Press Release: Prime Hospitality Corporation
August 3, 2000
FAIRFIELD, NJ -- Prime Hospitality Corp. (NYSE: PDQ) yesterday reported net income of $24.4 million, or $.53 per
share, in the second quarter of 2000 compared to net income of $16.3 million, or $.31 per share, in the same period
of 1999. Earnings per share before asset transactions grew by 13% to $.35 per share for the 2000-quarter versus
$.31 per share in the prior year's quarter.
``We are very pleased with our second quarter results'', said A.F. Petrocelli, chairman and CEO of Prime. ``Our
operating performance was strong across all our segments, with comparable REVPAR rising by 5.4%. In addition, our
conversion of 38 hotels to the Wellesley Inn & Suites brand has been a success thus far, with REVPAR growing
by 24% over the past year. We also made significant progress in accelerating the growth of our AmeriSuites brand.
We will be adding 30 AmeriSuites through the conversion of the Sumner Suites brand and we have another 62 AmeriSuites
to be built under executed franchise agreements.''
``In addition to the positive operating trends, we also continue to strengthen our financial picture,'' said Petrocelli.
``We generated $85 million in asset sale proceeds in the quarter bringing our total sales to $187 million this
year. With these proceeds, we have reduced our debt this year by almost $150 million and purchased 3.7 million
shares. Our debt to capitalization ratio is now at 39%, among the lowest in the industry.''
For the quarter, revenues were $140.6 million and earnings before interest, taxes, depreciation and amortization
(EBITDA) was $47.8 million. Excluding the impact of the hotels divested in the past year, revenues and EBITDA each
grew by approximately 10%. The Company also generated gains from property transactions of $13.5 million in the
quarter.
For the six months ended June 30, 2000, net income was $34.9 million, or $.74 per share, as compared to $22.5 million,
or $.42 per share, in the same period of the prior year. Income before property transactions and special charges
was $.57 per share in 2000 versus $.53 per share in 1999. Non-recurring charges for the first six months of 2000
were comprised of gains on asset sales of $.17 per share. For the first six months of 1999, non-recurring items
were comprised primarily of a loss of $.10 per share due to a change in accounting principle related to the write-off
of start-up costs.
Hotel Operations:
Prime's comparable owned hotels achieved a 5.4% revenue per available room (REVPAR) growth rate over the same quarter
in 1999. The comparable owned AmeriSuites hotels generated a 4.7% REVPAR increase, as occupancy advanced by four
percentage points to 72.4% and average daily rate (``ADR'') decreased by 1.1% to $81.69. The comparable owned full-service
hotels achieved an 8.0% REVPAR increase over the same quarter in 1999, as occupancy increased by two percentage
points to 79.0% and ADR increased by 4.9% to $110.50. Prime's comparable owned Wellesley Inns reported a REVPAR
increase of 3.2% as occupancy decreased by one percentage point to 74.2% and ADR increased by 4.8% to $58.51. The
Wellesley Inn & Suites hotels, which were converted from the HomeGate brand in November 1999, achieved a 64.7%
occupancy rate and $59.31 ADR which reflects a 24% increase from the REVPAR performance in the prior year's quarter.
Brand Development:
Prime currently has 101 AmeriSuites and 67 Wellesley Inn & Suites hotels in operation and is expanding its
brands, primarily through franchising. The Company has signed 18 new franchise agreements this year and currently
has a pipeline of 62 AmeriSuites and two Wellesley Inn & Suites to be built under franchise agreements.
During the quarter, two new AmeriSuites hotels, both of which were constructed by franchisees, opened in Elmhurst,
IL and Atlanta, GA. Currently, there are seven AmeriSuites under construction with ten to twelve additional sites
scheduled to begin construction in the next 30 to 120 days. Prime also intends to convert two of its owned hotels
to its Wellesley chain.
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.
Other Events:
During the quarter, Prime generated approximately $85 million from asset sales. Thus far in 2000, the Company has
sold $187 million of assets which includes four AmeriSuites, six Wellesley Inns, two full-service hotels and its
remaining five HomeGate hotels. Prime has several other potential AmeriSuites and Wellesley Inn hotel sales under
contract or in negotiation.
Prime utilized the proceeds from asset sales along with its cash flow from operations to reduce its debt balance
during the year by $143 million to $405.8 million as of June 30, 2000. Prime has also repurchased 3.7 million of
its outstanding shares at a total average cost of $7.86 per share. This brings the total number of shares repurchased
since January 1999 to 9.4 million. Prime intends to continue to utilize future proceeds from asset sales for the
reduction of debt and/or repurchase of shares.
