##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from     to
 Commission file no. 1-14537
 Lodgian, Inc.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    52-2093696(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)3445 Peachtree Road, N.E., Suite 700,Atlanta, GA
    
    30326(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number, including area code
(404) 364-9400
 (Former name, former address and former fiscal year, if changed since last report): Not
applicable
 þ o
 þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
 þ o
  Class
    

Outstanding as of May 1, 2009Common
    
    21,689,590




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##### 



LODGIAN, INC. AND SUBSIDIARIES
  
 INDEX
 PagePART I. FINANCIAL INFORMATIONItem 1. Financial Statements:Condensed Consolidated Balance Sheets as of March 31, 2009 and December 31, 2008 (unaudited)
    
    
    3Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2009 and March 31, 2008 (unaudited)
    
    
    4Condensed Consolidated Statement of Stockholders Equity for the Three Months Ended March 31, 2009 (unaudited)
    
    
    5Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2009 and March 31, 2008 (unaudited)
    
    
    6Notes to Condensed Consolidated Financial Statements (unaudited)
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    20Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    35Item 4. Controls and Procedures
    
    
    35PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    35Item 1A. Risk Factors
    
    
    35Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    36Item 6. Exhibits
    
    
    36Signatures
    
    
    37EX-31.1EX-31.2EX-32
  2




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PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 LODGIAN, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 March 31, 2009
    
    
    December 31, 2008(Unaudited in thousands, except share data)ASSETSCurrent assets:Cash and cash
equivalents
    
    $
    19,064
    
    
    $
    20,454Cash, restricted
    
    
    8,110
    
    
    
    8,179Accounts receivable (net of allowances: 2009 -
$300; 2008 - $263)
    
    
    9,491
    
    
    
    7,115Inventories
    
    
    3,044
    
    
    
    2,983Prepaid expenses and other current assets
    
    
    17,178
    
    
    
    21,257Assets held for sale
    
    
    30,513
    
    
    
    33,021Total
current
assets
    
    
    87,400
    
    
    
    93,009Property and
equipment, net
    
    
    446,438
    
    
    
    447,366Deposits for capital
expenditures
    
    
    9,171
    
    
    
    11,408Other assets
    
    
    5,218
    
    
    
    3,631$
    548,227
    
    
    $
    555,414LIABILITIES AND STOCKHOLDERS
EQUITYCurrent liabilities:Accounts payable
    
    $
    7,297
    
    
    $
    7,897Other accrued
liabilities
    
    
    23,220
    
    
    
    22,897Advance deposits
    
    
    2,196
    
    
    
    1,293Current portion of long-term liabilities
    
    
    124,133
    
    
    
    124,955Liabilities related to assets held for sale
    
    
    16,562
    
    
    
    16,167Total
current
liabilities
    
    
    173,408
    
    
    
    173,209Long-term liabilities
    
    
    194,455
    
    
    
    194,800Total liabilities
    
    
    367,863
    
    
    
    368,009Stockholders equity:Common stock, $.01 par value, 60,000,000
shares authorized;
25,144,364 and 25,075,837 issued at
March 31, 2009 and
December 31, 2008, respectively
    
    
    252
    
    
    
    251Additional paid-in
capital
    
    
    331,077
    
    
    
    330,785Accumulated deficit
    
    
    (112,168
    )
    
    
    (105,246
    )Accumulated other comprehensive income
    
    
    1,051
    
    
    
    1,262Treasury stock, at cost, 3,825,417 and
3,806,000 shares at
March 31, 2009 and December 31, 2008,
respectively
    
    
    (39,688
    )
    
    
    (39,647
    )Total stockholders equity
attributable to common stock
    
    
    180,524
    
    
    
    187,405Noncontrolling
interest
    
    
    (160
    )
    
    
    Total
stockholders
equity
    
    
    180,364
    
    
    
    187,405$
    548,227
    
    
    $
    555,414
  3




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##### Table of Contents



LODGIAN, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 Three Months Ended March 31,2009
    
    
    2008(Unaudited in thousands,except per share data)Revenues:Rooms
    
    $
    36,635
    
    
    $
    43,848Food and beverage
    
    
    10,838
    
    
    
    12,062Other
    
    
    1,703
    
    
    
    2,062Total revenues
    
    
    49,176
    
    
    
    57,972Direct operating expenses:Rooms
    
    
    10,082
    
    
    
    11,183Food and beverage
    
    
    7,638
    
    
    
    8,819Other
    
    
    1,298
    
    
    
    1,388Total direct operating expenses
    
    
    19,018
    
    
    
    21,39030,158
    
    
    
    36,582Other operating expenses:Other hotel operating costs
    
    
    15,628
    
    
    
    17,879Property and other taxes, insurance, and leases
    
    
    4,211
    
    
    
    4,352Corporate and other
    
    
    3,605
    
    
    
    5,885Casualty losses, net
    
    
    81
    
    
    
    Depreciation and amortization
    
    
    8,493
    
    
    
    7,469Impairment of long-lived assets
    
    
    465
    
    
    
    2,141Total other operating expenses
    
    
    32,483
    
    
    
    37,726Operating loss
    
    
    (2,325
    )
    
    
    (1,144
    )Other income (expenses):Interest income and other
    
    
    45
    
    
    
    390Interest expense
    
    
    (3,779
    )
    
    
    (5,172
    )Loss before income taxes and noncontrolling interest
    
    
    (6,059
    )
    
    
    (5,926
    )Provision for income taxes  continuing operations
    
    
    (72
    )
    
    
    (63
    )Loss from continuing operations
    
    
    (6,131
    )
    
    
    (5,989
    )Discontinued operations:Loss from discontinued operations before income taxes
    
    
    (927
    )
    
    
    (1,357
    )Provision for income taxes  discontinued operations
    
    
    (24
    )
    
    
    (172
    )Loss from discontinued operations
    
    
    (951
    )
    
    
    (1,529
    )Net loss
    
    
    (7,082
    )
    
    
    (7,518
    )Less: Net loss attributable to noncontrolling interest
    
    
    160
    
    
    
    Net loss attributable to common stock
    
    $
    (6,922
    )
    
    $
    (7,518
    )Basic and diluted net loss per share attributable to common stock
    
    $
    (0.32
    )
    
    $
    (0.33
    )
  4




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LODGIAN, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
 Attributable to Common StockAccumulated
    
    
    
    
    
    
    
    
    
    
    TotalAdditional
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    Attributable
    
    
    
    
    
    
    TotalCommon Stock
    
    
    Paid-In
    
    
    Accumulated
    
    
    Comprehensive
    
    
    Treasury Stock
    
    
    to Common
    
    
    Noncontrolling
    
    
    StockholdersShares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    Income
    
