Richard Szymanski (973) 808-7751
October 30, 2003
PRIME HOSPITALITY CORP. REPORTS THIRD QUARTER RESULTS
Fairfield, NJ - Prime Hospitality Corp. (NYSE:PDQ), a leading hotel owner,
operator and franchisor, reported its results for the three and nine months
ended September 30, 2003.
Net income before asset transactions for the third quarter of 2003 was $2.1
million, or $.05 per share, compared to $2.2 million, or $.05 per share, for the
third quarter of 2002. The third quarter of 2002, also included a loss of $.02
per share from the funding of deficits on the hotels leased from Hospitality
Properties Trust ("HPT").
Total net income, which also includes gains and losses from asset transactions,
was $2.0 million, or $.05 per share, for the third quarter of 2003 compared to
$2.8 million, or $.06 per share, in the third quarter of 2002. The 2002 results
included gains on asset sales partially offset by debt retirement costs.
"Our third quarter results reflected strong occupancy levels due to increased
leisure travel over the summer months," said A.F. Petrocelli, chairman and CEO
of Prime. "While we have seen a modest recovery in corporate transient travel,
until this rebounds more significantly, pricing will remain challenging."
"We continue to strengthen our financial position. We have discontinued the
funding of losses on our lease with HPT, which negatively impacted cash flow by
$11.5 million annually and we retired another $10.5 million of debt in the
quarter."
For the nine months ended September 30, 2003, Prime reported a net loss before
asset transactions of $1.2 million, or $.03 per share, compared to net income
before asset transactions of $8.7 million, or $.19 per share, for the comparable
period in 2002. The total net loss, which includes lease termination charges and
gains and losses from asset sales and debt retirements, for the nine months
ended September 30, 2003 was $22.4 million, or $.50 per share, compared to a net
loss of $0.9 million, or $.02 per share, for the comparable period in 2002.
OPERATING RESULTS
- -----------------
For the quarter, total revenues decreased by $14.5 million to $89.2 million due
to the deconsolidation of the HPT hotels and the impact of asset divestitures.
Revenue per available room ("REVPAR") at Prime's comparable owned and leased
hotels increased by 0.3% in the third quarter of 2003 as compared to the third
quarter of 2002. The results were affected by higher occupancies and a lower
average daily rate ("ADR") due to a
higher percentage of leisure and group travel. For the third quarter of 2003,
occupancy increased by 5.8 percentage points to 66.9% and ADR decreased by 8.4%
to $67.17. Gross operating profit margins at comparable owned and leased hotels
declined by 1.8 percentage points due to the lower ADR.
Earnings before interest, taxes, depreciation and amortization ("EBITDA")
decreased by $1.4 million to $18.2 million in the third quarter of 2003.
Interest expense declined by 26.8%, or $1.8 million, to $4.9 million for the
quarter ended September 30, 2003 primarily due to debt reductions and lower
interest rates.
SYSTEM-WIDE PERFORMANCE
- -----------------------
For the third quarter of 2003, Prime reported a 1.5% REVPAR decrease at its
comparable AmeriSuites hotels, as occupancy increased by 4.0 percentage points
to 68.3% and ADR decreased by 7.3% to $68.34. Increases were reported in
Cincinnati, Oklahoma City and Richmond while decreases were posted in Chicago,
Denver, Orlando and the Northeast.
For the third quarter of 2003, Prime reported a 3.7% REVPAR increase at its
comparable Wellesley Inns & Suites hotels, as occupancy increased by 7.6
percentage points to 63.5% and ADR decreased by 8.9% to $55.05. The South
Florida and Phoenix markets reported increases while revenues decreased in the
Northeast.
Prime's upscale full-service hotels which are located in the Northeast, reported
a 0.1% REVPAR decrease for the third quarter of 2003 as occupancy increased by
2.0 percentage points to 71.5% and ADR decreased by 2.9% to $118.73. The
full-service hotels were impacted by an increase in revenue at the recently
converted Prime Hotel in Saratoga Springs, NY and decreases in the suburban New
York City market.
HOTEL DEVELOPMENTS
- ------------------
As of September 30, 2003, Prime had 148 AmeriSuites and 81 Wellesley Inns &
Suites hotels in operation. Although Prime intends to expand its brands
primarily through franchising, it will consider corporate development
opportunities in strategic markets with high barriers to entry.
During the third quarter, Prime converted two owned Ramada Inns to Wellesley
Inns. The new hotels converted in the quarter are located in Armonk, NY and
Clifton, NJ. This year Prime has converted nine hotels to the Wellesley brand
including five owned hotels.
Currently, Prime has two AmeriSuites under construction and a pipeline of 21
executed franchise agreements including eight in the planning stage. There is
also one franchised Wellesley Inn under conversion.
