##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Period ended September 30, 2005
 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 no. 1-14537
 Lodgian, Inc.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    52-2093696(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)3445 Peachtree Road, N.E., Suite 700,Atlanta, GA
    
    30326(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number, including area code
(404) 364-9400
 (Former name, former address and former fiscal year, if changed since last report): Not
applicable
 þ o
 þ o
 o þ
 þ o
  Class
    
    Outstanding as of November 1, 2005Common
    
    24,586,465




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LODGIAN, INC. AND SUBSIDIARIES
 INDEX
 PagePART I. FINANCIAL INFORMATIONItem 1.
    
    Financial Statements:Condensed Consolidated Balance Sheets as of September 30, 2005 and December 31, 2004 (unaudited)
    
    
    2Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2005 and September 30, 2004 (unaudited)
    
    
    3Condensed Consolidated Statement of Stockholders Equity for the Nine Months Ended September 30, 2005 (unaudited)
    
    
    4Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2005 and September 30, 2004 (unaudited)
    
    
    5Notes to Condensed Consolidated Financial Statements (unaudited)
    
    
    6Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results  of Operations
    
    
    25Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    49Item 4.
    
    Controls and Procedures
    
    
    49PART II. OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    49Item 6.
    
    Exhibits
    
    
    49Signatures
    
    
    
    
    50EX-10.32 SEPARATION AND RELEASE AGREEMENT BETWEEN LODGIAN, INC. AND MICHAEL W.AMARALEX-31.1 SECTION 302, CERTIFICATION OF THE CEOEX-31.2 SECTION 302, CERTIFICATION OF THE CFOEX-32 SECTION 906, CERTIFICATION OF THE CEO AND CFO
  1




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 LODGIAN, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 September 30, 2005
    
    
    December 31, 2004(Unaudited in thousands, except share data)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    9,737
    
    
    $
    36,234Cash, restricted
    
    
    14,627
    
    
    
    9,840Accounts receivable (net of allowances: 2005 - $1,374; 2004 - $684)
    
    
    11,070
    
    
    
    7,967Insurance receivable
    
    
    6,005
    
    
    
    3,280Inventories
    
    
    6,777
    
    
    
    6,293Prepaid expenses and other current assets
    
    
    19,788
    
    
    
    17,232Assets held for sale
    
    
    6,516
    
    
    
    30,528Total current assets
    
    
    74,520
    
    
    
    111,374Property and equipment, net
    
    
    603,469
    
    
    
    569,371Deposits for capital expenditures
    
    
    21,340
    
    
    
    34,787Other assets
    
    
    6,595
    
    
    
    7,775$
    705,924
    
    
    $
    723,307LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    12,637
    
    
    $
    10,957Other accrued liabilities
    
    
    34,438
    
    
    
    31,475Advance deposits
    
    
    2,137
    
    
    
    1,638Insurance advances
    
    
    17,834
    
    
    
    2,000Current portion of long-term liabilities
    
    
    20,633
    
    
    
    25,290Liabilities related to assets held for sale
    
    
    912
    
    
    
    30,541Total current liabilities
    
    
    88,591
    
    
    
    101,901Long-term liabilities
    
    
    381,513
    
    
    
    393,143Total liabilities
    
    
    470,104
    
    
    
    495,044Minority interests
    
    
    2,731
    
    
    
    1,629Commitments and contingenciesStockholders equity:Common stock, $.01 par value, 60,000,000 shares authorized;
24,608,405 and 24,579,255 issued at September 30, 2005 and
December 31, 2004, respectively
    
    
    246
    
    
    
    246Additional paid-in capital
    
    
    308,980
    
    
    
    306,943Unearned stock compensation
    
    
    (701
    )
    
    
    (315
    )Accumulated deficit
    
    
    (77,442
    )
    
    
    (81,941
    )Accumulated other comprehensive income
    
    
    2,232
    
    
    
    1,777Treasury stock, at cost, 21,633 and 7,211 shares at
September 30, 2005 and December 31, 2004, respectively
    
    
    (226
    )
    
    
    (76
    )Total stockholders equity
    
    
    233,089
    
    
    
    226,634$
    705,924
    
    
    $
    723,307
  2




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##### Table of Contents



LODGIAN, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 Three Months Ended
    
    
    Nine Months EndedSeptember 30, 2005
    
    
    September 30, 2004
    
    
    September 30, 2005
    
    
    September 30, 2004(Unaudited in thousands, except per share data)Revenues:Rooms
    
    $
    65,946
    
    
    $
    62,660
    
    
    $
    184,904
    
    
    $
    181,232Food and beverage
    
    
    16,706
    
    
    
    16,656
    
    
    
    50,424
    
    
    
    52,050Other
    
    
    2,598
    
    
    
    2,752
    
    
    
    7,761
    
    
    
    8,21285,250
    
    
    
    82,068
    
    
    
    243,089
    
    
    
    241,494Operating expenses:Direct:Rooms
    
    
    17,959
    
    
    
    17,895
    
    
    
    51,086
    
    
    
    49,709Food and beverage
    
    
    12,034
    
    
    
    12,328
    
    
    
    36,078
    
    
    
    36,097Other
    
    
    2,030
    
    
    
    2,052
    
    
    
    6,059
    
    
    
    6,02032,023
    
    
    
    32,275
    
    
    
    93,223
    
    
    
    91,82653,227
    
    
    
    49,793
    
    
    
    149,866
    
    
    
    149,668Other operating expenses:Other hotel operating costs
    
    
    26,736
    
    
    
    24,457
    
    
    
    75,327
    
    
    
    70,570Property and other taxes, insurance, and leases
    
    
    5,900
    
    
    
    5,416
    
    
    
    17,399
    
    
    
    16,163Corporate and other
    
    
    6,039
    
    
    
    4,412
    
    
    
    16,567
    
    
    
    13,437Casualty losses
    
    
    190
    
    
    
    2,019
    
    
    
    322
    
    
    
    2,019Depreciation and amortization
    
    
    7,173
    
    
    
    6,955
    
    
    
    20,698
    
    
    
    20,422Impairment of long-lived assets
    
    
    611
    
    
    
    
    
    
    
    3,220
    
    
    
    Other operating expenses
    
    
    46,649
    
    
    
    43,259
    
    
    
    133,533
    
    
    
    122,6116,578
    
    
    
    6,534
    
    
    
    16,333
    
    
    
    27,057Other income (expenses):Business interruption insurance proceeds
    
    
    6,094
    
    
    
    
    
    
    
    7,823
    
    
    
    Interest income and other
    
    
    348
    
    
    
    212
    
    
    
    573
    
    
    
    321Interest expense and other financing costs:Preferred stock dividend
    
    
    
    
    
    
    (866
    )
    
    
    
    
    
    
    (9,383
    )Interest expense
    
    
    (6,855
    )
    
    
    (7,264
    )
    
    
    (20,749
    )
    
    
    (34,795
    )Loss on preferred stock redemption
    
    
    
    
    
    
    (4,471
    )
    
    
    
    
    
    
    (6,063
    )Income (loss) before income taxes and minority interests
    
    
    6,165
    
    
    
    (5,855
    )
    
    
    3,980
    
    
    
    (22,863
    )Provision for income taxes  continuing operations
    
    
    (13
    )
    
    
    (337
    )
    
    
    (148
    )
    
    
    (488
    )Minority interests
    
    
    (1,127
    )
    
    
    503
    
    
    
    (1,102
    )
    
    
    285Income (loss) from continuing operations
    
    
    5,025
    
    
    
    (5,689
    )
    
    
    2,730
    
    
    
    (23,066
    )Discontinued operations:Income from discontinued operations before income taxes
    
    
    4,684
    
    
    
    1,952
    
    
    
    1,769
    
    
    
    4,996Income tax benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Income from discontinued operations
    
    
    4,684
    
    
    
    1,952
    
    
    
    1,769
    
    
    
    4,996Net income (loss) attributable to common stock
    
    $
    9,709
    
    
    $
    (3,737
    )
    
    $
    4,499
    
    
    $
    (18,070
    )Net earnings per share attributable to common stock:Basic
    
    $
    0.40
    
    
    $
    (0.15
    )
    
    $
    0.18
    
    
    $
    (1.77
    )Diluted
    
    $
    0.39
    
    
    $
    (0.15
    )
    
    $
    0.18
    
    
    $
    (1.77
    )
  3




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LODGIAN, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
 AccumulatedAdditional
    
    
    Unearned
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    TotalCommon Stock
    
    
    Paid-In
    
    
    Stock
    
    
    Accumulated
    
    
    Comprehensive
    
    
    Treasury
    
    
    StockholdersShares
    
    
    Amount
    
    
    Capital
    
    
    Compensation
    
    
    Deficit
    
    
    Income
    
    
    Stock
    
    
    Equity (Deficit)(Unaudited in thousands, except share data)Balance December 31, 2004
    
    
    24,579,255
    
    
    $
    246
    
    
    $
    306,943
    
    
    $
    (315
    )
    
    $
    (81,941
    )
    
    $
    1,777
    
    
    $
    (76
    )
    
    $
    226,634Amortization of unearned stock compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    397
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    397Issuance of restricted shares
    
    
    
    
    
    
    
    
    
    
    783
    
    
    
    (783
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Vesting of restricted stock units
    
    
    45,826
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Release of surplus accrual on final settlement of
bankruptcy claims
    
    
    
    
    
    
    
    
    
    
    1,292
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,292Retirement of disputed claims shares
    
    
    (16,676
    )Treasury stock (14,422 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (150
    )
    
    
    (150
    )Other
    
    
    
    
    
    
    
    
    
    
    (38
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (38
    )Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,499
    
    
    
    
    
    
    
    
    
    
    
    4,499Currency translation
adjustments (related taxes estimated at nil)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    455
    
    
    
    
    
    
    
    455Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,954Balance September 30, 2005
    
    
    24,608,405
    
    
    $
    246
    
    
    $
    308,980
    
    
    $
    (701
    )
    
    $
    (77,442
    )
    
    $
    2,232
    
    
    $
    (226
    )
    
    $
    233,089
     4




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LODGIAN, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Nine Months EndedSeptember 30, 2005
    
    
    September 30, 2004(Unaudited in thousands)Operating activities:Net income (loss)
    
    $
    4,499
    
    
    $
    (18,070
    )Adjustments to reconcile net income (loss) to net cash provided by operating activities:Depreciation and amortization
    
    
    20,970
    
    
    
    20,957Impairment of long-lived assets
    
    
    7,161
    
    
    
    3,579Amortization of unearned stock compensation
    
    
    397
    
    
    
    137Preferred stock dividends
    
    
    
    
    
    
    9,383Loss on redemption of preferred stock
    
    
    
    
    
    
    6,063Casualty losses
    
    
    227
    
    
    
    2,019Minority interests
    
    
    1,102
    
    
    
    (285
    )Gain on asset dispositions
    
    
    (6,850
    )
    
    
    (9,204
    )Write-off and amortization of deferred financing costs
    
    
    922
    
    
    
    10,595Other
    
    
    (242
    )
    
    
    860Changes in operating assets and liabilities:Accounts receivable, net of allowances
    
    
    (2,916
    )
    
    
    (2,908
    )Insurance receivable
    
    
    (2,725
    )
    
    
    (46
    )Inventories
    
    
    (543
    )
    
    
    (331
    )Prepaid expenses and other assets
    
    
    (2,476
    )
    
    
    (1,052
    )Accounts payable
    
    
    (2,697
    )
    
    
    1,959Other accrued liabilities
    
    
    2,609
    
    
    
    4,456Advance deposits
    
    
    388
    
    
    
    106Net cash provided by operating activities
    
    
    19,826
    
    
    
    28,218Investing activities:Capital improvements
    
    
    (63,197
    )
    
    
    (22,391
    )Proceeds from sale of assets, net of related selling costs
    
    
    36,338
    
    
    
    38,919(Deposits) withdrawals for capital expenditures
    
    
    13,447
    
    
    
    (21,046
    )Insurance advances related to hurricanes
    
    
    15,834
    
    
    
    Net increase in restricted cash
    
    
    (4,787
    )
    
    
    (2,879
    )Other
    
    
    (118
    )
    
    
    (493
    )Net cash used in investing activities
    
    
    (2,483
    )
    
    
    (7,890
    )Financing activities:Proceeds from issuance of long term debt
    
    
    3,202
    
    
    
    370,000Proceeds from exercise of stock options and issuance of common stock
    
    
    
    
    
    
    175,904Principal payments on long-term debt
    
    
    (46,669
    )
    
    
    (400,234
    )Shares redeemed from reverse stock split
    
    
    
    
    
    
    (5
    )Preferred stock redemption
    
    
    
    
    
    
    (114,043
    )Purchase of treasury stock
    
    
    (150
    )
    
    
    (76
    )Payments of deferred financing costs
    
    
    (294
    )
    
    
    (5,409
    )Net cash (used in) provided by financing activities
    
    
    (43,911
    )
    
    
    26,137Effect of exchange rate changes on cash
    
    
    71
    
    
    
    (18
    )Net (decrease) increase in cash and cash equivalents
    
    
    (26,497
    )
    
    
    46,447Cash and cash equivalents at beginning of period
    
    
    36,234
    
    
    
    10,897Cash and cash equivalents at end of period
    
    $
    9,737
    
    
    $
    57,344Supplemental cash flow information:Cash paid during the period for:Interest, net of the amounts capitalized shown below
    
    $
    20,305
    
    
    $
    27,705Interest capitalized
    
    
    1,662
    
    
    
    469Income taxes, net of refunds
    
    
    233
    
    
    
    753Supplemental disclosure of non-cash activities:Net non-cash debt decrease
    
    
    (490
    )
    
    
    (208
    )Issuance of promissory notes as consideration for taxation liabilities
    
    
    
    
    
    
    2,466Release of surplus accrual on final settlement of bankruptcy claims
    
    
    (1,292
    )
    
    
    Change in accounts payable related to the purchase of property and equipment
    
    
    3,597
    
    
    
    79
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LODGIAN, INC. AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
 Throughout this Form 10-Q, we will use the terms Lodgian, we, our, and us, to refer to
Lodgian, Inc. and, unless the context otherwise requires or expressly states, our subsidiaries.
 1. Business Summary
  
    
    74 hotels that we wholly own and operate through subsidiaries;
    
    three hotels that we operate in joint ventures in which we have a 50% or
greater voting equity interest and exercise control (see Note 2 for discussion on
buyout of joint venture partner at one of our hotels); and
    
    one hotel that we operate in a joint venture in which we have a 30%
non-controlling equity interest.
   2. General
  6




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
    
    the reported amounts of assets and liabilities;
    
    the reported amounts of revenues and expenses during the reporting period; and
    
    the disclosures of contingent assets and liabilities at the date of our financial statements.
  Stock-based Compensation
   7




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##### Table of Contents



Stock
    
    
    Weighted AverageOptions
    
    
    Exercise PricesBalance, December 31, 2004
    
    
    526,410
    
    
    $
    11.46Granted
    
    
    435,000
    
    
    
    9.28Exercised
    
    
    
    
    
    
    Forfeited
    
    
    (97,940
    )
    
    
    11.05Balance, September 30, 2005
    
    
    863,470
    
    
    $
    10.41
 Restricted
    
    
    RestrictedStock Units
    
    
    Stock SharesBalance, December 31, 2004
    
    
    45,827
    
    
    
