<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A
Current Report
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 6, 1996
PRIME HOSPITALITY CORP.
(Exact name of Registrant as specified in its charter)
COMMISSION FILE NO. 1-6869
DELAWARE 22-2640625
(State or other jurisdiction of (IRS employer
incorporation or organization) identification no.)
700 ROUTE 46 EAST, FAIRFIELD, NEW JERSEY 07004
(address of principal executive offices) (zip code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (201)882-1010
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Item 2. Acquisition of Assets
On March 6, 1996, Prime Hospitality Corp. (the "Company") acquired 18
hotels, consisting of 16 Wellesley Inns and two other limited-service hotels for
approximately $65.1 million in cash. The acquisition enables the Company to
consolidate the ownership and establish full control over its proprietary brand
Wellesley Inns with all 30 Wellesley Inns now owned and operated by the Company.
The acquisition is intended to provide the Company with significant new
opportunities to maximize the value of its brand.
The hotels are located in Florida, New York, New Jersey, Virginia,
Maryland and Pennsylvania. In 1995, the hotels generated $24.3 million of
revenues and earnings before interest, taxes, depreciation and amortization and
management fees of $10.4 million.
The acquisition price was comprised of $60.4 million to purchase the
first mortgage on the 18 hotels with a face value of approximately $70.5 million
and $4.7 million to purchase the interests of the three partnerships which owned
the hotels. The Company utilized its available cash to fund the acquisition.
Approximately $1.9 million of the total purchase price was paid to a partnership
in which a general partner is the father of David A. Simon, the Company's
President and Chief Executive Officer. In connection with the transaction, the
Company also terminated its management agreements and junior subordinated
mortgages related to the 18 hotels.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of
Wellesley I, L.P., Meriden Hotel Associates, L.P., Multi-Wellesley
Hotels, L.P., Biscayne-Clifton Associates, LeJeune Associates, Fort
Pierce Associates and Daytona Associates:
We have audited the accompanying combined balance sheets of Wellesley I, L.P.,
Meriden Hotel Associates, L.P., Multi-Wellesley Hotels, L.P., Biscayne-Clifton
Associates, LeJeune Associates, Fort Pierce Associates and Daytona Associates
(collectively, the "Partnerships") as of December 31, 1995 and the related
combined statements of operations and cash flows for the year then ended. These
combined financial statements are the responsibility of the Partnerships'
management. Our responsibility is to express an opinion on these combined
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the combined financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the combined financial statements. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall combined financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position of the
Partnerships as of December 31, 1995, and the combined results of operations and
cash flows for the year then ended, in conformity with generally accepted
accounting principles.
As discussed in Note 5 to the combined financial statements, in March 1996, all
assets of the Partnerships were sold to Prime Hospitality Corp.
ARTHUR ANDERSEN LLP
Roseland, New Jersey
May 17, 1996
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WELLESLEY I, L.P., MERIDEN HOTEL ASSOCIATES, L.P., MULTI-
WELLESLEY HOTELS, L.P., BISCAYNE-CLIFTON ASSOCIATES, LEJEUNE
ASSOCIATES, FORT PIERCE ASSOCIATES AND DAYTONA ASSOCIATES
COMBINED BALANCE SHEET
DECEMBER 31, 1995
(IN THOUSANDS)
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents ..................................... $ 1,470
Accounts receivable, net of reserves .......................... 715
Other current assets .......................................... 1,086
---------
Total current assets .................................... 3,271
Property, equipment and leasehold improvements, net of accumulated
depreciation and amortization ................................. 87,719
Restricted cash .................................................. 1,964
---------
TOTAL ASSETS ............................................ $ 92,954
=========
LIABILITIES AND PARTNERSHIPS' EQUITY
Current liabilities:
Current portion of debt ....................................... $ 87,523
Other current liabilities ..................................... 6,041
---------
Total current liabilities ............................... 93,564
Long-term debt, net of current portion ........................... 13,562
Other liabilities ................................................ 250
---------
Total liabilities ....................................... 107,376
---------
Commitments and contingencies
Partnership equity:
Partnership equity ............................................ 10,775
Retained earnings ............................................. (25,197)
---------
Total partnership equity ................................ (14,422)
---------
TOTAL LIABILITIES AND PARTNERSHIPS' EQUITY .............. $ 92,954
=========
</TABLE>
See Accompanying Notes to Combined Financial Statements.
