,2010
    
    
    2009Buildings and equipment
    
    $
    302,420
    
    
    $
    295,704Furniture and fixtures
    
    
    46,822
    
    
    
    46,226Landscaping and land improvements
    
    
    9,022
    
    
    
    8,959358,264
    
    
    
    350,889Less accumulated depreciation and
amortization
    
    
    (148,667
    )
    
    
    (134,063
    )209,597
    
    
    
    216,826Land
    
    
    63,430
    
    
    
    66,146Construction in progress
    
    
    5,313
    
    
    
    2,629$
    278,340
    
    
    $
    285,601
 5. Notes Payable to Bank and Long-Term Debt
     7




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##### Table of Contents



6. Business Segments
  Three months ended September 30,
    
    Nine months ended September 30,2010
    
    2009
    
    2010
    
    2009Revenues:Hotels
    
    $
    46,221
    
    
    $
    44,756
    
    
    $
    115,473
    
    
    $
    115,929Franchise
    
    
    999
    
    
    
    1,046
    
    
    
    2,446
    
    
    
    2,845Entertainment
    
    
    2,048
    
    
    
    3,861
    
    
    
    6,866
    
    
    
    8,968Other
    
    
    575
    
    
    
    592
    
    
    
    1,815
    
    
    
    1,986$
    49,843
    
    
    $
    50,255
    
    
    $
    126,600
    
    
    $
    129,728Operating
income (loss):Hotels
    
    $
    8,383
    
    
    $
    8,241
    
    
    $
    10,055
    
    
    $
    12,101Franchise
    
    
    (97
    )
    
    
    319
    
    
    
    (224
    )
    
    
    824Entertainment
    
    
    416
    
    
    
    777
    
    
    
    1,049
    
    
    
    1,279Other
    
    
    (1,799
    )
    
    
    (2,003
    )
    
    
    (6,206
    )
    
    
    (5,782
    )$
    6,903
    
    
    $
    7,334
    
    
    $
    4,674
    
    
    $
    8,422
 September 30,
    
    December 31,2010
    
    2009Identifiable
assets:Hotels
    
    $
    300,409
    
    
    $
    300,880Franchise
    
    
    17,308
    
    
    
    16,853Entertainment
    
    
    5,094
    
    
    
    5,143Other
    
    
    22,057
    
    
    
    27,518$
    344,868
    
    
    $
    350,394
 7. Earnings (Loss) Per Share
  8




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Three months ended September 30,
    
    Nine months ended September 30,2010
    
    2009
    
    2010
    
    2009Numerator  basic and diluted:Net income (loss) from continuing operations
    
    $
    3,157
    
    
    $
    3,392
    
    
    $
    (1,003
    )
    
    $
    1,647Net income (loss) from discontinued operations
    
    $
    (106
    )
    
    $
    248
    
    
    $
    (389
    )
    
    $
    183Net income (loss) attributable to noncontrolling interest
    
    
    (7
    )
    
    
    (5
    )
    
    
    3
    
    
    
    (5
    )Net income (loss) attributable to Red Lion Hotels Corporation
    
    $
    3,044
    
    
    $
    3,635
    
    
    $
    (1,389
    )
    
    $
    1,825Denominator:Weighted average shares  basic
    
    
    18,514
    
    
    
    18,157
    
    
    
    18,402
    
    
    
    18,089Weighted average shares  diluted
    
    
    18,710
    
    
    
    18,306
    
    
    
    18,402
    
    
    
    18,119Earnings per share from continuing operationsBasic
    
    $
    0.17
    
    
    $
    0.19
    
    
    $
    (0.05
    )
    
    $
    0.09Diluted
    
    $
    0.17
    
    
    $
    0.19
    
    
    $
    (0.05
    )
    
    $
    0.09Earnings per share from discontinued operationsBasic
    
    $
    (0.01
    )
    
    $
    0.01
    
    
    $
    (0.02
    )
    
    $
    0.01Diluted
    
    $
    (0.01
    )
    
    $
    0.01
    
    
    $
    (0.02
    )
    
    $
    0.01Earnings per share attributable to Red Lion Hotels Corporation:Basic
    
    $
    0.16
    
    
    $
    0.20
    
    
    $
    (0.07
    )
    
    $
    0.10Diluted
    
    $
    0.16
    
    
    $
    0.20
    
    
    $
    (0.07
    )
    
    $
    0.10
   8. Change in Executive Officers
  9. Stock Based Compensation
   9




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##### Table of Contents



WeightedAverageNumber
    
    
    Exerciseof Shares
    
    
    PriceBalance, December 31, 2009
    
    
    1,194,460
    
    
    $
    7.36Options granted
    
    
    5,864
    
    
    $
    7.10Options exercised
    
    
    (150,754
    )
    
    $
    5.32Options forfeited
    
    
    (256,487
    )
    