    
    Shares
    
    
    Amount
    
    
    Stock
    
    
    Interest
    
    
    Equity(Unaudited in thousands, except share data)Balance, December 31, 2008
    
    
    25,075,837
    
    
    $
    251
    
    
    $
    330,785
    
    
    $
    (105,246
    )
    
    $
    1,262
    
    
    
    3,806,000
    
    
    $
    (39,647
    )
    
    $
    187,405
    
    
    $
    
    
    
    $
    187,405Amortization of unearned stock compensation
    
    
    
    
    
    
    
    
    
    
    293
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    293
    
    
    
    
    
    
    
    293Issuance and vesting of nonvested shares
    
    
    68,527
    
    
    
    1
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Repurchases of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,417
    
    
    
    (41
    )
    
    
    (41
    )
    
    
    
    
    
    
    (41
    )Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,922
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,922
    )
    
    
    (160
    )
    
    
    (7,082
    )Currency translation adjustments (related
taxes estimated at nil)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (211
    )
    
    
    
    
    
    
    
    
    
    
    (211
    )
    
    
    
    
    
    
    (211
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,133
    )
    
    
    (160
    )
    
    
    (7,293
    )Balance, March 31, 2009
    
    
    25,144,364
    
    
    $
    252
    
    
    $
    331,077
    
    
    $
    (112,168
    )
    
    $
    1,051
    
    
    
    3,825,417
    
    
    $
    (39,688
    )
    
    $
    180,524
    
    
    $
    (160
    )
    
    $
    180,364
   5




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LODGIAN, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Three Months EndedMarch 31, 2009
    
    
    March 31, 2008(unaudited in thousands)Operating activities:Net loss
    
    $
    (7,082
    )
    
    $
    (7,518
    )Adjustments to reconcile net loss to net cash provided by operating activities:Depreciation and amortization
    
    
    8,493
    
    
    
    7,481Impairment of long-lived assets
    
    
    1,220
    
    
    
    2,464Stock compensation expense
    
    
    293
    
    
    
    342Casualty loss, net
    
    
    81
    
    
    
    Amortization of deferred financing costs
    
    
    335
    
    
    
    353Changes in operating assets and liabilities:Accounts receivable, net of allowances
    
    
    (2,386
    )
    
    
    (3,027
    )Inventories
    
    
    (46
    )
    
    
    (107
    )Prepaid expenses and other assets
    
    
    3,715
    
    
    
    202Accounts payable
    
    
    2,490
    
    
    
    3,919Other accrued liabilities
    
    
    1,033
    
    
    
    105Advance deposits
    
    
    920
    
    
    
    837Net cash provided by operating activities
    
    
    9,066
    
    
    
    5,051Investing activities:Capital improvements
    
    
    (11,529
    )
    
    
    (15,587
    )Proceeds from sale of assets, net of related selling costs and note receivable from buyer
    
    
    217
    
    
    
    Withdrawals for capital expenditures
    
    
    2,237
    
    
    
    676Payments related to casualty damage, net
    
    
    (81
    )
    
    
    (133
    )Net decrease (increase) in restricted cash
    
    
    69
    
    
    
    (227
    )Other
    
    
    (3
    )
    
    
    Net cash used in investing activities
    
    
    (9,090
    )
    
    
    (15,271
    )Financing activities:Proceeds from exercise of stock options
    
    
    
    
    
    
    17Principal payments on long-term debt
    
    
    (1,244
    )
    
    
    (1,262
    )Purchases of treasury stock
    
    
    (41
    )
    
    
    (13,043
    )Payments of deferred financing costs
    
    
    (54
    )
    
    
    Other
    
    
    
    
    
    
    (2
    )Net cash used in financing activities
    
    
    (1,339
    )
    
    
    (14,290
    )Effect of exchange rate changes on cash
    
    
    (27
    )
    
    
    (35
    )Net decrease in cash and cash equivalents
    
    
    (1,390
    )
    
    
    (24,545
    )Cash and cash equivalents at beginning of year
    
    
    20,454
    
    
    
    54,389Cash and cash equivalents at end of year
    
    $
    19,064
    
    
    $
    29,844Supplemental cash flow information:Cash paid during the year for:Interest, net of the amounts capitalized shown below
    
    $
    3,747
    
    
    $
    5,612Interest capitalized
    
    
    77
    
    
    
    136Income taxes, net of refunds
    
    
    185
    
    
    
    51Supplemental disclosure of non-cash investing and financing activities:Treasury stock repurchases traded, but not settled
    
    
    
    
    
    
    879Purchases of property and equipment on account
    
    
    2,921
    
    
    
    3,657Note receivable from buyer of sold hotel
    
    
    1,850
    
    
    
    
  6




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LODGIAN, INC. AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 1. Business Summary
    2. General
     7




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
    
    the reported amounts of assets and liabilities;
    
    the reported amounts of revenues and expenses during the reporting period; and
    
    the disclosures of contingent assets and liabilities at the date of the financial
statements.
  3. Stock-Based Compensation
   Issued Under the StockIncentive PlanAvailable under the plan, less previously issued as of December 31, 2008
    
    
    2,499,921Nonvested stock issued February 4, 2009
    
    
    (286,503
    )Nonvested stock issued February 12, 2009
    
    
    (20,000
    )Shares of nonvested stock withheld from awards to satisfy tax withholding obligations
    
    
    19,417Nonvested shares forfeited in 2009
    
    
    67Available for issuance, March 31, 2009
    
    
    2,212,902
 Stock Options
   Options Outstanding and ExercisableWeighted Average
    
    
    WeightedRemaining Life
    
    
    AverageRange of prices
    
    Number
    
    
    (In Years)
    
    
    Exercise Price$7.83 to $9.39
    
    
    73,663
    
    
    
    6.1
    
    
    $
    9.05$9.40 to $10.96
    
    
    72,587
    
    
    
    5.3
    
    
    $
    10.51$10.97 to $15.66
    
    
    28,661
    
    
    
    4.4
    
    
    $
    15.21174,911
    
    
    
    5.5
    
    
    $
    10.66
  8




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##### Table of Contents



Nonvested Stock
     WeightedAverageNonvested
    
    
    Grant DateStock
    
    
    Fair ValueBalance, December 31, 2008
    
    
    133,474
    
    
    $
    10.41Granted
    
    
    306,503
    
    
    
    2.62Forfeited
    
    
    (67
    )
    
    
    8.90Vested
    
    
    (68,527
    )
    
    
    10.71Balance, March 31, 2009
    
    
    371,383
    
    
    $
    3.93
   Unrecognized
    
    
    Weighted-AverageCompensation
    
    
    AmortizationType of Award
    
    Expense ($000s)
    
