##### 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 1934For the Period ended June 30, 2005ORo
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from           to
 Commission file no. 1-14537
 Lodgian, Inc.
 (Exact name of registrant as specified in its charter)
 Delaware(State or other jurisdiction of
incorporation or organization)
    
    52-2093696(I.R.S. Employer
Identification No.)
 3445 Peachtree Road, N.E., Suite 700,
Atlanta, GA(Address of principal executive offices)
    
    30326(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
 þ o
  Class
    
    Outstanding as of August 1, 2005Common
    
    24,646,454




---



LODGIAN, INC. AND SUBSIDIARIES
 INDEX
 PagePART I. FINANCIAL INFORMATIONItem 1.
    
    Financial Statements:Condensed Consolidated Balance Sheets as of June 30, 2005 and December 31, 2004 (unaudited)
    
    
    2Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2005 and June 30, 2004 (unaudited)
    
    
    3Condensed Consolidated Statement of Stockholders Equity for the Six Months Ended June 30, 2005 (unaudited)
    
    
    4Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2005 and June 30, 2004 (unaudited)
    
    
    5Notes to Condensed Consolidated Financial Statements (unaudited)
    
    
    6Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    21Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    40Item 4.
    
    Controls and Procedures
    
    
    40PART II. OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    40Item 6.
    
    Exhibits
    
    
    40Signatures
    
    
    41EX-10.9 SIXTH AMENDMENT TO LEASE AGREEMENTEX-10.22 AMENDMENT TO EMPLOYMENT AGREEMENTEX-10.35 EXECUTIVE EMPLOYMENT AGREEMENTEX-10.36 RESTRICTED STOCK AWARD AGREEMENTEX-10.40 FORM OF RESTRICTED STOCK AWARD AGREEMENTEX-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




---



##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 LODGIAN, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 June 30, 2005
    
    December 31, 2004(Unaudited in thousands, except share data)ASSETSCurrent assets:Cash and cash
equivalents
    
    $
    18,234
    
    
    $
    36,234Cash, restricted
    
    
    13,597
    
    
    
    9,840Accounts receivable (net of
allowances: 2005 - $1,651; 2004 -
$684)
    
    
    9,726
    
    
    
    7,967Insurance
receivable
    
    
    3,333
    
    
    
    3,280Inventories
    
    
    6,600
    
    
    
    6,293Prepaid expenses and other
current assets
    
    
    19,588
    
    
    
    17,232Assets held for
sale
    
    
    26,113
    
    
    
    30,528Total
current assets
    
    
    97,191
    
    
    
    111,374Property and
equipment, net
    
    
    586,833
    
    
    
    569,371Deposits for capital
expenditures
    
    
    26,059
    
    
    
    34,787Other assets
    
    
    7,011
    
    
    
    7,775$
    717,094
    
    
    $
    723,307LIABILITIES
AND
STOCKHOLDERS
EQUITYCurrent liabilities:Accounts
payable
    
    $
    13,106
    
    
    $
    10,957Other
accrued
liabilities
    
    
    33,091
    
    
    
    31,475Advance
deposits
    
    
    2,398
    
    
    
    1,638Insurance
advances
    
    
    17,834
    
    
    
    2,000Current portion of long-term
liabilities
    
    
    22,442
    
    
    
    25,290Liabilities related to assets
held for sale
    
    
    19,425
    
    
    
    30,541Total current
liabilities
    
    
    108,296
    
    
    
    101,901Long-term liabilities
    
    
    384,462
    
    
    
    393,143Total liabilities
    
    
    492,758
    
    
    
    495,044Minority interests
    
    
    1,604
    
    
    
    1,629Commitments and
contingenciesStockholders equity:Common stock, $.01 par value,
60,000,000 shares authorized;
24,563,961 and 24,579,255
issued at June 30, 2005
and
December 31, 2004,
respectively
    
    
    246
    
    
    
    246Additional paid-in
capital
    
    
    308,198
    
    
    
    306,943Unearned stock
compensation
    
    
    (208
    )
    
    
    (315
    )Accumulated deficit
    
    
    (87,151
    )
    
    
    (81,941
    )Accumulated other comprehensive income
    
    
    1,723
    
    
    
    1,777Treasury stock, at cost, 7,211 shares
at June 30, 2005
and December
31, 2004
    
    
    (76
    )
    
    
    (76
    )Total
stockholders equity
    
    
    222,732
    
    
    
    226,634$
    717,094
    
    
    $
    723,307
  2




---



##### Table of Contents



LODGIAN, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 Three Months Ended
    
    Six Months EndedJune 30, 2005
    
    June 30, 2004
    
    June 30, 2005
    
    June 30, 2004(Unaudited in
thousands, except per share data)Revenues:Rooms
    
    $
    64,497
    
    
    $
    62,522
    
    
    $
    118,958
    
    
    $
    118,572Food and beverage
    
    
    18,817
    
    
    
    19,167
    
    
    
    33,718
    
    
    
    35,394Other
    
    
    2,671
    
    
    
    2,760
    
    
    
    5,163
    
    
    
    5,46085,985
    
    
    
    84,449
    
    
    
    157,839
    
    
    
    159,426Operating expenses:Direct:Rooms
    
    
    17,632
    
    
    
    16,357
    
    
    
    33,127
    
    
    
    31,814Food and beverage
    
    
    13,062
    
    
    
    12,477
    
    
    
    24,044
    
    
    
    23,768Other
    
    
    2,098
    
    
    
    2,038
    
    
    
    4,029
    
    
    
    3,96832,792
    
    
    
    30,872
    
    
    
    61,200
    
    
    
    59,55053,193
    
    
    
    53,577
    
    
    
    96,639
    
    
    
    99,876Other operating expenses:Other hotel operating costs
    
    
    24,693
    
    
    
    22,916
    
    
    
    48,592
    
    
    
    46,112Property and other taxes, insurance, and leases
    
    
    5,810
    
    
    
    5,187
    
    
    
    11,499
    
    
    
    10,747Corporate and other
    
    
    5,870
    
    
    
    4,691
    
    
    
    10,528
    
    
    
    9,025Casualty losses
    
    
    28
    
    
    
    
    
    
    
    132
    
    
    
    Depreciation and amortization
    
    
    6,867
    
    
    
    6,797
    
    
    
    13,524
    
    
    
    13,468Impairment of long-lived assets
    
    
    954
    
    
    
    
    
    
    
    2,609
    
    
    
    Other operating expenses
    
    
    44,222
    
    
    
    39,591
    
    
    
    86,884
    
    
    
    79,3528,971
    
    
    
    13,986
    
    
    
    9,755
    
    
    
    20,524Other income (expenses):Business interruption insurance proceeds
    
    
    1,729
    
    
    
    
    
    
    
    1,729
    
    
    
    Interest income and other
    
    
    54
    
    
    
    66
    
    
    
    225
    
    
    
    109Interest expense and other financing costs:Preferred stock dividend
    
    
    
    
    
    
    (4,233
    )
    
    
    
    
    
    
    (8,518
    )Interest expense
    
    
    (6,912
    )
    
    
    (19,507
    )
    
    
    (13,894
    )
    
    
    (27,531
    )Loss on preferred stock redemption
    
    
    
    
    
    
    (1,592
    )
    
    
    
    
    
    
    (1,592
    )Income (loss) before income taxes and minority interests
    
    
    3,842
    
    
    
    (11,280
    )
    
    
    (2,185
    )
    
    
    (17,008
    )Provision for income taxes  continuing operations
    
    
    (67
    )
    
    
    (76
    )
    
    
    (135
    )
    
    
    (151
    )Minority interests
    
    
    (120
    )
    
    
    (71
    )
    
    
    25
    
    
    
    (218
    )Income (loss) from continuing operations
    
    
    3,655
    
    
    
    (11,427
    )
    
    
    (2,295
    )
    
    
    (17,377
    )Discontinued operations:(Loss) income from discontinued operations
before income taxes
    
    
    (1,781
    )
    
    
    4,180
    
    
    
    (2,915
    )
    
    
    3,044Income tax benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Income (loss) from discontinued operations
    
    
    (1,781
    )
    
    
    4,180
    
    
    
    (2,915
    )
    
    
    3,044Net income (loss) attributable to common stock
    
    $
    1,874
    
    
    $
    (7,247
    )
    
    $
    (5,210
    )
    
    $
    (14,333
    )Basic and diluted income (loss) per common share:Net income (loss) attributable to common stock
    
    $
    0.08
    
    
    $
    (2.04
    )
    
    $
    (0.21
    )
    
    $
    (4.87
    )
  3




---



##### Table of Contents



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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    107
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    107Vesting of restricted stock units
    
    
    1,382Release of surplus accrual on final settlement of
bankruptcy claims
    
    
    
    
    
    
    
    
    
    $
    1,292
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,292Retirement
of disputed claims shares
    
    
    (16,676
    )
    
    
    
    
    
    
    
    

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    (37
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (37
    )Comprehensive loss:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,210
    )
    
    
    
    
    
    
    
    
    
    
    (5,210
    )Currency
translation adjustments (related taxes estimated at nil)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (54
    )
    
    
    
    
    
    
    (54
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,264
    )Balance June 30, 2005
    
    
    24,563,961
    
    
    $
    246
    
    
    $
    308,198
    
    
    $
    (208
    )
    
    $
    (87,151
    )
    
    $
    1,723
    
    
    $
    (76
    )
    
    $
    222,732
 
  4




---



##### Table of Contents



LODGIAN, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Six Months EndedJune 30, 2005
    
    June 30, 2004(Unaudited in thousands)Operating activities:Net loss
    
    $
    (5,210
    )
    
    $
    (14,333
    )Adjustments to reconcile net loss
to net cash provided by operating activities:Depreciation and amortization
    
    
    13,650
    
    
    
    13,826Impairment of long-lived assets
    
    
    6,327
    
    
    
    2,604Amortization of unearned stock compensation
    
    
    107
    
    
    
    100Preferred stock dividends
    
    
    
    
    
    
    8,518Loss on redemption of preferred stock
    
    
    
    
    
    
    1,592Minority interests
    
    
    (25
    )
    
    
    218Gain on asset dispositions
    
    
    (2,003
    )
    
    
    (7,249
    )Write-off and amortization of deferred financing costs
    
    
    682
    
    
    
    10,309Other
    
    
    (667
    )
    
    
    (151
    )Changes in operating assets and liabilities:Accounts receivable, net of allowances
    
    
    (2,124
    )
    
    
    (3,134
    )Insurance receivable
    
    
    (53
    )
    
    
    Inventories
    
    
    (462
    )
    
    
    (219
    )Prepaid expenses and other assets
    
    
    (2,261
    )
    
    
    (2,808
    )Accounts payable
    
    
    465
    
    
    
    3,296Other accrued liabilities
    
    
    4,492
    
    
    
    1,409Advance deposits
    
    
    811
    
    
    
