Exhibit 99.1
Richard Szymanski (973) 808-7751
February 12, 2004
PRIME HOSPITALITY CORP. REPORTS FOURTH QUARTER RESULTS
Fairfield, NJ - Prime Hospitality Corp. (NYSE:PDQ), a leading hotel owner,
operator and franchisor, reported its results for the three months and year
ended December 31, 2003.
Prime reported a net loss before asset transactions and other non-cash charges
for the fourth quarter of 2003 of $1.3 million, or $.03 per share, compared to a
loss of $2.8 million, or $.06 per share, for the fourth quarter of 2002. The
fourth quarter of 2002 included a loss of $.04 per share from the funding of
deficits on the hotels formerly leased from Hospitality Properties Trust
("HPT").
The total net loss, which included a non-cash valuation charge of $1.0 million,
was $2.0 million, or $.05 per share, for the fourth quarter of 2003 compared to
a loss of $2.9 million, or $.06 per share, in the fourth quarter of 2002.
"Our fourth quarter results reflected improved occupancy although rate levels
still remain a challenge," said A.F. Petrocelli, chairman and CEO of Prime. "We
are cautiously optimistic that corporate travel will rebound in 2004 enabling us
to increase rates."
"Our new management agreement with HPT went into effect on January 1. We not
only retained the 24 AmeriSuites but added 12 full-service hotels which we
expect to convert to the Prime Hotel brand by June. With the one hotel currently
open and two other hotels scheduled for conversion on March 1, we expect to have
15 Prime Hotels opened in 10 states by mid-year. We look forward to the new
opportunities this presents for all our brands with these full-service hotels
available for cross-selling, rewards redemptions and national sales contracts."
For the year ended December 31, 2003, we reported a net loss before asset
transactions of $2.5 million, or $.06 per share, compared to net income before
asset transactions of $5.8 million, or $.13 per share, for the comparable period
in 2002. The total net loss, which includes lease termination charges, gains and
losses from asset sales and debt retirements, and other non-cash charges for the
year ended December 31, 2003 was $24.5 million, or $.55 per share, compared to a
net loss of $3.9 million, or $.08 per share, for the comparable period in 2002.
Operating Results
- -----------------
For the quarter, total revenues decreased by $3.0 million to $86.8 million.
Revenue per available room ("REVPAR") at our comparable owned and leased hotels
decreased by 1.6% in the fourth quarter of 2003 as compared to the fourth
quarter of 2002. The results
were affected by higher occupancies and a lower average daily rate ("ADR") due
to softness in corporate travel. For the fourth quarter of 2003, occupancy
increased by 1.8 percentage points to 56.8% and ADR decreased by 4.7% to $66.36.
Gross operating profit margins at comparable owned and leased hotels declined by
3.9 percentage points due to the lower ADR.
Earnings before interest, taxes, depreciation and amortization ("EBITDA")
increased by $2.0 million to $11.9 million in the fourth quarter of 2003 due to
the termination of the HPT lease. Interest expense declined by 9.0%, to $5.0
million, for the quarter ended December 31, 2003 primarily due to debt
reductions.
System-Wide Performance
- -----------------------
For the fourth quarter of 2003, we reported a 2.1% REVPAR decrease at our
comparable AmeriSuites hotels, as occupancy increased by 0.8 percentage points
to 57.2% and ADR decreased by 3.4% to $68.75. Increases were reported in
Oklahoma City and Richmond while decreases were posted in Chicago, Charlotte,
Denver and the Northeast.
For the fourth quarter of 2003, we reported a 1.1% REVPAR increase at our
comparable Wellesley Inns & Suites hotels, as occupancy increased by 3.5
percentage points to 57.0% and ADR decreased by 5.2% to $55.97. 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 6.2% REVPAR decrease for the fourth quarter of 2003 as occupancy decreased by
0.6 percentage points to 62.3% and ADR decreased by 5.2% to $111.37. The
full-service hotels were impacted by decreases in the suburban New York City
market.
Hotel Developments
- ------------------
As of December 31, 2003, we had 148 AmeriSuites, 82 Wellesley Inns & Suites and
one Prime Hotel in operation. Although we intend to expand our brands primarily
through franchising, we will consider corporate development or acquisition
opportunities in strategic markets.
In December 2003, we entered into a management agreement with HPT for 24
AmeriSuites hotels and 12 full-service hotels to be re-branded under our Prime
Hotels & Resorts chain. The agreement became effective on January 1, 2004 for
the AmeriSuites hotels and February 1, 2004 for the Prime Hotels & Resorts
hotels. The term is 15 years and we have two renewal options of 15 years each.