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WELLESLEY I, L.P., MERIDEN HOTEL ASSOCIATES, L.P., MULTI-
WELLESLEY HOTELS, L.P., BISCAYNE-CLIFTON ASSOCIATES, LEJEUNE
ASSOCIATES, FORT PIERCE ASSOCIATES AND DAYTONA ASSOCIATES
COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS)
<TABLE>
<S> <C>
Revenues:
Lodging ............................................ $ 24,015
Rental and other ................................... 331
--------
Total revenues ............................... 24,346
--------
Costs and expenses:
Direct hotel operating expenses:
Lodging .......................................... 6,492
Selling and general .............................. 5,875
Occupancy and other operating ...................... 2,836
Depreciation and amortization ...................... 4,965
--------
Total costs and expenses ..................... 20,168
--------
Operating income ...................................... 4,178
Interest expense ...................................... 5,403
--------
Net loss .............................................. $ (1,225)
========
</TABLE>
See Accompanying Notes to Combined Financial Statements.
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WELLESLEY I, L.P., MERIDEN HOTEL ASSOCIATES, L.P., MULTI-
WELLESLEY HOTELS, L.P., BISCAYNE-CLIFTON ASSOCIATES, LEJEUNE
ASSOCIATES, FORT PIERCE ASSOCIATES AND DAYTONA ASSOCIATES
COMBINED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS)
<TABLE>
<S> <C>
Cash flows from operating activities:
Net loss ........................................................................ $(1,225)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization ................................................. 4,965
Accretion of excess face amount of prior debt and accrued interest over
restructured principal balance .............................................. (2,942)
Increase (decrease) from changes in other operating assets and liabilities:
Accounts receivable ........................................................... 95
Other current assets .......................................................... (10)
Other liabilities ............................................................. 2,180
-------
Net cash provided by operating activities ..................................... 3,063
-------
Cash flows from investing activities:
Proceeds from sales of property, equipment and leasehold improvements ........... 75
Purchases of property, equipment and leasehold improvements ..................... (737)
Increase in restricted cash ..................................................... (644)
Other ........................................................................... 158
-------
Net cash used in investing activities ......................................... (1,148)
-------
Cash flows from financing activities:
Net proceeds from issuance of debt .............................................. 4,887
Payments of debt ................................................................ (5,780)
Distribution to owners .......................................................... (542)
-------
Net cash provided by financing activities ..................................... (1,435)
-------
Net increase in cash and cash equivalents .......................................... 480
Cash and cash equivalents at beginning of period ................................... 990
-------
Cash and cash equivalents at end of period ......................................... $ 1,470
=======
</TABLE>
See Accompanying Notes to Combined Financial Statements.
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WELLESLEY I, L.P., MERIDEN HOTEL ASSOCIATES, L.P., MULTI-WELLESLEY
HOTELS, L.P., BISCAYNE-CLIFTON ASSOCIATES, LEJEUNE ASSOCIATES, FORT
PIERCE ASSOCIATES AND DAYTONA ASSOCIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
(1) BUSINESS OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
--------------------
During 1995 and through March 6, 1996 (see Note 5), Wellesley I, L.P.
and Meriden Hotel Associates, L.P. owned 55.6% and 44.4%, respectively,
of the following limited service hotels which were operated under a
management agreement with Prime Hospitality Corp. ("Prime").
Wellesley Inn - Deerfield Beach, Florida 79 rooms
Wellesley Inn - Hazlet, New Jersey 89 rooms
Wellesley Inn - Miami, Florida 106 rooms
Wellesley Inn - Reading, Pennsylvania 105 rooms
Wellesley Inn - Rochester, New York 99 rooms
During 1995 and through March 6, 1996 (see Note 5), Multi-Wellesley
Hotels, L.P. owned the following four limited service hotels which were
operated under a management agreement with Prime.
