FORM 10-Q
SECURITIES EXCHANGE COMMISSION
Washington, D.C. 20549
(MARK ONE)
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
JUNE 30, 2000
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
___________ TO __________
Commission File No. 1-6869
PRIME HOSPITALITY CORP.
(Exact name of registrant as specified in its charter)
Delaware 22-2640625
(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
700 Route 46 East, Fairfield, New Jersey 07004
(Address of principal executive offices)
(973) 882-1010
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ----
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes X No
---- ----
The registrant had 45,097,305 shares of common stock, $.01 par value
outstanding, as of August 9, 2000.
PRIME HOSPITALITY CORP. AND SUBSIDIARIES
INDEX
PAGE
PART I. FINANCIAL INFORMATION NUMBER
Item 1. Financial Statements
Consolidated Balance Sheets
December 31, 1999 and June 30, 2000 ............................1
Consolidated Statements of Income
Three and Six Months Ended June 30, 1999 and June 30, 2000 .....2
Consolidated Statements of Cash Flows
Six Months Ended June 30, 1999 and June 30, 2000 ...............3
Notes to Interim Consolidated Financial Statements..................4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations......................9
Item 3. Quantitative and Qualitative
Disclosures About Market Risk......................................17
PART II. OTHER INFORMATION
Item 1. Legal Proceedings..................................................18
Item 2. Changes in Securities and Use of Proceeds..........................18
Item 3. Defaults upon Senior Securities....................................18
Item 4. Submission of Matters to a Vote of Security Holders................18
Item 5. Other Information..................................................19
Item 6. Exhibits and Reports on Form 8-K...................................19
Signatures .................................................................20
PRIME HOSPITALITY CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
December 31, June 30,
1999 2000
-------------------- ---------------------
ASSETS (Unaudited)
------
Current assets:
Cash and cash equivalents ....................................... $7,240 $27,045
Marketable securities available for sale ........................ 8,262 4,831
Accounts receivable, net of reserves ............................ 21,379 28,278
Current portion of mortgages and
notes receivable ............................................ 1,920 4,285
Other current assets ............................................ 16,879 16,622
-------------------- ---------------------
Total current assets ..................................... 55,680 81,061
Property, equipment and leasehold improvements,
net of accumulated depreciation and amortization ................ 1,093,123 1,035,573
Properties held for sale ............................................. 134,596 38,318
Mortgages and notes receivable, net of
current portion ................................................. 11,750 12,228
Other assets ......................................................... 33,630 32,701
-------------------- ---------------------
TOTAL ASSETS ............................................. $1,328,779 $1,199,881
==================== =====================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of debt ......................................... $5,547 $2,021
Current portion of deferred income .............................. 10,322 12,769
Other current liabilities ....................................... 61,225 68,224
-------------------- ---------------------
Total current liabilities ................................ 77,094 83,014
Long-term debt, net of current portion ............................... 543,485 403,818
Other liabilities .................................................... 5,223 7,087
Deferred income ...................................................... 70,977 66,849
-------------------- ---------------------
Total liabilities ........................................ 696,779 560,768
Commitments and contingencies ----- -----
Stockholders' equity:
Preferred stock, par value $.10 per share;
20,000,000 shares authorized; none issued ................... ----- -----
Common stock, par value $.01 per share;
75,000,000 shares authorized; 55,757,340 and 55,792,218 shares issued
and outstanding at December 31, 1999 and June 30, 2000,
respectively ................................................ 557 558
Capital in excess of par value .................................. 519,834 521,638
Retained earnings ............................................... 194,466 229,319
Accumulated other comprehensive loss,
net of taxes ................................................ (2,694) (2,927)
Treasury stock (7,263,578 shares at December 31, 1999
and 10,972,478 shares at June 30, 2000) ..................... (80,163) (109,475)
-------------------- ---------------------
Total stockholders' equity ............................... 632,000 639,113
-------------------- ---------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ............... $1,328,779 $1,199,881
==================== =====================
SEE ACCOMPANYING NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS.
-1-
PRIME HOSPITALITY CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
THREE AND SIX MONTHS ENDED JUNE 30, 1999 AND 2000
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1999 2000 1999 2000
------------ ------------- ------------ ------------
Revenues:
Lodging ...................................................... $125,450 $121,860 $241,763 $242,885
Food and beverage ............................................ 15,761 11,864 28,986 24,971
Management, franchise and other fees ......................... 4,081 6,611 7,106 10,069
Interest on mortgages and
notes receivable .......................................... 729 306 1,465 607
------------ ------------- ------------ ------------
Total revenues ........................................ 146,021 140,641 279,320 278,532
Costs and expenses:
Direct hotel operating expenses:
Lodging ................................................... 31,172 30,884 59,560 62,068
Food and beverage ......................................... 10,556 8,147 19,998 17,397
Selling and general ....................................... 28,559 25,630 58,088 55,883
Occupancy and other operating ................................ 18,653 19,026 36,550 37,613
General and administrative ................................... 7,353 9,120 15,540 17,266
Depreciation and amortization ................................ 12,224 11,083 24,904 21,781
Other charges ................................................ 1,411 -- 3,911 --
------------ ------------- ------------ ------------
Total costs and expenses .............................. 109,928 103,890 218,551 212,008
Operating income .................................................. 36,093 36,751 60,769 66,524
Investment income ................................................. 198 325 721 565
Interest expense .................................................. (10,741) (10,562) (19,383) (23,292)
Other income ...................................................... 1,112 13,481 3,434 13,833
------------ ------------- ------------ ------------
Income before income taxes
and cumulative effect of a change in accounting principle .... 26,662 39,995 45,541 57,630
Provision for income taxes ........................................ 10,398 15,598 17,761 22,476
------------ ------------- ------------ ------------
Income before the cumulative effect of a change in
accounting principle ......................................... 16,264 24,397 27,780 35,154
Cumulative effect of a change in
accounting principle, net of taxes ........................... -- -- (5,315) --
Extraordinary items - loss on discharge
of indebtedness .............................................. -- -- -- (302)
------------ ------------- ------------ ------------
Net income . ...................................................... $ 16,264 $ 24,397 $ 22,465 $ 34,852
============ ============= ============ ============
Earnings per common share:
Basic:
Income before the cumulative effect of a change in
accounting principle ...................................... $ 0.32 $ 0.54 $ 0.54 $ 0.75
Cumulative effect of a change in accounting principle ........ -- -- (0.10) --
Extraordinary items - loss on discharge
of indebtedness ........................................... -- -- -- --
------------ ------------- ------------ ------------
Net earnings. ..................................................... $ 0.32 $ 0.54 $ 0.44 $ 0.75
============ ============= ============ ============
Diluted:
Income before the cumulative effect of a change in
accounting principle ...................................... $ 0.31 $ 0.53 $ 0.52 $ 0.74
Cumulative effect of a change in accounting principle ........ -- -- (0.10) --
Extraordinary items - loss on discharge
of indebtedness ........................................... -- -- -- --
------------ ------------- ------------ ------------
Net earnings ...................................................... $ 0.31 $ 0.53 $ 0.42 $ 0.74
============ ============= ============ ============
SEE ACCOMPANYING NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS.