Under the agreement, HPT will receive an owner's priority return of $26 million
per year. This return is guaranteed by Prime under a limited guarantee which
caps the maximum cash outlay by Prime over the life of the agreement at $30
million. Cash flow generated by the hotels in excess of $26 million per year
will be split 50/50 between HPT and Prime with Prime's share counting as its
royalty and management fee. Also, as part of the agreement, HPT will provide $25
million during the first two years to pay for re-branding and other capital
improvements on the 36 hotels.
The 12 full-service hotels are currently branded as Wyndham hotels and we expect
the conversion to the Prime Hotels & Resorts brand will be completed by
mid-year. We currently have one Prime Hotel open and on March 1, we will convert
Radisson hotels in Fairfield, NJ and Secaucus, NJ to the Prime brand. We expect
that by June 2004 we will have 15 Prime Hotels in 10 states encompassing almost
3,000 guestrooms.
Currently, we have three AmeriSuites under construction and a pipeline of 20
executed franchise agreements including five in the planning stage. There is
also one franchised Wellesley Inn under conversion.
During the quarter, we continued our installation of high speed internet access
in our AmeriSuites, Wellesley Inns & Suites and Prime Hotels and Resorts brands.
This new amenity will be available on both a wired and wireless basis in all
guest and meeting rooms and via wireless access in all common areas, including
hotel lobbies, fitness centers, pool areas and restaurants. We have installed
this feature in the majority of our hotels and expect the installations to be
complete by the end of the first quarter of 2004.
Financial Condition
- -------------------
As of December 31, 2003, we had $228.6 million in debt and $12.9 million in cash
and cash equivalents. During the quarter, we reduced our debt balance by $15.0
million funded by operating cash flow and a federal income tax refund. Our debt
to book capitalization percentage is 25.2%. Our debt to last twelve months
EBITDA ratio is 3.8 times, and its EBITDA to interest is 3.0 times. Under our
revolving credit facility, we are required to maintain a debt to EBITDA ratio of
4.25 times and an EBITDA to interest ratio of 2.50 times.
2004 Outlook
- ------------
Our current estimate is that REVPAR for comparable hotels will increase by 3% -
4% for the full year 2004 resulting in EBITDA in the range of $65 - $70 million
and earnings per share before asset transactions in the $.05 - $.10 range. We
estimate a loss for the first quarter of 2004 of $0.07 per share.
We currently expect capital expenditures to be approximately $20 million in 2004
with the majority to be spent on maintenance capital. Based on the EBITDA
estimates and after deducting interest, taxes and maintenance capital
expenditures, we would expect to generate approximately $25 million in free cash
flow in 2004 before asset sales.
Prime Hospitality Corp., one of the nation's premiere lodging companies, owns,
manages and franchises 260 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 February 12, 2004 at 9:30
a.m. EST to discuss our fourth quarter and year end results. Investors and
members of the media may participate by calling 800-243-6403. A recording of the
call will be available through February 26, 2004 by calling 800-839-6713 and
using the conference ID# 6046668.
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 Twelve Months ended December 31, 2003 and 2002
($ in thousands, except per share amounts)
Three months ended Twelve months ended
December 31, December 31,
2003 2002 2003 2002
-------- -------- --------- ---------
Revenues:
Hotel revenues $ 81,756 $ 85,731 $ 359,454 $ 385,575
Management, franchise and other fees 5,043 4,085 22,834 16,728
-------- -------- --------- ---------
Total revenue 86,799 89,816 382,288 402,303
Costs and expenses:
Hotel operating expenses 50,850 53,146 210,179 216,419
Rent and other occupancy 13,921 19,822 77,957 82,655
Brand and administrative 10,170 6,989 39,733 28,888
Depreciation and amortization 9,052 10,053 39,440 40,045
Valuation reserve 1,000 -- 1,000 --
-------- -------- --------- ---------
Total costs and expenses 84,993 90,010 368,309 368,007
Operating income 1,806 (194) 13,979 34,296
Investment income 104 1,043 1,078 2,863
Interest expense (5,013) (5,507) (20,914) (27,582)
Equity in earnings from unconsolidated
joint ventures 48 -- 822 --
Gain (loss) from asset transactions (301) (163) (35,089) (15,916)
-------- -------- --------- ---------
Income (loss) before income taxes (3,356) (4,821) (40,124) (6,339)
Provision (benefit) for income taxes (1,309) (1,880) (15,648) (2,472)
-------- -------- --------- ---------
Net income (loss) $ (2,047) $ (2,941) $ (24,476) $ (3,867)
Diluted income (loss) per common share:
Income (loss) before asset transactions
and valuation reserve $ (0.03) $ (0.06) $ (0.06) $ 0.13
Income (loss) from asset transactions
and valuation reserve (0.02) -- (0.49) (0.21)
-------- -------- --------- ---------
Net income (loss) per share $ (0.05) $ (0.06) $ (0.55) $ (0.08)
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Prime Hospitality Corp.