Wellesley Inn - Buffalo, New York 84 rooms
Wellesley Inn - Fairfax, Virginia 83 rooms
Holiday Inn Express - Herndon, Virginia 115 rooms
Wellesley Inn - Miami Lakes, Florida 100 rooms
During 1995 and through March 6, 1996 (see Note 5), Biscayne-Clifton
Associates, LeJeune Associates, Fort Pierce Associates and Daytona
Associates owned the following nine limited service hotels which were
operated under a management agreement with Prime.
Wellesley Inn - Coral Springs, Florida 106 rooms
Wellesley Inn - Ft. Lauderdale, Florida 106 rooms
Wellesley Inn - Ft. Lauderdale, Florida 100 rooms
Wellesley Inn - Fishkill, New York 83 rooms
Wellesley Inn - Hagerstown, Maryland 84 rooms
Wellesley Inn - Rochester, New York 98 rooms
Wellesley Inn - Ramsey, New Jersey 90 rooms
Wellesley Inn - Suffern, New York 97 rooms
Days Inn - Dunmore, Pennsylvania 90 rooms
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These hotel properties (the "Hotels"), excluding the Suffern Wellesley
Inn, were purchased from Prime Motor Inns, Inc. ("PMI") the predecessor
corporation to Prime, in 1989 for $107,000,000. The consideration
consisted of $16,120,000 in cash, the assumption of $77,455,000 in
existing first mortgage notes payable to a group of financial
institutions ("the Holders") and $13,425,000 in new second mortgage
notes payable to PMI. PMI retained ownership of the land under the
hotels owned by the Wellesley I and Multi-Wellesley, L.P.'s and leased
it back to these partnerships under a long-term lease. The land was
subsequently sold to these partnerships (see Note 3). Effective
December 1, 1992, the Suffern Wellesley Inn was transferred to the
Biscayne-Clifton partnership in exchange for the assumption of mortgage
debt.
As reflected in the accompanying combined financial statements of
Wellesley I, L.P., Meriden Hotel Associates, Multi-Wellesley Hotels,
L.P., Biscayne-Clifton Associates, LeJeune Associates, Fort Pierce
Associates and Daytona Associates (collectively, the "Partnerships")
and described in Note 3, a significant portion of the Partnerships'
debt matured in December 1995. On March 6, 1996, the Holders, the
Partnerships and Prime entered into an agreement in which Prime
purchased the first mortgage notes of the Holder and the Partnerships'
interests in the 18 hotels for $65,100,000 in cash (see Note 5).
Principles of Combination
-------------------------
The combined financial statements include the accounts of the
Partnerships for the year ended December 31, 1995. The combined
financial statements do not reflect the sale of these hotels to Prime.
Use of Estimates
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Cash and Cash Equivalents
-------------------------
All investments with a maturity of three months or less are considered
to be cash equivalents.
Restricted Cash
---------------
Restricted cash is cash held by the servicer, Kleinwort Benson Limited,
for payment of principal and interest on the first mortgage notes (Note
3) and to provide for the
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replacement and maintenance of buildings and equipment at the Hotels in
accordance with the provisions of the management agreement.
Property, Equipment and Leasehold Improvements
----------------------------------------------
The property, equipment and leasehold improvements of the Partnerships
are reflected in the accompanying combined financial statements at
cost, less valuation reserves and net of accumulated depreciation and
amortization. Depreciation and amortization have been provided on a
straight-line basis for financial reporting purposes as follows-
Buildings -- 31.5 years
Furniture and equipment -- 4 to 7 years
Leasehold improvements and refurbishing -- 10 years
Par Operating Equipment
-----------------------
Par operating equipment (primarily linen supplies) is reflected at 80%
of its original cost. All replacements of par operating equipment are
expensed when purchased.