-2-
PRIME HOSPITALITY CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1999 AND 2000
(IN THOUSANDS)
1999 2000
------------- ------------
Cash flows from operating activities:
Net income ............................................................ $22,465 $34,852
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization ...................................... 24,904 21,781
Extraordinary item - loss on discharge of indebtedness ............. -- 496
Valuation adjustments .............................................. 2,500 --
Amortization of deferred financing costs ........................... 1,553 1,699
Utilization of net operating loss carryforwards .................... 1,660 1,529
Cumulative effect from a change in accounting principle ............ 8,713 --
Net loss (gain) on asset disposals ................................. 564 (13,833)
Deferred income taxes .............................................. 1,955 1,947
Amortization of deferred gain ...................................... (5,014) (4,992)
Increase (decrease) from changes in other operating assets and
liabilities:
Accounts receivable ............................................ (6,116) (6,898)
Other current assets ........................................... 2,842 310
Other liabilities .............................................. (5,124) (777)
------------- ------------
Net cash provided by operating activities ...................... 50,902 36,114
Cash flows from investing activities:
Proceeds from mortgages and notes receivable .......................... 364 184
Disbursements for mortgages and notes receivable ...................... -- (355)
Proceeds from sales of property, equipment and leasehold improvements . 43,041 157,849
Construction of new hotels ............................................ (65,586) (11,271)
Purchases of property, equipment and leasehold improvements ........... (11,707) (8,555)
Decrease in restricted cash ........................................... 5,789 --
Proceeds from sales of marketable securities .......................... 7,725 --
Purchases of marketable securities .................................... (1,652) --
Proceeds from officer's life insurance ................................ 4,706 --
Other ................................................................. (1,420) (2,183)
------------- ------------
Net cash (used in) provided by investing activities ............ (18,740) 135,669
Cash flows from financing activities:
Net proceeds from issuance of debt .................................... 10,000 30,835
Payments of debt ...................................................... (19,918) (153,778)
Proceeds from the exercise of stock options ........................... 3,137 276
Treasury stock purchases .............................................. (26,773) (29,311)
------------- ------------
Net cash (used in) financing activities ........................ (33,554) (151,978)
------------- ------------
Net (decrease) increase in cash and cash equivalents .................. (1,392) 19,805
Cash and cash equivalents at beginning of period ...................... 12,534 7,240
------------- ------------
Cash and cash equivalents at end of period ............................ $11,142 $27,045
============= ============
SUPPLEMENTAL CASH FLOW DISCLOSURES OF NON-CASH ACTIVITIES:
Hotels sold in exchange for assumption of debt ........................ -- $17,364
Note receivable and equity interest received from the sale of hotels .. -- $3,348
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid ......................................................... $19,580 $24,323
Income taxes paid ..................................................... $14,361 $13,698
SEE ACCOMPANYING NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS.
-3-
PRIME HOSPITALITY CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
THREE AND SIX MONTHS ENDED JUNE 30, 1999 AND 2000
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
In the opinion of management, the accompanying interim unaudited
consolidated financial statements of Prime Hospitality Corp. and subsidiaries
(the "Company") contain all material adjustments, consisting of normal recurring
adjustments, necessary to present fairly the financial position of the Company
as of June 30, 2000 and the results of its operations for the three and six
months ended June 30, 1999 and 2000 and cash flows for the six months ended June
30, 1999 and 2000.
The consolidated financial statements for the three and six months
ended June 30, 1999 and 2000 were prepared on a consistent basis with the
audited consolidated financial statements for the year ended December 31, 1999.
Certain reclassifications have been made to the June 30, 1999 consolidated
financial statements to conform them to the June 30, 2000 presentation.
The consolidated results of operations for the three and six months
ended June 30, 2000 are not necessarily indicative of the results to be expected
for the full year. These interim unaudited consolidated financial statements
should be read in conjunction with the audited consolidated financial statements
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1999.
NOTE 2 - ACCOUNTING POLICIES
In June 1999, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 137, amending Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"), which extended the required date of
adoption to fiscal years beginning after June 15, 2000. SFAS 133 establishes
accounting and reporting standards requiring that every derivative instrument
(including certain derivative instruments embedded in other contracts) be
recorded on the balance sheet as either an asset or liability measured at its
fair value. SFAS 133 requires that changes in the derivative's fair value be
recognized currently in earnings unless specific hedge accounting criteria are
met. The Company has not yet quantified the impact of adopting SFAS 133 on its
financial statements, however, the Company expects the impact to be immaterial
due to its limited derivative activity.