Balance Sheet Information
(Unaudited)
(In Thousands, except per share amounts)
December 31, December 31,
2003 2002
---------- ----------
Cash and cash equivalents $ 12,901 $ 25,850
Fixed assets 925,380 958,517
Total assets 1,006,388 1,119,649
Revolving credit facility 35,000 70,000
Other debt 193,602 215,069
---------- ----------
Total debt 228,602 285,069
Stockholders' equity $ 680,454 $ 706,676
Quarterly weighted average diluted shares outstanding 44,737 45,051
Book value per quarterly weighted average diluted share $ 15.21 $ 15.69
Prime Hospitality Corp.
Comparable Hotel Performance Summary
December 31, 2003
Three Months Ended Year Ended
December 31, December 31,
2003 2002 Variance 2003 2002 Variance
-------- -------- -------- -------- -------- --------
Owned and Leased Hotels:
Occupancy 56.8% 55.0% 1.8 pts. 63.3% 59.7% 3.6 pts.
ADR $ 66.36 $ 69.64 (4.7%) $ 66.02 $ 72.28 (8.7%)
REVPAR $ 37.69 $ 38.29 (1.6%) $ 41.77 $ 43.18 (3.3%)
System-Wide Hotels:
AmeriSuites
Occupancy 57.2% 56.4% 0.8 pts. 63.9% 62.2% 1.7 pts.
ADR $ 68.75 $ 71.20 (3.4%) $ 68.64 $ 73.74 (6.9%)
REVPAR $ 39.32 $ 40.14 (2.1%) $ 43.85 $ 45.87 (4.4%)
Wellesley Inns & Suites
Occupancy 57.0% 53.5% 3.5 pts. 62.7% 56.7% 6.0 pts.
ADR $ 55.97 $ 59.02 (5.2%) $ 55.71 $ 61.43 (9.3%)
REVPAR $ 31.92 $ 31.56 1.1% $ 34.93 $ 34.86 0.2%
Full-Service Brands
Occupancy 62.3% 62.9% (0.6 pts.) 65.5% 65.0% 0.5 pts.
ADR $111.37 $117.51 (5.2%) $116.42 $122.44 (4.9%)
REVPAR $ 69.34 $ 73.89 (6.2%) $ 76.25 $ 79.54 (4.1%)
Prime Hospitality Corp.
Hotel Statistics
January 31, 2004
December 2003
---------------
# of # of
Hotels Rooms
------ -----
AmeriSuites
Owned/Leased 62 8,024
(1) Managed-Cash Flow Interest 42 5,214
Managed 8 1,077
Franchised 36 4,196
--- ------
Total 148 18,511
Wellesley Inns & Suites
Owned/Leased 56 6,906
Managed 6 668
Franchised 20 2,059
--- ------
Total 82 9,633
(2) Prime Hotels & Resorts
Owned/Leased 1 240
--- ------
Total 1 240
(2) Non-Proprietary Brands
Owned/Leased 5 1,020
(1) Managed - Cash Flow Interest 12 2,321
Managed 10 1,934
Joint Venture 2 665
--- ------
Total 29 5,940
Total Portfolio
Owned/Leased 124 16,190
Managed - Cash Flow Interest 54 7,535
Managed 24 3,679
Franchised 56 6,255
Joint Venture 2 665
--- ------
Total 260 34,324
Note: 1) The managed-cash flow interest hotels we operate under management
agreements where Prime guarantees a minimum level of cash flow
and has a significant participation in cash flow above the
minimum levels.
2) The non-proprietary brand hotels include 2 owned hotels and 12
managed hotels to be converted to the Prime hotel brand.
Prime Hospitality Corp.
Supplemental Financial Information Reconciliation of Net Income
(Unaudited)
Three and Twelve Months Ended December 31, 2003 and 2002
($ in thousands)
Three Months Ended Twelve Months Ended
December 31, December 31,
2003 2002 2003 2002
-------- -------- -------- --------
Net income (loss) $ (2,047) $ (2,941) $(24,476) $ (3,867)
Provision (benefit) for income taxes (1,309) (1,880) (15,648) (2,472)
Loss (gain) from asset transactions 301 163 35,089 15,916
Equity in earnings of unconsolidated
joint ventures (48) -- (822) --
Interest expense 5,013 5,507 20,914 27,582
Investment income (104) (1,043) (1,078) (2,863)
Depreciation and amortization 9,052 10,053 39,440 40,045
Valuation reserve 1,000 -- 1,000 --
-------- -------- -------- --------
EBITDA $ 11,858 $ 9,859 $ 54,419 $ 74,341
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