<PAGE> 1
FORM 10-Q
SECURITIES EXCHANGE COMMISSION
Washington, D.C. 20549
(MARK ONE)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
------- -------
Commission File No. 1-6869
PRIME HOSPITALITY CORP.
(Exact name of registrant as specified in its charter)
Delaware 22-2640625
(State or other jurisdiction of (I.R.S. employer)
incorporation or organization) identification no.)
700 Route 46 East, Fairfield, New Jersey 07004
(Address of principal executive offices)
(201) 882-1010
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No
---- ----
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes x No
---- ----
The registrant had 30,861,824 shares of common stock, $.01 par value
outstanding, as of August 7, 1995.
<PAGE> 2
PRIME HOSPITALITY CORP. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE
PART I. FINANCIAL INFORMATION NUMBER
------
<S> <C>
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets-
December 31, 1994 and June 30, 1995 . . . . . . . . . . . . 1
Consolidated Statements of Income
Three and Six Months Ended June 30, 1994
and June 30, 1995 . . . . . . . . . . . . . . . . . . . . . 2
Consolidated Statements of Cash Flows
Six Months Ended June 30, 1994
and June 30, 1995 . . . . . . . . . . . . . . . . . . . . . 3
Notes to Interim Consolidated Financial Statements . . . . . . . 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . . . 8
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . 18
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . 19
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
<PAGE> 3
PRIME HOSPITALITY CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Data)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1994 1995
-------- --------
ASSETS (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . $12,524 $81,865
Marketable securities available for sale. . . . . . 1,117 12,058
Restricted cash . . . . . . . . . . . . . . . . . 9,725 3,731
Accounts receivable, net of reserves . . . . . . . 7,819 10,377
Current portion of mortgages and
notes receivable . . . . . . . . . . . . . . . . 1,925 14,494
Other current assets . . . . . . . . . . . . . . . 7,196 8,269
-------- --------
Total current assets . . . . . . . . . . . . . 40,306 130,794
Property, equipment and leasehold improvements,
net of accumulated depreciation and amortization. . 299,291 337,451
Mortgages and notes receivable, net of
current portion . . . . . . . . . . . . . . . . . . 81,260 75,233
Marketable securities available for sale. . . . . . . 3,652 11,074
Other assets . . . . . . . . . . . . . . . . . . . . 10,423 13,876
-------- --------
TOTAL ASSETS . . . . . . . . . . . . . . . . . $434,932 $568,428
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of debt . . . . . . . . . . . . . $5,284 $6,901
Other current liabilities . . . . . . . . . . . . 23,904 27,449
-------- --------
Total current liabilities . . . . . . . . . . . 29,188 34,350
Long-term debt, net of current portion . . . . . . . 178,545 293,986
Other liabilities . . . . . . . . . . . . . . . . . . 23,134 22,497
-------- --------
Total liabilities . . . . . . . . . . . . . . . 230,867 350,833
-------- --------
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value $.10 per share;
20,000,000 shares authorized; none issued . . . . -- --
Common stock, par value $.01 per share;
75,000,000 shares authorized; 30,409,371 and
30,817,727 shares issued and outstanding
at December 31, 1994 and June 30, 1995,
respectively . . . . . . . . . . . . . . . . . . 304 308
Capital in excess of par value . . . . . . . . . . 171,774 176,116
Retained earnings . . . . . . . . . . . . . . . . 31,987 41,171
-------- --------
Total stockholders' equity . . . . . . . . . . 204,065 217,595
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $434,932 $568,428
======== ========
</TABLE>
See Accompanying Notes to Interim Consolidated Financial Statements.
- 1 -
<PAGE> 4
PRIME HOSPITALITY CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
THREE AND SIX MONTHS ENDED JUNE 30, 1994 AND 1995
(In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1994 1995 1994 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues:
Lodging . . . . . . . . . . . . . . . . . . . . . . . . $21,900 $35,750 $39,921 $70,125
Food and beverage . . . . . . . . . . . . . . . . . . . 4,717 10,691 7,655 19,575
Management and other fees . . . . . . . . . . . . . . . 2,586 2,044 4,903 3,681
Interest on mortgages and
notes receivable . . . . . . . . . . . . . . . . . . 3,677 2,888 8,157 5,914
Rental and other . . . . . . . . . . . . . . . . . . . 314 330 637 646
------- ------- ------- -------
Total revenues . . . . . . . . . . . . . . . . . . 33,194 51,703 61,273 99,941
------- ------- ------- -------
Costs and expenses:
Direct hotel operating expenses:
Lodging . . . . . . . . . . . . . . . . . . . . . . . 6,215 9,595 11,298 18,293
Food and beverage . . . . . . . . . . . . . . . . . 3,458 7,774 5,964 14,431
Selling and general . . . . . . . . . . . . . . . . 6,316 12,109 12,120 23,933
Occupancy and other operating . . . . . . . . . . . 2,768 2,781 5,019 5,392
General and administrative . . . . . . . . . . . . . . 3,724 3,589 7,368 7,461
Depreciation and amortization . . . . . . . . . . . . . 2,081 3,797 4,022 7,773
------- ------- ------- -------
Total costs and expenses . . . . . . . . . . . . 24,562 39,645 45,791 77,283
------- ------- ------- -------
Operating income . . . . . . . . . . . . . . . . . . . . 8,632 12,058 15,482 22,658
Investment income . . . . . . . . . . . . . . . . . . . . 473 1,415 1,031 1,929
Interest expense . . . . . . . . . . . . . . . . . . . . (3,357) (5,886) (6,989) (9,986)
Other income . . . . . . . . . . . . . . . . . . . . . . 5,894 605 6,932 605
------- ------- ------- -------
Income before income taxes
and extraordinary items . . . . . . . . . . . . . . . 11,642 8,192 16,456 15,206
Provision for income taxes . . . . . . . . . . . . . . . 4,773 3,277 6,747 6,083
------- ------- ------- -------
Income before extraordinary items . . . . . . . . . . . . 6,869 4,915 9,709 9,123
Extraordinary items - Gains on discharges of
indebtedness (net of income taxes) 58 54 169 61
------- ------- ------- -------
Net income . . . . . . . . . . . . . . . . . . . . . . . $6,927 $4,969 $9,878 $9,184
======= ======= ======= =======
Net income per common share:
Income before extraordinary items . . . . . . . . . . .22 .14 .30 .27
Extraordinary items . . . . . . . . . . . . . . . . . . -- .01 .01 .01
------- ------- ------- -------
Net Income . . . . . . . . . . . . . . . . . . . . . . . .22 .15 .31 .28
======= ======= ======= =======
</TABLE>
See Accompanying Notes to Interim Consolidated Financial Statements.
