EX-99 3 ex991form8k130.txt EXHIBIT 99.1 EXHIBIT 99.1 ------------ FOR IMMEDIATE RELEASE Contact: Bruce Riggins Melissa Thompson Jerry Daly or Carol McCune Director of Finance Director of Corporate Daly Gray Public Relations (Media) (202) 295-2276 Communications (703) 435-6293 (202) 295-2228 MERISTAR HOSPITALITY CORPORATION REPORTS FOURTH-QUARTER, YEAR-END RESULTS RESULTS EXCEED ANALYSTS' ESTIMATES BY $0.04; COMPANY PROVIDES GUIDANCE FOR 2002 WASHINGTON, D.C., January 30, 2002--MeriStar Hospitality Corporation (NYSE: MHX), the nation's third largest hotel real estate investment trust (REIT), today announced results for the fourth quarter and year ended December 31, 2001. For comparative purposes, the results for the three and 12 months ended December 31, 2000, are presented on a pro forma basis as if the 106 leases with MeriStar Hotels & Resorts (NYSE: MMH) that were converted to management contracts on January 1, 2001, had been converted on January 1, 2000. Results continue to reflect a sluggish economy and significantly lower levels of travel nationwide following the terrorist attacks on September 11. Recurring funds from operations (Recurring FFO) for the 2001 fourth quarter were $14.2 million, compared to $45.0 million for the 2000 fourth quarter. Recurring FFO represents funds from operations, as defined by the National Association of Real Estate Investment Trusts, adjusted for significant non-recurring items. Recurring FFO per diluted share was $0.27, compared to $0.84 for the 2000 fourth quarter. FFO results were $0.04 higher than the consensus analysts' estimate of $0.23. Revenues decreased 20.8 percent to $227.5 million. Recurring earnings before interest expense, income taxes, depreciation and amortization (EBITDA) declined 41.3 percent to $43.8 million. Operating profit margins for owned hotels decreased 270 basis points to 29.6 percent. - more - MeriStar Hospitality Reports Page 2 During the fourth quarter, the company recorded the following non-recurring charges: o An asset impairment charge of $43.6 million related to the write-down of certain hotel assets. These write-downs resulted from the negative impact of changes in the economic climate on the value of these assets. o A $6.7 million charge to recognize the effect of interest rate swaps that were converted to non-hedging derivatives upon the repayment of portions of the company's senior secured credit facility in December 2001. Revenue per available room (RevPAR) for the 2001 fourth quarter declined 24.1 percent to $53.05. Average daily rate (ADR) decreased 10.0 percent to $95.09, while occupancy fell 15.6 percent to 55.8 percent. "MeriStar and the entire travel industry continued to feel the negative effects of the sluggish economy and the dramatic post-September 11 falloff in business and leisure travel nationwide, particularly at urban and resort properties in `fly-to' locations," said Paul W. Whetsell, chairman and CEO of MeriStar Hospitality. "Although our RevPAR decline in the fourth quarter was dramatic, our gross operating profit margins were down only 270 basis points, a testament to the effectiveness of cost-cutting measures that were implemented subsequent to September 11. Since September when RevPAR dropped 31 percent, we have seen a steady, gradual improvement in our hotel operating results, with RevPAR declining less in each successive month--26 percent in October, 24 percent in November and 22 percent in December. We expect this trend to continue into 2002." - more - MeriStar Hospitality Reports Page 3 FULL-YEAR RESULTS For the full year 2001, recurring FFO decreased to $147.0 million, and FFO per diluted share declined to $2.77. Revenues were off 9.4 percent to $1.08 billion, and EBITDA declined 21.5 percent to $267.9 million. RevPAR for all hotels owned for the full year fell 10.4 percent to $69.37. ADR decreased 2.5 percent to $105.04, and occupancy decreased 8.2 percent to 66.0 percent. OPERATING PERFORMANCE IN SIGNIFICANT MARKETS RevPAR and EBITDA contributions in significant markets for the fourth quarter and full year 2001 are as follows:

IMPROVED BALANCE SHEET "During the quarter, we made several improvements to our balance sheet that will give us - more - MeriStar Hospitality Reports Page 4 greater flexibility going forward," said John Emery, MeriStar president and chief operating officer. "We amended the terms of our senior credit facility, relaxing the financial covenants and allowing us to extend the maturity. With the successful issuance of $250 million in senior unsecured notes in December, we reduced our revolver to 13 percent of our total debt at December 31. Our total debt is now $1.7 billion, with an average maturity of six years at an average rate of 8.6 percent. Our balance sheet remains prudently leveraged, and we are well prepared to weather the current economic conditions and to take advantage of the expected rebound in the economy later this year." KEY FINANCIAL INFORMATION o Total debt to annual EBITDA of 6.1x o Annual interest coverage ratio of 2.2x o Capitalized interest of $0.8 million and $6.1 million, respectively, for the three months and year ended December 31, 2001, compared to $2.9 million and $8.6 million for the same periods in 2000 o Capital expenditures of $11.8 million and $45.8 million, respectively, for the three months and year ended December 31, 2001 o Note receivable from MeriStar Hotels & Resorts was $36.0 million at December 31, 2001 o Cash balance of $44.8 million at December 31, 2001 LONG-TERM DEBT Long-term debt as of December 31, 2001, consists of the following (in 000s): BALANCE INTEREST RATE MATURITY Revolver $ 224,000 LIBOR + 400bps 2003 Convertible Notes 154,300 4.75% 2004 Subordinated Notes 202,817 8.75% 2007 Senior Unsecured Notes 299,192 9.00% 2008 Senior Unsecured Notes 248,420 10.50% 2009 CMBS 319,788 7.76% 2009 Senior Unsecured Notes 199,282 9.13% 2011 Mortgage Debt and Other 52,335 9.00% Various ---------- $1,700,134 - more - MeriStar Hospitality Reports Page 5 DIVIDEND POLICY Whetsell noted that the challenging economic climate coupled with the unprecedented decline in business travel since mid-September caused the company to reduce its fourth quarter dividend from $0.505 to $0.01. "During these difficult times, we want to maintain a conservative approach toward the dividend," Whetsell added. "Based on the current outlook, we expect to retain the dividend at the $0.01 level through the second quarter. Based on our forecast for 2002, we anticipate increasing the dividend to $0.25 in the third quarter; however, the actual increase, if any, will be determined by factors including our operating results, capital expenditure requirements, the economic outlook and IRS dividend payout requirements for REITs." EARNINGS GUIDANCE Based on current trends, MeriStar estimates 2002 first-quarter RevPAR to decline 14 to 18 percent, compared to the 2001 first quarter. EBITDA in the first quarter is projected to be $58 million to $60 million, and FFO per diluted share is expected to be $0.46 to $0.50. The company expects full-year 2002 EBITDA to be $245 million and FFO per diluted share to be $2.05. RevPAR in 2002 is expected to decline 2.5 percent compared to full year 2001. For more information about MeriStar Hospitality, visit the company's Web site at WWW.MERISTAR.COM. An updated investor presentation, including 2002 financial forecast, will be posted to the Investor Relations section of the company's Web site later today. To listen to a webcast of the company's fourth-quarter conference call today, January 30, at 9 a.m. Eastern time, go to the Web site and click on Investor Relations, Fourth-Quarter Conference Calls. Interested parties also may listen to an archived webcast of the conference call on the Web site, - more - MeriStar Hospitality Reports Page 6 or may dial (800) 405-2236, reference number 432662, to hear a telephone replay. The archived webcast will be available through Thursday, February 28, and the telephone replay will be available through Friday, February 1, 2002. Washington, D.C.-based MeriStar Hospitality Corporation owns 112 principally upscale, full-service hotels in major markets and resort locations with 28,597 rooms in 27 states, the District of Columbia and Canada. The company owns hotels under such internationally known brands as Hilton, Sheraton, Marriott, Westin, Radisson and Doubletree. For more information about MeriStar Hospitality Corporation, visit the company's Web site: www.meristar.com. THIS PRESS RELEASE CONTAINS "FORWARD-LOOKING STATEMENTS," WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995, ABOUT THE COMPANY, INCLUDING THOSE STATEMENTS REGARDING FUTURE OPERATING RESULTS AND THE TIMING AND COMPOSITION OF REVENUES, AMONG OTHERS, AND STATEMENTS CONTAINING WORDS SUCH AS "EXPECTS," "BELIEVES" OR "WILL," WHICH INDICATE THAT THOSE STATEMENTS ARE FORWARD-LOOKING. EXCEPT FOR HISTORICAL INFORMATION, THE MATTERS DISCUSSED IN THIS PRESS RELEASE ARE FORWARD-LOOKING STATEMENTS THAT ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE THE ACTUAL RESULTS TO DIFFER MATERIALLY, INCLUDING THE EFFECTS OF THE EVENTS OF SEPTEMBER 11, 2001, AND THE DOWNTURN IN THE ECONOMY. ADDITIONAL RISKS ARE DISCUSSED IN THE COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2000. - 30 - MERISTAR HOSPITALITY CORPORATION STATEMENTS OF OPERATIONS (UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS AND OPERATING STATISTICS)

(1) For comparative purposes, the results for the three and twelve months ended December 31, 2000 are presented on a proforma basis assuming the leases with MeriStar Hotels & Resorts were converted to management contracts on January 1, 2000. (2) Recurring funds from operations represents funds from operations, as defined by the National Assocation of Real Estate Investment Trusts, adjusted for significant non-recurring items.

MERISTAR HOSPITALITY OPERATING PARTNERSHIP LP 8-K