    Granted
    
    
    
    
    
    
    75,000Shares converted to common stock
    
    
    (45,826
    )
    
    
    Unit lost due to 1:3 reverse stock split
    
    
    (1
    )Forfeited
    
    
    
    
    
    
    Balance, September 30, 2005
    
    
    
    
    
    
    75,000
  8




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Options outstanding
    
    Options exercisableWeighted average
    
    Weighted
    
    
    
    
    
    Weightedremaining life
    
    Average
    
    
    
    
    
    averageRange of prices
    
    Number
    
    (in years)
    
    exercise price
    
    Number
    
    exercise price$  7.83
to $  9.40
    
    
    404,083
    
    
    
    8.5
    
    
    $
    9.05
    
    
    
    73,333
    
    
    $
    9.03$  9.41 to $10.96
    
    
    328,915
    
    
    
    7.6
    
    
    $
    10.51
    
    
    
    137,383
    
    
    $
    10.52$10.97 to $12.53
    
    
    32,500
    
    
    
    9.4
    
    
    $
    11.78
    
    
    
    
    
    
    $
    $12.54 to $15.66
    
    
    97,972
    
    
    
    6.5
    
    
    $
    15.21
    
    
    
    97,972
    
    
    $
    15.21863,470
    
    
    
    8.0
    
    
    $
    10.40
    
    
    
    308,688
    
    
    $
    11.65
   9




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##### Table of Contents



Three Months ended
    
    
    Nine Months endedSeptember 30, 2005
    
    
    September 30, 2004
    
    
    September 30, 2005
    
    
    September 30, 2004($ in thousands, except share data)Income (Loss) from continuing operations:As reported
    
    $
    5,025
    
    
    $
    (5,689
    )
    
    $
    2,730
    
    
    $
    (23,066
    )Add: Stock-based compensation expense included in net income
    
    
    290
    
    
    
    62
    
    
    
    397
    
    
    
    162Deduct: Total pro forma stock-based employee compensation
expense
    
    
    (1,040
    )
    
    
    (423
    )
    
    
    (1,973
    )
    
    
    (778
    )Pro forma
    
    
    4,275
    
    
    
    (6,050
    )
    
    
    1,154
    
    
    
    (23,682
    )Income from discontinued operations:As reported
    
    
    4,684
    
    
    
    1,952
    
    
    
    1,769
    
    
    
    4,996Add: Stock-based compensation expense included in net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Deduct: Total pro forma stock-based employee compensation
expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Pro forma
    
    
    4,684
    
    
    
    1,952
    
    
    
    1,769
    
    
    
    4,996Net Income (Loss) attributable to common stock:As reported
    
    
    9,709
    
    
    
    (3,737
    )
    
    
    4,499
    
    
    
    (18,070
    )Add: Stock-based compensation expense included in net income
    
    
    290
    
    
    
    62
    
    
    
    397
    
    
    
    162Deduct: Total pro forma stock based employee compensation
expense
    
    
    (1,040
    )
    
    
    (423
    )
    
    
    (1,973
    )
    
    
    (778
    )Pro forma
    
    $
    8,959
    
    
    $
    (4,098
    )
    
    $
    2,923
    
    
    $
    (18,686
    )Basic earnings per common shareIncome (Loss) from continuing operations:As reported
    
    $
    0.20
    
    
    $
    (0.23
    )
    
    $
    0.11
    
    
    $
    (2.26
    )Add: Stock-based compensation expense included in net income
    
    
    0.01
    
    
    
    
    
    
    
    0.02
    
    
    
    0.02Deduct: Total pro forma stock-based employee compensation
expense
    
    
    (0.04
    )
    
    
    (0.01
    )
    
    
    (0.08
    )
    
    
    (0.08
    )Pro forma
    
    
    0.17
    
    
    
    (0.24
    )
    
    
    0.05
    
    
    
    (2.32
    )Income from discontinued operations:As reported
    
    
    0.19
    
    
    
    0.08
    
    
    
    0.07
    
    
    
    0.49Add: Stock-based compensation expense included in net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Deduct: Total pro forma stock-based employee compensation
expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Pro forma
    
    
    0.19
    
    
    
    0.08
    
    
    
    0.07
    
    
    
    0.49Net Income (Loss) attributable to common stock:As reported
    
    
    0.40
    
    
    
    (0.15
    )
    
    
    0.18
    
    
    
    (1.77
    )Add: Stock-based compensation expense included in net income
    
    
    0.01
    
    
    
    
    
    
    
    0.02
    
    
    
    0.01Deduct: Total pro forma stock-based employee compensation
expense
    
    
    (0.04
    )
    
    
    (0.01
    )
    
    
    (0.08
    )
    
    
    (0.08
    )Pro forma
    
    $
    0.37
    
    
    $
    (0.16
    )
    
    $
    0.12
    
    
    
    (1.84
    )Diluted earnings per common shareIncome (Loss) from continuing operations:As reported
    
    $
    0.20
    
    
    $
    (0.23
    )
    
    $
    0.11
    
    
    $
    (2.26
    )Add: Stock-based compensation expense included in net income
    
    
    0.01
    
    
    
    
    
    
    
    0.02
    
    
    
    0.02Deduct: Total pro forma stock-based employee compensation
expense
    
    
    (0.04
    )
    
    
    (0.01
    )
    
    
    (0.08
    )
    
    
    (0.08
    )Pro forma
    
    
    0.17
    
    
    
    (0.24
    )
    
    
    0.05
    
    
    
    (2.32
    )Income from discontinued operations:As reported
    
    
    0.19
    
    
    
    0.08
    
    
    
    0.07
    
    
    
    0.49Add: Stock-based compensation expense included in net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Deduct: Total pro forma stock-based employee compensation
expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Pro forma
    
    
    0.19
    
    
    
    0.08
    
    
    
    0.07
    
    
    
    0.49Net Income (Loss) attributable to common stock:As reported
    
    
    0.39
    
    
    
    (0.15
    )
    
    
    0.18
    
    
    
    (1.77
    )Add: Stock-based compensation expense included in net income
    
    
    0.01
    
    
    
    
    
    
    
    0.02
    
    
    
    0.01Deduct: Total pro forma stock-based employee compensation
expense
    
    
    (0.04
    )
    
    
    (0.01
    )
    
    
    (0.08
    )
    
    
    (0.08
    )Pro forma
    
    $
    0.36
    
    
    $
    (0.16
    )
    
    $
    0.12
    
    
    $
    (1.84
    )
 3. Discontinued Operations
        10




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##### Table of Contents



a)
    
    $0.6 million on the Quality Hotel Metairie, LA to write-down the carrying value
of the hotel to the estimated fair value;b)
    
    $0.2 million on the Holiday Inn Austin, TX to adjust for the further reduction
in the estimated selling price of this hotel;c)
    
    $0.1 million on the Holiday Inn Florence, KY to adjust for the further
reduction in the estimated selling price of this hotel; andd)
    
    $0.1 million on the Holiday Inn Morgantown, WV to adjust for the further
reduction in the estimated selling price of this hotel.
  11




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##### Table of Contents



September 30, 2005
    
    
    December 31, 2004(Unaudited in thousands)Property and equipment, net
    
    
    5,848
    
    
    
    28,207Other assets
    
    
    668
    
    
    
    2,321Total assets
    
    $
    6,516
    
    
    $
    30,528Other liabilities
    
    
    876
    
    
    
    3,305Long-term debt
    
    
    36
    
    
    
    27,236Total liabilities
    
    $
    912
    
    
    $
    30,541
  Three Months Ended
    
    
    Nine Months EndedSeptember 30, 2005
    
    
    September 30, 2004
    
    
    September 30, 2005
    
    
    September 30, 2004(Unaudited in thousands)
    
    
    (Unaudited in thousands)Total Revenues
    
    $
    3,568
    
    
    $
    12,222
    
    
    $
    17,471
    
    
    $
    38,205Total Expenses
    
    
    3,793
    
    
    
    11,300
    
    
    
    18,897
    
    
    
    38,884Impairment of long-lived assets
    
    
    223
    
    
    
    975
    
    
    
    3,941
    
    
    
    3,579Interest income and other
    
    
    286
    
    
    
    50
    
    
    
    286
    
    
    
    50Gain on asset dispositions
    
    
    4,846
    
    
    
    1,955
    
    
    
    6,850
    
    
    
    9,204Income from discontinued operations
    
    $
    4,684
    
    
    $
    1,952
    
    
    $
    1,769
    
    
    $
    4,996
  4. Cash, Restricted
   12




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##### Table of Contents



5. Income (Loss) Per Share
  Three months ended
    
    
    Nine Months EndedSeptember 30, 2005
    
    
    September 30, 2004
    
    
    September 30, 2005
    
    
    September 30, 2004(Unaudited in thousands, except per share data)Basic and diluted earnings per share:Numerator:Income (loss) from continuing operations
    
    $
    5,025
    
    
    $
    (5,689
    )
    
    $
    2,730
    
    
    $
    (23,066
    )Income from discontinued operations
    
    
    4,684
    
    
    
    1,952
    
    
    
    1,769
    
    
    
    4,996Net income (loss) attributable to common stock
    
    $
    9,709
    
    
    $
    (3,737
    )
    
    $
    4,499
    
    
    $
    (18,070
    )Denominator:Denominator for basic earnings per share -weighted average shares
    
    
    24,573
    
    
    
    24,571
    
    
    
    24,573
    
    
    
    10,205Denominator for diluted earnings per share -weighted average
shares
    
    
    24,633
    
    
    
    24,571
    
    
    
    24,618
    
    
    
    10,205Basic income (loss) per common share:Income (loss) from continuing operations
    
    $
    0.20
    
    
    $
    (0.23
    )
    
    $
    0.11
    
    
    $
    (2.26
    )Income from discontinued operations
    
    
    0.20
    
    
    
    0.08
    
    
    
    0.07
    
    
    
    0.49Net income (loss) attributable to common stock
    
    $
    0.40
    
    
    $
    (0.15
    )
    
    $
    0.18
    
    
    $
    (1.77
    )Diluted income (loss) per common share:Income (loss) from continuing operations
    
    $
    0.20
    
    
    $
    (0.23
    )
    
    $
    0.11
    
    
    $
    (2.26
    )Income from discontinued operations
    
    
    0.19
    
    
    
    0.08
    
    
    
    0.07
    
    
    
    0.49Net income (loss) attributable to common stock
    
    $
    0.39
    
    
    $
    (0.15
    )
    
    $
    0.18
    
    
    $
    (1.77
    )
  6. Debt
  13




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##### Table of Contents



September 30,
    
    
    December 31,2005
    
    
    2004($ in thousands)Refinancing DebtMerrill Lynch Mortgage Lending, Inc.  Floating
    
    $
    67,772
    
    
    $
    102,617Merrill Lynch Mortgage Lending, Inc.  Fixed
    
    
    255,417
    
    
    
    258,410Merrill Lynch Mortgage Lending, Inc.  Total
    
    
    323,189
    
    
    
    361,027Computer Share Trust Company of Canada
    
    
    7,872
    
    
    
    7,843Other FinancingsColumn Financial, Inc.
    
    
    23,215
    
    
    
    25,058Lehman Brothers Holdings, Inc.
    
    
    22,534
    
    
    
    22,927JP Morgan Chase Bank, Trustee
    
    
    10,064
    
    
    
    10,110DDL Kinser
    
    
    
    
    
    
    2,286Wachovia
    
    
    3,187
    
    
    
    Column Financial, Inc.
    
    
    8,258
    
    
    
    8,545Column Financial, Inc.
    
    
    
    
    
    
    3,069Tax notes issued pursuant to Lodgians Joint Plan of Reorganization
    
    
    2,688
    
    
    
    3,302Total  Other Financings
    
    
    69,946
    
    
    
    75,297Long-term liabilities  otherOther long-term liabilities
    
    
    1,183
    
    
    
    1,8651,183
    
    
    
    1,865402,190
    
    
    
    446,032Long-term liabilities related to assets held for sale
    
    
    (44
    )
    
    
    (27,599
    )$
    402,146
    
    
    $
    418,433Less: Current portion of long-term liabilities  continuing operations
    
    
    (20,633
    )
    
    
    (25,290
    )Total long-term liabilities  continuing operations
    
    $
    381,513
    
    
    $
    393,143
  14




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##### Table of Contents



September 30, 2005Number
    
    
    Property, plant
    
    
    Long-term
    
    
    Interestof Hotels
    
    
    and equipment, net (1)
    
    
    obligations (1)
    
    
    ratesRefinancing DebtMerrill Lynch Mortgage Lending, Inc.  Floating
    
    
    19
    
    
    $
    96,196
    
    
    $
    67,772
    
    
    LIBOR plus 3.40%Merrill Lynch Mortgage Lending, Inc.  Fixed
    
    
    35
    
    
    
    333,763
    
    
    
    255,417
    
    
    
    6.58%Merrill Lynch Mortgage Lending, Inc.  Total
    
    
    54
    
    
    
    429,959
    
    
    
    323,189Computer Share Trust Company of Canada
    
    
    1
    
    
    
    16,293
    
    
    
    7,872
    
    
    
    7.88%Other FinancingsColumn Financial, Inc.
    
    
    9
    
    
    
    72,623
    
    
    
    23,215
    
    
    
    10.59%Lehman Brothers Holdings, Inc.
    
    
    5
    
    
    
    52,061
    
    
    
    22,534
    
    
    $15,874 at 9.40%; $6,660 at 8.90%JP Morgan Chase Bank
    
    
    2
    
    
    
    6,037
    
    
    
    10,064
    
    
    
    8.00%Wachovia
    
    
    1
    
    
    
    5,009
    
    
    
    3,187
    
    
    
    5.78%Column Financial, Inc.
    