During the second quarter, Prime announced an agreement for the installation of
high speed internet access in its AmeriSuites, Wellesley Inns & Suites and Prime
Hotels and Resorts brands. The new amenity will be available on both a wired and
wireless basis in all guest and meeting rooms as well as wireless access in all
common areas including
hotel lobbies, fitness centers, pool areas and restaurants. Prime has already
installed this feature in over 80 hotels and expects the installations to be
substantially complete by year end.
In October 2003, Prime assumed management of its first hotel in New York City,
the Empire Hotel at Broadway and 63rd Street across from Lincoln Center.
FINANCIAL CONDITION
- -------------------
In July 2003, Glen Rock Holding Corp, a subsidiary of the Company, did not make
its scheduled monthly rent payment of approximately $2.0 million to HPT and
received a default notice from HPT. The lease covers 24 AmeriSuites hotels owned
by HPT. Prime is continuing to operate the hotels on an interim basis as
AmeriSuites while HPT decides the long-term management and franchise affiliation
of these hotels.
As of September 30, 2003, Prime had $243.7 million in debt and $18.4 million in
cash and cash equivalents. During the quarter, Prime reduced its debt balance by
$10.5 million funded by operating cash flow and the financing of its 40% owned
Quebec Holiday Inn Select hotel. Prime's debt to book capitalization percentage
is 26.3%. Adjusted on a pro-forma basis for the HPT lease which is required
under its revolving credit facility, Prime's debt to last twelve months EBITDA
ratio is 4.0 times, and its EBITDA to interest is 3.0 times. Under its revolving
credit facility, the Company is required to maintain a debt to EBITDA ratio of
4.25 times and an EBITDA to interest ratio of 2.50 times.
Prime Hospitality Corp., one of the nation's premiere lodging companies, owns,
manages and franchises 247 hotels throughout North America. The Company owns and
operates three proprietary brands that compete in different segments:
AmeriSuites(R) (all-suites), Wellesley Inns & Suites(R) (limited-service) and
Prime Hotels & Resorts (full-service). Also within its portfolio are owned
and/or managed hotels operated under franchise agreements with national hotel
chains including Hilton, Radisson, Sheraton, Holiday Inn and Ramada. Prime can
be accessed over the internet at www.primehospitality.com.
Prime Hospitality Corp. will hold a conference call on October 30, 2003 at 9:30
a.m. EST to discuss our third quarter results. Investors and members of the
media may participate by calling 800-603-4335. A recording of the call will be
available through November 13, 2003 by calling 800-642-1687 and using the
conference ID# 2902984.
Statements in this press release, other than statements of historical
information, may constitute forward-looking statements pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995. The
words "believe", "anticipate", "project", "expect", "intends", "may result",
"will continue", and words of similar impact identify forward-looking
statements. Forward-looking statements involve known and unknown risks which may
cause the Company's actual results in future periods to differ materially from
expected results. These risks include but are not limited to changes in economic
conditions, supply and demand changes for hotel rooms, competition within the
lodging industry, relationships with owners, franchisees and suppliers, the
impact of government regulations, the availability of capital, the ability to
attract and retain personnel and the impact of emerging technologies. Prime
undertakes no obligation to update the information set forth herein. For further
information regarding forward-looking statements and to some of the factors and
uncertainties affecting us, please refer to the Company's filings with the
Securities and Exchange Commission (SEC) copies of which are available from the
SEC or may be obtained upon request from the Company.
PRIME HOSPITALITY CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2003 2002 2003 2002
------------------------------------------------------
Revenues:
Hotel revenues $ 83,311 $ 99,334 $ 265,373 $ 299,844
Management, franchise and other fees 5,897 4,405 17,796 13,043
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Total revenue 89,208 103,739 283,169 312,887
Costs and expenses:
Hotel operating expenses 45,760 55,670 151,930 163,273
Rent and other occupancy 15,290 20,811 58,857 63,233
Brand and administrative 9,988 7,690 29,563 21,899
Depreciation and amortization 10,254 9,866 30,646 29,992
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Total costs and expenses 81,292 94,037 270,996 278,397
Operating income 7,916 9,702 12,173 34,490
Investment income 103 637 974 1,820
Interest expense (4,908) (6,709) (15,900) (22,075)
Equity in earnings from unconsolidated
joint ventures 322 -- 774 --
Gain (loss) from asset transactions (110) 935 (34,788) (15,753)
------------------------------------------------------
Income (loss) before income taxes 3,323 4,565 (36,767) (1,518)
Provision (benefit) for income taxes 1,296 1,780 (14,339) (592)
------------------------------------------------------
Net income (loss) 2,027 2,785 (22,428) (926)
Diluted income (loss) per common share:
Income (loss) before asset transactions $ 0.05 $ 0.05 $ (0.03) $ 0.19
Income (loss) from asset transactions -- 0.01 (0.47) (0.21)
------------------------------------------------------
Net income (loss) per share $ 0.05 $ 0.06 $ (0.50) $ (0.02)
======================================================
PRIME HOSPITALITY CORP.