Income Taxes
------------
In accordance with the applicable Internal Revenue Service regulations,
the income tax effects of profits and losses are attributable to the
individual partners and are not reflected in the Partnerships' combined
financial statements.
(2) PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Property, equipment and leasehold imporvements consist of the following
at December 31 (in thousands):
<TABLE>
<S> <C>
Land ............................................. $ 7,894
Furniture, fixtures and equipment ................ 5,762
Buildings ........................................ 103,401
Leasehold improvements ........................... 1,161
Refurbishing ..................................... 1,670
---------
119,888
Less: accumulated depreciation ................... (32,169)
---------
Property, equipment and leasehold improvements-net $ 87,719
=========
</TABLE>
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(3) LONG-TERM DEBT
Long-term debt consists of the following at December 31, 1995 (in
thousands):
<TABLE>
<S> <C>
First Mortgages ........................ $ 72,381
Second Mortgages ....................... 11,175
Third Mortgages ........................ 7,894
Subrogation Mortgages .................. 9,635
---------
Total Debt .................... 101,085
Less: Current Portion ......... (87,523)
---------
Total Long-term Debt ................... $ 13,562
=========
</TABLE>
The first mortgage notes were assumed by the Partnerships in connection
with the acquisition of the Hotels by the Partnerships from PMI. PMI
had guaranteed a portion of the first mortgage notes payable to the
Holders and also guaranteed the payment of interest at a specified
rate. In September 1990, PMI filed for protection under Chapter 11 of
the Bankruptcy Code. PMI's bankruptcy was an event of default under the
loan agreement and consequently the loan agreement was restructured. On
July 31, 1992, PMI emerged from its Chapter 11 reorganization and
merged with and into Prime. As part of the reorganization, the Holders
received notes (the "Prime Notes") in full satisfaction of all claims
against PMI. Effective December 1, 1992, the Holders, Prime and the
Partnerships entered into a series of related agreements to restructure
the debt on the Hotels (the "Restructuring Agreements"). The first
mortgage notes matured on December 15, 1995 and the Partnerships were
unable to satisfy this obligation. In connection with the acquisition
of the Hotels, the first mortgage notes were purchased by Prime and the
remaining mortgages held by Prime were cancelled (see Note 5).
Interest on the first mortgage notes ranged from LIBOR (5.44% at
December 31, 1995) plus 1.7% to LIBOR plus 1.8%. The first mortgage
notes were secured by the Partnerships and substantially all of the
assets of the Hotels.
Interest on the second mortgage notes ranged from 8.2% to 9.5% and was
generally payable based on the available cash flow of the Hotels as
defined in the Restructuring Agreements.
The subrogation notes were issued to Prime and were increased whenever
the cash proceeds of the Prime Notes were utilized to pay obligations
of the Partnerships to the Holders. In addition, the notes were
increased from proceeds of the Prime Notes that were set aside to fund
certain capital expenditures, to fund debt service and for unpaid
interest on the notes. The subrogation notes accrued interest at the
same rate as the first mortgage notes and were due on December 15,
1995.
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In December 1992, the land under the Hotels was sold to two of the
partnerships for new third mortgage notes in the aggregate amount of
$7,894,000. The third mortgage notes accrued interest at rates ranging
from 10.8% to 11.85% and were scheduled to mature on March 31, 2088.
Interest was payable monthly to the extent of available cash flow, as
defined. No principal was due until maturity.
The Restructuring Agreements were accounted for in accordance with
Financial Accounting Standards Board Statement No. 15, "Accounting by
Debtors and Creditors for Troubled Debt Restructurings." Accordingly,
the remaining excess of the face amounts of the second mortgage note
and related accrued interest payable over the restructured principal
balance of $2,942,000 was amortized as a reduction of interest expense
in 1995.