    
    Period (in years)(unaudited in thousands)Nonvested Stock
    
    $
    1,076
    
    
    
    1.41Revised Plan Nonvested Stock Awards
    
    
    434
    
    
    
    2.96Total
    
    $
    1,510
    
    
    
    1.86
   9




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Three Months Ended March 31, 2009
    
    
    Three Months Ended March 31, 2008Compensation
    
    
    Income Tax
    
    
    Compensation
    
    
    Income TaxType of Award
    
    Expense
    
    
    Benefit
    
    
    Expense
    
    
    Benefit(unaudited in thousands)Stock Options
    
    $
    
    
    
    $
    
    
    
    $
    74
    
    
    $
    29Nonvested Stock
    
    
    287
    
    
    
    111
    
    
    
    268
    
    
    
    104Revised Plan Nonvested Stock Awards
    
    
    6
    
    
    
    2
    
    
    
    
    
    
    
    Total
    
    $
    293
    
    
    $
    113
    
    
    $
    342
    
    
    $
    133
 4. Treasury Stock
   5. Dispositions and Discontinued Operations
 Dispositions
  Assets Held for Sale and 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.
    10




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
    
    $0.7 million on the Holiday Inn Select in Windsor, Ontario, Canada to reflect the
current estimated selling price, net of selling costs; and
    
    $0.1 million to record the disposal of replaced assets at various hotels.
   
    
    French Quarter Suites Memphis, TN
    
    Hilton Northfield, MI
    
    Holiday Inn Cromwell Bridge, MD
    
    Holiday Inn Phoenix, AZ
    
    Holiday Inn Select Windsor, Ontario, Canada
  March 31, 2009
    
    
    December 31, 2008(Unaudited in thousands)Property and equipment, net
    
    $
    28,910
    
    
    $
    31,351Other assets
    
    
    1,603
    
    
    
    1,670Assets held for sale
    
    $
    30,513
    
    
    $
    33,021Other liabilities
    
    $
    7,335
    
    
    $
    6,886Long-term debt
    
    
    9,227
    
    
    
    9,281Liabilities related to assets held for sale
    
    $
    16,562
    
    
    $
    16,167
  Three Months Ended March 31,2009
    
    
    2008(Unaudited in thousands)Total revenues
    
    
    4,226
    
    
    
    9,587Total expenses
    
    
    (4,178
    )
    
    
    (10,155
    )Impairment of long-lived assets
    
    
    (755
    )
    
    
    (323
    )Interest income and other
    
    
    1
    
    
    
    9Interest expense
    
    
    (221
    )
    
    
    (475
    )Provision for income taxes
    
    
    (24
    )
    
    
    (172
    )Loss from discontinued operations
    
    $
    (951
    )
    
    $
    (1,529
    )
   11




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6. Income (Loss) Per Share
  Three Months Ended March 31,2009
    
    
    2008(Unaudited in thousands,except per share data)Numerator:Loss from continuing operations
    
    $
    (6,131
    )
    
    $
    (5,989
    )Less: Net loss attributable to noncontrolling interest
    
    
    160
    
    
    
    Loss from continuing operations attributable to common stock
    
    
    (5,971
    )
    
    
    (5,989
    )Loss from discontinued operations
    
    
    (951
    )
    
    
    (1,529
    )Net loss attributable to common stock
    
    $
    (6,922
    )
    
    $
    (7,518
    )Denominator:Basic and diluted weighted average shares
    
    
    21,301
    
    
    
    22,644Basic and diluted loss per common share:Loss from continuing operations
    
    $
    (0.28
    )
    
    $
    (0.26
    )Loss from discontinued operations
    
    
    (0.04
    )
    
    
    (0.07
    )Net loss attributable to common stock
    
    $
    (0.32
    )
    
    $
    (0.33
    )
   7. Long-Term Liabilities
    12




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March 31, 2009
    
    
    December 31, 2008Number
    
    
    Property, plant
    
    
    Long-term
    
    
    Long-termof Hotels
    
    
    and equipment, net
    
    
    obligations
    
    
    obligations
    
    
    Interest rates at March 31, 2009($ unaudited in thousands)Mortgage DebtGoldman Sachs
    
    
    10
    
    
    $
    122,713
    
    
    $
    130,000
    
    
    $
    130,000
    
    
    LIBOR plus 1.50%; capped at 8.50%Merrill Lynch Mortgage Lending, Inc. Fixed Pool 1
    
    
    4
    
    
    
    67,237
    
    
    
    39,016
    
    
    
    39,372
    
    
    6.58%Merrill Lynch Mortgage Lending, Inc. Fixed Pool 3
    
    
    7
    
    
    
    81,459
    
    
    
    52,747
    
    
    
    53,031
    
    
    6.58%Merrill Lynch Mortgage Lending, Inc. Fixed Pool 4
    
    
    6
    
    
    
    83,551
    
    
    
    35,775
    
    
    
    35,984
    
    
    6.58%IXIS
    
    
    3
    
    
    
    19,064
    
    
    
    20,903
    
    
    
    20,977
    
    
    LIBOR plus 2.95%; capped at 7.45%IXIS
    
    
    1
    
    
    
    16,476
    
    
    
    18,471
    
    
    
    18,530
    
    
    LIBOR plus 2.90%; capped at 7.90%Wachovia
    
    
    1
    
    
    
    12,672
    
    
    
    16,412
    
    
    
    16,501
    
    
    6.04%Wachovia
    
    
    1
    
    
    
    7,942
    
    
    
    9,427
    
    
    
    9,478
    
    
    6.03%Wachovia
    
    
    1
    
    
    
    5,603
    
    
    
    5,736
    
    
    
    5,767
    
    
    6.04%Wachovia
    
    
    1
    
    
    
    5,863
    
    
    
    2,971
    
    
    
    2,988
    
    
    5.78%Total
    
    
    35
    
    
    
    422,580
    
    
    
    331,458
    
    
    
    332,628
    
    
    4.38%            (1)Long-term liabilities  otherTax notes issued pursuant to our Joint Plan
of Reorganization
    
    
    
    
    
    
    
    
    
    
    16
    
    
    
    42Other
    
    
    
    
    
    
    
    
    
    
    1,288
    
    
    
    1,342
    
    
    
    
    
    
    
    1,304
    
    
    
    1,384Property, plant and equipment  Unencumbered
    
    
    5
    
    
    
    52,768
    
    
    
    
    
    
    
    40
    
    
    
    475,348
    
    
    
    332,762
    
    
    
    334,012Held for sale
    
    
    (5
    )
    
