UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-13957

Red Lion Hotels Corporation

(Exact name of registrant as specified in its charter)

Washington		91-1032187
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
201 W. North River Drive, Suite 100 Spokane Washington		99201
(Address of principal executive offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (509) 459-6100

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ    No o

     Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o    No o

     Indicate by check mark whether the registrant is a large accelerated filer, accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o		Accelerated filer þ		Non-accelerated filer o		Smaller reporting company o
				(Do not check if a smaller reporting company)

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o    No þ

     As of August 2, 2010, there were 18,520,557 shares of the registrant’s common stock outstanding.

 

 

TABLE OF CONTENTS

Item No.		Description		Page No.
		PART I — FINANCIAL INFORMATION
Item 1		Financial Statements (unaudited):
		Consolidated Balance Sheets June 30, 2010 and December 31, 2009			3
		Consolidated Statements of Operations Three and Six Months Ended June 30, 2010 and 2009			4
		Consolidated Statements of Cash Flows Six Months Ended June 30, 2010 and 2009			5
		Condensed Notes to Consolidated Financial Statements			6
Item 2		Management’s Discussion and Analysis of Financial Condition and Results of Operations			13
Item 3		Quantitative and Qualitative Disclosures About Market Risk			24
Item 4		Controls and Procedures			25
		PART II — OTHER INFORMATION
Item 1		Legal Proceedings			26
Item 1A.		Risk Factors			26
Item 2		Unregistered Sales of Equity Securities and Use of Proceeds			26
Item 3		Defaults Upon Senior Securities			26
Item 4		Reserved			26
Item 5		Other Information			26
Item 6		Exhibits			27
		Signatures			28
EX-31.1
EX-31.2
EX-32.1
EX-32.2

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

RED LION HOTELS CORPORATION

		June 30,				December 31,
		2010				2009
		(In thousands, except share data)
ASSETS
Current assets:
Cash and cash equivalents		$	3,146			$	3,885
Restricted cash			5,223				3,801
Accounts receivable, net			8,400				6,995
Inventories			1,281				1,350
Prepaid expenses and other			3,845				3,245
Total current assets			21,895				19,276
Property and equipment, net			279,469				285,782
Goodwill			28,042				28,042
Intangible assets, net			10,111				10,199
Other assets, net			7,373				7,337
Total assets		$	346,890			$	350,636
LIABILITIES
Current liabilities:
Accounts payable		$	9,581			$	6,080
Accrued payroll and related benefits			5,034				2,404
Accrued interest payable			301				318
Advance deposits			974				496
Other accrued expenses			10,337				7,936
Long-term debt, due within one year			3,258				3,171
Total current liabilities			29,485				20,405
Revolving credit facility			21,000				26,000
Long-term debt, due after one year			75,494				77,151
Deferred income			8,258				8,638
Deferred income taxes			9,669				12,595
Debentures due Red Lion Hotels Capital Trust			30,825				30,825
Total liabilities			174,731				175,614
STOCKHOLDERS’ EQUITY
Red Lion Hotels Corporation stockholders’ equity
Preferred stock - 5,000,000 shares authorized; $0.01 par value; no shares issued or outstanding			—				—
Common stock - 50,000,000 shares authorized; $0.01 par value; 18,452,656 and 18,180,104 shares issued and outstanding			185				182
Additional paid-in capital, common stock			144,055				142,479
Retained earnings			27,913				32,346
Total Red Lion Hotels Corporation stockholders’ equity			172,153				175,007
Noncontrolling interest			6				15
Total equity			172,159				175,022
Total liabilities and stockholders’ equity		$	346,890			$	350,636

The accompanying condensed notes are an integral part of the consolidated financial statements.

RED LION HOTELS CORPORATION

		Three months ended June 30,								Six months ended June 30,
		2010				2009				2010				2009
		(In thousands, except per share data)
Revenue:
Hotels		$	38,632			$	40,956			$	69,253			$	71,760
Franchise			889				1,262				1,447				1,799
Entertainment			2,340				2,584				4,818				5,107
Other			594				661				1,239				1,394
Total revenues			42,455				45,463				76,757				80,060
Operating expenses:
Hotels			28,759				28,969				55,499				55,631
Franchise			810				502				1,388				1,116
Entertainment			1,986				2,273				3,999				4,388
Other			413				544				835				1,081
Depreciation and amortization			5,175				5,306				10,400				10,263
Hotel facility and land lease			1,824				1,834				3,640				3,650
Gain on asset dispositions, net			(57	)			(45	)			(155	)			(47	)
Undistributed corporate expenses			1,362				1,721				3,804				2,987
Total expenses			40,272				41,104				79,410				79,069
Operating income (loss)			2,183				4,359				(2,653	)			991
Other income (expense):
Interest expense			(2,314	)			(2,182	)			(4,550	)			(4,029	)
Other income, net			9				23				46				62
Income (loss) before taxes			(122	)			2,200				(7,157	)			(2,976	)
Income tax expense (benefit)			(60	)			723				(2,715	)			(1,167	)
Net income (loss)			(62	)			1,477				(4,442	)			(1,809	)
Net (income) loss attributable to noncontrolling interest			(2	)			(5	)			9				—
Net income (loss) attributable to Red Lion Hotels Corporation		$	(64	)		$	1,472			$	(4,433	)		$	(1,809	)
Earnings (loss) per share attributable to Red Lion Hotels Corporation:
Basic		$	—			$	0.08			$	(0.24	)		$	(0.10	)
Diluted		$	—			$	0.08			$	(0.24	)		$	(0.10	)
Weighted average shares — basic			18,420				18,095				18,345				18,054
Weighted average shares — diluted			18,420				18,140				18,345				18,054

The accompanying condensed notes are an integral part of the consolidated financial statements.

