EXHIBIT 99.1
[FELCOR LODGING TRUST LETTERHEAD]
FOR IMMEDIATE RELEASE:
FELCOR REPORTS FIRST QUARTER 2003 RESULTS
- ANNOUNCES CLOSING OF $150 MILLION OF SECURED FINANCING
IRVING, TEXAS...APRIL 30, 2003 - FelCor Lodging Trust Incorporated
(NYSE: FCH), the nation's second largest hotel real estate investment trust
(REIT), today reported operating results for the first quarter ended March 31,
2003.
FIRST QUARTER RESULTS:
FelCor's first quarter revenues were $307.3 million, which reflected a
decline of 17.5 million, or 5.4 percent, compared to the first quarter in 2002.
The decrease was primarily related to a 5.3 percent decline in the hotel
portfolio's revenue per available room ("RevPAR"). For the quarter, occupancy
decreased 1.2 percent, to 60.0 percent, and average daily rate ("ADR")
decreased 4.1 percent, to $96.92, compared to the same quarter of 2002.
The operating margin for FelCor's hotels during the first quarter 2003
was 29.0 percent, which reflected a 460 basis point decrease, compared to the
same period in 2002. The deterioration in margins principally resulted from the
4.1 percent decline in ADR, coupled with increases in insurance, marketing, and
energy costs for the quarter, compared to first quarter of 2002.
FelCor's first quarter 2003 Funds From Operations ("FFO") was $9.6
million, or $0.15 per share. FFO for the same period last year was $29.3
million, or $0.44 per share. First quarter 2003 Earnings Before Interest,
Taxes, Depreciation, Amortization ("EBITDA") totaled $59.8 million, compared to
$77.2 million for first quarter of 2002. For the quarter, FelCor reported a net
loss of $27.8 million, or a loss of $0.48 per share, compared to a first
quarter 2002 net loss of $12.3 million, or $0.23 per share. The Company's
operating results included a $953,000 gain on the early extinguishment of debt.
"Sustained economic weakness and war-related uncertainties adversely
affected FelCor's and the lodging industry's operating results for the first
quarter. With the effective end of the war in Iraq and the reduction in the
threat advisory level to "yellow" from "orange", we are seeing some recovery in
forward bookings," said Thomas J. Corcoran, Jr., FelCor's President and CEO.
CAPITAL STRUCTURE:
On April 24, 2003, FelCor completed a $150 million non-recourse loan,
at a spread over LIBOR of 250 basis points, which is secured by 10 full service
hotels. The term of the loan is three years with two, one-year extension
options. The proceeds were used to pay off all outstanding borrowings under
FelCor's unsecured line of credit. FelCor also has reduced its line of credit
from $300 million to $150 million in total commitments.
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FelCor Lodging Trust First Quarter 2003 Operating Results
April 30, 2003
Page 2
In April, FelCor announced the refinancing of $16 million of secured
debt that was to mature in late 2003. In the first quarter, FelCor also prepaid
$6 million in secured debt that was scheduled to mature this year. FelCor has
no remaining debt maturing during 2003, other than $11 million in normal
recurring principal payments.
At March 31, 2003, FelCor had $2.0 billion of debt outstanding, and
$156 million in cash and cash equivalents. The weighted average life of
FelCor's debt is six years. The Company's next significant debt maturity is its
$175 million of senior notes that will mature in October 2004. FelCor expects
to meet this obligation from excess cash on hand, future cash flow from
operations, its additional secured debt capacity, and from the proceeds of
non-strategic hotel sales.
"We have strengthened our financial position with the closing on our
previously announced $150 million of secured debt financing, the reduction of
our 2003 maturities, and the pay down of our line of credit. FelCor continues
to hold excess cash and our balance sheet is in good shape," said Richard J.
O'Brien, FelCor's Executive Vice President and Chief Financial Officer.