    
    (28,910
    )
    
    
    (14,174
    )
    
    
    (14,257
    )Held for use (2)
    
    
    35
    
    
    $
    446,438
    
    
    $
    318,588
    
    
    $
    319,755
 
 (1)
    
    The rate represents the annual effective weighted average cost of debt at March 31, 2009.(2)
    
    Long-term debt obligations at March 31, 2009 and December 31, 2008 include the current portion
of $124.1 million and $125.0 million, respectively.    13




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##### Table of Contents



8. Commitments and Contingencies
 Franchise Agreements and Capital Expenditures
   Three Months Ended March 31,2009
    
    
    2008(Unaudited in thousands)Continuing operations
    
    $
    3,677
    
    
    $
    4,077Discontinued operations
    
    
    343
    
    
    
    756$
    4,020
    
    
    $
    4,833
    
    
    One hotel is not in compliance of the franchise agreement because of substandard guest
satisfaction scores. If the Company does not achieve scores above the required thresholds
by July 2009, this hotel could be placed in default by the franchisor. However, since the
Company recently completed some renovations at the hotel and is following an action plan
for improvement, the Company anticipates that it will cure the failure by the required
date.
    
    One hotel is in default of the franchise agreement for failure to complete a Property
Improvement Plan. If the Company does not cure the default by June 2009, the hotels
franchise agreement could be terminated by the franchisor. This hotel is also in default of
the franchise agreement because of substandard guest satisfaction scores. If the Company
does not achieve scores above the required thresholds by June 2009, the hotels franchise
agreement could be subject to termination by the franchisor. However, since the hotel is
currently under renovation, the Company anticipates that it will be given additional time
to cure the default.
    
    One hotel is in default with some of the terms of the franchise agreement because of
substandard guest scores. If the Company does not achieve scores above the required quality
thresholds by July 2009, the hotels franchise agreement could be subject to termination by
the franchisor. However, the Company has met with the franchisor, is following a specific
action plan for improvement, and anticipates that it will cure the failure by the required
cure date.
 14




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##### Table of Contents




    
    The Company is anticipating cure letters for two hotels to be delivered no later than
February 2010.
     Letters of Credit
  Self-insurance
    Casualty gains (losses) and business interruption insurance
  15




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##### Table of Contents



Litigation
   9. Income Taxes
     10. Recent Accounting Pronouncements
 Recently Adopted Pronouncements
  16




---



##### Table of Contents



Level 1
    
    Quoted prices for identical instruments in active markets at the measurement date.Level 2
    
    Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in
markets that are not active; and model-derived valuations in which all significant inputs and significant
value drivers are observable in active markets at the measurement date and for the anticipated term of the
instrument.Level 3
    
    Valuations derived from valuation techniques in which one or more significant inputs or significant value
drivers are unobservable inputs that reflect the reporting entitys own assumptions about the assumptions
market participants would use in pricing the asset or liability developed based on the best information
available in the circumstances.
   Fair Value Measurements at Reporting Date Using(unaudited in thousands)SignificantQuoted Prices in
    
    Other
    
    SignificantActive Markets for
    
    Observable
    
    UnobservableIdentical Assets
    
    Inputs
    
    Inputs
    
    Total GainsDescription
    
    March 31, 2009
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)
    
    (Losses)Real Estate Assets  Held for Sale Hotels
    
    $
    14,405
    
    
    $
    
    
    
    $
    5,605
    
    
    $
    8,800
    
    
    $
    (660
    )
  .
  17




---



##### Table of Contents



Loss from continuing operations
    
    $
    (5,989
    )Less: Net income attributable to noncontrolling interest
    
    
    (225
    )Loss from continuing operations attributable to common stock
    
    
    (6,214
    )Loss from discontinued operations
    
    
    (1,529
    )Net loss attributable to common stock
    
    $
    (7,743
    )DenominatorBasic and diluted weighted average shares
    
    
    22,644Basic and diluted loss per common share:Loss from continuing operations
    
    $
    (0.27
    )Loss from discontinued operations
    
    
    (0.07
    )Net loss attributable to common stock
    
    $
    (0.34
    )
  .
   18




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##### Table of Contents



Recently Issued Pronouncements
    11. Subsequent Events
   19




---



##### Table of Contents



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, 2008. The terms Company, we, us and our mean
Lodgian and its wholly owned subsidiaries.
 Executive Overview
     Overview of Continuing Operations
  
    
    First quarter revenues decreased $8.8 million or 15.2%. Rooms revenues decreased $7.2
million, or 16.5%, as occupancy and average daily rate decreased 7.8% and 8.3%,
respectively. Food and beverage revenues declined $1.2 million, driven largely by fewer
banquets.
    
    Operating loss increased $1.2 million. We realized the benefits of several cost
containment initiatives as total operating expenses decreased $7.6 million, or 12.9%.
However, these initiatives did not fully offset the $8.8 million decline in revenues since
many of our operating costs are fixed in nature.
 Overview of Discontinued Operations
   20




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##### Table of Contents



Critical Accounting Policies and Estimates
    21




---



##### Table of Contents



Loss from continuing operations
    
    $
    (5,989
    )Less: Net income attributable to noncontrolling interest
    
    
    (225
    )Loss from continuing operations attributable to common stock
    
    
    (6,214
    )Loss from discontinued operations
    
    
    (1,529
    )Net loss attributable to common stock
    
    $
    (7,743
    )DenominatorBasic and diluted weighted average shares
    
    
    22,644Basic and diluted loss per common share:Loss from continuing operations
    
    $
    (0.27
    )Loss from discontinued operations
    
    
    (0.07
    )Net loss attributable to common stock
    
    $
    (0.34
    )
 Income Statement Overview
  Results of Operations  Continuing Operations
 The analysis below compares the results of operations for the three months ended March 31, 2009 and
2008.
 Revenues  Continuing Operations
 Three Months Ended March 31,2009
    
    
    2008
    
    
    Increase (decrease)(unaudited in thousands)Revenues:Rooms
    
    $
    36,635
    
    
    $
    43,848
    
    
    $
    (7,213
    )
    
    
    (16.5
    %)Food and beverage
    
    
    10,838
    
    
    
    12,062
    
    
    
    (1,224
    )
    
    
    (10.1
    %)Other
    
    
    1,703
    
    
    
    2,062
    
    
    
    (359
    )
    
    
    (17.4
    %)Total revenues
    
    $
    49,176
    
    
    $
    57,972
    
    
    $
    (8,796
    )
    
    
    (15.2
    %)Occupancy
    
    
    61.1
    %
    
    
    66.3
    %
    
    
    
    
    