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<PAGE> 5
PRIME HOSPITALITY CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
SIX MONTHS ENDED JUNE 30, 1994 AND 1995
(In Thousands)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
1994 1995
------- -------
<S> <C> <C>
CASH FLOWS
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . $9,878 $9,184
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . 4,022 7,773
Gain on settlement of a note receivable . . . . . . . . . . . (5,894) --
Utilization of net operating loss
carryforwards . . . . . . . . . . . . . . . . . . . . . . . 1,530 2,836
Gains on discharges of indebtedness . . . . . . . . . . . . . (286) (102)
Gain on disposal of assets . . . . . . . . . . . . . . . . . (985) (605)
Compensation expense related to stock
options . . . . . . . . . . . . . . . . . . . . . . . . . . 25 8
Increase (decrease) from changes in other
operating assets and liabilities:
Accounts receivable . . . . . . . . . . . . . . . . . . . . (1,010) (2,558)
Other current assets . . . . . . . . . . . . . . . . . . . 3,697 (1,148)
Other liabilities . . . . . . . . . . . . . . . . . . . . . 1,621 2,255
------- -------
Net cash provided by operating
activities . . . . . . . . . . . . . . . . . . . . . . . 12,598 17,643
------- -------
Cash flows from investing activities:
Net proceeds from mortgages and notes
receivable . . . . . . . . . . . . . . . . . . . . . . . . . 32,559 3,543
Disbursements for mortgages and
notes receivable . . . . . . . . . . . . . . . . . . . . . . (1,100) (12,704)
Proceeds from sales of property, equipment
and leasehold improvements . . . . . . . . . . . . . . . . . 1,088 1,671
Purchases of property, equipment and
leasehold improvements . . . . . . . . . . . . . . . . . . . (19,420) (36,462)
Decrease in restricted cash . . . . . . . . . . . . . . . . . . 1,742 5,994
Proceeds from marketable securities . . . . . . . . . . . . . . 1,082 1,012
Purchases of marketable securities . . . . . . . . . . . . . . (5,885) (18,460)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,808) 918
------- -------
Net cash provided by (used in) investing activities . . . . 8,258 (54,488)
------- -------
Cash flows from financing activities:
Net proceeds from issuance of debt . . . . . . . . . . . . . . 3,725 120,802
Payments of debt. . . . . . . . . . . . . . . . . . . . . . . . (40,701) (15,697)
Proceeds from the exercise of stock options
and warrants. . . . . . . . . . . . . . . . . . . . . . . . . 558 1,133
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 (52)
------- -------
Net cash provided by (used in) financing
activities . . . . . . . . . . . . . . . . . . . . . . . (36,311) 106,186
------- -------
Net increase (decrease) in cash and
cash equivalents. . . . . . . . . . . . . . . . . . . . . . . (15,455) 69,341
Cash and cash equivalents at beginning
of period . . . . . . . . . . . . . . . . . . . . . . . . . . 41,569 12,524
------- -------
Cash and cash equivalents at end of period . . . . . . . . . . $26,114 $81,865
======= =======
</TABLE>
See Accompanying Notes to Interim Consolidated Financial Statements.
- 3 -
<PAGE> 6
PRIME HOSPITALITY CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1 - BASIS OF PRESENTATION
In the opinion of management, the accompanying interim unaudited
consolidated financial statements of Prime Hospitality Corp. and subsidiaries
(the "Company") contain all material adjustments, consisting of normal recurring
adjustments, necessary to present fairly the financial position of the Company
as of June 30, 1995 and the results of its operations for the three and six
months ended June 30, 1994 and 1995 and cash flows for the six months ended June
30, 1994 and 1995. Certain reclassifications have been made to the June 30, 1994
consolidated financial statements to conform them to the June 30, 1995
presentation.
The financial statements for the three and six months ended June 30,
1994 and 1995 were prepared on a consistent basis with the audited consolidated
financial statements for the year ended December 31, 1994.
The consolidated results of operations for the three and six months
ended June 30, 1995 are not necessarily indicative of the results to be expected
for the full year. These interim unaudited consolidated financial statements
should be read in conjunction with the audited consolidated financial statements
included in the Company's Annual Report on Form 10-K/A for the fiscal year ended
December 31, 1994.
Note 2 - ACQUISITIONS
In March 1995, the Company acquired the option of ShoLodge, Inc.
("ShoLodge") to purchase a 50% interest in eleven of the Company's AmeriSuites
hotels and also acquired the ownership interest of the remaining AmeriSuites
hotel not already owned by the Company. In 1993, the Company and its
wholly-owned subsidiary, Suites of America, Inc. ("SOA") entered into agreements
with ShoLodge, a company controlled by a former director, designed to further
the growth of its AmeriSuites hotels from the six hotels owned by the Company at
that time. Pursuant to these agreements, (i) ShoLodge agreed to build and
finance six additional AmeriSuites hotels and received an option to purchase a
50% interest in SOA and (ii) the Company received an option pursuant to which it
could require ShoLodge to purchase a 50% interest in SOA. The exercise of the
option by ShoLodge was scheduled to occur in January 1995, when the Company and
ShoLodge began to negotiate the Company's buyout of ShoLodge's option. The
consideration payable by the Company was based upon the fair market value of the
properties. The consideration totaled $19,700,000 and was comprised of (i)
$16,100,000 in cash, of which $6,100,000 was paid on March 31, 1995 and
$10,000,000 was paid on May 5, 1995, plus (ii) $18,500,000 which will be paid in
notes maturing in 1997, less (iii) $14,900,000 of existing debt on five hotels,
which was retired at face value. The transaction resulted in a net increase of
approximately $3,600,000 of long-term debt. No
- 4 -
<PAGE> 7
gain or loss was recorded on the forgiveness of debt. As a result of this
transaction, the Company assumed management of these hotels.