    720Net cash provided by operating activities
    
    
    13,729
    
    
    
    14,698Investing activities:Capital improvements
    
    
    (41,945
    )
    
    
    (14,000
    )Proceeds from sale of assets, net of related selling costs
    
    
    12,908
    
    
    
    33,890(Deposits) withdrawals for capital expenditures
    
    
    8,728
    
    
    
    (20,452
    )Insurance advances related to hurricanes
    
    
    15,834
    
    
    
    Net increase in restricted cash
    
    
    (3,757
    )
    
    
    (2,528
    )Other
    
    
    (106
    )
    
    
    (60
    )Net cash used in investing activities
    
    
    (8,338
    )
    
    
    (3,150
    )Financing activities:Proceeds from issuance of long term debt
    
    
    3,200
    
    
    
    370,000Proceeds from exercise of stock options and issuance of common stock
    
    
    
    
    
    
    176,183Principal payments on long-term debt
    
    
    (26,409
    )
    
    
    (393,071
    )Shares redeemed from reverse stock split
    
    
    
    
    
    
    (5
    )Payments of deferred financing costs
    
    
    (174
    )
    
    
    (5,354
    )Net cash (used in) provided by financing activities
    
    
    (23,383
    )
    
    
    147,753Effect of exchange rate changes on cash
    
    
    (8
    )
    
    
    Net (decrease) increase in cash and cash equivalents
    
    
    (18,000
    )
    
    
    159,301Cash and cash equivalents at beginning of period
    
    
    36,234
    
    
    
    10,897Cash and cash equivalents at end of period
    
    $
    18,234
    
    
    $
    170,198Supplemental cash flow information:Cash paid during the period for:Interest, net of the amounts capitalized shown below
    
    $
    13,784
    
    
    $
    22,018Interest capitalized
    
    
    1,047
    
    
    
    190Income taxes, net of refunds
    
    
    162
    
    
    
    586Supplemental disclosure of non-cash activities:Net non-cash debt decrease
    
    
    (572
    )
    
    
    (228
    )Issuance of promissory notes as consideration for taxation liabilities
    
    
    
    
    
    
    2,369Release of
surplus accrual on final settlement of bankruptcy claims
    
    
    (1,292
    )
    
    
    
  5




---



##### Table of Contents



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
  
    
    76 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




---



##### Table of Contents




    
    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




---



##### Table of Contents



Weighted AverageOptions
    

Exercise PricesBalance, December 31, 2004
    
    
    526,410
    
    
    $
    11.46Granted
    
    
    427,500
    
    
    
    9.26Exercised
    
    
    
    
    
    
    Forfeited
    
    
    (56,329
    )
    
    
    11.69Balance, June 30, 2005
    
    
    897,581
    
    
    $
    10.40
 RestrictedStock UnitsBalance, December 31, 2004
    
    
    45,827Granted
    
    
    Shares converted to common stock
    
    
    (1,382
    )Forfeited
    
    
    Balance, June 30, 2005
    
    
    44,445
  Options outstanding
    
    Options exercisableWeighted average
    
    Weighted average
    
    
    
    
    
    Weighted averageRange of prices
    
    Number
    
    remaining life (in years)
    
    exercise prices
    
    Number
    
    exercise prices$9.00 to $10.50
    
    
    428,333
    
    
    
    9.7
    
    
    $
    9.05
    
    
    
    11,111
    
    
    $
    9.00$10.51 to $15.00
    
    
    367,500
    
    
    
    9.0
    
    
    $
    10.63
    
    
    
    111,632
    
    
    $
    10.52$15.01 to $15.50
    
    
    101,748
    
    
    
    8.2
    
    
    $
    15.21
    
    
    
    68,145
    
    
    $
    15.21897,581
    
    
    
    9.3
    
    
    $
    10.40
    
    
    
    190,888
    
    
    $
    12.11
   8




---



##### Table of Contents



Three Months ended
    
    Six Months endedJune 30, 2005
    
    June 30, 2004
    
    June 30, 2005
    
    June 30, 2004($ in thousands, except share data)Income (Loss) from continuing operations:As reported
    
    $
    3,655
    
    
    $
    (11,427
    )
    
    $
    (2,295
    )
    
    $
    (17,377
    )Add: Stock-based compensation expense included in net income
    
    
    50
    
    
    
    50
    
    
    
    107
    
    
    
    100Deduct: Total pro forma stock-based employee compensation expense
    
    
    (468
    )
    
    
    (174
    )
    
    
    (933
    )
    
    
    (349
    )Pro forma
    
    
    3,237
    
    
    
    (11,551
    )
    
    
    (3,121
    )
    
    
    (17,626
    )(Loss) income from discontinued operations:As reported
    
    
    (1,781
    )
    
    
    4,180
    
    
    
    (2,915
    )
    
    
    3,044Add: Stock-based compensation expense included in net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Deduct: Total pro forma stock-based employee compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Pro forma
    
    
    (1,781
    )
    
    
    4,180
    
    
    
    (2,915
    )
    
    
    3,044Net Income (Loss) attributable to common stock:As reported
    
    
    1,874
    
    
    
    (7,247
    )
    
    
    (5,210
    )
    
    
    (14,333
    )Add: Stock-based compensation expense included in net income
    
    
    50
    
    
    
    50
    
    
    
    107
    
    
    
    100Deduct: Total pro forma stock based employee compensation expense
    
    
    (468
    )
    
    
    (174
    )
    
    
    (933
    )
    
    
    (349
    )Pro forma
    
    $
    1,456
    
    
    $
    (7,371
    )
    
    $
    (6,036
    )
    
    $
    (14,582
    )Basic and diluted loss per common shareIncome (Loss) from continuing operations:As reported
    
    $
    0.15
    
    
    $
    (3.22
    )
    
    $
    (0.09
    )
    
    $
    (5.90
    )Add: Stock-based compensation expense included in net income
    
    
    
    
    
    
    0.01
    
    
    
    
    
    
    
    0.03Deduct: Total pro forma stock-based employee compensation expense
    
    
    (0.01
    )
    
    
    (0.05
    )
    
    
    (0.03
    )
    
    
    (0.12
    )Pro forma
    
    
    0.14
    
    
    
    (3.26
    )
    
    
    (0.12
    )
    
    
    (5.99
    )(Loss) income from discontinued operations:As reported
    
    
    (0.07
    )
    
    
    1.18
    
    
    
    (0.12
    )
    
    
    1.03Add: Stock-based compensation expense included in net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Deduct: Total pro forma stock-based employee compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Pro forma
    
    
    (0.07
    )
    
    
    1.18
    
    
    
    (0.12
    )
    
    
    1.03Net Income (Loss) attributable to common stock:As reported
    
    
    0.08
    
    
    
    (2.04
    )
    
    
    (0.21
    )
    
    
    (4.87
    )Add: Stock-based compensation expense included in net income
    
    
    
    
    
    
    0.01
    
    
    
    
    
    
    
    0.03Deduct: Total pro forma stock-based employee compensation expense
    
    
    (0.01
    )
    
    
    (0.05
    )
    
    
    (0.03
    )
    
    
    (0.12
    )Pro forma
    
    $
    0.07
    
    
    $
    (2.08
    )
    
    $
    (0.24
    )
    
    
    (4.96
    )
 3. Discontinued Operations
   a)
    
    Management commits to a plan to sell the asset;b)
    
    The asset is available for immediate sale in its present condition;c)
    
    An active marketing plan to sell the asset at a reasonable price has been
initiated;d)
    
    The sale of the asset is probable within one year; ande)
    
    It is unlikely that significant changes to the plan to sell the asset will
be made.
  9




---



##### Table of Contents



a)
    
    an additional $0.6 million on the Holiday Inn Rolling Meadows, IL to reflect
the lowered estimated selling price of the hotel; andb)
    
    an additional $1.3 million on the Holiday Inn St. Louis North, MO to reflect
the reduced selling price on this hotel.
  a)
    
    $0.2 million on the Downtown Plaza Hotel Cincinnati, OH hotel to adjust for the
further reduction in the estimated selling price of this hotel; andb)
    
    $0.3 million on the Holiday Inn Morgantown, WV to adjust for the further
reduction in the estimated selling price of this hotel.
  10




---



##### Table of Contents



June 30, 2005
    
    December 31, 2004(Unaudited in thousands)Property and equipment, net
    
    
    23,836
    
    
    
    28,207Other assets
    
    
    2,277
    
    
    
    2,321Total assets
    
    $
    26,113
    
    
    $
    30,528Other liabilities
    
    
    4,395
    
    
    
    3,305Long-term debt
    
    
    15,030
    
    
    
    27,236Total liabilities
    
    $
    19,425
    
    
    $
    30,541
  Three months ended
    
    Six months endedJune 30, 2005
    
    June 30, 2004
    
    June 30, 2005
    
    June 30, 2004(Unaudited in thousands)Total revenues
    
    $
    7,696
    
    
    $
    13,416
    
    
    $
    13,903
    
    
    $
    25,982Total expenses
    
    
    7,651
    
    
    
    13,026
    
    
    
    15,103
    
    
    
    27,583Impairment of long-lived assets
    
    
    1,827
    
    
    
    451
    
    
    
    3,718
    
    
    
    2,604Gain on asset dispositions
    
    
    1
    
    
    
    4,241
    
    
    
    2,003
    
    
    
    7,249Gain(loss) from discontinued operations
    
    $
    (1,781
    )
    
    $
    4,180
    
    
    $
    (2,915
    )
    
    $
    3,044
 4. Cash, Restricted
   5. Income (Loss) Per Share
  Three months ended
    
    Six Months EndedJune 30, 2005
    
    June 30, 2004
    
    June 30, 2005
    
    June 30, 2004(Unaudited in thousands, except per share data)Basic and diluted income (loss) per share:Numerator:Income (loss) from continuing operations
    
    $
    3,655
    
    
    $
    (11,427
    )
    
    $
    (2,295
    )
    
    $
    (17,377
    )(Loss) income from discontinued operations
    
    
    (1,781
    )
    
    
    4,180
    
    
    
    (2,915
    )
    
    
    3,044Net income (loss) attributable to common stock
    
    $
    1,874
    
    
    $
    (7,247
    )
    
    $
    (5,210
    )
    
    $
    (14,333
    )Denominator:Denominator for basic and diluted loss per share -
weighted-average shares
    
    
    24,573
    
    
    
    3,554
    
    
    
    24,573
    
    
    
    2,944Basic and diluted income (loss) per common share:Income (loss) from continuing operations
    
    $
    0.15
    
    
    $
    (3.22
    )
    
    $
    (0.09
    )
    
    $
    (5.90
    )(Loss) income from discontinued operations
    
    
    (0.07
    )
    
    
    1.18
    
    
    
    (0.12
    )
    
    
    1.03Net income (loss) attributable to common stock
    
    $
    0.08
    
    
    $
    (2.04
    )
    
    $
    (0.21
    )
    
    $
    (4.87
    )
 11




---



##### Table of Contents



6. Debt
  June 30,
    
    December 31,2005
    
    2004($ in thousands)Refinancing DebtMerrill Lynch Mortgage Lending, Inc.  Floating
    
    $
    83,669
    
    
    $
    102,617Merrill Lynch Mortgage Lending, Inc.  Fixed
    
    $
    256,392
    
    
    
    258,410Merrill Lynch Mortgage Lending, Inc.  Total
    
    
    340,061
    
    
    
    361,027Computer Share Trust Company of Canada
    
    
    7,567
    
    
    
    7,843Other FinancingsColumn Financial, Inc.
    