RED LION HOTELS CORPORATION

		Six months ended June 30,
		2010				2009
		(In thousands)
Operating activities:
Net loss		$	(4,442	)		$	(1,809	)
Adjustments to reconcile net loss attributable to Red Lion Hotels Corporation to net cash provided by operating activities:
Depreciation and amortization			10,400				10,263
Gain on disposition of property, equipment and other assets, net			(155	)			(47	)
Deferred income tax benefit			(2,926	)			(1,323	)
Equity in investments			25				31
Stock based compensation expense			1,050				554
Provision for doubtful accounts			131				64
Change in current assets and liabilities:
Restricted cash			(1,422	)			1,224
Accounts receivable			(1,851	)			2,256
Inventories			69				115
Prepaid expenses and other			(600	)			(831	)
Accounts payable and related benefits			3,501				(4,674	)
Accrued payroll and related benefits			2,868				(423	)
Accrued interest payable			(17	)			(30	)
Deferred lease income			—				900
Other accrued expenses and advance deposits			2,733				3,235
Net cash provided by operating activities			9,364				9,505
Investing activities:
Purchases of property and equipment			(3,832	)			(12,479	)
Non-current restricted cash for sublease tenant improvements, net			—				(576	)
Proceeds from disposition of property and equipment			8				8
Advances to Red Lion Hotels Capital Trust			(27	)			(27	)
Other, net			198				(423	)
Net cash used in investing activities			(3,653	)			(13,497	)
Financing activities:
Borrowings on revolving credit facility			4,500				—
Repayment of revolving credit facility			(9,500	)			(6,000	)
Repayment of long-term debt			(1,570	)			(1,491	)
Proceeds from stock options exercised			304				—
Proceeds from issuance of common stock under employee stock purchase plan			71				51
Additions to deferred financing costs			(171	)			—
Common stock redeemed			(84	)			(11	)
Net cash used in financing activities			(6,450	)			(7,451	)
Change in cash and cash equivalents:
Net decrease in cash and cash equivalents			(739	)			(11,443	)
Cash and cash equivalents at beginning of period			3,885				18,222
Cash and cash equivalents at end of period		$	3,146			$	6,779
Supplemental disclosure of cash flow information:
Cash paid during periods for:
Interest on long-term debt		$	4,567			$	4,515
Noncash investing activities:
Conversion of accounts receivable to note receivable		$	322			$	—

The accompanying condensed notes are an integral part of the consolidated financial statements.

RED LION HOTELS CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization

     Red Lion Hotels Corporation (“Red Lion” or the “Company”) is a NYSE-listed hospitality and leisure company (ticker symbols RLH and RLH-pa) primarily engaged in the ownership, operation and franchising of midscale full, select and limited service hotels under the Red Lion brand. As of June 30, 2010, the Red Lion system of hotels contained 43 hotels located in eight states and one Canadian province, with 8,384 rooms and 419,987 square feet of meeting space. As of that date, the Company operated 31 hotels, of which 19 are wholly owned and 12 are leased, and franchised 12 hotels that were owned and operated by various third-party franchisees.

     The Company is also engaged in entertainment operations, which includes TicketsWest.com, Inc., and through which the Company derives revenues from event ticket distribution and promotion and presentation of a variety of entertainment productions. In addition to hotel operations, the Company maintains a direct ownership interest in a retail mall that is attached to one of its hotels and in other miscellaneous real estate investments.

     The Company was incorporated in the state of Washington in April 1978, and operated hotels until 1999 under various brand names including Cavanaughs Hotels. In 1999, the Company acquired WestCoast Hotels, Inc., and rebranded its Cavanaughs hotels to the WestCoast brand — changing the Company’s name to WestCoast Hospitality Corporation. In 2001, the Company acquired Red Lion Hotels, Inc. In September 2005, after rebranding most of its WestCoast hotels to the Red Lion brand, the Company changed its name to Red Lion Hotels Corporation. The financial statements encompass the accounts of Red Lion Hotels Corporation and all of its consolidated subsidiaries, including its 100% ownership of Red Lion Hotels Holdings, Inc., and Red Lion Hotels Franchising, Inc., and its approximately 99% ownership of Red Lion Hotels Limited Partnership (“RLHLP”). The 1% noncontrolling interest in RLHLP has been classified as a component of equity separate from equity of Red Lion Hotels Corporation.

     The financial statements also include an equity method investment in a 19.9% owned real estate venture, as well as certain cost method investments in various entities included as other assets, over which the Company does not exercise significant influence. In addition, the Company holds a 3% common interest in Red Lion Hotels Capital Trust (the “Trust”) that is considered a variable interest entity. The Company is not the primary beneficiary of the Trust; thus, it is treated as an equity method investment. As more fully discussed in Note 10, the consolidated financial statements also include all of the activities of the Company’s cooperative marketing fund, also a variable interest entity.

     All significant inter-company and inter-segment transactions and accounts have been eliminated upon consolidation. Certain amounts disclosed in prior period statements have been reclassified to conform to the current period presentation.

2. Basis of Presentation

     The unaudited consolidated financial statements included herein have been prepared by Red Lion pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and in accordance with generally accepted accounting principles in the United States of America (“GAAP”). Certain information and footnote disclosures normally included in financial statements have been condensed or omitted as permitted by such rules and regulations.

     The consolidated balance sheet as of December 31, 2009 has been compiled from the audited balance sheet as of such date. The Company believes the disclosures included herein are adequate; however, they should be read in conjunction with the consolidated financial statements and the notes thereto for the year ended December 31, 2009, previously filed with the SEC on Form 10-K.

     In the opinion of management, these unaudited consolidated financial statements contain all of the adjustments of a normal and recurring nature necessary to present fairly the consolidated financial position of the Company at June 30, 2010, the consolidated results of operations for the three and six months ended June 30, 2010 and 2009, and the consolidated cash flows for the six months ended June 30, 2010 and 2009. The results of operations for the periods presented may not be indicative of those which may be expected for a full year.

     Management makes estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, the reported amounts of revenues and expenses during the reporting period and the disclosures of contingent liabilities. Actual results could materially differ from those estimates.