In January 1999, the Company adopted Statement of Position 98-5,
"Reporting on the Costs of Start-Up Activities" (SOP 98-5). The Company recorded
a $5.3 million charge, net of taxes, for the cumulative effect of a change in
accounting principle to write off any unamortized pre-opening costs that
remained on the balance sheet at the date of adoption. Additionally, subsequent
to the adoption of this new standard, all future pre-opening costs are expensed
as incurred.
-4-
NOTE 3 - HOTEL DISPOSITIONS
In February 2000, the Company's five remaining HomeGate hotels and the
Company's rights to the HomeGate brand name were sold for approximately $17.7
million, including the assumption of debt by the purchaser of approximately
$17.4 million related to these properties. In accordance with SFAS 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," during the six months ended June 30, 1999, the Company had
reduced the carrying value of the assets by $2.5 million, to reflect the
estimated fair value of the hotels.
In March 2000, the Company sold its Frenchman's Reef hotel in St.
Thomas, U.S.V.I. ("Frenchman's Reef") for $73.0 million. The Company utilized
$40.0 million of the proceeds to retire debt encumbering the hotel and the
remainder was used for the repayment of other debt and the repurchase of the
Company's common stock. Upon repayment of the debt associated with this hotel,
the Company also expensed unamortized deferred financing costs of approximately
$546,000, which is included in extraordinary items, net of income taxes, in the
accompanying consolidated financial statements.
During the six months ended June 30, 2000, the Company sold four
AmeriSuites hotels, for $46.6 million five Wellesley Inns for $25.5 million, one
full-service hotel for $18.2 million and three land parcels for $3.2 million.
The asset sales transactions generated net gains of approximately $13.8
million for the six months ended June 30, 2000, which are included other income,
net in the accompanying consolidated financial statements. The Company also
retained the franchise rights on the four AmeriSuites and five Wellesley Inn
sales under 20 year franchise agreements. In addition, the Company entered into
management agreements on one of the sold AmeriSuites and three of the sold
Wellesley Inns.
NOTE 4 - DEBT
During the six months ended June 30, 2000 the Company retired $15.2
million of its $120 million First Mortgage Notes due 2006 ("First Mortgage
Notes"). Included in the accompanying consolidated financial statements is an
extraordinary gain on the discharge of indebtedness of approximately $51,000
related to this retirement.
NOTE 5 - EARNINGS PER COMMON SHARE
Basic earnings per common share was computed based on the weighted
average number of common shares outstanding during each period. The weighted
average number of common shares used in computing basic earnings per common
share was 51.3 million and 45.1 million for the three months ended June 30, 1999
and 2000, respectively, and 51.8 million and 46.5 million for the six months
ended June 30, 1999 and 2000, respectively.
-5-
Diluted earnings per common share reflect adjustments to basic earnings
per common share for the dilutive effect of stock options. The weighted average
number of common shares used in computing diluted earnings per common share was
53.0 million and 45.9 million for the three months ended June 30, 1999 and 2000,
respectively, and 53.3 million and 47.2 million for the six months ended June
30, 1999 and 2000, respectively.
NOTE 6 - TREASURY STOCK
Under its stock repurchase program, the Company purchased approximately
3.7 million shares of its common stock during the six months ended June 30, 2000
for $29.3 million for a total average cost of $7.90 per share. The Company's
$200 Million Revolving Credit Facility (the "Revolving Credit Facility"), allows
for stock repurchases equal to 50% of net proceeds from asset sales with
repurchases not to exceed $100.0 million. As of August 10, 2000, the Company has
repurchased $32.1 million of its shares under this covenant and has $24.8
million of availability based on the proceeds from asset sales.
NOTE 7 - INTEREST EXPENSE
The Company capitalizes interest related to borrowings used to finance
hotel construction. Capitalized interest was approximately $3.1 million and
$559,000 for the three months ended June 30, 1999 and 2000, respectively, and
$8.5 million and $1.0 million for the six months ended June 30, 1999 and 2000,
respectively. Also included in interest expense is the amortization of deferred
financing fees of $788,000 and $835,000 for the three months ended June 30, 1999
and 2000, respectively, and $1.6 million and $1.7 million for the six months
ended June 30, 1999 and 2000, respectively.
Note 8 - Comprehensive Income
For the three and six months ended June 30, 1999 and 2000,
comprehensive income consisted of the following (in thousands):
Three Months Ended Six Months Ended
June 30, June 30,
1999 2000 1999 2000
----------- ----------- ------------ ----------
Net income $16,264 $24,397 $22,465 $34,852
Unrealized gain (loss) on
marketable securities available for
sale, net of income taxes 709 (235) (2,049) (233)
----------- ----------- ------------ ----------
Total $16,973 $24,162 $20,416 $34,619
=========== =========== ============ ==========
Note 9 - Geographic and Business Information
The Company's hotels currently service three major lodging industry
segments: the all-suites segment, under its AmeriSuites brand; the
limited-service segment, primarily under its Wellesley Inn & Suites brand; and
the full-service segment under major national franchises. The Company's 101
AmeriSuites are upscale hotels located in 30 states throughout the United
States. The 66 Wellesley Inn & Suites ("Wellesley Inn") hotels compete in the
mid-price
-6-
segment, and are primarily located in the Northeast, Texas and Florida regions
of the United States. The Company's full-service hotels are primarily located in
the northeastern region of the United States. On November 1, 1999, the Company
converted 38 of its 43 extended-stay HomeGate hotels into its limited-service
Wellesley Inn & Suites brand. The conversion changed the customer base from
extended-stay to transient. In March 2000, the Company sold the remaining five
HomeGate hotels and its rights to the HomeGate brand name and no longer operates
in the extended-stay segment. As a result, segment information for the prior
period has been restated to conform to this change.