    $
    9.22Balance, September 30, 2010
    
    
    793,083
    
    
    $
    7.14Exercisable, September 30, 2010
    
    
    676,464
    
    
    $
    6.80
  WeightedAverage
    
    
    
    
    
    Weighted
    
    Aggregate
    
    
    
    
    
    Weighted
    
    AggregateRange of
    
    
    
    
    
    Remaining
    
    
    
    
    
    Average
    
    Intrinsic
    
    
    
    
    
    Average
    
    IntrinsicExercise
    
    Number
    
    Contractual
    
    Expiration
    
    Exercise
    
    Value(1)
    
    Number
    
    Exercise
    
    Value(1)Prices
    
    Outstanding
    
    Life (Years)
    
    Date
    
    Price
    
    (in thousands)
    
    Exercisable
    
    Price
    
    (in thousands)$5.10 - 6.07
    
    
    404,009
    
    
    
    1.25
    
    
    
    2011-2014
    
    
    $
    5.30
    
    
    $
    865,461
    
    
    
    404,009
    
    
    $
    5.30
    
    
    $
    865,4617.10 - 7.80
    
    
    141,560
    
    
    
    2.01
    
    
    
    2011-2020
    
    
    
    7.45
    
    
    
    1,994
    
    
    
    123,196
    
    
    
    7.46
    
    
    
    8.74 - 8.80
    
    
    166,836
    
    
    
    7.60
    
    
    
    2018
    
    
    
    8.76
    
    
    
    
    
    
    
    86,159
    
    
    
    8.76
    
    
    
    10.88
    
    
    5,974
    
    
    
    5.82
    
    
    
    2016
    
    
    
    10.88
    
    
    
    
    
    
    
    5,974
    
    
    
    10.88
    
    
    
    12.21-13.00
    
    
    74,704
    
    
    
    6.39
    
    
    
    2016-2017
    
    
    
    12.61
    
    
    
    
    
    
    
    57,126
    
    
    
    12.61
    
    
    
    793,083
    
    
    
    3.24
    
    
    
    2011-2020
    
    
    $
    7.14
    
    
    $
    867,455
    
    
    
    676,464
    
    
    $
    6.80
    
    
    $
    865,461
   10




---



##### Table of Contents



WeightedAverageNumber
    
    
    Grant Dateof Shares
    
    
    ValueBalance, December 31, 2009
    
    
    239,318
    
    
    $
    5.24Granted
    
    
    147,039
    
    
    $
    7.10Vested
    
    
    (124,622
    )
    
    $
    5.32Forfeited
    
    
    (32,188
    )
    
    $
    5.99Balance, September 30,
2010
    
    
    229,547
    
    
    $
    6.29
   10. Fair Value of Financial Instruments
  September 30,
    
    December 31,2010
    
    2009Carrying
    
    Fair
    
    Carrying
    
    FairAmount
    
    Value
    
    Amount
    
    ValueFinancial assets:Cash and cash equivalents and restricted cash
    
    $
    8,689
    
    
    $
    8,689
    
    
    $
    7,682
    
    
    $
    7,682Accounts receivable
    
    $
    8,626
    
    
    $
    8,626
    
    
    $
    6,993
    
    
    $
    6,993Financial liabilities:Current liabilities, excluding debt and
discontinued operations
    
    $
    24,613
    
    
    $
    24,613
    
    
    $
    17,205
    
    
    $
    17,205Total debt
    
    $
    93,964
    
    
    $
    90,071
    
    
    $
    106,322
    
    
    $
    105,073Debentures
    
    $
    30,825
    
    
    $
    31,602
    
    
    $
    30,825
    
    
    $
    25,897
  11. Commitments and Contingencies
  11




---



##### Table of Contents



12. Change in Accounting Principle
 Variable Interest Entities
    13. Recent Accounting Pronouncements
 Fair Value Measurements 
 14. Discontinued Operations
  12




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##### Table of Contents



Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Revenues
    
    $
    
    
    
    $
    870
    
    
    $
    
    
    
    $
    1,457Operating expenses
    
    
    (97
    )
    
    
    (475
    )
    
    
    (498
    )
    
    
    (1,112
    )Depreciation and amortization
    
    
    (7
    )
    
    
    (19
    )
    
    
    (34
    )
    
    
    (60
    )Income tax benefit (expense)
    
    
    36
    
    
    
    (128
    )
    
    
    181
    
    
    
    (97
    )Net income (loss) from operations
    
    
    (68
    )
    
    
    248
    
    
    
    (351
    )
    
    
    188Loss on disposal of discontinued business units
    
    
    (58
    )
    
    
    
    
    
    
    (58
    )
    
    
    (8
    )Income tax benefit
    
    
    20
    
    
    
    
    
    
    
    20
    
    
    