    
    1
    
    
    
    11,625
    
    
    
    8,258
    
    
    
    9.45%Total  other financing
    
    
    18
    
    
    
    147,355
    
    
    
    67,25873
    
    
    
    593,607
    
    
    
    398,319
    
    
    
    7.19% (2)Long-term liabilities  otherTax notes issued pursuant to our Joint Plan
of Reorganization
    
    
    
    
    
    
    
    
    
    
    2,688Other
    
    
    
    
    
    
    
    
    
    
    1,183
    
    
    
    
    
    
    
    3,871Property, plant and equipment  other
    
    
    4
    
    
    
    15,710
    
    
    
    77
    
    
    
    609,317
    
    
    
    402,190Held for sale
    
    
    (2
    )
    
    
    (5,848
    )
    
    
    (44
    )Total September 30, 2005 (3)
    
    
    75
    
    
    $
    603,469
    
    
    $
    402,146
 
 (1)
    
    Debt obligations and property, plant and equipment of one hotel in which we have a non-controlling equity interest that we do not consolidate are excluded from the table above.(2)
    
    The 7.19% in the table above represents our annual weighted average cost of debt at September 30, 2005, using a LIBOR of 3.8638% as of September 30, 2005.(3)
    
    Debt obligations at September 30, 2005 include the current portion. Merrill Lynch Mortgage Lending, Inc. Debt
     
    
    Extension of the initial maturity from June 30, 2006 to January 11, 2007. We
still maintain the option, subject to certain conditions, to extend the loan for up to
three years from the new initial maturity date in January 2007;
 15




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##### Table of Contents




    
    Three additional properties in the floating rate pool are now classified as
sale properties. Once classified as sale properties a hotel will be able to be
released from the collateral pool by payment of
the greater of (a) 100% of the aggregate allocated loan amount (lowered from 125%) and
(b) the net sales proceeds of the property;
    
    The prepayment penalty dropped to 1% in July 2005 and has been further reduced
for the three additional sale properties after July 2005 to 0.5%; and
    
    Certain required capital and environmental repairs under the original Floating
Rate Loan have been determined not to be necessary and have been removed as
requirements under the loan.
 1 2
    
    
    multiple franchise agreement defaults and the continuance thereof beyond all
notice and grace periods for hotels whose allocated loan amounts total 10% or more of
the outstanding principal amount of such Refinancing Debt;
 16




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##### Table of Contents




    
    with regard to the Floating Rate Debt, either the termination of franchise
agreements for more than two properties or the termination of franchise agreements for
hotels whose allocated loan amounts represent more than 5% of the outstanding principal
amount of the Floating Rate Debt, and such hotels continue
to operate for more than five consecutive days without being subject to replacement
franchise agreements;
    
    with regard to the Fixed Rate Debt, either the termination of franchise
agreements for more than one property or the termination of franchise agreements for
hotels whose allocated loan amounts represent more than 5% of the outstanding principal
amount of the fixed rate loan, and such hotels continue to operate for more than five
consecutive days without being subject to replacement franchise agreements; or
    
    a franchise termination for any hotel currently subject to a franchise
agreement that remains without a franchise agreement for more than six months.
   1 2
  Column Financial Debt
   17




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##### Table of Contents



JP Morgan Chase Bank Debt
   Minority Owned Hotel
    18




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##### Table of Contents



7. Executive Staff Changes
 Appointment of Chief Executive Officer
  Termination of Chief Operating Officer
  Resignation of Chief Financial Officer
  8. Commitments and Contingencies
 Franchise Agreements and Capital Expenditures
    19




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##### Table of Contents



Three months ended
    
    
    Nine months endedSeptember 30, 2005
    
    
    September 30, 2004
    
    
    September 30, 2005
    
    
    September 30, 2004(unaudited in thousands)Continuing operations
    
    $
    6,100
    
    
    $
    5,754
    
    
    $
    16,881
    
    
    $
    16,564Discontinued operations
    
    
    275
    
    
    
    910
    
    
    
    1,236
    
    
    
    2,504$
    6,375
    
    
    $
    6,664
    
    
    $
    18,117
    
    
    $
    19,068
    a)
    
    Two hotels are held for sale. One of these hotels is in default of its
franchise agreement for failure to complete the Property Improvement Plan (PIP) and
one hotel is in default of its franchise agreement for not maintaining required guest
satisfaction scores. Both of these hotels are in need of significant capital
investment for which we do not anticipate an acceptable return on our
investment. One of the hotels is unencumbered and the other may be
released from its loan upon payment to the lender of a specified
amount. The franchisor with respect to one of the
hotels that is in default has agreed to maintain the flag until the earlier of March 31,
2006 or until we sell the hotel, without requiring payment for
liquidated damages.b)
    
    One hotel is held for sale but will be reclassified into continuing operations
in the fourth quarter 2005. This hotel is in failure of its franchise agreement for
not maintaining required guest satisfaction scores. We will be evaluating this hotel
for reflagging and could be subject to liquidated damages. This
property is unencumbered.c)
    
    Four hotels are currently undergoing renovations required by a PIP. One of
these hotels is also in Overall Satisfaction Index (OSI) failure for receiving guest
scores below required thresholds. We anticipate that the completion of this renovation
will return the guest satisfaction scores to acceptable levels and cure this OSI
failure. For the other three hotels, we anticipate the completion of their renovations
will cure their PIP defaults.d)
    
    One hotel has received a 30 day extension to its default termination date. The
franchisor has agreed to our planned renovations of two floors of guestrooms and
guestroom corridors. We have issued purchase orders to begin this work. We will not
complete this work by the 30 day extension, however, the franchisor will discuss
further extensions to this date as work progresses.e)
    
    Four hotels are in default of their franchise agreement because of substandard
guest satisfaction scores. If we do not achieve scores above the required thresholds
by the designated date, each hotels franchise agreement is subject to termination.
Our corporate and regional teams, as well each propertys general
 20




---



##### Table of Contents



manager and associates, have focused their efforts to cure these defaults through enhanced service,
increased cleanliness, and product improvements by the required termination date. If we
fall below the required thresholds on the required termination dates, we could seek an
extension of time from the franchisor in order to have additional time to improve our
scores. Two of the four hotels can be considered for sale in 2006
without requiring the payment of liquidated damages.f)
    
    Nine hotels are in failure of their franchise agreements because of substandard
guest satisfaction or quality scores. Our corporate and regional teams, as well as each
propertys general manager and associates, have focused their efforts to cure these
failures through enhanced service, increased cleanliness, and product improvements by
the required cure date. If we do not achieve scores above required thresholds by the
designated date, the hotel would be subject to default of its franchise agreement.
Each hotel would receive another opportunity to improve their scores before the hotel
would be at the risk of having its franchise agreement terminated.g)
    
    Two hotels have scored below the required guest satisfaction thresholds and we
are at risk of receiving failure notices, however, we have not received these notices
to date. We have entered into an agreement with the lender for one of
these hotels providing for the sale or surrender of the hotel. Unless
the hotel is sold prior to February 1, 2006, the lender will
take title to the hotel on that date. We own a 30% interest in the
other hotel and are in active negotiations with our joint venture
partner and lender regarding the future ownership of the hotel. We
will not be subject to the payment of liquidated damages with regard
to either of these hotels.h)
    
    Three hotels are in default or failure of their franchise agreements because of
substandard guest satisfaction scores. One of these hotels is in default and has a
default termination date of January 16, 2006. That same hotel also has a franchise
agreement which expires on February 23, 2006 and will not be renewed by the franchisor.
This property is unencumbered. Two hotels (which may be released from
their loans upon payment of a specified release price) are currently in failure status with their franchise agreements due to low
guest satisfaction scores. All three of these hotels are under evaluation by the
management to determine what course of action will be taken with these hotels. These
actions could include renovation, reflagging, or a sale of the asset.
     21




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Letters of Credit
  Self-insurance
    Casualty losses
     22




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##### Table of Contents



Litigation
  9. New Accounting Pronouncements
   23




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##### Table of Contents



10. Subsequent Events
 Additional Hotel Classified as Held for Sale
  Jekyll Island Hotel
  Closure of Holiday Inn Clarksburg, WV Hotel
  Amendment of Merrill Lynch Mortgage
  24




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##### Table of Contents



Resignation of Chief Financial Officer
  
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 You should read the discussion below in conjunction with the unaudited condensed consolidated
financial statements and accompanying notes, set forth in Item I. Financial Statements included
in this Form 10-Q . Also, the discussion which follows contains forward-looking statements which
involve risks and uncertainties. Our actual results could differ materially from those anticipated
in these forward-looking statements as a result of various factors, including those discussed in
our Form 10-K for the year ended December 31, 2004.
 Executive Overview
  
    
    74 hotels that we wholly own and operate through subsidiaries;
    
    three hotels that we operate in joint ventures in which we have a 50% or
greater voting equity interest and exercise control; and
    
    one hotel that we operate in a joint venture in which we have a 30%
non-controlling equity interest.
   25




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##### Table of Contents



Overview of Continuing Operations
  
    
    Revenues for the three months ended September 30, 2005 increased from the prior
year despite the continued closure of two hotels for hurricane renovations and six
hotels under renovation during the quarter. We saw ADR and RevPAR improvements in the
three and nine months ended September 30, 2005 as compared to the same period in 2004.
We saw positive growth in occupancy for the three months ended September 30, 2005.
    
    Operating expenses increased in the third quarter 2005 as compared to the third
quarter 2004 as a result of higher revenues but as a percentage of total revenues
direct and other hotel operating expenses were flat to last year. Bad debt expenses
were higher due to the write-off of accounts receivable as a result of the Chapter 11
bankruptcy filings for Northwest Airlines and Delta Airlines. Corporate overhead
expenses increased primarily due to the hiring costs of the Companys new president and
chief executive officer and the severance costs for the former chief executive officer
and chief operating officer.
    
    We recorded $0.6 million of impairment charges in the quarter which primarily
relates to the write-down of the carrying costs of the Park Inn Brunswick, GA hotel to
its estimated fair value based on a broker opinion.
    
    Business interruption insurance proceeds were recorded for the January through
July 2005 period for the two Florida hotels (Crowne Plaza West Palm Beach, FL and
Holiday Inn Melbourne, FL) currently closed for repair from the hurricanes in the fall
of 2004.
    
    Net income attributable to common stock was $9.7 million for the third quarter
2005 compared with a net loss of $3.7 million for the third quarter 2004. For the nine
months ended September 30, 2005, the net income attributable to common stock was $4.5
million as compared to a net loss of $18.1 million for 2004.
 Overview of Discontinued Operations
  ($ in thousands)Aggregate Sales Price
    
    $
    95,079Debt pay down (principal only)
    
    $
    71,659
  26




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Critical Accounting Policies and Estimates
  Income Statement Overview
  Results of Operations  Continuing Operations
  Revenues  Continuing Operations
 Three months endedSeptember 30, 2005
    
    
    September 30, 2004
    
    
    Increase (decrease)Revenues
(unaudited $ in thousands):Rooms
    
    $
    65,946
    
    
    $
    62,660
    
    
    $
    3,286
    
    
    
    5.2
    %Food and beverage
    
    
    16,706
    
    
    
    16,656
    
    
    
    50
    
    
    
    0.3
    %Other
    
    
    2,598
    
    
    
    2,752
    
    
    
    (154
    )
    
    
    (5.6
    )%Total revenues
    
    $
    85,250
    
    
    $
    82,068
    
    
    $
    3,182
    
    
    
    3.9
    %Occupancy
    
    
    66.0
    %
    
    
    65.7
    %
    
    
    
    
    
    
    0.5
    %ADR
    
    $
    83.82
    
    
    $
    77.90
    
    
    $
    5.92
    
    
    
    7.6
    %RevPAR
    
    $
    55.29
    
    
    $
    51.19
    
    
    $
    4.10
    
    
    
    8.0
    %
  27




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28




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##### Table of Contents



Hotel
    
    Room
    
    
    
    Three Months EndedCount
    
    Count
    
    
    
    September 30, 2005
    
    September 30, 2004
    
    Change/% Change75
    
    
    13,477
    
    
    All Continuing OperationsOccupancy
    
    
    66.0
    %
    
    
    65.7
    %
    
    
    
    
    
    
    0.5
    %ADR
    
    $
    83.82
    
    
    $
    77.90
    
    
    $
    5.92
    
    
    
    7.6
    %RevPAR
    
    $
    55.29
    
    
    $
    51.19
    
    
    $
    4.10
    
    
    
    8.0
    %73
    
    
    12,963
    
    
    Continuing Operations less two hotels
closed due to hurricane damageOccupancy
    
    
    66.0
    %
    
    
    66.0
    %
    
    
    
    
    
    
    0.0
    %ADR
    
    $
    83.83
    
    
    $
    77.71
    
    
    $
    6.12
    
    
    
    7.9
    %RevPAR
    
    $
    55.29
    
    
    $
    51.28
    
    
    $
    4.01
    
    
    
    7.8
    %RevPAR Index
    
    
    96.9
    %
    
    
    97.4
    %
    
    
    
    
    
    
    (0.5
    %)50
    
    
    9,193
    
    
    Continuing Operations less two hotels
closed due to hurricane damage and
hotels under renovation in the first,
second & third quarters 2004 and 2005Occupancy
    
    
    66.7
    %
    
    
    66.3
    %
    
    
    
    
    
    
    0.6
    %ADR
    
    $
    80.96
    
    
    $
    75.33
    
    
    $
    5.63
    
    
    
    7.5
    %RevPAR
    
    $
    54.00
    
    
    $
    49.91
    
    
    $
    4.09
    
    
    
    8.2
    %RevPAR Index
    
    
    99.5
    %
    
    
    97.8
    %
    
    
    
    
    
    
    1.7
    %21
    
    
    3,013
    
    
    Hotels completing major renovations
in 2003 and 2004Occupancy
    
    
    70.9
    %
    
    
    64.3
    %
    
    
    
    
    
    
    10.3
    %ADR
    
    $
    86.73
    
    
    $
    82.72
    
    
    $
    4.01
    
    
    
    4.8
    %RevPAR
    
    $
    61.45
    
    
    $
    53.22
    
    
    $
    8.23
    
    
    
    15.5
    %RevPAR Index
    
    
    105.1
    %
    
    
    97.9
    %
    
    
    
    
    
    
    7.4
    %16
    
    
    1,845
    
    
    Marriott HotelsOccupancy
    
    
    73.2
    %
    
    
    68.6
    %
    
    
    
    
    
    
    6.7
    %ADR
    
    $
    89.51
    
    
    $
    85.19
    
    
    $
    4.32
    
    
    
    5.1
    %RevPAR
    
    $
    65.54
    
    
    $
    58.48
    
    
    $
    7.06
    
    
    
    12.1
    %RevPAR Index
    
    
    115.0
    %
    
    
    109.7
    %
    
    
    
    
    
    
    4.8
    %4
    
    
    777
    
    
    Hilton HotelsOccupancy
    
    
    73.0
    %
    
    
    69.5
    %
    
    
    
    
    
    
    5.0
    %ADR
    
    $
    97.28
    
    
    $
    92.82
    
    
    $
    4.46
    
    
    
    4.8
    %RevPAR
    
    $
    71.03
    
    
    $
    64.54
    
    
    $
    6.49
    
    
    
    10.1
    %RevPAR Index
    
    
    95.0
    %
    
    
    90.0
    %
    
    
    
    
    
    
    5.6
    %45
    
    
    8,829
    
    
    IHG Hotels less two hotels closed due
to hurricane damageOccupancy
    
    
    66.5
    %
    
    
    68.7
    %
    
    
    
    
    
    
    (3.2
    %)ADR
    
    $
    83.45
    
    
    $
    76.82
    
    
    $
    6.63
    
    
    
    8.6
    %RevPAR
    
    $
    55.46
    
    
    $
    52.74
    
    
    $
    2.72
    
    
    
    5.2
    %RevPAR Index
    
    
    94.3
    %
    
    
    97.1
    %
    
    
    
    
    
    
    (2.9
    %)8
    
    
    1,512
    
    
    Other Brands and Independent HotelsOccupancy
    
    
    50.6
    %
    
    
    45.6
    %
    
    
    
    
    
    
    11.0
    %ADR
    
    $
    66.73
    
    
    $
    60.77
    
    
    $
    5.96
    
    
    
    9.8
    %RevPAR
    
    $
    33.74
    
    
    $
    27.73
    
    
    $
    6.01
    
    
    
    21.7
    %RevPAR Index
    
    
    87.8
    %
    
    
    81.1
    %
    
    
    
    
    
    
    8.3
    %
 29




---



##### Table of Contents



Lodgian Hotel
    
    
    
    LodgianCount (A)
    
