Interstate Hotels & Resorts is the nation's largest independent hotel management company. Interstate Hotels & Resorts Inc. has a market cap of $37.1 million; its shares were traded at around $1.154 with a P/E ratio of 4.4. Interstate Hotels & Resorts Inc. had an annual average earning growth of 14.6% over the past 5 years.
Highlight of Business Operations:Cost-Savings Program In order to partially mitigate the effects of current economic conditions on the lodging industry and to ensure that we are positioned to meet our short term obligations and liquidity requirements, we implemented a cost-savings program in January 2009 that has reduced administrative and general expense by $11.4 million to date. During 2009, we incurred several non-recurring expenses of approximately $1.4 million. Absent these non-recurring items, we anticipate annual savings to be approximately $18 million. The cost-savings program consisted of eliminating 45 corporate positions, reducing pay up to 10 percent for senior management, placing a freeze on merit increases for all corporate employees, suspending the company match for 401(K) and non-qualified deferred compensation plans for 2009, restructuring the corporate bonus plan, reducing the annual fee by 25 percent and eliminating restricted stock grants during 2009 for the companys Board of Directors, and reducing all other corporate expenses, including advertising, travel, training, and employee relations expenses.
The decrease in termination fees of $0.2 million in the third quarter of 2009 compared to the same period in 2008 was primarily due to the recognition of $0.2 million in the third quarter of 2008 related to the sale by Blackstone of the Radisson Plaza Lexington property to one of our joint ventures.
The decrease in depreciation and amortization expense of $0.9 million in the third quarter of 2009 compared to the same period in 2008 was primarily due to a decrease in depreciation expense of $0.4 million and $0.5 million for the Westin Atlanta Airport and the Sheraton Columbia, respectively, as the furniture, fixtures and equipment acquired with the properties were fully depreciated and replaced during their comprehensive renovation programs.
For the third quarter of 2009, we recognized an impairment loss of $3.5 million related to the Hilton Garden Inn Baton Rouge to write its carrying value down to the sales price less estimated cost to sell as the property was classified as held for sale during the period. For the third quarter of 2008, $0.3 million of asset impairment was recorded primarily on the termination of the management contract intangible asset related to the sale of the Radisson Plaza Lexington property by Blackstone to our MPVF IHR Lexington, LLC joint venture.
The increase in net interest expense of $2.6 million in the third quarter of 2009 compared to the same period in 2008 was primarily due to certain third party costs incurred associated with the amendment of our Credit Facility, the resulting increase in our interest rate payable on the term loan under the Credit Facility, and additional amortization of deferred financing fees as $4.0 million in financing fees associated with the amendment were recorded during the quarter. Furthermore, as LIBOR remained at levels below the stated floor rate on our interest rate collar agreement during the third quarter of 2009, additional interest expense was incurred as we are required to pay the effective difference.
The decrease in termination fees of $1.2 million in the nine months ended September 30, 2009 compared to the same period in 2008 was primarily due to $1.4 million in termination fees recognized in the first quarter of 2008 relating to three properties our Harte IHR joint venture purchased from Blackstone for which all contingencies were removed.
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