Prime Hospitality Corp., one of the nation's premiere lodging companies, owns, manages, develops and franchises
231 hotels throughout the United States. The Company owns and operates two proprietary brands that compete in different
segments: AmeriSuites® (all-suites) and Wellesley Inns & Suites® (limited-service). Also within its
portfolio are owned and/or managed hotels operated under franchised agreements with national hotel chains including
Hilton, Radisson, Sheraton, Crowne Plaza, Holiday Inn and Ramada.
Forward-looking statements:
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.
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) over the last 12 months,
copies of which are available from the SEC or may be obtained upon request from the Company.
Prime Hospitality Corp.
Hotel Performance Summary
Three Months Ended June 30, 2000
Company Total
Hotel Data Owned Brand
AmeriSuites
Number of hotels 65 101
Number of rooms 8,376 12,941
Occupancy 72.3% 73.4%
ADR $ 81.32 $ 81.47
REVPAR $ 58.77 $ 59.81
REVPAR Growth-Comparable Hotels 4.7% 4.8%
Wellesley Inns
Number of hotels 23 28
Number of rooms 2,300 2,807
Occupancy 74.2% 74.4%
ADR $ 58.51 $ 59.82
REVPAR $ 43.41 $ 44.53
REVPAR Growth-Comparable Hotels 3.2% 4.1%
Wellesley Inns & Suites
Number of hotels 38
Number of rooms 4,668
Occupancy 64.7%
ADR $ 59.31
REVPAR $ 38.37
REVPAR Growth-Comparable Hotels N/A
Full-Service
Number of hotels 11
Number of rooms 2,195
Occupancy 79.0%
ADR $ 110.50
REVPAR $87.26
REVPAR Growth-Comparable Hotels 8.0%
Total
Number of hotels 140
Number of rooms 17,876
Occupancy 71.2%
ADR $ 76.73
REVPAR $ 54.63
REVPAR Growth-Comparable Hotels 5.4%
PRIME HOSPITALITY CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
THREE AND SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(In Thousands, Except Per Share Amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
Revenues:
Lodging $121,860 $125,450 $242,885 $241,763
Food and beverage. 11,864 15,761 24,971 28,986
Management, franchise
and other fees. 6,611 4,081 10,069 7,106
Interest on mortgages
and notes receivable. 306 729 607 1,465
Total revenues. 140,641 146,021 278,532 279,320
Costs and expenses:
Direct hotel operating expenses:
Lodging. 30,884 31,172 62,068 59,560
Food and beverage. 10,556 17,397 19,998
Selling and general. 25,630 28,559 55,883 58,088
Occupancy and
other operating. 19,026 18,653 37,613 36,550
General and
administrative. 9,120 7,353 17,266 15,540
Depreciation and
amortization. 11,083 12,224 21,781 24,904
Other charges 125 1,411 125 3,911
Total costs and
expenses. 104,015 109,928 212,133 218,551
Operating income 36,626 36,093 66,399 60,769
Investment income. 325 198 566 721
Interest expense 22,206 22,027 (23,292) (19,383)
Other income 13,606 1,112 13,959 3,434
Income before income
taxes and cumulative
effect of a change
in accounting
principle. 39,995 26,662 57,632 45,541
Provision for
income taxes. 15,598 10,398 22,476 17,761
Income before the
cumulative effect of a
change in
accounting principle 24,397 16,264 35,156 27,780
Cumulative effect of a
change in accounting
principle, net of
taxes. -- -- -- 27,453
Extraordinary items -
loss on discharge
of indebtedness. -- -- 32,466 --
Net income 24,397 16,264 34,854 22,465
Earnings per common share:
Basic:
Income before the
cumulative effect of a
change in
accounting principle. 0.54 0.32 0.75 0.54
Cumulative effect of a
change in
accounting principle. -- -- -- (0.10)
Extraordinary items - loss
on discharge of
indebtedness. -- -- -- --
Net earnings. 0.54 0.32 0.75 0.44
Diluted:
Income before the
cumulative effect of a
change in
accounting principle 0.53 0.31 0.74 0.52
Cumulative effect of a
change in
accounting principle. -- -- -- (0.10)
Extraordinary items -
loss on discharge
of indebtedness. -- -- -- --
Net earnings. 0.53 0.31 0.74 0.42
See Accompanying Notes to Interim Consolidated Financial Statements.
SOURCE: Prime Hospitality Corporation