The Company evaluates the performance of its segments based primarily
on earnings before interest, taxes and depreciation and amortization ("Hotel
EBITDA") generated by the operations of its owned hotels. Interest expense is
primarily related to debt incurred by the Company through its corporate
obligations and collateralized by certain of its hotel properties. The Company
files a consolidated Federal income tax return and therefore taxes are allocated
based upon the relative contribution to the Company's consolidated taxable
income/losses and changes in temporary differences. The allocation of interest
expense and taxes is not evaluated at the segment level and is not believed to
be material to these consolidated statements. The difference between segment
data and consolidated financial information relates to corporate activity not
specific to the Company's reportable segments.
The following table presents revenues and other financial information
for the owned hotels by business segment for the three and six months ended June
30, 1999 and 2000 (in thousands):
Three Months Ended June 30, 1999 All-suites Limited-Service Full-Service Consolidated
- -------------------------------- ---------- --------------- ------------ ------------
Revenues (1)......................... $63,623 $26,580 $51,008 $141,211
Hotel EBITDA (2)..................... 25,717 10,660 14,130 50,507
Depreciation and amortization........ 5,830 3,394 2,786 12,010
Capital expenditures................. 15,631 8,302 2,988 26,921
Total Assets......................... 643,402 429,841 216,221 1,289,464
- -------------------------------------
Three Months Ended June 30, 2000 All-suites Limited-Service Full-Service Consolidated
- --------------------------------- ---------- --------------- ------------ ------------
Revenues (1)......................... $61,499 $28,637 $43,588 $133,724
Hotel EBITDA (2)..................... 22,961 11,598 12,253 46,812
Depreciation and amortization........ 5,215 3,488 2,126 10,829
Capital expenditures................. 5,788 1,805 963 8,556
Total Assets......................... 548,899 393,681 119,885 1,062,465
Six Months Ended June 30, 1999 All-suites Limited-Service Full-Service Consolidated
- ------------------------------ ---------- --------------- ------------ ------------
Revenues (1)......................... $120,805 $53,153 $96,791 $270,749
Hotel EBITDA (2)..................... 46,816 22,534 25,658 95,008
Depreciation and amortization........ 11,580 6,806 6,091 24,477
Capital expenditures................. 42,484 27,564 4,796 74,844
Total Assets......................... 643,402 429,841 216,221 1,289,464
- -------------------------------------
Six Months Ended June 30, 2000 All-suites Limited-Service Full-Service Consolidated
- ------------------------------- ---------- --------------- ------------ ------------
Revenues (1)......................... $119,356 $58,587 $89,913 $267,856
Hotel EBITDA (2)..................... 43,217 23,882 22,212 89,311
Depreciation and amortization........ 10,161 6,739 4,359 21,259
Capital expenditures................. 11,065 4,119 3,027 18,211
Total Assets......................... 548,899 393,681 119,885 1,062,465
((1))Revenues represent lodging and food & beverage related revenues, only.
((2))Hotel EBITDA represents earnings before interest, income taxes,
depreciation and amortization from the hotels.
-7-
NOTE 10 - SUBSEQUENT EVENTS
In July 2000, the Company sold one Wellesley Inn hotel located in
Orlando, FL for $3.3 million. In addition, the Company will receive franchise
fees under a 20-year franchise agreement.
In July 2000, the Company acquired the leasehold interests on 27 Sumner
Suites hotels from Sholodge, Inc. ("Sholodge") with the intention of converting
them to AmeriSuites. In addition, three additional AmeriSuites will be built,
two of which will be funded by Sholodge and one by Prime. The hotels are located
in 12 states primarily in the Southeast, Midwest and Southwest regions of the
United States and have an average age of approximately three years. Prime will
operate the hotels as Sumner Suites until the conversion date which is projected
to be November 1. The transaction increases the AmeriSuites brand by 30% over
its current level.
-8-
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
GENERAL
Prime Hospitality Corp. ("Prime" or "the Company") is an owner,
operator, manager and franchisor of hotels, with 231 hotels in operation
containing 29,879 rooms located in 33 states (the "Portfolio") as of August 10,
2000. Prime controls two hotel brands -- AmeriSuites (R) and Wellesley Inn &
Suites (R) -- as well as a portfolio of upscale, full-service hotels operated
under franchise agreements with national hotel chains. As of August 10, 2000,
the Company owned and operated 142 hotels (the "Owned Hotels"), operated 52
hotels under lease agreements with real estate investment trusts (the "Leased
Hotels"), managed 20 hotels for third parties (the "Managed Hotels"), and
franchised 17 hotels which it does not operate (the "Franchised Hotels").
Included in the Portfolio are 36 AmeriSuites and six Wellesley Inn & Suites
hotels owned by third parties, operated pursuant to franchise agreements, 25 of
which are operated by Prime under lease or management agreements. Prime's
portfolio consists primarily of new, well-maintained hotels, with an average age
of approximately 7 years.
The Company's strategy is to develop its proprietary AmeriSuites and
Wellesley Inn & Suites brands primarily through franchising. The Company
currently has 101 AmeriSuites and 66 Wellesley Inn & Suites in operation.
Through the development of its proprietary brands, the Company is transforming
itself from an owner/operator into a franchisor and manager and has positioned
itself to generate additional revenues with minimal capital investment. In
addition to the current 36 franchised AmeriSuites and 6 franchised Wellesley Inn
& Suites, the Company currently has 62 executed franchise agreements for new
AmeriSuites to be built. In 2000, the first four franchisee constructed
AmeriSuites were opened. All other franchise agreements related to opened hotels
were generated pursuant to asset sales.
Prime's strategy is also focused on growing the operating profits of
its Portfolio. With over 200 hotels in operation, Prime believes it possesses
the hotel management expertise to maximize the profitability and value of its
hotel assets.