    3Net loss on disposal of discontinued business
units
    
    
    (38
    )
    
    
    
    
    
    
    (38
    )
    
    
    (5
    )Net income (loss) from discontinued operations
    
    $
    (106
    )
    
    $
    248
    
    
    $
    (389
    )
    
    $
    183
  September 30,
    
    December 31,2010
    
    2009ASSETSCash and cash equivalents
    
    $
    
    
    
    $
    4Accounts receivable, net
    
    
    
    
    
    
    2Inventory
    
    
    
    
    
    
    9Prepaid expenses and other
    
    
    
    
    
    
    46Total current assets of discontinued
operations
    
    
    
    
    
    
    61Property and equipment, net
    
    
    
    
    
    
    181Total assets of discontinued operations
    
    $
    
    
    
    $
    242LIABILITIESAccounts payable
    
    $
    
    
    
    $
    1Accrued payroll and related benefits
    
    
    
    
    
    
    2Other accrued expenses
    
    
    
    
    
    
    26Current liabilities of discontinued operations
    
    $
    
    
    
    $
    29
 13




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 This quarterly report on Form 10-Q includes forward-looking statements. We have based these
statements on our current expectations and projections about future events. When words such as
anticipate, believe, estimate, expect, intend, may, plan, seek, should, will
and similar expressions or their negatives are used in this quarterly report, these are
forward-looking statements. Many possible events or factors, including those discussed in Risk
Factors under Item 1A of our annual report filed on Form 10-K for the year ended December 31,
2009, could affect our future financial results and performance, and could cause actual results or
performance to differ materially from those expressed. You are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date of this quarterly
report.
 In this report, we, us, our, our company and the company refer to Red Lion Hotels
Corporation and, as the context requires, all of its wholly and partially owned subsidiaries,
including, but not limited to, its 100% ownership of Red Lion Hotels Holdings, Inc. and Red Lion
Hotels Franchising, Inc. and its approximate 99% ownership of Red Lion Hotels Limited Partnership.
Red Lion refers to the Red Lion brand. The term the system, system-wide hotels or system of
hotels refers to our entire group of owned, leased and franchised hotels.
 The following discussion and analysis should be read in connection with our unaudited
consolidated financial statements and the condensed notes thereto and other financial information
included elsewhere in this quarterly report, as well as in conjunction with the consolidated
financial statements and the notes thereto for the year ended December 31, 2009, previously filed
with the SEC on Form 10-K .
 Introduction
    Total
    
    MeetingAvailable
    
    SpaceHotels
    
    Rooms
    
    (sq. ft.)Owned and Leased Hotels
    
    
    31
    
    
    
    6,121
    
    
    
    304,566Franchised Hotels
    
    
    12
    
    
    
    2,263
    
    
    
    115,421Total Red Lion Hotels
    
    
    43
    
    
    
    8,384
    
    
    
    419,987
  
    
    The hotels segmentderives revenue primarily from guest room rentals and food and
beverage operations at our owned and leased hotels.
    
    The franchise segmentis engaged primarily in licensing the Red Lion brand to
franchisees, and generates revenue from franchise fees that are typically based on a
percent of room revenues and are charged to hotel owners. It has also historically
reflected revenue from management fees charged to the owners of managed hotels, although
we have not managed any hotels for third parties since January 2008.
    
    The entertainment segmentderives revenue primarily from ticketing services and
promotion and presentation of entertainment productions.
  14




---



##### Table of Contents



Executive Summary
    For the three months ended September 30,
    
    For the nine months ended September 30,2010
    
    2009
    
    2010
    
    2009Average(1)
    
    
    
    
    
    RevPAR
    

Average(1)
    
    
    
    
    
    RevPAR
    

Average(1)
    
    
    
    
    
    RevPAR
    

Average(1)
    
    
    
    
    
    RevPAROccupancy
    

ADR(2)
    
    (3)
    
    Occupancy
    
    ADR(2)
    
    (3)
    
    Occupancy
    
    ADR(2)
    
    (3)
    
    Occupancy
    
    ADR(2)
    
    (3)Owned and Leased Hotels
    
    
    70.1
    %
    
    $
    90.50
    
    
    $
    63.46
    
    
    
    68.5
    %
    
    $
    85.57
    
    
    $
    58.58
    
    
    
    59.3
    %
    
    $
    85.74
    
    
    $
    50.83
    
    
    
    58.4
    %
    
    $
    83.74
    
    
    $
    48.90Franchised Hotels
    
    
    63.9
    %
    
    $
    78.24
    
    
    $
    50.03
    
    
    
    62.6
    %
    
    $
    77.26
    
    
    $
    48.39
    
    
    
    54.1
    %
    
    $
    77.49
    
    
    $
    41.91
    
    
    