In August 1995, the Company entered into an agreement to purchase four
Bradbury Suites hotels for $18.9 million. The hotels, comprising 459 rooms, are
located in Augusta, Georgia; Columbia, South Carolina; Arlington Heights,
Illinois and Jacksonville, Florida. The Company plans to convert the hotels to
its proprietary AmeriSuites brand, bringing to seventeen the total number of
AmerSuites hotels. The agreement is subject to certain due diligence
conditions. Closing is set for the end of August.
Note 3 - DEBT
In April and May 1995, the Company sold $86,250,000 of 7% Convertible
Subordinated Notes due 2002. The notes bear interest at 7%, are convertible into
common stock at a price of $12 per share at the option of the holder and mature
on April 15, 2002. The notes are redeemable, in whole or in part, at the option
of the Company after three years at premiums to principal which decline on each
anniversary date.
In February 1995, Prime obtained $39,000,000 of mortgage financing on
eleven of its hotels under two separate loan agreements. Both loans bear
interest at variable rates (approximately 10.5% at June 30, 1995) and have
five-year maturities.
During the first quarter of 1995, the Company retired $388,000 of its
senior secured notes, resulting in a pre-tax extraordinary gain of $11,000.
During the second quarter of 1995, the Company prepaid approximately $12,100,000
of its senior secured notes with a payment funded by collections from the
collateral for these notes (See Note 2). These transactions resulted in a
pre-tax extraordinary gain of $91,000. In July 1995, the Company retired an
additional $2.7 million of its senior secured notes. A pre-tax extraordinary
gain of $20,000 will be recorded in the third quarter.
Note 4 - INCOME TAXES
At June 30, 1995, the Company had available federal net operating loss
carryforwards of approximately $123,400,000 which will expire beginning in 2005
and continuing through 2007. Of this amount, $104,800,000 is subject to an
annual limitation of $8,735,000 under the Internal Revenue Code due to a change
in ownership of the Company. The Company also has potential state income tax
benefits relating to net operating loss carryforwards of approximately
$8,800,000 which will expire during various periods from 1995 to 2006. Certain
of these potential benefits are subject to annual limitations similar to federal
requirements due to factors such as the level of business conducted in each
state and the amount of income subject to tax within each state's carryforward
period. For the three and six months ended June 30, 1995 the Company recognized
$1,418,000 and $2,836,000 of tax benefits as a contribution to stockholders'
equity.
- 5 -
<PAGE> 8
Note 5 - CONTINGENCIES
The Company received a second favorable ruling in its litigation with
Financial Security Assurance, Inc. ("FSA") in which FSA sought approximately
$31,200,000 previously received by the Company in settlement of a note and
guaranty from Allen V. Rose and Arthur Cohen ("Rose and Cohen"). In an order
dated April 25, 1995, the U.S. District Court for the Southern District of
Florida (the "U.S. District Court") affirmed a lower court ruling approving the
Company's settlement with Rose and Cohen and finding that the Company alone was
entitled to the settlement proceeds. The Company had previously reached a
settlement in 1993 with Rose and Cohen which provided for Rose or his affiliate
to pay the Company $25,000,000 plus proceeds from the sale of approximately
1,100,000 shares of the Company's common stock held by Rose, bringing the total
settlement proceeds to approximately $31,200,000. FSA asserted that, under the
terms of an intercreditor agreement, it was entitled to receive the settlement
proceeds otherwise payable to the Company. The U.S. Bankruptcy Court for the
Southern District of Florida (the "Bankruptcy Court") ruled in favor of the
Company in April 1994 and the Company used $25,000,000 of the settlement
proceeds to retire certain senior secured notes. FSA appealed to the U.S.
District Court, which affirmed the Bankruptcy Court's ruling. On May 12, 1995,
the Company used the remaining proceeds plus accrued interest to prepay senior
secured notes. On May 23, 1995, FSA filed a notice of appeal with the U.S. Court
of Appeals for the 11th Circuit.
Note 6 - NET INCOME PER COMMON SHARE
The Company has restated net income per common share for the three and
six months ended June 30, 1994 to reflect a 9.4% reduction in the number of
shares distributed under the plan of reorganization (the "Plan") of the
Company's predecessor, Prime Motor Inns, Inc. ("PMI"). The financial statements
had previously given effect to the maximum amount of 33,000,000 shares to be
issued under the Plan whereas the Company ultimately distributed 29,913,000
shares under the Plan.
Primary net income per common share was computed based on the weighted
average number of common shares and common share equivalents (dilutive stock
options and warrants) outstanding during each period. The weighted average
number of common shares used in computing primary net income per share was
31,885,000 and 31,961,000 for the three and six months ended June 30, 1994 and
32,584,000 and 32,401,000 for the three and six months ended June 30, 1995,
respectively.
Fully diluted net income per share, in addition to the adjustments for
primary net income per share, reflects the elimination of interest expense and
the issuance of additional common shares from the assumed conversion of the 7%
convertible subordinated notes from their issuance in the second quarter of
1995. The weighted average number of common shares used in computing fully
diluted net income per share was 37,797,000 and 35,078,000 for the three and six
months ended June 30, 1995. Fully diluted net income per share has not been
presented in the consolidated financial statements because the dilutive effect
is not material.