    
    23,846
    
    
    
    25,058Lehman Brothers Holdings, Inc.
    
    
    22,668
    
    
    
    22,927JP Morgan Chase Bank, Trustee
    
    
    10,064
    
    
    
    10,110DDL Kinser
    
    
    2,225
    
    
    
    2,286Wachovia
    
    
    3,196
    
    
    
    Column Financial, Inc.
    
    
    8,368
    
    
    
    8,545Column Financial, Inc.
    
    
    
    
    
    
    3,069Tax notes issued pursuant to Lodgians Joint Plan of Reorganization
    
    
    2,837
    
    
    
    3,302Total  Other Financings
    
    
    73,204
    
    
    
    75,297Long-term liabilities  otherOther long-term liabilities
    
    
    1,303
    
    
    
    1,8651,303
    
    
    
    1,865422,135
    

    
    
    446,032Long-term liabilities related to assets held for sale
    
    
    (15,231
    )
    
    
    (27,599
    )$
    406,904
    
    
    $
    418,433Less: Current portion of long-term liabilities
    
    
    (22,442
    )
    
    
    (25,290
    )Total long-term liabilities  continuing operations
    
    $
    384,462
    
    
    $
    393,143
  12




---



##### Table of Contents



June 30, 2005Number
    
    Property, plant
    
    Long-term
    
    Interestof Hotels
    
    and equipment, net (1)
    
    obligations (1)
    
    ratesRefinancing DebtMerrill Lynch Mortgage Lending, Inc.  Floating
    
    
    21
    
    
    $
    104,703
    
    
    $
    83,669
    
    
    LIBOR plus 3.40%Merrill Lynch Mortgage Lending, Inc.  Fixed
    
    
    35
    
    
    
    326,523
    
    
    
    256,392
    
    
    6.58%Merrill Lynch Mortgage Lending, Inc.  Total
    
    
    56
    
    
    
    431,226
    
    
    
    340,061Computer Share Trust Company of Canada
    
    
    1
    
    
    
    15,652
    
    
    
    7,567
    
    
    7.88%Other FinancingsColumn Financial, Inc.
    
    
    9
    
    
    
    71,941
    
    
    
    23,846
    
    
    10.59%Lehman Brothers Holdings, Inc.
    
    
    5
    
    
    
    45,233
    
    
    
    22,668
    
    
    $15,970 at 9.40%; $6,698 at 8.90%JP Morgan Chase Bank
    
    
    2
    
    
    
    6,124
    
    
    
    10,064
    
    
    8.00%DDL Kinser
    
    
    1
    
    
    
    3,082
    
    
    
    2,225
    
    
    8.25%Wachovia
    
    
    1
    
    
    
    5,014
    
    
    
    3,196
    
    
    5.78%Column Financial, Inc.
    
    
    1
    
    
    
    11,804
    
    
    
    8,368
    
    
    9.45%Total  other financing
    
    
    19
    
    
    
    143,198
    
    
    
    70,36776
    
    
    
    590,076
    
    
    
    417,995
    
    
    7.10%(2)Long-term liabilities  otherTax notes issued pursuant to our Joint Plan
of Reorganization
    
    
    
    
    
    
    
    
    
    
    2,837Other
    
    
    
    
    
    
    
    
    
    
    1,303
    
    
    
    
    
    
    
    4,140Property, plant and equipment  other
    
    
    5
    
    
    
    20,593
    
    
    
    81
    
    
    
    610,669
    
    
    
    422,135Held for sale
    
    
    (6
    )
    
    
    (23,836
    )
    
    
    (15,231
    )Total June 30, 2005 (3)
    
    
    75
    
    
    $
    586,833
    
    
    $
    406,904
 
 (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 7.10% in the table above represents our annual weighted average cost of debt at June 30, 2005, using a
LIBOR of 3.34% as of June 30, 2005.(3)
    
    Debt obligations at June 30, 2005 include the current portion. Mortgage Debt
     13




---



##### Table of Contents




    
    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;
    
    Once the Holiday Inn Select in Niagara Falls, New York is sold, three additional
properties in the floating rate pool will be classified as sale properties. Once
classified as sale properties, these hotels 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, which is currently 3% and dropped to 1% in July 2005,
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;
 14




---



##### 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
     15




---



##### Table of Contents



7. Commitments and Contingencies
 Franchise Agreements and Capital Expenditures
  16




---



##### Table of Contents



Three months ended
    
    Six months endedJune 30, 2005
    
    June 30, 2004
    
    June 30, 2005
    
    June 30, 2004(unaudited in thousands)Continuing operation
    
    $
    5,848
    
    
    $
    5,703
    
    
    $
    10,781
    
    
    $
    10,810Discontinued operations
    
    
    536
    
    
    
    863
    
    
    
    960
    
    
    
    1,595$
    6,384
    
    
    $
    6,566
    
    
    $
    11,741
    
    
    $
    12,405
    a)
    
    Three of these hotels are held for sale;
 17




---



##### Table of Contents



b)
    
    Eight of the remaining hotels either recently completed a major renovation, are
undergoing a major renovation or a major renovation is planned. The total cost of the
renovations is projected to be $25.6 million of which $8.9 million has been spent;c)
    
    One of the remaining hotels has a franchise agreement that expires in 2006 and
is expected to be renovated upon selection of a new franchise. The total cost of the
renovation will not be known until the franchisor inspects the property;d)
    
    Two of the remaining hotels are currently above the required franchise
thresholds. One of these hotels must remain above those levels until February 2006 to
receive a clean slate letter, and the other hotel must remain above those levels
until September 2005 to receive a cure letter;e)
    
    One of the remaining hotels is expected to be surrendered to the lender;f)
    
    One of the remaining hotels is being evaluated to determine if we will complete
the renovation to retain the existing franchise or refranchise it under an alternate
brand; andg)
    
    The remaining two hotels must operate above required thresholds through August
2008 to receive clean slate letters.
      18




---



##### Table of Contents



Letters of Credit
  Self-insurance
    Casualty losses
    Litigation
 19




---



##### Table of Contents







8. New Accounting Pronouncements




9. Subsequent Events
 Appointment of President
     20




---



##### Table of Contents



Amendment to Employment Agreement
  Sale of Two Hotels
  
 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
  
    
    76 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.
   21




---



##### Table of Contents



Overview of Continuing Operations
  
    
    Revenues for the three months ended June 30, 2005 increased from the prior year despite
the continued closure of two hotels for hurricane renovations and eight hotels under
renovation during the quarter. We saw improvements in the three and six months ended June
30, 2005 ADR and RevPAR as compared to the same period in 2004 with positive growth in
occupancy for the three months ended June 30, 2005. RevPAR for
our continuing operations hotels, less the two hotels closed for
hurricane damage, was up 7.1% with 70% of the growth coming from a 5%
increase in ADR.
    
    Operating expenses increased in the second quarter 2005 as compared
to the second quarter 2004 as
a result of higher revenues, an increase in workers compensation and
group medical insurance claims, and brand-mandated upgrades in linen
packages and property management systems.
Corporate overhead expenses increased primarily due to the write-off of our investment and
accounts receivable related to our 30%-owned Columbus hotel that we plan to surrender to the
lender.
    
    Interest expense was lower for 2005 as a significant portion of the costs incurred in the
second quarter 2004 were related to our refinance completed in June 2004.
    
    We recorded $1.0 million of impairment charges in the quarter primarily related to the
write-down of the Holiday Inn, Hamburg, New York hotel to its estimated fair value based on
a broker opinion.
    
    Net income attributable to common stock was $1.9 million for the second quarter 2005
compared with a net loss of $7.2 million for the second quarter 2004. For the six months
ended June 30, 2005, the net loss attributable to common stock was $5.2 million as compared
to a net loss of $14.3 million for 2004.
 Overview of Discontinued Operations
  ($ in thousands)Aggregate Sales Price
    
    $
    88,610Debt pay down (principal only)
    
    $
    70,236
   22




---



##### Table of Contents



Critical Accounting Policies and Estimates
  Income Statement Overview
  Results of Operations  Continuing Operations
  Revenues  Continuing Operations
 Three months endedJune 30, 2005
    
    June 30, 2004
    
    Increase (decrease)Revenues (unaudited
$ in thousands):Rooms
    
    $
    64,497
    
    
    $
    62,522
    
    
    $
    1,975
    
    
    
    3.2
    %Food and beverage
    
    
    18,817
    
    
    
    19,167
    
    
    
    (350
    )
    
    
    (1.8
    )%Other
    
    
    2,671
    
    
    
    2,760
    
    
    
    (89
    )
    
    
    (3.2
    )%Total revenues
    
    $
    85,985
    
    
    $
    84,449
    
    
    $
    1,536
    
    
    
    1.8
    %Occupancy
    
    
    66.2
    %
    
    
    65.1
    %
    
    
    
    
    
    
    1.6
    %ADR
    
    $
    82.64
    
    
    $
    78.94
    
    
    $
    3.70
    
    
    
    4.7
    %RevPAR
    
    $
    54.67
    
    
    $
    51.38
    
    
    $
    3.29
    
    
    
    6.4
    %
  23




---



##### Table of Contents



24




---



##### Table of Contents



Hotel
    
    Room
    
    
    
    
    
    Three Months EndedCount
    
    Count
    
    
    
    
    
    June 30, 2005
    
    June 30, 2004
    

Change % Change75
    
    
    13,478
    
    
    All Continuing OperationsOccupancy
    
    
    66.2
    %
    
    
    65.1
    %
    
    
    
    
    
    
    1.6
    %ADR
    
    $
    82.64
    
    
    $
    78.94
    
    
    $
    3.70
    
    
    
    4.7
    %RevPAR
    
    $
    54.67
    
    
    $
    51.38
    
    
    $
    3.29
    
    
    
    6.4
    %73
    
    
    12,964
    
    
    Continuing Operations less two hotels closed due to hurricane damageOccupancy
    
    
    66.2
    %
    
    
    64.9
    %
    
    
    
    
    
    
    2.0
    %ADR
    
    $
    82.64
    
    
    $
    78.68
    
    
    $
    3.96
    
    
    