On November 1, 1999, the Company converted 38 of its 43 extended-stay
HomeGate hotels into its limited-service Wellesley Inn & Suites brand. In 2000,
the Company sold the remaining five HomeGate hotels and the Company's rights to
the HomeGate brand name. The conversion changed the hotels' customer base from
extended-stay to transient. The Company believes this will enhance the value of
its existing hotels, create efficiencies by adding critical mass to the chain
and improve its franchising prospects for the Wellesley Inn & Suites brand. For
the first six months of 2000, revenue per available room (REVPAR) increased by
4.4% over the comparable period of the prior year for the hotel.
-9-
In July 2000, the Company acquired the leasehold interests on 27 Sumner
Suites hotels from Sholodge, Inc. ("Sholodge") with the intention of converting
them to AmeriSuites. In addition, three additional AmeriSuites will be built,
two of which will be funded by Sholodge and one by Prime. The hotels are located
in 12 states primarily in the Southeast, Midwest and Southwest regions of the
United States and have an average age of approximately three years. Prime will
operate the hotels as Sumner Suites until the conversion date which is projected
to be November 1. The transaction increases the AmeriSuites brand by 30% over
its current level.
For the three months ended June 30, 2000, net income increased by 50.0%
from $16.3 million in 1999 to $24.4 million for the same three-month period in
2000. These results were impacted by the effect of hotel divestitures, reserves
and other charges and capitalized interest. Earnings before asset transactions
and other charges for the three months ended June 30, 2000 grew by 49.7% over
the same three-month period in the prior year to $24.4 million.
The Company's earnings before interest, taxes and depreciation and
amortization ("EBITDA") decreased by 3.8% to $47.8 million for the three months
ended June 30, 2000. Hotel EBITDA also decreased by 7.3% to $46.8 million during
the same three-month period. The decreases are attributable to the Company's
continual effort to divest of its hotel assets, utilizing the proceeds from such
sales to reduce its existing debt and repurchase its outstanding shares of
common stock.
Excluding the impact from hotel divestitures in the past year, revenues
grew over the same three and six-month periods in the prior year by 10.0% and
10.7%, respectively. Hotel EBITDA also grew during the same periods by 9.6% and
10.7%, respectively. EBITDA represents earnings before extraordinary items,
interest, taxes, depreciation and amortization. Hotel EBITDA represents EBITDA
generated from the operations of Owned Hotels. Hotel EBITDA excludes management
fee income, interest income from mortgages and notes receivable, general and
administrative expenses and other revenues and expenses, which do not directly
relate to the operations of Owned Hotels.
The Company's hotels operate in three segments of the industry: the
upscale all-suites segment, under the Company's proprietary AmeriSuites brand
and the mid-price limited-service segment, primarily under the Company's
proprietary Wellesley Inn & Suites brand; the upscale full-service segment,
under major national franchises. The following table illustrates the Hotel
EBITDA contribution from each segment (in thousands) for the three and six
months ended June 30, 1999 and 2000:
Three Months Ended June 30, Six Months Ended June 30,
-------------------------------------------- ---------------------------------------------
1999 2000 1999 2000
-------------------- --------------------- --------------------- ---------------------
% Of % Of % Of % Of
Amount Total Amount Total Amount Total Amount Total
--------- -------- --------- --------- --------- --------- --------- ---------
All-suites $25,717 50.9% $22,961 49.0% $46,816 49.3% $43,217 48.4%
Limited-service 10,660 21.1% 11,598 24.8% 22,534 23.7% 23,882 26.7%
Full-service 14,130 28.0% 12,253 26.2% 25,658 27.0% 22,212 24.9%
------- ----- ------- ----- ------- ----- ------- ---
$50,507 100.0% $46,812 100.0% $95,008 100.0% $89,311 100.0%
Total ======= ===== ======= ===== ======= ===== ======= =====
Hotel EBITDA reflects the growth of the Company's proprietary brands.
The Company expects the relative contribution from its proprietary brands to
continue to increase.
-10-
The Company evaluates the performance of its segments based primarily
on EBITDA generated by the operations of its hotels. EBITDA and Hotel EBITDA are
not measures of financial performance under accounting principles generally
accepted in the United States and should not be considered as alternatives to
net income as an indicator of the Company's operating performance or as
alternatives to cash flows as a measure of liquidity.
Certain statements in this Form 10-Q constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other important factors that could cause the actual results, performance or
achievements of the Company, or industry results, to differ materially from any
future results, performance or achievements expressed or implied by such
forward-looking statements.
Forward-looking statements include the information about Prime's
possible or assumed future results of operations and statements preceded by,
followed by or that include the words "believe," "except," "anticipate,"
"intend," "plan," "estimate," or similar expressions, or the negative thereof.
Actual results may differ materially from those expressed in these
forward-looking statements. Readers of this Form 10-Q are cautioned not to
unduly rely on any forward-looking statements.
The following important factors, in addition to those discussed
elsewhere in this Form 10-Q or incorporated herein by reference, could cause
results to differ materially from those expressed in such forward-looking
statements: competition within each of the Company's business segments in areas
such as access, location, quality or accommodations and room rate structures;
the balance between supply of and demand for hotel rooms and accommodations; the
Company's continued ability to obtain new operating contracts and franchise
agreements; the Company's ability to develop and maintain positive relations
with current and potential hotel owners and other industry participants; the
level of rates and occupancy that can be achieved by such properties and the
availability and terms of financing; changes in travel patterns, taxes and
government regulations which influence or determine wages, prices, construction
procedures and costs; the effect of national and regional economic conditions
that will affect, among other things, demand for products and services at the
Company's hotels; government approvals, actions and initiatives including the
need for compliance with environmental and safety requirements, and change in
laws and regulations or the interpretation thereof and the potential effects of
tax legislative action; and other risks described from time to time in the
Company's filings with the SEC.
Although the Company believes the expectations reflected in these
forward-looking statements are based upon reasonable assumptions, no assurance
can be given that Prime will attain these expectations or that any deviations
will not be material. Except as otherwise required by the federal securities
laws, the Company disclaims any obligation or undertaking to disseminate any
updates or revisions to any forward-looking statement contained herein to
reflect any change in its expectations with regard thereto or any change in
events, conditions or circumstances on which any such statement is based.