    Quarter
    
    Comp Sets
    
    Industry
    
    Ratio71
    
    1st Qtr 04
    
    4.5%
    
    7.7%
    
    58.4%71
    
    2nd Qtr 04
    
    5.6%
    
    8.6%
    
    65.1%71
    
    3rd Qtr 04
    
    5.2%
    
    6.4%
    
    81.3%71
    
    4th Qtr 04
    
    7.6%
    
    8.4%
    
    90.5%71
    
    1st Qtr 05
    
    6.3%
    
    7.2%
    
    87.5%71
    
    2nd Qtr 05
    
    8.1%
    
    8.3%
    
    97.6%71
    
    3rd Qtr 05
    
    8.4%
    
    8.3%
    
    101.2%
 
 (A)
    
    The 71 hotels includes the 75 hotels in our continuing operations portfolio less the hotels in West Palm Beach, Melbourne, Windsor and Pinehurst.  Direct operating expenses  Continuing Operations
 Three months endedSeptember 30, 2005
    
    
    September 30, 2004
    
    
    Increase (decrease)(unaudited in
thousands)Direct operating expenses:Rooms
    
    $
    17,959
    
    
    $
    17,895
    
    
    $
    64
    
    
    
    0.4
    %Food and beverage
    
    
    12,034
    
    
    
    12,328
    
    
    
    (294
    )
    
    
    (2.4
    )%Other
    
    
    2,030
    
    
    
    2,052
    
    
    
    (22
    )
    
    
    (1.1
    )%Total direct operating expenses
    
    $
    32,023
    
    
    $
    32,275
    
    
    $
    (252
    )
    
    
    (0.8
    )%% of total revenues
    
    
    37.6
    %
    
    
    39.3
    %
  30




---



##### Table of Contents



Other operating expenses  Continuing Operations
 Three months endedSeptember 30, 2005
    
    
    September 30, 2004
    
    
    Increase (decrease)(unaudited in
thousands)Other operating expenses:Other hotel operating costs:General and administrative
    
    $
    6,275
    
    
    $
    5,460
    
    
    $
    815
    
    
    
    14.9
    %Advertising and promotion
    
    
    4,266
    
    
    
    3,696
    
    
    
    570
    
    
    
    15.4
    %Franchise fees
    
    
    6,100
    
    
    
    5,754
    
    
    
    346
    
    
    
    6.0
    %Repairs and maintenance
    
    
    4,624
    
    
    
    4,537
    
    
    
    87
    
    
    
    1.9
    %Utilities
    
    
    5,442
    
    
    
    5,006
    
    
    
    436
    
    
    
    8.7
    %Other expenses
    
    
    29
    
    
    
    4
    
    
    
    25
    
    
    
    625.0
    %Total other hotel operating costs
    
    $
    26,736
    
    
    $
    24,457
    
    
    $
    2,279
    
    
    
    9.3
    %Property and other taxes, insurance and leases
    
    $
    5,900
    
    
    $
    5,416
    
    
    $
    484
    
    
    
    8.9
    %Corporate and other
    
    
    6,039
    
    
    
    4,412
    
    
    
    1,627
    
    
    
    36.9
    %Casualty losses
    
    
    190
    
    
    
    2,019
    
    
    
    (1,829
    )
    
    
    (90.6
    )%Depreciation and amortization
    
    
    7,173
    
    
    
    6,955
    
    
    
    218
    
    
    
    3.1
    %Impairment of long-lived assets
    
    
    611
    
    
    
    
    
    
    
    611
    
    
    
    n/mTotal other operating expenses
    
    $
    46,649
    
    
    $
    43,259
    
    
    $
    3,390
    
    
    
    7.8
    %% of total revenues
    
    
    54.7
    %
    
    
    52.7
    %
  
    
    Hotel general and administrative costs increased $0.8 million or 14.9%
primarily as a result of training costs related to franchise mandated property
management system upgrades, and the write off of Northwest and Delta airline
receivables as a result of their respective Chapter 11 bankruptcy filings; and
    
    Advertising and promotion costs increased $0.6 million or 15.4% primarily due
to the addition of sales personnel and sales programs to promote our newly renovated
properties and costs related to increased group medical insurance claims.
     31




---



##### Table of Contents



Non-operating income (expenses)  Continuing Operations
 Three months endedSeptember 30, 2005
    
    September 30, 2004
    
    Increase (decrease)(unaudited in
thousands)Non-operating income (expenses):Business interruption proceeds
    
    $
    6,094
    
    
    $
    
    
    
    $
    6,094
    
    
    
    n/mInterest income and other
    
    
    348
    
    
    
    212
    
    
    
    136
    
    
    
    64.2
    %Interest expense and other financing costs:Preferred Stock dividend
    
    
    
    
    
    
    (866
    )
    
    
    (866
    )
    
    
    (100.0)
    %Interest expense
    
    
    (6,855
    )
    
    
    (7,264
    )
    
    
    (409
    )
    
    
    (5.6)
    %Loss on preferred stock redemption
    
    
    
    
    
    
    (4,471
    )
    
    
    (4,471
    )
    
    
    (100.0)
    %Minority interests
    
    
    (1,127
    )
    
    
    503
    
    
    
    (1,630
    )
    
    
    n/m
      Revenues  Continuing Operations
 Nine months endedSeptember 30, 2005
    
    
    September 30, 2004
    
    
    Increase (decrease)Revenues
(unaudited, $ in thousands):Rooms
    
    $
    184,904
    
    
    $
    181,232
    
    
    $
    3,672
    
    
    
    2.0
    %Food and beverage
    
    
    50,424
    
    
    
    52,050
    
    
    
    (1,626
    )
    
    
    (3.1
    )%Other
    
    
    7,761
    
    
    
    8,212
    
    
    
    (451
    )
    
    
    (5.5
    )%Total revenues
    
    $
    243,089
    
    
    $
    241,494
    
    
    $
    1,595
    
    
    
    0.7
    %Occupancy
    
    
    63.6
    %
    
    
    63.7
    %
    
    
    
    
    
    
    (0.2
    )%ADR
    
    $
    82.17
    
    
    $
    77.83
    
    
    $
    4.34
    
    
    
    5.6
    %RevPAR
    
    $
    52.25
    
    
    $
    49.55
    
    
    $
    2.70
    
    
    
    5.4
    %
  32




---



##### Table of Contents



33




---



##### Table of Contents



Hotel
    
    Room
    
    
    
    Nine Months EndedCount
    
    Count
    
    
    
    September 30, 2005
    
    September 30, 2004
    
    Change/% Change75
    
    
    13,477
    
    
    All Continuing OperationsOccupancy
    
    
    63.6
    %
    
    
    63.7
    %
    
    
    
    
    
    
    (0.1
    %)ADR
    
    $
    82.17
    

    
    $
    77.83
    
    
    $
    4.34
    
    
    
    5.6
    %RevPAR
    
    $
    52.25
    
    
    $
    49.55
    
    
    $
    2.70
    
    
    
    5.4
    %73
    
    
    12,963
    
    
    Continuing Operations less two hotels
closed due to hurricane damageOccupancy
    
    
    63.6
    %
    
    
    63.5
    %
    
    
    
    
    
    
    0.2
    %ADR
    
    $
    82.17
    
    
    $
    77.30
    
    
    $
    4.87
    
    
    
    6.3
    %RevPAR
    
    $
    52.25
    
    
    $
    49.05
    
    
    $
    3.20
    
    
    
    6.5
    %RevPAR Index
    
    
    98.3
    %
    
    
    99.2
    %
    
    
    
    
    
    
    (0.9
    %)50
    
    
    9,193
    
    
    Continuing Operations less two hotels
closed due to hurricane damage and
hotels under renovation in the first,
second & third quarters 2004 and 2005Occupancy
    
    
    63.3
    %
    
    
    62.3
    %
    
    
    
    
    
    
    1.6
    %ADR
    
    $
    79.96
    
    
    $
    75.50
    
    
    $
    4.46
    
    
    
    5.9
    %RevPAR
    
    $
    50.57
    
    
    $
    47.05
    
    
    $
    3.52
    
    
    
    7.5
    %RevPAR Index
    
    
    100.3
    %
    
    
    99.5
    %
    
    
    
    
    
    
    0.8
    %21
    
    
    3,013
    
    
    Hotels completing major renovations in
2003 and 2004Occupancy
    
    
    71.0
    %
    
    
    66.8
    %
    
    
    
    
    
    
    6.3
    %ADR
    
    $
    87.98
    
    
    $
    82.72
    
    
    $
    5.26
    
    
    
    6.4
    %RevPAR
    
    $
    62.49
    
    
    $
    55.27
    
    
    $
    7.22
    
    
    
    13.1
    %RevPAR Index
    
    
    108.8
    %
    
    
    103.9
    %
    
    
    
    
    
    
    4.7
    %16
    
    
    1,845
    
    
    Marriott HotelsOccupancy
    
    
    72.0
    %
    
    
    68.6
    %
    
    
    
    
    
    
    5.0
    %ADR
    
    $
    88.08
    
    
    $
    83.14
    
    
    $
    4.94
    
    
    
    5.9
    %RevPAR
    
    $
    63.15
    
    
    $
    57.05
    
    
    $
    6.10
    
    
    
    10.7
    %RevPAR Index
    
    
    119.0
    %
    
    
    114.8
    %
    
    
    
    
    
    
    3.7
    %4
    
    
    777
    
    
    Hilton HotelsOccupancy
    
    
    68.5
    %
    
    
    66.1
    %
    
    
    
    
    
    
    3.6
    %ADR
    
    $
    96.27
    
    
    $
    90.99
    
    
    $
    5.28
    
    
    
    5.8
    %RevPAR
    
    $
    65.93
    
    
    $
    60.15
    
    
    $
    5.78
    
    
    
    9.6
    %RevPAR Index
    
    
    96.0
    %
    
    
    92.1
    %
    
    
    
    
    
    
    4.2
    %45
    
    
    8,829
    
    
    IHG Hotels less two hotels closed due
to hurricane damageOccupancy
    
    
    64.1
    %
    
    
    65.0
    %
    
    
    
    
    
    
    (1.4
    %)ADR
    
    $
    81.46
    
    
    $
    76.61
    
    
    $
    4.85
    
    
    
    6.3
    %RevPAR
    
    $
    52.25
    
    
    $
    49.77
    
    
    $
    2.48
    
    
    
    5.0
    %RevPAR Index
    
    
    95.9
    %
    
    
    98.4
    %
    
    
    
    
    
    
    (2.5
    %)8
    
    
    1,512
    
    
    Other Brands and Independent HotelsOccupancy
    
    
    47.9
    %
    
    
    47.3
    %
    
    
    
    
    
    
    1.3
    %ADR
    
    $
    66.60
    
    
    $
    63.30
    
    
    $
    3.30
    
    
    
    5.2
    %RevPAR
    
    $
    31.91
    
    
    $
    29.95
    
    
    $
    1.96
    
    
    
    6.5
    %RevPAR Index
    
    
    83.8
    %
    
    
    83.5
    %
    
    
    
    
    
    
    0.4
    %




---



##### Table of Contents



Direct operating expenses  Continuing Operations
 Nine months endedSeptember 30, 2005
    
    
    September 30, 2004
    
    
    Increase (decrease)(unaudited in
thousands)Direct operating expenses:Rooms
    
    $
    51,086
    
    
    $
    49,709
    
    
    $
    1,377
    
    
    
    2.8
    %Food and beverage
    
    
    36,078
    
    
    
    36,097
    
    
    
    (19
    )
    
    
    (0.1
    )%Other
    
    
    6,059
    
    
    
    6,020
    
    
    
    39
    
    
    
    0.6
    %Total direct operating expenses
    
    $
    93,223
    
    
    $
    91,826
    
    
    $
    1,397
    
    
    
    1.5
    %% of total revenues
    
    
    38.4
    %
    
    
    38.0
    %
  Other operating expenses  Continuing Operations
 Nine months endedSeptember 30, 2005
    
    
    September 30, 2004
    
    
    Increase (decrease)(unaudited in
thousands)Other operating expenses:Other hotel operating costs:General and administrative
    
    $
    17,325
    
    
    $
    15,605
    
    
    $
    1,720
    
    
    
    11.0
    %Advertising and promotion
    
    
    12,481
    
    
    
    11,260
    
    
    
    1,221
    
    
    
    10.8
    %Franchise fees
    
    
    16,881
    
    
    
    16,564
    
    
    
    317
    
    
    
    1.9
    %Repairs and maintenance
    
    
    13,576
    
    
    
    13,082
    
    
    
    494
    
    
    
    3.8
    %Utilities
    
    
    14,852
    
    
    
    14,066
    
    
    
    786
    
    
    
    5.6
    %Other expenses
    
    
    212
    
    
    
    (7
    )
    
    
    219
    
    
    
    n/mTotal other hotel operating costs
    
    $
    75,327
    
    
    $
    70,570
    
    
    $
    4,757
    
    
    
    6.7
    %Property and other taxes, insurance and leases
    
    $
    17,399
    
    
    $
    16,163
    
    
    $
    1,236
    
    
    
    7.6
    %Corporate and other
    
    
    16,567
    
    
    
    13,437
    
    
    
    3,130
    
    
    
    23.3
    %Casualty losses
    
    
    322
    
    
    
    2,019
    
    
    
    (1,697
    )
    
    
    (84.1
    )%Depreciation and amortization
    
    
    20,698
    
    
    
    20,422
    
    
    
    276
    
    
    
    1.4
    %Impairment of long-lived assets
    
    
    3,220
    
    
    
    
    
    
    
    3,220
    
    
    
    n/mTotal other operating expenses
    
    $
    133,533
    
    
    $
    122,611
    
    
    $
    10,922
    
    
    
    8.9
    %% of total revenues
    
    
    54.9
    %
    
    
    50.8
    %
  
    
    Hotel general and administrative costs increased $1.7 million or 11.0%
primarily as a result of increased costs related to our property management system
conversions, an increase in group medical insurance claims, additional payroll costs,
an increase in vacation pay accruals and the write-off of the Delta Airlines and
Northwest Airlines receivables as a result of their respective Chapter 11 bankruptcy
filings;
    
    Advertising and promotion costs increased $1.2 million or 10.8% primarily due
to the addition of sales personnel and sales programs to promote our newly renovated
properties and added costs related to increased group medical insurance claims; and
    
    Utility costs increased $0.8 million or 5.6% due to higher rates.
 35




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##### Table of Contents




    
    $1.6 million impairment charge on the Holiday Inn, Lawrence, KS hotel due to a
reduced fair value appraisal;
    
    $0.9 million impairment charge on the Holiday Inn, Hamburg, NY hotel due to its
undiscounted cash flows being less than its carrying value and the resulting broker
opinion of value requiring a write-down of the asset to its estimated fair value;
    
    $0.5 million impairment charge on the Park Inn, Brunswick, GA hotel due to its
undiscounted cash flows being less than its carrying value and the resulting broker
opinion of value requiring a write-down of the asset to its estimated fair value; and
    
    $0.3 million write-off of the net book value of assets that were replaced in
the first nine months of 2005.
 Non-operating income (expenses)  Continuing Operations
 Nine months endedSeptember 30, 2005
    
    September 30, 2004
    
    Increase (decrease)(unaudited in
thousands)Non-operating income (expenses):Business interruption proceeds
    
    $
    7,823
    
    
    $
    
    
    
    $
    7,823
    
    
    
    n/mInterest income and other
    
    
    573
    
    
    
    321
    
    
    
    252
    
    
    