    5.0
    %RevPAR
    
    $
    54.67
    
    
    $
    51.04
    
    
    $
    3.63
    
    
    
    7.1
    %RevPAR Index
    
    
    97.5
    %
    
    
    98.6
    %
    
    
    
    
    
    
    (1.1
    )%55
    
    
    9,717
    
    
    Continuing Operations less two hotels closed due to hurricane damage and hotels under renovation in the first & second quarters 2004 and 2005Occupancy
    
    
    66.2
    %
    
    
    64.0
    %
    
    
    
    
    
    
    3.3
    %ADR
    
    $
    80.57
    
    
    $
    76.76
    
    
    $
    3.81
    
    
    
    5.0
    %RevPAR
    
    $
    53.32
    
    
    $
    49.16
    
    
    $
    4.15
    
    
    
    8.4
    %RevPAR Index
    
    
    100.0
    %
    
    
    100.5
    %
    
    
    
    
    
    
    (0.5
    )%21
    
    
    3,013
    
    
    Hotels completing major renovations in 2003 and 2004Occupancy
    
    
    73.0
    %
    
    
    68.0
    %
    
    
    
    
    
    
    7.5
    %ADR
    
    $
    87.36
    
    
    $
    81.77
    
    
    $
    5.59
    
    
    
    6.8
    %RevPAR
    
    $
    63.80
    
    
    $
    55.57
    
    
    $
    8.23
    
    
    
    14.8
    %RevPAR Index
    
    
    107.7
    %
    
    
    104.1
    %
    
    
    
    
    
    
    3.4
    %16
    
    
    1,845
    
    
    Marriott HotelsOccupancy
    
    
    74.8
    %
    
    
    70.7
    %
    
    
    
    
    
    
    5.8
    %ADR
    
    $
    88.67
    
    
    $
    82.78
    
    
    $
    5.89
    
    
    
    7.1
    %RevPAR
    
    $
    66.34
    
    
    $
    58.53
    
    
    $
    7.80
    
    
    
    13.3
    %RevPAR Index
    
    
    118.4
    %
    
    
    114.9
    %
    
    
    
    
    
    
    3.1
    %4
    
    
    777
    
    
    Hilton HotelsOccupancy
    
    
    71.3
    %
    
    
    70.2
    %
    
    
    
    
    
    
    1.5
    %ADR
    
    $
    96.77
    
    
    $
    91.53
    
    
    $
    5.24
    
    
    
    5.7
    %RevPAR
    
    $
    68.99
    
    
    $
    64.29
    
    
    $
    4.70
    
    
    
    7.3
    %RevPAR Index
    
    
    94.2
    %
    
    
    94.8
    %
    
    
    
    
    
    
    (0.7
    )%45
    
    
    8,830
    
    
    IHG Hotels less two hotels closed due to hurricane damageOccupancy
    
    
    66.5
    %
    
    
    66.1
    %
    
    
    
    
    
    
    0.6
    %ADR
    
    $
    82.01
    
    
    $
    77.96
    
    
    $
    4.06
    
    
    
    5.2
    %RevPAR
    
    $
    54.52
    
    
    $
    51.53
    
    
    $
    2.99
    
    
    
    5.8
    %RevPAR Index
    
    
    94.3
    %
    
    
    96.8
    %
    
    
    
    
    
    
    (2.6
    )%8
    
    
    1,512
    
    
    Other Brands and Independent HotelsOccupancy
    
    
    51.1
    %
    
    
    48.3
    %
    
    
    
    
    
    
    5.8
    %ADR
    
    $
    66.46
    
    
    $
    67.98
    
    
    ($
    1.52
    )
    
    
    (2.2
    )%RevPAR
    
    $
    33.99
    
    
    $
    32.86
    
    
    $
    1.13
    
    
    
    3.4
    %RevPAR Index
    
    
    88.6
    %
    
    
    86.7
    %
    
    
    
    
    
    
    2.2
    %
 25




---



##### Table of Contents



LGN Hotel
    
    
    
    
    
    LodgianCount
    
    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
    %
  Direct operating expenses  Continuing Operations
 Three months endedJune 30, 2005
    
    June 30, 2004
    
    Increase (decrease)(unaudited in thousands)Direct operating expenses:Rooms
    
    $
    17,632
    
    
    $
    16,357
    
    
    $
    1,275
    
    
    
    7.8
    %Food and beverage
    
    
    13,062
    
    
    
    12,477
    
    
    
    585
    
    
    
    4.7
    %Other
    
    
    2,098
    
    
    
    2,038
    
    
    
    60
    
    
    
    2.9
    %Total direct operating expenses
    
    $
    32,792
    
    
    $
    30,872
    
    
    $
    1,920
    
    
    
    6.2
    %% of total revenues
    
    
    38.1
    %
    
    
    36.6
    %
  Other operating expenses  Continuing Operations
 26




---



##### Table of Contents



Three months endedJune 30, 2005
    
    June 30, 2004
    
    Increase (decrease)(unaudited in thousands)Other operating expenses:Other hotel operating costs:General and administrative
    
    $
    5,403
    
    
    $
    4,949
    
    
    $
    454
    
    
    
    9.2
    %Advertising and promotion
    
    
    4,163
    
    
    
    3,678
    
    
    
    485
    
    
    
    13.2
    %Franchise fees
    
    
    5,849
    
    
    
    5,703
    
    
    
    146
    
    
    
    2.6
    %Repairs and maintenance
    
    
    4,762
    
    
    
    4,304
    
    
    
    458
    
    
    
    10.6
    %Utilities
    
    
    4,434
    
    
    
    4,274
    
    
    
    160
    
    
    
    3.7
    %Other expenses
    
    
    82
    
    
    
    8
    
    
    
    74
    
    
    
    925.0
    %Total other hotel operating costs
    
    $
    24,693
    
    
    $
    22,916
    
    
    $
    1,777
    
    
    
    7.8
    %Property and other taxes, insurance and leases
    
    $
    5,810
    
    
    $
    5,187
    
    
    $
    623
    
    
    
    12.0
    %Corporate and other
    
    
    5,870
    
    
    
    4,691
    
    
    
    1,179
    
    
    
    25.1
    %Casualty losses
    
    
    28
    
    
    
    
    
    
    
    28
    
    
    
    n/mDepreciation and amortization
    
    
    6,867
    
    
    
    6,797
    
    
    
    70
    
    
    
    1.0
    %Impairment of long-lived assets
    
    
    954
    
    
    
    
    
    
    
    954
    
    
    
    n/mTotal other operating expenses
    
    $
    44,222
    
    
    $
    39,591
    
    
    $
    4,631
    
    
    
    11.7
    %% of total revenues
    
    
    51.4
    %
    
    
    46.9
    %
  
    
    Hotel general and administrative costs increased $0.5 million or 9.2% primarily as a
result of increased costs related to our property management system
conversions, an increase in group medical insurance claims, and
additional payroll costs;
    
    Advertising and promotion costs increased $0.5 million or 13.2% 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; and
    
    Repairs and maintenance costs increased $0.5 million or 10.6% primarily due to higher
costs related to our on-going renovation program and an increase in workers compensation
and group medical insurance claims.
    27




---



##### Table of Contents



Non-operating income (expenses)  Continuing Operations
 Three months endedJune 30, 2005
    
    June 30, 2004
    
    Increase (decrease)(unaudited in thousands)Non-operating income (expenses):Business interruption proceeds
    
    $
    1,729
    
    
    $
    
    
    
    $
    1,729
    
    
    
    n/mInterest income and other
    
    
    54
    
    
    
    66
    
    
    
    (12
    )
    
    
    (18.2)
    %Interest expense and other financing costs:Preferred Stock dividend
    
    
    
    
    
    
    (4,233
    )
    
    
    (4,233
    )
    
    
    (100.0)
    %Interest expense
    
    
    (6,912
    )
    
    
    (19,507
    )
    
    
    (12,595
    )
    
    
    (64.6)
    %Loss on preferred stock redemption
    
    
    
    
    
    
    (1,592
    )
    
    
    (1,592
    )
    
    
    (100.0)
    %Minority interests
    
    
    120
    
    
    
    71
    
    
    
    49
    
    
    
    69.0
    %
      Revenues  Continuing Operations
 Six months endedJune 30, 2005
    
    June 30, 2004
    
    Increase (decrease)Revenues
(unaudited, $ in
thousands):Rooms
    
    $
    118,958
    
    
    $
    118,572
    
    
    $
    386
    
    
    
    0.3
    %Food and beverage
    
    
    33,718
    
    
    
    35,394
    

    
    
    (1,676
    )
    
    
    (4.7)
    %Other
    
    
    5,163
    
    
    
    5,460
    
    
    
    (297
    )
    
    
    (5.4)
    %Total revenues
    
    $
    157,839
    
    
    $
    159,426
    
    
    $
    (1,587
    )
    
    
    (1.0)
    %Occupancy
    
    
    62.4
    %
    
    
    62.6
    %
    
    
    
    
    
    
    (0.4)
    %ADR
    
    $
    81.28
    
    
    $
    77.80
    
    
    $
    3.48
    
    
    
    4.5
    %RevPAR
    
    $
    50.70
    
    
    $
    48.72
    
    
    $
    1.98
    
    
    
    4.1
    %
  28




---



##### Table of Contents



29




---



##### Table of Contents



Hotel
    
    Room
    
    
    
    
    
    Six Months EndedCount
    
    Count
    
    
    
    
    
    June 30, 2005
    
    June 30, 2004
    
    
    
    Change % Change75
    
    
    13,478
    
    
    All Continuing OperationsOccupancy
    
    
    62.4
    %
    
    
    62.6
    %
    
    
    
    
    
    
    
    
    
    
    (0.4
    )%ADR
    
    $
    81.28
    
    
    $
    77.80
    
    
    
    

    
    
    $
    3.49
    
    
    
    4.5
    %RevPAR
    
    $
    50.70
    
    
    $
    48.72
    
    
    
    
    
    
    $
    1.98
    
    
    
    4.1
    %73
    
    
    12,964
    
    
    Continuing Operations less two hotels closed due to hurricane damageOccupancy
    
    
    62.4
    %
    
    
    62.2
    %
    
    
    
    
    
    
    
    
    
    
    0.3
    %ADR
    
    $
    81.28
    
    
    $
    77.08
    
    
    
    
    
    
    $
    4.21
    
    
    
    5.5
    %RevPAR
    
    $
    50.70
    
    
    $
    47.92
    
    
    
    
    
    
    $
    2.78
    
    
    
    5.8
    %RevPAR Index
    
    
    99.0
    %
    
    
    100.1
    %
    
    
    
    
    
    
    
    
    
    
    (1.1
    )%55
    
    
    9,717
    
    
    Continuing Operations less two hotels closed due to hurricane damage and hotels under renovation in the first & second quarters 2004 and 2005Occupancy
    