3. Property and Equipment

     Property and equipment used in operations is summarized as follows (in thousands):

		June 30,				December 31,
		2010				2009
Buildings and equipment		$	300,100			$	296,032
Furniture and fixtures			46,640				46,383
Landscaping and land improvements			8,959				8,967
			355,699				351,382
Less accumulated depreciation and amortization			(143,954	)			(134,375	)
			211,745				217,007
Land			63,430				66,146
Construction in progress			4,294				2,629
		$	279,469			$	285,782

4. Notes Payable to Bank and Long-Term Debt

     In September 2006, the Company entered into a revolving credit facility with a syndication of banks led by Credit Agricole Corporate and Investment Bank, formerly named Calyon, New York Branch. The initial maturity date for the facility was September 13, 2009, which the Company extended for an additional year under the terms of the facility to September 13, 2010. The Company has the unilateral right to extend the maturity for an additional one-year term, which it exercised in July 2010. As such, the amount owed under the facility has been recorded as a long-term liability. Borrowings under the facility may be used to finance acquisitions or capital expenditures, for working capital and for other general corporate purposes. The obligations under the facility are collateralized by a company owned hotel, including a deed of trust and security agreement covering all of its assets. In connection with this facility, the Company has paid loan fees and related costs of approximately $1.3 million as of June 30, 2010, which have been deferred and are being amortized over the remaining term of the facility.

     The credit facility requires the Company to comply with certain customary affirmative and negative covenants, the most restrictive of which are financial covenants dealing with leverage, interest coverage and debt service coverage. In February 2010, the Company amended the terms of the facility to modify the total leverage ratio and senior leverage ratio covenants, increase the interest rate on Eurodollar borrowings to LIBOR plus 3.25% and reduce borrowing capacity to $37.5 million. At June 30, 2010, $21.0 million was outstanding under the facility at an interest rate of 3.60%, and the Company was in compliance with all of its covenants.

     In connection with the amendment to the credit facility, the Company also amended its $13.0 million variable rate property note with a bank to mirror the new covenants in the credit facility. The interest rate on the outstanding balance at June 30, 2010 was 3.25%, based on LIBOR plus 3.0%, and the Company was in compliance with all covenants.

5. Business Segments

     As of June 30, 2010 and December 31, 2009, the Company had three operating segments — hotels, franchise and entertainment. The “other” segment consists primarily of a retail mall and miscellaneous revenues and expenses, cash and cash equivalents, certain receivables and certain property and equipment which are not specifically associated with an operating segment. Management reviews and evaluates the operating segments exclusive of interest expense; therefore, it has not been allocated to the segments. All balances have been presented after the elimination of inter-segment and intra-segment revenues. Selected information with respect to operations is as provided below (in thousands).

		Three months ended June 30,								Six months ended June 30,
		2010				2009				2010				2009
Revenues:
Hotels		$	38,632			$	40,956			$	69,253			$	71,760
Franchise			889				1,262				1,447				1,799
Entertainment			2,340				2,584				4,818				5,107
Other			594				661				1,239				1,394
		$	42,455			$	45,463			$	76,757			$	80,060
Operating income (loss):
Hotels		$	3,621			$	5,634			$	1,245			$	3,762
Franchise			(14	)			677				(127	)			505
Entertainment			263				203				634				504
Other			(1,687	)			(2,155	)			(4,405	)			(3,780	)
		$	2,183			$	4,359			$	(2,653	)		$	991

		June 30,				December 31,
		2010				2009
Identifiable assets:
Hotels		$	300,387			$	301,122
Franchise			17,422				16,853
Entertainment			5,731				5,143
Other			23,350				27,518
		$	346,890			$	350,636

6. Earnings (Loss) Per Share

     The following table presents a reconciliation of the numerators and denominators used in the basic and diluted income (loss) per share computations for the three and six months ended June 30, 2010 and 2009 (in thousands, except per share amounts):

		Three months ended June 30,								Six months ended June 30,
		2010				2009				2010				2009
Numerator — basic and diluted:
Net income (loss)			(62	)			1,477				(4,442	)			(1,809	)
Net (income) loss attributable to noncontrolling interest			(2	)			(5	)			9				—
Net income (loss) attributable to Red Lion Hotels Corporation			(64	)			1,472				(4,433	)			(1,809	)
Denominator:
Weighted average shares — basic			18,420				18,095				18,345				18,054
Weighted average shares — diluted			18,420				18,140				18,345				18,054
Earnings (loss) per share attributable to Red Lion Hotels Corporation:
Basic		$	—			$	0.08			$	0.24	)		$	(0.10	)
Diluted		$	—			$	0.08			$	(0.24	)		$	(0.10	)

     For the three months ended June 30, 2010, all of the 904,189 options to purchase common shares outstanding as of that date were considered anti-dilutive due to the loss for the period. Likewise, all of the 44,837 convertible operating partnership units of RLHLP (“OP units”) were considered anti-dilutive, as were the 262,684 unissued restricted stock units outstanding. For the three months ended June 30, 2009, none of the 1,213,691 options to purchase common shares outstanding as of that date were considered dilutive, as the grant date stock prices of all options outstanding were below the Company’s stock price at June 30, 2009. Similarly, none of the 246,396 restricted stock units outstanding were considered dilutive during the second quarter of 2009. For the three months ended June 30, 2009, all of the 44,837 convertible OP units were considered dilutive.

     For the six months ended June 30, 2010 and 2009, all of the 904,189 and 1,213,691 options to purchase common shares, respectively, and the 262,684 and 246,396 restricted stock units outstanding as of those dates were considered anti-dilutive due to the losses for the periods. In addition, all of the 44,837 OP units outstanding during both periods were anti-dilutive.

7. Change in Executive Officers

     In January 2010, the Company terminated the employment agreement of its President and Chief Executive Officer, who was also a director. In connection therewith, the Company recorded expense of $1.2 million for separation and other benefits during the first quarter of 2010, including $0.4 million in stock-based compensation expense. Under the terms of the agreement, 84,433 of the former executive’s restricted stock units vested. Pursuant to a separate agreement entered into in connection with the termination, the exercise period for 80,000 vested stock options was extended for six months. Cash amounts due related to this transaction were paid in July 2010.

8. Stock Based Compensation

     The 2006 Stock Incentive Plan authorizes the grant or issuance of various option and other awards including restricted stock units and other stock-based compensation. The plan was approved by the shareholders of the Company and allows awards of 2.0 million shares, subject to adjustments for stock splits, stock dividends and similar events. In May 2010, the board of directors granted to executive officers and other key employees 5,864 options to purchase common stock and 147,039 unvested restricted stock units, all of which will vest 25% each year for four years. In addition, directors of the Company were granted an aggregate of 23,415 shares of common stock with a fair value of $0.2 million as part of the existing director compensation arrangement. As of June 30, 2010, there were 1,080,945 shares of common stock available for issuance pursuant to future stock option grants or other awards under the 2006 plan.