-11-
RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1999 COMPARED
TO THE THREE AND SIX MONTHS ENDED JUNE 30, 2000
Lodging revenues, which include room revenues and other related
revenues such as telephone and vending, decreased by $3.6 million, or 2.9%, for
the three months ended June 30, 2000, as compared to the same period in 1999.
The decrease was primarily due to loss revenues attributed to the disposal of 22
properties sold subsequent to June 30, 1999. Incremental revenues of $5.6
million from new and the converted Wellesley Inn & Suites hotels and higher
revenues for comparable Owned Hotels, which increased by $3.5 million, or 5.0%,
offset this decrease. Lodging revenues for the six months ended June 30, 2000
increased by $1.1 million or .5%, as compared to the same period in 1999.
Lodging revenues for the six months ended June 30, 2000 increased due to
incremental revenues of $14.1 million from new and converted hotels and higher
revenues from comparable Owned Hotels, which increased by $5.0 million, or 4.0%.
Revenues associated with hotels sold subsequent to June 30, 1999 offset this
increase.
The following table sets forth hotel operating data for the comparable
Owned Hotels for the three and six months ended June 30, 2000 as compared to the
same period in 1999, by product type:
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
1999 2000 %Change 1999 2000 %Change
---- ---- ------- ---- ---- -------
AMERISUITES
OCCUPANCY 68.4% 72.4% 66.4% 70.0%
ADR $82.60 $81.69 $82.99 $81.95
REVPAR $56.50 $59.14 4.7% $55.08 $57.33 4.1%
FULL-SERVICE
OCCUPANCY 76.7% 79.0% 68.3% 70.5%
ADR $105.29 $110.50 $104.43 $108.24
REVPAR $80.81 $87.26 8.0% $71.27 $76.36 7.1%
WELLESLEY INN
OCCUPANCY 75.3% 74.2% 75.1% 72.8%
ADR $55.81 $58.51 $62.66 $65.19
REVPAR $42.04 $43.41 3.2% $47.07 $47.48 .9%
TOTAL
OCCUPANCY 71.0% 73.9% 68.2% 70.5%
ADR $81.58 $82.69 $82.52 $83.32
REVPAR $57.93 $61.07 5.4% $56.29 $58.75 4.4%
-12-
The improvements in REVPAR at comparable Owned Hotels were generated by
higher occupancy percentages, which rose by approximately 4.1% and 3.4%, for the
three and six month periods, respectively, and ADR growth of 1.4% and 1.0% for
the three and six month periods, respectively. The REVPAR increases reflect the
growing recognition of the AmeriSuites and Wellesley brands and favorable
industry trends in the Northeast where the full-service hotels are located.
The Company's 38 Wellesley Inn & Suites, which were converted from the
HomeGate brand and are classified as non-comparable, achieved a 64.7% and 61.7%
occupancy rate, respectively, and a $59.31 and $59.71 ADR, respectively for the
three and six months ended June 30, 2000, which reflects a 24.0% and 17.3%
increase from the comparable periods of 1999.
Food and beverage revenues for the three and six months ended June 30,
2000 decreased by $3.9 million and $4.0 million, or 24.7% and 13.8%,
respectively, as compared to the same period in the prior year primarily due to
the sale of the Frenchman's Reef Marriott hotel, which was sold on March 15,
2000. Food and beverage revenues at comparable hotels for the three month period
decreased slightly due to renovations at two restaurants, while food and
beverage revenues at comparable hotels for the six-month period increased by
$300,000, or 2.6%, to $11.8 million, due to increased banquet business.
Management, franchise and other fees consists primarily of base,
incentive and other fees earned under management agreements, royalty fees earned
under franchise agreements, sales commissions earned by the Company's national
sales group and rental income. Management, franchise and other fees increased by
$2.5 million and $3.0 million, or 62.0% and 41.7%, respectively, for the three
and six months ended June 30, 2000 as compared to the same period in 1999, due
to additional Managed and Franchised Hotels.
Interest on mortgages and notes receivable primarily relates to
mortgages secured by certain Managed Hotels. Interest on mortgages and notes
receivable decreased by $423,000 and $858,000, respectively, for the three and
six months ended June 30, 2000 as compared to the same period in 1999 due to the
settlement of various cash flow notes during 1999.
Direct lodging expenses decreased by $288,000, or .9%, for the three
months ended June 30, 2000, as compared to the same period in 1999, due
primarily to hotel divestitures. For the six months ended June 30, 2000, direct
lodging expenses increased by $2.5 million, or 4.2%, as compared to the same
period in 1999. As a percentage of lodging revenue, direct lodging expenses also
increased from 24.8% to 25.3% and from 24.6% to 25.6% for the three and
six-month periods, respectively. The increases are primarily due to higher
travel agent commissions and hotel payroll costs, particularly at the staff
level.
Direct food and beverage expenses for the three and six months ended
June 30, 2000 decreased by $2.4 million and $2.6 million, or 22.8% and 13.0%,
respectively, as compared to the same period in 1999, due primarily to the sale
of the Frenchman's Reef. As a percentage of food and beverage revenues, direct
food and beverage expenses increased from 67.0% to 68.7% for the three-month
period and from 69.0% to 69.7% for the six-month period as compared to the
-13-
same periods in the prior year. The increases were attributed to the higher
margins at the Frenchman's Reef.
Direct hotel selling and general expenses consist primarily of hotel
expenses for Owned Hotels, which are not specifically allocated to rooms or food
and beverage activities, such as administration, selling and advertising,
utilities, repairs and maintenance. Direct hotel selling and general expenses
decreased by $2.9 million and $2.2 million, or 10.3% and 3.8%, respectively, for
the three and six months ended June 30, 2000, as compared to the same periods in
1999, due primarily to hotel divestitures. As a percentage of hotel revenues
(defined as lodging and food and beverage revenues), direct hotel selling and
general expenses decreased slightly from 20.2% to 19.2% for the three-month
period and from 21.5% to 20.9% for the six-month period due to lower liability
insurance costs.
