Richard Szymanski (973) 808-7751
July 29, 2004
PRIME HOSPITALITY CORP. REPORTS AN INCREASE SECOND QUARTER INCOME
Fairfield, NJ - Prime Hospitality Corp. (NYSE:PDQ), a leading hotel owner,
operator and franchisor, reported its results for the three and six months ended
June 30, 2004.
Prime reported net income for the second quarter of 2004 of $3.6 million, or
$.08 per share, compared to a loss of $17.8 million, or $.40 per share, for the
second quarter of 2003. The second quarter of 2003 included a loss of $.48 per
share from the termination of our lease with Hospitality Properties Trust
("HPT") and gains of $.03 per share from asset sales and debt retirements.
"Our second quarter results reflect our objective of emphasizing the quality of
our brand offerings and increasing our room rates" said A.F. Petrocelli,
chairman and CEO of Prime. "For the quarter, we achieved an 8.1% increase in
average daily rate. While this resulted in lower occupancy levels, it improved
operating margins by 160 basis points. We believe that as more markets recover,
we will see occupancy improvements."
"During the quarter, we converted the 12 full-service hotels which we added
through our new management agreement with HPT to the Prime Hotels and Resorts
brand. We now have 15 Prime Hotels open in 10 states and we look forward to the
opportunities this presents for all of our brands."
For the six months ended June 30, 2004, net income was $0.7 million, or $.02 per
share, compared to a loss of $24.5 million, or $.55 per share, for the
comparable period in 2003. The 2003 amounts reflect a loss of $.48 per share
related to the HPT lease.
OPERATING RESULTS
For the quarter, total revenues increased by $12.8 million to $124.1 million due
to the addition of twelve full-service hotels in January 2004.
Operating income plus depreciation increased by $2.8 million to $20.8 million in
the second quarter of 2004. This was due to the elimination of deficits incurred
in the second quarter of 2003 on our lease with HPT which was converted to a
management agreement in December 2003, and operating improvements at existing
hotels. Interest expense declined by 11.0% to $4.8 million for the quarter ended
June 30, 2004, due to debt reductions.
In addition, through June 30, 2004, we have earned approximately $2.5 million in
management and franchise fees as calculated under our agreement with HPT. This
amount has been recorded as deferred income in accordance with generally
accepted
accounting principles and may not be recognized as income until the fourth
quarter when the annual calculation is finalized.
For the second quarter of 2004, revenue per available room ("REVPAR") at our
comparable hotels decreased by 0.2% compared to the second quarter of 2003.
Average daily rate ("ADR") increased by 8.1% to $70.41 and occupancy decreased
by 5.3 percentage points to 64.5%. Gross operating profit margins at comparable
hotels increased by 1.6 percentage points due to higher ADR and operating
efficiencies.
SYSTEM-WIDE PERFORMANCE
For the second quarter of 2004, we reported a 1.4% REVPAR increase at our
comparable AmeriSuites hotels. ADR increased by 6.5% to $71.33 and occupancy
decreased by 3.4 percentage points to 67.6%. Increases were reported in Miami,
Nashville, Orlando and Richmond while decreases were posted in Albuquerque,
Austin, Chicago and Detroit.
For the second quarter of 2004, we reported a 0.4% REVPAR decrease at our
comparable Wellesley Inns & Suites hotels, ADR increased by 6.2% to $57.91 and
occupancy decreased by 4.2 percentage points to 62.2%. The Austin, Orlando and
South Florida markets reported increases while revenues decreased in Atlanta,
Dallas, Houston and the Northeast.
For the second quarter of 2004, we reported a 2.0% REVPAR decrease at our three
owned Prime Hotels. ADR increased by 3.4% to $116.45 while occupancy decreased
by 3.9 percentage points to 69.7%. The Saratoga Springs Prime Hotel reported an
increase due to strong group business while the Secaucus and Fairfield Prime
Hotels' revenues decreased.
Our non-proprietary brand full-service hotels, reported a 1.0% REVPAR decrease
for the second quarter of 2004. ADR increased by 3.3% to $110.93 and occupancy
decreased by 2.7 percentage points to 64.3%. The full-service hotels were
impacted by a decrease in group business in Northern New Jersey partially offset
by a recovery in tourism at the Quebec City Holiday Inn.