    
    62.0
    %
    
    
    60.9
    %
    
    
    
    
    
    
    
    
    
    
    1.9
    %ADR
    
    $
    79.28
    
    
    $
    75.55
    
    
    
    
    
    
    $
    3.73
    
    
    
    4.9
    %RevPAR
    
    $
    49.16
    
    
    $
    45.97
    
    
    
    
    
    
    $
    3.19
    
    
    
    6.9
    %RevPAR Index
    
    
    100.9
    %
    
    
    101.3
    %
    
    
    
    
    
    
    
    
    
    
    (0.4
    )%21
    
    
    3,013
    
    
    Hotels completing major renovations in 2003 and 2004Occupancy
    
    
    71.1
    %
    
    
    68.1
    %
    
    
    
    
    
    
    
    
    
    
    4.5
    %ADR
    
    $
    88.62
    
    
    $
    82.72
    
    
    
    
    
    
    $
    5.90
    
    
    
    7.1
    %RevPAR
    
    $
    63.03
    
    
    $
    56.31
    
    
    
    
    
    
    $
    6.72
    
    
    
    11.9
    %RevPAR Index
    
    
    110.6
    %
    
    
    106.9
    %
    
    
    
    
    
    
    
    
    
    
    3.5
    %16
    
    
    1,845
    
    
    Marriott HotelsOccupancy
    
    
    70.9
    %
    
    
    68.6
    %
    
    
    
    
    
    
    
    
    
    
    3.4
    %ADR
    
    $
    87.33
    
    
    $
    82.10
    
    
    
    
    
    
    $
    5.23
    
    
    
    6.4
    %RevPAR
    
    $
    61.93
    
    
    $
    56.32
    
    
    
    
    
    
    $
    5.61
    
    
    
    10.0
    %RevPAR Index
    
    
    121.2
    %
    
    
    117.8
    %
    
    
    
    
    
    
    
    
    
    
    2.9
    %4
    
    
    777
    
    
    Hilton HotelsOccupancy
    
    
    66.2
    %
    
    
    64.4
    %
    
    
    
    
    
    
    
    
    
    
    2.8
    %ADR
    
    $
    95.71
    
    
    $
    89.98
    
    
    
    
    
    
    $
    5.73
    
    
    
    6.4
    %RevPAR
    
    $
    63.34
    
    
    $
    57.93
    
    
    
    
    
    
    $
    5.41
    
    
    
    9.3
    %RevPAR Index
    
    
    96.5
    %
    
    
    93.4
    %
    
    
    
    
    
    
    
    
    
    
    3.3
    %45
    
    
    8,830
    
    
    IHG Hotels less two hotels closed due to hurricane damageOccupancy
    
    
    63.0
    %
    
    
    63.1
    %
    
    
    
    
    
    
    
    
    
    
    (0.2
    )%ADR
    
    $
    80.40
    
    
    $
    76.49
    
    
    
    
    
    
    $
    3.91
    
    
    
    5.1
    %RevPAR
    
    $
    50.61
    
    
    $
    48.27
    
    
    
    
    
    
    $
    2.34
    
    
    
    4.8
    %RevPAR Index
    
    
    96.6
    %
    
    
    99.0
    %
    
    
    
    
    
    
    
    
    
    
    (2.4
    )%8
    
    
    1,512
    
    
    Other Brands and Independent HotelsOccupancy
    
    
    46.6
    %
    
    
    48.2
    %
    
    
    
    
    
    
    
    
    
    
    (3.3
    )%ADR
    
    $
    66.53
    
    
    $
    64.51
    
    
    
    
    
    
    $
    2.02
    
    
    
    3.1
    %RevPAR
    
    $
    30.99
    
    
    $
    31.08
    
    
    
    
    
    
    ($
    0.09
    )
    
    
    (0.3
    )%RevPAR Index
    
    
    81.7
    %
    
    
    84.7
    %
    
    
    
    
    
    
    
    
    
    
    (3.6
    )%
 30




---



##### Table of Contents



Direct operating expenses  Continuing Operations
 Six months endedJune 30, 2005
    
    June 30, 2004
    
    Increase (decrease)(unaudited in thousands)Direct operating expenses:Rooms
    
    $
    33,127
    
    
    $
    31,814
    
    
    $
    1,313
    
    
    
    4.1
    %Food and beverage
    
    
    24,044
    
    
    
    23,768
    
    
    
    276
    
    
    
    1.2
    %Other
    
    
    4,029
    
    
    
    3,968
    
    
    
    61
    
    
    
    1.5
    %Total direct operating expenses
    
    $
    61,200
    
    
    $
    59,550
    
    
    $
    1,650
    
    
    
    2.8
    %% of total revenues
    
    
    38.8
    %
    
    
    37.4
    %
  Other operating expenses  Continuing Operations
 Six months endedJune 30, 2005
    
    June 30, 2004
    
    Increase (decrease)(unaudited in thousands)Other operating expenses:Other hotel operating costs:General and administrative
    
    $
    11,052
    
    
    $
    10,144
    
    
    $
    908
    
    
    
    9.0
    %Advertising and promotion
    
    
    8,217
    
    
    
    7,564
    
    
    
    653
    
    
    
    8.6
    %Franchise fees
    
    
    10,781
    
    
    
    10,810
    
    
    
    (29
    )
    
    
    (0.3
    )%Repairs and maintenance
    
    
    8,955
    
    
    
    8,545
    
    
    
    410
    
    
    
    4.8
    %Utilities
    
    
    9,410
    
    
    
    9,060
    
    
    
    350
    
    
    
    3.9
    %Other expenses
    
    
    177
    
    
    
    (11
    )
    
    
    188
    
    
    
    n/mTotal other hotel operating costs
    
    $
    48,592
    
    
    $
    46,112
    
    
    $
    2,480
    
    
    
    5.4
    %Property and other taxes, insurance and leases
    
    $
    11,499
    
    
    $
    10,747
    
    
    $
    752
    
    
    
    7.0
    %Corporate and other
    
    
    10,528
    
    
    
    9,025
    
    
    
    1,503
    
    
    
    16.7
    %Casualty losses
    
    
    132
    
    
    
    
    
    
    
    132
    
    
    
    n/mDepreciation and amortization
    
    
    13,524
    
    
    
    13,468
    
    
    
    56
    
    
    
    0.4
    %Impairment of long-lived assets
    
    
    2,609
    
    
    
    
    
    
    
    2,609
    
    
    
    n/mTotal other operating expenses
    
    $
    86,884
    
    
    $
    79,352
    
    
    $
    7,532
    
    
    
    9.5
    %% of total revenues
    
    
    55.0
    %
    
    
    49.8
    %
  
    
    Hotel general and administrative costs increased $0.9 million or 9.0% primarily as a
result of increased costs related to our property management system
conversions, an increase in group medical insurance claims,
additional payroll costs and an increase in vacation pay accruals; and
    
    Advertising and promotion costs increased $0.7 million or 8.6% 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.
  31




---



##### Table of Contents



Non-operating income (expenses)  Continuing Operations
 Six months endedJune 30, 2005
    
    June 30, 2004
    
    Increase (decrease)(unaudited in thousands)Non-operating income (expenses):Business interruption proceeds
    
    $
    1,729
    
    
    $
    
    
    
    $
    1,729
    
    
    
    n/mInterest income and other
    
    
    225
    
    
    
    109
    
    
    
    116
    
    
    
    106.4
    %Interest expense and other financing costs:Preferred Stock dividend
    
    
    
    
    
    
    (8,518
    )
    
    
    (8,518
    )
    
    
    (100.0
    )%Interest expense
    
    
    (13,894
    )
    
    
    (27,531
    )
    
    
    (13,637
    )
    
    
    (49.5
    )%Loss on preferred stock redemption
    
    
    
    
    
    
    1,592
    
    
    
    (1,592
    )
    
    
    (100.0
    )%Minority interests
    
    
    (25
    )
    
    
    218
    
    
    
    (243
    )
    
    
    (111.5
    )%
     Results of Operations  Discontinued Operations
 32




---



##### Table of Contents



a)

    
    an additional $0.6 million on the Holiday Inn Rolling Meadows, IL to reflect
the lowered estimated selling price of the hotel; andb)
    
    an additional $1.3 million on the Holiday Inn St. Louis North, MO to reflect
the reduced selling price on this hotel.
  a)
    
    $0.2 million on the Downtown Plaza Hotel Cincinnati, OH hotel to adjust for the
further reduction in the estimated selling price of this hotel; andb)
    
    $0.3 million on the Holiday Inn Morgantown, WV to adjust for the further
reduction in the estimated selling price of this hotel.
 Income taxes
  EBITDA
  33




---



##### Table of Contents



Three months ended
    
    Six months endedJune 30, 2005
    
    June 30, 2004
    
    June 30, 2005
    
    June 30, 2004(Unaudited in thousands)Continuing operations:Income (loss) from continuing operations
    
    $
    3,655
    
    
    $
    (11,427
    )
    
    $
    (2,295
    )
    
    $
    (17,377
    )Depreciation and amortization
    
    
    6,867
    
    
    
    6,797
    
    
    
    13,524
    
    
    
    13,468Interest income
    
    
    (205
    )
    
    
    (80
    )
    
    
    (425
    )
    
    
    (128
    )Interest expense
    
    
    6,912
    
    
    
    19,507
    
    
    
    13,894
    
    
    
    27,531Preferred stock dividends
    
    
    
    
    
    
    4,233
    
    
    
    
    
    
    
    8,518Loss on preferred stock redemption
    
    
    
    
    
    
    1,592
    
    
    
    
    
    
    
    1,592Provision for income taxes  continuing operations
    
    
    67
    
    
    
    76
    
    
    
    135
    
    
    
    151EBITDA from continuing operations
    
    $
    17,296
    
    
    $
    20,698
    
    
    $
    24,833
    
    
    $
    33,755
  Three months ended
    
    Six months endedJune 30, 2005
    
    June 30, 2004
    
    June 30, 2005
    
    June 30, 2004(Unaudited in thousands)Post-emergence Chapter 11 expenses, included in corporate and
other on our consolidated statement of operations
    
    $
    52
    
    
    $
    135
    
    
    $
    162
    
    
    $
    330Impairment loss
    
    
    954
    
    
    
    
    
    
    
    2,609
    
    
    
    Casualty losses - 2004 hurricane damage
    
    
    28
    
    
    
    
    
    
    
    132
    
    
    
    Write-off of receivable from non-consolidated hotel
    
    
    946
    
    
    
    
    
    
    
    946
    
    
    
    Write-off of investment in joint venture for non-consolidated hotel
    
    
    170
    
    
    
    
    
    
    
    170
    
    
    
    Guaranty payments on Kansas properties
    
    
    500
    
    
    
    
    
    
    
    500
    
    
    
    
 Additional Financial Information Regarding Quarterly Results of Our Continuing Operations
  34