    78.5
    %Interest expense and other financing costs:Preferred Stock dividend
    
    
    
    
    
    
    (9,383
    )
    
    
    (9,383
    )
    
    
    (100.0
    )%Interest expense
    
    
    (20,749
    )
    
    
    (34,795
    )
    
    
    (14,046
    )
    
    
    (40.4
    )%Loss on preferred stock redemption
    
    
    
    
    
    
    (6,063
    )
    
    
    6,063
    
    
    
    (100.0
    )%Minority interests
    
    
    (1,102
    )
    
    
    285
    
    
    
    (1,387
    )
    
    
    n/m
     36




---



##### Table of Contents



Results of Operations  Discontinued Operations
    a)
    
    $0.6 million on the Quality Hotel Metairie, LA to record the difference
between the fair value and the carrying value of the hotel;b)
    
    $0.2 million on the Holiday Inn Austin, TX to adjust for the further reduction
in the estimated selling price of this hotel;c)
    
    $0.1 million on the Holiday Inn Florence, KY to adjust for the further
reduction in the estimated selling price of this hotel; andd)
    
    $0.1 million on the Holiday Inn Morgantown, WV to adjust for the further
reduction in the estimated selling price of this hotel.
 Income taxes
  EBITDA
   37




---



##### Table of Contents



Three months ended
    
    
    Nine months endedSeptember 30, 2005
    
    
    September 30, 2004
    
    
    September 30, 2005
    
    
    September 30, 2004(Unaudited in thousands)Continuing operations:Income (loss) from continuing operations
    
    $
    5,025
    
    
    $
    (5,689
    )
    
    $
    2,730
    
    
    $
    (23,066
    )Depreciation and amortization
    
    
    7,173
    
    
    
    6,955
    
    
    
    20,698
    
    
    
    20,422Interest income
    
    
    (347
    )
    
    
    (175
    )
    
    
    (771
    )
    
    
    (303
    )Interest expense
    
    
    6,855
    
    
    
    7,264
    
    
    
    20,750
    
    
    
    34,795Preferred stock dividends
    
    
    
    
    
    
    866
    
    
    
    
    
    
    
    9,383Loss on preferred stock redemption
    
    
    
    
    
    
    4,471
    
    
    
    
    
    
    
    6,063Provision for income taxes  continuing operations
    
    
    13
    
    
    
    337
    
    
    
    148
    
    
    
    488EBITDA from continuing operations
    
    $
    18,719
    
    
    $
    14,029
    
    
    $
    43,555
    
    
    $
    47,782
  Three months ended
    
    Nine months endedSeptember 30, 2005
    
    September 30, 2004
    
    September 30, 2005
    
    September 30, 2004(Unaudited in thousands)Post-emergence Chapter 11 expenses, included in corporate
and other on
our consolidated statements of operations
    
    $
    13
    
    
    $
    67
    
    
    $
    175
    
    
    $
    397Impairment loss
    
    
    611
    
    
    
    
    
    
    
    3,220
    
    
    
    Casualty losses  hurricane damage
    
    
    190
    
    
    
    2,019
    
    
    
    322
    
    
    
    2,019Write-off of receivable from non-consolidated hotel
    
    
    (200
    )
    
    
    
    
    
    
    746
    
    
    
    Write-off of investment in subsidiary for non-consolidated hotel
    
    
    
    
    
    
    
    
    
    
    170
    
    
    
    Guaranty payments on Kansas properties
    
    
    
    
    
    
    
    
    
    
    500
    
    
    
    
 Additional Financial Information Regarding Quarterly Results of Our Continuing Operations
  38




---



##### Table of Contents



Three Months Ended9/30/05
    
    
    6/30/05
    
    
    3/31/05
    
    
    12/31/04
    
    
    9/30/04
    
    
    6/30/04
    
    
    3/31/04
    
    
    12/31/03($ in thousands)Revenues:Rooms
    
    $
    65,946
    
    
    $
    64,497
    
    
    $
    54,461
    
    
    $
    50,672
    
    
    $
    62,660
    
    
    $
    62,522
    
    
    $
    56,050
    
    
    $
    50,726Food and beverage
    
    
    16,706
    
    
    
    18,817
    
    
    
    14,901
    
    
    
    19,258
    
    
    
    16,656
    
    
    
    19,167
    
    
    
    16,227
    
    
    
    18,513Other
    
    
    2,598
    
    
    
    2,671
    
    
    
    2,492
    
    
    
    2,294
    
    
    
    2,752
    
    
    
    2,760
    
    
    
    2,701
    
    
    
    2,51085,250
    
    
    
    85,985
    
    
    
    71,854
    
    
    
    72,224
    
    
    
    82,068
    
    
    
    84,449
    
    
    
    74,978
    
    
    
    71,749Operating expenses:Direct:Rooms
    
    
    17,959
    
    
    
    17,632
    
    
    
    15,494
    
    
    
    15,648
    
    
    
    17,895
    
    
    
    16,357
    
    
    
    15,457
    
    
    
    15,441Food and beverage
    
    
    12,034
    
    
    
    13,062
    
    
    
    10,982
    
    
    
    13,936
    
    
    
    12,328
    
    
    
    12,477
    
    
    
    11,289
    
    
    
    12,307Other
    
    
    2,030
    
    
    
    2,098
    
    
    
    1,930
    
    
    
    1,842
    
    
    
    2,052
    
    
    
    2,038
    
    
    
    1,931
    
    
    
    2,13232,023
    
    
    
    32,792
    
    
    
    28,406
    
    
    
    31,426
    
    
    
    32,275
    
    
    
    30,872
    
    
    
    28,677
    
    
    
    29,88053,227
    
    
    
    53,193
    
    
    
    43,448
    
    
    
    40,798
    
    
    
    49,793
    
    
    
    53,577
    
    
    
    46,301
    
    
    
    41,869Other operating expenses:Other hotel operating costs
    
    
    26,736
    
    
    
    24,693
    
    
    
    23,900
    
    
    
    22,763
    
    
    
    24,457
    
    
    
    22,916
    
    
    
    23,194
    
    
    
    21,677Property and other taxes, insurance and leases
    
    
    5,900
    
    
    
    5,810
    
    
    
    5,690
    
    
    
    5,037
    
    
    
    5,416
    
    
    
    5,187
    
    
    
    5,561
    
    
    
    5,118Corporate and other
    
    
    6,039
    
    
    
    5,870
    
    
    
    4,658
    
    
    
    3,451
    
    
    
    4,412
    
    
    
    4,691
    
    
    
    4,335
    
    
    
    4,537Casualty gains and losses
    
    
    190
    
    
    
    28
    
    
    
    104
    
    
    
    295
    
    
    
    2,019
    
    
    
    
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    7,173
    
    
    
    6,867
    
    
    
    6,658
    
    
    
    6,523
    
    
    
    6,955
    
    
    
    6,797
    
    
    
    6,671
    
    
    
    6,982Impairment of long-lived assets
    
    
    611
    
    
    
    954
    
    
    
    1,655
    
    
    
    4,878
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,062Other operating expenses
    
    
    46,649
    
    
    
    44,222
    
    
    
    42,665
    
    
    
    42,947
    
    
    
    43,259
    
    
    
    39,591
    
    
    
    39,761
    
    
    
    45,3766,578
    
    
    
    8,971
    
    
    
    783
    
    
    
    (2,149
    )
    
    
    6,534
    
    
    
    13,986
    
    
    
    6,540
    
    
    
    (3,507
    )Other income (expenses):Business interruption insurance proceeds
    
    
    6,094
    
    
    
    1,729
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interest income and other
    
    
    348
    
    
    
    54
    
    
    
    171
    
    
    
    360
    
    
    
    212
    
    
    
    66
    
    
    
    43
    
    
    
    486Interest expense and other financing costs:Preferred stock dividend
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (866
    )
    
    
    (4,233
    )
    
    
    (4,285
    )
    
    
    (4,065
    )Other interest expense
    
    
    (6,855
    )
    
    
    (6,912
    )
    
    
    (6,983
    )
    
    
    (7,456
    )
    
    
    (7,264
    )
    
    
    (19,507
    )
    
    
    (8,024
    )
    
    
    (7,583
    )Gain on asset dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    444Loss on preferred stock redemption
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,471
    )
    
    
    (1,592
    )
    
    
    
    
    
    
    (Loss) income before income taxes, reorganization items and
minority interests
    
    
    6,165
    
    
    
    3,842
    
    
    
    (6,029
    )
    
    
    (9,245
    )
    
    
    (5,855
    )
    
    
    (11,280
    )
    
    
    (5,726
    )
    
    
    (14,225
    )Reorganization items
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    647Income (loss) before income taxes and minority interest
    
    
    6,165
    
    
    
    3,842
    
    
    
    (6,029
    )
    
    
    (9,245
    )
    
    
    (5,855
    )
    
    
    (11,280
    )
    
    
    (5,726
    )
    
    
    (13,578
    )Minority interests
    
    
    (1,127
    )
    
    
    (120
    )
    
    
    145
    
    
    
    407
    
    
    
    503
    
    
    
    (71
    )
    
    
    (147
    )
    
    
    1,412Income (loss) before income taxes  continuing operations
    
    
    5,038
    
    
    
    3,722
    
    
    
    (5,884
    )
    
    
    (8,838
    )
    
    
    (5,352
    )
    
    
    (11,351
    )
    
    
    (5,873
    )
    
    
    (12,166
    )(Provision) benefit for income taxes  continuing operations
    
    
    (13
    )
    
    
    (67
    )
    
    
    (67
    )
    
    
    259
    
    
    
    (337
    )
    
    
    (76
    )
    
    
    (76
    )
    
    
    48Income (loss) from continuing operations
    
    
    5,025
    
    
    
    3,655
    
    
    
    (5,951
    )
    
    
    (8,579
    )
    
    
    (5,689
    )
    
    
    (11,427
    )
    
    
    (5,949
    )
    
    
    (12,118
    )Discontinued operations:(Loss) income from discontinued operations before income
taxes
    
    
    4,684
    
    
    
    (1,781
    )
    
    
    (1,134
    )
    
    
    (5,185
    )
    
    
    1,952
    
    
    
    4,180
    
    
    
    (1,136
    )
    
    
    (4,388
    )Income tax benefit (provision)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (Loss) income from discontinued operations
    
    
    4,684
    
    
    
    (1,781
    )
    
    
    (1,134
    )
    
    
    (5,185
    )
    
    
    1,952
    
    
    
    4,180
    
    
    
    (1,136
    )
    
    
    (4,388
    )Net income (loss)
    
    
    9,709
    
    
    
    1,874
    
    
    
    (7,085
    )
    
    
    (13,764
    )
    
    
    (3,737
    )
    
    
    (7,247
    )
    
    
    (7,085
    )
    
    
    (16,506
    )Net income (loss) attributable to common stock
    
    $
    9,709
    
    
    $
    1,874
    
    
    $
    (7,085
    )
    
    $
    (13,764
    )
    
    $
    (3,737
    )
    
    $
    (7,247
    )
    
    $
    (7,085
    )
    
    $
    (16,506
    )
 EBITDA Reconciliation of Continuing Operations
  Three Months Ended9/30/05
    
    6/30/05
    
    3/31/05
    
    12/31/04
    
    9/30/04
    
    6/30/04
    
    3/31/04
    
    12/31/03($ in thousands)Continuing operations:Income (loss) from continuing operations
    
    $
    5,025
    
    
    $
    3,655
    
    
    $
    (5,951
    )
    
    $
    (8,579
    )
    
    $
    (5,689
    )
    
    $
    (11,427
    )
    
    $
    (5,949
    )
    
    $
    (12,118
    )Depreciation and amortization
    
    
    7,173
    
    
    
    6,867
    
    
    
    6,658
    
    
    
    6,523
    
    
    
    6,955
    
    
    
    6,797
    
    
    
    6,670
    
    
    
    6,982Interest income
    
    
    (347
    )
    
    
    (205
    )
    
    
    (220
    )
    
    
    (346
    )
    
    
    (175
    )
    
    
    (80
    )
    
    
    (48
    )
    
    
    (196
    )Interest expense
    
    
    6,855
    
    
    
    6,912
    
    
    
    6,983
    
    
    
    7,456
    
    
    
    7,264
    
    
    
    19,507
    
    
    
    8,024
    
    
    
    7,583Preferred stock dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    866
    
    
    
    4,233
    
    
    
    4,285
    
    
    
    4,065Loss on preferred stock redemption
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,471
    
    
    
    1,592
    
    
    
    
    
    
    
    Provision (benefit) for income taxes  continuing operations
    
    
    13
    
    
    
    67
    
    
    
    67
    
    
    
    (259
    )
    
    
    337
    
    
    
    76
    
    
    
    76
    
    
    
    (48
    )EBITDA from continuing operations
    
    $
    18,719
    
    
    $
    17,296
    
    
    $
    7,537
    
    
    $
    4,795
    
    
    $
    14,029
    
    
    $
    20,698
    
    
    $
    13,058
    
    
    $
    6,268
 39




---



##### Table of Contents



Three Months Ended9/30/05
    
    6/30/05
    
    3/31/05
    
    12/31/04
    
    9/30/04
    
    6/30/04
    
    3/31/04
    
    12/31/03($ in thousands)Post-emergence Chapter 11 expenses, included in corporate
and other on consolidated statement of operations
    
    $
    13
    
    
    $
    52
    
    
    $
    110
    
    
    $
    61
    
    
    $
    67
    
    
    $
    135
    
    
    $
    195
    
    
    $
    1,289Reorganization expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (647
    )Impairment loss
    
    
    611
    
    
    
    954
    
    
    
    1,655
    
    
    
    4,878
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,062Gain on asset dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (444
    )Casualty losses - 2004 and 2005 hurricane damage
    
    
    190
    
    
    
    28
    
    
    
    104
    
    
    
    294
    
    
    
    2,019
    
    
    
    
    
    
    
    
    
    
    
    Adjustments to bankruptcy claims reserves
    
    $
    
    
    
    
    
    
    
    
    
    
    
    
    (38
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (302
    )Write-off (recovery) of receivable from non-consolidated hotel
    
    
    (200
    )
    
    
    946
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Write-off of investment in subsidiary for non-consolidated hotel
    
    
    
    
    
    
    170
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Guaranty payments on Kansas properties
    
    
    
    
    
    
    500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 Hotel data by market segment and region
 Hotel data by market segment
  
    
    The Springhill Suites by Marriott hotel in Pinehurst, North Carolina (acquired
in December 2004) since we do not have comparative figures for the three months ended
September 30, 2004;
    
    The Holiday Inn Melbourne, Florida hotel since it is currently closed for
hurricane renovations; and
    
    The Crowne Plaza West Palm Beach, Florida hotel since it is currently closed
for hurricane renovations.
 40




---



##### Table of Contents



Combined Continuing and Discontinued Operations  75 hotels (excludes Pinehurst, West Palm
Beach and Melbourne hotels)
 Capital expendituresNine Months Ended
    
    Three Months Ended
    
    Nine Months EndedSeptember 30, 2005
    
    September 30, 2005
    
    September 30, 2004
    
    September 30, 2005
    
    September 30, 2004(in thousands $)Upper UpscaleNumber of properties
    
    $
    291
    
    
    
    4
    
    
    
    4
    
    
    
    4
    
    
    
    4Number of rooms
    
    
    
    
    
    
    825
    
    
    
