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Prime Hospitality Corp. Reports an Increase Second Quarter Income FAIRFIELD, N.J., July 29 /PRNewswire-FirstCall/ -- Prime Hospitality Corp. (NYSE:PDQ), a leading hotel owner, operator and franchisor, reported its results for the three and six months ended June 30, 2004. Prime reported net income for the second quarter of 2004 of $3.6 million, or $.08 per share, compared to a loss of $17.8 million, or $.40 per share, for the second quarter of 2003. The second quarter of 2003 included a loss of $.48 per share from the termination of our lease with Hospitality Properties Trust ("HPT") and gains of $.03 per share from asset sales and debt retirements. "Our second quarter results reflect our objective of emphasizing the quality of our brand offerings and increasing our room rates," said A.F. Petrocelli, chairman and CEO of Prime. "For the quarter, we achieved an 8.1% increase in average daily rate. While this resulted in lower occupancy levels, it improved operating margins by 160 basis points. We believe that as more markets recover, we will see occupancy improvements." "During the quarter, we converted the 12 full-service hotels which we added through our new management agreement with HPT to the Prime Hotels and Resorts brand. We now have 15 Prime Hotels open in 10 states and we look forward to the opportunities this presents for all of our brands." For the six months ended June 30, 2004, net income was $0.7 million, or $.02 per share, compared to a loss of $24.5 million, or $.55 per share, for the comparable period in 2003. The 2003 amounts reflect a loss of $.48 per share related to the HPT lease. Operating Results For the quarter, total revenues increased by $12.8 million to $124.1 million due to the addition of twelve full-service hotels in January 2004. Operating income plus depreciation increased by $2.8 million to $20.8 million in the second quarter of 2004. This was due to the elimination of deficits incurred in the second quarter of 2003 on our lease with HPT which was converted to a management agreement in December 2003, and operating improvements at existing hotels. Interest expense declined by 11.0% to $4.8 million for the quarter ended June 30, 2004, due to debt reductions. In addition, through June 30, 2004, we have earned approximately $2.5 million in management and franchise fees as calculated under our agreement with HPT. This amount has been recorded as deferred income in accordance with generally accepted accounting principles and may not be recognized as income until the fourth quarter when the annual calculation is finalized. For the second quarter of 2004, revenue per available room ("REVPAR") at our comparable hotels decreased by 0.2% compared to the second quarter of 2003. Average daily rate ("ADR") increased by 8.1% to $70.41 and occupancy decreased by 5.3 percentage points to 64.5%. Gross operating profit margins at comparable hotels increased by 1.6 percentage points due to higher ADR and operating efficiencies. System-Wide Performance For the second quarter of 2004, we reported a 1.4% REVPAR increase at our comparable AmeriSuites hotels. ADR increased by 6.5% to $71.33 and occupancy decreased by 3.4 percentage points to 67.6%. Increases were reported in Miami, Nashville, Orlando and Richmond while decreases were posted in Albuquerque, Austin, Chicago and Detroit. For the second quarter of 2004, we reported a 0.4% REVPAR decrease at our comparable Wellesley Inns & Suites hotels, ADR increased by 6.2% to $57.91 and occupancy decreased by 4.2 percentage points to 62.2%. The Austin, Orlando and South Florida markets reported increases while revenues decreased in Atlanta, Dallas, Houston and the Northeast. For the second quarter of 2004, we reported a 2.0% REVPAR decrease at our three owned Prime Hotels. ADR increased by 3.4% to $116.45 while occupancy decreased by 3.9 percentage points to 69.7%. The Saratoga Springs Prime Hotel reported an increase