---



##### Table of Contents



Three months ended6/30/05
    
    3/31/05
    
    12/31/04
    
    9/30/04
    
    6/30/04
    
    3/31/04
    
    12/31/03
    
    9/30/03($ in thousands)Revenues:Rooms
    
    $
    64,497
    
    
    $
    54,461
    
    
    $
    50,672
    
    
    $
    62,660
    
    
    $
    62,522
    
    
    $
    56,050
    
    
    $
    50,726
    
    
    $
    60,424Food and beverage
    
    
    18,817
    
    
    
    14,901
    
    
    
    19,258
    
    
    
    16,656
    
    
    
    19,167
    
    
    
    16,227
    
    
    
    18,513
    
    
    
    16,092Other
    
    
    2,671
    
    
    
    2,492
    
    
    
    2,294
    
    
    
    2,752
    
    
    
    2,760
    
    
    
    2,701
    
    
    
    2,510
    
    
    
    2,77185,985
    
    
    
    71,854
    
    
    
    72,224
    
    
    
    82,068
    
    
    
    84,449
    
    
    
    74,978
    
    
    
    71,749
    
    
    
    79,287Operating expenses:Direct:Rooms
    
    
    17,632
    
    
    
    15,494
    
    
    
    15,648
    
    
    
    17,895
    
    
    
    16,357
    
    
    
    15,457
    
    
    
    15,441
    
    
    
    16,945Food and beverage
    
    
    13,062
    
    
    
    10,982
    
    
    
    13,936
    
    
    
    12,328
    
    
    
    12,477
    
    
    
    11,289
    
    
    
    12,307
    
    
    
    11,773Other
    
    
    2,098
    
    
    
    1,930
    
    
    
    1,842
    
    
    
    2,052
    
    
    
    2,038
    
    
    
    1,931
    
    
    
    2,132
    
    
    
    1,96832,792
    
    
    
    28,406
    
    
    
    31,426
    
    
    
    32,275
    
    
    
    30,872
    
    
    
    28,677
    
    
    
    29,880
    
    
    
    30,68653,193
    
    
    
    43,448
    
    
    
    40,798
    
    
    
    49,793
    
    
    
    53,577
    
    
    
    46,301
    
    
    
    41,869
    
    
    
    48,601Other operating expenses:Other hotel operating costs
    
    
    24,693
    
    
    
    23,900
    
    
    
    22,763
    
    
    
    24,457
    
    
    
    22,916
    
    
    
    23,194
    
    
    
    21,677
    
    
    
    23,206Property and other taxes, insurance and leases
    
    
    5,810
    
    
    
    5,690
    
    
    
    5,037
    
    
    
    5,416
    
    
    
    5,187
    
    
    
    5,561
    
    
    
    5,118
    
    
    
    5,929Corporate and other
    
    
    5,870
    
    
    
    4,658
    
    
    
    3,451
    
    
    
    4,412
    
    
    
    4,691
    
    
    
    4,335
    
    
    
    4,537
    
    
    
    4,127Casualty gains and losses
    
    
    28
    
    
    
    104
    
    
    
    295
    
    
    
    2,019
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    6,867
    
    
    
    6,658
    
    
    
    6,523
    
    
    
    6,955
    
    
    
    6,797
    
    
    
    6,671
    
    
    
    6,982
    
    
    
    7,308Impairment of long-lived assets
    
    
    954
    
    
    
    1,655
    
    
    
    4,878
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,062
    
    
    
    2Other operating expenses
    
    
    44,222
    
    
    
    42,665
    
    
    
    42,947
    
    
    
    43,259
    
    
    
    39,591
    
    
    
    39,761
    
    
    
    45,376
    
    
    
    40,5728,971
    
    
    
    783
    
    
    
    (2,149
    )
    
    
    6,534
    
    
    
    13,986
    
    
    
    6,540
    
    
    
    (3,507
    )
    
    
    8,029Other income (expenses):Business interruption insurance proceeds
    
    
    1,729
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interest income and other
    
    
    54
    
    
    
    171
    
    
    
    360
    
    
    
    212
    
    
    
    66
    
    
    
    43
    
    
    
    486
    
    
    
    114Interest expense and other financing costs:Preferred stock dividend
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (866
    )
    
    
    (4,233
    )
    
    
    (4,285
    )
    
    
    (4,065
    )
    
    
    (4,027
    )Other interest expense
    
    
    (6,912
    )
    
    
    (6,983
    )
    
    
    (7,456
    )
    
    
    (7,264
    )
    
    
    (19,507
    )
    
    
    (8,024
    )
    
    
    (7,583
    )
    
    
    (7,523
    )Gain on asset dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    444
    
    
    
    Loss on preferred stock redemption
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,471
    )
    
    
    (1,592
    )
    
    
    
    
    
    
    
    
    
    
    Income (loss) before income taxes, reorganization items and
minority interests
    
    
    3,842
    
    
    
    (6,029
    )
    
    
    (9,245
    )
    
    
    (5,855
    )
    
    
    (11,280
    )
    
    
    (5,726
    )
    
    
    (14,225
    )
    
    
    (3,407
    )Reorganization items
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    647
    
    
    
    Income (loss) before income taxes and minority interest
    
    
    3,842
    
    
    
    (6,029
    )
    
    
    (9,245
    )
    
    
    (5,855
    )
    
    
    (11,280
    )
    
    
    (5,726
    )
    
    
    (13,578
    )
    
    
    (3,407
    )Minority interests
    
    
    (120
    )
    
    
    145
    
    
    
    407
    
    
    
    503
    
    
    
    (71
    )
    
    
    (147
    )
    
    
    1,412
    
    
    
    99Income (loss) before income taxes  continuing operations
    
    
    3,722
    
    
    
    (5,884
    )
    
    
    (8,838
    )
    
    
    (5,352
    )
    
    
    (11,351
    )
    
    
    (5,873
    )
    
    
    (12,166
    )
    
    
    (3,308
    )(Provision) benefit for income taxes  continuing operations
    
    
    (67
    )
    
    
    (67
    )
    
    
    259
    
    
    
    (337
    )
    
    
    (76
    )
    
    
    (76
    )
    
    
    48
    
    
    
    (76
    )Income (loss) from continuing operations
    
    
    3,655
    
    
    
    (5,951
    )
    
    
    (8,579
    )
    
    
    (5,689
    )
    
    
    (11,427
    )
    
    
    (5,949
    )
    
    
    (12,118
    )
    
    
    (3,384
    )Discontinued operations:(Loss) income from discontinued operations before
income taxes
    
    
    (1,781
    )
    
    
    (1,134
    )
    
    
    (5,185
    )
    
    
    1,952
    
    
    
    4,180
    
    
    
    (1,136
    )
    
    
    (4,388
    )
    
    
    (262
    )Income tax benefit (provision)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (Loss) income from discontinued operations
    
    
    (1,781
    )
    
    
    (1,134
    )
    
    
    (5,185
    )
    
    
    1,952
    
    
    
    4,180
    
    
    
    (1,136
    )
    
    
    (4,388
    )
    
    
    (262
    )Net income (loss)
    
    
    1,874
    
    
    
    (7,085
    )
    
    
    (13,764
    )
    
    
    (3,737
    )
    
    
    (7,247
    )
    
    
    (7,085
    )
    
    
    (16,506
    )
    
    
    (3,646
    )Preferred stock dividend
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income (loss) attributable to common stock
    
    $
    1,874
    
    
    $
    (7,085
    )
    
    $
    (13,764
    )
    
    $
    (3,737
    )
    
    $
    (7,247
    )
    
    $
    (7,085
    )
    
    $
    (16,506
    )
    
    $
    (3,646
    )
 EBITDA Reconciliation of Continuing Operations
  Three months ended6/30/05
    

3/31/05
    
    12/31/04
    
    9/30/04
    
    6/30/04
    

3/31/04
    
    12/31/03
    
    9/30/03($ in thousands)Continuing operations:Income (loss) from continuing operations
    
    $
    3,655
    
    
    $
    (5,951
    )
    
    $
    (8,579
    )
    
    $
    (5,689
    )
    
    $
    (11,427
    )
    
    $
    (5,949
    )
    
    $
    (12,118
    )
    
    $
    (3,384
    )Depreciation and amortization
    
    
    6,867
    
    
    
    6,658
    
    
    
    6,523
    
    
    
    6,955
    
    
    
    6,797
    
    
    
    6,670
    
    
    
    6,982
    
    
    
    7,308Interest income
    
    
    (205
    )
    
    
    (220
    )
    
    
    (346
    )
    
    
    (176
    )
    
    
    (80
    )
    
    
    (48
    )
    
    
    (196
    )
    
    
    (72
    )Interest expense
    
    
    6,912
    
    
    
    6,982
    
    
    
    7,456
    
    
    
    7,264
    
    
    
    19,507
    
    
    
    8,025
    
    
    
    7,583
    
    
    
    7,523Preferred stock dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    866
    
    
    
    4,233
    
    
    
    4,285
    
    
    
    4,065
    
    
    
    4,027Loss on preferred stock redemption
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,471
    
    
    
    1,592
    
    
    
    
    
    
    
    
    
    
    
    Provision (benefit) for income taxes  continuing operations
    
    
    67
    
    
    
    68
    
    
    
    (259
    )
    
    
    337
    
    
    
    76
    
    
    
    76
    
    
    
    (48
    )
    
    
    76EBITDA from continuing operations
    
    $
    17,295
    
    
    $
    7,537
    
    
    $
    4,795
    
    
    $
    14,028
    
    
    $
    20,698
    
    
    $
    13,059
    
    
    $
    6,268
    
    
    $
    15,478
 35




---



##### Table of Contents



Three Months Ended6/30/05
    
    3/31/05
    
    12/31/04
    
    9/30/04
    
    6/30/04
    
    3/31/04
    
    12/31/03
    
    9/30/03($ in thousands)Post-emergence Chapter 11 expenses, included in corporate
and other on consolidated statement of operations
    
    $
    52
    
    
    $
    110
    
    
    $
    61
    
    
    $
    67
    
    
    $
    135
    
    
    $
    195
    
    
    $
    1,289
    
    
    $
    320Reorganization expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (647
    )
    
    
    Impairment loss
    
    
    954
    
    
    
    1,655
    
    
    
    4,878
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,062
    
    
    
    2Gain on asset dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (444
    )
    
    
    Casualty losses - 2004 hurricane damage
    
    
    28
    
    
    
    104
    
    
    
    294
    
    
    
    2,019
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Adjustments to bankruptcy claims reserves
    
    
    
    
    
    
    
    
    
    
    (38
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (302
    )
    
    
    Write-off of receivable from non-consolidated hotel
    
    
    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) is
excluded since we do not have comparative figures for the three months ended June 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.
 36