     In the second quarter and first six months of 2010, the Company recognized approximately $0.1 million and $0.2 million, respectively, in compensation expense related to options, compared to $0.1 million and $0.2 million, respectively, during the same periods in 2009. The 2010 six-month period included expense recorded upon the separation of the Company’s former President and Chief Executive Officer, as discussed above in Note 7. As outstanding options vest, the Company expects to recognize approximately $0.3 million in additional compensation expense, before the impact of income taxes, over a weighted average period of 21 months, including $0.1 million during the remaining six months of 2010.

     A summary of stock option activity at June 30, 2010, is as follows:

		Number				Exercise
		of Shares				Price
Balance, December 31, 2009			1,194,460			$	7.36
Options granted			5,864			$	7.10
Options exercised			(58,197	)		$	5.24
Options forfeited			(237,938	)		$	9.32
Balance, June 30, 2010			904,189			$	6.98
Exercisable, June 30, 2010			770,478			$	6.62

     Additional information regarding stock options outstanding and exercisable as of June 30, 2010, is as follows:

						Weighted
						Average								Weighted				Aggregate								Weighted				Aggregate
Range of						Remaining								Average				Intrinsic								Average				Intrinsic
Exercise		Number				Contractual				Expiration				Exercise				Value(1)				Number				Exercise				Value(1)
Prices		Outstanding				Life (Years)				Date				Price				(in thousands)				Exercisable				Price				(in thousands)
5.10 - 6.07			499,516				1.30				2010-2014			$	5.31			$	334,834				499,516			$	5.31			$	334,834
7.10 - 7.80			150,256				2.55				2010-2020				7.45				—				123,196				7.46				—
8.74 - 8.80			172,286				7.85				2010-2018				8.76				—				86,159				8.76				—
10.88			5,974				6.07				2016				10.88				—				4,481				10.88				—
12.21-13.00			76,157				6.64				2010-2017				12.61				—				57,126				12.61				—
			904,189				3.24				2010-2020			$	6.98			$	334,834				770,478			$	6.62			$	334,834

     As of June 30, 2010 and 2009, there were 262,684 and 246,396 unvested restricted stock units outstanding, respectively. Since the Company began issuing restricted stock units, approximately 6.2% of total units granted have been forfeited. In the second quarter and first six months of 2010, the Company recognized approximately $0.1 million and $0.5 million, respectively, in compensation expense related to restricted stock units compared to $0.1 million and $0.1 million, respectively, during the same periods in 2009. The 2010 six-month expense reflects $0.4 million recorded upon the separation of the Company’s former President and Chief Executive Officer. As the restricted stock units vest, the Company expects to recognize approximately $1.5 million in additional compensation expense over a weighted average period of 42 months, including $0.2 million during the remaining six months of 2010.

     A summary of restricted stock unit activity as of June 30, 2010, is as follows:

						Weighted
						Average
		Number				Exercise
		of Shares				Price
Balance, December 31, 2009			239,318			$	5.24
Granted			147,039			$	7.10
Vested			(123,673	)		$	5.32
Balance, June 30, 2010			262,684			$	6.24

     In March 2010, the Company issued 35,937 shares of common stock to non-executive employees as compensation for 2009 bonuses earned. Pursuant to the terms of the 2006 plan, this issuance was net of 16,741 shares repurchased at $6.59 per share in order to cover the employees’ tax withholding obligations.

     In January 2008, the Company adopted the 2008 employee stock purchase plan (the “2008 ESPP”) upon the expiration of its previous plan. Under the 2008 ESPP, a total of 300,000 shares of common stock are authorized for purchase by eligible employees at a discount through payroll deductions. No employee may purchase more than $25,000 worth of shares in any calendar year, or more

than 10,000 shares during any six-month purchase period under the plan. As allowed under the 2008 ESPP, a participant may elect to withdraw from the plan, effective for the purchase period in progress at the time of the election with all accumulated payroll deductions returned to the participant at the time of withdrawal. In January and July 2010, 17,791 and 14,371 shares, respectively, were issued to participants under the terms of the plan.

9. Fair Value of Financial Instruments

     Estimated fair values of financial instruments (in thousands) are as indicated in the table below. The carrying amounts for cash and cash equivalents, accounts receivable and current liabilities are reasonable estimates of their fair values. The fair value of long-term debt is estimated based on the discounted value of contractual cash flows using the estimated rates currently offered for debt with similar remaining maturities. The debentures are valued at the closing price on June 30, 2010, of the underlying trust preferred securities on the New York Stock Exchange, plus the face value of the debenture amount representing the trust common securities held by the Company.

		June 30,								December 31,
		2010								2009
		Carrying				Fair				Carrying				Fair
		Amount				Value				Amount				Value
Financial assets:
Cash and cash equivalents and restricted cash		$	8,369			$	8,369			$	7,686			$	7,686
Accounts receivable		$	8,400			$	8,400			$	6,995			$	6,995
Financial liabilities:
Current liabilities, excluding debt		$	26,227			$	26,227			$	17,234			$	17,234
Long-term debt		$	99,752			$	96,221			$	106,322			$	105,073
Debentures		$	30,825			$	30,574			$	30,825			$	25,897

     The fair values provided above are not necessarily indicative of the amounts the Company or the debt holders could realize in a current market exchange. In addition, potential income tax ramifications related to the realization of gains and losses that would be incurred in an actual sale or settlement have not been taken into consideration.

10. Commitments and Contingencies

     At any given time, the Company is subject to claims and actions incidental to the operations of our business. During the second quarter of 2010, a federal court ruled in favor of the Company in a lawsuit the Company filed against the owner of a former franchisee. The court awarded to the Company approximately $0.6 million in damages, which will accrue interest at 18% per annum pending the defendant’s appeal. During the first six months of 2010, the Company has incurred approximately $0.2 million in legal expense in connection with this matter. The Company is actively pursuing this action and cannot at this time reasonably predict the ultimate outcome of the proceedings. The Company does not expect that any sums it may receive or have to pay in connection with this or any other legal proceeding would have a materially adverse effect on its consolidated financial position or net cash flows.

