Prime Hospitality Corp.
(NYSE: PDQ), a leading hotel owner, operator and franchisor, reported its
results for the three and nine months ended September 30, 2002.
Net income before asset transactions and other charges for the third
quarter was $2.2 million, or $.05 per share, compared to $5.0 million, or
$.11 per share, for the third quarter of 2001.
Income before extraordinary items was $6.7 million, or $.15 per share, for
the third quarter of 2002. Non-recurring items in the third quarter of 2002
were comprised primarily of $7.4 million in gains from asset sales.
For the third quarter of 2002, Prime also reported an extraordinary loss,
net of taxes, of $3.9 million, or $.09 per share, related to the premium
associated with the retirement of the 9-1/4% First Mortgage Notes and deferred
loan fees written off related to the First Mortgage Notes and the former
revolving credit facility.
“Our results were affected by the continued weakness in business travel
and the impact of the first anniversary of the September 11th attacks,” said
A.F. Petrocelli, Chairman and CEO of Prime. “In particular, we experienced a
significant variance to our projection during the first two weeks of
“During the quarter, we continued to focus on our brand infrastructure.
We are scheduled to open our new proprietary reservation system in early
November and we continue to generate increased revenues from our new rewards
“We have also made improvements in our financial structure. In July, we
entered into a new $125 million revolving credit facility at LIBOR + 2.25%
which we immediately used to redeem our 9-1/4% First Mortgage Notes. Although
the travel industry is in the midst of a difficult period, we believe our
brand and financing initiatives provide for a strong foundation for growth.”
For the nine months ended September 30, 2002, net income before
asset transactions and other charges was $8.7 million, or $.19 per share,
compared to $26.3 million, or $.57 per share, for the nine months ended
September 30, 2001. Income before extraordinary items was $10.9 million, or
$.23 per share, for the first nine months of 2002.
For the quarter, total revenues decreased by $15.4 million to
$103.7 million due to lower revenues at comparable hotels and the impact of
asset divestitures. Revenue per available room (“REVPAR”) at Prime`s
comparable owned and leased hotels decreased by 7.1% as compared to the third
quarter of 2001. The decrease was driven primarily by lower occupancies. For
the quarter, occupancy decreased by 3.6 percentage points to 61.7% and average
daily rate (“ADR”) decreased by 1.7% to $72.55. Gross operating profit
margins at comparable owned and leased hotels declined by 2.0 percentage
points due to the lower revenues partially offset by the impact of cost
Earnings before interest, taxes, depreciation and amortization (“EBITDA”)
decreased by $5.8 million to $19.6 million in the third quarter of 2002.
EBITDA margins declined by 2.4 percentage points primarily due to the lower
gross profit margins at the owned and leased hotels.
Interest expense declined by 19.2%, or $1.6 million, to $6.7 million for
the quarter ended September 30, 2002 primarily due to debt reductions, the
refinancing of the Senior Subordinated Notes in April 2002 and the retirement
of the First Mortgage Notes in August 2002 primarily with borrowings under the
Company`s new revolving credit facility.
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