due to strong group business while the Secaucus and Fairfield Prime Hotels' revenues decreased. Our non-proprietary brand full-service hotels, reported a 1.0% REVPAR decrease for the second quarter of 2004. ADR increased by 3.3% to $110.93 and occupancy decreased by 2.7 percentage points to 64.3%. The full-service hotels were impacted by a decrease in group business in Northern New Jersey partially offset by a recovery in tourism at the Quebec City Holiday Inn. Hotel Developments As of June 30, 2004, we had 148 AmeriSuites, 81 Wellesley Inns & Suites and 15 Prime Hotels in operation. Under our new management agreement with HPT, in the second quarter of 2004 we converted twelve full-service Wyndham hotels to the Prime Hotels and Resorts brand. We now have 15 Prime Hotels open in 10 states encompassing almost 3,000 guestrooms. Currently, we have four AmeriSuites under construction and another four in the planning stage. During the quarter, we completed our installation of high speed internet access in all of our owned and all HPT-owned AmeriSuites, Wellesley Inns & Suites and Prime Hotels and Resorts properties. This new amenity is available on both a wired and wireless basis in all guest and meeting rooms and via wireless access in all common areas, including hotel lobbies, fitness centers, pool areas and restaurants. Financial Condition As of June 30, 2004, we had $222.6 million in debt and $12.2 million in cash and cash equivalents. Our debt to book capitalization percentage is 24.7%. Our debt to last twelve months EBITDA ratio is 3.59 times, and our EBITDA to interest is 3.39 times, as defined under our revolving credit facility. The covenants in this facility require us to maintain a debt to EBITDA ratio of 4.25 times and an EBITDA to interest ratio of 2.50 times. 2004 Outlook Our current estimate for 2004 is for operating income plus depreciation to be in the range of $65 - $70 million and earnings per share before asset transactions to be in the $.05 - $.10 range. We estimate earnings per share for the third quarter of 2004 to be $0.07 per share. We currently expect capital expenditures to be approximately $15 million in 2004 with the majority to be spent on maintenance capital. We expect to generate approximately $30 million in free cash flow in 2004 before asset sales. Prime Hospitality Corp., one of the nation's premiere lodging companies, owns, manages and franchises 256 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 our portfolio are owned and/or managed hotels operated under franchise agreements with national hotel chains including Hilton, 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 July 29, 2004 at 9:30 a.m. EDT to discuss our second quarter results. Investors and members of the media may participate by calling 800-243-6403. A recording of the call will be available through August 12, 2004 by calling 800-839-6713 and using the conference ID# 6046677. 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," "estimate," "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 CONSOLIDATED STATEMENTS OF INCOME (Unaudited) THREE AND SIX MONTHS ENDED JUNE 30, 2004 AND 2003 (In Thousands, Except Per Share Amounts) Quarter Year to Date 2004 2003 2004 2003 Revenues: Owned hotels $69,903 $71,966 $131,090 $134,234 Cash flow hotels 38,126 23,380 73,384 44,199 Management, franchise and other fees 7,335 8,147 13,665 13,641 Total revenue before reimbursable costs 115,364 103,493 218,139 192,054 Cost reimbursements 8,730 7,754 16,625 14,960 Total revenues 124,094 111,247 234,764 207,014 Costs and expenses: Owned hotels 44,585 47,046 88,234 92,289 Cash flow hotels 38,937 26,089 75,950 51,559 Brand operating 4,224 5,422 8,430 8,953 General and administrative 6,850 7,013 14,081 13,913 Depreciation and amortization 10,363 9,662 20,618 20,295 Total costs and expenses before reimbursable costs 104,959 95,232 207,313 187,009 Reimbursable costs 8,730 7,754 16,625 14,960 Total costs and expenses 113,689 102,986 