    825
    
    
    
    825
    
    
    
    825Occupancy
    
    
    
    
    
    
    75.6
    %
    
    
    72.1
    %
    
    
    71.7
    %
    
    
    69.4
    %Average daily rate
    
    
    
    
    
    $
    102.63
    
    
    $
    97.95
    
    
    $
    101.29
    
    
    $
    95.94RevPAR
    
    
    
    
    
    $
    77.60
    
    
    $
    70.59
    
    
    $
    72.64
    
    
    $
    66.56RevPAR change
    
    
    
    
    
    
    9.9
    %
    
    
    
    
    
    
    9.1
    %UpscaleNumber of properties
    
    
    8,591
    
    
    
    18
    
    
    
    16
    
    
    
    18
    
    
    
    16Number of rooms
    
    
    
    
    
    
    3,322
    
    
    
    2,779
    
    
    
    3,322
    
    
    
    2,779Occupancy
    
    
    
    
    
    
    67.7
    %
    
    
    66.9
    %
    
    
    67.4
    %
    
    
    67.1
    %Average daily rate
    
    
    
    
    
    $
    87.49
    
    
    $
    84.64
    
    
    $
    88.17
    
    
    $
    85.27RevPAR
    
    
    
    
    
    $
    59.19
    
    
    $
    56.67
    
    
    $
    59.44
    
    
    $
    57.20RevPAR change
    
    
    
    
    
    
    4.5
    %
    
    
    
    
    
    
    3.9
    %Midscale with Food & BeverageNumber of properties
    
    
    22,877
    
    
    
    42
    
    
    
    44
    
    
    
    42
    
    
    
    44Number of rooms
    
    
    
    
    
    
    8,010
    
    
    
    8,435
    
    
    
    8,010
    
    
    
    8,435Occupancy
    
    
    
    
    
    
    63.9
    %
    
    
    66.1
    %
    
    
    60.6
    %
    
    
    62.3
    %Average daily rate
    
    
    
    
    
    $
    81.89
    
    
    $
    74.73
    
    
    $
    78.76
    
    
    $
    74.00RevPAR
    
    
    
    
    
    $
    52.31
    
    
    $
    49.42
    
    
    $
    47.74
    
    
    $
    46.09RevPAR change
    
    
    
    
    
    
    5.9
    %
    
    
    
    
    
    
    3.6
    %Midscale without Food &
BeverageNumber of properties
    
    
    1,437
    
    
    
    8
    
    
    
    8
    
    
    
    8
    
    
    
    8Number of rooms
    
    
    
    
    
    
    926
    
    
    
    926
    
    
    
    926
    
    
    
    926Occupancy
    
    
    
    
    
    
    69.2
    %
    
    
    65.3
    %
    
    
    68.2
    %
    
    
    64.2
    %Average daily rate
    
    
    
    
    
    $
    68.25
    
    
    $
    59.98
    
    
    $
    66.96
    
    
    $
    61.27RevPAR
    
    
    
    
    
    $
    47.21
    
    
    $
    39.17
    
    
    $
    45.69
    
    
    $
    39.34RevPAR change
    
    
    
    
    
    
    20.5
    %
    
    
    
    
    
    
    16.1
    %EconomyNumber of properties
    
    
    1,164
    
    
    
    1
    
    
    
    0
    
    
    
    1
    
    
    
    0Number of rooms
    
    
    
    
    
    
    126
    
    
    
    0
    
    
    
    126
    
    
    
    0Occupancy
    
    
    
    
    
    
    38.6
    %
    
    
    0.0
    %
    
    
    53.0
    %
    
    
    0.0
    %Average daily rate
    
    
    
    
    
    $
    57.53
    
    
    $
    0.00
    
    
    $
    64.20
    
    
    $
    0.00RevPAR
    
    
    
    
    
    $
    22.21
    
    
    $
    0.00
    
    
    $
    34.03
    
    
    $
    0.00RevPAR change
    
    
    
    
    
    
    n/m
    
    
    
    
    
    
    
    n/mIndependent HotelsNumber of properties
    
    
    60
    
    
    
    2
    
    
    
    3
    
    
    
    2
    
    
    
    3Number of rooms
    
    
    
    
    
    
    291
    
    
    
    535
    
    
    
    291
    
    
    
    535Occupancy
    
    
    
    
    
    
    38.7
    %
    
    
    38.9
    %
    
    
    36.7
    %
    
    
    39.0
    %Average daily rate
    
    
    
    
    
    $
    63.55
    
    
    $
    61.99
    
    
    $
    65.76
    
    
    $
    62.78RevPAR
    
    
    
    
    
    $
    24.58
    
    
    $
    24.11
    
    
    $
    24.15
    
    
    $
    24.51RevPAR change
    
    
    
    
    
    
    1.9
    %
    
    
    
    
    
    
    -1.5
    %All HotelsNumber of properties
    
    
    34,420
    
    
    
    75
    
    
    
    75
    
    
    
    75
    
    
    
    75Number of rooms
    
    
    
    
    
    
    13,500
    
    
    
    13,500
    
    
    
    13,500
    
    
    
    13,500Occupancy
    
    
    
    
    
    
    65.1
    %
    
    
    65.5
    %
    
    
    62.9
    %
    
    
    62.9
    %Average daily rate
    
    
    
    
    
    $
    83.43
    
    
    $
    77.07
    
    
    $
    81.66
    
    
    $
    76.79RevPAR
    
    
    
    
    
    $
    54.32
    
    
    $
    50.50
    
    
    $
    51.36
    
    
    $
    48.31RevPAR change
    
    
    
    
    
    
    7.6
    %
    
    
    
    
    
    
    6.3
    %
 Continuing Operations  73 hotels (excludes Pinehurst, West Palm Beach, Melbourne and held for
sale hotels)
 41




---



##### Table of Contents



Capital expendituresNine Months Ended
    
    Three Months Ended
    
    Nine Months EndedSeptember 30, 2005
    
    September 30, 2005
    
    September 30, 2004
    
    September 30, 2005
    
    September 30, 2004(in thousands $)Upper UpscaleNumber of properties
    
    $
    291
    
    
    
    4
    
    
    
    4
    
    
    
    4
    
    
    
    4Number of rooms
    
    
    
    
    
    
    825
    
    
    
    825
    
    
    
    825
    
    
    
    825Occupancy
    
    
    
    
    
    
    75.6
    %
    
    
    72.1
    %
    
    
    71.7
    %
    
    
    69.4
    %Average daily rate
    
    
    
    
    
    $
    102.63
    
    
    $
    97.95
    
    
    $
    101.29
    
    
    $
    95.94RevPAR
    
    
    
    
    
    $
    77.60
    
    
    $
    70.59
    
    
    $
    72.64
    
    
    $
    66.56RevPAR change
    
    
    
    
    
    
    9.9
    %
    
    
    
    
    
    
    9.1
    %UpscaleNumber of properties
    
    
    8,591
    
    
    
    18
    
    
    
    16
    
    
    
    18
    
    
    
    16Number of rooms
    
    
    
    
    
    
    3,322
    
    
    
    2,779
    
    
    
    3,322
    
    
    
    2,779Occupancy
    
    
    
    
    
    
    67.7
    %
    
    
    66.9
    %
    
    
    67.4
    %
    
    
    67.1
    %Average daily rate
    
    
    
    
    
    $
    87.49
    
    
    $
    84.64
    
    
    $
    88.17
    
    
    $
    85.27RevPAR
    
    
    
    
    
    $
    59.19
    
    
    $
    56.67
    
    
    $
    59.44
    
    
    $
    57.20RevPAR change
    
    
    
    
    
    
    4.5
    %
    
    
    
    
    
    
    3.9
    %Midscale with Food & BeverageNumber of properties
    
    
    22,766
    
    
    
    40
    
    
    
    42
    
    
    
    40
    
    
    
    42Number of rooms
    
    
    
    
    
    
    7,607
    
    
    
    8,032
    
    
    
    7,607
    
    
    
    8,032Occupancy
    
    
    
    
    
    
    64.9
    %
    
    
    66.3
    %
    
    
    61.2
    %
    
    
    62.5
    %Average daily rate
    
    
    
    
    
    $
    82.31
    
    
    $
    75.53
    
    
    $
    79.39
    
    
    $
    74.55RevPAR
    
    
    
    
    
    $
    53.40
    
    
    $
    50.06
    
    
    $
    48.55
    
    
    $
    46.62RevPAR change
    
    
    
    
    
    
    6.7
    %
    
    
    
    
    
    
    4.1
    %Midscale without Food & BeverageNumber of properties
    
    
    1,437
    
    
    
    8
    
    
    
    8
    
    
    
    8
    
    
    
    8Number of rooms
    
    
    
    
    
    
    926
    
    
    
    926
    
    
    
    926
    
    
    
    926Occupancy
    
    
    
    
    
    
    69.2
    %
    
    
    65.3
    %
    
    
    68.2
    %
    
    
    64.2
    %Average daily rate
    
    
    
    
    
    $
    68.25
    
    
    $
    59.98
    
    
    $
    66.96
    
    
    $
    61.27RevPAR
    
    
    
    
    
    $
    47.21
    
    
    $
    39.17
    
    
    $
    45.69
    
    
    $
    39.34RevPAR change
    
    
    
    
    
    
    20.5
    %
    
    
    
    
    
    
    16.1
    %EconomyNumber of properties
    
    
    1,164
    
    
    
    1
    
    
    
    0
    
    
    
    1
    
    
    
    0Number of rooms
    
    
    
    
    
    
    126
    
    
    
    0
    
    
    
    126
    
    
    
    0Occupancy
    
    
    
    
    
    
    38.6
    %
    
    
    0.0
    %
    
    
    53.0
    %
    
    
    0.0
    %Average daily rate
    
    
    
    
    
    $
    57.53
    
    
    $
    0.00
    
    
    $
    64.20
    
    
    $
    0.00RevPAR
    
    
    
    
    
    $
    22.21
    
    
    $
    0.00
    
    
    $
    34.03
    
    
    $
    0.00RevPAR change
    
    
    
    
    
    
    n/m
    
    
    
    
    
    
    
    n/mIndependent HotelsNumber of properties
    
    
    60
    
    
    
    2
    
    
    
    3
    
    
    
    2
    
    
    
    3Number of rooms
    
    
    
    
    
    
    291
    
    
    
    1,824
    
    
    
    291
    
    
    
    1,824Occupancy
    
    
    
    
    
    
    38.7
    %
    
    
    38.9
    %
    
    
    36.7
    %
    
    
    39.0
    %Average daily rate
    
    
    
    
    
    $
    63.55
    
    
    $
    61.99
    
    
    $
    65.76
    
    
    $
    62.78RevPAR
    
    
    
    
    
    $
    24.58
    
    
    $
    24.11
    
    
    $
    24.15
    
    
    $
    24.51RevPAR change
    
    
    
    
    
    
    1.9
    %
    
    
    
    
    
    
    -1.5
    %All HotelsNumber of properties
    
    
    34,309
    
    
    
    73
    
    
    
    73
    
    
    
    73
    
    
    
    73Number of rooms
    
    
    
    
    
    
    13,097
    
    
    
    14,386
    
    
    
    13,097
    
    
    
    14,386Occupancy
    
    
    
    
    
    
    65.7
    %
    
    
    65.6
    %
    
    
    63.3
    %
    
    
    63.1
    %Average daily rate
    
    
    
    
    
    $
    83.70
    
    
    $
    77.63
    
    
    $
    82.08
    
    
    $
    77.20RevPAR
    
    
    
    
    
    $
    55.02
    
    
    $
    50.93
    
    
    $
    51.95
    
    
    $
    48.71RevPAR change
    
    
    
    
    
    
    8.0
    %
    
    
    
    
    
    
    6.6
    %
  
    
    Upper Upscale: Hilton and Marriott;
    
    Upscale: Courtyard by Marriott, Crowne Plaza, Radisson and Residence Inn by Marriott;
    
    Midscale with Food & Beverage: Clarion, DoubleTree, Holiday Inn, Holiday Inn
Select, and Quality Inn;
    
    Midscale without Food & Beverage: Fairfield Inn by Marriott and Holiday Inn Express; and
    
    Economy: Park Inn
 42




---



##### Table of Contents



Hotel data by region
  
    
    The Springhill Suites by Marriott hotel in Pinehurst, North Carolina (acquired
in December 2004) is excluded since we do not have comparative figures for the nine
months ended September 30, 2004;
    
    The Holiday Inn Melbourne, Florida hotel since it is currently closed for
hurricane renovations; and
    
    The Crowne Plaza West Palm Beach, Florida hotel since it is currently closed
for hurricane renovations.
 Combined Continuing and Discontinued Operations  75 hotels (excludes Pinehurst, West Palm
Beach and Melbourne hotels)
 Capital expendituresNine Months Ended
    
    Three Months Ended
    
    Nine Months EndedSeptember 30, 2005
    
    September 30, 2005
    
    September 30, 2004
    
    September 30, 2005
    
    September 30, 2004(in thousands $)Northeast RegionNumber of properties
    
    $
    17,046
    
    
    
    28
    
    
    
    28
    
    
    
    28
    
    
    
    28Number of rooms
    
    
    
    
    
    
    5,155
    
    
    
    5,155
    
    
    
    5,155
    
    
    
    5,155Occupancy
    
    
    
    
    
    
    69.6
    %
    
    
    72.4
    %
    
    
    64.8
    %
    
    
    66.8
    %Average daily rate
    
    
    
    
    
    $
    91.91
    
    
    $
    85.61
    
    
    $
    89.36
    
    
    $
    84.14RevPAR
    
    
    
    
    
    $
    63.94
    
    
    $
    61.98
    
    
    $
    57.94
    
    
    $
    56.25RevPAR change
    
    
    
    
    
    
    3.2
    %
    
    
    
    
    
    
    3.0
    %Southeast RegionNumber of properties
    
    
    12,752
    
    
    
    25
    
    
    
    25
    
    
    
    25
    
    
    
    25Number of rooms
    
    
    
    
    
    
    4,156
    
    
    
    4,156
    
    
    
    4,156
    
    
    
    4,156Occupancy
    
    
    
    
    
    
    60.7
    %
    
    
    60.2
    %
    
    
    59.9
    %
    
    
    59.0
    %Average daily rate
    
    
    
    
    
    $
    77.89
    
    
    $
    69.07
    
    
    $
    73.51
    
    
    $
    68.29RevPAR
    
    
    
    
    
    $
    47.27
    
    
    $
    41.55
    
    
    $
    44.00
    
    
    $
    40.28RevPAR change
    
    
    
    
    
    
    13.8
    %
    
    
    
    
    
    
    9.2
    %Midwest RegionNumber of properties
    
    
    1,706
    
    
    
    15
    
    
    
    15
    
    
    
    15
    
    
    
    15Number of rooms
    
    
    
    
    
    
    2,873
    
    
    
    2,873
    
    
    
    2,873
    
    
    
    2,873Occupancy
    
    
    
    
    
    
    63.3
    %
    
    
    63.0
    %
    
    
    60.9
    %
    
    
    60.7
    %Average daily rate
    
    
    
    
    
    $
    76.20
    
    
    $
    70.79
    
    
    $
    76.18
    
    
    $
    71.91RevPAR
    
    
    
    
    
    $
    48.21
    
    
    $
    44.60
    
    
    $
    46.38
    
    
    $
    43.64RevPAR change
    
    
    