    
    (7.8
    %)ADR
    
    $
    100.16
    
    
    $
    109.17
    
    
    $
    (9.01
    )
    
    
    (8.3
    %)RevPar
    
    $
    61.17
    
    
    $
    72.37
    
    
    $
    (11.20
    )
    
    
    (15.5
    %)
   22




---



##### Table of Contents



Direct operating expenses  Continuing Operations
 % of total revenuesThree Months Ended March 31,
    
    
    
    
    
    
    
    
    
    
    Three Months Ended March 31,2009
    
    
    2008
    
    
    Increase (decrease)
    
    
    2009
    
    
    2008(unaudited in thousands)Direct operating expenses:Rooms
    
    $
    10,082
    
    
    $
    11,183
    
    
    $
    (1,101
    )
    
    
    (9.8
    %)
    
    
    20.5
    %
    
    
    19.3
    %Food and beverage
    
    
    7,638
    
    
    
    8,819
    
    
    
    (1,181
    )
    
    
    (13.4
    %)
    
    
    15.5
    %
    
    
    15.2
    %Other
    
    
    1,298
    
    
    
    1,388
    
    
    
    (90
    )
    
    
    (6.5
    %)
    
    
    2.6
    %
    
    
    2.4
    %Total direct operating expenses
    
    $
    19,018
    
    
    $
    21,390
    
    
    $
    (2,372
    )
    
    
    (11.1
    %)
    
    
    38.7
    %
    
    
    36.9
    %Direct operating contribution (by revenue source):Rooms
    
    $
    26,553
    
    
    $
    32,665
    
    
    $
    (6,112
    )
    
    
    (18.7
    %)Food and beverage
    
    
    3,200
    
    
    
    3,243
    
    
    
    (43
    )
    
    
    (1.3
    %)Other
    
    
    405
    
    
    
    674
    
    
    
    (269
    )
    
    
    (39.9
    %)Total direct operating contribution
    
    $
    30,158
    
    
    $
    36,582
    
    
    $
    (6,424
    )
    
    
    (17.6
    %)Direct operating contribution % (by revenue source):Rooms
    
    
    72.5
    %
    
    
    74.5
    %Food and beverage
    
    
    29.5
    %
    
    
    26.9
    %Other
    
    
    23.8
    %
    
    
    32.7
    %Total direct operating contribution
    
    
    61.3
    %
    
    
    63.1
    %
     23




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##### Table of Contents



Other operating expenses and operating income  Continuing Operations
 % of total revenuesThree Months Ended March 31,
    
    
    
    
    
    
    
    
    
    
    Three Months Ended March 31,2009
    
    
    2008
    
    
    Increase (decrease)
    
    
    2009
    
    
    2008(unaudited in thousands)Other operating expenses:Other hotel operating costsGeneral and administrative
    
    $
    3,485
    
    
    $
    3,999
    
    
    $
    (514
    )
    
    
    (12.9
    %)
    
    
    7.1
    %
    
    
    6.9
    %Advertising and promotion
    
    
    2,619
    
    
    
    3,460
    
    
    
    (841
    )
    
    
    (24.3
    %)
    
    
    5.3
    %
    
    
    6.0
    %Franchise fees
    
    
    3,677
    
    
    
    4,077
    
    
    
    (400
    )
    
    
    (9.8
    %)
    
    
    7.5
    %
    
    
    7.0
    %Repairs and maintenance
    
    
    2,634
    
    
    
    2,866
    
    
    
    (232
    )
    
    
    (8.1
    %)
    
    
    5.4
    %
    
    
    4.9
    %Utilities
    
    
    3,194
    
    
    
    3,303
    
    
    
    (109
    )
    
    
    (3.3
    %)
    
    
    6.5
    %
    
    
    5.7
    %Other expenses
    
    
    19
    
    
    
    174
    
    
    
    (155
    )
    
    
    (89.1
    %)
    
    
    0.0
    %
    
    
    0.3
    %Other hotel operating costs
    
    
    15,628
    
    
    
    17,879
    
    
    $
    (2,251
    )
    
    
    (12.6
    %)
    
    
    31.8
    %
    
    
    30.8
    %Property and other taxes, insurance, and leases
    
    
    4,211
    
    
    
    4,352
    
    
    
    (141
    )
    
    
    (3.2
    %)
    
    
    8.6
    %
    
    
    7.5
    %Corporate and other
    
    
    3,605
    
    
    
    5,885
    
    
    
    (2,280
    )
    
    
    (38.7
    %)
    
    
    7.3
    %
    
    
    10.2
    %Casualty losses, net
    
    
    81
    
    
    
    
    
    
    
    81
    
    
    
    n/m
    
    
    
    0.2
    %
    
    
    0.0
    %Depreciation and amortization
    
    
    8,493
    
    
    
    7,469
    
    
    
    1,024
    
    
    
    13.7
    %
    
    
    17.3
    %
    
    
    12.9
    %Impairment of long-lived assets
    
    
    465
    
    
    
    2,141
    
    
    
    (1,676
    )
    
    
    (78.3
    %)
    
    
    0.9
    %
    
    
    3.7
    %Total other operating expenses
    
    $
    32,483
    
    
    $
    37,726
    
    
    $
    (5,243
    )
    
    
    (13.9
    %)
    
    
    66.1
    %
    
    
    65.1
    %Total operating expenses
    
    $
    51,501
    
    
    $
    59,116
    
    
    $
    (7,615
    )
    
    
    (12.9
    %)
    
    
    104.7
    %
    
    
    102.0
    %Operating loss
    
    $
    (2,325
    )
    
    $
    (1,144
    )
    
    $
    (1,181
    )
    
    
    (103.2
    %)
    
    
    (4.7
    %)
    
    
    (2.0
    %)
   
    
    Hotel general and administrative costs decreased $0.5 million, or 12.9%. The decrease
was primarily the result of lower labor costs of $0.2 million driven by initiatives to
reduce our cost structure, a decline in medical and workers compensation insurance costs of
$0.1 million, and a $0.1 million reduction in travel costs.
    
    Advertising and promotion costs decreased $0.8 million, or 24.3%, because of lower
payroll costs of $0.5 million and lower costs associated with our medical and workers
compensation insurance programs of $0.1 million. The remaining decrease was largely the
result of cost containment initiatives.
    
    Repairs and maintenance decreased $0.2 million, or 8.1%, compared to the prior year
primarily due to lower labor costs of $0.1 million and lower fuel costs of $0.1 million.
    
    Utilities decreased $0.1 million, or 3.3%, due to reduced consumption.
    