HOTEL DEVELOPMENTS
As of June 30, 2004, we had 148 AmeriSuites, 81 Wellesley Inns & Suites and 15
Prime Hotels in operation.
Under our new management agreement with HPT, in the second quarter of 2004 we
converted twelve full-service Wyndham hotels to the Prime Hotels and Resorts
brand. We now have 15 Prime Hotels open in 10 states encompassing almost 3,000
guestrooms.
Currently, we have four AmeriSuites under construction and another four in the
planning stage.
During the quarter, we completed our installation of high speed internet access
in all of our owned and all HPT-owned AmeriSuites, Wellesley Inns & Suites and
Prime Hotels and Resorts properties. This new amenity is 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.
FINANCIAL CONDITION
As of June 30, 2004, we had $222.6 million in debt and $12.2 million in cash and
cash equivalents. Our debt to book capitalization percentage is 24.7%. Our debt
to last twelve months EBITDA ratio is 3.59 times, and our EBITDA to interest is
3.39 times, as defined under our revolving credit facility. The covenants in
this facility require us 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 for 2004 is for operating income plus depreciation to be in
the range of $65 - $70 million and earnings per share before asset transactions
to be in the $.05 - $.10 range. We estimate earnings per share for the third
quarter of 2004 to be $0.07 per share.
We currently expect capital expenditures to be approximately $15 million in 2004
with the majority to be spent on maintenance capital. We expect to generate
approximately $30 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 256 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 our portfolio are owned
and/or managed hotels operated under franchise agreements with national hotel
chains including Hilton, 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 July 29, 2004 at 9:30
a.m. EST to discuss our second quarter results. Investors and members of the
media may participate by calling 800-243-6403. A recording of the call will be
available through August 12, 2004 by calling 800-839-6713 and using the
conference ID# 6046677.
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", "estimate", "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
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
THREE AND SIX MONTHS ENDED JUNE 30, 2004 AND 2003
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
QUARTER YEAR TO DATE
2004 2003 2004 2003
---- ---- ---- ----
Revenues:
Owned hotels $ 69,903 $ 71,966 $ 131,090 $ 134,234
Cash flow hotels 38,126 23,380 73,384 44,199
Management, franchise and other fees 7,335 8,147 13,665 13,641
--------- --------- --------- ---------
Total revenue before reimbursable costs 115,364 103,493 218,139 192,054
Cost reimbursements 8,730 7,754 16,625 14,960
--------- --------- --------- ---------
Total revenues 124,094 111,247 234,764 207,014
Costs and expenses:
Owned hotels 44,585 47,046 88,234 92,289
Cash flow hotels 38,937 26,089 75,950 51,559
Brand operating 4,224 5,422 8,430 8,953
General and administrative 6,850 7,013 14,081 13,913
Depreciation and amortization 10,363 9,662 20,618 20,295
--------- --------- --------- ---------
Total costs and expenses before reimbursable costs 104,959 95,232 207,313 187,009
Reimbursable costs 8,730 7,754 16,625 14,960
--------- --------- --------- ---------
Total costs and expenses 113,689 102,986 223,938 201,969
Operating income (loss) 10,405 8,261 10,826 5,045
Investment income 26 429 51 871
Interest expense (4,773) (5,365) (9,591) (10,993)
Gains (losses) on retirement of debt -- 822 -- 1,622
Other income (loss) 303 (35,346) 314 (35,346)
--------- --------- --------- ---------
Income (loss) before equity in earnings of unconsolidated joint
ventures, income taxes and discontinued operations 5,961 (31,199) 1,600 (38,801)
Equity in earnings of unconsolidated joint ventures 94 263 168 453
--------- --------- --------- ---------
Income (loss) before income taxes and discontinued operations 6,055 (30,936) 1,768 (38,348)
Provision (benefit) for income taxes 2,362 (12,065) 690 (14,956)
--------- --------- --------- ---------
Income (loss) before discontinued operations 3,693 (18,871) 1,078 (23,392)
Discontinued operations:
Income (loss) from discontinued operations, net of income taxes -- 85 (126) (480)
Gain (loss) on disposal, net of income taxes (117) 964 (238) (582)
--------- --------- --------- ---------
Net income (loss) $ 3,576 $ (17,822) $ 714 $ (24,454)
========= ========= ========= =========
Earnings (loss) per common share:
Basic:
Income (loss) before discontinued operations $ 0.08 $ (0.42) $ 0.02 $ (0.53)
Income (loss) from discontinued operations, net of income taxes -- 0.02 -- (0.02)
--------- --------- --------- ---------
Net income (loss) $ 0.08 $ (0.40) $ 0.02 $ (0.55)
========= ========= ========= =========
Diluted:
Income (loss) before discontinued operations $ 0.08 $ (0.42) $ 0.02 $ (0.53)
Income (loss) from discontinued operations, net of income taxes -- 0.02 -- (0.02)
--------- --------- --------- ---------
Net income (loss) $ 0.08 $ (0.40) $ 0.02 $ (0.55)
========= ========= ========= =========
PRIME HOSPITALITY CORP.
