Press Release: Interstate Hotels Corporation
August 9, 2001
PITTSBURGH, PA -- Interstate Hotels Corporation (Nasdaq:IHCO), one of the largest independent hotel management
companies in the United States, yesterday announced results for the second quarter ended June 30, 2001.
For the second quarter of 2001, the Company reported a net loss of $0.1 million compared to a net loss of $0.4
million reflecting earnings per share of $(.01) compared to $(.07) for the same period last year. Earnings before
interest, income tax expense and depreciation and amortization (EBITDA) were $3.6 million versus $0.9 million in
the second quarter of 2000. Total Company revenues decreased by $53.4 million to $12.3 million in the second quarter
as a result of the conversion of the Equity Inns leases into management contracts on January 1, 2001. The lodging
revenues related to the leased hotels that were recorded in 2000 will not be reflected in the Company's 2001 financial
statements, as the Company will record revenues from management fees only.
Revenue per available room (RevPAR) for comparable U.S. full-service hotels managed by the Company decreased 9.2%
for the quarter to $97.25 from $107.06 for the same period in 2000. Average daily room rate (ADR) increased slightly
to $132.47 from $131.33, while occupancy rates declined by approximately eight percentage points from 81.5% to
73.4% in the second quarter from a year ago. The Company's second quarter RevPAR growth was again adversely impacted
by softness in the economy, particularly in the New York and California markets.
In addition, Interstate closed on August 2, 2001 a $40 million senior secured revolving credit facility co-arranged
by Lehman Brothers Holdings Inc. and Credit Lyonnais. The Company expects to draw upon the facility to pursue its
growth strategy.
Interstate Hotels Corporation operates approximately 135 hotels with more than 27,000 rooms in 36 states in the
United States as well as Canada, the Caribbean and Russia. For more information, visit www.interstatehotels.com.
FINANCIAL TABLES FOLLOW -
Comparable Hotel Statistics(a)
-----------------------------
Three Months Ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
------------------------ ------------------------
U.S. Full-Service
Managed Hotels:
Occupancy 73.4% 81.5% 74.6% 80.3%
ADR $ 132.47 $ 131.33 $ 134.51 $ 131.62
RevPAR $ 97.25 $ 107.06 $ 100.40 $ 105.71
(a) Comparable U.S. hotels represent those operated by the Company
since January 1, 2000, excluding hotels that underwent a major
renovation or a change in franchise affiliation.
NOTE:
Certain matters discussed within this press release are forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Although the Company believes the expectations reflected in such forward-looking
statements are based on reasonable assumptions, it cannot give assurance that its expectations will be attained.
Factors that could cause actual results to differ materially from expectations include financial performance, real
estate conditions, execution of hotel development programs, changes in the availability of additional management
contracts, leases or acquisitions, changes in local or national economic conditions and other risks detailed from
time to time in the Company's reports filed with the SEC.
INTERSTATE HOTELS CORPORATION
Consolidated Statements of Operations
(Unaudited, in thousands except per share amounts)
Actual Three Months Actual Six Months
Ended June 30, Ended June 30,
2001 2000 2001 2000
--------- --------- --------- ---------
Lodging revenues:
Rooms $ 1,386 $ 51,913 $ 2,451 $ 94,908
Other departmental 37 3,164 73 5,894
Net management fees 6,404 7,861 12,880 14,045
Other fees 4,437 2,727 7,945 5,628
--------- --------- --------- ---------
Total revenues 12,264 65,665 23,349 120,475
--------- --------- --------- ---------
Lodging expenses:
Rooms 299 11,999 570 22,465
Other departmental 21 1,915 45 3,509
Property costs 431 15,449 821 29,554
General and
administrative 2,911 3,288 5,748 6,472
Payroll and related
benefits 5,461 5,433 10,818 10,753
Lease expense 188 24,221 282 44,377
Depreciation and
amortization 2,782 4,300 5,575 8,588
--------- --------- --------- ---------
Total expenses 12,093 66,605 23,859 125,718
--------- --------- --------- ---------
Operating
income (loss) 171 (940) (510) (5,243)
Other income (expense):
Interest, net (77) 538 (57) 984
Other, net 157 24 334 24
--------- --------- --------- ---------
Income (loss)
before income
tax expense (benefit) 251 (378) (233) (4,235)
Income tax expense
(benefit) 79 (274) (129) (877)
--------- --------- --------- ---------
Income (loss)
before minority
interest 172 (104) (104) (3,358)
Minority interest 54 307 90 (2,042)
--------- --------- --------- ---------
Net income (loss) $ 118 $ (411) $ (194) $ (1,316)
========= ========= ========= =========
Less mandatorily
redeemable preferred
stock:
Dividends 159 -- 318 --
Accretion 15 -- 30 --
--------- --------- --------- ---------
Net loss available
to common
stockholders $ (56) $ (411) $ (542) $ (1,316)
========= ========= ========= =========
Earnings per share:
Basic (0.01) (0.07) (0.08) (0.21)
Diluted (0.01) (0.07) (0.08) (0.21)
Common shares
outstanding:
Basic 6,539 6,159 6,510 6,159
Diluted 6,539 6,159 6,510 6,159
EBITDA $ 3,582 $ 943 $ 6,057 $ 1,097
========= ========= ========= =========
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Contact:
Interstate Hotels Corporation
Lisa O'Connor, 412/937-3319
Tom Loftus, 412/937-3382