223,938 201,969 Operating income (loss) 10,405 8,261 10,826 5,045 Investment income 26 429 51 871 Interest expense (4,773) (5,365) (9,591) (10,993) Gains (losses) on retirement of debt -- 822 -- 1,622 Other income (loss) 303 (35,346) 314 (35,346) Income (loss) before equity in earnings of unconsolidated joint ventures, income taxes and discontinued operations 5,961 (31,199) 1,600 (38,801) Equity in earnings of unconsolidated joint ventures 94 263 168 453 Income (loss) before income taxes and discontinued operations 6,055 (30,936) 1,768 (38,348) Provision (benefit) for income taxes 2,362 (12,065) 690 (14,956) Income (loss) before discontinued operations 3,693 (18,871) 1,078 (23,392) Discontinued operations: Income (loss) from discontinued operations, net of income taxes -- 85 (126) (480) Gain (loss) on disposal, net of income taxes (117) 964 (238) (582) Net income (loss) $3,576 $(17,822) $714 $(24,454) Earnings (loss) per common share: Basic: Income (loss) before discontinued operations $0.08 $(0.42) $0.02 $(0.53) Income (loss) from discontinued operations, net of income taxes -- 0.02 -- (0.02) Net income (loss) $0.08 $(0.40) $0.02 $(0.55) Diluted: Income (loss) before discontinued operations $0.08 $(0.42) $0.02 $(0.53) Income (loss) from discontinued operations, net of income taxes -- 0.02 -- (0.02) Net income (loss) $0.08 $(0.40) $0.02 $(0.55) Prime Hospitality Corp. Balance Sheet Information (Unaudited) (In Thousands, except per share amounts) June 30, December 31, 2004 2003 Cash and cash equivalents $12,182 $12,901 Fixed assets 908,796 925,380 Total assets 995,120 1,007,305 Revolving credit facility 30,000 35,000 Other debt 192,641 193,602 Total debt 222,641 228,602 Stockholders' equity $680,153 $681,014 Quarterly weighted average diluted shares outstanding 46,030 44,737 Book value per quarterly weighted average diluted share $14.78 $15.22 Prime Hospitality Corp. Comparable Hotel Performance Summary June 30, 2004 Three Months Ended Six Months Ended June 30, June 30, 2004 2003 Variance 2004 2003 Variance Owned and Leased Hotels: Occupancy 64.5% 69.8% (5.3)pts. 61.1% 64.4% (3.3)pts. ADR $70.41 $65.16 8.1% $69.86 $65.93 6.0% REVPAR $45.44 $45.51 (0.2)% $42.67 $42.48 0.5% System-Wide Hotels: AmeriSuites Occupancy 67.6% 71.0% (3.4)pts. 63.8% 64.6% (0.8)pts. ADR $71.33 $66.97 6.5% $71.24 $68.66 3.8% REVPAR $48.23 $47.54 1.4% $45.45 $44.36 2.4% Wellesley Inns & Suites Occupancy 62.2% 66.4% (4.2)pts. 60.3% 64.7% (4.4)pts. ADR $57.91 $54.52 6.2% $59.73 $56.07 6.5% REVPAR $36.04 $36.18 (0.4)% $36.02 $36.28 (0.7)% Prime Hotels Occupancy 69.7% 73.6% (3.9)pts. 61.9% 65.3% (3.4) pts. ADR $116.45 $112.65 3.4% $111.79 $110.01 1.6% REVPAR $81.20 $82.88 (2.0)% $69.15 $71.88 (3.8)% Non-Proprietary Brands Occupancy 64.3% 67.0% (2.7)pts. 57.0% 59.7% (2.7) pts. ADR $110.93 $107.43 3.3% $112.22 $108.83 3.1% REVPAR $71.28 $72.00 (1.0)% $63.98 $65.00 (1.6)% Prime Hospitality Corp. Hotel Statistics June 30, 2004 June 2004 # of # of Hotels Rooms AmeriSuites Owned 62 8,024 (1) Managed-Cash Flow Interest 42 5,214 Managed 8 1,077 Franchised 36 4,189 Total 148 18,504 Wellesley Inns & Suites Owned 56 6,901 Managed 6 667 Franchised 19 1,926 Total 81 9,494 Prime Hotels & Resorts Owned 3 595 (1) Managed - Cash Flow Interest 12 2,321 Total 15 2,916 Non-Proprietary Brands Owned 2 505 Managed 8 1,521 Joint Venture 2 665 Total 12 2,691 Total Portfolio Owned 123 16,025 Managed - Cash Flow Interest 54 7,535 Managed 22 3,265 Franchised 55 6,115 Joint Venture 2 665 Total 256 33,605 Note: (1) The managed-cash flow interest hotels are operated under management agreements where Prime guarantees a minimum level of cash flow and has a significant participation in cash flow above the minimum levels. DATASOURCE: Prime Hospitality Corp. CONTACT: Richard Szymanski, +1-973-808-7751, for Prime Hospitality Corp. Web site: http://www.primehospitality.com/ Company News On-Call: http://www.prnewswire.com/comp/130238.html

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