Occupancy and other operating expenses consist primarily of property
insurance, real estate and other taxes and rent expense. Occupancy and other
operating expenses for the three and six months ended June 30, 2000 increased by
$373,000 and $1.1 million or 2.0% and 2.9%, respectively, as compared to the
same period in 1999 due to percentage rent at the Leased Hotel.
General and administrative expenses consist primarily of centralized
management expenses such as operations management, sales and marketing, finance
and hotel support services associated with operating the Owned, Leased and
Managed Hotels and general corporate expenses. General and administrative
expenses increased by $1.8 million and $1.7 million, or 24.0% and 11.1%,
respectively, for the three and six months ended June 30, 2000 as compared to
the same period in 1999, primarily due to increased advertising and other costs
associated with the Company's franchising efforts.
Depreciation and amortization expense decreased by $1.1 million and
$3.1 million, or 9.3% and 12.5%, respectively, for the three and six months
ended June 30, 2000 as compared to the same period in 1999 due to asset
dispositions.
Valuations and other charges for the six months ended June 30, 1999
consisted of a $2.5 million valuation reserve related to certain non-prototype
HomeGate hotels. In accordance with SFAS 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of," in 1999, the
Company reduced the carrying value of the assets to reflect the estimated fair
value of the hotels and subsequently sold the assets in 2000.
Investment income increased by $127,000, or 64.0%, for the three months
ended June 30, 2000 as compared to the same period in 1999, due to an overall
increase in the Company's weighted average cash balances due to proceeds from
the increased number of hotel divestitures during the three-month period.
Investment income for the six months ended June 30, 2000 decreased by $156,000
due to an overall decrease in the Company's weighted average cash balances due
to the Company's utilization of its proceeds from its hotel divestitures to
reduce its debt balance and repurchase its common stock.
Interest expense decreased by $179,000, or 1.7%, for the three months
ended June 30, 2000 as compared to the same period in 1999, primarily due to a
lower weighted average debt
-14-
balance offset by a reduction in the amount of interest capitalized during the
three-month period as compared to the same period in 1999. Interest expense
increased by $3.9 million or 20.2% for the six months ended June 30, 2000 as
compared to the same period in 1999 primarily due to a reduction in the amount
of interest capitalized. Capitalized interest decreased from $3.1 million to
$500,000 for the three-month period ended June 30, 1999 and 2000, respectively,
and from $8.5 million to $1.0 million for the six-month period ended June 30,
2000, respectively.
Other income, net consists of income and losses from property
transactions and other asset sales and retirements. For the three and six months
ended June 30, 2000, other income, net consisted of $13.5 and $13.8 million,
respectively, related to net gains on property transactions. For the three
months ended June 30, 1999, other income, net consisted of $1.1 million related
to net gains on property transactions. For the six months ended June 30, 1999,
other income, net consisted of net gains on property transactions of $4.2
million, losses on the sales of marketable securities of $4.8 million and income
from a contract termination fee of $4.0 million.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2000, the Company had cash, cash equivalents and current
marketable securities of $31.9 million. In addition, at June 30, 2000, the
Company had $92.1 million available under the Revolving Credit Facility.
The Company's major sources of cash for the six months ended June 30,
2000 were net proceeds from the sales of hotels of $157.8 million, borrowings of
$30.8 million and cash flow from operations of $36.1 million. The Company's
principal uses of cash during the period were $153.8 million of debt repayments,
primarily related to the Revolving Credit Facility and the retirement of debt
related to the Frenchman's Reef, repurchases of its common stock totaling $29.3
million and capital expenditures of $19.8 million.
For the six months ended June 30, 1999 and 2000, cash flow from
operations was positively impacted by the utilization of net operating loss
carry forwards ("NOLs") of $1.7 million and $1.5 million, respectively. At June
30, 2000, the Company had federal NOLs relating primarily to its predecessor,
Prime Motor Inns, Inc., of approximately $56.8 million, which are subject to
annual utilization limitations and will expire in 2006.
SOURCES OF CAPITAL. The Company has undertaken a strategic initiative to dispose
of certain hotel real estate while retaining the franchise rights and to invest
the proceeds in the growth of its proprietary brands, the repurchase of the
Company's common stock or the reduction of debt.
During the six months ended June 30, 2000, the Company sold the
Frenchman's Reef hotel for $73.0 million, the remaining five HomeGate hotels and
all rights to the HomeGate brand name for $17.7 million, four AmeriSuites for
$46.6 million, five Wellesley Inn and Suites for $25.3 million and one full
service property for $18.2 million. The Company also sold three land parcels for
$3.2 million. Subsequent to June 30, 2000, the Company sold one Wellesley Inn
and Suites for $3.3 million.
-15-
The Company has a $200.0 million Revolving Credit Facility, which bears
interest at LIBOR plus 2%. The facility is available through 2001 and may be
extended for an additional year. The aggregate amount of the Revolving Credit
Facility will be reduced to $175.0 million in December 2000 and to $125.0
million in December 2001. Borrowings under the facility are secured by first
liens on certain of the Company's hotels with recourse to the Company.
Additional properties may be added subject to the approval of the lenders.
Availability under the facility is subject to a borrowing base test and certain
other covenants. During the six months ended June 30, 2000, the Company had
gross borrowings of $31.0 million related to this facility. During the six
months ended, June 30, 2000, the Company had reduced the outstanding borrowings
related to this facility from $125 million to $59.0 million with further
availability of $92.1 million.