Schedule maturities of long-term debt are as follows (in thousands):
<TABLE>
<CAPTION>
Year Ended
----------
<S> <C>
1996 .................. $ 87,523
1997 .................. --
1998 .................. --
1999 .................. --
2000 .................. --
Thereafter ............ 13,562
--------
Total ........ $101,085
========
</TABLE>
(4) COMMITMENTS AND CONTINGENCIES
Management Agreements
The Hotels were operated under management agreements with Prime. The
management fees payable to Prime under the terms of the management
agreements was equal to 3.0% of net revenues, as defined, and an
accounting fee of $25,000 per year for each hotel property was also
payable to Prime. For the year ended December 31, 1995, management and
accounting fees of $1,174,295 are included in the combined statement of
operations. In connection with the acquisition of the Hotels (see Note
5), the management agreements were terminated.
Prime maintained coverage relating to general liability insurance for
the Hotels. For the year ended December 31, 1995, insurance premiums
charged to the Hotels were $477,000. Prime maintained workmen's
compensation and health insurance coverage for the Hotels. Premiums
charged by Prime totaled $761,000 for the year ended December 31, 1995.
In addition, Prime was reimbursed for reasonable expenses incurred for
the benefit of the Hotels, primarily payroll related costs. Amounts due
to Prime of $384,000
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are included in other current liabilities in the accompanying combined
financial statements and consist of operating expenses and management
fees payable.
Reservation Agreement
The Hotels operate under the terms of a reservation agreement with
ShoLodge, Inc. ("ShoLodge"). The agreement provides for a fee for
participation in ShoLodge's centralized reservation systems equal to
1.0% of gross room revenues, as defined, plus certain other charges.
For the year ended December 31, 1995, the Hotels incurred charges of
$240,000 for participation in their centralized reservation systems.
The Dunmore Days Inn operates under the terms of a franchise license
agreement with Days Inn which expires on August 1, 1996. Franchise
royalty fees are equal to 5% of gross room revenues, as defined. For
the year ended December 31, 1995, the hotel incurred net franchise
royalty fees of $57,000. The agreement also provides an advertising fee
equal to 1.5% of gross room revenues, as defined, and a fee for
participation in Days Inn's centralized reservation system equal to
2.3% of room revenues, as defined, plus certain other fixed charges.
During the year ended December 31, 1995 the hotel incurred charges of
$17,000 for advertising fees and $27,000 for participation in the
centralized reservation system.
The Herndon, Virginia hotel operates under the terms of a franchise
license agreement with Holiday Inns, which expires on January 31, 2003.
Franchise royalty fees are equal to 4% of gross room revenues as
defined. For the year ended December 31, 1995, the hotel incurred net
franchise royalty fees of $65,000. This agreement also provides for an
advertising fee equal to 2% of gross room revenues, as defined, and a
reservation fee for participation in Holiday Inn's centralized
reservations system equal to 1% of room revenues, as defined, plus
certain other fixed charges. During the year ended December 31, 1995,
the hotel incurred charges of $32,000 for advertising fees and $29,000
for participation in the centralized reservation system.
(5) SUBSEQUENT EVENT
On March 6, 1996, Prime acquired the 18 hotels for approximately
$65,100,000 in cash. The acquisition price was comprised of
approximately $60,400,000 to purchase the first mortgages on the 18
hotels and $4,700,000 to purchase the interests of the Partnerships. In
connection with the transaction, the management agreements and
subordinated mortgage note agreements with Prime were terminated.
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(b) Pro Forma Financial Information
PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following pro forma condensed combined balance sheet and statement
of operations are provided for Prime Hospitality Corp. ("Prime") for the year
ended December 31, 1995, and give effect to the acquisition of Wellesley I,
L.P., Multi-Wellesley Hotels, L.P., Biscayne-Clifton Associates, LeJeune
Associates, Fort Pierce Associates and Daytona Associates (collectively,
"Partnerships") and the related financing as though they had occurred at the
beginning of the earliest period presented.
Those pro forma condensed combined balance sheet and statement of
operations are presented for illustrative purposes only, and therefore are not
necessarily indicative of the financial position or operating results that might
have been achieved had such events occurred as of an earlier date, nor are they
necessarily indicative of the operating results that may occur in the future.