    Other expenses decreased $0.2 million. In the first quarter of 2008, we incurred costs
associated with a hotel brand conversion. Such costs were not incurred in the first
quarter of 2009.
    24




---



##### Table of Contents



Non-operating
income (expenses)  Continuing Operations
 Three Months Ended March 31,2009
    
    2008
    
    Increase (decrease)(unaudited in thousands)Non-operating income (expenses):Interest income and other
    
    $
    45
    
    
    $
    390
    
    
    $
    (345
    )
    
    
    (88.5
    %)Interest expense
    
    
    (3,779
    )
    
    
    (5,172
    )
    
    
    (1,393
    )
    
    
    (26.9
    %)
  Results of Operations  Discontinued Operations
   
    
    $0.7 million on the Holiday Inn Select in Windsor, Ontario, Canada to reflect the
current estimated selling price, net of selling costs; and
    
    $0.1 million to record the disposal of replaced assets at various hotels.
  Income Taxes
    25




---



##### Table of Contents



Additional Financial Information Regarding Quarterly Results of Our Continuing Operations
  2009
    
    
    2008
    
    
    2007First
    
    
    Fourth
    
    
    Third
    
    
    Second
    
    
    First
    
    
    Fourth
    
    
    Third
    
    
    SecondQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter(unaudited in thousands)Revenues:Rooms
    
    $
    36,635
    
    
    $
    38,732
    
    
    $
    46,679
    
    
    $
    49,364
    
    
    $
    43,848
    
    
    $
    40,730
    
    
    $
    46,942
    
    
    $
    49,224Food and beverage
    
    
    10,838
    
    
    
    13,532
    
    
    
    12,545
    
    
    
    15,404
    
    
    
    12,062
    
    
    
    14,429
    
    
    
    12,857
    
    
    
    15,323Other
    
    
    1,703
    
    
    
    1,886
    
    
    
    2,176
    
    
    
    2,138
    
    
    
    2,062
    
    
    
    1,819
    
    
    
    2,134
    
    
    
    2,13149,176
    
    
    
    54,150
    
    
    
    61,400
    
    
    
    66,906
    
    
    
    57,972
    
    
    
    56,978
    
    
    
    61,933
    
    
    
    66,678Direct operating expenses:Rooms
    
    
    10,082
    
    
    
    11,026
    
    
    
    12,200
    
    
    
    12,179
    
    
    
    11,183
    
    
    
    10,497
    
    
    
    11,997
    
    
    
    11,725Food and beverage
    
    
    7,638
    
    
    
    9,015
    
    
    
    9,070
    
    
    
    9,851
    
    
    
    8,819
    
    
    
    9,054
    
    
    
    9,432
    
    
    
    9,918Other
    
    
    1,298
    
    
    
    1,333
    
    
    
    1,548
    
    
    
    1,537
    
    
    
    1,388
    
    
    
    1,288
    
    
    
    1,512
    
    
    
    1,46219,018
    
    
    
    21,374
    
    
    
    22,818
    
    
    
    23,567
    
    
    
    21,390
    
    
    
    20,839
    
    
    
    22,941
    
    
    
    23,10530,158
    
    
    
    32,776
    
    
    
    38,582
    
    
    
    43,339
    
    
    
    36,582
    
    
    
    36,139
    
    
    
    38,992
    
    
    
    43,573Other operating expenses:Other hotel operating costs
    
    
    15,628
    
    
    
    16,075
    
    
    
    18,287
    
    
    
    17,719
    
    
    
    17,879
    
    
    
    16,285
    
    
    
    17,847
    
    
    
    17,603Property and other taxes, insurance and leases
    
    
    4,211
    
    
    
    4,223
    
    
    
    4,226
    
    
    
    3,760
    
    
    
    4,352
    
    
    
    4,334
    
    
    
    4,087
    
    
    
    4,418Corporate and other
    
    
    3,605
    
    
    
    3,063
    
    
    
    4,373
    
    
    
    3,484
    
    
    
    5,885
    
    
    
    4,248
    
    
    
    5,575
    
    
    
    5,906Casualty losses (gain), net
    
    
    81
    
    
    
    1,152
    
    
    
    (57
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Restructuring
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25
    )
    
    
    1,258
    
    
    
    Depreciation and amortization
    
    
    8,493
    
    
    
    8,352
    
    
    
    8,120
    
    
    
    7,989
    
    
    
    7,469
    
    
    
    7,464
    
    
    
    7,226
    
    
    
    7,098Impairment of long-lived assets
    
    
    465
    
    
    
    354
    
    
    
    1,393
    
    
    
    5,580
    
    
    
    2,141
    
    
    
    796
    
    
    
    512
    
    
    
    155Other operating expenses
    
    
    32,483
    
    
    
    33,219
    
    
    
    36,342
    
    
    
    38,532
    
    
    
    37,726
    
    
    
    33,102
    
    
    
    36,505
    
    
    
    35,180Operating (loss) income
    
    
    (2,325
    )
    
    
    (443
    )
    
    
    2,240
    
    
    
    4,807
    
    
    
    (1,144
    )
    
    
    3,037
    
    
    
    2,487
    
    
    
    8,393Other income (expenses):Interest income and other
    
    
    45
    
    
    
    147
    
    
    
    241
    
    
    
    276
    
    
    
    390
    
    
    
    912
    
    
    
    1,312
    
    
    
    807Other interest expense
    
    
    (3,779
    )
    
    
    (4,577
    )
    
    
    (4,821
    )
    
    
    (4,775
    )
    
    
    (5,172
    )
    
    
    (5,790
    )
    
    
    (5,958
    )
    
    
    (6,044
    )Loss on debt extinguishment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,330
    )(Loss) income before income taxes
    
    
    (6,059
    )
    
    
    (4,873
    )
    
    
    (2,340
    )
    
    
    308
    
    
    
    (5,926
    )
    
    
    (1,841
    )
    
    
    (2,159
    )
    
    
    (174
    )(Provision) benefit for income taxes  continuing operations
    
    
    (72
    )
    
    
    (74
    )
    
    
    81
    
    
    
    (24
    )
    
    
    (63
    )
    
    
    (2,262
    )
    
    
    1,027
    
    
    
    372(Loss) income from continuing operations
    
    
    (6,131
    )
    
    
    (4,947
    )
    
    
    (2,259
    )
    
    
    284
    
    
    
    (5,989
    )
    
    
    (4,103
    )
    
    
    (1,132
    )
    
    
    198Discontinued operations:(Loss) income from discontinued operations before income
taxes
    
    
    (927
    )
    
    
    199
    
    
    
    (3,870
    )
    
    
    5,986
    
    
    
    (1,357
    )
    
    
    (5,824
    )
    
    
    1,818
    
    
    
    (248
    )(Provision) benefit for income taxes
    
    
    (24
    )
    