---



##### Table of Contents



Combined Continuing and Discontinued
Operations  77 hotels (excludes Pinehurst, West Palm Beach and
Melbourne hotels)
 Capital expenditures
    
    Three months ended
    
    Six months endedSix Months Ended
    
    June 30, 2005
    
    June 30, 2004
    
    June 20, 2005
    
    June 30, 2004June 30, 2005(in thousands $)Upper UpscaleNumber of properties
    
    $
    252
    
    
    
    4
    
    
    
    4
    
    
    

    4
    
    
    
    4Number of rooms
    
    
    
    
    
    
    825
    
    
    
    825
    
    
    
    825
    
    
    
    825Occupancy
    
    
    
    
    
    
    72.4
    %
    
    
    72.0
    %
    
    
    69.7
    %
    
    
    68.0
    %Average daily rate
    
    
    
    
    
    $
    100.82
    
    
    $
    95.43
    
    
    $
    100.55
    
    
    $
    94.87RevPAR
    
    
    
    
    
    $
    73.02
    
    
    $
    68.74
    
    
    $
    70.11
    
    
    $
    64.53UpscaleNumber of properties
    
    
    6,912
    
    
    
    18
    

    
    
    16
    
    
    
    18
    
    
    
    16Number of rooms
    
    
    
    
    
    
    3,322
    
    
    
    2,779
    
    
    
    3,322
    
    
    
    2,779Occupancy
    
    
    
    
    
    
    70.2
    %
    
    
    67.7
    %
    
    
    67.3
    %
    
    
    67.1
    %Average daily rate
    
    
    
    
    
    $
    87.31
    
    
    $
    85.14
    
    
    $
    88.52
    
    
    $
    85.58RevPAR
    
    
    
    
    
    $
    61.31
    
    
    $
    57.67
    
    
    $
    59.57
    
    
    $
    57.46Midscale with Food & BeverageNumber of properties
    
    
    16,498
    
    
    
    43
    
    
    
    45
    
    
    
    43
    
    
    
    45Number of rooms
    
    
    
    
    
    
    8,432
    
    
    
    8,857
    
    
    
    8,432
    
    
    
    8,857Occupancy
    
    
    
    
    
    
    63.0
    %
    
    
    63.2
    %
    
    
    58.3
    %
    
    
    59.4
    %Average daily rate
    
    
    
    
    
    $
    78.83
    
    
    $
    75.95
    
    
    $
    76.38
    
    
    $
    73.49RevPAR
    
    
    
    
    
    $
    49.69
    
    
    $
    48.02
    
    
    $
    44.50
    
    
    $
    43.69Midscale without Food & BeverageNumber of properties
    
    
    1,434
    
    
    
    9
    
    
    
    9
    
    
    
    9
    
    
    
    9Number of rooms
    
    
    
    
    
    
    1,067
    
    
    
    1,067
    
    
    
    1,067
    
    
    
    1,067Occupancy
    
    
    
    
    
    
    67.6
    %
    
    
    63.5
    %
    
    
    63.9
    %
    
    
    60.3
    %Average daily rate
    
    
    
    
    
    $
    65.92
    
    
    $
    60.99
    
    
    $
    65.22
    
    
    $
    61.13RevPAR
    
    
    
    
    
    $
    44.57
    
    
    $
    38.76
    
    
    $
    41.71
    
    
    $
    36.85EconomyNumber of properties
    
    
    617
    
    
    
    1
    
    
    
    0
    
    
    
    1
    
    
    
    0Number of rooms
    
    
    
    
    
    
    126
    
    
    
    0
    
    
    
    126
    
    
    
    0Occupancy
    
    
    
    
    
    
    54.5
    %
    
    
    0.0
    %
    
    
    60.3
    %
    
    
    0.0
    %Average daily rate
    
    
    
    
    
    $
    61.33
    
    
    $
    0.00
    
    
    $
    66.37
    
    
    $
    0.00RevPAR
    
    
    
    
    
    $
    33.43
    
    
    $
    0.00
    
    
    $
    40.04
    
    
    $
    0.00Independent HotelsNumber of properties
    
    
    14
    
    
    
    2
    
    
    
    3
    
    
    
    2
    
    
    
    3Number of rooms
    
    
    
    
    
    
    291
    
    
    
    535
    
    
    
    291
    
    
    
    535Occupancy
    
    
    
    
    
    
    41.5
    %
    
    
    43.4
    %
    
    
    35.7
    %
    
    
    39.1
    %Average daily rate
    
    
    
    
    
    $
    68.87
    
    
    $
    67.19
    
    
    $
    66.98
    
    
    $
    63.18RevPAR
    
    
    
    
    
    $
    28.61
    
    
    $
    29.14
    
    
    $
    23.93
    
    
    $
    24.71All HotelsNumber of properties
    
    
    25,727
    
    
    
    77
    
    
    
    77
    
    
    
    77
    
    
    
    77Number of rooms
    
    
    
    
    
    
    14,063
    
    
    
    14,063
    
    
    
    14,063
    
    
    
    14,063Occupancy
    
    
    
    
    
    
    65.1
    %
    
    
    63.9
    %
    
    
    61.0
    %
    
    
    60.8
    %Average daily rate
    
    
    
    
    
    $
    81.14
    
    
    $
    77.81
    
    
    $
    80.07
    
    
    $
    76.35RevPAR
    
    
    
    
    
    $
    52.83
    
    
    $
    49.72
    
    
    $
    48.88
    
    
    $
    46.40
 Continuing
Operations  73 hotels (excludes Pinehurst, West Palm Beach,
Melbourne and held for sale hotels)
 37




---



##### Table of Contents



Capital expenditures
    
    Three months ended
    
    Six months endedSix Months Ended
    
    June 30, 2005
    
    June 30, 2004
    
    June 20, 2005
    
    June 30, 2004June 30, 2005(in thousands $)Upper UpscaleNumber of properties
    
    $
    252
    
    
    
    4
    
    
    
    4
    
    
    
    4
    
    
    
    4Number of rooms
    
    
    
    
    
    
    825
    
    
    
    825
    
    
    
    825
    
    
    
    825Occupancy
    
    
    
    
    
    
    72.4
    %
    
    
    72.0
    %
    
    
    69.7
    %
    
    
    68.0
    %Average daily rate
    
    
    
    
    
    $
    100.82
    
    
    $
    95.43
    
    
    $
    100.55
    
    
    $
    94.87RevPAR
    
    
    
    
    
    $
    73.02
    
    
    $
    68.74
    
    
    $
    70.11
    
    
    $
    64.53UpscaleNumber of properties
    
    
    6,912
    
    
    
    18
    
    
    
    16
    
    
    
    18
    
    
    
    16Number of rooms
    
    
    
    
    
    
    3,322
    
    
    
    2,779
    
    
    
    3,322
    
    
    
    2,779Occupancy
    
    
    
    
    
    
    70.2
    %
    
    
    67.7
    %
    
    
    67.3
    %
    
    
    67.1
    %Average daily rate
    
    
    
    
    
    $
    87.31
    
    
    $
    85.14
    
    
    $
    88.52
    
    
    $
    85.58RevPAR
    
    
    
    
    
    $
    61.31
    
    
    $
    57.67
    
    
    $
    59.57
    
    
    $
    57.46Midscale with Food & BeverageNumber of properties
    
    
    16,363
    
    
    
    40
    
    
    
    41
    
    
    
    40
    
    
    
    41Number of rooms
    
    
    
    
    
    
    7,607
    
    
    
    7,639
    
    
    
    7,607
    
    
    
    7,639Occupancy
    
    
    
    
    
    
    63.7
    %
    
    
    65.5
    %
    
    
    59.3
    %
    
    
    62.2
    %Average daily rate
    
    
    
    
    
    $
    80.54
    
    
    $
    76.64
    
    
    $
    77.76
    
    
    $
    74.11RevPAR
    
    
    
    
    
    $
    51.33
    
    
    $
    50.23
    
    
    $
    46.09
    
    
    $
    46.07Midscale without Food & BeverageNumber of properties
    
    
    1,172
    
    
    
    8
    
    
    
    6
    
    
    
    8
    
    
    
    6Number of rooms
    
    
    
    
    
    
    926
    
    
    
    692
    
    
    
    926
    
    
    
    692Occupancy
    
    
    
    
    
    
    70.2
    %
    
    
    63.3
    %
    
    
    67.8
    %
    
    
    60.8
    %Average daily rate
    
    
    
    
    
    $
    67.16
    
    
    $
    63.51
    
    
    $
    66.29
    
    
    $
    63.90RevPAR
    
    
    
    
    
    $
    47.17
    
    
    $
    40.20
    
    
    $
    44.91
    
    
    $
    38.82EconomyNumber of properties
    
    
    617
    
    
    
    1
    
    
    
    0
    
    
    
    1
    
    
    
    0Number of rooms
    
    
    
    
    
    
    126
    
    
    
    0
    
    
    
    126
    
    
    
    0Occupancy
    
    
    
    
    
    
    54.5
    %
    
    
    0.0
    %
    
    
    60.3
    %
    
    
    0.0
    %Average daily rate
    
    
    
    
    
    $
    61.33
    
    
    $
    0.00
    
    
    $
    66.37
    
    
    $
    0.00RevPAR
    
    
    
    
    
    $
    33.43
    
    
    $
    0.00
    
    
    $
    40.04
    
    
    $
    0.00Independent HotelsNumber of properties
    
    
    14
    
    
    
    2
    
    
    
    6
    
    
    
    2
    
    
    
    6Number of rooms
    
    
    
    
    
    
    291
    
    
    
    1,162
    
    
    
    291
    
    
    
    1,162Occupancy
    
    
    
    
    
    
    41.5
    %
    
    
    45.1
    %
    
    
    35.7
    %
    
    
    43.1
    %Average daily rate
    
    
    
    
    
    $
    68.87
    
    
    $
    66.50
    
    
    $
    66.98
    
    
    $
    62.79RevPAR
    
    
    
    
    
    $
    28.61
    
    
    $
    29.97
    
    
    $
    23.93
    
    
    $
    27.10All HotelsNumber of properties
    
    
    25,330
    
    
    
    73
    
    
    
    73
    
    
    
    73
    
    
    
    73Number of rooms
    
    
    
    
    
    
    13,097
    
    
    
    13,097
    
    
    
    13,097
    
    
    
    13,097Occupancy
    
    
    
    
    
    
    65.8
    %
    
    
    64.5
    %
    
    
    62.0
    %
    
    
    61.8
    %Average daily rate
    
    
    
    
    
    $
    82.45
    
    
    $
    78.55
    
    
    $
    81.20
    
    
    $
    76.96RevPAR
    
    
    
    
    
    $
    54.26
    
    
    $
    50.65
    
    
    $
    50.39
    
    
    $
    47.59
  
    
    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
 38




---



##### 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 six months ended June 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  77 hotels (excludes Pinehurst,
West Palm Beach and Melbourne hotels)
 Capital expenditures
    