11. Change in Accounting Principle

     Variable Interest Entities — In June 2009, the FASB issued changes to the consolidation guidance applicable to variable interest entities (“VIE”). These changes also amended the guidance governing the determination of whether an enterprise is the primary beneficiary of a VIE, and is, therefore, required to consolidate an entity, by requiring a qualitative analysis rather than a quantitative analysis. The qualitative analysis is to include, among other things, consideration of who has the power to direct the activities of the entity that most significantly impact the entity’s economic performance and who has the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE.

     Under the new guidance, the Company determined that the Central Program Fund (“CPF”) now meets the definition of a VIE and should be included in its consolidated financial statements. The Company adopted these changes retrospectively on January 1, 2010. For additional information on the CPF, see Note 2 of Notes to Consolidated Financial Statements for the year ended December 31, 2009, previously filed with the SEC in the Company’s annual report on Form 10-K.

     The CPF acts as an agent for the Company’s owned and leased hotels and for its franchisees, and was created to provide services to all member hotels including certain advertising services, frequent guest program administration, reservation services, national sales promotions and brand and revenue management services intended to increase sales and enhance the reputation of the Red Lion brand. The activities of the CPF benefit the Company’s owned and leased hotels as well as its franchise properties; however, historically only the proportionate share of CPF expense for its owned and leased hotels was recognized in the consolidated financial statements. Based on the new guidance, the Company will now include all of the expenses and other balances of the CPF in its consolidated

financial statements, including revenue received from franchisees to support CPF activities. There have been no changes to the organization, structure or operating activities of the CPF since its inception in 2002.

     The adoption of these changes was applied retrospectively, including the recording to retained earnings of the $1.0 million net of tax impact of cumulative effect of change in accounting principle as of January 1, 2008, and the consolidated financial statements have been adjusted to conform to the new treatment. On January 1, 2010, total assets decreased by $0.9 million primarily representing the consolidation of accounts receivable, and total liabilities increased $0.1 million. The impact of the CPF for the three and six months ended June 30, 2010, added additional expense before income tax of $0.6 million and $1.0 million, respectively, compared to $0.5 million and $1.1 million during the prior year comparable periods. The activities of the CPF are cyclical throughout any one year. For the quarters ended September 30, 2009 and December 31, 2009, net income (loss) before income tax was positively impacted by $0.6 million and $0.4 million, respectively. The total impact on net loss before income tax for the year ended December 31, 2009 related to the CPF was a negative adjustment of $24,000, compared to a positive impact of $105,000 for the year ended December 31, 2008.

12. Recent Accounting Pronouncements

     Fair Value Measurements — On January 1, 2010, the Company adopted new accounting guidance that requires disclosure of significant transfers between Level 1 and Level 2 of the fair value hierarchy, the reasons for these transfers and the reasons for any transfers in or out of Level 3 of the fair value hierarchy. In addition, the guidance clarifies certain existing disclosure requirements. This standard did not have a material impact on the Company’s disclosures in its consolidated financial statements.

     Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     This quarterly report on Form 10-Q includes forward-looking statements. We have based these statements on our current expectations and projections about future events. When words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “seek,” “should,” “will” and similar expressions or their negatives are used in this quarterly report, these are forward-looking statements. Many possible events or factors, including those discussed in “Risk Factors” under Item 1A of our annual report filed on Form 10-K for the year ended December 31, 2009, could affect our future financial results and performance, and could cause actual results or performance to differ materially from those expressed. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this quarterly report.

     In this report, “we,” “us,” “our,” “our company” and “the company” refer to Red Lion Hotels Corporation and, as the context requires, all of its wholly and partially owned subsidiaries, including, but not limited to, its 100% ownership of Red Lion Hotels Holdings, Inc. and Red Lion Hotels Franchising, Inc. and its approximate 99% ownership of Red Lion Hotels Limited Partnership. “Red Lion” refers to the Red Lion brand. The term “the system,” “system-wide hotels” or “system of hotels” refers to our entire group of owned, leased and franchised hotels.

     The following discussion and analysis should be read in connection with our unaudited consolidated financial statements and the condensed notes thereto and other financial information included elsewhere in this quarterly report, as well as in conjunction with the consolidated financial statements and the notes thereto for the year ended December 31, 2009, previously filed with the SEC on Form 10-K.

Introduction

     We are a NYSE-listed hospitality and leisure company (ticker symbols RLH and RLH-pa) primarily engaged in the ownership, operation and franchising of midscale, full, select and limited service hotels under our proprietary Red Lion brand. Established over 30 years ago, the Red Lion brand is nationally recognized and particularly well known in the western United States, where most of our hotels are located. The Red Lion brand is typically associated with three star, full and select service hotels.

     As of June 30, 2010, our hotel system contained 43 hotels located in eight states and one Canadian province, with 8,384 rooms and 419,987 square feet of meeting space as provided below:

						Total				Meeting
						Available				Space
		Hotels				Rooms				(sq. ft.)
Red Lion Owned and Leased Hotels			31				6,121				304,566
Red Lion Franchised Hotels			12				2,263				115,421
Total Red Lion Hotels			43				8,384				419,987

     We operate in three reportable segments:

•

The hotels segment derives revenue primarily from guest room rentals and food and beverage operations at our owned and leased hotels.

•

The franchise segment is engaged primarily in licensing the Red Lion brand to franchisees, and generates revenue from franchise fees that are typically based on a percent of room revenues and are charged to hotel owners. It has also historically reflected revenue from management fees charged to the owners of managed hotels, although we have not managed any hotels for third parties since January 2008.

•

The entertainment segment derives revenue primarily from ticketing services and promotion and presentation of entertainment productions.

     Our remaining activities, none of which constitute a reportable segment, have been aggregated into “other,” and are primarily related to our retail mall direct ownership interest that is attached to one of our hotels and other miscellaneous real estate investments.