    
    98
    
    
    
    (54
    )
    
    
    97
    
    
    
    (172
    )
    
    
    1,854
    
    
    
    (639
    )
    
    
    (157
    )(Loss) income from discontinued operations
    
    
    (951
    )
    
    
    297
    
    
    
    (3,924
    )
    
    
    6,083
    
    
    
    (1,529
    )
    
    
    (3,970
    )
    
    
    1,179
    
    
    
    (405
    )Net (loss) income
    
    $
    (7,082
    )
    
    $
    (4,650
    )
    
    $
    (6,183
    )
    
    $
    6,367
    
    
    $
    (7,518
    )
    
    $
    (8,073
    )
    
    $
    47
    
    
    $
    (207
    )Less: Net loss (income) attributable to noncontrolling interest
    
    
    160
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (56
    )Net (loss) income attributable to common stock
    
    
    (6,922
    )
    
    
    (4,650
    )
    
    
    (6,183
    )
    
    
    6,367
    
    
    
    (7,518
    )
    
    
    (8,073
    )
    
    
    47
    
    
    $
    (263
    )
 26




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##### Table of Contents



Hotel data by market segment and region
   
    
    Upper Upscale: Hilton and Marriott;
    
    Upscale: Courtyard by Marriott, Crowne Plaza, Four Points by Sheraton, Radisson,
Residence Inn by Marriott, SpringHill Suites by Marriott and Wyndham;
    
    Midscale with Food & Beverage: Holiday Inn, Holiday Inn Select; and
    
    Midscale without Food & Beverage: Fairfield Inn by Marriott and Holiday Inn
Express.
 Combined Continuing and Discontinued Operations  39 hotels (excludes the Memphis hotel)
 Three months endedMarch 31, 2009
    
    March 31, 2008Upper UpscaleNumber of properties
    
    
    4
    
    
    
    4Number of rooms
    
    
    825
    
    
    
    825Occupancy
    
    
    60.2
    %
    
    
    64.4
    %Average daily rate
    
    $
    112.27
    
    
    $
    119.02RevPAR
    
    $
    67.60
    
    
    $
    76.68UpscaleNumber of properties
    
    
    22
    
    
    
    22Number of rooms
    
    
    4,049
    
    
    
    4,049Occupancy
    
    
    66.5
    %
    
    
    69.3
    %Average daily rate
    
    $
    101.13
    
    
    $
    114.93RevPAR
    
    $
    67.26
    
    
    $
    79.59Midscale with Food & BeverageNumber of properties
    
    
    11
    
    
    
    11Number of rooms
    
    
    2,225
    
    
    
    2,225Occupancy
    
    
    50.7
    %
    
    
    63.5
    %Average daily rate
    
    $
    90.71
    
    
    $
    91.97RevPAR
    
    $
    45.95
    
    
    $
    58.37Midscale without Food & BeverageNumber of properties
    
    
    2
    
    
    
    2Number of rooms
    
    
    244
    
    
    
    244Occupancy
    
    
    44.4
    %
    
    
    55.6
    %Average daily rate
    
    $
    94.38
    
    
    $
    116.38RevPAR
    
    $
    41.92
    
    
    $
    64.67All HotelsNumber of properties
    
    
    39
    
    
    
    39Number of rooms
    
    
    7,343
    
    
    
    7,343Occupancy
    
    
    60.3
    %
    
    
    66.5
    %Average daily rate
    
    $
    99.56
    
    
    $
    108.78RevPAR
    
    $
    60.00
    
    
    $
    72.34
 27




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##### Table of Contents



Continuing Operations  35 hotels (excludes held for sale hotels)
 Three months endedMarch 31, 2009
    
    March 31, 2008Upper UpscaleNumber of properties
    
    
    3
    
    
    
    3Number of rooms
    
    
    634
    
    
    
    634Occupancy
    
    
    66.0
    %
    
    
    62.8
    %Average daily rate
    
    $
    116.36
    
    
    $
    126.48RevPAR
    
    $
    76.78
    
    
    $
    79.44UpscaleNumber of properties
    
    
    22
    
    
    
    22Number of rooms
    
    
    4,049
    
    
    
    4,049Occupancy
    
    
    66.5
    %
    
    
    69.3
    %Average daily rate
    
    $
    101.13
    
    
    $
    114.93RevPAR
    
    $
    67.26
    
    
    $
    79.59Midscale with Food & BeverageNumber of properties
    
    
    8
    
    
    
    8Number of rooms
    
    
    1,728
    
    
    
    1,728Occupancy
    
    
    48.9
    %
    
    
    62.1
    %Average daily rate
    
    $
    89.79
    
    
    $
    86.78RevPAR
    
    $
    43.88
    
    
    $
    53.92Midscale without Food & BeverageNumber of properties
    
    
    2
    
    
    
    2Number of rooms
    
    
    244
    
    
    
    244Occupancy
    
    
    44.4
    %
    
    
    55.6
    %Average daily rate
    
    $
    94.38
    
    
    $
    116.38RevPAR
    
    $
    41.92
    
    
    $
    64.67All HotelsNumber of properties
    
    
    35
    
    
    
    35Number of rooms
    
    
    6,655
    
    
    
    6,655Occupancy
    
    
    61.1
    %
    
    
    66.3
    %Average daily rate
    
    $
    100.16
    
    
    $
    109.17RevPAR
    
    $
    61.17
    
    
    $
    72.37
 28




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##### Table of Contents




    
    Northeast: Canada, Massachusetts, Maryland, New Hampshire, New York, Ohio,
Pennsylvania;
    
    Southeast: Florida, Georgia, Kentucky, Louisiana, North Carolina, South Carolina;
    
    Midwest: Arkansas, Indiana, Michigan, Oklahoma, Texas; and
    
    West: Arizona, California, Colorado, New Mexico.
 Combined Continuing and Discontinued Operations  39 hotels (excludes the Memphis hotel)
 Three months endedMarch 31, 2009
    
    March 31, 2008Northeast RegionNumber of properties
    
    
    15
    
    
    
    15Number of rooms
    
    
    3,205
    
    
    
    3,205Occupancy
    
    
    53.3
    %
    
    
    60.1
    %Average daily rate
    
    $
    101.42
    
    
    $
    104.77RevPAR
    
    $
    54.04
    
    
    $
    63.00Southeast RegionNumber of properties
    
    
    10
    
    
    
    10Number of rooms
    
    
    1,624
    
    
    
    1,624Occupancy
    
    
    65.4
    %
    
    
    68.5
    %Average daily rate
    
    $
    97.81
    
    
    $
    114.56RevPAR
    
    $
    63.93
    
    
    $
    78.43Midwest RegionNumber of properties
    
    
    8
    
    
    