- 6 -
<PAGE> 9
Note 7 - OTHER INCOME
Other income consists of items which are not considered part of the
Company's recurring operations. Other income of $605,000, for the three and
six months ended June 30, 1995, relates to a gain on the sale of a land parcel.
Other income of $5.9 million for the three months ended June 30, 1994, consists
of a gain on the settlement of a note receivable from Rose and Cohen. For the
six months ended June 30, 1994, other income also consists of a gain on the sale
of a hotel for approximately $1.0 million.
- 7 -
<PAGE> 10
PART I. FINANCIAL INFORMATION
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
GENERAL
The Company is a leading hotel owner/operator which owns or leases 50
hotels (the "Owned Hotels") and manages 36 hotels (the "Managed Hotels") for
third parties. The Company has a financial interest in the form of mortgages or
profit participations (primarily incentive management fees) in 16 of the Managed
Hotels. The Company consolidates the results of operations of its Owned Hotels
and records management fees (including incentive management fees) and interest
income, where applicable, on the Managed Hotels.
The Company has implemented a growth strategy which focuses on
improving results at existing hotels through increased operating efficiencies,
acquiring full-service hotels and expanding its AmeriSuites hotel brand in the
all-suites segment. Operating results have continued to improve at comparable
hotels due to repositioning efforts, yield management programs and overall
improvements in the industry. The Company also added 13 Owned Hotels in the past
year through acquisition, construction or settlements of notes receivable.
Although future results of operations may be adversely affected in the
short-term by the costs associated with the acquisition and construction of new
hotels, it is expected that this impact will be offset, after an initial period,
by revenues generated by these new hotels. The Company believes that it is well
positioned to benefit from the expected continued improvements in the lodging
industry due to its hotel equity ownership position and its growth strategy.
The Company has restated net income per common share for the three and
six months ended June 30, 1994 to reflect a 9.4% reduction in the number of
shares distributed under the plan of reorganization (the "Plan") of the
Company's predecessor, Prime Motor Inns, Inc. ("PMI"). The financial statements
for the three and six months ended June 30, 1994 had previously given effect to
the maximum amount of 33,000,000 shares of common stock issuable under the Plan,
whereas the Company in total distributed only 29,913,000 shares under the Plan.
RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1994 COMPARED
TO THE THREE AND SIX MONTHS ENDED JUNE 30, 1995
The following table presents the components of operating income,
operating expense margins and other data for the Company and the Company's
comparable Owned Hotels for the three and six months ended June 30, 1994 and
1995. The results of the four hotels divested during 1994 and 1995 are not
material to an understanding of the results of the Company's operations in such
periods and, therefore, are not separately discussed.
- 8 -
<PAGE> 11
<TABLE>
<CAPTION>
Comparable Owned
Total Hotels(1)
------------------ ------------------
Three Months Ended Three Months Ended
June 30, June 30,
1994 1995 1994 1995
---- ---- ---- ----
(Dollars in thousands, except ADR and REVPAR)
<S> <C> <C> <C> <C>
Revenues:
Lodging . . . . . . . . . . . . . . . . . . . . . . . $21,900 $35,750 $19,677 $21,210
Food and Beverage . . . . . . . . . . . . . . . . . . 4,717 10,691 3,793 3,528
Management Fees and Other Fees . . . . . . . . . . . . 2,586 2,044
Interest on Mortgages and Notes Receivable . . . . . . 3,677 2,888
Rental and Other . . . . . . . . . . . . . . . . . . . 314 330
------- -------
Total Revenues . . . . . . . . . . . . . . . . . . 33,194 51,703
Direct Hotel Operating Expenses:
Lodging . . . . . . . . . . . . . . . . . . . . . . . 6,215 9,595 5,263 5,475
Food and Beverage . . . . . . . . . . . . . . . . . . 3,458 7,774 2,759 2,711
Selling and General . . . . . . . . . . . . . . . . . 6,316 12,109 5,509 5,941
Occupancy and Other Operating . . . . . . . . . . . . . 2,768 2,781
General and Administrative . . . . . . . . . . . . . . . 3,724 3,589
Depreciation and Amortization . . . . . . . . . . . . . 2,081 3,797
------- -------
Total Cost and Expenses . . . . . . . . . . . . . . 24,562 39,645
Operating Income . . . . . . . . . . . . . . . . . . . . 8,632 12,058
Operating Expense Margins:
Direct Hotel Operating Expenses:
Lodging, as a percentage of lodging revenue . . . . . 28.4% 26.8% 26.7% 25.8%
Food and Beverage, as a percentage of food and
beverage revenue . . . . . . . . . . . . . . . . . 73.3% 72.7% 72.7% 76.8%
Selling and General, as a percentage of lodging and
food and beverage revenue . . . . . . . . . . . . . 23.7% 26.1% 23.5% 24.0%
Occupancy and Other Operating, as a percentage of
lodging and food and beverage revenue . . . . . . . . . 11.8% 5.8%
General and Administrative, as a percentage of total
revenue . . . . . . . . . . . . . . . . . . . . . . . 11.2% 7.9%
Other Data:
Occupancy . . . . . . . . . . . . . . . . . . . . . . . . 70.9% 72.2% 73.6% 74.8%
Average daily rate ("ADR") . . . . . . . . . . . . . . . $58.63 $70.65 $58.93 $63.16
Revenue per available room ("REVPAR") . . . . . . . . . $41.57 $51.00 $43.37 $47.24
Gross Operating Profit . . . . . . . . . . . . . . . . . $10,997 $16,963 $9,939 $10,611
</TABLE>
- 9 -
<PAGE> 12
<TABLE>
<CAPTION>
Comparable Owned
Total Hotels(1)
---------------- ----------------
Six Months Ended Six Months Ended
June 30, June 30,
1994 1995 1994 1995
---- ---- ---- ----
(Dollars in thousands, except ADR and REVPAR)
<S> <C> <C> <C> <C>
Revenues:
Lodging . . . . . . . . . . . . . . . . . . . . . . . $39,921 $70,125 $37,142 $39,967