The Revolving Credit Facility contains covenants requiring the Company
to maintain certain financial ratios and limitations on the incurrence of debt,
liens, dividend payments, stock repurchases, certain investments, transactions
with affiliates, asset sales, mergers and consolidations and any change of
control of the Company. In October 1999, the Revolving Credit Facility was
amended to allow an additional $100.0 million of share repurchases to be funded
by 50% of the proceeds from asset sales. In April 2000, the Revolving Credit
Facility was amended to allow for additional retirements of other debt owed by
the Company.
USES OF CAPITAL. The Company utilized the proceeds from asset sales along with
its cash flow from operations, to reduce its debt balance during the year by
$143.2 million to $405.8 million at June 30, 2000. This reduction of debt was
primarily comprised of the gross payments or transfers of $62.0 million of
mortgage debt on assets sold, the reduction in outstanding the Revolving Credit
Facility debt of $97.0 million and the retirement of $15.3 million of the
Company's $120 million First Mortgage Notes due 2006 ("First Mortgage Notes").
The Company had repurchased $12.2 million of these notes during the first
quarter ended June 30, 2000 at a purchase price, which approximated the par
value of the notes. In December 1999, the Company had repurchased $3.1 million
of these notes for a purchase price of $3.0 million and subsequently retired
these notes during 2000. Gross borrowing related to the Revolving Credit
Facility of $31.0 million offset the reductions.
The Company also purchased approximately 3.7 million shares of its
common stock during the six months ended June 30, 2000 for $29.3 million at a
total average cost of $7.90 per share. The purchases of these shares are limited
by the Revolving Credit Facility to 50% of the proceeds from asset sales not to
exceed $100 million. As of August 10, 2000, the Company has repurchased $32.1
million of its shares under this covenant and has $24.8 million of availability
based on the proceeds from asset sales.
The Company intends to continue the growth of its brands primarily
through franchising and therefore, its corporate development will be limited.
The Company spent $11.3 million during the six months ended June 30, 2000 on
development spending and plans to spend an additional $20.0 million on five new
AmeriSuites during the remainder of 2000. In addition, during the six months
ended June 30, 2000, the Company also spent approximately $8.6 million on
capital improvements at its Owned Hotels and expects to spend an additional
$10-12 million on its Owned Hotels during the remainder of the year. This
spending will include the conversion
-16-
of three limited-service hotels to Wellesley Inn & Suites and approximately $2.5
million for the conversion of the 27 Sumner Suites to the AmeriSuites brand. The
Company plans to fund its corporate development and capital improvements with
internally generated cash flow.
In order to facilitate future tax-deferred exchanges of hotel
properties, the Company from time to time enters into arrangements with an
unaffiliated third party under Section 1031 of the Internal Revenue Code of
1986, as amended. As of June 30, 2000 , the Company had advances of
approximately $143.8 million to such third party, which advances are classified
as property, equipment and leasehold improvements in the Company's accompanying
financial statements.
YEAR 2000 READINESS. In prior years, the Company discussed the nature and
progress of its plans to become Year 2000 ready. In late 1999, the Company
completed its remediation and testing of systems. As a result of those planning
and implementation efforts, the Company experienced no significant disruptions
in mission critical information technology and non-information technology
systems and believes those systems successfully responded to the Year 2000 date
change. The Company expensed approximately $1.0 million during 1999 in
connection with remediating its systems. The Company is not aware of any
material problems resulting from year 2000 issues, either with its products, its
internal systems, or the products and services of third parties. The Company
will continue to monitor its mission critical computer applications and those of
its suppliers and vendors throughout the year 2000, and will work to promptly
address any latent year 2000 matters that may arise.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to changes in interest rates primarily from its floating
rate debt arrangements. A hypothetical 100 basis point adverse move (increase)
in interest rates along the entire rate curve would adversey affect the
Company's annual interest cost by approximately $762,000 annually.
In October 1999, the Company entered into an interest rate protection agreement
with a major financial institution which reduces the Company's exposure to
fluctuations in interest rates by effectively fixing interest rates on $40.0
million of variable interest rate debt. Under the agreement, on a monthly basis
the Company pays a fixed rate of interest of 6.03% and receives a floatinig
interest rate payment equal to the 30 day LIBOR rate on a $40.0 million notional
principal amount. The agreement commenced in October 1999 and expires in October
2001.
-17-
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is involved in certain legal proceedings incidental to the
normal conduct of its business. The company does not believe that any
liabilities relating to any of the legal proceedings to which it is a party are
likely to be, individually or in the aggregate, material to its consolidated
financial position or results of operations.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its annual meeting of stockholders on May 23, 2000
(the "Annual Meeting"). The Company's stockholders were asked to take the
following actions at the meeting:
(1) Elect three Class II Directors to serve until the 2003 annual
meeting of stockholders or until their successors shall otherwise
be elected (the "Board Proposal"); and
(2) To ratify the Board of Directors selection of Ernst & Young to
serve as the Company's independent auditors for the fiscal year
ending December 31, 2000 (the "Ratification");
With respect to the Board Proposal, the three individuals nominated for director
were all elected by the affirmative vote of a majority of shares of common stock
present at the Annual Meeting. The nominees and the votes received by each are
as follows:
FOR WITHHELD
--- --------
Herbert Lust, II 43,004,049 576,093
Jack H. Nusbaum 43,010,229 569,913
Lawrence N. Friedland 43,005,185 574,957
With respect to the Ratification, Ernst & Young LLP was elected by the
affirmative vote of a majority of shares of common stock present at the Annual
Meeting. The votes received were as follows:
FOR WITHHELD ABSTAIN
--- -------- -------
43,540,842 31,650 7,650
-18-
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 11 Computation of Earnings Per Share
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K
None.
-19-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PRIME HOSPITALITY CORP.
Date: August 14, 2000 By: /s/ A.F. Petrocelli
-----------------------------
A.F. Petrocelli
President and Chief Executive
Officer
Date: August 14, 2000 By: /s/ Douglas Vicari
-----------------------------
Douglas Vicari
Senior Vice President and Chief
Financial Officer
-20-