    54.8
    %
    
    $
    78.40
    
    
    $
    42.96Total Red Lion Hotels
    
    
    68.5
    %
    
    $
    87.50
    
    
    $
    59.93
    
    
    
    66.9
    %
    
    $
    83.53
    
    
    $
    55.90
    
    
    
    57.9
    %
    
    $
    83.72
    
    
    $
    48.49
    
    
    
    57.5
    %
    
    $
    82.40
    
    
    $
    47.34Change from prior comparative period:Owned and Leased Hotels
    
    
    1.6
    
    
    
    5.8
    %
    
    
    8.3
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.9
    
    
    
    2.4
    %
    
    
    3.9
    %Franchised Hotels
    
    
    1.3
    
    
    
    1.3
    %
    
    
    3.4
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.7
    )
    
    
    -1.2
    %
    
    
    -2.4
    %Total Red Lion Hotels
    
    
    1.6
    
    
    
    4.8
    %
    
    
    7.2
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.4
    
    
    
    1.6
    %
    
    
    2.4
    %
 
 (1)
    
    Average occupancy represents total paid rooms divided by total available rooms. Total available rooms represents the number of rooms available multiplied by the number of days in the reported period and includes rooms taken out of service for renovation.(2)
    
    Average daily rate (ADR) represents total room revenues divided by the total number of paid rooms occupied by hotel guests.(3)
    
    Revenue per available room (RevPAR) represents total room and related revenues divided by total available rooms.  Results of Operations
   15




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##### Table of Contents



Nine months endedSeptember 30, 2010(in thousands)Separation costs
    
    $
    (1,219
    )Income tax benefit
    
    
    433Impact of separation costs on net income
    
    $
    (786
    )Separation costs
    
    
    (0.06
    )Income tax benefit
    
    
    0.02Impact of separation costs on earnings per share
    
    $
    (0.04
    )Impact of separation costs on EBITDA
    
    $
    (1,219
    )
  Three months ended September 30,
    
    
    Nine months ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Total revenue
    
    $
    49,843
    
    
    $
    50,255
    
    
    $
    126,600
    
    
    $
    129,728Operating expenses
    
    
    42,940
    
    
    
    42,921
    
    
    
    121,926
    
    
    
    121,306Operating income
    
    
    6,903
    
    
    
    7,334
    
    
    
    4,674
    
    
    
    8,422Other income (expense):Interest expense
    
    
    (2,282
    )
    
    
    (2,268
    )
    
    
    (6,832
    )
    
    
    (6,297
    )Other income, net
    
    
    265
    
    
    
    49
    
    
    
    312
    
    
    
    111Income (loss) before taxes
    
    
    4,886
    
    
    
    5,115
    
    
    
    (1,846
    )
    
    
    2,236Income tax expense (benefit)
    
    
    1,729
    
    
    
    1,723
    
    
    
    (843
    )
    
    
    589Net Income (loss) from continuing operations
    
    
    3,157
    
    
    
    3,392
    
    
    
    (1,003
    )
    
    
    1,647Discontinued operations:Income (loss) from discontinued business units,
net of income tax benefit (expense) of $36 and $(128)
for the three months ended and $181and $(97) for the
nine months ended September 30, 2010 and 2009, respectively
    
    
    (68
    )
    
    
    248
    
    
    
    (351
    )
    
    
    188Loss on disposal of discontinued business units, net of income
tax benefit of $20 and $0 for the three months ended and
$20 and $3 for the nine months ended September 30, 2010
and 2009, respectively
    
    
    (38
    )
    
    
    
    
    
    
    (38
    )
    
    
    (5
    )Net Income (loss)
    
    
    3,051
    
    
    
    3,640
    
    
    
    (1,392
    )
    
    
    1,830Income (loss) attributable to noncontrolling interest
    
    
    (7
    )
    
    
    (5
    )
    
    
    3
    
    
    
    (5
    )Net income (loss) attributable to Red Lion Hotels Corporation
    
    $
    3,044
    
    
    $
    3,635
    
    
    $
    (1,389
    )
    
    $
    1,825EBITDA
    
    $
    12,221
    
    
    $
    13,094
    
    
    $
    20,021
    
    
    $
    24,409EBITDA as a percentage of revenues
    
    
    24.5
    %
    
    
    26.1
    %
    
    
    15.8
    %
    
    
    18.8
    %EBITDA from continuing operations
    
    $
    12,377
    
    
    $
    12,700
    
    
    $
    20,579
    
    
    $
    24,072EBITDA from continuing operations
as a percentage of revenues
    
    
    24.8
    %
    
    
    25.3
    %
    
    
    16.3
    %
    
    
    18.6
    %
  16




---



##### Table of Contents



Three months ended September 30,
    
    
    Nine months ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009EBITDA
    
    $
    12,221
    
    
    $
    13,094
    
    
    $
    20,021
    
    
    $
    24,409Income tax (expense) benefit
    
    
    (1,674
    )
    
