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Prime Hospitality Corp. Reports Third Quarter Results FAIRFIELD, N.J., Oct. 30 /PRNewswire-FirstCall/ -- Prime Hospitality Corp. , a leading hotel owner, operator and franchisor, reported its results for the three and nine months ended September 30, 2003. Net income before asset transactions for the third quarter of 2003 was $2.1 million, or $.05 per share, compared to $2.2 million, or $.05 per share, for the third quarter of 2002. The third quarter of 2002, also included a loss of $.02 per share from the funding of deficits on the hotels leased from Hospitality Properties Trust ("HPT"). Total net income, which also includes gains and losses from asset transactions, was $2.0 million, or $.05 per share, for the third quarter of 2003 compared to $2.8 million, or $.06 per share, in the third quarter of 2002. The 2002 results included gains on asset sales partially offset by debt retirement costs. "Our third quarter results reflected strong occupancy levels due to increased leisure travel over the summer months," said A.F. Petrocelli, chairman and CEO of Prime. "While we have seen a modest recovery in corporate transient travel, until this rebounds more significantly, pricing will remain challenging. "We continue to strengthen our financial position. We have discontinued the funding of losses on our lease with HPT which negatively impacted cash flow by $11.5 million annually and we retired another $10.5 million of debt in the quarter." For the nine months ended September 30, 2003, Prime reported a net loss before asset transactions of $1.2 million, or $.03 per share, compared to net income before asset transactions of $8.7 million, or $.19 per share, for the comparable period in 2002. The total net loss, which includes lease termination charges and gains and losses from asset sales and debt retirements, for the nine months ended September 30, 2003 was $22.4 million, or $.50 per share, compared to a net loss of $0.9 million, or $.02 per share, for the comparable period in 2002. Operating Results For the quarter, total revenues decreased by $14.5 million to $89.2 million due to the deconsolidation of the HPT hotels and the impact of asset divestitures. Revenue per available room ("REVPAR") at Prime's comparable owned and leased hotels increased by 0.3% in the third quarter of 2003 as compared to the third quarter of 2002. The results were affected by higher occupancies and a lower average daily rate ("ADR") due to a higher percentage of leisure and group travel. For the third quarter of 2003, occupancy increased by 5.8 percentage points to 66.9% and ADR decreased by 8.4% to $67.17. Gross operating profit margins at comparable owned and leased hotels declined by 1.8 percentage points due to the lower ADR. Earnings before interest, taxes, depreciation and amortization ("EBITDA") decreased by $1.4 million to $18.2 million in the third quarter of 2003. Interest expense declined by 26.8%, or $1.8 million, to $4.9 million for the quarter ended September 30, 2003 primarily due to debt reductions and lower interest rates. System-Wide Performance For the third quarter of 2003, Prime reported a 1.5% REVPAR decrease at its comparable AmeriSuites hotels, as occupancy increased by 4.0 percentage points to 68.3% and ADR decreased by 7.3% to $68.34. Increases were reported in Cincinnati, Oklahoma City and Richmond while decreases were posted in Chicago, Denver, Orlando and the Northeast. For the third quarter of 2003, Prime reported a 3.7% REVPAR increase at its comparable Wellesley Inns & Suites hotels, as occupancy increased by 7.6 percentage points to 63.5% and ADR decreased by 8.9% to $55.05. The South Florida and Phoenix markets reported increases while revenues decreased in the Northeast. Prime's upscale full-service hotels which are located in the Northeast, reported a 0.1% REVPAR decrease for the third quarter of 2003 as occupancy increased by 2.0 percentage points to 