The condensed consolidated historical balance sheet and statement of
operations of Prime are derived from the historical consolidated financial
statements of Prime. The condensed combined historical balance sheet and
statement of operations for the Partnerships are derived from the historical
combined financial statements of the Partnerships.
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PRIME HOSPITALITY CORP.
PRO FORMA CONDENSED COMBINED BALANCE SHEET
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Eliminations of Total
Partnership Pro Forma Pro Forma
Prime(1) Partnerships(2) Asset/Liab(3) Adjustments Combined
-------- --------------- ------------- ----------- --------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents .............. $ 49,533 $ 1,470 $ -- $(51,003)(4)(5) $ --
Marketable securities available for sale 11,929 -- -- -- 11,929
Accounts receivables-net ............... 13,139 715 -- -- 13,854
Other current assets ................... 18,576 1,086 -- -- 19,662
-------- --------- ------- -------- --------
Total current assets ............... 93,177 3,271 -- (51,003) 45,445
Property, equipment and leasehold
improvements, net of accumulated
depreciation and amortization ........ 398,201 87,719 -- (23,189)(4) 462,731
Mortgages and notes receivable, net of
current portion ...................... 64,962 -- -- (2,816)(4) 62,146
Other assets ........................... 16,901 1,964 -- (1,964)(4) 16,901
-------- --------- ------- -------- --------
TOTAL ASSETS ....................... $573,241 $ 92,954 $ -- $(78,972) $587,223
======== ========= ======= ======== ========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilites:
Current portion of debt ................ $ 5,731 $ 87,523 $ -- $(87,523)(4) $ 5,731
Other current liabilities .............. 38,961 6,041 -- (3,916)(4) 41,086
-------- --------- ------- -------- --------
Total current liabilities .......... 44,692 93,564 -- (91,439) 46,817
Long-term debt, net of current portion . 276,920 13,562 -- (1,955)(4)(5) 288,527
Other liabilities ...................... 18,713 250 -- -- 18,963
-------- --------- ------- -------- --------
Total liabilities .................. 340,325 107,376 -- (93,394) 354,307
-------- --------- ------- -------- --------
Total stockholders' equity ................ 232,916 (14,422) 14,422 -- 232,916
-------- --------- ------- -------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $573,241 $ 92,954 $14,422 $(93,394) $587,223
======== ========= ======= ======== ========
</TABLE>
The accompanying notes are an integral part of the pro forma condensed combined
financial statements.
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<PAGE> 15
PRIME HOSPITALITY CORP.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Total
Pro Forma Pro Forma
Prime(1) Partnerships(2) Adjustments Combined
-------- --------------- ----------- --------
<S> <C> <C> <C> <C>
REVENUES
Lodging ................................ $ 146,184 $ 24,015 $ -- $ 170,199
Food & Beverage ........................ 37,955 -- -- 37,955
Management and Other Fees .............. 8,115 -- (1,174)(6) 6,941
Interest Income on Mortgages and Notes . 11,895 -- (163)(7) 11,732
Rental and Other ....................... 1,479 331 -- 1,810
--------- -------- ------- ---------
TOTAL REVENUES ..................... 205,628 24,346 (1,337) 228,637
--------- -------- ------- ---------
COSTS AND EXPENSES
Direct Hotel Operating Expenses:
Lodging .............................. 38,383 6,492 -- 44,875
Food and Beverage .................... 28,429 -- -- 28,429
Selling and General .................. 49,753 5,875 -- 55,628
Occupancy and Other Operating .......... 11,763 2,836 (1,174)(6) 13,425
General & Administrative Expense ....... 15,515 -- -- 15,515
Depreciation and Amortization .......... 15,974 4,965 (2,959)(8) 17,980
--------- -------- ------- ---------
TOTAL EXPENSES ..................... 159,817 20,168 (4,133) 175,852
--------- -------- ------- ---------
OPERATING INCOME .......................... 45,811 4,178 2,796 52,785
Investment Income ...................... 4,861 -- -- 4,861
Interest Expense ....................... (21,603) (5,403) (619)(7)(9) (27,625)
Other Income ........................... 2,239 -- -- 2,239
Other Expense .......................... (2,200) -- -- (2,200)
--------- -------- ------- ---------
INCOME (LOSS) BEFORE INCOME TAXES AND
EXTRAORDINARY ITEMS .................... 29,108 (1,225) 2,177 30,060
Provision for Income Taxes ............. 11,643 -- 871(10) 12,514
--------- -------- ------- ---------
INCOME (LOSS)BEFORE EXTRAORDINARY ITEMS ... 17,465 (1,225) 1,306 17,546
Extraordinary Items, Net of Income Taxes 104 -- -- 104
--------- -------- ------- ---------
NET INCOME (LOSS) ......................... $ 17,569 $ (1,225) $ 1,306 $ 17,650
========= ======== ======= =========
</TABLE>
The accompanying notes are an integral part of the pro forma condensed combined
financial statements.