BALANCE SHEET INFORMATION
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
JUNE 30, DECEMBER 31,
2004 2003
---- ----
Cash and cash equivalents $ 12,182 $ 12,901
Fixed assets 908,796 925,380
Total assets 995,120 1,007,305
Revolving credit facility 30,000 35,000
Other debt 192,641 193,602
---------- ----------
Total debt 222,641 228,602
Stockholders' equity $ 680,153 $ 681,014
Quarterly weighted average diluted shares outstanding 46,030 44,737
Book value per quarterly weighted average diluted share $ 14.78 $ 15.22
PRIME HOSPITALITY CORP.
COMPARABLE HOTEL PERFORMANCE SUMMARY
JUNE 30, 2004
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2004 2003 VARIANCE 2004 2003 VARIANCE
---- ---- -------- ---- ---- --------
OWNED AND LEASED HOTELS:
Occupancy 64.5% 69.8% (5.3) pts. 61.1% 64.4% (3.3) pts.
ADR $70.41 $65.16 8.1% $69.86 $65.93 6.0%
REVPAR $45.44 $45.51 (0.2)% $42.67 $42.48 0.5%
SYSTEM-WIDE HOTELS:
AMERISUITES
Occupancy 67.6% 71.0% (3.4) pts. 63.8% 64.6% (0.8) pts.
ADR $71.33 $66.97 6.5% $71.24 $68.66 3.8%
REVPAR $48.23 $47.54 1.4% $45.45 $44.36 2.4%
WELLESLEY INNS & SUITES
Occupancy 62.2% 66.4% (4.2) pts. 60.3% 64.7% (4.4) pts.
ADR $57.91 $54.52 6.2% $59.73 $56.07 6.5%
REVPAR $36.04 $36.18 (0.4)% $36.02 $36.28 (0.7)%
PRIME HOTELS
Occupancy 69.7% 73.6% (3.9) pts. 61.9% 65.3% (3.4) pts.
ADR $116.45 $112.65 3.4% $111.79 $110.01 1.6%
REVPAR $81.20 $82.88 (2.0)% $69.15 $71.88 (3.8)%
NON-PROPRIETARY BRANDS
Occupancy 64.3% 67.0% (2.7) pts. 57.0% 59.7% (2.7) pts.
ADR $110.93 $107.43 3.3% $112.22 $108.83 3.1%
REVPAR $71.28 $72.00 (1.0)% $63.98 $65.00 (1.6)%
PRIME HOSPITALITY CORP.
HOTEL STATISTICS
JUNE 30, 2004
JUNE 2004
---------
# OF # OF
HOTELS ROOMS
------ -----
AMERISUITES
Owned 62 8,024
(1) Managed-Cash Flow Interest 42 5,214
Managed 8 1,077
Franchised 36 4,189
--- ------
Total 148 18,504
WELLESLEY INNS & SUITES
Owned 56 6,901
Managed 6 667
Franchised 19 1,926
--- ------
Total 81 9,494
PRIME HOTELS & RESORTS
Owned 3 595
(1) Managed - Cash Flow Interest 12 2,321
--- ------
Total 15 2,916
NON-PROPRIETARY BRANDS
Owned 2 505
Managed 8 1,521
Joint Venture 2 665
--- ------
Total 12 2,691
TOTAL PORTFOLIO
Owned 123 16,025
Managed - Cash Flow Interest 54 7,535
Managed 22 3,265
Franchised 55 6,115
Joint Venture 2 665
--- ------
Total 256 33,605
Note: 1) The managed-cash flow interest hotels are operated under management
agreements where Prime guarantees a minimum level of cash flow and has
a significant participation in cash flow above the minimum levels.