BALANCE SHEET INFORMATION
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
SEPTEMBER 30, DECEMBER 31,
2003 2002
------------- ------------
Cash and cash equivalents $ 18,385 $ 25,850
Fixed assets 925,374 958,517
Total assets 1,043,826 1,119,649
Revolving credit facility 50,000 70,000
Other debt 193,652 215,069
---------- ----------
Total debt 243,652 285,069
Stockholders' equity $ 682,239 $ 706,676
Quarterly weighted average basic shares outstanding 44,726 45,051
Quarterly weighted average diluted shares outstanding 44,726 45,051
Book value per quarterly weighted average diluted share $ 15.25 $ 15.69
PRIME HOSPITALITY CORP.
COMPARABLE HOTEL PERFORMANCE SUMMARY
SEPTEMBER 30, 2003
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2003 2002 VARIANCE 2003 2002 VARIANCE
--------- --------- -------- --------- --------- --------
OWNED AND LEASED HOTELS:
Occupancy 66.9% 61.1% 5.8 pts. 65.2% 61.0% 4.2 pts.
ADR $ 67.17 $ 73.31 (8.4%) $ 66.30 $ 73.50 (9.8%)
REVPAR $ 44.92 $ 44.80 0.3% $ 43.25 $ 44.82 (3.5%)
SYSTEM-WIDE HOTELS:
AMERISUITES
Occupancy 68.3% 64.3% 4.0 pts. 66.2% 64.1% 2.1 pts.
ADR $ 68.34 $ 73.75 (7.3%) $ 68.64 $ 74.54 (7.9%)
REVPAR $ 46.70 $ 47.41 (1.5%) $ 45.41 $ 47.78 (5.0%)
WELLESLEY INNS & SUITES
Occupancy 63.5% 55.9% 7.6 pts. 64.6% 57.6% 7.0 pts.
ADR $ 55.05 $ 60.40 (8.9%) $ 55.45 $ 61.86 (10.4%)
REVPAR $ 34.98 $ 33.75 3.7% $ 35.84 $ 35.61 0.6%
FULL-SERVICE BRANDS
Occupancy 71.5% 69.5% 2.0 pts. 65.7% 65.6% 0.1 pts.
ADR $ 118.73 $ 122.34 (2.9%) $ 109.57 $ 115.62 (5.2%)
REVPAR $ 84.95 $ 85.00 (0.1%) $ 71.96 $ 75.87 (5.2%)
PRIME HOSPITALITY CORP.
HOTEL STATISTICS
SEPTEMBER 30, 2003
SEPTEMBER 2003
-------------------------------
# OF # OF
HOTELS ROOMS
-------------------------------
AMERISUITES
Owned 62 8,024
Leased 24 2,923
Managed 27 3,480
Franchised 35 4,084
--- ------
Total 148 18,511
WELLESLEY INNS & SUITES
Owned 56 6,906
Leased - -
Managed 6 668
Franchised 19 1,837
-- -----
Total 81 9,411
PRIME HOTELS & RESORTS
Owned 1 240
- ---
Total 1 240
NON-PROPRIETARY BRANDS
Owned 4 860
Leased 1 160
Managed 10 1,934
Joint Venture 2 665
-- -----
Total 17 3,619
TOTAL PORTFOLIO
Owned 123 16,030
Leased 25 3,083
Managed 43 6,082
Franchised 54 5,921
Joint Venture 2 665
--- ------
Total 247 31,781
PRIME HOSPITALITY CORP.
SUPPLEMENTAL FINANCIAL INFORMATION
(UNAUDITED)
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
($ IN THOUSANDS)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2003 2002 2003 2002
------------------------- --------------------------
Net income (loss) $ 2,027 $ 2,785 $ (22,428) $ (926)
Provision (benefit) for income taxes 1,296 1,780 (14,339) (592)
Loss (gain) from asset transactions 110 (935) 34,788 15,753
Equity in earnings of unconsolidated
joint ventures (322) ------ (774) ------
Interest expense 4,908 6,709 15,900 22,075
Investment income (103) (637) (974) (1,820)
Depreciation and amortization 10,254 9,866 30,646 29,992
------------------------- --------------------------
EBITDA $18,170 $ 19,568 $ 42,819 $ 64,482
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