    
    
    
    8.1
    %
    
    
    
    
    
    
    6.3
    %West RegionNumber of properties
    
    
    2,916
    
    
    
    7
    
    
    
    7
    
    
    
    7
    
    
    
    7Number of rooms
    
    
    
    
    
    
    1,316
    
    
    
    1,316
    
    
    
    1,316
    
    
    
    1,316Occupancy
    
    
    
    
    
    
    65.6
    %
    
    
    61.0
    %
    
    
    69.3
    %
    
    
    64.8
    %Average daily rate
    
    
    
    
    
    $
    79.59
    
    
    $
    76.44
    
    
    $
    86.15
    
    
    $
    81.49RevPAR
    
    
    
    
    
    $
    52.23
    
    
    $
    46.66
    
    
    $
    59.73
    
    
    $
    52.80RevPAR change
    
    
    
    
    
    
    11.9
    %
    
    
    
    
    
    
    13.1
    %All HotelsNumber of properties
    
    
    34,420
    
    
    
    75
    
    
    
    75
    
    
    
    75
    
    
    
    75Number of rooms
    
    
    
    
    
    
    13,500
    
    
    
    13,500
    
    
    
    13,500
    
    
    
    13,500Occupancy
    
    
    
    
    
    
    65.1
    %
    
    
    65.5
    %
    
    
    62.9
    %
    
    
    62.9
    %Average daily rate
    
    
    
    
    
    $
    83.43
    
    
    $
    77.07
    
    
    $
    81.66
    
    
    $
    76.79RevPAR
    
    
    
    
    
    $
    54.32
    
    
    $
    50.50
    
    
    $
    51.36
    
    
    $
    48.31RevPAR change
    
    
    
    
    
    
    7.6
    %
    
    
    
    
    
    
    6.3
    %
 Continuing Operations  73 hotels (excludes Pinehurst, West Palm Beach, Melbourne and held for
sale hotels)
 43




---



##### Table of Contents



Capital expenditures
    
    Three Months Ended
    
    Nine Months EndedNine Months Ended
    
    September 30, 2005
    
    September 30, 2004
    
    September 30, 2005
    
    September 30, 2004September 30, 2005(in thousands $)Northeast RegionNumber of properties
    
    $
    17,047
    
    
    
    28
    
    
    
    28
    
    
    
    28
    
    
    
    28Number of rooms
    
    
    
    
    
    
    5,155
    
    
    
    5,155
    
    
    
    5,155
    
    
    
    5,155Occupancy
    
    
    
    
    
    
    69.6
    %
    
    
    72.4
    %
    
    
    64.8
    %
    
    
    66.8
    %Average daily rate
    
    
    
    
    
    $
    91.91
    
    
    $
    85.61
    
    
    $
    89.36
    
    
    $
    84.14RevPAR
    
    
    
    
    
    $
    63.94
    
    
    $
    61.98
    
    
    $
    57.94
    
    
    $
    56.25RevPAR change
    
    
    
    
    
    
    3.2
    %
    
    
    
    
    
    
    3.0
    %Southeast RegionNumber of properties
    
    
    12,640
    
    
    
    23
    
    
    
    23
    
    
    
    23
    
    
    
    23Number of rooms
    
    
    
    
    
    
    3,753
    
    
    
    3,753
    
    
    
    3,753
    
    
    
    3,753Occupancy
    
    
    
    
    
    
    62.4
    %
    
    
    59.9
    %
    
    
    60.9
    %
    
    
    59.2
    %Average daily rate
    
    
    
    
    
    $
    78.47
    
    
    $
    70.32
    
    
    $
    74.31
    
    
    $
    68.93RevPAR
    
    
    
    
    
    $
    48.95
    
    
    $
    42.09
    
    
    $
    45.25
    
    
    $
    40.80RevPAR change
    
    
    
    
    
    
    16.3
    %
    
    
    
    
    
    
    10.9
    %Midwest RegionNumber of properties
    
    
    1,706
    
    
    
    15
    
    
    
    15
    
    
    
    15
    
    
    
    15Number of rooms
    
    
    
    
    
    
    2,873
    
    
    
    2,873
    
    
    
    2,873
    
    
    
    2,873Occupancy
    
    
    
    
    
    
    63.3
    %
    
    
    63.0
    %
    
    
    60.9
    %
    
    
    60.7
    %Average daily rate
    
    
    
    
    
    $
    76.20
    
    
    $
    70.79
    
    
    $
    76.18
    
    
    $
    71.91RevPAR
    
    
    
    
    
    $
    48.21
    
    
    $
    44.60
    
    
    $
    46.38
    
    
    $
    43.64RevPAR change
    
    
    
    
    
    
    8.1
    %
    
    
    
    
    
    
    6.3
    %West RegionNumber of properties
    
    
    2,916
    
    
    
    7
    
    
    
    7
    
    
    
    7
    
    
    
    7Number of rooms
    
    
    
    
    
    
    1,316
    
    
    
    1,316
    
    
    
    1,316
    
    
    
    1,316Occupancy
    
    
    
    
    
    
    65.6
    %
    
    
    61.0
    %
    
    
    69.3
    %
    
    
    64.8
    %Average daily rate
    
    
    
    
    
    $
    79.59
    
    
    $
    76.44
    
    
    $
    86.15
    
    
    $
    81.49RevPAR
    
    
    
    
    
    $
    52.23
    
    
    $
    46.66
    
    
    $
    59.73
    
    
    $
    52.80RevPAR change
    
    
    
    
    
    
    11.9
    %
    
    
    
    
    
    
    13.1
    %All HotelsNumber of properties
    
    
    34,309
    
    
    
    73
    
    
    
    73
    
    
    
    73
    
    
    
    73Number of rooms
    
    
    
    
    
    
    13,097
    
    
    
    13,097
    
    
    
    13,097
    
    
    
    13,097Occupancy
    
    
    
    
    
    
    65.7
    %
    
    
    65.6
    %
    
    
    63.3
    %
    
    
    63.1
    %Average daily rate
    
    
    
    
    
    $
    83.70
    
    
    $
    77.63
    
    
    $
    82.08
    
    
    $
    77.20RevPAR
    
    
    
    
    
    $
    55.02
    
    
    $
    50.93
    
    
    $
    51.95
    
    
    $
    48.71RevPAR change
    
    
    
    
    
    
    8.0
    %
    
    
    
    
    
    
    6.6
    %
  
    
    Northeast: Canada, Connecticut, Massachusetts, Maryland, New Hampshire, New
York, Ohio, Pennsylvania, Vermont, West Virginia;
    
    Southeast: Alabama, Florida, Georgia, Kentucky, Louisiana, South Carolina, Tennessee;
    
    Midwest: Arkansas, Iowa, Indiana, Kansas, Michigan, Minnesota, Missouri, Oklahoma, Texas; and
    
    West: Arizona, California, Colorado, New Mexico.
 Liquidity and Capital Resources
 Working Capital
   44




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45




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##### Table of Contents



Cash Flow
 Operating Activities
  Investing Activities
  Financing activities
  46




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Debt and Contractual Obligations
  Off Balance Sheet Arrangements
  Market Risk
       Forward-looking Statements
  47




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##### Table of Contents




    
    The effects of regional, national and international economic conditions,
including the magnitude and duration of the economic recovery in the United States;
    
    Competitive conditions in the lodging industry and increases in room capacity;
    
    The effects of actual and threatened terrorist attacks and international
conflicts and their impact on domestic and international travel, including the
potentially marked decrease in travel in connection with military action in Iraq or
elsewhere;
    
    The effectiveness of changes in management and our ability to retain qualified
individuals to serve in senior management positions;
    
    Requirements of franchise agreements, including the right of some franchisors
to immediately terminate their respective agreements if we breach certain provisions;
    
    Our ability to complete planned hotel and land parcel dispositions;
    
    Our ability to complete capital improvement projects on budget and on time;
    
    Seasonality of the hotel business;
    
    The financial condition of the airline industry and its impact on air travel;
    
    The effects of unpredictable weather such as hurricanes;
    
    The effect that Internet reservation channels may have on the rates that we are
able to charge for hotel rooms;
    
    Increases in the cost of debt and our continued compliance with the terms of our loan agreements;
    
    The effect of the majority of our assets being encumbered on our borrowings and future growth;
    
    Our ability to meet the continuing listing requirements of the Securities and
Exchange Commission and the American Stock Exchange;
    
    The effect of self-insured claims in excess of our reserves, or our ability to
obtain adequate property and liability insurance to protect against losses, or to
obtain insurance at reasonable rates;
    
    Potential litigation and/or governmental inquiries and investigations;
    
    Laws and regulations applicable to our business, including federal, state or
local hotel, resort, restaurant or land use regulations, employment, labor or
disability laws and regulations;
    
    The short time that the public market for our new securities has existed;
    
    The risks identified under Risks Related to Our Business and Risks Relating
to Our Common Stock in our Annual Report on Form 10-K for the year ended December 31,
2004; and
    
    Our ability to collect insurance proceeds for both property damage and business
interruption claims related to damage caused by hurricanes to certain hotels.
  48




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##### Table of Contents



Inflation
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
   
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 6. Exhibits
  49




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SIGNATURES
  LODGIAN, INC.By:
    
    /s/ EDWARD J. ROHLINGDate: November 9, 2005
    
    
    
    Edward J. RohlingPresident andChief Executive OfficerBy:
    
    /s/ LINDA BORCHERT PHILPDate: November 9, 2005
    
    
    
    Linda Borchert PhilpExecutive Vice President andChief Financial Officer
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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description1.1
    
    Disclosure Statement for Joint Plan of Reorganization of Lodgian, Inc., et al(other than the
CCA Debtors), Together with the Official Committee of Unsecured Creditors under Chapter 11 of
the Bankruptcy Code, dated September 26, 2002) (Incorporated by reference to Exhibit 10.6 to
the Companys Annual Report for the period ended December 31, 2003 (File No. 1-14537), filed
on March 9, 2004).1.2
    
    First Amended Joint Plan of Reorganization of Lodgian, Inc., et al(Other than CCA Debtors),
Together with the Official Committee of Unsecured Creditors under Chapter 11 of the Bankruptcy
Code, dated September 26, 2002) (Incorporated by reference to Exhibit 10.7 to the Companys
Annual Report for the period ended December 31, 2003 (File No. 1-14537), filed on March 9,
2004).1.3
    
    Order Confirming First Amended Joint Plan of Reorganization of Lodgian, Inc., et alissued on
November 5, 2002 by the United States Bankruptcy Curt for the Southern District of New York
(Incorporated by reference to Exhibit 10.8 to the Companys Annual Report for the period ended
December 31, 2003 (File No. 1-14537), filed on March 9, 2004).1.4
    
    Disclosure Statement for Joint Plan of Reorganization of Impac Hotels II, L.L.C. and Impac
Hotels III, L.L.C. Together with the Official Committee of Unsecured Creditors Under Chapter
11 of the Bankruptcy Code (Incorporated by reference to Exhibit 10.13.1 to the Companys
Annual Report for the period ended December 31, 2003 (File No. 1-14537), filed on March 9,
2004).1.5
    
    Joint Plan of Reorganization of Impac Hotels II, L.L.C. and Impac Hotels III, L.L.C. Together
with the Official Committee of Unsecured Creditors under Chapter 11 of the Bankruptcy Code
(Incorporated by reference to Exhibit 10.13.2 to the Companys Annual Report for the period
ended December 31, 2003 (File No. 1-14537), filed on March 9, 2004).1.6
    
    Order Confirming Joint Plan of Reorganization of Impac Hotels II, L.L.C. and Impac Hotels
III, L.L.C. Together with the Official Committee of Unsecured Creditors under Chapter 11 of
the Bankruptcy Code (Incorporated by reference to Exhibit 10.13.3 to the Companys Annual
Report for the period ended December 31, 2003 (File No. 1-14537), filed on March 9, 2004).1.7
    
    Post Confirmation Order and Notice for Joint Plan of Reorganization of Impac Hotels III,
L.L.C. Together with the Official Committee of Unsecured Creditors under Chapter 11 of the
Bankruptcy Code (Incorporated by reference to Exhibit 10.13.4 to the Companys Annual Report
for the period ended December 31, 2003 (File No. 1-14537), filed on March 9, 2004).3.1
    
    Amended and Restated Certificate of Incorporation of Lodgian, Inc. (Incorporated by reference
to Exhibit 3.1 to Amendment No. 2 to the Companys Registration Statement on Form S-1 (File
No. 333-113410), filed on June 6, 2004).3.2
    
    Amended and Restated Bylaws of Lodgian, Inc. (Incorporated by reference to Exhibit 3.4 to the
Companys Annual Report for the period ended December 31, 2003 (File No. 1-14537), filed on
March 9, 2004).4.1
    
    Specimen Common Stock Certificate (Incorporated by reference to Exhibit 4.1 to Amendment No.
2 to the Companys Registration Statement on Form S-1 (File No. 333-113410), filed on June 6,
2004).4.2
    
    Class A Warrant Agreement, dated as of November 25, 2002, between Lodgian, Inc. and Wachovia
Bank, N.A. (Incorporated by reference to Exhibit 10.9 to the Companys Annual Report for the
period ended December 31, 2003 (File No. 1-14537), filed on March 9, 2004).4.3
    
    Class B Warrant Agreement, dated as of November 25, 2002, between Lodgian, Inc. and Wachovia
Bank, N.A. (Incorporated by reference to Exhibit 10.10 to the Companys Annual Report for the
period ended December 31, 2003 (File No. 1-14537), filed on March 9, 2004).