71.5% and ADR decreased by 2.9% to $118.73. The full-service hotels were impacted by an increase in revenue at the recently converted Prime Hotel in Saratoga Springs, NY and decreases in the suburban New York City market. Hotel Developments As of September 30, 2003, Prime had 148 AmeriSuites and 81 Wellesley Inns & Suites hotels in operation. Although Prime intends to expand its brands primarily through franchising, it will consider corporate development opportunities in strategic markets with high barriers to entry. During the third quarter, Prime converted two owned Ramada Inns to Wellesley Inns. The new hotels converted in the quarter are located in Armonk, NY and Clifton, NJ. This year Prime has converted nine hotels to the Wellesley brand including five owned hotels. Currently, Prime has two AmeriSuites under construction and a pipeline of 21 executed franchise agreements including eight in the planning stage. There is also one franchised Wellesley Inn under conversion. During the second quarter, Prime announced an agreement for the installation of high speed internet access in its AmeriSuites, Wellesley Inns & Suites and Prime Hotels and Resorts brands. The new amenity will be available on both a wired and wireless basis in all guest and meeting rooms as well as wireless access in all common areas including hotel lobbies, fitness centers, pool areas and restaurants. Prime has already installed this feature in over 80 hotels and expects the installations to be substantially complete by year end. In October 2003, Prime assumed management of its first hotel in New York City, the Empire Hotel at Broadway and 63rd Street across from Lincoln Center. Financial Condition In July 2003, Glen Rock Holding Corp, a subsidiary of the Company, did not make its scheduled monthly rent payment of approximately $2.0 million to HPT and received a default notice from HPT. The lease covers 24 AmeriSuites hotels owned by HPT. Prime is continuing to operate the hotels on an interim basis as AmeriSuites while HPT decides the long-term management and franchise affiliation of these hotels. As of September 30, 2003, Prime had $243.7 million in debt and $18.4 million in cash and cash equivalents. During the quarter, Prime reduced its debt balance by $10.5 million funded by operating cash flow and the financing of its 40% owned Quebec Holiday Inn Select hotel. Prime's debt to book capitalization percentage is 26.3%. Adjusted on a pro-forma basis for the HPT lease which is required under its revolving credit facility, Prime's debt to last twelve months EBITDA ratio is 4.0 times, and its EBITDA to interest is 3.0 times. Under its revolving credit facility, the Company is required to maintain a debt to EBITDA ratio of 4.25 times and an EBITDA to interest ratio of 2.50 times. Prime Hospitality Corp., one of the nation's premiere lodging companies, owns, manages and franchises 247 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 its portfolio are owned and/or managed hotels operated under franchise agreements with national hotel chains including Hilton, Radisson, Sheraton, Holiday Inn and Ramada. Prime can be accessed over the internet at http://www.primehospitality.com/. Prime Hospitality Corp. will hold a conference call on October 30, 2003 at 9:30 a.m. EST to discuss our third quarter results. Investors and members of the media may participate by calling 800-603-4335. A recording of the call will be available through November 13, 2003 by calling 800-642-1687 and using the conference ID# 2902984. 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. 