    
    (1,852
    )
    
    
    1,046
    
    
    
    (683
    )Interest expense
    
    
    (2,282
    )
    
    
    (2,268
    )
    
    
    (6,832
    )
    
    
    (6,297
    )Depreciation and amortization
    
    
    (5,221
    )
    
    
    (5,339
    )
    
    
    (15,624
    )
    
    
    (15,604
    )Net income (loss) attributable to Red Lion
Hotels Corporation
    
    $
    3,044
    
    
    $
    3,635
    
    
    $
    (1,389
    )
    
    $
    1,825
 Three months ended September 30,
    
    
    Nine months ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009EBITDA from continuing operations
    
    $
    12,377
    
    
    $
    12,700
    
    
    $
    20,579
    
    
    $
    24,072Income tax (expense) benefit
    
    
    (1,729
    )
    
    
    (1,723
    )
    
    
    843
    
    
    
    (589
    )Interest expense
    
    
    (2,282
    )
    
    
    (2,268
    )
    
    
    (6,832
    )
    
    
    (6,297
    )Depreciation and amortization
    
    
    (5,216
    )
    
    
    (5,322
    )
    
    
    (15,590
    )
    
    
    (15,544
    )Discontinued operations, net of tax
    
    
    (106
    )
    
    
    248
    
    
    
    (389
    )
    
    
    183Net income (loss) attributable to Red Lion
Hotels Corporation
    
    $
    3,044
    
    
    $
    3,635
    
    
    $
    (1,389
    )
    
    $
    1,825
 17




---



##### Table of Contents



Revenue
  Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,Operating revenue
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Hotels:Rooms
    
    $
    35,734
    
    
    $
    32,988
    
    
    $
    84,934
    
    
    $
    81,722Food and beverage
    
    
    9,048
    
    
    
    10,453
    
    
    
    26,914
    
    
    
    31,037Other department
    
    
    1,439
    
    
    
    1,315
    
    
    
    3,625
    
    
    
    3,170Total hotels segment
    
    
    46,221
    
    
    
    44,756
    
    
    
    115,473
    
    
    
    115,929Franchise
    
    
    999
    
    
    
    1,046
    
    
    
    2,446
    
    
    
    2,845Entertainment
    
    
    2,048
    
    
    
    3,861
    
    
    
    6,866
    
    
    
    8,968Other
    
    
    575
    
    
    
    592
    
    
    
    1,815
    
    
    
    1,986Total Operating Revenue
    
    $
    49,843
    
    
    $
    50,255
    
    
    $
    126,600
    
    
    $
    129,728
 Three Months Ended September 30, 2010 and 2009
   Nine Months Ended September 30, 2010 and 2009
   Operating Expenses
  18




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##### Table of Contents



Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,Operating Expenses
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009(In thousands)Hotels
    
    $
    31,652
    
    
    $
    30,233
    
    
    $
    86,864
    
    
    $
    85,357Franchise
    
    
    789
    
    
    
    646
    
    
    
    2,177
    
    
    
    1,764Entertainment
    
    
    1,545
    
    
    
    2,987
    
    
    
    5,544
    
    
    
    7,375Other
    
    
    438
    
    
    
    528
    
    
    
    1,275
    
    
    
    1,609Depreciation and amortization
    
    
    5,216
    
    
    
    5,322
    
    
    
    15,590
    
    
    
    15,544Hotel facility and land lease
    
    
    1,987
    
    
    
    1,750
    
    
    
    5,512
    
    
    
    5,271Gain on asset dispositions, net
    
    
    (118
    )
    
    
    (85
    )
    
    
    (273
    )
    
    
    (140
    )Undistributed corporate expenses
    
    
    1,431
    
    
    
    1,540
    
    
    
    5,237
    
    
    
    4,526Total operating expenses
    
    $
    42,940
    
    
    $
    42,921
    
    
    $
    121,926
    
    
    $
    121,306Hotels revenue  owned
    
    $
    33,316
    
    
    $
    32,354
    
    
    $
    83,582
    
    
    $
    84,545Direct margin (1)
    
    $
    10,674
    
    
    $
    11,044
    
    
    $
    21,603
    
    
    $
    24,437Direct margin %
    
    
    32.0
    %
    
    
    34.1
    %
    
    
    25.8
    %
    
    
    28.9
    %Hotels revenue  leased
    
    $
    12,904
    
    
    $
    12,402
    
    
    $
    31,891
    
    
    $
    31,384Direct margin (1)
    
    $
    3,895
    
    
    $
    3,478
    
    
    $
    7,006
    
    
    $
    6,134Direct margin %
    
    
    30.2
    %
    
    
    28.0
    %
    
    
    22.0
    %
    
    
    19.5
    %Franchise revenue
    
    $
    999
    
    
    $
    1,046
    
    
    $
    2,446
    
    
    $
    2,845Direct margin (1)
    