OTHER HIGHLIGHTS:
FelCor declared and paid first quarter dividends on its $1.95 Series A
Cumulative Convertible Preferred Stock and its 9% Series B Cumulative
Redeemable Preferred Stock.
In February, FelCor announced plans to dispose of 33 non-strategic
hotels over 36 months. These non-strategic hotels generally include smaller
properties in secondary and tertiary locations. FelCor has announced the
selected brokers to market 27 of these hotels. A listing of these hotels
actively being marketed can be found on FelCor's Web site at www.felcor.com on
the `Hotels' page.
In March, FelCor converted an independently branded hotel in Dallas,
Texas, to a Staybridge Suites(R) hotel.
In April, FelCor completed the conversion of the 385-room Hilton
Myrtle Beach Resort, following a $15 million renovation of the former
Wyndham(R)-affiliated property. The resort is located on the ocean at the north
end of Myrtle Beach and is adjacent to FelCor's Kingston Plantation complex,
one of the largest and most comprehensive resort destination properties on the
East Coast.
2003 GUIDANCE:
Due to the uncertainties of the impact of the war in Iraq, heightened
terrorism alerts, SARS and the impact of these events on the nation's economy,
it is difficult to provide meaningful earnings guidance.
Our current estimates for the second quarter and full year 2003 for
recurring operating results, are as follows:
SECOND QUARTER 2003
-------------- ----
RevPAR down 7% to 8% down 3% to 4%
Operating margin decrease 3% to 4% decrease 2.25% to 2.75%
FFO per share $0.34 to $0.42 $0.80 to $0.95
EBITDA $72 to $77 million $252 to $260 million
Net loss per share $0.24 to $0.32 $1.60 to $1.75
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FelCor Lodging Trust First Quarter 2003 Operating Results
April 30, 2003
Page 3
Non-GAAP estimates of FFO and EBITDA are derived from our estimate of
net loss applicable to common shareholders. Estimated FFO per share and unit was
computed by dividing estimated FFO by today's weighted average shares and units
outstanding. Estimated FFO was computed by taking estimated net loss applicable
to common shareholders, adding forecasted depreciation expense ($40 million for
the second quarter and $157 million for the year) and deducting forecasted
minority interest in FelCor LP ($1 million for the second quarter and $5 million
for the year). To derive estimated EBITDA, FelCor started with estimated FFO and
added back interest expense ($43 million for the second quarter and $173 million
for the year), amortization ($0.5 million for the second quarter and $2 million
for the year) and preferred stock dividends ($7 million for the second quarter
and $27 million for the year).
FelCor's estimated RevPAR decline for the month of April is
approximately 10.5 to 11.5 percent. The RevPAR decline is the direct result of
reduced travel during the war in Iraq, the lack of comparability due to the
occurrence of Easter in April 2003, as compared to March in 2002, and the
continued economic softness.
FelCor announced the suspension of its common dividend on February 4,
2003, and does not expect to pay a common dividend during 2003. FelCor's
decision regarding future dividends on its preferred stock will be made
quarterly, based on hotel operating results and its then estimates of the
minimum distributions required to maintain its REIT status.
The Company currently anticipates that its 2003 total capital
expenditures will be between $60 and $70 million.
FelCor has published its First Quarter 2003 Supplemental Information,
which provides additional corporate data, financial highlights and portfolio
statistical data for the quarter ended March 31, 2003. Investors are encouraged
to access the Supplemental Information on the Company's Web site at
www.felcor.com, on its Investor Relations page in the "Financial Reports"
section. The Supplemental Information also will be furnished upon request.
Requests may be made by e-mail to information@felcor.com or by writing to the
Director of Investor Relations, FelCor Lodging Trust Incorporated, 545 E. John
Carpenter Freeway, Suite 1300, Irving, Texas, 75062.