Food and Beverage . . . . . . . . . . . . . . . . . . 7,655 19,575 6,698 6,334
Management Fees and Other Fees . . . . . . . . . . . . 4,903 3,681
Interest on Mortgages and Notes Receivable . . . . . . 8,157 5,914
Rental and Other . . . . . . . . . . . . . . . . . . . 637 646
------- -------
Total Revenues . . . . . . . . . . . . . . . . . . 61,273 99,941
Direct Hotel Operating Expenses:
Lodging . . . . . . . . . . . . . . . . . . . . . . . 11,298 18,293 9,933 10,526
Food and Beverage . . . . . . . . . . . . . . . . . . 5,964 14,431 5,234 5,089
Selling and General . . . . . . . . . . . . . . . . . 12,120 23,933 11,099 11,694
Occupancy and Other Operating . . . . . . . . . . . . . 5,019 5,392
General and Administrative . . . . . . . . . . . . . . . 7,368 7,461
Depreciation and Amortization . . . . . . . . . . . . . 4,022 7,773
------- -------
Total Costs and Expenses . . . . . . . . . . . . . . 45,791 77,283
Operating Income . . . . . . . . . . . . . . . . . . . . 15,482 22,658
Operating Expense Margins:
Direct Hotel Operating Expenses:
Lodging, as a percentage of lodging revenue . . . . . 27.3% 26.1% 26.7% 26.3%
Food and Beverage, as a percentage of food and
beverage revenue . . . . . . . . . . . . . . . . . 77.9% 73.7% 78.1% 80.3%
Selling and General, as a percentage of lodging and
food and beverage revenue . . . . . . . . . . . . . 24.8% 26.7% 25.3% 25.3%
Occupancy and Other Operating, as a percentage of
lodging and food and beverage revenue . . . . . . . . . 12.0% 6.0%
General and Administrative, as a percentage of total
revenue . . . . . . . . . . . . . . . . . . . . . . . 12.0% 8.4%
Other Data:
Occupancy . . . . . . . . . . . . . . . . . . . . . . . . 67.6% 68.5% 69.9% 70.5%
Average daily rate ("ADR") . . . . . . . . . . . . . . . $58.63 $74.64 $59.23 $63.56
Revenue per available rooms ("REVPAR") . . . . . . . . . $39.63 $53.18 $41.40 $44.81
Gross Operating Profit . . . . . . . . . . . . . . . . . $18,289 $33,016 $17,575 $18,991
</TABLE>
--------------------
(1) For purposes of this discussion of results of operations for 1994
compared to 1995, comparable Owned Hotels refers to the 37 Owned Hotels
that were owned or leased by the Company during all of the three and
six months ended June 30, 1994 and 1995.
Lodging revenues increased by $13.9 million and $30.2 million, or 63.2%
and 75.6%, during the three and six months ended June 30, 1995 over the same
periods of the prior year. The increases were primarily due to incremental
lodging revenues from the 13 new hotels added during 1994 and 1995 of $12.7
million and $28.2 million for the three and six months ended June 30, 1995 and
continued growth in revenues at comparable Owned Hotels. Lodging revenues for
comparable Owned Hotels increased by $1.5 million
- 10 -
<PAGE> 13
and $2.8 million or 7.8% and 7.6%, for the three and six months ended June 30,
1995 as compared to the same periods of the prior year.
The Company operates in three major segments of the industry:
full-service, all-suites and limited-service. The following table illustrates
the changes in REVPAR for the comparable Owned Hotels for the three and six
months ended June 30, 1995 by industry segment:
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
June 30, 1995 June 30, 1995
------------- -------------
<S> <C> <C>
Full-service 6.7% 5 .5%
All-suites 13.3% 13.9%
Limited-service 8.8% 8 .8%
Total 8.8% 8 .7%
</TABLE>
REVPAR at comparable Owned Hotels increased for the three and six month
periods primarily due to increased demand at the Company's AmeriSuites hotels in
the all-suites segment and repositioning efforts at both full-service and
limited-service hotels. The improvements in REVPAR were generated primarily by
increases in ADR, which rose by 7.3% and 7.2% for the three and six month
periods.
Food and beverage revenues increased by $6.0 million and $11.9 million,
or 126.7% and 155.7%, for the three and six months ended June 30, 1995 compared
to the same period in the prior year. These increases were primarily due to the
additional food and beverage operations related to the six full-service hotels
acquired since March 31, 1994. Food and beverage revenues for comparable Owned
Hotels decreased by $265,000 and $364,000, or 6.9% and 5.4%, for the three and
six months ended June 30, 1995 compared to the same periods in the prior year
primarily due to decreased banquet business and lower beverage revenues at the
Company's sports lounges.
Management and other fees consist of base and incentive fees earned
under management agreements, fees for additional services rendered to Managed
Hotels and sales commissions earned by the Company's national sales group,
Market Segments, Inc. Management and other fees decreased by $542,000 and $1.2
million, or 24.8% and 26.9%, for the three and six months ended June 30, 1995 as
compared to the same periods in the prior year. The decreases were primarily due
to the loss of management fees on five Managed Hotels acquired by the Company
during 1994 and 1995 and six additional hotels which were sold by a third party
hotel owner in 1994. Partially offsetting these decreased management fees were
increased base and incentive management fees associated with the remaining
Managed Hotels.
Interest on mortgages and notes receivable during the periods primarily
related to mortgages secured by certain Managed Hotels. Interest on mortgages
and notes receivable
- 11 -
<PAGE> 14
decreased by $789,000 and $2.3 million, or 21.5% and 27.5%, for the three and
six months ended June 30, 1995 primarily due to the Company's conversion of a
$50 million note receivable secured by the Frenchman's Reef into an operating
hotel asset in December 1994. Partially offsetting the decrease was interest
income related to the purchase of $17.4 million of first mortgages secured by
two hotels for $12.7 million in June 1995.