    8Number of rooms
    
    
    1,419
    
    
    
    1,419Occupancy
    
    
    58.5
    %
    
    
    66.8
    %Average daily rate
    
    $
    91.91
    
    
    $
    98.00RevPAR
    
    $
    53.81
    
    
    $
    65.43West RegionNumber of properties
    
    
    6
    
    
    
    6Number of rooms
    
    
    1,095
    
    
    
    1,095Occupancy
    
    
    75.3
    %
    
    
    81.9
    %Average daily rate
    
    $
    105.69
    
    
    $
    121.55RevPAR
    
    $
    79.64
    
    
    $
    99.51All HotelsNumber of properties
    
    
    39
    
    
    
    39Number of rooms
    
    
    7,343
    
    
    
    7,343Occupancy
    
    
    60.3
    %
    
    
    66.5
    %Average daily rate
    
    $
    99.56
    
    
    $
    108.78RevPAR
    
    $
    60.00
    
    
    $
    72.34
 29




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##### Table of Contents



Continuing Operations  35 hotels (excludes held for sale hotels)
 Three months endedMarch 31, 2009
    
    March 31, 2008Northeast RegionNumber of properties
    
    
    13
    
    
    
    13Number of rooms
    
    
    2,852
    
    
    
    2,852Occupancy
    
    
    53.7
    %
    
    
    60.0
    %Average daily rate
    
    $
    102.68
    
    
    $
    104.68RevPAR
    
    $
    55.10
    
    
    $
    62.80Southeast RegionNumber of properties
    
    
    10
    
    
    
    10Number of rooms
    
    
    1,624
    
    
    
    1,624Occupancy
    
    
    65.4
    %
    
    
    68.5
    %Average daily rate
    
    $
    97.81
    
    
    $
    114.56RevPAR
    
    $
    63.93
    
    
    $
    78.43Midwest RegionNumber of properties
    
    
    7
    
    
    
    7Number of rooms
    
    
    1,228
    
    
    
    1,228Occupancy
    
    
    61.3
    %
    
    
    66.3
    %Average daily rate
    
    $
    92.06
    
    
    $
    98.21RevPAR
    
    $
    56.40
    
    
    $
    65.11West RegionNumber of properties
    
    
    5
    
    
    
    5Number of rooms
    
    
    951
    
    
    
    951Occupancy
    
    
    75.7
    %
    
    
    81.4
    %Average daily rate
    
    $
    106.75
    
    
    $
    122.82RevPAR
    
    $
    80.79
    
    
    $
    99.97All HotelsNumber of properties
    
    
    35
    
    
    
    35Number of rooms
    
    
    6,655
    
    
    
    6,655Occupancy
    
    
    61.1
    %
    
    
    66.3
    %Average daily rate
    
    $
    100.16
    
    
    $
    109.17RevPAR
    
    $
    61.17
    
    
    $
    72.37
 30




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##### Table of Contents



Liquidity and Capital Resources
 Working Capital
         31




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##### Table of Contents



32




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##### Table of Contents



Cash Flow
  Operating activities
  Investing activities
   Financing activities
   Debt and Contractual Obligations
  Off Balance Sheet Arrangements
  Market Risk
   33




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##### Table of Contents



Forward-looking Statements
  
    
    Our ability to refinance or extend the portion of our mortgage indebtedness that
is scheduled to mature in 2009;
    
    The effects of regional, national and international economic conditions;
    
    Competitive conditions in the lodging industry and increases in room supply;
    
    The effects of actual and threatened terrorist attacks and international conflicts
in the Middle East and elsewhere, and their impact on domestic and international
travel;
    
    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 franchisors to
immediately terminate their respective agreements if we breach certain provisions;
    
    Our ability to complete planned hotel dispositions;
    
    Seasonality of the hotel business;
    
    The effects of unpredictable weather events such as hurricanes;
    
    The financial condition of the airline industry and its impact on air travel;
    
    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 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;
    
    A downturn in the economy due to several factors, including but not limited to,
high energy costs, natural gas and gasoline prices;
    
    The impact of continued disruptions in the stock and credit markets and potential
failures of financial institutions on our ability to access capital; and
 34




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##### Table of Contents




    
    The risks identified in our Form 10-K under Risks Related to Our Business and
Risks Related to Our Common Stock.
  Inflation
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
   
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  The terms of our debt instruments place many restrictions on us, which reduce operational
flexibility and create default risks.
   35




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##### Table of Contents



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  Total Number of
    
    
    Maximum Dollar Amount ofShares Purchased as
    
    
    Shares That May Yet BeTotal Number of
    
    
    
    
    
    
    Part of Publicly
    
    
    Purchased Under theShares
    
    
    Average Price
    
    
    Announced Plans or
    
    
    Publicly Announced Plans orPeriod
    
    Purchased (1)
    
    
    Paid Per Share
    
    
    Programs
    
    
    ProgramsJanuary 2009
    
    
    15,189
    
    
    $
    2.20
    
    
    
    
    
    
    $
    5,599,458February 2009
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    5,599,458March 2009
    
    
    4,228
    
    
    $
    1.72
    
    
    
    
    
    
    $
    5,599,45819,417
    
    
    $
    2.10
    
    
    
    
 
 (1)
    
    The total number of shares purchased represents shares of employee nonvested stock awards
withheld by the  
 Item 6. Exhibits
  36




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##### Table of Contents



SIGNATURES
  LODGIAN, INC.By:
    /s/ PETER T. CYRUSPeter T. CyrusDate: May 7, 2009
    
    Interim President and
Chief Executive OfficerBy:
    /s/ JAMES A. MACLENNANJames A. MacLennanDate: May 7, 2009
    
    Executive Vice President and
Chief Financial Officer
(Principal Accounting Officer) 37




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description3.1
    
    Certificate of Correction to the Second Amended and Restated Certificate of Incorporation and
Second 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 4, 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 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).10.1
    
    Form of Indemnification Agreement (Incorporated by reference to Exhibit 10.1 to the Companys
Current Report on Form 8-K (File No. 1-14537), filed on February 10, 2009).10.2
    
    Form of Lodgian Executive Incentive Plan (Incorporated by reference to Exhibit 99.1 to the
Companys Current Report on Form 8-K (File No. 1-14537), filed on March 16, 2009).31.1
    
    Sarbanes-Oxley Section 302 Certification by the CEO.**31.2
    
    Sarbanes-Oxley Section 302 Certification by the CFO.**32
    
    Sarbanes-Oxley Section 906 Certification by the CEO and CFO.**
 
 **
    
    Filed herewith. 38