Executive Summary

     Our company strategy is to focus on initiatives to grow revenues at our owned and leased hotels and expand our current franchise base, with an ongoing commitment to cost management and margin control. During the first quarter we announced the addition of resources to support our objectives, including executive leadership to concentrate on franchise development in markets where we have strong brand awareness which may augment our sales and marketing capabilities. During the second quarter, we experienced some margin erosion compared to the prior year period due to revenue challenges combined with our investments made in sales, marketing and franchising that we believe will position us for long-term profitability and growth for shareholders.

     Our hotel operational strategy is to increase group, preferred corporate and higher-rated transient business to reduce reliance on discount on-line travel agent (“OTA”) and permanent business. We are also implementing centralized revenue management across our system of hotels to create greater consistency in pricing, to improve value perception and capture market share. We have added sales personnel at our properties and at the corporate office to expand our local and national reach in an effort to grow our mix of group and preferred corporate customer base. Non-qualified retail and preferred corporate room business increased during the first six months of 2010 compared to the prior year, offset by targeted declines in OTA room nights. While these efforts are in their early stages, and pricing and guest capture continues to be highly competitive, we are encouraged by the gains we are reporting compared to the prior year period.

     RevPAR in the second quarter of 2010 for our owned and leased properties decreased 1.8% from the second quarter of 2009, although for the first six months of 2010 it increased 1.0% over the prior year period. Similarly, occupancy was down 120 points quarter-on-quarter although up 50 points year-over-year. ADR continues to hold steady to the prior year at $84.58 during the second quarter of 2010 and $82.59 during the first six months. Average occupancy, average daily rate and revenue per available room statistics are provided below on a comparable basis.

		For the three months ended June 30,																								For the six months ended June 30,
		2010												2009												2010												2009
		Average (1)												Average (1)												Average(1)												Average(1)
		Occupancy				ADR (2)				RevPAR(3)				Occupancy				ADR (2)				RevPAR(3)				Occupancy				ADR (2)				RevPAR(3)				Occupancy			ADR (2)				RevPAR(3)
Owned and Leased Hotels			59.3	%		$	84.58			$	50.13				60.5	%		$	84.40			$	51.07				53.8	%		$	82.59			$	44.41				53.3	%		$	82.54			$	43.98
Franchised Hotels			53.8	%		$	78.15			$	42.04				55.4	%		$	80.29			$	44.46				49.3	%		$	76.59			$	37.79				50.8	%		$	79.12			$	40.20
Total Red Lion Hotels			57.8	%		$	83.01			$	48.01				59.2	%		$	83.39			$	49.34				52.6	%		$	81.11			$	42.67				52.6	%		$	81.67			$	42.99
Change from prior comparative period:
Owned and Leased Hotels			(1.2	)			0.2	%			-1.8	%															0.5				0.1	%			1.0	%
Franchised Hotels			(1.6	)			-2.7	%			-5.4	%															(1.5	)			-3.2	%			-6.0	%
Total Red Lion Hotels			(1.4	)			-0.5	%			-2.7	%															—				-0.7	%			-0.7	%

     We expect economic conditions will continue to challenge our industry and create a difficult operating environment through 2010. While our goal is to deliver bottom-line profitability through the above described initiatives, there can be no assurance that we will achieve this goal if economic conditions do not improve.

Results of Operations

     During the second quarter of 2010, we reported a net loss attributable to Red Lion Hotels Corporation of $0.1 million compared to net income of $1.5 million, or $0.08 per share, during the second quarter of 2009. EBITDA decreased $2.3 million to $7.4 million, impacted primarily by our investments in direct sales and franchise development activities; a franchise termination settlement received during the second quarter of 2009 that did not recur; the 2010 closure of a leased hotel in Astoria, Oregon; and a reduction in group business and competitive rate pressures.

     For the first six months of 2010, we reported a net loss attributable to Red Lion Hotels Corporation of $4.4 million (or $0.24 per share) compared to a net loss of $1.8 million (or $0.10 per share) during the first six months of 2009. In January 2010, we terminated the employment agreement of our President and Chief Executive Officer, which resulted in recorded expense of $1.2 million for separation and other benefits. The $1.2 million recorded during the first quarter of 2010 included $0.4 million in stock-based compensation expense related to the immediate vesting of 84,433 of the former executive’s restricted stock units, as well as for the extension of the exercise period for certain vested stock options. The following table details the impact of the $1.2 million in separation costs for the six months ended June 30, 2010 on net loss, loss per share and EBITDA:

		Six months ended
		June 30, 2010
		(in thousands)
Separation costs		$	(1,219	)
Income tax benefit			433
Impact of separation costs on net loss		$	(786	)
Separation costs		$	(0.07	)
Income tax benefit			0.02
Impact of separation costs on loss per share		$	(0.05	)
Impact of separation costs on EBITDA		$	(1,219	)

     A summary of our consolidated statement of operations is as provided below (in thousands, except per share data). Certain amounts disclosed in the prior period have been reclassified to conform to the current period presentation as it relates to the consolidation of the Central Program Fund (“CPF”) as discussed in Note 10 in Condensed Notes to Consolidated Financial Statements. As a result, franchise segment revenue increased $0.5 million during the second quarter of both 2010 and 2009, and hotel and franchise segment expenses increased $1.0 million in the 2010 period compared to $0.8 million during 2009.

		Three months ended June 30,								Six months ended June 30,
		2010				2009				2010				2009
Total revenue		$	42,455			$	45,463			$	76,757			$	80,060
Operating expenses			40,272				41,104				79,410				79,069
Operating income			2,183				4,359				(2,653	)			991
Other income (expense):
Interest expense			(2,314	)			(2,182	)			(4,550	)			(4,029	)
Other income, net			9				23				46				62
Income (loss) before taxes			(122	)			2,200				(7,157	)			(2,976	)
Income tax expense (benefit)			(60	)			723				(2,715	)			(1,167	)
Net income (loss)			(62	)			1,477				(4,442	)			(1,809	)
(Income) loss attributable to noncontrolling interest			(2	)			(5	)			9				—
Net income (loss) attributable to Red Lion Hotels Corporation		$	(64	)		$	1,472			$	(4,433	)		$	(1,809	)
EBITDA		$	7,365			$	9,683			$	7,802			$	11,316
EBITDA as a percentage of revenues			17.3	%			21.3	%			10.2	%			14.1	%

     EBITDA represents net income (loss) attributable to Red Lion Hotels Corporation before interest expense, income tax expense (benefit) and depreciation and amortization. We utilize EBITDA as a financial measure because management believes that investors find it a useful tool to perform more meaningful comparisons of past, present and future operating results and as a means to evaluate the results of core, on-going operations. We believe it is a complement to net income (loss) attributable to Red Lion Hotels Corporation and other financial performance measures. EBITDA is not intended to represent net income (loss) attributable to Red Lion Hotels Corporation as defined by generally accepted accounting principles in the United States (“GAAP”), and such information should not be considered as an alternative to net income (loss), cash flows from operations or any other measure of performance prescribed by GAAP.

