Interstate 4Q, Annual Results Show Loss

WASHINGTON, DC— Interstate Hotels & Resorts announced a final-quarter net loss of $3.4 million, or $0.17 per share, during the course of reporting historical and pro forma results for the fourth quarter and year ended Dec. 31, 2002. The company was formed July 31 following the merger of MeriStar Hotels & Resorts and Interstate Hotels Corp. As such, historical financial data as well as combined pro forma financial data (assuming the merger was completed on Jan. 1, 2001) are taken into account. Historical financial data represents results for Interstate Hotels Corp. through July 31, 2002, and results for Interstate Hotels & Resorts subsequent to July 31, 2002. That said, on a historical basis, the company’s net loss available to common shareholders was $3.1 million, or $0.60 per share, in the 2001 fourth quarter. On a pro forma basis, recurring earnings before interest, taxes, depreciation and amortization (EBITDA) was $9.9 million for the 2002 fourth quarter. Pro forma fourth-quarter 2002 revenues were $247.9 million. Excluding non-recurring items, pro forma net income for the 2002 fourth quarter was $1.8 million, or $0.09 per share, $0.03 above consensus analysts’ estimates. The statement of operations for the 2002 fourth quarter includes as non-recurring charges: • $2.7 million for the impairment of a joint-venture investment; • $1.1 million for the write-off of certain intangible management-contract assets due to the disposition of the related properties and the termination of Interstate’s management contracts on these properties; • $0.2 million of net benefit related to restructuring within the BridgeStreet Corporate Housing Worldwide subsidiary (and the closing of operations in one corporate housing market, offset by an adjustment to previously recorded restructuring expenses related to the MeriStar/Interstate merger; and • $3.7 million of merger and integration costs, including the write-down of fixed assets, professional fees, travel, and other transition costs. Same-store revenue per available room (RevPAR) for all full-service managed hotels in the 2002 fourth quarter increased 8.4% to $62.38, occupancy rose 7.8% to 60.9%, while average daily rate (ADR) increased 0.6% to $102.50. Same-store RevPAR for all limited-service managed hotels in the 2002 fourth quarter increased 2.7% to $46.58, occupancy increased 2.7% to 59.8%, and ADR was flat at $77.91. On a historical basis, net loss available to common shareholders for full year 2002 was $38.8 million or $2.86 per share, compared to a loss of $8.0 million, or $1.41 per share in 2001. Excluding non-recurring items, pro forma net loss for the full year was $0.5 million or $0.02 per share on a diluted basis, compared to pro forma net loss of $3.8 million or $0.19 per share in 2001. Pro forma EBITDA for 2002 was up slightly to $30.2 million, compared to 2001 pro forma EBITDA of $29.6 million. Same-store RevPAR for all full-service managed hotels for the 2002 full year declined 6.7% to $68.13, average daily rate (ADR) was down 5.7% to $104.52, and occupancy decreased 1.1% to 65.2%. Same-store RevPAR for all limited-service managed hotels for the 2002 full year fell 4.2% to $51.60, while ADR was off 3.3% to $79.27, and occupancy dropped 1.1% to 65.1%.