    $
    210
    
    
    $
    400
    
    
    $
    269
    
    
    $
    1,081Direct margin %
    
    
    21.0
    %
    
    
    38.2
    %
    
    
    11.0
    %
    
    
    38.0
    %Entertainment revenue
    
    $
    2,048
    
    
    $
    3,861
    
    
    $
    6,866
    
    
    $
    8,968Direct margin (1)
    
    $
    503
    
    
    $
    874
    
    
    $
    1,322
    
    
    $
    1,593Direct margin %
    
    
    24.6
    %
    
    
    22.6
    %
    
    
    19.3
    %
    
    
    17.8
    %Other revenue
    
    $
    575
    
    
    $
    592
    
    
    $
    1,815
    
    
    $
    1,986Direct margin (1)
    
    $
    137
    
    
    $
    64
    
    
    $
    540
    
    
    $
    377Direct margin %
    
    
    23.8
    %
    
    
    10.8
    %
    
    
    29.8
    %
    
    
    19.0
    %
 
 (1)
    
    Revenues less direct operating expenses. Three Months Ended September 30, 2010 and 2009
     19




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##### Table of Contents



Three months ended September 30, 2010
    
    Three months ended September 30, 2009Amounts
    
    
    
    
    
    
    
    
    
    Amountsbefore
    
    Impact of
    
    
    
    
    
    before
    
    Impact ofCPF
    
    CPF
    
    As reported
    
    CPF
    
    CPF
    
    As reportedRevenue:Hotels
    
    $
    46,221
    
    
    $
    
    
    
    $
    46,221
    
    
    $
    44,756
    
    
    $
    
    
    
    $
    44,756Franchise
    
    
    393
    
    
    
    606
    
    
    
    999
    
    
    
    389
    
    
    
    657
    
    
    
    1,046Entertainment
    
    
    2,048
    
    
    
    
    
    
    
    2,048
    
    
    
    3,861
    
    
    
    
    
    
    
    3,861Other
    
    
    575
    
    
    
    
    
    
    
    575
    
    
    
    592
    
    
    
    
    
    
    
    592Total revenues
    
    
    49,237
    
    
    
    606
    
    
    
    49,843
    
    
    
    49,598
    
    
    
    657
    
    
    
    50,255Operating expenses:Hotels
    
    
    31,720
    
    
    
    (67
    )
    
    
    31,652
    
    
    
    30,854
    
    
    
    (621
    )
    
    
    30,233Franchise
    
    
    159
    
    
    
    630
    
    
    
    789
    
    
    
    154
    
    
    
    492
    
    
    
    646Entertainment
    
    
    1,545
    
    
    
    
    
    
    
    1,545
    
    
    
    2,987
    
    
    
    
    
    
    
    2,987Other
    
    
    438
    
    
    
    
    
    
    
    438
    
    
    
    528
    
    
    
    
    
    
    
    528Depreciation and amortization
    
    
    5,216
    
    
    
    
    
    
    
    5,216
    
    
    
    5,322
    
    
    
    
    
    
    
    5,322Hotel facility and land lease
    
    
    1,987
    
    
    
    
    
    
    
    1,987
    
    
    
    1,750
    
    
    
    
    
    
    
    1,750Gain on asset dispositions, net
    
    
    (118
    )
    
    
    
    
    
    
    (118
    )
    
    
    (85
    )
    
    
    
    
    
    
    (85
    )Undistributed corporate expenses
    
    
    1,431
    
    
    
    
    
    
    
    1,431
    
    
    
    1,540
    
    
    
    
    
    
    
    1,540Total expenses
    
    
    42,378
    
    
    
    563
    
    
    
    42,940
    
    
    
    43,050
    
    
    
    (129
    )
    
    
    42,921Operating income (loss)
    
    
    6,859
    
    
    
    44
    
    
    
    6,903
    
    
    
    6,548
    
    
    
    786
    
    
    
    7,334Other income (expense):Interest expense
    
    
    (2,282
    )
    
    
    
    
    
    
    (2,282
    )
    
    
    (2,268
    )
    
    
    
    
    
    
    (2,268
    )Other income, net
    
    
    368
    
    
    
    (103
    )
    
    
    265
    
    
    
    189
    
    
    
    (140
    )
    
    
    49Income (loss) before income taxes
    
    
    4,945
    
    
    
    (59
    )
    
    
    4,886
    
    
    
    4,469
    
    
    
    646
    
    
    
    5,115Income tax expense
    
    
    1,729
    
    
    
    
    
    
    
    1,729
    
    
    
    1,723
    
    
    
    
    
    
    