FelCor is the nation's second largest lodging REIT and the nation's
largest owner of full service, all-suite hotels. FelCor's consolidated
portfolio is comprised of 169 hotels, located in 35 states and Canada. FelCor
owns 77 upscale, all-suite hotels, and is the largest owner of Embassy
Suites(R) and Doubletree Guest Suites(R) hotels. FelCor's portfolio also
includes hotels in the upscale and full service segments. FelCor has a current
market capitalization of approximately $2.8 billion. Additional information can
be found on the Company's Web site at www.felcor.com.
FelCor invites you to listen to its first quarter 2003 conference call
on Thursday, May 1, 2003, at 10:00 a.m. (Central Standard Time). The conference
call will be webcast simultaneously via FelCor's Web site at www.felcor.com.
Interested investors and other parties who wish to access the call should go to
FelCor's website and click on the conference call microphone icon on either the
Investor Relations or FelCor News pages. A phone replay will be available from
Thursday, May 1, 2003, at 12:00 p.m. (Central Standard Time), through Friday,
May 30, 2003, at 7:00 p.m. (Central Standard Time), by dialing 416-695-6012
(access code is 2488). A recording of the call also will be archived and
available at www.felcor.com.
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FelCor Lodging Trust First Quarter 2003 Operating Results
April 30, 2003
Page 4
With the exception of historical information, the matters discussed
in this news release include "forward looking statements" within the meaning of
the federal securities laws. Forward looking statements are not guarantees of
future performance. Numerous risks and uncertainties, and the occurrence of
future events, may cause actual results to differ materially from those
currently anticipated. General economic conditions, including the timing and
magnitude of any recovery from the current soft economy, the continuing impact
of the war in Iraq, future acts of terrorism, the impact of SARS on the travel
industry, the availability of capital, the ability to effect sales of
non-strategic hotels at anticipated prices, and numerous other factors may
affect future results, performance and achievements. Certain of these risks and
uncertainties are described in greater detail in our filings with the
Securities and Exchange Commission. Although we believe our current
expectations to be based upon reasonable assumptions, we can give no assurance
that our expectations will be attained or that actual results will not differ
materially.
Contact:
Thomas J. Corcoran, Jr., President and CEO (972) 444-4901 tcorcoran@felcor.com
Richard J. O'Brien, Executive Vice President and CFO (972) 444-4932 robrien@felcor.com
Monica L. Hildebrand, Vice President of Communications (972) 444-4917 mhildebrand@felcor.com
Stephen A. Schafer, Director of Investor Relations (972) 444-4912 sschafer@felcor.com
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FelCor Lodging Trust First Quarter 2003 Operating Results
April 30, 2003
Page 5
RESULTS OF OPERATIONS - THREE MONTHS ENDED
(in thousands, except per share data)
THREE MONTHS
ENDED MARCH 31,
---------------------------
2003 2002
--------- ---------
Revenues:
Hotel operating revenue:
Room $ 242,972 $ 257,230
Food and beverage 47,914 50,691
Other operating departments 16,060 16,219
Retail space rental and other revenue 400 670
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Total revenues 307,346 324,810
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Expenses:
Hotel departmental expenses:
Room 63,464 63,233
Food and beverage 38,939 39,991
Other operating departments 7,516 7,316
Other property related costs 91,824 89,160
Management and franchise fees 16,310 15,648
Taxes, insurance and lease expense 32,533 34,570
Corporate expenses 3,423 3,746
Depreciation 36,107 38,618
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Total operating expenses 290,116 292,282
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Operating income 17,230 32,528
Interest expense, net (40,253) (41,196)
Gain on early extinguishment of debt 953
--------- ---------
Loss before equity in income (loss) from unconsolidated
entities and minority interests (22,070) (8,668)
Equity in income (loss) from unconsolidated entities (148) 1,221
Minority interests 1,127 1,301
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Net loss (21,091) (6,146)
Preferred dividends (6,726) (6,150)
--------- ---------
Net loss applicable to common stockholders $ (27,817) $ (12,296)
========= =========