Direct lodging expenses increased by $3.3 million and $7.0 million, or
54.3% and 61.9%, for the three and six months ended June 30, 1995 compared to
the same periods in the prior year, due primarily to the addition of new hotels.
Direct lodging expenses, as a percentage of lodging revenue, decreased from
28.4% to 26.8% for the three month period and from 27.3% to 26.1% for the six
month period. These decreases were primarily due to increases in ADR which had
minimal corresponding increases in expenses. For comparable Owned Hotels, direct
lodging expenses as a percentage of lodging revenues decreased from 26.7% to
25.8% for the three month period and from 26.7% to 26.3% for the six month
period.
Direct food and beverage expenses increased by $4.3 million and $8.5
million, or 124.8% and 141.9%, for the three and six months ended June 30, 1995
as compared to the same periods in the prior year primarily due to the addition
of six new full-service hotels. As a percentage of food and beverage revenues,
direct food and beverage expenses decreased from 73.3% to 72.7% for the three
month period and 77.9% to 73.7% for the six month period. The decreases were
primarily due to increased revenues in higher margin areas such as banquet
departments at the new hotels offset by increased expense margins at comparable
Owned Hotels. For comparable Owned Hotels, direct food and beverage expenses as
a percentage of food and beverage revenue increased from 72.7% to 76.8% for the
three month period and increased from 78.1% to 80.3% for the six month period
primarily due to decreased banquet revenues at these hotels.
Direct hotel selling and general expenses consist primarily of hotel
expenses for Owned Hotels which are not specifically allocated to rooms or food
and beverage activities, such as administration, selling and advertising,
utilities, repairs and maintenance. Direct hotel selling and general expenses
increased by $5.8 million and $11.8 million, or 96.1% and 97.4%, for the three
and six months ended June 30, 1995 as compared to the same periods in the prior
year due primarily to the addition of new hotels. As a percentage of hotel
revenues (defined as lodging and food and beverage revenues), direct hotel
selling and general expenses increased from 23.7% to 26.1% for the three month
period and from 24.9% to 26.7% for the six month period due to the addition of
new full-service properties which generally require higher levels of unallocated
expenses. For comparable Owned Hotels, direct selling and general expenses as a
percentage of revenues remained stable at 25.3% for the three month period and
increased slightly from 23.5% to 24.0% for the six month period.
Occupancy and other operating expenses consist primarily of insurance,
real estate and other taxes and rent expense. For the three months ended June
30, 1995, occupancy
- 12 -
<PAGE> 15
and other operating expenses were even with the prior year as the additional
costs associated with the new hotels were offset by a real estate tax refund of
approximately $300,000. For the six months ended June 30, 1995, occupancy and
other operating expenses increased by $373,000 or 7.4% due to the addition of
new hotels. As a percentage of hotel revenues, occupancy and other operating
expenses decreased from 11.8% to 5.8% for the three month period and from 12.0%
to 6.0% for the six month period primarily due to operating leverage.
General and administrative expenses consist primarily of centralized
management expenses such as operations management, sales and marketing, finance
and hotel support services associated with operating both the Owned and Managed
Hotels and general corporate expenses. General and administrative expenses
decreased by $135,000 or 3.6% for the quarter and increased by only $93,000 or
1.3% for the six month period primarily due to home office payroll reductions.
As a percentage of total revenues, general and administrative expenses decreased
from 11.2% to 7.9% for the three month period and from 12.0% to 8.4% for the six
month period due to operating leverage.
Depreciation and amortization expense increased by $1.7 million and
$3.8 million, or 82.5% and 93.3%, for the three and six months ended June 30,
1995 due to the impact of new hotel properties acquired in the past year and
refurbishment efforts at several hotels.
Interest expense increased by $2.5 million and $3.0 million, or 75.3%
and 42.9%, for the three and six months ended June 30, 1995 primarily due to new
mortgage borrowings of $39.0 million incurred in February 1995 and $86.3 million
of 7% Convertible Subordinated Notes due 2002 ("the Convertible Notes") issued
in April and May 1995. Investment income increased by $942,000 and $898,000, for
the three and six months due to higher average cash balances generated by the
new borrowings.
Other income of $605,000 for the three and six months ended June 30,
1995 relates to a gain on the sale of a land parcel. Other income of $5.9
million for the three months ended June 30, 1994 consists of a gain on the
settlement of a note receivable from Alan Rose and Arthur Cohen ("Rose and
Cohen"). For the six months ended June 30, 1994, other income also consists of a
gain on sale of a hotel for approximately $1.0 million.
Pretax extraordinary gains of approximately $91,000 and $102,000 for
the three and six months ended June 30, 1995 relate to the retirement of secured
notes with a face value of $12.5 million. Pretax extraordinary gains of
approximately $100,000 and $286,000 for the three and six months ended June 30,
1994 relate to the retirement of debt with a face value of $8.3 million.
- 13 -
<PAGE> 16
LIQUIDITY AND CAPITAL RESOURCES
The Company's growth strategy focuses on increasing its equity
ownership in hotels, particularly in the full-service and all-suites segments of
the market. The Company intends to actively pursue acquisitions of full-service
hotels or hotel portfolios which may also require additional capital for the
costs of any necessary renovation or refurbishment. Additionally, the Company
plans to expand its AmeriSuites hotel brand by opening or commencing
construction on at least ten AmeriSuites hotels in 1995. The Company plans to
fund its development and acquisition program in 1995 with the proceeds from the
$86.3 million of the Convertible Notes issued in the second quarter of 1995,
mortgage financings of $42.6 million incurred in the first quarter of 1995 and
additional mortgage financings on its unencumbered properties, as well as,
potentially, on properties acquired. The Company believes that these sources
will be adequate to fund the implementation of its growth strategy in 1995.
Additionally, the Company believes that its cash flow from operations is
sufficient to fund its anticipated working capital needs, routine capital
expenditures and debt service obligations due through 1995.