     We use EBITDA to measure the financial performance of our owned and leased hotels because we believe interest, taxes and depreciation and amortization bear little or no relationship to our operating performance. By excluding interest expense, EBITDA measures our financial performance irrespective of our capital structure or how we finance our properties and operations. We generally pay federal and state income taxes on a consolidated basis, taking into account how the applicable taxing laws apply to us in the aggregate. By excluding taxes on income, we believe EBITDA provides a basis for measuring the financial performance of our operations excluding factors that our hotels cannot control. By excluding depreciation and amortization expense, which can vary from hotel to hotel based on historical cost and other factors unrelated to the hotels’ financial performance, EBITDA measures the financial performance of our hotels without regard to their historical cost. For all of these reasons, we believe EBITDA provides us and investors with information that is relevant and useful in evaluating our business.

     However, because EBITDA excludes depreciation and amortization, it does not measure the capital we require to maintain or preserve our fixed assets. In addition, because EBITDA does not reflect interest expense, it does not take into account the total amount of interest we pay on outstanding debt nor does it show trends in interest costs due to changes in our borrowings or changes in interest rates. EBITDA, as defined by us, may not be comparable to EBITDA as reported by other companies that do not define EBITDA exactly as we define the term. Because we use EBITDA to evaluate our financial performance, we reconcile it to net income (loss) attributable to Red Lion Hotels Corporation, which is the most comparable financial measure calculated and presented in accordance with GAAP. EBITDA does not represent cash generated from operating activities determined in accordance with GAAP, and should not be considered as an alternative to operating income or net income (loss) determined in accordance with GAAP as an indicator of performance or as an alternative to cash flows from operating activities as an indicator of liquidity.

     The following is a reconciliation of EBITDA to net income (loss) attributable to Red Lion Hotels Corporation for the periods presented (in thousands):

		Three months ended June 30,								Six months ended June 30,
		2010				2009				2010				2009
EBITDA		$	7,365			$	9,683			$	7,802			$	11,316
Income tax (expense) benefit			60				(723	)			2,715				1,167
Interest expense			(2,314	)			(2,182	)			(4,550	)			(4,029	)
Depreciation and amortization			(5,175	)			(5,306	)			(10,400	)			(10,263	)
Net income (loss) attributable to Red Lion Hotels Corporation		$	(64	)		$	1,472			$	(4,433	)		$	(1,809	)

Revenue

     A breakdown of our revenues for the three and six months ended June 30, 2010 and 2009 is as follows (in thousands):

		Three months ended June 30,								Six months ended June 30,
Operating revenue		2010				2009				2010				2009
Hotels:
Rooms		$	27,919			$	28,877			$	49,199			$	49,317
Food and beverage			9,469				11,046				17,867				20,583
Other department			1,244				1,033				2,187				1,860
Total hotels segment			38,632				40,956				69,253				71,760
Franchise			889				1,262				1,447				1,799
Entertainment			2,340				2,584				4,818				5,107
Other			594				661				1,239				1,394
Total Operating Revenue		$	42,455			$	45,463			$	76,757			$	80,060

     Three Months Ended June 30, 2010 and 2009

     During the second quarter of 2010, revenue from the hotels segment decreased $2.3 million, or 5.7%, compared to the second quarter of 2009. Overall, room revenues in the current period were negatively impacted by a $1.3 million drop in group revenues and our planned shift away from discount OTA channels in favor of higher-rated transient business. The current period reflects a 1.8% drop in RevPAR for owned and leased properties, due to a 120 basis point drop in occupancy on flat ADR. Food and beverage revenues declined $1.6 million, or 14.3%, during the second quarter of 2010 compared to the second quarter of 2009, reflecting the impact of our breakfast-inclusive sales strategy and the decision to modify food and beverage offerings in select markets.

     Hotel revenues during the second quarter of 2010 also reflect a $0.4 million impact from the closure of the Astoria, Oregon leased property. As previously announced, the property was closed earlier in 2010 as the hotel building had reached the end of its useful life. In July 2010, we entered into an agreement with the Port of Astoria to evaluate the potential re-development of this hotel, with discussions ongoing.

     Revenue from the franchise segment decreased $0.4 million due to a one-time settlement received in the second quarter of 2009. Revenues from the entertainment segment decreased $0.2 million, or 9.4%, quarter-over-quarter due to the mix of shows presented during both periods and an increase in ticketing revenues.

     Six Months Ended June 30, 2010 and 2009

     In the first six months of 2010, revenue from the hotels segment decreased $2.5 million, or 3.5%, compared to the first six months of 2009, driven by a $2.7 million, or 13.2%, drop in food and beverage revenue. Room revenues in the first six months of 2010 were positively impacted by our focus on higher-rated transient and preferred corporate guests and reduced room bookings from discount OTA channels. Compared to the first six months of 2009, RevPAR increased 1.0% for owned and leased hotels on a 50 basis point increase in occupancy on flat ADR. Current period results were also impacted by the introduction of our Variable Dining Option concept that includes a system-wide breakfast initiative to compete with the limited and select service hotels that offer free breakfast in our markets.

     Revenue from the franchise segment decreased $0.4 million compared to the first six months of 2009, due to a one-time settlement received in the second quarter of 2009. Entertainment revenue was down 5.7% to $4.8 million.