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<PAGE> 16
FOOTNOTES TO PRO FORMA CONDENSED COMBINED
FINANCIAL INFORMATION OF PRIME HOSPITALITY CORP.
(1) The balance sheet and statement of operations of Prime Hospitality
Corp. include the financial condition and results of Prime Hospitality
Corp as of December 31, 1995 and for the year then ended.
(2) The balance sheet and statement of operations of the Partnerships
include the combined results of Wellesley I L.P., Multi-Wellesley
Hotels, L.P., Biscayne-Clifton Associates, LeJeune Associates, Fort
Pierce Associates and Daytona Associates as of December 31, 1995.
(3) The eliminated Partnerships net assets and liabilities represent the
equity of the combined Partnerships which were not acquired or assumed
in the acquisition as only the assets and related liabilities of the
Partnerships were acquired.
(4) Represents the purchase of the first mortgage notes from the Holders,
reclassification of restricted cash to cash and cash equivalents,
elimination of accrued interest, elimination of the Prime second, third
and subrogation mortgages and adjustments to property, equipment and
leasehold improvements to their fair value in accordance with purchase
accounting.
(5) Represents additional borrowing necessary to fund the acquisition.
(6) Represents the elimination of management and accounting fees paid to
Prime by the Partnerships for the year ended December 31, 1995.
(7) Represents the elimination of interest income and interest expense
recorded between Prime, the Partnerships and the Holders for the year
ended December 31, 1995.
(8) Represents adjustment of depreciation expense based upon the new fair
value of the property, equipment and leasehold improvements.
(9) Interest expense based upon the total purchase price at Prime's
incremental borrowing rate.
(10) To tax effect all statement of operations pro forma adjustments at a
rate of 40%, Prime's effective tax rate.
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<PAGE> 17
(c) Exhibits
2.1(a) Contract of Purchase and Sale dated February 1, 1996 between
Hillsborough Associates, Meriden Hotel Associates, L.P., Wellesley I,
L.P., Multi-Wellesley Limited Partnership, Seller and Prime Hospitality
Corp., Buyer (previously filed).
2.1(b) Consent of the Holders thereof to the Purchase by Prime Hospitality
Corp. of the Outstanding First Mortgage Notes (previously filed).
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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 therunto duly authorized.
PRIME HOSPITALITY CORP.
Date: May 17, 1996 By: /s/ David A. Simon
------------------
David A. Simon, President and
Chief Executive Officer
Date: May 17, 1996 By: /s/ John M. Elwood
------------------
John M. Elwood, Executive Vice
President and Chief Financial Officer
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EXHIBIT INDEX
Exhibit
2.1(a) Contract of Purchase and Sale dated February 1, 1996 between
Hillsborough Associates, Meriden Hotel Associates, L.P., Wellesley I,
L.P., Multi-Wellesley Limited Partnership, Seller and Prime Hospitality
Corp., Buyer (previously filed).
2.1(b) Consent of the Holders thereof to the Purchase by Prime Hospitality
Corp. of the Outstanding First Mortgage Notes (previously filed).
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