At June 30, 1995, the Company had cash and cash equivalents of $81.9
million, current marketable securities of $12.1 million and restricted cash,
which is primarily collateral for various debt obligations, of $3.7 million.
Cash and cash equivalents and current marketable securities increased by $80.3
million during six months ended June 30, 1995 primarily due to new borrowings.
Cash flow from operations was approximately $17.6 million for the six
months ended June 30, 1995 as compared to $12.6 million for the same period of
the prior year. Cash flow from operations was positively impacted by the
utilization of net operating loss carryforwards ("NOLs") of $1.5 and $2.8
million for the six months ended June 30, 1994 and 1995, respectively. At June
30, 1995, the Company had federal NOLs relating to its predecessor, PMI, of
approximately $123.4 million which are subject to annual utilization limitations
and expire beginning in 2005 and continuing through 2007.
The Company's other major sources of cash for the six months ended June
30, 1995 were net proceeds of approximately $83.2 million from the sale of the
Convertible Notes, mortgage financings of $39.0 million and collections of
mortgages and notes receivable of $3.5 million. The Company's major uses of cash
for the six months ended June 30, 1995 were purchases of marketable securities
of $18.5 million, capital expenditures of $36.5 million, debt payments of $15.7
million and the purchase of first mortgage notes for $12.7 million.
Debt. In April and May 1995, the Company sold $86.3 million of 7%
Convertible Subordinated Notes due 2002. The notes bear interest at 7%, are
convertible into common stock at a price of $12 per share at the option of the
holder and mature April 15, 2002. The notes are redeemable, in whole or in part,
at the option of the Company after three years at premiums to principal which
decline on each anniversary date. The Company plans to use the proceeds
primarily to finance the development and acquisition of hotels or hotel
portfolios.
- 14 -
<PAGE> 17
In February 1995, the Company obtained $39.0 million of mortgage
financing on 11 of its hotels under two separate loan agreements. Both loans
bear interest at variable rates (approximately 10.5% at June 30, 1995) and have
five-year maturities. The funds will be used to finance the Company's
acquisition and development program. The Company incurred an additional $3.6
million of debt in connection with the ShoLodge Transaction. See "-- Capital
Investments."
During the first quarter of 1995, the Company retired $388,000 of its
senior secured notes resulting in a pre-tax extraordinary gain of $11,000. In
the second quarter of 1995, the Company prepaid $12.1 million of its senior
secured notes with a payment funded by collections from the collateral for these
notes. The transaction resulted in a pre-tax extraordinary gain of $91,000. In
July 1995, the Company retired an additional $2.7 million of its senior secured
notes. A pre-tax extraordinary gain of $20,000 will be recorded in the third
quarter.
As of June 30, 1995, the Company has $37.5 million of debt related to
the Frenchman's Reef. The obligation matures in December 1996 at which time a
balloon payment of $34.9 million is due. The Company intends to seek an
extension of the maturity of such debt or refinance it. The debt is secured by
the property which has a book value of $50.0 million.
At June 30, 1995, the Company had $300.9 million in debt outstanding.
Of this debt, approximately $83.7 million bears interest at floating rates. The
Company intends to enter into an interest rate protection agreement with a major
financial institution with respect to its floating rate debt. However, in the
short term, the interest the Company pays on such debt will increase or decrease
depending on the movement of interest rates generally.
Capital Investments. The Company has implemented a hotel development
and acquisition program which focuses on the acquisition of strategically
positioned full-service hotels or hotel portfolios and the development of
AmeriSuites hotels. In connection with this program, the Company spent
approximately $28.8 million in cash on the acquisition and construction of
hotels, purchased first mortgage notes for $12.7 million and assumed $3.6
million of debt in the first half of 1995. The cash portion was funded by a
combination of existing cash balances, cash flow from operations, mortgage
financings and the Convertible Notes offering.
The Company currently plans to spend approximately $70.0 million to
open or commence construction on at least ten new AmeriSuites hotels in 1995.
The Company currently has six AmeriSuites hotels under construction in Atlanta,
Miami, Cleveland, Dallas, Greensboro and Detroit. The Company plans to begin
construction of three additional AmeriSuites in the third quarter and has
several other sites targeted for the commencement of development in the fourth
quarter.
In March 1995, the Company purchased an AmeriSuites hotel in Richmond,
Virginia and ShoLodge Inc.'s option to acquire a 50% interest in 11 of the
Company's 12 AmeriSuites hotels. The total consideration payable by the Company
in the ShoLodge Transaction is $19.7 million and is comprised of (i) $16.1
million which was paid during the first half of 1995 plus (ii) $18.5 million
which will be paid in notes maturing in 1997 less (iii) $14.9 million of
existing debt on five hotels
- 15 -
<PAGE> 18
which was forgiven at face value. The transaction results in a net increase of
$3.6 million of long-term debt. As a result of the transaction, the Company now
manages these 12 AmeriSuites bringing to 13 the number of AmeriSuites hotels
owned and operated by the Company.
In June 1995, the Company purchased $17.4 million of first hotel
mortgages for $12.7 million in cash. The mortgage loans are secured by the
324-room Holiday Inn Hampton Coliseum and an adjacent 132-room Hampton Inn in
Hampton, Virginia. The Company acquired the mortgage loans from a private
investment partnership and entered into an agreement with the owner of the
hotels to restructure the notes. The restructuring provided for a twelve month
maturity and a right of first refusal to the Company upon any sale of the
hotels.
In August 1995, the Company entered into an agreement to purchase four
Bradbury Suites hotels for $18.9 million. The hotels, comprising 459 rooms, are
located in Augusta, Georgia; Columbia, South Carolina; Arlington Heights,
Illinois and Jacksonville, Florida. The Company plans to convert the hotels to
its proprietary AmeriSuites brand, bringing to seventeen the total number of
AmerSuites hotels. The agreement is subject to certain due diligence
conditions. Closing is set for the end of August.