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 Condensed Consolidated Statements of Income (Unaudited) Three and Nine Months ended September 30, 2003 and 2002 ($ in thousands, except per share amounts) Three months ended Nine months ended September 30, September 30, 2003 2002 2003 2002 Revenues: Hotel revenues $83,311 $99,334 $265,373 $299,844 Management, franchise and other fees 5,897 4,405 17,796 13,043 Total revenue 89,208 103,739 283,169 312,887 Costs and expenses: Hotel operating expenses 45,760 55,670 151,930 163,273 Rent and other occupancy 15,290 20,811 58,857 63,233 Brand and administrative 9,988 7,690 29,563 21,899 Depreciation and amortization 10,254 9,866 30,646 29,992 Total costs and expenses 81,292 94,037 270,996 278,397 Operating income 7,916 9,702 12,173 34,490 Investment income 103 637 974 1,820 Interest expense (4,908) (6,709) (15,900) (22,075) Equity in earnings from unconsolidated joint ventures 322 ----- 774 ----- Gain (loss) from asset transactions (110) 935 (34,788) (15,753) Income (loss) before income taxes 3,323 4,565 (36,767) (1,518) Provision (benefit) for income taxes 1,296 1,780 (14,339) (592) Net income (loss) 2,027 2,785 (22,428) (926) Diluted income (loss) per common share: Income (loss) before asset transactions $0.05 $0.05 $(0.03) $0.19 Income (loss) from asset transactions ----- 0.01 (0.47) (0.21) Net income (loss) per share $0.05 $0.06 $(0.50) $(0.02) Prime Hospitality Corp. Balance Sheet Information (Unaudited) (In Thousands, except per share amounts) September 30, December 31, 2003 2002 Cash and cash equivalents $18,385 $25,850 Fixed assets 925,374 958,517 Total assets 1,043,826 1,119,649 Revolving credit facility 50,000 70,000 Other debt 193,652 215,069 Total debt 243,652 285,069 Stockholders' equity $682,239 $706,676 Quarterly weighted average basic shares outstanding 44,726 45,051 Quarterly weighted average diluted shares outstanding 44,726 45,051 Book value per quarterly weighted average diluted share $15.25 $15.69 Prime Hospitality Corp. Comparable Hotel Performance Summary September 30, 2003 Three Months Ended Nine Months Ended September 30, September 30, 2003 2002 Variance 2003 2002 Variance Owned and Leased Hotels: Occupancy 66.9% 61.1% 5.8 pts. 65.2% 61.0% 4.2 pts. ADR $67.17 $73.31 (8.4%) $66.30 $73.50 (9.8%) REVPAR $44.92 $44.80 0.3% $43.25 $44.82 (3.5%) System-Wide Hotels: AmeriSuites Occupancy 68.3% 64.3% 4.0 pts. 66.2% 64.1% 2.1 pts. ADR $68.34 $73.75 (7.3%) $68.64 $74.54 (7.9%) REVPAR $46.70 $47.41 (1.5%) $45.41 $47.78 (5.0%) Wellesley Inns & Suites Occupancy 63.5% 55.9% 7.6 pts. 64.6% 57.6% 7.0 pts. ADR $55.05 $60.40 (8.9%) $55.45 $61.86 (10.4%) REVPAR $34.98 $33.75 3.7% $35.84 $35.61 0.6% Full-Service Brands Occupancy 71.5% 69.5% 2.0 pts. 65.7% 65.6% 0.1 pts. ADR $118.7 $122.34 (2.9%) $109.57 $115.62 (5.2%) REVPAR $84.95 $85.00 (0.1%) $71.96 $75.87 (5.2%) Prime Hospitality Corp. Hotel Statistics September 30, 2003 September 2003 # of # of Hotels Rooms AmeriSuites Owned 62 8,024 Leased 24 2,923 Managed 27 3,480 Franchised 35 4,084 Total 148 18,511 Wellesley Inns & Suites Owned 56 6,906 Leased -- -- Managed 6 668 Franchised 19 1,837 Total 81 9,411 Prime Hotels & Resorts Owned 1 240 Total 1 240 Non-Proprietary Brands Owned 4 860 Leased 1 160 Managed 10 1,934 Joint Venture 2 665 Total 17 3,619 Total Portfolio Owned 123 16,030 Leased 25 3,083 Managed 43 6,082 Franchised 54 5,921 Joint Venture 2 665 Total 247 31,781 Prime Hospitality Corp. Supplemental Financial Information (Unaudited) Three and Nine Months Ended September 30, 2003 and 2002 ($ in thousands) Three Months Ended Nine Months Ended September 30, September 30, 2003 2002 2003 2002 Net income (loss) $2,027 $2,785 $(22,428) $(926) Provision (benefit) for income taxes 1,296 1,780 (14,339) (592) Loss (gain) from asset transactions 110 (935) 34,788 15,753 Equity in earnings of unconsolidated joint ventures (322) ------ (774) ------ Interest expense 4,908 6,709 15,900 22,075 Investment income (103) (637) (974) (1,820) Depreciation and amortization 10,254 9,866 30,646 29,992 EBITDA $18,170 $19,568 $42,819 $64,482 DATASOURCE: Prime Hospitality Corp. CONTACT: Richard Szymanski of Prime Hospitality Corp., +1-973-808-7751 Web site: http://www.primehospitality.com/ Company News On-Call: http://www.prnewswire.com/comp/130238.html

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