    Three months ended
    
    Six months endedSix Months Ended
    
    June 30, 2005
    
    June 30, 2004
    
    June 20, 2005
    
    June 30, 2004June 30, 2005(in thousands $)Northeast RegionNumber of properties
    
    $
    11,577
    
    
    
    28
    
    
    
    28
    
    
    
    28
    
    
    
    28Number of rooms
    
    
    
    
    
    
    5,155
    
    
    
    5,155
    
    
    
    5,155
    
    
    
    5,155Occupancy
    
    
    
    
    
    
    68.5
    %
    
    
    69.2
    %
    
    
    62.4
    %
    
    
    64.0
    %Average daily rate
    
    
    
    
    
    $
    90.31
    
    
    $
    85.60
    
    
    $
    87.92
    
    
    $
    83.30RevPAR
    
    
    
    
    
    $
    61.82
    
    
    $
    59.23
    
    
    $
    54.89
    
    
    $
    53.34Southeast RegionNumber of properties
    
    
    10,699
    
    
    
    26
    
    
    
    26
    
    
    
    26
    
    
    
    26Number of rooms
    
    
    
    
    
    
    4,297
    
    
    
    4,297
    
    
    
    4,297
    
    
    
    4,297Occupancy
    
    
    
    
    
    
    62.4
    %
    
    
    60.4
    %
    
    
    58.8
    %
    
    
    57.7
    %Average daily rate
    
    
    
    
    
    $
    73.90
    
    
    $
    71.68
    
    
    $
    70.84
    
    
    $
    67.54RevPAR
    
    
    
    
    
    $
    46.12
    
    
    $
    43.29
    
    
    $
    41.63
    
    
    $
    38.99Midwest RegionNumber of properties
    
    
    962
    
    
    
    16
    
    
    
    16
    
    
    
    16
    
    
    
    16Number of rooms
    
    
    
    
    
    
    3,295
    
    
    
    3,295
    
    
    
    3,295
    
    
    
    3,295Occupancy
    
    
    
    
    
    
    63.3
    %
    
    
    62.1
    %
    
    
    57.8
    %
    
    
    57.2
    %Average daily rate
    
    
    
    
    
    $
    73.98
    
    
    $
    71.54
    
    
    $
    74.56
    
    
    $
    72.30RevPAR
    
    
    
    
    
    $
    46.81
    
    
    $
    44.43
    
    
    $
    43.09
    
    
    $
    41.38West RegionNumber of properties
    
    
    2,488
    
    
    
    7
    
    
    
    7
    
    
    
    7
    
    
    
    7Number of rooms
    
    
    
    
    
    
    1,316
    
    
    
    1,316
    
    
    
    1,316
    
    
    
    1,316Occupancy
    
    
    
    
    
    
    65.4
    %
    
    
    59.2
    %
    
    
    71.2
    %
    
    
    66.7
    %Average daily rate
    
    
    
    
    
    $
    83.49
    
    
    $
    79.03
    
    
    $
    89.23
    
    
    $
    83.82RevPAR
    
    
    
    
    
    $
    54.61
    
    
    $
    46.77
    
    
    $
    63.54
    
    
    $
    55.90All HotelsNumber of properties
    
    
    25,727
    
    
    
    77
    
    
    
    77
    
    
    
    77
    
    
    
    77Number of rooms
    
    
    
    
    
    
    14,063
    
    
    
    14,063
    
    
    
    14,063
    
    
    
    14,063Occupancy
    
    
    
    
    
    
    65.1
    %
    
    
    63.9
    %
    
    
    61.0
    %
    
    
    60.8
    %Average daily rate
    
    
    
    
    
    $
    81.14
    
    
    $
    77.81
    
    
    $
    80.07
    
    
    $
    76.35RevPAR
    
    
    
    
    
    $
    52.83
    
    
    $
    49.72
    
    
    $
    48.88
    
    
    $
    46.40
 Continuing
Operations  73 hotels (excludes Pinehurst, West Palm Beach,
Melbourne and held for sale hotels)
 39




---



##### Table of Contents



Capital expendituresSix Months EndedJune 30, 2005
    
    Three months ended
    
    Six months ended(in thousands $)
    
    June 30, 2005
    
    June 30, 2004
    
    June 20, 2005
    
    June 30, 2004Northeast RegionNumber of properties
    
    $
    11,577
    
    
    
    28
    
    
    
    28
    
    
    
    28
    
    
    
    28Number of rooms
    
    
    
    
    
    
    5,155
    
    
    
    5,155
    
    
    
    5,155
    
    
    
    5,155Occupancy
    
    
    
    
    
    
    68.5
    %
    
    
    69.2
    %
    
    
    62.4
    %
    
    
    64.0
    %Average daily rate
    
    
    
    
    
    $
    90.31
    
    
    $
    85.60
    
    
    $
    87.92
    
    
    $
    83.30RevPAR
    
    
    
    
    
    $
    61.82
    
    
    $
    59.23
    
    
    $
    54.89
    
    
    $
    53.34Southeast RegionNumber of properties
    
    
    10,319
    
    
    
    23
    
    
    
    23
    
    
    
    23
    
    
    
    23Number of rooms

    
    
    
    
    
    
    3,753
    
    
    
    3,753
    
    
    
    3,753
    
    
    
    3,753Occupancy
    
    
    
    
    
    
    63.4
    %
    
    
    60.7
    %
    
    
    60.1
    %
    
    
    58.9
    %Average daily rate
    
    
    
    
    
    $
    75.29
    
    
    $
    72.51
    
    
    $
    72.11
    
    
    $
    68.21RevPAR
    
    
    
    
    
    $
    47.74
    
    
    $
    43.99
    
    
    $
    43.36
    
    
    $
    40.15Midwest RegionNumber of properties
    
    
    945
    
    
    
    15
    
    
    
    15
    
    
    
    15
    
    
    
    15Number of rooms
    
    
    
    
    
    
    2,873
    
    
    
    2,873
    
    
    
    2,873
    
    
    
    2,873Occupancy
    
    
    
    
    
    
    64.4
    %
    
    
    63.4
    %
    
    
    59.7
    %
    
    
    59.5
    %Average daily rate
    
    
    
    
    
    $
    76.20
    
    
    $
    72.09
    
    
    $
    76.17
    
    
    $
    72.50RevPAR
    
    
    
    
    
    $
    49.05
    
    
    $
    45.74
    
    
    $
    45.45
    
    
    $
    43.15West RegionNumber of properties
    
    
    2,488
    
    
    
    7
    
    
    
    7
    
    
    
    7
    
    
    
    7Number of rooms
    
    
    
    
    
    
    1,316
    
    
    
    1,316
    
    
    
    1,316
    
    
    
    1,316Occupancy
    
    
    
    
    
    
    65.4
    %
    
    
    59.2
    %
    
    
    71.2
    %
    
    
    66.7
    %Average daily rate
    
    
    
    
    
    $
    83.49
    
    
    $
    79.03
    
    
    $
    89.23
    
    
    $
    83.82RevPAR
    
    
    
    
    
    $
    54.61
    
    
    $
    46.77
    
    
    $
    63.54
    
    
    $
    55.90All HotelsNumber of properties
    
    
    25,330
    
    
    
    73
    
    
    
    73
    
    
    
    73
    
    
    
    73Number of rooms
    
    
    
    
    
    
    13,097
    
    
    
    13,097
    
    
    
    13,097
    
    
    
    13,097Occupancy
    
    
    
    
    
    
    65.8
    %
    
    
    64.5
    %
    
    
    62.0
    %
    
    
    61.8
    %Average daily rate
    
    
    
    
    
    $
    82.45
    
    
    $
    78.55
    
    
    $
    81.20
    
    
    $
    76.96RevPAR
    
    
    
    
    
    $
    54.26
    
    
    $
    50.65
    
    
    $
    50.39
    
    
    $
    47.59
  
    
    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, Illinois, Indiana, Kansas, Michigan, Minnesota, Missouri,
Oklahoma, Texas; and
    
    West: Arizona, California, Colorado, New Mexico.
 Liquidity and Capital Resources
 Working Capital
  40




---



##### Table of Contents



41




---



##### Table of Contents



Cash Flow
 Operating Activities
  Investing Activities
  Financing activities
  Debt and Contractual Obligations
  Off Balance Sheet Arrangements
  42




---



##### Table of Contents



Market Risk
       Forward-looking Statements
  
    
    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;
 43




---



##### Table of Contents




    
    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.
  Inflation
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
 44




---



##### Table of Contents



Item 4. Controls and Procedures
   
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 6. Exhibits
  45




---



##### Table of Contents



SIGNATURES
  LODGIAN, INC.Date: August 9, 2005
    
    By:
    
    /s/ W. THOMAS PARRINGTONW. Thomas ParringtonChief Executive OfficerDate: August 9, 2005
    
    By:
    
    /s/ LINDA BORCHERT PHILPLinda Borchert PhilpExecutive Vice President andChief Financial Officer
 46




---



##### 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).
 47




---



##### 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.**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).10.11
    
    Promissory Note A in the original amount of $72,000,000.00, dated as of June 25, 2004, by
the
 48




---



##### Table of Contents



ExhibitNumber
    
    DescriptionBorrowers 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).10.12
    
    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).10.13
    
    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).10.14
    
    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).10.15
    
    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).10.16
    
    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).10.17
    
    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).10.18
    
    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).10.19
    
    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).10.20
    
    Promissory Note in the original amount of $61,516,500.00, 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 10.5.2 to the Companys Quarterly Report
for the period ended June 30, 2004 (File No. 1-14537), filed on August 16, 2004).10.21
    
    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).10.22
    
    Amendment to Employment Agreement between, Lodgian, Inc. and W. Thomas Parrington, dated
August 3, 2005.**10.23
    
    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).10.24
    
    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
 49




---



##### Table of Contents



ExhibitNumber
    
    DescriptionMarch 31, 2004 (File No. 1-14537), filed with the Commission on May 14, 2004).10.25
    
    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).10.26
    
    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).10.27
    
    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).10.28
    
    Release Agreement, dated January 31,
2005, 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).10.29
    
    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).10.30
    
    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).10.31
    
    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).10.32
    
    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).10.33
    
    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).10.34
    
    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).10.35
    
    Executive Employment Agreement between Edward J. Rohling and Lodgian, Inc., dated July 12,
2005. **10.36
    
    Restricted Stock Award Agreement between Edward J. Rohling and Lodgian, Inc., dated July 15,
2005.**10.37
    
    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).10.38
    
    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).10.39
    
    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).10.40
    
    Form of Restricted Stock Award Agreement.**
 50




---



##### Table of Contents



ExhibitNumber
    
    Description10.41
    
    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).10.42
    
    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).10.43
    
    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).10.44
    
    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).10.45
    
    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).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.**
 
  51