Basic and diluted per common share data:
Net loss applicable to common stockholders $ (0.48) $ (0.23)
========= =========
Weighted average common shares outstanding 58,532 52,717
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FelCor Lodging Trust First Quarter 2003 Operating Results
April 30, 2003
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RECONCILIATION OF FFO AND EBITDA
(in thousands, except per share and unit data)
THREE MONTHS ENDED
MARCH 31,
-------------------------
2003 2002
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FUNDS FROM OPERATIONS (FFO)
Net loss $(21,091) $ (6,146)
Depreciation 36,107 38,618
Depreciation from unconsolidated entities 2,859 2,178
Preferred dividends:
Series A preferred dividends (2,915) --
Series B preferred dividends (3,811) (3,234)
Minority interest in FelCor LP (1,557) (2,087)
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FFO (a) $ 9,592 $ 29,329
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FFO per common share and unit $ 0.15 $ 0.44
======== ========
Basic and diluted net loss per common share $ (0.48) $ (0.23)
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Weighted average common shares outstanding 58,532 52,717
Weighted average FelCor LP units outstanding 3,289 9,005
Conversion of Series A preferred shares -- 4,636
Conversion of options and stock grants 309 357
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Weighted average common shares and units outstanding 62,130 66,715
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EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (EBITDA)
FFO $ 9,592 $ 29,329
Interest expense 40,628 41,775
Interest expense from unconsolidated entities 2,339 2,359
Amortization expense 516 509
Preferred dividends:
Series A preferred dividends 2,915 --
Series B preferred dividends 3,811 3,234
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EBITDA (a) $ 59,801 $ 77,206
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(a) Includes a $953,000 gain on early extinguishment of debt.
Historical cost accounting for real estate assets implicitly assumes
that the value of real estate assets diminish predictably over time. Since real
estate values instead have historically risen or fallen with market conditions,
most industry investors consider supplemental measurements of performance to be
helpful in evaluating a real estate company's operations. We consider FFO and
EBITDA to be key measures of a REIT's performance and should be considered
along with, but not as an alternative to, net income and cash flow as a measure
of our operating performance.
The White Paper on Funds From Operations approved by the Board of
Governors of the National Association of Real Estate Investment Trusts
("NAREIT") defines FFO as net income or loss (computed in accordance with
generally accepted accounting principles), excluding gains or losses from sales
of property, plus depreciation and amortization, and after adjustments for
unconsolidated partnerships and joint ventures. Adjustments for unconsolidated
partnerships and joint ventures are calculated to reflect funds from operations
on the same basis. We believe that FFO and EBITDA are helpful to investors as a
measure of the performance of an equity REIT. We compute FFO in accordance with
standards established by NAREIT. This may not be comparable to FFO reported by
other REITs that do not define the term in accordance with the current NAREIT
definition, or that interpret the current NAREIT definition differently than we
do.
In the future, to the extent that FelCor's FFO, computed in
accordance with the NAREIT White Paper, contains gains, losses or other charges
that are appropriately identified as non-recurring items, we presently intend
to provide, supplemental adjustments to eliminate such non-recurring items and
to reflect recurring FFO.
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FelCor Lodging Trust First Quarter 2003 Operating Results
April 30, 2003
Page 7
SELECTED BALANCE SHEET DATA
(in thousands)
MARCH 31, DECEMBER 31,
2003 2002
----------- -----------
Investment in hotels, net of accumulated depreciation $ 4,286,018 $ 4,255,618
Accumulated depreciation (819,094) (782,166)
----------- -----------
Investments in hotels $ 3,466,924 $ 3,473,452
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Total cash and cash equivalents $ 155,671 $ 66,542
Total assets 3,872,888 3,780,363
Total debt 2,017,294 1,877,134
Total stockholders' equity $ 1,594,052 $ 1,616,817
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