    1,723Net income (loss) from continuing operations
    
    $
    3,216
    
    
    $
    (59
    )
    
    $
    3,157
    
    
    $
    2,746
    
    
    $
    646
    
    
    $
    3,392Net income (loss) per share from continuing operations
    
    $
    0.17
    
    
    $
    (0.00
    )
    
    $
    0.17
    
    
    $
    0.15
    
    
    $
    0.03
    
    
    $
    0.19Weighted-average shares outstanding  diluted
    
    
    18,710
    
    
    
    18,710
    
    
    
    18,710
    
    
    
    18,306
    
    
    
    18,306
    
    
    
    18,306EBITDA from continuing operations
    
    $
    12,436
    
    
    $
    (59
    )
    
    $
    12,377
    
    
    $
    12,054
    
    
    $
    646
    
    
    $
    12,700
   Nine Months Ended September 30, 2010 and 2009
  20




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##### Table of Contents



Nine months ended September 30, 2010
    
    
    Nine months ended September 30, 2009Amounts
    
    
    
    
    
    
    
    
    
    
    Amountsbefore
    
    
    Impact of
    
    
    
    
    
    
    before
    
    
    Impact ofCPF
    
    
    CPF
    
    
    As reported
    
    
    CPF
    
    
    CPF
    
    
    As reportedRevenue:Hotels
    
    $
    115,473
    
    
    $
    
    
    
    $
    115,473
    
    
    $
    115,929
    
    
    $
    
    
    
    $
    115,929Franchise
    
    
    1,022
    
    
    
    1,424
    
    
    
    2,446
    
    
    
    1,397
    
    
    
    1,448
    
    
    
    2,845Entertainment
    
    
    6,866
    
    
    
    
    
    
    
    6,866
    
    
    
    8,968
    
    
    
    
    
    
    
    8,968Other
    
    
    1,815
    
    
    
    
    
    
    
    1,815
    
    
    
    1,986
    
    
    
    
    
    
    
    1,986Total revenues
    
    
    125,176
    
    
    
    1,424
    
    
    
    126,600
    
    
    
    128,280
    
    
    
    1,448
    
    
    
    129,728Operating expenses:Hotels
    
    
    86,352
    
    
    
    512
    
    
    
    86,864
    
    
    
    85,383
    
    
    
    (26
    )
    
    
    85,357Franchise
    
    
    595
    
    
    
    1,582
    
    
    
    2,177
    
    
    
    300
    
    
    
    1,464
    
    
    
    1,764Entertainment
    
    
    5,544
    
    
    
    
    
    
    
    5,544
    
    
    
    7,375
    
    
    
    
    
    
    
    7,375Other
    
    
    1,275
    
    
    
    
    
    
    
    1,275
    
    
    
    1,609
    
    
    
    
    
    
    
    1,609Depreciation and amortization
    
    
    15,590
    
    
    
    
    
    
    
    15,590
    
    
    
    15,544
    
    
    
    
    
    
    
    15,544Hotel facility and land lease
    
    
    5,512
    
    
    
    
    
    
    
    5,512
    
    
    
    5,271
    
    
    
    
    
    
    
    5,271Gain on asset dispositions, net
    
    
    (273
    )
    
    
    
    
    
    
    (273
    )
    
    
    (140
    )
    
    
    
    
    
    
    (140
    )Undistributed corporate expenses
    
    
    5,237
    
    
    
    
    
    
    
    5,237
    
    
    
    4,526
    
    
    
    
    
    
    
    4,526Total expenses
    
    
    119,832
    
    
    
    2,094
    
    
    
    121,926
    
    
    
    119,868
    
    
    
    1,438
    
    
    
    121,306Operating income (loss)
    
    
    5,344
    
    
    
    (670
    )
    
    
    4,674
    
    
    
    8,412
    
    
    
    10
    
    
    
    8,422Other income (expense):Interest expense
    
    
    (6,832
    )
    
    
    
    
    
    
    (6,832
    )
    
    
    (6,297
    )
    
    
    
    
    
    
    (6,297
    )Other income, net
    
    
    653
    
    
    
    (341
    )
    
    
    312
    
    
    
    537
    
    
    
    (426
    )
    
    
    111Income (loss) before income taxes
    
    
    (835
    )
    
    
    (1,011
    )
    
    
    (1,846
    )
    
    
    2,652
    
    
    
    (416
    )
    
    
    2,236Income tax (benefit) expense
    
    
    (843
    )
    
    
    
    
    
    
    (843
    )
    
    
    589
    
    
    
    
    
    
    
    589Net income (loss) from continuing operations
    
    $
    8
    
    
    $
    (1,011
    )
    
    $
    (1,003
    )
    
    $
    2,063
    
    
    $
    (416
    )
    
    $
    1,647Net income (loss) per share from continuing operations
    
    $
    0.00
    
    
    $
    (0.05
    )
    