Operating Expenses

     Operating expenses include direct operating expenses for each of the operating segments, hotel facility and land lease expense, depreciation and amortization, gain or loss on asset dispositions and undistributed corporate expenses. In the aggregate, operating expenses during the second quarter of 2010 compared to the 2009 period decreased $0.8 million, while during the first six months they increased $0.3 million year-over-year, as provided below:

		Three months ended June 30,								Six months ended June 30,
Operating Expenses		2010				2009				2010				2009
		(In thousands)
Hotels		$	28,759			$	28,969			$	55,499			$	55,631
Franchise			810				502				1,388				1,116
Entertainment			1,986				2,273				3,999				4,388
Other			413				544				835				1,081
Depreciation and amortization			5,175				5,306				10,400				10,263
Hotel facility and land lease			1,824				1,834				3,640				3,650
Gain on asset dispositions, net			(57	)			(45	)			(155	)			(47	)
Undistributed corporate expenses			1,362				1,721				3,804				2,987
Total operating expenses		$	40,272			$	41,104			$	79,410			$	79,069
Hotels revenue — owned		$	27,893			$	29,287			$	50,266			$	52,190
Direct margin (1)		$	7,539			$	9,197			$	10,937			$	13,397
Direct margin %			27.0	%			31.4	%			21.8	%			25.7	%
Hotels revenue — leased		$	10,739			$	11,669			$	18,987			$	19,570
Direct margin (1)		$	2,334			$	2,790			$	2,817			$	2,731
Direct margin %			21.7	%			23.9	%			14.8	%			14.0	%
Franchise revenue		$	889			$	1,262			$	1,447			$	1,799
Direct margin (1)		$	79			$	760			$	59			$	683
Direct margin %			8.9	%			60.2	%			4.1	%			38.0	%
Entertainment revenue		$	2,340			$	2,584			$	4,818			$	5,107
Direct margin (1)		$	354			$	311			$	819			$	719
Direct margin %			15.1	%			12.0	%			17.0	%			14.1	%
Other revenue		$	594			$	661			$	1,239			$	1,394
Direct margin (1)		$	181			$	117			$	404			$	313
Direct margin %			30.5	%			17.7	%			32.6	%			22.5	%

     Three Months Ended June 30, 2010 and 2009

     Direct hotel expenses in the second quarter of 2010 decreased slightly by $0.2 million, or less than 1%, compared to the second quarter of 2009. Room related expenses increased $0.6 million, or 7.9%, compared with a room revenue decrease of $1.0 million. Food and beverage costs decreased $1.2 million, or 13.6%, compared with a food and beverage revenue decrease of $1.6 million. Quarter-on-quarter, the hotel segment reported a 14.7% increase in expense related to sales personnel and technology expense. Overall, the hotels segment had a direct profit of $9.9 million during the second quarter of 2010 compared to $12.0 million during the second quarter of 2009, providing for a direct operating margin in the current period of 25.6%, a 370 basis point decline compared to 29.3% during the same period in 2009.

     As discussed in Note 10 of Condensed Notes to Consolidated Financial Statements, in June 2009, the FASB issued changes to the consolidation guidance applicable to variable interest entities (“VIE”). Under the new guidance, we determined that our Central Program Fund (“CPF”) now meets the definition of a VIE and should be included in our consolidated financial statements. We adopted these changes retrospectively on January 1, 2010.

     The CPF acts as an agent for our owned and leased hotels and for our franchisees, and was created to provide services to all member hotels including certain advertising services, frequent guest program administration, reservation services, national sales promotions and brand and revenue management services intended to increase sales and enhance the reputation of the Red Lion brand. The activities of the CPF benefit our owned and leased hotels as well as our franchise properties. Historically, only the proportionate share of CPF expense for our owned and leased hotels was recognized in the consolidated financial statements. Based on the new guidance, we now include all of the expenses and other balances of the CPF in our consolidated financial statements, including revenue received from franchisees to support CPF activities. There have been no changes to the organization, structure or operating activities of the CPF since its inception in 2002.

     The adoption of these changes were applied retrospectively, including the recording to retained earnings of the $1.0 million impact of cumulative effect of change in accounting principle as of the earliest period presented, and the consolidated financial statements have been adjusted to conform to the new treatment. The table below represents the impact on consolidation of the CPF

for the three months ended June 30, 2010 and 2009 (in thousands, except per share data), which added additional net expense of $0.6 million and $0.5 million, respectively, before the impact of income tax expense.

		Three months ended June 30, 2010												Three months ended June 30, 2009
		Amounts												Amounts
		before				Impact of								before				Impact of
		CPF				CPF				As reported				CPF				CPF				As reported
Revenue:
Hotels		$	38,632			$	—			$	38,632			$	40,956			$	—			$	40,956
Franchise			364				525				889				733				529				1,262
Entertainment			2,340				—				2,340				2,584				—				2,584
Other			594				—				594				661				—				661
Total revenues			41,930				525				42,455				44,934				529				45,463
Operating expenses:
Hotels			28,251				508				28,759				28,633				336				28,969
Franchise			297				513				810				8				494				502
Entertainment			1,986				—				1,986				2,273				—				2,273
Other			413				—				413				544				—				544
Depreciation and amortization			5,175				—				5,175				5,306				—				5,306
Hotel facility and land lease			1,824				—				1,824				1,834				—				1,834
Gain on asset dispositions, net			(57	)			—				(57	)			(45	)			—				(45	)
Undistributed corporate expenses			1,362				—				1,362				1,721				—				1,721
Total expenses			39,251				1,021				40,272				40,274				830				41,104
Operating income (loss)			2,679				(496	)			2,183				4,660				(301	)			4,359
Other income (expense):
Interest expense			(2,314	)			—				(2,314	)			(2,182	)			—				(2,182	)
Other income, net			119				(110	)			9				172				(149	)			23
Income (loss) before income taxes			484				(606	)			(122	)			2,650				(450	)			2,200
Income tax expense			(60	)			—				(60	)			723				—				723
Net income (loss)		$	544			$	(606	)		$	(62	)		$	1,927			$	(450	)		$	1,477
Net earnings (loss) per share		$	0.03			$	(0.03	)		$	—			$	0.11			$	(0.03	)		$	0.08
Weighted-average shares outstanding			18,420				18,420				18,420				18,140				18,140				18,140
EBITDA		$	7,971			$	(606	)		$	7,365			$	10,133			$	(450	)		$	9,683