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##### Table of Contents



ExhibitNumber
    
    Description4.4
    
    Registration Rights Agreement, dated as of November 25, 2002, between Lodgian, Inc. and the
other signatories thereto (Incorporated by reference to Exhibit 10.11 to the Companys Annual
Report for the period ended December 31, 2003 (File No. 1-14537), filed on March 9, 2004).4.5
    
    Preferred Share Exchange Agreement, dated June 22, 2004, by and among Lodgian, Inc. and the
record and/or beneficial stockholders as signatories thereto. (Incorporated by reference to
Exhibit 10.9 to the Companys Quarterly Report for the period ended June 30, 2004 (File No.
1-14537), filed on August 16, 2004).4.6
    
    Registration Rights Agreement, dated June, dated June 22, 2004, by and among Lodgian, Inc.
and the signatories thereto. (Incorporated by reference to Exhibit 10.10 to the Companys
Quarterly Report for the period ended June 30, 2004 (File No. 1-14537), filed on August 16,
2004).10.1
    
    Loan Agreement, dated as of January 31, 1995, by and among Column Financial, Inc., Servico
Fort Wayne, Inc., Washington Motel Enterprises, Inc., Servico Hotels I, Inc., Servico Hotels
II, Inc., Servico Hotels III, Inc., Servico Hotels IV, Inc., New Orleans Airport Motels
Associates, Ltd., Wilpen, Inc., Hilton Head Motels Enterprises, Inc., and Moon Airport Hotel,
Inc. (Incorporated by reference to Exhibit 10.1.1 to the Companys Annual Report for the
period ended December 31, 2003 (File No. 1-14537), filed on March 9, 2004).10.2
    
    Promissory Note, in original amount of $60.5 million, dated as of January 31, 1995, by
Servico Fort Wayne, Inc., Washington Motel Enterprises, Inc., Servico Hotels I, Inc., Servico
Hotels II, Inc., Servico Hotels III, Inc., Servico Hotels IV, Inc., New Orleans Airport Motels
Associates, Ltd., Wilpen, Inc., Hilton Head Motels Enterprises, Inc., and Moon Airport Hotel,
Inc., in favor of Column Financial, Inc. (Incorporated by reference to Exhibit 10.1.2 to the
Companys Annual Report for the period ended December 31, 2003 (File No. 1-14537), filed on
March 9, 2004).10.3
    
    Lease Agreement, dated April 7, 1997, by and between CSB-Georgia Limited Partnership and
Impac Hotel Group, L.L.C. (Incorporated by reference to Exhibit 10.14.1 to the Companys
Annual Report for the period ended December 31, 2003 (File No. 1-14537), filed on March 9,
2004).10.4
    
    First Amendment to Lease Agreement, dated as of May 8, 1998, by and between Cousins LORET
Venture, L.L.C. and Impac Hotel Group, L.L.C. (Incorporated by reference to Exhibit 10.14.2 to
the Companys Annual Report for the period ended December 31, 2003 (File No. 1-14537), filed
on March 9, 2004).10.5
    
    Second Amendment to Lease Agreement, dated as of June 7, 2000, by and between Cousins LORET
Venture, L.L.C. and Lodgian, Inc. (Incorporated by reference to Exhibit 10.14.3 to the
Companys Annual Report for the period ended December 31, 2003 (File No. 1-14537), filed on
March 9, 2004).10.6
    
    Third Amendment to Lease Agreement, dated as of April 1, 2002, by and between Cousins LORET
Venture, L.L.C. and Lodgian, Inc. (Incorporated by reference to Exhibit 10.14.4 to the
Companys Annual Report for the period ended December 31, 2003 (File No. 1-14537), filed on
March 9, 2004).10.7
    
    Fourth Amendment to Lease Agreement, dated as of April 28, 2003, by and between Cousins LORET
Venture, L.L.C. and Lodgian, Inc. (Incorporated by reference to Exhibit 10.14.5 to the
Companys Annual Report for the period ended December 31, 2003 (File No. 1-14537), filed on
March 9, 2004).10.8
    
    Fifth Amendment to Lease Agreement, dated as of December 23, 2003, by and between Cousins
LORET Venture, L.L.C. and Lodgian, Inc. (Incorporated by reference to Exhibit 10.14.6 to the
Companys Annual Report for the period ended December 31, 2003 (File No. 1-14537), filed on
March 9, 2004).10.9
    
    Sixth Amendment to Lease Agreement, dated as of July 11, 2005, by and between ND Properties,
Inc. and Lodgian, Inc. (Incorporated by reference to Exhibit 10.9 to the Companys Quarterly
Report for the period ended June 30, 2005 (File No. 1-14537), filed on August 9, 2005).10.10
    
    Loan and Security Agreement (Floating Rate), dated as of June 25, 2004, by and between the
Borrowers listed on Schedule 1 thereto and Merrill Lynch Mortgage Lending, Inc. (Incorporated
by reference to Exhibit 10.1.1 to the Companys Quarterly Report for the period ended June 30,
2004 (File No. 1-14537), filed on August 16, 2004).




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##### Table of Contents



ExhibitNumber
    
    Description10.11
    
    Loan Modification Agreement (Floating Rate) between Merrill Lynch Mortgage Lending, Inc. and
the Borrowers identified on the signature pages thereto dated April 29, 2005. (Incorporated
by reference to Exhibit 10.40 to the Companys Quarterly Report for the period ended March 31,
2005 (File No. 1-14537), filed with the Commission on May 10, 2005.10.12
    
    Promissory Note A in the original amount of $72,000,000.00, dated as of June 25, 2004, by
the Borrowers listed on the signature pages thereto in favor of Merrill Lynch Mortgage
Lending, Inc. (Incorporated by reference to Exhibit 10.1.2 to the Companys Quarterly Report
for the period ended June 30, 2004 (File No. 1-14537), filed on August 16, 2004).10.13
    
    Promissory Note B in the original amount of $38,000,000, dated as of June 25, 2004, by the
Borrowers listed on the signature pages thereto in favor of Merrill Lynch Mortgage Lending,
Inc. (Incorporated by reference to Exhibit 10.1.3 to the Companys Quarterly Report for the
period ended June 30, 2004 (File No. 1-14537), filed on August 16, 2004).10.14
    
    Loan and Security Agreement (Fixed Rate #1), dated as of June 25, 2004, 2004, by and between
the Borrowers listed on Schedule 1 thereto and Merrill Lynch Mortgage Lending, Inc.
(Incorporated by reference to Exhibit 10.2.1 to the Companys Quarterly Report for the period
ended June 30, 2004 (File No. 1-14537), filed on August 16, 2004).10.15
    
    Promissory Note in the original amount of $63,801,000.00, dated as of June 25, 2004, by the
Borrowers listed on the signature pages thereto in favor of Merrill Lynch Mortgage Lending,
Inc. (Incorporated by reference to Exhibit 10.2.2 to the Companys Quarterly Report for the
period ended June 30, 2004 (File No. 1-14537), filed on August 16, 2004).10.16
    
    Loan and Security Agreement (Fixed Rate #2), dated as of June 25, 2004, by and between the
Borrowers listed on Schedule 1 thereto and Merrill Lynch Mortgage Lending, Inc. (Incorporated
by reference to Exhibit 10.3.1 to the Companys Quarterly Report for the period ended June 30,
2004 (File No. 1-14537), filed on August 16, 2004).10.17
    
    Promissory Note in the original amount of $67,864,000.00, dated as of June 25, 2004, by the
Borrowers listed on the signature pages thereto in favor of Merrill Lynch Mortgage Lending,
Inc. (Incorporated by reference to Exhibit 10.3.2 to the Companys Quarterly Report for the
period ended June 30, 2004 (File No. 1-14537), filed on August 16, 2004).10.18
    
    Loan and Security Agreement (Fixed Rate #3), dated as of June 25, 2004, by and between the
Borrowers listed on Schedule 1 thereto and Merrill Lynch Mortgage Lending, Inc. (Incorporated
by reference to Exhibit 10.4.1 to the Companys Quarterly Report for the period ended June 30,
2004 (File No. 1-14537), filed on August 16, 2004).10.19
    
    Promissory Note in the original amount of $66,818,500.00, dated as of June 25, 2004, by the
Borrowers listed on the signature pages thereto in favor of Merrill Lynch Mortgage Lending,
Inc. (Incorporated by reference to Exhibit 10.4.2 to the Companys Quarterly Report for the
period ended June 30, 2004 (File No. 1-14537), filed on August 16, 2004).10.20
    
    Loan and Security Agreement (Fixed Rate #4), dated as of June 25, 2004, by and between the
Borrowers listed on Schedule 1 thereto and Merrill Lynch Mortgage Lending, Inc. (Incorporated
by reference to Exhibit 10.5.1 to the Companys Quarterly Report for the period ended June 30,
2004 (File No. 1-14537), filed on August 16, 2004).10.21
    
    Loan Modification Agreement (Fixed Rate #4) dated October 17, 2005, by and between Merrill
Lynch Mortgage Lending, Inc. and certain Lodgian, Inc. subsidiaries. (Incorporated by
reference to Exhibit 99.1 to Companys Current Report on Form 8-K. (File No. 1-14537), filed
on October 21, 2005).10.22
    
    Promissory Note in the original amount of $61,516,500.00, dated as of June 25, 2004, 2004,
by the Borrowers listed on the signature pages thereto in favor of Merrill Lynch Mortgage
Lending, Inc. (Incorporated by reference to Exhibit 10.5.2 to the Companys Quarterly Report
for the period ended June 30, 2004 (File No. 1-14537), filed on August 16, 2004).




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##### Table of Contents



ExhibitNumber
    
    Description10.23
    
    Employment Agreement with W. Thomas Parrington, dated December 18, 2003 (Incorporated by
reference to Exhibit 10.12 to the Companys Annual Report for the period ended December 31,
2003 (File No. 1-14537), filed on March 9, 2004).10.24
    
    Amendment to Employment Agreement between, Lodgian, Inc. and W. Thomas Parrington, dated
August 3, 2005. (Incorporated by reference to Exhibit 10.22 to the Companys Quarterly Report
for the period ended June 30, 2005 (File No. 1-14537), filed on August 9, 2005).10.25
    
    Restricted Unit Award Agreement with W. Thomas Parrington, dated as of July 15, 2003
(Incorporated by reference to Exhibit 10.2 to the Companys Quarterly Report for the period
ended March 31, 2004 (File No. 1-14537), filed with the Commission on May 14, 2004).10.26
    
    Restricted Unit Award Agreement with W. Thomas Parrington, dated as of April 9, 2004
(Incorporated by reference to Exhibit 10.2 to the Companys Quarterly Report for the period
ended March 31, 2004 (File No. 1-14537), filed with the Commission on May 14, 2004).10.27
    
    Letter Agreement, dated January 21, 2005, between Thomas W. Parrington and Lodgian, Inc.
related to Mr. Parringtons waiver of his 2004 Annual performance bonus. (Incorporated by
reference to Exhibit 10.26 to the Companys Annual Report for the period ended December 31,
2004 (File No. 1-14537), filed with the Commission on March 23, 2005).10.28
    
    Employment Agreement between Lodgian, Inc. and Daniel E. Ellis, dated May 2, 2004
(Incorporated by reference to Exhibit 10.4 to the Companys Quarterly Report for the period
ended March 31, 2004 (File No. 1-14537), filed with the Commission on May 14, 2004).10.29
    
    Employment Agreement between Lodgian, Inc. and Manuel E. Artime, dated May 10, 2004
(Incorporated by reference to Exhibit 10.5 to the Companys Quarterly Report for the period
ended March 31, 2004 (File No. 1-14537), filed with the Commission on May 14, 2004).10.30
    
    Release Agreement, dated January 31, 2004, between Manuel E. Artime and Lodgian, Inc.
(Incorporated by reference to Exhibit 10.29 to the Companys Annual Report for the period
ended December 31, 2004 (File No. 1-14537), filed with the Commission on March 23, 2005).10.31
    
    Employment Agreement between Lodgian, Inc. and Michael W. Amaral, dated May 4, 2004
(Incorporated by reference to Exhibit 10.6 to the Companys Quarterly Report for the period
ended March 31, 2004 (File No. 1-14537), filed with the Commission on May 14, 2004).10.32
    
    Separation and Release Agreement between Lodgian, Inc. and Michael W. Amaral dated October
4, 2005.**10.33
    
    Employment Agreement between Lodgian, Inc. and Samuel J. Davis, dated May 14, 2004
(Incorporated by reference to Exhibit 10.19 to Amendment No. 2 to the Companys Registration
Statement on Form S-1 (Registration Number 333-113410), filed with the Commission on June 4,
2004).10.34
    
    Executive Employment Agreement between Lodgian, Inc. and Linda B. Philp, dated February 7,
2005. (Incorporated by reference to Exhibit 10.32 to the Companys Annual Report for the
period ended December 31, 2004 (File No. 1-14537), filed with the Commission on March 23,
2005).10.35
    
    Stock Option Award Agreement, dated January 31, 2005, between Linda B. Philp and Lodgian,
Inc. (Incorporated by reference to Exhibit 10.33 to the Companys Annual Report for the period
ended December 31, 2004 (File No. 1-14537), filed with the Commission on March 23, 2005).10.36
    
    Incentive Stock Option Award Agreement, dated January 31, 2005, between Linda B. Philp and
Lodgian, Inc. (Incorporated by reference to Exhibit 10.34 to the Companys Annual Report for
the period ended December 31, 2004 (File No. 1-14537), filed with the Commission on March 23,
2005).10.37
    
    Incentive Stock Option Award Agreement, dated February 28, 2005, between Daniel G. Owens and
Lodgian, Inc. (Incorporated by reference to Exhibit 10.35 to the Companys Annual Report for
the period ended December 31, 2004 (File No. 1-14537), filed with the Commission on March 23,
2005).




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##### Table of Contents



ExhibitNumber
    
    Description10.38
    
    Executive Employment Agreement between Edward J. Rohling and Lodgian, Inc., dated July 12,
2005. (Incorporated by reference to Exhibit 10.35 to the Companys Quarterly Report for the
period ended June 30, 2005 (File No. 1-14537), filed on August 9, 2005).10.39
    
    Restricted Stock Award Agreement between Edward J. Rohling and Lodgian, Inc., dated July 15,
2005. (Incorporated by reference to Exhibit 10.36 to the Companys Quarterly Report for the
period ended June 30, 2005 (File No. 1-14537), filed on August 9, 2005).10.40
    
    2002 Amended and Restated Stock Incentive Plan of Lodgian, Inc. (Incorporated by reference
to Exhibit 10.5 to Amendment No. 2 to the Companys Registration Statement on Form S-1 (File
No. 333-1113410), filed on June 6, 2004).10.41
    
    First Amendment to the Amended and Restated 2002 Stock Incentive Plan of Lodgian, Inc. dated
April 28, 2005. (Incorporated by reference to Exhibit 10.34 to the Companys Quarterly Report
for the period ended March 31, 2005 (File No. 1-14537), filed with the Commission on May 10,
2005.)10.42
    
    Form of Stock Option Award Agreement. (Incorporated by reference to Exhibit 10.37 to the
Companys Annual Report for the period ended December 31, 2004 (File No. 1-14537), filed with
the Commission on March 23, 2005).10.43
    
    Form of Restricted Stock Award Agreement. (Incorporated by reference to Exhibit 10.40 to
the Companys Quarterly Report for the period ended June 30, 2005 (File No. 1-14537), filed on
August 9, 2005).10.44
    
    Lodgian, Inc. 401(k) Plan, As Amended and Restated Effective September 1, 2003 (Incorporated
by reference to Exhibit 20.1.1 to Amendment No. 2 to the Companys Registration Statement on
Form S-1 (File No. 333-113410), filed on June 6, 2004).10.45
    
    Amendment No. 1 to the Lodgian, Inc. 401(k) Plan (As Amended and Restated Effective
September 1, 2003) (Incorporated by reference to Exhibit 10.3 to the Companys Quarterly
Report for the period ended March 31, 2004 (File No. 1-14537), filed with the Commission on
May 14, 2004).10.46
    
    Amendment No. 2 to the Lodgian, Inc. 401(K) Plan dated March 24, 2005 (As Amended and
Restated Effective as of September 1, 2003). (Incorporated by reference to Exhibit 10.38 to
the Companys Quarterly Report for the period ended March 31, 2005 (File No. 1-14537), filed
with the Commission on May 10, 2005).10.47
    
    Amendment No. 3 to the Lodgian, Inc. 401(K) Plan dated April 28, 2005 (As Amended and
Restated Effective as of September 1, 2003). (Incorporated by reference to Exhibit 10.39 to
the Companys Quarterly Report for the period ended March 31, 2005 (File No. 1-14537), filed
with the Commission on May 10, 2005).31.1
    
    Sarbanes-Oxley Section 302 Certification by the CEO.**31.2
    
    Sarbanes-Oxley Section 302 Certification by the CFO.**32
    
    Sarbanes-Oxley Section 906 Certification by the CEO and CFO.**
 
 **
    
    Filed herewith.