    $
    (0.05
    )
    
    $
    0.11
    
    
    $
    (0.02
    )
    
    $
    0.09Weighted-average shares outstanding
    
    
    18,402
    
    
    
    18,402
    
    
    
    18,402
    
    
    
    18,119
    
    
    
    18,119
    
    
    
    18,119EBITDA from continuing operations
    
    $
    21,590
    
    
    $
    (1,011
    )
    
    $
    20,579
    
    
    $
    24,488
    
    
    $
    (416
    )
    
    $
    24,072
   Income Taxes
  21




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##### Table of Contents



Liquidity and Capital Resources
       September 30,
    
    December 31,2010
    
    2009Consolidated balance sheet data (in thousands):Cash and cash equivalents
    
    $
    3,046
    
    
    $
    3,881Working capital (1)
    
    $
    (39,886
    )
    
    $
    (1,161
    )Assets of discontinued operations
    
    $
    
    
    
    $
    242Property and equipment, net
    
    $
    278,340
    
    
    $
    285,601Total assets
    
    $
    344,868
    
    
    $
    350,636Liabilities of discontinued operations
    
    $
    
    
    
    $
    29Total debt
    
    $
    93,964
    
    
    $
    106,322Debentures due Red Lion Hotels Capital Trust
    
    $
    30,825
    
    
    $
    30,825Total liabilities
    
    $
    168,811
    
    
    $
    175,614Total stockholders equity
    
    $
    176,057
    
    
    $
    175,022
 
 (1)
    
    Represents current assets less current liabilities.  22




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##### Table of Contents



Operating Activities
  Investing Activities
   Financing Activities
    23




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##### Table of Contents



Contractual Obligations
  Less than
    
    
    
    
    
    
    
    
    
    
    AfterTotal
    
    
    1 year
    
    
    1-3 years
    
    
    4-5 years
    
    
    5 yearsLong-term debt(1)
    
    $
    105,223
    
    
    $
    42,094
    
    
    $
    63,129
    
    
    $
    
    
    
    $
    Operating leases(2)
    
    
    65,003
    
    
    
    8,692
    
    
    
    14,032
    
    
    
    12,014
    
    
    
    30,265Service agreements
    
    
    1,689
    
    
    
    655
    
    
    
    1,034
    
    
    
    
    
    
    
    Debentures due Red Lion
Hotels Capital Trust(1)
    
    
    128,681
    
    
    
    2,928
    
    
    
    5,857
    
    
    
    5,857
    
    
    
    114,039Total contractual obligations(3)
    
    $
    300,596
    
    
    $
    54,369
    
    
    $
    84,052
    
    
    $
    17,871
    
    
    $
    144,304
 
 (1)
    
    Including estimated interest payments and commitment fees over the life of the debt agreement.(2)
    
    Operating lease amounts are net of estimated sublease income of $10.5 million annually.(3)
    
    With regard to purchase obligations, we are not party to any material agreements to purchase goods or services that are enforceable or
legally binding as to fixed or minimum quantities to be purchased or stated price terms.    Franchise Contracts
  Off-balance Sheet Arrangements
  24




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##### Table of Contents



Critical Accounting Policies and Estimates
   New Accounting Pronouncements
 Variable Interest Entities
   Fair Value Measurements 
 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  25




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##### Table of Contents



2010
    
    2011
    
    2012
    
    2013
    
    2014
    
    Thereafter
    
    Total
    
    Fair ValueLong-term debt
    
    $
    812
    
    
    $
    41,275
    
    
    $
    1,974
    
    
    $
    49,903
    
    
    $
    
    
    
    $
    
    
    
    $
    93,964
    
    
    $
    90,071Average interest rate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5.9
    %Debentures due Red Lion
Hotels Capital Trust
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    30,825
    
    
    $
    30,825
    
    
    $
    31,602Average interest rate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9.5
    %
 
 Item 4. Controls and Procedures
   26




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A.Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Reserved
 
 Item 5. Other Information
  27




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##### Table of Contents



Item 6. Exhibits
 Index to Exhibits
 ExhibitNumber
    
    Description31.1
    
    Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a)31.2
    
    Certification of Principal Financial Officer pursuant to Exchange Act Rule 13a-14(a)32.1
    
    Certification of Chief Executive Officer pursuant to Exchange Act Rule 13(a)-14(b)32.2
    
    Certification of Principal Financial Officer pursuant to Exchange Act Rule 13(a)-14(b)
 28




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##### Table of Contents



SIGNATURES
  Red Lion Hotels Corporation
 Signature
    
    Title
    
    DateBy:
    
    /s/ Jon E. Eliassen

Jon E. Eliassen
    
    President and Chief Executive Officer
(Principal Executive Officer) and
(Principal Financial Officer)
    
    November 8, 2010
 29