During the first six months of 1995, the Company spent approximately
$7.7 million on capital improvements at its Owned Hotels, of which approximately
$3.3 million related to refurbishments and repositionings on recently acquired
hotels. In 1995, the Company intends to spend a total of approximately $18.0
million on capital improvements, of which $10.8 million relates to the
refurbishing and repositioning of recently acquired hotels.
Asset Realizations. The Company has pursued a strategy of converting
the mortgage notes receivable and other assets that it owns into cash or
operating hotel assets. Since July 31, 1992, the Company has received $103.5
million in cash and added eight operating hotel assets through note settlements
and lease terminations. The Company will continue to pursue settlements with
mortgage and note obligors and will utilize the cash for debt repayments or
general corporate purposes. During the first quarter of 1995, the Company
received $2.7 million in cash in settlement of a note receivable. No gain or
loss was recognized in the transaction. In May 1995, the Company obtained
control of the 240 room Princeton Holiday Inn by converting its $2.7 million
mortgage note receivable into a long-term leasehold position and assuming $1.5
million of debt. The hotel was recently repositioned to a Holiday Inn from a
Ramada Inn and is currently being refurbished. In July 1995, the Company
collected an additional $1.8 million in settlement of a note receivable. No gain
or loss will be recognized from the settlement of the note.
The Company received a second favorable ruling in its litigation with
Financial Security Assurance, Inc. ("FSA") in which FSA sought approximately
$31.2 million previously received by the Company in settlement of a note and
guaranty from Rose and Cohen. In an order dated April 25, 1995, the U.S.
District Court for the Southern District of Florida (the "U.S. District Court")
affirmed a lower court ruling approving the Company's settlement with Rose and
Cohen and finding that the Company alone was entitled to the settlement
proceeds. The Company had previously reached a settlement in 1993 with Rose and
Cohen which provided for Rose or his affiliate to pay the Company $25 million
plus proceeds from the sale of approximately 1.1 million shares of the Company's
common stock held by Rose, bringing the total settlement proceeds to
approximately $31.2 million.
- 16 -
<PAGE> 19
FSA asserted that, under the terms of an intercreditor agreement, it was
entitled to receive the settlement proceeds otherwise payable to the Company.
The U.S. Bankruptcy Court for the Southern District of Florida (the "Bankruptcy
Court") ruled in favor of the Company in April 1994 and the Company used $25.0
million of the settlement proceeds to retire certain senior secured notes. FSA
appealed to the U.S. District Court, which affirmed the Bankruptcy Court's
ruling. On May 12, 1995, the Company used the remaining proceeds plus accrued
interest to prepay senior secured notes. On May 23, 1995, FSA filed a notice of
appeal with the U.S. Court of Appeals for the 11th Circuit.
- 17 -
<PAGE> 20
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security-Holders
On May 16, 1995, the Company held its Annual Meeting of Stockholders.
There were 30,588,024 shares of common stock of the Company which could be voted
and 24,488,931 shares represented at such meeting by the holders thereof or by
proxy, which constituted a quorum. The results were as follows:
1. Election of two directors to serve as Class III Directors until
the 1998 Annual Meeting of Stockholders:
<TABLE>
<CAPTION>
FOR WITHHELD
--- --------
<S> <C> <C>
Allen J. Ostroff 23,958,083 530,893
A.F. Petrocelli 23,873,812 615,119
</TABLE>
As of August 7, 1995, Directors David A. Simon, John M. Elwood,
Herbert L. Lust, II, Jack H. Nusbaum and Howard M. Lorber
continue to serve as directors of the Company.
2. Approval of an amendment to the Company's Restated Certificate
of Incorporation to increase the number of authorized shares of
Common Stock of the Company from 50,000,000 to 75,000,000:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
--- ------- -------
<S> <C> <C>
23,382,870 1,063,948 42,113
</TABLE>
3. Approval of the 1995 Employee Stock Option Plan.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
--- ------- -------
<S> <C> <C>
23,586,258 812,103 90,570
</TABLE>
4. Approval of the 1995 Non-employee Director Stock Option Plan.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
--- ------- -------
<S> <C> <C>
19,839,256 4,549,908 99,767
</TABLE>
5. Ratification of the selection of Arthur Andersen LLP as
independent accountants to audit the Company's consolidated
financial statements for the fiscal year ended December 31,
1995.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
--- ------- -------
<S> <C> <C>
24,356,181 54,087 78,663
</TABLE>
- 18 -
<PAGE> 21
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) On April 25, 1995 a report on Form 8-K was filed announcing the
Company's first quarter earnings.
- 19 -
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PRIME HOSPITALITY CORP.
Date: August 10, 1995 By: /s/ David A. Simon
----------------------
David A. Simon, President and
Chief Executive Officer
Date: August 10, 1995 By: /s/ John M. Elwood
----------------------
John M. Elwood, Executive
Vice President and Chief
Financial Officer
- 20 -
<PAGE> 23
EXHIBIT INDEX
Exhibit No. Description Page No.
---------- ----------- -------
EX-27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 81,865
<SECURITIES> 12,058
<RECEIVABLES> 10,377
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 130,794
<PP&E> 327,451
<DEPRECIATION> 0
<TOTAL-ASSETS> 568,428
<CURRENT-LIABILITIES> 34,350
<BONDS> 293,986
<COMMON> 308
0
0
<OTHER-SE> 217,287
<TOTAL-LIABILITY-AND-EQUITY> 568,428
<SALES> 0
<TOTAL-REVENUES> 99,941
<CGS> 0
<TOTAL-COSTS> 77,283
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,986
<INCOME-PRETAX> 15,206
<INCOME-TAX> 6,083
<INCOME-CONTINUING> 9,123
<DISCONTINUED> 0
<EXTRAORDINARY> 61
<CHANGES> 0
<NET-INCOME> 9,184
<EPS-PRIMARY> .28
<EPS-DILUTED> .28
</TABLE>
